CA reverses order for Piatco to pay gov’t $6-M in arbitration costs

The Court of Appeals (CA) has reversed its order for the Philippine International Air Terminals Co. Inc. (PIATCO) to pay the government $6 million in arbitration costs for a legal feud over the contracts for the construction and development of the Ninoy Aquino International Airport (NAIA) Terminal 3.

The $6,009,351.66 award represented 25 percent of the Philippine government's arbitration costs before the International Chamber of Commerce (ICC) International Court of Arbitration, before which PIATCO sought $565 million in damages over the Supreme Court's (SC) nullification of its contract to operate the airport terminal in 2003.

In an amended decision dated June 4, the CA's Special Eleventh Division reinstated the ruling of a Mandaluyong regional trial court (RTC) denying the government's petition seeking the enforcement of the payment from PIATCO, as awarded by the ICC court in favor of Manila in 2011, for being against domestic law.

Part of the government's legal team in the case before the ICC tribunal was ousted Chief Justice Maria Lourdes Sereno, then a private lawyer, though one of her spokespersons believes she ought not to be "dragged into the issue" as a non-party in the case.

Sereno was hired from 2003 through 2009 by the Office of the Solicitor General (OSG) and was entitled to $275,931.21 in attorney's fees from the over over $6-million liability of the PIATCO to the government, as initially calculated.

"As exhaustively discussed by the RTC, petitioners violated the fundamental public policy in the hiring of 'expert witnesses' or 'consultants,' or local or foreign lawyers or law firm, when the OSG did not follow the provisions of R.A. No. 9184 and its IRR (implementing rules and regulations)," the CA through Association Justice Ramon Bato, Jr. said.

This law is the Government Procurement Reform Act, which aims to "standardize" and "streamline" state procurement activities by the national government, its departments, bureaus, offices and agencies.

The CA also partly modified an earlier decision by reversing its order for PIATCO the multi-million dollar arbitration costs to the Philippine government and its lawyers as it partly granted the firm's motion for reconsideration.

"We fully agree with the ruling of the RTC that the 'recognition and enforcement of the Final Award is contrary to Philippine law and public policy,'" the CA said.

"This is because the arbitration costs and expenses were incurred in 'violation of the Constitution, relevant statutes, and other rules governing government expenditures' of public funds," it added.

PIATCO and Sereno

Prior to her ouster by her colleagues in the SC, Sereno was accused before the House of Representatives' justice committee of a failure to declare part of the amount she earned from the PIATCO case.

She was specifically alleged to have failed "to declare in two filed Statements of Assets, Net Worth and Liabilities for 2006 and 2009, and to disclose to the public an amount of around P13.8 million, which form part of more than P32 million fees she earned from the PIATCO cases from 2004 to 2009."

During a hearing on impeachment charges against Sereno, an executive of the Bureau of Internal Revenue (BIR) said she had an estimated basic tax deficiency of P2 million.

The BIR found "discrepancies" even while Sereno substantially declared her income from the PIATCO case, bureau deputy commissioner Arnel Guballa said in February.

Questions on her earnings from the international case also formed part of the quo warranto petition against her before the SC. Sereno denied having concealed or under-declared her income from her stint as government lawyer.

In its landmark decision ousting her, the SC said Sereno failed to file her SALNs for 2004, 2005, and 2006, years she was supposed to have been a lawyer for the Republic.

The SC said Sereno's 2006 and 2009 were belatedly accomplished and filed, and that these "did not reflect" attorney's fees she was supposed to have received for the PIATCO case.

In mid-May, Sereno said the ongoing tax audit on her was illegal for being "long-prescribed." —NB/JST, GMA News