The Court of Appeals has ruled in favor of Chief Justice Maria Lourdes Sereno, reversing a lower court decision declaring illegal her receipt of attorney’s fees amounting to more than P16 million, as part of legal expenses in the case involving the Ninoy Aquino International Airport terminal 3.
The court’s 17th Division declared as legal the $6 million in legal expenses claimed by the government from airport contractor Philippine International Air Terminals Co. Inc. (Piatco).
In a 23-page decision dated January 20, obtained by The Manila Times, the court granted the plea of the government to junk the ruling of Mandaluyong Regional Trial Court Judge Carlos Valenzuela that declared the attorney’s fees of Sereno and other counsels hired by the government invalid for lack of public bidding and bud get appropriation, among other issues. Sereno was a commercial lawyer prior to her appointment to the Supreme Court in 2012.
The ruling was penned by Associate Justice Marlene Gonzales-Sison, and concurred in by Justices Ramon Cruz and Henry Jean Paul Inting. The appeals court said that the ruling shall be “immediately executory.”
The fees were in connection with the arbitration case between the government and Piatco after the latter’s takeover of the terminal in 2004. The government junked the contract after it was declared illegal by the Supreme Court for violating the 40 percent foreign ownership cap for public utilities. Fraport AG was found to be the majority investor in the terminal project.
Based on court records, the total amount of attorneys’ fees and legal expenses, including that of Sereno, reached $30,888,631.73. Sereno, who acted as legal researcher, earned $336,287.66 or more than P16 million.
PIATCO was “Ordered to pay the Government of the Republic of the Philippines…the amount of Six Million Nine Thousand Three Hundred Fifty One United States Dollars and Sixty-six Cents (US$6,009,351.66).”
The CA opined that by hiring private counsels like Sereno and retired Supreme Court associate justice Florentino Feliciano, “the [Office of the Solicitor General] possesses both the authority and funding against which the expenses for such engagement will be charged. As such, there is no need for the enactment of a law appropriating funds therefore as these expenses were charged to the agencies concerned.”
It noted that President Gloria Macapagal-Arroyo hired Feliciano and the White and Case Law office in the US to represent the Philippine government before an arbitration tribunal in Singapore.
The court ruled that there could never be an offsetting of payments even if the government was also indebted to pay Piatco for the construction of the terminal.
“Verily, the claim of Piatco of P293,516,514.14 representing Piatco’s annual guaranteed payments, is just that—a claim. No court of general jurisdiction has ever ruled that indeed the Government owed Piatco such amount, which would create a creditor-debtor relationship between them. Even if it is proven that there is such a debt, no judgment has been rendered to qualify it is due and demandable,” it said.
Piatco thus is obliged to pay because it was the losing party to the case and not the Philippine government.
“All told, we find that no public policy is transgressed when the Government is the one receiving the money duly awarded by an Arbitral Tribunal. There may be public policy against unlawful and unnecessary expenditure, but there is no public policy that prohibits the recovery of that expenditure by the Government,” the court said.
Mandaluyong judge Valenzuela had ruled that the arbitration costs and expenses were incurred in violation of government policy mandating public bidding and the “long-standing policy against the incurrence of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures or use of funds and property by the government.”