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Agan, Jr. vs. Philippines International Air Terminal Co., Inc. 402 SCRA 612 05may2003 PDF
Agan, Jr. vs. Philippines International Air Terminal Co., Inc. 402 SCRA 612 05may2003 PDF
*
G.R. No. 155001. May 5, 2003.
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* EN BANC.
613
614
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615
involved, this Court is of the view that the crux of the instant
controversy involves significant legal questions. The facts
necessary to resolve these legal questions are well established
and, hence, need not be determined by a trial court.
Same; Same; Same; The rule on hierarchy of courts may be
relaxed when the redress desired cannot be obtained in the
appropriate courts or where exceptional and compelling
circumstances justify availment of a remedy within and calling for
the exercise of the Supreme Court’s primary jurisdiction.—The
rule on hierarchy of courts will not also prevent this Court from
assuming jurisdiction over the cases at bar. The said rule may be
relaxed when the redress desired cannot be obtained in the
appropriate courts or where exceptional and compelling
circumstances justify availment of a remedy within and calling for
the exercise of this Court’s primary jurisdiction. It is easy to
discern that exceptional circumstances exist in the cases at bar
that call for the relaxation of the rule. Both petitioners and
respondents agree that these cases are of transcendental
importance as they involve the construction and operation of the
country’s premier international airport. Moreover, the crucial
issues submitted for resolution are of first impression and they
entail the proper legal interpretation of key provisions of the
Constitution, the BOT Law and its Implementing Rules and
Regulations. Thus, considering the nature of the controversy
before the Court, procedural bars may be lowered to give way for
the speedy disposition of the instant cases.
Actions; Alternative Dispute Resolution; Arbitration; Where
petitioners are not parties to a contract with an arbitration clause,
they cannot be compelled to submit to arbitration proceedings; A
speedy and decisive resolution of all the critical issues in the
present controversy, including those raised by petitioners, cannot
be made before an arbitral tribunal.—It is established that
petitioners in the present cases who have presented legitimate
interests in the resolution of the controversy are not parties to the
PIATCO Contracts. Accordingly, they cannot be bound by the
arbitration clause provided for in the ARCA and hence, cannot be
compelled to submit to arbitration proceedings. A speedy and
decisive resolution of all the critical issues in the present
controversy, including those raised by petitioners, cannot be made
before an arbitral tribunal. The object of arbitration is precisely to
allow an expeditious determination of a dispute. This objective
would not be met if this Court were to allow the parties to settle
the cases by arbitration as there are certain issues involving non-
parties to the PIATCO Contracts which the arbitral tribunal will
not be equipped to resolve.
616
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617
618
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time the contract was bidded out. It is not very difficult to see that
the changes in the 1997 Concession Agreement translate to direct
and concrete financial advantages for PIATCO which were not
available at the time the contract was offered for bidding. It
cannot be denied that under the 1997 Concession Agreement only
“Public Utility Revenues” are subject to MIAA regulation.
Adjustments of all other fees imposed and collected by PIATCO are
entirely within its control. Moreover, with respect to terminal fees,
under the 1997 Concession Agreement, the same is further
subject to “Interim Adjustments” not previously stipulated in the
draft Concession Agreement. Finally, the change in the currency
stipulated for “Public Utility Revenues” under the 1997
Concession Agreement, except terminal fees, gives PIATCO an
added benefit which was not available at the time of bidding.
Same; Section 4.04 of the 1997 Concession Agreement is an
important amendment because it grants PIATCO a financial
advantage or benefit which was not previously made available
during the bidding process.— Without going into the validity of
this provision at this juncture, suffice it to state that Section 4.04
of the 1997 Concession Agreement may be considered a form of
security for the loans PIATCO has obtained to finance the project,
an option that was not made available in the draft Concession
Agreement. Section 4.04 is an important amendment to the 1997
Concession Agreement because it grants PIATCO a financial
advantage or benefit which was not previously made available
during the bidding process. This financial advantage is a
significant modification that translates to better terms and
conditions for PIATCO.
Same; It has been held that the three principles in public
bidding are (1) the offer to the public, (2) opportunity for
competition, and (3) a basis for the exact comparison of bids.—We
agree that it is not inconsistent with the rationale and purpose of
the BOT Law to allow the project proponent or the winning bidder
to obtain financing for the project, especially in this case which
involves the construction, operation and maintenance of the NAIA
IPT III. Expectedly, compliance by the project proponent of its
undertakings therein would involve a substantial amount of
investment. It is therefore inevitable for the awardee of the
contract to seek alternate sources of funds to support the project.
Be that as it may, this Court maintains that amendments to the
contract bidded upon should always conform to the general policy
on public bidding if such procedure is to be faithful to its real
nature and purpose. By its very nature and characteristic, com-
620
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621
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622
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624
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625
626
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right to operate NAIA IPT III will do so within the bounds of the
law and with due regard to the rights of third parties and above
all, the interest of the public.
627
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Courts; Judicial Review; The Court has, in the past, held that
questions relating to gargantuan government contracts ought to be
settled without delay.—The Court has, in the past, held that
questions relating to gargantuan government contracts ought to
be settled without delay. This holding applies with greater force
to the instant cases. Respondent Piatco is partly correct in
averring that petitioners can obtain relief from the regional trial
courts via an action to annul the contracts.
Same; Same; Alternative Dispute Resolution; Arbitration;
Public Utilities; Build-Operate-and-Transfer (BOT) Projects;
International Airport Terminal; The Piatco contracts are void in
their entirety—resort to arbitration is unavailing.—As will be
discussed at length later, the Piatco contracts are indeed void in
their entirety; thus, a resort to the aforesaid provision on
arbitration is unavailing. Besides, petitioners and petitioners-in-
intervention have pointed out that, even granting arguendo that
the arbitration clause remained a valid provision, it still cannot
bind them inasmuch as they are not parties to the Piatco
contracts. And in the final analysis, it is unarguable that the
arbitration process provided for under Section 10.02 of the ARCA,
to be undertaken by a panel of three (3) arbitrators appointed in
accordance with the Rules of Arbitration of the International
Chamber of Commerce, will not be able to address, determine and
628
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PUNO, J.:
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633
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635
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639
_______________
640
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641
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642
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tions at the NAIA IPT III, the Government shall cause the
closure of Ninoy Aquino International Airport Passenger
Terminals I and II as international passenger terminals.
With respect to existing concession agreements between
MIAA and international airport service providers regarding
certain services or operations, the 1997 Concession
Agreement and the ARCA uniformly provide that such
services or operations will not be carried over to the NAIA
IPT III and PIATCO is under no obligation to permit such
carry over except through 8
a separate agreement duly
entered into with PIATCO.
With respect to the petitioning service providers and
their employees, upon the commencement of operations of
the NAIA IPT III, they allege that they will be effectively
barred from providing international airline airport services
at the NAIA Terminals I and II as all international airlines
and passengers will be diverted to the NAIA IPT III. The
petitioning service providers will thus be compelled to
contract with PIATCO alone for such services, with no
assurance that subsisting contracts with MIAA and other
international airlines will be respected. Petitioning service
providers stress that despite the very competitive market,
the substantial capital investments required and the high
rate of fees, they entered into their respective contracts
with the MIAA with the understanding that the said
contracts will be in force for the stipulated period, and
thereafter, renewed so as to allow each of the petitioning
service providers to recoup their investments and obtain a
reasonable return thereon.
Petitioning employees of various service providers at the
NAIA Terminals I and II and of MIAA on the other hand
allege that with the closure of the NAIA Terminals I and II
as international passenger terminals under the PIATCO
Contracts, they stand to lose employment.
The question on legal standing is whether such parties
have “alleged such a personal stake in the outcome of the
controversy as to assure that concrete adverseness which
sharpens the presentation of issues upon which the court so
largely depends for illumina-
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8 Sections 3.01 (a) and 3.02, 1997 Concession Agreement; Sections 3.01
(d) and (e) and 3.02, ARCA.
644
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9
tion of difficult constitutional questions.” Accordingly, it
has been held that the interest of a person assailing the
constitutionality of a statute must be direct and personal.
He must be able to show, not only that the law or any
government act is invalid, but also that he sustained or is
in imminent danger of sustaining some direct injury as a
result of its enforcement, and not merely that he suffers
thereby in some indefinite way. It must appear that the
person complaining has been or is about to be denied some
right or privilege to which he is lawfully entitled or that he
is about to be subjected to some burdens 10
or penalties by
reason of the statute or act complained of.
We hold that petitioners have the requisite standing. In
the above-mentioned cases, petitioners have a direct and
substantial interest to protect by reason of the
implementation of the PIATCO Contracts. They stand to
lose their source of livelihood, a property right which is
zealously protected by the Constitution. Moreover,
subsisting concession agreements between MIAA and
petitioners-intervenors and service contracts between
international airlines and petitioners-intervenors stand to
be nullified or terminated by the operation of the NAIA IPT
III under the PIATCO Contracts. The financial prejudice
brought about by the PIATCO Contracts on petitioners and
petitioners-intervenors in these cases are legitimate
interests sufficient to confer on them the requisite standing
to file the instant petitions.
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9 Kilosbayan, Inc. v. Morato, G.R. No. 118910, July 17, 1995, 246 SCRA
540, 562-563, citing Baker v. Carr, 369 U.S. 186, 7 L. Ed. 633 (1962).
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10 Id.; Bayan v. Zamora, G.R. No. 138570, October 10, 2000, 342 SCRA
449, 478.
11 Rollo, G.R. No. 155547, p. 12.
645
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646
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647
previous ruling
21
in Salas, Jr. v. Laperal Realty
Corporation, held that to tolerate the splitting of
proceedings by allowing arbitration as to some of the
parties on the one hand and trial for the others on the
other hand would, in effect, result in multiplicity
22
of suits,
duplicitous procedure and unnecessary delay. Thus, we
ruled that the interest of justice would best be served if the
trial court hears and adjudicates the case in a single and
complete proceeding.
It is established that petitioners in the present cases who
have presented legitimate interests in the resolution of the
controversy are not parties to the PIATCO Contracts.
Accordingly, they cannot be bound by the arbitration clause
provided for in the ARCA and hence, cannot be compelled
to submit to arbitration proceedings. A
_______________
648
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649
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650
6. Basis of Pre-qualification
The basis for the pre-qualification shall be on the compliance of
the proponent to the minimum technical and financial
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651
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652
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29
PAGS 26,735,700.00
Paircargo 3,123,515.00
TOTAL P558,384,871.55
653
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654
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655
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656
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In the case 34
of Caltex (Philippines), Inc. v. Delgado
Brothers, Inc., this Court quoted with approval the ruling
of the trial court that an amendment to a contract awarded
through public bidding, when such subsequent amendment
was made without a new public bidding, is null and void:
The Court agrees with the contention of counsel for the plaintiffs
that the due execution of a contract after public bidding is a
limitation upon the right of the contracting parties to alter or
amend it without another public bidding, for otherwise what
would a public bidding be good for if after the execution of a
contract after public bidding, the contracting parties may alter or
amend the contract, or even cancel it, at their will? Public biddings
are held for the protection of the public, and to give the public the
best possible advantages by means of open competition between
the bidders. He who bids or offers the best terms is awarded the
contract subject of the bid, and it is obvious that such protection
and best possible advantages to the public will disappear if the
parties to a contract executed after public bidding 35
may alter or
amend it without another previous public bidding.
_______________
657
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658
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659
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40 Emphasis supplied.
660
Inc.
With respect
41
to terminal fees that may be charged by
PIATCO, as shown earlier, this was included within the
category of “Public Utility Revenues” under the 1997
Concession Agreement. This classification is significant
because under the 1997 Concession Agreement, “Public
Utility Revenues” are subject to an “Interim Adjustment” of
fees upon the occurrence of 42certain extraordinary events
specified in the agreement. However, under the draft
Concession Agreement, terminal fees are not included in the43
types of fees that may be subject to “Interim Adjustment.”
Finally, under the 1997 Concession Agreement, “Public
Utility Revenues,”
44
except terminal fees, are denominated in
US Dollars while payments to the Government are in
Philippine Pesos. In the draft Concession Agreement, no
such stipulation was included. By stipulating that “Public
Utility Revenues” will be paid to PIATCO in US Dollars
while payments by PIATCO to the Government are in
Philippine currency under the 1997 Concession Agreement,
PIATCO is able to enjoy the benefits of depreciations of the
Philippine Peso, while being effectively insulated from the
detrimental effects of exchange rate fluctuations.
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661
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662
_______________
664
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665
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666
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48 Emphasis supplied.
49 Concession Agreement, Art. 4, Sec. 4.04 (b) and (c), Art. 1, Sec. 1.06,
July 12, 1997.
50 Ibid.
51 Id., at Art. 4, Sec. 4.04 (c).
667
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One of the main impetus for the enactment of the BOT Law
is the lack of government funds to construct the
infrastructure and development projects necessary for
economic growth and development. This is why private
sector resources are being tapped in order to finance these
projects. The BOT law allows the private sector to
participate, and is in fact encouraged to do so by way of
incentives,
52
such as minimizing the unstable flow of
returns, provided that the government would not have to
unnecessarily expend scarcely available funds for the
project itself. As such, direct guarantee, subsidy and equity
by the government
53
in these projects are strictly
prohibited. This is but logical for if the government would
in the end still be at a risk of paying the debts incurred by
the private entity in the BOT projects, then the purpose of
the law is subverted.
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52 Record of the Senate Second Regular Session 1993-1994, vol. III, no. 42, p.
362.
53 Republic Act No. 7718, Secs. 2 and 4-A, Implementing Rules and Regulations,
Rule 11, Secs. 11.1 and 11.3.
668
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669
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670
_______________
672
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Trial Court IVth Judicial Region, Pasig, G.R. No. L-72306, October 5,
1988, 166 SCRA 281; Laurel v. Civil Service Commission, G.R. No. 71562,
October 28, 1991, 203 SCRA 195; Davac v. Court of Appeals, G.R. No.
106105, April 21, 1994, 231 SCRA 665.
59 Republic Act No. 7718, Sec. 1.
60 III Record of the Constitutional Commission, pp. 266-267 (1986).
61 Id.
673
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62 Except for providing for the suspension of all payments due to the
Government for the duration of the takeover, Article V, Section 5.10(b) of
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the ARCA contains the same provision. Emphasis and caption supplied.
674
63
Terminal and/or Terminal Complex.” Article XII, section
17 of the 1987 Constitution envisions a situation wherein
the exigencies of the times necessitate the government to
“temporarily take over or direct the operation of any
privately owned public utility or business affected with
public interest.” It is the welfare and interest of the public
which is the paramount consideration in determining
whether or not to temporarily take over a particular
business. Clearly, the State in effecting the temporary
takeover is exercising its police power. Police power is64 the
“most essential, insistent, and illimitable of powers.” Its
exercise therefore must not be unreasonably hampered nor
its exercise be a source of obligation by the government in 65
the absence of damage due to arbitrariness of its exercise.
Thus, requiring the government to pay reasonable
compensation for the reasonable use of the property
pursuant to the operation of the business contravenes the
Constitution.
V Regulation of Monopolies
Sec. 19. The state shall regulate or prohibit monopolies when the
public interest so requires. No combinations in restraint of trade
or unfair competition shall be allowed.
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63 Id.
64 Bataan Shipyard and Engineering Co., Inc. v. Presidential
Commission on Good Government, G.R. No. 75885, May 27, 1987, 150
SCRA 181; citing Freund, The Police Power (Chicago, 1904).
65 Genuino v. Court of Agrarian Relations, G.R. No. L-25035, February
26, 1968, 22 SCRA 792.
66 Black’s Law Dictionary, 4th Ed., p. 1158.
675
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676
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73 Id., at CA, Art. Ill, Sec. 3.01(d) and (e); ARCA, Art. III, Sec. 3.01(d) and (e).
74 Executive Order No. 903, as amended, Sec. 4 (b) and (c).
75 Art. XII, Sec. 19, Philippine Constitution.
76 Republic Act No. 7718, Sec. 1.
677
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678
and the ARCA did not strip government, thru the MIAA, of
its right to supervise the operation of the whole NAIA
complex, including NAIA IPT III. As79 the primary
government agency tasked with the job, it is MIAA’s
responsibility to ensure that whoever by contract is given
the right to operate NAIA IPT III will do so within the
bounds of the law and with due regard to the rights of third
parties and above all, the interest of the public.
VI CONCLUSION
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Section 5. Functions, Powers, and Duties.—The Authority shall have the following
functions, powers and duties:
...
679
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SEPARATE OPINION
VITUG, J.:
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680
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681
SEPARATE OPINION
PANGANIBAN, J.:
Hierarchy of Courts
The Court has, in the past, held that questions relating to
gargantuan government
2
contracts ought to be settled
without delay. This holding applies with greater force to
the instant cases. Respondent Piatco is partly correct in
averring that petitioners can obtain relief from the regional
trial courts via an action to annul the contracts.
Nevertheless, the unavoidable consequence of having to
await the rendition and the finality of any such judgment
would be a prolonged state of uncertainty that would be
prejudicial to the nation, the parties and the general
public. And, in light of the feared loss of jobs of the
petitioning workers, consequent to the inevitable
pretermination of contracts of the petitioning service
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1 See Kilosbayan, Inc. v. Guingona, Jr., 232 SCRA 110, May 5, 1994;
and Basco v. Phil. Amusements and Gaming Corporation, 197 SCRA 52,
May 14, 1991.
2 Commission on Elections v. Quijano-Padilla, G.R. No. 151992,
September 18, 2002, 389 SCRA 353.
683
Arbitration
Should the dispute be referred to arbitration prior to
judicial recourse? Respondent Piatco claims that Section
10.02 of the Amended and Restated Concession Agreement
(ARCA) provides for arbitration under the auspices of the
International Chamber of Commerce to settle any dispute
or controversy or claim arising in connection with the
Concession Agreement, its amendments and supplements.
The government disagrees, however, insisting that there
can be no arbitration based on Section 10.02 of the ARCA,
since all the Piatco contracts are void ab initio. Therefore,
all contractual provisions, including Section 10.02 of the
ARCA, are likewise void, inexistent and inoperative. To
support its stand, the government cites 6Chavez v.
Presidential Commission on Good Government: “The void
agreement will not be rendered operative by the parties’
alleged performance (partial or full) of their respective
prestations. A contract that violates the Constitution and
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the law is null and void ab initio and vests no rights and
creates no obligations. It produces no legal effect at all.”
As will be discussed at length later, the Piatco contracts
are indeed void in their entirety; thus, a resort to the
aforesaid provision
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684
Locus Standi
Given this Court’s previous decisions in cases of similar
import, no one will seriously doubt that, being taxpayers
and members of the House of Representatives, Petitioners
Baterina, et al., have locus standi to7 bring the Petition in
GR No. 155547. In Albano v. Reyes, this Court held that
the petitioner therein, suing as a citizen, taxpayer and
member of the House of Representatives, was sufficiently
clothed with standing to bring the suit questioning the
validity of the assailed contract. The Court cited the fact
that public interest was involved, in view of the important
role of the Manila International Container Terminal
(MICT) in the country’s economic development and the
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685
8
gona, Jr. that “in cases of transcendental importance, the
Court may relax the standing requirements and allow a suit
to prosper even when there is no direct 9
injury to the party
claiming the right of judicial review.”
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8 Supra, Paras, J.
9 As reiterated in Bayan (Bagong Alyansang Makabayan) v. Zamora,
342 SCRA 449, 480-481, October 10, 2000.
10 RA No. 6957 as amended by RA No. 7718.
687
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688
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12 Initially the minimum equity was set at 20%, per Sec. 3.6.4 of the Bid
Documents. However, this was later clarified in Bid Bulletin No. 3(B)(6) to
read 30% of Project Cost, to bring the same in line with the draft
concession agreement’s Art. II Sec. 2.01 (a), which specifically set the
project’s debt-to-equity ratio at 70:30, thereby requiring a minimum
equity of 30% of project cost.
13 The consortium was composed of Paircargo, PAGS and Security
Bank. Paircargo’s audited financial statements as of 1993 and 1994
showed a net worth of P2,783,592 and P3,123,515 respectively. PAGS’
audited financial statements as of 1995 showed a paid-up capital of
P5,000,000 and deposits on future subscriptions of P21,735,700, or an
aggregate of P26,735,700 of equity available to invest in the project.
Security Bank’s audited statements for 1995 showed a net worth of
689
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P3,523,504,377. However, the bank’s entire net worth was not available
for investment in the project since Sec. 21-B of the General Banking Act
provides inter alia that a commercial bank’s equity investment in any one
enterprise, whether allied or non-allied, should not exceed 15% of the net
worth of the investing bank. This limitation is reiterated in Sec. 1381.1.a.
of the Manual for Banks and Other Financial Intermediaries. Thus, the
maximum amount which Security Bank could have legally invested in the
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690
_______________
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691
_______________
692
694
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695
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696
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697
698
_______________
699
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700
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701
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32 As cf. Annex “G” of the ARCA vis-à-vis Annex “G” of the CA.
33 Cf. §8.04(d) of the ARCA vis-à-vis §9.01 (d) of the CA.
34 Cf §2.05 of the ARCA vis-à-vis §2.05 of the CA.
35 Cf §5.08(a) of the ARCA vis-à-vis §5.08(a) of the CA
36 Cf. §6.03(a) (i) of the ARCA vis-à-vis §6.03(a) of the CA.
37 Cf §8.01(b) and §12.09 of the ARCA vis-à-vis §8.04(b) and 12.09 of the
CA.
38 Cf §8.03(a) (i) of the ARCA vis-à-vis §8.06(a) (i) of the CA.
702
39
tion of all Public Utility Revenues. No such
obligation existed previously.
11. Government is now also obligated to perform and
cause other persons and entities under its direct or
indirect control to perform all acts necessary to
perfect the security interests40to be created in favor
of Piatco’s Senior Lenders. No such obligation
existed previously.
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703
_______________
704
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705
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Interchange; and 52
removal of squatters along
Andrews Avenue.
(e) Dealing directly with BCDA and the Phil. Air Force
in acquiring additional land or right of way
53
for the
road upgrade and improvement program.
_______________
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706
_______________
707
_______________
708
709
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710
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61 Page 37.
711
712
713
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714
obligations.
Furthermore, in those instances where such termination
compensation is authorized by the BOT Law, it is
indispensable that the interest of government be duly
insured. Section 5.08 of the ARCA mandates insurance
coverage for the terminal facility; but all insurance policies
are to be assigned, and all proceeds are payable, to the
Senior Lenders. In brief, the interest being secured by such
coverage is that of the Senior Lenders, not that of
government. This can hardly be considered compliance
with law.
In essence, the ARCA provisions on termination
compensation result in another unauthorized government
guarantee, this time in favor of Piatco.
A Prohibited Direct
Government Subsidy,
Which at the Same Time
Is an Assault on the
National Honor
Still another contractual provision offensive to law and
public policy is Section 8.01 (d) of the ARCA, which is a
“bolder and badder” version of Section 8.04(d) of the CA.
It will be recalled that Section 4-A of the BOT Law as
amended prohibits not only direct government guarantees,
but likewise a direct government subsidy for unsolicited
proposals. Section 13.2. b. iii. of the 1999 IRR defines a
direct government subsidy as encompassing “an agreement
whereby the Government x x x will x x x postpone any
payments due from the proponent.”
Despite the statutory ban, Section 8.01 (d) of the ARCA
provides thus:
715
716
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717
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719
a) x x x x x x x x x
b) In the event the Agreement is terminated pursuant to
Section 8.01(b) hereof, Concessionaire shall be entitled to
collect the Liquidated Damages specified in Annex ‘G’. The
full payment by GRP to Concessionaire of the Liquidated
Damages shall be a condition precedent to the transfer by
Concessionaire to GRP of the Development Facility. Prior
to the full payment of the Liquidated Damages,
Concessionaire shall to the extent practicable continue to
operate the Terminal and the Terminal Complex and shall
be entitled to retain and withhold all payments to GRP for
the purpose of offsetting the same against the Liquidated
Damages. Upon full payment of the Liquidated Damages,
Concessionaire shall immediately transfer the
Development Facility to GRP on ‘as-is-where-is’ basis.”
720
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68 §3.02(b) and (c) of the ARCA and §3.02(b) of the CA. Pertinent
portions of §3.02(b) of the ARCA are quoted hereinbelow:
“(b) On the In-Service Date, GRP shall cause the closure of the Ninoy Aquino
International Airport Passenger Terminals I and II as international passenger
terminals in order to allow Concessionaire, during the entire Concession Period, to
exclusively operate a commercial international passenger terminal within the
island of Luzon; provided that the aforesaid exclusive right to operate a
commercial international passenger terminal shall be without prejudice to the
international passenger terminal operations already existing on the date of this
Agreement in SBFSEZ, CSEZ and Laoag City (but subject to the limitation with
regard to CSEZ referred to in Section 3.02[a]). Neither shall GRP, DOTC or MIAA
use or permit the use of Terminals I and/or II under any arrangement or scheme,
for compensation or otherwise, with any party which would directly or indirectly
compete with Concessionaire in the latter’s operation of and the operations in the
Terminal and Terminal Complex, including without limitation the use of
Terminals I and/or II for the handling of international traffic; provided that if
Terminals I and/or II are operated as domestic passenger terminals, the conduct of
any activity therein which under the ordinary course of operating a domestic
passenger terminal is normally undertaken, shall not be considered to be in direct
or indirect competition with Concessionaire in its operation of the Development
Facility.”
721
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“(d) For the purpose of an orderly transition, MIAA shall not renew any expired
concession agreement relative to any service or operation currently being
undertaken at the Ninoy Aquino International Airport Passenger Terminal I, or
extend any concession agreement which may expire subsequent hereto, except to
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the extent that the continuation of existing services and operations shall lapse on
or before the In-Service Date. Nothing herein shall be construed to prohibit MIAA
from maintaining arrangements for the uninterrupted provision of essential
services at the Ninoy Aquino International Airport Passenger Terminal I until the
Terminal shall have commenced operations on the In-Service Date, and thereafter,
from making such arrangements as are necessary for the utilization of NAIA
Passenger Terminal I as a domestic passenger terminal or as a facility other than
an international passenger terminal.
“(e) GRP confirms that certain concession agreements relative to certain services
or operations currently being undertaken at the Ninoy Aquino International
Airport Passenger Terminal I have a validity period extending beyond the In-
Service Date. GRP, through DOTC/MIAA, confirms that these services and
operations shall not be carried over to the Terminal and that Concessionaire is
under no legal obligation to permit such carry-over except through a separate
agreement duly entered into with Concessionaire. In the event Concessionaire
becomes involved in any litigation initiated by any such concessionaire or operator,
GRP undertakes and hereby holds Concessionaire free and harmless on a full
indemnity basis from and against any loss and/or liability resulting from any such
litigation, including the cost of litigation and the reasonable fees paid or payable to
Concessionaire’s counsel of choice, all such amounts being fully deductible by way
of an offset from any amount which Concessionaire is bound to pay GRP under
this Agreement.”
722
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723
74
wholly-owned subsidiary of Friendship Holdings, 75
Inc.,
which is in turn owned 80 percent by PAGS. PAGS is 76
a
service provider owned 60 percent by the 77
Cheng Family; it
is a stockholder of 35 percent of Piatco and is the latter’s
78
designated contractor-operator for NAIA Terminal III.
Such entry into and domination of the airport-related
services sector appear to be very much in line with the
following provisions contained in the 79
First Addendum to
the Piatco Shareholders Agreement, executed on July 6,
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a. x x x x x x x x x;
b. That (Phil. Airport and Ground Services, Inc.) PAGS
and/or its designated Affiliates shall, at all times during
the Concession Period, be exclusively authorized by
(PIATCO) to engage in the provision of groundhandling,
catering and fueling services within the Terminal
Complex.
c. That PAIRCARGO and/or its designated Affiliate shall,
during the Concession Period, be the only entities
authorized to construct and operate a warehouse for all
cargo handling and related services within the Site.”
_______________
724
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725
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727
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728
_______________
729
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730
_______________
732
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It can be easily inferred, then, that DPWH did not set aside
enough funds to be able to complete the upgrading program
for the crucially situated access roads prior to the targeted
opening date of Terminal III; and that, had MIAA not
agreed to lend the P410 million, DPWH would not have
been able to complete the program on time. As a
consequence, government would have been in breach of a
material obligation. Hence, this particular undertaking of
government may likewise not be construed as being for
best-efforts compliance only.
_______________
733
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EPILOGUE
What Do We Do Now?
_______________
734
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736
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——o0o——
737
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