State Operation of Private Enterprises: Art. XII, Sec.

G.R. No. 155001 (2003 & 2004)
Date of Promulgation: May 5, 2003 & January 21, 2004 (Resolution)
Ponente: Puno, J.
Petition: Petition for Prohibition (2003) & Motion for Reconsideration (2004)
Petitioners: Demosthenes Agan Jr., Joseph Catahan, Jose Mari Reunilla, Manuel Antonio
Bone, Mamerto Clara, Reuel Dimalanta, Mory Domalaon, Conrado Dimaano, Lolita Hizon,
Remedios Adolfo, Bienvenido Hilario, MIASCOR Workers Union – Nat’l Laber Union, & Phil.
Airlines Employees Assoc.
Respondents: Phil. Int’l Air Terminals Co., Inc. (PIATCO), Manila Int’l Airport Authority, DOTC
(and Sec. Leandro Mendoza)
6 business leaders formed Asians Emerging Dragon Corp. (AEDC) in 1993 and explored the
possibility of investing in the new NAIA airport terminal. They submitted unsolicited proposal to
the government, and NEDA approved the NAIA IPT III project.
Bidders were invited in 1996, and among them the Peoples Air Cargo (Paircargo) was chosen.
AEDC protested alleging that preference was given to Paircargo, but still the project was
awarded to Paircargo which then incorporated into Phil. Intl. Airport Terminals Co. (PIATCO).
The DOTC and PIATCO entered into a concession agreement in 1997 to franchise and operate
the said terminal for 25 years.
In 1998 it was amended in the matters of pertaining to the definition of the obligations given to
the concessionaire, development of facilities and proceeds, fees and charges, and the
termination of contract.

temporary government takeover and obligate the government to pay “reasonable cost for the
use of the Terminal and/or Terminal Complex.”
The temporary takeover by the government extends only to the operations and not to the
ownership per se.
The government is not required to compensate the owner since there is no transfer of
ownership. Also, the temporary takeover by the government is in exercise of its police power and
not of its power of eminent domain (which gives just compensation).
The 1997 Concession Agreement, the Amended and Restated Concession Agreement and the
Supplements thereto are set aside for being null and void.
Concur: Davide, Jr., C.J.
Carpio-Morales, JJ.
Separate Concur: Panganiban
Callejo, Sr.
Azcuna, J
Dissent: Vitug, J
The court has no jurisdiction. Petition prays for nullification of contract and does not involve
judicial, quasi-judicial or ministerial functions.
No Jurisdiction: Quisumbing, J

2 monopolies were created by the PIATCO contracts: (1) That NAIA Terminal III will be the
only facility to be operated as an international passenger terminal and that no one (including the
government) will be allowed to compete with PIATCO in the operation of an international
passenger terminal in the NAIA Complex; and (2) the business of providing international airlines
with groundhandling, in-flight catering, cargo handling, and aircraft repair and maintenance
Since MIAA is charged with the maintenance and operations of NAIA terminals I and II, it has a
contract with several service providers. The workers filed the petition for prohibition claiming that
they would lose their jobs.
The service providers joined them, filed a motion for intervention. Likewise several employees of
the MIAA filed a petition assailing the legality of arrangements. A group of congressmen filed
similar petitions.
Pres. GMA then declared in her speech that she will not honor PIATCO contracts which the
Exec. Branch's legal office concluded null and void.
WON the State can take over a private enterprise if affected with public interest. - YES
PIATCO cannot, by mere contractual stipulation, contravene the Constitutional provision on

No Part: Carpio, J
Article XII, Section 17:
In times of national emergency, when the public interest so requires, the State may, during the
emergency and under reasonable terms prescribed by it, temporarily take over or direct the
operation of any privately owned public utility or business affected with public interest.