Professional Documents
Culture Documents
Agan Vs Piatco
Agan Vs Piatco
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G.R. No. 155001. May 5, 2003.
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* EN BANC.
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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.:
Petitioners and petitioners-in-intervention filed the instant
petitions for prohibition under Rule 65 of the Revised Rules
of Court seeking to prohibit the Manila International
Airport Authority (MIAA) and the Department of
Transportation and Communications (DOTC) and its
Secretary from implementing the following agreements
executed by the Philippine Government through the DOTC
and the MIAA and the Philippine International Air
Terminals Co., Inc. (PIATCO): (1) the Concession
Agreement signed on July 12, 1997, (2) the Amended and
Restated Concession Agreement dated November 26, 1999,
(3) the First Supplement to the Amended and Restated
Concession Agreement dated August 27, 1999, (4) the
Second Supplement to the Amended and Restated
Concession Agreement dated September 4, 2000, and (5)
the Third Supplement to the Amended and Restated
Concession Agreement dated June 22, 2001 (collectively,
the PIATCO Contracts).
The facts are as follows:
In August 1989, the DOTC engaged the services of
Aeroport de Paris (ADP) to conduct a comprehensive study
of the Ninoy Aquino International Airport (NAIA) and
determine whether the present airport can cope with the
traffic development up to the year 2010. The study
consisted of two parts: first, traffic forecasts, capacity of
existing facilities, NAIA future requirements, proposed
master plans and development plans; and second,
presentation of the preliminary design of the passenger
terminal building. The ADP submitted a Draft Final
Report to the DOTC in December 1989.
Some time in 1993, six business leaders consisting of
John Gokongwei, Andrew Gotianun, Henry Sy, Sr., Lucio
Tan, George Ty and Alfonso Yuchengco met with then
President Fidel V. Ramos to explore the possibility of
investing in the construction and operation of a new
international airport terminal. To signify their
commitment to pursue the project, they formed the Asia’s
Emerging Dragon Corp. (AEDC) which was registered with
the Securities and Exchange Commission (SEC) on
September 15, 1993.
On October 5, 1994, AEDC submitted an unsolicited
proposal to the Government through the DOTC/MIAA for
the development of NAIA International Passenger
Terminal III (NAIA IPT III) under
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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
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).
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
646 SUPREME COURT REPORTS ANNOTATED
Agan, Jr. vs. Philippine International Air Terminals Co.,
Inc.
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647
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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
requirements provided in the Bid Documents and in the IRR of
the BOT Law, R.A. No. 6957, as amended by R.A. 7718.
The minimum amount of equity to which the proponent’s
financial capability will be based shall be thirty percent (30%) of
the project cost instead of the twenty percent (20%) specified in
Section 3.6.4 of the Bid Documents. This is to correlate with the
required debt-to-equity ratio of 70:30 in Section 2.01a of the draft
concession agreement. The debt portion of the project financing
should not exceed 70% of the actual project cost.
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654 SUPREME COURT REPORTS ANNOTATED
Agan, Jr. vs. Philippine International Air Terminals Co.,
Inc.
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656
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.
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40 Emphasis supplied.
660
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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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
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.
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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
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.
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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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77 Transcript of Oral Arguments, p. 157, December 10, 2002.
78 G.R. No. L-54958, September 2, 1983, 124 SCRA 494.
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:
...
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SEPARATE OPINION
VITUG, J.:
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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
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
magnitude of the financial consideration. This,
notwithstanding the fact that expenditure of public funds
was not required under the assailed contract.
In the cases presently under consideration, petitioners’
personal and substantial interest in the controversy is
shown by the fact that certain provisions in the Piatco
contracts create obligations on the part of government
(through the DOTC and the MIAA) to disburse public funds
without prior congressional appropriations.
Petitioners thus correctly assert that the injury to them
has a twofold aspect: (1) they are adversely affected as
taxpayers on account of the illegal disbursement of public
funds; and (2) they are prejudiced qua legislators, since the
contractual provisions requiring the government to incur
expenditures without appropriations also operate as
limitations upon the exclusive power and prerogative of
Congress over the public purse. As members of the
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685
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686 SUPREME COURT REPORTS ANNOTATED
Agan, Jr. vs. Philippine International Air Terminals Co.,
Inc.
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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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
project was only P528,525,656.55. And consequently, the maximum
amount of equity which the consortium could have put up was only
P558,384,871.55.
690
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691
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692
694
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695
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696
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697
698
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699
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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
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.
12. DOTC/MIAA’s right of intervention in instances
where Piatco’s Non-Public Utility Revenues 41
become
exorbitant or excessive has been removed.
13. The illegality and unenforceability of the ARCA or
any of its material provisions was made an event of
default on the part of government only, thus
constituting
42
a ground for Piatco to terminate the
ARCA.
14. Amounts due from and payable by government
under the contract were made payable on demand
—net of taxes, levies, imposts, duties, charges
43
or
fees of any kind except as required by law.
15. The Parametric Formula in the contract, which is
utilized to compute for adjustments/increases to the
public utility revenues (i.e., aircraft parking and
tacking fees, checkin counter fee and terminal fee),
was revised to permit Piatco to input its more costly
short-term borrowing rates instead of the longer-
terms rates in the computations for adjustments,
with the end result that the changes will redound to
its greater financial benefit.
16. The Certificate of Completion simply deleted the
successful performance-testing of the terminal
facility in accordance with defined performance
standards as a precondition for 44
government’s
acceptance of the terminal facility.
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703
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704
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705
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
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708
708 SUPREME COURT REPORTS ANNOTATED
Agan, Jr. vs. Philippine International Air Terminals Co.,
Inc.
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710
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61 Page 37.
711
712
713
714
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
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718
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719
a) x x x xxx xxx
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.”
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“(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
VOL. 402, MAY 5, 2003 721
Agan, Jr. vs. Philippine International Air Terminals Co.,
Inc.
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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
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,
1999, which appear to constitute a sort of master plan to
create a monopoly and combinations in restraint of trade:
a. x x x xxx 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
_______________
725
_______________
727
_______________
728
90
all contracts, and/or the 91
right to make a contract in
relation to one’s business.
_______________
729
_______________
730
731
_______________
732
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
EPILOGUE
What Do We Do Now?
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734
735
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736
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737
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