G.R. No. 75197 - E. Razon, Inc. vs. Philippine Ports Authority

E. Razon, Inc. (ERI), also known as Metro Port Service, Inc. (MPSI), was organized on June 21, 1962 to bid for management of South Harbor piers.
In 1966 ERI won a five-year arrastre contract for Piers 3 and 5 and invested heavily in equipment on assurance of renewal without rebidding.

In 1971 the Bureau of Customs called for rebidding of all South Harbor piers; ERI sought certiorari to enjoin rebidding before the Court of First Instance of Manila.
This Court in Virata v. Bocar (50 SCRA 468) ordered rebidding but conditioned no final award until further order; rebidding was held, ERI was unanimously chosen, and a five-year contract was executed on January 18, 1974 (effective January 1, 1974), renewable for another five years.

In late 1978 under coercion, Enrique Razon allegedly endorsed 60% of ERI’s stock in blank to parties close to President Marcos (later identified as Alfredo “Bejo” Romualdez). ERI’s bylaws were amended diminishing the president’s powers; corporate name changed to MPSI.
The January 1, 1974 contract expired December 31, 1978, was extended to June 30, 1980, then renewed by PPA on July 1, 1980 for eight years.

After February 1986 Enrique Razon retook active management: reorganized the board, restored corporate name, had books audited by SGV, improved service and equipment functionality, and restored labor relations (acknowledged by PPA letter, July 9, 1986).

July 18, 1986—truckers’ demonstration led PPA to demand explanation by 9:00 AM next day as to alleged violations. ERI sought reply “early next week.”
July 19, 1986—PPA unilaterally cancelled the management contract “effective immediately” and took over cargo operations and equipment.
July 21, 1986—PPA appointed Marina Port Services, Inc. as interim operator; ERI filed certiorari petition in this Court and a complaint in the RTC of Manila.

ERI withdrew its Supreme Court petition; Solicitor-General opposed as forum-shopping. July 31, 1986—this Court denied withdrawal, dismissed petitions in both courts, suspended ERI’s counsel.
August 6, 1986—petitioners filed new RTC suit; Supreme Court issued TRO on August 14, 1986 enjoining further action, required show-cause.
October 30, 1986—this Court made the TRO permanent, allowed Marina’s intervention, lifted counsel’s suspension, and agreed to entertain the instant petition.

Whether the unilateral cancellation of ERI’s management contract by PPA violated ERI’s right to due process by failing to afford prior hearing or investigation.
Whether the 1980 management contract is void or avoidable for illegality due to Alfredo Romualdez’s prohibited control under R.A. No. 3019 and the alleged simulated stock transfer.
Whether PPA acted within its proprietary or regulatory functions in canceling the contract and appointing Marina as interim operator.