Case Summary (G.R. No. 155001)
Factual Background
• In 1994 AEDC submitted to DOTC/MIAA an unsolicited proposal to build-operate-transfer Ninoy Aquino International Airport Terminal III (NAIA-T3).
• After unsuccessful competitive bidding challengers, PIATCO was formed and awarded the Concession Agreement in 1997, later amended and supplemented through four more instruments (ARCA and Supplements).
Procedural Posture
Petitioners filed special civil actions for prohibition under Rule 65, seeking to enjoin implementation of the Concession Agreement, its Restatement and Supplements, on grounds of grave abuse of discretion, unconstitutionality and statutory violation.
Jurisdiction, Standing, and Arbitration
• The Supreme Court assumed original jurisdiction over Rule 65 petitions affecting public interest in major infrastructure.
• Petitioners (employees, taxpayers, legislators, service providers) have direct, concrete stakes—loss of livelihood, impairment of contracts, curtailment of congressional appropriation powers.
• Arbitration clauses in PIATCO contracts could not bind non-parties and would not resolve sweeping constitutional and statutory issues.
PIATCO’s Prequalification and Award Irregularities
• BOT Law requires a minimum 30% equity (of US$350 million project cost) for prequalification; consortium’s maximum valid equity was only 6.08%.
• Despite clear deficiencies and General Banking Act limits on bank investments (15% of net worth), the DOTC’s PBAC improperly prequalified the Paircargo consortium (PIATCO’s predecessor).
• Award of contract to a disqualified bidder rendered the award and all subsequent agreements void ab initio.
Unauthorized Post-Bidding Amendments
• PIATCO negotiated substantial changes to the Draft Concession Agreement without a new public bidding, including:
– Shifting numerous fees from MIAA regulation to exclusive PIATCO control;
– Denominating key charges in US dollars while government payments remained in pesos;
– Extending government obligations for road construction, utilities and insurance proceeds;
– Creating new security and debt-assumption provisions.
• Such material alterations, post-award and pre-execution, violated public bidding principles and were null.
Prohibited Government Guarantee and Subsidy
• Concession and ARCA clauses obligated government to assume or pay PIATCO’s senior lenders’ debts (“Attendant Liabilities”) upon default, a direct government guarantee outlawed by Section 4-A of the BOT Law.
• Provisions postponing payments due to government in favor of lenders constituted a direct subsidy, also prohibited by law.
Invalid Termination and Compensation Provisions
• BOT Law permits termination compensation only if government revokes without fault or defaults on major obligations.
• PIATCO contracts unlawfully granted PIATCO termination compensation even for PIATCO’s own breaches, contrary to statutory limits and insurance requirements, creating yet another disguised guarantee.
Monopoly and Competition Concerns
• The contracts granted PIATCO “the exclusive right to operate a commercial international passenger terminal within Luzon,” forbidden by Article XII, Section 11 of the Constitution.
• Existing concessionaires and service providers at Terminals I & II faced loss of contracts and workplace displacement, as PIATCO’s exclusivity included ancillary airport services, establishing combinations in restraint of trade and unfair competition (Art. XII, Sec. 19).
Impairment of Con
...continue readingCase Syllabus (G.R. No. 155001)
Citation
• 450 Phil. 744; 99 O.G. No. 33, 5152 (Aug. 18, 2003) En Banc
• Decision by Chief Justice Reynato S. Puno, J. (May 5, 2003)
Parties and Procedural Posture
• Petitioners: Employees of MIAA and airport-service companies, labor unions (MWU-NLU, PALEA), service providers, accredited legislators, and airport workers.
• Respondents: PIATCO (successor to Paircargo Consortium), MIAA, DOTC (Sec. Mendoza), other concessionaires and intervenors.
• Relief sought: Writ of prohibition under Rule 65 to enjoin enforcement of PIATCO contracts.
• Consolidated cases: G.R. Nos. 155001, 155547, 155661.
Factual Background
• Aug. 1989: DOTC commissions ADP study for NAIA capacity to 2010.
• Sept. 1993: AEDC formed; Oct. 1994: unsolicited BOT proposal for NAIA IPT III submitted.
• 1995–96: NEDA-ICC endorsements and conditions; PBAC invited competitive bids.
• Sept. 20, 1996: Only Paircargo Consortium submits bid challenge.
• Dec. 1996: AEDC fails to match Paircargo’s price proposal.
• Feb. 1997: Paircargo forms PIATCO.
• July 12, 1997: PIATCO and DOTC/MIAA sign 1997 Concession Agreement.
Agreements Executed and Supplemented
• Concession Agreement (July 12, 1997) granting PIATCO a 25-year BOT franchise for NAIA Terminal III.
• Amended and Restated Concession Agreement (ARCA) (Nov. 26, 1998) with material revisions.
• First Supplement to ARCA (Aug. 27, 1999): shifts additional road works, maintenance obligations, revenue adjustments.
• Second Supplement (Sept. 4, 2000): PIATCO to remove subterranean obstructions—public works-style entitlement.
• Third Supplement (June 22, 2001): government to deliver site for Terminal III access road and assume related duties.
Petitioners’ Main Contentions
• Prequalification/award of contract to Paircargo was flawed—lacked required equity (30% of project cost).
• PIATCO Contracts contain substantial amendments without rebidding, contrary to BOT Law and public policy.
• Agreements vest untenable exclusive rights, create monopolies, impose direct government guarantee and subsidy, violate franchise term limit, impair subsisting concession/service contracts and dispossess workers.
• Contracts require government disbursement of public funds sans valid appropriations, violating Constitutional appropriation mandate.
• Arbitration clause cannot oust SC jurisdiction nor bind non-parties.
Respondents’ Defenses
• PBAC’s net-worth determination was discretionary and valid; Paircargo Consortium met minimum criteria.
• Draft Concession