Agan JR V Philippine International Air Terminals PDF

EN BANC
[G.R. No. 155001. January 21, 2004.]
DEMOSTHENES P. AGAN, JR., JOSEPH B. CATAHAN, JOSE MARI B.

REUNILLA, MANUEL ANTONIO B. BOÑE, MAMERTO S. CLARA, REUEL
E. DIMALANTA, MORY V. DOMALAON, CONRADO G. DIMAANO,
LOLITA R. HIZON, REMEDIOS P. ADOLFO, BIENVENIDO C. HILARIO,
MIASCOR WORKERS UNION-NATIONAL LABOR UNION (MWU-NLU),
and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA) ,
petitioners, vs . PHILIPPINE INTERNATIONAL AIR TERMINALS CO.,
INC., MANILA INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT
OF TRANSPORTATION AND COMMUNICATIONS and SECRETARY
LEANDRO M. MENDOZA, in his capacity as Head of the Department
of Transportation and Communications , respondents.
MIASCOR GROUNDHANDLING CORPORATION, DNATA-WINGS

AVIATION SYSTEMS CORPORATION, MACROASIA-EUREST
SERVICES, INC., MACROASIA-MENZIES AIRPORT SERVICES
CORPORATION, MIASCOR CATERING SERVICES CORPORATION,
MIASCOR AIRCRAFT MAINTENANCE CORPORATION, and MIASCOR
LOGISTICS CORPORATION, petitioners-in-intervention,
FLORESTE ALCONIS, GINA ALNAS, REY AMPOLOQUIO, ROSEMARIE

ANG, EUGENE ARADA, NENETTE BARREIRO, NOEL BARTOLOME,
ALDRIN BASTADOR, ROLETTE DIVINE BERNARDO, MINETTE BRAVO,
KAREN BRECILLA, NIDA CAILAO, ERWIN CALAR, MARIFEL
CONSTANTINO, JANETTE CORDERO, ARNOLD FELICITAS, MARISSA
GAYAGOY, ALEX GENERILLO, ELIZABETH GRAY, ZOILO HERICO,
JACQUELINE IGNACIO, THELMA INFANTE, JOEL JUMAO-AS,
MARIETTA LINCHOCO, ROLLY LORICO, FRANCIS AUGUSTO
MACATOL, MICHAEL MALIGAT, DENNIS MANALO, RAUL
MANGALIMAN, JOEL MANLANGIT, CHARLIE MENDOZA, HAZNAH
MENDOZA, NICHOLS MORALES, ALLEN OLAÑO, CESAR ORTAL,
MICHAEL ORTEGA, WAYNE PLAZA, JOSELITO REYES, ROLANDO
REYES, AILEEN SAPINA, RAMIL TAMAYO, PHILLIPS TAN, ANDREW
UY, WILLIAM VELASCO, EMILIO VELEZ, NOEMI YUPANO, MARY
JANE ONG, RICHARD RAMIREZ, CHERYLE MARIE ALFONSO, LYNDON
BAUTISTA, MANUEL CABOCAN AND NEDY LAZO , respondents-in-
intervention,
NAGKAISANG MARALITA NG TAÑONG ASSOCIATION, INC. ,

respondents-in-intervention,
[G.R. No. 155547. January 21, 2004.]
SALACNIB F. BATERINA, CLAVEL A. MARTINEZ and CONSTANTINO

G. JARAULA, petitioners, vs . PHILIPPINE INTERNATIONAL AIR
CD Technologies Asia, Inc. © 2018 cdasiaonline.com
TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT
AUTHORITY, DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS, DEPARTMENT OF PUBLIC WORKS AND
HIGHWAYS, SECRETARY LEANDRO M. MENDOZA, in his capacity as
Head of the Department of Transportation and Communications,
and SECRETARY SIMEON A. DATUMANONG, in his capacity as Head
of the Department of Public Works and Highways, respondents,
JACINTO V. PARAS, RAFAEL P. NANTES, EDUARDO C. ZIALCITA,

WILLY BUYSON VILLARAMA, PROSPERO C. NOGRALES, PROSPERO
A. PICHAY, JR., HARLIN CAST ABAYON, and BENASING O.
MACARANBON , respondents-intervenors,

intervention,

respondents-in-intervention,
[G.R. No. 155661. January 21, 2004.]
CEFERINO C. LOPEZ, RAMON M. SALES, ALFREDO B. VALENCIA, MA.

TERESA V. GAERLAN, LEONARDO DE LA ROSA, DINA C. DE LEON,
VIRGIE CATAMIN, RONALD SCHLOBOM, ANGELITO SANTOS, MA.
LUISA M. PALCON and SAMAHANG MANGGAGAWA SA PALIPARAN
NG PILIPINAS (SMPP), petitioners, vs. PHILIPPINE INTERNATIONAL
AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT
AUTHORITY, DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS, SECRETARY LEANDRO M. MENDOZA, in his
capacity as Head of the Department of Transportation and
Communications, respondents,

intervention,

respondents-in-intervention.
RESOLUTION
PUNO , J : p
Before this Court are the separate Motions for Reconsideration led by respondent
Philippine International Air Terminals Co., Inc. (PIATCO), respondents-intervenors Jacinto
V. Paras, Rafael P. Nantes, Eduardo C. Zialcita, Willie Buyson Villarama, Prospero C.
Nograles, Prospero A. Pichay, Jr., Harlin Cast Abayon and Benasing O. Macaranbon, all
members of the House of Representatives (Respondent Congressmen), 1 respondents-
intervenors who are employees of PIATCO and other workers of the Ninoy Aquino
International Airport International Passenger Terminal III (NAIA IPT III) (PIATCO
Employees) 2 and respondents-intervenors Nagkaisang Maralita ng Tañong Association,
Inc., (NMTAI) 3 of the Decision of this Court dated May 5, 2003 declaring the contracts for
the NAIA IPT III project null and void. EICDSA
Brie y, the proceedings. On October 5, 1994, Asia's Emerging Dragon Corp. (AEDC)
submitted an unsolicited proposal to the Philippine Government through the Department
of Transportation and Communication (DOTC) and Manila International Airport Authority
(MIAA) for the construction and development of the NAIA IPT III under a build-operate-
and-transfer arrangement pursuant to R.A. No. 6957, as amended by R.A. No. 7718 (BOT
Law). 4 In accordance with the BOT Law and its Implementing Rules and Regulations
(Implementing Rules), the DOTC/MIAA invited the public for submission of competitive
and comparative proposals to the unsolicited proposal of AEDC. On September 20, 1996 a
consortium composed of the People's Air Cargo and Warehousing Co., Inc. (Paircargo),
Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security Bank)
(collectively, Paircargo Consortium), submitted their competitive proposal to the
Prequalification Bids and Awards Committee (PBAC).
After nding that the Paircargo Consortium submitted a bid superior to the
unsolicited proposal of AEDC and after failure by AEDC to match the said bid, the DOTC
issued the notice of award for the NAIA IPT III project to the Paircargo Consortium, which
later organized into herein respondent PIATCO. Hence, on July 12, 1997, the Government,
through then DOTC Secretary Arturo T. Enrile, and PIATCO, through its President, Henry T.
Go, signed the "Concession Agreement for the Build-Operate-and-Transfer Arrangement of
the Ninoy Aquino International Airport Passenger Terminal III" (1997 Concession
Agreement). On November 26, 1998, the 1997 Concession Agreement was superseded by
the Amended and Restated Concession Agreement (ARCA) containing certain revisions
and modi cations from the original contract. A series of supplemental agreements was
also entered into by the Government and PIATCO. The First Supplement was signed on
August 27, 1999, the Second Supplement on September 4, 2000, and the Third
Supplement on June 22, 2001 (collectively, Supplements) (the 1997 Concession
Agreement, ARCA and the Supplements collectively referred to as the PIATCO Contracts).
On September 17, 2002, various petitions were led before this Court to annul the
1997 Concession Agreement, the ARCA and the Supplements and to prohibit the public
respondents DOTC and MIAA from implementing them.
In a decision dated May 5, 2003, this Court granted the said petitions and declared
the 1997 Concession Agreement, the ARCA and the Supplements null and void.
Respondent PIATCO, respondent-Congressmen and respondents-intervenors now
seek the reversal of the May 5, 2003 decision and pray that the petitions be dismissed. In
the alternative, PIATCO prays that the Court should not strike down the entire 1997
Concession Agreement, the ARCA and its supplements in light of their separability clause.
Respondent-Congressmen and NMTAI also pray that in the alternative, the cases at bar
should be referred to arbitration pursuant to the provisions of the ARCA. PIATCO-
Employees pray that the petitions be dismissed and remanded to the trial courts for trial
on the merits or in the alternative that the 1997 Concession Agreement, the ARCA and the
Supplements be declared valid and binding.
I
Procedural Matters
a. Lack of Jurisdiction
Private respondents and respondents-intervenors reiterate a number of procedural
issues which they insist deprived this Court of jurisdiction to hear and decide the instant
cases on its merits. They continue to claim that the cases at bar raise factual questions
which this Court is ill-equipped to resolve, hence, they must be remanded to the trial court
for reception of evidence. Further, they allege that although designated as petitions for
certiorari and prohibition, the cases at bar are actually actions for nullity of contracts over
which the trial courts have exclusive jurisdiction. Even assuming that the cases at bar are
special civil actions for certiorari and prohibition, they contend that the principle of
hierarchy of courts precludes this Court from taking primary jurisdiction over them.
We are not persuaded.

There is a question of fact when doubt or difference arises as to the truth or falsity
of the facts alleged. 5 Even a cursory reading of the cases at bar will show that the Court
decided them by interpreting and applying the Constitution, the BOT Law, its Implementing
Rules and other relevant legal principles on the basis of clearly undisputed facts. All the
operative facts were settled, hence, there is no need for a trial type determination of their
truth or falsity by a trial court.
We reject the unyielding insistence of PIATCO Employees that the following factual
issues are critical and beyond the capability of this Court to resolve, viz: (a) whether the
National Economic Development Authority - Investment Coordinating Committee (NEDA-
ICC) approved the Supplements; (b) whether the First Supplement created ten (10) new
nancial obligations on the part of the government; and (c) whether the 1997 Concession
Agreement departed from the draft Concession Agreement contained in the Bid
Documents. 6 CAcEaS
The factual issue of whether the NEDA-ICC approved the Supplements is hardly
relevant. It is clear in our Decision that the PIATCO contracts were invalidated on other and
more substantial grounds. It did not rely on the presence or absence of NEDA-ICC
approval of the Supplements. On the other hand, the last two issues do not involve
disputed facts. Rather, they involve contractual provisions which are clear and categorical
and need only to be interpreted. The interpretation of contracts and the determination of
whether their provisions violate our laws or contravene any public policy is a legal issue
which this Court may properly pass upon.
Respondents' corollary contention that this Court violated the hierarchy of courts
when it entertained the cases at bar must also fail. The rule on hierarchy of courts in cases
falling within the concurrent jurisdiction of the trial courts and appellate courts generally
applies to cases involving warring factual allegations. For this reason, litigants are required
to repair to the trial courts at the rst instance to determine the truth or falsity of these
contending allegations on the basis of the evidence of the parties. Cases which depend on
disputed facts for decision cannot be brought immediately before appellate courts as they
are not triers of facts.
It goes without saying that when cases brought before the appellate courts do not
involve factual but legal questions, a strict application of the rule of hierarchy of courts is
not necessary. As the cases at bar merely concern the construction of the Constitution, the
interpretation of the BOT Law and its Implementing Rules and Regulations on undisputed
contractual provisions and government actions, and as the cases concern public interest,
this Court resolved to take primary jurisdiction over them. This choice of action follows the
consistent stance of this Court to settle any controversy with a high public interest
component in a single proceeding and to leave no root or branch that could bear the seeds
of future litigation. The suggested remand of the cases at bar to the trial court will stray
away from this policy. 7
b. Legal Standing
Respondent PIATCO stands pat with its argument that petitioners lack legal
personality to le the cases at bar as they are not real parties in interest who are bound
principally or subsidiarily to the PIATCO Contracts. Further, respondent PIATCO contends
that petitioners failed to show any legally demandable or enforceable right to justify their
standing to file the cases at bar.
These arguments are not di cult to de ect. The determination of whether a person
may institute an action or become a party to a suit brings to fore the concepts of real party
in interest, capacity to sue and standing to sue. To the legally discerning, these three
concepts are different although commonly directed towards ensuring that only certain
parties can maintain an action. 8 As de ned in the Rules of Court, a real party in interest is
the party who stands to be bene ted or injured by the judgment in the suit or the party
entitled to the avails of the suit. 9 Capacity to sue deals with a situation where a person
who may have a cause of action is disquali ed from bringing a suit under applicable law or
is incompetent to bring a suit or is under some legal disability that would prevent him from
maintaining an action unless represented by a guardian ad litem. Legal standing is relevant
in the realm of public law. In certain instances, courts have allowed private parties to
institute actions challenging the validity of governmental action for violation of private
rights or constitutional principles. 1 0 In these cases, courts apply the doctrine of legal
standing by determining whether the party has a direct and personal interest in the
controversy and whether such party has sustained or is in imminent danger of sustaining
an injury as a result of the act complained of, a standard which is distinct from the concept
of real party in interest. 1 1 Measured by this yardstick, the application of the doctrine on
legal standing necessarily involves a preliminary consideration of the merits of the case
and is not purely a procedural issue. 1 2
Considering the nature of the controversy and the issues raised in the cases at bar,
this Court a rms its ruling that the petitioners have the requisite legal standing. The
petitioners in G.R. Nos. 155001 and 155661 are employees of service providers operating
at the existing international airports and employees of MIAA while petitioners-intervenors
are service providers with existing contracts with MIAA and they will all sustain direct
injury upon the implementation of the PIATCO Contracts. The 1997 Concession
Agreement and the ARCA both provide that upon the commencement of operations at the
NAIA IPT III, NAIA Passenger Terminals I and II will cease to be used as international
passenger terminals. 1 3 Further, the ARCA provides: cSCADE
(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 the existing services and operations shall lapse
on or before the In-Service Date. 1 4
Beyond iota of doubt, the implementation of the PIATCO Contracts, which the
petitioners and petitioners-intervenors denounce as unconstitutional and illegal, would
deprive them of their sources of livelihood. Under settled jurisprudence, one's employment,
profession, trade, or calling is a property right and is protected from wrongful interference.
1 5 It is also self evident that the petitioning service providers stand in imminent danger of
losing legitimate business investments in the event the PIATCO Contracts are upheld.
Over and above all these, constitutional and other legal issues with far-reaching
economic and social implications are embedded in the cases at bar, hence, this Court
liberally granted legal standing to the petitioning members of the House of
Representatives. First, at stake is the build-operate-and-transfer contract of the country's
premier international airport with a projected capacity of 10 million passengers a year.
Second, the huge amount of investment to complete the project is estimated to be
P13,000,000,000.00. Third, the primary issues posed in the cases at bar demand a
discussion and interpretation of the Constitution, the BOT Law and its implementing rules
which have not been passed upon by this Court in previous cases. They can chart the
future inflow of investment under the BOT Law.
Before writing nis to the issue of legal standing, the Court notes the bid of new
parties to participate in the cases at bar as respondents-intervenors, namely, (1) the
PIATCO Employees and (2) NMTAI (collectively, the New Respondents-Intervenors). After
the Court's Decision, the New Respondents- Intervenors led separate Motions for
Reconsideration-In-Intervention alleging prejudice and direct injury. PIATCO employees
claim that "they have a direct and personal interest [in the controversy] . . . since they stand
to lose their jobs should the government's contract with PIATCO be declared null and
void." 1 6 NMTAI, on the other hand, represents itself as a corporation composed of
responsible tax-paying Filipino citizens with the objective of "protecting and sustaining the
rights of its members to civil liberties, decent livelihood, opportunities for social
advancement, and to a good, conscientious and honest government." 1 7
The Rules of Court govern the time of ling a Motion to Intervene. Section 2, Rule 19
provides that a Motion to Intervene should be led "before rendition of judgment . . ." The
New Respondents-Intervenors led their separate motions after a decision has been
promulgated in the present cases. They have not offered any worthy explanation to justify
their late intervention. Consequently, their Motions for Reconsideration-In-Intervention are
denied for the rules cannot be relaxed to await litigants who sleep on their rights. In any
event, a sideglance at these late motions will show that they hoist no novel arguments.
c. Failure to Implead an Indispensable Party
PIATCO next contends that petitioners should have impleaded the Republic of the
Philippines as an indispensable party. It alleges that petitioners sued the DOTC, MIAA and
the DPWH in their own capacities or as implementors of the PIATCO Contracts and not as
a contract party or as representatives of the Government of the Republic of the
Philippines. It then leapfrogs to the conclusion that the "absence of an indispensable party
renders ineffectual all the proceedings subsequent to the ling of the complaint including
the judgment." 1 8
PIATCO's allegations are inaccurate. The petitions clearly bear out that public
respondents DOTC and MIAA were impleaded as parties to the PIATCO Contracts and not
merely as their implementors. The separate petitions led by the MIAA employees 1 9 and
members of the House of Representatives 2 0 alleged that "public respondents are
impleaded herein because they either executed the PIATCO Contracts or are undertaking
acts which are related to the PIATCO Contracts. They are interested and indispensable
parties to this Petition." 2 1 Thus, public respondents DOTC and MIAA were impleaded as
parties to the case for having executed the contracts.
More importantly, it is also too late in the day for PIATCO to raise this issue. If
PIATCO seriously views the non-inclusion of the Republic of the Philippines as an
indispensable party as fatal to the petitions at bar, it should have raised the issue at the
onset of the proceedings as a ground to dismiss. PIATCO cannot litigate issues on a
piecemeal basis, otherwise, litigations shall be like a shore that knows no end. In any event,
the Solicitor General, the legal counsel of the Republic, appeared in the cases at bar in
representation of the interest of the government.
II
Pre-qualification of PIATCO
The Implementing Rules provide for the unyielding standards the PBAC should apply
to determine the nancial capability of a bidder for pre- quali cation purposes: (i) proof of
the ability of the project proponent and/or the consortium to provide a minimum amount
of equity to the project and (ii) a letter testimonial from reputable banks attesting that the
project proponent and/or members of the consortium are banking with them, that they are
in good nancial standing, and that they have adequate resources . 2 2 The evident intent of
these standards is to protect the integrity and insure the viability of the project by seeing
to it that the proponent has the nancial capability to carry it out. As a further measure to
achieve this intent, it maintains a certain debt-to-equity ratio for the project.
At the pre-quali cation stage, it is most important for a bidder to show that it has
the nancial capacity to undertake the project by proving that it can ful ll the requirement
on minimum amount of equity. For this purpose, the Bid Documents require in no uncertain
terms:
The minimum amount of equity to which the proponent's nancial
capability will be based shall be thirty percent (30%) of the project cost instead of
the twenty percent (20%) speci ed 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 nancing should not
exceed 70% of the actual project cost. 2 3
In relation thereto, section 2.01(a) of the ARCA provides:

Section 2.01 Project Scope.
The scope of the project shall include:
(a) Financing the project at an actual Project cost of not less than Three Hundred
Fifty Million United States Dollars (US$350,000,000.00) while maintaining
a debt-to-equity ratio of 70:30, provided that if the actual Project costs
should exceed the aforesaid amount, Concessionaire shall ensure that the
debt-to-equity ratio is maintained; 2 4
Under the debt-to-equity restriction, a bidder may only seek nancing of the NAIA
IPT III Project up to 70% of the project cost. Thirty percent (30%) of the cost must come in
the form of equity or investment by the bidder itself. It cannot be overly emphasized that
the rules require a minimum amount of equity to ensure that a bidder is not merely an
operator or implementor of the project but an investor with a substantial interest in its
success. The minimum equity requirement also guarantees the Philippine government and
the general public, who are the ultimate bene ciaries of the project, that a bidder will not
be indifferent to the completion of the project. The discontinuance of the project will
irreparably damage public interest more than private interest. cICHTD
In the cases at bar, after applying the investment ceilings provided under the General
Banking Act and considering the maximum amounts that each member of the consortium
may validly invest in the project, it is daylight clear that the Paircargo Consortium, at the
time of pre-quali cation, had a net worth equivalent to only 6.08% of the total estimated
project cost. 2 5 By any reckoning, a showing by a bidder that at the time of pre-
quali cation its maximum funds available for investment amount to only 6.08% of the
project cost is insu cient to satisfy the requirement prescribed by the Implementing
Rules that the project proponent must have the ability to provide at least 30% of the total
estimated project cost. In peso and centavo terms, at the time of pre-quali cation, the
Paircargo Consortium had maximum funds available for investment to the NAIA IPT III
Project only in the amount of P558,384,871.55, when it had to show that it had the ability
to provide at least P2,755,095,000.00. The huge disparity cannot be dismissed as of de
minimis importance considering the high public interest at stake in the project.

PIATCO nimbly tries to sidestep its failure by alleging that it submitted not only
audited nancial statements but also testimonial letters from reputable banks attesting to
the good nancial standing of the Paircargo Consortium. It contends that in adjudging
whether the Paircargo Consortium is a pre-quali ed bidder, the PBAC should have
considered not only its nancial statements but other factors showing its nancial
capability.
Anent this argument, the guidelines provided in the Bid Documents are instructive:
3.3.4 FINANCING AND FINANCIAL PREQUALIFICATIONS REQUIREMENTS
• Minimum Amount of Equity
Each member of the proponent entity is to provide evidence of networth in
cash and assets representing the proportionate share in the proponent entity.
Audited nancial statements for the past ve (5) years as a company for each
member are to be provided.
• Project Loan Financing SECcAI
Testimonial letters from reputable banks attesting that each of the

members of the ownership entity are banking with them, in good nancial
standing and having adequate resources are to be provided. 2 6
It is beyond refutation that Paircargo Consortium failed to prove its ability to

provide the amount of at least P2,755,095,000.00, or 30% of the estimated project cost.
Its submission of testimonial letters attesting to its good nancial standing will not cure
this failure. At best, the said letters merely establish its credit worthiness or its ability to
obtain loans to nance the project. They do not, however, prove compliance with the
aforesaid requirement of minimum amount of equity in relation to the prescribed debt-to-
equity ratio. This equity cannot be satisfied through possible loans.
In sum, we again hold that given the glaring gap between the net worth of Paircargo
and PAGS combined with the amount of maximum funds that Security Bank may invest by
equity in a non-allied undertaking, Paircargo Consortium, at the time of pre-quali cation,
failed to show that it had the ability to provide 30% of the project cost and necessarily, its
financial capability for the project cannot pass muster.
III
1997 Concession Agreement
Again, we brightline the principle that in public bidding, bids are submitted in accord
with the prescribed terms, conditions and parameters laid down by government and
pursuant to the requirements of the project bidded upon. In light of these parameters,
bidders formulate competing proposals which are evaluated to determine the bid most
favorable to the government. Once the contract based on the bid most favorable to the
government is awarded, all that is left to be done by the parties is to execute the necessary
agreements and implement them. There can be no substantial or material change to the
parameters of the project, including the essential terms and conditions of the contract
bidded upon, after the contract award. If there were changes and the contracts end up
unfavorable to government, the public bidding becomes a mockery and the modi ed
contracts must be struck down.
Respondents insist that there were no substantial or material amendments in the
1997 Concession Agreement as to the technical aspects of the project, i.e., engineering
design, technical soundness, operational and maintenance methods and procedures of the
project or the technical proposal of PIATCO. Further, they maintain that there was no
modi cation of the nancial features of the project, i.e., minimum project cost, debt-to-
equity ratio, the operations and maintenance budget, the schedule and amount of annual
guaranteed payments, or the financial proposal of PIATCO. A discussion of some of these
changes to determine whether they altered the terms and conditions upon which the bids
were made is again in order.
a. Modification on Fees and Charges to be collected by PIATCO
PIATCO clings to the contention that the removal of the groundhandling fees, airline
o ce rentals and porterage fees from the category of fees subject to MIAA regulation in
the 1997 Concession Agreement does not constitute a substantial amendment as these
fees are not really public utility fees. In other words, PIATCO justi es the re-classi cation
under the 1997 Concession Agreement on the ground that these fees are non-public utility
revenues.
We disagree. The removal of groundhandling fees, airline o ce rentals and
porterage fees from the category of "Public Utility Revenues" under the draft Concession
Agreement and its re-classi cation to "Non-Public Utility Revenues" under the 1997
Concession Agreement is signi cant and has far reaching consequence. The 1997
Concession Agreement provides that with respect to Non-Public Utility Revenues, which
include groundhandling fees, airline o ce rentals and porterage fees, 2 7 "[PIATCO] may
make any adjustments it deems appropriate without need for the consent of GRP or any
government agency." 2 8 In contrast, the draft Concession Agreement speci es these fees
as part of Public Utility Revenues and can be adjusted "only once every two years and in
accordance with the Parametric Formula" and "the adjustments shall be made effective
only after the written express approval of the MIAA." 2 9 The Bid Documents themselves
clearly provide:
4.2.3 Mechanism for Adjustment of Fees and Charges
4.2.3.1 Periodic Adjustment in Fees and Charges

Adjustments in the fees and charges enumerated hereunder, whether or not
falling within the purview of public utility revenues, shall be allowed only once
every two years in accordance with the parametric formula attached hereto as
Annex 4.2f. Provided that the adjustments shall be made effective only after the
written express approval of MIAA. Provided, further, that MIAA's approval, shall be
contingent only on conformity of the adjustments to the said parametric formula.
..
The fees and charges to be regulated in the above manner shall consist of
the following:
xxx xxx xxx
(c) groundhandling fees;

(d) rentals on airline offices;
xxx xxx xxx
(f) porterage fees; DHSACT
xxx xxx xxx 3 0

The plain purpose in re-classifying groundhandling fees, airline o ce rentals and
porterage fees as non-public utility fees is to remove them from regulation by the MIAA. In
excluding these fees from government regulation, the danger to public interest cannot be
downplayed.
We are not impressed by the effort of PIATCO to depress this prejudice to public
interest by its contention that in the 1997 Concession Agreement governing Non-Public
Utility Revenues, it is provided that "[PIATCO] shall at all times be judicious in xing fees
and charges constituting Non-Public Utility Revenues in order to ensure that End Users are
not unreasonably deprived of services." 3 1 PIATCO then peddles the proposition that the
said provision confers upon MIAA " full regulatory powers to ensure that PIATCO is
charging non-public utility revenues at judicious rates." 3 2 To the trained eye, the argument
will not y for it is obviously non sequitur. Fairly read, it is PIATCO that wields the power to
determine the judiciousness of the said fees and charges. In the draft Concession
Agreement the power was expressly lodged with the MIAA and any adjustment can only be
done once every two years. The changes are not insigni cant specks as interpreted by
PIATCO. CSaHDT
PIATCO further argues that there is no substantial change in the 1997 Concession
Agreement with respect to fees and charges PIATCO is allowed to impose which are not
covered by Administrative Order No. 1, Series of 1993 3 3 as the "relevant provision of the
1997 Concession Agreement is practically identical with the draft Concession Agreement."
34
We are not persuaded. Under the draft Concession Agreement, PIATCO may impose
fees and charges other than those fees and charges previously imposed or collected at
the Ninoy Aquino International Airport Passenger Terminal I, subject to the written
approval of MIAA. 3 5 Further, the draft Concession Agreement provides that MIAA reserves
the right to regulate these new fees and charges if in its judgment the users of the airport
shall be deprived of a free option for the services they cover. 3 6 In contrast, under the 1997
Concession Agreement, the MIAA merely retained the right to approve any imposition of
new fees and charges which were not previously collected at the Ninoy Aquino
International Airport Passenger Terminal I. The agreement did not contain an equivalent
provision allowing MIAA to reserve the right to regulate the adjustments of these new fees
and charges. 3 7 PIATCO justi es the amendment by arguing that MIAA can establish terms
before approval of new fees and charges, inclusive of the mode for their adjustment.
PIATCO's stance is again a strained one. There would have been no need for an
amendment if there were no change in the power to regulate on the part of MIAA. The
deletion of MIAA’s reservation of its right to regulate the price adjustments of new fees
and charges can have no other purpose but to dilute the extent of MIAA’s regulation in the
collection of these fees. Again, the amendment diminished the authority of MIAA to
protect the public interest in case of abuse by PIATCO.
b. Assumption by the Government of the liabilities
of PIATCO in the event of the latter's default
PIATCO posits the thesis that the new provisions in the 1997 Concession
Agreement in case of default by PIATCO on its loans were merely meant to prescribe and
limit the rights of PIATCO’s creditors with regard to the NAIA Terminal III. PIATCO alleges
that Section 4.04 of the 1997 Concession Agreement simply provides that PIATCO’s
creditors have no right to foreclose the NAIA Terminal III.

We cannot concur. The pertinent provisions of the 1997 Concession Agreement
state:
Section 4.04 Assignment.
xxx xxx xxx
(b) In the event Concessionaire should default in the payment of an Attendant

Liability, and the default has resulted in the acceleration of the payment
due date of the Attendant Liability prior to its stated date of maturity, the
Unpaid Creditors and Concessionaire shall immediately inform GRP in
writing of such default. GRP shall, within one hundred eighty (180) Days
from receipt of the joint written notice of the Unpaid Creditors and
Concessionaire, either (i) take over the Development Facility and assume
the Attendant Liabilities, or (ii) allow the Unpaid Creditors, if quali ed, to be
substituted as concessionaire and operator of the Development Facility in
accordance with the terms and conditions hereof, or designate a quali ed
operator acceptable to GRP to operate the Development Facility, likewise
under the terms and conditions of this Agreement; Provided that if at the
end of the 180-day period GRP shall not have served the Unpaid Creditors
and Concessionaire written notice of its choice, GRP shall be deemed to
have elected to take over the Development Facility with the concomitant
assumption of Attendant Liabilities.
(c) If GRP should, by written notice, allow the Unpaid Creditors to be substituted
as concessionaire, the latter shall form and organize a concession
company quali ed to take over the operation of the Development Facility.
If the concession company should elect to designate an operator for the
Development Facility, the concession company shall in good faith identify
and designate a quali ed operator acceptable to GRP within one hundred
eighty (180) days from receipt of GRP's written notice. If the concession
company, acting in good faith and with due diligence, is unable to
designate a quali ed operator within the aforesaid period, then GRP shall
at the end of the 180-day period take over the Development Facility and
assume Attendant Liabilities.
A plain reading of the above provision shows that it spells out in limpid language the
obligation of government in case of default by PIATCO on its loans. There can be no
blinking from the fact that in case of PIATCO’s default, the government will assume
PIATCO’s Attendant Liabilities as de ned in the 1997 Concession Agreement. 3 8 This
obligation is not found in the draft Concession Agreement and the change runs roughshod
to the spirit and policy of the BOT Law which was crafted precisely to prevent government
from incurring financial risk.
In any event, PIATCO pleads that the entire agreement should not be struck down as
the 1997 Concession Agreement contains a separability clause.
The plea is bereft of merit. The contracts at bar which made a mockery of the
bidding process cannot be upheld and must be annulled in their entirety for violating law
and public policy. As demonstrated, the contracts were substantially amended after their
award to the successful bidder on terms more bene cial to PIATCO and prejudicial to
public interest. If this awed process would be allowed, public bidding will cease to be
competitive and worse, government would not be favored with the best bid. Bidders will no
longer bid on the basis of the prescribed terms and conditions in the bid documents but
will formulate their bid in anticipation of the execution of a future contract containing new
and better terms and conditions that were not previously available at the time of the
bidding. Such a public bidding will not inure to the public good. The resulting contracts
cannot be given half a life but must be struck down as totally lawless.
IV.
Direct Government Guarantee
The respondents further contend that the PIATCO Contracts do not contain direct
government guarantee provisions. They assert that section 4.04 of the ARCA, which
superseded sections 4.04(b) and (c), Article IV of the 1997 Concession Agreement, is but
a "clari cation and explanation" 3 9 of the securities allowed in the bid documents. They
allege that these provisions merely provide for "compensation to PIATCO" 4 0 in case of a
government buy-out or takeover of NAIA IPT III. The respondents, particularly respondent
PIATCO, also maintain that the guarantee contained in the contracts, if any, is an indirect
guarantee allowed under the BOT Law, as amended. 4 1
We do not agree. Section 4.04(c), Article IV 4 2 of the ARCA should be read in
conjunction with section 1.06, Article I, 4 3 in the same manner that sections 4.04(b) and
(c), Article IV of the 1997 Concession Agreement should be related to Article 1.06 of the
same contract. Section 1.06, Article I of the ARCA and its counterpart provision in the 1997
Concession Agreement de ne in no uncertain terms the meaning of "attendant liabilities."
They tell us of the amounts that the Government has to pay in the event respondent
PIATCO defaults in its loan payments to its Senior Lenders and no quali ed transferee or
nominee is chosen by the Senior Lenders or is willing to take over from respondent
PIATCO.
A reasonable reading of all these relevant provisions would reveal that the ARCA
made the Government liable to pay "all amounts . . . from time to time owed or which may
become owing by Concessionaire [PIATCO] to Senior Lenders or any other persons or
entities who have provided, loaned, or advanced funds or provided nancial facilities to
Concessionaire [PIATCO ] for the Project [NAIA Terminal 3]." 4 4 These amounts include
"without limitation, all principal, interest, associated fees, charges, reimbursements, and
other related expenses . . . whether payable at maturity, by acceleration or otherwise." 4 5
They further include amounts owed by respondent PIATCO to its "professional consultants
and advisers, suppliers, contractors and sub-contractors" as well as "fees, charges and
expenses of any agents or trustees" of the Senior Lenders or any other persons or entities
who have provided loans or nancial facilities to respondent PIATCO in relation to NAIA
IPT III. 4 6 The counterpart provision in the 1997 Concession Agreement specifying the
attendant liabilities that the Government would be obligated to pay should PIATCO default
in its loan obligations is equally onerous to the Government as those contained in the
ARCA. According to the 1997 Concession Agreement, in the event the Government is
forced to prematurely take over NAIA IPT III as a result of respondent PIATCO’s default in
the payment of its loan obligations to its Senior Lenders, it would be liable to pay the
following amounts as "attendant liabilities": DTAESI
Section 1.06. Attendant Liabilities
Attendant Liabilities refer to all amounts recorded and from time to time
outstanding in the books of the Concessionaire as owing to Unpaid Creditors who
have provided, loaned or advanced funds actually used for the Project, including
all interests, penalties, associated fees, charges, surcharges, indemnities,
reimbursements and other related expenses, and further including amounts owed
by Concessionaire to its suppliers, contractors and sub-contractors. 4 7
These provisions reject respondents’ contention that what the Government is

obligated to pay, in the event that respondent PIATCO defaults in the payment of its loans,
is merely termination payment or just compensation for its takeover of NAIA IPT III. It is
clear from said section 1.06 that what the Government would pay is the sum total of all the
debts, including all interest, fees and charges, that respondent PIATCO incurred in
pursuance of the NAIA IPT III Project. This reading is consistent with section 4.04 of the
ARCA itself which states that the Government "shall make a termination payment to
Concessionaire [PIATCO] equal to the Appraised Value (as hereinafter de ned) of the
Development Facility [NAIA Terminal III] or the sum of the Attendant Liabilities, if greater."
For sure, respondent PIATCO will not receive any amount less than su cient to cover its
debts, regardless of whether or not the value of NAIA IPT III, at the time of its turn over to
the Government, may actually be less than the amount of PIATCO’s debts. The scheme is a
form of direct government guarantee for it is undeniable that it leaves the government no
option but to pay the "attendant liabilities" in the event that the Senior Lenders are unable
or unwilling to appoint a quali ed nominee or transferee as a result of PIATCO’s default in
the payment of its Senior Loans. As we stressed in our Decision, this Court cannot depart
from the legal maxim that "those that cannot be done directly cannot be done indirectly."
This is not to hold, however, that indirect government guarantee is not allowed under
the BOT Law, as amended. The intention to permit indirect government guarantee is
evident from the Senate deliberations on the amendments to the BOT Law. The idea is to
allow for reasonable government undertakings, such as to authorize the project proponent
to undertake related ventures within the project area, in order to encourage private sector
participation in development projects. 4 8 An example cited by then Senator Gloria
Macapagal-Arroyo, one of the sponsors of R.A. No. 7718, is the Mandaluyong public
market which was built under the Build-and-Transfer ("BT") scheme wherein instead of the
government paying for the transfer, the project proponent was allowed to operate the
upper oors of the structure as a commercial mall in order to recoup their investments. 4 9
It was repeatedly stressed in the deliberations that in allowing indirect government
guarantee, the law seeks to encourage both the government and the private sector to
formulate reasonable and innovative government undertakings in pursuance of BOT
projects. In no way, however, can the government be made liable for the debts of the
project proponent as this would be tantamount to a direct government guarantee which is
prohibited by the law. Such liability would defeat the very purpose of the BOT Law which is
to encourage the use of private sector resources in the construction, maintenance and/or
operation of development projects with no, or at least minimal, capital outlay on the part of
the government.
The respondents again urge that should this Court a rm its ruling that the PIATCO
Contracts contain direct government guarantee provisions, the whole contract should not
be nullified. They rely on the separability clause in the PIATCO Contracts.
We are not persuaded.
The BOT Law and its implementing rules provide that there are three (3) essential
requisites for an unsolicited proposal to be accepted: (1) the project involves a new
concept in technology and/or is not part of the list of priority projects, (2) no direct
government guarantee, subsidy or equity is required, and (3) the government agency or
local government unit has invited by publication other interested parties to a public bidding
and conducted the same. 5 0 The failure to ful ll any of the requisites will result in the denial
of the proposal. Indeed, it is further provided that a direct government guarantee, subsidy
or equity provision will "necessarily disqualify a proposal from being treated and accepted
as an unsolicited proposal." 5 1 In ne, the mere inclusion of a direct government guarantee
in an unsolicited proposal is fatal to the proposal. There is more reason to invalidate a
contract if a direct government guarantee provision is inserted later in the contract via a
backdoor amendment. Such an amendment constitutes a crass circumvention of the BOT
Law and renders the entire contract void.
Respondent PIATCO likewise claims that in view of the fact that other BOT
contracts such as the JANCOM contract, the Manila Water contract and the MRT contract
had been considered valid, the PIATCO contracts should be held valid as well. 5 2 There is
no parity in the cited cases. For instance, a reading of Metropolitan Manila Development
Authority v. JANCOM Environmental Corporation 5 3 will show that its issue is different
from the issues in the cases at bar. In the JANCOM case, the main issue is whether there is
a perfected contract between JANCOM and the Government. The resolution of the issue
hinged on the following: (1) whether the conditions precedent to the perfection of the
contract were complied with; (2) whether there is a valid notice of award; and (3) whether
the signature of the Secretary of the Department of Environment and Natural Resources is
su cient to bind the Government. These issue and sub-issues are clearly distinguishable
and different. For one, the issue of direct government guarantee was not considered by
this Court when it held the JANCOM contract valid, yet, it is a key reason for invalidating the
PIATCO Contracts. It is a basic principle in law that cases with dissimilar facts cannot have
similar disposition.
This Court, however, is not unmindful of the reality that the structures comprising
the NAIA IPT III facility are almost complete and that funds have been spent by PIATCO in
their construction. For the government to take over the said facility, it has to compensate
respondent PIATCO as builder of the said structures. The compensation must be just and
in accordance with law and equity for the government can not unjustly enrich itself at the
expense of PIATCO and its investors.
II.
Temporary takeover of business affected with public
interest in times of national emergency
Section 17, Article XII of the 1987 Constitution grants the State in times of national
emergency the right to temporarily take over the operation of any business affected with
public interest. This right is an exercise of police power which is one of the inherent
powers of the State.
Police power has been de ned as the "state authority to enact legislation that may
interfere with personal liberty or property in order to promote the general welfare." 5 4 It
consists of two essential elements. First, it is an imposition of restraint upon liberty or
property. Second, the power is exercised for the bene t of the common good. Its
de nition in elastic terms underscores its all-encompassing and comprehensive embrace.
5 5 It is and still is the "most essential, insistent, and illimitable" 5 6 of the State's powers. It
is familiar knowledge that unlike the power of eminent domain, police power is exercised
without provision for just compensation for its paramount consideration is public welfare.
57 IaDTES
It is also settled that public interest on the occasion of a national emergency is the
primary consideration when the government decides to temporarily take over or direct the
operation of a public utility or a business affected with public interest. The nature and
extent of the emergency is the measure of the duration of the takeover as well as the
terms thereof. It is the State that prescribes such reasonable terms which will guide the
implementation of the temporary takeover as dictated by the exigencies of the time. As we
ruled in our Decision, this power of the State can not be negated by any party nor should its
exercise be a source of obligation for the State.
Section 5.10(c), Article V of the ARCA provides that respondent PIATCO " shall be
entitled to reasonable compensation for the duration of the temporary takeover by GRP,
which compensation shall take into account the reasonable cost for the use of the
Terminal and/or Terminal Complex ." 5 8 It clearly obligates the government in the exercise
of its police power to compensate respondent PIATCO and this obligation is offensive to
the Constitution. Police power can not be diminished, let alone defeated by any contract
for its paramount consideration is public welfare and interest. 5 9
Again, respondent PIATCO's reliance on the case of Heirs of Suguitan v. City of
Mandaluyong 6 0 to justify its claim for reasonable compensation for the Government's
temporary takeover of NAIA IPT III in times of national emergency is erroneous. What was
involved in Heirs of Suguitan is the exercise of the state's power of eminent domain and
not of police power, hence, just compensation was awarded. The cases at bar will not
involve the exercise of the power of eminent domain.
III.
Monopoly
Section 19, Article XII of the 1987 Constitution mandates that the State prohibit or
regulate monopolies when public interest so requires. Monopolies are not per se
prohibited. Given its susceptibility to abuse, however, the State has the bounden duty to
regulate monopolies to protect public interest. Such regulation may be called for,
especially in sensitive areas such as the operation of the country's premier international
airport, considering the public interest at stake.
By virtue of the PIATCO contracts, NAIA IPT III would be the only international
passenger airport operating in the Island of Luzon, with the exception of those already
operating in Subic Bay Freeport Special Economic Zone ("SBFSEZ"), Clark Special
Economic Zone ("CSEZ") and in Laoag City. Undeniably, the contracts would create a
monopoly in the operation of an international commercial passenger airport at the NAIA in
favor of PIATCO.
The grant to respondent PIATCO of the exclusive right to operate NAIA IPT III
should not exempt it from regulation by the government. The government has the right,
indeed the duty, to protect the interest of the public. Part of this duty is to assure that
respondent PIATCO’s exercise of its right does not violate the legal rights of third parties.
We reiterate our ruling that while the service providers presently operating at NAIA
Terminals I and II do not have the right to demand for the renewal or extension of their
contracts to continue their services in NAIA IPT III, those who have subsisting contracts
beyond the In-Service Date of NAIA IPT III can not be arbitrarily or unreasonably treated.
Finally, the Respondent Congressmen assert that at least two (2) committee reports
by the House of Representatives found the PIATCO contracts valid and contend that this
Court, by taking cognizance of the cases at bar, reviewed an action of a co-equal body. 6 1
They insist that the Court must respect the ndings of the said committees of the House
of Representatives. 6 2 With due respect, we cannot subscribe to their submission. There is
a fundamental difference between a case in court and an investigation of a congressional
committee. The purpose of a judicial proceeding is to settle the dispute in controversy by
adjudicating the legal rights and obligations of the parties to the case. On the other hand, a
congressional investigation is conducted in aid of legislation. 6 3 Its aim is to assist and
recommend to the legislature a possible action that the body may take with regard to a
particular issue, speci cally as to whether or not to enact a new law or amend an existing
one. Consequently, this Court cannot treat the ndings in a congressional committee
report as binding because the facts elicited in congressional hearings are not subject to
the rigors of the Rules of Court on admissibility of evidence. The Court in assuming
jurisdiction over the petitions at bar simply performed its constitutional duty as the arbiter
of legal disputes properly brought before it, especially in this instance when public interest
requires nothing less.
WHEREFORE, the motions for reconsideration led by the respondent PIATCO,
respondent Congressmen and the respondents-in-intervention are DENIED with finality.
SO ORDERED.
Davide, Jr., C.J., Austria-Martinez, Corona and Carpio-Morales, JJ., concur.
Vitug, J., maintains his separate opinion in the main ponencia, promulgated on May
5, 2003.
Panganiban, J ., reiterates his Separate Opinion in the main case, promulgated on
May 5, 2003.
Quisumbing, Ynares-Santiago, Sandoval-Gutierrez and Azcuna, JJ., joins J . Vitug's
opinion.
Carpio andTinga, JJ., took no part.
Callejo, Sr., J., joins J. Panganiban in his concurring opinion.
Footnotes
1. G.R. No. 155547.
2. G.R. Nos. 155001, 155547, and 155661.

3. Id.
4. An Act Authorizing the Financing, Construction, Operation and Maintenance of Infrastructure

Projects by the Private Sector.
5. Ignacio v. Court of Appeals , G.R. Nos. L-49541-52164, March 28, 1980; 96 SCRA 648, 652-
653.
6. Rollo, G.R. No. 155001, pp. 3102-3103.

7. Alger Electric, Inc. v. Court of Appeals, G.R. No. L-34298, February 28, 1985, 135 SCRA 37, 43.
8. J.H. Friedenthal, M. K. Kane, A. R. Miller, Civil Procedure 328 (1985).
9. Section 2, Rule 3.
10. J. Cound, Civil Procedure: Cases & Materials, 523 (1980).
11. Bayan v. Zamora , G.R. No. 138570, October 10, 2000; 342 SCRA 449, 478; 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).
12. Supra note 11.
13. Section 3.02 (b), ARCA, November 26, 1998; Section 3.02(b) of the 1997 Concession
Agreement, July 12, 1997.
14. Section 3.01 (d), ARCA. Equivalent provision is similarly numbered in the 1997 Concession
Agreement.
15. Ferrer, et al. v. NLRC , G.R. No. 100898, July 5, 1993, 224 SCRA 410, 421 citing Callanta vs.
Carnation Philippines, Inc., G.R. No. 70615, October 28, 1986, 145 SCRA 268.
16. Rollo, G.R. No. 15501, pp. 3096-3097.
17. Id. at p. 3098.

18. Id. at pp. 3270-3271.
19. G.R. No. 155661.

20. G.R. No. 155547.
21. Rollo, G.R. No. 155661, p. 17; Rollo, G.R. No. 155547, p. 14.
22. Section 5.4 Pre-qualification Requirements.

xxx xxx xxx
c. Financial Capability: The project proponent must have adequate capability to sustain the
nancing requirements for the detailed engineering design, construction and/or
operation and maintenance phases of the project, as the case may be. For purposes of
pre-quali cation, this capability shall be measured in terms of (i) proof of the ability of
the project proponent and/or the consortium to provide a minimum amount of equity to
the project, and (ii) a letter testimonial from reputable banks attesting that the project
proponent and/or members of the consortium are banking with them, that they are in
good nancial standing, and that they have adequate resources . The government
agency/LGU concerned shall determine on a project-to-project basis and before pre-
qualification, the minimum amount of equity needed. (emphasis supplied).
23. Emphasis supplied.
24. The equivalent provision in the 1997 Concession Agreement states:

Section 2.01 Project Scope.
The scope of the project shall include:
(a) Financing the project at an actual Project cost of not less than Three Hundred Fifty Million
United States Dollars (US$350,000,000.00) while maintaining a debt-to-equity ratio of
70:30, or ensuring that the debt portion of the project nancing does not exceed 70% of
the actual Project cost;
xxx xxx xxx

25. Combined net worth of the Paircargo Consortium is P558,384,871.55 out of an estimated
project cost of US$350,000,000.00 or approximately P9,183,650,000.00.

26. Rollo, G.R. No. 155547, p. 392. Emphasis supplied.
27. Under section 1.33 of the 1997 Concession Agreement, fees classi ed as "Public Utility
Revenues" are: (a) aircraft parking fees; (b) aircraft tacking fees; (c) check-in counter
fees; and (d) Terminal Fees. Section 1.27 of the 1997 Concession Agreement provides
that "Non-Public Utility Revenues" refer to all other income not classi ed as Public Utility
Revenues derived within the Terminal and the Terminal Complex . . ."
28. Section 6.06, 1997 Concession Agreement.

29. Section 6.03, Draft Concession Agreement.
30. Rollo, G.R. No. 155547, pp. 417-418. Emphasis supplied.

31. Section 6.03 (c), 1997 Concession Agreement.
32. Rollo, G.R. No. 155001, p. 3211. Emphasis supplied.
33. Administrative Order No. 1, Series of 1993 enumerates the fees and charges that may be
imposed by MIAA pursuant to its Charter.
34. Rollo, G.R. No. 155001, p. 3212.
35. Par. 2, Section 6.01, Draft Concession Agreement.

36. Par. 2, Section 6.03, Draft Concession Agreement. The pertinent portions provide:
Section 6.03. Periodic Adjustment in Fees and Charges. Adjustments in the aircraft parking
fees, aircraft tacking fees, groundhandling fees, rentals and airline o ces, check-in-
counter rentals and porterage fees shall be allowed only once every two years and in
accordance with the Parametric Formula attached hereto as Annex F. Provided that
adjustments shall be made effective only after the written express approval of the MIAA.
Provided, further, that such approval of the MIAA, shall be contingent only on the
conformity of the adjustments with the above said parametric formula. The rst
adjustment shall be made prior to the In-Service Date of the Terminal.
The MIAA reserves the right to regulate under the foregoing terms and conditions the lobby
and vehicular parking fees and other new fees and charges as contemplated in
paragraph 2 of Section 6.01 if in its judgment the users of the airport shall be deprived
of a free option for the services they cover. Emphasis supplied.
xxx xxx xxx

37. Section 6.01 (b), 1997 Concession Agreement.
38. The term "Attendant Liabilities" under the 1997 Concession Agreement is defined as:
Attendant Liabilities refer to all amounts recorded and from time to time outstanding in the
books of the Concessionaire as owing to Unpaid Creditors who have provided, loaned or
advanced funds actually used for the Project, including all interests, penalties,
associated fees, charges, surcharges, indemnities, reimbursements and other related
expenses, and further including amounts owed by Concessionaire to its suppliers,
contractors and sub-contractors. (Section 1.06)
39. Rollo, G.R. No. 15501, p. 3065.

40. Id. at p. 3071.
41. Id. at pp. 3069-3070.

42. Amended and Restated Concession Agreement dated November 26, 1998.
Section 4.04 Security
xxx xxx xxx

(c) GRP agrees with Concessionaire (PIATCO) that it shall negotiate in good faith and enter
into direct agreement with the Senior Lenders, or with an agent of such Senior Lenders
(which agreement shall be subject to the approval of the Bangko Sentral ng Pilipinas), in
such form as may be reasonably acceptable to both GRP and Senior Lenders, with
regard, inter alia, to the following parameters:
xxx xxx xxx
(iv) If the Concessionaire [PIATCO] is in default under a payment obligation owed to the Senior
Lenders, and as a result thereof the Senior Lenders have become entitled to accelerate
the Senior Loans, the Senior Lenders shall have the right to notify GRP of the same, and
without prejudice to any other rights of the Senior Lenders or any Senior Lenders' agent
may have (including without limitation under security interests granted in favor of the
Senior Lenders), to either in good faith identify and designate a nominee which is
quali ed under sub-clause (viii)(y) below to operate the Development Facility [NAIA
Terminal 3] or transfer the Concessionaire's [PIATCO] rights and obligations under this
Agreement to a transferee which is qualified under sub-clause (viii) below;
xxx xxx xxx
(vi) if the Senior Lenders, acting in good faith and using reasonable efforts, are unable to
designate a nominee or effect a transfer in terms and conditions satisfactory to the
Senior Lenders within one hundred eighty (180) days after giving GRP notice as referred
to respectively in (iv) or (v) above, then GRP and the Senior Lenders shall endeavor in
good faith to enter into any other arrangement relating to the Development Facility [NAIA
Terminal 3] (other than a turnover of the Development Facility [NAIA Terminal 3] to GRP)
within the following one hundred eighty (180) days. If no agreement relating to the
Development Facility [NAIA Terminal 3] is arrived at by GRP and the Senior Lenders
within the said 180-day period, then at the end thereof the Development Facility [NAIA
Terminal 3] shall be transferred by the Concessionaire [PIATCO] to GRP or its designee
and GRP shall make a termination payment to Concessionaire [PIATCO] equal to the
Appraised Value (as hereinafter de ned) of the Development Facility [NAIA Terminal 3]
or the sum of the Attendant Liabilities, if greater. Notwithstanding Section 8.01(c) hereof,
this Agreement shall be deemed terminated upon the transfer of the Development
Facility [NAIA Terminal 3] to GRP pursuant hereto;
xxx xxx xxx
43. Amended and Restated Concession Agreement ("ARCA") dated November 26, 1998.
Section 1.06. Attendant Liabilities
Attendant Liabilities refer to all amounts in each case supported by veri able evidence from
time to time owed or which may become owing by Concessionaire [PIATCO] to Senior
Lenders or any other persons or entities who have provided, loaned, or advanced funds
or provided nancial facilities to Concessionaire [PIATCO] for the Project [NAIA Terminal
3 ] , including, without limitation, all principal, interest, associated fees, charges,
reimbursements, and other related expenses (including the fees, charges and expenses
of any agents or trustees of such persons or entities), whether payable at maturity, by
acceleration or otherwise, and further including amounts owed by Concessionaire
[PIATCO] to its professional consultants and advisers, suppliers, contractors and sub-
contractors.
44. Section 1.06, Article I, Amended and Restated Concession Agreement.
45. Id. Emphasis supplied.

46. Id. Emphasis supplied.
47. Emphasis supplied.
48. III Record of the Senate 598, 602.

49. Id. at 455-456.
50. Section 4-A, Republic Act No. 7718, as amended, May 5, 1994; Section 11.1, Rule 11,
Implementing Rules and Regulations.
51. Section 11.3, Rule 11, Implementing Rules and Regulations.
52. Rollo, G.R. No. 15501, pp. 3073-3076.

53. G.R. No. 147465, January 20, 2002; 375 SCRA 320.
54. Philippine Association of Service Providers Co., Inc. v. Franklin M. Drilon, et al ., G.R. No. L-
81958, June 30, 1988 citing Edu v. Ericta , G.R. No. L-32096, October 24, 1970, 35 SCRA
481, 487.
55. Id.
56. Bataan Shipyard and Engineering Co., Inc. v. Presidential Commission on Good
Government, G.R. No. 75885; May 27, 1987 citing Freund, The Police Power (Chicago,
1904), cited by Cruz, I.A., Constitutional Law; 4th ed., p. 42, Smith, Bell & Co. v. Natividad ,
40 Phil. 136, U.S. v. Toribio , 15 Phil. 85, Churchill and Tait v. Rafferty , 32 Phil. 580, and
Rubi v. Provincial Board of Mindoro , 39 Phil. 660; Florentian A. Lozano v. Antonio M.
Martinez, G.R. No. L-63419, December 18, 1986; Alejandro Melchor, Jr. v. Jose L. Moya,
et al., G.R. No. L-35256, March 17, 1983; 206 Phil 1; Ichong vs. Hernandez, L-7995, May
31, 1957.
57. Jose D. Sangalang, et al. v. Intermediate Appellate Court, et al ., G.R. Nos. 71169, 74376,
76394, 78182, 82281 and 60727, August 25, 1989.
58. Section 5.10(c), Article V of the Amended and Restated Concession Agreement, November
26, 1998.
59. Taxicabs of Metro Manila, Inc., et al. v. Board of Transportation, et al ., G.R. No. L-59234,
September 30, 1982, 202 Phil. 925; Ynot v. Intermediate Appellate Court , G.R. No. 74457,
March 20, 1987; Presidential Commission on Good Government v. Pena , G.R. No. L-
77663, April 12, 1988.
60. 328 SCRA 137.

61. Rollo, G.R. No. 155547, pp. 3018-3020.
62. Id.
63. Arnault v. Nazareno, G.R. No. L-3820, July 18, 1950.

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EN BANC

[G.R. No. 155001. January 21, 2004.]

DEMOSTHENES P. AGAN, JR., JOSEPH B. CATAHAN, JOSE MARI B.

MIASCOR GROUNDHANDLING CORPORATION, DNATA-WINGS

FLORESTE ALCONIS, GINA ALNAS, REY AMPOLOQUIO, ROSEMARIE

NAGKAISANG MARALITA NG TAÑONG ASSOCIATION, INC. ,

[G.R. No. 155547. January 21, 2004.]

SALACNIB F. BATERINA, CLAVEL A. MARTINEZ and CONSTANTINO

JACINTO V. PARAS, RAFAEL P. NANTES, EDUARDO C. ZIALCITA,

FLORESTE ALCONIS, GINA ALNAS, REY AMPOLOQUIO, ROSEMARIE

NAGKAISANG MARALITA NG TAÑONG ASSOCIATION, INC. ,

[G.R. No. 155661. January 21, 2004.]

CEFERINO C. LOPEZ, RAMON M. SALES, ALFREDO B. VALENCIA, MA.

FLORESTE ALCONIS, GINA ALNAS, REY AMPOLOQUIO, ROSEMARIE

NAGKAISANG MARALITA NG TAÑONG ASSOCIATION, INC. ,

We are not persuaded.

In relation thereto, section 2.01(a) of the ARCA provides:

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Testimonial letters from reputable banks attesting that each of the

It is beyond refutation that Paircargo Consortium failed to prove its ability to

4.2.3.1 Periodic Adjustment in Fees and Charges

(c) groundhandling fees;

xxx xxx xxx 3 0

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(b) In the event Concessionaire should default in the payment of an Attendant

Section 1.06. Attendant Liabilities

These provisions reject respondents’ contention that what the Government is

1. G.R. No. 155547.

2. G.R. Nos. 155001, 155547, and 155661.

4. An Act Authorizing the Financing, Construction, Operation and Maintenance of Infrastructure

6. Rollo, G.R. No. 155001, pp. 3102-3103.

8. J.H. Friedenthal, M. K. Kane, A. R. Miller, Civil Procedure 328 (1985).

12. Supra note 11.

17. Id. at p. 3098.

19. G.R. No. 155661.

22. Section 5.4 Pre-qualification Requirements.

24. The equivalent provision in the 1997 Concession Agreement states:

The scope of the project shall include:

xxx xxx xxx

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28. Section 6.06, 1997 Concession Agreement.

30. Rollo, G.R. No. 155547, pp. 417-418. Emphasis supplied.

32. Rollo, G.R. No. 155001, p. 3211. Emphasis supplied.

35. Par. 2, Section 6.01, Draft Concession Agreement.

xxx xxx xxx

39. Rollo, G.R. No. 15501, p. 3065.

41. Id. at pp. 3069-3070.

Section 4.04 Security

xxx xxx xxx

xxx xxx xxx

44. Section 1.06, Article I, Amended and Restated Concession Agreement.

45. Id. Emphasis supplied.

47. Emphasis supplied.

48. III Record of the Senate 598, 602.

52. Rollo, G.R. No. 15501, pp. 3073-3076.

60. 328 SCRA 137.

63. Arnault v. Nazareno, G.R. No. L-3820, July 18, 1950.

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