AGAN, JR. v. PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC.
,
G.R. No. L-155001 (2002) - May 5, 2003
Facts:
AEDC made an unsolicited proposal to the government for the construction
of NAIA International Passenger Terminal III (NAIA IPT III) on October 5,
1994, through the DOTC/MIAA. The public was urged by DOTC/MIAA to
submit competing and contrasting proposals to the AEDC's unsolicited
proposal. An organization made up of the Peoples Air Cargo and
Warehousing Co., Inc. (Paircargo), Phil. PAGS (Air and Grounds Services, Inc.
The Prequalification Bids and Awards Committee (PBAC), along with and
Security Bank Corp. (Security Bank) (collectively, Paircargo Consortium),
acquired a competitive proposal from those parties.The Paircargo
Consortium accepted the notice of award from DOTC for the NAIA IPT III
project. This consortium ultimately coalesced into the present respondent
PIATCO. In light of this, 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 NAIA IPT III. On November 26, 1998, the 1997
Concession Agreement was replaced by the Amended and Restated
Concession Agreement (ARCA), which included some changes and
modifications from the original contract. Additionally, the Government and
PIATCO signed a number of additional agreements.
On September 17, 2002, multiple petitions seeking to void the 1997
Concession Agreement, the ARCA, and the Supplements as well as bar the
public respondents DOTC and MIAA from putting them into effect were
submitted to this court. The stated petitions were approved by the court,
and the 1997 Concession Agreement, the ARCA, and the Supplements were
deemed invalid.Respondent PIATCO, respondents-Congressmen, and
respondents-intervenors are now pleading for the petitions to be dismissed
and seeking a reverse of the aforementioned ruling. Alternately, PIATCO asks
the Court to refrain from invalidating the whole 1997 Concession Agreement,
the ARCA, and its supplements due to their separability clause. Respondent-
Congressmen and NMTAI further ask that the matters at hand be, instead,
sent to arbitration in accordance with the ARCA's rules. The PIATCO-
Employees request that the petitions be dismissed and the cases be sent
back to the trial courts for a merits-based trial, or, alternatively, that the
1997 Concession Agreement, the ARCA, and the Supplements be recognized
as legally valid and enforceable.
Issue:
Whether or not the state can temporarily take over a business affected
with public interest?
Held:
Yes. A simple contractual clause cannot allow PIATCO to violate the
constitutional clause on temporary control and oblige the government to pay
“reasonable cost for the use of terminal complex.” Under 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. One of the inherent powers of the State is the
right to exercise the police. The "state authority to enact legislation that may
impinge on personal liberty or property in order to promote the general
welfare" is known as police power. It consists of two essential elements: (1)
an imposition of restraint upon liberty or property and (2) the power is
exercised for the benefit of the common good. 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 duration and terms of the takeover are determined by the type
and severity of the emergency. Respondent PIATCO is entitled to fair
remuneration during the temporary takeover by GRP, as stated in Section
5.10(c), Article V of the ARCA. This compensation must take into
consideration the fair cost of using the Terminal and/or Terminal Complex.
It obviously imposes obligations on the government when it uses its police
power to compensate respondent PIATCO and this obligation is offensive to
the Constitution. Any contract cannot lessen or even threaten to undermine
police authority because the public's welfare and interest are its top
priorities.
