Case Digest: Agan, Jr. vs. Philippine International Air Terminals Co., Inc., G.R. No. 155001

Agan, Jr. vs. Philippine International Air Terminals Co., Inc., G.R. No. 155001, May 5, 2003

Subject: Transportation Law

FACTS

In 1989, DOTC engaged in the services of Aeroport de Paris (ADP) to conduct a study of the Ninoy Aquino International Airport (NAIA) to determine whether the airport can cope with traffic development by year 2010.

In 1993, Asia’s Emerging Dragon Corp (ADEA) was formed by John Gokongwei, Henry Sy, Lucio Tan, Andrew Gotianun, George Ty, and Alfonso Yuchengco, for the purpose of exploring the possibility of constructing a new international airport terminal. ADEA then submitted an unsolicited proposal to the government through the DOTC/MIAA and called the project NAIA International Airport Terminal III (NAIA ITP III) under the build-operate-and-transfer arrangement pursuant to the BOT Law.

DOTC/MIAA published in two daily newspapers the invitation for competitive or comparative proposals on AEDC’s proposal and the bidders were required to submit three separate envelopes containing the prequalification documents, technical proposal, and financial proposal.

The government granted Philippine International Airport Terminals Co, Inc. (PIATCO, formerly known as Pairgo), to operate and maintain NAIA IPT III during the concession period and to collect the fees, rentals and other charges in accordance with the rates or schedules stipulated in the 1997 Concession Agreement.

On November 26, 1998, the Government and PIATCO signed an Amended and Restated Concession Agreement (ARCA).

Subsequently, the Government and PIATCO signed three Supplements to the ARCA. 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).

Due to various issues and petitions, former President Arroyo did not honour the PIATCO contract.

ISSUE

Whether or not the exclusive right granted to PIATCO to solely operate a commercial international passenger terminal at the NAIA IPT III is unconstitutional.

RULING

No, the exclusive right granted to PIATCO to solely operate a commercial international passenger terminal at the NAIA IPT III is not unconstitutional, but the government must have strict regulation towards its operation.

Article XII, Section 19 of the 1987 Constitution states: 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. The operation of an international passenger airport terminal is no doubt an undertaking imbued with public interest.

In this case, while PIATCO may be authorized to exclusively operate NAIA IPT III as an international passenger terminal, the Government, through the MIAA, has the right and the duty to ensure that it is done in accord with public interest. PIATCO's right to operate NAIA IPT III cannot also violate the rights of third parties. PIATCO, by the mere expedient of claiming an exclusive right to operate, cannot require the Government to break its contractual obligations to the service providers. As 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.