Cases in Public Utilities and Transportation law

7/25/2019 Cases in Public Utilities and Transportation law

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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 83551 July 11, 1989

RODOLFO B. ALBANO,petitioner,vs.HON. RAINERIO O. REES, PHILIPPINE

PORTS AUTHORIT, INTERNATIONAL

CONTAINER TERMINAL SER!ICES, INC., E.

RA"ON, INC., ANSCOR CONTAINER

CORPORATION, #$% SEALAND SER!ICES.

LTD.,respondents.

Vicente Abad Santos for petitioner.

Bautista, Picazo, Buyco & Tan for privaterespondents.

PARAS,J.&

This is a Petition for Prohibition with prayer forPreliinary !n"unction or Restrainin# $rder see%in#to restrain the respondents Philippine Ports Authority&PPA' and the (ecretary of the )epartent ofTransportation and Counications Rainerio $.

Reyes fro awardin# to the !nternational ContainerTerinal (ervices, !nc. &!CT(!' the contract for thedevelopent, ana#eent and operation of theManila !nternational Container Terinal &M!CT'.

$n April *+, -/, the PPA Board adopted itsResolution No. 0+ directin# PPA ana#eent toprepare the !nvitation to Bid and all relevant biddin#docuents and technical re1uireents necessary forthe public biddin# of the developent, ana#eentand operation of the M!CT at the Port of Manila, andauthori2in# the Board Chairan, (ecretary Rainerio

$. Reyes, to oversee the preparation of the technical

and the docuentation re1uireents for the M!CTleasin# as well as to ipleent this pro"ect.

Accordin#ly, respondent (ecretary Reyes, by )$TC(pecial $rder /3456, created a seven &/' an7(pecial M!CT Biddin# Coittee7 char#ed withevaluatin# all bid proposals, recoendin# to theBoard the best bid, and preparin# the correspondin#

contract between the PPA and the winnin# bidder orcontractor. The Biddin# Coittee consisted of three&4' PPA representatives, two &*' )epartent ofTransportation and Counications &)$TC'representatives, one &' )epartent of Trade and!ndustry &)T!' representative and one &' privatesector representative. The PPA ana#eent preparedthe ters of reference, bid docuents and draftcontract which aterials were approved by the PPABoard.

The PPA published the !nvitation to Bid several ties

in a newspaper of #eneral circulation whichpublication included the reservation by the PPA of7the ri#ht to re"ect any or all bids and to waive anyinforality in the bids or to accept such bids whichay be considered ost advanta#eous to the#overnent.7

(even &/' consortiaof copanies actually subittedbids, which bids were opened on 8uly /, -/ at thePPA 9ead $ffice. After evaluation of the severalbids, the Biddin# Coittee recoended theaward of the contract to develop, ana#e and operate

the M!CT to respondent !nternational ContainerTerinal (ervices, !nc. &!CT(!' as havin# offered thebest Technical and :inancial Proposal. Accordin#ly,respondent (ecretary declared the!CT(! consortiumas the winnin# bidder.

Before the correspondin# M!CT contract could besi#ned, two successive cases were filed a#ainst therespondents which assailed the le#ality or re#ularityof the M!CT biddin#. Thefirstwas (pecial CivilAction 005- for 7Prohibition with Preliinary!n"unction7 filed with the RTC of Pasi# by Basilio 9.

Alo, an alle#ed 7concerned ta;payer7, and,thesecondwas Civil Case 35466 for 7Prohibition

with Prayer for Teporary Restrainin# $rder &TR$'7filed with the RTC of Manila by C.:. (harp Co., !nc.,a eber of the nine &-' fir consortiu < 7ManilaContainer Terinals, !nc.7 which had activelyparticipated in the M!CT Biddin#.

Restrainin# $rders were issued in Civil Case 35466 but these were subse1uently lifted by this

Court in Resolutions dated March /, - &in =.R.No. ** captioned 79on. Rainerio $. Reyes etc., etal. vs. 9on. )oroteo N. Caneba, etc., et al.' and April5, - &in =.R. No. -5/ captioned 79on.Rainerio $. Reyes etc., et al. vs. Court of Appeals, etal.7'

$n May , -, the President of the Philippinesapproved the proposed M!CT Contract, withdirectives that 7the responsibility for plannin#,detailed en#ineerin#, construction, e;pansion,rehabilitation and capital dred#in# of the port, as well

as the deterination of how the revenues of the portsyste shall be allocated for future port wor%s, shallreain with the PPA> and the contractor shall notcollect ta;es and duties e;cept that in the case ofwharfa#e or tonna#e dues and harbor and berthin#fees, payent to the =overnent ay be adethrou#h the contractor who shall issue provisionalreceipts and turn over the payents to the=overnent which will issue the official receipts.7&Anne; 7!7'.

The ne;t day, the PPA and the !CT(! perfected the

M!CT Contract &Anne; 747' incorporatin# therein by7clarificatory #uidelines7 the aforeentionedpresidential directives. &Anne; 757'.

Meanwhile, the petitioner, Rodolfo A. Albano filedthe present petition as citi2en and ta;payer and as aeber of the 9ouse of Representatives, assailin#the award of the M!CT contract to the !CT(! by thePPA. The petitioner clais that since the M!CT is apublic utility, it needs a le#islative franchise before itcan le#ally operate as a public utility, pursuant toArticle *, (ection of the -/ Constitution.


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The petition is devoid of erit.

A review of the applicable provisions of law indicatesthat a franchise specially #ranted by Con#ress is notnecessary for the operation of the Manila!nternational Container Port &M!CP' by a privateentity, a contract entered into by the PPA and suchentity constitutin# substantial copliance with the

law.

. E;ecutive $rder No. 4+, dated 8uly 6, -6,provides?

@9ERE:$RE, !, C$RA$N C.A!N$, President of theRepublic of the Philippines, byvirtue of the powers vested in eby the Constitution and the law, dohereby order the iediate recallof the franchise #ranted to the

Manila !nternational PortTerinals, !nc. &M!PT!' andauthori2e the Philippine PortsAuthority &PPA' to ta%e over,ana#e and operate the Manila!nternational Port Cople; atNorth 9arbor, Manila andunderta%e the provision of car#ohandlin# and port related servicesthereat, in accordance with P.).0/ and other applicable laws andre#ulations.

(ection 6 of Presidential )ecree No. 0/ &theRevised Charter of the Philippine Ports Authority'states?

a' The corporateduties of theAuthority shallbe?

;;; ;;; ;;;

&ii' To supervise,control, re#ulate,construct,aintain, operate,and provide suchfacilities orservices as arenecessary in the

ports vested in, orbelon#in# to theAuthority.

;;; ;;; ;;;

&v' To provideservices &whetheron its own, by

contract, or

otherwise' withinthe Port )istricts

and theapproachesthereof, includin#but not liited to

< loadin# ordischar#in# anyvessel>

< sortin#,wei#hin#,easurin#,storin#,warehousin#, orotherwisehandlin# #oods.

;;; ;;; ;;;

b' The corporatepowers of theAuthority shallbe as follows?

;;; ;;; ;;;

&vi' To a%e or

enter intocontracts of any%ind or nature toenable it todischar#e itsfunctions underthis )ecree.

;;; ;;; ;;;

DEphasis supplied.

Thus, while the PPA has been tas%ed, under E.$. No.4+, with the ana#eent and operation of the Manila!nternational Port Cople; and to underta%e theprovidin# of car#o handlin# and port related servicesthereat, the law provides that such shall be 7inaccordance with P.). 0/ and other applicable lawsand re#ulations.7 $n the other hand, P.). No. 0/e;pressly epowers the PPA to provide serviceswithin Port )istricts 7whether on its own, bycontract, or otherwise7 D(ee. 6&a' &v'. Therefore,under the ters of E.$. No. 4+ and P.). No. 0/, thePPA ay contract with the !nternational ContainerTerinal (ervices, !nc. &!CT(!' for the ana#eent,operation and developent of the M!CP.

*. Even if the M!CP be considered a publicutility, 1or a public service '

on the theory that it is a7wharfF or a 7doc%7 3as conteplated under the Public(ervice Act, its operation would not necessarily callfor a franchise fro the Ge#islative Branch.:ranchises issued by Con#ress are not re1uiredbefore each and every public utility ay operate.Thus, the law has #ranted certain adinistrative

a#encies the power to #rant licenses for or to


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authori2e the operation of certain public utilities. &(eeE.$. Nos. /* and *+*'

That the Constitution provides in Art. H!!, (ec. that the issuance of a franchise, certificate or otherfor of authori2ation for the operation of a publicutility shall be sub"ect to aendent, alteration orrepeal by Con#ress does not necessarily, iply, as

petitioner posits that only Con#ress has the power to#rant such authori2ation. $ur statute boo%s arereplete with laws #rantin# specified a#encies in theE;ecutive Branch the power to issue suchauthori2ation for certain classes of public utilities. (

As stated earlier, E.$. No. 4+ has tas%ed the PPA withthe operation and ana#eent of the M!CP, inaccordance with P.). 0/ and other applicable lawsand re#ulations. 9owever, P.). 0/ itself authori2esthe PPA to perfor the service by itself, bycontractin# it out, or throu#h other eans. Readin#

E.$. No. 4+ and P.). No. 0/ to#ether, theinescapable conclusion is that the lawa%er hasepowered the PPA to underta%e by itself theoperation and ana#eent of the M!CP or toauthori2e its operation and ana#eent by anotherby contract or other eans, at its option. The latterpower havin# been dele#ated to the PPA, a franchisefro Con#ress to authori2e an entity other than thePPA to operate and ana#e the M!CP becoesunnecessary.

!n the instant case, the PPA, in the e;ercise of the

option #ranted it by P.). No. 0/, chose to contractout the operation and ana#eent of the M!CP to aprivate corporation. This is clearly within its power todo. Thus, PPAFs acts of privati2in# the M!CT andawardin# the M!CT contract to !CT(! are whollywithin the "urisdiction of the PPA under its Charterwhich epowers the PPA to 7supervise, control,re#ulate, construct, aintain, operate and providesuch facilities or services as are necessary in the portsvested in, or belon#in# to the PPA.7 &(ection 6&a' ii,P.). 0/'

The contract between the PPA and !CT(!, coupledwith the PresidentFs written approval, constitute the

necessary authori2ation for !CT(!Fs operation andana#eent of the M!CP. The award of the M!CTcontract approved by no less than the President of thePhilippines herself en"oys the le#al presuption ofvalidity and re#ularity of official action. !n the case atbar, there is no evidence which clearly shows theconstitutional infirity of the 1uestioned act of#overnent.

:or these reasons the contention that the contractbetween the PPA and !CT(! is ille#al in the absenceof a franchise fro Con#ress appears bereft of anyle#al basis.

4. $n the peripheral issues raised by the party, thefollowin# observations ay be ade?

A. That petitioner herein is suin# as a citi2en andta;payer and as a Meber of the 9ouse ofRepresentatives, sufficiently clothes hi with the

standin# to institute the instant suit 1uestionin# thevalidity of the assailed contract. @hile thee;penditure of public funds ay not be involvedunder the contract, public interest is definitelyinvolved considerin# the iportant role of the M!CPin the econoic developent of the country and thea#nitude of the financial consideration involved.Conse1uently, the disclosure provision in theConstitution 5would constitute sufficient authority forupholdin# petitionerFs standin#. DCf. TaIada v.Tuvera, =.R. No. 64-0, April *5, -0,46 (CRA*/, citin# (everino v. =overnor =eneral, 6 Phil. 466

&-+', where the Court considered the petitionerswith sufficient standin# to institute an action where apublic ri#ht is sou#ht to be enforced.

B. That certain coittees in the (enate and the9ouse of Representatives have, in their respectivereports, and the latter in a resolution as well, declaredtheir opinion that a franchise fro Con#ress isnecessary for the operation of the M!CP by a privateindividual or entity, does not necessarily create aconflict between the E;ecutive and the Ge#islativeBranches needin# the intervention of the 8udicial

Branch. The court is not faced with a situation wherethe E;ecutive Branch has contravened an enactent

of Con#ress. As discussed earlier, neither is the Courtconfronted with a case of one branch usurpin# apower pertainin# to another.

C. PetitionerFs contention that what was bid out, i.e.,the developent, ana#eent and operation of theM!CP, was not what was subse1uently contracted,considerin# the conditions iposed by the President

in her letter of approval, thus renderin# the bids andpro"ections iaterial and the procedure ta%enineffectual, is not supported by the established facts.The conditions iposed by the President did notaterially alter the substance of the contract, buterely dealt on the details of its ipleentation.

). The deterination of whether or not the winnin#bidder is 1ualified to underta%e the contracted serviceshould be left to the sound "ud#ent of the PPA. ThePPA, havin# been tas%ed with the forulation of aplan for the developent of port facilities and its

ipleentation D(ec. 6&a' &i', is the a#ency in thebest position to evaluate the feasibility of thepro"ections of the bidders and to decide which bid iscopatible with the developent plan. Neither theCourt, nor Con#ress, has the tie and the technicale;pertise to loo% into this atter.

Thus, the Court inManue v. Viena&=.R. No. G3**, :ebruary */, -/, 4/ (CRA /50 stated?

DCourts, as a rule, refuse tointerfere with proceedin#s

underta%en by adinistrativebodies or officials in the e;ercise ofadinistrative functions. This is sobecause such bodies are #enerallybetter e1uipped technically todecide adinistrative 1uestions andthat non3le#al factors, such as#overnent policy on the atter,are usually involved in thedecisions. Dat p. /0+.

!n conclusion, it is evident that petitioner has failed toshow a clear case of #rave abuse of discretion


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aountin# to lac% or e;cess of "urisdiction as towarrant the issuance of the writ of prohibition.

@9ERE:$RE, the petition is hereby )!(M!((E).

($ $R)ERE).

!ernan, ".#., $arvasa, Meencio%errera, "ruz,

'ancayco, Bidin, "ortes, 'ri(o%A)uino, Mediadeaand *e+aado, ##., concur.

!eiciano, #., concurs in the resut.

Padia and Sarmiento, ##., too no part.

S)*#+#) O*-$-o$

GUTIERRE", JR.,J., concurrin#?

! concur in the CourtFs decision that the deterinationof whether or not the winnin# bidder is 1ualified tounderta%e the contracted service should be left to thesound "ud#ent of the Philippine Ports Authority&PPA'. ! a#ree that the PPA is the a#ency which canbest evaluate the coparative 1ualifications of thevarious biddin# contractors and that in a%in# suchevaluation it has the technical e;pertise which neitherthis Court nor Con#ress possesses.

9owever, ! would feel ore cofortable in thethou#ht that the above rulin#s are not only #roundedon fir le#al foundations but are also factuallyaccurate if the PPA shows #reater consistency in itssubissions to this Court.

! recall that in-. *azon, nc. v. Phiippine PortsAuthority&0 (CRA *44 D-//', this Court decidedthe case in favor of the PPA because, aon# others,of its subissions that? &' the petitioner thereincoitted violations as to outside stevedorin#

services, inade1uate e1uipent, delayed subissionof reports, and non3copliance with certain port

re#ulations> &*' respondent Marina Port (ervices andnot the petitioner was better 1ualified to handlearrastre services> &4' the petitioner bein# controlledby Alfredo Roualde2 could not enter into aana#eent contract with PPA and any such contractwould be null and void> and &5' even if the petitioneray not have shared in the ille#al intention behindthe transfer of a"ority shares, it shared in the

benefits of the violation of law.

! was surprised durin# the oral ar#uents of thepresent petition to hear the counsel for PPA subitdiaetrically different stateents re#ardin# thecapabilities and worth of E. Ra2on, !nc., as anarrastre operator. !t now turns out that the Manila!nternational Container Terinal will depend a #reatdeal on the e;pertise, reliability and copetence of E.Ra2on, !nc., for its successful operations. The tiedifference between the two petitions is insubstantial.After #oin# over the pleadin#s of the present petition,

! a now convinced that it is the subissions of PPAin this case and not its contentions in =.R. No. /0-/which are accurate and eritorious. There is thedistinct possibility that we ay have been unfair inthe earlier petition because of assertions ade thereinwhich are contradictory to the subissions in theinstant petition. No such doubts would e;ist if the=overnent is ore consistent in its pleadin#s onsuch iportant factual atters as those raised in thesetwo petitions.


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Manila

EN BANC

G.R. No. 11(''' A*+-l /, 1995

FRANCISCO S. TATAD, JOHN H. OSMENA #$%

RODOLFO G. BIA"ON,petitioners,vs.HON. JESUS B. GARCIA, JR., -$ 0- #*#-y #

0) S)+)#+y o2 0) D)*#+)$ o2 T+#$*o+#-o$

#$% Cou$-#-o$, #$% EDSA LRT

CORPORATION, LTD., respondents.

4UIASON,J.:

This is a petition under Rule 60 of the Revised Rulesof Court to prohibit respondents fro furtheripleentin# and enforcin# the 7Revised andRestated A#reeent to Build, Gease and Transfer aGi#ht Rail Transit (yste for E)(A7 dated April **,--*, and the 7(uppleental A#reeent to the **April --* Revised and Restated A#reeent To

Build, Gease and Transfer a Gi#ht Rail Transit (ystefor E)(A7 dated May 6, --4.

Petitioners :rancisco (. Tatad, 8ohn 9. $sena andRodolfo =. Bia2on are ebers of the Philippine(enate and are suin# in their capacities as (enatorsand as ta;payers. Respondent 8esus B. =arcia, 8r. isthe incubent (ecretary of the )epartent ofTransportation and Counications &)$TC', whileprivate respondent E)(A GRT Corporation, Gtd. is aprivate corporation or#ani2ed under the laws of9on#%on#.

!

!n --, )$TC planned to construct a li#ht railwaytransit line alon# E)(A, a a"or thorou#hfare inMetropolitan Manila, which shall traverse the citiesof Pasay, ue2on, Mandaluyon# and Ma%ati. Theplan, referred to as E)(A Gi#ht Rail Transit !!!&E)(A GRT !!!', was intended to provide a ass

transit syste alon# E)(A and alleviate thecon#estion and #rowin# transportation proble in theetropolis.

$n March 4, --+, a letter of intent was sent by theEli Gevin Enterprises, !nc., represented by Eli"ahuGevin to )$TC (ecretary $scar $rbos, proposin# toconstruct the E)(A GRT !!! on a Build3$perate3Transfer &B$T' basis.

$n March 0, --+, (ecretary $rbos invited Gevin tosend a technical tea to discuss the pro"ect with

)$TC.

$n 8uly -, --+, Republic Act No. 6-0/ entitled 7AnAct Authori2in# the :inancin#, Construction,$peration and Maintenance of !nfrastructure Pro"ectsby the Private (ector, and :or $ther Purposes,7 wassi#ned by President Cora2on C. A1uino. Referred toas the Build3$perate3Transfer &B$T' Gaw, it too%effect on $ctober -, --+.

Republic Act No. 6-0/ provides for two schees forthe financin#, construction and operation of#overnent pro"ects throu#h private initiative andinvestent? Build3$perate3Transfer &B$T' or Build3Transfer &BT'.

!n accordance with the provisions of R.A. No. 6-0/and to set the E)(A GRT !!! pro"ect underway,)$TC, on 8anuary **, -- and March 5, --,issued )epartent $rders Nos. -35-5 and -35-6,respectively creatin# the Pre1ualification Bids andAwards Coittee &PBAC' and the TechnicalCoittee.

After its constitution, the PBAC issued #uidelines forthe pre1ualification of contractors for the financin#and ipleentation of the pro"ect The notice,advertisin# the pre1ualification of bidders, waspublished in three newspapers of #eneral circulationonce a wee% for three consecutive wee%s startin#:ebruary *, --.

The deadline set for subission of pre1ualificationdocuents was March *, --, later e;tended toApril , --. :ive #roups responded to the invitationnaely, ABB Tra2ione of !taly, 9opewell 9oldin#sGtd. of 9on#%on#, Mansteel !nternational ofMandaue, Cebu, Mitsui J Co., Gtd. of 8apan, andE)(A GRT Consortiu, coposed of ten forei#n anddoestic corporations? naely, Kaiser En#ineers!nternational, !nc., ACER Consultants &:ar East' Gtd.and :reean :o;, TradeinvestLCK) Tatra of theC2ech and (lova% :ederal Republics, TC=!En#ineerin# All Asia Capital and Geasin#

Corporation, The (ali =roup of 8a%arta, E. G.Enterprises, !nc., A.M. $reta J Co. Capitol !ndustrialConstruction =roup, !nc, and :. :. Cru2 J co., !nc.

$n the last day for subission of pre1ualificationdocuents, the pre1ualification criteria proposed bythe Technical Coittee were adopted by the PBAC.The criteria totallin# ++ percent, are as follows? &a'Ge#al aspects < + percent> &b'Mana#eentL$r#ani2ational capability < 4+ percent>and &c' :inancial capability < 4+ percent> and &d'Technical capability < 4+ percent &*oo, p. **'.

$n April 4, --, the Coittee, char#ed under theB$T Gaw with the forulation of the!pleentation Rules and Re#ulations thereof,approved the sae.

After evaluatin# the pre1ualification, bids, the PBACissued a Resolution on May -, -- declarin# that ofthe five applicants, only the E)(A GRT Consortiu7et the re1uireents of #arnerin# at least * pointsper criteria Dsic, e;cept for Ge#al Aspects, andobtainin# an over3all passin# ar% of at least *

points7 &*oo, p. 56'. The Ge#al Aspects referred toprovided that the B$TLBT contractor3applicant eet


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the re1uireents specified in the Constitution andother pertinent laws &*oo, p. 5'.

(ubse1uently, (ecretary $rbos was appointedE;ecutive (ecretary to the President of thePhilippines and was replaced by (ecretary PeteNicoedes Prado. The latter sent to President A1uinotwo letters dated May 4, -- and 8une 5, --,

respectively recoendin# the award of the E)(AGRT !!! pro"ect to the sole coplyin# bidder, theE)(A GRT Consortiu, and re1uestin# for authorityto ne#otiate with the said fir for the contractpursuant to para#raph 5&b' of the !pleentin#Rules and Re#ulations of the B$T Gaw &*oo, pp.*-34+*'.

!n 8uly --, E;ecutive (ecretary $rbos, actin# oninstructions of the President, issued a directive to the)$TC to proceed with the ne#otiations. $n 8uly 6,--, the E)(A GRT Consortiu subitted its bid

proposal to )$TC.

:indin# this proposal to be in copliance with thebid re1uireents, )$TC and respondent E)(A GRTCorporation, Gtd., in substitution of the E)(A GRTConsortiu, entered into an 7A#reeent to Build,Gease and Transfer a Gi#ht Rail Transit (yste forE)(A7 under the ters of the B$T Gaw &*oo, pp.5/3//'.

(ecretary Prado, thereafter, re1uested presidentialapproval of the contract.

!n a letter dated March 4, --*, E;ecutive (ecretary:ran%lin )rilon, who replaced E;ecutive (ecretary$rbos, infored (ecretary Prado that the Presidentcould not #rant the re1uested approval for thefollowin# reasons? &' that )$TC failed to conductactual public biddin# in copliance with (ection 0 ofthe B$T Gaw> &*' that the law authori2ed publicbiddin# as the only ode to award B$T pro"ects, andthe pre1ualification proceedin#s was not the publicbiddin# conteplated under the law> &4' that !te 5of the !pleentin# Rules and Re#ulations of theB$T Gaw which authori2ed ne#otiated award of

contract in addition to public biddin# was of doubtfulle#ality> and &5' that con#ressional approval of thelist of priority pro"ects under the B$T or BT (cheeprovided in the law had not yet been #ranted at thetie the contract was awarded &*oo, pp. /3/-'.

!n view of the coents of E;ecutive (ecretary)rilon, the )$TC and private respondents re3

ne#otiated the a#reeent. $n April **, --*, theparties entered into a 7Revised and RestatedA#reeent to Build, Gease and Transfer a Gi#ht RailTransit (yste for E)(A7 &*oo, pp. 5/3/'inasuch as 7the parties Dare co#ni2ant of the factthe )$TC has full authority to si#n the A#reeentwithout need of approval by the President pursuant tothe provisions of E;ecutive $rder No. 4+ and thatcertain events Dhad supervened since Noveber /,-- which necessitateDd the revision of theA#reeent7 &*oo, p. 0'. $n May 6, --*, )$TC,represented by (ecretary 8esus =arcia vice (ecretary

Prado, and private respondent entered into a7(uppleental A#reeent to the ** April --*Revised and Restated A#reeent to Build, Gease andTransfer a Gi#ht Rail Transit (yste for E)(A7 so asto 7clarify their respective ri#hts and responsibilities7and to subit Dthe (uppleental A#reeent to thePresident, of the Philippines for his approval7 &*oo,pp. /-3+'.

(ecretary =arcia subitted the two A#reeents toPresident :idel . Raos for his consideration andapproval. !n a Meorandu to (ecretary =arcia on

May 6, --4, approved the said A#reeents, &*oo,p. -5'.

Accordin# to the a#reeents, the E)(A GRT !!! willuse li#ht rail vehicles fro the C2ech and (lova%:ederal Republics and will have a a;iu carryin#capacity of 50+,+++ passen#ers a day, or 0+ illiona year to be achieved3throu#h 05 such vehiclesoperatin# siultaneously. The E)(A GRT !!! will runat #rade, or street level, on the id3section of E)(Afor a distance of /. %iloeters fro :.B. 9arrison,Pasay City to North Avenue, ue2on City. The

syste will have its own power facility &Revised andRestated A#reeent, (ec. *.4 &ii'>*oop. 00'. !t will

also have thirteen &4' passen#er stations and onedepot in 63hectare #overnent property at NorthAvenue &(uppleental A#reeent, (ec. >*oo,pp. -3-*'.

Private respondents shall underta%e and finance theentire pro"ect re1uired for a coplete operationalli#ht rail transit syste &Revised and Restated

A#reeent, (ec. 5.>*oo, p. 0'. Tar#et copletiondate is ,++ days or appro;iately three years frothe ipleentation date of the contract inclusive ofobili2ation, site wor%s, initial and final testin# ofthe syste &(uppleental A#reeent, (ec. 0>*oo,p. 4'. pon full or partial copletion and viabilitythereof, private respondent shall deliver the use andpossession of the copleted portion to )$TC whichshall operate the sae &(uppleental A#reeent,(ec. 0> Revised and Restated A#reeent, (ec.0.>*oo, pp. 636*, 5'. )$TC shall pay privaterespondent rentals on a onthly basis throu#h an

!rrevocable Getter of Credit. The rentals shall bedeterined by an independent and internationallyaccredited inspection fir to be appointed by theparties &(uppleental A#reeent, (ec. 6>*oo, pp.036' As a#reed upon, private respondentFs capitalshall be recovered fro the rentals to be paid by the)$TC which, in turn, shall coe fro the earnin#sof the E)(A GRT !!! &Revised and RestatedA#reeent, (ec. , p. 0>*oo, p. 05'. After *0 yearsand )$TC shall have copleted payent of therentals, ownership of the pro"ect shall be transferredto the latter for a consideration of only .(. .++

&Revised and Restated A#reeent, (ec. .>*oo,p. 6/'.

$n May 0, --5, R.A. No. //, an 7Act Aendin#Certain (ections of Republic Act No. 6-0/, Entitled7An Act Authori2in# the :inancin#, Construction,$peration and Maintenance of !nfrastructure Pro"ectsby the Private (ector, and for $ther Purposes7 wassi#ned into law by the President. The law waspublished in two newspapers of #eneral circulationon May *, --5, and too% effect 0 days thereafteror on May *, --5. The law e;pressly reco#ni2es

BGT schee and allows direct ne#otiation of BGTcontracts.


7/25

!!

!n their petition, petitioners ar#ued that?

&' T9E A=REEMENT $: APR!G**, --*, A( AMEN)E) BO T9E(PPGEMENTAG A=REEMENT$: MAO 6, --4, !N($:AR A( !T

=RANT( E)(A GRTC$RP$RAT!$N, GT)., A:$RE!=N C$RP$RAT!$N, T9E$@NER(9!P $: E)(A GRT !!!,A PBG!C T!G!TO, !$GATE(T9E C$N(T!TT!$N AN),9ENCE, !(NC$N(T!TT!$NAG>

&*' T9E B!G)3GEA(E3TRAN(:ER (C9EMEPR$!)E) !N T9E

A=REEMENT( !( N$T)E:!NE) N$R REC$=N!E)!N R.A. N$. 6-0/ $R !T(!MPGEMENT!N= RGE( AN)RE=GAT!$N( AN), 9ENCE,!( !GGE=AG>

&4' T9E A@AR) $: T9EC$NTRACT $N ANE=$T!ATE) BA(!( !$GATE(R> A. N$. 6-0/ AN), 9ENCE, !(NGA@:G>

&5' T9E A@AR) $: T9EC$NTRACT !N :A$R $:RE(P$N)ENT E)(A GRTC$RP$RAT!$N, GT).!$GATE( T9ERE!REMENT( PR$!)E) !NT9E !MPGEMENT!N= RGE(AN) RE=GAT!$N( $: T9EB$T GA@ AN), 9ENCE, !(!GGE=AG>

&0' T9E A=REEMENT(!$GATE EHECT!E $R)ERN$ 4+ :$R T9E!R :A!GRET$ BEAR PRE(!)ENT!AGAPPR$AG AN), 9ENCE, ARE!GGE=AG AN) !NE::ECT!E>AN)

&6' T9E A=REEMENT( ARE=R$((GO )!(A)ANTA=E$(T$ T9E =$ERNMENT &*oo,pp. 036'.

(ecretary =arcia and private respondent filed theircoents separately and claied that?

&' Petitioners are not the real parties3in3interest andhave no le#al standin# to institute the presentpetition>

&*' The writ of prohibition is not the proper reedyand the petition re1uires ascertainent of facts>

&4' The schee adopted in the A#reeents is actuallya build3transfer schee allowed by the B$T Gaw>

&5' The nationality re1uireent for public utilitiesandated by the Constitution does not apply toprivate respondent>

&0' The A#reeents e;ecuted by and between

respondents have been approved by President Raosand are not disadvanta#eous to the #overnent>

&6' The award of the contract to private respondentthrou#h ne#otiation and not public biddin# is allowedby the B$T Gaw> and

&/' =rantin# that the B$T Gaw re1uires publicbiddin#, this has been aended by R.A No. //passed by the Ge#islature $n May *, --5, whichprovides for direct ne#otiation as a ode of award ofinfrastructure pro"ects.

!!!

Respondents claied that petitioners had no le#alstandin# to initiate the instant action. Petitioners,however, countered that the action was filed by thein their capacity as (enators and as ta;payers.

The prevailin# doctrines in ta;payerFs suits are to

allow ta;payers to 1uestion contracts entered into bythe national #overnent or #overnent3owned orcontrolled corporations alle#edly in contravention ofthe law &Kilosbayan, !nc. v. =uin#ona, *4* (CRA+ D--5' and to disallow the sae when onlyunicipal contracts are involved &Bu#nayConstruction and )evelopent Corporation v. Garon,/6 (CRA. *5+ D--'.

:or as lon# as the rulin# in/iosbayanon ocusstandiis not reversed, we have no choice but tofollow it and uphold the le#al standin# of petitioners

as ta;payers to institute the present action.

!

!n the ain, petitioners asserted that the Revised andRestated A#reeent of April **, --* and the(uppleental A#reeent of May 6, --4 areunconstitutional and invalid for the followin#reasons?

&' the E)(A GRT !!! is a public

utility, and the ownership andoperation thereof is liited by theConstitution to :ilipino citi2ens anddoestic corporations, not forei#ncorporations li%e privaterespondent>

&*' the Build3Gease3Transfer &BGT'schee provided in the a#reeentsis not the B$T or BT (cheeunder the law>

&4' the contract to construct theE)(A GRT !!! was awarded to


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private respondent not throu#hpublic biddin# which is the onlyode of awardin# infrastructurepro"ects under the B$T law> and

&5' the a#reeents are #rosslydisadvanta#eous to the #overnent.

. Private respondent E)(A GRT Corporation, Gtd. towho the contract to construct the E)(A GRT !!!was awarded by public respondent, is adittedly aforei#n corporation 7duly incorporated and e;istin#under the laws of 9on#%on#7 &*oo, pp. 0+, /-'.There is also no dispute that once the E)(A GRT !!!is constructed, private respondent, as lessor, will turnit over to )$TC, as lessee, for the latter to operatethe syste and pay rentals for said use.

The 1uestion posed by petitioners is?

Can respondent E)(A GRTCorporation, Gtd., a forei#ncorporation own E)(A GRT !!!> apublic utility &*oo, p. /'.

The phrasin# of the 1uestion is erroneous> it isloaded. @hat private respondent owns are the railtrac%s, rollin# stoc%s li%e the coaches, rail stations,terinals and the power plant, not a public utility.@hile a franchise is needed to operate these facilitiesto serve the public, they do not by theselvesconstitute a public utility. @hat constitutes a publicutility is not their ownership but their use to serve thepublic &!loilo !ce J Cold (tora#e Co. v. Public(ervice Board, 55 Phil. 00, 00/ 00 D-*4'.

The Constitution, in no uncertain ters, re1uires afranchise for the operation of a public utility.9owever, it does not re1uire a franchise before onecan own the facilities needed to operate a publicutility so lon# as it does not operate the to serve thepublic.

(ection of Article H!! of the Constitutionprovides?

No franchise, certificate or anyother for of authori2ation forthe operation of a pubicutiity shall be #ranted e;cept tociti2ens of the Philippines or tocorporations or associationsor#ani2ed under the laws of thePhilippines at least si;typercentumof whose capital is ownedby such citi2ens, nor shall suchfranchise, certificate orauthori2ation be e;clusivecharacter or for a lon#er periodthan fifty years . . . &Ephasissupplied'.

!n law, there is a clear distinction between the7operation7 of a public utility and the ownership ofthe facilities and e1uipent used to serve the public.

$wnership is defined as a relation in law by virtue ofwhich a thin# pertainin# to one person is copletelysub"ected to his will in everythin# not prohibited bylaw or the concurrence with the ri#hts of another&Tolentino, !! Coentaries and 8urisprudence onthe Civil Code of the Philippines 50 D--*'.

The e;ercise of the ri#hts encopassed in ownershipis liited by law so that a property cannot beoperated and used to serve the public as a publicutility unless the operator has a franchise. Theoperation of a rail syste as a public utility includes

the transportation of passen#ers fro one point toanother point, their loadin# and unloadin# atdesi#nated places and the oveent of the trains atpre3scheduled ties &cf. Ari2ona Eastern R.R. Co. v.8.A.. Matthews, *+ Ari2 **, + P.0-, / A.G.R.5- D-- >nited (tates :ire !ns. Co. v. NorthernP.R. Co., 4+ @ash *d. /**, -4 P. *d 6, * A.G.R. *d+60 D-5'.

The ri#ht to operate a public utility ay e;istindependently and separately fro the ownership ofthe facilities thereof. $ne can own said facilities

without operatin# the as a public utility, orconversely, one ay operate a public utility without

ownin# the facilities used to serve the public. Thedevotion of property to serve the public ay be doneby the owner or by the person in control thereof whoay not necessarily be the owner thereof.

This dichotoy between the operation of a publicutility and the ownership of the facilities used toserve the public can be very well appreciated when

we consider the transportation industry. Enfranchisedairline and shippin# copanies ay lease theiraircraft and vessels instead of ownin# thetheselves.

@hile private respondent is the owner of the facilitiesnecessary to operate the E)(A. GRT !!!, it aditsthat it is not enfranchised to operate a public utility&Revised and Restated A#reeent, (ec. 4.*>*oo, p.0/'. !n view of this incapacity, private respondent and)$TC a#reed that on copletion date, privaterespondent will iediately deliver possession of the

GRT syste by way of lease for *0 years, durin#which period )$TC shall operate the sae as acoon carrier and private respondent shall providetechnical aintenance and repair services to )$TC&Revised and Restated A#reeent, (ecs. 4.*, 0. and0.*>*oo, pp. 0/30, 636*'. Technical aintenanceconsists of providin# &' repair and aintenancefacilities for the depot and rail lines, services forroutine clearin# and security> and &*' producin# anddistributin# aintenance anuals and drawin#s forthe entire syste &Revised and Restated A#reeent,Anne; :'.

Private respondent shall also train )$TC personnelfor failiari2ation with the operation, use,aintenance and repair of the rollin# stoc%, powerplant, substations, electrical, si#nalin#,counications and all other e1uipent as suppliedin the a#reeent &Revised and Restated A#reeent,(ec. +>*oo, pp. 6636/'. Trainin# consists oftheoretical and live trainin# of )$TC operationalpersonnel which includes actual drivin# of li#ht railvehicles under siulated operatin# conditions,control of operations, dealin# with eer#encies,

collection, countin# and securin# cash fro the farecollection syste &Revised and Restated A#reeent,


9/25

Anne; E, (ecs. *34'. Personnel of )$TC will wor%under the direction and control of private respondentonly durin# trainin# &Revised and RestatedA#reeent, Anne; E, (ec. 4.'. The trainin#ob"ectives, however, shall be such that uponcopletion of the E)(A GRT !!! and upon openin#of noral revenue operation, )$TC shall have intheir eploy personnel capable of underta%in#trainin# of all new and replaceent personnel&Revised and Restated A#reeent, Anne; E (ec. 0.'.!n other words, by the end of the three3yearconstruction period and upon coenceent ofnoral revenue operation, )$TC shall be able tooperate the E)(A GRT !!! on its own and train allnew personnel by itself.

:ees for private respondentF s services shall beincluded in the rent, which li%ewise includes thepro"ect cost, cost of replaceent of plant e1uipentand spare parts, investent and financin# cost, plus a

reasonable rate of return thereon &Revised andRestated A#reeent, (ec. >*oo, p. 05'.

(ince )$TC shall operate the E)(A GRT !!!, it shallassue all the obli#ations and liabilities of a cooncarrier. :or this purpose, )$TC shall indenify andhold harless private respondent fro any losses,daa#es, in"uries or death which ay be claied inthe operation or ipleentation of the syste, e;ceptlosses, daa#es, in"ury or death due to defects in theE)(A GRT !!! on account of the defective conditionof e1uipent or facilities or the defective

aintenance of such e1uipent facilities &Revisedand Restated A#reeent, (ecs. *. and *.*>*oo,p. 6'.

!n su, private respondent will not run the li#ht railvehicles and collect fees fro the ridin# public. !twill have no dealin#s with the public and the publicwill have no ri#ht to deand any services fro it.

!t is well to point out that the role of privaterespondent as lessor durin# the lease period ust bedistin#uished fro the role of the Philippine =ain#

Mana#eent Corporation &P=MC' in the caseof/iosbayan nc. v. 'uin+ona, *4* (CRA +

&--5'. Therein, the Contract of Gease betweenP=MC and the Philippine Charity (weepsta%es$ffice &PC($' was actually a collaboration or "ointventure a#reeent prescribed under the charter of thePC($. !n the Contract of Gease> P=MC, the lessorobli#ated itself to build, at its own e;pense, all thefacilities necessary to operate and aintain anationwide on3line lottery syste fro who PC($was to lease the facilities and operate the sae. pondue e;aination of the contract, the Court found thatP=MCFs participation was not confined to theconstruction and settin# up of the on3line lotterysyste. !t spilled over to the actual operation thereof,becoin# indispensable to the pursuit, conduct,adinistration and control of the hi#hly technical andsophisticated lottery syste. !n effect, the PC($leased out its f ranchise to P=MC which actuallyoperated and ana#ed the sae.

!ndeed, a ere owner and lessor of the facilities used

by a public utility is not a public utility &Providenceand @.R. Co. v. nited (tates, 56 :. *d 5-, 0*D-4+> Chippewa Power Co. v. RailroadCoission of @isconsin, *+0 N.@. -++, -+4, @is. *56 D-*0> Ellis v. !nterstate CoerceCoission, !ll 40 (. Ct. 650, 656, *4/ .(. 545, 0-G. Ed. +46 D-5'. Neither are owners of tan%,refri#erator, wine, poultry and beer cars who supplycars under contract to railroad copanies consideredas public utilities &Crystal Car Gine v. (tate Ta;Coission, /5 p. *d -5, -/ D-56'.

Even the ere foration of a public utilitycorporation does not ipso factocharacteri2e thecorporation as one operatin# a public utility. Theoent for deterinin# the re1uisite :ilipinonationality is when the entity applies for a franchise,certificate or any other for of authori2ation for thatpurpose &People v. uasha, -4 Phil. 444 D-04'.

*. Petitioners further assert that the BGT scheeunder the A#reeents in 1uestion is not reco#ni2ed inthe B$T Gaw and its !pleentin# Rules andRe#ulations.

(ection * of the B$T Gaw defines the B$T and BTschees as follows?

&a' Build3operate3and3transferschee < A contractualarran#eent whereby thecontractor underta%es theconstruction includin# financin#, of

a #iven infrastructure facility, andthe operation and aintenancethereof. The contractor operates thefacility over a fi;ed ter durin#which it is allowed to char#efacility users appropriate tolls, fees,rentals and char#es sufficient toenable the contractor to recover itsoperatin# and aintenancee;penses and its investent in thepro"ect plus a reasonable rate ofreturn thereon. The contractor

transfers the facility to the#overnent a#ency or local#overnent unit concerned at theend of the fi;ed ter which shallnot e;ceed fifty &0+' years. :or theconstruction sta#e, the contractoray obtain financin# fro forei#nandLor doestic sources andLoren#a#e the services of a forei#nandLor :ilipino constructor Dsic?Provided, That the ownershipstructure of the contractor of an

infrastructure faciity whose

operation re)uires a pubic utiity

franchise must be in accordance

with the "onstitution? Provided,however, That in the case ofcorporate investors in the build3operate3and3transfer corporation,the citi2enship of each stoc%holderin the corporate investors shall bethe basis for the coputation of:ilipino e1uity in the saidcorporation? Provided, further,That, in the case of forei#nconstructors Dsic, :ilipino labor


10/25

shall be eployed or hired in thedifferent phases of the constructionwhere :ilipino s%ills are available?Provided, furtherore, that thefinancin# of a forei#n or forei#n3controlled contractor froPhilippine #overnent financin#institutions shall not e;ceed twentypercent &*+Q' of the total cost ofthe infrastructure facility or pro"ect?Provided, finally, That financin#fro forei#n sources shall notre1uire a #uarantee by the=overnent or by #overnent3owned or controlled corporations.The build3operate3and3transferschee shall include a supply3and3operate situation which is acontractual a#reeent whereby thesupplier of e1uipent andachinery for a #iveninfrastructure facility, if the interestof the =overnent so re1uires,operates the facility providin# inthe process technolo#y transfer andtrainin# to :ilipino nationals.

&b' Build3and3transfer schee *oo, p. 0'. At the end of *0 years and when fullpayent shall have been ade to and received byprivate respondent, it shall transfer to )$TC, freefro any lien or encubrances, all its title to, ri#htsand interest in, the pro"ect for only .(. .++&Revised and Restated A#reeent, (ec. .>(uppleental A#reeent, (ec> />*oo, pp. 6/, ./'.

A lease is a contract where one of the parties bindshiself to #ive to another the en"oyent or use of a

thin# for a certain price and for a period which aybe definite or indefinite but not lon#er than -- years&Civil Code of the Philippines, Art. 654'. There is notransfer of ownership at the end of the lease period.But if the parties stipulate that title to the leasedpreises shall be transferred to the lessee at the endof the lease period upon the payent of an a#reedsu, the lease becoes a lease3purchase a#reeent.

:urtherore, it is of no si#nificance that the rentsshall be paid in nited (tates currency, not Philippinepesos. The E)(A GRT !!! Pro"ect is a hi#h priority

pro"ect certified by Con#ress and the NationalEconoic and )evelopent Authority as fallin#under the !nvestent Priorities Plan of =overnent&*oo, pp. 4+34'. !t is, therefore, outside theapplication of the nifor Currency Act &R.A. No.0*-', which reads as follows?

(ec. . < Every provisioncontained in, or ade with respectto, any doestic obli#ation to wit,any obli#ation contracted in thePhilippines which provisions

purports to #ive the obli#ee theri#ht to re1uire payent in #old or


11/25

in a particular %ind of coin orcurrency other than Philippinecurrency or in an aount of oneyof the Philippines easuredthereby, be as it is hereby declareda#ainst public policy, and null,void, and of no effect, and no suchprovision shall be contained in, orade with respect to, anyobli#ation hereafter incurred. Theabove prohibition shall not apply to&a' . . .> &b' transactions affectin#hi#h3priority econoic pro"ects fora#ricultural, industrial and powerdevelopent as ay be deterinedbythe National Econoic Councilwhich are financed by or throu#hforei#n funds> . . . .

4. The fact that the contract for the construction ofthe E)(A GRT !!! was awarded throu#h ne#otiationand before con#ressional approval on 8anuary ** and*4, --* of the Gist of National Pro"ects to beunderta%en by the private sector pursuant to the B$TGaw &*oo, pp. 4+-34*' does not suffice toinvalidate the award.

(ubse1uent con#ressional approval of the listincludin# 7rail3based pro"ects pac%a#ed withcoercial developent opportunities7 &*oo, p.4+' under which the E)(A GRT !!! pro"ects falls,

aounts to a ratification of the prior award of theE)(A GRT !!! contract under the B$T Gaw.

Petitioners insist that the pre1ualifications processwhich led to the ne#otiated award of the contractappears to have been ri##ed fro the very be#innin#to do away with the usual open international publicbiddin# where 1ualified internationally %nownapplicants could fairly participate.

The records show that only one applicant passed thepre1ualification process. (ince only one was left, to

conduct a public biddin# in accordance with (ection0 of the B$T Gaw for that lone participant will be an

absurb and pointless e;ercise &cf.)eloso v.(andi#anbayan, */ (CRA 5-, 6 D--4'.

Contrary to the coents of the E;ecutive (ecretary)rilon, (ection 0 of the B$T Gaw in relation toPresidential )ecree No. 0-5 allows the ne#otiatedaward of #overnent infrastructure pro"ects.

Presidential )ecree No. 0-5, 7Prescribin# Policies,=uidelines, Rules and Re#ulations for =overnent!nfrastructure Contracts,7 allows the ne#otiatedaward of #overnent pro"ects in e;ceptional cases.(ections 5 of the said law reads as follows?

Biddin+. < Construction pro"ectsshall #enerally be underta%en bycontract after copetitive publicbiddin#.Pro0ects may beundertaen by administration or

force account or by ne+otiated

contract ony in e1ceptiona caseswhere time is of the essence, or

where there is ac of )uaified

bidders or contractors, or where

there is concusive evidence that

+reater economy and efficiency

woud be achieved throu+h this

arran+ement, and in accordancewith provision of laws and acts onthe atter, sub"ect to the approvalof the Minister of Public @or%s andTransportation and

Counications, the Minister ofPublic 9i#hways, or the Minister ofEner#y, as the case ay be, if thepro"ect cost is less than P Million,and the President of thePhilippines, upon recoendationof the Minister, if the pro"ect cost isP Million or ore &Ephasissupplied'.

;;; ;;; ;;;

!ndeed, where there is a lac% of 1ualified bidders orcontractors, the award of #overnent infrastructurecontracts ay he ade by ne#otiation. Presidential)ecree No. 0-5 is the #eneral law on #overnentinfrastructure contracts while the B$T Gaw #overnsparticular arran#eents or schees aied atencoura#in# private sector participation in#overnent infrastructure pro"ects. The two laws arenot inconsistent with each other but are inparimateria and should be read to#ether accordin#ly.

!n the instant case, if the pre1ualification process wasactually tainted by foul play, one wonders why noneof the copetin# firs ever brou#ht the atter beforethe PBAC, or intervened in this case before us&cf.Malayan !nte#rated !ndustries Corp. v. Court ofAppeals, *4 (CRA 65+ D--*> Bureau eritas v.$ffice of the President, *+0 (CRA /+0 D--*'.

The challen#ed a#reeents have been approved by

President Raos hiself. Althou#h then E;ecutive(ecretary )rilon ay have disapproved the7A#reeent to Build, Gease and Transfer a Gi#ht RailTransit (yste for E)(A,7 there is nothin# in ourlaws that prohibits parties to a contract frorene#otiatin# and odifyin# in #ood faith the tersand conditions thereof so as to eet le#al, statutoryand constitutional re1uireents. nder thecircustances, to re1uire the parties to #o bac% tostep one of the pre1ualification process would "ust bean idle cereony. seless bureaucratic 7red tape7should be eschewed because it discoura#es private

sector participation, the 7ain en#ine7 for national#rowth and developent &R.A. No. 6-0/, (ec. ',and renders the B$T Gaw nu#atory.

Republic Act No. // reco#ni2es and defines a BGTschee in (ection * thereof as?

&e' Build3lease3and3transfer < Acontractual arran#eent whereby apro"ect proponent is authori2ed tofinance and construct aninfrastructure or developent

facility and upon its copletionturns it over to the #overnent


12/25

a#ency or local #overnent unitconcerned on a lease arran#eentfor a fi;ed period after whichownership of the facility isautoatically transferred to the#overnent unit concerned.

(ection 03A of the law, which e;pressly allows direct

ne#otiation of contracts, provides?

)irect Ne#otiation of Contracts. (antos . )uata, 5 (CRA +5D-60> Adon# . Cheon# (en# =ee, 54 Phil. 54D-**.

5. Gastly, petitioners clai that the a#reeents are#rossly disadvanta#eous to the #overnent becausethe rental rates are e;cessive and private respondentFsdevelopent ri#hts over the 4 stations and the depotwill rob )$TC of the best ters durin# the ostproductive years of the pro"ect.

!t ust be noted that as part of the E)(A GRT !!!pro"ect, private respondent has been #ranted, for a

period of *0 years, e;clusive ri#hts over the depotand the air space above the stations for developentinto coercial preises for lease, sublease,transfer, or advertisin# &(uppleental A#reeent,(ec. >*oo, pp. -3-*'. :or and in consideration ofthese developent ri#hts, private respondent shallpay )$TC in Philippine currency #uaranteedrevenues #enerated therefro in the aounts set forthin the (uppleental A#reeent &(ec. >*oo, p.-4'. !n the event that )$TC shall be unable to collectthe #uaranteed revenues, )$TC shall be allowed todeduct any shortfalls fro the onthly rent due

private respondent for the construction of the E)(AGRT !!! &(uppleental A#reeent, (ec. >*oo,pp. -43-5'. All ri#hts, titles, interests and incoeover all contracts on the coercial spaces shallrevert to )$TC upon e;piration of the *03yearperiod. &(uppleental A#reeent, (ec. >*oo,pp.-3-*'.

The ters of the a#reeents were arrived at after apainsta%in# study by )$TC. The deterination bythe proper adinistrative a#encies and officials whohave ac1uired e;pertise, speciali2ed s%ills and

%nowled#e in the perforance of their functionsshould be accorded respect absent any showin# of


13/25

#rave abuse of discretion &:elipe Osael, 8r. J Co. v.)eputy E;ecutive (ecretary, -+ (CRA 6/4D--+>Board of Medica -ducation v. Afonso, /6(CRA 4+5 D--'.

=overnent officials are presued to perfor theirfunctions with re#ularity and stron# evidence isnecessary to rebut this presuption. Petitioners have

not presented evidence on the reasonable rentals to bepaid by the parties to each other. The atter ofvaluation is an esoteric field which is better left to thee;perts and which this Court is not ea#er tounderta%e.

That the #rantee of a #overnent contract will profittherefro and to that e;tent the #overnent isdeprived of the profits if it en#a#es in the businessitself, is not worthy of bein# raised as an issue. !n allcases where a party enters into a contract with the#overnent, he does so, not out of charity and not to

lose oney, but to #ain pecuniarily.

0. )efinitely, the a#reeents in 1uestion have beenentered into by )$TC in the e;ercise of its#overnental function. )$TC is the priary policy,plannin#, pro#rain#, re#ulatin# andadinistrative entity of the E;ecutive branch of#overnent in the prootion, developent andre#ulation of dependable and coordinated networ%sof transportation and counications systes aswell as in the fast, safe, efficient and reliable postal,transportation and counications services

&Adinistrative Code of -/, Boo% !, Title H,(ec. *'. !t is the E;ecutive departent, )$TC inparticular that has the power, authority and technicale;pertise deterine whether or not a specifictransportation or counication pro"ect is necessary,viable and beneficial to the people. The discretion toaward a contract is vested in the #overnent a#enciesentrusted with that function &Bureau eritas v. $fficeof the President, *+0 (CRA /+0 D--*'.

@9ERE:$RE, the petition is )!(M!((E).

($ $R)ERE)

Beosio and /apunan, ##., concur.

Padia and *e+aado, ##., concurs in the resut.

*omero, #., is on eave.

S)*#+#) O*-$-o$

MENDO"A,J., concurrin#?

! concur in all but Part !!! of the a"ority opinion.

Because ! hold that petitioners do not have standin#to sue, ! "oin to disiss the petition in this case. !write only to set forth what ! understand the #roundsfor our decisions on the doctrine of standin# are and,why in accordance with these decisions, petitionersdo not have the ri#hts to sue, whether as le#islators,ta;payers or citi2ens. As ebers of Con#ress,because they alle#e no infrin#eent of prero#ative asle#islators.1As ta;payers because petitioners alle#eneither an unconstitutional e;ercise of the ta;in# orspendin# powers of Con#ress &Art !, *53*0 and*-''nor an ille#al disburseent of public

oney.3As this Court pointed out inBu+nay"onst. and 2ev."orp. v.3aron,(a party suin# asta;payer 7ust specifically prove that he hassufficient interest in preventin# the ille#ale;penditure of oney raised by ta;ation and that hewill sustain a direct in"ury as a result of theenforceent of the 1uestioned statute or contract. !t isnot sufficient that he has erely a #eneral interestcoon to all ebers of the public.7 !n that case, itwas held that a contract, whereby a local #overnentleased property to a private party with theunderstandin# that the latter would build a ar%et

buildin# and at the end of the lease would transfer thebuildin# of the lessor, did not involve a disburseent

of public funds so as to #ive ta;payer standin# to1uestion the le#ality of the contract. ! see nosubstantial difference, as far as the standin# is ofta;payers to 1uestion public contracts is concerned,between the contract there and the build3lease3transfer &BGT' contract bein# 1uestioned bypetitioners in this case.

Nor do petitioners have standin# to brin# this suit asciti2ens. !n the cases 5in which citi2ens wereauthori2ed to sue, this Court found standin# becauseit thou#ht the constitutional clais pressed fordecision to be of 7transcendental iportance,7 as infact it subse1uently #ranted relief to petitioners byinvalidatin# the challen#ed statutes or #overnentalactions. Thus in the Gotto case/relied upon by thea"ority for upholdin# petitioners standin#, thisCourt too% into account the 7paraount publicinterest7 involved which 7ieasurably affectDedthe social, econoic, and oral well3bein# of the

people . . . and the counter3productive andretro#ressive effects of the envisioned on3line lotterysyste?7Accordin#ly, the Court invalidated thecontract for the operation of lottery.

But in the case at bar, the Court precisely finds theopposite by findin# petitionersF substantivecontentions to be without erit To the e;tenttherefore that a partyFs standin# is affected by adeterination of the substantive erit of the case or apreliinary estiate thereof, petitioners in the case atbar ust be held to be without standin#. This is in

line with our rulin# in3awyers 3ea+ue for a BetterPhiippines v. A)uino8and !n reBermudez9wherewe disissed citi2ensF actions on the #round thatpetitioners had no personality to sue and theirpetitions did not state a cause of action. The holdin#that petitioners did not have standin# followed frothe findin# that they did not have a cause of action.

!n order that citi2ensF actions ay be allowed a partyust show that he personally has suffered soeactual or threatened in"ury as a result of the alle#edlyille#al conduct of the #overnent> the in"ury is fairly

traceable to the challen#ed action> and the in"ury is


14/25

li%ely to be redressed by a favorable action. 16As the.(. (upree Court has held?

Typically, . . . the standin# in1uiryre1uires careful "udiciale;aination of a coplaintFsalle#ation to ascertain whether theparticular plaintiff is entitled to an

ad"udication of the particularclais asserted. !s the in"ury tooabstract, or otherwise notappropriate, to be considered"udicially co#ni2able !s the line ofcausation between the ille#alconduct and in"ury too attenuated!s the prospect of obtainin# relieffro the in"ury as a result of afavorable rulin# too speculativeThese 1uestions and any othersrelevant to the standin# in1uiryust be answered by reference tothe Art !!! notion that federal courtsay e;ercise power only 7in thelast resort, and as a necessity,Chica#o J =rand Trun% R. Co. v.@ellan, 54 ( 44-, 450, 46 GEd /6,* ( Ct 5++ &-*', andonly when ad"udication is7consistent with a syste ofseparated powers and Dthe disputeis one traditionally thou#ht to becapable of resolution throu#h the"udicial process,7 :last v Cohen,4-* ( 4, -/, *+ G Ed *d -5/, ( Ct -5* &-6'. See alley:or#e, 505 (, at 5/*35/4, /+ G Ed*d /++, +* ( Ct /0*.11

TodayFs holdin# that a citi2en, )ua citizen, hasstandin# to 1uestion a #overnent contract undulye;pands the scope of public actions and sweeps awaythe case and controversy re1uireent so carefullyebodied in Art. !!!, 0 in definin# the "urisdictionof this Court. The result is to convert the Court into

an office of obudsan for the ventilation of#enerali2ed #rievances. Consistent with the view that

this case has no erit ! subit with respect thatpetitioners, as representatives of the public interest,have no standin#.

$arvasa, ".#., Bidin, Meo, Puno, Vitu+ and

!rancisco, ##., concur.

DA!IDE, JR.,J., dissentin#?

After wadin# throu#h the record of the vicissitudes ofthe challen#ed contract and evaluatin# the issuesraised and the ar#uents adduced by the parties, !find yself unable to "oint a"ority in the well3writtenponencia of Mr. 8ustice Cailo P. uiason.

! ost respectfully subit that the challen#edcontract is void for at least two reasons? &a' it is an3ultra3vires act of the )epartent of Transportationand Counications &)$TC' since under R.A. 6-0/the )$TC has no authority to enter into a Build3

Gease3and3Transfer &BGT' contract> and &b' evenassuin# ar+uendothat it has, the contract wasentered into without coplyin# with the andatoryre1uireent of public biddin#.

!

Respondents adit that the assailed contract wasentered into under R.A. 6-0/. This law, fittin#lyentitled 7An Act Authori2in# the :inancin#,Construction, $peration and Maintenance of!nfrastructure Pro"ects by the Private (ector, and :or$ther Purposes,7 reco#ni2es only two &*' %inds ofcontractual arran#eents between the private sectorand #overnent infrastructure a#encies? &a' theBuild3$perate3and3Transfer &B$T' schee and &b'the Build3and3Transfer &BT' schee. This conclusionfinds support in (ection * thereof which defines onlythe B$T and BT schees, in (ection 4 whiche;plicitly provides for said schees thus?

(ec. 4Private nitiative innfrastructure. < All #overnent

infrastructure a#encies, includin##overnent3owned and controlled

corporations and local #overnentunits, are hereby authori2ed to enterinto contract with any dulypre1ualified private contractor forthe financin#, construction,operation and aintenance of anyfinancially viable infrastructurefacilities throu+h the buid%operate%and transfer or buid%and%

transfer scheme, sub"ect to theters and conditions hereinafter setforth> &Ephasis supplied'.

and in (ection 0 which re1uires public biddin# ofpro"ects under both schees.

All prior acts and ne#otiations leadin# to theperfection of the challen#ed contract were clearlyintended and pursued for such schees.

A Build3Gease3and3Transfer &BGT' schee is notauthori2ed under the said law, and none of theaforesaid prior acts and ne#otiations were desi#nedfor such unauthori2ed schee. 9ence, the )$TC iswithout any power or authority to enter into the BGTcontract in 1uestion.

The a"ority opinion aintains, however, that since7Dthere is no ention in the B$T Gaw that the B$Tand the BT schees bar any other arran#eent forthe payent by the #overnent of the pro"ect cost,7then 7Dthe law ust not be read in such a way as to

rule outer unduly restrict any variation within theconte;t of the two schees.7 This interpretationwould be correct if the law itself provides a roo forfle;ibility. @e find no such provisions in R.A. No.6-0/ if it intended to include a BGT schee, then itshould have so stated, for contracts of lease are notun%nown in our "urisdiction, and Con#ress hasenacted several laws relatin# to leases. That the BGTschee was never intended as a perissible variation7within the conte;t7 of the B$T and BT schees isconclusively established by the passa#e of R.A. No.// which aends?


15/25

a. (ection * by addin# to the ori#inalB$T and BT schees thefollowin# schees?

erate &B$$'

ansfer &BGT'

3operate &BT$'

perate &CA$'

nd3transfer &)$T'

te3and3transfer &R$T'

nd3operate &R$$'.

b' (ection 4 of R.A. No. 6-0/ bydeletin# therefro the phrase7throu#h the build3operate3and3transfer or build3and3transferschee.7

!!

Public biddin# is andatory in R.A. No. 6-0/.(ection 0 thereof reads as follows?

(ec. 0Pubic Biddin+ of Pro0ects.< pon approval of the pro"ects

entioned in (ection 5 of this Act,the concerned head of the

infrastructure a#ency or local#overnent unit shall forthwithcause to be published, once everywee% for three &4' consecutivewee%s, in at least two &*'newspapers of #eneral circulationand in at least one &' localnewspaper which is circulated inthe re#ion, province, city orunicipality in which the pro"ect isto be constructed a notice invitin#all duly pre1ualified infrastructurecontractors to participate in thepublic biddin# for the pro"ects soapproved. !n the case of a build3operate3and3transfer arran#eent,the contract shall be awarded to thelowest coplyin# bidder based onthe present value of its proposedtolls, fees, rentals, and char#es overa fi;ed ter for the facility to be

constructed, operated, andaintained accordin# to theprescribed iniu desi#n andperforance standards plans, andspecifications. :or this purpose, thewinnin# contractor shall beautoatically #ranted by theinfrastructure a#ency or local#overnent unit the franchise tooperate and aintain the facility,includin# the collection of tolls,fees, rentals> and char#es in

accordance with (ection 6 hereof.

!n the case of a build3and3transferarran#eent, the contract shall beawarded to the lowest coplyin#bidder based on the present valueof its proposed, schedule ofaorti2ation payents for thefacility to be constructed accordin#to the prescribed iniu desi#nand perforance standards, plansand specifications?Provided,however, That a :ilipino

constructor who subits an e1uallyadvanta#eous bid shall be #ivenpreference.

A copy of each build3operate3and3transfer or build3and3transfercontract shall forthwith besubitted to Con#ress for its

inforation.

The re1uireent of public biddin# is not an idlecereony. !t has been aptly said that in our"urisdiction 7public biddin# is the policy and ediuadhered to in =overnent procureent andconstruction contracts under e;istin# laws andre#ulations. !t is the accepted ethod for arrivin# at afair and reasonable price and ensures thatoverpricin#, favoritis, and other anoalouspractices are eliinated or inii2ed. And any=overnent contract entered into without the

re1uired biddin# is null and void and cannotadversely affect the ri#hts of third parties.7&Bartoloe C. :ernande2, 8r., A TREAT!(E $N=$ERNMENT C$NTRACT( N)ERP9!G!PP!NE GA@ *0 Drev. ed. --, citin# "ate1vs.2e+ado Bros., -6 Phil. 46 D-05'.

The $ffice of the President, throu#h then E;ecutive(ecretary :ran%lin )rilon Correctly disapproved thecontract because no public biddin# is strictcopliance with (ection 0 of R.A. No. 6-0/ wasconducted. (ecretary )rilon :urther bluntly stated

that the provision of the !pleentin# Rules of saidlaw authori2in# ne#otiated contracts was of doubtfulle#ality. !ndeed, it is null and void because the lawitself does not reco#ni2e or allow ne#otiatedcontracts.

9owever the a"ority opinion posits the view thatsince only private respondent E)(A GRT waspre1ualified, then a public biddin# would be 7anabsurd and pointless e;ercise.7 ! subit that theandatory re1uireent of public biddin# cannot bele#ally dispensed with siply because only one was

1ualified to bid durin# the pre1ualificationproceedin#s. (ection 0 andates that the B$T or BT


16/25

contract should be awarded 7to the lowest coplyin#bidder,7 which lo#ically eans that there ust atleast be two &*' bidders. !f this iniu re1uireentis not et, then the proposed biddin# should bedeferred and a new pre1ualification proceedin# bescheduled. Even those who were earlier dis1ualifieday by then have 1ualified because they ay have,in the eantie, e;erted efforts to eet all the1ualifications.

This view of the a"ority would open the flood#atesto the ri##in# of pre1ualification proceedin#s or tounholy conspiracies aon# prospective bidders,which would even include dishonest #overnentofficials. They could "ust a#ree, for a certainconsideration, that only one of the 1ualify in orderthat the latter would autoatically corner the contractand obtain the award.

That section 0 adits of no e;ception and that no

biddin# could be validly had with only one bidder isli%ewise conclusively shown by the aendentsintroduced by R.A. No. // Per section / thereof, anew section denoinated as (ection 03A wasintroduced in R.A. No. 6-0/ to allow directne#otiation contracts. This new section reads?

(ec. 03A.2irect $e+otiation 4f"ontracts< )irect ne#otiation,shall be resorted to when there isonly one coplyin# bidder left asdefined hereunder.

&a' !f, afteradvertiseent,only onecontractor appliesforpre1ualificationre1uireents,after which it isre1uired tosubit abidLproposal

whichsubse1uently

found by thea#encyLlocal#overnent unit&G=' to becoplyin#.

&b' !f, afteradvertiseent,

ore than onecontractorapplied forpre1ualificationbut only oneeets thepre1ualificationre1uireents,after which itsubitsbidLproposalwhich is found bythe a#encyLlocal#overnent unit&G=' to becoplyin#,

&c' !f afterpre1ualificationof ore than onecontractor onlyone subits a bidwhich is found bythe a#encyLG=

to be coplyin#.

&d' !f, afterpre1ualification,ore than onecontractor, onlyone subit bidsbut only one isfound by thea#encyLG= tobecoplyin#?Provi

ded, That, any ofthe dis1ualified

prospectivebidder ayappeal thedecisioncontractor of theipleentin#a#encyLG=spre1ualificationbids an awardcoittee withinfifteen &0'wor%in# days tothe head of thea#ency, in case ofnational pro"ectsor to the)epartent ofthe !nterior andGocal=overnent, incase of local

pro"ects fro thedate thedis1ualificationwas ade %nownto thedis1ualifiedbidderProvided,That theipleentin#a#encyLG=sconcerned shouldact on the appeal

within forty3five&50' wor%in#days fro receiptthereof.

Can this aendent be #iven retroactive effect to thechallen#ed contract so that it ay now be considereda perissible ne#otiated contract ! subit that itcannot be R.A. No. // does not provide that itshould be #iven retroactive effect to pre3e;istin#contracts. (ection thereof says that it 7shall ta%eeffect fifteen &0' days after its publication in at least

two &*' newspapers of #eneral circulation.7 !f it were


17/25

the intention of Con#ress to #ive said act retroactiveeffect then it would have so e;pressly provided.Article 5 of the Civil Code provides that 7Dlaws shallhave no retroactive effect, unless the contrary isprovided.7

The presuption is that all laws operateprospectively, unless the contrary clearly appears or

is clearly, plainly, and une1uivocally e;pressed ornecessarily iplied. !n every case of doubt, the doubtwill be resolved a#ainst the retroactive application oflaws. &Ruben E A#palo, (TATT$ROC$N(TRCT!$N **0 D*d ed. --+'. As toaendatory acts, or acts which chan#e an e;istin#statute, (utherland states?

!n accordance with the ruleapplicable to ori#inal acts, it ispresued that provisions added bythe aendent affectin#

substantive ri#hts are intended tooperate prospectively. Provisionsadded by the aendent that affectsubstantive ri#hts will not beconstrued to apply to transactionsand events copleted prior to itsenactent unless the le#islature hase;pressed its intent to that effect orsuch intent is clearly iplied by thelan#ua#e of the aendent or bythe circustances surroundin# itsenactent. & :ran% E. 9orac%, 8r.,

(T9ERGAN)F( (TATTE(AN) (TATT$ROC$N(TRCT!$N 5453546 D-54ed.'.

! vote then to #rant the instant petition and to declarevoid the challen#ed contract and its suppleent.

FELICIANO,J., dissentin#?

After considerable study and effort, and with uchreluctance, ! find ! ust dissent in the instant case. !

a#ree with any of the thin#s set out in the a"ority

opinion written by y distin#uished brother in theCourt uiason,#. At the end of the day, however, !find yself unable to "oin in the resutreached by thea"ority.

! "oin in the dissentin# opinion written by Mr. 8ustice.)avide, 8r> which is appropriately drawn on fairlynarrow #rounds. At the sae tie> ! wish to address

briefly one of the points ade by 8ustice uiason inthe a"ority opinion in his effort to eet thedifficulties posed by )avide 8r.,#.

! refer to the invocation of the provisions ofpresidential )ecree No. 0-5 dated 8une -/entitled? 7Prescribin# policies, =uidelines, Rules andRe#ulations for =overnent !nfrastructureContractsS7 More specifically, the a"ority opinioninvo%es para#raph of (ection 5 of this )e#reewhich reads as follows?

(ec. 5.Biddin+. < Constructionpro"ects shall, #enerally beunderta%en by contract aftercopetitive public biddin#.Pro"ects ay be underta%en byadinistration or force account orby ne#otiated contract only ine;ceptional cases where tie is ofthe essence, or where there is lac%of 1ualified bidders or contractors,or where there is a conclusiveevidence that #reater econoy and

efficiency would be achievedthrou#h this arran#eent, and inaccordance with provisions of lawsand acts on the atter, sub"ect tothe approval of the Ministry ofpublic @or%s, Transportation andCounications, the Minister ofPublic 9i#hways, or the Minister ofEner#y, as the case ay be, if thepro"ect cost is less than P Million,and of the President of thePhilippines, upon the

recoendation of the Minister, if

the pro"ect cost is P Million orore.

;;; ;;; ;;;

! understand the unspo%en theory in the a"orityopinion to be that above (ection 5 and presuablythe rest of Presidential )ecree No. 0-5 continue to

e;ist and to run parallel to the provisions of RepublicAct No. 6-0/, whether in its ori#inal for or asaended by Republic Act No. //.

A principal difficulty with this approach is thatPresidential )ecree No. 0-5 purports to applyto a7#overnent contracts for infrastructure andother construction pro"ects.7 But Republic Act No.6-0/ as aended by Republic Act No. //,relates ony to 7infrastructure pro"ects7 which arefinanced, constructed, operated and maintained 5by

the private sector5 7throu#h the buid6operate%and%

transfer or buid%and%transfer scheme7 underRepublic Act No. 60-/ and under a series of othercomparabe schemesunder Republic Act No. //.!n other words, Republic Act No. 6-0/ and RepublicAct. No. // ust be held, in y view, tobespecia statutesapplicable to a ore liited fieldof 7infrastructure pro"ects7 than the wide3ran#in#scope of application of the+enera statutei.e.,Presidential )ecree No. 0-5. Thus, the hi#hrelevance of the point ade by Mr. 8ustice )avidethat Republic Act No. 6-0/ in specific connectionwith B"T% andB3T type and B3T type of

contractsiposed an un)uaifiedre1uireent ofpublic biddin# set out in (ection 0 thereof.

!t should also be pointed out that under Presidential)ecree No. 0-5, pro"ects ay be underta%en 7byadinistration or force account or by ne#otiatedcontract ony7

&' in e;ceptional cases where tieis of the essence> or

&*' where there is lac% of bidders orcontractors> or


18/25

&4' where there is a conclusiveevidence that #reater econoy andefficiency would be achievedthrou#h these arran#eents, and inaccordance with provisionDs oflaws and acts on the atter.

!t ust, upon the one hand, be noted that the special

law Republic Act No. 6-0/ ade absolutely nomention of ne+otiated contractsbein# peritted todisplace the re1uireent of public biddin#. pon theother hand, (ection 03a, inserted in Republic Act No.6-0/ by the aendin# statute Republic Act No. //,does notpurport to authori2e direct ne#otiation ofcontractssituationswhere there is a lac% of pre31ualified contractors or, coplyin# bidders. Thus,even under the aended special statute, enterin# intocontracts by ne#otiation is notperissiblein theother 789 cate+ories of cases referred to in Section :

of Presidentia 2ecree $o. ;>;?, Theprovision of Republic Act No. //. The assailed

contract was entered into before Republic Act. No.// was enacted.

The difficulties. of applyin# the provisions ofPresidential )e#ree No. 0-5 to the Edsa GRT3typeof contracts are a##ravated when one considers thedetailed 7!pleentin# Rules and Re#ulations asaended April -7 issued under that Presidential)ecree. 1:or instance?

!B D*.0.* *.5.*By $e+otiated"ontract

;;; ;;; ;;;

a. !n ties ofeer#enciesarisin# fronatural calaitieswhere iediateaction is

necessary toprevent iinentloss of life andLorproperty.

b. :ailure toaward thecontract aftercompetitive

pubic

biddin+for validcause or causes

Dsuch as wherethe pricesobtained throu#hpublic biddin#are all above theAAE and thebidders refuse toreduce theirprices to theAAE.

!n these cases, biddin# ay be

underta%en throu#h sealed canvassof at least three &4' 1ualifiedcontractors. Authority to ne#otiatecontracts for pro"ects under thesee;ceptional cases shall be sub"ectto prior approval by heads ofa#encies within their liits ofapprovin# authority.

c. @here thesub"ect pro"ect isad"acent or

conti#uous to anon3#oin# pro"ect

and it could beeconoicallyprosecuted by thesae contractorprovided that hehas no ne#ativeslippa#e and hasdeonstrated asatisfactoryperforance.&Ephasissupplied'.

Note that there is no reference at all in thesePresidential )ecree No. 0-5 !pleentin# Rulesand Re#ulations to absence of pre31ualifiedapplicants and bidders as "ustifyin# ne#otiation ofcontracts as distin#uished fro re1uirin# publicbiddin# or a second public biddin#.

Note also the followin# provision of the sae!pleentin# Rules and Re#ulations?

!B Pre)uaification

Thefoowin+ may be becomecontractors for +overnment

pro0ects?

!iipino

a.Citi2ens &sin#le proprietorship'

b.Partnership ofcorporation duyor+anized under the aws of the

Phiippines, and at east seventy

five percent 7>


19/25

contract, shall for purposes ofbiddin#Ltenderin# coply with G$!64+, and, aside fro bein#currently and properly accreditedby the Philippine ContractorsAccreditation Board, shall coplywith the provisions of R.A. 5066,provided that0oint ventures inwhich !iipino ownership is ess

than seventy five percent 7 >


20/25


Manila

(EC$N) )!!(!$N

G.R. No. 1195'8 M#+0 '/, 199

PHILIPPINE AIRLINES, INC.,petitioner,vs.CI!IL AERONAUTICS BOARD #$% GRAND

INTERNATIONAL AIR7AS, INC., respondents.

TORRES, JR.,J.:

This (pecial Civil Action for "ertiorariandProhibition under Rule 60 of the Rules of Court see%sto prohibit respondent Civil Aeronautics Board froe;ercisin# "urisdiction over private respondentFsApplication for the issuance of a Certificate of PublicConvenience and Necessity, and to annul and setaside a teporary operatin# perit issued by theCivil Aeronautics Board in favor of =rand!nternational Airways &=randAir, for brevity'allowin# the sae to en#a#e in scheduled doesticair transportation services, particularly the Manila3Cebu, Manila3)avao, and converse routes.

The ain reason subitted by petitioner PhilippineAirlines, !nc. &PAG' to support its petition is the factthat =randAir does not possess a le#islative franchiseauthori2in# it to en#a#e in air transportation servicewithin the Philippines or elsewhere. (uch franchiseis, alle#edly, a re1uisite for the issuance of aCertificate of Public Convenience or Necessity by therespondent Board, as andated under (ection ,Article H!! of the Constitution.

Respondent =randAir, on the other hand, posits that a

le#islative franchise is no lon#er a re1uireent forthe issuance of a Certificate of Public Convenience

and Necessity or a Teporary $peratin# Perit,followin# the CourtFs pronounceents in the caseofAbano vs.*eyes,1as restated by the "ourt ofAppeas in Avia !iipinas nternationa vs. "iviAeronautics Board'and Sian+an Airways,nc. vs. 'rand nternationa Airways, nc., and the9on. Civil Aeronautics Board. 3

$n Noveber *5, --5, private respondent =randAirapplied for a Certificate of Public Convenience andNecessity with the Board, which application wasdoc%eted as CAB Case No. EP3*/. (Accordin#ly,the Chief 9earin# $fficer of the CAB issued a Noticeof 9earin# settin# the application for initial hearin#on )eceber 6, --5, and directin# =randAir toserve a copy of the application and correspondin#notice to all scheduled Philippine )oesticoperators. $n )eceber 5, --5, =randAir filed itsCopliance, and re1uested for the issuance of aTeporary $peratin# Perit. Petitioner, itself theholder of a le#islative franchise to operate airtransport services, filed an $pposition to theapplication for a Certificate of Public Convenienceand Necessity on )eceber 6, --0 on thefollowin# #rounds?

A. The CAB has no "urisdiction tohear the petitionerFs applicationuntil the latter has first obtained afranchise to operate fro Con#ress.

B. The petitionerFs application is

deficient in for and substance inthat?

. Theapplication doesnot indicate aroute structureincludin# acoputation oftrun%line,secondary andrural available

seat %iloeters&A(K' which

shall always beaintained at aonthly level atleast 0Q and *+Qof the A(Koffered into andout of theproposed base ofoperations for

rural andsecondary,respectively.

*. !t does notcontain apro"ectLfeasibilitystudy, pro"ectedprofit and lossstateents,pro"ected balancesheet, insurancecovera#e, list ofpersonnel, list ofspare partsinventory, tariffstructure,docuentssupportive offinancialcapacity, routefli#ht schedule,contracts onfacilities&han#ars,aintenance, lot'etc.

C. Approval of petitionerFsapplication would violate the e1ualprotection clause of theconstitution.

). There is no ur#ent need anddeand for the services applied for.


21/25

E. To #rant petitionerFs applicationwould only result in ruinouscopetition contrary to (ection5&d' of R.A. //6. 5

At the initial hearin# for the application, petitionerraised the issue of lac% of "urisdiction of the Board tohear the application because =randAir did notpossess a le#islative franchise.

$n )eceber *+, --5, the Chief 9earin# $fficer ofCAB issued an $rder denyin# petitionerFs$pposition. Pertinent portions of the $rder read?

PAG alle#es that the CAB has no"urisdiction to hear the petitionerFsapplication until the latter has firstobtained a franchise to operatefro Con#ress.

The Civil Aeronautics Board has"urisdiction to hear and resolve theapplication. !nAvia !iipinavs."AB, CA =.R. No. *4460, it hasbeen ruled that under (ection + &c'&!' of R.A. //6, the Boardpossesses this specific power andduty.

!n view thereof, the opposition ofPAG on this #round is herebydenied.

($ $R)ERE).

Meantie, on )eceber **, --5, petitioner thistie, opposed private respondentFs application for ateporary perit aintainin# that?

. The applicant does not possessthe re1uired fitness and capabilityof operatin# the services appliedfor under RA //6> and,

*. Applicant has failed to prove thatthere is clear and ur#ent publicneed for the services applied for./

$n )eceber *4, --5, the Board proul#atedResolution No. -&-*' approvin# the issuance of aTeporary $peratin# Perit in favor of =randAir for a period of three onths, i.e., fro)eceber **, --5 to March **, --5. Petitioneroved for the reconsideration of the issuance of theTeporary $peratin# Perit on 8anuary , --0,but the sae was denied in CAB Resolution No. +*&-0' on :ebruary *, --0. 8!n the said Resolution, theBoard "ustified its assuption of "urisdiction over=randAirFs application.

@9EREA( , the CAB isspecifically authori2ed under(ection +3C &' of Republic ActNo. //6 as follows?

&c' The Board shall have thefollowin# specific powers andduties?

&' !n accordance with theprovision of Chapter ! of this Act,to issue, deny, aend revise, alter,odify, cancel, suspend or revo%e,in whole or in part, upon petitioner3coplaint, or upon its owninitiative, any teporary operatin#

perit or Certificate of PublicConvenience and Necessity>Provided, however> that in the caseof forei#n air carriers, the peritshall be issued with the approval ofthe President of the Republic of thePhilippines.

@9EREA(, such authority wasaffired inPA3 vs. "AB, &*4(CRA --*', wherein the (upreeCourt held that the CAB can evenon its own initiative, #rant a T$Peven before the presentation ofevidence>

@9EREA(, ore recently,Avia!iipinas vs. "AB, &CA3=R No.*4460', proul#ated on $ctober4+, --, held that in accordancewith its andate, the CAB canissue not only a T$P but also aCertificate of Public Convenienceand Necessity &CPCN' to a1ualified applicant therefor in theabsence of a le#islative franchise,citin# therein as basis the decisionofAbano vs.*eyes&/0 (CRA*65' which provides &inter aia'that?

a' :ranchises by Con#ress are notre1uired before each and everypublic utility ay operate when thelaw has #ranted certainadinistrative a#encies the powerto #rant licenses for or to authori2ethe operation of certain publicutilities>

b' The Constitutional provision inArticle H!!, (ection that theissuance of a franchise, certificateor other for of authori2ation forthe operation of a public utilitydoes not necessarily iply thatonly Con#ress has the power to#rant such authori2ation since ourstatute boo%s are replete with laws#rantin# specified a#encies in theE;ecutive Branch the power toissue such authori2ation for certain

classes of public utilities.


22/25

@9EREA(, E;ecutive $rder No.*- which too% effect on **8anuary --0, provides in (ection*. that a iniu of two &*'operators in each routeLlin% shall beencoura#ed and that routesLlin%spresently serviced by only one &'operator shall be open for entry toadditional operators.

RE($GE), &T'9ERE:$RE, thatthe Motion for Reconsiderationfiled by Philippine Airlines on8anuary +0, --0 on the =rant bythis Board of a Teporary$peratin# Perit &T$P' to =rand!nternational Airways, !nc. alle#in#aon# others that the CAB has nosuch "urisdiction, is hereby)EN!E), as it hereby denied, inview of the fore#oin# andconsiderin# that the #rounds reliedupon by the ovant are notindubitable.

$n March *, --0, upon otion by privaterespondent, the teporary perit was e;tended for aperiod of si; &6' onths or up to (epteber **, --0.

9ence this petition, filed on April 4, --0.

Petitioners ar#ue that the respondent Board acted

beyond its powers and "urisdiction in ta%in#co#ni2ance of =randAirFs application for the issuanceof a Certificate of Public Convenience and Necessity,and in issuin# a teporary operatin# perit in theeantie, since =randAir has not been #ranted anddoes not possess a le#islative franchise to en#a#e inscheduled doestic air transportation. A le#islativefranchise is necessary before anyone ay en#a#e inair transport services, and a franchise ay only be#ranted by Con#ress. This is the eanin# #iven bythe petitioner upon a readin# of (ection , ArticleH!!,9and (ection , Article !, 16of the Constitution.

To support its theory, PAG subits $pinion No. 64,(. -- of the )epartent of 8ustice, which reads?

)r. Arturo C. CoronaE;ecutive )irectorCivil Aeronautics BoardPPG Buildin#, +++ .N. AvenueErita, Manila

(ir?

This has reference to your re1uestfor opinion on the necessity of ale#islative franchise before theCivil Aeronautics Board &7CAB7'ay issue a Certificate of PublicConvenience and Necessity andLorperit to en#a#e in air coerceor air transportation to anindividual or entity.

Oou state that durin# the hearin# onthe application of Cebu Air for acon#ressional franchise, the ouse"ommittee on "orporations and

!ranchises contended that under

the present "onstitution, the "AB

may not issue the abovestated

certificate or permit, uness the

individua or entity concerned

possesses a e+isative franchise.Oou believe otherwise, however,

for the reason that under R.A. No.//6, as aended, the CAB ise;plicitly epowered to issueoperatin# perits or certificates ofpublic convenience and necessityand that this statutory provision isnot inconsistent with the currentcharter.

@e concur with the view e;pressedby the 9ouse Coittee onCorporations and :ranchises. !n anopinion rendered in favor of yourpredecessor3in3office, this)epartent observed that, it can beconferred only by the lawa%in#authority &/ @ and P, pp. 6-36-/'. The latter is adinistrativeand re#ulatory in character &!n reApplication of :ort Croo%3BellevueBoulevard Gine, *4 N@ **4'> it is#ranted by an adinistrativea#ency, such as the Public (erviceCoission Dnow Board ofTransportation, in the case of landtransportation, and the CivilAeronautics Board, in case of airservices. @hile a le#islativefranchise is a pre3re1uisite to a#rant of a certificate of publicconvenience and necessity to anairline copany, such franchisealone cannot constitute theauthority to coence ope

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