Francisco V TRB

6/23/2016
G.R.No.166910
RepublicofthePhilippines
SUPREMECOURT
Manila
ERNESTOB.FRANCISCO,JR.
andJOSEMA.O.HIZON,
Petitioners,
versus
TOLLREGULATORYBOARD,
PHILIPPINENATIONAL
CONSTRUCTION
CORPORATION,MANILA
NORTHTOLLWAYS
CORPORATION,BENPRES
HOLDINGSCORPORATION,
FIRSTPHILIPPINE
INFRASTRUCTURE
DEVELOPMENT
CORPORATION,TOLLWAY
MANAGEMENT
CORPORATION,PNCCSKYWAY
CORPORATION,CITRAMETRO
MANILATOLLWAYS
CORPORATIONand
HOPEWELLCROWN
INFRASTRUCTURE,INC.,
Respondents.
xx
HON.IMEER.MARCOS,
RONALDOB.ZAMORA,
CONSUMERSUNIONOFTHE
PHILIPPINES,INC.,QUIRINOA.
MARQUINEZ,HON.LUISA.
ASISTIO,HON.ERICOBASILIO
A.FABIAN,HON.RENATOKA
RENEB.MAGTUBO,HON.
RODOLFOG.PLAZA,HON.
ANTONIOM.SERAPIO,HON.
EMMANUELJOELJ.
VILLANUEVA,HON.ANIBAN
http://sc.judiciary.gov.ph/jurisprudence/2010/october2010/166910.htm
ENBANC
G.R.No.166910
Present:
CORONA,CJ,
CARPIO,
CARPIOMORALES,
VELASCO,JR.,
NACHURA,
LEONARDODECASTRO,
BRION,
PERALTA,
BERSAMIN,
DELCASTILLO,
ABAD,*
VILLARAMA,JR.,
PEREZ,
MENDOZA,and
SERENO,JJ.
G.R.No.169917
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G.R.No.166910
NGMGAMANGGAGAWASA
AGRIKULTURA(AMA),INC.,
ANIBANNGMGAMAGSASAKA,
MANGINGISDAAT
MANGGAGAWASA
AGRIKULTURAKATIPUNAN,
INC.,KAISAHANNGMGA
MAGSASAKASA
AGRIKULTURA,INC.,KILUSAN
NGMANGAGAWANG
MAKABAYAN,
Petitioners,
versus
TheREPUBLICOFTHE
PHILIPPINES,actingbyand
throughtheTOLLREGULATORY
BOARD,MANILANORTH
TOLLWAYSCORPORATION,
PHILIPPINENATIONAL
CONSTRUCTION
CORPORATION,andFIRST
PHILIPPINEINFRASTRUCTURE
DEVELOPMENTCORP.,
Respondents.
xx
GISINGKABATAAN
MOVEMENT,INC.,BARANGAY
COUNCILOFSANANTONIO,
MUNICIPALITYOFSAN
PEDRO,LAGUNA[asRepresented
byCOUNCILORCARLONG.
AMBAYEC],andYOUNG
PROFESSIONALSAND
ENTREPRENEURSOFSAN
PEDRO,LAGUNA
Petitioners,
versus
THEREPUBLICOFTHE
PHILIPPINES,actingthroughthe
TOLLREGULATORYBOARD
G.R.No.173630
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G.R.No.166910
(TRB),PHILIPPINENATIONAL
CONSTRUCTION
CORPORATION(PNCC),
Respondents.
xx
THEREPUBLICOFTHE
PHILIPPINES,representedbythe
TOLLREGULATORYBOARD,
Petitioner,
versus
G.R.No.183599
Promulgated:
October19,2010
YOUNGPROFESSIONALSAND
ENTREPRENEURSOFSAN
PEDRO,LAGUNA,
Respondent.
xx
DECISION
VELASCO,JR.,J.:
Before us are four petitions the first three are special civil actions under Rule 65,
assailing and seeking to nullify certain statutory provisions, presidential actions and
implementing orders, toll operationrelated contracts and issuances on the construction,
maintenanceandoperationofthemajortollwaysystemsinLuzon.Thepetitionslikewiseseek
to restrain and permanently prohibit the implementation of the allegedly illegal toll fee rate
hikesfortheuseoftheNorthLuzonExpressway(NLEX),SouthLuzonExpressway(SLEX)
andtheSouthMetroManilaSkyway(SMMS).Thefourth,apetitionforreviewunderRule45,
seekstoannulandsetasidethedecisiondatedJune23,2008oftheRegionalTrialCourt(RTC)
ofPasig,inSCANo.3138PSG,enjoiningtheoriginaltolloperatingfranchiseefromcollecting
tollfeesintheSLEX.
ByResolutionofMarch20,2007,theCourtorderedtheconsolidationofthefirstthree
petitions,docketedasG.R.Nos.166910,169917and173630,respectively.Thefourthpetition,
G.R.No.183599,wouldlaterbeorderedconsolidatedwiththeearlierthreepetitions.
THEFACTS
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Theantecedentfactsareasfollows
OnMarch31,1977,thenPresidentFerdinandE.MarcosissuedPresidentialDecreeNo.
[1]
(P.D.) 1112, authorizing the establishment of toll facilities on public improvements. This
issuance, in its preamble, explicitly acknowledged the huge financial requirements and the
necessity of tapping the resources of the private sector to implement the governments
infrastructure programs. In order to attract private sector involvement, P.D. 1112 allowed the
collectionoftollfeesfortheuseofcertainpublicimprovementsthatwouldallowareasonable
rateofreturnoninvestments.Thesamedecreecreatedthe TollRegulatoryBoard(TRB)and
invested it under Section 3 (a) (d) and (e) with the power to enter, for the Republic, into
contracts for the construction, maintenance and operation of tollways, grant authority to
operate a toll facility, issue therefor the necessary Toll Operation Certificate (TOC) and fix
initialtollrates,and,fromtimetotime,adjustthesameafterduenoticeandhearing.
Onthesamedate,P.D.1113wasissued,grantingtothePhilippineNationalConstruction
Corporation (PNCC), then known as the Construction and Development Corporation of the
Philippines(CDCP),foraperiodofthirtyyearsfromMay1977oruptoMay2007afranchise
to construct, maintain and operate toll facilities in the North Luzon and South Luzon
Expressways, with the right to collect toll fees at such rates as the TRB may fix and/or
authorize.Particularly,Section1ofP.D.1113delineatesthecoverageoftheexpresswaysfrom
Balintawak, Caloocan City to Carmen, Rosales, Pangasinan and from Nichols, Pasay City to
Lucena,Quezon.Andbecausethefranchiseisnotselfexecuting,asitwasinfactmadesubject,
under Section 3 of P.D. 1113, to such conditions as may be imposed by the Board in an
appropriatecontracttobeexecutedforsuchpurpose,TRBandPNCCsignedinOctober1977,
aTollOperationAgreement(TOA)ontheNorthLuzonandSouthLuzonTollways,providing
for the detailed terms and conditions for the construction, maintenance and operation of the
[2]
expressway.
OnDecember22,1983,P.D.1894wasissuedthereinfurthergrantingPNCCafranchise
over the Metro Manila Expressway (MMEX), and the expanded and delineated NLEX and
SLEX.Particularly,PNCCwasgrantedtheright,privilegeandauthoritytoconstruct,maintain
andoperateanyandallsuchextensions,linkagesorstretches,togetherwiththetollfacilities
appurtenant thereto, from any part of the North Luzon Expressway, South Luzon Expressway
and/or Metro Manila Expressway and/or to divert the original route and change the original
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endpointsoftheNorthLuzonExpresswayand/orSouthLuzonExpresswayasmaybeapproved
[3]
by the [TRB]. Under Section 2 of P.D. 1894, the franchise granted the [MMEX] and all
extensions, linkages, stretches and diversions after the approval of the decree that may be
constructed after the approval of this decree [on December 22, 1983] shall likewise have a
termofthirty(30)years,commencingfromthedateofcompletionoftheproject.
AsexpresslysetoutinP.D.1113andreiteratedinP.D.1894,PNCCmaysellorassignits
[4]
[5]
franchise thereunder granted or cede the usufruct thereof upon the Presidents approval.
This same provision on franchise transfer and cession of usufruct is likewise found in P.D.
[6]
1112.
[7]
Thencamethe1987Constitutionwithitsfranchiseprovision.
In 1993, the Government Corporate Counsel (GCC), acting on PNCCs request, issued
[8]
[9]
OpinionNo.224,s.1993, lateraffirmedbytheSecretaryofJustice, holdingthatPNCC
may, subject to certain clearance and approval requirements, enter into a joint venture (JV)
agreement(JVA)withprivateentitieswithoutgoingintopublicbiddingintheselectionofits
JVpartners.PNCCsquerywasevidentlypromptedbytheneedtoseekoutalternativesources
offinancingforexpandingandimprovingexistingexpressways,andtolinkthemtoeconomic
zonesinthenorthandtotheCALABARZONareainthesouth.
MOUFORTHECONSTRUCTION,REHABILITATION
ANDEXPANSIONOFEXPRESSWAYS
On February 8, 1994, the Department of Public Works and Highways (DPWH), TRB,
PNCC, Benpres Holdings Corporation (Benpres) and First Philippine Holdings Corporation
(FPHC), among other private and government entities/agencies, executed a Memorandum of
Understanding (MOU) envisaged to open the door for the entry of private capital in the
rehabilitation, expansion (to Subic and Clark) and extension, as flagship projects, of the
expressways north of Manila, over which PNCC has a franchise. To carry out their
undertakingsundertheMOU,BenpresandFPHCformed,astheirinfrastructureholdingarm,
theFirstPhilippineInfrastructureandDevelopmentCorporation(FPIDC).
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ConsequenttotheMOUexecution,PNCCenteredintofinancialand/ortechnicalJVAs
withprivateentities/investorsforthetolloperationofitsfranchisedareasfollowingwhatmay
beconsideredasastandardpattern,viz.:(a)afteraJVAisconcludedandtheusualgovernment
approval of the assignment by PNCC of the usufruct in the franchise under P.D. 1113, as
amended,secured,anewJVcompanyisspecificallyformedtoundertakeadefinedtollroad
project(b)theRepublicofthePhilippines,throughtheTRB,asgrantor,PNCC,asoperator,
andthenewcorporation,asinvestor/concessionaire,withitslender,asthecasemaybe,then
executeaSupplementalTollOperationAgreement(STOA)toimplementtheTOApreviously
issuedand(c)oncetherequisiteSTOAapprovalisgiven,projectprosecutionstartsandupon
thecompletionofthetollroadprojectorofadivisiblephasethereof,theTRBfixesorapproves
the initial toll rate after which, it passes a board resolution prescribing the periodic toll rate
adjustment.
The STOA defines the scope of the road project coverage, the terminal date of the
concession,andincludesprovisionsoninitialtollrateandabuiltinformulaforadjustmentof
toll rates, investment recovery clauses and contract termination in the event of the
concessionaires,PNCCsorTRBsdefault,asthecasemaybe.
Thefollowingeventsortransactions,involvingthepersonalitiesasindicated,transpired
withrespecttothefollowingprojects:
THESOUTHMETROMANILASKYWAY(SMMS)
(BUENDIABICUTANELEVATEDSTRETCH)PROJECT
PNCCenteredintoaJVpartnershiparrangementwithP.T.Citra,anIndonesiancompany,
andcreated,fortheSMMSproject,theCitraMetroManilaTollwaysCorporation(CMMTC).
On November 27, 1995, TRB, PNCC and CMMTC executed a STOA for the SMMS
project (CITRA STOA).And onApril 7, 1996, then President Fidel V. Ramos approved the
CITRASTOA.
Phase I of the SMMS project the Bicutan to Buendia elevated expressway stretch was
completed in December 1998, and the consequent initial toll rates for its use implemented a
monthafter.OnNovember26,2004,theTRBpassed ResolutionNo.200453, approving the
periodictollrateadjustmentfortheSMMS.
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THE NLEX EXPANSION PROJECT (REHABILITATED AND WIDENED NLEX, SUBIC EXPRESSWAY,
CIRCUMFERENTIALROADC5)
InreplytothequeryofthethenTRBChairman,theDepartmentofJustice(DOJ)issued
DOJ Opinion No. 79, s. of 1994, echoing an earlier opinion of the GCC, that the TRB can
implementtheNLEXexpansionprojectthroughaJVschemewithprivateinvestorspossessing
therequisitetechnicalandfinancialcapabilities.
On May 16, 1995, then President Ramos approved the assignment of PNCCs
usufructuary rights as franchise holder to a JV company to be formed by PNCC and FPIDC.
PNCCandFPIDCwouldlaterinkaJVAfortherehabilitationandmodernizationoftheNLEX
referred in certain pleadings as the North Luzon Tollway project.
[10]
The Manila North
TollwaysCorporation(MNTC)wasformedforthepurpose.
OnApril30,1998,theRepublic,throughtheTRB,PNCCandMNTC,executedaSTOA
for the North Luzon Tollway project (MNTC STOA) in which MNTC was authorized, inter
alia,tosubcontracttheoperationandmaintenanceoftheproject,providedthatthemajorityof
theoutstandingsharesofthecontractorshallbeownedbyMNTC. TheMNTCSTOAcovers
three phases comprising of ten segments, including the rehabilitated and widened NLEX, the
[11]
Subic Expressway and the circumferential Road C5.
The STOA is to be effective for
thirty years, reckoned from the issuance of the toll operation permit for the last completed
phase or until December 31, 2030, whichever is earlier. The Office of the President (OP)
approvedtheSTOAonJune15,1998.
On August 2, 2000, pursuant to the MNTC STOA, the Tollways Management
Corporation(TMC)formerlyknownastheManilaNorthTollwaysOperationandMaintenance
Corporationwas created to undertake the operation and maintenance of the NLEX tollway
facilities,interchangesandrelatedworks.
On January 27, 2005, the TRB issued Resolution No. 200504 approving the initial
authorizedtollratesfortheclosedandflattollsystemsapplicabletothenewNLEX.
THESOUTHLUZONEXPRESSWAYPROJECT(NICHOLSTOLUCENACITY)
FortheSLEXexpansionproject,PNCCandHopewellHoldingsLimited(HHL),asJV
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partners, executed a Memorandum of Agreement (MOA),
[12]
which eventually led to the
formation of a JV company Hopewell Crown Infrastructure, Inc. (HCII), now MTD Manila
Expressways, Inc., (MTDME). And pursuant to the PNCCMTDME JVA, the South Luzon
Tollway Corporation (SLTC) and the Manila Toll Expressway Systems, Inc. (MATES) were
incorporated to undertake the financing, construction, operation and maintenance of the
resultingProjectTollRoadsformingpartoftheSLEX.Thetollroadprojectsaredivisibletoll
sectionsorsegments,eachsegmentdefinedastoitsstartingandendpointsandeachwiththe
corresponding distance coverage. The proposed JVA, as later amended, between PNCC and
MTDMEwasapprovedbytheOPonJune30,2000.
[13]
Eventually,oronFebruary1,2006,aSTOA
forthefinancing,design,construction,
lane expansion and maintenance of the Project Toll Roads (PTR) of the rehabilitated and
improved SLEX was executed by and among the Republic, PNCC, SLTC, as investor, and
MATES,asoperator.Tobeprecise,thePTRs,undertheSTOA,compriseandcontemplatedthe
full rehabilitation and/or roadway widening of the following existing toll roads or facilities:
PTR1thatportionofthetollwaycommencingattheendofSouthMMSkywaytotheFilinvest
exitatAlabang(1242km)PTR2thetollwayfromAlabangtoCalamba,Laguna(27.28km)
PTR3thetollwayfromCalambatoSto.Tomas,Batangas(7.6km)andPTR4thetollwayfrom
[14]
Sto.TomastoLucenaCity(54.27km).
Under Clause 6.03 of the STOA, the Operator, after substantially completing a TPR,
shall file an application for a Toll Operation Permit over the relevant completed TPR or
segment,whichshallincludearequestforareviewandapprovalbytheTRBofthecalculation
ofthenewcurrentauthorizedtollrate.
G.R.NO.166910
PetitionersFranciscoandHizon,astaxpayersandexpresswayusers,seektonullifythe
variousSTOAsadvertedtoaboveandthecorrespondingTRBresolutions,i.e.Res.Nos.2004
53and200504,fixinginitialratesand/orapprovingperiodictollrateadjustmentstherefor.To
the petitioners, the STOAs and the toll ratefixing resolutions violate the Constitution in that
theyveritablyimposeonthepublictheburdenoffinancingtollwaysbywayofexorbitantfees
andthusdeprivingthepublicofpropertywithoutdueprocess.TheseSTOAsarealsoallegedto
beinfirmastheyeffectivelyawardedpurportedbuildoperatetransfer(BOT)projectswithout
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publicbiddinginviolationoftheBOTLaw(R.A.6957,asamendedbyR.A.7718).
PetitionerslikewiseassailtheconstitutionalityofSections3(a)and(d)ofP.D.1112in
relation to Section 8 (b) of P.D. 1894 insofar as they vested the TRB, on one hand, toll
operationawardingpowerwhile,ontheotherhand,grantingitalsothepowertoissue,modify
andpromulgatetollratecharges.TheTRB,sopetitionersbemoan,cannotbeanawardingparty
ofaTOAand,atthesametime,betheregulatorofthetollwayindustryandanadjudicatorof
rateexactionsdisputes.
Additionally, petitioners also seek to nullify certain provisions of P.D. 1113 and P.D.
1894,whichuniformlygrantthePresidentthepowertoapprovethetransferorassignmentof
usufruct or the rights and privileges thereunder by the tollway operator to third parties,
particularly the transfer effected by PNCC to MNTC. As argued, the authority to approve
[15]
partakesofanexerciseoflegislativepowerunderArticleVI,Section1oftheConstitution.
In the meantime, or on April 8, 2010, the TRB issued a Certificate of Substantial

[16]
Completion
with respect to PTR 1 (AlabangFilinvest stretch) and PTR 2 (Alabang
Calambasegments)ofSLEX,signifyingthecompletionofthefullrehabilitation/expansionof
both segments and the linkages/interchanges in between pursuant to the requirements of the
corresponding STOA. TRB on even date issued aToll Operation Permit in favor of MATES
[17]
over said PTRs 1 and 2.
Accordingly, upon due application, the TRB approved the
[18]
publicationofthetollratematrixforPTRs1and2,theratetotakeeffectonJune30,2010.
Theimplementationofthepublishedratewould,however,bepostponedtoAugust2010.
On July 5, 2010, petitioner Francisco filed a Supplemental Petition with prayer for the
issuance of a temporary restraining order (TRO) and/or status quo order focused on the
impendingcollectionofwhatwasperceivedtobetollrateincreasesintheSLEX.Theassailed
adjustments were made public in a TRB notice of toll rate increases for the SLEX from
AlabangtoCalambaonJune6,2010,andweresupposedtohavebeenimplementedonJune
30,2010.OnAugust13,2010,theCourtgrantedthedesiredTRO,enjoiningtherespondentsin
theconsolidatedcasesfromimplementingthetollrateincreasesintheSLEX.
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In their Consolidated Comment/Opposition to the Supplemental Petition, respondents

SLTCetal.,averthatthedisputedratesareactuallyinitialandopeningrates,notanincreaseor
adjustment of the prevailing rate, for the new expanded and rehabilitated SLEX. In fine, the
newtollratesare,perSLTC,foranewandupgradedfacility,i.e.theaforementionedProject
TollRoads1and2putuppursuanttothe2006RepublicPNCCSLTCMATESSTOAadverted
to.
G.R.NO.169917
Whiletheyraise,forthemostpart,thesameissuesarticulatedinG.R.No.166910,such
as the public bidding requirement, the power of the President to approve the assignment of
PNCCsusufructuaryrightstocover(aspetitionersImeeR.Marcos,etal.,wouldstress)even
the assignment of the expressway from Balintawak to Tabang, the virtual amendment and
extension of a statutory franchise by way of administrative action (e.g., the execution of a
STOAorissuanceofaTOC),petitionersin G.R.No.169917someofthemthenandstillare
membersoftheHouseofRepresentativeshave,astheirmainfocus,theNorthLuzonTollway
projectandtheagreementsanddevicesenteredinrelationtherewith.
PetitionersalsoassailtheMNTCSTOAonthegroundthatitgrantedthelenders(Asian
DevelopmentBank/WorldBank)ofMNTC,asprojectconcessionaire,theunrestrictedrightsto
appointasubstituteentitytoreplaceMNTCincaseofanMNTCDefaultbeforeprepaymentof
the loans, while also granting said lenders, in appropriate cases, the option to extend the
concessionorfranchiseforaperiodnotexceedingfiftyyearscoincidingwiththefullpayment
oftheloans.
G.R.NO.173630
Apartfromthosetakenupintheotherpetitionsforcertiorariandprohibition,petitioners,
inG.R.No.173630,whosemembersandconstituentsallegedlytraverseSLEXdaily,averthat
TRB ought to have applied the provisions of R.A. 6957 [BOT Law] and R.A. 9184
[GovernmentProcurementReformAct],whichrequirepublicbiddingfortheprosecutionofthe
SLEXproject.
G.R.NO.183599
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CIVILCASESCANO.3138PSGBEFORETHERTC
On September 14, 2007, the Young Professionals and Entrepreneurs of San Pedro,
Laguna(YPES),oneofthepetitionersinG.R.No.173630,filedbeforetheRTC,Branch155,
inPasigCity,aspecialcivilactionforcertiorari,etc.,againsttheTRB,docketedasSCANo.
3138PSG,containingpracticallyidenticalissuesraisedinG.R.No.173630.Likeitspetition
inG.R.No.173630,YPES,beforetheRTC,assailedandsoughttonullifytheApril27,2007
TOC, which TRB issued to PNCC inasmuch as the TOC worked to extend PNCCs tollway
operationfranchisefortheSLEX.AsYPESargued,onlytheCongresscanextendthetermof
PNCCsfranchisewhichexpiredonMay1,2007.
RULINGOFTHERTCINSCANO.3138PSG
[19]
By Decision
dated June 23, 2008, the RTC, for the main stated reason that the
authority to grant or renew franchises belongs only to Congress, granted YPES petition,
disposingasfollows:
ACCORDINGLY, the instant Petition for Certiorari, Prohibition and Mandamus is
hereby GRANTED and the questionedToll Operation Certificate (TOC) covering the [SLEX]
issuedbyrespondentTRBinApril,2007,isherebyorderedANNULLEDandSETASIDE.
FURTHER,respondentPNCCisherebyimmediatelyPROHIBITEDfromcollectingtoll
fessalongtheSLEXfacilitiesasitnolongerhasthepowerandauthoritytodoso.
FINALLY, as mandated under Section 9 of PD No. 1113, respondent PNCC is hereby

COMMANDEDtoturnoverwithoutfurtherdelaythephysicalassetsandfacilitiesoftheSLEX
includingimprovementsthereon,togetherwiththeequipmentandappurtenancesdirectlyrelated
totheiroperations,withoutanycost,totheGovernmentthroughtheTollRegulatoryBoardxx
[20]
x.
Thus, the instant petition for review on certiorari under Rule 45, filed by the TRB on
purequestionsoflaw,docketedasG.R.No.183599.
Intheirseparatecomments,publicandprivaterespondentsuniformlyseekthedismissal
ofthethreespecialcivilactionsonthethresholdissueoftheabsenceofajusticiablecaseand
lackoflocusstandionthepartofthepetitionerstherein.Othergroundsraisedrangefromthe
improprietyofcertioraritonullifytolloperationagreementstheinapplicabilityofthepublic
biddingrulesintheselectionbyPNCCofitsJVpartnersandtheauthorityofthePresidentto
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approveTOAsandthetransferofusufructuaryrights.PNCCargues,inesse,thatitscontinuous
tolloperationsdidnotconstituteanextensionofitsfranchise,itsauthoritytooperateafterthe
expirydatethereofinMay2007beingbasedonthevalidauthorityofTRBtoissueTOC.
THEISSUES
The principal consolidated but interrelated issues tendered before the Court, most of
which with constitutional undertones, may be reduced into six (6) and formulated in the
following wise: first, whether or not an actual case or controversy exists and, relevantly,
whether petitioners in the first three petitions have locus standi second, whether the TRB is
vestedwiththepowerandauthoritytograntwhatamountstoafranchiseovertollwayfacilities
third, corollary to the second, whether the TRB can enter into TOAs and, at the same time,
promulgate toll rates and rule on petitions for toll rate adjustments fourth, whether the
Presidentisdulyauthorizedtoapprovecontracts,inclusiveofassignmentofcontracts,entered
intobytheTRBrelativetotollwayoperationsfifth,whetherthesubjectSTOAscoveringthe
NLEX, SLEX and SMMS and their respective extensions, linkages, etc. are valid sixth,
whetherapublicbiddingisrequiredormandatoryforthesetollwayprojects.
Expresslyprayed,ifnotsubsumed,inthefirstthreepetitions,istoprohibitTRBandits
concessionairesfromcollectingtollfeesalongtheSkywayandLuzonTollways.
PRELIMINARYISSUES
EXISTENCEOFANACTUALCONTROVERSY,ITSRIPENESSAND
THELOCUSSTANDITOSUE
The power of judicial review can only be exercised in connection with a bona fide
[21]
controversyinvolvingastatute,itsimplementationoragovernmentaction.
Withal,courts
willdeclinetopassuponconstitutionalissuesthroughadvisoryopinions,bereftastheyareof
[22]
authoritytoresolvehypotheticalormootquestions.
Thelimitationonthepowerofjudicial
reviewtoactualcasesandcontroversiesdefinestheroleassignedtothejudiciaryinatripartite
allocationofpower,toassurethatthecourtswillnotintrudeintoareascommittedtotheother
[23]
branchesofgovernment.
InTheProvinceofNorthCotabatov.TheGovernmentoftheRepublicofthePhilippines
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Peace Panel onAncestral Domain (GRP), the Court has expounded anew on the concept of
actualcaseorcontroversyandtherequirementofripenessforjudicialreview,thus:
Anactualcaseorcontroversyinvolvesaconflictoflegalrights,anassertionofopposite
legal claims, susceptible of judicial resolution as distinguished from a hypothetical or abstract
differenceordispute.Theremustbeacontrarietyoflegalrightsxxx.TheCourtcandecidethe
constitutionalityofanactxxxonlywhenapropercasebetweenopposingpartiesissubmitted
forjudicialdetermination.
Related to the requirement of an actual case or controversy is the requirement of

ripeness. A question is ripe for adjudication when the act being challenged has had a direct
adverseeffectontheindividualchallengingit.xxx[I]tisaprerequisitethatsomethinghadthen
beenaccomplishedorperformedbyeitherbranchbeforeacourtmaycomeintothepicture,and
thepetitionermustallegetheexistenceofanimmediateorthreatenedinjurytoitselfasaresult
of the challenged action. He must show that he has sustained or is immediately in danger of
[24]
sustainingsomedirectinjuryasaresultoftheactcomplainedof.
But even with the presence of an actual case or controversy, the Court may refuse
judicial review unless the constitutional question or the assailed illegal government act is
broughtbeforeitbyapartywhopossesseswhatinLatinistechnicallycalledlocusstandiorthe
[25]
standing to challenge it.
To have standing, one must establish that he has a personal and
substantialinterestinthecasesuchthathehassustained,orwillsustain,directinjuryasaresult
[26]
of its enforcement.
Particularly, he must show that (1) he has suffered some actual or
threatenedinjuryasaresultoftheallegedlyillegalconductofthegovernment(2)theinjuryis
fairly traceable to the challenged action and (3) the injury is likely to be redressed by a
[27]
favorableaction.
Petitions for certiorari and prohibition are, as here, appropriate remedies to raise
constitutional issues and to review and/or prohibit or nullify, when proper, acts of legislative
[28]
and executive officials.
The present petitions allege that then President Ramos had
exercised visvis an assignment of franchise, a function legislative in character.As alleged,
too, the TRB, in the guise of entering into contracts or agreements with PNCC and other
juridicalentities,virtuallyenlarged,modifiedtothecoreand/orextendedthestatutoryfranchise
of PNCC, thereby usurping a legislative prerogative. The usurpation came in the form of
executingtheassailedSTOAsandtheissuanceofTOCs.Graveabuseofdiscretionisalsolaid
on the doorstep of the TRB for its act of entering into these same contracts or agreements
withouttherequiredpublicbiddingmandatedbylaw,specificallytheBOTLaw(R.A.6957,as
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amended)andtheGovernmentProcurementReformAct(R.A.9184).
In fine, the certiorari petitions impute on then President Ramos and the TRB, the
commission of acts that translate inter alia into usurpation of the congressional authority to
grant franchises and violation of extant statutes. The petitions make a prima facie case for
certiorariandprohibitionanactualcaseorcontroversyripeforjudicialreviewexists. Verily,
whenanactofabranchofgovernmentisseriouslyallegedtohaveinfringedtheConstitution,it
becomesnotonlytherightbutinfactthedutyofthejudiciarytosettlethedispute.Indoingso,
[29]
thejudiciarymerelydefendsthesanctityofitsdutiesandpowersundertheConstitution.
In any case, the rule on standing is a matter of procedural technicality, which may be
relaxed when the subject in issue or the legal question to be resolved is of transcendental
[30]
importancetothepublic.
Hence,evenabsentanydirectinjurytothesuitor,theCourtcan
relaxtheapplicationoflegalstandingoraltogethersetitasidefornontraditionalplaintiffs,like
[31]
ordinary citizens, when the public interest so requires.
There is no doubt that individual
petitioners, Marcos, et al., in G.R. No. 169917, as then members of the House of
Representatives,possesstherequisitelegalstandingsincetheyassailactsoftheexecutivethey
perceivetoinjuretheinstitutionofCongress.Ontheotherhand,petitionersFrancisco,Hizon,
and the other petitioning associations, as taxpayers and/or mere users of the tollways or
representativesofsuchusers,wouldordinarilynotbeclothedwiththerequisitestanding.While
thisisso,theCourtiswonttopresentlyrelaxtheruleonlocusstandiowingprimarilytothe
transcendentalimportanceandtheparamountpublicinterestinvolvedintheimplementationof
the laws on the Luzon tollways, a roadway complex used daily by hundreds of thousands of
motorists. What we said a century ago in Severino v. Governor General is just as apropos
today:
Whenthereliefissoughtmerelyfortheprotectionofprivaterights,xxx[therelators]
rightmustclearlyappear.Ontheotherhand,whenthequestionisoneofpublicrightandthe
object of the mandamus is to procure the enforcement of a public duty, the people are
regardedastherealpartyininterest,andtherelatoratwhoseinstigationtheproceedings
areinstitutedneednotshowthathehasanylegalorspecialinterestintheresult,itbeing
[32]
sufficienttoshowthatheisacitizenandassuchinterestedintheexecutionofthelaws.
(Wordsinbracketandemphasisadded.)
Accordingly, We take cognizance of the present case on account of its transcendental

importancetothepublic.
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SECONDISSUE:TRBEMPOWEREDTOGRANTAUTHORITYTOOPERATE
TOLLFACILITY/SYSTEM
ItisabundantlyclearthatSections3(a)and(e)ofP.D.1112inrelationtoSection4of
P.D. 1894 have invested the TRB with sufficient power to grant a qualified person or entity
withauthoritytoconstruct,maintain,andoperateatollfacilityandtoissuethecorresponding
tolloperatingpermitorTOC.
Sections3(a)and(e)ofP.D.1112andSection4ofP.D.1894amplyprovidethepower
tograntauthoritytooperatetollfacilities:
Section 3. Powers and Duties of the Board. The Board shall have in addition to its general
powersofadministrationthefollowingpowersandduties:
(a)SubjecttotheapprovalofthePresidentofthePhilippines,toenterintocontractsinbehalfof
theRepublicofthePhilippineswithpersons,naturalorjuridical,fortheconstruction,operation
and maintenance of toll facilities such as but not limited to national highways, roads, bridges,
and public thoroughfares. Said contract shall be open to citizens of the Philippines and/or to
corporationsorassociationsqualifiedundertheConstitutionandauthorizedbylawtoengagein
tolloperations
xxxx
(e)TograntauthoritytooperateatollfacilityandtoissuethereforethenecessaryTollOperation
CertificatesubjecttosuchconditionsasshallbeimposedbytheBoardincludinginteraliathe
following:
(1) That the Operator shall desist from collecting toll upon the expiration of the Toll
OperationCertificate.
(2)Thattheentirefacilityoperatedasatollsystemincludingalloperationandmaintenance
equipment directly related thereto shall be turned over to the government immediately
upontheexpirationoftheTollOperationCertificate.
(3) That the toll operator shall not lease, transfer, grant the usufruct of, sell or assign the
rights or privileges acquired under the Toll Operation Certificate to any person, firm,
company, corporation or other commercial or legal entity, nor merge with any other
company or corporation organized for the same purpose, without the prior approval of
thePresidentofthePhilippines.IntheeventofanyvalidtransferoftheTollOperation
Certificate, the Transferee shall be subject to all the conditions, terms, restrictions and
limitationsofthisDecreeasfullyandcompletelyandtothesameextentasiftheToll
OperationCertificatehasbeengrantedtothesameperson,firm,company,corporationor
othercommercialorlegalentity.
(4)Thatintimeofwar,rebellion,publicperil,emergency,calamity,disasterordisturbance
ofpeaceandorder,thePresidentofthePhilippinesmaycausethetotalorpartialclosing
ofthetollfacilityorordertotakeoverthereofbytheGovernmentwithoutprejudiceto
thepaymentofjustcompensation.
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(5) That no guarantee, Certificate of Indebtedness, collateral, securities, or bonds shall be

issued by any government agency or governmentowned or controlled corporation on
anyfinancingprogramofthetolloperatorinconnectionwithhisundertakingunderthe
TollOperationCertificate.
(6) The Toll Operation Certificate may be amended, modified or revoked whenever the
publicinterestsorequires.
(a) TheBoardshallpromulgaterulesandregulationsgoverningtheproceduresforthe
grant of Toll Certificates. The rights and privileges of a grantee under a Toll
OperationCertificateshallbedefinedbytheBoard.
(b)ToissuerulesandregulationstocarryoutthepurposesofthisDecree.
SECTION 4.TheToll Regulatory Board is hereby given jurisdiction and supervision over the
GRANTEE with respect to the Expressways, the toll facilities necessarily appurtenant thereto
and,subjecttotheprovisionsofSection8and9hereof,thetollthattheGRANTEEwillcharge
theusersthereof.
By explicit provision of law, the TRB was given the power to grant administrative
franchisefortollfacilityprojects.
The concerned petitioners would argue, however, that PNCCs [then CDCPs] franchise,
astolloperator,wasgrantedviaP.D.1113,onthesamedayP.D.1112,creatingtheTRB,was
issued.ItisthuspointedoutthatP.D.1112couldnothaveplausiblygrantedtheTRBwiththe
powerandjurisdictiontoissueasimilarfranchise.Pushingthepoint,theymaintainthatonly
Congress has, under the 1987 Constitution, the exclusive prerogative to grant franchise to
operatepublicutilities.
WeareunabletoagreewithpetitionersstanceandtheirunduerelianceonArticle XII,
Section11oftheConstitution,whichstatesthat:
SEC.11.Nofranchise,certificate,oranyotherformofauthorizationfortheoperationof
a public utility shall be granted except to citizens of the Philippines or to corporations or
associations organized under the laws of the Philippines at least sixty per centum of whose
capital is owned by such citizens, nor shall such franchise, certificate, or authorization be
exclusiveincharacterorforalongerperiodthanfiftyyears.Neithershallanysuchfranchiseor
rightbegrantedexceptundertheconditionthatitshallbesubjecttoamendment,alteration,or
repealbytheCongresswhenthecommongoodsorequiresxxx.
Thelimitingthrustoftheforegoingconstitutionalprovisiononthegrantoffranchiseor
otherformsofauthorizationtooperatepublicutilitiesmay,incontext,bestatedasfollows:(a)
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thegrantshallbemadeonlyinfavorofqualifiedFilipinocitizensorcorporations(b)Congress
can impair the obligation of franchises, as contracts and (c) no such authorization shall be
exclusiveorexceedfiftyyears.
A franchise is basically a legislative grant of a special privilege to a person.
[33]
Particularly, the term, franchise, includes not only authorizations issuing directly from
Congressintheformofstatute,butalsothosegrantedbyadministrativeagenciestowhichthe
[34]
power to grant franchise has been delegated by Congress.
The power to authorize and
control a public utility is admittedly a prerogative that stems from the Legislature. Any
suggestion,however,thatonlyCongresshastheauthoritytograntapublicutilityfranchiseis
less than accurate. As stressed in Albano v. Reyesa case decided under the aegis of the 1987
Constitutionthere is nothing in the Constitution remotely indicating the necessity of a
congressionalfranchisebeforeeachandeverypublicutilitymayoperate,thus:
ThattheConstitutionprovidesxxxthattheissuanceofafranchise,certificateorother
form of authorization for the operation of a public utility shall be subject to amendment,
alterationorrepealbyCongressdoesnotnecessarilyimplyxxxthatonlyCongresshasthe
power to grant such authorization. Our statute books are replete with laws granting
specifiedagenciesintheExecutiveBranchthepowertoissuesuchauthorizationforcertain
[35]
classesofpublicutilities.
(Emphasisours.)
In such a case, therefore, a special franchise directly emanating from Congress is not
necessaryifthelawalreadyspecificallyauthorizesanadministrativebodytograntafranchise
[36]
ortoawardacontract.
This is the same view espoused by the Secretary of Justice in his
opiniondatedJanuary9,2006,whenhestated:
Thattheadministrativeagenciesmaybevestedwiththeauthoritytograntadministrative
franchisesorconcessionsovertheoperationofpublicutilitiesundertheirrespectivejurisdiction
andregulation,withoutneedofthegrantofaseparatelegislativefranchise,hasbeenupheldby
[37]
theSupremeCourtxxx.
Underthe1987Constitution,Congresshasanexplicitauthoritytograntapublicutility
franchise. However, it may validly delegate its legislative authority, under the power of
[38]
subordinatelegislation,
toissuefranchisesofcertainpublicutilitiestosomeadministrative
agencies.InKilusangMayoUnoLaborCenterv.Garcia,Jr.,Weexplainedthereasonforthe
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validityofsubordinatelegislation,thus:
Such delegation of legislative power to an administrative agency is permitted in

order to adapt to the increasing complexity of modern life. As subjects for governmental
regulationmultiply,sodoesthedifficultyofadministeringthelaws.Hence,specializationeven
[39]
inlegislationhasbecomenecessary.
(Emphasisours.)
AsaptlypointedoutbytheTRBandotherprivaterespondents,theLandTransportation
FranchisingandRegulatoryBoard(LTFRB),theCivilAeronauticsBoard(CAB),theNational
TelecommunicationsCommission(NTC),andthePhilippinePortsAuthority(PPA),tonamea
few,havebeensuchdelegates.TheTRBmayverywellbeaddedtothegrowinglist,having
beenstatutorilyendowed,asearlierindicated,thepowertogranttoqualifiedpersons,authority
to construct road projects and operate thereon toll facilities. Such grant, as evidenced by the
correspondingTOCorsetoutinaTOA,maybeamended,modified,orrevoked[bytheTRB]
[40]
wheneverthepublicinterestsorequires.
[41]
In Philippine Airlines, Inc. v. Civil Aeronautics Board,
the Court reiterated its
holdinginAlbanothattheCAB,likethePPA,hassufficientstatutorypowersunderR.A.776to
issueaCertificateofPublicConvenienceandNecessity,orTemporaryOperatingPermit to a
domesticairtransportoperatorwho,althoughnotpossessingalegislativefranchise,meetsall
theotherrequirementsprescribedbylaw.Weheldthereinthatthereisnothinginthelawnorin
theConstitutionwhichindicatesthatalegislativefranchiseisanindispensablerequirementfor
[42]
anentitytooperateasadomesticairtransportoperator.
Wefurtherexplicated:
Congress has granted certain administrative agencies the power to grant licenses
for,ortoauthorizetheoperationofcertainpublicutilities.Withthegrowingcomplexityof
modern life, the multiplication of the subjects of governmental regulation, and the increased
difficulty of administering the laws, there is a constantly growing tendency towards the
delegationofgreaterpowersbythelegislature,andtowardstheapprovalofthepracticebythe
courts.Itisgenerallyrecognizedthatafranchisemaybederivedindirectlyfromthestate
through a duly designated agency, and to this extent, even the power to grant franchises
hasfrequentlybeendelegated,eventoagenciesotherthanthoseofalegislativenature.In
pursuanceofthis,ithasbeenheldthatprivilegesconferredbygrantbylocalauthoritiesas
agentsforthestateconstituteasmuchalegislativefranchiseasthoughthegranthadbeen
[43]
madebyanactoftheLegislature.
(Emphasisours.)
ThevalidityofthedelegationbyCongressofitsfranchisingprerogativeisbeyondcavil.
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[44]
SoitwasthatinTatadv.SecretaryoftheDepartmentofEnergy,
Weagainruledthatthe
delegation of legislative power to administrative agencies is valid. In the instant case, the
certiorari petitioners assume and harp on the lack of authority of PNCC to continue with its
NLEX,SLEX,MMEXoperations,injointventurewithprivateinvestors,afterthelapseofits
P.D. 1113 franchise. None of these petitioners seemed to have taken due stock of and
appreciatedthevaliddelegationoftheappropriatepowertoTRBunderP.D.1112,asenlarged
inP.D.1894.Tobesure,afranchisemaybederivedindirectlyfromthestatethroughaduly
designated agency, and to this extent, the power to grant franchises has frequently been
[45]
delegated, even to agencies other than those of a legislative nature.
Consequently, it has
beenheldthatprivilegesconferredbygrantbyadministrativeagenciesasagentsforthestate
constituteasmuchalegislativefranchiseasthoughthegranthadbeenmadebyanactofthe
[46]
Legislature.
While it may be, as held in Strategic Alliance Development Corporation v. Radstock

[47]
Securities Limited,
that PNCCs P.D. 1113 franchise had already expired effective May 1,
2007,thisfactofexpirationdidnot,however,carrywithitthecancellationofPNCCsauthority
and that of its JV partners granted under P.D. 1112 in relation to Section 1 of P.D. 1894 to
construct,operateandmaintainanyandallsuchextensions,linkagesorstretches,togetherwith
the toll facilities appurtenant thereto, from any part of the North Luzon Expressway, South
Luzon Expressway and/or Metro Manila Expressway and/or to divert the original route and
changetheoriginalendpointsofthe[NLEX]and/or[SLEX]asmaybeapprovedbythe[TRB].
Andtohighlightthepoint,thesucceedingSection2ofP.D.1894specificallyprovidesthatthe
franchise for the extension and toll road projects constructed after the approval of P.D. 1894
shallbethirtyyears,countedfromprojectcompletion.Indeed,priortotheexpirationofPNCCs
originalfranchiseinMay2007,theTRB,intheexerciseofitsspecialpowersunderP.D.1112,
signed supplemental TOAs with PNCC and its JV partners. These STOAs covered the
expansionandrehabilitationofNLEXandSLEX,asthecasemaybe,and/ortheconstruction,
operationandmaintenanceoftollroadprojectscontemplatedinP.D.1894.Andtherecanbeno
denyingthatthecorrespondingtolloperationpermitshavebeenissued.
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[48]
In fine, the STOAs
TRB entered with PNCC and its JV partners had the effect of
granting authorities to construct, operate and maintain toll facilities, but with the injection of
additional private sector investments consistent with the intent of P.D. Nos. 1112, 1113 and
[49]
1894.
The execution of these STOAs came in 1995, 1998 and 2006, or before the
expiration of PNCCs original franchise on May 1, 2007. In accordance with applicable laws,
these transactions have actually been authorized and approved by the President of the
[50]
Philippines.
Andasameasuretoensurethelegalityofthesaidtransactionsandinlinewith
duediligencerequirements,areviewthereofwassecuredfromtheGCCandtheDOJ,priorto
theirexecution.
InasmuchasitscharterempoweredtheTRBtoauthorizethePNCCandlikeentitiesto
maintain and operate toll facilities, it may be stated as a corollary that the TRB, subject to
certain qualifications, infra, can alter the conditions of such authorization.Well settled is the
rulethatalegislativefranchisecannotbemodifiedoramendedbyanadministrativebodywith
general delegated powers to grant authorities or franchises. However, in the instant case, the
[51]
lawgrantingadirectfranchisetoPNCC
evidentlyandspecificallyconferredupontheTRB
[52]
the power to impose conditions in an appropriate contract.
And to reiterate, Section 3 of
P.D. 1113 provides that [t]his [PNCC] franchise is granted subject to such conditions as
maybeimposedbythe[TRB]inanappropriatecontracttobeexecutedforthispurpose,
andwiththeunderstandingandupontheconditionthatitshallbesubjecttoamendment,
[53]
alteration or repeal when public interest so requires.
A similarly worded proviso is
foundinSection6ofP.D.1894.ItisinthislightthattheTRBenteredintothesubjectSTOAs
in order to allow the infusion of additional investments in the subject infrastructure projects.
Prior to the expiration of PNCCs franchise on May 1, 2007, the STOAs merely imposed
additionalconditionalities,orasaptlypointedoutbySLTCetal.,obviouslyhavinginmindpar.
16.06 of its STOA withTRB,
[54]
served as supplement, to the existingTOA of PNCC with
TRB. We have carefully gone over the different STOAs and discovered that the tollway
projects covered thereby were all undertaken under the P.D. 1113 franchise of PNCC. And it
cannot be overemphasized that the respective STOAs of MNTC and SLTC each contain
provisions addressing the eventual expiration of PNCCs P.D. 1113 franchise and authorizing,
thrutheissuancebytheTRBofaTOC,theimplementationofagiventollprojectevenafter
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May1,2007.Thus:
MNTCSTOA
2.6 CONCESSION PERIOD. In order to sustain the financial viability and integrity of
the Project, GRANTOR [TRB] hereby grants MNTC the CONCESSION for the PROJECT
ROADSforaperiodcommencinguponthedatethatthis[STOA]comesintoeffectunderClause
4.1 until 31 December 2030 or thirty years after the issuance of the corresponding TOLL
OPERATION PERMIT for the last completed phase. Accordingly, unless the PNCC
FRANCHISEisfurtherextendedbeyonditsexpiryon01May2007,GRANTORundertakesto
issuethenecessary[TOC]fortherehabilitatedandrefurbished[NLEX]sixmonthspriortothe
expiryofthePNCCFRANCHISEon01May2007.
SLTCSTOA
2.03AuthorityofInvestorandOperatortoUndertaketheProject
(1) The GRANTOR [TRB] has determined that the Project Toll Roads are within the
existingSLEXandarethuscoveredbythePNCCFranchisethatisduetoexpireonMay
1,2007.PNCChascommittedtoexertitsbesteffortstoobtainanextensionxxxItis
understoodandagreedthatintheeventthePNCCFranchiseisnotrenewedbeyondthe
saidexpirydate,this[STOA]andtheConcessiongrantedxxxwillstandinplaceofthe
PNCCFranchiseandserveasanewconcession,orauthority,pursuanttoSection3(a)of
theTRBCharter,fortheInvestortoundertaketheProjectandfortheOperatortoOperate
and Maintain the Project Toll Roads immediately upon the expiration of the PNCC
Franchise,withoutneedoftheexecutionxxxofanyotherdocumenttoeffectthesame.
(2)xxxintheeventitissubsequentlydecreedbycompetentauthoritythattheissuancebythe
Grantorofa[TOC]isnecessaryxxxtheGrantorshallxxxcausetheTRBxxxtoissue
such [TOC] in favor of the Operator, embodying the terms and conditions of this
Agreement.
The foregoing notwithstanding, there are to be sure certain aspects in PNCCs

legislativefranchisebeyondthealteringreachofTRB.Werefertothecoverageareaofthe
tollwaysandtheexpirydateofPNCCsoriginalfranchise,whichisMay1,2007,asexpressly
stated under Sections 1 and 2 of P.D. 1894, respectively. The fact that these two items were
specifically and expressly defined by law, i.e. P.D. 1113, indicates an intention that any
alteration, modification or repeal thereof should only be done through the same medium. We
saidasmuchinRadstock,thus:[T]hetermofthexxxfranchise,whichis30yearsfrom1
May 1977, shall remain the same, as expressly provided in the first sentence of x x x
[55]
Section2ofP.D.1894.
ItislikewiseworthnotingwhatWefurtherheldinthatcase:
TheTRBdoesnothavethepowertogivebacktoPNCCthetollassetsandfacilities
which were automatically turned over to the Government, by operation of law, upon the
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expirationofthefranchiseofthePNCCon1May2007.WhateverpowertheTRBmayhave
tograntauthoritytooperateatollfacilityortoissuea[TOC],suchpowerdoesnotobviously
includetheauthoritytotransferbacktoPNCCownershipofNationalGovernmentassets,like
thetollassetsandfacilities,whichhavebecomeNationalGovernmentpropertyupontheexpiry
[56]
ofPNCCsfranchisexxx.
(Emphasisintheoriginal.)
Verily, upon the expiration of PNCCs legislative franchise on May 1, 2007, the new
authoritiestoconstruct,maintainandoperatethesubjecttollwaysandtollfacilitiesgrantedby
the TRB pursuant to the validly executed STOAs and TOCs, shall begin to operate and be
treated as administrative franchises or authorities. Pursuant to Section 3 (e) P.D. 1112, TRB
possessesthepowerandduty,interaliato:
xxxgrantauthoritytooperateatollfacilityandtoissuethereforethenecessaryTollOperation
Certificatesubjecttosuchconditionsasshallbeimposedbythe[TRB]includinginteraliaxxx.
ThisislikewiseconsistentwiththepositionoftheSecretaryofJusticeinOpinionNo.
[57]
122onNovember24,1995,
thus:
TRB has no authority to extend the legislative franchise of PNCC over the existing NSLE
(NorthandSouthLuzonExpressways).However,TRBisnotprecludedunderSection3(e)of
P.D.No.1112(TRBCharter)tograntPNCCanditsjointventurepartnertheauthoritytooperate
the existing toll facility of the NSLE and to issue therefore the necessary Toll Operation
Certificatexxx.
ItshouldbenotedthattheexistingfranchiseofPNCCovertheNSLE,whichwillexpireonMay
1,2007,givesittheright,privilegeandauthoritytoconstruct,maintainandoperatetheNSLE.
The Toll Operation Certificate which TRB may issue to the PNCC and its joint venture
partner after the expiration of its franchise on May 1, 2007 is an entirely new
authorization, this time for the operation and maintenance of the NSLE x x x. In other
words,therightofPNCCanditsjointventurepartner,afterMay7,2007[sic]tooperate
andmaintaintheexistingNSLEwillnolongerbefoundedonitslegislativefranchisewhich
isnottherebyextended,butonthenewauthorizationtobegrantedbytheTRBpursuant
toSection3(e),abovequoted,ofP.D.No.1112.(Emphasisours.)
ThesameopinionwasthereaftermadebytheSecretaryofJusticeonJanuary9,2006,in
[58]
OpinionNo.1,
statingthat:
TheexistingfranchiseofPNCCovertheNSLE,whichwillexpireonMay1,2007,gives
it the right, privilege and authority to construct, maintain and operate the NSLE. The Toll
OperationCertificatewhichtheTRBmayissuetothePNCCanditsjointventurepartnerafter
theexpirationofitsfranchiseonMay1,2007isanentirelynewauthorization,thistimeforthe
operationandmaintenanceoftheNSLE.[T]herightofPNCCanditsjointventurepartner,after
May 1, 2007, to operate and maintain the existing NSLE will no longer be founded on its
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legislativefranchisewhichisnottherebyextended,butonthenewauthorizationtobegranted
bytheTRBpursuanttoSection3(e)ofPDNo.1112.
Itappearstherefore,thattheeffectoftheSTOAisnottoextendtheFranchiseofPNCC,
butrather,tograntanewConcessionovertheSLEXProjectandtheOMCo.,entitieswhichare
separateanddistinctfromPNCC.Whileinitially,theauthorityofSLTCandOMCo.toenterinto
theSTOAwiththeTRBandtherebybecomegranteesoftheConcession,willstemfromandbe
basedontheJVAandtheassignmentbyPNCCtotheOMCo.oftheUsufructintheFranchise,
we submit that upon the execution by SLTC and the TRB of the STOA, the right to the
ConcessionwillemanatefromtheSTOAitselfandfromtheauthorityoftheTRBunderSection
3(a)oftheTRBCharter.Suchbeingthecase,theexpirationoftheFranchiseon1May2007,
sincesuchConcessionisanentirelynewanddistinctconcessionfromtheFranchiseandis,as
stated,grantedtoentitiesotherthanPNCC.
Finally, with regards (sic) the authority of the TRB this Office in Secretary of Justice
OpinionNo.92,s.2000,statedthat:
SufficeittosaythatofficialactsofthePresidentenjoyfullfaithandconfidenceofthe
Government of the Republic of the Philippines which he represents. Furthermore, considering
thatthequeriesraisedhereinrelatestotheexercisebytheTRBofitsregulatorypowersovertoll
roadproject,thesamefallssquarelywithintheexclusivejurisdictionofTRBpursuanttoP.D.
No.1112.Consequently,itis,therefore,solelywithinTRBsprerogativeanddeterminationasto
whatruleshallgovernandismadeapplicabletoaspecifictollroadprojectproposal.
TheSTOAisanexplicitgrantoftheConcessionbytheRepublicofthe Philippines,
through the TRB pursuant to P.D. (No.) 1112 and as approved by the President xxx. The
foregoinggrantisinfullaccordwiththeprovisionsofP.D.(No.)1112whichauthorizesTRBto
enterintocontractsonbehalfoftheRepublicofthePhilippinesfortheconstruction,operation
andmaintenanceoftollfacilities.Suchbeingthecase,weopinethatnootherlegalrequirement
is necessary to make the STOA effective of to confirm MNTCs (In this case, SLTC and the
OMCO)rightsandprivilegesgrantedtherein.(Emphasisintheoriginal.)
Considering,however,thatalltollassetsandfacilitiespertainingtoPNCCpursuanttoits
P.D.1113franchisearedeemedtohavealreadybeenturnedovertotheNationalGovernment
[59]
on May 1, 2007,
whatever participation that PNCC may have in the new authorities to
construct,maintainandoperatethesubjecttollways,shallbelimitedtodoingthesameintrust
fortheNationalGovernment.InRadstock,theCourtheldthat[w]iththeexpirationofPNCCs
franchise,[its]assetsandfacilitieswereautomaticallyturnedover,byoperationoflaw,tothe
[60]
governmentatnocost.
TheCourtwentonfurthertostatethattheGovernmentsownership
ofPNCCstollassetsinevitablyresultedinitsowningtooofthetollfeesandthenetincome
[61]
derived, after May 1, 2007, from the toll assets and facilities.
But as We have earlier
discussed, the tollways and toll facilities should remain functioning in accordance with the
validlyexecutedSTOAsandTOCs.However,PNCCsassetsandfacilities,or,inshort,itsvery
share/participationintheJVAsandtheSTOAs,inclusiveofitspercentageshareinthetollfees
collected by the JV companies currently operating the tollways shall likewise automatically
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accruetotheGovernment.
Infine,petitionersclaimaboutPNCCsfranchisebeingamenabletoanamendmentonly
byanactofCongress,or,whatpracticallyamountstothesamething,thattheTRBiswithout
authority at all to modify the terms and conditions of PNCCs franchise, i.e. by amending its
TOA/TOC,hastoberejected.TheirlamentthenthattheTRB,throughtheinstrumentalityof
merecontractsandanadministrativeoperatingcertificate,orSTOAsandTOC,tobeprecise,
effectively, but invalidly amended PNCC legislative franchise, are untenable. For, the bottom
lineis,theTRBhas,throughtheinterplayofthepertinentprovisionsofP.D.Nos.1112,1113
and1894,thepowertogranttheauthoritytoconstructandoperatetollroadprojectsandtoll
facilitiesbywayofaTOAandthecorrespondingTOC.Whatisotherwisealegislativepower
to grant or renew a franchise is not usurped by the issuance by the TRB of a TOC. But to
emphasize, the case of the TRB is quite peculiarly unique as the special law conferring the
legislative franchise likewise vested the TRB with the power to impose conditions on the
franchise, albeit in a limited sense, by excluding from the investiture the power to amend or
modifythestatedlifetimeofthefranchise,itscoverageandtheownershiparrangementofthe
[62]
tollassetsfollowingtheexpirationofthelegislativefranchise.
Atthisjuncture,theCourtwishestoexpresstheobservationthatP.D.Nos.1112,1113
and 1894, as couched and considered as a package, very well endowed the TRB with
extraordinary powers. For, subject to welldefined limitations and approval requirements, the
TRBcan,bywayofSTOAs,allowandauthorize,asithasallowedandauthorized,alegislative
franchisee,PNCC,toshareitsconcessionwithanotherentityorJVpartners,theauthorization
effectivelycoveringperiodsbeyondMay2007.However,thisunpalatablereality,aleftoverof
the martial law regime, presents issues on the merits and the wisdom of the economic
programs,whichproperlybelongtothelegislatureortheexecutivetoaddress.TheTRBisnot
precluded from granting PNCC and its joint venture partners authority, through a TOC for a
periodfollowingthetermoftheproposedSMMS,withthesaidTOCservingasanentirelynew
authorizationupontheexpirationofPNCCsfranchiseonMay1,2007.Inshort,afterMay1,
2007,theoperationandmaintenanceoftheNLEXandtheothersubjecttollwayswillnolonger
befoundedonP.D.1113orportionsofP.D.1894(PNCCsoriginalfranchise)butonanentirely
new authorization, i.e. a TOC, granted by the TRB pursuant to its statutory authority under
Sections3(a)and(e)ofP.D.1112.
Likewise needing no extended belaboring, in the light of the foregoing dispositions, is
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theuntenableholdingoftheRTCinSCANo.3138PSGthattheTRBiswithoutpowertoissue
a TOC to PNCC, amend or renew its authority over the SLEX tollways without separate
legislative enactment.And lest it be overlooked, the TRB may validly issue an entirely new
authorizationtoaJVcompanyafterthelapseofPNCCsfranchiseunderP.D.1113.Its thirty
year concession under P.D. 1894, however, does not have the quality of definiteness as to its
start, as by the terms of the issuance, it commences and is to be counted from the date of
approvaloftheproject,thetermprojectobviouslyreferringtoMetroManilaExpresswaysand
allextensions,linkages,stretchesanddiversionsrefurbishingandrehabilitationoftheexisting
NLEX and SLEX constructed after the approval of the decree in December 1983. The
suggestion, therefore, of the petitioners in G.R. No. 169917, citing a 1989 Court ofAppeals
(CA)decisioninCAG.R.13235(Republicv.Guerrero,etal.),thattheBalintawaktoTabang
portion of the expressway no longer forms part of PNCCs franchise and, therefore, PNCC is
without any right to assign the same to MNTC via a JVA, is specious. Firstly, in its
[63]
Decision
in G.R. No. 89557, a certiorari proceeding commenced by PNCC to nullify the
CA decision adverted to, the Court approved a compromise agreement, which referred to (1)
thePNCCsauthoritytocollecttollandmaintenancefeesand(2)thesupervision,approvaland
[64]
controlbytheDPWH
oftheconstructionofadditionalfacilities,onthequestionedportion
[65]
[66]
of the NLEX.
And still in another Decision,
the Court ruled that the Balintawak to
Tabangstretchwasrecognizedaspartofthefranchiseof,orotherwiserestoredastollfacilities
[67]
to be operated by x x x PNCC.
Once stamped with judicial imprimatur, and unless
amended,modifiedorrevokedbytheparties,acompromiseagreementbecomesmorethana
merebindingcontractasthussanctioned,theagreementconstitutesthecourtsdeterminationof
[68]
the controversy, enjoining the parties to faithfully comply thereto.
Verily, like any other
[69]
judgment,ithastheeffectandauthorityofresjudicata.
Atanyrate,thePNCCwaslikewisegrantedtemporaryorinterimauthoritybytheTRB
[70]
tooperatetheSLEX,
toensurethecontinueddevelopment,operationsandprogressofthe
projects. We have ruled in Oroport Cargohandling Services, Inc. v. Phividec Industrial
Authority that an administrative agency vested by law with the power to grant franchises or
authoritytooperatecanvalidlygrantthesameintheinterimwhenitisnecessary,temporary
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[71]
and beneficial to the public.
The grant by the TRB to PNCC as interim operator of the
SLEXwascertainlyintendedtoguaranteethecontinuedoperationofthesaidtollwayfacility,
andtoensurethewantofanydelayandinconveniencetothemotoringpublic.
All given, the cited CA holding is not a binding precedent. The time limitation on
PNCCs franchise under either P.D. 1113 or P.D. 1894 does not detract from or diminish the
TRBs delegated authority under P.D. 1112 to enter into separate toll concessions apart and
distinctfromPNCCsoriginallegislativefranchise.
THIRDISSUE:TRBSPOWERTOENTERINTOCONTRACTSISSUE,
MODIFYANDPROMULGATETOLLRATESANDTORULEONPETITIONS
RELATIVETOTOLLRATESLEVELANDINCREASESVALID
ThepetitionersinthespecialcivilactionscaseswouldhavetheCourtdeclareasinvalid
(a)Section3(a)and(d)ofP.D.1112(whichaccordtheTRB,ononehand,thepowertoenter
into contracts for the construction, and operation of toll facilities, while, on the other hand,
granting it the power to issue and promulgate toll rates) and (b) Section 8 (b) of P.D. 1894
(granting TRB adjudicatory jurisdiction over matters involving toll rate movements). As
submitted, granting the TRB the power to award toll contracts is inconsistent with its quasi
judicial function of adjudicating petitions for initial toll and periodic toll rate adjustments.
Therecannot,sopetitionerswouldpostulate,beimpartialityinsuchasituation.
TheassailedprovisionsofP.D.1112andP.D.1894read:
P.D.1112
Section 3. Powers and Duties of the Board. The Board shall have in addition to its general
powersofadministrationthefollowingpowersandduties:
(a)SubjecttotheapprovalofthePresidentofthePhilippines,toenterintocontractsinbehalfof
theRepublicofthePhilippineswithpersons,naturalorjuridical,fortheconstruction,operation
andmaintenanceoftollfacilities such as but not limited to national highways, roads, bridges,
and public thoroughfares. Said contract shall be open to citizens of the Philippines and/or to
corporationsorassociationsqualifiedundertheConstitutionandauthorizedbylawtoengagein
tolloperations
(d) Issue, modify and promulgate from time to time the rates of toll that will be charged the
directusersoftollfacilitiesandupon notice and hearing, to approveor disapprovepetitions
fortheincreasethereof.DecisionsoftheBoardonpetitionsfortheincreaseoftollrateshallbe
appealable to the Office of the President within ten (10) days from the promulgation thereof.
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Suchappealshallnotsuspendtheimpositionofthenewrates,providedhowever,thatpending
theresolutionoftheappeal,thepetitionerforincreasedratesinsuchcaseshalldepositinatrust
fundsuchamountsasmaybenecessarytoreimbursetollpayersaffectedincaseareversalofthe
decision.(Emphasisours.)
P.D.1894
SECTION8.xxx
(b) For the Metro Manila Expressway and such extensions, linkages, stretches and
diversionsoftheExpresswayswhichmayhenceforthbeconstructed,maintainedandoperated
bytheGRANTEE,theGRANTEEshallcollecttollatsuchratesasshallinitiallybeapproved
by the Toll Regulatory Board. The Toll Regulatory Board shall have the authority to approve
suchinitialtollrateswithoutthenecessityofanynoticeandhearing,exceptasprovidedinthe
immediately succeeding paragraph of this Section. For such purpose, the GRANTEE shall
submitfortheapprovaloftheTollRegulatoryBoardthetollproposedtobechargedtheusers.
After approval of the toll rate(s) by theToll Regulatory Board and publication thereof by the
GRANTEEonceinanewspaperofgeneralcirculation,thetollshallimmediatelybeenforceable
andcollectibleuponopeningoftheexpresswaytotrafficuse.
AnyinterestedExpresswaysusersshallhavetherighttofile,withinaperiodofninety
(90)daysafterthedateofpublicationoftheinitialtollrate,apetitionwiththeTollRegulatory
Boardforareviewoftheinitialtollrateprovided,however,thatthefilingofsuchpetitionand
thependencyoftheresolutionthereofshallnotsuspendtheenforceabilityandcollectionofthe
tollinquestion.TheTollRegulatoryBoard,atapublichearingcalledforthepurposeafterdue
notice,shallthenconductareviewoftheinitialtollshallbeappealable(sic)totheOfficeofthe
Presidentwithinten(10)daysfromthepromulgationthereof.TheGRANTEEmayberequired
to post a bond in such amount and from such surety or sureties and under such terms and
conditionsastheTollRegulatoryBoardshallfixincaseofanypetitionforreviewof,orappeal
from,decisionsoftheTollRegulatoryBoard.
In case it is finally determined, after a review by theToll Regulatory Board or appeal

therefrom, that the GRANTEE is not entitled, in whole or in part, to the initial toll, the
GRANTEEshalldepositintheescrowaccounttheamountcollectedundertheapprovedinitial
toll fee and such amount shall be refunded to Expressways users who had paid said toll in
accordance with the procedure as may be prescribed or promulgated by the Toll Regulatory
Board.(Emphasisours.)
Thepetitionersareindulgingingratuitous,ifnotunfair,conclusionastothecapacityof
theTRBtoactasafairandobjectivetribunalonmattersoftollfeefixing.
Administrative bodies have expertise in specific matters within the purview of their
respective jurisdictions. Accordingly, the law concedes to them the power to promulgate
implementingrulesandregulations(IRR)tocarryoutdeclaredstatutorypoliciesprovidedthat
[72]
theIRRconformstothetermsandstandardsprescribedbythatstatute.
The Court does not perceive an irreconcilable clash in the enumerated TRBs statutory
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powers,suchthattheexerciseofonenegatesanother.Theascriptionofimpartialityonthepart
oftheTRBcannot,underthepremises,beaccordedcogency.Petitionershavenotshownthat
theTRBlackstheexpertise,competenceandcapacitytoimplementitsmandateofbalancing
the interests of the tollpaying motoring public and the imperative of allowing the
concessionairestorecouptheirinvestmentwithreasonableprofits.Asitwere,Section9ofP.D.
1894providesaparametricformulaforadjustmentoftollratesthattakesintoaccountthePeso
US Dollar exchange rate, interest rate and construction materials price index, among other
verifiableandquantifiablevariables.
Whilenotdeterminativeoftheissueimmediatelyathand,thegranttoandtheexercise
byanadministrativeagencyofregulatingandallowingtheoperationofpublicutilitiesand,at
the same time, fixing the fees that they may charge their customers is now commonplace. It
must be presumed that the Congress, in creating said agencies and clothing them with both
adjudicative powers and contractmaking prerogatives, must have carefully studied such dual
[73]
authority and found the same not breaching any constitutional principle or concept.
So
mustitbeforP.D.Nos.1112and1894.
The Court can take judicial cognizance of the exercise by the LTFRB and NTC both
spinoffagenciesofthenowdefunctPublicServiceCommissionofsimilarconcurrentpowers.
[74]
[75]
The LTFRB, under Executive Order No. (E.O.) 202,
series of 1987, is empowered,
among others, to regulate the operation of public utilities or for hire vehicles and to grant
franchises or certificates of public convenience (CPC) and to fix rates or fares, to approve
petitionsforfarerateincreasesandtoresolveoppositionstosuchpetitions.
The NTC, on the other hand, has been granted similar powers of granting franchises,
allocatingareasofoperations,ratefixingandtoruleonpetitionsforrateincreasesunderE.O.
[76]
546,
s.of1979.
TheEnergyRegulatoryCommission(ERC)likewiseenjoysontheonehand,thepower(a)to
grant,modifyorrevokeanauthoritytooperatefacilitiesusedinthegenerationofelectricity,
and on the other, (b) to determine, fix and approve rates and tariffs of transmission, and
distribution retail wheeling charges and tariffs of franchise electric utilities and all electric
[77]
powerratesincludingthatwhichischargedtoendusers.
InChamber of Real Estate and
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BuildersAssociation,Inc.v.ERC,WeevencategoricallystatedthattheERCisaquasijudicial
andquasilegislativeregulatorybodycreatedunderSection38oftheEPIRA,[and]xxxan
administrative agency vested with broad regulatory and monitoring functions over the
[78]
Philippineelectricindustrytoensureitssuccessfulrestructuringandmodernizationxxx.
Tosummarize,thefactthatanadministrativeagencyisexercisingitsadministrativeor
executive functions (such as the granting of franchises or awarding of contracts) and at the
same time exercising its quasilegislative (e.g. rulemaking) and/or quasijudicial functions
(e.g.ratefixing),doesnotsupportafindingofaviolationofdueprocessortheConstitution.In
[79]
C.T.TorresEnterprises,Inc.v.Hibionada,
Weexplainedtherationale,thus:
It is by now commonplace learning that many administrative agencies exercise and

perform adjudicatory powers and functions, though to a limited extent only. Limited
delegation of judicial or quasijudicial authority to administrative agencies (e.g. the
Securities and Exchange Commission and the National Labor Relations Commission) is well
recognized in our jurisdiction, basically because the need for special competence and
experience has been recognized as essential in the resolution of questions of complex or
specialized character and because of a companion recognition that the dockets of our
regularcourtshaveremainedcrowdedandclogged.
xxxx
Asaresultofthegrowingcomplexityofthemodernsociety,ithasbecomenecessarytocreate
more and more administrative bodies to help in the regulation of its ramified activities.
Specialized in the particular fields assigned to them, they can deal with the problems
thereofwithmoreexpertiseanddispatchthancanbeexpectedfromthelegislatureorthe
courtsofjustice.Thisisthereasonfortheincreasingvestureofquasilegislativeandquasi
judicial powers in what is now not unquestionably called the fourth department of the
government.
xxxx
Thereisnoquestionthatastatutemayvestexclusiveoriginaljurisdictioninanadministrative
agencyovercertaindisputesandcontroversiesfallingwithintheagency'sspecialexpertise.The
very definition of an administrative agency includes its being vested with quasijudicial
powers. The ever increasing variety of powers and functions given to administrative
agencies recognizes the need for the active intervention of administrative agencies in
matterscallingfortechnicalknowledgeandspeedincountlesscontroversieswhichcannot
possiblybehandledbyregularcourts.(Emphasisours.)
FOURTHISSUE:PRESIDENTAMPLYVESTEDWITHSTATUTORY
POWERTOAPPROVETRBCONTRACTS
Just like their parallel stance on the grant to TRB of the power to enter into toll
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agreements,e.g.,TOAsorSTOAs,thepetitionersinthefirstthreepetitionswouldassertthat
thegranttothePresidentofthepowertoperemptorilyauthorizetheassignmentbyPNCC,as
franchise holder, of its franchise or the usufruct in its franchise is unconstitutional. It is
unconstitutional,sopetitionerswouldclaim,forbeinganencroachmentoflegislativepower.
Asearlierindicated,Section3(a)ofP.D.1112requiresapprovalbythePresidentofany
contract TRB may have entered into or effected for the construction and operation of toll
facilities.Complementing Section 3 (a) is 3 (e) (3) of P.D. 1112 enjoining the transfer of the
usufructofPNCCsfranchisewithoutthePresidentspriorapproval.Forperspective,Section3
(e)(3)ofP.D.1112provides:
That the toll operator shall not lease, transfer, grant the usufruct of, sell or assign the
rightsorprivilegesacquiredunderthe[TOC]toanypersonxxxorlegalentitynormergewith
anyothercompanyorcorporationorganizedforthesamepurposewithoutthepriorapprovalof
the President of the Philippines. In the event of any valid transfer of theTOC, theTransferee
[80]
shallbesubjecttoalltheconditions,terms,restrictionsandlimitationsofthisDecreexxx.
ThePresidentsapprovingauthorityisofstatutoryorigin.Tous,thereisnothingillegal,
letaloneunconstitutional,withthedelegationtothePresidentoftheauthoritytoapprovethe
assignmentbyPNCCofitsrightsandinterestinitsfranchise,theassignmentanddelegation
being circumscribed by restrictions in the delegating law itself. As the Court stressed in
[81]
Kilosbayanv.Guingona,Jr.,
therightsandprivilegesconferredunderafranchisemaybe
assignedifauthorizedbyastatute,subjecttosuchrestrictionsasmaybeprovidedbylaw,such
[82]
asthepriorapprovalofthegrantororagovernmentagency.
Therecan,therefore,benoseriouschallengetothispresidentialapprovingprerogative.
Shouldgraveabuseofdiscretioninsomewayinfecttheexerciseoftheprerogative,thenthe
approval action may be nullified for that reason, but not on the ground that the underlying
authority is constitutionally doubtful. If theTRB may validly be empowered to grant private
entities the authority to operate toll facilities, would a delegation of a lesser authority to
approve the grant to the head of the administrative machinery of the government be
objectionable?
The fact that P.D. 1112 partakes of a martial law issuance does not per se provide an
objectionable feature to the decree, albeit it may be argued with some plausibility that then
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PresidentMarcosintendedtohavethefinalsayastowhoshallactasthetolloperatorsofthe
Luzonexpressways.Bethatasitmay,allproclamations,orders,decrees,instructions,andacts
promulgated,issued,ordonebytheformerPresident(FerdinandE.Marcos)arepartofthelaw
of the land, and shall remain valid, legal, binding, and effective, unless modified, revoked or
superseded by subsequent proclamations, orders, decrees, instructions, or other acts of the
[83]
President.
To emphasize, Padua v. Ranada cited Association of Small Landowners in the
Philippines,Inc.v.SecretaryofAgrarianReform,quotingthat:
TheCourtwrylyobservesthatduringthepastdictatorship,everypresidentialissuance,
bywhatevernameitwascalled,hadtheforceandeffectoflawbecauseitcamefromPresident
Marcos.Sucharethewaysofdespots.Hence,itisfutiletoarguethatLOI474couldnothave
repealedP.D.No.27becausetheformerwasonlyaletterofinstruction.Theimportantthingis
[84]
thatitwasissuedbyPresidentMarcos,whosewordwaslawduringthattime.
FIFTHISSUE:ASSAILEDSTOASVALIDLYENTERED
ThisbringsustotheissueofthevalidityofcertainprovisionsoftheSTOAsandrelated
agreementsenteredintobytheTRB,asdulyapprovedbythePresident.
[85]
RelyingonClause17.4.1
oftheMNTCSTOAthatthelendershavetheunrestricted
righttoappointasubstituteentityincaseofdefaultofMNTCoroftheoccurrenceofanevent
of default in respect of the loans, petitioners argue that since MNTC is the assignee or
transfereeofPNCCsfranchise,thenitstepsintotheshoesofPNCC.Theycontendthattheact
of replacing MNTC as grantee is tantamount to an amendment or alteration of the PNCCs
original franchise and hence unconstitutional, considering that the constitutional power to
[86]
appointanewfranchiseholderisreservedtoCongress.
Thiscontentionisbereftofmerit.
PetitionerspresuppositionthatonlyCongresshasthepowertodirectlygrantfranchisesis
misplaced.Timeandagain,Wehaveheldthatadministrativeagenciesmaybeempoweredby
[87]
theLegislaturebymeansofalawtograntfranchisesorsimilarauthorizations.
And this,
[88]
We have sufficiently addressed in the present case.
To reiterate,We discussed in Albano
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thatourstatutebooksarerepletewithlawsgrantingadministrativeagenciesthepowertoissue
[89]
authorizations.
Thisdelegationoflegislativepowertoadministrativeagenciesisallowedin
[90]
ordertoadapttotheincreasingcomplexityofmodernlife.
Consequently,Wehaveheldthat
theprivilegesconferredbygrantbylocalauthoritiesasagentsforthestateconstituteasmucha
[91]
legislativefranchiseasthoughthegranthadbeenmadebyanactoftheLegislature.
Inthiscase,theTRBscharteritself,orSection3(e)ofP.D.1112,specificallyempowers
ittograntauthoritytooperateatollfacilityandtoissuethereforethenecessaryTollOperation
[92]
Certificatesubjecttosuchconditionsasshallbeimposedbythe[TRB]xxx.
Section3(a)
of the same law permits the TRB to enter into contracts for the construction, operation and
maintenance of toll facilities. Clearly, there is no question that the TRB is vested by the
Legislature,throughP.D.1112,withthepowernotonlytograntanauthoritytooperateatoll
facility,butalsotoenterintocontractsfortheconstruction,operationandmaintenancethereof.
PetitionersalsocontendthatsubstitutingMNTCasthegranteeincaseofitsdefaultwith
respecttoitsloansistantamounttoanamendmentofPNCCsoriginalfranchiseandishence,
unconstitutional. We also find this assertion to be without merit. Besides holding that the
Legislature may properly empower administrative agencies to grant franchises pursuant to a
law,WehavealsoearlierexplainedinthiscasethatP.D.1113andtheamendatoryP.D.1894
both vested the TRB with the power to impose conditions on PNCCs franchise in an
appropriate contract and may therefore amend or alter the same when public interest so
[93]
requires
savefortheconditionsstatedinSections1and2ofP.D.1894,whichrelatesto
[94]
thecoverageareaofthetollwaysandtheexpirationofPNCCsoriginalfranchise.
P.D.1112
providedfurtherthattheTRBhasthepowertoamendormodifyaTollOperationCertificate
[95]
thatitissuedwhenpublicinterestsorequires.
Accordingly,toOurmind,thereisnothing
infirm much less questionable about the provision in the STOA, allowing the substitution of
MNTCincaseitdefaultsinitsloans.
[96]
Furthermore, in the subject provision (Clause 17.4.1
), the unrestricted right of the
lendertoappointasubstitutedentityisneverintendedtoaffordsuchlenderaplenarypowerto
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doso.Thesubjectclausestates:
17.4.1ThePARTIESacknowledgethatfollowingaNoticeofSubstitutionunderclauses17.2
or17.3theLENDERShave,subjecttotheprovisionsofClause17.4.3,theunrestrictedright
to appoint a SUBSTITUTED ENTITY in place of MNTC following the declaration of the
occurrenceofaMNTCDEFAULTpriortofullrepaymentoftheLOANSorofaneventof
default in respect of the LOANS. GRANTOR shall extend all reasonable assistance to the
AGENTtoputinplaceaSUBSTITUTEDENTITY.MNTCshallmakeavailableallnecessary
informationtopotentialSUBSTITUTEDENTITYtoenablesuchentitytoevaluatetheProject.
(Emphasisours.)
ItisclearfromtheabovequotedprovisionthatClause17.4.1shouldalwaysbeconstrued
and read in conjunction with Clauses 17.2, 17.3, 17.4.2, 17.4.3 and 20.12. Clauses 17.2 and
17.3 discuss the procedures that must be followed and undertaken in case of MNTCs default
priortothefullrepaymentoftheloans,andbeforethesubstitutionunderClause17.4.1could
takeplace.Theseclausesprovidethefollowingprocess:
PriortoFullRepaymentoftheLOANS:
17.2 Upon occurrence of an MNTC DEFAULT under Clause 17.1(a) and (e) prior to full
repaymentoftheLOANS,GRANTORshallserveawrittenNoticeofDefaulttoMNTCwith
copytotheAGENT givingareasonableperiodoftimetocuretheMNTCDEFAULT,such
periodbeingthree(3)monthsfromreceiptofthenoticeorsuchlongerperiodasmaybe
approvedbyGRANTOR,takingdueconsiderationofthenatureofthedefaultandoftherepair
worksrequired.If MNTC fails to remedy such default during such three (3) month or [sic]
curingperiod,GRANTORmayissueaNoticeofSubstitutiononMNTC,copyfurnishedto
theAGENT,whichshalltakeeffectupontheassumptionandtakeoverbytheSUBSTITUTED
ENTITYpursuanttotheprovisionsofClause17.4hereofProvided, However, that prior to
such assumption and take over by the SUBSTITUTED ENTITY, MNTC shall continue to
OPERATEANDMAINTAINthePROJECTROADSandshallplaceinanescrowaccountthe
TOLL revenues, save such amounts as may be needed to primarily cover the OPERATING
COSTS and as may be owing and due to the lenders under the LOANS and, secondarily, to
cover the PNCC Gross Toll Revenue Share, Provided, Further, that upon the assumption and
takeoverbytheSUBSTITUTEDENTITY,suchassumptionandtakeovershallhavetheeffect
ofrevokingtherights,privilegesandobligationsofMNTCunderthisAGREEMENTinfavorof
theSUBSTITUTEDENTITYandMNTCshallceasetobeaPARTYtothisAGREEMENT.
17.3IfpriortofullrepaymentoftheLOANSMNTCfailstoremedyMNTCDEFAULTunder
Clause 17.1 (b) or an MNTC DEFAULT occurs under Clause 17.1 (c), (d) or (f) prior to full
repaymentoftheLOANS,GRANTORshallserveaNoticeofSubstitutiononMNTC,copy
[97]
furnishedtotheAGENT,asprovidedunderClause17.4.
(Emphasisours)
It is apparent from the abovequoted provision that it is the TRB representing the
Republic of the Philippines as Grantor which has control over the situation before Clause
17.4.1couldcomeintoplace.Tostress,followingtheconditionunderClause17.4.1,itisonly
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whenClauses17.2and17.3havebeencompliedwiththattheentireClause17.4couldbeginto
materialize.
Clauses 17.4.2 and 17.4.3 also provide for certain parameters as to when a substituted
entitycouldbeconsideredacceptable,andenumeratetheconditionsthatshouldbeundertaken
[98]
andcompliedwith.
Particularly,thesubjectprovisionsstate:
17.4.2TheSUBSTITUTEDENTITYshallberequiredtoprovideevidencetoGRANTORthat
atthetimeofsubstitution:
(i)itislegallyandvalidlynominatedbytheAGENTasMNTCssubstitutetocontinue
theimplementationofthePROJECT.
(ii) it is legally and validly constituted and has the capability to enter into such
agreementasmayberequiredtogiveeffecttothesubstitution
17.4.3TheAGENTshallhaveone(1)yeartoeffectasubstitutionunderClause17.4 Provided,
However, that during this time the AGENT shall not take any action which may
jeopardizethecontinuityoftheserviceandshalltakethenecessaryactiontoensureits
continuation. To effect such substitution, the AGENT shall notify its intention to
GRANTORandshall,atthesametime,giveallnecessaryinformationtoGRANTOR.
GRANTOR shall, within one (1) month following such notification, inform the
AGENT of its acceptance of the substitution, if the conditions set forth in Clause
17.4.2 have been satisfied. The SUBSTITUTED ENTITY shall be permitted a
reasonableperiodtocureanyMNTCDEFAULTunderClause17.1(a),(b)or(e).
From the foregoing, it is clear that the lenders do not actually have an absolute or
unrestrictedrighttoappointtheSUBSTITUTEDENTITYinviewofTRBsrighttoacceptor
rejectthesubstitutionwithinone(1)monthfromnoticeandsuchrighttoappointcomesinto
forceonlyifandwhentheTRBdecidestoeffectuatethesubstitutionofMNTCasallowedin
Clause17.2oftheMNTCSTOA.
Atthesametime,Clause17.4.4particularizestheconditionsuponwhichthesubstitution
shallbecomeeffective,towit:
17.4.4TheSubstitutionshallbeeffectiveupon:
(a)theappointmentofaSUBSTITUTEDENTITYinaccordancewiththeprovisionsof
thisClause17.4and,
(b) assumptionbytheSUBSTITUTEDENTITYofalloftherightsandobligationsof
MNTC under this AGREEMENT, including the payment of PNCCs Gross Toll
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RevenueShareundertheJOINTVENTUREAGREEMENTdated29August1995
andallotheragreementsinconnectionwiththisagreementsignedandexecutedby
andbetweenPNCCandMNTC.
TheaforequotedSection(a)ofClause17.4.4reiteratesthenecessityofcomplianceby
the substituted entity with all the conditions provided under Clause 17.4. Furthermore,
following the abovequoted conditions veritably protects the interests of the Government. As
previously discussed supra, PNCCs assets with respect to its legislative franchise under P.D.
1113, as amended, has already been automatically turned over to the Government. And
whatever share PNCC has in relation to the currently implemented administrative authority
grantedbytheTRBismerelybeingheldintrustbyitinfavoroftheGovernment.Accordingly,
the fact that Section b of Clause 17.4.4 ensures that the obligation to pay PNCCs GrossToll
Revenue Share is assumed by the substituted entity, necessarily means that the Governments
GrossTollRevenueShareissafeguardedandkeptintact.
The MNTC STOA also states that only in case no substituted entity is established in
accordancewithClause17.4thatClause17.5shallbeapplied.Clause17.5grantsthelenders
thepowertoextendtheconcessionincasetheGrantor(RepublicofthePhilippines)takesover
[99]
thesame,foraperiodnotexceedingfiftyyears,untilfullpaymentoftheloans.
Petitioners
contend that the option to extend the concession for that stated period is, however,
unconstitutional.
Thisassertionisimpressedwithmerit.Attheoutset,Clause17.5doesnotactuallygrant
thelendersofthedefaultingconcessionaire,thepowertounilaterallyextendtheconcessionfor
aperiodnotexceedingfiftyyears.Forreference,thepertinentprovisionstates:
17.5OnlyifnoSUBSTITUTEENTITYisestablished shalltheGRANTOR[TRB]beentitled
to takeover the CONCESSION with no commitment on the LOANS in which case the
OPERATION AND MAINTENANCE CONTRACT shall be assigned to any entity that the
[100]
AGENT
maydesignateprovidedsuchentityhasasufficientlegalandtechnicalcapacityto
performandassumetheobligationsoftheOPERATIONANDMAINTENANCECONTRACT
under this AGREEMENT. The LENDERS shall receive all TOLL, excepting PNCCs
revenue share provided for under the JOINT INVESTMENT PROPOSAL (vide: Annex C
hereof),foraslongasrequireduntilfullrepaymentoftheLOANSincluding if necessary an
extension of the CONCESSION PERIOD which in no case shall exceed fifty (50) years
Provided that the LENDERS support all amounts payable under the OPERATION AND
MAINTENANCE CONTRACT. For avoidance of doubt, the GRANTOR will have no
[101]
obligation in relation to liabilities incurred by MNTC prior to such takeover.
(Emphasis
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supplied)
The aforequoted provision should be read in conjunction with Clause 20.12, which
expressly provides that the MNTC STOA is made under and shall be governed by and
construedinaccordancewiththelawsofthePhilippines,andparticularly,bytheprovisionsof
P.D. Nos. 1112, 1113 and 1894. Under the applicable laws, the TRB may very well amend,
[102]
modify,alterorrevoketheauthority/franchisewheneverthepublicinterestsorequires.
In
aword,thepowertodeterminewhetherornottocontinueorextendtheauthoritygrantedtoa
concessionairetooperateandmaintainatollwayisvestedtotheTRBbytheapplicablelaws.
Thenecessityofwhetherornottoextendtheconcessionortheauthoritytoconstruct,operate
andmaintainatollwayrests,byoperationoflaw,withtheTRB. As such, the lenders cannot
unilaterallyextendtheconcessionperiod,or,withlikeeffect,imposeuponordemandthatthe
TRBagreetoextendsuchconcession.
Bethatasitmay,itmustbenoted,however,thatwhiletheTRBisvestedbylawwiththe
powertoextendtheadministrativefranchiseorauthoritythatitgranted,nevertheless,itcannot
do so for an accumulated period exceeding fifty years. Otherwise, it would violate the
[103]
proscriptionunderArticleXII,Section11ofthe1987Constitution,whichstatesthat:
Sec.11.Nofranchise,certificate,oranyotherformofauthorizationfortheoperationof
a public utility shall be granted except to citizens of the Philippines or to corporations or
associations organized under the laws of the Philippines at least sixty per centum of whose
capital is owned by such citizens, nor shall such franchise, certificate, or authorization be
exclusive in character or for a longer period than fifty years. Neither shall any such
franchiseorrightbegrantedexceptundertheconditionthatitshallbesubjecttoamendment,
alteration or repeal by the Congress when the common good so requires. The State shall
encourage equity participation in public utilities by the general public. The participation of
foreigninvestorsinthegoverningbodyofanypublicutilityenterpriseshallbelimitedtotheir
proportionate share in its capital, and all the executive and managing officers of such
corporationorassociationsmustbecitizensofthePhilippines.(EmphasisOurs)
Inthiscase,theMNTCSTOAalreadyhasanoriginalstipulatedperiodofthirtyyears.
[104]
Clause17.5allowstheextensionofthisperiodifnecessarytofullyrepaytheloansmade
byMNTCtothelenders,thus:
xxxTheLENDERSshallreceiveallTOLL,exceptingPNCCsrevenueshareprovided
for under the JOINT INVESTMENT PROPOSAL (vide: Annex C hereof), for as long as
required until full repayment of the LOANS including if necessary an extension of the
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CONCESSION PERIOD which in no case shall exceed a maximum period of fifty (50)
yearsxxx(Emphasisours.)
If the maximum extension as provided for in Clause 17.5, i.e. fifty years, shall be
utilized,theaccumulatedconcessionperiodthatwouldbegrantedinthiscasewouldeffectively
beeightyyears.ToUs,thisisaclearviolationofthefiftyyearfranchisethresholdsetbythe
Constitution. It is in this regard that we strike down the abovequoted clause, including if
necessary an extension of the CONCESSION PERIOD which in no case shall exceed a
maximum period of fifty (50) years in Clause 17.5 as void for being violative of the
[105]
Constitution.
Itmustbemadeabundantlyclear,however,thatthenullityshallbelimited
tosuchextensionbeyondthe50yearconstitutionallimit.
All told, petitioners allegations that the TRB acted with grave abuse of discretion and
with gross disadvantage to the Government with respect to Clauses 17.4.1 and 17.5 of the
MNTCSTOAareunfoundedandspeculative.
Petitioners also allege that the MNTC STOA is grossly disadvantageous to the
GovernmentsinceunderClause11.7thereof,theGovernment,throughtheTRB,guaranteesthe
viabilityofthefinancingprogramofatolloperator.UnderClause11.7oftheMNTCSTOA,
theTRBagreedtopaymonthly,thedifferenceinthetollfeesactuallycollectedbyMNTCand
thatwhichitcouldhaverealizedundertheSTOA.Thepertinentprovisionsstates:
11.7 To insure the viability and integrity of the Project, the Parties recognize the
necessityforadjustmentsoftheAUTHORIZEDTOLLRATE.Intheeventthatsaidadjustment
are not effected as provided under thisAgreement for reasons not attributable to MNTC, the
GRANTOR [TRB] warrants and so undertakes to compensate, on a monthly basis, the
resultinglossofrevenueduetothedifferencebetweentheAUTHORIZEDTOLLRATE
actually collected and theAUTHORIZED TOLL RATE which MNTC would have been
abletocollecthadtheadjustmentsbeenimplemented.(Emphasisours)
As set out in the preamble of P.D. 1112, the need to encourage the infusion of private
capital in tollway projects is the underlying rationale behind the enactment of said decree.
Owingtothescarcecapitalavailabletobankrollahugecapitalintensiveproject,suchasthe
North Luzon Tollway project, it is wellnigh inevitable that the financing of these types of
projectsissourcedfromprivateinvestors.Quitenaturally,theinvestorsexpecttheregularityof
thecashflow.ItisperhapsinthisbroadcontextthattheobligationoftheGrantorunderClause
11.7oftheMNTCSTOAwasincludedintheSTOA.ToUs,Clause11.7isnotonlygrossly
disadvantageoustotheGovernmentbutamanifestviolationoftheConstitution.
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Section3(e)(5)ofP.D.1112explicitlystates:
[t]hat no guarantee, Certificate of Indebtedness, collateral securities, or bonds shall be

issued by any government agency or governmentowned or controlled corporation on any
financing program of the toll operator in connection with his undertaking under the Toll
OperationCertificate.
What the law seeks to prevent in this situation is the eventuality that the Government,
throughanyofitsagencies,couldbeobligatedtopayorsecure,whetherdirectlyorindirectly,
the financing by the private investor of the project. In this case, under Clause 11.7 of the
MNTCSTOA,theRepublicofthePhilippines(throughtheTRB)guaranteedthesecurityofthe
projectagainstrevenuelossesthatcouldresult,incasetheTRB,basedonitsdeterminationofa
just and reasonable toll fee, decides not to effect a toll fee adjustment under the STOAs
periodic/interimadjustmentformula.TheOSG,initsComment,admittedthattheamountsthe
government undertook to pay in case of Clause 11.7 violation is an undertaking to pay
[106]
compensatory damage for something akin to a breach of contract.
As P.D. 1112 itself
expresslyprohibitstheguaranteeofasecurityinthefinancingofthetolloperatorpursuantto
itstollwayproject,Clause11.7cannotbeavalidstipulationintheSTOA.
ThisismoresoforbeinginviolationoftheConstitution.ArticleVI,Section29(1)of
the Constitution mandates that [n]o money shall be paid out of the Treasury except in
[107]
pursuanceofanappropriationmadebylaw.
We have held in Radstock that government
fundsorpropertyshallbespentorusedsolelyforpublicpurposes,asexpresslymandatedby
Section 4 (2) of PD 1445 or the Government Auditing Code.
[108]
Particularly, We held in
Radstockcasethat:
[t]he power to appropriate money from the General Funds of the Government belongs
exclusivelytotheLegislature.Anyactinviolationofthisironcladruleisunconstitutional.
Reinforcing this Constitutional mandate, Sections 84 and 85 of PD 1445 require that

before a government agency can enter into a contract involving the expenditure of
governmentfunds,theremustbeanappropriationlawforsuchexpenditure,thus:
Section84.Disbursementofgovernmentfunds.
1.Revenuefundsshallnotbepaidoutofanypublictreasuryordepositoryexceptinpursuanceofan
appropriationlaworotherspecificstatutoryauthority.
xxxx
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Section85.Appropriationbeforeenteringintocontract.
No contract involving the expenditure of public funds shall be entered into unless there is an
appropriation therefor, the unexpended balance of which, free of other obligations, is sufficient to cover the
proposedexpenditure.
xxxx
Section 86 of PD 1445, on the other hand, requires that the proper accounting official
mustcertifythatfundshavebeenappropriatedforthepurpose.Section87ofPD1445provides
thatanycontractenteredintocontrarytotherequirementsofSections85and86shallbevoid.
[109]
(Emphasisours.)
In the instant case, the TRB, by warranting to compensate MNTC with the loss of
revenueresultingfromthenonimplementationoftheperiodicandinterimtollfeeadjustments,
violates the very constitutionally guaranteed power of the Legislature, to exclusively
appropriate money for public purpose from the General Funds of the Government. The TRB
veritablyaccordeduntoitselftheexclusiveauthoritygrantedtoCongresstoappropriatemoney
thatcomesfromtheGeneralFunds,bymakingawarrantytocompensatearevenuelossunder
Clause 11.7 of the MNTC STOA. There is not even a badge of indication that the
aforementionedrequisitesundertheConstitutionandP.D.1445inrespectofappropriationof
moneyfromtheGeneralFundsoftheGovernmenthavebeenproperlycompliedwith.Worse,
P.D. 1112 expressly prohibits the guarantee of security of the financing of a toll operator in
connectionwithhisundertakingundertheTollOperationCertificate.Accordingly,Clause11.7
of the MNTC STOA, under which theTRB warrants and undertakes to compensate MNTCs
loss of revenue resulting from the nonimplementation of the periodic and interim toll fee
adjustments,isillegal,unconstitutionalandhencevoid.
Parenthetically,WealsofindasimilarprovisionintheSLTCSTOAunderClause8.08
[110]
thereof,whichstatesthat:
(2)IntheeventtheAuthorizedTollRateandadjustmentstheretoarenotimplementedormade
effectiveinaccordancewiththeprovisionsofthisAgreement,forreasonsnotattributableto
the fault of the Investor and/or the Operator, including the reversal by theTRB or by any
competentcourtorauthorityofanysuchadjustmentintheAuthorizedTollRatepreviously
approved by the TRB, except where such reversal is by reason of a determination of the
misapplicationoftheAuthorizedTollRates,theGrantorshallcompensatetheOperator,ona
monthlybasisandwithinthirty(30)daysofsubmissionbytheOperatorofanoticethereof,
withoutinterest,fortheresultinglossofrevenuecomputedasthedifferencebetween:
(a)theactualtrafficvolumeforthemonthinquestionmultipliedbytheCurrentAuthorized
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TollRateasescalatedand/oradjusted,thatshouldbeineffectand
(b)theGrossTollRevenueforthemonthinquestion.
(3)TheobligationoftheGrantortocompensatetheOperatorshallcontinueuntiltheapplicable
CurrentAuthorizedTollRateisimplemented.
AkintowhatiscontemplatedinClause11.7oftheMNTCSTOA,Clauses8.08(2)and
(3) of the SLTC STOA, under which the TRB warrants or is obligated to compensate the
Operator for its loss of revenue resulting from the nonimplementation of the
calculation/formulaofauthorizedtollpriceandtollrateadjustmentsfoundinClause8thereof,
areillegal,unconstitutionaland,hence,void.ThisrulingisconsistentwiththeTRBspowerto
determine,withoutanyinfluenceorcompulsiondirectorindirectastowhetherachangeinthe
tollfeeratesiswarranted.Wewilldiscussthesamebelow.
PetitionersarguethattheCITRA,SLTCandMNTCSTOAstiethehandsoftheTRBas
it is bound by the stipulated periodic and interim toll rate adjustments provided therein.
Petitioners contend that the SMMS (CITRA STOA), the SLTC and the MNTC STOAs
provisions on initial toll rates and periodic/interim toll rate adjustments, by using a builtin
[111]
automatictollrateadjustmentformula,
allegedlyguaranteedfixedreturnsfortheinvestors
andnegatedthepublichearingrequirement.
This contention is erroneous. The requisite public hearings under Section 3 (d) of P.D.
1112andSection8(b)ofP.D.1894arenotnegatedbythefixingoftheinitialtollratesandthe
periodicadjustmentsundertheSTOA.
Prefatorily, a clear distinction must be made between the statutory prescription on the
fixingofinitialtollrates,ontheonehand,andofperiodic/interimorsubsequenttollrates,on
theother.First,thehearingrequiredunderthesaidprovisosreferstonoticeandhearingforthe
approvalordenialofpetitionsfortollrateadjustmentsorthesubsequenttollrates,nottothe
fixing of initial toll rates. By express legal provision, the TRB is authorized to approve the
initialtollrateswithoutthenecessityofahearing.Itisonlywhenachallengeontheinitialtoll
ratesfixedensuesthatpublichearingsarerequired.Section8ofP.D.1894saysso:
xxxtheGRANTEEshallcollecttollatsuchratesasshallinitiallybeapprovedbythe[TRB].
The[TRB]shallhavetheauthoritytoapprovesuchinitialtollrateswithoutthenecessity
ofanynoticeandhearing,exceptasprovidedintheimmediatelysucceedingparagraphof
thisSection.Forsuchpurpose,theGRANTEEshallsubmitfortheapprovalofthe[TRB]the
toll proposed to be charged the users. After approval of the toll rate(s) by the [TRB] and
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publicationthereofbytheGRANTEEonceinanewspaperofgeneralcirculation,thetollshall
immediatelybeenforceableandcollectibleuponopeningoftheexpresswaytotrafficuse.
Any interested Expressways users shall have the right to file, within x x x (90) days
afterthedateofpublicationoftheinitialtollrate,apetitionwiththe[TRB]forareviewof
theinitialtollrateprovided,however,thatthefilingofsuchpetitionandthependencyofthe
resolutionthereofshallnotsuspendtheenforceabilityandcollectionofthetollinquestion.The
[TRB],atapublichearingcalledforthepurposeshallthenconductareviewoftheinitialtoll
(sic) shall be appealable to the [OP] within ten (10) days from the promulgation thereof.
(Emphasisours.)
OfthesametenorisSection3(d)ofP.D.1112statingthattheTRBhasthepowerand
dutyto:
[i]ssue,modifyandpromulgatefromtimetotimetheratesoftollthatwillbechargedthe
directusersoftollfacilitiesanduponnoticeandhearing,toapproveordisapprovepetitions
fortheincreasethereof.Decisionsofthe[TRB]onpetitionsfortheincreaseoftollrateshall
beappealabletothe[OP]withinten(10)daysfromthepromulgationthereof.Suchappealshall
notsuspendtheimpositionofthenewrates,providedhowever,thatpendingtheresolutionofthe
appeal,thepetitionerforincreasedratesinsuchcaseshalldepositinatrustfundsuchamounts
as may be necessary to reimburse toll payers affected in case a (sic) reversal of the decision.
[112]
(EmphasisOurs.)
SimilarlyinPaduav.Ranada,thefixingofprovisionaltollratesbytheTRBwithouta
[113]
publichearingwasheldtobevalid,suchprocedurebeingexpresslyprovidedbylaw.
To
be very clear, it is only the fixing of the initial and the provisional toll rates where a public
hearing is not a vitiating requirement. Accordingly, subsequent toll rate adjustments are
mandatedbylawtoundergoboththerequirementsofpublichearingandpublication.
InManilaInternationalAirportAuthority(MIAA)v.Blancaflor,theCourtexpoundedon
the necessity of a public hearing in rate fixing/increases scenario.There, the Court ruled that
theMIAA,beinganagencyattachedtotheDepartmentofTransportationandCommunications
(DOTC), is governed by Administrative Code of 1987,
[114]
Book VII, Section 9 of which
[115]
specifically mandates the conduct of a public hearing.
Accordingly, the MIAAs
resolutions, which increased the rates and charges for the use of its facilities without the
[116]
requiredhearing,werestruckdownasvoid.
Similarly,asWedoconcede,theTRB,being
[117]
likewise an agency attached to the DOTC,
is governed by the same Code and
consequently requires public hearing in appropriate cases. It is, therefore, imperative that in
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implementing and imposing new, i.e. subsequent toll rates arrived at using the toll rate
adjustment formula, the subject tollway operators and the TRB must necessarily comply not
only with the requirement of publication but also with the equally important public hearing.
Accordingly, any fixing of the toll rate, which did not or does not comply with the twin
requirementsofpublichearingandpublication,mustthereforebestruckdownasvoid.Insuch
case,thepreviouslyvalidtollrateshallconsequentlyapply,pendingcompliancewiththetwin
requirementsforthenewtollrate.
Intheinstantconsolidatedcases,thefixingoftheinitialtollratesmayhaveindeedcome
[118]
topasswithoutanypublichearing.
Unfortunatelyforpetitioners,andnotwithstandingits
presumptivevalidity,theydidnotassailtheinitialtollrateswithinthetimeframeprovidedin
[119]
P.D.1112andP.D.1894.
Besides,asearlierexplicated,theSTOAprovisionsonperiodic
rate adjustments are not a bar to a public hearing as the formula set forth therein remains
constant, serving only as a guide in the determination of the level of toll rates that may be
allowed.
It is apropos to state at this juncture that, in determining the reasonableness of the

subsequent toll rate increases, it behooves the TRB to seek out the Commission on Audit
(COA) for assistance in examining and auditing the financial books of the public utilities
concerned. Section 22, Chapter 4, Subtitle B,Title 1, BookV of theAdministrative Code of
1987 expressly authorizes the COA to examine the aforementioned documents in connection
[120]
withthefixingofratesofeverynature,includingasinthiscase,thefixingoftollfees.
We
have on certain occasions applied this provision. Manila Electric Company, Inc. v. Lualhati
easilycomestomindwherethisCourttaskedtheEnergyRegulatoryCommissiontoseekthe
assistanceoftheCOAindeterminingthereasonablenessoftherateincreasesthatMERALCO
[121]
intended to implement.
We have consistently held that the law is deemed written into
[122]
every contract.
Being a provision of law, this authority of the COA under the
Administrative Code should therefore be deemed written in the subject contracts i.e. the
STOAs.
In this regard, during the examination and audit, the public utilities concerned are
mandatedtoproduceallthereports,records,booksofaccountsandsuchotherpapersasmay
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berequired,andtheCOAisempoweredtoexamineunderoathanyofficialoremployeeofthe
[123]
said public utilit[ies].
Any public utility unreasonably denying COA access to the
aforementioned documents, unnecessarily obstructs the examination and audit and may be
adjudgedliableofconcealinganymaterialinformationconcerningitsfinancialstatus,shallbe
[124]
subject to the penalties provided by law.
Finally, theTRB is further obliged to take the
appropriate action on the COA Report with respect to its finding of reasonableness of the
[125]
proposedrateincreases.
Furthermore, while the periodic, interim and other toll rate adjustment formulas are
[126]
indicatedintheSTOAs,
it does not necessarily mean that theTRB should accept a rate
adjustment predicated on the economic data, references or assumptions adopted by the toll
operator. At the end of the day, the final figures should be those of the TRB based on its
appreciation of the relevant rateinfluencing data. In fine, the TRB should exercise its rate
fixingpowersvestedtoitbylawwithinthecontextoftheagreedformula,butalwayshavingin
mindthattheratesshouldbejustandreasonable.Conversely,itisverywellwithinthepower
[127]
oftheTRBunderthelawtoapprovethechangeinthecurrenttollfees.
Section3(d)
ofP.D.1112grantstheTRBthepowerto[i]ssue,modifyandpromulgatefromtimetotimethe
ratesoftollthatwillbechargedthedirectusersoftollfacilities.But the reasonableness of a
possible increase in the fees must first be clearly and convincingly established by the
petitioning entities, i.e. the toll operators. Otherwise, the same should not be granted by the
approvingauthorityconcerned.InPhilippineCommunicationsSatelliteCorporationv.Alcuaz,
[128]
theCourthadtheopportunitytoexplainwhatismeantbyajustandreasonablefixingof
rates,thus:
Hence,theinherentpowerandauthorityoftheState,oritsauthorizedagent,toregulatetherates
chargedbypublicutilitiesshouldbesubjectalwaystotherequirementthattheratessofixed
shallbereasonableandjust.Acommissionhasnopowertofixrateswhichareunreasonable
ortoregulatethemarbitrarily.Thisbasicrequirementofreasonablenesscomprehendssuchrates
whichmustnotbesolowastobeconfiscatory,ortoohighastobeoppressive.
What is a just and reasonable rate is not a question of formula but of sound business
judgment based upon the evidence it is a question of fact calling for the exercise of
discretion, good sense, and a fair, enlightened and independent judgment. In determining
whether a rate is confiscatory, it is essential also to consider the given situation, requirements
andopportunitiesoftheutility.Amethodoftenemployedindeterminingreasonablenessisthe
fairreturnuponthevalueofthepropertytothepublicutilityxxx.(Emphasisours.)
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IfincasetheTRBfindsthechangeintheratestobereasonableandthereforemerited,
theincreaseshallthenbeimplementedaftertheformalitiesofpublichearingandpublication
are complied with. In this case, it is clear that the change in the toll fees is immediately
effective and implementable. This is notwithstanding that, in case of an increase in the toll
fees,anappealthereonisfiled.Thelawisclear.Thus:
xxxDecisionsofthe[TRB]onpetitionsfortheincreaseoftollrateshallbeappealabletothe
OfficeofthePresidentwithinten(10)daysfromthepromulgationthereof.Suchappealshall
notsuspendtheimpositionofthenewrates,providedhowever,thatpendingtheresolutionof
the appeal, the petitioner for increased rates in such case shall deposit in a trust fund such
amountsasmaybenecessarytoreimbursetollpayersaffectedincaseareversalofthedecision.
[129]
(Emphasisours.)
BesidesthesettledruleunderSection3(d)ofP.D.1112thatthepowertoissue,modify
andpromulgatetollfeesrestswiththeTRB,itmustalsobeunderscoredthattheperiodicand
theinterimadjustmentsfoundinClauses11.4to11.6oftheMNTCSTOAdonotnecessarily
guaranteeanincreaseinthetollfees.Tostress,theformulaisbasedonmanyvariablefactors
thatcouldmeaneitheranincreaseoradecreaseinthetollfees,depending,interalia,onhow
wellcertaineconomiesaredoingandontheprojectionsandfigurespublishedbytheBangko
[130]
Sentral ng Pilipinas (BSP).
It is therefore arduous to contemplate a grossness in a
disadvantage that could only possibly arise in case of a nonimplementation of a change
particularly,anincreaseinthetollrates.
Petitioners have not incidentally shown that it is the traveling public, the users of the
expressways, who shouldered or will shoulder the completion of the projects by way of
exorbitantfeespayment,withtheinvestorsendingupwithakillingtherefrom.Thisconclusion,
for all its factual dimension, is too simplistic for acceptance. And it does not consider the
realitythattheCourtisnotatrieroffacts.Neitherdoesittakestockofthenatureandfunction
oftollroadsandtollfeespaidbymotorists,asaptlyelucidatedinNorthNegrosSugarCo.,Inc.
[131]
v.Hidalgo,
thus:
Toll is the price of the privilege to travel over that particular highway, and it is a
quidproquo.Itrestsontheprinciplethathewho,receivesthetolldoesorhasdonesomething
asanequivalenttohimwhopaysit.Everytravelerhastherighttousetheturnpikeasanyother
[132]
highway,buthemustpaythetoll.
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Atollroadisapublichighway,differingfromtheordinarypublichighwayschiefly
inthis:thatthecostofitsconstructioninthefirstinstanceisbornebyindividuals,orbya
corporation, having authority from the state to build it, and, further, in the right of the
[133]
publictousetheroadaftercompletion,subjectonlytothepaymentoftoll.
Tollroadsareinalimitedsensepublicroads,andarehighwaysfortravel,butwedonot
regardthemaspublicroadsinajustsense,sincethereisinthemaprivateproprietaryrightx
[134]
xx.
(Emphasisours.)
Parenthetically, our review of Section 7 of the SMMS STOA readily yields the
informationthattheleveloftheinitialtollrateshingesonamixoffactors.Taxholidaysthat
maybegrantedandthetaxtreatmentofdividendsmaybementioned.Ontheotherhand,the
subsequent periodic adjustments are provided to address factors that usually weigh on the
financial condition of any business endeavor, such as currency devaluation, inflation and the
usual increases in maintenance and operational costs incorporated into the formula provided
therefor.Evenwiththeexistenceofanautomatictollrateadjustmentformula,complianceby
the TRB and the other respondents with the twin requirements of public hearing and
publication is still mandatory. To reiterate, laws always occupy a plane higher than mere
contract provisions. In case the minimum statutory requirements are stiffer than that of a
contract, or when the contract does not expressly stipulate the minimum requirements of the
law,thenWerulethatcompliancewithsuchminimumlegalrequirementsshouldbedone. To
summarize,anytollfeeincreaseshouldcomplywiththelegaltwinrequirementsofpublication
andpublichearing,theabsenceofwhichwillnullifytheimpositionandcollectionofthenew
tollfees.
Inall,theinitialtollratesandperiodicadjustmentsappeartoUsassimplypredicatedon
thebasicrationaleforinvestinginatollproject,whichtorepeatis:areasonablerateofreturn
fortheinvestment.Section2(o)oftheBOTLaw,asamended,providesforadefinitionfora
[135]
reasonable rate of return on investments and operating and maintenance cost.
Running
throughthegamutofourstatutesprovidingforandencouragingpartnershipofthepublicand
private sector is the paramount common good for infrastructure projects and the equally
important factor of giving a reasonable rate of return to private sectors investments. The
viabilityofanyinfrastructureprojectdependsonthereturnswhichshouldbereasonableofthe
investmentcomingfromtheprivatesector.
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While the interests of the public are ideally to be accorded primacy in considering
government contracts, the reality on the ground is that the tollway projects may not at all be
possibleorwouldbedifficulttorealizewithouttheinvolvementoftheinvestingprivatesector,
whichexpectsitsusualshareofprofit.Thus,theCourtisatalosstounderstandhowthelevel
oftheinitialtollrates,whichdependedonseveralfactorsindicatedabove,andthesubsequent
adjustments resulted in the charging of exorbitant toll fees that, to petitioners, enabled the
investorstoshifttheburdenoffinancingthecompletionoftheprojectsonthemotoringpublic.
Neither does the alleged drasticif we may characterize it as suchsteep increase in the
leveloftollratesforNLEXconstituteakillingforPNCCanditspartnerMNTC. Petitioners
make much of the amount of the toll fees visvis the then prevailing minimum wage. These
playsoffiguresdetractfromtheessentialconcernontheproprietyofthelevelofthetollrates
visvistheinvestmentssunkintheNLEXprojectwithaview,onthepartofprivateinvestors,
toareasonablereturnontheirinvestment.Wherenosubstantialfigureswereprovidedonthe
investments,theprojectedoperatingandmaintenancecostsvisvistheprojectedrevenuefrom
thetollfees,nosubstantialconclusionsmayreasonablybededucedtherefrom.Besides, to be
takenintoaccountinrelationtothecostsoftheconstructionandrehabilitationoftheNLEXis
thelengthofthetollwayandforwhichmotoristshavetopaythecorrespondingtoll.Certainly,
theallegationsandconclusionsofpetitionersastotheunreasonableincreaseofthetollratesare
withoutadequatefactualmooring.
Theuseofatollwayisaprivilegethatcomesatacost.Thetollisapricepaidfortheuse
ofaprivilege.Therearetobesurealternativeroadsandroutes,whichmotoristsmayfallback
oniftheyareunwillingtopaythetoll.Thetoll,asmightbeexpected,ispeggedatalevelthat
makesthedevelopmentalprojectsandtheirmaintenanceviableotherwise,noinvestmentcan
beexpectedforthefurtheranceoftheprojects.
PetitionersFranciscoandHizonallegedthat,pertheminutesoftheTRBmeetings,the
Boarddeliberatelyrefrained,particularlywithrespecttotheSkywayproject,fromconducting
public hearings for the grant of the initial toll rates and on the rate adjustment formula to be
used in order to accelerate the implementation of the projects. The allegation is far from
correct. A perusal of the pertinent minutes of the TRB meetings, particularly that held on
[136]
August 17, 1995,
in fact would disclose a picture different from that depicted by said
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petitioners.NothingintheminutesofsaidmeetingtendstoindicatethattheTRBresolvedto
dispensewithpublichearings.We,therefore,findpetitionersFranciscoandHizonsattemptto
[137]
mislead the Court by falsely citing supposed portions
of the August 17, 1995 TRB
meeting very unfortunate. They quoted a correction on the minutes of the Special Board
MeetingNo.9505heldonJuly26,1995,whichwastakenupintheAugust17,1995meeting
for the approval of the minutes of the previous meeting. In said special meeting of July 26,
[138]
1995,
theBoarddeliberatedontherecommendationofADGSantosfortheconductofa
public hearing or soliciting the endorsement of the Metro Manila Development Authority
[139]
(MMDA).
But theTRB did not resolve to omit a public hearing with respect to the toll
rates.Infact,thedeliberationsusedthewordsintheeventtheBoarddecidesandiftheBoard
conducts,clearlyconveyingthenotionthattheTRBhadnotdecidedorresolvedtheissueof
publichearings.Bethatasitmay,WerulethattheTRBismandatedtocomplywiththetwin
requirementsofpublichearingandpublication.
PetitionersFranciscoandHizonslamentabouttheTRBmerelyrelyingon,ifnotyielding
to,therecommendationandfindingsoftheTechnicalWorkingGroup(TWG)oftheDPWHon
matters relative to STOA stipulations and tollrate fixing cannot be accorded cogency. In the
area involving big finance and complex project planning, banking on the data supplied by
techniciansandexpertsisatoncepracticalasitisinevitable.TheCourtcannotseeitswayclear
tounderstandwhypetitionerswouldbegrudgetheTRBfortappingthetechnicalknowhowof
others.Anditcannotbeoveremphasizedthatarecommendationisnomorethananexhortation
oranurgingastowhatisadvisableorexpedient,notbindingonthepersontowhichitisbeing
[140]
[141]
made.
To recommend involves the idea that another has the final decision.
The
ultimatedecisionstillrestswiththeTRBwhetherornottoacceptthefindingsoftheTWG.The
minutes of the TRB meetings show that its members went through the tedious process of
deliberatingontheformulatobeusedincomputingthetollrates.ThefactthattheTRBmight
have adopted the TWGs recommendation would not, on that ground alone, vitiate the bona
fidesoftheformersdecisionnorstaintheproceedingsleadingtosuchdecision.Inanycase,as
earlier held, the toll rate adjustment formula does not and cannot contravene the legal twin
requirementsofpublichearingandpublication.
InanotherbidtonullifytheSTOAsinquestion,petitionerswouldfoistontheCourtthe
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argumentsthat,firstly,PresidentRamostwistedthearmsoftheTRBtowardsenteringintothe
agreements in question and, secondly, that the CITRA STOA contained restrictive
confidentialityprovisionsbarringthepublicfromknowingtheircontentsandthedetailsofthe
negotiationsrelatedthereto.
Wearenotpersuadedbythefirstground,notnecessarilybecausethepressurebroughtto
bear on TRB rendered the STOAs infirm, but because the allegations on pressuretactics
allegedlyemployedbyPresidentRamosaretoospeculativeforacceptance.
On the second ground, We fail to see how the insertion of the alleged confidentiality
clause in the CITRA STOA translates into grave abuse of discretion or a violation of the
Constitution, particularly Article III, Section 7
[142]
thereof. First off, the Court can take
judicial notice that most commercial contracts, including financerelated project agreements
carrythestandardconfidentialityclausetoprotectproprietarydataand/orintellectualproperty
rights. This protection angle appears to be the intent of Clause 14.04(l)
[143]
of the CITRA
[144]
STOA.Andasmaybenoted,thesucceedingClause14.04(2)
removesfromtheambitof
the confidentiality restriction the following: disclosure of any information: (a) not otherwise
done by the parties (b) which is required by law to be disclosed to any person who is
authorizedbylawtoreceivethesame(c)toatribunalhearingpertinentproceedingsrelative
to the contract or agreement and (d) to confidential entities and persons relative to the
disclosing party like its banks, consultants, financiers and advisors. The second (item b)
exceptionprovidesareasonabledimensiontotheassailedconfidentialityclause.
Needless to stress, the obligation of the government to make information available

[145]
cannotbeexaggerated.
The constitutional right to information does not mean that every
day and every hour is open house in government offices having custody of the desired
[146]
documents.
Petitioners have not sufficiently shown, thus cannot really be heard to
complain, that they had been unreasonably denied access to information with regard to the
MNTCorSMMSSTOA.Besides,theremedyforunreasonabledenialofinformationthatisa
[147]
matterofpublicconcernisbywayofmandamus.
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Finally, as to petitioners catchall claim that the STOAs are disadvantageous to the
government, as therein represented by the TRB, suffice it to state for the nonce that behind
theseagreementsaretheBoardsexpertiseandpolicydeterminationontechnical,financialand
operational matters involving expressways and tollways. It is not for courts to look into the
wisdomandpracticalitiesbehindtheexercisebytheTRBofitscontractmakingprerogatives
underP.D.Nos.1112,1113and1894,absentproofofgraveabuseofdiscretionwhichwould
justify judicial review. In this regard, the Court recalls what it wrote in G & S Transport
[148]
Corporationv.CourtofAppeals,
towit:
xxxcourts,asarule,refusetointerferewithproceedingsundertakenbyadministrative
bodies or officials in the exercise of administrative functions.This is because such bodies are
generally better equipped technically to decide administrative questions and that nonlegal
factors,suchasgovernmentpolicyonthematterareusuallyinvolvedinthedecision.
SIXTHISSUE:PUBLICBIDDINGNOTREQUIRED
PrivatepetitionerswouldfinallymaintainthatpublicbiddingisrequiredfortheSMMS
and the North Luzon/South Luzon Tollways, partaking as these projects allegedly do of the
natureofaBOTinfrastructureundertakingundertheBOTLaw.Prescindingfromthispremise,
they would conclude that the STOAs in question and related preliminary and postSTOA
agreementsarenullandvoidforwantofthenecessarypublicbiddingrequiredforgovernment
infrastructureprojects.
Thecontentionispatentlyflawed.
TheBOTLawdoesnotsquarelyapplytothepeculiarcaseofPNCC,whichexercisedits
prerogatives and obligations under its franchise to pursue the construction, rehabilitation and
expansionofthetollwayswithchosenpartners.Thetollwayprojectsmayverywellqualifyasa
buildoperatetransfer undertaking. However, given that the projects in the instant case have
beenundertakenbyPNCCintheexerciseofitsfranchiseunderP.D.Nos.1113and1894,in
joint partnership with its chosen partners at the time when it was held valid to do so by the
OGCCandtheDOJ,thepublicbiddingprovisionsundertheBOTLawdonotstrictlyapply.
For, as aptly noted by the OSG, the subject STOAs are not ordinary contracts for the
construction of government infrastructure projects, which requires under the Government
[149]
ProcurementReformActorthenowrepealedP.D.1594,
publicbiddingasthepreferred
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G.R.No.166910
modeofcontractaward.Neitheraretheycontractswherefinancingorfinancialguaranteesfor
the project are obtained from the government. Rather, the STOAs actually constitute a
statutorilyauthorized transfer or assignment of usufruct of PNCCs existing franchise to
[150]
construct,maintainandoperateexpressways.
Theconclusionwouldperhapsbedifferentifthetollwayprojectsweretobeprosecuted
byanoutfitcompletelydifferentfrom,andnotrelatedto,PNCC.Insuchascenario,theentity
awardedthewinningbidinaBOTschemeinfrastructureprojectwillhavetoconstruct,operate
and maintain the tollways through an automatic grant of a franchise or TOC, in which case,
publicbiddingisrequiredunderthelaw.
Where,intheinstantcase,afranchiseeundertakesthetollwayprojectsofconstruction,
rehabilitation and expansion of the tollways under its franchise, there is no need for a public
bidding.Inpursuingtheprojectswiththevastresourcerequirements,thefranchiseecanpartner
with other investors, which it may choose in the exercise of its management prerogatives. In
this case, no public bidding is required upon the franchisee in choosing its partners as such
process was done in the exercise of management prerogatives and in pursuit of its right of
[151]
delectus personae.
Thus, the subject tollway projects were undertaken by companies,
whicharetheproductofthejointventuresbetweenPNCCanditschosenpartners.
PetitionersFranciscoandHizonsassertionsabouttheTRBawardingthetollwayprojects
tofavoredcompanies,unsubstantiatedastheyare,neednobelaboring.Suffice it to state that
thediscretiontochoosewhoshallstandascriticalJVpartnersremainedallalongwithPNCC,
at least theoretically. Needless to say, the records do not show that the TRB committed an
oversight as an administrative body over any aspect of tollway operations with regard to
PNCCsselectionofpartners.
The foregoing disquisitions considered, there is no more point in passing upon the
propriety of prohibiting or enjoining, on the ground of unconstitutionality or grave abuse of
discretion, the implementation of the initial toll rates and/or the adjusted toll rates for the
SMSS,expandedNLEXandSLEX,asauthorizedbytheseparateTRBresolutions,subjectof
andoriginallychallengedintheseproceedings.
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TheseTRBresolutionsandtheSTOAsuponwhichtheyarepredicatedhavelongbeenin
effect.Thepartieshaveactedontheseissuancesandcontractswhoseexistence,asanoperative
fact, cannot be ignored, let alone erased, even if the charge of unconstitutionality is given
currency.
While not exactly of governing applicability in this case, what the Court wrote in De
[152]
Agbayaniv.PhilippineNationalBank,
ontheoperativefactdoctrineisapropos:
xxxWhenthecourtsdeclarealawtobeinconsistentwiththeConstitution,theformer
shallbevoidandthelattershallgovern.Administrativeorexecutiveacts,ordersandregulations
shallbevalidonlywhentheyarenotcontrarytothelawsoftheConstitution..
Such a view has support in logic and possesses the merit of simplicity. It may not
howeverbesufficientlyrealistic.Itdoesnotadmitofdoubtthatpriortothedeclarationof
nullitysuchchallengedlegislativeorexecutiveactmusthavebeeninforceandhadtobe
complied with. This is so as until after the judiciary, in an appropriate case, declares its
invalidity,itisentitledtoobedienceandrespect.Partiesmayhaveactedunderitandmayhave
changedtheirpositions.Whatcouldbemorefittingthanthatinasubsequentlitigationregardbe
hadtowhathasbeendonewhilesuchlegislativeorexecutiveactwasinoperationandpresumed
tobevalidinallrespects.Itisnowacceptedasadoctrinethatpriortoitsbeingnullified,its
existenceasafactmustbereckonedwith.Thisismerelytoreflectawarenessthatprecisely
becausethejudiciaryisthegovernmentalorganwhichhasthefinalsayonwhether ornot
alegislativeorexecutivemeasureisvalid,aperiodoftimemayhaveelapsedbeforeitcan
exercisethepowerofjudicialreviewthatmayleadtoadeclarationofnullity.Itwouldbe
todeprivethelawofitsqualityoffairnessandjusticethen,iftherebenorecognitionof
whathadtranspiredpriortosuchadjudication.
In the language of an American Supreme Court decision: The actual existence of a

statute, prior to such a determination [of constitutionality], is an operative fact and may
haveconsequenceswhichcannotjustlybeignored.Thepastcannotalwaysbeerasedbya
newjudicialdeclarationxxx.(Emphasisintheoriginal.)
Thepetitionersinthefirstthree(3)petitionsandtherespondentinthefourthhavenotso
saidexplicitly,buttheirbriefisagainsttheissuanceofP.D.Nos.1112,1113and1894,which
conferredapackageofexpressandimpliedpowersanddiscretiontotheTRBandthePresident
resulting in the execution of what is perceived to be offending STOAs and the runaway
collection of illegal toll fees. And they have come to the Court to strike down all these
issuances,agreementsandexactions.While the Court is not insensitive to their concerns, the
ruleisthatallreasonabledoubtsshouldberesolvedinfavoroftheconstitutionalityofastatute,
[153]
andthevalidityoftheactstakeninpursuantthereof.Itfollows,therefore,thattheCourt
[154]
willnotsetasidealawasviolativeoftheConstitutionexceptinaclearcaseofbreach
and
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G.R.No.166910
[155]
onlyasalastresort.
Andasthetheoryofseparationofpowersprescribes,theCourtdoes
not pass upon questions of wisdom, expediency and justice of legislation. To Us, petitioners
and respondent YPES in the fourth petition have not discharged the heavy burden of
demonstrating in a clear and convincing manner the unconstitutionality of the decrees
challengedortheinvalidityofassailedactsofthePresidentandtheTRB.Becausetheyfailed
todoso,theCourtmustupholdthepresumptiveconstitutionalityandvalidityoftheprovisions
ofthethreedecreesinquestion,andthesubjectcontractsandTOCs.
RegardingpetitionerFranciscosSupplementalPetition,thetollrates,thecollectionofwhichin
theamountbasedontheformulaandassumptionssetforthinthelaw,andtheadvertedSTOA
dated February 1, 2006 and subject of the TRO issued on August 13, 2010, has been duly
[156]
[157]
published
andapprovedbytheTRB,asrequiredbySection5ofP.D.1112.
Andthe
partyconcessionaires have adequately demonstrated, and the TRB has virtually
[158]
acknowledged
thatthesaidratessubjectoftheTROpartakeofthenatureofopeningor
initial toll rates, which have not yet been implemented since the time the SLTC STOA took
[159]
effect.
Tonote,thetollratessubjectoftheTROwereapprovedandaretobeimplemented
in connection with the new facility, such as Project Toll Roads 1 and 2 pursuant to the new
SLTC STOA and the expanded and rehabilitated SLEX.
[160]
As earlier discussed, public
hearingisnotrequiredinthefixingandimplementationofinitialtollrates.But an interested
partyaggrievedbytheinitialratesimposedisnotwithoutanyresourceashemay,withinthe
timeframeprovidedbySection8(b)ofP.D.1894,repairtotheTRBforreviewandthereafter
[161]
to the OP.
As expressly provided in the same section, however, the pendency of the
petitionforreview,iftherebeany,shallnotsuspendtheenforceabilityandcollectionofthetoll
in question. In net effect, the challenge before the Court of the SLEX toll rate imposition is
premature.However,theCourttreatsthisSupplementalPetitionassailingthetollratescovered
bytheTRBNoticeofTollRatespublishedonJune6,2010asapetitionforreviewfiledunder
P.D. 1894, and hereby remands the same to the TRB for a review of the questioned rates to
determinetheproprietythereof.
WHEREFORE,thepetitionsinG.R.Nos.166910and173630areherebyDENIEDfor
lackofmerit.Accordingly,WedeclareasVALIDANDCONSTITUTIONALthefollowing:
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G.R.No.166910
1. theSupplementalTollOperationAgreementdatedApril30,1998coveringthe
North Luzon Tollway Project and the TRB Board Resolution No. 20054 issued
pursuantthereto
2.theSupplementalTollOperationAgreementdatedNovember27,1995covering
theSouthMetroManilaSkywayandtheTRBBoardResolutionNo.200453and
previousTRBresolutionsissuedpursuantthereto
3. theSupplementalTollOperationAgreementcoveringtheSouthLuzonTollway
Project or South Luzon Expressway and the TRB Board resolutions issued
pursuant to the said agreement, particularly the TRB Board resolutions allowing
the toll rate increases that are supposed to have been implemented on June 30,
2010
4.Section3,paragraph(a)ofPresidentialDecreeNo.1112,otherwiseknownasthe
TollOperationDecree,inrelationtoSection3,paragraph(d)thereofandSection
8,paragraph(b)ofPresidentialDecreeNo.1894and
5.Section3,paragraph(e)3ofP.D.No.1112andSection13ofP.D.No.1894.
WehoweverdeclareClause11.7oftheSupplementalTollOperationAgreementbetween
the Republic of the Philippines, represented by respondent TRB, as grantor, the Philippine
NationalConstructionCorporation,asfranchisee,andtheManilaNorthTollwaysCorporation
(MNTC) dated April 30, 1998 and the clause including if necessary an extension of the
CONCESSIONPERIODwhichinnocaseshallexceedamaximumperiodoffifty(50)yearsin
Clause17.5ofthesameSTOA,asVOIDandUNCONSTITUTIONAL forbeingcontraryto
Section2,ArticleXIIofthe1987Constitution.WelikewisedeclareClauses8.08(2)&(3)of
the Supplemental Toll Operation Agreement between the Republic of the Philippines,
represented by respondentTRB, as grantor, the Philippine National Construction Corporation
as franchisee, the South Luzon Tollway Corporation as investor, and the Manila Toll
Expressway Systems, Inc. as operator, dated February 1, 2006, as VOID and
UNCONSTITUTIONAL.
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The petition in G.R. No. 169917 is likewise hereby DENIED for lack of merit. We
declareasVALIDandCONSTITUTIONALthefollowing:
1.NoticeofApprovaldatedMay16,1995byformerPresidentFidelV.Ramosonthe
assignmentofPNCCsusufructuaryrights
2.theJointVentureAgreementdatedAugust29,1995
3.theJointInvestmentProposal,etc.datedJune16,1996
4.theSupplementalTollOperationAgreement(STOA)datedApril30,1998andthe
NoticeofApprovalofsaidSTOAdatedJune15,1998byformerPresidentFidel
V.Ramosand
5.theprovisionaltollrateincreasespublishedFebruary9,2005,grantedbytheTRB.
ThepetitioninG.R.No.183599isGRANTED.Accordingly,theDecisiondatedJune
23, 2008 of the RegionalTrial Court, Branch 155 in Pasig City, docketed as SCA No. 3138
PSG, annulling the TOC covering the SLEX, enjoining the original toll operating franchisee
from collecting toll fees in the SLEX, and ordering the turnover of related assets to the
Government, is hereby REVERSED and SETASIDE, and the petition filed therein by the
Young Professionals and Entrepreneurs of San Pedro, Laguna with the RTC of Pasig is
DISMISSEDforlackofmerit.
Inviewoftheforegoingdispositionsinthepetitionsatbar,theTROissuedbytheCourt
on August 13, 2010 is hereby ordered LIFTED, with respect to the petitions in G.R. Nos.
166910,169917,173630and183599.
ThechallengecontainedintheSupplementalPetitioninG.R.No.166910againstthetoll
ratessubjectoftheTRBNoticeofTollRatespublishedonJune6,2010,fortheSLEXprojects,
TollRoadProjects1and2ofthenewSLTCSTOA,andtheexpandedandrehabilitatedSLEX,
isREMANDEDtotheTRBforareviewoftheassailedtollratestodeterminewhetherSLTC
andMATESareentitledtothetollfees.
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G.R.No.166910
NoCost.
SOORDERED.
PRESBITEROJ.VELASCO,JR.
AssociateJustice
WECONCUR:
RENATOC.CORONA
ChiefJustice
(Onleave)
ANTONIOT.CARPIOCONCHITACARPIOMORALES
AssociateJusticeAssociateJustice
ANTONIOEDUARDOB.NACHURATERESITAJ.LEONARDODECASTRO
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ARTUROD.BRIONDIOSDADOM.PERALTA
LUCASP.BERSAMINMARIANOC.DELCASTILLO
(Onleave)
ROBERTOA.ABADMARTINS.VILLARAMA,JR.
JOSEPORTUGALPEREZJOSECATRALMENDOZA
MARIALOURDESP.A.SERENO
AssociateJustice
CERTIFICATION
Pursuant to Section 13,Article VIII of the Constitution, I certify that the conclusions in the
aboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriterof
theopinionoftheCourtEnBanc.
RENATOC.CORONA
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ChiefJustice
Onleave.
[1]
AuthorizingtheEstablishmentofTollFacilitiesonPublicImprovements,CreatingaBoardfortheRegulationthereofandfor
otherPurposes,P.D.1112[TOLLOPERATIONDECREE],whereasclause(March31,1977).
[2]
SeeP.D.1113,3.
[3]
AmendingtheFranchiseofthe[PNCC]toConstruct,MaintainandOperateTollFacilitiesintheNorthLuzonandSouthLuzon
Expressways to Include the Metro Manila Expressway to Serve as an Additional Artery in the Transportation of Trade and
CommerceintheMetroManilaArea,P.D.1894,1.
[4]
Whatisinvolvedwhentheusufructiscededare,interalia,therighttocollectandkeeptolloperate,repairorreplacethetoll
collectionsystemfortheprojecttollroadsandprovidecontinuingoperationandmaintenanceduringtheconcessionperiod.
[5]
P.D.1113,8P.D.1894,13.
[6]
P.D.1112,3(e)(3).
[7]
PHILIPPINECONSTITUTION,Art.XII,11.
SEC.11.Nofranchise,certificate,oranyotherformofauthorizationfortheoperationofapublicutilityshallbe
grantedexcepttocitizensofthePhilippinesortocorporationsorassociationsorganizedunderthelawsofthe
Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall such franchise,
certificate,orauthorizationbeexclusiveincharacterorforalongerperiodthanfiftyyears.Neithershallanysuch
franchiseorrightbegrantedexceptundertheconditionthatitshallbesubjecttoamendment,alterationorrepeal
by the Congress when the common good so requires. The State shall encourage equity participation in public
utilitiesbythegeneralpublic.Theparticipationofforeigninvestorsinthegoverningbodyofanypublicutility
enterpriseshallbelimitedtotheirproportionateshareinitscapital,andalltheexecutiveandmanagingofficersof
suchcorporationorassociationmustbecitizensofthePhilippines.
[8]
Rollo(G.R.No.166910),pp.152160.
[9]
Id.at166171DOJOpinionNo.79,s.1994.
[10]
InthesamewaythattheimprovementoftheSLEXwouldalsobereferredtoastheSouthLuzonTollwayproject.
[11]
Rollo(G.R.No.169917),pp.194196MNTCSTOA,clause3.1.
[12]
Initial focus of the MOA are the full rehabilitation and construction of the Alabang viaduct and full rehabilitation and
expansionoftheAlabangCalambaSantoTomasstretch.
[13]
Annex14,SLTCsandMATESConsolidatedComment/OppositiontotheSupplementalPetitionofpetitionerFrancisco.
[14]
Sections2.01oftheSTOA.
[15]
ArticleVI,Section1oftheConstitutionprovidesthatlegislativepowershallbevestedintheCongressofthePhilippinesxxx.
[16]
Annex16,ConsolidatedComment/OppositiontopetitionerFranciscosSupplementalPetition.
[17]
Annex17,ConsolidatedComment/OppositiontopetitionerFranciscosSupplementalPetition.
[18]
Id.
[19]
Rollo(G.R.No.183599),pp.5870.
[20]
Rollo(G.R.No.183599),p.70.
[21]
Dumlaov.COMELEC,G.R.No.L52245,January22,1980,95SCRA392,401.
[22]
Muskratv.U.S.,219U.S.346(1913).
57/65
6/23/2016
G.R.No.166910
[23]
SeeFlastv.Cohen,392U.S.83,20EEd2d947,88S.Ct.1942,1950(1968).
[24]
G.R.Nos.183591,183752,183893&183591,October14,2008,568SCRA402,405[citationsomitted]seealsoPACUv.
SecretaryofEducation,97Phil.806,810(1955).
[25]
JOAQUING.BERNAS,S.J.,THE1987CONSTITUTIONOFTHEREPUBLICOFTHEPHILIPPINES:ACOMMENTARY939(2003).
[26]
Id.at93940citingPeoplev.Vera,65Phil.56,89(1937)Macasianov.NationalHousingAuthority,G.R.No.107921,July1,
1993,224SCRA236.
[27]
Gonzalesv.Narvasa,G.R.No.140835,August14,2000,337SCRA733,740.
[28]
SeeTaadav.Angara,G.R.No.118295,May2,1997,272SCRA18.
[29]
Angarav.ElectoralCommission,63Phil.139,158(1936).
[30]
Chavez v. Public Estates Authority, G.R. No. 133250, July 9, 2002, 384 SCRA 152 Lim v. Executive Secretary, G.R. No.
151445,April11,2002,380SCRA739IBPv.Zamora,G.R.No.141284,August15,2000Tatadv.SecretaryoftheDepartmentof
Energy[DOE],G.R.Nos.124360&127867,November5,1997,281SCRA330 Kilosbayanv.Guingona,Jr.,G.R.No.113375,
May5,1994,232SCRA110,13738.
[31]
Tatadv.DOE,id.at349DeGuiav.COMELEC,G.R.No.104712,May6,1992,208SCRA420,422.
[32]
Severinov.GovernorGeneral,16Phil.366,371(1910).
[33]
DelMarv.PAGCOR,G.R.No.138298,November29,2000,346SCRA485,503.
[34]
MetropolitanCebuWaterDistrictv.Adala,G.R.No.168914,July4,2007,526SCRA465,466.
[35]
Albanov.Reyes,G.R.No.83561,July11,1989,175SCRA264.
[36]
Id.at264.
[37]
DOJOpinionNo.1,s.2006Annex15,ConsolidatedComment/Oppositiontosupplementalpetition.
[38]
KilusangMayoUnoLaborCenterv.Garcia,Jr.,G.R.No.115381,Dec.23,1994,239SCRA386,405.
[39]
Id.
[40]
P.D.1112,3,e.
[41]
PhilippineAirlines,Inc.v.CivilAeronauticsBoard,G.R.No.119528,March26,1997,270SCRA538.
[42]
PhilippineAirlines,Inc.,id.at551.
[43]
PhilippineAirlines,Inc.,id.at54950.
[44]
SeeTatadv.DOE,supranote30,349DeGuiav.COMELEC,supranote31,at422.
[45]
PhilippineAirlines,Inc.,supranote41,at550citingDyerv.TuskaloosaBridgeCo.,2Port.296,27Am.D.655 Christian
TodaTel.Co.v.Commonwealth,161S.W.543,156Ky.557,37C.J.S.158.
[46]
PhilippineAirlines,Inc.,id.citingYnchaustiSteamshipCo.v.PublicUtilityCommissioner,42Phil.642(1923).
[47]
G.R.No.178158,December4,2009,607SCRA413,49294.
[48]
See STOA (Covering the South Metro Manila Skyway) among the Republic, PNCC and Citra Metro Manila Tollways
Corporation,November27,1995,Rollo(G.R.No.166910),pp.329397STOA(CoveringtheManilaNorthExpressway)among
theRepublic,PNCCandManilaNorthTollwaysCorporation,April1998,Rollo(G.R.No.169917),pp.177242.
[49]
SeeP.D.1112,whereasclausesP.D.1113,whereasclausesP.D.1894,whereasclauses.
[50]
Seee.g.Rollo(G.R.No.169917),p.243seealsoRollo(G.R.No.169917),p.106.
[51]
P.D.1894,amendingP.D.1113.
[52]
P.D.1113,3P.D.1894,6.
[53]
P.D.1894,6.(Emphasisours.)
[54]
16.06SupplementalEffectThisAgreement[STOA]isintendedasasupplementtothe[TRBPNCC]TOA.Accordingly,tothe
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extentpossible,bothagreementsshouldberegardedasoneintegratedinstrumentwhoseprovisionsarefullyconsistentwitheach
otherprovidedhowever,thatinrespectoftheProjectoranyoftheProjectTollRoads,theprovisionsofthisAgreementshallhave
primacyofapplicationandshallbedeemedtohavemodifiedorreplacedprovisionsoftheTOAthatiscontraryorinconsistentwith
anyprovisionofthisAgreement.
[55]
StrategicAllianceDevelopmentCorporationv.RadstockSecuritiesLimited,supranote47,at494.(Emphasisintheoriginal.)
[56]
Id.at495.
[57]
DOJOpinionNo.122,s.1995Rollo(G.R.No.169917),p.363.
[58]
DOJOpinionNo.1,s.2006.
[59]
StrategicAllianceDevelopmentCorporationv.RadstockSecuritiesLimited,supranote47,at495.
[60]
Id.at494.
[61]
Id.
[62]
Seesupra.
[63]
DatedAug.20,1990reportedin188SCRA775.
[64]
TheDPWHhadjurisdictionovertheTRBpursuanttoE.O.No.644(July30,2007).
[65]
PNCCv.Republic,G.R.No.89557,August20,1990,188SCRA775,79091.
[66]
PNCCv.CourtofAppeals,G.R.No.104437,December17,1993,228SCRA565.
[67]
Id.at572.
[68]
Id.at567&570.
[69]
Martirv.Verano,497SCRA120,12627(2006)citingArmedForcesofthePhilippinesMutualBenefitAssociation,Inc.v.
CourtofAppeals,G.R.No.126745,July26,1999,311SCRA143,15455.
[70]
InrelationtoG.R.No.183599.
[71]
G.R.No.166785,July28,2008,560SCRA197,198,208209.
[72]
EasternAssurance&SuretyCorporation(EASCO)v.LandTransportationandFranchisingRegulatoryBoard(LTFRB),G.R.
No.149717,October7,2003,413SCRA75,90.
[73]
Drilonv.Lim,235SCRA135(1994).
[74]
EntitledCreatingTheLandTransportationFranchisingAndRegulatoryBoard.
[75]
Sec.5.PowersandFunctionsofthe[LTFRB].TheBoardshallhavethefollowingpowersandfunctions:
a.Toprescribeandregulateroutesofservice,economicallyviablecapacitiesandzonesorareasofoperationofpublicland
transportationservicesprovidedbymotorizedvehiclesxxxx
b.Toissuexxxorcancelxxxorpermitsauthorizingtheoperationofpubliclandtransportationservicesxxxandto
prescribetheappropriatetermsandconditionstherefor
c.Todetermine,prescribeandapprovexxxreasonable fares, rates and other related charges, relative to the operation of
publiclandtransportationservicesprovidedbymotorizedvehicles
.
g.Toconductinvestigationsandhearingsofcomplaintsforviolationofthepublicservicelawsonlandtransportationand
of the Board's rules and regulations, orders, decisions and/or rulings and to impose fines and/or penalties for such
violations
[76]
EntitledCreatingAMinistryOfPublicWorksAndAMinistryOfTransportationAndCommunications.
xxxx
Sec.15.FunctionsoftheCommission.TheCommissionshallexercisethefollowingfunctions:
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a.Issue[CPC]fortheoperationofcommunicationsutilitiesandservices,radiocommunicationssystems,wireor
wireless telephone or telegraph systems, radio and television broadcasting system and other similar public
utilities
b.Establish,prescribeandregulateareasofoperationofparticularoperatorsofpublicservicecommunications
anddetermineandprescribechargesorratespertinenttotheoperationofsuchpublicutilityfacilitiesandservices
exceptincasesxxx
c. Grant permits for the use of radio frequencies for wireless telephone and telegraph systems and radio
communicationsystemsincludingamateurradiostationsandradioandtelevisionbroadcastingsystems
xxxx
g.Promulgatesuchrulesandregulations,aspublicsafetyandinterestmayrequire,toencouragealargerandmore
effective use of communications, radio and television broadcasting facilities, and to maintain effective
competitionamongprivateentitiesintheseactivitieswhenevertheCommissionfindsitreasonablyfeasible
xxxx
[77]
AnActOrdainingReformsintheElectricPowerIndustry,AmendingforthePurposeCertainLawsandforOtherPurposes,R.A.
9136[ELECTRICPOWERINDUSTRYREFORMACTOF2001],4(w),6,8,34,38&43(f).
[78]
ChamberofRealEstateandBuildersAssociation,Inc.v.ERCandMERALCO,G.R.No.174697,July8,2010.
[79]
C.T.TorresEnterprises,Inc.v.Hibionada,etal.,G.R.No.80916,November9,1990.
[80]
Sec.8ofP.D.1113andSec.13ofP.D.1894eachcontainsasimilarprovisionbutusethewordgranteeinsteadoftolloperator
foundinSec.3ofP.D.1112,thus:
Thegranteeshallnotlease,transfer,granttheusufructof,sellorassignthefranchisenortherightsorprivileges
acquired thereby, x x x nor merge with any other company or corporation without the prior approval of the
PresidentofthePhilippines.xxx
.
[81]
G.R.No.113375,May5,1994,232SCRA110citing36Am.Jur.2D,Franchises,63.
[82]
NationalFederationofLaborv.NationalLaborRelationsCommission,G.R.No127718,March2,2000,327SCRA158,165.
[83]
Paduav.Ranada,G.R.No.141949,390SCRA663,679.
[84]
Paduav.Ranada,id.at679citingAssociationofSmallLandownersinthePhilippines,Inc.v.SecretaryofAgrarianReform,
175SCRA343(1989).
[85]
Rollo(G.R.No.169917),p.217.
[86]
Id.at4647.
[87]
Seesupraseee.g.Albanov.Reyes,supranote35,at264PhilippineAirlines,Inc.,supranote41,at538,549551.
[88]
Seesupra.
[89]
Albanov.Reyes,supranote35,at264.
[90]
KilusangMayoUno,supranote38,at405.
[91]
PhilippineAirlines,Inc.,supranote41,at549550.
[92]
P.D.1112,3(e).
[93]
P.D.1113,3P.D.1894,6.
[94]
SeesupraseealsoP.D.1894,1&2.
SECTION 1.Any provision of law to the contrary notwithstanding, there is hereby granted to the Philippine National
ConstructionCorporation,acorporationdulyorganizedandexistingunderbythevirtueofPhilippinelaws(hereinaftercalledthe
GRANTEE), the right, privilege and authority to construct, maintain and operate the following expressways (hereinafter
collectivelycalled"theExpressways"),togetherwiththetollfacilitiesappurtenantthereto:
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(a)theNorthLuzonExpresswayfromBalintawak(Station9+563)toCarmen,Rosales,Pangasinan
(b)theSouthLuzonExpresswayfromNichols,PasayCity(Station10+540)toLucena,Quezon
(c) the Metro Manila Expressway, from Bicutan, Paraaque, Metro Manila (Station 18 +720) to Meycauayan, Bulacan
(approximateStation63+290)withanapproximatelengthof44.570km.,toserveasanarteryinthetransportationof
tradeandcommerceintheMetropolitanManilaarea.
TheGRANTEEisherebyfurthergrantedtheright,privilegeandauthoritytoconstruct,maintainandoperateanyandall
such extensions, linkages or stretches, together with the toll facilities appurtenant thereto, from any part of the North Luzon
Expressway,SouthLuzonExpresswayand/orMetroManilaExpresswayand/ortodiverttheoriginalrouteandchangetheoriginal
endpointsoftheNorthLuzonExpresswayand/orSouthLuzonExpresswayasmaybeapprovedbytheTollRegulatoryBoard(any
andallsuchextensions,linkages,stretchesanddiversionshereinafterdeemedincludedinthetermExpressways).
SECTION2.ThetermofthefranchiseprovidedunderPresidentialDecreeNo.1113fortheNorthLuzonExpresswayandtheSouth
LuzonExpresswaywhichisthirty(30)yearsfrom1May1977shallremainthesameprovidedthat,thefranchisegrantedforthe
MetroManilaExpresswayandallextensionslinkages,stretchesanddiversionsthatmaybeconstructedafterthedateofapprovalof
thisdecreeshalllikewisehaveatermofthirty(30)yearscommencingfromthedateofcompletionoftheproject.
[95]
P.D.1112,3(e)(6).
[96]
17.4.1The PARTIES acknowledge that following a Notice of Substitution under clauses 17.2 or 17.3 the LENDERS have,
subjecttotheprovisionsofClause17.4.3,theunrestrictedrighttoappointaSUBSTITUTEDENTITYinplaceofMNTCfollowing
thedeclarationoftheoccurrenceofaMNTCDEFAULTpriortofullrepaymentoftheLOANSorofaneventofdefaultinrespectof
theLOANS.GRANTORshallextendallreasonableassistancetotheAGENTtoputinplaceaSUBSTITUTEDENTITY.MNTC
shallmakeavailableallnecessaryinformationtopotentialSUBSTITUTEDENTITYtoenablesuchentitytoevaluatetheProject.
[97]
Rollo(G.R.No.169917),pp.227228.
[98]
Id.at228.
[99]
MNTCSTOA,Clause17.5,id.Rollo,G.R.No.166917,at228.
[100]
Id.at184.Clause1.1.1AGENTshallmeantheauthorizedrepresentative/sappointedbytheLENDERStoactandnegotiate
ontheirbehalfwithrespecttotheLOANSandtothisAGREEMENTandnotifiedtoGRANTORbyMNTC.Id.at184.
[101]
Supranote99.
[102]
P.D.1112,3,e,P.D.1113,3P.D.1894,6.
[103]
PHIL.CONST.,Art.XII,11.
[104]
Rollo(G.R.No.166917),p.192.
[105]
PHIL.CONST.,Art.XII,11.
[106]
Rollo(G.R.No.169971),p.507.
[107]
PHIL.CONST.,Art.VI,29(1).
[108]
StrategicAllianceDevelopmentCorporationv.RadstockSecuritiesLimited,supranote47,at498.
[109]
Id.at498500.
[110]
SLTCSTOA,8.08(2)&(3).
[111]
Seee.g.MNTCSTOA,11.4&11.5SLTCSTOA,8.06&8.08.
11.4PeriodicAdjustment.
11.4.1 The AUTHORIZED TOLL RATE shall be adjusted as provided in this Clause every two calendar years, the first such
adjustmenttooccurontheOPERATIONDATEProvided,However,thatintheeventthatadelayincompletionofanyrelevant
PHASE is attributable to MNTC, MNTC shall not be entitled to an additional adjustment of the InitialAUTHORIZED TOLL
RATEattheactualOPERATIONDATEofthedelayedphase.
11.4.2Theadjustmentformulawillbeasfollows:
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1.UntilthetimetheLOANShavebeenfullyrepaidbutnotlaterthan31December2013,theprojectedfinalrepaymentdate
asperthePROJECTIMPLEMENTATIONSCHEDULEandtheFINANCIALPROJECTIONS:
ATRp =ATR0 xIp
where:
ATRp=AUTHORIZEDTOLLRATEforyearp
ATR0 =InitialReferenceAUTHORIZEDTOLLRATEasdefinedinClause11.3.
Ip =Tolladjustmentindexforyearp
=PCPIp Ep /E0
PCPI0x(1+Fc)p x[AP+BPx(DP/D0 )]
PCPIP=PhilippineConsumerPriceIndexforthemonthpriortofilingtherequestforadjustmentinyearp(orthelastindex
availableatthattime)
USCPIp =USAConsumerPriceIndexforthemonthpriortofilingtherequestforadjustmentinyearp(orthelastindex
availableatthattime)
PCPI0 =BasePhilippineConsumerPriceIndexasdefinedintheFINANCIALPROJECTIONSaspublishedbytheBangko
SentralngPilipinasasof30June1995
USCPI0 =BaseUSAConsumerPriceIndexasdefinedintheFINANCIALPROJECTIONSasof30June1995
Ap =Percentageoftotaldebtservice(ordebtoutstandingifthereisnodebtserviceinthatperiod)inPESOduringthe
periodofsix(6)monthspriortofilingtherequestforadjustmentinyearp
Bp =Percentageoftotaldebtservice(ordebtoutstandingifthereisnodebtserviceinthatperiod)inUS$duringtheperiod
ofsix(6)monthspriortofilingtherequestforadjustmentinyearp.Bp shallnotexceetFiftypercent(50%)after
thefirstadjustmentoftheAUTHORIZEDTOLLRATEmadeonOPERATIONDATE.
Ep=RollingaverageofUS$sellingrateagainstPESO,aspublishedbytheBangkoSentralngPilipinas,fortheperiodof
six(6)monthspriortofilingtherequestforadjustmentinyearp
Dp =ConsumerPriceIndexdifferentialbetweenPhilippinesandUSAcalculatedasPCPIp /USCPIp
E0 = Base average of US$ selling rate against PESO, as published by the Bangko Sentral ng Pilipinas as stated in the
FINANCIALPROJECTIONSasof30June1995
D0 =BaseConsumerPriceIndexdifferentialbetweenPhilippinesandUSAcalculatedasPCPI0 /USCPI0
Fc=Onepercent(1%)fortheperioduptotheOPERATIONDATEofthefirstPHASEincludingthefirstadjustmentofthe
TOLLRATE.
=Oneandonefourthofapercent(1.25%)fortheperiodfollowingtheOPERATIONDATEofPHASE1
2.FromthetimewhentheLOANShavebeenfullyrepaidnotlaterthan31December2013:
PCPIp
ATRp =ATRp1 x[1+(PCPIp1 1)x50%]
where:
ATRp1 =AUTHORIZEDTOLLRATEforyearp1
If,foranyreason,thePhilippineConsumerPriceIndexaspublishedbytheNationalStatisticsOfficeceasestobepublished
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G.R.No.166910
orisnotavailableinthemonthinquestion,thePARTIESshallusetheindexpublishedbytheBangkoSentralngPilipinas
assubstituteindexforthepurposeofeffectingtheabovecalculationor,incasethelatterindexisalsonotpublishedor
available,anotherindexagreedmutuallybytheGRANTORandMNTC.
11.4.3 Any such notice for adjustment to the AUTHORIZED TOLL RATE which results in the increase of the existing
AUTHORIZEDTOLLRATEshallbepublishedinanewspaperofgeneralcirculationnolaterthan30Novemberoftheyearin
which it is calculated and shall become enforceable and be collected by MNTC on the first day of January of the immediately
succeedingyear.
11.5InterimAdjustment.
11.5.1InadditiontothePeriodicAdjustment,(a)inthecircumstancescontemplatedinClauses15and16,MNTCshallbeentitled
to InterimAdjustment of the Initial ReferenceAUTHORIZEDTOLL RATE provided under Clause 11.3 or theAUTHORIZED
TOLLRATEprovidedunderClause11.4,ascompensationundersuchprovisions,or(b)whentherollingaverageovertwomonths
ofeithertheBangkoSentralngPilipinasforeignexchangesellingrate(PESO/US$)(Epasdefinedbelow)hasvariedbytenpercent
(10%) as long as the Toll RateAdjustment Formula described in Clause 11.4.2.1 applies or the Consumer Price Index for the
Philippines(PCPIp asdefinedbelow)hasvariedbyfifteenpercent(15%)comparedtothelevelofthisrateand/orindextothelevel
ofEp1andPCPIp1,respectively,MNTCshallbeentitledtoanadjustmentoftheInitialReferenceAUTHORIZEDTOLLRATEor
AUTHORIZEDTOLLRATEafterthefirstPeriodicAdjustment.
11.5.2AnyproposalforanadjustmentoftheInitialReferenceAUTHORIZEDTOLLRATEorAUTHORIZEDTOLLRATE,asthe
casemaybe,pursuanttoClauses15,16or11.5.1(b)hereofshallbesubmittedtoGRANTOR,withasupportingcalculation.Such
calculationshallbesubjecttoverificationandapprovalbyGRANTOR.
11.5.3AnysuchproposalforaninterimadjustmentintheInitialReferenceAUTHORIZEDTOLLRATEorAUTHORIZEDTOLL
RATE as the case may be, which results in the increase of the existing AUTHORIZED TOLL RATE shall be published in a
newspaperofgeneralcirculationnolaterthan30Novemberoftheyearinwhichitiscalculatedandshallbecomeenforceableand
becollectedbyMNTConthefirstdayofJanuaryoftheimmediatelysucceedingyear.
11.5.4AnInterimAdjustmentshall,otherthanthosemadebyreasonoftheoccurrenceofcircumstancesspecifiedunderClause15
and16,beconsideredasanadvancetoMNTCtobesetoffagainstfutureTOLLRATEPeriodicAdjustment Provided,However,
thatincomputingtheamounttobesetoffagainsttheforegoingadvance,thetimevaluethereofshallbeconsideredasrecognizedin
theFINANCIALPROJECTIONS.
[112]
P.D.1112,3,d.
[113]
Paduav.Ranada,G.R.Nos.141949&151108,October14,2002,390SCRA663,67883.
[114]
ManilaInternationalAirportAuthorityv.Blancaflor,G.R.No.157581,December1,2004,445SCRA471,479.
[115]
ManilaInternationalAirportAuthority,id.at479.
[116]
ManilaInternationalAirportAuthority,id.at479480.
[117]
ExecutiveOrderNo.686(December19,2007).
[118]
SeeP.D.1894,8,b.
[119]
Withintheperiodof90daysafterthedateofpublicationoftheinitialtollrate.
[120]
Instituting theAdministrative Code of 1987 [ADMINISTRATIVE CODE], Executive Order No. 292, book V, title 1, subtitle B,
chapter4,22(1)(1987).
Section22.AuthoritytoExamineAccountsofPublicUtilities.
(1)The[COA]shallexamineandauditthebooks,recordsandaccountsofpublicutilitiesinconnectionwiththe
fixingofratesofeverynature,orinrelationtotheproceedingsoftheproperregulatoryagencies,forpurposesof
determiningfranchisetaxes
[121]
G.R.Nos.166769&166818,December6,2006,510SCRA455.
[122]
HeirsofSeverinaSanMiguelv.CourtofAppeals,etal.,G.R.No.136054,September5,2001.
[123]
ADMINISTRATIVECODE,BookV,Title1,subtitleB,Chapter4,22(3).
63/65
6/23/2016
G.R.No.166910
[124]
ADMINISTRATIVECODE,BookV,Title1,subtitleB,Chapter4,22(2).
[125]
SeeManilaElectricCompany,Inc.v.Lualhati,510SCRAat478.
[126]
MNTCSTOA,Clause11CITRASTOA,Clause7SLTCSTOA,Clauses78.
[127]
P.D.1112,3,d.
[128]
G.R.No.84818,December18,1989,180SCRA218.
[129]
P.D.1112,3,d.
[130]
Rollo(G.R.No.169971),pp.214217.
[131]
NorthNegrosSugarCo.,Inc.v.Hidalgo,G.R.No.L42334,October31,1936,63Phil.664.
[132]
Ibid,citingCityofSt.Louisv.Creen,7Mo.App.,468,476.
[133]
Id.,citingVirginiaCaonTollRoadCo.v.People,45Pac.,396,39922Colo.,42937L.R.A.,711.
[134]
NorthNegrosSugarCo.,Inc.,63Phil.664citingBoardofShelbyCountyCommissionersv.Castetter,33N.E.,986,9877
Ind.App.,309.
[135]
Sec.2(o)ReasonablerateofreturnoninvestmentsandoperatingandmaintenancecostThe rate of return that reflects the
prevailingcostofcapitalinthedomesticandinternationalmarketsxxxProvidedfurtherthatfornegotiatedcontractsforpublic
utilityprojectswhicharemonopolies,therateofreturnonratebaseshallbedeterminedbyexistinglaws,whichinnocaseshall
exceedtwelvepercentum(12%).
[136]
Rollo(G.R.No.166910),pp.275285.
[137]
Id.at88.Petitionersquoted:
1.17August1995BoardMeeting
TheBoardresolvedthat(i)ntheeventthattheBoarddecidesonahearingbeforetheTOAapproval,thiswillmean
delayinthestartoftheconstructionandconsideringthatthePresidenthasgiveninstructionstoacceleratethe
implementationofthisproject,theissueofthedelayshouldberaisedtothePresident.IftheBoardconductsthe
hearingaftertheapprovaloftheTOA,thiswillallowconstructiontostartsoonandwouldeventuallyresultin
timesavings.However,iftheratesarerejectedinpublichearing,thengovernmentmaybeconsideredindefault.
[138]
Id.at219226.
[139]
Id.at225.Thediscussionwentlikethis:
TherepresentativeofADGSantosbroughttotheattentionoftheBoardthelatterspositionthatiftheparametric
formulaisadopted,thereshallbenodefaultonthepartofgovernmentincasenotollrateadjustmentisgiven.He
furtherstatedthatifdefaultisinsistedbytheproponent,ADGSantosisrecommendingfortheconductofapublic
hearingbeforeapproval.ADGSantosfurthersuggestedthatbeforethecontractissigned,theBoardshallconduct
apublichearingorsolicittheindorsementofMMDA.IntheeventthattheBoarddecidesonahearingbeforethe
TOA approval, this will mean delay in the start of construction and considering that the President has given
instructions to accelerate the implementation of this project, the issue of the delay should be addressed to the
President.IftheBoardconductsthehearingaftertheapprovaloftheTOA,thiswillallowconstructiontostart
soon and would eventually result in time savings. However, if rates are rejected in the public hearing, then
governmentmaybeconsideredindefault.
[140]
Cuyegkengv.Cruz,G.R.No.L16263,July26,1960,108Phil.1147.
[141]
Simonv.CivilServiceCommission,G.R.No.101251,November5,1992,215SCRA410,418.
[142]
Sec.7.Therightofthepeopletoinformationonmattersofpublicconcernshallberecognized.Accesstoofficialrecords,and
todocuments,paperspertainingtoofficialacts,transactions,ordecisions,aswellastogovernmentresearchdatausedasbasisfor
policydevelopment,shallbeaffordedthecitizens,subjecttosuchlimitationsasmaybeprovidedbylaw.
[143]
14.04 CONFIDENTIALITY. 1. None of the parties shall xxx without the consent of the other, divulge x x x any of the
contents of this Agreement or any information relating to the negotiation concerning the operations, contracts, commercial or
financialarrangementsoraffairsoftheotherpartiesheretoxxx.
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6/23/2016
G.R.No.166910
[144]
Rollo(G.R.No.166910),p.392.
[145]
JOAQUING.BERNAS,S.J.,THECONSTITUTIONOFTHEREPUBLICOFTHEPHILIPPINES337(1996).
[146]
SeeBaldozav.JudgeDimaano,A.M.No.1120MTJ,May5,1976,17SCRA14.
[147]
SeeTaadav.Tuvera,G.R.No.63915,April24,1985,136SCRA27 Legaspiv.CivilServiceCommission,G.R.No.72119,
May29,1987,150SCRA530.
[148]
432Phil.7(2002).
[149]
Dated June 11, 1978 entitled, Prescribing Policies, Guidelines, Rules and Regulations for Government Infrastructure
ContractsExpresslyrepealedbyR.A.9184.
[150]
Rollo(G.R.No.166910),pp.820821.
[151]
Choiceofpersonstheselectionofpersonssatisfactorytoonesselfforapositioninvolvingtrustandconfidenceintheothers
character.
[152]
DeAgbayani,v.PhilippineNationalBank,G.R.No.L23127,April29,1971,38SCRA429430.
[153]
Bascov.PAGCOR,G.R.Nos.138298,November29,2000,346SCRA485.
[154]
Angarav.ElectoralCommission,G.R.No.45081,July15,1936,63Phil.139.
[155]
16Am.Jur.2d,ConstitutionalLaw,Sec.115,citingcases.
[156]
Annex18A2,ConsolidatedComment/OppositiontoSupplementalPetition.
[157]
P.D.1112,5.
[158]
SeeAnnexes18A2&18C2,suprawhereintheTRBgavenoticethatanyinterestedexpresswayusershallhavetherightto
file,withinaperiodofninety(90)daysfromthedateofpublicationofthetollratematrix,apetitionforreview.
[159]
SeeSupplementalPetitionofpetitionerFrancisco,at18,AnnexC.
[160]
ConsolidatedComment/OppositiontopetitionerFranciscosSupplementalPetition,at4350,Annex16.
[161]
SeealsoAnnex18C2,ConsolidatedComment/OppositiontopetitionerFranciscosSupplementalPetition.
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partners, executed a Memorandum of Agreement (MOA),

In the meantime, or on April 8, 2010, the TRB issued a Certificate of Substantial

In their Consolidated Comment/Opposition to the Supplemental Petition, respondents

FINALLY, as mandated under Section 9 of PD No. 1113, respondent PNCC is hereby

Related to the requirement of an actual case or controversy is the requirement of

Accordingly, We take cognizance of the present case on account of its transcendental

(5) That no guarantee, Certificate of Indebtedness, collateral, securities, or bonds shall be

A franchise is basically a legislative grant of a special privilege to a person.

Such delegation of legislative power to an administrative agency is permitted in

While it may be, as held in Strategic Alliance Development Corporation v. Radstock

The foregoing notwithstanding, there are to be sure certain aspects in PNCCs

In case it is finally determined, after a review by theToll Regulatory Board or appeal

It is by now commonplace learning that many administrative agencies exercise and

[t]hat no guarantee, Certificate of Indebtedness, collateral securities, or bonds shall be

Reinforcing this Constitutional mandate, Sections 84 and 85 of PD 1445 require that

It is apropos to state at this juncture that, in determining the reasonableness of the

Needless to stress, the obligation of the government to make information available

In the language of an American Supreme Court decision: The actual existence of a

ATRp =ATR0 xIp

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