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Agan v.

PIATCO

CASE DIGEST by JEA LACAP
FACTS

In 1989, DOTC engaged in the services of ADP to conduct a study of the NAIA to determine whether the
airport can cope with traffic development by year 2010.
In 1993, ADEA submitted an unsolicited proposal to the government through the DOTC/MIAA and called
the project NAIA ITP III under the BOT Law.
The government granted PIATCO, formerly known as Pairgo, to operate and maintain NAIA IPT III during
the concession period and to collect the fees, rentals and other charges in accordance with the rates or
schedules stipulated in the 1997 Concession Agreement.
Due to various issues and petitions, former President Arroyo did not honour the PIATCO contract.

ISSUES

I. Whether or not (WoN) petitioners possessed locus standi.
II. WoN PIATCO was a qualified bidder.
III. WoN the 1997 Concession Agreement is valid.
IV. WoN the Direct Government Guarantee clause of the concession agreement is in violation of the BOT
Law.
V. WoN the Temporary Takeover clause of the concession agreement clause is unconstitutional.
VI. WoN the exclusive right granted to PIATCO to solely operate a commercial international passenger
terminal at the NAIA IPT III is unconstitutional.
HELD

I. Yes, the individual petitioners are employees of MIAA and have contract with MIAA. Therefore, they stand
to lose their employment or their contracts violates.
II. No. PIATCO was not a qualified bidder. According to the agreement, a bidder must be able to invest at
least 30% of the project cost PIATCO can only fund 6.08% of the project cost.
III. No, the 1997 Concession Agreement is not valid. The contract is invalid because the changes made
between the draft agreement and the 1997 agreement were substantial enough to constitute them as two
different contracts.
IV. Yes, the Direct Government Guarantee clause of the concession agreement is in violation of the BOT Law
because the government is obligated to pay the remainder of PIATCOs debt if the latter fails to pay its
loan obligations.
V. Yes, the Temporary Takeover clause of the concession agreement clause is unconstitutional. Based on the
1997 Concession Agreement, the government can temporarily take-over NAIA IPT III in case of national
emergency but the government is obligated to pay for the cost incurred in the use of the terminal during
this take-over. This clause in the concession agreement is in violation of Section 17, Article XII of the
Constitution because government take-over is an exercise of police power.
VI. No, the exclusive right granted to PIATCO to solely operate a commercial international passenger terminal
at the NAIA IPT III is not unconstitutional but the government must have strict regulation towards its
operation. Thus, while PIATCO may be authorized to exclusively operate NAIA IPT III as an international
passenger terminal, the Government, through the MIAA, has the right and the duty to ensure that it is
done in accord with public interest.