LOPEZ VS PLATCO

The Supreme Court said that PIATCO cannot, by mere contractual

stipulation, contravene this constitutional provision, and obligate
the government to pay “reasonable cost for the use of the Terminal
and/or Terminal complex”. The constitutional provision envisions a
situation wherein the exigencies of the times necessitate the
government to “temporarily take over or direct the operation of any
privately owned public utility or business affected with public
interest”. It is the welfare and interest of the public which is the
paramount consideration in determining whether or not to
temporarily take over a particular business. Clearly, the State, in
effecting the temporary takeover is exercising its police power.

Note that the temporary takeover by the government extends only to the
operation of the business and not to the ownership thereof. As such, the
government is not required to compensate the private entity-owner of the
said business as there is no transfer of ownership, whether permanent or
temporary. The private entity-owner affected by the temporary takeover
cannot, likewise, claim just compensation for the use of said business and
its properties, as the temporary takeover by the government is in exercise
of the police power and not the power of eminent domain

Facts: Some time in 1993, six business leaders, explored the possibility of

investing in the new NAIA airport terminal, so they formed Asians Emerging
Dragon Corp. They submitted proposals to the government for the
development of NAIA Intl. Passenger Terminal III (NAIA IPT III). The NEDA
approved the NAIA IPT III project. Bidders were invited, and among the
proposal Peoples Air Cargo (Paircargo) was chosen. AEDC protested
alleging that preference was given to Paircargo, but still the project was
awarded to Paircargo. Because of that, it incorporated into, Phil. Intl.
Airport Terminals Co. (PIATCO). The DOTC and PIATCO entered into
a concession agreement in 1997 to franchise and operate the said terminal
for 21years. In Nov. 1998 it was amended in the matters of pertaining to the
definition of the obligations given to the concessionaire, development of
facilities and proceeds, fees and charges, and the termination of contract.
Since MIAA is charged with the maintenance and operations of NAIA
terminals I and II, it has a contract with several service providers. The
workers filed the petition forprohibition claiming that they would lose their
job, and the service providers joined them, filed a motion for intervention.
Likewise several employees of the MIAA filed a petition assailing
the legality of arrangements. A group of congressmen filed similar petitions.
Pres. Arroyo declared in her speech that she will not honor PIATCO
contracts which the Exec. Branch's legal office concluded null and void.

Issue: Whether or Not the 1997 concession agreement is void, together

with its amendments for being contrary to the constitution.

Held: The 1997 concession agreement is void for being contrary to public

policy. The amendments have the effect of changing it into and entirely
different agreement from the contract bidded upon. The amendments
present new terms and conditions which provide financial benefit to PIATCO
which may have the altered the technical and financial parameters of other
bidders had they know that such terms were available. The
1997 concession agreement, the amendments and supplements thereto are
set aside for being null and void.

The petitioners have local standi. They are prejudiced by the concession

agreement as their livelihood is to be taken away from them.