Lawyers ask SC to declare unconstitutional NAIA's rehabilitation, operation contract

The Supreme Court (SC) was asked to declare illegal and unconstitutional the Ninoy Aquino International Airport's (NAIA) rehabilitation and operation contract that was awarded to the New NAIA Infra Corporation (NNIC) in February 2024.

In a petition filed on Monday, April 7, the SC was told that the bidding for the concession contract did not comply with the provisions of the Public-Private Partnership Code (Republic Act No. 11966) that was signed into law on Dec. 5, 2023 and took effect on Dec. 23, 2023.

The petitioners are lawyers Joel R. Butuyan and Roger R. Rayel of the Center for International Law (CENTERLAW), former undersecretary of the Department of Environment and Natural Resources (DENR) Antonio Gabriel M. La Viña, and law deans Ma. Soledad Deriquito-Mawis and Jose Mari Benjamin Francisco U. Tirol.

Named respondents were the executive department led by Executive Secretary Lucas P. Bersamin, the Department of Transportation, the Manila International Airport Authority (MIAA), the PPP governing board, and the NNIC.

The petitioners pleaded the SC to issue a temporary restraining order (TRO), a writ of preliminary injunction, or a status quo ante order to stop immediately the implementation of the concession agreement. 

Since the petition was filed on Monday, April 7, in Manila, it was not known immediately if it can be taken up during the SC’s session on Tuesday, April 8, in Baguio City where the justices are having their traditional summer session.

In their 182-page petition, the petitioners told the SC that the NAIA concession contract was approved by the National Economic and Development Authority (NEDA) in June 2023 after 47 days from its submission.

They said the concession was subjected to bidding on Dec. 27, 2023 and awarded to the NNIC in February 2024 with the signing of the agreement done in March 2024.

“It would soon become evident just how quickly and easily a PPP (Public-Private Partnership) Project could be drawn up, approved, peddled, bid out, awarded and a concession agreement for it signed if absolutely none of the government officials overseeing it cared about following the law or safeguarding the public’s interest,” they also said. 

They added that the bidding did not comply with and was in violation of the provisions of the new Public-Private Partnership Code signed into law on Dec. 5, 2023 and took effect before the bidding on Dec. 23, 2023. 

They told the SC that the Office of the Solicitor General (OSG) and the Office of the Government Corporate Counsel (OGCC) both advised the Manila International Airport Authority (MIAA) that the bidding and award of the NAIA project is covered by and must comply with the PPP Code. 

Despite the advice, the petitioners said  the bidding proceeded without the terms being clear about how the concessionaire will be compensated. 

They said the MIAA charges fees, rentals and other charges to users of its facilities which will be paid ultimately by the passengers and consumers. From the income from these fees and charges will come the compensation for the concessionaire, they also said. 

But they pointed out that the fees and charges must undergo a ladderized rate-fixing approval process which includes public participation as an integral process, and “this constitutional right to due process of the law was not followed and was, in fact, done away with for future increases.”

The petitioners also pointed out that the Revised Administrative Order No. 1 (RAO1) governing these fees, rentals and charges were only approved in September 2024 or more than six months after the award of the project to NNIC and more than five months after the signing of the concession agreement.” 

They said: “Anomalously, RAO1 was adopted and passed without any changes as the draft that was first issued on Dec. 4, 2023. This, notwithstanding the objections and clarifications from relevant stakeholders which made the public hearing held therefor a mere formality.”

“Yet, despite the absence of the compensation mechanism as of bidding date on Dec. 27, 2023, NNIC managed to bag the contract by promising to pay MIAA 82 percent of the revenues on top of the P2 billion annual payments and the P30 billion performance bond for the fifteen years contract,” they also said.

They said that Section 2.2.2. Part III of RAO1 predetermines that the passenger service charge will be increased from P550 for every departing international passenger to P950 starting Sept. 14, 2025, while   domestic passenger service charge will be increased from P200 to P390 per passengers.   

While the revised administrative order provides mechanisms to effect increases in rates, this does not provide mechanisms that allow for corresponding decreases in rates when justified.   

They warned: “If the subject Concession Agreement is rendered valid …, it will open the floodgates to an open and institutional connivance between the government and business conglomerates to partner in operating public utilities, government monopolies, and government facilities --- not with an eye for “protecting the public interest by providing affordable, accessible, and efficient public services but for maximum business profit for the government and the private entity….”

Thus, they said “such an arrangement will be tantamount to a quasi-bribery, because the award of government concession agreements will be decided on the basis of who can guarantee maximum financial gain to the government, at the expense of an unsuspecting public.”

Earlier in November 2024, a consumers group asked the Manila regional trial court (RTC) to invalidate certain provisions of the NAIA concession agreement with the NNIC.

The case was filed by Consumers Union-Philippines, Inc. which alleged that the provisions of the concession agreement regarding "regulated" and "non-regulated" fees are “unlawful and discriminatory.”

The group alleged that the provisions allow the NNIC to impose "non-regulated" fees without government oversight, which they claim violates the PPP Code.

It also claimed that the classification of charges as "regulated" or "non-regulated" is arbitrary, lacks substantial basis, and is inconsistent with the public interest.

It was not known immediately what has transpired in the RTC case.