The Supreme Court (SC) has declared valid the P65 billion concession agreement forged by the government with the Light Rail Manila Corporation (LRMC) in 2014 for the extension of the Light Rail Transit Line 1 from Baclaran in Paranaque City to Bacoor City in Cavite.

Known as the Cavite Extension Project, the LRMC was authorized to construct, operate, and maintain the LRT 1 extension for 32 years.

The LRMC, the lone bidder which won the contract, is composed of the Metro Pacific Light Rail Corporation, Ayala Corporation’s AC Infrastructure Holdings Corporation, and the Philippine Investment Alliance for Infrastructure’s Macquarie Infrastructure Holdings PTE Limited.

The contract was awarded to the LRMC by the then Department of Transportation and Communications (now Department of Transportation or DOTr) and the Light Rail Transit Authority (LRTA) on May 28, 2014.     

The validity of the concession agreement signed on Oct. 2, 2014 was challenged by various groups led by the Bagong Alyansang Makabayan (Bayan) and commuters group Train Riders Network (TREN).

In a full court decision written by Senior Associate Justice Marvic M.V.F. Leonen, the SC dismissed the petition for lack of merit.

Petitioners Bayan and TREN claimed that the concession agreement was “unconstitutional and detrimental to the Filipino people.”

They alleged that the agreement and the fare adjustments are violative of the constitutional right to information on matters of public concern when the DOTr, the LRTA and the LRMC refused to furnish them with copies of the concession agreement and other documents related to their negotiations.    

Allowing the respondents (DOTr, LRTA and LRMC) to adjust the LRT fare without notice and hearing, as required under the Public Service Law, constitutes a violation of the public’s right to due process, they said.  

Also, they said, the agreement violates the LRTA employees' constitutional right to security of tenure since it gives the concessionaire the absolute discretion to dismiss a transferring employee due to economic reasons. 

They said the agreement fails to provide guidelines to be followed by transferring employees to prevent them from being discharged.   

At the same time, the petitioners said the concession agreement is essentially a public utility franchise which can only be granted by Congress.    

They alleged that the DOTr’s powers over railways do not include the authority to grant a franchise for LRT’s construction, operation and maintenance.   

In dismissing the petition, the SC said that under Section 4 of Executive Order No. 603, the LRTA is vested with authority to fix the fare for the use of LRT, and the High Court had already settled the issue in a previous decision.

On due process, the SC said: “We find that the Concession Agreement does not violate the public’s right to due process. It merely provides for a mechanism through which the concessionaire may apply for an increase of the LRT fare.”

It also junked the petitioners’ claim that the agreement violated the right of the employees to security of tenure.    

It upheld the argument that the agreement is not an employment contract between the LRMC and the transferring employees but a contract that governs the obligations of the government and the concessionaire to one another.    

“Not being an employment contract, the Concession Agreement is not intended to lay down the tasks that the transferring employees must undertake. It is not meant to provide for the reasonable standards that the probationary employees must conform to,” the SC said.      

It pointed out that the under the agreement, the LRMC has no absolute prerogative of dismissing a transferring employee due to economic reasons since it should be done in accordance with the “Relevant Rules and Procedures.”

Thus, it said: “We find the concession agreement does not violate the constitutional right to security of tenure.”   

The SC stressed that contrary to the claim of petitioners, congressional approval or legislative franchise is not a prerequisite for the execution of the concession agreement.   

It said that Congress has granted certain administrative agencies, like the DOTr, the power to grant licenses for, or authorize the operation of certain public utilities.    

Under Section 5 of Executive Order No. 125-A, one of the powers and functions of the DOTr pertains to the issuance of "certificates of public convenience for the operation of public land and rail transportation utilities and services,” the SC also said.    

On alleged violation of the right to information, the SC said that the respondents complied with their obligations under the laws which require the government to make full disclosure of all its transactions involving public interest.   

“Here, respondents DOTr and LRTA posted in their respective websites and bulletin boards the Invitation to Qualify and Bid for the LRT 1 Extension Project,” it also said.     

It added: “The Invitation to Qualify, which was also advertised in various newspapers, contained the following information relating to the project: first, estimated cost; second, description and components; third, bidding process; and fourth, bidders' qualifications.”      

The SC ruled: “Accordingly, the Petition for Certiorari and Prohibition is dismissed for lack of merit. So ordered.”