Supreme Court Confirms Validity of LRT 1 Extension Contract
The Supreme Court has affirmed the validity of the P65 billion concession agreement signed in 2014 between the government and the Light Rail Manila Corporation (LRMC) for the extension of the Light Rail Transit Line 1. This project, known as the Cavite Extension Project, covers the stretch from Baclaran in Parañaque City to Bacoor City in Cavite.
Under this agreement, the LRMC was granted the authority to build, operate, and maintain the LRT 1 extension for a period of 32 years. The LRMC, the sole winning bidder, is a consortium composed of Metro Pacific Light Rail Corporation, Ayala Corporation’s AC Infrastructure Holdings Corporation, and Macquarie Infrastructure Holdings PTE Limited of the Philippine Investment Alliance for Infrastructure.
Background of the Concession Agreement and Legal Challenge
The contract was awarded on May 28, 2014, by the then Department of Transportation and Communications (now Department of Transportation or DOTr) together with the Light Rail Transit Authority (LRTA). However, various groups, including Bagong Alyansang Makabayan (Bayan) and the commuter group Train Riders Network (TREN), contested the concession agreement’s legality.
They argued that the agreement was unconstitutional and harmful to Filipino commuters. The petitioners claimed that both the fare adjustments and the concession contract violated the public’s right to information, as the DOTr, LRTA, and LRMC allegedly refused to provide copies of the agreement and related negotiation documents.
Alleged Violations and Petitioners’ Claims
The groups pointed out that fare increases were implemented without proper notice or hearing, which they said breached the due process requirements under the Public Service Law. They also argued that the agreement threatened LRTA employees’ constitutional right to security of tenure by giving the concessionaire broad discretion to dismiss transferring workers for economic reasons without clear guidelines.
Furthermore, petitioners insisted that the concession agreement essentially functions as a public utility franchise, which can only be granted by Congress. They contended that the DOTr did not have the authority to issue such a franchise for the construction, operation, and maintenance of the LRT.
Supreme Court’s Ruling and Reasoning
In a full court decision penned by a senior justice, the Supreme Court dismissed the petition, citing lack of merit. The Court emphasized that under Executive Order No. 603, the LRTA has the power to set fares for the LRT system, a matter previously settled by the judiciary.
Regarding due process, the Court clarified that the concession agreement includes a mechanism for the concessionaire to apply for fare increases, which does not violate public rights. It rejected the claim that the contract infringes on employees’ security of tenure, noting that the agreement is not an employment contract but a contract governing the relationship between the government and the concessionaire.
The Court further explained that dismissals of transferring employees must follow relevant rules and procedures, denying the concessionaire any absolute right to terminate workers for economic reasons.
Legislative Franchise Not Required for Agreement Execution
The Supreme Court also underscored that congressional approval or a legislative franchise is not necessary for the concession agreement. It stated that Congress has authorized administrative bodies like the DOTr to issue licenses and certificates of public convenience for operating public utilities, including rail transportation services.
Section 5 of Executive Order No. 125-A was cited as empowering the DOTr to issue such certificates for public land and rail transportation utilities.
Transparency and Right to Information Considerations
On the right to information issue, the Court found that the DOTr and LRTA complied with disclosure laws. Invitations to qualify and bid for the LRT 1 Extension Project were posted on official websites and bulletin boards and advertised in newspapers. These contained details such as estimated costs, project descriptions, bidding procedures, and bidder qualifications.
Conclusion of the Supreme Court Decision
In closing, the Supreme Court ruled to dismiss the petition for certiorari and prohibition, affirming the concession agreement’s validity and dismissing the claims against it. The decision supports the government’s contract with the LRMC as lawful and binding.
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