Philippine Supreme Court Resolutions > Year 2010 > November 2010 Resolutions > [G.R. No. 192484 : November 23, 2010] JOEY SARTE SALCEDA V. SEC. OF THE DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, TOLL REGULATORY BOARD, MANILA TOLL EXPRESSWAY SYSTEMS, INC., AND SOUTH LUZON TOLLWAY CORPORATION :

Please take notice that the Court en banc issued a Resolution dated NOVEMBER 23, 2010, which reads as follows:

"G.R. No. 192484 (Joey Sarte Salceda v. Sec. of the Department of Transportation and Communications, Toll Regulatory Board, Manila Toll Expressway Systems, Inc., and South Luzon Tollway Corporation)

R E S O L U T I O N

In his Petition for Prohibition and Mandamus under Rule 65 dated June 22. 2010, petitioner Joey Sarte Salceda, Governor of the Province of Albay, seeks, as expressway user, to prohibit and restrain the implementation, enforcement and collection of the approved new rates in the toll fees of the South Luzon Expressway (SLEX). The increase, he laments, is to be effected without complying with the twin requirements of notice and hearing under applicable laws, namely, Presidential Decree Nos. (PDs) 1112, 1113 and 1894. Petitioner likewise alleges that the Toll Regulatory Board (TRB) acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it contracted for the determination and fixing of the toll rales under the Supplemental Toll Operation Agreement (STOA) even without any authority to do so under PD 1112.^[1] Finally, petitioner, without presenting clear proof, alleges that the new rates for the improved, expanded and rehabilitated SLEX are unconscionable and exorbitant.^[2]

It may be recalled that on February 1, 2006, a STOA was executed by and among the Republic of the Philippines through the TRB, the Philippine National Construction Corporation (PNCC), the South Luzon Tollway Corporation (SLTC), as investor, and the Manila Toll Expressway Systems, Inc. (MATES), as operator, for the financing, design, construction, lane expansion and maintenance of the Project Toll Roads of the rehabilitated, expanded and improved SLEX.^[3]

Prior to the instant proceedings, four (4) separate petitions, docketed as G.R. Nos. 166910, 169917. 173630 and 183599,^[4] were filed assailing, in the main, the validity of laws, issuances and contracts relating to the North Luzon Expressway (NLEX), the South Metro Manila Skyway (SMMS) and the SLEX, as the case may be. Particularly:

xxx [T]he first three [were] special civil actions under Rule 65, assailing and seeking to nullify certain statutory provisions, presidential actions and implementing orders, toll operation-related contracts and issuances on the construction, maintenance and operation of the major tollway systems in Luzon. The petitions likewise [sought] to restrain and permanently prohibit the implementation of the allegedly illegal toll fee rate hikes for the use of the [NLEX], [SLEX] and the [SMMS]. The fourth, a petition for review under Rule 45, [sought] to annul and set aside the decision dated June 23. 2008 of the Regional Trial Court ("RTC") of Pasig, in SCA No. 3138-PSG. enjoining the original toll operating franchisee from collecting toll fees in the SLEX.^[5]

On August 13, 2010, G.R. No. 192484 was consolidated with the four (4) other petitions. Pending consideration of the five aforementioned petitions, the Court en banc issued on August 13, 2010 a Temporary Restraining Order (TRO), particularly for G.R. Nos. 166910, 169917, 173630, 183599 and 192484, enjoining:

xxx respondents Secretary of the Department of Transportation and Communication[s], Toll Regulatory Board, Manila Toll Expressway Systems, Inc., South Luzon Tollway Corporation, Philippine National Construction Corporation, Manila North Tollways Corporation, Benpres Holdings Corporation, First Philippine Infrastructure Development Corporation, Tollways Management Corporation, MTD Manila Expressways, Inc. and Citra Metro Manila Tollways Corporation, [their] agents, representatives, or persons acting in [their] place or stead, from implementing the toll rate increases in the South Luzon Expressway.^[6]

As expressly stated in the corresponding Order, the TRO was to be "effective immediately and continuing until further orders" from the Court.^[7]

On September 24, 2010, G.R. No. 192484 was deconsolidated from the first four (4) petitions, because the petition in G.R. No. 192484 was not yet ripe for adjudication.^[8]

In an en banc Decision dated October 19, 2010, in G.R. Nos. 166910, 169917, 173630 and 183599 (hereinafter "Tollway Decision1'), the Court resolved to uphold the constitutionality of the questioned provisions and the validity of the alleged TRB issuances and the STOAs. The Court, in the same decision, lifted the TRO with respect to the aforementioned dockets. The dispositive portion, insofar as pertinent, reads as follows:

WHEREFORE, the petitions in G.R. Nos. 166910 and 173630 are hereby DENIED for lack of merit. Accordingly, We declare as VALID and CONSTITUTIONAL the following:

1. the Supplemental Toll Operation Agreement dated April 30, 1998 covering the North Luzon Tollway Project and the TRB Board Resolution No. 2005-4 issued pursuant thereto;
   
   
2. the Supplemental Toll Operation Agreement dated November 27, 1995 covering the South Metro Manila Skyway and the TRB Board Resolution No. 2004-53 and previous TRB resolutions issued pursuant thereto;
   
   
3. the Supplemental Toll Operation Agreement covering the South Luzon ToUway Project or South Luzon Expressway and the TRB Board resolutions issued pursuant to the said agreement, particularly the TRB Board resolutions allowing the toll rate increases that are supposed to have been implemented on June 30, 2010;
   
   
4. Section 3, paragraph (a) of Presidential Decree No. 1112, otherwise known as the "Toll Operation Decree," in relation to Section 3, paragraph (d) thereof and Section 8, paragraph (b) of Presidential Decree No. 1894; and
   
   
5. Section 3, paragraph (e) 3 of P.D. No. 1112 and Section 13 of P.D. No. 1894.
   

We however declare Clause 11.7 of the Supplemental Toll Operation Agreement between the Republic of the Philippines represented by the respondent, TRB as grantor, the Philippine National Construction Corporation as franchisee, and the Manila North Tollways Corporation ("MNTC") dated April 30, 1998; and the clause "including if necessary an extension of the CONCESSION PERIOD which in no case shall exceed a maximum period of fifty (50) years" in Clause 17.5 of the same STOA, as VOID and UNCONSTITUTIONAL for being contrary to Section 2, Article XII of the 1987 Constitution. We likewise declare Clauses 8.08 (2) & (3) of the Supplemental Toll Operation Agreement between the Republic oi~ the Philippines represented by the respondent, TRB as grantor, the Philippine National Construction Corporation as franchisee, the South Luzon Tollway Corporation as investor, and the Manila Toll Expressway Systems, Inc. as operator, dated February 1, 2006, as VOID and UNCONSTITUTIONAL.

The petition in G.R. No. 169917 is likewise hereby DENIED for lack of merit. We declare as VALID and CONSTITUTIONAL the following:

1. Notice of Approval dated May 16, 1995 by former President Fidel V. Ramos on the assignment of PNCC's usufructuary rights;
   
   
2. the Joint Venture Agreement dated August 29, 1995;
   
   
3. the Joint Investment Proposal, etc. dated June 16, 1996;
   
   
4. the Supplemental Toll Operation Agreement ("STOA") dated April 30, 1998 and the Notice of Approval of said STOA dated June 15, 1998 by former President Fidel V. Ramos; and
   
   
5. the provisional toll rate increases published February 9, 2005, granted by the TRB.
   

The petition in G.R. No. 183599 is GRANTED. x x x

In view of the foregoing dispositions in the petitions at bar, the TRO issued by the Court on August 13, 2010 is hereby ordered LIFTED, with respect to the petitions in G.R. Nos. 166910, 169917, 173630 and 183599.

The challenge contained in the Supplemental Petition in G.R. No. 166910 against the toll rates subject of the TRB Notice of Toll Rates published on June 6, 2010, for the SLEX projects, Toll Road Projects 1 and 2 of the new SLTC STOA, and the expanded and rehabilitated SLEX, is REMANDED to the TRB for a review of the assailed toll rates to determine whether SLTC and MATES are entitled to the toll fees.

No Cost.

SO ORDERED.

In the aforementioned decision, the Court ruled that the TRB is verily invested under PDs 1112, 1113 and 1894 with the power to fix toll rates. The fact that the TRB entered into a contract by means of a STOA that provides for periodic/adjustment formulas to fix the toll rates is not contrary to the 1987 Constitution and PDs 1112, 1113 and 1894. The Court explicated, thus:

Furthermore, while the periodic, interim and other toll rate adjustment formulas are indicated in the STOAs, it does not necessarily mean that the TRB should accept a rate adjustment predicated on the economic data, references or assumptions adopted by the toll operator. At the end of the day, the final figures should be those of the TRB based on its appreciation of the relevant rale-influencing data. In fine, the TRB should exercise its rate-fixing powers vested to it by law within the context of the agreed formula, but always having in mind that the rates should be just and reasonable. Conversely, it is very well within the power of the TRB under the law to approve the change in the current toll fees. Section 3 (d) of P.D. 1112 grants the TRB the power to "[i]ssue, modify and promulgate from time to time the rates of toll that will be charged the direct users of toll facilities." But the reasonableness of a possible increase in the fees must first be clearly and convincingly established by the petitioning entities, i.e. the toll operators. Otherwise, the same should not be granted by the approving authority concerned. In Philippine Communications Satellite Corporation v. Alcaraz, the Court had the opportunity to explain what is meant by a just and reasonable fixing of rates, thus:

Hence, the inherent power and authority of the State, or its authorized agent, to regulate the rates charged by public utilities should be subject always to the requirement that the rates so fixed shall be reasonable and just. A commission has no power to fix rates which are unreasonable or to regulate them arbitrarily. This basic requirement of reasonableness comprehends such rates which must not be so low as to be confiscatory, or too high as to be oppressive.

What is a just and reasonable rate is not a question of formula but of sound business judgment based upon the evidence it is a question of fact calling for the exercise of discretion, good sense, and a fair, enlightened and independent judgment. In determining whether a rate is confiscatory, it is essential also to consider the given situation, requirements and opportunities of the utility. A method often employed in determining reasonableness is the fair return upon the value of the property to the public utility xxx. (Emphasis ours.)

If in case the TRB finds the change in the rates to be reasonable and therefore meriled, the increase shall then be implemented after the formalities of public hearing and publication are complied with. In this case, it is clear that the change in the toll fees is immediately effective and implementable. This is notwithstanding that, in case of an increase in the toll fees, an appeal thereon is filed. The law is clear. Thus:

xxx Decisions of the [TRB] on petitions for the increase of toll rate shall be appealable to the Office of the President within ten (10) days from the promulgation thereof. Such appeal shall not suspend the imposition of the new rates, provided however, that pending the resolution of the appeal, the petitioner for increased rates in such case shall deposit in a trust fund such amounts as may be necessary to reimburse toll payers affected in case a reversal of the decision. (Emphasis ours.)

Besides the settled rule under Section 3 (d) of P.D. 1112 that the power to issue, modify and promulgate toll fees rests with the TRB, it must also be underscored that the periodic and the interim adjustments found in Clauses 11.4 to 11.6 of the MNTC STOA do not necessarily guarantee an increase in the toll fees. To stress, the formula is based on many variable factors that could mean either an increase or a decrease in the toll fees, depending, inter alia, on how well certain economies are doing; and on the projections and figures published by the Bangko Sentral ng Pilipinas ("BSP"). It is therefore arduous to contemplate a grossness in a disadvantage that could only possibly arise in case of a non-implementation of a change - particularly, an increase - in the toll rates.

Petitioners have not incidentally shown that it is the traveling public, the users of the expressways, who shouldered or will shoulder the completion of the projects by way of exorbitant fees payment, with the investors ending up with a "killing" therefrom. This conclusion, for all its factual dimension, is too simplistic for acceptance. And it does not consider the reality that the Court is not a trier of facts. Neither does it take stock of the nature and function of toll roads and toll fees paid by motorists, as aptly elucidated in North Negros Sugar Co., Inc. v. Hidalgo.^[9] xxx

Furthermore, with respect to the due process issue of complying with the twin requirements of notice and hearing, the Court made a clear distinction between initial or provisional rates, on the one hand, and subsequent or period rate adjustments, on the other.^[10] The Court ruled that while both instances of rate adjustment would generally require compliance with prior notice or publication, the necessity of a prior public hearing could be dispensed with in case of an initial or provisional rate where the law itself expressly dispenses with public hearing.^[11] In this case, Section 8(b) of PD 1894^[12] explicitly provides that the TRB has the authority to approve the initial toll rates without the necessity of a hearing. Particularly, PD 1894 states:

xxx The Toll Regulatory Board shall have the authority to approve such initial toll rates without the necessity of any notice and hearing, except as provided in the immediately succeeding paragraph of this Section. For such purpose, the GRANTEE shall submit for the approval of the Toll Regulatory Board the toll proposed to be charged the users. After approval of the toll rate(s) by the Toll Regulatory Board and publication thereof by the GRANTEE once in a newspaper of general circulation, the toll shall immediately be enforceable and collectible upon opening of the expressway to traffic use.

Accordingly, the new rates published on June 6, 2010 for the rehabilitated and improved SLEX under the SLEX STOA, being initial toll rates, need not require a prior public hearing to be valid.^[13] But as clarified in the Tollway Decision and as will be discussed infra, an interested party, such as an expressway user, is not without recourse, as said party may file a petition before the TRB assailing the propriety of the said initial toll rates.^[14]

From the aforementioned discussion, it is clear that the Court has already resolved the first four petitions relating to the subject tollways. What remains to be dispensed with is the fifth and last petition of Gov. Salceda relating to the SLEX. Considering, however, that Gov. Salceda has not raised, in this recourse, any new issue, which has not been considered and passed upon in the earlier resolved petitions, this Court hereby resolves to dismiss his petition.

The Court further notes that with respect to the propriety and reasonableness of the new toll fees, the Court held in the Tollway Decision that the Supplemental Petition of petitioner Francisco,^[15] "assailing the toll rates covered by the TRB Notice of Toll Rates published on June 6, 2010," shall be treated "as a petition for review filed under Section 8 of P.D. 1894."^[16] The pertinent portion of Section 8 of PD 1894 states:

Any interested Expressways users shall have the right to file, within a period of ninety (90) days after the date of publication of the initial toll rate, a petition with the Toll Regulatory Board for a review of the initial toll rate; provided, however, that the filing of such petition and the pendency of the resolution thereof shall not suspend the enforceability and collection of the toll in question. The Toll Regulatory Board, at a public hearing called for the purpose after due notice, shall then conduct a review of the initial toll shall be appealable to the Office of the President within ten (10) days from the promulgation thereof x x x.^[17]

The Court thus ordered the TRB to review the propriety and reasonableness of the new or initial toll rates stipulated under the SLEX STOA. In the case docketed as G.R. No. 192484, Gov. Salceda likewise assails the new toll rates that are covered by the same TRB Notice of Toll Rates published on June 6, 2010 that was assailed by petitioner Francisco. Gov. Salceda's challenge on the new SLEX toll rates, therefore, has, for all intents and purposes, already been resolved by this Court.

WHEREFORE, the petition in G.R. No. 192484 is hereby DISMISSED for lack of merit. Accordingly, the TRO issued by the Court on August 13, 2010 with respect to this petition is hereby ordered LIFTED.

Pursuant to our ruling in Francisco, Jr. v. Toll Regulatory Board, docketed as G.R. Nos. 166910, 169917, 173630, and 183599, the toll rates assailed in the instant petition published on June 6, 2010 have already been remanded to the Toll Regulatory Board for its review of the reasonableness thereof and for its determination of whether SLTC and MATES are entitled to the said toll fees.

The Court further Resolves to

(a) NOTE the Reply (to the Comment of the Solicitor General in G.R. No. 166910 and 192484), dated October 15, 2010 filed by counsel for petitioner Gov. Joey Sarte Salceda;

(b) NOTE the Very Urgent Plea to Lift the August 13, 2010 Temporary Restraining Order, dated October 29, 2010 filed by the Office of the Solicitor General for public respondents Secretary of the Department of Transportation and Communications and Toll Regulatory Board;

(c) NOTE and ACCEPT the Compliance (with the resolution of August 24, 2010), dated October 20, 2010 filed by petitioner Ernesto Francisco, informing the Court that respondent First Philippine Infrastructure Development Corporation may be served with the orders and other processes of the Court at Puno & Puno Law Office, 12th Flr., East Tower, Philippine Stock Exchange Centre, Exchange Road, Ortigas Center, Pasig City;

(d) DIRECT the Process Servicing Unit to henceforth serve court processes upon respondent First Philippine Infrastructure Development Corporation at the above-given address;

(e) NOTE the Third Urgent Motion to Lift Temporary Restraining Order, dated November 5, 2010 filed by counsel for private respondents Manila Toll Expressway Systems, Inc. and South Luzon Tollway Corporation; and

(f) GRANT the Motion dated October 22, 2010 filed by the petitioner for a third extension of ten (10) days from October 3, 2010 or until October 13, 2010 within which to file reply and opposition to private respondents' Consolidated Comment/Opposition with Urgent Motion to Lift Temporary Restraining Order dated September 3, 2010, but this would DEFINITELY be the LAST EXTENSION to be given by the Court." Del Castillo, J., on official leave.

Endnotes:

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^[1] Petition, p. 5.

^[2] Id. at 3 & 5.

^[3] Francisco, Jr. v. TRB. G.R. Nos. 166910, 169917, 173630 & 183599, October 19 2010.

^[4] Id.

^[5] Id.

^[6] Rollo (G.R. No. 192484), p. 139, Order dated August 13, 2010.

^[7] Id.

^[8] Id. at 152.

^[9] Francisco, Jr. v. TRB, supra.

^[10] Id.

^[11] Id.; citing Padua v. Ranada, G.R. Nos. 141949 & 151108, October 14, 2002, 390 SCRA 663, 678-683; see also Manila International Airport Authority v. Blancaflor, G.R. No. 157581, December 1, 2004, 445 SCRA 471, 479, cited in Francisco, Jr. v. TRB, supra.

^[12] Amending the Franchise of the [PNCC] to Construct, Maintain and Operate Toll Facilities in the North Luzon and South Luzon Expressways to Include the Metro Manila Expressway to Serve as an Additional Artery in the Transportation of Trade and Commerce in the Metro Manila Area.

^[13] Francisco, Jr. v. TRB, supra.

^[14] Id.

^[15] In G.R. No. 166910.

^[16] Francisco, Jr. v. TRB, supra.

^[17] PD 1894, � 8 (b), 2.