Supreme Court affirms NLEx, SLEx toll hike

ABS-CBN News

Posted at Oct 22 2010 12:23 AM | Updated as of Oct 22 2010 07:11 PM

MANILA, Philippines – There's no stopping toll hikes at major arteries connecting Metro Manila to the southern and northern provinces now.

On Thursday, the Supreme Court gave the go-signal for the regulatory body to proceed with rate hikes ranging from 250% to 300% slapped on those plying North Luzon Expressway (NLEx), South Metro Manila Skyway Project (Skyway), and the South Luzon Expressway (SLEx).

In an en banc and unanimous decision, the Supreme Court has lifted the Court's temporary restraining order (TRO) issued on August 13, 2010 that stopped the Toll Regulatory Board (TRB) from implementing the controversial 250% toll hike at SLEx.

The 75-page ruling penned by Associate Justice Presbitero Velasco also paved the way for the long-delayed rate hike stipulated in the agreements between the government and the concessionaires of NLEx and the Skyway. These 3 expressways connect the country's economic and political capital with the rest of Luzon.

The controversial toll hikes greeted the administration of highly popular President Aquino who assumed office in June 30, 2010, around the same time the toll hike at SLEx was supposed to commence. However, strong opposition from various groups cited the economic impact of higher transportation costs and cases were brought to the Court to question the constitutional basis for the hike.

The Aquino administration has flip-flopped on the rate hike even if it has professed dependence on the private sector to fund costly infrastructure investments. Investors have been keenly watching the government's move and the Court's decision since these provide a glimpse on whether they can realize profits when they enter into contracts for capital intensive projects in the Philippines.

For the Court, it was respect for the sanctity of contracts that mattered.

Infrastructure contracts

The toll hike at SLEx was provided for in the 2006 contract between regulator TRB and the private concessionaire South Luzon Tollway Corp (SLTC).

The contract, inked in 2006 and called the Supplemental Toll Operation Agreement (STOA), bestowed to SLTC the right to manage and operate the toll facilities at SLEx after the firm has shouldered the cost of expanding and rehabilitating the 29-kilometer expressway.

To recoup its investments, the STOA provided for series of toll hikes subject to approval by the TRB. The first round of toll hikes was supposed to commence last June 30, but was deferred several times.

The SLTC, which is a joint venture between Philippine National Construction Corp., and the Manila Toll Expressway Systems, Inc. (MATES), raised a howl citing their potential default on loans that funded the project.

Malaysian holding firm MTD Capital Berhad, which has a stake in MATES, said they have spent about P12 billion in widening the 4-lane expressway, which starts from the Alabang viaduct in Muntinlupa City and ends in Calamba in Laguna, to 8 lanes from the viaduct to Santa Rosa in Laguna, and 6 lanes from Santa Rosa to Calamba.

On the other hand, the Court declared as valid the contracts between the TRB and the concessionaires for the NLEx, Subic Expressway, Circumferential Road (C-5), and the Skyway road projects.

Way back on January 27, 2005, the TRB gave the go signal for the 300% initial toll increase along the NLEx. The April 1998 STOA was awarded to concessionaires Philippine National Construction Co. (PNCC) and the Manila North Tollways Corp. (MNTC), which is controlled by the infrastructure firm of a conglomerate led by Manny Pangilinan.

The concessionaires invested in the rehabilitation and widening of NLEx.

The Court likewise gave its nod to the TRB resolution approving the periodic toll rate adjustments for the Skyway project, an elevated expressway that aims to ease the congestion along SLEx.

The STOA between the TRB and Skyway operator Citra Metro Manila Tollways Corp. was inked on November 27, 1995 and covered Phase 1 of the Skyway project.

No violation

Several interest groups and concerned individuals, including lawyer Ernesto Francisco and Jose Ma. Hizon has asked the Court to nullify these agreements. They cited violations of the build-operate-transfer (BOT) Law, which was the basis for the public-private partnership on the projects, since the rate hikes did not go through due process.

They said the STOAs and the toll rate-fixing resolutions also violated the Constitution for imposing the financial burdens of the road project on the public through exorbitant fees.

In separate petitions, Representatives Imee Marcos and Ronaldo Zamora, the Consumer's Union of the Philippines (CUP), and cause-oriented groups also sought to nullify the Ramos-era STOA for the NLEx project.

They argued that the agreement extended the franchise of the Philippine National Construction Corp. (PNCC) over the NLEx project for additional 30 years without the approval of Congress.

They argued that this is unconstitutional since only Congress has the authority to extend a franchise. The PNCC’s franchise lapsed on May 1, 2007.

"It is not for the courts to look into the wisdom and practicalities behind the exercise by the TRB of its contract-making prerogatives…absent proof of grave abuse of discretion which would justify judicial review," the decision says.

The Court also upheld the authority of the TRB to enter into road project contracts.