Digest Author: Cecille Mangaser

Ernesto Francisco, Jr. v. Toll Regulatory Board

GR Number 166910
Petition: Special civil actions under Rule 65
Petitioner: Ernesto B. Francisco, Jr. and Jose Ma. O. Hizon
Respondent: Toll Regulatory Board, Philippine National Construction Corporation, Manila
North Tollways Corporation, Benpres Holdings Corporation, First Philippine Infrastructure
Development Corporation, Tollway Management Corporation, PNCC Skyway Corporation, Citra
Metro Manila Tollways Corporation, and Hopewell Crown Infrastructure, Inc.
Ponente: Velasco, Jr. J.
Date: October 19, 2010
Facts:
President Marcos issued PD 1112 authorizing the establishment of toll facilities on public
improvements. It acknowledged the huge financial requirements and the need to tap the
resources of the private sector to implement the governments infrastructure programs. PD 1112
allowed the collection of toll fees for the use of certain public improvements that would allow a
reasonable rate of return on investments. The same decree created the Toll Regulatory Board,
vesting it with the power to enter into contracts for the construction, maintenance, and operation
of tollways, grant authority to operate a toll facility, issue the necessary Toll Operation
Certificate (TOC) and fix initial toll rates, and adjust it from time to time after due notice and
hearing. PD 1113 was issued granting the Philippine National Construction Corporation for a
period of 30 years, a franchise to operate toll facilities in the North Luzon and South Luzon
Expressways. Subsequently, PD 1894 was issued further granting the PNCC a franchise over the
Metro Manila Expressway and the expanded delineated NLEX and SLEX.
Then came the 1987 Constitution with its franchise provision. In 1993, the Government
Corporate
Counsel held that the PNCC may enter into a joint venture agreement with private entities
without going into public bidding. On February 1994, the DPWH together with other private
entities executed a MOU to open the door for entry of private capital in the Subic and Clark
extension projects. PNCC entered into a financial and technical JVAs with entities for the toll
operation of its franchised areas. Several Supplemental Toll Operation Agreements (STOA) were
entered for the South Metro Manila Skyway, NLEX Expansion, and South Luzon Expressway
Projects.
Petitioners seek to nullify the various STOAs and assail the constitutionality of Sections 3(a and
d) of PD 1112 in relation to Section 8(b) of PD 1894. Insofar as they vested the TRB the power
to issue, modify, and promulgate toll rate changes while given the ability to collect tolls.
Issue:
Whether or not the TRB may be empowered to grant authority to operate the toll facility/system.
Ruling:
The TRB was granted sufficient power to grant a qualified person or entity with authority to
operate the toll facility/system. By explicit provisions of the PDs, the TRB was given power to

Digest Author: Cecille Mangaser

grant administrative franchise for toll facility projects. The limiting thrust of Article 11, Section
11 of the Constitution on the grant of franchise or other forms of authorization to operate public
utilities may, in context, be stated as follows: (a) the grant shall be made only in favor of
qualified Filipino citizens or corporations; (b) Congress can impair the obligation of franchises,
as contracts; and (c) no such authorization shall be exclusive or exceed fifty years. Under the
1987 Constitution, Congress has an explicit authority to grant a public utility franchise.
However, it may validly delegate its legislative authority, under the power of subordinate
legislation, to issue franchises of certain public utilities to some administrative agencies.
Dispositive:
The petitions in G.R. Nos. 166910 173630, and 169917 are hereby DENIED for lack of merit.
The petition in G.R. No. 183599 is GRANTED.