CA ruling stays: DOTC can buy MRT trains from China

The Court of Appeals has upheld a 2014 decision that allowed the Department of Transportation and Communications (DOTC) to acquire additional trains for the problem-plagued Metro Rail Transit (MRT) from a Chinese supplier.

In a ruling dated April 28 but released Wednesday, the appellate court’s 14th Division affirmed its July 2014 decision that denied the plea of the Metro Rail Transit Corp. (MRTC) and MRT Holdings II Inc. that sought to prevent the DOTC from awarding the contract for the manufacture and supply of 48 brand-new light rail vehicles (LRVs) to Dalian Locomotive & Rolling Stock of China.

“After due consideration of the parties’ arguments, we find no cogent reason to set aside or reverse our earlier ruling denying petitioners’ prayer for a temporary restraining order and/or writ of preliminary injunction. Petitioners’ allegation that the present procurement of LRVs from Dalian Locomotive could lead to higher risks of train collisions and cause incalculable damage to the MRT 3 system is speculative,” the court said in a six-page resolution written by Justice Ma. Elisa Sempio Diy.

The other division members, Justices Ramon Bato Jr. and Manuel Barrios, concurred in the ruling.

MRTC, whose majority shareholder is MRT Holdings, entered into a build-lease-transfer (BLT) agreement with the DOTC in 1997 to construct and maintain a light rail transit system for Edsa that became the MRT.

In their petition, MRTC and MRT Holdings accused the DOTC of undertaking the procurement of 48 LRVs worth P3.8 billion without the companies’ consent or waiver of their right of first refusal, in violation of the BLT agreement.

The petitioners claimed that its right for capacity expansion of MRT 3 under the BLT was “clear and unmistakable” and scored the recent opinion issued by the Department of Justice that was invoked by the DOTC in ignoring the companies’ right of first refusal.

They noted that the DOTC’s procurement of LRVs from Dalian deviated from the principle of having a single point of responsibility which underlays the construction, operation and maintenance of MRT 3.

Thus, the petitioners warned that if the new LRVs were allowed to run without the necessary adjustment and upgrade to the system, the riding public would be exposed to high risks of train collisions and loss of lives.

The CA, in its latest ruling, agreed with the DOTC that a writ of preliminary injunction was no longer feasible since the notice to proceed was already issued to Dalian.

The appeals court said the case proper—on whether the procurement of the LRVs was in violation of the BLT agreement—was now deemed submitted for decision following the submission by the parties of their respective memoranda.