DOJ affirms DOTC decision halting permit issuance to MRTDevco for MRT 3

The Department of Justice (DOJ) on Monday affirmed the decision of the Department of Transportation and Communications (DOTC) not to issue anymore permits for development and advertising rights to Metro Rail Transit Development Corp.’s  (MRTDevco) for Edsa MRT 3 unless it settles its obligations that ballooned to P2.4-billion as of January 2016.

In a 27-page legal opinion, acting Justice Secretary Emmanuel Caparas said that while there is no specific provision concerning non-payment of Developing Rights Payments (DRPs), Article 1191 of the Civil Code provides that “a party is not required to comply with its reciprocal obligation, in case a counter-party fails to comply with what is incumbent upon it.”

“Thus, insofar as disallowing permits on MRTDevco’s supposed advertising rights over the airspace above the stations, DOTC may argue that MRTDevco’s failure to make payments on the exercise of such rights (which has been admitted by MRTDevco) excuses DOTC’s obligation to issue the relevant permits,” the DOJ said.

The DOJ added that DOTC was also correct in disallowing permits for MRTDevco’s supposed rights to lease out commercial spaces in the stations due to lack of contractual basis.

“In view of the very nature of a permit as a privilege to do what otherwise would be unlawful and not as a right, and it would be irregular to extend MRTDevco permits for lessees on commercial stalls for LRT Phase 1 (Edsa MRT 3) as the same has no apparent basis in the BLT Agreement, Tripartite and the Restructuring Agreement,” the DOJ explained.

The DOJ issued its legal opinion upon the request of DOTC Undersecretary for Legal Affairs Reggie Ramos.

The DOTC sought the DOJ’s view on the matter after the MRTDevco insisted that it is no longer liable to make DRPs because development rights to undeveloped air space above stations automatically reverted to the DOTC based on paragraph 16.3 (b) of the 1997 Build-Lease-Transfer (BLT) Agreement.

The said provision, according to the company, expresses the intention of the parties to automatically forfeit in favor of DOTC specified development rights should MRTDevco fail to exercise such right by completion date.

Since, at completion date, MRTDevco had only developed the Ayala station and south portion of the Shaw, the development rights had been automatically forfeited to DOTC.

However, DOTC argued that MRTDevco is still liable to pay the DRPs saying that assuming that automatic forfeiture did take place, then there was no need, in the Restructuring Agreement, to surrender development rights to the Buendia Station and portions of Ayala and Shaw stations.

The DOTC also maintained that there is no basis in the agreements for MRTDevco’s right to lease out commercial spaces within the stations.

In agreeing with the DOTC, the DOJ held that the act of DOTC and MRTDevco in entering the Restructuring Agreement should be given considerations in determining the parties’ intentions when they executed the agreement.

“It would be illogical for MRTDevco, to agree to new terms by which to comply with its obligations to pay DRPs, due to its exercise of development rights it allegedly never had,” the DOJ noted.

“Thus, we are of the opinion that DOTC and MRTDevco peformed acts which are meant to cement MRTDevco’s obligation to pay the DRP provided in the 1997 BLT Agreement and as amended in the Restructuring Agreement,” it added. RAM