Companies dealing with a unit of the private owner of the Metro Rail Transit Line 3 System have proposed several courses of action to the government to allow them to continue doing business on the vital railway—and keep their enterprises running—despite MRT Development Corp. not paying its dues to the Department of Transportation.
In an executive brief obtained by Manila Standard, the companies proposed that they be allowed to pay their fees to the Transportation Department until 2025 so the government agency could grant them work permits and access to the MRT 3 system, and thus allow them to continue doing business.
The firms also proposed that the DoTr cancel its Build-Lease-Transfer agreement with MRTDevCo. based on the latter’s non-payment of Development Rights Payments since 2004.
The third alternative, the companies said, were to put their Monthly Guaranteed Feeds to MRTDevCo. in an escrow account until the funds could be released after arbitration proceedings between the DoTr and the MRTDevCo., currently ongoing in Singapore, are finished.
The companies, which have signed management contracts with MRTDevCo., said they could not conduct their business on the train line as the Transportation department had stopped “issuing access and/or work permits” to the MRT firm.
These firms said they had been paying MRTDevCo. Monthly Guaranteed Fees for the last five years, from P12.5 million per month in the first year up to P21.86 million a month in year five. But without access to the MRT 3 system, they could not carry out their business and fulfill their obligations to their customers, the brief showed.
In April 2018, the Court of Appeals barred MRTDevCo from exercising its advertising and commercial-leasing rights over the MRT Line 3 system pending the result of arbitration proceedings involving its DRP obligations to the government amounting to P2.3 billion.
In a 23-page ruling penned by Associate Justice Pablito Perez, the CA’s Eleventh Division lifted the writ of preliminary injunction issued by the Regional Trial Court in Pasig City on July 18, 2016.
This had compelled the DOTr, then called the Department of Transportation and Communications, to issue the necessary access or work permits to the MRTDevCo to allow the company to fully exercise its rights over MRT 3.
MRTDevCo is a unit of MRT 3 private owner MRT Holdings.
The RTC in Pasig City issued the writ of preliminary mandatory injunction upon MRTDevCo’s posting of the P130-million injunction bond, court records showed.
The DOTr earlier claimed that from 2001 to 2004, the MRTDevCo paid according to the agreed DRP schedule under their BLT agreement covering the construction and operation of MRT 3.
However, on July 21, 2004, the MRTDevCo ceased paying the DRPs despite repeated demands by the then-DOTC. Early in 2013, the Transportation department then stopped issuing access or work permits to the MRTDevCo, its advertisers and lessees, barring their entry to the MRT 3 system.
On May 7, 2015, the Commission on Audit issued to the DOTr an Audit Observation Memorandum noting the unpaid amount of P981,354,501, representing the DRPs from MRTDevCo since 2004.
The DOTr then sent a final demand to the MRTDevCo for the payment of its outstanding DRP obligations in the accumulated amount of P2,298,788,929.52.
The DOTr warned of termination of the BLT agreement, even as it expressed its willingness to commence arbitration, as mandated under the BLT agreement.
This prompted the MRTDevCo to file before the RTC in Pasig City a petition for interim measure protection (IMP) with extremely urgent prayer for the issuance of a temporary order of protection.
In its assailed order, the Pasig RTC granted MRTDevCo’s petition and held that under Rule 5.2 of the Special Alternative Dispute Resolution Rules, a petition for IMP may properly be issued before arbitration is commenced.
However, the CA held that while the arbitration clauses in the 1997 BLT Agreement do not strip Philippine courts of jurisdiction over the grant of interim measures to protect the rights of parties in arbitration agreement before or after the start of arbitral proceedings, the Pasig RTC committed grave abuse of discretion in issuing the preliminary mandatory injunction in favor of MRTDevCo.