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‘Firm can’t rent out MRT spaces’

The Department of Justice has upheld the legality of the decision made by the Department of Transportation and Communications not to issue anymore permits  to Metro Rail Transit Development Corp.’s   development and advertising rights over Edsa MRT III unless it settles its obligations amounting to P2.4 billion as of January 2016.

In a 27-page legal opinion, Justice Secretary Emmanuel Caparas stressed that while the provisions of the 1997 Build, Lease and Transfer Agreement between DoTC, and MRTDevco is quiet on non-payment of development rights payments, the Civil Code mandates that a party is not required to comply with its reciprocal obligations in case the other party fails to comply with what is expected of 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 opined.

The Justice secretary also held that the DoTC was right in disallowing permits for MRTDevco’s supposed rights to lease out commercial spaces in the stations due 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 III] as the same has no apparent basis in the BLT Agreement, Tripartite and the Restructuring Agreement,” Caparas pointed out.

Earlier, DoTC Undersecretary for Legal Affairs Reggie Ramos sought for legal opinion on several issues concerning its agreement with MRTDevco with regard to the development of commercial premises in the depot and above the stations of MRT III.

In particular, Ramos asked the DoJ’s opinion on whether or not the position of MRTDevco that the development rights and advertising rights under the BLT agreement and its amendments are separate and tenable; whether or not the DoTC can give permits to MRTDevco in relation to the exercise of its development rights despite MRTDevco’s non-payment of DRP; and whether MRTDevco’s claim over its rights to lease commercial stalls in MRT3 has any basis.   

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 BLT Agreement.   

According to the company, the said provision 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.   

But the DOTC asserted that MRTDevco remains liable to pay DRPs because the Restructuring Agreement nullifies paragraph 16.3 of the 1997 BLT Agreement.   

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

Topics: Department of Justice , Department of Transportation and Communications , Metro Rail Transit Development Corp. , MRT
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