MRT Development Corp. v. Department of Transportation

FIRST DIVISION

[G.R. No. 240709. June 15, 2020.]

MRT DEVELOPMENT CORPORATION, petitioner, vs. DEPARTMENT OF TRANSPORTATION (FORMERLY DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS), respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution datedJune 15, 2020which reads as follows:

"G.R. No. 240709 — MRT DEVELOPMENT CORPORATION,petitioner, versus DEPARTMENT OF TRANSPORTATION (formerly DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS), respondent.

The existence of a right in esse to warrant the issuance of an injunctive relief is the main issue in this petition for review on certiorari under Rule 45 of the Rules of Court assailing the Court of Appeals' Decision dated March 5, 2018 in CA-G.R. SP No. 147008, which annulled the Regional Trial Court's Order dated July 18, 2016 in Special Proceeding No. 12980.

ANTECEDENTS

In 1997, the Department of Transportation and Communications (DOTC), the MRT Development Corporation (MRTDC), and the Metro Rail Transit Corporation Limited (MRTCL) entered into a tripartite agreement. 1 In the contract, MRTCL transferred to MRTDC its "Development Rights" for the MRT 3 under the Build, Lease and Transfer Agreement (BLT Agreement), 2 which consist of commercial leasing rights and advertising rights on the depot and the air space above the stations. Accordingly, the DOTC issued the necessary work permits and gave MRTDC access to the MRT 3 from the start of its operation in July 2000.

In 2013, however, the DOTC refused to give work permits to MRTDC's advertisers. In 2016, the DOTC likewise denied access to MRTDC's lessees due to outstanding Development Rights Payment (DRPs). Aggrieved, MRTDC explained that the DRPs due on the depot, the Ayala, and the Shaw stations are all updated. Moreover, the amount demanded pertains to the undeveloped air spaces on the other stations. At any rate, the DRPs are only due on the commercial development but not on the exercise of advertising rights.

On the other hand, the DOTC clarified that it entered into a DRP Restructuring Agreement 3 with MRTDC, which deferred and rescheduled the DRPs. Also, MRTDC surrendered to the DOTC its development rights over the entire Buendia station and certain portions of the Shaw and Ayala stations. Thereafter, from 2001 to 2004, MRTDC paid DRPs for both rights in the depot and the air space above the remaining ten stations. In July 2004, however, MRTDC stopped the payments with respect to the air space above the stations arguing that the development rights on the air space above the undeveloped stations had already reverted to the government pursuant to the automatic forfeiture provision in paragraph 16.3 (b) 4 of the BLT Agreement. Yet, the DOTC took a contrary stand stating that the parties' subsequent restructuring agreement expressly superseded the automatic forfeiture clause.

Further, the DOTC explained that MRTDC's advertising rights are inseparable from the development rights which have three components, to wit: (a) the right to develop commercial premises and air space; (b) the right to lease, sub-lease or assign such interest; and (c) the right to obtain advertising income therefrom. It was also the Commission on Audit which ordered the collection of the receivables from MRTDC. 5

Lastly, the DOTC averred that MRTDC has no clear legal right that needs to be protected. Notably, paragraph 16.1 6 of the BLT Agreement only gave MRTDC the right to develop commercial premises in the depot and the air space above each station. The MRTDC has no right to develop commercial spaces in the stations themselves, let alone to lease out said premises. The DOTC was also firm that the MRTDC's advertising rights has always been subject to the full payment of the corresponding DRPs. Considering that MRTDC stopped the payments, it has no more right to demand for the issuance of access and work permits for the exercise of its advertising rights and for leasing the commercials spaces in the station.

The parties agreed to submit themselves to arbitration. Meantime, MRTDC filed a Petition 7 for Preliminary Mandatory Injunction as Interim Measure of Protection (IMP) under Rule 5 of the Special Rules of Court on Alternative Dispute Resolution (Special ADR Rules) 8 before the Regional Trial Court. The MRTDC prayed that it be allowed to fully exercise its development rights prior to arbitration proceedings.

In its Order dated July 18, 2016, 9 the RTC granted MRTDC's application for injunctive relief. It held that MRTDC has a clear legal right to the issuance of work permits or access to MRT 3 which are necessary for the exercise of its development rights granted under the BLT Agreement and Tripartite Agreement for the period starting the year 2000 until December 2015. It added that the DOTC's refusal to issue work permits is a violation of MRTDC's rights. The issuance of an injunctive writ, as a provisional remedy, is imperative to prevent irreparable losses and injury, including MRTDC's tarnished reputation and the loss of trust of its advertisers and commercial lessees, 10 thus:

WHEREFORE, premises considered, and pending completion of the three (3) dispute resolution methods provided for in paragraph 20 of the BLT Agreement, the petitioner's application for a writ of preliminary mandatory injunction is GRANTED.

Upon posting by the petitioner of an injunction bond in the amount of Thirty Million Pesos (P30,000,000.00), let a writ of preliminary mandatory injunction be issued ORDERING the DOTC, through its Secretary and/or any of its duly authorized officials to issue the necessary access and/or work permits to the petitioner and/or its employees and representatives in order to allow petitioner to fully exercise its advertising and commercial leasing rights pursuant to the BLT Agreement, Tripartite Agreement and the Deed of Assignment of Development Rights.

Furnish the parties copies of this order.

SO ORDERED.

Undaunted, the DOTC filed a petition for review 11 pursuant to Rules 19.12 and 19.13 12 of the Special ADR Rules before the Court of Appeals.

In its Decision dated March 5, 2018, 13 the CA set aside the RTC's ruling. It held that the MRTDC has no clear legal right to support its application for an injunctive relief, 14viz.:

WHEREFORE, the instant petition is GRANTED. The Order issued on July 18, 2016 by the Regional Trial Court of Pasig City, Branch 67 in Special Proceeding No. 12980 is ANNULLED and SET ASIDE and the Writ of Preliminary Mandatory Injunction is LIFTED.

SO ORDERED.

The MRTDC sought reconsideration but was denied. 15 Hence, this petition.

RULING

The petition is unmeritorious.

The office of a writ of preliminary injunction is to prevent a threatened or continuous irremediable injury to some of the parties before their claims can be thoroughly studied and adjudicated. 16 Specifically, a writ of preliminary mandatory injunction must be cautiously regarded since it requires the performance of a particular act that tends to go beyond the maintenance of the parties' status quo. 17 Jurisprudence dictates that an applicant must prove the following requisites before the writ may issue: (1) that the complainant has a clear legal right; (2) that his right has been violated and the invasion is material and substantial; and (3) that there is an urgent and permanent necessity for the writ to prevent serious damage. 18

Here, the existence of MRTDC's right in esse is in itself the very question which must be established during the forthcoming arbitration. The extent of the parties' rights and obligations under the BLT Agreement, the Tripartite Agreement and the DRP Restructuring Agreement has yet to be determined. The RTC even acknowledged in its Order that the scope of MRTDC's development rights, the matters relating to the payment or non-payment of the DRPs and whether there was a termination of the BLT Agreement, are issues that must still be resolved through arbitration. As such, the RTC should have been more cautious in dealing with the application for provisional relief. To be sure, absent proof of a right in esse, or when the applicant's right or title is doubtful or disputed, there is no basis for the issuance of a writ of injunction. 19

Verily, the CA is correct in adopting the more prudent approach of balancing the parties' relative interests which will be better preserved by encouraging them to proceed with the dispute resolution mechanism, 20 to wit:

In the case at bar, the "last actual, peaceable and uncontested status" before the dispute arose was the free and unhampered access by the MRTDC to the MRT 3 System as long as it was fully and faithfully paying DRPs for the continued exercise of its development and advertising rights.

The RTC's issuance of the IMP, which allows the MRTDC's exercise of development and advertising rights without the payment of DRPs altered the balance of the parties' contractual equilibrium as it effectively allows the MRTDC the exercise of its rights while the existence of its correlative obligations is disputed and awaits settlement by arbitration.

xxx xxx xxx

Under Rule 5.9 of the Special ADR Rules, the Court, in determining whether to grant interim measures shall "balance the relative interests of the parties and inconveniences that may be caused" to the parties. This balance of interests of the parties in this dispute is preserved not by providing provisional relief to one party to the controversy, but by encouraging them to resort to the dispute resolution mechanism they have mutually elected where all their claims may be arbitrated. 21 (Emphases Ours.)

In sum, while the grant or denial of an application for injunctive relief generally rests on the sound discretion of the trial court, this Court may and should intervene in a clear case of grave abuse. 22 One such instance is obtained here when the RTC issued a writ of preliminary mandatory injunction despite the absence of a clear and unquestioned legal right of the applicant.

FOR THESE REASONS, the petition is DENIED and the assailed Court of Appeals' Decision dated March 5, 2018 in CA-G.R. SP No. 147008 is AFFIRMED.

SO ORDERED."

Very truly yours,

(SGD.) LIBRADA C. BUENADivision Clerk of Court

By:

MARIA TERESA B. SIBULODeputy Division Clerk of Court

 

Footnotes

1.Rollo, pp. 127-129.

2.Id., pp. 66-126.

3.Id., pp. 525-530.

4.Id., pp. 115-116.

16.3. Development Rights Payments. In consideration of the Development Rights granted to Metro Rail pursuant to Paragraphs 16.1 and 16.2, Metro Rail shall make payments to DOTC in accordance with the Development Rights Payment Schedule; provided, however, that:

(a) x x x

(b) Metro Rail has the option to commence the development of the air space above the Stations not later than the Completion Date; if, by the Completion Date, Metro Rail has not undertaken development in the air space above a Station, Metro Rail shall automatically forfeit its Development Rights to the air space above such Station (other than a Station with a concourse level below ground) and such Development Rights shall revert to DOTC, which may then award the same to third Persons or undertake the development itself, if it so desires;

5.Id., pp. 274-275, Letter dated February 29, 2016 from DOTC's Director of Legal Service.

6.Id., pp. 114-115.

16.1. Details of Development Rights. DOTC hereby confirms and awards to Metro Rail the rights to (a) develop commercial premises in the Depot and the air space above the Stations, which shall be allowed to such height as is legally and technically feasible, (b) lease or sub-lease interests or assign such interests in the Depot and such air space, and (c) obtain any advertising income from the Depot and such air space and LRTS Phase I (but in the case of LRTS Phase I for the Revenue Period only) (collectively, the "Development Rights"). x x x.

7.Id., pp. 31-50.

8. A.M. No. 07-11-08-SC dated September 1, 2009.

9.Rollo, pp. 442-452.

10.Id., pp. 451-452.

11.Id., pp. 408-440.

12.Rule 19.12.Appeal to the Court of Appeals. — An appeal to the Court of Appeals through a petition for review under this Special Rule shall only be allowed from the following final orders of the Regional Trial Court:

a. Granting or denying an interim measure of protection;

xxx xxx xxx

Rule 19.13.Where to appeal. — An appeal under this Rule shall be taken to the Court of Appeals within the period and in the manner herein provided.

13.Rollo, pp. 385-403. Penned by Associate Justice Pablito A. Perez and concurred in by Associate Justices Ramon M. Bato, Jr. and Ramon A. Cruz.

14.Id., pp. 402-403.

15.Id., pp. 383-384.

16.First Global Realty and Development Corporation v. San Agustin, G.R. No. 144499, February 19, 2002.

17.Pablo-Gualberto v. Gualberto V, G.R. Nos. 154994 and 156254, June 28, 2005; citing Spouses Crystal v. Cebu International School, 356 SCRA 296, 305, April 14, 2001; Prosperity Credit Resources, Inc. n v. CA, supra, and other related cases.

18.Prosperity Credit Resources, Inc. v. Court of Appeals, G.R. No. 114170, January 15, 1999, citing Pelejo v. Court of Appeals, 117 SCRA 665 (1982).

19.Ocampo v. Sison Vda. de Fernandez, G.R. No. 164529, June 19, 2007.

20.Rollo, p. 402, citing Rule 5.9 of the Special ADR Rules.

21.Ibid.

22.Land Bank of the Philippines v. Continental Watchman Agency, Incorporated, G.R. No. 136114, January 22, 2004, cited in Spouses Castro v. Spouses Dela Cruz, G.R. No. 190122, January 10, 2011.

n Note from the Publisher: Written as "Prosperity Credit" in the official document.