Question & AnswerQ&A (EXECUTIVE ORDER NO. 126)
The primary purpose of Executive Order No. 126 is to repeal Executive Order No. 855 (s.2010) and to authorize and direct the implementation of the Equity Value Buyout (EVBO) of the Metro Rail Transit Corporation (MRTC) pursuant to the Build-Lease-Transfer (BLT) Agreement, including relevant guidelines.
The BLT Agreement is a contract entered into by the Government through the Department of Transportation and Communications (DOTC) with Metro Rail Transit Corporation (MRTC) for the construction of the EDSA Light Rail Transit Phase I, also known as MRT Line 3.
The Department of Finance (DOF), Department of Transportation and Communications (DOTC), Development Bank of the Philippines (DBP), and Land Bank of the Philippines (LBP), in coordination with other concerned government agencies and instrumentalities, are tasked with implementing the EVBO of MRTC.
The Government may acquire either (i) all outstanding shares of stock and other securities issued by MRTC and/or entities owning the MRT Line 3 Project (equity purchase), or (ii) all rights, title, and interests of MRTC in the MRT Line 3 Project (asset purchase) pursuant to the BLT Agreement.
The components include: acquisition of shares or assets of MRTC, execution of a Compromise Agreement with MRTC, settlement of local tax liabilities of MRTC which are to be borne by the Government, and termination of the BLT Agreement.
The Compromise Agreement between the Government (through DOTC and OSG) and MRTC is to put an end to the arbitration case filed by MRTC in Singapore without admission of fault by the Philippines, and to submit the agreement to the Arbitration Committee in Singapore for case dismissal.
The OSG, together with DOTC, is responsible for negotiating and entering into the Compromise Agreement with MRTC, submitting it to the Arbitration Committee, recommending mechanisms to settle local tax liabilities, and reviewing agreements related to the BLT Agreement for termination.
The Government, through the Secretary of Finance, is authorized to raise funds through domestic or foreign borrowings to finance the EVBO and its components, subject to legal requirements governing government borrowings.
EO No. 126 expressly repeals EO No. 855 (s.2010) and any inconsistent orders, rules, regulations, and issuances, thus consolidating authority and updating provisions relevant to the EVBO implementation for MRT Line 3.
The BLT Agreement constrains the Government's capacity expansion initiatives due to the right of first refusal given to MRTC to supply additional Light Rail Vehicles and causes financial burdens due to Equity Rental Payments (ERPs) that the Government has to subsidize.