A consumers’ group has filed graft charges against Transportation Secretary Joseph Emilio Abaya and other officials of the Department of Transportation and Communication over a P1.7-billion contract for a train ticketing system.
Also named in the complaint were Undersecretaries Jose Lotilla, Catherine Gonzales and Rene Limcaoco (head and members of the bids and awards committee).
The National Coalition of Filipino Consumers (NCFC), through lawyer Oliver San Antonio, filed the charges on Monday at the Office of the Ombudsman.
Also named respondents were Undersecretaries Jose Lotilla, head of the Bids and Awards Committee, and Catherine Gonzales and Rene Limcaoco, members of the committee.
“By awarding the ticketing contract to AF Consortium, it is most likely that the government stands to lose and be completely deprived of its full promised revenue supposedly amounting to P1,088,103,900 as committed by AF Consortium in their bid,” the group said in its complaint.
AF Consortium, where Metro Pacific Investments Corp. (MPIC) and Ayala Corp. are partners , was awarded the contract in January this year.
The case stemmed from a contract to change the ticketing system from magnetic to non-contact, which aims to ease queues and inconvenience of buying separate tickets for the three rail systems in Metro Manila—Light Rail Transit 1, Light Rail Transit 2 and Metro Rail Transit (MRT) 3.
San Antonio said the government’s move was a good concept but that “in awarding the contract to AF Consortium, they [in the Department of Transportation and Communications or DOTC]violated specific rules on bidding.”
He added that the consortium should not have been allowed to bid in the first place.
Under bidding rules, an entity with a dispute with the government is disqualified.
Citing rules for prospective bidders, the complaint said AF Consortium had a conflict of interest as it owned more than 50 percent of train operator MRT Corp. (MRTC).
The MRTC has an arbitration case against the government in Singapore and a case on the DoTC’s purchase of new MRT 3 coaches from China last year.
The MRT 3 deal was dismissed in February by the Makati Regional Trial Court but was still ongoing during the bidding for the new ticketing system.
AF Consortium promised to pay the government P280 million out of the total project cost of P1.1 billion. The balance would be paid in installments over 10 years.
This is a negative bid where the winning bidder pays the government instead of the operator and riding public.
The other bidders were Comworks-Berjaya Consortium and SM Consortium. The SM Consortium, which lost by P103,000, also offered a negative financial bid but promised to pay the P1.1 billion outright.
“Why would the government enter into a contract where the cost would be paid on a piecemeal basis, when there is this bidder who is willing to pay the project cost in full?” San Antonio argued.
For the NCFC, the result of the bidding showed that the DOTC was partial to AF Consortium.
“Pertinently, AF Consortium was a marriage between erstwhile business rivals the Ayalas and the Metro Pacific Group led by businessman Manny Pangilinan. Both groups are commonly and widely known to be staunch supporters and financiers of the Aquino administration,” the complainants said. Manny Pangilinan is Manuel V. Pangilinan, also chairman of Philippine Long Distance Telephone Co.
Last month, Abaya was also hit by some lawmakers for his alleged early campaigning for Interior Secretary Manuel “Mar” Roxas 2nd ahead of the 2016 presidential elections.
The consumers’ coalition also alleged that the P800 million based on the daily earnings of the three rail lines that would be paid on installments was not based on realistic ridership figures.
Based on DoTC’s figures, according to San Antonio, the three lines can carry only 1.2 million riders daily.
“What AF Consortium did was they computed the P800 million . . . based on figures of 2.4 million to 4 million riders a day,” the lawyer said.
Also, the contract was disadvantageous to the government and the people because the balance would be paid only if the transaction volume reached 750 million per quarter, the complaint said.
To achieve this “bloated” figure, it added, two to four million riders for the three rail systems are needed daily.
With that number, the complaint said, train platforms would practically collapse under such weight.
“The promised ‘balance’ of P809,112,000.00 . . . is impossible to achieve. The 750-million [transaction volume]per quarter is exposed as utterly erroneous,” it added, noting that the current volume is 324 million per quarter.
Transaction volume is the number of rides and payment transactions in LRT 1, LRT 2 and MRT 3 made by the public when they use their stored-value or single-journey cards.
The consumers’ coalition believes that the new ticketing system is not the solution to problems hounding the DOTC stemming from lack of train coaches.
San Antonio said this system would raise ticket costs for passengers who are mostly blue-collar workers.
But Abaya maintained that rules and procedures were properly followed in the bidding for the new ticketing system or Automatic Fare Collection System (AFCS) Project.
“We were sure to follow all bidding rules and process very carefully. The process was completely aboveboard. This is why we are ready to face this complaint… as long as what you do is right, you have nothing to fear,” he added.
Abaya said they are yet to receive an official copy of the complaint.
“At this stage, we are only reacting to several news reports. We will review the complaint once we receive a copy, but we are not worried since we know that there was nothing irregular in the bidding out of the project,” he added.
In February this year, shortly after the project was awarded to AF Consortium, a group called the Coalition of Filipino Consumers or CFC threatened to file a suit to question the project’s award.
CFC said the project should have been awarded to SM Consortium instead.
Under a concession agreement, the AFCS ticketing scheme will be fully integrated into the LRT and MRT systems by September 2015.
The DOTC is verifying whether NCFC is the same organization as CFC, since both groups are raising the same issues also raised by SM Consortium in its appeals to the DOTC’s Bids and Awards Committee while the bidding was ongoing. All these issues were resolved against SM Consortium for lack of merit.
Neither CFC nor SM Consortium, however, has filed a case in court to question the legality of the DOTC’s bidding process.