Government to sue MRTC for breach of contract

By: TJ Burgonio - 10 years ago

40 MINUTES TO GET MRT RIDE Commuters have to wait for 40 minutes before they can ride a train of Metro Rail Transit 3, the operations manager tells the Senate subcommittee on transportation chaired by Sen. Grace Poe (left photo). Transportation Secretary Joseph Abaya (right photo) attended the hearing. PHOTOS BY JOSEPH VIDAL/PRIB

MANILA, Philippines–The government is suing Metro Rail Transit Corp. (MRTC) for breach of obligation and is asking Congress for a P53-billion budget to take over MRT 3 to improve its service, transport officials said on Monday.

But before MRT 3’s more than half a million daily commuters get better service, they must wait until 2016 when 48 new coaches are scheduled

to be delivered.

Until then, transport officials said the current “30 to 40 minutes” that a commuter must spend to queue before boarding a train was the “best” that could be done for now.

The 16.9-kilometer MRT 3 runs through 13 stations from the North Triangle in Quezon City to Edsa Taft in Pasay City.

At the Senate hearing on MRT glitches, Sen. Francis Escudero wondered why the government had not sued the MRTC for defaulting on its duty to

buy more trains.

“Don’t you have any plans in your pipeline to sue MRTC? Why do you allow them to [bombard] the government with litigations left and right by way of TROs when clearly, they did not perform on their contract? They are in default. Have they not been doing all of these we are talking about here in the past 11 years?” Escudero said.

Sobrepeña family

The MRTC is owned by the Sobrepeña family of the Fil-Estate group and Metro Pacific Investments Corp.

Transportation Undersecretary Jose Perpetuo Lotilla said the option to sue MRTC was under study. “We hope to go in that direction,” he said at the hearing of the Senate subcommittee on transportation chaired by Sen. Grace Poe.

When Escudero pressed why this was still being studied, Lotilla said the maintenance records were still with MRTC and the government was loathe to file a case unless it had gathered sufficient evidence.

Breach of obligation

After the hearing, Lotilla told reporters that the MRTC had failed to maintain the system in a clear “breach of obligation” under the contract.

The trains, last overhauled in 2006, were due for an overhaul this year following the eight-year cycle, Lotilla said.

“For 25 years, the government would pay equity rental payment at 15 percent per annum and guarantee the loans of MRTC … And for what? For a system that today is breaking down and for a system that lacks upgrade,” Lotilla said.

MRT 3 became operational in July 2000 under a 25-year build-lease-transfer (BLT) contract between the Department of Transportation and Communications (DOTC) and MRTC.

Both the DOTC and the MRTC have since tangled in local and international courts.

The MRTC petitioned the Makati Regional Trial Court to stop the DOTC from procuring 48 light-rail vehicles or coaches from China’s CNR Dalian Locomotive and Rolling Stock Co. Ltd. The DOTC won the case.

The MRTC has also filed an arbitration case against the DOTC in the Singapore-based International Chamber of Commerce-Court of Arbitration for violating the BLT agreement.

Crash

Senators called for the inquiry following the series of glitches that hit MRT trains, culminating in an Aug. 13 crash, on top of the long queues to the ticket booth.

An MRT train hurtled past the railway at its Taft Avenue station in Pasay City, leaving 38 passengers hurt. The defective train was being pushed by another train when the coupler between them broke, sending it crashing through the metal stopper and concrete barrier of the last station. The train broke down at the Magallanes station.

At the hearing, MRT 3 operations manager Renato San Jose admitted to Sen. Paolo Benigno Aquino IV that the 30 to 40 minutes it took for a commuter to queue for a ticket and board a train was the “best” that could be done.

“We’re talking of 30 to 40 minutes’ waiting time because we have only this number of trains available and we have an allowable speed limit,” San Jose said.

When Aquino asked if this was the best thing that could be done, San Jose said, “Yes.”

San Jose said this waiting time could be drastically reduced to 10 minutes when the 48 new coaches are delivered in 2016.

‘Sorry’

“So, sorry for now to our countrymen because we have to deal with the 40 minutes’ waiting time,” Aquino said.

The DOTC awarded a contract to China’s CNR Dalian Locomotive and Rolling Stock Co. Ltd. to supply 48 new train cars for MRT 3, which is operating well above its intended capacity of 350,000 people a day.

The prototype of the new trains is expected to be delivered in August 2015. Once this passes the tests, the Chinese company would start manufacturing the trains.

“We’re hoping they can produce four a month,” Lotilla said.

State ownership

Transportation Secretary Joseph E. A. Abaya said the DOTC requested P53 billion in the 2015 national budget to buy out the equity value of MRTC, the MRT 3 operator.

Abaya acknowledged that full government ownership of MRT 3 would improve its services. But he said the government planned to bid out its operation and maintenance to the private sector.

“We will buy it so the government could own the facility. But we will bid out the maintenance and operation, but the government still owns the system,” Abaya said, citing the case of the Light Rail Transit.

“If the private sector handles operation and maintenance, it’s more efficient,” he added.

Rehab program

In a PowerPoint presentation, San Jose listed down several projects to rehabilitate MRT 3 that would cost some P6.8 billion.

The projects include the procurement of 48 new coaches; general overhaul of trains; upgrade of ancillary systems, platform edge doors and signaling system; replacement of traction motors, security and noise barrier, and the North Avenue footbridge; weather protection cladding; and the provision of public WiFi, passenger information system and passenger hand straps.