Is DAP funding new MRT3 rail cars?

July 9, 2014
(The Philippine Star) July 9, 2014

With the Supreme Court declaring the Disbursement Acceleration Program or DAP unconstitutional, there are fears MRT3 riders will have no relief from overcrowded and dangerous commutes. Apparently, the rail cars DOTC is buying from Dalian, a Chinese manufacturer, is funded by DAP.

I texted DOTC Sec. Jun Abaya and he reassured me that this is not so. He said that “MRT3 IRVS wasn’t funded by DAP. It was funded by GAA 2014.” (I think Sec. Jun means LRVS for Light Rail Vehicles; GAA is General Appropriations Act or the National Budget). Indeed, I have been informed by other sources, that DOTC has already given a down payment of P300 million to Dalian.

I wish I could take Sec. Jun’s word at face value because he seems to be a nice guy. If he were not a politician on top of DOTC, he would come across as a rather decent individual you can trust. But in this case, things just don’t add up.

Indeed, I don’t understand why Sec. Jun would lie to me. I checked out the actual Supreme Court decision and there it is in the list of projects funded by DAP submitted by Butch Abad and signed by no less than P-Noy is number 31 — DOTC-MRT: Purchase of additional rail cars for a total amount of P4.5 billion.

I also checked earlier with MRTC, the private company that technically owns MRT 3 if what Sec Jun was saying is true. No, they told me. Their lawyers have researched the matter and they could not find any such provision in the 2013 and 2014 GAA appropriating anything for MRT 3 rail cars.

I thought, maybe the MRTC lawyers just don’t know where to look. Sec Jun was once Chairman of the powerful House Appropriations Committee and he should know what he is talking about. He should also know where to hide it, if hiding it makes sense.

I consulted a friend who is familiar with how the DOTC bureaucracy works and he was incredulous that Sec. Jun could claim funding from the 2014 GAA. Said he: “If Abaya is correct that the funding for the LRVs of MRT 3 came from GAA 2014, how could they have conducted bidding in 2013? Availability of funds is a prerequisite for government bidding.”

Then, there is the column of former Sen. Kit Tatad last May which provided details which Kit said clearly shows that the Chinese purchase is being funded by DAP. If this is so, the poor Chinese company can no longer be paid because presumably whatever money DOTC intended for the purchase has to be returned to the General Fund after that Supreme Court decision.

According to Sen Tatad, “On Oct. 18, 2011, two years before we ever heard of the Disbursement Acceleration Program… the Department of Budget and Management released to the DOTC P4.5 billion  for the ‘construction, rehabilitation and improvement of transportation and communications infrastructure projects, including acquisition of equipment; MRT3 Operation and Maintenance (EDSA LRT III).”

“This release was from the DAP through Special Allotment Release Order (SARO) A-11-01469. On Dec. 28, 2011, the DBM advised the DOTC through Notice of Cash Allotment (NCA) No. NCA-BMB-A-11-0023872 that P4.5 billion has been credited to its Land Bank of the Philippines account, ‘for the implementation of the capacity expansion of MRT3.’

“On Dec. 29, 2011, DOTC Assistant Secretary Dante Lantin advised Administrator Rafael S. Rodriguez of the Light Rail Authority in a letter that his office had issued a check for P4.5 billion and deposited it to the LRTA account at Land Bank Baclaran branch ‘for the implementation of the MRT3 System Capacity Expansion Project.’

“The amount shall be deposited with the Bureau of Treasury and ‘recorded as trust in the LRTA book of accounts,’ the letter said.”

It gets murkier if you remember past official announcements on the MRT3 rehabilitation plans and budgets. In response to my query, a source recalled that “sometime in Nov 2011, Mar Roxas who was DOTC Secretary at that time, announced that he has gotten funding for procurement of 25 additional LRVs for MRT-3.

“I wondered at that time, how was it possible to secure a multi-billion peso allocation WITHOUT Congress enactment of such a budget. Now we know: from DAP…

“This money was not spent but made to appear as having been spent (which is technical malversation, in my book; or plain dishonesty) by transferring the money to LRTA (a government corporation)… (because) unspent money should revert back to the Treasury within the next quarter at the end of a budget year for Line agencies (non-corporate).

If funding for the contract with Dalian for additional LRVs for MRT 3 came from that hidden cache, then the contract can no longer be executed. In short, no additional relief to the daily miseries of commuters on EDSA!

“Augmentation within the Executive branch is legally allowed – if the ‘savings’ are to be used for programs/projects already in the budget act. I do not recall seeing MRT-3 as a budget item – other than payment for leases to MRTC.”

I googled a bit and found this Rappler article of March 26, 2012. It reports that then “DOTC Sec. Mar Roxas said a budget has already been set aside for the purchase of new trains to address overcapacity issues but the funds could not be disbursed until the legal issue with Pangilinan’s group is resolved.”

The report continues: “President Aquino approved the release of P6.3 billion to acquire new coaches. Of the amount, P4.5 billion will be spent to buy 26 coaches for the MRT line 3. The remaining P1.8 billion will be spent for the rehabilitation of LRT line 1.

“The 26 additional coaches for MRT-3 are meant to increase its loading capacity by as much as 60 percent to 37,824 passengers per peak hour in each direction from the current 23,640 passengers per peak hour per direction.”

Rappler then quotes Roxas: “The government plans to acquire 26 coaches versus MPIC’s (Metro Pacific Investment Corp.) proposal of 73. We need to take a look if the 26 is enough or if we need the entire 73. Also, we have to study the conditions attached to their proposal such as the proposed fare and possible extension of the contract. All of which have to be taken into serious consideration.”

In Sept. 4, 2012, InterAksyon, a web news site, reports that “The board of the National Economic and Development Authority has approved 11 major infrastructure projects, including the purchase of additional train cars for the Metro Rail Transit Line 3.

“Outgoing Transport Secretary Mar Roxas announced through his Twitter account that the NEDA Board, which President Benigno Aquino III chairs, approved the P8.63 billion MRT 3 Capacity Expansion Project, which involves the purchase of 52 more light rail vehicles to enable the service to operate a four-car configuration.”

Confusing, isn’t it? There is no clarity on how the MRT 3 rehab is being funded. Why is Sec Jun saying it will be funded by the 2014 GAA when Sec Butch Abad says it was funded by DAP?

Add to the mess is the COA ruling reported by PhilStar August 1, 2013. Here are relevant paragraphs from that report:

“The Department of Transportation and Communications (DOTC) released P4.5 billion in government funds to the Light Rail Transit Authority (LRTA) for the controversial Metro Rail Transit (MRT) 3 expansion project in 2011 – a move that the Commission on Audit (COA) finds questionable.

“The money was eventually returned to the agency in October 2012 after a memorandum of agreement (MOA) between the two, the basis for the fund transfer, was cancelled, according to a COA report. (if money was returned to DOTC, what happened to it? It wasn’t spent on MRT 3 rehab. Was it returned to the General Fund?)

“The 2011 report… said the DOTC also released more than P5.6 billion to the LRTA and the Manila International Airport Authority (MIAA) to finance the MRT 3 System Capacity Expansion Project and the rehabilitation of the Ninoy Aquino International Airport (NAIA) Terminal 1.

“State auditors said the funds were given to the two government-owned and controlled corporations despite the absence of Programs of Work (POW) and Cost Benefit Analysis.

“The POW “is an indispensable requirement that indicates the scope of work to be done, equipment/ materials/items to be procured, the total project cost and the basis of the Approved Budget for the Contract,” the COA report explained.”

I suspect DOTC is playing around with the rules and they may even claim that much abused “good faith” of wanting to alleviate conditions at MRT 3. I hope Sec Jun can explain why he seems to have lied to me. Despite everything that’s rotten at DOTC, I trusted Sec Jun somehow due to reassurances of a mutual friend that he is a good guy.Daang Matuwid, anyone?