Ombudsman dismisses graft raps vs Abaya, 16 other ex-DOTr officials over MRT3 deal

The Office of the Ombudsman has dismissed the graft complaint against former Department of Transportation (DOTr) secretary Joseph Emilio Abaya and 16 others over the anomalous ₱4.2-billion MRT3 maintenance contract.


Abaya was facing the complaint for violation of Section 3(e) of R.A. 3019, the Anti-Graft and Corrupt Practices Act, alongside 16 individuals – DOTr Under secretaries Edwin Lopez; Rene Limcaoco, Head of the Negotiating Team; Catherine Jennifer Francis Gonzales, Vice-Head, Negotiating Team, MRT3 General Manager Roman Buenafe; Camille Alcaraz, Assistant Secretary for Procurement; Ofelia Astrera, Vice-Chairperson, MRT3 Bids and Awards Committee; Charissa Eloisa Julia Opulencia, Attorney V; Oscar Bongon, Chief of the Engineering Division; and Jose Rodante Sabayle, Engineer III .

The private respondents are Eldonn Ferdinand Uy of Edison Development and Construction, Elizabeth Velasco of Tramat Mercantile Inc., Belinda Tan of TMI Corporation, Inc., Brian Velasco of Castan Corporation, and Antonio Borromeo, Jun Ho Hwang and Elpidio Uy of Busan Universal Rail, Inc. (BURI). After a careful re-evaluation of the case records, the Office of the Ombudsman reconsidered its earlier finding of probable cause against the 17 respondents since the element of manifest partiality, evident bad faith, or gross inexcusable negligence is “wanting.”

“There is satisfactory proof, based on the case records, that Abaya had no participation in the procurement of the MRT3 long-term maintenance contract,” the order stated.

The Ombudsman likewise found that Busan JV had complied with all the requirements to be eligible as the winning offeror for the MRT3 longterm maintenance contract.

Earlier, the Ombudsman's Special Panel of Investigators discovered that in October, 2014, and January, 2015, the DOTr conducted two biddings for the three-year maintenance service contract for MRT3.

The biddings were considered a failure due to non-submission of bids. Abaya took action on January 28, 2015 and issued a Special Order creating the MRT3 Bids and Awards Committee (BAC) for the procurement of goods, infrastructure projects, and consulting services of the MRT3 system.

On March 2015, the MRT3 BAC issued Resolution No. 002, Series of 2015, recommending the resort to Negotiated Procurement through Emergency Cases under Section 53.2 of the Revised Implementing Rules and Regulations (RIRR) of the Government Procurement Reform Act (Republic Act No. 9184).

The contract will be awarded to a single maintenance service provider, which would provide a Single Point Responsibility for the General Overhauling of 43 units of light rail vehicles (LRVs), total replacement of the Signaling System, and additional maintenance works.

All in all, the contract amounted to ₱4,251,900,000.

The proposals for the contracts were submitted on October 21 by Busan Joint Venture (Busan JV); Joint Venture of DM Consunji, Inc., Beta Electric Corporation, Baudis Bergmann Rosch Rail Automation GmbH, and Hamburg Consult GmbH; and the Joint Venture of Schunk Bahn-Und Industrietechnik GmbH and Comm Builders and Technology Philippines Corporation.

The Busan JV is composed of Edison Development and Construction, Tramat Mercantile Incorporated, TMI Corporation, Inc., Castan Corporation, and BURI.

All these joint ventures fell short during the evaluation process because they lacked eligibility and technical documents.

However, the Negotiating Team declared on October 28 that Busan JV is the sole entity that passed evaluation.

The Negotiating Team then recommended to the MRT3 BAC that the bid of Busan JV be declared as the Single Calculated Officer and that post-qualification proceedings be conducted.

In turn, the MRT3 BAC issued Resolution No. 14 Series of 2015 on December 21 and recommended that the project be awarded to Busan JV.

The recommendations pulled through on January 7, 2016 when the DOTr, the MRT3 and the Busan JV entered into a contract for the longterm maintenance contract.

The Commission on Audit (COA) stated in its Consolidated Annual Audit Report (CAAR) for 2016 that the “DOTr still failed to provide the riding public with a safe and comfortable transport system even with the procurement and delivery from August 2015 to January 2017 of 48 new LRVs with a total cost of ₱3,759,382,400.00.”

“Despite four years in the procurement process and total payments of ₱527,761,083 (equivalent to 14 percent of the contract price) to Dalian, the LRVs remain inoperational and unaccepted by the DOTr as of reporting date due to glitches in the power supply and signaling system. These resulted from the DOTr’s poor planning and other major procurement lapses,” it added.

The Special Panel also found irregularity in the award when the Busan JV was allowed to just submit a Certificate of Registration of BURI as a Special Purpose Company (SPC) instead of a valid JVA.

Records from the companies 2014 audited financial statements revealed that the net worth of Tramat was only ₱1.9 million, while Edison's net worth was ₱383.5 million.

This fell below the ₱1-billion requirement under the amended Instructions to Offerors.

The Ombudsman said that Busan JV was not technically, legally, or financially capable to take on the long-term maintenance contract for the MRT3.

The respondents, however, chose to award the contract to them.