Sumitomo rehab contract bars use of Dalian trains

MRT-3’s redeployment of nine Dalian coaches soon can cost the government P9 billion in surcharge. This is because of a proviso in the commuter railway rehab contract that forbids use of additional trains unless the government pays a hefty 50 percent more.

The Dept. of Transport that operates MRT-3 along EDSA is to field anew three train sets, each consisting of three coaches made in China. It has authorized payment of the nine coaches despite delayed delivery and substandard make.

MRT-3 operations manager Michael Capati announced the use of the nine coaches by last or this month. The trains from Dalian Corp. can take in 20,000 to 30,000 more riders a day.

But DOTr’s separate rehab contract for MRT-3’s 72 original coaches and tracks deems as default its deployment of additional trains. Contractor Sumitomo Corp. of Japan can void the contract unless paid “a factor 1.5 times” the contract amount.

The contract costs P18.8 billion. So the factor of 1.5 times, or 50-percent surcharge, is P9.4 billion. That averages more than P1 billion for each of the nine Chinese coaches. The surcharge can even be higher.

Section 5.3 of Sumitomo’s contract spells out DOTr’s “Events of Default, Remedies”. It states that DOTr would be in default if it “uses or otherwise deploys any Other Rail Vehicles in the System at anytime.” Default can void the contract.

The proviso states further: “Contractor may continue the performance of the Services or any part thereof in its discretion, provided that the (A) fees payable by [DOTr] to Contractor for such Services shall be multiplied by a factor 1.5x and (B) [DOTr] shall also reimburse Contractor for any incremental Costs incurred as a result of such Event of Default plus fifteen percent (15%) profit and overhead on such Cost.”

Main signatories of the contract are Atty. Reinier Paul R. Yebra, DOTr Undersecretary for legal affairs, and Tsutomu Akimoto, Sumitomo managing executive officer. Other signatories are from joint venture partners Mitsubishi Heavy Industries Inc. and TES-Philippines.

Government’s only relief is if Sumitomo waives the staggering P9.4-billion surcharge. The P18.8-billion rehab price, for 38 months, is more than double what MRT-3’s private builder MRT Corp. offered DOTr in 2016-2017. Documents show that MRTC proposed to do the same work for $150 million (P7.5 billion), also with Sumitomo as contractor. MRTC offered to serve as “pass through” of DOTr funds to  the Japanese contractor.

Signed in Dec. 2018, the rehab began on May 1, 2019. On that day the nine Dalian coaches that DOTr-MRT-3 had been using for two months were pulled out of the tracks. Sumitomo has always been against the use of the Chinese trains, due to overweight by more than three tons each and incompatible chassis size with the expensive car maintenance hoist at the depot. Sumitomo had built the tracks for MRTC in 1998-1999 and maintained the trains in 2000-2012.

Last July 16 DOTr authorized the payment of the nine coaches out of 48 that the government indented in 2013. DOTr Sec. Arthur Tugade, Undersecretary for railways Timothy John Batan, and operations director Capati signed the authorization. MRT-3 general manager Rodolfo Garcia did not sign.

The 48 coaches had remained unused for years because delivered many months late, with no signaling system, and 94 crucial components and parts untested for safety, functionality, reliability, and durability. State auditors had recommended ditching of the contract, but Dalian belatedly offered to fix the units.

At P3.8 billion purchase contract, each Dalian coach costs more than P79 million. A former MRT-3 general manager had sworn there was a five-percent or nearly P200-million kickback then.

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From witnesses’ and his diary accounts, cadet Darwin Dormitorio systematically was tortured to death by Philippine Military Academy upperclassmen. No one will be spared from criminal and administrative liabilities, the Armed Forces says. New PMA superintendent Rear Adm. Allan Cusi and commandant of cadets Brig. Gen. Romeo Brawner vow to end the hazing of plebes by seniors. That mission must start with acknowledging that such warped tradition exists, and nearly all PMA grads underwent maltreatment. A long-time source shares some insights while requesting anonymity:

“The PMA culture is based on an Honor Code that says: ‘We, the cadets, do not lie, cheat, steal, nor tolerate among us those who do so.’ But from frequent defiance of the Code, immature cadets began to crave to violate and get away with it. Note these terminologies and deeper meanings that every PMAer knows: (1) ‘Magan’ - brave, with no fear of speaking up; (2) ‘Take Life’ - violate the rules and hope you don’t get caught; (3) ‘Talent’ - faking an info or doing something to have one’s way; (4) ‘Endorsed’ - marked for hazing by an upperclassman; (5) ‘Malas’ - incurring the ire of an upperclassman; and (6) ‘Malingerer’ - feigning illness to shirk duties. These PMA-invented meanings are character definitions that each officer carries throughout his military service.

“Numbers 1, 2, and 3 are badges of honor within the PMA class and part of batch memories. Numbers 4, 5, and 6 can shorten one’s career.

“Look at the peripherals of this tragedy: (1) Missing combat boots of an upperclassman – theft at PMA, clothes, equipment, uniforms, shoes have the habit of going missing only to see it worn by another cadet. (2) Upperclassmen get angry when plebes spend up their stipends, because less collection for them. (3) Use of a Taser gun on Cadet Dormitorio by members of a company notorious for electric torture of lowerclassmen.

“Suggestions: (1) Authorities (not PMA officials) should ask or at least form a Parent Association of the current PMA classes to gather more facts, especially on Item 2, stipends. (2) Create a better culture: a Code of Conduct and not just an Honor Code. Eg.: ‘We the cadets have high respect for others, our environment and our freedom.’ (3) Link up PMA with the Commission on Higher Education to develop intellectual competencies of the cadets, not just Military Science but also AB History, BS Engineering, BS Computer Science, etc. This will professionalize the Corps of Professors.”

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