| October 4, 2014

MANILA, Philippines – The private consortium that runs the Metro Rail Transit Line 3 has defended MRT-3’s former maintenance provider Sumitomo Corp. from allegations that the Japanese firm had supplied the transit system with “cannibalized” parts from the latter’s own coaches.

In a statement recently sent to, Metro Rail Transit Corp. (MRTC) said it has papers to show that Sumitomo was a responsible maintenance provider and was supposed to install genuine parts for MRT-3 but was unable to do so due to lack of clearance for the Bureau of Customs to allow the entry of the parts that were sourced overseas.

MRTC said the clearance should have come from the Department of Transportation and Communications. However, “for unknown reasons,” the DOTC “refused to sign the release papers for the Customs,” the consortium said, explaining that all parts imported for the MRT trains need the department’s clearance.

On Tuesday, October 1, DOTC Secretary Joseph Emilio Abaya told media covering an inquiry by the Senate Committee on Public Services that his agency was investigating allegations that Sumitomo purportedly "cannibalized” an entire train for it to be able to supply parts for MRT-3.

But MRTC say that “if Secretary Abaya was indeed brave enough to say this during the Senate hearing, he would have been confronted with documents to show that…Sumitomo Corp. was undertaking the periodic refurbishment of train Unit No. 70.”

The consortium said Sumitomo was about to install the imported parts for MRT-3 but was prevented from doing so due to lack of permit from the DOTC to allow the entry of the parts.

“As a result, Customs declared the important spare parts as "abandoned" and it was disposed of,” MRTC said.

“Note that those spare parts were already paid for.  Now it is clear that DOTC refused to sign the release papers to fabricate a scenario and claim "cannibalization" of spare parts instead,” the consortium added.

MRTC said a review of the entire tape of the October 1 Senate panel hearing “will prove that Secretary Abaya did not dare state such an absurd allegation as he would have been instantly rebutted and shown to be lying under oath again, as he had been proven several times during that Senate hearing.”

Moreover, the consortium belied Abaya’s statement that Sumitomo did not offer any warranty. It said that during the Senate inquiry, DOTC Undersecretary Catherine Gonzales “stated that Sumitomo indeed had financial guarantees.”

MRTC said it was DOTC’s selected maintenance provider, APT Global “upon further questioning” by senators Serge Osmena and Francis Escudero during the Oct. 1 Senate probe that “admitted that they do not warrant their work.”

On the reported statement of Abaya that Sumitomo was asking for an increase in payment because the firm’s MRT-3 contract included spare parts, periodic refurbishment of trains and labor, and that the DOTC’s selected maintenance provider had the same scope of work, MRTC said statements made by representatives of APT Giobal during the Senate inquiry would belie Abaya’s claim.

“(U)nder questioning from Sen. Osmena, PH Trams and APT Global's Vic Espiritu admitted that their contract was for labor only and it was DOTC (that) supplied the parts,” the MRTC said.

The consortium further explained that Osmena was advised that spare parts alone take up at least 60 percent of Sumitomo's monthly maintenance expense, which the senator computed at 60 percent of $1.4 million a month, or $840,000 a month.

“Thus, Sen. Osmena concluded that since PH Trams & APT Global charged the same rate as Sumitomo but they did not provide the spare parts, there was $840,000 a month, or over $ 10,000,000 a year (over P450 million per year), that was being overcharged by DOTC maintenance providers.  So where is this money going?” MRTC said.