LRT-MRT common station: Where is the good faith?

Some people are skeptical of the “good faith” that the government is invoking to justify the implementation of the Disbursement Acceleration Program that the Supreme Court has ruled as unconstitutional.  In its basic sense, “good faith” implies a sincere intention to deal with others in a fair manner – something that observers say is lacking in the way some government agencies treat contracts and agreements with the private sector.

A good example is the LRT-MRT Common station project that was approved by the National Economic Development Authority (NEDA) as a priority project in 2007 where three rail lines – MRT-3, MRT-7 and LRT-1 – would be “interconnected” through a common station. The DOTC and the Light Rail Transit Authority (LRTA) signed a Memorandum of Agreement with SM Prime Holdings Inc., in 2009 for the construction of a common station in front of the SM City North EDSA Mall, with SMPHI also allowed to construct and maintain/operate a walkway or bridge way interconnecting the common station with the mall.

Imagine the consternation of the company therefore when it suddenly found out that the project is being put on hold and worse, that the common station will be located elsewhere. The company wrote several letters to the DOTC asking about the status of the project and wishing to clarify media reports about the supposed relocation. After all, SMPHI had began conducting bored-piling activities (a method to build a solid foundation for various types of structures) as early as 2010 believing it had a solid agreement with the government, not to mention the fact that it paid P200 million for the right to name the station after SM City North EDSA Mall.

Out of the blue, DOTC decided to “change plans,” integrating the common station into the LRT 1 extension project and relocating it to the Ayala-owned Trinoma Mall. DOTC says it is not bound by the 2009 agreement, and that the deal with SMPH had “lapsed” – leaving the company with no recourse but to take the legal route, filing for a TRO and a writ of preliminary injunction against the LRT Line 1 extension project which was turned down, however, by a Pasay City regional trial Court.

Unfazed, the company says it will seek to enforce its rights under the MOA which it believes to be legally binding, and whose existence was duly acknowledged by the DOTC and LRTA in court. According to a lawyer familiar with the issue, the government is duty-bound to honor the agreement not only because it accepted the P200 million but that additionally, the MOA has neither been cancelled nor terminated by both parties. Transportation Secretary Jun Abaya had repeatedly said government will just return the P200 million – but that does not justify the unilateral abrogation of a valid and existing contract. Clearly, there is no good faith there, the lawyer commented.

DOTC says it only has the welfare of the people in changing plans (or changing horses midstream as an observer said) for the common station project. However, an informal survey shows that commuters prefer the original plan because it will be more convenient going from one line to another since the transfers will be unified and integrated in one place – unlike the new plan where passengers from the MRT-7 line will have to cross a lengthy connecting bridge to get to the MRT-3 and LRT-1 platforms.

Safety issues have also been raised since the new plan shows the MRT-3 and LRT-1 having head-to-head platforms – making people concerned about the possibility of a collision. Considering the already dreadful traffic situation along the crowded intersection of EDSA and North Avenue (where Trinoma is located), the commuting public and private car owners would be better off with the common station located in SM mall which is farther from North Avenue and therefore will not aggravate the congestion in the area.

Crying for Argentina

A few weeks ago, the government of Argentina came out with fullpage ads in several newspapers denouncing a US Supreme Court ruling that favored hedge fund companies which the country described as “buitres” or vultures. In 2001, hedge funds bought Argentine government bonds at very discounted rates after the country defaulted on its debts. Argentina has been engaged in a legal battle against hedge funds that refused to write off two-thirds of the bonds’ value before the crisis as part of the restructuring.

The cash-strapped government tried to make a June 30 coupon payment on the bonds, but this was blocked by a US court that said the country should pay the $1.3 billion asked by the funds – resulting in a 30-day grace period that ends this July 30. Argentina says the court ruling might encourage other creditors to demand payment which would deplete half of Argentine national reserves and trigger another default.

The strong sentiment among Argentineans is not to pay the buitres – and to go against this sentiment could cost President Cristina Fernandez de Kirchner politically.  On the other hand, if Argentina refuses to pay, it might be turned off by new lenders which could sink the economy deeper. Clearly, this is a “damned if you do, damned if you don’t” kind of situation that is making a lot of Argentineans cry.

Spy tidbit

With the latest SWS survey upgrading his rating from good to excellent, Vice President Jejomar Binay is once again in demand to speak at various forums. The Vice President will be the guest speaker at the regular meeting of the Rotary Club of Manila today – where a full house is expected with members eager to hear what the country’s most popular politician has to say about current issues.

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