The MRT Sobrepeña Story

Why is the name “Sobrepeña” so familiar?

This is not the first time Mar has heard of the name Sobrepeña. When Mar was senator, Serge Osmeña delivered a privilege speech regarding CAP. Mar interpellated. According to Senator Osmeña:

From 1998 onwards, almost 100% of the trust fund investments made by CAP were in related companies of the Sobrepeña family: Fil-Estate Land, Fil Estate Management, Nasugbu Properties, Camp John Hay, MRT Light Rail, and others. All were criminal violations of the rule on trust fund management where the trustor shall not have an interest and shall not dictate the investments made by the management of the trust fund.

Mar cautioned against the renewal of licenses that would allow CAP to sell pre-need plans.

I would advise against any move to renew CAPs license without due consultation with thousands of victimized parents, whose high hopes of giving their children quality education had been thrown out of the window due to CAPs demise. Granting CAP a new license before it has fulfilled its obligations to existing plan holders could create even more problems for the company and its present and future clients.

Who is Robert John Sobrepeña?

roxas-sobrepeno-abaya-20160208_9926ABC5DE0F4BF4965535F7203977C1
Robert Sobrepeña (center)

Among other things, Sobrepeña is a shady businessman known for:

He tried to leave the country once but was caught by the Bureau of Immigration. According to the BCDA president:

First, he declares that he will fight [the charges], and then he tries to run the very next day, before the case can even be raffled and without having been arraigned? He is clearly a flight risk, trying to delay the court process. This is a textbook display of obstruction of justice.

How does he figure in the whole MRT setup?

  • Mr. Sobrepeña heads MRT Holdings, Incorporated II (MRTH)
  • MRTH is the parent company of the Metro Rail Transit Corporation (MRTC).
  • MRTC was in charge of MRT maintenance from 2000 to October of 2012.

How was the system supposed to work?

In the 1990’s, right after martial law, the government had no money.

Solution? A private-public partnership whereby:

  1. MRTC to build the MRT.
  2. MRTC to maintain the MRT.
  3. MRTC to expand system when the volume of riders go up.
  4. MRTC to own the system.
  5. Government to operate the system.
  6. Government to pay MRTC for the right to use the system.
  7. Government to pay MRTC to maintain the system.

So, what happened?

The MRTC was obligated to have a general overhaul of the MRT in 2010. However, upon the DOTC’s inspection, the only changes made by the MRTC were cosmetic. MRTC was continuously renewing the maintenance contract with its subcontractor Sumitomo.

So the first question that probably came to Mar’s mind was simple: Will the government continue to pay a maintenance contractor for poor service, without warranty? If you were thinking of the safety of the riding public, the answer would be no.

Note that 2011-2012 was the time when service interruptions and breakdowns in the MRT became regularly occurring events. This was because, during the prior years, the maintenance was poorly done!

The MRTC was obligated to bid out the maintenance contract but it refused to do so. The MRT cannot run without a maintenance provider. So what did the government do?  It took over. A new maintenance contractor, PH Trams CB&T (a joint venture), was engaged after October of 2012. It bears stressing that CB&T was the long-time LRT 1 maintenance provider.

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In 2014, the government wanted to purchase more trains. What did MRTC do? It sued the government and secured a TRO from the court, preventing the purchase of new trains. To quote Kat Usita:

Similar to maintenance, buying the new coaches was MRTC’s contractual responsibility but DOTC decided to take over in 2012, again because of MRTC’s inaction. This is probably even worse because the need for new coaches was apparent as early as 2003 or 2004!

The breakdown of trains can be traced to poor maintenance. The lack of improvements was intentionally orchestrated by the very entity responsible to maintain it: the MRTC. According to President Aquino:

This lack of care practically guaranteed the breakdown of our trains. Is it not in the interest of all companies to make sure that they get their money’s worth from their investment? Yet, they allowed the situation to deteriorate, to the point where, at very short notice, they just passed the job of improving the MRT onto us.

When we made moves to undertake improvements, [but] suddenly, they wanted to take back the responsibility of maintenance. However, their proposal was significantly more expensive than ours. This would, of course, translate to added expense and aggravation for our people. We did not agree to this, and began the process of obtaining new train coaches. But because the MRTC was adamant, they were able to obtain a TRO on the procurement. That is why the MRT situation has come to this.

What was Mr. Sobrepeña’s reaction?

Mr. Sobrepeña obviously had a different view from the government.

According to him, his company submitted proposals to maintain, repair, and upgrade the MRT3, but the Department of Transportation and Communications (DOTC) did not respond:

Everything is on record. We, the private sector corporations, have done everything that we possibly can. In fact we have 8 proposals with the DOTC. So I beg to disagree when DOTC says the private sector has done nothing. That is a lie. We did everything we could do by submitting these proposals. They refuse to let us in the system, they refuse to answer our proposals, and then they have that temerity to say that we did nothing? In reality it is the DOTC and Secretary Abaya who did nothing because they refuse to act on our proposals which remain pending up to now. All these proposals offered expansion, repairs, and upgrade at no cost to government, yet were ignored by the DOTC.

The simple answer to this? They were all overpriced.

According to DOTC Sec. Jun Abaya:

[Mr. Sobrepeña] demanded for an increase in payment but they would not have (any) warranty, liability, if anything goes wrong.

Abaya said what he couldn’t condone was that since:

After we increased the payment, they would tell (the government), ‘by the way, everything we do would have no ‘warranty.’

Knowing all of this, would you still blame Mar for saying no to Sobrepeña’s shady deals? Would you blame Mar for putting the interests of the public above the interests of a snake-tongued profit-seeker?

 

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8 thoughts on “The MRT Sobrepeña Story”

  1. Good article given that some people blame Mar for the poor state of the MRT. It would be good though to include references and links so this would not look like plain hearsay.

    Might improve your seo also to link.

    Like

  2. 1. I read in the papers that MRT Holdings has brought this case for arbitration in Singapore. This was not mentioned here. And what’s the update on that
    2. John Sobrepena as far I know is not connected with CAP. CAP is owned by his dad, though I forgot his name.
    3. CAP invested in MRT that’s true. And if I remember correctly around P3 billion
    4. CAP also have advances to Fil Estate, one of the causes of CAP’s downfall.
    5. On the side SEC, the trust division of the bank that handled the CAP trust fund should go to jail. And that includes the BSP for failing in its oversight regulatory function.

    Liked by 1 person

    1. Grabe yang mga Sobrepena na yan.Pwede bang i class suit sila dahil maraming hindi nakapagaral na mga bata ng na.banckrupt ang CAP.May utang pa sila samin ng 1 taong non payment of tuition fees.

      Like

    2. Good day sir,
      Regarding 1, & 2.
      1. Yes, MRTC has brought the case to SIAC (Sing. Int’l Arbitration Centre in 2014. However, no news have been found so far regarding the case.
      Regardless, the government has already proceeded with the acquisition and installation of the new train units. The MRT-3 buy is expected to be done by end/start of 2nd/3rd quarter 2016, which includes dropping of SIAC case by MRTC.
      2. Yes sir, CAP is owned by Enrique Sobrepena Jr. (John’s dad).
      However, John Robert Sobrepena is also director of CAP Life Insurance, a subsidiary of College Assurance Plan [ph] Inc or simply known as CAP.
      See:
      http://www.cap.com.ph/life/board.htm
      http://www.bloomberg.com/research/stocks/private/person.asp?personId=13621429&privcapId=10038335

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  3. The government should have made this all public [in some form or fashion]. So that people were informed. In the battle of perception talo si Mar Roxas dito. Lalo na sa galing mangutya ng mga anay. It’s not enough that Mar Roxas was doing good, the people must know he’s doing good. I’m all for RoRO…but things like this…nanghihinayang ako bakit hindi nilaban sa sangkaterbang misinformation na nangyari at kumalat.

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  4. I have the same sentiment as Barry p. A video about this could have been made as an info material campaign, as well as the Yolanda funds issue, since these are the 2 major issues being thrown at Sec. Roxas — blaming him for incompetence and/or corruption. I know it is not true, as I do my own research. But we have to admit, majority of Filipinos will not bother to do research and just believe memes and black propaganda videos. 😦

    Also it would be informative for the public to know how disadvantageous the contract is with MRTC, in terms of the monthly lease, and that this lease was signed during Pres. Ramos time in 1997.

    Like

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