Luck—or influence?

The Ayala Group of Companies is either very lucky or very influential and persuasive. In less than a week, it has bagged two billion-peso projects—the unified ticketing system for LRT 1, LRT 2, and MRT 3, and the development of the 7.7-hectare prime property of the Negros Occidental provincial government in Bacolod, adjacent to the provincial capitol. And only last January, the Quezon City government and the National Housing Authority broke laws to eject the Manila Seedling Bank Foundation from a 7-hectare property on Quezon Avenue, over which the MSBF has a 50-year usufruct which will be in effect for 14 more years, in order to hand it over to Ayala Land.

Even now, Quezon City Hall, with the help and cooperation of the Philippine National Police, the NHA, and the Department of Interior and Local Government, is ejecting informal settlers on Agham Road and on the space behind Ayala’s Trinoma so that Ayala Land can take possession of the property.

And yet, ownership of the whole North Triangle area is in doubt. The heirs of Eulalio Ragua, a Spaniard, are claiming the property. The People’s Homesite and Housing Corp., now the NHA, acquired the property from the Tuason Estate. But the Ragua heirs claim that the Tuason title overlaps the Ragua title, so that 400 hectares of the Ragua property were included in the land turned over to the PHHC.

The Ragua heirs further claim that they had won the ownership fight in the QC Regional Trial Court but that the Court of Appeals reversed the decision. They are still pursuing ownership claims.

In the Bacolod property battle, SM Property Holdings Inc. was the highest bidder for the development of the property. But its bid of P18,888 per square meter was P612 below the floor price of P19,500 fixed by the bids and awards committee, which declared the bidding a failure.

SMPHI said the P612 difference is insignificant as it represents only 3 percent of the floor price.

Ayala Land negotiated to buy the property at P20,500 per sq m and was awarded the deal.

In the single ticketing system for the three elevated trains, the AF Consortium of Ayala companies and Metro Pacific Investment Corp. bid against the SM consortium of SM companies, Advanced Card Systems Ltd. of Hong Kong, and Pentacapital Investment Corp. Both offered to pay the government over P10 billion to implement the project for 10 years.

The SM consortium offered to pay the government up front. Ridership or no ridership, the government will be paid, no questions asked.

On the other hand, the Ayala-MPIC consortium said it would pay the government only 27 percent of the contract at the beginning of the project, with the rest to be paid only when the volume of riders reaches 750 million a quarter.

Below that volume, the government will not get paid even for a single transaction. Based on projections of the Department of Transportation and Communications’ bid committee, that ridership volume will be possible only on the ninth or tenth year, if at all. This means that for at least eight years, the government will not be earning a single centavo from the deal.

And if the specified volume is not reached—which is highly probable given the current operations—the more than P800 million balance of the consortium’s bid will not be realized by the government at all. How can this ridership volume be reached when the MRT-LRT lacks trains to service the current number of riders?

The Ayala-MPIC consortium’s bid is higher by a measly 0.01 percent than the SMPHIL bid, or just over P100,000. A look at the financials, will show that this little extra was enough to make them win. But according to the terms and conditions of the two bids, the SM consortium offers certain and outright returns, compared to Ayala-MPIC’s offer where the government does not have any guarantee that the entire amount would be paid. As they say, a bird in the hand is worth two in the bush.

Unfortunately, it seems that it’s not as simple as that. The behind-the-scenes story seems to reveal a big effort to give the Ayala-MPIC consortium an advantage. It’s said that as early as the prebidding stage, the bids and awards committee changed the criteria for bidders to prevent the Ayala-MPIC consortium from being disqualified on the basis of conflict of interest. Specifically, the conflict threshold was raised in terms of a bidder or consortium member’s shares in any rail or transport system to 50 percent instead of the old 33 percent. The basis for the change is unknown to me, but it allowed the MPIC to participate despite the controlling 48 percent of MRTC, the company that operates MRT 3.

In spite of all these, the AF Consortium (Ayala-MPIC) was awarded the project.  Why?

Going back a little further to show Ayala’s clout, the area where Ayala’s Trinoma now stands was originally set aside for Metro Rail’s depot. Ayala became a member of the consortium that was to construct and operate Metro Rail. Something happened along the way and the depot was transformed into the present Trinoma shopping mall.

It was also the original plan to have parking lots at each train station so that motorists can leave their vehicles there and take the MRT. That plan was never followed. Then senator Francisco Tatad exposed the anomaly in the Senate, but nothing happened. Guess why?

Another original plan that was not followed: The Metro Rail was supposed to be above ground from Quezon City all the way to Pasay. But something happened along the way. When the Metro Rail was to pass the Ayala villages in Makati, it suddenly went underground so as not to disturb the residents of the Ayala villages.

That’s clout.