C – 5 sound and fury: Is Monsod painting the full picture?

Posted on | February 2, 2010 | 2 Comments

Professor Solita Collas Monsod´s analysis of C – 5 attempts to inject “facts” into the sound and fury, that passes for parliamentary debate. While laudable, her efforts risk losing sight of the first principles in economics. By framing the debate too narrowly, we learn half the story. Unfortunately, it is the half that proves inaccurate.

For this reason, I offer contrasting views that draw different conclusions, proving Senator Manny Villar´s innocence.

The controversy on C – 5 precisely arose because Villar´s detractors a priori have judged him guilty. To build their case, they selectively use what passes as data that fit their arguments, while ignoring those that contradict their personal agenda. Hence “half-truths” not only mislead, they inflict serious injustice on the aggrieved parties.

How do we see the full picture? Answers to the following questions help:

1. What are the facts of the case?
2. Who are accountable for executive decisions, and those with responsibility for due care and diligence?
3. In the event that Villar has a case to answer, what due process is needed to serve the interests of justice?

The answer to these questions, in its order, serve to establish a) what we are dealing with; b) pin accountabilities on the right parties; and c) ensure transparency that gives all aggrieved parties a fair trial.
What are the facts?

Senate Committee Report 780 alleged that Senator Manny Villar is guilty of a) double “insertion” that funded the same project twice at P200 million each; b) realignment of road to favor his corporations; and c) as a consequence, bloated the project costs by an extra P6 billion. Hence, Villar is asked by the senate to pay back this amount.

Prof Monsod, using data from the Senate report and the media, succinctly describes that the C – 5 controversy actually comprise three different road projects: a) Manila Cavite Toll Expressway (MCTEP), where motorists pay a toll for its usage, links Southern Luzon Expressway (SLEX) to Coastal Road; b) C – 5 extension (CX – 5); and c) together with Las Piñas – Parañaque Link project (LPPLP) gives a separate toll free link to SLEX.

So what are the issues … and the underlying principles that should be considered?
Waste … or creating choices for motorists ?

Monsod argues that MCTEP and CX – 5 / LPPLP are close to each other. Given that MCTEP already exists, CX – 5/LPPLP is redundant. Hence, by not building CX – 5 / LPPLP, the government stands to save P6.96 billion.

While this logic is alluring, the case for waste cannot be argued convincingly. With two different roads, one charging motorists for its use (MCTEP) while the other is free of charge (CX – 5 / LPPLP), the issue becomes one of providing choices for motorists.

Does this have precedents in international practice?

Yes. In fact it is common to see toll roads and toll free roads to co-exist in Europe and in other countries. For infrastructures, such as roads, this choice is important given that multiple points of access are needed to connect communities, facilitate travel and decongest high traffic density areas. Competition between toll and toll free roads, when they coexist, often comes at the expense of toll roads. However, for C – 5, this is not an issue given the high traffic density.

Monsod´s argument that the toll road only costs the government P2.68 billion, hence cheaper than CX – 5/LPPLP, is indeed “novel economics”. The total costs to motorists (who are also taxpayers) are in fact higher. MCTEP´s sponsors recoup their total investments plus a return by collecting tolls every time motorists use the road. Notwithstanding this flawed logic, the fact is, both segments of C – 5 are needed to decongest Las Piñas, Cavite and Parañaque.

Senator Villar, in his speech to the senate on February 2, 2010, presented the same evidence given in 2008 and 2009: Realignment of C – 5 involved one kilometer in MCTEP, and shifting one bridge (i.e.no. 2) to avoid conflicting with the light railway transport.

Therefore, without a solid case for claiming waste, redundancy and extra costs for re-alignment, Monsod and the senate´s demand for restitution from Villar cannot withstand scrutiny and legal challenge. Interestingly, the P6.96 billion sought from Villar for “wasting” tax-payer´s money is well above the total P4.2 billion budget for C – 5.
Land value and right of way

Comparison of land values is at best a treacherous art. Fortunately for Villar, he has the Bureau of Internal Revenue, Department of Finance and Philippine jurisprudence on his side. As a rule of thumb, government zonal values are lower than what developers can realize in the commercial markets. For this reason, real estate developers tend to resist forced acquisitions by government for public works.

Monsod suggested that Villar´s lots were acquired at an average price of P7,168 / sq meter, while the non-Villar properties were paid P1,880 / sq meter. She gave higher numbers of P11,000 / sq meter and P4,500 / sq meter respectively, in her television talk show. Apparently, both figures are estimated from the senate report.

While the comparison is simple and appears compelling, it is in fact simplistic. Atty Carmela Bocod, as early as 2008, certified that there was no over-pricing. Based on the government´s zonal value, Commercial and Industrial lots are valued at P30,000 / sq mtr, while residential lots around Sucat is valued at P4,500 / sq meter. Villar´s detractors later claimed that the wrong zonal value was used. In response, Atty Bocod re-affirmed that the values used in the acquisitions of all land relating to C – 5 are correct, and in accordance with government guidelines. Hence, without knowing the composition of the land types acquired (i.e. commercial, industrial or residential), any comparison of land acquisition prices are meaningless.

Land value is claim by Monsod and other Villar detractors to have directly benefited Villar´s family corporations. This is a double edged sword:

1. Assuming this is true, did the government under-pay Villar´s corporations by depriving them of any rightful gain from their real estate assets? Or,
2. If capital gains link to proximity to public works should accrue to government, as Monsod appears to suggest, should other real estate developers and Hda Luisita of the Aquinos – Cojuangcos (as a result of the P 32 billion Subic – Clark – Tarlac Expressway) be subjected to the same claims?

You cannot have your cake and eat it too. As a matter of principle, government acquisition of land for public works is subject to government sequestration. Government dictates the value without any recourse for negotiations.

Clawing back capital gains (i.e. induced by improved infrastructures) set dangerous precedents. Such gains are called by economists externality simply because it cannot be directly quantified or link to unique beneficiaries. Applying such “novel” legal construct can only erode any security of tenure, and violates property rights, making Philippine legal framework onerous and unpredictable.

In the same speech to the senate, Villar revealed that his family corporations remain unpaid on a number of land acquisitions by the government related to C – 5. Others were fully paid. Surely, if Villar is as influential as his detractors paint him to be, why are his companies the last in the payment queue?

Therefore, without any over-pricing of the Villar properties, there is no basis to claim against ill gotten wealth.
Double amendments…or additional budget ?

In October 6, 2009, Atty Yolanda Doblon of the Senate Legislative Budget Research and Monitoring Office (LBRMO) certified that there were no double amendments (more popularly referred to as “insertions”) on C – 5. The P400 million were allocated for Sucat Flyover (i.e. P200 million) and Coastal Road (i.e. P200 million).

As of February 2, 2010, the P200 million for C – 5 has not been disbursed. Curiously, while this fact is readily verifiable, Villar´s detractors insist that Villar enriched himself from money that was not yet disbursed. Worst, this is money that will never be disbursed to Villar or his company.

The principle of separation of judiciary, legislative and executive branches of government is ignored. While senators and congressman can legitimately propose amendments to the national budget, it is the executive that disburse and monitor any money earmark for public works and other projects. Hence, the possibility of Villar or anyone from the legislature directly receiving any money for projects is remote, if not in breach of this separation of powers and accountabilities.

Legislature scrutinizes the budget, giving each senator and congressman the duty of due care and diligence to preserve the wealth of the Filipino nation. In contrast, the executive (i.e president and cabinet secretaries) disposes of money approved under the national budget.

Therefore, without direct fiduciary responsibility, how can Villar or any senator, be held responsible for any disbursements of public funds? Under the principle of separation of powers and accountabilities, why is the senate only after Villar and not anyone from the executive branch of government?

If Villar hood winked his colleagues in the senate, as his detractors allege, and “rob the country” right under the senators´ noses, are the senators remiss in their duty of due care and diligence in voting in favor of the national budget?
Due process … or hanging by assumptions?

A traffic violator is given more protection and rights to redress. When issued a ticket for traffic violation, the violator can appeal and given the opportunity to overturn any penalty on the basis of evidence.

The senate investigation on C – 5, after two years of work, only manages to assume a plausible link between Villar and alleged irregularities. The senate report, while explicitly admitting there was no direct cause to link Villar, a plausible cause was sufficient basis for “censure” and demand for repayment of P6.96 billion wasted on public works.

This stance violates two basic principles of jurisprudence: a) Guilt is establish only after presenting compelling evidence that directly links the party to a crime; and b) Restitution is due only on conviction of a relevant crime.

Under its newly formulated principles, the senate now wants to legislate, sits in judgment of a colleague, and adjudicates using rigor of proof that cannot stand a chance in any court of law. This blurring of the powers and accountabilities violate the most basic principles of good governance and justice.

Is it any wonder then that Villar refuse to be drawn to such “trials by innuendos”? Far from being a “coward”, which no less than Senate President Juan Ponce Enrile labeled Villar, Villar actually showed courage in refusing to be complicit to a farce.
Conclusion

Monsod´s “conclusive” proof to declare Villar guilty of wasting taxpayers´ money is a great leap of faith. To ask P6.96 billion back requires greater rigor of proof. Censure does not carry any lower burden of proof, given that “half truths”, innuendos and assumptions (i.e. to fill the gaps in evidence) inflict great injustice to an innocent person.

The charges against Villar can neither stand the test of jurisprudence, nor the judgment of wise and practical men … and women as well. The greater concerns are the absence of integrity, cavalier application of tests for evidence, and total disregard for inflicting injustice to an innocent man. After all, Villar remains innocent until convicted of any crime in a qualified court of law.

The senators sitting as accusers, judges and executor of sentences is far from a credible body to judge Villar or any senator. Villar showed courage, not cowardice, by refusing to legitimize such farce at great personal calumny by his detractors.

Be informed … ask questions! Madame Professor – together we can paint a full picture we can believe in, by remaining true to our academic calling as guardians of truth and integrity.

Author Information:

Ricardo G. Barcelona is currently the managing director of Barcino Capitas Limited – Barcelona, Spain and the United Kingdom. He is also the senior adviser to Livingstone Partners (Spain and USA), Agrival Tigrus (Romania and United States), ServiHabitat / La Caixa (Spain) and board director to In2Power (Philippines). He is also a lecturer at the IESE Business School in Spain. He is currently working for his DBA (Candidate) in the Cranfield School of Management at the United Kingdom, and has an MBA at IESE Business School, Universidad de Navarra, Spain; a BA in Economics at the University of the Philippines School of Economics.

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