OGCC nixes Smokey Mountain settlement

MANILA The government has officially cancelled its settlement agreement with the private developer of the Smokey Mountain project in Tondo, Manila in connection with legal disputes before the Court of Appeals (CA).

Office of the Government Corporate Counsel (OGCC) chief Elpidio Vega said the National Housing Authority (NHA) will no longer pursue the settlement via mediation proceedings with R-II Builders before the appellate court as it rejected the proposed PHP1.12-billion settlement amount.

"We have dropped the settlement negotiations because we cannot accept their offer of P1.12 billion. We believe that this amount is too much," Vega told reporters.

The OGCC chief, who handles the CA case as statutory counsel of the NHA, revealed that the government will just proceed with the legal battle against R-II Builders before the appellate court.

"We will just proceed with the case and let the CA decide. We believe we have presented a strong case and so we can win this one," he stressed.

The CA had set a hearing last Oct. 17 for the approval of the proposed settlement agreement, but it was postponed due to the position taken by the OGCC. R-II Builders then sought more time to proceed with the settlement and asked the CA to set another hearing last Oct. 31 to allow parties to pursue the mediation process.

In a resolution promulgated last Oct. 19, the CA decided to end the mediation proceedings.

"Considering that up to date no Joint Compromise Agreement have been concluded by the parties, the Court opted to terminate the mediation proceedings and the consolidated cases are reverted back to appellate proceedings that is the cases are now deemed submitted for decision. This is without prejudice to parties' right to submit to Court a compromise agreement that may be concluded in the future for judicial approval," read the resolution.

The CA ruling was approved by Associate Justices Romeo Barza, Elihu Ybanez and Maria Eliza Sempio Diy.

The OGCC, statutory counsel of NHA in the case, earlier moved to put on hold the NHA's compromise deal with R-II Builders for payment of an additional PHP1,122,416,969.92 for the 4.5-hectare Vitas property as settlement in pending cases before the CA.

The OGCC chief explained that the PHP300 million overpaid by NHA to R-II Builders in the earlier settlement for another five-hectare property should be deducted from the amount. He also stressed that the 12 percent interest rate used in computing the NHA's obligations to R-II Builders should also only be six-percent.

In a three-page letter last Oct. 16, Vega asked NHA General Manager Marcelino Escalada to review the NHA's Board Resolution 6396, which accepted R-II Builder's proposal to settle the civil cases with the said amount in addition to the earlier payment to the developer of five hectares of NHA's Vitas properties - to avoid the "possibility of overpayment."

The OGCC stressed that the amount approved by government's housing agency for the court-administered settlement is too high.

Vega cited the findings of the NHA's accounting department that R-II Builders was actually "overpaid by around PHP300 million" in the settlement for the earlier five hectares of property.

Despite this report from its accounting department, the NHA still approved the payment of PHP1.12 billion for R-II Builders and issued a resolution last July authorizing the settlement as well as another resolution last Oct. 3 modifying the settlement terms.

"Given the manifest variance in the findings of NHA's Accounting Department as well as the Board resolutions, such findings and Resolutions have to be harmonized and justified for the benefit of both the NHA and its Board," the letter read.

The OGCC chief also advised the NHA to reconsider the 12-percent interest rate it used in computing the agency's obligations to R-II Builders as he believed that it should only be 6-percent interest that should lead to a lower amount of payment. (PNA)

Source: Philippine News Agency