State lawyers warn NHA vs overpaying R-II to settle Tondo slum redevelopment dispute

The government’s corporate lawyers recently warned the state housing agency against a P1.1-billion settlement deal with businessman Reghis Romero II meant to resolve a compensation dispute over the latter’s controversial redevelopment of the Smokey Mountain garbage dump site and slum in the 1990s.

In a letter to National Housing Authority (NHA) general manager Marcelino Escalada sent last week, chief government corporate counsel Elpidio Vega cautioned the agency about the “variance” between its own computation and the proposed settlement with R-II amounting to P1.12-billion plus five hectares of government property in Vitas, Tondo.

Vega said earlier computations presented by the housing agency’s accounting department to the NHA board indicate that it allegedly “overpaid” Romero’s R-II Builders by as much as P300 million.

“Given the manifest variance in the findings of NHA’s accounting department as well as [NHA] board resolutions [authorizing the settlement], such findings and resolutions have to be harmonized and justified for the benefit of both the NHA and its board,” the lawyer from the Office of the Government Corporate Counsel (OGCC) said.

Last October 3, 2018, the NHA’s board of directors passed a resolution to implement a revised P1.12-billion settlement agreement with R-II Builders involving a 2011 Smokey Mountain housing case.

This settlement was supposed to be presented to the Court of Appeals (CA), which instructed both parties early this year to explore the possibility of an amicable settlement through a mediation proceeding.

But aside from citing the alleged variance in computation, Vega urged the NHA to defer its mediation with R-II stressing that any possible settlement should involve proper computation of interest as well as proper valuation of the properties to be given as payment to the firm.

He said the NHA board should consider OGCC’s position on the applicability of the 6 percent legal interest versus the asserted 12 percent on NHA’s obligation to R-II, if any, and the proper valuation of its Vitas properties.

Finally, Vega said that as chief counsel for government owned and controlled corporations, the OGCC advised NHA that any possible settlement “should be conditioned on the settlement of all the above-referenced cases filed directly or indirectly against the NHA [by R-II Builders], and R-II’s waiver of any and all claims arising out of or in connection with its causes of action in such cases, to avoid the possibility of over payment.”

In 2011, a Quezon City regional trial court ruled in favor of R-II Builders in the long running dispute, ordering NHA to pay the firm P859 million with interest plus a five-hectare property in Vitas, Tondo to settle NHA’s obligations to the construction firm due from the failed Smokey Mountain project.

The NHA appealed the decision, but early this year, the CA directed the housing agency and R-II Builders to explore the possibility of an amicable settlement in a mediation proceeding.

Given questions on the variance of computations, applicable interest rate and proper valuation of properties subject of the deal, the OGCC advised NHA to move for a resetting of the mediation proceedings for NHA “to deliberate anew and arrive at readily justifiable settlement terms.”  /kga