The Smokey Mountain controversy

The Office of the Ombudsman recently wrote finis to a long-drawn out battle between Reghis Romero-led R-II Builders and the Home Guaranty Corporation (HGC).

In dismissing the case filed by R-II against seven HGC officials led by president Gonzalo Bongolan, the Ombudsman said the case involving the controversial Smokey Mountain project was unfounded.

The decision was dated Oct. 12, 2010 but it was approved by Ombudsman Merceditas Gutierrez only last Nov. 12.

 In a nutshell, it cleared HGC officials of charges by that they sold at a purportedly undervaluation price two parcels of HGC lands to La Paz Milling Corp. The disputed selling price for the 28,926 square meters of land was P384.7 million or P13,300 per square meter.

Cleared of the charges filed by one Jerome Canlas were Bongolan; Elmer Cadano, executive vice president; and vice presidents Melinda Adriano, Rafael delos Santos, Corazon G. Corpuz, Danilo Javier and Jimmy Sarona.

In throwing out the misconduct case, the Ombudsman took cognizance of the rebuttal made by HGC officials that there was no undervaluation contrary to the claim of R-II that government was shortchanged in an amount ranging from P121. 49 million to P309.5 million.

The HGC officials pointed out that their selling price of P13,300 per sqm was even way above the latest zonal valuation for the properties set at P9,750 per square meter by the Bureau of Internal Revenue (BIR).

It was also above the assigned book value of P10,971.29 per sqm., the minimum disposition value of P11,668 under the net effective return method, and the P5273.76 per sqm under the severity of loss method of HGC’s revised disposition guidelines, they said.

Aside from the Ombudsman decision, HGC had also scored a victory against R-II earlier this year when the Supreme Court stopped Manila Judge Mariano dela Cruz from hearing the civil case which R-II had filed against HGC’s sale of lands.

HGC had gone to the high court saying that Dela Cruz has no jurisdiction over the case because the original court from whom he took over was not designated as a special commercial court, which has the authority over such a dispute.

On March 19, 1993, the NHA and RBI entered into a JVA for the development of the Smokey Mountain dumpsite and reclamation of the area across R-10 based on Presidential Decree No. 757, which mandated NHA to undertake physical and socio-economic upgrading and development of lands of the public domain identified for housing.

We just learned however that R-II Builders is filing a motion asking the Office of the Ombudsman to reconsider its decision.

The said Jerome Canlas, on Oct. 16, 2009, filed the case for violation of the anti-graft and corrupt practices act against the said HGC officials in connection with the sale by the latter in 2008 of two parcels of land to La Paz for P384.7 million.

Canlas said that a report from the appraising authority disclosed that at the time of the contract, the subject properties were worth P506.2 million to P694.2 million. These were based on the sale of adjacent properties.

On July 2008, EValue Plus Inc., a credited property consultant, reported that parcels of land adjoining the subject properties had a fair market value (FMV) of P24,000 per sqm which means that the HGC properties should have been sold for much more.

Because of the disparity between the actual fair market value of the subject properties and the actual purchase price at the time of the execution of the contract, Canlas said that the involved HGC officials committed an act that resulted in huge losses to the government.

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