NHA urged to review proposed settlement offer with R-II Builders

MANILA, Philippines — The Office of the Government Corporate Counsel has asked state-owned National Housing Authority (NHA) to review a proposed settlement offer with construction firm R-II Builders.

The settlement stems from a 2011 case filed by R-II Builders against NHA related to the Smokey Mountain housing project in the government’s Vitas property in Tondo, Manila during the Ramos administration.

However, government corporate counsel Elpidio Vega cautioned the NHA about the supposed “variance” between its own computation and the proposed settlement with R-II amounting to P1.12-billion, plus five hectares of the government property in Vitas.

In a letter to NHA general manager Marcelino Escalada dated Oct.16,Vega said earlier computations presented by NHA’s accounting department to the NHA board indicate that the housing agency allegedly “overpaid” 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 settlement), such findings and resolutions have to be harmonized and justified for the benefit of both the NHA and its board,” Vega said.

NHA’s board of directors issued resolution 6441 on Oct.  3 to implement a revised P1.12 billion settlement agreement with R-II Builders.

The settlement is supposed to be presented to the Court of Appeals which mandated both parties early this year to explore the possibility of an amicable settlement through a mediation proceeding.

But Vega urged the NHA to defer its mediation proceeding with R-II, saying there should be proper valuation of properties to be given as payment to the firm and there should be proper computation of interest of the settlement amount.

Vega said the NHA board should consider OGCC’s position on the applicability of the six 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.

In 2011, a Quezon City regional trial court ruled in favor of R-II Builders. It ordered 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 Court of Appeals mandated 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.”