From a badge of shame to 30,000 homes
The press reported several days ago the Supreme Court decision declaring as valid the government’s 1993 contract with R-II Builders Inc. to turn the notorious Smokey Mountain dump into a low-cost housing and commercial area.Smokey Mountain was the huge mound of garbage in the Balut area of Manila’s Tondo district. After years of dumping the garbage of Manila and neighboring cities and municipalities on it, the mound became so big it resembled a hill or a small mountain. Methane from decaying organic materials seeped up and the garbage deep within the hillocks began to burn. Smoke from this burning trash hovered like a dark cloud over the hundreds of scavengers gathering recyclable materials among the garbage. Sold to junk shops, they gave the poorest of the poor a meager income.
Newspaper photographs and television footage of the men, women and children poking and raking sticks on huge piles of smoldering trash were vividly etched in the minds of Filipinos and people around the world. It gave the outside world a graphic view of poverty, Philippine-style: gaunt human beings bent over mounds of trash, smoke swirling around them. It was like a mountain on fire, not unlike Moses’ Mt. Sinai with the burning bush. Hence, the name Smokey Mountain.
Smokey Mountain became a tourist spot. Tourists actually came to the Philippines to see this mound of smoldering trash that became so big it resembled a miniature mountain.
While it attracted foreigners, Smokey Mountain became a badge of shame for the Philippines, epitomizing the poverty, the powerlessness and despair of those struggling to keep body and soul together in a harsh urban environment. It became so shameful that President Corazon Aquino decided to wipe it off the face of the earth. She had the idea of turning this mound of trash, this badge of shame into a housing project for the thousands of scavengers who scraped a living out of it.
In 1992, she ordered the National Housing Authority (NHA) to enter into a joint-venture agreement with R-II Builders of Reghis Romero II to construct 30 buildings to house over 30,000 families in the area. The agreement stipulated that there would be no budget outlay from the government. R-II was to spend for the entire project. As compensation, R-II was to own 79 hectares of foreshore lands it would reclaim. The area was later increased to 229 hectares.
As the project would cost billions of pesos, R-II entered into an asset pool arrangement with a number of government financial institutions. In exchange for Smokey Mountain Participation Certificates, the Social Security System, Land Bank of the Philippines, Philippine National Bank, Home Guarantee Corp., HGC Provident Fund, Overseas Workers Welfare Administration, Philippine Amusement and Gaming Corp. (Pagcor) and other financial institutions pooled assets totaling P3 billion to bankroll the project. These institutions later earned handsome profits from the certificates.
Still, the project ran out of money. In 2002, President Gloria Macapagal-Arroyo released P480 million to continue the project, on the condition that the contract with R-II would be cancelled. The original contract was terminated on Aug. 27, 2003. But the government promised to pay R-II P250 million to be taken from the P480 million fund to settle partially the expenses the developer had incurred.
In 2004, former Solicitor General Frank Chavez filed a petition with the Supreme Court seeking to declare the original contract null and void. He raised a number of issues: that neither the NHA nor R-II may validly reclaim foreshore lands as these are inalienable public lands which are beyond the commerce of man; that there was never any declaration that the said lands were no longer needed for public use; that the developer could not acquire the lands because there was never any law authorizing the sale; that there was never any public bidding of the lands; and that R-II Builders, as a private corporation, was expressly prohibited by the Constitution to acquire lands of the public domain.
Last Aug. 13, the Supreme Court dismissed Chavez’s petition and upheld the validity of the government contract with R-II. One by one, the Court demolished his arguments.
It said the NHA has the power to reclaim lands and transfer these to its private partner without public bidding.
It rejected Chavez’s claim that only the Public Estates Authority (PEA) could reclaim submerged lands, saying Executive Order 525 creating the PEA did not say this power was exclusive.
The second condition, the PEA’s endorsement, was also present because its general manager was a member of the executive committee tasked to supervise the project’s implementation.
The Court also junked Chavez’s claim that the reclaimed lands were given by the NHA to R-II through a negotiated contract and not by public bidding as the law requires. It noted that R-II had won the right to become the NHA’s partner for the project through public bidding.
It said that the lands that the NHA transferred to R-II were not lands of the public domain, the sale of which requires public bidding, and that the NHA was empowered to transfer properties it acquired to other parties, hence there was no need for a law to authorize the sale of reclaimed lands. It added the lands reclaimed for the Smokey Mountain project have been declared alienable and disposable by three presidential proclamations.
Debunking Chavez’s claim that the Department of Environment and Natural Resources (DENR) did not authorize the NHA and R-II to reclaim lands, the Court said the authority to do so came from the President, who has power over the DENR.
With the decision, R-II’s project to construct homes for 30,000 Smokey Mountain families can now go full blast.
