The controversy that erupted last week when the Bases Conversion Development Authority (BCDA) pronounced that the brand-new SM Aura Premier in Fort Bonifacio was “illegally built” has quickly vanished from the public’s awareness, but the chaotic conflict between the BCDA, the City of Taguig, and development juggernaut SM remains a deeply troubling and unresolved problem. The issue is troubling not so much because of who may be right or wrong in the dispute, but because it is yet another signal of lingering inefficiency and institutional capriciousness on the part of the government in monitoring and regulating big-ticket projects.
In 2008, the BCDA transferred the parcel of land, a portion of which is now occupied by the new SM Aura, to the City of Taguig, and the terms of that transfer are at the heart of the current crisis. According to the city government, the land was transferred “free and clear”; according to the BCDA, the transfer stipulated that the land must be used for a government center, civic center, sports facilities, or parks, citing Republic Act (R.A.) 7917 as the legal basis for that position. R.A. 7917, which amended an earlier law creating the BCDA, does in fact specify that “approximately about 40 hectares” (on a side note, the imprecision of language commonly found in Philippine legislation is a never-ending source of amusement for this writer) of Fort Bonifacio Phase I should be retained for civic purposes. It does not, however, specifically describe which 40 hectares should be reserved—the SM property occupies about 3.5 hectares—and the Deed of Conveyance apparently did not contain any additional liens or restrictions.
In 2009, the City of Taguig passed a local ordinance designating the donated property as mixed-use, and began to seek out investors by opening the area to competitive bidding. SM won the bid in 2010 with a plan for a shopping mall, convention center and office tower to be used by the city government offices and public services, thus apparently aiding the city in complying with the “approximate” guidelines of R.A. 7917 with an arrangement that not only did not require any capital outlay on the city’s part for new facilities that could be used by the city government, but also promised hundreds of new jobs in the city and a windfall of tax revenue. The SM Aura project, in fact, was an early successful example—and even now, still one of the very few examples—of the then-new President’s much-heralded Public-Private Partnership (PPP) program.
The BCDA has claimed that as early as 2009, the Bonifacio Estate Services Corp. (BESC), which is the caretaker agency of the Bonifacio Global Center, rejected an application from SM Prime Holdings to build a retail and community center complex, judging that the plan was not in line with the provisions of R.A. 7917. However, SM was able to circumvent this rejection, the BCDA says, by not declaring the true purpose of the development and obtaining a permit directly from the City of Taguig. This explanation is ludicrous at best, because it suggests that not only does the BCDA retain veto authority over plans for the use of land which at that point belonged to the City of Taguig, it somehow is the only entity in the country that is unaware of SM’s main business—having already developed 46 shopping malls (SM Aura is number 47), the idea that SM could actually disguise its intentions is laughable.
BCDA’s argument also begs the question why, if the agency’s intentions are honest, it waited for three years of construction and P3.5 billion of investment to be completed before attempting to take action, action which took the form of BCDA President and Chief Executive Officer Arnel Paciano Casanova personally leading a squad of security guards to block construction on an access road (another piece of city infrastructure being provided to Taguig at SM’s expense) between SM Aura and the McKinley Parkway. Casanova’s explanation for the interference, at first, was that the road construction would “endanger families living in the area.” When it was pointed out that the properties of SM rival Ayala Land at Market! Market! and The Fort did not really fit any known definition of the word “families,” Casanova justified the blockage on the grounds that the road encroached on BCDA property—despite the fact that under the Local Government Code, all roads within the city fall under the city’s jurisdiction, whether public or privately owned.
If the BCDA had a legitimate case to stop the SM Aura project—for example, if the property being offered for development reduced the amount of remaining land to less than the “approximately about 40 hectares” reserved for civic use by R.A. 7917, or if the Deed of Conveyance did in fact include conditions on the use of the land—then it should have taken the issue to court three years ago. Since it did not, one must view its present hysteria with grave concern. What, exactly, are the BCDA’s intentions in standing by until a multibillion-peso project is fully developed, and then declaring it “illegally built”? Consider how this might look to other potential developers: Despite participating in a competitive bidding process, meeting the specifications of the (apparent) property owner, and providing civic infrastructure as part of the project, an unexpected change in the rules can be raised at any moment, with still-unknown consequences. Does the BCDA plan to expropriate the new development? Does it plan to pursue litigation against the developer, even though the actual counter-party in the dispute is the municipal government? Does it plan to take extralegal action to block the business, such as hiring more goons to barricade roads? Will the Aquino administration, which has been silent on this particular issue, step in to resolve a crisis involving a PPP project, or does this one “not count” because it was not handled at the national level?
Would any investor want to brave an environment in which those questions might arise? SM certainly would not have, had they known or even suspected that might be the case; it is not a company that has become as large and successful as it is by taking irresponsible risks, or—well aware that it is a company that has become a fashionable target for activist protests—cutting legal corners in developing projects. And for their part, the government of Taguig seems thoroughly mystified by the BCDA’s attack. “We’re very happy to have SM here,” said one city official. “Of course, the mall is new and there’s still more to come so we don’t have a completely firm idea yet of the value to the city from this, but it will be great. SM Aura will provide jobs, a lot of revenue, and many other benefits for the people of Taguig. We just can’t understand why the BCDA or any other agency wouldn’t want to support that.”