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By Lakambini A. Sitoy, Karen Capino
and Janice Alonso
First of a series
The concrete road leading to the medium-rise
tenements of Isla de Balut in Manila’s Tondo district stands
unfinished. Drivers must slow down to avoid damaging their vehicles.
A market is being built on the lot near the
housing project. A day-care center stands not far from the
five-story houses, for the community’s children.
A faint odor of decay permeates the air. A pile
of garbage sits close to the buildings, evoking memories of what
this whole area used to be–the decades-old dumping ground for
Metro Manila’s rubbish, a perennially burning, 12-story heap of
garbage called Smokey Mountain, a name the place retains to this
day.
Dodong Asorya, in his late 20s, moved into a
second-floor apartment in Building 21 in April this year. The
buildings, containing 12 to 20 units a floor, had been opened to
residents in 2003.
Asorya’s only employment is as president of
his building. He collects the electricity and light payments from
his neighbors. His people have scavenged off Smokey Mountain from
before the 1990s, when government through the National Housing
Authority (NHA) contracted a private developer, R2 Builders to level
the dump and turn it into a residential and commercial district that
would primarily benefit the unfortunates of the area.
Though the pink- or cream-painted apartments are
a far cry from the scavengers’ hovels, Asorya can recite a long
list of complaints regarding the living arrangements.
“R2 Builders scrimped on materials,” he
begins, speaking in Tagalog. “They used inferior local or
made-in-China products. Our floors should have been tiled, but
they’re cement. The roads are bad. Our artesian wells overflow
during high tide. The first floor toilets gurgle like water heaters
every time the wells overflow. Water backs up through the first
floor drains.”
R2 Builders is now the subject of an exposé
spearheaded by feisty Sen. Miriam Defensor Santiago, which involves
a range of government agencies and seeks to implicate at least one
former president.
Beginnings
The monster problem that was Smokey Mountain was
born in 1954, when Manila’s then Department of Public Service
began to dump garbage within the peaceful fishing village known as
Barrio Magdaragat. Then the garbage began to mount, and the
fishermen, having lost their means of livelihood to polluted area
waters, hit upon the idea of scavenging through the growing heap of
trash. The dump drew squatters with similar ideas in mind.
By the Marcos administration the heap of garbage
was several stories high and came from all corners of Metro Manila.
The Tondo Urban Development Project was started, financed with
borrowings from the World Bank through the NHA.
Fr. Benigno Beltran, who was parish priest of
Vitas, Tondo, in 1983, recalled the relocation of squatters that
year in a 1995 joint committee hearing on the Smokey Mountain
housing issue. The squatters were brought to Bulihan, Batangas, and
jammed into tiny accommodations that initially had no electricity
and plumbing. The settlers insisted that the jobs they were
accustomed to–mainly in the informal economy, such as peddling
food—were in Metro Manila. Quietly starving, they trickled back to
Smokey Mountain and were joined by more squatters, this time without
permit from local officials. The costly Marcos project was a
failure.
In 1988 under Corazon Aquino’s administration,
another attempt was made to relocate the squatters. Aquino’s
vision was to provide low-cost housing for the poor, on the site
itself, and she issued Memorandum Order 161-A on March 2, 1998,
mandating the NHA to conduct feasibility studies.
On January 17, 1992, Aquino issued Memorandum
Order 415 ordering the NHA to implement a Smokey Mountain
development plan and find means to reclaim an area beyond R-10 road.
An Executive Committee was created to oversee this plan, with the
NCR/CORD as chair. Members were the Manila city mayor, and heads of
the NHA, DPWH, PPA, DENR, PEA, DBP, NEDA, the Metro Manila
Authority, the Presidential Commission for the Urban Poor and the
Presidential Task Force on Solid Waste Management.
It was Aquino’s seminal memorandum order that
allowed the “enabling component” to reclaim land in exchange for
the costs of developing Smokey Mountain. In 1992, the government had
no money to pay for a project that large.
Following MO 415, an interagency technical
committee was created, composed of technical representatives of the
executive committee.
Enter R2 Builders
In January and February 1992, in the closing
days of the Aquino administration, advertisements of a public
bidding to find a joint-venture partner to develop the project were
published in major newspapers. The bidding was held on May 18, 1992.
One week earlier, on May 11, Fidel V. Ramos and Miriam Defensor
Santiago had collided at the presidential polls. The race was too
close to call at first. Eventually, Ramos, whom Aquino had
supported, would be proclaimed winner—by a mere 800,000 votes, a
decision that Santiago refuses to swallow until now.
R2 Builders won out over New San Jose Builders
in the bidding.
When Ramos took his oath as president, he
inherited the project and received the conceptual plan for the
site’s development on August 28 that year. In October 7, 1992, the
contract was awarded to R2 Builders and after the signing of the
joint-venture agreement on March 19 the following year, R2 Builders
infused P300 million to the project.
The initial history of the Smokey Mountain
development project is all traced in a joint-venture agreement
executed between the NHA and R2 Builders on March 19, 1993, a copy
of which was obtained by The Manila Times.
Robert P. Balao, general manager of the NHA,
signed on behalf of the government. Reghis Romero 2nd signed on
behalf of the developer.
This initial joint-venture agreement defined the
21-odd hectare area constituting the Smokey Mountain dumpsite, as
well as 40 hectares to be reclaimed from the ocean. It bound the
developer to construct 3,500 temporary housing units with basic
amenities, for the squatter families to occupy while
“development” of the garbage dump went on.
When the project was finished, the government/NHA
was to receive, as per Article 3.01:
1. The 3500 temporary housing units
2. An incinerator to be established on five
hectares out of the developed Smokey Mountain dump site
3. 3500 units of permanent housing to be
constructed by R2 builders
4. An industrial area site of 3.2 ha
5. The open spaces, roads and facilities within
the area.
R2 was to get, as per Article 3.01:
1. The 40 hectares of reclaimed land
2. The commercial area of 1.3 ha resulting in
Smokey Mountain’s “development”
3. The remaining permanent housing units if more
than 3500 were built.
No timeframe was indicated for the project.
R2 was given the discretion to develop the 40-ha
reclamation area as it deemed necessary to recover its investment (JVA,
Article 4.01). It was to “finance the total project cost”
(Article 4.02).
The land titles to the reclaimed area, the
1.3-ha commercial area and any permanent housing units in excess of
the 3500 that was to go to the NHA, were to be issued to R2 after
completion of the project. (JVA, Article 4.13). However, the same
provision in the agreement granted R2 the authority to presell the
shares.
The standard for determining the success of the
project was to be set by a Final Report and Detailed Engineering, as
per Art. 2.02 of the JVA. Who would prepare the final report was not
indicated in the provision, only that it would be approved by the
Office of the President of the Philippines.
R2 was to shoulder “all costs . . . for hiring
technical personnel, data gathering, permits, licenses, appraisals,
clearances, testing,” etc.
As to who would select and hire these technical
personnel, etc., the agreement was silent. All it provided was that
R2 would pay the salaries of these personnel.
The NHA, however, was tasked, in Article 4.09,
to check R2’s work against the goals set in the Final Report. If
R2 fell short, the developer was to undertake remedial work and to
assume the expenses.
Any disputes arising from the agreement were to
be settled amicably between the parties, as per Article 5.02. But
failing an amicable resolution, they were to submit the matter to a
Construction Industry Arbitration Commission. In the event that the
government terminated the project through no fault of R2, or by
mutual agreement, the government was to compensate R2 for its actual
expenses incurred, plus a reasonable rate of return, as defined in
Article 5.04 of the JVA.
This was the only point in which the March 19,
1993, agreement ever spoke of government compensation to R2. And the
instances in which this compensation might be called for were
unmistakably defined.
Based on the findings of the Execom of the SMDRP,
the estimated cost would be P3.46 billion.
Version II
But the joint-venture agreement, like computer
software, was to surface in new and radically altered versions
during Ramos’ term, and be further amended under President
Estrada.
On February 21, 1994, an amended and restated
joint-venture agreement for the Smokey Mountain Development and
Reclamation Project, Phase I, was executed between the NHA and R2
Builders. Balao and Romero signed on behalf of the NHA and the
developer, respectively. The Times obtained a copy of this document.
The rationale for the amendments was set out in
the preamble: following public hearings with the Smokey Mountain
community conducted by the NHA, and public hearings for the EIS as
required by the Environmental Management Bureau of the DENR, as well
as recommendations from other government agencies, changes to the
plan were found to be necessary.
Where wood, plywood and GI sheets with a
three-year life span had sufficed for the temporary dwellings,
concrete/steel frame structures with GI roofing that could be used
for factories and warehouses were now recommended.
The medium-rise permanent mass shelters would no
longer be of box-type precast components, but built of conventional
and precast concrete. Lofts in each unit increased the living space
by about half but led to the need to raise the ceilings by 50
percent. The buildings were to be painted rather than left bare.
Because of the larger dimensions, 80 units, down from 160, were
proposed for each building. That would mean that to hit the 3,520
permanent housing unit quota imposed in the revised document, there
would have to be more buildings than earlier envisioned.
Originally, Smokey Mountain material–years of
compacted urban refuse–would have sufficed as dredgefill for the
reclamation work. Now, it was stipulated that clean dredgefill
material be used below the “mean lower low water” (MLLW)–the
average of the lower low water height of each tidal day, what the
layman might call the “waterline.” Above the MLLW, a mixture of
Smokey Mountain material and clean material would be used.
Steel sheet piles, instead of concrete, would be
used, in order to be embedded to a greater depth.
After subsoil investigation, it was found that
3.0 meters of silt would have to be removed, instead of the 1.0
meter of the original agreement.
The temporary housing units were reduced to
2,992.
These amendments had in mind the welfare of
those residing in the mass housing units, which now were closer in
nature to middle-class condominiums. But the amendments also ensured
the stability of the reclaimed areas, which would be awarded to the
developer.
At this point there didn’t seem to be issues
surrounding the stability of the leveled dump–sanitation,
stability of the marshy ground and such. At least the developer was
not asking for revisions to that effect.
The total project cost was elevated to P6.693
billion. R2 Builders was to fully finance the project (Article
3.01).
This time the agreement stipulated that R2
Builders would be allowed to reclaim and receive 79 ha of land. The
commercial area at the former site of the dump, to which it had been
entitled, was increased to 2.3 ha. R2 was given the right to reclaim
an additional 119 ha of foreshore land, as payment for the
installation of an incinerator.
The NHA would own the temporary housing units,
the planned incinerator site, the permanent housing units, the
industrial area site of 3.2 ha and the open spaces, roads and
facilities within the Smokey Mountain area (Article 3.01).
In case of extraordinary increase in labor,
materials, fuel and nonrecoverability of total project expenses, the
NHA was permitted to recommend a corresponding adjustment in the
“enabling component” (read, increase the property awarded to R2
in compensation) subject to the approval of the Office of the
President (Art. 3.02).
The clause on preselling stood unchanged.
Version III
The joint venture agreement was amended a third
time, on August 11, 1994.
Where, under Phase II of the project the payment
to R2 Builders for constructing an incinerator had been another 119
hectares of reclaimed land, the third version now set no limit on
the amount of land that could be awarded to the developer. The SMDRP
Executive Committee was tasked with deciding how much R2 could
receive under Phase II.
This third version made clear that the Final
Report, on which all the costs and logistics hinged, would be
submitted by R2 to the NHA for approval, and if accepted, the NHA
would submit it to the SMDRP Executive Committee for final approval.
The Execom was chaired by Dionisio de la Serna, one of the
government officials implicated by Miriam Defensor Santiago in her
attack on the Smokey Mountain project’s legality.
The reclaimed land was to be developed into a
commercial area with port facilities integrated with the Philippine
Port Authority’s North Harbor plan. The Public Estates Authority
and Philippine Ports Authority would be the bodies tasked to approve
the port plan.
A deadline was set: the developer was to
complete the work within 4-and-a-half years, from the issuance of an
ECC by the DENR, or approval of the final reclamation plan by the
Public Estates Authority, whichever was later.
Should the developer fail to complete the work
within the specified period, it was to pay the government damages.
Despite substantial changes in the Smokey
Mountain development plan as evidenced in the joint venture
agreements, the government did not bid out the project again.
Ramos, responding to charges that he may be
complicit in any irregularities arising from the Smokey Mountain
contract, said the opinion that rebidding would not be necessary had
come from then-Secretary of Justice Franklin Drilon himself.
Ramos cited Opinions 119 and 115, issued August
26, 1993, and November 12, 1993, to the effect that “where the
change orders are inseparable from the original scope of the
project,” rebidding would not be necessary, “in which case, a
negotiation with the incumbent contractor may be allowed.”
Drilon was responding at the time to queries
posed by Dionisio de la Serna, chairman of the Smokey Mountain
Development and Reclamation Project Executive Committee.
Senator Santiago believes that each of the
project’s incarnations was sufficiently different from the
previous as to merit a public bidding for a new developer.
“Of all these versions [of the joint venture
agreement] it was the second version that Ramos approved and this
version was not bid out. So he is only telling half the truth which
is equivalent to a lie,” she told The Times.
Questions as to the legality or fairness of the
project were being raised as early as November 1995, in a series of
joint hearings by the Senate Urban Planning, Housing and
Resettlement Committee and the Social Justice, Welfare and
Development Committee.
In these hearings, the issue of the unlimited
“enabling component” of Phase 2 of the project (the incinerator)
was raised.
“In accordance with the evaluation of the
Legal Department of the Office of the President, it was recommended
that the 119 hectares be deleted,” Romero explained to the
committees, adding that a memorandum to this effect had gone to
Dionisio de la Serna, chair of the Smokey Mountain project.
Romero volunteered that R2 itself was also
requesting a limit, because they “[could] not sell more than what
the market [could] accommodate.”
At this time R2 was already in the process of
preselling the future reclaimed land.
Also raised was whether the PEA was entitled to
any part of the reclamation area. Romero replied that because R2 had
contributed/advanced the construction of temporary and permanent
housing and the removal of the Smokey Mountain garbage, R2 should be
entitled, as payment, to the totality of what had been reclaimed.
Senator Magsaysay, who had raised the question,
said he found this set-up “highly unusual,” and asked why an
incinerator should be put dab smack in the middle of densely
populated Tondo.
Romero mentioned precedents set by Germany,
Belgium, Denmark and Japan.
The merits of urban incinerators versus rural
landfills never got to be proved, however. In 1999, the Clean Air
Act was passed. It banned all incineration. Although the enactment
of this law made Phase II of the Smokey Mountain project moot, no
modification was made to the joint venture agreement.
In fact a memorandum sent on May 23, 2000, by
President Joseph Estrada to Mr. de la Serna, chair of the SMDRP
Execom, informed him that the NHA would be tasked with drafting, for
approval by the Office of the President of the Republic, a
Proclamation for the additional reclamation of 150 ha as enabling
component for the SMDRP. The same memo indicated that the PPA was to
review the additional 150-ha enabling component to ensure that it
jibed with the North Harbor Development Plan. The PEA was to support
the SMDRP in approving the 150-ha reclamation.
The tone of the 1995committee hearings was
friendly and respectful to R2 Builders. Questions arose of who would
be the owners of the project once it was finished (projected year of
completion was 1998), but in relation to whether alien investors
would some day come to own part of the project. Romero assured the
committees that would not be the case.
But as the hearings progressed, representatives
of the Smokey Mountain inhabitants made it clear they were unhappy
with the project. There were complaints of leaky roofs and too-small
residential units, many of which were unoccupied because they were
inhabitable.
Dodong Asorya, Smokey Mountain housing
beneficiary and president of Building 21, maintains that R2 did not
properly finish the medium-rise apartment buildings, as per the
provisions of the joint venture agreements, which required that the
project be done by 1998. As late as 2004, when his family moved into
their apartment, the facilities were substandard.
“It took R2 Builders a very long time before
we could be moved in. Once we were living there, that’s when they
stepped up work,” he said.
To be continued
Part 2 |Conclusion |
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