MANILA, Philippines?The Supreme Court has stopped a Manila court from further hearing a civil case involving R-II Builders in connection with the controversial Smokey Mountain project.

In a minute resolution, the high court ordered Manila Judge Mariano de la Cruz, to stop hearing the case that R-II Builders filed against the Home Guaranty Corp. (HGC).

The case stems from the 1993 partnership between R-II Builders and the National Housing Corp. to undertake the Smokey Mountain Development and Reclamation Project, which involved the construction of 30 buildings to house more than 3,000 families.

Because no government outlay was supposedly involved, R-II was allowed to take possession of 79 hectares of land, later increased to 229 hectares.

However, when R-II ran out of funds to continue with the project in 1994, it was allowed to enter into an asset pool arrangement with various government financial institutions (GFIs). The latter put up P3 billion to bankroll the project, for which they were issued project participation certificates guaranteed by the HGC.

Most of these GFIs, like the Social Security System and the Overseas Workers Welfare Administration, still have to recover their investments.

When the HGC, which controls the Smokey Mountain Asset Pool (SMAP), sold some of the properties in the Smokey Mountain project for the payment of obligations, R-II went to court.

The HGC went to the high court, arguing that De la Cruz had no jurisdiction to proceed with the case since the original court that heard the case had declared it had no authority to hear it because it was not designated a special commercial court.

Subsequently, the case was transferred to De la Cruz who agreed with R-II that the sale would dissipate the SMAP and affect its residual value. He ordered the appointment of a court receiver to dispose of the SMAP to settle all obligations.

HGC opposed this but De la Cruz denied its motion for reconsideration in September 2009.

Among the actions suspended in yesterday?s order by the high tribunal was the enforcement of the lower court?s order allowing a receivership to take effect; the processing of any action to have an adverse claim or any annotation listed in a public registry office; and the lifting of any such annotation, if any has been processed, on the titles of the lots involved in the case.