COA wants IBC 13 deal with developer stopped

The Commission on Audit has asked the Presidential Commission on Good Government to temporarily stop the implementation of a joint-venture agreement between sequestered TV station IBC 13 and private company R-II Builders. Inc./Primestate Ventures Inc. to develop the TV station’s Quezon City property.

The COA said the agreement must be halted since the Privatization Council had not approved the agreement, which it said was skewed in favor of R-II Builders.

In its 2010 report on the PCGG, the COA said that the agreement stipulated that out of 4.14 hectares, 3.64 ha would be transferred to R-II where it would build houses on the residential portion of the project. The remaining 5,000 square meters would be left with IBC 13.

But the COA said its Legal Services Sector had noted that once the residential portion was developed, its value would rise but IBC 13 would not be a beneficiary since the land would be owned by R-II, and IBC 13 would only be getting P728 million.

Huge windfall

“In sum, R-II Builders would be enjoying a huge windfall in its investment over the 3.6401 hectares while IBC 13 would be left with only 5,000 square meters’ property,” the COA legal office said.

The COA said that the small two-story commercial building that would be left with TV station, and the IBC employee preference privilege for condominium units “are mere sweeteners without any material gain or worth on the part of IBC 13.”

It said that the PCGG, as the lead agency in conserving surrendered properties, should seek the help of the Office of the Solicitor General in filing a motion for a temporary restraining order on the implementation of the agreement to prevent the transfer of ownership without proper approval of the Privatization Council.

It said that the PCGG should submit the agreement to the Privatization Council for review and approval, adding that all forms of disposition of government property should pass the council’s review.

It also said that Section 11.1.c of the agreement, which stated that IBC 13 represented and warranted that its obligations and liabilities in the deal were credit obligations of the government, was “an onerous stipulation.”

The COA also said that while IBC 13 would be disposing of 3.64 hectares as its contribution to its joint venture agreement with R-II Builders, there was no absolute guarantee that it would receive in full the cash components of its share.