The Smokey Mountain Development and Reclamation Project (SMDRP) of the National Housing Authority (NHA) began in 1992, when then President Corazon Aquino approved an NHA conceptual plan to turn the infamous dump in Manila into a portside community.
In a memorandum order, Aquino directed the NHA to enter into a joint venture scheme that would pave the way for the construction of low-cost houses for residents of Smokey Mountain in Tondo, which served for four decades as a waste disposal facility for 2 million tons of garbage until it was closed in the early 1990s.
During the administration of President Fidel V. Ramos, the NHA and developer R-II Builders Inc. signed a joint venture agreement that created the SMDRP, which involved the construction of 30 buildings for 3,000 families.
Both sides agreed there would be no budget outlay from the government. Because it was to spend for the entire project, R-II was allowed to take possession of 79 hectares of public land, later increased to 229 ha.
However, when R-II ran out of funds in 1994, it was allowed to enter into an asset pool arrangement with various government financial institutions (GFIs), which put up P3 billion to bankroll the project, and for which they were issued project participation certificates guaranteed by the Home Guaranty Corp. (HGC).
Most of these GFIs, like the Social Security System and the Overseas Workers Welfare Administration, still have to recover their investments.
When HGC, which controls the Smokey Mountain Asset Pool, sold some of the properties in the project for the payment of obligations, R-II Builders went to court.
The group of businessman Reghis Romero II, which owns R-II, claimed that HGC reneged on its duty as a guarantor. But HGC alleged it was R-II that did not comply with all the conditions of the agreement.–Inquirer Research
Sources: Inquirer Archives