CLARK FREEPORT – Government bank deposi-tories have started to implement a notice of garnishment of some P214-million of the assets of the state-owned Clark Develop-ment Corp. (CDC) in favor of the private contractor of the Philippine National Construction Corp. (PNCC) over the issue of payment for the Sacobia bridge built here way back in 1998.
The CDC has sought the intervention of Pres. Aquino in the case that, records showed, seemed to gained faster pace in the last months of the term of former Pres. Arroyo.
In a letter to the CDC, Benilda Abrasia-Tejada, executive vice president and chief legal counsel of the Development Bank of the Philippines (DBP), said her bank had no choice but to comply with the execution of the garnishment order by releasing the CDC’s bank deposits amounting to P60,752,167 in favor of PNCC “joined by Ciriaco Corp.” Ciriaco is the private firm tasked by the PNCC to build the bridge whose original cost was P700 million.
The Land Bank of the Philippines (LBP) is set to follow and release another P170,704,469 of CDC’s deposits also to the same recipient.
Records showed that progress on the Sacobia bridge case, initially filed before the OGCC by PNCC and its private contractor Ciriaco Corp. in 2006, assumed faster pace during the last months of the Arroyo administration.
By then, Ma. Theresa Defensor, sister of former Arroyo cabinet member Mike Defensor, became president and chief executive officer of the PNCC.
While Ciriaco is a private firm, the PNCC is also a government corporation like CDC.
The garnishment order, served recently to the banks and even investors at this freeport, was based on a decision of the Office of the Government Corporate Counsel (OGCC) on Dec. 8, 2008, which was affirmed by the Department of Justice (DOJ) on April 24, 2009 and further affirmed by the Office of the President on Jan. 5, 2010 ordering the CDC to comply with the demands of the PNCC and Ciriaco.
As the CDC appealed the case last February before the Court of Appeals (CA) where it has remained pending, the OGCC issued almost simultaneously a write of execution of its order garnishing bank and other assets of the CDC in favor of the original complainants.
In a letter to Pres. Aquino dated Aug. 16, CDC president and chief executive officer Benigno Ricafort recalled that in 1997, the CDC and PNCC entered into a contract for the latter to construct the Sacobia bridge for P700-million. “PNCC constructed the bridge through its private sub-contractor Ciriaco. It was completed sometime in 1998 and PNCC turned over the project to the CDC,” the letter recalled.
Ricafort said in his letter that the controversy now brewing “involves the collection by Ciriaco from PNCC, the amount of about P17 million representing the unpaid progress billings, and the collection from CDC of about P153 million representing the costs due to foreign currency adjustments or a total of P170 million.” This, apart from six percent interest on the unpaid amount.
In 2006, the PNCC and Ciriaco filed a petition for arbitration with the OGCC for the collection of the P170 million. After the CDC failed to counter this petition, the OGCC decided in favor of PNCC and Ciriaco, a verdict later approved by the DOJ. The case was elevated to the office of Pres. Arroyo for review, but the OGCC verdict was again upheld.
“All offices concerned, namely the OGCC, DOJ, and the Office of the President at that time completely ignored the fact that by admission of the witnesses for PNCC and Ciriaco, the requirements under Presidential Decree 1594 which was the basis for the grant of the supposed foreign currency adjustment were not complied with,” the letter said.
PD 1594 prescribes policies, guidelines, rules and regulations for government infrastructure contracts. PNCC allegedly erroneously simplified the computation of cost adjustment of construction materials by simply adding the 30 percent maximum imposed by the decree, instead of following a more complicated computation per type of materials affected by fluctuations in the peso-dollar exchange rate.
In its petition before the OGCC, however, the PNCC and Ciriaco noted that despite the difficult time in finding interim financing for the project during the Asian financial crisis at that time, they pursued the project allegedly with the assurance that the CDC board was “fully cognizant of the Asian currency crisis” and that the state firm was “amenable to an adjustment of the Sacobia Bridge Project contract price.”
In his letter to Pres. Aquino, Ricafort reiterated CDC’s argument that “foreign currency adjustment will redound to the exclusive benefit of Ciriaco Corp. which is a private corporation.”
“The OGCC clearly had no jurisdiction to arbitrate the present case. The jurisdiction to arbitrate is vested in the Construction Industry Arbitration Commission (CIAC) under Executive Order No. 1008,” he also said.
Ricafort told the President that last February, the CDC “elevated the case to the Court of Appeals (CA) on a petition for review” and the case has remained pending.
He noted, however, that PNCC filed simultaneously with the OGCC a motion for writ of execution of the earlier order for the CDC to pay PNCC and Ciriaco.
“Notwithstanding the pendency of the case before the CA, the OGCC issued the writ of execution ex-parte. Assets of the CDC were forthwith garnished and the sum of P214 million now stands to be immediately released,” Ricafort lamented in his letter to the President.
In his letter, Ricafort requested the President, through the DOJ, to order the suspension of the implementation of the writ of execution of the OGCC’s garnishment order.
“Time is of the essence. The writ of execution has been issued. The amount of about P214 million of CDC’s assets has been garnished. There is an urgent need to subvert this indecent haste in the payment of this gargantuan amount and save precious government funds,” he said.
The 910-meter, three-lane Sacobia bridge was supposed to be a component of the Expo Pilipino theme park project for the commemoration of the Philippine Independence centennial under the administration of former Pres. Ramos in 1998.
The bridge connects the 4,500-hectare main freeport to the largely untapped Sacobia zone which was placed under the jurisdiction of the Philippine Export Zone Authority (PEZA) when Clark was converted from economic zone to freeport over a year ago.
At present, the bridge is hardly used amid plans of the CDC to now develop the area, covering some 29,000 hectares, for more investors amid shortage of space at the main freeport.
The CDC has sought the intervention of Pres. Aquino in the case that, records showed, seemed to gained faster pace in the last months of the term of former Pres. Arroyo.
In a letter to the CDC, Benilda Abrasia-Tejada, executive vice president and chief legal counsel of the Development Bank of the Philippines (DBP), said her bank had no choice but to comply with the execution of the garnishment order by releasing the CDC’s bank deposits amounting to P60,752,167 in favor of PNCC “joined by Ciriaco Corp.” Ciriaco is the private firm tasked by the PNCC to build the bridge whose original cost was P700 million.
The Land Bank of the Philippines (LBP) is set to follow and release another P170,704,469 of CDC’s deposits also to the same recipient.
Records showed that progress on the Sacobia bridge case, initially filed before the OGCC by PNCC and its private contractor Ciriaco Corp. in 2006, assumed faster pace during the last months of the Arroyo administration.
By then, Ma. Theresa Defensor, sister of former Arroyo cabinet member Mike Defensor, became president and chief executive officer of the PNCC.
While Ciriaco is a private firm, the PNCC is also a government corporation like CDC.
The garnishment order, served recently to the banks and even investors at this freeport, was based on a decision of the Office of the Government Corporate Counsel (OGCC) on Dec. 8, 2008, which was affirmed by the Department of Justice (DOJ) on April 24, 2009 and further affirmed by the Office of the President on Jan. 5, 2010 ordering the CDC to comply with the demands of the PNCC and Ciriaco.
As the CDC appealed the case last February before the Court of Appeals (CA) where it has remained pending, the OGCC issued almost simultaneously a write of execution of its order garnishing bank and other assets of the CDC in favor of the original complainants.
In a letter to Pres. Aquino dated Aug. 16, CDC president and chief executive officer Benigno Ricafort recalled that in 1997, the CDC and PNCC entered into a contract for the latter to construct the Sacobia bridge for P700-million. “PNCC constructed the bridge through its private sub-contractor Ciriaco. It was completed sometime in 1998 and PNCC turned over the project to the CDC,” the letter recalled.
Ricafort said in his letter that the controversy now brewing “involves the collection by Ciriaco from PNCC, the amount of about P17 million representing the unpaid progress billings, and the collection from CDC of about P153 million representing the costs due to foreign currency adjustments or a total of P170 million.” This, apart from six percent interest on the unpaid amount.
In 2006, the PNCC and Ciriaco filed a petition for arbitration with the OGCC for the collection of the P170 million. After the CDC failed to counter this petition, the OGCC decided in favor of PNCC and Ciriaco, a verdict later approved by the DOJ. The case was elevated to the office of Pres. Arroyo for review, but the OGCC verdict was again upheld.
“All offices concerned, namely the OGCC, DOJ, and the Office of the President at that time completely ignored the fact that by admission of the witnesses for PNCC and Ciriaco, the requirements under Presidential Decree 1594 which was the basis for the grant of the supposed foreign currency adjustment were not complied with,” the letter said.
PD 1594 prescribes policies, guidelines, rules and regulations for government infrastructure contracts. PNCC allegedly erroneously simplified the computation of cost adjustment of construction materials by simply adding the 30 percent maximum imposed by the decree, instead of following a more complicated computation per type of materials affected by fluctuations in the peso-dollar exchange rate.
In its petition before the OGCC, however, the PNCC and Ciriaco noted that despite the difficult time in finding interim financing for the project during the Asian financial crisis at that time, they pursued the project allegedly with the assurance that the CDC board was “fully cognizant of the Asian currency crisis” and that the state firm was “amenable to an adjustment of the Sacobia Bridge Project contract price.”
In his letter to Pres. Aquino, Ricafort reiterated CDC’s argument that “foreign currency adjustment will redound to the exclusive benefit of Ciriaco Corp. which is a private corporation.”
“The OGCC clearly had no jurisdiction to arbitrate the present case. The jurisdiction to arbitrate is vested in the Construction Industry Arbitration Commission (CIAC) under Executive Order No. 1008,” he also said.
Ricafort told the President that last February, the CDC “elevated the case to the Court of Appeals (CA) on a petition for review” and the case has remained pending.
He noted, however, that PNCC filed simultaneously with the OGCC a motion for writ of execution of the earlier order for the CDC to pay PNCC and Ciriaco.
“Notwithstanding the pendency of the case before the CA, the OGCC issued the writ of execution ex-parte. Assets of the CDC were forthwith garnished and the sum of P214 million now stands to be immediately released,” Ricafort lamented in his letter to the President.
In his letter, Ricafort requested the President, through the DOJ, to order the suspension of the implementation of the writ of execution of the OGCC’s garnishment order.
“Time is of the essence. The writ of execution has been issued. The amount of about P214 million of CDC’s assets has been garnished. There is an urgent need to subvert this indecent haste in the payment of this gargantuan amount and save precious government funds,” he said.
The 910-meter, three-lane Sacobia bridge was supposed to be a component of the Expo Pilipino theme park project for the commemoration of the Philippine Independence centennial under the administration of former Pres. Ramos in 1998.
The bridge connects the 4,500-hectare main freeport to the largely untapped Sacobia zone which was placed under the jurisdiction of the Philippine Export Zone Authority (PEZA) when Clark was converted from economic zone to freeport over a year ago.
At present, the bridge is hardly used amid plans of the CDC to now develop the area, covering some 29,000 hectares, for more investors amid shortage of space at the main freeport.
