Chavez vs.

National Housing
Authority
G.R. No. 164527
August 15, 2007

Prepared by: Mica Marie J. Valenzuela

Facts
Under
the JVA,
project
Mountain
for eventual
February 21, 1994
OnMarch
1,the
1988,
theninvolves the clearing of Smokey
Pursuant
to MO 161,
Pursuantdevelopment into a
Law) wasJoint
passed
low
cost
housing
complex
and
industrial/commercial
site
with
reclamation
of the area directly across RA 6957 (Build-Operate-Transfer
Amended
Amended and Restated
President Corazon C. Aquino
to MO 161-A, NHA prepared
on July 1990 declaring the importance of private
{R-10} to act as the enabling component of the project.

RBI
is
expected
to
fully
Venture Agreement
the feasibility studies of the
issued Memorandum Order No.
sectors as contractors in government projects.
finance
of Smokey Mountain and reclaim
40Mountain
hectares low-cost
of the land at the
(ARJVA) which delineated the
(MO) the
161development
approving and
Smokey
Manila
Bay
as containedofin Proclamation No. 39.
The latter
with the commercial area
different phases of the
directing
theArea
implementation
housing
projecttogether
which resulted
to be
built
on
Smokey
Mountain
will
be
owned
by
RBI
as
enabling
components.
If the
Project.
the Comprehensive and
in the formulation of the Smokey
project
is revoked
or terminated by the Government through
no Development
fault of RBI orand
by mutual agreement,Thereafter, Aquino proclaimed MO 415
Integrated
Metropolitan
Mountain
applying RA 6957 to SMDRP, among
the Government
shall compensate
RBI for its actual Reclamation
expenses incurred
the Project
Manila
Waste Management
Plan
Projectin(SMDRP;

I of established
the project involves
others. The samePhase
MO also
plus a reasonable rate of return not exceeding that stated in the
the Project).
feasibility study and in the
clearing, leveling-off the
contract as of the date of such revocation, cancellation, or termination on a schedule to be
EXECOM and TECHCOM in the
dumpsite,ofand
of
time, Smokey
execution and evaluation
theconstruction
plan,
agreed upon During
by boththat
parties.
temporary
housing
units
for
the
Mountain, a wasteland in
respectively, to be assisted by the
Tondo, Manila, was being made
current
residents
on
the
cleared
Public Estates Authority (PEA).
residence of many Filipinos
and leveled site.
living in a subhuman state.
Phase II involves the
ARJVA :
construction of a fenced
The original 3,500 units of temporary housing
incineration
for the on-site
June 23, 1994
Notices of public
bidding area
to become
were decreased to 2,992.
disposal
theSMDRP
garbage at the
The Legislature
NHAs venture
partneroffor
The reclaimed land as enabling component was
dumpsite.
passed the Clean Air
were published
in newspapers in 1992,
October 7, 1992, increased
President from
Ramos
40authorized
hectares to 79 hectares, which
Act.
from which R-II Builders, Inc. (RBI) won
NHA to enter into was
a Joint
Venture by
Agreement
supported
the issuance of Proclamation
The Act made the establishment
the bidding process.
with RBI
No. 465 by President Ramos.
of an incinerator illegal and
Provided 119-hectare land as an enabling
effectively barred the
August 27, 2003, the
component for Phase II of the project.
implementation of the planned
NHA and RBI executed a
incinerator project under
of
Phase II.
President RamosMemorandum
issued
(MOA)
Proclamation No.Agreement
39 on
March 19, 1993, the NHA and RBI entered into a Joint
November 1998, September 9, 1992
whereby both parties
1, 1998, the
Venture Agreement (JVA) for August
the development
of the
President Estrada
agreed to terminate the
granted
RBIs of the
Mountaindumpsite NHA
and the
reclamation
issued Memorandum
Special PatentsSmokey
were issued
JVA and other
request to suspend
acrossan
R-10 based on Presidential
Decree No. (PD)
Order No. 33
in favor of NHAarea
conveying
subsequent agreements
work on the
757
reconstituting the
additional areas.
SMDRP
SMDRP EXECOM

Under the JVA, the project involves the clearing of Smokey Mountain for eventual development into a
low cost housing complex and industrial/commercial site with reclamation of the area directly across
{R-10} to act as the enabling component of the project. RBI is expected to fully
finance the development of Smokey Mountain and reclaim 40 hectares of the land at the
Manila Bay Area as contained in Proclamation No. 39. The latter together with the commercial area
to be built on Smokey Mountain will be owned by RBI as enabling components. If the
project is revoked or terminated by the Government through no fault of RBI or by mutual agreement,
the Government shall compensate RBI for its actual expenses incurred in the Project
plus a reasonable rate of return not exceeding that stated in the feasibility study and in the
contract as of the date of such revocation, cancellation, or termination on a schedule to be
agreed upon by both parties.

June 23, 1994

The Legislature
passed the Clean Air
Act.
The Act made the establishment
of an incinerator illegal and
effectively barred the
implementation of the planned
incinerator project under
Phase II.

Special Patents were issued

in favor of NHA conveying an
additional areas.

ARJVA :
The original 3,500 units of temporary housing
were decreased to 2,992.
The reclaimed land as enabling component was
increased from 40 hectares to 79 hectares, which
was supported by the issuance of Proclamation
No. 465 by President Ramos.
Provided 119-hectare land as an enabling
component for Phase II of the project.

August 1, 1998, the

NHA granted RBIs
request to suspend
work on the
SMDRP

November 1998,
President Estrada
issued Memorandum
Order No. 33
reconstituting the
SMDRP EXECOM

February 21, 1994

Amended
Amended and Restated Joint
Venture Agreement
(ARJVA) which delineated the
different phases of the
Project.
Phase I of the project involves
clearing, leveling-off the
dumpsite, and construction of
temporary housing units for the
current residents on the cleared
and leveled site.
Phase II involves the
construction of a fenced
incineration area for the on-site
disposal of the garbage at the
dumpsite.

August 27, 2003, the

NHA and RBI executed a
Memorandum of
Agreement (MOA)
whereby both parties
agreed to terminate the
JVA and other
subsequent agreements