Press Release
January 22, 2015

On P. S. Res. No. 826 - On the alleged overpricing of (1) the 11-storey new
Makati City Hall II (Main) Building, and other alleged Related Anomalies

The thirteenth (13th) hearing on Proposed Senate Resolution No. 826 is hereby called to order.

My colleagues in the Senate, fellow Filipinos, our resource persons here present, Magandang Umaga po sa inyong lahat.

Today, we shall continue hearing Proposed Senate Resolution No. 826 which directed the Senate Blue Ribbon Committee to investigate, in aid of legislation, the alleged overpricing of the 11-storey Makati City Hall II Parking Building, the 22-storey Makati City Hall, and other alleged related anomalies.

Before we begin with the first hearing for the year 2015, and because we had a long break, I would like to give you a quick recap of the proceedings of our Subcommittee.

The Senate Blue Ribbon Subcomittee on PSR No. 826 had conducted twelve (12) public hearings, including ocular inspections of the 11-Storey Makati City Hall II Parking Building, the Rosario, Batangas property, and the Makati Science High School Building.

During the first hearing on August 20, 2014, Atty. Renato Bondal claimed that the 11-storey Makati City Hall II Parking Building was overpriced saying that the building should have only cost P700M and not P2.7B. Mayor Junjun Binay appeared before this Subcommittee and claimed that the Makati City Hall II Parking Building is a green building, a "dream office building", and of world-class quality that was designed to withstand earthquakes. Mayor Junjun said that Atty. Bondal should not compare the Makati City Hall II Parking Building with other establishments in the city as the type and features of the buildings as well as the types of soil they stand on vary. Mayor Junjun likewise cited a Commission on Audit (COA) report allegedly clearing the project of any irregularity, a claim which was later denied by COA Chairperson Grace Pulido Tan.

In the August 26, 2014 hearing, former Makati Vice Mayor Ernesto Mercado admitted that he and Vice President Jejomar Binay personally benefited from the construction of the Makati City Hall II Parking Building. The COA Technical Audit Specialist team assigned to the Makati City Hall II Parking Building claimed there was no overpricing and that the construction of the building was within the allowable limit of variance. Robert Henson, President of Hilmarc's Construction Corporation (hereafter referred to as "Hilmarc's"), blamed the high price of steel in the high construction costs of the Makati City Hall II Parking Building. COA Chairperson Pulido Tan, on the other hand, informed this Subcommittee that her agency was in the process of putting together a team that would review the audit on the questioned building.

On September 1, 2014, an ocular inspection was conducted of the Makati City Hall II Parking Building.

In the September 4, 2014 hearing, Hilmarc's Assistant Vice President for Legal Affairs, Atty. Rogelio Peig, claimed that the Makati City Hall II Parking Building is not overpriced after comparing the costs per square meter of the Makati Parking Building, the House of Representatives' North Lounge Extension, and the Iloilo Convention Center's Phase 1. Engr. Mario Hechanova, former head of the Makati City's General Services Department and former Vice Chairman of the Bids and Awards Committee (BAC), claimed that as in other infrastructure projects of the City of Makati under then Mayor Jejomar Binay, the bidding of the Makati Parking Building was rigged or "naluto."

On September 11, 2014, Makati Vice Mayor Mercado returned and claimed that Vice President Binay received 13 percent kickbacks from every project that the Makati City government undertook when the latter was still the mayor of this premier city. As a result, this Subcommittee decided to formally invite Vice President Binay to shed light on the said allegations of Vice Mayor Mercado. The hearings continued on September 25, 2014 with the Vice President still a no-show allegedly because of his full schedule. On October 1, 2014, Mayor Junjun filed a manifestation with motion for reconsideration challenging the jurisdiction of this Subcommittee. Similar jurisdictional challenges were filed by Ms. Ebeng Baloloy, Atty. Pio Kenneth Dasal, Ms. Marjorie de Veyra, and Prof. Tomas Lopez. This Subcommittee subsequently ruled on these jurisdictional challenges and denied them for being without merit.

On October 2, 2014, COA's Atty. Alexander Julliano detailed their initial evaluation on the so-called "red flags" in the construction of the Makati City Hall II Parking Building. According to Atty. Julliano, records show that the City of Makati had disbursed an aggregate amount of P2,367,679,633.85 (P2.367B) as of December 31, 2013 and that the project consisted of five phases that were awarded to a single contractor, Hilmarc's Construction Corporation.

On October 8, 2014, former Makati Vice Mayor Ernesto Mercado informed the Subcommittee of a 350-hectare property in Rosario, Batangas that allegedly belongs to Vice President Binay. Senator Antonio Trillanes showed the link between Vice President and the purported owner of the property, businessman Antonio Tiu.

On October 22, 2014, businessman Antonio Tiu appeared before this Subcommittee and claimed that he had paid P11 million to a certain Laureano B. Gregorio, Jr. for the rights and use of the property. He further claimed that he is obligated to pay Mr. Gregorio a total of P446 million before ownership rights of the Rosario, Batangas property would be transferred to his company, Sunchamp Real Estate Development Corporation.

On October 23, 2014, an ocular inspection of the Rosario, Batangas Property was conducted with Senator Trillanes present.

On October 30, 2014, Antonio Tiu submitted a one-page unnotarized agreement between him and the alleged former owner Laureano B. Gregorio, Jr., as proof of his ownership of the Rosario, Batangas property. Senator Alan Peter Cayetano then presented posts in some social networking sites as evidence to support the allegation that the Vice President was indeed the real owner of the Rosario, Batangas property.

On November 6, 2014, Vice President Binay again failed to attend the Subcommittee's hearing, choosing instead to attend his events in Cebu. However, he prepared and submitted a statement to this Subcommittee.

On November 15, 2014, an ocular inspection of the Makati Science High School Building was conducted.

In the November 18, 2014 hearing of this Subcommittee, COA Chairperson Pulido Tan informed this Subcommittee that the Makati Science Building could be overpriced and that the COA also detected "red flags" in the construction of the Makati Science High School Building.

I will repeat what I said in my Aug. 20, 2014 Opening Statement that "My interest in this investigation is principally "legislative". I have a pending bill called the "Bigger Pie, Bigger Slice Bill" which will bring more resources to Local Government Units if and when it becomes law. Hence I am concerned about minimizing if not totally eradicating corruption at the local level.

I am also the Chairman of the Oversight Committee on the Local Government Code of 1991, which is mandated to conduct a methodical and exhaustive review of the Local Government Code of 1991 (Republic Act No. 7160).

Before the "Bigger Pie, Bigger Slice Bill" becomes law, let us start fighting corruption at the local level now. This is also the reason why I expressed all out support for the programs of the Office of the Ombudsman directed at eradicating graft and corruption at the local level.

I am hoping and I am hopeful that this investigation will enable us to propose measures to improve good governance at the local level."

This Senate investigation is necessary for the ascertainment of the truth, and truth is certainly necessary for the enlightenment of our nation.

As of this date, we can already announce that the following ideas for legislative action have been floated because of our hearings:

1. Enhance transparency of government procurement processes by the mandatory video recording of all government procurement procedures and/or activities, as provided in Senate Bill No. 477 of Sen. Trillanes;

2. A review of the policy of Rotation Commission on Audit (COA) personnel to prevent familiarization and camaraderie with the personalities being audited;

3. Removal/Abolition of the resident auditor system in the national government and local government units, to be replaced with the adoption of a raffle system for the periodic rotation of assignment/reshuffling of auditors, in order to avoid familiarization, fraternization, and collusion;

4. Rotation of the members of the Bids and Awards Committee to prevent the same evil being prevented as that in the COA policy;

5. Necessity of a law to define when there is a presumption of overpricing in a government project;

6. "One Project, One Ordinance" - simply put, big-ticket infrastructure projects must be governed by specific ordinances authorizing their construction complete with budget allocation, as well as plans to be attached to the ordinances.

7. Enact a law which would require an independent special inspection company (Independent Third Party) that would handle, in coordination with the COA, the inspection of the construction of government buildings;

8. Enactment of the Freedom of Information (FOI) law as a tool in the fight against corruption;

9. Strengthen the Ombudsman's powers of forfeiture to provide an effective deterrent to prevent public officials or employees from concealing, destroying or dissipating their unlawfully acquired properties;

10. Review of Anti-Money Laundering laws to include foreign currency accounts under its coverage;

11. Inclusion of the actual measurement of the total floor area of a government building project as part of the requirements for formal acceptance and/or technical audit process being conducted by the COA;

12. Adoption of Langdon and Seah (formerly, Davis Langdon and Seah) Construction Cost Handbook and/or other acceptable industry standards to be adopted and/or approved by the Department of Public Works and Highways (DPWH), COA, and procuring agencies as the basis for agency estimates and as standard reference material for all government infrastructure projects;

13. Review and update the Anti-Dummy Law to clearly include the use of "dummies" by public officials.

14. Review the Government Procurement Act.

Without further ado, may I now ask the Committee Secretary to recognize for the record the presence of our resource persons, witnesses, and other guests.

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