DOCUMENT: Binay affidavit says no proof of overpricing

Ayee Macaraig

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DOCUMENT: Binay affidavit says no proof of overpricing
In an affidavit he submitted to the Senate in November 2014, Vice President Binay presents 5 arguments to deny the Makati parking building was overpriced

BINAY'S DEFENSE. Vice President Binay releases the affidavit he submitted to the Senate to disprove allegations of overpricing. File photo by Jonathan Vicencio

MANILA, Philippines – Ahead of the release of a Senate report accusing him of plunder, Vice President Jejomar Binay made public an affidavit where he presented a brief and general denial of charges against him.

Instead of showing up at the Senate and answering senators’ questions, Binay submitted before the blue ribbon subcommittee an affidavit last November 2014 responding to allegations that the Makati City Hall parking building II was overpriced by as much as P1.38 billion ($31 million). Binay’s camp released the affidavit on Friday, May 29.

In the 8-page document, the former Makati mayor said that there was no proof that the P2.28 billion ($51.197 million) building was overpriced.

“It is basic in the rules of evidence that bare allegations, unsubstantiated by evidence, are not equivalent to proof. In short, mere allegations are not evidence,” said Binay.

The following are the arguments Binay raised in his affidavit, a reiteration of claims he and his lawyers previously made:

1. Splitting contracts into phases is legal

A lawyer, Binay said that the Government Procurement Reform Act does not prohibit splitting contracts into phases. He said the only prohibition is, if the purpose is “to avoid bidding, circumvent rules on alternative procurement, or circumvent limits of approving authorities.”

“In the case of the Makati City Hall Building II, a bidding was conducted in EACH phase in compliance with RA 9184, and its implementing rules,” Binay said.

Constructed from 2008 to 2013, the 11-story Makati parking building was split into 5 phases. Binay was the signing authority as mayor from 2008 to 2013 while his son, Makati Mayor Jejomar Erwin “Junjun” Binay Jr took over during the last two phases of the building.

In the previous Senate hearings, former Commission on Audit (COA) Chairperson Grace Pulido-Tan said that dividing the project into phases already constituted a “red flag.”

The partial Senate report released on Monday, June 1, also cited the theory of lawyer Renato Bondal, a complainant against Binay, that splitting the contracts was meant to hide overpricing.

The subcommittee stated: “Maybe because this infrastructure project was divided into phases, which were submitted to audit separately, it did not become apparent to the COA auditors that these expenditures were unnecessary, redundant, and excessive.”

2. The bidding was conducted within ‘allowable periods of law’

Binay sought to downplay the COA’s observation that the building was speedily awarded to the contractor, Hilmarc’s Construction Corporation, in just two-and-a-half months when the process usually takes 6 months for a project of this magnitude.

According to him, the procurement law states that for infrastructure projects of more than P50 million ($1.12 million), the following are the periods allowed for the procurement process:

  • 144 calendar days – maximum period 
  • 28 calendar days – minimum period

Still, the COA said in its special audit report dated October 1, 2014 that the project was implemented with “undue haste” as there was no construction plan yet when it was bid out, and awarded to Hilmarc’s. For phase 1, it took the city government only one month to pass the appropriation ordinance, and to advertise the project. (READ: COA: Red flags, undue haste in Makati building)

“While the swiftness of the action taken by the city government may be considered as efficiency, the same could also be considered as a red flag because this project with such a huge budget will surely require a careful conceptualization and planning,” the COA said.

'LAWS FOLLOWED.' Binay says the Makati city government followed procurement laws in constructing the Makati parking building but the Senate says the facility was clearly overpriced. File photo from Makati Info

3. Awarding a contract to a lone bidder is not prohibited

Binay sought to explain why Hilmarc’s was the lone bidder that bagged all 5 phases of the project.

“In Phase 1 of the Makati City Hall Building II project, the winning bidder bested 2 other bidders. For Phases 2 to 5, the lone bidder was the same contractor. Based on the records, there was no reason to disqualify the said contractor,” Binay said.

Yet the Senate subcommittee report pointed out that Hilmarc’s was the “favored contractor” of Makati, also winning the contracts for the Ospital ng Makati, the Nursing Building, the Makati Science High School Building, and the 22-story Makati City Hall.

The panel urged COA to conduct a special audit of all Hilmarc’s construction projects in Makati.

“It must be emphasized that the law on public bidding is not a mere formality. The law has a purpose. It aims to secure the lowest possible price and obtain the best bargain for the government through real competition. It is based on the principle that under ordinary circumstances, fair competition in the market tends to lower prices and eliminate favoritism,” the report said.

Witnesses also testified that the bidding for infrastructure projects in Makati was rigged. J-Bros Construction, one of the contractors that supposedly participated in the bidding for the parking building, denied ever submitting a bid.

4. COA did not issue memos or disallowances

Binay also said that the resident COA auditors never issued audit observation memos or disallowances in all the years the building was constructed. He said this was proof there was no anomaly, and that the city complied with the procurement law.

Yet the COA main office discovered several “red flags” that it detailed in its special audit conducted only in the course of a few weeks.

The Senate recommended that the resident auditors be investigated for possible involvement in the conspiracy.

5. Actual canvass, price quotations are needed to prove overpricing

Binay also discredited the sources and standards that his critics used to say that the building was overpriced.

He said that data from the National Statistics Office is limited, as it is based on computations on approved building applications and documentary requirements, not on actual construction cost.

The Vice President also quoted property appraiser Federico Cuervo of Cuervo Valuers & Advisory as saying that he only used the market value in appraising the cost of the building at only P891 million ($20 million). Binay said Cuervo’s estimate was “hypothetical costing.”

The Senate though maintained that Cuervo’s computation and industry standards like the 2012 Davis Langdon and Seah Construction Costs Handbook showed that the building was “clearly overpriced.”

Using what it called the Valuation Approach and the Benchmarking Against Industry Standard Approach, the subcommittee said the overpricing was from a low of P1.12 billion ($25.24 million) to a high of P1.38 billion ($31 million).

Here is Binay’s full affidavit:

Vice President Binay’s affidavit to the Senate  

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