In a letter sent to Blue Star owner and Masungi proponent Ben Dumaliang on Friday, March 7, 2025, the DENR outlined three key reasons for the cancellation: the absence of a required Presidential Proclamation designating the land for housing purposes; failure to follow the necessary procurement or bidding process; and non-delivery of the 5,000-unit housing project within the agreed five-year period.
The final green light for the move was given by Environment Secretary Ma. Antonia Yulo-Loyzaga acting on the recommendations of the investigating team.
The contract in question was part of a joint venture initially established in 1997, when Blue Star entered into an agreement with the DENR to develop a 130-hectare area in Tanay, Rizal, into government housing called the “Garden Cottages.” However, despite limited progress on this project, the agreement was expanded in 2002 to cover an additional 300 hectares.
DENR Assistant Secretary for Legal Affairs Norlito Eneran emphasized that no substantial housing units were built under the original 130-hectare project before the contract was expanded.
“Blue Star was still able to secure a supplemental agreement in 2002 that even increased their project area to an additional 300 hectares, despite no substantial housing units built on the original 130 hectares awarded,” he said.
Key Takeaways from DENR’s Cancellation of Blue Star’s Contract
The planned housing units were meant for employees of various government agencies, including the DENR, Department of Education, Department of the Interior and Local Government, Department of National Defense, Department of Transportation, and the Office of the President.
The cancellation also stems from the fact that the designated land—Lot 10, where the Dumaliang family operates the Masungi Georeserve—was never declared open for disposition for housing development. The property, originally registered under the Republic of the Philippines, was transferred to the Bureau of Corrections and later to DENR Region IV-A (Calabarzon).
The Garden Cottages, which were supposed to serve as government housing, have instead been repurposed for commercial use, serving as venues for weddings and pre-nuptial shoots, with fees being charged by the Dumaliangs.
The DENR noted that the 2002 contract was among those reviewed by a special committee formed in 2019. “Multiple investigations by different administrations have found irregularities in the awarding of Blue Star’s contracts,” Eneran said.
The agency also pointed to a 2008 Memorandum of Agreement between the DENR and Blue Star, which attempted to swap the unbuilt 5,000 housing units in the Garden Cottages project for just 145 housing units in a 1.5-hectare site in Pueblocillo Village, Dasmariñas, Cavite. This agreement covered community facilities, roads, water sources, and other improvements, but was also flagged for irregularities.
Given the lack of execution and non-compliance with procurement rules, the DENR has deemed the 2002 agreement void. “The 2002 Supplemental Agreement is now without basis,” Eneran stated.
With the contract canceled, the future of the Masungi Georeserve’s operations on the contested land remains uncertain. The DENR has yet to announce its next steps regarding the property.
