Troubling issues by developers in Cebu City

The Island of Cebu was dubbed by the Conde Nast magazine as the Best Island in Asia, besting Boracay, the holder of the title for many years. I call it an add-on to last year’s grandiose Tourism Growth for Region-7. This is great news for Cebu!

Now for the bad news. The Department of Labor and Employment (DOLE) estimates that 10 million Filipinos stand to lose their jobs at the close of 2020 – this is by Christmas time – as the economy suffers a downturn from its efforts to contain the COVID-19 outbreak. The DOLE figures include Cebu City. Some call this pandemic an “act of God” not because God inflicted this upon us, but because the repercussions of this outbreak have spun out of control, and perhaps only the hand of God can put a stop to it. This may be true in one sense, but not in the sense that God has not given us the means to cope with it and to come out of it not only alive, but even better than before.

The business involving office and residential condominium units in Cebu City offers an interesting example. Many fear that due to the economic downturn caused by the pandemic, the business of selling condominiums in Cebu City would at least slow down in 2020. Some go so far as to believe that the real estate market in Cebu Ciy would more than shrink, it could temporarily or partially collapse. However, I did read a report that Manila-based real estate developers still want to enter the Cebu market.

Allow me to say business in Cebu City experienced phenomenal growth in the year 2019. However, I’m getting reports from friends that many developers do not listen to the pleas of their Cebuano investors, many of whom have suffered huge financial losses this year.

I do not subscribe to this rather bleak point of view because although the spread of COVID-19 is difficult to control, this outbreak cannot change the fact that people will continue to need safe places to use as their residences or offices. Real estate developers only need time to let this pandemic pass and let the people get back on their feet, to pick up from where they left off. Real estate developers, in the meantime, may still use this time of crisis or the selling hiatus to build more trust in their companies as well as in the market. To build trust in one’s character and intention as a company is a duty of a developing company.

There is a lot of talk in Cebu City these days about a Manila-based developer who came to Cebu at least 10 years ago to tap into its market for condominium units. For many years now, it has signed Contracts to Sell to dispose of at least 1,700 of its units. Mind you, Sec. 17 of P.D. 957 requires this developer to register these contracts with the Register of Deeds, whether or not the purchase price is paid in full, to protect the rights of the buyers.

When buyers purchase condominium units, they do not only acquire rights to their units, but also to the amenities and common areas promised to buyers. It is a fact that many developers get tempted to convert some of these promised amenities and common areas into saleable units, to increase their revenues by millions of pesos, even after many of its buyers have fully paid for their units. For this reason, the law requires that before the developer may alter its master plan or reduce its promised amenities to improve its profits, it must seek first the consent of majority of its buyers. However, this has not happened with this developer.

Furthermore, this Manila-based developer has refused to register any of its Contracts to Sell with its buyers. For this reason, the developer insists that it may still freely alter its master plan and its promised amenities to help improve its revenues, because it has not registered its contracts with its buyers anyway. But does this developer know that under Sec. 19 of PD 957, the amenities it has promised in its advertising brochures form part of its binding obligations, as they are considered written into the contacts they signed with their buyers? Is this developer aware that when they altered their master plan to withdraw some of the promised amenities without the consent of its buyers, many of their buyers felt cheated or at least let down?

Issues like this have surfaced, which is the reason why Secs. 39 & 40 of PD 957 impose criminal liabilities of up to 10 years imprisonment against the president, manager and members of the Board of Directors of developers who betray public trust in this way. But there is more to the betrayal of public trust made by this Manila-based company that expanded to Cebu.

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