Consunji firms to buy back units in quake-damaged condos at 125% to 150% of purchase cost, from 200% as demanded

DAVAO CITY (MindaNews / 26 January) – Two Consunji firms have offered owners of units in their condominiums that collapsed or were rendered unsafe by the series of powerful earthquakes late last year, buyback options of from 125% to 150% of acquisition cost, from 200% as demanded by their clients, and 40,000 pesos a month displacement assistance instead of 50,000.

For buyers of units in buildings still under construction, the offer is 100% refund on all payments made.

Atty. Miguel Palma Gil, OIC regional director of the Department of Human Settlements and Urban Development (DHSUD) said “all of the condo unit owners from different projects” were “asking 200%” while others were “even asking more.”

The Himeji Building of Ecoland 4000 Residences (L) in Davao City collapses during the Magnitude 6.5 earthquake on 31 October 2019.. MindaNews photo by MANMAN DEJETO

After a series of negotiations, the Consunji firms offered, as of January 21 and 22, from 125% to 150% buyback option even as some unit owners had pegged their demand down to a “non-negotiable” 150%, except owners of Ecoland 4000 Residences who are still pushing for 200%.

Palma Gil told MindaNews on Thursday that Herbert M. Consunji, Executive Vice President & Chief Finance Officer of DMCI Holdings, Inc. met with him late afternoon of January 22 and “he might give a better offer early next week.”

The DMC-UPDI (David M. Consunji-Urban Property Developers, Inc.) is the developer of

Ecoland 4000 Residences whose Himeji Building collapsed during the Magnitude 6.5 earthquake on October 31 and whose neighboring Osaka Building was ordered vacated by the Office of the City Building Official (OCBO). It is also the developer of Palmetto Place and Magallanes Residences, whose six buildings (three each) were also ordered vacated, the most recent – Magallanes’ Toledo Building — in an order dated January 17.

DMCI (David M. Consunji, Inc.) Homes is the developer of Verdon Parc which has four buildings, one occupied (Martel) and three still under construction.

Although far from the epicenters of the series of Magnitude 6 quakes last year – 6.3 on October 16; 6.6 and 6.1 on October 29; 6.5 on October 31 and 6.9 on December 15 – Davao City experienced Intensity V on October 16; VI on October 29 and October 31; and V on December 15, according to the Philippine Institute of Volcanology and Seismology.

Before the quakes, DMC-UPDI and DMCI Homes’ four condominium projects here had a total of nine occupied low-and medium-rise buildings – two in Ecoland 4000, three each in Magallanes Residences and Palmetto Place and one in Verdon Parc — and three high-rise buildings still under construction — Vernon Parc’s Beldevere building which is supposedly due for turnover to its buyers in March this year, Trevans in October, and Maurin next year.

The first two floors of the five-storey Himeji Building in Ecoland 4000 Residences in Davao City collapse from the Magnitude 6.5 earthquake on Thursday morning, 31 October 2019. The Office of the City Building Official said it had issued notices to vacate after the October 16 and 29 powerful quakes. MindaNews photo by MANMAN DEJETO

Both firms are under DMCI Holdings whose website states that DMCI Homes is “the country’s first Quadruple A developer, the highest license given to a contractor that meets the stringent requirements of the Philippine government” and has completed “more than 50 resort-inspired projects in Baguio City, Boracay, Davao City and Mega Manila which has become a sanctuary of more than 50,000 residents.”

DMC-UPDI, a real estate development company set up in 1977 “to contribute and cater to the housing needs and wants of the Filipino people,” introduced the first residential condominium here – the Ecoland 4000 Residences – in 2007.

“Lemon units”

On January 10, a furious President Rodrigo Duterte publicly warned the Consunjis to attend to the concerns of their condo owners and buyers in Davao City or “I will not grant you any permit to dig in.”

“It is the rich who have problems in the Philippines. The rich. Like this Consunji … All of his condos, four of them, one collapsed. Of all the buildings in Davao, only his … suffered many cracks, huge cracks. Not hairline but split open. Now he is making it difficult for them,” Duterte said in Filipino, at the ceremonial distribution of agricultural assistance to the farmers of Region 12 in Pigcawayan, North Cotabato.

President Rodrigo Roa Duterte visits Pigcawayan in North Cotabato on Friday, 10 January 2020, to distribute agricultural assistance to farmers IN Region 12. Among the issues he raised during his speech was a warning to the Consunjis to attend to the concerns raiised by owenrs of their quake-damaged condominium units in Davao City. MindaNews photo by GREGORIO BUENO

Addressing Isidro A. Consunji, President of DMCI Holdings, Inc., Duterte said in Filipino: “You have a problem. Settle your problem first with (the condo owners in Davao City). Because if you are a builder, Consunji or not, if I get peeved, I will not grant you any permit do dig in.”

Duterte was apparently irked by a news report on January 9 quoting Consunji as saying a day earlier that he does not know where the President was coming from in attacking the Manila’s water concessionaires when the contracts that Duterte described as onerous were drafted by government as advised by the World Bank-International Finance Corporation, and passed through the National Economic Development Authority and the Department of Justice.

DMCI Holdings is a partner of Metro Pacific Investments Corporation in Maynilad.

Unknown to many, a sober Duterte had met with Consunji and representatives of their Davao City condo owners in Malacanang on January 6, where he asked him to immediately attend to the concerns of his clients and give them a “better offer.”

James Patoc, a unit owner in Verdon Parc’s Martel Building, and one of those who attended the Malacanang meeting and took down notes, recalled how Duterte referred to the condo units as “lemon units.” Lemon refers to a defective product.

But the 33-year old Patoc, who is into agribusiness, said the President told Consunji that he believes they did not intend their buildings to be “lemon units,” that someone may have tinkered with the materials used but reminded him that as a developer, his companies provided the “contributory cause” for the buildings’ failure.

Palma Gil and Engr. Cirinia Grace Catubig, OIC of the City Building Official (OCBO), who were also at the meeting in Malacanang, remember the President’s “lemon units” description.

Palma Gil recalls the President telling Consunji to give their clients a “better offer.”

A pre-selling buyer of a Verdon Parc unit told MindaNews that “originally, they said we’ll get a 50% refund lang in 45 days. But after nagyawyaw si Digong (after Duterte’s rants), they offered 100% refund of the payments for Buildings 2, 3 and 4” which the buyers could collect by early February.

Catubig said the President asked Consunji, “why only your buildings? Ano nangyari diyan sa structural ninyo?”

52 condo buildings

The city has a total of 52 condominium buildings, 31 occupied and 21 still ongoing construction, Catubig told MindaNews on Friday.

Of the 31 occupied, one collapsed (Ecoland 4000’s Himeji Building), while nine others were red-tagged, eight of them Consunji projects (Ecoland 4000’s Osaka Building, three buildings of Magallanes Residences, three buildings of Palmetto Place, and Verdon Parc’s Martel Building) – and Ayala Land’s Avida Towers along CM Recto. Avida’s red tag, however, was lifted in December.

Red-tagged buildings mean they are not safe for habitation, must be vacated, and structural defects corrected.

Of the 21 ongoing condominium projects, Catubig said around 10 have been inspected by the OCBO and three yellow-tagged, two of them Verdon Parc’s Beldevere and Trevans. Yellow-tagged buildings mean non-structural damages in specific areas have to be cordoned off for repair. When the repairs are done and OCBO has approved it upon inspection, the yellow tag can be lifted.

Toledo Building of Magallanes Residences was initially yellow-tagged but was elevated to red tag when the OCBO, which was monitoring the repair work, found more cracks, hence the January 17 order for residents to vacate, Catubig explained.

To lift the red tag, Catubig said, property developers need to submit a structurual design computation which her office will evaluate within two to three days. Once approved, repair work can begin.

Catubig said the Consunji firms estimate the repair would take three weeks to a month. Within that period, she said the OCBO will check on the progress of the work and when done, the OCBO will again inspect the building and if it has passed the standards, lift the red tag.

Back in November, despite the red and yellow tags, Ma. Isabel Ybanez, DMCI Homes Customer Care manager on November 21, 2019 wrote Verdon Parc’s unit owners and pre-selling buyers that “all buildings of Verdon Parc are structurally safe.”

“After a series of thorough inspection and assessment, the buildings’ structural consultant – Macro Consulting Structural Engineers Company – has issued certifications on the structural soundness of Verdon Parc’s Martel, Belvedere, Trevan and Maurin buildings,” she said, adding that “minor and non-structural damages” were found on the buildings and are being addressed through rectification process.

The letter said the notice to vacate issued by the OCBO for Martel Building occupants was a “precautionary measure” and that they were “clarifying their findings and recommendations to be able to immediately address their concerns.”

Catubig clarified that a red tag does not necessarily mean the building is condemned. “Pwede siya ma repair, ma retrofit,” she told MindaNews.

Ecoland 4000

Workers check on the damage  of Ecoland 4000’s Himeji Building in Davao City which collapsed when a Magnitude 6.5 quake struck on October 31, 2019. The quake registered Intensity VI in Davao CIty.  MindaNews photo by MANMAN DEJETO

In their January 20 letter to DMCI Holdings President Consunji, owners of units in the collapsed Himeji Building and the vacated Osaka Building of Ecoland 4000 Residences, asked for an “outright payback of 200% of the original acquisition cost on both condo unit and parking lots, net of all government taxes, transfer fees and any legal costs, plus actual transfer fees paid by the homeowner.’”

They also demanded payment for nine damaged vehicles, amount to be negotiated directly with the unit owners; payment of personal belongings, furniture and appliances of homeowners on the second floor that were “unretrievable” as the structure had collapsed; a monthly displacement assistance of 40,000 pesos effective November 1, 2019 “until our payback is paid in full.”

“Displacement fee” is intended to cover expenses incurred due to the loss of their homes, such as house rentals which Patoc said had increased due to the high demand from the displaced condo dwellers.

The letter also said DMC-UPDI is “required to secure a signed clearance from the Ecoland 4000 Residence Condominium Corporation prior to release of any settlement from the homeowners to fully cover their arrears in association dues;” that funds of their condo corporation “will belong to the homeowners even after DMC-UPDI Settlement” and the increase in settlement is “also applicable to those homeowners who accepted the settlement before this demand letter.

In its January 22 letter to Palma Gil on the Ecoland 4000 homeowners’ demands, Architect Victoria Joy Adriano, General Manager of DMC-UPDI, said the company will “buy back all condominium units and parking slot at the price of 150% of the total contract price stated in the Deed of Absolute Sale between developer and buyer;” return 100% of transaction fees, if paid by unit owners; and increase the displacement assistance from 21,000 pesos to 40,000 a month for every affected unit owner.

The DMC-UPDI also offered to continue assisting unit owners to retrieve their belongings from the buildings and that the company is willing to settle with unit owners whose vehicles were damaged “based on vehicle type and assessed value.”

The letter also said payment will be made “within seven business days from submission of complete set of requirements.”

Ecoland 4000 Residences, Davao City, on January 23, 2020. MindaNews photo by CAROLYN O. ARGUILLAS

A unit owner in Ecoland 4000 told MindaNews that the January 22 letter of DMC-UPDI was submitted before the meeting of their Technical Working Group and Mr. Herbert Consunji that same afternoon.

Palma Gil said “they (Consunji and Technical Working Group) shook hands. “I do not know sa exact figures but what they said is they will inform me, mag-submit sila ng offer – agreement reached by both parties – settlement agreement to be signed. “

He said the two parties already have a “verbal agreement.”

In their letters, the Consunji firms and condo owners furnished copies to President Duterte, Senator Christopher Lawrence Go, Mayor Sara Duterte and Vice Mayor Sebastian Duterte.

Go is credited for making possible the Malacanang meeting on January 6. Unit owners also thank him for offering them a lawyer.

Magallanes Residences and Palmetto Place

Also on January 22, DMC-UPDI sent DHSUD an “improved settlement offer” for Magallanes Residences 1, 2 and 3 and Palmetto Place 1, 2 and 3 in two separate letters containing the same offer.

Magallanes Residences, Davao City. MindaNews photo by CAROLYN O. ARGUILLAS

The letters, also signed by Adriano, said they will “implement the repair works” required by the OCBO “to make the buildings safe;” they will “upgrade the buildings to latest standards” – the 2015 National Structural Code of the Philippines (NSCP) or ASCE (American Society of Civil Engineers) 41, “as applicable.”

DMC-UPDI will also advance all cost of repairs, retrofit and upgrade, “cost to be claimed against insurance policy of the Condominium Corporation;” that it will provide 40,000 pesos monthly displacement assistance from the time the OCBO “required the building/s to be vacated until the (OCBO) allows the building/s to be occupied” or when the red tag is lifted.

Palmetto Place, Davao City, on January 23, 2020. MindaNews photo by GREGORIO BUENO

The company also offered to “refund” unit owners “who decide not to retain their condominium units and parking space” 125% of the total contract price, if already fully paid; 125% of all payments made on the total contract price stated in the contract to sell, if on installment; and for all accounts, 100% of the Transfer Fee, if paid by unit owner to developer.

Verdon Parc

On January 13, DMCI Homes President Alfredo Austria in a letter to Palma Gil, offered displacement assistance to all unit owners of Martel Building at 40,000 pesos a month from the issuance of notice to vacate on November 8 “until necessary repair works are completed.”

Martel Building of Verdon Parc in Davao City. Photo taken on January 23, 2020. MindaNews photo by GREGORIO BUENO

The company added it will comply with the requirements of the OCBO “for all the needed repairs / rectifications for Martel Building.”

It also said it is “amenable to refund all payments made by unit owners who have the intention to cancel their purchase for all buildings of Verdon Parc Residences” and committed to do “sit-down one-on-one meeting with our unit owners to resolve any other issues and concerns that may arise.”

The offer was rejected by owners of condo units in Verdon Parc’s Martel Building.

On January 14, they wrote DMCI Homes demanding 50,000 monthly displacement assistance effective Nov. 8, 2019; “until a buy-back option will be released to us.”

The letter, signed by Core Group leader Amando Jaromay, said they are “not amenable” to a one-on-one negotiation with DMCI Homes “as a requirement for the immediate release of displacement assistance and buy back option.”

The group said the buy back option of 150% of the acquisition cost of their units is “non-negotiable, net of all related government fees and taxes.”

On January 21, DMCI Homes revised some parts of its offer to Martel Building owners. It held on to its January 13 offer of 40,000 displacement assistance monthly retroactive to November 8, until the OCBO lifts the red tag.

DMCI Homes rejected the demand for 150% buy back option “net of all related government fees and taxes” and instead offered 125% of the total contract price stated in the Deed of Absolute Sale between the developer and the original buyer, if the unit has been fully paid; if not fully paid, 125% of all payments made on the principal amount; and for all accounts, 100% of the actual closing fees paid.

Utility room on the ground floor of Verdon Parc, post-quake. Photo by JAMES PATOC

It also said that for title-transferred accounts, the unit owner will shoulder the 6% capital gains tax but remittance to the Bureau of Internal Revenue will be facilitated by DMCI Homes.

The offer to refund, it added, “shall terminate once (OCBO) allows the building to be occupied” or when the red tag is lifted.

The company also said it will comply with the requirements of the OCBO “for all needed repairs/rectification for Martel Building,” adding they already had a sit-down meeting with the OCO and Structural Experts of Davao on January 17 “and came up with the agreed parameters.”

Catubig said retrofitting plans for Martel have been submitted and approved and the company might start repair work by first week of February. “Basin mag start na sila ug (They might start) carbon fiber installation.”

Target date for final settlement: end of January, early February

Palma Gil told MindaNews they are targeting end of January or early February to “finish proceedings of settlement or move into a new direction.”

“New direction” means filing cases, which President Duterte in the January 6 meeting, had hoped would not happen as it would take time and, as Patoc noted down during the meeting, the President said he does “not want the issue to drag till kingdom come.”

“He does not want this to be taken to court as this will be dragged till kingdom come. He somehow reminded Consunji that he is the President of the people, and he will protect the people from this injustice,” Patoc said.

He said the President’s last remarks to Consunji was “think about it.”

Two days later, on January 8, Palma Gil issued an order suspending the collection of amortization payments for the four Consunji condo projects in the city.

Asked if this was intended to pressure the Consunjis, Palma Gil said his office’s mandate is “to protect the buyers.”

He said he was supposed to return to his post in Bicol on January 6 but was named OIC regional director here in late December and had to immediately review the case of the condos.

Palma Gil said the previous director issued an order to cease and desist from selling, due to the damages caused by the quake, but when he reviewed it, “may kulang sa order” (there was something missing), hence he added a cease and desist from collecting amortization addressed to the developer and the banks and other financial institutions.

He explained buyers will no longer be burdened to pay the amortization given that they still have to pay rent elsewhere, and their credit worthiness will not be destroyed so they can still apply for another loan. “Hindi sila ma bad shot sa banks. They can justify there was an order they were just following,” he said.

Palma Gil said he believes the Consunji firms will give an “amended offer in consideration of length” of occupancy as Martel unit owners have stayed there for one to two years while those in Magallanes and Palmetto have been staying there for around 8 to 10 years.

“At the end of the day, Palma Gil said, “we cannot force you to enter into an agreement. Whatever your course of action is, we will support you.”

He said those who are not amenable to the settlement proposal “can file cases.”

He said this might be a “battle of prinsipyo na lang (principles) if our course of action is legally but we will support whatever course of action the buyers will decide.”

“We are assisting the buyers to get the best possible settlement agreement if there is one to be reached,” he said. (Carolyn O. Arguillas / MindaNews)