Philippines’ corruption riddled property sector

The deals are just too big – from the hundreds of millions to billions of pesos – that the major players cannot help but have a full measure of control over the ventures. And why not? It makes good business sense to make sure all bases are covered. But in almost all these property development megadeals some questions have been raised over extraordinary steps taken to ensure success.

And since they involve such high-caliber brands like Ayala, SM, Megaworld, Filinvest, Rockwell, DMCI and Vista, they are frequently talked about everywhere: in coffee shop guffaws and cocktail whispers of polite society; in election campaign mudslinging and Senate investigations; in online petitions and social media campaigns; in mainstream media and anonymous blogs.

So much property to choose from... chances are, it's already taken. (Photo from propertyfinder.ph)

Yet through the years nothing has gone to court, nobody has gone to jail. All these talks of corruption in big time property development fall in the realm of “know but cannot prove.”

Take these officers of Ayala Land Inc. (ALI), who raised many an eyebrow when they said in an interview that it was just too large for government regulation.

Here’swhat the Daxim L. Lucas of Inquirer’s BizBuzzof May 12, 2014 said about it:

ALI’s winning formula

Save for a few exceptions, company officials tend to be very reserved when speaking to members of the local press. But they do tend to speak their mind when being interviewed by the foreign media.

And so it was with a couple of ranking officials of property giant Ayala Land Inc. who gave a rather candid interview (jawdropping, actually, if you’re used to the conglomerate’s “stick to the message” approach) to Singapore’s ‘Business Times,’ which was published last week.

In it, ALI’s chief sales and marketing executive Thomas Mirasol explained how the country’s largest real estate developer was able to leverage the absence of a state-run urban planning or development agency.

The article said: Not having to adhere to a regulatory body’s land-use blueprint has enabled it to acquire large plots of land and develop them according to its own plan and design. And as long as the developer is paying its property taxes, building financial districts to attract multinational corporations and foreign investment, and providing infrastructure and services that benefit the city, the government has no complaints.

“The fact that there is nobody in the Philippines who regulates urban planning has been great for Ayala Land because we are probably the only company there that has the scale financially to take on large plots of land,” Mirasol said.

“By developing big tracts of land, we become the government; we control and manage everything,” he added. “We are the mayors and the governors of the communities that we develop and we do not relinquish this responsibility to the government.”

“We don’t have to rely on the government very much at all,” added ALI vice president Jose Juan Jugo, who explained further that, going forward, it no longer matters to the business community who the country’s president is.

“The political impact on business each time there is a presidential election has been significantly less and less— to the point where it doesn’t matter anymore who the president is,” Jugo said. “Because business would continue to proceed and nobody on the political side would want to do anything that would upset what’s happening in business, so they tend to be quite supportive of us.”

They should be so lucky!

Then, of course, there are those that have sprouted up in total exception of existing local land use and zoning laws. These are legitimized, of course, by the granting of the exception by the city or municipal council. SM Blue comes to mind, the high rise condominiums in the area of Katipunan road and Ateneo de Manila university. Protesting residents including the university have raised issues such as traffic congestion and water supply shortages, but have failed miserably because the development has been legitimized by the city government. Protesters pounced on the fact that ittook one day for SMDC to get its permit, too much of a convenience that theysmell something fishy.

Mainstream and social media is also zooming in on this angle with DMCI’s Torre de Manila. How could this “national photobomber” of the Rizal monument skirt local zoning codes and national heritage laws? protesters ask. Already, headlines start the finger pointing of allegedspecial deals with government officials past and present.

The most obvious way to prove such corruption is to literally “follow the money” – check out the paper trail of funds deposits, sudden changes in Statements of Assets, Liabilities and Net worth (SALN), lifestyle checks.

We should be so lucky! 

They could always find ways to cloak these special deals, like giving them units in the condominiums to be developed.

Even the Senate investigations could notcrack the allegations that Vice President Jejomar Binay would always have aunit or two as payment for his allowing a condominium or building to rise inhis fair city when he was Makati mayor. As of late builders and developers like ALI, Megaworld , Robinsons Land and Rockwell have denied such bribes. We do have the word of his former Vice Mayor and partner in crime turned whistleblower.

You’d think that it’s easy to spot – like that humungous farm in Batangas where locals literally give you directions as the Binay farm. But with the Makati condos any developer could either put the title in a dummy’s name or just sit on it as unsold until Binay could decide what to do with it later – sell it or use it as a love nest, whatever the need may be at that time.

In fact, with developers doing business in many places in the rest of the metropolis and the country they don’t necessarily have to part with one of their Makati properties. Take the case of the Lopez group’s Rockwell Land which developed the former Makati riverside power plant into a high end condominium and commercial complex. Theyraised so much controversy when the VP’s daughter, Makati Representative Mar-lenAbigail Binay, won a unit in the developer’s Pasig City condo complex calledThe Grove in a raffle amid all the Senate controversy.

She should be so lucky!

And speaking of the politically motivated, what happened to former Senate President Manny Villar whose land andinfrastructure deals were doggedly pursued by his political opponents in the 2010 elections? Specifically, how he amassed raw land in Cavite, used taxpayer money – via his pork barrel funds – to develop support infrastructure like major roads and flyovers to and through his lands profiting from their acquisition and development of his Vista Land brands like Camella, Brittany, Evia, Protofino etc etc. But all those charges and countercharges just fizzled out when Villar’s presidential campaign disappeared as well.

He should be so lucky!

And since we’re talking about these big time property scams, what could be bigger than the Filinvest development in Alabang, Muntinlupa. One lawsuit on the matter puts good detail on this deal.

On June 14, 1993, the Makati City Registry of Deeds issued Transfer Certificate of Title (TCT) No. 185552 in the name of respondent Republic over the 244 hectares of Lot No. 392 (under OCT No. 684). The "Joint Venture Between the Republic of the Philippines, Owner, and Filinvest Development Corporation, Developer," and the

"Memorandum of Agreement" executed between the PEA and Filinvest Alabang, Inc. (FAI) were annotated on the back of TCT No. 185552.[16] Subsequently, or on September 26, 1995, derivative titles under TCT No. 185552 were issued in the names of both the Republic (26%) and FAI (74%).[17]

That suit did not prosper. Hectares upon hectares of prime government land worth billions under the stewardship of the Public Estates Authority (PEA), turned over to the Gotianun family’s premier business entity (the other is East West Bank, perhaps to handle all that cash).

Word has it that the Commission on Audit (COA) is in a bind because it has the records of the PEA-Filinvest deal – signed, sealed and delivered, including payment of billions – but the state auditors could not trace where the funds went. PEA? National Treasury? Office of the President?

And as whispers between sips of cab-savs and single malts in polite society go, it’s easy to purchase billions of pesos of government land if it’ll merely cost a couple of hundred million to line certain regulators’ offshore accounts, especially when these happened in the years BA (Before AMLC – Anti Money Laundering Council). 

They should be so lucky!

Well, we can take comfort that at least one didn’t get away. That is the Cojuangco family in their Hacienda Luisita. As theSupreme Court has ordered, proceeds from their land sale to the Subic ClarkTarlac Expressway (SCTEX) must go to farmer beneficiaries of the land reformed sugarlands held by the family of President Benigno S. Aquino III.

Then again, perhaps it’s more than the legal system at work but karmic forces. As the story goes the Cojuangco ancestor, Ysidra, acquired the huge tracts of land after funds under her care for the Philippine revolution against the Spanish colonizers disappeared.

Herman Tiu Laurel writes:

During the Spanish period, Gen. Antonio Luna, then chief of staff of the revolutionary army, turned over revolutionary funds to his paramour Ysidra Cojuangco for safekeeping.

When Luna was assassinated [apparently upon orders of the fledgling Philippine Republic President Emilio F. Aguinaldo] the Cojuangcos kept the treasure all to themselves — a tradition of treason and greed that has been kept alive by today's Cojuangcos, as well as, their Aquino branch.

To date the President’s uncle Peping Cojuangco, whose questionable tenure as Philippine Olympic Committee chair looms large, is still trying to sell the idea of developing much of Luisita as a major sports venue and training center to outdo the Iglesia Ni Cristo’s Philippine Arena in Bulacan. Of course that will mean government will have to spend for its building and development. A last minute, special arrangement before this administration bows out?

He should be so lucky.