What you need to know when viewing a model unit

We’ve been having a building boom! And today, I just read in the papers of a projected GDP growth of 5 percent. That’s good news for people in my industry who are happily conceptualizing, designing and delivering architecture and interior spaces. We have largely to thank the residential market, where the demand for housing—whether it be condominiums or single-detached homes—seems boundless. With this comes a full array of residential developments and their marketing tools, one of which is their model units.

Because the market has been competitive, developers want their units to be aspirational and sell not merely a space but a certain lifestyle as well, a lifestyle that a buyer has been longing for or dreaming of. Model units compete as the “dream come true” for the residential unit buyer. But dreams can shatter when there is a miscommunication between buyers and sellers, or when the sellers promise more than they will actually deliver. Sometimes, it’s also the buyer that has not done his due diligence and has false expectations.

Things to investigate

For happier endings, here are a few things to investigate when viewing a model unit:

Find out if what you are viewing is an “as-delivered” unit, or an “upgrade” unit. An “as-delivered” unit is one where the partitions, floor, wall and ceiling finishes, ceiling design and lighting fixtures, kitchen cabinetry and closets, are exactly what a buyer would get upon receiving his unit. For this unit, an interior designer is tasked to fix up the unit with loose items only (furniture, window treatment, carpets, decorative lighting, accessories), and work around the configuration, materials and colors the actual unit will have.

The latter would have modifications that deviate from what the developer will actually deliver. Some partitions may have been relocated, ceilings modified, and materials and finishes upgraded to support the interior designer’s concept for the unit. Many viewers misinterpret the upgrades as deliverables, and this is where the confusion (and sometimes the disappointment) comes in. Developers usually put notices of what are included or what are not. However, a salesperson may promise you the world in order to make a sale.

Verify if appliances are included. Some units are sold without any appliances, in which case it is important for you to sleuth on a few things:

—Avoid mistakes when purchasing your cooker. Check if your range or oven can be an LPG-fired one. Most developers disallow LPG tanks for valid reasons—the risk of gas explosions and the risk of damage to public spaces due to the movement of these heavy tanks around the building. Newer developments though, feature centralized LPG lines, in which case the main LPG tanks is located somewhere within the building and is piped to your unit just as water is. It is a system that is common in many parts of the world.

—Verify if your air-conditioner is a window-type or a split-type unit. The latter has two components: the indoor unit (or “fan coil unit” and the outdoor unit or “condenser.” Most developers will only provide you the space for both the indoor and outdoor units and will tell you where you can run the pipes that will connect the two. Others would already have installed the pipes and predetermined the location of the indoor unit. Newer development will have the air-conditioning systems fully delivered and ready for use, saving you the trouble of buying them and having them installed.

—Inspect the bathrooms for water heaters. Most units come with one heater per bathroom (which is the most economical system for the homeowner). Sometimes, these are not shown in the model units, or could be covered up by some furnishing. Some developers locate these as an afterthought, and you may find yourself with an unsightly water heater with exposed ugly pipe connections.

—Check the door openings. Most model units do not have doors installed. Not intended to deceive their buyers, but rather it just allows for easier movement around the unit without having to open the doors all the time. Check that door leaves, if they were installed, would not blocked by fixed items like closets or in the case of bathrooms, the sink or water closet.

—Ask to see the windows. More often than not, they will be concealed behind some decorative treatment: blinds, or curtains. Some buyers, in their excitement, overlook this, and realize what sort of window openings their unit has only when it is turned over to them. Also check for the operability of the panels, as you would like most, if not all, to be operable to let air in and avoid full-time use of your air-conditioner.

—Verify if the ceiling is a dropped ceiling or if it is the underside of the floor slab. This will give you an idea of the true ceiling heights you will be able to achieve, should you wish to play around with your own ceilings. Most developers deliver the units with the real slab heights, but a few others don’t. The perception of space is not merely of width and depth, but of height as well. A higher ceiling will always give you a more spacious and airy feel.

Before you sign that contract, read the fine print carefully and understand what is actually the deliverable product, despite what your sales agent tells you. A property investment, whether for speculative reasons or for actual use, comes with some very real dreams and aspirations, so don’t forget to do your homework. Happy dreaming, and happy hunting!

Lastly, FYI for related information on the new real estate law, RA 9646, please proceed to www.RA9646.com, the online repository of updated information on Real Estate Service Act of 2009 (RESA).

source: Philippine Daily Inquirer, April 2011

Government to lose P200-billion worth of assets if infrastructure is not maintained - study

MANILA, Philippines - The government stands to lose P200 billion worth of assets if the country’s roads and bridges are not maintained, a study conducted by a French-Philippine company said.

In a report, Paris Manila Technology Corp. (PAMATEC) president Hubert d’Aboville noted that over the next 10 years, 50 percent of roads across the country would need full-scale repairs if the rampant overloading of vehicles and trucks is not stopped.

“There is insufficient number of weigh bridges in the country. Those that are handling it operate irregularly. Truck owners should also be responsible enough not to allow their fleet to travel with overloaded cargo,” d’Aboville said.

“The private sector can come in and take over the anti-overloading campaign of the government over the next 10 years. The government does not spend single centavo at the onset of the project while at the same time assured that national, provincial, municipal, and barangay roads are adequately protected,” he added.

According to d’Aboville, there is a need for the government to enter into a public-private-partnership to prevent further deterioration in the 30,000-kilometer network of roads across the country.

PAMATEC estimated the government has P1.21 trillion worth of assets in roads and bridges nationwide. Value of paved roads is at P40 million per kilometer; unpaved roads, P25 million per kilometer; and P350 million per kilometer for bridges.

The PAMATEC study suggested that roads and bridges when properly maintained could last for 20 years. However, constant 10 percent overloading will reduce its lifespan to 14 years while 20 percent overloading will cut its durability by 10 years.

“There should be an aggressive awareness campaign against overloading. More than half the trucks in the country are overloaded,” d’Aboville said.

The Philippines, with a maximum allowable of 13.50 tons per axle under Republic Act 8794, has the highest loading capacity in the world. Developed countries only allow between 9.10 to 11.50 tons per axle.

By Ma. Elisa P. Osorio (The Philippine Star) Updated April 18, 2011

Zonal Valuation

Zonal valuation adjustments to hike property taxes, prices

REAL ESTATE prices and taxes are bound to go up in most parts of the country once new zonal values are finalized by the Bureau of Internal Revenue (BIR), officials said last week.

"We are updating them (zonal values) again ... Most of them will likely go up because of developments in most areas," BIR Deputy Commissioner Nelson M. Aspe said in a phone interview Sunday last week.

District and regional offices of the BIR all over the country are now conducting public hearings on the proposed zonal values -- the worth of a property for taxation purposes, some of which have not been updated for 10 years.

For the country’s top commercial areas -- Manila, Makati, and Quezon City -- zonal values are expected to rise but those in areas hit by calamities such as Marikina are likely to remain the same or even go down, regional BIR officials said.

Makati and Quezon City revenue district officials declined to say how much the increases would be. For Revenue District Office (RDO) 33 covering Intramuros-Ermita-Malate in Manila, however, data obtained by BusinessWorld showed zonal values could rise by 35-40%.

BIR Commissioner Kim S. Jacinto-Henares, in a telephone interview last week, said zonal values were used to prevent the undervaluation of properties to avoid the payment of higher taxes.

"In selling your property, it has always been the zonal value or the selling price, whichever is higher," that is used as the basis for computing the required capital gains, documentary stamp, estate and income taxes, she explained.

These taxes are paid by the seller of the property. The adjustment in zonal values means the 6% capital gains and 1.5% documentary stamp taxes will have higher base prices -- that is, in case zonal values rise -- resulting in higher taxes to be paid by the seller, Ms. Jacinto-Henares said.

"For the estate tax, transfer of properties will be costlier," she added.

Ma. Victoria A. Villaluz, president of the Tax Management Association of the Philippines, said properties can be sold "lower than the zonal value" but in computing the taxes, the BIR’s "basis will be the zonal value, not the selling price."

Zonal value differs from the market value, or the price on a property agreed on by seller and buyer.

Victor J. Asuncion, executive director for research and consultancy at CB Richard Ellis Philippines, said real estate prices could also be expected to rise in Cebu and in Clark Field in Pampanga where "developments are expected to spur demand in buying properties."

"In Mindanao, of course, you will have to classify where the war is. The war is in Basilan, so there is possibility that zonal values will likely stay there but that is not true for the rest of Mindanao," Mr. Asuncion explained.

"More often than not, BIR does not adjust zonal values downwards. What [it does] is to hold them and wait until inflationary pressures pull them up again."

The BIR’s Mr. Aspe said updating of zonal values should be done "every three years" but "tedious process" prevents the bureau from doing so. In April 2010, then Internal Revenue Commissioner Joel L. Tan-Torres issued Revenue Memorandum Order 41-2010 ordering RDOs to update their zonal values "not later than June 30, 2010."

BIR data showed that out of 115 RDOs nationwide, only 13 were able to comply: Urdaneta, East Pangasinan; Tabuk, Kalinga-Apayao; West Makati; Bacoor, North Cavite; two districts in Calamba, Laguna covering Calamba City and the cities of Los Baños and Sta. Cruz and Victoria and Pila towns; Batangas City; Lucena City; Gumaca, Quezon province; Binalbagan, Negros Occidental; Catbalogan, Western Samar; Zamboanga Sibugay; and Zamboanga City.

Iluminada V. Lucero, officer in charge of the BIR’s Asset Valuation Division, last Tuesday said RDOs in East Makati, South Makati, Las Piñas-Muntinlupa, San Jose, Antique and Kalibo, Aklan, submitted updated zonal values last month but these were returned for a discrepancy check. She did not elaborate.

"It is a continuing program. There’s really no deadline for these RDOs to submit updated zonal values," Ms. Lucero said.

Before reaching the BIR national office, the proposed zonal valuations have to undergo a series of public hearings at both the district and regional levels.

Mary Anne A. Sumpay, secretariat of the technical committee on zonal valuation at the Quezon City regional office, said "public hearings have already been conducted" on the proposed increase in zonal values for Novaliches, Pasig East, Mandaluyong and Cubao.

"Two RDOs in Marikina and Pasig West, meanwhile, asked to retain their zonal values due to the ‘Ondoy’ tragedy," she added.

In 2009, tropical storm Ondoy struck Metro Manila, destroying around P11 billion worth of property, particularly in Marikina, Pasig and Pateros.

Minerva P. Podreo, member of the technical committee on valuation at the BIR regional office, said "most" zonal values in Makati would increase by "different percentage levels". Out of the four districts in Makati, only RDO No. 48 or East Makati was able to revise its zonal values last year.

A hike in zonal valuations would help the BIR collect more taxes although Ms. Jacinto-Henares said "there is no estimated collection target" as far as national property taxes are concerned.

The BIR, which accounts for about 70% of the government’s programmed tax revenues, is behind its 2010 collection goal based on official data, collecting only P753.3 billion as of November against the P783.03-billion target.

Final December and 2010 collection figures are scheduled to be released within the week, although Mr. Aspe earlier this month said the bureau may have missed its P73.78-billion December goal by "more than P1 billion".

source: Businessworld, Jan 25 2011

RPT: Quezon Prov and Pagbilao vs TE 735-MW Power Plant

LUCENA CITY, Quezon, Philippines—Mayor Romar Portes of Pagbilao, Quezon, the host municipality of the 735-megawatt coal-fed power plant, insists that the local government should be involved in the negotiation on how to amicably settle the P6 billion unpaid real estate tax of the plant operator.

Portes complained that the local government of Pagbilao is being kept in the dark over the reported compromise agreement being worked out by President Benigno Aquino III and Quezon Governor David Suarez to prevent the scheduled auction of plant properties on January 26.

“What is that compromise agreement? I don’t understand that. We knew nothing about it. I only heard the news over the radio and newspapers,” Portes said in an interview Monday.

He added: “The rightful authority on the collection of taxes is the municipality of Pagbilao. That’s very clear under the law.”

The 200-hectare power plant, which is being run by Japanese-controlled Team Energy (TE) Corp., lies at Isla Grande in Barangay (village) Ibabang Polo in Pagbilao fronting Tayabas Bay.

Last week, Malacañang announced that Aquino and Suarez have agreed to come up with a compromise deal in settling the P6-billion real estate tax liabilities owed by the owner and operator of the facility.

The reported arrangement averted the plan of the Quezon government to auction the power plant to recoup the unpaid taxes owed by the plant owner.

Webster Letargo, Suarez’s executive assistant, explained that there is still no substantial development on the matter of collecting the plant’s unpaid taxes.

“There is nothing to report yet (to Mayor Portes),” Letargo said.

In an earlier interview, Suarez said the purported compromise agreement is still being prepared for consultation with all concerned parties and "all issues are being tackled and considered."

“We yield to the wisdom of President Aquino regarding the postponement of the auction. However, all parties should arrive at an acceptable proposal before February 9. That’s the final date,” the governor said in a text message to the Philippine Daily Inquirer.

But Portes is puzzled with the reported compromise deal which is now being worked out at the level of the national government.

“What is there to compromise? How much will be the subject of that compromise deal? I was not aware of the planned sharing under that supposed compromised agreement,” he said.

Under the Local Government Code, real estate tax is to be distributed as follows: 50 percent will be divided equally by the local government and the provincial government for their respective school board funds; the other 50 percent will be divided by the host barangay, 25 percent; local government unit, 40 percent; and provincial government, 35 percent.

Portes has made it clear that the main focus of his administration is still to collect the unpaid taxes owed by the plant operator.

He stressed that the local government of Pagbilao will not issue business permit for the current year unless the plant operator settles its tax liabilities.

However, he admitted that stopping the plant operation would not be easy for the local government. The electricity generated from Pagbilao power plant accounts for around 20 percent of the total power-generating capacity in Luzon.

Late last month, the Quezon provincial government and the municipality of Pagbilao issued a final notice of delinquency to TE in a bid to collect P6.1-billion real property taxes from 1997 to 2010.

The treasurers of Quezon and Pagbilao warned the plant operator that its failure to settle the tax obligation within 10 days from receipt of the notice would force the local governments to resort to legal actions such as serving of warrant of levy and selling the plant and its properties in a public auction.

A source from the provincial government said two big companies have shown interest in joining the bidding of plant properties.

However, TE management continued to insist that the tax in question should be addressed to the National Power Corporation and not to the plant operator based on their Energy Conversion Agreement.

But the Supreme Court, in its final decision in January last year, denied Napocor’s bid to exempt the plant operator from paying real estate taxes.

source: Inquirer, Jan 24 2011

For details on RA 9646 or RESA Law, please visit www.ra9646.com. RA9646.com is the central depository of all updates on the new law for the practice of real estate service in the Philippines.

Condominium Act

LGU: Final say in Opening of a Condo who has

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‘Makati gov’t has final say on condo reopening’

By Tina Santos
Philippine Daily Inquirer First Posted 21:56:00 01/13/2011

MANILA, Philippines—The Makati City government has the final say on whether or not residents of West Tower condominium in Barangay Bangkal can return to their homes.

This was the reaction of Joey Salgado, the city’s public information officer, after CH2MHill, the US-based firm hired by the Lopez-owned First Philippine Industrial Corp. (FPIC) to clean up and rehabilitate the area affected by an oil leak, announced on Wednesday that it would speed up its fuel draining and pumping activities to make the building habitable again “by the third quarter of the year or as early as July.”

“It’s a welcome development,” Salgado said. “But the city government will give the final go-signal if the residents can move back in; that has been clear from the start.”

He added that the city government would enlist the help of experts in inspecting CH2MHill cleanup process and in ensuring that it complies with internationally accepted standards.

“We have to review and inspect their work. And also, we have to consult the residents themselves and ensure first and foremost their safety and well-being,” Salgado said.

According to him, apart from the team of experts from the University of the Philippines’ National Institute of Geological Sciences which helped trace the source of the oil leak, other professionals familiar with safety standards and rehabilitation procedures would also be tapped.

West Tower, a 22-story condominium, was shut down in 2010 by the city government after oil started seeping into its basement in July.

It was later determined that the oil came from several leaks in the FPIC pipeline, a portion of which was located near the building. The 117-kilometer-long pipeline transports fuel products from Batangas province to the Pandacan oil depots in Manila.

Deed of Sale - Stocks

deed of sale of shares with assignment of subscription rights

peaceful possession

operating permits

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San Miguel acquires add'l 7% stake in Bank of Commerce

01.14.11 MANILA, Philippines - The real estate arm of conglomerate San Miguel Corp has acquired a 7.16% interest in Bank of Commerce, hiking the San Miguel group's stake in the commercial bank to over 59%.

In a disclosure to the stock exchange on Jan. 14, San Miguel Properties Inc said the deal was "by way of a Deed of Sale of Shares with Assignment of Subscription Rights with Valiant Ventures and Development Holdings, Inc."

"The purchase is still subject to completion and submission of parties of the standard closing conditions, including corporate approvals," San Miguel Properties said.

No additional information, including the deal price, was provided.

In 2010, San Miguel Properties sold its 31% stake in the bank to San Miguel Retirement Fund [12], which is the retirement fund for San Miguel employees. This increased San Miguel Retirement Fund's stake in the bank to 52%

San Miguel first acquired shares in Bank of Commerce in 2008

Property Tax - Companies

Quezon gov threatens to auction off power plant for unpaid taxes

By Delfin Mallari Jr. Inquirer Southern Luzon

Posted date: January 15, 2011

LUCENA CITY, Philippines—Quezon Governor David Suarez on Friday issued an ultimatum to the owner of Team Energy (TE), operator of the 735-megawatt coal-fired thermal power plant: Settle your back taxes or we will be forced to put all plant properties on the auction block. “The public auction will push through on January 26 as scheduled unless the plant operator settles its tax obligation to Pagbilao local government and the provincial government,” Suarez said in an interview Friday afternoon. Greggy Romualdez, head of TE’s external affairs department, expressed optimism that the inter-agency committee currently studying the matter would be able to resolve the issue before the auction date. “In our capacity as plant operator, we have been doing whatever it is we can to help settle the matter,” Romualdez said in a text message to the Inquirer. Suarez said the TE management has not given the local government any offer that would show their “honest desire” to compensate the province. “Their first proposal was unacceptable and since then nothing concrete has been offered,” Suarez said referring to the offer submitted by TE management last year. Federico Puno, TE president and chief executive officer, submitted a proposal and offered P1.1 billion to settle the basic back taxes due the local government that ballooned to P6.1 billion. But the offer was turned down by the Pagbilao and Quezon governments. According to a source from the provincial government, two big companies have shown interest to join the scheduled bidding for the plant. To force the issue, the Pagbilao government is also planning not to issue a business permit to the plant operator this year, which would force the company to shut down. Suarez said he was aware that some national government officials have been conducting dialogues with TE management on how to settle the back taxes due to the local government. “But we were not even invited to participate. We should be there in the middle of whatever negotiation is going on because the local government is the principal party here,” he said. Suarez said the plant operator could not escape responsibility for the payment of the back taxes. “The court ruled that the plant should shoulder all taxes due the local government because they were the owner of the properties,” he said. He maintained that the local government was not a party to the Energy Conversion Agreement between Napocor and plant operator. Suarez said the money that will be collected from the plant operator will be earmarked for different projects and programs of the local government. The Quezon provincial treasury is in the red as it has been saddled with more than P740 million in debts left by the past administration of former Governor Rafael Nantes. Late last month, the Quezon provincial government and the municipality of Pagbilao issued a final notice of delinquency to TE in a bid to collect P6.1-billion real property taxes from 1997 to 2010. The treasurers of Quezon and Pagbilao warned the plant operator that its failure to settle the tax obligation within 10 days from receipt of the notice would force the local governments to resort to legal actions such as serving of warrant of levy and selling the plant and its properties in a public auction. The 200-hectare power plant lies at Isla Grande in Barangay Ibabang Polo in Pagbilao. In an earlier statement, TE management maintained that the tax in question should be addressed to the Napocor and not to the plant operator based on their Energy Conversion Agreement. Signed in 1991 between Napocor and Mirant Pagbilao Corp., the former operator of the plant, the agreement provided that the state power company would shoulder all the taxes the government may impose on Mirant. But the Supreme Court, in its final decision in January last year, denied Napocor’s bid to exempt Mirant from over P1.5 billion in real estate taxes from 1997 to 2000 that Pagbilao was trying to collect from it.