Anomaly of Unscrupulous Resort Developers

Honesty in reporting to government, due diligence in transaction, and full disclosure to customers are three ethical rules of professional real estate practitioners. However, most real estate developers engage the services of unlicensed real estate agents because they can easily be manipulated to violate these ethical rules in real estate service, and they intend to continue their doings. In fact, the Chamber of Real Estate Builders Association (CREBA), who are real estate developers, have filed a petition in Supreme Court to nullify their inclusion in the coverage of the Real Estate Service Act of 1999 which professionalize all real estate agents.

I expect that the Philippine real estate sector will soon collapse because of integrity issues.

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The above is my comment to the article in Philippine Star below.

Unscrupulous resort developers
SPY BITS By Babe Romualdez (The Philippine Star) Updated December 21, 2010 12:00 AM
URL: http://www.philstar.com/Article.aspx?articleId=641283&publicationSubCategoryId=66#comments

Some real estate developers have lately been guilty of trying every trick in the book to lure people to buy shares or units in unfinished resorts, condominium projects and the like, promising the world to entice investors. It seems more often than not, mismanagement by these irresponsible developers often leads to half-finished projects and unusable clubs and condo units. Apparently the HULRB has been receiving several complaints from many victims particularly in Batangas.

One such case involves the Evercrest Golf Club Resort and the adjacent Gulod Condominium in Batangas which has been in limbo because the Land Bank allegedly has done nothing to foreclose the project so that reliable developers can take over. Both Evercrest and Gulod are owned by controversial businessman Jose Go of the Gotesco Mall chain. Apparently, Go’s company collected money from investors but left the resort unfinished which kept so many victims left “holding the bag.”

Go has been embroiled in several cases over the past several years including tax evasion charges filed by the Bureau of Internal Revenue in 2005 against the businessman and officers of his realty firm GMCC United Development Corp. for alleged falsification of income and other taxes amounting to more then P600 million for 1998 and 1999. In 2008, the Securities and Exchange Commission suspended Gotesco Land’s registration of securities for failing to submit financial reports and for not paying P111,000 in penalties.

In March 2009, the Bangko Sentral acquired Evercrest Golf Club Resort for P1.3 billion because it was the only bidder in the sheriff’s public auction sale of several properties of Go to pay the creditors of the now-defunct Orient Bank (where Go was also chairman) with debts amounting to P6 billion. That same year, the Supreme Court approved the prosecution of Go for allegedly approving questionable loan guarantees and borrowing at least P2.75 billion in deposits from the said bank without the written approval of the Board of Directors. Go was accused of estafa in relation to his bank’s operations and in fact, the Bangko Sentral even asked the Manila Regional Trial Court to deny the motion of Go to travel abroad in 2001 while the case was ongoing.

We hear a lot of rumors that another so called reputable real estate developer in Batangas will soon face charges from disgruntled lot/homeowners with the same recurring complaint – non-delivery of promises.