WHY is the Housing and Land Use Regulatory Board (HLURB) gun shy about going after property developers despite well-documented violations that could have earned the government at least P100 million in penalty revenues?
Government auditors raised this question in the 2019 audit after discovering that HLURB has not imposed sanctions against seven property developers despite reports from its inspectors about violations.
HLURB, an agency under the Office of the President, functions as a regulatory body for housing and land use development. It is also mandated to protect home and condominium buyers from fraudulent practices and manipulations by dishonest developers.
The audit team said 12 projects inspected by HLURB personnel from March 21, 2019 to August 23, 2019 had been flagged for marketing condo units without first securing Licenses to Sell (LS).
“Our examination of the SIR (site examination reports) showed that these projects committed violations of selling without LS with estimated fines and penalties ranging from P65,974,994 to P109,940,000,” it noted.
The developers named in the report were Empire East Land Holdings, Inc.; Global-Estate Resorts, Inc.; Megaworld Corp.; Metro Works Properties Inc.; New San Jose Builders Inc.; R. Moterico Development Corp; and Vivo City Real Estate Development Corp., with combined saleable units of 10,994.
Auditors listed five projects of the Empire East with violations, namely, Covent Garden in Sta. Mesa, Manila; Mango Tree Residences in San Juan City; and Pioneer Woodlands Tower 5 and 6 and The Paddington Place all in Mandaluyong City.
Also mentioned were The Fifth in Pasig City by Global-Estate and Megaworld; the 18th Avenue de Triomphe (Pasig) and Vion Tower (Makati City) both by Megaworld; Victoria de Hidalgo in Quiapo, Manila by New San Jose Builders; Monterico Residences-Creston in Mandaluyong City by R. Monterico Development Corp.; and Vivo Garden in Caloocan City by Vico City Real Estate.
At the minimum fine of P6,000 per unit, the Commission on Audit said the HLURB would have earned P65.975 million. If the P10,000 per unit is imposed, the Board would have collected P109.94 million.
Reacting to the audit findings, the HLURB said it has issued 10 notices of report of alleged violations (NORAVs) out of the 12 projects with violations while the remaining two are being still being reviewed.
It claimed that the delayed action is “due to the volume of projects that need to be evaluated” as well as complaints that also required its attention.
HLURB added that it is reviewing existing processes to ensure faster reaction against erring property developers in the future.
The audit team said the HLURB Records and Information Unit has all the documents on record to prove that the projects were not issued any license to sell.
Its own inspectors likewise submitted detailed reports and provided supporting documents, including property brochures, leaflets and other marketing materials.
“The SIR shows the details of the project as well as the inspector’s findings and recommendations for the imposition of fines. This document is prepared and signed by the Inspector and being forwarded to the evaluator for further evaluation,” auditors said.
It was the evaluators who were supposed to issue notices of report of alleged violations (NORAV) which is the basis for imposing fines.
However, the inspectors’ reports went not acted upon until auditors found them.
“Verification disclosed that evaluators failed to comply…there was no NORAV prepared and issued to the developer. We noted that no further action was taken by evaluators after the submission of the SIRs by inspectors,” the COA noted.