Realty broker: Corona’s posh condo
“a steal” at P14 million
Low taxes “unheard of” in the business, broker says
My Exclusive
By Raïssa Robles
What’s wrong with that, his friends and allies are likely to say. After all, it’s a business transaction done in his own private time.
Perhaps I’m being idealistic in my expectations of how a Chief Justice ought to behave. I recall my late lawyer-father – who used to teach Legal Ethics at the University of the Philippines College of Law – narrating how, in the US, when one lawyer was appointed Chief Justice of the US Federal Court, he took to dining alone or with his family in public. He was trying to avoid conflict of interest situations.
I’m sure nearly every lawyer is familiar with the saying: Caesar’s wife must be above reproach. In the case of Chief Justice Corona, did his personal transactions raise any conflict of interest issues? Did he get favorable treatment due to his position, or treatment that is not otherwise accorded ordinary citizens?
Did he violate Republic Act No. 6713 which imposes a Code of Conduct and Ethical Standards on all public officials and employees? Section 7 in particular states:
(d) Solicitation or acceptance of gifts. — Public officials and employees shall not solicit or accept, directly or indirectly, any gift, gratuity, favor, entertainment, loan or anything of monetary value from any person in the course of their official duties or in connection with any operation being regulated by, or any transaction which may be affected by the functions of their office [underlining is mine].
Interestingly enough, Megaworld Corporation, which directly sold the condo to CJ Corona, has had legal suits before the Supreme Court while Corona sat as an Associate Justice.
I do recall it won several suits before the Supreme Court. I could not see Corona’s name being mentioned as having cast any vote for or against Megaworld in any of the suits.
The suits of Megaworld decided in the Supreme Court can be viewed by clicking on this link and this link.
UPDATE, January 8, 2011 at 7:47 P.M.: Threecommenters named “George”, Manuel Buencamino and “Josh” have just pointed out to me that I had actually provided a link to the Supreme Court website showing that Renato Corona had penned a decision in 2004 in favor of Megaworld. Looking back, I was thrown off by the phrase “Corona, J.”
My brain had quickly dismissed it because I was thinking it must be a different Corona since his first name starts with “R.” Now I realize that “J.” stands for “Justice”. Click on this link to read CJ Corona’s decision.
Megaworld has refused to comment on its transaction with CJ Corona. I tried to broach the subject with Megaworld Investment Information Officer John Hao. He said he was not allowed to speak on the issue. He told me the same thing he had told the newspapers:
The company has a privacy policy under which it is committed to maintain all client information in strictest confidence. Consistent with this commitment, the company does not, as a matter of policy, disclose information pertaining to the business dealings with its clients.
We shall comply with the official orders of the authority – if summoned – in a proper forum.
Apart from John Hao, I talked to an architect and two other sources who do not know each other and have had no dealings with CJ Corona. Both declined to be identified. One is a prominent realty broker who deals with upmarket properties in Metro Manila. I will call him Pedro. The other works in a well-known property research firm specializing in tracking high-end properties. I’ll call him Danny.
Both Pedro and Danny were amazed at the price at which CJ Corona obtained his penthouse in Bellagio Tower 1. And at how low the taxes that were imposed on this property.
Both said that if offered the same deal, they would grab it quickly.
Why the Bellagio condo “is a steal”
Bellagio 1 was completed in end 2008, according to Megaworld. Before completion, Pedro the realty broker recalled that penthouse units there were pre-selling at P80,000 to P85,000 per sq m. At that price alone, CJ Corona’s 303.5 sq m unit would have cost at least P24.28 million. Add to that P800,000 per parking slot (of which he bought three) and that would raise the cost to P26.68 million.
CJ Corona’s penthouse was still cheaper than the pre-selling price.
According to the Deed of Absolute Sale between CJ Corona and Megaworld, the transaction was sealed and notarized on December 16, 2009 – or way past the pre-selling period. After a building is finished, units automatically rise in price because there is no longer the risk of non-completion, explained Danny of the property research firm.
This means, Danny said, CJ Corona would have normally been charged a higher price than the pre-selling price. And yet, according to the Deed of Absolute Sale, he paid only P14.5 million for the penthouse and three parking slots of 12.5 sq m each.
This means he actually owns 341 sq m in Bellagio. This means he only paid P42,521.99 per sq m, both Pedro and Danny said after their calculations.
“It’s really a steal I tell you,” Pedro said.
Portion of the Deed of Absolute Sale shows the terms of sale
Danny of the property research firm then placed CJ Corona’s purchase in the context of the prevailing market. He said that as a research firm, they track only developments they consider “premium”, “Grade A” and “Grade B” in five areas: Bonifacio Global City (also called BGC or The Fort) where Bellagio 1 is located; the Makati Central Business District or CBD, the Ortigas CBD, Eastwood and Rockwell.
Danny said Bellagio 1 belongs to the highest or premium grade category because of its location, “exclusivity”, floor area per unit, amenities and finishing.
To give you an idea, here are photos from the Megaworld website showing the interior of a Bellagio III unit:
Residents share in the use of the following:
- A 220 sq m swimming pool inclusive of the wading pool
- Sandy beach pool and water feature
- Aromatherm and SPA (male and female)
- Aromatherm Electronic Capsule (4 in 1)
- Hydrotherapy tub Steam
- Vichy Shower Wet table
- Heated Pool SPA in Glass Enclosure
- Fitness gym
- Music/piano function room, game room (billiards and table tennis)
- Day care center and play area
Danny said that of the 41 residential buildings located at BGC or The Fort, only six are considered premium buildings: Bellagio 1, 2 and 3, Essensa, Pacific Plaza and Serendra.
Danny noted that as of end 2008 when Bellagio 1 was completed, the average price of a condo unit in the Bonifacio area ranged from a low of P88,000 per sq m to a high of P115,000 per sq m.
“And he (Corona) got it for around P40,000 (a year later). Anyone would be amazed…because it is a Bellagio,” Danny said.
To give me an idea of how grossly under-priced Corona’s unit was, Danny said that at that time that CJ Corona bought his unit, condo units made by developer DMCI Homes were then selling at P42,000 per sq m. – which is the price at which Corona bought his property. DMCI projects are not high-end and are located in the outskirts of Parañaque, Quezon City and Taguig – not in the heart of Bonifacio, he said.
This is how DMCI Homes describes its market in its own website:
DMCI Homes is the country’s first Triple A builder/developer of premium quality, urban-friendly, serviced communities for young growing families of modest incomethat aspire to live comfortably near their place of work, of study and of leisure.
Hmmm. Families “of modest income” would have been able to afford CJ Corona’s Bellagio condo if only they were given the same terms that Corona got from Megaworld.
But Danny said, “You can’t get a Bellagio being sold at P42,000 per sq m. It’s so undervalued.” Especially because Bellagio 1 was the only building completed in 2008 with units sized over 300 sq m. The usual unit sizes being built in 2008 ranged from 220 sq m to 230 sq m, Danny said. And that was what made the Bellagio penthouses – that CJ Corona got – quite attractive.
From a purely business” standpoint, Danny found it “quite suspicious” for a developer to sell a prime unit at a loss”without any strings attached. “Maybe Megaworld has ties with Corona. I don’t know,” Danny said.
Why was Corona’s condo purchase taxed so low?
Aside from the low purchase price, CJ Corona seems to have benefited in the transaction in the form of low taxes.
The law taxes the buying and selling of property. The law required CJ Corona, as the buyer, to pay to the Bureau of Internal Revenue (BIR) a Documentary Stamp Tax equivalent to 1.5% of either the Selling Price or the Market/Zonal Value, “whichever is higher.”
The law also required the seller, Megaworld, to pay BIR a “Withholding Tax” equivalent to 5% of the Selling Price or the Market/Zonal Value, “whichever is higher.”
After payment, the BIR issues to the buyer a document called the Certificate Authorizing Registration or CAR. This details how much taxes were paid for the transaction.
In the case of CJ Corona’s condo purchase, everything seemed aboveboard at first glance. The tax was based on the Selling Price of P14.5 million because this was higher than the “Market/Zonal Value” of this piece of property.
CJ Corona’s CAR showed that BIR Revenue Officer Gerry O. Dumayas calculated the Market/Zonal Value of CJ Corona’s property at P6,827,200.
Wait a minute, I thought: P6,827,200 (the Market/Zonal Value) divided by 341 sq m would only give a Market/Zonal Value of P20,021 per sq m.
I remembered what Pedro earlier told me. To get the Zonal Value of an area, go to theBIR website and click on Zonal Values (under Special Sites).
He recalled that around 2008 Zonal Value for upscale Bonifacio area, where Bellagio stands, was even then around P80,000 per sq m.
I had to go back to both Pedro and Danny to confirm if I did the calculations correctly – that the BIR gave CJ Corona’s property a Zonal Value of P20,021 per sq m. instead of somewhere around P80,000.
I asked both of them to do the calculations. They came up with the same finding. His property was indeed under-taxed.
“Assuming that is true, that (kind of tax rate) is unheard of” for the Bonifacio area, Pedro said.
“That happens in our industry,” he said.
What happens in your industry, I asked.
Pedro said: “You know, you want savings (on your taxes), you pay only half, you save 25%, the other 25%, you know….”
“That was what was happening in the BIR at least before. Now they’re stricter. I really respect (the current tax chief Kim) Henares,” he added.
I asked both Pedro and Danny to confirm the following – if we assume that the Market/Zonal Value for the Bonifacio area at the time of CJ Corona’s purchase was around P80,000 per sq m, that would mean his 341 sq m property would have a Zonal Value of P27.28 million.
Since P27.28 million is higher than the P14.5 million he paid for the property, the tax he paid should have been based on the Market/Zonal Value and not on the selling price because the Market/Zonal Value is higher, right?
Both Pedro and Danny said “Yes.”
Under the law, CJ Corona had to pay documentary stamp tax equivalent to 1.5% of the selling price or Market/Zonal Value, “whichever was higher”. The BIR document shows he paid P217,655 – or 1.5% of the selling price since this was higher than the Zonal Value given in the document.
However, if the BIR had used P80,0000 per sq m as the Zonal Value, that would have made the Zonal Value P27.28 million for CJ Corona’s property higher than the Selling Price. This would mean, the Zonal Value would have been used as basis for calculating the Doc Stamp Tax. This would mean, CJ Corona should have been charged P409,200 instead of P217,655 by the BIR.
The same understatements are true for the Withholding Tax paid for this transaction. Instead of the P725,511.25 that was paid, it should have been P1.364 million.
All in all, the BIR seemed to have waived P830,033.80 in potential tax revenues in this transaction alone – P191,545 from the buyer CJ Corona and P638,488.80 from the seller Megaworld.
I tried to reach BIR Revenue Officer Gerry O. Dumayas last Friday. All I got was the answering machine in his office. I must have phoned him five times. He wasn’t in his office or was not picking up the phone.
Perhaps someone higher up asked Dumayas to do it?
I also tried to reach Supreme Court Administrator Midas Marquez but he wasn’t picking up. Other reporters have asked him about CJ Corona’s condo. Marquez has defended him saying CJ Corona could well afford to buy a condo.
What CJ Corona has admitted so far
CJ Corona’s Bellagio penthouse is cited as part of the evidence to show his alleged “culpable violation of the Constitution” and “betrayal of pubic trust.” The accusation against him reads:
2.4. Respondent is likewise suspected and accused of having accumulated ill-gotten wealth, acquiring assets of high values and keeping bank accounts with huge deposits. It has been reported that Respondent has, among others, a 300-sq. meter apartment in a posh Mega World Property development at the Fort in Taguig.
CJ Corona recently submitted his reply to the Senate. He denied the allegation it was ill-gotten. But he admitted owning it. He said:
Finally, Complainants allege in par. 2.4 that “reports” state CJ Corona acquired a 300-sq. m. apartment in the Fort, Taguig. Complainants speculate that he has not reported this in his SALN and that its price is beyond his income as a public official. CJ Corona admits that he and his wife purchased on installment a 300-sq. m. apartment in Taguiog, declared in his SALN when they acquired it.
From this statement, it is very clear that Corona claims he did not pay for the condo in lumpsum but “on installment”.
Pedro the realty broker told me Corona could easily prove what he said by presenting a document called the “Contract to Sell”. This is normally notarized in order to protect the buyer while paying on installment since the Condominium Certifcate of Title remains with the seller until everything is paid. The Contract to Sell states the installment terms and interest rate.
I haven’t seen any Contract to Sell. I don’t know if one exists. Only Corona or Megaworld or the notary public can produce it.
What I obtained from a source I can’t name is the Deed of Absolute Sale showing that the Corona couple paid in full for 38-B in Bellagio Tower 1, facing the Manila Golf and Country Club; as well as three basement parking slots of 12.5 sq m each.
You can view the Deed of Absolute Sale below, after the video.
To get an idea of how exclusive this property is, watch the video below on its triplet tower, Bellagio III:
DEED OF ABSOLUTE SALE for Bellagio 1, page one
DEED OF ABSOLUTE SALE for Bellagio 1, page two
CERTIFICATE AUTHORIZING REGISTRATION, BIR
CONDOMINIUM CERTIFICATE OF TITLE -CJ CORONA’S CONDO at Bellagio Tower 1, 38th floor
CONDOMINIUM CERTIFICATE OF TITLE – parking slot 1
CONDOMINIUM CERTIFICATE OF TITLE – parking slot 2
CONDOMINIUM CERTIFICATE OF TITLE – parking slot 3
x x x."
