2020 Status of Southforbes Tokyo Mansions Homeowners Association Dispute vs Cathay Land Inc

2020 Status of Southforbes Tokyo Mansions Homeowners Association Dispute vs Cathay Land Inc

This post is to inform all SFTMHOAI members (lot owners and homeowners) on the status of our dispute with Cathay Land Inc. (CLI) as of June 2020. We are all affected with this because our swimming pool and clubhouse are not operational as a result of this turnover issue with our subdivision developer, Cathay Land Inc. (CLI). The intention of this post is to update on what is happening and to eventually align members who only get information through informal channels. This way, concerned members can understand and see a clearer picture on what is happening to be able to give helpful insights based on facts, recommendations, suggestions, or help by participating in resolving the issue.

The issue with Cathay Land has been lingering for quite some time already and have already caused friction among members of the homeowners association (SFTMHOAI) which should not be the case. But rather, our subdivision developer, Cathay Land Inc. (CLI), and our issue with them such as turnover of facilities among others are the source of our unwarranted stress, problems, and disharmony among residents.

Last September 13, 2019, the 2019 SFTMHOAI Board of Directors led by President Joel Lapis reinitiated communication with Cathay Land Inc. (CLI) through a demand letter written by our legal counsel Atty. Ronald L Solis of Solis Law Office. A copy of the demand letter can be read by clicking the link below.

SFTMHOAI vs CLI Demand Letter Signed
SFTMHOAI Demand Letter 1 LBC Receipt

The 2019 BOD led by President Joel Lapis direction at that time was to go ahead and file a legal case against Cathay Land Inc. (CLI). The issue with them has remained hanging with no concrete results on the conflict resolution for three years and counting, thereby depriving Tokyo residents on the enjoyment of our facilities and amenities such as Clubhouse and Swimming Pool. However, after receiving our demand letter, Cathay Land Inc. (CLI) replied to our demand letter and appeared wanting to sit down and renegotiate again to resolve the issue amicably. Please note that there were (2) two previous negotiation attempts to resolve the issue but both were unsuccessful. The BOD thought of giving it a third try and hoping to have a positive result. The negotiators this time from Cathay Land Inc. (CLI) are Bernard B. Sanchez (Chief Finance Officer) and Mr. Paolo Sy (Marketing & Sales Department).

From September 2019 up to December 2019, numerous email exchanges, which are well documented, and a total of (4) face to face meetings lasting about 1.5 hours per meeting held at Coffeebean Westborough. The objective of the meeting is to come to a settlement agreement and to end the dispute amicably.

As the duly representatives SFTMHOAI, the 2019 Board of Directors led by President Joel Lapis knew that they cannot decide unilaterally on this big issue alone and need a consensus among members. President Lapis immediately called a townhall meeting to present to SFTMHOAI members the negotiated proposal to finally resolve the issue. Everyone who attended the townhall meeting was heard and gave their inputs on how go about it. The overall sentiment and consensus is to accept the deal with Cathay Land Inc. (CLI) to move forward.

Previous post for photos of the townhall meeting can be read by clicking the link below.
2020 SFTMHOAI Townhall Meeting

Here are the slides used on during the townhall meeting on the proposed amicable settlement.

The photos below are the slides that were used during the presentation on the December 2019 townhall meeting. It is a reminder to SFTMHOAI members the promises made Cathay Land Inc. (CLI) as the real estate developer of our village through their marketing collaterals. The marketing collaterals are one of the major considerations why we invested with Cathay Land. But in any case all deliverables (facilities, amenities, etc) must be based in their license to sell (LTS) issued by HLURB for the development project. As buyers of their real estate project, we can only expect what is based in the license to sell. Nothing more, nothing less.

The slide below shows the ideal residential subdivision development process. It starts with 1. registration and licensing 2. Land Development 3. Sales and Marketing 4. Formation of Homeowners Association 5. Project Completion 6. Turnover of Open Areas (to HOA or LGU). In that order is the most ideal development process.

The Tokyo Mansions subdivision project story was that the ideal development process was not followed accordingly. Cathay Land Inc. (CLI) had a PRESUMED project completion when they completed the facilities and amenities a few years after the land development. The early mover residents of Tokyo Mansions are very lucky to have enjoyed a working swimming pool and a functional clubhouse until they deteriorated.

The swimming pool and clubhouse are part of the deliverables of Cathay Land to the residents of Tokyo Mansions as per License To Sell (LTS) issued by the HLURB for the residential subdivision project. However, the developer (CLI) haven’t turned over yet the said facilities and amenities to the HOA as of December 2019. Turnover is defined as HOA accepts the completion of said facilities and amenities, and allowing the developer to secure a certificate of completion from HLURB, and transferring the TCT of a parcel of land where the amenity area is located to the HOA.

Since Cathay Land haven’t officially turned over the project to the SFTMHOAI as defined on the previous paragraph, Cathay Land can only assume a PRESUMED turnover to the SFTMHOAI. It is Cathay Land’s mistake that they haven’t turned over the amenities while it was still in good condition. Cathay Land Inc. (CLI) obviously was not properly managing the amenities and facilities, which resulted to fast deterioration which is why the swimming pool and clubhouse need repair and rehabilitation as of to date. All land owners in Tokyo Mansions have been paying maintenance dues to Cathay Land up to 2017 to “maintain the facilities and amenities”. And since 2017 the residents of Tokyo Mansions is deprived of swimming pool and clubhouse.

The slide below shows the PRESUMED completion of amenities and facilities by Cathay Land Inc. (CLI)

The photos below shows the November 18, 2019 ocular inspection by Cathay Land Inc. (CLI) with their engineers to assess the current state of our amenities and facilities that they must turnover to SFTMHOAI in good condition.

Logic and common sense dictate that the SFTMHOAI can only accept a turnover if the amenities and facilities are in good and acceptable condition. Cathay Land however wants itself released from its obligation or in short avoid shelling out more money to repair and rehabilitate since they “PRESUMED” to have turnover the facilities to the residents already which the residents contest.

In our conflict resolution with our real estate developer Cathay Land Inc. (CLI), the flow can only be like the one in the photo below. SFTMHOAI’s objectives are 1. to get all receivables from Cathay Land Inc. 2. to put things in order all the financial aspect and 3. To enjoy the functioning amenities such as clubhouse and swimming pool in our village as promised by CLI. The third round of negotitation with Bernard G. Sanchez (Chief Finance Officer) representing Cathay Land Inc. was in a way a chance to end this conflict as soon as possible by giving CLI a chance to deliver their deliverables so that both parties can avoid a legal battle. It is a means of exhausting all possibilities of settling amicable before going into a legal battle.

Below photo slide is the summary of demands by SFTMHOAI based on the demand letter given to Cathay Land Inc. (CLI) on September 2019.

The photo slide below is the negotiated settlement agreement on the operational aspect excluding the expenses on the rehabilitation and repair of the swimming pool, clubhouse, and the north perimeter fence. CLI receivable from SFTMHOAI such as the security guard share, janitorial services, water consumption, and electricity share were accepted without SFTMHOAI demanding anymore copy of the notarized service contract agreement if there is any, copy of audited financial statements or breakdowns. But for the sake of settling and finishing the dispute through amicable settlement that will eventually get things done and finally get rid of CLI in the affairs of HOA, the BOD was agreeable to the proposal. The difference or offsetting in the payable and receivable between SFTMHOAI and CLI is in the amount of P854,410.49

For the repair and rehabilitation of the clubhouse, swimming pool, and north perimeter fence, the demand of SFTMHOAI was P8,500,000.00 to cover the cost for all the repairs and rehabilitation needed. The labor, contracting, construction management, etc., are the responsibility of SFTMHOAI. Cathay Land Inc. (CLI) costing for the repairs and rehabilitation is only estimated at P1,500,000.00 as per Mr. Bernard Sanchez during our sitdown meeting at Coffeebean Westborough, and they want to do all the works. The agreed negotiated settlement is in the amount of P5,300,000.00, where Cathay Land Inc. (CLI) will give it as a lumpsum payment and SFMTHOAI will do all the works. The BOD accepted but emphasized to CLI that the amount of P5,300,000.00 is to the hilt on SFTMHOAI estimated expenses or will most likely end up as insufficient for the repair of the fence, swimming pool, and clubhouse. But due to the exhausting and time consuming process of this negotiation, SFTMHOAI side just want a closure and make the most of that amount for the repair and rehabilitation of the fence, clubhouse, and swimming pool. Director Arnel Orias of SFTMHOAI did some computations and can actually get things done with that amount since he has background in construction.

The negotiators of SFTMHOAI and Cathay Land Inc. (CLI) have come to an agreement to settle the issue once and for all for the benefit of Tokyo residents to expect a working swimming pool and a working clubhouse come summer of 2020. The dispute will be concluded by Cathay Land Inc. (CLI) issuing a check with the agreed amount and in exchange SFTHMHOAI will provide all the documentation CLI will request so that they can secure the certificate of completion from HLURB which they must secure on or before December 2020 as stated in their License To Sell (LTS). In addition, a Memorandum of Agreement (MOA) will be signed putting all negotiated agreement in writing and still binds Cathay Land Inc. (CLI) on their responsibilities such as installation of electric transformers that haven’t been installed yet in some blocks in Tokyo Mansions with no houses. Each electric transformer cost around P500,000.00.

In summary, below was the list of documents that were supposed to be included in the closing meeting.
1. Cathay Land gives a check equivalent to the agreed amount for the repair and rehab, and offsetting of account receivables and payables.
2. Memoradum of Agreement between SFTMHOAI and Cathay Land Inc. (CLI)(summary or everything discussed and agreed upon in the negotitations
3. Board Resolution on the approval and acceptance from the homeowners on P5,300,000.00 offer by Cathay Land Inc. (CLI) for the repair and rehabilitation of the fence, swimming pool, and clubhouse.
4. Board Resolution on agreeing on the offsetting the payables and receivables to SFTMHOAI.

In a sudden turn of events, Bernard G. Sanchez resigned from Cathay Land Inc. on December 2019.

The resignation was followed by a follow up meeting continuing the negotations. The BOD of SFTMHOAI and Cathay Land Inc. had a meeting held at coffeebean Westborough on January 15, 2020 as a pre closing meeting for the settlement agreement. The meeting was attended by Cathay Land Inc. (CLI) negotiators Mr. Paolo Sy and Atty. Gil Navarro. The January 15, 2020 meeting was the first participation of Atty. Gil Navarro in this third round of negotiation. He raised several new objections on the deal telling us that it is to the disadvantage of CLI. He even said that the accounting and finance department of CLI have to be consulted first. Atty. Navarro probably forgot the fact that the lead negotiator of Cathay Land Inc. (CLI) from September to December 2019 was Mr. Bernard G. Sanchez whose designation was CHIEF FINANCE OFFICER. The BOD sensed that this Atty. Navarro is not well informed with all the things discussed including the consensus made by Tokyo residents in the Townhall Meeting last December agreeing to Bernard G. Sanchez deal in settling amicably. Whether this Atty. Gil Navarro is well informed or not, or just trying to be lawyer, he definitely did not help in the meeting. The meeting was supposed to be a pre closing meeting but will all the new issues and concerns raised by this Atty. Gil Navarro it didn’t end well. The BOD just told the CLI negotiators to consult to who ever they need to consult within their company in Cathay Land Inc. (CLI). SFMTHOAI is set to close the negotiation and settle amicably based on what was agreed before the resignation of Mr. Bernard G. Sanchez.

For the record, this Atty. Gil Navarro is the same legal counsel of Cathay Land Inc. (CLI) who demanded a cease and desist order on the construction of Basketball court against SFTMHOAI and telling the same that the residents of Tokyo Mansions are TRESPASSERS in Tokyo Mansions. Click here for the copy of his demand letter.

The January 15, 2020 meeting was followed by a communication email sent by Mr. Paolo Sy that Cathay Land Inc. (CLI) prefers to do the repair and rehabilitation of the clubhouse, swimming pool, and north perimeter fence. That message of CLI meant that they were deviating from all the negotiated agreement that had been agreed upon after all the email exchanges, face to face meetings, and a go signal consensus achieved during the townhall meeting. All those time and effort given by the volunteer members of BOD in negotiating with Cathay Land Inc. to accomplish an amicable settle were basically a waste of time. The deviation means the P5,300,000.00 agreed amount will not be given to SFTMHOAI. The BOD objected at first but eventually agreed on the condition that there must be a memorandum of agreement with provisions subjecting Cathay Land Inc. on the quality worksmanship for the repair and rehabilitation they will do.

Cathay Land Inc. (CLI) did not agree on the provisions subjecting them on the quality workmanship and other relevant conditions set forth. The definition of quality workmanship by SFTMHOAI and CLI may differ and the provisions are meant to give clarity.

Mr. Paolo Sy’s said in an email dated February 14, 2020 – “CLI has come to a conclusion that giving you the said amount is not the best solution to the problem. CLI has decided that it will complete the repairs of the clubhouse, swimming pool, and fence, even without a MOA. We believe that we will not end up having a MOA that is acceptable to both parties, considering the provisions added. Hence, having a MOA will cause further delay to impending repairs. We want to finish the repairs as committed and at the same time, gove you and the Tokyo community the amenities.“

The supposed settlement agreement with Mr. Bernard G. Sanchez representing CLI at that time prior to his resignation on December 2019 and CLI’s deviation on January 2020, everything was all set, clear, and ready to settle amicably which could have finish everything once and for all. SFTMHOAI was willing to accept most of their demands and concessions. Because they deviated on what was agreed in principle at that time, the BOD is no longer in the mood and in a hurry to settle the dispute amicably. If CLI wants to complete the repair of the clubhouse, swimming, and fence, without a MOA, they can proceed as they want. But acceptance of their repair and rehabilitation works is another matter and is subject to Tokyo Mansions quality standards. After all, the deadline of their License To Sell extension is up to December 2020 only.

In the aspect of operational expense and receivables offsetting agreement such as (security guard share, janitorial services, water consumption, electricity share), SFTMHOAI position now is to scrutinize the financials and service contracts before accepting any concessions with CLI. In the supposed negotiated settlement agreement, SFTMHOAI did not so and considered it as a concession in the negotiation.

As of this writing, there is no feedback yet from CLI probably due to COVID-19. The position of the BOD is to file a legal against Cathay Land Inc. as SFTMHOAI representatives have already exhausted all means to settle amicably as evident of having (3) three rounds of negotitations starting year 2017, thereby depriving residents of swimming pool and a clubhouse to celebrate birthday, parties, and other life milestones. SFMTHOAI members should all unite and help the association. Together as a village community we can do incremental repairs and rehabilitation without Cathay Land Inc. (CLI) involvement. SFTMHOAI couldn’t care less if Cathay Land Inc. (CLI) may again write a demand letter against SFTMHOAI for trespassing in the clubhouse and amenity area if we do the repair and rehabilitation ourselves.