Tuesday, March 31, 2009 [ sunstar.com.ph ]
CEBU CITY -- While some City Hall officials welcome Capitol's plan to initiate a House inquiry on the City Hall-Filinvest Land Inc. (FLI) deal, the move could scuttle the transaction based on provisions of the joint venture contract.
FLI can terminate the contract if the Cebu City Government cannot fulfill its obligations or if the transfer of the South Road Properties (SRP) lots to its name is prevented, either by a lawsuit or any proceeding.
The contract also says that FLI can ask the city to refund any expenses it may incur as a result of any suit, proceeding, investigation or other legal action questioning the city's titles of SRP lots, and its right to dispose of the lots covered by the joint venture.
"If that is in the contract, then in effect, we are giving FLI an option or opportunity to withdraw from the joint venture, if there is an inquiry," Fernandez said, adding that he does not recall the exact words on the contract pertaining to litigations and investigation.
But even with these implications, City Administrator Francisco Fernandez said he looks forward to going to Congress to answer any question that may be raised against the joint venture contract during a congressional hearing.
He said a House inquiry would be an opportunity for the City Government to explain and prove that it entered into a good deal with FLI.
But Representative Pablo John Garcia (3rd District, Cebu) may have found another reason to push for the inquiry with FLI's admission that it already holds titles for two hectares of the 10.6-hectare Pond F that it purchased.
The admission, he said, refuted Osmeña's earlier statement that the city still holds the titles and won't release these until the investor has paid in full for the lots.
"It is not me, it is not the governor, it's not anybody else, it is Filinvest calling Mayor (on-leave) Tomas Osmeña a liar," he said.
But bigger than that is the irregularity of the procedure wherein FLI got titles before it has even fully paid the P1.59-billion stipulated in the contract, he added.
"Nowhere in the COA (Commission on Audit) rules is this kind of practice contemplated, nowhere in our laws," Garcia said.
He noted that in the regular course of business, a title can only be claimed after full payment of property and not on a piecemeal basis.
FLI, which develops a number of subdivisions, should know this, he said.
Provisions
The joint venture contract provides that in the event of a suit, proceeding, investigation or other legal action questioning the city's titles of SRP lots and its right to dispose of the sale and joint venture (JV) properties "and to carry out the objects of this agreement, the city shall indemnify and hold FLI free from any and all claims, damages, expenses and liabilities arising therefrom or relating thereto."
"Should any such pending or future suit, proceeding or action be decided adversely against Cebu City or result in a judgment affecting the city's performance of its obligations, or which would prevent the transfer of the properties under the name of FLI...then FLI should have the option to cancel and terminate this agreement and be reimbursed by Cebu City for any and all amounts which may have been paid to the city for the sale properties, and spent by FLI for the development of the joint venture properties...," the contract read.
FLI has already paid P348 million for the 10.6 hectares of beachfront properties worth P1.59 billion.
Aside from the P217 to P269 million that FLI will pay the city every year for the purchased lots, it will also turn over 10 percent of its gross sales for any development on the 40 hectares.
Tailor-made
"This (the transaction) was really tailor-made to keep the other investors out of the property," Garcia said.
He explained that other investors "equally serious and with enough financial resources" would have offered better deals had the city allowed development of parts of the properties.
But instead, the city gave FLI the right to the entire 10.6 hectares and issued the titles upon payment of a parcel, instead of payment for the entire property.
Part of the agreement, Garcia said, is a joint venture between the city and FLI on a 40-hectare property at the SRP.
"What if FLI say that it is not interested in the joint venture anymore? In any contract, you penalize default. In this case, it rewards default. Because if FLI defaults, there is no problem because they already have titles to the properties, depending on how many installments they have made already," the congressman explained.
Pablo John intends to file a resolution for the conduct of a House inquiry as early as April 13 when Congress resumes its session.
The resolution will then be referred to the appropriate committee, which will assess whether or not the case merits an inquiry.
Dinner
Governor Gwendolyn Garcia announced Monday that she is sponsoring a dinner with Cebuano congressmen on Wednesday to talk about the "irregularities" of the Filinvest deal.
Five already confirmed their attendance, she said, adding that these congressmen were "not necessarily just (from) Cebu Province."
Representative Raul del Mar (Cebu City, North District) is out of the country, which could mean that Representative Antonio Cuenco (Cebu City, South District) may have signified his plan to attend.
It was not known whether the governor counted her brother Pablo John and her father, Representative Pablo Garcia, as among the congressmen in the province who has signified their intention to join the gathering
"I don't want to get anything out of that meeting. But I'm sure that our congressmen will be enlightened on several provisions in this agreement," the governor said.
Just as she made a power point presentation on the controversial Cebu International Convention Center project, she said she might do the same for the FLI deal.
Copy
Also on Monday, Provincial Planning and Development Officer Adolfo Quiroga delivered to Fernandez a letter from the governor, asking for a copy of FLI's technical proposal.
Fernandez said they will consider the request, but they will also take into consideration the confidentiality agreement they entered into with FLI. (LCR/JGA/Sun.Star Cebu)
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