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Capitol to sue city officials over SRP deal

Wednesday, August 26, 2009 [ ]

CEBU CITY -- The Provincial Government announced Tuesday that it will file a criminal and administrative case against city officials over the city’s joint venture with Filinvest Land Inc. to develop part of the South Road Properties (SRP).

“Sige man sila’g panghagad (They kept challenging us). We wanted to wait for the legislative inquiry, but they challenged us and we are ready,” said Capitol consultant on information and revenue generation Rory Jon Sepulveda.

The province will sue “as a disqualified bidder.” It will question, among others, why the city entered into a “grossly disadvantageous” contract and why it held no public auction for 10.6 hectares of the property that it sold to Filinvest.

City officials welcomed the Capitol’s move to file administrative and criminal cases against them. They said they prefer cases in court to the scheduled House inquiry.

Mayor Tomas Osmeña said the court will be a fairer and more objective venue to hear the issues raised by Capitol officials, and he is ready to face his critics in court.

“Why? Is the SRP underwater?” Osmeña said when sought for comment, alluding to the partly submerged Balili property that the province purchased.

“We are ready. I hope they will submit the Taguig and R-II Builders joint venture contract so we can answer it,” the mayor said in a text message sent to Sun.Star Cebu.

Osmeña previously challenged Representative Pablo John Garcia (Cebu Province, 3rd district) to give the city a copy of the Taguig City and R-II Builders joint venture contract. Garcia has said the deal entitles Taguig City to revenues that are seven times higher than what Cebu City stands to get from its deal with Filinvest Land Inc. (FLI).

City Administrator Francisco Fernandez said the mere filing of a case will not have any implications on the city’s collection of payments for the purchase of a 10.6-hectare lot at the SRP, and the collection of its share from the joint venture activities on another 40 hectares.

“Are they giving up on the House inquiry? We welcome that case rather than the House inquiry because there will be a judge. In Congress, the prosecutor and the judge are the same. So we welcome it, I don’t think it will affect the transaction and the collection of payments,” he said.

The province’s bases for the complaints are those earlier raised in an audio-visual presentation about the alleged lapses of the City Government in approving a deal with FLI.

The Capitol pointed out that FLI can terminate the contract if the City Government cannot fulfill its obligations, or if the transfer of SRP lots to its name is prevented, either by a lawsuit or any other proceeding.

Since they are filing the suit, Sepulveda said that in essence, the implication would be the possible termination of contract, with City Hall being made to shoulder expenses brought about by the case.

Another allegation concerns an “irregularity” in the procedure, which allowed FLI to get titles of the sold portion, before the investor even made a full payment of P1.59 billion.

Capitol had wanted to bid against FLI for the sale of the 10.6-hectare property, but was shut out for not being a private entity.

FLI had offered an unsolicited proposal to buy Pond F and the right to develop a 40-hectare property, through a joint venture with the City Government.

When asked if Mayor Osmeña would be part of the suit when he was not in Cebu when the contract was signed, Sepulveda said, “Let us not prejudge the creativity of the Provincial Legal Office.”

The Cebu City-FLI joint venture contract indeed states that FLI can terminate the contract if the city cannot fulfill its obligations or if the transfer of the SRP lots to its name is prevented.

But city officials earlier said the provision is limited only to cases questioning the validity of the city’s titles and its right to dispose of the SRP lots.

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 so far paid P348 million for the 10.6 hectares of beachfront properties worth P1.59 billion. (JGA/LCR/Sun.Star Cebu)


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