City to Filinvest: Pay up-A A +A
Tuesday, December 3, 2013
THE Cebu City Government has sent a demand letter to Filinvest Land Inc. (FLI) for allegedly failing to remit the City’s share of the sales of condominium units in its joint venture project in the South Road Properties (SRP).
FLI, the City Legal Office said, was supposed to pay more than P1 billion for the first phase (10 hectares) out of the 40-hectare land that the private firm is developing with City Hall.
Of the total amount, City Legal Office chief Atty. Gerone Castillo said the SRP investor was supposed to remit P500 million to the City for 2013. That represents the City’s 10 percent share of the gross proceeds from the sale of condominium units.
The remaining amount, he said, will be paid once the first phase of development will be completed by March next year.
However, Castillo, in a news conference yesterday, said that FLI has paid only about P159 million out of the P500 million.
“With all due respect to Filinvest, I think, on our part, they have not complied with their contractual obligations,” he said.
The City’s joint venture project with FLI in the SRP is called Citta de Mare. It involves the construction of six medium-rise residential buildings and a four-hectare park on 10 hectares of the 40 hectares covered by the joint venture agreement.
Construction of the first phase of Citta de Mare started in 2010.
Sought for comment, FLI Vice President for Visayas and Mindanao Tristan Las Marias said their remittances to the City are updated and paid in advance.
“Filinvest would like to emphasize that it has been consistently remitting the profit share of the City from the collection of sales made on the joint venture project. To date, we have already remitted P160 million to the City. In fact, P80 million of our remittance is in the form of advances for the City’s profit share on sales we have not yet collected,” he said in one-page press statement.
Las Marias pointed out that they started remitting in December 2012 and have consistently remitted the City’s share each quarter.
“We have official receipts and receiving copies of checks to prove this,” he added.
As early as Sept. 13, Castillo said, his office had sent a demand letter to FLI.
“Because we treated them as partners, we gave them ample time from September until today to honor their contractual obligation. My marching order from the mayor is to collect P500 million as based on the contract. But now, they only remitted P159 million,” he said.
Castillo said they only disclosed the matter yesterday because they wanted to sit down with the FLI officials. However, he said there was still no clear resolution on the matter.
If FLI fails to give what is due to the City, Castillo said they might resort to legal action against the SRP investor. That could include, among others, issuing a cease-and-desist order on ongoing developments in the SRP.
“But we hope FLI would not force us to take legal action, as our partners. I hope they will remit soon because it is already long overdue. What is due to the City is due to the City,” he said.
Previously, Castillo said FLI had refused to remit the City’s share for its joint venture project because of the notice of levy and notice of “lis pendens” that the Regional Trial Court Branch 9 issued on the 10.6-hectare property in Pond F that FLI owns in the SRP.
This was a consequence of the Rallos case.
But Castillo said the court already cancelled the annotation and so FLI should already pay the City.
In a separate interview, Las Marias said the minimum guarantee is not yet due the City, because based on the joint venture agreement, it will only be paid upon the completion of the first phase of the development.
Under the joint venture contract, the City gets a 10-percent share in the sale of built-up units in the 40-hectare area, or a minimum guaranteed return, whichever is higher. The City will get its share annually.
But if the minimum guaranteed return, which is the sale price of the land plus 20 percent, is higher than the City’s 10-percent share, FLI is obliged to make additional payments at the end of the five-year development period.
According to Las Marias, they have received a request from the City to pay in advance the minimum guarantee and they are considering the matter.
Last Friday, he met with City Hall officials, excluding the legal office, and presented proposals on how it can accommodate the City’s request but they are still waiting for the City’s official reply on the matter.
“We look forward to continue our dialogue with the City to see how we can address the City’s financial needs at this time,” he said.
Las Marias then asked the legal office to be prudent in its pronouncements.
“We believe that as partners, we need to exercise prudence and maturity before we issue public comments and statements since such statements might scare the private sector and investors from doing business with the City,” he said.
Published in the Sun.Star Cebu newspaper on December 03, 2013.