CH to charge FLI interest?

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Tuesday, June 3, 2014


CEBU City Treasurer Diwa Cuevas wants to collect a two-percent interest from Filinvest Land Inc. (FLI) for the late payment of the City Government’s close to P800-million share in their joint venture project at the South Road Properties (SRP).

The payment was delayed by two months, which would mean a monthly interest of P16 million, or P32 million for two months.

Diwa said the City’s share was due last March 15, 2014 yet, but FLI turned over the checks amounting to P607.4 million only last May 15.

The original amount was P1.053 billion and was reduced to P800 million after FLI’s payment of some P309.71 million, which represents the City’s share in FLI’s sale of condominium units in the SRP lots covered by the joint-venture agreement.

Unreconciled records

While FLI’s records show the balance of the City’s share is only P607.4 million, Cuevas said their books show that the balance of the City’s collectibles is about P800 million. They have yet to reconcile their records, she said.

Citing provisions of the Local Government Code, Cuevas said the City can impose a two-percent interest for the P800 million paid after the due date.

“This is the first time (we are collecting interest) from Filinvest because it was overdue already. It was due last March 15 yet that’s why when I sent a collection letter before the payment was made, I charged them the interest,” she told Sun.Star Cebu.

Sun.Star Cebu tried calling FLI vice president for the Visayas Tristan las Maria but he could not be reached for comment.

Section 69 of the Local Government Code states: “Where the amount of any other revenue due a local government unit… is not paid on the date fixed in the ordinance or contract… there shall be collected as part of that amount an interest thereon at the rate not exceeding two percent per month from the date it is due until it is paid.”

Cuevas prepared a third letter collecting the interest from FLI, but she said she still has to get the approval of Mayor Michael Rama, who is out of the country.

The treasurer first sent FLI a collection letter last April, requesting payment for the P800 million, without interest yet that time.

“Since it was already May, I decided to send them another letter, this time with interest… I do not know if this will prosper and we can collect the interest because it’s up to the mayor, but I just had to exercise my duty as city treasurer. When I saw that as per my record, overdue na, I demanded for the interest,” she said.

Cuevas said that as stated in the joint-venture contract, FLI is bound to turn over a minimum guarantee fee to the City for its share of the condominium sales for the first phase of the development, or 10 percent of its sales receipt, whichever is higher.

Guarantee fee

The first phase was to be completed five years after the contract took effect, which was in 2009. This means the guarantee fee was due last March 15, 2014, she said.

“According to the contract, after the completion of each phase, we will sit down and discuss what is higher, their sales or the minimum guarantee fee. But since they have not completed the development yet, they will be forced to pay the minimum guarantee fee because the five years have already lapsed. As soon as they complete the first phase of the project, that’s when we will sit down and we will compare,” Cuevas explained.

She said that based on their computation, the minimum guarantee fee is about P1.053 billion. A portion of the amount has been paid in advance.

FLI also paid last May 15, but Cuevas said she cannot say yet if it is the final or partial payment because they still have to reconcile their records.

As for other payments to the City, Cuevas said FLI has been prompt with their payments, particularly the amortization for the 10.1-hectare SRP lot that it bought.

The City Government and FLI entered into a joint-venture agreement to develop a 40-hectare area of the SRP into a residential condominium complex and commercial buildings.

Published in the Sun.Star Cebu newspaper on June 04, 2014.

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