Maintaining a partnership-A A +A
Thursday, December 5, 2013
CITY Hall’s impatience over the refusal of Filinvest to remit payment of the full amount that they are demanding as share of the sales under their joint venture agreement is understandable. When you need money so badly and the source that you’re looking at fails to deliver, tolerance isn’t one of your strong suits.
But the city’s leadership should listen to Councilor Margot Osmeña advice to treat your business partners well, otherwise you would scare off investors.
Filinvest is one of the two major investors so far in the South Road Properties (SRP); the other one is SM. Both came in during the term of former mayor Tomas Osmeña through unsolicited proposals, a point that he never misses to point out.
In fact, when he appeared before the city council two weeks ago to speak against a proposal to repeal the ordinance that sets the parameters of the mayor’s power to strike deals on the SRP, Osmeña made particular reference to the Filinvest investment.
He cited the joint venture as an example of how the city can earn more money from the reclamation project by not going through what he termed a “fire sale.”
The former mayor explained that under the terms of the agreement, the city will earn P10,000 or 10 percent of the purchase price for every square meter that the property developer is able to sell. Osmeña hastened to point out that under the same agreement, Filinvest is not allowed to sell raw lots.
But when does the 10 [ercent become due? That and whether the city can charge interest on “unpaid remittances” seem to be the bone of contention between the two business partners now. City Hall claims that Filinvest has been remiss in its remittances; the latter however maintains that it has fully paid to the city government all the amounts that are due.
The dispute could become the subject of a court case, City Attorney Jerone Castillo warned. That prompted Margot Osmeña’s counsel for the city to go slow.
But City Hall officials continue to press with Executive Assistant and former City Councilor Joey Daluz suggesting the other day that the parties scuttle their partnership and that Filinviest should instead buy the property outright.
That is, of course, easier said than done. A party cannot just abrogate an agreement without the consent of the other. Secondly, why turn your back on an agreement that, Osmeña claims, will earn more money for the city than an ordinary sale?
Moreover, even if Mayor Mike Rama, heeding Daluz’s suggestion and Filinvest agree to mutually rescind the joint venture agreement, that rescission in order to bind the city should have the consent of the city council. Can the mayor get that consent? I seriously doubt it.
But let us assume that the city council sides with Rama and authorizes him to terminate the contract, what message will the city be sending to investors? That we are not loath to change the rules in the middle of the game?
That is why, instead of making threats and suggestions that are difficult, if not impossible, to implement, why don’t the city and its partner sit down in order to clear the air on how much is really owed by one to the other?
Not very long ago, City Hall and Filinvest were a picture of perfect harmony when they hailed a court ruling that lifted the writ of attachment and notice of lis pendens that the heirs of Vicente Rallos had caused to be annotated on the titles of some of the lots covered by the joint venture agreement.
On the day that Rama and other city officials were attending a thanksgiving mass for the court victory, Filinvest issued a statement that it was grateful to the city for “remaining steadfast” in the Rallos case.
Let’s hope that the parties remain steadfast in their commitment to their partnership.
Published in the Sun.Star Cebu newspaper on December 05, 2013.