Cebu City Councilor Sisinio Andales moved to investigate the joint venture agreement for the Carbon Public Market Redevelopment Project after the Commission on Audit flagged ₱150 million in unpaid guaranteed payments from 2023 to 2025.
The Commission on Audit also questioned the basis for the ₱50 million annual guaranteed share, citing the absence of a documented financial analysis, asset valuation, or value-for-money study when the 2021 agreement was drafted.
The City Council approved an omnibus motion directing the mayor's office, selection committee, and treasurer's office to submit documents explaining the revenue-sharing formula and established a special review committee to study the agreement.
WHEN a local government enters into a multi-billion-peso joint venture to redevelop a public landmark, transparency is critical. That principle came under scrutiny after the Commission on Audit (COA) flagged P150 million in unpaid guaranteed payments and the absence of key financial studies supporting Cebu City’s joint venture agreement (JVA) for the Carbon Public Market Redevelopment Project.
Councilor Sisinio Andales has moved to investigate the revenue-sharing provisions of the JVA following the audit findings, which prompted the City Council to review the contract between the City Government and Megawide Construction Corp.
The audit found that while Megawide remitted the initial P50 million guaranteed payment upon signing the agreement in 2022, the City did not receive the guaranteed annual payments for 2023 to 2025, totaling P150 million.
Responding to the audit findings, developer Cebu2World Development Inc. noted that it had not yet received an official copy of the COA report. “For matters relating to the report, we respectfully defer to the concerned department of the Cebu City Government for any official communication,” the company stated. “Once we receive the official document, we remain open to addressing any concerns and providing the necessary clarification through the proper forum.”
The Carbon market JVA, approved in January 2021 and amended in June 2022, increased the project’s cost from P5.5 billion to P8 billion and granted the private partner the right to collect revenues from various assets within the redevelopment area. In return, the City was guaranteed at least P50 million annually, subject to a 10 percent increase beginning in the 11th year.
COA also questioned the basis for the P50 million guaranteed share, noting the absence of any documented financial analysis, asset valuation or value-for-money study when the agreement was drafted.
The unfolding fiscal dispute highlights recurring vulnerabilities in local public-private partnerships (PPPs), where large-scale infrastructure projects intersect with complex revenue streams, asset valuations and City oversight.
The audit findings
Auditors noted that the Carbon Public Market generated an average of about P80.72 million in annual collections from 2021 to 2025, while projected recurring revenues could exceed P120 million annually.
PPPs are designed to attract private investment for infrastructure while reducing the burden on public funds. However, when public assets generate revenues far exceeding the government’s guaranteed share, questions arise over whether taxpayers are receiving fair value.
During council deliberations, officials noted that the reported collections represented gross revenues before operating expenses such as maintenance, labor and utilities were deducted.
COA also identified 188 delinquent market stallholders with unpaid rentals, surcharges, interest and garbage fees totaling about P5 million, prompting calls for stricter enforcement of lease agreements.
Andales described the continued non-remittance of the guaranteed payments as “alarming,” citing the COA report.
The problem with baseline transparency
The absence of a documented value-for-money study supporting the P50 million annual share sits at the center of the regulatory warning. Without clear baseline data establishing the true income-generating potential of public market assets prior to project execution, public officials struggle to defend contract terms against shifting economic realities.
When audit findings expose prolonged non-remittance alongside missing feasibility documentation, it signals a breakdown in fiscal governance. Public-private agreements must maintain transparent accounting trails to ensure that City partners fulfill their financial commitments without requiring legislative intervention to audit basic compliance.
Voices and perspectives
Councilor Joel Garganera, however, reminded the council that the legality of the Carbon redevelopment agreement remains the subject of a pending court case. He said the audit findings could form part of the evidence but cautioned against drawing conclusions while litigation is ongoing.
Garganera also questioned the need to create another committee to determine the number of ambulant vendors, saying the market authority had already been directed to validate the figures.
Councilor Harry Eran sought clarification on Andales’ proposal to terminate the leases of delinquent stallholders based on the COA findings. Andales said the recommendation stemmed from the audit, which identified 188 tenants who allegedly remained delinquent.
Councilor Alvin Arcilla, meanwhile, noted that the approval, regulation and termination of market stall leases already fall under the authority of the market authority.
What comes next
The City Council later approved an omnibus motion directing the mayor’s office, the JVA selection committee and the City Treasurer’s Office to submit documents explaining how the revenue-sharing formula was determined from 2022 onward.
The council also approved the creation of a special review committee to study the agreement and recommend amendments if its provisions are found to be disadvantageous to the city. The treasurer’s office and the legal office were likewise directed to pursue the collection of unpaid obligations from delinquent market stallholders. / CAV