The Commission on Audit reported that Cebu City failed to collect P150 million in guaranteed annual payments from Megawide/Cebu2World for the Carbon Public Market redevelopment between calendar years 2023 and 2025.
Auditors questioned the deal's fairness, noting a lack of supporting financial evaluations and highlighting that the market's own annual revenue consistently outperformed the P50-million guaranteed share set by the agreement.
COA identified contract loopholes regarding payment schedules and penalties, as well as concerns over construction delays, the absence of a performance bond, and the accelerated 18-day bidding timeline used in 2020.
CEBU City has failed to collect P150 million in guaranteed payments for the multi-billion peso Carbon Public Market redevelopment. The Commission on Audit (COA) is now questioning the math behind the entire deal, raising concerns that the city might be losing out on significant public revenue.
Under the Joint Venture Agreement (JVA) with Megawide Construction Corporation, through Cebu2World Development Inc., Cebu City was supposed to receive at least P50 million every year. This payment was scheduled to increase by 10 percent starting in the 11th year and every five years after that.
According to COA's latest report, the city received its first P50-million payment when a supplemental agreement was signed in 2022. However, state auditors revealed that "no subsequent annual payments were made for CYs 2023 to 2025."
The auditors expressed deep concern because they could not find any financial evaluations, asset valuations, or value-for-money studies showing how the parties originally agreed on the P50-million annual payment.
"There was no available financial analysis demonstrating that the guaranteed annual share provides a material improvement over the City's previous revenue performance," COA stated.
Without clear documents showing the value of the city's properties and projected revenues, COA said the fairness of the deal is "doubtful." Auditors warned that the city might be giving away long-term exclusive rights to a highly profitable public asset without getting its fair share.
Even the City Treasurer’s Office admitted during an exit conference that it could not locate the documents supporting the P50-million annual setup. Right now, the JVA is being challenged in court in two separate cases.
The audit showed that the Carbon Public Market is already a major moneymaker on its own. In 2025, the market generated P80.03 million in recorded revenue. Between 2021 and 2025, annual collections averaged P80.72 million—consistently staying well above the P50-million guaranteed share Megawide was supposed to pay.
Using rates from the city's amended Market Code, auditors projected that basic recurring sources like stall rentals, garbage fees, parking, and entrance fees could bring in P120,523,997.04 in gross annual revenue. This projection is P65.6 million, or 119.42 percent, higher than the base amount auditors used.
This P120.52-million estimate does not even include other income streams, such as arkabala fees, violation penalties, and commercial space rentals. However, COA clarified that this represents potential gross revenue, not net income, because full details on operating expenses and efficiency gains under the joint venture are missing.
Why did the payments stop after 2022? The JVA allows the city’s market collections to be offset against the guaranteed payment. However, because the city kept collecting fees and the redevelopment experienced delays, both sides ended up in a disagreement.
Megawide pointed to its inability to exercise its collection authority as the reason for holding back payments. Meanwhile, the city withheld revenue-sharing adjustments due to infrastructure delays. COA noted that revenues from the Mechanical Parking Facility, Puso Village, and commercial rentals were neither shared with the city nor offset against the guaranteed payment.
To make matters worse, COA found that the contract itself did not specify exactly when the annual payment should be made, and it did not include any interest, penalties, or sanctions for late payments. This loophole has weakened the city’s ability to force the partner to pay.
The entire project was supposed to be fully operational by 2024. However, as of December 31, 2025, the main Carbon Public Market infrastructure remained unfinished. While spaces like Puso Village, the Sto. Niño Chapel, Senior Citizens' Park, the Mechanical Parking Facility, the Interim Building, and Freedom Park are done, most sit in adjacent "future development" areas rather than the main market complex.
COA also pointed out other critical issues:
No Performance Bond: The joint venture partner started construction without posting a required performance security, exposing the city to financial risk. The City Legal Office argued that the security is linked to individual structures rather than the whole project, but COA maintained it should have been posted since a new building near Freedom Park is already underway.
Fast-Tracked Bidding: COA questioned the 18-day timeline given to competitive challengers back in 2020, comparing it to the 120-day national benchmark. No challengers stepped forward, and the project went to the original proponent. While the City Legal Office argued they followed local ordinances rather than national LGU guidelines, COA maintained that the short timeline hurt transparency.
To protect public funds, COA is urging Cebu City to conduct a comprehensive value-for-money study, get an independent valuation of its assets, and seek help from the national Public-Private Partnership Center. Most importantly, auditors advised the city to consider amending the JVA entirely if the current revenue-sharing deal continues to leave the city short-changed.