Tom O sues SM for ‘deceit’

Cebu City Mayor Tomas Osmeña (center) is assisted by City Attorney Joseph Bernaldez (right) in filing a complaint against SM Prime Holdings Inc. at the City Prosecutor’s Office. At left is Aurora Penaflor, Prosecutor II, of the City Prosecutor’s Office. (CDN PHOTO/LITO TECSON)

Mayor: City lost P23M in taxes after SM allegedly understated fair market value of SRP mall

For allegedly understating and underpaying their real property taxes, Cebu City Mayor Tomas Osmeña is now going after SM Prime Holdings Inc.

The mayor filed a complaint of “Other Deceits” under Article 318 of the Revised Penal Code against SM Prime Holdings Inc. (SMPHI) represented by four of their executives including board chairman Hans Sy Jr. for paying much lesser than their supposed real property tax (RPT) for their SM Seaside City Cebu mall located at the South Road Properties (SRP).

The management of SM Seaside City Cebu, when asked for comment, said they have yet to review the mayor’s claims.

“We cannot comment until we can refer the matter to our tax department, who will have to review the details of the Mayor’s statement regarding the SRP real property taxes,” the statement read.

The other executives who represented SMPHI and named in the city’s complaint are Jose Cuisia, vice chairman of the board; Hans Sy, executive director; and Imelda Lim, senior tax manager.

SM’s property taxes

In a press conference yesterday noon, hours before he filed the complaint at the Cebu City Prosecutor’s Office, Osmeña told reporters that SM only paid around P14 million in RPT for their property since he claimed that they didn’t religiously declare all their taxable properties in the mall.

Upon an ocular inspection and reassessment conducted by the City Assessor’s Office last November 10, Osmeña said it was found out that the entire RPT for the property should have been P37.6 million, a whopping P23 million more than what they paid the city.

“That’s the violation. They understated. They deceived the city government obviously with collusion from the administration of (then Cebu City mayor) Michael Rama. I just want to show the people of Cebu that there’s no difference between SM and Jaguar, this drug lord. They’re the same. It’s about the money,” Osmeña said.

“This is the kind of corruption that have been going on with the Rama administration,” Osmeña said when he filed the complaint at the City Prosecutor’s Office under City Prosecutor Licerio Lofranco Rabillas.

“These people think that just because they’re SM, they’re big, or the mayor was a sure winner, that they could get away with it. I don’t know what the Cebuanos want me to do. I’m just doing my job. I’ll stand up against them. I know that SM are cheaters. That’s why people don’t believe me when I said that they stole our property when they bought the property,” Osmeña said.

Assisted by City Attorney Joseph Bernaldez, Osmeña pointed out in his complaint-affidavit that as city mayor, he has the duty to ensure that all statutes, ordinances and laws, both local and national, are faithfully executed and implemented, and that he gives “special attention to all real property tax assessments and collections within the jurisdiction of Cebu City.”

Fair market value

Osmeña said that in the tax declaration issued in favor of SM Prime Holdings for its SM Seaside City building, the fair market value of the property was assessed at P1.3 billion, but upon reassessment under his order, it was found that “there were substantial and material misrepresentations between the floor areas and undeclared essential parts of the buildings (which included the basement, pavement, garden deck and roof deck) declared in the TD (tax declaration)” and that the property should have been assessed a fair market value of P3.58 billion.

Citing the Real Property Tax Code, Osmeña said in his affidavit that SM Prime Holdings, as the owner of SM Seaside City, “has the duty to declare the true value of its real property for taxation” and that its “failure to do so constitutes fraud.”

“Is SM exempted from the law and the rest of us has to follow?” Osmeña said.

“Let’s talk to Cebuanos. What do you want me to do? Surrender na lang? You break the law, you break the law. I’m telling you, they’re cheaters. These documents will show,” he said.

Setback violations too

But aside from this alleged tax fraud case, Osmeña said the city has also discovered violations on the setback requirements of some of the other big developments in the SRP including SM Seaside, and that of Filinvest Land Inc.

He said the city has decided to freeze and put in abeyance all pending applications for building permits and occupancy permits coming from these developers until they are able to correct their violations.

“They built on the setback because they think they can get away with anything. All their pending permits are being put in abeyance until they comply and correct the violations they have made,” he said.

Filinvest, SM informed

According to Osmeña, they have already sent a letter to both Filinvest and SM Prime Holdings about two to three weeks ago, informing them that all their pending permits, including those of the tenants who want to move in, have been frozen unless they correct their violations first.

When CDN tried to get a comment on the setback issue, SM management did not issue a statement.

“We’ll await for the official notices from City Hall on this alleged freezing of permits in all SRP projects. We’ll address whatever is/are the basis of said freezing of permits application, if any, said Allan Alfon, Filinvest Land Inc. first vice president and Visayas cluster head when asked for a reaction on Mayor Osmeña’s decision.

Osmeña said that as big developers with major properties all over the country, the likes of SM and Filinvest should know well the requirements on setbacks.

Osmeña said though that the suspension of the granting of permits only covers those that are still pending. Other locators, within these developments, which were already granted their permits can still continue to operate.

“(Other) occupants in SM Seaside, those who were issued already, we will not touch that especially the innocent outlets. But we have to make it clear that it does not make us forgive SM. So if they’re found guilty, I will close the store of SM,” he added.