FILINVEST SRP CONTRACT

Cebu City Mayor Tomas Osmeña, points at the location of the 19.2-hectare lot property bought by Filinvest. FLI Senior VP for VisMin, Tristan Las Marias, announced that his company would rescind the contract of sale for the SRP lot at the mayor’s office.

Rescission could hit snags at council

Cebu City Mayor Tomas Osmeña and Filinvest land Inc. (FLI) might have agreed in principle to rescind the sale of the 19.2- hectare lot at the South Road Properties (SRP), but the rescission would need the City Council’s approval as Osmeña cannot just act in behalf of the City of Cebu.

“That (rescission) needs the council’s authorization because the parties are Cebu City and Filinvest. The mayor is not Cebu City. Cebu City is composed of the mayor and the council,” said Councilor Jose Daluz III.

Furthermore, if the rescission is a unilateral decision of Filinvest, then they would have to go to court to have the contract canceled, said another councilor, Raymond Alvin Garcia. Both Daluz and Garcia are lawyers.

“How can they rescind? Rescission needs the consent of both parties. It seems it is only FLI that wants to rescind. How about the city? Remember that the mayor cannot bind the city without the council’s authority,” Garcia said.

Yesterday, Filinvest and Mayor Osmeña held a press conference at the mayor’s office where Filinvest Senior Vice President for the Visayas and Mindanao, Tristan Las Marias announced the company’s decision to cancel their purchase of the 19.2- hectare lot at the SRP. The purchase contract was signed in June 2015, during the incumbency of mayor Michael Rama.

“When we undertook the deed of sale, which covered the purchase, after we won the bidding, there were some covenants in the undertaking, some obligations that the city had to do. But until February 2016, those obligations and covenants were not complied with and we felt that we don’t see those being complied with within the reasonable future period of time left. So there are provisions under our deed of sale on installment, that’s the contract that governs actually the purchase transactions, that allows the buyer to actually rescind or cancel the sale,” Las Marias told reporters.

“Maybe titles, one of them possession of the property, long list of those covenants and obligations… I think you’ll have to reconcile it against the conditions set-in to the deed of sale which invoke as the grounds of canceling the agreement,” he added.

But Councilor Jocelyn Pesquera said it is the Osmeña administration’s refusal to comply with the terms of the sale which could have prompted the decision of Filinvest.

Pressure?

Daluz said the reasons cited by Filinvest for rescinding the contract of sale are mere excuses.

“Whatever excuses they may say, we all know the story. They succumbed to pressure from the executive. Ayaw na lang ta anang daghang estorya. (Let’s skip all this talk.) They succumbed to pressure. That’s the real scenario,” Daluz said.

Las Marias admitted that their decision to cancel the contract is to strengthen again the relationship between FLI and Cebu City.

“I think, this going back to strengthen the relationship between FLI and Cebu… will also prove that there will be continuing support for Filinvest projects and investments in Cebu City, not only in SRP but also in other parts of the country,” said Las Marias.

SRP is currently home to the 40-hectare mixed-used project City di Mare, owned by Filinvest and SM Seaside City Cebu of SM Prime Holdings, Inc. (SMPHI), two of the biggest developments in the area.

SM and Ayala formed a consortium in 2015 to purchase a 26-hectare lot at the SRP, which Cebu City Mayor Tomas Osmeña has objected to and demanded that the agreement be rescinded as well.

Sought for comment on Filinvest’s move and the possibility of following suit, SMPHI declined to issue a statement. CDN also tried to reach the Ayala group but to no avail.

Welcome

The mayor welcomed the decision of Filinvest, saying it is as good as bringing back the future for the city and the viability of the SRP.

He described the 19.2- hectare lot as the gateway of the 60-hectare Pond A, which will be lose value if FLI will pursue its development of the 19.2- hectare lot.

“What bothers me, this (19.2-hectare bought by FLI) serves as the gateway to Pond A, so by buying this we don’t have a frontage to Pond A and Pond A is 60 hectares. It’s not yet reclaimed, but Pond A is ours, and the position is such that this is absolutely critical, because if there’s no more frontage to Pond A, (it) becomes an interior lot, it will diminish its value by 80 percent, just like a backyard. We want to make the whole thing one development,” Osmeña said.

“Earlier the mayor has tasked us and other representatives of the city since there is already an agreement in principle to proceed with the cancellation, to work out the processes and details on how to consummate the cancellation. This is going to be put in place, only upon compliance of the certain conditions that the mayor has put in the table,”Las Marias said.

But when the mayor was asked on what conditions he has offered to FLI, “No condition… We get the property back and pay them back, details need to be threshed out, normal mana.”

Image

Filinvest’s decision to rescind its contract of sale with Cebu City may put Cebu’s image to investors at risk, a trade official said.

“It will affect our image, but I do not know the full background yet. While it will have an effect, it will be in the short term. The SRP is a prime property, especially in a fast growing city like Cebu,” Department of Trade and Industry (DTI) Cebu Director Ma. Elena Arbon told Cebu Daily News in a text message.

Arbon said this may raise concern on the reliability of the local government in honoring contracts, but the issue needs to be seen from a bigger perspective.

“Let us look more fully into the position of the city government because maybe they have a better deal in sight,” she said.

The trade official, however, warned that Filinvest could set a precedent for other big locators at the SRP to revoke their agreements with the city government if these issues aren’t handled correctly.