SM vs. Cebu City

SM SEASIDE VS CEBU CITY. Michelle Llanos (center on the witness stand), SM Prime Holding’s vice president for operation in the Visayas, listens as Cebu City lawyer Carlo Vincent Gimena (left) examines documents presented by Lawyer Crysilla Carissa P. Bautista (back to the camera), one of the legal counsels of SM Prime, during the hearing of the petition for mandamus and prohibition filed by SM Seaside against the Cebu City government and heard at the sala of Cebu Regional Trial Court Branch 9 Judge Alexander Nicandro V. Acosta on March 9, 2017.
CDN PHOTO/JUNJIE MENDOZA

City business permit head summoned to court today

The Cebu Regional Trial Court Branch 9 yesterday summoned the head of Cebu City’s permit office to appear before the court today as it continues to hear the petition filed by SM Prime Holdings Inc. to stop City Hall from closing SM Seaside City Cebu.

RTC Branch 9 Presiding Judge Alexander Acosta ordered the appearance of Claire Cabalda, head of City Hall’s Business Permit Licensing Office (BPLO), after the lawyers of the giant mall operator sought for her appearance in court.

Lawyer Chrysilla Carissa Bautista, legal counsel of SM Prime Holdings Inc., the parent company of SM Group’s shopping malls, said in yesterday’s hearing that it was the BPLO and Cabalda who have not issued a final business permit for the mall despite their submission of requirements and payment of their assessed business taxes.

SM filed the petition for mandamus and prohibition against Cebu City to compel the city government to renew its business permit and that of its tenants.

They said the city government has been “nitpicking” on SM’s business permit application for SM Seaside.

SM Seaside’s lawyers presented two witnesses during yesterday’s hearing.

The first was Sandy Basas, accounting manager of SM Seaside, who talked about the process they went through during the renewal of business permits last January.

Basas said that on January 12, they presented their business permit application at City Hall’s satellite processing center at Robinson’s Galleria Cebu.
The next day, they presented the mall’s business tax payment but it was not accepted.

“We were presented by the cashier assigned to us with a memo which said that permits or applications for SM Seaside will not be accepted or entertained,” she said in her testimony.

She said they were referred to Cabalda as well as the City Legal Office regarding their business tax payment. Eventually, their tax payment was received on January 18, after which official receipts and a certification of tax clearance were issued to SM Seaside.

However, she said, the mall was “also given a pink slip with a note from Cabalda that they will accept our payment but we will not be issued a final permit because of a pending show cause letter by the city to SM Seaside.”

On February 17, she said that their office submitted complete documents for their application to the BPLO.

But this, too, was not accepted and they were told that this was because of the “show cause order” given by the city to SM, which asked “why they should not be closed.”

According to Basas, they were constrained to just submit the documents to the BPLO by registered mail.

These documents submitted by SM were also the subject of a subpoena issued by Acosta yesterday and will be discussed in today’s hearing.

Michelle Llanos, Shopping Center Management Corp (SCMC) vice president for operations Visayas , on the other hand, testified in court yesterday that “grave and irreparable damage” maybe caused to SM Seaside if the city government will not act on the mall’s business permit application.

Llanos pointed out that Mayor Tomas Osmeña has been publicly making pronouncements through the media on his intent to close SM Seaside.

The mayor also filed a case against the mall in November last year for allegedly understating its taxable properties, an allegation that the SM group strongly denied.

“The closure of SM Seaside will threaten the goodwill and image of the SM brand. We’re not just talking about SM Seaside but all of SM’s 60 malls. SM is a reputable company and we have been in the mall business for 30 years,” she said.

She added that the closure could also mean loss of business for SM Seaside and its tenants, which are not just local but also international brands.
It can also open lawsuits for SM from its suppliers and tenants for breach of contract.

Aside from this, Llanos said this will also affect all of the 5,391 employees of SM Seaside and its tenants.

City Legal Officer Joseph Bernaldez, however, maintained that SM Seaside’s fear that it would be closed was “speculative.”

Bernaldez and other city lawyer, Lyndon Basan, also pointed out that the city has not ordered the mall closed and, thus, there is no closure order that should be prohibited by the court.

The court has earlier issued a 72-hour temporarily restraining order (TRO) meant to stop City Hall from closing the mall.

The TRO will expire today.

Basan also said that if ever there will be a closure order, the parties concerned will be duly notified and given due process.

Bernaldez added that the reason why the city has not yet issued a business permit for SM Seaside was because they were still “scrutinizing” the mall’s documents.

The city lawyers also claimed that SM Seaside failed to submit some documentary requirements, including a barangay clearance, real property tax clearance, certificate of no delinquency and business permits for previous years, among others.

But Bautista said these deficiencies were never communicated to SM Seaside and they just knew about these during yesterday’s hearing.

SM Seaside City Cebu, which was built for P8 billion, opened on Nov. 27, 2015. It is the country’s third largest shopping mall and the centerpiece of the SM Seaside Complex, a 30-hectare mixed-use development at the South Road Properties that is projected to be developed at a cost of about P30 billion.