Cebu City Legal Office: FLI liable for conventional interest of ‘unrescinded’ SRP sale

The Filinvest Land Inc. and the Cebu City government are trying to settle the issue about the sale of a lot at the South Road Properties.|  CDN file photo

CEBU CITY, Philippines — The Cebu City Legal said the Filinvest Land Inc. (FLI), who bought a 19.2-hectare lot at the South Road Properties (SRP) in 2015, but decided to rescind the sale on 2017, will have to pay the conventional interest of the deed of sale on installment (DSI) in the past two years following its unsuccessful rescindment of the lot sale.

FLI has written to the 15th City Council twice regarding their attempt to rescind the sales after they claimed the local government failed to fulfill its obligations under the sale contract.

Read more: FILINVEST SRP CONTRACT

The rescindment was considered “invalid” because the Cebu City government failed to return the P3 billion downpayment of the sales of the property.

Aside from this, FLI claimed that the city failed to do its obligation in the DSI.

They said the city failed to deliver documents, which included a copy of the current tax declaration covering the property in the name of Cebu City, the original joint certification from the City Assessor’s Office and City Treasurer’s Office attesting the ownership of the city of the property, and the exemption from payment of real property tax and the original copy of the zoning certification issued by the Zoning Enforcement Division.

The city did not also deliver the property in full and vacant possession to the FLI, free and clear of all structures and occupants by May 2016, contrary to the agreement.

FLI said the city failed to fulfill its part under Section 3, which stated that the seller was supposed to issue a new title covering the property under the name of Cebu City, cancel the Mortgage Annotation, issue the necessary permit approval and clearance that were supposed to be submitted to the buyers.

Until the city could fulfill its end of the contract, FLI said that it wanted the city to waive the penalties they had incurred from the DSI during the past two years following the unsuccessful rescindment of the contract.

For the city’s part, City Legal Officer Rey Gealon said the new administration could not be made accountable for the failure of the previous administration under former mayor, Tomas Osmeña, to deliver the city’s obligation.

“The City of Cebu is not bound by the mistake of its agents, in this case, the non-compliance of the officers of the previous administration with the terms of the DSI contrary to law and jurisprudence, and their refusal to recognize the judgment rendered by the Regional Trial Court and the Court of Appeals in the Torres case which upheld the validity of the sale,” said Gealon.

The city legal officer said that regardless of FLI being able to validly exercise its option to rescind the contract, they had still breached their obligation under the DSI.

With this, they will still be required to pay the conventional interest amounting to 6 percent per annum or the interest consented upon by the two parties for the staggered payment for the sale.

However, they have yet to discuss whether FLI will pay the default interest, which can be incurred if the payee caused damages by breach of contract.

Despite the city’s alleged failures, the FLI said it was open to any discussion with city government to settle issues “towards the complete and successful implementation of the DSI to the satisfaction of both parties.”/dbs