PAYMENT DELAYED

Bidders call off awarding of contract  

Cebu City Mayor Michael Rama (CDN FILE PHOTO)

Today would have seen an P8-billion cash payment handed over to the Cebu city government by winning bidders of two lots of the South Road Properties (SRP).

But the payment and award of contracts to an SM-Ayala consortium and Filinvest Inc. will have to wait.

In a last minute development, City Administrator Lucelle Mercado said today’s scheduled ceremony had to be called off after she was advised by the three developers to cancel it.

She gave no specific reason, but the hesitation was clearly related to the  Cebu City Council’s action last Wednesday when they voted 10 to 3 to ask the mayor to defer any action on the SRP bidding held last June 30 due to questions about the mayor’s authority to auction the reclaimed land.

Mercado said City Hall, after a meeting with Mayor Michael Rama yesterday, decided to defer the signing of the contract of sale to a future date.

50 PERCENT

The P8 billion would have been the first 50 percent down payment for the properties.

An SM-Ayala consortium won the bid for  Lot No. 8  covering 26 hectares where the Calungsod templete is located.

Filinvest Land gave the highest bid for a consolidated site known as Lot No. 7 and Lot no. 17 with  a land area of 19.2 hectares near the current project site in SRP.

Until late afternoon, Ronald Rumao, SM Prime’s vice president for market research and planning, told Cebu Daily News by phone  he was “waiting for the final decision form our principal heads in Manila.”

When CDN checked with Mercado in the evening, she said the ceremony was called off on advise of the developers, including SM.

A separate check with Allan Alfon, Filinvest Land vice president for strategic business developed, confirmed that today’s activity was canceled.

City Hall had scheduled for this morning the handing of the notice of award for the two winning bidders for the SRP lots.

Under the terms of the public bidding  “A down payment of 50 percent shall be paid immediately upon the awarding of the contract.”

The remaining balance shall be settled within a maximum of three years in equal annual installments with 6 percent interest per year.

Last June 30, city officials were elated when the first public bidding for SRP lots resulted in bids almost twice the floor price of P20,000 per square meter.

SM Prime, in consortium with Ayala Land Inc. and Cebu Holdings Inc. submitted a bid of P10 billion.

FIlinvest Land Inc. gave gave bid of P6.758 billion for a 19-hectare lot between their current development and the SM Seaside City Complex.

The  mandatory 10 percent security bond of the bidders resulted in a cash payment of P1.6 billion, the biggest payment ever received by the city government in a single day.

OPINION, NOT LAW

Earlier in the morning, Mayor Rama was still expressing confidence that the awarding ceremony would continue.

He downplayed the adverse opinion of the Department of Interior and Local Government (DILG)  about the mayor’s authority to sell the SRP lots by public bidding.

Rama said the DILG’s view was only an opinion, not a law, and that the city council’s resolution urging him to defer payment was not an ordinance.

The DILG, whose legal opinion was earlier sought by the Cebu City Council,  said the  council’s resolution last year authorizing Rama to dispose of SRP lots through public bidding cannot supersede a  2012 City Ordinance No. 2332 which prescribed unsolicited proposals as the preferred mode of disposing of the reclaimed land.

The DILG qualified that  it was giving an opinion but that it’s up to the parties to take the matter to court to clarify matters.

“There’s nothing for anyone to stop the whole process,” said Mayor Rama yesterday.

“We will pray that everything will be okay. That’s it as far as the executive is concerned. With my city legal office, the next thing to do is just to continue the process,” he said in a telephone conference.

He said the city’s action to consummate the bidding process for the two lots is covered by an approved ordinance by the city council covering the city’s P13.7 billion annual budget this year.

The sale of the two SRP lots are identified in the annual budget as one of the city’s main sources of funds.

The city projected around P4.5 billion in revenue from half of the sale of the two SRP lots as part of the city’s sources of funds this year.

But with the actual bids made last June 30, which exceeded the floor price,  the city is expecting around P8 billion as 50 percent down payment.

The mayor said there was no basis to stop the payment and the awarding of contract.

“The most important thing is I will have to abide with what we started. Everything has been complied with. Are they thinking of a better setup?

As mayor, and a lawyer I cannot see any legal ground why such action shall be forestalled,” he said.

SECRET

Rama reportedly flew to Manila Thursday morning to persuade principals of one of the winning bidders to  continue with the payment despite the council’s action.

When asked by reporters about this, Rama wouldn’t say.

“Secret. It’s all related to everything in the world. I’ll just bring my report in due time,” he said.

Rama aims to use part of the SRP proceeds to pay off the city’s outstanding balance on the SRP loan which is around P2.9 billion.

Councilor Sisinio Andales, who moved for the deferment of the payment in the city legislature, said the mayor would be inviting lawsuits if he presses on.

“That’s his call. He should respect the opinion of the DILG which is superior to his opinion. Where is his rule of law if he will not honor the opinion of DILG?” Andales said.

“We have to bend our pride. Ordinance 2332 is still valid and enforceable unless it has been repealed or amended. It is not a question of gain or benefits but the rule of law,” Andales added./With Associate editor Marites Villamor-Ilano