3 big land firms hold P6.7-B payment for Cebu property

Taken from this article on Inquirer.

CEBU CITY—Three big land developers called off the scheduled down payment of P6.7 billion for a 45-hectare property inside the South Road Properties (SRP) after questions were raised on the validity of the lot disposal.

Representatives of the consortium composed of Ayala Land Inc. and SM Prime Holdings Inc., and Filinvest Land Inc. (FLI) informed city officials on Thursday night that they were canceling the turnover of the down payment on Friday morning at City Hall.

After the turnover, the consortium and FLI were supposed to receive notice of award as winning bidders for 26 hectares Lot No. 8-B-1 and 19.2 hectares in SRP, a 300-hectare reclaimed land owned by Cebu City.

While no explanation was provided, the advise came a day after the City Council passed a resolution, asking Mayor Michael Rama to put on hold any further action related to the SRP lot disposal.

Rama met with some department heads and his financial advisers after he received word from the three buyers on Thursday night and agreed to postpone the turnover of the notice of award to a still undetermined date.

The SM and Ayala consortium won the bid to purchase 26 hectares inside the SRP for P10.009 billion at P38,000 per square meter.

The consortium gave P1 billion in security bond, said acting City Treasurer Diwa Cuevas.

Bidding

FLI won the bidding for a 19.2-hectare property near its City de Mare development project inside the SRP for P6.758 billion at P35,128 per square meter. The developer paid P700 million in security bond.

Under the terms of the public bidding, the winner is supposed to give 50 percent of the purchase cost in down payment immediately upon the awarding of the contract.

The balance plus interest of 6 percent per year is to be settled within the next three years in equal annual installments.

The P1.7-billion bond given by the developers formed part of the total P8.4 billion in down payment. The remaining P6.7 billion was supposed to be turned over at City Hall on Friday.

The City Council wrote the Department of the Interior and Local Government (DILG), asking its opinion on the validity of Council Resolution No. 13-3399-2015 on June 24, 2015, that authorized Rama to make new SRP lot sales through public bidding.

Interior Undersecretary Austere Panadero said in a July 30 opinion that the resolution “cannot validly supersede and/or amend” City Ordinance No. 2332 which states that the SRP lots could be disposed of only through unsolicited proposals.

Resolution

“The foregoing does not, however, preclude you or other concerned parties from lodging appropriate legal remedies before the proper forum,” he said.

During their Aug. 5 session, opposition councilors passed a resolution, asking Rama to defer action on the two SRP lot sales in the wake of the DILG opinion.

Lawyer Jose Daluz III of the city legal office, and one of Rama’s financial advisers, said they were studying the possibility of filing charges against the 10 councilors who voted in favor of the resolution that derailed the turnover of the down payments.

But opposition Councilor Sisinio Andales said the inconvenience could have been avoided if Rama heeded the council’s request to defer any new lot disposals while waiting for the DILG opinion. The opinion sought to resolve if a resolution authorizing new lot sales through public bidding was enough to supersede an ordinance passed in 2012 which authorized unsolicited proposal as mode of disposal.

He said it is best for the city government to be cautious with its transactions “rather than be sorry in the end.”

“If the opinion of the DILG will not be revoked or reversed then the bidders may ask for the return of the P1.7 billion bond considering that the basis of public bidding which is the resolution had been declared that it can not validly amend or supersede ordinance 2332, hence, invalid and unlawful,” he said.