‘Cebu City will charge interest for delayed SRP payments’

UNLESS it pays up, major developer Filinvest Land Inc. may be charged interest by the Cebu city government for delayed payments for the 50 hectares of reclaimed land bought in the South Road Properties (SRP).

Cebu City Mayor Michael Rama said this could happen because the city’s contract with Filinvest remains binding, and amortization and interest payment claims are “demandable” from the developer.

“The more they will be keeping it, (payments) the more it will earn interest,” said Rama.

Filinvest is scheduled to pay P245.2 million to the city this year as its fourth installment in their amortization for SRP lots.

Payment was due on March 11, said Asst. City Treasurer for administration Emma Villarete. Filinvest payments are made once a year.

The City Treasurer’s Office hopes to raise at least P1 billion from Filinvest and SM lot payments and proceeds from the disposal of other SRP lots this year to support the city’s annual budget.

SM Prime Holdings, Inc. is set to pay the city P404.34 million in four equal payments this year.

Tristan Las Marias, Filinvest first vice president for the Visayas and Mindanao, told Rama in a March 4 letter that his company would withhold its 2012 payment of amortization until the notices annotated on SRP titles to be released to Filinvest are removed.

“The SRP joint venture agreement between Filinvest and Cebu Ctiy requires that the titles, prior to turnover to Filinvest, should be free and clear of liens and encumbrances except the existing mortgages in favor the Land Bank of the Philippines,” said Las Marias in a press statement.

The legal question arose from the P133 million money judgement won by heirs of Vicente Rallos against Cebu City over a road lot dispute in Sambag II.

The court sheriff issued notice of levy on the rights and interests of Cebu City on the SRP titles to force the city government to pay the Rallos claim.

Mayor Rama is challenging the sheriff’s action as irregular and insists the city is not obliged to pay.

“Cebu City has also advised Filinvest that it already undertook initiatives in court to dispute and seek the removal of the notices of levy on the SRP titles so Filinvest can proceed with payment,” said Las Marias in a press statement.

Mayor Rama said he is meeting City Hall lawyers handling the Rallos case to discuss Las Marias’s letter. He said the city government would charge Filinvest interest on late patements.

“But I don’t want emotions to run high on the matter, I want to discuss this with them rationally.  I want our lawyers to discuss this,” the mayor said.

When asked if interest payments were specified in the Filinvest contract, Rama said his lawyers are reviewing the contract.

A City Hall source showed Cebu Daily News a copy of the Filinvest contract that showed no provision on interest payments.

The contract that was signed and notarized on March 5, 2010 set forth Filinvest’s payment schedule.

Villarete said a title of the paid property is given to Filinvest every time an annual payment is made.

She said if Filinvest won’t make its payment for this year, Villarete said, this may affect the city’s revenue generation efforts.