Filinvest rejects Cebu city demand letter for P858 million

Messages of peace and unity rang in Cebu City Mayor Michael Rama’s speech for Independence Day.

But he has a  big struggle ahead to get Filinvest Land Inc. to pay P858 million for its latest installment for land in the South Road Properties (SRP).

“In my political view, avoidance of political quarrel is a must not only for the city of Cebu but the entire world in order to build a better world for all of us,” the mayor said at Sugbu Plaza where  flag raising rites and a Mass were held.

He also led officials at the Cebu City sports center, the end point of a civic-military parade alive with national flags, Filipiniana floats, students, and men of the armed forces in uniform.

It’s well known that Rama is at odds with former ally Rep. Tomas Osmeña, who launched the the 300-hectare SRP reclamation project during his term as mayor in the 1990s.

With Rama seeking reelection next year and facing an Osmeña comeback, he’s under pressure to get big-ticket projects done which need funding like Filinvest’s annual installment payments to Cebu City for a  10.6 hectare lot and a percentage share in the development of 40 more hectares in SRP.

Sought for comment on Filinvest’s refusal to pay, Mayor Rama yesterday said he would meet with City Hall lawyers to study their options.

Filinvest has rejected a fourth demand letter sent for the collection of annual amortization of P858 million due last March – P245.2 million and and P600 million for the city’s share of the joint venture along with interest from delayed payment.

Filinvest First Vice President Tristan Las Marias in a statement said the payment is not yet due and non-interest bearing.

He said the land title which Cebu City is supposed to turn over is bogged down in litigation over money claims of the Rallos heirs who had the property garnished.

“First, the SRP titles involved are in areas for future development and are not areas where we are currently developing and selling.  Secondly, to date, the title that the City is due to turn over to Filinvest in exchange for this year’s payment still has an annotation of levy relative to the Rallos claim.

As per our joint venture agreement, the city is required to turn over titles that are free and clean from any claims and levy in exchange of our yearly payments,” said las Marias in response to the demand letter of the City Treasurer’s Office.

City Treasurer Ofelia Oliva is preparing a fifth demand letter for Filinvest. Her last one was sent two weeks ago.

The annotation of “lis pendens” on the title is a public notice that the property is the subject of pending court litigation.

“HLURB prohibits development on titles with annotation of levy. We will not be able to get development permits and license to sell for these areas. In short, Filinvest will not be able to use the properties that we will get unless the claims are removed even if there is a restraining order,” Las Marias said.

He invoked section 31 of the joint venture agreement between Cebu City and Filinvest, which entitles Filinvest to defer payment if there is ongoing litigation on a property or title in the joint venture.

“This gives us the right to suspend payments until the litigation is finally settled,” Las Marias said.

For the SRP land acquisitions, Filinvest  is supposed to pay P1.5 billion to Cebu City in seven annual installments.  For each payment made, the title to two hectares would have turned over to Filinvest. Cebu City would also receive 10 percent from sales made from developments in the joint venture.

Las Marias challenged the city treasurer’s computation  of a P600 million collectible as its share from developed lots in a 40-hectare area of SRP.

He said the amount was “wrong and baseless” and invited the city treasurer to review Filinvest’s  sales and collection records to get the “correct amount of shares that the city ought to receive before she makes public pronouncements.”

The city government expected Filinvest to hand in payment last week yet.

Oliva, the treasurer,  said Filinvest has no reason to use as an argument the liens and encumbrances in the two lots, which is a consequence of the expropriation case with the Rallos heirs which the city government lost, since the city secured a temporary restraining order (TRO).

The two titles with TCT numbers PT-15971 and PCT-15972 are part of the SRP joint venture parcels.

The lots cover 9.7 hectares each and each title was annotated with a Notice of Levy on Execution and Notice of Lis Pendens.

The Notice of Levy on Execution was registered last Nov. 2, 2011 after the notice of levy issued by court sheriff Eugenio Fuentes Jr.

But Filinvest said the TRO issued by the court did not include an order for the Register of Deeds to  remove of lift the levy annotated on the title of the subject SRP property.

“The TRO did not change the status of the titles or the properties.  The titles still carry an annotation of the levy and we still cannot use the properties.  The fourth payment is not due until the levy on the title is removed. All these are provided for in the JVA,” said last Marias. /Chief of Reporters Doris C. Bongcac