Osmeña files suit vs Cebu City government, real estate conglomerates over SRP deal

Ryan Macasero

This is AI generated summarization, which may have errors. For context, always refer to the full article.

Osmeña files suit vs Cebu City government, real estate conglomerates over SRP deal
The ex-mayor also seeks to stop the city from using proceeds from the SRP to fund the local government's P2.5-billion supplemental budget

CEBU CITY, Philippines – Ex-Cebu City Mayor Tomas Osmeña filed a petition for declaratory relief against SM Development Corporation, Ayala Corporation, Filinvest, and the Cebu City Council over the P17-billion sale of a 45-hectare lot at the city-owned South Road Properties (SRP), which the SM-Ayala consortium and Filinvest purchased separately in 2015.

A petition for declaratory relief asks the court to determine the rights of parties in a legal matter without asking for anything to be done or for monetary damages.

Osmeña’s legal counsel Amando Ligutan said in a press conference on Tuesday, September 3, that the contract – which former Cebu City mayor Michael Rama entered into with SM and Ayala – was “illegal” and sold under its market value.

“The lot was illegally sold for P17 billion,” Ligutan said. “It could have been sold for more than P50 billion.”

Osmeña-allied councilors previously tried to invalidate the sale of the lot in June. (READ: Osmeña council allies move to invalidate sale of South Road Properties)

Osmeña told Rappler in a separate interview that the value of the property assessed by the Ayala Corporation was severely understated by the previous administration.

Rama is currently the vice mayor of Cebu City. He won the election on the ticket of current Mayor Edgardo Labella.

“At the heart of this controversy, we’d like to tell the public that there is a prohibition in the law and [in the] contract entered by parties to use the proceeds of sale,” Osmeña’s lawyer said.

“This press con is called to remind the SP [City Council], we are informing them and the public that it cannot be used,” he added.

Ligutan said Rama had no authority from the council to sign the contract on behalf of the city.

“In the supplemental agreement between mayor and SM/Ayala Consortium, dated August 7, 2015, it says the amounts that equal to 30% of purchase price shall only be released to [the] seller if SP approves ordinance confirming and ratifying the authority of the city,” he said.

Osmeña filed a similar petition when he was mayor of the city, but is refiling it as a private citizen.

The Cebu City Council voted against a motion by Osmeña-allied Councilor Nestor Archival on Tuesday, seeking to stop the city from using funds from the lot sale. Osmeña’s allies lost 10-6 in trying to hold in abeyance the use of the SRP sale to fund the city’s budget. 

While the developers have been paying their installments for the P17-billion purchase, Osmeña, during his time as mayor, did not allow the city to use the funds.

Archival argued that the Commission on Audit (COA) has to approve the negotiated sale before a contract is considered valid, which this sale did not do.

The budget, itself, however, was approved by the council.

Mayor Edgar Labella announced in August that he sought to fund the entire 2020 supplemental budget from the proceeds of the stalled sale of the lots.

Among the priorities of the supplemental budget are P500 million to upgrade the city’s traffic system, P150 million for road improvements, P100 million for relocation site development, and P60 million for lot acquisitions. – Rappler.com

Add a comment

Sort by

There are no comments yet. Add your comment to start the conversation.

Summarize this article with AI
Nobuhiko Matsunaka


Ryan Macasero

Ryan covers social welfare for Rappler. He started at Rappler as social media producer in 2013, and later took on various roles for the company: editor for the #BalikBayan section, correspondent in Cebu, and general assignments reporter in the Visayas region. He graduated from California State University, East Bay, with a degree in international studies and a minor in political science. Outside of work, Ryan performs spoken word poetry and loves attending local music gigs. Follow him on Twitter @ryanmacasero or drop him leads for stories at ryan.macasero@rappler.com