LBP sets release of South Road Properties lot titles; CH to meet an obligation in JV
THE Land Bank of the Philippines (LBP) issued last week a certification for the release of the titles covering a 12-hectare area of the mortgaged South Road Properties (SRP) which they will turn over to the Cebu City Government anytime it asks for it.
Titles for another eight hectares could also be released after the City Government pays its P357-million amortization this month, a high-ranking official of the LBP said.
The release of the titles will allow the City to meet one of its obligations in the proposed joint venture contract with Filinvest Land Inc. (FLI) if Acting Mayor Michael Rama is authorized by the City Council to sign the agreement.
As conduit bank for the City’s 12.315-million yen loan with the Japan International Cooperation Agency (Jica), the LBP has the titles of some 240 hectares of reclaimed properties within the 302-hectare SRP.
12 hectares
According to records of the City Treasurer’s Office, as of August 2008 when the last loan payment was made, the City has paid P1.473 billion to Jica for the principal and interest, and is entitled to get titles of a land area equivalent to the payments made, the LBP source said.
“That is why we have already given them a certification that we will release the titles of 12 hectares anytime they need it. When they pay this month, we can give them titles for another eight hectares,” said the source who is privy to the SRP loan transaction and who requested anonymity.
As stated in the proposed Joint Venture contract between FLI and the City, the City is supposed to turn over titles for a 12-hectare portion before they start developing the property.
“Mr. Fernandez asked for the certification before they issued the notice of award to Filinvest but actually, the certification is no longer needed because it’s part of the loan agreement that the City will be entitled to get titles of properties that have been paid for,” the source said.
No turnover
In a phone interview yesterday, City Administrator Francisco Fernandez said he just came back from a leave of absence and has not received a copy of the certification.
He clarified that the City Government will not be turning over titles of any portion of the SRP to FLI unless it pays the City an amount equivalent to the value of the land.
“As a down payment, they will give us some P350 million and for that, we will release the titles of a two-hectare portion. When another payment is made, then we release other titles. We will have to review the contract and make sure that we will give them the titles only after payments are made,” said Fernandez.
The contract also requires FLI to remit payments for the outright purchase of a 10.6-hectare waterfront area directly to LBP. This would be considered as advance payment, the source from the bank said.
FLI is required to pay some P250 million a year for six years for the purchase of the land.
“This means the amount due for the City’s payment of the loan principal and the interest will decrease because the computation of the interest is based on the loan balance, it is diminishing,” said the source.
Since the JBIC and the National Government do not allow any pre-payment of loans by LBP, the latter will have to bear the interest payments to JBIC, as well as the risk of any change in the foreign exchange by the time the loan payments are due. (LCR)