Cebu City’s spat with investors: Dire consequences

Lately, the national government and some local government units had been dealing with several businessmen in numerous fronts. Some are good while a handful are bad. One of the good deals had been the groundbreaking of the Cebu-Cordova Bridge, a public-private partnership with the MVP Group. Envisioned to propel growth, it is the longest bridge in the island of Cebu.

The other good move the national government had done is dealing with Mighty Corporation. Found to, allegedly, affix fake stamps in the company’s cigarette packs, the government lost about ?1.5 billion in the process. For all intents and purposes, that is tax evasion.  Grievous, it may seem, President Duterte proposed that Mighty Corporation must double the amount as a compromise deal. Though insisting on its innocence, the embattled cigarette manufacturer had expressed its willingness, through Justice Secretary Vitaliano Aguirre II, to accept President Duterte's proposal of ?3 billion.

Clearly, in this instance, the national government discovered some infractions. Notably too, the government, through the president, no less, had expressed its willingness to strike a compromise deal.

In Cebu City, however, the environment is entirely different. What prevails is vindictiveness. Vindictiveness that is so pronounced through the LGU chief’s constant bullying of some investors/businessmen.

Again, to recall, two months ago, a controversy surfacedat the South Road Properties (SRP)involving Filinvest and SM Prime Holdings Inc.In, allegedly,“violating" the provisions of the building code, Cebu City Mayor Tomas Osmeña “threatened to demolish the structures built by these two developers” at the SRP. Purportedly, these developers "illegally" encroached into the road right-of-way.

In his show cause notices, he asked the respective managements of Filinvest Land’s Il Corso at City Di Mare and SM Prime’s Seaside City to explain why their locational clearances, building permits and occupancy permits should not be revoked. Devoid of any sufficient reason, Mayor Tom threatened to “remove and demolish” the “illegally constructed” structures.

In the meantime, the business permit application of SM Seaside City was, understandably, not processed. Sadly, however, that of the lessees/tenants were, likewise, left in the freezer and not acted upon. Worse, though there are no written “closure orders” yet, Mayor Tom in several occasions made several pronouncements that he might just do it.

Likewise, Mayor Tom said, in several occasions, that he shall also close all branches of Banco De Oro (BDO) in Cebu City. Why? Due, allegedly, to the gross understatement of BDO-Magallanes’ reported revenue in the previous year. Notably, BDO has several branches nationwide. Possibly, therefore, some branches must have contributed so much in deposit taking only while lending activities are undertaken by the others. Consequently, some branches will have so much revenue while others have none.

Whether these supposed closure orders have some undertones, we do not know. The fact is, Mayor Tom has already made it clear that he wanted the sale of the SRP lots rescinded. Curiously though, despite all the powers that he has, he didn’t focus on directly rescinding it by filing cases or just simply declaring it null and void. Instead, he resorted to such cheap shot of, first, reopening the Inayawan landfill to inconvenience present occupants at the SRP (who happen to be among the SRP lot buyers).

All these developments will definitely have dire consequences. First and foremost, if indeed, Mayor Tom gets what he wishes (rescinding the sale of SRP lots), it will directly mean refund, not only of the amount paid by the investors on the lot (by the City of Cebu) but a refund as well by the BIR of the Value Added Tax paid. Running in several billions, should the BIR refunds it, then that would mean hindering some of the government’s vital projects.

Well, he might insist that he can sell it at a higher price. Fine, if there is an investor who is brave enough. Simply put, will an investor deal with Mayor Tom now, then face the risk of being dragged into court by his successor.

On the other hand, threats of closing SM Seaside City and Cebu City-based BDO branches have been spreading indiscriminately. Consequently, employees of these companies and of its tenants (in Seaside City) have been spending sleepless nights. Knowing fully well that unemployment rose in January and more workers are expected to be out of jobs with the continuing closures of mines, these employees’ anxieties have become so unbearable day by day.

So that, with all these dire consequences, we may ask, if President Duterte considered a compromise deal with an apparent tax evader, why can’t Mayor Tom, instead of concocting charges, settles his differences with the investors at the SRP straightforwardly.