City to incur penalty if it fails to pay: SRP loan amortization due Febuary 20

CEBU, Philippines - The Cebu City government will incur penalties and charges if it cannot pay over P180 million in amortization of its South Road Properties loan that is due on February 20.

City Treasurer Diwa Cuevas, though, said funds for the amortization, whose payment is due eight days from now, is not included in the approved 6.4 billion annual budget for 2016 since the executive department had eyed to pay in full the remaining P2.4 billion, which is due in 2025 yet.

“We are consistent nga we will have that stand nga bayaran gyud ang tanan nga utang.  Kay maka-afford man gyud ta og bayad even if mobayad ta sa tanan nato nga utang, naa pa gyud masobra sa kuwarta,” said City Administrator Lucelle Mercado, who heads the city’s Local Finance Committee.

She made the statement after learning that the City Council has asked the executive department to submit Supplemental Budget-1 this year for the loan amortization payment.

In its session last Wednesday, the City Council asked the executive department to use continuing appropriations, like the unspent P1.5 billion for drainage project, to fund this year’s SB-1.

Mercado, though, said the executive department will endorse SB-1 but it would contain the payment for the P2.4 billion, with the P8.35 billion in revenue earned from the sale of 45.2s hectare of the SRP last year as fund source.

“Whole amount gyud ang among i-push kay di ba, there is a computation nga duna gyud ‘tay forex loss? What’s the point of paying interest nga dili man na kinahanglan kay duna man tay kuwarta?” she said.

When asked about the City Council’s argument that validity of the sale of the SRP lot is questionable, Mercado said the case filed by one Romulo Torres questioning the sale has been dismissed already by the Regional Trial Court.

She said the motion for reconsideration filed by Torres asking the court to stop the city from using the SRP money was also dismissed.

“Unya unsa pa may point?” she said, saying that the executive department will still use the SRP money to fund this year’s SB-1.

She cited Section 6.6 of the subsidiary loan agreement between Land Bank of the Philippines and Cebu City for the SRP under Japan’s Overseas Economic Cooperation Fund loan that states that “the borrower (city government) shall not sell more than 51 percent of the 330-hectares of the Cebu South Reclamation while the loan is still in force and unless the proceeds shall be used to pay the lender (LBP) and OECF in full.”

“Kinahanglan gyud nato bayaran ang tanan kay lapas na ‘tas 51 percent sa total area. so, dapat bayaran na nato atong utang,” she said.

As of today, she said, at least 126-hectare of the reclaimed lot has been sold already to different developers.

“The point there is, puwede ta kabaligya if ibayad nimo ang proceeds ini’g bayad nimo in full,” Mercado said.

The city government entered into an agreement with the Japan International Cooperation Agency in 1996 for a Y12.315-billion (around P4.65 billion) loan to finance the reclamation of the 300-hectare SRP.

Mercado said the city’s executive department intends to wipe out the SRP loan to prevent foreign exchange rate loss while paying just the amortization.

She warned that the city will have to pay P2 million per day as penalty if the city government cannot pay the amortization on February 20.

“Ang penalty kay it’s 24 percent of the principal loan man. Additional loss sa city and dili pa gyud na i-allow sa COA (Commission on Audit) ang pagbayad og penalties and charges,” she said.

Mercado said the city government has already complied with all requirements needed to pay the loan in full.

Asked if they will attend the invitation of the City Council’s committee on budget and finance, Mercado said it will depend on Mayor Michael Rama.

“I told the SP (Sangguniang Panlungsod) secretariat to send the invitation to Mayor Mike then kun unsay instruction ni mayor, we will follow kay it is an executive act. So far, wala pa mi…. I don’t think there is already an invitation sent to the Office of the Mayor.  Wala pa ta naka-receive og instruction. So, ang Local Finance Committee maghuwat nalang mi,” she said.

Last year, the City Council deferred deliberation of the P2.8-billion SB-1, which contains the P2.4 billion prepayment of SRP loan, because of the case Torres filed questioning the SRP lots sale.

Meanwhile, arguing that suspension of the deliberation on last year’s SB-1 was based on justifiable ground, the City Council has sought the denial of the mandamus petition filed by former Cebu City councilor Jose Daluz III, to compel the legislative body to act on the 2015 SB-1.

Through lawyer Cecilia Jugao-Adlawan, the council said the proposed 2015 SB-1 was being questioned by a taxpayer, Romulo Torres, before the court hence its decision not to deliberate on it.

“In the case at bar, the legality of the proposed SB-1 was frontally challenged at its inception in the case entitled “Romulo Torres v. Sangguniang Panlungsod ng Cebu” read the joint comment filed before the court.

Daluz, though, said suspension of the deliberation was without just cause.

“There is a legal mandate for respondent Sangguniang Panlungsod (SP) to act on SB-1 and not just sit on it without justifiable ground,” he said in his petition, adding that the SP has powers, duties and functions to enact and approve ordinances and resolutions and appropriations of funds for the general welfare of the city.

The council said that passage of the 2016 annual budget has rendered Daluz’s petition moot and academic, that Daluz has no clear legal right to compel the body, that deliberation and enactment of an SB is not ministerial but discretionary on its part, that a mandamus cannot compel its members to perform purely legislative functions like the deliberation on SB, and that deferment of the deliberation was fully sanctioned by its rules and proceedings.

The council also argued that per jurisprudence, a taxpayer’s suit would only prosper if the government act being questioned involves disbursement of public funds.

“In this case, it is readily obvious that there is no disbursement of public funds. A perusal of the petition reveals that petitioner is not claiming any illegal disbursement of public funds. On the contrary, what petitioner is asking is that public funds be disbursed through the enactment of SB-1 for 2015,” the council said.

It asked the court to deny Daluz’s petition as well as his application for the issuance of a temporary restraining order and/or preliminary injunction.  (FREEMAN)