CEBU, Philippines - With the February 20 due date getting near, Cebu City Mayor Michael Rama is asking the Land Bank of the Philippines to demand the city to pay its P2.4-billion South Road Properties loan balance instead of paying the P180-million amortization.
If the city government cannot pay the amount, Rama said LBP should sue the members of the council for deferring the deliberation of last year’s P2.8 billion Supplemental Budget-1, bulk of which is intended for the payment of the loan balance.
“There is no need for them (LBP) to be bringing to us the amortization, send us a demand letter, the money is around. If they will not be, let them sue us. Then sue the Sanggunian (City Council), don't sue the mayor because the mayor is ready to pay,” Rama said.
He said he visited the Japan International Cooperation Agency and the LBP office in Manila last week to inform them of the situation.
According to Rama, LBP has the authority to demand from the city government to pay the whole outstanding balance under the Subsidiary Loan agreement between the bank and the city for the Cebu South Reclamation.
Section 2.1 of the agreement states that "in any of the event of default, the lender, by written notice to the borrower, may suspend in whole or in part any unreleased disbursement and forthwith declare all the principal then outstanding, with the interest and other charges thereon, to be due and payable immediately, and upon such declaration such principal, interest and other charges shall become immediately due and payable.”
LBP has sent its billing statement to the city government to pay the over P180 million amortization of the SRP loan by February 20.
The council had earlier asked the executive department to submit for SB-1 this year the payment for the amortization since it did not include in the P6.4 billion approved 2016 Annual Budget the amortization amount.
But Rama has said the executive department will not submit for SB-1 this year for the said amortization of the loan.
As of yesterday, City Treasurer Diwa Cuevas said the executive department has not yet prepared the SB-1 asked by the council.
“Wala pa gihapon mi kalibutan. Mag-talk pa ni mayor. Puros mi nangaguol what will happen ani,” she said.
Rama said he has yet to know LBP’s position as to the provision of the Subsidiary Loan agreement.
He is referring to Section 6.6 of the agreement which states that “the borrower (city government) shall not sell more than 51 percent of the 330-hectare 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.”
In 1996, the city government entered into an agreement with JICA for the ¥12.315-billion or around P4.65-billion loan to finance the reclamation of SRP.
As of now, the city still owes JICA over P2.4 billion including the pre-termination fee. The remaining balance is supposedly due in 2025.
Rama said the executive department should not push for an SB-1 this year as urged by the council since it has already pushed for the P2.8 billion SB-1 last year, which the council deferred.
The mayor said the city should wipe out the outstanding balance of the loan to save the city from forex rate loss and have the money used to other projects. — (FREEMAN)