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Thursday, April 21, 2005
Talisay will pay, says DOJ chief
By Gingging A. Campaña Sun.Star Staff Reporter
With Allan I. Varquez
Talisay City is willing to pay Cebu City for the cost of developing a portion of the South Reclamation Project (SRP) that Talisay is claiming as its own.
Justice Secretary Raul Gonzalez said it is now up to Rep. Eduardo Gullas (Cebu, 1st district) and Cebu City Mayor Tomas Osmeña to reach an agreement on how much Talisay should pay for the reclaimed portion.
Gullas and Osmeña met separately with the justice secretary in Manila.
As news of the offer developed, Cebu City’s councilors learned in a briefing yesterday that City Hall could end up paying as much as P11.6 billion total in 2025, unless loan payments are made earlier.
Gonzalez is expected to come out this week with his opinion on the SRP controversy. This will determine whether the Department of Environment and Natural Resources (DENR) will give Cebu City a title for the reclamation project.
A title will enable Cebu City to do business at last on the SRP and ease the pressure of paying for a loan that costs City Hall some P1.5 million in interests each day.
Territory
Cebu City Hall has paid, in the last 10 years, about P976 million in guarantee fees to the National Government, for its SRP loan.
This forms part of the P1.4 billion in payments the City Government has made since 1996 to the Land Bank of Philippines, for handling the loan.
The City is due to pay the principal on Aug. 20 yet. Its loan amounts to a principal amount of 12.291 billion yen, plus 1.28 billion yen in capitalized interest.
Congressman Gullas, Gonzalez said in a radio dyRF interview yesterday, offered to pay Cebu City for the SRP portion that Talisay is claiming as part of its territory.
Talisay City Mayor Socrates Fernandez said he and Gullas had talked about the proposal even before the two cities’ dispute reached the DENR.
“It is not surrendering our territorial claim. We will pay for the land that Cebu City used to cover our seawaters,” Fernandez said in a telephone interview last night.
“Ug naa’y masapaw sa atong boundary dili nato angkonon, ato gyod ning bayaranan kay basin ug magabaan ta (If there are portions that fall within our boundary, we will pay for that development),” Fernandez quoted Gullas as saying early this year.
Guarantee
Councilor Jocelyn Pesquera believes that if the titles for the SRP are issued to Cebu City in May, it will no longer have to pay for the guarantee fees.
Otherwise, the fees could go on until it has fully paid its loan amortization in 2025.
But once the titles are annotated and mortgaged with the Land Bank, these are already enough guarantees that the City Government is capable of paying for the loan.
“Dato na kaayo ang National Government, Mr. Chairman. They already earned P976 million from us,” Pesquera told the council in its executive session yesterday morning with Land Bank.
Unfortunately, the guarantee fee from the Philippine Government was a primary requirement in the bilateral agreement between Land Bank and the Overseas Economic Cooperation Fund, now the Japan Bank for International Cooperation (JBIC), in 1995, a Land Bank official said.
Pesquera agreed. But once the property is titled, the agreement is already between the local government and the National Government, and not with JBIC. The guarantee fee stops with the Department of Finance (DOF).
Balance
Pesquera wanted to know how much the National Government already earned from the City so “it will have to balance if we will really pursue suing the National Government.”
Councilor Jose Daluz III, for his part, said it may be too late to question the guarantee fee because the City agreed to it in the first place.
He suggested that the City check with the National Government on the possibility of lowering the fees.
If Cebu City pursues its plan to stop paying in August and sues the National Government for not releasing the titles, Land Bank can automatically debit from the City’s existing deposits, including its P608-million yearly Internal Revenue Allotment (IRA) share.
This, Pesquera said, is provided under Section 2 of the loan agreement.
Councilors sought an executive session with representatives from Land Bank and JBIC Manila to find out: the total loan amounts released to the City, the amount the City has paid so far and its payables.
P11.6 billion
JBIC, however, did not respond to the invitation that the council secretariat sent last April 8.
Elsie Fe Tagupa, department manager of the Land Bank Cebu Lending Center, in her presentation, told the council that by 2025, the City will have fully paid up P11.6 billion in principal, capitalized interests, one-percent guarantee fees and .1 percent handling fees.
This will happen unless the City pays ahead of time. Early payments will also diminish interests and guarantee fees, Tagupa said.
The original loan amounted to P2.2 billion.
At the current exchange rate of P.54 to the yen, the City is liable to pay P6.4 billion (principal) plus P689.64 million in capitalized interest.
This does not include the charges imposed by Land Bank in handling the loan, as well as the one-percent guarantee fee the finance department collects.
Tagupa said the City has so far paid about P1.4 billion in interests and guarantee fees.
She clarified, however, that she “cannot peg the loan in peso because the yen is still fluctuating.”
Councilor Hilario Davide III sought Tagupa’s opinion on the City’s capacity to pay.
“I think what is critical here is the titling. There will be no locators and no right to lease if there is no title. If this can be leased out, you’ll have more than the capacity to pay,” Tagupa said.
(April 21, 2005 issue)
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