THE Cebu City Government is not allowed to use the initial payment of P9.8 billion for the lots measuring 45.2 hectares at the South Road Properties (SRP) that were sold to three giant developers in 2015 during the administration of former mayor Michael Rama.
In a letter to Mayor Tomas Osmeña, Acting City Accountant Arlene Rentuza explained that a revenue is recognized when the legal title is passed to the purchaser, in compliance with International Public Sector Accounting Standards 9.
In the case of the SRP sale, Section 3.4 of the Deed of Installment executed on Aug. 7, 2015 provided that only upon full payment will the Deed of Absolute Sale be executed for the purpose of transferring the title.
Rentuza said that the P9.8 billion was recognized as other deferred credits in their books of accounts.
According to Commission on Audit (COA) Circular 2015-009 prescribing the Revised Chart of Accounts for Local Government Units and COA Circular 2016-004 that provides the Guidelines on the Conversion of the Chart Accounts, other deferred credits is a liability account used to record the income received in advance not falling in any of the specified deferred credit accounts.
The City Legal Office (CLO) said that based on the opinion released by the City Accounting Office, the title over the amount paid will accrue upon full payment of the entire contractual obligation of the buyers.
CLO also expressed its reservation on using the fund since the receipt of payments last year were made under protest.
When sought for comment, Osmeña stood pat on his decision not to use the money for any purpose as he plans to rescind the contract of the sale.
“The transaction is illegal and by using the funds, which is found illegal, we will get a disallowance,” he told reporters.
Osmeña said that the City can survive by selling three hectares of land at the SRP.
“Let’s leave something para sa kaugmaon sa atong mga kabataan (for the future of our children). I just want to demonstrate that we can survive without that 45-hectare sale,” he said.