THE Land Bank of the Philippines (LBP) has granted the Cebu City Government a reprieve in its amortization payment for the South Road Properties (SRP), which falls due this Saturday.

Mayor Michael Rama announced yesterday that the state bank has decided to defer the City’s payables on Feb. 20, which amount to P188 million.

LBP President and Chief Executive Officer Gilda Pico, he mayor said, has allowed the City to defer the payments until August instead, without declaring the City in default.

But asked how much the City would have to pay in August, Rama declined to say.

The City can either pay the P188-million due this month together with the P187-million amortization due on Aug. 20, or pay the entire P2.4-billion loan balance for the SRP—the latter a move the mayor desires.

“Just wait. At least the news is there is no worry to be entertained because there is a deferment and I talked directly with Pico, who is so nice and immaculate,” he said.

“All the statements of my opponent telling about the City being in trouble or at risk, these are figments of their imagination. It is a matter of bringing the truth. So I brought them the truth,” he said.

Rama, however, did not show any document from LBP about the deferment. He said that it will follow.

Former mayor and south district congressman Tomas Osmeña, in a separate news conference yesterday, said he wants Rama to pay the amortization due by Feb. 20.

“Why ruin the credibility of the City? It is very unfair to all of us. This would mar our credit record. Maybe he doesn’t care but I care,” he said.


The majority bloc of the City Council headed by Osmeña’s wife Councilor Margarita Osmeña also wants the mayor to pay the amortization by submitting a first supplemental budget this year, considering that the P6.4-billion annual budget has no appropriation for SRP loan payments.

LBP serves as the conduit for the loan that the Japan International Cooperation Agency (Jica) lent the City in 1995 to develop the SRP.

Told later that LBP has reportedly decided to defer the City’s amortization payment until August, the former mayor said that was “very good.” By then, he quipped, Rama will no longer be mayor.

Rama and Osmeña of the Bando Osmeña Pundok Kauswagan will face each other again in the mayoral race this May 9. The former political allies first fought for the city’s top post during the 2013 polls. Osmeña lost to Rama, his vice mayor for three terms.

Rama met with LBP’s Pico in Manila two weeks ago. He met again with her the other day about the matter.


He also met the other day with officials from Jica’s Philippine office, about the deferment of the amortization. Pico earlier raised the concern that Jica might declare Land Bank, the borrower on record, in default.

“I expressed to them intensely, profoundly, the need to extend just, reasonable consideration on the matter in view of the fact that had it not been for political skirmishes, it (entire loan) would have already been paid last year,” the mayor said.

He referred to the proposed P2.8-billion first supplemental budget last year, which included the full amount to complete payments on the SRP loan.

The council’s majority bloc, however, has refused to act on the budget, citing a case Atty. Romulo Torres filed that seeks to stop the use of the City’s P8.35 billion. That amount was the down payment for a 46.2-hectare SRP lot sale the City embarked on in 2015. Torres has questioned the mode of disposal.

Rama said all the clearances for the prepayment of the loan have been complied with, including concurrence from the LBP, the Department of Finance through the Bureau of Local Government Finance, and the Bangko Sentral ng Pilipinas.

The only thing needed was the council’s approval of the budget and an authorization for Rama to proceed with the full payment.


In the council session yesterday, Councilor Gerardo Carillo delivered a privilege speech and asked the council to authorize the mayor to pay for the P2.4-billion SRP loan balance.

He said it has become a contractual obligation because the City has already disposed of more than 51 percent of the 330-hectare development.

Carillo, a lawyer, cited Section 6.6 of the subsidiary loan agreement for the SRP that the City, LBP and Jica signed in 1996.

It states that City should not sell more than 51 percent of the SRP while the loan is still in force, unless the proceeds shall be used to pay the LBP and Jica in full.

Out of the 330-hectare SRP, Carillo said, the City can only sell or use 189 hectares. Deducted from the 330 hectares were the 60-hectare Pond A and open spaces.

From the 189 hectares, Carillo said, the City is supposed to dispose of only 94.5 hectares while the loan is still in force.

At present, however, Carillo said the City has already disposed of more than 142 hectares.


That includes the 45 hectares sold to the SM Prime Holdings Inc.-Ayala consortium and Filinvest Land Inc., 30 hectares to SM alone, 10 hectares to Filinvest and 40 hectares for the Filinvest and City joint venture agreement.

On top of that, Carillo said, the City has also disposed of 12.7 hectares in donations. Five hectare went to the Department of Public Works and Highways, five hectares to the University of the Philippines, two hectares to the Department of Health and 7,000 square meters to the Court of Appeals.

Councilor Sisinio Andales, however, said that the Torres case is still pending before the Court of Appeals.

Councilor Osmeña, chairperson of the council’s committee on budget and finance, for her part, said that the LBP has not even sent a demand letter to the City to pay for the entire loan.

“Where is that demand letter? They did not tell us to pay it off. Meaning it is not due yet. The demand letter does not exist. So why consider it as an obligation?” she said.

Andales then said the entire loan can be paid off if the executive department would find other sources of funds for it, instead of using the SRP proceeds.