COA audit in December 2022 assailed flaws of TGC contract: it has “semblance of being void.”
Councilor Mary Ann de los Santos last October used COA’s flagging on Tokagawa’s manner of collecting parking fees to oppose C2W/Megawide use of its own collectors at Carbon Market.
Mayor Mike Rama ordered an investigation into defects of Tokagawa deal but suspended tax examination.
TOKAGAWA Global Corporation (TGC), Cebu City’s pay-parking service provider, has remitted the total amount of P42.858 million, for the period from January 2019 to September 2023 as the City Government’s share. But the city treasurer said it cannot determine if the amount paid is “true and correct.”’
NO ONE’S WATCHING. An oversight committee of three persons, provided by the joint venture agreement (JVA) with TGC, was “non-existent or not functional from the very start.” The committee was to “regularly check/monitor” Tokagawa’s income/statement on the parking fee collections, with weekly reports containing daily breakdowns.
City Treasurer Mare Vae F. Reyes -- in a November 6, 2023 letter replying to a City Council resolution that asked about the status of the JVA with Tokagawa -- said her office sent last March 9, 2003 a letter of instruction listing the documents to Tokagawa. is required to submit. Reyes said her office had not yet received all the papers it needed for an audit of TGC’s collections. But by order of Mayor Michael Rama, the treasurer has suspended tax examination of Tokagawa.
MAJOR OMISSION. It now appears that TGC started remitting only in January 2019. The first JVA for on-street parking with Tokagawa took effect November 22, 2018, when Tomas Osmeña was mayor, and lasted for three years, or until December 2022. The second JVA was signed by Mayor Rama, to last for five years, or until January 2027.
TGC’s performance under the JVA was supposed to be watched by an oversight committee, which apparently, the city treasurer said, was “non-existent and non-functional from the very start.” Both the Tomas and Mike administrations failed to correct that major omission.
The two mayors must not have also noticed the deficiencies flagged by COA in its 2022 audit, unless they were also included in previous audits and didn't act on them.
Mayor Rama, in a talk last October 24, 2023 on the City Hall-owned broadcast media, ordered City Administrator Collin Rosell to review the contract with Tokagawa or find a new contractor to manage the city’s pay-parking system. Reacting, former mayor Osmeña advised Rama publicly, “Just obey COA.”
WHY THE PRIVATE CONTRACTOR. The purpose then, Cebu City News & Information (CCNI) reported, was “to address the issues of insufficient parking management services and illegal parking,” which had caused daily traffic congestion.
The City needed work force and expertise to handle the pay-parking enterprise. Which City Hall didn’t have during Tomas’s 2016-2019 term, when the contract ran for three years; nor during Labella’s and Rama’s term, when it has been running for another five years.
WHERE THE CITY FAILS. What seems sorely needed -- as the COA 2022 audit and Treasurer Reyes’s recent report to the City Council have shown up and front -- is skill, along with care and diligence, in crafting the joint venture agreement and overseeing the JVA partner’s performance.
The Tokagawa experience, added to similar cases involving big-ticket JVAs and contracts with private entities forged by the City in the past few years, must tell there’s not enough diligence and competence in crafting the deal in the office of the mayor and reviewing it in the City Council.
‘CORRECTION, NOT RESCISSION.’ Mayor Rama’s repeatedly-announced policy of “just correcting, not rescinding” agreements on city projects may have some merit but it also tends to promote “carelessness, shallowness, even sheer recklessness” in writing and reviewing JVAs.
Like, “Go ahead, let’s pass it, anyway we can correct it later.” That attitude seems to have infected a number of local executive and legislative officials who handle contracts.
The damage is not only on reputation of the persons and the institutions the JVA makers and reviewers represent. It must have cost a lot of public money already, at least in the Cebu City situation.
RULE OF LAW, a widely circulated advocacy and passion of Mayor Rama, appears to have suffered some heavy battering in the Tokagawa JVA.
The COA 2022 audit listed among the flaws of the deal these major assaults on the law:
 Failure to comply with requirements of City Ordinance #2154 of 2008, which the audit report said “earned” the JVA “a semblance of a void contract.”
 Violation of the Local Government Code of 1991, which requires that collection of local taxes, fees, charges and other impositions “shall in no case be let to any private person.”
On a related note, the City appears bent on allowing Megawide/C2W to use its own people to collect Carbon Market fees, despite caution on illegality from COA and from Councilor Mary Ann de los Santos. I asked Councilor Rey Gealon, chairman of the committee on laws, if correction of the Carbon JVA will have Megawide/C2W’s collectors as deputies hired by the city treasurer’s office, paid by the City and answer to the treasurer’s orders. Gealon’s answer last October 27: “That’s the best-case scenario, pero mora’g dili.” Meaning, the Local Government Code that COA has waved in the city’s face won’t be followed.
THE BUSINESS OF IT. COA also noted that the TGC joint venture is not actually to undertake an investment activity “but merely a concession of government function involving the collection of charges to a private entity.” No “clearly defined business objective” and no “clear management role given to the City,” the COA audit said, and “with the City having no knowledge about how the operation goes. “
COA also cited the “unfairness” in the renewed JVA that still gives 78 percent to Tokogawa and 22 percent to the City, “despite TGC needing less capital, the city’s assets having strong revenue capital and the expanded scope” in the new contract.
P.S.: MAYOR’S ORDER. An interesting postscript to the news -- which Treasurer Reyes wished “to emphasize” -- is that “our tax examination procedure has been temporarily suspended per a memorandum” from Mayor Rama. Reyes’s office has “accordingly deferred” tax examination of Tokogawa’s remittances to the City.