Group gets proof loan ‘beyond’ city borrowing capacity
SAN PABLO CITY, Laguna, Philippines—The group of taxpayers here blocking the city’s P900 million-loan presented to the court Friday a Department of Finance (DOF) document which showed that the money it wanted to borrow was “over and beyond” the city government’s borrowing capacity.
Local church and civic groups submitted the certification to support its appeal to a decision by the Regional Trial Court here on Aug. 10 that denied their petition for a temporary restraining order (TRO) on the loan deal.
According to the certification obtained by the groups from the Bureau of Local Government Finance (BLGF), which is under the DOF, “the net borrowing capacity of San Pablo City for calendar year 2011 is P500.46 million with a 12-year repayment period, inclusive of the one-year grace period and 8 percent interest rate.”
This means that the city government “secured P400 million more than its allowable debt capacity (creating an) imminent danger to the city’s treasury,” said the motion for reconsideration for the TRO filed during Friday’s hearing by the petitioners represented by lawyer Restituto Mendoza.
With the BLGF certification, Mendoza said they hoped they would be able to convince the court to grant the TRO.
“Approved in principle” by the Philippine Veteran’s Bank, the loan was obtained for various obligations and projects: P140 million to pay a standing loan with Land Bank of the Philippines; P200 million each for a multipurpose convention center and a tourism and economic center; P180 million to convert the Dalubhasaan ng Lungsod ng San Pablo, a city college, into a university; P130 million for a food and transport terminal; and P50 million to buy an 8- to 10-hectare land for the convention center.
An ordinance authored by councilor Edgardo Adajar and approved by the city council in June authorized the mayor to secure the loan but the TRO petitioners said it was approved without a public hearing.
The petitioners also alleged that the loan agreement was “railroaded” as it was passed without a feasibility study.
On Aug. 23, the city council passed another ordinance “waiving the right of the city to the Bank Secrecy Law” to meet the last condition for the release of the loan.
Adajar, insisted over the phone that the city government has a good credit standing with financial institutions and capable of paying its loans.
He said he has yet to see the DOF certification but maintained that the PVB would not have granted the city the loan if the bank “didn’t see us capable of paying and if the projects would not bring a return on investment.”
At least 100 petitioners held a rally on Friday at the public park here before they filed the petition for a TRO.
