Issue of May 12, 2019
Mt. Province

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Dad explains reason for denial of request for loan agreement
by Rimaliza A. Opiña

One of the councilors who voted for the resolution denying the request of Tuba, Benguet Mayor Ignacio Rivera to ratify the terms and conditions for the loan agreement of the municipal council from the Development Bank of the Philippines explained the reason for their denial.

Councilor Joshelle Bentrez said the municipal council is supportive of plans of the executive to come up with projects that will improve the lives of their constituents but she said the denial was because they wanted that before proceeding with the plan, this should be backed by a feasibility study and other requirements that will justify the loan.

In 2017, the local government unit planned to borrow P45 million from the DBP for the acquisition of a lot to be used as future site for the town’s “economic enterprise.”

On the same year, the council passed a resolution authorizing the mayor to apply for a loan with DBP.

In January 2018, the DBP approved the LGU’s loan application.

Public consultations later ensued to inform the residents of Tuba that the LGU borrowed money to finance the purchase of a lot.

At that time, full acquisition could not proceed because of the absence of an ordinance confirming the agreement between the mayor and the bank.

The lot owner later withdrew the offer to sell but a new lot owner offered to sell to the LGU. 

Using the first draft agreement between the LGU and DBP, Rivera and Edgardo Manalo of the DBP signed the contract then referred the same to the municipal council to ratify.
In January, the council denied the mayor’s request to ratify the contract.

Bentrez said the council’s decision not to ratify has basis.

Among the reasons cited by the council are the terms favors only the DBP; the gross receipt tax should not be shouldered by the LGU; and the interest rate of five percent per annum for 15 years is disadvantageous to the LGU because the first agreement with the DPB was set only at 4.5 percent per annum. 

Rivera did not appeal the council’s decision but he answered the council’s reservations in a letter addressed to Vice Mayor Clarita Sal-ongan.

Rivera said the transaction is regular and can easily be remedied.

He also said the LGU is not at a disadvantage because the tax that the LGU will pay will still accrue to the national government. Further, the interest would not have increased, had it not taken the municipal council too much time to deliberate on the contract between him and the LGU.

Bentrez, who is not seeking reelection, said she has been receiving reports that the plan for an economic enterprise did not materialize because of her and two other colleagues’ opposition.

She said they continue to support plans of the executive but this has to go through the legal process and backed by studies so as not to shortchange the government.

“The case of La Trinidad where they entered into a loan then for the acquisition of a machine that was supposed to address the waste problem but turned out that they could not pay for it should be a basis for Tuba to be more careful of its transactions,” Bentrez said.

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