Mayor’s ‘authority’ to enter into proposed MOA recalled

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Friday, April 4, 2014

THE Lapu-Lapu City Council recalled the authority it granted Mayor Paz Radaza to enter into a proposed memorandum of agreement (MOA) with the Mactan-Cebu International Airport Authority (MCIAA) establishing a payment scheme for the latter’s overdue taxes.

The council wants further review of the proposed MOA, which involves waiving tax penalties.

As of December 2013, the MCIAA owes the City Government P1.79 billion in real property taxes, including penalties.


The MOA, drafted by the MCIAA and the City Mayor’s Office, provides that a joint committee be formed to survey MCIAA’s real properties and determine the tax amount it owes the City.

The MCIAA will then pay the tax computed by the committee. But it is given the option not to pay the surcharges or penalties, provided it gives the City financial assistance in the amount not less than the total penalties.


Councilor Francisco Senerpida, in a resolution, said the waiving of penalties violates the Local Government Code.

He said an ordinance granting tax exemption or tax relief would be required before the City can enter into a MOA that waives tax penalties.

On March 19, the council approved a resolution granting authority to Mayor Radaza to sign the MOA.

But during its next session on March 26, it approved a resolution recalling the approval of the earlier resolution.

Radaza, in an interview with reporters, said she did not receive the resolution granting her authority to sign the MOA. What she received, she said, was only the resolution recalling the approval of the one granting her authority.

“I find it awkward that they recalled the authority they gave me, when I haven’t even received any resolution giving me the authority,” she said.

She returned the resolution unsigned to the council. Senerpida, during last Wednesday’s session, said he deemed the mayor’s return of the resolution unsigned as a veto.

He moved to override the veto and got the support of the entire council.

‘It’s their right’

In a phone interview, MCIAA General Manager Nigel Paul Villarete said he respects the decision of the council.

“It’s their right to review the MOA and make sure it is fair, balance and not
disadvantageous to the City,” he said.

In a separate interview, City Legal Officer Yuri Beluan said the decision of the council doesn’t mean the City can longer enter into a MOA with the MCIAA.

“The purpose of the recall is to give the parties more time to study the MOA,” he said.

In July last year, the MCIAA offered to pay the City P23 million in real property taxes provided the City drop its pending case before the Supreme Court (SC). Radaza declined the proposal.

The MCIAA also offered to extend P10 million financial assistance to the City for the implementation of infrastructure projects adjacent to the airport, but this too was rejected.

Beluan said the City and the MCIAA held meetings to come up with a better MOA.

Under the new proposed MOA, the MCIAA will pay P37.2 million for the real properties used wholly for commercial purposes. The amount includes the P12.2-million tax penalty.

The penalty will be waived, however, once the MCIAA extends P15 million in financial assistance to the City for infrastructure projects.

Under the MOA, both parties will await the decision of the SC on whether MCIAA has tax liabilities for the properties used as runways and taxiways.


In another development, Department of Transportation and Communication (DOTC) Secretary Joseph Emilio Abaya yesterday said they will award the Mactan airport Public-Private Partnership (PPP) project soon.

“I give you my personal assurance that DOTC, along with the bids and awards committee (BAC), maintained and will continue to maintain a level playing field. There are no sacred cows, no favored contractors in DOTC and we pride ourselves for that,” he said.

In a press conference after the inauguration of the Pier 1 Passenger Terminal 1 of the Cebu Port Authority, which he attended, Abaya said BAC should come up with a resolution with two recommendations: the approval of the MCIAA Board and the approval
of the secretary.

“Those are the two approvals required and I think it will not go beyond next week. The BAC has not come up with a resolution yet. It could happen today, so, there might be a (MCIAA) board meeting called tomorrow, so that is the process,” he said.

He said all the remaining processes will be done within this month.

The awarding was delayed because of the complaints Filinvest-Changi Consortium raised against GMR-Megawide Consortium immediately after DOTC announced that GMR-Megawide placed the highest bid among the seven bidders.

Concession bids

Abaya said the P14.4 billion offered by GMR-Megawide Consortium and the P13.999 billion offered by Filenvest-Changi Consortium are concession bids and not a mere offer of money.

“That was the bidding parameter. That was a major component on how the bids were evaluated. Of course, the other requirements as to the specs of the terminal were part of the evaluation,” he said.

He said that within 20 days of signing, whoever wins has to give to the government the amount that they bid. Aside from that, it has to construct the airport according to the specs it was required.

“So not only that government would receive the money (concession bid) but they will also fork out money to construct the airport at no cost to government and they should be able to recover the business through fixed terminal fees,” Abaya said.

But the DOTC secretary clarified that the government will regulate terminal fees and the winning bidder cannot raise these on its own.

“Likewise, the commercial arrangement in and around the airport will be handled by them (winning bidder),” he said.

Published in the Sun.Star Cebu newspaper on April 04, 2014.

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