Osmeña’s role in loan signing questioned

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Friday, August 22, 2014

A TEAM Rama ally is asking why former Cebu City mayor Tomas Osmeña signed and entered into a loan agreement with the Land Bank of the Philippines for the South Road Properties (SRP) in 1996.

“On what capacity was he signing the agreement?” lawyer Jocelyn Pesquera asked.

Pesquera, who served as city councilor in 1998 to 2007, asked Osmeña if he was authorized by the City Council when he signed the agreement.


“I was not yet part of the council that time that is why we need a clarification,” she said.

A matter of legality

Pesquera also wants the officials in 1996 to clarify why they agreed for the accrued interest of the loan to be subjected to another interest compounded annually.

“We were made to understand that the City will not pay an interest for five years after the loan was granted but charges were still made,” she said.

Pesquera posted on a social networking site a copy of one of the pages of the loan agreement signed by Osmeña as Metro Cebu Development Project (MCDP) co-chairman and a Land Bank official.

She said that all agreements the City enters into must be signed by the mayor that is why she is questioning the legality of Osmeña’s signature on the loan document.

Pesquera said Alvin Garcia was mayor when the agreement was signed.

Reducing obligation

Asked why she only raised the matter 18 years after it was undertaken, Pesquera said she only found out about it when Mayor Michael Rama asked her to go over the agreement and conditions set by Land Bank on the loan the City availed itself for the SRP.

Pesquera said they’ve been looking for means to reduce the City’s obligation to pay the loan and its interest.

Rama’s representatives were reviewing the loan agreement since the mayor plans to convert the foreign loan for the reclamation project to a domestic loan to lessen the City’s annual payment and to sell the lots at the SRP to settle the debt.

Osmeña, for his part, said he only signed the loan agreement as a witness and not as mayor of the city.

“Tell that dumb lawyer that I signed as a witness. Anybody can sign as a witness but typist typed MCDP co-chair under my name. The typo is as superfluous as Pesquera’s existence,” Osmeña told Sun.Star Cebu in a text message.


Garcia, in a separate interview yesterday, said his signing of the loan agreement was authorized by the council.

He also confirmed that Osmeña signed the agreement as a witness. He didn’t think that needed the legislative body’s nod.

Last Tuesday, the City Treasurer’s Office remitted its 20th payment amounting to P200 million to the Land Bank.

Land Bank is the conduit bank of the Japan International Cooperation Agency and the Department of Finance’s collector for the SRP loan.

Jica had lent the City 12.315 billion yen, or P5.3 billion, in 1995 for the implementation of the SRP. The amount will be paid for 30 years ending in 2025.

The City still has a balance of more than P3 billion.

Published in the Sun.Star Cebu newspaper on August 22, 2014.

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