TomO OKs P2.4-B prepayment, but questions use of SRP sales proceeds

FOR former mayor and Bando Osmeña-Pundok Kauswagan (BO-PK) leader Tomas Osmeña, there is nothing wrong with paying off the P2.4-billion balance of the South Road Properties (SRP) loan.

What he is opposed to is the use of SRP sales proceeds to pay off the loan pending resolution of a court case filed by Romulo Torres, said
Osmeña said councilors including those allied with Mayor Michael Rama could be held liable if they allow the use of the P8.35-billion SRP sales proceeds while the

Court of Appeals is reviewing Torres’ petition for a Temporary Restraining Order (TRO) against the city.

“What is questionable is the source of the pre-payment. We do not want to take that risk,” Osmeña said in a phone interview with Cebu Daily News.

There is also no rush to make full payment now, he added.

Osmeña said that while he is not familiar with the provisions of the SRP loan agreement, he is certain that what the city has to pay now is only the P173-million amortization that is due on Saturday.

Landbank, however, has agreed to defer the Feb. 20 amortization payment to Aug. 20 this year on the condition that the city allows the tagging and earmarking of the amount due, plus charges, against its deposit account with the bank.

Osmeña laughed at Rama’s challenge asking the Land Bank of the Philippines to sue the city if they fail to pay on the due date.

“Rama, in effect, is like asking Landbank to shoot itself.  If Landbank sues the city, it’s like them saying that it’s okay for you to cut my income,” Osmena said.

Osmena said the 5.7 percent interest per annum that the city is paying for its SRP loan is shared by JICA – 2.7 percent; Landbank – 2 percent and the Department of Finance (DOF)– 1%.

The bulk or about 80 percent of the about P500 million in amortization that the city is paying per year goes to interest payments.

“I am willing to make a bet that Landbank will not sue,” said Osmena.

Osmena asked Rama to stop lying.

Rama’s saying that the city “should already pay the loan in full now” is like telling the Cebuanos that there is no other way but to hand in payment, the former mayor said.

Osmena said BO-PK councilors have asked Rama to pay a bond “to protect the council from suit” before full payment is made.