FINALLY, for the first time since it began operations in 2009, the Tagbilaran City Square will bare its financial records to a panel of city government officials to scrutinize the accuracy of rental payments to the city government.  In an unprecedented move, City Mayor John Geesnell Yap decided to exercise the city government’s right to examine financial records of the City Square including the inspection of the entire commercial complex and its operations after its key investors snubbed two Committee Hearings conducted by the Sangguniang Panlungsod (SP) Committee on Public Accountability and Investigation. Invoking provisions of the Rehabilitate-Operate-Transfer (ROT) Agreement which became the basis for the restoration of the former Agora Public Market and its subsequent operation for a period of 25-years by a private consortium, the city mayor issued a letter of authority to a panel to immediately conduct an inspection of City Square finances and operations. This developed following a request by City Councilor Alexander Lim to the mayor for such authorization after the Committee on Public Accountability and Investigation failed to elicit the presence of private investors Juan Apostol and Kho Beng Sum or even their authorized representatives during its hearings.

The said SP Committee, chaired by Lim, is conducting the investigation following complaints that City Square’s payments of rental to the city government during the previous city administration have been un-remitted, un-recorded and inaccurate. In his letter of authority, Mayor Yap declared that in line with Article V, Section 1 to Section 2 of the ROT Agreement, “the city or its duly authorized representative has the right to enter upon and examine the premises as well as [the] Books of Accounts at all reasonable times, both during the construction and operation period, which shall not be impaired by the Project-Proponent Operator (private investors).” The city mayor likewise cited that the parties of the ROT contract “have the right to terminate the agreement without resorting to legal proceedings in case of any substantial breach of conditions/obligations and responsibilities. A pattern of continuing or repeated non-performance, willful violation or non-compliance of the terms and conditions [of the ROT] will be deemed a fundamental breach of the Agreement.” Together with Lim in the investigating panel, the mayor tasked City Councilor Adam Jala, City Councilor Bebiano Inting and City Accountant Eleanor Beniga to conduct the on-site inspection at City Square.

In an interview, Councilor Lim said that the public seeks transparency in reporting the real income of the city from the prime commercial property which is being leased by the private consortium. An initial inquiry by the SP revealed that no proper accounting of rental income coming from the project has been made since 2009 when the City Square became fully operational. Based on the ROT, the city is supposed to receive a guaranteed minimum yearly rental of P5-million, or a much higher amount based on 20% of the developer’s total revenues. According to Lim, the ROT is very specific on the frequency of payments, which is on a monthly basis, but this was apparently disregarded by the management of City Square. The lawmaker also received reports that the payments made by City Square were not remitted or recorded on the date that payments have been made by City Square. Lim disclosed that Section 11 of the ROT Agreement states that the private investor shall pay a monthly rental to the city at the rate of 20% of the gross monthly receipts, but in no case shall be less than P5-million per year, until the termination of the concession period.

“The questions that need to be resolved are (1) can the City Square management show proof of monthly revenues?, (2) Are they (City Square management) adhering to Section 11 of the ROT?, (3) Do we have proofs of payments of rentals on the part of the city government and the City Square?” Lim added. Considered a flagship project of former City Mayor Dan Lim, the City Square has been at the center of controversy during the previous administration after Councilor Lim and two other lawyers led the filing of a “class suit” questioning the project. A similar case have been filed at the Ombudsman. An examination of the city government’s Summary Statement of Receipts and Expenditures for the years 2009, 2010 and 2011 would show that no rental or leasehold income has been reported to reflect the yearly payments of City Square, according to Lim. The lawmaker said that even the initial report made by the City Accountant and City Treasurer “cannot be justifiable since this was not based on actual computations from the revenues of the City Square”.  Lim explained that while the SP hearing is being conducted in aid of legislation, the committee findings and recommendations could become the basis of reviewing the ROT contract. “Apart from the SP’s mandate to review and oversee the implementation of enacted legislation covering the City Square ROT Contract, the city council is also responsible in ensuring that all properties and assets belonging to the City are properly utilized to fully benefit the people of Tagbilaran,” he stressed.