Bank loan

Pangasinan residents oppose LGU’s P500-M bank loan

Residents of the town of Sual in Pangasinan province hold a rally on Monday to protest against the planned 500 million peso bank loan from the municipal government, which they say will plunge the town into debt over the for the next 15 years due to 5% annual interest. (Photo by Yolanda Sotelo)

SUAL, Pangasinan – About 2,000 residents by Monday took to the streets to oppose the planned municipal government loan by the Land Bank of the Philippines (LBP) of 500 million pesos.

Janet Toreno, one of the protesters, said the loan would send the city into debt for the next 15 years because it bears 5% annual interest.

The loan of 500 million pesos has an annual interest of 4%, which is equivalent to 20 million pesos until December 2022, but the annual interest for the following years was not specified in the letter from LBP to the Mayor Liseldo Calugay.

“If the interest is 4% after December 2022, the loan, which is repayable in 15 years, would have a total interest of 325 million pesos. What would the local government do to repay the loan? Tax the peanut sellers?” Toreno told the Inquirer.

Toreno said there was no need to borrow money from the bank as the municipal government has an unspent budget of 595 million pesos in 2019 which could be used for the projects.

She said the money was not used because the city council did not pass a budget ordinance that year and no projects were implemented in 2020.

Another resident, Leward Caburao, also questioned the need to acquire a loan as the municipal government is always awash with money.

The 500 million peso loan is supposed to be used for various infrastructure projects and the purchase of multi-purpose vehicles, an order approving and ratifying the loan agreement between the local government unit and the LBP showed. The ordinance was voted on January 13, 2021.

Another resident filed a motion to declare the order of the loan agreement void, with a prior injunction and the issuance of a temporary restraining order.

Plaintiff Michael Abata from Baybay Sur village said he filed suit against municipal officials in Sual, “to prevent them from wasting public funds through the enforcement of an invalid or unconstitutional ordinance resulting in damages and harm to the taxpayers of Sual, Pangasinan.

The case was filed Nov. 26 against several senior city and LBP officials.

The complaint said that since there are 11 members of the Provincial Council, the required number of majority should be seven, but only six members approved the approval of the ordinance.

“The endorsement was apparently valid but not legally correct, and the endorsement from the municipal mayor’s office for endorsement was improper. Knowing of his disability, the mayor acted in bad faith. If he had not known about his disability, his lack of knowledge or ignorance does not excuse him,” Abata said.

He added that the LGU does not have the authority to enter into a loan agreement with LBP, but “despite the invalidity of the order and the absence of legal authority from the mayor, LBP has approved the loan”.

City officials have yet to release statements about the protest. INQ

JPD

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