Iloilo City Legal Office finds ferry terminal partner ‘non-compliant’

By Joseph B.A. Marzan

The Iloilo City Legal Office (CLO) found that the city government’s joint venture partner in the Guimaras-Iloilo Ferry Terminal (GIFT) had been remiss in its contractual obligations and recommended possible renegotiations on the city’s revenue shares.

In the May 16, 2023 initial report to the Sangguniang Panglungsod’s Committee on Transportation signed by Atty. Edgardo Gil, the CLO recommended that Double Dragon Properties Corporation (DDPC) be directed to comply with its obligations in accordance with their Joint Venture Agreement (JVA).

The report found that DDPC was uncompliant with provision 8.2 of the JVA, which required the latter to submit an annual report on the commercial operation and maintenance of the GIFT project to the Office of the Mayor.

The CLO cited the lack of replies from Pearl Anne Escote of DDPC’s Corporate Planning Department to letters sent by City Treasurer Jinny Hermano.

Hermano’s letters requested financial statements and a breakdown of revenue sharing for the periods of July 2018-June 2019, July 2019-June 2020, July 2020-2021, and July 2021-2022.

“Considering the failure of [DDPC] to respond to the request of the City Treasurer, it is recommended that the Office of the City Treasurer may resort to Section 290 of Revised Local Revenue Code of the City of Iloilo and examine books of accounts of DDPC to determine if the latter has or is remitting the correct amount to the City pursuant to the JVA on a yearly basis since it took effect,” the CLO’s report remarked.

As per the JVA’s provisions, the city government and DDPC as parties to the contract, may resort to dispute resolution.

The CLO report also suggested that the city government may renegotiate the JVA if the city finds that its percentage share was no longer fair.

The 2012 JVA guaranteed the city government of a 1 percent share each in revenues from the gross of berthing, cargo, and rental fees, as well as 1 to 5 percent in gross terminal fee revenues.

“On the financial aspect renegotiation of the agreement may be resorted to if the profit percentage share of the City of Iloilo is no longer just or fair taking into consideration the best interest of the City of Iloilo and the inflation rate, consumer price index and other factors. Since this will require expertise in the field of finance, it is hereby recommended that a Committee may be formed by the SP to review the financial or economic aspect of the Contract with members from City Treasurer, City Assessor, City Budget, and City Accountant’s Office,” the report said.

While they were able to clearly determine the lapses in DDPC’s financial obligations to the city government, the CLO was unable to identify the developer’s obligations with respect to the master development plan for the Parola wharf property.

Provision 6.1 of the JVA obliges DDPC to design, construct, develop, and operate the property in accordance with the Master Development Plan (MDP).

But in a May 9 letter to the CLO that was annexed to the report, City Building Official Mavi Gustilo told Gil that they could not provide the MDP as well as other permits and licenses due to having been worn out by time or being misplaced.

While the report was included in the calendar of the City Council’s May 24 session, further action was postponed.

Transportation committee chairperson Sedfrey Cabaluna told the media on Wednesday that this was to give DDPC a chance to respond to the CLO’s initial report.

“We gave the [CLO] 60 days to give us recommendations, and we expected a progress report after 30 days. We wrote to them on May 10 telling them that we were approaching the 30 days. They gave us this response on May 16, that’s why we calendared this for the session,” Cabaluna said.

“We’re not going to act on [the review] yet until the 60-day period lapses. [DDPC] may suddenly adhere to our requests and the 60-day report [by the CLO] may be more complete. But if not, at least at this point we would be guided on what to do moving forward,” he added.

The review of the JVA was triggered by doubts about the inequity of the city government’s share, the slow speed of the remittance of revenues, and the unresponsiveness of the DDPC to the city council’s and the executive branch’s respective requests to the company over their financial obligations.

The City Council’s March 29 resolution cited that the DDPC’s highest remittance from GIFT revenues in August 2022 amounted to ₱535,591.83 despite the seemingly high volume of travelers between Iloilo City and Guimaras.