Wednesday, May 18, 2011

Fit for a Queen: The Grand Design for a New City Hall

By The Daily Guardian Special Investigative Team
A PALACE fit for a Queen. Such is the avowed intent of City Mayor Jed Mabilog in pushing for the construction of an admittedly expensive New City Hall building which will put the Iloilo City government and its taxpayers into a debt burden of at least P715 million and counting for next 15 years.

The grand design for City Hall, of course, did not start with Mayor Mabilog. It began during the second term of then Mayor (now Iloilo City Representative) Jerry Treñas. But ‘grand’ is not just a word to describe the structure, it may also apply to the schemes and machinations that were used to extract, nay mine fully, from  the city government’s coffers the most that can be had for the taking.
It is a sordid tale of shortcuts taken and shortcomings (by omission or commission) by a spineless and gullible city council. For the past couple of weeks, The Daily Guardian (TDG) Special Investigative Team has been following a paper trail in order to establish a clear picture of what now appears to be a purposeful yet haphazard tactic to bilk the city coffers dry.

So far, what we have uncovered is a large puzzle with many pieces missing. But it is certainly in those missing pieces that we see the cunning deception that is being perpetrated against the public welfare.


The original Iloilo City Hall is that classically elegant structure that sits at the heart of the UPV Iloilo City campus. This has been the city’s seat of government from 1936 up the 1950s when the city donated it to the State University in order to lure UP into establishing a branch in Iloilo. Today, the old city hall serves as the main building of the UPIC campus and the future site of the expanded Center for West Visayan Studies and Museum of UP Visayas.

City Hall transferred to the site in front of Plaza Libertad where the New City Hall is being constructed. Here, it held business until the turn of 21st century, or sometime in 2000, when it was declared by engineers as “unfit/unsafe for human occupancy” due to its dilapidated conditions. Because of this, the Malabor administration (1992-2001) became a tenant in several ‘for-rent’ buildings, including Marymart Mall where it paid rent amounting to P511,500 per month for a floor area of 1,620 sq. m (or a concessionary rate of about P400 per square meter, including air conditioning)  for the period August 2000 to - December 2001.

With the city government rendered homeless, then Mayor Mansueto Malabor aspired to build a new city hall. He identified a lot in San Pedro, Molo district as a prospective site and, in fact, a ground breaking and time stamp laying ceremony was held thereat. Senator Miriam Santiago gave full support to Malabor’s lofty aspiration and allocated some P50 million from her pork barrel to jump start the project. It sank instead. Somewhere in the Iloilo River, near the banks of San Pedro, Molo are said to be buried some P50 million worth of pre-stressed concrete pilings. Malabor’s aspiration is buried with it.

Parenthetically, several years earlier, then Iloilo City Rep. Raul Gonzalez Sr. also tried to recover from UPV not just the Old City Hall but the entire UP Iloilo City site claiming that UPV already had its vast home in Miag-ao. He met with stiff opposition, not just from UP itself but from its powerful alumni. Gonzalez has now gone riding into his own political sunset without making any headway against UP.

Under the Treñas administration, City Hall moved to Robinsons Place Iloilo. How much it cost the city government has not been clearly established (despite nearly ten years of occupancy) although sources at the City Treasurer’s Office said “rent” for the occupancy at Robinsons consisted of an offset agreement (or in exchange for tax dues of the mall) excluding electric consumption or power bills which the city has to pay for. Whether this agreement was covered by the necessary authority from the City Council, we have yet to uncover.

The New City Hall: A Showcase

Like Malabor, Treñas also wanted to build a permanent home for the city but not in a new site. To establish some form of chronology to the Treñas undertaking, we secured from the City Council all documents relating to the New City Hall project. Those documents showed that on August 9, 2006, the City Council led by Vice Mayor Guillermo Dela Llana passed Resolution No. 2006-1089 authorizing Treñas to negotiate/enter into a Memorandum of Agreement (MOA) with the Land Bank of the Philippines for a loan to finance construction of a New City Hall intended to be a “showcase window” for the city. That resolution, principally pushed by then councilor Jed Mabilog, deemed as “urgent” the construction of the new city hall considering the constantly rising construction materials and labor costs. The original loan approved was for P350 million.

The initial plan was to for an 8-storey building in the Plaza Libertad site straddling two lots (Lot Nos. 594-A & 1153-A for TCT No. T-31992 and Lot No. 480 for TCT No. T-21278) with a total lot area of 2,162 square meters and a total floor area is 14,530 square meters.

News reports during this period quoted former Councilor Ed Peñaredondo, the Majority Floor Leader, to have made assurances on the city’s financial capability in securing and paying loan. The city government, he said, has a credit line as high as P2.5 billion in the LBP based on the city's 20 percent Internal Revenue Allotment (IRA) and amount of business taxes collected.

After all, in 2006, the City Government was paying “only” the loan acquired from the Pavia housing project.  [Note: The housing project has been dubbed “Pavia Housing Scam” where the city incurred over P130 million in indebtedness to Philippine National Bank (PNB) to pay-off the contractor which was found to have used substandard materials for the project. Standing now in the city’s 8-hectare property in Pavia are cannibalized low-cost houses now home to stray dogs, goats and other ghosts.  The term of Treñas began and ended with an unconscionable waste of people’s money.]

In October 2006, or barely two months since Treñas got the SP nod, his administration was already harping on P382 million at its disposal for the use of new City Hall building – the  P350 million to be loaned from LBP and P32 million that was then collected from various Government Owned and Controlled Corporations (GOCCs).

Missing pieces

By this time, Pacific-Orient Consultants & Management Co., Inc, fresh from its stint with the controversy-marred construction of the Iloilo Provincial Capitol, has entered the picture as consultant and construction manager of the City Hall building now estimated to cost P378,987,675. However, the The Daily Guardian’s Investigative Team has seen no record, particularly any City Council resolution granting authority or appointing Pacific-Orient as project consultant. Pacific-Orient is the same outfit that oversaw the construction of the Iloilo Provincial Capitol building, which its Manager, Engr. Conrado Goco, admitted only recently to be more expensive if not overpriced. Pacific-Orient first surfaced in a document submitted to city officials outlining additional cost for partitioning works pegged at P16,386,000 and additional works that affected general requirements with additional cost of P3,247,020.

Architects from the firm, W.V. Coscolluela & Associates, also came in the picture having won the contract for the design.  Its 2006 estimate of architectural works amounted to P116,240,000, P49,402,000 for the electrical works, plumbing and sanitary works worth P13,803,500 and fire protection which is P10,897,500. The mechanical works estimate was P31,638,600. Still in 2006, estimate was also given by the Pacific-Orient for four elevator sets pegged at P14 million. 

Soon enough, however, construction costs escalated. Thus, in early 2007, there were already moves in the City Council to secure additional loans. In May 9, 2007, or five days before the May 14, 2007 National and Local elections, twin Resolutions were passed granting full authority to Treñas to loan for and in behalf of the city P350 million and assigning the city’s Internal Revenue Allotment (IRA) as collateral. In both Resolutions, then Councilor and now City Hall spokesman Ed Peñaredondo was the prime mover.  Despite the election period, the City Council and Mayor Treñas took time to heed LBP’s request for amendments on the authority granted to Treñas citing the “vagueness” of the August 2006 authority granted by the council.

By May 24, 2007, two weeks after the elections that got Treñas reelected and Mabilog as the next Vice Mayor, a work contract with W.V. Coscolluela & Associates was signed. W.V. Coscolluela won over eight other firms that made their bids in the architectural, space planning, engineering design consultancy. The seven other bidders were the Mohri and DA Associates; Filipinas Dravo Corp; Woodfields Consultant Inc; United Technologies Inc.; Schema Konsult Corp; Palafox and Associates and E.S. de Castro & Associates.

W.V. Coscolluela’s design of the building cost the Iloilo City Government more than P12 million in fees. A Notice To Proceed (NTP) was issued the following day, May 25, 2007. A stipulation of the contract is that design will be presented after 120 days or by September 25, 2007.

On September 12, 2007, or four months into the term of the new City Council, they passed Resolution No. 2007-1042 authorizing Treñas to sign related documents needed for the P350 million loan. Two days later in September 14, 2007, the loan agreement was duly signed.

Here again is another missing piece, perhaps a fatal flaw. Under the Local Government Code, “the Local Chief Executive can enter into a contract in behalf of the Local Government Unit so long as there is a prior authorization from the Sanggunian concerned.

In this particular case, Mayor Treñas did have authorization to negotiate for a P350-million loan for and in behalf of the city. But that authorization came from the previous Sanggunian headed by Vice Mayor De La Llana.

By the time the first loan agreement was to be signed by Treñas on September 14, 2007, the City Council is already headed by Mabilog as Presiding Chair and there were six new City Councilors who were not privy to the earlier authority granted to Treñas to negotiate the said loan.

Can the “Mabilog Sanggunian” shortcut the process of securing the loan process without first granting Treñas authority to negotiate? No way. By legal definition, a “Resolution” is used whenever the legislature wishes to express an opinion and it has temporary effect, binding only upon the council members who passed it.  

Thus, the Mabilog Sanggunian’s Resolution of September 12, 2007 authorizing Treñas to sign the loan agreement and a subsequent Resolution dated November 14, 2007 confirming the LBP loan agreement in the amount of P350 million appears to be legally infirm and void ab initio.

Escalating costs and remedial legislation

Nevertheless, by March 2008 or four months later, estimates for the construction cost of the city hall building have increased to P463,883,922. 

By September of 2008, estimated construction cost increased further to P465,039,000. The two sets of estimates were prepared by the Pacific-Orient Consultants & Management Co. Inc. through its General Manager Conrado Goco.  It was clarified at that time, too, that the P465,039,000 costing does not include the installation of air conditioning units.

By November 2008, Treñas saw the need for additional project funding to be secured by another loan with LBP.

Incidentally, news stories in November 2008 reported of how Treñas acknowledged the need for another SP authority before he is allowed anew to represent the city in any bank transactions.  

Thus Resolution No. 2008-1867 dated December 10, 2008 was passed. This resolution broadly stated that the authority given to Treñas was to contract a loan for the “amount not exceeding Four Hundred Fifty Five Million Pesos (P455,000,000.00).”

Treñas was merely just trying to secure an additional P105 million loan but the new resolution which pegs the amount at P455 million could also have been made as effort to cure the glaring deficiency for the first P350-million loan. This was a very poor attempt at remedial legislation, made apparently upon prompting of Land Bank officials who noted the infirmity. Succeeding resolutions by the City Council glaringly exposes how much the City Council tried to correct itself to further clothe the LBP loans with some semblance of legality.

Coscolluela blames Treñas, Mabilog for delays

Meantime, the City Council with Councilor Erwin Plagata as Acting Presiding Chair approved Resolution No. 2008-1691. With Mabilog on official leave, lawyer-Councilor Eldrid Antiquiera pushed for the presence of Architect William V. Coscolluela to appear before the SP and shed light on the City Hall project.

That was November 19, 2008. By then it was ten months since W.V. Coscolluela was commissioned and supposed to have presented the basic design for the project. Yet what was available only then was a “perspective design.”

This delay and the expressed intention of the United Architects of the Philippines (UAP) Iloilo Chapter to present their own architectural design at a lower cost stirred an otherwise “quiet” project. Councilor Antiquiera asked Architect Coscolluela to appear before the body on November 26, 2008. He never did.

What happened was that in November 25, 2008, a presentation of the P465-million project was made in a local hotel with Mayor Treñas present. All members of the City Council were invited but seven of the City Councilors did not attend. The seven, said to be critics of the multi-million project, were lawyer-Councilors Antiquiera and Antonio Pesina, Julienne Baronda, Jeffrey Ganzon, Ely Estante, Armand Parcon and John Melchor Mabilog. Those present were Councilors Eduardo Peñaredondo, Jose Espinosa III, Lyndon Acap, Irene Ong, Lex Tupas, Erwin Plagata, Perla Zulueta and then Vice Mayor Mabilog.

In that presentation, the media reported Coscolluela as blaming Treñas for the delay. Coscolluela reportedly described the situation as “complicated as Mayor Treñas entertained other ideas regarding the project.”

Indeed, at that time there was an offer by Megaworld, which has just acquired the old airport in Mandurriao, to build a City Hall in the area in exchange for the city hall lots. The idea was shot down by many quarters before it could even take off.

Coscolluela said Treñas only informed him to proceed with the old plan of building the City Hall in its old site in March of 2008. As a matter of procedure, the contractor could not present the design for the city hall unless approved by the mayor.

There were other delays, too, including changes sought by then vice mayor Jed Mabilog. A news story in November of 2008 reported of the vice mayor’s admission that he returned the proposed plan as he wants the vice mayor's office near the session hall. The conference hall, he also insisted then, must be adjacent to the offices of the city councilors.

City Council cover-up

By late 2009, another series of maneuverings were made at the City Council to cover up the loan agreement deficiencies. On September 2, 2009, the City Council passed Resolution No. 2009-1244 confirming the P105-million second loan to be used for the construction of the new City Hall.

On September 14, 2009, Treñas also sought SP authority to sign the Deed of Assignment using the city’s Internal Revenue Allotment share from the national government as collateral to the LBP loan.  

By September 30, 2009, Resolution No. 2009-1404 was passed adopting a Committee Report and granting Treñas’ request relative to the collateral issue. This Resolution again showed a glaring irregularity. The Committee Report cited a supposed authority granted to Treñas to secure the P105-million loan as per Resolution No. 2008-1867 in December 2008. But there was no such provision in Resolution No. 2008-1867. This resolution grants Treñas authority to secure a loan in the amount “not exceeding” P455 million.

Simply put, Resolution No. 2008-1867 tried to cure a fundamental defect in the first LBP loan of P350 million but, in so doing, merely impaired the second loan of P105 million because it gave no specific authority for such. Hence, Resolution No. 2009-1404 that purports to cure both defects by mere assumption of non-existing facts.

Full speed ahead

Defective loans notwithstanding, construction of new City Hall went full speed ahead, secured by  two loans amounting to P455 million with interest rate of 7% payable in 15 years from initial drawdown. 

With elections of May 2010 drawing near and a ban on projects looming, the bidding was conducted and the project eventually awarded to FF Cruz with the winning bid of P368 million. The Notice To Proceed (NTP) was issued February 15, 2010.

Treñas was elected Congressman and Mabilog was elected City Mayor, both to assume their respective posts on July 1, 2010. But just about two weeks after the election, on June 1, 2010, Treñas released a total of P55.2 million in advance payments to the contractor. This was disclosed, not by Treñas, but by Mabilog in his official explanation to the public published in local dailies and posted in the official website of the city (

For his part, Mayor Mabilog was issued the authority to sign for and in behalf of the city all documents related to the LBP loan only on September 8, 2010.  Incidentally, Resolution No. 2010-853 was pushed by Councilor Joshua Alim and Councilor Lyndon Acap.

According to Mabilog, the city has made only the following payments to the contractor:

  • 1st Progress Billing dated October 13, 2010 for  P57,172,180.89 net;
  • 2nd Progress Billing November 10, 2010 – P16,517,504.03 net;
  • 3rd Progress Billing (received December 6, 2010) – P5,549, 950.34 net; 
  • 4th Progress Billing (received February 7, 2011) – P22,065,778.77 net; and
  • 5th Progress Billing (received March 11, 2011) - P37,512,496.69 net.

Records show that at the close of 2010, the city has already begun paying for the interest to the LBP loan for the construction of the new City Hall which amounted to P12,239,899.55. This year, tentative interest to be paid is P31.8 million with the principal loan of P455 million still intact.


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