Council clears up Kaltimex issue

BAGUIO CITY – The city council last Monday met with city executive officials to cast light on several issues arising from the request of Mayor Benjamin Magalong to confirm the termination of the contract between the city government and Kaltimex Energy Philippines Inc.

Councilor Betty Lourdes Tabanda apprised Mayor Magalong, City Administrator Bonifacio dela Pena, and OIC City Legal Officer Richard Dayag about the council’s action on the possible termination of the Kaltimex contract.

During the regular session on January 24, 2021, the city council required the company to submit conclusive documents to convince the legislators that the company has the capability to rehabilitate and operate the three city-owned mini-hydropower plants located at Asin, Tuba, Benguet.

In response to the council’s request, Kaltimex submitted a letter of intent to continue the contract, proof of the financial capability of P1.2 billion from Landbank Bukidnon Lending Center, the initial timetable for six months, a program of works including a detailed cost for a new Plant 1 HEP, and an updated company profile with the Security and Exchange Commission registration.

The city council’s Committee on Human Rights and Justice chaired by Tabanda referred the documents to the City Administrator, City Engineering Office, City Building and Architecture Office, General Service Office, and all the members of the Local Finance Committee for evaluation.

“We forwarded these documents to the concerned offices as I don’t think the council members are technically competent to review them,” Tabanda pointed out.

She stressed that the action of the council was part of the due process.

To date, the committee has yet to receive the requested reports from the concerned executive offices.

Magalong and dela Pena explained the executive department had decided it would not evaluate the company’s capability to operate the hydropower plants but would stand firm with its contention that the company violated the compromise agreement, thus the nonresponse of the executive offices to the council’s request for evaluation.

It can be recalled that, in 2018, the city government under the administration of then Mayor Mauricio Domogan, had sued Kaltimex due to the latter’s failure to fulfill its obligations.

However, a compromise agreement was signed in February 2020 between the city government under the current administration and Kaltimex.

As part of the agreement, Kaltimex paid the liquidated damages worth P13.6 million and reimbursed the city government’s filing fee of P605,000.00.

Upon the court’s approval of the compromise agreement, the city government issued Kaltimex a Notice to Proceed in February 2020.

However, the company once again failed to pursue the project.

The company likewise failed to replace and update its performance bond of P150 million pesos with a new bond as contained in Item 4 of the compromise agreement.

In his letter dated October 19, 2020, Mayor Benjamin Magalong requested the council to enact a resolution confirming the termination of the contract. Thereafter, Magalong subsequently wrote to the council on January 19, 2021 and June 11, 2021 reiterating his request.

Pressed for time, the committee filed a resolution confirming the termination or rescission of the contract. The resolution, however, was held in abeyance due to the request of Vice Mayor Faustino Olowan for an executive-legislative meeting in order to thresh out legal issues.

Olowan expressed that the city council is one with the executive department in its move to rescind the contract with Kaltimex. But the city government must exercise prudence with its decision regarding this issue taking into account legal implications that may arise in the future, he said.

He cited the legal case between the City Government of Baguio and Jadewell Parking Systems Corporation which spanned more than a decade.

It can be remembered that the Supreme Court in its April 23, 2014 ruling declared that there was no sufficient evidence to justify the rescission of the contract by the city council. 

He also recalled that Jadewell filed petitions before the SC to cite the city officials for indirect contempt and to disbar some of them who were lawyers. He asserted the legislative body is only being careful with its move.

Several council members stated that rescinding or terminating the contract is valid and legal if the company indeed failed to comply with the compromise agreement.

Answering the council members’ question of whether due process was observed by the executive department, Dayag and dela Pena said the company had been given many opportunities to air its side during meetings and through correspondence but still failed to show a willingness to fulfill its obligations.

The city council requested the executive department to furnish the legislative body with all the necessary documents to substantiate their claim that they observed due process.

The committee will review all the documents at hand and the requested documents and likewise consider the discussion during the executive-legislative meeting, then come up with a report and recommendation to be acted upon by the legislative body in one of its regular sessions. -Jordan G. Habbiling