December 8, 2022

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 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 Jan. 24, the city council required the company to submit conclusive documents to convince them 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 financial capability of P1.2 billion from Land Bank Bukidnon Lending Center, initial timetable for six months, program of work including a detailed cost for a new Plant 1 HEP, and an updated company profile with the Securities 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 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 said.
She said the action of the council was part of due process.
To date, the committee has yet to receive the reports it requested from the concerned executive offices.
Magalong and dela Pena said they decided not to evaluate the company’s capability to operate the hydro power plants but would stand firm with its contention that the company violated the compromise agreement, thus the non-response of the executive offices to the council’s request for evaluation.
In 2018, the city government under then mayor Mauricio Domogan 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. 
Upon the court’s approval of the compromise agreement, the city government issued Kaltimex a notice to proceed in February 2020.
However, the company again failed to pursue the project. 
The company also failed to replace and update its performance bond of P150M with a new bond.
In his letter dated Oct. 19, 2020, Magalong requested the council to pass a resolution confirming the termination of the contract and wrote to the council on Jan. 19, 2021 and June 11 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 to thresh out legal issues.
Olowan said 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 taking into account legal implications that may arise in the future.
He cited the case between the City Government of Baguio and Jadewell Parking Systems Corporation which spanned more than a decade and where the Supreme Court decided there was no sufficient evidence to justify the rescission of the contract by the city council.  
Several council members said rescinding or terminating the contract is valid and legal if the company indeed failed to comply with the compromise agreement.
Dayag and dela Peña said the company was given many opportunities to air its side during meetings and through correspondence but still failed to show willingness to fulfill its obligations.
The city council requested the executive department to furnish the legislative body with documents to substantiate their claim that they observed due process.
The committee will review all the documents at hand and the requested documents and 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