Rama: No Pretermination of City’s Time Deposit on P199M SEF

Cebu City Mayor Michael Rama said he will not comply with the recommendation of the Commission on Audit (COA) to pre-terminate the city’s P199.44 million time deposit in its Special Education Fund.

The state auditors earlier explained that investing the special education fund in time deposits is not allowed by law under Section 100 © and 272 of Republic Act 7160 or the Local Government Code.

Of the P199.44 million, the P165 million has been placed under five-year time deposit that will mature by the end of the year and to earn a six percent interest per annum.

Under the banking procedures, the depositors can pre-terminate their time deposits or withdraw the amount in full or in part, but the bank will also slap them with charges.

Initial inquiry shows that the city may be charged with over P10 million of pre-termination charges if it will decide to pre-terminate the P165 million five-year time deposits with the Philippine Veterans Bank.

Rama told METROCEBUNEWS that he will not comply with the COA recommendation because the city can wait until the transactions will mature on December this year.

“Ngano nga ato man g’yud nga i-pre-terminate nga duna pa man ta’y kuwarta? Basin og wala mahibawo ang COA nga bag-o ta nahalinan og yuta sa SRP ug daghan na ta’g kuwarta?” the mayor said.

COA said the special education fund should be spent for its purpose rather than to invest it in time deposit. The SEF derives from the one percent of the overall amount of real property tax (RPT) collected by the local government units.

The law provides that the SEF shall be spent only for construction and repair of public schools, purchase of books and other reading materials for schools and some other related expenses.