DUMAGUETE CITY — The independent review of the Dumaguete City Public Market redevelopment has told the Sangguniang Panlungsod, in both of its components, that the feasibility study in front of it must be revised before any further decision is made.
And on the single question that decides what happens to 859 vendor families, the two components of that review say opposite things.
The review covered the ₱1.948-billion market component. The city’s borrowing package totals ₱2.185 billion. The remaining ₱237 million — the twin two-storey City Hall extension with parking area — appears in no component of the review. No part of the review record costed it, tested its assumptions, assessed its legal exposure, or modelled its effect on the city’s debt service.
What each component concluded
The legal component concluded the study “lacks several critical verification data and must be revised to answer several key gaps in information before further decision on the project should be made.”
The accounting component recommended the study “be revised to incorporate the foregoing refinements — given their materiality to the project’s overall financial viability metrics — prior to final presentation to the Sangguniang Panlungsod.”
Neither component states that the Sangguniang Panlungsod has enough information to vote.
The relocation contradiction
The financial and accounting component is an Evaluation Report by Pinnacle Accounting & Consultancy Services Co. dated 3 August 2026, stamped received by the Sangguniang Panlungsod and prepared for the Office of the Sanggunian through Vice-Mayor Estanislao V. Alviola and Hon. Jose Victor V. Imbo, chairman of the Committee on Finance and Appropriation and Ways and Means. It is signed by Patrick P. Templado, Ramil D. Repe and Frederick C. Roda, all CPAs.
It treats the relocation package as settled, and commends it. It states that the developer shall provide and construct a three-hectare temporary market facility at no cost to vendors, that vendors occupying the temporary facility will not be charged stall rentals for the entire duration of the construction period, that all affected vendors are assured priority reinstatement, and that rates will not be subjected to abrupt or steep increases after the grace period. Under its summary of recommendations for socio-economic analysis it enters: “No corrective action required.”
The legal and policy component is an Independent Review by Atty. Golda S. Benjamin, who headed the review, dated 14 August 2026. Reading the same feasibility study, it finds the critical logistical data entirely missing.
It records the contractor’s obligation as one to “locate and lease” a three-hectare staging area — and then lists what the study never answers:
- Where exactly the site is
- Who owns the site
- What the projected rental for the property is
- Whether the city, if it owns the property, holds it free from any issue that would delay the project
- What the current zoning classification is
- By how much the contractor will subsidize utility payments
- Whether relocation will happen all at once
- Who bears the extended rental cost if construction goes beyond two years
- Whether stallholders will start paying rent after two years while still in the temporary facility
It also asks whether a three-hectare lot within a five-kilometre radius still exists for the site at all, and whether the relocation area is residential, has a waste management system, or will cause severe local odour and traffic.
One component describes an arrangement already in place. The other describes a site not yet located, without a lease, without zoning clearance, and with nobody named to carry the cost. Both were produced under the same review mandate. Both are in the Sanggunian’s file.
Two years, or three?
The study’s stated duration is 24 months. The accounting component’s own disbursement table spreads construction-in-progress across three years — ₱779,200,000 in 2027, ₱584,400,000 in 2028 and ₱584,400,000 in 2029 — and its Section 2.12 identifies 2027 to 2029 as the “pre-revenue period” when rental collections would not yet be available.
The same document describes the rent-free window in one passage as covering “the entire duration of the construction period” and in another as a “one-year grace period.”
The unanswered question in the legal component — who bears the cost if construction goes beyond two years — is therefore not hypothetical. The review’s own cash-flow schedule already runs to three.
What the borrowing costs, year by year
Repayment totals ₱2.670 billion on a ₱1.948-billion principal at 4.5 percent fixed over 15 years. The review flags that the study contains no computations for when the loan will have to be repriced due to changing interest rates, and that “the total payment could be significantly higher.”
In each of the first two years, ₱87.66 million in interest falls due against ₱0.00 in market revenue. Year 1 (2027) is funded ₱41.56 million from the 20% LDF and ₱46.09 million from the General Fund. Year 2 (2028) is funded ₱46.13 million LDF and ₱41.52 million General Fund.
From Year 3 the burden roughly triples:
| Phase | Total bank payment due | LDF | Speculative market revenue | General Fund |
|---|---|---|---|---|
| Year 3 | ₱237.5 M | ₱83.1 M | ₱80.6 M | ₱73.8 M |
| Year 4 | ₱231.5 M | ₱81.0 M | ₱80.6 M | ₱69.8 M |
| Year 5 | ₱225.5 M | ₱78.9 M | ₱80.6 M | ₱65.9 M |
| Year 6 | ₱219.7 M | ₱76.8 M | ₱81.9 M | ₱60.9 M |
| Year 7 | ₱213.8 M | ₱74.8 M | ₱83.3 M | ₱55.6 M |
The review labels the market revenue column “speculative” in its own table.
The 20% Local Development Fund it draws on totals ₱161.60 million a year, based on 2022–2025 Annual Investment Program baseline averages:
| Sector / programme line | Annual allocation | Share of LDF |
|---|---|---|
| Local roads, drainage & public infrastructure | ₱34.60 M | 21.4% |
| Banica River flood control & drainage works | ₱29.00 M | 17.9% |
| Health, nutrition & sanitation programs | ₱24.00 M | 14.9% |
| Aid to component barangays | ₱22.00 M | 13.6% |
| Indigent families & crisis assistance | ₱16.00 M | 9.9% |
| Education, sports & youth development | ₱14.00 M | 8.7% |
| Environment, solid waste & climate resilience | ₱12.00 M | 7.4% |
| Agriculture, livelihood & enterprise support | ₱10.00 M | 6.2% |
| Total 20% Local Development Fund | ₱161.60 M | 100% |
Beneath that table the review asks: “Which items will most likely suffer a funding cut to pay for this loan? What is the historical utilisation rate of the LDF? Does it show flexibility to accommodate the portion to be allocated to debt payment?”
The market has never earned what the plan needs
The review sets the required annual revenue at ₱80 million and above. Historical peak gross revenue is roughly ₱30 million to ₱35 million, and the historical net position is deficit.
Citing City Accountant and COA reports, it finds the existing market “has operated at a chronic operating deficit for 7 of the last 8 years,” requiring annual General Fund subsidies ranging from ₱11.7 million to ₱16.2 million just to survive. It calls the study’s assumption “problematic”: that “a brand-new building will instantly reverse decades of deficits and more than double historical peak revenues.”
For that money the market gains 91 stalls. Existing stalls number 859; the proposed structure has 950 — a net addition of 91, or 10.6 percent. The review asks directly whether that net addition “justifies a ₱1.948 Billion investment in a city dealing with extensive informal street vending.”
₱909.2 million in tax the study did not recognise
The accounting component found the study’s characterization of market income as “socially oriented” and therefore non-taxable no longer holds under Revenue Memorandum Circular No. 89-2024, issued 13 August 2024, which subjects LGU proprietary income — including public market operations — to 12 percent VAT, Percentage Tax, Documentary Stamp Tax, and withholding and income taxes.
The component states this omission “currently overstates the study’s projected net surplus and payback metrics by an estimated ₱909.2 million through Year 2055,” and puts the figure precisely at ₱909,244,231.54.
The payback figure was not recomputed afterwards. The component reports a simple cash payback period of 26 years and 3 months against a 30-year project horizon, describes it as “considerably extended,” and warns that a payback beyond 26 years implies the LGU “will be carrying debt service obligations funded substantially from general government resources for the greater part of two decades.” It nonetheless affirms the project financially viable on that figure, without restating it to absorb the ₱909.2-million liability it had just identified as materially overstating the same metric.
A further ₱78.9 million turns on drawdown timing alone. The loan is modelled as released in full at Year 1 while construction is disbursed over three years. Had drawdowns been phased to match, interest at the same 4.5 percent would have been approximately ₱184.1 million over the construction period, against approximately ₱263.0 million under full upfront release.
The liability that reaches signing officials
Government financial institutions readily underwrite physical works because these constitute depreciable capital assets under IPSAS 17, and under DBM-DOF-DILG Joint Memorandum Circular No. 1, s. 2020, the city may lawfully use its 20% Local Development Fund to service loans for such eligible works.
Operational soft costs are treated differently. Under the same JMC No. 1, s. 2020, the review identifies the monthly rental of the temporary relocation site and the 24-month utility subsidies for relocated vendors as prohibited operational expenses, which cannot be amortized using the Local Development Fund.
Because the loan is a single ₱1.948-billion lump sum and 39 percent is paid via the LDF, the review concludes the city “is indirectly using restricted LDF funds to amortize prohibited soft costs.” Under Section 342 of RA 7160, it finds, this “exposes signing officials to joint civil liability if COA issues a Notice of Disallowance.”
It recommends consulting the Commission on Audit on the loan structure, and obtaining official statements from Land Bank, DBP and other banks on whether they will approve a loan bundling both permanent physical assets and temporary operational subsidies into a single lot, and whether banks really do offer 4.5 percent fixed for an entire 15-year loan period — which the review notes is “not an ordinary practice based on other LGU loans.”
What is missing before bidding
Design and Build is a legally recognized modality under Section 14.1 of the RA 12009 IRR. What the review asks is whether the city has finished the site-readiness and cost-verification steps the law requires before bidding.
The ₱1.948-billion figure is derived by applying a ₱42,000–₱45,000 per square metre rate to 35,800 sqm of gross floor area. The review states the feasibility study “cites no regional DPWH guideline, historical bid record, or cost index to support that rate,” and recommends an independent quantity-surveyor market-scoping audit under Section 10.4.1 to “remove any perception of an inflated Approved Budget for the Contract.”
It calls for independent multi-point geotechnical core tests commissioned before bidding, warning that deferring them to the contractor “invites post-award Variation Orders up to the 10% statutory limit — ₱194.8 Million” under Section 71.2 of the RA 12009 IRR, and noting sandy coastal soil as a specific exposure a contractor could exploit. Sections 12.5 and 8.1.1 require verified site availability and permits to enter before award; the review states no award should proceed without them.
Four COA precedents are cited. In Dumanjug, Cebu, COA flagged the municipality for rounding off its public market contract cost to ₱300 million from an ABC of ₱299.4 million — the lesson being that large capital projects without detailed, itemized cost-index verifications invite immediate audit suspensions. In Minglanilla, Cebu, COA flagged critical delays on a ₱399-million government complex where the contractor was granted time extensions due to uncompleted site relocation works — the lesson being that bundling relocation milestones inside a Design and Build contract without ex-ante site readiness results in project stalls and zero penalty recovery. In the City of Manila, COA urged the city to seek legal action against private developers of six city-owned public markets who defaulted on revenue shares totalling ₱22.41 million. At the Cebu City Carbon Market, COA flagged a multi-billion redevelopment for failing to collect ₱150 million in guaranteed payments due to a lack of pre-approved regulatory structures — the lesson being never to proceed with massive vendor displacement without a finalized and approved Local Revenue Code.
The assumptions that hold the model up
The review calls the study’s 11 percent compounding NTA growth “out of the usual practice for conservative government borrowing,” against Dumaguete’s actual record: ₱860.5 million in 2022, a 38.0 percent one-time Mandanas spike; ₱736.3 million in 2023, a 14.4 percent severe contraction; ₱782.5 million in 2024, a 6.2 percent recovery. Compounding maximum historical growth across 15-plus straight years, with no allowance for downturns, is identified as the structural flaw — NTA being tied to national tax collections from three years prior. The accounting component independently flags CY2022 and CY2023 as outliers and recommends expanding the computation basis to ten years.
Local revenue growth is projected at 10 percent compounding, against actual figures of ₱385.2 million in 2021, up 2.1 percent; ₱430.5 million in 2022, up 11.7 percent on reopening; and ₱465.8 million in 2023, up 8.2 percent. Residents, the review notes, are already voicing concern that the loan will bring aggressive increases in local taxes and fees.
Premium commercial space is priced at ₱1,000 per square metre, which the review calls “highly speculative,” rivalling private mall rates with no independent appraisal proving commercial brands will pay it. It flags an internal contradiction — the study states no supermarket is proposed yet designs nine anchor stores — and recommends an ordinance barring corporate chains from those spaces so they cannot undercut local micro-vendors.
Parking at ₱15 per hour is fair in theory, the review finds, but carries high enforcement risk: strict fees may drive consumers to private supermarkets with free parking, leaving revenue unmet. It also asks whether the projected number of slots complies with the Building Code.
The review calls the “solar arbitrage” assumption problematic — that the city will charge vendors full NORECO grid electricity rates for power generated freely by the city’s own solar panels. The accounting component finds the 12-hour daily solar generation figure “appears to be based on the approximate length of daylight in the Philippines rather than on the actual productive output period of a photovoltaic system,” with monsoon reductions and overcast, rainy or typhoon degradation not modelled. It finds the 1,300 kW power demand requires stronger empirical support, listing four factors not yet incorporated: panel degradation, peak load requirements, minimum expected output on rainy or overcast days, and whether exported power would sufficiently offset power imported from NORECO II — noting stalls trade only in daytime while nighttime demand continues for perimeter lighting, CCTV and cold storage, and that under net metering the export rate is typically lower than the import rate.
What it means for vendors and shoppers
Fees escalate 7 percent compounding from Year 6 (2031). The review finds this “nearly double rental overheads for all 859 stallholders by Year 15,” and recommends it be codified as a step-by-step rent schedule in a Market Ordinance subject to public hearings — “not locked in as a non-negotiable bank covenant.”
The ₱400 flat-rate water fee is called inequitable by the legal component, penalizing dry-goods vendors who use virtually zero water compared to the fish and meat sections. The accounting component finds the flat rate blind to variation across business profiles and likely to weaken any incentive to conserve, and recommends five years of billing records be obtained from Metro Dumaguete Water and analysed by stall category.
The review sets out what the cost will mean for the public: vendors on thin margins passing the 7 percent annual rent hikes and ₱400 water fees down to consumers, raising the price of fish, meat and vegetables — “essentially taxing citizens indirectly to pay for the building” — alongside ₱15-per-hour parking in a public facility.
The current Market Code dates to 1988, at roughly ₱4.25 per day on some stalls, unadjusted for nearly four decades. Personnel services ran between ₱12 million and ₱17 million from 2018 to 2025; the 2026 projection is ₱23 million, and the accounting component asks for the basis of the increase, including positions, salary grades and benefits.
The gaps in method
The accounting component states that “the research instrument used to establish the basis for certain revenue assumptions was not presented in the study.” The assumptions it says need quantified support are occupancy of the additional 91 stalls at Year 2; receptiveness to the 7 percent escalation applied to all fees; occupancy of the anchor stores; utilization of the parking spaces; events per week at the function hall and multipurpose rooms; auditorium rate competitiveness against hotels and event venues; and comfort room capacity.
The same component nonetheless enters “No corrective action required” for market and demand analysis, stating the study’s demand assumptions are well-supported by established patronage, sustained foot traffic and current occupancy levels.
Also recorded as missing across the review: an itemized Bill of Quantities separating capital from operating expenditure; independent geotechnical soil boring logs before bid advertisement; a relocation masterplan with mapped plot, notarized lease and zoning clearance; a traffic and transit study for the transition period; technical sub-metering at the temporary facility; a draft revised Market Code; an organizational chart for the electrical engineer, parking fee collector, multimedia technician and meter reader the new facilities require; depreciation segregated by asset type, where a single 30-year life is applied across all assets though office equipment and furniture run 5 to 10 years and machinery 10 years, with no replacement provisions; borrowing cost capitalization ceasing at practical completion as PPSAS 5 requires; and General Fund projections that include the operating subsidy needed during the 2027–2029 pre-revenue period, with no record of consultation with health, education, tourism or other City offices on the impact.
Four mandates for the Council
The legal component asks the Sangguniang Panlungsod to enact a cost-disaggregation ordinance directing formal disaggregation of the Program of Work, stating it “protects signing officials from Joint Liability and COA disallowances”; a sinking fund ordinance — its heading reads “LEE Sinking Fund” — to legally ring-fence market revenues; a pre-operations reserve, pre-funded by surpluses from other high-performing local economic enterprises, to cover the ₱87.66-million annual interest “without starving regular local services”; and a pre-award veto resolution requiring the winning contractor’s final Detailed Engineering Design to be presented to and approved by the Council before the Notice to Proceed is issued. On that last point it flags that “the Council can no longer question the design of the contractor once the loan is approved.”
Each of its six verification benchmarks — Bill of Quantities, geotechnical logs, relocation masterplan, traffic and transit study, technical sub-metering and draft revised Market Codes — “protects signing officials, public funds, and the project’s credibility,” and all should appear in the feasibility study before final loan authorization.
The part nobody reviewed
The accounting component’s mandate was expressly limited. It states that “the focus of the accounting team is on the feasibility study’s financial assumptions and viability” — not procurement compliance, site readiness, Local Development Fund eligibility, or exposure under RA 7160 and RA 12009. Those fell to the legal component. Its conclusion that the project “remains a financially viable and strategically sound investment” is conditioned on revisions it says must be made before final presentation to the Sanggunian.
Neither component examined the City Hall extension. That matters to the findings both did make. The debt-service compliance the review cites — a BLGF certification under Section 324(b) of the Local Government Code — is described in relation to the market borrowing. The soft-cost and Local Development Fund analysis turns on the loan being a single lump sum of ₱1.948 billion. The recommendation to secure BLGF Net Debt Service Ceiling and Borrowing Capacity certification was framed against the same component. The Council has not been shown what the ₱2.185-billion package does to any of those findings.
Documents this newsroom obtained separately – none of them part of the review record – indicate the financing is not structured as the single facility the study models. Land Bank of the Philippines Board Resolution No. 26-243, approved 22 April 2026 under Credit Facilities Proposal No. RL2/2026/255726/CFP dated 5 March 2026, covers a ₱974-million Term Loan 1, described as 50 percent of the construction cost of the new four-storey public market, and a ₱237-million Term Loan 2 for the City Hall extension with parking.
That is the very question the legal component told the city to put to its lenders in writing — whether any government financial institution will underwrite the structure the feasibility study assumes, and whether 4.5 percent fixed for 15 years is available at all.
