DUMAGUETE CITY — If the Dumaguete City Public Market redevelopment proceeds as the feasibility study models it, stall rents rise 7 percent every year from 2031, every stallholder pays a flat ₱400 water fee regardless of whether they sell fish or dry goods, and shoppers pay ₱15 an hour to park at a public market.
The independent review that examined the project says the study behind those figures must be revised before the Sangguniang Panlungsod decides anything.
And it says the cost lands on the public twice — once in the fees, and again at the counter. Vendors on thin margins will pass the 7 percent annual rent hikes and ₱400 water fees down to consumers, raising the price of fish, meat and vegetables, which the review describes as "essentially taxing citizens indirectly to pay for the building."
What the fees do over time
The 7 percent compounding escalation begins in Year 6 (2031). The review finds it would "nearly double rental overheads for all 859 stallholders by Year 15." Its recommendation is that any increase 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 flat ₱400 water fee is called inequitable by the legal component, which notes it penalizes dry-goods vendors who use virtually zero water compared to the fish and meat sections. The accounting component finds the flat charge does not capture variation across business profiles and may reduce the incentive to conserve, and asks that five years of billing records be obtained from Metro Dumaguete Water and analysed by stall category.
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 the projected revenue unmet. Whether the projected number of slots complies with the Building Code is also left open.
For context on how far the rates move: the current Market Code dates to 1988, at roughly ₱4.25 per day on some stalls, unadjusted for nearly four decades.
859 vendors, and a review that contradicts itself about them
The review is one body working in components. On the question most consequential to 859 vendor families, its components do not agree.
The financial and accounting component — 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, signed by Patrick P. Templado, Ramil D. Repe and Frederick C. Roda, all CPAs — treats relocation as settled.
It states the developer shall provide and construct a three-hectare temporary market facility at no cost to vendors, that vendors occupying it 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 socio-economic analysis it enters: "No corrective action required."
The legal and policy component — an Independent Review by Atty. Golda S. Benjamin, who headed the review, dated 14 August 2026 — reads the same study and finds the critical logistical data entirely missing. It records the contractor's obligation as one to "locate and lease" a three-hectare staging area, then lists what the study never answers: where exactly the site is; who owns it; the projected rental; whether the city, if it owns the property, holds it free from any issue that would delay the project; the current zoning classification; 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; and 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 in place. The other finds no located site, no lease, no zoning clearance and nobody named to bear the cost. Both are in the Sanggunian's file.
Two years on paper, three in the cash flow
The study's stated construction duration is 24 months. The accounting component's 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."
So the question of who pays if construction runs past two years is not hypothetical. The review's own schedule already runs to three.
₱1.948 billion for 91 more 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."
The cost is also not itemized. The review's executive summary states the project cost "does not have itemized details; even for basic aspects like how much will be allocated for the construction and how much will be allocated to build the temporary market facility, and relocate the vendors."
Nor is the price per square metre sourced. 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, and the review states the study "cites no regional DPWH guideline, historical bid record, or cost index to support that rate." It 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."
The revenue the plan depends on
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."
Other assumptions the review found over-optimistic include ₱1,000 per square metre for premium commercial space — "highly speculative," rivalling private mall rates with no independent appraisal proving commercial brands will pay it. The review flags an internal contradiction, that 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.
It 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 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.
Growth assumptions are also flagged. The 11 percent compounding NTA growth is "out of the usual practice for conservative government borrowing," set against ₱860.5 million in 2022, a 38.0 percent one-time Mandanas spike; ₱736.3 million in 2023, a 14.4 percent severe contraction; and ₱782.5 million in 2024, a 6.2 percent recovery. The 10 percent compounding local revenue growth is set against ₱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. The review records that residents have already raised concerns the loan may lead to aggressive increases in local taxes and fees.
What the city will pay the bank
Repayment totals ₱2.670 billion on a ₱1.948-billion principal at 4.5 percent fixed over 15 years, and the review flags that the study contains no computations for loan repricing, so "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) funded ₱41.56 million from the 20% LDF and ₱46.09 million from the General Fund, Year 2 (2028) 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 — money currently allocated elsewhere:
| 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% |
The review asks beneath it: "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?"
₱909.2 million in tax, and a payback figure left unchanged
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. It states the omission "currently overstates the study's projected net surplus and payback metrics by an estimated ₱909.2 million through Year 2055," putting 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, calls it "considerably extended," and warns 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 still affirms the project financially viable on that figure, without restating it to absorb the ₱909.2-million liability it had identified as materially overstating the same metric.
A further ₱78.9 million turns on drawdown timing. 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.
Why the loan structure exposes 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. The monthly rental of the temporary relocation site and the 24-month utility subsidies for relocated vendors are identified by the review as prohibited operational expenses under the same JMC No. 1, s. 2020, and 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 permanent physical assets with temporary operational subsidies into a single lot, and whether banks really do offer 4.5 percent fixed for an entire 15-year loan period — "not an ordinary practice based on other LGU loans."
What must happen before bidding
Design and Build is a legally recognized modality under Section 14.1 of the RA 12009 IRR. The review's question is a narrower one: has the city finished the site-readiness and cost-verification steps the law requires before bidding?
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: Dumanjug, Cebu, flagged for rounding off its public market contract cost to ₱300 million from an ABC of ₱299.4 million; Minglanilla, Cebu, flagged for critical delays on a ₱399-million government complex where the contractor was granted time extensions due to uncompleted site relocation works; the City of Manila, urged by COA to seek legal action against private developers of six city-owned public markets who defaulted on revenue shares totalling ₱22.41 million; and the Cebu City Carbon Market, flagged for failing to collect ₱150 million in guaranteed payments due to a lack of pre-approved regulatory structures — the stated lesson being never to proceed with massive vendor displacement without a finalized and approved Local Revenue Code.
The questions the study never asked
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 needing 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: an itemized Bill of Quantities separating capital from operating expenditure; 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 rather than a single 30-year life across all assets, when office equipment and furniture run 5 to 10 years and machinery 10 years; borrowing cost capitalization ceasing at practical completion as PPSAS 5 requires; and General Fund projections including the operating subsidy needed during the 2027–2029 pre-revenue period, with no record of consultation with health, education, tourism or other City offices. Personnel services ran between ₱12 million and ₱17 million from 2018 to 2025 against a 2026 projection of ₱23 million, and the component asks for the basis of the increase.
Four things the Council is asked to enact
The legal component asks the Sangguniang Panlungsod for a cost-disaggregation ordinance directing formal disaggregation of the Program of Work, which it says "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 approved by the Council before the Notice to Proceed is issued — flagging 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.
And the ₱237 million nobody looked at
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.
The accounting component's mandate was expressly limited: "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.
That gap matters to the findings both components 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.
Separately obtained documents, which formed no 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.
Which is exactly what the legal component told the city to ask 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.