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Thursday, December 23, 2004
Compromise deal ‘approved’
By Rose O. Versoza
Sun.Star Staff Reporter
DESPITE its earlier adoption of a legal opinion calling the contract to be greatly disadvantageous to the Mandaue City Government, the City Council granted a “provisional approval” to the compromise agreement between the City and a private firm for the disposal of a City-owned property.
The compromise agreement, which was signed by Mayor Thadeo Ouano and Matimco Inc. vice president Alfred Go last May 4, stated that in consideration of the company’s development of a body of water into dry land and in “gratitude for its contribution to the City’s progress and economic success,” Mandaue will transfer to Matimco at least 21,362 square meters.
No COA go-ahead
However, the council’s approval of the agreement is still subject to the opinion or approval of the Commission on Audit (COA) as to the propriety of the compromise agreement.
This is in consonance with the provisions of the Local Government Code, stating that disposal of real property is subject to the approval of COA regardless of the value or cost involved.
Last June, then city attorney Malcolm Seno sent a legal opinion to the council, calling the compromise agreement to be “highly grossly, grossly and grossly disadvantageous to the City to the nth degree.”
Seno advised for its disapproval because there is no reason for the City to give up ownership of the property for free as it does not have any legal or moral obligation to Matimco.
The council adopted Seno’s opinion.
Tit-for-tat
Last September, the mayor again submitted the same agreement to the council for its ratification, stating, among others, that Matimco “has incurred expenses in the development of the foreshore land in Subangdaku.”
“Our administration would not wish to commit an injustice to Matimco should we insist to arrogate to the City the developed property after the expiration of the lease,” said Ouano.
On Jan. 27, 1988, a contract of lease was entered into between Mandaue and Matimco covering 52,859 square meter of foreshore land in Subangdaku at an annual rental rate of P0.60 per square meter for a period of 15 years.
This was amended on Nov. 17, 1988 extending the lease term to 25 years, or starting Jan. 1, 1988 to Dec. 21, 2013, and limiting the leased lot to only 48,110 square meters.
On March 23, 1998, both parties signed a contract of sale in which the City would sell a portion of the leased property, with an area of 27,423 square meters, to Matimco for P102.46 million.
Of the purchase price, only P15.37 million would be payable immediately and the balance would be paid in installment for 15 years without interest.
The purchase price was based on the valuation made by the City Appraisal Committee, which explained that the amount was derived at after deducting a development cost of P171.8 million, which was estimated to have been spent by Matimco in developing the land.
The City Council ratified the contract of sale and terminated the lease.
Disadvantageous
However, COA disapproved the contract in 1998 because it found the purchase price of P102.46 million, as well as the mode of payment, to be disadvantageous to the City.
COA pointed out that Mandaue will lose P171.8 million, which is given in favor of Matimco as payment for the expenses that they have spent in developing the land, when under the existing lease contract, all improvements introduced by the company to the property will automatically be owned by the City after the lease contract expires in 2012.
Last February, Matimco filed a case against the City for specific performance to compel the City to turn over the possession and ownership of the subject lot or to allow the extension of the lease contract for another 99 years.
While the case was pending in court, Man-daue and Matimco agreed to an out-of-court settlement by executing the compromise agreement.
Provisions
The agreement provides that out of the 48,110-square-meter leased property, the City will transfer ownership of 21,362 square meters to Matimco.
Only 21,522 square meters will remain under Mandaue’s name and the other 5,227 meters will be for roads.
“It is like childishly getting back at COA for disapproving a sale—you do not want us to sell our property at a price determined by us, we might as well give it for free,” Seno said of the compromise agreement.
Majority Floor Leader Wenceslao Gakit, in defending the council’s approval of the compromise agreement, said their move is still conditional because it is still subject to COA’s approval.
(December 23, 2004 issue)
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