City Hall defies demand to leave MCWD building

Cebu City Hall.
Cebu City Hall.Photo by LPL

THE Cebu City Government has refused to vacate the Metropolitan Cebu Water District-owned (MCWD) building that it uses as its satellite office, asserting its “lawful possession” of the property, following the water district’s demand for it to vacate the premises this week and pay back rent.

In a Feb. 20, 2024 letter addressed to MCWD general manager Edgar Donoso, the City Government through the City Legal Office, led by officer-in-charge Carlo Vincent Gimena, declined to meet the demands of the MCWD.

In a final notice and demand letter dated Jan. 22, 2024, MCWD had demanded that the City Government do the following: (a) vacate and surrender possession of the old MCWD building within 30 days from receipt of the notice, (b) pay rental of P500,000 for each month it has occupied the premises since June 1, 2023, (c) remove any structures added, without causing damage to the premises, (d) restore and/or repair any damage caused to the building, and (e) settle any unpaid utilities or bills associated with the premises.

The City’s response letter highlighted three points.

First, it said the City of Cebu is in “lawful possession” of the property without any legal basis to relinquish this.

Second, upon taking possession of the property in 2022, there was no lease contract, relieving the City of any rent obligation. Instead, a usufruct was established by MCWD in favor of the City of Cebu.

Third, the City is unable to make payments for the months that have passed even following the perfection of a lease contract between the parties since there are requirements which must be complied with first.

The document was signed by the following lawyers: Manuel Degollacion III, Shana Alexandra Perez, Arthcris Cuadra, Jave Mike Aton, Ramon Mikhail Duyongco, Feliciano Alinson Jr., Eleodoro Diaz IV, Bernard Inocentes Garcia, Lyndon Bernardo Basan, and Gimena.

In the letter, the city lawyers explained that by virtue of MCWD Board Resolution 04-067-2023, the possession of the old MCWD building (MCWD Annex Building) was transferred to the City of Cebu without any conditions attached. This resolution created the usufruct over the property.

Regarding the payment of rental, the city lawyers argued that since there was no contract of lease between the City and MCWD at the time the City took possession of the property, the City is not obligated to pay rent.

As for the requirements before the City can pay rental for the months that have lapsed following the perfection of their lease contract, the City cited Sections 85 and 86 of Presidential Decree 1445 (Auditing Code of the Philippines) that provide that contracts involving expenditure of public funds: (a) can be entered into only when there is an appropriation for it; and (b) such contract must be certified by the proper accounting official/agency that funds have been duly appropriated for the purpose, which certification shall be attached to and become an integral part of the proposed contract.

The city lawyers added that the Local Government Code of 1991 also requires the mayor to secure prior authorization from the City Council before entering into contracts on behalf of the City.

Daluz reacts

Sought for comment Thursday, Jose Daluz III, chairman of MCWD’s board of directors, said the building is titled in the name of MCWD.

“Gusto gyud sila ma-file-lan og grave abuse of authority. I don’t know. Let’s just see,” Daluz said, emphasizing that the City “definitely” has no ownership of the entire area.

(They really want a case for grave abuse of authority to be filed against them.)

He added that there was no usufruct to begin with.

“It’s a resolution. It was not consummated, maybe ha. I cannot remember. Basta what I can definitely remember is that there was no contract, whether usufruct, lease or anything. They just occupied the place without any contract,” he said.

Daluz said they will just follow the legal process on this matter.

Can’t be ejected

In their letter, the city lawyers argued that the usufruct was “perfected through delivery” since MCWD allowed the City to enter and occupy the premises since Nov. 15, 2022.

They argued that the City “cannot be ejected by force, violence or terror, not even by the owners,” considering that the City is in “lawful possession of the property.”

However, the City acknowledged MCWD’s proposal for a lease contract, as stipulated in Board Resolution 05-100-2023, and its willingness to negotiate rental and other terms consistent with law, particularly Commission on Audit guidelines on lease contracts.

According to the city lawyers, MCWD proposed to lease the “entire MCWD Annex Building” to the City, which offer was accepted, as contained in City Administrator Collin Rosell’s letter dated Sept. 19, 2023.

The City Government and MCWD later agreed on a monthly rental rate of P500,000. With the meeting of the minds of both parties on this, the contract of lease was formed, meeting the requirements of Article 1315 of the New Civil Code that “contracts are perfected by mere consent,” the City said.

On the suggestion to retain a portion of the MCWD Annex Building, as outlined in Donoso’s letter addressed to Mayor Michael Rama on Aug. 17, 2023, the lawyers argued that it does not align with the authority granted by the MCWD Board to lease the entire MCWD Annex Building to the Cebu City Government.

They said Board Resolution 05-100-2023 merely authorized Donoso to represent the water district and notify the City of Cebu of the proposal to execute a lease contract. He was not authorized to alter MCWD’s offer.

To fulfill the requirements of the lease agreement and facilitate its execution, the City reiterated its requests for (a) a board resolution issued by the MCWD directors duly appointed by Mayor Rama granting Donoso the authority to sign the contract on behalf of MCWD, (b) a board resolution issued, again by the MCWD directors duly appointed by Rama, endorsing the rental rates and approving the contract, and (c) the signed contract of lease.

The City also declined to remove structures and repair any damage on the building, saying that with the lease contract “already perfected,” the City of Cebu was a lessee and possessor in good faith.

It’s unclear whether MCWD can fulfill the City’s requests as Rama replaced MCWD board members Daluz, Miguelito Pato and Jodelyn May Seno last Oct. 31 with Melquiades Feliciano, Aristotle Batuhan and Nelson Yuvallos, but Daluz, Pato and Seno have refused to step down from their posts. Feliciano is the chairman of the Rama-appointed board.

Former allies Rama and Daluz have been at odds since Rama moved to remove Daluz as MCWD chairman in May 2023. Daluz said Rama was irked at Daluz’s opposition to Rama’s bid to “privatize” MCWD as well as his private comment for younger leaders to run in the next election. Rama is a senior citizen.


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