Court upholds validity of Baguio market dev’t contract

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BAGUIO CITY—The Regional Trial Court here affirmed the validity of the city government’s contract with the Uniwide Sales Realty and Resources Corporation (Uniwide) for the development of the city market ending a grueling court battle that put the market development pursuit at the backburner for 12 long years.

City officials led by Mayor Reinaldo Bautista Jr. and Vice Mayor Daniel Fariñas welcomed the decision saying it is high time that the case be resolved so the city can push through with the much-needed rehabilitation and improvement of the trading center.

Fariñas said that with the legal impediment now out of the way, the city can now pursue the development venture with Uniwide but in case Uniwide retracts from the deal, Fariñas said the city is ready to pursue other options, which include undertaking the project on its own.

Uniwide won the bid for the project costing P1.7 billion in 1995 but negative reports on its financial status over the past years raised doubts on its capability to pursue the project.

“We do not have any official information on Uniwide’s financial standing but right now, the ball is now in Uniwide’s hands. If it declares it cannot undertake the project, then we will have to rebid it. Nonetheless the city is prepared to take over,” Fariñas said.

In a 110-page decision penned by RTC Branch 59 Judge Iluminada Cabato, the court upheld the validity and constitutionality of Ordinance No. 38 series of 1995 which provides the guidelines for the market development, and the validity of the “award of the project development to Uniwide” as well as the amended Design, Build and Lease (DBL) agreement, the development scheme adopted for the project.

It also ordered the dismissal of the four cases filed separately in 1996 against city officials and Uniwide by the Hilltop Open Market Vendors Credit and Services Corporation (HOMVECSCO) for declaratory judgement, preliminary injuction and temporary restraining order; the group of Peter Sagayo, Pablito Gumnad et.al., the Baguio Market Vendors Association Inc.(BAMARVA) and the group of Lilia Calicdan, Manuel Dalida et. al., all for the annulment of Ordinance No. 38 series of 1995, the award of contract and the DBL Agreement, with prayer for the issuance of a Writ of Preliminary Injunction and Damages.

The court also ordered the dissolution of the writs of preliminary injunction issued initially by the court and the cancellation of the injunction bonds and denied the claims for damages by the parties.

The vendors’ groups filed the cases assailing the validity of the ordinance and the contract claiming the city council acted “beyond the scope of their authority” in adopting the ordinance.

The said the ordinance and the DBL agreement were void as these included in the development coverage the slaughterhouse compound which is a national government reservation. They claimed that the 60-year lease term as provided in the development parameters of the ordinance is also contrary to the Local Government Code provisions.

They also alleged that the DBL agreement was violative of the Local Government Code and the Republic Act No. 6957 or the Build-Operate-Transfer (BOT) Law.

The vendors also claimed they were not consulted on the project, that there were irregularities in the bidding procedures as the Uniwide did not submit the proper plan.

They said that the city government, in awarding the contract to Uniwide, “delegated to a private entity the power of eminent domain depriving them of their property or property rights without due process of the law.”

They claimed that they were the ones who built their stalls at their own expense and as such, they have gained property right over the city market that should protect them against the demolition of their stalls as inevitably would be done as part of the project’s implementation.

The vendors’ claims were belied by the city government which was represented in the case by the city legal office now headed by city legal officer Melchor Carlos Rabanes. They maintained that the passage of the subject ordinance and the forging of the DBL contract were within the powers and authority granted by the Local Government Code.

They maintained that all the government actions relative to the market contract were in accordance with existing laws with the award of the project went through the usual and regular process.

The choice of the DBL scheme, they said, was “deemed mutually advantageous to both the city and the developer and the city stands to earn revenue during the operational tenure (under the said scheme).”

The slaughterhouse, they said, is not included in the development and is planned to be only used as a relocation site for the vendors while the construction is being undertaken.

They said the 30-year lease is also acceptable as only the upper floors will be operated by the Uniwide because first floor will continue to be owned and operated by the city government.

The government charged that the petitioners have no direct personal interest in the project as they are merely lessees in the market.

In its decision, the court gave merit to the claims of the city government and ruled that the ordinance and the award were not contrary to any law and therefore valid.ss

The ordinance “is a legitimate exercise for the general welfare of the city and its residents therefore is not an “ultra-vires act as the passage of the subject ordinance is well within the powers of the city council,” the court said.

It agreed that intention for slaughterhouse only for relocation site and that the 30-year lease term is acceptable.

It also agreed that the DBL option is the city government’s prerogative and and that “there is no express provision or rule prohibiting (the use of ) other forms or schemes (of development)” apart from what were listed under the BOT law.

As to claims of property rights, the court said: “There is no doubt as shown in the plaintiff’s own evidence as well as their initial pleadings and that of public defendants that the former recognize that they are only enjoying the privilege granted them by the city government under their leasehold and no matter ho long they have been occupying the premises, their status will remain as leaseholders or temporary occupants and never be converted to ownership over the lots where their stalls or buildings stand.”

“The plaintiffs are thus barred from questioning the City’s title over the subject property. The plaintiffs as lessees, who had undisturbed possession for the entire term under the lease, are estopped to deny the City’s title, or to assert a better title not only in themselves but also in some third parties.”

“The city in the exercise of its police power, has the power to revoke the temporary/provisional permits assuming the existence of valid temporary permits, and take over the operations of the City Market. Whatever rights, if any, that the plaintiffs may have acquired on the basis of the temporary permits given them must yield to the City’s valid exercise of police power,” the court said.

It also upheld the validity of the bidding process and procedures employed by the city government.

Rabanes said they expect the vendors to further contest the ruling and appeal the same to higher courts.

Farinas said that in the meantime that there is no prohibition from the courts, the city can now work out the development procedures. # Aileen P. Refuerzo/PIO