DOJ Validates Lease Purchase Agreement for DILG Office Property
The Department of Justice (DOJ) has confirmed the legality of the Department of the Interior and Local Government’s (DILG) plan to acquire office space through a lease purchase agreement with the Government Service Insurance System (GSIS). This lease purchase agreement is seen as a strategic solution to secure a property for the DILG’s central office relocation in Metro Manila.
Under this proposed lease purchase agreement, the GSIS will first acquire a suitable office building based on a mutually agreed valuation. Then, it will lease the property to the DILG for a fixed period. Once the lease expires, ownership of the property will transfer to the DILG.
Understanding the Multi-Year Contractual Authority
A key component of the plan is the Multi-Year Contractual Authority (MYCA) issued by the Department of Budget and Management (DBM). The DOJ, through an official legal opinion, stated that the MYCA is a valid and binding document that the DILG can rely on to carry out the lease purchase scheme with GSIS.
According to sources familiar with the matter, the MYCA authorizes procuring entities like the DILG to undertake multi-year projects, provided this authority is sought before any procurement activity begins. Furthermore, the MYCA must clearly outline the full project cost with an annual funding breakdown included in the agency’s budget proposals.
The DOJ also explained that the MYCA’s total and annual costs serve as the basis for the Approved Budget for the Contract (ABC) and the yearly Certificate of Availability of Funds (CAF). This process ensures that the project is financially sound and authorized throughout its duration.
Guidance and Precautions for the Lease Purchase Agreement
While supporting the lease purchase agreement, the DOJ advised that the DILG strictly follow DBM guidelines to prevent any irregularities. It also emphasized the importance of determining the market value of the property before executing any agreement with GSIS.
In addition, the DOJ recommended that both the DILG and GSIS seek the guidance of the Commission on Audit (COA), which has the constitutional authority to audit and review all government funds and properties.
DILG Secretary Juanito Victor C. Remulla initially requested the DOJ’s legal opinion as part of the department’s plan to relocate its central offices to a new property in Metro Manila. This move aims to address the department’s office space requirements efficiently and legally through a structured lease purchase agreement.
The lease purchase agreement with GSIS, supported by a valid MYCA, presents a financially feasible and legally sound method for the DILG to secure its new office headquarters.
For more news and updates on government property acquisition, visit Filipinokami.com.