Legal issues raised

CEBU, Philippines — The Cebu City Legal Office (CLO) has raised questions on the tripartite agreement for the donations by private entities for the construction of the Cebu City Medical Center, including that on the authority of the Cebu Medical Society (CMC) to accept the money on the City Government’s behalf.

The Freeman managed to secure a copy of the CLO opinion, which was rendered approximately more than a month after it received the request for it to review the tripartite agreement for the donations, which are intended for the construction of CCMC’s 8th, 9th and 10th floors.

The Cebu City Council is set to discuss the CLO opinion during its regular session today.

The legal opinion, dated November 4, 2024, is addressed to Attorney Ken Lanvin L. Sayruddin, CCMC’s special assistant for legal matters, who sought the CLO’s expertise on the draft agreement last Oct. 21.

The agreement is meant to be enacted involving CMS, Dakay Construction and Development Corporation (DCDC) and the Cebu City Government, to establish the proposed terms and conditions of the involved parties to define each of their roles and responsibilities over the amount.

In its legal opinion, the CLO raised three issues which need to be “considered, properly addressed, and resolved”. These three issues are on the nature of the funds that are the subject of the agreement, CMS’ authority to accept the donation, and requirement of a public bidding for the project.

Among those that the CLO has raised and sought clarification on is the permit of the CMS to receive the cash donations on behalf of the city for the construction and completion of CCMC. The CLO stated the CMS has received P100 million donations for the CCMC project.

The CLO highlighted an excerpt from the “Charitable Trust Agreement” which granted CMS the “power to reimburse themselves from the Trust Fund for all fair and reasonable expenses” aside from “receiving further contributions for the CMCC project with the CMS, as trustee”.

They added that in an “undated” board resolution of CMS, the latter agreed to be a “trustee” in consideration of a “fund management fee”.

The CLO then cited Section 2 and 3 of Presidential Decree (PD) No. 1564 (Solicitation Permit Law) that “provide(s) the requirements before any person, corporation, organization, or association may solicit or or receive contributions for charitable or public welfare purposes”.

Among the requirements is a permit from the “Department of Social Services and Development” that is accordingly stipulated in the Integrated Reorganization Plan.

“Upon the filing of a written application for a permit in the form prescribed by the Regional Offices of the Department of Social Services and Development, the Regional Director or his duly authorized representative may, in his discretion, issue a permanent or temporary permit or disapprove the application,” the CLO said.

Further, the CLO emphasized that before the tripartite is signed, it must be ascertained first that CMS is “clothed with proper permit and/or legal authority to receive donations or contributions for the CCMC project”.

“As this Office does not have the authority to rule on whether CMS is required or exempted from getting the required permit, the matter shall be referred to the Regional Office of the DSWD (Department of Social Welfare and Development) for legal opinion and/or appropriate action,” it further said.

Also, the CLO also cited the lack of disclosure on the donors and how much was donated.

“It appears that the amount subject of the Trust Agreement and the MOA (Memorandum of Agreement) came from the donations for the CCMC. These have yet to be accounted for,” the CLO said.

IT mentioned from Section 42 of the Administrative Code of 1987, which requires the need for “transparency and accountability”, as it mandates that “all money and property received by public officials must be accounted for as government funds and property”.

The CLO likewise noted that since the donation drive for the CCMC completion has already been public knowledge, there should be an “accounting of all the money received either by the city government or any entity” and determine the nature of the funds.

“Are these "cash donations" public or private funds?” the CLO asked.

Further, the CLO also noted that there has been an indication of an “undisclosed trustor” who “explicitly chooses DCDC as the designated third-party contractor to accomplish the CCMC project."

The CLO recommended that in order to satisfy the public’s demand for transparency and accountability, the “Rama Baena Tan and Ang” Law Offices (RBTA Law), which represented a donor, in this case the “undisclosed donor”, should be required to submit a Special Power of Attorney or any document, showing that it is indeed the authorized representative of the donor.

RTBA Law is the law firm of Atty. Mikel Rama, the son of former mayor Michael Rama, whom the Ombudsman ordered dismissed from service last month for nepotism.

“While the undisclosed trustor desires to remain anonymous to the public, the name or names thereof should at least be disclosed to the Cebu City Government to ensure that the donated funds come from legitimate sources especially that, as stated above, there was no disclosure on the result or whereabouts of the donation fund drive of then Hon. Mayor Michael L. Rama,” the CLO said.

With this, the CLO further said that such “intricate matter” must be referred to the Commission on Audit (COA) for their proper guidance.

Lastly, the CLO also raised a concern on the need for a public bidding after the MOA “explicitly” designated DCDC as the project contractor, without the benefit of the procurement process required under Republic Act No. 12009 (New Government Procurement Act) of July 20, 2024.

The CLO emphasized that as indicated in the procurement law, one mode of procurement is the need for a “competitive bidding”.

“By its nature, public bidding aims to protect public interest by giving the public the best possible advantages through open competition,” the CLO said.

It said that competitive bidding should place an equal footing among the other qualified bidders to also avoid “suspicion or favoritism as well as anomalies” among the public contracts.

"The lingering doubt that the City Government of Cebu must face is whether the MOA is a legitimate arrangement or a circumvention of the law on government donations, public bidding and accountability of public funds,” the CLO said.

It added that to better protect the interest of the Cebu City Government and its officials who will be involved in the signing of the MOA, these issues, they added, must be dealt accordingly and must be resolved before deciding whether or not to proceed with the MOA.

In line with this, the CLO said that since there is an ongoing inquiry and deliberation on the CCMC project before the City Council, it recommends that the agreement be referred before the body for its scrutiny.

It also referred the agreement to the DSWD, the Commission On Audit (COA), and the Department of the Interior and Local Government (DILG).

During the first executive session last Aug. 15 on the donations, on the delay in the construction of CCMC, and why the donated funds were coursed through the CMS, City Councilor Mary Ann de los Santos laid down the importance of having a tripartite agreement.

She said City Ordinance 2439 identifies the guidelines for the CCMC donation drive and highlighted that it must have supervision by the City’s Department of Social Welfare and Services and the approval of the city mayor, hence a tripartite agreement.

Previously, the City Council approved a resolution that backed the crafting of the tripartite agreement.

During the 7th seventh executive session on the matter, Dr. Peter Mancao, CCMC medical director and former president of the CMS, told the City Council that the donated funds, currently at P205 million, are deposited in a bank under the name of the CMS in a separate account created just for the purposes of the donation drive.

Mancao, however, refused to divulge to the City Council who the donors are, as the donation allegedly came with a non-disclosure clause.

He also clarified with the City Council that no funds from the donations have been disbursed yet. — (FREEMAN)