The Department of Justice (DOJ) affirms the legality of the plan of the Department of the Interior and Local Government (DILG) to secure a property for its offices through a lease-purchase agreement with the Government Service Insurance System (GSIS).

Under the proposed agreement, the GSIS will acquire a suitable office property based on an agreed valuation and lease it to the DILG over a specified period.

The lease would be secured by a Multi-Year Contractual Authority (MYCA) issued by the Department of Budget and Management (DBM), and upon expiration of the lease, the ownership of the property will pass to the DILG.

In a legal opinion addressed to DILG Secretary Juanito Victor C. Remulla, the DOJ – through Undersecretary Raul T. Vasquez – said: “This Department opines that a Multi-Year Contractual Authority (MYCA) is a valid and binding document that the DILG can rely upon in acquiring its new office building, via the proposed lease-purchase scheme with the GSIS.”

DILG Secretary Remulla sought the legal opinion as he bared plans for his department’s need to secure a property in Metro Manila where its central offices can be relocated.

He told the DOJ that the DILG is exploring a potential agency-to-agency lease-purchase scheme with the GSIS which will acquire a suitable office property based on an agreed valuation.

“An MYCA is the authority given to the Procuring Entity (PE) to procure multi-year projects (MYPs), which must be requested prior to the commencement of any procurement activity,” the DOJ said.  

“Further, DBM Circular Letter No. 2023-7 provides that the MYCA must contain an annual breakdown of the full project cost and that the annual funding requirements for the MYPs must be included in the PE’s budget proposals,” it added.

The total and annual costs as indicated in the MYCA will be the basis for the Approved Budget for the Contract (ABC) and the yearly certificate of Availability of Funds (CAF), the DOJ said.

“All told, the issuance of a MYCA certifies that a project is financially viable and authorized over its intended duration,” it pointed out.

The DOJ, however, advised the DILG to follow the established guidelines of the DBM “to avoid any irregularity.”

“At the same time, the DILG, together with the GSIS, must make a prior determination of what the ‘market value’ of the new office building will be, prior to executing any agreement thereon,” it advised.

At the same time, the DOJ said the DILG should “seek the guidance of the Commission on Audit (COA), which has the constitutional mandate to examine, audit, and settle all accounts pertaining to the uses of government funds and property.”