THE Sangguniang Panlungsod of Dagupan has directed the City Legal Office to sue Bugnay Construction and Development Corp. (Bugnay) to compel it to give what is due the city as stipulated in a contract of lease executed between them 20 years ago over that piece of prime land downtown where half-burnt stalls now stand.

In a resolution authored principally by Councilor Michael Fernandez and co-authored by Councilor Jose Netu Tamayo, the city council said that Bugnay should return the Magsaysay Market area leased by the city government 20 years ago with all its improvements.

“The contract between the city and Bugnay is the law between the contracting parties and it is provided there that it is the obligation of Bugnay to insure the market,” Fernandez said.

Under Item 16 of the agreement, which was signed on April 27, 1987 by then Mayor Liberato Reyna Sr. and Bugnay president Antonio Licuanan, Bugnay “shall at the expiration of the period of the lease, turn over to the lessor without demand, the entire market building and all its appurtenances attached thereto…”

The Magsaysay Market, which Bugnay operated, was gutted by fire on September 25, 2005.

In a letter to Mayor Benjamin Lim dated November 11, 2005, Bugnay chair Manolo Uy Lim indicated his company’s intention to pre-terminate the contract of lease “in the higher interest of the City of Dagupan and its people… and hereby turnover the premises ‘as is where is.’”

Bugnay also said that upon acceptance, the City of Dagupan and Bugnay shall have no more claims or right of action against each other, either by way of damages, unpaid taxes, rentals or any other claim of whatsoever nature.

Lim conformed and accepted Bugnay’s proposal as evidenced by his signature at the bottom of the letter.

But Fernandez said that the mayor has no authority to amend the contract without authority from the SP as provided for in the Local Government Code.

“Under the New Civil Code, Bugnay still has the liability to turn over a fully functioning Magsaysay market to the city even in the case of fortuitous event because the market is a generic object and therefore, it is replaceable,” Fernandez added.

During the session, City Legal Officer Geraldine Baniqued confirmed that Fernandez’s points had legal bases.

Tamayo said that if Bugnay could no longer rebuild the Magsaysay Market complex, it should at least give to the city government the proceeds of its insurance “because the city is entitled to that.”

“They must comply with the contract in good faith,” Tamayo said.