AN ORDINANCE RATIONALIZING THE LEASE RENTAL OF THE OCCUPANTS OF THE PANGANIBAN BEAUTIFICATION AND UPGRADING PROJECT AT THE PHILIPPINE NATIONAL RAILWAYS PROPERTY ALONG PANGANIBAN DRIVE:
This ordinance rationalizes the lease rental rate for occupants of the Panganiban Beautification and Upgrading Project, located on a property leased by the City Government of Naga from the Philippine National Railways (PNR) along Panganiban Drive. The project, which started in 1992, involved the City developing a previously unsightly area and then subleasing it to private investors who constructed duplex and pavilion buildings. The lease rental rate had been fixed at P6.50 per square meter per month since 2008, despite the significant increase in property values in the area, where prevailing rates are now estimated at P540.00 per square meter per month. The ordinance adjusts the monthly lease rental rate to P100.00 per square meter, covering the building’s footprint, including any roofed extensions, but excluding the parking area. The policy mandates that government-administered properties used for commercial gain should generate a fair return to the public treasury to fund essential public services. The City Treasurer’s Office is responsible for issuing new lease contracts, collecting payments, and imposing penalties.
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ORDINANCE NO. 2026-007
AN ORDINANCE RATIONALIZING THE LEASE RENTAL OF THE OCCUPANTS OF THE PANGANIBAN BEAUTIFICATION AND UPGRADING PROJECT AT THE PHILIPPINE NATIONAL RAILWAYS PROPERTY ALONG PANGANIBAN DRIVE:-
Author: Hon. Francisco M. Mendoza
EXPLANATORY NOTE
WHEREAS, the City Government of Naga leased the property of the Philippine National Railways (PNR) along Panganiban Drive in 1992;
WHEREAS, the said property was a stretch of kangkongan and carabao mud holes along the main entrance to the then compact urban center;
WHEREAS, the city government sought the cooperation of the PNR in clearing this eyesore by way of leasing the property to the city for the latter to develop;
WHEREAS, the city government then subleased the same property to private investors who were willing to construct uniformly-designed duplex buildings and pavilions either for their own use or for rent to other entrepreneurs;
WHEREAS, the project, which was later called the “Panganiban Beautification and Upgrading Project,” became a partnership among the city government, the PNR, private investors who funded the construction of the buildings, the local chapter of the United Architects of the Philippines which designed the buildings, and entrepreneurs who rented and set up their businesses in the buildings;
WHEREAS, the city initially subleased the property to the private sector at the monthly rate per square meter of P3.00, adjusted it to P4.00 in 2002, and increased it to P6.50 in 2008, which rate remains to this day;
WHEREAS, since the inception of the project, Naga City has undergone significant economic transformation emerging as a major commercial hub in the Bicol Region with Panganiban Drive among those which saw increased property values;
WHEREAS, the City Assessor’s Office, in an appraisal report dated July 11, 2025, pegged the prevailing rental rate along Panganiban Drive at P540.00 per square meter per month based on the rent of similar properties in the same or nearby areas a far far cry from the prevailing P6.50 per square meter per month rate.
WHEREAS, after more than thirty years of commercial operation, the lessees have had ample time to more than recover their capital investment on their buildings and it is now the city’s fiduciary duty to adjust the property’s lease rental to reflect its current, significantly appreciated, fair market value;
WHEREAS, a realistic and long-overdue adjustment of the lease rental will correct what is now effectively a subsidized use of government property by the lessees depriving Nagauenos of revenue which could have funded additional public services had the lease rental been reflective of, or even just approximate, current property values in the area;
NOW, THEREFORE, be it ordained by the Sangguniang Panlungsod of the City of Naga in session assembled, that:
SECTION 1. Title. This Ordinance shall be known as the “Panganiban Lease Rental Rationalization Ordinance of 2026.”
SECTION 2. Declaration of Policy. It is the policy of the City Government of Naga to ensure that government-administered properties used for private commercial gain generate a fair return to the public treasury thereby augmenting funding for essential public services and the promotion of the general welfare of its constituents.
SECTION 3. Definition of Terms. As used in this Ordinance, the following terms shall mean:
a. Leased Property – The portion of the right-of-way of the Philippine National Railways (PNR) located between TP7560 and TP7579 on the Main Line South parallel to Panganiban Avenue with a total area of 17,380.50 square meters leased by the City Government of Naga from the PNR as per Contract of Lease entered into by the two parties on November 4, 1988. Said property is the site of the Panganiban Beautification and Upgrading Project, also known as the “Kapit Bisig Project.” The said property was subsequently subleased to private individuals or entities which in turn built thirteen (13) Duplex Type buildings covering an area of 3,997.5 sq.m. and seven (7) Pavillion Type Buildings covering an area of 7,390 sq.m. for a total area of 7,380.50 sq.m.
b. Lessee – Refers to the private entities or individuals who constructed the buildings on the Leased Property, or their successors, and have existing lease contracts with the city government.
SECTION 4. Lease Rental Rate The lease rental is herein adjusted to P100.00 per square meter per month. It shall cover the footprint of the building measured from the exterior walls. The footprint of any roofed extension shall be included in the computation of the leased area provided the same does not block the sidewalk or occupy mandatory setbacks, otherwise the same should be removed by its owner. The parking area shall be excluded from the computation of the lease rental.
SECTION 5. Surcharges and Penalties for Late Payment. Failure to pay the monthly lease rental within the prescribed period shall subject the Lessee to a surcharge of twenty-five percent (25%) of the unpaid amount, plus an interest of two percent (2%) per month on the unpaid lease rental and surcharge until the full amount is paid.
SECTION 6. Acknowledgment of PNR Ownership. All individual lease contracts on the Leased Premises executed by the city government with the lessees are subordinate to the Contract of Lease between the City Government of Naga and PNR. The effectivity and enforceability of the former is contingent upon the continued validity and effectivity of the Contract of Lease between the city government and PNR.
SECTION 7. Administrative and Enforcement Provisions. The City Treasurer’s Office shall issue a new lease contract containing the revised rental rate and covering only the building footprint as demarcated under Section 4 hereof.
The City Treasurer’s Office shall be responsible for the collection of the lease rental and the imposition of penalties and surcharges for those who fail to pay on time.
The City Mayor is authorized to take appropriate legal action, including closure of the building whose owner fails to settle rental payments on time.
SECTION 8. Affirmation of Prior Ordinances. The terms and conditions governing the use of the Panganiban Beautification and Upgrading Project imposed by prior Ordinances which are not contrary to the provisions of this Ordinance shall remain in full force and effect.
SECTION 9. Separability Clause. If, for any reason, any section or provision of this Ordinance is declared unconstitutional or invalid, the other sections or provisions hereof which are not affected thereby shall continue to be in full force and effect.
SECTION 10. Repealing Clause. Provisions of ordinances, resolutions, rules, and regulations that are inconsistent with the provisions of this Ordinance are hereby repealed, amended, or modified accordingly.
SECTION 11. Effectivity. This ordinance shall take effect on April 1, 2026 subject to prior posting for three weeks at city hall and on the city government website and social media account, and publication for three days in a newspaper of general circulation.
ENACTED: January 20, 2026
WE HEREBY CERTIFY to the correctness of the foregoing ordinance.
GABRIEL HBORDADO JR.
City Vice Mayor & Presiding Officer
LILIAN O. PASCUAL
Acting Secretary to the Sangguniang Panlungsod
APPROVED:
MARIA LEONOR G. ROBREDO
City Mayor
5 Comments
Do the long stretched of Panaganiban Drive included? from Union Bank up to the Police Station, We will appreciate the move of Naga City to have these stores directly lease to the City, rather than the exhorbitant rates imposed by PNR. How can we be included in these Kapit Bisig Program?
Thanks for the query. We are referring this to the appropriate office.
Please include the stretch from Union Bank to the Police Station
Thank you po for your comments. The portion you referred to was excluded in the original lease contract between the PNR and the city. To my knowledge, that was granted to the province and a building of the then FEDMACSI was put up there. The city has no jurisdiction over that portion po. PNR actually wants to cancel the lease contract with the city para sinda na po mag pa arkila. Fortunately dae po nadadagos. Kaya I doubt po kun magtugot pa an PNR na pakaputan sa city an portion na yan. Pera man po an pa arkila kan PNR?
Why the Kapit Bisig Program exclude the long stretch of PNR property from Union Bank up to the Police Station? Is the area mentioned included in the Naga City Beautification Improvement Plan (expansion of Kapit Bisig Program) this 2026? . We are very much willing to improve our stores and small building to follow the Naga city architectural design and willing to rent the area direct to Naga City government. Our 22 years of stay here in this place, I think and hope we will be an eligible rentee of our own small building. If there really is the Plan, hopefully this will serve as an intent in the future development.