THE Intramuros Administration (IA) could have earned P6.28 million more had it renewed the lease contracts/agreements of tenants/lessees of commercial spaces, state auditors said on Monday.
In a 2014 audit report, the Commission on Audit (COA) said the Intramuros Administration failed to renew the lease contracts/agreements after it was recommended in a 2013 audit report.
“The IA lost an opportunity to generate [an]additional income of P6,279,103.14 for failure to renew the lease contracts/agreements of all tenants/lessees of commercial spaces which all expired on January 1, 2010. The month-to-month tenancy arrangement prevented the insertion of a provision for the increase in rental fees to the disadvantage of the government,” the 2014 COA report said.
In a 2013 audit report, state auditors stated that since January 2010, the IA’s non-renewal of the lease contracts/agreements with all its tenants/lessees prevented a rental increase “for almost five years already.”
COA auditors said the management had agreed with their recommendations such as fast-tracking of the presentation for the proposed rate increases; guidelines on lease contract/agreement by the Board of Administrators; and the renewal of all contracts with provisions on reasonable rate increase and other terms that are just and acceptable to both parties.
The team of auditors was also informed of the scheduled meeting and presentation of the leasing guidelines to the Board of Administrators on July 14, 2014.
“Validation of Management’s action on the audit recommendations, however, disclosed that IA again failed to renew the lease contracts/agreements, hence, the lease is still on a month-to-month tenancy based on the provisions under Section 30 of the Contract, with the same terms and conditions provided therein,” the auditors said.
“The non-renewal of the contracts prevented the IA to increase the rental rate comparative with the current rate used by private lessors in the area, thus, the lessees were still charged with the same rates providing a rent income of P1,127,469.50 per month or a total of P13,529,634.00 per year instead of P1,650,728.09 per month and P19,808,737.14 per year computed with a reasonable increase of 10 percent from CY [calendar year]2010 to CY 2014,” they added.
Based on the audit report, the Commission on Elections (Comelec), which is located at the 5th floor of the Palacio del Gobernador, paid the highest rent of P310,346.50 per month. Jollibee Foods Corporation in Cantinas de Aduana came second with P176,000 per month. Barbara’s Foods and Catering Services in Plaza San Luis came third with P175,700 per month. Kalang Maju Phils, Corporation Inc. located in designated areas within Intramuros came fourth with P111,300 per month.
The other tenants/lessees, including those located in stalls in Plaza San Luis as well as in Tiendas del Parian and other locations, were: Alphaplus Corporation, Jasper Ano-os, Lourdes Apostol, Janice Balita, Gloria Barican, Luisa Cabuhat, Maria Elena Carlos, Caruaje (within Intramuros), John Charles Celdran, Michael Centeno, Joederick Dela Cruz, Angeli Digneneng, Maty Jane Digneneng, Raphael Dy, Eduardo Eugenio, Gawad Kalinga (the rent of which the COA indicated as “Electricity only”), Hipolito Domingo, Jose Mari Lacson, Lush Enterprises Corporation, Lorna Manaay, Mary Ann Gonzales Sotelo, Sebastian Tamayo, Li Hua Tan, Michelle Iris Tsai, Vacoop, and Yslas de Oro Travel & Tours.
“We reiterated our previous year’s recommendation and Management agreed to make a strong representation to the Board of Administrators for the approval of the rate increase,” the auditors said.
COA auditors also instructed the IA’s chiefs of the Administrative and Finance and the Business Management Divisions (BMD) “to revisit the existing Lease Contracts/Agreements and facilitate the contract renewal with the qualified/non-defaulting tenants/lessees and [effect]the reasonable rental increase and other terms that is just and acceptable to both parties.”
“Management informed that they will include the rationalized fees and charges and the corresponding guidelines, for presentation and approval by the Board on the next Board meeting,” the auditors closed.
The IA, attached to the Department of Tourism (DOT), was created in 1979 for restoring and administering the development of Intramuros in Manila.