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Intramuros lost P1.176M income from businesses with expired contracts – COA

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State auditors scored the administration of Intramuros in Manila for allowing various businesses to operate inside the historic walled city without valid contracts, resulting in foregone P1.176 million income.

In its annual audit report that ended in 2015, the Commission on Audit (COA) said the Intramuros Administration allowed all its tenants or lessees to operate businesses in the commercial spaces within the Intramuros area without valid contracts, which meant there was no legal basis.

Auditors said some businesses operated on contracts expired since 2010 and yet the management failed to conduct a public bidding to get the most competitive rates on the commercial spaces within Intramuros.

The administration also failed to renew the lease contracts or agreements with the proposed rate increase and lease guidelines.

Auditors said the business establishment with expired contracts paid a total rent of P980,335.50 per month or P11,764,026 per year, instead of the income computed with a reasonable 10 percent increase per year amounting to P1,176,402 per month or P12,940,428.60 per year.

The Intramuros Administration thus lost P1,176,402.60 worth of foregone additional rent income.

“Since the contracts/lease agreements of all tenants/lessees have already expired five years ago, the Management should have conducted a public bidding in order to obtain the reasonable and/or competitive rates on the commercial spaces within Intramuros,” the auditors said.

The COA recommended the management to immediately conduct public bidding on all the commercial spaces to obtain the rental rates most advantageous to the government.

The COA also recommended the management to make a strong representation to the Board of Administrators for the approval of the 10 percent rate increase.

Intramuros is the historic walled city at the heart of Manila built during the Spanish colonial regime.