COA Confirms P14.7-M Underpayment for Batangas Town's Commercial Lot Rental

The Commission on Audit (COA) has denied the appeal of outgoing Mayor Ryanh M. Dolor of Bauan, Batangas on the underpayment of P14.7 million lease rental from 2013 to 2017 by COMNET Management Corporation for the town’s 1,734 square-meter commercial lot.

Dolor appealed the Special Notice of Charge (NC) No. 2017-001-100(GF)-(2013-2014) issued by the COA dated March 18, 2017 on the underpayment of rental by COMNET for five years.

The audit conducted by COA found that the mayor and the Sangguniang Bayan preempted the procurement process. It said the lease of the subject property gave undue benefit to COMNET because the eventual P320 per square meter per year prescribed rate should have been P7,920 per square meter per annum.

In his appeal, Dolor said the rental rate of P320 per square-meter per year is valid because it is a lawful exercise of legislative function pursuant to Section 447 of the Local Government Code of 1991, which empowers the Sangguniang Bayan to generate and maximize the use of resources and revenues for the development plans, program objectives, and priorities of the municipality.

He also said that he exercised his sound discretion in determining the most favorable terms for the municipality in the Contract of Lease entered with COMNET.

But the COA found Dolor’s appeal devoid of merit as it stressed that the municipality did not exercise proper diligence to ascertain the reasonable rental rate for the property that sought to be leased.

Considering relevant factors such as location, desirability, and current development in the area, the COA said that the rental rate should at least be P168 per square meter per month or P2,016 per square meter per annum. Thus, the municipality loses an income of P2,940,864 per year or a total of P14,704,320 for five years, it said.

Accordingly, Special Audit Notice of Charge No. 2017-001-100(GF)-(2013-2014) dated March 18, 2017, on the underpayment of lease of 1,374 square-meter municipal commercial lot to COMNET Management Corporation, for a period of five years, in the total amount to P14,704,320 is affirmed, the ruling said.

The 14-page decision was signed by Chairperson Gamaliel A. Cordoba and Commissioners Roland Cafe Pondoc and Mario G. Lipana.