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Palawan leaves P155M lease incomes uncollected

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by Allan Yves Briones

The provincial government of Palawan failed to collect P154.58 million in lease incomes derived from the rental of heavy equipment to various municipalities in the province.

According to the Commission on Audit (COA), the lack of technical aspects in the lease agreements entered into by the provincial government has left them “defective and difficult to enforce.”

“Defective contracts will result in ineffective contract which is more disadvantageous to the (Provincial Government of Palawan), as lessor, it cannot enforce the terms of the agreement and demand payment of obligations from the lessees,” the 2018 annual audit report stated.

Since 2015, the provincial government has been in the practice of entering into memorandums of agreement with various municipalities for the rental of heavy equipment meant to be used “for the construction and improvement of roads and other public works.”

Source: 2018 Annual Audit Report on the Province of Palawan

The municipalities supposedly are to transfer funds to the provincial government in a yearly basis, yet according to state auditors, in the last three years, only P9.92 million or 6.03 percent of the total balance was collected.

According to the state auditing agency, technical aspects including monthly lease payment and period of lease were not included in the provincial government’s agreements.

State auditors mourned the fact that the uncollected lease incomes could’ve gone into the payment of the provincial government’s outstanding loans totaling P1.67 billion, P820.5 million owed for the purchase of the aforementioned heavy equipment itself.

“The failure to collect the lease receivable from the accrued heavy equipment rentals deprived the constituents of the benefits from priority projects that could have been implemented,” COA added.

State auditors called on Palawan Governor Jose Alvarez to negotiate the lease agreements for the immediate settlement of their due accounts.

According to local officials, as stated in the report, as soon as the memorandums of agreement are completed, the Provincial Treasurer will immediately collect on the revenues.