THE Commission on Audit (COA) has asked the Philippine National Construction Corporation (PNCC) to execute a new contract to update the rent on a 5,623 square meter property of its subsidiary, CDCP Farms Corp, which ceased operations in 1988.
Government auditors disclosed that the lease contract between CDCP Farms Corp and the unnamed occupant that was signed way back 2005 has already expired, although the tenant has stayed on and continues to pay the original rent of P3 per square meter.
Without renewing the lease deal and upgrading the rent to the current fair value, the audit team said the shuttered government firm has been losing millions in potential income.
“Based on the recent appraisal of the property, the current fair market value ranges from P20 to P32 per square meter per month,” auditors said.
At the old rate, the tenant only pays P16,869 monthly, whereas if the latest valuation is followed, the property would be earning P112,460 to P179,936 each month.
The COA recommended that the PNCC convene the Board of Directors (BOD) of the agency to renegotiate the expired lease with a more reasonable rent rate and to speed up the liquidation process for the shuttered subsidiary.
“Had the CDCP-FC had a functioning BOD, they could have renewed the lease contracts and derived substantial income to preserve the value of the assets and provide the highest possible liquidating value pending complete dissolution,” the audit team noted.
Separate appraisals of the land conducted in 2023 by CAL-FIL Appraisal and Management Inc. and Crown Property Appraisal Corp pinned the price tag on the property at P43.3 million and P33.7 million, respectively.
CDCP Farms Corp was incorporated in 1974 to engage in agriculture by raising and production of cattle, livestock, dairy, meat, fruits, and vegetables but it never took off until it stopped operations on December 31, 1988 “due to financial incapability.”
