THE Commission on Audit has upheld the right of property owner Tai-Pan Development Inc. (TPDI) to collect P5.03 million from the Professional Regulation Commission (PRC) representing unpaid rent for 24 months regarding the office space occupied by PRC-Region 7 in Mandaue City, Cebu from 2018 to 2019.
Sweeping aside the PRC’s objections that it has no obligation to pay the company in the absence of a valid contract, the COA held that the claimant is entitled to payment for 24 months’ rent since the occupancy was not contested.
However, the commission denied the additional claim for litigation and legal expenses on the ground that these are unliquidated damages that are properly addressed by a trial court.
Records showed the PRC, represented by then chairperson Teresita R. Manzala, signed a lease contract with Tai-Pan Development Inc. in 2012 for the office space for PRC-Region 7 at HVG Arcade, Subangku, Mandaue City in Cebu at P229,995.32 per month (inclusive of value added tax).
This lease was renewed twice more for April 1, 2015 to March 31, 2016 and for August 1, 2016 to August 1, 2017.
However, when the last contract extension expired on August 1, 2017, the PRC-Region 7 continued holding office in the building with the consent of TPDI, until December 2019.
When billed for the rental payments however, the claimant said PRC defaulted and ignored repeated demands, including the last one sent on March 4, 2020.
Left with no other recourse, TPDI filed a petition for money claim with the COA.
While noting that, as a rule, all government procurements shall be done through competitive public bidding as a means to ensure quality services and to minimize corruption, the COA said RA No. 9184 (Government Procurement Reform Act) and its Implementing Rules and Regulations (IRR) allow alternative method of negotiated procurement for lease of privately owned real estate.
It held that TPDI may recover reasonable rental amounts on the basis of the principle of quantum meruit.
“The principle prevents undue enrichment based on the equitable postulate that it is unjust for a person to retain any benefit without paying for it,” the COA explained.
It said since the fact of occupancy by the PRC-Region 7 of the office space is not disputed, the government cannot deny that it benefitted from the use of the premises.
“To deny TPDI the payment of reasonable value for the use of its property would be tantamount to unjust enrichment on the part of the government at the expense of TPDI,” the COA pointed out.
According to the computations of the audit team leader and the supervising auditors, TPDI is entitled to payment of reasonable rental value in the amount of P5,027,040.57 representing monthly rental rate of P229,995.32 multiplied by 24 months, less withholding tax.
