STATE auditors have called out the management of the Light Rail Transit Authority (LRTA) over the continuing collection of lease payments based on old rates in connection with 15 lease contracts that were supposed to have already been revoked for lack of imprimatur from the Board of Directors (BOD).
In the 2023 audit of the LRTA, the Commission on Audit revealed that the 15 contracts worth P350.46 million were only signed between a former administrator and the various lessees hence considered invalid.
Under COA Circular No. 88-282A, Executive Order No. 603 dated July 12, 1980, and LRTA Board Resolution No. 011-2017, prior approval by the BOD was required since it has oversight and authority over such contracts.
The Business Development Division (BDD) requested clarification from the Legal Department and the Corporate Board Secretary of LRTA and was informed that the BOD approval is a prior requirement.
“Any business endeavor and transaction with a period exceeding one year shall require prior approval from the BOD as well as authority from the BOD to execute and sign the appurtenant contract,” the audit team said.
The BDD recommended in 2022 that the succeeding LRTA Administrator terminate those lease contracts with lifespans of more than one year.
“The BOD decided through a Board Resolution that these lease contracts shall be deemed void and revoked and all the concerned parties should secure proper and valid contracts based on appropriate existing rates,” auditors said.
In 2023, the LRTA reportedly sent notices to 11 lessees informing them of the BOD ruling and instructing each to submit a Letter of Intent should they opt to continue doing business with the agency. It was made clear that the new lease deals will be based on current existing rates.
However, the audit team noted that the LRTA did not provide a deadline for the submission of the Letter of Intent and when the revocation of the contracts would take effect if the submission was not made.
“The LRTA has not provided the timeline for the lessees to submit their Letter of Intent, clarification on the termination date of the revoked contracts and information to discuss other matters,” the COA pointed out.
As proof that the notice of termination did not take effect, auditors said the lease payments were still accepted by the LRTA.
“It was noted that continuous payments from various lessees using the old lease rate were accepted despite the revocation of the lease contracts. This unresolved situation may be disadvantageous to the government due to the difference between the updated lease rate and the actual rate being paid,” they added.
Responding to the audit findings, the LRTA agreed to provide the status of the submission of the documentary requirements for the new lease contracts.
Management also assured the COA that it will evaluate and appraise all non-rail business activities with consideration for the most advantageous lease rates and contractual periods for the government.