Bureaucratic red tape that prevented airport authorities to hike rental rates for hangars and other airport facilities for at least eight years had cost government over P186 million in unrealized income.

The Commission on Audit (CoA) made the disclosure as it asked the Manila International Airport Authority to push government, particularly Transportation Secretary Leandro Mendoza and the National Economic Development Authority, to act swiftly on the MIAA board’s recommendation to adjust rental fees for hangars, airport buildings and other developed land being occupied by private firms, particularly air transport companies.

In an audit report submitted to the MIAA board of directors, CoA Director Divinia Alagon said state audit examiners have assailed the continued imposition of old rental rates for airport facilities, saying that this deprived government a total P186.29 million in 2008.

An examination of the audit report indicated that billions of pesos were actually lost due to the failure of MIAA to increase rental rates since 2000.

Financial records audited by MIAA indicated that new rental rates were supposed to be implemented in 2000 after the management issued Administrative Order No. 1, series of 2000.

Lessees challenged the order before the Regional Trial Court of Makati City Branch 58 and were upheld by the court which ruled that MIAA cannot adjust rental rates for failure to conduct public hearings.

Sustained later by the Supreme Court, the ruling also stated that no increase in rental can be imposed unless approved by the secretary of transportation and communications.

“Thus, the billing rates were restored to 1997 rates, which rates considered as unrealistic because they are already 11 years old,” the audit report said.

Last year, the MIAA observed the rules spelled out by the court when it conducted a public hearing in order to impose new rates based on the Consumer Price Index and approved under Board Resolution 2008-022.

“Use of old rental rates will result in loss of income as the new rates under 2008-022 are not yet implemented. Non-compliance with the required notice and hearing, as well as approval of the DoTC secretary of rental rates deprived authority income in the amount of P186,290,121 for the year 2008,” CoA said.

Auditors advised MIAA to “exert extra effort” in securing Mendoza’s approval of the proposed rates which was ignored last year.

However, the airport management said it cannot implement the new rates without being reviewed by NEDA. MIA officials explained that the proposed rates were presented this year to President Arroyo and the Cabinet.

In the same audit report, government audit examiners demanded that lawyers of the Office of Government Corporate Counsel return the P300,268 they received from MIAA as honorarium.

CoA said the grant of honoraria to OGCC lawyers is prohibited under Executive Order 878.

“The provision of EO 878 leaves no room for other interpretation,” CoA said.