COA: PUP’s P575-M building purchase ‘waste of funds’

MANILA, Philippines - The Polytechnic University of the Philippines (PUP) wasted government funds when it bought two dilapidated buildings in Manila for P575.7 million in 2007, according to the Commission on Audit (COA).

Records show that PUP has been paying P1.6 million annually for the two 10-year-old five-story Government Service Insurance System (GSIS) condotel-hostel buildings, state auditors said in a report released yesterday.

The COA said only two floors of Building A were utilized by the PUP’s Colleges of Technology and Engineering after the building was rehabilitated for P101.2 million.

Building B could not be occupied at all because it was not in usable condition when it was acquired, the COA said.

The PUP purchased the buildings in a bid to generate new revenue. Based on a feasibility study, one building was supposed to serve as an extension of the College of Technology to accommodate a projected increase of enrollees while the other building was to be converted into a university dormitory for students, faculty members, administrative employees and transients.

As of Dec. 31, 2012, the PUP has paid GSIS a total of P84.1 million from March 2008, leaving a balance of P491.6 million over 25 years.

State auditors who inspected the buildings found that the basements were flooded because the area is prone to floods due to its proximity to the Pasig River.

They said that the PUP, before making the purchase, should have taken the physical condition of the buildings into consideration and studied whether acquiring them “would be feasible, viable and advantageous to the university.”

The COA said the PUP should have asked for a price reduction or not bought the buildings at all since they were already 10 years old and dilapidated. 

The COA recommended that the PUP prioritize the rehabilitation and conversion of Building B into a university dormitory to prevent its further deterioration. The state auditors said the university should also consider alternative uses for Building A, such as renting out space on the ground floor to enable the PUP to earn additional income.