THE Commission on Audit has denied a P24.2 million claim filed by PrimeWater Infrastructure Corp. against the Jaen Water District (JWD) in Jaen, Nueva Ecija arising from a 2016 joint venture agreement (JVA).
In its January 27, 2020 decision, the COA said it cannot give due course to PrimeWater’s petition for money claim on the absence of sufficient proof as to how JWD incurred the P24.2 million obligation.
This despite PrimeWater’s submission of a June 18, 2019 certification from JWD’s corporate budget specialist attesting that no payment has been made in favor of the private water firm.
“After a judicious evaluation, this Commission denies the petition for lack of proper documentation. Without the required documents to prove compliance and the duly accounted amount prayed for, this Commission is constrained to deny the petition,” the commission said.
It clarified that PrimeWater can refile the claim once it can comply with documentary requirements.
Records showed the Jaen Water District entered into a JVA with PrimeWater on October 28, 2016 “for the financing, development, rehabilitation, expansion, improvement, operation, and maintenance of the water supply and septage management system” covering the municipality of Jaen.
On January 6, 2017 or just a little over two months after the agreement was signed, the joint venture started operations.
However, PrimeWater’s application for a business permit was still under process so that from January 6 to April 15, 2017 it was JWD’s official receipt that was used for all transactions particularly customer payments. Still, actual collections ended up deposited in the bank account of PrimeWater.
The problem cropped up during the regular audit of Jaen Water District’s financial records as a cash shortage showed up totaling P7.27 million representing the collections of the joint venture based on official receipts issued.
Executives of JWD and PrimeWater executed a memorandum of agreement dated October 26, 2017 to address the adverse audit findings.
To reverse the cash shortage, PrimeWater agreed to return the full P7.27 million.
Based on the same MOA, they likewise agreed to complete the full settlement and reconciliation of their accounts pursuant to the JVA. The parties came up with the amount of P24.2 million as payable to PrimeWater.
Jaen Water District sought the opinions of the Office of the Government Corporate Counsel (OGCC) and the COA-Regional Office No. 3 if it is already proper to release the said amount to PrimeWater.
The OGCC issued a favorable opinion noting that there was already a proper accounting and reconciliation of accounts to determine the final amount.
But the COA-RO3 advised the JWD that it is the COA that has an exclusive jurisdiction over settlement of money claims against government agencies.
This prompted PrimeWater to file its petition for money claim on June 20, 2018.
The audit team leader and the regional director of COA-RO3 recommended denial of the claim for lack of merit on the ground that it covered a period when PrimeWater did not even have a valid business permit.
While denying the claim, the COA took a similar view with the OGCC that the lack of a business permit did not necessarily render the JVA void stressing that PrimeWater has the right to collect using JWD’s receipts.
Still, it held that PrimeWater has to provide sufficient documentary evidence to support the collection of P24.2 million it is claiming as payment.
“It is incumbent upon PrimeWater to present evidence that the amount claimed is accurate, such as its financial statements under the JVA, supported by schedules of revenues, operating expenses, capital expenditures and changes in the working capital,” the COA said.