P23M uncollected loans to Pinatubo victims written off

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    THE Commission on Audit has granted the appeal of the Department of Science and Technology (DOST)-Regional Office No. III to write off uncollected loan assistance given to victims of the June 1991 Mount Pinatubo eruption totaling P23.85 million.

    The January 10, 2020 decision of the COA Commission Proper effectively set aside a previous ruling dated June 14, 2016 that forbade the DOST-RO3 from removing the uncollected loan accounts from its books on the ground that the agency failed to exert diligent efforts to demand payment from borrowers and has not exhausted available remedies.

    In its new ruling, the COA agreed with the DOST-RO3 that most of the projects funded by the loans are no longer non-operational or no longer in existence.

    “The validation of the loan program conducted by the DOST and the ATL [audit team leader] showed…individual beneficiaries are either dead, have no capacity to pay, or can no longer be located. The loan receivables …are considered dormant since they have remained non-moving for 10 to 20 years and the probability of collection is nil,” the commission said.

    The COA, however, clarified that a write-off does not equate to condonation or release of the obligation.

    A write-off is an accounting strategy to allow an agency to maintain a more accurate assessment of its current assets. Should the account written off become collectible, the agency can still take steps to collect payment.

    The loans were granted to families who sought livelihood assistance after being displaced by the Mount Pinatubo eruption in 1991 and the subsequent lahar inundation of entire towns and farmlands.

    The implementation of the livelihood projects was entrusted to the DOST by the now defunct Mount Pinatubo Commission (MPC).

    While the DOST claimed that it was the MPC that was tasked to collect the loan payments from borrowers, the COA noted that in the memorandum of agreement executed between the MPC and DOST, it was the latter that undertook to release the funds for the loans, collect the principal and interest, and remit the collections to the MPC.