THE Commission on Audit has dismissed a P93.25 million claim of unpaid loan plus interest and penalties filed by the Philippine National Bank (PNB) against the municipality of Santo Tomas in Isabela province.
In an 11-page decision released last month, the COA en banc held that it has no jurisdiction over the petition because the exact amount of the obligation being claimed cannot be determined based on available documents or has not been decided by a competent court.
“The scope of COA’s authority to only take cognizance of money claims are those that are liquidated and uncontested. This means that claims must be determined or readily determinable from vouchers, invoices, and such other papers within reach of accounting officers,” the commission said.
“It may also mean that the claim no longer presents a justiciable question ripe for judicial determination,” it added.
The ruling was signed by COA Chairperson Gamaliel Cordoba and Commissioners Roland Café Pondoc and Mario Lipana.
Based on PNB’s petition, the municipal government signed a loan agreement on September 30, 2003 to borrow P15 million payable in five years for the purchase of three brand new heavy equipment units: a Mitsubishi grader (P6.574 million), a wheel loader (P5.4 million), and an Isuzu dump truck (P2.6 million) or a total of P14.933 million.
As a guarantee for the loan, the municipality reportedly executed a Deed of Assignment on the same date in favor of the bank, over its Internal Revenue Allotment (IRA), real property taxes, and revenue receivables.
As of March 2, 2011, the bank said the loan had ballooned to P38.246 million including principal, interest, penalties, and other charges.
The municipality reportedly executed a restructuring agreement in 2011 over a P18.27 million portion of the loan payable in nine years and covered by post-dated checks of P250,000 each for the monthly amortizations.
However, the bank said the checks bounced when presented for payment.
In its reply, the municipality only admitted the existence of the documents of the original loan. It denied the bank’s statements, saying it was PNB that offered the loan with assurances of minimal interest and pegged the loan amount at P15 million.
NO LOAN RESTRUCTURING
Likewise, it denied that there was a loan restructuring at all, disclaiming the existence, execution, as well as documents in relation to it.
The local government said it never even saw or held the P15 million, alleging it was the bank that used the loan amount to buy the heavy equipment “thereby acting as both the lender and the supplier.”
It added it was not given a copy of documents about the procurement and thus remained clueless about the acquisition costs.
Lastly, it refused to accept the obligation for the entire loan amount on the grounds of incomplete delivery of the heavy equipment. It acknowledged only the grader and the loader but denied receiving a dump truck.
It said it was unfair to expect the municipality to pay even the cost of an undelivered item, together with interests and penalties.
In its decision, the COA said the scope of its authority prevents it from taking cognizance of petitions where the claim for payment remains a justiciable question or when the liability or non-liability of the government remains an issue requiring examination of documents or subject to judicial discretion.
However, the commission sustained the position of the municipality that the restructuring agreement is unenforceable due to the lack of authorization from the Sangguniang Bayan – a fatal defect to the petitioner’s claim.
Likewise, it underscored the absence of the delivery receipts and the sales invoice for the machinery as noted by the audit team leader.
“Wherefore, the Petition for Money Claim of the Philippine National Bank against the Municipality of Santo Tomas, Isabela, for payment of the loan in the amount of P93,250,780.69 as well as running interests and penalties, is hereby dismissed for lack of jurisdiction,” the commission said.