The Supreme Court upheld the findings of the Commission on Audit which denied the condonation and write-off of portions of financial assistance given by state-run Philippine Deposit Insurance Corp. to Westmont Bank and Keppel Monte Savings Bank amounting to P1.65 billion and P325 million, respectively.
The high tribunal, in an 18-page en banc decision penned by Associate Justice Mario Lopez, denied the petition filed by PDIC to set aside the Aug. 2, 2012 decision of COA rejecting the condonation granted
to Westmont Bank on the ground that it was included the principal loan.
The state auditor also turned down the request to write off the account of KMSH as the said account did not appear to be uncollectible.
The COA, in a resolution dated March 9, 2015, denied PDIC’s motion for reconsideration for lack of new and substantial arguments to warrant the reversal of its decision and subsequently issued a notice of disallowance.
Pending the resolution of PDIC’s petition, COA issued notices of disallowance for the amounts on July 10, 2015.
The PDIC in its petition said COA committed grave abuse of discretion in issuing the notices of disallowance, noting the unreasonable delay on the latter’s part in resolving the issues on the
grants of financial assistance.
It said such delay was tantamount to “an evasion of a positive duty” amounting to grave abuse of discretion on the part of COA.
It maintained that it is empowered under its charter to condone or release any claim or liability regardless of the amount, and that its actions were approved by the Monetary Board of the Bangko Sentral ng Pilipinas.
The SC, in ruling in favor of COA, said that in authorizing the condonation and write-off, the PDIC’s board acted with gross negligence, amounting to bad faith, thus, justifying their liability for the disallowance.
The court noted that the disallowed condonation and write-off were implemented without Congressional approval and recommendations from COA and the Office of the President as mandated under Section 20 of the Administrative Code.
“The patent illegality of the condonation and write-off indubitably countermands PDIC’s invocation of good faith. There is no justification to legitimize the palpable lapse of the PDIC BOD in simply ignoring the mandatory provisions of the Administrative Code, which had long been in effect before the condonation and write-off were implemented,” the SC ruled.