Commission on Audit

Cash-strapped PNCC told to pay Malaysian firm seeking compensation since 1994

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Cash-strapped PNCC told to pay Malaysian firm seeking compensation since 1994
The Philippine National Construction Corporation, which has been in the red for decades, is ordered to pay its former Malaysian business partner over a failed infrastructure venture

MANILA, Philippines – A Malaysian firm seeking compensation for undelivered service obligations of the Philippine National Construction Corporation (PNCC) found further backing from the latest decision of the Commission on Audit (COA)

COA granted the claim of Asiavest Equity SDN BHD against PNCC for payment of a 1994 judgment award by the Pasig Regional Trial Court, amounting P174.5 million, as well as lawyer’s fees totaling P300,000.

PNCC is likely to pay up much more, possibly reaching over a billion, as COA stipulated that it should also pay interest of 12% per year from April 1994 to June 2013, and 6% annual interest from July 2013 until it is fully paid.

The issue stems from the deal struck between Asiavest and the Construction Development Corporation of the Philippines (which later transformed into PNCC), where they entered into a contract to build infrastructure in Pahang, Malaysia. 

PNCC, backed by various bonds and guarantees from Asiavest, bagged four contracts, but failed to deliver. This prompted the state of Pahang to go after Asiavest’s performance bonds.

The Pahang government and Asiavest entered into a compromise agreement, with the latter paying up some 3.9 Malaysian ringgit.

Asiavest filed a case against PNCC before the Pasig Court in April 1994. PNCC was declared to be in default after it failed to answer the complaint despite being granted three extensions.

PNCC elevated the case up to the Supreme Court, which upheld the ruling in favor of Asiavest in 2016.

Despite this, PNCC still did not pay up, forcing Asiavest to file a petition before COA to compel the company to settle its obligations.

According to its website, PNCC has been struggling financially and has refrained from actively engaging in the construction business since 2002. It has instead focused on the operation and maintenance of its tollways

From 1987 to 2001, PNCC still implemented selected construction projects, but this resulted in losses.

According to its mission statement, it aims to achieve financial viability by 2025, and aims to be an “effective and capable partner of the government in tollroad and other related infrastructure development.” –

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