Return P8.6-M, World Bank tells SC

Purple S. Romero
Part of the WB loan paid for officials' travels arranged by an agency chaired by lawyer Estelito Mendoza

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MANILA, Philippines – The World Bank has asked the Supreme Court to return a total of US$199,000 (P8.6-M) in “ineligible” funds by the end of January, saying the High Tribunal spent this on activities and projects not covered by a loan agreement between both parties.

In a Dec 28, 2011 letter addressed to SC Associate Justice Teresita Leonardo de Castro, chair of the Judicial Reform Support Project (JRSP) Management Committee, Matthew Stephens, acting WB country director, cited seven concerns and issues on how the High Tribunal used the US$21.9M loan (P903-M based on current rates) it granted the High Tribunal in 2003.

Cover letter: World Bank Aide Memoire to Philippine Supreme Court

The WB-funded JRSP was developed to expedite case resolution and increase access to justice, among others. A team from the WB was in Manila from October 24 to Nov 12, 2011, to review the projects attached to the loan.

Based on the team’s findings, the WB told the SC that out of the 133 transactions worth $5.5-M (P233.8-M), at least 70 transactions, or 53% of the total, were found to be “ineligible.” This means that the SC spent this on projects that were not in the procurement plan. Projects in the plan must be mutually approved.

A chunk of these ineligible funds went to the purchase of computers, with over P2 million used to buy laptops for different offices of the SC.

The WB also discovered that over P200,000 was spent for the airfare of SC officials.

Mendoza’s business

The High Tribunal, it was discovered, paid one travel agency for the three trips identified by the WB: Prestige Travel Inc, a company that an online search showed, is chaired by lawyer Estelito Mendoza.

Mendoza, arguably the highest-paid lawyer in the country, has pending cases in the SC. He wrote the SC in relation to a labor case involving his client, Philippine Airlines, and the conversion into cityhood of 16 municipalities in 2010 and 2011. 

Mendoza’s letter led to the re-opening of cases in favor of his clients PAL and the 16 municipalities.

The three trips transacted with Prestige Travel Inc, associated with Mendoza, were made by the following, based on the WB document: 

  • A certain “L.D.” who went to Jakarta, Indonesia from March 13-16, 2011 to attend the Asia Pacific Regional Conference of the International Association for the Court Administration  
  • 5 SC officials who went to Cebu on March 18, 2011, to attend the conferment of an honorary degree on a senior SC official of the Justice of the Unified Judiciary of Guam by the University of Cebu. The report described the five SC officials as the following: one senior official; a certain “E.E,” a certain “P.P.,” a certain “E.V.,” and a certain “M.M.”
  • Another trip was made by an unnamed judge and a senior SC official from May 5-7, 2011, this time for an official trip to Sydney for the International Commercial Law Conference.

INELIGIBLE: Transactions charged by the High Court against World Bank loan

A check made on the Cebu trip showed that Chief Justice Renato Corona went to the city on March 18, 2011 to attend the conferment of an honorary degree on Chief Justice Emeritus Robert Torres of the Guam Supreme Court.

Marquez’s office

The WB task team stressed that 16 of the ineligible expenditures “relate” to the Office of the Court Administrator. This, according to the multilateral organization, showed that there is a need to look at how the “lack of segregation of duties/functions” weakened internal checks and balances.

The Office of the Court Administrator is headed by Jose Midas Marquez, who concurrently serves as the SC spokesperson. We asked Marquez about this report last Tuesday, January 10, but he said he could not comment on something he has not read.

The WB said that out of the $199,000 (P8.6-M) ineligible funds, $161,422 (P6.9-M) has yet to be refunded as of November 2011.

Copyfurnished in the World Bank’s letter to SC Justice de Castro were Chief Justice Corona, Finance Secretary Cesar Purisima, Budget Secretary Florencio Abad, and Socio-Economic Planning Secretary Cayetano Paderanga, among others.

Besides the “ineligible expenditures,” the WB also called the attention of the High Tribunal to the following:

1. Missed opportunities due to implementation delays;

2. Compliance with only 3 out of 11 legal convenants that the team reviewed;

3. Severe procurement delays and slippages on civil works contracts;

4. Breakdown of internal controls, incomplete financial information, unsatisfactory contract management;

5. Over-commitment of project funds; and

6. The signing of only 5 out of 23 contracts due to procurement delays and over-commitment of project funds – Rappler.com