COA flags P2.9 billion bad loans of private companies to GSIS

MANILA, Philippines – Government auditors urged the Government Service Insurance System (GSIS) to go after almost P3-billion worth of bad loans from  21 private companies.

A 140-page Commission on Audit (COA) report released Tuesday, June 6, said that the unpaid loans of these delinquent companies were worth P2.114 billion, while the accumulated interests have reached P823.153 million.

The list of delinquent borrowers in the COA report showed that the outstanding obligations have been unsettled between 24 to 53 years, thus the elevated interest amounts.

The COA report did not identify the borrowers of the bad loans, though it detailed the circumstances of their decades-long outstanding debts.

COA listed a “Company 1” as the borrower with the biggest loan. Records of the state’s social insurance institution showed that “Company 1” acquired a P600 million loan payable in five years with an interest rate of 18% per annum compounded monthly.

GSIS documents reveal that the loan of “Company 1” was approved December 10, 1997 and the obligation remained unsettled for 25 years.

Though unnamed, the COA report described “Company 1” as a property developer whose loan security included water theme parks, condominium units, and house and lots in a residential subdivision.

The government auditor said that among the collaterals listed under “Company 1”  were:

• Water Fun in Muntinlupa City,
• Water Fun in Quezon City,
• 102 units in St. John Condominium in Quezon City,
• 366 lots in Mary Homes Subdivision in Cavite, and
• rights on 240 units in Metro Homes in Manila.

In 1997, when the loan was authorized, the total appraised value of the security was P1.041 billion.

The COA report said that in 2003 GSIS was able to foreclose some of the properties of “Company 1” which were earlier submitted as security/collateral when it defaulted on loan payments. Among those foreclosed were the pair of Water Fun theme parks and 12 of 102 units in St. John Condominium. GSIS marked these as investment properties.

As for the other properties, the auditors said: “Relative to the remaining 90 units in St. John Condominium, Quezon City, the audit team was informed by Management that these are subject to litigation pending decision of the Supreme Court.” 

The Supreme Court’s website reveals the case docketed as G.R. No. 200683 titled New San Jose Builders, Inc. vs. Government Service Insurance System with a ruling dated July 28, 2021. 

In that case, the SC ordered the dispute remanded to the Quezon City Regional Trial Court.

As for the lots in Mary Homes Subdivision in Cavite, which were also among the collaterals of “Company 1,” the auditors found P35.504 million proceeds from the sale of 71 lots in the said area have been remitted in full to the GSIS. 

COA though could not find any information on the sale of 122 lots, which GSIS also listed as fully paid.

Another big borrower flagged by COA was identified as “Company 3″ but in this case GSIS did not foreclose properties despite failure to pay.

Auditors faulted the state insurance agency for not initiating foreclosures of the collaterals of “Company 3.” 

Among those listed as collaterals of “Company 3” were: 

• Adelina Complex 3, Phases 4, 5, and 6 in BIñan, Laguna;
• Adelina Complex Extension in Trece Martires, Cavite; 
• Xavierville Avenue, Loyola Heights in Quezon City; and 
• Pacita Complex I in San Pedro, Laguna.

GSIS approved the P353.987 million loan of “Company 3” on August 26, 1994. The “Company 3” obligation was supposed to be payable in seven years with an interest of 16% per annum compounded monthly. 

The COA report said: “Records disclosed that no payment was made by the borrower on the loan secured by properties with aggregate loanable value of P400.898 million at the time of loan granting.” 

The February 28, 2022, the statement of account of “Company 3” showed that the outstanding amount of the loan has reached to P170.523 billion. – Rappler.com