COA urges GSIS to collect P2 billion in unpaid loans from companies

The Commission on Audit (COA) has urged the state-run Government Service Insurance System (GSIS) to collect over P2 billion worth of unpaid loans of at least 22 delinquent borrowers, on top of interest worth P823 million.

In its annual audit report on GSIS for 2022, state auditors said the biggest unpaid loan of P600 million was granted to the firm it only named as “Company 1”.

The loan has not been paid over the last 25 years.

GSIS records showed that the P600 million loan was approved on December 10, 1997. The said loan was payable in five years at an interest rate of 18 percent per annum, compounded monthly.

COA did not identify the borrower but described it as a property developer whose loan security included water theme parks, condominium units, and houses and lots in a residential subdivision.

“Records disclosed that the borrower was in default in paying the loan hence, in 2003, GSIS foreclosed some of the properties …which were used as security/collateral,” COA said.

“Relative to the remaining 90 units [of a condominium building in Quezon City], the audit team was informed by Management that these are subject to litigation pending a decision of the Supreme Court,” auditors said.

GMA News Online has asked for comment from GSIS and will publish it as soon as it becomes available.

The properties foreclosed in 2003 included both theme parks and only 12 of 102 units in the QC condominium, and were subsequently recorded by GSIS as investment properties (IPs).

In addition, COA said the P35.504 million proceeds from the sale of 71 lots in a Cavite subdivision sold for have been remitted in full to the GSIS.

State auditors, however, were not able to find records on the sale of the other 122 lots which, although fully paid, had no information on whether or not the proceeds went to the GSIS.

The second biggest borrower with a P353.987 million loan was Company 3, also identified by the COA as a property developer.

Company 3’s loan was approved on August 26, 1994, payable in seven years with 16% yearly interest compounded monthly.

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

COA also cited that as of February 28, 2022, the outstanding amount of this loan has ballooned to P170.523 billion, of which P170.168 billion are from interest and surcharges.

As a result, COA called on the GSIS to implement the following:

• create a task force/committee/team that will focus on the recovery of the outstanding private loans including their interests and surcharges, secure prior years’ documents, undertake settlement negotiations with borrowers, foreclose assets, and/or monitor the cleansing of the private loans;
• update the total loan balance of the 22 accounts as of December 31, 2022;
• apply the proceeds of the foreclosed collaterals in the years 1989, 1998, and 2003 against the loan;
• formulate a concrete action plan for the recovery of the private loans;
• identify and resolve the factors which caused the delays in reaching final settlement agreements and negotiations with the borrowers;
• file the criminal and/or civil cases that are not yet filed;
• monitor and follow up on all ongoing cases;
• foreclose and dispose of all properties attached to the loans; and
• submit to the Audit Team a periodic report on the status of collection and percentage of the collectability of the outstanding accounts.

—NB, GMA Integrated News