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DECISION NO. 2017-037
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DECISION NO. 2017-037

February 16, 2017

Subject: Request of Atty. Winston M. Ginez,

Chairman, Land Transportation
Franchising and Regulatory Board
(LTFRB), East Avenue, Quezon
City, for authority
to write off unliquidated cash advances
of three former LTFRB employees, in
the total amount of P29,399.50

DECISION

FACTS OF THE CASE

Before this Commission is the request 1 of Atty. Winston M. Ginez, Chairman,

Land Transportation Franchising and Regulatory Board (LTFRB), East Avenue,
Quezon City, forauthority to write off unliquidated cash advances of three former
LTFRB employees, in the total amount of P29,399.50.
Page 1 of 4
 Records show that three former LTFRB employees have unliquidated cash
advances in the total amount of P29,399.50, which have remained outstanding for nine
to 18 years, to wit:

Accountable Officer Year Purpose of Cash Amount

Granted Advance
Atty. Lydio J. Cataluña 1998 Travel expense P10,019.50
Mr. Giomarti R. Gamayo 2005 Travel expense 13,243.00
Atty. Villamor Ventura S. Plan 2007 Travel expense 6,137.00
TOTAL P29,399.50

On April 16, 2015, Atty. Ginez filed the request for authority to write off the
foregoing cash advances alleging that all possible efforts were exerted to cause their
liquidation or settlement but to no avail. In support thereof, Atty. Ginez submitted the
following documents:

1. Letter dated August 16, 2004 2 to Atty. Cataluña reminding him to

liquidate his cash advance;

2. Memorandum dated December 22, 2005 3 for Mr. Gamayo directing

him to liquidate his cash advances;

3. Memorandum dated September 6, 2006 4 for Mr. Gamayo informing

him of the suspension of his salary until his liquidation of the cash
advances; and

4. Individual demand letter dated January 11, 2012 to Atty. Plan, 5 Mr.
Gamayo, 6 and Atty. Cataluña 7 issued by the Audit Team Leader
(ATL), LTFRB.

In a Memorandum dated June 11, 2015, the ATL and the Supervising Auditor
(SA), LTFRB, recommended the grant of the request considering that diligent efforts
exerted by the management and the former ATL to cause the liquidation of the cash
advances through the issuance of demand letters proved futile, and considering further
that the whereabouts of the accountable officers are unknown and they are no longer
connected with the LTFRB. 8 However, the Director, Cluster 7, National Government
Sector, this Commission, in her Memorandum 9 dated August 25, 2015, recommended
the denial of this request.

Page 2 of 4
ISSUE

The issue to be resolved is whether or not the request for authority

to write off may be given due course.

DISCUSSION

After a circumspect evaluation, this Commission rules in the affirmative.

The accounts have been dormant for nine to 18 years, hence, they may now be
written off from the books of accounts of the LTFRB in order to provide reliable and
fairly presented financial statements of the agency.

It must be emphasized, however, that write-off does not equate to a

condonation or release of a debt by the creditor. When write-off occurs, the legal
relationship between the creditor and debtor remains the same—the debtor continues
to be liable to the creditor for the full extent of the unpaid debt. 10

Hence, the writing-off of the dormant accounts receivable shall not preclude
the agency from exerting diligent effort to effect collection of these accounts
authorized to be written off.

RULING

WHEREFORE , premises considered, the request of Atty. Winston M.

Ginez, Chairman, Land Transportation Franchising and Regulatory Board (LTFRB),
East Avenue, Quezon City, for authority to write off unliquidated cash advances of
three former LTFRB employees, in the total amount of P29,399.50, is
hereby GRANTED .

Accordingly, the corresponding journal entry voucher may now be prepared,

transferring the amount written off from the books of accounts to the registry of
accounts written off, with a copy thereof furnished the Auditor concerned for audit
and record purposes.

(SGD.) MICHAEL G. AGUINALDO

Chairperson

Page 3 of 4
 (SGD.) JOSE A. FABIA (SGD.) ISABEL D. AGITO
Commissioner Commissioner

Attested by:

(SGD.) NILDA B. PLARAS

Director IV
Commission Secretariat

Copy furnished:

Atty. Winston M. Ginez, CPA

Chairman
Land Transportation Franchising and Regulatory Board
East Avenue, Quezon City

The Audit Team Leader

The Supervising Auditor
Audit Group B-Department of Transportation and Communications I
Ortigas Avenue, Mandaluyong City

The Directors
Cluster 7 – Public Works, Transport and Energy
Information Technology Office, Systems and Technical Services Sector

The Assistant Commissioners

National Government Sector
Commission Proper Adjudication and
Secretariat Support Services Sector

All of this Commission

EGAT/EEL/JISL/MCZ
CPASSSO-08-27-2015-00496
CP Case No. 2015-303
National D

1 Pursuant to Section 1, Rule VIII of the 2009 Revised Rules of Procedure of the Commission on Audit.
2 Rollo , p. 7.
3 Rollo , p. 3.
4 Rollo , p. 4.

Page 4 of 4
5 Rollo , p. 2.
6 Rollo , p. 6.
7 Rollo , p. 9.
8 Rollo , pp. 24-25.
9 Rollo , pp. 26-28.
10 Reyna and Soria vs. COA , G.R. No. 167219, February 8, 2011.

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COA Issuances >> Decisions of the Commission Proper >> COA
DECISION NO. 2016-244
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DECISION NO. 2016-244

September 9, 2016

Subject : Request of Ms. Cecilia

A. Concubierta, Provincial Manager,
National Food Authority, Benguet
Provincial Office, Baguio
City, for authority to write off outstanding
accounts receivable in the total amount of
₱18,452.36

DECISION

FACTS OF THE CASE

Page 5 of 4
 Before this Commission is the request 1 of Ms. Cecilia A. Concubierta,
Provincial Manager, National Food Authority (NFA)-Benguet Provincial Office
(BPO), Baguio City, forauthority to write off outstanding accounts receivable in the
total amount of ₱18,452.36.

Records show that sometime in 1980 to 1981, the NFA adopted a nationwide
program to assist all government employees through the project “rice loan
program for government employees.” NFA-BPO implemented the project in the
different government agencies in Baguio, including local government units. About 20
government agencies availed of the program until 1984, when the NFA central office
indefinitely suspended the program.

Collections of loan payments from borrowers under the program were stalled
particularly during the 1986 EDSA uprising where the Aquino administration
abolished and reorganized some government agencies. This resulted in non-collection
of receivables in the total amount of ₱18,452.36 from four agencies whose accounts
have remained dormant for 31 to 32 years, as follows:

Years
Government Offices Date Granted Outstanding Amount
to Present
Aviation Security Command November 1983 32 ₱ 1,337.50
Bureau of Telecommunications November 1983 32 764.85
Commission on Elections September 1984 31 11,424.82
Ministry of Public Highways December 1983 32 4,925.19
TOTAL ₱ 18,452.36

Ms. Concubierta requested this Commission for authority to write off the
subject accounts receivable in her letter 2 dated April 16, 2015. She stated that the rice
loan program was indefinitely suspended by virtue of a directive from NFA central
office and the collection was suspended due to reorganization during the Aquino
administration in 1986. Moreover, she explained that NFA-Benguet organized a
collection team to intensify the collection of the rice loan receivables and that most of
the accounts were collected except for a few accounts due to loss of records or
documents supporting them. Likewise, she averred that the agency had exerted
diligent efforts to locate the missing documents, to no avail, rendering the collection
highly improbable.

Both the Audit Team Leader (ATL) and the Regional Supervising Auditor
(RSA), Cordillera Administrative Region, La Trinidad, Benguet, in their
memoranda 3 dated April 22 and 27, 2015, respectively, favorably recommended
the request for write-off. The Director, Cluster 5 – Agriculture and Natural Resources,
Page 6 of 4
Corporate Government Sector, this Commission, in her memorandum 4 dated June 25,
2015, concurred in their recommendation to write off considering the length of time,
the efforts exerted, and the improbability of collection.

ISSUE

The issue to be resolved is whether or not the request for authority

to write off may be granted.

DISCUSSION

The request for write-off is granted.

In the case of Ruben Reyna, et al. vs. Commission on Audit, G.R. No. 167219
dated February 8, 2011, the Supreme Court explained the concept of write-off and the
corresponding effect thereof on the rights and obligations of the parties involved
(creditor and debtor), thus:

A write-off is a financial accounting concept that allows for the

reduction in value of an asset or earnings by the amount of an
expense or loss. It is a means of removing bad debts from the
financial records of the business.

xxx

xxx this Court rules that writing-off a loan does not equate to a
condonation or release of a debt by the creditor.

As an accounting strategy, the use of write-off is a task that can

help a company maintain a more accurate inventory of the worth
of its current assets. x x x. If in the future, the debt appears to be
collectible, as when the debtor becomes solvent, then the books
will be adjusted to reflect the amount to be collected as an
asset.In turn, income will be credited by the same amount of increase
in the accounts receivable.

Write-off is not one of the legal grounds for extinguishing an

obligation under the Civil Code. It is not a compromise of liability.
Neither is it a condonation, since in condonation gratuity on the part
of the obligee and acceptance by the obligor are required. In making
the write-off, only the creditor takes action by removing the
Page 7 of 4
 uncollectible account from its books even without the approval or
participation of the debtor.

Furthermore, write-off cannot be likened to a novation, since the

obligations of both parties have not been modified. When a write-
off occurs, the actual worth of the asset is reflected in the books of
accounts of the creditor, but the legal relationship between the
creditor and the debtor still remains the same - the debtor
continues to be liable to the creditor for the full extent of the
unpaid debt. (Emphasis supplied)

Write-off is an accounting concept which does not affect the legal ties between
the creditor and debtor but it has for its purpose, the determination of the proper value
of the accounts in order to reflect a fair presentation in the financial statements.

This Commission finds merit in granting the request for write-off. Records of
the case show that NFA-BPO exerted efforts to collect the subject uncollectible
accounts by sending various demand letters 5 from 1984 to 1995 to the different
government offices, but the same proved futile. Further, the subject accounts
receivable have been dormant for more than 30 years now. Maintaining them in the
agency’s books will distort the true value of the assets of NFA-BPO and will not
reflect a fair presentation of its financial statements.

It is worth noting that the ATL, RSA, and the Cluster Director favorably
recommended the write-off of said long outstanding accounts receivable due to the
impossibility of collection and the minimal amounts involved. Given the foregoing
circumstances, this Commission grants the request to write off these accounts.

RULING

WHEREFORE , premises considered, the request of Ms. Cecilia A.

Concubierta, Provincial Manager, National Food Authority, Benguet Provincial
Office, Baguio City, forauthority to write off the outstanding accounts receivable in
the total amount of ₱18,452.36 is hereby GRANTED .

Accordingly, the appropriate journal entry voucher may now be prepared to

record the write-off and transfer said amount from the books of accounts of the agency
to a registry of accounts written off, in accordance with its accounting system, copy
furnished the concerned Audit Team Leader and the Supervising Auditor for audit and
record purposes.

Page 8 of 4
 (SGD.) MICHAEL G. AGUINALDO
Chairperson

(SGD.) JOSE A. FABIA (SGD.) ISABEL D. AGITO

Commissioner Commissioner

Attested by:

(SGD.) NILDA B. PLARAS

Director IV
Commission Secretariat

Copy furnished:

Ms. Cecilia A. Concubierta

Provincial Manager
National Food Authority
Benguet Provincial Office
Baguio City

The Audit Team Leader

Commission on Audit
NFA-Benguet Provincial Office
Baguio City

The Regional Supervising Auditor

CGS Cluster 5 and 6
COA-Cordillera Administrative Region
La Trinidad, Benguet

The Regional Director

COA-Cordillera Administrative Region
La Trinidad, Benguet

The Director
Claims and Adjudication Office-Corporate

Page 9 of 4
Commission Proper Adjudication and Secretariat
Support Services Sector

The Director
Information Technology Office
Systems and Technical Services Sector

The Assistant Commissioners

Corporate Government Sector
Commission Proper Adjudication and Secretariat
Support Services Sector

All of this Commission

ESZ/EDS/DVG/NRP
CPASSSS-07-03-2015-00323; CAO C-2015-291
CPCN-2015-342
Writeoff-NFA-BPO Baguio City
10 March 2016

1 Pursuant to Section 4, Rule VIII of the Revised Rules of Procedure of the Commission on Audit.
2 Rollo, p. 40.
3 Rollo, pp. 41 & 42.
4 Rollo, p. 49.
5 Rollo, pp. 2 to 29.

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COA Issuances >> Decisions of the Commission Proper >> COA
DECISION NO. 2016-176
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Page 10 of 4
 DECISION NO. 2016-176
July 29, 2016

Subject: Request of Atty. Arnel Jose S. Bañas,

Deputy Secretary, Administration and
Financial Services, Senate of the
Philippines, Pasay City, forauthority
to write off from the books of accounts the
Prepaid Expenses Account, in the total
amount of ₱344,985.57

DECISION

FACTS OF THE CASE

Before this Commission is the letter-request 1 dated July 5, 2012 of Atty. Arnel
Jose S. Bañas, Deputy Secretary, Administration and Financial Services, Senate of the
Philippines (Senate), Pasay City, for authority to write off the Prepaid Expenses
Account covering calendar years 1989 to 2003 in the total amount of ₱344,985.57.

Records show that the Senate’s books of accounts have inactive and dormant
balances of prepaid expenses in the amount of ₱344,985.57. The amount represents
balances of payments made to suppliers who did not render the services in full, whose
whereabouts are unknown, and whose accounts have been dormant for at least 10
years.

In support of the request, Atty. Bañas submitted the following:

1. Schedule of Prepaid Expenses as of February 29, 2012;

2. Demand letters sent to the suppliers together with the registry

receipts of various dates; and

3. Reports and memoranda to/from responsible Senate offices.

The summary of the subject account is as follows:

Page 11 of 4
Supplier Date Paid Nature of Expense Amount
DEPOSIT ON INSTRUMENTS
Easy Call 1994-1995 Pagers ₱ 60,264.00
Philippine Wireless 1993 Pocketbell pagers 32,370.00

OTHER PREPAID EXPENSES

A-Z Direct Marketing, 7/13/1999 Balance of one year 1,461.58
Inc. 12/27/2002 subscription
Citations Publications 5/22/1989 January –December 864.00
1989 issue
Delloro’s Marketing 5/4/2000 Balance of various 118,236.00
3/31/2001 subscriptions
6/1/2000
7/31/2000
Eastern Book Service 10/24/1989 Balance of various 60,206.75
Corporation 1996-2003 subscriptions
Global 4/17/1995 Balance of various 27,990.47
Communications 4/18/1995 subscriptions
Company, Inc. 7/31/1995
Green Arrow 7/4/2000 Philippine Local 583.33
Publishing Government
Corporation Journal, remaining
Balance
H-MAN Marketing 4/20/1998 Balance of one year 22,593.61
subscription
Phil. 9/17/1993 Manila News 6,000.00
Center for 3 rdWorld Featured and
Journalism Commentaries
January-February
1993
Publication Research 5/29/1989 One copy of 67.76
and Planning Philippine
Development Development
Information Magazine
S-SES Marketing 6/3/1996 Subscription 14,348.07
balance
TOTAL ₱ 344,985.57

Page 12 of 4
 According to the request, Atty. Bañas made efforts to demand the refund of
deposits on pager/beeper instruments from Easy Call and Philippines Wireless but no
response was received from said companies despite follow-ups. The offices of
Delloro’s Marketing, Eastern Book Service Corporation, Hi-Man Marketing and SES
Marketing and Global Communication Company, Inc., were also visited, only to find
out that these companies had moved out from their original business addresses and
their whereabouts are unknown. The request also stated similar demands for payment
from the other suppliers, but no responses were received.

In his 1 st Indorsement dated July 17, 2012, the Supervising Auditor interposed
no objection to the request for write-off of the subject account and referred the same
to the Director, National Government Sector (NGS) Cluster A – General Public
Services, this Commission.

The NGS Director, in a memorandum dated August 6, 2012, opined that

Commission on Audit (COA) Circular No. 97-001 2 dated February 5, 1997 is not
applicable to the case as the same is applicable only to dormant accounts of abolished
and/or merged/transferred agencies and of projects/programs the implementation of
which have already been completed, discontinued or abandoned. She recommended
that the request for write-off be denied.

ISSUE

The issue to be resolved is whether or not the request for write-off may be
granted.

DISCUSSION

After a circumspect evaluation, this Commission finds the request meritorious.

From a review of the documents submitted in support of the request, it is

apparent that the probability of collecting the account is remote and that the Senate
exerted utmost efforts to collect the dormant accounts r eceivable through demand
letters, but the same proved futile. 3 Moreover, having these uncollectible accounts
reflected in the books of the agency for more than ten years affects the true and fair
presentation of the Senate’s financial statements.

Page 13 of 4
 This Commission finds merit in granting the request for write-off considering
that the accounts, although classified as prepaid expenses, were actually claims
against companies by the Senate and thus, in the nature of accounts receivable that
may be a proper subject of write-off.

It bears emphasis, however, that write-off is only a means of removing bad

debts from the financial records of the business. It cannot be likened to condonation,
compromise, novation and the other modes of extinguishing obligations under the
Civil Code, as ruled by the Supreme Court in the case of Ruben Reyna, et al. vs.
COA, G.R. No. 167219, February 8, 2011, to wit:

[T]his court rules that writing-off a loan does not equate to a

condonation or release of a debt by the creditor.

Write-off is not one of the legal grounds for extinguishing an

obligation under the Civil Code. It is not a compromise of liability.
Neither is it a condonation, since in condonation gratuity on the
part of the obligee and acceptance by the obligor are required. In
making the write-off, only the creditor takes action by removing
the uncollectible accounts from its books even without the
approval or participation of the debtor.

Furthermore, write-off cannot be likened to a novation, since the

obligations of both parties have not been modified. When a write-
off occurs, the actual worth of the asset is reflected in the books
of accounts of the creditor, but the legal relationship between the
creditor and the debtor still remains the same - the debtor continues
to be liable to the creditor for the full extent of the unpaid
debt. (Underscoring supplied)

A write-off is an accounting concept which does not affect the legal ties
between the creditor and debtor but it has for its purpose, the determination of the
proper value of the accounts in order to reflect a fair presentation of the financial
statements.

From an accounting standpoint, these receivables are categorized as worthless

and uncollectible and can be written off for purposes of fair presentation of the
financial statements. However, it should be stressed that from a legal point of view,
pursuant to the Reyna case, these receivables remain outstanding as against the
debtors and can still be the subject of future collection, if possible.

Page 14 of 4
RULING

WHEREFORE , premises considered, the request of Atty. Arnel Jose S.

Bañas, Deputy Secretary, Administration and Financial Services, Senate of the
Philippines, Pasay City, forauthority to write off the Prepaid Expenses Account in the
total amount of ₱344,985.57 is hereby GRANTED .

Accordingly, a journal entry voucher (JEV) may now be drawn for the purpose
pursuant to the Government Accounting Manual for National Government Agencies .
A copy of the JEV shall be furnished the Audit Team Leader and the Supervising
Auditor, Senate of the Philippines, for audit and record purposes.

(SGD.) MICHAEL G. AGUINALDO

Chairperson

(SGD.) JOSE A. FABIA (SGD.) ISABEL D. AGITO

Commissioner Commissioner

Attested by:

(SGD.) NILDA B. PLARAS

Director IV
Commission Secretariat

Copy furnished:

Atty. Arnel Jose S. Bañas

Deputy Secretary
Administrative and Financial Services
Senate of the Philippines
Room 408, 4 th floor, GSIS Complex, Financial Center
Roxas Boulevard, Pasay City

Supervising Auditor
Page 15 of 4
The Audit Team Leader
Senate of the Philippines
Pasay City

The Director
Cluster 2- Legislative and Oversight
National Government Sector

The Director
Information Technology Office
Systems and Technical Services Sector

The Assistant Commissioners

National Government Sector
Commission Proper Adjudication and
Secretariat Support Services Sector

All of this Commission

ESZ/EGAT/EEL/RMF
OGC-2012-6-16-14101
Write off_Senate_prepaidexpense
National B 5/30/2016

1 Pursuant to Section 1, Rule VIII of the 2009 Revised Rules of Procedure of the Commission on Audit
(RRPC).
2 Guidelines on the Proper Disposition/Closure of dormant Funds and/or Accounts of National Government
Agencies
3 As stated in the letter of Atty. Banas, rollo, page 5

Page 16 of 4