COA orders BSP to return P17-M over anomalous anti-fire system

/ 05:47 PM September 24, 2017

The Commission on Audit has ordered the Bangko Sentral ng Pilipinas to return P17.15 million in funds spent on a fire suppression system in 2002 and blacklist the supplier for alleged “fraudulent and wrongful acts.”

In a recently-released Aug. 18 decision, COA sustained the Nov. 28, 2008 notice of disallowance on the installation of the FM-200 Fire Suppression System, citing Builders International First Defense, Inc.’s submission of allegedly falsified documents at the procurement stage.


COA also directed the Prosecution and Litigation Office to forward the case to the Office of the Ombudsman for possible criminal or administrative charges against the persons held liable under the ND.

These were Deputy Governor Armando Suratos, who chaired the Disbursement Control Committee and the Bids and Awards Committee, as well as DCC/BAC members Evelyna Avila, Nestor Garcia, Wilfredo Domong and Eduardo Magahis.


The other liable officials include Building and Maintenance Department officer-in-charge Michael Gesmundo, director Rolando Pinangat, acting deputy director Edgardo Reyes, and bank officer II Ismael Bacarse. BIFDI was also held liable to return the amount.

The case arose after a report by newspaper RP Daily Exposé on the alleged fabrication of the equipment triggered several investigations by the BSP, the National Bureau of Investigation, and the Presidential Anti-Graft Commission.

BIFDI was found to have submitted false documents during the prequalification stage. It also allegedly filled its cylinders with HCFC 123 gas instead of FM-200 gas as required, and passed off 31 locally fabricated cylinders as genuine Kiddie cylinders.

The fake cylinders turned out to have been refurbished by Padilla Machine Shop from BSP’s dismantled old Halon cylinders which were improperly disposed of.

Various procurement anomalies were also uncovered, such as the lack of an import commodity clearance and inspection certificates for the supposedly imported system.

The BSP BAC was also found to have failed to define the meaning of the word “similar” in the invitation to prequalify and to bid, contrary to Section 4.4(b) of Executive Order No. 262. It also failed to conduct the proper post-qualification of the lowest calculated bid.

Suratos, Avila, Magahis, Pinangat, and Reyes appealed their inclusion in the ND and said they could not be held liable for the anomaly because it was not attributable to them.


The officials, who claimed to be in good faith, noted that BSP already filed charges against Gesmundo and Reyes, who were deemed directly responsible for the irregularities.

While they argued the DCC was only expected to evaluate the bid proposals based on the submitted documents, COA said the implementing rules and regulations of EO 262 required them to “verify, validate and ascertain” the bidder’s eligibility and compliance during the post-qualification period.

COA blamed the DCC/BAC’s failure to conduct the post-qualification of the lowest bid for the “qualification of, and awarding of the contract to an unqualified contractor, and to the eventual irregular and unnecessary disbursement of BSP funds.”

It said the procurement officials cannot feign ignorance by claiming to rely on the recommendation of their subordinates because Section 16 of the New Central Bank Act required every employee to “exercise extraordinary diligence in the performance of his/her duty.”

“By not exercising the highest degree of diligence, intelligence, and skill, the members of the DCC/BAC have failed to live up to the exacting standards of responsibility of the law and thus, caused injury to the BSP,” read the decision. /je

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TAGS: anomalous, anti-fire system, Audit, BSP, COA, falsified, funds, procurement
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