The Commission on Audit (COA) has lifted the P138 million notice of disallowances (NDs) issued against officials of the Home Development Mutual Fund (HDMF) for payments made to Globe Asiatique Realty Holdings Corporation (GARHC) in 2010.

However, those responsible for the payments were referred by the COA to the Office of the Ombudsman for investigation.

In a decision, the COA granted the petition for review filed by HDMF's Bayani C. Garcia, Elmer D. Tugade, Amy G. Gopez, Florian R. Ong, Rachelle P. Arceo, and Diana G. Jimenez.

They contested ND Nos. 2010-01, 2010-02, and 2010-03, all dated Nov. 15, 2010, on the payments of HDMF-Pampanga Branch to GARHC for the Xevera and Sameera Housing Projects for P138,046,666.04.

The amount was disallowed because the HDMF-Pampanga Branch failed to enforce post-validation of loan documents, post-inspection of units within 30 days from loan take-outs, and issuance of Notice of Buyback.

The COA also said that the disbursement vouchers (DVs) for loan take-outs lack the required approving and certifying signatures, contrary to Section 4(5) of Presidential Decree No. 1445 and COA Circular No. 97-004 dated July 1, 1997.

In their petition, Garcia and his group said that the housing loan proceeds released to GARHC were not irregular because GARHC is an accredited developer of HDMF with an existing Funding Commitment Agreement (FCA).

They also argued that the lack of signatures of appropriate officers is not a convincing proof of irregularity, as all checks covering the disallowed transactions were honored by the drawee bank.

The COA, for its part, found the petition partly meritorious. Since there was no loss of government funds, the Commission said that the disallowance may be lifted.

However, it stressed that the approvals and certifications of proper officers are "indispensable requirements" in the disbursement of government funds.

"These are necessary to determine the respective accountabilities of persons in the processing of disbursement transactions. Otherwise, the law would not have mandated it to be simply ignored or neglected," the COA stressed.

"The failure of the branch manager and the certifying officers to sign the DVs prior to approval and release of the checks to GARHC impresses upon this Commission that these are acts of evading responsibility or liability in case the transactions are found to be disallowable expenditures," it added.

So, while the disallowance was lifted, the COA ordered its Prosecution and Litigation Office to refer the case to the Office of the Ombudsman for the conduct of investigation and filing of administrative/criminal complaint, if warranted.

The 10-page decision was signed by Chairperson Gamaliel A. Cordoba and Commissioners Mario G. Lipana and Douglas M.N. Mallillin.