The Commission on Audit has ordered the Department of Transportation and Communications to settle its unpaid debt to the developer of the New Iloilo Airport 10 years after the completion of the project.
In a Dec. 21, 2016 decision, CoA ruled in favor of the project contractor, the Taisei Shimizu Joint Venture Inc., for the unpaid services to build the Iloilo airport in March 2007 during the Arroyo administration.
Despite the ruling, the administration rejected the contractor’s payment claims of P216.074 million, citing the reevaluation of its Commission Proper that the government only owed the TSJVI P104.661 million.
The Commission’s chairman Michael Aguinaldo, and Commissioners Jose Fabia and Isabel Agito disallowed the company’s demand of a P61.066-million interest on delayed payments, P37.08-million compensation due to unforeseen increase in materials cost, P7.235-million attorney’s fee and litigation expenses and P6.032-million compensation due to extension of contract time with a total of P111.413 million.
“After a judicious evaluation of the documents, this Commission finds the instant money claim to be laden with merit. Thus, the DoTC is liable to pay TSJV,” CoA’s decision read.
CoA invoked Section 61 of the Implementing Rules and Regulations of Republic Act 9184 or the Government Procurement Reform Law, and said charges against a government project based on unforeseen increase in the price of construction materials were not allowed.
Such charges could be allowed in “extraordinary circumstances” with the approval of the Government Procurement Policy Board upon the determination of the National Economic and Development Authority.
“In this case, there is no showing that the parties sought the approval of the Neda. The variation order does not even contain the approval of the head of the procuring entity. Moreover, there are no documents on record to prove that there was indeed an unforeseen increase in the cost of materials and such increase is extraordinary,” CoA explained.
“Certainly, in the case at hand, the DoTC cannot be made to pay for the misdeed an inability of its officials to fulfill its obligations to the TSJV. In the absence of a statutory provision clearly or expressly directing or authorizing payment of interest or extension of contract time, the National Government cannot be required to pay the same,” it said.
The airport project contract was executed in March 2004 with the completion date set on Oct. 18, 2006, but was later moved to March 18, 2007.
Because of failure to collect payments, TSJV was prompted to file an arbitration case with the Construction Industry Arbitration Commission in May 2014.
The arbitral tribunal rendered a final award in favor of TSJV on Dec. 11, 2014 for the sum of P223,401,870.83.
Upon DoTC’s appeal, the amount was lowered to P216,073,989.89.
In the modification of the final cost of the claim, CoA said it was not bound by the final decision of a tribunal since all settlement of money claims were “still subject to the primary jurisdiction of CoA.”
