After nearly a decade, contractor for Iloilo airport project gets paid

MANILA, Philippines – A contractor is finally getting paid almost a decade after it completed an airport project in Iloilo.

The Commission on Audit (COA) in December 2016 granted Taisei Shimizu Joint Venture (TSJV)’s money claim filed against the Department of Transportation and Communications (now Department of Transportation) for failing to compensate work for the Iloilo airport project that was completed in March 2007.

TSJV, however, will only receive P104.661 million ($2,100,875) and not the entire P216.074 million ($4,337,285) it sought to collect from the government. 

The contract for the airport project was signed in March 2004 with the completion date set for October 18, 2006. It was later moved to March 18, 2007.

The COA Commission Proper did not grant TSJV’s additional P111.413 million ($2,236,409) that includes P61.066 million ($1,225,786) interest on the delayed payments, P37.08 million ($744,312) for materials’ cost increase, P7.235 million ($145,229) for attorney’s fees and litigation expenses, and P6.032 million ($121,081) compensation due to extension of contract time.

Not on government’s shoulders 

Dismissing the contractor’s money claim for the unforeseen increase in construction materials’ cost was based on Section 61 of the Implementing Rules and Regulations of the Government Procurement Reform Act. 

Based on the provision, the only time the government can be charged for construction materials’ cost increase is when the claim is filed citing “extraordinary circumstances” with prior approval of the Government Procurement Policy Board (GPPB).

These “extraordinary circumstances” are determined only by the National Economic and Development Authority (NEDA).  

“The variation order does not even contain the approval of the head of the procuring entity,” COA pointed out. “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 also noted that the government cannot shoulder the costs incurred due to inaction by its officials.  

“Certainly, in the case at hand, the DOTC cannot be made to pay for the misdeed and inability of its officials to fulfill its obligations to TSJV. In the absence of a statutory provision clearly or expressly directing or authorizing payment of interest or EOT, the national government cannot be required to pay the same,” it said. – Rappler.com

$1 = P49