COA rejects contractor’s claim for P32-M payment for equipment destroyed in NPA attack

By Ben Rosario

The Commission on Audit has ruled that government cannot be faulted for failure of contractors to ensure properties deliberately destroyed during terrorist or criminal attacks.

The COA-Commission Proper (COA-CP) issued the ruling after it denied the petition for money claim filed by a contractor in its bid to recover some P32.4 million in losses as a result of an arson incident involving two units of heavy equipment it owned.

In issuing the ruling, the three-man COA panel said contractor Cavite Ideal International Construction (CAVDEAL) could not fault the government for the losses it incurred in an arson attack staged by still unidentified men at the construction site for a road project in Catanduanes in 2017.

COA records showed that CAVDEAL, represented in the petition by chief executive officer Lamberto L. Lee Jr., was awarded in 2016 the P1.17 billion Catanduanes Circumferential Road Improvement Project in Minale-Pandan Road, Catanduanes.

At around 8:05 pm on June 10, 2017, four unidentified armed men attacked the working area at Baldoc Bridge, and then set on fire the backhoe and crane. Police believed that New People’s Army terrorists were behind the attack.

Lee sought to recover the cost of the destroyed heavy equipment in the amount of P24.6 million and P7.8 million for the crane and backhoe, respectively. His request was acted favorably by Director Virgilio Castillo of the Unified Project Management Office.

Castillo’s recommendation was approved by Public Works and Highways Secretary Mark Villar who recommended payment of the claim as he pointed out that incident falls under the “definition of force majeure.”

However, the supervising auditor of the DPWH recommended denial of the claim for lack of merit.

The three-man COA –CP upheld the auditor’s recommendation, pointing out that Republic Act No. 9184 or the Government Procurement Act provides that the contractor is responsible for the safety, protection, and security of its personnel and equipment during the construction of a project.

The panel headed by COA Chairman Michael Aguinaldo also said the contractor is duty bound to insure its equipment “for not less than the full replacement value.”

Records indicated that CAVDEAL had committed a “clear violation” of RA 9184 for insuring the contract work but not the construction plant, equipment, and machinery.

“The said provision required CAVDEAL to obtain a comprehensive all risks insurance coverage to provide protection against risks to construction machinery and equipment,” COA-CP said.

The panel added: “The government could not be faulted for the failure of the petitoner to obtain the necessary insurance coverage for his construction machinery and equipment.”