DPWH ordered to pay consortium P46M over halted Zamboanga del Sur road project

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The consortium halted work on an P713-million road project in Zamboanga del Sur after suspected MILF attacks in 2002 and 2003

MANILA, Philippines – For a consortium of construction firms, the promise of a major road project in Zamboanga del Sur turned into a costly nightmare that dragged on for over two decades.

The group – CMC, Monark, Pacific, and Hi-Tri – had secured a P713.3-million contract from the Department of Public Works and Highways in April 1999 to build the Pagadian-Buug Road Section in the Zamboanga Peninsula region. By late 2002, the project was nearly finished – 80% complete, according to French engineering consultants. Then came the attacks.

On October 23, 2002, the contractor’s trucks and heavy equipment were torched. Months later, on March 11, 2003, their batching plant in Barangay West Boyogan, Kumalarang town, was bombed.

The assaults were blamed on the Moro Islamic Liberation Front (MILF), whose conflict with the government was still raging at the time. The violence forced the project to a standstill, leaving the contractor in limbo.

The MILF, which subsequently signed a peace agreement with the government, is now the dominant force in the regional government of the six-year-old Bangsamoro Autonomous Region in Muslim Mindanao.

Last week, the Commission on Audit (COA) ordered the Department of Public Works and Highways to pay the consortium P46.6 million in compensation, which includes the principal amount and interest granted through arbitration, a ruling which brought closure to years of uncertainty and financial dispute over the project.

On March 3, 2004, the consortium filed a complaint against the DPWH with the Construction Industry Arbitration Commission, citing unpaid billings.

A year later, the arbitration body ordered the DPWH to pay the consortium its claims with interest. The claims included US$358,227 in foreign component costs with US$18,313 in interest; P5 million for equipment and plant losses with P464,298 in interest; P6.2 million in costs linked to the bombing with P320,410 in interest; and P20.3 million in additional contract costs with P1 million in interest.

The Supreme Court upheld the ruling on September 13, 2017.

The consortium said it was owed P131.3 million, but the COA en banc noted that the DPWH and the contractor had agreed on a fixed exchange rate for the project’s foreign currency portion.

“Hence, applying all of the foregoing, the arbitral award of P46,622,867.36, representing the principal amount and total interests awarded by the CIAC as computed by this Commission, shall earn the interest rate of 6 percent per annum from June 13, 2018, or the date the SC decision becomes final and executory, until its satisfaction,” read part of the COA decision signed by COA Chairperson Gamaliel Cordoba and Commissioner Mario Lipana. 

COA Commissioner Roland Café Pondoc, who dissented, said the petition should have been dismissed, arguing that the COA lacked jurisdiction since the high tribunal had already issued a final ruling. – Rappler.com