COA assails Cebu City’s P4.4M payment to firm

CEBU, Philippines - The Commission on Audit says the Cebu City government has contravened certain laws when it paid P4.4 million to a contractor despite lack of documents.

COA said the validity, legality and propriety in the transaction with Armed Builders and Supply cannot be determined.

The city paid Armed Builders P4.4 million or 15 percent of the P29.2-million contract cost for Cluster 1 projects last year, which included the warehousing partitioning at the GSO Office located at the 7th floor of the Executive Building; construction of reinforced concrete footbridge at Sitio Common in Barangay Bacayan; construction of attached three-story six classrooms school building in Barangay San Jose; and construction of a four-story with 28 classrooms school building in Barangay Pahina.

COA pointed out that the disbursement of funds violated Presidential Decree 1445 (Government Auditing Code of the Philippines) and COA Circular No. 2010-001 of 2012.

 Section 4 (6) of P.D. 1445 provides that the claims against government funds shall be supported with “complete documentation” as a fundamental principle governing financial transactions and operation of any governing agency.

 The payment also violates Section 9.1.1.1 of the COA Circular, which states that “the procuring entity shall, upon a written request from the contractor make an advance payment to the contractor in an amount not exceeding 15 percent of the total contract price to be in lump-sum or, at the most, two installments according to a schedule specified in the Invitation to Bidders and other relevant Tender Documents.”

 The same provision further stipulates that advance payment shall be made only upon submission to and acceptance by the procuring entity of an irrevocable standby letter of credit of equivalent value from a commercial bank, a bank guarantee or a surety bond callable upon demand, issued by a surety or insurance company duly licensed by the Insurance Commission and confirmed by the procuring entity.

 COA Cebu City State Auditor Cymbeline Celia Uy said the transaction lacked four documents, including the printout copy of advertisement posted in the PhilGEPS; certification from the Head of BAC Secretariat on the posting of advertisement at conspicuous places; printout copies of advertisement posted in agency website; and irrevocable standby letter of credit/security bond/bank guarantee.

 “Hence, the said disbursement contravenes the said provisions of law, rules and regulations,” the Audit Observation Memorandum dated January 9, 2015 reads.

 COA has warned the Cebu City government to refrain from approving disbursement if pertinent documentary requirements are not complied with “to ensure the legality and validity of the claim.”

 COA said the city must submit the needed documents immediately to avoid suspension or disallowance,

 “…for the immediate submission of the required supporting documents with complete data, otherwise the disbursements shall be suspended and/or disallowed in audit and shall hold all those who authorized the payment as jointly and severally liable of the amount disbursed,” the report reads further.

 During its session last week, the City Council endorsed the matter to the Local Finance Committee for review. (FREEMAN)