THE Department of Public Works and Highways (DPWH) has been cleared by the Commission on Audit from having to pay a private contractor’s P185.07 million claim for recovery of additional costs in relation to a road project in Mindanao.
In a decision issued last January 14, COA Chairman Michael G. Aguinaldo and Commissioner Roland C. Pondoc denied the petition for money claim filed by Vicente T. Lao Construction (VTLC) in which it demanded payment of additional value added tax (VAT) in the sum of P11.74 million, idle/standby time of equipment and manpower amounting to P147.49 million, and foreign currency adjustments totaling P25.84 million.
The COA Commission Proper said none of the three claims is applicable against the DPWH due to lack of merit.
“In resolving claims against the government, this Commission adheres to the requirement on complete documentation provided under… the Government Accounting and Auditing Manual, Volume 1. It is Incumbent upon the claimant to present evidence that it actually deserves to be paid the amount being claimed,” it declared.
VTLC was awarded the P242.393 million contract for the MN-D(3): Oroquieta-Sindangan (Katipunan-Manukan Section) and the P184.345 million MN-D(3-1) Nipaan-Sindangan Road Section both in Zamboanga del Norte in 2003.
According to the claimant, the DPWH incurred delay in processing and releasing the monthly payment of progress billing. It said it sent several communications to the DPWH over the delayed payments, reduction of work attributable to said delays, and its intention to seek additional compensation.
It likewise claimed increased expenses due to the passage of Republic Act No. 9337 which increased the VAT rate from 10 percent to 12 percent. It said the bid documents were prepared under the old prevailing VAT rate.
Both claims were filed with the DPWH in 2006.
In 2007, the third claim was filed by VTLC, this time anchored on foreign currency adjustments as payments of progress billings were made in peso equivalent instead of Euros as earlier agreed upon.
In 2011, the DPWH advised the contractor to file its claim with the Commission on Audit.
The VTLC said it is entitled to seek additional compensation based on the three grounds and pointed out that the DPWH approved the claim on extra VAT, acknowledged the contractor’s right to collect for idle/standby time, and did not refute the claim based on foreign currency adjustments.
The COA, however, said the DPWH is under no obligation to pay because the claims were unfounded.
“(T)he VAT imposed by suppliers on materials purchased by the Contractor … is an input tax that is deducted from the output tax when VAT declaration is filed with the Bureau of Internal Revenue (BIR). In this case, the petitioner failed to adduce evidence that it did not avail of and credit the input taxes from the output taxes when it filed its quarterly VAT Returns with the BIR,” it noted.
With respect to the idle/standby time for equipment and manpower, the commission said no supporting documents like contracts of employment, daily time records, and receipts of salaries paid were submitted to substantiate the claim.
Finally, the currency adjustment cost was also shot down as the COA noted that the contractor and the government stipulated on a fixed rate of P46.998 per Euro which means any adjustment cannot be considered.