DPWH not liable for contractor’s P32M equipment lost in fire: COA


    THE Commission on Audit has cleared the Department of Public Work and Highways (DPWH) of any liability over the destruction by fire of heavy equipment machinery owned by a private contractor for a road project in Catanduanes in 2017.

    In a decision dated January 29, 2020 but released only this week, the COA Commission Proper denied the petition for money claim filed by Cavite Ideal International Construction and Development Corp. (Cavdeal) that sought payment by the DPWH of P32.4 million for the burned crane worth P24.6 million and backhoe valued at P7.8 million.

    Based on the ruling, Cavdeal was awarded a P1.18 billion contract for a road project in Catanduanes province on January 26, 2016.

    While the project was ongoing, on June 10, 2017 at 8:05 p.m., four armed men appeared on the Baldoc Bridge worksite and, at gunpoint, ordered construction personnel, including the crane and backhoe operators, to leave the area.

    Once the worksite was abandoned, the armed men poured gasoline on everything and burned them to the ground including the machineries. Company workers reported the incident to the Pandan Municipal Police Station in Pandan, Catanduanes.

    Cavdeal sent a request to the Japan Overseas Consultants Co. Ltd. On August 14, 2017 requesting payment for the lost equipment. The latter forwarded the request to DPWH–Unified Project Management Office, recommending favorable action.

    The DPWH-UPMO then sought the approval of the office of DPWH Secretary Mark Villar for the compensation on the ground that the destruction of the said machinery falls under the definition of force majeur.

    In a memorandum dated December 22, 2017, DPWH Assistant Secretary for Technical Services Gilberto Reyes recommended that the claimant seek approval from the COA which led to the filing of the petition.

    While the DPWH, in a submission dated June 11, 2018 endorsed payment of the claim, the supervising auditor-DPWH and the cluster director for the National Government Sector-Cluster 7 both recommended otherwise, citing lack of merit.

    COA chairman Michael G. Aguinaldo and Commissioners Jose A. Fabia and Roland C. Pondoc affirmed the stand of government auditors.

    The COA Commission Proper pointed out that under the Revised Implementing Rules and Regulations (IRR) or RA 9184 or the Government Procurement Reform Law, the government contractor is responsible for the safety and protection of work and equipment.

    The same rule required the contractor to get full insurance coverage for its equipment that will be used in the project site.

    At best, the COA noted that the government may only put up part of the cost of the damaged equipment that was not indemnified by the insurance companies if the cause is determined to fall under force majeur.

    The Commission said it is the contractor’s own failing that the destroyed equipment were not insured for full cost hence the DPWH cannot be compelled to replace them.

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