THE Commission on Audit has affirmed a 2017 ruling of COA Region 4A that upheld the validity of the Notice of Disallowance (ND) issued against Tagaytay City Water District’s (TCWD) release of P121.87 million as payment for a pipeline upgrade project in 2013 and 2014.
A 19-page en banc decision released last week denied the Petition for Review filed by TCWD general manager Ruth Ambion and contractor TVG Builders. Inc. asking for the lifting of the disallowance and for relief from liability.
According to the audit records, the TCWD board of directors passed a resolution on May 22, 2013 authorizing the Bids and Awards Committee (BAC) to bid out the Design, Supply, Build, and Finance of 650mm Spiral Welded Transmission Line (DSBF-SWTL) project from the Indang-Tagaytay Boundary to Pumping Stations Nos. 1 and 24.
Funding for the project was set at P122 million and management said it will “augment water supply to all concessionaires.”
The contract was awarded to TVG on July 10, 2013 for the total cost of P147.094 million, inclusive of taxes and interest, with all works to be completed within six months.
TVG completed the project on May 17, 2014 and the TCWD issued a Certificate of Completion on July 31, 2014.
To meet progress payment to TVG, the water district’s board of directors issued several resolutions authorizing the use of different trust funds and accounts as payment sources for the total disbursement of P121,873,660 in eight separate payments from October 2013 to October 2014.
On post audit, however, auditors issued a Notice of Disallowance on the ground that the TCWD only had P60.609 million in its annual budget for the DSBF-SWTL project and yet it allocated P122 million as the approved budget for the contract (ABC) and signed a deal for P147.094 million for its implementation.
It noted that the project had no Certificate of Availability of Funds so that trust funds such as the Water System Development Share, Capex-Sinking Fund, and Guaranty Deposits were used in the payment of progress billings.
The audit team said the absence of adequate funding and tapping the trust funds constituted violations of the Government Auditing Code of the Philippines (Presidential Decree No. 1445) and the Government Procurement Reform Act (RA 9184).
It added that the TCWD “hastily implemented the DSBF-SWTL project and abandoned the conduct of meticulous and judicious preliminary design and construction studies,” which left unresolved legal impediments attending the bulk water supply project in Indang, Cavite, during the pre-procurement stage.
The bidding process was likewise questioned due to the absence of a Bill of Quantities that would have enabled prospective bidders to prepare their bid proposal and for allegedly “restricting prospective bidders from participation.”
The audit team said the TVG should have been disqualified as the lone bidder since its offer “did not match what was reflected in the ABC and included items for hydro testing and disinfection, temporary site facilities, including field office, bonds, and insurance permits.” It said the bid should have been deemed unresponsive.
Finally, auditors said the contract cost exceeded the approved budget by P27.19 million due to the inclusion of indirect costs and “duplication of welded pipes.”
Held liable under the notice of disallowance were TCWD general manager Ruth Ambion, administrative and finance division manager Marie Stella Luna, engineering department manager Ben Padonsolan, BAC chairperson Ben Toledo, and BAC members Lilia Alvarez, Emerson Torres, Danstan Javier, and Ariel Amulong.
Likewise included were TCWD board of directors chair Samson Bedruz and board members Ronald Dee, Laureano Mendoza, and Delia Mendoza, as well as contractor TVG Builders, Inc.
In their petition for review, Ambion and other water district officers said the requirement to certify fund availability was unnecessary since no public fund was involved since it will be funded initially by TVG.
They said no law was violated when they tapped the trust funds to pay TVG’s progress billings since the use was in accordance with what the funds were intended for.
TVG said it was wrong for the audit team to say that there was no transparency in the procurement process since the bidding documents made it clear that there would be a deferred payment scheme for 36 months, subject to a 10 percent interest each year.
It likewise questioned the basis for the finding that the contract cost was excessive or exorbitant.
The COA en banc sustained COA Region 4A on its findings that provisions of PD 1445 and RA 9184 were violated due to inadequate funding.
It swept aside Ambion’s argument that the expenditure would not involve public funds.
“This Commission finds the argument very absurd. Even assuming that TVG will initially finance the DSBF-SWTL project, the expenditure of public funds is still necessary for the payment thereof,” the commission pointed out.
While the TCWD management claimed that the money taken out of the trust funds had been restored, the COA noted that no evidence was submitted to support this assertion.
“The lack of sufficient appropriation and other irregularities in the ABC and bidding documents show that TCWD did not comply with the required meticulous and judicious planning under Section 7 of RA No. 9184,” the COA added.
It underscored the hasty implementation of the project when the proposed source of the bulk water supply in Indang, Cavite, was struck down by the Court of Appeals with an issuance of a final environmental protection order that rendered the pipeline project useless, resulting in the wastage of government funds.
“The Prosecution and Litigation Office, Legal Services Sector, this Commission, is hereby directed to forward the case to the Office of the Ombudsman for investigation and filing of the appropriate charges, if warranted, against the persons liable for the transaction,” the COA declared.
