THE Philippine Army (PA) failed to persuade the Commission on Audit (COA) to reverse its March 22, 2023 decision that granted a military supplier’s claim for the refund of excessive liquidated damages totaling P64.92 million.
In a decision released on Monday, the COA en banc denied the PA’s motion for reconsideration and affirmed its stand that liquidated damages should not exceed 10 percent as prescribed under Section 3.2 of Annex D of the Revised Implementing Rules and Regulations of the Government Procurement Reform Act (RA 9184).
In the assailed decision, the COA held that the maximum imposable liquidated damages on JROG’s P332.869 million contracts was only P27.553 million, not P92.476 million that was charged, hence the supplier is entitled to recover the excess amount.
JROG was awarded six contracts for the delivery of troop transport vehicles and heavy equipment machinery in 2017 and 2018.
Claimant Ronie Osnan, owner of JROG Marketing, said he won the contracts for the delivery of 19 dump trucks worth P104.9 million, eight motor graders for P79.984 million, 11 truck troop carriers for P63.8 million, three passenger buses and two mini-buses for P24.795 million, and one fuel lorry worth P2.05 million in December 2017.
Osnan admitted that he failed to meet the deadlines on the procurement contracts by four to 14 months.
In April 2018, he was again awarded a P57.34 million contract for three well-drilling truck/rigs and accessories. The supplier delivered in January 2020 but the PA issued a certificate of non-acceptance.
While acknowledging that the PA was right to impose liquidated damages, Osnan said it should not have amounted to 33.56 percent of the contract cost.
In its motion for reconsideration, the PA argued that the law allows continued imposition of liquidated damages over and above 10 percent of the contract price as the appropriate sanction for the delay in the delivery of goods constituting a breach of contract.
It added that JROG was made aware that the liquidated damages would continue to mount the longer the delay.
The COA, however, stood by its earlier pronouncements, noting that the military merely submitted the same arguments it had previously raised.
It said the PA should have dissolved the contract once JROG failed to meet its commitment deadline on the deliveries.
“To emphasize, despite the delay in the delivery of the equipment, the PA opted not to rescind the contract but accepted the equipment as shown in the certificates of acceptance and inspection,” the commission pointed out.
