Pipe-laying contractor may risk paying penalty for ‘liquidated damages’ unless…

This is a photo of the excavation works of JFAP Construction at Wilson Street in Barangay Lahug, Cebu City taken on Feb. 1, 2023.| Contributed photo

CEBU CITY, Philippines — The Ormoc-based construction firm JFAP Construction may face a penalty worth hundreds of thousands of pesos in “liquidated damages” for failing to complete a multi-million peso pipe-laying project in Barangay Busay, Cebu City on time.

Minerva Gerodias, Metropolitan Cebu Water District (MCWD) spokesperson, told CDN Digital in a phone interview on Wednesday, April 26, 2023, that under Section 68 of the revised Implementing Rules and Regulations (IRR) of the Republic Act 9184 or the Government Procurement Reform Act, the amount of the liquidated damages shall be at least equal to one-tenth of one percent (0.1%) of the cost of the unperformed portion for every day of delay for the procurement of goods, infrastructure projects, and consulting services.

She, however, said the MCWD had yet to decide if it would impose the penalty on liquidated damages against JFAP Construction.

The contract with JFAP Construction has not yet been terminated, but works on the project remain temporarily halted as of now.

“Ang kaning sa JFAP nga case, pwede na siya [for the imposition of liquidated damages], but wa ta kahibaw [as of now] kay pwede man makajustify ang contractor sa reason sa delay. So, depende pa g’yod na siya sa ilahang puhon nga justification sa delay,” she said.

(The JFAP case, that can be done [for the imposition of liquidated damages], but we don’t know [as of now] because it could be that the contractor could justify the reason for the delay. So, it will depend on their justification of the delay.)

“So, as of now, wala pa mi naningil. Wala pa mi niingon nila nga mo-impose na mi og penalty, kay ongoing pa man ang project,” she added.

(So, as of now, we are not going to collect from them. We are not saying to them that we will impose the penalty because the project is still ongoing.)

Gerodias said their top management, particularly the Technical Services unit, had still set to meet with representatives of JFAP Construction “to see” what they could do to help complete the project.

READ: TMC orders CCTO to deny permit applications of contractor of ‘unfinished’ P115-million pipe-laying project

The 2.7-kilometer pipe-laying project is expected to complement the bulk water supply from Barangay Lusaran, as these pipelines will deliver the water from Lusaran to “thirsty” areas of the MCWD for the past years, like barangays Lahug and Apas.

The pipe-laying project, which spans from JY Square Mall along Salinas Drive in Barangay Lahug until Lobregat Property, Nivel Hills, in Barangay Busay, started in November 2021 and was expected to be completed in August 2022.

However, due to various causes of delay cited by the contractor, the completion date of the project was then moved to Dec. 4, 2022, and moved again to Feb. 28, 2023.

To recall, the Cebu City Traffic Management Coordination (TMC) Board recommended to the Office of the Mayor the perpetual disqualification or blacklisting of the JFAP Construction over alleged numerous violations on several traffic ordinances of the city and alleged lack of excavation works permit in the course of the project.

READ: Cebu City Traffic Board pushes to blacklist construction firm

The DPWH also cited an illegal deviation from actual excavation works, including the construction of manholes, which were not stated in the submitted approved plan, a violation of the provisions of DPWH Department Order No. 26 series 2011.

Meanwhile, Gerodias said the contractor had yet to formally explain to MCWD the cause of further delay incurred on the project.

She, however, said that according to the MCWD Project Monitoring Office, the pipe-laying project undertaken by JFAP was already 97 percent complete as of April 20.

The remaining works include the fine-tuning and finishing touches, including a hydro test.

“So, from March 1 up to now, wala pa silay justification nga gihatag sad on why what caused the delay. If mopenalize mi, ari ta magsugod sa March 1…However, kwentahunon pa sad na. Kung magpenalize man gani mi nila, if dili sila makajustify for this delay, kwentahon na sad na namo kay dili man ang total project cost ang basehan karon,” she told CDN Digital.

(So from March 1 up to now, they still have not given justification on why what caused the delay. If we will penalize, we will start on March 1…However, that still had to be computed. If we penalize them, if they could not justify for this delay, then we will compute that because it is not the total project cost that we will base now.)

Gerodias said around 50 percent of the project had already been delivered by the contractor within the extended project period and had already been utilized by MCWD.

“If naa may penalty, [it] will be based on the portion of the project nga wala nagamit. Kwentahon pa na kung pilay cost ani nga portion nga wala nagamit. Mao na siyay adto i-apply ang 1/10th of 1 percent,” she added.

(If there will be a penalty, [it] will be based on the portion of the project that would not be used. It will be computed how much will be the cost of this portion that would not be used. That is where we will apply the 1/10the of 1 percent.)