Recovery of P199M paid to contractor for Cebu City flood control project pushed

Local

CEBU City Councilor Alvin Arcilla is pushing the local government to recover a ₱199.32 million mobilization fee paid to a contractor for a flood control project that never materialized, five years after the payment was released.

Arcilla raised the issue during an executive session of the Cebu City Council on August 11. The amount involved—₱199,323,870.75—represents the 15% mobilization fee paid for the Design and Build Project–Flood Control System (Construction of Drainage Mains).

“Ang atong gi-question nga ang ₱199 million, legal man to pag-hatag. Pero wala maka-serve ba. Walay project nga nahitabo. Walay serbisyo nga nahatag katong contractor didto sa Syudad sa Sugbo,” Arcilla told reporters on Thursday.

Documents endorsed to the council showed that the project covered drainage mains along Cabreros Street, N. Bacalso Avenue, V.H. Garces Street, A. Gabuya Street, Leon Kilat Street, and Escano Street, with a total project cost of ₱1.328 billion.

The city awarded the project to A.M. Oreta in 2021 and released the ₱199.32 million mobilization fee on June 15, 2021.

According to a June 16, 2025 letter from then-City Engineer Lowell M. Corminal to former Mayor Raymond Alvin Garcia, the mobilization fee was intended to cover both the design and construction phases. Of the total advance payment, ₱10.95 million was allocated for the Design Phase, while ₱188.37 million was earmarked for the Build Phase.

Under the construction agreement, the Build Phase was supposed to begin following the completion of the Design Phase or within six months. However, the project never moved forward.

Corminal, through a letter coursed through the City Legal Office, requested that appropriate charges be filed against A.M. Oreta to compel the return of the advance payment.

He noted that the Commission on Audit (COA) had issued a Notice of Disallowance dated July 30, 2024, finding that the city government incurred financial damage because it received no benefit from the uncompleted contract.

COA also ruled that advancing mobilization funds for the Build Phase was unnecessary and that the contractor was obligated to return the money upon the expiration of the contract.

The controversy subsequently led to a COA Order of Execution dated March 17, 2026, directing the Cebu City Treasurer to withhold the salaries and other compensation of two officials held liable for the transaction: Corminal, former officer-in-charge city engineer, and former City Administrator Floro Q. Casas Jr.

The order cited COA Regional Office VII Decision No. 25-034 (dated November 19, 2025) along with the earlier Notice of Disallowance. COA instructed the city to withhold payments due to the two officials until their liabilities are settled, or to pursue direct collection from them if they are no longer in government service.

Arcilla stressed that the administrative consequences have been particularly taxing for Corminal, who remains employed with the city government.

“Dili maayo kay gi-hold ang ilahang [sweldo]... Engineer Lowell, since March pa,” Arcilla said.

Efforts to recover the funds predated Arcilla’s latest push. In his June 2025 letter, Corminal noted that he had already sent two demand letters (dated April 28 and May 21, 2025) to A.M. Oreta, but the contractor failed to return the advance payment.

In response, the City Council approved a resolution sponsored by Arcilla calling for the executive session to review whether formal cases had been filed and whether any portion of the mobilization fee had been retrieved.

The resolution cited the substantial amount of public funds involved and the severe administrative penalties imposed on the officials.

During Thursday’s interview, Arcilla shared that the City Legal Office committed during the executive session to explore all legal avenues to recover the funds.

“Naa toy igisaad ang City Legal Office, nga ilang paningkamotan nga maka-go sila og legal nga pamaagi nga mabalik ang katong kwartaha,” he said.

He added that the city’s next move could involve either a settlement or direct litigation, depending on the legal strategy evaluated by the City Legal Office.

“Mao na atong i-challenge sa City Legal nga mu-go into court gyud sila,” Arcilla said.

“Naa'y first step lang, unya hoping lang nga either maka-come up og settlement or maka-file si City Legal og kaso nga ma-recover gyud ang katong ₱199 million. Mao ra man na atong tumong, mauli lang.”

While Arcilla has yet to discuss the matter personally with Mayor Nestor Archival, documents show that Archival requested records concerning the case shortly after assuming office on July 1.

Arcilla added that he is currently gathering related files from various city offices as part of his ongoing review.

Beyond fund recovery, Arcilla raised concerns regarding how the project was bid and executed.

Typically, the city government prepares the program of work and estimates before establishing the project cost and opening the bidding process. For this 2021 project, however, the contractor was tasked with preparing the design under a design-and-build setup.

Arcilla revealed that during the executive session, an engineering official disclosed that the design submitted by A.M. Oreta did not fit the target location. Furthermore, officials suspect the submitted plan may have been recycled from another local government unit.

“Wala gyuy maski usa nga design nga na-submit ni contractor nga approbado sa City Engineering Office,” Arcilla noted.

He also pointed out that A.M. Oreta was the sole bidder for the ₱1.328 billion project, questioning why established construction firms based in Cebu did not participate.

This issue has prompted Arcilla to re-examine the city’s reliance on non-Cebu-based contractors. Citing a separate cluster of five projects discussed by the council, where only one winning contractor was local, Arcilla warned that outside contractors frequently face logistical challenges bringing in personnel, equipment, and materials.

He referenced delays in the Pulangbato Bridge project as an example of these operational hurdles.

He urged the city to evaluate whether Cebu-based contractors might be better positioned to execute local infrastructure projects efficiently.

Nevertheless, Arcilla stressed that the immediate priority remains retrieving the unspent ₱199.32 million.

“Perting dakoa. Dako gyud kaayo,” Arcilla said of the amount.

He noted that while the money could have funded vital community programs, the city’s primary focus right now must be taking decisive legal action to return the public funds to city coffers.(TGP)