COA wants contractor penalized for unfinished Caloocan housing project

Commission on Audit. INQUIRER FILE PHOTO

MANILA, Philippines — State auditors have advised the Social Housing Finance Corporation (SHFC) to take steps to impose penalties against a contractor who has yet to complete a P352.304 million high-density housing project in Caloocan City despite a two-year extension.

The Commission on Audit said the contractor’s failure to complete the housing project “deprived the intended 720 member beneficiaries of the immediate use of decent housing units.”

The CA did not name the contractor in the report.

In a 2020 audit report on the SHFC, the audit team also advised the agency to terminate or rescind the agreement because of the contractor’s fault or negligence.

“A high-density housing (HDH) project of a community association costing P352.304 million was not completed within the scheduled date of completion despite two approved extension periods or a total of two years, contrary to the provisions of the Building Construction and Site Development Agreement and Corporate Circular HDH No. 14-002, series of 2014,” the COA said.

This ended up “depriving the intended 720 informal settler families – beneficiaries of the immediate use of the decent housing, resulting in the non-attainment of the objectives of the HDH program and the risk of non-recovery of SHFC’s investment in housing projects.”

The HDH project is located in Camarin, Caloocan City, and is meant as a near-city relocation for 720 informal settler families coming from barangays in Quezon City and Caloocan City that are near Tullahan River and its tributaries.

The community association secured a P352.304 million loan from the SHFC under the HDH program for the lot, site development, and house construction.

Attached to the Department of Human Settlements and Urban Development, the SHFC administers the Community Mortgage Program and the Abot-Kaya Pabahay Fund Program, which are amortization support and developmental financing programs, respectively.

The HDH project began in May 2017 and was supposed to be completed by October 2018, or one year after the contractor received the P68.55 million mobilization fee in October 2017.

But as of October 2018, the project has not been completed yet, which prompted the contractor to request for an extension of the construction period.

Due to reasons such as heavy monsoon rains and typhoons and other construction delays, the community association approved the extension until December 2019.

Another inspection following the first extension showed that the project was only 28.61 percent complete, which needed a second extension from the community association until October 2020.

An inspection conducted in October 2020 by the HDH team and Department of Engineering revealed that despite a two-year extension, the project was only 62.43 percent complete. By March 30, 2021, the project was 75.08 percent complete.

The COA also learned that the contractor’s request for extensions that lasted two years and two months had no approval from the SHFC board of directors. The contractor reportedly made another extension request for another year.

In addition, the total released amount to the contractor has reached P 160.492 million, or 62.43 percent of the project cost.

The COA recommended that the SHFC require the community association to “impose the liquidated damages against the contractor for each day of delay, and initiate termination or rescission of the agreement as a result of the contractor’s fault or negligence.”

The audit team also advised the agency to require the Department of Engineering to perform due diligence on future projects and ensure that the contractor has the financial and managerial capability, organizational structure, technical expertise, delivery capability, and experience to complete projects.

The SHFC was also told to “require the Department of Engineering to strictly monitor and validate the construction projects undertaken by the community association.”

In response, the state corporation committed to coordinate with the community association to impose liquidated damages against the contractor.

/MUF