The Commission on Audit (COA) has ordered the referral to the Office of the Ombudsman for prosecution, “if warranted,” of the officials of the Department of Public Works and Highways (DPWH) in Davao City and the contractor in connection with the disallowed P10.8 million paid for a road project in 2010.

The order was contained in the COA’s decision that affirmed the P11.9 million notice of disallowance (ND) issued against the DPWH’s Davao City District Engineering Office (DCDEO) in its payment to E. Gardiola Construction (EGC).

While the ND was affirmed, the COA, however, reduced the disallowed amount to P10,803,148.50 as there was a variance between the contract price actually paid to EGC and the COA’s allowable cost.

The COA said that ECG was paid P19,144,433.08 for the project described as "Rehabilitation/Improvement along Old Circumferential Road to El Rio, Jct., Davao City Diversion Road with exception, Davao City."

When the project was audited, the COA said its special audit team (SAT) issued ND No. 14-003-101 (2010) on March 24, 2014 and disallowed P11,999,675.57 as it found that the contract cost was 167.95 percent higher than the COA allowable cost of P7,144,757.51.

In its audit report, the SAT said the approved and as-built plans failed to comply with the planning standards set by the DPWH as they did not indicate measurements and landmarks.

During the actual inspection of the project, it said the auditors found that most rails, bolts, nuts, and washers were rusty while road signs and pavement studs were sub-standard.

The DPWH-DCDEO, represented by District Engineer Lorna T. Ricardo, contested the ND and argued that it did not contain a detailed computation of the disallowed amount.

Ricardo also said that the SAT estimates did not include indirect costs, other construction materials such as cement, sand and gravel, and transportation and labor costs.

But the COA found the petition for review bereft of merit. “This Commission finds that the disallowance was properly issued," it said.

It maintained the liability of Ricardo; Engineers Milagros Delos Reyes, Dwight Vincent Fernandez, Eduardo Villar, and Lilibeth Sarmiento; Emilio Sucaldito, Francisco Pilapil, and the EGC owners for the amount of P10,803,148.50.

It excluded from any liability Engineers Gregorio Yee, Cecilia A. Barrientos, Ma. Gloria G. Sorrera, and Perry Neil B. Palacio; and Nelson B. Luayon and Resituto D. Mira.

It said that Rolly B. Tulayba remained liable in the amount of P3,788,312.

It also instructed the SAT to evaluate the participation of the Technical Working Group in the transaction and to issue a supplemental ND, if warranted.