Cebu City still chasing P199.3M flood-control advance 5 years later

CEBU CITY, Philippines — Cebu City has yet to recover the P199.3 million advance payment it gave a contractor in 2021 for a flood-control project that never materialized, with the Commission on Audit (COA) ordering the city to enforce the liability and city officials now considering court action to recover the money.

The Sangguniang Panlungsod revisited the long-running issue during an executive session earlier this week, five years after the city paid A.M. Oreta & Co., Inc. a 15 percent mobilization fee worth P199,323,870.75 for the Design and Build Project – Flood Control System (Construction of Drainage Mains).

Councilor Alvin Arcilla, who sponsored the executive session, said the city has yet to recover any of the money despite findings from COA and efforts by a city engineering official to seek legal action against the contractor.

“Ang atong gi-question nga ang P199 million, legal man to paghatag. Pero wala maka-serve ba. Walay project nga nahitabo. Walay serbisyo nga nahatag katong contractor sa syudad sa Sugbo,” he said.

(What we are questioning is that the P199 million was legally released. But it did not serve its purpose. No project happened. The contractor provided no service to the City of Cebu.)

P1.33-billion flood-control project never materialized

The flood-control project carried a total contract price of P1.328 billion, according to a June 16, 2025, letter from then Officer-in-Charge City Engineer Lowell Corminal to former Mayor Raymond Alvin Garcia.

The project covered drainage works along Cabreros Street, N. Bacalso Avenue, V.H. Garces Street, A. Gabuya Street, Leon Kilat Street, and Escano Street in Cebu City.

The city awarded the contract to A.M. Oreta in 2021 and released the P199.3 million mobilization fee through a check dated June 15, 2021.

The payment covered the project’s design and build phases, with P10.95 million allotted for the Design Phase and P188.37 million for the Build Phase.

Under the construction agreement, the Build Phase should have started after the Design Phase or within six months.

However, it never did.

Corminal told Garcia in his 2025 letter that the project failed to materialize and that the city received no benefit from the contract.

COA subsequently issued a Notice of Disallowance dated July 30, 2024, saying the city incurred damage because it did not benefit from the uncompleted contract.

Moreover, COA found that the advance payment for the Build Phase had become unnecessary and that the contractor’s obligation to return the advance arose upon the expiration of the contract.

Engineer sought charges in 2025

Corminal had already asked the city to pursue appropriate charges against A.M. Oreta and recover the P199.3 million before the Sangguniang Panlungsod revisited the matter.

In his June 16, 2025, letter, Corminal said he had sent two demand letters, dated April 28 and May 21, 2025, requesting that the contractor settle or return the advance.

He said A.M. Oreta refused to settle the amount or return the money.

Corminal then formally requested the filing of appropriate charges against the contractor for the recovery of the advance payment.

The records later cited by the Sangguniang Panlungsod also show that COA held Corminal and former City Administrator Floro Q. Casas Jr. liable in connection with the transaction.

COA orders salary withholding

COA Regional Office VII issued an Order of Execution on March 17, 2026, citing its Nov. 19, 2025, decision. The order directed the Cebu City treasurer to withhold salaries or any other amounts due to Corminal and Casas for the settlement of their respective liabilities.

For officials who no longer remain in government service, COA instructed the city to pursue collection or settlement directly from them and report its collection efforts to the audit office within 15 days of receiving the order.

The Sangguniang Panlungsod resolution said Corminal, a former OIC city engineer, continues to work at the Department of Engineering and Public Works but currently renders service without pay because of the COA order.

‘Where is the P199 million?’

Arcilla questioned what the city has done to recover the money since the 2021 transaction.

“Ang atoa lang gusto mahibaw-an nga sa kadugay na sa katong transaction, 5 years ago na, unsay steps sa Cebu City Government ba nga ma-recover to ang P199 million,” he said.

(What we want to know is, after all this time since the transaction five years ago, what steps has the Cebu City Government taken to recover the P199 million?)

Arcilla said the City Legal Office committed during the executive session to pursue legal means to recover the amount.

He said the next step could involve a court case, although the city may still explore a settlement with the contractor.

“Ang ato, pag-abot na didto sa korte, naa man nay mga settlement ba. So, maybe ang City maka-abot og settlement ani nga contractor. Kun dili gani mianha, mao na, mu-full-blown gyud ang kaso,” he said.

(Once it reaches court, there can be a settlement. The city may reach a settlement with the contractor. If that does not happen, the case will proceed in full.)

Arcilla said the goal remains straightforward: recover the public funds.

“Either maka-come up og settlement or maka-file si City Legal og kaso nga ma-recover gyud ang katong P199 million. Mao ra man na atong tumong, mauli lang.”

(Either the city reaches a settlement or City Legal files a case so the P199 million can be recovered. That is our only goal: for the money to be returned.)

No new resolution yet

Arcilla said the council has not yet filed a new resolution following the executive session. Instead, he said he will monitor whether the City Legal Office follows through on the steps discussed during the closed-door meeting.

“Wala pa tay ipang-file nga resolution, ma’am. Amo pa sa hunahunaon unsa’y mga resolution amo nga angay ipa-file ani nga case,” he said. (We have not filed any resolution yet. We still need to consider what resolution should be filed in this case.)

The executive session focused on two questions: whether the city had already filed appropriate cases against A.M. Oreta and whether it had recovered any portion of the P199.3 million mobilization fee.

Arcilla said the contractor did not attend the latest executive session because the meeting focused exclusively on the Cebu City Government’s side. He said the contractor had previously been called to an executive session.

Why was the P199 million released?

Arcilla clarified that the city did not necessarily release the mobilization fee illegally.

Government contracts allow contractors to receive a mobilization payment, he said, citing the 15 percent advance allowed for the project.

“Ang P199 million, legal man to pag-hatag,” he said. (The P199 million was legally released.)

The issue, he said, lies in what happened after the payment.

The contractor allegedly failed to produce a design that the City Engineering Office could approve, leaving the project without an approved design and preventing the project from proceeding.

Arcilla said officials told the council that the submitted design did not fit the areas where the drainage works would have taken place.

He also said officials raised concerns that the submitted design may have originated from another local government unit.

“Wala gyuy maski usa nga design nga na-submit ni contractor nga approbado sa City Engineering Office,” he said. (The contractor did not submit a single design that the City Engineering Office approved.)

Arcilla also questioned the bidding process, noting that A.M. Oreta was the sole bidder.

He said council members questioned why none of Cebu’s established construction firms participated in the bidding, but officials could not provide a clear answer during the discussion.

The city has yet to announce a new resolution or confirm the filing of a fresh court case against A.M. Oreta following the executive session.

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