COA Denies LSD Construction’s Retention Money Claim for Road Project
The Commission on Audit (COA) has rejected the P14.6 million retention money and performance security claimed by LSD Construction and Supplies from Ifugao province. This claim was tied to a farm-to-market road improvement project. The COA ruled the claim lacked merit, citing the contract’s termination due to non-compliance.
The contract for the farm-to-market road project expired and was officially terminated on September 3, 2029. Records revealed that LSD Construction failed to meet the conditions required to continue the contract. At termination, the company had completed only 28.489 percent of the work. Despite this, LSD Construction received payments totaling P44,600,296.21, far less than the contracted amount of P186,928,586.56.
Legal Battle Over Retention Money and Performance Security
In 2020, LSD Construction’s Vice President for Operations, Michael J. David, requested payment of P14,671,837.83. This amount represented retention money and performance security related to their contract, which the company claimed was mutually terminated. When the province of Ifugao did not pay, LSD Construction filed a money claim petition before the COA on October 6, 2022.
The company argued that the province had no legal or factual basis to withhold 10 percent retention money from its payments. However, the COA found these claims baseless because the contract ended due to LSD Construction’s failure to complete the project within the agreed time.
COA Upholds Forfeiture of Retention Money
The COA sided with the province, affirming its right to forfeit the performance security and retain the retention money. This decision reflects the firm’s failure to fulfill contractual obligations. The ruling was detailed in a seven-page decision signed by COA Chairperson Gamaliel A. Cordoba and Commissioners Roland Cafe Pondoc and Mario G. Lipana.
Local sources noted that this verdict serves as a reminder for contractors to strictly comply with contract terms or face financial penalties. It also highlights the provincial government’s commitment to safeguarding public funds and ensuring project completion.
For more news and updates on farm-to-market road projects, visit Filipinokami.com.