Five years after Cebu City released a P199,323,870.75 advance payment to A.M. Oreta & Co. Inc. in June 2021 for an unmaterialized flood control project, the funds remain unrecovered.
The Commission on Audit issued a notice of disallowance on July 30, 2024, followed by an order of execution on March 17 targeting former officials, while the City considers legal action or a settlement.
City Councilor Alvin Arcilla stated during an interview on Thursday, Aug. 13, 2026, that the City Legal Office indicated it will pursue legal means to recover the public funds from the contractor.
FIVE years after Cebu City released a P199.3 million advance payment for a flood control project that never materialized, the money remains unrecovered as the City considers legal action against the contractor.
The P199,323,870.75 payment was made to Manila-based A.M. Oreta & Co. Inc. in June 2021 as a 15 percent mobilization fee for a P1.328 billion flood-control system. City records show the contract price was P1,328,825,805.
City Councilor Alvin Arcilla said in an interview Thursday, Aug. 13, 2026, that the council’s executive session on Tuesday, Aug. 11, brought the long-standing transaction back into focus, particularly the failure to recover the advance payment.
He said the council wanted to establish what the City had done to retrieve the money and what legal remedies remained available.
“We just want to know, given how long ago the transaction took place, five years ago, what steps has the Cebu City Government taken to recover the P199 million,” Arcilla said.
Project never advanced
The council resolution, authored by Arcilla, that called for the executive session sought answers on two points: whether the City had filed appropriate cases against A.M. Oreta and whether any part of the P199.3 million had already been recovered.
The flood-control contract covered drainage rehabilitation works along Cabreros St., N. Bacalso Ave., V.H. Garces St., A. Gabuya St., Leon Kilat St. and Escano St., intended to improve Cebu City’s existing drainage system, with about 80 percent of the scope in the south district and the remainder in the north.
A.M. Oreta was awarded the contract on April 15, 2021. The notice to proceed was issued on April 20, with work scheduled to begin on April 27. The 570-calendar-day contract was supposed to end on Nov. 17, 2022.
The City issued the mobilization payment through a check dated June 15, 2021. The amount represented exactly 15 percent of the P1.328 billion contract price.
Of the P199.3 million, P10.95 million was intended for the design phase, while P188.37 million was allocated for the construction phase.
The contract provided that construction would begin after completion of the design phase or within six months. That did not happen.
By 2023, the project was already more than a year overdue and had reportedly achieved “zero performance.”
The council also noted that A.M. Oreta repeatedly failed to appear before it. A scheduled Aug. 16, 2023 executive session was moved to Sept. 6, but that meeting also did not push through and was reset to Oct. 18.
At the October 2023 meeting, the contractor sent a representative, Aladin Bautista, who was unable to present an authorization letter or provide basic project information. The council then scheduled another meeting for Dec. 15.
Despite its absence in hearings, A.M. Oreta had submitted its side through an Aug. 14, 2023 letter signed by Melvin Caidet. The contractor said the delays were not entirely its fault, citing “several pending issues and matters still to be addressed by the City” and claiming that the City’s failure to provide certain information had hindered progress.
According to a June 16, 2025 letter by then officer-in-charge City Engineer Lowell Corminal, the project ultimately failed to materialize and the City did not obtain the benefit expected from the contract.
Arcilla said the council was told during the executive session that the contractor failed to submit a design that secured approval from the City Engineering Office.
The absence of an approved design meant the project could not move forward, according to Arcilla.
COA disallows payment
The Commission on Audit (COA) issued a notice of disallowance on July 30, 2024. The City, it said, incurred a loss because the project was not completed and the City did not benefit from the contract.
A 2023 COA audit report had earlier flagged the P199.3 million mobilization payment and said the project had failed to progress beyond the design stage.
State auditors also found that the advance payment intended for the construction phase had become unnecessary and that the contractor’s obligation to return the advance arose upon expiration of the contract.
COA later issued a decision dated Nov. 19, 2025, followed by an order of execution dated March 17. The latter directed the city treasurer to withhold salaries or other amounts due to Corminal and former city administrator Floro Casas Jr., who were identified as persons liable in connection with the transaction.
Corminal remains connected with the Cebu City Government and is currently rendering services without pay, according to the council resolution. Casas resigned in November 2021 after the death of mayor Edgardo Labella.
While COA’s order addresses the liabilities of officials, the City is also pursuing recovery of the funds from the contractor.
Demands for repayment
The City had already attempted to demand the return of the money before the council revisited the issue.
In his June 2025 letter to then mayor Raymond Alvin Garcia, Corminal said he sent demand letters to A.M. Oreta on April 28 and May 21, 2025.
The contractor, however, did not return or settle the amount, according to Corminal.
He subsequently asked the City to pursue appropriate charges against the company and recover the P199.3 million.
More than a year later, the council is again asking what happened to that request.
Arcilla said the City Legal Office (CLO) indicated during the executive session that it would pursue legal means to recover the funds.
A court case is one possible route, although Arcilla said the City could still explore a settlement with the contractor.
“Either the City reaches a settlement or the City Legal Office files a case to recover the P199 million. That is our only goal, to get the money back,” he said.
Arcilla said the objective was not simply to determine fault but to ensure recovery of public funds, either through settlement or litigation.
The council has not yet approved another resolution following the executive session, according to Arcilla.
He said they would first determine what action or resolution would be appropriate based on the discussions.
Council reviews other questions
Arcilla clarified that the council’s concern was not necessarily that the original release of the mobilization fee was illegal.
The 15 percent advance payment was allowed under the terms of the project, he said.
The problem arose because the project did not proceed after the payment was made.
“The P199 million was legally released,”Arcilla said.
The council’s concern, he added, was what happened to the money after the contractor received it and why the City had yet to recover it despite the project not materializing.
Arcilla also said questions were raised during the executive session regarding the bidding process, including why A.M. Oreta emerged as the sole bidder for the project. He said these matters would still require further review.
For now, the P199.3 million remains unrecovered, with the CLO expected to determine the next legal steps five years after the payment was released.
The City’s immediate challenge, Arcilla said, is to turn COA findings and previous demands for repayment into action that would bring the public funds back to the city coffers. / CAV