THE Cebu City Legal Office has recommended terminating the contract for the P1.328 billion flood control project, and recovering the P200 million advance payment made to the winning contractor, A.M. Oreta & Co. Inc.
It used as basis the contractor’s failure to disclose the subcontractor arrangement for the project’s build and design stage.
The contractor was called to appear during the City Council’s second executive session on Wednesday, Sept. 6, 2023, but it was a no-show. A.M. Oreta representative Melvin Caidet had asked for the postponement when the contractor couldn’t make it to the Aug. 16 executive session.
“Contrary to what the contractor attests as ‘inadvertent’ omission to notify the head of the procuring entity regarding the subcontracting arrangement, their justification in not disclosing the subcontracting agreement would reveal that it is deliberate and intentional, for which reason there is clear refusal and failure to comply along with the valid instructions of the procuring entity which is ground for the termination of the project,” said City Legal Officer Jerone Castillo, quoting the dispositive portion of the opinion. “The office (of the City Legal) recommends that the implementing unit come up with a verified report on the matter and submit the same to the head of the procuring entity to initiate the procedure for the termination of the contract.”
The City Engineering Office had asked the City Legal Office for a legal opinion when the submitted documents for the project’s design came from Schema Konsult Inc. (SKI) and not from A.M. Oreta.
Castillo said there was no disclosure in the bidding process that SKI was the designer.
“There is no subcontractor agreement in the bidding process. The award was given directly to A.M. Oreta,” he said.
In one of his meetings with Nonato Paylado, head of the planning and design division of the Department of Public Works and Highways (DPWH) 7, Castillo said he asked why the City had to provide funds for a project on a national road, emphasizing that if the project was implemented on a national road then it should be funded by the national government.
Castillo said Paylado responded that it was the City that insisted on implementing the project.
In the 2022 audit report, the Commission on Audit flagged the City’s infrastructure projects, which included the flood mitigation project where an “excessive” advance payment of P199.32 million was made on June 15, 2021.
According to Castillo, the City should not have given the advance payment, which was 15 percent of the total project cost, while still in the design stage.
He said the City should have only paid 15 percent of the P200 million intended for the design stage.
He said the payment was released during the administration of the late mayor Edgardo Labella, while the contract was signed by former city administrator Floro Casas Jr.
City Councilor Pastor Alcover asked Castillo about the possibility of recovering the advance payment to which the latter responded that he already asked the DPWH 7 office, on behalf of Mayor Michael Rama, to incorporate the project in the agency’s drainage plan since it will be implemented on national roads that are under the agency’s jurisdiction.
Castillo said the agency has yet to give him a definite answer.
“I already spoke to Paylado on behalf of Mayor Mike so that we can save the P1.3 billion for other projects,” he said in a mix of Cebuano and English.
He said the City wants to implement the project since it is part of the drainage master plan, but the DPWH should finance it.
According to Castillo, he also asked the local finance committee if a cash bond was posted for the payment of the 15 percent mobilization fund, and was told that only a surety bond was posted.
“Kinsa man unya atong gukoron ana nga wala pa ra ba na naka comply sa ilang trabaho (So who are we going to go after considering that the contractor has not even complied with its work)?” Castillo said.
Vice Mayor Raymond Alvin Garcia, for his part, told SunStar Cebu in a phone interview on Wednesday that there’s a need to implement flood mitigation projects, especially since flooding is a perennial problem.
He said that if the executive has seen any violations with regard to the implementation of the project, they should do the right thing against the contractor.
“Klarohon usa kon sad-an ba jud ang contractor or gihimoan lang og sala (Let’s first make it clear if the contractor is really at fault or mistakes were just fabricated),” he said.
Garcia said if the contractor would voluntarily say that they would not comply with their tasks, then the City should look for another contractor to execute the task.
“Dili gyud ta dapat mosugot nga i-set aside ang maong project kay that P1.3 billion project is very essential sa baha sa city of Cebu (But we should not set aside the P1.3 billion project because it is very essential to address flooding in the city),” he said.
He said that any contractor has the right to request a 15 percent mobilization fund, but if it hasn’t done anything then it should return the amount.
According to a February 2020 report of SunStar Cebu, the P1.3 billion drainage project aims to solve flooding problems in the city’s southern barangays.
The project was supposed to be implemented in the second quarter of 2020, with the first phase starting at the Mambaling flyover and ending at the Sto. Tomas Villanueva Church in Barangay Pardo. (AML)