MAKE sure you have a valid contract before providing any kind of service.
A waste management firm learned this lesson the hard way after the Commission on Audit (COA) denied its claim for compensation against the Cebu City government for the sum of P27.38 million representing unpaid haulage of trash from August to November 2015.
In its 11-page decision, the COA en banc held that Alry Waste Management Solutions did not have an enforceable claim against the city government because there was no contract to speak of regardless of the fact that it provided trucks to haul solid waste from the Inayawan Transfer Station to the Polog Consolacion Landfill.
The claimant firm, represented by Joseph Ryan Go, relied on a July 28, 2015 letter from the head of Cebu City’s Department of Public Service (DPS) which requested Alry Waste Management to “continue and extend hauling services to maintain the cleanliness of the city.”
The payment for this service contract was supposed to come from a proposed Supplemental Budget then pending before the Sangguniang Panlungsod.
However, records showed that the city’s existing garbage hauling contract at the time was not with Alry but with the Joint Venture of Aljory Waste Management Solution and JJ and J Construction and General Supplies which was due to expire on August 1, 2015.
In its claim, Alry said it hauled a total of 18,214.73 tons of garbage which was supported by the Monthly Report of Garbage Hauled duly reviewed and verified by the DPS which also issued corresponding acceptance reports.
According to the breakdown of its claim, Alry said it paid tipping fees to Consolacion Sanitary Landfill, Methane Recovery and Power Generation Facility totaling P12.807 million, haulage fees for using dump trucks of the Visayas Truckers Equipment and Quarry Operations Service Cooperative (VTEQC) amounting to P9.107 million, and transfer station rent of P5.46 million.
After failing to receive payment despite repeated demands, the firm sent a demand letter dated July 1, 2019 to then City Mayor Edgardo Labella to no avail.
In his petition, Go said even if there were infirmities in the procurement process and the city’s failure to pass the supplemental budget, he is still entitled to payment for services rendered since the city benefited from it.
The COA Commission Proper said the petition must be denied since it is not supported by complete documentation required under the Government Auditing Code of the Philippines.
“It should be noted that Mr. Go’s supposed contract with the city for the period of August 1, 2015 to November 30, 2015 was by virtue of the DPS Head’s letter extending the services of Mr. Go/AIry. As already pointed out, the city had no contract with Mr. Go/AIry prior to August 2015, thus, there is nothing to extend in the first place,” the Commission said.
While the letter was addressed to Alry, the COA said it did not create an implied contract between the city government and the hauler since the DPS head had no authority to enter into such contract on behalf of Cebu City.
“Further, he cannot bind the city on his representation that the budget appropriations for the said services shall be included in SB No. 2 since he is not a member of the city council responsible for the enactment thereof,” the COA added.
However, it pointed out that there are other recourse available to Alry to collect what it is owed.
“In this case, the concerned city officials who prompted Mr. Go to proceed with the alleged rendition of services even without formal contract, the required competitive bidding and covering appropriations, among others, must be liable for the same,” the COA explained.
