Malaybalay’s market complex project: 4 years delay and a looming legal battle

MALAYBALAY CITY (MindaNews/28 August) – The city government is preparing for a legal battle with a Manila-based contractor seven years after signing the P225-million contract to build the city’s supposedly biggest infrastructure project and four years after its scheduled completion.

Mayor Ignacio Zubiri told MindaNews that the city government will either file or respond to charges over its controversial public market complex in Barangay 9 as earlier attempts to draw off-court resolution failed.

He said they are on a “wait and see” status as a legal team studies the city government’s courses of action.

Zubiri said the city government will take the option that will lead to the completion of the three-phase public market-integrated terminal-commercial building project. Only the public market was completed and was turned over in 2009.

This has been the statement from city hall since February, when the city government received communication from H.R. Lopez Co., Inc. declining the city government’s offer to continue the stalled project through turn-key scheme.

The contract signed in 2004 provides for periodic collection based on progressive output.

Marianito G. Rivera, vice president of H.R. Lopez, said in his letter to the city council dated January 27 but received only on February 14 that they would continue to finish the project but they will “abide by the terms and conditions” of the contract.

“We hope that with the above stand of the company, we can now proceed to start the remaining works at the soonest possible time,” he added.

Vice Mayor Victor Aldeguer told MindaNews in February the firm’s position is a blow to the city government’s plan to proceed with the project as it preferred.

Rivera said the decision was arrived during the firm’s board of directors meeting last January 26, seven days after he met city officials here.

The firm insisted that the length of time for the completion of the project be based on the original approved PERT-CPM schedule. [PERT (Programme Evaluation Review Technique) and CPM (Critical Path Method) are project management techniques, which are being used to plan, schedule and control complex projects.]

The company also asked possession of the two other structures in the three-phase project.

In January, in a closed-door meeting, the city government opted to negotiate with the contractor in an effort to complete the project amidst the possibility of legal battle.

The project was originally planned to be completed in only 540 days in 2007. But misunderstanding and legal squabbles between the contracting parties stepped in the way.

The meeting, held at the city council session hall, was prompted by a November 15 letter sent by contractor H.R. Lopez demanding full possession of the construction site, a term included in the contract. But the city government refused the contractor’s demand due to difficulty relocating vendors back then. H.R. Lopez warned of a legal option if the city government would not give in, a warning prompting possible termination of the contract.

But some of the city councilors preferred to initiate negotiation. The city government, Aldeguer said, offered to H.R. Lopez the plan to finish the remaining two phases of the complex but on condition that they do it on “turn-key” scheme and using the balance of the P225-million project started in 2004.

Aldeguer said then that of the P225-million loan made available to the city government by the Land Bank of the Philippines, only P110 million was left to fund the two remaining phases.

The city government, in response to at least five requests for turnover during the administration of former mayor now Rep. Florencio T. Flores Jr. (2nd Dist.), refuses to turn over the site because of the difficulty in relocating the occupants.

The city’s position demanded in the scheme, the contractor will have to complete the project before they can claim payment. The city will only pay if the contractor completes the building.

In the present arrangement, payment is based on periodic accomplishment. In 2007, the contractor and the city government had a legal standoff at the Commission on Audit on the billing scheme.

In January 2009, Atty. Alfredo Reyes, director of the Commission on Audit in Region 10, opined that the payment of the contractor’s billing be based on the quantities accomplished multiplied by its unit cost in every billing period. (Walter I. Balane / MindaNews)