City Hall severs contract with contractor

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Thursday, February 21, 2013

MAYOR Michael Rama has terminated the Cebu City Government’s contract with Young Builders Corp. (YBC) for the multi-million renovation of Unit II Carbon Market.

Rama signed the order of termination of contract on Feb. 18, 2013 citing “abandonment and undue delay in the prosecution of contract work.”

The City Government has asked YBC to continue the renovation of the market building and issued two work resumption orders on June 18, 2012 and later on Sept. 17, 2012.


“Despite the issuance of the orders and as of Jan. 13, 2013, the Office of the City Engineer found that there had been no contractor or activity at the project site,” read the mayor’s order.

It pointed out that more than six months had passed since the last work resumption order.

The Department of Engineering and Public Works (DEPW) recommended the termination of contract based on abandonment or undue delay in the prosecution of contract work.


But DEPW assistant department head June Nadine Sison earlier said YBC can still participate in the bidding for the project.

YBC, in a letter to Rama on Feb. 13, said it has requested the Cebu City Government to clear the area so that it can proceed with the fencing of the project site.

The letter, signed by Gilbert Yu, read: “Clearing of the area is vital to YBC's resumption of work because of the presence of vendors, occupants, shanties, etc.”

The construction firm said its workers have been threatened by vendors when it tried to fence the project site and resume work. The company attached a copy of a police blotter report dated Nov. 27, 2012.

The contractor said vendors tore up the tarpaulin mounted by YBC. The incident was reported by Charlie Medrano, a YBC engineer.

Price adjustment

YBC also pointed out that it asked the City Government for an “equitable adjustment” in the fees as the costs of materials and labor are now higher than the amount stipulated in the contract, which was based on 2001 prices.

“We need to follow the proper procedures in order to avoid any problems later on,” Yu said in his two-page letter to Rama.

He cited the contract price escalation provision under the Presidential Decree 1594 or the guidelines on government infrastructure contracts.

If YBC requested payments for board piles and billed the City Government on the balance from the first billing, this was meant to imply that there was no abandonment of work.

YBC also asked the City Government for a certification of availability of funds, which the company deemed important in proceeding with job.


“Young Builders reiterates its commitment to proceed with Carbon Market 2 Project in compliance with its valid and existing contract with the City of Cebu,” Yu said.

The City Government allotted P170 million for the Carbon Market but Market Administrator Racquel Arce needs an additional P190 million.

Rama said he talked to Development Bank of the Philippines (DBP) president Gil Buenaventura on the possibility of a loan or grant for the Carbon Market project. He did not give details.

Rama said Buenaventura made a courtesy call on his office a couple of months ago and mentioned interest in helping the City with the Carbon Market project.


Rama said the DBP found the idea an attractive project. He added that the DBP found “historical and heritage value” in the Carbon Market.

Rama asked President Benigno Aquino III for funding when the latter visited Cebu in June 2011. But Aquino advised Rama to apply for a foreign loan.

Last October, officials held the groundbreaking rites to signal the start of the renovation of the market that was gutted down by fire in 1998.

The contract for the renovation project was signed in 2001 but project implementation was supposed to start late last year.

Published in the Sun.Star Cebu newspaper on February 21, 2013.

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