City Treasurer seeks CLO's opinion

CEBU, Philippines — The Cebu City Treasurer's Office (CTO) sought the opinion of the City Legal Office (CLO) related to its authority to withhold any issuance of payment.

The request followed after the controversy raised by the Cebu City Council regarding the validity of the contract with the supplier of the Digital Traffic System.

In a letter signed by Cebu City Treasurer Mare Vae Reyes, the CTO requested for a legal opinion from CLO on the former's authority to withhold payment to a supplier with whom the City has signed a contract with.

On Feb. 25, 2025, the treasurer's office received a disbursement voucher (DV) with several supporting documents for processing the amount of P120,128,485.85 as "partial payment" for the 63.38 percent work accomplishment of the contract for the Digital Traffic System (PHASE 2).

This project, it added, is supposed to be installed at various intersections in Cebu City, with the payable account going to Triune Cylix Joint Venture.

The CTO explained that the DV was submitted to its office for Reyes to sign, which would signify that there is availability of funds. Afterward, the CTO added, it was supposed to be forwarded to the Office of the City Mayor for payment approval.

The CTO further explained that prior to receiving the DV, the head of the Department of Engineering and Public Works (DEPW), Engr. Lowell M. Corminal, and the Office of the City Accountant through Jerome V. Ornopia, head of the Accounting Unit, also approved and signed the same voucher as part of the payment procedures.

In addition to these procedures, the CTO outlined that the "Obligation Request and Status" was also signed and certified by Raquel B. Arce, head of the Cebu City Transportation Office.

Arce had certified that the charges to appropriation were “necessary, lawful, and under her direct supervision.”

It was also signed by Roseny G. Reyes, acting City Budget Officer, who certified the existence of the appropriation.

The CTO recalled that the Cebu City Government entered into a construction agreement with Cylix Technologies Inc. and Triune Electronic Systems Inc. on Sept. 16, 2020 for the installation of the Digital Traffic System for various intersections in Cebu City, which will be implemented in two phases.

For Phase 1, it was reported that the City of Cebu paid a total of P201,818,088.31 to Cylix Technologies Inc. and Triune Electronic Systems Inc.

The subject disbursement voucher was intended to cover the initial and first partial payment for Phase 2.

However, in November 2024, the Cebu City Council raised some alleged controversies through a series of resolutions.

It was reported that these resolutions stemmed from the privilege speech of Councilor Jocelyn Pesquera on the City’s Digital Traffic System, following the pronouncement of Cebu City Mayor Raymond Garcia to include the purchase of Phase 3 in the 2025 annual budget.

The council then approved a request for the Commission on Audit (COA) to conduct a fraud audit on the City’s Digital Traffic System project, particularly on the contracts.

The council also approved a resolution urging Mayor Garcia to withhold the payment for Phase 2 of the project until the results of the fraud audit are released.

These resolutions were based on questions regarding the validity or legality of the contract agreement with the supplier, as the council also sought clarity on whether the construction agreement was enacted without a Sangguniang Panlungsod resolution authorizing the City Mayor to sign such an agreement.

It was in the same session that the council requested the National Bureau of Investigation (NBI) 7 to conduct a handwriting comparison to determine the authenticity of the signature of former mayor Edgardo C. Labella as it appeared on the Terms of Reference for Phases 1 and 2 of the Digital Traffic System on Oct. 9, 2024.

The council also raised concerns about the alleged overpricing of costs.

In the same letter, the CTO laid down it's mandates as well as the governing principles on the disbursement of government funds.

“Verily, this Office strictly adheres to the policy that government funds must be protected in all stages of the proceedings or disposition thereof,” the letter read.

However, the CTO highlighted an incident in the past wherein "in good faith" it withheld the release of a check payment to Docast Construction (for garbage collection services) after a controversy arose in the City Council.

“But I ended up being charged with an administrative complaint before the Office of the Ombudsman by the supplier/service provider for my refusal or failure to release the check/payment (without a court order) after a series of demands from them, as I was bent on awaiting the outcome of the NBI investigation before releasing the check, if warranted,” the letter reads.

Although the issue was settled for the CTO, the NBI investigation into that particular case progressed into a plunder case.

In line with this, the CTO is seeking legal clarity on whether they have the authority or power under existing law to withhold the issuance of a Certificate of Availability of Funds (CAF) or release payment to a supplier or service provider.

It can be recalled that Pesquera, in the same privilege speech, said that a resolution from the Bids and Awards Committee (BAC) awarding the Digital Traffic System to Triune Electronic Systems Inc. and Cylix Technologies Inc. was approved on Sept. 1, 2020, through a Joint Venture Agreement (JVA).

Pesquera noted that the JVA and the award were signed by Lawyer Floro Casas Jr., then Cebu City administrator during the stint of the late mayor Edgardo Labella.

She continued that on Sept. 16, 2020, Casas allegedly entered into a construction agreement with Cylix Technologies Inc. and Triune Electronic Systems Inc. with a contract price of more than P232 million.

Upon her review, Pesquera said that Casas signed these agreements allegedly through a “mayor’s order” that indicated July 2019, even though Labella assumed office on June 30, 2019.

“Mayor Labella was very much active at that time. Unfortunately, there is no copy of that mayor’s order attached to the contract,” she previously said.

She also noted the lack of a council resolution authorizing Labella or even Casas to sign the construction agreement on behalf of the City of Cebu. Pesquera, a lawyer herself, said this meant that the contract itself is invalid. — /JG (FREEMAN)