6.13 This observation was communicated to Management through Audit Observation
Memorandum (AOM) No. 2025-03(24) dated March 27, 2025.
6.14 We recommended that Management conduct a comprehensive operational
review of the Operation of the Waterworks System to become self-reliant
and avoid losses so that it can contribute to sustainable development and
community empowerment.
6.15 Management acknowledged the finding and has been a concern of the City
Government as well.
6.16 In response, management has initiated various corrective measures such as
reviewing of water rates, improving billing and collection, infrastructure
upgrades and exploring public-private partnership models.
6.17 Further, management has directed for a review of workers assigned to the
Waterworks system to streamline operations and reduce overhead costs.
Payment for the purchase of medicines amounting to ₱5,964,085.88
7. Payment of ₱5,964,085.88 corresponding to 83.88 per cent of the contract for the
purchase of drugs and medicines for City Health Unit (CHU) I was made even
without the certification by the Head of the Procuring Entity (HOPE) that the
goods have been delivered in accordance with the terms of the contract as provided
under Section 10 of the General Conditions of the Contract (GCC), thus
undermining good governance in the procurement process.
7.1 On October 9, 2024, the City paid its supplier of drugs and medicines the amount
of ₱5,964,085.88 for deliveries made to the CHU I on December 27, 2023. The
amount paid was corresponding to 83.88 per cent of the contract made between
the City and the supplier to supply drugs and medicines to the CHU I amounting
to ₱7,110,581.00 within 30 calendar days from receipt of the Notice to Proceed.
Among the integral part of the Agreement is the GCC.
7.2 Section 10 of the GCC provides that payment shall be made only upon a
certification by the HOPE that the goods have been delivered in accordance with
the terms of the contract.
7.3 As a general rule, no payment, partial or final, shall be made on any contract for
services or for supplies and materials except upon a certification by the head of
the agency concerned to the effect that the service or supplies and materials have
been rendered or delivered in accordance with the terms of the contract and have
been duly inspected and accepted pursuant to Section 88(1) of PD No. 1445.
7.4 Further verification revealed that on November 23, 2024, the Supplier was
awarded the contract “Purchase of Drugs and Medicines (CHU I).” The Notice
57
