COA Announces Lapu-Lapu City P218-M Furniture Supply Agreement

Logo and facade of the Commission d’audit (COA) building.

CEBU CITY—The Audit Committee (COA) reported the government of the city of Lapu-Lapu in the province of Cebu for the alleged purchase of materials worth more than 218 million pesos from a manufacturer of furniture products that was not qualified to negotiate with the local government.

In its 2021 report posted on the COA website, state auditors said Lapu-Lapu city officials purchased a total of 218,455,329.90 pesos worth of equipment, furniture, office supplies, groceries and other materials to Heritage Muebles Mirabile Export Inc. (HMMEI), which COA inspectors found to be housed in a school canteen not open to the public and which may not be not qualified to do business with the local government because they were only a “middleman” and not a legitimate supplier. If HMMEI were permitted to deal with the local government, the COA said it would defeat the purpose of Republic Act No. 9184 (Public Procurement Reform Act), particularly the purchase of goods at the most advantageous prices for the government.

Not competitive

State auditors recommended that members of the Tenders and Rewards Committee (BAC) be required to explain why it decided to purchase the materials from an “apparently unqualified supplier.” The Lapu-Lapu City government was also asked to explain why it had followed BAC’s recommendations. , but in order to ensure that the government obtains the goods and services at the most favorable prices for it,” the COA said.

Under the law, it is the BAC that verifies the eligibility of a potential supplier. However, in the case of Lapu-Lapu City, the BAC did not assume this responsibility in accordance with the law on public procurement, the COA said.

“We are concerned that due to this practice of buying from intermediaries in the procurement process, which is a flagrant disregard of the law on public procurement, it cannot be assured that the management (Lapu-Lapu City) got the lowest possible price for the goods and got the best deal for the government,” state auditors explained.

A review of HMMEI’s registration with the Securities and Exchange Commission (SEC) indicated that the company is a manufacturer of furniture products. and goods,” the COA said.

Some submitted vouchers relevant to the supplier’s dealings with the local government were also not accompanied by complete documentation such as business license and financial statements stamped by the Bureau of Internal Revenue (BIR). Charles Lim, owner of HMMEI, begged to release a statement, saying he has yet to consult with his lawyer about the matter.

The Inquirer also tried unsuccessfully to reach Lapu-Lapu Mayor Junard Chan, who won re-election in May. A text message sent to him on Friday also went unanswered.

Some city employees, who asked not to be named for lack of authority to speak on the matter, said they did not know where the furniture was placed or which offices were using the office supplies. The COA report also did not detail the items on which the 218 million pesos were spent. In its comment submitted to the COA, the Lapu-Lapu city government said that HMMEI had submitted the necessary eligibility documents and was deemed qualified.

The city said HMMEI’s articles of incorporation show that as of June 5, 2020, it retains its name while also doing business as a general merchandise business and offering services in general construction, catering, trade automotive, boat building and supplying filming needs.Lapu-Lapu City assured the audit team that it had exercised due diligence, carried out the necessary eye inspection and found that it had displayed of its various products, and determined that HMMEI was qualified to supply the goods purchased by the city.

In its reply, however, the COA said it discovered that HMMEI had already transacted with the city government for the supply of goods before August 19, 2021, its BIR registration date.

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