Iligan City Solid Waste Management Project (ICSWMP) - FINAL NARRATIVE REPORT by Task Force CMRF (Feb 2014)

Republic of the Philippines City of Iligan

ILIGAN CITY SOLID WASTE MANAGEMENT PROJECT (ICSWMP)

OBSERVATIONS/COMMENTS/ RECOMMENDATIONS

Task Force CMRF Executive Order No. 193, Series of 2013 Iligan City

February 2014

TABLE OF CONTENTS Page Introduction

i--iii

Observations / Findings / Discussion

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RECOMMENDATIONS SUPPLEMENTAL REPORT TECHNICAL COMMITTEE: INPUTS TO CMRCF TASK FORCE REPORT By Engr. Eduardo Tabelon INITIAL ASSESSMENT of ILIGAN CENTRAL MATERIAL RECOVERY and COMPOSTING FACILITIY (CMRCF) By Ernesto P. Piccio, Jr. OVERALL FINDINGS, OBSERVATIONS, COMMENTS & REMARKS ON THE PROJECT ENGINEERING IMPLEMENTATION OR MANAGEMENT ASPECTS By Engr. Norberto Oller

FINANCIAL COMMITTEE: SOLID WASTE MANAGEMENT PROJECT CITY GOVERNMENT OF ILIGAN FINDINGS AND OBSERVATIONS By Atty. Edgardo B. Prospero CENTRAL MATERIAL RECOVERY AND COMPOSTING FACILITY FINANCIAL REVIEW By Exequiel Martinez

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LEGAL COMMITTEE: OBSERVATIONS AND FINDINGS By Atty. Dexter Rey T. Sumaoy Jonah Rienzi M. Roa Gwendolyn Jean P. Juanillo Atty. Rafael A. Benedictos, Jr.

ATTACHMENTS: Brima Construction Photos DACODECO Photos Lacto-Asia Photos

1-12 1-9 1-22

INTRODUCTION In 2000, then Mayor Franklin Quijano commissioned the Philippine Regional Municipal Development Facility (PRMDP for brevity) to prepare the Solid Waste Master Plan for Iligan City. The PRMDP is an AusAid funded project and experts on the field of waste management made this study. As a basis of the said study, the then Mayor Quijano, proposed the Sanitary Landfill project where the project site of Upper Tominobo was identified after the commissioning on March 2002 of a study entitled, “Project Feasibility Study on the Proposed Sanitary Landfill and Wastewater Treatment Facility”. Preliminary site inspection commenced thru the help of Japanese experts but the same project was halted in 2004 when then Mayor Lawrence Cruz was elected and eventually the Sanitary Landfill project became a time of the past, and discarded. Consequently, without the Sanitary Landfill, the use of the ten (10) hectares open dump site at Barangay Santiago which has lasted for more than thirty (30) years became a big problem. The residents became vocal with their opposition. It is also found that it is ninety (90%) percent filled with an estimated remaining life of about only 2-3 years. Accordingly, with the passage of Republic Act 9003 known as the “Ecological Solid Waste Management Act of 2000”, the closure of the open dumpsite became imperative, it being not allowed under the provisions of the Act. The introduction then of a Central Material Recovery and Composting Facility (CMRCF for brevity) was the choice of then Mayor Lawrence Cruz, Councilor Chonilo Ruiz (Chairman, Committee on Environment), and the members of the Sangguniang Panlungsod. The Iligan City Solid Waste Management System (ICSWMS for brevity) was established thru Executive Order No. 332, Series 2005 and further strengthened by Executive Order No. 645, Series of 2006 by the creation of Iligan City Solid Waste Management Board (ICSWMB for brevity) and the Technical Working Committee (TWG for brevity) pursuant to the provision of Section 12 of Republic Act 9003. The ICSWMB was headed by then Mayor Lawrence Cruz, with Councilor Chonilo Ruiz as Vice-chairman, and Engr. Merlito Catolico as Action Officer. (10 Years Solid Waste Management Plan, Chapter VII, Plans and Programs of ICSWMS, page 64, incorporated in the Status Report of Engr. Benjamin Quitos, Jr., as of December 2012). In August of 2005, the ICSWMB is in final stages on the start of its project implementation.

In the plan preparation there were “two major components, as follows: ‘The infrastructure development is composed of site development, access road development, and the construction of the following buildings, namely: material recovery and composting facility, special waste and hazardous facility, administration building, ware houses, guardhouse, motor pool and agri-demo farm. Closure and rehabilitation of the existing dumpsite is part of the infra development.’ ‘The institutionalization program aims to strengthen the Iligan City Solid Waste Management Board and the 28 coastal and host barangay Solid Waste Management Committee. It includes institutionalizing the ICSWM-Projects Management Office. The program includes providing alternative livelihood to affected families of Barangay Santiago and Barangay Bonbonon recycling projects; information, education and communication campaign; strengthening the existing garbage collection fleet and policy advocacy. Implementation of the project includes city-wide and barangay base activities.’ ” This facility was scheduled for completion on or before December 2008. (COA Annual Report of the City of Iligan for CY 2007, page 38, herein attached as Annex “A”). In September 23, 2005, Mayor Cruz submitted a Letter of Intent to the Development Bank of the Philippines (DBP for brevity) to avail a loan of P180M from its Solid Waste Management Fund. The DBP loan was approved in June 22, 2006 and its releases were made in three (3) drawdowns: first, on August 9, 2006 in the amount of P69, 978,000.00; second, on December 09, 2008 in the amount of P78, 050,000.00; and third, on February 07, 2012 in the amount of P15, 610.000.00. This loan became the impetus of the Solid Waste Management System spearheaded by the City Government. The span of 7 years presented us an overview of how the projects were implemented and what gave rise to the transactions, projects implementations, disbursements, and finally, the objective or the purpose for which the loan was intended: supposedly to solve the garbage problem of Iligan City. The CMRCF project is fragment of the Solid Waste Management System to solve 165 tons per day of mixed wastes of the City of Iligan. The 80 tons per day is the contracted volume input which the CMRCF is tasked to undertake, and the remaining volume is to be undertaken by household and barangay participation. At its present state, the SWMS became a pressing problem which prompted the present administration to create the Task CMRF through Executive Order No. 193

ii Series of 2013. To specifically address: (1) the costly operation of CMRCF with approximately P420,000.00 monthly but could not however process the desired 80 tons capacity of mixed garbage; (2)failure of Barangay MRF; (3) failure of Information and Education Campaign; (4) resort to emergency and alternative controlled dumpsite; and (5) the corresponding burden of payment to the DBP of the loan for 10 years in the total amount of P163,638,000.00, and interest . (As of September 30, 2013, the principal payment made is P80,829,396.00, and interest of P56,675,928.00. Based on the findings of the Task Force, a scenario of unwarranted and questionable transactions were revealed, such as: faulty designs, deliberate efforts to subvert the bidding process, splitting of contracts, overpricing of materials and equipment, wastage of the loan money, unreasonable delays, gross neglect of those involved, incapability of the implementing technical personnel, or undue supervision of the projects, and plainly, the money was used not as a means to complete a project or to make the project a success but to squander the said resources to the expense of the tax payers of Iligan City who will be burdened in the payment of the loan obligation. Such actions of the officials involved caused undue injury to the local government of which they may be criminally liable under the Republic Act No. 3019, otherwise known as the “Anti-graft, Corrupt Practices Act.; Splitting of Contracts under Republic Act No. 9184 otherwise known as the "Government Procurement Reform Act”; Malversation of Public Funds or Property and Illegal Use of Public Funds or Property (Technical Malversation) under The Revised Penal Code, and such other corresponding administrative cases under relevant laws against public officials and employees.

iii OBSERVATIONS/FINDINGS AND DISCUSSION:

I. THE FEASIBILITY STUDY WAS NOT PREPARED BY CONSULTANTS AND PREPARED FOR THE PURPOSE OF OBTAINING A LOAN. On 2005, then Mayor Cruz communicated to Councilor Ruiz, Vice Chair, ICSWMB, that a Task Force was needed and thereafter created for the “Preparation of the Feasibility Study for the Iligan City Solid Waste Management System Project.” The said Task force was chaired by Engr. Merlito Catolico, City Mayor’s Office, with nine (9) members, namely: Engr. Gideon Taban, City Engineer’s Office; Engr. Benjamin Quitos, Jr., City Engineer’s Office; Engr. Samson Laranjo, Geodetic Engineer Consultant; Engr. Maricel Lagaras, Financial Consultant; Engr. Donato Caponong, Public Services Division; Engr. Delia Genobaten, Iligan City Water Works System; Engr. Franklin Actub, City Engineer’s Office; Engr. Cenon Juntilla, City Environment Management Office; and Arch. Rico Dumadag, City Engineer,s Office. This task force was intended for the sole purpose of obtaining a loan from DBP or other financial institutions to fund the CMRCF. As “part of the loan requirements from the banks, it is essential that a feasibility study establishing the technical, economic, marketing, and financial feasibility of the above project be prepared as soon as possible.” (highlight supplied; Letter of Mayor Cruz to Councilor Ruiz in 2005,herein attached as Annex “B”). The officials here concerned were not even part of the PRMDP project commissioned by then Mayor Quijano in 2000 for the Solid Waste Master Plan for Iligan City, and have no experience in solid waste management nor have any direct knowledge of garbage disposal technology. When the said study group was mandated to make the feasibility study, it was clearly decided by the then Mayor Cruz, Councilor Chonilo Ruiz and the members of the Sangguniang Panglungsod that the Central Material Recovery and Composting Facility must be the technology to be used and not Sanitary landfill which is the choice of the previous administration of Mayor Quijano. In a statement of Engr. Catolico (January 03, 2014 discussions with the TaskForce CMRF as part of the report), the choice of the CMRCF was in lieu of the Sanitary Landfill because of the “Q factor”- meaning the then Mayor Cruz and SP did not like the Sanitary Landfill because it was a project initiated by then Mayor Quijano. Furthermore, Engr. Catolico, flatly stated that the feasibility study was made for purposes of securing the loan from the DBP, and not for the study of the feasibility and possible success of the CMRF project. To make the

Page 2 matter aggravating is the fact that the data used in the feasibility study was based on a previous study of the PRMDP projects for Sanitary Landfill and Solid Waste Management for Iligan City in year 2000.

II. THE CMRCF PROJECT WAS TAILORED FIT TO A FAVORED CONTRACTOR. In 2004, the then Mayor Cruz directed the Planning Division of the City Engineer Office composed of Engr. Gideon Taban, Engr. Benjamin Quitos, Jr, Engr. Rico L. Dumadag with Councilor Chonilo Ruiz who guided the City Engineers to conduct an ocular inspection of CMRCF plants in Batangas and Bulacan that are using LACTO Asia technology and to make a design and technical specifications similar to the CMRCF building. The following year in 2005, the Engr. Gideon Taban, Engr. Rico L. Dumadag and Ma. Cecelia Lagaras together again with Councilor Ruiz went back to Batangas and Bulacan CMRF Projects to finalize the design of the facility. This was the basis in which the design and engineering specifications of the structure of the Iligan City CMRCF. Engr. Taban and his group redesigned the CMRCF buildings from a forty (40) ton per day facility to eighty (80) ton per day as initially decided by the City officials . In 2004, the Lacto Asia CMRCF technology was already pre-determined when the design of the facility was selected. In 2005 the same design was incorporated in the feasibility study submitted thus, the feasibility study made substantial reference to (blue print of the design, equipment and machineries, and operations) LACTO ASIA technology. (A copy of the Feasibility Study of Solid Waste Management Program dated August 2005 herein attached as Annex “C” ). The same reference of the LACTO Asia technology was incorporated in the 10-Year Iligan City Solid Waste Management Plan dated 2006. “As briefly mentioned above, the City government shall bid out, in accordance with RA 9184 (or the Government Procurement Reform Act), the MRCF equipment supply and the management (designated as the Facility Manager) of the facility for 3 to 5 years

utilizing a fixed working capital set up at the beginning of the project. The City shall shoulder the cost of payroll, power and other inputs while facility Manager will absorb Page 3

the cost of the solid inoculants inputs to enhance the marketability of the organic compost fertilizer produced.” “The Facility Manager/equipment supplier will not be paid a management fee but instead a profit share of up to 40%. In addition, the Facility Manager will be entitled to the equivalent of 70% of the organic compost fertilizer from the CMRCF to recover its investment for the cost of solid inoculants composting inputs.” This is exactly, the offer of Lacto Asia to the City Government in 2012 and 2013, since the same technology was the one chosen and contracted. The contractor offered to operate the same. To substantiate further, the complete operation of LACTO Asia technology is herein stated: “The process flow within the Central Material Recovery and Composting Facility for 80 tpd (tons per day) is described below”. [Refer to figure 11.1 Process Flow Diagram and Mass Balance for the City Material Recovery and Composting Facility](Status Report of Engr. Benjamin Quitos, Jr. as of December 2012, see pages 90 to 93). When the Iligan City Solid Waste Management Board (ICSWMB for brevity) was created on July 29, 2005, Councilor Ruiz and Engr. Merlito Catolico were totally involved in the CMRCF project of which they were designated as Vice-Chairman and Action Officer of the ICSWMB, respectively. However, Engr. Catolico was later pulled out from the project and transferred to the water system project, and on March 23, 2006, Engr. Benjamin Quitos, Jr. was designated Project Manager (E.O. 101, Series of 2006). In the early years of implementation, “DELAYS” became the byword of the project. The issues and concerns were the following: “on the engineering matters are the preparation of plans and specifications, topographic map of the proposed site, and actual lay-outing of the site development plan at the projected site; on the financial matters are the administrative control of the budget; financial and economic viability evaluation of Lacto Asia proposal, and other similar proposals, and other similar proposals, Budget for the Pilot Material Recovery Facility (MRF), and Hammer Mill Quotation by ALSAM.” (Letter of Engr. Catolico to Councilor Ruiz, Vice Chairman, ICSWMB, dated February 17, 2006, herein attached as Annex “D”.)

In a COA Final Audit Report as of December 31, 2008, “the following deficiencies and shortcomings constituting drawbacks in the implementation of the City Solid Waste Management Project as follows:” Page 4

“Due care and diligence was not exercised in the implementation of the projects undertaken by administration. With exception of the projects No. 7 (Dumpsite Closure & Rehab, appropriated with P4,999,930.00) and 8 (Plant Nursery/Demo Far, appropriated with P1,146,100.00) (Table I), in which its nature of works are intermittent, and full implementation shall be when the facility is operation, it indicates unreasonable delays and very low rate of accomplishment. Of the six (6) projects being implemented by administration since 2006, only two (2) were completed, leaving the remaining four (4) (referring to: Drainage System, appropriated with P3,500,000.00; Water System, appropriated with P2,000,000.00; Electrical Works, appropriated with 2,999,730; Earthworks, appropriated with P4,780,997.00; Tree Buffer Zone, appropriated with P500,000.00), were completed, leaving the remaining four (4) still struggling for completion.” “Unreasonable delay brought about by constant change of plan, design and specifications. Percentage of accomplishment for the Central Material Recovery and Composting Facility of the project, which is scheduled for completion last December 2008, is only eighteen per cent (18%). Other components of the project are still to be scheduled for biddings. . . . “ (COA Final Audit Report as of December 31, 2008, pages 33 and 40). It must be noted that the delay was more of the indifference of the city officials concerned in the implementation of the project since no experts and consultants were hired except Maricel Lagaras, CPA, Financial Consultant, Engr. Samson Laranjo, Geodetic Survey Consultant then Geodetic Engr. Macario Tompong, Geodetic Survey Consultant. The official incharged, Councilor Ruiz, is not an engineer; the preliminary engineering works were delegated to the city engineers and employees who were already burdened by regular functions of their offices. Furthermore, the early phase in the implementation of the site development was hindered with lack of required earthmoving equipment. However, a noticeable highly bloated labor force was employed, more specifically months before and after the 2007, and 2010 election seasons. The delays were further aggravated when the technical engineers could not submit a detailed engineering design of CMRCF on time due to lack of knowledge of the technology

newly introduced to the city for implementation. The BAC thereafter accepted the Design and Build Scheme. Page 5

Hence, when the first bidding was conducted on October 25, 2006, the Special Bids and Awards Committee (SBAC) chaired by Ernesto Balat, City Treasurer had to bid using the Design, Build and Operate Scheme under R.A. No. 9184. The unusual recourse of this bid process is the fact that no IRR had been created at that time on the Design, Build and Operate Scheme. Thereafter, only one bidder representing the Consortium of CB Garay/Asia Envirocons Inc., met the qualifications and was declared the lowest evaluated bidder. However, it became evident that Councilor Ruiz exerted undue pressure and influence to the TWG during the post qualification evaluation of the CB Garay/AEI resulting to the disqualification of the consortium. During the bidding, Lacto Asia Technology failed to qualify the Design, Build and Operate Scheme. (In one instance, on March of 2006, the SBAC awarded a Hammer Mill costing ONE HUNDRED SEVENTY THOUSAND PESOS (P170,000.00) to Barangay Luinab. However, the Hammer Mill supplied was not by ALSAM who is the lowest bidder but by LACTO Asia. In a corresponding effort, Commission On Audit (COA for brevity) comments dated October 31, 2006, asserted that “(T)he bidding conducted on October 25, 2006 that calls for design, build and operate scheme of the aforesaid project is tainted with nullity and infirmity. Consequently, the submitted detailed engineering design by the bidders as part of their bid may have no material significance.” And thereafter recommended the “cancellation of the bidding conducted on October 25, 2006 for the Construction, Supply and Installation of Iligan City Central Material Recovery and Composting Facility Equipment, Infrastructure and Its Appurtenances.” (Letter of Amoran M. Banocag, State Auditor IV, COA to Mayor Lawrence Ll. Cruz dated October 31, 2006, herein attached as Annex “E” On November 13, 2006, in a reply to the “Comment of the TWG to the City Auditor’s Letter of October 31, 2006”, COA reiterated that “(A)s earlier noted, the Bid Documents of this project appears to be in “Chopsuey/Halo-Halo Type”, a mixture of the procurement of goods, infrastructure, consulting services and design, build and operate schemes lump into one. This cannot be done because each type of procurement has each own prescribes bidding documents forms, set of requirements and evaluation criteria.” (Letter of Amoran M. Banocag, State Auditor

IV, COA to Mayor Lawrence Ll. Cruz dated November 13, 2006, herein attached as Annex “F”. Thereafter, on April 3, 2007, the new BAC chaired by Architect Gil Balondo, City Planning Officer declared a failure of bidding. Page 6

It is noteworthy to mention that after all of the above activities, it was only on August 6, 2007 that the Evaluation Committee approved the use of mechanized segregation with composting facility- in clear preference of Lacto-Asia technology. Four (4) years later from the time of the release of the loan in 2006, on July 8, 2010, the City Government entered into a Negotiated Contract with Lacto Asia for ICSWMS Project – Package “B” for the “Supply, Delivery, Installation, Testing and Commissioning of the CMRCF Equipment and Appurtenances and Miscellaneous.”

III. THE CMRCF PROJECT WAS UNDERTAKEN UNDER THE DIRECT SUPERVISION AND CONTROL OF COUNCILOR CHONILO RUIZ, A MEMBER OF THE SANGGUNIANG PANLUNGSOD WHO DIRECTLY PARTICIPATED IN AN EXECUTIVE FUNCTION. The CMRCF is definitely the special project of Councilor Chonilo Ruiz. A three (3) consecutive terms member of the Sangguniang Panlungsod (SP for brevity) from 2004 to 2013, servicing the City Government for nine (9) years. He was the Chairman of the Committee on Environment and Natural Resources, and the Committee on Health. It could be observed that being a member of the SP, a legislative branch of the Local Government Unit (LGU for brevity), the City Mayor gave Councilor Ruiz full authority in the implementation of the CMRF. He was designated as Vice Chairman of the Iligan City Solid Waste Management Board in July 29, 2005 by virtue Executive Order No. 332, Series of 2005; he therefor engaged in the execution of the project from 2005 until the end of his term in July 2013. He is no expert nor has a formal education, training or experience in the field of Solid Waste Management and on project management. However, the Task Force could not discount his enthusiasm in the implementation of the CMRCF project. He was instrumental in the proposal and in the implementation of the Solid Waste Management System in line with the CMRF project. The previous study of the Sanitary Landfill (PRMDP Solid Waste Management Plan for Iligan City, 2000; Project Feasibility Study on the Proposed Sanitary Landfill and Wastewater Treatment

Facility in Upper Tominobo, March 2002) was totally disregarded and by pushing the CMRCF, the City Engineer’s were tasked to make the specifications of the Lacto Asia technical set-up and designed in Batangas CMRCF. Page 7

In the ensuing year of 2006 and in the early part of 2007, when the TWG (composed of Atty. Ranulfo Cenas, Electrical Engineer, Chairman; Engr. Jaime Sato, Civil Engineer, Engr. Gino Alejo, Mechanical Engineer of the BAC was tasked to make Post Qualification Evaluation of the Bio-Reactor technology/Integrated Liquefaction System of CB Garay/IEA joint venture, who had the lowest bid of the proposed CMRCF project, intervention into the inquiry of the TWG was met with passionate interest and resistance by Coucilor Ruiz justifying that his intervention that “the undersigned (referring to Councilor Ruiz) was not officially furnished a copy of the Reports, being a representative of the end user and having made a thorough study of the complex problem of the Solid Waste Management”. In his letter/position paper to BAC dated February 1, 2007, entitled “Comments on the Initial and Supplemental Reports Post–Qualification of CB Garay/Asia Iligan City Central Material Recovery and Composting Facility Project”, Councilor Ruiz said that he was obligated to make the comment. His letter “is a ‘point by point’ evaluation of the Initial and Supplemental Reports submitted by the TWG addressed to BAC. He insinuated that that he feels “that it is my (his) obligation to enlighten the BAC members on the contents of the report, without any intention of unduly influencing the decision of the BAC members, but for the members to have a very objective and clear appreciation of the situation to insure a successful Solid Waste Management System, in compliance with R.A. 9003, from household segregation, street cleaning, collection, transport, disposal and the facilities aimed at efficiently managing the approximately 165 tons of mixed waste generated daily.” “Failure in the Solid Waste Management System to be adopted will have serious social, political, economic and environmental impacts on the City of Iligan. It is common knowledge that failure of government projects are because of incorrect choices/decisions because of other considerations aside from the quality, doability and sustainability of the project. All of us who are tasked in being part of the project, in whatever capacity, have the moral obligation to assess the project objectively and intelligently, as public servants in whose hands lie success or failure of the project, in order to make the right choices and decisions.” (A letter transmitted to the members of the Bids and Awards Committee in response to the letter of Architect Gil R. Balondo, BAC Chairman, to Dr. Chonilo O. Ruiz, Vice Chairman of the Iligan City Solid

Waste Management Board, dated January 30, 2007, page 1, herein attached as Annex “G”).

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Such intervention was manifested with the hesitation of the TWG to the presence of Councilor Ruiz in the post qualification evaluation of GB Garay/Asia Envirocons, Inc. In many instances herein quoted, interventions were apparent: 1) “Part III – COMMENTS ON INITIAL NARRATIVE REPORT DATED JANUARY 2007” (TWG Report) “On December 27, 2006 the team together with Kagawad Ruiz visited the on-going construction of the Baliwag Integrated Solid Management System the construction of which is undertaken by the CBG/AEI. The team coordinated with the MPDC of Baliwag, Engr. Nemi de Leon. He informed us that when the municipality of Baliwag bid out the project, there were many bidders which participated. One was Lacto Asia but at that time, there was already a controversy between the City of Malolos and Lacto Asia. The municipality of Baliwag awarded the project to CBG/AEI. Engr. De Leon further told the team that there is a pending case filed by Nueva Ecija against Lacto Asia. Due to time constraint, the team was not able to verity this.” (Comment of Councilor Ruiz)“Remarks: Take note of the word “on going construction” (bigger size for emphasis and easy reference). If I may add to their report, I asked approximately how many percentage accomplishment. The answer was approximately 40% (accuracy unverified).” “Questions: … “2. Is it proper and essential to mention anything about Lacto-Asia (in this paragraph) when the subject of the post-qualification assessment was of only CBG/AEI? “Remarks: It is the opinion of the undersigned that the remarks about LactoAsia at this stage is “misplaced” and irrelevant.” (A letter transmitted to the members of the Bids and Awards Committee in response to the letter of Architect Gil R. Balondo, BAC Chairman, to Dr. Chonilo O. Ruiz, Vice Chairman of the Iligan City Solid Waste Management Board, dated January 30, 2007, pages 11-12, herein attached as Annex “G-1”)

2) (TWG Report) “The team visited the Malolos Central Materials Recovery Facility. . . . The controversy between Lacto Asia and the City of Malolos is with regards to the Happy Soil which is the additive to the biodegradable to accelerate the composting process . . . . Because of the controversy, Lacto Asia operated the facility for only five (5) months and left.” Page 9

“About 40 tons of mixed garbage is being delivered to the facility each day. But only 10 tons is being processed by the facility. The rest is stockpiled to an open dump site. This means that some biodegradable is being stockpiled everyday at the open dump area. This explains for the smell in the area. The DENR has called the attention of the City of Malolos about its open dump and to remedy the situation. A check with the internet reveals that the National Solid Waste Management Commission has issued a cease and desist order for the Matimbo, Malolos City MRF for maintaining an open dump in the area.” (Comment of Councilor) “Remarks: 1. The main reason why I brought the two members of the TWG to Malolos MRF, Philamlife Homes and then Barangay Holy Spirit MRFs, is because the identical technology of these three MRFs was one of these presented during the first few, months of the project when we undertook a “systems evaluation process”, inviting several technology proponents to present their technology to the members of the Iligan City Solid Waste Management to guide the Board in the planning & conceptualization of the system that the city wants to adopt – q system that satisfies the criteria the Board has set for the City’s Solid Waste Management Facility in accordance with R.A. 9003. It is worthy to mention that CGG/AEI has not presented, during that time, therefore their proposed technology has not been thoroughly evaluated by the members of the Iligan City Solid Waste management Board.” “In addition, I wanted them to see a system that is totally different from that of CGB/AEI for their information.” “2. While the report of the TWG is a sort of a narrative report on their travel, I find it unusual and disturbing that their report focused more, in detail, of the weaknesses of the Lacto-Asia Technology when it is not the subject of the Post-qualification Evaluation, going even to the extent of resorting to the internet on information that is not relevant to the Post-Qualification Evaluation.” (A letter transmitted to the members of the Bids and Awards Committee in response to the letter of Architect Gil R.

Balondo, BAC Chairman, to Dr. Chonilo O. Ruiz, Vice Chairman of the Iligan City Solid Waste Management Board, dated January 30, 2007, pages 12-13, herein attached as Annex “H”).

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3. (TWG Report) “Mr Conception told us that the bio-reactor employs a continuous process. One has to continuously fed it with raw biodegradable and at the other end compost is continuously being expelled from the bio-reactor. This is different from the technology of Lacto Asia where the composting drum has to be filled at one time to capacity and after five days or so, compost is emptied out from the drum. While Lacto Asia uses a batch type process, the bio-reactor uses a continuous process, continuous feeding of biodegradable and continuous production of compost. “Mr. Concepcion further informed the team that the bio-reactor has been operating satisfactorily. In fact, the bio-reactor is one of the reasons the team has been getting awards for cleanliness, Vigan was the awardee in 2005. It is again the finalist in 2006. “Mr. Conception informed us that when the City of Vigan bid out the project, there were many bidders which participated. One was Lacto Asia, but at that time the facility installed by Lacto Asia in Zamboanga City was already a failure. The City of Vigan chose the bio-reactor technology offered by Asia Envirocon Inc.” (Comment of Councilor Ruiz). “Questions that should have been addressed in the TWG Report for a more compressive(sic) evaluation of the system.” Basing on the comments raised by Councilor Ruiz, it appeared that a thorough examination had been addressed to the TWG to the point of questioning their competence on the technical aspect of the waste disposal technology thereby accommodating a favored technology of Lacto Asia. However, the person questioning the competence of the TWG is not even an expert on the technical aspect of the solid waste management technology but just a self proclaimed expert by reason of “enthusiasm.” (A letter transmitted to the members of the Bids and Awards Committee in response to the letter of Architect Gil R. Balondo, BAC Chairman, to Dr. Chonilo O. Ruiz, Vice Chairman of the Iligan City Solid Waste Management Board, dated January 30, 2007, page 18). In a “Reply to the Comments of Atty. Ranulfo Cenas, TWG Chairman, to the Comments of Dr. Ruiz on the Initial and Supplemental Reports on the Post –

Qualification Evaluation of CB Garay/AEI…”, Atty. Cenas stated that, “out of defedence to Dr. Ruiz, who kept on texting Mssrs. Cenas and Sato when they would arrive in Manila as he would like to join them in the post-qualification at Baliwag . . . True Enough Dr. Ruiz fetched the team in the morning of December 27, 2006, and together they proceeded to Baliwag. After Baliwag, Dr. Ruiz brought the team to Page 11

Malolos. While the undersigned wanted to go back to the hotel to rest after Malolos, Dr. Ruiz brought the team to PhilHomes and Barangay Holy Spirit. It was not the intention of the team to visit these facilities because these are not the facilities that had to be post-qualified. “In page 12 of the letter, Dr. Ruiz admits that he was the one who brought the team to the Lacto-Asia Facilities.” In response, Councilor Ruiz affirmed that “(A)s end user, I believe it is very much my prerogative to go with the TWG to the subject of their Post-Qualification for me to see what the real score is. Offering them the vehicle is just a gesture of goodwill, not necessarily to influence them. The act of bringing the to Lacto-Asia facilities in spite of it not being the subject of the Post-qualification Evaluation is just so they will see other systems, with its positive and negative point, . . . .”(A reply letter addressed to BAC dated February 3, 2006, no page number but located on the 3rd and 4th pages, herein attached as Annex “I”). In the exercise of an executive function as Vice-Chairman of the ICSWMB, Councilor Ruiz interfered with the bidding, signed communications, made directives, recommended the purchase of equipment and dump trucks, personally supervised the operations and became the spokesperson of the implementation of the CMRF project. In an undated communication which was received in City Accounting Office in November 27, 2007, Eng. Benjamin Quitos, Jr., SWM Project Manager prepared a Revised Program of Work for equipment requirements for the SWM Project and Councilor Ruiz recommended the said breakdown of estimated expenditures, and approved by then Mayor Cruz. This expenditures pertains to the purchase of equipment and dump trucks to be used in the SWM Project herein stated for emphasis: “A. DIRECT & INDIRECT COSTS OF EQUIPMENT: “1) Diesel Powered Turbo Charged Generator, 200 KVA 3- Phase with Automatic Transfer Switch with complete accessories P2,200,000.00

“2) Service Vehicle pick-up 4W drive P1,500,000.00 “3) Garbage Trucks and other related expenses 19,980,000.00 “4) Bucket loader, 1.2 cu.m. Cap. With lifter attachment (forklift use) 4,400,000.00 “6) Repair/Upgrading of 10 units existing Garbage Trucks 7,200,000.00 “B. ESTIMATED GOVERNMENT EXPENSE: Page 12 “1) Insurance/Registration and other related expenses “2) Light Equipment and Tools

“C. CONTINGENCIES AND RESERVES “1) Other Miscellaneous Expense “TOTAL ESTIMATED COST (Items A-C)

100.000.00 400,000.00

P

220,000.00 36,000,000.00”

Based on this expenditures, six (6) Hino Garbage trucks were purchased through a negotiated procurement with MotoMall Davao Corporation thru a Bank Letter of Credit direct payment to Hino Motors of Japan in the amount of P19,980,000.00 in 2008, and Bucket Loader in the amount of P4,429,824.92 in March of 2012. To this date the Bucket Loader had the compactor and the back hue detached. The purchased of a service pick-up truck was withdrawn. Then in the 2nd quarter of 2008 was the rehabilitation and repair of seven (7) press pack garbage trucks in the total amount of P7,200,000.00. However, it could be noticed that one of the most important and critical component of the CMRCF was not purchased on orders of Councilor Ruiz, which is the Diesel Powered Turbo Charged Generator. The present facility could not operate in case of brown-outs. Until the end of his term in 2013, Councillor Ruiz was still vigorous of the campaign of the CMRCF thereby appearing therein that his justifications or his motivation and concerns of the CMRCF were justified despite the questionable transactions which became a political issue in Iligan City.

IV. DBP LOAN - P163,638,000.00; CITY EQUITY P25,181,000.00: THE ABSENCE OF APPROPRIATE AND SOUND FINANCIAL PLANNING CAUSE UNREASONABLE EXPENSES AND INTEREST PAYMENTS.

On June 22, 2006, the City Government thru then Mayor Cruz entered into a loan agreement with Development Bank of the Philippines (DBP for brevity) in the amount of P163, 638,000.00. The loan was funded with Kfw CLSWM (a foreign funding institution, making the DBP a conduit bank) in the amount of P156,100,000.00, payable in twelve (12) years in forty (40) equal quarterly Page 13

instalments, and from DBP in the amount of P7,538,000.00 with repayment in five (5) years in sixteen (16) equal quarterly instalments at ten percent (10%) per annum. Added component of the loan agreement was the equity from the City Government of P25,181,000.00. Therefore, the total amount of the ICSWMS project is P188, 819,000.00. On June 13, 2006, Sangguniang Panlungsod Resolution No. 06-503 adopted and approved Appropriation Ordinance No. 06-4969-71, appropriating the amount of P163,000,000.00 for the “Establishment of the Solid Waste management System at Bonbonon, this City, With Material Recovery Facility Out of the Proceeds of Loan From Development Bank of the Philippines.” The project was already authorized, approved and confirmed by SP Resolution No. 06-469. This appropriation authority is deficient of P638,000.00 from the total amount of the loan. The City Government contributed, as part of the loan agreement, an equity coming from the 20% Citywide Development Fund P25,181,000.00, with a total amount of the project of P188,819,000.00. The amount of P25,181,000.00 is the summation of various appropriation ordinances from 2005 to 2011, the specific funding are as follows: 1) 2005 20% Development Fund, MRF appropriation in the amount of P8,992,302.21; At the onset, when the SWM project commenced, P9,000,000 .00(P8,992,302.21) was diverted from the DBP loan of the CCTV project, and the fund was used as starting equity of the City Government. (There is a need for detailed information if the same amount was re-appropriated by the SP for SWM project, due to scant reference of the source of funding; what is certain is the fact that a portion of the amount came from the DBP loan of the CCTV project in Iligan City); 2) 2006 20% Development Fund, MRF appropriation in the amount of P1,554,413.53; 3) 2007 20% Development Fund, MRF appropriation in the amount of P9,688,154.26;

4) 2008 20% Development Fund, MRF appropriation in the amount of P356,415.99; 5) 2009 20% Development Fund, MRF appropriation in the amount of P2,702,656.36; and, Page 14

6) 2011 Reversion of Balances, included in the equity in the amount of P1,887,057.65. (SP Resolution No. 11-424, adopting and approving Appropriation Ordinance No. 11-5695-09, dated May 2011; this total amount reversion came from the equity [2005-2009]) With respect to releases of the DBP loan in the amount of P163,638,000.00, three (3) drawdowns were made: first, on August 9, 2006 in the amount of P69,978,000.00; second, on December 09, 2008 in the amount of P78,050,000.00; and third, on February 07, 2012 in the amount of P15,610,000.00. These drawdowns are the basis in which the interest of ten percent (10%) per annum commenced from the time of release. However, a cloudy and inconvenient truth is exposed. The revelation is telling and very disturbing on how the City officials in all levels/departments colluded with the contractors, or, by reason of inexcusable neglect or delay, incompetence, disregard of proper accountability, and improper use of money beyond belief, have exploited and drained the City finances. As of September 30, 2013, the payment of principal amounted to P80,829,396.00 with interest of P56, 675,928.09. (Subsidiary Ledger from the City Accounting Officer, herein attached as Annex “J”). The City Government will still have to pay the balance of the principal and interest thereof until 2018. At the time of the first drawdown of P69, 978, 000.00 on August 9, 2006, no major project commenced until November 3, 2008, when, the City Government thru then Mayor Cruz entered into a contract with BRIMA Construction and was awarded the “furnishing of materials, labor and equipment, and its accessories, tools and supplies for the Construction of the Central Material Recovery Facility Buildings and its Appurtenances” in a contract amount of P34,576,359.21. Major construction begun only after two (2) years, and in between those years in the implementation of the Solid Waste Management program, various administration projects (implemented by the City Engineers Office) were undertaken without restrain, such as, but not limited to, site development; road widening, and concreting, riprapping,

and fencing of vicinity. Such undertakings resulted in splitting of contracts, and multiple, unnecessary expenses of repetitious road and site development projects. The second drawdown of P78, 050,000.00 was on January 31, 2009. However, it took another one (1) year and three (3) months before other major Page 15

constructions were started. This construction happened when the City Government thru then Mayor Cruz entered into a contract with Davao Contractors Development Cooperative (DACODECO for brevity) on March 31, 2010, for the “furnishing of materials, labor equipment, and its accessories, tools and supplies of Package “A”: MRF Composting Bin and other facilities, Completion of Remaining Work (Concreting of Road, Riprap Works) to include the Wash Rack, Improvement and Widening of Access Road, Installation of Street Lighting Along Access Road, Special;/Hazardous Waste Vaults, Supply and Installation of 3 units – 167 KVA Transformers and Miscellaneous” in the total amount of P27,584,055.54. Then, on July 08, 2010, the City Government thru then Mayor Cruz entered into a negotiated contract with LACTO ASIA PACIFIC CORPORATION (Lacto Asia for brevity) for Package “B” in the “furnishing of materials, labor equipment, and its accessories, and tools for supply, Delivery, Installation, Testing and Commissioning of the CMRCF Equipment and its Appurtenances and Miscellaneous” in the amount of P29,683,485.27. The three (3) major projects were all contracted for One Hundred Fifty (150) calendar days. These two (2) contractors (BRIMA Construction and DACODECO) have no record of final turn over; however, they were awarded with extra works and time extensions. For LACTO Asia, there were also extensions of time and a certificate of turn over signed by the Project Manager, Engr. Benjamin Quitos, Jr. The third and last drawdown of P15, 610,000.00 was made on January 31, 2012, and as of September 30, 2013, the remaining balance was P14, 144,881.06. It is noted that the amount spent for the one year and nine months period is only P1,465,118.94. On careful analysis, the three (3) drawdowns appeared to have been made every three (3) years. The failure to make a proper documentation and availment of cash flow schedule caused the City Government unnecessary interest expense.

The City Government hired the services of Ma. Cecilia Lagaras, CPA, financial consultant/contract services, to undertake the financial flow of the loan and equity of the ICSWM project. The resulting delay and failure of the implementation of the CMRCF project caused the City Government to pay the objectionable and abhorrent interest of P26, 729.000.00. (See Analysis in Interest Expenses). “Had there been a cash disbursement schedule tied with the withdrawals from the bank to insure, say, Page 16

P2,000,000.00, cash on hand at the end of every 6 months,” the reasonable amount for the interest expenses could have been only P2,600,000.00 without adding the unnecessary and outrageous interest of P24,729,000.00. It must be noted, that the City Government had the “option of the availment clause” under the terms of the Loan Agreement. The City Government in this incident, the City Engineer’s Office through Engineers Benjamin Quitos., Jr, and Gideon Taban; and others involved, have negligently and incompetently failed to submit on time the design, or just plainly, the City Engineers could not understand the technology of the CMRCF or could not finalize the design, and the engineers/designer have to wait for a contractor (Lacto Asia in this regard) to provide them with the engineering details. Hence, it took them more than two (2) years from the time of the release of the loan to have the design (Lacto Asia) submitted. The first design was made by GB Garay which was vehemently opposed by Councilor Ruiz, and later on rejected by BAC. The project management unit never had the realistic project implementation schedule which in effect caused the premature drawdowns. The questionable delay and insatiable interest of the City Government officials and the inexperience of the project implementation group contributed to the untold irregular use of the funds with incalculable charges and expenditures to the detriment of the City Government.

V. MISAPPROPRIATION AND EXPLOITATION OF LOAN AND EQUITY.

The implementation of the ICSWMS as a major project of the City Government came into realization through the initiative of then Mayor Cruz and the members of the Sangguniang Panlungsod. As early as 2005 an initial amount of P8,992,302.21 was appropriated to commence the ICSWM Project. This was before the loan was executed by the City Government and DBP. This initial amount was then incorporated in the City Equity under the Term Loan Agreement. The start of the operations of the CMRCF project was characterized with a Page 17

labor intensive agenda by using the P25,181,000.00 equity and the loan from the DBP. In 2005, salaries and wages alone for casual employees amounted to P917,546.35; in 2006 to 2008, salaries and wages amounted to P2,268,034.93; overtime pay of P45,865.40. The wages disbursement coincided with the 2007 election period. In 2009 to 2011, salaries and wages amounted to P2,374,873.04, another 2010 election period, and the total amount disbursed for casual employees is P5,606,319.72. Other questionable expenditures taken from the City Equity were the following: 1. Fuel and Gasoline Expenses (P769,891.69); 2. Equipment and Furniture/Fixtures Expenses (P318,010.00); 3. Training and Seminar Expenses (855,294.50); 4. Printing and Binding Expenses (P45,700.84); 5. Office Supplies Expenses (P724,544.69); 6. Travelling Expenses (P187,449.52); 7. Material and Tri-media Expenses (P20,054.50); 8. Light and Water Expenses (P90,834.37); 9. Telephone/Internet Expenses (P125,334.07; 10. Module Crafting/Campaign and Advocacy Material/Earth day celebration/Recycling Activity/Alternative Livelihood/Product Development and Marketing Expenses (P540,318.37); 11. Building Maintenance Expenses (P206,760.00), 12. Other related expenses (P777,247.10). 13. expenditures of Land and Lot Acquisitions (P5,808,457.39);

14. Land improvements (P339,832.88); 15. CMRF Operating Expenses (P1,019,298.55); 16. Legal fees and related expenses (P590,000.00); 17. Capital Gains Tax (P577,436.77); 18. Site Development (P1,309,924.82); 19. Perimeter Fence (P23,505.66); 20. Drainage (P24,584.58); 21. Garbage Trucks (P929,201.00); and Page 18

22. Establishment of Pilot MRF Del Carmen (P1,065,386.54). The misuse of the 20 (%) Development Fund is in violation of a DILG M.C. No. 2010-138. “The utilization of the 20% component of the Internal Revenue Allotment shares is not allowed for: 1) Administrative expenses, such as cash gifts, bonuses, food allowance, medical assistance, uniforms, supplies, meetings, communications, water and light, petroleum products, and the like; 2) Salaries, wages or overtime pay; 3) Travelling expenses; 4) Registration or participation fees in training, seminars, conferences or conventions; 5) Construction, repair or refinishing of administrative offices; 6) Purchase of administrative office furniture fixtures, equipment or appliances; and 7) Purchase, maintenance or repair of motor vehicles or motorcycles except ambulance.”(DILG MC No. 2010-138 dated December 02, 2010). Throughout the duration of the project from 2005 until 2012, the remaining amount left from the City Equity is P597,313.38 as of December 31, 2013. On the loan component of P163,638,000.00, the salaries and wages disbursements from 2006 to 2012 amounted to P10,051,078.20. From the total amount of P188,819,000.00 of the loan package less: 1. the cost of projects (P103,723,554.00), 2. Soil Investigation (P373,948.30); 3. Purchase/upgrading of Garbage trucks and equipment (P31,273,205.00);

4. Lot acquisition (P13,995,039.00) ; and 5. the Unused Loan cash as of December 31, 2013 (P14,137,655.00) The total remaining amount representing the actual project handled by administration amounted to P25,315,598.70.

Page 19

This amount of P25,315,598.70 directly handled by administration, the total salaries and wages amounted to P15,657,397.92 (P5,606,319.72 from equity and P10,051,078.20 from loan) , or sixty two per cent (62%). Furthermore, fuel, oil and gasoline consumptions were clearly monopolized by one gasoline station (A’s Powertech Corporation) with few participation of other gasoline station (Abu Caltex Service Station) with the total disbursement from 2005 to 2012 amounted to P4,914,758.90.

VI. THE INFORMATION AND EDUCATION CAMPAIGN IS A FAILURE. The Information and Education Campaign (IEC for brevity) was one of the main components of the ICSWMS that started in 2005. The amountof approximately P1,500,000.00 (P1,146,793.69 for salaries and wages; P334,300.00 for Training and Seminar Expenses as of December 31, 2013) was appropriated in the IEC taken from the City equity. From the start of the IEC in 2006 until 2013, for eight (8) years of introducing the concept of solid waste management, funding used and exhaustions became an issue. In one communication of Councilor Ruiz dated May 2, 2011, he wrote the City Budget Officer, Marina Jumalon requesting for a Certificate of Balances for the CMRCF loan equity from year 2006 to 2009, with the admission that the “budget for labor cost had already been exhausted,…” of which he was asking for a re-appropriation “to cover the cost of labor for our continuing IEC

programs and activities.” (Letter request of Councilor Ruiz to the City Budget Office, herein attached as Annex “K”). As reported, the IEC covered the 28 barangays in Iligan City where campaign for household segregation was introduced. However, the impact of the success of the campaign could not be felt by the resident households of Iligan City. It is noteworthy to emphasize that alleged vigorous campaign were made thru media outlets, schools, and specially to barangay unit sessions but the Committee on IEC spearheaded by Mr. Melvin Anggot, was not able to make a significant follow up, Page 20

post IEC data gathering, and benchmarking. The absence of the information and education campaign data showed the failure of the committee to know the success of the information and education drive. In addition to the supposed reinforcement of the campaign was the passage on January 20, 2009 of City Ordinance No. 095488, an Ordinance strengthening the implementation of R.A. No. 9003, “establishing a Comprehensive City Ecological Solid Waste Management System…” (City Ordinance No.09-5488 amending certain provisions of City Ordinance No. 034395; R.A. No. 9003, the Ecological Solid Waste Management Act of 2000, and IRR herein made reference). Despite the enactment of the said ordinance and the huge budget poured into the IEC, the barangay could not set up the MRF simply due to lack of interest or express apprehension from the barangay officials and participating private individuals. There was no Barangay Solid Waste Management Committee (BSWMC for brevity; as mandated under Sec. 10, City Ordinance No. 095488) in placed. And that the barangays could not jump start on the said MRF since some were not able to submit the design for material recovery facility for funding, or if the designs were already submitted, the funds for the facility were exhausted without the implementation of the MRF, and that the MRF barangay activities that they started were overtaken with political issues or changes of officials after the barangay elections.

VII. BARANGAY DEL CARMEN AS PILOT MATERIAL RECOVERY FACILITY (MRF) WAS A FAILURE.

The establishment of pilot MRF project in Barangay Del Carmen was part of the ICSWM program with the objective of serving “as model for other Barangay in their own areas.”, and “to compose/recycle the waste generated by Barangay Del Carmen in accordance with Republic Act No. 9003.” (Project Brief/Description/Pilot MRF], Project Status/TWC Reports as of January—June 2006, ICSWMB, August 2006, herein attached as Annex “L”). The Barangay Pilot MRF was funded in 2006 from the 20% Citywide Development Fund in the amount of P1,081,000.00 coming from the equity. (Attached herein is a Certification from the City Budget Officer, Marina P. Jumalon, dated May 20, 2011, herein attached as Annex “M”). The concept is that Page 21

Public Services Division (PSD for brevity) of City Environment and Management Office (CEMO for brevity) shall operate the Barangay MRF through collection of solid waste, segregation, milling, composting and harvesting of compost for disposal. (See Project Status/TWC Reports as of January --June 2006, ICSWMB, August 2006). After the inception of the pilot project up to the present, the same became a total failure due to lack of knowledge, participation/commitment of the barangay officials concerned as to the administration and the operation of the MRF. The same project was not sustained despite the funding poured into the project. The failure was mainly attributed to the intent of the proponent of the project as a mere display or exhibition that a functional Barangay MRF had commenced, but in reality the same was not designed for sustainability. In interviews conducted by the Task Force CMRCF, it was learned that the Barangay Del Carmen officials had no participation of the project; the same project was not turned over to the Barangay for operation; the Hammer Mill, which is supposed to be used in the Pilot MRF was delivered to Barangay Luinab. (This Hammer Mill was never used in Barangay Luinab, since there was no functional MRF then, and the hammer mill is now in the CMRCF); and the proponent stopped the operation after the depletion of the budget. The proponent, Councilor Ruiz, continued to give credence as to the success of the Pilot MRF in Barangay Del Carmen despite the glaring failure of the operation. The current state of the Pilot project showed a dilapidated structure and a failed system of the Barangay MRF. The failure then of the Pilot MRF of Barangay Del Carmen became the failure of the rest of the 28 coastal barangays that were supposed to copy or at least make a model of the MRF of Barangay Del Carmen. At present no Barangay in Iligan City have the appropriate MRF, except for Barangay Pugaan. (It is ironic that Barangay Pugaan was not even considered as an ideal Barangay MRF model). This barangay is actually not burdened with the garbage

disposal considering that it is already in the interior of the City of which biodegradable waste comprising the bulk of its disposal can be composted at source or in the household level.

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VIII. THE THREE MAJOR CONTRACTS WERE TECHNICALLY DEFICIENT AND A FAILURE. There were three major constructions undertaken for the CMRCF project with the total amount of P103,723,554.00 out of the loan package of P188, 819,000.00 or 54.93(%) per cent. The amount of these project components could have been reduced from the original contract cost of P91,843,899.90 due to deletion of other components from the original contract and should not had been increased to P11,879,654.10 or 12.93 (%) per cent due to variation orders and extra works. There were various reasons of the delay but notable reasons were: 1. the failure of the designer to come up with a structural design to fit the technology; 2. the Site Development was consistently too slow to be developed; and 3. the area access was not given priority. Despite the administration’s handling of the initial phase of the project and the amount of P30,678,949.34 (Note: this amount is the appropriation intended but some projects were not completed), some of the project components were noticeably duplicated, such as: 1. 2. 3. 4. 5.

Site Development (Drainage—P3,500,000.00; Water System—P1,988,200.50; Electrical Works—P2,999,730.00; Earthworks—P4,780,997.00; Tree Buffer Zone—P1,000,000.00;

6. Access Road Street Lights [partial only]—P1,567,189.00; 7. Fencing Guardhouse—[12 hectares] –P1,187,640.38.00; 8. Fencing Guardhouse [5 hectares] – P2,273,893.69; 9. Access Road Improvement [partial only] – P2,450,280.00; 10. Opening of Diversion Road [partial only] – P3,931,040.00; 11. Road Network, Riprapping, Retaining Walls – P4,999,978.77). Included therein was the immediate purchase of electrical materials for the three-phase power supply from the panel board to assorted machineries at the Page 23

CMRCF by realigning/re-appropriating an additional amount of P1,600,000.00 (SP Resolution No. 11-1020 dated November 7, 2011, adopting and approving Appropriation Ordinance No. 11-5758-39), of which installation “was inadvertently not included in the program of works.” (Letter request of Engr. Benjamin Quitos, Jr. dated November 4, 2011, herein attached as Annex “N”). The said re-appropriation was taken from the appropriation for the purchase of custom van and purchase of autoclave in the amount of P1,600,000.00. As per Accomplishment Report (undated), the “Installation of Main Protection, Sub Protection of AC Motors wiring of MRF 1 & 2 Buildings & Mounting of Electrical Lay-out (Cable tray system MRF 1& 2) was undertaken by administration in the total amount of P1,314,812.10 with 74.0920% current accomplishment. This report was prepared by Engr. Ricardo Librado, Jr., detailed Mechanical Engineer, noted by Councilor Chonilo Ruiz, ViceChairman – ICSWMB, and approved by Engr. Benjamin Quitos, Jr., Asst. City Engineer, Project Manger – ICSWMB. (A copy of the Accomplishment Report by Admin is herein attached as Annex “O”.) From the time the loan agreement was executed on June 22, 2006, the first contract was entered with Brima Construction on November 3, 2008, two (2) years and four (4) month after June 22, 2006. The two major contracts of DACODECO and Lacto-Asia were executed in March 31, 2010 and July 08, 2010, respectively, four (4) years after June 22, 2006. These contracts were way beyond the terms of the loan agreement of one hundred fifty (150) calendar days for project duration. The first contract was executed on November 3, 2008 with BRIMA Construction. Brima Construction contracted was “for the Construction of the Central Material Recovery Facility Buildings and its Appurtenances” in a contract amount of P34,576,359.21. (Contract with Brima Constrution is herein attached as Annex “P”).

The second contract was executed on March 31, 2010 with Davao Contractors Development Cooperative (DACODECO for brevity) and commenced construction on May 18, 2010 and to be completed for “Package “A”: MRF Composting Bin and other facilities, Completion of Remaining Work (Concreting of Road, Riprap Works) to include the Wash Rack, Improvement and Widening of Access Road, Installation of Street Lighting Along Access Road, Special;/Hazardous Waste Vaults, Supply and Installation of 3 units – 167 KVA Transformers and

Page 24

Miscellaneous” in the total amount of P27,584,055.54. (Contract with DACODECO is herein attached as Annex “Q”) The third contract was executed on July 08, 2010 with LACTO ASIA PACIFIC CORPORATION (Lacto Asia for brevity) and commenced assembly for Package “B” “for supply, Delivery, Installation, Testing and Commissioning of the CMRCF Equipment and its Appurtenances and Miscellaneous” in the amount of P29,683,485.27. (Contract with LACTO Asia is herein attached as Annex “R”)

A. BRIMA CONSTRUCTION The project commenced on November 26, 2008 and to be completed on April 26, 2009 for the duration of 150 calendar days. On November 26, 2008, Brima Construction started the construction of the Central Material Recovery Facility Buildings and its Appurtenances with the project cost of P34,576,395.21 (Main Contract) with Extra Work No. 1 with the amount of P3,385,988.60 and Extra Work No 2 in the amount of P2,188,001.19 with the total cost of P40,150,349.00. There were 12 descriptive units of construction facilities, namely: (1) Lump Sum Bid for Special Items Facilities to the Engineers in the amount of P3,101,502.00 (Note: No specification was given for the construction of a bunkers/facilities for engineers, and the said bunkers/facilities no longer exist in the premises; no records showed as to the use of the funds but further investigation has to be conducted since a double cab pick- up truck (Mitsubishi Strada) was used in the CMRF Project, and could not be account as to the source of funds) ;

(2) Construction of Material Recovery Facility Bldg. 1 in the amount of P4,277,053.22; (3) Construction of Material Recovery Facility Bldg. 2 in the amount of P4,948,650.86; (4) Construction of Motorpool Bldg. (MRF) in the amount of P3,596,756.91; (5) construction of Warehouse Bldg. 1 & 2 in the amount of P10,483,635.32; (6) Construction of Administrative Bldg. (MRF) in the amount of P2,839,611.93; Page 25

(7) Construction of Training Center (MRF) --- “Deleted”; (8) Construction of Guard House (MRF) in the amount of P126,624.35; (9) Construction of Toilet and Bath (MRF) --- “Deleted”; (10) Construction of 5-Hectares Perimeter Fence at MRF in the amount of P1,243,375.34; (11) Water Supply for MRF P320,841.23; and (12) Site Development for Admin. Bldg. in the amount of P3,638,308.07. Of these components under (2), (3), (4), (5), (8) and (10), Miscellaneous Works (reproduction of plans, supporting documents, contracts, testing of materials and permit fees is P25,680.00 in each components) with the total amount of P128,400.00; the reproduction of documents were repetitious. It is also noticeable that the incorporated electrical works amounted to P646,109.45 with the Guard House having an Electrical Works of P24,795.97. All of these components for the main contract has the total amount of P34,567,359.21. However, Variation Order No.1 commenced with the approval of then Mayor Cruz as Extra Work No 1. for the following: (1) Riprapping Works (Slope Protection and Existing Open Canal) in the amount of P628,065.22;

(2) Construction of Tie Beams of the following Structures: I. Warehouse No. 1; and II. Administration Building in the total amount of P970,070.00 (Note: In the construction of these tie beams, earthworks, backfilling and compacting work were included in the total amount of P445,961.45);

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III. Gravel Bedding in all Building Foundation in the amount of PP332,775.00 (Note: Gravel Bedding is a component part of every building structure and should have been part of the main contract); (3) Toilet & Septic Vault for MRF 1 &2 in the amount of P387,484.61 (Note: The construction of these toilets was part of the main contract but was deleted. The reason was that the said toilet was designed with no septic tank! The carpentry works amounted to P108,662.40); (4) Ceiling Works at Admin Bldg. in the amount of P196,847.28; (5) Perimeter Fence in the amount of P870,745.65. The total cost of the Change Order/Extra Works No. 1 is P3,385,988.80. In Variation Order No. 2 (Extra Work), the total amount of the change order is P2,188,001.19 and was added for the construction of the following: I. II. III.

Steel Works (Warehouse) 1 & 2), Motorpool in the amount of P721,155.81; Concrete Works (Warehouse 1 & 2), Motorpool; Steel Reinforcement (Warehouse 1 & 2)/Motorpool in the amount of P871,050.80. The total amount of these Variation Orders is P5,573,989.79.

While the total cost of the project amounted to P34,576,359.21, the variation orders/change of work had the total percentage of 16.12 (%) per cent. From the target date of completion on April 16, 2010, the construction of the ten (10) components and the variation orders had the completion targets revised

first on June 26, 2009 then September 26, 2009 and thereafter suspended and resumed on March 22, 2010. The project accomplishment was considered 99.98 (%) April 4, 2012, and the contractor Brima Construction was paid by the City Government. The Project Accomplishment Report for the period covered: September 4, 2009 to April 4, 2012 was prepared by Engr. Jonathan R. Revelo, Building Inspector, Asst. Project Manager – ICSWMP, recommended for approval by Engr. Benjamin W. Quitos, Jr., Assistant City Engineer, Project Manager -- ICSWMP , noted by Chonilo O. Ruiz, City Councilor, Vice Chairman –ICSWMB, and was not signed by then Mayor Lawrence Cruz as the approving official. (See detailed Solid Waste Management Accomplishment Report of Brima Construction, herein attached as “S”). Page 27

This project was never issued a certificate of completion and that the same was never completed. B. DACODECO The contractor Davao Contractors Development Cooperative (DACODECO for brevity) commenced construction on May 18, 2010 for “Package “A”: MRF Composting Bin and other facilities, Completion of Remaining Work (Concreting of Road, Riprap Works) to include the Wash Rack, Improvement and Widening of Access Road, Installation of Street Lighting Along Access Road, Special;/Hazardous Waste Vaults, Supply and Installation of 3 units – 167 KVA Transformers and Miscellaneous” in the total amount of P27,584,055.54. The project had the duration of 150 calendar days or until the target date of completion on October 14, 2010. The said Package “A” has seven (7) components, namely: (1) Construction of Composting Bins in the amount of P10,384,538.29; this has a Miscellaneous Works (reproduction of plans, supporting documents, contracts, testing of materials and permit fees with the total amount of P128,400.00) with the same computed amount with BRIMA construction; (2) Completion of Remaining Works, [1.0] Riprap and Grouted Riprap in the amount of P3,672,833.84; [2.0] Construction of Wash Rack in the amount of P584,573.00

(3) Improvement of Access Road along Brgy. Bonbonon leading to Sitio Bangko in the amount of P4,037,709.64; (4) Opening of Diversion Road going to CMRCF in the amount of P1,906,963.16; (5) Street Lighting for Access Road in the amount of P P3,503,521.00; (6) Construction of Vaults in the amount of P1,499,078.97; and (7) Supply and Installation including Commissioning/Testing of three units 167 KVA Single Phase Transformer, 60 HZ. Oil immersed 13.8KV, 220v sec including Accessories and Concrete Pedestal in the amount of P2,157,796.19 (Note: The Page 28

installation of a second hand transformers delayed the project when the inspectorate team rejected the units). The Seven (7) components of the project amount the total cost of P27,499.078.97. The contract was added with extra works when Variation Order No. 1 (Extra Work No. 1), with the following: I. II. III.

Opening of Diversion Road going to CMRF in the amount of P1,481,128.34; Construction of Composting Bins in the amount P2,634,495.17; Construction of Waste Vaults in the amount of P497,814.45.

The Variation Order No. 2 (Extra Work No. 2) was for the Completion of Remaining Work in the amount P1,691,627.02 broken down to: a) Riprap and Grouted Riprap in the amount of P582,825.29; b) Concrete Structure in the amount of P505,771.97; and c) Concrete Pavement in the amount of P603,029.75. The total amount for Change Orders/Extra Work No. 1 & 2 is P6,305,064.02. or 22.93 (%) per cent. The total Revised Contract Amount is increased by P33,889,120.62.

This Completion of Remaining Works is a duplication of previous program of works and obviously could not be verified. The administration handled projects overlapped with that of the Contractors and no clear delineation of accomplishments were established. The contract duration of 150 calendar days from May 18, 2010 to the target completion of October 14, 2010, were revised first to February 21, 2011 then revised on May 21, 2011. Further revision on the target date was made on May 21, 2011. And it took 647 days as of April 4, 2012 for the contract to have a 98.5743(%) accomplishment as stated in Consolidated Project Accomplishment Report from May 18, 2010 to April 4, 2012 of the SWM Project as prepared by Engr. Jonathan R. Revelo, Building Inspector, Asst. Project Manager – ICSWMP, recommended for

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approval by Engr. Benjamin W. Quitos, Jr., Assistant City Engineer, Project Manager – ICSWMP , noted by Chonilo O. Ruiz, City Councilor, Vice Chairman –ICSWMB, and was not signed by then Mayor Lawrence Cruz as the approving official. (See detailed Solid Waste Management Report of package “A”, herein attached as “S”). Records showed that no final acceptance was issued to the said contractor and that the project was abandoned. C. LACTO – Asia Pacific Corporation The third contract was executed on July 08, 2010 with LACTO ASIA PACIFIC CORPORATION (Lacto Asia for brevity) and July 14, 2010 commenced assembly for Package “B” “for Supply, Delivery, Installation, Testing and Commissioning of the CMRCF Equipment and its Appurtenances and Miscellaneous” in the amount of P29,683,485.27 for the duration of 150 calendar days or on the target date of completion on December 10, 2010. The following delivered equipment were installed: A. Main Equipment: (1) Receiving Hopper, 2 units with a unit price of P1,330,987.14 with the total amount of P2,661,794.24;

(2) Parallel Conveyor, (3) Cut-off Conveyor, (4) Conveyor Leading to Trommel Screener, 2 units each with each unit price of P484,670.20 and the total amount of P2,908,021.20; (5) Trommel Screener, 1 unit with a price of P605,854.80; (6) Plastic Blower Equipment, 1 unit with a price of P547,888.06. This plastic blower could not be installed as to specifications due to the lack of building space for the placement of the plastic blower which reduced the efficiency of the Trommel Screener by at least 10 (%) per cent to separate plastics from the solid waste due to plastic blockage of the trommel sieves. The equipment is now stored in the warehouse; (7) Four (4) way sorting with in and out Mechanical Conveyor (1 set Main conveyor,

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4 units and 1 set out feed conveyor, 4 units) in the amount of P2,925,307.16; (8) Out Feed Extension Conveyor, 1 unit with a price of P387,736.16; (9) Screw Conveyor Carbon Amendment , 2 units with unit price of P191,556.73, and total cost of P387,736.16; (10) Hammermill Loading Conveyor, 2 units with unit price of P442,816.73 and total cost of P885,632.54; (11) Hammermill/Shredder/Decorticator, 3 units with unit price of P872,662.64 and total cost of P2,617,987.92; (12) Hammermill off-loading mechanical convey, 2 units with unit price of P348,170.20 and total cost of P696,340.20; (13) Steel Trolleys , 6 units with unit price of P37,930.71 and total cost of P227,584.26. The same units are obviously overpriced; (14) Portable Power Sprayer, 2 units with unit price of P151,722.84 and a total cost of P303,445.68. These units are stored in the warehouse. These sprayers are obviously overpriced since these are the same sprayers used in car wash and cost only P6,000.00 each.

B. For Composting System and Support Equipment (1) Rotary Composter Drum 2000 liter capacity, 27 units with unit price of P360,341.63 and total cost of P9,729,224.01. These 27 drums were placed on the Material Recovery Bldg. 2., and only 5 drums were used for compost drying. The contention of Lacto Asia that that 40 tons of compost results from the 80 tons per day input of solid waste is a misplaced assumption since only 25 tons per day maximum output of compose could have been possible or 13 composter drums. The 14 excess composter drums is not justified costing the City Government P5,044,782. Aside from over pricing of the unit which is simply operated by a 1 hp Engine, the estimated cost of material for the drum fabrication could not be more than P100,000.00; (2) Steel Ladder to Composter Drum, 2 units with unit price of P160,464.11 and total cost of P320,968.22. These units are overpriced way beyond the reasonable

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cost. The ladder has seven (7) steps and if the costing is made per step, each step costs P22,923.44. (3) Compost Buggy, 10 units with unit price of P37,930.71 and total cost of P379,307.10; (4) Rotary Screener, 3 units with price of P330,065.05 and total cost of P990,195.15; (5) Bagging Equipment, 1 set with price of P66,196.17. This bagging equipment is not in storage and could not be accounted, although appeared to have been delivered and received. Weighing scale was placed in Building 2.

C. Baling and Composting Equipment (1) Mechanical Baler/Compactor, 1 unit with price of P1,222,742.60. This baling machine is manually operated and could not perform the specifications of six bales per hour. When used, baling machine produced only one bale per hour.

D. Residuals to Concrete Brick Equipment (1) Residual Crusher, 1 unit with price of P1,300,012.45. This unit was not used but tested on the coconut husk and residuals. E. Tools and Spare Parts and Others in the total amount of P522,193.66. The total cost of the entire project is P29,683,485.27. As appearing therein, mostly all equipment were overpriced by more than half of the actual cost of labor and material. Although the Task Force was not able to get the cost estimates from project proponent or the Approved Budget for the Contract (ABC), a strong indication showed that this negotiated contract was not actually entered into to reduce the cost but allowed Lacto Asia to dictate the costing since no effort could be seen from the procuring entity to reduce the costing. At the start of the contract on July 14, 2010, the target date of completion was moved from December 10, 2010 to March 12, 2011 or 92 days. Another target Page 32

date was set on March 31, 2011, and a Suspension Order No. 1 was approved on April 1, 2011 up to April 4, 2012 due to the unavailability of power supply/transformer. This Accomplishment Report as of July 14, 2010 to January 17,2013, was prepared by Engr. Ricardo A. Librado, Jr., Engineer III, detailed Mechanical Engineer – ICSWMP, checked by Engr. Benjamin W. Quitos, Jr. Asst. City Engineer, noted by Councilor Chonilo Ruiz, City Councilor, Vice-Chairman ---ICSWMB and approved by Lawrence Ll. Cruz, City Mayor. From the Accomplishment Report the total amount of P29,683,485.27 was only intended for the payment of all equipment, and no allocation for the testing and commissioning of the equipment which was supposedly part of the contract. Although no clear commissioning was done with the equipment to determine the 80 ton per day capacity, the City Government through Engr. Benjamin W. Quitos, Project Manager –ICSWM Project “has acknowledged receipt in good order and condition of the completed project for Package B” which “project was awarded and undertaken by Lacto Asia Pacific Corporation last July 14, 2010 and was completed last January 22, 2013.” ( A copy of the Acknowledgement of Turn-Over and Acceptance of Completed Projects is herein attached as Annex “T”). On February 19, 2013, Engr. Benjamin W. Quitos, Project Manager –ICSWM Project issued a Certificate of

Completion, certifying that the contract undertaken by Lacto Asia Pacific Corporation “has been accepted on January 22, 2013, and that “the project was undertaken in accordance with the approved PLANS and SPECIFICATIONS.” (A copy of the Certification of /acceptance is herein attached as Annex “U”). Despite the Acceptance of Package B, then Mayor Cruz on March 22, 2013, made a Letter of Exemption addressed to Atty. Anna Liza T. Barredo, City Election Officer IV, COMELEC, Iligan City asking for exemption of casual of the ISCWM project. “(T)he project components that are undergoing for its implementation which falls within the banned period to wit: “1. Package A – Completion of the following project components; * Remaining works of the Improvement and Widening of Roads * Replacement of the 3 –units 167 KVA Transformers “2. Package B – Testing and Commissioning of the ICMRC equipment and its Appurtenances. “3. Procurement of the following; a. Autoclave Equipment Page 33 b. Special/Hazardous Transport Equipment (Custom Built).” The present administration of Mayor Celso G. Regencia disputed the acceptance of Package “B”. The City Government could not be bound by the said acceptance. The contract is between the City of Iligan represented by then Mayor Cruz and the contactor Lacto Asia. To recognize the completion of the project, the acceptance must be by the City Mayor being the head of the procuring entity. This was reiterated when the present Mayor Celso G. Regencia wrote Mr. Rolando L. Sianghio, President of Lacto Asia, that “the CMRCF did not undergo complete testing and commissioning”, and that without the conformity of the Procuring Entity, the “acceptance made cannot be considered.” (A copy of the letter dated January 8, 2014 to Lacto Asia by Mayor Regencia is herein attached as Annex “V”).

FINAL OBSERVATIONS The ICSWM project almost took eight (8) years to implement and the major contracts are not completed to this date. The administration of then Lawrence Ll. Cruz was fully supported by the Sanggunniang Panglungsod notwithstanding that the execution of the projects suffered legal infirmities, and turn out to be a failure.

The members of the Sangguniang Panlungsod have not investigated nor made inquiry as to the status of the projects; had passively tolerated the implementation by administration knowing that they would benefit in to the deployment of casuals; had continuously allowed the three (3) major contracts to be executed without a resolution of express authority to allow the then Mayor Cruz to enter into the said contracts; had continuously appropriated the projects thru the 20% Development Fund allowing therein the funding to be used in violation of DILG MC No. 2010-138; had continuously approved the realignments or re-appropriation of funds intending to support the projects without taking into consideration the appropriated funds were useful for the operation of the CMRCF. Such inaction, or implicit involvement, in the implementation of ICSWM projects caused the City Government an unreasonable burden until 2018 on wasteful expenditures of which payment of principal and interest would reached P230,000,000.00. RECOMMENDATIONS

THE CITY GOVERNMENT SHOULD CONTINUE TO OPERATE THE CMRCF WHILE ENGAGING THE POSSIBILITY FOR PRIVATIZED OPERATION WITHIN ONE (1) YEAR OR UNTIL JUNE 30 2015. The projected waste disposal of Iligan City is 165 tons per day and the CMRCF is designed to accommodate 80 tons per day. However, the present garbage disposal is 125 tons per day, and the facility can accommodate less than 80 tons per day (Note: Obscure data could not be relied on since the operation of the facility, no daily data was reported nor established. However, what is curtained is the fact that the 80 tons per day was never achieved). At present, all waste are disposed of and directed to the Bgy. Abuno Controlled Dump Site. The CMRCF is still struggling to process the remaining waste dumped for three (3) weeks from October 1 to 24, 2013 at the CMRCF premises after the closure of the Santiago dump on October 7, 2013. While no Barangay MRF is functional (Bgry. Pugaan waste is still covered by PSD operation), the state of the CMRCF is not suitable for the City Government operations in the absence of a clear personnel functions and organization. The budget for 2014 operation is only P3,000,000.00, and if full operation of 2 shifts be undertaken, the said amount will not last until June 2014. The excessive monthly operational cost of P500,000.00, with no productive income in return, would warrant another subsidy of its maintenance and operation. Furthermore, the

maintenance of the equipment will later hinder further operations since the machinery already experienced breakdowns in three (3) to four (4) months continuous operations since it was turned-over last September 24, 2012. The CEMO, the office under which the operation is assigned already reduced operations starting February 16, 2014, with labor force of eighty (80) workers (two (2) shifts) to twenty five (25) workers (one (1) shift) and closing the facility Saturdays and Sundays. While the City Government should not limit its options, the least it can do (for the time being) is not to stop the operation of the CMRCF. The operation is costly for the City plus the loan obligation. The said operational cost could only be remedied if useful product of compost fertilizer and the future use of non-biodegradable will be materialized. Or, the facility will generate income and self-liquidate.

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It is then imperative for the City Government to maximize future operation to venture on other measures and to find solution that is acceptable to the local government, one of which is to privatize the operation of the CMRCF. The City Government necessitate to undertake an option of privatized operation on scheme that is functional, acceptable, and advantageous to the City of Iligan. If considered, the previous offer of Lacto Asia of operational control should be viewed with caveat. It must be emphasized that Lacto Asia claimed to have delivered MRF equipment to 350 LGU’s of the same mechanical set-up, design and Happy Soil technology but has yet to prove the success of its operation. At present, no LGU has entered into contract with Lacto Asia on privatized operation except the local government of Malolos, Bulacan but the same was abandoned after five months of operation. This caution is factual. Aside from colluding with officials of the LGU’s, and insinuation of bribery to officials in the different national government agencies, the said contractor clearly overpriced its equipment, as reflected in the contract between the City and Mr. Rolando L. Sianghio, President of LACTO Asia Pacific Corporation. In a statement of Mr. Sianghio before the Sangguniang Panlungsod session October __ 2013, he stated that:

“(M)ost of the local government will purchase my equipment, have purchase my equipment and not to solve garbage(.) (b)ut for something else, and so I am frustrated because not too many installations are working. The smaller installation system(s) are working. The big installations like Iligan are not working. I have to tell you honestly.” (emphasis supplied).

The entry then of Lacto Asia for privatization of operation is unacceptable. However, there are other private entities which have signified their interest to operate the CMRF facility. The City Government must be ready to negotiate the said privatization of the operation within a period of one (1) year.

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Rationalization

A. The operation of CMRCF should only be used for market waste and the remaining waste be disposed at the controlled dumpsite in Fatima, Brgy. Abuno.

The current waste generated in Iligan City was established and known to be 125 tons per day (44tpd market waste and 81 tpd of mixed/residential waste). Due to limited resources and to maximize its production, the CMRCF should process only the 44 tons market waste utilizing an eight-hour a day shift only. This scheme shall be implemented until a privatized operation will be in placed. The remaining mix/residential/industrial waste should be disposed at the controlled dump site in Brgy. Abuno. Although questions of legality may arise, the emergency nature of garbage disposal in controlled dump sites can be justified through the provisions of Section 16 of Republic Act 9003 which allows an LGU for remedied measures on existing waste management alternatives that had not been

fully utilized. However, the City Government should endeavour to comply the requirements of the provisions of Republic Act. 9003.

B. The remaining 7 hectares of the CMRCF must be utilized as the residual waste sanitary landfill. The operation of the CMRCF as final destination of garbage waste should be viewed in a realistic situation. The existence of residuals makes it imperative to find a suitable area of disposal which is a sanitary landfill. Residuals are end of the line garbage after other biodegradable and nonbiodegradable are processed. The bulk of this waste could no longer be dealt with. The best remedy is for these residuals to be dump in a mini sanitary landfill that is near the facility. The CMRCF has an area of 12 hectares with rugged terrain that may Page 37

be suitable for a mini sanitary landfill. The facility occupied only a portion of less than 2 hectares, and the remaining portion of rugged terrain is not utilized except a 300 square meter area used as farm demo for fertilizer use. Therefore, the City Government could use the remaining portion of 7 hectares for mini sanitary landfill in compliance of the provisions of RA No. 9003.

C. The implementation of the Barangay MRF must be rationalized and restructured. The failure of the pilot project of Barangay Del Carmen MRF should set precedence for the City Government to rethink of strategies in its implementation. It is observed now that many barangays within the City are enthusiastic in the engagement of the Barangay MRF program. This enthusiasm hopefully is not the same with the enthusiasm of the officials of the previous administration. Many of the 28 participating barangays did undergo trainings and seminars, and were instructed with information and educational campaign.

However, when releases were made, the funds went into other purposes other than the strengthening of the Barangay MRF. The released funds were used in Lakbay Aral program and some constructed a facility that was designed to be temporary. The previous recipient barangays must justify how the funds were expended. To be effective, the City Government and the barangay concern must come up with reasonable and realistic strategy to sustain operation. Funding of BMRF should not be downloaded to barangay account. Further study shall commence immediately. In line with the effective implementation of the project the City Environment and Management Office (CEMO) should formulate a guideline for the barangay to adhere to, such as, but not limited to the following: 1) A MOA be executed to set the guidelines, conditions and terms of barangay MRF operations; 2) The barangay should comply structural designs that would sustain for a longer period of time; Page 38

3) The structure must be placed in a vicinity that is innocuous, and if near residences, the approval of the residents in the vicinity shall be secured; 4) The Barangay Council should pass a resolution for commitment of the project; 5) The barangay must state the capability of sustaining the facility; 6) In cases where other barangays could not build a MRF, barangay clustering through a MOA shall be encouraged; 7) The City Government must assign CEMO to follow up and make annual report and recommendations for further subsidy to the participating barangays. This report will be the basis for appropriation to be incorporated in the annual budget.

D. The City Government must produce additional garbage trucks.

There are only six (6) Hino garbage trucks now used in the waste disposal operation. These trucks purchased in 2008 are already 5 years old. Although functional, the said fleet must be reinforced with additional garbage trucks. In order to comply with the “No segregation, No collection” policy, additional garbage trucks be used for recyclables only. In this way such measures would sustain the implementation of household and barangay segregation as mandated by Republic Act No. 9003 and City Ordinance No. ________. As recommended, additional fleet of seven (7) garbage trucks should be given appropriation priority on the 2015 annual budget. The longer that the City Government could not add garbage trucks, the efficiency of collection of the PSD will be in jeopardy. A mechanical failure of two (2) or more trucks would directly affect the efficiency of the thirty six (36) daily truck load collection. Thus, the additional garbage trucks will not only address the collection of biodegradable and nonbiodegradable waste but will also extend the operational use of the other trucks.

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E. The City Government must explore other venues for sanitary landfill.

The City Government must begin to explore alternative options for garbage disposal. The PRMDP Feasibility Study for Sanitary Landfill in Iligan City should be given a second look and that the locations must be explored the soonest. As already projected, the City of Iligan produced 165 tons per day market and solid mixed waste. At the moment the PSD collects 125 tons per day garbage. In a realistic scenario, if the CMRCF facility could process only 80 tons per day garbage waste, the remaining 56 tons per day could not be processed. There is need therefore, for an alternative garbage disposal. Since the closure of the Santiago dumpsite, the City Government is faced with the unavoidable reality that CMRCF could not cope with the garbage problem. Aside from the fact that the 80 tons per day processing could not be attained, the remaining garbage waste demands an alternative disposal.

On studies made, one of the recognized systems of waste disposal is the sanitary landfill which can be used in Iligan City. It was inconceivable then that the City Government refused to take cognizance of the option for a comprehensive waste disposal system and relied solely on the CMRCF despite the uncontroverted fact that the CMRCF is designed to accommodate only 80 tons per day garbage waste disposal.

TECHNICAL REPORT

FINANCIAL REPORT

LEGAL REPORT

ATTACHMENTS

TASK FORCE CMRCF (Executive Order No. 193 Series of 2013)

TASK FORCE CMRCF (Executive Order No. 193 Series of 2013)

TASK FORCE CMRCF (Executive Order No. 193 Series of 2013)

TASK FORCE CMRCF (Executive Order No. 193 Series of 2013)

TASK FORCE CMRCF (Executive Order No. 193 Series of 2013)

TASK FORCE CMRCF (Executive Order No. 193 Series of 2013)

TASK FORCE CMRCF (Executive Order No. 193 Series of 2013)