BY GEROME DALIPE IV
ILOILO City – The Commission on Audit (COA) reported that the municipal government of Lemery, Iloilo failed to impose liquidated damages on a supplier for delayed deliveries of drugs, medicines, and laboratory equipment.
This lapse amounted to P1.101 million in 2023, and COA underscored that the failure to deduct the penalty from the supplier’s payment resulted in delays in providing essential health services.
Additionally, this action violated the 2016 Revised Implementing Rules and Regulations (IRR) of Republic Act No. 9184, which governs government procurement, the auditors noted in their audit reports.
Under Republic Act No. 9184, liquidated damages are incurred when the supplier fails to satisfactorily deliver goods under the contract within the specified delivery schedule.
If this happens, the supplier shall be liable for damages for the delay and shall pay the procuring entity liquidated damages, not by way of penalty, an amount equal to one-tenth of one percent of the cost of the delayed goods scheduled for delivery for every day of delay until such goods are finally delivered and accepted by the procuring entity concerned.
The amount shall be deducted from any money due or which may become due to the supplier, or collected from any securities or warranties posted by the supplier.
Based on the audit of financial transaction documents submitted by the municipality to COA, the auditors said the documents showed that the municipality purchased drugs, medicines, and laboratory equipment for the use of the town’s Rural Health Unit totaling to P1,101,642.72.
The period for delivery of the purchased goods indicated 30 calendar days with a provision for liquidated damages in case of failure to make full delivery within the time specified.
However, the auditors said the delivery receipts showed that several partial deliveries were made, which were already beyond the specified period.
When inquired about it, COA said the municipal accountant explained that the main reason that caused the delay in the full delivery of the purchased drugs and medicines within the time specified in the purchase order was the shortage of supplies due to high demand in consumption.
During the exit conference, the municipal government acknowledged that it is a vital function of the General Services Office to monitor the timeliness of the delivery of the goods and services so that suppliers and contractors will be notified of the delay.
Likewise, the auditors said the municipal accountant should be apprised of the liquidated damages that must be withheld from the payments.
COA also added that the suppliers must be reminded even before the due dates of the delivery to avoid delays and the incurrence of liquidated damages.
“Thus, late delivery of the drugs and medicines and various laboratory equipment resulted in the delayed provision of health services to the constituents of the Municipality, and the non-withholding of liquidated damages from the payment to the suppliers posed a risk of non-recovery thereof,” read the audit report.
The auditors said the non-imposition of liquidated damages on the delayed deliveries of goods does not encourage prompt and timely delivery as it would entail no cost against the supplier and, hence, disadvantageous to the municipality.
The auditors recommended to the municipal mayor to direct the person in charge at the GSO to ensure complete delivery of goods and services procured within the schedule stipulated in the purchase orders or contracts.
The municipal accountant was also asked to strictly impose liquidated damages against payments to suppliers who incurred delays in conformity with the provisions of the contracts, and collect the liquidated damages amounting to P32,566.44 by demanding its payment from the supplier./PN
