By BenCyrus G. Ellorin/ July 6, 2024

CAGAYAN DE ORO CITY — Parties to the internal dispute in the Cagayan de Oro Water District (COWD) look up to the court to settle whether the takeover by the Local Water Utilities Administration (LWUA) is legal.

The citizen’s group Banay Tubig Movement however argues that the LWUA and the interim management are duty-bound to follow the legal opinion of the Justice Department.

Internal General Manager Fermin Jarales is not worried about the opinion from the Justice Department saying that under Presidential Decree 198, the LWUA can only take over the water district if it has defaulted financial obligations to the water regulator.

“DOJ opinions much like OGCC opinions are ‘directory’ and almost always sought to guide the party seeking the same. Purposely, opinions are susceptible to differing interpretations and only have ‘persuasive’ and not ‘binding’ effect,” Jarales said of the seven-page Dept. of Justice (DOJ) opinion dated June 18, 2024, signed by USec. Raul T. Vasquez.

On the other hand, Antonio Young, the general manager ordered replaced by Jarales when LWUA took over management of the beleaguered COWD last May 29, 2024, said the DOJ opinion is a big boost to the case asking the court to prohibit the LWUA from taking over. “We will submit the DOJ opinion to the court hearing the case we filed for Prohibition with a prayer of issuance of Status Quo Ante order,” Young told CurrentPH.

COURT TO RULE ON TAKEOVER

The interim general manager is convinced the court will rule in their favor as it even dismissed the petition of Young and his group for the issuance of the Status Quo Ante order.

“As far as we know, the RTC Branch 38 already issued an order denying Mr. Young’s and the set-aside Board’s Petition for Prohibition with prayer for Status Quo Ante Order. We stand by our mandate that LWUA’s takeover is legal under PD 198. At the end of the day, DOJ opinions take a backseat to court rulings. in this case, the Court had already made a preliminary determination that LWUA’s take over is valid and under law,” Jarales told CurrentPH.

On July 13, 2024, Judge Emmanuel P. Pasal, presiding judge of branch 38 of the RTC of Misamis Oriental refused to issue a Status Quo Ante Order, saying only the Supreme Court can issue such an order. He however construed it as an application for Temporary Restraining Order (TRO). But the judge further denied issuing the TRO because of the petitioner’s “failure to show grave and irreparable injury” because of the LWUA takeover.

“Depriving them their rights to exercise their duties will not result in injury absent allegations that their usual compensation was also withheld,” the three-page Order penned by Pasal said.

Judge Pasal however reserved ruling on whether the takeover of LWUA is legal.

“Whether the LWUA has the power under PD 198 to take over the operations of the COWD is a matter that could be properly resolved after trial,” he added.

PRESIDENT’S ORDER

The citizen’s group Bantay Tubig Movement said the proper thing to do for LWUA is to follow the opinion of the DOJ.

LWUA’s takeover came after President Bongbong Marcos ordered the agency to study the possibility of taking over the management of the COWD to ensure that the right of Kagayanons to water is protected.

“LWUA asking the DOJ for its legal opinion was the right thing to do as the order of the President was “pag-aralan ang posibleng pamamahala” of the COWD,” said Bantay Tubig Movement co-convenor and barangay Gusa captain Marlo Tabac.

CurrentPh transcribed the portion of the President’s speech where he ordered LWUA to look into the water issue when he visited Cagayan de Oro on May 16:

“Akin ding inatasan ang LWUA na pag-aralan ang posibleng pamamahala nito sa COWD upang sa lalong madaling panahon mapag-aralan ang solusyon sa situation sa supply ng tubig sa inyong lugar. Hindi lang sa supply nga tubig pati na ang pagtukoy ng angkop na water rate at pagtupad sa mga obligasyon nito sa mga consumer at mga supplier. Hindi natin hahayaan na mapagkaitan ang mga taga Cagayan de Oro ng kanilang karapatan na magkaruon ng sapat, malinis, ligtas na supply ng tubig.”

The refusal of the interim management installed by LWUA to follow the opinion of the DOJ is tantamount to disobeying the president’s orders,” Tabac said.

“Wala man nag-order ang presidenti nga mag take-over ang LWUA sa COWD, gi-ingnan sila nga tun-an. Og sa ilang pagtuon mikonsulta sila sa DOJ, ang eksperto sa balaud sa executive branch, (The president did not order LWUA to takeover the COWD. They were told to study. And in the course of their study, they consulted the DOJ, the expert on law in the executive branch)” Tabac explained, saying further that it is but legal and logical for LWUA, which is part of the executive to follow the directive of the DOJ. “We only have one government and one set of laws,” he added.

The DOJ issued the opinion upon request by LWUA Administrator Jose Moises Salonga. The LWUA administrator sought the opinion and guidance from the Justice Department on the directive of President Ferdinand Marcos Jr. for the water regulator to study the possible management of the Cagayan de Oro Water District and to solve the current water supply issue in Cagayan de Oro City, and to ascertain the proper water rate for COWD to ensure that it will be able to fulfill its obligations to its consumers and bulk water suppliers.

The DOJ opinion said that under sections 36 and 61 of PD 198, “it is clear that LWUA may only take over and operate the entire facilities, systems or properties of the district when the following elements are present: (a) the local water district is in default; (b) the default is in the payment of principal or interest on its outstanding bonds or other obligations; and (c) the outstanding bonds or other obligations of the local water district are incurred to LWUA. For grounds other than that pertaining to default in payment of a loan, LWUA may NOT (emphasis supplied) intervene in the affairs of the concerned water district.”

REFORM THE CONTRACT

The barangay captain added that LWUA should focus on addressing the water problem that stemmed from the 2017 contract between the Cagayan de Oro Bulkwater Inc. and the COWD.

Problems at the COWD stemmed from a collection by COBI of the alleged debt amounting to P479 million. This is the accumulated differential of bulk water rate adjustments in 2021 and January 2024. The 2017 contract between COWD and COBI stipulated automatic bulk water increases every three years.

“Balik ta sa basic issue, ang 2017 kontrata sa COWD ug COBI nga dunay automatic increase in the bulk water rates every three years, (Let’s go back to the basic issue which is the 2017 contract between COWD and COBI that has contained a provision of automatic escalation of bulk water rates every three years,)” Tabac said.

The COWD under Young refused to acknowledge the collection of COBI, a subsidiary of Metro Pacific Waters, Inc., by invoking the force majeure provision of their 2017 contract. The COVID-19 pandemic prohibited them from increasing water rates. The COWD however continues to pay COBI based on the 2017 rate of P16.60 per cubic meter.

“Ang gusto sa katawhan sa Cagayan de Oro mao pag-amend o reform sa 2017 contract nga nakit-an sa pagtuon sa city government nga onerous, (What the people of Cagayan de Oro are demanding is the amendment or reformation of the 2017 contract which was found to contain onerous provisions in a legal study done by the city government,)” added Tabac, whose group gathered over 17,000 signatures demanding revisions in the contract to rid it of onerous provisions.

When the contract between COWD and COBI took effect, the price per cubic meter of water was P16.60. Based on the automatic escalation of prices every three years in the contract, COBI raised the rates to P20.57 in 2021 and P24 starting January 1, 2024.

COBI, a subsidiary of Metro Pacific Waters, Inc. gave the COWD a deadline to pay the alleged debt on April 30, 2024. When the COWD failed, COBI ordered its main supplier of treated water Rio Verde Water Consortium Inc. to cut off the bulkwater supply on May 1.

This prompted Cagayan de Oro Mayor Klarex Uy to declare the city under a state of emergency and ask the COWD to resort to emergency purchases from other bulk water suppliers should COBI cut off the water supply. COBI finally cut off the water supply around noon on May 14, 2024. But the Court issued a 72-hour temporary restraining order. It was extended to another 17 days, with the Court ruling that the right of the people to water should not be sacrificed because of a contractual conflict between two parties.

On June 3, 2024, the court issued a Writ of Preliminary Injunction, enjoining COBI and Rio Verde from cutting off water supply to COWD. The court ruled that while COBI manifested it would no longer resort to cutting off water supply to COWD, the said manifestation was contingent on future negotiations, and thus the threat of water disconnection “hangs like a sword of Damocles” over the heads of water consumers.

The COWD has contracted COBI to supply 40% of its water needs or 80,000 to 100,000 cubic meters of treated water daily. COBI however does not have its own water production and treatment facilities. It buys treated water from Rio Verde. Critics say this has relegated COBI to a water trader.

The COWD, the first water district in the country created un PR 198 in 1973 has been beset by problems like its extremely high water wastage or non-water revenue of around 50%.