IN a detailed report released Saturday, Fact-Finding team Chair Councilor James Judith disclosed that the agreement between Metro Pacific Water and the local water authority to form Cagayan de Oro Bulk Inc (COBI) contains multiple violations, deeming it flawed.
Judith pointed out that the contract breaches Article 1306 of the Philippine New Civil Code, which requires contract terms to be legal and fair.
The chairperson emphasized the significant flaws in the contract, including automatic rate increases set every three years.
This provision is considered unfair, especially when compared to the Cagayan de Oro Water District (COWD), which does not have the same freedom to adjust prices.
The COWD board’s reluctance stems from their refusal to recognize the P3 per cubic meter water rate increase charged by COBI, citing force majeure due to the COVID-19 pandemic.
Under the current agreement, COBI is authorized to raise the water rate by P3.97 every three years. Currently, COWD pays P16.60 per cubic meter to COBI.
Judith also highlighted a contentious clause in the agreement – the 5%-95% profit-sharing scheme between COWD and Metro Pacific Water, which established COBI.
The split was criticized as defective, with the potential of being detrimental to government interests.
“I may be wrong, or I may not, but there’s a loss of trust and confidence,” Judith expressed, underscoring his reservations about the contract’s terms.
Moreover, Judith pointed out that COBI cannot seek rate adjustments from the National Water Resources Board (NWRB) because Metro Pacific, the parent company, does not have water rights.
This reality casts doubts on the legality of COBI’s rate increases.
Further complicating matters, COBI has been accused of not having its own water rights, facility, or legal basis to operate.
“They do not have water rights,” was a point stressed during the press briefing.
Board member Dr. Gerry Caño of COWD disclosed that the water district has not received any benefits from the supposed 5% share in COBI.
There were no dividends paid out, nor financial statements or dividend declarations provided.
“This is a big deception,” Caño remarked, expressing his frustration.
In response to the collection issues, Caño suggested that the appropriate venue for resolution is the court.
He also mentioned that COBI’s approach has become more ‘mellow’ and ‘diplomatic,’ but still not adequate, especially considering the 12-day extension COBI granted to COWD.
COBI had previously issued a disconnection notice to COWD for unpaid bills totaling P426 million, which COWD contested.
In a move to defuse the tension, COBI agreed to extend the payment deadline following the City Council’s request.
COBI laid out specific conditions to avoid cutting off the water supply, including the full payment of the January 2024 invoice by March 22 and the February invoice by April 1, along with a satisfactory plan to settle all remaining debts by April 5.
If COWD fails to meet these conditions, COBI will take all necessary legal and contractual steps after April 12.
“It’s misdirected or misplaced,” Caño stated, adding “The response regarding the water extension should have been addressed to us, the water district, not to the city council.”
Meanwhile, Vice Chairman Dr. Ronnie of the fact-finding team responded to his usual criticism of former mayor Oscar Moreno in connection with the water deal contract.
Waniwan said he was just presenting situations and events that explain where, when, and who was involved in signing the defective contract.
He stated that under Moreno’s government, the COBI contract was signed, and Waniwan even confirmed during the four-day investigation that the former mayor appointed the majority of the board.
He reiterated that the five-member COWD Board in 2017 included Moreno’s appointees: Chairman Ed Montalban, Hilly Ann Quiaoit, Mateo Delegencia, and Concepcion Quiblat, in contrast to only Soc Anthony Del Rosario.
He was the mayor at that time and he did not even ask the water district itself if the contract was disadvantageous or not, given that water is a basic need for the people.
The councilors then filed a complaint as they saw the contract seemed defective, and the former mayor could have asked the COWD board to provide them with a copy of the contract, but he didn’t do so.
He also mentioned that the city had allocated a P500 million interest-free loan to COWD for pipeline upgrades in 2021, which were not carried out and instead reallocated by the former mayor.
Waniwan remarked that although Moreno claimed he was not directly involved, his tenure as mayor seemed to influence the signing of the contract.
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