Cagayan de Oro water firm gets 18 more days to settle debt dispute with supplier

CAGAYAN DE ORO, Philippines – The Cagayan de Oro Water District (COWD) has been granted an 18-day extension by its primary water supplier, Cagayan de Oro Bulk Water Incorporated (COBI), to settle a disputed debt exceeding P400 million.

The notice of disconnection extension, or until April 30, was granted after the Local Water Utilities Administration (LWUA) facilitated a meeting between COWD and Cagayan de Oro Bulk Water Incorporated (COBI) representatives to resolve the dispute that has posed a threat to the city’s treated water supply.

Previously, the COWD was given until April 12 to pay up. LWUA intervened that day and requested COBI for more time.

COBI, a company controlled by Metro Pacific Water, owned by business magnate Manny V. Pangilinan, has been demanding payment of more than P400 million for the supply of treated water to the COWD since 2021.

The COWD has refused to acknowledge the amount, representing the increase in COBI rates that year, because of a force majeure provision in their contract vis-a-vis the crisis caused by the COVID-19 pandemic during the period.

Water consumers in the city, who were earlier advised by COWD to store water and brace for a COBI disconnection, heaved a sigh of relief after the announcement of the extension.

Engineer Antonio Young, COWD general manager, told Rappler that negotiators need to settle a few matters by April 30, including the identification of the validity period of COWD’s force majeure invocation in 2021 due to the COVID-19 pandemic.

Young said both parties agreed that the pandemic had ended upon lifting the country’s state of public health emergency status in 2023. However, they have yet to decide if the force majeure invocation will also end in the same month and year.

Lawyer Roberto Rodrigo, senior legal counsel for Metro Pacific Water, said the COWD needs to provide an acceptable explanation of how exactly the pandemic affected it to the point that it could not comply with its contractual obligations.

“We sold them the water. They took the water. They sold it to the people, and they were able to collect it from the people. So, it doesn’t make sense why we were not paid,” Rodrigo told Rappler on Monday, April 15.

Rodrigo said COBI only granted COWD’s request for collection deferment, asserting that the water district did not invoke the force majeure clause until 2023, two years after COBI implemented the rate increase.

The water district also raised concerns about alleged inaccuracies in the water rate adjustment during the meeting, pointing out discrepancies between its calculation using the parametric formula stated in the contract and COBI’s computation. Young said that the figures did not match.

COBI increased its water rates from P16.60 to P20.57 per cubic meter in 2021, but COWD asserted that it should only be around P18, Young said.

The over P400 million billed by COBI to the water district mostly represents the accumulated difference in price when it implemented a water rate increase, since COWD has only been paying the water supplier P16.60 per cubic meter up to this day.

Nevertheless, both parties agreed to submit their positions during their next meeting to determine the correct price difference.

Young said the water district is also seeking a legal means to incorporate the agreed-upon total debt amount in its book of accounts without disallowing payment by the Commission on Audit (COA).

“Mao lagi na among ingon sa ila nga dili man dili namo gusto ang pag-acknowledge. Ang rason ra gyud kung unsaon lang siya,” Young said.

(We have been telling them that it’s not like we don’t want to acknowledge [the increase]. The only reason is how to do it.)

He said COWD wanted to wait for COA’s review after the agency requested copies of the agreements between COWD and COBI.

However, there were worries that it might take time. Hence, LWUA recommended asking for the opinion of the Office of the Government Corporate Counsel (OGCC), the agency responsible for safeguarding the legal interests of government-owned and controlled operations.

Rodrigo, however, said the COWD can issue a board resolution to acknowledge the debt.

As of Friday, April 12, the water district owed COBI over P479 million based on the latter’s records, which include unpaid monthly billings for February and March 2024. – Rappler.com