CAGAYAN DE ORO, Philippines – Uncertainty hounded Cagayan de Oro’s tap water supply as negotiations between the local water district and its primary source of treated bulk water reached a stalemate.

Engineer Antonio Young, general manager of the Cagayan de Oro Water District (COWD), confirmed that they met online with representatives of the Metro Pacific Water on Thursday, March 21, in the hope of settling a dispute over a debt of over P400 million.

The supplier, Cagayan de Oro Bulk Water Incorporated (COBI), a company controlled by business tycoon Manny V. Pangilinan’s Metro Pacific Investments Corporation, has given COWD notices of disconnection as it demanded payment of the debt which the water district did not acknowledge. COBI extended the deadline from March 31 to April 12.

The COBI notices have caused alarm in the city in that they threaten to cut off about half of the water supply which COWD distributes in the city.

Young said the COWD asked COBI not to discontinue the supply of bulk water and instead go to court for them to determine if the water district really needed to pay the disputed debt.

He pointed out that the COWD is a government-owned and -controlled corporation, subject to state auditing rules and which cannot just decide to release funds for a debt that has not been acknowledged.

The disputed debt represents the accumulated difference of a rate increase from P16.60 per cubic meter to P20.57 which COBI implemented in 2021. Last January, COBI increased the rates again to P24.19 per cubic meter. 

COWD has rejected the price increases as it invoked a force majeure clause in its 2017 contract with COBI, citing the impact of the COVID-19 pandemic. Under the contract, COBI can make rate adjustments every three years from 2017.

“[If] there’s a court order, our office will be compelled to pay. That would be our legal basis,” Young told Rappler. 

He said the COWD releasing payments for the disputed debt would likely lead to notices of disallowances from the Commission on Audit (COA).

COBI warned that unless COWD settled its obligations, it would be forced to resort to “legal and contractual remedies.”

COBI legal counsel Roberto Rodrigo, however, said that a water supply disconnection would be the bulk water supplier’s last resort.

Rodrigo said COBI would not go to court yet and would bring the matter to the Office of the Government Corporate Counsel (OGCC) which approved the 2017 contract, the Local Water Utilities Administration (LWUA), or the COA.

“We are still studying what’s the best angle, and we have to do our research,” Rodrigo said.,

He said COBI was hoping to receive a response from any of the government agencies before the April 12 deadline.

Rodrigo noted that the decision for the COWD not to acknowledge the rate adjustments boiled down to a resolution that was passed by the water district’s board of directors in 2021.

The resolution contains the invocation of the force majeure clause and the decision not to acknowledge the rate adjustment.

Rodrigo maintained that the COWD should start acknowledging the rate adjustments so it could pay up, a matter which Young said was not possible. 

“It’s only possible if there’s a legal basis to acknowledge the debt. The [COWD] board approved the contract of COBI way back through a board resolution. So, in other words, they could also be disapproved now through a board resolution,” Young said.

Young said the COWD also proposed amendments to the 2017 COWD-COBI contract, including the provision that allows the bulk water supplier to make rate adjustments every three years. COBI representatives, however, said they would need to study the provisions that COWD requested to change and their possible impact on their business.

“For us, it’s not a good practice if you keep changing the provisions in the agreement,” Rodrigo said. – Rappler.com