By MARK FRANCISCO
AMID a threat of disconnection looming in the city from its major water supplier, representatives of Cagayan de Oro Bulk Water, Inc. (COBI) and its sole client, the government-run utility Cagayan de Oro Water District (COWD), said their entities will inherit huge losses if each backs away from its respective position.
COBI lawyer Roberto Rodrigo said in a March 5 statement and during a City Council hearing two days later that if they won’t implement the increase every three years, it will “create challenges for COBI and its ability to fulfill its financial obligations to banks and suppliers.”
“These automatic adjustments simply account for inflation and movements in the cost of goods and materials,” Rodrigo pointed out.
The contract signed in 2018 for COBI to be the bulk water supplier of COWD provides increases in water rates from P16.60 per cubic meter to P20.57 by January 2021; and P24.19 by January 2024.
But the contract also included a force majeure clause which in Philippine law under Article 1174 of the New Civil Code is vague enough already: “extraordinary events that could not be foreseen or which though foreseen were inevitable.”
It was this clause that COWD general manager Antonio Young invoked at the height of the pandemic and thus disregarded the increases.
Young added that since COWD cited the force majeure clause, the Commission on Audit (COA) will disallow anyway if COWD’s payments are beyond what is stipulated in the contract.
As far as COWD is concerned, the utility had no debt before COBI because it had been paying its dues periodically.
But Rodrigo offered a different view and the debt had ballooned to P426 million to the present, putting into account the difference between P16.60 and P20.57 per cubic meter in a 37-month period.
“COBI emphasizes the importance of COWD’s adherence to its contractual obligation. COWD has consistently remitted payments based on outdated rates which will have an adverse impact on COBI’s financial standing,” Rodrigo continued.
But Young said in his own testimony before the councilors that COWD had already lost P32 million during the Covid-19 crisis, thus invoking the force majeure clause.
The utility is also in a quandary since councilors and even the mayor himself Rolando Uy refused to endorse COWD’s own water rate increases to consumers supposedly to mitigate COBI’s demands.
COWD’s proposal was for a P13.10 rate increase divided in three tranches.
The City Council’s recommendation is the first step for a provincial water utility to secure approval for water rates increase from the Local Water Utilities Administration (LWUA).
During the March 7 hearing of the City Council which convened itself as an ad hoc committee, Rodrigo said they are willing to listen to COWD’s force majeure claim if they could show proof.
“We have already been incurring losses since 2021. What proof do they still want?” Young shot back.
