CAGAYAN DE ORO, Philippines – A regional court has ordered the Local Water Utilities Administration (LWUA) to back off and halt its takeover of the Cagayan de Oro Water District (COWD), citing a lack of legal basis.
In a 36-page ruling, Judge Jeoffre Acebido of the Regional Trial Court Branch 41 in Misamis Oriental said LWUA can only intervene if a local water district defaults on a loan specifically owed to the agency, as provided under Sections 36 and 61(e) of the Provincial Water Utilities Act.
COWD entered a financial assistance contract with LWUA in 1996 amounting to more than P520 million for water supply and distribution projects. The court said LWUA failed to prove that COWD defaulted, and instead found that the water district had overpaid on its amortization.
The ruling added that even in cases of default, LWUA must first allow the district to remedy the breach and exhaust all contractual remedies before assuming control.
The Office of the Government Corporate Counsel (OGCC), the legal counsel for state-run corporations, earlier backed the LWUA takeover, citing provisions in the financial assistance contract that supposedly allow the agency to cancel the COWD’s certificate of conformance in “any event of default.”
The OGCC stated that the COWD failed to meet its obligation to conduct periodic water rate reviews.
Acebido rejected the OGCC’s opinion, pointing out that Section 66 of the Provincial Water Utilities Act does not grant LWUA the authority to assume control over a water district. The provision, he said, only allows the agency to revoke the certificate, but not operate the district’s facilities.
“… LWUA is unduly stretching too wide the implications of a revocation of a Certificate of Conformance to include effects and consequences not clearly provided in Section 66 of PD 198, as amended,” read part of the court ruling.
The full takeover was implemented on May 29, 2024, based on a resolution passed by the LWUA Board of Trustees. It has been extended twice already, which has been questioned by the sidelined board members.
The takeover followed a visit by President Ferdinand Marcos Jr. to Cagayan de Oro in 2024, where he instructed LWUA to study a possible intervention after the Cagayan de Oro Bulk Water Incorporated, controlled by tycoon Manny V. Pangilinan, cut the water supply to the district as a result of a debt dispute.
However, the court said the President’s directive should not be interpreted as an order to grant LWUA the “absolute and unbridled power and authority” to immediately take over “without the necessity of judicial process,” or even the basic requirements of due process.
Aside from not receiving the official communication from the LWUA pertaining to the takeover decision, the COWD also did not receive a response when it asked the LWUA to reconsider its decision.
The court granted the petition to enjoin LWUA and its Board of Trustees, including the appointed interim officials, from intervening in the management and policy-making functions of COWD. The petitioners of the case was a group that included then-COWD general manager Antonio Young and represented by lawyer Greg Pallugna.
Fermin Jarales, LWUA-appointed interim general manager of COWD, acknowledged the court decision, but he said it was not yet final and executory. He added that the LWUA and the interim members of the board intend to appeal the court ruling.
Edna Najeal, acting general manager of COWD, told local broadcaster Magnum Radyo that although the court decision was not yet final, the interim officials should leave as the takeover lacked legal basis. She said security personnel had been instructed to deny them entry to the COWD office. – Rappler.com