Pangilinan group: Cagayan de Oro water debt settlement deadline stays

CAGAYAN DE ORO, Philippines – Bulk water supplier Cagayan de Oro Bulk Water Incorporated (COBI) has declined an appeal from the Cagayan de Oro Water District (COWD) to do away with the deadline for a disputed debt settlement as negotiations between the two entities continue.

COBI, the COWD’s primary supplier of treated water, has given the water district only up to April 30 to pay for a disputed debt exceeding P400 million or face the prospect of losing its bulk water supply. 

COBI, a company controlled by business tycoon Manny V. Pangilinan’s Metro Water Pacific, accounts for nearly half of Cagayan de Oro’s water supply.

Lawyer Roberto Rodrigo, senior legal counsel for Metro Pacific Water, said COBI cannot carry the burden since it’s the obligation of COWD to pay its primary supplier.

“Tuloy yung deadline na April 30 (The April 30 deadline stays). We have no choice,” Rodrigo said.

The dispute between COBI and COWD has become more complicated. Apart from acknowledging a debt, they are now facing another problem involving alleged discrepancies in the water rate adjustment formula.

Both parties met on April 18 to discuss the unresolved matters. In that meeting, they each presented their interpretations based on the parametric formula stated in their contract to determine the exact water rate adjustment. However, their computations didn’t match.

In 2021, COBI implemented a water rate adjustment from P16.60 to P20.57 per cubic meter. However, during an April 12 meeting, COWD asserted that it should only be over P18. The contention between both parties boiled down to the 12% value-added tax (VAT).

Engineer Antonio Young, COWD’s general manager, told Rappler on Wednesday, April 24, that there was already VAT included in the base rate of P16.60. Therefore, the supplier shouldn’t add VAT to the adjustment implemented in 2021.

Rodrigo, however, asserted that there was no VAT component in the base rate of P16.60, explaining that COBI had been absorbing the VAT and remitting it to the Bureau of Internal Revenue (BIR). He clarified that the VAT was charged to COWD based on an agreement.

The COWD general manager said they were considering seeking an independent party to interpret the parametric formula with COBI’s approval.

Meanwhile, Rodrigo said he needs to bring the proposal to management. But he pointed out the potential consequences for previous billings and VAT remittances if the formula is reinterpreted.

As of April 12, the water district, based on COBI’s claims, owed the bulk water supplier over P479 million, mostly representing the accumulated price difference since COWD has been paying P16.60 up to this day. The amount also includes unpaid monthly billings for February and March this year.

Young said they proposed to temporarily set aside the discussion about the disputed debt incurred from 2021 for a few months of 2024 since they have yet to find a legal basis to acknowledge the debt.

The government-run water district refused to acknowledge the adjustment implemented by COBI due to the force majeure clause invoked in their contract because of the COVID-19 pandemic crisis.

However, Young said they were now planning to adjust the rate for the succeeding months, but Rodrigo pointed out that the agreed interpretation of the increase has not yet been resolved.

COWD was given until April 30 to settle the disputed debt after the previous April 12 notice of disconnection deadline was extended. During their recent meeting, Rodrigo said COBI did not agree to a proposed extension as the water district “has not offered anything new.” However, he reiterated that stopping the water supply to COWD would be their last resort.

The water district received a communication from the local government of Cagayan de Oro on April 18, stating that the possible problem in the water supply amid the issue has been mitigated because various water providers in the city have committed to help in case COBI decides to halt its supply. 

It was a sigh of relief for the water utility, but it would still explore other means to settle the dispute with COBI. –Rappler.com