FLOW letter to City Council

First Labor Organization of the Cagayan de Oro City Water District
Corrales Avenue, Cagayan de Oro City

Certificate of Registration No. 1369 dated April 20,2004
Certificate of Accreditation No. 637 dated June 12,2007

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February 1, 2010


HON. VICENTE Y. EMANO
Vice Mayor
City of Cagayan de Oro
Thru : Mr. Ian Mark Q. Nacaya
Chairman
Committee on Public Utilities
Office of the City Council


Sir :

Once again, the Cagayan de Oro City Water District is besieged with commotion and chaos. Our office had been and has continued to be the arena of controversy and disarray brought about by the actions of our very own Board of Directors.

Allow us to present before your committee the latest issues in the Cagayan de Oro City Water District (COWD) to date.

 COWD Board Resolution No. 096 dated October 21, 2009 requesting for an Interim General Manager from the Local Water Utilities Administration

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F.L.O.W. strongly opposed to this resolution.

We had communicated with the Local Water Utilities Administration (LWUA) on the matter last October 23, 2009 citing impropriety of such act. COWD Board Resolution No. 096 merely cited “ that the Acting General Manager is in a very difficult situation when asked if he is comfortable working with the Board of Directors and that has difficulty in complying orders.

We believed that the grounds and basis for such resolution was not meritorious enough and should have been investigated first by LWUA before sending an Interim General Manager. LWUA’s very own guidelines, Resolution No. 104 , series of 1995 under Paragraph 2 of said resolution , titled Assessment Requirement for Any Intervention , states

“ Before any intervention can occur, the Administration (LWUA) shall first conduct an assessment or audit of the water district (WD) to determine precisely the existence and cause of the problem or deficiency. Thereafter, a full report will be submitted to the WD concerned giving it an appropriate time frame to solve the problem or correct the deficiency. Failure on the part of the WD to make or meet all of its commitments may result in the immediate intervention by LWUA. “

This guideline was not followed when the sixth member to the COWD Board of Directors (BOD), Engr. Emmanuel B. Malicdem, came in. And in the case of the Interim General Manager (IGM) to COWD, this procedure was ignored and its installation was even expeditious. Records showed that the COWD Board Resolution No. 096, series of 2009,requesting for an IGM, was signed October 21, 2009 and thereafter, Engr. Proceso B. Pag-ong, Jr. reported to COWD on November 4, 2009. There was no assessment done prior to the entry of Engr. Pag-ong since it was barely or less than fifteen (15) working days after said request have been issued.

Again records will show that two (2) days after the COWD Board passed Resolution No. 096, F.L.O.W. communicated with LWUA citing concerns and opposition to such resolution. This could have been taken as grounds by their office to conduct assessment and thorough investigation on the matter prior to the appointment of an IGM. Furthermore, if there was an assessment made, COWD should have been given the appropriate time to resolve it on their own as stipulated on their very own guidelines.

What was really the basis that would give LWUA the merits to send for an IGM? COWD Board Resolution No. 096 is ambiguous and discriminating. Is it not proper enough to investigate first what COWD Board orders the Acting GM not comfortable with? Again, meritorious or not, the LWUA guideline should have been followed to assess first the situation, establish what specific orders not being complied with and account management’s position. But to no avail, none of these procedures were applied.

The same LWUA guideline has emphasized that in all cases of intervention, there should have been a clear defining of the intervening problem or deficiency in a particular district of which the Interim General Manager should focused on before and during his temporary stay on the district.

Paragraph 7 of the LWUA Resolution states that;

“ All recommendations for interventions shall be accompanied with a Plan of Action containing information as follows;

a. Reasons, namely, situations, issues and problems that justify the intervention;
b. Courses of action to be taken with time frame to address the reasons for the intervention; and
c. Conditions and performance indicators to be satisfied for the lifting of the intervention.

Again, the F.L.O.W. and the employees felt deceived by this contravention. These requirements were not followed. With a sixth member from LWUA already sitting in the COWD Board of Directors, we expected that this protocol should have and must have been strictly adhered to protect the district’s rights and maintain check & balance. The courses of action and the time frame of said intervention were not presented as if Engr. Proceso B. Pag-ong, Jr. can stay as general manager as long as the COWD Board desires and as if LWUA wanted to permanently install him as one.

The real intervening problem in COWD is not simply that the Acting GM is not comfortable working with the Board of Directors. The core of the conflict is the following;

 Discrepancies of the Bulk Water Supply Project (BWSP) Contract provisions.

The COWD Board had pushed for amendments and revisions instead of reformation. The Office of the Government Corporate Council’s opinion was for reformation of the contract to the model agreement. This was deviated when IGM Pag-ong submitted amendments of the BWSP Contract. Instead of reverting back to its model contract provisions, the amendments are still favorable to Rio Verde. Subsequently, LWUA had approved said request last December 21,2009 without even considering the factual findings of COA’s Fraud Audit Report.

F.L.O.W.’s Position :

We strongly oppose the Interim General Manager’s actions and LWUA’s approval on the matter. We are consistent of our position that the COWD BWSP Contract be reverted back to its model agreement provisions.

 Memorandum of Agreement of the Indahag Project

The COWD Board and the Office of the Mayor is forging a Memorandum of Agreement for the Indahag Project which will involve purchase of bulk water of 10,000 cu.m./day from Rio Verde Water Consortium. The COWD Management deemed it disadvantageous to the district citing legal and financial reasons. We are currently investigating if indeed IGM Engr. Pag-ong has already signed said MOA. The COWD Board has been silent and discrete on this matter and kept on snubbing the union’s inquiry.

F.L.O.W.’s Position :

Entering into another agreement with Rio Verde is an act of conceding with the BWSP Contract disputes and would only jeopardize our claims.

We now have all the reasons to believe that the entry of the Interim General Manager to COWD was so designed via request by the COWD Board to consummate and carry out these anomalous transactions. The COWD Board wanted a general manager who can and will manage the district via their instructions without confrontation and undermining the observations and findings of graft per special report submitted by the Commission on Audit.
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To the honorable body of the City Council of Cagayan de Oro, the whole COWD mess is not new to you. F.L.O.W. was in one of your committee hearings when the COWD Board at that time issued the very irresponsible Board Resolution 246 – to waive the district’s rights in favor of Rio Verde Consortium to serve the areas of Indahag among others. That was not only reckless but a clear violation of PD 198 or the Water District Law. We were grateful for the members then of the Committee on Public Utilities in aiding for the repeal of said resolution.

And now it’s dejavu. The same majority of the COWD Board members are now pushing for that Indahag MOA without even considering management’s position, take ample time to review their policies, refer to the factual contents and veracity of the latest COA Special Fraud Audit Report while examining their very own conscience.

The COA Fraud Report has enumerated the series of events that started from the Bulk Water Supply Project. It probed the anomalies and irregularities of the COWD Board of Directors’ actions, to list;

 Bidding for the contract of Bulk Water Supply Project (BWSP) was persistently awarded by the Board of Directors to Rio Verde Water Consortium, Inc. ( RVWCI), a non- responsive bidder, despite the recommendation of the Bids and Awards Committee (BAC) for failure of bidding, in violation of RA 9184.

 The contract for BWSP was crafted and awarded apparently for the benefit and undue advantage of the contractor, the RVWCI. The provisions substantially deviated from the model contract and turned onerous in favor of RVWCI.

1. The Approved BWSP Agreement/Contract was substantially different from the Model Contract which was part of the bidding documents. Revisions made were all in favor of the Contractor, RVWCI.
2. The COWD Board of Directors appeared to have amended the contract to accommodate the proposal of the contractor, RVWCI, enlarging the scope of area from the original take-off point of the initial delivery from Lumbia Airport to another location. This could possibly increase the service area of the Contractor in the near future.
3. Parametric formula for Bulk Water Supply Project (BWSP) was revised as embodied in Board of Directors Resolution No. 010, s-05, to accommodate the proposal of the contractor at the disadvantage of public consumers, which could be as much as Php 1.46 per cu.m. of water.

 Fraud was committed in the execution of the Bulk Water Supply Contract as opined by the Government Corporate Counsel after its review.

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As employees and government workers of a very vital utility which is water service, we have that mandate stipulated under our F.L.O.W.’s constitution and by-laws , that is to protect the integrity of public service and to serve as watchdogs against graft and corruption for a better, wider and upscale drive of good governance.

We are looking forward that a special committee hearing be created to address this case and establish if there is graft and corruption we can charge against past and present COWD Board of Directors.

Hence, we find it very necessary to have this investigated in the City Council in aid of legislation for F.L.O.W.’s future legal pursuit. We are to file the appropriate legal means against COWD Board of Directors responsible for this mess.


In unity we stand for the good of public service delivery.




Very respectfully yours,


The F.L.O.W. Executive Board


REONIL JOSEPH J. LINAAC ANTONIO B. YOUNG
Secretary General President

MENELEO Q. SIAO, Jr. DORIS B. GENTILES
Vice-President Secretary

CRIS JAY A. RICACHO MA. IONE R. VERDAD
Treasurer Assistant Treasurer

JOFRAN P. DOROMAL ANNIE C. LABITAD
Public Relations Officer Auditor





Cc : Office of the Government Corporate Counsel
Local Water Utilities Administration