How the fate of COWD was derailed by its own Boardof Directors

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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We, the members of the First Labor Organization of the Cagayan de Oro City Water District (FLOW) and employees of the same office would like to present before the public the transformation of controversies, issues and problems that we have been experiencing, and, if to remain unresolved would greatly affect us employees, the water district and most importantly all water concessionaires of Cagayan de Oro City.


THE NEED FOR AN EMPLOYEES’ ORGANIZATION

Today, in the Cagayan de Oro City Water District, a board resolution seems to be the ultimate and absolute source of power & authority in the legislation and management of the district.

It is so unlimited that numerous self-serving board resolutions have been created by and for the welfare of the COWD Board of Directors (BOD) like the availing of the CAR LOAN & the questionable GRATUITY PAY to just name a few.

Even the authority of the general manager to appoint personnel of the district was strongly influenced by the COWD BOD paving the employment of their own children in the office. Since the birth of the so-called board that “ barks and bites “, micromanaging the district has been a common practice by the board of directors of COWD.

This ugly transformation has prompted employees of COWD in 2004, to organize and form a public sector union in accordance with the rules and regulations of Department of Labor & Employment (DOLE) and the Civil Service Commission (CSC).



ALLEGATIONS ON OVER-PRICING, VIOLATIONS OF GOVERNMENT PROCUREMENT ACT AND ANTI-GRAFT & CORRUPTION PRACTICES ACT

Anomalous transactions specifically on the procurement of water meters was so rampant with only board resolutions as the basis for awarding said requirements. The prices of which were so high, and to our surprise, always been awarded to a specific supplier.

In 2005, there were irregular procurements pushed by the COWD BOD via board resolutions. The overpricing of one (1) Welding Machine ( BOD Res. No. 233, s-05 dated October 17, 2005 ) & one (1) Compressor ( BOD Res. No. 257, s-05 dated November 11, 2005 ) were blatant abuse of authority, if not graft, by the policy makers of the district. We openly and officially addressed these irregularities but to no avail, the board simply snubbed the issue and disregard our claims compelling FL.OW to wear black T-shirts for the first time as a sign of our protest.

All of these alleged anomalies were brought to the attention of the Commission on Audit (COA) as well as the Ombudsman. Unfortunately, development of the requested investigation seemed snail-paced and has been long overdue that some of those involved got out of the hook already.

THE BULK WATER SUPPLY PROJECT ( BWSP )

In 2004, the Cagayan de Oro City Water District (COWD), through its management and board of directors, welcomed a new technology in the water industry by entering into a BULK WATER SUPPLY PROJECT (BWSP), a buy water contract for COWD from a surface water treatment plant of a private company.

In 2005, to prepare for the BWSP, a receiving pipeline system was necessary for COWD to connect to the Take-off Point (TOP). This preparatory project was inserted to the then ongoing COWD Phase III Main Service Area (MSA) Loan Availment as SUPPLEMENTAL PROJECT.

Treating this project as supplemental to the MSA -III Project posed some questions on its legality and most importantly on the project cost. Supplemental as it is, there must be no excessive price increase in cost of same materials used, e.g. the steel pipes. What happened was an astonishing threefold increase or more in pipelines cost. Agency Estimate by COWD of Php 151,436,867.12 was overruled by the contractor’s claim for a project cost of Php 193,641,463.93. Through negotiated contract, the project was awarded to GEO-Transport Construction Incorporated (GTCI) per BOD Res. No. 262, s-05 dated November 21, 2005.


Board of Directors responsible were the following;

Raymundo J. Java - Chairman
Sandy R. Bass, Sr., - Vice-Chairman
Joel A. Baldelovar - Secretary
Bibiana C. Sarmiento - Treasurer
Federico M. Gapuz - Asst. Sec./ Treas.

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The irregularities continued when the contractor, GTCI had requested for a price escalation on project materials which were enormous and questionable. It was not only disadvantageous to the district but FLOW deemed it as an act of graft on the part of the COWD BOD by facilitating such through Board Resolution No. 014, s-07 dated January 16, 2007. Instead of management’s strong recommendation to settle it at Php 5,511,589.82, the board was unanimous in approving to pay Php 21,837,065.94 to GTCI.


Board of Directors responsible were the following;

Raymundo J. Java - Chairman
Joel A. Baldelovar - Vice-Chairman
Sandy R. Bass, Sr., - Secretary
Bibiana C. Sarmiento - Treasurer
Soc Anthony del Rosario - Asst. Sec./ Treas.

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AWARDING OF THE BWSP CONTRACT TO RIO VERDE WATER CONSORTIUM, INC. (RVWCI) WAS QUESTIONABLE. According to the Fraud Audit Report later transmitted by the Commission on Audit (COA) to COWD, the bidding for the contract of Bulk Water Supply Project (BWSP) was persistently awarded by the Board of Directors to RVWCI, a non- responsive bidder, despite the recommendation of the Bids and Awards Committee (BAC) for failure of bidding, in violation of RA 9184.





















Signing of the Bulk Water Supply Project Contract

The BWSP Contract was signed by COWD & RVWCI and conformed by LWUA on December 23,2004 in a very suspicious and expeditious manner.

The BWSP is a mega-project for COWD and RVWCI and the provisions of the contract were very sensitive to both parties. Surprisingly, why is it that the chairman and vice-chairman of COWD Board at that time, Mr. Francisco G. Mendez and Atty. Frederico M. Gapuz, respectively, not around during the signing of this monumental project? We had legitimate doubts that something’s not in order during the contract signing which took place in a nick of time. Only Directors Java and Bass were present and signed as witnesses who later made their position letter, dated November 19, 2007, addressed to the Office of the Government Corporate Counsel (OGCC) manifesting irregularities of said proceedings.

Dr. Raymundo J. Java, Secretary of the Board of Directors at that time, in the August 20,2007 dialogue with FLOW, admitted that they were tricked into signing the contract. And that lately it was found out that there were discrepancies on major provisions of the signed contract compared to the model contract.

The Change/ Revision of the BWSP Parametric Formula

By virtue of COWD BOD Res. No. 010, s-05 dated January 14, 2005, the parametric formula which will serve as the basis for RVWCI’s Water Rates Adjustment was prematurely and irresponsibly adopted.

Despite Assistant General Manager Bienvenido V. Batar’s presentation to the COWD BOD of the proposed parametric formula by RVWCI as disadvantageous to COWD and the consuming public, the Board of Directors adopted a constant Base Power Rate of Php 2.68/Kw-h instead of using what will be the actual power rate in 2007.

Change in Location of the Take-Off-Point ( TOP )

Under the bid documents of the Bulk Water Supply Project, the location of the TOP is at the vicinity of Lumbia Airport. Said location was the reference point considered by all parties who joined the bidding.

Without stating a clear rationale, COWD Board Resolution No. 171, S-05 dated August 12,2005 was issued changing the location of the TOP. There is scant information in the resolution that would determine the importance of changing its location. Instead, the resolution simply stated that the change in location was simply requested by RVWCI, originally @ the Lumbia Airport with an elevation of 194 meters to a new location with a much lower elevation at 150.2 meters, a significant difference of 43.8 meters.

Again, with this reckless COWD Board resolution, RVWCI has emerged the lone recipient by saving approximately 3 km. of pipeline system.

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January of 2007, the Bulk Water Supply by Rio Verde Water Consortium Incorporated (RVWCI) commenced its operations via the revised location of the Take-Off Point @ the Taguanao-Lumbia Junction supplying COWD’s West Service Area.

The deliberate change in the design of the location of the TOP (the metering point of the bulk water supply) was pointed out by COWD Management to be disadvantageous to the district’s future operations. To no avail, the COWD Board of Directors ignored such valid position by management. With the plan’s revision, RVWCI saved a lot in pipeline construction while it left COWD the technical burden of supplying the elevated portions leading to Lumbia area.


Discrepancies of the 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 the Interim General Manager from the Local Water Utilities Administration (LWUA) submitted amendments of the BWSP Contract. Instead of reverting back to its model contract provisions, the amendments are still onerous and favorable to RVWCI. 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 that very sensitive matter. We are consistent of our position that the COWD BWSP Contract be reverted back to its model agreement provisions.

Memorandum of Agreement for Additional Bulk Water Supply

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 RVWCI. The COWD Management deemed it disadvantageous to the district citing legal and financial reasons. The Interim General Manager has claimed that there is no MOA signed but the City Mayor had already conducted its ground-breaking ceremonies of the 800 cubic meter Indahag Reservoir.

F.L.O.W.’s Position :

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


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

F.L.O.W. strongly opposed 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. “

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, FL.OW communicated with LWUA citing concerns and opposition to such resolution. This could have been taken as grounds by their office to conduct thorough assessment and impartial investigation on the matter prior to the appointment. If there was an assessment made, COWD should have been given the appropriate time to resolve by itself as stipulated on their 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.

LWUA has violated its own guidelines and deprived COWD the fair and just treatment that the district deserves.





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.

The FL.OW 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.

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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 the BWSP controversy and carry out actions not favorable to the district but to RVWCI. The COWD Board wanted a general manager who can and will manage the district via their instructions without confrontation and even undermining the observations and findings of graft per special report submitted by the Commission on Audit.




WE URGED THE PUBLIC TO INVESTIGATE AND ASSESS HOW THE FATE OF THE CAGAYAN DE ORO CITY WATER DISTRICT WAS DERAILED BY ITS OWN BOARD OF DIRECTORS
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From the inception of the Bulk Water Supply Project up to the present, the actions of the COWD Board of Directors and the recently installed Interim General Manager seemed to be a mere continuation of the entire COWD controversy, if not anomaly, which were noticeably manifested by their board resolutions.

In chronological order, THE FOLLOWING COWD BOARD RESOLUTIONS APPEARED TO HAVE BEEN IRRESPONSIBLY ISSUED AS APPARENT OBEDIENCE TO THE CAPRICES OF A BULK WATER SUPPLIER ( Rio Verde Water Consortium, Inc. ), to list;


 BOD Res. No. 222, s-04 dated December 09, 2004

Despite the recommendations of the BWSP Technical Committee declaring RVWCI as a non-responsive bidder, the COWD Board insisted to award the same.

Board of Directors responsible were the following;

Francisco G. Mendez - Chairman
Federico M. Gapuz - Vice-Chairman
Raymundo J. Java - Secretary
Sarah P. Borja - Treasurer
Sandy R. Bass, Sr. - Asst. Sec./ Treas.


 Signing of BWSP Agreement on December 23, 2004

The contract signing was tricky and expeditious. It was later found out that there were inserted provisions that deviated from the model agreement in favor of Rio Verde. Very unusual and suspicious, Chairman Mendez and Vice-Chair Gapuz were not present during that monumental signing. Only Java and Bass were present during the contract signing as witnesses who later made their position letter, dated November 19, 2007, addressed to the Office of the Government Corporate Counsel manifesting irregularities of said proceedings.


 BOD Res. No. 010, s-05 dated January 14, 2005

Despite AGM Batar’s presentation to the board of the proposed parametric formula by Rio Verde as disadvantageous to COWD and the consuming public, the Board of Directors adopted a constant Base Power Rate of Php 2.68/Kw-h instead of using what will be the actual power rate in 2007.

Board of Directors responsible were the following;

Raymundo J. Java - Chairman
Sandy R. Bass, Sr., - Vice-Chairman
Joel A. Baldelovar - Secretary
Bibiana C. Sarmiento - Treasurer



 BOD Res. No. 171, s-05 dated August 12, 2005

Upon request by Rio Verde, the COWD Board of Directors issued a resolution to change/transfer the location of the Take-off Point from Lumbia Airport to a much lower elevation, a clear advantage to RVWCI. They instructed COWD’s technical staff to adjust the plans and specifications undermining the technical odds it may result to the district’s future operation.

Board of Directors responsible were the following;

Raymundo J. Java - Chairman
Sandy R. Bass, Sr., - Vice-Chairman
Joel A. Baldelovar - Secretary
Bibiana C. Sarmiento - Treasurer
Federico M. Gapuz - Asst. Sec./ Treas.



 BOD Res. No. 246, s-07 dated August 15, 2007

COWD Board of Directors irresponsibly issued a resolution upon request by the City Mayor Jaraula to waive the rights of the district in favor of RVWCI to supply the areas of Indahag and Lumbia among others. As opined by the Office of the Government Corporate Counsel, such policy fell short of establishing consistency with PD 198 or otherwise known as the Water District Law. Brought to the City Council hearings under the Committee on Public Utilities, the COWD Board was persuaded if not compelled to have said resolution repealed.

Board of Directors responsible were the following;

Raymundo J. Java - Chairman
Joel A. Baldelovar - Vice-Chairman
Sandy R. Bass, Sr., - Secretary
Bibiana C. Sarmiento - Treasurer
Soc Anthony del Rosario - Asst. Sec./ Treas

 BOD Res. No. 096, s-09 dated October 21, 2009

The COWD Board of Directors requested from LWUA to assign an Interim General Manager pending selection and appointment of a general manager. The basis for such act was questionable and LWUA’s very own guidelines for intervention were not followed accordingly. The resolution discriminately stated that Acting GM Batar is not comfortable working with and has difficulty in complying orders from the Board of Directors. The big question is what are these orders, where are these directed to and who’s the recipient? It seemed clear that the protocol for intervention were violated by the COWD Board of Directors and LWUA itself.

Board of Directors responsible were the following;

Joel A. Baldelovar - Chairman
Soc Anthony del Rosario - Vice-Chairman
Sandy R. Bass, Sr., - Secretary
Bibiana C. Sarmiento - Treasurer
Ruben A. Vegafria - Asst. Sec./ Treas
Emmanuel B. Malicdem - LWUA 6th Member

The effect of BOD Res. No. 096 were the expeditious actions by the INTERIM GENERAL MANAGER.

November 04, 2009 , an Interim General Manager from LWUA was installed in the person of Engr. Proceso B. Pag-ong, Jr. His immediate actions were surprisingly fast and expeditious especially on the issue of the Bulk Water Supply Contract/Agreement, hereto listed;

November 16, 2009 , IGM Pag-ong requested from LWUA approval of the proposed amendments without considering the factual observations of the COA Fraud Audit Report dated November 09, 2009. He could have applied the brakes upon knowledge of said report but instead insisted to push on with the amendments. In the City Council hearing, he falsely declared that it was Engr. Batar who sought conformity from LWUA on these amendments and that he has no hand at all on the matter.

December 21, 2009, LWUA Acting Administrator Daniel I. Landingin approved the proposed amendments, in response to IGM Pag-ong’s request, without putting into consideration, again, the findings of the Commission on Audit Report relative to the Bulk Water Supply Contract/ Agreement issue.

January 12, 2010 , IGM Pag-ong communicated with RVWCI regarding the approved amendments stating “ we can now take the appropriate steps to formalize the agreements…. “.

THIS WOULD SEEM TO BE THE ULTIMATE MISSION OF IGM PAG-ONG, that is , TO CONSUMMATE AND CONCEAL THE VERY ANOMALOUS IF NOT FRAUDAULENT BWSP CONTRACT/AGREEMENT OF COWD AND RVWCI.
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As a matter of great concern and discerning duty as government employees and public servants, FLOW believed that it is our obligation to know, investigate and perform actions in bringing about the principle of transparency and accountability in the government service. ( Section 7 of Article II of F.L.O.W.’s Constitution & By-Laws )

Please support us in our quest for truth and genuine public service delivery.