Court halts takeover of Cagayan de Oro Water District

A Cagayan de Oro Court has ordered the Local Water Utilities Administration (LWUA) to stop its takeover of the Cagayan de Oro Water District (COWD), the primary water service provider in the city and adjacent municipalities.

In a 36-page decision, the Cagayan De Oro City Regional Trial Court (RTC) Branch 41 ordered the LWUA to cease and desist from further implementing Resolution 34, Series of 2024.

The resolution mandated the full intervention of the LWUA, through the designation and appointment of an Interim Board of Directors and Interim General Manager, in the operations of the COWD.

“In implementing a full intervention in and takeover of COWD’s policy-making functions, administration, operations, and management, LWUA has arrogated unto itself a power already declared by its own counsel, the OGCC, in a previous and similar takeover of a water district, as lacking validity, and with which it is not vested,” the court said.

The RTC also said that the decision does not foreclose the LWUA’s remedy of full intervention in and takeover of the COWD if COWD defaulted on its loan under their financial assistance contract (FAC), and as long as due process is followed.

This stemmed from the special civil action for prohibition filed by members of the COWD Board of Directors against the takeover in May 2024.

In its ruling, the Court stressed that the LWUA may only take over and operate the facilities or properties of a water district under Sections 36 and 61.

Under Section 36, the LWUA may take over a local water district “in the event of the default by the district in the payment of principal or interest on its outstanding bonds or other obligations.”

Meanwhile, Section 61 states, “In the event of a default by the local water district in the payment of principal or interest on its outstanding bonds or other obligations to the administration, the latter may, without necessity of judicial process, takeover and operate the facilities or properties of the district.”

The Court noted that the takeover proceeded despite COWD not having defaulted in its obligation to LWUA.

“There is no dispute that despite COWD not having defaulted in its obligation to LWUA under the FAC, the LWUA BOT on 17 May 2024, adopted Resolution 34, Series of 2024 approving the full intervention of LWUA,” it said.

The court also said that the intervention, which was supposed to last only for six months, had been extended twice for “reasons unknown.”

Aside from this, the court said that Section 66 of PD 198 does not empower LWUA to fully intervene and take over the COWD’s management.

“Section 66 of PD 198 only allows LWUA to revoke a certificate of conformance it has issued to a local water utility when the latter fails to continue conformance with such standards and procedures established,” it said.

“In insisting that its ‘full intervention in COWD is subsumed under its power to cancel COWD’s certificate of conformance,’ LWUA is unduly stretching too wide the implications of a revocation of a certificate of conformance,” it added. —VAL, GMA Integrated News