Seares: What's next on MCWD chief Jose Daluz's case: Will mayor order the firing or await LWUA or ombudsman action? Law's silent on who fires but specific about removal for cause, with LWUA review and approval.

CEBU. (From left) Cebu City Attorney Jerone Castillo, City Administrator Collin Rosell and Metropolitan Cebu Water District chairman Jose Daluz III. (Cebu City PIO/SunStar File)
CEBU. (From left) Cebu City Attorney Jerone Castillo, City Administrator Collin Rosell and Metropolitan Cebu Water District chairman Jose Daluz III. (Cebu City PIO/SunStar File)

THE SITUATION. Last Friday, June 16, 2023, Cebu City Attorney Jerone Castillo, head of the City Legal Office (CLO), announced at a City Hall press-con that his office has recommended the removal of Jose Daluz III and two other directors from the board of Metropolitan Cebu Water District (MCWD).

Noticeably, there's no finding, or recommendation for further investigation, of possible graft and corrupt practices. Just weed the directors out, seems to be the plain message of the CLO report, calling the need for new policy-makers at MCWD "urgent."

The investigation started with a show-cause order CLO sent on May 22, 2023 to chief Daluz and directors Miguelito Pato and Jodelyn May Seno following a petition of the MCWD Employees Union officers addressed in September 2022 to the Visayas ombudsman.

COVERED BY THE INVESTIGATION. The petitioners/complainants from the Employees Union asked for the removal of the three board members headed by Daluz, alleging, among others:

[] "deteriorating corporate health" of the company;

[] failure to address the water demand of consumers in the service area;

[] increase by 70 percent of water rates starting this year 2023;

[] "irregular" joint venture agreements on Cordova, Marigondon and Canjulao water projects;

[] interfering in the appointment and personnel selection process.

The petition was forwarded by the ombudsman to city mayor "for appropriate action."

Action came in May 2023 following an unsuccessful informal attempt to replace Daluz as chairman by the mayor, who then shifted to the "legal formalities."

A joint reply signed only by Daluz was treated by Castillo as coming only from Daluz. It wasn't known how the investigation was conducted, whether documents were examined, the complainants and other witnesses were questioned and documents examined, or the investigator/s relied only on the 2022 allegations and Daluz's answer.

'INADEQUATE, UNTENABLE' REPLY. Published news reports cited two reasons the CLO recommends the firing of Daluz, Pato and Seno, all appointees of then mayor Edgardo Labella in 2019:

[] Daluz's answer was "not sufficient to answer the allegations"; he was "not able to defend properly" against the union officers' charges; his answer, Castillo said, was "untenable."

[] Removal of the three directors will "discontinue acts constituting evident bad faith, serious misconduct, gross inefficiency, gross incompetence, and gross neglect of duty."

TO WHOM WAS CLO RECOMMENDING? CLO investigators -- assuming it wasn't just Castillo doing it -- provided copies of the investigation report to LWUA, the Visayas ombudsman, the MCWD Employees Union and its executive board, MCWD's general manager, the Government Corporate Counsel, and the City Council.

Castillo didn't say but a copy must have been given to the city mayor who, after all, issued the order to investigate. Mayor Rama probably even received and discussed the findings with Castillo and City Administrator Collin Rosell before the Jerone-and-Collin show was streamed from City Hall. (A curiosity: no reporter asked questions. C.A. Rosell had to ask for the finding himself.)

To whom was the CLO recommendation addressed? To the city mayor, who's expressly authorized under the law, affirmed by a Supreme Court decision, to appoint the directors? Or to LWUA, whose "review and approval" of the dismissal for cause are expressly provided by law?

WHY SEQUENCE IN PROCESS IS CRUCIAL. There's an express provision for determining the authority that hires the directors: it's the city mayor, the bulk of MCWD"s clientele being residents of Cebu City. But there's no express provision that says the city mayor can fire the directors he appointed. Yet a legal principle also says the authority that hires can fire, unless expressly provided otherwise. Based on that, the mayor can order the dismissal of Daluz and his two colleagues in the MCWD board.

Or the mayor may opt to leave it to the LWUA to do its part in the process. By "review" is meant somebody else does the firing -- in this case, the city mayor -- and LWUA goes over the facts and the law of the case and decides to approve or overturn the dismissal.

The problem with the ambiguity on whether LWUA approval is "prior to" the dismissal is that the would-be-sacked directors can choose to latch on to their posts until the LWUA order of termination is issued.

DALUZ, MCWD OPT FOR STATUS QUO. MCWD's statement after the Castillo-Rosell announcement says the CLO action “wouldn't preclude the actions to be taken by LWUA,” at the same time waving the law requiring removal for cause, subject to review and approval by LWUA. That can only mean the water district's managers will wait for the LWUA decision.

Considering the underlying reason for the Local Water Utilities Act -- to prevent or reduce meddling by politicians -- one can see that the law seems to be on the respondent directors' side. Evidence, not just allegations, must support the CLO's recommendation or LWUA is legally bound to throw it out. Given the announced basis for the recommendation, the legal office appears to rely on the weakness of Daluz's reply, not the strength of the charges.

Daluz has kept his stance of holding on and staying put, this time as he awaits the LWUA decision, claiming that the MCWD board and the management are "behind" him. Earlier, the said he'd wait for the board vote to oust him as chairman, which didn't come.

He'd have no reason though to cry "foul" as the mayor and City Hall lawyers are following the law's formalities. They want Daluz's head but on a platter provided by the Local Water Utilities Act.


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