EXPLAINER: Mike Rama, Joey Daluz both dismayed by LWUA takeover of MCWD. Mayor's appointees yanked out with Daluz, all other board members. Mess worsens: MCWD workers won't recognize, for now, LWUA authority.

Jose Daluz III interviewed by broadcaster Jason Monteclar.
Jose Daluz III interviewed by broadcaster Jason Monteclar.Photo from Monteclar Facebook page

[1] How would LWUA take 'temporary' non-recognition of its authority by MCWD officials and employees? Can they defy, even 'in the meantime,' LWUA authority?

[2] Daluz himself says he'll abide by LWUA order but manages to have MCWD managerial and employee groups not to obey LWUA's order until Office of Government Corporate Counsel renders a legal opinion on LWUA move. A status quo means Daluz and his two ally directors -- Miguelito Pato and Jodelyn May Seno -- can stay; will they step down?

[3] Rama says the LWUA order is "not what he wanted," which was for LWUA to issue a certificate of no objection to his appointment of Melquiades Feliciano, Aristotle Batuhan and Nelson Yuvallos.

'LWUA MISSED THE POINT.' That appeared as the common reaction of Cebu City Mayor Michael Rama and Jose Daluz III to the March 15, 2024 order of Local Water Utilities Administration (LWUA) installing an interim board of directors at MCWD, the local water district.

To Mayor Rama, his three appointees headed by Mel Feliciano should've been affirmed by LWUA through a certificate-of-no-objection the LGU had requested. They should stay, along with the two remaining directors from the old board -- lawyers Danilo Ortiz and Earl Bunachita -- who have aligned with Rama's appointees and were "expelled" by the Daluz-led board.

To Joey DaluZ, LWUA should've focused on the main issue -- the dispute between him and Mike Rama over the firing of three directors and their replacement.

Interviewed by broadcaster Jason Monteclar Monday, March 18, Daluz blasted "imperial Manila" and the "private interest" of LWUA Chairman Ronnie Ong. The March 15 takeover was pushed by Chairman Ong "and some syndicates in LWUA," said Daluz.

SO, DID THE TAKEOVER HAPPEN? Did the interim board assume control of MCWD last Monday, March 18? The order was received by the general manager's office at 2:06 p.m. Weekend and last Monday, the public was still to know if the interim board of three was installed under the supervision of a fourth person from Manila, one Eileen de la Vega.

People wanted to know less whether MCWD service was affected -- since consumers could easily verify service by turning on their faucet -- than whether the directors flown into Cebu by LWUA were already in place and have started sorting out the mess at the local water district.

DOES MCWD DECIDE WHEN TO OBEY LWUA? 'KINSAY MAGBUOT'? MCWD management must think it calls the shots and it did.

A March 18 letter of GM Edgar Donoso said that pending the reply of Office of the Government Corporate Counsel (OGCC), MCWD management and employees would still recognize the Daluz-led board to "ensure a continuous and unhampered delivery of public service." In a separate message to its consumers, Donoso said operations will "continue as usual, with no disruptions," with no mention that it's withholding recognition of the LWUA authority, referring only to "developments" about the LWUA takeover.

There's only one reason GM Donoso cited: to have "continuity" and avoid "disruption." He didn't say how and why, as the board has nothing to do with MCWD operations, only with policy. In past upheavals at the local water district, Donoso's assurance of continuity was that the board doesn't directly handle any service to consumers. Besides, the interim board's No. 1 marching order is "Operate entire facilities, systems or properties of MCWD in an efficient manner." Does MCWD imply that the water district can be run with no disruption only if Daluz stays and even LWUA cannot do it?

"Status quo at MCWD; Daluz-led board stays," says the news headline, telling the public the MCWD managers and work force will decide ("sila'y magbuot") when or if they follow LWUA board's order.

THE LAW LWUA RELIES ON. GM Donoso, an engineer, must not have read the law on which LWUA based its decision or Daluz was right when he said they weren't given a copy of LWUA board of trustees Resolution #35, series 2023. Daluz told Monteclar the LWUA letter addressed to him as board chairman and GM Donoso didn't attach a copy of Resolution #35.

If it's true that they don't have a copy of the resolution -- although it had been circulating as early as last January -- they can get one from LWUA's Eileen de la Vega, who's supervising the installation of the interim board. On Page 1 of the 15-page document, in the first two "Whereases," the LWUA board of trustees citied the provision on default, thus: LWUA may without necessity of judicial process, take over and operate the entire facilities..." in the event of a default.

It's found in Section 38 of Presidential Decree 198 and repeated in Section 6 (e) of the same law: "In the event of a default by the local water district," LWUA "may, without the necessity of judicial process, take over and operate the facilities of properties of the district" (with the part on no-judicial process-needed printed in bold).

If MCWD personnel question the declaration of "default," the same law also provides that it is committed by the local water district's "failure to perform or in violation of any term, covenant promise or condition of the FAC (financial assistance contract) or any rule, regulation, or standard" promulgated by LWUA. It's not just failure to pay loan installments (MCWD loan of P16.5 million had a balance of P13.80 million as of August 2023). It also covers any breach of promise or rule, which Resolution #35 enumerated including alleged irregularities in contracts and projects and increasing loss of non-revenue water.

[Related: Explainer, March 18, 2024: 'Why LWUA's taking over MCWD:... default on obligations tied to P33M loan-grant, irregularity or inefficiency...']

DALUZ USES THIRD PARTY. What did Daluz mean by he'd abide by the law and accept the LWUA order, but was pleased that MCWD personnel -- from the GM to supervisors group to employees union -- are withholding recognition of LWUA authority to order an immediate takeover?

One news media news headline said, "Daluz to stay." Which might mislead and confuse because when he says -- as he had repeatedly done in various stages of his dispute with the mayor -- that he'll follow LWUA order, that can only mean he'll leave his seat, at least during the six-month period the interim board will run MCWD.

What seems to have developed -- instigated by Daluz or done unilaterally by MCWD officials and workers, is an MCWD mass support for Daluz.

Daluz himself explained to Monteclar he had said again and again about waiting for, and heeding when it comes, LWUA's decision on dismissals and appointments of MCWD directors. He wouldn't be credible to a public that he's courting for highly likely run for mayor in the 2025 elections. As to contesting the order in court, he wouldn't be like Mayor Rama, who, he said, is fighting the Cebu Port Authority, the governor and, of course, Daluz.

He must be using, critics speculate, MCWD personnel groups to help wage his fight to stop or delay the takeover.

CAMPS CHARGE, COUNTER-CHARGE ON INFLUENCING LWUA. In the interview with Monteclar, Daluz blamed the mayor for the LWUA order. "This is the work of Mike," said Daluz, former councilor and the mayor's former ally who was Barug campaign manager in the 2022 election. Daluz alleged that Rama was constantly going to LWUA and Malaca ang: "Sigi'g suroy, begging and destroying me."

Earlier, the Rama camp had raised the question whether Vicente Revil, whom incumbent administrator Salonga succeeded, connived with Daluz. At the time, Resolution #35, passed by the LWUA board on September 28, 2023, was aborted when it was pulled out while being routed for signatures. Daluz and his board are hurt more by the said resolution, as the LWUA takeover was prompted by allegation of irregularities and record of inefficiency, which the board listed in the said document. That Revil was later replaced tended to reinforce the suspicion of something rotting at MCWD, which led to the revival or finally issuing and implementing the resolution.

A source in Rama's camp pointed out to me earlier that Revil acted on his own in deciding on the MCWD situation, not getting the trustees' decision and "going out of his way" to reply to the Cebu City Government with a legal opinion that didn't pass through the LWUA board.

Daluz accuses Rama of lobbying and having on the mayor's side the LWUA chairman, Ronnie Ong. Even as the Rama camp accuses Daluz of securing the favor and services of the then LWUA administrator Revil. Plot and counter-plot?

THE SITUATION, AS WE'RE TOLD. The LWUA interim board was in Cebu to serve the order. Its four hard-copy letter dated March 15, 2024 was marked received on the same day by the MCWD general manager's office. Monday, March 18, the next business day after the weekend, the GM announced that the MCWD work force, including its managers, will not recognize for now ("in the meantime") LWUA's authority to take over, not until after it will get a legal opinion from OGCC.

Daluz -- who was used to saying he wouldn't step down when ordered by Mayor Rama but would do so if ordered by LWUA -- said in the Monteclar interview he'd "abide by" the latest LWUA order. He has not stepped down yet and he's not complaining that the forces at MCWD resisting the order for him.


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