This was the response of the government-owned and -controlled corporation (GOCC) after Cebu City Hall publicized a copy of a document dated Feb. 27, 2023 addressed to MCWD General Manager Edgar Donoso, regarding its request for an opinion and contract review of MCWD’s bulk water supply projects for Cordova, Marigondon and Canjulao in Mactan Island, Cebu.
Graft allegations
City Hall publicized the document through a May 26, 2023 letter Mayor Michael Rama wrote to Philip Camiguing, officer-in-charge of the Office of the Ombudsman-Visayas Public Assistance and Corruption Prevention Bureau, in which the mayor requested the Ombudsman to look into the “serious allegations of graft and corrupt practices mentioned by Government Corporate Counsel, Atty. Rogelio V. Quevedo.”
The dispositive portion of Quevedo’s opinion states that the action of the joint venture selection committee (JVSC) members in recommending the projects’ approval is “highly irregular and grossly inexcusable, tantamount to bad faith.”
Quevado said the same of the actions of the MCWD Board in “peremptorily approving the conduct of proceedings pursuant to the 2013 Revised Neda (National Economic and Development Authority) JV Guidelines and the awarding of the JVA to the respective proponents of these projects.”
Quevedo indicated that such actions of MCWD and the JVSC members constitute a violation of Republic Act 3019 or the Anti-Graft and Corrupt Practices Act.
Considering these premises, the draft Bulk Water Supply JVAs for MCWD’s Cordova, Marigondon and Canjulao projects were “not given due course, and hence disapproved in its entirety,” Quevedo wrote in the document.
No response
Pia Mae Barnido, JVSC member and acting assistant general manager for finance, said the adverse opinion has prompted the committee to conduct a thorough internal review of the draft JVAs of the projects, while closely coordinating with the OGCC.
In a press conference on Friday, June 9, 2023, Barnido said that in April 2023, they submitted to the OGCC a letter seeking a reevaluation of the three JVA projects on Mactan Island, hoping that the OGCC would specifically point out the issues and concerns for each project, so they could be guided on how to rectify any legal and procedural shortcomings.
However, as of Friday, the MCWD had not yet received any response from the OGCC with regard to its appeal for reevaluation.
JVSC member John DX Lapid said the OGCC is mandated to respond within 20 days and that if it fails to comply with this, MCWD could make an appeal to the Department of Justice since the OGCC is under this department.
Barnido also said the OGCC’s opinion did not point out the issues and concerns for each project, but was applied generally for the three projects.
Barnido added that the pending issues would cause delays in the implementation of the projects, but nevertheless they are committed to completing the necessary legal requirements as soon as possible to safeguard the interest of MCWD and the public it serves as it aims to provide adequate and safe potable water to the people of Metro Cebu in its franchise area.
For MCWD, the desalination projects are significant and crucial in providing adequate water supply in Cordova, Marigondon and Canjulao, especially in response to the impending El Niño phenomenon.
Partnership
The MCWD has partnered with various private firms for its projects on Mactan Island.
In Cordova, the MCWD is partnering with Vivant Hydrocore. Its partner in Marigondon is Filinvest Development Corp.-Philippines, while in Canjulao, it is Pilipinas Water Resources Inc.
Barnido said they had already issued a notice of award to each project proponent, yet cannot proceed to the signing of the JVAs without the favorable legal opinion of the OGCC, which is one of the requirements of the Neda based on the revised guidelines and procedures for entering into joint venture agreements between government and private entities released in 2013.
Based on the Neda guidelines, the approval of JV proposals shall be in accordance with the following provisions:
Section 7.2 .a .ii states that “projects which involve the formation of a JV company shall be required to secure approval from GCG pursuant to RA 10149, otherwise known as the GOCC Governance Act of 2011.”
GCG refers to the Governance Commission for GOCCs.
Section 7.2 .d further states that “project proposals that shall be submitted to Neda Investment Coordination Committee (ICC) for approval as indicated in this section should include the following: (i) endorsement of the JV proposal by the Head of the Government Entity concerned; (ii) project details; (iii) draft JV agreement; and (iv) other documents and requirements as may be determined by the Neda ICC pursuant to its guidelines. The Government Entity concerned shall furnish the Department of Finance all the documents submitted to the Neda ICC for the approval of a JV proposal.”
Barnido also said the OGCC has interpreted that the projects shall be based on RA 9184, also known as the Government Procurement Reform Act.
She, however, argued that their endeavor is not just a simple purchase of water, but unsolicited proposals coming from the private sector, promising to actualize the projects while on their part they will be the one to set up the receiving pipes, providing a distribution system, which makes it a joint venture activity.
She further argued that some provisions in the Neda guidelines are not applicable to their JV agreements such as having a contract management committee which the OGCC required from them.