High court orders MCWD to pay P12.1 million to bulk supplier

THE Supreme Court (SC) ordered the Metropolitan Cebu Water District (MCWD) to pay at least P12.1 million to a water  supplier over unpaid price adjustments of its services.

In a decision penned by Associate Justice Jose Mendoza, the High Court affirmed the appellate court’s ruling on the formula for the computation of the Capital Cost Recovery Adjustment sought by Mactan Rock Industries Inc. (MRII).

MCWD  will file a motion for reconsideration on the High Court’s decision.

Charmaine Rodriguez, MCWD Public Affairs Department manager, said yesterday that  they  are waiting for a copy of the decision before making further comment.

“Our lawyer said we still have to clarify which issue the decision is referring to,” said Rodriguez.

She said  the matter between the MCWD and Mactan Rock involved several issues.

The SC decision  stemmed from a May 19, 1997 water supply contract entered into by the MCWD and MRII.

The MRII agreed to supply MCWD with potable water in accordance with the World Health Organization (WHO) standard or the Philippine national standard, with a minimum guaranteed annual volume.

In 2004, MRII filed a complaint against MCWD before the Construction Industry Arbitration Commission (CIAC), citing the arbitration clause of the contract.

MRII sought the reformation of a portion of the contract, or the price escalation in order to include Capital Cost Recovery in the price escalation formula, and to have such revised formula applied from 1996 when the bidding was conducted, instead of from the first day when MRII started selling water to MCWD.

It requested for the payment of the unpaid price escalation/adjustment, and the payment of unpaid variation/extra work order and interest/cost of money up to Dec. 31, 2003.

The High Court ordered MCWD to pay MRII P12,126,296.70 plus legal interest of six percent per annum from March 15, 2004, the date of filing of the case with the Construction Industry Arbitration Commission, and 12 percent per annum from the date this Decision becomes final and executory, until the foregoing amounts shall have been fully paid.

The SC said the price escalation shall be reckoned from January 1999 when the water was first delivered by MRII to the MCWD facilities in Mactan./With a report from Correspondent Jessa Marie Agua