contents

1 Vision / Mission 12 MCWD GMs and Board 2 MCWD Core Values Chairpersons: their contributions 3 Message of the Chairman of and wishes for MCWD the Board 14 40th Anniversary Party 4 Message of the General 18 A Quick Glance at 40 Years Ago Manager 22 Table of Organization 5 Cover Story 23 Operational Highlights 2015 6 2015 Highlights 25 Reaching Out to more Consumers 11 Four Decades of Growth 26 Financial Report 28 Financial Statement

ABOUT THE COVER

The cover shows MCWD’s 40th Anniversary logo with the slogan “A New Life Beings,” in red and black signifying the water district’s celebration of its ruby year. The series of photos symbolizes MCWD’s growth in the last four decades and significant strides it has made in all aspects in the water industry. vision

MCWD envisions itself to be a progressive and economically viable utility firm that provides adequate, safe, potable and affordable water and an effective sewerage system for Metro Cebu.

Mission

We are committed to undertake continuing exploration and development activities, aimed at the preservation and sustainability of our water resources. We must always adhere to sound practices in preserving our natural environment.

Our capability to provide proper services must continuously improve by designing and managing the growth of infrastructure in an innovative, timely, safe and cost-effective manner and conforming to internationally-accepted standards.

We shall operate and maintain our facilities in an optimal manner, making total quality an integral part of our performance.

It is then indispensable to nurture a highly-motivated workforce, with a strong spirit of collaboration, deeply committed to professionalism, and firmly focused on productivity.

The work force shall be upheld and inspired by a competent management team dedicated to the common good of MCWD.

All these tasks must be accompanied by sound and prudent financial management with the overriding goal of providing better services to the people of Metro Cebu.

annual report 2015 | 1 Core Values

To attain our vision through the fulfillment of our mission, we must establish a corporate culture deeply characterized by our core values. Everything that we do in the office and in the field on a day- to-day basis must be imbued by the force of these core values:

SPIRIT OF SERVICE PROFESSIONALISM

Anchored in the belief that our major reward in work Based on a belief that our God-given talents must be consists in making people happy because we serve them well. made to grow and be constantly improved so that we may be of Let us be accessible to all our customers and serve them better service to people. with sincere and honest attention. It is our personal responsibility to build our own Our spirit of service must go beyond responding to the competence by working hard and demanding a lot from customers’ complaints by providing them with prompt service ourselves, seeking to upgrade our skills and learn from our and accurate information. mistakes. Let us create and maintain a culture where respect for MORAL INTEGRITY work standards is paramount and where we help one another in striving for excellence. Built on the reality that human dignity and happiness are essentially linked to the practice of moral values in the workplace and elsewhere. FOCUS ON PERFORMANCE Genuine selflessness will be our prime motive for doing our work. This means that we principally desire to be of valuable Linked to our ideal that it is through excellence in our service to people, and not to do our work simply because of performance that we best serve people. what we can get in return. We must find pride and meaning in our own work, Avoid all use of influence and connections to get undue principally because we have worked productively, constantly favors for oneself or for others, and refuse to influence one conscious of the standards we have set for ourselves. another negatively. Let us instill a sense of urgency in all that we do. We will Let us encourage a lifestyle that is truly respectful of a fight against all forms of procrastination. This will require that person’s dignity. we take timely and adequate initiative in all our efforts. Reject all use of MCWD resources and time for our own Conscious of the need for goal setting at all levels of the personal convenience and financial benefit. organization, we need to be forward-looking and review our goals often.

LOYALTY TO OUR INSTITUTION STABILITY IN UNITY

Rooted in the intrinsic values of our corporation worthy of our love and pride. Founded in the knowledge that our organization will be Let us align our personal goals with the corporate goals firm and strong, anchored in the spirit of solidarity by which we of MCWD. It would be a disservice for any employee of MCWD all strive to contribute to the good of all. to use undue influence which is in conflict with the corporate The strength of an organization is found principally in goals. the united power of people. We will foster an atmosphere of Deep concern about the image of MCWD must genuine trust and confidence in one another based on building characterize our behavior at all times. We must strive to competence and instilling integrity within the organization. contribute to the good image of MCWD by doing our work Open and honest communication shall likewise be encouraged. selflessly with competence and integrity. A sense of fairness and justice would guide all our actions Loyalty to our institution leads us to be mutually and thoughts. This requires a firm respect for the rights of supportive of all employees and departments of MCWD with no everyone without exception. We must avoid all forms for envy exception whatsoever. and greed.

2 | annual report 2015 Message from the chairman of the board

First of all, I would like to congratulate the Metropolitan Cebu Water District (MCWD), the management and its employees on its 40th year of public service.

Generally, 2015 was a good year for MCWD not because it celebrated another milestone but corporate performance-wise, 2015 was much better compared to the previous year. We were able to increase the volume of water production, the number of new water service connections and water sales and lowered the non-revenue water (NRW) to 23.33 percent from last year’s 23.36 percent.

MCWD started the year right with the initial delivery of the bulk water supply of 18,000 cubic meters per day from the Cebu Manila Water Development Inc. (CMWD). The volume will increase to 35,000 cubic meters per day the following year up to 19 years. With this development, we were able to serve some of the thirsty areas within our service area. Punta Engaño in Lapu-Lapu City for example, started to enjoy a 24/7 water supply. In the north Metro Cebu, like Compostela, applications for new water service connections were being accepted after it was considered a “suspended area” over a period of time due to the lack of water supply while some areas are now enjoying a stable supply of water.

Mandated to provide safe, potable and affordable water to the people of Metro Cebu, MCWD firmly stands by its commitment. It entered into a contract with different bulk water suppliers in order to cope with the increasing demand for water. The recent agreement that MCWD has signed was with the Danao City Government for a bulk water supply with an initial delivery of 10,000 cubic meters of water per day starting January 1, 2018. The volume will increase to 20,000 cubic meters per day for a duration of 20 years.

For now, we are only serving 42 percent of the demand of the total service area. We are aiming a 100-percent service coverage so that every one will have access to potable water, for water is a human right.

We have more expansion projects that are ready for implementation. These include the € 7 million-worth expansion project funded by the Dutch Government through Fonds Duurzaam Water intended for the very poor families in Metro Cebu. There are about 15,000 households who are the target beneficiaries of this project. However, the problem on right- of-way acquisition and the securing of excavation permits from the Department of Public Works and Highways hindered us from implementing these projects on time. We take these as challenges so we need to double our efforts.

On the other hand, MCWD has just acquired a state-of-the-art equipment worth P3.8 million that will give real time information on supply and distribution. The Supervisory Control and Data Acquisition (SCADA) equipment, received through a grant from the Japan International Cooperation Agency (JICA), is vital to the operations of the water district as it will help improve its corporate efficiency. This will be operational by the second quarter of 2016.

Soon, MCWD’s Septage Management Program will be implemented when the Septage Treatment Plant will be ready. This is also a part of the water district’s mandate to have an effective sewerage system in Metro Cebu and in compliance with the Clean Water Act of 2004.

Again, congratulations to all of us. I hope that this year’s performance will motivate us more to do better in the fulfilment of our mandate. With God’s help and with the warm support and cooperation of all the local governments, partners and stakeholders, MCWD will be able to rise above all the challenges and live up to the expectations of the public.

RENATO E. MERCADO

annual report 2015 | 3 Message from the General Manager

I am not sure if it was luck or as fate would have it, the seat of the highest position in the water district fell on my hands during one of the most challenging times for MCWD. The challenge was not due to financial reasons because the water district is still very much viable as a water utility, but more of the internal and external forces at work at the time of my appointment. In 2015, MCWD encountered the severe effects of the El Niño phenomenon. Water levels dropped at an accelerated rate during the summer months. The production of Jaclupan wells, which would normally yield an abundant supply of some 33,000 to 35,000 cubic meters per day, dropped to an all-time low of 8,000 cubic meters per day. Other wells were not spared and even the water district’s private partners’ supply also was affected. On top of this, many of MCWD’s key posts were vacated as executive officers opted to retire from government service. It was not easy, but as the saying goes, “when the going gets rough, the tough gets going.” During the last quarter of 2015, we set out to prepare for the extended El Niño phenomenon. When the water levels normalized, we reduced the production of some wells to recharge our water sources and intensified our redundancy program. For instance, instead of extracting about 33,000 cubic meters per day from our Jaclupan wells, we lowered it to 25,000 to 27,000 cubic meters per day to minimize the impact of the dry spell when the summer of 2016 sets in. We also worked steadily on our hydraulics analysis program to improve our pressure management and contribute to a much better distribution system and also to lower Non-Revenue Water (NRW). We managed to curb NRW losses which resulted to savings for the water district and an additional water supply for our consumers. We ended the year with an NRW of 23.33% which is lower by .03 percentile points compared to 23.36% in 2014. We also set out to prepare for the implementation of the pro-poor supply program to bring water to areas not yet reached by MCWD through our partner, Vitens Evides International (VEI), which is a corporate social responsibility firm of two of the biggest water companies in Netherlands. I first met with the representative of VEI when I accompanied them to visit Tacloban City in the aftermath of Super Typhoon Yolanda. It was during this time that the talks of a pro-poor water project started. After that initial contact with VEI, our partnership will translate to water access to about 15,000 households, the target number of beneficiaries to be fully served once the expansion project will have been implemented in a span of 4 years. To intensify MCWD’s in-house water production efforts, the moratorium on groundwater well digging will be amended to identify and cover specific areas only. Other areas where additional water supply could be sourced could now be considered and drilling may be done once feasibility will be established. As a great year-ender, we were able to successfully work hand in hand with the local government unit of Lapu-Lapu for the passage of an ordinance to make desludging mandatory in their city. MCWD has more hurdles to overcome as we strive to reach our goals as an organization. Our quest to bring water to more people may have had stumbling blocks, such as the lack of water sources and difficulty in securing excavation permits, among others. But as we set our course in the direction of our targets, I urge all my fellow public servants in MCWD to work even harder. If we have made ourselves and the Cebuanos proud for the last 40 years, there can be no reason that we can not continue to do so in the next 40 years and more. Let us move forward with a much better focus in our direction to quench the thirst of Metro Cebu.

ENGR. NOEL R. DALENA

4 | annual report 2015 Cover Story

A new life begins the cost of power and fuel—two of the biggest expenses of the water district to be able to produce water. Why is the number 40 considered important, one may ask. MCWD spends an estimated P23 to produce a cubic meter of water but consumers pay a subsidized rate since Forty has always been associated with the height or the water tariff is aimed at making water services not only acme of a man’s life and thus, has been given significance affordable but to encourage the wise water use among big especially in the Bible, according to jewishencyclopedia. consumers. com. Love It’s when life begins as the cliché goes. The celebration of the fortieth year is associated with the gemstone ruby, a It is with the spirit of love that MCWD is doing all of red-colored precious mineral popularly symbolizing blood, these. In the same spirit, the water district started initiatives fire and love. to benefit its customers, like addressing their specific needs by listening to them and checking As Metropolitan Cebu Water their facilities, improving the water District (MCWD) celebrates its 40th bill to make it more helpful for them anniversary, it brought new life to and more importantly, in addressing communities and businesses with an environmental protection through the additional 18,000 cubic meters of bulk septage management program. water supply per day, specifically for consumers in northern Metro Cebu and “The Municipality of Cordova is Lapu-Lapu City. a trailblazer after it passed the first--in the entire Metro Cebu--an ordinance It also signed a contract for more on septage management. The program supply in the coming years, started work could spell a lot of difference in the for a new reservoir, commissioned a well, lives of its residents as environmental laid out new pipelines and launched sanitation will greatly improve along a five-year project to provide safe, with water quality,” said Acting General affordable and potable water to 80,000 Manager Noel Dalena. poor families in Metro Cebu. Aside from water safety, Lifeblood environmental protection is among the core values of MCWD to secure the future With more water supply coming in of Metro Cebu in terms of water supply. for Metro Cebu’s growing population and booming economy, MCWD needed to implement expansion It intensified this year its efforts on reforestation and and new projects to bring its water services directly to the tree growing and in desilting the Jaclupan Facility in Talisay taps of customers. City to cushion the effects of climate change.

Since projects mean capital, MCWD, after operating In caring for nature, MCWD shared its expertise with prudently and with financial efficiency used its revenues, a water company in Bangladesh on non-revenue water and implemented its new water rates as its lifeblood to fund more is fast-tracking the operation of its Supervisory Control and projects and improve the supply of existing consumers. Data Acquisition equipment from Japan for an efficient distribution system to bring down water loss and preserve The new water rates meant a minimal increase of this precious resource. P1.60 per cubic meter for the first 10 cubic meters of water consumed and still remains to be one of the lowest water For some, 40 years might be a turning point. For tariffs in the country. others, a symbol of a new life.

It was in July 2006 yet when MCWD increased its But for a public water utility, days, months and years water rates. From P13.60 per cubic meter of water, it became are meant only for dedicated service. And every challenge, P15.20 per cubic meter despite the numerous increases in change and milestone is worth celebrating for.

annual report 2015 | 5 2015 Highlights

New water rates National Annual Convention of the Philippine Association of Water MCWD implemented the new water rates starting January 1, Districts (PAWD) on February 3 to 5 at the Waterfront Cebu City Hotel 2015. From a minimum charge of P136 for the first 10 cubic meters, and Casino. it has slightly gone up by 12-percent at P152 for the first 10 cubic MCWD Assistant General Manager for Finance Myra Ravelo said meters. the amount of hard work that went into the preparation for the said event had been tremendous but it was all worth it. Additional bulk water supply PAWD Secretary and Cabanatuan City Water District GM Mario The year started off with an additional 18,000 cubic meters per Villasan commented during the opening ceremony that MCWD just day of bulk water supply from the Cebu Manila Water Development raised the standard in the hosting of the annual event. Corp. (CMWD). Some 1,402 delegates (representing 14 regions) registered for This brought MCWD’s water supply to 221,334 cubic meters per the convention. In his report, GM Villasan said that almost 19 million day in January 2015 from 202,681 cubic meters in December 2014. people are served by the more than 500 water districts all over the With this development, MCWD saw the importance of hastening country. its marketing efforts and the implementation of expansion projects. With the theme “Acting Now Towards the Future of Local Water The additional supply allowed the water district to deliver more Districts,” the gathering gave emphasis to the crucial role of local water to consumers in Lapu-Lapu City. water districts in making sure that Filipinos in the countryside have access to safe water supply and sanitation facilities. Ravelo said the success of the event was due to the heart of the volunteers. She added that it was the first time that MCWD provided shuttle services to all the delegates. MCWD Engineering Department Manager Raul Tabasa took charge of the transportation needs of all delegates while Community Relations Division Manager Edna Inocando led the Reception team at the Mactan-Cebu International Airport. “It was such a fulfilment being a leader to see that your team is doing their tasks with a smile. It is very important for me to see that they enjoyed what they were doing,” Ravelo said.

Marketing AVP MCWD’s Marketing Audio Visual Presentation (AVP) was launched during the water district’s 40th Anniversary program on February 2 to highlight the water district’s growth in the last four decades and its Injection point for Cebu Manila Water Development aspirations in the years to come. HRD Personnel Welfare Division OIC Carla Gonzaga said that the Water for Punta Engaño residents MCWD Execom chose an AVP that would not only speak of the water After more than 10 years of not having affordable and potable district’s 40th anniversary but that it could also be used as a marketing water, residents of Barangay Punta Engaño in Lapu-Lapu City were tool to showcase to its consumers what MCWD has done in the last able to enjoy the services of the Metropolitan Cebu Water District. 40 years. The installation of water service connections in Punta Engaño Community Relations and External Affairs Department Manager was suspended years ago due to the lack of water supply. Residents in Charmaine Rodriguez-Kara wrote the AVP script which was used by the area sourced water from deep and artesian wells or bought water the production team that produced the AVP. from neighbors who have MCWD connections. Facility visit Subdivision’s appreciation On February 13, the Board of Directors, MCWD Executive MegaCrown Realty and Development Corp. president Annie Hsu Committee, department and division managers travelled to the expressed her company’s appreciation to MCWD’s Service Connection Municipality of Carmen to observe and see the facility of CMWD, Installation Department (SCID) team for addressing their subdivision’s which is supplied by the Luyang River and the Mangitngit Spring. water needs. GM Ernie Delco said it was originally only the MCWD Board of In a letter to Acting GM Ernie Delco, Hsu said MegaCrown Directors who planned to do the facility tour. But they decided to looked forward to partnering with MCWD for a better service to the make it a corporate activity instead so more people can see the place community. Their subdivision in Cotcot is estimated to have 1,165 for themselves, he added. units or a potential 900 cubic meters per day supply requirement, said The visit was organized by MCWD’s Corporate Planning Corporate Planning Department OIC John Macabinta. Department. In the partnership, the water district designed the pipeline network of the subdivision. The latter implemented the project and DOH, WHO recognition would eventually turn over the water system to MCWD. The Department of Health (DOH) in cooperation with the World The mainline that MCWD installed supplied water to other users Health Organization recognized water utilities with Water Safety Plans near the subdivision. (WSP) in place. This was in line with the World Water Day celebration on March 22. 36th PAWD Convention MCWD’s Water Safety Plan was one of the few that were The Metropolitan Cebu Water District (MCWD) hosted the 36th

6 | annual report 2015 2015 highlights recognized, according reference. With the old bill, which did not have the payment stub, to Production Division consumers had to surrender their copy to the payment centers. Now, Manager Rebecca with the payment stub, they can retain their copy for their file. Husayan. In fact, MCWD Another feature is a portion where MCWD can put a remark was the only awardee particularly if the consumer’s meter will be replaced. This is not for the Visayas. Other available in the old bill which caused some complaints from awardees were Davao consumers when they notice that their meter serial number has been City Water District, changed after MCWD’s routine meter maintenance. Dasmariñas City Water There is also an advisory for consumers on how or where they District, Maynilad and can generate a copy of their water bill online or to inquire about their Manila Water, among bill through text. others. Another new feature is the list of payment centers which can be Yet, MCWD was found at the back portion of the bill. Delco added that they usually the only water utility get queries from consumers about payment centers. With the new bill asked by DOH to make a format, she hopes that such queries will be lessened. presentation of its WSP during the conference. Husayan said this was Certificate of Recognition to MCWD by the because MCWD is the Department of Health only water utility able to integrate its Emergency Response Plan within its WSP. Husayan made the presentation on March 24 at the Holiday Inn, Clark, Pampanga. She likewise received MCWD’s recognition together with Water Quality Control Division Manager Helen Aragones.

Walk through CPA MCWD Board Chairman Renato Mercado and Director Eugene Elizalde together with the MCWD Executive Committee conducted an ocular tour inside the Cebu Port Authority (CPA) on March 12. Acting GM Ernie Delco said that MCWD wished to supply water to CPA, including the ships and the buildings. Lapu-Lapu City public hearing on ordinance on Septage Management Program MCWD used to have pipelines inside the CPA but these were abandoned in the early 1990s. Septage management program The potential number of commercial consumers in the area is Residents of Lapu-Lapu City and Cordova welcomed the water high, said Delco. This could mean an additional 4,000 cubic meters district’s septage management program. per day requirement. This after a public hearing was held in Barangay San Miguel, According to Delco, CPA General Manager Edmund Tan has Cordova on May 19. agreed to the possibility of connecting CPA to MCWD’s pipeline. The public hearing sought for the approval and support of the However, this is subject to some requirements, such as the payment residents for the desludging fee particularly for the water consumers of royalty fee, among others. of MCWD who reside in Lapu-Lapu City and Cordova. It was also MCWD is already supplying water to a few of the establishments conducted to get the support of the residents of Barangay San Miguel inside the CPA. for the building of a Septage Treatment Plant (STP) in their barangay. Technical personnel from both MCWD and CPA will sit down to Cordova Mayor Adelino Sitoy welcomed and is supporting the thresh out issues relative to this project. program. He said that the STP would be an added tourist attraction in Cordova because of its modern features and facilities. The mayor is Dry spell’s effects also pleased that the municipality will be the first to implement such a The dry spell has greatly affected MCWD’s water supply from its program among the local government units served by MCWD. Jaclupan wells. MCWD consumers will be able to avail of the services for an add- Water production from the Jaclupan wells only reached 14,500 on charge of P2.20 per cubic meter of water consumed or an average cubic meters per day as of April 27 compared to 27,138 cubic meters of P52.80 per month for five years. This will total P3,168 in five years per day in April 2014 with nine operational wells. The dry spell in 2015 which is the ideal period to conduct the desludging. This means that was worse than the previous year. MCWD, through its contractor, will undertake the desludging of a This greatly affected the water supply in Talisay City as well as consumer’s septic tank every five years. central, interior and elevated areas in Cebu City such as in Oprra, For those without MCWD service connections, they have to pay a Capitol Hills and Maracas, Lahug, among others. one-time fee of P3,500 for the disludging services.

Upgraded bill format Kalunasan reservoir MCWD adopted a new format for its new water bill. This sought to To improve its services in the elevated areas, the water district modernize MCWD’s billing format, said Billing Department Manager will put up a reservoir in Barangay Kalunasan. The 1,000-cubic-meter Jennifer L. Delco. The new billing features a payment stub which is storage facility can serve some 1,000 households. similar to that being used by most utilities. One of the requirements for the project is for MCWD to conduct Delco said this feature would allow consumers to hold on to a public hearing in the area. This is a requirement of the Department their copy of the bill and leave only the payment stub portion in the of Environment and Natural Resources since some trees had to be cut payment facilities in case the consumer would make payments in any down during the construction of the reservoir. However, because of of MCWD’s payment centers or partners. MCWD’s reforestation program, DENR gave MCWD a clearance for the Some consumers would like to keep a copy of their bill for cutting of trees.

annual report 2015 | 7 2015 highlights

During the public hearing, some barangay officials were External Affairs Department and the General Services Department concerned that the operation of the well could affect their water facilitated the request. supply, said Principal Engineer Orlando Tinapay of the MCWD Environment and Water Resources Department. Tinapay however New metal detectors assured the residents the extraction of water in Kalunasan is within The General Services Department (GSD) which is in-charge the allowed limits of the National Water Resources Board. MCWD also of security measures for MCWD installed two walk-through metal assured the residents that it continually conducts monitoring of the detectors at the MCWD Main Building. water level and water quality to ensure a proper volume extraction “The installation of two walk-through metal detectors or and sustainability. weapon scanners would enhance our existing security system,” said With the extension of MCWD service in the area, the residents GSD Manager Stephen Yee. One was installed at the entrance of the can look forward to MCWD’s affordable quality water. Most of the consumers’ area and the other one at the employees’ entrance. residents of Kalunasan buy water from private suppliers--one of Security and GSD personnel were trained to maximize the use which is operated by the barangay. of the scanners. Both feature the highest safety standards and are harmless to pregnant women and those with heart pacemakers. They Jaclupan Facility desilting also come with traffic counters that record the number of persons Some 200 employees responded to the invitation of Acting GM that pass through them. It is cost-efficient with only a 20-watt power Ernie Delco to a half-day “Bayanihan alang sa Jaclupan” on May 23. consumption. Its led light will point to any metal object detected on MCWD officials and rank-and-file employees set aside their the person covering 24 zones or from head to foot. time, strength and dedication in desilting the infiltration pond of the Yee added that with the scanners in place, consumers and Jaclupan Infiltration Facility--all for free. employees can feel safer while inside the MCWD building. The volunteers gathered more than 2,000 sacks of silt. Some came as early as 5am and started right away to gather the silt into Danao City bulk supply the sacks. The Metropolitan Cebu Water District (MCWD) embarked on It was just a simple way for the employees to work together another partnership to give the best service to its consumers, this under the spirit of volunteerism. time with the local government of Danao City. MCWD entered into a 20-year agreement with Danao City for a bulk water supply of 10,000 cubic meters of water a day by January 1, 2018. On the third up to the 20th year of the contract, Danao City is obliged to increase the volume to 20,000 cubic meters a day. For the whole duration of the contract, the water rate is fixed at P19.38 per cubic meter. Danao City will be the one to secure all the permits for the project, put up the facility and develop the source--the Tangon River in Barangay Sta. Rosa--as well as lay pipes to bring the water to the injection point in Barangay Jubay, Liloan.

Desilting activity at the Jaclupan Facility

MSTs for 2 barangays To help residents in the mountain barangays of Cambinocot and Bonbon during the dry spell, MCWD installed Mobile Siphon Tanks (MST) in the area. The MST in Barangay Cambinocot is truck-mounted and could produce some seven cubic meters of potable water per hour. The MST is a modern technology to collect water from rivers. The water passes through a process so that it will come out potable and MOA signing for bulk water supply between MCWD and Danao City government officials safe for human consumption. New well The MST in Bonbon could yield 20 cubic meters of clean water per MCWD held a public consultation in Barangay Kalunasan hour. It is a technology shared by the Japan International Cooperation regarding the operation of its new well, Well Oprra1, that Agency (JICA). It was invented by Nihon Genryo Co. Ltd. in Japan and commissioned on March 26. given to JICA for free. The activity was organized upon the request of barangay officials. MCWD, for its part, was grateful for the opportunity to address the Free water questions of the residents and officials of the barangay. As part of its Corporate Social Responsibility, MCWD provided Well Oprra 1 produces 960 cubic meters per day and supplies free water to participants of the one-day launch of Cebu City safe, affordable and potable water to more than 900 consumers from Volunteerism Movement (CC-VoM) at the Cebu City Sports Complex Units 1, 2 and 3 in Oprra, Cebu City. Since the commissioning of the grounds on May 16. said well, water supply in the area has improved from 16 hours to 24 Office of the Mayor focal person Veronica Jimenez requested hours. MCWD’s free water services since they expected some 4,000 volunteers from 80 barangays to join the launching. 600 seedlings Engr. Israel Ortiz of the Service Connection Installation On August 15, some 300 members of the Kapisanan ng mga Department in coordination with the Community Relations and

8 | annual report 2015 2015 highlights

Brodkaster ng Pilipinas (KBP) Cebu trooped to the David Livingstone Monastery property in Jubay, Liloan to conduct its National “Broadcastreeing” activity in coordination with MCWD. The water district gave out 600 seedlings to the group. KBP Cebu President Manny Galicia said the tree planting was a national activity and was their way of showing their concern for the environment. They also invited other groups to join them. Some 20 officers from the Philippine National Police stationed in Liloan and Compostela joined the tree planting along with their partners from the National Nutrition Council. The David Livingstone Monastery committed to look after the MCWD’s new logo 400 mahogany and 200 jackfruit trees planted on their property. MCWD maintains two nurseries and other satellite nurseries to Septage Management ordinance prepare seedlings for tree growing activities. It partners with groups The Lapu-Lapu City Council passed and approved its septage or organizations and encourages their participation in caring for the management ordinance after a public hearing on September 15 at the environment by providing not only the seedlings but planting sites City Hall. The ordinance proposed by Councilor Alexander Gestopa Jr. as well. seeks to implement septage and sewerage management in the city. Engr. Roderico Tagaan, Lapu-Lapu City Environment and Natural 71K seedlings Resources Office (CENRO) head, and officials from different barangays The Environment Division of MCWD’s Environment and Water in the City of Lapu-Lapu and Municipality of Cordova attended the Resources Department produced some 71,000 assorted seedlings public hearing. from January to June this year. These were fruit trees like jackfruit, guyabano, avocado, chicos and mangoes, among others. Bangladesh visit Out of the total production, more than 2,000 seedlings were Acting General Manager Noel Dalena, Assistant General Manager planted within MCWD’s planting areas in Tabunan, Cantipla, Pung- Ma. Rowan Teñedo and Department Manager Ferdinand Nicanor ol Sibugay, Bonbon, Buot, Sinsin in Cebu City and Campos 4, 5, 6, responded to an invitation organized by the Japan International and Talisay Highlands in Talisay City. About 17,547 were given out to Cooperation Agency (JICA) to give NRW training to water workers in institutions and groups which requested for free seedlings during the Bangladesh. period. The Chittagong Water Supply and Sewerage Authority (CWASA) Employees of San Miguel Corporation, ABS-CBN, the Kapisanan asked for the said training through JICA. Chittagong is the second ng mga Brodkaster ng Pilipinas and some schools, among others, largest city in Bangladesh, next to Dhaka. conduct yearly tree growing activities and partner with the water It was the first time that a seminar of such nature was ever district which provides them with seedlings and identifies the planting done for their country and city, said Dalena. There were over 200 sites, said Jaime Cabural of the Environment Division. participants from all the water stakeholders. Government, academe, MCWD grows seedlings to encourage individuals and non-government organizations, people’s organizations and communities to join in the protection of water sources, added Cabural. employees’ unions were all represented. “We want to be ready with the seedlings and even planting sites,” he Dalena made a presentation during the one-day multi- said. He also observed that more and more people are becoming stakeholders’ gathering. The second and third days were spent in the environment-conscious which he says is a very good development. field as the three MCWD executives visited CWASA water facilities. The water district maintains tree nurseries in Jaclupan and CWASA has a non-revenue water of 18% with 50,000 service Talamban. The nursery in Jaclupan aims to produce some 100,000 connections and a daily water production average of 210,000 cubic native species of forest and fruit-bearing trees per year while the one meters for 1.2 million people. inside the D’ Family Park in Talamban produces some 30,000 seedlings per year. Leadership training Aside from these main nurseries, the water district partnered MCWD division managers attended a two-day training on the with 10 barangays in Liloan in maintaining satellite nurseries to Foundations of Supervisory and Managerial Excellence on September produce 10,000 seedlings. MCWD buys the seedling at P5 each but 10-11 at the Big Hotel, North Reclamation Area, Mandaue City. they should pass the quality requirement set by MCWD. In the introductory handbook, the division managers were To set an example for others, MCWD employees have planted exposed to John Maxwell’s words on leadership. In part, it focused seedlings annually for more than 20 years. The tall trees leading to the on the key to becoming an effective leader which is not in focusing Lagtang satellite office in Talisay City and those within the MCWD D’ on making other people follow but on being the kind of person they Family Park are proofs of such endeavours. would want to follow. A leader is someone others can trust to take By the end of June 2015, MCWD’s nurseries had a total of 414,737 them where they want to go. seedlings ready for distribution. Certificate of recognition New logo The Civil Service Commission presented a Certificate of The water district introduced a new logo design which was used Recognition to MCWD during its 115th Anniversary celebration on for the first time in the 2015 MCWD uniforms. September 8 at the Cebu Provincial Capitol Social Hall, Cebu City. The new logo represents water and the environment which The certificate bears the commission’s appreciation for the water are indicated by the colors blue and green. The wave in the design district’s unfaltering support to its programs and projects. signifies water flowing. To note, MCWD promptly responded to requests from the It reflects MCWD’s commitment to care for and protect the commission for support during its various activities, such as use of the environment which directly affect water sources. MCWD vehicles and the participation of the MCWD Chorale, among The design was conceptualized by MCWD’s Corporate Planning others. Department, Human Resources Department and Community Community Relations and External Affairs Department Manager Relations and External Affairs Department and approved by the Charmaine Rodriguez-Kara and Customer Service Representative Executive Committee.

annual report 2015 | 9 2015 highlights

linear meters of 200-millimeter ductile iron pipeline in both Estaca, Compostela and Catarman, Liloan.

Cub1 well As the first of 12 in-house wells developed in the spirit of bayanihan in MCWD, the water district commissioned the Cub1 Well last October. Located in Cubacub, Mandaue City, the well now supplies water to some 1,200 households with its 1,200 cu.m. per day capacity. The well directly feeds MCWD’s mainline in the Mandaue City area and is part of the in-house water sourcing project of the water district prior to the declaration of the moratorium on groundwater extraction. Like the Tomodachi Well which is primarily for the residents of Tomodachi Subdivision in Talamban, Cebu City and MAC12 which is dedicated to Airportville resident in Lapu-Lapu City, water from Cub1 Well will primarily serve those in Cubacub, Mandaue City. Certificate of Recognition to MCWD during the 11s5th Anniversary celebration of the Philippine Civil Service Commission

Emmylou Tagpono received the certificate on behalf of MCWD.

SCADA equipment The installation of MCWD’s Supervisory Control and Data Acquisition (SCADA) equipment started in March 2015. The one billion yen or P3.8-million project was expected to be done in March 2016. SCADA aims to optimize production and distribution of water through a faster response time during well breakdown. It will also enhance the operation of the water district’s water supply management including pressure management, lower maintenance and operation costs through a more efficient use of power. All these will consequently improved non-revenue water. The SCADA project was granted to MCWD through the Japan International Cooperation Agency (JICA). Blessing of MCWD’s Cubcub Well Pro-poor water supply Temporary pipeline It is estimated that some 10,000 poor families in Cebu City will Residents of Modena Subdivision in Basak, Lapu-Lapu City soon have MCWD water service connections and another 5,000 more enjoyed better water supply with the installation of a one-kilometer of the poorest of the poor will enjoy potable water after an expansion temporary pipeline for their subdivision. project to be implemented by MCWD. A permanent distribution pipeline was supposed to be laid The Dutch Government, through Fonds Duurzaam Water, will for the area in 2013 but due to some issues between the private be MCWD’s counterpart in implementing the said expansion project contractor and the Lapu-Lapu City government, the project was not which amounts to 7 million euros. An estimated 15,000 poor families implemented. in the cities of Cebu, Mandaue and Talisay will benefit from the said To address the water needs of the more than 100 residents of project. the subdivision, the water district resorted to the delivery of water MCWD will purchase 27 generator sets, install some 16 kilometers through trucks five to six times a day to fill Modena’s 70 cubic meter- of pipelines and 3.15 kilometers of interconnection lines. capacity cistern and overhead tanks. The additional equipment, like the generator sets, will greatly But MCWD worked on laying a temporary pipeline to lessen the improve MCWD’s capacity to respond during calamities as these will need for water delivery for the subdivision. serve as back-up power when needed. After a series of negotiations with the Cebu Light Industrial Park, The project includes partnership with VitensEvides International where the temporary pipeline would traverse, the water district was (VEI) which is a corporate social responsibility firm of two of the finally able to lay a temporary line for the subdivision. biggest water companies in Netherlands, French company Eau et Vie (Tubig Pag-asa), The Netherlands Red Cross and the City Government of Cebu. Global handwashing day The Dutch Government will give a subsidy of 4 million euros, Thirty gradeschoolers learned more about handwashing and while MCWD set aside 1.2 million euros as counterpart for the project. hygiene when MCWD spent an afternoon with them in celebration of VEI will give 750,000 euros while 20,000 euros will come from Tubig Global Handwashing Day. Pag-asa and 200,000 euros from the Red Cross of Netherlands. Grade 1 and 2 pupils of the First Assembly of God Christian School in Cansojong, Talisay City joined the activity in partnership with the Expansion project Cebu Institute of Technology Industrial Engineering Department. MCWD wants to teach the young generation the importance MCWD began its pipeline expansion project under its Hydraulic of sanitation and the value of water to health and how this limited Area 1 in Estaca, Compostela and Catarman, Liloan, Cebu. resource should be cared for. The transmission pipes were directly connected to the injection Its water conservation efforts encourage the wise use of water points from the Cebu Manila Water Development Inc. pipeline so that water will be distributed to MCWD’s consumers in Compostela and and to conserve during the summer months. Liloan. CIT’s IE students launched their winning Android-run mobile The water district laid 264 linear meters of 250-millimeter- application, Water Warrior, that teaches children to save water by diameter ductile iron pipeline in Estaca, Compostela and some 2,263 storing rainwater and fixing leaking faucets through a game.

10 | annual report 2015 Four decades of growth MCWD’s service connection growth, service area expansion, financial strides

After four decades, MCWD has grown not just in its service survey, purchase of hydrological and meteorological equipment for area and assets but also in its consumer base. monitoring stations and land acquisition for the development of water supply sources. From an initial asset of P25.4 million when the Osmeña Waterworks System turned over its assets to the water district By the late 1970s, MCWD implemented the P112-million in 1974, MCWD is now a P3.6-billion government-owned and Interim Improvements Program, which included the drilling of 23 -controlled corporation. wells; construction of three 5,000 cu.m. reservoirs and chlorination facilities in Consolacion, Talamban and Mananga and the The bulk of MCWD’s financial assets is in its distribution facilities maintenance depot in Talamban (with a material store, a workshop and support investments, such as vehicles, automated systems and and a water laboratory). It was also during this time that MCWD disaster preparedness, among others. made extensive studies on Metro Cebu’s available water sources and trained its personnel on modern water resource management. In 2015, under the Hydraulic Area 1 expansion project, with The main objective then was to improve MCWD’s production to the additional 18,000 cubic meters (cu. m.) of water per day from 70,000 cu.m. per day. the Cebu Manila Water Development Inc. bulk water supply, MCWD will be laying a total of 36,515 linear meters of pipelines. With a loan from the Local Water Utilities Administration and from the Asian Development Bank in 1983, MCWD started “We project an additional 13,200 service connections this the Program I, Early Works and Main Works Development to utilize year,” said Corporate Planning Department’s the remaining groundwater water sources Engr. John Paul Delgado. MCWD’s Marketing of Metro Cebu and to rehabilitate existing Unit projects 208 more commercial facilities. establishments, 22 condominiums and 13,200 residences to connect to MCWD. By the late 1980s to the early 1990s under the Operations and Maintenance “We have made some strides and have Assistance Program, MCWD instituted a gone far from where MCWD was once before,” comprehensive service connection planning said AGM for Administration Ma. Rowan and rehabilitation of some 24,000 service Teñedo. connection lines. During this time, MCWD had close to 50,000 service connections “The 40 years in the service of the within its service area. Cebuanos have been worthwhile but there is so much to be done. We have to aim for From the early to mid 1990s even more or better services because in the search without the funds from the Local Water for excellence, there is no finish line,” Teñedo Utilities Administration, MCWD was able added. to commission seven additional pumping stations in Lahug and Guadalupe in Cebu City When MCWD was created in 1974, and Canduman, Mandaue City. By 1994, the it initially covered only the cities of Cebu, average daily production was 103,311 cu. m. Mandaue and Lapu-Lapu and the municipalities for a total of 53,309 service connections. The of Consolacion, Liloan and Compostela. net revenues from water sales amounted to P313.95 million. According to Billing Division records, it was only in the early 1990s that MCWD started installing service In 1998, MCWD completed the P700-million Mananga Phase connections in Cordova. Talisay City was included as a service area I Project with its 15 wells, 19 pumping stations, diversion weir, sometime in the late 1980s. sedimentation and infiltration facilities. Its 33,000 cu.m. per day additional production benefited about 17,000 more households. From an initial consumer base of about 20,000 service connections, recalled Construction Department Manager The late 1990s also saw the construction of the new MCWD Demosthenes Manlosa, who joined MCWD in 1978, MCWD now has building and by 2002, employees moved in to the new office. The 164,059 service connections. building was built without outside financial aid or through any loan.

The increase is attributable to MCWD’s expansion projects, In 2004 or 12 years ago, the average daily production reached additional water supply and the trust that consumers have on the 149,000 cu.m. to meet the water needs of some 99,347 service quality of the MCWD’s water, Delgado added. connections.

MCWD acquired more assets as early as 1975 when it By the end of 2015, MCWD had an average daily production borrowed P58 million to finance the Early Works which covered of 217,000 cu. m., a Non-Revenue Water of 23.36 percent, a total of the purchase of 24 chlorinators, the repair of water meter and 170,655 service connections and sold some 165,972 cu. m. of water laboratory facilities, implementation of a leak detection and control per day.

annual report 2015 | 11 GMs and Board Chairpersons: Their contributions and wishes for MCWD

The Metropolitan Cebu Water District will not be where it is right now without the able leadership of the men and women who gave their share of the toil, sweat, and maybe tears to propel the water district forward. To honor their legacy and to express our appreciation for their contributions to the water district, we asked some of MCWD’s former leaders to share their thoughts and wishes for their beloved water district as it transcends 40 years of genuine public service.

Alfonso Albaño During her time, MCWD received several awards and recognition Chairman of the Board of Directors, from different award-giving bodies, like the Civil Service Commission, 1989-1998 which recognized MCWD as the Most Outstanding Accredited Agency in Region 7 for three consecutive years. During his term as chairman of the On MCWD’s 40th year, she wished that MCWD will have many Board of Directors of MCWD, Chairman more years to celebrate and will continue the good legacy that they Alfonso Albaño worked closely with General left behind. Manager (GM) Francisco Silva and together they accomplished big projects. Juan Saul F. Montecillo Among their significant Chairman of the Board of Directors, accomplishments were the northern 2005-2016 wellfields or the Liloan and Compostela wells and Cordova’s water supply system and other expansion projects. Chairman Montecillo considered As former chairman of MCWD, Albaño wishes that MCWD will two major contributions to MCWD. The continue to implement more expansion projects and will have more first one being the successful buy-out of water sources so that more people will be served and will enjoy the water district’s loan to the Local Water MCWD’s services. Utilities Administration (LWUA) and having transferred the same to the Development Fr. Francisco Silva Bank of the Philippines (DBP). With the LWUA General Manager, 1990-1994 loan, MCWD paid a 12-14 percent interest compared to only 8.5 percent with the DBP. This resulted to a savings of Fr. Francisco Silva was responsible P600-Million spread over a 25-year payment period. for the planning and implementation of The second contribution he noted was to strongly advocate significant development projects, like the for the tapping of private partners for bulk-water supply contracts. It northern wellfields or the wells in Liloan was during his administration that the focus was on expansion and to and Compostela) and the Mananga Phase I strengthen MCWD’s pipeline distribution. project. He looked forward to the day that MCWD will have been able He also contributed to building a to serve all of Metro Cebu’s water needs. That the water district will be good image for MCWD and for bringing the able to make water available to everybody and by then, MCWD will public’s trust back to the water district. have given life to the United Nations’ declaration of water being a basic It was during his leadership that all employees were united human right. and the barriers between management and the general workforce were overcome. He deeply encouraged teamwork and provided high Engr. Armando Paredes motivation among employees. General Manager, 2003-2013 He was also known for instilling discipline—best demonstrated by employees clearing their lunch tables as they leave---which up to As the longest-serving MCWD general this day is still being practiced and passed on to new employees. manager to date, GM Armando Paredes’ For MCWD’s anniversary, he wished for unity among all contributions to the water district and the employees and more teamwork and hard work for everyone for he water industry as a whole are numerous. considers these as the keys for MCWD to move forward and stay strong. He was able to obtain a Certificate of Approval for MCWD’s Quality Management System for MCWD to become the first water Dulce Abanilla district in the Philippines to be ISO 9001 General Manager, 1994-2003 certified. He also obtained approval for MCWD’s Water Safety Plan from GM Dulce Abanilla, during her stint, the Department of Health and the World Health Organization. implemented the best management practices For customer service, GM Paredes made sure that application more specifically on financial management. requirements for new service connections would be eased up by One proof of this was when she was given allowing the signing of a waiver in the absence of house/lot ownership recognition for her sincere and dedicated papers and lowering the down payment requirement from P3,000 to services and invaluable contribution as P1,500 and the occasional “No Down Payment” promos. president of Visayas Association of Water In terms of financial management, GM Paredes secured the Districts, the umbrella organization of water approval of the Development Bank of the Philippines (DBP) for a P1.25- districts in Regions 6, 7 and 8. billion refinancing loan at 8.5% interest per annum to pay off MCWD’s Known for being frugal, she was instrumental for the construction outstanding loans with the Local Water Utilities Administration, of the MCWD new building without having to get a loan to fund the ranging from 12.5 percent to 14 percent interest. MCWD was able to project. She also saw the implementation of the Cordova Water Supply save approximately P600-million on interest payments because of this System project. initiative.

12 | annual report 2015 It was also under GM Paredes’ leadership when the MCWD The ISO Certification that made MCWD the first water district Annex Building rehabilitation, the new Motorpool and new warehouse to get the ISO was also an achievement of the board under Chairman in Talamban and MCWD’s new laboratory equipped with state-of-the- Almendras. It established processes and operational improvements of art facilities were completed. the company. During his term, MCWD obtained a grant from the Japan He also counts as his achievement the improvement of International Cooperating Agency for the Study on Water Supply and employee morale through better compensation and benefits based on Sanitation Improvement in Metro Cebu and another grant from the productivity. United States Agency for International Development (USAID) for a As MCWD turns 40, Chairman Almendras wishes the water Feasibility Study of Developing Septage Management in Metro Cebu. district’s NRW will be at 10 percent. Through the use of information MCWD also obtained another grant from JICA to conduct a technology, this can be even be brought down to as low as 7 to 8 feasibility study for a Supervisory Control and Data Acquisition (SCADA) percent to help the environment. He also wishes that MCWD would system for MCWD and for its implementation. aspire to be world class in this aspect. He also hopes that MCWD can To improve non-revenue water (NRW), MCWD entered into a source an additional 100,000 cu. m. per day from surface water sources twinning arrangement with the City West Water (CWW) of Melbourne, to preserve the water table of Cebu City. He believes this will be good Australia under the Asian Development Bank’s Water Operators for the future of Metro Cebu and to address saltwater intrusion. Lastly, Partnership Program. In the twinning arrangement, CWW assisted Chairman Almendras hopes the board and management of MCWD will MCWD in its non-revenue water reduction program. be professionalized further. In line with this, he wishes that there will be Another effort to bring down NRW was when MCWD entered a continuing cooperation among the employees’ union, the employees, into a JICA-sponsored partnership with Yokohama Waterworks Bureau the supervisors, the management and the Board of Directors. and Yokohama Water to assist MCWD in its NRW reduction efforts and to improve the operation of the Tisa Filter Plant. MCWD also became a partner of Las Vegas Valley Water District Eligio Pacana under the Water Operators Partnership sponsored by Eco-Asia USAID. Chairman of the Board of Directors, The partnership helped make MCWD’s pumping facilities more energy 2007-2012 efficient. Under GM Paredes’ watch, MCWD was able to reduce its NRW Chairman Eligio Pacana has always from 32% in 2003 to 22% in mid 2014. been proud of what he has done to help GM Paredes was also responsible for the awarding of several Bulk the people of Cebu as chairman of MCWD. Supply Contracts totaling approximately 60,000 cubic meters per day He considers a collective for the following injection or drop off points: Guadalupe, BC Homes, accomplishment of the board the Apas, Banawa, Talamban, Mactan, Mandaue, Pit-os, Compostela, Liloan, establishing and pursuing of the bulk Casili. water supply concept. As a result, MCWD For environment protection, he entered into tripartite accomplished the highest percentage memorandum of agreement for ground water monitoring and increase in water supply ever attained and consequently, the highest regulation among MCWD, National Water Resources Board and the number of service connections in the history of the water district. local governments of Lapu-Lapu City, Mandaue City and Cebu City. His wish is for the MCWD to start thinking about dams (mini dams, He also initiated discussions and negotiations for MCWD’s medium-sized dams). This is one approach to generate a sustainable Septage Management Program. water supply for the ever-increasing population in Metro Cebu, he said. Prior to his retirement, GM Paredes also paved the way for the This will also be good for the groundwater situation. He also wishes for Danao Bulk Water Supply Project, Nivel Bulk Water Supply Project and MCWD to continue to be a service company. the Netherlands Government’s grant for the Sustainable and Pro-poor Water Supply Project. GM Paredes’ wish for MCWD in the coming years is for it to have Engr. Ernie Delco practically 100 percent service coverage with the kind of water and General Manager, 2013-2014 septage/sewerage services that will delight its customers. GM Ernie Delco said his one-year service as acting general manager for Ruben Almendras MCWD was like 10 years because of the Chairman of the Board of Directors, many challenges the water district faced. 1993-2004 He said that it was during his term that the Philippines suffered one of the Chairman Ruben Almendras believes worst effects of the El Niño phenomenon. the successes and failures of MCWD are the On the other hand, during his combined efforts of all those who had been short stint as GM, he said he was able to with MCWD in all these years, and he is glad strengthen the relationship with MCWD’s stakeholders starting within to be part of them. the organization among all levels from the board, to the Executive He said MCWD was successful Committee and to the employees as a whole. because of everyone working together. One He also saw as a great challenge the justification of and of the most important contributions of the Board of Directors, under implementation of the water rates increase which had been pending Chairman Almendras, was the reduction of NRW over the years. Since for eight years. he was chairman for 12 years, he saw that the effect of the decreased He hopes that all national and local government and government NRW had a great impact on the finances of MCWD. instrumentalities will give full support to the water districts otherwise, When he joined MCWD as chairman, MCWD retained negative these water districts can never live up to their mandate of providing earnings and had heavy losses. safe, affordable and potable water for all. The Board of Directors and the management worked together to improve the ability of MCWD to take out loans. By the third or fourth month year, MCWD’s profitability improved which resulted in positive earnings.

annual report 2015 | 13 MCWD thanks partners on its 40th anniversary party

It was a night of expressions of gratitude to Metropolitan “Deep in my heart, I am glad and proud that you honored Cebu Water District’s partners in the government, business and the him,” Andrew said in his speech. media for the last 40 years. The water district also honored 27 corporate accounts for Aptly called “Thanksgiving Night,” it was an affair to being loyal customers of MCWD. remember as MCWD celebrated with and handed out plaques of recognition to almost 200 guests led by local chief executives of The list included property developers, hotels, resorts, Cebu, Mandaue, Lapu-Lapu and Talisay and the municipalities of malls, schools, government agencies, manufacturers, beverage Cordova, Compostela, Liloan and Consolacion for their support to companies and condominiums. the programs and projects of MCWD. Cognizant of the value of their contribution to MCWD by Without their partnership, MCWD would not be able to serve making subsidized water rates for residential consumers possible, more consumers and operate in its service area. MCWD Chairman of the Board Renato Mercado said that the commercial consumers deserved to be honored. “This is the first ever Thanksgiving Night for government agencies, local government units, major clients, the media and a lot Also recognized during the program were the media outlets of people who were able to enjoy our world-class service,” MCWD which helped inform the public about the services, programs and General Manager Ernie Delco said during his welcome remarks. advocacies of the water district.

Consolacion Mayor Teresa Alegado, Liloan Councilor Francisco Comendador, Cordova Councilor Lemuel Pogoy, Cebu City Administrator Lucelle Mercado, who represented Cebu City Mayor Michael Rama, Atty. Ramil Abing, who represented Cebu Gov. Hilario Davide III and a representative of Mayor Jonas Cortes, attended the event.

One of the highlights of the program was the giving of a Plaque of Appreciation to the family of former Cebu City Mayor Eulogio “Yoyong” Borres, who is known as the father of MCWD.

Borres was the mayor when MCWD was created and took over the operations and management of the Osmena Waterworks System in 1974. He passed away in 2008 at the age of 91.

The mayor’s youngest son, Andrew, accepted the plaque. He was joined by his wife Maria Dahlia and children Samantha and Andrew Jordan.

MESSAGE. MCWD General Manager Ernie Delco welcomes guests and awardees to the first ever Thanksgiving Night.

OPENING NUMBER. The Metropolitan Cebu Water District (MCWD) choir members sing the MCWD Hymn. SPECIAL GUEST. Consolacion Mayor Teresa Alegado (center) receives the Plaque of Recognition for the Municipality of Consolacion from MCWD Chairman of the Board Renato Mercado (right) and GM Ernie Delco.

14 | annual report 2015 LEADERS. MCWD, represented by Chairman Renato Mercado (4th from right) and GM Ernie Delco (5th from right), recognize the value of the partnership of local government units and honored their leaders (from right) Consolacion Mayor Teresa APPRECIATION. MCWD Chairman Renato Mercado (rightmost) and GM Ernie Delco Alegado, Liloan Councilor Francisco Comendador, who represented Liloan Mayor (leftmost) present a Plaque of Appreciation to the family of the late Cebu City Mayor Vincent Duke Frasco; Cebu City Administrator Lucelle Mercado, who represented Eulogio Borres, also known as the Father of MCWD. The plaque was accepted by the Cebu City Mayor Michael Rama; Edgar Seno, who represented Mayor Jonas Cortes; family of Andrew, his youngest son, together with his wife Maria Dahlia and children Cordova Councilor Lemuel Pogoy, who represented Cordova Mayor Adelino Sitoy Samantha and Andrew Jordan. and Atty. Ramil Abing, who represented Cebu Gov. Hilario Davide III.

TOP ACCOUNTS. Owners, managers and representatives of MCWD’s 27 top accounts pose with MCWD SHINE. Professional dancers glitter in silver and white Chairman Renato Mercado (7th from right, foreground) and GM Ernie Delco (8th from right, foreground) ensembles. after receiving their Plaques of Recognition during the Thanksgiving Night.

TOKENS. Plaques are ready to be given out to the awardees.

DIRECTORS. MCWD Directors Manuel Legaspi (foreground) and Jose Maria Eugenio Elizalde walk to the stage to present the awards.

annual report 2015 | 15 MEDIA PARTNERS. MCWD expresses its appreciation to its media partners. Assistant General Manager for Pipelines Maintenance Group Noel Dalena (leftmost) and MCWD Director Juan Saul Montecillo (rightmost)pose with representatives of media outlets (from left) Jessa Agua of The Freeman,Aida Tampus of dyHP, Santino Bunachita of Cebu Daily News, Joworski Alipon of ABS-CBN, Jhunnex Napallacan of dyLA, Dante Luzon of dyRC, Elias Baquero and Jovy Taghoy-Gerodias of Sun.Star Cebu, Rolando Morallo of Superbalita, Lesley Caminade-Vestil of TV 5, Melchard Bing and William Valencia of Sonshine Radio, Fe Marie Dumaboc of CCTN and June Berongan of dyAB. REFRESHING. Special guests get refreshing smiles from the Registration Committee members (from left) Mel Santos, Anna Silud- Goricho, Sade Edelweiss Abarri, Joanne Tan, Analou Otadoy, Quessie Wahing and Mae Felle Matugas.

SMILES. MCWD’s fine gentlemen (seated from left) Maintenance Support Services Department OIC-Manager Juan Antonio Martinez, Angelo Otero of the Accounting WELCOME. Customer Services Group Head Ma. Rowan Tenedo welcomes the guests Department, Corporate Planning Department OIC-Manager John Neville Macabinta with Engr. Erin Tallo (left) and Engr. Mia Gaurana of the Marketing Unit. and Engr. Tom Anoba (standing) of the Marketing Unit welcome the guests.

CREW. The camera-ready events coordination team of (from left) Sade Edelweiss WINE AND DINE. MCWD Managers (from left) Elmer de Guzman, Engr. Giovanni Abarri, Anna Lisa Rodil, Jhoan Bragat and John Winston Jaculan are more than ready Getubig, Engr. Arsenio Guanzon and Engr. Rodrigo Alaba are ready to wine and dine to do their work. with the special guests.

16 | annual report 2015 WOMEN POWER. The powerful guest lineup includes (from left) Concordia Waldoza and Architect Socorro Atega of Cebu Uniting for Sustainable Water, Evelyn Nacario- Castroof Mega Cebu and Melanie Ng of Philippine Business for Social Progress.

SPECIAL GUEST. Myrra Montano of the Local Water Utilities Administration graces the event.

THE GM AND THE LADIES. MCWD General Manager Ernie Delco is flanked by (seated from left) Accounts Division Manager Marina Mago, Payroll Division Manager Miriam Cumba, Accounting Department Manager Lian Garciano-Balbuena, Materials Management Department OIC-Manager Christine Caballes, Janice Layosa and (standing from left) Emily Ceniza, GM’s Office intern KC Dilao and Billing Department THEME COLORS. The welcome committee members in red, white and black (from Manager Jennifer Delco. left) Melinda Calipusan, Marian Therese Mansing, Nathaniel Florentino, Jennifer Suarez and Community Relations and External Affairs Department Manager Charmaine Rodriguez-Kara.

PHOTO WALL. OIC-Assistant General Manager for Operations Group Lasaro Salvacion (3rd from left) shares a photo wall shot with Human Resources Department (HRD) Manager Elson Englis (2nd from right) and Personnel Welfare Division Manager Carla Gonzaga (3rd from left) along with HRD staff (from left) Carmela Salgado, Lorena SERENADE. A violinist sets the mood by serenading the guests. Velos, Raquel Suson, Rechelle Wong and Rhiza Lastimosa.

annual report 2015 | 17 A quick glance at 40 years ago

1974. The Cebu City Council passed Resolution No. 1378 to create the Metropolitan Cebu Water District (MCWD). Subsequently, MCWD assumed ownership and managed Osmeña Waterworks System’s facilities. 1975 1975. MCWD fully operated. It borrowed P58 million to finance the Early Works which covered the purchase of 24 chlorinators, repair of water meter and laboratory facilities, implementation of a leak detection and control survey, purchase of hydrological and meteorological equipment for monitoring stations and land acquisition for the development of water supply sources.

1976. MCWD’s P112-million Interim Improvements Program started drilling of 23 wells; constructing three 5,000-cu.m. reservoirs and chlorination facilities in Consolacion, Talamban and Mananga; set a maintenance depot in Talamban (with a material store, a 1976 workshop and a water laboratory); made extensive studies on Metro Cebu’s available water sources; and trained MCWD personnel on modern water resources management. The main objective was to improve MCWD’s production to 70,000 cu.m. per day.

1983. With a loan from the Local Water Utilities Administration and the Asian Development Bank, MCWD started the Program I, Early Works and Main Works Development to utilize the remaining groundwater sources of Metro Cebu and to rehabilitate existing facilities.

1984. MCWD began the Operations and Maintenance Assistance Program (OMAP) to address the problem of unaccounted-for-water. 1983 With the partial commissioning of the old Tisa Filter plant, old Tisa-Pardo wells, and the maximum pumping of the Consolacion and Talamban wellfields – MCWD increased its daily production to more than 70,000 cu.m. per day.

1987-1991. Under OMAP, some 24,000 old service connections underwent a comprehensive service connection planning and rehabilitation. House-to-house surveys, leak detection works, pipelines rehabilitation, extensive metering and monitoring; and a vigorous campaign against water pilferage started. Subsequently, unaccounted-for-water slid from 55% in 1984 to around 36% in 1991. 1984 1988. MCWD constructed the 5,000-cu.m. reservoir in Tisa and commissioned eight wells in Tisa-Pardo. This increased MCWD’s production capacity to about 80,000 cu.m. per day. By the end of 1990, service connections rose to 40,684 from 37,400 in 1983.

1990. The completed Tisa-Pardo wellfields produced an additional 8,000 cu.m. daily.

The start of the P468-million Northern Wellfields Project (Liloan and Compostela wellfields) – expected to generate 40,000 cu.m. more daily and pull MCWD’s daily production capacity to 120,000 cu.m. daily. The project included a 5,000 cu.m.- storage reservoir in Casili, Consolacion; a 2,000 cu.m. daily-water tower in Mactan; 32 pumping stations – 17 in Liloan, 14 in Compostela and one in Mactan.

MCWD installed standby power equipment and facilities in the three major wellfields of Talamban, Mananga and Casili – providing 60% of MCWD consumers needs during power failures.

1991. Completion of the Mactan Beach Resorts Water Supply Project; - its four wells supplied 1,000 cu.m. more per day.

1992. MCWD operated the Liloan wellfield where 16 pumps produced 20,000 cu.m. 1987-1991 daily.

18 | annual report 2015 A quick glance at 40 years ago

1995. The district completed the Cordova Water Supply Project in Cordova, Cebu. This, and the 4,000 cu.m. per day booster pumping station (with three booster pumps and a 150-cu.m. sump tank) in Mandaue City, greatly improved Mactan Island’s water supply.

1993-1996. MCWD was able to commission seven additional pumping stations in 1988 Lahug, Guadalupe and Canduman.

1998. MCWD completed the P700-million Mananga Phase I Project with its 15 wells, 19 pumping stations, diversion weir, sedimentation and infiltration facilities. Its 33,000 cu.m. per day additional production benefited about 17,000 more households. Two new wells in the Ayala complex, which produced an average of 3,000 cu.m. per day, were also commissioned. The Most Outstanding Water District Award in the Very Large Water District category was also given by the Philippine Association of Water Districts to MCWD.

1999. MCWD raised its water rates by 4% which is part of the scheduled increases approved by LWUA in 1991. In partnership with former Congressman Raul Del Mar, MCWD 1990 opened the D’ Family Park to the public; the first of its kind in the province. This year, MCWD also completed the major pipelaying work at the 2nd Mandaue-Mactan bridge.

The year ended with MCWD being recognized to be one of the country’s first 11 environmental laboratories by the Department of Environment and Natural Resources, the Environmental Management Bureau, and the United Nations Development Programme.

2000. MCWD was recognized as a Hall of Famer by the Civil Service Commission for having been awarded as the “Most Outstanding Accredited Agency in Region VII for three consecutive years – 2000 to 2002.

“Pulong-pulong sa Barangay” – an information dissemination program, was launched to bring MCWD closer to its consumers especially in the barangay level. This provided a venue where consumers can express their concerns pertaining to MCWD services and operations.

2002. Employees moved in to the new MCWD building which was built out of the earnings and savings of the water district at a cost of close to 194-million pesos. The building 1990 took almost three years to finish and is now a symbol of pride and prudence of the water district.

2003. MCWD was awarded as the “Most Outstanding Government Agency in the Field of Personnel and Records Management” by the Civil Service Commission during its 103rd anniversary.

By the end of 2003, MCWD became the first water district all over the Philippines to have earned the ISO 9001:1994 certification conferred by the Bureau Veritas Quality International.

2004. As the number of stolen meters soared, the MCWD Board of Directors passed a resolution for the Implementing Guidelines for Awards and Incentives to informants of fence 1990 and pilferers.

The year also saw an increase in average daily production to 149,000 cu.m. from MCWD’s 103 water sources to meet the water needs of 99,347 consumers.

2005. The Massive Rehabilitation Program of the Pipelines Maintenance Group was fully implemented. This eliminated “spaghetti lines” and standardized the service connection tapping point to a 2-inch diameter stub-out.

In the same year, MCWD received the Most Outstanding Award for the Very Large Water District Category in the Bicol and Visayas Region by the Philippine Association of Water 1992

annual report 2015 | 19 2000 2002

Districts (PAWD). The award meant that MCWD was recognized for its exemplary performance in providing water services to its community.

2006. MCWD’s Call Center was launched to handle consumers’ complaints, queries, leak reports, stolen meters, among others through the telephone.

This year, the Knowledge Center was created to sustain the work of the Water Remind Project and to provide data and expertise to everybody. 1995

2007. MCWD received the Outstanding Water District in the Very Large Category, Bicol/Visayas Region by the Local Water Utilities Administration (LWUA) during the LWUA- Water District Forum at the Manila Hotel, Manila.

Another achievement for the year was the “Very Satisfactory Frontline Service” award in terms of “Service Provider, Quality Service and Physical Working Condition” by the Civil Service Commission’s PASADA during the 107th Philippine Civil Service Anniversary celebration.

The year ended with a milestone reward as it became the first ISO 9001:2000 certified water district in the country by the Bureau Veritas Certification. 1993-1996 2008. MCWD partnered with the United States Agency International Development (USAID) – Philippine Water Revolving Fund (PWRF-SP), as it signed the Memorandum of Understanding for the creation of a Septage Management Project.

Another partnership was forged between MCWD and the City West Water of Melbourne, Australia under the Twinning Program supported by the Asian Development Bank for its Operation’s Partnership Program.

1998 2009. MCWD entered into a Memorandum of Agreement with Lapu-Lapu City and the National Water Resources Board (NWRB) for the implementation of the Mactan Bubble Project, which allows MCWD to manage and control reckless groundwater withdrawal.

By the end of the year, MCWD earned its ISO 9001:2008 certification award given by the Bureau Veritas Certification.

2010. MCWD commissioned Lagtang, Talisay wells 2.2 and 2.3 which yielded an additional water supply of 720 cu.m. per day and 450 cu.m. per day, respectively. Another achievement in this area was the completion of 2,159 linear meters of mainline rehabilitation and 3,407 linear meters of pipeline expansions amounting to a total of P41,905,889. 1998 The year was dedicated in preparing and outlining the groundwork paving the way for MCWD’s 60/80 vision in 2020. Although conceived in 2010, it was in 2012 when Vision 60/80 in 2020 was in full swing. The goal was set to increase MCWD’s service connection coverage to 60% for residential consumers and 80% for the commercial consumers.

2011. MCWD embarked on its rearrangement scheme to group together units whose functions involve customer service. This gave birth to the creation of the Customer Services Group (CSG) and the Key Accounts Unit (KAU). Part of the scheme put together under one group the Public Affairs, Billing, Service Connection and Installation and Finance departments – all of which have customer-related functions, into the Customer Services Group. KAU was formed to give utmost attention to concerns of big consumers, mostly commercial and 1999 industrial companies.

20 | annual report 2015 2002 2003-2004 2005-2006

The first Sepatge Ordinance was passed by the Municipality of Cordova which established a Comprehensive Septage Management System.

2012. As of December 31, 2012, MCWD was able to serve only some 44.34% of residential and 28.86% of commercial consumers.

The Buhisan Dam Centennial was celebrated commemorating 100 years of the existence of MCWD’s lone surface water source.

2005-2006 During this time, technology advancement allowed the printing of water bills via online. Consumers could look up their bills online and print these at the same time.

As part of its Corporate Social Responsibility, the water district assisted Ayungon Water District in Leyte after a typhoon hit the area. It sent a team with a water delivery truck to assist in the distribution of clean, potable water to the victims of the flash floods.

2013. The year that was beset with major calamities. MCWD’s resilience and disaster preparedness was put to the test as it faced two major natural catastrophes by the end of the year – a 7.2-magnitude earthquake on October 13 and Super Typhoon Yolanda on November 2009 8. MCWD was able to restore its service within 24 hours after the said calamities.

After taking care of its own, MCWD extended help to water districts affected by the earthquake in Bohol and Metro Leyte in Tacloban including Carigara. The water district did not only give out relief goods and boxes of food packs, it also gave generator sets to the affected water districts. Apart from this, a team from the Pipelines Maintenance Group helped out in the clearing operations in the Yolanda aftermath in Leyte.

MCWD, together with the City of Cebu, unveiled its Buhisan Dam marker in celebration of the dam’s 100th year of existence.

This year, water district designed and implemented its discount scheme to attract and retain commercial consumers. The five percent discount given to residential consumers was 2010 stopped and an new tiered discount scheme was introduced.

2014. The journey to vision 60/80 in 2020 inches forward. Though targets were not met, yet, targets from previous years were exceeded. MCWD achieved its lowest Non- Revenue Water at 23.89% as of November 2014. It was also this year that the One-Stop Shop (OSS) was formed and put in place at the ground floor of the MCWD main building. The OSS caters to consumers’ walk-in complaints and requests such as low pressure to no water problems, billing or high consumption concerns, service connection application concerns, among others.

2015. MCWD implemented its water rates adjustment after it was granted approval by the Local Water Utilities Administration (LWUA). The increase was within the12% allowed by LWUA. After implementation, the first 10 cubic meters cost 152 pesos which is a few pesos more than the minimum of 136 pesos prior to the increase.

The year closed with the City of Lapu-Lapu passing its septage management ordinance that includes the provision that mandates the desludging of all septic tanks every five years.

2012

annual report 2015 | 21 22 | annual report 2015 Metropolitan Cebu Water District Table of Organization As of February 19, 2016

BOARD OF DIRECTORS

MEMBER VICE-CHAIRMAN CHAIRMAN SECRETARY MEMBER JOSE MARIA EUGENIO V. ELIZALDE JUAN SAUL F. MONTECILLO RENATO E. MERCADO PROCOPIO E. FERNANDEZ MANUEL P. LEGASPI

ACTING GENERAL MANAGER NOEL R. DALENA 01/01/2016-09/01/2016

FINANCE GROUP OPERATIONS GROUP TECHNICAL SERVICES GROUP PIPELINES MAINTENANCE GROUP ADMINISTRATION GROUP MARIA ROWAN E. TEÑEDO RAUL E. TABASA JORGE L. GABRIENTE (OIC) FERDINAND E. NICANOR (OIC) 01/01/2016 - 06/30/2016 MARIA ROWAN E. TEÑEDO (OIC) 01/22/2016-06/30/2016 01/22/2016-06/30/2016 (OIC) 01/22/2016-06/30/2016

INTERNAL AUDIT DEPARTMENT COMMUNITY RELATIONS & EXTERNAL PRODUCTION DEPARTMENT ENGINEERING DEPARTMENT PIPELINES MAINTENANCE DEPARTMENT-SOUTH COMMERCIAL SERVICES DEPARTMENT ELMER R. DE GUZMAN AFFAIRS DEPARTMENT EDGAR D. ORTEGA ANDREW L. MAGNO ROGELIO T. JUMAO-AS JR. JENNIFER L. DELCO (OIC) 04/18/15 - 4/17/2016 CHARMAINE JANIS R. KARA (OIC) 01/01/2016-06/30/2016 (OIC) 01/22/2016-06/30/2016 (OIC) 01/22/2016-06/30/2016

OPERATIONS AUDIT DIVISION BILLINGS DIVISION COMMUNITY RELATIONS DIVISION WATER PRODUCTION DIVISION PLANNING DIVISION PIPELINES REPAIR DIVISION ENRIQUE P. REYES LEODEGARIO B. CASQUEJO EDNA A. INOCANDO REBECCA L. HUSAYAN ANDREW L. MAGNO ROGELIO T. JUMAO-AS JR. (OIC) 01/01/2016-12/31/2016 ACCOUNTS DIVISION PUBLIC INFORMATION DIVISION WATER DISTRIBUTION DIVISION DESIGN DIVISION S/C REHABILITATION DIVISION MANAGEMENT AUDIT DIVISION MARINA MAGO EDWIN C. CORREOS EDGAR D. ORTEGA RICHARD G. MISAL ENRIQUITO A. OUANO ELMER R. DE GUZMAN (OIC) 01/01/2016-12/31/2016 WATER QUALITY DIVISION MATERIALS & EQP’T QUALITY CONTROL ROAD RESTORATION DIVISION PROPERTY & MATERIALS MGT. DEPT. MA. HELEN V. ARAGONES DIVISION RODRIGO T. ALABA LEGAL DEPARTMENT ACCOUNTING DEPARTMENT CHRISTINE B. CABALLES NELSON N. RUIZ (OIC) 01/01/2016-06/30/2016 ROLANDO P. LAVILLA JR. LIAN G. BALBUENA SERVICE CONNECTION & INSTALLATION DEPT. PIPELINES MAINTENANCE DEPARTMENT- CONSTRUCTION DEPARTMENT PROCUREMENT DIVISION JOHN NEVILLE T. MACABINTA NORTH DEMOSTHENES G. MANLOSA INVESTIGATION AND LITIGATION DIVISION GENERAL ACCOUNTING DIVISION TBN (OIC) 01/01/2016-06/30/2016 FERDINAND E. NICANOR TBN SADE EDELWEISS G. ABARRI (OIC) 01/01/2016-06/30/2016 PROPERTY & WAREHOUSING DIVISION WATER SERVICE PROCESSING & INSPECTION DIV. MAINLINES EXPANSION & PIPELINES REPAIR DIVISION LEGAL SERVICES DIVISION CHRISTINE B. CABALLES JOHN NEVILLE T. MACABINTA REHABILITATION DIVISION DANILO D. BORRES CLAIRON B. PAÑARES PAYROLL & SUBSIDIARY DIVISION (OIC) 01/01/2016-06/30/2016 ARSENIO A. GUANZON LUCIA P. MONTEBON S/C REHABILITATION DIVISION (OIC) 01/01/2016-03/31/2016 GENERAL SERVICES DEPARTMENT INSTALLATION & DISCONNECTION DIV. GLENDA T. PONCE CORPORATE PLANNING STEPHEN D. YEE ISRAEL G. ORTIZ DEPARTMENT (OIC) 01/01/2016-06/30/2016 PROJECT MANAGEMENT OFFICE ROAD RESTORATION DIVISION TBN ALAN P. CHU GIOVANNI M. GETUBIG FINANCIAL MANAGEMENT DEPT. (OIC) 01/01/2016-06/30/2016 BLDG. & GROUNDS MAINTENANCE DIV. MANAGEMENT INFORMATION IMELDA P. CHU MAINTENANCE SUPPORT SERVICES DEPT. (OIC) 01/01/2016-03/31/2016 JUAN M. CONDE TECHNICAL DIVISION SERVICES DIVISION (OIC) 01/01/2016-06/30/2016 TOMMY L. GONZALEZ TBN (OIC) 01/01/2016-06/30/2016 PACIENCIO T. QUIMSON TREASURY DIVISION TRANSPORT OPERATIONS & EQP’T. GENERAL IMPROVEMENT & CIVIL PLANNING AND MONITORING DIVISION JOSEPHINE E. CORREOS ELECTRO-MECHANICAL DIVISION MAINTENANCE DIVISION WORKS DIVISION JOHN PAUL H. DELGADO TOMMY L. GONZALEZ (OIC) 01/01/2016-06/30/2016 BRANCH COLLECTION DIVISION Juanito D. Ando (Designate) ALAN P. CHU IMELDA P. CHU WATER METER MAINTENANCE DIVISION HUMAN RESOURCES DEPARTMENT JOSEPH Z. CABALLES BUDGET DIVISION INFORMATION & COMMUNICATIONS ELSON C. ENGLIS (OIC) 01/01/2016-06/30/2016 TECHNOLOGY DEPARTMENT PIA MAE S. BARNIDO (OIC) 01/01/2016-06/30/2016 ROMMEL CYRIL V. YU (OIC) 01/01/2016-06/30/2016 (OIC) 01/01/2016-06/30/2016 FABRICATION DIVISION RECRUITMENT AND TRAINING DIVISION JOSEPH Z. CABALLES SYSTEMS DEVELOPMENT DIVISION ERNETTE B. JAGANAS ENVIRONMENT & WATER RESOURCES DEPT. TARLEYTO O. TABINAS (OIC) 01/01/2016-06/30/2016 LEMUEL A. CANASTRA SYSTEMS APPLICATION DIVISION (OIC) 01/01/2016-06/30/2016 PERSONNEL WELFARE DIVISION ROMMEL CYRIL V. YU CARLA MICHELLE CHAVES-GONZAGA GROUNDWATER DIVISION (OIC) 01/01/2016-06/30/2016 RONNEL Y. MAGALSO

SURFACEWATER DIVISION LEMUEL A. CANASTRA

ENVIRONMENT DIVISION ROEL A. PANEBIO Operational Highlights 2015 NORTH NORTH GLENDA T. PONCE PONCE T. GLENDA DANILO D. BORRES BORRES D. DANILO RODRIGO T. ALABA ALABA T. RODRIGO ENRIQUITO A. OUANO OUANO A. ENRIQUITO GIOVANNI M. GETUBIG M. GIOVANNI FERDINAND E. NICANOR NICANOR E. FERDINAND PIPELINES REPAIR DIVISION DIVISION REPAIR PIPELINES PIPELINES REPAIR DIVISION DIVISION REPAIR PIPELINES FERDINAND E. NICANOR E. FERDINAND ROGELIO T. JUMAO-AS JR. JR. JUMAO-AS T. ROGELIO MEMBER ROGELIO T. JUMAO-AS JR. JR. JUMAO-AS T. ROGELIO S/C REHABILITATION DIVISION DIVISION S/C REHABILITATION ROAD RESTORATION DIVISION DIVISION RESTORATION ROAD ROAD RESTORATION DIVISION RESTORATION ROAD (OIC) 01/22/2016-06/30/2016 S/C REHABILITATION DIVISION S/C REHABILITATION (OIC) 01/22/2016-06/30/2016

PIPELINES MAINTENANCE GROUP PIPELINES MCWD accomplished more in 2015 compared to 2014 under the water district’s performance parameters of water production, number MANUEL P. LEGASPI LEGASPI P. MANUEL PIPELINES MAINTENANCE DEPARTMENT- DEPARTMENT- MAINTENANCE PIPELINES PIPELINES MAINTENANCE DEPARTMENT-SOUTH DEPARTMENT-SOUTH MAINTENANCE PIPELINES of service connections, water sales and non-revenue water (NRW).

Indicators 2015 2015 Variance 2014 Variance Actual Target Actual 2014 vs 2015 PRODUCTION (cu.m./day) 217,008 235,935 -18,927 212,722 4,286 No. of SC 170,655 176,927 -6,272 161,413 9,242 DIVISION

ALAN P. CHU CHU P. ALAN CHU P. ALAN WATER SALES (cu.m/day) 165,972 180,414 - 14,442 162,627 3,345 NELSON N. RUIZ N. NELSON WORKS DIVISION WORKS DESIGN DIVISION DESIGN RICHARD G. MISAL G. RICHARD ANDREW L. MAGNO MAGNO L. ANDREW MAGNO L. ANDREW PLANNING DIVISION TECHNICAL DIVISION TECHNICAL ARSENIO A. GUANZON A. ARSENIO 01/22/2016-06/30/2016 PACIENCIO T. QUIMSON T. PACIENCIO REHABILITATION DIVISION REHABILITATION MAINLINES EXPANSION & EXPANSION MAINLINES JORGE L. GABRIENTE (OIC) (OIC) GABRIENTE L. JORGE NRW 23.33% 23.04% - 0.32% 23.36% 0.06 TECHNICAL SERVICES GROUP GROUP SERVICES TECHNICAL ENGINEERING DEPARTMENT ENGINEERING DEPARTMENT DEMOSTHENES G. MANLOSA G. DEMOSTHENES (OIC) 01/01/2016-06/30/2016 (OIC) 01/22/2016-06/30/2016 CONSTRUCTION DEPARTMENT DEPARTMENT CONSTRUCTION PROJECT MANAGEMENT OFFICE MANAGEMENT PROJECT GENERAL IMPROVEMENT & CIVIL GENERAL IMPROVEMENT SUMMARY. The table shows MCWD’s performance in 2015 under its four parameters starting with water production, number of service connections, water sales and MATERIALS & EQP’T QUALITY CONTROL CONTROL & EQP’T QUALITY MATERIALS non-revenue water in contrast with the corporate accomplishment in 2014. Even though the water district failed to meet its targets in 2015, the figures above show an SECRETARY improvement compared to the accomplishment in 2014.

PROCOPIO E. FERNANDEZ FERNANDEZ E. PROCOPIO

Although when compared to its target, MCWD’s 2015 water Non-Revenue Water (NRW) for 2015 was stable at 23.33% production fell short because the expected additional water supply compared to the year-to-date projection of 23.54%. The low did not materialize within the year, according to the report of the production could be a factor in the NRW improvement but the Corporate Planning Department. repair of a significant number of leaks also contributed to the good performance of MCWD according to the Corporate Planning ISRAEL G. ORTIZ ORTIZ G. ISRAEL RAUL E. TABASA E. RAUL ROEL A. PANEBIO PANEBIO A. ROEL EDGAR D. ORTEGA ORTEGA D. EDGAR EDGAR D. ORTEGA D. EDGAR JOSEPH Z. CABALLES Z. JOSEPH OPERATIONS GROUP GROUP OPERATIONS JOSEPH Z. CABALLES CABALLES Z. JOSEPH RONNEL Y. MAGALSO MAGALSO Y. RONNEL TOMMY L. GONZALEZ GONZALEZ L. TOMMY REBECCA L. HUSAYAN L. REBECCA TOMMY L. GONZALEZ GONZALEZ L. TOMMY LEMUEL A. CANASTRA A. LEMUEL FABRICATION DIVISION FABRICATION LEMUEL A. CANASTRA CANASTRA A. LEMUEL

ENVIRONMENT DIVISION ENVIRONMENT However, the additional water from the Cebu Manila Water Department report. GROUNDWATER DIVISION GROUNDWATER SURFACEWATER DIVISION SURFACEWATER MA. HELEN V. ARAGONES ARAGONES V. HELEN MA. WATER QUALITY DIVISION QUALITY WATER PRODUCTION DEPARTMENT DEPARTMENT PRODUCTION (OIC) 01/01/2016-06/30/2016 (OIC) 01/01/2016-06/30/2016 (OIC) 01/01/2016-06/30/2016 (OIC) 01/22/2016-06/30/2016 (OIC) 01/01/2016-06/30/2016 (OIC) 01/01/2016-06/30/2016 (OIC) 01/01/2016-06/30/2016 (OIC) 01/01/2016-06/30/2016 JOHN NEVILLE T. MACABINTA MACABINTA T. NEVILLE JOHN MACABINTA T. NEVILLE JOHN WATER PRODUCTION DIVISION PRODUCTION WATER ELECTRO-MECHANICAL DIVISION ELECTRO-MECHANICAL WATER DISTRIBUTION DIVISION DISTRIBUTION WATER

INSTALLATION & DISCONNECTION DIV. DIV. & DISCONNECTION INSTALLATION Development Inc. (CMWD) helped augment the supply during MAINTENANCE SUPPORT SERVICES DEPT. SERVICES SUPPORT MAINTENANCE SERVICE CONNECTION & INSTALLATION DEPT. & INSTALLATION CONNECTION SERVICE WATER SERVICE PROCESSING & INSPECTION DIV. DIV. & INSPECTION PROCESSING SERVICE WATER ENVIRONMENT & WATER RESOURCES DEPT. RESOURCES & WATER ENVIRONMENT WATER METER MAINTENANCE DIVISION DIVISION MAINTENANCE METER WATER summer. From 18,000 cubic meters per day, CMWD delivered an additional 6,000 cubic meters per day which made up for the 24,000 cubic meters per day to met the increase in demand. However,

CHAIRMAN MCWD’s total volume of water produced per day was better by NOEL R. DALENA DALENA R. NOEL

RENATO E. MERCADO MERCADO E. RENATO almost 4,286 cubic meters per day compared to the average daily 01/01/2016-09/01/2016

ACTING GENERAL MANAGER GENERAL MANAGER ACTING production in 2014. BOARD OF DIRECTORS OF BOARD (Designate) As of February 19, 2016 As of February TBN Table of Organization Table Meanwhile, the water district’s total number of service connections in 2015 reached a total of 170,655 service connections JUAN M. CONDE M. JUAN STEPHEN D. YEE D. STEPHEN ELSON C. ENGLIS ENGLIS C. ELSON EDWIN C. CORREOS C. EDWIN EDNA A. INOCANDO INOCANDO A. EDNA ERNETTE B. JAGANAS JAGANAS B. ERNETTE AFFAIRS DEPARTMENT DEPARTMENT AFFAIRS CHRISTINE B. CABALLES CABALLES B. CHRISTINE CHRISTINE B. CABALLES B. CHRISTINE

MAINTENANCE DIVISION which was short by 6,272 compared to the target of 176,927 service ADMINISTRATION GROUP GROUP ADMINISTRATION PROCUREMENT DIVISION PROCUREMENT MARIA ROWAN E. TEÑEDO TEÑEDO E. ROWAN MARIA Juanito D. Ando D. Juanito CHARMAINE JANIS R. KARA KARA R. JANIS CHARMAINE (OIC) 01/01/2016-06/30/2016 (OIC) 01/01/2016-06/30/2016 (OIC) 01/01/2016-06/30/2016 (OIC) 01/01/2016-06/30/2016 (OIC) 01/01/2016-06/30/2016 PERSONNEL WELFARE DIVISION WELFARE PERSONNEL PUBLIC INFORMATION DIVISION PUBLIC INFORMATION Metropolitan Cebu Water District Cebu Water Metropolitan connections. Corporate Planning Department’s annual report GENERAL SERVICES DEPARTMENT DEPARTMENT GENERAL SERVICES COMMUNITY RELATIONS DIVISION RELATIONS COMMUNITY TRANSPORT OPERATIONS & EQP’T. & EQP’T. OPERATIONS TRANSPORT CARLA MICHELLE CHAVES-GONZAGA MICHELLE CARLA HUMAN RESOURCES DEPARTMENT DEPARTMENT HUMAN RESOURCES PROPERTY & MATERIALS MGT. DEPT. MGT. & MATERIALS PROPERTY COMMUNITY RELATIONS & EXTERNAL RELATIONS COMMUNITY BLDG. & GROUNDS MAINTENANCE DIV. BLDG. & GROUNDS PROPERTY & WAREHOUSING DIVISION & WAREHOUSING PROPERTY RECRUITMENT AND TRAINING DIVISION RECRUITMENT showed that this shortage was caused by the non-accomplishment of the target number of new residential consumers. This was consequently brought about by the non-accomplishment of the target additional water supply so there were still a lot of areas declared suspended meaning MCWD did not accept new applications of service connections in these areas. INCREASING. The water district’s average daily production in 2015 was close to

VICE-CHAIRMAN VICE-CHAIRMAN 220,000 cubic meters per day which was some 7,000 cubic meters more than that of 2014. Compared to the average daily production in 2011 or five years ago, the increase JUAN SAUL F. MONTECILLO MONTECILLO F. SAUL JUAN On the other hand, MCWD’s total number of commercial was about 40,000 cubic meters per day. IMELDA P. CHU P. IMELDA

IMELDA P. CHU CHU P. IMELDA consumers exceeded its 2015 target by 399 service connections. MARINA MAGO MAGO MARINA FINANCE GROUP FINANCE GROUP BUDGET DIVISION BILLINGS DIVISION JENNIFER L. DELCO DELCO L. JENNIFER LIAN G. BALBUENA G. LIAN TREASURY DIVISION TREASURY ACCOUNTS DIVISION ACCOUNTS LUCIA P. MONTEBON MONTEBON P. LUCIA PIA MAE S. BARNIDO BARNIDO S. MAE PIA The target in 2015 was 3,171 commercial connections but the water JOSEPHINE E. CORREOS E. JOSEPHINE MARIA ROWAN E. TEÑEDO TEÑEDO E. ROWAN MARIA LEODEGARIO B. CASQUEJO B. LEODEGARIO MCWD’s water production in the last five years showed a SADE EDELWEISS G. ABARRI G. EDELWEISS SADE ACCOUNTING DEPARTMENT DEPARTMENT ACCOUNTING (OIC) 01/01/2016-12/31/2016 (OIC) 01/01/2016-03/31/2016 (OIC) 01/01/2016-06/30/2016 (OIC) 01/01/2016-03/31/2016 (OIC) 01/01/2016-06/30/2016 (OIC) 01/01/2016 - 06/30/2016 BRANCH COLLECTION DIVISION BRANCH COLLECTION district installed a total of 3,570 connections at the close of the year. PAYROLL & SUBSIDIARY DIVISION & SUBSIDIARY PAYROLL FINANCIAL MANAGEMENT DEPT. FINANCIAL MANAGEMENT GENERAL ACCOUNTING DIVISION GENERAL ACCOUNTING steady increase. Although MCWD only had a the total volume in COMMERCIAL SERVICES DEPARTMENT SERVICES COMMERCIAL 2015 of 217,008 cubic meters per day it failed to hit the target of The shortage on MCWD’s water production and number 235,935 cubic meters per day. But, it is an improvement of some of service connections contributed to the non-attainment of the 36,885 cubic meters compared to the average daily production targeted water sales in 2015 of 171,212 cubic meters per day. in 2011 which was 180,123 cubic meters. In 2015, an increase of During the said period, the water district’s water sales only reached 24,000 cubic meters per day was from the additional bulk water 162,627 cubic meters which is below the target by 14,442 cubic supply from CMWD. meters per day.

TBN TBN TBN MEMBER

DEPARTMENT DEPARTMENT The low water supply due to the dry spell not only affected ENRIQUE P. REYES REYES P. ENRIQUE SERVICES DIVISION SERVICES LEGAL DEPARTMENT DEPARTMENT LEGAL CLAIRON B. PAÑARES PAÑARES B. CLAIRON ROMMEL CYRIL V. YU V. CYRIL ROMMEL ROMMEL CYRIL V. YU YU V. CYRIL ROMMEL TARLEYTO O. TABINAS TABINAS O. TARLEYTO ELMER R. DE GUZMAN DE R. ELMER ELMER R. DE GUZMAN DE R. ELMER the water district’s in-house production but also its partner CORPORATE PLANNING CORPORATE JOHN PAUL H. DELGADO H. PAUL JOHN ROLANDO P. LAVILLA JR. JR. LAVILLA P. ROLANDO LEGAL SERVICES DIVISION SERVICES LEGAL (OIC) 04/18/15 - 4/17/2016 TECHNOLOGY DEPARTMENT DEPARTMENT TECHNOLOGY OPERATIONS AUDIT DIVISION AUDIT OPERATIONS (OIC) 01/01/2016-12/31/2016 (OIC) 01/01/2016-06/30/2016 (OIC) 01/01/2016-06/30/2016 INTERNAL AUDIT DEPARTMENT DEPARTMENT INTERNAL AUDIT MANAGEMENT INFORMATION INFORMATION MANAGEMENT

MANAGEMENT AUDIT DIVISION AUDIT MANAGEMENT suppliers. Bulk water supply from private suppliers also dropped. SYSTEMS APPLICATION DIVISION APPLICATION SYSTEMS SYSTEMS DEVELOPMENT DIVISION DEVELOPMENT SYSTEMS JOSE MARIA EUGENIO V. ELIZALDE ELIZALDE V. EUGENIO MARIA JOSE INFORMATION & COMMUNICATIONS & COMMUNICATIONS INFORMATION INVESTIGATION AND LITIGATION DIVISION DIVISION LITIGATION AND INVESTIGATION PLANNING AND MONITORING DIVISION PLANNING AND MONITORING

annual report 2015 | 23 Operational Highlights

From 2011 to 2015, the water district saw an increase of some 36,762 cubic meters per day in water sales.

This was attributable to the increase in water production from the additional water supply from both in-house and bulk water supply partners of the water district. The additional 30,706 service connections also contributed to the increase in water sales.

CONSUMERS. The water district served more than 170,000 consumers in 2015 which was an increase of about 40,000 service connections in the last five years or since 2011. This figure is eight times more compared to the early 1980s when MCWD had a consumer base of about 20,000 service connections.

Almost 40,000 additional consumers enjoyed safe, potable and affordable water from MCWD from 2011 to 2015. However, the increase was still below the 2015 target of 176,927 service HIGH FIVE. The water district’s non-revenue water reduction efforts resulted to an improvement in its NRW of 4.89 percentile points in 2015 when it achieved 23.33% connections. Total number of service connections in 2015 was only compared to the NRW in 2011 of 28.22%. This was the highest in the last five-year 170,655 which is a shortage of some 6,272 service connections. period. The water saved through NRW reduction translated to additional water supply and water sales for the water district. According to the Corporate Planning Department report, the targeted number of service connections was not accomplished MCWD’s non-revenue water (NRW) reduction efforts resulted due to the lack of water supply brought about by the El Niño to a steady improvement in curbing water loss in the last five years. phenomenon and the non-realization of the projected additional The NRW committee intensified its efforts in leak detection, pressure supply from bulk water suppliers and some in-house wells. management, regular water meter maintenance, preventive well This necessitated the temporary suspension of processing and maintenance and prompt repair of leaks. Even with the increase installation of new service connections in elevated areas. in the volume of water supply, the water district was able to consistently minimize wastage.

6ixty 8ighty

GROWING SALES. Water sales increased by almost 40,000 cubic meters per day in the last five years. From close to 130,000 cubic meters in 2011, water sales has gone up to 2 2

166,000 cubic meters per day in 2015. The subsequent increase in water supply and number of service connections in the last five years contributed to the increase in water O sales alongside non-revenue water reduction.

24 | annual report 2015 Reaching out to more consumers

In 2015, the water district worked on expansion programs to improve its services. These expansion and renewal efforts were spread out within its service areas from Talisay City in the south to the municipalities of Cordova, Liloan, Consolacion and Compostela in the north. Other improvements were spread in Cebu City.

2015 Completed Projects Expansion Projects Total Length Actual Target Project Name Project Cost of Project (in Date started completion completion date linear meters) date 1) 100mm dia. X 192.0 lm DI Distribution Main at I. Php1,766,946.23 192 October 27, 2014 January 20, 2015 January 20, 2015 Tabura St., Brgy. Pardo, Cebu City

2) 75mm dia X 282.0 lm DI Expansion Mains for Php2,136,060.00 282 November 24, 2014 January 27, 2015 January 27, William Lines Subdivision, Kimba, Talisay City, 2015 Cebu 3) 150mm dia. x 262.0 lm uPVC Interconnecting Php2,735,363.23 262 January 29, 2015 March 26, 2015 March 26, 2015 Pipeline for Summerville Subdivision, Felimon Nuñez Street, Buagsong, Cordova, Cebu 4) 150mm dia. X 68lm, Ø100mm X 225lm, Ø75mm X Php4,899,000.00 1,030 December 23, 2014 May 21, 2015 May 16, 2015 129lm, Ø50mm X 608 lm DI Water Distribution Line for Mutual Homes Subd., Brgy. Pajac, Lapu-Lapu City, Cebu 5) 200mm dia. PVC Temporary Pipe Realignment PhP803,000.00 32 June 1, 2015 July 1, 2015 July 1, 2015 along Pilipog Bridge 1, Pilipog, Cordova, Cebu

6) 200mm dia. X 452 lm DI Water Distribution Lines at PhP5,000,000.00 452 March 3, 2015 July 8, 2015 July 8, 2015 E.Bascon St., Dumlog, Talisay City, Cebu 7) 100mm dia. X 320 lm DI Interconnecting Pipeline PhP2,102,167.97 320 May 27, 2015 July 17, 2015 July 17, 2015 Project Mactan Plains Subd., Sitio Angasil, Mactan, Lapu-Lapu City 8) 100mm dia. x 116 lm DI Distribution Project at PhP1,414,474.21 116 July 22, 2015 August 20, 2015 August 25, 2015 Poblacion Consolacion, Cebu Total length in meters of pipelines 2,686 Rehabilitation Projects 1) 100mm dia.X 141 lm DI Rehabilitation Project at J. Php1,706,370.37 141 April 16, 2015 May 23, 2015 May 23, 2015 Tabura, Upper Pardo, Pardo, Cebu City 2) 100mm dia. X 297.0 lm DI Rehabilitation Project at PhP2,137,000.00 297 May 27, 2015 July 1, 2015 July 1, 2015 San Vicente , Liloan, Cebu 3) 100mm dia. x 423 lm DI Rehabilitation Project at H. PhP4,376,978.80 423 July 22, 2015 October 21, October 21, Pepito St., Poblacion Consolacion, Cebu 2015 2015 4) Realignment of Ø200mm x 76 lm & Ø100mm x PhP1,513,000.00 152 July 29, 2015 September 30, September 30, 76 lm uPVC Pipelines along F. Llamas St., Tisa, 2015 2015 Labangon, Cebu City Total length in meters of pipelines 1, 013 2015 On-Going Projects 1) Proposed 150mm dia. X 435.0 LM Pipelines PhP4,742,700.00 435 November 16, 2015 January 30, 2016 On-going Rehabilitation Project in Sitio Panagdait, Brgy. project Kasambagan, Cebu City 2) Proposed 150mm dia. X 322.0 lm DI Rehabilitation PhP4,000,000.00 322 November 16, 2015 February 12, On-going Project along Sitio Tangkongan, Brgy. Sambag 1, 2016 project Cebu City Total length in meters of pipelines 757

annual report 2015 | 25 financial highlights

FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS (in millions)

2000 1755 1800 1626 1617 1600 1446 1400 1308 1124 1200 1000 800 7% 12% 19% 16% 242% 10% 600

400 294 267 200 86 0 Opera1ng Revenue Other Opera1g Expenses Net Income

TARGET 2015 2014

MCWDMCWD earned earned a Net Operatinga Net Operating Revenue Revenuein 2015 of inP1.62 2015 Billion of P1.62 giving Billion the Districtgiving thean increase District ofan P180 increase Million of in P180 operating Million in revenueoperating or 12% revenue as compared or 12% to as 2014 compared which was to at 2014P1.44 which Billion. wasBut it at missed P1.44 the Billion. target But by it around missed P129M the target or 7%. by The around number P129M ofor cubic 7%. meters The number sold contributed of cubic to meters the surge sold of attributed the Net Operating to the surgeRevenue of whichthe Net is at Operating 59 Million, Revenuecomparing which it to 2014 is at which 59 Million, was atcomparing 56 Million, an it toincrease 2014 whichof 3 Million was or at about 56 Million, 7%. The an number increase of billed of 3 service Million connections or about 7%. also The contributed number toof the billed increase service from 162,543 in 2014connections to 170,655 in also 2015. contributed to the increase from 162,543 in 2014 to 170,655 in 2015. Total Operating Expense (OPEX) for the year reached to P1.3 Billion while in 2014 it was at P1.12 Million, a surge of P184 Million or 16%. The purchase of 18,000 cubic meters per day of water from Cebu Manila Water Development Inc. contributed to the Total Operating Expense (OPEX) for the year reached to P1.3 Billion while in 2014 it was at P1.12 Million, a surge of increase of other operating expenses by P190M. P184 Million or 16%. The purchase of 18,000 cubic meters per day of water from Cebu Manila Water Development Owing to an increase of OperatingInc. contributed Revenues atto 12% the and increase an increase of other in OPEX operating at 16%, the expenses District achievedby P190M. a Net Income of P294 Million. The Net Income Ratio went down slightly to 18.10% as compared in 2014 which was at 18.46%. Owing to an increase of Operating Revenues at 12% and an increase in OPEX at 16%, the District achieved a Net CashIncome balancesof P294 and otherMillion. highlyThe liquidNet investmentsIncome Ratio amountedwent todown P1.35Billion.slightly toDisbursements18.10% as comparedfor the year werewith as2014 follows:which was at 18.46%. > OPEX- P1.4 Billion > Capital Outlay- P149 Million > Debt Service- P178 Million Cash > Taxes- balances P109 Million and other highly liquid investments amounted to P1.35Billion. Disbursements for the year are as follows: > OPEX- P1.4 Billion Capital outlay include the following projects and other assets disbursed for the year 2015: > Capital Outlay- P149 Million >Pipeline Expansion- P92 Million > Debt Service- P178 Million >Pipeline Rehabilitation- P13 Million >Various > Taxes- equipment- P109 Million P18 Million Capital >Others- outlay P26 Million include the following projects and other assets disbursed for the year 2015: >Pipeline Expansion- P92 Million >Pipeline Rehabilitation- P13 Million

26 | annual report 2015 STATEMENT OF MANAGEMENT RESPONSIBILITY

The Management of METROPOLITAN CEBU WATER DISTRICT is responsible for all information and representations contained in the financial statements for the calendar year ended December 31, 2015 and 2014. The financial statements have been prepared in conformity with generally accepted accounting principles and reflect the amounts that are based on the best estimates and informed judgment of Management with an appropriate consideration to materiality.

In this regard, management maintains a system of accounting and reporting which provides necessary internal controls to ensure that transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition and liabilities are recognized.

The Board of Directors reviews the financial statements before such statements are approved and submitted to the creditors and Local Water Utilities Administration (LWUA).

The Commission on Audit (COA), in pursuance of its mandate under Section 2, Article IX-D of the Philippine Constitution and pertinent provisions of Presidential Decree 1445, is tasked to audit the financial statements of the District in accordance with laws, COA and INTOSAI standards, and applicable generally accepted auditing standards and expresses its opinion on the fairness of presentation upon completion of such examination.

LIAN S. GARCIANO Accounting Department Manager

MA. ROWAN TEÑEDO ENGR. NOEL R. DALENA OIC - AGM for Finance Acting General Manager

DISCLOSURES OF EVENTS AFTER THE BALANCE SHEET DATE

The draft financial statements for the year-ended December 31, 2015 were completed on January 15, 2016. After management review, the financial statements were approved and authorized for issue on January 26, 2016 and will be filed with the Bureau of Internal Revenue (BIR) on the second week of April 2016.

LIAN S. GARCIANO Accounting Department Manager

MA. ROWAN TEÑEDO ENGR. NOEL R. DALENA OIC - AGM for Finance Acting General Manager

annual report 2015 | 27 METROPOLITAN CEBU WATER DISTRICT METROSTATEMENTSPOLITA OFN C FINANCIALEBU WATER POSITION DISTRICT STATEMENTS OF financial position

A S S E T S December 31 2015 2014

CURRENT ASSETS Cash and cash equivalents (Note 2 and 3) 1,129,932,426 991,910,806 Trade and Other Receivables - net (Notes 2 & 4) 288,969,093 289,322,986 Materials and supplies inventories (Notes 2 & 5) 218,368,747 215,831,279 Prepayments and other current assets (Note 6) 60,490,499 18,984,279 Total Current Assets 1,697,760,766 1,516,049,350

NON-CURRENT ASSETS Utility plant in service - net (Notes 2 & 7) P 1,645,699,088 P 1,683,821,462 Investment property - net (Notes 2 & 8 ) 27,815,193 29,007,272 Other financial assets (Note 9) 305,614,478 359,256,632 Total Non-Current Assets 1,979,128,760 2,072,085,366 P 3,676,889,526 P 3,588,134,716

LIABILITIES AND CAPITALIZATION

CURRENT LIABILITIES Accounts payable and accrued expenses (Note 10) 195,780,771 122,930,733 Customers' deposits 220,016,742 205,957,105 Current portion of long-term loans (Note 11) 105,110,928 91,901,716 Total Current Liabilities 520,908,441 420,789,554

NON-CURRENT LIABILITIES Long-term loans - net of current portion (Note 11) 524,050,440 633,692,022 Deferred liabilities (Note 12) 100,480,110 95,333,002 Total Non-Current Liabilities 624,530,550 729,025,024

CAPITALIZATION Equity (Notes 1 & 14) P 12,888,650 P 12,888,650 Revaluation surplus (Notes 7) 183,997,770 183,997,770 Retained earnings (Notes 7 & 18) 2,100,974,585 1,959,771,959 Total Capitalization 2,297,861,005 2,156,658,379

RESERVE FOR RETIREMENT AND OTHER OPERATING RESERVES (Note 15) 233,589,530 281,661,759 P 3,676,889,526 P 3,588,134,716

28 | annual report 2015 METROPOLITAN CEBU WATER DISTRICT STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

METROPOLITAN CEBU WATER DISTRICT STATEMENTS OF INCOME 2015 2014 FOR THEMETRO YEARSPO ENDEDLITAN CDECEMBEREBU WATER 31, DI2015STR ANDICT 2014 OPERATING INCOME STATEMENTS OF income Water Sales - net (Note 2) For the Years Ended DecemberP 31, 1,612,285,0242015 and 2014 P 1,435,190,542 Penalties and Service Charges (Notes 2 and 19) 20,081,406 16,520,052 1,632,366,430 2015 1,451,710,5942014

OPERATING EXPENSESINCOME OperationWater Sales (Note - net 16) (Note 2) P 1,081,717,520 1,612,285,024 P 1,435,190,542 918,749,383 MaintenancePenalties and (Note Service 17) Charges (Notes 2 and 19) 239,628,297 20,081,406 218,466,392 16,520,052 1,321,345,817 1,632,366,430 1,137,215,7751,451,710,594 OPERATING EXPENSES INCOME FROM OPERATIONS 311,020,614 314,494,819 Operation (Note 16) 1,081,717,520 918,749,383 Maintenance (Note 17) 239,628,297 218,466,392 MISCELLANEOUS INCOME (EXPENSES) Other Miscellaneous Income (Notes 2 and 18) 1,321,345,817 22,362,325 1,137,215,775 11,709,861 Interest Income (Note 2) 7,858,338 7,538,366 INCOMEInterest FROMExpense OPERATIONS (Note 11) ( 311,020,614 47,388,213 ) ( 314,494,819 66,269,577 ) Unrealized Foreign Exchange Gain/ (Loss) - net (Note 2) ( ) MISCELLANEOUS INCOME (EXPENSES) 379,593 449,432 Other Miscellaneous Income (Notes 2 and 18) ( 16,787,95822,362,325 ) ( 47,470,782 11,709,861 ) Interest Income (Note 2) METROPOLITAN CEBU WATER DISTRICT 7,858,338 7,538,366 NETInterest INCOME Expense (Note 11) ( P 294,232,656 47,388,213 ) ( P 267,024,037 66,269,577 ) STATEMENTS OF INCOME Unrealized Foreign Exchange Gain/ (Loss) - net (Note 2) 379,593 ( 449,432 ) FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 ( 16,787,958 (0) ) ( 47,470,782 ) (16,787,958) NET INCOME P 294,232,656 P 267,024,037

(0) See Accompanying Notes to Financial Statements. (16,787,958) 2015 2014 METROPOLITAN CEBU WATER DISTRICT METROSTATEMENTSPOLITAN OF C CHANGESEBU WATER IN EQUITY DISTRICT FORSee THEAccompanying YEARS ENDED Notes DECEMBER to Financial 31, 2015Statements. and 2014 OPERATING INCOME statement of changes in equity Water Sales - net (Note 2) For the Years Ended DecemberP 31, 1,612,285,0242015 and 2014 P 1,435,190,542 Penalties and Service Charges (Notes 2 and 19) 20,081,406 16,520,052

Revaluation 1,632,366,430 Retained 1,451,710,594 Equity Surplus Earnings Total OPERATING EXPENSES BalanceOperation at December (Note 16) 31, 2012 P 12,888,650 P 183,997,770 1,081,717,520 P 1,683,533,103 P 918,749,383 1,880,419,523 PriorMaintenance years' adjustments (Note 17) - - (239,628,297 200,022,267 )( 218,466,392 200,022,267 ) Restated Retained Earnings, 1,321,345,817 1,137,215,775 December 31, 2012 P 12,888,650 P 183,997,770 1,483,510,836 1,680,397,256

NetINCOME income FROMfor the year OPERATIONS - - 311,020,614 215,688,701 314,494,819 215,688,701 Balance at December 31, 2013 P 12,888,650 P 183,997,770 P 1,699,199,537 P 1,896,085,957 MISCELLANEOUS INCOME (EXPENSES) Prior years' adjustments - - ( 6,451,615 )( 6,451,615 ) Other Miscellaneous Income (Notes 2 and 18) 22,362,325 11,709,861 RestatedInterest Retained Income Earnings, (Note 2) 7,858,338 7,538,366 December 31, 2013 P 12,888,650 P 183,997,770 1,692,747,922 1,889,634,342 Interest Expense (Note 11) ( 47,388,213 ) ( 66,269,577 ) NetUnrealized income for Foreignthe year Exchange Gain/ (Loss) - net (Note - 2) - 379,593 267,024,037 ( 267,024,037449,432 ) Balance at December 31, 2014 P 12,888,650 P 183,997,770( P 16,787,958 1,959,771,959) ( P 47,470,782 2,156,658,379) Prior years' adjustments - - ( 153,030,030 )( 153,030,030 ) NET INCOME P 294,232,656 P 267,024,037 Restated Retained Earnings, December 31, 2015 P 12,888,650 P 183,997,770 1,806,741,929 2,003,628,349 (0) Net income for the year - - (16,787,958) 294,232,656 294,232,656 Balance at December 31, 2015 P 12,888,650 P 183,997,770 P 2,100,974,585 P 2,297,861,005

See Accompanying Notes to Financial Statements.

annual report 2015 | 29 METROPOLITAN CEBU WATER DISTRICT STATEMENTS OF CASH FLOWS

For the Years Ended METROPOLITAN CEBU WATER DISTRICT2015 2014 STATEMENTS OF CASH FLOWS CASH FLOWS FROM OPERATING ACTIVITIES METROPOLITAN CEBU WATER DISTRICT Net income for the year P 294,232,656 P 267,024,037 Adjustments to reconcile net income to cashSTATEMENTS OF CASH FLOWS flows provided by operating activities:METROPOLITAN CEBU WATER DISTRICT Depreciation 137,221,384 136,854,470 Provision for uncollectible accountsSTATEMENTS OF Ca s h flow2,651,128 - Prior year's adjustments For the Years Ended December( 31, 2015 153,030,030 andFor 2014the Years) Ended( 6,451,615 ) 2014 Provision for retirement 2015 8,457,004 25,654,634 Interest expense 47,388,213 66,269,577 CASH FLOWS FROM OPERATING ACTIVITIES Unrealized foreign exchange (gain) / loss ( For379,593 the Years) Ended 449,432 InterestNet income Income for the year P ( 2015 294,232,656 7,858,338 ) P ( 267,024,037 20147,538,366 ) Adjustments to reconcile net income to cash CASHOperatingflows FLOWS provided income FROM bybefore OPERATINGoperating working activities: capital ACTIVITIES changes 329,441,610 482,262,169 ChangesDepreciation in assets and liabilities 137,221,384 136,854,470 Net (income Increase) for thedecrease year in assets: P 294,232,656 P 267,024,037 Provision for uncollectible accounts 2,651,128 - Adjustments Trade andto reconcile Other Receivables net income to cash ( 2,297,235 ) 4,841,589 Prior year's adjustments ( 6,451,615 ) flows Materials provided and by suppliesoperating inventory activities: (( 153,030,030 2,537,468 )) ( 82,336,106 ) DepreciationProvision Prepayments for retirement and other current assets ( 137,221,384 41,506,2218,457,004 ) 136,854,470 25,654,634 890,262 Provision Interest Increase expense for (decrease) uncollectible in liabilities: accounts 47,388,2132,651,128 66,269,577 - PriorUnrealized Accounts year's foreignadjustments payable exchange and acrued (gain) expenses / loss (( 153,030,030 72,850,037 379,593 )) ( 6,451,6154,038,399 449,432 ) Customers' deposits 13,635,390 InterestProvision Income for retirement ( 14,059,6388,457,0047,858,338 ) ( 25,654,634 7,538,366 ) Current portion of long-term loans 13,209,211 7,463,565 Interest expense 47,388,213 66,269,577 Operating Deferred income liabilities before working capital changes 329,441,610 5,147,108 482,262,169 5,711,012 UnrealizedChanges in foreign assets exchangeand liabilities (gain)METROPOLITAN / loss CEBU WATER( DISTRICT 379,593 ) 449,432 P InterestNet (Cash Increase) Income Provided decrease by Operating in assets: ActivitiesSTATEMENTS OF CASHP( FLOWS 388,366,680 7,858,338 ) ( 436,506,280 7,538,366 ) Trade and Other Receivables ( 2,297,235 ) 4,841,589 Operating income before working capital changes 329,441,610 482,262,169 Materials and supplies inventory ( 2,537,468 ) ( 82,336,106 ) Changes Prepayments in assets and and other liabilities current assets ( 41,506,221 ) 890,262 ( IncreaseIncrease) (decrease) decrease inin assets:liabilities: TradeAccounts and payable Other Receivables and acrued expenses ( 72,850,0372,297,235 ) 4,841,5894,038,399 MaterialsCustomers' and deposits supplies inventorySee Accompanying Notes to Financial( Statements. 14,059,6382,537,468 ) ( 82,336,10613,635,390 ) PrepaymentsCurrent portion and of otherlong-term current loans assets ( 41,506,22113,209,211 ) 7,463,565890,262 Increase (decrease) in liabilities: Deferred liabilities 5,147,108 5,711,012 Accounts payable and acrued expenses 72,850,037For the Years Ended 4,038,399 2014 Net Cash Customers' Provided deposits by Operating Activities P 2015 388,366,68014,059,638 P 436,506,280 13,635,390 Current portion of long-term loans 13,209,211 7,463,565 CASH FLOWS Deferred FROM liabilities OPERATING ACTIVITIES 5,147,108 5,711,012 NetNet Cashincome Provided for the year by Operating Activities P P 388,366,680294,232,656 P P 436,506,280267,024,037 Adjustments to reconcile net income to cash flows provided by operating activities: See Accompanying Notes to Financial Statements. Depreciation 137,221,384 136,854,470 Provision for uncollectible accounts 2,651,128 - CASH FLOWS FROM INVESTING ACTIVITIES Prior year's adjustments ( 153,030,030 ) ( 6,451,615 ) UtilityProvision plant for in retirementservice See Accompanying Notes toP Financial( Statements. 97,906,9318,457,004 ) P ( 96,398,89025,654,634 ) OtherInterest financial expense assets 45,185,15047,388,213 ( 194,922,779 66,269,577 ) InterestUnrealized received foreign exchange (gain) / loss ( 7,858,338379,593 ) 7,538,366 449,432 NetInterest Cash Income Used in Investing Activities (( 44,863,4447,858,338 )) (( 283,783,303 7,538,366 )) Operating income before working capital changes 329,441,610 482,262,169 CASHChanges FLOWS in FROM assets FINANCING and liabilities ACTIVITIES ( Increase) decrease in assets: Long-term loans payable ( 109,641,582 ) ( 91,901,716 ) CASH FLOWS Trade and FROM Other INVESTING Receivables ACTIVITIES ( 2,297,235 ) 4,841,589 Operating reserves 111,231,240 Materials and supplies inventory (( 48,072,2292,537,468 )) ( 82,336,106 ) Utility plant in service P ( 96,398,890 ) Interest Prepayments paid and other current assets P (( 47,388,21341,506,22197,906,931 )) ( 66,269,577 890,262 ) Other financial assets 45,185,150 ( 194,922,779 ) Net CashIncrease Used (decrease) in Financing in liabilities: Activities ( 205,102,024 ) ( 46,940,053 ) CASHInterest FLOWS Accounts received FROM payable INVESTING and acrued ACTIVITIES expenses 72,850,0377,858,338 7,538,3664,038,399 EFFECT Customers'OF FOREIGN deposits EXCHANGE CHANGES ON 14,059,638 13,635,390 NetUtility Cash plant Used in servicein Investing Activities P (( 97,906,93144,863,444 )) P (( 283,783,303 96,398,890 )) Current portion of long-term loans 7,463,565 CASHOther AND financial CASH assets EQUIVALENTS 45,185,15013,209,211 379,593 ( 194,922,779 449,432 ) Deferred liabilities 5,147,108 5,711,012 NETCASH InterestINCREASE FLOWS received FROM IN CASH FINANCING AND CASH ACTIVITIES EQUIVALENTS 138,021,620 7,858,338 105,333,492 7,538,366 Net Cash Provided by Operating Activities P 388,366,680 P 436,506,280 CASHNetLong-term CashAND CASHUsed loans in EQUIVALENTS Investing payable Activities AT BEGINNING (( 109,641,58244,863,444 )) (( 283,783,303 91,901,716 )) OFOperating YEAR reserves ( 991,910,80648,072,229 ) 886,577,314111,231,240 CASHInterest FLOWS paid FROM FINANCING ACTIVITIES ( 47,388,213 ) ( 66,269,577 ) CASH AND CASH EQUIVALENTS AT END OF YEAR P 1,129,932,426 P 991,910,806 NetLong-term Cash Used loans in Financingpayable Activities (( 109,641,582205,102,024 )) (( 91,901,71646,940,053 )) Operating reserves ( 48,072,229 ) 111,231,240 EFFECT OF FOREIGN EXCHANGESee CHANGES Accompanying ON Notes to Financial- Statements. 0 0 Interest paid ( 47,388,213 ) ( 66,269,577 ) CASH AND CASH EQUIVALENTS 379,593 0 ( 449,432 0 ) Net Cash Used in Financing Activities ( 205,102,024 ) ( 46,940,053 ) 30NET | INCREASE annual IN report CASH AND 2015 CASH EQUIVALENTS 138,021,620 105,333,492 EFFECT OF FOREIGN EXCHANGESee CHANGES Accompanying ON Notes to Financial Statements. CASH AND CASH EQUIVALENTS AT BEGINNING CASH AND CASH EQUIVALENTS 379,593 ( 449,432 ) OF YEAR 991,910,806 886,577,314 NET INCREASE IN CASH AND CASH EQUIVALENTS 138,021,620 105,333,492 CASH AND CASH EQUIVALENTS AT END OF YEAR P 1,129,932,426 P 991,910,806 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 991,910,806 886,577,314 - 0 0 CASH AND CASH EQUIVALENTS AT END OF YEAR P 1,129,932,426 0 P 991,910,806 0 CASH FLOWS FROM INVESTING ACTIVITIES

Utility plant in service See Accompanying Notes toP Financial( - Statements. 97,906,931 0 ) P ( 96,398,890 0 ) Other financial assets 45,185,150 0 ( 194,922,779 0 ) Interest received 7,858,338 7,538,366 Net Cash Used in Investing ActivitiesSee Accompanying Notes to Financial( Statements. 44,863,444 ) ( 283,783,303 )

CASH FLOWS FROM FINANCING ACTIVITIES Long-term loans payable ( 109,641,582 ) ( 91,901,716 ) Operating reserves ( 48,072,229 ) 111,231,240 Interest paid ( 47,388,213 ) ( 66,269,577 ) Net Cash Used in Financing Activities ( 205,102,024 ) ( 46,940,053 ) EFFECT OF FOREIGN EXCHANGE CHANGES ON CASH AND CASH EQUIVALENTS 379,593 ( 449,432 ) NET INCREASE IN CASH AND CASH EQUIVALENTS 138,021,620 105,333,492 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 991,910,806 886,577,314

CASH AND CASH EQUIVALENTS AT END OF YEAR P 1,129,932,426 P 991,910,806

- 0 0 0 0

See Accompanying Notes to Financial Statements. STATEMENTS reconciling book income and income tax return STATEMENT RECONCILINGFor the Years BOOK Ended INCOME December AND INCOME 31, 2015 TAX RETURN For the Year Ended December 31, 2015

GROSS INCOME PER BOOKS Operating Income 1,632,366,430 Miscellaneous Income 30,220,662 Total Gross Income Per Books 1,662,587,093

DEDUCT EXCLUSIONS FROM GROSS INCOME: Water Sales (Pursuant to Sec. 32 (B) 7 (b) Chapter VI and Sec. 34, Chapter VII, NIRC 1997) 1,612,285,024 Interest Revenues Subject to Final Tax 7,858,338 Total Exclusions 1,620,143,362

TAXABLE GROSS INCOME 42,443,731

LESS ALLOWABLE DEDUCTIONS FROM TAXABLE GROSS INCOME: Operation Expenses 1,081,717,520 Maintenance Expenses 239,628,297 Total Allowable Deductions 1,321,345,817

TAXABLE NET INCOME (LOSS) (1,278,902,086)

INCOME TAX DUE ON TAXABLE NET INCOME -

annual report 2015 | 31 METROPOLITAN CEBU WATER DISTRICT Notes To Financial Statements December 31, 2015

1. GENERAL INFORMATION

In 1910, the Cebu Municipal Council created the Osmeña Waterworks System (OWS), which was the first and only major water source used to operate and manage the water facility of the City. However, due to the rising water demand of the people in 1970’s, which OWS failed to address coupled by its recurring financial losses, a transition management was created. Thus, when Presidential Decree 198 or the Local Water Utilities Act of 1973 was created promising loans, trainings and other assistance to autonomous water districts, the Cebu City Government, under the mayorship of Engr. Eulogio Borres, approved Resolution No. 873 on May 9, 1974 to create Metropolitan Cebu Water District (MCWD). In turn, Mayor Borres turned over OWS assets and facilities that served as its initial capital. It started its full commercial operations on February 1, 1975. In March 1992, the Supreme Court declared all water districts as a Government-Owned and Controlled Corporations (GOCCs). Hence, MCWD stopped operating as a Quasi-Public Corporation. Everything that has to be done must conform to Civil Service Commission (CSC), the Department of Budget of Management (DBM), and the Commission on Audit (COA) rules and regulations. MCWD continues to be true to its Mission-Vision to protect and sustain Metro Cebu’s limited water resources, while living out its commitment to provide safe, potable and affordable water to Metro Cebu. Today, MCWD provides water to the cities of Cebu, Talisay, Mandaue and Lapu-lapu, and the municipalities of Consolacion, Liloan, Compostela, and Cordova. The District was registered with the Bureau of Internal Revenue on February 13, 1997 as a GOCC. Its principal office is located at corner Lapu-lapu and Magallanes Sts., Cebu City.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting System and Compliance The accompanying financial statements and records were prepared in accordance with the uniform and standard accounting system prescribed by the LOCAL WATER UTILITIES ADMINISTRATION (LWUA). The Financial Statements along with the accompanying notes have been prepared in accordance with accounting principles generally accepted in the Philippines as set forth in the PFRS.

Receivables The allowance method has been adopted in the valuation of trade receivables. Starting 1986, the allowance for bad debts was estimated at 2% of the outstanding receivables at the end of the year. Prior to 1986, it was estimated at 2% of gross billings for the year. However, with recommendation from COA to increase the allowance for bad debts, the new estimated amount for the year 2015 was increased to 3%.

Inventories Inventories are stated at a weighted average cost method.

Utility Plant in Service Property and equipment are initially measured at cost less any subsequent accumulated depreciation, amortization and impairment losses. Subsequent expenditures on property and equipment are recognized only as an asset when the expenditure improves the condition of the asset beyond its originally assessed standard of performance or prolongs its estimated economic useful life. All other subsequent expenditures, such as repairs and maintenance and overhaul costs, are recognized as expenses when incurred. Depreciation and amortization are computed using the straight-line method. The following are the estimated useful lives of the properties and equipment of the company.

32 | annual report 2015 The cost of maintenance and repairs is charged to income as incurred; significant renewals and betterments are capitalized. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss will be reflected in income for the period.

Investment Property Investment property is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is computed using the straight-line method over its estimated useful life.

Revenue Recognition Revenue is recognized when it is probable that the economic benefit associated with the transaction will flow to the Company and the amount of revenue can be measured reliably. Interest income is accrued on a timely basis, and dividend income from investment is recognized when the right to receive payment has been established.

Foreign Currency Transactions Transactions in foreign currencies are recorded in pesos based on the exchange rates prevailing at the time of the transactions. Foreign exchange gains or losses arising from restatement of foreign denominated monetary items and settlement of receivables and payables in foreign currencies are credited or charged directly to income.

3. CASH AND CASH EQUIVALENTS Cash and cash equivalents consists of:

All collections of the water district are promptly deposited in the depository banks. The cash on hand at the end of the year are those collections that remain as deposit in transit, crediting to the bank accounts at the beginning of the succeeding year.

The temporary investments are short term investments that are highly liquid, with maturities of one month to three months and are invested in the Development Bank of the Philippines and in the Land Bank of the Philippines.

4. TRADE AND OTHER RECEIVABLES Trade and Other Receivables consists of:

5. MATERIALS AND SUPPLIES INVENTORIES Inventories consist of:

6. PREPAYMENTS AND OTHER CURRENT ASSETS This account consists of:

annual report 2015 | 33 7. UTILITY PLANT IN SERVICE Comprising this account are the following:

On March 17, 2006, a contract of loan was entered with Development Bank of the Philippines (DBP) to refinance the existing long- term loans with Local Water Utilities Administration (LWUA). Under the terms and conditions of the contract, this loan shall be secured by a real estate mortgage consisting of land and building. Documentary stamp tax amounting to P 2,503,849.55 was paid on March 14, 2006. Total land area put up as collateral for the loan is 8,453 square meters. On July 5, 1991, some properties were appraised by Asian Appraisal Co. Inc., an independent appraiser. On the said date, the properties were assessed to have a sound value of P 694,403,360 which resulted to an appraisal increment of P 575,535,327. The net appraisal increment that resulted from the revaluation in 1991 was credited to the account “Revaluation Increment in Property” and is shown under “Capitalization” in the Balance Sheet. Depreciation is computed based on the carrying value of the property using the straight-line method over their estimated useful lives.

34 | annual report 2015 On December 31, 2005 and 2006, accumulated depreciation of revaluation surplus amounting to P 391,537,558 and P 390,457,797, respectively, was closed to retained earnings in accordance to SFAS/IAS No. 16 “Piecemeal Realization of Revaluation Surplus”. Starting 2007, the new balance of the Revaluation Increment in Property is P183,997,770.

8. INVESTMENT PROPERTY This account is the two-storey building owned by the District which was leased out to Prince Warehouse Club for a fifteen (15)-year period under an operating lease contract. This property is among the collateral securities mortgaged to the Development Bank of the Philippines (DBP).

9. OTHER FINANCIAL ASSETS This account is composed of:

10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES This account composed of:

The amount of withholding taxes accrued for the year amounted to:

annual report 2015 | 35 11. LOANS PAYABLE Loans payable were obtained from the following creditors:

The loans with the Local Water Utilities Administration (LWUA) were credit lines that were obtained to finance the various projects of the District. Interest rates from these loans ranged from 10% to 14% per annum and were supposed to be amortized over a period of 20 to 26 years. On March 17, 2006, a contract of loan was entered with Development Bank of the Philippines (DBP) in order to refinance the existing long-term loans from Local Water Utilities Administration (LWUA). Salient terms and conditions of the contract are the following: a. Term - 15 years to commence on the month following the release of the loan; b. Interest rate - 8.5% per annum computed using the annuity method; c. Interest differential/savings to be deposited to a Escrow Account; d. Loan to be secured by a real estate mortgage. However, starting April 2015, DBP has lowered the interest rate to 6%.

12. DEFERRED LIABILITIES This account is composed of:

13. CONTIGENT LIABILITY a. MCWD has a present obligation to the Cebu City Government for Real Property Taxes of real properties situated within the latter’s jurisdiction. These properties became the subject of foreclosure proceedings in 2012. The total delinquency amounted to P 95M as of October 2013. However, questions arose as to the taxability of some properties as they have been declared as watersheds and are therefore, exempted from tax while others have different other claimants or owners. Negotiations are on- going as to the settlement of this obligation b. Franchise Tax Liability for the fiscal year 2003 payable to the Bureau of Internal Revenue had a pending resolution with the Court of Tax Appeal (CTA). MCWD appealed that the interest and surcharges be condoned. However, on April 2014, a decision from the CTA was released and MCWD is liable for the amount of P 28,645,421.74. Recently, MCWD filed a Motion for Reconsideration on the decision of CTA and the former is now waiting resolution of this matter.

14. EQUITY On September 22, 2006, MCWD Knowledge Center received by way of transfer/assignment various assets with a net book value of P 1,576,490 from the Government of Netherlands. As per Deed of Transfer, these assets are to be used for the implementation of the project known as “Central Cebu Water Resources Management through Integrated Development” or Cebu Water Remind Project.

15. RESERVE FOR RETIREMENT AND OTHER OPERATING RESERVES This account consists of the following:

Amount set-up as reserve for retirement benefits is based on the existing MCWD Retirement Plan with respect to those who are already entitled thereto. This is intended for the employees who were hired prior to April 1993.

36 | annual report 2015 16. OPERATION EXPENSES This account is composed of the following:

17. MAINTENANCE EXPENSES This account is composed of the following:

18. OTHER MISCELLANEOUS INCOME This account is composed of the following:

19. PENALTIES AND SERVICE CHARGES

20. PRIOR YEARS’ ADJUSTMENT Transactions, charges and other adjustments that relate to previous years and having no effect in the current year are recorded as Prior Years’ Adjustment and are closed to the Retained Earnings account.

21. RECLASSIFICATION Certain accounts were reclassified to conform to the 2015 financial statements presentation.

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