The government said Thursday it would not pay P10.8 billion to private water concessionaires as ordered by a Singapore-based arbitration court, arguing that the concession agreements with the two companies were unfavorable to the country.
Presidential Spokesman Salvador Panelo also said President Rodrigo Duterte has the constitutional power to revoke the “onerous” deals signed with Maynilad and Manila Water in 1997.
Asked if the government would pay the court-mandated fines, Panelo said: “No, because the deal is onerous. It’s really disadvantageous for the government.”
President Duterte on Tuesday expressed outrage over the order of the Permanent Court of Arbitration to pay the Ayala-owned Manila Water P7.4 billion and Pangilinan-led Maynilad P3.4 billion for their respective losses since the state did not allow the companies to increase prices years ago.
The two utility companies distribute water in Metro Manila and its nearby provinces under agreements signed with the Metropolitan Waterworks and Sewerage System during the Ramos administration, which carried a provision that pushes the government to “indemnify” the company against any loss that could result from the regulator’s actions.
As regulator, the MWSS approves or rejects petitions for water rate adjustments.
Duterte directed the Department of Justice to file charges against all those involved in the contracts with the utility firms, including their owners, legal counsels, and government lawyers for “economic sabotage.”
“Let us stop this business of milking the people,” Duterte said Tuesday.
He also asked the DOJ, along with the Office of the Solicitor General, to draft and prepare new “covenants that are favorable to the state and the Filipino people.”
Panelo, who is also Duterte’s chief legal counsel, said the President can rescind the contracts with Maynilad and Manila Water if they are against the interest of the people.
The DOJ reviewed the contracts upon Duterte’s order amid the water crisis earlier this year.
Meanwhile, a law professor said that Maynilad and Manila Water could reinforce the ruling of the Singapore-based PCA if they file a case in a local court.
“The winning party should file in a Regional Trial Court in the country so the arbitral ruling could be recognized, so it can be enforced in the Philippines,” lawyer and UP professor Rowena Daroy-Morales told GMA News in an interview.
Justice Secretary Menardo Guevarra said the government is unlikely to enter into a compromise agreement with the two concessionaires.
“The government is more interested in getting a new deal than in compromising the arbitral award,” Guevarra said in a text message.
Manila Water earlier said it was discussing with the Department of Finance the possibility of coming up with a compromise agreement regarding the P7.3-billion refund ordered by the Singaporean arbitral tribunal.
Guevarra said the Department of Justice found the extension of the contracts to 2037 irregular, considering that the extension was granted 12-13 years before the original expiration of the 25-year concession agreements in 2022.
The DOJ conducted the review upon directive of President Duterte during the water crisis last summer and before the ruling of the arbitral court was released.
Guevarra said the DOJ is currently looking into all legal options against Manila Water and Maynilad and at the same time it would start drafting a new version of the concession agreement without the provisions that are contrary to law and public policy and prejudicial to the interest of the consuming public.
The DOJ secretary pointed out that the government is not barred from questioning the concession agreements although these have been in force for 22 years ago.
“The State is not estopped by the mistakes of its agents, especially if the acts committed are constitutionally or legally infirm, and the statute of limitations does not apply if the act sought to be set
aside is void for being contrary to law or public policy,” Guevarra said.
Ramoncito Fernandez, Maynilad president and chief executive officer, said he already knew of what the Duterte administration would want to look into the provisions of their agreement with the MWSS.
“We have an idea of what the government wants reviewed. We are just waiting for the formal communication to be sent to us,” he said. “We are willing to sit down and discuss with the government.”
Also on Thursday, Dasmariñas City Rep. Elpidio Barzaga Jr. called for a congressional investigation into the private water concessionaires, saying they failed to deliver efficient water services. Despite
Manila Water’s dismal performance in its Manila concession, it has won 11 new projects in 2018 through its Manila Water Philippine Ventures, he said.
On the other hand, Barzaga said, despite its claim of losses, Maynilad reported a net income of P7.3 billion in 2018, up from P6.8 billion in 2017. According to its 2018 Annual Report, its core income increased by 5 percent due to the combined effect of a 3 percent growth in billed volume and several rounds of tariff increases.
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