PRESIDENT Duterte yesterday rejected an arbitration ruling ordering the Philippine government to pay a private water concessionaire more than P7 billion in compensation following losses that they incurred for the past four years.
“Yayariin ko sila. Pag dinemanda nila tayo diyan sa…hindi magbayad ng P7 billion (I will destroy them. If they sue us there at the… we will not pay P7 billion),” Duterte said during his visit to Legazpi City in the aftermath of Typhoon Tisoy.
Duterte again ranted against private concessionaires Manila Water Company and Maynilad Water for the “onerous” and “disadvantageous” contracts that they made with the government in 1997.
He even threatened to go to the offices of the water firms to lock them up and burn them to the ground.
Duterte said he is not scared of going to jail since he is already old and he is ready to assume responsibility for his actions.
The President said he was pissed off as the country had surrendered everything including its sovereignty when the onerous contracts were made and signed.
Chief Presidential Legal Counsel Salvador Panelo earlier on Thursday said the government will not pay the billions of pesos worth of compensation that the Permanent Court of Arbitration (PCA) has awarded to the Manila Water Company and Maynilad Water because the decision was based from an “onerous” contract.
Panelo, when asked if the government will pay the over P10 billion damages to the two utility firms, said: “Hindi kasi nga onerous iyung kontrata eh, masyadong disadvantageous sa gobyerno (No, because the contract is onerous, it is too disadvantageous to the government).”
The PCA has ordered the Philippine government to pay Manila Water P7.39 billion to compensate for the losses that the company incurred from June 2015 to November 2019, and to pay Maynilad P3.4 billion for its losses from 2013 to 2017 after the government rejected its bid to increase water rates.
President Duterte the other night threatened to charge the water concessionaires with economic sabotage for abusing the agreements and milking the people using the onerous contracts.
Duterte had hinted that the international court’s decisions were biased, claiming that private investors had a stake or alliance with the arbitral court.
Panelo echoed the Presidents observations, alleging that the PCA decision did not find anything wrong with the water deals because they were “partners.”
“Eh magkakakampi iyang mga iyan eh. Kaya alam mo, iyang mga may-ari niyan, may mga interlocking corporations iyan (They are all partners. Those owners have interlocking corporations),” Panelo, concurrent presidential spokesman, said.
Panelo said he is not aware as to when the economic sabotage charges will be filed, leaving the discretion to the Department of Justice (DOJ) which he said was still looking into the issue.
He said that apart from the water concessionaires, the government is also looking at charging the people behind the contracts.
Panelo said even government representatives that were supposed to promote and protect the interest of the people and the country appeared to have colluded with the private water firms.
Justice Secretary Menardo Guevarra said the government is studying what legal actions it can take against the two water concessionaires, including challenging the decision of the PCA.
“We are still studying our legal options. Our legal remedies are not mutually exclusive. The Office of the Solicitor General is contemplating of judicial remedies here and or abroad,” Guevarra said when asked for an update on the matter.
He said the grounds for appealing the ruling of the arbitration court depends on the Office of the Solicitor General (OSG) as the DOJ is not privy to what happened in the arbitration proceedings.
Guevarra said that if the water concessionaires will be “constrained” to enforce the arbitral ruling here in the country, the government will oppose the move before the proper court.
“In terms of local enforcement, that’s a totally different ball game because we can oppose the enforcement on grounds that it’s contrary to public policy and so on,” Guevarra said.
He said right now some members of the Cabinet want an overhaul of the existing concession agreements while others are thinking of more drastic actions.
“PRRD has asked the DOJ to come up with an integrated solution. We’ll do. We’ll probably start with the drafting of a new version that excises all provisions in the concession agreement that we believe are contrary to law and public policy, as well as those that are highly prejudicial to the interest of the consuming public,” Guevarra said.
The DOJ chief said the government is more interested in getting a new deal that in compromising the arbitral award.
POWER TO RESCIND
Panelo said the President has already ordered the DOJ and OSG to draw up new water contracts. Duterte the other night ordered Solicitor General Jose Calida and Finance Secretary Carlos Dominguez III to make sure that the new contracts will be equitable to the country, the people and the government.
Panelo said the President has the power to rescind the water contracts if it is proven to be detrimental to public interest.
“Sa Saligang Batas, ang pangunahing tungkulin ng Pangulo ay pagsilbihan at proteksyunan ang taong bayan. So on the basis of that, the President can do things that can either annul, rescind contracts kung saan arranged or agreed against the interest of the people or public policy (Under the Constitution, the primary duty of the President is to serve and protect the people. So on the basis of that, the President can do things that can either annul, rescind contracts if the arrangement or agreement is against the interest of the people or public policy),” he said.
Guevarra affirmed that the government is not barred from seeking changes or amendments in the concession agreements with Maynilad and Manila Water, especially if the provisions concerned are legally infirm.
Guevarra said “there is also a contractual provision on amendments to the concession agreement” that the government can use.
“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 limitation does not apply if the act sought to be set aside is void for being contrary to law or public policy,” he said, citing previous jurisprudence on the matter by the Supreme Court.
“In any event, there is a standard separability clause that leaves other valid provisions effective,’ Guevarra added.
Among the “onerous” and “disadvantageous” provisions found by the government include the prohibition against government’s interference in rate-setting, the provision on indemnity for possible losses in the event of such government interference, and the extension of the concession agreement until 2037 even before the lapse of the original term in 2022.
The prohibition against government interference in rate-setting and the provision on indemnity for possible losses in the event of such interference were cited by Maynilad and Manila Water when they brought their financial losses before the arbitral court.
Dasmariñas City Rep. Elpidio Barzaga Jr. on Thursday filed a resolution seeking a congressional investigation into the Manila Water’s demand for compensation.
Barzaga, chair of the House committee on environment, filed the resolution after Duterte threatened to scrap the concession agreement entered into by Manila Water and Maynilad with the Metropolitan Waterworks and Sewerage System (MWSS) in favor of a new one which he said would “really (be) favorable to public, to government.”
“The P7.39 billion comes after the country went through a recent water shortage that brought misery to tens of thousands of Filipinos that still looms when the summertime comes,” Barzaga said in the resolution, adding that it is clear to every Filipino that Manila Water and Maynilad “have failed to deliver efficient water services.”
“Unfortunately, despite Manila Water’s dismal performance in its Manila concession, it has won eleven (11) new projects in 2018 through its Manila Water Philippine Ventures,” it said.
The DOJ has said the government stands to lose billions of pesos to Manila Water and Maynilad because of disadvantageous provisions prohibiting government interference in rate setting and indemnity in case of interference.
Barzaga said Manila Water is claiming P7.39 billion in supposed losses it suffered “despite the fact that according to them, it posed a gross income of P6.5 billion, (or) a net income increase of six percent from the previous year.”
On the other hand, Maynilad reported a net income of P7.3 billion in 2018, up fromP6.8 billion in 2017. According to its 2018 Annual Report, its core income increased by five percent due to the combined effect of a three percent growth in billed volume and several rounds of tariff increases.
Barzaga said Manila Water and Maynilad still have to pay a fine of nearly P1billion each for violating the Philippine Clean Water Act when it failed to put up sewage systems in their service areas 10 years ago.
“The two firms have also been penalized by the (MWSS) for service interruptions in their respective markets earlier this year. However, we have yet to see if these sanctions have been complied with,” he said. – With Ashzel Hachero and Wendell Vigilia