Guevarra: MWSS’ revocation of extension of concession based on President’s directive, DOJ’s advice

Mike Navallo, ABS-CBN News

Posted at Dec 11 2019 05:58 PM | Updated as of Dec 11 2019 10:34 PM

MANILA – Justice Secretary Menardo Guevarra on Wednesday justified the Metropolitan Waterworks and Sewerage System’s (MWSS) decision to revoke the extension of the concession agreements with Maynilad and Manila Water.

“The MWSS’ act of revoking the MOA (memorandum of agreement) extending the period of the concession was upon the President’s directive, which was in turn based on the DOJ (Department of Justice) recommendation (after finding that the extension had no legal basis in the concession agreement),” Guevarra said in a message to reporters.

The concession agreements took effect in 1997 and were initially expected to end in 2022 but these were extended to up to 2037 in 2009 (for Manila Water) and 2010 (for Maynilad) through separate memoranda of agreement.
Speaking to DZMM’s Failon Ngayon last week, Guevarra said they were baffled why the agreements were extended 12 or 13 years prior to their expiration dates “without changing any grounds or conditions of the original contract.” He also revealed the President and the Cabinet adopted the DOJ’s findings that the agreements were “prematurely extended.”

“Take note that the proper time to renew the contract is upon the expiration of the concession agreements in 2022, as expressly provided in the agreements themselves,” he said Wednesday. “The ball is now in the concessionaires’ court.”

MWSS Deputy Administrator for Engineering Leonor Cleofas disclosed the cancellation of the extension at a House hearing Wednesday morning, although the MWSS board reached the decision Thursday, December 5.
This development follows Maynilad’s and Manila Water’s announcement Tuesday that they will no longer enforce the P10.8-billion worth of combined compensation they won at arbitration proceedings in Singapore for losses the water concessionaires incurred due to denied rate increases.

The DOJ earlier said it found 12 onerous provisions in the concession agreements of the 2 water concessionaires, which prompted President Rodrigo Duterte to order the drafting of a new water concession agreement.

Guevarra, however, did not answer queries on whether a court order or resort to arbitration proceedings is needed before the MOA could be revoked. 

Under the concession agreements, disputes concerning the interpretation or the implementation of the agreements would first be settled through mutual consultation or negotiation. 

Any disagreements or disputes would be subject to arbitration before a 3-member arbitration panel in accordance with the arbitration rules of the United Nations Commission on International Trade Law.

Parties to the concession agreements waived their right to appeal, agreeing that any decision shall be “final and binding” upon the parties. They also agreed not to plead any immunity based on sovereignty or otherwise.

Aside from the issue surrounding the extension of the concession agreement, Maynilad and Manila Water are also facing stiff fines imposed by the Supreme Court.

In August this year, the Supreme Court en banc voted 14-0 to fine the two water companies, together with MWSS, over P921 million each for violation of the Philippine Clean Water Act in failing to put up sewage lines and sewage treatment facilities.