Gov't mulls legal actions vs water distributors over compensation ruling


Posted at Dec 05 2019 11:01 AM | Updated as of Dec 05 2019 11:25 AM

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MANILA - The Duterte government will pursue legal action against water concessionaires Manila Water and Maynilad if it fails to reach an agreement with the distributors, Justice Secretary Menardo Guevarra said Thursday.

The Singapore-based Permanent Court of Arbitration earlier ordered government to pay P3.4 billion to Maynilad and P7.4 billion to Manila Water as compensation for losses the water concessionaires incurred due to denied rate increases.

Ayala-led Manila Water Co said Wednesday it was "more than willing" to strike a "workable solution" with government.

Currently, the Department of Justice is preparing a "serious amendment, if not a total overhaul" of the concession agreements of government with the water distributors, Guevarra said.

Aside from this, government's lawyer the Office of the Solicitor General is "contemplating of judicial action in Singapore itself" to challenge the decision of the arbitration court, he added.

"Kung hindi voluntarily by contact mag-agree ang parties, we’ll have to take legal action. Tina-try muna namin to kasi meron namang feedback ang water concessionaires na they are very much willing to sit down para mapag-usapan itong mga provisions na kino-complain natin," Guevarra told radio DZMM.

(If the parties will not voluntarily agree by contract, we’ll have to take legal action. We're trying this first because there's feedback from water concessionaires that they are very much willing to sit down to discuss these provisions we're complaining about.)

Upon President Rodrigo Duterte's orders, the DOJ reviewed the contracts and found "a dozen provisions that were deemed onerous or disadvantageous to the government and the consuming public."

Guevarra said these include the distributors' business taxes, payments for debt service, penalty for noncompliance obligation, among others.

"Yung penalty na 'yun ipapasa nila sa consumer in the form of an element in the water rates. Para namang masyadong agrabyado ang tao dun," he said.

(They will pass these penalties to the consumer in the form of an element in the water rates. This is too disadvantageous to the public.) 

"It’s (water) a natural resource owned by the state. Atin 'yun, distribution ang hawak ng water concessionaires pero ganito nga ang nangyari."

(That's ours, water concessionaires only handle distribution but this is what's happening.) 

The DOJ also found irregular the extension of the water distributors' contracts by 15 years to 2037. The extension was granted in 2009 for Manila Water and in 2010 for Maynilad, years before the original expiration of the agreements in 2022.

"Anong basehan niyan sa mismong (What's the basis in the) concession agreement and we couldn’t find anything at all," Guevarra said.

"Hindi pa napapanahon 'yung pag-renew or pag-extend ng contract na 'yan... Na-preempt eh. Dapat sa 2022 pa paguusapan 'yan pero nextend na by 15 years."

(The renewal or extension of the contract was not timely. It was preempted, it should be discussed in 2022 but it was already extended by 15 years.)

The DOJ recommends that government withdraw or revoke the extension of the contracts, Guevarra said.

The agency will follow the original expiration of contracts in 2022 in its proposed revised contract with the distributors, he added.