MANILA - President Rodrigo Duterte is authorized under the Constitution to "temporarily take over" privately-owned utilities, Justice Sec. Menardo Guevarra said Saturday, a day after the Chief Executive warned of a military takeover of Metro Manila's water distribution companies.
Duterte had threatened to take over Manila Water and Maynilad after the water companies proposed rate hikes despite allegedly bagging "onerous contracts" from previous administrations.
"Under the Constitution, the state may temporarily take over or direct the operations of privately owned public utilities or businesses affected with public interest: in case of national emergency and when public interest requires it," Guevarra said in a statement.
"These are factual issues that only the President, as chief executive, can determine," he said.
Presidential Spokesman Salvador Panelo earlier told water concessionaires to retain existing water rates after Duterte threatened to pursue charges of "economic sabotage" and economic plunder against them.
"The concessionaires are put on notice that the Chief Executive will not renege from his constitutional duty of enforcing the law. Neither will he be swayed nor enticed into accepting a compromise," Panelo said.
Last week, Duterte threatened to file "economic sabotage" and economic plunder charges against the 2 water distributors as he claimed that Filipinos are “milked by billions” because of their onerous water concession contracts with the government.
Following Duterte's tirades and threats, both the Pangilinan-led Maynilad and Ayala-owned Manila Water said they would no longer collect P10.8 billion in compensation a Singapore-based arbitration court had ordered the Philippine government to pay the distributors.
The court had mandated the compensation citing supposed denied rate increases to the water distributors.
The President refused to pay the fines imposed by a Singapore-based court, saying portions of the government's concession agreement with the water providers must be "renegotiated" in favor of consumers.
The Metropolitan Waterworks and Sewerage System (MWSS) has revoked the extension of government's concession agreements with Maynilad and Manila Water since it had "no legal basis," Guevarra earlier said.
The government’s concession contracts with the Ayala-owned Manila Water and the now Pangilinan-led Maynilad were originally signed in 1997 during the administration of former President Fidel Ramos.
While the agreements were set to expire in 2022, the government, in 2009, extended it for another 15 years or until 2037. This was done during the presidency of Gloria Macapagal Arroyo, an ally of President Duterte.
Earlier this year, the water distributors implemented rotational supply cuts and rationing amid limited supply, leaving residents in several parts of Metro Manila with dry taps.