OSG to contest P7.3 billion award to Manila Water

MANILA, Philippines — The Office of the Solicitor General (OSG) has slammed Manila Water for citing an international court ruling that orders the government to pay over P7 billion that the company reportedly lost after the government slashed water tariffs.

It implied that the water distribution firm has not addressed the water shortage in Metro Manila. 

“We can only ask what the millions of Manila Water customers have been asking and complaining of for the past year: if indeed billions went to investing in water infrastructure, then why is the public suffering from one of Manila’s worst water shortages for the past year?” the OSG said in a statement issued before the weekend.

After suffering from water cuts that lasted for up to 16 hours during the hot season until August, customers of Manila Water once again faced water service interruptions since Oct. 24.

The OSG said it would insist that Manila Water be subjected to government regulation as it argued that the decision of the Permanent Court of Arbitration in Singapore favoring the company “was not… due to a ‘procedural lapse’ by government” but because of the “company’s refusal to become the subject of a legitimate regulation.” 

It cited a Supreme Court ruling which said “corporations that provide basic commodities, like water, must submit itself to government regulation, lest it resort to abusive profiteering to the detriment of the Filipino people.” 

“The OSG cannot simply stand by and watch Manila Water spin the circumstances and paint itself as an exemplary, outstanding company,” it stressed.

The Singapore-based international court ordered the government to pay Manila Water P7.39 billion for losses it allegedly incurred from June 1, 2015 to Nov. 22 this year.

Members of the group Freedom from Debt Coalition (FDC) condemned the international court ruling by holding an indignation rally in front of the Manila Water and the Metropolitan Waterworks and Sewerage System offices in Quezon City yesterday.

“The public should be warned that we are not just being asked to compensate Manila Water. Maynilad also has similar claims. Between them, they are claiming immediate compensation totaling P10.8 billion for denied rate hike petitions after winning in international arbitration. But in the case of Manila Water, that’s just the tip of the iceberg,” Rene Ofreneo, FDC president said.                 

Metro Manila’s two water concessionaires filed several arbitration cases stemming from a dispute following the rate rebasing done in 2013. In the first set of cases, Maynilad won while Manila Water lost.               

“Can you imagine, after losing the arbitration case and being ordered to stop forcing their customers to shoulder the company’s income taxes in 2015, Manila Water turned around and asked government to pay them a total of P79 billion until 2037? That amount supposedly represents the income they stand to lose until the end of the extended concession term. Basically, they are asking government to shell out money on the basis of income projections. Why should public funds be used to guarantee the profits of a private corporation?” Ofreneo asked.               

The group explained that Manila Water’s claim is based on the Letter of Guarantee issued by the Philippine government in favor of the company which basically commits the government to compensate them should they fail to realize their expected profits.               

“FDC has long warned of the lopsided nature of the contract favoring corporate interests over people’s needs. This is the face of corporate impunity. On top of economic sabotage, the water concessionaires should be charged with violating the Covenant on Economic, Social and Cultural Rights, of which the Philippine government is a state party,” Mae Buenaventura, an FDC officer said.             

She added: “As a state party to the Convention, it is the legal obligation of the Philippine government to call out and censure violators, including non-state actors.”              

Citing General Comment No. 15 of the international treaty adopting the right to water, Buenaventura stressed that “the human right to water is vital to a life of human dignity.”

“It is a requirement for the realization of other human rights,” she also said. FDC executive director Zeena Manglinong said the water distribution agreements should be scrutinized because these are “clearly onerous.”

“When the Ramos government signed these agreements in 1997, and the Arroyo government extended them by another 15 years, they basically threw Metro Manila’s water consumers under the proverbial bus. Our government basically promised that any loss suffered by the water companies would be shouldered by taxpayers. To add insult to injury, consumers were already being made to shoulder the corporate income taxes of these giant corporations,” she said.

Meanwhile, Cagayan de Oro City Rep. Rufus Rodriguez said yesterday that it is the courts, and not Malacañang, that are the final arbiters of the controversial water concession contracts of the two water firms.

“There has to be an action in court to rescind those contracts if they are onerous and tainted with fraud from the beginning. If they are rescinded for being disadvantageous to the public and fraudulent, then that is the basis to refuse payment. But we have to go to court first,” he said over ANC.            

He added that the President is right in asking the OSG and the Department of Finance to review those contracts as the Department of Justice already found at least 12 onerous provisions, which include the prohibition for the government to intervene in setting rates and the payment of damages in case of such intervention.            

Unless the courts invalidate the contracts, he said the government could not refuse to pay the arbitral award.

“If they think that the arbitral ruling is like a check they can encash at the bank, they are dead wrong. We in Congress will not allow these water firms to get billions of pesos in public funds for services not rendered or delivered poorly,” said Alfredo Garbin Jr. of party-list Ako Bicol.

Bernadette Dy of party-list Bagong Henerasyon said President Duterte, through an executive order, could cancel the “premature term extension of the contracts made in 2014, which extended the concession agreements until 2037.”

She said the Chief Executive could also force Manila Water and Maynilad to implement “billed but unimplemented projects” or require the two companies to return billions in collections for such projects to consumers with interest. – With Rhodina Villanueva, Jess Diaz