To deal or not to deal

The government announced that in six months it will give our water concessionaires a new contract, which is open for discussion and renegotiation. Have Maynilad and Manila Water already accepted the unilateral revocation of the 15-year extension of their concession agreements? Or will they take judicial action at the ripe and proper time? Abangan!

Whether this matter will go to the negotiating table, another arbitral body or the courts, the government must make sure we will have continuous water supply at home. While judicial recourse is always available, I hope Maynilad and Manila Water will opt to renegotiate and maybe put into the table the reported waiver of their Singapore arbitration awards as an initial manifestation of good faith and a genuine concern to arrive at fair and more reasonable terms.

Understandably, the business climate in 1997 when the original contract was signed may have impelled the execution of what appears to be a “sweetheart” concession agreement because no businessman would have gambled so much money on a public utility at that time without an assurance of earning a decent profit. But the circumstances now are a lot better than 1997, which should allow both sides to be more circumspect and reasonable in their negotiation demands. Or will the government set the standards and dangle the contract on a take it or leave it basis? I hope not, although there is really nothing wrong with this if it is truly justified by public interest.

Others say that these developments will only scare away investors, especially with the presidential threat not to give a new franchise to ABS-CBN and the rumor that MERALCO and maybe other companies running businesses imbued with public interest could be next. Is it still prudent for the private sector to deal with the government in these areas of business?

Unlike the water concession agreements which are regular contracts, what was given to ABS-CBN is a congressional franchise under Republic Act 7966. There should be greater protection in favor of a franchisee because it would take a law to repeal the franchise or exceptionally, the Supreme Court to declare it unconstitutional. A Franchise is however a mere privilege that may be subjected to amendment, alteration or repeal at any time when the public interest so requires. Other than this, the franchisee should be safe for the duration of the allowed term subject only to its compliance with the provisions of the Constitution, applicable laws, rules and regulations.

There may be no legal issue with respect to the present situation of ABS-CBN because the problem is the expiration of its franchise and not any alleged violation of the Constitution or law for that matter. The president could just sit down and watch the clock tick the life out of the broadcast giant that he claims to have unfairly refused to air his presidential campaign materials in 2016. Maybe ABS-CBN should have sought an amendment of Republic Act 7966 to extend the term of its franchise during the past administration. Or did it not believe the Mayor would win?

While the MWSS board resolution extending the terms of the water concession agreements was conveniently revoked by the government, a legislative extension of a franchise could not be set aside without a repealing law. Was it a lack of foresight or did somebody sleep or forget about the impending date of expiration? Now, ABS-CBN needs to do magic to facilitate the passage of a law granting it new life, which I heard to be too expensive in many ways. With the tedious process of legislation, there would be a need to lobby just for the proposed bill to be calendared. Even if a magic wand would cast a spell on both houses of Congress to pass the law on record time in a fast and furious manner, a presidential veto is not unlikely considering the way the president made known his personal disgust against the company for what it did to his campaign ads and for alleged loans unjustly condoned by the government.

If this veto happens, ABS-CBN would need another magic in a more costly yet uncertain lobby operation to override the veto. With the president still having two years of his term, our legislators may not be politically ready to side with ABS-CBN and vote for a historical veto override. There may be other pragmatic considerations that could sway the balance in favor of ABS-CBN, but it might just run out of magic in the end. In short, ABS-CBN is in a real tight fix. Malacañang could always point to the expiration of the franchise as the culprit. It is not curtailment of private investment but adherence to the rule of law that a franchise is a privilege, which nobody could demand as a matter of right. If nothing positive for ABS-CBN comes out from Congress, those who are already tired of “Ang Probinsyano” may have their wish of an ending. Or could this be the reason for ABS-CBN’s iwant TV? Well, you can also watch Netflix on your cellphones, but of course, this would be another issue.

Is it still safe to enter a contract with the government? I heard that without the red-tape and corruption, the government is the best business partner because it does not run out of money. Unlike ordinary contracts with private individuals though, there are peculiar laws and Commission on Audit rules that must be observed especially in endeavors imbued with public interest where a stipulation that is burdensome and prejudicial to the government could be disregarded.

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Last Friday, my father’s old time best friend Johnny M. Araneta passed away.  He was 91.  My late father Maximo V. Soliven would have also been 91 years old this year. 

Uncle Johnny and my father belonged to Ateneo Guild 47, the first class to graduate from Padre Faura campus. Their batchmates were Cesar Concio, Ramon Pedrosa, Luis Lorenzo, Jose Tuazon, Jesus Ayala, Onofre Pagsanhan, Ramon Hontiveros, Florentino Gonzales, Hector Quesada, and Ricardo Lopa.  In college, Ateneo Class 1951. 

He served under two presidents. He was working in Philippine Refining Company (Unilever) until he was invited to work in Government as an adviser to then President Marcos (first term). He also became Undersecretary of Trade and Industry. He served as a Trustee in Asset Privitization Trust (APT) during the Cory Administration.

Last year around June, his first born granddaughter Monica Araneta Tiosejo who was influenced by my father and her grandfather to become a journalist asked the late Nelson Navarro to write something about Johnny.  What Nelson didn’t know was that he would reach the heavens before Johnny. This was what Nelson wrote:

Johnny Araneta was a perfect gentleman, bright, smiling, ready to be of help, a team player.  Max Soliven was a small but proud guy who was often bullied but protected by Johnny and Moro Lorenzo. Max was close to both and always met with Johnny at Mandarin to chat and lunch. Moro departed some years earlier. They talked a lot of old times and they were a great generation. So few are left like Cesar Concio and Ramon Pedrosa. Like Max, they have the kindest and fondest words for Johnny Araneta. He was the best friend anybody could ever wish for.  I learned a lot from him about the importance of loving our country, doing a good job and being true to friends and God are all about.