THE DECISION of the Singapore High Court to uphold the arbitral award amounting to at least P3.4 billion in favor of Maynilad Water Services, Inc. has become final after the Philippine government no longer appealed the case.
In separate disclosures to the stock exchange on Wednesday, Maynilad’s major shareholders Metro Pacific Investments Corp. (MPIC) and DMCI Holdings, Inc. said the water concessionaire’s Singapore-based counsel formally confirmed on Tuesday that the decision of the court issued on Sept. 4, 2018 had become final as of Oct. 4, 2018.
The court last month dismissed the application of the Republic of the Philippines to set aside the first partial award dated July 24, 2017 that was issued by a unanimous three-man arbitral tribunal in the arbitration between Maynilad and the Philippine government. The Philippines on Feb. 13, 2018 filed an application to set aside the arbitral award.
The disclosures quoted Ramon S. Fernandez, Maynilad president and chief operating officer, as saying the company’s “latest victory” vindicates its position that there are no valid and meritorious grounds to challenge or set aside the arbitral award.
Maynilad holds the exclusive concession granted by the Metropolitan Waterworks and Sewerage System (MWSS), on behalf of the government, to provide water and sewerage services in the west service area of Metro Manila. Metro Pacific owns 52.8% of Maynilad, while DMCI has a 25% indirect economic interest in the utility.
The arbitral award upheld the validity of Maynilad’s claim against the undertaking letters issued by the Republic, through the Department of Finance (DoF). The award ordered the Philippines to compensate the company for foregone revenues, from March 11, 2015 onwards. The losses resulted from the refusal of the MWSS to implement Maynilad’s tariff adjustment for the period 2013 to 2017, which includes its recovery of corporate income tax payments.
The Singapore court’s decision became final after the Philippines decided to no longer appeal the dismissal within 30 days from Sept. 4 or until Oct. 4, the disclosures said.
Aside from dismissing the application to set aside the award, the Singaporean court also ordered the Philippines to pay Maynilad S$40,000 by way of costs.
Randolph T. Estrellado, Maynilad chief operating officer, said in a text message that details of the company’s next steps were not yet available. He said the company “will work towards an efficient collection of its claim in a manner that recognizes the interest of its various stakeholders including its shareholders and customers, taxpayers and the government.”
He said the arbitral tribunal previously ordered the Philippines to reimburse Maynilad P3,424,690,000 for losses from March 11, 2015 to Aug. 31, 2016.
Under Maynilad’s concession agreement with the government, it may request tariff rate adjustments based on movements in the inflation rate, foreign exchange currency differentials, a rate rebasing process scheduled every five years and certain extraordinary events.
Any rate adjustment needs the approval of MWSS and the agency’s regulatory office. Tariff adjustments that are not granted could have an adverse effect on Maynilad’s finances as well as those of MPIC.
Sought for comment, MWSS Chief Regulator Patrick Lester N. Ty said by phone: “That one (Singapore court case) is actually between the DoF and Maynilad. I am not party to the case. I wasn’t even informed about all these things.”
He said the national government could still decide to contest the case in the Philippines or pay the arbitral award.
“I’m going to wait if the DoF decides to pay it and then if it tries to claim against the MWSS. Right now, we don’t know,” he added.
The department’s undertaking letter provides that the government will indemnify Maynilad for any losses caused by a delay attributable to the Republic or to any state agency in implementing any increase in the standard water rates beyond the date of its implementation, in accordance with the Feb. 21, 1997 concession agreement.
MPIC is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls. — Victor V. Saulon