THE government is studying its legal options over what it claims are onerous provisions in the contracts of two water utilities, Justice Secretary Menardo I. Guevarra said on Thursday.
Lawyers would probably draft a new version of the agreements with Manila Water Co. and Maynilad Water Services, Inc. without the clauses that are against the law and public policy, he told reporters in a Viber group message.
“We’ll probably start with the drafting of a new version that excises all provisions in the concession agreement that we believe are contrary to law and public policy, as well as those that are highly prejudicial to the interest of the consuming public,” he said.
Mr. Guevarra said President Rodrigo R. Duterte had asked the department to come up with an “integrated solution.”
The justice secretary on Monday said they found a dozen provisions that disadvantaged the government and consumers after reviewing the water concessionaires’ contracts with stated-owned Metropolitan Waterworks and Sewerage System (MWSS).
For one, the contracts bar state interference in rate-setting and protect the water companies if losses arise from government intervention, Mr. Guevarra said.
Mr. Duterte on Tuesday slammed Manila Water and Maynilad over the contracts.
Manila Water on Friday told the Philippine Stock Exchange that the Permanent Court of Arbitration in Singapore had ordered the Philippine government to pay the company P7.9 billion for losses after the government allegedly breached its obligation.
In September last year, the Singapore High Court also upheld the arbitral award to Maynilad of at least P3.4 billion after the government failed to appeal the court’s decision. The losses were due to MWSS’ refusal to implement tariff adjustment that included recovery of corporate income tax payments.
Mr. Guevarra said the legal remedies “are not mutually exclusive.”
The Office of the Solicitor General is contemplating judicial remedies here and overseas, he said.
Some Cabinet members want an overhaul of the existing concession agreements, while others are thinking of more drastic actions. Mr. Duterte has asked the Justice department to come up with an integrated solution, he added.
“The government is more interested in getting a new deal than in compromising the arbitral award,” he said.
The presidential palace on Wednesday said the president had ordered the filing of appropriate criminal, civil, and administrative charges against state officials involved in the making of the contract.
Manila Water on Wednesday said it had complied with its obligations as a concessionaire.
Meanwhile, three congressmen have filed a resolution seeking an investigation of the contracts “in aid of legislation.”
“It is the primordial duty of Congress in the exercise of its legislative and oversight functions to protect the Filipino people from onerous agreements,” according to a copy of the five-page resolution signed by Bayan Muna Reps. Carlos Isagani T. Zarate, Ferdinand Gaite and Eufemia C. Cullamat.
The Senate may also review water concession agreements with utilities deemed onerous in the exercise of its oversight function, Senator Francis N. Tolentino said at a forum on Wednesday.
The concession agreement states that “all disagreements, disputes, controversies or claims which cannot be resolved through consultation and negotiation among the parties shall be resolved not by the Philippine justice system but by a foreign tribunal.” — Vann Marlo M. Villegas and Genshen L. Espedido