OSG to pursue ‘all options’ in contesting water arbitral ruling

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THE Office of the Solicitor General (OSG) said it will exhaust all legal remedies in response to the P7.39 billion award granted by an arbitral tribunal to Manila Water Co., Inc.

“The Office of the Solicitor General (OSG) will exhaust all available legal remedies against the award recently rendered by the arbitral tribunal constituted under the Permanent Court of Arbitration in Singapore, in an arbitration which Manila Water Co. Inc. (Manila Water) initiated against the Republic of the Philippines,” it said in a statement.

Manila Water issued a statement Wednesday saying that it has “diligently discharged its obligations as concessionaire.”

It also said that upon being informed of the award its chairman spoke with Finance Secretary Carlos G. Dominguez III to tell him that the company is “willing to come up with a mutually-acceptable manner of implementation of the arbitral award,” noting that the issue under arbitration took place during the previous administration.

Manila Water said last week in a disclosure that the Permanent Court of Arbitration in Singapore ruled in its favor and ordered the government to indemnify the company the amount of P7.39 billion for the losses it suffered, finding that the government breached its obligations.


The court in September last year also awarded at least P3.4 billion to Maynilad Water Services, Inc. for the same reason.

President Rodrigo R. Duterte threatened the water companies Tuesday, claiming that they won concessions with provisions onerous to the government. The allegedly onerous provisions, Justice Secretary Menardo I. Guevarra said, include a provision calling for the non-interference of government in rate setting and government’s liability to provide indemnities.

The OSG said it cannot stand and watch Manila Water “spin circumstances and paint itself as an exemplary and outstanding company.”

“The arbitration proceeding tells a very different story, one which will naturally reveal itself through the next actions we will undertake. Our next steps will show that the arbitral award was not, to quote Manila Water, due to a ‘procedural lapse’ by government. It is a company’s refusal to become the subject of legitimate regulation,” it said.

The government’s legal counsel also said that Manila Water cannot hide “within the confines of the Concession Agreement and escape its obligations to the People.”

The government also asserted its right to regulate basic services, citing a Supreme Court ruling.

“This is a time-honored principle. No other than our Supreme Court has ruled that public utilities are imbued with public interest. Corporations that provide basic commodities, like water, must submit (themselves) to government regulation, lest (they) resort to abusive profiteering to the detriment of the Filipino people,” he said.

The OSG also questioned Manila Water’s claim that it spent over P166 billion for the improvement of its water services.

“As regards Manila Water’s alleged billions worth of investment in infrastructure, 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?” it said.

Shares of Ayala-controlled Manila Water fell 3.55% to P16.30. Metro Pacific Investments Corp. (MPIC) which is the controlling shareholder of Maynilad, fell 3.68% to P3.66, while DMCI Holdings, Inc., also a shareholder in the west zone concessionaire, fell 1.31% to P6.05.

MPIC and DMCI Holdings, Inc. hold 52.8% and 25.24% stakes, respectively, in Maynilad while Japan’s Marubeni Corp. has a 20% stake.

Mr. Guevarra on Thursday said the government is studying ita legal options in regard to the water concessions, including drafting new contracts that do not conflict with the law and public policy.

He said that the department was tasked by the President to come up with an “integrated solution.”

He said however that legal action may also coincide with parallel work by some Cabinet officials to adjust the current agreements.

Jeric T. Sevilla, head of Manila Water’s Corporate Strategic Affairs Group and Corporate Communication, declined to comment, while Communications Planning and Tactical Development Manager Dittie L. Galang did not answer requests for comment. — Vann Marlo M. Villegas