SC asked to stop gov’t from granting claims of Maynilad, Manila Water

PARTY-LIST group Bayan Muna on Tuesday asked the Supreme Court to stop the government from granting the claims of Maynilad Water Services Inc. (MWSI) and Manila Water Company Inc. (MWCI) worth P3.44-billion and P79-billion, respectively.

“Billions of pesos in public funds are threatened to be illegally disbursed in this case which threat arises from the illegal and unconstitutional sovereign guarantee of the government in favor of the Concessionaires,” petitioner Bayan Muna Party-List group led by Representatives Neri Colmenares and Isagani Zarate said in their 64-page petition.

“This Honorable Court is again being asked to intervene in a public interest issue. In terms of prudence, the present situation is awash with urgency because arbitral award stemming from a similarly illegal and unconstitutional arbitration clause contained in the Concession Agreements,” they added.

In a 64-page petition, Colmenares and Zarate said Article 12 of the concession agreement should be nullified for being contrary to the 1987 Constitution.

The article provides an “unconstitutional conferment or delegation to a private entity of strictly government functions, and at the same time an unconstitutional denial of the rights of the water consumers safeguarded by the due process clause,” the petitioners said.

The same article also provides for the submission of disputes to arbitration and the express waiver of the State’s right to appeal.

“The arbitration clause in the Concession Agreements is a derogation, an affront in broad daylight, of the Court’s power and duty of judicial review. Said provision is illegal and unconstitutional as it essentially gives a privately organized arbitration panel or tribunal the power to supplant and reverse a Supreme Court decision as the Appeals Panel actually did in the Maynilad arbitration,” petitioners said.

The said provisions, according to the petitioners, violate various provisions of the 1987 Constitution such as Section 6, Article XII (mandates the government to promote distributive justice and to intervene when the common good so requires); Section 1, Article III (insofar as these contravenes the water consuming public’s right against deprivation of property without due process) ;

Section 1, Article VIII (insofar as it nullifies the Supreme Court’s power of judicial review) ; Section 19, Article XII (as it contravenes the State’s duty t subject monopolies to strict State regulation); and Republic Act 6234 (MWSS) Charter (insofar as arbitration effectively takes away the agency’s power and duty to regulate the water sewerage system).

The petitioners also sought to declare null and void for being unconstitutional the Letters of Undertaking executed by the government in connection with the concession agreements.

They also asked the high court to exclude the corporate income taxes from Maynilad and Manila Water’s allowed expenditures under the concession agreements. Petitioners said it cannot be passed on directly or indirectly to the water consumers.

The petitioners insisted that the concessionaires are public utility thus, subject to State’s regulation and cannot be subject to arbitration.

“Verily, only through strict State and public regulation can the interest of the water consuming public be truly protected from the evils and greed for profit of a monopolistic private water and sewerage system provider,” they added.

Petitioners also urged the high court to nullify the “Sovereign Guarantee” embodied in the letters of undertaking executed by the government in relation to the concession agreements.

“Clearly, even despite a Supreme Court decision prohibiting the imposition of an unjust rate increase, the sovereign guarantee imposes the same on the public since public funds will be paid to the Concessionaires even if they have lost the case,” the petitioners noted.

The petitioners added that a sovereign guarantee will be paid by the public at large including those in Visayas and Mindanao who are not even privy to the concession agreement.

“These innocent public suddenly pays the sovereign guarantee, in a case which it never was involved in, for services which it never even had, from an agreement which it never was a party,” the petitioners stressed.

Maynilad is claiming P3.44-billion from the government for its losses from Jan. 1, 2013 to Feb. 28 this year due to the delayed implementation of arbitration panel-approved rate increase on Dec. 29, 2014.

Maynilad said it has been incurring losses worth P208-million for every month of delay.

Like MWSI, MWCI also filed a notice of claim before the Department of Finance (DOF) invoking the letter of undertaking issued by the government in July 1997 and 2009 to recover indirectly from the DOF what was prohibited in the arbitral award, which ruled against it.

MWCI insisted that the government must compensate it for over P79-billion of potential revenue losses from 2015 up to the end of its 25-year contract or until 2037.

“The interest and welfare of the water consumers who now number in tens of millions cannot be left to the mercy of a privately organized ‘Appeals Panel’ and to the whims, mistakes or prejudices of private individuals who do not have public accountability,” petitioners said.