Manila Water says arbitral award made due to breach not under Duterte administration

December 4, 2019

After President Rodrigo Duterte's threat to file economic sabotage,  Ayala-led Manila Water, Inc. said on Wednesday that the P7.39-billion arbitral award to the company was due to the breach of the procedure committed not by the Duterte administration but by the previous government.

"The arbitral award issued in our favor is for acts in breach of the procedure committed by officials of the previous administration, not the Duterte administration," Manila Water said in a statement a day after Duterte lashed out at the company and its officials led by Fernando Zobel de Ayala as well as the Pangilinan-led Maynilad Water Services.

Manila Water said when it received the information about the award by the Singapore-based Arbitral Tribunal, Ayala, along with a few other senior officers of the company, met with Finance Secretary Carlos Dominguez III before it became public.

"We informed him that we are willing to come up with a mutually acceptable manner of implementation of the arbitral award considering that this case was filed due to a violation incurred not during this administration. Secretary Dominguez acknowledged our proposal to work very closely with his office to find a mutually acceptable scheme to address the award," it said.

According to the arbitration court, Manila Water has a right to indemnification for actual losses suffered by it on the account of the Philippine government's breach of its obligation.

It ordered the government to indemnify Manila Water the amount of P7.39 billion representing the actual losses it suffered from June 1, 2015 until Nov. 22, 2019 and to pay 100 percent of the amounts paid by Manila Water to the Permanent Court of Arbitration ( PCA) and 85 percent of Manila Water's other claimed costs.

The Arbitral Tribunal was constituted under the PCA.

"We wish to reiterate that Manila Water is more than willing and have started to work with the incumbent administration to come up with a workable solution to the arbitration decision," Manila Water said.

The east zone water concessionaire stressed that it has diligently discharged its obligation as concessionaire of the Metropolitan Waterworks and Sewerage System since it won the bid after the government then under President Fidel Ramos sought for bids in 1997 to address the water crisis in Metro Manila.

Manila Water said it has spent over P166 billion to improve water and wastewater services and has installed over 5,500 kilometers of pipes and built two new filter plants, 32 new reservoirs, 113 pumping and booster stations, 40 additional wastewater treatment facilities and five times more sewer network capacity to improve the MWSS facilities in the east zone.

"Because MWSS decided to pay our services and reimburse our costs with the water tariff that we collect, the Concession Agreement contains a procedure for the adjustment of water rates in accordance with the MWSS Charter. The Republic of the Philippines undertook to respect the procedure, which is under the full control of MWSS from beginning to end," it said.

It noted that in 2009, the administration of then President Gloria Macapagal-Arroyo extended the Concession Agreement up to 2037 "upon recognizing the compelling need for more water and wastewater investments."

"The Clean Water Act and subsequently the Supreme Court Mandamus expanded from 50 percent as contained in the original Concession Agreement to 100 percent sewer coverage. The extension required our commitment to spend an additional P 458 billion to comply with the new water supply and wastewater requirements all the way to 2037," Manila Water explained.

Meanwhile, in a statement, Presidential Spokesperson Salvador Panelo said Duterte has directed the filing of appropriate criminal, civil, and administrative charges against all those involved in the water agreements, "including the latter's owners and legal counsels, as well as agents and lawyers of the government for economic sabotage."

Panelo, also chief presidential legal counsel, accused that those from the government did not protect the interest of the state and the people when they signed the deals.

"It is apparent that some members of the government have not only looked the other way, but have in fact purposely guided the hands of those who have raped our economy for their own personal aggrandisement. Worse, they are hell-bent on bleeding our country dry. The proper delivery of basic services has not been fostered but thwarted to the outrageous detriment of the Filipinos," he said.

He said the Palace is putting on notice that the constitutional command to the President to serve and protect the Filipino people shall be complied with passion and dedication, regardless of whatever power or influential groups are run over.

"Those who impede or derail the constitutional directive to the President to serve and protect the people shall find themselves behind bars with free food and lodging," Panelo added. Celerina Monte/DMS