Now it can be told. The water utilities won an arbitral award not for capital expenditures but, lo and behold, for corporate income tax that they wanted the consumers to pay on their behalf! Talk of insatiable greed.
Taxation is one of three absolute and inherent powers of state. And in modern times, the tendency is for government to impose progressive taxation; meaning, those who earn more should pay more. But in the case of our water concessionaires, not only do they want their corporate earnings to be safeguarded, and hence a guaranteed return on their investment for the life of their concessions, they also want their profits to be tax-free and paid for in their behalf by the consumers.
Why the previous administrations agreed to this provision is beyond me. Certainly, since there can be no taxation without representation, only the representatives of the people, through Congress, can impose and, corollary, exempt individuals and corporations from taxation.
Of course, this was not a case of exemption from taxation. It’s a case of passing on the burden to the consumers. But again, where is the legal basis that says that the people should shoulder the tax burden of for-profit corporations? No wonder the President referred to the arbitral award as an instance of economic sabotage!
In any case, this has proven to be water under the bridge since the concessionaires have apologized to the President and both have committed not to enforce the arbitral award. This waiver must be in writing!
I suspect the concessionaires are playing lip service now because they know that President Duterte will make do his threat to put the billionaire owners of the water concessions behind bars. A written waiver of the arbitral award is necessary to protect us, consumers, from a later demand from the concessionaires should subsequent presidents prove to be friendlier to them.
Certainly, given the cost of running for the presidency, I’m sure the concessionaires will simply spend to help elect a future president that is friendlier to them and unless there is a written waiver now, they may yet still enforce the award and compel the consumers to pay for their tax liabilities. Let us not fall for the Trojan horse and ensure that the public is not swindled while we have a pro-people president.
The issue now shifts to the validity of the decision of Metropolitan Waterworks and Sewerage System to rescind the grant of yet another concession agreement to the water companies even prior to the expiration of the existing one. Under our New Civil Code, contracts that are null and void for being contrary to law and public policy are null and void ab initio. But this requires a judicial decision to this effect. A party who opts to unilaterally rescind a null and void contract without going to court does so at the risk of being overturned by a court.
I think the better option for government, given that the existing expiration is not until 2022, is to go to court and get a judicial declaration of nullity. Of course, I understand completely the predicament of government lawyers. Oftentimes, the ugly head of corruption rears its head in our courts and the Republic may yet lose its case for nullity simply because judges can be paid. The solution is to develop an airtight case so that even a corrupt judge could not rule against the state unless he be condemned into oblivion by history itself. The fact that this new concession agreements were entered into without a public bidding clearly shows that even the most corrupt judge would find it difficult not to declare its invalidity.
Of course, there should also be accountability against those who agreed on this particular onerous provision that the tax liability of the water companies should be shouldered by us, and for the renewal of the concession prior its expiration and without the benefit of public bidding. The case is clearly for graft, specifically, for entering into a grossly disadvantageous contract to government that caused damage to the consuming public. There is also a penal provision in our Government Procurement Law (Republic Act 9184) that imposes criminal penalty for those who will violate the mandatory provisions of the law. Needless to say, a contract for the supply and treatment of water for Metro Manila is a procurement of both goods and services for which a public bidding is required.
Again, the water companies may yet yield anew and not insist on the enforcement of their renewed agreements. But unless we jail those who entered into this grossly disadvantageous contract, this will happen over and over again. The President should finally instill fear in the hearts and minds of corrupt individuals conspiring to impose further hardships on our people. It’s time to jail them all and let them rot in jail.