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Charter aids seizure

We are talking here of privately owned businesses, and no appointments or designations are contemplated.

Alvin Murcia



A military takeover of private utility firms that is imbued with public interest can be done since it is provided for in the Constitution, Department of Justice (DoJ) Secretary Menardo Guevarra said yesterday.

President Rodrigo Duterte said in his address during the birthday celebration of former Senate President Manny Villar that he is considering a military takeover of the operations of water service providers if an agreement is not reached.

“Under the Constitution, the state may temporarily take over or direct the operations of privately-owned public utilities or businesses, in case of national emergency and when public interest requires it,” Guevarra said.

“These are factual issues that only the President, as Chief Executive, can determine,” the DoJ chief noted.

Likewise, he noted Section 5(4), Article XVI of the 1987 Constitution that says “no member of the armed forces in the active service shall, at any time, be appointed or designated in any capacity to a civilian position including government-owned or controlled corporations or any of their subsidiaries” is not applicable.

Different situation

“We are talking here of privately owned businesses, and no appointments or designations are contemplated,” he noted.

The President said earlier he may resort to tapping the military in taking over the operations of water service providers in Metro Manila if no agreement is reached on provisions of the contracts that are disadvantageous to the public.

This was recounted by Mr. Duterte during the birthday celebration of former Senate President Manny Villar in Las Piñas City on Thursday, saying he broached the option of a military takeover to the Presidential Security Group (PSG) in a dialogue last Wednesday.

When a water shortage occurred in March, the companies caught the ire of the President when rationing was declared and when the Permanent Court of Arbitration (PCA) in Singapore ordered the government in November to pay P7.39 billion to Manila Water for the company’s alleged losses due to the government’s decisions to stop water price hikes.

The PCA also ordered the government to pay Maynilad P3.4 billion in a similar case.

Pattern of abuse

The water supply controversies in Metro Manila has reached the province of Cebu with Governor Gwendolyn Garcia and the provincial board deciding to terminate its joint investment agreement with Manila Water for its failure to cure breaches and violations.

“It’s just rather significant that the President is now taking action against Manila Water and Maynilad for the grossly disadvantageous agreements. There seems to be a pattern,” Garcia said.

The provincial board in its regular session on Monday has en masse passed the resolution sponsored by Board Member John Ismael Borgonia authorizing Garcia to issue a notice of termination to MCWI.

The resolution added that “the termination of said 21 March 2012 JIA is beneficial to the interests of the Province of Cebu and the Cebuanos and not contrary to law.”

Manila Water entered into a JIA with Cebu on 21 March 2012 for the creation of Cebu Manila Water Development Inc. (CMWDI) which is a joint investment company (JICO) for the construction and development of water supply facilities expected to deliver bulk water, with an option to engage in retail supply in certain areas and to some areas in the Province of Cebu by tapping the surface water source of Luyang River in the Municipality of Carmen.

The province discovered, as confirmed by representatives of MWCI during their 28 August 2019 meeting at the Cebu Capitol that Manila Water has committed serious and material breach of its obligations under the said JIA.

Garcia said the increase of P1 billion is “dubious.”

Saying that there was no resolution passed by the board of directors of the JICO approving and authorizing these decisions and these serious and material violations are greatly prejudicial to public interest.

Remember that up to now Manila Water has not remitted the shares for the province. So of course,even if we will no longer be partnering with them, they have to pay.

Belated feelers

In letters sent to the President, Manila Water and Maynilad signified their intention to cooperate with the government to settle the issue.

Presidential spokesman Salvador Panelo released the letters, which are still under review by the Chief Executive, “for the sake of transparency.”

“As we have previously stated, Maynilad and Manila Water each wrote a formal letter making an offer to talk about the issue and renegotiate the onerous provisions of the contracts. There has been no acceptance by the President of their offer nor has he declined it. The subject is still under review,” he said.

Manila Water chairman Fernando Zobel de Ayala, in his letter, relayed to Duterte his company’s decision not to collect the compensation it won in an arbitration case against the government.

Ayala also assured the President that Manila Water informed regulator Metropolitan Waterworks and Sewerage System on 3 December of its plan to “work out an arrangement that will effectively defer the implementation of the approved water charge.”

Giant interests fold

He also noted that Manila Water has agreed to “immediately start with the discussions and expedite the negotiations” with regard to its supposed “illegal, onerous or disadvantageous” agreement with the government.

“Mr. President, we heed your call to revisit and re-negotiate certain provisions of the concession agreement. We fully share your mandate to put the interest of the people as the primary objective,” Zobel’s letter read. “We will work closely with the proper government agency to make sure that the P7.39 arbitral award will not have to be paid by the government directly or through the customers,” it added.

Meanwhile, Maynilad chairman Manuel Pangilinan and president and chief executive officer Ramoncito Fernandez assured the President that they would cooperate with MWSS in reviewing and possibly amending the concession agreement.

With Rico Osmeña

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