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Payment to water firms placed on hold

The Department of Justice has advised the Department of Finance  to defer payment of P82.4 billion to water concessionaires Maynilad Water Services and Manila Water Co. Inc. because  a  case involving the two utility firms  remains pending  before the Supreme Court.

In a five-page letter to Finance Secretary Cesar Purisima,  the DoJ advised the DoF not to act yet on the demand of  Manila Water  and Maynilad for payment of P79 billion and P3.44 billion, respectively, for supposed losses they incurred in the postponement of the increase in their basic charges.

The DoJ declined to take a stand on the legality and validity of such claims by invoking the sub judice rule, which prohibits comments and disclosures on matters pending with courts.

The Justice department cited a pending case in the Supreme Court filed last year by   Bayan Muna party-list  Rep.  Neri   Colmenares and Isagani Zarate seeking to stop payment of the claims.

“Hence, by settled policy and practice, the Secretary of Justice does not render opinion or give legal advice on matters that are considered sub judice. For the Secretary of Justice to rule on your query would constitute an unwarranted intrusion into the exercise of judicial powers and functions pertaining to the Supreme Court, a separate and coordinate branch of government, and could subject this department to criticism or in some instances, if applicable, indirect contempt,” the DoJ said in an opinion signed by Chief State Counsel Ricardo Paras III.   

“It is our considered view that, at the present state of events, the proper and most prudent course of action for the DoF to take is to maintain the status quo and hold in abeyance any action on the claims filed by MWCI and Maynilad, while waiting for the ruling of the Supreme Court,” it said.

In the SC petition filed in August last year, militant lawmakers   asked the high court to declare unconstitutional Article 12 of the government’s concession agreements with the two utilities, which provided for the submission of disputes to arbitration and contains the express waiver of the State’s right to appeal.

Petitioners alleged that this agreement violates the Constitution, including   the provision on the Supreme Court’s power of judicial review and the State’s duty to subject monopolies to strict regulations, as well as Republic Act 6234, or the Metropolitan Waterworks and Sewerage System Charter, since arbitration effectively takes away the MWSS’ power and duty to regulate the water system.

The two  lawmakers also asked the SC to  nullify and void the letters of undertaking made by government in connection with the concession agreements with the two water utilities.

They also asserted that both water concessionaires are public utility companies since the services they provide are of utmost importance to the public and should be covered by the General Public Service Act and, therefore, subject to government regulation. 

The petition said the sovereign guarantees in the letters of undertaking “should be declared unconstitutional since it violates the people’s constitutionally assured due process rights and essentially thwarts the powers of the Supreme Court and the MWSS to regulate public utilities. It gives away in one hand, what the Supreme Court and MWSS said cannot be given by the other hand.”

Because of the sovereign guarantees, they said, even if the high court rules against a rate hike, the ruling would come to naught since the water concessionaires would still be paid with public funds, thus passing on the burden not only to Metro Manila consumers but also those in the Visayas and Mindanao.

Maynilad has filed a sovereign guarantee claim covering its losses from January 2013 to February 2015 over what it claimed is the delayed implementation of an arbitration panel-approved rate hike in December 2014.

The company sent its claim for P3.44 billion to the DOF in   March last year.   

Manila Water, on the other hand, sent a claim for more than P79 billion to the DOF in April last year invoking the 1997 notice of undertaking issued by the government despite a ruling that it is a public utility and is therefore covered by the prohibition on the recovery of corporate income tax as an operating expenditure.   

The amount it is demanding covers potential revenue losses from this year to 2037, when its contract expires.

Topics: Department of Justice , Maynilad Water Services , Manila Water Co. Inc. , defer payment
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