Years ago, to justify her ostentatious lifestyle, Imelda Romualdez Marcos declared that the Philippines is “a rich country pretending to be poor.”
Sarcastically, I say, yes. Just take a brief historical review on how previous and the present governments had squandered taxpayers’ money due to legal ineptitude.
Consider these:
Bataan Nuclear Plant—After the collapse of the Marcos dictatorship, the $2.3-billion, 621-megawatt Bataan Nuclear Power Plant was mothballed in 1986 by the government of the late Corazon Cojuangco Aquino due to safety and corruption concerns. In October 1995, Aquino’s successor, President Fidel Ramos, agreed to a $100-million settlement with Westinghouse which mandated the Philippines to pay the US company $300,000 in daily interest alone. Ramos in 1993 lost the bribery, fraud and racketeering suits his government filed against Westinghouse Electric Co. and New Jersey company Burns and Roe for conniving with former strongman President Ferdinand Marcos and his crony Herminio Disini in the construction of the power plant. After spending a total of P64.7 billion—P43.5 billion for principal amortization and P21.2 billion in interest—for 21 years, the power plant has not generated a single watt of electricity.
Laguna Lake Rehabilitation—The International Centre for Settlement of Investment Disputes (ICSID) ordered the Philippine government to pay P800 million to Baggerwerken Decloedt En Zoon (BDC) for scrapping the P18.7-billion Laguna Lake Rehabilitation Project (LLRP) in 2011. The award was issued on January 23, 2017, six years after former President Benigno S. Aquino III junked the deal that was twice declared by then-Justice Secretary Leila M. de Lima as “legal and binding.” The project was originally crafted to dredge the 94,900-hectare Laguna de Bay and deepen its average depth of 2.5 meters, and called for the creation of navigational channels in the waterway, which has Class C water quality deemed to be inappropriate for human consumption.
Piatco—In November 2018, the government lost its bid before the Court of Appeals to compel the Philippine International Air Terminals Co. Inc. (Piatco) to pay the amount of $6 million, or more than P300 million, representing the cost of the arbitration proceedings before the International Chamber of Commerce (ICC) International Court of Arbitration. In a three-page resolution penned by Associate Justice Ramon M. Bato Jr., the CA’s former Special Eleventh Division held that the government, through the Office of the Solicitor General (OSG), failed to raise new arguments that would warrant the reversal of its June 4, 2018, amended decision. The appellate court, in its amended decision, reversed its order for Piatco to pay the government $6 million in arbitration.
Malampaya—In March this year, with a unanimous vote of 3-0, the operator of the multibillion Malampaya gas field project led by Shell Philippines Exploration BV won its landmark $1.1 billion (approximately P53 billion) tax case before the ICC in Singapore. Voting in favor of the Malampaya consortium had been designated arbitration Chairman Yves Fortier, SPEx-led consortium arbitrator David Williams, and Philippine arbitrator and former Supreme Court Chief Justice Reynato S. Puno.
I could go on and on. Consider how the aggravating dismissal of nearly all the graft and corruption charges against the Marcoses and their cronies means a loss of billions of pesos for the country, represented by both previously recovered and still-to-be-claimed ill-gotten wealth. It would take probably more than six full pages of this paper to document all of the government’s legal mortifications.
Now this—In 2013, Manila Water lost the case it filed before the ICC questioning the Metropolitan Waterworks and Sewerage System (MWSS) for slashing its basic charge of P25.07 per cubic meter by 29.47 percent, a reduction of P7.25 per cubic meter for the rate rebasing period of 2013 to 2017. The arbitration panel ruled that Manila Water is a public utility and, therefore, cannot pass on its corporate income tax to consumers. But from the same court, Maynilad was able to secure a favorable ruling. The ICC appeals panel upheld Maynilad’s alternative rate rebasing adjustment which would result to a 9.8-percent increase in the 2013 average basic water charge of P31.28 per cubic meter, inclusive of the P1 currency exchange rate adjustment that the MWSS incorporated into the basic charge. What kind of legal gobbledygook is this? How could the same court hand conflicting edicts? Could it be that Maynilad got the “right” lawyer?
Just recently, however, the Singapore Arbitration Panel ordered the MWSS to pay Manila Water P7.4 billion for refusing the concessionaire’s demand to increase water rates in 2015. This follows a favorable July 2017 ruling the Lopez-owned Maynilad Water Services Inc. got from the Singapore court that the government owed it P3.42 billion in compensation for the delayed implementation of upward tariff adjustment for the rebasing period of 2013 through 2017 (Note that Maynilad still elevated its case for arbitration despite its legal victory in 2013. I can only surmise that it did so to ensure compliance by the Philippine government). On why the government failed to raise before the Singapore Arbitration Panel the 2013 ICC ruling that public utilities cannot pass on its corporate income tax to consumers is beyond me.
Clearly, the losers in these recent legal setbacks by the government are the Filipino consumers. The crux of the legal victory by both water concessionaires was the supposed “guaranteed profit” under the concession agreement it signed with MWSS. Whatever you sugarcoat it with, guaranteed profit is plain and simple “sovereign guarantee” which this and the previous governments are supposed to have stricken off in every contract it entered into with the private sector. It is a guarantee given by the state to a private contractor to compensate it if it runs into some financial straits.
Sovereign guarantee compels all of us—whether you are a customer of either Maynilad or Manila Water to make up for each company’s losses through the taxes we pay. This is just crudely appalling, a kick right in the gut of Filipino consumers, especially those living in large swathes of these concessionaire’s service areas still without steady water supply. Asking Congress to investigate the matter seems futile, given the way that branch of government is being run these days.
A lone voice in the wilderness, House Deputy Minority Leader Rep. Carlos Isagani Zarate, branded the tribunal’s decision as “a mockery and an insult to Filipino, consumers and exposes the ‘tragedy and lunacy of privatization.’” Lawyer Neri Colmenares, Bayan Muna chairman, also backed the proposed inquiry and eventual scrapping of the concession agreements. But we’re a rich nation pretending to be poor, right? The government can just gloss over its legal faux pas, because our coffers are brimming with cash. Geez!
For comments and suggestions, e-mail me at mvala.v@gmail.com