10 Facts about the Maynilad and Manila Water Arbitration
In the past few days, false and malicious assertions have been circulated about my role as SolGen in relation to these disputes. In particular, Mr. Tiglao of the Manila Times asserts that I and former President Aquino III agreed to keep these arbitrations “secret” and even insinuated I was responsible for why the Republic lost in these cases.
Let me take this opportunity to fact-shame Mr. Tiglao.
In 1997, Pres. Ramos entered into water concession agreements with Maynilad and Manila Water. In 2009, Pres. Arroyo extended these contracts. Pres. Aquino III had nothing to do with the drafting of these contracts.
The Secretaries of Finance of both the Ramos and Arroyo administrations issued so-called Letters of Undertaking promising to indemnify the concessionaires in case it interferes with the rate-setting mechanism under the agreement. Also, in case of a dispute, they agreed that an arbitration shall be held under UNCITRAL Rules. Notably, these rules mandate that the proceedings be confidential. This fact destroys the factual basis of Mr. Tiglao’s allegations.
I can proceed from here to make fun of Mr. Tiglao and his sorry career as a propagandist, but please indulge me with a few more facts.
When Maynilad decided to sue the Republic on these Letters of Undertaking in 2015, the OSG insisted on inserting “public interest exceptions” to these confidentiality rules. We were therefore able to relax these confidentiality rules. This will be found in Par. 26 of the Procedural Order of the arbitral panel dated 17 March 2016.
Thus, contrary to Mr. Tiglao’s hallucinations, I, as Solgen, even sought to relax the confidentiality rules the Ramos and Arroyo Secretaries of Finance agreed to. This is because, whereas the water concessionaires are accountable only to their private shareholders, the Republic, as a party and as an entity, is accountable to the Filipino public.
What was my role as Solgen during these arbitrations? Very limited, as my term expired before the proceedings went underway. ALL the hearings in these arbitrations happened during the present administration. While the Republic lost in these cases, I am confident that the career legal personnel of the Office of the Solicitor General did their best in protecting the interests of the Republic.
What is the substance of these disputes? The fundamental question in these arbitrations is whether Maynilad and Manila Water can transfer to the consumers—the public—their corporate income taxes.
What was my position as Solgen on this issue? Both Maynilad and Manila Water cannot pass on to consumers their corporate income taxes, that is, that they should pay these taxes because there is no law or contract that allows them to transfer their tax burden to the public—they should pay these taxes, like everybody else. The “losses” that the concessionaires claim from the Republic are actually the income taxes they wanted to transfer to the public but weren’t able to do so. This position coincides with that of the MWSS and the Office of the Gov’t Corporate Counsel under the Aquino III administration.
Furthermore, I believed that the Letter of Undertaking issued by the Secretaries of Finance of both the Ramos and Arroyo administrations were either unconstitutional or issued without proper authority.
How do we move forward from the ashes of Mr. Tiglao? If the Duterte Administration is really serious about protecting the public, then its task is to question the enforcement of these decisions in Philippine courts or find a way to renegotiate these contracts, instead of simply threatening to transfer these concessions to another set of “oligarchs.”