Legally yes, realistically no: Duterte’s powers to take over water operations

Lian Buan
Legally yes, realistically no: Duterte’s powers to take over water operations
Guevarra reveals it is the DOJ that recommended revoking the extension of Maynilad and Manila Water

MANILA, Philippines – President Rodrigo Duterte can legally take over water operations, Justice Secretary Menardo Guevarra said on Wednesday, December 11, even as he admits that the government is “unlikely” to be capable of taking over now.

Guevarra was again forced to provide a legal justification to Duterte, after the President ranted on Tuesday, December 10, that if he is not satisfied with the concessionaires’ explanations of the supposed onerous provisions in the agreement, “I will expropriate everything, kunin ko lahat (I will take everything).”

Guevarra cited the state’s constitutional right under Section 17, Article XII of the Constitution, which says, “In times of national emergency, when the public interest so requires, the State may, during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any privately owned public utility or business affected with public interest.”

Asked if a takeover is warranted, Guevarra said, “I will not answer the question unless it’s the President who will ask it.”

But Guevarra himself admitted on Monday, December 9, that the government was “unlikely” able to take over actual operations for now.

“Legal basis and capability are two different issues,” Guevarra said.

DOJ behind it

Guevarra also revealed that it was the Department of Justice (DOJ) which recommended that the Metropolitan Waterworks and Sewerage System (MWSS) revoke the extension of the concession agreement with Maynilad Water Services and Manila Water.

Originally valid only until 2022, the two concessionaires got an extension to 2037 under the Gloria Arroyo term. With the revocation, the expiry date is set back to 2022.

“The MWSS’ act of revoking the memorandum of agreement extending the period of the concession was upon the President’s directive, which was in turn based on the DOJ recommendation (after finding that the extension had no legal basis in the concession agreement),” Guevarra said.

“The ball is now in the concessionaires’ court,” Guevarra added. 

The conflict roots from allegedly onerous provisions in the concession agreements, like the prohibition on government to interfere in rate-setting, and business taxes being passed on to consumers.

After winning a combined P10.8 billion in losses from arbitration, Maynilad and Manila Water have now conceded and said they will no longer demand payments from the government.

But that has not seemed to appease Duterte, as he seems hell-bent on revising the current agreements, with threats of a takeover. – Rappler.com

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Lian Buan

Lian Buan covers justice and corruption for Rappler. She is interested in decisions, pleadings, audits, contracts, and other documents that establish a trail. If you have leads, email lian.buan@rappler.com or tweet @lianbuan.