Duterte orders review of ‘onerous’ gov’t contracts with private firms

Pia Ranada

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Duterte orders review of ‘onerous’ gov’t contracts with private firms

Toto Lozano/PPD

The Chief Executive orders the review after telling Justice Secretary Menardo Guevarra and Solicitor General Jose Calida to 'study' the Maynilad arbitration case against the government

MANILA, Philippines (UPDATED) – President Rodrigo Duterte has ordered all government agencies to review their contracts with private companies and foreign entities and “remove” provisions that could harm Filipinos.

He gave this directive during the 36th Cabinet meeting on Monday, April 1, in Malacañang.

“The Chief Executive then instructed all agencies to check and review all contracts entered into and remove onerous provisions that might be detrimental to the lives of the Filipinos,” Presidential Spokesman Salvador Panelo said in a statement sent on Tuesday.

“He (President Duterte) reiterated his vow to protect the people of the Republic of the Philippines,” Panelo added.

Justice Secretary Menardo Guevarra told Rappler that Duterte’s general review order will cover “onerous government contracts with private domestic companies.”

Panelo, in a Tuesday press briefing, added that the review order covers foreign “countries” with which the Philippines has entered into agreements with. This means, he said, that even deals with China will be reviewed.

Guevarra pointed to articles on contracts in the Civil Code as legal basis for the government to “invalidate” provisions in signed contracts that harm the public.

“Contractual provisions that are contrary to public interest or public policy may be invalidated under our laws,” said Guevarra.

This presidential directive is apparently related to the water crisis hitting parts of Metro Manila and Rizal which Duterte blamed on the Metropolitan Waterworks and Sewerage System (MWSS) and the two water concessionaires Manila Water and Maynilad. 

He had earlier threatened to scrap the concession agreements entered into by the two firms and the government.

‘Study’ Maynilad case

Duterte’s review order was predicated on instructions to Solicitor General Jose Calida and Guevarra to “study” the arbitration case that Maynilad won over the government.

“During the same Cabinet meeting, PRRD directed the Solicitor General and the Secretary of Justice to study the case of Maynilad vs Republic,” said Panelo.

The Chief Executive had problems with provisions in the Maynilad concession agreement that supposedly prohibited the government from intervening, leading to Maynilad’s victory over the government in their case.

“Because according to the ruling, the government intervened, and by reason of the intervention, Maynilad suffered damages. And the President could not believe that how can a contract like this entered by the government imposing a ban on the government to take government action with respect to such item as water services,” said Panelo.

To make sure the government is not put in such a situation again, Duterte wants all government contracts with similar provisions to be reviewed then changed or rescinded, depending on the situation.

The decision in the Maynilad case compels the Philippine government to pay Maynilad P3.42 billion for not implementing a water tariff hike from March 2015 to August 2016. It also said Maynilad can still sue the government for losses incurred due to the unenforced tariff hike from January 2013 to March 2015. 

The Singapore High Court decision on the case became final in October 2018. The Philippine government did not appeal its decision during the time allotted to lodge such an appeal. – Rappler.com


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Pia Ranada

Pia Ranada is Rappler’s Community Lead, in charge of linking our journalism with communities for impact.