Press Release
July 8, 2013

TV5 interview with Senator Juan Ponce Enrile

Q: Pero sir, on the side, nag-usap na kayo sir ng minority? Wala pa? kayo nina Jinggoy sir?

SJPE: Nag-usap na sila, but I've not joined them in the meetings because I did not want Frank Drilon to think that I am campaigning for the position, which I'm not. I'm not really talking to anybody. I've not talk to anybody about it. It is a requirement to be a minority leader that you must be... you must present yourself as an alternative candidate, di ba? But, I've not talk to the members of UNA. I left them to make their own individual decisions, how they will situate themselves. Whether they will join the majority or they remain under the umbrella of the opposition, which is UNA. But, I told them that I have opted to become an opposition and I'm going to aspire as a Minority Floor Leader.

Q: Sir, mukhang solid naman sila sir eh. Solid naman sila sir, sina Tito Sen, sila Jinggoy.

SJPE: Ya, we are going to have a meeting and I will join them for the first time. I think it will be on the 11th.

Q: Sir, basically the past weeks sinasabi, maraming lumabas na mga issues about Maynilad and Manila Waters passing on the income tax expenses on the consumers. Sir, legal ba ito o hindi? Ang sinasabi kasi sir ng Maynilad, nasa kontrata.

SJPE: Alam mo, the peculiarity of the situation of Manila Water and Maynilad, is that they are concessioners of this business and the one that granted them the concession is the government themselves through a government agency known as the, what do you call this? MWSS, what's the name of, Metropolitan Waters Sewerage System. Manila ba o Metropolitan?

Q: Metropolitan sir.

SJPE: Metropolitan ba yung MWSS?

Q: Yes Sir. Opo.

SJPE: Well, anyway, I'll just call it MWSS.

Q: Yes sir.

SJPE: This MWSS was actually the successor of NAWASA, di ba? And NAWASA was the successor of the Metropolitan Water District which used to have the franchise for the distribution of water in Metro Manila. Now, over time, it metamorphosed into MWSS which in effect was granted a franchise I think with the government or they carried over with them the franchise of the old Metropolitan Water District, NAWASA, and now, MWSS. The peculiarity of this business of water is that MWSS is originally both the operator and regulator of tariff. Before this happened, all of these public utilities where under the Public Service Commission. Later on, the Public Service Commission was changed and there was a... what is the one now assigned to handle Power Energy Regulatory Commission, the ERC. And then, water is left with the MWSS and then, in the case of transportation, you have now the LTO, no, no, not LTO, LTFRB. Land Transformation Franchising Regulatory Board. In case of shipping, it's now given to MARINA, and in the case of air transportation it is given to CAAP now I think, CAAP.

Now, when the MWSS, before the onset of Manila Water and Maynilad, the distribution of water in Metro Manila was handled by MWSS under its franchise also as a regulator of other water operators I think in the Metropolitan area. But, because of the inability of the government through MWSS to solve the inefficiency of distribution and the inadequacy of the water supply to be delivered to the householders of Metro Manila and this was compounded by the onset of many home, new residential areas, new buildings that were requiring water, they decided, the government decided to shift into a what you call, deregulation and privatization di ba. This happened both in the case of the telephone system which is under the NTC, the Communication System and it happened also in the case of the power system which is under the ERC and then, in the case of water which is under the MWSS now. In order to solve the inefficient system and the lack of money to refurbish and modernize the distribution lines of water distribution system in Metro Manila, they contracted this to the private sector and Manila, Metropolitan Manila was divided into two zones, one was being handled by Manila Waters and the other one by MAYNILAD.

Now, they are governed by their contract. They do not have any franchise because the franchise holder is MWSS. They were given a contract and the one that governs that contract is not a law, not the franchise of MWSS, but the contract between MWSS, representing the government and Ayalas in the case of Manila Water and I do not know, the owner of the MAYNILAD, used to be owned by the Lopez, and I think now, it was passed on to Mr. Pangilinan.

So, what really governs the amount of collection that was allowable to be charged by MAYNILAD and Manila Waters to their customers will be that contract and the problem here is, MWSS, the other contracting party that granted them the concession is itself the regulator. So, it is the function to allow or disallow whatever charges that would be presented by these concessioners to MWSS as a regulator and if it was approved by the regulator, then, it means that they find it to be within the contract. So, anybody saying that this contract is unconstitutional must consider the constitutional provision that even Congress can impair the obligation contracts. Let alone a contract enter the, especially a contract entered into by the government itself.

Now, this problem of an agency of the government granting exemption from income tax by a concessioner is not new. This already happened in the case of Malampaya, Shell is being exempted by the government from paying income tax on its share of the proceeds of the Malampaya gas well. Now, in the case of the power generators which are actually in effect in the same situation as the concessioner of water, in the case of this issue, Manila Water and MAYNILAD. They are not regulated. They are governed in their pricing of the power supply that they deliver to their distributor by their contract with that distributor. In the case of Meralco, it's supplier of power, they have a contract with this supplier of water. That's the same thing in the case of Manila Water and MAYNILAD, they have a contract with the franchise holder, MWSS, to supply water to the franchise area of MWSS under this contract and if they approved all of this charges then, they have to answer to the people.

Q: The MWSS?


Q: Okay. So, it's not the call of MAYNILAD and Manila Water?

SJPE: Well, bear in mind that these two companies made a proposal to the government when they entered, that they'll invest money, they will reduce the water losses, I think at that time, if I remember correctly, the losses from deliverable water supply was something like, 50% or thereabouts. So, if they were successful in refurbishing the system and introducing investment, I do not know how much investment they have introduced, they have the right to recover that investment only within the concession period. So, if the government entered into that contract under those conditions how can they now vary the contract? It is going to be a messy legal situation.

Q: Sir, so ibig sabihin...

SJPE: And I think, even Congress cannot, I don't know if Congress has the power to intervene, because it's very clear that you cannot impair the obligation of contracts. Now, the only remedy here of the government would be to renegotiate the contract if, the parties agree.

Q: But, MWSS moved to strike down the 2004 Resolution. Bigla silang bumawi sir, sinabi nila na hindi na pwedeng singilin, hindi na pwedeng ipasa yung income tax...

SJPE: How can they do that? They are in effect violating their contract.

Q: Okay.

SJPE: The government itself was the one who entered into a contract with these concessioners, they have to renegotiate it.

Q: Sir, so ibig sabihin, walang mali na ipinapasa yung income tax expenses sa consumers?

SJPE: Kung nandoon yun sa kontrata. I have not read the contract eh. Kung nandoon yun sa kontrata, just like in the Malampaya contract of the government. How can the government remit? If it wants to help the people, it has to absorb that cost.

Q: So, sir, bakit ngayon lang nabubuksan yung issue na ito? Ang sinasabi, matagal na naman yung kontrata. Bakit ngayon lang binubuksan ito?

SJPE: Ewan ko. Because the people now enjoy a very efficient system. Now you can put all these high-rise buildings. And you can get water up to the top floor efficiently. So, maybe the people are beginning to say, why are we paying so much for water. Which of course, is a legitimate question to the consumer. But, it's the government that must solve this problem itself. Because it is the government that entered into these contracts and if they were erroneous at the time they were entered into, then some people must answer for it. But if at that time, they were considered reasonable, considering the amount of investment envisioned to be, as put up by the concessionaires, that will depend upon the courts to decide.

Q: Sir, may sinabi pa, siyempre yung ibang mga lumabas ngayon sa mga articles, pati daw yung mga expenses sa official travel, pati daw yung mga flowers na binibigay sa official functions, ipinapasa sa mga consumers.

SJPE: I do not know the contract. If those are not in the contract, then the regulators should have not allowed it. If all these are included in the contract, well, you cannot change a contract in mid-term. You have to renegotiate it.

Q: How do we renegotiate it? Paano po ang magiging proseso?

SJPE: Well, they have to approach the operators, if they want to renegotiate depending upon their calculation of the amount of investment they have already put up plus those that they will still incur and the maintenance costs and operating costs. And then how much profit they were allowed to recover from the public. A business enters into a contract, not for charity. They are businessmen, they enter to this contract to make a profit. So, now it's up to the other party, who is to suppose to safeguard the interest of the people, to see to it the terms and condition of the contract are reasonable, not exorbitant. I do not know whether it is exorbitant. I have not read the contract at all. But we are only depending upon the information we are gathering from the media. You know, you have to be very, very careful in approaching this because all of these charges must be justified on the basis of the contract between the MWSS and the two concessionaires, Manila Water and Maynilad.

Q: To renegotiate sir, you're saying MWSS should again talk to Maynilad and Manila Water?

SJPE: Yes. If they think that they would recover their investment according to the period of the concession and that the profit that they will earn on top of all the costs, reasonable costs that they are supposed to charge is exorbitant. Well, I do not know whether it is exorbitant or not. I'm just making this statement on the basis of how it would be if they will agree to renegotiate.

Q: What you are saying is that MWSS cannot just strike down.

SJPE: No they cannot. A contract is a contract. They have to pay for all the investments of Manila Water and Maynilad that they have put in. They'll have to take over this system and pay the corresponding investments plus their assumed profit at the end of the period they have agreed upon.

Q: Ano, sir ang pwedeng gawin ng Maynilad and Manila Water, now that MWSS move to strike down the resolution saying na "di na niyo pwede isingil yung tax expenses".

SJPE: Whether that will be decided by the courts. Only the courts can make a final judgement. I'm sure Maynilad and Manila Water will go to court and resist that unilateral decision of the other party to rehash the terms and conditions of the contract in effect that is what they are doing. You cannot just obviate from the contract without the consent of the other

Q: Sir, itong pagpasa ng tax expenses, unusual ba ito para maging kasama sa contract o nangyari na ito sa mga ibang contracts before?

SJPE: Well, kagaya nga nung Malampaya, sinabi ko na, the government agreed to absorb the income tax of Shell.

Q: So, it's not unusual, sir? Walang mali dun sa pagpasa nung income tax expenses?

SJPE: Well, kung ako ang nasa gobyerno, at I negotiate the contract, I am the one handling MWSS, then I would have covered that in the contract they could not pass on. But if they agreed, the government agreed, then that means the government was holding the concessionaires harmless from all taxes.

Q: Sir, itong ganitong problema, does this merit an inquiry sa Congress? Sir, meron an kaseng nag-mo-move sa Senate.

SJPE: What can Congress do? They cannot pass a law to impair the obligation of the contract between the contracting parties. Eventually, they will have to bring it to the court those who are interested legislators, they will have to file a case in court. There is no need to investigate this if they really believe this erroneous contract entered into by the MWSS then, they should now get their lawyers and study it, and then, file the case.

Q: Yes sir. So, at this point of sir, MWSS should be the one to answer the issues.

SJPE: Yes, yes. The burden is on MWSS.

Q: because?

SJPE: Because they were the one, that's the agency of the government that entered into this contract, in effect, it was government that granted this concession because the franchise granted by Congress to MWSS is an authority to put up a distribution system for water and subject to the terms and conditions of the franchise. Now, that's another aspect of this issue, are they empowered to vary the terms and conditions of the franchise granted by the Congress. But then, they have to answer to these innocent contractors because they entered in good faith with the government to do the job of the government under the conditions spelled out in their contract with that government.

Q: Lumalabas sir, parang sumunod lang naman yung MAYNILAD sir, at Manila Water doon sa kontrata?

SJPE: Yes, the law that governs the performance, obligations, and duties and performance of part of its contract is the contract itself nothing else. If there is a higher truth, then let the government, if there is a law then the law must come in, it becomes a part of the contract, unless they can show a law. Then, the terms and condition must be exacted by both parties from one to the other.

Q: Sir, kasi ang nirereklamo ng mga concessioners ngayon MWSS naman yung nag-draft nung mismong kontrata.

SJPE: Ay, hindi ko alam yan. Ay, lalo ng grabe yan kung MWSS yung nag-draft.

Q: Bakit sir? Mas malala?

SJPE: Sa kanila galing ang terms and conditions eh, bakit nila babaguhin?

Q: Sir, ngayon, what's left? Courts nalang talaga kung sakali?

SJPE: Yes, only the courts can decide this but, 50-50 yan. I cannot predict either way. I am more inclined to believe that a contract is a sacred one unless it's really, there's a basis to consider it void. Ab initio.

Q: So, mahirap yun sir, mahirap baguhin, talaga sir? Even if subject to ganito sir, controversies?

SJPE: Yes.

Q: So, mas malala pa pala sir na nagbanggit.

SJPE: This is governed of the law, the rules of contracts.

Q: Sabi nyo nga kanina sir magiging messy pag ganitong binabaliktad nila. Sir, simpleng paliwanag lang sir, kapag ganyang ipinapasa sa concessioner. Paano nga ba masisiguro ng concessioner na kikita sya. Pwede ba sya magdemand kung ano ang mga hihingin nya.

SJPE: Hindi. They can demand that the contract must be fulfilled.

Q: Sir, about Senate Presidency naman sir. Sir, ano na po balak ang balak ninyo for the incoming 16th Congress?

SJPE: Well, kami we assumed the role of opposition because by what happened in the election it seems that the administration controls the Senate. So, UNA which is the leading opposition party in the country because the other parties coalesced with the administration, we'll have to play role of the opposition, not a destructive, obstructionist opposition, but an opposition that is responsible, support what is good for the country, oppose what they think is bad for the country.

Q: Sir, nag-usap na raw kayo ni Senator Drilon?

SJPE: Nag-usap kami rito. Dito mismo, dito sa lamesa na ito.

Q: Sir, anong, kung pwede lang naming malaman, binigay nyo ba yung suporta nyo sakanya?

SJPE: No, no, I told him that I'm going to be in the opposition, I could not join the Majority because I will submit my name as a candidate for Senate President in order to assume the role of a Minority Floor Leader. But, I told him, you are free to talk to the members of UNA individually.

Q: Ano po ang sabi nya sir? Okay naman?

SPJPE: Ok naman. Maganda naman yung usapan namin.

Q: Sir, bakit ayaw nyo na? What if manalo kayo ulit sir?


Q: By any chance sir, manalo kayong Senate President ulit?

SJPE: Ah, unrealistic yun eh.

Q: unrealistic... Pero sir, ayaw nyo na? napagod na ho kayo sir?

SJPE: Unrealistic yun. Siguro mas mabuti na na the administration will have their own Senate President. Better that way.

Q: Sir, gaano ho kayo kalakas na magiging Minority leader? Ano po ang magiging...

SJPE: I don't know, I will see how things will go. I've been a Minority Floor Leader before, I also was the only one, if you remember in 1987, there were two of us, si President Erap who is now the mayor of the city of Manila, but later on he joined the Majority because he joined the Liberal Party and later on, he separated again during the election for president in 1992. Ako naman, I did not run for re-election as a Senator, I ran for Congress.

Q: Na-miss nyo rin po ba maging part ng Minority.

SJPE: No, I'm used to being in the Minority eh. In the House, when I was a member of the House, I was invited by the Liberal Party to join them and I did. In fact, I became President of the Liberal Party and I ran under the Liberal Party banner in 1995 for the Senate. When I return back to the Senate.

Q: Sir, after everything na nangyari nung 15th Congress, excited ba kayong bumalik sir ngayong 16th Congress?

SJPE: Pareho lang. No difference.

Q: Sir, Charter Change sir, medyo nabubuhay sa Lower House, anong possibility nya sir sa Senate?

SJPE: I will keep my options dyan sa issue nay an.

Q: Bakit sir?

SJPE: Wag na muna.

Q: Sir, konting shots lang kami. Sir, yung sa Malampaya, same lang din with the Maynilad and Manila Water?

SJPE: Alin?

Q: Yung sa Malampaya sir, almost the same contract lang din ho ba?

SJPE: no, no, Iba yun eh.

Q: Pero allowed sila to pass that?

SJPE: Dun sa kontrata ng Malampaya may problema yun pero nobody is raising the issue. When I was studying it I found out that not only the income tax of the operator which is the subsidiary of, I think, foreign multinational but, also the income tax of the, that mother company was exempted from income taxation, from Philippine income taxation.

Q: Oo nga. So, doble doble sir. Pero hindi naman pala, kasi biglang lumaki ang issue the past weeks eh. Na biglang bakit daw ipinapasa yung income tax.

SJPE: Iba yun eh, itong mga concessioner na ito, they are governed by their contract not by law. In the same way that Shell is governed with its contract with the government. Now, in the case of MERALCO, different yun. Sila, they were charging income tax but, the Supreme Court said no, you cannot because you are the franchise holder and I don't think their franchise carried an exemption for income tax.

Q: So sir, sa Malampaya contract, yung Shell hindi na rin sila pinagbabayad ng kontrata sa income tax?

SJPE: They are not paying. Nakikita mo dun sa statement of accounts na sharing the... the income tax of Shell and the mother company is deducted from the share of the government.

Q: Yes, ganun din, okay. Sir, anong mangayayari kung magkaroon ng inquiry sa Congress anong pwedeng mangyari?

SJPE: I don't know.

Q: Wala lang ipapatawag yung mga MWSS, mga concessioner.

SJPE: Siguro I will join the hearing and ask questions.

Q: Pero sir, para sa inyo no need.

SJPE: What for? What is the purpose to legislate? We cannot impair that contract. We cannot say; no, the contract is exorbitant. How? Only the Supreme Court can decide that.

Q: In the first place pumayag yung MWSS before. So, kawawa naman yung mga concessioner sir at this point in time sila yung na...

SJPE: Yung kawawa yung mga concessioner. They have the right to complain but, a contract is a contract naman.

Q: In the first place, dapat hindi na pumayag yung MWSS sir.

SJPE: Dapat yun. They should have studied the contract very well. Especially if it's a long term contract then I'm sure that they knew the amount of investment that must be injected by the concessioners in order to make the system efficient and for them to recover their investment within a certain time, because the contract is not forever, it has a period and they have to recover their investment within that period and the system goes to the government in the end of the concession.

Q: Paano sir kung MWSS din yung nag-draft sir? Ibig sabihin hindi nila inaral yun mismo?

SJPE: Pananagutan nila yun.

Q: Oo nga eh, tapos ngayon bigla sila magba-back out.

SJPE: Pananagutan nila yun. Ibang salitaan yun kung ang nag-draft ng kontrata ay yung mga concessioner. Hindi ko alam na yung nag-draft pala ng kontrata ay MWSS.

Q: MWSS daw sir.

SJPE: Malaking problema ng, mas malaking sakit ng ulo ng gobyerno yan.

Q: So sana pala sir, hindi nalang lumabas yung issue.

SJPE: Bahala sila no.

Q: So sir, pagpasok sa July, pwedeng ipatawag, si Senator Recto ata nagpapatawag ng hearing.

SJPE: Ewan ko. Si Ralph naman he understands business, he understands the economics of business. So, I am sure, if he studies it quite well even if he's not a lawyer, he will find out that, maybe he will find the contract proposed by the government to be rather generous.

Q: Yes sir. Pero sir, is it safe to say that at this point in time, na walang pananagutan yung concessioner, for now.

SJPE: As I see it, wala eh because they rely on their contract. They are not governed by any other rule except their contract with the grantor of the concession.

Q: Sir, marami pong salamat. Thank you so much.

SJPE: Maraming Salamat.

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