Duterte wants Manny Pangilinan and Fernando Zobel de Ayala jailed for "syndicated estafa"

Pinoy Money Talk

President Rodrigo Duterte vows that he will pursue cases against Manny Pangilinan and Fernando Zobel de Ayala, calling them “big fishes” he wants to put to jail for alleged violations of the law.

Manny Pangilinan is the chairman of Maynilad Water Services, Inc. while Fernando Zobel de Ayala is the chairman of Manila Water Co. (MWC), two water distribution companies that have recently earned the ire of the President for supposed “onerous water deals” the Philippine government signed with the two companies back in 1997.

During a speech in front of earthquake victims in M’lang, Cotabato, Pres. Duterte stated:

“Yung nagtatanong: Saan ‘yung big fish? Saan ‘yung mga corruption? Saan ‘yung malalaki?’ O, i-deliver ko na sa inyo ngayon: si Ayala pati si Pangilinan.”

“I want billionaires inside the prison,” Duterte said.

Duterte blasts Maynilad and Manila Water for alleged onerous water contracts
Pres. Duterte on MWC and Maynilad: “Alam mo ginawa ng mga ulol? Water distributor lang itong mga buwang na ito pero as it turned out, sila na ‘yung pinaka-mayaman at akala mo sila ‘yung may-ari ng tubig.”

Syndicated estafa

In the same speech, he explained that the two companies are guilty of syndicated estafa.

“Pag nagkamali ‘yang mga gagong ‘yan, ipakukulong ko talaga sila. Kita mo maski anong insulto ko hindi na sumasagot. Sigurado, swak sila. Syndicated estafa,” he warned.

“That is estafa or economic sabotage. Either way, no bail ‘yan. Nakita mo sila, tahimik talaga. Puro apology, apology, apology. Buti nga makinig si Pangilinan pati si Ayala. There is a violation of law. A crime has been committed.”

Although he did not cite specific applicable provisions, Duterte said Maynilad and MWC are guilty of violating the country’s Anti-Graft and Corrupt Practices Law.

“‘Pag hawakan mo ‘yung Anti-Graft and Corrupt Practices [Act]…’pag hinawakan mo ‘’yan, tapos ‘’yung kontrata nila, itandi mo, all the provisions of the Anti-Graft law can be found in the contract,” he explained.

Null and void from the beginning

For Pres. Duterte, the government contracts with Maynilad and MC are void from the start.

“That contract is null and void from the very beginning. They control water, they are just distributors,” Duterte said.

“Alam mo ginawa ng mga ulol? Water distributor lang itong mga buwang na ito pero as it turned out, sila na ‘yung pinaka-mayaman at akala mo sila ‘yung may-ari ng tubig.”

“In that contract, the Philippines surrendered its sovereignty by allowing these concessionaires to control when there should be an increase. Sila ang may hawak sa faucet,” Duterte added.

Gov’t loses in Singapore arbitration proceedings

Duterte’s attacks against MWC and Maynilad came on the heels of a ruling by the Singapore Supreme Court ordering the Philippine government to pay the water concessionaires more than P10 billion as compensation for their losses when the government disallowed rate increases in previous years.

In 2017, the Singapore-based Permanent Court of Arbitration awarded P3.6 billion to Maynilad and another P7 billion to MWC, to be paid by the Philippine government, for losses incurred by the two companies as a result of unimplemented water rate increases from 2013 until 2017.

On September 4, 2018 the Singapore High Court — the lower division of their Supreme Court — upheld the ruling and denied the Philippine government’s request to set aside the arbitration award.

In October 2018, the ruling became final after the Philippine government decided not to elevate the suit to the Court of Appeal, the upper division of Singapore’s Supreme Court.

Last December 2019, with Pres. Duterte stepping up his rants against Maynilad and Manila Water, the two companies announced they will no longer collect the P10 billion compensation awarded by the Singapore court.

Villar’s Prime Water to be the new water concessionaire?

Last month, the Metropolitan Waterworks and Sewerage System (MWSS) rescinded a board resolution granting an extension of the water concession agreement with Maynilad and Manila Water until 2037. With this termination, the concession agreement with the two companies will now end in 2022.

Pres. Duterte, however, is open to renegotiating the existing contract with the two companies.

“I can allow the novation of the contract. As a matter of fact, the Secretary of Justice has his proposal,” Duterte said.

Still, Duterte’s ongoing fight with MWC and Maynilad has sparked rumors that Duterte-allied billionaire Manny Villar of Prime Water Inc. is eyeing to take over Metro Manila’s water operations. Villar’s Prime Water used to be the exclusive water provider for their Camella Homes properties but has now expanded to become the water distributor in various cities and provinces.

However, Manny Villar’s wife, Sen. Cynthia Villar, denied the speculations. For now, they are focused in the provinces, according to the senator.

“We never talked about it. Speculation yun,” Sen. Villar said. “We are in the provinces. Malayong-malayo kami sa Metro Manila.”

Pinoy Money Talk is an educational website about money, banking, investments, and personal finance which started in 2005. Its group of five writers consists of one equity research analyst, one fintech startup owner, one finance educator, and two investment professionals.