Would it be an 'OK Corral' showdown?
Published Dec 17, 2019 12:00 am
THE LEGAL FRONT
By JUSTICE ART D. BRION (RET.)
Justice Art D. Brion (Ret.)
I never thought that a head-to-head confrontation between the government and our country’s business titans would ever take place. In the past, business magnates always had their way as I observed in my October 16, 2019, article – The Manila Waters threat: serious or sewage.
I wrote this article after the Supreme Court had imposed a hefty fine on the Ayala-controlled Manila Water for failure to comply with its sewage water treatment obligations; Manila Water, in a haughty reply, simply sent the court a warning: it would raise water rates by 780% if the fine imposed would not be reconsidered.
More than this warning, Manila began suffering regular water service interruption soon after. Service interruption remains to this day despite the rains that recently came.
My article also cited a past experience with Manila Waters’ Ayala/Zobel family – the old case of Republic v. Judge de los Angeles where no less than then Chief Justice Claudio Teehankee had bewailed in 1988 the frustration of the court in executing its 1965 decision. The case involved the titling of foreshore lands in the Calatagan, Batangas, area.
In a subsequent article – Politics, politics….and more politics? – I went further to point out:
“If they carefully take stock, they may see that they are not governing alone; monopolistic combinations exist within our midst and they practically control the economy and the nation. With unseen hands, they effectively make the bigger and more critical decisions in this country.”
When I wrote this, I had at the back of my mind tales of unscrupulous and ethically questionable methods used by the titans of industry in the late 19th century to monopolize and control US industries. Government and politicians, of course, played a key role in these tales.
Among the big-name titans were J.P. Morgan, James Mellon, Andrew Carnegie, and John D. Rockfeller, collectively called the “robber barons” because of their dubious methods and their service to the interests of the rich. They were into steel, railroads, banks, finance, oil, and other endeavors that made a difference in the growing and developing US economy.
Through innovative but ruthless management practices, the barons amassed previously unheard -- of levels of wealth, but in the process also helped the economy. They ultimately sought redemption in the eyes of history through philanthropy. The famous Stanford University rests on this kind of background.
Our country, it seems, is undergoing a similar development, albeit not in terms of developmental progress and philanthropy, but in terms of the combinations who control the economy and the nation.
But in our case, a potential game-changer, an unconventional “sheriff,” is now in town – a provincial politician who had thrown his hat into the presidential ring in 2016 and who surprisingly won over his more nationally known opponents. More surprises awaited the nation when the “sheriff” began using out-of-the-box governance approaches.
The court’s fine on Manila Water and our interrupted water service issues would have ultimately faded into history in the way other past crises did, if not for the billion-peso fines a Singapore tribunal thereafter imposed on the government as compensation for the concessionaries’ unrealized 2015-2019 rate increases. The fines were not petty -- P7.39 billion for Manila Waters, and P3.4 billion for Maynilad; they are rooted, too, on questionable circumstances.
As had happened in the Tombstone Territory in 1881 when the taunts of the law-contemptuous Cowboys forced Sheriff Wyatt Earp into a famous gunfight that proved fatal to three Cowboys, the Singapore fines outraged our “sheriff” and drove him to rage and decisive action.
For starters, he caused the cancellation of the extension of Manila Water’s concession. The original grant would not be due until 2022 but an extension had been granted as early as 2009.
So far, the water concessionaires have blinked by offering to waive the Singapore awards and to renegotiate the terms of their concessions, but the “sheriff” has not at all meaningfully responded.
Will these offers mollify the sheriff and his government, thereby avoiding a potentially deadly “OK Corral” showdown?
Prognosis so far looks bleak as our “sheriff” President has only said: Water and its distribution are the lifeblood of the metropolis and are beyond compromise.
Left unsaid in the exchange is the reality that Ayala and its allied business interests likewise control other businesses critical to the life of the nation. They are into energy, electricity, communications, newspapers and media, and banks, among others – economic interests similar to those of the robber barons of old. All these are unmistakable assets in an OK Corral fight, but they can also prove to be Goliath-like liabilities.
Other available weapons are no less formidable. The government has the Constitution in terms of the emergency powers it can invoke if public interest would be threatened, together with the forces to implement its will.
But the same Constitution also limits the administration’s life and powers, unless it claims emergency powers and bypasses the usual safeguards and term limits applicable to normal times.
Business is not at all helpless. Its first strong point is its developed expertise in its areas of operations. While government can seize and take over business assets, it had failed in the past to run these assets to the satisfaction of our populace.
In a shootout, popular reaction could be critical either way. The people may like well-run utilities, but may also abhor being the serfs paying for successes and their excesses.
Investor confidence is another factor that both sides have to consider. We need economic investments if our economy is to advance. A spooked business community could bring their funds elsewhere. But decisive government action can also inspire confidence.
Past experience and time can also be important in the parties’ arsenals. The water concessionaires have run into many sheriffs before and know how to deal with them. So far, they have managed their encounters well and have outlasted administrations, but mostly using conventional approaches. Time, too, may not at all help in a fast OK Corral shootout where the initial salvos could be telling.
Last but not the least, both sides cannot disregard the local and international allies they can line up, both business and political. Include the press – local and international – in this line up, without forgetting that it also has interests beyond pure reporting.
In the meanwhile, we, poor citizens, simply have to wait, not only for developments but for the continuity of water from our faucets.
While waiting, we should remember that in the case of the US robber barons, citizen action made a difference in curbing their excesses. Even the US Supreme Court got into the act through anti-trust rulings and the reversal of business-friendly and permissive Lochner v. New York-type rulings.
Shall we see similar participative actions from our citizenry and our Supreme Court (as in President Erap’s case), or shall we simply be bystanders scampering for safety and later watching as the morticians clean up?
My eyes will not only be on the Ides of March, but on the 3rd weeks of February and September – historically aberrant periods for the country.
[email protected]
Justice Art D. Brion (Ret.)
I never thought that a head-to-head confrontation between the government and our country’s business titans would ever take place. In the past, business magnates always had their way as I observed in my October 16, 2019, article – The Manila Waters threat: serious or sewage.
I wrote this article after the Supreme Court had imposed a hefty fine on the Ayala-controlled Manila Water for failure to comply with its sewage water treatment obligations; Manila Water, in a haughty reply, simply sent the court a warning: it would raise water rates by 780% if the fine imposed would not be reconsidered.
More than this warning, Manila began suffering regular water service interruption soon after. Service interruption remains to this day despite the rains that recently came.
My article also cited a past experience with Manila Waters’ Ayala/Zobel family – the old case of Republic v. Judge de los Angeles where no less than then Chief Justice Claudio Teehankee had bewailed in 1988 the frustration of the court in executing its 1965 decision. The case involved the titling of foreshore lands in the Calatagan, Batangas, area.
In a subsequent article – Politics, politics….and more politics? – I went further to point out:
“If they carefully take stock, they may see that they are not governing alone; monopolistic combinations exist within our midst and they practically control the economy and the nation. With unseen hands, they effectively make the bigger and more critical decisions in this country.”
When I wrote this, I had at the back of my mind tales of unscrupulous and ethically questionable methods used by the titans of industry in the late 19th century to monopolize and control US industries. Government and politicians, of course, played a key role in these tales.
Among the big-name titans were J.P. Morgan, James Mellon, Andrew Carnegie, and John D. Rockfeller, collectively called the “robber barons” because of their dubious methods and their service to the interests of the rich. They were into steel, railroads, banks, finance, oil, and other endeavors that made a difference in the growing and developing US economy.
Through innovative but ruthless management practices, the barons amassed previously unheard -- of levels of wealth, but in the process also helped the economy. They ultimately sought redemption in the eyes of history through philanthropy. The famous Stanford University rests on this kind of background.
Our country, it seems, is undergoing a similar development, albeit not in terms of developmental progress and philanthropy, but in terms of the combinations who control the economy and the nation.
But in our case, a potential game-changer, an unconventional “sheriff,” is now in town – a provincial politician who had thrown his hat into the presidential ring in 2016 and who surprisingly won over his more nationally known opponents. More surprises awaited the nation when the “sheriff” began using out-of-the-box governance approaches.
The court’s fine on Manila Water and our interrupted water service issues would have ultimately faded into history in the way other past crises did, if not for the billion-peso fines a Singapore tribunal thereafter imposed on the government as compensation for the concessionaries’ unrealized 2015-2019 rate increases. The fines were not petty -- P7.39 billion for Manila Waters, and P3.4 billion for Maynilad; they are rooted, too, on questionable circumstances.
As had happened in the Tombstone Territory in 1881 when the taunts of the law-contemptuous Cowboys forced Sheriff Wyatt Earp into a famous gunfight that proved fatal to three Cowboys, the Singapore fines outraged our “sheriff” and drove him to rage and decisive action.
For starters, he caused the cancellation of the extension of Manila Water’s concession. The original grant would not be due until 2022 but an extension had been granted as early as 2009.
So far, the water concessionaires have blinked by offering to waive the Singapore awards and to renegotiate the terms of their concessions, but the “sheriff” has not at all meaningfully responded.
Will these offers mollify the sheriff and his government, thereby avoiding a potentially deadly “OK Corral” showdown?
Prognosis so far looks bleak as our “sheriff” President has only said: Water and its distribution are the lifeblood of the metropolis and are beyond compromise.
Left unsaid in the exchange is the reality that Ayala and its allied business interests likewise control other businesses critical to the life of the nation. They are into energy, electricity, communications, newspapers and media, and banks, among others – economic interests similar to those of the robber barons of old. All these are unmistakable assets in an OK Corral fight, but they can also prove to be Goliath-like liabilities.
Other available weapons are no less formidable. The government has the Constitution in terms of the emergency powers it can invoke if public interest would be threatened, together with the forces to implement its will.
But the same Constitution also limits the administration’s life and powers, unless it claims emergency powers and bypasses the usual safeguards and term limits applicable to normal times.
Business is not at all helpless. Its first strong point is its developed expertise in its areas of operations. While government can seize and take over business assets, it had failed in the past to run these assets to the satisfaction of our populace.
In a shootout, popular reaction could be critical either way. The people may like well-run utilities, but may also abhor being the serfs paying for successes and their excesses.
Investor confidence is another factor that both sides have to consider. We need economic investments if our economy is to advance. A spooked business community could bring their funds elsewhere. But decisive government action can also inspire confidence.
Past experience and time can also be important in the parties’ arsenals. The water concessionaires have run into many sheriffs before and know how to deal with them. So far, they have managed their encounters well and have outlasted administrations, but mostly using conventional approaches. Time, too, may not at all help in a fast OK Corral shootout where the initial salvos could be telling.
Last but not the least, both sides cannot disregard the local and international allies they can line up, both business and political. Include the press – local and international – in this line up, without forgetting that it also has interests beyond pure reporting.
In the meanwhile, we, poor citizens, simply have to wait, not only for developments but for the continuity of water from our faucets.
While waiting, we should remember that in the case of the US robber barons, citizen action made a difference in curbing their excesses. Even the US Supreme Court got into the act through anti-trust rulings and the reversal of business-friendly and permissive Lochner v. New York-type rulings.
Shall we see similar participative actions from our citizenry and our Supreme Court (as in President Erap’s case), or shall we simply be bystanders scampering for safety and later watching as the morticians clean up?
My eyes will not only be on the Ides of March, but on the 3rd weeks of February and September – historically aberrant periods for the country.
[email protected]