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Not only are local governments and water districts terminating or preparing to terminate their joint venture agreements with the Villars’ PrimeWater, but subcontractors are also lining up over unpaid bills, Rappler has learned.
We obtained documents of a subcontractor trying to collect P75 million worth of overdue bills from PrimeWater, which cover different works for several water districts that went into a joint venture partnership with PrimeWater. This subcontractor, who requested anonymity, is not alone.
Senator Raffy Tulfo, chairperson of the public works committee which has begun investigating PrimeWater, said a contractor had relayed similar problems. “We also received a complaint from a contractor providing non-revenue water and maintenance services across multiple PrimeWater sites nationwide. They’re seeking assistance for their uncollected billings amounting to more than P90 million overdue since March 2023,” Tulfo said on December 3.
PrimeWater, a wholly-owned subsidiary of Prime Asset owned by Manuel Paolo Villar, is under multiple investigations for allegedly defaulting on their obligations to the water districts. Rappler had earlier reported on the suffering of their consumers under agreements that were allegedly faulty from the start.
PrimeWater grew exponentially under the Duterte administration, when Manuel Paolo’s brother, Senator Mark Villar, was the Department of Public Works and Highways secretary. The Local Water Utilities Administration or LWUA, which oversees water districts, is an agency attached to the DPWH, a conflict of interest for Mark Villar.
Rappler emailed and sent a Viber message to Prime Asset’s communication officer on December 8 and 9, but we have yet to receive a response. We will update this story if and when we get a response.
Rappler was able to speak with the contractor who said the total outstanding payable has actually reached P150 million. The source said PrimeWater subcontracts its construction work to their own firm, MGS construction, which then subcontracts to other companies including theirs, the source said.
MGS Construction is owned by Villar associate Jerry Navarrete.
The source said the difficulty collecting payment from PrimeWater began in 2023, which was also the time that the management kept changing, the source added. PrimeWater, we were told, has offered payment plan alternatives, such as paying with a lot property.
Allbank loans
The latest payment plan offer, the source said, was for Allbank — a thrift bank of the Villar group — to extend their credit lines. That way, the subcontractor can finance the project through Allbank loans, in lieu of their own financing if only PrimeWater had paid diligently.
The billings obtained by Rappler show that the subcontractor was also collecting P4 million from paying interest on the Allbank loans. The source said that while PrimeWater offered to be the guarantor on the loan, they also could not pay the interest afterwards, forcing them to shoulder the interest charges in the meantime so they could “make further drawbacks in the loan.”
The source said they have had to retrench 10 employees because of the financial difficulty caused by PrimeWater. “If this continues in the next two months, we might have the tendency to fold the business,” the source added.
On the request of the source, we are not disclosing the nature of the subcontracts and the water districts. But these are subcontracts for as low as P5 million to as high as P90 million.
Yet PrimeWater still reported a P1.35-billion comprehensive income in their 2024 financial statement. Their assets were worth P40.5 billion.
“Napaisip po tayo kung kaya ‘nyong kumita ng bilyon, bakit hindi ‘nyo po kayang maglabas para sa sahod at bayarin sa mga contractors?” said Tulfo. (I wondered why if you can earn a billion, why can’t you spend for the salary and payables to contractors?)
Renee Co, representative of Kabataan Partylist and a lawyer, said there should be a criminal investigation into “what may be considered fraud and bad-faith business practice.” Co and the progressive Makabayan bloc has been pushing to terminate all PrimeWater joint venture agreements in their cause to stop privatization of a public service.
Low expenditures, non-payment of bonds
We checked the audit reports of the water districts where the source worked and found that PrimeWater had also run into financial troubles in these areas.
In one water district, PrimeWater allegedly did not pay the taxes that they’re supposed to shoulder under their contract, and did not increase the profit share of the water district even though the latter chipped in for the repairs. In another water district, PrimeWater allegedly did not pay for manpower, labor, and equipment even if the contract stipulates it to be their responsibility.
In two water districts, PrimeWater allegedly also did not fulfill the investments they committed to under the joint venture.
Tulfo questioned PrimeWater over this same issue during a September 25 hearing, as several other water districts complained that the Villar company did not actually implement what they promised to do under their capital expenditures (capex).
Capital expenditure refers to funds used to buy, upgrade, or maintain long-term assets. Capex is important because this is what will enable PrimeWater to increase charges on consumers. If PrimeWater builds and expands facilities under capex, they can then go to the regulators to justify increasing their charges. PrimeWater consumers have complained about high charges, but no actual water supply.
“It goes on and on and on, halos lahat (almost all), ang dami nang nag-terminate ng contract because of that (so many have terminated contracts because of that),” said Tulfo, meaning, that almost all partner water districts were found by auditors to have capex shortcoming by PrimeWater.
“Pikit-mata pumayag sila kasi ang ganda ng offer ‘nyo, gaganda nga ang service kung ganito, half a billion ang i-iinfuse ‘nyong capital. Sino ba naman ang local water district na hindi papayag pero nabudol sila, ang dami ‘nyo pong nabudol,” said Tulfo.
(The water districts agreed blindly because your offers were so good, service will really improve if you were going to infuse half a billion in capital. No water district will say no to this, but they were fooled, you fooled so many.)
PrimeWater president Roberto Fabrique disputed a figure for one water district, but this did not satisfy Tulfo who was reading off a Commission on Audit (COA) report.
“This is a breach of contract…the water district can get the bond, or ask PrimeWater to comply, or pre-terminate if they don’t want [it] anymore,” said Assistant Government Corporate Counsel Tricia Velasco-Catera.
Collecting performance bonds from PrimeWater, however, has also been a challenge for water districts. Rappler’s research has found that 41 water districts out of the 77 PrimeWater partners have failed to forfeit performance bonds, including the water district that the source subcontracted for. This means they have not pursued their rightful claims. One of the water districts representative told the Senate that they couldn’t collect the bonds from the insurance company without PrimeWater’s consent.
The Insurance Commission suggested mediation, or filing for a claim.
Some water districts or local governments have resorted to termination of the contract, but when that happens, PrimeWater always just runs to the courts. “More often than not, the TRO is granted,” said Tulfo.
That’s what happened in La Union. There’s a local win in San Fernando, Pampanga when Mayor Vilma Caluag unilaterally terminated the PrimeWater contract. PrimeWater sought a temporary restraining order from the court. A San Fernando, Pampanga Regional Trial Court denied the TRO on December 2.
According to Tulfo, half of the 77 partner water districts have either unilaterally terminated the agreement, or issued a pre-termination notice.
“The suggestion is don’t go to court, if the joint venture is canceled, don’t go to court, can you do that?” Tulfo asked PrimeWater during the December 3 hearing.
“With all due respect, I cannot decide on that,” said Fabrique.
Co said criminal complaints must be initiated soon, as termination proceedings “take years” and the Malacañang-mandated LWUA investigation is “often slow and politically pressured.”
“Without criminal cases, what is happening is only damage control, not real justice. The state ends up merely ‘regulating’ the abuse instead of actively defending the public and holding powerful corporations accountable,” said Co. – with research from Shay Du/Rappler.com
