Supreme Court urged to stop water firms’ ‘illegal’ pass-on charges

The attendant “novel” issues they also raised include the urgent need to stop Finance Secretary Cezar Purisima and President Benigno Aquino III from paying out of the national coffers any amount to Maynilad and Manila Water for alleged damage claims against the Sovereign Guarantee.

By MARYA SALAMAT
Bulatlat.com

MANILA – “Private water concessionaires Maynilad and Manila Water have no legal basis to overcharge and pass on to consumers their income taxes. The international arbitration and sovereign guarantees they resorted to to push their desired water rates or demand payment for it, are also illegal and unconstitutional.”

L - R: Bayan Muna Reps. Zarate, Colmenares (Photo grabbed from Bayan Muna Facebook account)
L – R: Bayan Muna Reps. Zarate, Colmenares (Photo grabbed from Bayan Muna Facebook account)

These, among other novel issues “awash with urgency,” were brought to the Supreme Court for resolution on Tuesday, August 12, by Bayan Muna legislators. It coincided with the no-water week for Maynilad’s service areas affecting three million customers, as Maynilad worked on the P130-million pipe realignment. There were talks that the cost may also be passed on to consumers or to the general public.

In their 58-page petition for certiorari and prohibition, Bayan Muna Representatives Neri Colmenares and Carlos Zarate cited Philippine laws, audit manual and practices, international laws and several jurisprudences involving public utilities, to ask the Supreme Court not only to put a stop to the water concessionaires’ “illegal” drive to overcharge consumers, but also to clarify to these companies, once and for all, that they are public utilities subject to state regulation.

The ongoing Maynilad-Manila Water controversy sprung from their continuous attempts to implement their proposed rate hikes which pass on to their consumers even their income tax payments. The law expressly forbids it for public utilities. In the Concessionaire’s Agreement, income tax is also not included in the expenses which they are expected to “prudently” incur (and recover from consumers) in the business of delivering water to their service areas.

The Metropolitan Waterworks and Sewerage System (MWSS) disapproved the pass-on charging of income tax in 2013, amid massive protests calling for water rate reduction instead.

Bulatlat picture water concessionaires
‘RIPE FOR JUDICIAL REVIEW’ – that’s how Bayan Muna describes the acts of two water concessionaires after both have tested the mechanisms in the concession agreement that could “trump” regulation and the law. (Bulatlat File Photo)

But the water concessionaires separately brought the case to the International Court of Arbitration of the International Chamber of Commerce, using the arbitration clause in the Concession Agreement. In their petition with the Supreme Court, Bayan Muna cited laws and landmark jurisprudence proving that the said arbitration clause is “illegal and Constitutionally infirm.”

After both Maynilad and Manila Water have pursued separate arbitration proceedings with conflicting results since 2013; and after both companies have written Finance Secretary Cezar Purisima to collect on the Aquino government’s sovereign guarantees to pay their declared foregone revenues, Bayan Muna said in their petition that the “controversy is now ripe for judicial determination.”

The attendant “novel” issues they also raised include the urgent need to stop Finance Secretary Cezar Purisima and President Benigno Aquino III from paying out of the national coffers any amount to Maynilad and Manila Water for alleged damage claims against the Sovereign Guarantee. Also, the urgent need to restrain or prohibit MWSS Regulatory Office (MWSS-RO) Administrator Esquivel and MWSS-RO Chief Regulator Yu from implementing the International Court Arbitral Awards. Should the MWSS start implementing it, Colmenares and Zarate warned it could result to two contradictory regulatory regimes in the lone MWSS franchise area in greater Metro Manila.

The progressive lawmakers said the issues they raised are “justiciable and serious ones.” These center on assertions that the Respondents have conducted themselves illegally and improperly.

Colmenares and Zarate urged the Supreme Court to assess the Respondents’ conduct not in terms of policy context and implications but “in terms of the Respondents’ duty to follow the relevant statutes and constitutional provisions and to act with decency, good faith, and obedience to the principles of what is legal, just, and reasonable.”

Aside from Manila Water Company Inc and Maynilad Water Services Inc, they named as respondents Finance Sec. Cezar V. Purisima, Metropolitan Waterworks and Sewerage System Administrator Gerardo Esquivel, MWSS Regulatory Office Chief Regulator Joel Yu, and Pres. Aquino. ()

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