A water rate increase sought by Maynilad Water Services Inc. is legal, the Court of Appeals (CA) said as it affirmed a ruling of the Quezon City Regional Trial Court (RTC) allowing Maynilad to raise charges.
In a 12-page resolution dated May 30, 2018, the CA’s 2nd Division dismissed a petition for review filed by Metropolitan Waterworks and Sewerage System (MWSS) assailing the lower court’s August 30, 2017 decision, which ruled in favor of Maynilad.
The ruling was made by Associate Justice Jane Aurora Lantion and concurred in by Associate Justices Remedios Salazar-Fernando and Zenaida Galapate-Laguilles,
The appellate court said the lower court “did not err in rendering the assailed decision and in confirming the arbitral award.”
Arbitration, an alternative mode of settling disputes, is not covered by the court system and is a voluntary process.
It applies rules of the Alternative Dispute Resolution Law, which resolves controversies by rendering an arbitral award.
“None of the grounds to vacate the arbitral award are present in this case and, as already established, the merits of the award cannot be reviewed by the courts,” the ruling said.
The lower court granted Maynilad’s petition asking MWSS to honor the appeals panel’s December 2014 final award in an arbitration case.
The arbitral award allowed Maynilad to include its corporate income tax in its future cash flows, thus, pushing up its basic water charge of P30.28 per cubic meter to P34.34.
But the MWSS said the lower court “should have vacated the arbitral award for being contrary to public policy” and that Maynilad “should not be allowed to include its corporate income tax as a deductible expense in its future cash flow since it is tantamount to passing its taxes to its consumers.”
The final award also gave credence to Maynilad’s alternative rebasing adjustment for the fourth rate rebasing period of 13.41 percent, representing an average basic water charge of P30.28 per cubic meter.
Such charge results in an adjusted rate of P34.34 per cubic meter for every charging year of the rebasing period.
Maynilad and MWSS entered into a concession agreement on February 21, 1997, which gave the water concessionaire the right to manage, operate, repair, decommission and refurbish water facilities in the west zone that covers 17 cities and municipalities in Metro Manila.
The west zone includes Manila (all but portions of San Andres and Santa Ana), Quezon City (west of San Juan River, West Avenue, EDSA, Congressional, Mindanao Avenue, the northern part starting from the Districts of Holy Spirit and Batasan Hills), Makati City (west of South Super Highway), Caloocan City, Pasay City, Parañaque City, Las Pinas City, Muntinlupa City, Valenzuela City, Navotas City and Malabon City.
The concession agreement extends to Bacoor, Imus, Kawit, Noveleta and Rosario in Cavite.
The MWSS said the rate rebasing may not be implemented in August as planned.
“Ang target ko [to implement the rate rebasing]is August but to be honest, mukhang hindi (My target to implement the rate rebasing] is August but to be honest, it is unlikely),” MWSS-RO Chief Regulator Patrick Lester Ty told reporters.
Maynilad and Manila Water are set to hike their rates in July.
WITH JORDEENE LAGARE