CA approves Maynilad’s rate adjustment

A Maynilad personnel checks freshwater flow into the water treatment facility at the La Mesa Dam in suburban Manila, 11 December 2002. The Maynilad Water Services, Inc filed a notice of termination, 09 December, in its water distribution in Metro-Manila after the government rejected a petition for rate increase. Maynilad is 59 percent owned by Benpres Holdings Corporation a flagship of prominent Lopez family and 40 percent by Ondeo, French multinational affiliated with Suez Lyonnaise Des Eaux. AFP PHOTO/Romeo GACAD / AFP PHOTO / ROMEO GACAD Water service provider Maynilad has been allowed by the Court of Appeals (CA) to raise its tariff and to pass its corporate income tax (CIT) to consumers.

In a 12-page decision dated May 30, 2018 released to media yesterday, the CA Second Division dismissed a petition of water service regulator Metropolitan Waterworks and Sewerage System (MWSS) to review a lower court’s decision that approved Maynilad’s rate adjustment and inclusion of its CIT in its future cash flows.

The original decision assailed by MWSS but affirmed by the CA was issued by the Quezon City Regional Trial Court on Aug. 30, 2017.

Penned by Associate Justice Jane Aurora Lantion and concurred in by Associate Justices Remedios Salazar-Fernando and Zenaida Galapate-Laguilles, the CA resolution said the lower court “did not err in rendering the assailed Decision and in confirming the Arbitral Award.”

The appellate court noted the MWSS did not seek to vacate the arbitration award won by Maynilad from the International Court of Arbitration (ICA) in December 2014, thus the RTC was correct in its decision.

The ICA affirmed Maynilad’s rate adjustment of P34.34 per cubic meter for the period 2013 to 2017 and ordered MWSS to reimburse Maynilad P540,502.81 and HKD179.73 representing MWSS’ share of the costs of arbitration advanced by Maynilad.

Arbitration is an alternative mode of dispute outside the regular court system and is a voluntary process, applying the rules of Alternative Dispute Resolution Law which is resolved by rendering an award, the CA said.

“None of the grounds to vacate the Arbitral Award is present in this case and as already established, the merits of the award cannot be reviewed by the courts.

“Since petitioner did not file a petition to vacate the arbitral award, Rule 11.9 of the Special Rules on ADR (Alternative Dispute Resolution Law) specifically requires the court a quo to confirm the Arbitral Award unless a ground to vacate the same has been proven.”

In appealing the RTC decision, the MWSS argued before the CA the Quezon City court “should have vacated the Arbitral Award for being contrary to public policy.”

The water regulator told the appellate court allowing Maynilad to include CIT as a deductible expense in its future Cash Flow is tantamount to passing its taxes to its consumers.

Those to be affected by the CA ruling, if not put on appeal before the Supreme Court by MWSS, are water users from Maynilad’s franchise areas covering western Metro Manila and the cities of Cavite, Bacoor and Imus and the towns of Kawit, Noveleta and Rosario, all in the Province of Cavite.

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