Home > Campaigns > Court junks water rate hike due to CPE et al’s petition

Court junks water rate hike due to CPE et al’s petition


Friday, June 01, 2007


THE Court of Appeals (CA) has denied the bid of the Lopez-owned Maynilad Water Services Inc. (MWSI) to increase its water rates by P30.19 per cubic meter for service area west effective Jan. 1, 2005.

Associate Justice Marlene Gonzales-Sison of the CA 15th Division affirmed the jurisdiction of the National Water Resources Board (NWRB) to hear the complaint filed by several groups and individuals seeking to stop Maynilad from increasing its water rates.

Maynilad was assailing Resolution 04-014 of the NWRB dated July 29, 2005 junking the water concessionaire’s motion to dismiss the complaint filed by the Center for Popular Empowerment (CPE), Kongreso ng Pagkakaisa ng Maralitang Lungsod (KPML), Kapisanang Panlipunan ng Commonwealth, QC Inc. (KapaCom), together with some of Maynilad customers/subscribers seeking to stop the implementation of the water tariff rate increase.

It said the NWRB has no jurisdiction to act on the complaint and to review the rates of a private corporation since its power to fix rates covers only public utilities.

But the CA junked the arguments of Maynilad saying that based on legislative history, the power of control and supervision over public utilities was handed down from the Bureau of Rate Regulation (BRR), to the Public Service Commission (PSC) and finally to the NWRB.

“It is fairly clear from the foregoing that NWRB has jurisdiction to pass upon the complaint of CPE, touching as it does on the ‘fixing of water rates.’ The power of control and supervision over public utilities would be a meaningless delegation if the NWRB would be precluded from taking cognizance of complaints relative to waterworks, which naturally includes the fixing of water rates entrusted to it by law,” the CA said.

The CA held that Maynilad ceases to be solely private after it has entered into a concession agreement with the Metropolitan Waterworks and Sewerage System (MWSS), a public entity created for a public purpose. It further said that its business operations are imbued with public interest.

“Being so, if MWSS is by its Charter, subject to the regulatory and adjudicatory power of the NWRB, it follows that as agent, it is also subject thereto and cannot evade reasonable regulation by the state. It must necessarily submit to the regulation of government authorities even if in the process it has to surrender its certain business prerogatives,” the CA ruled.

Court records showed that MWSS awarded concessions to Manila Water Inc. for the service area east and Maynilad for the service area west following the enactment of Republic Act (RA) 8041 or the National Water Crisis Act, which was passed to address the then looming water crisis.

Under the MWSS’ concession agreement with Maynilad, the company will act as agent and contractor of MWSS for 25 years and perform some of its functions and exercise certain rights and powers of MWSS.

Maynilad however suffered severe financial difficulties prompting it to file on Nov. 13, 2003, a petition for corporate rehabilitation and subsequently sought an increase in the water rate.

The increase was approved by the MWSS-Regulatory Office on Nov. 24, 2004 through its Resolution No. 04-014.

On Jan. 28, 2005, a complaint was filed before the NWRB by CPE, KPML, KapaCom seeking to enjoin the MWSS from enforcing Resolution 04-014 allowing Maynilad to push through with the increase.

In seeking the dismissal of the complaint, Maynilad said water rates are governed by the concession agreement and it would be a violation of contracts if its implementation would be stayed.

On the other hand, the complainants insisted that even if the rates were subject of the concession agreement, it is still the MWSS which formally sets the rate and not the concessionaire, which is merely acting as its agent.

They added that MWSS cannot simply delegate its authority to Maynilad as this would amount to undue delegation of power.

The complainants argued that if MWSS’ tariff fixing function is subject to review by the NWRB, then it follows that is agent, Maynilad is also subject to its review.

In its resolution dated July 29, 2005, the NWRB dismissed Maynilad’s motion to dismiss the case and declared that it has jurisdiction over water rate disputes. The NWRB also junked Maynilad’ motion for reconsideration in a resolution dated Oct. 14, 2005. (ECV/Sunnex)

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