Residents in Pasay City stock up on water from a mobile tanker after Maynilad announced that several areas in Pasay, Parañaque, Las Piñas, and Manila will experience water service interruption last March 5. Mark Demayo, ABS-CBN News/file
The Supreme Court has ruled Maynilad and Manila Water are public utilities barred from passing on income taxes to their customers.
The SC, however, ruled out refunds to customers because period to claim it already lapsed.
In ruling that Maynilad and Manila Water are public utilities, SC noted that both provide a basic service indispensable to public interest—providing water to an indefinite public that they cannot selectively serve and being contractors of the Metropolitan Waterworks and Sewerage System (MWSS) does not negate this.
The Supreme Court also said that Maynilad and Manila Water do not need a legislative franchise to be considered public utilities.
Additionally, it also does not matter that it is MWSS that owns the facilities because what matters, to be considered a public utility, is who operates them.
The SC held that as public utilities, Maynilad and Manila Water are bound by 12 percent rate of return and can't claim corporate income taxes as operating expenses.
Operating expenses are incurred in business operations while income taxes are imposed on privilege of earning income.
Under their concession agreements, Maynilad and Manila Water are allowed to recover PH business taxes.
But SC pointed out that income taxes are not business taxes. These must be shouldered by the income earner, not passed on to consumers.
The Supreme Court, however, said income taxes Manila Water and Maynilad passed on to consumers may no longer be recovered because the right to a refund has prescribed and an action to contest the water rate should've been filed with National Water and Resources Board within 30 days from effectivity of the rates.
Bayan Muna chairman Neri Colmenares and executive vice president Carlos Isagani Zarate, who were among the petitioners, welcomed the ruling, calling it a "victory of the people."
"It’s about time that this unjust imposition is stopped once and for all," Colmenares said in Bayan Muna's statement.
“We filed the petition more than 8 years ago together with other petitioners and groups advocating for just water rates. Though the decision did not grant all the remedies we asked, at least this is a victory if only for this part," he added.
The decision was dated Dec. 7, 2021 but Bayan Muna only received a copy last May 17, 2023.
Meanwhile, Zarate said that while they welcomed the SC's decision, they are "dismayed" that the court did not grant the refund that was charged through the years.
Zarate added that they are studying if they are going to file a Motion for Reconsideration on the denied refund.