MANILA — The Court of Appeals (CA) upheld the decision of the Quezon City Regional Trial Court (QC RTC) allowing the Maynilad Water Services Inc. to increase water rates for its consumers.
In a 12-page resolution dated May 30 penned by Associate Justice Jane Aurora Lantion and concurred by Associate Justices Remedios Salazar-Fernando and Zenaida Galapate-Laguilles, the CA’s 2nd Division junked the petition for review filed by the Metropolitan Waterworks and Sewerage System (MWSS) assailing the lower court’s August 30, 2017 decision which ruled in favor of the utility firm.
The CA found that the RTC “did not err in rendering the assailed Decision and in confirming the Arbitral Award.”
The CA pointed out it “deliberately refrained from passing upon the merits of the Arbitral Award—not because the award was erroneous—but because it would be improper.”
“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,” read the CA resolution
The CA explained arbitration is an alternative mode of dispute outside the regular court system and is a voluntary process, applying the rules of Alternative Dispute Resolution (ADR) Law, which is resolved by rendering an award.
“In the instant case, record shows that the petitioner did not avail of remedy of filing a petition to vacate the arbitral award. Instead, petitioner merely asserted its arguments in opposition to the Petition for Confirmation and Execution of Arbitral Award filed by respondent,” the appelate court cited.
“Since petitioner did not file a petition to vacate the arbitral award, Rule 11.9 of the Special Rules on ADR specifically requires the court a quo to confirm the Arbitral Award unless a ground to vacate the same has been proven,” it pointed out.
The RTC granted Maynilad’s petition asking MWSS to honor the Appeals Panel’s December 2014 final award in an arbitration case which 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. The arbitration case was filed by Maynilad.
The MWSS had argued that the RTC “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 was issued on December 29, 2014, and affirmed by the RTC on August 30, 2017.
The final award also upheld Maynilad’s alternative Rebasing adjustment for the Fourth Rate Rebasing Period of 13.41 percent, representing an average basic water charge of PHP30.28/cubic meter, which results in an adjusted rate of PHP34.34/cubic meter for every charging year of the said rebasing period.
It also ordered MWSS to reimburse Maynilad PHP540,502.81 and HKD 179.73, representing MWSS’ share of the costs of arbitration advanced by Maynilad.
Maynilad and MWSS entered into a concession agreement on Feb. 21, 1997 which allowed the former the right to manage, operate, repair, decommission, and refurbish the water facilities in the west zone which covers 17 cities and municipalities in the Metropolitan Manila area.
The area covers Manila (all but portions of San Andres and Sta. 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 (west of South Super Highway), Caloocan, Pasay, Parañaque, Las Pinas, Muntinlupa, Valenzuela, Navotas and Malabon.
The concession agreement also covers the cities of Cavite, Bacoor and Imus, and the towns of Kawit, Noveleta and Rosario, all in the Province of Cavite.
Maynilad filed a dispute notice against MWSS in October 2013, seeking “appropriate rebasing (new base level for tax, price index) adjustment and the resulting adjusted average basic water charge per cubic meter that [MWSS] can collect for every charging year of the parties’ Fourth Rebasing Period.”
Maynilad also sought a ruling on whether it is allowed to include its CIT as expenditure in its future cash flows, arguing that the concession agreement allowed the recovery of CIT.
MWSS, for its part, claimed Maynilad is not allowed to include its CIT as expenditure in future cash flows “because as a public utility, [Maynilad] is not allowed to pass its [CIT] to the consuming public.” (Christopher Lloyd Caliwan/PNA)
