Refund of water tax charged to users sought

THE BAYAN Muna party-list group on Thursday asked the Supreme Court (SC) to order Maynilad Water Services, Inc. and Manila Water Co. to refund corporate income taxes they had passed on to consumers.

“In the interest of fair play, equity and justice, this honorable court needs to relax the rules in order for the water consumers to recover the overpayments made,” it said in a partial motion for reconsideration filed by former Bayan Representatives Neri J. Colmenares and Carlos Isagani T. Zarate.

The High Court earlier barred the water concessionaires from recovering their corporate income tax as operating expenses because they are public utilities.

In the tribunal’s Dec. 7, 2021 ruling published last month, the High Court said the period to recover income taxes had lapsed.

The consumers had the right to claim refunds 30 days after the increased water rates took effect, it said, citing the law establishing the Metropolitan Waterworks and Sewerage System (MWSS).

Under the law, the water concessionaires and MWSS are allowed a rate of net return not exceeding 12% of the rate base of their assets in operation.

“The 30-day period requirement to file the complaint contesting water rates presents an insurmountable hurdle to ordinary water consumers,” the plaintiffs said.

They said determining whether the water concessionaires overcharged consumers was a “task no ordinary water consumer can possibly endeavor.”

The MWSS can periodically fix water rates and sewerage service fees at levels deemed to be fair and equitable.

The plaintiffs, who filed the petition in 2015, sought to void the arbitration clause in the 1997 concession agreements between the water companies and MWSS.

The provision the plaintiffs challenged allowed Maynilad and Manila Water to recover their income taxes by classifying them as operating expenses.

Citing jurisprudence, the High Court said public utilities cannot pass on these income taxes to consumers.

“We implore this honorable court not to allow the substantive right of the water-consuming public to recover the amounts we all paid over the years for said unlawful water exactions, to be thwarted by the hallmark ruling of this honorable court,” the former congressmen said. — John Victor D. Ordoñez