SC asked to void MWSS concession deal with Manila Water, Maynilad

MANILA, Philippines - A petition has been filed with the Supreme Court (SC) seeking to void the concession agreements of the state-owned water regulator Metropolitan Waterworks and Sewerage System (MWSS) with Manila Water Co. Inc. and Maynilad Water Systems Inc.

In a 56-page petition for certiorari and prohibition, the Abakada party-list asked the High Court to nullify the resolution issued by the MWSS Regulatory Office extending the two separate concession agreements to another 15 years or until 2037.

Through lawyer Florante Legaspi Jr., petitioner alleged that MWSS and the two concessionaires are using the deals to “circumvent” water rates in their respective areas of service. 

It noted that despite the fact that the concession agreements would not expire for 12 more years and the absence of a water crisis in the country, the MWSS opted to extend the agreements.

Such action on the part of the MWSS, according to the petitioner, constitutes grave abuse of discretion amounting to lack or excess of jurisdiction for disregarding public bidding as the method of procurement under Republic Act 9184, otherwise known as the Government Procurement Reform Act.

It noted that the extensions made are new contracts that need to undergo public bidding.

“Although the agreements have, patent on their faces, grave flaws that hostage the government to the whims of the concessionaires, the MWSS surprisingly and without any justification renewed these unconstitutional contracts for an additional 15 years way before they were to expire,” it said. 

The petitioner also asked the High Tribunal to declare Manila Water and Maynilad as public utilities subject to the rules and regulations of public service laws and the audit powers of the Commission on Audit (COA).

“The very basis of the respondents Manila Water and Maynilad in exploiting the rates of water tariffs in their serviced areas are the assailed Concession Agreements executed in February 1997 between the MWSS, on the one hand, and Manila Water and Maynilad, on the other hand,” read the petition.

“Nevertheless, the water tariffs charged by the Concessionaires and set with the imprimatur of the MWSS and that are used to torment and exploit the Filipino public are based on these unconstitutional Agreements, which carry state approval and state action.  These agreements deserve to be struck down for being anathema to the Constitution,” it added.

Furthermore, the partylist group said the MWSS committed grave abuse of discretion when it delegated to Maynila and Manila Water its duties under its charter.

The group said the MWSS delegated to the concessionaires its duty to supply water and sewerage services, fix water rates, which were delegated to the MWSS the MWSS the legislature. 

The petitioner insisted that Maynilad and Manila Water are actually “public utilities” separate from MWSS, contrary to their designation in the agreements.

It noted that public utility has been defined as business or service engaged in regularly supplying the public with some commodity or service of public consequence such as electricity, gas, water, transportation, telephone or telegraph service. 

“There can be no doubt that the matter of ensuring adequate water supply for domestic use is one of paramount importance to the public...The public character of a business engaged in supplying water to the greater majority of the residents of Metropolitan Manila is without question... It is as clear as a cloudless sky that Manila Water and Maynilad are public utilities,” petitioner stressed.

Abakada also accused MWSS of being in a state of “regulatory” capture due to its failure to implement its 2013 board resolution mandating downward adjustments of the water tariffs charged by the concessionaires.

The group explained that regulatory capture happens when a regulatory agency, created to protect the public’s interest, “eventually acts in ways that benefit the industry it is supposed to be regulating, rather than the public.”

It noted that Manila Water’s tariff rates have increased more than eight-fold from 1997 to 2012, averaging a 16.2-percent increase each year for the last 15 years.

On the other hand, Maynilad’s tariff rates have increased five-fold from 1997 to 2012, averaging a 13.1-percent increase each year for the last 15 years.

The Ayala-led Manila Water services the east zone of Metro Manila, while the west service area has been given to Maynilad under the Metro Pacific Investments Corporation and DMCI Holdings.