MWSS admits consumers paying Maynilad, Manila Water taxes

By Camille Diola (philstar.com) | Updated June 26, 2013 - 8:24am

http://www.philstar.com/headlines/2013/06/26/958448/mwss-admits-consumers-paying-mayniladmanila-water-taxes
MANILA, Philippines - Metropolitan Waterworks and Sewerage System (MWSS) Administrator Gerardo
Esquivel admitted Wednesday that consumers have been shouldering Maynilad's and Manila Water's
corporate taxes for the past six years.
Esquivel confirmed the findings of IBON Foundation's Water for the People Network (WPN) that the
two water Concessionaires' customers are shouldering an estimated P3.1 billion in corporate taxes
yearly since 2008.
The foundation said that the P3.1 billion is divided between the taxes of Manila Water amounting to
P1.5 billion annually and Maynilad's P1.6 billion.
"Anim na taon na pong kinukumbra ng Maynilad at Manila Water 'yung income tax at 'yung binabayad
nila at ipinapasa nila sa consumer," Esquivel said in a radio interview.
The MSWW executive, meanwhile, said that the two water concessionaires have been very transparent
with the customers. He said that the payment of the corporate taxes is reflected in the consumers'
billing records.
"Hindi naman po siguro 'yun sinasadyang itago kundi ganoon lang po talaga 'yung framework ng billing
natin. Wala naman po akong nakikitang desire to hide that fact," Esquivel said.
Headlines ( Article MRec ), pagematch: 1, sectionmatch: 1
The official also maintained that the MWSS has been working on minimizing the consumers' burdens if
not scrapping the scheme altogether.
"Tinitignan po natin kung meron pong paraan para tanggalin 'yan at kung meron man, tignan nang
maayos para maging seamless ang implementation nito," he said.
The WPN's report released on Monday indicated that the two water firms are still proposing to pass on
the taxes to the consumers for the next five years.
"Manila Water is seeking a Php5.83 per cubic meter (cu. m.) increase in its basic charge and Maynilad,
Php8.58 for 2013-2018," the report noted.
The group said that the scheme does not only provide tax relief to the two water concessionaires, it is
also profitable for the two firms.
"A guaranteed rate of return called appropriate discount rate or ADR is applied on the pass-on income
taxes as part of the (operating expenses or opex)," WPN said.
The report, which the WPN says is "based on documents obtained by research group IBON," also
accused Maynilad of retaining the pass-on income tax scheme even as the the government has granted
them a tax holiday.
"In the case of Maynilad, this is even a triple whammy because the Manny Pangilinan-led firm enjoys
an income tax holiday but still included corporate income taxes in its opex, further bloating its profits,"
it said.
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Esquivel confirmed such findings, saying that both firms were indeed granted a tax holiday in 2009
while still making consumers pay for supposed corporate taxes.
"Huwag po kayong mag-alala. Talaga pong masinop ang kanilang pag-audit at pagbalanse ng
dalawang interes na ito," Esquivel said.

Senate probe into Maynilad, Manila Water 'consumer abuse' sought

By Louis Bacani (philstar.com) | Updated June 26, 2013 - 3:36pm
http://www.philstar.com/headlines/2013/06/26/958498/senate-probe-maynilad-manila-waterconsumer-abuse-sought
MANILA, Philippines - Senator Ralph Recto on Wednesday disapproved the alleged consumer abuse of
Maynilad and Manila Water Services, which are passing on their multi-billion corporate income tax
payments to their consumers.
The senator said he would file a resolution calling for a Senate inquiry into the perceived consumer
abuse by the two private water concessionaires, who would have been giving "grave disservice" to the
people.
"By its very essence, corporate income taxes are shouldered by the companies, which made the
income and should not be passed on to their clients," said Recto, who is also senior vice-chair of the
Senate committee on public services.
Recto said the alleged malpractice, if proven true, was "immoral" and "unethical."
"Corporate responsibilities such as tax payments could not be relegated to a proxy, especially when the
designated and unsuspecting proxy is the water consumer," Recto said.
"More so, when the state concession was granted to deliver a precious commodity like water, it did not
include the authority to also bilk dry their clients," he added.
Advocacy group Water for People Network (WPN) earlier revealed that Maynilad and Manila Water
tucked in the income tax payments in their "operating expenses," which amounted to P3.1 billion each
per year from 2008 to 2012 for a combined total of P15.3 billion.
The WPN's report released on Monday showed that the two water firms are still proposing to pass on
their taxes to the consumers for the next five years.
"Manila Water is seeking a Php5.83 per cubic meter (cu. m.) increase in its basic charge and Maynilad,
Php8.58 for 2013-2018," the report noted.
The group said the scheme does not only provide tax relief to the two water firms since it is also
profitable for the two concessionaires.
In a radio interview on Wednesday morning, Metropolitan Waterworks and Sewerage System (MWSS)
Administrator Gerardo Esquivel admitted that consumers have been shouldering the corporate taxes of
the two firms for the past six years.
Recto said the MWSS must have done something to protect the welfare of the water consumers, but
"seemed to have generously capitulated to the avarice of the water companies."

Water rate hikes

The senator said the alleged consumer abuse now casts a shadow of illegitimacy on the petition of two
water companies for a rate increase.
"What's now the compelling justification for approving a rate increase? If they are not practically
paying income taxes and at the same time, receiving some tax perks from government, what's the
happiness in granting them a rate hike," Recto said.
Manila Water is seeking a P5.83/cubic-meter increase in its basic charge and Maynilad, P8.58. The
increases will be implemented up to 2018.
On Wednesday, Gabriela Party-list Rep. Luzviminda Ilagan condemned the water rate hikes, saying
basic utilities such as water services should be within the reach of the ordinary consumer, especially
the poor.

SC orders Manila Water, Maynilad: Answer petitions vs rate increase

By Edu Punay (The Philippine Star) | Updated July 3, 2013 - 12:00am
http://www.philstar.com/headlines/2013/07/03/961008/sc-orders-manila-water-maynilad-answerpetitions-vs-rate-increase
MANILA, Philippines - The Supreme Court (SC) has deferred action on a bid to stop the impending
water rate increases of Manila Water Co. and Maynilad Water Systems Inc., but the court ordered the
two firms to answer the petitions against the rate adjustment.
SC spokesman Theodore Te said the justices tackled yesterday the petition filed last week by Water for
All Refund Movement (WARM), Water Watch Coalition Inc. and Alyansa ng Mamamayang Naghihirap
Inc. (Almana) in their regular session but did not immediately issue a halt order that the petitioners
have sought.
There was no action taken on the request for TRO (temporary restraining order), he said in a press
conference.
Instead, the high court decided to first seek comments from respondents Manila Water, Maynilad and
Manila Waterworks and Sewerage System (MWSS) before acting on the TRO plea.
Te said the water companies were given 10 working days from receipt of notice to comply with the
order.
Without the TRO, the two water concessionaires may for now proceed with their planned water hike
increases.
In their petition, the groups said Maynilad and Manila Water conducted public consultations with
various groups on the proposed water rate hike but did not present data to justify the increase.
They also asked the high court to declare that respondents are public utilities subject to the rules and
regulations of public service laws and the auditing powers of the Commission on Audit.
The groups alleged that the two firms seemed to have been given too much sovereign power in
water infrastructure projects, which they allegedly use to justify higher water rates, through a
concession agreement the companies signed in February 1997 with the MWSS.
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They also criticized the water concessionaires for their over billing or advance collections to fund
water infrastructure projects whose construction has yet to be completed or had been mothballed.

MWSS rejects water rate hike

By Louella Desiderio (The Philippine Star) | Updated September 13, 2013 - 12:00am
http://www.philstar.com/headlines/2013/09/13/1204231/mwss-rejects-water-rate-hike
MANILA, Philippines - Average basic water rates will go down starting next month as the Metropolitan
Waterworks and Sewerage System (MWSS) Regulatory Office denied the petitions filed by Manila Water
Co. Inc. and Maynilad Water Services Inc. to hike rates.
In a press conference yesterday, MWSS acting chief regulator Emmanuel Caparas said the board has
approved a 29.47 percent downward adjustment on Manila Waters 2012 average basic water charge
of P24.57 per cubic meter, which will be implemented in five equal tranches of -5.894 percent per
charging year.
This means that for residential customers with consumption of 10 cubic meters, the monthly water bill
will be reduced to P123.04 by October from P134.77 previously. Those with consumption of 20 cubic
meters will see a lower monthly bill of P271.13 from P297.12 and those who consume 30 cubic meters
will pay a monthly water bill of P552.04 from the previous P605.10.
Manila Water proposed a basic rate increase of P5.83 per cubic meter.
Manila Water provides water and wastewater services for the East Zone of the metropolis, which
covers Makati, Mandaluyong, Pasig, Pateros, San Juan, Taguig, Marikina, and most parts of Manila and
Quezon City, as well as Rizal.
Caparas said the MWSS board has likewise approved a negative adjustment of 4.82 percent on
Maynilads 2012 average basic water charge of P30.28 per cubic meter, which will be implemented in
five equal tranches of -0.964 per charging year.
For consumers with consumption of 10 cubic meters or less, the approved downward adjustment
translates to a lower monthly water bill of P90.92 by October from P105.22. Meanwhile, for consumers
with consumption of 20 cubic meters, the monthly water bill will be reduced to P339.62 from P369.76
and those who consume 30 cubic meters will pay a decreased monthly bill of P692.76 from P739.79
previously.
Maynilad requested for an P8.58 per cubic meter rate hike for 2013 to 2018.
Maynilad serves the cities of 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 the Holy Spirit and Batasan Hills), Makati (west of South Super Highway), Caloocan,
Pasay, Paraaque, Las Pias, Muntinlupa, Valenzuela, Navotas and Malabon, all in Metro Manila; the
cities of Cavite, Bacoor and Imus, and the towns of Kawit, Noveleta and Rosario, all in Cavite province.
The two companies proposed to hike rates as part of their business and investment plans submitted to
the MWSS earlier this year.
Caparas said the MWSS decided to approve downward adjustment in water rates as the two firms were
unable to justify the need for higher rates based on their business and investment plans. Substantial
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disallowances were effected for unsubstantiated expenses, unliquidated cash advances, infrastructure
projects, unjustified variation orders, capitalized interest, among others, he said.
There was no pressure from any party with the approval of the rates, he said.
He added that the reductions are seen to be beneficial for the public.
While the MWSS has approved downward adjustments, he said the water concessionaires can still file
an appeal on the decision as the concession agreements allow for an arbitration process.
We are open to compromise but it has to be reasonably fair, he said.
He said that during the entire rebasing process, the MWSS Regulatory Office adhered to the
Concession Agreement and followed the law.
We engaged the concessionaires in hundreds of hours of discussions and evaluation of their
documents, Caparas said, adding that they consulted the public as well as private sector groups.
Manila Water said in a disclosure to the Philippine Stock Exchange yesterday that it objects to the rate
adjustments and that it intends to avail of the dispute resolution mechanism as provided in the
concession agreement.
Manila Water corporate communications head Jeric Sevilla told reporters the water firm will file the
intent to proceed with arbitration in two weeks. With Rhodina Villanueva

Maynilad seeks ICC arbitration

By Rhodina Villanueva (The Philippine Star) | Updated October 5, 2013 - 12:00am
http://www.philstar.com/headlines/2013/10/05/1241638/maynilad-seeks-icc-arbitration
MANILA, Philippines - Ordered by the Metropolitan Waterworks and Sewerage System (MWSS) to
reduce rates despite its petition for rate increase, the Maynilad Water Services Inc. (Maynilad) is now
seeking arbitration from the International Chamber of Commerce (ICC).
West Zone concessionaire Maynilad said it has filed a notice of dispute with the secretariat of the ICC
to resolve its rebasing dispute with the MWSS.
MWSS, in a resolution dated Sept. 12, denied Maynilads petition for an upward adjustment of 28.35
percent in its average basic charge or P8.58 per cubic meter, and instead ordered a reduction of 4.82
percent or P1.46 per cubic meter to be implemented in five tranches of 0.964 percent every charging
year.
Under the concession agreement signed by Maynilad and the MWSS, any disagreement, dispute, or
controversy that cannot be resolved through consultation shall be subject to arbitration.
A three-member appeals panel will conduct the arbitration proceedings in accordance with the rules of
the United Nations Commission on International Trade Law.
The MWSS and Maynilad will have one representative each in the panel to be chaired by an appointee
of the ICC chairman.
Unless otherwise ordered by the appeals panel, the current water rates will continue to apply pending a
final decision by the panel.
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Maynilad wins appeal to increase water rates

By Czeriza Valencia (The Philippine Star) | Updated January 6, 2015 - 12:00am
http://www.philstar.com/headlines/2015/01/06/1409919/maynilad-wins-appeal-increase-water-rates
MANILA, Philippines - An international appeals panel handling the arbitration proceedings between
Maynilad Water Services and the Metropolitan Waterworks and Sewerage System (MWSS) has ruled in
favor of an increase in the base water rate.
Maynilads major shareholder Metro Pacific Investments Corp., led by businessman Manny Pangilinan,
said the panel of the International Chamber of Commerce (ICC) has upheld its alternative rate rebasing
adjustment, which would result in a 9.8-percent increase in the 2013 average basic water charge of
P31.28 per cubic meter, inclusive of the P1 currency exchange rate adjustment that the MWSS
incorporated into the basic charge.
This translates to an average increase of P3.06 per cubic meter in its basic charge.
The decision, dated Dec. 29, 2014, was disclosed to the local bourse yesterday.
This decision confirms that the concession agreement works and restores investor confidence in
public-private partnership program of the government, said Maynilad president Ricky Vargas. This
also ensures the continued implementation of Maynilads capital expenditure projects that are intended
to benefit further our customers.
Metro Pacific said Maynilad is willing to implement the increase on a staggered basis to mitigate the
impact of the award on its customers in the west zone of Metro Manila, subject to approval of the
MWSS.
In 2013, the MWSS rejected the applications of metro water concessionaires Maynilad and Manila
Water Co. Inc. for increased base charges.
Instead of increasing water rates, the MWSS approved reductions in base water rates, which were
supposed to be implemented in tranches in the next five years beginning 2014.
MWSS acting chief regulator Emmanuel Caparas earlier said the board had decided to approve
downward adjustment in water rates as the two firms were unable to justify the need for higher rates
based on their business and investment plans for the next five years.
As provided for in their concession agreements with the MWSS, the water concessionaires have filed
dispute notices before Paris-based ICC.
The concession agreement between MWSS and the concessionaires provides for arbitration to resolve
disagreements that cannot be resolved through consultation or negotiation.
The arbitration panel was composed of representatives from a concessionaire, MWSS and the ICC that
sat as appeals chairman.
Maynilad services the west zone of Metro Manila covering Manila (all but portions of San Andres and
Sta. Ana), Quezon City (west of San Juan River, West Ave.), EDSA, Congressional, Mindanao Ave.,
northern part from the districts of the Holy Spirit and Batasan Hills, Makati (west of South Super

Highway), Caloocan, Pasay, Paraaque, Las Pias, Muntinlupa, Valenzuela, Navotas and Malabon, cities
of Cavite like Bacoor and Imus and towns of Kawit, Noveleta and Rosario.

MWSS: No official copy of Maynilad increase ruling yet

By Patricia Lourdes Viray (philstar.com) | Updated January 6, 2015 - 1:27pm
http://www.philstar.com/metro/2015/01/06/1410070/mwss-no-official-copy-maynilad-increase-rulingyet
MANILA, Philippines - The Metropolitan Waterworks and Sewerage System (MWSS) has not yet
received an official copy of the ruling on the basic water rate increase of Maynilad Water Services.
In an interview with radio dzMM on Tuesday, MWSS chief regulator Dr. Joel Yu said that the water
concessionaire has not yet received the official award.
"Sa totoo lang po, kami rin po ay nagulat na nagpalabas na ng disclosure ang Metro Pacific at ang DM
Consunji, mga majority owners ng Maynilad patungkol po dito sa resulta. Pero wala pa po kaming
natatanggap na opisyal na award," Yu said.
Reports that an international appeals panel handling the arbitration proceedings between MWSS and
Maynilad ruled in favor of water rate increase were released on Monday.
The said ruling would allow a 9.8 percent increase in the 2013 basic water charge which is P31.28 per
cubic meter.
The basic water charge increase would amount to around P1.68 per 20 cubic meters per month.
Yu said that they have presented all their arguments for their appeal to increase water rates to the
panel composed of the legal counsels of the MWSS, representatives of the Office of the Government
Corporate Counsel and some private lawyers.

Maynilad mulls staggered increase

By Czeriza Valencia (The Philippine Star) | Updated January 7, 2015 - 12:00am
http://www.philstar.com/headlines/2015/01/07/1410274/maynilad-mulls-staggered-increase
MANILA, Philippines - West zone water concessionaire Maynilad Water Services is willing to implement
the approved increase in its basic charge on a staggered basis over three years to minimize the impact
on customers, its chief finance officer said yesterday.
The water firm won the arbitration proceedings against the Metropolitan Waterworks and Sewerage
System (MWSS) before the International Chamber of Commerce (ICC).
The ICC, in a decision dated Dec. 29, ruled in favor of Maynilads alternative rate rebasing adjustment
that would result in a 9.8-percent increase in the 2013 average basic water charge of P31.28 per cubic
meter, inclusive of the P1 currency exchange rate adjustment that the MWSS incorporated into the
basic charge.
This translates to an average increase of P3.06 per cubic meter.

Despite the two-year delay in the implementation (of the increase in basic charge), we are willing to
stagger (the implementation) in three years, Maynilad chief finance officer Randolph Estrellado said in
a briefing.
He said the staggered implementation of the increase in the basic charge would still have to be
approved by the MWSS board. The company hopes to implement the basic charge hike in three equal
tranches beginning this year.
For the meantime, Maynilad would only be implementing the MWSS-approved increase of P0.38 per
cubic meter in the foreign currency differential adjustment (FCDA) component of its water billing, a
rate hike granted outside of the arbitration proceedings with the ICC.
The FCDA is a tariff mechanism that allows the concessionaires of the MWSS to cope with foreign
exchanges losses or gains arising from payments of foreign currency-denominated borrowings used for
expansion and improvement of services. It is expressed as a percentage of the basic charge. The
MWSS regulatory office ideally reviews the FCDA quarterly.
Estrellado said that in coming up with an alternative business proposal during the arbitration process,
Maynilad opted not to pursue several water sourcing projects but maintained that it would be able to
fulfill its obligations within its concession area.
We will make sure that in the next five years, our service obligations in our concession area would be
met, he said.
Assuming that the hike in the base rate would be implemented in a single tranche, household lifeline
consumers using 10 cubic meters per month would experience a daily increase of P0.42 in the basic
charge component of their water bill totaling P12.60 per month. Including all the charging components
of the water bill using the current FCDA lifeline consumers would pay P127.17 per month, up from
P120.15 per month.
Households consuming 20 cubic meters per month would experience a daily increase of P1.68 per cubic
meter in the basic charge component of their water bill totaling P50.40 per month. Monthly all-in
charges would thus rise to P476.79 per month from P426.25 per month.
In 2013, the MWSS rejected the applications of metro water concessionaires Maynilad and Manila
Water Co. Inc. for increased base charges.
Instead of increasing water rates, the MWSS approved reductions in base water rates, which were
supposed to be implemented in tranches in the next five years beginning 2014. With Rhodina
Villanueva

Maynilad submits staggered fee hike schedule

By Czeriza Valencia (The Philippine Star) | Updated January 13, 2015 - 12:00am
http://www.philstar.com/business/2015/01/13/1412220/maynilad-submits-staggered-fee-hike-schedule
MANILA, Philippines - Metro Manila West Zone water concessionaire Maynilad Water Services has
submitted to the Metropolitan Waterworks and Sewerage System (MWSS) its proposal for a staggered
implementation of the increase in it basic charge as awarded post-arbitration.

Maynilad chief financial officer (CFO) Randolph T. Estrellado yesterday said the proposal for a threeyear staggered implementation of increase in the base water rate has been submitted both to the
corporate and regulatory offices of the MWSS on Jan. 8.
The MWSS said they will be reviewing our proposal. We will just follow up after a reasonable amount
of time. The MWSS board meets twice a month so they can take it up as soon as theyre ready, he
said in a text message.
The MWSS board had a meeting last Jan. 9, he said, but was not yet able to take up the companys
proposal.
The International Chamber of Commerce (ICC), which facilitated the arbitration proceedings between
MWSS and Maynilad, ruled in favor of an increase in the water firms base water rate.
In a decision dated Dec. 29, 2014, the ICC appeals panel upheld its alternative rate rebasing
adjustment which would result to a 9.8-percent increase in the 2013 average basic water charge of
P31.28 per cubic meter inclusive of the P1 Currency Exchange Rate Adjustment that the MWSS
incorporated into the basic charge. This translates to an average increase of P3.06 per cubic meter in
its basic charge.
In coming up with an alternative business proposal during the arbitration process, Maynilad opted not
to pursue several water sourcing projects, but would continue to fulfill its obligations within its
concession area.
Maynilad aims to implement the rate hike in three equal tranches beginning this year so as to minimize
the impact of the increase on consumers.
In 2013, the MWSS rejected the applications of Maynilad and Manila Water Co. Inc. for increased base
charges.
Instead of increasing water rates, the MWSS approved reductions in base water rates, which were
supposed to be implemented in tranches in the next five years beginning 2014.
MWSS acting chief regulator Emmanuel Caparas earlier said the board had approved the downward
adjustment in water rates as the two firms were unable to justify the need for higher rates based on
their business and investment plans for the next five years.
As provided for in their concession agreements with the MWSS, the water concessionaires have filed
dispute notices before Paris-based ICC.