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

Louis Bacani - The Philippine Star

June 26, 2013 | 3:36pm

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.