petition for certiorari & tro 06252013 (for filing)

8/10/2019 Petition for Certiorari & TRO 06252013 (for Filing)

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REPUBLIC OF THE PHILIPPINESSUPREME COURT

MANILA

EN BANC

WATERWATCH COALITION,INC., represented herein byRODRIGO G. GATMAITAN, JR.,ALYANSA NG MAMAMAYANGNAGHIHIRAP (ALMANA) INC.,represented by EDUARDO F.LANDAYAN, NICANOR E.FAELDON, CRISTETO DINOPOL,JR., Dr. RESTITUTO T.ENRIQUEZ, Dr. NOWELL P.LETRONDO, ALDA E. GARADO,ALVIN TADO JIMENEZ,MICHAEL P. UNTALAN,SALVACION CORPIN, andEDUARDO D. VERZOLA,

Petitioners

--versus--

RAMON B. ALIKPALA, JR., in hiscapacity as Chairman of the Boardof Trustees of the MetropolitanWaterworks and Sewerage System ,GERARDO A.I. ESQUIVEL, in hiscapacity as Administrator/ViceChairman of the MetropolitanWaterworks and Sewerage System ,ATTY. EMMANUEL L.CAPARAS, in his capacity as Chief

Regulator, Metropolitan Waterworksand Sewerage System RegulatoryOffice, and in his capacity as

Member of the Board of Trustees ofthe Metropolitan Waterworks and

Sewerage System , ATTY. RAOULC. CREENCIA, MA. CECILIA. G.SORIANO, JOSE RAMON T.VILLARIN, an BENJAMIN J.YAMBAO, in their capacities as

Members of the Board of Trustees of

SC-G.R. SP. NO. _______________

(Petition for Certiorari andMandamus with Prayer for theIssuance of a Temporary RestrainingOrder)


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the Metropolitan Waterworks andSewerage System ,METROPOLITANWATERWORKS ANDSEWERAGE SYSTEM, MANILAWATER COMPANY INC.,MAYNILAD WATER SYSTEMS,INC.

Respondents .

x--------------------------------------------x

PETITION FOR CERTIORARI AND PROHIBITIONwith

PRAYER FOR THE ISSUANCE OF ATEMPORARY RESTRAINING ORDER

Petitioners, by counsel, respectfully state:

PREFATORY STATEMENT

The business and operations of a public utility areimbued with public interest. In a very real sense, apublic utility is engaged in public service--providing basic commodities and servicesindispensable to the interest of the general public.For this reason, a public utility submits to theregulation of government authorities andsurrenders certain business prerogatives, includingthe amount of rates that may be charged by it. It is

the imperative duty of the State to interpose itsprotective power whenever too much profitsbecome the priority of public utilities. (Emphasissupplied)

- Former Chief Justice Reynato Puno, speakingfor the Court in ERB v. Meralco, G.R. No.141314. April 9, 2003.

1. The nation is facing a severe mismanagement of its waterresource despite the abundance of water, being a tropical country withfrequent rain waters pouring on its land. On the other hand, there is a severemishandling of sewerage and sanitation for the health and wellness of itspeople the Filipinos.


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2. The agencies of the government responsible in addressing theeffects of global warming and the El Nino phenomenon were slow in puttingup the needed infrastructure and watershed protection measures for waterconservation as well as sewerage and sanitation facilities needed by amodernizing society and growing economy. This is so now and in the yearsahead, unless necessary measures are formulated and implemented to catchup with the backlog.

3. There is therefore an urgent need for all sectors of society towork together to address this condition prevailing throughout the nation. Ingeneral, only 45% (national average) of our population get potable watercoverage served by Water Districts or LGUs throughout the country.Another 55% more need access to clean, potable and affordable water. Even

worse is the apparent neglect in wastewater disposal, which may account toa dismal 1% or even less service coverage nationwide. These deficienciesare surely a contributing factor to the wellness and health of the people as anational community.

4. In their public presentation for the 2013 Rate Rebasing Exerciseto set the 2013 Tariff Schedule for Water Rates (Tariff Schedule) held byPublic Respondent Metropolitan Waterworks and Sewerage System(MWSS) for Private Respondents Manila Water Company Inc.,

(MWCI) and Maynilad Water Systems, Inc., (MWSI), the PrivateRespondents admitted that in the fifteen years that they have operated MetroManila's water and sewerage system public utilities, they have not onlyfailed to stop leaks, they have failed to implement the sewerage system thatthey were meant to complete.

Even in the light of this spectacular failure, Private Respondents MWCI andMWSI now seek to raise the fees that they want to impose on the generalpublic, on top of the spectacularly high rates for water that they charge, forthe public to pay for these utilities in advance, including costs attributable tomothballed projects and future contingent projects based on mere businessplans.

NATURE OF THE PETITION

5. This is a Petition for Certiorari filed with this Honorable Courtpursuant to Rule 65 of the 1997 Revised Rules on Civil Procedure (Rules),concerning the legality of the Concession Agreements (Agreements)entered into between Public Respondent MWSS and Private Respondents

MWCI and MWSI dated sometime in February 1997.

6. Due to the patent unconstitutionality and blatant infringementof law on the part of the Public Respondents, all of whom have acted with


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grave abuse of discretion amounting to lack or excess of jurisdiction, there isno other adequate or speedy remedy in the ordinary course of law. Thus,Petitioners are constrained to seek relief from this Honorable Court by filingthe instant petition under Rule 65 of the 1997 Rules of Civil Procedure.

PARTIES

7. Petitioner WaterWatch Coalition, Inc., is a non-stock, non-profit corporation duly organized and existing under the laws of thePhilippines, and is represented herein by its President, Rodrigo G.Gatmaitan, Jr., a Filipino, legal age, with office address at 91 West St., WestTriangle, Quezon City.

8. Petitioner Alyansa ng Mamamayang Naghihirap (Almana) Inc.,is a multi-sectoral non-stock, non-profit corporation duly organized andexisting under the laws of the Philippines, and is represented herein by itsPresident, Eduardo F. Landayan, a Filipino, legal age, with office address atRm. 317, JIAO Building, Timog Avenue, Quezon City.

9. Petitioner Nicanor E. Faeldon is a Filipino of legal age withaddress at Block 25 Lot 20, Mango St., Palmera Hills 6 Dolores, Taytay,Rizal.

10. Petitioner Cristeto Dinopol, Jr. is a Filipino of legal age withaddress at Corporate 101 Bldg., Mother Ignacia Street, South Triangle,Quezon City.

11. Petitioner Dr. Restituto T. Enriquez is a Filipino of legal agewith address at 688 P Esteban St., Caridad Cavite City.

12. Petitioner Dr. Nowell P. Letrondo is a Filipino of legal age with

address at Block 112 Lot 4, Ph 2C2, Karangalan Village, Manggahan, PasigCity.

13. Petitioner Alda E. Garado is a Filipino of legal age with addressat Bulalakaw St., Sitio Tibagan, Greater Fairview, Quezon City.

14. Petitioner Alvin Tado Jimenez is a Filipino of legal age withaddress at Lot 12, Block 3b Royalville Subd., Sta. Elena, Marikina City.

15.

Petitioner Salvacion Corpin is a Filipino of legal age withaddress at Bulalakaw St. Sitio Tibagan, Greater Fairview, Quezon City.

16. Petitioner Michael P. Untalan is a Filipino of legal age withaddress at 59 T.Alonzo St., Sta. Lucia Novaliches Quezon City.


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17. Petitioner Eduardo D. Verzola is a Filipino of legal age withaddress at 10-A Sagittarius St., Carmel 5 Subd., Brgy Tandang Sora, QuezonCity.

18. Petitioners may be served with legal processes of thisHonorable Court through its counsel of record, Tupaz & Associates, at 41-BN. Romualdez Street, BF Homes Subdivision, Quezon City 1120.

19. Public Respondent Ramon B. Alikpala, Chairman of theMWSS Board of Trustees (Board), can be served with legal processes ofthis Honorable Court at 4/F Administration Building, MWSS Complex, 489Katipunan Road, Balara, Quezon City 1105.

20. Public Respondent Gerardo A.I. Esquivel, Administrator andVice-Chairman of the MWSS Board, can be served with legal processes ofthis Honorable Court at 4/F Administration Building, MWSS Complex, 489Katipunan Road, Balara, Quezon City 1105.

21. Public Respondent Atty. Emmanuel L. Caparas is concurrentlythe Chief Regulator, MWSS Regulatory Office (MWSS-RO), and can beserved with legal processes of this Honorable Court at 4/F AdministrationBuilding, MWSS Complex, 489 Katipunan Road, Balara, Quezon City 1105.

22. Public Respondents Atty. Raoul C. Creencia, Ma. Cecilia G.Soriano, Jose Ramon T. Villarin, Benjamin J. Yambao, Nathaniel C. Santos,Zoilo L. Andin, Jr., and Leonor Cleofas, Members of the MWSS Board, canall be served with legal processes of this Honorable Court at 4/FAdministration Building, MWSS Complex, 489 Katipunan Road, Balara,Quezon City 1105.

23. Public Respondent MWSS is a government-owned and

controlled corporation (GOCC) formed pursuant to Republic Act No.6234, and has for its objective owning and/or having jurisdiction,supervision and control over all waterworks and sewerage systems in MetroManila and the provinces of Rizal and Cavite, to provide for the properoperation and maintenance of [a] waterworks system to insure anuninterrupted and adequate adequate supply and distribution of potablewater for domestic and other purposes and the proper operation andmaintenance of sewerage systems are essential public services because theyare vital to public health and safety. Republic Act No. 6234 (1971), 1. Toachieve this purpose, MWSS has power to fix periodically water rates andsewerage service fees as the System may deem just and equitable. Republic

Act No. 6234 (1971), 3(h) . It can be served with legal processes of thisHonorable Court at 4/F Administration Building, MWSS Complex, 489Katipunan Road, Balara, Quezon City 1105.


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24. Private Respondent MWCI is a private corporation organizedand incorporated under the Corporation Code of the Philippines, and can beserved with legal processes of this Honorable Court at MWSSAdministration Building, 489 Katipunan Road, Balara, Quezon City 1105.

25. Private Respondent MWSI is a private corporation organizedand incorporated under the Corporation Code of the Philippines, and can beserved with legal processes of this Honorable Court at MWSS Compound,489 Katipunan Road, Balara, Quezon City 1105.

STANDING

The Petitioners have standing tochallenge the constitutionality andlegality of the Agreements and the2013 Tariff Schedule.

26. This finding is required by law.

27. In a recent case, it was held that for locus standi to lie, thepetitioners must exhibit that they have been denied, or are about to be denieda personal right or privilege to which they are entitled. Chavez v. Judicial

and Bar Council, G.R. No. 202242, July 17, 2012 .

28. Citizens may be accorded standing if the issue raised involvesone of transcendental importance that must be settled early. David v. Gloria

Macapagal-Arroyo, 522 Phil. 705 (2006) .

29. Moreover, in cases that involve a public right, it is sufficientthat the petitioner is a citizen and has an interest in the execution of the laws.Chavez v. PCGG, G.R. No. 130716, 9 December 1998, Chavez v. Public

Estates Authority, 433 Phil. 506 (2002). David v. Macapagal-Arroyo, G.R. No. 171396, 3 May 2006, 489 SCRA 160; Santiago v. Commission on Elections, G.R. No. 127325, 19 March 1997, 270 SCRA 106; Kilosbayan, Inc. v. Guingona, Jr., G.R. No. 113375, 5 May 1994, 232 SCRA 110 (1994),Province of North Cotabato v. Government of the Republic of thePhilippines Peace Panel on Ancestral Domain, G.R. No. 183591, October14, 2008.

30. For cases that involve the due execution of the laws in publicinterest cases such as this Petition, this Honorable Court has adopted thedirect injury test to determine standing. People of the Philippines and HSBCv. Vera, 65 Phil. 56, 89 (1937) . Under the direct injury test, it is not enoughthat a petitioner in a public interest case, such as the instant Petition, allegesthat there has been an illegal executive action, but the petitioner must


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demonstrate that there is validity of a statute must have a personal andsubstantial interest in the case such that he has sustained, or will sustaindirect injury as a result. Advocates for Truth in Lending, Inc., et al., v.

Bangko Sentral Monetary Board, G.R. No. 192986, January 15, 2013.

31. Petitioner Waterwatch Coalition has legal standing to file thisPetition as a juridical person, being a non-stock, non-profit corporation thathas, for its purpose, to act, among others: (a) as a watchdog to providecontinuous protection of the water consumers not only in Metro Manila butall over the country; and (b) as a resource group and organization toadvance the cause of the water sector, most specifically, the waterconsumers for a public entity expressly declared under law to be engagingin an essential public service on the grounds of it being vital to public

health and safety. Republic Act No. 6234 (1971), 1. PetitionerWaterwatch Coalition suffers direct injury as a result of the Respondentsactions, because the Public Respondents continued advocacy of PrivateRespondents MWCI and MWSIs interests amounts to nothing less than anabject failure of the corporate objectives of Petitioner.

32. Petitioner Alyansa ng Mamamayang Naghihirap (Almana) Inc.,has legal standing to file this Petition as a juridical person, being a non-stock, non-profit corporation that has, for its purpose, to develop alternative

solutions to poverty through the support of the government and the privatesector. Petitioner Almana suffers direct injury as a result of the Respondentsactions, because the dismantling of Public Respondents continued advocacyof Private Respondents MWCI and MWSIs interests is an integral part ofthe very raison detre for the said Petitioners existence, and a failure thereinis nothing less than a failure of the corporation, and because the continuedincrease in water prices means that the persons who make up Petitioner willhave to literally sacrifice the Petitioners continued existence to support theirvery own..

33. Petitioners Nicanor Faeldon, Cristeto Dinopol, Jr., Dr. RestitutoT. Enriquez, Dr. Nowell P. Letrondo, Alda E. Garado, Alvin Tado Jimenez,Salvacion Corpin, Michael P. Untalan, and Eduardo D. Verzola, all havelegal standing to file this Petition as natural persons who reside and obtainwater from MWSS, through one of its concessionaires, MWCI or MWSI asend-users, Thus, as consumers, upon the approval of the 2013 TariffSchedule, the Petitioners will be subjected to water rates far above those thatmay legally be imposed, and in the case of Petitioner Salvacion Corpin, whohas very limited income, far above that which she can afford. Republic Act

No. 6234 (1971), 12.

The Petition at bar involvesconstitutional issues of


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transcendental importance andrepresents matters of paramountpublic interest that must be settledearly.

34. This is well-supported in case law.

35. This Honorable Court has held that in determining whether amatter is of transcendental importance:

a. The character of the funds or other assets involved in thecase;

b. The presence of a clear case of disregard of a constitutionalor statutory prohibition by the public respondent agency orinstrumentality of the government; and

c. The lack of any other party with a more direct and specificinterest in the questions being raised. Senate of thePhilippines v. Ermita, G.R. No. 169777, April 20, 2006. Anyrelaxation on the rule on standing will not apply withoutthese matters being established. Anak-Mindanao Party-List

Group v. The Executive Secretary, 531 SCRA 583 (2007).

36. It is beyond cavil that matters directly involving the price ofwater for Metro Manila, which services more than 16,000,000 people eachday, including this Honorable Court, especially when there are strongindicators of regulatory capture in the most essential of regulated publicutilities, as in this particular instance, qualifies the instant dispute as a matterof paramount public interest. We invite the focus of this Honorable Court tothe nature of the public utility whose actions are assailed and the reason for

this instant action: access to one of the most basic requirements for humansurvival: potable water.

37. Here, the disregard of the Respondents cannot be any moreclear. Respondents have overcharged for water despite a clear legal mandate.

Public respondent MWSSs basisfor and imminent approval of thetariff adjustments in favor ofRespondent Concessionaires isillegal, irregular, excessive, orunconscionable, or is grosslydisadvantageous to the public-at-large, which excess tariffs amount


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to an undue delegation of legislativepower.

38. Respondent MWSSs imminent administrative fiat approvingsuch illegal and excessive rates under all RORB exercises, past and present,is ultra vires and/or unconstitutional. Setting tariffs over and above existingfares is illegal, as it is tantamount to an undue delegation of legislativepower. Kilusang Mayo Uno Labor Center v. Garcia, 239 SCRA 386.

39. As end-users of the service provided by the Respondents, therecan be no further persons or entities with a more direct and specific interestin the questions being raised than herein Petitioners.

40. Worthy to note is that at the onset of the concession agreementsin 1997, the Public Respondent MWSIs water rate per cubic meter waspegged at P7.21; Public Respondent MWCIs, at P4.02 per cubic meter.Now, Manila Waters rates are set at P37.66 per cubic meter for thoseconsuming 20 cubic meters a month, and P39.34 per cubic meter for thoseconsuming 50 cubic meters a month. Maynilads rates are set at P43.66 percubic meter for consumers averaging 20 cubic meters a month and a basicrate of P45.34 per cubic meter for those using 50 cubic meters a month.These rates are charged as basic costs to consumers excluding those add-ons

such as sanitation charges, VAT, sewerage, FCDU, currency adjustments,etc., to their monthly water billings.

41. To better illustrate to this Honorable Court the dramatic andunabated increase in water rates demanded from consumers, we invite theattention of this Honorable Court to the following tables, which graphicallyillustrates just how steep the increase has been for the delivery of water forthe coverage area of Public Respondent MWSS. While this Honorable Courtmay take judicial notice of what the duly published rates are following theappropriate Rate Rebasing Exercises, the change in the retail price of waterthrough the years must give pause:


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Table 1 Increase in Water Rates M

0

5

10

15

20

25

30

35

40

1st - 3rd Quarter 1st Quarter1st Quarter2nd Quarter3rd Quarter4th Quarter1st Quarter2nd Quarter3rd Quarter4th Quarter1st Quarter2nd Quarter3rd Quarter4th Quarter1st Quarter2nd Quarter3rd Quarter4th Quarter1st Quarter2nd Quarter3rd Quarter4th Quarter17-Feb

Aug.1997

1-Jan-99

1-Jan-00

1-Jan-01

21-Apr-

01

21-Oct-01

1-Jan-03

1-Jan-03

25-Aug-

03

7-Oct-03

1-Jan-04

1-Apr-04

1-Jul-04

31-Dec-

04

1 jan -17

sept2005

18-Sep-05

1-Jan-06

1-Feb-06

1-Apr-06

10-Jul-06

7-Oct-06

1-Jan-07

1-Apr-

07

1-Jul-07

1-Oct-07

1-Jan-08

1-Apr-

08

1-Jul-08

1-Oct-08

20-Feb-09

1-Mar-

09

1-Jul-09

1-Nov-

09

1-Jan-10

1-Apr-10

1-Jul-10

9-Oct-10

1-Jul-10

1997 1999 2000 2001 2001 2001 2002 2003 2003 2003 2004 2004 2004 2004 2005 2005 2006 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011

Non-sewered Connections Basic/Ave. Tariff

CERA FCDA

Environmental Charge Sub-total

VAT All-in Tariff W/ FCDA


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Table 2

Increase in Water Rates


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The Petition at bar involves an issuethat is ripe for judicial inquiry.

42. This finding is required by law.

43. It has been held that no question involving the constitutionalityor validity of a law or act may be heard and decided by the Court unlessthere is: (a) a question raised by the proper party; (b) an actual case orcontroversy; (c) a question raised at the earliest possible opportunity; and (d)the decision on the constitutional or legal question is necessary to thedetermination of the case itself. Joya v. Presidential Commission on GoodGovernment, 224 SCRA 568 .

44. Here, the Petitioners are proper parties who have personal andsubstantial interest in the present case and have sustained, and continue tosustain direct injury from the implementation. Case law supports thisfinding.

45. The exercise of the power of judicial review is proper andappropriate in this case: there is an actual case or controversy due to the

pending implementation of the 2013 Tariff Schedule.

46. The constitutional and legal questions raised in this Petitionwere raised at the earliest possible opportunity. The Petitioners and personssimilarly situated have taken great pains to exhaust all available remediesbefore coming to this Honorable Court. Because the Public RespondentsMWSS and MWSS-RO are now under regulatory capture; these efforts toobtain relief from the appropriate agency have only proved futile. A copy ofthe Letter dated July 30, 2012 sent by Petitioner Waterwatch Coalition to

Rep. Jerry Treas of the Committee on Good Government and Public Accountability is attached to this Petition as Annex J . A copy of the Letter dated April 18, 2012 of Justice Artemio Tuquero and Rodolfo Javellana, Jr. covering most of the issues discussed in this Petition isattached to this Petition as Annex L . Copies of Resolution Nos 2012-155and 2012-155A of Public Respondent MWSS dated November 12, 2012 and

November 22, 2012, are attached to this Petition as Annex _____.

47. It is plain from the discussion herein that the Decision of thisHonorable Court on the constitutional or legal questions raised are necessaryto the determination of the case itself.

The relief desired cannot beobtained elsewhere based on


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exceptional and compellingcircumstances justifying immediateresort to this Honorable Court.

48. Case law supports this finding.

49. In a case, this Honorable Court has noted that a directinvocation of the Supreme Courts original jurisdiction to issue Writs ofCertiorari should be allowed only when there are special and importantreasons therefor, clearly and specifically set out in the petition. Constancia

Mendoza, et al. v. Mayor Enrilo Villas, et al., G.R. No. 187256, February23, 2011.

50. This is not the first time that the MWSS has undergone a RateRebasing Exercise. Under the Agreements, the term of the Concessions wassupposed to last only until 2017. Moreover, the economic impact of anunrestrained rate hike over the concession areas being served by MWSI andMWCI will not be insignificant, the transcendental import of this instantcase cannot be understated. In as late as last week, representatives fromMWCI and MWSI have announced that they expect to charge an extraP1,000,000,000.00 from their consumers until the next Rate RebasingExercise sometime in 2018.

51. While the Petitioner is mindful of the pronouncement of thisCourt in Freedom from Debt Coalition, et al. v. MWSS (G.R. No. 173044,

December 10, 2007) , Petitioner submits that with the foregoing, there ismore than substantial justification for recourse to this Honorable Court, withall due respect to the hierarchy of courts.

Amendatory actions by the MWSS,MWCI, or MWSI after the filing ofthis Petition do not render theissues moot, because they arecapable of repetition, evadingreview.

52. Case law in the United States, from which we derive our law onstanding, is in support of this position.

53. Judicial notice may be taken that this is the third Rate RebasingExercise under the Concession Agreement. Granting arguendo , that the RateRebasing Exercise may yet yield rates that are far lower than that sought byPrivate Respondents MWCI and MWSI, such lower rates this time aroundwill not render the issues moot, because these transgressions are capable ofrepetition when the next Rate Rebasing Exercise occurs, yet evading review.


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Southern Pacific Terminal Company v. Interstate Commerce Commissionand Young, 219 U.S. 498 (1911).

STATEMENT OF FACTS

54. Sometime in 1995, and due to the inability of MWSS to copewith severe El Nio conditions, given its prior mismanagement, then-President Fidel V. Ramos led the passage of the National Water Crisis Actthrough Congress. An Act to Address the National Water Crisis and forOther Purposes [N ATIONAL W ATER C RISIS ACT OF 1995], Republic Act No.8041, 2.

55. Following the enactment of the National Water Crisis Act,MWSS entered into public-private partnership agreements with MWCI, andMWSI, through separate Concession Agreements both dated sometime inFebruary 1997, each for a period of twenty-five (25) years. Freedom from

Debt Coalition, et al., v. MWSS, et al., G.R. No. 173044, December 10,2007 .

56. Pursuant to the Concession Agreements, the MWSS Board ofTrustees is to create an independent Regulatory Office, the MWSS-RO, toregulate the activities of the water concessionaires, funded in part by MWSI,

MWCI, and MWSS. Jorge C. Mateo, Regulatory Office , M ETROPOLITANW ATERWORKS AND S EWERAGE S YSTEM R EGULATORY OFFICE . A copy of this

presentation is Annexed to this Petition as Annex N . Minutes of the Meeting of the Committee on Good Government and Public Accountabilityheld on 15 December 2010 at the Ramon Mitra Building, House of

Representatives, Batasan Hills, Quezon City, 1-2. A copy of these Minutesare attached to this Petition as Annex E. A copy of the Minutes of the

Meeting of the Committee on Good Government and Public Accountabilityheld on July 31, 2012 are attached as Annex F .

57. The MWSS-RO, inter alia, (a) monitors the concessionairescompliance with quality standards, water supply, sewerage, sanitationdevelopment programs and projects, repair and maintenance of assets vis--vis population coverage and required targets, and sets efficiency targets andcustomer service standards; and (b) recommends to MWSS Board ofTrustees reasonable water rates that may be imposed by the concessionairesto cover all necessary capital investments and expenditure necessary tosmoothly operate the water system. Jorge C. Mateo, Regulatory Office ,

M ETROPOLITAN W ATERWORKS AND S EWERAGE S YSTEM R EGULATORY OFFICE .

Minutes of the Meeting of the Committee on Good Government and Public Accountability held on 15 December 2010 at the Ramon Mitra Building, House of Representatives, Batasan Hills, Quezon City, 1-2.


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58. The maximum rates for water and sewerage services were setfor the first five (5) years by a Schedule attached to the ConcessionAgreement, and, following that period, by MWSS Board of Trustees, uponthe advice of the MWSS-RO, through several Rate Rebasing Exercises to beheld every five (5) years, beginning in 2002 and ending in 2017. The tariffsare supposed to factor in the return of all capital expenditure made byMWCI and MWSI over the length of the Agreement. Concession Agreementdated February 21, 1997 between Metropolitan Waterworks and SewerageSystem and Manila Water Company & Concession Agreement datedFebruary 21, 1997 between Metropolitan Waterworks and Sewerage Systemand Maynilad Water Systems, Inc. Copies of these Agreements are attachedto this Petition as Annexes A and B respectively. Any cancelled orunfinished projects are corrected on the fifth year on the next Rate Rebasing

Exercise. Concession Agreement dated February 21, 1997 between Metropolitan Waterworks and Sewerage System and Manila WaterCompany. Minutes of the Meeting of the Committee on Good Governmentand Public Accountability held on 15 December 2010 at the Ramon Mitra

Building, House of Representatives, Batasan Hills, Quezon City, 4.

59. Sometime in 2000, and in preparation for the 2002 RateRebasing Exercise, MWSS Board of Trustees sought the help of theCommission on Audit and commissioned an audit of both MWSI andMWCI to determine whether the actual rates being charged to the public arewithin the maximum Rate of Return of twelve percent (12%) as mandatedby 12 of Republic Act No. 6234.

60. On October 5, 2001, the Concession Agreement with MWSIwas modified by Amendment No. 1, which allowed MWSI to adjust its ratesbased on the current exchange rate and scheduled the first Rate RebasingExercise for MWSI on January 1, 2003. Anand Chiplunkar, Ma. Christina

Dueas, and Mai Flor, Maynilad on the Mend: Rebuilding Process Infuses New Life to a Struggling Concessionaire, Asian Development Bank. A copyof this publication is attached to this Petition as Annex G .

61. Sometime in 2002, and in preparation for the first RateRebasing Exercise, MWSS engaged the services of Thames Water, a Britishpublic utility, for assistance. In the final report submitted to MWSS Board ofTrustees, Thames Water noted that neither concessionaire allocated anyadditional capital outlay for the processing of wastewater. Thames Water,Technical Team, UP Econ Foundation, Final Draft Report, Rate RebasingProject, Technical Review Revised Business Plans, MWSS-RO, 16. A copy

of the Final Draft Report is attached to this Petition as Annex H .

62. On September 15, 2003 and December 2, 2003, theCommission on Audit submitted to MWSS Board of Trustees separate


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Reports stating that while MWSI had a Rate of Return of 7.71%, MWCI hada Rate of Return of 40.92%. This rate is significantly higher compared to theRate of Return cap of twelve percent (12%) mandated by 12 of RepublicAct No. 6234. The Commission on Audit noted only those propertiesacquired, owned, and actually used in the operation of the concessionaireswere included in computing the concessionaires capital.

63. In the meantime, on November 5, 2003, an internationalarbitration panel ruled that MWSI, which had not been paying its concessionfees, could draw on MWSIs performance bond, and MWSI went intoreceivership. At the time MWSI went into receivership, MWSI lost 69% ofthe water pumped through its concession area, and was only able to bill onthe 31% that made it to their clients faucets.

64. Shortly thereafter, MWSS Board of Trustees informed MWSIand MWCI that it was exercising its right to adjust the rates pursuant to 9.3.1 of the Concession Agreements. In order to stave off arbitration, MWSSBoard of Trustees commissioned a Technical Working Group, composed ofrepresentatives of MWSS, MWSS-RO, MWSI and MWCI.

65. On July 30, 2004, MWSS-RO issued Resolution 04-006-CA,whereby it adopted the findings of the specially created Technical Working

Group and ruled that the Rate of Return in 12 of Republic Act No. 6234must be interpreted to mean that the Rate of Return must be computed basedon the entire capital expenditure of MWCI, MWSI, and MWSS, becauseMWCI and MWSI are mere agents of MWSS.

66. On the same day, MWSS Board of Trustees issued ResolutionNo. 2004-201, approving MWSS-RO Resolution No. 04-006-CA in itsentirety. To this day, this ruling and interpretation has not been overturned,repealed, or at least modified. A challenge to the aforesaid ruling before thisHonorable Court, Freedom from Debt Coalition, et al. v. MWSS (G.R. No.173044, December 10, 2007), was dismissed on technical grounds notrelated to the merits of the case.

67. On April 28, 2005, the rehabilitation court approved a DebtCapital and Restructuring Agreement that allowed MWSS to subscribe83.97% of MWSIs outstanding capital stock.

68. On or around the same time, MWSS explored the addition ofseveral sources of fresh water for the Metropolitan Manila area, to beundertaken by MWSS, financed by MWSI and MWCI concession fees, asfinanced by foreign lenders. As such, these projects are known as concessionfee projects. Memorandum dated February 24, 2011 of the Chief Regulator,

MWSS-RO to MWSS Board of Trustees. A copy of the Memorandum is


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attached to this Petition as Annex M . Among these projects are theexpansion of the capacities of Angat Dam and Wawa Dam, and theconstruction of the Laiban Dam in the Kaliwa-Kanan River Watershed.

69. Sometime in late 2006, the 84% of MWSIs capital stockowned by MWSS was awarded, after bidding, to a consortium led by MetroPacific and DM Consunji, Inc.

70. On January 1, 2008, the new water rates for MWCI began totake effect, following the mandated Rate Rebasing Exercise.

71. On January 1, 2009, the new water rates for MWSI began totake effect, following a Rate Rebasing Exercise. At the end of that year,MWSI posted net income of P2,824,626,000.00, after a reduction from 66%to 60% water loss from 2007, when MWSI was barely solvent, to 2009.

Irineo Dimaano, The Challenge of Reducing Maynilads Non-RevenueWater, Maynilad Water Services, Inc. A copy of this presentation attached tothis Petition as Annex O .

72. Sometime in October 2009, the term of the ConcessionAgreement with MWCI was extended for an additional fifteen (15) years, oruntil 2037, despite the absence of a water crisis that justified any exercise of

emergency police powers by the President to extend the term of theConcession Agreement with MWCI.

73. On April 22, 2010, the term of the Concession Agreement withMWSI was extended for an additional fifteen (15) years, or until 2037.

Disclosure Letter dated April 22, 2010 of Metro Pacific InvestmentsCorporation to Disclosure Department, Philippine Stock Exchange. A copyof the Disclosure Letter is attached to this Petition as Annex K .

74.

On July 21, 2010, after the assumption into office of PresidentBenigno Simeon C. Aquino III, the President instructed then DPWHSecretary Rogelio L. Singson to put on hold on all new ventures and loansof MWSS, including concession fee projects, such as the development ofthe Laiban Dam complex, the Angat Dam rehabilitation, and the Wawa Damrehabilitation. Memorandum dated February 24, 2011 of Chief Regulator

Manuel P. Quizon is attached as Annex M .

75. On February 24, 2011 and March 16, 2011, MWSS-RO issuedMemoranda discussing possible grounds for a downward adjustment in thetariff rate, to mitigate the impact of the recent tariff adjustments,considering that the concession fee projects, which had been included in thebusiness plans of the concessionaires, remain unimplemented, and do notappear to be implemented any time soon.


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76. On 13 June 2013, and in the latest round of public consultationsheld pursuant to the 2013 Rate Rebasing Exercises, the MWSS-RO refusedto divulge information that should have enabled watchdog groups such asthe Petitioner, to compute the correct Return of Rate Base for the 2013 RateRebasing Exercise, on the grounds that the future expansion plans of MWCIand MWSI are confidential.

77. To this day, both MWSS Board of Trustees and MWSSRegulatory Office have not revoked, rescinded or otherwise set aside MWSSRegulatory Office Resolution 04-006-CA or MWSS Board of TrusteesResolution No. 2004-201, especially as it relates to the twelve percentincome cap of the MWSS.

78. To this date, notwithstanding the mandate for refunds on thelast year for projects, and the fact that all new ventures and loans of theMWSS have been put on hold, there has been no downward adjustment inthe tariff schedule.

79. Hence, this Petition.

ISSUES

80. The instant case presents the following novel issues before thisHonorable Court:

a. Whether the Concession Agreements are unconstitutionaland/or ultra vires ;

b. Whether Respondents MWCI and MWSI are public utilitiessubject to the rules and requirements set forth by the generalpublic service law, including the 12 percent profit cap;

c. Whether the Concessionaire Agreement between MWCI andMWSI can create the MWSS-RO, a public office performingpublic functions, funded primarily by MWCI and MWSI; and,in the alternative,

d. Whether the 2013-2018 Tariff Schedules for MWCI and MWSIallow MWSI and MWCI, as public utilities, to overcharge theconsuming public for water, and 12 of Republic Act No.6234. In particular:

i. Whether the profit restriction in Republic Act No.6234 applies to MWSI and MWCI individually;


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ii. Whether MWSI and MWCI can advance and pass onthe cost for projected, contingent, and future waterinfrastructure projects on to the consumer/end-user, aswell as continue charging costs for projects whichhave failed or remain unimplemented.

ARGUMENT

On their face, and in theiroperation, the ConcessionAgreements are unconstitutionalfor granting the inherent sovereignpowers of police power, eminentdomain, and taxation powers, to theConcessionaires which insist thatthey are purely private entities,mere agents of MWSS, no more.

Inherent sovereign powers of theState cannot be contracted away,nor can they be delegated ordevolved upon purely private

entities save for an enabling statuteor express constitutional grant. TheConcession Agreements do not riseto the level of statutes which areissuable only by Congress or theLegislature, nor do they qualify asconstitutional provisions. TheConcession Agreements are merecontracts.

Assuming without conceding thatprivate respondents are mereagents, no more, with more reasonthen that the delegation ofsovereign powers such as eminentdomain, by mere contract or, in thiscase, by mere ConcessionAgreement, is an undue delegationof sovereign powers. The

Concessionaire Agreements whichare the direct source of purportedlysovereign functions areunconstitutional and/or ultra vires.


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Because the Agreements are voidfor being unconstitutional and/orultra vires, consequently theobligations that flow from them,including but not limited to theestablishment of the MWSS-RO,are illegal and void.

81. A facial analysis of the Concession Agreements will requirethese findings.

82. Article 5 (Service Obligations of the Concessionaire) of theConcession Agreements grant various functions and obligations to PrivateRespondents MWCI and MWSI to provide water services, sewerageservices, maintain wastewater standards, septic and sanitation, and othercustomer service standards for the benefit of the general public. These are allpowers, duties, and functions ordinarily reposed in the State, deemed astraditional sovereign and governmental functions exercised by publicagencies, normally under the category of police power.

83. To cite another instance, 72 (Easements, Eminent Domain,Right of Way and Similar Powers) of the Concession Agreement empowers

the Concessionaire, as MWSSs agent and representative to exercise thepowers under 3(k) of the MWSS Charter, in its name, place and stead, toapply for an exercise [of] its easement, eminent domain , right of way andsimilar rights and powers given to MWSS under its Charter inconnection with infrastructure projects and works undertaken relating to theConcession... The Concessionaire shall be solely responsible for thepayment of any compensation to third parties occasioned by the exerciseof such rights and powers. (emphasis supplied)

84. The power to exercise the inherent State power of taxation isgranted to the Concessionaires, viz:

6.2 Taxes

Subject to the Undertaking Letter, the Concessionaire shallbe responsible for all income and withholding taxes andother forms of taxes . . . . documentary stamp taxes . . . . allcustoms, import duties and other taxes . . . .all local transfertaxes on property acquired through the exercise of rightspursuant to Section 7.2. In addition, the Concessionaireshall pay , for and on behalf of MWSS, or shall reimburseMWSS within 10 days of demand therefor, any realproperty taxes and other taxes or assessments payable byMWSS on MWSS property or assets in the Service Areaused for the supply of water and sewerage services.


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85. The foregoing provisions evince an incident of taxation powerpurportedly granted to the Concessionaires. It has been held that theassessment and collection of taxes are, at least, executive or administrativefunctions . The Concessionaires are not executive or administrative agencies. 6.2s grant of power to collect, reimburse, or pay taxes for and on behalfof MWSS is unconstitutional and/or ultra vires .

86. The power of taxation is an inherent power of sovereignty. See,e.g., Commissioner v. Pineda, 21 SCRA 105 (Lifeblood theory). Taxationis inherently legislative . Luzon Stevedoring v. CA, 163 SCRA 647 (1988).The power to collect, reimburse, pay, etc., for and on behalf of MWSS areaspects of taxation which refer to phases, processes, stages of, or steps in,the exercise of taxation powers. In particular, assessment and collection is an

act of administration and implementation of the tax law by the executivethrough administrative agencies . See Jose C. Vitug & Ernesto D. Acosta,Tax Law and Jurisprudence 26 (2000) .

87. If at all the State can delegate the powers of taxation, the Statecan do so by constitutional mandate or by law, to local governments orpolitical subdivisions. See Cu Unjieng v. Patstone, 42 Phil. 818. TheConcessionaires are not local government units.

88. If at all the State can delegate the powers of taxation, the Statecan do so by enabling constitutional provisions . See Vitug & Acosta,supra, at 9. The Concession Agreements are not enabling constitutionalprovisions.

89. If at all the State can delegate the powers of taxation, the Statecan do so by administrative implementation passing muster under thesufficient standards test. See, e.g., Cervantes v. Auditor General, 91 Phil.359. The Concession Agreements are not administrative regulations.Assuming without conceding that they are, then the Concessionaires arepublic utilities subject to, inter alia, the 12 percent profit cap applicable toall public utilities.

90. The Concession Agreements also attempt to grant traditionalpolice power functions , inter alia:

a. 6.13.1(i) (referring to the supervisory responsibility ofthe Concessionaires over Existing Projects covered bythe MWSS Loans, interest, and fee obligations for thoseLoans)

b. 6.13.1(ii) (referring to the power of the Concessionaireto continue with projects which remain unawarded to a


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third party via public tender, bycontinuing/amending/canceling/funding the projectdesign and project).

c. 6.13.3 (Performance Penalties) (referring to thepower of the Concessionaire to treat liquidateddamages and performance penalties paid to MWSSas mere Receipts under the Concession and are to bepaid over to the Concessionaire ).

d. 6.15 (New Assets) (referring to legal title to all fixedassets contributed by Concessionaires shall automaticallyvest in MWSS upon the expiration)

e. 6.15 with respect to the power to create a securityinterest over the facilities to which MWSS has legaltitle .

f. 9.5(i) (Connection Charges) (referring to the powerof the Concessionaires to promulgate rules thatpermit Payment of Connection Charges ininstallments over a five-year period by Low-Income

Customers)

g. 9.5(i) (referring to the right of the Concessionaire tocharge each Customer requesting a Connection)

91. Private Respondents MWCI and MWSI cannot claim to bepurely private entities which do not need a public utility franchise forRespondents to exercise these functions. Private respondents certainlycannot claim to be state entities or administrative agencies directly

empowered by a government charter or statute. These theories areinconsistent with all jurisprudence discussing the legal sovereignty andinherent governmental powers of the State.

92. Because the Concession Agreements unduly delegate inherentsovereign powers traditionally reposed in the Legislature to PrivateRespondents MCWI and MWSI, so-called mere agents of MWSS, nomore, then the Concession Agreements are unconstitutional and/or ultravires.

This Honorable Court has jurisdiction over MWCI and MWSIbecause they are ipso jure publicutilities within the meaning of the


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law, and must be subject to profitrestrictions on public utilities,including but not limited to therestriction on Return on Rate Baseas set forth in Republic Act No.6234 and within the meaning ofpublic service laws.

Private respondents MWCI andMWSI are not mere agents ofMWSS without qualification. Thepowers, duties, functions, andcorrelative obligations of the

Concessionaires under theConcession Agreements require thefinding that these entities are, at thevery least, ipso jure public utilities,for many of the Concessionairespowers and duties are incidents ofthe very same sovereign powergranted to MWSS under its owncharter, such as the power ofeminent domain, police power, andthe power to tax.

Because MWSS Board of TrusteesResolution No. 2004-201, approvingMWSS-RO Resolution No. 04-006-CA in its entirety, rules that theConcessionaires are mere agentsof MWSS, no more, suchadministrative fiat isunconstitutional and/or ultra vires.

Because the same Resolution seeksto exempt MWCI and MWSI fromthe 12 percent profit cap otherwiseapplicable to public utilities, suchResolution is void for beingcontrary to the public service law.

93. These findings are required by law.

94. By explicit instruction of Congress, the rates and fees fixed bythe Board of Trustees for the System and by the local governments for the


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local systems shall be of such magnitude that the Systems rate of net returnshall not exceed twelve per centum (12%), on a rate base composed of thesum of its assets in operation as revalued from time to time plus two monthsoperating capital. Republic Act No. 6234, 12.

95. In adopting this standard on the rate of return, it is clear thatCongress intended to restrict any profits that MWSS may make in the samemanner as any other public utility, as set by jurisprudence. Republic v.

Medina, G.R. No. L-32068, October 4, 1971. Manila Electric Company v.Public Service Commission, 18 SCRA 651, 665-666 (1966) . ERB v. Meralco,G.R. No. 141314, April 9, 2003 .

96. This Honorable Court strictly kept this rate of return regime,even in the absence of a regulatory statute. In the words of former ChiefJustice Puno, Public utilities cannot be allowed to overcharge at theexpense of the public and worse, they cannot complain that they are notovercharging enough. ERB v. Meralco, G.R. No. 141314, April 9, 2003 .

97. It is plain to see that Private Respondents MWCI and MWSIare ipso jure public utilities within the meaning of statutes and case law.

98. In 13 (b) of Commonwealth Act No. 146, or the Public

Service Law, the supply of water and the provision of a sewerage systemwere explicitly considered as public utilities. Moreover, the determination ofthe operation of a given business as a public utility depends on the publiccharacter of the services rendered by it and the public consequence andconcern attached thereto. 51 C. J. 5 . Luzon Stevedoring Co., Inc., v. PublicService Commission, G.R. No. L-5458, September 16, 1953

99. In arrogant defiance of these laws, Public Respondent MWSS,through MWSS Board of Trustees Resolution No. 2004-201, approvingMWSS-RO Resolution No. 04-006-CA, ruled that the Rate of Return in 12of Republic Act No. 6234 must be interpreted to mean that the Rate ofReturn must be computed based on the entire capital expenditure of MWCI,MWSI, and MWSS, because MWCI and MWSI are mere agents of MWSS.Resolution No. 2004-201 exempts MWCI and MWSI from the 12percent profit cap otherwise applicable to public utilities under the publicservice law.

100. The obligations of MWSI and MWCI under the Agreementsbelie the nature of MWCI and MWSI as public utilities. To highlight theseservices and the public consequence and concern attached thereto, we invitethe attention of this Honorable Court to the provisions of the Agreement, inparticular, 5.1, Article 5 of the Agreements, which provides:


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5.1 General Obligations Regarding the Provision ofWater Services

The Concessionaire shall have the obligations set

forth in this Article 5 in respect of the provision ofwater services in the Service Area. The RegulatoryOffice may defer the implementation of specificService Obligations in any situation where, in theopinion of the Regulatory Office such a defermentis warranted in light of unforeseen circumstances(e.g., material delay in the completion of the UATPproject beyond June 30, 1999 or a material delay inthe completion of the LBT project, if such project isamended pursuant to Section 6.13.1 (ii)(B) hereof,beyond June 30, 1999).

101. Congress may not declare a company to not be a public utilitywhen it is inherently such. Luzon Stevedoring Co., Inc., v. Public ServiceCommission, G.R. No. L-5458, September 16, 1953. With more reason,Public Respondent MWSS and Private Respondents MWCI and MWSIcannot declare themselves to not be public utilities by their mere say-so.

102. To illustrate the extent of the scale of the overcharge fromMWCI and MWSI, we invite the attention of this Honorable Court to the

following:

a. By the end of 2009, MWCI posted a net return on itsinvestment of 34.1%, or around 22.1% points higher than the12% cap required under 12 of Republic Act No. 6234. 1

b. By the end of 2011, MWSI posted net income ofP5,864,850,000.00, with non-revenue water loss at 48% as ofthe end of that year, from 60% in 2009. SyCip Gorres Velayo &Co., Audited Financial Statements dated December 31, 2011and 2010 and Years Ended December 31, 2011, 2010, and 2009and Independent Auditors Report, SGV & Co. A copy of the

Audited Financial Statements is attached to this Petition as Annex P .

103. A simple comparative analysis of the prices demanded byPrivate Respondents MWCI and MWSI show that there is a massiveoverprice of the water charged to consumers. For example, the San Jose delMonte Bulacan Water District gets its water from the same water source,Angat Dam. This entity also pumps its raw water from the same pipes that

1 Annex D, at 4.


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deliver water to Metro Manila. Even though the San Jose Del Monte WaterDistrict pays Public Respondent MWSS P4.50 per cubic meter bulk supplyprice, and both Private Respondent MWSI and MWCI do not pay a similarfee to Public Respondent MWSS, it retails to households only at P27.00 percubic meter net price, compared to Private Respondent MWCI that has1,000,000 households and retails at over P33.00 pesos net price, and PrivateRespondent MWSI that has approximately 1,000,000 households and retailsat over P42.00 per cubic meter net price.

104. Notwithstanding this blatant price-gouging, Private RespondentMWCI wants an additional P5.83 per cubic meter from the current tariffschedule, while Private Respondent MWSI is asking for an increase of P8.58in the 2013 Tariff Schedule.

105. Therefore, Private Respondents MWCI and MWSI, in theirindividual capacities, are subject to all rules and regulations including the12% tariff rate limit for public utilities under jurisprudence and underRepublic Act No. 6234 as well as government agencies having jurisdictionover public utilities generally, such as the Public Service Commission andits successor agencies.

106. Notwithstanding this financial turnaround for MWSI, there has

been no recalibration from MWSS Board of Trustees on whether thesefigures still satisfy the cap on the Rate of Return under 12 of Republic ActNo. 6234.

107. Private Respondents MWCI and MWSI continue to factorin contingent, future projects, based on mere concept papers andbusiness plans, in their water rate calculations over the last two RateRebasing Exercises, all of which have been approved by PublicRespondent MWSS.

108. In the 2002 Tariff Schedule, the Public Respondent MWSSallowed Private Respondents MWCI and MWSI to collect fees for thefollowing projects in advance: (a) the Feasibility Study for Laiban Dam; (b)the Business Plan by Private Respondent MWCI for Wawa Dam; and (c) theBusiness Plan by Private Respondent MWSI for the Putatan PumpingStation.

109. In the 2008 Tariff Schedule, the Public Respondent MWSSallowed Private Respondents MWCI and MWSI to collect fees for thefollowing projects in advance : (a) Pinugay Sewerage System in AntipoloCity, valued at P1,000,000,000.00; (b) Angat Water Irrigation ReplacementSystem, valued at P5,700,000,000.00; and (c) Laiban Dam Feasibility Study.Notwithstanding the non-continuance of the Angat Water Irrigation


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Replacement System and the Laiban Dam Feasibility Study, neither PublicRespondent MWSI nor MWCI have taken steps to return the moneyadvanced.

110. In addition, Public Respondent MWSS has consistently allowedPrivate Respondents MWCI and MWSI to collect an Environmental andSanitation Fee in the amount of 10% of a consumers water bill despite nothaving any sewerage coverage at that particular point in time. At this point,only Private Respondent MWCI has sewerage coverage, representing 11%of its service area.

111. There is nothing in the Concession Agreement and nothing inany state policy expressed by the National Water Resources Board(NWRB) that allows for the transfer of investment risk in projectedinvestments to the general public. As admitted by then Chief RegulatorManuel P. Quizon in his testimony before the House Committee on GoodGovernance, there is no legal basis nor precedent for this practice. Under theregime of the Concession Agreements, the concessionaires may only adjustrates, based on a RORB exercise, on capital expenditures prudentlyincurred, i.e., past tense . On top of prudent incurring is an efficiency andacid audit test by a (government) auditor. Apparently, this has not been thecase. This practice of billing the public for future contingent projects based

on mere business plans, effectively making the public foot the sumsotherwise to be booked as capital expenditures , is highly illegal. This isoutside the Water Rate Setting Policy of the Agreements. A copy of the

Memorandum dated December 10, 2010 of Chief Regulator Manuel P.Quizon is attached hereto as Annex I .

112. Since the commencement of the Concession Agreement, therehas been no annual audit of Asset Registry, nor any Annual Audit ofOperating Expenses. Hence, there has been no annual computation of Returnof Rate Base through which the MWSS is supposed to compute theconcessionaires profit cap.

113. In a case, it was held what really matters in determining theappropriate rate of return is whether a particular utility renders efficient andsatisfactory service and whether its net income bears a just relation to thesize of its investment. Republic v. Medina, G.R. No. L-32068, October 4,1971.

114. Even though private concessionaires were brought in to helprun MWSS, rates of non-water revenue remained high for MWSI, or ataround 65% or higher, dropping significantly only in the last four years.Moreover, this inefficiency was addressed only when mismanagement onthe part of MWSI was taken to task, and when Malacaang ordered a halt to


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all new MWSS projects. Until it was ruled upon by this Honorable Court in MMDA v. Concerned Residents of Manila Bay , G.R. Nos. 171947-48, December 18, 2008 . MWSS paid little to no attention to the seweragesystem, as it collected, and continues to collect, through MWSI and MWCI,charges for sewerage notwithstanding minute coverage on the part of MWSSfor sewerage facilities. 2 There remains scant attention to the development ofwastewater treatment facilities for the entire Metropolitan Manila area.

115. Notwithstanding the issuance of Memoranda dated February24, 2011 and March 16, 2011 from MWSS Regulatory Office, and theissuance of a direct order from the Office of the President to then DPWHSecretary Singson to stop all future projects and loans of MWSS, thereremains no action toward the lowering of the tariffs or water rates. In no

instance since 1997 has MWSS Board of Trustees or MWSS RegulatoryOffice proposed lower water rates or tariffs.

116. Thus, Public Respondent MWSSs approval of the 2013 TarriffRates, which allow MWCI and MWSI to exceed the 12% profit cap, ispatently illegal, and must be struck down by this Honorable Court.

The Concessionaires are holders ofConcession Assets and Concession

Fees only in trust, because theseassets are fees are deemed to bepublic funds subject to eventualreversion to the State upon theexpiration of the Concession.

117. A facial analysis of the terms of the Concession Agreementssupports this finding.

118. Any possessory or custodial right over the Concession Assetsand Concession Fees purportedly in favor of the Concessionaires undercontract exist by virtue of usufruct, trust, tolerance, or other temporaryarrangement amounting to less than full ownership, hence one cannotconsider such possession or custody of MWSS assets, along with the streamof financial returns attendant to that possession, as vested rights.

119. To illustrate this point, 6.15, among others, of the ConcessionAgreement expressly acknowledges and stipulates in part that Legal title toall fixed assets contributed to the MWSS system in the Service Area . . .during the term of the Concession shall remain with the Concessionaire until

2 Annex D, at 5.


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the Expiration Date . . . at which time all right, title and interest in suchassets shall automatically vest in MWSS.

120. In Ardona v. Reyes, 125 SCRA 220, the Court stated that theconcept of public use is not limited to traditional purposes. In particular,the Court held that the mere fact that private concessionaires will beallowed to maintain facilities inside the tourist resort does not mean the useis not public . The fact that private businesses use public streets does notdetract from the public character of the expropriation of property for streets.

The concession system of MWSS,MWCI, and MWSI is in a state ofregulatory capture.

121. Petitioners restate, by way of emphasis, all the foregoingparagraphs to support this finding.

122. At the onset of the Concession Agreements, to date, theestablishment and operations of the independent MWSS RegulatoryOffice (RO) are funded in no small part by the Concession Fees of theConcessionaires and their partners and joint-venturers. The annual budget ofMWSS under the Concession Agreement is likewise funded in no small part

by the Concession Fees of the Concessionaires and their partners and OtherOperators and/or joint ventures:

123. 11.1 (Organization) & 11.2 (Funding), Art. 11(Regulatory Office), of the Concession Agreements provide:

11.2 Funding

Not later than 10 days after the Commencement Date,MWSS shall allocate from the Concession fees receivedfrom the Concessionaire and the Other Operator the amountof 100 million Pesos which shall constitute the budget ofthe Regulatory Office for the year 1997. Not later thanJanuary 10 of each subsequent year, MWSS shall allocatefrom the Concession Fees paid in that year by theConcessionaire and the Other Operator the annual budgetfor the Regulatory Office and MWSS for that year;provided that such annual budget shall not for any yearexceed 200 million Pesos, subject to annual CPIadjustments, 100 million Pesos of which, as so adjusted,shall be allocated by MWSS for the Regulatory Office.

124. Regulatory capture occurs when regulatory agencies, created toact in the publics interest, eventually come to be dominated by the veryindustries they were charged with regulating. The theory of regulatory


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capture is associated with George Stigler, a Nobel laureate economist, andtraces its history to the writings of Karl Marx:

A more cynical regulatory capture view focuses on therole of interest groups in shaping public policy. Thisintellectual tradition has deep roots. Marx argued that bigbusiness sought and paid for control of important economicinstitutions. Stigler [1971], in his theory of regulatorycapture, argued that even small business industries couldcapture their regulators. Stigler incorporates Olsens [1965]theory of collective action, which predicts that for a givenissue and its interested parties, the smaller the group andthe higher the per capita stake, the more likely the groupwill be successful in organizing and effectively influencingregulatory outcomes. Peltzman [1976], noting theemergence of powerful consumer groups in the 1970s,extended Stiglers view to incorporate these groups as well,and saw a role for government officials to weigh competinginterests and not always choose an outcome that favorsbusiness. The further contribution of Laffont and Tirole[1991] was to emphasize the importance of the complexityof the issue and the resulting information asymmetriesbetween the various interest groups and between theinterest groups and the bureaucrats who decide their fate indetermining the regulatory outcome. SusanWoodward, Regulatory Capture at the U.S. Securities and

Exchange Commission (paper prepared for the Milken Institute Conference on Capital Markets, Santa Monica,California, March 16, 1998).

125. Public choice theorists have criticized the assumption inherentin public welfare regulation, such that the regulatory authoritys actions aremotivated by the public interest. They argue that individuals are essentiallyself-interested in or out of the public arena and that it is therefore necessaryto [analyze] the regulatory process as the product of relationships betweendifferent groups. Literature on regulatory capture concludes that in theextreme case, regulation always leads to socially suboptimal outcomesbecause of inefficient bargaining between interest groups over potentialutility rents. Stigler (1971) and Peltzman (1976) also argue that regulatorsare presumed to [favor] producer interests because of the concentration ofregulatory benefits and diffusion of regulatory cost, which enhances thepower of lobbying groups as rent seekers Edmund Amman (Ed.),

Regulating Development: Evidence from Africa and Latin America, (UK: Edward Elgar Publishing, 2006), 14.

126. In the United States, some examples of regulatory agencies thathave been accused of acting in the interests of their respective industries atthe expense of public welfare interests include: the Securities and ExchangeCommission and the Federal Reserve Bank of New York in light of the 2008


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financial crisis; the Bureau of Ocean Energy Management, Regulation andEnforcement (formerly the Minerals Management Service) in the wake ofthe 2010 Deepwater Horizon oil spill; among others.

Being a product of the ConcessionAgreements, the MWSS-RO is acreature of contract.

127. Under the terms of the Concession Agreements theindependent Regulatory Office was purportedly established by the MWSSBoard of Trustees. While purportedly established by the MWSS Board ofTrustees, still all decisions of the Regulatory Office are subject to the powersof control and supervision of the same MWSS Board of Trustees. There isno real distinction between the MWSS Regulatory Office and the Boardof Trustees. Any distinction between them set forth under the ConcessionAgreements ought to be collapsed or pierced . See 11.1-11.2(Organization) of MWSS-MWCI Concession Agreement:

ARTICLE 11. REGULATORY OFFICE

11.1 Organization

The MWSS Board of Trustees shall establish and fund aregulatory Office (the Regulatory Office) to be organizedand operated in a manner consistent with the descriptioncontained in Exhibit A hereto, subject to such changesthereto that the MWSS Board of Trustees may make fromtime to time, and shall have the functions and powersdescribed in that Exhibit. Decisions of the RegulatoryOffice requiring action by the MWSS Board of Trustees,including decisions affecting the level of Standard Rates,shall promptly be submitted to the Board in accordancewith Section 7.1 hereof.

1 of Exhibit A of the Concession Agreements provides:

1. General

The Regulatory Office shall be established under the jurisdiction of the MWSS Board of Directors, pursuant toSection 4(c) of the MWSS Charter and in accordance withother applicable laws and regulations, not less than 30 daysafter the Commencement Date. No change will be made tothe MWSS Charter in connection with the establishment of

the Regulatory Office. Rather, the powers andresponsibilities of the Regulatory Office shall be as set outin the Concession Agreement, including this Exhibit A.(Emphasis supplied)


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128. 7.1 of the MWSS-MWCI Concession Agreement sets forththe obligation of the MWSS to cooperate with the Concessionaire. 7.1provides:

ARTICLE 7. OBLIGATIONS OF MWSS

7.1 Cooperation with Concessionaire

Subject to the requirements of the Charter, MWSS shall,upon request of the Concessionaire, cooperate in allreasonable ways to facilitate the Concessionaires carryingout of its responsibilities under the Concession. Pursuant tothe authority given to MWSS by Section 3(h) of theCharter, and subject to the restrictions contained in Section

12 of the Charter, this cooperation shall include, but not belimited to, cooperation with actions undertaken by theConcessionaire to implement changes to the Standard Ratesfor water and sewerage services as instructed by theRegulatory Office or, as appropriate, by the Appeals Panel.

The cooperation to be rendered by MWSS to theConcessionaire shall not require MWSS or any of itsaffiliates to finance (or guarantee the financing of) anyexpenditure required in connection with the Concession, orto undertake any liability in favor of a third party other thanthose expressly provided for in this Agreement. (Emphasisin original)

129. 3 of Exhibit A of the Concession Agreements provides:

3. Physical location

The Regulatory Office shall be given suitable office spacein Metro Manila at a location separate from any other officeor establishment of MWSS or either Concessionaire...[T]he physical location of the Regulatory Office shallalways be separate from any other office or establishmentof MWSS or either of the Concessionaires.

130. Despite the foregoing prohibition against proximity, Petitionerswish to underscore the fact that Public Respondents MWSS, MWSS-RO,and Private Respondents MWCI and MWSC, in clear breach of 3 ofExhibit A, have all been sharing the same physical office space: MWSSAdministration Building, 489 Katipunan Road, Balara, Quezon City1105 .

Various conflicting interests inherein the MWSS concession system forthe reason that there are


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interlocking directors and keyofficers between and among theMWSS, the Concessionaires andtheir successors-in-interest, whichconflict of interest resulted to theirregular and unconscionabletransactions, rates, and RORBexercises, and which events will beused by Respondents to justify theirimminent water rate hike.

131. It has been held that holding incompatible offices between andamong various agencies is unlawful. In one case, the Court held that the

duties of the Chief Presidential Legal Counsel and the Chairmanship of thePresidential Commission on Good Government are incompatible positions.See Public Interest Center, Inc. v. Elma, 494 SCRA 53.

132. Due to the MWSS-ROs existence as a creature of contract, theAgreements define the duties, powers and functions of the MWSS-RO andits officers, including the Chief Regulator. Here, Public RespondentsAlikpala, Esquivel, Soriano, and Yambaos appointment of PublicRespondent Caparas as Chief Regulator on November 22, 2012 through

Resolution No. 2012-155A demonstrates that very incompatibility.

133. The Resolution reads:

Resolution No. 2012-155A(By Referendum)

So as not to expose the Board or the System to anyunnecessary risk in connection with her appointment, asrequested by Atty. Ma. Cristina P. Fernandez-Milan (copy

attached as Annex "A" hereof, and favorably endorsed bythe Executive Committee, BE IT RESOLVED, as it ishereby resolved, to ACCEPT the withdrawal of acceptanceof her appointment as Chief Regulator;

In view of the above acceptance; and to ensure continuityof flow of the rate rebasing exercise, in the interest ofpublic service, RESOLVED, further io DESIGNATE,effective immediately, Trustee EMMANUEL L.CAPARAS as Acting Chief Regulator, Regulatory Office,to serve without pay.

Quezon City, Philippines, 22 November 2012.


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134. As a MWSS Trustee, Private Respondent Caparas does notcarry within his duties and functions the power of control and supervisionover the MWSS-RO as Chief Regulator.

135. To demonstrate the incompatibility even further, on December14, 2012, the MWSS Board of Trustees approved, approved a 3.2%Consumer Price Index (CPI) Adjustment on the 2012 Basic Charge by virtueof a recommendation of the MWSS-RO, acting through respondent Caparas,through MWSS-RO Resolution No. 12-009-CA dated November 28, 2012and Resolution No. 12-011-CA dated December 13, 2012.

Because the concession system is ina state of regulatory capture, allprovisions under the ConcessionAgreements purporting toregulate, review, or confirmthe actions of the Concessionaires review powers supposedly held byan independent RegulatoryOffice are negated or renderedineffective and nugatory, if notcollusive.

136. These provisions include, without limitation:

a. Service Obligations to be revised from time to time bythe Regulatory Office. MWSS-MWCI Concession

Agreement, at 9.

b. Powers to review the Common Purpose Facilities with theaim of meeting Service Obligations. Id. 3.8(i)

c. Power to defer implementation of specific ServiceObligations in the opinion of the Regulatory Office. Id. 5.1.

d. Power to consent to a phase-in of compliance with respectto Drinking Water Quality Standards. Id. 5.1.4.

e. Power to determine that any asset or improvement is aDisapproved Asset. Id. 2, 6.5.2.

f. Power to audit or commission an audit of the AssetCondition Report of the Concessionaires. Id. 6.5.3.


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g. Power to conclude that the Concessionaires are not meetingits general obligations under 6.5.1, nor conductingremedial works. Id. 6.5.4.

h. Power to waive the Concessionaires obligation to provideequity capital contribution in cash . Id. 6.11.

i. 6.11 is also void for being ultra vires . State entitiesmay not waive private obligations owed by theInternational Water Operator or Sponsor (in thiscase, Ayala Corp.) to pay subscribed capital stock ofthe Concessionaire.

ii. Power to approve the Concessionaires decision toincur debt or liability maturing after the ExpirationDate of the Concessions. Id. 6.12.

iii. 6.12 is also constitutionally suspect because itempowers MWSS to effectively guarantee privateloans.

i. Power to require a Technical Submission/Financial Modelsupporting the Concessionaires Rate Bid and TechnicalSubmission in a sealed envelope. Id. 6.14.

j. Power to review proposals for Rate StructureAdjustments. Id. 9.2.2

k. Power to verify whether proposed Standard Rates isconsistent with the Rates Adjustment Limit. Id. 9.2.3

l. Automatic approval and verification whether proposalcomplies with Rate Adjustment Limit, and lapse thereof. Id. 9.2.3.1.

i. 9.2.3.1. is also constitutionally suspect because itallows the Concessionaires to unilaterally set rates inthe event the verification period lapses, without needof an independent (government) auditor.

m. Power to determine validity of Changes to Basis of Rates. Id. 9.2.4.

n. Power to determine validity of Interim Standard RateAdjustments. Id. 9.2.5. See, in particular, 5, 9.2.5.


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o. Power to determine validity and grounds for ExtraordinaryPrice Adjustments. Id. 9.3.

p. Power of all parties to the Concession Agreement, toexercise Right of Appeal or to constitute the Appeals Panel.

Id. 9.3.3, 10.3.3 (Appeal).

q. Power to determine Rebasing Adjustment to calculateRates Limit for each of the five Charging Years of eachRebasing Period. Id. 9.4.

i. 9.4.4 (Expiration Payment) is alsoconstitutionally suspect and/or ultra vires becauseit passes concessionaire expenditures, liabilities, andany remaining debt burden to the MWSS/Republic ofthe Philippines by treating the Expiration Payment asan anticipated Receipt and by requiring a USDollar-denominated debt instrument issued by MWSSor by the Republic ranking at least pari passu having acash value equal to such Expiration Payment.

ii. 9.4.4 is effectively a state-sponsored or sovereign

guarantee of private debt.

r. Power to determine whether Connection Charges made byConcessionaires are reasonable and to notify themwhether an adjustment is required. Id. 9.5.1.

s. Power to determine and prescribe Maximum ConnectionCharges. Id. 9.5.2.

t. Power to assess financial penalties against theConcessionaires. Id. 10.4

The powers, duties, functions, andcorrelative obligations of theConcessionaires under theConcession Agreements do supportthe finding that these entities areipso jure public utilities, many ofwhich powers and duties areincidents of the very same sovereignpower granted to MWSS under itsown charter, such as the power ofeminent domain.


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137. To illustrate, Article 5 (Service Obligations of theConcessionaire) of the Concession Agreements describe and explain thevarious obligations to provide water services, sewerage services, maintainwastewater standards, septic and sanitation, and other customer servicestandards for the benefit of the general public.

138. To cite another instance, Article 7 (Obligations of MWSS) ofthe same contract empowers the MWSS to appoint the Concessionaire as itsagent and representative to exercise the powers under 3(k) of the MWSSCharter, in its name, place and stead, to apply for an exercise [of] itseasement, eminent domain , right of way and similar rights and powersgiven to MWSS under its Charter in connection with infrastructureprojects and works undertaken relating to the Concession... The

Concessionaire shall be solely responsible for the payment of anycompensation to third parties occasioned by the exercise of such rightsand powers. (emphasis supplied)

The Concession Agreementsbetween and among MWSS and theConcessionaires ipso jure vest ontothose Concessionaires the veryprivileges and correlative duties

accorded to every public utility orentity impressed with publicinterest. By their very nature, theConcession Agreements make theConcessionaires public utilitieswithin the meaning of the publicservice law.

Under the terms of the ConcessionAgreement, Concessionaires carryno greater power than theirprincipal, the MWSS, which is aGOCC that exercises sovereignfunctions delegated to it by statute.

It is the express wishes and intent ofthe parties to the ConcessionAgreements that theConcessionaires fall within the class

of public utilities subject to the 12percent Rate of Return profit cap,among other duties and obligations


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required of enterprises impressedwith public interest.

The Concessionaires are estoppedto deny that they are public utilities.

139. A facial analysis of the terms of the Concession Agreementsrequires these findings.

140. Any and all rights, powers, and privileges now enjoyed by theConcessionaires purportedly flow from the MWSS Charter. Whereas clausesof the Concession Agreements provide:

WHEREAS, Article 3(j) of the Charter authorizes MWSS,among other things, to dispose of real and personalproperty, including rights and franchises, consistent withthe purpose for which MWSS was created and reasonablyrequired for the transaction of the lawful business of thesame;

WHEREAS, MWSS has determined to grant concessions toprivate sector corporations, at least 60% of the outstandingcapital stock of which is owned and controlled by

Philippine nationals, which shall act as contractors toperform certain functions, and as agents for the exercise ofcertain rights and powers, of MWSS under its Charter,operate the system of waterworks and sewerage servicesreferred to in the Charter;

xxx

WHEREAS, MWSS and the Concessionaire wish to recordthe terms on which the Concessionaire is being granted theright to operate the waterworks and sewerage services inthe Service Area for the period specified herein; (emphasissupplied)

141. Core terms of the Concession Agreements which indicate thefull grant of such powers and privileges attending every public utilityinclude, without limitation:

a. 2.1 (Grant of Concession)

2.1 Grant of Concession

On the terms and subject to the conditions set forth herein,MWSS hereby grants to the Concessionaire, as contractorto perform certain functions and as agent for the exercise of


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rights and powers under the Charter, the sole right tomanage, operate, repair, decommission and refurbish theFacilities in the Service Area, including the right to bill andcollect water and sewerage services supplied in the Service

Area (the Concession). The Concessionaire shall performits functions and exercise its rights under this Agreementdirectly or, in respect of functions and rights delegated tothe Joint Venture. The rights and benefits of theConcessionaire under this Agreement shall be deemed toapply with equal force to the Joint Venture to the extentthat the Joint Venture is performing functions delegated toit under this Agreement. (emphasis supplied)

b. Under the Definitions section,

ARTICLE 1. DEFINITIONS

xxx

Qualified Replacement Operator means a corporation, ora consortium of corporations, (i) that has the technical andfinancial capacity to perform all of the obligations of theConcessionaire under this Agreement and (ii) that meets therequirements of Philippine law concerning foreignownership and management of a public utility . (emphasis

supplied)

c. 4.2.1 of the Concession Agreements states:

4.2.1 Corporate Organization

The Concessionaire is a corporation duly organized, validlyexisting and in good standing under the laws of theRepublic of the Philippines. The Concessionaire has fullcorporate power and authority to carry on its business as

required under the terms of this Agreement and is dulyqualified to do business in all jurisdictions where theownership of its assets or the conduct of its businessrequires such qualification. The outstanding voting capitalstock of the Concessionaire is at least 60% owned bycitizens of the Philippines or by corporations that arethemselves at least 60% owned by citizens of thePhilippines. (emphasis supplied)

d. 5.1.1 of the Concession Agreements states:

5.1.1 Water Supply; New Connections

The Concessionaire shall offer water supply services to allexisting Customers in the Service Area on the


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Commencement Date and, in addition, the Concessionaireshall make at least sufficient connections (net of anydisconnections) to meet the coverage target percentages ofthe population in the designated municipality at the time of

the target (excluding users who obtain water from a legalsource other than the MWSS system) set out in Schedule 2hereto by the dates specified in that Schedule. Further, theConcessionaire shall provide data and supporting evidenceto the Regulatory Office that demonstrates compliance withsuch coverage targets, along with the method by whichsuch compliance was calculated, prior to each RebasingDate in accordance with Section 9.4.1. (emphasis supplied)

e. 5.1.5 states:

5.1.5 Obligation to Supply Water for Public Purposes

The Concessionaire shall make available an adequatesupply of water for fire-fighting and other public purposesas the municipalities comprising the Service Area mayreasonably request. The Concessionaire shall not assess acharge for such water used for fire-fighting purposes butmay charge for all other water used for public purposes.(emphasis supplied)

f. 5.2 and 5.2.1 state:

5.2 General Obligations Regarding the Provisions ofSewerage Services

The Concessionaire shall have the following obligations inrespect of the provision of sewerage services in the ServiceArea:

5.2.1 Supply of Sewerage Service; New Connections

The Concessionaire shall offer to supply sewerage servicesto all Customers in the Service Area who have sewerageconnections on the date hereof for domestic sewage andindustrial effluents compatible with available treatmentprocesses and, in addition, the Concessionaire shall meetthe coverage target percentages of the total population inthe designated municipality connected to theConcessionaires water system at the time of the targets setout in Schedule 3 below by the dates specified in thatSchedule.

142. Other provisions supportive of the finding that theConcessionaires are public utilities are spread out in the ConcessionAgreements, include:


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a. 5.2.2. (Obligation to Make Connections to a PublicSewer)

b. 5.2.3. (Wastewater Standards)

c. 5.2.4. (Septic and Sanitation Cleaning)

d. 5.4. (Other Customer Service Standards)

e. 6.7. (Insurance). ([T]he Concessionaire shall at alltimes comply with Administrative Order #141 regardinginsurance of Government properties by the GeneralInsurance Funds of the Government Service InsuranceSystem).

f. 6.13.1 (referring to the supervisory responsibility of theConcessionaires over Existing Projects covered by theMWSS Loan documentation

g. 6.13.1(i) (referring to the supervisory responsibility of theConcessionaires over Existing Projects covered by theMWSS Loans, interest, and fee obligations for those Loans)

h. 6.13.1(ii) (referring to the power of the Concessionaire tocontinue with projects which remain unawarded to a thirdparty via public tender, bycontinuing/amending/canceling/funding the project designand project).

i. 6.13.3 (Performance Penalties) (referring to the powerof the Concessionaire to treat liquidated damages and

performance penalties paid to MWSS as mere Receiptsunder the Concession and are to be paid over to theConcessionaire ).

j. 6.15 (New Assets) (referring to legal title to all fixedassets contributed by Concessionaires shall automaticallyvest in MWSS upon the expiration)

k. 8.1 (power of Concessionaire to charge water customers a

CERA of one peso per cubic meter above Standard Rates)

That the Concessionaires are mereagents as purportedly stipulated,inter alia, under 2.1 and 7.2 of


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the Concession Agreements andaffirmed by MWSS Board ofTrustees Resolution No. 2004-201(approving MWSS-RO ResolutionNo. 04-006-CA in its entirety), withmore reason should they be deemedpublic utilities within the meaningof statutes and case law and arethus subject to all rules andregulations including the 12%ROR limit and tariff rate formula as well as government agencieshaving jurisdiction over public

utilities generally, such as thesuccessor agencies of the PublicService Commission as well as theCommission on Audit.

Because the Concessionaires wieldno greater power than theirprincipal, a finding that theConcessionaires are purely privateagents unfettered by any franchiseor privilege required of everyregulated public utility orenterprise impressed with publicinterest, would be a finding that isvoid for being ultra vires within themeaning of the MWSS Charter andpublic service laws.

Thus the finding of the MWSSBoard of Trustees Resolution No.2004-201, approving MWSS-ROResolution No. 04-006-CA in itsentirety, which ruled that the Rateof Return in 12 of Republic ActNo. 6234 (MWSS Charter) aremere agents of MWSS, is void forbeing ultra vires.

What is more, so-called JointVentures under the Concession parties which are not privy toMWSS but are privy to the


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Concessionaires may exercise thesame powers and privileges grantedto the Concessionaires.

143. It is the nature of the business, not the form or grant ofauthority , which is dispositive of the question of whether that business is apublic utility or not.

144. 13(b) of Commonwealth Act No. 146, as amended, defines apublic utility, viz:

(b) The term public service in

petition for certiorari & tro 06252013 (for filing)

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