|
FREEDOM
FROM DEBT COALITION, AKBAYAN CITIZENS’ ACTION PARTY, ALLIANCE OF PROGRESSIVE
LABOR, MARIO JOYO AGUJA, ANA THERESIA HONTIVEROS-BARAQUEL, RENATO B. MAGTUBO,
EMMANUEL JOEL J. VILLANUEVA, EDUARDO C. ZIALCITA, MA. THERESA DIOKNO-PASCUAL,
MARY ANN B. MANAHAN AND PATROCINIO JUDE ESGUERRA III, Petitioners, - versus - METROPOLITAN WATERWORKS AND SEWERAGE
SYSTEM (MWSS) and the MWSS REGULATORY OFFICE (MWSS-RO), Respondents. |
G.R. No. 173044
Present:
Puno, C.J. *Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, CARPIO, AUSTRIA-MARTINEZ, CARPIO MORALES, azcuna, TINGA, chico-nazario, velasco, jr., nachura, and Reyes, JJ. Promulgated: December
10, 2007 |
x----------------------------------------------------------------------------------------x
|
|
|
|
|
DECISION
|
|
|
|
|
SANDOVAL-GUTIERREZ,
J.:
|
|
|
|
|
Before
us for resolution is the instant Petition for Certiorari and Prohibition (with prayer for the issuance of a
temporary restraining order and a writ of preliminary injunction) assailing (a)
Resolution No. 2004-
201 of the Metropolitan Waterworks and Sewerage System (MWSS) Board of Trustees,
respondent; and (b) Resolution No. 04-006-CA of the MWSS Regulatory Office
(MWSS-RO), another respondent, both dated July 30, 2004.
The facts
as culled from the petition are:
Respondent
MWSS is a government corporation created in 1971 under Republic Act No. 6234,[1] as
amended, for the purpose of owning and/or having jurisdiction, supervision and
control over all waterworks and sewerage systems in Metro Manila and the provinces
of Rizal and
In 1995, the government embarked upon
the privatization of the waterworks and sewerage system of MWSS. Among the range of privatization options,
MWSS chose to enter into concession arrangement with private entities. The area of Metro Manila was divided into
two (2) concession areas – Service Area East and Service Area West.
After a process of public bidding and
selection, the Service Area East was awarded to Manila Water Company, Inc., while the Service Area West was awarded
to Maynilad Water Services, Inc.
On
As consideration for the performance
of their obligations, the concessionaires are empowered to charge and collect
water and sewerage services based on standard rates. Article 9[2] of
the Concession Agreements provides inter
alia that the standard rates may be adjusted from time to time subject to the limitation that the
concessionaires’ rate of net return shall not exceed twelve percent (12%) per annum, as required in Section 12[3] of
the MWSS Charter (R.A. No. 6234).
On August 3, 2000, the MWSS Board of
Trustees, pursuant to Article 13.2[4] of
the Concession Agreements, passed Resolution No. 277-2000 directing the Commission
on Audit (COA) to conduct a rate audit
of the concessionaires’ operations for the purpose of ensuring that their rate
of return does not exceed the 12% cap mandated in Section 12 of the MWSS
Charter.
On
Report No. 2000-38 (for Maynilad Water
Services, Inc. [MWSI])
Result of the Audit
The audit, after considering the adjustments for rate
determination, resulted in an actual rate
of return of 7.71% during the period January 1 to
x x x
Report No. 2000-39 (for Manila Water Company, Inc. [MWCI])
Result
of the Audit
The audit, after considering the adjustments for rate
determination, resulted in an actual rate
of return of 40.92% during the period January 1 to December 31, 1999 on
MWCI’s invested capital of P971.93 million inclusive of Concession Fees of
P556.12 million pertaining to completed projects. The return is 28.92% above the allowable RORB
of 12%.
x x x
According to the COA Reports, “in the
rate determination, only those properties acquired, owned, and actually used in
the operation of the concessionaires were included in the computation of the
invested capital.”
On March 31, 2004, the MWSS Regulatory
Office issued a Notice of Extraordinary Price Adjustment (NEPA) to both
concessionaires, stating that “pursuant to Article 9.3.1 of the Concession
Agreements, the Regulatory Office has determined that Grounds for Extraordinary
Price Adjustment (GEPA) have occurred,” consisting in a purported “change in
law, government regulation, rule or order or interpretation thereof, that
affects or is likely to affect the Cash Flow of the concessionaires.” According to the NEPA, the “change in law,
rule or interpretation thereof” was brought about by the Supreme Court
Resolution dated
The
concessionaires opposed the NEPA and requested that it be set aside on the
grounds that (a) they are not public utilities but mere agents and contractors
of MWSS by virtue of the Concession Agreements; (b) their income tax payments
are considered expenditures under the Concession Agreements; (c) in the case of
the Manila Water Company, Inc., the MWSS Regulatory Office had approved its Business
Plan dated September 18, 2002 and granted it a Rate Rebasing; and that the said
Plan treats income tax payments as expenditures; (d) the premise of the GEPA is
that the concessionaires are public utilities; (e) the COA conducted the rate audit
on the premise that the concessionaires are public utilities even if they maintain
they are not of such character; and (f) the MERALCO
ruling does not involve the GEPA contemplated in clause 9.3.1 (ii) of the
Concession Agreements.
On
Thus, the TWG was created composed of
representatives from the MWSS Regulatory Office, the concessionaires, and the
MWSS Corporate Office. On July 9, 2004,
the TWG invited resource persons[7] to
shed light on what should be the status of the MWSS and the concessionaires
under the privatization program, as well as the proper interpretation and
application that should be given to Section 12 of the MWSS Charter and Section
9.1 of the Concession Agreements insofar as the rate of return set in the
Charter and the tariff adjustments are concerned.
On
On
NOW,
THEREFORE, BE IT RESOLVED, as it is hereby resolved:
1. The RO
hereby APPROVES and adopts all the findings, conclusions, and recommendations
of the Joint Technical Working Group as contained in its memorandum to the MWSS
Board of Trustees dated July 29, 2004;
2. The RO shall consider and treat the
Concessionaires as mere agents and contractors of MWSS, which is and still
remains to be the public utility. The
Supreme Court Decision in the Meralco
case is not applicable to the Concessionaires, thus the NEPA Notice dated
3. The RO shall
provide COA with a copy of the TWG Report per Assistant Commissioner Cuenco’s
request, as well as inform the COA of the appropriate framework for the conduct
of the rate audit.
4. The RO shall
inform the COA of the appropriate framework for the conduct of the rate audit
of MWSS such that: a) the rate audit of
MWSS as public utility shall observe the procedures/guidelines set out in the
MWSS letter to NWRB dated 21 November 1996 and NWRB letter to MWSS dated 02
December 1996, i.e., “The procedure
for rate of return (ROR) calculation and, the 12% ceiling shall be applicable
to the entire waterworks system, including both the income and assets held
respectively by the Concessionaires and MWSS,” and the formula that the ROR is equal to income
after interest and taxes divided by the base of Net revalued fixed assets in
operation + 2 months operating capital; and b) MWSS and its Concessionaires shall ensure that actual tariff rates as adjusted by Article 9.1 of the CA shall not
exceed the maximum tariff rates consisted with the 12% ROR limit, and in case actual rates exceed the tariff
ceiling consistent with 12% ROR limit, RO shall propose a service obligation
deferment to adjust actual rates or compute Expiration Payment due to
Concessionaires.
The
following were also identified as continuing
guiding principles:
1. Any dispute
between MWSS and its Concessionaires on rate audits shall be resolved through
Dispute Resolution procedures (Art. 12) set in the CA.
2. The
Concessionaires, as agents and contractors of MWSS are to submit annual audited
Financial Statements (F/S) relating to the Concession. Said F/S, which will be treated as final
inputs, shall be consolidated for purposes of rate audit determination as per
NWRB guidelines.
3. The
Concessionaires shall engage an independent Auditor who will be tasked to
prepare the audited F/S. The
Concessionaires shall ensure that the independent Auditor shall have competence
and international experience auditing water projects.
4. Prior to the
implementation of any Rate Rebasing tariff adjustment for a Rate Rebasing
Period, the RO shall:
a) Determine
the indicative tariff consistent with the 12% return limit for said RR period;
b) Determine
the actual RR tariff adjustment consistent with the Concessionaires’ Business
Plan and ADR as reviewed and approved by RO;
c) Prepare a
“trial or test rate audit” to indicate level and trend of actual rates
vis-ŕ-vis the tariff ceiling in each year of the Rate Rebasing.
5. The KPI/BEM mutually agreed between the
Concessionaires and MWSS/RO shall serve as basis for determining the prudent
and efficient expenditures of the Concessionaires. Other mechanism to determine prudence and
efficiency will be explored by the RO with the Concessionaires.
6. The RO shall
take the lead role to conduct a revaluation/reappraisal of the assets of both
MWSS and its Concessionaires use for the provision of water supply and sewerage
services. This shall be conducted by
reputable appraisal firms and shall be done at least once a year.
7. The COA (or
any Independent Auditor of RO’s choice) shall facilitate the consolidation of
audited F/S of both MWSS and Concessionaires.
8. The audit of
MWSS as the public utility by COA shall be based on the framework developed by
NWRB. The audit of Concessionaires shall
be conducted by an Independent Auditor in accordance with KPI/BEM framework.
On the same day (
On
only on May 25, 2006;[10] that
respondents, in issuing the assailed Resolutions, acted with grave abuse of
discretion amounting to lack or in excess of jurisdiction; that the finding by
respondents that the concessionaires are not public utilities, but mere agents/contractors
of the MWSS, has “the effect of excluding the rates set by such concessionaires
from the limitation in Section 12 of R.A. 6234 (MWSS Charter);” and that this,
in turn, “will have the effect of increasing the rates that can be charged
against them and the subscribers to the water service provided by the
concessionaires.”[11]
For
their part, respondents, in their Comment, pray for the dismissal of the
petition for lack of merit.
The
instant petition must fail.
First,
petitioners failed to resort to the appropriate remedy. Under Section 12 of the MWSS Charter, it was
the defunct Public Service Commission[12] which
had the exclusive original jurisdiction
over all cases contesting the rates or
fees of water and sewerage services, thus:
Sec. 12. Review
of Rates by the Public Service Commission.- The rates and fees fixed by the Board of
Trustees for the System (MWSS) and by the local governments for the local
systems shall be of such magnitude that the System’s rate of net return shall
not exceed twelve percentum (12%), on
a rate base composed of the sum of its assets in operation as revalued from
time to time plus two months’ operating capital. Such rates and fees shall be effective and
enforceable fifteen (15) days after publication in a newspaper of general
circulation within the territory defined in Section 2(c) of this Act. The
Public Service Commission shall have exclusive original jurisdiction over all
cases contesting said rates or fees.
Any complaint against such rates or fees shall be filed with the Public
Service Commission within thirty (30) days after the effectivity of such
rates, but the filing of such complaint or action shall not stay the
effectivity of said rates or fees. The
Public Service Commission shall verify the rate base, and the rate of return
computed therefrom, in accordance with the standards above outlined. The Public Service Commission shall finish,
within sixty (60) calendar days, any and all proceedings necessary and/or
incidental to the case, and shall render its findings or decisions thereon
within thirty (30) calendar days after said case is submitted for decision.
In cases where the decision is against the fixed rates
or fees, excess payments shall be reimbursed and/or credited to future
payments, in the discretion of the Commission.
(Underscoring supplied)
Indeed, petitioners have a plain and
speedy remedy in the ordinary course of law as prescribed in Section 12 above. They cannot avail of certiorari as a substitute for that plain and speedy recourse. The writ of certiorari and prohibition may be availed of only when “there is no
appeal, or any plain, speedy, and adequate remedy in the ordinary course of
law.”[13]
Second, even
assuming that petitioners may resort to certiorari
and prohibition, their petition, however, suffers from a fatal defect, i.e., it failed to implead the two
concessionaires who are certainly indispensable
parties. Indispensable parties are
those which have such interest in the controversy that a final adjudication of
the case would certainly affect their rights, so that the court cannot proceed
without their presence.[14] Thus, their non-inclusion
in the petition for a writ of certiorari would render the said petition
defective.[15]
Third, the
petition is barred under the doctrine of hierarchy of courts. Such doctrine is one of the structural
aspects intended for the orderly administration of justice. This Court has concurrent original jurisdiction with the Regional Trial Court and
the Court of Appeals in the issuance of the extraordinary writ of certiorari and prohibition. However, in availing of such extraordinary writ,
petitioners do not have the complete liberty
or discretion to file their petition in any of these courts. In the absence of special reasons, they
cannot disregard the doctrine of the hierarchy of courts in our judicial system
by seeking relief directly from this Court despite the fact that the same is
available in the lower tribunals in the exercise of their original concurrent
jurisdiction.[16]
Significantly, the petition raises issues of fact which cannot be addressed
to this Court. For instance, in
determining whether the concessionaires are public utilities or mere agents of
MWSS, there must be an examination of the intention
of MWSS and the concessionaires at the time of the bidding process,
negotiation, and execution of the Concession Agreements. Certainly, this matter is a factual issue
requiring presentation and evaluation of evidence such as bidding documents,
memoranda, and the testimonies of the
participants of the bidding and contract negotiations. Moreover, petitioners maintain that the
assailed Resolutions could authorize the increase of water rates beyond the 12%
rate of return limit. While such claim is
purely speculative in nature, it would nonetheless require a very complicated
and technical computation of the current rate of return – which entails a
determination of income, the valuation of assets, which assets are to be included
in the computation, and other factual factors.
Again, these matters are beyond the Court’s function as it is not a
trier of facts.
While petitioners claim that the
assailed Resolutions are “in flagrant violation of the Constitution and
statutory provisions defining public utilities,” however, they failed to cite
any Constitutional provision being violated.
In
x
x x.
We discern in the proceedings in this case a propensity on the part of
petitioner, and, for that matter, the same may be said of a number of litigants
who initiate recourses before us, to disregard the hierarchy of courts in our
judicial system by seeking relief directly from this Court despite the fact
that the same is available in the lower courts in the exercise of their
original concurrent jurisdiction, or is even mandated by law to be sought
therein. This practice must be stopped, not only because of the imposition
upon the precious time of this Court but also because of the inevitable and
resultant delay, intended or otherwise, in the adjudication of the case which
often has to be remanded or referred to the lower court as the proper forum
under the rules of procedure, or as better equipped to resolve the issues since
this Court is not a trier of facts. We, therefore, reiterate the judicial
policy that this Court will not entertain direct resort to it unless the
redress desired cannot be obtained in the appropriate courts or where
exceptional and compelling circumstances justify availment of a remedy within
and calling for the exercise of our primary jurisdiction. (Underscoring supplied)
WHEREFORE, we DISMISS the instant petition for lack
of merit. No pronouncement as to costs.
SO ORDERED.
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
Chairperson (On leave) |
|
|
LEONARDO A. QUISUMBING Associate Justice ANTONIO T. CARPIO Associate Justice RENATO C. CORONA Associate Justice ADOLFO S. AZCUNA Associate Justice MINITA V. CHICO-NAZARIO Associate Justice ANTONIO EDUARDO B. NACHURA Associate Justice |
CONSUELO YNARES-SANTIAGO Associate Justice MA. ALICIA AUSTRIA-MARTINEZ Associate Justice CONCHITA CARPIO MORALES Associate Justice DANTE O. TINGA Associate Justice PRESBITERO J. VELASCO, JR. Associate Justice RUBEN T. REYES Associate Justice |
REYNATO S. PUNO
Chief Justice
* On leave.
[1] Entitled “An Act Creating The Metropolitan Waterworks And Sewerage System And Dissolving The National Waterworks And Sewerage Authority; And For Other Purposes.”
[2] “ARTICLE 9. RATES AND CONNECTION CHARGES
9.1. Standard Rates/CERA Fee
Subject to the limitation of Section 12 of the Charter, Standard Rates may be adjusted from time to time in accordance with the rate adjustment provisions set forth in Section 9.2, 9.3 and 9.4 below. x x x.” (Underscoring supplied)
[3] “Sec. 12. Review of Rates by the Public Service Commission).- The rates and fees fixed by the Board of Trustees for the System (MWSS) and by the local governments for the local systems shall be of such magnitude that the System’s rate of net return shall not exceed twelve percentum (12%), on a rate base composed of the sum of its assets in operation as revalued from time to time plus two months’ operating capital. Such rates and fees shall be effective and enforceable fifteen (15) days after publication in a newspaper of general circulation within the territory defined in Section 2(c) of this Act. x x x.” (Underscoring supplied)
[4] “ARTICLE 13. INFORMATION AND REPORTING REQUIREMENTS
x x x
13.2.
Audits
Not less frequent than once a year, the Concessionaire’s books and records shall be audited by an independent auditor appointed by, or acceptable to, the Regulatory Office, pursuant to internationally accepted accounting practices. In addition, the Regulatory Office may, upon giving not less than 15 days prior written notice to the Concessionaire, require that the Concessionaire’s books and records relating to the Concession be audited on an interim basis by the Regulatory Office or by an outside auditor. The Concessionaire shall cooperate fully with all such audits.”
[5] G.R. Nos. 141314 & 141369,
[6] “Art. 12.1. The parties hereto agree to use reasonable efforts to resolve any disagreements or disputes concerning the interpretation or implementation of this Concession Agreement through mutual consultation and negotiation.”
[7] Gregorio Vigilar, former Secretary of the Department of Public Works and Highways (DPWH), Dr. Angel Lazaro III, former MWSS Administrator, Mark Dumol, former DPWH Chief of Staff, and Atty. Eusebio Tan of the ACCRA Law Office, legal advisor to the MWSS.
[8] Annex “B,” Petition, rollo, pp. 41-44.
[9] Annex “A,” id., p. 36.
[12] Now the National Water Resources Board.
[13] Section 1, Rule 65 of the 1997 Rules of Civil Procedure, as amended.
[14] Amargo
v. Court of Appeals, No. L-31762,
[15] Id., citing Republic v. Hon. Roberto Zurbano, et al., 105 Phil. 409; Dacudao v. Hon. Duenas, et al., 108 Phil. 94.
[16] Florenz D. Regalado, Remedial Law Compendium, Vol. One, Sixth Revised Edition, p. 719.