MWSS-RO orders Maynilad to rebate customers

The Metropolitan Waterworks and Sewerage System-Regulatory Office (MWSS-RO) has ordered West zone concessionaire Maynilad Water Services Inc. to rebate its customers in certain areas of its franchise.

In a statement, the MWSS-RO said that customers Muntinlupa-Las Piñas, Malabon-Valenzuela, and Quezon City “will receive minor corrections in their water bills in the form of rebates, as a result of Maynilad’s implementation of tax rates that are not in accordance with the rates approved by the MWSS Board of Trustees (BOT).”

In March, the MWSS-RO announced that following the passage of Maynilad’s and Manila Water’s respective congressional franchises, the water services charges of the water distribution utilities shall no longer be subject to 12% VAT beginning March 21, 2022.

Instead of VAT, however, water services of the water firms will be subject to 2% other percentage tax or national franchise tax (NFT) and the actual rate of local franchise tax (LFT) implemented by local government units (LGUs).

The NFT and LFT shall be reflected as “government tax” in the customers’ water bills starting March 21.

However, the MWSS-RO said that upon monitoring and evaluation of the rates being implemented by Maynilad in its service areas, “it has come to the attention of the MWSS RO that Maynilad has been charging customers in the aforementioned Business Areas the actual LFT rates of the relevant local government units instead of the rates approved by the MWSS BOT.”

“The MWSS-RO recognizes that Maynilad implemented these rates in good faith, as the rates that it previously submitted to and approved by the MWSS BOT were outdated,” it added.

The regulatory office said Maynilad implemented LFT rates without prior recommendation by the MWSS-RO and subsequent approval of the MWSS BOT, which are part of the procedural requirements as provided under relevant laws.

Sought for comment, Maynilad said that the local franchise tax rates initially approved by the MWSS BOT were based on outdated rates.

“[H]ence, Maynilad applied the actual local franchise tax rates in computing the Government Taxes to be included in the water bills. The MWSS Board has since issued a Resolution affirming the use of actual local franchise tax rates in the computation,” the company said.

The MWSS-RO directed Maynilad to:

-revert the rates of the Government Tax charges in accordance with the rates approved by the MWSS BOT
-rebate to the customers in the subsequent customer bills all taxes collected in excess of the LFT rates approved by the MWSS BOT

“The above will be implemented only in the March to June 2022 water bills of the relevant Maynilad customers, as the MWSS BOT issued on 02 June 2022 a Resolution recommending that the actual LFT rates imposed by the relevant local governments be adopted for computing Government Tax charges moving forward,” the regulatory office said.

Maynilad, for its part, said that it will comply with the MWSS-RO's directive to adopt the initially approved rates for the March to June 2022 billing cycle.

“Around P2.1 million will be returned in the form of rebates to the relevant customers. Note that all local franchise taxes collected will be remitted to the relevant LGUs,” the company said.

Maynilad provides water and wastewater services to residents in most parts of the City of Manila; northern and western parts of Quezon City; western parts of Makati City; and the Cities of Caloocan, Pasay, Parañaque, Las Piñas, Valenzuela, Muntinlupa, Navotas, and Malabon in Metro Manila.

It also serves the municipalities of Kawit, Noveleta, and Rosario, as well as the Cities of Bacoor, Cavite, and Imus in the Province of Cavite. —KBK, GMA News