MWSS may admit it erred on tax charges, says Angara

Former Senator Edgardo Angara. INQUIRER file photo

MANILA, Philippines—To rectify its mistake, the Metropolitan Waterworks and Sewerage System (MWSS)  may  admit  that  it committed a “legal mistake” in allowing two water concessionaires   to pass on their income tax payments to  consumers,   former Senator Edgardo Angara said on  Thursday.

Angara said Maynilad Water Services Inc. and  Manila Water Company  Inc . were not authorized to  pass on their income  tax payments to  consumers, citing a previous  Supreme Court ruling on the  same  issue  against  the Manila Electric Co.  (Meralco).

“This is not new because Meralco used to pass on their income tax to the consumers and they lost the case in the Supreme Court,” he said during a regular  weekly forum at the Senate.

“(The Supreme Court said) huwag ninyong ipasa sa consumers (don’t pass it on to your consumers), that is your own responsibility,” he said.

“Kung susundin mo iyong prinsipyo ng (If you follow the  principle of the)  Meralco case, they are not authorized to pass on their own income tax burden to the consumers,” Angara pointed out.

Angara said  Meralco was then required to repay their consumers some P28 billion.

From 2008 to 2012, Maynilad and Manila Water allegedly charged  consumers P15.3 billion combined  income taxes.

And while the pass-on charges  were allowed in the  concessionaire agreement between the government, through the MWSS, and the two concessionaires,  Angara argued the law should prevail  over any private arrangement.

“You cannot just agree between two contracting parties that my clients will pay for my income tax. Taxation is a matter of law. What does the law says? Whoever is mandated to pay should pay regardless of private arrangement,” he  said.

So to correct this mistake, Angara said the MWSS may admit  first its mistake in allowing the two concessionaires to charge their income  taxes to their customers.

“They can decide preliminarily yes, I think we made a mistake. They are giving the concessionaires the right or the privilege to pass on their income tax to consumers and it is a legal mistake,” he said.

“They can do that, and who ever feels aggrieved can appeal to the Supreme Court because the Supreme Court will be the final arbiter,”  he said.

The  water consumers,  Angara said,  may file  a case in court against those who committeed such mistake.