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.