G.R. No. L-47851 - Nakpil vs. Court of Appeals

The Metropolitan Waterworks and Sewerage System (MWSS) was created in 1971 under Republic Act No. 6234 as a government corporation with power to fix water and sewerage rates subject to a 12% maximum net return and exclusive original jurisdiction of the Public Service Commission (PSC) over rate complaints.
In 1995, the National Water Crisis Act (R.A. 8041) authorized privatization of MWSS segments. Under E.O. 286 (1995) and E.O. 311 (1996), MWSS facilities in Metro Manila were bid out in two service areas: East (awarded to Manila Water Co., Inc.) and West (awarded to Maynilad Water Services, Inc.).

MWSS granted each concessionaire the exclusive right to operate, manage, refurbish and bill customers within its service area, subject to MWSS board approval of “Standard Rates” and to the 12% cap of R.A. 6234. Rates were set via annual adjustments and five-year “rate rebasing” reviews by the MWSS Regulatory Office.
Dispute Resolution: Article 12 provided for UNCITRAL arbitration of disputes, with awards “final and binding” and waivers of appeals, but subject to court confirmation or vacation under the Domestic Arbitration Law (R.A. 876).

In Republic v. MERALCO (2002), the Supreme Court held that public utilities may not include corporate income tax as an operating expense in rate computations.
MWSS Regulatory Office issued Extraordinary Price Adjustment Notices (2004) to Manila Water and Maynilad, excluding income taxes from recoverable expenses. A technical working group and the MWSS board later reversed the adjustment, allowing tax recovery in the 2007 rebasing.

In 2005, water customers filed complaints with the National Water Resources Board (NWRB) contesting Maynilad’s rate increase, invoking exclusive NWRB (successor to PSC) jurisdiction under R.A. 6234. Maynilad and MWSS–Regulatory Office challenged jurisdiction.
Certiorari proceedings began in CA and finally reached the Supreme Court as G.R. Nos. 181764 and 187380.
Separate original petitions (G.R. Nos. 207444, 208207, 210147, 213227, 219362) challenged the constitutionality of the concession agreements, rate schedules, arbitration clauses, and sovereign guarantees.
Maynilad and Manila Water sought arbitration of the 2013 rebasing adjustments: UNC 136/CYK (Manila Water, disallowing income tax recovery) and UNC 141/CYK (Maynilad, allowing income tax recovery).
Maynilad filed a petition in RTC Quezon City to confirm the UNC 141/CYK award (2015), granted in 2017; CA affirmed in 2018, leading to G.R. No. 239938.

Whether the NWRB succeeded to PSC jurisdiction under R.A. 6234 to hear challenges to MWSS-fixed rates.
Whether MWSS and its Regulatory Office could intervene in Maynilad’s certiorari petition.
Whether rate-rebasing rates fixed by concessionaires fall under R.A. 6234’s 12% cap and NWRB review.
Whether Maynilad, a private concessionaire, is a “public utility” subject to R.A. 6234.

Whether certiorari/prohibition are proper remedies to challenge concession agreements and rate schedules.
Whether petitioners presented an actual case or controversy and have standing (including “transcendental importance”).
Whether petitioners violated hierarchy of courts, primary jurisdiction, and exhaustion of remedies doctrines.
Whether concession agreements are ultra vires/delegations of sovereign powers (eminent domain, taxation, police power).
Whether Manila Water and Maynilad are public utilities subject to 12% cap and barred from recovering corporate income tax.
Whether MWSS concession system is under regulatory capture.
Whether disputes are arbitrable and arbitration clauses lawful.
Whether Letters of Undertaking (sovereign guarantees) are unconstitutional/unenforceable.

Whether Maynilad filed its petition for confirmation of UNC 141/CYK award within the reglementary period.
Whether enforcing the award is contrary to Philippine public policy (unequal rates, income tax recovery).