G.R. No. 38814 ; September 15, 1933
THE METROPOLITAN WATER DISTRICT, petitioner, vs. THE PUBLIC SERVICE COMMISSION and LA ASOCIACION DE EMPLEADOS CIVILES DE FILIPINAS, INC., respondents.

FACTS

The Metropolitan Water District (MWD), a public utility, was charged before the Public Service Commission (PSC) by various consumer groups for allegedly charging excessive and unreasonable rates. The PSC, while finding that MWD’s overall finances did not justify a general rate reduction, ordered the MWD to: (1) cease collecting annual charges for the maintenance and upkeep of consumers’ meters and service pipe lines, and (2) replace the flat-rate surcharge on delinquent bills with a percentage-based charge. MWD appealed this order.

ISSUE

1. Whether the PSC acted within its authority in ordering the suspension of MWD’s annual maintenance charges.
2. Whether the PSC correctly declared the flat-rate delinquency charge unjust and unreasonable.

RULING

The Supreme Court reversed the PSC’s order.
1. On the maintenance charges: The Court held that MWD, under its charter, had the power to prescribe uniform rates for meter and pipe maintenance. The evidence showed MWD incurred an annual loss of about P4,000 from this service, and forcing it to cease collection would increase the annual loss to about P50,000. MWD’s overall net profit of about P140,000 on an investment exceeding P22,000,000 (a return of less than 1%) was not excessive. The charges were therefore not unreasonable.
2. On the delinquency charge: The Court found the flat-rate charge (which MWD had voluntarily reduced to P1 during the proceedings) was not unjust or unreasonable. Its purpose was to cover extra administrative costs due to late payment and to act as a penalty for delinquency.
The Court concluded there was no evidence before the PSC reasonably supporting a finding that MWD’s charges were unreasonable. The PSC’s order was set aside.

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