Franchise grant and initial condition precedent
- A franchise is granted to Lazatin Incorporated (the grantee) for a period of twenty-five years from the approval of this Act to construct, maintain, and operate a water system for distributing water for sale within the limits of the City of Angeles.
- The franchise authority covers the right to:
- Construct, maintain, and operate water mains, pipes, conduits, reservoirs, or dams on land owned or duly acquired or obtained by the grantee for the purpose.
- Install, lay, and maintain above or below-ground water mains, pipes, and conduits on the right of way duly acquired or obtained by the grantee, or below the ground on all streets, public thoroughfares, and public places, and along or under bridges within Angeles City.
- Supply, sell, and furnish water within Angeles City for domestic or manufacturing uses and for any other use to which water may be put, and to charge and collect a schedule of prices and conventional rates subject to regulation by the Public Service Commission or its legal successor.
- Purify water sources, reservoirs, and dams, subject to the approval of the Bureau of Health Services, and to regulate control and use and to prevent the waste of water.
- The franchise shall not take effect until the grantee obtains from the Public Service Commission a certificate showing the public necessity and convenience under Section fifteen of Commonwealth Act No. 146, as amended, and files that certificate with the Secretary of Public Works and Communications upon accepting the franchise.
- If the grantee fails to file the proper application for the required certificate within three months from the date of the approval of this Act, the franchise becomes null and void.
Land acquisition and right of way
- The grantee may acquire or obtain by grant, lease, or purchase sufficient land for water reservoirs or dams, and for the erection of buildings and tanks at suitable heights for water storage.
- The grantee may acquire a separate right of way not to exceed ten meters in width from the location of each tank to the limits of the strong material-zone of Angeles City.
- To acquire such land or any part of it, the grantee may institute expropriation proceedings in a competent court as provided by law.
Underground placement; service capacity; connections
- All water mains and pipes located within the strong material-zone of the City of Angeles must be placed at least forty-five centimeters below the ground, measured as to the upper part of the mains or pipes.
- Water mains or pipes between the reservoir and the source of supply and the strong material-zone limits may be placed above ground on the grantee’s right of way, except where they cross a street or public place, in which case they must be placed below ground at the same forty-five centimeters depth.
- Construction and laying of mains and pipes must be done in a workmanlike manner in accordance with a plan previously approved by the Public Service Commission.
- If changing the level is necessary to avoid interference with any public sewer or drain (constructed or to be constructed), the grantee must change the portion of the mains and pipes forthwith as directed in writing by the Public Service Commission.
- The grantee must supply water to any applicant within fifteen days after application, in order of application date, up to the capacity of the system determined by the Public Service Commission upon the grantee’s application.
- If demand increases beyond system capacity, the grantee must increase capacity in accordance with the Public Service Commission’s decision (or its legal successor).
- Distribution system installation, laying, maintenance, and operation must be limited to such streets and public places as the Public Service Commission designates.
- When furnishing water to applicants, the grantee must make all required connections with applicants’ mains and may demand a fair charge therefor as the Public Service Commission may order.
Equipment standards; regulatory control; public safety
- All apparatus and appurtenances used must be modern and first class in every respect.
- Water mains and pipes laid in streets or public places must be placed and maintained so they do not interfere with the unrestricted use of public places and streets.
- The grantee is subject to such reasonable regulations as the Public Service Commission may promulgate regarding maintenance and operation of the water supply system.
Sidewalks, road extensions, and relocation
- If laying mains or pipes requires taking up sidewalks or digging up ground of sidewalks of public streets or thoroughfares, the grantee must, after installation, without delay:
- Replace sidewalks properly; or
- Arrange streets or public thoroughfares properly;
- Remove all rubbish, dirt, refuse, or other material placed or removed; and
- Leave the area in as good condition as before the work.
- If required by extension of roads determined by the city council, or extension of streets or plazas determined by the city council, the grantee (and successors or assigns) must change the location of mains and pipes at its expense, without delay, and place the mains and pipes where directed by the city council.
Liability, compensation, and damages
- The grantee must compensate the city government for any damage to its property caused by non-construction under the franchise or by neglect or omission to keep water system property in a safe condition.
- The grantee must be responsible for damage arising out of the grantee’s fault or negligence to individuals, corporations, co-partnerships, and private, public, or quasi public associations, or joint stock companies.
Time to file acceptance; start, completion; service standard
- The grantee must file written acceptance of the franchise with the Secretary of Public Works and Communications within one hundred and twenty days from the date it obtains the certificate required by Section one.
- The grantee must commence work under the supervision of the city engineer, in accordance with plan specifications and estimates previously approved by the Public Service Commission, within six months from filing such acceptance, unless prevented by:
- act of God or force majeure; or
- usurped or military power; martial law; riot; civil commotion; or other inevitable cause.
- The grantee must complete the system and have it in operation within eighteen months from the date of acceptance, unless prevented by the same listed causes.
- After completion, the grantee must maintain a first-class water system and furnish first-class service to the public and to private consumers.
Franchise payments and deposits
- The grantee must pay to the city treasury of Angeles City on a quarterly basis a franchise share of:
- three per centum of gross earnings during the first fifteen years of the franchise; and
- two per centum during the remaining ten years of the franchise.
- After acceptance of the franchise, the grantee must deposit with the city treasury or its agents in Angeles City ten per centum of the value of the investment:
- in cash; or
- in negotiable bonds of the Government of the Philippines; or
- in other securities approved by the city council,
as an earnest of good faith and guaranty that the grantee will begin the business and be ready to operate with necessary equipment under the franchise.
- If the deposit is in cash, it may be made in an official depository of the Government in the name of the grantee, subject to the order of the city treasurer, who retains evidence of deposit.
- The interest earned on cash deposits or on bonds and securities deposited belongs to the grantee.
- If the grantee fails or neglects, unless prevented by fortuitous cause/force majeure, the public enemy, usurped or military power, martial law, riot, civil commotion, or other inevitable cause:
- to commence the work for the water supply service within six months from acceptance; or
- to provide necessary equipment and be ready to operate within eighteen months from acceptance,
then the deposit is forfeited to the city government of Angeles City as damages for breach of the implied contract involved in acceptance.
- If the grantee begins to operate and is ready within the required time, the deposit is returned by the city treasurer upon recommendation of the Public Service Commission or its legal successor.
- The time during which performance is prevented by the causes listed must be added to the franchise time granted for fulfilling conditions.
Franchise property reversion and accounting access
- Upon termination of the franchise, all lands or rights of use or occupation of lands secured by virtue of the franchise must revert to the national, provincial, or municipal governments that owned them at the time the franchise was granted.
- Upon termination, the waterworks property used in connection with the franchise must become the property of the City Government.
- The grantee’s books and accounts must always be open to inspection by the city treasurer and the city auditor of Angeles City or their authorized representatives.
- The grantee must submit to the city treasurer every six months in duplicate:
- showing gross receipts and net receipts for the past six months; and
- showing the general condition of the business,
and one duplicate must be forwarded by the city treasurer to the Auditor General for filing.
Tax treatment and restrictions on assignment
- The grantee must pay taxes on real estate, buildings, plant, machinery, and other personal property at the same rates and types as those required by law for other persons.
- The grantee must not, without prior approval of the Congress of the Philippines, lease, grant, sell, convey, or give in usufruct:
- the franchise, and
- the property and rights acquired thereunder.
- For any approved lease, grant, sale, conveyance, or usufruct, the grantee must file with the Secretary of Public Works and Communications a written agreement where the transferee binds itself to comply with all existing terms a