Law Summary
Definitions
- Concession Agreement: Contract between Maynilad and MWSS including its amendments.
- Franchise Area: Specific coverage area including parts of Metro Manila and Cavite as detailed in the Concession Agreement.
- Regulatory Office: The MWSS Regulatory Office or its legal successor overseeing operations.
Rights and Privileges of the Grantee
- Authority to manage, operate, maintain, expand, and bill for water and sewerage services within the Franchise Area.
- Development and operation of water sources, treatment plants, reservoirs, pipelines, and related facilities.
- Reuse and distribution of treated and grey water.
- Construction and operation of sewerage systems including industrial effluents subject to treatment compatibility.
- Authority to purify water subject to government agency approval.
- Permission to construct infrastructure across public roads and properties with restoration.
- Disconnect services for non-payment or acts of pilferage as per law.
Operations and Compliance Standards
- Operation and maintenance of systems must adhere to industry standards under the Philippine Clean Water Act and Water Code.
- Compliance with resolutions and standards set by the Regulatory Office and other agencies.
- Obligation to modernize and improve facilities to promote efficiency and environmental sustainability.
- Encouragement of water conservation and wastewater reuse.
- Adoption of technologies like waste-to-energy from sludge is permitted.
Certificate of Public Convenience and Validity
- The Concession Agreement functions as the certificate or permit for operation.
- The agreement remains valid unless terminated or invalidated due to national security, emergency, or public interest.
- Provisions exist for extension and amendments upon public interest and application.
- Right to match highest bid for MWSS-owned assets is granted in cases of privatization.
Excavation and Restoration Requirements
- Grantee may excavate public areas for infrastructure with prior approval from authorities.
- Obligated to restore disturbed public properties to standards set by relevant authorities.
- Failure to restore within a 10-day notice period allows government to undertake restoration and charge double expenses.
Public Responsibility and Ethical Conduct
- Must provide prudent, efficient, and satisfactory water and sewerage services.
- Obliged to modify and improve facilities for service efficiency at reasonable costs.
- Fees charged must be just and reasonable.
- Compliance with environmental standards and Indigenous Peoples' Rights Act including free, prior, and informed consent as applicable.
- Must establish mechanisms for stakeholder consultation.
Tariff and Rate Setting
- Regulatory Office shall establish fair, reasonable tariffs ensuring economic viability and fair returns.
- Rate-setting methodology to consider costs, efficiency, consumer willingness to pay, equity, administrative simplicity, and legal requirements.
- Approved tariffs presumed valid barring administrative or judicial challenges.
Consumer Protection
- Grantee to establish a consumer desk for complaints and ensure prompt attention.
- Service interruptions to be minimized following Regulatory Office standards.
Governance: Independent Directors
- Board of Directors must include at least 20% independent directors.
- Independent directors must be free from conflicts and have at least three years of expertise in relevant fields.
Government’s Special Rights
- President may temporarily take over or suspend operations during war, emergencies, or public calamities with due compensation.
Eminent Domain Authority
- Grantee authorized to exercise eminent domain for infrastructure purposes subject to legal processes and just compensation.
- May install facilities on or across public properties and acquire necessary private properties.
Franchise Term
- Valid for 25 years from enactment unless revoked for noncompliance or lack of continuous operation.
Acceptance Requirement
- Written acceptance must be given to Congress within 60 days or franchise becomes void.
Warranty and Liability
- Grantee holds government free from claims arising from accidents during construction or operation.
- Liable for injuries or property damage caused by defective construction or neglect.
Employment and Labor Standards
- Required to create jobs and accept on-the-job trainees prioritizing local residents.
- Must comply with labor laws and report employment data annually.
Restrictions on Transfer and Ownership Changes
- Transfer, sale, lease, or assignment of franchise or controlling interest requires Congressional approval.
- Certain stock issuances and transfers related to capital raising or ownership dispersal are exempt, but Congress must be informed within 60 days.
- Failure to notify Congress results in automatic franchise revocation.
Ownership Dispersal
- Must offer at least 30% of outstanding capital stock to Filipinos in local securities exchange within five years.
- Noncompliance leads to automatic revocation.
Public Information
- Required to disseminate information about services and franchise provisions to all consumers.
Reporting Obligations
- Annual reports to Congress and Regulatory Office detailing operations, financials, compliance, and ownership dispersal.
- Submission of a long-term completion plan targeting 100% coverage by 2037.
- Periodic comprehensive assessments by Regulatory Office.
Penalties for Noncompliance
- Failure to file annual report to Congress results in daily fines of PHP 1,000,000.
- Fines are separate from penalties imposed by the Regulatory Office.
Tax Responsibilities
- Grantee pays taxes on real estate, properties, and income as per tax laws.
- Income taxes must not be passed on to consumers.
- Tax returns subject to audit by the Bureau of Internal Revenue.
Equality Clause
- Any privileges granted under existing or future water utility franchises, approved by Congress, shall be extended to the grantee.
- Territorial coverage and franchise term provisions are excluded.
Compliance with Laws
- Subject to the Public Service Act and other legal requirements relating to business operation.
Amendability and Nonexclusivity
- Franchise may be amended or repealed by Congress as public interest requires.
- Franchise is nonexclusive.
Repealing Provisions
- Conflicting laws, decrees, or regulations are repealed or amended to conform with this Act.
Effectivity
- Act takes effect 15 days after publication in the Official Gazette or newspaper of general circulation.