December 10, 2021
REPUBLIC ACT NO. 11600
AN ACT GRANTING MAYNILAD WATER SERVICES, INC. A FRANCHISE TO ESTABLISH, OPERATE, AND MAINTAIN A WATERWORKS SYSTEM AND SEWERAGE AND SANITATION SERVICES IN THE WEST ZONE SERVICE AREA OF METRO MANILA AND PROVINCE OF CAVITE
SECTION 1.Nature and Scope of Franchise. — Subject to the provisions of the Constitution and applicable laws, rules and regulations, there is hereby granted to Maynilad Water Services, Inc., hereunder referred to as the grantee, its successors or assignees, a franchise to establish, operate, and maintain, for commercial purposes and in the public interest, a waterworks system to ensure an uninterrupted and adequate supply, and distribution of potable water for domestic, commercial, and other purposes, and for the establishment and maintenance of sewerage system and sanitation services in the West Zone Service Area of Metro Manila and Province of Cavite, under a concession from the Metropolitan Waterworks and Sewerage System (MWSS), or under an appropriate certificate of public convenience and necessity, license, or permit...
Summary of Republic Act No. 11600:
Nature and Scope of Franchise (Section 1):
- Grants Maynilad Water Services, Inc. (the grantee) a franchise to establish, operate, and maintain a waterworks system, sewerage system, and sanitation services in the West Zone Service Area of Metro Manila and Cavite Province.
- Allows operation under a concession from the Metropolitan Waterworks and Sewerage System (MWSS) or appropriate certificate from the Regulatory Office.
Definition of Terms (Section 2):
- Defines "Concession Agreement", "Franchise Area", and "Regulatory Office".
Rights and Privileges (Section 3):
- Allows the grantee to establish, manage, operate, repair, rehabilitate, expand, and improve the waterworks and sewerage system in the Franchise Area, including billing and collecting fees.
- Grants rights to develop water sources, recover and reuse treated and grey water, construct sewerage systems, purify water, construct works across public places, and disconnect water supply for non-payment or pilferage.
Manner of Operation (Section 4):
- Requires operation and maintenance of systems in accordance with industry standards and compliance with resolutions, issuances, and standards set by the Regulatory Office and other agencies.
- Mandates modification, improvement, and change of systems as required by the Regulatory Office or authorized agencies.
- Promotes water conservation, waste-to-energy technology, and recovery and reuse of wastewater.
Certificate of Public Convenience and Necessity, License or Permit (Section 5):
- Considers the Concession Agreement as the certificate of public convenience and necessity, license, or permit for operation.
- Allows amendment of the Concession Agreement to extend its term upon application by the grantee.
- Requires the grantee to apply for a new certificate, license, or permit if a new regulatory framework is established or required by the Regulatory Office.
- Grants the grantee the right to match the highest compliant bid if MWSS assets are privatized.
Excavation and Restoration Works (Section 6):
- Allows the grantee to make excavations or lay pipes in public places with prior approval from relevant authorities.
- Requires the grantee to repair or replace any public place disturbed by its works, or face penalties.
Responsibility to the Public (Section 7):
- Requires the grantee to conform to ethical business practices and provide prudent, efficient, and satisfactory services.
- Mandates modification, improvement, or change of facilities as required by the Regulatory Office.
- Requires the grantee to charge reasonable and just fees in accordance with Section 8.
- Requires compliance with environmental and sustainability standards, and consultation with stakeholders.
Setting Tariffs, Rates and Other Charges (Section 8):
- Authorizes the Regulatory Office, with approval from the MWSS Board of Trustees, to establish fair and reasonable tariffs, rates, and charges based on a defined rate-setting methodology.
- Outlines factors to be considered in the rate-setting methodology, including costs, efficiency, willingness to pay, equity, and administrative simplicity.
- Establishes a presumption of validity and reasonableness for tariffs, rates, and charges set by the Regulatory Office.
Protection of Consumer Interests (Section 9):
- Requires the grantee to establish a consumer desk to handle complaints and ensure adequate protection of consumer interests.
- Mandates minimal service interruptions and observance of standards imposed by the Regulatory Office.
Election of Independent Directors (Section 10):
- Requires at least 20% of the grantee's Board of Directors to be independent directors elected in accordance with the Revised Corporation Code.
- Specifies qualifications for independent directors, including management or supervisory experience in relevant fields.
Right of the Government (Section 11):
- Reserves the right for the President to temporarily take over, suspend, or authorize the temporary use and operation of the grantee's waterworks and sewerage system during times of war, public peril, calamity, emergency, or disturbance, with due compensation.
Right of Eminent Domain (Section 12):
- Authorizes the grantee to exercise the power of eminent domain as reasonably necessary for efficient establishment, improvement, upgrading, rehabilitation, maintenance, and operation of services.
- Allows the grantee to install and maintain facilities over public property.
- Permits the grantee to acquire private property necessary for its operations, subject to expropriation proceedings and just compensation.
Term of the Franchise (Section 13):
- Grants the franchise for a term of twenty-five (25) years from the effectivity of the Act, unless sooner cancelled or revoked by Congress or ipso facto revoked for continuous non-operation for two (2) years or default under the Concession Agreement.
Acceptance and Compliance (Section 14):
- Requires the grantee to accept the franchise in writing to Congress within sixty (60) days from the effectivity of the Act.
Warranty in Favor of the National and Local Governments (Section 15):
- Requires the grantee to hold the national, provincial, city, and municipal governments free from claims, liabilities, demands, or actions arising from accidents causing injury or damage during construction or operation.
Commitment to Provide and Promote the Creation of Employment Opportunities (Section 16):
- Mandates the grantee to create employment opportunities and accept on-the-job trainees, with priority given to residents of the place where the grantee operates.
- Requires compliance with applicable labor standards and allowance entitlement.
Liability for Damages (Section 17):
- Holds the grantee liable for any injury to persons and damage to property caused by accidents arising from defective construction or neglect to keep facilities in safe condition.
Sale, Lease, Transfer, Grant of Usufruct, or Assignment of Franchise (Section 18):
- Prohibits the grantee from selling, leasing, transferring, granting usufruct, or assigning the franchise or rights and privileges without prior approval from Congress, subject to exceptions.
- Requires the grantee to inform Congress of any sale, lease, transfer, grant of usufruct, or assignment within sixty (60) days after completion, or face ipso facto revocation.
Dispersal of Ownership (Section 19):
- Requires the grantee to offer at least thirty percent (30%) of its outstanding capital stock to Filipino citizens in a securities exchange in the Philippines within five (5) years from the effectivity of the Act, or face ipso facto revocation.
Information Dissemination (Section 20):
- Mandates an information dissemination campaign regarding the grantee's public services, operations, and general provisions of the franchise, including its term, to all end-users in the Franchise Area.
Reportorial Requirement (Section 21):
- Requires the grantee to submit an annual report on its compliance with the franchise terms and conditions, and its operations, to Congress on or before April 30 of every year.
- Specifies the contents of the annual report, including financial statements, GIS, certification from the Regulatory Office, and update on dispersal of ownership.
- Requires the grantee to submit a completion plan and annual progress reports to the MWSS Regulatory Office and Congress regarding water, sewerage, and sanitation coverage targets.
- Mandates the Regulatory Office to conduct a comprehensive assessment of the grantee's operations and compliance every five (5) years and submit a report to Congress.
Fine (Section 22):
- Imposes a fine of One million pesos (P1,000,000.00) for each working day of non-compliance with the annual report submission requirement, to be remitted to the Bureau of the Treasury.
Tax Provision (Section 23):
- Subjects the grantee to payment of taxes on real estate, buildings, and personal property, as well as income taxes under the National Internal Revenue Code.
- Prohibits the grantee from passing on income taxes to consumers.
Equality Clause (Section 24):
- Grants the grantee any advantage, favor, privilege, exemption, or immunity granted to other water distribution utility franchises, subject to prior review and approval by Congress, except for provisions concerning territorial coverage, term, or type of service.
Applicability of Existing Laws (Section 25):
- Requires the grantee to comply with the Public Service Act and other pertinent laws relating to the operation of its business.
Repealability and Nonexclusivity Clause (Section 26):
- Subjects the franchise to amendment, alteration, or repeal by Congress when public interest so requires, and states that it shall not be interpreted as an exclusive grant of privileges.
Separability Clause (Section 27):
- Provides that if any section or provision of the Act is held invalid, all other provisions not affected shall remain valid.
Repealing Clause (Section 28):
- Repeals, amends, or modifies all laws, decrees, orders, resolutions, instructions, rules and regulations, and other issuances or parts thereof inconsistent with the provisions of the Act.
Effectivity (Section 29):
- States that the Act shall take effect fifteen (15) days after its publication in the Official Gazette or in any newspaper of general circulation.
Nature and Scope of Franchise (Section 1):
- Grants Maynilad Water Services, Inc. (the grantee) a franchise to establish, operate, and maintain a waterworks system, sewerage system, and sanitation services in the West Zone Service Area of Metro Manila and Cavite Province.
- Allows operation under a concession from the Metropolitan Waterworks and Sewerage System (MWSS) or appropriate certificate from the Regulatory Office.
Definition of Terms (Section 2):
- Defines "Concession Agreement", "Franchise Area", and "Regulatory Office".
Rights and Privileges (Section 3):
- Allows the grantee to establish, manage, operate, repair, rehabilitate, expand, and improve the waterworks and sewerage system in the Franchise Area, including billing and collecting fees.
- Grants rights to develop water sources, recover and reuse treated and grey water, construct sewerage systems, purify water, construct works across public places, and disconnect water supply for non-payment or pilferage.
Manner of Operation (Section 4):
- Requires operation and maintenance of systems in accordance with industry standards and compliance with resolutions, issuances, and standards set by the Regulatory Office and other agencies.
- Mandates modification, improvement, and change of systems as required by the Regulatory Office or authorized agencies.
- Promotes water conservation, waste-to-energy technology, and recovery and reuse of wastewater.
Certificate of Public Convenience and Necessity, License or Permit (Section 5):
- Considers the Concession Agreement as the certificate of public convenience and necessity, license, or permit for operation.
- Allows amendment of the Concession Agreement to extend its term upon application by the grantee.
- Requires the grantee to apply for a new certificate, license, or permit if a new regulatory framework is established or required by the Regulatory Office.
- Grants the grantee the right to match the highest compliant bid if MWSS assets are privatized.
Excavation and Restoration Works (Section 6):
- Allows the grantee to make excavations or lay pipes in public places with prior approval from relevant authorities.
- Requires the grantee to repair or replace any public place disturbed by its works, or face penalties.
Responsibility to the Public (Section 7):
- Requires the grantee to conform to ethical business practices and provide prudent, efficient, and satisfactory services.
- Mandates modification, improvement, or change of facilities as required by the Regulatory Office.
- Requires the grantee to charge reasonable and just fees in accordance with Section 8.
- Requires compliance with environmental and sustainability standards, and consultation with stakeholders.
Setting Tariffs, Rates and Other Charges (Section 8):
- Authorizes the Regulatory Office, with approval from the MWSS Board of Trustees, to establish fair and reasonable tariffs, rates, and charges based on a defined rate-setting methodology.
- Outlines factors to be considered in the rate-setting methodology, including costs, efficiency, willingness to pay, equity, and administrative simplicity.
- Establishes a presumption of validity and reasonableness for tariffs, rates, and charges set by the Regulatory Office.
Protection of Consumer Interests (Section 9):
- Requires the grantee to establish a consumer desk to handle complaints and ensure adequate protection of consumer interests.
- Mandates minimal service interruptions and observance of standards imposed by the Regulatory Office.
Election of Independent Directors (Section 10):
- Requires at least 20% of the grantee's Board of Directors to be independent directors elected in accordance with the Revised Corporation Code.
- Specifies qualifications for independent directors, including management or supervisory experience in relevant fields.
Right of the Government (Section 11):
- Reserves the right for the President to temporarily take over, suspend, or authorize the temporary use and operation of the grantee's waterworks and sewerage system during times of war, public peril, calamity, emergency, or disturbance, with due compensation.
Right of Eminent Domain (Section 12):
- Authorizes the grantee to exercise the power of eminent domain as reasonably necessary for efficient establishment, improvement, upgrading, rehabilitation, maintenance, and operation of services.
- Allows the grantee to install and maintain facilities over public property.
- Permits the grantee to acquire private property necessary for its operations, subject to expropriation proceedings and just compensation.
Term of the Franchise (Section 13):
- Grants the franchise for a term of twenty-five (25) years from the effectivity of the Act, unless sooner cancelled or revoked by Congress or ipso facto revoked for continuous non-operation for two (2) years or default under the Concession Agreement.
Acceptance and Compliance (Section 14):
- Requires the grantee to accept the franchise in writing to Congress within sixty (60) days from the effectivity of the Act.
Warranty in Favor of the National and Local Governments (Section 15):
- Requires the grantee to hold the national, provincial, city, and municipal governments free from claims, liabilities, demands, or actions arising from accidents causing injury or damage during construction or operation.
Commitment to Provide and Promote the Creation of Employment Opportunities (Section 16):
- Mandates the grantee to create employment opportunities and accept on-the-job trainees, with priority given to residents of the place where the grantee operates.
- Requires compliance with applicable labor standards and allowance entitlement.
Liability for Damages (Section 17):
- Holds the grantee liable for any injury to persons and damage to property caused by accidents arising from defective construction or neglect to keep facilities in safe condition.
Sale, Lease, Transfer, Grant of Usufruct, or Assignment of Franchise (Section 18):
- Prohibits the grantee from selling, leasing, transferring, granting usufruct, or assigning the franchise or rights and privileges without prior approval from Congress, subject to exceptions.
- Requires the grantee to inform Congress of any sale, lease, transfer, grant of usufruct, or assignment within sixty (60) days after completion, or face ipso facto revocation.
Dispersal of Ownership (Section 19):
- Requires the grantee to offer at least thirty percent (30%) of its outstanding capital stock to Filipino citizens in a securities exchange in the Philippines within five (5) years from the effectivity of the Act, or face ipso facto revocation.
Information Dissemination (Section 20):
- Mandates an information dissemination campaign regarding the grantee's public services, operations, and general provisions of the franchise, including its term, to all end-users in the Franchise Area.
Reportorial Requirement (Section 21):
- Requires the grantee to submit an annual report on its compliance with the franchise terms and conditions, and its operations, to Congress on or before April 30 of every year.
- Specifies the contents of the annual report, including financial statements, GIS, certification from the Regulatory Office, and update on dispersal of ownership.
- Requires the grantee to submit a completion plan and annual progress reports to the MWSS Regulatory Office and Congress regarding water, sewerage, and sanitation coverage targets.
- Mandates the Regulatory Office to conduct a comprehensive assessment of the grantee's operations and compliance every five (5) years and submit a report to Congress.
Fine (Section 22):
- Imposes a fine of One million pesos (P1,000,000.00) for each working day of non-compliance with the annual report submission requirement, to be remitted to the Bureau of the Treasury.
Tax Provision (Section 23):
- Subjects the grantee to payment of taxes on real estate, buildings, and personal property, as well as income taxes under the National Internal Revenue Code.
- Prohibits the grantee from passing on income taxes to consumers.
Equality Clause (Section 24):
- Grants the grantee any advantage, favor, privilege, exemption, or immunity granted to other water distribution utility franchises, subject to prior review and approval by Congress, except for provisions concerning territorial coverage, term, or type of service.
Applicability of Existing Laws (Section 25):
- Requires the grantee to comply with the Public Service Act and other pertinent laws relating to the operation of its business.
Repealability and Nonexclusivity Clause (Section 26):
- Subjects the franchise to amendment, alteration, or repeal by Congress when public interest so requires, and states that it shall not be interpreted as an exclusive grant of privileges.
Separability Clause (Section 27):
- Provides that if any section or provision of the Act is held invalid, all other provisions not affected shall remain valid.
Repealing Clause (Section 28):
- Repeals, amends, or modifies all laws, decrees, orders, resolutions, instructions, rules and regulations, and other issuances or parts thereof inconsistent with the provisions of the Act.
Effectivity (Section 29):
- States that the Act shall take effect fifteen (15) days after its publication in the Official Gazette or in any newspaper of general circulation.