SIXTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES· 
) 
First Regular Session 
) 
SENATE 
, 
q 0 
S.B. No. _'_. n 
-irlmtl? 
{OHI;,t tlf t~11 ~\~.;rrbr~ 
'13 
JUL -1 
P12 :49 
Introduced by Senator LOREN LEGARDA 
.•....... 
EXPLANATORY NOTE 
Despite the Philippines being an archipelagic country within the tropics, a study by 
the Asian Development Bank finds that 16 million Filipinos or around 20% of the 
country's population have no access to potable water. And yet, a separate study 
done by the Department of Environment and Natural Resources 
River Basin 
Control Office (DENR-RBCO) finds that 112 billion cubic meters of the country's 
water resources are wasted every year. 
At present, there are more than 30 government agencies and departments that work 
on water and water-related program though water resource management and 
development are directed by four main institutions-the National Economic 
Development Authority (NEDA) which serves as the country's premier social and 
economic development planning and coordinating body; the National Water 
Resources Board (NWRB) which is the national apex body for water resource 
management and development; the Department of Environment and Natural 
Resources (DENR) which is responsible for the conservation, management, 
development, and proper use of the country's environment and natural resource; 
and the River Basin Control Office (RBCO) under the DENR which is tasked to 
manage and develop the country's priority basins. 
By institutionalizing sustainable water resource management, this bill seeks to do 
the following: 
(1) to institute reforms in the water industry; 
(2) to improve the rationalization, allocation and distribution of service areas; 
(3) to provide incentives for infrastructure development, or for new, clean, 
efficient and ecological technologies; 
(4) to re-organize the national water resources board; and 
(5) to create local water supply and sanitation companies. 
In view of the foregoing, approvi\1 of the said measure is earnestly sought. 
=====idi~E~RDA-~::'""=-
Senator 


SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
SENATE 
S~B. No. ~13 
Introduced by Senator LOREN LEGARlJA 
~t'lmh! 
(A)ff1;r u,f Hit ,;i-~r1't'll1r~ 
"13 
JtJL -1 
P12:4 9 
AN ACT INSTITUTING REFORMS IN THE WATER INDUSTRY, PROVIDING FOR 
THE RATIONALIZATION, ALLOCATION AND DISTRIBUTION OF SERVICE 
AREAS, PROVISION OF INCENTIVES FOR INFRASTRUCTURE DEVELOPMENT OR 
FOR NEW, CLEAN, EFFICIENT AND ECOLOGICAL TECHNOLOGIES, 
REORGANIZING THE NATIONAL WATER RESOURCES BOARD AND CREATION . 
OF LOCAL WATER SUPPLY AND SANITATION COMPANIES, AMENDING FOR 
THE PURPOSE PD 1067 AND OTHER LAWS AND FOR OTHER RELATED PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress 
assembled: 
CHAPTER I 
TITLE AND DECLARATION OF POLICY 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
1 
Section 1. Short Title. - This Act shall be known as the "Water Sector Reform Act of 
2 
2013." 
3 
Sec. 2. Declaration of Policy. - It is hereby declared the policy of the Slate: 
I 
I 
4 
(a) that all waters in the Philippines shall belong to the State, pursuant to the 1987 
5 
Philippine Constitution; 
6 
(b) that the State, as owner of all waters in the Philippines, may control and regulate 
7 
the use, exploitation, development appropriation, protection and conservation of 
8 
water in order to protect and promote life, public health and welfare, and the 
9 
environment, including imposing such conditions and restrictions, as may be 
10 
warranted, on existing holders of licenses; 
11 
(c) to recognize that water is a human right, and it is the obligation of the State to 
12 
ensure that there is "sufficient, safe, accessible and affordable water, without 
13 
discrimination;" 
14 
(d) to ensure that all Filipinos shall have access to clean, safe, affordable and 
15 
adequate supply of water; 
16 
(e) to ensure reasonable, and yet cost-reflective, prices of water which protect both 
17 
the interests of the consumers and the service providers; 
1 


(f) to monitor and regulate the quality and supply of water in the Service Areas to 
2 
protect life, public health and the environment; 
3 
(g) to integrate the supply and distribution of water and the provision of sanitation 
4 
services in provinces or regions to ensure adequacy and efficiency in the supply of 
5 
water; 
6 
(h) to develop and maintain a centralized, comprehensive and unified data and 
7 
information base on water resources, and key industry data to ensure the efficient 
8 
evaluation, analysis, dissemination and enforcement o[ applicable standards on 
9 
water resource development, utilization, demand and pricing; 
10 
(i) to provide incentives to and a predictable regulatory environment for investors in 
I I 
order to promote and develop the water industry and allow investors a reasonable 
12 
return on their investments; 
13 
G) to rationalize the operation of water utilities and the grant of Public-Private 
14 
Partnership (PPP) arrangements [or the provision of water and/or sanitation 
15 
services; 
16 
(k) to foster competition among existing and future Water Service Providers to 
17 
maintain price stability conducive to a balanced and sustainable growth of the 
18 
industry; 
19 
(1) to organize the Water and Sanitation Regulatory Authority in order to achieve 
20 
the foregoing State policies; and 
21 
(m) to monitor and regulate the sewerage service industry in relation to the proper 
22 
collection, treatment, transport and disposal of septage, sewage and wastewater. 
23 
Section 3. Scope. - This Act shall provide a framework for the restructuring and 
24 
reformation of the water industry, from sourcing, storage, treatment, distribution, 
25 
sewerage treatment and reuse, including the provision of incentives to promote 
26 
investment in new infrastructure for modernization of the indush'y and the 
27 
rationalization of the powers, duties, responsibilities and obligations of relevant 
28 
government agencies and Water Service Providers. 
29 
Section 4. Definition of Terms. - For purposes of this Act, the term: 
30 
(a) "Authority" - refers to the Water and Sanitation Regulatory Authority; 
3 I 
(b) "Flood Control" - refers to the methods, acts, and protocols to be observed in 
32 
order to prevent and reduce the detrimental and catastrophic effects of flood waters; 
33 
(c) "Flood Risk Management" or "FRM" 
~ refers to such acts of defining and 
34 
determining the appropriate methods, acts and protocols geared in preventing and 
35 
reducing the risk of incurring loss of both life and property due to flood waters. It 
36 
also includes, but is not limited to, the implementation of precautionary measures, 
37 
as well as the installation of infrastructures and the determination of post-flood 
38 
clean-up activities in order to arrest the residual effects of flood waters; 
39 
(d) Integrated Water Resource Management" or "IWRM" - refers to a systematic, 
~o 
collaborative and multi-stakeholder process, which promotes the coordinated 
41 
development and management of water, land and related resources within hydro 
42 
geological boundaries, in order to maximize the resultant economic and social 
43 
welfare in an equitable m31mer and without compromising the sustainability of 
44 
vital ecosystems. 
2 


(e) "License" - refers to the authority granted to a person, entity or consortium to 
2 
provide water and/ or sanitation services to a particular Service Area; This term 
3 
shall include management contracts, PPP Agreements and similar arrangements 
4 
through which a person, entity or consortium is granted the right to provide water 
5 
and/ or sanitation services to the Service Area. 
6 
(f) "Licensee" - refers to a person, entity or consortium which has been granted a 
7 
license to operate and provide water and/ or sanitation services to a particular 
.8 
Service Area under the provisions of this Act; These terms shall cover persons, 
9 
entities or consortium who were granted the right to operate and provide water 
10 
and/or sanitation services through a management contract, PPP Agreement or 
11 
similar arrangement. 
12 
(g) "Local Government Unit" - refers to the territorial and political subdivisions Of 
\3 
the Philippines as defined under the 1987 Constitution of the Philippines, which 
14 
includes provinces, cities, municipalities and barangays; 
15 
(h) "Local Water District" - refers to districts created pursuant Title II of Presidential 
16 
Decree No. 198, as amended; 
17 
(i) "Local Water Supply and Sanitation Company" or "LWSSC" - refers to a 
18 
government-owned and controlled corporation, which shall have supervision, 
19 
control and jurisdiction over all waterworks and sewerage systems in a designated 
20 
PWRZ which shall be created pursuant to the provisions of this Act; 
21 
0) "LWUA" - refers to the Local Water Utilities Administration created pursuant to 
22 
Presidential Decree No. 198, as amended; 
23 
(k) "NWRB" - refers to the National Water Resources Board created pursuant to 
24 
Presidential Decree No. 424, as amended; 
25 
(1) "NEDA" - refers to the National Economic and Development Authority; 
26 
(m) "Private Sewerage System" - refers to a sewerage system owned, operated and 
27 
controlled by private entities; 
28 
(n) "Provincial Water Resource Zone" or "PWRZ" - refers to the territories and 
29 
boundaries of which shall be equivalent to the areas comprising each existing 
30 
province created under Republic Act No. 7160 and other laws, with Metro Manila, 
31 
the autonomous regions, special economic zones and other special areas considered 
32 
as separate PWRZs; 
33 
(0) "Public-Private Partnership Agreement" or "PPP Agreement" - refers to 
34 
management contracts, concession agreements or other similar arrangements 
35 
between the government and a private person or entity for the provision of water 
36 
and/ or sanitation services in a particular Service Area pursuant to the provisions of 
37 
this Act; 
38 
(p) "Public Sewerage System" - refers to a sewerage system owned, operated and 
39 
controlled by the National or Local Government; 
40 
(q) "Relevant Information" - refers to information or data concerning the Water 
41 
Industry and Water Service Providers essential to its effective monitoring and 
42 
regulation, and the introduction and maintenance of effective competition, such a~ 
43 
but not limited to pricing, performance, quality of service, area of coverage, and 
44 
water quality; 
3 


(r) "River Basin Cluster" - refers to a grouping of PWRZs and/or portions thereof 
2 
primarily based upon the proximity of PWRZs and/ or portions thereof to the major 
3 
river basins, subject rules to be promulgated by the Authority; 
4 
(s) "River Basin Organization" or "RBO" - refers to organizations, which plan, 
s 
coordinate and monitor activities within an RBC; 
6 
(t) "Service Area" - refers to a province, region or geographic area identified and 
7 
designated to a Licensee to provide and operate water and/ or sanitation services; 
8 
(u) "Septage" - refers to the sludge produced on individual on-site wastewater 
9 
disposal systems, principally septic tanks and cesspool; 
10 
(v) "Sewage" - refers to water-borne human or animal wastes, excluding oil or oil 
11 
waste, which are removed from residences, buildings, institutions, industrial and 
.l2 
commercial establishments together with such groundwater, surface water and 
13 
storm water, as may be present, including such waste from vessels, offshore 
14 
structures, other receptacles intended to receive or retain waste or other places or the 
15 
combination thereof; 
16 
(w) "Sewers" - refers to pipes or such other civil works or structures which are built 
17 
and constructed to treat, carry, transport and dispose sewage; 
18 
(x) "Sewerage System" - refers, but is not limited to any system or network of 
19 
pipeline, ditches, channels or conduits including pumping stations, lift stations and 
20 
force mains, service connections including other constructions, devices, and 
21 
appliances appurtenant thereto, which includes the collection, transport, pumping 
22 
and treatment of sewage to a point of disposal; 
23 
(y) "Sewera~ge Service Provider" - refers to a person, entity or consortium engaged in 
24 
the business of collecting, treating, transporting and disposing of wastewater, 
25 
sewage and septage, including maintaining and operating sewerage systems, arid 
26 
who are required to register with and secure a license from tbe Authority before 
27 
they may conduct their business or operations in a particular Service Area; 
28 
(z) "Tariff' -- refers to an amount which may be charged by Licensees or Water 
29 
Service Providers for the supply of water and/ or sanitation services within their 
30 
Service Area; 
31 
(aa) "Wastewater" - refers to waste in liquid stale containing pollutants; 
32 
(bb) "Water Service Provider" or "WSP" - refers to a person, entity or consortium 
33 
engaged in the business of allocating, collecting, treating, supplying and distributing 
34 
water to the public. The term includes Local Water Districts, Water Utilities owned 
35 
and/ or operated by Local Government Units, Rural Waterworks and Sanitation 
36 
Associates, Barangay Waterworks and Sanitation Associations, Local Water 
37 
Cooperatives and Local Water Supply and Sanitation Companies (LWSSC); 
38 
(cc) "Water Supply System" -refers to the whole of a system incorporating public 
39 
mains, pipes, chambers, treatment plants, pumping stations, service or balancing 
40 
reservoirs or any combination thereof and all other structures, installations, 
41 
buildings, equipment and appurtenances used, and the lands where the same are 
42 
located for the storage, abstraction, collection, conveyance, treatment, distribution 
43 
and supply of water; and 
44 
(dd) "Water Supply Services" - means the treatment of water abstracted from 
45 
watercourses and the distribution and supply of treated water consumers and 
46 
includes the operation and maintenance of a water supply system. 
4 


CHAPTER II 
2 
REFORM IN THE WATER SERVICES INDUSTRY 
3 
Section 5. Organization of the Water Industry. - The organization of the water industry 
4 
shall be accomplished in order to introduce higher efficiency, enhanced private 
5 
sector participation, consumer protection, competitive pricing, greater innovation 
6 
and improving access to safe water, incorporating for these purposes, Integrated 
7 
Water Resources Management thrust in every activity. For this purpose, any law tb 
8 
the contrary notwithstanding, regulatory power over all WSPs shall be exclusively 
9 
lodged in the Authority. The NWRB, the LWUA and other similar agencies and 
10 
offices, shall cooperate with the Authority to ensure the immediate and smooth 
11 
consolidation of regulatory functions; Provided that, the LWUA may, with respect to 
12 
Local Water Districts with remaining financial obligations to it, institute temporary 
13 
monitoring systems to ensure the compliance with such outstanding obligations 
14 
only until they are satisfied; Provided further, that the enforcement of such systems 
15 
shall be with the supervision of the Authority. 
16 
Section 6. Provincial Water Resource Zones and River Basin Clusters. - There are hereby 
17 
created Provincial Water Resource Zones (PWRZs), the territories and boundaries of 
18 
which shall be equivalent to the areas comprising each existing province created 
19 
under Republic Act No. 7160 and other laws, with Metro Manila, the autonomous 
20 
regions, special economic zones and other special areas considered as separate 
21 
PWRZs; Provided that the Authority may redefine or modify the geographic 
22 
boundaries of a PWRZ based 011 the existence of special geographic conditions, the 
23 
location of water sources or other circumstances which warrant such redefinition of 
24 
boundaries. 
25 
Consistent with the principles of Integrated Water Resources Management, PWRZs 
26 
and/ or portions thereof shall be grouped into River Basin Clusters (RBCs) for 
27 
purposes of water resource management applying the river basin/watershed 
28 
approach to ensure rational, efficient and ecologically sustainable allocation of water 
29 
within the RBC. The grouping of PWRZs and/ or portions thereof into RBCs shall 
30 
primarily be based upon the proximity of PWRZs and/ or portions thereof to the 
31 
major river basins, subject rules to be promulgated by the Authority. 
32 
Subject to the provisions of Presidential Decree No. 1067, otherwise known as the 
33 
Water Code of the Philippines, the Authority shall exercise power and authority 
34 
over water resources, and if applicable, existing water utilities and providers within 
35 
the PWRZ and RBCs. In the case of Metro Manila and special economic zones, the 
36 
Metropolitan Waterworks and Sewerage System CMWSS") and the appropriate 
37 
special economic zone authority, respectively, shall continue to exercise jurisdiction 
38 
and authority. 
39 
Section 7. Amalgamation of Existing WSPs. - The creation, selection or assignment of 
40 
WSPs, which shall service a PWRZ shall be subject to the provisions of this Act. The 
41 
number of WSPs serVicing each PWRZ shall be determined and limited by tl;le 
42 
Authority created hereunder for the purpose of achieving economies of scale, 
43 
effective competition and efficiency of service: Provided that, in no case shall the 
44 
number of WSPs be reduced to an extent where it will result in anti-competitive 
45 
practices. 
46 
For this purpose, within two (2) years from the passage of this Act, the LWUA shall 
47 
cause and implement the amalgamation of WSPs within each PWRZ into one or 
48 
more LWSSCs, in accordance with the rules and regulations that the Authority shall 
49 
promulgate. The Authority shall exercise overall supervision over the amalgamation 
5 


process and shall develop the necessary rules and guidelines during the transition 
2 
period to ensure that there shall be no diminution of service levels and quality for 
3 
consumers. 
4 
The Authority shall provide technical support and h'aining to WSPs and their 
5 
personnel in order to aid them during the amalgamation process. Where applicable, 
6 
personnel of existing WSPs that will be amalgamated shall, subject to the provisions 
7 
of this Act, be absorbed by the resulting LWSSC to the extent that it is 
8 
administratively viable; Provided, that the rights accorded to such personnel 
9 
pursuant to civil service laws shall not be impaired. 
10 
Subject to the application of Section 24 of this Act on amalgamation of water assets, 
11 
an existing and operating WSP shall, upon approval by the LWUA and the 
12 
Authority, have the option to provide, operate and maintain the Water Supply 
13 
System and/ or Sewerage System in its current area of operation within a 
14 
corresponding PWRZ, upon the showing that the WSP meets financial and 
15 
operational benchmarks, including capital 16 investments, price levels, service 
16 
quality, customer satisfaction, profitability, productivity gains, expansion of basic 
17 
services, subsidies, functioning of new and existing markets, and other performance 
18 
metrics set by the Authority. In such cases, the License covering the PWRZ, or a 
19 
portion thereof, as defined and contemplated in this Act may be granted to the WSP 
20 
itself; Provided that in addition to the mandatory clauses and provisions for Licenses 
21 
granted under this Act, said License shall expressly state that the failure of the WSP 
:22 
to comply with the Authority's standards for two (2) years shall be a ground to 
23 
automatically cancel the License without need of judicial recourse. The WSP shall blo 
24 
monitored and supervised by the Authority in all aspects of its operation necessary 
25 
to ensure compliance with the provisions of this Act and the rules to be issued by 
26 
the Authority thereunder. 
27 
28 
An existing and operating WSP may, upon approval of the LWUA and the 
29 
Authority and upon compliance with financial and operational benchmarks to be set 
30 
by the Authority, act as the lead entity in the amalgamation process and constitute 
31 
itself into the LWSSC that will exercise jurisdiction over the PWRZ or a portion 
32 
thereof. Said resulting LWSSC shall be subject to the authority and jurisdiction of the 
33 
Authority herein created. 
34 
35 
All employees and personnel, if qualified, of existing WSPs in a particular PWRZ 
36 
shall be given preference in the hiring of personnel by the LWSSC or subsequent 
37 
Licensee in the said PWRZ, All displaced or separated personnel from the service as 
38 
a result of the aforesaid amalgamation of WSPs shall be entitled to separation pay 
39 
and other benefits in accordance with existing laws, rules or regulations, 
40 
Section 8. Creation of a Unified Database for Water Industry. - In furtherance of the 
41 
policies set forth in this Act, all information regarding the water industry, WSPs, 
42 
including the rights and contracts involved in the utilization of water resources shall 
43 
be lodged with the Authority. It shall be the Authority's duty to receive and 
44 
consolidate basic data, to act as a central registry or central repository of 
45 
informatioh, and to provide access to reliable, standardized information on the 
46 
water industry and WSPs. 
47 
6 


,I 
For this purpose, the Authority shall assume the power, authority and responsibility 
2 
of creating and maintaining a unified, publicly accessible, computerized and 
3 
centralized database of all relevant information as defined in this Act, including blit 
4 
not limited to, the use of benchmarking techniques to process information related to 
,5 
pricing, performance, quality of service, and coverage targets of all WSPs within and 
6 
across PWRZs. 
7 
8 
WSPs, their subsidiaries and affiliates, and other entities that provide water services 
9 
are required to submit Relevant Information on a regular basis to the Authority. 
10 
II 
The Authority may request and collect data from other offices and agencies in the 
12 
government in order to ensure the timeliness, accuracy and relevance of the 
13 
database. It shall be the duty of the government official receiving such request from 
14 
the Authority to facilitate the transfer of requested information at the soonest 
15 
possible time, subject only to the restrictions on confidentiality, as implemented by 
16 
other laws or valid agreements. 
17 
18 
The Authority shall, on a quarterly basis, issue a consolidated report containing the 
19 
performance, pricing and quality data gathered from WSPs. Each report shall 
20 
contain graphical representations of the above data rel1ecting the relative 
21 
performance of WSPs within a PWRZ and across PWRZs. The public shall have, as a 
22 
matter of right, ready and immediate access to Relevant Information possessed and 
23 
collected by the Authority. In order to encourage effective competition and 
24 
consumer participation, the Authority shall ensure that online access to data 
25 
pertinent to the monitoring of the water industry is free and open. For non-web 
26 
based requests, the Authority is empowered to charge reasonable fees to recoup 
27 
costs incurred in producing copies for the requesting party. 
28 
29 
Any provision of law notwithstanding, the functions of the LWUA related to data 
30 
and information gathering, evaluation, inspection, and analysis of the water 
31 
industry and WSPs are hereby transferred to the Authority. The LWUA shall, within 
32 
six (6) months from the passage of this Act, transfer to the Authority all accumulated 
33 
data and information, including methodologies and best practices in generating the 
34 
same, relating to the water industry and WSPs. Both entities shall coordinate iJ;l 
35 
order to ensure a smooth transmission of functions and the integrity of accumulated 
36 
information. 
37 
38 
A continuing nationwide educational campaign shall be developed and undertaken 
39 
by the Authority to promote the benefits of a unified information system to the 
40 
economy; to create awareness on the rights of consumers; and to brief consumers of 
41 
other related information. 
42 
43 
Section 9. Declaration of the Water Industry as a Priority Investment Sector. - The Water 
44 
Industry is hereby declared a priority investment sector that will regularly form part 
45 
of the country's Investment Priority Plan, unless declared otherwise by law. 
7 


2 
Section 10. Incentives for Investment in the Water Industry. - LWSSCs, WSPs, Licensees, 
3 
developers and operators of water industry facilities formed and organized under 
4 
this Act shall, upon certification by the Authority, in consultation with the Board of 
5 
Investments, be entitled to the following incentives: 
6 
(a) Income Tax Holiday (ITI-I) - For the first ten years (10) of its commercial 
7 
operations, the duly registered developer or operator shall be exempt from 
8 
income taxes levied by the national government. 
9 
Additional investments in the project shall be entitled to additional income 
10 
tax exemption on the income attributable to the investment. 
11 
(b) Duty-free Importation of Machinery, Equipment and Materials - Within the 
12 
first ten (10) years upon the issuance of a certification by the Authority, the 
13 
importation of machinery and equipment, and materials and parts thereof, 
14 
including control and communication equipment, shall not be subject to tariff 
15 
duties; Provided, however, that the said machinery, equipment, materials and 
16 
parts are directly and actually needed and used exclusively in the facilities 
17 
for processing, distribution and delivery of water to the point of use and 
18 
covered by shipping documents in the name of the duly registered operator 
19 
to whom the shipment will be directly delivered by customs authorities: 
20 
Provided, further, that endorsement of the Authority is obtained before the 
21 
importation of such machinery, equipment, materials and parts are made. 
22 
Endorsement of the Authority must .be secured before any sale, transfer or 
.23 
disposition of the imported capital equipment, machinery or spare parts is 
24 
made. 
25 
When the aforementioned sale, transfer or disposition is made under any of 
f6 
the conditions provided for in the foregoing paragraphs after ten (10) years 
27 
from the date of importation, the sale, transfer or disposition shall no longer 
28 
be subject to the payment of taxes and duties; 
29 
(c) Special Realty Tax Rates on Equipment and Machinery. - Any law to the 
30 
contrary notwithstanding, realty and other taxes on civil works, equipment, 
31 
machinery, and other improvements of a registered WSP actually and 
32 
exclusively used for WSP facilities shall not exceed one and a half percent 
33 
(1.5%) of their original cost, less accumulated normal depreciation or net book 
34 
value. 
35 
(d) Net Operating Loss Carry-Over (NOLCO). - The NOLCO of a WSP during 
36 
the first three (3) years from the start of commercial operation which had not 
37 
been previously offset as deduction from gross income shall be carried over 
38 
as a deduction from gross income for the next seven (7) consecutive taxable 
39 
years immediately following the year of such loss: Provided, however, that 
40 
operating loss resulting from the availment of incentives provided for in this 
41 
Act shall not be entitled to NOLCO; 
42 
(e) Accelerated Depreciation. - If, and only if, a WSP fails to receive an III-I before 
.43 
full operation, it may apply for Accelerated Depreciation in its tax books and 
44 
be taxed based on such: Provided, that if it applies for Accelerated 
45 
Depreciation, the project or its expansions shall no longer be eligible for an 
.46 
!TH. Accelerated depreciation of plant, machinery, and equipment that are 
47 
reasonably needed and actually used for the exploration, development and 
48 
utilization of water resources may be depreciated using a rate not exceeding 
8 


twice the rate which would have been used had the annual allowance been 
2 
computed in accordance with the rules and regulations prescribed by the 
3 
Secretary of the Department of Finance and the provisions of the National 
4 
Internal Revenue Code (NIRC) of 1997, as amended. Any of the following 
5 
methods of accelerated depreciation may be adopted: 
6 
(i) Declining balance method; and 
7 
(ii) Sum-of-the years digit method. 
8 
(f) Tax Credit on Domestic Capital Equipment and Services. - A tax credit 
9 
equivalent to one hundred percent (100%) 0 f the value 0 f the value-added 
10 
tax and custom duties that would have been paid on the machinery, 
11 
equipment, materials and parts, had these items been imported, shall be 
12 
given to a WSP who purchases machinery, equipment, materials, and parts 
13 
from a domestic manufacturer for purposes set forth in this Act: Provided, that 
14 
prior approval by the Authority was obtained by the WSP: Provided, further, 
15 
that the acquisition of such machinery, equipment, materials, and parts shall 
16 
be made within the validity of the WSP's contract, license or other agreement 
17 
to service as a PWRZ. 
18 
The availment of incentives under this Act shall be regulated by the 
19 
Authority. Should an existing WSP be entitled to incentives under another 
20 
law, the WSP shall be required to state whether it prefers to adopt the 
21 
incentives laid out in this Act in lieu of other incentives under other laws. 
22 
Such statement shall be in a public document addressed to the Authority for 
23 
its approval. 
24 
CHAPTER III 
25 
RIVER BASIN CLUSTERS AND RIVER BASIN ORGANIZATIONS 
26 
Section 11. IWRM Principles in River Basin Clusters. - Principles of Integrated Water 
27 
Resources Management (IWRM) shall be adopted as the strategy for the 
28 
management and administration of the River Basin Clusters (RBCs) defined 
29 
pursuant to Section 6 of this Act. The appropriation and utilization of water in RBCs 
30 
for domestic, municipal, irrigation, power generation, fisheries, livestock raisin$, 
31 
recreational and other purposes shall be in accordance with rWRM principles 
32 
including the following: 
33 
(a) Fresh water, a resource which is limited and vulnerable, is vital in the sustenance 
34 
of life, progress and development; 
35 
(b) Water, capable of being appropriated to various uses, possesses economic value 
36 
and thus should be considered an economic good; and 
37 
(c) A collaborative multi-stakeholder approach shall be utilized in the development 
38 
and management of water resources. 
39 
The Authority, in collaboration with the DENR and other relevant agencies shall 
40 
promulgate rules and regulations to implement the foregOing policies. 
41 
Section 12. Creation and Composition of River Basin Organizations - The Authority shall 
42 
create River Basin Organizations (RBOs) for each River Basin Cluster (RBC) which 
43 
shall be composed of: 
44 
(a) One (1) representative [or each LWSSCs within the RBC; 
45 
(b) One (1) representative for each provincial or city government within the RBC; 
9 


(c) Two (2) representatives from the private sector appointed by the Authority. The 
2 
private sector representatives must have recognized competence in the relevant 
3 
Gelds in the water and sanitation industry and shall be knowledgeable principles of 
4 
Integrated Water Resource Management; and 
5 
(d) Other multi-sectoral members and key stakeholders in the water industry to be 
6 
determined by the Authority. 
7 
Section 13. Functions of River Basin Organizations. - The River Basin Organizations 
8 
shall have the following functions: 
9 
(a) To plan, coordinate and monitor all activities within the river basin located in the 
10 
RBC; 
11 
(b) To engage in Flood Risk Management (FRM) with respect to the RBC; 
12 
(c) To create a special task force in extreme cases of disasters brought about by flood 
13 
waters in coordination with the respective LGUs where the RBCs are located; 
14 
(d) To formulate Integrated Water Resources Management (IWRM) policies and 
15 
plans and recommend the same [or the approval of the Authority; 
16 
(e) To set-up efficient assessment procedures of available water in different sectors 
17 
(i.e. commercial, municipal, agricultural) in order to achieve supply optimization, 
18 
including, but not limited to water balances, wastewater reuse, and environment 
19 
impacts of distribution and use options; 
20 
(f) To oversee and coordinate the implementation, promotion, revision and 
21 
enhancement of the IWRM Plan; and 
22 
(g) To secure funding sources to support the identified projects and programs for 
23 
the river basin within the RBC. 
24 
25 
Section 14. Integration of Planning, Management, Rehabilitation and Development of River 
26 
Basins. - Adopting the river basin or watershed approach to water resource 
27 
management, the Authority shall integrate and rationalize the planning, 
28 
management, rehabilitation and development of river basins, including but not 
29 
limited to river basin infrastructure development, flood control, environmental 
30 
protection and integrated water resources management. The Authority shall 
31 
coordinate initiatives, programs and projects of local government units, non-
32 
government organizations and other entities concerning the development and 
33 
rehabilitation of river and catchment basins. In order to create an effective policy 
34 
environment for the management of river basins, the Authority shall harmonize, 
35 
consolidate and enhance all relevant river basin policies, rules and 15 regulations. 
36 
37 
To ensure that an equitable access to water within an RBC, the Authority shall 
38 
set guidelines in the effective and efficient water allocation and distribution. The 
39 
Authority shall identify the character of the water available in the various river and 
40 
catchment basins and shall ensure the effective water distribution in accordance 
41 
with the needs of the different sectors found in the RBC. 
42 
43 
In order to prevent and reduce the dire effects of flood waters, the Authority shall 
44 
make disaster awareness and preparedness a priority, and will develop measures to 
10 


ensure that the methods used in flood control will effectively minimize the damage 
2 
brought about by flood waters. The Authority shall also focus on "post-flood" 
3 
activities such as clean-up, restoration and renovation 0 f infrastructures that were 
4 
affected by the flood waters. 
5 
Section 15. River Basin Database Management. - The Unified Database for the Water 
6 
Industry created pursuant to Section 8 of this Act shall also serve as the central river 
7 
basin database to which all River Basin Organizations, government agencies and 
8 
other organizations with relevant mandates and developmental initiatives within 
9 
the river basins are required to regularly submit their updated databases for 
J 0 
integration and consolidation. 
11 
Section 16. River Basin Conservation, Protection and Rehabilitation. - The Authority, in 
12 
coordination with the River Basin Organizations, the DENR and other appropriate 
13 
agencies involved in river basin management, shall undertake river basin 
14 
conservation, protection and rehabilitation and shall adopt appropriate soil and 
15 
water conservation, and protection measures to safeguard the hydrological integrity 
16 
of river basins and help sustain the protection of water for various purposes and 
17 
uses. 
18 
CHAPTER IV 
19 
CREATION OF LOCAL WATER SUPPLY AND SANITATION COMPANIES 
20 
Section 17. Creation of Local Water Supply and Sanitation Companies. - There are hereby 
21 
created government-owned and -controlled corporations to be known as the LWSSC 
22 
which shall have supervision, control and jurisdiction over all water and sanitation 
23 
systems within the PWRZs created pursuant to this Act and take ownership of all 
24 
assets of WSPs within such PWRZs. 
25 
Water and sanitation systems in Metro Manila and in all special and economic zones 
26 
shall remain under the supervision, control and jurisdiction of the MWSS and the 
27 
appropriate special/ economic zone authority, respectively. 
28 
Section 18. Purpose and Objective. Domicile and Term of Existence. - The principal 
29 
purpose of the LWSSCs is to manage, operate and maintain the water and sanitation 
30 
systems with a PWRZ and, subject to rules and guidelines to be promulgated by the 
31 
Authority, to enter into PPP Agreements with eligible persons or entities. 
32 
Each LWSSC shall have its principal office and place of business within its 
33 
jurisdictional area in its designated PWRZ. 
34 
LWSSCs shall exist for a period of fifty (50) years from its organization and 
35 
establishment, unless otherwise provided by law. 
36 
Section 19. Powers and Functions of the Local Water Supply and Sanitation Companies. -
37 
The LWSSCs shall have the following powers and functions: 
38 
(a) To construct, maintain, and operate dams, reservoirs, conduits, aqueducts, 
39 
tunnels, purification plants, water mains, pipes, fire hydrants, hydraulic structures, 
40 
pumping stations, machineries and other waterworks for the purpose of supplying 
41 
water to the inhabitants of its territory, for domestic and other purposes; and to 
42 
purify, research and develop, regulate and control the use, as well as prevent the 
43 
wastage of water; 
44 
(b) To constrljct, maintain, and operate such sanitary sewerages, as may be 
45 
necessary, for the proper sanitation and other uses of the areas comprising the 
11 


, 1 
PWRZ and to make sure that such sanitary sewerages are capable of accommodating 
2 
the regular to heavy £low of rain water; 
'3 
(c) To acquire, purchase, hold, transfer, sell, lease, rent, mortgage, encumber, and 
4 
otherwise dispose of real and personal property, consistent with the purpose for 
5 
which the LWSSC is created and reasonably required for the transaction of the 
6 
lawful business of the same; 
7 
(d) To construct works across, over, through and/ or alongside, any stream, wate~-
8 
course, canal, ditch, £lume, street, avenue, highway or railway, whether public or 
9 
private, as the location of said works may require; Provided, that, such works be 
10 
constructed in such manner as to afford security to life and property and so as not to 
11 
obstruct traffic; Provided, further, that the stream, water-course, canal, ditch, £lume, 
12 
street, avenue, highway or railway so crossed or intersected be restored without 
13 
unnecessary delay to its former state. Any person or entity whose right may be 
14 
prejudiced by said works shall not obstruct the same; however, he shall be given 
15 
reasonable notice before the construction and shall be paid just compensation. The 
16 
LWSSC shall likewise have the right to locate, construct and maintain such works 
17 
on, over and/ or through any street, avenue, or highway and land and/or real rights 
18 
of the Republic of the Philippines or any of its branches, agencies and political 
19 
subdivisions upon due notice to the office, or entity concerned, subject solely to the 
20 
condition that the street, avenue, or highway in which said works are constructed be 
21 
restored without unnecessary delay to its former state unless otherwise agreed upon 
22 
by the LWSSC and the office or entity concerned; 
23 
(e) To exercise the right of eminent domain for the purpose for which the LWSSC is 
24 
created; 
25 
(f) To sue and be sued; 
26 
(g) To adopt and establish the policies and goals as may be necessary or proper for 
27 
the orderly conduct of its business or operations; 
28 
(h) To borrow money and incur such liabilities, including the issuance of bonds, 
29 
securities or other evidences of indebtedness utilizing its assets as collateral and/ or 
30 
through the guarantees of the National Government; Provided, however, that all such 
31 
debts or borrowings shall have been paid off before the end of its corporate life; 
32 
(i) To approve, regulate, and supervise the establishment, operation and 
33 
maintenance of waterworks within its jurisdiction operated for commercial, 
34 
industrial and governmental purposes and to fix just and equitable rates or fees that 
35 
may be charged to customers thereof; 
, 
36 
0) To establish, operate and maintain the waterworks and sewerage system within 
37 
its jurisdicti on; 
38 
(k) To approve and regulate the establishment and construction of waterworks and 
39 
sewerage systems in privately owned subdivisions within its jurisdiction; 
40 
(1) To have exclusive and sole right to test, mount, dismount and remount water 
41 
meters within its jurisdiction; 
42 
(m)To enter into PPP Agreements with persons or entitles to operate and maintain 
43 
water and sanitation systems within the PWRZ, subject to the provisions of this Act; 
44 
(n) To exercise primary and exclusive jurisdiction over disputes between WSPs, or 
45 
between customers and WSPs, within an LWSSC, where such cases involve 
46 
contesting rates, levels and quality of service, fees, fines and penalties imposed in 
12 


the exercise of an LWSSC's powers, functions and responsibilities, as set forth 
; 2 
herein; and 
3 
(0) To compel a PPP p3ltner or WSP to submit required documents and information 
4 
through subpoena duces tecum in the conduct of inquiry or investigation of possible 
5 
violations of this Act or other related issuances and rules. 
6 
Section 20. Composition, Qualification, Appointment and Tenure of the Board of Trustees. -
7 
The corporate powers and functions of the LWSSC shall be vested in and exercised 
8 
by a Board of Trustees composed five (5) members, to wit: 
9 
(a) One (1) member who shall be appointed by the Provincial Governor; 
10 
(b) One (1) member who shall be nominated by the League of Cities or 
11 
Municipalities covering the jurisdictional area of an L WSSC; 
12 
(c) One (1) member representing the private sector who shall be appointed by the 
13 
President of the Philippines; 
14 
(d) One (1) ex-officio member representing the Department of Finance, as nominated 
15 
by the Secretary of Finance; and 
16 
(e) One (1) ex-officio member representing the NEDA, as nominated by the Director-
17 
General. 
18 
The member representing the private sector shall act as Chairman. The Chairman 
19 
and the members of the Board, except the ex-officio members, shall serve for a term of 
20 
three (3) years, except that the members initially appointed shall serve, as 
21 
designated in their appointments, one for one year, one for two years and one for 
22 
three years; Provided, that, any person chosen to fill a vacancy shall serve only for. the 
23 
unexpired term of the member whom he succeeds. 
24 
No person shall be appointed as a member of the Board unless he is a Filipino 
25 
citizen, of good moral character and of recognized competence in relevant fields in 
26 
the water industry or in civil engineering and/ or sanitary engineering, business 
27 
management, economics, finance, and law, with at least five (5) years of actual and 
28 
distinguished experience in their respective fields of expertise. 
29 
The Authority shall issue guidelines on the appointment process for the Board of 
30 
Trustees of the LWSSCs to facilitate the completion of the board compositions. 
31 
Section 21. Meetings of the Board; Quorum, Required Votes. - The Board ot'Trustees 
32 
shall, immediately after its organization, adopt rules and procedures in the conduct 
33 
of its meetings. A majority of the Board shall constitute a quorum for the transaction 
34 
of business and the affirmative vote of three shall be required for the adoption of 
35 
any action. 
36 
Section 22. LWUA as a Specialized Lending Institution. - After the completion of the 
37 
amalgamation process in accordance with Section 7 hereof, the LWUA shall function 
38 
solely as a specialized lending institution which shall provide financial services to 
39 
qualified local water utilities, LWSSCs, Licensees and Water Service Providers. 
40 
CHAPTER V 
41 
ECONOMIC POLICY AND REGULATIONS 
42 
Section 23. Operation of a Water Supply System and/or Sewerage System. - The function 
43 
and responsibility of providing, operating and maintaining a Water Supply System 
44 
and/or Sewerage System in a PWRZ shall fall upon the LWSSC concerned, In the 
45 
case of special and economic zones and Metro Manila, the specialj economic zone 
13 


authority or MWSS, respectively, all of which shall be subject to guidance from the 
2 
Authority. 
3 
Subject to the proVISIOns of this Act and the rules to be promulgated by the 
4 
Authority, an LWSSC may enter into a PPP Agreement with a person or entity for 
5 
the provision, operation and maintenance of a Water Supply System and/or 
6 
Sewerage System in a PWRZ; Provided that an L WSSC which opts to provide water 
7 
and/ or sanitation services in a PWRZ shall comply with performance standards 
8 
which shall be determined and monitored by the Authority within a period of three 
9 
(3) years. LWSSCs which fail to attain such performance standards Within the 
10 
aforesaid period shall be mandated to enter into a PPP Agreement with eligible 
II 
persons or entities in accordance with rules to be determined by the Authority. 
12 
Section 24. Amalgamation of Water Assets. - Within the periods provided herein, the 
13 
LWUA shall, under the supervision of, and based on the rules promulgated by, the 
14 
Authority, cause the amalgamation of assets of WSPs pertaining to water supply 
15 
and sanitation within a particular PWRZ. This is to ensure a unified and 
16 
comprehensive Water Supply System and/ or Sewerage System that shall supply 
17 
water and sanitation services to the entire PWRZ concerned. As much as possible, a 
18 
single, unified and comprehensive Water Supply and/ or Sewerage System shall 
19 
cover all aspects of such systems, including water resource development, treatment, 
20 
storage, distribution and reuse. For this purpose, the initial sum of ten million pesos 
21 
(Php10,OOO,OOO.OO) shall be appropriated to facilitate the amalgamation process and 
22 
this amount shall be charged against proceeds from PPP or other arrangements 
23 
which may be entered as regards these assets. 
24 
The Authority shall guide the LWUA and the WSPs concerned to ensure an efficient, 
25 
2 smooth and orderly amalgamation of operations and assets. WSPs undergoing 
26 
amalgamation may, subject to existing laws, enter into such arrangements that will 
27 
facilitate 
~he management or temporary ownership of their assets pending 
28 
amalgamation. 
29 
The assets of the amalgamated WSPs within a PWRZ shall, subject to just 
30 
compensation, be transferred to and held by the LWUA; Provided that the 
31 
management and ownership of the LWUA over such assets shall be transferred to 
32 
the appropriate LWSSC upon the completion of the amalgamation process, as 
33 
determined by the Authority. In the case of special and economic zones and Metro 
34 
Manila, the entity exercising jurisdiction over such areas will exercise the 
35 
aforementioned authority. For this purpose, the LWUA is empowered to acquire, 
36 
sell, dispose, contract, change and transfer ownership or control of assets, rights and 
37 
contracts concerning WSPs and its assets. The LWUA shall, in the exercise of this 
38 
responsibility defer to the guidelines promulgated by the Authority concerning the 
39 
amalgamation process. 
40 
Section 25. Licensing. - Each LWSSC is empowered and encouraged to enter into a 
41 
partnership with a qualified Licensee for the proviSion, operation and maintenance 
42 
of the Water Supply System and/or Sewerage System for its respective PWRZ, 
43 
through the issuance of a License, the execution of a PPP Agreement, or any other 
44 
similar arrangement; Provided that such partnership shall be made in accordance 
45 
WIth the rules and regulations to be promulgated by the Authority on the matter, as 
46 
well as the provisions of Republic Act No. 9184. The LWSSC shall secure the 
47 
endorsement of the Provincial Government for any partnership under this section. 
48 
14 


Section 26. Qualifications of Licensee. - Licensees must meet the following 
2 
qualifications: 
3 
(a) Must be a citizen of the Philippines or corporations or associations organized 
4 
under the laws of the Philippines at least sixty percent of the capital stock of which 
5 
is owned by such citizens; 
6 
(b) Minimum paid-up capitalization of one million pesos (Php 1,000,000.00); 
7 
(c) Established track record to be defined by the Authority; and 
8 
(d) Any other qualifications that the Authority may deem appropriate. 
9 
Section 27. Rights and Duties of Licensees. - Licensees shall have the duty to ensure 
10 
that its activities are conducted so as to further the public interest and, in particular, 
11 
that they: 
12 
(a) foster the maintenance and development of efficient, coordinated, and economic 
13 
cooperation of their activities; 
14 
(b) give priority to FRM and propose measures towards the end of developing the 
15 
methods of flood control; 
16 
(c) ensure that their Water Supply and/or Sanitation Services are provided in a 
17 
diligent, conscientious and workmanlike manner, in accordance with applicable 
18 
laws and the standards and practices generally accepted in the Philippine and 
19 
international water supply and/ or sanitation industry; and 
20 
(d) comply with drinking water quality requirements. 
21 
Licensees shall, to the extent allowed by law and specified in the License, have the 
22 
right to acquire or lease land and lay or repair water or sewerage mains and other 
23 
relevant facilities in public ways, when required to fulfill their obligations. In as far 
24 
as laying or repairing of water or sewerage mains are concerned, the same shall be 
25 
done expeditiously and efficiently to avoid contributing to the risk of damage 
26 
brought about by flood waters. 
27 
Subject to any condition imposed by the Authority, a Licensee may disconnect the 
28 
supply of piped water services and/ or sanitation services to a customer if such 
29 
customer defaults in the payment of amount(s) due to that Licensee in respect of 
30 
water supplied or sanitation services provided, or for acts of pilferage pursuant to 
31 
Sections 8, 9, 10, and 11 of Republic Act No. 8041, otherwise known as the "National 
32 
Water Crisis Act of 1995." 
33 
Section 28. Mandatory Provisions.- Any License issued under this Act shall include 
34 
provisions on the following matters: 
35 
(a) Incentives and disincentives for Licensees; 
36 
(b) Severance of affected employees and personnel; 
37 
(c) Dispute resolution mechanism in accordance with the Section 32 of this Act; 
38 
(d) Transferability of License, Management Contract, PPP Agreement or award in 
39 
case of failure to meet the standard set by the Authority; and 
40 
(e) Any other provision the Authority or the LWSSC shall deem appropriate to 
41 
achieve the stated objectives of this Act. 
15 


Section 29. Non-Derogation; Effect on Existing Licenses and Similar Arrangements.-
2 
Except for what is provided for in Section 7 hereof on the amalgamation of WSPs, 
3 
nothing in this Act shall be construed as to derogate any rights arising from existing 
4 
Licenses, management contracts, concession agreements and similar arrangements. 
5 
Section 30. Revision and Subrogation Mechanisms. - The Authority shall have the 
6 
power to revise the terms of a License in the event of the Licensee's failure to meet 
7 
the quality standards set by the Authority within a period of two (2) years from the 
8 
start of its operations after observance of due process. This right includes the right to 
9 
replace the current Licensee with another qualified Licensee. 
10 
Section 31. Mechanism for Setting Tariffs, Rates and Other Charges.-The Authority shall 
11 
formulate an objective, rational and transparent mechanism for fixing and adjusting 
12 
Tariffs, rates and other charges imposed by Licensees which (i) allows the economic 
13 
viability of the provision of water and/or sanitation services; (ii) grants the 
14 
Licensees a reasonable return on investments; (iii) encourages the inflow of 
15 
investments in the water sector, promotes effidency and continuous improvement in 
16 
water systems and fadlities; (iv) ensures affordable and reasonable rates and fees for 
17 
the average consumer, and (iv) protects the welfare of consumers. 
18 
The aforesaid mechanism for fixing and adjusting Tariffs, rates and other charges 
19 
shall apply conventional and internationally accepted rate-setting methods and shall 
20 
consider the following factors, among others: 
21 
(a) Rational and prudent operating costs of providing water and/or sanitation 
22 
services, including a reasonable rate of return on investments; 
23 
(b) Costs of debt in domestic and international markets and the cost of equity for 
24 
utility businesses in the Philippines and abroad; and 
25 
(c) Service quality and performance of a Licensee based on key indicators, such as, 
26 
but not limited to, water quality, availability, unaccounted for water (or non-
27 
revenue water), service coverage, including incentives for Licensees which achieve 
28 
specified levels of performance benchmarked against existing industry 2 data, and 
29 
disincentives 
for 
Licensees 
which 
fail 
to 
attain 
the 
same. 
30 
31 
Any escalation on tariffs, rates and other charges shall be primarily based upon the 
32 
level of compliance with key performance metrics which shall reflect current 
33 
industry standards maintained and updated in the Unified Database [or the Water 
34 
Industry, as set forth in Section 8 of this Act. 
35 
36 
Section 32. Arbitration. - All disputes, controversies, or disagreements between 
37 
LWSSCs and licensed WSPs or private sector partners, except where such involve an 
38 
allegation of a criminal act, arising out of, in connection with or in relation to a PPP 
39 
Agreement executed pursuant to this Act, which cannot be amicably settled or 
40 
resolved through mutual consultations or negotiation among the parties, shall be 
41 
finally settled by domestic arbitration in accordance with Republic Act No. 876 
42 
(Arbitration Law), as amended, and Republic Act No. 9285 (Alternative Dispute 
43 
Resolution Law of 2004), as amended. The decision of the arbitrators shall be final 
44 
and conclusive on the parties. 
45 
46 
An Arbitration Clause reflecting the foregoing policy shall be included in all PPP 
47 
Agreements executed pursuant to this Act. 
16 


· I 
Section 33. Lifeline Rate. - In line with the policy of granting universal access to water 
2 
services, more particularly to the marginalized sector, the Authority shall establish a 
3 
socialized pricing mechanism. This will enable the setting of a lifeline rate or a 
4 
targeted subsidy on the basic water consumption of low-income market end-users 
5 
who cannot afford to pay at fldl cost and ensure that the overall tariff rate supports 
6 
the viability of the Licensees, as described in Section 31 of this Act. The Authority, 
7 
after due notice and hearing, shall determine the level of basic water consumption 
8 
and the discount rate. 
9 
10 
Section 34. Missionary Water Services. - The Authority shall encourage and promote 
II 
missionary water services or the provision of water services to remote, rural and 
12 
unviable areas that do not have sufficient or adequate access to water with the end 
13 
in view of elevating water services in such areas to a viable and sustainable level. 
14 
Missionary water service initiatives shall be funded from the revenues from water 
15 
services provided in missionary areas and from such charges which may be 
16 
collected from all consumers within a PWRZ, subject to implementing regulations 
i 7 
which shall be determined and formulated by the Authority. 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
Section 35. Water Crisis Provision. - The Authority shall adopt a proactive approach to 
avert a water crisis by initiating water conservation efforts and water use efficiency, 
incentivizing the use of efficient water distribution systems, utilizing integrated, 
systematic and predictive water management and monitoring systems, encouraging 
the financing, construction, improvement and operation of water facilities, and 
analogous efforts and initiatives in order to increase water supply and improve 
water quality. The Authority shall create plans and programs, and issue rules and 
regulations to accomplish the foregoing. 
28 
In the event the President of the Philippines determines that a water CrISIS is 
29 
impending, Congress may, through a joint resolution, authorize the employment of 
30 
emergency measures to increase water supply under such terms and conditions as it 
31 
may approve, and reorganize the Joint Executive-Legislative Water Crisis 
32 
Commission created pursuant to Republic Act No. 8041, otherwise known as the 
33 
"National Water Crisis Act of 1995", to exercise the powers and perform the 
34 
functions stated in the said law. 
35 
CHAPTER VI 
36 
ORGANIZATION 
37 
Section 36. The Authority. - There is hereby created and established an independent 
38 
Authority to be named the Water and Sanitation Regulatory Authority, hereinafter 
39 
referred to as the "Authority", which shall be organized within one hundred eighty 
40 
(180) days upon effectivity of this Act, primarily from but not limited to the NWRI3 
41 
and similar government agencies, offices or bureaus tasked with the allocation, 
42 
distribution and preservation of water as a valuable resource. 
43 
The Authority shall be placed under the administrative supervision of the Office of 
44 
the President. 
45 
Section 37. Powers and Functions of the Authority. - The Authority, pursuant to Section 
46 
5 of this Act, shall exercise to the exclusion of other agencies, regulatory power over 
47 
all WSPs and for this purpose shall have the following powers and functions: 
17 


(a) Evaluate, review, monitor, examine and approve all applications for the 
2 
appropriation, and use of waters, development of sewerage systems and treatment 
3 
of wastewater. 
4 
5 
6 
7 
(b) Formulate policy directions, strategies 
objectives 
for 
water sourcing, 
supply, 
preservation, wastewater treatment and 
management. 
and targets to meet the goals and 
allocation, 
distribution, 
including 
sewerage development and septic 
8 
(c) Issue and promulgate rules, regulations and guidelines, as may be necessary, to 
9 
implement and enforce its powers and functions under this Act; 
10 
(d) Set and enforce just and reasonable technical criteria, methods, standards, 
11 
benchmarks and other measurements of service; 
12 
(e) Primary jurisdiction in matters relating to the appropriation, utilization, 
13 
exploitation, development, control and conservation, protection of all waters, as well 
14 
as· proper disposal and! or treatment of sewage, septage and wastewater in the 
15 
country, including autonomous regions; 
16 
(£) Manage, administer and operate all watersheds; 
17 
(g) Establish rules and regulations to monitor, avoid and provide remedies for any 
18 
abuse or anti-competitive or discriminatory act or behavior by or against any 
.19 
participant in the water supply and sanitation industry; 
20 
(h) Adopt and require that books, records and accounts be kept and maintained in 
21 
accordance with the prescribed uniform accounting system; 
22 
(i) Fix and determine proper and adequate fees for services; 
23 
0) Fix and determine proper and adequate rates of depreciation of properties aI).d 
24 
equipment used in water supply and sanitation industry; 
25 
(k) Impose and collect annual levies determined, as a percentage of gross revenue 
26 
accruing in relation to the licensed activities, and reasonable fees and surcharges as 
27 
may be necessary for achieving the purposes, powers and functions of the 
28 
AuthOrity; 
29 
(1) Require the submission of reports, documents, testimony and other Relevant 
30 
Information as set forth in this Act, through subpoena ad testificandum or duces 
31 
tecum if necessary; 
32 
(m) Determine and require the monitoring and submission of such data, statistics 
33 
and other information from public and private entities and any or all licensees, as 
34 
may be necessary, for the effective and efficient exercise of its duties, functions, 
.. 35 
powers and responsibilities; 
. 36 
(n) Investigate, motu proprio or upon complaint in writing, any matter concerning the 
37 
operation of the service, and require that service be provided in proper and suitable 
. 38 
manner; 
39 
(0) Impose penalties and fines against any Licensee or against its owners, directors, 
40 
officers, agents or representatives for any violation of this Act or of the license, 
41 
order, rule regulation or requirement issued by the Authority; 
42 
(p) Require any Licensee to pay the actual expenses incurred by the Authority in any 
43 
investigation, if it shall be found that a Licensee violated any provision of this Act or 
44 
of the license, order, rule regulation or requirement issued by the Authority; 
18 


(q) Advise, apprise and coordinate with other relevant agencies of the national or 
2 
local government on any matter relating to water supply and sanitation industry; 
3 
(r) Deputize agents, whether from the public or private sector, to assist in the 
4 
performance of any of the powers and functions of the Authority; 
5 
(s) Upon appeal and after due hearing, appoint an interim or temporary 
6 
management committee to ensure continuity of service in case a Service Provider 
7 
Licensee fails to meet conditions of the license; 
8 
(t) Appoint, hire and maintain adequate staff and personnel, advisers, and/ or 
9 
consultants, with suitable qualifications and experience, as necessary; 
10 
(u) Exercise exclusive appellate jurisdiction over appeals from LWSSC decisions and 
11 
resolutions regarding contesting rates, levels and quality of service, fees, fines and 
12 
penalties imposed in the exercise of an LWSSC's powers, functions and 
13 
responsibilities, as set forth herein where said cases involve disputes between WSPs, 
14 
or between customers and WSPs, within an LWSSC; 
15 
(v) Exercise primary and exclusive jurisdiction over disputes between LWSSCs and 
16 
between customers and LWSSCs regarding contesting rates, levels and quality of 
17 
service, and such other matters relative to the exercise of the powers and 
18 
responsibilities of LWSSCs; and 
19 
(w) Such other incidental powers and functions as may be necessary to attain the 
20 
objectives of this Act. 
21 
Section 3S.Water Resource Regulation. - When exercising its water resource regulation 
22 
functions, the Authority shall be guided by the provisions of Presidential Decree 
23 
No.1067, otherwise known as the Water Code of the Philippines, on Appropriation 
24 
of Waters, resolution of cases arising from water use, including conflicts between 
25 
water users, as well as any other applicable provisions of the Water Code and other 
26 
relevant laws or government issuances. 
27 
Section 39. Composition. - All the powers of the Authority shall be vested in and 
28 
exercised by a Board of Officers, a collegial body of nine (9) members. Seven (7) 
29 
members shall be full-time employees of the Authority composed of a Chairperson 
30 
and six (6) Officers, appointed by the President of the Philippines. Each member, 
31 
including the Chairperson shall concurrently head and serve the following 
32 
Departments of the Authority: (1) Administration; ( 2 ) Registry; ( 3 ) Tariffs; (4) 
33 
Engineering and Infrastructure Development; (5) Environmental and Consumer 
34 
Protection; (6) Audit and Finance; and (7) Legal and Enforcement. While the 
35 
remaining two (2) officers shall be ex-officio members representing the Department of 
36 
Finance and the National Economic Development Authority ("NED A") nominated 
37 
by the Secretary and the Director-General, respectively. 
38 
Section 40. Common Qualifications for Concurrent and Ex-Officio Officers.- Each Officer, 
39 
including the Chairperson must be citizens and residents of the Philippines, at least 
40 
thirty five (35) years of age, and of good moral character, recognized integrity and 
41 
competence in the field of law, business, commerce, finance, accounting or public 
42 
administration, water or utility economics, management, physical or engineering 
43 
services, hydrology and other related services, with at least three (3) years actual 
44 
and distinguished experience in their respective fields of expertise. 
45 
46 
Section 41. Special Qualifications for Concurrent Officers. - In addition to the 
47 
qualifications enumerated, the Chairperson, who shall concurrently head 
19 


I 
the Administration Department shall be a member of the Philippine Bar with at least 
2 
ten (10) years experience in the active practice of law. The Officer who shall 
3 
concurrently head the Legal and Enforcement Department shall be a member of the 
4 
Philippine Bar with at least ten (10) years experience in the active practice of law; 
5 
while the Officer who shall concurrently head the Audit and Finance Department 
6 
shall be a certified public accountant with at least (10) ten years experience in active 
7 
practice. Additional requirements and qualifications for the officers, including the 
8 
Chairperson, may be set forth under the Implementing Rules and Regulations to be 
9 
promulgated upon creation and formation of the Authority in conformity with this 
10 
Act. 
II 
Section 42. Prohibition and Disqualification . . - The Chairperson and Officers of the 
12 
Authority or any of their relatives within the fourth civil degree of consanguinity 
13 
or affinity, legitimate or common law, shall be prohibited from holding any interest 
14 
whatsoever, either as investor, stockholder, officer or director, in any company or 
15 
entity engaged in the business of transmitting, generating, supplying or distributing 
16 
any form of energy and must, therefore, divest, through sale or legal disposition, 
17 
any and all interests in the water sector upon assumption of office. 
18 
Section 43. Term. - The Chairperson and Concurrent Officers of the Board shall be 
19 
entitled to a term of seven (7) years; Provided, however, that among the Officers first 
20 
appointed upon creation of the Authority, tl1e Chairperson shall serve for a period of 
21 
seven (7) years, three (3) Officers shall serve for five (5) yea~s and the remaining 
22 
three (3) Officers shall serve for four (4) years without reappointment; Provided, 
23 
further, that any member whose term has expired, as specified herein, shall serve as 
24 
such until his successor shall have been appointed and qualified; Provided, 
25 
moreover, that any appointment to fill a vacancy in the Authority arising from 
26 
death, removal, retirement or resignation shall be made only for the unexpired term; 
27 
Provided, finally, that in no case shall any member serve for more than seven (7) 
28 
years in the Authority. 
29 
Ex-Officio Officers of the Authority shall serve at the pleasure of the appointing 
30 
power. But in no case shall ex-officio member serve for more than seven (7) years in 
31 
the Authority. Ex-Officio Officers shall participate in the activities of the Authority to 
32 
the extent that the participation is not incompatible with their respective positions 
33 
with the Department of Finance or NEDA, as the case may be. 
34 
Section 44. Security of Tenure. - Concurrent Officers of the Authority shall enjoy 
35 
security of tenure and shall not be suspended or removed from office except for just 
36 
cause, as specified by law. 
37 
Section 45. Board Meetings. - The Board shall meet at least once a week, or as often as 
38 
may be necessary upon the call of the Chairman of the Board or by a majority of the 
39 
Board of Officers to ensure performance of its functions, subject to holidays, 
40 
calamities, emergencies or supervening events. 
41 
Section 46. Quorum. - The presence of at least five (5) Officers of the Board shall 
42 
constitute a quorum, which shall be necessary for the transaction of any business. 
43 
The affirmative vote of a majority of the Officers present in a quorum shall be 
44 
adequate for the approval of any resolution, decision or action. 
45 
Section 47. Administrative Function. - The Chairperson, shall concurrently head the 
46 
Administrative Department and shall exercise direct executive control and 
47 
supervision of the internal operations of the Authority, its Officers, staff and 
48 
personnel, agents and representatives. The Chairperson is also authorized to 
49 
represent the Authority in all dealings and transactions with other offices, agencies, 
20 


I 
and instrumentalities of the Government and with all persons and other entities, 
2 
private or public, domestic or foreign. 
3 
Section 48. The Registrar. - There is hereby created and established the Water 
4 
Industries and Sewerage Registry, headed by a Registrar, tasked with implementing 
5 
the unified database referred to in Section 8 of this Act. The Registrar, shall conduct 
6 
appropriate research and comprehensive studies to provide the necessary technical 
7 
inputs to facilitate 
. 
8 
Section 49. EffiCient Database Management, Confidentiality and Non-Disclosure. - The 
9 
Registrar, as custodian of vital information necessary for the development of the 
10 
water and sanitation industry, shall develop cost-effective methods and systems for 
II 
data accumulation and dissemination while ensuring confidentiality of sensitive 
12 
information. To this end, this Authority shall establish and issue such rules and 
13 
guidelines, as may be necessary, to regulate disclosure of information, establish 
14 
standards, and enforcement of fines and penalties that would be imposed for any 
15 
violations as set forth in this Act. 
16 
Section 50. Fiscal Autonomy and Responsibility.- The Authority shall enjoy . fiscal 
17 
autonomy, subject to regular audits by the Commission on Audit. The amount of 
18 
thirty million pesos (Php 30,000,000.00) is hereby allocated from the existing budget 
19 
of the NWRB for the initial operation of the Authority. Any balance shall initially be 
20 
sourced from the Office of the President of the Philippines. Thereafter, the annual 
21 
budget certified by the Authority, through its chairperson, as necessary to defray its 
22 
expenses, shall be prOVided for in the regular or special appropriations and shall be 
23 
released automatically and regularly. To ensure the fiscal independence of the 
24 
AuthOrity, the Officer and concurrent head of the Finance Department, shall be 
25 
primarily responsible for the preparation and disbursement of the budget of the 
26 
AuthOrity. 
27 
28 
Section 51. Compensation and Other Emoluments. - The compensation of the Officers of 
29 
the Authority and its staff shall be exempt from the coverage of Republic Act No. 
30 
6758, otherwise known as the "Salary Standardization Act"; Provided, that the salaries 
31 
of the Authority and its staff shall conform, as closely as possible, to the principles of 
32 
2 R.A. 6758. 
33 
34 
For this purpose, the schedule of compensation of the Authority's officers and 
35 
employees shall be submitted for approval of the President of the Philippines. The 
36 
compensation schedule shall be implemented within six (6) months from the 
37 
effectivity of this Act and maybe upgraded by the President of the Philippines, as 
38 
the need arises; Provided further, that in no case shall the compensation of the 
39 
Authority and its staff be upgraded more than once a year. 
40 
41 
Pertinent civil service laws, rules and regulations of the Philippines shall be 
42 
applicable to the Authority. 
43 
44 
Section 52. Board Per Diems and Allowances. - The Officers of the Board shall receive 
45 
per diem for each regular or special meeting of the Board actually attended by them, 
46 
and, such other allowances as the Board may prescribe, upon approval of the 
47 
Secretary of Finance, and in conformity with existing and future legislation. 
21 


Section 53. Environmental and Consumer Protection. - A qualified Officer of the Board, 
2 
shall concurrently head a department that shall address environmental and 
3 
consumer concerns in connection with applications, rights, licenses, concessions, 
4 
programs, activities, investments and projects approved by or pending with the 
5 
Authority. 
6 
7 
Section 54. Technical Competence. - Pursuant to the recommendations of the NEDA, 
8 
the Authority shall effectively undertake its vital and comprehensive functions by 
9 
enhancing its technical competence through continuing education and rigorous 
10 
training programs in the following areas: 
arbitration, 
dispute resolution, 
II 
benchmarking, evaluation of technical performance and compliance monitoring, 
12 
service and performance standards, performance-based rate-setting reform, 
13 
environmental standards, fiscal responsibility, profitability and such other areas as 
14 
will enable the Authority to adequately perform its duties and functions. 
15 
16 
Section 55. Realignment and Supervision of Existing Water Services Related Agencies. '-
17 
The Authority shall have primary jurisdiction in matters relating to the 
18 
appropriation, utilization, exploitation, development, control and conservation, 
19 
protection of all waters, as well as proper disposal and/ or treatment of sewage, 
20 
septage and wastewater in the country, including autonomous regions. 
21 
22 
Pursuant to this mandate, all existing government agencies, bureaus or offices shall, 
23 
as far as practicable, be realigned with and fall under the supervision and control of 
24 
the Authority. Within ninety (90) days from the creation of the Authority's Board 
25 
and assumption of a majority of its Officers, the latter shall closely coordinate with 
26 
representatives from the Department of Environment and Natural Resources, 
27 
Department of Interior and Local Government, Department of Health, Cooperative 
28 
Development Authority, Laguna Lake Development Authority and other relevant 
29 
government agencies or offices to implement an effective realignment offunctions 
30 
and transition of resources. 
31 
32 
All government employees and personnel displaced or separated from the service as 
33 
a result of the restructuring of realignment of or abolition of government offices, 
34 
shall be entitled to separation pay and other benefits in accordance with existing 
35 
laws, rules or regulations. Displaced or separated employees and personnel, if 
36 
qualified, shall be given preference in the hiring of other government agencies or 
37 
instrumentalities. 
38 
39 
Section 56. Reportorial Requirements. - The Authority shall submit an annual report to 
40 
the President of the Philippines, Congress and to such other agencies as may be 
41 
required by law before the end of April of each year. An annual report containing 
42 
but not limited to the following matters: licenses issued, investments obtained, 
43 
incentives granted, disputes resolved, revenue generated, cost saved, and such 
44 
matters relevant to the performance of its functions. The Authority shall make 
45 
copies of such reports available to any interested patl y upon payment of a charge, 
46 
which reflects the printing costs. 
22 


The Authority shall adopt its internal rules of procedures; conduct hearings and 
2 
receive testimonies, reports and technical advice; invite or summon by subpoena ad 
3 
testificandum any public official, private citizen or any other person to testify before 
4 
it, or require any person by subpoena duces tecum to produce before it such records, 
5 
reports, documents or other materials as it may require to attain the purposes for 
6 
which it is created and to make an accurate and comprehensive report to the 
7 
President and Congress. Any public official or private citizen or entity who willfully 
8 
and deliberately refuses without just cause to extend the suppOll and assistance 
9 
required by the Authority to effectively attain its objectives shall be punished as set 
10 
forth in this Act. 
11 
CHAPTER VII 
12 
WATER SUPPLY SYSTEM AND SEWERAGE SYSTEM 
13 
Section 57. Construction of Sewerage System. - The simultaneous construction of a 
14 
sewerage system with the water supply system is encouraged. A water services 
15 
provider licensed in a service area shall, subject to the approval of the Authority, be 
16 
given an optional license to construct and maintain a sewerage system in the same 
17 
service area, 
18 
Section 58. Hand Over of Water Supply System and Sewerage System. - (a) Subject to 
19 
Subsections (a) and (e), a developer of a new development which is within a service 
20 
licensee's water supply distribution area or sewerage services area, as the case may 
21 
be, shall, upon the issuance of the certificate of compliance of the water supply 
22 
system or sewerage system or part of the systems by the Authority, hand over the 
23 
water supply system or sewerage system or part of the systems within the 
24 
development to the water distribution licensee or the service licensee providing 
25 
sewerage services, as the case may be, at no cost, for the purposes set out in 
26 
Subsection (c); 
27 
(b) The service licensee shall accept the water supply system or sewerage system or 
28 
part of the systems, as the case may be, after the service licensee is satisfied that the 
29 
water supply system or the sewerage system or part of the systems meets the 
30 
requirements set out in the approved plans and specifications and standards; 
31 
(e) Upon the water supply system: or the sewerage system or part of the systems 
32 
being handed over to the service licensee, the service licensee shall operate and 
33 
maintain such system; 
34 
(d) The developer shall provide or cause the owner of the land to provide the service 
35 
licensee access to the water supply system and sewerage system or part of the 
36 
systems for the purposes of operating and maintaining such system; and 
37 
(e) The Authority may exempt any developer from the reqUirements of this section if 
38 
the developer can establish that he has the sufficient financial, operational and 
39 
technical capacity to construct, maintain and operate the water supply system or 
.40 
sewerage system. The Authority shall regularly assess the developer'S water supply 
41 
system or sewerage and may revoke any exemption upon notice and hearing. 
42 
Section 59. Power to Require Premises to be Connected to Sewerage System. - (a) The 
43 
Authority may direct the owner in writing, or if the owner cannot, with reasonable 
44 
diligence, be traced, the occupant, of any premises not connected to a public 
45 
sewerage system, to construct or install for the premises, within the period specified 
46 
in the notice, a private connection pipe of such material or size and at such level as 
47 
to enable the premises to be properly and effectively connected to any sewerage 
48 
system located within thirty meters from the boundary of the premises; and 
23 


(b) If the owner or occupant to whom a direction under Subsection (a) has been 
2 
issued fails to comply with the direction within the period specified in the notice, the 
3 
Authority or any person authorized by the Authority may construct or install the 
4 
private connection pipe or cause the pipe to be constructed or installed and recover 
5 
the expenses incurred in the construction and installation of such pipes from the 
6 
owner or occupant. 
7 
Section 60. Power to Require Developer to Connect Development to Public Sewerage 
8 
System - (a) The Authority may direct the developer of any development not 
9 
connected to a sewerage system, to construct or install for the development, within 
10 
the period specified in the notice, a connection pipe of such material or size and at 
11 
such level as to enable the development to be properly and effectively connected to 
12 
the sewerage system; and 
13 
14 
(b) If the developer to whom a direction under Subsection (a) has been issued fails to 
15 
comply with the direction within the period specified in the notice, the Authority or 
16 
any person authorized by the Commission may cause the pipe to be constructed or 
17 
installed and recover the expenses incurred in the construction and installation of 
18 
such pipes from the developer. 
19 
Section 61. Power to Install or Construct Private Sewerage System or Septic Tank - (a) The 
20 
Authority may direct in writing the owner of any premises, or if the owner cannot, 
21 
with reasonable diligence, be traced, the occupant of the premises, to install or 
22 
construct a private sewerage system or septic tank for the premises, as the Authority 
23 
deems necessary in accordance with guidelines provided for in the Implementing 
24 
Rules and Regulations; and 
25 
(b) The cost of the construction or installation of the private sewerage system or 
26 
septic tank shall be borne by the owner of the premises, or if the owner or cannot, 
27 
with reasonable diligence, be traced, the occupant. 
28 
Section 62. Power to Require Private Sewerage System to be Put in Proper Order. - (a) If 
29 
the Authority is satisfied that: (i)a private sewerage system, septic tank, individual 
30 
internal sewerage piping or common internal sewerage piping on any premises or 
31 
which serves any premises; or (b)a private connection pipe connecting any premises 
32 
to a sewerage system, is defective or is not properly maintained or is in need of 
33 
repair, the Authority may issue a notice to the owner, or occupant of such premises 
34 
or the person responsible for the private sewerage system, septic tank, individual 
35 
internal sewerage piping, common internal sewerage piping or private connection 
36 
pipe to have such private sewerage system, septic tank, individual sewerage piping, 
37 
common internal sewerage piping or private connection pipe repaired or put in 
38 
proper order within the period specified in the notice; 
39 
40 
(b) If the Authority is satisfied that, due to any obstruction, any premises on which a 
41 
septic tank is situated does not have adequate access for the purpose of desludging 
42 
the septic tank, the Authority may issue a notice to the owner or occupant of such 
43 
premises to remove such obstruction within the period specified in therein; 
44 
45 
(c) If the person to whom a notice issued under Subsection (a) or (b) fails to comply 
46 
therewith within the period specified, (i) the Authority or any person authorized by 
47 
the Authority may, at the expiration of such period, do the work required in the 
24 


I 
notice and may recover the expenses incurred in doing so from the owner, or 
2 
occupant; or (ii) the Authority may direct the service licensee in that sewerage 
3 
services area to manage and operate the private sewerage system, septic tank, 
4 
individual internal sewerage piping, common internal sewerage piping or private 
,,5 
connection pipe, as the case may be, for such period, as the Authority may decide, 
6 
and to charge the owner, or occupant for services 2 rendered by that service licensee; 
7 
and 
8 
(d) For the purposes of Subsection (c)(ii), the owner and occupant of the premises 
,9 
shall grant the service licensee access to the private sewerage system, septic tank, 
10 
individual internal sewerage piping, common internal sewerage piping or private 
II 
connection pipe, as the case may be, for the purposes of operating and maintaining 
12 
the private sewerage system, septic tank, individual internal sewerage piping, 
13 
common internal sewerage piping or private connection pipe, as the case may be, 
14 
15 
Section 63. Duty to Operate and Maintain Private Sewerage System - (a) The owner or 
16 
occupant of any premises having a private sewerage system or septic tank shall: (i) 
17 
grant the service licensee or permit holder adequate access to the septic tank for the 
18 
purpose of enabling the septic tank to be serviced and desludged; (ii) cause the 
19 
private sewerage system, septic tank, the private connection pipe, individual 
20 
internal sewerage piping, common internal sewerage piping and all accessories 
21 
thereto to be so maintained and kept so as not to be a nuisance or so that it may not 
22 
be harmful to health; (iii) cause the septic tank to be desludged and, in the case of a 
23 
private sewerage system, to be serviced or maintained by a service licensee or 
24 
permit holder at such intervals and in such manner as may be prescribed; and (iv) 
25 
grant the service licensee or permit holder adequate access to the private sewerage 
26 
system for the purposes of enabling the private sewerage system to be inspected, 
27 
serviced or maintained. (b) The owner or occupant of any premises, as the case may 
28 
be, shall be solely responsible for the maintenance, refurbishment or replacement of 
49 
the individual internal sewerage piping or the common internal sewerage piping. 
30 
Section 64. Contract for Provision of Sewerage Services. - The owner or occupant of any 
31 
premises to whom sewerage services is provided shall be deemed, upon the 
32 
provision of sewerage services to that premises, to have contracted with the service 
33 
licensee providing sewerage services for the provision of sewerage services. 
34 
CHAPTER VIII 
35 
DEVELOPMENT OF EFFICIENT, ECOLOGICAL AND SUSTAINABLE 
36 
TECHNOLOGIES AND ENVIRONMENTAL PROTECTION 
37 
Section 65. Incentives for integration of lNastewater Treatment/Coliection Facilities In 
38 
Water Supply and Sewerage Systems. - An incentive scheme is hereby provided for the 
39 
purpose of encouraging WSPs to integrate wastewater treatment/collection and 
40 
treatment facilities in their water supply and sewerage systems. 
41 
Section 66. Tax and Duty Exemption of Donations, Legacies and Gifts. - All legacies, gifts 
42 
and donations to providers of water supply and sanitation services for the support 
43 
and maintenance of the program for effective water quality management shall be 
44 
exempt from donor's tax and shall be deductible from the gross income of the donor 
45 
for income tax purposes. 
46 
Imported articles donated to, or for the account of any provider of water supply and 
47 
sanitation services specifically for the exclusive use of the provider in its water 
25 


1 
quality management programs shall be exempted from the payment of customs 
2 
duties and applicable internal revenue taxes. 
3 
Wastewater treatm.ent and/ or installation of water pollution control devices shall be 
4 
classified as pioneer and preferred areas of investment under the Board of 
5 
Investment's annual priority plan and shall enjoy the applicable fiscal and non-fiscal 
6 
incentives, as may be provided for under the Omnibus Investment Code, as 
7 
amended. 
8 
Section 67. Financial Assistance Program. - Government financial institutions such as 
9 
the Development Bank of the Philippines, Land Bank of the Philippines, 
10 
Government Service Insurance System, and such other government institutions 
11 
providing financial services shall, in accordance with and to the extent allowed by 
12 
the enabling provisions of their respective charters or applicable laws, accord high 
13 
priority to extend financial services to providers of water supply and sanitation 
14 
services engaged in sewage collection and treatment facilities. 
15 
Section 6S. Availabilih} of Technologies Developed Under the Incentive Schemes of the 
16 
Clean Water Act. - To the extent that they do not duplicate the incentives provided 
17 
under this Act, technologies, projects, processes and techniques in water quality 
18 
management developed under the incentive schemes of Republic Act No. 9275, or 
19 
the Philippine Clean Water Act of 2004, shall be made available to providers of 
20 
water supply and sanitation services that will integrate the said technologies, 
21 
projects, processes and techniques in thcir water supply and sewerage systems free 
22 
of applicable taxes. 
23 
Section 69. Environmental Protection. - Participants in the provision of water supply 
24 
and sanitation services shall comply with all environmental laws, rules, regulations 
25 
and standards promulgated by the Department of Environment and Natural 
26 
Resources including, in appropriate cases, the establishment of an environmental 
27 
guarantee fund. 
28 
CHAPTER IX 
29 
FINES AND PENALTIES 
30 
Section 70. Prohibited Acts. - The following acts shall be penalized by suspension or 
31 
revocation of the violator's license or other right to the use of water and/ or a fine of 
32 
not exceeding one million Pesos (Php 1,000,000.00), in the discretion of the 
33 
Authority: 
34 
(a) Non-compliance with reportorial rules and requirements; 
35 
(b) Refusal to submit reports and/ or permit examination; 
36 
(c) Falsification or tampering of documents and/ or official records to avail of the 
37 
fiscal and non-fiscal incentives provided under this Act; 
38 
(d) Non-compliance with the established guidelines and standards promulgated by 
39 
the Authority; 
40 
(e) Appropriation of subterranean or ground water for domestic use by an 
41 
overlying landowner without registration required by the Authority; 
42 
(f) Failure to comply with any of the terms or conditions in a water permit or a 
43 
water rights grant; 
44 
(g) Unauthorized use of water for a purpose other than that for which a license, right 
45 
or permit or concession was granted; 
26 


(h) Construction or repair of any hydraulic work or structure without duly 
2 
approved plans and specifications, when required; 
3 
(i) Failure to install a regulating and measuring device for the control of the volume 
4 
of water appropriated, when required; 
5 
G) Unauthorized sale, lease, or transfer of water and/ or water rights; 
6 
(k) Failure to provide adequate facilities to prevent or control diseases when 
7 
required by the Authority in the construction of any work for the storage, diversion, 
8 
distribution and utilization of water; and 
9 
(I) Violation of or non-compliance with any order, rule or regulation of the 
10 
Authority. 
1J 
12 
Section 71. Fines and Penalties. - Any violation of the mandatory provisions of this 
13 
Act shall be punishable by imprisonment of six (6) years and/ or fine not exceeding 
14 
One Million Pesos (Php 1,000,000.00). In the case of juridical persons, the President, 
. 15 
the Chief Executive Officer and other responsible corporate officers shall be held 
16 
liable for any violation of this Act committed by the juridical person, through its 
17 
employees, agents and representatives. 
18 
CHAPTER X 
19 
TRANSITORY AND FINAL PROVISIONS 
20 
Section 72. Statutory Construction. - This Act shall, unless the context indicates 
21 
otherwise, he construed in favor of the establishment, promotion, preservation of 
22 
competition and people empowerment so that the widest participation of the 
23 
people, whether direct or indirect, is ensured. 
24 
25 
Section 73. Implementing Rules and Regulations. - The Board shall, in consultation with 
26 
relevant public and private stakeholders within the water services industry, 
27 
promulgate the Implementing Rules al1d Regulations (IRR) of this Act within six (6) 
28 
months from the effectivity of this Act. 
29 
30 
Section 74. Injunction and Restraining Order. - The implementation of the provisions 
31 
of this Act shall not be restrained or enjoined except by an order issued by the 
32 
Supreme Court of the Philippines. 
33 
34 
Section 75. Separability Clause. - If for any reason, any prOVISIon of this Act is 
35 
declared unconstitutional or invalid, the other parts or provisions hereof which are 
36 
not affected thereby shall continue to be in full force and effect. 
37 
Section 76. ApplicabilihJ and Repealing Clause.-
The applicable provlslOns of 
38 
Presidential Decree No.1 067, otherwise known as the "Water Code of the 
39 
Philippines", Republic Act No. 8041, otherwise known as the "National Water Crisis 
40 
Act of 1995", Republic Act No. 4062, otherwise known as the "Water Power Act", 
41 
Republic Act No. 6234, as amended, creating the MWSS, Presidential Decree No 198, 
42 
as amended, creating the LWUA, Republic Act No. 7160, otherwise known as the 
43 
"Local Government Code", and Republic Act No. 10149 otherwise known as the 
27 


"GOCC Governance Act of2011" shall continue to have full force and effect except in 
2 
so far as inconsistent with this Act. 
3 
All laws, orders, rules and regulations, or portions thereof, inconsistent with this Act 
4 
are hereby repealed and modified accordingly. 
5 
6 
Section 77. Effectivity Clause. - This Act shall take effect on the fifteenth day following 
7 
its publication in at least two (2) national papers of general circulation. 
9 
Approved, 
28