FIFTEENTH CONGRESS OFTHE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session 
) 
) 
) 
SENATE 
S.B. No. _-,2_9--,,9-=7_ 
Introduced by Senator Edgardo J. Angara 
EXPLANATORY NOTE 
'11 
The Philippine water situation does not paint a rosy picture. With an increasing 
population and a finite water supply, the lack of a cohesive regime has led to the 
detriment of water services in the provinces, issues on water quality, and consequently, to 
the spread of diseases and a scarcity of clean water. 
There are approximately 30 government agencies involved in water and sanitation in the 
Philippines. For example, there are different kinds of water service providers such as 
Water Districts, MWSS Concessionaires, LGUs, Water Cooperatives, etc.; different 
regulators such as the Local Water Utilities Administration (LWUA), MWSS regulatory 
office, LGUs and the National Water Resources Board (NWRB); different agencies 
managing dams such as the National Irrigation Administration (NIA), MWSS and 
National Power Corporation (NAPOCOR). This fragmented approach leads to the 
intersection of authority and resources being spread thinly, not to mention the varying 
policy regimes among different agencies. 
One of the proposed solutions to address this fragmentation is to create a superbody to 
handle all water related issues. Although the idea is laudible, it may only result in adding 
another layer into the bureaucracy to complicate an already confused system. The water 
services industry requires reform, not just more regulation. 
It is in this light that the proponent earnestly seeks the passage of this Bill. This Bill 
adopts and institutionalizes the Integrated Water Resources Management approach. The 
focus of this Bill is to reform the water industry itself, not just introduce another layer of 
regulation, The bill seeks to create reforms not just in water supply and sanitation but also 
covers other uses of water such as use for municipal, irrigation, agriculture, fisheries, 
power generation, industrial, livestock, recreational and other uses and sub-sectors of 
water including flood management. 
Particularly, in water resource management, the Bill seeks to divide the country into 
Provincial Water Resource Zones within which Water Service Providers shall be 
synergized and integrated in order to restructure the industry players into a scale that is 
efficient and cost-effective. 
The Bill also emphasizes that Public-Private Partnerships (PPP) of water and sanitation 
services may be the step in the right direction toward securing uninterrupted, adequate, 
I Andreas Kanzler, German Technical Cooperation Agency Country Director Philippines 
and the Pacific and Program Manager Water, Sanitation, Solid Waste in a presentation on 
"Water, Sanitation and Solid Waste in the Philippines" 2006 


quality and dependable water services for everyone. An incentive scheme is provided to 
induce more investors to participate in our water industry. 
Finally, the Bill introduces regulatory reform through the strengthening of the NWRB 
and renaming it as the Water and Sanitation Regulatory Authority to serve as the lead 
agency in water resource and industry management. 
The State assumes the burden of ensuring that the water located in our lakes and rivers 
reaches our faucets. The past 30 years have shown us that the fragmented water district 
model of P.D. No. 198 has failed. Instead, it has given rise to little water fiefdoms where 
small operators, in cahoots with local officials, monopolize water services with no 
incentive to provide quality service. There is impetus to consolidate, and there is little 
reason not to. 
Water is a human right. But, it is also an economic good. And in order to ensure that 
every Filipino has access to quality and consistent water service, the State has to re-align 
its policies on how the industry should be lUll. 
In view of the foregoing, the passage of this Bill is earnestly sought. 
~~ 
EDGARDo1!ANGARA 


FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session 
) 
) 
) 
'/1 
OCT 17 "J ::52 
SENATE 
"'":'\~ 
S.B. No. _--"2,,-,~,,,--~ 9=, 2.7_ 
Introduced by Senator EDGARDO J. ANGARA 
AN ACT INSTITUTING REFORMS IN THE WATER INDUSTRY, 
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, CREATING LOCAL WATER SUPPLY AND SANITATION 
COMJ>ANIES, AMENDING FOR THE J>URPOSE CERTAIN LAWS AND FOR 
OTHER RELATED PURPOSES. 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
1 
CHAPTER I 
2 
TITLE AND DECLARATION OF POLICY 
3 
4 
Section 1. Short Tille. - This Act shall be known as the "Water Sector Reform Act of 
5 
201 ".It shall hereinafter be referred to as the Act. 
6 
7 
Section 2. Declaration of Policy. - It is hereby declared the policy of the State: 
8 
9 
(a) that all waters in the Philippines shall belong to the State, pursuant to the 1987 
10 
Philippine Constitution; 
11 
12 
(b) that the State, as owner of all waters in the Philippines, may control and regulate 
13 
the use, exploitation, development appropriation, protection and conservation of 
14 
water in order to protect and promote life, public health and welfare, and the 
15 
environment, including imposing such conditions and restrictions, as may be 
16 
warranted, on existing holders oflicenses; 
17 
18 
( c) to recognize that water is a human right, and it is the obligation of the State to 
19 
ensure that there is "sufficient, safe, accessible and affordable water, without 
20 
discrimination;" 
21 
22 
(d) to ensure that all Filipinos shall have access to clean, safe, affordable and 
23 
adequate supply of water; 
24 
25 
(e) to ensure rcasonable, and yet cost-reflective, prices of water which protect both 
26 
the interests of the consumers and the service providers; 
27 
28 
(£) to monitor and regulate the quality and supply of water in the Service Areas to 
29 
protect life, pnblic health and the environment; 
30 
1 
1/------


I 
(g) to integrate the supply and distribution of water and the provision of sanitation 
2 
services in provinces or regions to ensure adequacy and efficiency in the supply 
3 
of water; 
4 
5 
(h) to develop and maintain a centralized, comprehensive and unified data and 
6 
information base on water resources, and key industry data to ensure the efficient 
7 
evaluation, analysis, dissemination and enforcement o[ applicable standards on 
8 
water resource development, utilization, demand and pricing; 
9 
10 
(i) to provide incentives to and a predictable regulatory environment for investors in 
11 
order to promote and develop the water industry and allow investors a reasonable 
12 
return on their investments; 
13 
14 
Gl to rationalize the operation of water utilities and the grant of Public-Private 
IS 
Partnership (PPP) arrangements [or the provision of water and/or sanitation 
16 
services; 
17 
18 
(k) to foster competItIon among eXlstmg and future Water Service Providers to 
19 
maintain price stability conducive to a balanced and sustainable growth of the 
20 
industry; 
21 
22 
(1) to organize the Water and Sanitation Regulatory Authority in order to achieve the 
23 
foregoing State policies; and 
24 
25 
(m) to monitor and regulate the sewerage service industry in relation to the proper 
26 
collection, treatment, transport and disposal of septage, sewage and wastewater. 
27 
28 
Section 3. Scope. - This Act shall provide a framework for the restructuring and 
29 
reformation of the water induslIy, from sourcing, storage, treatment, distribution, 
30 
sewerage treatment and reuse, including the provision of incentives to promote 
31 
investment in new infrastructure for modernization of the industry and the rationalization 
32 
of the powers, duties, responsibilities and obligations of relevant government agencies 
33 
and Water Service Providers. 
34 
35 
Section 4. Definition (!fTerms. - For purposes of this Act, the term: 
36 
37 
(a) 
"Authority" - refers to the Water and Sanitation Regulatory Authority; 
38 
39 
(b) 
"Flood Control" - refers to the methods, acts, and protocols to be observed in 
40 
order to prevent and reduce the detrimental and catastrophic effects of flood 
41 
waters; 
42 
43 
(c) 
"Flood Risk Management" or "FRM" - refcrs to such acts of defining and 
44 
determining the appropriate methods, acts and protocols geared in preventing 
45 
and reducing the risk of incurring loss of both life and property due to flood 
46 
waters. It also includes, but is not limited to, the implementation of 
47 
precautionary measures, as well as the installation of infrastructures and the 
48 
determination of post-flood clean-up activities in order to arrest the residual 
49 
effects of flood waters; 
50 
51 
(d) 
Integrated Water Resource Management" or "IWRM" - refers to a systematic, 
52 
collaborative and multi-stakeholder process, which promotes the coordinated 
53 
development and management of water, land and related resources within hydro 
54 
geological boundaries, in order to maximize the resultant economic and social 
55 
welfare in an equitable m31mer and without compromising the sustainability of 
56 
vital ecosystems. 
57 
2 


1 
(e) 
"License" - refers to the authority granted to a person, entity or consortium to 
2 
provide water andlor 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 
5 
water andlor sanitation services to the Service Area. 
6 
7 
(f) 
"Licensee" - refers to a person, entity or consortium which has been granted a 
8 
license to operate and provide water andlor sanitation services to a particular 
9 
Service Area under the provisions of this Act; These terms shall cover persons, 
10 
entities or consortium who were granted the right to operate and provide water 
11 
andlor sanitation services through a management contract, PPP Agreement or 
12 
similar arrangement. 
13 
14 
(g) 
"Local Government Unit" - refers to the territorial and political subdivisions of 
15 
the Philippines as defined under the 1987 Constitution of the Philippines, which 
16 
includes provinces, cities, municipalities and barangays; 
17 
18 
(h) 
"Local Water District" -
refers to districts created pursuant Title II of 
19 
Presidential Decree No. 198, as amended; 
20 
21 
(i) 
"Local Water Supply and Sanitation Company" or "L WSSC" - refers to a 
22 
government-owned and controlled corporation which shall have supervision, 
23 
control and jurisdiction over all waterworks and sewerage systems in a 
24 
designated PWRZ which shall be created pursuant to the provisions of this Act; 
25 
26 
G) 
"L WUA" - refers to the Local Water Utilities Administration created pursuant 
27 
to Presidential Decree No. 198, as amended; 
28 
29 
(k) 
"NWRB" - refers to the National Water Resources Board created pursuant to 
30 
Presidential Decree No. 424, as amended; 
31 
32 
(1) 
"NEDA" - refers to the National Economic and Development Authority; 
33 
34 
(m) "Private Sewerage System" - refers to a sewerage system owned, operated and 
35 
controlled by private entities; 
36 
37 
(n) 
"Provincial Water Resource Zone" or "PWRZ" - refers to the territories and 
38 
boundaries of whieh shall be equivalent to the areas comprising each existing 
39 
province created under Republic Act No. 7160 and other laws, with Metro 
40 
Manila, the autonomous regions, special economic zones and other special areas 
41 
considered as separate PWRZs; 
42 
43 
(0) 
"Public-Private Partnership Agreement" or "PPP Agreement" -
refers to 
44 
management contracts, concession agreements or other similar arrangements 
45 
between the government and a private person or entity for the provision of water 
46 
andlor sanitation services in a particular Service Area pursuant to the provisions 
47 
of this Act; 
48 
49 
(p) 
"Public Sewerage System" - refers to a sewerage system owned, operated and 
50 
controlled by the National or Local Government; 
51 
52 
(q) 
"Relevant Information" - refers to information or data concerning the Water 
53 
Industry and Water Service Providers essential to its effective monitoring and 
54 
regulation, and the introduction and maintenance of effective competition, such 
55 
as but not limited to pricing, performance, quality of service, area of coverage, 
56 
and water quality; 
57 
3 


1 
(1') 
"River Basin Cluster" - refers to a grouping of PWRZs andlor portions thereof 
2 
primarily based upon the proximity of PWRZs andlor portions thereof to the 
3 
major river basins, subject rules to be promulgated by the Authority; 
4 
S 
(s) 
"River Basin Organization" or "RBO" - refers to organizations which plan, 
6 
coordinate and monitor activities within an RBC; 
7 
8 
(I) 
"Service Area" - refers to a province, region or geographic area identified and 
9 
designated to a Licensee to provide and operate water andlor sanitation services; 
10 
11 
(u) 
"Septage" - refers to the sludge produced on individual on-site wastewater 
12 
disposal systems, principally septic tanks and cesspool; 
13 
14 
(v) 
"Sewage" - refers to water-borne human or animal wastes, excluding oil or oil 
1 S 
waste, which are removed from residences, buildings, institutions, industrial and 
16 
commercial establishments together with such groundwater, surface water and 
17 
storm water, as may be present, including such waste from vessels, offshore 
18 
structures, other receptacles intended to receive or retain waste or other places 
19 
or the combination thereof; 
20 
21 
(w) "Sewers" - refers to pipes or such other civil works or structures which are built 
22 
and constructed to treat, carry, transport and dispose sewage; 
23 
24 
(x) 
"Sewerage System" - refers, but is not limited to any system or network of 
2S 
pipeline, ditches, channels or conduits including pumping stations, lift stations 
26 
and force mains, service connections including other constructions, devices, and 
27 
appliances appurtenant thereto, which includes the collection, transport, 
28 
pumping and treatment of sewage to a point of disposal; 
29 
30 
(y) 
"Sewerage Service Provider" - refers to a person, entity or consortium engaged 
31 
in the business of collecting, treating, transporting and disposing of wastewater, 
32 
sewage and septage, including maintaining and operating sewerage systems, and 
33 
who are required to register with and secure a license from tbe Authority before 
34 
they may conduct their business or operations in a particular Service Area; 
35 
36 
(z) 
"Tariff' -- refers to an amount which may be charged by Licensees or Water 
37 
Service Providers for the supply of water and/or sanitation services within their 
38 
Service Area; 
39 
40 
(aa) "Wastewater" - refers to waste in liquid stale containing pollutants; 
41 
42 
(bb) "Water Service Provider" or "WSP" - refers to a person, entity or consortium 
43 
engaged in the business of allocating, collecting, treating, supplying and 
44 
distributing water to the public. The term includes Local Water Districts, Water 
45 
Utilities owned and/or operated by Local Government Units, Rural Waterworks 
46 
and Sanitation Associates, Barangay Waterworks and Sanitation Associations, 
47 
Local Water Cooperatives and Local Water Supply and Sanitation Companies 
48 
(LWSSC); 
49 
50 
(cc) "Water Supply System" -refers to the whole of a system incorporating public 
51 
mains, pipes, chambers, treatment plants, pumping stations, service or balancing 
52 
reservoirs or any combination thereof and all other structures, installations, 
53 
buildings, equipment and appurtenances used, and the lands where the same are 
54 
located for the storage, abstraction, collection, conveyance, treatment, 
55 
distribution and supply of water; and 
56 
4 


, 
1 
(dd) "Water Supply Services" - means the treatment of water abstracted from 
2 
watercourses and the distribution and supply of treated water (0 consumers and 
3 
includes the operation and maintenance of a water supply system. 
4 
5 
6 
CHAPTER II 
7 
REFORM IN THE WATER SERVICES INDUSTRY 
8 
9 
Section 5. Organization of the Water Industry. -
The organization of the water industry 
10 
shall be accomplished in order to introduce higher efficiency, enhanced private sector 
11 
participation, consumer protection, competitive pricing, greater innovation and improving 
12 
access to safe water, incorporating for these purposes, Integrated Water Resources 
13 
Management thrust in every activity. For this purpose, any law to the contrary 
14 
notwithstanding, regulatory powcr over all WSPs shall be exclnsively lodged in the 
15 
Authority. Thc NWRB, the L WUA and other similar agencies and offices, shall 
16 
coopcrate with the Authority to ensure the immediate and smooth consolidation of 
17 
regulatolY functions; Provided that, the LWUA may, with respect to Local Water 
18 
Districts with remaining financial obligations to it, institute temporary monitoring 
19 
systems to ensure thc compliance with such outstanding obligations only until they are 
20 
satisfied; Provided further, that the enforcement of such systems shall be with the 
21 
supervision ofthc Authority. 
22 
23 
Section 6. Provincial Water Resource Zones and River Basin Clusters. - There are 
24 
hereby created Provincial Water Resource Zones (PWRZs), the territories and boundaries 
25 
of which shall be equivalent to the areas comprising each existing province created undcr 
26 
Republic Act No. 7160 and other laws, with Metro Manila, the autonomous regions, 
27 
special economic zones and other special areas considered as separate PWRZs; Provided 
28 
that the Authority may redefine or modify the geographic boundaries of a PWRZ based 
29 
011 the existence of special geographic conditions, the location of water sources or other 
30 
circumstances which warrant such redefinition of boundaries. 
31 
32 
Consistent with the principles of Integrated Water Resources Management, PWRZs 
33 
and/or portions thereof shall be grouped into River Basin Clusters (RBCs) for purposes of 
34 
water resource management applying the river basin/watershed approach to ensure 
35 
rational, efficient and ecologically sustainable allocation of water within the RBC. The 
36 
grouping of PWRZs and/or portions thereof into RBCs shall primarily be based upon the 
37 
proximity of PWRZs and/or portions thereof to the major river basins, subject rules to be 
38 
promulgated by the Authority. 
39 
40 
Subject to the provisions of Presidential Decree No. 1067, otherwise known as the Water 
41 
Code of the Philippines, the Authority shall exercise power and authority over water 
42 
resources, and if applicablc, existing water utilities and providers within the PWRZ and 
43 
RBCs. In the case of Metro Manila and spccial economic zones, the Metropolitan 
44 
Waterworks and Sewerage System CMWSS") and the appropriate special economic zone 
45 
authority, respectively, shall continue to cxercise jurisdiction and authority. 
46 
47 
Section 7. Amalgamation of lTxisting wSPs. - The creation, sdection or assignment of 
48 
WSPs which shall service a PWRZ shall be subject to the provisions of this Act. The 
49 
number of WSPs servicing each PWRZ shall be determined and limited by the Authority 
50 
created hereunder for the purpose of achieving economies of scale, effective competition 
51 
and efficiency of service: Provided that, in no case shall the number of WSPs be reduced 
52 
to an extent where it will result in anti-competitive practices. 
53 
54 
For this purpose, within two (2) years from the passage of this Act, the L WUA shall 
55 
cause and implement the amalgamation of WSPs within each PWRZ into onc or more 
56 
L WSSCs, in accordance with the rules and regulations that the Authority shall 
57 
promulgate. The Authority shall exercise overall supervision over the amalgamation 
5 


I 
process and shall develop the necessary rules and guidelines during the transition period 
2 
to ensure that there shall be no diminution of service levcls and quality for consumers. 
3 
4 
The Authority shall provide technical support and training to WSPs and their personnel in 
5 
order to aid them during the amalgamation process. Where applicable, personnel of 
6 
existing WSPs that will be amalgamated shall, subject to the provisions of this Act, be 
7 
absorbed by the resulting LWSSC to the extent that it is administratively viable; 
8 
Provided, that the rights accorded to such personnel pursuant to civil service laws shall 
9 
not be impaired. 
10 
II 
Subject to the application of Section 24 of this Act on amalgamation of water assets, an 
12 
existing and operating WSP shall, upon approval by the L WUA and the Authority, have 
13 
the option to provide, operate and maintain the Water Supply System and/or Sewerage 
14 
System in its currcnt area of operation within a corresponding PWRZ, upon the showing 
15 
that the WSP meets financial and operational benchmarks, including capital 
16 
investments, 
price levels, service quality, customer satisfaction, profitability, 
17 
productivity gains, expansion of basic services, subsidies, functioning of new and 
18 
existing markets, and other performance metrics set by the Authority. In such cases, the 
19 
License covering the PWRZ, or a portion thereof, as defined and contemplated in this 
20 
Act may be granted to the WSP itself; Provided that in addition to the mandatory 
21 
clauses and provisions for Licenses granted under this Act, said License shall expressly 
22 
statc that the failure of the WSP to comply with the Authority'S standards for two (2) 
23 
years shall be a ground to automatically cancel the License without need of judicial 
24 
recourse. The WSP shall be monitored and supervised by the Authority in all aspects of 
25 
its operation necessary to ensure compliance with the provisions of this Act and the 
26 
rules to be issued by the Authority thereunder. 
27 
28 
An existing and operating WSP may, upon approval of the LWUA and the Authority 
29 
and upon compliance with financial and operational benchmarks to be set by the 
30 
Authority, act as the lead entity in the amalgamation process and constitute itself into 
31 
the LWSSC that will exercise jurisdiction over the PWRZ or a portion thereof. Said 
32 
resulting L WSSC shall be subject to the authority and jurisdiction of the Authority 
33 
herein created. 
34 
35 
All employees and personnel, if qualified, of existing WSPs in a particular PWRZ shall 
36 
be given preference in the hiring of personnel by the LWSSC or subsequent Licensee in 
37 
the said PWRZ. All displaced or separated personnel from the service as a result of the 
38 
aforesaid amalagamation of WSPs shall be entitled to separation pay and other benefits in 
39 
accordance with existing laws, rules or regulations. 
40 
41 
Section 8. Creation of a Unified Database for Water Industry. - In furtherance of the 
42 
policies set forth in this Act, all information regarding the water industry, WSPs, 
43 
including the rights and contracts involved in the utilization of water resources shall be 
44 
lodged with the Authority. It shall be the Authority'S duty to receive and consolidate basic 
45 
data, to act as a central registry or central repository of information, and to provide access 
46 
to reliable, standardized information on the water industry and WSPs. 
47 
48 
For this purpose, the Authority shall assume the power, authority and responsibility of 
49 
creating and maintaining a unified, publicly accessible, computerized and centralized 
50 
database of all relevant information as defined in this Act, including but not limited to, 
51 
the use of benchmarking techniques to process information related to pricing, 
52 
performance, quality of service, and coverage targets of all WSPs within and across 
53 
PWRZs. 
54 
55 
WSPs, their subsidiaries and affiliates, and other entities that provide water services are 
56 
required to submit Relevant Information on a regular basis to the Authority. 
57 
6 


1 
The Authority may request and collect data from other offices and agencies in the 
2 
government in order to ensure the timeliness, accuracy and relevance of the database. It 
3 
shall be the duty of the government official receiving such request from the Authority to 
4 
facilitate the transfer of requested information at the soonest possible time, subject only 
5 
to the restrictions on conlldentiality, as implemented by other laws or valid agreements. 
6 
7 
The Authority shall, on a quarterly basis, issue a consolidated report containing the 
8 
performance, pricing and quality data gathered from WSPs. Each report shall contain 
9 
graphical representations of the above data rel1ecting the relative performance of WSPs 
10 
within a PWRZ and across PWRZs. The public shall have, as a matter of right, ready and 
11 
immediate access to Relevant Information possessed and collected by the Authority. In 
12 
order to encourage effective competition and consumer participation, the Authority shall 
13 
ensure that online access to data pertinent to the monitoring of the water industry is free 
14 
and open. For non-web based requests, the Authority is empowered to charge reasonable 
15 
fees to recoup costs incurred in producing copies for the requesting party. 
16 
17 
Any provision of law notwithstanding, the functions of the L WUA related to data and 
18 
information gathering, evaluation, inspection, and analysis of the water industry and 
19 
WSPs are hereby transferred to the Authority. The LWUA shall, within six (6) months 
20 
from the passage of this Act, transfer to the Authority all accumulated data and 
21 
information, including methodologies and best practices in generating the same, relating 
22 
to the water industry and WSPs. Both entities shall coordinate in order to ensure a smooth 
23 
transmission of functions and the integrity of accumulated information. 
24 
25 
A continuing nationwide educational campaign shall be developed and undertaken by the 
26 
Authority to promote the benefits of a unified information system to the economy; to 
27 
create awareness on the rights of consumers; and to brief consumers of other related 
28 
information. 
29 
30 
Section 9. Declaration of the Water Industry as a Priority Investment Sector. - The Water 
31 
Industry is hereby declared a priority investment sector that will regularly form part of 
32 
the country's Investment Priority Plan, unless declared otherwise by law. 
33 
34 
Section 10. Incentives for Investment in the Water Industry. -
LWSSCs, WSPs, 
35 
Licensees, developers and operators of water industry facilities formed and organized 
36 
under this Act shall, upon certification by the Authority, in consultation with the Board of 
37 
Investments, be entitled to the following incentives: 
38 
39 
(a) Income Tax Holiday (ITI-I) - For the first ten years (10) of its commercial 
40 
operations, the duly registered developer or operator shall be exempt from income 
41 
taxes levied by the national government. 
42 
43 
Additional investments in the project shall be entitled to additional income tax 
44 
exemption on the income attributable to the investment. 
4S 
46 
(b) Duty-free Importation of Machinery, Equipment and Materials - Within the first 
47 
ten (l0) 
years upon the issuance of a certification by the Authority, the 
48 
importation of machinery and equipment, and materials and parts thereof, 
49 
including control and communication equipment, shall not be subject to tariff 
50 
duties; Provided, however, that the said machinery, equipment, materials and 
51 
parts are directly and actually needed and used exclusively in the facilities for 
S2 
processing, distribution and delivery of water to the point of use and covered by 
S3 
shipping documents in the name of the duly registered operator to whom the 
S4 
shipment will be directly delivered by customs authorities: Provided,further, that 
55 
endorsement of the Authority is obtained before the importation of such 
56 
machinery, equipment, materials and parts are made. 
57 
7 


1 
Endorsement of the Authority must be secured before any sale, transfer or 
2 
disposition oCthe imported capital equipment, machinery or spare parts is made. 
3 
4 
When the aforementioned sale, transfer or disposition is made under any of the 
5 
conditions provided for in the foregoing paragraphs after ten (10) years from the 
6 
date of importation, the sale, transfer or disposition shall no longer be subject to 
7 
the payment oftaxes and duties; 
8 
9 
( c) Special Realty Tax Rates on Equipment and Machinery. - Any law to the contrary 
10 
notwithstanding, realty and other taxes on civil works, equipment, machinery, and 
11 
other improvements of a registered WSP actually and exclusively used for WSP 
12 
facilities shall not exceed one and a half percent (1.5%) of their original cost, less 
13 
accumulated normal depreciation or net book value. 
14 
15 
(d) Net Operating Loss Carry-Over (NOLCO). - The NOLCO of a WSP during the 
16 
first three (3) years from the start of commercial operation which had not been 
17 
previously offset as deduction from gross income shall be carried oyer as a 
18 
deduction fi'om gross income for the next seven (7) consecutive taxable yeill's 
19 
immediately following the year of such loss: Provided, however, that operating 
20 
loss resulting from the availment of incentives provided for in this Act shall not 
21 
be entitled to NOLCO; 
22 
23 
(e) Accelerated Depreciation. - If, and only if, a WSP fails to receive an III-I before 
24 
full operation, it may apply for Accelerated Depreciation in its tax books and be 
25 
taxed based on such: Provided, that if it applies for Accelerated Depreciation, the 
26 
project or its expansions shall no longer be eligible for an ITH. Accelerated 
27 
depreciation of plant, machinery, and equipment that are reasonably needed and 
28 
actually used for the exploration, development and utilization of water resources 
29 
may be depreciated using a rate not exceeding twice the rate which would have 
30 
been used had the annual allowance been computed in accordance with the rules 
31 
and regulations prescribed by the Secretary of the Department of Finance and the 
32 
provisions of the National Internal Revenue Code (NIRC) of 1997, as amended. 
33 
Any of the following methods of accelerated depreciation may be adopted: 
34 
35 
(i) Declining balance method; and 
36 
37 
(ii) Sum-of-the years digit method. 
38 
39 
(1) Tax Credit on Domestic Capital Equipment and Services. -
A tax credit 
40 
equivalent to one hundred percent (100%) of the value of the value-added tax and 
41 
custom duties that would have been paid on the machinery, equipment, materials 
42 
and parts, had these items been imported, shall be given to a WSP who purchases 
43 
machinery, equipment, materials, and pill·ts from a domestic manufacturer for 
44 
purposes set forth in this Act: Provided, that prior approval by the Authority was 
45 
obtained by the WSP: Provided, further, that the acquisition of such machinery, 
46 
equipment, materials, and p31is shall be made within the validity of the WSP's 
47 
contract, license or other agreement to service as a PWRZ. 
48 
49 
The availment of incentives under this Act shall be regulated by the Authority. Should an 
50 
existing WSP be entitled to incentives under another law, the WSP shaH be required to 
51 
state whether it prefers to adopt the incentives laid out in this Act in lieu of other 
52 
incentives under other laws. Such statement shall be in a public document addressed to 
53 
the Authority for its approval. 
54 
55 
56 
CHAPTER III 
57 
RIVER BASIN CLUSTERS AND RIVER BASIN ORGANIZATIONS 
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2 
Section 11. IWRM Principles in River Basin Clusters. - Principles of Integrated Water 
3 
Resources Management (IWRM) shall be adopted as the strategy for the management and 
4 
administration of the River Basin Clusters (RBCs) defined pursuant to Section 6 of this 
5 
Act. The appropriation and utilization of water in RBCs for domestic, municipal, 
6 
irrigation, power generation, fisheries, livestock raising, recreational and other purposes 
7 
shall be in accordance with IWRM principles including the following: 
8 
(a) Fresh water, a resource which is limited and vulnerable, is vital in the sustenance 
9 
of life, progress and development; 
10 
(b) Water, capable of being appropriated to various uses, possesses economic value 
11 
and thus should be considered an economic good; and 
12 
(c) A collaborative multi-stakeholder approach shall be utilized in the development 
13 
and management of water resources. 
14 
15 
The Authority, in collaboration with the DENR and other relevant agenCIeS, shall 
16 
promulgate rules and regulations to implement the foregoing policies. 
17 
18 
Section 12. Creation and Composition of River Basin Organizations - The Authority 
19 
shall create River Basin Organizations (RBOs) for each River Basin Cluster (RBC) which 
20 
shall be composed of: 
21 
22 
23 
(a) One (1) representative [or each LWSSCs within the RBC; 
24 
(b) One (1) representative for each provincial or city government within the RBC; 
25 
26 
(c) Two (2) representatives from the private sector appointed by the Authority. 
27 
The private sector representatives must have recognized competence in the 
28 
relevant Gelds in the water and sanitation industry and shall be knowledgeable 
29 
principles ofIntegrated Water Resource Management; and 
30 
31 
(d) Other multi-sectoral members and key stakeholders in the water industry to be 
32 
determined by the Authority. 
33 
34 
Section 13. Functions of River Basin Organizations. - The River Basin Organizations 
35 
shall have the following functions: 
36 
37 
(a) To plan, coordinate and monitor all activities within the river basin located in the 
38 
RBC; 
39 
40 
(b) To engage in Flood Risk Management (FRM) with respect to the RBC; 
41 
42 
(c) To create a special task force in extreme cases of disasters brought about by flood 
43 
waters in coordination with the respective LGUs where the RBCs are located; 
44 
45 
(d) To formulate Integrated Water Resources Management (IWRM) policies and 
46 
plans and recommend the same [or the approval o[ the Authority; 
47 
48 
(e) To set-up efficient assessment procedures of available water in different sectors 
49 
(i.e. commercial, municipal, agricultural) in order to achieve supply optimization, 
50 
including, but not limited to water balances, wastewater reuse, and environment 
51 
impacts o[ distribution and use options; 
52 
53 
(0 To oversee and coordinate the implementation, promotion, reVlSlOn and 
54 
enhancement of the IWRM Plan; and 
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(g) To secure funding sources to support the identified projects and programs for the 
3 
river basin within the RBC. 
4 
5 
Section 14. Integration of Planning, Management, Rehabilitation and Development of 
6 
River Basins. ~ Adopting the river basin or watershed approach to water resource 
7 
management, the Authority shall integrate and rationalize the planning, management, 
8 
rehabilitation and development of river basins, including but not limited to river basin 
9 
infrastructure development, flood control, environmental protection and integrated water 
10 
resources management. The Authority shall coordinate initiatives, programs and projects 
II 
of local government units, non-government organizations and other entities concerning 
12 
the development and rehabilitation of river and catchment basins. In order to create an 
13 
effective policy environment for the management of river basins, the Authority shall 
14 
harmonize, consolidate and enhance all relevant river basin policies, rules and 
15 
regulations. 
16 
17 
To ensure that an equitable access to water within an RBC, the Authority shall set 
18 
guidelines in the effective and efficient water allocation and distribution. The Authority 
19 
shall identify the character of the water available in the various river and catchment 
20 
basins and shall ensure the effective water distribution in accordance with the needs of 
21 
the different sectors found in the RBC. 
22 
23 
In order to prevent and reduce the dire effects of flood waters, the Authority shall make 
24 
disaster awareness and preparedness a priority, and will develop measures to ensure that 
25 
the methods used in flood control will effectively minimize the damage brought about by 
26 
flood waters. The Authority shall also focus on "post-flood" activities such as clean-up, 
27 
restoration and renovation of infrastructures that were affected by the flood waters. 
28 
29 
30 
Section 15. River Basin Database Management. ~ The Unified Database for the Water 
31 
Industry created pursuant to Section 8 of this Act shall also serve as the central river 
32 
basin database to which all River Basin Organizations, government agencies and other 
33 
organizations with relevant mandates and developmental initiatives within the river 
34 
basins are required to regularly submit their updated databases for integration and 
35 
consolidation. 
36 
37 
Sectioll16. River Basin Conservation, Protection and Rehabilitation. ~ The Authority, in 
38 
coordination with the River Basin Organizations, the DENR and other appropriate 
39 
agencies involved in river basin management, shall undertake river basin conservation, 
40 
protection and rehabilitation and shall adopt appropriate soil and water conservation, and 
41 
prote.ction measures to safeguard the hydrological integrity of river basins and help 
42 
sustain the protection of water for various purposes and uses. 
43 
44 
45 
CHAPTER IV 
46 
CREATION OF LOCAL WATER SUPPLY AND SANITATION COMPANIES 
47 
48 
Section 17. Creation of Local Water Supply and Sanitation Companies. ~ There are 
49 
hereby created government-owned and -controlled corporations to be known as the 
50 
LWSSC which shall have supervision, control and jurisdiction over all water and 
51 
sanitation systems within the PWRZs created pursuant to this Act and take ownership of 
52 
all assets of WSPs within such PWRZs. 
53 
54 
WaleI' and sanitation systems in Metro Manila and in all special and economic zones shall 
55 
remain under the supervision, control and jurisdiction of the MWSS and the appropriate 
56 
special/economic zone authority, respectively. 
10 
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I 
2 
Section 18. Purpose and Objective. Domicile and Term of Existence. - The principal 
3 
purpose of the L WSSCs is to manage, operate and maintain the water and sanitation 
4 
systems with a PWRZ and, subject to rules and guidelines to be promulgated by the 
5 
Authority, to enter into PPP Agreements with eligible persons or entities. 
6 
7 
Each LWSSC shall have its principal office and place of business within its jurisdictional 
8 
area in its designated PWRZ. 
9 
10 
LWSSCs shall exist for a period of fifty (50) years from its organization and 
11 
establishment, unless otherwise provided by law. 
12 
13 
Section 19. Powers and Functions of the Local Water Supply and Sanitation Companies. 
14 
- The LWSSCs shall have the following powers and functions: 
15 
16 
(a) To construct, maintain, and operate dams, reservoirs, conduits, aqueducts, 
17 
tunnels, purification plants, water mains, pipes, fire hydrants, hydraulic 
18 
structures, pumping stations, machineries and other waterworks for the 
19 
purpose of supplying water to the inhabitants of its territory, for domestic and 
20 
other purposes; and to purify, research and develop, regulate and control the 
21 
use, as well as prevent the wastage of water; 
22 
23 
(b) To construct, maintain, and operate such sanitary sewerages, as may be 
24 
necessary, for the proper sanitation and other uses of the areas comprising the 
25 
PWRZ and to make sure that such sanitary sewerages are capable of 
26 
accommodating the regular to heavy flow of rain water; 
27 
28 
(c) To acquire, purchase, hold, transfer, sell, lease, rent, mortgage, encumber, 
29 
and otherwise dispose of real and personal property, consistent with the 
30 
purpose for which the L WSSC is created and reasonably required for the 
31 
transaction of the lawful business of the same; 
32 
33 
(d) To construct works across, over, through andlor alongside, any stream, 
34 
water-course, canal, ditch, flume, street, avenue, highway or railway, whether 
35 
public or private, as the location of said works may require; Provided, that, 
36 
such works be constructed in such manner as to afford security to life and 
37 
property and so as not to obstruct traffic; Provided, further, that the stream, 
38 
water-course, canal, ditch, flume, street, avenue, highway or railway so 
39 
crossed or intersected be restored without unnecessary delay to its former 
40 
state. Any person or entity whose right may be prejudiced by said works shall 
41 
not obstruct the same; however, he shall be given reasonable notice before the 
42 
construction and shall be paid just compensation. The L WSSC shall likewise 
43 
have the right to locate, construct and maintain such works on, over and/or 
44 
through any street, avenue, or highway and land and/or real rights of the 
45 
Republic of the Philippines or any of its branches, agencies and political 
46 
subdivisions upon due notice to the office, or entity concerned, subject solely 
47 
to the condition that the street, avenue, or highway in which said works are 
48 
constructed be restored without unnecessary delay to its former state unless 
49 
otherwise agreed upon by the L WSSC and the office or entity concerned; 
50 
51 
(e) To exercise the right of eminent domain for the purpose for which the 
52 
L WSSC is created; 
53 
54 
(f) To sue and be sued; 
55 
56 
(g) To adopt and establish the policies and goals as may be necessary or 
57 
proper for the orderly conduct of its business or operations; 
11 


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2 
(h) To borrow money and incur such liabilities, including the issuance of 
3 
bonds, securities or other evidences of indebtedness utilizing its assets as 
4 
collateral and/or through the guarantees of the National Government; 
5 
Provided, however, that all such debts or borrowings shall have been paid off 
6 
before the end of its corporate life; 
7 
8 
(i) To approve, regulate, and supervise the establishment, operation and 
9 
maintenance of waterworks within its jurisdiction operated for commercial, 
10 
industrial and governmental purposes and to fix just and equitable rates or fees 
II 
that may be charged to customers thereof; 
12 
13 
0) To establish, operate and maintain the waterworks and sewerage system 
14 
within its jurisdiction; 
15 
16 
(k) To approve and regulate the establishment and construction of waterworks 
17 
and sewerage systems in privately owned subdivisions within its jurisdiction; 
18 
19 
(I) To have exclusive and sole right to test, mount, dismount and remount 
20 
water meters within its jurisdiction; 
21 
22 
(m)To enter into PPP Agreements with persons or entItles to operate and 
23 
maintain water and sanitation systems within the PWRZ, subject to the 
24 
provisions of this Act; 
25 
26 
(n) To exercise primary and exclusive jurisdiction over disputes between 
27 
WSPs, or between customers and WSPs, within an L WSSC, where such 
28 
cases involve contesting rates, levels and quality of service, fees, fines and 
29 
penalties imposed in the exercise of an L WSSC's powers, functions and 
30 
responsibilities, as set forth herein;and 
31 
32 
(0) To compel a PPP p31tner or WSP to submit required documents and 
33 
information through subpoena duces tecum in the conduct of inquiry or 
34 
investigation of possible violations of this Act or other related issuances and 
35 
rules. 
36 
37 
Section 20. Composition, Qualification, Appointment and Tenure of the Board of 
38 
Trustees. - The corporate powers and functions of the L WSSC shall be vested in and 
39 
exercised by a Board of Trustees composed five (5) members, to wit: 
40 
41 
(a) One (I) member who shall be appointed by the Provincial Governor; 
42 
43 
(b) One (I) member who shall be nominated by the League of Cities or 
44 
Municipalities covering the jurisdictional area of an L WSSC; 
45 
46 
(c) One (1) member representing the private sector who shall be appointed by 
47 
the President of the Philippines; 
48 
49 
(d) One (1) ex-officio member representing the Department of Finance, as 
50 
nominated by the Secretary of Finance; and 
51 
52 
(e) One (1) ex-officio member representing the NEDA, as nominated by the 
53 
Director-General. 
54 
55 
The member representing the private sector shall act as Chairman. The Chairman and the 
56 
members of the Board, except the ex-officio members, shall serve for a term of three (3) 
57 
years, except that the members initially appointed shall serve, as designated in their 
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I 
appointments, one for one year, one for two years and one for three years; Provided, that, 
2 
any person chosen to fill a vacancy shall serve only for the unexpired term of the member 
3 
whom he succeeds. 
4 
5 
No person shall be appointed as a member of the Board unless he is a Filipino citizen, of 
6 
good moral character and of recognized competence in relevant fields in the water 
7 
industry or in civil engineering and/or sanitary engineering, business management, 
S 
economics, finance, and law, with at least five (5) years of actual and distinguished 
9 
experience in their respective fields of expertise. 
10 
11 
The Authority shall issue guidelines on the appointment process for the Board of Trustees 
12 
of the LWSSCs to facilitate the completion of the board compositions. 
13 
14 
Section 21. Meetings of the Board; Quorum, Required Votes. - The Board of Trustees 
15 
shall, immediately after its organization, adopt rules and procedures in the conduct of its 
16 
meetings. A majority of the Board shall constitute a quorum for the transaction of 
17 
business and the affirmative vote of three shall be required for the adoption of any action. 
18 
19 
Section 22. LWUA as a Specialized Lending Institution. - After the completion of the 
20 
amalgamation process in accordance with Section 7 hereof, the L WUA shall function 
21 
solely as a specialized lending institution which shall provide financial services to 
22 
qualified local water utilities, L WSSCs, Licensees and Water Service Providers. 
23 
24 
25 
CHAPTER V 
26 
ECONOMIC POLICY AND REGULATIONS 
27 
28 
Section 23. Operation of a Water Supply System and/or Sewerage System. - The function 
29 
and responsibility of providing, operating and maintaining a Water Supply System and/or 
30 
Sewerage System in a PWRZ shall fall upon the L WSSC concerned, In the case of 
31 
special and economic zones and Metro Manila, the special/economic zone authority or 
32 
MWSS, respectively, all of which shall be subject to guidance from the Authority. 
33 
34 
Subject to the provisions of this Act and the rules to be promulgated by the Authority, an 
35 
LWSSC may enter into a PPP Agreement with a person or entity for the provision, 
36 
operation and maintenance of a Water Supply System and/or Sewerage System in a 
37 
PWRZ; Provided that an L WSSC which opts to provide water and/or sanitation services 
38 
in a PWRZ shall comply with performance standards which shall be determined and 
39 
monitored by the Authority within a period of three (3) years. L WSSCs which fail to 
40 
attain such performancc standards within the aforesaid period shall be mandated to enter 
41 
into a PPP Agreement with eligible persons or entities in accordance with rules to be 
42 
determined by the Authority. 
43 
44 
Section 24. Amalgamation of Water Assets. - Within the periods provided herein, the 
45 
L WUA shall, under the supervision of, and based on the rules promulgated by, the 
46 
Authority, cause the amalgamation of assets of WSPs pertaining to water supply and 
47 
sanitation within a particular PWRZ. This is to ensure a unified and comprehensive 
48 
Water Supply System and/or Sewerage System that shall supply water and sanitation 
49 
services to the entire PWRZ concerned. As much as possible, a single, unified and 
50 
comprehensive Water Supply and/or Sewerage System shall cover all aspects of such 
51 
systems, including water resource development, treatment, storage, distribution and 
52 
reuse. For this purpose, the initial sum of ten million pesos (Php10,000,000.OO) shall be 
53 
appropriated to facilitate the amalgamation process and this amount shall be charged 
54 
against proceeds from PPP or other arranagcments which may be entered as regards these 
55 
assets. 
56 
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The Authority shall guide the L WUA and the WSPs concerned to ensure an efficient, 
smooth and orderly amalgamation of operations and assets. WSPs undergoing 
amalgamation may, subject to existing laws, enter into such arrangements that will 
facilitate the management or temporary ownership of their assets pending amalgamation. 
The assets of the amalgamated WSPs within a PWRZ shall, subject to just compensation, 
be transferred to and held by the L WUA; Provided that the management and ownership 
of the L WUA over such assets shall be transferred to the appropriate L WSSC upon the 
completion of the amalgamation process, as determined by the Authority. In the case of 
special and economic zones and Metro Manila, the entity exercising jurisdiction over 
such areas will exercise the aforementioned authority. For this purpose, the L WUA is 
empowered to acquire, sell, dispose, contract, change and transfer ownership or control of 
assets, rights and contracts concerning WSPs and its assets. The L WUA shall, in the 
exercise of this responsibility defer to the guidelines promulgated by the Authority 
concerning the amalgamation process. 
Section 25. Licensing. - Each L WSSC is empowered and encouraged to enter into a 
partnership with a qualified Licensee for the provision, operation and maintenance of the 
Water Supply System and/or Sewerage System for its respective PWRZ, through the 
issuance of a License, the execution of a PPP Agreement, or any other similar 
arrangement; Provided that such partnership shall be made in accordance with the rules 
and regulations to be promulgated by the Authority on the matter, as well as the 
provisions of Republic Act No. 9184. The LWSSC shall secure the endorsemcnt of the 
Provincial Government for any partnership under this section. 
Section 26. Qualifications of Licensee. -
Licensees must meet the following 
qualifications: 
(a) Must be a citizen of the Philippines or corporations or associations organized 
under the laws of the Philippines at least sixty percent of the capital stock of 
which is owned by such citizens; 
(b) Minimum paid-up capitalization of one million pesos (Php 1,000,000.00); 
( c) Established track record to be defined by the Authority; and 
(d) Any other qualifications that the Authority may deem appropriate. 
Section 27. Rights and Duties of Licensees. - Licensees shall have the duty to ensure that 
its activities are conducted so as to further the public interest and, in particular, that they: 
(a) foster the maintenance and development of efficient, coordinated, and economic 
cooperation of their activities; 
(b) give priority to FRM and propose measures towards the end of developing the 
methods of 1100d control; 
(e) ensure that their Water Supply and/or Sanitation Services are provided in a 
diligent, conscientious and workmanlike manner, in accordance with applicable 
laws and the standards and practices generally accepted in the Philippine and 
international water supply and/or sanitation industry; and 
(d) comply with drinking water quality requirements. 
Licensees shall, to the extent allowed by law and specified in the License, have the right 
to acquire or lease land and lay or repair water or sewerage mains and other relevant 
facilities in public ways, when required to fulfill their obligations. In as far as laying or 
14 


1 
repairing of water or sewerage mains are concerned, the samc shall be done expeditiously 
2 
and efficiently to avoid contributing to the risk of damage brought about by Dood waters. 
3 
4 
Subject to any condition imposed by the Authority, a Licensee may disconnect the supply 
5 
of piped water services andlor sanitation services to a customer if such customer defaults 
6 
in the payment of amount(s) due to that Licensee in respect of water supplied or 
7 
sanitation services provided, or for acts of pilferage pursuant to Sections 8, 9, 10, and 11 
8 
of Republic Act No. 8041, otherwise known as the "National Water Crisis Act of 1995." 
9 
10 
Section 28. Mandatory Provisions. - Any License issued under this Act shall include 
II 
provisions on the following matters: 
12 
13 
(a) Incentives and disincentives for Licensees; 
14 
15 
(b) Severance of affected employees and personnel; 
16 
17 
(c) Dispute resolution mechanism in accordance with the Section 32 of this Act; 
18 
19 
(d) Transferability of License, Management Contract, PPP Agreement or award 111 
20 . 
case of failure to meet the standard set by the Authority; and 
21 
22 
(e) Any other provision the Authority or the LWSSC shall deem appropriate to 
23 
achieve the stated objectives of this Act. 
24 
25 
Section 29. Non-Derogation; Effect on Existing Licenses and Similar Arrangements.-
26 
Except for what is provided for in Section 7 hereof on the amalgamation of WSPs, 
27 
nothing in this Act shall be construed as to derogate any rights arising from existing 
28 
Licenses, management contracts, concession agreements and similar arrangements. 
29 
30 
Section 30. Revision and Subrogation Mechanisms. - The Authority shall have the power 
31 
to revise the terms of a License in the event of the Licensee's failure to meet the quality 
32 
standards set by the Authority within a period of two (2) years from the start of its 
33 
operations after observance of due process. This right includes the right to replace the 
34 
current Licensee with another qualified Licensee. 
35 
36 
Section 31. Mechanism for Setting Tariffs, Rates and Other Charges.-The Authority 
37 
shall formulate an objective, rational and transparent mechanism for fixing and adjusting 
38 
Tariffs, rates and other charges imposed by Licensees which (i) allows the economic 
39 
viability of the provision of water andlor sanitation services; (ii) grants the Licensees a 
40 
reasonable return on investments; (iii) encourages the inflow of investments in the water 
41 
sector, promotes efficiency and continuous improvement in water systems and facilities; 
42 
(iv) ensures affordable and reasonable rates and fees for the average consumer, and (iv) 
43 
protects the welfare of consumers. 
44 
45 
The aforesaid mechanism for fixing and adjusting Tariffs, rates and other charges shall 
46 
apply conventional and internationally accepted rate-setting methods and shall consider 
47 
the following factors, among others: 
48 
49 
(a) Rational and prudent operating costs of providing water andlor sanitation services, 
50 
including a reasonable rate of return on investments; 
51 
52 
(b) Costs of debt in domestic and international markets and the cost of equity for 
53 
utility businesses in the Philippines and abroad; and 
54 
55 
(c) Service quality and performance of a Licensee based on key indicators, such as, 
56 
but not limited to, water quality, availability, unaccounted for water (or non-
57 
revenue water), service coverage, including incentives for Licensees which 
15 


I 
achieve specified levels of performance benchmarked against existing industry 
2 
data, and disincentives for Licensees which fail to attain the same. 
3 
4 
Any escalation on Tarills, rates and other charges shall be primarily based upon the level 
5 
of compliance with key performance metrics which shall reflect current industry 
6 
standards maintained and updated in the Unified Database [or the Water Industry, as set 
7 
forth in Section 8 of this Act. 
8 
9 
Section 32. Arbitration. - All disputes, controversies, or disagreements between L WSSCs 
10 
and licensed WSPs or private sector partners, except where such involve an allegation of 
11 
a criminal act, arising out of, in connection with or in relation to a PPP Agreement 
12 
executed pursuant to this Act, which cannot be amicably settled or resolved through 
13 
mutual consultations or negotiation among the parties, shall be finally settled by domestic 
14 
arbitration in accordance with Republic Act No. 876 (Arbitration Law), as amended, and 
15 
Republic Act No.9285 (Alternative Dispute Resolution Law of 2004), as amended. The 
16 
decision of the arbitrators shall be final and conclusive on tbe parties. 
17 
18 
An Arbitration Clause reflecting the foregoing policy shall be included m all PPP 
19 
Agreements executed pursuant to this Act. 
20 
21 
Section 33. Lifeline Rate. - In line with the policy of granting universal access to water 
22 
services, more particularly to the marginalized sector, the Authority shall establish a 
23 
socialized pricing mechanism. This will enable the setting of a lifeline rate or a targeted 
24 
subsidy on the basic water consumption of low-income market end-users who cannot 
25 
afford to pay at fldl cost and ensure that the overall tariff rate supports the viability of the 
26 
Licensees, as described in Section 31 of this Act. The Authority, after due notice and 
27 
hearing, shall determine the level of basic water consumption and the discount rate. 
28 
29 
Section 34. Missionary Water Services. - The Authority shall encourage and promote 
30 
missionary water services or the provision of water services to remote, rural and unviable 
31 
areas that do not have sufficient or adequate access to water with the end in view of 
32 
elevating water services in such areas to a viable and sustainable level. Missionary water 
33 
service initiatives shall be funded from the revenues from water services provided in 
34 
missionary areas and from such charges which may be collected from all consumers 
35 
within a PWRZ, subject to implementing regulations which shall be determined and 
36 
formulated by the Authority. 
37 
38 
Section 35. Water Crisis Provision. - The Authority shall adopt a proactive approach to 
39 
avert a water crisis by initiating water conservation efforts and water use efficiency, 
40 
incentivizing the use of efficient water distribution systems, utilizing integrated, 
41 
systematic and predictive water management and monitoring systems, encouraging the 
42 
financing, construction, improvement and operation of water facilities, and analogous 
43 
effolis and initiatives in order to increase water supply and improve water quality. The 
44 
Authority shall create plans and programs, and issue rules and regulations to accomplish 
45 
the foregoing. 
46 
47 
In the event the President of the Philippines determines that a water crisis is impending, 
48 
Congress may, through a joint resolution, authorize the employment of emergency 
49 
measures to increase water supply under such terms and conditions as it may approve, 
50 
and reorganize the Joint Executive-Legislative Water Crisis Commission created 
51 
pursuant to Republic Act No. 8041, otherwise known as the "National Water Crisis Act 
52 
of 1995", to exercise the powers and perform the functions stated in the said law. 
53 
54 
55 
CHAPTER VI 
56 
ORGANIZATION 
57 
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Section 36. The Authority. - There is hereby created and established an independent 
Authority to be named the Water and Sanitation Regulatory Authority, hereinafter 
referred to as the "Authority", which shall be organized within one hundred eighty (180) 
days upon effectivity of this Act, primarily from but not limited to the NWRI3 and 
similar government agencies, offices or bureaus tasked with the allocation, distribution 
and preservation ofwatcr as a valuable resource. 
The Authority shall be placed under the administrative supervision of the Office of the 
President. 
Section 37. Powers and Functions a/the Authority. - The Authority, pursuant to Section 
5 of this Act, shall exercise to the exclusion of other agencies, regulatory power over all 
WSPs and for this purpose shall have the following powers and functions: 
(a) Evaluate, review, monitor, examine and approve all applications 
for the appropriation, and use of waters, development of sewerage 
systems and treatment of wastewater. 
(b) Formulate policy directions, strategies and targets to meet the 
goals and objectives 
for 
water 
sourcing, 
supply, 
allocation, 
distribution, 
including preservation, 
wastewater treatment 
and 
sewerage development and septic management. 
(c) Issue and promulgate rules, regulations and guidelines, as may 
be necessary, to implement and enforce its powers and functions 
under this Act; 
(d) Set and enforce just and reasonable technical criteria, methods, 
standards, benchmarks and other measurements of service; 
(e) Primary jurisdiction in matters relating to the appropriation, 
utilization, exploitation, development, control and conservation, 
protection of all waters, as well as proper disposal and/or treatment of 
sewage, septage and wastewater in the country, including autonomous 
regions; 
(f) Manage, administer and operate all watersheds; 
(g) Establish rules and regulations to monitor, avoid and provide 
remedies for any abuse or anti-competitive or discriminatory act or 
behavior by or against any participant in the water supply and 
sanitation industry; 
(h) Adopt and require that books, records and accounts be kept and 
maintained in accordance with the prescribed uniform accounting 
system; 
(i) Fix and determine proper and adequate fees for services; 
(j) Fix and determine proper and adequate rates of depreciation of 
properties and equipment used in water supply and sanitation industry; 
(k) Impose and collect annual levies determined, as a percentage of 
gross revenue accruing in relation to the licensed activities, and 
reasonable fees and surcharges as may be necessary for achieving the 
purposes, powers and functions of the Authority; 
17 


I 
(I) Require the submission of reports, documents, testimony and 
2 
other Relevant Information as set forth in this Act, through subpoena 
3 
ad testificandum or duces tecum if necessary; 
4 
5 
(m) Determine and require the monitoring and submission of such 
6 
data, statistics and other information from public and private entities 
7 
and any or all licensees, as may be necessary, for the effective and 
8 
efficient exercise of its duties, functions, powers and responsibilities; 
9 
10 
(n) Investigate, motu proprio or upon complaint in writing, any matter 
II 
concerning the operation of the service, and require that service be 
12 
provided in proper and suitable manner; 
13 
14 
(0) Impose penalties and fines against any Licensee or against its 
15 
owners, directors, officers, agents or representatives for any violation 
16 
of this Act or of the license, order, rule regulation or requirement 
17 
issued by the Authority; 
18 
19 
(p) Require any Licensee to pay the actual expenses incurred by the 
20 
Authority in any investigation, if it shall be found that a Licensee 
21 
violated any provision of this Act or of the license, order, rule 
22 
regulation or requirement issued by the Authority; 
23 
24 
(q) Advise, apprise and coordinate with other relevant agencies of 
25 
the national or local government on any matter relating to water 
26 
supply and sanitation industry; 
27 
28 
(r) Deputize agents, whether from the public or private sector, to 
29 
assist in the performance of any of the powers and functions of the 
30 
Authority; 
31 
32 
(s) Upon appeal and after due hearing, appoint an interim or 
33 
temporary management committee to ensure continuity of service in 
34 
case a Service Provider Licensee fails to meet conditions of the 
35 
license; 
36 
37 
(t) Appoint, hire and maintain adeqnate staff and personnel, 
38 
advisers, and/or consultants, with suitable qualifications and 
39 
experience, as necessary; 
40 
41 
(u) Exercise exclusive appellate jurisdiction over appeals from L WSSC 
42 
decisions and resolutions regarding contesting rates, levels and quality of 
43 
service, fees, fines and penalties imposed in the exercise of an L WSSC's 
44 
powers, functions and responsibilities, as set forth herein where said cases 
45 
involve disputes between WSPs, or between customers and WSPs, within an 
46 
LWSSC; 
47 
48 
(v) Exercise primary and exclusive jurisdiction over disputes between 
49 
LWSSCs and between customers and LWSSCs regarding contesting rates, 
50 
levels and quality of service, and such other matters relative to the exercise 
51 
of the powers and responsibilities of LWSSCs; and 
52 
53 
(w) Such other incidental powers and functions as may be necessary to 
54 
attain the objectives of this Act. 
55 
56 
Section 38.Water Resource Regulation. - When exercising its water resource regulation 
57 
functions, the Authority shall be guided by the provisions of Presidential Decree No. 
18 


1 
1067, otherwise known as the Water Code of the Philippines, on Appropriation of 
2 
Waters, resolution of cases arising from water use, including conflicts between water 
3 
users, as well as any other applicable provisions of the Water Code and other relevant 
4 
laws or government issuances. 
5 
6 
Section 39. Composition. - All the powers of the Authority shall be vested in and 
7 
exercised by a Board of Officers, a collegial body of nine (9) members. Seven (7) 
8 
members shall be full-time employees of the Authority composed of a Chairperson and 
9 
six (6) Officers, appointed by the President of the Philippines. Each member, including 
10 
the Chairperson shall concurrently head and serve the following Departments of the 
II 
Allthority: (1) Administration; (2) Registry; (3) Tariffs; (4) Engineering and 
12 
Infrastructure Development; (5) Environmental and Consumer Protection; (6) Audit and 
13 
Finance; and (7) Legal and Enforcement. While the remaining two (2) officers shall be 
14 
ex-officio members representing the Department of Finance and the National Economic 
15 
Development Authority ("NEDA") nominated by the Secretary and the Director-General, 
16 
respectively. 
17 
18 
Section 40. Common Qualifications for Concurrent and Ex-Officio Officers.- Each 
19 
Ofllcer, including the Chairperson must be citizens and residents of the Philippines, at 
20 
least thirty five (35) years of age, and of good moral character, recognized integrity and 
21 
competence in the field of law, business, commerce, finance, accounting or public 
22 
administration, water or utility economics, management, physical or engineering services, 
23 
hydrology and other related services, with at least three (3) years actual and distinguished 
24 
experience in their respective fields of expeltise. 
25 
26 
Section 41. Special Qualifications for Concurrent Officers. -
In addition to the 
27 
qualifications enumerated, the Chairperson, who 
shall concurrently head the 
28 
Administration Department shall be a member of the Philippine Bar with at least ten (l0) 
29 
years experience in the active practice of law. The Officer who shall concurrently head 
30 
the Legal and Enforcement Department shall be a member of the Philippine Bar with at 
31 
least ten (l0) years experience in the active practice of law; while the Officer who shall 
32 
concurrently head the Audit and Finance Department shall be a certified public 
33 
accountant with at least (l0) ten years experience in active practice. Additional 
34 
requirements and qualifications for the officers, including the Chairperson, may be set 
35 
forth under the Implementing Rules and Regulations to be promulgated upon creation and 
36 
formation of the Authority in conformity with this Act. 
37 
38 
Section 42. Prohibition and Disqualification. .- The Chairperson and Officers of the 
39 
Authority or any of their relatives within the fourth civil degree of consanguinity or 
40 
affinity, legitimate or common law, shall be prohibited from holding any interest 
41 
whatsoever, either as investor, stockholder, officer or director, in any company or entity 
42 
engaged in the business of transmitting, generating, supplying or distributing any form of 
43 
energy and must, therefore, divest, through sale or legal disposition, any and all interests 
44 
in the water sector upon assumption of office. 
45 
46 
Section 43. Term. - The Chairperson and Concurrent Officers of the Board shall be 
47 
entitled to a term of seven (7) years; Provided, however, that among the Officers first 
48 
appointed upon creation of the Authority, the Chairperson shall serve for a period of 
49 
seven (7) years, three (3) Officers shall serve for five (5) years and the remaining three 
50 
(3) Officers shall serve for four (4) years without reappointment; Provided, further, that 
51 
any member whose term has expired, as specified herein, shall serve as such until his 
52 
successor shall have been appointed and qualified; Provided, moreover, that any 
53 
appointment to fill a vacancy in the Authority arising from death, removal, retirement or 
54 
resignation shall be made only for the unexpired term; Provided, finally, that in no case 
55 
shall any member serve for more than seven (7) years in the Authority. 
56 
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Ex-Officio Officers of the Authority shall serve at the pleasure of the appointing power. 
But in no case shall ex-officio member serve for more than seven (7) years in the 
Authority. Ex-Officio Officers shall participate in the activities of the Authority to the 
extent that the participation is not incompatible with their respective positions with the 
Department of Finance or NEDA, as the case may be. 
Section 44. Security of Tenure. - Concurrent Officers of the Authority shall enjoy 
security of tenure and shall not be suspended or removed from office except for just 
cause, as specified by law. 
Section 45. Board Meetings. - The Board shall meet at least once a week, or as often as 
may be necessary upon the call of the Chairman of the Board or by a majority of the 
Board of Officers to ensure performance of its functions, subject to holidays, calamities, 
emergencies or supervening events. 
Section 46. Quorum. - The presence of at least five (5) Officers of the Board shall 
constitute a quorum, which shall be necessary for the transaction of any business. The 
affirmative vote of a majority of the Officers present in a quorum shall be adequate for 
the approval of any resolution, decision or action. 
Section 47. Administrative Function. - The Chairperson, shall concurrently head the 
Administrative Department and shall exercise direct executive control and supervision of 
the internal operations of the Authority, its Officers, staff and personnel, agents and 
representatives. 
The Chairperson is also authorized to represent the Authority in all 
dealings and transactions with other offices, agencies, and instrumentalities of the 
Government and with all persons and other entities, private or public, domestic or 
foreign. 
29 
Section 48. The Registrar. - There is hereby created and established the Water Industries 
30 
and Sewerage Registry, headed by a Registrar, tasked with implementing the unified 
31 
database referred to in Section 8 of this Act. The Registrar, shall conduct appropriate 
32 
research and comprehensive studies to provide the necessary technical inputs to facilitate 
33 
. the Authority in the conduct of its functions. 
34 
35 
36 
37 
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46 
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48 
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54 
55 
56 
Section 49. Efficient Database Management, Confidentiality and Non-Disclosure. - The 
Registrar, as custodian of vital information necessary for the development of the water and 
sanitation industry, shall develop cost-effective methods and systems for data 
accumulation and dissemination while ensuring confidentiality of sensitive information. 
To this end, the Authority shall establish and issue such rules and guidelines, as may be 
necessary, to regulate disclosure of information, establish standards, and enforcement 
of fines and penalties that would be imposed for any violations as set forth in this Act. 
Section 50. Fiscal Autonomy and Responsibility.- The Authority shall enjoy fiscal 
autonomy, subject to regular audits by the Commission on Audit. The amount of thirty 
million pesos (Php 30,000,000.00) is hereby allocated from the existing budget of the 
NWRB for the initial operation of the Authority. Any balance shall initially be sourced 
from the Office of the President of the Philippines. Thereafter, the annual budget certified 
by the Authority, through its chairperson, as necessary to defray its expenses, shall be 
provided for in the regular or special appropriations and shall be released automatically 
and regularly. To ensure the fiscal independence of the Authority, the Officer and 
concurrent head of the Finance Department, shall be primarily responsible for the 
preparation and disbursement of the budget of the Authority. 
Section 51. Compensation and Other Emoluments. - The compensation of the Officers 
of the Authority and its staff shall be exempt from the coverage of Republic Act No. 
6758, otherwise known as the "Salary Standardization Act"; Provided, that the salaries 
20 


of the Authority and its staff shall conform, as closely as possible, to the principles of 
2 
R.A. 6758. 
3 
4 
For this purpose, the schedule of compensation of the Authority's officers and 
5 
employees shall be submitted for approval of the President of the Philippines. The 
6 
compensation schedule shall be implemented within six (6) months from the effectivity 
7 
of this Act and maybc upgraded by the President of the Philippines, as the need arises; 
8 
Provided further, that in no case shall the compensation of the Authority and its staff be 
9 
upgraded more than once a year. 
10 
11 
Pertinent civil service laws, rules and regulations of the Philippines shall be applicable 
12 
to the Authority. 
13 
14 
Section 52. Board Per Diems and Allowances. - The Officers of the Board shall receive 
15 
per diem for each regular or special meeting of the Board actually attended by them, and, 
16 
such other allowances as the Board may prescribe, upon approval of the Secretary of 
17 
Finance, and in conformity with existing and future legislation. 
18 
19 
Section 53. Environmental and Consumer Protection. - A qualified Officer of the Board, 
20 
shall concurrently head a depattment that shall address environmental and consumer 
21 
concerns in connection with applications, rights, licenses, concessions, programs, 
22 
activities, investments and projects approved by or pending with the Authority. 
23 
24 
Section 54. Technical Competence. - Pursuant to the recommendations of the NEDA, the 
25 
Authority shall effectively undertake its vital and comprehensive functions by enhancing 
26 
its technical competence through continuing education and rigorous training programs in 
27 
the following areas: arbitration, dispute resolution, benchmarking, evaluation of technical 
28 
performance 
and compliance monitoring, 
service 
and 
performance 
standards, 
29 
performance-based rate-setting reform, environmental standards, fiscal responsibility, 
30 
profitability and such other areas as will enable the Authority to adequately perform its 
31 
duties and functions. 
32 
33 
Section 55. Realignment and Supervision of Existing Water Services Related Agencies. -
34 
The Authority shall have primary jurisdiction in matters relating to the appropriation, 
35 
utilization, exploitation, development, control and conservation, protection of all waters, 
36 
as well as proper disposal and/or treatment of sewage, septage and wastewater in the 
37 
country, including autonomous regions. 
38 
39 
Pursuant to this mandate, all existing government agencies, bureaus or offices shall, as far 
40 
as practicable, be realigned with and fall under the supervision and control of the 
41 
Authority. 
Within ninety (90) days from the creation of the Authority's Board and 
42 
assumption of a majority of its Officers, the latter shall closely coordinate with 
43 
representatives from the Department of Environment and Natural Resources, Department 
44 
of Interior and Local Government, Department of Health, Cooperative Development 
45 
Authority, Laguna Lake Development Authority and other relevant government agencies 
46 
or offices to implement an effective realignment offunctions and transition of resources. 
47 
48 
All government employees and personnel displaced or separated from the service as a 
49 
result of the restructuring of realignment of or abolition of government offices, shall be 
50 
entitled to separation pay and other benefits in accordance with existing laws, rules or 
51 
regulations. Displaced or separated employees and personel, if qualified, shall be given 
52 
preference in the hiring of other government agencies or instrumentalities. 
53 
54 
Section 56. Reportorial Requirements. - The Authority shall submit an annual repolt to 
55 
the the President of the Philippines, Congress atld to such other agencies as may be 
56 
required by law before the end of April of each year. An annual report containing but not 
57 
limited to the following matters: licenses issued, investments obtained, incentives 
21 


· 
' 
1 
granted, disputes resolved, revenue generated, cost saved, and such matters relevant to 
2 
the perfomance of its functions. The Authority shall make copies of such reports 
3 
available to any interested pat1y upon payment of a charge which reflects the printing 
4 
costs. 
5 
6 
The Authority shall adopt its internal rules of procedures; conduct hearings and receive 
7 
testimonies, reports and technical advice; invite or summon by subpoena ad 
8 
testificandum any public official, private citizen or any other person to testify before it, or 
9 
require any person by subpoena duces tecum to produce before it such records, reports, 
10 
documents or other materials as it may require to attain the purposes for which it is 
11 
created and to make an accurate and comprehensive report to the President and Congress. 
12 
Any public official or private citizen or entity who willfully and deliberately refuses 
13 
without just cause to extend the supp0l1 and assistance required by the Authority to 
14 
effectively attain its objectives shall be punished as set forth in this Act. 
15 
16 
17 
CHAPTER VII 
18 
WATER SUPPLY SYSTEM AND SEWERAGE SYSTEM 
19 
20 
Section 57. Construction of Sewerage System. - The simultaneous construction of a 
21 
sewerage system with the water supply system is encouraged. A water services provider 
22 
licensed in a service area shall, subject to the approval of the Authority, be given an 
23 
optional license to construct and maintain a sewerage system in the same service area, 
24 
25 
Section 58. Hand Over of Water Supply System and Sewerage System. - (a) Subject to 
26 
Subsections (a) and (e), a developer of a new development which is within a service 
27 
licensee's water supply distribution area or sewerage services area, as the case may be, 
28 
shall, upon the issuance of the certificate of compliance of the water supply system or 
29 
sewerage system or parl of the systems by the Authority, hand over the water supply 
30 
system or sewerage system or part of the systems within the development to the water 
31 
distribution licensee or the service licensee providing sewerage services, as the case may 
32 
be, at no cost, for the purposes set out in Subsection (c); 
33 
34 
(b) The service licensee shall accept the water supply system or sewerage system or part 
35 
of the systems, as the case may be, after the service licensee is satisfied that the water 
36 
supply system or the sewerage system or part of the systems meets the requirements set 
37 
out in the approved plans and specifications and standards; 
38 
39 
(e) Upon the water supply system or the sewerage system or part of the systems being 
40 
handed over to the service licensee, the service licensee shall operate and maintain such 
41 
system; 
42 
43 
(d) The developer shall provide or cause the owner of the land to provide the service 
44 
licensee access to the water supply system and sewerage system or part of the systems for 
45 
the purposes of operating and maintaining such system; and 
46 
47 
(e) The Authority may exempt any developer from the requirements of this section if the 
48 
developer can establish that he has the sufficient financial, operational and technical 
49 
capacity to construct, maintain and operate the water supply system or sewerage system. 
50 
The Authority shall regularly assess the developer's water supply system or sewerage and 
51 
may revoke any exemption upon notice and hearing. 
52 
53 
Section 59. Power to Require Premises to be Connected to Sewerage System. - (a) The 
54 
Authority may direct the owner in writing, or if the owner cannot, with reasonable 
55 
diligence, be traced, the occupant, of any premises not connected to a public sewerage 
56 
system, to construct or install for the premises, within the period specified in the notice, a 
57 
private connection pipe of such matcrial or size and at such level as to enable the 
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premises to be properly and effectively connected to any sewerage system located within 
thirty meters from the boundary of the premises; and 
(b) If the owner or occupant to whom a direction under Subsection (a) has been issued 
fails to comply with the direction within the period specified in the notice, the Authority 
or any person authorized by the Authority may construct or install the private connection 
pipe or cause the pipe to be constructed or installed and recover the expenses incurred in 
the construction and installation of such pipes from the owner or occupant. 
Section 60. Power to Require Developer to Connect Development to Public Sewerage 
System - (a) The Authority may direct the developer of any development not connected 
to a sewerage system, to construct or install for the development, within the period 
specified in the notice, a connection pipe of such material or size and at such level as to 
enable the development to be properly and effectively connected to the sewerage system; 
and 
(b) If the developer to whom a direction twder Subsection (a) has been issued fails to 
comply with the direction within the period specified in the notice, the Authority or any 
person authorized by the Commission may construct or install the connection pipe or 
cause the pipe to be constructed or installed and recover the expenses incurred in the 
construction and installation of such pipes from the developer. 
Section 61. Power to Install or Construct Private Sewerage System or Septic Tank - (a) 
The Authority may direct in writing the owner of any premises, or if the owner cannot, 
with reasonable diligence, be traced, the occupant of the premises, to install or construct a 
private sewerage system or septic tank for the premises, as the Authority deems necessary 
in accordance with guidelines provided for in the Implementing Rules and Regulations; 
and 
(b) The cost of the construction or installation of the private sewerage system or septic 
tank shall be borne by the owner of the premises, or if the owner or cannot, with 
reasonable diligence, be traced, the occupant. 
Section 62. Power to Require Private Sewerage System to be Put in Proper Order. - (a) 
If the Authority is satisfied that: (i)a private sewerage system, septic tank, individual 
internal sewerage piping or common internal sewerage piping on any premises or which 
serves any premises; or (b) a private connection pipe connecting any premises to a 
sewerage system, is defective or is not properly maintained or is in need of repair, the 
Authority may issue a notice to the owner, or occupant of such premises or the person 
responsible for the private sewerage system, septic tank, individual internal sewerage 
piping, common internal sewerage piping or private connection pipe to have such private 
sewerage system, septic tank, individual internal sewerage piping, common internal 
sewerage piping or private connection pipe repaired or put in proper order within the 
period specified in the notice; 
(b) If the Authority is satisfied that, due to any obstruction, any premises on which a 
septic tank is situated does not have adequate access for the purpose of desludging the 
septic tank, the Authority may issue a notice to the owner or occupant of such premises to 
remove such obstruction within the period specified in therein; 
(c) If the person to whom a notice issued under Subsection (a) or (b) fails to comply 
therewith within the period specified, (i) the Authority or any person authorized by the 
Authority may, at the expiration of such period, do the work required in the notice and 
may recover the expenses incurred in doing so from the owner, or occupant; or (ii) the 
Authority may direct the service licensee in that sewerage services area to manage and 
operate the private sewerage system, septic tank, individual internal sewerage piping, 
common internal sewerage piping or private connection pipe, as the case may be, for such 
23 


, 
period, as the Authority may decide, and to charge the owner, or occupant for services 
2 
rendered by that service licensee; and 
3 
4 
(d) For the purposes of Subsection (c)(ii), the owner and occupant of tbe premises shall 
5 
grant the service licensee access to the private sewerage system, septic tank, individual 
6 
internal sewerage piping, common internal sewerage piping or private connection pipe, as 
7 
the case may be, for the purposes of operating and maintaining the private sewerage 
8 
system, septic tank, individual internal sewerage piping, common internal sewerage 
9 
piping or private connection pipe, as the case may be. 
10 
11 
Section 63. Duty to Operate and Maintain Private Sewerage System - (a) The owner or 
12 
occupant of any premises having a private sewerage system or septic tank shall: (i) grant 
13 
the service licensee or permit holder adeq~ate access to the septic tank for the purpose of 
14 
enabling the septic tank to be serviced and desludged; (ii) cause the private sewerage 
15 
system, septic tank, the private connection pipe, individual internal sewerage piping, 
16 
common internal sewerage piping and all accessories thereto to be so maintained and 
17 
kept so as not to be a nuisance or so that it may not be harmful to health; (iii) cause the 
18 
septic tank to be desludged and, in the case of a private sewerage system, to be serviced 
19 
or maintained by a service licensee or permit holder at such intervals and in such manner 
20 
as may be prescribed; and (iv) grant the service licensee or permit holder adequate access 
21 
to the private sewerage system for the purposes of enabling the private sewerage system 
22 
to be inspected, serviced or maintained. (b) The owner or occupant of any premises, as 
23 
the case may be, shall be solely responsible for the maintenance, refurbishment or 
24 
replacement of the individual internal sewerage piping or the common internal sewerage 
25 
piping. 
26 
27 
Section 64. Contract flJr Provision of Sewerage Services. - The owner or occupant of any 
28 
premises to whom sewerage services is provided shall be deemed, upon the provision of 
29 
sewerage services to that premises, to have contracted with the service licensee providing 
30 
sewerage services for the provision of sewerage services. 
31 
32 
33 
CHAPTER VIII 
34 
DEVELOPMENT OF EFFICIENT, ECOLOGICAL AND SUSTAINABLE 
35 
TECHNOLOGIES AND ENVIRONMENTAL PROTECTION 
36 
37 
Section 65. Incentives for Integration of Wastewater Treatment/Collection 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 treatment 
40 
facilities in their water supply and sewerage systems. 
41 
42 
Section 66. Tax and Duty Exemption of Donations, Legacies and Gifts. - All legacies, 
43 
gifts and donations to providers of water supply and sanitation services for the support 
44 
and maintenance of the program for effective water quality management shall be exempt 
45 
from donor's tax and shall be deductible from the gross income of the donor for income 
46 
tax purposes. 
47 
48 
Imported articles donated to, or for the account of any provider of water supply and 
49 
sanitation services specifically for the exclusive use of the provider in its water quality 
50 
management programs shall be exempted from the payment of customs duties and 
51 
applicable internal revenue taxes. 
52 
53 
Wastewater treatment and/or installation of water pollution control devices shall be 
54 
classified as pioneer and preferred areas of investment under the Board of Investment's 
55 
annual priority plan and shall e~oy the applicable fiscal and non-fiscal incentives, as may 
56 
be provided for under the Omnibus Investment Code, as amended. 
57 
24 


Section 67. Financial Assistance Program. - Government financial institutions such as 
2 
the Dcvelopment Bank of the Philippines, Land Bank of the Philippines, Government 
3 
Service Insurance System, and such other government institutions providing financial 
4 
services shall, in accordance with and to the extent allowed by the enabling provisions of 
5 
their respective charters or applicable laws, accord high priority to extend financial 
6 
services to providers of water supply and sanitation services engaged in sewage 
7 
collection and treatment facilities. 
8 
9 
Section 68. Availability of Technologies Developed Under the Incentive Schemes of the 
10 
Clean Water Act. - To the extent that they do not duplicate the incentives provided under 
II 
this Act, technologies, projects, processes and techniques in water quality management 
12 
developed under the incentive schemes of Republic Act No. 9275, or the Philippine 
13 
Clean Water Act of 2004, shall be made available to providers of water supply and 
14 
sanitation services that will integrate the said technologies, projects, processes and 
IS 
techniques in thcir water supply and sewerage systems free of applicable taxes. 
16 
17 
Section 69. Environmental Protection. - Participants in the provision of water supply and 
18 
sanitation services shall comply with all environmental laws, rules, regulations and 
19 
standards promulgated by the Department of Environment and Natural Resources 
20 
including, in appropriate cases, the establishment of an environmental guarantee fund. 
21 
22 
23 
CHAPTER IX 
24 
FINES AND PEN AL TIES 
25 
26 
Section 70. Prohibited Acts. - The following acts shall be penalized by suspension or 
27 
revocation of the violator's license or other right to the use of water and/or a fine of not 
28 
exceeding one million Pesos (Php 1,000,000.00), in the discretion of the Authority: 
29 
30 
(a) Non-compliance with reportorial rules and requirements; 
31 
32 
(b) Refusal to submit reports and/or permit examination; 
33 
34 
(c) Falsification or tampering of documents and/or official records to avail of the 
35 
fiscal and non-fiscal incentives provided under this Act; 
36 
37 
(d) Non-compliance with the established guidelines and standards promulgated by 
38 
the Authority; 
39 
40 
(e) Appropriation of subterranean or ground water for domestic use by an 
41 
overlying landowner without registration required by the Authority; 
42 
43 
(1) Failure to comply with any of the terms or conditions in a water permit or a 
44 
waler rights grant; 
45 
46 
(g) Unauthorized use of water for a purpose other than that for which a license, 
47 
right or permit or concession was granted; 
48 
49 
(h) Construction or repair of any hydraulic work or structure without duly 
50 
approved plans and specifications, when required; 
51 
52 
(i) Failure to install a regulating and measuring device for the control of the 
53 
volume of water appropriated, when required; 
54 
55 
G) Unauthorized sale, lease, or transfer of water and/or water rights; 
56 
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(k) Failure to provide adequate facilities to prevent or control diseases whcn 
required by the Authority in the construction of any work for the storage, 
diversion, distribution and utilization of water; and 
(I) Violation of or non-compliance with any order, rule or regulation of the 
Authority. 
Section 71. Fines and Penalties. - Any violation of the mandatory provisions of this Act 
shall be punishable by imprisonment of six (6) years and/or fine not exceeding One 
Million Pesos (Php 1,000,000.00). In the case of juridical persons, the President, the 
Chief Executive Officer and other responsible corporate officers shall be held liable for 
any violation of this Act committed by the juridical person, through its employees, agents 
and representatives. 
CHAPTER X 
TRANSITORY AND FINAL PROVISIONS 
Section 72. Statutory Construction. - This Act shall, unless the context indicates 
otherwise, he construed in favor of the establishment, promotion, preservation of 
competition and people empowerment so that the widest participation of the people, 
whether direct or indirect, is ensured. 
Section 73. Implementing Rules and Regulations. - The Board shall, in consultation with 
relevant public and private stakeholders within the water services industry, promulgate 
the Implementing Rules al1d Regulations (IRR) of this Act within six (6) months from the 
effectivity of this Act. 
Section 74. Injunction and Restraining Order. - The implementation of the provisions of 
this Act shall not be restrained or enjoined except by an order issued by the Supreme 
Court of the Philippines. 
Section 75. Separability Clause. - If for any reason, any provision of this Act is declared 
unconstitutional or invalid, the other parts or provisions hereof which are not affected 
thereby shall continue to be in full force and effect. 
Section 76. Applicability and Repealing Clause.- The applicable provIsions of 
Presidential Decree No.1 067, otherwise known as the "Water Code of the Philippines", 
Republic Act No. 8041, otherwise known as the "National Water Crisis Act of 1995", 
Act No. 4062, otherwise known as the "Water Power Act", Republic Act No. 6234, as 
amended, creating the MWSS, Presidential Decree No 198, as amended, creating the 
LWUA, Republic Act No. 7160, otherwise known as the "Local Government Code", and 
Republic Act No. 10149 otherwise known as the "GOCC Governance Act of2011" shall 
continue to have full force and effect except in so far as inconsistent with this Act. 
All laws, orders, rules and regulations, or portions thereof, inconsistent with this Act are 
hereby rcpealed 01' modified accordingly. 
Section 77. Effectivity Clause. - This Act shall take effect on the fifteenth day following 
its publication in at least two (2) national papers of general circulation. 
Approved, 
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