Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City, Metro Manila 
EIGHTEENTH CONGRESS 
Second Regular Session 
HOUSE BILL NO. ___________ 
___________________________________________________________________________ 
Introduced by Hon. Elpidio F. Barzaga, Jr. 
__________________________________________________________________________ 
AN ACT GRANTING MANILA WATER COMPANY, INC.  
A FRANCHISE TO ESTABLISH, OPERATE, AND MAINTAIN THE WATERWORKS AND 
SEWERAGE SYSTEM IN THE EAST ZONE SERVICE AREA OF METRO MANILA AND 
PROVINCE OF RIZAL 
EXPLANATORY NOTE 
The access to safe, affordable and reliable water is a basic human right. 
The participation of the private sector increases efficiency and innovation, 
service quality and saves taxpayers’ money.  
This bill seeks to grant MANILA WATER COMPANY, INC. (MWC) a franchise 
to establish, operate and maintain the waterworks and sewerage system for 
commercial purposes and in the public interest in the Service Area East Zone. 
MWC was incorporated on 6 January 1997 to provide water treatment, 
sewerage and sanitation, distribution services, pipeworks, and management 
services to residential, commercial, and industrial customers. MWC became a 
subsidiary of Ayala Corporation (AC) in 2010.  
In 1995, Congress passed Republic Act No. 8041(“The Water Crisis Act”) 
to allow the privatization of water services to address the nationwide water 
crisis which adversely affected the health and well-being of the population, 
food production and industrialization process.  
MWC participated in the bidding process conducted by government 
and was declared the winner to provide services for the East Zone. The 
Metropolitan Waterworks and Sewerage System (MWSS) entered into a 
concession agreement (CA) with MWC on 21 February 1997 granting  MWC 
the exclusive right to provide water and used water services to the East Zone 
of the franchise area of the MWSS. The East Zone encompasses 23 cities and 
municipalities spanning a 1,400-square kilometer area that includes Makati, 
May 10, 2021
7:29 am
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Mandaluyong, Pasig, Pateros, San Juan, Taguig, Marikina, most parts of 
Quezon City, portions of Manila as well as 14 towns of Rizal province. 
Pursuant to President Rodrigo R. Duterte’s drive to protect the interest of 
the Filipino consumer and the national government, the government pushed 
for the revision of the CA. After a renegotiation, a Revised Concession 
Agreement (RCA) was signed by MWC and MWSS on 31 March 2021.  MWC is 
now considered a public utility subject to all restrictions applicable to public 
utilities such as nationality restriction. The RCA contained the following features: 
1. The RCA confirms the continuation of the concession until July 31, 2037. The
Revised CA largely adopts the provisions of the New Clark City - Joint
Venture Agreement (NCC-JVA) for the development of water and
wastewater infrastructure in New Clark City.
2. Consistent with the NCC-JVA, the RCA removes recovery of the Corporate
Income Taxes and adjustment for foreign currency differential (FCDA). To
mitigate the impact of tariff increases on customers, the RCA lowers the
inflation factor to 2/3 of the Consumer Price Index adjustment and imposes
caps on increases in standard rates for water (1.3x the previous standard
rate) and wastewater (1.5x the previous standard rate). Instead of a market-
driven appropriate discount rate, MWC shall now be limited to a 12% fixed
nominal discount rate.
3. The rate rebasing mechanism under the original CA is retained. Thus, the
rates for water and sewerage services provided by MWC shall be set at a
level that will permit it to recover over the term of the concession
expenditures efficiently and prudently incurred and to earn a reasonable
rate of return.
4. To align with the government’s program to assist the disadvantaged sector
and to contribute to the recovery of the economy post-COVID 19, the
Revised CA includes a tariff freeze until 31 December 2022.
5. Finally, the Undertaking Letter of the Republic is retained but has been
amended to exclude the non-interference clause. It now applies only to
contracts and obligations existing at the time of execution of the RCA.
While respecting the terms of the RCA, a legislative franchise will 
promote and protect the continuity and stability of the essential services 
rendered by MWC. It will secure the continuing obligation of MWC to provide 
uninterrupted and adequate supply and distribution of potable water for 
domestic, commercial and other purposes, and to provide necessary 
sewerage services in the East Zone.  
The entry of MWC into the scene in 1997 has shown a dramatic 
improvement in the provision of water and used water services in the East Zone. 
MWC has reduced non-revenue water (water lost through leaks in pipes) in the 
East Zone to 12% and MWC has expanded the scope of its services to many 
areas which were not covered before.  MWC’s decades-long experience in 
the industry and the financial strength of AC has been further strengthened by 


the recent entry of Trident Water Company Holdings, Inc. (Trident)  into MWC. 
Trident is part of the Razon Group of Companies  and provides MWC with a 
track record for providing efficient public services, fund raising capacity, non-
adversarial and cooperative relationship with government and regulators. 
MWC now has the unqualified support of its two big stockholders groups, as 
well as the significant public shareholdings in MWC as a listed company in the 
Philippine Stock Exchange.  
The grant of franchise will also prepare MWC for a change in regulatory 
framework for water services proposed in the pending bills for the creation of 
the Department of Water Resources. The grant of franchise also gives Congress 
oversight over MWC and the services that it renders in the East Zone. 
Considering that MWC possesses the required capability, it is apt for the 
Congress to grant MWC the franchise to establish, operate and maintain the 
waterworks and sewerage system for commercial purposes and in the public 
interest in the Service Area East Zone. 
The Support of the Members of Congress for the prompt and timely 
passage of this measure is earnestly requested. 
HON. ELPIDIO F. BARZAGA, JR. 
Representative 
Lone District of the City of Dasmariñas, Cavite 


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
EIGHTEENTH CONGRESS 
Second Regular Session 
HOUSE BILL NO. __________ 
Introduced by Hon. Elpidio F. Barzaga, Jr. 
AN ACT GRANTING MANILA WATER COMPANY, INC.  
A FRANCHISE TO ESTABLISH, OPERATE, AND MAINTAIN THE WATERWORKS AND 
SEWERAGE SYSTEM IN THE EAST ZONE SERVICE AREA OF METRO MANILA AND 
PROVINCE OF RIZAL 
Be it enacted by the Senate and the House of Representatives of the 
Philippines in the Congress assembled: 
SECTION 1. Nature and Scope of Franchise. — Subject to the provisions 
of the Constitution and  applicable laws, rules and regulations, there is hereby 
granted to Manila Water Company, Inc., hereunder referred to as the grantee, 
its successors or assignees, a franchise to establish,  operate, and maintain, for 
commercial purposes and in the public interest, a waterworks  and sewerage 
system to ensure an uninterrupted and adequate supply and distribution of 
potable water for domestic, commercial, and other purposes, and for the 
establishment and maintenance of sewerage system in the East Zone Service 
Area of Metro Manila and Province of Rizal,  under a concession from the 
Metropolitan Waterworks and Sewerage System (MWSS) ), or under an 
appropriate certificate of public convenience and necessity, license, or permit 
from the appropriate water regulatory agency.   
Under this Act, the grantee, shall have the sole right to establish, 
manage, operate, repair, expand, and improve the waterworks and 
sewerage system in the East Zone Service Area as defined in the Concession 
Agreement between the grantee and MWSS dated February 21, 1997, as 
amended under the Revised Concession Agreement dated March 31, 2021 or 
as may hereafter be amended, including the right to bill and collect fees for 
the water supply and sewerage services in the service area from the end-users. 
Without prejudice to the obligation of the MWSS to source and supply 
raw water under the Revised Concession Agreement, the grantee shall 
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develop new raw water sources as its operations may require. The grantee 
may enter into bulk water supply arrangements.  
 
 
SECTION 2. Manner of Operation of Facilities. — All waterworks and 
sewerage systems for water and sewerage services owned, maintained, 
operated, or managed by the grantee, its successors, or assignees shall be 
operated and maintained at all times in accordance with industry standards 
provided in RA No. 9275 or the “Philippine Water Act of 2004” and Presidential 
Decree No. 1067 or the “Water Code of the Philippines”, and as specified in 
the Revised Concession Agreement, certificate of public convenience and 
necessity, license or permit.  
 
 
The grantee shall comply with the standards set by the Regulatory Office 
or its legal successor, and other government agencies concerned, their 
resolutions and other issuances. 
 
 
The La Mesa Dam and Reservoir which was designed to work with the 
Balara Water Treatment Plants operated by the grantee shall continue to be 
managed by the grantee with the approval of the Regulatory Office or its legal 
successor.  
 
 
It shall be the duty of the grantee, its successors and assignees, 
whenever required to do so by the Regulatory Office or its legal successor, or 
any other authorized government agency, to modify, improve, and change 
such system or facilities in such manner and to such extent as the progress in 
science and improvements in the water supply and sewerage services may 
reasonably require, and to employ the latest technology and innovations that 
promote efficiency, environmental sustainability and is beneficial to 
consumers.  
 
 
The grantee shall promote water conservation and avoid water 
wastage. With the approval of the Regulatory Office or its legal successor, 
considering cost efficiencies, the grantee shall establish water impounding 
facilities, consider and undertake the recovery and appropriate reuse of 
wastewater, grey water, industrial water, and reclaimed water. The grantee 
may adopt waste-to-energy or similar technology utilizing sludge waste from 
its wastewater facilities to promote energy efficiency in its operations.   
 
 
SECTION 3. Certificate of Public Convenience and Necessity, License, or 
Permit. — For purposes of this Act, the Revised Concession Agreement shall 
serve as the certificate of public convenience and necessity, or license or 
permit of the grantee for the operation of its waterworks and sewerage system.  
 
 
The Revised Concession Agreement between the MWSS and the 
grantee shall remain valid unless otherwise terminated, after due notice and 
hearing for reasons provided in the Revised Concession Agreement, or 
invalidated by a court of competent jurisdiction, or by a government agency 


authorized by law to do so where national security, national emergency, or 
public interest so requires, or unless modified or amended under this Act or any 
subsequent law. 
 
 
The grantee, its successors or assignees, shall apply for a certificate of 
public convenience and necessity, license or permit when a new regulatory 
framework for water service providers is established by law or when required 
by the Regulatory Office or its legal successor which will supersede the terms 
and conditions of the Revised Concession Agreement; Provided That, if the 
public service function and assets of MWSS are privatized by law, the grantee 
shall have the right of first refusal to acquire ownership of the facilities or 
waterworks and sewerage system in the East Zone Service Area owned by 
MWSS, and the grantee shall then own the waterworks and sewerage system 
in the franchise area. 
 
 
 
Regulatory Office shall mean the Regulatory Office referred to under the 
Revised Concession Agreement, or its legal successor tasked to regulate the 
services and operations of waterworks and sewerage systems.   
 
 
SECTION 4. Excavation and Restoration Works. — For the purpose of 
erecting and maintaining water pipelines, sewerage line, and other related 
facilities, it shall be lawful for the grantee, its successors or assignees, with prior 
approval of the Department of Public Works and Highways (DPWH), 
Metropolitan Manila Development Authority (MMDA) or the local government 
units (LGU) concerned, as may be appropriate, to make excavations or lay 
pipes in any of the public places, roads, highways, streets, lanes, alleys, 
avenues, sidewalks, or bridges in the East Zone Service Area of Metro Manila 
and Province of Rizal; Provided, however, That public place, road, highway, 
street, lane, alley, avenue, sidewalk, or bridge disturbed, altered, or changed 
by reason of erection of water pipelines and other related facilities, shall be 
repaired or replaced in workmanlike manner by the grantee, its successors or 
assignees, in accordance with the standards set by the DPWH, MMDA, or the 
LGU concerned. Should the grantee, its successors or assignees, after the ten 
(10)-day notice from the said authority, fail, refuse, or neglect to repair or 
replace any part of a public place, road, highway, street, lane, alley, avenue, 
sidewalk, or bridge altered, changed or disturbed by the grantee, its 
successors or assignees, then the DPWH, MMDA or the LGU concerned shall 
have the right to have the same repaired or replaced in good order and 
condition and charge the grantee, its successors or assignees at double the 
amount of the costs and expenses for such repair or replacement. 
 
 
SECTION 5. Responsibility to the Public. — The grantee, its successor or 
assignees shall conform to the ethics of honest enterprise and shall provide 
water supply and sewerage services to its service area in a prudent, efficient 
and satisfactory manner.  
 


 
For the public interest, as far as feasible and whenever required by the 
Regulatory Office or its legal successor, the grantee shall modify, improve, or 
change its facilities, pipelines, systems, and equipment for the purpose of 
providing efficient and reliable service at reasonable costs. The grantee shall 
charge reasonable and just fees for its services to all types of consumers and 
water users within its franchise area as set in accordance with Section 6 of this 
Act.   
 
 
The grantee, its successors or assignees, shall comply with environmental 
and sustainability standards and shall work with the local government to 
ensure safe and inclusive development. 
 
 
SECTION 6. Setting Tariffs, Rates, and Other Charges. — The Regulatory 
Office, or its legal successor, shall establish tariffs, rates and other charges 
which are fair and reasonable, and ensure economic viability and a fair return 
on investments.  
 
 
Tariffs, rates and charges shall be based on and consistent with a rate-
setting methodology that the Regulatory Office or its legal successor shall, after 
due consultation with stakeholders, define and publish, taking into account 
the following, among others:  
 
a. reasonable and prudent capital and recurrent costs of providing the 
service including a reasonable rate of return on capital;  
b. efficiency of the service;  
c. incentives for enhancement of efficiency;  
d. willingness to pay of the customers/consumers;  
e. equity considerations; and  
f. administrative simplicity.  
 
 
Tariffs, rates and charges set by the Regulatory Office, or its legal 
successor,  shall be presumed valid and reasonable, unless declared otherwise 
in a proper administrative or judicial proceeding. 
 
 
SECTION 7. Protection of Consumer Interests. — The grantee shall 
establish a consumer desk that will handle consumer complaints and ensure 
adequate protection of consumer interests. The grantee shall act with 
dispatch on all complaints brought before it. 
 
 
The grantee shall reduce the duration and frequency of interruptions in 
its services and in that regard, shall observe the relevant standards imposed by 
the Regulatory Office or its legal successor. 
 
 
SECTION 8. Election of Independent Directors. — The Board of the 
grantee shall have independent directors constituting at least twenty percent 
(20%) of its total membership. These directors must be elected by a majority of 
the total number of outstanding shares entitled to vote. 


 
 
An independent director is a person who, apart from shareholdings and 
fees received from the corporation, is independent of management and free 
from any business or other relationship which could, or could reasonably be 
perceived to materially interfere with the exercise of independent judgment in 
carrying out the responsibilities as a director. 
 
 
SECTION 9. Right of the Government. — A special right is hereby reserved 
to the President of the Philippines, in times of war, rebellion, public peril, 
calamity, emergency, disaster or disturbance of peace and order, to 
temporarily take over and operate the waterworks and sewerage system of 
the grantee; to temporarily suspend the operation of any  portion thereof in 
the interest of public safety, security and public welfare; or to authorize the 
temporary use and operation thereof by any agency of the government, upon 
due compensation to the grantee, for the use of said waterworks and 
sewerage system during the period when they shall be so operated. 
 
 
SECTION 10. Right of Eminent Domain. — Subject to the limitations and 
procedures prescribed by law, the grantee, its successors or assignees is 
authorized to exercise the power of eminent domain insofar as it may be 
reasonably 
necessary 
for 
the 
efficient 
establishment, 
improvement, 
upgrading, rehabilitation, maintenance, and operation of services. The 
grantee is authorized to install and maintain its water pipelines and other 
facilities over, under, and across public property, including streets, highways, 
parks, and other similar property of the Government of the Philippines, its 
branches, or any of its instrumentalities. The grantee may acquire private 
property as is actually necessary for the realization of the purposes for which 
this franchise is granted, including, but not limited to pipelines, buildings, 
infrastructure, machineries and equipment previously, currently or actually 
used, or intended to be used, or have been abandoned, unused or 
underutilized, or which obstructs its facilities, for the operation of a waterworks 
and sewerage system for the conveyance of water supply and sewerage 
services to end-users in its service area: Provided, That expropriation 
proceedings before the proper court shall have been instituted and just 
compensation paid.  
 
 
SECTION 11. Terms of the Franchise. — This franchise shall be for a term 
of twenty-five (25) years from the effectivity of this Act, unless sooner cancelled 
or revoked by Congress when the public interest so requires or when the 
grantee fails to reasonably comply with regulatory standards.  
 
 
SECTION 12. Acceptance and Compliance. — Acceptance of this 
franchise shall be given in writing to the Congress of the Philippines, through 
the Committee on Legislative Franchises of the House of Representatives and 
the Committee on Public Services of the Senate, within sixty (60) days from the 
effectivity of this Act. Upon giving such acceptance, the grantee, its 


successors or assignees, shall exercise the privileges granted under this Act. 
Nonacceptance shall render this franchise void. 
 
 
SECTION 13. Warranty in Favor of the National and Local Governments. 
— The grantee shall hold the national, provincial, city, and municipal 
governments of the Philippines free from all claims, liabilities, demands, or 
actions arising out of accidents causing injury to persons or damage to 
properties, during the construction or operation of the waterworks and 
sewerage system facilities of the grantee. 
 
 
SECTION 14. Liability for Damages. — The grantee shall be liable for any 
injury to persons and damage to property arising from or caused by any 
accident arising from any defective construction of any infrastructure built 
pursuant to the operation of its business under this franchise, or by any neglect 
or failure to keep its pipelines and other related facilities in safe condition. 
 
 
SECTION 15. Sale, Lease, Transfer, Grant of Usufruct, or Assignment of 
Franchise. — The grantee shall not sell, lease, transfer, grant the usufruct of, nor 
assign this franchise or the rights and privileges acquired thereunder to any 
person, firm, company, corporation, or other commercial or legal entity, nor 
merge with any other corporation or entity, nor shall the controlling interest of 
the grantee be transferred, simultaneously or contemporaneously, to any 
person, firm, company, corporation, or entity without the prior approval of 
Congress; Provided, That the foregoing limitations shall not apply to any 
transfer, sale or issuance of shares of stock at the level of corporate 
stockholders of the grantee; Provided, further, That the foregoing limitations 
shall not apply in case of assignment or transfer of the operation of any of its 
related business; Provided, however, That any transfer, sale, or issuance at the 
level of the corporate stockholders of the grantee is in accordance with 
applicable constitutional limitations. 
 
 
The grantee shall inform Congress, through the Office of the Speaker of 
the House of Representatives and the Office of the Senate President, of any 
sale, lease, transfer, grant of usufruct, or assignment of franchise or the rights 
and privileges acquired thereunder, or of the merger or transfer of the 
controlling interest of the grantee, within sixty (60) days after the completion of 
the said transaction. Failure to report to Congress such change of ownership 
shall render the franchise ipso facto revoked. Any person or entity to which this 
franchise is sold, transferred, or assigned shall be subject to the same 
conditions, terms, restrictions, and limitations of this Act.  
 
 
SECTION 16.  Dispersal of Ownership. – In accordance with the 
constitutional provision to encourage public participation in public utilities, the 
grantee, a publicly listed corporation in the Philippine Stock Exchange, shall 
maintain its listing therein and comply with its minimum public float requirement 
during the term of the franchise. Noncompliance therewith shall render the 
franchise ipso facto revoked. 


 
 
SECTION 17. Information Dissemination. — An information dissemination 
campaign regarding public services and operations of the grantee, as well as 
the general provisions of the franchise including its term, shall be made to all 
end-users in the franchise area. 
 
 
SECTION 18. Reportorial Requirement. — The grantee shall submit an 
annual report on its compliance with the terms and conditions of the franchise 
and on its operations to the Congress of the Philippines, through the 
Committee on Legislative Franchises of the House of Representatives and the 
Committee on Public Services of the Senate, on or before April 30 of every year 
during the term of its franchise. 
 
 
The annual report shall include an update on the development, 
operation and expansion of business; audited financial statements; latest GIS 
officially submitted to the SEC, if applicable; certification of the Regulatory 
Office on the status of its permits and operations; and an update on the public 
float in its outstanding shares,, if applicable. 
 
 
The Regulatory Office or its legal successor shall, one (1) year from the 
grant of this franchise, and every five (5) years thereafter, conduct a 
comprehensive assessment of the grantee’s operations and compliance with 
the conditions imposed hereunder and submit a report thereof to Congress. 
The grantee shall transmit to the Regulatory Office or its legal successor all 
information and documents necessary to complete such assessment. 
 
 
SECTION 19. Fine. — Failure of the grantee to submit the requisite annual 
report to Congress shall be penalized by a fine of Five hundred pesos (P500.00) 
for each working day of noncompliance. The fine shall be collected separately 
from the reportorial penalties imposed by the Regulatory Office, or its legal 
successor, and it shall be remitted to the Bureau of the Treasury. 
 
 
 
SECTION 20. Equality Clause. — Any advantage, favor, privilege, 
exemption or immunity granted under existing franchises, or which may 
hereafter be granted for  water utility, upon prior review and approval of 
Congress, shall become part of this franchise and shall be accorded 
immediately and unconditionally to the herein grantee: Provided, That the 
foregoing shall neither apply to nor affect provisions of waterworks and 
sewerage system franchises concerning territorial coverage, the term, or the 
type of service authorized by the franchise. 
 
 
SECTION 21. Applicability of Existing Laws. — The grantee shall comply 
with and be subject to the provisions of Commonwealth Act No. 146, or the 
“Public Service Act,” as amended, Republic Act No. 9275 or the “Philippine 
Water Act of 2004”,  Presidential Decree No. 1067 or the “Water Code of the 
Philippines”, and other pertinent laws relating to the operation of its business.  
 


 
SECTION 22. Repealability Clause. — This franchise shall be subject to 
amendment, alteration or repeal by Congress when public interest so requires.  
 
 
SECTION 23. Separability Clause. — If any of the sections or provisions of 
this Act is held invalid, all other provisions not affected thereby shall remain 
valid. 
 
 
SECTION 24. Repealing Clause. — All laws, decrees, orders, resolutions, 
instructions, rules and regulations, and other issuances or parts thereof which 
are inconsistent with the provisions of this Act, are hereby repealed, amended, 
or modified accordingly. 
 
 
SECTION 25. Effectivity. — This Act shall take effect fifteen (15) days after 
its publication in the Official Gazette or in any newspaper of general 
circulation. 
 
 
Done this 10th day of May 2021.