Ex-legal officer of Tarlac accused of water pilferage

Updated November 24, 2002 - 12:00am

TARLAC CITY; The former senior legal adviser of Mayor Genaro Mendoza is facing a
criminal case for allegedly stealing water from the Tarlac City Water District (TCWD).
A task force of the TCWD discovered an illegal water connection of lawyer Blesilo
Buan, at his home in Barangay Sto. Cristo.
Noel Esguerra, TCWDs commercial division manager who filed the charges, said
that, "after (a) thorough investigation" of the incident, the local water firm
discovered a "bypass connection" from its pipe to Buan’s home.
Buan was cited for violating the provisions of Republic Act 8041, otherwise known
as the National Water Crisis Act of 1995, which criminalizes water pilferage.
http://www.philstar.com/nation/185207/ex-legal-officer-tarlac-accused-waterpilferage
Pilferage Law & Legal Definition
Pilferage is the crime of theft of small amounts or small items. Pilferage is a problem
commonly involving employees who steal items from their place of employment,
especially in a manufacturing plant. Various methods are employed to prevent
pilferage, such as use of locks and other security devices and inventory control
procedures.
Pilferage often occurs by baggage handlers when cargo is transported. Baggage
that has been pilfered is checked baggage that, while in custody of the airline or
transporter during the trip, lost some or all of its contents due to damage or theft.
http://definitions.uslegal.com/p/pilferage/
Theft
A criminal act in which property belonging to another is taken without that person's
consent.
The term theft is sometimes used synonymously with Larceny. Theft, however, is ac
tually a broader term, encompassing many forms of deceitful takingof property, incl
uding swindling, Embezzlement, and False
Pretenses. Some states categorize all these offenses under a single statutory crime
of theft.
Cross-references
Burglary; Robbery.
West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group,
Inc. All rights reserved.
theft n. the generic term for all crimes in which a person intentionally and fraudulen
tly takes personal property of another without permission or consentand with the int
ent to convert it to the taker's use (including potential sale). In many states, if the v
alue of the property taken is low (for example, lessthan $500) the crime is "petty th
eft," but it is "grand theft" for larger amounts, designated misdemeanor, or felony, r
espectively. Theft is synonymous with"larceny." Although robbery (taking by force),
burglary (taken by entering unlawfully), and embezzlement (stealing from an emplo
yer) are all commonlythought of as theft, they are distinguished by the means and

methods used, and are separately designated as those types of crimes in criminal c
hargesand statutory punishments.
theft noun burglary, embezzlement, felonious taking, filchery, fraudulent taking, furt
um, larceny, looting, misappropriation, peculation, pilferage, pilfering,robbery, steali
ng, swindling, thievery, wrongful taking
Associated concepts: theft of services
Foreign phrases: Contrectatio rei alienae animo furando, est furtum.The touching or
removing of another's propprty, with an intention of stealing, is theft.
THEFT, crimes. This word is sometimes used as synonymous with larceny, (q.v.) but
it is not so technical. Ayliffe's Pand. 581 2 Swift's Dig. 309.
2. In the Scotch law, this is a proper and technical word, and signifies the secret
and felonious abstraction of the property of another for sake of lucre,without his con
sent. Alison, Princ. Cr. Law of Scotl. 250.

MWSS orders Maynilad, Manila Water to

slash rates
ABS-CBNnews.com
Posted at 09/12/2013 2:34 PM | Updated as of 09/13/2013 1:52 AM
MANILA, Philippines - Instead of raising rates, the Metropolitan Waterworks and Sewerage System (MWSS) on
Thursday ordered water concessionaires in Metro Manila to cut their charges in the next five years.
MWSS ordered east zone concessionaire Manila Water to reduce water charges by P7.24/cubic meter and west zone
concessionaire Maynilad Water to reduce rates by P1.46/cubic meter in the next five years.
In response to the decision, Manila Water and Maynilad said they will initiate arbitration proceedings to dispute the
MWSS decision.
Maynilad said the MWSS decision to reduce its water tariff is "unjustified."
"Maynilad will thus initiate arbitration proceedings to dispute the MWSS decision and to settle the tariff rebasing
issues promptly, to avoid any disruption in its operations to the detriment of its consumers," the company said.
On the other hand, Manila Water said the rate reduction will compromise its ability to fulfill its service obligations to its
customers.
"Under these circumstances, we feel and believe it is our duty to challenge the MWSS rate determination. As such,
we will file the dispute notice which officially commences the process of arbitration as prescribed in the Concession
Agreement," Manila Water said.
In their petition with the MWSS, Manila Water had sought a P5.83 per cubic meter increase in basic charge, while
Maynilad asked for a P8.58 per cubic meter hike.
The proposed adjustments are part of the concession contract the two companies signed with the MWSS in 1997,
that allows a rate rebasing scheme every 5 years. Rate rebasing allows the firms to adjust tariffs based on operation
costs. - With report from Alvin Elchico, ABS-CBN News

http://www.abs-cbnnews.com/business/09/12/13/mwss-orders-maynilad-manilawater-slash-rates

Resolve high water rates, MWSS urged

By Dennis Carcamo (philstar.com) | Updated September 5, 2013 - 1:03pm
0 0 googleplus0 0

MANILA, Philippines - Groups led by Bayan and Water for the People Network (WPN) on Thursday called on the
Metropolitan Manila Sewerage System (MWSS) to immediately decide on the issue of high water rates.

"We call on the MWSS to resolve the issue of high water rates by rejecting the rate hike proposals of the two
private water concessionaires and immediately lowering water rates for the benefit of consumers. We also call
on the Aquino government to begin the process of rescinding the onerous water privatization contract
responsible for todays very high water rates," Bayan Secretary General Renato Reyes, Jr. said.
Members of Bayan the WPN held a protest rally at the MWSS office in Balara in Quezon City this morning.

The protest coincided with the meeting of the Board of Trustees of the MWSS which is supposed to approve
the new water rates under a rate rebasing process.
"The people demand immediate relief from high rates. The MWSS should already implement some of its earlier
resolutions such as the disallowance of the recovery of corporate income tax and other expenses not related to
the delivery of water services. This move should effectively lower rates since the private concessionaires will no
longer be allowed to pass on their income tax to consumers," Reyes added.
The groups are worried that while the process drags on, consumers will continue to be charged onerous rates.
For his part, former Bayan Muna partylist Rep. Teddy Casino said that any reduction in rates by the MWSS will
be met with strong opposition by the two private water concessionaires Maynilad and Manila Water.
He warned of the possibility of international arbitration which would only further prolong the issue and burden
the consumers even more.
"The Aquino government must address the problem of high water rates now. It must implement a rollback on
water rates and oppose any move to bring the matter to international arbitration. The opposition should be
grounded on the view that the contract terms themselves are vague and lopsided in favor of the private
concessionaires," Casino said.
"Rather than waste government resources on a protracted arbitration process, the Aquino government should
be mobilizing its resources for the cancelation of the water concession agreement," he added.

http://www.philstar.com:8080/nation/2013/09/05/1175211/resolve-high-water-ratesmwss-urged
MWSS officials should resign for continued
mishandling of Maynilad
Written by Administrator

The entire Board of Trustees of the Metropolitan Waterworks and Sewerage System (MWSS) and its
administrator Orlando Hondrade should resign en masse for consistently compromising the public
interest with their mishandling of the case against Maynilad Water Services Inc.
Allowing the suspension of Maynilads payment of concession fees (or the amount due to MWSS
creditors prior to its privatization in August 1997) covering September to December 2005 worth
$17.93 million is just the latest in a long list of anti-people decisions made by the MWSS leadership.
What is worse is that the public is made to suffer the subservience of MWSS to the interest of private
and foreign business such as its plan to borrow $30 million to pay for the maturing debts of Maynilad.
Meanwhile, as Maynilad is again relieved of financial obligations, its customers are forced to pay P55.8
(for those consuming 30 cubic meters) more per month starting this year, and this does not yet
include the impact of the expected VAT (value added tax) increase.
Indeed, the temerity with which MWSS defends its pro-privatization and pro-business stance is truly
mind-boggling. Instead of answering squarely the inquiry of the Commission on Audit (COA) on why
MWSS allowed the suspension of concession fee payments, one of its directors Government
Corporate Counsel Agnes VST Devanadera retorted that it is COA that must explain why it is asking
for a reason for the deferral.
Devanadera went further to claim that MWSS has enough funds even with the deferred concession
fee payments. We wonder why it needs to borrow $30 million this year, on top of the P10 billion it
borrowed in 2005, just to service the obligations of Maynilad? We wonder why Devanadera does not
feel obliged to explain to Maynilad consumers, who actually carry the burden of paying the concession
fees through their monthly water bill, why the MWSS allowed the deferment and why it did not
translate to lower water rates when a portion of the water bill supposedly goes to concession fee
payments?
And lest we forget, MWSS agreed to amend its contract with Maynilad to introduce various cost
recovery charges that further bloated the peoples water bill when the Maynilad, citing financial
problems, unilaterally stopped paying the concession fees in March 2001. In spite of the new charges,
Maynilad never paid the concession fees until December 2004. True to its anti-people disposition,

MWSS even bailed out Maynilad through corporate rehabilitation in June 2005 which it now uses as
basis for the decision to defer the payment of concession fees.
Water consumers have endured long enough the callousness of the current MWSS management.
These officials clearly do not represent the general good and public welfare and therefore suffer the
same problem of legitimacy just like their political patron Mrs. Gloria Arroyo who appointed them to
power.

http://www.w4pn.org/index.php/w4pn-latest-statement/2-w4pn-categorystatements/7-mwss-officials-should-resign-for-continued-mishandling-ofmaynilad.html

Non-revenue water
From Wikipedia, the free encyclopedia

Non revenue water (NRW) is water that has been produced and is lost before it reaches the
customer. Losses can be real losses (through leaks, sometimes also referred to as physical losses)
or apparent losses (for example through theft or metering inaccuracies). High levels of NRW are
detrimental to the financial viability of water utilities, as well to the quality of water itself. NRW is
typically measured as the volume of water "lost" as a share of net water produced. However, it is
sometimes also expressed as the volume of water lost per km of water distribution network per day.

Overview of NRW levels[edit]

Expressed as a share of produced water[edit]

The following percentages indicate the share of NRW in total water produced:

Singapore 5%

Denmark 6%

Netherlands 6% [11]

Germany 7% (2005) [12]

Japan 7% (2007) [13]

Eastern Manila, Philippines 11% (2011), down from 63% in 1997 [14]

Tunisia 18% (2004) [15]

England and Wales 19% (2005) [12]

MWA, Bangkok 25% (2012) [16]

France 26% (2005) [12]

Dhaka, Bangladesh 29% (2010) [17]

Italy 29% (2005) [12]

Chile 34% (2006) [18]

Eastern Jakarta, Indonesia 39% (2011) [19]

Amman, Jordan 34% (2010) [20]

Mexico 51% (2003) [21]

Western Jakarta, Indonesia 39% (2011), down from 57% in 1998 [22]

Bauchi state, Nigeria 70% [23]

Yerevan, Armenia 72% (1999)[24]

Lagos, Nigeria 96% (pre-2003) [25]

http://en.wikipedia.org/wiki/Non-revenue_water
PRESIDENTIAL DECREE No. 401-A MARCH 6, 1974
AMENDING PRESIDENTIAL DECREE NO. 401 ENTITLED "PENALIZING THE UNAUTHORIZED
INSTALLATION OF WATER, ELECTRICAL OR TELEPHONE CONNECTIONS, THE USE OF
TAMPERED WATER OR ELECTRICAL METERS, AND OTHER ACTS
WHEREAS, on March 1, 1974 Presidential Decree No. 401 was promulgated in order to put an end
to rampant illegal installation of water, electrical and telephone connection, use of tampered water
and electrical meters, jumpers and other devices to steal water or electricity;

WHEREAS, Presidential Decree No. 401 does not include in its coverage the
unauthorized/illegal/unlawful installation of piped gas connection and other similar acts, although this
nefarious activity is violative to the objectives of the New Society and constitutes theft of piped gas;
WHEREAS, there is an equally urgent need to put an end to rampant theft/pilferage of piped gas,
unauthorized/illegal/unlawful installation of piped gas connection, use of tampered gas meters,
jumpers and other devices to steal piped gas, and other similar acts;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of the Philippines, by
virtue of the powers vested in me by the Constitution, and pursuant to Proclamation No. 1081, dated
September 21, 1972 and General Order No. 1 dated September 22, 1972, as amended, do hereby
and decree that Presidential Decree No. 401 be amended as follows:
Section 1. Any person who installs any water, electrical, telephone or piped gas connection without
previous authority from the Metropolitan Waterworks and Sewerage System, the Manila Electric
Company, the Philippine Long Distance Telephone Company, or the Manila Gas Corporation, as the
case may be, tampers and/or uses tampered water, eletrical or gas meters, jumpers or other devices
whereby water, electricity or piped gas is stolen; steals or pilfers water, electric or piped gas meters,
or water, electric and/or telephone wires, or piped gas pipes or conduits; knowingly possesses stolen
or pilfered water, electrical or gas meters as well as stolen or pilfered water, electrical and/or
telephone wires, or piped gas pipes and conduits, shall, upon conviction, be punished with prision
correccional in its minimum period or a fine ranging from two thousand to six thousand pesos, or
both.
"If the violation is committed by, or with the connivance of an officer or employee of the Metropolitan
Waterworks and Sewerage System, or the Manila Electric Company, or the Philippine Long Distance
Telephone company, or the Manila Gas Corporation, such officer or employee shall, upon conviction,
be punished with a penalty one degree higher than the penalty provided herein, and forthwith be
dismissed and perpetually disqualified from employment in any public or private utility or service
company.
Section 2. Any provision of Presidential Decree No. 401 and of any law inconsistent with this
Decree is hereby repealed, amended or modified accordingly.
Section 3. This Decree shall take effect immediately."
Done in the City of Manila, this 6th day of March, in the year of Our Lord, nineteen hundred and
seventy-four.
http://www.lawphil.net/statutes/presdecs/pd1974/pd_401a_1974.html
With their full-page ads (see images below) published in various newspapers defending the
unscrupulous practice of passing on their income taxes to consumers, Maynilad and Manila Water
unwittingly affirmed what anti-privatization advocates have been saying all along.
From the onset, groups like the Water for the People Network (WPN) have been arguing that the
crux of the issue on exorbitant water rates is the Concession Agreement, or the privatization
contract, between the Metropolitan Waterworks and Sewerage System (MWSS) and the
concessionaires. This contract, a form of public-private partnership (PPP), introduced a pricing
mechanism that allowed full-cost recovery and guaranteed profits for Maynilad and Manila Water, all
at the expense of consumers.
Unjust and anti-consumer
The concessionaires got it all wrong when they argued that the inclusion of income taxes in the
determination of water rates is legitimate because it is sanctioned by the Concession Agreement.
They are banking on the so-called sanctity of contracts and blatantly ignore the larger and more
fundamental issue of public interest. Such posture only underscores how unjust and anti-consumer
the privatization of MWSS is, and exposes the lack of public accountability of profit-driven water
service providers.
To recall, the WPN disclosed that the concessionaires passed on some P15.31 billion (Manila
Water, P7.36 billion; Maynilad, P7.95 billion) worth of income taxes to their consumers from 2008 to
2012. The cost of future income taxes, estimated at P152.87 billion (Manila Water, P76.96 billion;
Maynilad, P75.92 billion) from 2013 to 2037 (the end of the Concession Agreement) has been
included as well in the monthly water bills.

Maynilad and Manila Water thought that the Concession Agreement is their best defense against all
the flak they have been getting. In reality, however, they just inadvertently bolstered the position of
anti-privatization advocates that the long-term solution to our problem of exorbitant water rates is the
termination of the Concession Agreement and the reversal of MWSS privatization.
The MWSS-Regulatory Office (MWSS-RO), to which the paid ads are apparently addressed, will
likely counter that, like Maynilad and Manila Water, they do respect the Concession Agreement. For
the regulators, the issue is simply the proper interpretation of the privatization contract. The
concessionaires, for instance, interpret Philippine business taxes referred to in the Concession
Agreement as including income taxes while the MWSS-RO says otherwise.
Such dispute may be resolved legally through arbitration proceedings (an internal dispute
settlement mechanism under the Concession Agreement) or the regular courts. But even when the
result of these legal processes favors the regulators, the basic issue remains unresolved why, in
the first place, are the business taxes of the private water monopolies being shouldered by the
consumers?
Other onerous provisions
And lest we forget, while the income tax is the most controversial, it is just one of the many
questionable provisions of the Concession Agreement. The rate rebasing model, for example, is
onerous because it allows the concessionaires to charge the cost of future expenses to consumers.
Maynilad and Manila Water pass on to consumers not only the cost of projected income tax but also
the cost of future projects. Some of these projects never materialized but were paid for anyway by
the consumers. Two such unimplemented projects that have charged to consumers are the P48billion Laiban Dam and the 15 CMS Water Source Replacement projects.
The Concession Agreement was designed in such a way that tariffs are regularly adjusted to ensure
the financial viability of MWSS privatization. Aside from the rate rebasing every five years, the basic
charge is also adjusted at the start of every year (January 1) to account for inflation, as measured by
the consumer price index (CPI) for the month of July of the preceding year. It represents a doublewhammy for consumers as they bear the brunt of both the inflation (rise in prices of basic goods and
services, including water) and the rise in water rates due to inflation.
Under the contract, the basic charge is adjusted as well every quarter to reflect fluctuations in the
foreign exchange (forex) rate, which is listed in the water bill as FCDA (foreign currency differential
adjustment). The FCDA is being charged to protect Maynilad and Manila Water from losses in case
of sharp declines in the value of the peso against foreign currencies that could bloat the
concessionaires foreign loans as well as the concession fees.
While the FCDA could be negative, e.g. a reduction in the basic charge when the peso is stronger
than other currencies (such as the announced rate reductions by the concessionaires last month),
this is offset by another currency-related charge the fixed P1 currency exchange rate adjustment
(CERA). Burdening the consumers with the cost of forex fluctuations is already oppressive by itself
but worse, consumers are even being double-charged for currency fluctuations with the collection of
the FCDA and the fixed CERA. It is estimated that CERA collections have already reached P7.2
billion of which P3.4 billion went to Maynilad and P3.8 billion went to Manila Water.
Furthermore, the private concessionaires are also allowed to collect additional fees resulting from
so-called extraordinary price adjustment (EPA). The EPA protects the profits of the concessionaires
by charging additional fees to the consumers to cover for the financial consequences of unforeseen
events such as changes in national laws or regulations and force majeure events (calamities,
conflict, etc.), among others.
On top of these regular and guaranteed adjustments, the concessionaires collect as well the
environmental charge which is equivalent to 20% of the basic charge. Maynilad is currently collecting
an environmental charge of P6.93 per cu. m. while Manila Water is imposing P5.64. With the rate
rebasing, the environmental charge could go up to P6.80 per cu. m. (Manila Water) to P8.63
(Maynilad). The concessionaires explain that the environmental charge pertains to additional service
charges collected from consumers for the mitigation of environmental impacts in the course of water
treatment and distribution and wastewater operations.

Again, imposing additional burden on consumers for the cost of something that is inherently a part of
operating a water system is unreasonable. Worse, it appears that Maynilad and Manila Water are
still negligent of their environmental obligations even as they impose the environmental charge. In
August 2012, the Court of Appeals (CA) affirmed the P29.4-million fine imposed by the
Department of Environment and Natural Resources (DENR) on MWSS, Maynilad and Manila Water
for violating the Clean Water Act.
Foreign creditors
To better understand why the Concession Agreement was designed in a way that assures the
commercial viability and profitability of Metro Manilas water distribution system, we need to review
the rationale behind the MWSS privatization. The main impetus for the privatization of MWSS in
1997 was the agencys huge debts incurred from the World Bank, the Asian Development Bank
(ADB) and the Japan Bank for International Cooperation (JBIC). MWSS debts from the three
international financial institutions (IFIs) reached around $800 million prior to privatization.
Privatization was used a conditionality by these foreign lenders for new loans.
Thus, the overarching goal of privatization was not to make water services more accessible and
address the corruption and inefficiencies of MWSS but to ensure that the agency will not default on
its debts. But Maynilad and Manila Water did not assume the responsibility of paying the debts of
MWSS but will simply act as collectors from the consumers who will shoulder these debts. From
these collections, the concessionaires will pay concession fees to MWSS which it will use to service
its loans. Aside from raising the concession fees, Maynilad and Manila Water are also allowed to
collect their profits from the consumers.
The IFIs played a key role in the privatization process. The World Bank, through its investment arm
International Finance Corp. (IFC), acted as governments consultant in the project. The IFC designed
the Concession Agreement that the MWSS eventually signed with Maynilad and Manila Water.
Challenging Aquinos PPP
Maynilad and Manila Water, by putting on the table the Concession Agreement, have upped the ante
in this raging controversy on the income tax and other onerous charges. They have, in effect,
challenged Malacaang to take a position on the matter of governments contractual obligations with
private investors. Indeed, the paid ads are addressed not only to the MWSS-RO but ultimately to
President Aquino.
The concessionaires know that what is at stake for the Aquino administration is its centerpiece PPP
program where governments commitment to fulfill its contractual obligations is key to enticing and
reassuring big investors. MWSS privatization, in fact, has been showcased by government to
promote PPP. Also, the billionaires behind Maynilad and Manila Water, namely the group of Manny
Pangilinan, the Consunjis and the Ayalas are among the huge business groups that are most active
in participating in Aquinos PPP initiative.
The controversy surrounding MWSS privatization is discrediting and undermining the entire
privatization program of government and further exposing the anti-people character of PPP. This is
bad news for Aquino, the economic elite and foreign creditors but certainly a welcome development
for the people.
By the way, advertising costs are also being passed on by Maynilad and Manila Water to
consumers. So we will also foot the bill of the expensive advertisements and media campaign of the
concessionaires that intend to justify their abuses. Truly enraging!

http://arnoldpadilla.wordpress.com/2013/07/10/maynilad-manila-water-ads-furtherexpose-anti-consumer-mwss-privatization/
NOTE: PAPER PRESENTED BY AUTHOR WHEN HE WAS STILL ADMINISTRATOR OF LWUA

Development and Regulation of Water Utilities:

The Philippine LWUA Experience
by Administrator Lorenzo H. Jamora
Local Water Utilities Administration
Quezon City, Philippines

Abstract. The Local Water Utilities Administration (LWUA) was established in 1973 by
Presidential Decree No. 198, as amended, otherwise known as the Provincial Water Utilities
Act of 1973 to promote the development of provincial water supply in the Philippines.
LWUA's establishment was the national government's response to the problems then
besetting the provincial water supply, among them funding problems, institutional
weaknesses and technological inadequacies which led to the generally poor water service in
the countryside during the period.
The same decree created the water districts, paving the way to the adoption of the water
district concept which revolutionized the then water supply development and management,
which was characterized by heavy government subsidies of water utilities consequently
developing dole-out mentality among consumers. Under the water district concept, water
consumed has to be accounted and paid for by every consumer, whether government,
private industries or plain citizens. This new concept also promotes the principles of selfreliance and financial viability for the water utilities.
LWUA as a specialized lending institution is a one-stop-shop where the water districts may
gain access at once to its varied development services, such as:
1) financial assistance in the form of loans at concessionary rates;
2) engineering/technical services and assistance on project identification, planning, detailed
engineering design, construction supervision of water projects, operation and maintenance
of systems; and
3) institutional development and regulatory services in the forms of skills and management
training, management advisory, water rates review/regulation, and water quality regulation,
among others.
Regulating the operations of water districts including the setting of proper water rates is
inherent and indispensable to the performance of the developmental mission of LWUA. The
regulatory standards/guidelines LWUA has developed and institutionalized are those
pertaining to water tariffs setting, commercial practices systems, water quality, engineering
design and construction and organizational as well as institutional setup for water districts,
which have stood the tests of times. Public hearings on water rates adjustments are closely
monitored and cash-flow requirements for capital expenses and systems expansion of water
districts are judiciously studied. LWUA's effectiveness as water tariff regulator is evidenced
by an almost complete absence of court decisions reversing water rates adjustments
reviewed and approved by the agency.
For the period 1973-2002, the institutional arrangement between LWUA and the water
districts has resulted in the following:
a) formation of 584 water districts covering 691 cities and municipalities in provincial urban
areas
nationwide;
b) served 11.4 M people with potable water thru individual house connections;
c) developed water districts into viable institutions, with an average of 29% non-revenue
water, and an average of 96% WD collection ratio from customers; and
d) the success and wide public acceptance of the LWUA-Water District development
relationship.
Overview of the Philippine Water Supply Sector
In the Philippines, the development, operation and delivery of potable water in the country's
three major areas, is the responsibility of various government agencies and water utilities.
Metro Manila is being served primarily by the Metropolitan Waterworks and Sewerage
System (MWSS) through its two private concessionaires, the Maynilad Water Services Inc.
and the Manila Water Company, and by some private companies serving subdivisions. The

provincial urban areas are served by the a) water districts with the development assistance
of the Local Water Utilities Administration (LWUA), b) local government units (LGUs), and c)
some private companies. And the provincial rural areas are being served primarily by the
local government units and cooperative water associations, with government assistance
from the Department of Interior and Local Government (DILG), Department of Public Works
and Highways (DPWH), and LWUA.
Based on the Medium-Term Philippine Development Plan (2001-2004), as of 2000, 79% of
the 76.3 million Philippine population was served with safe and reliable water, with the
following distribution: 47% (6.2 M) in Metro Manila, 88% (18.3 M) in the provincial urban
areas, and 85% (35.8 M) in the provincial rural areas.
The same Plan sets a 90.5% target of total Philippine population to be served with potable
water by year 2004. The specific targets by 2004 on the three major areas are: 90% in
Metro Manila, 89.6% in provincial urban areas, and 90.4% in provincial rural areas.
Creation of the LWUA and the Water Districts
The creation of the LWUA was an offshoot of a comprehensive study on the provincial water
supply sector conducted in 1968-72 by the James M. Montgomery consultancy group with
funding assistance from the United States Agency for International Development (USAID).
The study revealed that practically all the then existing provincial water supply systems
were antiquated, dilapidated and poorly managed. It pointed to the lack of adequate
financing, technical know-how and proper institutional setup as the main causes of the
widespread problems in the sector.
Soon after the national government declared the establishment of reliable and viable water
supply systems in the country as a high national priority. And in 1973, Presidential Decree
No. 198 otherwise known as the Provincial Water Utilities Act of 1973, was promulgated
authorizing the establishment on local option basis of locally-controlled independent water
districts to own, manage and operate provincial water supply systems. The decree likewise
provided for the creation of a national government agency, LWUA, to minister to the
financial, technical and institutional development needs of these water districts and to
regulate their operations.
The water district concept was a totally new concept in water supply development and
management then. At the time it was introduced, it was considered revolutionary since the
practice of having water consumed, accounted and accordingly paid for was radically new to
the consumers, especially those who had already developed a dole-out mentality on account
of years of government subsidies and political favors.
Under the old NAWASA (National Waterworks and Sewerage System) system, water users
were charged flat rate regardless of water consumption thereby encouraging wasteful water
use while
contributing very little to the utility coffers. It was also not uncommon then for politicians to
use free water as main platform for their electoral campaigns. However, it was rare to find a
water connector paying for water consumption justly and promptly.
The new concept demanded change not only in physical terms but also in the mental
outlook and the behavior especially of the consumers. Under the concept, every drop of
water consumed has to be accounted and paid for. Every consumer, whether government,
private industries or plain citizens must pay for water consumed. Among the reasons behind
this are to instill responsibility and discipline among the consumers and make them realize
and recognize the value of water as an economic commodity.
The water district concept is based on the principles of self-reliance and financial viability.
This means that when a water district is formed, it has to operate on its own, independent
from local political control and no longer reliant on government subsidy support. Therefore,
a water district has to be financially viable, able to generate enough revenues through water
sales to its concessionaires to meet all its financial needs and obligations to include payment
of capital improvement loans to LWUA. To realize this, a water district is allowed to charge

certain water rates but subject to the review and approval of LWUA, collect service fees and
to impose penalties on erring or delinquent concessionaires.
Development and Regulation of Water Districts
A. Development Assistance to Water Districts
LWUA was established primarily as a specialized lending institution for the development and
promotion of provincial water supply and wastewater disposal systems. It lends out capital
improvement loans only to duly-organized water districts. In addition, LWUA was further
mandated to prescribe minimum standards and regulations, furnish technical assistance and
personnel training, monitor, and evaluate local water standards, among others.
Essentially, LWUA's relationship with the water districts is that of a lender and a borrower
based on a supervised credit scheme.
In pursuit of this, LWUA provides regular management advisory assistance to the water
districts. LWUA advisors regularly visit water districts to advise their officers and staff on the
rudiments of effective water utility management and operation as well as to monitor and
continually evaluate their performance. The advisors also see to it that the water districts
follow the utility rules and regulations formulated by LWUA and the guidelines issued
periodically.
LWUA likewise introduces and installs a uniform Commercial Practices System for all water
districts. Moreover, LWUA extends training assistance to water district board and
management officials and employees on such aspects as policy-making, utility management
and system operation and maintenance.
Correlated to this supervised credit scheme, LWUA also extends technical assistance to the
water districts in the preparation of project feasibility studies and detailed designs and
supervision of their water system construction projects.
B. Regulation and Performance Monitoring of Water Districts
Foremost in LWUA's regulatory function is the review of water rates of water districts. This
function ensures that the rates charged by the water districts are in accordance with the
provisions of applicable laws and regulations. It also guarantees recovery of government
investment in the water sector coursed through LWUA. More specifically, such review
function ensures that such rates adequately provide for reimbursement of costs of installing
new services and meters, district revenue, annual operating expenses, works maintenance
and repairs, payment of interest on debts, and a reasonable surplus for improvements.
LWUA's rate reviews are appealable to the National Water Resources Board (NWRB).
LWUA is also mandated to establish standards for local water utilities and to formulate rules
and regulations for their enforcement. These standards and regulations include the
following:
1) water quality
2) design and construction
3) equipment, materials and supplies
4) operation and maintenance
5) personnel
6) organization
7) accounting
LWUA conducts management and financial audits of water districts annually, for regulatory
and performance monitoring purposes.
LWUA is responsible for the performance assessment of water districts. In this connection,
LWUA requires all water districts to submit monthly reports covering technical, financial,
administrative and other aspects of operations. These reports are also summarized by the
water districts annually. LWUA in turn publishes water district industry averages annually,
and compares these with the water district performance.
The following are some of the details of WD monthly reports required by LWUA:

1) customer data- number of service connections, new connections, disconnections

2) present water rates
3) billing and collection data - collection efficiency, billed volume of water
4) financial data - revenues, expenses
5) water production data - production measurement and; production cost (power costs,
treatment cost, pumping efficiency); unaccounted-for-water
6) status of various developments
7) miscellaneous data - number of staff per 1,000 customers; bacteriological tests
(physical/chemical tests required annually); chlorination; board meetings
Other important performance indicators, which mostly relate to customer satisfaction,
include the following:
1) coverage targets (so that operators will not concentrate only on profitable areas)
2) adequacy of pressure
3) round the clock supply (depending on customer/LGU desires; some may agree to switch
off water supply during hours of minimum demand)
LWUA adopts interventions when water districts are not able to fulfill their obligations,
usually regarding loan repayments. These are take-over management of water districts and
the assignment of 6th member in the water district board.
To summarize, LWUA's strategies to monitor the operational efficiency of water districts are:
1) Water District Industry Averages - showing financial and operating parameters of Water
Districts
2) Developing written Standard Operating Procedures for efficiency and effectiveness
3) Monitoring of:
a) annual rate review
b) implementation of audit recommendations
c) implementation of written programs
d) implementation of loan agreement
e) implementation of Commercial Practices System
f) conduct of training programs for officers and employees of WDs
g) WD Board's participation in policy making and implementation of policies it approved
4) LWUA's interventions in WDs (where necessary)
a) Interim Board of Directors
b) Sixth membership in the Board of Directors
c) Installation of Interim General Manager for defaulting WDs
d) Full time advisory services
e) Operations and maintenance assistance
f) Installation of commercial practices system
g) Water rates review
h) Audit
LWUA Accomplishments (1973-2002)
With the three-pronged services on financial, technical, and institutional and regulatory
aspects, the LWUA has several accomplishments in its 30 year-experience in public service
towards the development of the water supply sector.
As of 2002, LWUA has formed 584 water districts covering 691 towns/cities nationwide. It
has approved P 17 billion loans of which P 11 billion have been availed by 467 water
districts. The loans were used for the development of 1,431 water supply projects benefiting
11.4 million people in water district areas. On the loans availed, LWUA generated an annual
average of 86% collection efficiency for the last five years.
LWUA was able to develop water districts into viable institutions, which had an average of
29% non-revenue water, and an average of 96% WD collection ratio on customers' billings.
It has also shown its effectiveness as water tariff regulator as evidenced by an almost

complete absence of court decisions reverting water rates adjustments it reviewed and
approved.
With these, it can be said that the LWUA-Water District development model has been
successful and has wide public acceptance.
Current Developments in the Water Sector
In 2002, Executive Order No. 123 was issued, limiting LWUA's economic regulation to only
reviewing tariffs of WDs which it has financial exposure to. Section 6 of EO 123 specifically
provides that
the "LWUA shall cease and desist with its practice of regulating the water tariffs of Water
Districts which shall hereinafter be undertaken by NWRB. However, LWUA, consistent with
its mandate under PD 198, may continue reviewing the rates of water districts which it has
financial exposure, with the end view of ensuring their financial viabilities". Since its
issuance up to 2002, the NWRB has not acted upon any single request for rate approval,
which if continued will adversely affect the implementation of LWUA-funded projects. With
this consideration and cognizant of the spirit of the EO, LWUA made a stand to continue
reviewing and approving the water rates adjustments of water districts where it has
financial exposure to, to promote the financial viability of these water districts. The NWRB
welcomed this position.
During the latter part of 2002, the national government through the Department of Finance
(DOF) commissioned a study of reforms in the water sector to be funded by a grant from
the Miyazawa Initiative to be administered by the World Bank. The specific title of the study
is "Study of Reforms in the Financing Polices in the Water Sector, Graduation Policies in the
Water District and Approaches to Various Regulatory Issues". The objectives of the study are
to rationalize the financing of the water sector, ensure that resources are funneled in the
most appropriate way, used in the most effective manner, and that the respective
institutions are empowered to fulfill their responsibilities. To date, a final report of the Stone
& Webster Consultants has yet to be issued by the DOF.
The single most critical constraint in the development of the water sector is the lack of local
counterpart funds. For instance, LWUA has not been released its congressional
appropriations for the last three years for its water supply projects, because of the national
government's own financial constraints. This situation calls for innovative financing schemes
which both the government and the private sectors may forge to identify and develop.
Challenge for the Government and LWUA
As of 2002, the remaining unserved population in the provincial urban areas without access
to safe and potable water, is estimated to be 15 million, and about 1,000 provincial
towns/municipalities which have yet to be served with Water District water. This is a gigantic
task in the years ahead, which hopefully will be addressed by the planned reforms in the
water sector. LWUA, for its part, is committed to be a key player in this challenge, as it has
proven for the last 30 years of serving the public.

http://www.lwua.gov.ph/tech_mattrs_08/development_regulation.htm

Class action suit filed vs. water concessionaires

December 15, 2013 9:54 pm

by JING VILLAMENTE
REPORTER

More than 100 individuals filed a class action suit on Friday against water concessionaires Manila
Water Co. Inc. and Maynilad Water Systems Inc. as well as the Metropolitan Waterworks and
Sewerage System (MWSS).
The petition, captioned as a Special Civil Action for Certiorari, Prohibition, and Mandamus with
Prayer for Issuance of Temporary Restraining Order[s], Writ[s] of Preliminary Injunction, and/or
Status Quo Ante Order[s], assailed the monopolistic abuse, unfair pricing, and the flawed rebasing
practice of the cited water concessionaires and government owned corporation.

The suit, which was filed by lawyer Francis Acero, counsel for the petitioners and the class which
they represent, underlined that the MWSS, through the Office of the Government Corporate
Counsel, is apparently joining the arbitration request recently filed by Maynilad and Manila Water
when it should have immediately implemented its own rate reduction orders of September 12,
2013.
A request for arbitration, the petition argued, is not an automatic stay of rate orders, for one
aggrieved by such order should have applied for a stay order from the courts.
MWSS should have immediately implemented the reduction of rates following the 2013 rate rebasing
exercise, the petition asserted.
But it appears well too convenient for all Respondents to use arbitration as a reason for having it
both ways: Maynilad and Manila Water will still enjoy, for an indefinite period as a sham and selfserving arbitration is pending, tariff rates which have had no basis since 1997, layer upon layer,
defect upon defect, through time, with MWSS apparently succumbing into the excuse as a way to
self-enjoin their own recent 12 September 2013 downward adjustments, it added.
The said suit, consolidating the claim of 150 petitioners, also alleged that the two arbitration
proceedings initiated by Maynilad and Manila Water amounted to strategic lawsuits against public
participation (SLAPP).
SLAPP refers to suits filed to stifle any legal recourse that persons or government entities have
taken in order to enforce the laws.
The petition, moreover, argued: SLAPPs are used by large corporations in efforts to silence
individuals through high cost litigation, often without merit, in the expectation that the cost of the
litigation causes the individual to abandon any initial complaints against the corporation.
Both firms are also accused of systematically passing on capital expenditures, operating
expenditures, future receivables of multi-billion dollar ghost projects and scuttled mothballed water
infrastructure projects, to household water consumers in the east and west zones.
Subsidy scheme for supply problem
Meanwhile, a development studies expert pushed for an output-based subsidy scheme to address
the water supply problems of remote municipalities.
Philippine Institute for Development Studies President Gilberto Llanto said there is a great merit in
exploring output-based aid (OBA) scheme for the delivery of basic services like electricity, water,
health and education to the poor.
Llanto said that such scheme could complement innovative financing models developed by the
government financial institutions and the private sector under public-private partnership or private
sector participation arrangements
He said such arrangements or schemes might provide innovative solutions to address the
inaccessibility of safe water in small municipalities or rural areas.
A strategy using OBA subsidy may create a strong incentive for private water service providers to
operate in waterless municipalities, Llanto said.
There is no equivalent tax-and-subsidy scheme in the water supply sector but an OBA subsidy
scheme could be explored as a component of private sector participation or public-private joint
ventures to provide water services to waterless municipalities, he added.
WITH REPORT FROM RAADEE S. SAUSA
http://www.manilatimes.net/class-action-suit-filed-vs-water-concessionaires/60854/

Provisions in concession agreements

not the fault of water firms
By Marvin Sy (The Philippine Star) | Updated July 10, 2013 - 12:00am
1 19 googleplus0 0

MANILA, Philippines - Sen. Juan Ponce Enrile said yesterday that the water concessionaires should not be
blamed for the provisions in their concession agreements since it has the blessing of the Metropolitan
Waterworks and Sewerage System (MWSS).

Enrile said the only remedy to the situation is for the Maynilad Water Services Inc. and Manila Water Co. to
agree to renegotiate their contracts with the government.
He said Congress has no role to play in the issues raised by the consumer groups against the two water
concessionaires, as he noted that their contract is with the MWSS. He said Congress only deals with the grant
of franchises.
They are governed by their contract. They do not have any franchise because the franchise holder is MWSS.
They were given a contract and the one that governs that contract is not a law, not the franchise of MWSS, but
the contract between MWSS, representing the government, and the Ayalas in the case of Manila Water, Enrile
said in an interview with TV-5.
The senator said whatever charges collected by the two firms including the tax exemptions are contained in
their respective contracts or concession agreements with the MWSS.

http://www.philstar.com/headlines/2013/07/10/963686/provisions-concessionagreements-not-fault-water-firms