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Republic of the Philippines Date Pubished

City of Iloilo Date Effet-Ovtt .. 0~ 0..5,
OFFICE OF 'I'HE SA GGUNIA G P LUNGSOD . at>f&

EXCERPT FROM THE MINUTES OF THE 47TII REGULAR SESSION OF THE 8

SANGGUNIANG PANLUNGSOD OF THE CITY OF ILOILO, PHILIPPINES, HELD AT
THE SESSION HALL, 6·rH FLOOR CITY HALL BUILDING, PLAZA LIBERTAD, lLOlLO
CITY, ON TUESDAY, DECEMBER 11, 2018.

PRESENT:
HON. JEFFREY P. GANW
City Vice Mayor/Presiding Officer

Hon. Lyndon V. Acap Member

Hon. Joshua C. Alim Member
Hon. Lady Julie Grace L. Baronda, Asst Floor Leader Member
Hon. Ely A. Estante, Jr. Member
rlon. R Leone N. Gerochi, Member
Hon. Lei1a G. Luntao, SK Federation President E~ Officio Member
Hon. Mandrie T. Malabor Member
Hon. Plaridel C. Nava, II, Floor Leucler Member
Hon. Maria Irene D. Ong, Laga ngmga &nmgayPresR1cnt Ex Officio Member
Hon . .Annand S. Parcon Member
Hon. Eduardo L. Pciiaredondo, Member
Hon. Liezl Joy Z. Salazar Member
Hon. Jose Efrain G. Treftas, ill Member
Hon. Candice Magdalane A. Tupas Member

ABSENT:

None

REGULATIO ORDINANCE NO. 2018-194

A ORDINANCE GRANTING PRIMEWATER INFRASTRUCTURE
CORP. WITH A FRANCOISE TO CONSTR CT, ESTABLISH,
COMMISSION, OPERATE AND MAINTAIN A WATER SUPPLY
SYSTEM FOR ILOILO CI'l'Y, PROVI CE OF ILOILO.

Spon~·ored by Councilor Plaride/ C'. Nava ff. duly seconded by Hon.

Lyndon V. Acap, Hon. JoshtJa c:. Alim and Hon. Candice Magdalane A. Tupas;

WHEREAS, the Sangguniang Panlungsod has the mandate to provide basic services and
facilities to its constituents under the LocaJ Government Code of the Philippines, such as
adequate water supply systems, and pursuant thereto, has the objective of constructing~
commissioning and establishing a waterworks facility to service the population of Tloilo City;

WHEREAS, majority of the people of Iloilo City have expressed their dissatisfaction
with the current water system in the City due to poor quality of service, recurrent water
shortages, and a significant percentage of unserved areas in some districts, hence, the people
have instead resorted to the alternative water rationing system~

WHEREAS, recognizing the people's clamor for a better quality of water supply and
services, and realizing its duty and responsibility of seeing what is best for its community, lloilo
City is in need of a more efficient water utility provider capable of constructing, establishing,
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&lg, Ord No. 2018-194. Dece"1ber J I. 2018 Page 2

commissioning, operating, and maintaining a water supply system that sufficiently addresses the
public need and convenience of the people of Iloilo City~

WHEREAS, Primewater Infrastructure Corp., having proven competence in providing

potable, reliable and sustainable water to Filipino communities, is willing and capable of
addressing the need of the people of Iloilo City by providing better mole efficient, and adequate
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water supply and distribution system covering all households and other establishments within the
City;

NOW "f ll F:REFORE, BE IT ORDAINED BY ·1·e11: SANGGUNIANG

p ANLUNGSOD OF aoJLO Cfl'Y, IN REGULAR SESSION DULy ASSEMBLED:

ARTICLE I
GRANT OF FRANCIDSE

1.1 A non-exclusive Franchise tor a period of Twenty Five (25) years is hereby granted to
PRIMEWATER INFRASTRUCTURE CORP. ("PRIMEWATER'') to construct,
establish, commissio~ operate and maintain a Water Supply System to service the
population of lloilo City (the ''Franchise~').

1.1.1 Pursuant to Section 458(a)(3) of the Local Government Code of 1991, a non-
exclusive franchise for a period of Twenty-Five (25) Years to service all the
barangays unde·r the governance and jurisdiction of ILOILO CITY, hereinafter
referred to as the nFranchise Area''.

1.1.2 Pursuant to Section 1.1.1 above, the non-exclusive right and discretion to:

(i) Finance, develop, improve, operate, and maintain all water source
facilities, weJls, pumping stations, water mains, pipes, ftre hydrants, and
other machineries and waterworks for the purpose of supplying potable
water to the inhabitants of the Franchise Area.

(ii) Design. construct, com1nission and maintain a new and complete

waterworks system in Iloilo City and to conduct certain procedures such
as but not Jimited to well drilling, pipe laying, construction of storage
tanks, pump houses and any other waterworks facilities or works
necessary to render reliabJe and adequate water service to the said area;

(iji) Manage, occupy, repair, decommission, refurbish, operate and maintain

any existing waterworks facility or works currently established thereon,
including all other facilities that may be deemed necessary;

(iv) Thenceforth, absolutely own and manage all improvements to the

waterworks facilities introduced and established by PRlMEWATER;

(v) Render reliable and adequate water service to the said area in confonnance
to duly approved standards set by the Philippine National Standards for
Drinking Water (PNSDW) or with such prevailing standards on drinking
water quality issued by the Department of Health or such other
govern.mental agency of the Philippines that is tasked with issuing such
standards·
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Reg. Ord No. 2018-194. De.c~mber / ), 2018 Page3

(vi) Install, if necessary, water disinfection facility within the water system to
make the water potable in accordance with the standards prescribed by the
government·

(vii) BiJI and collect payment from the serviced customers for all services
rendered;

(viii) The full power and authority to autonomously and freely deal with its
customers in the conduct of its business such as info11nation
dissemination, public consultatio~ complaints monitoring and resolution,
and the like, and as the NWRB deems appropriate, provided that the
vested rights of Ilojlo City are not compromised nor undennined, and
without prejudice to asking assistance from the City Government of JJoilo
City, if necessary.

1.2 lloilo City, through its vested power and proper negotiations, shall have the obligation to
exercise its power of eminent domain to ensure the obtainment of aJl necessary rights of
way and such other easements within the Franchise Area where the waterworks facilities
shall be laid and constructed, and/or access to such facilities so that PRTMEW ATER may
perfor1n its obligations under this Franchise. Specifically, the City Government of Iloilo
City shall issue local pennits to PRIMEWATER upon the effectivity of this Franchise.
These local permits include Mayor's Per11tit, Zoning Pe1111it, Sanitary Pennit and other
related documents needed for the effective operation of the waterworks system. Any and
aJI costs and expenses that may be incurred in pursuance of this Clause 1.2 shall be for
the account of PRIMEWA'l'ER.

ARTICLE II
TERM/RENEWAL

2.1 The Franchise shall be valid and existing Twenty-Five (25) Years to co1nmence upon
the effectivity of this Ordinance, hereinafter referred to as the "Commencement Date",
unless sooner terminated as provided for under Article IX. Tbe Franchise may be
renewed subject to the approval of the Sangguniang Panlungsod of lloilo City, provided
that the request for extension of the Franchise shall be made within five years from the
date of expiration of the initial 25-year ter111.

ARTICLE ID
FRANCIDSE FEE

3 .1 PRIMEWA'IER shaJl pay to the City Government of IJoi1o City a Franchise Fee of One
Peso (PhP l .00) in Philippine Currency per cubic meter of water sold and paid for in the
Franchise Area and is subject to appropriate increases proportional to tariff adjustments.

ARTICLE IV
TARIFF

4.1 During the tenn of the Franchise, PRIMEWATER shall be allowed to bill and collect
payment from its customers for services rendere~ provided, that PRIMEW ATER have
secured the necessary water pera1it/s and certificate/s of public convenience from the
National Water Resources Board (NWRB). Funher, any implementation of tariff
adjustments should require prior NWRB approval, as mandated by law.
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Reg. Ord No. 2018-19t J)pp:mb,,er 11. 2018 Page.if

4.2 PRlMEWATP.R. will also implement automatic percentage adjustJnents in Total Tariff
equal to: (i) the change in the Consumer Price Index (CPI) and (ii) the Power Cost
Adjustment (PCA), a standard provision for uti1ity providers, as published by the
Philippine Government and made available through
l1Lt1)://\V\V\-\'.QSa.eo''·P}1/busi ness/pr1ce-1n<lices and~ without need of any approvals,
provided PRIMEWATER can justify the increase in power and fuel cost.

4.3 PRlMEWATER shall be allowed to require all applicants to sign a contract with
PRIMEWA'I'ER and to make a meter and consumption deposit and pay other reasonable
fees, as may be dete1111ined by PRlMEWATER.

4.4 Any of the aforementioned sums charged to the customer is exclusive of any value added
tax or other tax which might be chargeable in connection with payment of that sum and
which if chargeable will be stated separately and payable by the customer at the same
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time as it makes the relevant payment.

ART ICLE V
EXPIRA1'IO OF THE FRANCHISE

5. J ln the evenL of non-renewal of the Franchise> the City Govemmertt of lloilo City shall
have the option to fo11n or appoint a capable agency of the locaJ government, herein
referred to as the SUCCEEDI G PARTY, to assume the managemen~ operations and
ownership of the waterworks system subject to the payment of a fai r market value, to be
deten11ined by an independent appraiser mutually appointed by the City Government and
PRTMEWA'IER, for all or some of the fixed assets of PRIMEWATER~ except for: (i)
any propeny such as but not limited to land, equipment, and pipelines which is donated
by a government agency to PRIMEWATER during the term of the Franchise; (ij) any
fixed asset, which may be deemed fully depreciated or no longer practical, to be removed
by PRlMEWATER in the event that the S CCEEDING PARTY decides not to acquire
the same; and (iii) the pipeline and water distribution devices.

5.2 Should the City Government of lloilo City fail to appoint or for1r1 the SUCCEEDING
P ARTY and after the expiration of the Franchise but rather opt to maintain its operation
by a private firm , PRIMEWATER shall now have the priority right, assutning that the
same tercns and conditions are offered by other negotiating/competing parties to re-
negotiate with the City Government for the continuance of its operation subject to the
terms and conditions agreed therefrom.

ARTICLE VI
EMPLOYEES

6.1 Further to the rights and discretion granted to PRIMEWATER under the Franchise,
PR fMEWATER shall be obligated to:

6.1. l identify, recruit, interview and hire all new labor and professional, supervisory
and managerial personnel as are required to perfonn its obligations under the
Franchise, provided, however that residents of Iloilo City, Iloi lo Province, shall be
given priority to be employed by PRIMEWATER and that at least 50% of the
employees should be from lloilo City.

6.1.2 undertake all activities pertaining to customer relations such as info1111ation

disseminatio~ public consultation, complaints monitoring and resolution, and the
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Reg. Ord No. 2018-194. December 11. 2018 Page .5

like, without prejudice to asking assistance from the City Government of lloilo
City,, if necessary.

ARTICLE VII
TITLES

7.1 The title to the entire waterworks facility assumed (if any) and procured by
PRIMEWATER in the perfor111ance of its obligations under the Franchise shaJl not pass
to lloilo City and shall remain the absolute property of PRIMEWA'l'ER other than in
accordance with Article 5 hereof.

7 .2 PRlMEWATER shall be able and have the right to create security over the waterworks
facilities.

ARTICLEVIll
SERVICE TARGETS

8.1 PRIMEWATER shall, during the franchise period of 25 years, endeavor to fulfill the
f o11owing service targets:

8.1.1 Service Coverage - PRlMEWATER shall extend and provide Water Supply
Services to conswners in the Franchise Area, as far as feasibly possible, as
p·rescribed below:

PHASEl 25 barangays of La Paz

(Years 1to3) 16 barangays ofMandurriao
17 barangays of City Proper
9 barangays of Lapuz

PHASE2 Remaining 113 uns~rved barangays,

(Years 4 to 25) including the barangays of Jaro, Molo,
and Arevalo

8.1.2 Provision of Reliable and ,';ufficient Water S11pply to all C'onnected C'om·umer.s -
PRIMEWA'l 'ER shall ensure, as far as feasibly possible, that all connected
consumers will enjoy reliable and sufficient water supply, subject to interruptions
due to reas-0nable causes and, when possible, upon 24 hours prior notice.

8.1.3 Drinking Water Standards - PRIMEWA'l'ER shall ensure that the water supplied
to consumers complies with standard set by the Philippine National Standards for
Drinking Water (PNSDW) or with such prevailing standards on drinking water
quality issued by the Department ofHeaJth or such other governmental agency of
the Philippines that is tasked with issuing such. standards.

8.1.4 Water Safety Manage1nent Plan - PRIMEWATER shall create a Water Safety
Management Plan in accordance with the requirements set by the proper
government agencies.
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Reg. 0 1·d No. 2018-194; December I I. 2018 Page6

8. 1.5 (;uston1er Service - PRJMEW ATER shall, at all times, provide acceptable
customer service standards to consumers and strictly comply with the Customer
Service Handbook~ which handbook shall be completed within 1 year from
Commencement Date. The Customer Service Handbook shall contain, among
other things, timelinc for responding to consumer inquiries/complaints, notices
for interruption in water supply, procedures on biUs payment and rules on
disconnection.

8.2 The service targets shaJl be subject to the approval by NWRB of reasonable tariff
increases~ or the issuance by the proper government authorities of the necessary pem1its
and approvals to enable PRIMEWATER to perfor1r1 its service obligations, such as, but
not limited to, water pe11nits; or changes in circumstances that affect the perfo1111ance of
such service targets, such as, but not limited to, changes in projections for population
growth or demand.
ARTICLE IX
EVENTS AND REMEDJE IN CASE OF DEFAULT

9. I Each .o f the following shall, to the extent that it is not caused by the default of the City
Government of Iloilo City or any act or omission of any Government Entity or a Force
Majeure and/or Fortuitous Event and is not remedied within the time period permitted (if
any), be a PRIMEWATER EVE T OF DEFAULT and entitle the City Government to
issue a Notice of Intention to te11r1inate immediately:

i. PRJMEWA'I'ER fails to provide services to a sufficient standard that there is a

widespread danger to the health of the public in the serviced area and such failure
continues for 30 days after written notice from the City Government to the
PRIMEWATER requesting that such a failure be cured; or

ii . PRIMEWATER fails to perform or fulfill its obligations and such failure continues for
180 days after written notice for the City Government to PRIMEWATER requesting that
such failure be cured; or

iii. PRIMEWATER is declared inso1vent by a competent authority.

9.2 Jn an event that the City Government of lloilo City fail s to perfo1111 any of its obligations
under the Franchise in a material respect and such failure continues for 45 days after
written notice from PRIMEWATER to the City Government requesting that such failure
be remedied; and if such non-perfor111ance is not caused by a default of the
PRIMEWATER or a Force Majeure and/or Fortuitous Event a CITY GOVERNMENT
EVENrf OF DEFAULT shall be declared and shall thus entitle the PRIMEWATER to
issue a Notice of Intention to te1111inate immediately.

9.3 If a Force Majeure and/or Fortuitous Event occurs either:

i. for a period exceeding I 80 calendar days, or

ii. for an aggregate of more than I 80 calendar days over any period of 360 calendar days

then PRIMEWATER may tern1inate the tetm of the Franchise by issuing a Termination
Notice at any time after the 180-calendar day period has expired.

ARTICLEX
CO SEQUE CE OF DEFAULT
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Reg. Ord No. 2018~ 194. December 11. 2018 Page 7

.
I0.1 In any Event of Default occurs and due notice of intent to ter111inate has been issued to
the defattlting party, both PRJMEWATER and the City Government of Iloilo City shall
cease to perform their obligations herein stated in the Franchise. Thereafter, both
PRIMEWATER and the City Government shall agree on the following tenns:

a. Should the Event of Default occur before the PRIMEWATER has completely
recovered its investment, the City Government shall:

i. allow the PRIMEWATER to operate the water system with due assistance and
approval, until such time it would have completely recovered its investment, as well
as repay all loans incurred in the conduct of business; or
ii. procure al I assets of the waterworks system from the PRIMEW ATER based on
terms mutually agreed upon by PRIMEWA'1"ER and the City Government, and
insofar as the latter shall be able to recover its investment, and repay al J loans
incurred in the conduct of business.

b. If the investment of the PRTMEWATER would have been completely re~overed at

any time or within the occurrence of the Even1 of Default, the conrutions stated in
Article S hereof in the turnover of the waterworks facilities shall be followed.

ARTICLE XI
FINAL PROVISIONS

11 .1 ln the event that any one or more of the provisions of this Ordinance is declared invalid,
illegal, or unenforceable, such provisions shall be deemed stricken out, and the invalidity,
illegality, or unenforceability of these provision/s shall not affect the rest of the
Ordinance, which shaJl remain in full force and effect.

11.2 This Ordinance shall take effect after its approval and posting of the text in the City Hall
of Iloilo City and other conspicuous places in lloiJo City, and the website of the City
Government of Iloilo City.

Enacted, December 11, 2018. (With one ( 1) objection by Coun. Ar111and S. Parcon and
five (5) abstentions of the following Coun. Lady Julie Grace L. Baronda, Coun. EJy A. Estante,
.Tr., Coun. Leila G. Luntao, Coun. Maria Irene D. Ong and Coun. Jose Efrain G. Trefias, Ill)

l hereby certify to the correctness of the above quoted--ordinance.

R H. ARR
Seer tary to the Sanggunian(
r1 ,,,,e l
ATTESTED AND CERTIFIEl > APPROVED:
TO BE DULY ENACTED:

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P. . ZON PINOSA, YJ

Pr siding Officer City Mayor

,,_ 1q-1¥'
rpb (.:RN. 18 12-2389