Senate

ore of the Seccetary

FIFTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES) . _
First Regular Session ) 11 JAN 18 PS 19
?
SENATE RECEM Eb BY:

s.B.No. 2644

Introduced by Senator EDGARDO J. ANGARA

EXPLANATORY NOTE

The Philippines is endowed with abundant fresh water resources but, ironically, 1s
unable to provide steady access to potable water supply for all Filipinos. Lack of access to
safe, clean drinking water and sufficient water sanitation affect the quality of life enjoyed
by our citizens as these have significant implications on health, food security, productivity
and livelihood.

‘The country has been aiming to attain universal access to safe, adequate, affordable
and sustainable water supply for all Filipinos. The 2007 Annual Poverty Indicators Survey
of the National Statistics Office shows the gaps we still need to fill. On the average, nearly
83 percent of Filipino families have access to safe water. However, less than half of
families living in the Autonomous Region of Muslim Mindanao have the same benefit

One in every five Filipino families, or 17 pefcent, remain without access to a safe
water supply. ILis a problem that 1s mote pronounced among the poor where seven in 10
Tamulies use water considered unsafe for consumption. Furthermore, one in every 10
Filipino families have no sanitary toilet facilities

Our domestic water supply sector is plagued by a fragmented institutional setup
and weak regulatory framework. The water supply sector is primarily regulated by
the National Water Resources Board(NWRB), Local Water Utilities Administration
(LWUA) and Local Government Units, Special regulatory bodies also exist, such as the
Subic Bay Regulatory Board and Metropolitan Waterworks and Sewerage System
(MWSS) - Regulatory Office.

Based on World Bank data, there were more than 6,000 water service providers in
the country as of 2005. More specifically, this comprised of 580 water districts, 1,000
LGU utilities, 500 Rural Water Supply Associations, 3,100 Barangay Water Supply
Associations, 200 cooperatives and 900 private firms,

This indicates an extensive network of water supphers but inadequate centralized
regulation. Regulatory bodies involved have different practices, processes and fees. Their
functions and jurisdictions inevitably overlap. [tis imperative that "an
independent economic regulator be made in charge of regulating water supply, sewerage


and septage management services so universal access can be realized faster.

The Water Regulatory Act of 2011 seeks to rationalize the economic regulation of
water utilities through an independent, quasi-judicial body called the Water Regulatory
Commission, Among its functions are to set the policy for water supply, sewerage and
septage management; issue licenses; set, review and approve rates; review and suspend
contracts; and ensure that the welfare of consumers are prioritized. To streamline
organizational functions and responsibilities, the pertinent regulatory units of the MWSS,
NWRB and LWUA will also be transferred to the commission.

Every Filipino has a right to clean water and requisite sanitation. We should
endeavor to ensure that all Filipinos have the full benefit of this most fundamental of
human rights. Hence, the expeditious approval of the Water Regulatory Act of 201! is
camestly requested

hiked Pancana



on
i © Senate

WP cotice of tye Seerstary

FIFTEENTH CONGRESS OF THE)
REPUBLIC OF THE PHILIPPINES —_)
First Regular Session ) ‘it JAN TB P59

SENATE RECEIVED BY: (@

sB.No. 2641

Introduced by Senator EDGARDO J. ANGARA.

AN ACT RATIONALIZING THE ECONOMIC REGULATION OF WATER
UTILITIES, CREATING THE WATER REGULATORY COMMISSION AND
FOR OTHER PURPOSES

Be it enacted in the Senate and House of Representatives of the Philippines in the
Congress assembled:

CHAPTER 1 - GENERAL PROVISIONS

s Short Title. This Act shali be known as the “Water Regulatory
Act of HHP”. 201) ae

SEC. 2. Declaration of National Policy. ~ It is hereby declared the policy
of the State to recognize, protect, realize and enhance the right of all Filipinos to safe and
clean drinking water and sanitation as essential to the full enjoyment of life and all human
rights.

In the pursuit of this Policy, this Act shall have the following objectives:

a) To prioritize and seek the immediate attainment of universal access to safe,
adequate, affordable and sustainable water supply and sanitation s
Filipinos, and adopt all necessary measures directed towards the realization of the

ices for all

human right to water,

b) To accelerate the expansion, improvement and, ultimately, efficient provision of
Level III water supply systems and sanitation services for the entire country, in a
manner consistent with the protection, preservation and revival of the quality of the
country’s water resources;

©) To encourage and enable private sector leadership in the continued growth and
development of water supply and septage management and sewerage facilities and
services;



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d) To create a business and regulatory environment that is level, transparent and
conducive for public and private domestic and foreign investment in water supply
and sanitation services;

¢) To provide incentives and/or support to encourage investments, and/or take all
steps necessary for the provision of affordable access to water supply and sanitation
services in unserved and underserved areas,

) To ensure that water resources allocated to water service providers are used
efficiently to meet public demand;

2) To ensure fair, just and reasonable tariffs, rates and charges for water supply and
sanitation services;

h) To protect the legal and other interests of consumers of water supply and
sanitation services rendered by public and private sector licensees;

i) To establish an admmistrative process for economic regulation that 1s stable,
transparent and fair, giving due emphasis -to technical, legal, environmental,
economic and financial considerations and with due reg
process at all times; and

d to the observance of due

j) To establish a strong and independent economic regulatory body to ensure
consumer protection, promote good business practice and competition among
Service Providers and full public accountability to achieve greater operational and
economic efficiency.

SEC. 3. Definition of Terms. — As used under this Act, the following words or
terms shall have the following meaning:

a) “Bulk water suppliers” shall refer to any entity, natural or juridical, whether public
or private, supplying or intending to supply large quantities of raw or treated water
to buyers who will use it for own consumption, such as industrial companies, or for
retail distribution to consumers, such as Water Districts or subdivisions managing
their own distribution network

b) "Commission" shall mean the Water Regulatory Commission.

©) “Levels of water supply service” ~ consistent with the definitions provided under
NEDA Board Resolution No. 12 (Series of 1995) shall mean as follows:

Level I (point source) - a protected well or a developed spring with an outlet
but without a distribution system, generally adaptable for rural areas where
the houses are thinly scattered. A Level I facility normally serves an average
of 15 households.

Level II (communal faucet system or standposts) - a system composed of a
source, a reservoir, a piped distribution network, and communal faucets,
Usually, one faucet serves 4 10 6 houscholds, Generally suitable for rural and



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urban fringe areas where houses are clustered densely to justify a simple
piped system.

Level IL] (waterworks system or wdividual house connections) - a system
with a source, a reservoir, a piped distribution network and household taps.
It is generally suited for densely populated urban areas

“License” shall mean the Water Supply and/or Sanitation Services Operating

License that the Commission is authorized to grant and issue to Service Providers.

CO)

8)

b)

"Licensee" shall mean the Service Provider to whom a License is granted or issued
by the Commission.

"LWUA" shall mean the Local Water Utilities Administration created under
Presidential Decree No. 198, as amended.

“MWSS” shall mean the Metropolitan Watcrworks and Sewerage System, created
by Republic Act 6234,

“NWRB" shall mean the National Water Resources Board created by Presidential
Decree No. 424, as amended by Executive Order No. 124-A.

“Regulatory Units” shall refer to the regulatory offices established under Section 5
of this Act to issue Licenses authorizing the operation of Water Supply and
Sanitation Services; provide, review, determine, fix, and approve water and
sewerage tariffs, rates and charges that Licensees may impose; and exercise such
other functions and powers as may be provided hereunder

j) “Sanitation” as used under this Act, refers only to sewerage and septage
management.

k)

b

m)

n)

sewerage and

"Service Area” shall refer to the area covered by the water distribution system,
eplage management services.

“Service Provider” shall refer to any entity, natural or juridical, whether private
or public, providing or intending to provide levels II & II water supply,
including bulk water suppliers; sewerage; and/or septage treatment and disposal
services for domestic/residential, industrial or commercial use

"Sewerage" shall refer to any system or network of pipelines, ditches, channels or
conduits including pumping stations, lift” stations and force mains, service
connections including other constructions, devices or appliances appurtenant
thereof, which includes the collection, transport, pumping and treatment of water-
borne human or animal waste removed from residences, buildings, institutions,
industrial and commercial establishments to point of disposal.

“Septage” shall refer to sludge produced on individual onsite wastewater disposal
systems, principally septic tanks and cesspools.



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0) “Septage Management” shall refer to the provision of proper collection, treatment
and disposal of septage.

p) "Tariffs" shall refer to such amounts which may be charged by Licensees of Water
Supply and/or Sanitation Services for their services based on principles, standards,
and guidelines established by the Commission.

q) “Water District" shall refer to government-owned and controlled corporations
organized under Presidential Decree No. 198, as amended, created primarily to
acquire, install, operate, maintain and improve water supply and distribution
systems for domestic, industrial and municipal uses of residents and to provide,
maintain and operate waste water collection, treatment and disposal facilities
within the boundaries of the district,

1) “Water Supply and/or Sanitation Service’- refers to any activity comprising of
Levels I and [If water supply including suppliers to subdivisions and other
Service Providers; sewerage; and septage treatment and disposal services.

CHAPTER 2 - ORGANIZATION

SEC. 4. The Water Regulatory Commission. — There is hereby created and
established an independent, quasi-judicial regulatory body to be named the Water
Regulatory Commission, hereinafter referred to as the “Commission”, which shall be
organized within one hundred twenty (120) days after the effectivity of this Act

The Commission shall be placed under the administrative supervision of the Office of
the President.

The Commission shall have a Board of Commissioners, and shall be vested with powers
and functions, as conferred and set forth hereunder

SEC. 5. The Regulatory Units. — The Regulatory Units of the Commission
shall be composed of the Provincial Regulatory Units and the Central Regulatory Unit.

The Provincial Regulatory Units shall be established by the Commission in accordance
with such rules, regulations, guidelines and standards as the Commission shall issue, and
as provided hereunder.

Moreover, the pertinent regulatory divisions or units of MWSS, NWRB and LWUA are
hereby transferred to the Commission, and they shall collectively comprise its Central
Regulatory Unit for water supply and sanitation services that

(a) provide services to more than one province;
(b) are owned, operated and/or maintained by special economic zones and Metro
Manila concessionaires,

SEC. 6. Powers and Functions of the Commission. - The overall authority
and powers of the Commission shall cover and apply to all Service Providers, whether
private or public, providing or intending to provide levels Il & Il water supply,
including suppliers to subdivisions and/or other Service Providers; sewerage; and/or


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septage treatment and disposal services for domestic/residential, industrial or commercial

use.

The Commission shall have the following powers and functions:

a)

b)

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8)

h)

i)

k)

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Provide the overall policy directions, strategies and targets to meet the goals and
objectives for water supply, sewerage and septage management.

Issue and promulgate rules, regulations and guidelines as may be necessary to
implement and enforce its powers and functions under this Act;

Set and enforce just and reasonable techmcal standards, classifications and
measurements of service;

Appoint the central and provincial regulators;

Establish rules and regulations to monitor, avoid and provide remedies for any
market power abuse or anti-competitive or discriminatory act or behavior by or
against any participant in the water supply and sanitation sector. Upon finding
that a market participant has engaged in, or fell victim to such act or behavior,
the WRC shall act to stop and/or redress the same, Such remedies may, without
limitation, include the imposition of price controls, issuance of injunctions,
requirement of divestment or disgorgement of excess profits, invalidation of
contracts and imposition of fines and penalties pursuant to this Act.

Adopt and require that books, records and accounts be kept and maintained in
accordance with the prescribed uniform accounting system;

Fix and determine proper and adequate rates of depreciation of properties and
equipment used in Water Supply and Sanitation Service/s;

Impose and collect annual levies determined as a percentage of gross revenue
accruing in relation to the licensed activities, and reasonable fees and surcharges
as may be necessary for achieving the purposes, powers and functions of the
Commission;

Require the submission reports of finances and operations, verified under oaths
by the owner or president and secretary of the Licensees

Determine and require the monitoring and submission of such data, statistics and
other information from the Regulatory Units and any or all licensees as may be
necessary for the effective and efficient exercise of its duties, functions, powers
and responsibilities.

Investigate, motu propio or upon complaint in writing, any matter concerning the
operation of the service and require that service be provided in proper and
suitable manner;

Impose penalties and fines against any Licensee or against its owners, directors,
officers, agents or representatives for any violation of this Act or of the license,


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m)

p)

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3)

SEC. 7.

order, rule regulation or requirement issued by the Commission;

Require any Licensee to pay the actual expenses incurred by the Commission in
any investigation if it shall be found that a Licensee violated any provision of
this Act or of the license, order, rule regulation or requirement issued by the
Commission;

Advise, apprise and coordinate with other relevant agencies of the national or
local government on any matter relating to Water Supply and/or Sanitation
Services;

Deputize agents, whether from the public: or private sector, to assist in the
performance of any of the powers and functions of the Commission;

Upon appeal and after due hearing, appoint an interim or temporary management
committee to ensure continuity of service in cases a Licensee fails to meet
conditions of the license and the concerned Regulatory Unit fails or refuses to
appoint an interim management committee as provided in the following section.

Appoint, hire and maintain adequate staff’ and personnel, advisers, and/or
consultants, with suitable qualifications and experience, as necessary;

Original and exclusive jurisdiction over all cases contesting rates, (ees, fines and
penalties imposed by the Regulatory Units in the exercise of their powers,
functions and responsibilities, as set forth herein, and over all cases involving
akeholders in the Water Supply

disputes between and among participants or s
and Sanitation services; and

Such other incidental powers and functions as may be necessary to attain the
objectives of this Act.

Powers and Functions of the Regulatory Units. ~ The Regulatory Units of

the Commission shall have the following powers and fiunctions:

a)

b)

gd

Subject to the review and approval of the Commission, issue and
promulgate rules, regulations and guidelines as may be necessary to implement
and enforce its powers and functions under this Section;

Issue Licenses authorizing the operation of Water Supply and Sai
Services in any specified area or areas within the Philippines.

Impose fines, charges and other penalties upon any Provider and/or its
officers and stockholders who shall fail or refuse to register and/or obtain a
License prior to operation or commencement of business, as provided hereunder.

Consistent with rules, guidelines, procedures and methodologies which the
Commission shall provide, review, determine, fix, and approve proposed water
and sewerage tariffs, rates and charges that Licensees may impose upon their
customers/consumers;


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°) Appraise and value property and equipment used by Licensees in providing
water supply and sanitation service/s.

fy Enforce technical, financial and other performance standards set by the
Commission for licensees/utilities;

2) Respond to consumer complaints and’ ensure the adequate promotion of
consumer interests;

h) Investigate accidents directly or indirectly arising from or connected with
the maintenance or operation of the service, and make such order or
recommendation as the public interest may warrant;

i) Upon petition or motu propio where in its determination public interest so
dictates, require the review and/or approval of contracts or agreements that may
impact on the tariff and rates of service provision entered into by Service
Providers;

nN) Require the submission of reports, plans and other documents that set out
the performance targets of the licensees/utilities, and regular accomplishment
reports;

k) Impose and collect annual Jevies determined as a percentage of gross

revenue accruing in relation to the licensed activities, and reasonable fees and
surcharges as may be necessary for achieving the purposes, powers and
functions of the regulator;

) Conduct benchmarking and monitor the performance of licensees/utilities
under their jurisdiction, and publish reports detailing the results thereof, as may
be necessary or required by the Commission;

m) Amend, modify, suspend or revoke any License issued by them, after due
notice and hearing, on any of the following grounds:

i. when the facts and circumstances on the strength of which the license was
issued have been misrepresented or has matertally changed;

ii, where the Licensee has failed to meet or comply with terms, conditions and
performance targets - including but not limited to service expansion - that
may have been set in the license;

iii, where the Licensee is found to be manifestly incompetent in the operation of
or provision of Water Supply and Sanitation services in its area; or

iv. when the holder thereof has violated ot willfully refused to comply with any
order, rule or regulation of the Commission or any provision of this Act;

n) Appoint an interim management committee to ensure continuity of service
incase a licensee fails to meet conditions of the license; and


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a)

d)

°) Submit performance plans and reports as required by the Commission
SEC. 8. Composition. -

The Commission shall be a collegial body composed of five (5) full-ume
members composed of a Chairperson and four (4) members, who shail all be
appointed by the President of the Philippines. All members of the Commission
must be citizens and residents of the Philippines, at least thirty five (35) years of
age, and of good moral character, recognized integrity and competence in the
field of law, business, commerce, finance, accounting or public administration,
water or utility economics, management, physical or engineering services,
hydrology and other related services, with at least three (3) years actual and
distinguished experience in their respective fields of expertise; Provided that out
of the four members of the Commission, at least one (1) shall be a member of the
Philippine Bar with at least ten years experience in the active practice of law, and
al least one (1) shall be a certified public accountant with at least ten years
experience in active practice

The term of office of cach member of the Commission shall be seven (7) years;
Provided, however, that among the members first appointed, the Chairperson
shall serve for a period of seven (7) years, two (2) members shall serve for five
(5) years and the other two (2) members shall serve for three (3) years; Provided,
further, that any member whose term has expired as specified herein shall serve
as such until his successor shall have been appointed and qualified; Provided,
moreover, that any appointment to fill a vacancy in the Commission arising from
death, removal, retirement or resignation shall be made only for the unexpired
term; and Provided, finally, that in no case shall any member serve for more than
seven (7) years in the Commission.

‘The Commission shall meet as often as may be necessary on such day or days as
the Chairperson may fix. The presence of at least three (3) members of the
Commission shall constitute a quorum, which shall be necessary for the
transaction of any business. The affirmative vote of majority of the members of
the Commission where a quorum is present shall be necessary for the adoption of
any order, resolution, decisions, or other act of the Commission in the exercise of
its quasi-judicial functions; Provided that in promulgating rules, regulations,
guidelines and in the exercise of its quasi-legislative functions, an affirmative
vote of three (3) members shall be required.

The Chairman of the Commission shall exercise general executive control and
supervision of the Commission and its members, staff and personnel, agents and
representatives.

Within three (3) months from the creation of the WRC and the appointment of all
Members of the Commission, the Chairman shall submit for the approval by the
President of the Philippines the new organizational structure and plantilla positions
necessary {0 carry out the powers and functions of the Commission, including
those of the Central and Provincial Regulatory, Units.


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‘The staff and personnel positions of the WRC shall be filled by regular
appointments in accordance with a staffing plan to be prepared by the Commission.

©) Members of the Commission shall enjoy security of tenure and shall not be
suspended or removed from office except for just cause as specified by law.

1) The Chairman and members of the Commission or any of their relatives within the
fourth civil degree of consanguinity or affinity, legitimate or common law, shall be
prohibited from holding any interest whatsoever, either as investor, stockholder,
officer or director, in any company or entity engaged in the business of
transmitting, generating, supplying or distributing any form of energy and must,
therefore, divest through sale or legal disposition of any and all interests in the
water sector upon assumption of office.

SEC.9, Executive Director. ~

The WRC shall appoint an Executive Director who shall head the WRC Secretariat, keep
and maintain the official record and report of the proceedings of the Commission, and
have the authority to administer oaths in all matters.falling within the jurisdiction of the
Commission.

‘The Executive Director shall be responsible for the effective implementation of the
policies, plans, programs, rules, regulations and directives of the Commission; coordinate
and supervise the activities of the different operating units under the Commission; and
perform such functions as may be assigned by the Chairperson and/or other members of
the Commission.

SEC. 10. WRC Secretariat

‘The Commission shall also establish a Secretariat which shall provide the Commission
with technical and other support including, among others

a) Providing the necessary technical inputs and Secretariat support to the Commission
to facilitate the conduct of «ts functions:

b) Coordinating with Regulatory Units to ensure proper implementation of the rules,
regulations and guidelines promulgated by the Commission;

c) Monitoring and assessing activities of the Regulatory Units vis-a-vis their
respective annual performance plans and targets;

d) Maintaining a database on the WSS sector; and

ce) Coordinating with other relevant agencies of the national or local government on
any matter relating to WSS.

SEC. 11. Compensation and Other Emoluments.

“The compensation of the members of the Commission and its staff shall be exempt from
the coverage of Republic Act. No. 6758, otherwise known as the “Salary Standardization


Sowudswaen—

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‘Act.” Provided, that the salaries of the Commission and its staff shall conform as closely
as possible to the principles of R.A. 6758.

For this purpose, the schedule of compensation of the Commission and its Regulatory
Units and staff shall be submitted for approval of the President of the Philippines. The
compensation schedule of the Commission and its Regulatory Units and staff shall be
implemented within six (6) months from the effectivity of this Act and maybe upgraded
by the President of the Philippines as the need arises: Provided further, that in no case
shall the compensation of the Commission and its staff be upgraded more than once a
year.

Pertinent civil service laws, rules and regulations of the Philippines shall be applicable to
the Commission.

The Chairman and members of the Commission shall initially be entitled to the same
salaries, allowances and benefits as those of the Presiding Justice and Associate Justices of
the Supreme Court, respectively.

CHAPTER 3 - REGISTRATION AND LICENSING

SEC.12. Registration and Licensing of All Water Supply and/or Sanitation
Services -

‘All Water Supply and/or Sanitation Service Providers, including Bulk Water Suppliers
and those providing services to subdivisions and/or other Service Providers, shall register
with the Commission and, subject to such rules, guidelines, procedures and other
issuances as the Commission may issue, obtain a License to operate from the appropriate
Regulatory Units.

The Commission shal! also ensure that the granting and revocation of licenses are carried
out fairly, Uansparently, and without discrimination. Its issuances shall therefore
specily, among others, the qualifications, requirements and procedure for the granting
and revocation of Licenses, as well as the standards and performance targets that must
continuously be complied with in order to keep such Jicenses valid

Unless otherwise provided herein or by the Commission, no public Water Supply and/or
Sanitation Service provider shall commence or conduct the business of providing water
supply and sanitation services without first obtaining a license,

Concession agreements and other contracts for water supply provision currently existing
shall remain valid and in force, unless otherwise invalidated by the Commission where
public interest so dictates, after due notice and hearing.

SEC 13. Conditions of License. -

‘The Commission and/or the concerned Regulatory Unit, may impose such conditions in the
issued License, as it may be deem necessary, such as but not limited to:

a) Tariffs, rates and charges that may be imposed from its customers/consumers.

b) Term fixing the duration of the privilege.

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) Grounds for modification, suspension or cancellation of the License.
d) Minimum technical performance and service level standards.

e) _ Expansion targets and service level

provements over time.

1) Restrictions or conditions for transferability of the business or controlling
interest in the business.

£) _ Reportorial requirements and obligations of the grantee.

h) Submission to annual performance audit by the Commission or its duly
authorized representative(s)

The Commission shall specify the requirements and procedure for existing holders of
Certificate of Public Convenience/Certificates of Public Convenience and Necessity
issued by NWRB, and/or Conformance issued by LWUA, to convert their existing
certificates into Licenses issued by the Commission.

|All existing providers of Water Supply and/or Sanitation Services without a legal and
valid Certificate of Public Convenience/Certificate of Public Convenience and Necessity
ot Certificate of Conformance shall register with the Commission and apply for a
License within six (6) months from the effectivity of this Act.

SEC. 14. Rights and Duties of Licensees. ~

(1) Any person granted a License under this Act shall have the obligation to ensure that
its licensed activities are conducted so as to further the public interest and, in
particular, that they:

a) foster the maintenance and development of efficient, coordinated, and viable
operation of their licensed activities;

b) ensure that their Water Supply and/or Sanitation Services are provided in a
diligent, conscientious and workmanlike manner, in accordance with applicable
laws and the standards and practices set by the Commission and generally
accepted in the Philippine and interWater supply and/or sanitation industry;

©) comply with drinking water quality requirements and other requirements and
standards that may be set by the Commission; and

4) not abandon its service without notice to and approval by the Commission

(2) Any person granted a License under this Act shall, to the extent allowed by law and
specified in the License, have the right to acquire or lease land and lay or repair
water or sanitation mains and other relevant fatilities in public ways, when required
to fulfill their obligations.

(3) Subject to any condition or limitation laid down in the License, a Licensee may
disconnect the supply of Water Supply and/or Sanitation services to a customer if
such customer defaults in the payment of amount(s) due to that Licensee in respect


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of water supplied or sanitation services provided, or for acts of pilferage pursuant to
Sections 8, 9, 10, and 11 of Republic Act No. 8041, otherwise known as the “Water
Crisis Act of 1995."

(4) Any License issued under this Act shall contain provisions designed to ensure that
Licensees:

a) Publish the Tariff and other charges approved by the Commission, and other
terms and conditions imposed by the Commission for the provision of Water
Supply and/or Sanitation Services.

b) Prepare, within three (3) months from the issuance of a License, in consultation
with its customers, a customer service code specifying the manner and procedure
for: (a) metering, billing, and collection of the Licensee's approved tariff and
other charges, (b) disconnection or suspension of service in case of non-payment
of tariffs and/or other charges, or acts of pilferage, and (c) recommendation and
recovery of arrears in tariffs and other charges; and

©) Maintain financial accounts in accordance with the manner and procedure
specified in the License and as may be required by the Commission.

d) Maintain and upon request by anyone during regular office hou
make available for scrutmy and inspection such d

information, as may be required by the Commission

. promptly
‘a, Statistics and other

SEC. 15. Setting Tariffs, Rates and Other Charges. ~

Regulatory Units shall establish tariffs, rates and other charges which are fair and
reasonable and which provide for the economic viability of the service and a fair return on
their investments considering the prevailing cost of capital in the domestic and
international markets,

Such tariffs, rates and charges shall be based on and consistent with a rate-setting
methodology that the Commission shall, after due consultation, define and publish, taking

into account the following, among others:

i. reasonable and prudent capital and recurrent costs of providing the service
including a reasonable rate of return on capital,

ii, efficiency of the service;

iii, incentives for enhancement of efficiency;

iv. willingness to pay of the customers/consumers,
v. equity considerations; and

vi. administrative simplicity.



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Tariffs, rates and charges set by the Regulatory Units shall be presumed valid and
reasonable unless a protest or contest is filed with the Commission.

SEC.16. Promotion of Innovative Schemes to Improve Efficiency and
Management of Systems. ~

The Commission shall promote innovative schemes, including bul not limited to the
consolidation and/or integration of Water Supply and/or Sanitation Services and/or
Providers in the same Service Area, where it will result in improved efficiency, services
expansion and/or lowering of costs.

To this end, the Commission shall establish and issue such rules and guidelines as may
be necessary to (a) create incentives to encourage efficiency and service expansion; (b)
establish the standards and targets that service providers are required to meet; and (c) set
the fines and penalties that would be imposed for failure to meet such standards and
targets.

CHAPTER 4 - QUASLJUDICIAL FUNCTIONS OF THE COMMISSION
SEC.17. Proceedings Before the Commission.

For the purpose of any investigation, inquiry or proceeding, the Commission shall have
the requisite power to

a) Issue subpoena duces tecum and subpoena duices tecum ad testificandum;

b) Appoint a Commissioner to hear and receive evidence on behalf of the
Commission;

©) Cite any person or party for contempt for refusal to appear, testify or comply
with an order of the Commission on any matter that is the subject of
investigation, inquiry or proceeding before the Commission.

SEC.18. Orders and Decisions of the Commission. ~

The orders, resolutions and decisions of the Commission, which must be reached as
promptly and expeditiously as reasonably and fairly possible, shall be in writing and shall
state clearly and distinctly the facts and law on which it is based.

‘The Commission shall publish and make available for public inspection all decisions
and final orders in the adjudication of contested cases or applications,

SEC.19. Appeals Procedure and Prohibition Against Injunction. ~

(1) The orders, rulings, and decisions of the Commission are final and executory unless
appealed to the Court of Appeals within fifteen (15) days from receipt of notice of such
order, ruling or decision; Provided that orders, rulings, and decisions of the
Commission approving tariffs shall be immediately executory and may be suspended
only upon appeal and filing of a bond, in an amount to be fixed by the Commission,
to answer for damages occasioned by the suspension or stay of execution of such
orders, rulings, and decisions.

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(2) No injunction may be issued by any court or admmistrative agency to restrain any
proceeding before, or the implementation or execution of any order, ruling, ot
decision of the Commission, except on the basis of 2 question of law brought before
the Supreme Court on certiorari

(3) Subject to Sec. 7, paragraph 3 of this Act, an act or decision of the Commission shall
not be invalid merely because of a defect or irregularity in, or in connection with, the
appointment ot vacancy in the Office of the Chairperson or any other member of the
Commission.

CHAPTER 5 - TRANSITORY PROVISIONS
SEC. 20, Interface with Other Sector Regulators. —

(1) The Department of Environment and Natural Resources shall continue to have the
primary authority and respon:
water sources from waste and pollution and shall promulgate rules, regulations, and
standards in this regard.

lity for protecting the environment and the quality

(2) The Department of Health shall bave primary authority and responsibility for
determining and enforcing drinking water quality and sanitation standards. The
Commission shall coordinate with the DOH in this regard, and shall ensure the
consistency of the standards and targets that it will set for compliance by licensees with
the DOH’s mandated standards.

(3) The Commission shall coordinate with the NWRB for water allocation and data
collection, the local government units for development projects relating to water supply
and sanitation, and the Department of Public Works and Highways for flood control
and the harnessing and impounding of water.

SEC. 21. Transfer of Rights and Obligations. ~

‘The Commission shall, by virtue of this Act, be subrogated to all the rights, and assume all
the obligations, of the Water Utilities Division of the NWRB, the Regulatory Offices of
MWSS and LWUA, the Regulatory Units of all special economic zones, and all other
government agencies and units whose powers and functions have been transferred to the
Commission.

‘The transfer of powers and functions in the Department and agencies attached thereto, as
herein provided for, shall take effect within six (6) months after the effectivity of this Act.
The foregoing transfer of powers and functions shall include all applicable funds,
personnel, records, property and equipment, as may be necessary. The same shall apply to
agencies which have been attached to the Department by virtue of this Act.

As such, all offices under the Department and all attached agencies affected by the
provisions of this Act shall continue to function under their present mandates until
transition is effected as provided for under this Act

The heads of the agencies shall continue to serve untt! replaced as provided for under this
Act

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All rights and obligations of the said government agencies are hereby transferred to and
assumed by the Commission and shall be acted upon in accordance with the rules and
regulations of the Commission on Audit and other pertinent laws, rules, and regulations.

SEC. 22. Separation form Service.

Employees separated {rom government service as a result of this Act shall be entitled to the
benefits which they may receive under existing laws, rules and regulations.

SEC.23. Funding. -
The sum of e .00) Pesos shall be set aside from any

available funds of the National Treasury, and is hereby appropriated and authorized to be
released, for the organization of the Commission and its initial operations

‘Thereafler, funds sufficient to fully carry out the objectives, powers, and functions of the
Commission and its Regulatory Units shall be appropriated every fiscal year in the General
Appropriations Act, in an amount that shall not be less than the amount appropriated for it
the previous year.

The Commission shall submit its annual budget, which shall include, among others,
detailed information on the compensation and benefits received by their employees, to the
Offfice of the President for approval.

Moreover, subject to existing rules and regulations, __ percent (__%) of funds and
monies collected by the Commission from fees, charges, surcharges and penalties, which
the Commission may impose and collect under this Act, shall accrue directly and
automatically to the Commission, The guidelines for the collection and disbursement of
these proceeds shall be defined in the implementing rules and regulations of this Act. Of
his amount, and where applicable, __ percent (._%) of fees and monies that may
have been collected by the Regulatory Units shall automatically be retained by it, and the
rest of the collection shall then be remitted to the Commission.

The abovementioned retained amounts shall be used exclusively for training and capacity
building purposes, including the upgrade and procurement of equipment and software as
may be necessary for the efficient and effective exercise of its powers. Such upgrades and
procurements shall comply with the requirements’ of existing laws on procurement,
accounting and auditing rules and regulations.

The amount of funds and monies collected, and the costs and purposes for which such
were expended shall be made publicly available upon request, as well as on an official
website that the Commission shall establish.

SEC.24. —_Effectivity, ~ This Act shall take effect immediately upon its
approval. The Chaitman of the Commission shall, after due consultation with stakeholders,
promulgate such other rules and regulations as may be necessary and appropriate to
implement this Act.

SEC.25.  Separability Clause.—

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In the event that any provision of this Act is declared unconstitutional, invalid, or illegal,
the constitutionality, validity, or legality of the remainder of the provisions of this Act shall
not be affected thereby.

SEC. 26. Repealing Clause. -

The provision with respect to fixing of water rates and sanitation service fees of Section 3
(a) and Section 12, and regulation of waterworks and deep wells of Section 3 (n),
regulation of waterworks and sanitation systems in privately owned subdivisions of
Section 3 (p) of Republic Act 6234, as amended, is hereby repealed or modified
accordingly

Section 62 on regulation and Section 63 on rate review of Presidential! Decree 198, as
amended by LOI 700 (1978), LOI 744 (1978), EO 124 (1987), EO 123 (2002), is hereby
repealed or modified accordingly.

The provisions of the Local Government Code and its Implementing Rules and
Regulations of Republic Act No. 7160 which allow local government units to fix the
rates of water utilities owned, operated and maintained by them within their jurisdiction
is hereby repealed or modified accordingly.

Section 13 (b) on regulation of enterprises in ECOZONE of Republic Act No. 7916 as
amended, also known as the Special Economic Zone Act of 1995, is hereby repealed or
modified accordingly.

“Provisions under Section 69 of Republic Act No. 9593 or the Tourism Act ‘of 2009 and its
Implementing Rules and Regulations which mandates the Tourism Infrastructure and
Enlerprise Zone Authority to grant franchises, supervise the operation of public utilities,
and register, monitor and regulate enterprises within Tourism Enterprise Zones, are hereby
repealed or modified accordingly.”

Commonwealth Act No. 146, as amended, otherwise known as the “Public Service Act,”
and all laws, decrees, rules and regulations, or portion thereof, inconsistent with this Act
are hereby repealed or modified accordingly.

‘All other laws, decrees, rules and regulations and executive orders that are contrary to or
inconsistent with this Act are hereby repealed or modified accordingly.

SEC.27. — Effectivity Clause. ~
‘This Act shall take effect fifteen (15) days following the completion of its publication in a

navional newspaper of general circulation,

Approved...

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