Republic of the Philippines
HOUSE OF THE REPRESENTATIVES
Constitution Hills, Quezon City

NINETEENTH CONGRESS
First Regular Session

HOUSE BILL No.1013

Introduced by Rep. BERNADETTE HERRERA-DY

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

EXPLANATORY NOTE
The Philippines is a water rich country, yet despite an overflowing capital,
many Filipinos experience deprivation from affordable, safe drinking water and a
working sanitation system. This perennial problem has seriously affected the lives
of our citizens in terms of health, sanitation, food, security and livelihood, in
addition to negatively impacting the environment.

As noted at the 6" World Water Forum, ' the lack of sufficient, safe,
acceptable, accessible, affordable drinking water and sanitation is not a problem
unique to the Philippines, but it is incumbent on each country to push for strong
standards within its goverment and to contribute to global governance on the
issues of water and sanitation.

The Philippines is lacking a strong liquid in-liquid out system, meaning
that even if households are serviced with clean drinking water, a minute number
receive adequate sanitation and sewerage services, leading to severe cases of
leptospirosis, dengue, typhoid, and related tropical and water-borne illnesses.
This year alone there has been a 16% increase in cases of dengue fever over the
same period last year. Moreover, 31% of illnesses in the country are
water-related.

The Water Regulatory Act seeks to rationalize the economic as well as
administrative 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 and
licenses; set, review and approve rates; review and suspend contracts; initiate
investigations on erring officials through its quasi-judicial nature; review and
revoke issuances, memoranda and the like that are not in accordance with the



spirit of the Commission 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.

‘To live in a community that is clean, free from human waste, and abundant
with safe and affordable drinking water is an utmost human right, se much so
that 189 states recognized the Right to Water and Sanitation at the United
Nations in 201 1 , according to the World Water Forum.’ In step with the
sremational movement, tarough this bill the Philippines is declaring

_

Held at Marseille, France. See hitp://www.worldwaterforum6.org/en
2 Sec About page, 6° World Water Forum, http: “wrww.worldwaterforun6.org/en/the-forum/abou!

4 primary political priority is the universal access to wate and sanitation and
sustainable management of water resources, forming an indispensable basis for
social and economic improvement and basic health and prosperity. ‘The
Philippines is also committing to meeting and exceeding the Millennium
Development Goals for water and sanitation. To ensure Filipinos the benefit of
vhs nest fundamental human right, the urgent approval of this bill is earnestly

sought.

BERNADETTE HI ERA-DY


Republic of the Philippines
HOUSE OF THE REPRESENTATIVES
Constitution Hills, Quezon City

NINETEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 1013

Introduced by Rep. BERNADETTE HERRERA-DY

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 | - GENERAL PROVISIONS
SEC. 1. Short Title, This Act shall be known as the "Water Regulatory Act
of 2019."
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:

2) To prioritize and seek the immediate attainment of universal access to
safe,

ndequate, affordable and sustainable water supply and sanitation services
for all Filipinos, and adopt all necessary measures directed towards the
realization of the human right to water;

b) To accelerate the expansion, improvement and ultimately, efficient
provision of

Tevel Ill 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;


c) To encourage and enable private school leadership in the continued
growth and development of water supply and septage management and
sewerage facilities and sentences;

4) Yo 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;

e) 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;

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

ii) 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 administrative process for economic regulation that is
stable,

transparent and fair, giving due emphasis 10 technical, legal,
environmental, economic and financial considerations and with due regard
to the observance of

due process at all times; and

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 accountability to achieve greater
operational economic efficiency.

SEC. 3, Definition Of Terms. — As used under this Act, the following words
on terms 10 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, oF for retail distribution to

2



consumers, such as Water Districts or subdivisions managing 15 their
own distribution network.

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

¢) "Levels of water supply service’ — consistent with the definitions
provided under 18 NEDA Board Resolution no- 12 (Series of 1995)
shall mean as follows:

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

Level Il (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 to 6 houscholds. Generally suitable

for rural and urban fringe areas where ‘houses are clustered
densely to justify a simple piped system.
Level Ill (waterworks system oT individual house connections) — @
system with a source, reservoir, a piped distribution network and
Household taps. It is generally suited for densely populated urban
areas.

4) "License" shall mean the Water Supply and/or Sanitation Services
Operating License that the Commission is authorized to grant and
issue to Service Providers.

©) "Licensee" shall mean the Serviee Provider 1° whom a License is
granted of issued by the Commission.

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

g) "MWSS" shall mean the Metropolitan Waterworks and Sewerage
System, created by Republic Act 6234.

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


i) "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,
sanitation and septage management.

k) "Service Arca" shall refer to the area covered by the water
distribution system,sewerage and septage management services

1) “Service Provider" shall refer to any entity, natura} or juridical,
whether private or public, providing or intending to provide levels Tl
& Ill water supply, including bulk water suppliers; sewerage: and/or
septage treatment and disposal services for domestic/residential,
industrial or commercial use.

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

1) "Septage” shall refer to sludge produced op individual onsite
» cemater disposal systems, principally septic tanks and cesspools.

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

1) "Tariffs" shall refer to such amounts which may be charged by
ve censees of Water Supply and/or Sanitation Services for their
sentences 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 {ll 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
a rcblished an independent, quasi-judicial regulatory board to be named the
Water Regulatory/ 33 Commission, hereinafter referred t0 24 the

see itcion’, which shall be organized within one bundred-pventy (120)
days after the effectivity of this Act.

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 in
ercordance with such rules, regulations, guidelines and standards as the
Commission shall issue 40 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

2) provide sen/ices to more than one province,
) 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
Jevels TI & Ill water supply, including suppliers to subdivisions and/or other
Service Providers ; sewerage; and/or septage 5 treatment and disposal
services for domestic/residential, industrial or commercial use.

‘The Commission shall have the following powers and functions:

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

b) 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 technical standards,
classifications and measurement of sen/ice;

4) 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

a ntained 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;



hh) Impose and collect annual levels 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;

i) Require the submission reports of finances and operation’.
» srfied under oaths by the owner or president and seeretary of
the Licensee;

4) Determine and requite the monitoring and submission of such
data,

statistics and other information from Regulatory Units and any or
all licensees as may be necessary for the effective and efficient
exercise of its duties, functions, powers and responsibilities;

k) Investigate, moto proprio or upon complaint in writing, any
matter concerning the operation of the service and require that
service be provided in proper and suitable manner,

1) Impose penalties and fines against any Licensee oF against its
owners, directors, officers, agents or representatives for any
violation of this Act or of the license, order, rule regulation or
requirement issued by the Commission;

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

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

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

p) 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 to refuses to appoint an interim
management committee as provided in the following section;

q) 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, fees, 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 disputes between
and among participants or stakeholders in the Water Supply and
Sanitation services ; and

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

SEC. 7. Powers and Functions of Regulatory Units. — The Regulatory Units of
the Commission shall have the following powers and functions:

a) 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
Sanitation 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;

4) 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
Licenses may impose upon their customers/consumers;

©) Appraise and value property and equipment used by Licenses
in providing water supply and sanitation service/s;

f) Enforce technical, financial and other performance standards
set by the Commission for licenses/utilities;

g) Respond to consumer complaints and ensure the adequate
promotion of consumer interests,



hh) 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
iiterest ‘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;

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

) 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 regulator;

1) Conduct benchmarking and monitor the performance of
licensees/utilities under their jurisdiction, and publish reports
detailing the results thereof, as may be necessary oF 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:when the facts and ciscumstances on the strength of
which the license was issued have been misinterpreted or has
materially changed;

‘where the Licensee has failed to meet or comply withterms,
conditions and performance targets —— including 15 but not
limited to service expansion — that may have been set in the
license;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 when the holder thereof has violated or
‘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 sen,'ice in case @ licensee fails to meet conditions of
the license; and

0) Submit performance plans and reports a required by the
Commission.

©


SEC. 8. Composition, — The Commission shall be collegial body
composed of five (5) full time members composed of a Chairperson
and four (4) members, who shall 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 economies,
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 at least one (1) shall be certified public
accountant with at least ten years experience in active practice.

‘The term of office of each 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 @ 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 WRC and the appointment of
“IL Members of te Commission, the Chairman shall submit for the
approval by the President of the Philippines the new organizational
sPcture and plantilla positions necessary to cary out the powels and
functions of the Commission, including those of the Central and
Provisional Regulatory Units.

‘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
suspected or removed from office except for just cause 8 specified by law.

The Chairman and members of the Commission or any of their relatives
within the forth civil degree of consanguinity or affinity legitimate or
common law, shall be prohibited from holding any interest whatsoever,
cither as investor, stockholder, officer, or director, in any company or entity
engaged 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. Exceutive Director. — The WRC shat 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 &
Secretariatwhich shall provide the Commission with technical and other support
including, aniong others.
a) Providing the necessary technical inputs and secretariat support to the
Commission to facilitate the conduct of its functions;


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

©) 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 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 may be 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 shall also ensure that the granting and revocation of licenses
are carried out fairly, transparently, and without discrimination. [is issuances
shall therefore specify, 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 licenses valid.

12



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 deeming 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.

€) Grounds for modification, suspension or cancellation of the License.

d) Minimum technical performance and service level standards.

e) Expansion targets and service level improvements over time.

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

g) 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 Convenicnce/Certificate of Public Convenience
and Necessity or 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 tbat 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 inter-water supply and/or sanitation
industry;
c) comply with drinking water quality requirements and other requirements
and standards that may be set by the Commission; and
d) 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
facilities 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 of water supplied or sanitation services
provided, or for acts of pilferage pursuant to Section 8,
9, 10, and 1 1 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 terns and conditions imposed by the Commission for the
provision of Water Supply and/or Sanitation Services.
) 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
c) Maintain financial accounts in accordance with the manner and
procedure specified in the License and as may be required by the
Commission.
4) Maintain and upon request by anyone during regular office hours,
promptly make available for scrutiny and inspection such data,


statistics and other in ormation, as may be required by the
Commission.

SEC. 15, Setting Tarifis, Rates and Other Charges. — Regulatory Units
shall establish tariff, 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 intemational markets.

Such tariffs, rates and charges shall be based on and consistent with a rate-
setting methodology that the Commission shall, after due public
consultation, define and publish in consecutively for three weeks in
newspapers of general circulation, 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;

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.

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 but 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.

SEC. 17. Twelve percent (12%) investment cap. — Pursuant to
Commonwealth Act No. 146, as amended, otherwise known as the "Public
Service Act," shall farther provide that any and all government agency/ies
or such government agency/ies’ private sector concessionaires, agents,


‘operators, contractors and the like deliv >cing publiz services to the people
must be subjected to the Twelve (12%) cap financial formula on Return of
Investment. Furthermore the Commission on Audit (COA) is hereto
designated as the sole and official Auditor to determine the Actual Physical
Investments of such government agency/es or private sector
concessionaires, operators, agents, contractors and the like delivering
public to the people for purposes of computing the Twelve (12%) Return
on Investment Cap.

CHAPTER 4- QUASI-JUDICIAL FUNCTIONS OF THE COMMISSION

SEC. 18. Proceedings Before the Commission, — For the purpose of any 31
investigation, inquiry or proceeding, the Commission shall have the requisite power to:

a) Issue subpoena duces tecum and subpoena duces tecum ad testificandum;
b) Appoint a Commissioner to hear and receive evidence on behalf of the
Commission;

c) 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. 19. 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 ills 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. 20. 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 ot decision; Provided that orders, rulings, and decisions
of

the Commission approving tariffs shall be immediately executory and may be

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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.

(2) No injunction may be issued by any court or administrative agency (o restrain
any proceeding before, or the implementation or execution of any order, ruling, or
decision of the Commission, except on the basis of a 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 shail not be invalid merely because of a defect or irregularity in, or in
connection with, the appointment or vacancy in the Office of the Chairperson or
any other member of the Commission.

CHAPTER 5- TRANSITORY PROVISIONS

SEC. 21. Interface with Other Sector Regulators. —

(1) The Department of Environment and Natural Resources shail continue to
have

the primary authority and responsibility for protecting the environment and the
quality water sources from waste and pollution and shall promulgate rules,
regulations, and standards in this regard. (2) The Department of Health shall
have 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
NWR13 for water allocation and data collection, the local government units
for development projects relating to water supply and sanitation, and the
Deparment of Public Works and Highways for flood control and the
hamessing and impounding of water.


SEC, 22. Transfer of Rights and Obligations. — The Commission shall, by virtue
Of thi 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
covefered to the Commission. The transfer of powers and functions in the
Department and agencies attached thereto, as hercin 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 selve until replaced as provided for
under this Act.

All sights 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 rales and regulations of the Commission on Audit and other pertinent laws,
rules, and regulations.

SEC, 23. Separation form Service. — Employees separated from 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. 24, Funding, — The sum of THREE HUNDRED MILLION

(P 300,000.00)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 inital operations.

‘Thereafter, funds sufficient to fully carry out the objectives, powers, and
fanctions of the Commission and its Regulatory Units shall be appropriated
very 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 Office of the President for approval.

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SEC. 25. Effectivity. — This Act shall take effect immediately upon its
approval. The Chairman 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. 26. Separability Clause. —— 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. 27. Repealing Clause. - The provision with respect to fixing of watet
ites and sanitation service fees of Section 3 (h) and Section 12, and
regulation of waterworks and deep wells of Section 3 (n), regulation of
vaterworks 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 LOT 700 (1978), LOT 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 thei
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 Enterprise Zone Authority to grant franchises,
supervise the operation of public utilities, and register, monitor and regulate
enterprises within Tourism Enterprise Zones, are hereby repealed ot
citied 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. 28. Effectivity Clause. — This Act shall take effect fifteen (is)
days following the completion of its publication in 2 national newspaper
of general circulation.

Approved, ..