E lC in LEM 11 CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES )
First Regular Session 
)
SENATE
S. No. 44
iif c ji' 
S it m i’
of Il;r ijc c rrtn rp
*19 JUL -1 All :36
Introduced by Senator Ralph G. Recto
RECiiiV. J
AN ACT
RATIONALIZING THE ECONOMIC REGULATION OF WATER UTILITIES, 
CREATING THE WATER REGULATORY COMMISSION, AND FOR OTHER 
PURPOSES
Explanatory Note
The lack of access to safe water supply and sanitation has direct and adverse 
impact on the health, environment, economic productivity and development. In the 2017 
Annual Poverty Indicators Suiwey (APIS), almost 90 percent of the 24.4 million families 
have access to safe water supply sufficient and accessible while almost one percent of 
families still rely on natural sources such as rivers, streams, ponds, lakes or dams.1 Of 
the families with access to safe water supply, 51 percent have piped connection and the 
rest rely on unsustainable communal faucets and point sources.2 Water refilling stations 
are becoming popular. Almost four in every ten families (40%) obtain their drinking 
water from the refilling stations, while 20 percent drink water piped into their dwelling.3
The same 2017 APIS study also showed that 88.9 percent of families have access 
to sanitary toilet facilities while 5.7 percent of families do not use any sanitation facility.
The Philippine Water and Sanitation sector is challenged by the absence of a lead 
agency for the sector, the lack of a cohesive policy framework, insufficient public 
financing, inadequate seetor data that can provide informed policy and investment 
decisions, and a severely fragmented and poorly enforced regulatory regime.
There are currently several economic regulatory agencies for water: The Local 
Water Utilities Administration (LWUA) for water districts, rural waterworks and 
sanitation associations, the National Water Resources Board (NWRB) for private utilities, 
the Metropolitan Waterworks and Sewerage System (MWSS) for Metro Manila, other 
agencies covering various economic and industrial zones, and Local Government Units 
that essentially self-regulatc. 
These agencies have other mandates particularly, 
proprietary roles on the part of the MWSS, LGUs, and the economic and industrial zones; 
financing on the part ot LWUA, and resource regulation on the part of NWRB; that 
inherently pose conflicts of interest on their economic regulatory functions.
Compounding this issue is the low coverage of the economic regulatory mantle. 
There are an estimated 4,600 water utilities in the country, of which 2,200 are small 
utilities with less than 1,500 connections, and with different ownership structures and
1 2017 Annual Poverty Indicators Survey. Philippine Statistics Authority.
a well or borehole, that serves one or a group of households, depending on the source's ownership, as 
well as its regeneration capacity
3 2017 Annual Poverty Indicators Survey. Philippine Statistics Authority.


governance systems—from public and private corporate entities, LGU-ran systems and 
loosely formed community-based associations. Only 27% of the total utilities (mostly 
water districts and private utilities) are subject to economic regulation, leaving 73% 
without any standard guidelines for tariff setting or oversight on perfonnance. Weak or 
benign exercise of regulatory functions has led to under investments and sub-optimal 
performance of water utilities.
The objective ot this bill is to rationalize the economic regulation of water supply 
and sanitation services with the creation of the Water Regulatory Commission; an 
independent, quasi-judicial body consolidating the economic regulatory powers of the 
various water agencies into one national body.
The proposed measure seeks to achieve the following objectives:
• 
Achieve universal access to improved water and sanitation services for the entire 
country through an effective economic regulatory system that can compel 
expansion of service coverage, efficiency in operations and quality of service;
• 
Encourage private sector participation in the development and expansion of water 
and sanitation services;
• 
Protect the interest of consumers; and
• 
Address the conflicts of interest inherent in the current water regulatory agencies.
The bill may be subject to refinements, upon the submission of position papers from 
government agencies and stakeholders and after consideration of the collective wisdom 
of the separate Committee members of the Senate.
In view of the foregoing, the approval of this bill is hereby requested.
/mjma


EIGMTEEM II CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES )
First Regular Session 
)
SENATE
s. No. 
4 4
(Dil.cf at ifjp fei' ri ftarp
■19 
JUL -1 
All :36
Introduced by Senator Ralph G. Recto
RECLi'i. J u..
AN ACT
RATIONALIZING THE ECONOMIC REGULATION OF WATER UTILITIES, 
CREATING THE WATER REGULATORY COMMISSION AND FOR OTHER 
PURPOSES
Be it enacted by the Senate and House of Representatives of the 
Philippines in Congress assembled:
1 
CHAPTER I
2 
TITLE AND DECLARATION OF POLICY
3 
SECTION 1. Short Title. This Act shall be known as the “Water Regulatory
4 
Commission Act.”
5 
SEC. 2. Declaration of Policy. It is hereby declared the policy of the State to
6 
pursue and foster, in an orderly, rational, efficient, and dynamic manner, the attainment
7 
of nationwide water supply and sanitation serviees at reasonable rates and, encourage the
8 
participation and investment of the private sector, both domestic and foreign, in the
9 
provision of piped-water supply and sanitation services. For this purpose, there is a need
10 
to establish a single agency of government to be invested with ample powers for the
11 
rational and effective economic regulation of all water supply and sanitation systems.
12 
SEC. 3. Objectives. The Commission shall have the following objectives:
13 
(a) 
To promote the expansion, improvement and efficient provision of Water
14 
Supply and Sanitation Services throughout the Philippines.
15 
(b) 
To provide an environment conducive to the adequate financing of Water
16 
Supply and Sanitation Seiwices provided by public and private sector
17 
Licensees in order to facilitate financially viable water Supply and
18 
Sanitation Services.
19 
(c) 
To protect the legal and valid interests of consumers of Water Supply and/or
20 
Sanitation Services.
21 
(d) 
To promote efficient competition in the supply of Water and Sanitation
22 
Services in order to benefit the consumers.
23 
(e) 
To develop and maintain a national water utility database using the
24 
geographic infonnation system (GIS).
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SEC. 4. Definition of Terms. The following terms used in this Act shall have the 
meanings stated below:
(a) 
“Certificate of Public Convenience (CPC) or Certificate of Public 
Necessity (CPN)” shall mean a fomial written authority to sell water 
issued to an applicant for the operation of a public service wherein a 
franchise is required by law.
(b) 
“Commission” shall mean the Water Regulatory Commission.
(c) 
“Commissioner” shall mean a person appointed in accordance with the 
provisions of this Act.
(d) 
“E.xisting Licensee” shall mean any water service and/or sanitation 
service provider granted a license by existing regulatory institutions such 
as the NWRB, LWUA, MWSS, PEZA, that are qualified to provide water 
supply and sanitation services for a particular seiwice area or areas.
(e) 
“Integrated Innovation” shall mean the coordinated application of 
scientific or technological, social and business innovation to develop 
solutions to complex challenges.
(f) 
“Level I (point source)” shall mean a protected well or a developed 
spring with an outlet but without a distribution system as it is generally 
adaptable for rural areas where the houses are thinly scattered. A level 1 
facility nonnally serves around firteen (15) to twenty-five (25) households 
and its outreach must not be more than two hundred fifty (250) meters 
from the farthest user. The yield or discharge is generally from forty (40) 
to one hundred forty (140) liters per minute.
(g) 
“Level II (communal faucet system or stand post)” 
- A system 
composed of a source, a reservoir, a piped distribution network and 
communal faucets, located at not more than twenty (25) meters from the 
farthest house. The system is designed to deliver forty (40) to eighty (80) 
liters of water per capita per day to an average of one hundred (100) 
households, with one faucet per four (4) to six (6) households. Generally 
suitable for rural and urban areas where houses are clustered densely to 
justify a simple piped system.
(h) 
“Level 111 (waterworks system or individual house connections)” - a 
system with a source, a reservoir, a piped distribution network connecting 
individual households based on a daily water demand of more than one 
hundred (100) liters per person. It is generally suited for densely populated 
urban areas. This level of facility requires a minimum treatment of 
disinfection.
Page 2 of 17


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(i) 
“Licensee” shall mean the Water Supply and/or Sanitation Services 
operating licenses issued by the Commission and are qualified to provide 
Water Supply and/or Sanitation Services for a particular Service Area or 
Areas.
(j) 
“LWUA” shall mean the Local Water Utilities Administration created 
under PD No. 198, as amended.
(k) 
“NWRB” shall mean tlie National Water Resources Board created by 
Presidential Decree No. 424, as amended by Executive Order No. 124-A.
(l) 
“MWSS” shall mean the Metropolitan Waterworks and Sewerage System, 
created by Republic Act No. 6234.
(m) 
“PEZA” shall mean the Philippine Economic Zone Authority, created by 
Republic Act No. 7916.
(n) 
“Regulatory Units” shall mean the regulatory offices established under 
Section 5 of this Act to issue licenses authorizing the operation of Water 
Supply and Sanitation Services in accordance with its powers provided in 
this Act.
(o) 
“Sanitation Service” shall mean a service involving the collection of 
effluent and sludge from human waste and greywater from residences and 
establishments utilizing a sanitation system through pipes and structures.
(p) 
“Sanitation System” shall mean an infrastructure system that collects, 
treats, and disposes or reuses effluents and sludge, and may include but is 
not limited to other systems such as sewerage, septage or combined 
drainage interceptor systems.
(q) 
“Service Area” shall mean the territory or area of operations granted by 
the Commission to a Licensee to provide Water Supply and/or Sanitation 
Services.
(r) 
“Sewerage Service” shall mean the sewerage services provided by a 
Licensee in a particular Service Area involving the collection of human 
waste and sullage from residences and establishments through pipes and 
structures.
(s) 
“TIEZA” shall mean the Tourism Infrastructure Zone Authority, created 
by Republic Act No. 9593.
(t) 
“Tariffs” shall mean 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.
(u) 
“Water District” shall mean a government-owned and controlled 
coiporation organized under Presidential Decree No. 198, as amended.
Page 3 of 17


1 
created primarily to acquire, install, operate, maintain and improve water
2 
supply and distribution systems for domestic, industrial and municipal
3 
uses of residents and to provide, maintain, and operate waste water
4 
collection, treatment and disposal facilities within the boundaries of the
5 
district.
6 
(v) 
“Water Supply Service” shall refer to the provision of water supply
7 
through the use of piped water distribution systems.
8 
CHAPTER 2
9 
ORGANIZATION
10 
SEC. 5. The Water Regulatory Commission. There is hereby created and
11 
established an independent, quasi-judicial body to be known as the Water Regulatory
12 
Commission, hereafter referred to as the Commission and organized within one hundred
13 
twenty (120) days after the effectivity of this Act. The Commission shall exercise the
14 
power and functions provided in this Act.
15 
The Commission shall be an attached agency of the Department of Public Works
16 
and Highways (DPWH). For purposes of this Section, the relationship between the
17 
Commission as an attached agency of the DPWH shall be limited only to coordination
18 
and/or consultation by the Commission with the DPWH on tlae latter’s general policy
19 
framework for Water Supply and Sanitation Services.
20 
SEC. 6. Powers and Functions of the Commission. The powers and functions of
21 
the Commission are as follows;
22 
(a) 
To formulate rules and regulations, strategies and targets to facilitate and
23 
rationalize the expansion, improvement, and efficient provision of Supply
24 
and Sewerage Services throughout the country.
25 
(b) 
To fonnulate tariffs for Water Supply and/or Sanitation Services, taking into
26 
account among others, the following:
27 
1) capital and recurrent eost of providing the service including a reasonable
28 
rate of return on capital;
29 
2) efficiency of the service;
30 
3) incentives for enhancement of efficiency, including demand side
31 
management;
32 
4) consumers’ willingness to pay;
33 
5) equity considerations; and
34 
6) administrative simplicity.
35 
(c) 
To approve and regulate the tariffs to be charged by Licensees of Water
36 
Supply and/or Sanitation Services, including local government units.
Page 4 of 17


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(d) 
To regulate persons or entities, whether from the public or private sector, 
that provide Water Supply and/or Sanitation Services.
(e) 
To grant, issue, modify, monitor, enforce, suspend and/or cancel licenses for 
Water Supply and Sanitation Services and impose penalties for 
administrative violations thereof Such penalties may be decided by the 
Commission and may include the suspension or revocation of a license. 
Where necessary, the Commission may delegate the management of the 
Licensee through a receivership mode.
(f) 
To require the monitoring and submission of utility data, statistics and other 
information from all Licensees as may be necessary for the effective and 
efficient exercise of its duties, functions, powers, and responsibilities.
(g) 
To disseminate and publish comparative infomiation on process and service 
perfonnance of Licensees of Water Supply and/or Sanitation Services.
(h) 
In the exercise of its powers and functions under this Act, to take into 
account Licensee’s service targets and perfonnance with respect to 
consumer service standards regarding water pressure, minimum flow rates, 
connections and billing and metering requirements and procedures, among 
others.
(i) 
To provide a system for complaints and appeals including, but not limited 
to:
1) Tariffs imposed for Water Supply and/or Sanitation Services;
2) The quality of services provided by said Licensees; and
3) The inadequate or inequitable distribution and reliability of Water 
Supply and/or Sanitation Services.
(j) 
Investigate, motu propria or upon complaint in writing, any 
matter
concerning the service and require the Licensee to submit in writing any 
undertaking for immediate remedial measures.
(k) 
To impose and collect an annual levy on all Licensees determined by the
Commission as a percentage of the revenue accruing in relation to the
licensed activities; and reasonable fees, surcharges, and fines 
from
Licensees of Water Supply and/or Sanitation Services.
(l) 
To 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.
(m) To deputize agents whether from public or private sector, to assist in the 
performance of any powers and functions of the Commission.
Page 5 of 17


1 
(n) 
To appoint, hire and maintain as necessary, adequate statY and personnel,
2 
advisers, and/or consultants, with suitable qualifications and experience.
3 
(o) 
To conduct inquiries on matters relating to water supply or sanitation
4 
disposal.
5 
(p) 
To provide a system for the settlement of disputes between or among the
6 
Licensees.
7 
(q) 
To issue and promulgate rules and regulations necessary to implement,
8 
perfomi and effect its aforementioned powers and functions.
9 
(r) 
Such other incidental powers and functions as may be necessary to attain the
10 
objectives of this Act.
11 
SEC. 7. The Regulatory Units. The Regulatory Units of the Commission shall be
12 
composed of the Regional Regulatory Units and the Central Regulatory Unit. The
13 
Regional Regulatory Units shall be established by the Commission in accordance with
14 
such rules, regulations, guidelines and standards provided hereunder as the Commission
15 
shall issue.
16 
Moreover, the pertinent regulatory units of the MWSS, NWRB and LWUA are
17 
hereby transferred to the Commission, and they shall collectively comprise its Central
18 
Regulatory Unit for water supply and sanitation services that are owned, operated and/or
19 
maintained by public and private sector Licensees (including those for the special
20 
economic zones, and Metro Manila concessionaires), and for other institutions
21 
appropriate for the Central Regulatory Unit.
22 
SEC. 8. Powers and Functions of the Regulator}’ Units. The Regulatory Units of
23 
the Commission shall have the following powers and functions:
24 
(a) 
Subject to review and approval of the Commission, issue and promulgate
25 
rules, regulations, and guidelines as may be necessary to implement and
26 
enforce its powers and functions under this Section.
27 
(b) 
Issue licenses authorizing the operation of Water Supply and/or Sanitation
28 
Services in specified area.
29 
(c) 
Impose fines, charges, and other penalties upon any water service provider
30 
and/or officers and stockholders who shall fail or refuse to register and/or
31 
obtain a license prior to operation or commencement of business, as
32 
provided hereunder.
33 
(d) 
Consistent with rules, guidelines, procedures and methodologies, which the
34 
Commission shall provide, review, detennine, fix and approve proposed
35 
water and sewerage tariffs, rates and charges that Licensees may impose
36 
upon their customers.
Page 6 of 17


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(e) 
Appraise and value property equipment used by Licensees in providing
2 
water supply and sanitation services.
3 
(f) 
Enforce the financial, technical, and other pcrfomiance standards set by the
4 
Commission for Licensees and utilities.
5 
(g) 
Respond to customer complaints and ensure adequate protection of customer
6 
interests.
7 
(h) 
Investigate accidents directly or indirectly arising from or connected with
8 
the maintenance or operation of the service, and make such order or
9 
recommendation as the public interest may warrant.
10 
(j) 
Require the submission of reports, plans, and other documents that set out
11 
the perfonnance targets and accomplishment of Licensees and utilities.
12 
(k) 
Impose and collect annual levies determined as a percentage of gross
13 
revenue accruing in relation to the licensed activities, and reasonable fees
14 
and surcharges as may be necessary for achieving the purposes, powers, and
15 
functions of the regulator.
16 
(1) 
Conduct benchmarking and monitor the perfonnance of Licensees and
17 
utilities under their jurisdiction, and publish reports detailing the results
18 
thereof, as may be necessary or required by the Commission.
19 
(m) Amend, modify, suspend or revoke any license issued by the Commission,
20 
after due notice and hearing, on any of the following grounds:
21 
1) When the facts and circumstance on which the license was issued have
22 
been misinteipreted or has materially changed.
23 
2) When the Licensee has failed to meet or comply with terms, conditions
24 
and performance targets -  including but not limited to service expansion
25 
-  that may have been set forth in the license.
26 
3) Where the Licensee is found to be manifestly incompetent in the
27 
operation of or provision of Water Supply and Sanitation Services in its
28 
area; or
29 
4) When the holder thereof has violated or willfully refused to comply with
30 
any order, rule or regulation of the Commission or any provision of this
31 
Act.
32 
(n) 
Appoint an interim management committee to ensure continuity of service
33 
in case a Licensee fails to meet conditions of the license.
34 
(o) 
Submit perfonnance plans and reports as required by the Commission.
35 
SEC. 9. Composition. The Commission shall be a collegial body composed of
36 
five (5) full-time members composed of a Chairperson and four (4) members, who shall
37 
be appointed by the President of the Philippines. All members of the Commission must
Page 7 of 17


1 
be citizens and residents of the Philippines, at least thirty five (35) years of age, and of
2 
good moral character, recognized integrity and competency in the field of law, business,
3 
commerce, finance, accounting or public administration, water or utility economics,
4 
management, physical or engineering services, hydrology and other related services, with
5 
at least three (3) years of actual and distinguished experience in their respective fields of
6 
expertise: Provided, That out of the four (4) members of the Commission at least one (1)
7 
shall be a member of the Philippine Bar with at least ten (10) years experience in the
8 
active practice of law, and one (1) shall be a certified public accountant with at least ten
9 
(10) years experience in active practice.
10 
Within three (3) months from the creation of the Commission, the Chairman shall
11 
submit for approval of the Department of Budget and Management the new
12 
organizational structure and staffing pattern necessary to carry out the powers and
13 
functions of the Commission and its Regulatory Units.
14 
The tenn of office of each member of the Commission shall be five (5) years:
15 
Provided, however, that among the members of the Commission first appointed by the
16 
President; a) the Chainnan shall serve for a period of five (5) years, b) three Associate
17 
Commissioners (Legal and Strategic Relations, Policy and Planning, and Economic
18 
Regulation) shall serve three (3) years, and c) one other Associate Commissioner for
19 
Administration and Finance shall serve for two (2) years, as fixed in their respective
20 
appointments.
21 
Provided, further, that upon the expiration of the tenn, each member of the
22 
Commission shall serve until his successor shall have been appointed and qualified:
23 
Provided, furthennore, that any appointment to fill a vacancy in the Commission that
24 
arises prior to the expiration of the term of a member of the Commission shall only be for
25 
the unexpired portion of such tenn: Provided, finally, that no member of the Commission
26 
shall be appointed for more than two (2) consecutive or partial tenns.
27 
The Chainnan and members of the Commission or any of their relatives within
28 
the fourth civil degree of consanguinity or affinity, legitimate or common law, shall be
29 
prohibited from holding any interest whatsoever, either as investor, stockholder, officer
30 
or director, in any company or entity engaged in the business of water supply and/or
31 
sanitation services and must, therefore, divest through sale or legal disposition of any and
32 
all interests in the water and sanitation sector upon assumption to office.
33 
The Commission shall meet as often as may be necessary on such day or days as
34 
the Chairman may fix. The presence of at least three (3) members of the Commission
35 
shall constitute a quorum and the majority vote of two (2) members in a meeting where a
36 
quorum is present shall be necessary for the transaction of any business: Provided, That
37 
in fixing tariffs, rates and other charges, and the adoption of any rule, ruling, order.
Page 8 of 17


1 
resolution, decision or other act of the Commission in the exercise of its quasi-judicial
2 
functions, an affirmative vote of three (3) members shall be required.
3 
The Chainnan shall exercise general executive control, direction and supervision
4 
of the work, business, and operation of the Commission and its members, staff and
5 
personnel, agents and representatives.
6 
The staff and personnel positions in the Commission herein created shall be filled
7 
by regular appointments in accordance with a staffing plan prepared by the Chairman of
8 
the Commission.
9 
SEC. 10. Executive Director. The Commission shall appoint an Executive
10 
Director who shall provide an official record and report of the proceedings of the
11 
Commission and have the authority to administer oaths in all matters falling within the
12 
Jurisdiction of the Commission. The Executive Director shall be responsible for the
13 
effective implementation of the policies, rules and directives promulgated by the
14 
Commission; coordinate and supervise activities of the different operating units that may
15 
be created by the Commission; and perfonn such functions as may be assigned to the
16 
Executive Director by the Chainnan and/or members of the Commission.
17 
SEC. 11. Staffing. The Commission shall appoint a technical staff, including an
18 
administrative or support staff, as maybe necessary to assist the Commission in fulfilling
19 
its objectives and in exercising its powers and functions under this Act. In this
20 
connection, the Commission shall employ persons with legal, economic, customer
21 
service, financial accounting and technical expertise.
22 
SEC. 12. Compensation and Other Emoluments. The compensation and other
23 
emoluments of the Commission and its personnel shall be subject to the coverage of
24 
Republic Act No. 6758, othei-wise known as the Salary Standardization Act.
25 
CHAPTER 4
26 
WATER SUPPLY AND/OR SANITATION LICENSES
27 
SEC. 13. Application for License for Water Supply and/or Sanitation Services, (a)
28 
All persons and public or private entities intending to engage in the provision of Water
29 
Supply and/or Sanitation Services, including but not limited to operators of privately-
30 
owned water supply systems, local government managed utilities, barangay waterworks
31 
associations, water districts, cooperatives, shall be required to apply for and obtain a
32 
license from the Commission prior to their operation of the relevant Water Supply and/or
33 
Sanitations Seiwices.
34 
(b) 
An application for a license of Water Supply and/or Sanitation Services
35 
shall, in addition to such infonnation as may be prescribed by the Commission, contain
36 
details of:
37 
1) The service for which the license is being sought; and
Page 9 of 17


1 
2) The Service Area, including location maps, within which the services
2 
will be provided.
3 
(c) 
Service providers operating under existing agreements with MWSS, local
4 
government units, and special economic and freeport zone authorities shall register with
5 
the Commission and, during the validity of such agreement, shall be deemed duly
6 
licensed to provide services consistent with the terms and conditions of such existing
7 
agreements: Provided, That, the aforesaid service provider shall be regulated by the
8 
Commission or the appropriate regulatory unit in accordance with the terms and
9 
conditions of such existing agreements: Provided, further. That, any extension or renewal
10 
of such existing agreement shall be subjected to the review and approval of the
11 
Commission.
12 
SEC. 14. Restrictions on Grants for fVater Supply and/or Sanitation Services.
13 
Except for Service Areas with respect to which exclusive rights to provide Water Supply
14 
and/or Sanitation Services are granted under existing laws. Licensees do not have the
15 
exclusive right to provide Water Supply and/or Sanitation Seiwiccs within a Service Area
16 
and, consequently, the Commission may issue one or more licenses for operators within
17 
any existing or proposed Service Area(s).
18 
SEC. 15. Conditions of License, (a) License(s) issued by the Commission shall be
19 
subject to the following conditions:
20 
1) 
Provide and operate Water Supply and/or Services in a specified
21 
Service Area or Areas.
22 
2) 
Impose tariffs, rates and charges for water and sanitation services as
23 
determined and approved by the Commission.
24 
3) 
The temi or duration of the license as determined by the
25 
Commission.
26 
4) 
Restrictions on or conditions for the transferability or assignment
27 
shall be subject to the prior approval of the Commission.
28 
5) 
Restrictions on or conditions for the sale or disposition of the
29 
business which is the subject of a license, or the transfer of a
30 
controlling interest in such a business, which sale, disposition, or
31 
transfer shall require the prior approval of the Commission.
32 
6) 
Grounds for the modification of any of the provisions of, or the
33 
suspension or cancellation of the license and procedure.
34 
7) 
The nature of services to be provided, the minimum standards for
35 
service efficieney such as standards on: (1) water pressure; (2)
36 
minimum fiow rates; (3) connections; and (4) sewerage discharge.
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billing and metering requirements, and sanctions for failure to
2 
comply with the standards set.
3 
8) 
Expansion targets and continual service level improvement.
4 
9) 
Reportorial requirements and obligations of the Licensee.
5 
(b) 
The Commission shall approve a tariff which is fair and reasonable and
6 
which allows for economic viability of the operations and businesses of the Licensee,
7 
including reasonable return on their investments considering the prevailing cost of capital
8 
in the domestic and international markets.
9 
(c) 
The Commission shall promulgate the rules, guidelines and standards to be
10 
applied in detemiining who, among two (2) or more competing applicants, should be
11 
awarded the license for a specific Service Area, based on technical, financial, economic
12 
and organizational considerations, managerial capacity, and past record and experience in
13 
the provision of Water Supply and/or Sanitation Services.
14 
(d) 
All holders of a license shall be subject to an annual perfonriance audit by
15 
the Commissioner or its designated agent/s.
16 
(e) 
The Commission shall specify the requirements and procedures for
17 
existing holders of CPC or CPN issued by NWRB, and other Certificates issued by
18 
LWUA to convert their existing certificates into licenses issued by the Commission.
19 
Henceforth, no further CPC or CPN or LWUA Certificates shall be issued by the NWRB
20 
and LWUA, respectively.
21 
(f) 
All existing providers of Water Supply and/or Sanitation Services without
22 
a valid and legal CPC or CPN or Certificate of Conformance including all LGU-run
23 
utilities shall have twelve (12) months from the effectivity of this Act to apply for the
24 
appropriate license from the Commission.
25 
SEC. 16. Procedure for Grunting of Licenses, (a) The Commission shall ensure
26 
that the granting of a license under this Act is carried out fairly, transparently, and
27 
without undue discrimination.
28 
(b) 
The Commission shall prescribe in appropriate regulations the procedure
29 
and requirements to be followed with respect to the granting of a license,
30 
such regulations shall include:
31 
1) The qualifications required of applicants for a license.
32 
2) The application procedure to be followed by all applicants, including
33 
arrangements for the publication of details of all applications received
34 
by the Commission.
35 
3) The procedure by which the Commission will consider applications,
36 
including the consideration of all comments and objections lodged with
37 
respect to applications.
Page 11 of 17


1 
4) The procedure by which the Commission shall reach a detemiination
2 
with respect to all such applications.
3 
SEC. 17. Rights and Duties of Licensees, (a) Any person granted a license under
4 
this Act shall have the duty to ensure that its licensed activities are conducted so as to
5 
further the public interest, and in particular, that they:
6 
1) Foster the maintenance and development of efficient, coordinated and
7 
viable operation of their licensed activities.
8 
2) Ensure that their Water Supply and/or Sanitation Services are provided
9 
in accordance with applicable laws and standards and practices set by
10 
the Commission and generally accepted in the Philippine and
11 
international water supply and/or sanitation industry.
12 
3) Comply with drinking water quality requirements.
13 
4) Pay appropriate compensation in accordance with procedures laid
14 
down in any relevant statute or in regulations promulgated or issued by
15 
the Commission if, in laying or repairing a water and/or sewerage
16 
main or relevant facility, a Licensee should injure any person and/or
17 
damage any property.
18 
(b) 
Any person granted a license under this Act shall, to the extent allowed by
19 
law and specified in the license, have the right to acquire or lease land and lay or repair
20 
water and sanitation mains and other relevant facilities in public roads.
21 
(c) 
Subject to any condition or any limitation laid down in the license, a
22 
Licensee may disconnect the supply of Water Supply and/or Sanitation Services to a
23 
customer who defaults in the payment of amount/s due to that Licensee with respect to
24 
water supplied or sanitation services, or for acts of pilferage pursuant to Sections 8, 9, 10,
25 
and 11 of Republic Act No. 8041 otherwise known as the “Water Crisis Act of 1995”.
26 
(d) 
Any license issued under this Act shall contain provisions designed to
27 
ensure that Licensees:
28 
1) Publish tariff and other charges approved by the Commission, and
29 
other tenns and conditions imposed by the Commission for the
30 
provision of Water Supply and/or Sanitation Services.
31 
2) Prepare within three (3) months from the issuance of a Water Supply
32 
and/or Sanitation license, in consultation with the customers, codes of
33 
practice specifying the manner and procedure for: (1) metering,
34 
billing, and collection of the Licensee’s approved tariff and other
35 
charges, (2) disconnection or suspension of service in case of non-
36 
payment of tariffs and other charges, or acts of pilferage, and (3)
37 
recommendation and recovery of areas in tariffs and other charges.
Page 12 of 17


1 
3) A Licensee shall be bound by a perfonnance contract which will lay
2 
down all key perfonnance targets agreed by both the Licensee and the
3 
Commission.
4 
4) Maintain financial accounts in accordance with the manner and
5 
procedure specified in the license and as may be amended from time to
6 
time by the Commission.
7 
SEC. 18. Principles of Efficient Tariff Regulatory Units shall establish tariff, rates
8 
and other charges which are fair and reasonable and which provide for the economic
9 
viability of the service and a fair return on their investments considering the prevailing
10 
cost of capital in the domestic and international markets. Such tariffs, rates, and charges
11 
shall be based on and consistent with a rate-setting methodology that the Commission
12 
shall, after due consultation, define and publish, taking into account the following, among
13 
others:
14 
(a) 
Reasonable and prudent capital and recurrent costs of providing the service
15 
including a reasonable rate of return of the capital.
16 
(b) Efficiency of the service.
17 
(c) Ineentives for enhancement of efficiency.
18 
(d) Willingness to pay of consumers.
19 
(e) Equity considerations.
20 
(f) Administrative simplicity.
21 
SEC. 19. Promotion of Integrated Innovations for Sustainable and Efficient
22 
Water and Sanitation Services. The Commission shall promote the consolidation of
23 
Piped-Water Supply and/or Sewerage Services in the same Service Area when it would
24 
improve the eooperation among service providers to develop and implement integrated
25 
innovations to aehieve efficient and affordable delivery of services. The Commission
26 
shall issue and implement rules and regulations as may be necessary to:
27 
a) Create incentive programs as a stimulus for sustainable safe water and
28 
sanitation services;
29 
b) Establish perfonnance standards and indicators for service providers; and
30 
c) Impose fines and penalties on service providers for failure to meet
31 
performance standards and indicators.
32 
CHAPTER 5
33 
QUASI-JUDICIAL FUNCTIONS OF THE COMMISSION
34 
SEC. 20. Proceedings Before the Commission. The Commission shall, for the
35 
purpose of any inquiry or proceeding under this Act, exercise quasi-judicial powers:
36 
(a) 
To investigate and decide administrative matters involving officers and
37 
employees under the jurisdiction of the Commission;
Page 13 of 17


1 
(b) 
Issue subpoena duces tecum and summon witnesses to appear in any
2 
proceedings of the Commission and in appropriate cases, order the
3 
examination, search and seizure of any document or other material object of
4 
any entity or person under investigation as may be necessary for the proper
5 
disposition of the cases before it, subject to the provisions of existing laws;
6 
(c) 
To cite in contempt an erring party or person who disobeys any order of the
7 
Committee or refuses to be sworn or to testify or to answer a proper
8 
question by the Committee or any of its members, or testifying, testifies
9 
falsely or evasively, or who unduly refuses to appear or bring before the
10 
Committee certain documents and/or object evidence required by the
11 
Committee; and
12 
(d) 
To initiate an investigation, upon complaint under oath by an aggrieved
13 
party of any industry participant for violations of any law, rule or regulation.
14 
SEC. 21. Order and Decisions of the Commission. Every order or decision
15 
rendered by the Commission shall be in writing and shall state clearly and distinctly the
16 
facts and law on which it is based. The Commission shall decide each case or application
17 
within thirty (30) days following its formal submission for resolution. The Commission
18 
shall publish and make available for public inspection all decisions and final orders in the
19 
adjudication of contested cases or applications.
20 
SEC. 22. Appeals Procedure and Prohibition Against Injunction, (a) The orders,
21 
rulings, and decisions of the Commission are final and executory unless appealed to the
22 
Court of Appeals within fifteen (15) days from the receipt of notice of such order, ruling
23 
or decision. All orders, rulings and decisions of the Commission approving tariffs shall
24 
be immediately executory and enforcement thereof may be suspended only upon appeal
25 
and filing of a bond, in an amount to be fixed by the Commission, to answer for damages
26 
occasioned by the suspension or stay of execution of such orders, rulings and decisions.
27 
(b) 
No injunction may be issued by any court or administrative agency to
28 
restrain any proceeding before, or the implementation or execution of any order, ruling or
29 
decision of the Commission, except on the basis of a question of law in a petition for
30 
certiorari brought before the Supreme Court.
31 
(e) 
Subject to Sec. 9, paragraph 3 of this Act, an act or decision of the
32 
Commission shall not be invalid merely because of the defect or irregularity in, or in
33 
connection with, the appointment or vacancy in the Office of the Chairperson or any
34 
other member of the Commission.
35 
SEC. 23. Power to Arbitrate Interconnection Disputes. When there is a dispute
36 
between two or more Licensees regarding the terms and conditions, including price rates,
37 
for interconnection between them of Piped-Water Supply and/or Sewerage Systems, then
Page 14 of 17


1 
upon elevation of the dispute to the Commission by two or more Licensees, the
2 
Commission may make a binding arbitration of the terms and conditions 
on
3 
interconnection that are in dispute.
4 
CH APTER 6
5 
TRANSITORY PROVISIONS
6 
SEC. 24. Interface with Other Sector Regulators, (a) The Department of
7 
Environment and Natural Resources (DENR) shall continue to have the primary authority
8 
and responsibility for protecting the environment and water resources from waste and
9 
pollution and shall promulgate rules, regulations, and standards in this regard. The
10 
Commission shall coordinate with the DENR regarding this matter.
11 
(b) 
The Department of Health (DOH) and LGUs shall have the primary
12 
authority and responsibility for determining and enforcing drinking water quality and
13 
sanitation standards.
14 
(c) 
The Commission shall coordinate with the NWRB for water allocation and
15 
data collection, the LGUs under administrative supei-vision from the Department of the
16 
Interior and Local Government for developing projects related to water supply and
17 
sanitation, and the DPWH for flood control and the harnessing and impounding of water.
18 
SEC. 25. Advisory Council, (a) Within six (6) months from its organization, the
19 
Commission shall cause the formation of an Advisory Council which shall include, but
20 
shall not be limited to, representatives from the following sectors; women, academe,
21 
business and industry, local government units, peoples organizations, non-government
22 
associations, professional organizations, consumer groups and indigenous peoples.
23 
(b) 
The Advisory Council shall have the following functions, among others:
24 
1) To help disseminate information to the public relating to the
25 
Commission’s objectives, powers and functions.
26 
2) To serve as a pennanent advisory body to the Commission on issues of
27 
interest to consumers.
28 
(c) 
The Commission shall promulgate rules and regulations defining the
29 
nature, composition, and other functions of the Advisory Council.
30 
SEC. 26. Transfer of Duties, Powers, Functions, and Assets. The functions,
31 
powers, and assets of the Water Utilities Division of the NWRB, as set forth in
32 
Presidential Decree No. 1206, and other applicable laws are hereby transferred to the
33 
Commission. In the same manner, the pertinent economic regulation powers of LWUA as
34 
set forth under Presidential Decree No. 198, as amended; MWSS under RA No. 6234;
35 
PEZA under RA No. 7916; Subic Bay Metropolitan Authority (SBMA) and under RA
36 
No. 7227; Clark Development Corporation (CDC) under RA No. 7227 and Executive
Page 15 of 17


1 
Order No. 80; and Tourism Infrastructure Enteiprise Zone Authority (TIEZA) under RA
2 
No. 9593 are likewise hereby transfened to the Commission.
3 
SEC. 27. Transfer of Rights ami Obligations. The Commission shall, by virtue of
4 
this Act, be subrogated to all the rights, and assume all the obligations, of the Water
5 
Utilities Division of the NWRB, and all other government agencies and units whose
6 
powers and functions are hereby transferred to and assumed by the Commission and shall
7 
be acted upon in accordance with the mles and regulations of the Commission on Audit
8 
and other pertinent laws, rules, and regulations.
9 
SEC. 28. Separation from Senice. Employees separated from government service
10 
as a result of this Act shall be entitled to the benefits which they may receive under
11 
existing laws, rules, and regulations.
12 
SEC. 29. Penalties for Violations. Subject to Sec. 17, paragraph (c), of this Act,
13 
any person, natural or juridical, found violating the provisions of this Act and its
14 
implementing rules and regulations shall be imprisoned Ifom six (6) months to six (6)
15 
years, or be liable to pay a fine not exceeding Five Hundred Thousand Pesos
16 
(P500,000.00), or both. When the offender is a corporation, association, or partnership,
17 
the penalty shall be imposed on the president, directors, or managing partners, as the case
18 
may be, and the persons charged with the administration thereof The corporation shall be
19 
subsidiarily liable for the pecuniary liability of its aforementioned officers, president,
20 
directors, managing partners of persons charged with administration thereof: Provided,
21 
That, the Commission may impose other administrative penalties and charges, upon the
22 
recommendation of the Commission and approval by the President.
23 
SEC. 30. Appropriations. The sum of Three Hundred Million Philippine Pesos
24 
(P300,000,000.00) shall be charged against the current year’s appropriation of the
25 
Contingent Fund, and is hereby appropriated and authorized to be released, for the
26 
organization of the Commission, and in establishing the regional regulatory units and its
27 
initial operations. Thereafter, funds sufficient to fully carry out the objectives, powers,
28 
and functions of the Commission shall be appropriated every fiscal year in the General
29 
Appropriations Aet.
30 
CHAPTER 7
31 
FINAL PROVISIONS
32 
SEC. 31. Implementing Rules and Regulations. Within sixty (60) days from the
33 
effectivity of this Act, the Chairman of the Commission shall, upon consultation with the
34 
stakeholders, provide the necessary rules and regulations for the effective implementation
35 
of this Act.
Page 16 of 17


1 
SEC. 32. Separability Clause. In the effect that any provision of this Act is
2 
declared unconstitutional, invalid, or illegal, the constitutionality, validity, or legality of
3 
the remainder of the provisions of this Act shall not be affected thereby.
4 
SEC. 33. Repealing Clause. All laws, decrees, rules and regulations, and
5 
executive orders contrary to or inconsistent with this Act, including but not limited to
6 
Section 2 of Presidential Decree (P.D.) No. 1206, are hereby repealed or modified
7 
accordingly. The power of LGUs under Section 154 of the Implementing Rules and
8 
Regulations of Republic Act No. 7160 to fix the rates in connection with the operation of
9 
water utilities owned, operated and maintained by them within their jurisdiction is hereby
10 
repealed.
11 
Further, the provision with respect to fixing of water rates and sanitation service
12 
fees of Section 3 (h) and Section 12, and regulation of waterworks and deep wells of
13 
Section 3 (n), regulation of waterworks and sanitation of systems in privately owned
14 
subdivisions of Section 3 (p) of Republic Act No. 6234, as amended is hereby repealed or
15 
modified, accordingly.
16 
Section 13 (b) on the registration, regulation and supervision of enterprises in the
17 
ecozone of Republic Act No. 7916, as amended, also known as tlie Special Economic
18 
Zone Act of 1995, is hereby repealed or modified, accordingly.
19 
Provisions under Section 69 of Republic Act No. 9593 or the Tourism Act of
20 
2009 and its Implementing Rules and Regulations which mandates the TIEZA to grant
21 
franchises, supervise the operation of public utilities, and register, monitor and regulate
22 
enteqirises within Tourism Enterprise Zones, are hereby repealed or modified,
23 
accordingly.
24 
Commonwealth Act No. 146, as amended otherwise known as the “Public Service
25 
Act,” and all laws, decrees, rules and regulations, or portion thereof, inconsistent with
26 
this Act are hereby repealed or modified, accordingly.
27 
SEC. 34. Effectivity Clause. This Act shall take effect fifteen (15) days following
28 
the completion of its publication in a national newspaper of general circulation or in the
29 
Official Gazette.
Approved,
Page 17 of 17