EIGHTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES,

Introduced by Representative Rufus B. Rodrigu
1829

House Bill No. +8£9

EXPLANATORY NOTE

In the water sector, the most urgent need is probably the upgrading of the water
utlities outside Metro Manila. While people in the provinces now have more and better
roads, electricity, telephones, cable TV, etc., very few have piped drinking water and
sewerage systems.

The main responsibility for this task lies with the Local Water Utilities Administration
(LWUA). The reality, however, is that the capital requirements of the water sector are so
large that the LWUA is unable to fulfill ts mandate. LWUA depends on government funds,
which are limited, as well as ODA funds which are likewise limited.

An alternative source of financing for water utilities is the private sector. In the case
of the MWSS, the government was able to pass on all the financing burden to the private
sector, together with huge responsibilities for expanding and improving the system, while
lowering tariffs and significantly increasing government tax revenues through VAT and
income tax.

Unfortunately, the case of the MWSS is unique because its charter is unique. Water
utilities outside MWSS are governed by different rules, some of which appear to conflict with
each other. Therefore, the success of the MWSS privatization has not been repeated up to
now. This is in spite of the fact that water companies world-wide have taken a huge interest
in the Philippines after the MWSS privatization. The largest water companies in the world
have set up permanent offices here and are making large investments. Yet these
investments so far have mainly been in private economic zones or central business districts.

The main difficulty in privatizing water utilities in a similar way as the case of MWSS
{ie., through a concession) is the question of financial regulation. The rules are presently
vague as to whether jurisdiction lies with the LWUA, NWRB or even LGUs. Also, it requires
a different set of skills to properly regulate privatized water systems and we need to develop
this in order to entice foreign investments.

The main objective of the proposed bill for the creation of a Water Regulatory
Commission is to rationalize the financial regulation of water utilities (including MWSS),
thereby paving the way for more private sector investment

Early approval of this proposed measure is earnestly sought.

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EIGHTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )

First Regular Session )
HOUSE OF REPRESENTATIVES
Introduced by Representative Rufus B. Rodriguez =a
House Bill no l828_
AN ACT

RATIONALIZING THE FINANCIAL 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 Philipines in Congress
assembled:

SECTION 1. Short Title. This Act shall be known as the “Water Regulatory
Commission Act.”

SEC. 2. Declaration of Policy. — It is hereby declared policy of the State to pursue
and foster, in an orderly, rational, efficient, and vigorous manner, the attainment of complete
coverage over the entire country of piped-water supply and sewerage services at reasonable
rates and, in this connection, encourage the participation and investment of the private
sector, both domestic and foreign, in the provision of piped-water supply and sewerage
services. For this purpose, there is a need to establish a single agency of government to be
invested with ample powers for the rational and effective economic regulation of all piped-
water supply and sewerage systems.

SEC. 3. Definition of Terms. — As used under this Act, the following words or terms
shall have the following meanings, unless a different meaning clearly appears from the
context:

a. “Commission” shall mean the Water Regulatory Commission

b. “Commissioner” shall mean persons appointed in accordance with provisions
of this Act.

c. “License” shall mean the Piped-Water Supply and/or Sewerage Services

operating license that the Commission is authorized to grant and issue to
persons or entities that are qualified to provide Piped-Water Supply and/or
‘Sewerage Services for a particular Service Area or Areas.

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

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

f “Licensee” shall mean the qualified person or entity to whom a License is

granted or issued by the Commission, authorizing such Licensee to provide
Piped-Water Supply and/or Sewerage Services to a particular Area or Areas.

9g. “Piped-Water Supply Service” shall refer to water supply services which make
use of piped-water distribution system with individual connections for
domestic and/or industrial use provided by a Licensee in a particular Service
Area or Areas.

h. “Service Area” shalll refer to the territory or area of operations with respect or
which a License from the Commission to provide Piped-Water Supply and/or
‘Sewerage Services is applied for or granted.



i “Sewerage Service” shall refer to 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.

i. “Tariffs” shall refer to such amounts which may be charged by Licensees of
Piped-Water Supply and/or Sewerage Services for their services based on
principles, standards, and guidelines established by the Commission.

k. ‘Water District” shall refer to quasi-public 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 within the boundaries
of the district

SEC. 4. The Water Regulatory Commission. — (1) For purposes of carrying out and
effecting the declared policy provided for in Section 2 above, there is hereby created and
established an independent 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 execute the powers and functions herein vested
and conferred upon it in such a manner as will, in its judgment, aid to the fullest possible
extent in carrying out its objectives as set forth below.

(2) The Commission shall be an attached agency of the Office of the President. For
purposes of this section, the relationship between the Commission as an attached agency of
the Office of the President shall be limited only to coordination and/or consultation by the
Commission with the Office of the President on the latter’s general policy framework for
Piped-Water Supply Service and Sewerage Service. The Commission shall however
‘endeavor to make its policies and plans conform as closely as possible with the applicable
and relevant policies and plans of the Office of the President.

SEC. 5. Objectives of the Commission. - The Commission shall have the following
objectives:

a. to promote the expansion, improvement and efficient provision of Piped-
Water Supply and Sewerage Services throughout the Philippines;

b. to provide an environment conducive to the adequate financing of Piped-
Water Supply and Sewerage Services provided by public and private sector
Licensees in order to facilitate financially viable Piped-Water Supply and
Sewerage Services;

©. to protect the legal and valid interests of customers/consumers of Piped-
Water Supply and/or Sewerage Services;

d. to promote efficient competition in the supply of Piped-Water and Sewerage
Services in order to benefit customers/consumers;

e. to promote the interest of customers/consumers with respect to prices of

Piped Water Supply and Sewerage Services and the safety, reliability and
quality of Piped-Water Supply and Sewerage Services; and
f. To prevent misuse or monopoly or market power.

SEC. 6. Powers and Functions of the Commission. ~ The Commission shall have

the following powers and functions:

a. to formulate rules and regulations to facilitate and rationalize the expansion,
improvement, and efficient provision of Piped-Water Supply and Sewerage
Services throughout the country;

b. to formulate Tariffs for Piped-Water Supply and/or Sewerage Services taking
into account, among others, the following: (1) capital and recurrent cost of
providing the service including a reasonable rate of return on capital; (2)
efficiency of the service; (3) incentives for enhancement of efficiency,
including demand-side; (3) incentives for enhancement of efficiency, including
demand-side management; (4) willingness. to pay of the


customers/consumers; (5) equity considerations; and (6) administrative
simplicity

¢. to approve and regulate the Tariffs to be charged by Licensee of Piped-Water
Supply and/or Sewerage Services;

4 to regulate persons or entities, whether from the public or private sector, that
provide Piped-Water Supply and/or Sewerage Services;
e. __ toissue, grant, modify, monitor, enforce, suspend and/or cancel Licensees for

Piped-Water Supply and/or Sewerage Services, penalties to be imposed for
administrative violations thereof, and make decisions and determinations in

connection therewith;

th to disseminate and publish comparative information on prices and service
performance of Licensees of Piped-Water Supply and/or Sewerage Services;
g. __ inthe exercise of its powers and functions under this Act, to take into account

Licensee's service targets and performance against such targets in respect of
consumer service standards regarding water pressure, minimum flow rates,
connections and billing and metering requirements and procedures, among
others;

h. to provide a system for complaints and appeals relating, but not limited, to: (1)
Tariffs set or collected for Piped-Water Supply and/or Sewerage Services; (2)
the quality of services provided by said Licensees; and (3) the adequate
and/or equitable distribution and reliability of Piped-Water Supply and/or
Sewerage Services;

i. to impose and collect an annual levy on all Licensees determined as a
percentage of the revenue accruing in relations to the licensed activities to be
determined by the Commission, and reasonable fees, surcharges, and fines
from Licensees of Piped-Water Supply and/or Sewerage Services to the
extent necessary for achieving the purposes, powers and functions of the
Commission;

i to advise, apprise and coordinate with other relevant agencies of the national
‘or local government on any matter relating to Piped-Water Supply and/or
Sewerage Services;

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

|. to appoint, hire and maintain adequate staff and personnel, advisers, and/or
consultants, with suitable qualifications and experience, as necessary;

m. to conduct inquiries on matters relating to water supply and distribution or
sewerage disposal;

n. to provide a system for the settlement of disputes between or among
Licensees;

©. to issue and promulgate rules and regulations necessary to implement,

perform and effect its aforementioned powers and functions. To the extent
practicable [as the Commission shall determine], the Commission shall
conduct public hearings or consultations with customers/consumers,
licensees, and other affected stakeholders before issuing new rules and
regulations or modifying or amending existing rules and regulations, All rules
and regulations of the Commission shall take effect fifteen (15) days from the
publication in the Official Gazette or in a newspaper of general circulation in
the Philippines.

SEC. 7. Composition. - (1) The Commission shall be a collegial body composed of
three (3) members: a Chairman and two (2) Associate Commissioners, all of whom shall be
appointed by the President.

(2) The term of office of each member of the Commission shall be five (5) years;

Provided, however, that among members of the Commission first appointed by
the President; a) the Chairman shall serve for a period of five (5) years, b) one


Associate Comt ner shall serve three (3) years, and c) the other Associate
Commissioner shall serve for one (1) year, as fixed in their respective
appointments; Provided, further, that upon the expiration of his term, each
member of the Commission 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 which arises prior to the expiration of the term of a
member of the Commission which arises prior to the expiration of the term of a
member of the Commission shall only be for the unexpired portion of such term,
and Provided, finally, that no member of the Commission shall be appointed for
more than two (2) consecutive full or partial terms.

(3) The Commission shall meet as often as may be necessary on such day or days
as the Chairman may fix. The presence of at least two (2) members of the
Commission shall constitute a quorum, which shall be necessary for the
transaction of any business. The affirmative vote of at least two (2) members of
the Commission shall be necessary for the approval of any resolution, decision or
order.

(4) The Chairman shall exercise general executive control, direction and supervision
of the work, business, and operation of the Commission and its members, staff
and personnel, agents and representatives.

(5) The Chairman and two (2) Associate Commissioners shall have the rank of a
Secretary and undersecretary, respectively, of an executive department of the
national government. The salary of the Chairman and the Associate
Commissioners shall be fixed by the President of the Philippines commensurate
to the importance and responsibility attached to such positions and shall be
‘subject to periodic review no more than every (2) years. The Chairman and
Associate Commissioners shall be exempt from existing laws, rules and
regulations on compensation, position classification, and qualification standards.
The President shall endeavor to make the salaries of the Commissioners conform
as closely as possible with the principles under Republic Act No. 6758 entitled
“An Act Prescribing a Revised Compensation and Position Classification System
in the Government and for Other Purposes”, as the same way may be suspended
from time to time.

(6) Subject to the immediately preceding paragraph, the pertinent civil service laws,
and rules and regulations of the Philippines shall be applicable to the Chairman,
Associate Commissioners, and other personnel of the Commission.

SEC. 8. Qualifications. — All members of the Commission must be citizens and
residents of the Philippines. In addition, the members shall be of good moral character, at
least thirty five (35) years of age, and of recognized competence in the filed of business,
commerce, finance, accounting or public administration, water or utility economics industry,
management, physical or engineering services, hydrology and other related services, or law.

SEC. 9. Executive Director. - (1) The Commission shall appoint an Executive
Director who shalll provide an 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 will be responsible for the effective implementation of
the policies, rules and directives promulgated by the Commission; coordinate and supervise
activities of the different operating units that may be created by the Commission; and
perform such functions as may be assigned to the Executive Director by the Chairman
and/or other members of the Commission.

(2) The Commission shall appoint a technical staff, including an administrative or
support staff, as maybe necessary to assist the Commission in fulfilling its objectives and in
exercising its powers and functions under this Act. In this connection, the Commission shall
employ persons with legal, economic, customer service, financial, accounting and technical
expertise.


SEC. 10. Proceedings Before the Commission. — The Commission shall, for the
purpose of any inquiry or proceeding under this Act, exercise quasi-judicial powers and, in
this connection, shall have the requisiste power for:

(a) the summoning and enforcing of attendance of any witness and examination

‘on oath;

(b) the discovery and production of any document or other material object

producible as evidence:

(c) the reception of evidence on affidavits;

(d) the requisition of any public record from any court or office;

(e) the issuance of a commission for examination of witnesses;

( the grant of adjournment at hearings; and

(a) compelling of the appearance of parties and the imposition of penalties as a

consequence of non-appearance.

SEC. 11. Power to Obtain Information and Documents. - (1) The Commission
may require that a Licensee or any other person shall provide the Commission with any
information that may be reasonably necessary for it to attain its objectives and/or to carry out
its powers and functions under this Act. For purposes of this Section, the information
required by the Commission may include any document, plan, electronic file, record and
other material.

(2) Any requirement for information must be made in a written notice that

identifies the information or document and that specifies;

(a) when requirement must be complied with; and

(6) in what form the information or a copy of the document is to be given
to the Commission

(3) Any person who, without lawful excuse, fails to comply with any requirement
for information contained in a notice issued to him under this Section shall be subject to
administrative sanction by the Commission. It is a lawful excuse for purposes of this Section
that compliance may tend to incriminate the person liable to a penalty for any other offense.

(4) A person must not, in purported compliance with any requirement or order of
the Commission, knowingly give to the Commission information that is false or misleading.

(5) A’person shall not be liable in any way for any loss, damage or injury suffered
by another person because of giving, in good faith, of a document or information to the
Commission under this Section.

SEC. 12. Application for licenses for Piped-Water Supply and/or Sewerage
Services. - (1) All persons and public or private entities intending to engage in the provision
of Piped Water Supply and/or Sewerage Services, including but not limited to operators of
privately owned water supply systems, local water districts, and local government units
(‘LGUs") operating water supply systems shall be required to apply for and obtain a License
from the Commission prior to their operation of the relevant Piped-Water Supply and/or
‘Sewerage Services.

(2) An application for a License for Piped-Water Supply and/or Sewerage Services
shall, in addition to such information as may be prescribed by the Commission, contain
details of:

(a) the service for which the License is being sought and
(b) the Service Area, including location maps, within which the service(s)
will be provided.

SEC. 13. Licenses do not Grant Exclusively. Except for Service Areas with respect
to which exclusive rights to provide Piped-Water Supply and/or Sewerage Services are
granted under existing laws, licensees do not have the exclusive right to provide Piped-
Water Supply and/or Sewerage Services within a Service Area and, consequently, the


Commission may issue one, two, or more licenses for operators within any existing or
proposed Service Area(s).

SEC. 14. Licensees for Piped-Water Supply and/or Sewerage Services. ~ (1)
License(s) issued by the Commission shall include provisions, among others, on:

(a) the right to provide and operate Piped-Water Supply and/or Sewerage
Services in a specified Service Area or Areas;

(b) the term or duration of the License, as determined by the Commission;

(c) restrictions on or conditions for the transferability or assignment shall be
subject to the prior approval of the Commission;

(a) restrictions on or conditions for the sale or disposition of the business which is
the subject of the License, or the transfer of a controlling interest in such a
business, which sale, disposition, or transfer shalll require the prior approval of
the Commission;

(e) the grounds for the modification of any of the provisions of, or the suspension
or cancellation of, the license and the procedure therefore;

( the nature of the services to be provided, the minimum standards for service
efficiency such as standards on: (1) water pressure, (2) minimum flow rates,
(3) connections, and (4) sewerage discharge, billing and metering
requirements, and sanctions for failure to comply with the standards set;

(@)___ the Tariffs to be charged by the Licensee and the basis for the variance of the
tariffs; and

(h) the reporting requirements of Licensees.

(2) The Commission shall approve Tariffs which are fair and reasonable and which
allows for the economic viability of the operations and business of the Licensee,
including reasonable return on their investments considering the prevailing costs of
capital in the domestic and international markets.

(3) The Commission shall promulgate the rules, guidelines, and standards to be applied
in determining who, among two (2) or more competing applicants, should be awarded
the License for a specific Service Area, based on technical, financial, economic, and
organizational considerations, managerial capacity, and past record and experience
in the provision of Piped-Water Supply and/or Sewerage Services, including the
following guidelines and procedures.

(4) All holders of a License shall be subject to an annual performance audit by the
‘Commission or its designated agent(s).

(5) 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 the LWUA, to convert their existing
certificates into Licenses issued by the Commission. Henceforth, no further
Certificates of Public Convenience or Certificates of Public Convenience and
Necessity and Certificate of Conformance shall be issued by the NWRB and LWUA,
respectively.

(6) All existing providers of Piped-Water Supply and/or Sewerage Services without a
legal and valid Certificate of Public Convenience/Certificate of Public Convenience
and Necessity or Certificate of Conformance shall have twelve (12) months from the
‘effectivity of this Act to apply for the appropriate License from the Commission.

SEC. 15. Procedure for Granting Licenses. - (1) The Commission shall ensure that
the granting of a License under this Act is carried out fairly, transparently, and without undue
discrimination.

(2) The Commission shall prescribe in appropriate regulations the procedure and
requirements to be followed in respect of the granting of a License, such regulations shall
include:

(a) __ the qualifications required of applicants for a License;


(b) the application procedure to be followed by all applicants, including
arrangements for the publication of details of all applications made;

(c) the procedure by which the Commission will consider applications,
including the consideration of all comments and objections lodged with
respect to applications; and

(4) the procedure by which the Commission shall reach a determination
with respect to all such applications.

SEC. 16. Rights and Duties of Licensees. ~ (1) Any person granted a License
under this Act shall have the duty 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
‘economic cooperation of their licensed activities;

(b) ensure that their Piped Water Supply and/or Sewerage Services are
provided in a diligent, conscientious and workmanlike manner, in
accordance with applicable laws and the standards and practices
generally accepted in the Philippine and international water supply
and/or sewerage industry;

(c) comply with drinking water quality requirements; and

(d) pay appropriate compensation in accordance with procedures laid
down in any relevant statute or in regulations promulgated or issued
by the Commission if, in laying or repairing a water and/or sewerage
main or relevant facility, a Licensee should injure any person and/or
damage any property.

(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 sewerage mains and other relevant facilities in public ways, when required to fulfil
their obligations.

(3) Subject to any condition or limitation laid down in the License, a Licensee
may disconnect the supply of piped water services and/or sewerage services to a customer
when such customer defaults in the payment of amount(s) due to that Licensee in respect of
water supplied or sewerage services provided, or for acts of pilferage pursuant to Sections 8,
9, 10, and 11 of Republic Act No. 8041, otherwise known as the “National 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 Piped-Water Supply and/or Sewerage Services.

(b) Prepare, within three (3) months from the issuance of a Piped-Water
Supply and/or Sewerage Service License, and make available for
public inspection, codes of practice 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 as may be amended from time to
time by the Commission.

SEC. 17. Principles for Efficient Tariffs. ~ When proposing Tariffs for specific
customers or groups of customers, providers of Piped-Water Supply and/or Sewerage
Services should consider that Tariffs should cover: (a) at least the cost that would be


avoided if the customers subject of such Tariffs were not supplied the services and (b) at
most the cost of providing the service those customers on a stand-alone basis

SEC. 18. Consolidation of Service Operations and Areas of Piped-Water Supply
and/or Sewerage Systems. - The Commission shall promote the consolidation of Piped-
Water Supply and/or Sewerage Services in the same Service Area when it would improve
the efficiency and lower the cost of the provision of such services in the area.

SEC. 19. Orders and Decisions of the Commission. ~ Every order or decision
rendered by the Commission shall be in writing and shall state clearly and distinctly the facts
and law on which it is based. The Commission shall decide each case or application within
thirty (30) days following its formal submission for resolution. 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) 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. All orders, rulings, and decisions of the Commission approving Tariffs shall be
immediately executory and enforcement thereof may be suspended only upon the filing of a
bond, in an amount 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 to 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 shall not be invalid merely because of a defect or irregularity in, or in
connection with, the appointment or vacancy in the Office of the Chairman or any other
member of the Commission.

SEC. 21. Commission has the Power to Arbitrate Interconnection Disputes. -
When there is a dispute between two or more Licensees regarding the terms and conditions,
including price rates, for interconnection between them of Piped Water Supply and/or
Sewerage Services, then upon notification of the dispute to the Commission by one or more
of the Licensees, the Commission may make a binding arbitration of the terms and
conditions on interconnection that are in dispute.

SEC. 22. Interface with Other Sector Regulators. - (1) The Department of
Environment and Natural Resources ("DENR’) shall continue to have the primary authority
and responsibility for protecting the environment and water sources from waste and pollution
and shall promulgate rules, regulations, and standards in this regard. The Commission shall
coordinate with the DENR on this matter.

(2) The Department of Health (‘DOH") and LGUs shall continue to have primary
authority and responsibility for determining and enforcing drinking water quality standards.
The Commission shall coordinate with the DOH and the LGUs in this regard.

(3) The Commission shall coordinate with the National Water Resources Board (the
“NWRB") for water data collection, the LGUs under administrative supervision and with
technical assistance from the Department of Interior and Local Government 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. 23. Advisory Council. — (1) Within six (6) months from its organization, the
Commission shall cause the formation of an Advisory Council which shall include, but shall
not be limited to, representatives from the following sectors: women, academe, business and


industry, local government units, people's organizations, non-government organizations,
professional associations, consumer groups, and indigenous peoples.
(2) The Advisory Council shall have the following functions, among others:
a. To help disseminate information to the public relating to the Commission's
objectives, powers, and functions;
b. To serve as a permanent advisory body to the Commission on issues of
interest to customers/consumers; and
c. To perform such other functions as may be delegated to it by the
Commission.
(3) The Commission shall promulgate rules and regulations defining the nature,
composition, and other functions of the Advisory Council

SEC. 24. Transfer of Duties, Powers, Functions, and Assets. ~ The powers,
functions, and assets of the Water Utilities Division of the National Water Resources Board
(NWRB'), as set forth under Presidential Decree Nos. 424 as amended by Executive Order
No. 124 and other applicable laws are hereby transferred to the Commission. In the same
manner, the economic regulation powers of the LWUA as set forth under Presidential
Decree No. 198, as amended, are likewise hereby transferred to the Commission.

SEC. 25. Transfer of Rights and Obligations. — The Commission shall, by virtue of
this Act, be subrogated to alll the rights, and assume all the obligations, of the Water Utilities
Division of the NWRB, and all other government agencies and units whose powers and
functions have been transferred to the Commission. 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. 26. Staffing. - The staff and personnel positions in the Commission herein
created shail be filled by regular appointments in accordance with a staffing plan prepared
by the Chairman of the Commission. The personnel of the Water Utilities Division of the
NWRB shall be given preference in the positions herein created; Provided, however, that
such personnel shall comply with the qualification standards set by the Commission for the
positions for which they apply.

SEC. 27. Separation from 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. There shall be an early retirement incentive for
‘employees who shall be separated from service.

SEC. 28. Penalties for Violations. — Subject to Sec. 15, paragraph (c), of this Act,
any person, natural or juridical, found violating the provisions of this Act and its implementing
rules and regulations shall be imprisoned from six (6) months to six (6) years, or be liable to
pay a fine not exceeding Five Hundred Thousand Pesos (P 500,000.00) or both. When the
offender is a corporation, association or partnership, the penalty shall be imposed on the
president, directors, or managing partners, as the case may be, and the persons charged
with the administration thereof. The corporation shall be subsidiarily liable for the pecuniary
liability of its aforementioned officers, president, directors, managing partners or persons
charged with the administration thereof.

SEC. 29. Appropriations. — (1) The sum of One Hundred Million (P 100,000,000.00)
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
initial operations. Thereafter, funds sufficient to fully carry out the objectives, powers, and
functions of the Commission shall be appropriated every fiscal year in the General
Appropriations Act.


SEC. 30. 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. 31. Repealing Clause. - All laws, decrees, rules and regulations, and
‘executive orders contrary to or inconsistent with this Act, including but not limited to Section
2 of Presidential Decree (P.D.) No. 424, as amended by Executive Order 124, are hereby
repealed or modified accordingly. The power of LGUs under Section 154 of the
Implementing Rules and Regulations of Republic Act No. 7160 to fix the rates in connection
with the operation of water utilities owned, operated and maintained by them within their
jurisdiction is hereby repealed.

SEC. 32. Effectivity Clause. — This Act shall take effect fifteen (15) days following
the completion of its publication in a national newspaper of general circulation.

Approved,