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Republic of the Philippines » RECEIVED @\
HOUSE OF REPRESENTATIVES ~ omg: SEP_2 a

Quezon City, Metro Manila ME
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EIGHTEENTH CONGRESS

First Regular Session

4807
HB. No.

Introduced by HON. LORD ALLAN JAY Q. VELASCO

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

EXPLANATORY NOTE

Based on the 2015 Family Income and Expenditure Survey of the Philippine Statistics Office,
87.2% of the population has access to water from formal providers, but only 43.6% have piped
connection, 11.2% use communal faucets and the remaining 45.2% rely on point sources. The
remaining 12.8% of the population use various means of getting water including fetching water
from rivers, digging shallow wells or buying vended water. On wastewater treatment services,
coverage is dismal. Roughly 4% of the population is connected to sewerage systems. It is only in
Metro Manila where the service providers, in this case private concessionaires, have a program
for septage management services and future plans to put in place improved wastewater treatment
collection and treatment services. The inadequate safe water and wastewater services result to
significant economic losses, attributed to health costs, losses from tourism and fisheries industries.
Diarrhea, the most significant waterbome disease, remains as one of the leading causes of
morbidity and mortality in the Philippines, an easily preventable disease.

The problem is not in access alone; the water supply level of service (i.e., from point sources or
communal faucets to piped connection) and quality of service (for example achieving 24/7 supply,
adequate pressure and drinking water quality) has to be improved considerably also.

While there are many facets to the problem, poor economic regulation has been identified as a
critical structural weakness in the sector. Because of the lack of or poor enforcement of economic
regulations, water utilities are not compelled to expand coverage or improve quality of service,
tariffs are not set rationally, operations are not efficient and few service providers are financially
viable. The inability of the formal service providers to expand coverage encouraged “work-
around” solutions that eventually aggravated the problem including spawning of many small-
scale water service providers. Based on the nationwide registry of water service providers', there
is an estimated 23,603 water service providers from 1,451 municipalities and cities in the
Philippines, 90% of which have connections of less than 5,000. Hence, by and large there are no
‘economies of scale resulting to inefficiencies and inherent limitations for growth

In the Philippine context poor economic regulation is a result of fragmentation; there are several
agencies doing economic regulation, (e.g., LWUA, MWSS, LGUs, NWRB, TIEZA). Apart from
NWRB, regulators have conflicts of interest in their dual role as financier, as in the case of LWUA
or as direct service providers, as in the case of municipal or city governments thus effectively
practicing self-regulation.

' The “Listahang Tubig” managed and implemented by the National Water Regulatory Board


This Bill intends to address the issue of fragmentation through the rationalization of the economic
and administrative regulation of water utilities through an independent, quasi-judicial body called
the Water Regulatory Commission. Among its functions will be to enforce service coverage and
quality of performance targets, toward the objective of providing every Filipino safe water supply
and adequate wastewater services.

In view of the foregoing, the urgent passage of this bill is sought.

LORD ALYAN JAY Q. VELASCO.


Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
First Regular Session

HB. No. sgn

Introduced by HON. LORD ALLAN JAY Q. VELASCO

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:

(CHAPTER 1 - GENERAL PROVISIONS

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

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

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

a)

b)

°)

d)

2)

8)
h)

To prioritize and seek the immediate attainment of universal access to safe, adequate,
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;

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

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

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

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

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

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

To establish an administrative process for economic regulation that is stable, transparent
and fair, giving due emphasis to technical, legal, environmental, economic and financial
considerations and with due regard to the observance of due process at all times; and


i)

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

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

a)

b)

°)

4d)

°)

8)

h)

id

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

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

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

Level II (communal faucet system or standposts) - a system composed of a source, a
reservoir, a piped distribution network, and communal faucets. Usually, one faucet
serves 4 to 6 households. Generally suitable for rural and urban fringe areas where
houses are clustered densely to justify a simple piped system.

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

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

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

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

“MWSS” shall mean the Metropolitan Waterworks and Sewerage System, created by
Republic Act (RA) 6234.

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

“PEZA” shall mean the Philippine Economic Zone Authority, created by RA 7916,
known as the “Special Economic Zone Act of 1995”.

“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.

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


1) “SBMA” shall mean the Subic Bay Metropolitan Authority, created by Section 13 of RA
7227, known as the “Bases Conversion and Development Act of 1992”.

m) “Service Area” shall refer to the area covered by the water distribution system, sewerage
and septage management services.

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

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

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

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

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

1)

s) “TIEZA” shall mean the Tourism Infrastructure and Enterprise Zone Authority, created
by RA 9593, known as the “Tourism Act of 2009”.

1) “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.

u) “Water Supply and/or Sanitation Service”- refers to any activity comprising of Levels II
and III water supply including suppliers to subdivisions and other Service Providers;
sewerage; and septage treatment and disposal services

CHAPTER 2 - ORGANIZATION

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

The Commission shall be placed under the administrative supervision of the Department of
Environment and Natural Resources (DENR).

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


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

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

Moreover, the pertinent regulatory divisions or units of MWSS, NWRB, LWUA, LLDA, SBMA,
PEZA, and TIEZA are hereby transferred to the Commission, and they shall collectively comprise
its Central Regulatory Unit for Water Supply and Sanitation Services that: (a) provide services to
more than one province; and (b) are owned, operated and/or maintained by special economic zones
and Metro Manila concessionaires.

SEC. 6. Powers and Functions of the Commission. — The overall authority and powers of the
Commission shall cover and apply to all Service Providers, whether private or public, providing
or intending to provide levels II & III water supply, including suppliers to subdivisions and/or
other Service Providers; sewerage; and/or septage treatment and disposal services for
domestic/residential, industrial or commercial use.

The Commission shall have the following powers and functions:

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

'b) Set and enforce just and reasonable technical standards, classifications and measurements
of service;

c) Appoint the central and provincial regulators;

d) 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 Commission shall act to stop

and/or redress the same. Such remedies may, without limitation, include the imposition of

price controls, issuance of injunctions, requirement of divestment or disgorgement of

excess profits, invalidation of contracts and imposition of fines and penalties pursuant to

this Act.

‘Adopt and require that books, records and accounts be kept and maintained in accordance

with the prescribed uniform accounting system;

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

8) Impose and collect annual levies determined as a percentage of gross revenue accruing in

relation to the licensed activities, and reasonable fees and surcharges as may be necessary

for achieving the purposes, powers and functions of the Commission;

Require the submission reports of finances and operations, verified under oaths by the

owner or president and secretary of the Licensee;

i) Determine and require the monitoring and submission of such data, statistics and other

information from the Regulatory Units and any or all licensees as may be necessary for the

effective and efficient exercise of its duties, functions, powers and responsibilities.

Investigate, motu 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;

°)

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

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

m) 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;

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

0) 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 concemed Regulatory Unit fails or refuses to appoint an interim
management committee as provided in the following section.

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

q) 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/or Sanitation Services;
and

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

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

a) Issue Licenses authorizing the operation of Water Supply and/or Sanitation Services in any
specified area or areas within the Philippines.

b) Impose fines, charges and other penalties upon any Provider and/or its officers and

stockholders who shall fail or refuse to register and/or obtain a License prior to operation

or commencement of business, as provided hereunder.

Consistent with rules, guidelines, procedures and methodologies which the Commission

shall provide, review, determine, fix, and approve proposed water and sewerage tariffs,

rates and charges that Licensees may impose upon their customers/consumers;

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

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

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

g) 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;

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

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

°)


j) 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 regulat

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

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

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

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

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

iv. 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,

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

n) Submit performance plans and reports as required by the Commission

SEC. 8. Composition. —

a) The Commission shall be a 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 economics, management, physical or
engineering services, hydrology and other related services, with at least three (3) years
actual and distinguished experience in their respective fields of expertise; Provided that out
of the four members of the Commission, at least one (1) shall be a member of the Philippine
Bar with at least ten years of experience in the active practice of law, and at least one (1)
shall be a certified public accountant with at least ten years of experience in active practice.

b) 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 a quorum, which shall be necessary for the transaction of any business. The
affirmative vote of majority of the members of the Commission where a quorum is present

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shall be necessary for the adoption of any order, resolution, decisions, or other act of the
Commission in the exercise of its quasi -judicial functions; Provided that in promulgating
rules, regulations, guidelines and in the exercise of its quasi-legislative functions, an
affirmative vote of three (3) members shall be required.

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

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

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

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

‘The Chairman and members of the Commission or any of their relatives within the fourth
civil degree of consanguinity or affinity, legitimate or common law, shall be prohibited
from holding any interest whatsoever, either as investor, stockholder, officer or director, in
any company or entity engaged in provision of water supply and distribution, septage
management and sewerage services and must, therefore, divest through sale or legal
disposition of any and all interests in the water sector upon

assumption of office.

SEC. 9. Commission Secretariat —

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

a)
b)
°°)

)
e)

Providing the necessary technical inputs and secretariat support to the Commission to
facilitate the conduct of its functions;

Coordinating with Regulatory Units to ensure proper implementation of the 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,

Maintaining a database on the water supply and sanitation subsector; and

Coordinating with other relevant agencies of the national or local government on any
matter relating to water supply and sanitation

SEC. 10. Executive Director. —

The Commission shall also appoint an Executive Director who shall head the Commission
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. 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 maybe upgraded by the President of the Philippines
as the need arises: Provided further, that in no case shall the compensation of the Commission and
its staff be upgraded more than once a year.

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

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

CHAPTER 3 - REGISTRATION AND LICENSING

SEC. 12. Registration and Licensing of All Water Supply and/or Sanitation Services —
All Water Supply and/or Sanitation Service Providers, including Bulk Water Suppliers and those
providing services to subdivisions and/or other Service Providers, shall register with the
Commission and, subject to such rules, guidelines, procedures and other issuances as the
Commission may issue, obtain a License to operate from the appropriate Regulatory Units

‘The Commission shall also ensure that the granting and revocation of licenses are carried out fairly,
transparently, and without discrimination. Its 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.

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.


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SEC 13. Conditions of License. —
The Commission and/or the concerned Regulatory Unit, may impose such conditions in the issued
License, as it may deem necessary, such as but not limited to:

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

b) Term fixing the duration of the privilege.

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

4) Minimum technical performance and service level standards.

) Expansion targets and service level improvements over time.

£) 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 Convenience/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. —

a) 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:

i. foster the maintenance and development of efficient, coordinated, and viable
operation of their licensed activities;

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

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

iv. not abandon its service without notice to and approval by the Commission.

b) 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.

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 Sections 8, 9, 10, and 11

of Republic Act No. 8041, otherwise known as the "Water Crisis Act of 1995."

°)


d) Any License issued under this Act shall contain provisions designed to ensure that

Licensees
i. Publish the Tariff and other charges approved by the Commission, and other terms

and conditions imposed by the Commission for the provision of Water Supply

and/or Sanitation Services.

Prepare, within three (3) months from the issuance of a License, in consultation

with its customers, a customer service code specifying the manner and procedure

for: (a) metering, billing, and collection of the Licensee’s approved tariff and other

charges, (b) disconnection or suspension of service in case of non-payment of

tariffs and/or other charges, or acts of pilferage, and (c) recommendation and

recovery of arrears in tariffs and other charges; and

Maintain financial accounts in accordance with the manner and procedure

specified in the License and as may be required by the Commission.

iv. Maintain and upon request by anyone during regular office hours, promptly make
available for scrutiny and inspection such data, statistics and other information, as
may be required by the Commission.

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

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

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

a) reasonable and prudent capital and recurrent costs of providing the service including a
reasonable rate of return on capital;

b) efficiency of the service;

c) incentives for enhancement of efficiency;

4) willingness to pay of the customers/consumers;

) equity considerations; and

f) 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.

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(CHAPTER 4 - QUASI-JUDICIAL FUNCTIONS OF THE COMMISSION

SEC. 17. Proceedings Before the Commission. —
For the purpose of any investigation, inquiry or proceeding, the Commission shall have the
requisite power to:

a) Issue subpoena duces tecum and subpoena ad testificandum;

b) Appoint hearing officers 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. 18. Orders and Decisions of the Commission. —
The orders, resolutions and decisions of the Commission, which must be reached as promptly and
expeditiously as reasonably and fairly possible, shall be in writing and shall state clearly

and distinctly the facts and law on which it is based.

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

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

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 Chairperson or any other member of the
Commission.

b)

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

a) The DENR shall 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.

b) The Department of Health (DOH) 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.

The Commission shall coordinate with the NWRB for water allocation and data collection,

the local government units for development projects relating to water supply and sanitation,

©)


and the Department of Public Works and Highways for flood control and the harnessing
and impounding of water.

SEC. 21. Transfer of Rights and Obligations. —

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

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

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

The heads of the agencies shall continue to serve until replaced as provided for under this Act.
All rights and obligations of the said government agencies are hereby transferred to and assumed

by the Commission and shall be acted upon in accordance with the rules and regulations of the
Commission on Audit and other pertinent laws, rules, and regulations.

SEC. 22. Separation form Service. —

Employees separated 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. 23. Funding. —
The sum of Three Hundred Million (P 300,000,000.00) 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 and its Regulatory Units shall be appropriated every fiscal year in the General
Appropriations Act, in an amount that shall not be less than the amount appropriated for it the
previous year.

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

Moreover, subject to existing rules and regulations of the Department of Budget and Management

(DBM), all funds and monies collected by the Commission from fees, charges, surcharges and
penalties, which the Commission may impose and collect under this Act, shall

“4


accrue directly and automatically to the Commission and shall be utilized solely for its operations.
The guidelines for the collection and disbursement of these proceeds shall be defined in the
implementing rules and regulations of this Act.

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

regulations.

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

SEC. 24. 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. 25. Repealing Clause. — The provision with respect to fixing of water rates and sanitation
service fees of Section 3 (h) and Section 12, and regulation of waterworks and deep wells of
Section 3 (n), regulation of waterworks and sanitation systems in privately owned subdivisions of
Section 3 (p) of Republic Act 6234, as amended, is hereby repealed or modified accordingly.

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

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

or modified accordingly

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

“Provisions under Section 69 of Republic Act No. 9593 or the Tourism Act of 2009 and its
Implementing Rules and Regulations which mandates the Tourism Infrastructure and 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 or modified
accordingly.”

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

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


SEC. 26. Effectivity Clause. — This Act shall take effect fifteen (15) days following the
completion of its publication in a national newspaper of general circulation.

Approved,