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SEVENTEENTH CONGRESS ) nrg, MAY 297
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

Introduced by Representative Maximo B. Rodriguez, Jr.
House Bill No. 97°76

EXPLANATORY NOTE

In the water sector, the most urgent need is probably the upgrading of the
water utilities 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 its mandate. LWWUA
depends on government funds, which are limited, as well as ODA funds which are
likewise limited.

‘An alternative source of financing for water utiles 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 ultlities 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 LUA, NWRB or even LGUs
‘Aiso, 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.

sae eer JR.


SEVENTEENTH CONGRESS
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

Introduced by Representative Maximo B. Rodriguez, Jr.
House Bill No. 5776

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 Philippines 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.

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

fe. "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.

9. “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” shall 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.

|. “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. _ Toprevent misuse or monopoly or market power.

SEC. 6. Powers and Functions of the Commission. — The Commission shall
have the following powers and functions:


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;

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
retum 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;

to regulate persons or entities, whether from the public or private sector,
that provide Piped-Water Supply and/or Sewerage Services;

to issue, 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;

to disseminate and publish comparative information on prices and
service performance of Licensees of Piped-Water Supply and/or
Sewerage Services;

in the 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
Tequirements and procedures, among others;

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;

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 andior Sewerage
Services to the extent necessary for achieving the purposes, powers
and functions of the Commission;

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;

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;

to conduct inquiries on matters relating to water supply and distribution
or sewerage disposal,

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

sed 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 shalll serve for a period of five
(5) years, b) one Associate Commissioner shall serve three (3) years, and
¢) the other Associate Commissioner shalll 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 shall 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
fufflling 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;

(f) the grant of adjournment at hearings; and

(g) 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 andlor 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) whenrrequirement must be complied with; and

(b) __ 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) cosa] 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;

(4) 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 shall
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;

(f) 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;

(9) 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 retum 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 agents),


(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 folowed 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

(d) 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 futfill 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
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 all the rights, and assume all the obligations, of the
Water Utlities 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 shalll 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 resut 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
400,000,000.00) 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 constitutionally, 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

folowing the completion of its publication in a national newspaper of general
circulation

Approved,