SEVENTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session
S E N A T E
S.B.No.1217
I of 
i > L'l ur
'* 16 
OCT 19 
P 4 5 7
K I X L l V i . i )  b y
' 4
^
Introduced by Senator Poe
AN ACT
RATIONALIZING THE ECONOMIC REGULATION OF WATER UTILITIES 
THE WATER r e g u l a t o r y  COMMISSION AND FOR OTHER
F  UKJrOISES
Explanatory Note
The Philippines is a water rich country. The Philippines has total annual renewable 
water resources of479 billion cubic meters (m3).i This is equivalent to an annual per capacity
availability of 6,100 "■3. which is twice that of the rest of Asia and 6 times the global scarcity 
threshold of 1,000 m3.
However, many Filipinos experience deprivation from affordable, safe drinking water 
and a working sanitation system despite our abundant sources of freshwater. An article from 
the Department of Environment and Natural Resources states that the “government still 
scrambles to avert a water crisis during the summer season or when the country experiences
the El Nino phenomenon.”2 Furthermore, 8.03 million Filipinos still do not have access to 
improved water sources as of 2015.3
The Philippines also lacks a strong liquid in-liquid out system. This means that even if 
households are serviced with clean drinking water, a minute number receive adequate 
samtation and sewerage services. This leads to severe cases of leptospirosis, dengue typhoid 
and related tropical and water-borne illnesses. 31% of illnesses in the country are water-related 
due to lack of clean drinking water supply and efficient sanitary facilities.4
l.^S1 
f el>0Pment 
PhiliPPines Water Supply and Sanitation Sector Assessment. Strategy and Road
Map (2013). Retrieved from h:ttp:.//www.adb.org/sites/default/files/
^ocument/33810/files/philippines-water-suPDlv-sector-assessment pdf...............
Bank'! 2015 ' St"”a,eS for‘» '’“la't a  ” d *  of population with access to
l U x1fted.Nf 0nSnE^.0n0miC and Social Commission for Asia and the Pacific. “Watstewater Treatment Facilitv in
e 
untinlupa Public Market.” Retrieved from http://www.unescaD.org/sites/defaulfyfilpc/Muntinliina RS p^ f


This perennial problem has seriously affected the lives of our citizens in terms of health, 
sanitation, food security, and livelihood, in addition to negatively impacting the environment’ 
This particularly impacts the poor, who not only have the worst access to water but are also 
usually compelled to pay more for water.
The lack of sufficient, safe, acceptable, accessible, affordable drinking water and 
sanitation is not unique to the Philippines. However, as the World Water Council has repeatedly 
stated, it is incumbent on each coimtry to push for strong standards within its government and 
to contribute to global governance on the issues of water and sanitation.
There are many water-related laws in the Philippines. However, enforcement is weak 
and the water sector is beset with problems such as poor database management and weak 
cooperation among water agencies, regulatory bodies, and LGUs. Currently, there are four (4) 
major economic regulatory agencies for water; the National Water Resources Board (NWRB), 
Local Water Utilities Administration (LWUA), Local Government Units (LGUs), and National 
Agencies which include Industrial Zones and the Metropolitan Waterworks and Sewerage 
System (MWSS). There are 580 Water Districts in the Philippines. However, according to a 
2005 World Bank Survey, 125 of these were considered non-operational. In addition, there are 
over 1,000 LGU Utilities, 500 Rural Water Supply Associations, 200 Cooperatives, and 900 
Private Firms.
The regulatory framework for water has many overlaps, and economic regulations are 
provided under a number of different arrangements thereby resulting to an unstable and 
fragmented regulatory framework. This fragmentation has had significant implications in the 
effective and adequate delivery of water and sanitation services in the country. Because there 
is no lead agency in the water resource sector, the different coordination systems, functions 
and jurisdictions of the various agencies have made it impossibly hard for water and sanitation 
to be collectively managed. Thus, the establishment of a unified agency that would focus on 
water, sewerage and sanitation is certainly very important.
This bill seeks to rationalize the economic as well as administrative regulation of water 
utilities through an independent, quasi-judicial body called the Water Regulatory Commission. 
Among its functions are to set the policy for water supply, sewerage and septage management; 
issue and licenses; set, review and approve rates; review and suspend contracts; initiate 
investigations on erring officials through its quasi-judicial nature; review and revoke issuances, 
memoranda and the like that are not in accordance with the spirit of the Commission and ensure 
that the welfare of consumers are prioritized. To streamline organizational functions and 
responsibilities, the pertinent regulatory units of the MWSS, NWRB and LWUA will also be 
transferred to the commission. The bill takes cue from a number of prior legislative measures 
in prior Congresses, but includes a number of updated provisions.
To live in a community that is clean, free from human waste, and abundant with safe 
and affordable drinking water is an utmost human right, so much so that the United Nations 
General Assembly explicitly recognized the Right to Water and Sanitation through UN


Resolution 64/292 in 20lO.5 In step with the international movement, through this bill the 
Philippines will be prioritizing, in terms of policy and political will, the universal access to 
water and sanitation and sustainable management of water resources, forming an indispensable 
basis for social and economic improvement, basic health, and prosperity.
The Philippines is committed to meeting and exceeding the Sustainable Development 
Goal on ensuring availability and sustainable management of water and sanitation for all. To 
ensure Filipinos the benefit of this most fundamental human right, the urgent approval of this 
bill is earnestly sought.
J fU u u  
____
/  GRACE POE
'United Nations Department of Economic and Social Affairs. “The Human Right to Water and Saniation” 
Retrieved from http://www.un.org/waterforlifedecade/human right to water.shtml


,^k'uah'
(§ffui of the.J^fnctiru
SEVENTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session
S E N A T E
S.B.No. 1217
1 6  
OCT 19 
P4 5 7
RFCEIVKl * BY
- 4 ^
Introduced by Senator Poe
1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16 
17
AN ACT
RATIONALIZING THE ECONOMIC REGULATION OF WATER UTILITIES 
CREATING THE WATER REGULATORY COMMISSION AND FOR OTHER 
PURPOSES
Be it enacted in the Senate and House of Representatives of the Philippines in the 
Congress assembled:
CHAPTER 1 - GENERAL PROVISIONS
SECTION 1. Short Title. This Act shall be known as the “Water Regulatory 
Act of 2016”.
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)
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;


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
b) 
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;
c) 
To encourage and enable private sector leadership in the Continued 
growth and development of water supply and septage management and 
sewerage facilities and services;
d) 
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;
e) 
To provide incentives and/or support to encourage investments, and/or 
take all steps necessary for the provision of affordable access to water 
supply and sanitation services in unserved and underserved areas;
f) 
To ensure that water resources allocated to water service providers are 
used efficiently to meet public demand;
g) 
To ensure fair, just and reasonable tariffs, rates and charges for water 
supply and sanitation services;
h) 
To protect the legal and other interests of consumers of water supply and 
sanitation services rendered by public and private sector licensees;
i) 
To establish an administrative process for economic regulation that is 
stable, transparent and fair, giving due emphasis to technical, legal, 
environmental, economic and financial considerations and with due 
regard to the observance of due process at all times; and


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28 
29
j) 
To establish a strong and independent economic regulatory body to 
ensure consumer protection, promote good business practice and 
competition among Service Providers and full 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) 
iiBulk 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.
b) 
"Commission" shall mean the Water Regulatory Commission.
c) 
Levels of water supply service'' -  consistent with the definitions provided 
under NEDA Board Resolution No. 12 (Series of 1995) shall mean as 
follows:
1. 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.
2. 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


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28 
29
suitable for rural and urban fringe areas where houses are clustered 
densely to justify a simple piped system.
3. 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.
d) 
License shall mean the Water Supply and/or Sanitation Services Operating 
License that the Commission is authorized to grant and issue to Service 
Providers.
e) 
Licensee shall mean the Service Provider to whom a License is granted 
issued by the Commission.
or
f) 
"L WUA" shall mean the Local Water Utilities Administration created under 
Presidential Decree No. 198, as amended.
g) 
i^MWSS’, shall mean the Metropolitan Waterworks and Sewerage System, 
created by Republic Act 6234.
h) 
"NWRB" shall mean the National Water Resources Board created by 
Presidential Decree No. 424, as amended by Executive Order No. 124-A.
i) 
''Regulatory Units" shall refer to the regulatory offices established under 
Section 5 of this Act to issue Licenses authorizing the operation of Water 
Supply and Sanitation Services; provide, review, determine, fix, and approve 
water and sewerage tariffs, rates and charges that Licensees may impose; 
and exercise such other functions and powers as may be provided hereunder.


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
j) 
Sanitation as used under this Act, refers only to sewerage, sanitation and 
septage management.
k) 
"Service Area" shall refer to the area covered by the water distribution 
system, sewerage and septage management services.
l) 
“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.
m) 
"Sewerage" shall refer to any system or network of sanitary pipelines, 
ditches, channels or conduits including pumping stations, lift stations and 
force mains, service connections including other constructions, devices or 
appliances appurtenant thereof, which includes the collection, sanitary 
piping transport, pumping and treatment of water-borne human or animal 
waste 
removed fi*om residences, buildings, institutions, industrial and 
commercial establishments to point of sewerage treatment plant disposal.
n) 
Septage shall refer to sludge produced on individual onsite wastewater 
disposal systems, principally septic tanks and cesspools.
o) 
“Septage Managemenr shall refer to the provision of proper collection, 
septage treatment and disposal of septage.
p) 
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
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21
22
23
24
25
26
27
28
29
30
q) 
" Water District" shall refer to government-owned and controlled 
corporations organized under Presidential Decree No. 198, as amended, 
created primarily to acquire, install, operate, maintain and improve water 
supply and distribution systems for domestic, industrial and municipal uses 
of residents and to provide, maintain and operate waste water collection, 
treatment and disposal facilities within the boundaries of the district.
r) 
‘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 an attached agency to the Office of the President.
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.


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
Moreover, the pertinent regulatory divisions or units of MWSS, NWRB and 
LWUA are hereby transferred to the Commission, and they shall collectively comprise 
its Central Regulatory Unit for water supply and sanitation services that
a) Provide services to more than one province;
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) Provide the overall policy directions, strategies and targets to meet the goals 
and objectives for water supply, sewerage and septage management.
b) Issue and promulgate rules, regulations and guidelines as may be necessary 
to implement and enforce its powers and functions under this Act;
c) Set and enforce just and reasonable technical standards, classifications and 
measurements of service;
d) Appoint the central and provincial regulators;


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28 
29
e) Establish rules and regulations to monitor, avoid and provide remedies for any 
market power abuse or anti-competitive or discriminatory act or behavior by 
or against any participant in the water supply and sanitation sector. Upon 
finding that a market participant has engaged in, or fell victim to such act or 
behavior, the WRC shall act to stop and/or redress the same. Such remedies 
may, without limitation, include the imposition of price controls, issuance of 
injunctions, requirement of divestment or disgorgement of excess profits, 
invalidation of contracts and imposition of fines and penalties pursuant to this 
Act.
f) Adopt and require that books, records and accounts be kept and maintained 
accordance with the prescribed uniform accoimting system;
m
g) Fix and determine proper and adequate rates of depreciation of properties and 
equipment used in Water Supply and Sanitation Service/s;
h) 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 
fimctions of the Commission;
i) Require the submission reports of finances and operations, verified under oaths 
by the owner or president and secretary of the Licensee;
j) 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, fimctions, 
powers and responsibilities.


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28 
29
k) Investigate, motupropio or upon complaint in writing, any matter concerning 
the operation of the service and require that service be provided in proper and 
suitable manner;
l) 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;
m) 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;
n) 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;
o) Deputize agents, whether from the public or private sector, to assist in the 
performance of any of the powers and functions of the Commission;
p) Upon appeal and after due hearing, appoint an interim or temporary 
management committee to ensure continuity of service in cases a Licensee fails 
to meet conditions of the license and the concerned Regulatory Unit fails or 
refuses to appoint an interim management committee as provided in the 
following section.
q) Appoint, hire and maintain adequate staff and personnel, advisers, and/or 
consultants, with suitable qualifications and experience, as necessary;


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
r) Original and exclusive jurisdiction over all cases contesting rates, fees, fines 
and penalties imposed by the Regulatory Units in the exercise of their powers, 
functions and responsibilities, as set forth herein, and over all cases involving 
disputes between and among participants or stakeholders in the Water Supply 
and Sanitation services; and
s) 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) Subject to the review and approval of the Commission, issue and 
promulgate rules, regulations and guidelines as may be necessary to 
implement and enforce its powers and functions under this Section;
b) Issue Licenses authorizing the operation of Water Supply and Sanitation 
Services in any specified area or areas within the Philippines.
c) 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.
d) 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;
e) Appraise and value property and equipment used by Licensees in
10


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
providing water supply and sanitation service/s.
f) Enforce technical, financial and other performance standards set by the 
Commission for licensees/utilities;
g) Respond to consumer complaints and ensure the adequate promotion of 
consumer interests;
h) Investigate accidents directly or indirectly arising from or connected with 
the maintenance or operation of the service, and make such order or 
recommendation as the public interest may warrant;
i) Upon petition or motu propio where in its determination public 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;
j) Require the submission of reports, plans and other documents that set out 
the performance targets of the 
licensees/utilities, and regular 
accomplishment reports;
k) Impose and collect annual levies determined as a percentage of gross 
revenue accruing in relation to the licensed activities, and reasonable fees 
and surcharges as may be necessary for achieving the purposes, powers 
and functions of the regulator;
l) 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;
11


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28 
29
m) Amend, modify, suspend or revoke any License issued by them, after due 
notice and hearing, on any of the following grounds:
1. When the facts and circumstances on the strength of which the license 
was issued have been misrepresented or has materially changed;
2. 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;
3. Where the Licensee is found to be manifestly incompetent in the 
operation of or provision of Water Supply and Sanitation services in 
its area; or
4. When the holder thereof has violated or willfully refused to comply 
with any order, rule or regulation of the Commission or any provision 
of this Act;
n) Appoint an interim management committee to ensure continuity of service 
in case a licensee fails to meet conditions of the license; and
o) Submit performance plans and reports as required by the Commission.
SEC. 8. Composition. -  The Commission shall be a collegial body composed 
of five (5) full-time members composed of a Chairperson and four (4) members. The 
Chairperson and the Commissioners who shall have the rank equivalent of cabinet 
secretary and undersecretary, respectively, shall be appointed by the President.
12


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
All members of the Commission must be citizens and residents of the 
Philippines, 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 ten (10) years actual and distinguished experience in their 
respective fields of expertise; Provided that out of the four members of the 
Commission, at least one (1) shall be a member of the Philippine Bar with at least ten 
years experience in the active practice of law, and at least one (1) shall be a certified 
public accountant with at least ten years experience in active practice.
The term of office of the Chairperson and the Commissioners shall be seven 
(7) years without reappointment. Of the first set of appointees, the Chairperson shall 
hold office for seven (7) years and of the first four (4) Commissioners, two (2) shall 
hold office for a term of seven (7) years and two (2) for a term of five (5) years. In 
case a vacancy occurs before the expiration of the term of office, the appointment to 
such vacancy shall only be for the unexpired term of the predecessor. The Chairperson 
and the Commissioners shall enjoy security of tenure and shall not be suspended or 
removed from office except for just cause as provided by law.
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 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.
13


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
The Chairman of the Commission shall exercise general executive control and 
supervision of the Commission and its members, staff and personnel, agents and 
representatives.
The staff and personnel positions of the WRC shall be filled by regular 
appointments in accordance with a staffing plan to be prepared by the Commission. 
Within three (3) months from the creation of the WRC 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 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 the business of transmitting, generating, 
supplying or distributing any form of energy and must, therefore, divest through sale or 
legal disposition of any and all interests in the water sector upon assumption of office.
SEC. 9. Executive Director. -  The WRC shall appoint an Executive Director 
who shall head the WRC Secretariat, keep and maintain the official record and report 
of the proceedings of the Commission, and have the authority to administer oaths in all 
matters falling within the jurisdiction of the Commission.
The Executive Director shall be responsible for the effective implementation of the 
policies, plans, programs, rules, regulations and directives of the Commission; 
coordinate and supervise the activities of the different operating units under the 
Commission; and perform such functions as may be assigned by the Chairperson and/or 
other members of the Commission.
14


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28 
29
SEC. 10. fVRC Secretariat - The Commission shall also establish a Secretariat 
which shall provide the Commission with technical and other support including, among 
others:
a) Providing the necessary technical inputs and secretariat support to the 
Commission to facilitate the conduct of its functions;
b) Coordinating with Regulatory Units to ensure proper implementation of the 
rules, regulations and guidelines promulgated by the Commission;
c) Monitoring and assessing activities of the Regulatory Units vis-a-vis their 
respective aimual performance plans and targets;
d) Maintaining a database on the WSS sector; and
e) Coordinating with other relevant agencies of the national or local 
government on any matter relating to WSS.
SEC. 11. Compensation and Other Emoluments. — The compensation and 
other emoluments for the members and personnel of the Commission shall be exempted 
from the coverage of Republic Act No. 6758, otherwise known as the “Salary 
Standardization Act”. For this purpose, the salaries and other emoluments of the 
Chairperson, the Commissioners, and personnel of the Commission shall be set based 
on an objective classification system, taking into consideration the importance and 
responsibilities attached to the respective positions, and shall be submitted to the 
President of the Philippines for his approval.
CHAPTER 3 - REGISTRATION AND LICENSING
15


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
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.
SEC 13. Conditions of License. -  
The Commission and/or the concerned 
Regulatory Unit, may impose such conditions in the issued License, as it may be 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.
c) Grounds for modification, suspension or cancellation of the License.
16


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28 
29
d) Minimum technical performance and service level standards.
e) Expansion targets and service level improvements over time.
f) 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:
17


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
1. Foster the maintenance and development of efficient, coordinated, and 
viable operation of their licensed activities;
2. 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 Philippine and interWater 
supply and/or sanitation industry;
3. Comply with drinking water quality requirements and other 
requirements and standards that may be set by the Commission; and
4. 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.
c) 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 knovra as the "Water Crisis Act of 1995."
d) Any License issued under this Act shall contain provisions designed to 
ensure that Licensees;
18


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
1. 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.
2. 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
3. Maintain financial accounts in accordance with the manner and 
procedure specified in the License and as may be required by the 
Commission.
e) 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 international markets.
Such tariffs, rates and charges shall be based on and consistent with a rate-setting 
methodology that the Commission shall, after due public consultation, define and publish 
in consecutively for three weeks in newspapers of general circulation , taking into 
account the following, among others’.
19


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
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;
d) willingness to pay of the customers/consumers;
e) 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.
SEC. 17. Twelve percent (12%) investment cap.- Pursuant to Commonwealth 
Act No. 146, as amended, otherwise known as the “Public Service Act,” shall further
20


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
provide that any and all government agency/ies or such government agency/ies’ private 
sector concessionaires, agents, operators, contractors and the like delivering public 
services to the people must be subjected to the Twelve (12%) cap financial formula on 
Return of Investment.
Furthermore the Commission on Audit (COA) is hereto designated as the sole 
and official Auditor to determine the Actual Physical Investments of such government 
agency/ies or private sector concessionaires, operators, agents, contractors and the like 
delivering public to the people for purposes of computing the Twelve (12%) Return on 
Investment Cap.
CHAPTER 4 - QUASI-JUDICIAL FUNCTIONS OF THE COMMISSION
SEC. 18. Proceedings Before the Commission. -  For the purpose of any 
investigation, inquiry or proceeding, the Commission shall have the requisite power to:
a) Issue subpoena duces tecum and subpoena duces tecum ad testificandum-,
b) Appoint a Commissioner to hear and receive evidence on behalf of the 
Commission;
c) Cite any person or party for contempt for refusal to appear, testify or comply 
with an order of the Commission on any matter that is the subject of 
investigation, inquiry or proceeding before the Commission.
SEC. 19. Orders and Decisions of the Commission, —
The orders, resolutions and decisions of the Commission, which must be 
reached as promptly and expeditiously as reasonably and fairly possible, shall be in 
writing and shall state clearly and distinctly the facts and law on which it is based.
The Commission shall publish and make available for public inspection all 
decisions and final orders in the adjudication of contested cases or applications.
21


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28 
29
SEC. 20. Appeals Procedure and Prohibition Against Injunction. -  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.
CHAPTER 5 - TRANSITORY PROVISIONS
SEC. 21. Interface with Other Sector Regulators. -
a) The Department of Environment and Natural Resources 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.
22


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
b) The Department of Health shall have primary authority and responsibility for 
determining and enforcing drinking water quality and sanitation standards. 
The Commission shall coordinate with the DOH in this regard, and shall 
ensure the consistency of the standards and targets that it will set for 
compliance by licensees with the DOH’s mandated standards.
c) 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. 22. 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
23


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
and regulations of the Commission on Audit and other pertinent laws, rules, and 
regulations.
SEC. 23. Separation form Service. -  Employees separated from government 
service as a result of this Act shall be entitled to the benefits which they may receive 
under existing laws, rules and regulations.
SEC. 24. Appropriations and Use of Fees, Charges and Penalties. -  The initial 
budgetary requirements of the Commission of three hundred million pesos 
(P300,000,000.00) is hereby appropriated.
All fees, fines, penalties collected by the Commission and its Regulatory Units 
shall not be retained by the Commission, but will be remitted to the National Treasury 
and shall accrue to the general funds.
Such funds necessary for the continuous and effective operation of the 
Commission shall be included in the annual General Appropriations Act.
SEC. 25. Transparency Clause. -  Final decisions, orders and rulings of the 
Commission shall be published on the official website. Records of public proceedings 
shall be made available to the public.
SEC. 26. Effectivity. — This Act shall take effect immediately upon its approval. 
The Chairman of the Commission shall, after due consultation with stakeholders, 
promulgate such other rules and regulations as may be necessary and appropriate to 
implement this Act.
SEC. 27. 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.
24


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
SEC. 28. 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 LOI700 (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 
Infi-astructure 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.
25


1
2
3
4
5
6
7
8 
9
10
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. 29. Effectivity Clause. -  This Act shall take effect fifteen (15) days 
following the completion of its publication in a national newspaper of general 
circulation.
Approved,
26