FIFTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES —_)
FIRST REGULAR SESSION )

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B. Rodriguez, Jr.

House Bill No._ 1679

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.
LWUA depends on government funds, which are limited, as well as ODA funds
which are likewise limited.

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

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

The main difficulty in privatizing water utilities in a similar way as the
case of MWSS (ie., through a concession) is the question of financial
regulation. The rules are presently vague as to whether jurisdiction lies with the
LWUA, NWRB or even LGUs. Also, it requires a different set of skills to


properly regulate privatized water systems and we need to develop this in order
to entice foreign investments.

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

Early approval of this proposed measure is earnestly sought.

RUFUS B. RODRIGUEZ

Me

MAXIMO B. RODRIGUEZ, JR.


FIFTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES —)
FIRST REGULAR SESSION )

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B. Rodriguez, Jr.

1679

House Bill No.

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 of 2010.”

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.

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

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

£ “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.

g. __“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.

j. “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

SEC.

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

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;

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

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

To prevent misuse or monopoly or market power.

6. Powers and Functions of the Commission. - The

Commission shall have the following powers and functions:

a.

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

to formulate Tariffs for Piped-Water Supply and/or Sewerage
Services taking into account, among others, the following: (1)
capital and recurrent cost of providing the service including a
reasonable rate of return on capital; (2) efficiency of the service;
(3) incentives for enhancement of efficiency, including demand-
side; (3) incentives for enhancement of efficiency, including
demand-side management; (4) willingness to pay of the
customersiconsumers; (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 fiow rates, connections and billing and
metering requirements 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 and/or 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
composed of three (3) members: a Chairman and two (2) Associate
Commissioners, all of whom shall be appointed by the President.

(2) The term of office of each member of the Commission shall be five
(5) years; Provided, however, that among members of the
Commission first appointed by the President; a) the Chairman shall
serve for a period of five (5) years, b) one Associate Commissioner
shall serve three (3) years, and c) the other Associate Commissioner
shall serve for one (1) year, as fixed in their respective appointments;
Provided, further, that upon the expiration of his term, each member
of the Commission shall serve as such until his successor shall have
been appointed and qualified; Provided, moreover, that any
appointment to fill a vacancy in the Commission which arises prior to
the expiration of the term of a member of the Commission which
arises prior to the expiration of the term of a member of the
Commission shall only be for the unexpired portion of such term, and
Provided, finally, that no member of the Commission shall be
appointed for more than two (2) consecutive full or partial terms.

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

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

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

(6) Subject to the immediately preceding paragraph, the pertinent civil
service laws, and rules and regulations of the Philippines shall be


applicable to the Chairman, Associate Commissioners, and other
personnel of the Commission.

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

SEC. 9. Executive Director. - (1) The Commission shall appoint an
Executive Director who 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 fulfiling 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;

(4) __ the requisition of any public record from any court or office;
(e) _ the issuance of a commission for examination of witnesses;
() the grant of adjournment at hearings; and

(3) compelling of the appearance of parties and the imposition of
penalties as a consequence of non-appearance.

SEC. 11. Power to Obtain Information and Documents. ~ (1) The
Commission may require that a Licensee or any other person shall provide the
Commission with any information that may be reasonably necessary for it to


attain its objectives and/or to carry out its powers and functions under this Act
For purposes of this Section, the information required by the Commission may
include any document, plan, electronic file, record and other material.

(2) Any requirement for information must be made in a written notice
that identifies the information or document and that specifies;

(a) when requirement must be complied with; and

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

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

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

(a) _ the service for which the License is being sought and

(b) the Service Area, including location maps, within which the
service(s) will be provided.

SEC. 13. Licenses do not Grant Exclusively. Except for Service Areas
with respect to which exclusive rights to provide Piped-Water Supply and/or
Sewerage Services are granted under existing laws, licensees do not have the
exclusive right to provide Piped-Water Supply and/or Sewerage Services within
a Service Area and, consequently, the Commission may issue one, two, or
more licenses for operators within any existing or proposed Service Area(s)


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

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

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

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

(d) 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;

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

(h) the reporting requirements of Licensees.

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

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

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

(5) The Commission shall specify the requirements and procedure for
existing holders of Certificate of Public Convenience/Certficates 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)
(b)

()

(a)

the qualifications required of applicants for a License;

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

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

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)

(b)

(©)
(d)

foster the maintenance and development of efficient,
coordinated, and economic cooperation of their licensed
activities;

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;

comply with drinking water quality requirements; and

Pay appropriate compensation in accordance with
procedures laid down in any relevant statute or in
regulations promulgated or issued by the Commission if, in
laying or repairing a water and/or sewerage main or


relevant facility, a Licensee should injure any person
and/or damage any property.

(2) Any person granted a License under this Act shall, to the extent
allowed by law and specified in the License, have the right to acquire or lease
land and lay or repair water or sewerage mains and other relevant facilities in
public ways, when required to fulfil their obligations.

(3) Subject to any condition or limitation laid down in the License, a
Licensee may disconnect the supply of piped water services and/or sewerage
services to a customer when such customer defaults in the payment of
amount(s) due to that Licensee in respect of water supplied or sewerage
services provided, or for acts of pilferage pursuant to Sections 8, 9, 10, and 11
of Republic Act No. 8041, otherwise known as the "National Water Crisis Act of
1995."

(4) Any License issued under this Act shall contain provisions
designed to ensure that Licensees:

(a) Publish the Tariff and other charges approved by the
Commission, and other terms and conditions imposed by
the Commission for the provision of Piped-Water Supply
and/or Sewerage Services.

(b) Prepare, within three (3) months from the issuance of a
Piped-Water Supply and/or Sewerage Service License,
and make available for public inspection, codes of practice
specifying the manner and procedure for: (a) metering,
billing, and collection of the Licensee's approved Tariff and
other charges, (b) disconnection or suspension of service
in case of non-payment of Tariffs and/or other charges, or
acts of pilferage, and (c) recommendation and recovery of
arrears in Tariffs and other charges; and

(©) Maintain financial accounts in accordance with the manner
and procedure specified in the License as may be
amended from time to time by the Commission.

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

were not supplied the services and (b) at most the cost of providing the service
those customers on a stand-alone basis.

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


SEC. 19. Orders and Decisions of the Commission. - Every order or
decision rendered by the Commission shall be in writing and shall state clearly
and distinctly the facts and law on which it is based. The Commission shall
decide each case or application within thirty (30) days following its formal
submission for resolution. The Commission shall publish and make available
for public inspection all decisions and final orders in the adjudication of
contested cases or applications.

SEC. 20. Appeals Procedure and Prohibition Against Injunction. -
(1) Orders, rulings, and decisions of the Commission are final and executory
unless appealed to the Court of Appeals within fifteen (15) days from receipt of
notice of such order, ruling or decision. Alll 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 responsibilty 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 LWWUA 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 Utilities Division of the NWRB, and all other
government agencies and units whose powers and functions have been
transferred to the Commission. All rights and obligations of the said
government agencies are hereby transferred to and assumed by the
Commission and shall be acted upon in accordance with the rules and
regulations of the Commission on Audit and other pertinent laws, rules, and
regulations.

SEC. 26. Staffing. - The staff and personnel positions in the
Commission herein created shall be filled by regular appointments in
accordance with a staffing plan prepared by the Chairman of the Commission.
The personnel of the Water Utilities Division of the NWRB shall be given
preference in the positions herein created; Provided, however, that such
personnel shall comply with the qualification standards set by the Commission
for the positions for which they apply.


SEC. 27. Separation from Service. ~ Employees separated from
government service as a result of this Act shall be entitled to the benefits which
they may receive under existing laws, rules and regulations. There shall be an
early retirement incentive for employees who shall be separated from service.

SEC. 28. Penalties for Violations. - Subject to Sec. 15, paragraph (0),
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 subsidiary liable for
the pecuniary liability of its aforementioned officers, president, directors,
managing partners or persons charged with the administration thereof

SEC. 29. Appropriations. — (1) The sum of One Hundred Million (P
100,000,000.00) Pesos shall be set aside from any available funds of the
National Treasury, and is hereby appropriated and authorized to be released,
for the organization of the Commission and its initial operations. Thereafter,
funds sufficient to fully carry out the objectives, powers, and functions of the
Commission shall be appropriated every fiscal year in the General
Appropriations Act.

SEC. 30. Separability Clause. — \n the event that any provision of this
Act is declared unconstitutional, invalid, or illegal, the constitutionality, validity,
or legality of the remainder of the provisions of this Act shall not be affected
thereby.

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

utilities owned, operated and maintained by them within their jurisdiction is
hereby repealed.

SEC. 32. Effectivity Clause. - This Act shall take effect fifteen (15)

days following the completion of its publication in a national newspaper of
general circulation.

Approved,