" 
SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
Sen<li~ 
(~ff,;1' uf Uf~ ~"'(T .. brll 
First Regular Session 
) 
) 
) 
'13 
SEP 10 
1110 :37 
SENATE 
Senate Bill No. 1 5 8 5 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
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 (i.e., 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 investment. 
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. 
OY EJERCITO ESTRADA 
Senator 


" 
FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES. 
First Regular Session 
) 
) 
) 
SENATE 
Senate Bill No. 15 8 5 
.lP ., n.;:rt " 
(.11,;, ,,[ til' .:h,mt"'~ 
·13 
SEP 10 
AlO :37 
RECEIVED BY'._~_ 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
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 2013". 
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 su'pply 
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 
Section 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. 
"LWUA" shall mean the Local Water Utilities Administration created 
under Presidential Decree No. 198, as amended. 
e. 
,"NWRS" 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 
License 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 License 
in a particular Service Area or Areas. 
h. 
"Service Area" shall refer to the territory or area of operations with 
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 th~ P.CW6(S .<lnd 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 and 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; 
c. 
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 for Piped Water Supply and Sewerage Services and the 
safety, reliability and quality of Piped-Water Supply and Sewerage 
Services; and 
f. 
To prevent misuse of monopoly or market power. 
SEC. 6. Powers and Functions of the Commission. - The Commission 
shall have the following functions: 
a. 
To formulate rules and regulations to facilitate and rationalize the 
expansion, improvement, and efficient provision of Piped-Water 
Supply and Sewerage Services throughout the country; 
b. 
To formulate for approving Tariffs for Piped-Water Supply and/or 
Sewerage Services taking into account, among others, the 
following: (1) capital and recurrent cost of providing the service 
including a reasonable rate of return on capital; (2) efficiency of the 
service; (3) incentives for enhancement of efficiency, including 
demand-side; (3) incentives for enhancement of efficiency, 
including demand-side management; (4) willingness to pay of the 
customers/consumers; (5) equity considerations; and (6) 
administrative simplicity 
c. 
To approve and regulate the Tariffs to be charged by Licensee of 
Piped-Water Supply and/or Sewerage Services; 
d. 
To regulate per~olJ,~,Qr ~,nti.ties, whether from the public or private 
sector, that provide Piped~Water Supply and/or Sewerage Services; 
e. 
To issue, grant, mOdify, monitor, enforce, suspend and/or cancel 
Licensees for Piped-Water Supply and/or Sewerage Services, 
penalties for impose administrative violations thereof, and make 
decisions and determinations in connection therewith; 
f. 
To disseminate and publish comparative information on prices and 
service performance of Licensees of Piped-Water and/or Sewerage 
Services; 
g. 
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 requirements and procedures, among others; 
h. 
To provide a system for complaints and appeals relating, but not 
limited, to: (1) Tariffs set or collected for Piped-Water Supply and/or 
Sewerage Services; (2) the quality of services provided by said 
Licensees; and (3) the adequate and/or equitable distribution and 
reliability of Piped-Water Supply and/or Sewerage Services; 
i. 
To impose and collect an annual levy on all Licensees determined 
as a percentage of the revenue accruing in relations to the licensed 
activities to be determined by the Commission, and reasonable 
fees, surcharges, and fines from Licensees of Piped-Water Supply 
and/or Sewerage Services to the extent necessary for achieving the 
purposes, powers and functions of the Commission; . 
j. 
To advise, apprise and coordinate with other relevant agencies of 
the national or local government on any matter relating to Piped-
Water Supply and/or Sewerage Services: 
k. 
To deputize agents, whether from the public or private sector, to 
assist in the performance of any of the powers and functions of the 
Commission; 


I. 
To appoint, hire and maintain adequate staff and personnel, 
advisers, and/or consultants, with suitable qualifications and 
experience, as necessary: 
m. 
To conduct inquiries on matters relating to water supply and 
distribution or sewerage disposal; 
n. 
To provide a system for the settlement of disputes between or 
among Licensees; 
o. 
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. Ali 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,!i~rye, ,t~ree (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 tenn, 
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. 
ThEi"" salary of the Chairman and the Associate 
Commissioners shall be fixed py 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 confonn 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. 
"\" 
,!iJl 
(2) The Commission shall appoint a technical staff, including an 
administrative or support staff, as maybe necessary to assist the Commission in 
fulfilling its objectives and in exercising its powers and functions under this Act. In 
ihis 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 quasijudicial 
powers and, in this connection, shall have the requisite power for: 
a. 
the summoning and enforcing of attendance of any witness and 
examination on oath; 
b. 
the discovery and production of nay 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 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 
(b) in what form the information or a copy of the document is toe 
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 nay 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-Wafer 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 g.Qyernment 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 applicant on 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 
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 
Areas and, consequently, the Commission may issue one, two, or more Licensees 
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 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) 
Restriction 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 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 orga'nizational considerations,' managerial capacity, and 
past record and experience in the provision of Piped-Water Supply and/or 
Sewerage Services, including tQ~foIl9~ing guidelines and procedures. 
(4) All holders of a License shall be subject to an annual performance audit 
by the Commission or its deSignated agent(s). 
(5) The Commission shall specify the requirements and procedure for 
existing 
folders 
Certificate 
of Public Convenience/Certificates 
of Public 
Convenience and Necessity issued by NWRB, and/or Conformance issued by the 
LWUA, to convert their existing certificates into Licenses issued by the 
Commission. Henceforth, no further Certificates of Public Convenience or 
Certificates of Public Convenience and Necessity and Certificate of Conformance 
shall be issued by the NWRB and LWUA, respectively. 
(6) All existing providers of Piped-Water Supply and/or Sewerage Services 
without a legal and valid Certificate of Public Convenience/Certificate of Public 
Convenience and Necessity or Certificate of Conformance shall have twelve (12) 
months from the effectivity of this Act to apply for the appropriate License from the 
Commission. 
SEC. 15. Procedure for Granting Licenses. - (1) The Commission shall 
ensure that the granting of a License under this Act is carried out fairly, 
transparently, and without undue discrimination. 
(2) 
The Commission shall prescribe in appropriate regulations the procedure 
and requirements to be followed in respect of the granting of a License, such 
regulations shall include: 
a. 
The qualifications required of applicants for a License; 
b. 
The application procedure to be followed by all applicants, 


0, 
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.wat~r, 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 fulfill their obligations. 
(3) 
Subject to a 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 is 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 "Natio.nal 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 License'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; 
(d) Maintain financial accounts in accordance with the mann~r 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 caver: (a) at least 
the cost that would be avoided if the customers subject of such Tariffs were not 
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 where this improves the efficiency and lowers 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 order in the adjudication of contested cases or applications. 
" ll-' i 
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 Power to Arbitrate in Interconnection 
Disputes. -Where 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/pf 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 Resource.s ("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. 
others: 
(2) 
The Advisory CO!.lncil. sh,all have the following functions, among 
a. To help disseminate information to the public relating to the 
Commission's objectives, powers, and functions; Commission 
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 
(3) 
The Commission shall promulgate rules and regulations defining the 
nature, composition, and other functiorts 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 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 Utilities Division of the NWRB, and all other government agencies and 
units whose powers and functions have been transferred to the Oommission. 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 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. 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 (P 
500,000.00) Pesos, or both. When the offender is a corporation, association or 
partnership, the penalty shall be imposed on the president, directors, or managing 
partner, 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. 
Appropriatio.~s. ,-,(1) The sum of One Hundred Million 
(P100,000,000.00) Pesos shali be set aside from any available funds of the 
National Treasury, and is hereby appropriated and authorized to be released, for 
the organization of the Commission and its initial operations. Thereafter, funds 
sufficient to fully carry out the objectives, powers, and functions of the Commission 
shall be appropriated every fiscal year in the General Appropriations 
Act. 
SEC. 30. Separability Clause. - In the event that any provision of this Act 
is declared unconstitutional, invalid, or illegal, the constitutionality, validity, or 
legality of the remainder of the provisions of this Act shall not be affected thereby. 
SEC. 31. Repealing Clause. - All laws, decrees, rules and regulations, and 
executive orders contrary to or inconsistent with this Act, including but not limited 
to Section 2 of Presidential Decree (P.O.) No. 424, as amended by Executive 
Order 124-1479, 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,