Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

EIGHTEENTH CONGRESS
First Regular Session

- 432
House Bill No.

Introduced by: REPRESENTATIVE ERIC L. OLIVAREZ

EXPLANATORY NOTE

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

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

While there are many facets to the problem, poor economic
regulation has been identified as a critical structural weakness in


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

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

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

ew OW,

ERIC OLIVAREZ


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

EIGHTEENTH CONGRESS
First Regular Session

4328

House Bill No,

Introduced by: REPRESENTATIVE ERIC L. OLIVAREZ

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

Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:

CHAPTER 1 - GENERAL PROVISIONS

SEC. 1.Short Title. - This Act shall be known as the “Water
Regulatory Act of 2019”.

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;

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

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

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

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

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

a)“Bulk water suppliers” shall refer to any entity, natural or
juridical, whether public or private, supplying or intending
to supply large quantities of raw or treated water to buyers


who will use it for their 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:

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

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

Level Ill (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.

c) “License” shall mean that the water supply and/or
sanitation services operating license that the Commission is
authorized to grant and issue to service providers.

d) “Licensee” shall mean the service provider to whom a license
is granted or issued by the Commission.

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

e)

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


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

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

“Regulatory Units” shall refer to the regulatory offices
established under Section 5 of this Act to 1) issue licenses
authorizing the operation of water supply and sanitation
services; 2) provide, review, determine, fix, and approve
water and sewerage tariffs, rates, and charges that
Licensees may impose; and 3) exercise such other functions
and powers, as may be provided hereunder.

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

j
k) “SBMA” shall mean the Subic Bay Metropolitan Authority,

created by Section 13 of RA 7227, known as the “Bases
Conversion and Development Act of 1992”.

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

k) “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, and sewerage and/or septage treatment and
disposal services for domestic/residential, industrial or
commercial use.

“Sewerage” shall refer to any system or network of pipelines,
ditches, channels or conduits including pumping stations,
lift stations and force mains, service connections including
other constructions, devices or appliances appurtenant
thereof which includes the collection, transport, pumping,
and treatment of water-borne human or animal waste


removed from residences, buildings, institutions, industrial,
and commercial establishments to point of disposal.

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

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

0) “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.

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

“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.

q

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 and sewerage and septage treatment and
disposal services.

CHAPTER 2 - ORGANIZATION

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


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

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

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

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

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

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

The Commission shall have the following powers and functions:
a)Issue and promulgate rules, regulations, and guidelines as
may be necessary to implement and enforce its powers and

functions under this Act;

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


c) Appoint the central and provincial regulators;

d)Establish rules and regulations to monitor, avoid, and
provide remedies for any market power abuse or anti-
competitive or discriminatory act or behavior by or against
any participant in the water supply and sanitation sector.
Upon finding that a market participant has engaged in, or
fell victim to such act or behavior, the Commission shall act
to stop and/or redress the same. Such remedies may,
without limitation, include the imposition of price controls,
issuance of injunctions, requirement of divestment or
disgorgement of excess profits, invalidation of contracts, and
imposition of fines and penalties pursuant to this Act.

e)Adopt and require that books, records, and accounts be
kept and maintained in accordance with the prescribed
uniform accounting system;

f) Fix and determine proper and adequate rates of
depreciation of properties and equipment used in water
supply and sanitation service/s;

g)Impose and collect annual levies determined as a percentage
of gross revenue accruing in relation to the licensed
activities and reasonable fees and surcharges as may be
necessary for achieving the purposes, powers, and functions
of the Commission;

h)Require the submission reports of finances and operations,
verified under oaths by the owner or president and secretary
of the licensee;

i) Determine and require the monitoring and submission of
such data, statistics and other information from the
Regulatory Units and any or all licensees as may be
necessary for the effective and efficient exercise of its duties,
functions, powers, and responsibilities.

j) Investigate, motu propio or upon complaint in writing, any
matter concerning the operation of the service and require
that service be provided in proper and suitable manner;


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

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

m)Advise, apprise and coordinate with other relevant agencies
of the national or local government on any matter relating to
water supply and/or sanitation services;

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

o)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.

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

q) Original and exclusive jurisdiction over all cases contesting

rates, fees, fines, and penalties imposed by the regulatory
e exercise of their powers, functions, and
ies, as set forth herein, and over all cases
involving disputes between and among participants or
stakeholders in the water supply and/or sanitation services;
and

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


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

a)Issue licenses authorizing the operation of water supply
and/or sanitation services in any specified area or areas
within the Philippines.

b)Impose fines, charges, and other penalties upon any
provider and/or its officers and stockholders who shall fail
or refuse to register and/or obtain a license prior to
operation or commencement of business, as provided
hereunder.

c)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;

d)Appraise and value property and equipment used by
licensees in providing water supply and_ sanitation
service/s.

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

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

g)Investigate accidents directly or indirectly arising from or
connected with the maintenance or operation of the service
and make such order or recommendation as the public
interest may warrant;

h)Upon petition or motu 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;


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

j) Impose and collect annual levies determined as a percentage
of gross revenue accruing in relation to the licensed
activities and reasonable fees and surcharges as may be
necessary for achieving the purposes, powers, and functions
of the regulator;

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

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

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

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

iii. where the licensee is found to be manifestly inefficient
in the operation of or provision of water supply and
sanitation services in its area; or

iv. when the holder thereof has violated or willfully refused
to comply with any order, rule, or regulation of the
Commission or any provision of this Act;

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

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


SEC. 8.Composition. -

a)The Commission shall be a collegial body composed of five
(5) full-time members composed of a Chairperson and four
(4) members who shall all be appointed by the President of
the Philippines. All members of the Commission must be
citizens and residents of the Philippines, at least thirty five
(35) years of age and of good moral character, recognized
integrity, and competence in the field of law, business,
commerce, finance, accounting, or public administration,
water or utility economics, management, physical or
engineering services, hydrology, and other related services,
with at least three (3) years actual and distinguished
experience in their respective fields of expertise; Provided
that out of the four members of the Commission, at least
one (1) shall be a member of the Philippine Bar with at
least ten (10) years of experience in the active practice of
law and at least one (1) shall be a certified public
accountant with at least ten (10) years of experience in
active practice.

b)The term of office of each member of the Commission shall
be seven (7) years; Provided, however, that among the
members first appointed, the Chairperson shall serve for a
period of seven (7) years, two (2) members shall serve for
five (5) years and the other two (2) members shall serve for
three (3) years. Provided further, that any member whose
term has expired as specified herein shall serve as such
until his successor shall have been appointed and
qualified. Provided furthermore, that any appointment to
fill a vacancy in the Commission arising from death,
removal, retirement, or resignation shall be made only for
the unexpired term. Provided furthermost, that in no case
shall any member serve for more than seven (7) years in
the Commission.

c) 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.

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

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

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

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

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



SEC. 9. Commission Secretariat - The Commission shall
establish a Secretariat which shall provide the Commission with
technical and other support including, among others:

a)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 annual performance plans and
targets;

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

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

SEC. 10. Executive Director. - The Commission shall also
appoint an Executive Director who shall head the Commission
Secretariat, keep and maintain the official record and report of
the proceedings of the Commission, and have the authority to
administer oaths in all matters falling within the jurisdiction of
the Commission.

The Executive Director shall be responsible for the effective
implementation of the policies, plans, programs, rules,
regulations, and directives of the Commission; coordinate and
supervise the activities of the different operating units under the
Commission; and perform such functions as may be assigned by
the Chairperson and/or other members of the Commission.

SEC. 11. Compensation and Other Emoluments. - The
compensation of the members of the Commission and its staff
shall be exempt from the coverage of Republic Act. No. 6758,
otherwise known as the “Salary Standardization Act.” Provided


that the salaries of the Commission and its staff shall conform
as closely as possible to the principles of R.A. 6758.

For this purpose, the schedule of compensation of the
Commission and its regulatory units and staff shall be
submitted for approval of the President of the Philippines. The
compensation schedule of the Commission and its regulatory
units and staff shall be implemented within six (6) months from
the effectivity of this Act and maybe upgraded by the President
of the Philippines as the need arises: Provided, that in no case
shall the compensation of the Commission and its staff be
upgraded more than once a year.

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

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

CHAPTER 3 - REGISTRATION AND LICENSING

SEC. 12. Registration and Licensing of All Water Supply
and/or Sanitation Services- All water supply and/or
sanitation service providers, including bulk water suppliers and
those providing services to subdivisions and/or other service
providers, shall register with the Commission and, subject to
such rules, guidelines, procedures ,and other issuances as the
Commission may issue, obtain a license to operate from the
appropriate regulatory units.

The Commission shall also ensure that the granting and
revocation of licenses are carried out fairly, transparently, and
without discrimination. Its issuances shall therefore specify,
among others, the qualifications, requirements and procedure
for the granting and revocation of licenses, as well as the
standards and performance targets that must continuously be
complied with in order to keep such licenses valid.


Unless otherwise provided herein or by the Commission, no
public water supply and/or sanitation service provider shall
commence or conduct the business of providing water supply and
sanitation services without first obtaining a license.

Concession agreements and other contracts for water supply
provision currently existing shall remain valid and in force,
unless otherwise invalidated by the Commission where public
interest so dictates, after due notice and hearing.

SEC 13. Conditions of License. —

The Commission and/or the concerned regulatory unit, may
impose such conditions in the issued license, as it may deem
necessary, such as but not limited to:

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

b)Term fixing the duration of the privilege.

c)Grounds for modification, suspension, or cancellation of the
license.

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 or
Certificates of Public Convenience and Necessity issued by
NWRB, and/or Certificate of 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 or
Certificate of Public Convenience and Necessity or Certificate of
Conformance shall register with the Commission and apply for a
license within six (6) months from the effectivity of this Act.

SEC. 14. Rights and Duties of Licensees. -

a)Any person granted a license under this Act shall have the
obligation to ensure that its licensed activities are
conducted so as to further the public interest and, in
particular, that they:

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

ii, ensure that their water supply and/or sanitation
services are provided in a diligent, conscientious, and
workman-like manner, in accordance with applicable
laws and the standards and practices set by the
Commission and generally accepted in the water
supply and sanitation industry;

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

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

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

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 known as
the "Water Crisis Act of 1995."

d)Any license issued under this Act shall contain provisions
designed to ensure that licensees:

i, Publish the tariff and other charges approved by the
Commission and other terms and conditions imposed
by the Commission for the provision of water supply
and/or sanitation services.

ii, 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

iii, Maintain financial accounts in accordance with the
manner and procedure specified in the license and as
may be required by the Commission.

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

SEC. 15. Setting Tariffs, Rates and Other Charges. -
Regulatory units shall establish tariffs, rates, and other charges
which are fair and reasonable and which provide for the
economic viability of the service and a fair return on their
investments considering the prevailing cost of capital in the
domestic and international markets.

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


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

bjefficiency 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.

CHAPTER 4 - QUASI-JUDICIAL FUNCTIONS OF THE
COMMISSION

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


a)Issue subpoena duces tecum and subpoena ad
testificandum;

b)Appoint hearing officers to hear and receive evidence on
behalf of the Commission;

c) Cite any person or party for contempt for refusal to appear,
testify, or comply with an order of the Commission on any
matter that is the subject of investigation, inquiry, or
proceeding before the Commission.

SEC. 18. Orders and Decisions of the Commission. - The
orders, resolutions, and decisions of the Commission which
must be reached as promptly and expeditiously as reasonably
and fairly possible shall be in writing and shall state clearly and
distinctly the facts and law on which it is based.

The Commission shall publish and make available for public
inspection all decisions and final orders in the adjudication of
contested cases or applications.

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

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

b)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.


c)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. 20. Interface with Other Sector Regulators. —

a)The DENR shall continue to have the primary authority and
responsibility for protecting the environment and the quality
water sources from waste and pollution and _ shall
promulgate rules, regulations, and standards in this regard.

b)The Department of Health (DOH) shall have primary
authority and responsibility for determining and enforcing
drinking water quality and sanitation standards. The
Commission shall coordinate with the DOH in this regard
and shall ensure the consistency of the standards and
targets that it will set for compliance by licensees with the
DOH’s mandated standards.

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. 21. Transfer of Rights and Obligations. - The
Commission shall, by virtue of this Act, be subrogated to all the
rights and assume all the obligations of the Water Utilities
Division of the NWRB, the regulatory offices of MWSS and LWUA,
the regulatory units of all special economic zones, and all other
government agencies and units whose powers and functions have
been transferred to the Commission.

The transfer of powers and functions in the Department and
agencies attached thereto, as herein provided for, shall take effect
within six (6) months after the effectivity of this Act. The foregoing
transfer of powers and functions shall include all applicable


funds, personnel, records, property, and equipment, as may be
necessary. The same shall apply to agencies which have been
attached to the Department by virtue of this Act.

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

The heads of the agencies shall continue to serve until replaced
as provided for under this Act.

All rights and obligations of the said government agencies are
hereby transferred to and assumed by the Commission and shall
be acted upon in accordance with the rules and regulations of the
Commission on Audit and other pertinent laws, rules, and
regulations.

SEC. 22. Separation form Service. - Employees separated
from government service as a result of this Act shall be entitled to
the benefits which they may receive under existing laws, rules
and regulations.

SEC. 23. Funding. - The sum of Three Hundred Million (P
300,000,000.00) pesos shall be set aside from any available
funds of the National Treasury and is hereby appropriated and
authorized to be released for the organization of the Commission
and its initial operations.

Thereafter, funds sufficient to fully carry out the objectives,
powers, and functions of the Commission and its regulatory units
shall be appropriated every fiscal year in the General
Appropriations Act in an amount that shall not be less than the
amount appropriated for it the previous year.

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


Moreover, subject to existing rules and regulations of the
Department of Budget and Management (DBM), all funds and
monies collected by the Commission from fees, charges,
surcharges, and penalties, which the Commission may impose
and collect under this Act shall accrue directly and automatically
to the Commission and shall be utilized solely for its operations.
The guidelines for the collection and disbursement of these
proceeds shall be defined in the implementing rules and
regulations of this Act.

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

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

SEC. 24. Separability Clause. - In the event that any provision
of this Act is declared unconstitutional, invalid, or illegal, the
constitutionality, validity, or legality of the remainder of the
provisions of this Act shall not be affected thereby.

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

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

The provisions of the Local Government Code and its
Implementing Rules and Regulations of Republic Act No. 7160


which allow local government units to fix the rates of water
utilities owned, operated, and maintained by them within their
jurisdiction is hereby repealed or modified accordingly.

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

Provisions under Section 69 of Republic Act No. 9593 or the
Tourism Act of 2009 and its Implementing Rules and Regulations
which mandates the Tourism Infrastructure and Enterprise Zone
Authority “to grant franchises, supervise the operation of public
utilities, and register, monitor and regulate enterprises within
Tourism Enterprise Zones” are hereby repealed or modified
accordingly.

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

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

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

Approved.