[220.127.116.11] The present paper has shown that the experimental observations on hysteresis and process dependence of capillary pressure and relative permeabilities can be reproduced within a macroscopic phenomenological theory. [18.104.22.168] The approach is based on the distinction between percolating and nonpercolating fluid phases introduced in [14, 16, 15]. [22.214.171.124] Contrary to what was expected, the introduction of interfacial areas can be avoided at the expense of some rather drastic constitutive assumptions. [126.96.36.199] In spite of these assumptions the present theory is more general than the traditional theory because the [page 8, §0] latter can be obtained as a special case. [188.8.131.52] In this special case capillary pressure and relative permeability functions can be identified, and are found to show similar hysteresis and process dependence as observed in experiment.