A
collection of Philippine laws, statutes and codes
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included or cited in the main
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Chan Robles Virtual Law Library
PRESIDENTIAL DECREE NO. 198
PRESIDENTIAL DECREE NO. 198
- DECLARING A NATIONAL POLICY FAVORING LOCAL OPERATION AND CONTROL OF
WATER SYSTEMS; AUTHORIZING THE FORMATION OF LOCAL WATER DISTRICTS AND
PROVIDING FOR THE GOVERNMENT AND ADMINISTRATION OF SUCH DISTRICTS;
CHARTERING A NATIONAL ADMINISTRATION TO FACILITATE IMPROVEMENT OF LOCAL
WATER UTILITIES; GRANTING SAID ADMINISTRATION SUCH POWERS AS ARE
NECESSARY TO OPTIMIZE PUBLIC SERVICE FROM WATER UTILITY OPERATIONS, AND
FOR OTHER PURPOSES
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chanroblesvirtualawlibrary
WHEREAS,
one of the pre-requisites to the orderly and well-balanced growth of
urban areas is an effective system of local utilities, the absence of
which is recognized as a deterrent to economic growth, a hazard to
public health and an irritant to the spirit and well-being of the
citizenry;chanroblesvirtualawlibrary
WHEREAS, domestic water systems and sanitary sewers are two of the most
basic and essential elements of local utility system, which, with a few
exceptions, do not exist in provincial areas in the Philippines;chanroblesvirtualawlibrary
WHEREAS, existing domestic water utilities are not meeting the needs of
the communities they serve; water quality is unsatisfactory; pressure
is inadequate; and reliability of service is poor; in fact, many
persons receive no piped water service whatsoever;chanroblesvirtualawlibrary
WHEREAS, conditions of service continue to worsen for two apparent
reasons, namely: (1) that key element of existing systems are
deteriorating faster than they are being maintained or replaced, and
(2) that they are not being expanded at a rate sufficient to match
population growth; and chanroblesvirtualawlibrary
WHEREAS, local water utilities should be locally-controlled and
managed, as well as have support on the national level in the area of
technical advisory services and financing;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in my by the Constitution, as
Commander-in-Chief of all the Armed Forces of the Philippines, and
pursuant to Proclamation No. 1081 dated September 21, 1972 and General
Order No. 1 dated September 22, 1972, as amended, do hereby decree,
order and make as part of the law of the land the following measure:cralaw:red
TITLE I — PRELIMINARY PROVISIONS
Section 1. Title. — This Decree shall be known and
referred to as the "Provincial Water Utilities Act of
1973." chanroblesvirtualawlibrary
Section 2. Declaration of Policy. — The creation,
operation, maintenance and expansion of reliable and economically
viable and sound water supply and wastewater disposal system for
population centers of the Philippines is hereby declared to be an
objective of national policy of high priority. For purpose of achieving
said objective, the formulation and operation of independent, locally
controlled public water districts is found and declared to be the most
feasible and favored institutional structure. To this end, it is hereby
declared to be in the national interest that said districts be formed
and that local water supply and wastewater disposal systems be operated
by and through such districts to the greatest extent practicable. To
encourage the formulation of such local water districts and the
transfer thereto to existing water supply and wastewater disposal
facilities, this Decree provides the general act the authority for the
formation thereof, on a local option basis. It is likewise declared
appropriate, necessary and advisable that all funding requirements for
such local water systems, other than those provided by local revenues,
should be channeled through and administered by an institution on the
national level, which institution shall be responsible for and have
authority to promulgate and enforce certain rules and regulations to
achieve national goals and the objective of providing public waterworks
services to the greatest number at least cost, to effect system
integration or joint investments and operations whenever economically
warranted and to assure the maintenance of uniform standards, training
of personnel and the adoption of sound operating and accounting
procedures.
Section 3. Definitions. — As used in this Decree, the
following words and terms shall have the meanings herein set forth,
unless a different meaning clearly appears from the context. The
definition of a word or term applies to any of its variants.
(a) Act. — This Provincial Water Utilities Act of
1973.
(b) Appointing authority. — The person empowered to
appoint the members of the board of Directors of a local water
district, depending upon the geographic coverage and population make-up
of the particular district. In the event that more than seventy-five
percent of the total active water service connections of a local water
district are within the boundary of any city or municipality, the
appointing authority shall be the mayor of that city or municipality,
as the case may be; otherwise, the appointing authority shall be the
governor of the province within which the district is located. If
portions of more than one province are included within the boundary of
the district, and the appointing authority is to be the governors then
the power to appoint shall rotate between the governors involved with
the initial appointments made by the governor in whose province the
greatest number of service connections exists.
(c) Administration. — The Local Waters Utilities
Administration chartered in Title III of this Decree. chanroblesvirtualawlibrary
(d) NEDA. — The National Economic and Development
Authority.
(e) Board or Board of Directors. — The Board of
directors of a district.
(f) Contracts. — All agreements, including leases,
conveyances and obligations.
(g) District. — A local water district formed
pursuant to Title II of this Act.
(h) Local Water Utility. — Any district, city,
municipality, province, investor-owned public utility or cooperative
corporation which owns or operates a water system serving an urban
center in the Philippines, except that said term shall not included the
Metropolitan Waterworks and Sewerage System (MWSS) or any system
operated by the Bureau of Public Work as successor to the Wells and
Springs Department of the National Waterworks and Sewerage Authority.
(i) Person. — A natural person, corporation,
cooperative, partnership, association, city, municipality or other
juridical entity. chanroblesvirtualawlibrary
(j) Property. — All real and personal property,
including but not limited to: water, water rights, works, easements,
rights of way.
(k) Street. — Includes road, valley, avenue, highway
or other public way.
(l) Trustee or Board of Trustees. — The Board of
trustees of the Administration.
TITLE II — LOCAL WATER DISTRICT LAW
CHAPTER I
Title
Section 4. Title. — The provisions of this Title
shall be known and referred to as the "Local Water District Law." chanroblesvirtualawlibrary
CHAPTER II
Purpose and Formation
Section 5. Purpose. — Local water districts may be
formed pursuant to this Title for the purposes of (a) acquiring,
installing, improving, maintaining and operating water supply and
distribution systems for domestic, industrial, municipal and
agricultural uses for residents and lands within the boundaries of such
districts, (b) providing, maintaining and operating water collection,
treatment and disposal facilities, and (c) conducting such other
functions and operations incidental to water resource development,
utilization and disposal within such districts, as are necessary or
incidental to said purpose. chanroblesvirtualawlibrary
Section 6. Formation of District. — This Act is the
source of authorization and power to form and maintain a district. Once
formed, a district is subject to the provisions of this Act and not
under the jurisdiction of any political subdivision. To form a
district, the legislative body of any city, municipality or province
shall enact a resolution containing the following:cralaw:red
(a) The name of the local water district, which shall
include the name of the city, municipality, or province, or region
thereof, served by said system, followed by the words "Water District".
(b) A description of the boundary of the district. In
the case of a city or municipality, such boundary may include all lands
within the city or municipality. A district may include one or more
municipalities, cities or provinces, or portions thereof.
(c) A statement of intent to transfer any and all
waterworks and/or sewerage facilities owned by such city, municipality
or province to such district pursuant to a contract authorized by
Section 31 (b) of this Title.
(d) A statement identifying the purpose for which the
district is formed, which shall include those purposes outlined in
Section 5 above.
(e) The names of the initial directors of the
district with the date of expiration of term of office for each.
(f) A statement that the district may only be
dissolved on the grounds and under the conditions set forth in Section
44 of this Title.
(g) A statement acknowledging the powers, rights and
obligations as set forth in Section 36 of this Title.
Nothing in the resolution of formation shall state or infer that the
local legislative body has the power to dissolve, alter or affect the
district beyond that specifically provided for in this Act. chanroblesvirtualawlibrary
If two or more cities, municipalities or provinces, or any combination
thereof, desire to form a single district, a similar resolution shall
be adopted in each city, municipality and province.
Section 7. Filing of Resolution. — A certified copy
of the resolution or resolution forming a district shall be forwarded
to the Office of the Secretary of the Administration. If found by the
Administration to conform to the requirements of Section 6 and the
policy objectives in Section 2, the resolution shall be duly filed. The
district shall be deemed duly formed and existing upon the date of such
filing. A certified copy of said resolution showing the filing stamp of
the Administration, shall be maintained in the Office of the district.
CHAPTER III
Directors
Section 8. Number and Qualifications. — The Board of
Directors of a district shall be composed of five citizens of the
Philippines who are of voting age and residents within the district.
One member shall be a representative of civic-oriented service clubs,
one member a representative of business, commercial, or financial
organizations, one member a representative of educational or religious
institutions and one member a representative of women's organizations.
No director may be an elected official of the government. chanroblesvirtualawlibrary
Section 9. Appointment. — Board members shall be
appointed by the appointing authority. Said appointments shall be made
from a list of nominees, if any, submitted pursuant to Section 10. If
no nominations are submitted, the appointing authority shall appoint
any qualified person of the category to the vacant position.
Section 10. Nominations. — On or before October 1 of
each even-numbered year, the secretary of the district shall conduct
each known organization, association, or institution being represented
by the director whose term will expire on December 31 and solicit
nominations from these organizations to fill the position for the
ensuring term. One nomination may be submitted in writing by each such
organization to the secretary of the district on or before November 1
of such year: This list of nominees shall be transmitted by the
Secretary of the district to the office of the appointing authority on
or before November 15 of such year and he shall make his appointment
from the list submitted on or before December 15. In the event the
appointing authority fails to make his appointments on or before
December 15, selection shall be made from said list of nominees by
majority vote of the seated directors of the district constituting a
quorum. Initial nominations for all five seats of the board shall be
solicited by the legislative body or bodies at the time of adoption of
the resolution forming the district. Thirty days thereafter, a list of
nominees shall be submitted to the provincial governor in the event the
resolution forming the district is by a provincial board, or the mayor
of the city or municipality in the event the resolution forming the
adoption of the district is by the city or municipal board of
councilors, who shall select the initial directors therefrom within 15
days after receipt of such nominations. chanroblesvirtualawlibrary
Section 11. Term of Office. — Of the five initial
directors of each newly-formed district, two shall be appointed for a
maximum term of two years, two for a maximum term of four years, and
one for a maximum term of six years. Terms of office of all directors
in a given district shall be such that the term of at least one
director, but not more than two directors, shall expire on December 31
of each even-numbered year. Regular terms of office after the initial
terms shall be for six years commencing on January 1 of odd-numbered
years. Directors may be removed for cause only.
Section 12. Vacancies. — In the event of a vacancy in
the board of directors occurring more than six months before expiration
of any director's term, the remaining directors shall, within 30 days,
serve notice or request the secretary of the district for nominations
and within 30 days thereafter a list of nominees shall be submitted to
the appointing authority for his appointment of a replacement director
from the list of nominees. In the absence of any such nominations, the
appointing authority shall make such appointment. Vacancies occurring
within the last six months of an unexpired term may be filled by a vote
of a majority of the remaining members of the board of directors
constituting a quorum. The director thus appointed shall serve the
unexpired term only.
Section 13. Compensation. — Each director shall
receive compensation in an amount, for each meeting of the board
actually attended by him, equivalent to one percent (1%) o the mayor's
monthly salary for a first class city. No director shall receive other
compensation for services to the district. chanroblesvirtualawlibrary
Section 14. Personal Liability. — No director may be
held to be personally liable for any action of the district.
CHAPTER IV
The Board
Section 15. Organizational Meeting. — The board shall
held its first meeting as soon as practicable after appointment of the
first directors, and not later than 45 days after formation of the
district. At said first meeting of each odd-numbered year, the board
shall elect a chairman, a vice-chairman, a secretary and a treasurer.
Such secretary and treasurer may, but need not be members of the board,
and the offices of secretary and treasurer may be held by the same
person. chanroblesvirtualawlibrary
Section 16. Quorum. — A majority of the board present
in person shall constitute a quorum for the transaction of business;
Provided, however, That no resolution or motion shall be adopted or
become effective without the affirmative vote of a majority of the
authorized number of members of the board.
CHAPTER V
Powers and Duties of Board
Section 17. Performance of District Powers. — All
powers, privileges, and duties of the district shall be exercised and
performed by and through the board: Provided, however, That any
executive, administrative or ministerial power shall be delegated and
redelegated by the board to officers or agents designated for such
purpose by the board.
Section 18. Functions Limited to Policy-Making. — The
function of the board shall be to establish policy. The Board shall not
engage in the derailed management of the district.
Section 19. By-Laws. — At first meeting, the board
shall adopt, and may thereafter from time to time amend by-laws for the
operation of business and affairs of the board and the district.
By-laws may not be amended without 30 days public notice to that
effect, and a public hearing held.
Section 20. System of Business Administration. — The
Board shall, as soon as practicable, prescribe and define by the
resolution a system of business administration and accounting for the
district, which shall be patterned upon and conform to the standard
established by the Administration. Auditing shall be performed by a
certified public accountant not in the government
office. chanroblesvirtualawlibrary
Section 21. Depository. — The district's depository
shall be the Philippine National Bank, unless use of such bank is
impractical: Provided, however, That any and all reserves accumulated
for capital improvements may be deposited with the Administration.
Section 22. Contracts. — All contracts of the
district shall be entered into by or pursuant to authority of the
board: Provided, however, That the board may by resolution delegate and
redelegate to officers or agents of the district, under such conditions
and restrictions as shall be affixed by the board, the power to bind
the district by contract. chanroblesvirtualawlibrary
CHAPTER VI
Officers and Employees
Section 23. Additional Officers. — At the first
meeting of the board, or as soon thereafter as practicable, the board
shall appoint, by a majority vote, a general manager, an auditor, and
an attorney, and shall define their duties and fix their compensation.
Said officers shall service at the pleasure of the board.
Section 24. Duties. — The duties of the officer shall
be those customary to the office held and as determined and specified
from time to time by the board. The general manager, who shall not be a
director, shall, subject to approval of the board, have full
supervision and control of the maintenance, operation and construction
of water supply and wastewater disposal and administrative facilities
of the district, with full power and authority to exercise management
prerogatives as set forth in the district's personnel rules and
regulations.
Section 25. Exemption from Civil Service. — The
district and its employees, being engaged in a proprietary function,
are hereby exempt from the provisions of the Civil Service Law.
Collective bargaining shall be available only to personnel below
supervisory levels: Provided, however, That the total of all salaries,
wages, emoluments, benefits or other compensation paid to all employees
in any month shall not exceed fifty percent (50%) of average net
monthly revenue, said net revenue representing income from water sales
and sewerage service charges, less pro-rata share of debt service and
expenses for fuel or energy for pumping during the preceding fiscal
year.
CHAPTER VII
Powers of District
Section 26. Authorization. — The district may
exercise all the powers which are expressly granted by this Title or
which are necessary implied from, or incidental to the powers and
purposes herein stated.
Section 27. Acquisition of Waterworks. — A district
may purchase, construct, or otherwise acquire works, water, water
rights, land, rights and privileges useful or necessary to convey,
supply, store, collect, treat, dispose of or make other use of water
for any purpose authorized by this Title. In the acquisition of water
or water or water rights the district shall cooperate with existing
agencies of the government of the Philippines.
Section 28. Sale of Water. — The district shall have
the power to sell water, pursuant to generally applicable rules and
regulations, to any person for use within the district. As a condition
of such sale, the district may require the filing of a written
application for service, payment of established charges or deposits and
execution of water service contract. chanroblesvirtualawlibrary
A district may provide service to public faucets or hydrants provided
that it shall first have executed an application and service contract
with the Government entity to established or maintain such faucets or
hydrants within the district. The district will be paid for such
service in the same manner as regular domestic service and pursuant to
the adopted rules and regulations of the district.
Any district holding a valid Certificate of Conformance or a
Conditional Certificate of Conformance from the Administration shall be
exempt from regulation by the Public Service Commission or its
successors.
Section 29. Sewerage. — A district may require,
construct, operate and furnish facilities and services, within or
without the district, for the collection, treatment and disposal of
sewerage, waste, and storm water. The district may only furnish such
services outside the district by means of facilities designed primarily
to serve inside the district. Upon providing a sewer system in any area
of the district, the district may require all buildings used by human
beings to be connected to the sewer system within such reasonable time
as may be prescribed by the district, provided that the property upon
which such building to be connected stands is located within 35 meters
of an existing main of the district's sewer system, the district may
declare the further maintenance or use of cesspools, septic tanks, or
other local means of sewerage disposal in such area to be a public
nuisance and, after notice in writing of at least 10 days, deprive said
property owner of any and all services provided by the district, which
sanction may be co-extensive with the period during which the property
owner persists in refusing to connect with the district's sewer
system. chanroblesvirtualawlibrary
Section 30. Rights of Way. — The right is hereby
granted to locate, construct and maintain works of the district on any
land which is now, or hereafter may be, owned by the Government of the
Philippines or by any of its political subdivisions, and/or
instrumentalities. A district may construct any works along, under or
across any street, watercourse, railway, or conduit in a manner which
will afford security for life and property: Provided, That in planning
any such works, the environmental aspects shall also be
considered. chanroblesvirtualawlibrary
Section 31. Contracts. — A district shall have the
power to enter into contracts with any person for the purpose of
performing any functions of the district: Provided, That the Board of
Directors may not by contract delegate any of the discretionary powers
vested in the board by this Title. Specifically, but without limiting
said general power, a district may enter into the following contracts:cralaw:red
(a) Cooperation. — Agreement with the Government of
the Philippines or any of its agencies or political subdivisions for
the cooperative or joint performance of any function of the district.
(b) In-Lieu Share. — As an incident to the
acquisition of the existing water system of a city, municipality, or
province, a district may enter into a contract to pay in lieu of taxes
on such utility plant, an annual amount not exceeding three percent
(3%) of the district's gross receipts from water sales in any year.
(c) MWSS Agreement. — In the event the city,
municipality or province has not reached agreement with the
Metropolitan Waterworks and Sewerage System pursuant to Sections 15 and
17 of R.A. 6234, a district may, with the consent of the local
government, act for and in behalf of the local interests in negotiating
and executing such contract for final settlement of the consequences of
MWSS involvement in the operation of the water system.
Section 32. Protection of Waters of District. — A
district may commence, maintain, intervene in, defend and compromise
actions, and proceedings to prevent interference with or deterioration
of water quality or the natural flow of any surface, stream or ground
water supply which may be used or useful for any purpose of the
district or be a common benefit to the lands or its inhabitants. The
ground water within a district is necessary to the performance of the
district's powers and such district is hereby authorized to adopt rules
and regulations governing the drilling, maintenance and operation of
wells within its boundaries for purposes other than single family
domestic use on overlying land. Any well operated in violation of such
regulations shall be deemed an interference with the waters of the
district. chanroblesvirtualawlibrary
Section 33. Fire Protection Capacity. — The district
may install and maintain pipeline capacity and additional hydrants for
fire protection purposes: Provided, That prior agreement has been
executed with the public entity having principal fire protection
responsibility within the district whereby the district will be
reimbursed over the reasonable life of said facilities for the cost of
installation and operation of such fire protection capacity and
facilities.
CHAPTER VIII
Financial Provisions
Section 34. Receipt, Deposit and Payment of District
Funds. — The treasurer shall receive, to the credit of the district and
in trust for its use and benefit, all monies belonging to the district.
Any monies belonging to the district shall, where practicable, be
deposited by the treasurer in the Philippines National Bank, except for
the payment of bonds and interest thereon, district money shall be paid
out only upon a warrant therefor drawn and executed by authorized
officers of the district. chanroblesvirtualawlibrary
Section 35. Negotiable Promissory Notes. — A district
may issue negotiable promissory notes with a maturity of not later than
two years from the date thereof. The total aggregate amount of such
notes outstanding at any one time shall not exceed 20% of the annual
gross revenues of the district payable from all revenue sources
thereof.
Section 36. Revenue Bonds. — A district may borrow
money to raise funds to pay all costs of any public improvements
authorized by this Title and may issue revenue bonds to evidence the
indebtedness created by such borrowing. Such revenue bonds shall
constitute special obligations and evidence of special indebtedness of
the district and shall be a charge upon, and payable, as to the
principal thereof, any part thereof, solely from such revenues and
funds as are specified therein in the proceedings for their issuance.
Said bonds may be issued pursuant to the following
procedures: chanroblesvirtualawlibrary
(a) Estimate of Expenses. — If a revenue bond issue
is contemplated, the board of the district shall adopt by resolution a
plan describing the works to be acquired or constructed together with
an estimate of all costs thereof, including payment of interest on any
bonds of the district, which will become payable before the expiration
of one year from completion or acquisition of such works, for which the
general funds of the district then in the treasury are
inadequate. chanroblesvirtualawlibrary
(b) Issuance in the District Name: Limitation of
Obligations. — Revenue bonds shall be issued in the name of the
district and shall be obligations of the district; limited, however, to
the payment or redemption of the revenue bonds and the payment of
interest thereon from the revenue of the district. chanroblesvirtualawlibrary
(c) Call, Price and Redemption. — The Board, by
resolution authorizing the issuance of revenue bonds, shall fix the
method of giving notice of redemption. Such bonds shall be issued
subject to call and redemption prior to maturity and a statement to
that effect shall appear on the face of the face of the revenue bonds.
No such bond shall be subject to call or redemption prior to its fixed
maturity date unless it contains such recital.
(d) Form of Bonds. — The face of revenue bonds shall
contain a statement that: (1) the payment or redemption of the bond and
payment of interest therein is secured solely by a first and direct
charge and lien upon all of the revenues received from the sale of
water, (2) neither the payment of all or any part of the principal or
interest thereon is a general debt, liability or obligation of the
district, and (3) the bond is subject to call and redemption prior to
maturity, if the board so provides. Each issue of revenue bonds shall
be numbered consecutively from lower to higher as they mature and shall
bear such date as may be prescribed by the board. The date appearing
upon the face of a revenue bond shall be deemed the date of issuance
irrespective of subsequent delivery of the bond. Each bond shall be
signed by the chairman and attested by the secretary: Provided, That
interest coupons appertaining thereto may be signed by the secretary
only. The seal of the district shall be affixed to each revenue bond.
(e) Payment of Maturity. — Revenue bonds shall be
paid in cash and in full at such time and place as may be designated by
the board and shown on the face of each bond, but in no case shall the
maturity of any bond be more than 40 years from its date.
(f) Default. — In the event of default by the
district in the payment of principal or interest on its outstanding
revenue bonds, any bondholder shall have the power to bring an action
in any court of competent jurisdiction to compel the payment of said
amount, and in connection therewith, to require the appointment of a
receiver of the property and operations of the district and to assume
full jurisdiction over its affairs including the power to increase
rates, if necessary, until such time as the default is
cured. chanroblesvirtualawlibrary
CHAPTER IX
Revenues
Section 37. Rates and Charges — Water. — A district
may sell water under its control, without preference, under uniform
schedules of rates and charges to any all water users within the
district. Said schedule may provide for differential rates for
different categories of use and different quantity blocks. The
district, so far as practicable, shall fix such rates and charges for
water as will result in revenues which will:cralaw:red
(a) Provide for reimbursement from all new water
customers for the cost of installing new services and meters;chanroblesvirtualawlibrary
(b) Provide for revenue from all water deliveries and
services performed by the district; chanroblesvirtualawlibrary
(c) Pay the operating expenses of the district;chanroblesvirtualawlibrary
(d) Provide for the maintenance and repairs of the
works;chanroblesvirtualawlibrary
(e) Provide a reasonable surplus for replacement
extension and improvements; and
(f) Pay the interest and provide a sinking or other
fund for the payment of debts of the district as they become due.
Section 38. Service and Stand-By Charges — Sewer. — A
district may prescribe and collect rates and other charges for sewer
services furnished. A district may also fix, levy and collect a
sewerage and wastewater service stand-by or availability charge in the
event sewer service is available and no connection is made. Such rates
and charges may be collected with the water charges of the district. In
the event of failure to pay the whole or any part thereof, district may
discontinue any and all services for which such bill is rendered,
including water, shall not be construed to prohibit the district from
collecting rates and other charges in any other lawful manner.
Section 39. Production Assessment. — In the event the
board of a district finds, after notice and hearing, that production of
ground water by other entities within the district for commercial or
industrial uses in injuring or reducing the district's financial
condition, the board may adopt and levy a ground water production
assessment to compensate for such loss. In connection therewith, the
district may require necessary reports by the operator of any
commercial or industrial well. Failure to pay said assessment shall
constitute an invasion of the waters of the district and shall entitle
this district to an injunction and damages pursuant to Section 32 of
this Title.
Section 40. Assessment and Stand-By Charges. — In
order to obtain capital to finance installation of sanitary sewerage, a
district shall have the power to establish by resolution of the board
of directors the area to be benefited from such facilities. After a
hearing and upon notice to all parties affected, the district may levy
and collect assessment, or stand-by charges based upon available
capacities or upon selected characteristics of property benefited by
said improvements, as determined by the board. Said characteristics may
include, but not limited to, the effective length of property fronting
upon the proposed improvement or in terms of the area contained within
the boundary of said property. Said assessment, if unpaid, shall be and
constitute a lien on the land assessed.
CHAPTER X
Changes in Organization
Section 41. Exclusion of a Territory. — Any territory
within the boundary of a district may be excluded by resolution of the
board of directors after notice to land owners within the territory
proposed to be excluded, and upon a finding that said lands do not and
will not benefit by reason of their inclusion within the district. A
certified copy of said resolution of exclusion shall be filed in the
same manner and become effective in accordance with the provisions
applicable to the resolution forming the district. chanroblesvirtualawlibrary
Section 42. Annexations and Deannexations. — The
Administration may, after notice to property owners within the
territory proposed for annexation or deannexation and following a
hearing, make finding of benefit or potential benefit, and thereafter,
require annexation or deannexation shall be accomplished by adoption
and filing of an appropriate resolution in the same manner as the
filing of the resolution forming a district or of exclusion, as the
case may be.
Section 43. Consolidation and Joint Operation. — The
Administration may require the merger or consolidation of the
facilities or operations of two or more districts formed pursuant to
the levy, in the event that the Administration shall have determined,
following a hearing, that such merger or consolidation is in the best
interest of the residents in the districts involved. chanroblesvirtualawlibrary
Section 44. Dissolution. — A district may be
dissolved by resolution of its board of directors filed in the manner
of filing the resolution forming the district: Provided, however, to
the adoption of any such resolution: (1) another public entity has
acquired the assets of the district and has assumed all obligations and
liabilities attached thereto; (2) all bondholders have been notified
and they consent to said transfer and dissolution; and (3) a court of
competent jurisdiction has found that said transfer and dissolution are
in the best interest of the public.
CHAPTER XI
Protection to Districts
Section 45. Exemption from Taxes. — A district shall
(1) be exempt from paying income taxes, and (2) shall be exempt from
the payment of (a) all National Government, local government and
municipal taxes and fees, including any franchise, filing, recordation,
license or permit fees or taxes and fees, charges or costs involved in
any court of administrative proceeding in which it may be a party and
(b) all duties or imposts on imported machinery, equipment and
materials required for its operations.
Section 46. Exclusive Franchise. — No franchise shall
be granted to any other person or agency for domestic water service
within the district or any portion thereof unless and except to the
extent that the board of directors of said district consents thereto by
resolution duly adopted.
TITLE III — LOCAL WATER UTILITIES ADMINISTRATION LAW
CHAPTER I
Title
Section 47. Title. — The Title of the Provincial
Water Utilities Act of 1973 shall be known and referred to as the
"Local Water Utilities Administration Law".
CHAPTER II
Charter and Purpose
Section 48. Charter. — There is hereby chartered,
created and formed a national agency to be known as the "Local Water
Utilities Administration" which is hereby attached to the National
Economic and Development Authority (NEDA). The provisions of this Title
shall be and constitute the charter of the Administration.
Section 49. Purposes. — The purposes for which the
Administration is created are: (1) to establish minimum standards and
regulations in order to assure acceptable standards of construction
materials and supplies, maintenance, operation, personnel, training,
accounting and fiscal practices for local water utilities; (2) to
furnish technical assistance and personnel training programs for local
water utilities; (3) to monitor and evaluate local water standards; (4)
to effect system integration, joint investment and operations district
annexation and deannexation whenever economically warranted; and (5) to
provide a specialized lending institution with peculiar expertise in
the financing of local water utilities. chanroblesvirtualawlibrary
CHAPTER III
Board of Trustees
Section 50. Number of Qualifications. — The Board of
Trustees of the Administration shall be composed of five members all of
whom shall be citizens of the Philippines. Two trustees at any time
shall each have at least ten (10) years experience in banking or
finance and employed by the National Government. Two trustees at any
time shall be a manager, an engineer, an accountant or an attorney
employed by a local water utility, each with at least four years
experience related to water supply or wastewater operations. One
trustee at any time shall be a civil or sanitary engineer employed by
the National Government. Not more than one trustee may represent a
private, investor-owned utility. No elected official shall be entitled
to act as a trustee.
Section 51. Appointed and Term of Office. — The
trustee shall be appointed by the President of the Philippines. They
shall serve a term of five years each: Provided, That of the first five
appointed, one shall serve a term of five years, another for four
years, the third for three years, the fourth for two years, and the
last for one year. Trustees may be removed for cause only.
Section 52. Vacancies. — Vacancies in the board of
trustees for any reason whatsoever shall be filled by the President of
the Philippines in like manner as in the case of new appointments, but
the trustees so appointed shall serve only the unexpired portion of the
term of the trustee substituted for.
Section 53. Powers. — All of the business and affairs
of the Administration shall be carried on and its powers shall be
exercised by and through the board of trustees. The function of the
trustees, however, shall be to establish policy, not to engage in the
detailed management of the Administration.
Section 54. Compensation. — The members of the board
of trustees shall each receive a per diem equivalent to four percent
(4%) of the mayor's monthly salary for a first class city for every day
of actual attendance at board meetings which meetings shall not exceed
twelve in one year.
CHAPTER IV
By-Laws
Section 55. Adoption. — The Board of Trustees shall
adopt a code of by-laws for the conduct of the affairs of the
Administration, subject to approval by the NEDA.
Section 56. Amendment. — The by-laws may be amended
from time to time by affirmative vote of four trustees, subject to
approval by the NEDA. chanroblesvirtualawlibrary
CHAPTER V
Officers and Employees
Section 57. Officers. — The Board shall elect a
chairman and a vice-chairman, each of whom shall be a trustee. In
addition there shall be selected by the Board, a secretary, treasurer,
an auditor and a general counsel.
Section 58. Employees. — The trustees shall select a
general manager, who shall not be a trustee. The general manager shall
employ all additional personnel, pursuant to guidelines established by
and subject to review of trustees. There shall be established at least
three basic divisions, to wit: (1) loan fund, (2) technical, and (3)
regulatory, each of which shall be under the supervision of a director
responsible to the general manager. chanroblesvirtualawlibrary
The regular professional and technical personnel of the Administration
shall be exempt from WAPCO and Civil Service rules and regulations:
Provided, That the personnel shall be entitled to the benefits and
privileges normally accorded to government employees, such as
retirement, GSIS insurance, leave and similar matters.
CHAPTER VI
Powers
Section 59. General Corporate Powers. — The
Administration shall have all the powers which are expressly granted to
it under this Title, or which are necessary, implied from or incidental
to the powers and purposes herein stated.
Section 60. Borrowing and Security Therefor. —
Administration may borrow funds as authorized in Section 71 of this
Title, and issue as security therefor debentures constituting a lien on
any and all securities, covenants and obligations of local water
utilities held by Administration as security for loans made to such
local water utilities.
Section 61. Loans. — Administration may make loans
from its Revolving Loan Fund to qualified local water utilities, upon
the following conditions and pursuant to the following procedures:cralaw:red
(a) Qualification of Borrower. — Before any loan may
be granted, the local water utility shall (1) hold a valid certificate
of Conformance or a Condition Certificate of Compliance from the
Administration, and (2) meet such other and further loan qualification
requirements as the trustees may establish;chanroblesvirtualawlibrary
(b) Feasibility Study. — A feasibility study of any
proposed project for which loan funds are sought shall be made by a
consultant prequalified by the Administration; chanroblesvirtualawlibrary
(c) Security. — The Administration may take as
security for such loans the authorized revenue bonds or other evidence
of debt by the local water utility;chanroblesvirtualawlibrary
(d) Loan Document and Procedures. — The trustees
shall adopt uniform rules, loan documents and procedures to be used in
the granting of loans. Such rules shall include provisions for
security, payment and default, and shall authorize the Administration
to act as receiver in the event of Court proceedings for enforcement.
(e) Funding of Loan. — When a loan is made to a local
water utility, the entire amount of such loan shall be funded and set
aside to assure completion of the subject for which such loan was
granted.
Section 62. Regulations. — Administration shall have
the power and duty to establish standards for local water utilities,
and adopt rules and regulations for the enforcement thereof. The
Administration shall vigorously consult and coordinate its actions with
all governmental agencies active in the areas of public works and all
other concerned agencies in the promulgation of these standards. Said
standards and regulations shall include the following: chanroblesvirtualawlibrary
(a) Water Quality. — Minimum drinking water standards
including a uniform testing and reporting system. Said Standards shall
include bacteriological, chemical and physical parameters;chanroblesvirtualawlibrary
(b) Design and Construction. — Minimum criteria for
the design and construction of new or additional facilities for water
supply, treatment, transmission and distribution, and for wastewater
collection, treatment and disposal;chanroblesvirtualawlibrary
(c) Equipment, Materials and Supplies. — Standards
for the optimum selection and effective utilization of equipment,
materials and supplies by local water and sewer utilities;chanroblesvirtualawlibrary
(d) Operations and Maintenance. — Standardized
procedures for operating and maintaining equipment and
facilities; chanroblesvirtualawlibrary
(e) Personnel. — The training of personnel who
operate or manage local water utilities;chanroblesvirtualawlibrary
(f) Organization. — Organizational and institutional
criteria to assure independent operation and funding of local water
utilities;chanroblesvirtualawlibrary
(g) Accounting. — A uniform accounting system with
uniform chart of accounts. Said standards and regulations also shall
include stipulated levels of internal reporting to local water utility
management.
Section 63. Rate Review. — Any publicly-owned local
utility holding a Certificate of Conformance or a Conditional
Certificate of Conformance from the Administration is hereby declared
exempt from the jurisdiction of the Public Service Commission or its
successor. Any rates or charges established by such a local water
utility shall be adequate to provide for:cralaw:red
(a) Reimbursement from all new water customers for
the cost of installing new services and meters;chanroblesvirtualawlibrary
(b) Revenue from all water deliveries and services
performed by the district;chanroblesvirtualawlibrary
(c) Annual operating expense of the district;chanroblesvirtualawlibrary
(d) The maintenance and repairs of the works;chanroblesvirtualawlibrary
(e) A reasonable surplus for replacement, extension
and improvements; and
(f) Payment of the interest and provide a sinking or
other fund for the payment of debts of the district as they become due.
The rates or charges established by such a local water utility shall be
subject to review by the Administration to establish compliance with
the above-stated provisions. Said review of rates or any charges
therein shall be by the Trustees, and in writing. Any party aggrieved
by such review may within 30 days appeal in writing to the Public
Service Commission or its successor which shall decide such appeal
within 60 days thereafter. Failure of the Public Service Commission or
its successor to promulgate its decision on such appeal within such
period shall be deemed an affirmation of Administration's
review. chanroblesvirtualawlibrary
Section 64. Technical Assistance. — Administration
shall provide technical assistance to local water utilities; their
boards, management and operating personnel, tod in meeting the
standards and criteria established by the Administration, and to
encourage the upgrading of the operations and management of such local
water utilities. Said technical assistance should consist of those
matters which are practical to finance or develop on a national basis
but are beyond the capability of the individual local water utility, as
such.
Section 65. Training Programs. — Administration shall
establish training programs and seminars for personnel of local water
utilities. Programs shall include the areas of utility management,
operations, maintenance and customer service. Administration shall have
the power to issue Certificate of Completion for the satisfactory
completion of a specified course of instruction. In the case of
operational personnel, Administration may conduct appropriate
examinations and issue corresponding Certificates of Competence to
assist local water utilities to meet the personnel standards set
pursuant to Section 63 (d) of this Title. chanroblesvirtualawlibrary
Section 66. Certificate of Conformance. —
Administration may require report from all water utilities, conduct
field investigations and review all available information to determine
whether there has been conformance to its standards and procedures
established pursuant to Section 63 of this Title. Upon a finding that
said standards are met, the Administration shall issue a Certificate of
Conformance to any such local water utility. Said Certificate may be
revoked after due notice and hearing as to any local water utility
which thereafter fails to continue conformance with such standards. A
Conditional Certificate of Conformance may be issued where procedures
and practices have been adopted to assure conformances and a reasonable
time schedule has been adopted. Failure to reach conformance as
contemplated shall be cause for revocation of such conditional
certificate, without hearing or other cause.
CHAPTER VII
Financial Provisions
Section 67. Operating Budget and Expenses. — The
annual general operating budget and all expenses of the Administration
shall be provided for in the General Appropriations Act from year to
year.
Section 68. Charges. — To the extent that the
Administration performs services, gives technical assistance, or
reviews feasibility studies for the benefit and at the request of any
particular local water utility. Administration shall establish charges
therefor designed (within the reasonable capability of such local water
utility to pay) to recover the costs of such services. chanroblesvirtualawlibrary
Section 69. Revolving Loan Fund. — There is hereby
created and established a Revolving Loan Fund, under the
administration, control and supervision of the Board of Trustees,
initially to consist of twenty million pesos; which is hereby
appropriated out of any funds of the National Treasury, not otherwise
appropriated, for such purpose. The sum of twenty million pesos is
likewise authorized to be appropriated in the General Appropriations
Act every fiscal year for the next nine years, beginning with the
Fiscal Year 1973-1974, to augment and form part of said fund. All funds
acquired by the Administration by grant, appropriation, borrowing or
otherwise, for purposes of making loans to local water utilities shall
be deposited in said Revolving Loan Fund, any may be used only for such
purpose. As principal on said loans is repaid, the same including all
earnings thereof shall insure to and become a part of the fund for use
solely as part thereof and for no other purpose except for debt
services of the Administration.
Section 70. Appropriations. — There is hereby
appropriated for the organization of the Administration and its initial
operations the sum of one million pesos from the general funds of the
National Government, not otherwise appropriated. Thereafter, the annual
general operating budget and all expenses of the Administration shall
be included in the General Appropriations Act as provided for in
Section 67 thereof. chanroblesvirtualawlibrary
Section 71. Borrowing Authority. — Subject to prior
approval by the President of the Philippines, the Administration shall
have the right and power to borrow additional sums: Provided, That the
loans outstanding at any time shall not exceed the principal sum of
five hundred million pesos to domestic sources both government and
private and the principal sum of one hundred million dollars in United
States currency or its equivalent in other currencies, to supplement
said Revolving Loan Fund from: chanroblesvirtualawlibrary
(a) Agencies of the Government of the Philippines,
including, but not limited, to the Social Security System, Government
Service Insurance System and Development Bank of the Philippines.
(b) International Loan Sources, both public and
private. The Secretary of Finance is authorized to assist with and
underwrite such loans, with the approval of the President of the
Philippines. Said underwriting shall include the increased obligation
that may accrue to the Administration relative to foreign borrowing
based upon unfavorable changes in the rate of currency exchange.
Any and all loan obligations incurred by the Administration in virtue
of this section shall be fully and unconditionally guaranteed both as
to principal and interest by the Government of the Republic of the
Philippines which guaranty shall be expressed on the face of any
document, note, bond, debenture, or other securities evidencing said
loan obligations. Such guaranty shall be without compensation in any
form whatsoever to the Government.
Section 72. Depository for Reserves. — Any local
water utility which is accumulating reserves for capital improvements
may make specified time deposits of the same to the Administration in
the manner authorized for banks in handling trust funds. Such funds
shall not become a part of the Revolving Loan Fund, nor shall they be
used for operating purposes by the Administration.
GENERAL PROVISIONS
Section 73. Separability of Provisions. — If any
provision of this Decree, or the application of such provision to any
person or circumstances, is declared invalid, the remainder of the
Decree or the application of such provision to other persons or
circumstances shall not be affected by such declaration.
Section 74. Effect on Other Acts. — All Acts or parts
of Acts, Decrees, General Orders, Executive Orders, Proclamations, or
rules and regulations inconsistent herewith are repealed or modified
accordingly.
Section 75. Effectivity. — This Decree shall take
effect immediately.
Done in the City of Manila,
this 25th day of May, in the year of Our Lord, nineteen hundred and
seventy-three.
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