AMENDING CERTAIN SECTIONS OF REPUBLIC ACT NUMBERED SIXTY-TWO HUNDRED THIRTY-FOUR, ENTITLED “AN ACT CREATING THE METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM AND DISSOLVING THE NA…

WHEREAS, under Republic Act No. 6234, it is a declared
national policy of the State that the establishment, operation and
maintenance of waterworks system must be supervised and controlled by
the State, because the proper operation and maintenance of waterworks
systems to insure an uninterrupted and adequate supply and distribution
of potable water for domestic and other purposes and the proper
operation and maintenance of sewerage systems are essential public
services which are vital to public health and safety;

WHEREAS, in the attainment of the aforementioned objectives,
the Metropolitan Waterworks and Sewerage System has implemented an
interim program of construction and improvement in order to provide
stopgap measures in the interim to insure continuous and adequate supply
of potable water to the inhabitants of the Manila metropolitan area up
to 1973;

WHEREAS, in view of the increasing water demand of a growing
and expanding population in the service area, including the industries,
factories, commercial establishments, etc., all of which will require
uninterrupted and adequate supply of potable water, the Metropolitan
Waterworks and Sewerage System is now ready to undertake the first phase
of a long range program of construction, development and improvement of
the water system to be able to meet the increased water demand
beginning the year 1974;

WHEREAS, equally vital, if not more critical, is the
maintenance of an adequate sewage disposal system in the serviced areas
which should allow the management of the System a wider latitude of
fiscal projections than it is allowed in its present Charter; and

WHEREAS, to achieve the foregoing objectives the System
needs reliable and definite capitalization of its programs and projects
through the conversion of the System into a stock corporation with a
definite equity base;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers in me vested 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 amend
Republic Act Numbered Sixty-two Hundred Thirty-four, .otherwise known as
the Charter of the Metropolitan Waterworks and Sewerage System, to wit:

SECTION 1. A new section to be known as Section 2-A thereof
is hereby provided to read as follows:

“SEC. 2-A. Capital Stock of the System. — The
System is hereby authorized a capital stock of one billion pesos divided
into ten million shares at a par value of one hundred pesos each, which
shares shall not be transferred, negotiated, pledged, mortgaged, or
otherwise given as security for the payment of any obligation. The
shares shall be subscribed and paid for by the Government of the
Philippines as follows:

“(a) The sum of four hundred thirty-eight million nine hundred
eighty-six thousand seven hundred pesos, more or less, representing
bonded indebtedness on local bonds, including arrearages on
amortization, net of sinking fund investment and interest payable, and
eleven million six hundred seventy thousand pesos as organizational loan
under Republic Act Numbered Sixty-two Hundred Thirty-four shall be
converted into subscribed and paid-in capital stocks by the Government
of the Philippines equivalent to approximately four million five hundred
six thousand five hundred sixty-seven shares of stock at a par value of
one hundred pesos;
“(b) The sum of six million two hundred thirty-five thousand four
hundred pesos, more or less, representing outstanding cost and interest
of reparations goods procured by the System and its predecessor in
interest pursuant to the provisions of Republic Act Numbered Seventeen
Hundred Eighty-nine shall be additional paid-in subscription of the
Government of the Philippines equivalent to approximately sixty-two
thousand three hundred fifty-four shares of stock with the same par
value of one hundred pesos each; and
“(c) The balance of said subscription shall be paid by the conversion
into equity capital of outstanding interest payments on bonded
indebtedness, cost of reparations funds that may be allocated to the
System in the future and surplus of the System, bond issues upon request
of the System or through any capital contribution from any source as
may be duly approved from time to time by the President of the
Philippines.”

SEC. 2. Section 3(k) thereof is hereby amended to read as
follows:

“(k) To construct works across, over, through, and/or alongside
any stream, watercourse, canal, ditch, flume, street, avenue, highway or
railway, whether public or private, as the location of said works may
require: Provided, That such works he constructed in such
manner as to afford security to life and property: And provided,
further, That the stream, watercourse, canal, ditch, flume, street,
avenue, highway, railway so crossed or intersected be restored as near
as possible to their former state, or in a manner not to impair
unnecessarily their usefulness. Every person or entity whose
right-of-way or property is lawfully crossed or intersected by said
works shall not obstruct any such crossing or intersection and shall
grant the System or its representatives the proper authority to execute
such work. The System is hereby given the right-of-way to locate,
construct and maintain such works over and throughout the lands,
including any street, avenue, or highway owned by the Republic of the
Philippines or any of its branches and political subdivisions, and is
given right of immediate entry and to prosecute any undertaking thereon
without any further requirement or restriction other than due notice to
the office or entity concerned. The System, or its representatives, may
also enter upon private property in the lawful performance or
prosecution of its business or purposes, including the construction of
water mains and distribution pipes thereon, provided that the owner of
such private property shall be compensated as follows:

“(1) In case the land shall be acquired by purchase, the fair
market value thereof, which shall be the value of the land based on the
tax declaration that is valid and effective at the lime of the filing of
the complaint for eminent domain or of the taking of said land by the
System, whichever is earlier; and
“(2) in addition, the owner shall be compensated for the improvements
such as houses, buildings, structures, or agricultural crops and the
like, if any, actually damaged during the construction, operation, and
maintenance of such works on the land, in amounts based on the value of
such improvements appearing on the tax declaration that is valid and
effective and/or the prevailing valuation of such agricultural crops and
the like made by the appropriate appraisal body authorized by law at
the time of the filing of the said complaint for eminent domain or of
the taking of said improvements by the System, whichever is earlier: Provided,
further, That any action for compensation and/or damages under (1)
and (2) above, shall be filed within five years from the date the
right-of-way, pipelines, structures or other facilities shall have been
established: Provided, finally, That after the said period of
five years, no suit shall be brought to question said right-of-way,
pipelines, structures or other facilities nor the amounts of
compensation and/or damages involved.”

SEC. 3. A new paragraph, to be known as paragraph (s) in
Section 3 thereof, is hereby provided to read as follows:

“(s) In the prosecution and maintenance of its projects and
plants, the System shall adopt measures to prevent environmental
pollution and shall enhance the conservation, development and maximum
utilization of national resources, including the improvement and
beautification of its reservoirs, filter plants, and other areas to
promote tourism and related purposes, and shall provide for the
necessary corporate funds therefor.”

SEC. 4. Section 4 thereof is hereby amended to read as
follows:

“SEC. 4. The Board of Trustees; Composition,
Qualifications; Tenure; Powers and Duties. — The Corporate powers
and functions of the System shall be vested in and exercised by a Board
of Trustees composed of five members consisting of a Chairman and three
Trustees all of whom shall be appointed by the President of the
Philippines and the General Manager of the System who shall be the
ex officio Vice-Chairman of the Board.

“The Chairman and the three members of the Board shall serve for
terms of three years, except that any person appointed to fill a
vacancy shall serve only for the unexpired term of the member whom he
succeeds.

“Every member of the Board shall possess any one or a
combination of the following qualifications; A duly licensed
professional of recognized competence in engineering, in business
management and finance, or in law with at least ten years of actual and
distinguished experience in their respective fields of expertise, and of
good moral character.

“The Board, moreover, shall have the following specific powers
and duties:

“(a) To formulate and adopt policies and measures for the
management and operation of the System;
“(b) To adopt an annual and supplemental budget of receipts and
expenditures of the System according to its requirements;
“(c) Subject to the provisions of existing laws and regulations, and
upon the recommendations of the General Manager, or motu proprio,
to organize, reorganize in a manner other than what is provided for
under this Act and Section 3 of Republic Act No. 4177, and determine the
System’s staffing pattern and the number of personnel, to fix their
salaries including other emoluments, and to define their power and
duties, WAPCO rules and regulations shall not apply to the System;
however, for the above purpose, the Board shall take into consideration
similar staffing patterns and salary ranges obtaining in other
government corporations of the same category as the System;
“(d) To recommend to the President of the Philippines the appointment of
the General Manager of the System and to fix his compensation which
shall be not less than sixty thousand pesos per annum;
“(e) Subject to the approval of the President of the Philippines, to
appoint and fix the compensation of each Assistant General Manager which
shall be not less than forty-eight thousand pesos per annum;
“(f) By a majority vote of all its members, to suspend or remove for
cause, with the approval of the President of the Philippines, any
Assistant General Manager subject to the provisions of Article VII of
the Civil Service Act, as amended;
“(g) To adopt and establish guidelines for the employment of personnel
on the basis of merit, technical competence and moral character;
“(h) To issue such rules and regulations as may be necessary for the
sanitary protection of watersheds, reservoirs, conduits, springs and
other water sources; for the proper operation of water supply lines and
sanitary sewers; for the preservation and protection of water and sewer
service as soon as established; and for proper procedures in applying
for approval of, and connection to, water and/or sewer services which
rules shall take effect after publication at least once a week for three
consecutive weeks in a newspaper of general circulation in the
territory served by the System.”

SEC. 5. Section 6 thereof is hereby amended to read as
follows:

“SEC. 6. Meeting of the Board, Quorum, Required Votes,
Per Diems. – The Board of Directors shall immediately, after its
organization, adopt rules and procedures in the conduct of its meetings.
A majority of at least three of the members of the Board, to include
the Chairman and/or the Vice-Chairman shall constitute a quorum to
transact business, and the affirmative vote of three shall be required
for the adoption of any action. The members of the Board shall each
receive a per diem not to exceed three hundred pesos for every regular
Board meeting and one hundred pesos for every special meeting actually
attended by them: Provided, That such per diem shall not exceed
one thousand five hundred pesos during any calendar month for any
member.”

SEC. 6. Section 7 thereof is hereby amended to read as
follows:

“SEC. 7. Other Officers and Employees: Their
Appointment and Qualifications. — The management of the System shall
be vested in the General Manager who shall be appointed by the
President of the Philippines and shall hold office at the pleasure of
the President. He shall receive a compensation of sixty thousand pesos
per annum unless the Board shall fix a higher amount therefor. He shall
be assisted by four Assistant General Managers — one for Engineering,
one for Operation, one for Finance and Administration, one for
Commercial and Customers Service — and heads of departments all of whom
shall perform managerial, highly technical and/or primarily confidential
functions and such additional officers and employees as the Board may
provide. The Assistant General Managers shall be appointed by the Board
and each shall receive a compensation of forty-eight thousand pesos per
annum unless the Board shall fix a higher amount therefor.

“The Assistant General Managers shall be persons of integrity,
competence, and experience in technical and executive fields related to
the purpose of this Act. Their other qualifications as well as powers
and duties shall be determined by the Board.

“In case of temporary disability or absence of the General
Manager, the Chairman of the Board shall designate any Assistant General
Manager to act as General Manager; in case of temporary disability or
absence of any Assistant General Manager, the General Manager may
designate any department head in the group to act as Assistant General
Manager.”

SEC. 7. Paragraphs (a), (b), (c) and (d) thereof of Section
8 are hereby amended to read as follows:

“SEC. 8. Other Powers and Duties of the General
Manager.

“(a) To execute and administer the policies and measures
approved by the Board, and be responsible for the efficient discharge of
management functions;
“(b) To submit for the consideration of the Board such policies and
measures which he deems are necessary to carry out the purposes and
provisions of this Act;
“(c) To direct and supervise the operation and internal administration
of the System and, for the purpose, he may delegate some or any of his
administrative responsibilities and duties to other officers of the
System; and
“(d) Subject to the guidelines and policies set up by the Board:

“(1) To appoint or promote upon recommendation of the proper
Assistant General Manager with the approval of the Board, the department
heads, division and section chiefs and other officers of equivalent
rank;
“(2) To appoint or promote all other personnel, upon recommendation of
the proper Assistant General Manager and to submit to the Board a
monthly report on such appointments and non-disciplinary transfers made
on the month immediately preceding;
“(3) To remove, suspend or otherwise discipline for cause, or terminate
by reason of incapacity, department heads, division and section chiefs,
and other officers of equal rank, subject to the approval of the Board,
and in accordance with the provisions of Article VII of the Civil
Service Act, as amended;
“(4) To remove, suspend or otherwise discipline for cause or terminate
by reason of incapacity all other personnel in accordance with the
provisions of Article VII of the Civil Service Act, as amended.”

SEC. 8. Section 9 thereof is hereby amended by substitution
to read as follows:

“SEC. 9. Authority to Incur Indebtedness and Issue
Bonds; Their Conditions, Privileges, Exceptions; Sinking Funds:
Guarantee. —

“(a) Domestic Indebtedness. — Whenever the Board deems it
necessary for the System to incur indebtedness or to issue bonds to
carry out the purpose for which the System has been organized, it shall,
by resolution, so declare and state the purpose for which the proposed
debt is to be incurred. In order that such resolution be valid, it shall
be passed by the affirmative vote of at least three members of the
Board and approved by the President of the Philippines upon
recommendation of the Secretary of Finance.

“The Board shall determine the amount, terms, and conditions of
domestic indebtedness, subject to approval by the Secretary of Finance.

“The bonds issued under the authority of this Act shall be
exempt from the payment of all taxes by the Republic of the Philippines,
or by any authority, branch, division or political subdivision thereof,
which facts shall be stated upon the face of said bonds. Said bonds
shall be receivable as security on any transaction with the Government
for which such security is required.

“A sinking fund shall be created, the total thereof at each
annual due date of the bonds to be equal to an amount of annuity earning
an annual interest of nine-tenth of the rate of interest of the bonds
as fixed by the Secretary of Finance. The sinking fund shall be under
the custody of the Treasurer of the Philippines, who shall invest the
same subject to the approval of the Board and the Secretary of Finance.

“The Republic of the Philippines hereby
guarantees the payment by the System of both the principal and the
interest of the bonds issued by said System by virtue of this Act, and
shall pay such principal and interest in case the System fails to do so.
There is hereby appropriated, out of the general funds in the National
Treasury not otherwise appropriated, the sums necessary to make the
payments guaranteed by the Act: Provided, That the sums paid by
the Republic of the Philippines shall be refunded by the System: Provided,
further, That the System shall set aside five per centum
of its annual net operating revenues before interests as a reserve or
sinking fund to answer for amounts advanced by the National Government
for any loan, credit and indebtedness contracted by the former for which
the latter shall be held answerable as primary obligor or guarantor
under the provisions of this Act: Provided, furthermore, That
the setting aside of the amounts mentioned herein shall automatically
cease the moment the accumulated sinking fund or reserve exceeds the
amounts advanced to the System by the National Government under this
Act: Provided, finally, That the System may periodically make
partial payments to the National Government out of the said reserve.

“The total principal indebtedness of the System under this
subsection, exclusive of interest, shall not exceed one billion pesos,
at any given time.

“(b) Foreign Loans. — The System is hereby authorized to
contract loans and credits, in any convertible foreign currency or
capital goods, and to incur indebtedness from time to time from foreign
governments, or any international financial institutions or fund sources
or to issue bonds, the total outstanding amount of which, exclusive of
interest, shall not exceed two hundred million United States dollars or
the equivalent thereof in other currencies at any given time on such
terms as it shall deem appropriate for the accomplishment of its
purposes and to enter into and execute agreements and other documents
specifying such terms and conditions.

“The President of the Philippines, by himself, or through his
duly authorized representative, is hereby authorized to negotiate and
contract with foreign governments or any international financial
institution or fund sources in the name and on behalf of the System, one
or several loans, for the purpose of assisting in die reconstruction,
or promoting the development of the country.

“The President of the Philippines by himself, or through his
duly authorized representative, is hereby further authorized to
guarantee, absolutely and unconditionally, as primary obligor and not as
surety merely, in the name and on behalf of the Republic of the
Philippines, the payments of the loans, credits, indebtedness and bonds
issued up to the amount herein authorized, which shall be over and above
the amount which the President of the Philippines is authorized to
guarantee under Republic Act No. 4860, as amended, as well as the
performance of all or any of the obligations undertaken by the System in
the territorial jurisdiction of the Republic of the Philippines
pursuant to loan agreements entered into with foreign governments or any
international financial institutions or fund sources.

“The loans, credits and indebtedness contracted under this
subsection and the payments of the principal, interest and other charges
thereon, as well as the importation of machinery, equipment, materials,
supplies and services by the System, paid from the proceeds of any
loan, credit, or indebtedness incurred under this Act, shall also be
exempt from all direct and indirect taxes, fees, imposts, other charges
and restrictions, including import restrictions previously and presently
imposed and to be imposed by the Republic of the Philippines, or any of
its agencies and political subdivisions.”

SEC. 9. A new section to be known as Section 9-A thereof
is hereby provided to read as follows:

“SEC. 9-A. Construction or Repair Work Awarded Upon
Public Bidding; Exceptions. — All construction or repair work of the
System involving an estimated cost of seventy-five thousand pesos or
more shall be awarded by the General Manager with the approval of the
Board, to the responsible bidder who made the lowest and most
advantageous bid. Notice to bidders shall be published as provided by
law. In case no satisfactory bid is received, the General Manager may
proceed to advertise anew, or, with the approval of the Board, to do the
work by administration. Before award of contract is made, the General
Manager shall require the contractor to give an adequate bond to secure
the proper accomplishment of the work under contract and to satisfy all
obligations to materials used and labor employed upon the same: Provided,
That any repair, reconstruction or other work of an emergency nature
may be authorized by the Board to be undertaken by administration or by
contract: And provided, further, That any single work of
construction or repair involving an estimated total cost of less than
seventy-five thousand pesos may, at the option of the General Manager,
be authorized by him to be undertaken by administration or by contract
after a canvass of the market to determine the lowest and most
advantageous bid.”

SEC. 10. A new section to be known as Section 10-A thereof
is hereby provided to read as follows:

“SEC. 10-A. Punishable Acts. — Any person who
shall maliciously destroy, injure or interfere with any canal, raceway,
ditch, lock, pier, inlet, crib, bulkhead, dam, gate, service, reservoir,
aqueduct, water mains, water distribution pipes, conduit pipes, weir,
benchmark, monument, or other works, appliance, machinery, building, or
property of the System, or who shall maliciously do any act which shall
injuriously affect the quantity or quality of the water or sewage flow
of the System, or the supply, conveyance, measurement, or regulation
thereof, or who shall maliciously interfere with any person engaged in
the discharge of duties connected therewith, or who shall maliciously
prevent, obstruct, and interfere with the survey, works and the
construction of access road and water main and distribution network and
any related works of the System, shall be punished upon conviction, with
a fine ranging from one thousand to five thousand pesos or imprisonment
ranging from one to five years, or both such fine and imprisonment at
the discretion of the court, and any injured party shall have the right
to recover all damages suffered and cost of suit in a separate civil
action in any court of competent jurisdiction: Provided, further,
That any person who shall violate any rule or regulation of the System
issued pursuant to the law or who shall connect to water and/or sewer
lines without approval of the System, shall, upon conviction, be
punished with a One of not more Hum one thousand pesos or imprisonment
for not more than six months or both such fine and imprisonment upon the
discretion of the court: Provided, finally, That the System
.shall be authorized to summarily disconnect any illegal connection even
pending the appropriate court action.”

SEC. 11. Section 11 thereof is hereby amended to read as
follows:

“SEC. 11. Audit. — The Chairman of the Commission
on Audit shall be the ex officio auditor of the System. The
provisions of Section five hundred eighty-four of the Revised
Administrative Code, as amended by Section one of Republic Act Numbered
2266 and Republic Act Numbered 2716 and further amended by Presidential
Decrees Numbered 61, 111 and 111-A, shall apply to the Office of the
Representative of the Commission on Audit in the System.”

SEC. 12. Section 15 thereof is hereby amended by the
deletion of the last proviso therein which reads as follows:

“Provided, finally, That in no case shall the expenses in
any fiscal year for salaries, wages, allowances, emoluments, and other
fringe benefits exceed thirty-five percent (35%) of the gross income of
the System in the immediately preceding fiscal year.”

SEC. 13. Section 18 thereof is hereby amended to read as
follows:

“SEC. 18. Nonprofit Character of the System, Exemption
from all Taxes, Duties, Fees, Imposts and Other Charges by Government
and Governmental Instrumentalities. — The System shall be nonprofit
and shall devote all its returns from its capital investment as well as
excess revenues from its operations, for expansion and improvement. To
enable the System to pay its indebtedness and obligations and the
furtherance and effective implementation of the policy enumerated in
Section one of this Act, the System is hereby declared exempt:

“(a) From the payment of all taxes, duties, fees, imposts,
charges and restrictions of the Republic of the Philippines, its
provinces, cities, municipalities, and other government agencies and
instrumentalities including the taxes, duties, fees, imposts, and other
charges provided for under the Tariff and Customs Code of the
Philippines, Republic Act Numbered Nineteen Hundred Thirty-Seven, as
amended and further amended by Presidential Decree No. 34, dated October
27, 1972, and costs and service fees in any Court or administrative
proceedings in which it may be a party;
“(b) From all income taxes, franchise taxes and realty taxes to be paid
to the National Government, its provinces, cities, municipalities and
other government agencies and instrumentalities; and
“(c) From all imposts, duties, compensating taxes, and advanced sales
tax, and wharfage fees on import of foreign goods required for its
operations and projects.”

SEC. 14. This Decree is hereby made part of the law of the
land and provisions of existing laws, decrees, orders, rules and
regulations, or parts thereof, in conflict with this Decree are hereby
repealed or modified accordingly.

SEC. 15. This Decree shall take effect immediately.

Done in the City of Manila, this 29th day of March, in the
year of Our Lord, nineteen hundred and seventy-four.