Creation of National Waterworks and Sewerage Authority

Corporate powers and operational functions

Section 2 grants the Authority continuous succession under its corporate name until otherwise provided by law.
Section 2 allows the Authority to prescribe by-laws, adopt and use a seal, and alter the seal at its pleasure.
Section 2 authorizes the Authority to sue and be sued in any court.
Section 2 empowers the Authority to:
- construct, maintain, and operate mains, pipes, water reservoirs, machinery, and other waterworks to supply water for domestic and other purposes within its zone;
- purify the source of supply, regulate control and use, and prevent the waste of water; and
- fix water rates and collect rents therefor.
Section 2 authorizes the Authority to construct, maintain, and operate sanitary sewer systems necessary for proper sanitation of cities and towns comprising the Authority, and to charge and collect equitable and just sums and rates for construction and service.
Section 2 authorizes the Authority to construct, maintain and operate storm drains, artesian wells and springs needed and requested by any city or municipality, and to take control and administer storm drains, artesian wells and springs already in operation, subject to the concerned local government appropriating sufficient funds.
Section 2 authorizes the Authority to acquire, purchase, hold, transfer, sell, lease, mortgage, encumber, and otherwise dispose of real and personal property and rights and franchises within the Philippines when authorized by its purposes and reasonably and necessarily required for its lawful business.
Section 2 authorizes the Authority to construct works across specified infrastructure and waterways (including streams, watercourses, canals, ditches, flumes, streets, avenues, highways, or railways) as the location of the works may require, under these conditions:
- the works must be constructed to afford security for life and property; and
- the crossed or intersected stream/watercourse/canal/ditch/flume/street/avenue/highway/railway must be restored to former state as near as may be, or in a manner not to impair unnecessarily their usefulness.
Section 2 requires any person or entity whose right of way is crossed or intersected not to obstruct the crossing/intersection and to grant proper authority for the execution of the work upon payment of just compensation.
Section 2 grants the Authority the right of way to locate, construct, and maintain works over and through lands now or later owned by the Government of the Republic of the Philippines or its branches and political subdivisions.
Section 2 authorizes the Authority to exercise the right of eminent domain in the manner provided by law for condemnation proceedings by the national, provincial, and municipal governments.
Section 2 authorizes the Authority to issue regulations for sanitary protection of watersheds, reservoirs, water mains, springs, and other water sources for the water and sewer service, and for proper operation of sanitary sewers, prescribing punishments for violations:
- a fine of not more than five hundred pesos, or
- imprisonment of not more than six months, or
- both fine and imprisonment, at the discretion of the court.
Section 2 authorizes the Authority to contract indebtedness and issue bonds when essential for proper administration of corporate affairs, necessary for proper transaction of business, or necessary to carry out its purposes, subject to approval of the Secretary of Finance.
Section 2 imposes a bonded indebtedness ceiling: bonds of all classes must not at any time exceed one hundred fifty million pesos, and are subject to Section 5 conditions.
Section 2 authorizes the Authority to transact business for which it was organized and do acts reasonably necessary to carry out its purposes.

Board of Directors governance and reporting

Section 3 provides that corporate powers are exercised, business managed, and properties preserved by a Board of Directors composed of five members: a chairman, three other members, and the general manager as an ex officio member.
Section 3 requires qualifications: two members must have knowledge of waterworks, public works and/or sanitary engineering; one must have knowledge of public health; and one must have knowledge of business management and finance.
Section 3 provides for appointment: the chairman and the three other members are appointed for a term of six years by the President of the Philippines with the consent of the Commission on Appointments.
Section 3 requires the Board to render annual reports to the President and to the Congress of the Philippines.

First meeting, quorum, voting, compensation

Section 4 requires the chairman, immediately after formation, to fix the time and place for the first meeting and for the Board to adopt rules of procedure and fix times and places for regular meetings.
Section 4 sets quorum: not less than three members constitute a quorum.
Section 4 sets voting requirement: two affirmative votes are necessary to adopt any resolution or motion, except as otherwise provided in the Act.
Section 4 fixes per diems: the chairman receives a per diem of thirty pesos for actual attendance; each Board member (except the general manager) receives a per diem of twenty-five pesos.
Section 4 requires the Board to appoint its secretary and fix the secretary’s salary.

Debt, bond issuance, terms, sinking fund

Section 5 requires Board action: whenever the Board deems it necessary to incur indebtedness or issue bonds, it must adopt a resolution stating the purpose and bond conditions.
Section 5 validates Board debt resolutions only if passed by the affirmative vote of at least three members and approved by the Secretary of Finance.
Section 5 sets bond sale and form requirements:
- bonds must not be sold at less than par;
- bonds must be redeemable at the pleasure of the Board after ten years from date of issue;
- bonds must be payable forty years after date of issue;
- bonds bear interest at an annual rate determined by the Secretary of Finance; and
- bonds must be in registered form and transferable at the office of the National Treasurer.
Section 5 declares tax treatment: the bonds are exempt from taxation by the Government of the Republic of the Philippines or any authority, branch, division or political subdivision, and this exemption must be stated on the face of the bonds.
Section 5 makes the bonds receivable as security in any transaction with the Government of the Republic of the Philippines where such security is required.
Section 5 requires a sinking fund structured so that the total amount due on each annual due date equals the total of annuity of the sum (per one million pesos of bonds outstanding) plus interest at a rate determined by the Secretary of Finance, sufficient to retire bonds at maturity.
Section 5 places custody of the sinking fund with the Central Bank of the Philippines, which invests it in the manner the Monetary Board and the Secretary of Finance may approve in accordance with Act Numbered Three thousand fourteen, and credits interest and other incomes to the sinking fund.
Section 5 provides government guarantee: the Government guarantees payment of both principal and interest; it must pay if the Authority fails.
Section 5 authorizes appropriation: sums necessary to make guaranteed payments are authorized to be appropriated from the National Treasury not otherwise appropriated.
Section 5 requires reimbursement by the Authority of sums paid by the Government.
Section 5 imposes a reimbursement deadline and enforcement:
- if the Authority fails to refund within thirty days after payment by the Government, the National Treasurer must retain, out of revenues of the City of Manila and the cities, municipalities and municipal districts included in the Authority in his possession, sums necessary to refund the Government payments in proportions approved by the Auditor General to ensure collection.

Staffing and appointment rules

Section 6 directs that affairs and current business are conducted under the Board by a general manager, assistant general manager, chief engineer, auditor, treasurer, and such additional officers and employees as the Board provides.
Section 6 provides that officers’ and employees’ duties, powers, and compensation are defined and prescribed or fixed by the Board, consistent with the Act and existing laws.
Section 6 requires appointment by the President with consent of the Commission on Appointments for the general manager, assistant general manager, chief engineer, and treasurer, and allows removal for cause by the President.
Section 6 subjects other officers and employees to the Civil Service Law, rules and regulations, except positions declared by the President upon recommendation of the Board as policy-determining, primarily confidential, or highly technical.
Section 6 provides that the Auditor is appointed by the Auditor General with approval of the President and may be removed for cause in the same manner.

Officers’ specific functions and auditing

Section 7 requires each of the general manager, assistant general manager, chief engineer, treasurer, and auditor to receive an annual salary fixed by the Board with approval of the Secretary of Finance.
Section 7 makes the general manager the Authority’s representative in all business matters.
Section 7 requires the general manager to submit:
- an annual report; and
- partial reports required by the Board or rendered at the general manager’s discretion;
  regarding the condition of the business or parts of it.
Section 7 requires the general manager to perform other executive duties prescribed by law or required by Board resolution.
Section 7 makes the assistant general manager perform duties required by the Board or the general manager, and serve as general manager during temporary absence or disability of the general manager.
Section 7 requires the chief engineer and treasurer to perform duties required by the Board or the general manager.
Section 7 designates the Auditor as the representative of the Auditor General as an ex officio auditor of the Authority.
Section 7 makes the Auditor the head of the Authority’s auditing and accounting department, with authority to audit, examine, and settle all accounts according to existing law and regulations, and to perform additional duties required by the Auditor General, general manager, or Board.
Section 7 provides that employees of the Auditor’s office are appointed by the Auditor General; with approval of the Board, the Auditor General fixes the number and salaries of such employees.

Metropolitan Water District dissolution and transfers

Section 8 dissolves the Metropolitan Water District created under Act Numbered Two thousand eight hundred thirty-two, as amended.
Section 8 transfers the Metropolitan Water District’s records, assets, and liabilities to the Authority.
Section 8 transfers all existing government-owned waterworks and sewerage systems in cities, municipalities, and municipal districts, including springs and other water sources, and transfers the Metropolitan Water District’s waterworks and sewerage bonds, sinking funds, and all indebtedness in general.
Section 8 authorizes and directs the Board to receive and assume transferred assets and liabilities and to pledge such assets as security for payment of transferred waterworks and sewerage bonded debt.
Section 8 sets a valuation rule: the net book value of Metropolitan Water District properties and assets and government-owned systems is received by the Authority as payment for an equal value of the Authority’s assets.
Section 8 provides statutory continuity: references in any Act, Executive Order, Proclamation, or city or municipal ordinance still in force to the Metropolitan Water District or to existing government-owned waterworks and sewerage systems in any city, municipality, municipal district, or under the Bureau of Public Works are deemed references to the National Waterworks and Sewerage Authority.

Rates, control, and administrative status

Section 9 vests in the Authority ownership and control over all water and sewer distributing systems of the City of Manila and nearby municipalities comprising the Metropolitan Water District.
Section 9 extends the same ownership and control to water and sewer distributing systems of all other cities, municipalities and municipal districts in the Philippines.
Section 9 requires a uniform rate for all services rendered in each city, municipality, or municipal district, regardless of whether the service is to persons, corporations, firms, government bodies, municipal entities, or religious or charitable institutions.
Section 9 removes regulator interference: the Public Service Commission has no control, supervision, or jurisdiction over the Authority in fixing rates or over its properties.
Section 9 places the Authority as an independent agency of the Government under the Department of Public Works and Communications for administrative purposes.

National subsidies for non-revenue systems

Section 10 provides National Government subsidy support for non-self-supporting and/or non-revenue producing water systems and sanitary works, including springs, artesian wells, and drainage systems.
Section 10 requires subsidy funding through the Annual Appropriation Acts for construction, operation, maintenance, and control of these works once completed.
Section 10 sets subsidy determination: the Budget Commissioner determines the subsidy amount based on recommendation of the National Waterworks and Sewerage Authority.
Section 10 requires separate accounting and disbursing of funds for this expense in the Authority’s separate account books.

Contracting for public works

Section 11 requires letting of contracts for authorized Authority construction and repair works involving an estimated cost of ten thousand pesos or more.
Section 11 requires the General Manager to let such works with approval of the Board of Directors under the Government’s usual bidding procedure.
Section 11 recognizes exceptions: in the case of construction or repair of water, sewer, and pipe lines or storm drains, and other projects that, in the Board’s discretion, should be undertaken by administration due to urgent nature.

Repeal and effective date

Section 12 repeals or modifies all Acts, executive orders, administrative orders and proclamations, or parts thereof, inconsistent with any provisions of the Act.
Section 13 provides that the Act takes effect upon its approval.
The Act was approved June 18, 1955.