PD 198 TITLE II - LOCAL WATER DISTRICT LAW

Title.

Section 4

SEC. 4. Title. — The provisions of this Title shall be known and referred to as the "Local Water District Law."

Purpose.

Section 5

SEC. 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 wastewater 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.

Formation of District.

Section 6

SEC. 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: (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. 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.

Filing of Resolution.

Section 7

SEC. 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.

Number and Qualifications.

Section 8

SEC. 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 professional associations, 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.

Appointment.

Section 9

SEC. 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.

Nominations.

Section 10

SEC. 10. Nominations. — On or before October 1 of each even-numbered year, the secretary of the district shall contact 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 ensuing 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. The 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.

Term of Office.

Section 11

SEC. 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.

Vacancies.

Section 12

SEC. 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.

Compensation.

Section 13

SEC. 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%) of the mayor's monthly salary for a first class city. No director shall receive other compensations for services to the district.

Personal Liability.

Section 14

SEC. 14. Personal Liability. — No director may be held to be personally liable for any action of the district.

Organizational Meeting.

Section 15

SEC. 15. Organizational Meeting. — The board shall hold 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 the district board, and thereafter at the 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.

Quorum.

Section 16

SEC. 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.

Performance of District Powers.

Section 17

SEC. 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.

Functions Limited to Policy-Making.

Section 18

SEC. 18. Functions Limited to Policy-Making. — The function of the board shall be to establish policy. The board shall not engage in the detailed management of the district.

By-Laws.

Section 19

SEC. 19. By-Laws. — At its 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.

System of Business Administration.

Section 20

SEC. 20. System of Business Administration. — The board shall, as soon as practicable, prescribe and define by resolution a system of business administration and accounting for the district, which shall be patterned upon and conform to the standards established by the Administration. Auditing shall be performed by a certified public accountant not in the government office.

Depository.

Section 21

SEC. 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.

Contracts.

Section 22

SEC. 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.

Additional Officers.

Section 23

SEC. 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 serve at the pleasure of the board.

Duties.

Section 24

SEC. 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.

Exemption from Civil Service.

Section 25

SEC. 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.

Authorization.

Section 26

SEC. 26. Authorization. — The district may exercise all the powers which are expressly granted by this Title or which are necessarily implied from, or incidental to the powers and purposes herein stated.

Acquisition of Waterworks.

Section 27

SEC. 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 rights the district shall cooperate with existing agencies of the Government of the Philippines.

Sale of Water.

Section 28

SEC. 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. 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 establish 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. SEC. 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. After due notice thereof and refusal on the part of the property owner to so connect with 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.

Rights of Way.

Section 30

SEC. 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.

Contracts.

Section 31

SEC. 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: (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 that the city, municipality or province has not reached agreement with the Metropolitan Waterworks and Sewerage System pursuant to Sections 15 and 17 of Republic Act 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.

Protection of Waters of District.

Section 32

SEC. 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.

Fire Protection Capacity.

Section 33

SEC. 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.

Receipt, Deposit and Payment of District Funds.

Section 34

SEC. 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 Philippine 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.

Negotiable Promissory Notes.

Section 35

SEC. 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 twenty percent (20%) of the annual gross revenues of the district payable from all revenue sources thereof.

Revenue Bonds.

Section 36

SEC. 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: (a) Estimate of Expenses. — If a revenue bond issue is contemplated, the hoard 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. (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. (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 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 of 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 bong 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 dates 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 bong. 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 brine 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.

Rates and Charges — Water.

Section 37

SEC. 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: (a) Provide for reimbursement from all new water customers for the cost of installing new services and meters; (b) Provide for revenue from all water deliveries and services performed by the district; (c) Pay the operating expenses of the district; (d) Provide for the maintenance and repairs of the works; (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.

Service and Stand-By Charges — Sewer.

Section 38

SEC. 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, sewer, and other district services: Provided, That this provision shall not be construed to prohibit the district from collecting rates and other charges in any other lawful manner.

Production Assessment.

Section 39

SEC. 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 is 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.

Assessment and Stand-By Charges.

Section 40

SEC. 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.

Exclusion of a Territory.

Section 41

SEC. 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.

Annexations and Deannexation.

Section 42

SEC. 42. Annexations and Deannexation. — The Administration may, after notice to property owners within the territory proposed for annexation or deannexation and following a hearing, make findings 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.

Consolidation and Joint Operation.

Section 43

SEC. 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.

Section 44

SEC. 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, That the following procedures have bee-n accomplished prior 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.

Exemption from Taxes.

Section 45

SEC. 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 any fees, charges or costs involved in any court or 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.

Exclusive Franchise.

Section 46

SEC. 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.