PD 198 TITLE III — LOCAL WATER UTILITIES

Title.

Section 47

SEC. 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."

Charter.

Section 48

SEC. 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.

Purposes.

Section 49

SEC. 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.

Number of Qualifications.

Section 50

SEC. 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.

Appointment and Term of Office.

Section 51

SEC. 51. Appointment and Term of Office. — The trustees 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.

Vacancies.

Section 52

SEC. 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.

Powers.

Section 53

SEC. 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 functions of the trustees, however, shall be to establish policy, not to engage in the detailed management of the Administration.

Compensation.

Section 54

SEC. 54. Compensation. — The members of the Board of Trustees shall each receive a per diem equivalent to four (4%) percent of the mayor's monthly salary for a first class city for everyday of actual attendance at board meetings which meetings shall not exceed twelve in one year.

Adoption.

Section 55

SEC. 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.

Amendment.

Section 56

SEC. 56. Amendment. — The by-laws may be amended from time to time by affirmative vote of four trustees, subject to approval by the NEDA.

Officers.

Section 57

SEC. 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.

Employees.

Section 58

SEC. 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 the 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. 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.

General Corporate Powers.

Section 59

SEC. 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.

Borrowing and Security Therefor.

Section 60

SEC. 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.

Loans.

Section 61

SEC. 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: (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; (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; (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; (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 project for which such loan was granted.

Regulations.

Section 62

SEC. 62. Regulations. — The Administration shall have the power and duty to establish standards for local water utilities, and adopt rules and regulations for the enforcement hereof 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: (a) Water Quality. — Minimum drinking water standards including a uniform testing and reporting system. Said standards shall include bacteriological, chemical and physical parameters; (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; (c) Equipment, Materials and Supplies. — Standards for the optimum selection and effective utilization of equipment, materials and supplies by local water and sewer utilities; (d) Operations and Maintenance. — Standardized procedures for operating and maintaining equipment and facilities; (e) Personnel. — The training of personnel who operate or manage local water utilities; (f) Organization. — Organizational and institutional criteria to assure independent operation and funding of local water utilities; (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.

Rate Review.

Section 63

SEC. 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: (a) Reimbursement from all new water customers for the cost of installing new services and meters; (b) Revenue from all water deliveries and services performed by the district; (c) Annual operating expense of the district; (d) The maintenance and repairs of the works; (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.

Technical Assistance.

Section 64

SEC. 64. Technical Assistance. — Administration shall provide technical assistance to local water utilities; their boards, management and operating personnel, to aid 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.

Training Programs.

Section 65

SEC. 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.

Certificate of Conformance.

Section 66

SEC. 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 maybe 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.

Operating Budget and Expenses.

Section 67

SEC. 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.

Charges.

Section 68

SEC. 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 therefore designed (within the reasonable capability of such local water utility to pay) to recover the costs of such services.

Revolving Loan Fund.

Section 69

SEC. 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, and may be used only for such purpose. As principal on said loans is repaid, the same including all earnings thereof shall inure to and become a part of the Loan Fund for use solely as part thereof and for no other purpose except for debt services of the Administration.

Appropriations.

Section 70

SEC. 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

Borrowing Authority.

Section 71

SEC. 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 one 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: (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 increase 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. SEC. 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

Separability of Provisions.

Section 73

SEC. 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 provisions to other persons or circumstances shall not be affected by such declaration.

Effect on Other Acts.

Section 74

SEC. 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.

Effectivity.

Section 75

SEC. 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. (Sgd.) FERDINAND E. MARCOS President Republic of the Philippines By the President: (Sgd.) ALEJANDRO MELCHOR Executive Secretary In order to facilitate the implementation of this Presidential Decree No. 198, the Office of the President issued the following: Memorandum Order No. 363, dated June 22, 1973, creating the Task Force to lay the groundwork; and Memorandum Circular No. 364, dated July 20, 1973, designating the Officer-in-Charge of the Administration.

Section 67

Section 67 thereof.