Section 5
SEC. 5. Resolution to incur indebtedness and issue bonds; their conditions, privileges, and exemptions; sinking funds; guaranty.—Whenever the Board may deem it necessary for the Authority to incur indebtedness or issue bonds it shall by resolution so declare and state the purpose for which the proposed debt is to be incurred and the conditions of the bonds. 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 Secretary of Finance. The bonds shall not be sold at less than par; shall be redeemable at the pleasure of tlie Board after ten years from date of issue, and payable forty years after date of issue; shall bear interest at an annual rate as determined by the Secretary of Finance; and shall be in registered form and transferable at the office of the National Treasurer. The said bonds are hereby declared exempt from taxation by the Government of the Republic of the Philippines, or by any authority, branch, division or political subdivision thereof, which fact shall be stated upon the face of said bonds. The bonds shall be receivable as security in any transaction with the Government of the Republic of the Philippines in which such security is required. A sinking fund shall be created for the payment of the bonds issued under the provisions of this Act in such a manner that the total amount thereof on each annu&I due date of the bonds issued shall be equal to the total of annuity of such a sum for each million pesos of the bonds outstanding that, together with interest at a rate to be determined by the Secretary of Finance, shall b sufficient to retire the bonds at maturity. The sinking fund shall be under the custody of the Central Bank of the Philippines, which shall invest the same in such manner the Monetary Board and the Secretary of Finance may approve in accordance with Act Numbered Three thousand fourteen, and shall credit to the same the interest on investment and other incomes accruing to it. The Government of the Republic of the Philippines hereby guarantees the payment by the National Waterworks and Sewerage Authority of both the principal and the interest of the bonds issued by said Authority by virtue of this Act, and shall pay such principal and interest in case the said Authority fails to do so, and there are hereby authorized to be appropriated, out of any funds in the National Treasury not otherwise appropriated, the sums necessary to make the payments guaranteed by this Act: Provided, That the sums so paid by the Government of the Republic of the Philippines shall be refunded by the National Waterworks and Sewerage Authority, and if said Authority fails to refund the same within thirty days after such payment has been made by the Government of the Republic of the Philippines, the National Treasurer is hereby authorized and directed to retain out of the revenues of the City of Manila and the cities, municipalities and municipal districts included in the Authority, that may come into his possession as belonging to said cities, municipalities and municipal district, the sums necessary o refund the payments made by the Government of the Republic of the Philippines in any proportion which the Auditor General may approve and which will insure their collection.