EXECUTIVE ORDER NO. 577
EXECUTIVE ORDER NO. 577 - CREATING
THE RURAL WATERWORKS DEVELOPMENT CORPORATION, PRESCRIBING ITS POWERS
AND ACTIVITIES, APPROPRIATING THE NECESSARY FUNDS THEREFOR, AND FOR
OTHER PURPOSES
WHEREAS,
it is a declared policy of the State to provide a complete coverage of
water supply services for the whole country;
WHEREAS, the provision of water supply in Metropolitan Manila and in
the larger municipalities and cities has been assigned to the
Metropolitan Waterworks and Sewerage System (MWSS) and the Local Water
Utilities Administration (LWUA), respectively;
WHEREAS, the other areas not covered by the MWSS and the LWUA are
predominantly rural areas and the efforts of providing the water supply
needs of the residents therein are fragmented among many different
agencies; and
WHEREAS, under Presidential Decree No. 1416, the President is empowered
to undertake such organizational and related improvements as may be
appropriate in the light of changing circumstances and new
developments.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution and the
authority vested in me by Presidential Decree No. 1416, do hereby order
and ordain;
CHAPTER
I
Declaration of Policy; Creation
of RWDC
Section 1. Declaration of Policy. — It is hereby
declared to be the policy of the State to pursue in an orderly and
vigorous manner the attainment of complete coverage of water supply
services for the whole country. Complete coverage cannot be achieved
unless service to the urban and densely populated areas is combined
with service to the thinly settled rural areas. The rationalization of
the water supply sector structure, shall, therefore, be pursued in
accordance with the following strategies:
a)
The National Water Resources Council shall be responsible for
formulating policies and framework plans for water supply. Consistent
with these policies and framework plans, the Ministry of Public Works
shall be responsible for developing integrated national water supply
plans and programs covering all sectors and agencies concerned;
b) The MWSS
shall concentrate its operations in Metropolitan Manila and such
contiguous areas as may be added to its area of jurisdiction in
accordance with the provisions of its charter;
c) The LWUA
shall promote water districts in cities and municipalities with a
population of at least 20,000 each; and
d) A separate
and permanent institution shall handle the rural water supply sector
and areas not serviced by the abovementioned agencies.
To attain the objectives of water supply service coverage of rural
areas, the Government shall encourage self-help and self-reliant water
supply projects and promote the organization of non-profit, non-stock
rural waterworks associations, or cooperatives hereinafter to be
referred to as RWA’s.
The heavy financial burdens that RWA’s must sustain to become
effectively established and operationally stable indispensably
necessitate every tenable support and assistance by the National
Government, its instrumentalities and agencies to the fullest extent
possible.
Sec. 2. Creation of Rural Waterworks Development
Corporation. — To implement the foregoing policy, there is hereby
created a public corporation to be known as the Rural Waterworks
Development Corporation hereinafter referred to as the Corporation,
which shall be primarily responsible for the formation of RWA’s that
will construct, operate and maintain water supply systems in the rural
areas. It shall likewise, provide technical, institutional and
financial assistance to the RWA’s. The Corporation shall be directly
under the Office of the President.
Sec. 3. Relationship with the Ministry of Public
Works. — The Ministry of Public Works shall serve as the principal
implementing agency of the Corporation for engineering and construction
of water supply projects.
CHAPTER
II
Corporate Powers
Sec. 4. General Powers. — The Corporation shall
have the following general powers:
a)
To have continuous succession under its corporate name until otherwise
provided by law;
b) To adopt,
amend and/or repeal its by-laws;
c) To adopt
and use a seal and alter it at its pleasure;
d) To sue and
be sued;
e) To enter
into relevant contracts of every name and nature and to execute all
pertinent instruments for their execution and implementation;
f) To borrow
funds from any source, private or public, foreign or domestic, and to
issue bonds and other evidence of indebtedness, the payment of which
shall be guaranteed by the National Government;
g) To receive,
take and hold by bequest, devise, gift, purchase or lease, either
absolutely or in trust for any of its purposes, from foreign and
domestic sources, any asset, grant or property, real or personal,
subject to such limitations as are provided in existing laws and
regulations; and to convey such assets, grants or properties; invest
and reinvest the same under this provision and deal with and expand its
assets and income in such manner as will best promote its objectives;
h) To exercise
the right of eminent domain whenever the Corporation deems it necessary
for the attainment of its objectives;
i) To
prescribe rules and regulations in the conduct of its general business
as well as to fix and implement the terms and conditions of its related
activities;
j) To
establish, operate and maintain branch or field offices when required
by the exigencies of its business subject to the provisions of Sec. 24;
k) To
determine its organizational structure and the number, positions and
salaries of its personnel; and
l) To exercise
such powers and do such things as may be necessary to carry out the
business and purposes for which the Corporation was established or
which from time to time may be declared by the Board of Directors to be
necessary, useful, incidental or auxiliary to accomplish such purposes;
and generally, to exercise all powers of a Corporation under the
Corporation Law that are not inconsistent with the provisions of this
Executive Order.
Sec. 5. Specific Powers. — The Corporation is
hereby authorized and empowered to promote, encourage and assist RWA’s
to the end of making adequate water supply services available to
residents of the rural areas not served nor covered by the LWUA and the
MWSS and for this purpose it is hereby specifically authorized and
directed:
a)
To prepare feasibility studies and development plans for water system
development including the procurement of necessary facilities, devises
and accessory equipment;
b) To
cooperate, coordinate and exchange such information, studies and
reports with and to seek the cooperation of other agencies and
instrumentalities of the National Government including government-owned
or controlled corporations, as will be most effectively conducive to
the achievement of the purposes of this Executive Order;
c) To provide
managerial or administrative expertise including the rendering of
professional and training services for the development of the staff and
employees of the RWA’s;
d) To have
exclusive jurisdiction to receive from RWA’s all articles of
incorporation and by-laws and amendments thereof, consolidations,
merger, conversion, dissolution, annual financial statements, changes
in the location of principal offices, annual elections and other
related documents and, upon determining that such are in conformity
with this Executive Order and the pertinent provisions of related
legislation, to certify the same, to file them in its records and
maintain a registry of such filing;
e) To make
loans to RWA’s for the construction and acquisition of facilities,
related properties, and equipment for supplying water services and for
the restoration, improvement or expansion of such facilities;
f) To provide
or arrange for grants to RWA’s for point source development, under such
terms and conditions as the Board may determine;
g) To approve
or disapprove any request for permission to acquire loans from other
lenders to RWA’s which at the time are borrowers of the Corporation;
and
h) To report
annually to the President of the Philippines on the status of its
operations, including a comprehensive report of loans extended, areas
serviced as a result of such loans, and other activities.
CHAPTER
III
Capitalization and Financing
Sec. 6. Capitalization. — The authorized capital
stock of the Corporation is one billion pesos divided into ten million
shares with a par value of one hundred pesos per share which shall be
wholly subscribed by the National Government and shall be appropriated,
programmed and released upon consultation with the Minister of the
Budget and in accordance with Presidential Decree No. 1177.
A standing annual sum of P20 million is hereby authorized to be
appropriated out of any funds in the National Treasury not otherwise
appropriated to cover grants, institutional development, manpower
developmental training and technical assistance of the Corporation.
Sec. 7. Loan Standards. — Only RWA’s shall be
entitled to loans from the Corporation. In extending the loans
authorized under Sec. 5 (e) hereof, the Board is hereby authorized,
empowered and directed:
a)
Prior to approving such loan to determine that:
1)
The project is financially feasible for the purpose for which the loan
is applied for;
2) Funds are
or will be imminently available for the total advancement of such loan
to the borrower on the schedule contemplated under the loan
agreement;
3) The
borrower is financially capable of complying with the terms and
conditions of the loan;
b)
To require that the loan be self-liquidating within the terms and
conditions specified;
c) To require
that the amount of loan applied for does not exceed ninety (90) per
cent of the total cost of the project;
d) To impose
reasonable interest rates;
e) To fix
schedules for repayment; and
f) To require compliance with the pertinent
procedures, rules and regulations promulgated by the Board of Directors
of the Corporation to assure that the purposes of such loan will be
timely achieved and that the loan agreement and the provisions of this
Act shall be complied with.
Sec. 8. Enforcement Powers. — If any RWA with an
outstanding loan(s) with the Corporation shall default in the payment
of its principal and/or interest or shall fail to comply with any of
the terms and conditions of the loan agreement or any rule or
regulations promulgated in implementation of this Executive Order, the
Board of Directors of the Corporation is hereby authorized to do any or
any combination of the following:
a)
Refuse approval of any new loan to the borrower;
b) Withhold
without limitation the Corporation’s advancement, or withhold its
approval for any other lender with respect to which the Corporation has
such approval power to make advancement of any funds pursuant to any
loan already made to the borrower;
c) Withhold
any technical or professional assistance being furnished or that might
be furnished to the borrower;
d) Foreclose
any mortgage or deed or trust or other security held by the Corporation
on the properties of the borrower. In this connection, the Corporate
may, subject to any superior or co-equal rights in such lien held by
any other lender;
1) Bid for and
purchase or otherwise acquire such property (lies);
2) Pay the
purchase price thereof and any cost and expenses incurred in connection
therewith out of the revolving fund;
3) Accept
title to such properties in the name of the Republic; and
4) Even prior
to the institution of foreclosure proceedings, operate or lease such
properties for such period and in such manner as may be deemed
necessary or advisable to protect the investment therein, including the
improvement, maintenance and rehabilitation of facilities and systems
to be foreclosed, but the Corporation shall, within three years from
acquiring such properties in foreclosure proceedings, sell the same for
such consideration as it determine most conducive to the purpose of
this Executive Order; or
e) Take any
other remedial measures which the loan agreement may provide.
In addition to the foregoing, the Corporation may petition any court
having jurisdiction for such purpose or any administrative agency
possessing regulatory powers for such purpose to issue order and afford
such lawful relief as may be necessary.
Sec. 9. General Conditions of Loans. — All loans
extended by the Corporation shall be subject to the following general
conditions:
a)
No borrower shall, without the prior approval of the Board and of any
other lender holding and sharing a lien on such borrower’s properties,
sell or dispose of the whole or any part of the property, rights,
franchise, permits or any other assets acquired and/or mortgaged
pursuant to the provisions of this Executive Order until all the
outstanding indebtedness including interest thereon to the Corporation
and any other such lender shall have been fully paid; Provided, That
the Corporation may be appropriate rule or regulation grant general
permission to borrowers to dispose of incidental real and/or personal
properties, rights, franchise, permits or other assets no longer deemed
necessary or useful in conducting the borrower’s operation.
b) No
association with an outstanding loan with the Corporation shall borrow
money from any source without the prior written approval of the
Corporation; Provided, That the Board of Directors of the Corporation
may, by appropriate rules or regulations, grant general permission to
such associations to secure short term loans not requiring the
encumbering of their real properties or a substantial portion of other
properties or assets.
The foregoing conditions shall be included by reference or
incorporation in all loans approved by the Corporation.
Sec. 10. Foreign/Local Loans. — With the prior
approval of the President, upon recommendation of the Minister of
Finance, the Corporation may borrow from local or foreign private or
public institutions such amount as may from time to time be required by
its operations or to issue bonds and other evidences of indebtedness.
Notwithstanding the provisions of any law to the contrary, the Central
Bank is hereby authorized to extend loans and advances to the
Corporation, subject to such terms and conditions as may be prescribed
by the Monetary Board. The bonds, promissory notes and other debt
instruments shall be at such interest rates, maturities and other terms
and conditions as the Corporation may determine and shall be secured by
the assets of the Corporation. Such debt instruments shall be fully
exempt both as to principal and interest, from any and all taxes
imposed by the government or any of its branches. They shall be fully
negotiable and unconditionally guaranteed by the National Government.
No part of the proceeds of the loans provided in this Section shall be
used for the operation of the Corporation.
Sec. 11. Sinking Fund. — A sinking fund shall be
established for the payment of the Corporation’s bonds in such manner
that the total contribution thereto accrued at such rate of interest as
may be determined by the Minister of Finance in consultation with the
Monetary Board shall be sufficient to redeem the bonds at maturity.
Said fund shall be under the custody of the Central Bank which shall
invest the same, subject to the approval of the Monetary Board,
provided that the proceeds thereof shall accrue to the Corporation.
A standing annual appropriation is hereby made out of any general funds
in the National Treasury in such amount as may be necessary to provide
for the sinking fund created herein and for the interest on bonds which
may be issued by the Corporation by virtue hereof.
Sec. 12. Earnings of the Corporation. — Earnings
which may be realized from the operations of the Corporation shall
accrue to and be automatically appropriated as part of the corporate
earnings of the Corporation, any provision of law to the contrary
notwithstanding.
Sec. 13. Expenditures and Disbursements. — The
Corporation, the Commission on Audit, and the Ministry of Budget shall
adopt special procedures on expenditures and disbursements of the
Corporation, which procedures shall be most responsive to the needs and
operation of the Corporation.
Sec. 14. Auditor. — The Commission on Audit shall
appoint, a representative who shall be the auditor of the Corporation.
CHAPTER
IV
Management and Personnel
Sec. 15. Board of Directors. — All powers of the
Corporation shall be vested in and exercised by the Board of Directors
hereinafter referred to as the Board, which shall be composed of the
Minister of Human Settlement as Chairman and as members, the Minister
of Public Works, the Minister of Local Government and Community
Development, the Minister of Health, the Executive Director of the
National Water Resources Council, the General Manager of the Local
Water Utilities Administration and the General Manager of the
Corporation.
The General Manager shall be the Vice-Chairman of the Board. In the
absence of the Chairman, he shall act as Chairman.
Sec. 16. Vacancies. — Board vacancies may be
temporarily filled by appointment by the President from senior
responsible officials of the Ministries/agencies concerned.
Sec. 17. Meetings, Per Diems, Allowances. — The
Board shall meet regularly at least twice a month. Upon call of the
Chairman, special meetings of the Board shall be held as often as
exigencies demand.
The Chairman and Members of the Board shall be entitled to a per diem
per actual meeting attended at such amount as may be fixed by the Board
but not exceed P1,500 a month.
The Board may provide for travelling and representation allowances for
the Chairman and members of the Board in such amount as it may
determine.
Sec. 18. Notice. — Notice of meetings shall be
served on Board Members either personally or by mail at least
twenty-four (24) hours prior to the date of the meeting.
Sec. 19. Quorum. — The presence of at least four
(4) members shall constitute a quorum to do business. Unless otherwise
provided by law, the affirmative vote of the majority of the quorum
shall be sufficient for the approval of any resolution, decision or
order.
Sec. 20. Powers and Duties of the Board. — The
Board shall have the following powers and duties:
a)
To formulate and adopt policies and plans for the management operation
and conduct of the affairs of the Corporation;
b) To
implement the provisions of this Executive Order and for this purpose
to formulate and promulgate rules and regulations;
c) To adopt or
amend the annual budget of the Corporation;
d) To approve
the organizational structure of the Corporation its staffing pattern
and to determine the powers, duties, and salaries of its
personnel;
e) To
determine the powers and duties of duly designated personnel from other
government agencies called upon to assist the Corporation in the
exercise of its powers and to grant honoraria and/or allowance to such
personnel;
f) To exercise
all the general and specific powers of the Corporation unless otherwise
provided in this Executive Order and
g) To delegate
any of its powers to a duly designated representative.
Sec. 21. Secretary of the Board. — The Corporate
Legal Counsel shall act as the Secretary of the Board and shall have
such additional duties and functions as the Board may determine.
Sec. 22. General Manager. — The management of the
Corporation shall be vested in the General Manager who shall be a
person of known integrity, competence and experience in technical and
executive fields related to the objectives of this Executive Order. He
shall be appointed by the President of the Philippines.
Sec. 23. Powers and Duties of the General Manager.
— The powers and duties of the General Manager shall be as follows:
a)
To execute, administer and implement policies, measures, rules and
regulations promulgated by the Board;
b) To direct
and supervise the operation and general administration of the
Corporation;
c) To
represent the Corporation in all its dealings;
d) To pass
upon and approve the corporate papers submitted under Sec. 5 (d)
hereof;
e) Subject to
the guidelines established by the Board, to appoint and fix the number
and compensation of subordinate officials and employees of the
Corporation; and
f) To exercise
such other powers and duties as may be provided in the By-Laws or
delegated by the Board.
Sec. 24. Organization and Personnel. — The Board
shall create such departments, divisions, sections, units and positions
as may be conducive to the attainment of the objectives of this
Executive Order and shall define their functions. Additional personnel
may be hired on contract basis as the exigencies of the services may
require. The Corporation shall not establish its own regional and local
organizations staffed with personnel of the Corporation but shall
instead make full use of existing regional, provincial and/or local
organizations of the Ministry of Public Works, the Ministry of Local
Government and Community Development, the National Electrification
Administration and such other government agencies as the Board may
designate, provide that the supervision and control of such functions
and responsibilities as may be delegated to these organizations shall
remain with the Corporation.
Sec. 25. Merit System. — All officials and
employees shall be selected, transferred, promoted and dismissed on the
basis of merit and fitness in accordance with a comprehensive and
progressive merit system to be established by the Board in conformity
with the Civil Service Law.
Sec. 26. Positions and Compensations. — The
positions and compensations of the officers and employees of the
Corporation shall be in line with those of comparable positions in
government corporations under the infrastructure and utilities sector.
Sec. 27. Conflict of Interest. — No member of the
Board, officer, agent or employee of the Corporation shall in any
manner directly or indirectly participate in the determination of any
question affecting any entity in which he or any of his relatives
within the third degree of consanguinity or affinity is directly or
indirectly interested nor shall such member, officer, agent or employee
become the guarantor or surety of any loans extended by the
Corporation.
CHAPTER
V
Rural Waterworks Association
Sec. 28. Organization. — Cooperative, non-profit,
non-stock associations to be known as Rural Waterworks Association
(RWA) may be organized for the purpose of supplying water services in
the rural areas.
Sec. 29. Powers and Functions. — Rural Waterworks
Association, shall be vested with all the powers and functions provided
for non-profit, non-stock corporations and cooperatives under the
Corporation Law and other related laws, rules and regulations and such
other powers and functions as may be provided in their Articles of
Incorporation and By-Laws as approved by the Corporation.
Sec. 30. Registration. — Any provision of law to
the contrary notwithstanding RWA’s organized under this Executive Order
shall be under the exclusive jurisdiction of the Corporation. Articles
of Incorporations and other corporate papers enumerated in Sec. 5
(d) herein shall be in effect on the date of the issuance of the
certification by the Corporation that the same conform to the
requirements of this Executive Order.
RWA’s and the like already existing at the time of the effectivity of
this Executive Order shall register with the Corporation to be entitled
to the benefits extended by the Corporation to RWA’s and be endowed
with the powers, rights, and privileges accorded by this Executive
Order to regular RWA’s.
Sec. 31. Rules and Regulations. — The Corporation
shall promulgate rules and regulations governing the registration of
RWA’s their management, operation and resolution of conflicts fifteen
(15) days after publication in the Official Gazette.
Sec. 32. Conflicts Between RWA’s. — In case of
conflict between two or more RWA’s the Corporation shall have the
jurisdiction to settle such conflicts subject to such rules and
regulations as the Board may promulgate.
CHAPTER
VI
Franchise
Sec. 33. Applicability. — This Chapter shall apply
only to franchise to supply water in areas outside the coverage of the
LWUA and the MWSS, with any question of jurisdiction to be settled by
the National Water Resources Council in case of dispute.
Sec. 34. Areas within LWUA or MWSS Coverage. —
Areas within a water district or falling within the coverage of the
LWUA or the MWSS may avail themselves of the benefits under this
Executive Order; Provided, That a written waiver shall first be secured
from the LWUA or the MWSS, as the case may be; and Provided, further,
That for purposes of this Executive Order, the MWSS shall have
jurisdiction over water supply provisions in Metropolitan Manila; and
the LWUA in larger municipalities and cities as well as in areas having
a population of at least 20,000.
The RWDC shall have jurisdiction over areas with a population of less
than 20,000. The identification of the areas of jurisdiction of the
LWUA and the RWDC shall be done by mutual agreement. However,
notwithstanding the provisions of this Section , they may, by mutual
arrangement allow the entry of one into the territory of the other for
purposes of pursuing their objectives.
Sec. 35. Franchising Power. — The power to grant
and thereafter to repeal or alter franchises to supply water is hereby
vested exclusively in the Corporation; Provided, That this Section shall not invalidate any franchise heretofore lawfully granted. The
Corporation is hereby authorized to notify and require every person
holding a water franchise to report to its, within 120 days after such
notice, an accurate description of the area encompassed, the number of
households wherein serviced, the date the franchise was granted and
such other information the Corporation may require.
Sec. 36. Authority to Grant Certificates of Public
Convenience (CPC) and/or Certificate of Public Convenience and
Necessity (CPCN). — Notwithstanding any provision of law to the
contrary, the Corporation shall have the authority to grant
Certificates of Public Convenience (CPC) or Certificates of Public
Convenience and Necessity (CPCN), as the case may be, to persons or
entities other than PWA’s that with to operate and maintain waterworks
systems in areas within the territorial jurisdiction of the
Corporation.
Sec. 37. Preference to RWA’s. — Whenever two or
more public service entities have competing interests with respect to
the granting, repeal, alteration or conditioning of the same water
franchise and one is a RWA duly organized under Chapter V herein, the
Corporation shall accord preference to the latter over any other type
of public service entity, unless the other one type of public service
entity will, as found by the Corporation, result to the immediate
furnishing of water supply service to (1) a greater number of
households, and (2) over a larger geographic area, on the comparative
basis of same or lower rates and charges.
Sec. 38. Compliance with Presidential Decree No.
1067. — Any form of authorization granted under the provisions of these
Chapter shall not exempt its holder from the provisions of Presidential
Decree No. 1067, otherwise known as the Philippine Water Code, on water
permits and registration.
Sec. 39. Furnishing Service Without a Valid CPC,
CPCN or Franchise Prohibited. — No person or entity shall extend and
charge for water supply service within area for which such person or
entity has not been granted a valid franchise, CPC, CPCN, or after such
franchise, CPC, CPCN has been cancelled or altered so as to prohibit
service therein.
CHAPTER
VII
Final Provisions
Sec. 40. Existing Agencies. — The Task Force on
Rural Water Supply of the National Water Resources Council is hereby
abolished and its personnel shall constitute the nucleus of the
Corporation. All other agencies of the government may undertake
projects on rural water supply provided they are in accordance with the
policies and guidelines of the Corporation.
Sec. 41. Separability of Provisions. — If any
provision of this Executive Order or the application of such provision
to any person or circumstances is declared invalid, the remainder of
the Executive Order or the application of such provision to other
persons or circumstances shall not be affected by such
declaration.
Sec. 42. Repealing Clause. — All laws, decrees,
executive orders, rules and regulations, inconsistent herewith are
hereby repealed or modified accordingly.
Sec. 43. Effectivity. — This Executive Order shall
take effect immediately.
DONE in the City of Manila,
this 12th day of January, in the year of Our Lord, Nineteen Hundred and
Eighty.
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Since 19.07.98.