AN ACT CREATING THE METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM AND DISSOLVING THE NATIONAL WATERWORKS AND SEWERAGE AUTHORITY; AND FOR OTHER PURPOSES.

Case Overview and Summary

Summary of Republic Act No. 6234

Declaration of Policy (Section 1)
- Proper operation and maintenance of waterworks and sewerage systems are essential public services vital to public health and safety.
- The establishment, operation, and maintenance of such systems must be supervised and controlled by the state.

Creation, Name, Domicile, and Jurisdiction (Section 2)
- Creates the Metropolitan Waterworks and Sewerage System (MWSS), a government corporation.
- Domicile and principal place of business is in Manila City.
- MWSS has jurisdiction over waterworks and sewerage systems in specified cities and municipalities.
- Local governments can elect to separate from MWSS by giving notice within 30 days.
- Water rights enjoyed by NWSA in different cities and municipalities are transferred to MWSS or local systems.

Attributes, Powers, and Functions (Section 3)
- MWSS has a corporate term of 50 years, renewable for another 50 years.
- It can construct, maintain, and operate waterworks and sewerage systems.
- It can fix water rates and sewerage service fees based on specified standards (Section 12).
- It can acquire, purchase, hold, transfer, sell, lease, rent, mortgage, encumber, and dispose of real and personal property.
- It can exercise the right of eminent domain.
- It can contract indebtedness and issue bonds with the President's approval.
- It can approve, regulate, and supervise commercial, industrial, and governmental waterworks and deepwells within its jurisdiction.
- It has the exclusive right to test, mount, dismount, and remount water meters within its jurisdiction.

Board of Trustees (Section 4)
- The corporate powers and functions of MWSS are vested in a Board of Trustees composed of a Chairman, the General Manager as ex-officio Vice-Chairman, and three members.
- One member shall be nominated by the labor union representing the majority of rank and file employees.
- The Chairman and members are appointed by the President with the consent of the Commission on Appointments for a term of three years.

Suspension and Removal of Trustees (Section 5)
- Trustees may be suspended or removed by the President for cause, upon the recommendation of the Secretary of Justice, after due notice and hearing.

Meetings of the Board (Section 6)
- A majority of the Board constitutes a quorum for transaction of business.
- The affirmative vote of three is required for adoption of any action.
- The Chairman and members receive a per diem of ₱100 for actual attendance at meetings, but not more than ₱400 per month.

Officers and Employees (Section 7)
- The management of MWSS is vested in the General Manager, assisted by four Assistant General Managers and department heads.
- The General Manager is appointed by the President with the consent of the Commission on Appointments for a term of six years, with an annual compensation of ₱36,000.
- The Assistant General Managers are appointed by the Board with the President's approval, with an annual compensation of ₱28,000, and hold office until retirement age.
- Department Heads, Division and Section Chiefs, and other officers of equivalent rank are appointed or promoted by the General Manager with the Board's approval.
- All other personnel are appointed or promoted by the General Manager.

Powers and Duties of the General Manager (Section 8)
- The General Manager directs and manages MWSS in accordance with the Board's policies.
- The General Manager controls, directs, and supervises all officers and employees under him.
- The General Manager can remove, suspend, or discipline Department Heads, Division and Section Chiefs, and other officers of equivalent rank, subject to the Board's approval.
- The General Manager can remove, suspend, or discipline all other personnel, subject to appeal to the Board.
- The General Manager can detail any officer or employee for up to six months without reduction in salary.
- The General Manager submits an annual budget and plantilla of personnel to the Board.
- The General Manager submits monthly financial and operational reports, and an annual report to the Board.

Appointment and Promotion (Section 9)
- Officers and employees of MWSS are not subject to the Civil Service Law, rules, and regulations.
- MWSS can conduct appropriate examinations as additional bases for appointment and promotion.
- The terms and conditions of employment are governed by law, except that the WAPCO rules and regulations do not apply, without prejudice to the right of collective bargaining.

Administrative Jurisdiction for Disciplining Officers and Employees (Section 10)
- The General Manager can remove, demote, suspend for up to one year without pay, or fine up to six months' salary any subordinate officer or employee for specified causes, after due notice and hearing.
- Transfers without reduction in rank and salary are not considered disciplinary when made in the interest of public service and approved by the Board.

Audit (Section 11)
- The Auditor General appoints an Auditor and necessary personnel to audit MWSS's financial transactions.
- The Auditor General fixes the salaries and number of auditing personnel.
- The Auditor General submits an Audit Report for each fiscal year to the President, Congress, and the Board within 90 days after the close thereof.

Review of Rates by the Public Service Commission (Section 12)
- The rates and fees fixed by the Board shall not exceed a 12% rate of return on a rate base composed of assets in operation plus two months' operating capital.
- Rates and fees are effective 15 days after publication in a newspaper of general circulation.
- The Public Service Commission has exclusive original jurisdiction over cases contesting the rates or fees.
- Complaints against rates or fees must be filed within 30 days after effectivity, but filing does not stay the effectivity.
- The Public Service Commission verifies the rate base and rate of return, and renders a decision within 90 days.
- Excess payments are reimbursed or credited to future payments if the decision is against the fixed rates or fees.

Disposition of Income (Section 13)
- MWSS's income is disposed of according to the following priorities:
1. Pay contractual and statutory obligations, and meet essential current operating expenses.
2. Allocate at least 50% of the balance exclusively for expansion, development, and improvement of the System.
3. Allocate the residue for enhancing efficient operation and maintenance, including increases in administrative expenses or salaries and benefits of employees.

Assistance to Local Systems (Section 14)
- MWSS may provide technical and management assistance to local waterworks and sewerage systems upon request.
- MWSS may charge actual expenses incurred plus 10% as overhead expenses for this service.

Abolition of NWSA and Transfer of Assets, Liabilities, and Personnel (Section 15)
- The National Waterworks and Sewerage Authority (NWSA) is abolished upon the organization of MWSS.
- NWSA's records, properties, equipment, assets, rights, choses in action, obligations, and liabilities are transferred to and assumed by MWSS.
- The Auditor General conducts an inventory and valuation of NWSA's properties, and NWSA's accountable officers remain accountable until issued a clearance certificate.
- Employees and laborers of NWSA, including the planning and coordinating office and provincial, city, and municipal departments in specified areas, are transferred to and absorbed by MWSS.
- The Board of Trustees is authorized to make personnel movements based on merit and fitness, without reducing salaries.
- Expenses for salaries, wages, allowances, emoluments, and other fringe benefits cannot exceed 35% of MWSS's gross income in the immediately preceding fiscal year.

Gratuity (Section 16)
- NWSA personnel not appointed or refusing appointment in MWSS are paid the money value of accumulated vacation and sick leave, and retirement gratuity due under existing retirement laws.
- Those not qualifying under existing retirement laws are paid one month's salary for every year of service, in a lump sum.
- ₱15 million is appropriated from the national treasury to provide for separation gratuities, accumulated vacation and sick leaves, and/or retirement, subject to reimbursement by MWSS within three fiscal years.
- Personnel of the Wells and Springs Department whose salaries are paid from Congressional Appropriations and cannot be absorbed by the Bureau of Public Works are paid terminal pay and retirement gratuity from Congressional Appropriations.

Transfer of Local Systems (Section 17)
- When a local government exercises the right to separate from MWSS, the local systems, employees, laborers, records, properties, equipment, assets, choses in action, obligations, and liabilities are ceded, transferred, and conveyed to the respective provinces, cities, and/or municipalities.
- Employees and laborers not appointed in the local system or refusing appointment are paid from the ₱15 million appropriation for accumulated vacation and sick leaves, and retirement gratuities.
- Employees and laborers, records, property, and equipment of the Wells and Springs Department are ceded, transferred, and conveyed to the Bureau of Public Works.
- Systems initially constructed and operated by NWSA are ceded, transferred, and conveyed to the provinces, cities, or municipalities they serve, with outstanding obligations assumed by the local government.
- Outstanding bond indebtedness is guaranteed by the national government until fully paid.
- The Auditor General determines the accounts and liabilities of the respective local governments.
- Conflicts between local governments served by one system are decided by a board composed of their respective mayors, treasurers, and a representative of the Auditor General.

Tax Exemption (Section 18)
- Articles imported by MWSS or local governments for the exclusive use of their waterworks and sewerage systems, such as machineries, equipment, pipes, fire hydrants, and those related to or connected with the construction, maintenance, and operation of dams, reservoirs, conduits, aqueducts, tunnels, purification plants, water mains, pumping stations, or artesian wells and springs within their territorial jurisdictions, are exempt from import duties and other taxes.

Repeal or Modification (Section 19)
- All Acts, executive orders, administrative orders, and proclamations or parts thereof inconsistent with any provisions of this Act are repealed or modified accordingly.

Separability Clause (Section 20)
- If any provision of this Act or its application to any person or circumstance is declared unconstitutional, the remainder of the Act or its application to other persons or circumstances shall not be affected.

Effectivity (Section 21)
- This Act takes effect upon its approval on June 19, 1971.