Creating the Rural Waterworks Development Corporation, Prescribing Its Powers and Activities, Appropriating the Necessary Funds Therefor, and for Other Purposes

Case Overview and Summary

Summary of Executive Order No. 577

Declaration of Policy and Creation of RWDC
- The State shall pursue complete coverage of water supply services for the whole country, combining service to urban and densely populated areas with rural areas. (Sec. 1)
- The Rural Waterworks Development Corporation (RWDC) is created as a public corporation under the Office of the President, primarily responsible for forming Rural Waterworks Associations (RWAs) and providing them technical, institutional, and financial assistance. (Sec. 2)

Corporate Powers of RWDC
- RWDC has general corporate powers, including the power to borrow funds, issue bonds, exercise eminent domain, and establish branch offices. (Sec. 4)
- RWDC has specific powers to promote and assist RWAs, including preparing feasibility studies, providing managerial expertise, receiving and certifying RWA documents, making loans to RWAs, and approving or disapproving RWA loans from other lenders. (Sec. 5)

Capitalization and Financing
- RWDC has an authorized capital stock of 1 billion pesos, wholly subscribed by the National Government. (Sec. 6)
- A standing annual sum of 20 million pesos is appropriated for grants, institutional development, training, and technical assistance. (Sec. 6)
- RWDC can extend loans to RWAs, subject to specific standards and conditions, including a maximum loan amount of 90% of the project cost and reasonable interest rates. (Sec. 7)
- RWDC has enforcement powers over defaulting RWAs, including foreclosure and operation of properties. (Sec. 8)
- RWDC can borrow from local or foreign sources, issue bonds guaranteed by the National Government, and establish a sinking fund for bond redemption. (Sec. 10, 11)

Management and Personnel
- RWDC is governed by a Board of Directors chaired by the Minister of Human Settlement, with specific powers and duties. (Sec. 15, 20)
- The General Manager is appointed by the President and manages RWDC's operations. (Sec. 22, 23)
- RWDC shall use existing regional and local organizations of other government agencies instead of establishing its own. (Sec. 24)
- RWDC shall establish a merit system for personnel selection and promotion. (Sec. 25)

Rural Waterworks Associations (RWAs)
- RWAs are non-profit, non-stock associations organized to supply water services in rural areas. (Sec. 28)
- RWAs have powers and functions provided for non-profit corporations and cooperatives under the Corporation Law. (Sec. 29)
- RWAs are under the exclusive jurisdiction of RWDC for registration and certification of corporate papers. (Sec. 30)
- RWDC shall promulgate rules and regulations governing RWA registration, management, operation, and conflict resolution. (Sec. 31)

Franchising
- RWDC has exclusive power to grant, repeal, or alter franchises to supply water outside LWUA and MWSS coverage areas. (Sec. 33, 35)
- RWDC can grant Certificates of Public Convenience (CPC) or Certificates of Public Convenience and Necessity (CPCN) to entities other than RWAs. (Sec. 36)
- Preference shall be given to RWAs over other entities when granting franchises, unless the other entity can provide better service. (Sec. 37)
- Providing water supply service without a valid franchise, CPC, or CPCN is prohibited. (Sec. 39)

Final Provisions
- The Task Force on Rural Water Supply is abolished, and its personnel shall constitute the nucleus of RWDC. (Sec. 40)
- Inconsistent laws, decrees, executive orders, rules, and regulations are repealed or modified accordingly. (Sec. 42)