RA 6234

MWSS Charter

On June 19, 1971, Republic Act 6234 was enacted, creating the Metropolitan Waterworks and Sewerage System (MWSS) “to ensure an uninterrupted and adequate supply and distribution of potable water for domestic and other purposes at just and equitable rates.”  This Act concurrently dissolved the NWSA and all waterworks and sewerage systems under its control and supervision were thus ceded to the newly-created government corporation.  The rationale and objective for the creation of the MWSS was clearly expressed in Section 1 of RA 6234:

Declaration of Policy – The proper operation and maintenance of water works system to insure an uninterrupted and adequate supply and distribution of potable water for domestic and other purposes and the proper operation and maintenance of sewerage systems are essential public services because they are vital to public health and safety.  It is therefore declared a policy of the state that the establishment, operation and maintenance of such systems must be supervised and controlled by the State.

Expressed specifically, the corporate objectives of the MWSS are stated as follows:

1.  
   • Water Supply – to provide adequate, potable and safe water to the service areas at just and equitable rates
   • Waste Water  Disposal – to provide adequate, dependable and sanitary waste disposal to the MWSS clientele at just and equitable rates
   • Manpower and Organization – to provide a dynamic and satisfying atmosphere that would facilitate adequate recruitment and development of qualified and competent workforce committed to the attainment of organizational effectiveness and to enhance administrative services through computerization and the upliftment of its human resources
   • Viability – to generate sufficient revenue to be able to sustain operations and enhance development
   • Consumer and Community Relations – to enhance public awareness on the policies and programs of the MWSS to generate acceptance and support.

RA 6234 also defined the original jurisdiction of the MWSS to include all waterworks and sewerage systems in the cities of Manila, Pasay, Cavite and Caloocan; the municipalities of Antipolo, Cainta, Las Piñas, Makati, Malabon, Mandaluyong, Marikina, Montalban, Navotas, Parañaque, Pasig, Pateros, San Juan, San Mateo, Taguig, Taytay; all of Rizal province, the municipalities of Bacoor, Imus, Kawit, Noveleta, Rosario, all of Cavite province and Valenzuela Bulacan.

Presidential Decree 1269, issued on December 22, 1977 amended Section 2-c of RA 6234, expanding the jurisdiction of the MWSS to include “all waterworks and sewerage systems in Lungsod Silangan, Muntinlupa and, subject to the approval of the President, other areas that may come within the development path of the expanding Metropolitan Manila area, which areas the Board of the Metropolitan Waterworks and Sewerage System may, from time to time, determine and declare as contiguous to its service area and requiring immediate attention by the System…”

All other waterworks and sewerage systems under the supervision and control of the MWSS other than those earlier mentioned were ceded to the respective Local Government Units pursuant to PD 1406 (June 7, 1978) for qualification in the program of development of the Local Water Utilities Administration (LWUA).  On April 27, 1984, Batas Pambansa Blg. 799 placed all waterworks and sewerage systems in the province of Rizal under the supervision and control of the MWSS.

The more significant attributes, powers and functions of the MWSS, as provided in Section 3 of RA 6234 are listed below:

·  To construct, maintain and operate dams, reservoirs, conduits, aqueducts, tunnels, purification plants, water mains, pipes, fire hydrants, pumping stations, machineries and other waterworks for the purpose of supplying water to the inhabitant of its territory, for domestic and other purposes; and to purify, regulate and control the use, as well as prevent the wastage of water (Section 3-f);

·  To construct, maintain and operate such sanitary sewerages as may be necessary for the proper sanitation and other uses of the cities and towns comprising the System (Section 3-g);

·  To fix periodically water rates and sewerage service fees as the System may deem just equitable… (Section 3-h);

·  To construct, develop, maintain and operate such artesian wells and springs as may be needed in its operation within its territory (Section 3-i);

·  To construct works across, over, through and/or alongside, any stream, watercourse, canal, ditch, flume, street, avenue, highway or railway, whether public or private, as the location of said works may require… (Section 3-k);

·  To exercise the right of eminent domain for the purpose for which the System is created (Section 3-1);

·  To contract indebtedness in any currency and issue bonds to finance projects… with the approval of the President of the Philippines upon the recommendation of the Secretary of Finance (Section 3-m);

·  To approve, regulate and supervise the establishment, operation and maintenance of waterworks and deep wells within its jurisdiction operated for commercial, industrial and government purposes, and to fix just and equitable rates or fees that may be charged to the customers thereof (Section 3-n);

·  To assist in the establishment, operation and maintenance of waterworks and sewerage systems within its jurisdiction under cooperative basis (Section 3-o);

·  To approve and regulate the establishment and construction of waterworks and sewerage systems in privately-owned subdivisions within its jurisdiction (Section 3-p); and

·  To have exclusive and sole right to test, mount, dismount and remount water meters within its jurisdiction (Section 3-q)

Section 3-k of RA 6234 was amended by PD 425 to explicitly define the schedule of compensation for private persons whose property or person may be affected by constructions carried out by the MWSS.  The said decree provided that in case land needs to be acquired by purchase, compensation shall be based on the property’s fair market value (based on tax declaration), either at the time of filing of complaint for eminent domain or of the acquisition of the land by the MWSS, whichever is earlier, Damages to improvements such as houses, buildings, structures or agricultural crops incurred during the construction, operation and maintenance of the MWSS’ works are compensated based on prevailing  valuation or their respective values based on tax declarations.

2.  Amendments to the MWSS Charter

PD 425 also recognized the need to consider environmental concerns in the operations of the MWSS Section 3 of the Decree amended the System’s attributes, powers and functions to include the following:

“In the prosecution and maintenance of its projects and plants the System shall adopt measures to prevent environmental pollution and shall enhance the conservation, development and maximum utilization on national resources, including the improvement and beautification of its reservoirs,  filters plants, and other areas to promote tourism and shall provide for the necessary corporate funds therefore.”

As a public enterprise, the corporate powers of the MWSS are vested in its Board of Trustees. 

PD 425 has defined specifically the powers and functions of the Board of Trustees.  These powers include the formulation and adoption of operational policies, control over organizational and personnel concerns, and the authority, subject to the approval of the President of the Philippines, to recommend the appointment of a General Manager and also suspend or remove for cause any Assistant General Manager by majority vote.  The Board also has the duty:

“To issue such rules and regulations as may be necessary for the sanitary protection of watersheds, reservoirs, conduits, springs, and other water sources; for proper operation of water supply lines and sanitary sewers; for the preservation and protection of water and sewer service as soon as established; and for proper procedures in applying for approval of, and connection to, water and/or sewer services…”  (Section 4-h, PD 425)

Executive Order No. 796 issued on May 6, 1982, further amended the Board’s composition and reiterated the requirement for the inclusion of one representative from the Labor Union to sit as a member.  The Order explicitly designated the Minister of Public Works and Highways as Chairman and increased the Board’s membership to seven, comprised of the Chairman, Vice Chairman (GM of the MWSS), the Labor Union representative and four other members to be appointed by the President of the Republic.  Presidential Decree No. 1940, dated June 20, 1984 designated the then Deputy Minister of Public Works and Highways for Construction and Quality Control as the ex-officio General Manager of the MWSS.

On June 27, 1985, Executive Order No. 1036 was issued institutionalizing a new organizational structure for the MWSS.  The General Manager’s position was converted to Administrator, and the Senior Deputy Administrator and other Deputy Administrators’ positions were instituted to supplant the former Assistant General Managers.  Thus, the composition of the Board of Trustees was again altered.  Pursuant to EO 1036, the Board was to be composed of seven members, with the Minister of Public Works and Highways as ex-officio Chairman unless the President of the Philippines appoints any other person, the MWSS Administrator as Vice-Chairman, four presidential appointees as members, and the Government Corporate Counsel as ex-officio member and legal adviser.

In 1987, President Corazon Aquino recognized the need to increase the present composition of the Board of Trustees of the MWSS “to make it effectively discharge its functions”.  Thus, she issued Executive Order No. 197 on June 17 of the same year to increase the membership of the board to nine, with the Secretary of Public Works and Highways as ex-officio Chairman (unless another person is appointed by the President), the Administrator as Vice-Chairman, six (from four) presidential appointees and the Government Corporate Counsel as an ex-officio member and legal adviser.

The MWSS was initially created as a non-stock corporation, as RA 6234 was silent regarding the equity-base of the System.  However, in 1974, due to the increased water demand from its clientele particularly from industrial and commercial establishments, the MWSS was about to undertake the first phase of a long-range program of construction, development and improvement of the water system in its service area.  Former President Marcos also recognized the need to allow MWSS management wider latitude of fiscal projections for a more effective maintenance of an adequate sewerage disposal system.  Thus, PD 425 issued on March 28, 1974, converted the MWSS into a stock corporation to provide the System with reliable and definite capitalization for its programs and projects.  This Decree authorized an initial capital stock of one billion pesos, divided into ten million shares at a par value of one-hundred pesos each.  PD 1406, issued on June 7, 1978, increased capital stock to three billion pesos, divided into thirty million shares and on November 12, 1985, EO 1063 increased this further to eight billion, divided into eighty million shares, retaining the constant par value of one hundred pesos per share.

Section 18 of RA 6234 exempted the MWSS from the imposition of taxes on all articles that it may import for use in the waterworks and sewerage systems within its jurisdiction.  PD 425 amended said provision to explicitly state that the System shall be non-profit in character and thus, it shall devote returns from capital investment and taxes revenues from operations for expansion and improvement of services.  The Decree also exempted the MWSS from all taxes, duties, fees, imposts, charges and restrictions of the Republic.  This  includes income, realty and franchise taxes, compensating taxes, advanced sales tax and import fees/tariffs.

As provided for in its Charter, the MWSS has the power to fix rates and fees at it may deem just and equitable.  Section 12 of RA 6234 provided that the rates and fees fixed by the Board of Trustees (and by the LGU’s for local systems) shall be such that the MWSS rate of return does not exceed twelve percent (12%), on a rate base composed of the value of its assets in operation and two months’ operating capital. 

The System has two main sources of income, capital investment and revenues from operations.  Being a corporation, it can retain its revenues and spend these as needed, without the obligation to turn to Congress yearly for budget allocation.  However, RA 6234 (Section 13) specifically identified three priorities for which income should be allocated.  These are:

·     To pay for contractual and statutory obligations and to meet its essential current operating expenses;

·     To serve at least fifty percent (50%) of the balance exclusively for expansion, development and improvement; and

·     To allocate the residue to enhance the efficient operation and maintenance of the System which include increases of administrative expenses or increases or adjustment of salaries and other benefits of employees

The MWSS also has the authority to incur indebtedness from domestic and foreign creditors.  In terms of domestic sources, the System can incur indebtedness or issue bonds, for a specific purpose expressly stated via Board Resolution, subject to the approval of the Secretary of Finance.  PD 425 provided for a total principal domestic indebtedness ceiling of not more than one billion pesos at any given time.  PD 1406 subsequently increased this ceiling to three billion pesos in 1978.  Payment of the principal and interest of bonds issued by the MWSS is guaranteed by the Philippine Republic and thus the latter would pay for these in case the former is unable to do so.

The MWSS is also authorized to contract loans and credits from foreign governments, international institutions and other fund sources.  PD 425 provided a foreign debt ceiling of two hundred million dollars, or its equivalent in other currencies.  The President of the Republic or his duly authorized representative has the authority to negotiate with such foreign fund sources on behalf of the MWSS and guarantee, as primary obligor, the payment of such by R.A. 6234: