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EIGHTEENTH CONGRESS OF THE
REPUBLIC OF THE PHILIPPINES

Second Regular Session
HOUSE OF REPRESENTATIVES
HOUSE BILL No. 8733

Introduced by REPRESENTATIVE VIRGILIO S. LACSON

Our water resources are invaluable assets for the Filipino people. They contribute to the
historical, political, economic and cultural development of the country. The United Nations
Environment under the UN Decade on Ecosystem Restoration declared the importance of
protecting of the marine environment to assure food security by preserving the ecological balance
of food chains. The destruction of our bays and rivers threatens the stability of our food supply.
Destructive fishing practices, massive pollution, and unmitigated land conversion of wetlands
and coastal areas have also contributed to the deterioration of our water resources.

While we recognize the economic benefits brought to the country by utilizing our water
resources, there must be a balance of interests between economic progress and environmental
protection. No less than the Constitution provides for the right to “a balanced and healthful
ecology”. Without proper management of our resources, we run the risk of losing one of the most
important natural resources we have. Countless people depend on these resources for sustenance
and livelihood. Additionally, its historical significance and environmental importance call for the
need to create a body corporate that shall focus on its protection and preservation.

This Bill seeks to create the Manila Bay, Rivers, and Waters Authority, which shall have
the sole mandate to promote, and accelerate the development, protection and balanced growth of
all the water resources within the its jurisdiction with due regard and adequate provisions for
environmental management and control, preservation of the quality of human life and ecological
systems, and the prevention of undue ecological disturbances, deterioration and pollution. The
creation of a central body, which will be in charge of managing all of our water resources in key
metropolitan areas, shall ensure that there is a delicate balance between our rapid industrial and
economic development, and the protection of our environmental resources.

In this regard, the approval of this Bill is urgently sought.

ee
HON. <GILIO S. LACSON

Manila Teachers Partylist


EIGHTEENTH CONGRESS OF THE
REPUBLIC OF THE PHILIPPINES )

Second Regular Session

HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 8733

Introduced by REPRESENTATIVE VIRGILIO S. LACSON

AN ACT
CREATING THE MANILA BAY, RIVERS, AND WATERS AUTHORITY
APPROPRIATING FUNDS THEREFOR

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

Section 1. Short Title. This Act shall be known a “Manila Bay, Rivers, and Waters
Authority Act”,

Section 2, Declaration of Policy. It shall be the policy of the State to promote, and
accelerate the development, protection and balanced growth of all bodies of water with due
regard and adequate provisions for environmental management and control, preservation of the
quality of human life and ecological systems, and the prevention of undue ecological
disturbances, deterioration and pollution.

Section 3. Creation of the Authority. For the purpose of carrying out and effecting
the declared policy, as provided for in Section 2 hereof, there is hereby created a body corporate
to be known as the Manila Bay, Rivers, and Waters Authority, hereinafter referred to as the
Authority, which shall be organized within one hundred twenty (120) days after the approval of
this Act.

‘The Authority shall have jurisdiction over the Manila Bay, including all connected bodies
of water and its tributaries. The Authority shall execute the powers and functions herein vested
and conferred upon it in such a manner as will, in its judgment, aid to the fullest possible extent
in carrying out the aims and purposes set forth below.

Section 4. Powers and Function. The Manila Bay, Rivers, and Waters Authority,
otherwise known as the MBRWA, has the following powers and function:
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a) To succeed on its corporate name;
b) To sue and be sued in such corporate name;
©) To adopt, alter and use a corporate seal;

4) To adopt, amend, and repeals its by-laws;

e) To enter into contracts of any kind and description, to enable it to carry out its
purposes and functions under this Act;

£) To acquire, buy, purchase, hold or lease, such personal and real property as it
deems necessary or convenient in the transaction of its business and/or in relation
with carrying out its purposes under this Act; and to lease, mortgage, sell, alienate,
or otherwise encumber, utilize, exploit or dispose any such personal and real
property held by it, subject to prior or existing individual or communal right of
private parties or of the government or any agency or enterprise thereof.

g) To exercise the right of eminent domain whenever the Authority deems it
necessary for the attainment of the objectives of the Authority under this Act;

h) To borrow funds from any local or foreign financial institutions independent
of the bonds it may issue or may continue to issue, to carry out the purposes of
this Authority under this Act;

i) To purchase, hold, alienate, mortgage, pledge or otherwise dispose of the shares
of the capital stock of, or any bond, securities, or other evidence of indebtedness
created by any other corporation, co-partnership, or government agencies or
instrumentalities; and while the owner of said stock to exercise all the rights or
ownership, including the right to vote thereon; Provided, That the Authority shall
not invest its funds in any highly risky debt instruments issued without recourse
to commercial banks or investment houses as well as in any highly speculative
stocks.

{j) For carrying on its business, or for the purpose of attaining or furthering any of
its objectives, to perform any and all acts which a corporation, co-partnership, or
natural person is authorized to perform under the laws now existing or which may
be enacted hereafter.

k) To issue such rules and regulations as may be necessary to effectively carry
out the powers and purposes herein provided including the plans, programs and
projects of the Authority, subject to the approval of the NEDA, the same to take
effect thirty (30) days after publication thereof, in a newspaper of general
circulation.

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Section 5. Location of principal office. The Authority shall maintain its principal
office at a convenient place within Metro Manila, but it may have branch offices in such other
places as are necessary for the proper conduct of its business.

Section 6. Special Powers and Functions. The Authority shall exercise perform the
following powers and functions:

(a) To make a comprehensive survey of the physical and natural resources and
potentialities of all bodies of water located under its jurisdiction, particularly its
social and economic conditions, hydrologic characteristics, power potentials,
scenic and tourist spots, regional problems, and on the basis thereof, to draft a
comprehensive and detailed plan designed to conserve and utilize optimally the
resources within the region to promote the region's rapid social and economic
development and upon approval by the National Economic and Development
Authority (NEDA) Board of such plan, to implement the same including projects
in line with said plan: Provided, that implementation of all fisheries plans and
programs of the authority shall require prior consensus of the Bureau of Fisheries
and Aquatic Resources to ensure that such plans and programs are consistent with
the national fisheries plans and programs. For the purpose of said survey, public
agencies shall submit and private entities shall provide necessary data except such
data which under existing laws are deemed inviolable.

(b) To provide the machinery for extending the necessary planning, management
and technical assistance to prospective and existing investors in the region;

(©) To make recommendation to the proper agencies on the financing, technical
support, physical assistance and, generally, the level of priority to be accorded
agricultural, industrial and commercial projects, soliciting or requiring direct help
from or through the government or any of its instrumentalities;

(@) To pass upon and approve or disapprove all plans, programs, and projects
proposed by local government offices/agencies within the region, public
corporations, and private persons or enterprises where such plans, programs
and/or projects are related to those of the Authority for the development of all
bodies of water under its jurisdiction as envisioned in this Act. The Authority
shall issue the necessary clearance for approved proposed plans, programs, and
projects within thirty days from submission thereof unless the proposals are not
in consonance with those of the Authority or that those will contribute to the
unmanageable pollution or will bring about the ecological imbalance of the
region: Provided, further, That the Authority is hereby empowered to institute
necessary legal proceeding against any person who shali commence to implement
or continue implementation of any project, plan or program in any of the water
resources covered in this Act, without previous clearance from the
‘Authority: Provided, furthermore, That any local government office, agency,
public corporation, private person, or enterprise whose plans, programs and/or
projects have been disapproved by the Authority may appeal the decision of the

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Authority to the NEDA within fifteen (15) days from receipt of such disapproval
whose decision on the matter shall be final.

(e) To collect reasonable processing fees as may be fixed by the Authority’s Board
for the processing of such plans, programs, and/ or projects, and licensing
procedures with respect to the water resources covered in this Act for the purpose
of drawing up a Manila Water Resources Development Plan which shall be
binding upon all parties concerned upon approval of the NEDA Board;

(f) To engage in agriculture, industry, commerce, or other activities in any of the
water resources under its jurisdiction which may be necessary or directly
contributory to its socio-economic development of the region, and, for this
purposes, whether by itself or in cooperation with private persons or entities, to
organize, finance, invest in, and operate subsidiary corporations: Provided, That
the Authority shall engage only, unless public interest requires otherwise, in those
activities as are in the nature of new ventures or are clearly beyond the scope,
capacity, or interest or private enterprises due to consideration of geography,
technical or capital requirements, returns on investment, and risk;

(g) To plan, program finance/or undertake infrastructure projects such as river,
flood and tidal control works, waste water and sewerage works, water supply,
roads, portworks, irrigation, housing and related works, when so required within
the context of its development plans and programs including the readjustment,
relocation or settlement of population within the region as may be necessary and
beneficial by the Authority: Provided, That should any project be financed wholly
or in part by the Authority, it is hereby authorized to collect reasonable fees and
tolls as may be fixed by its Board of Directors subject to the approval of the
NEDA Board from users and/or beneficiaries thereof to recover costs of
construction, operation and maintenance of the projects: Provided, further, That
if the Authority should find it necessary to undertake such infrastructure projects
which are classified, as social overhead capital projects as determined by the
NEDA, the Authority shall be authorized to receive financial assistance from the
government in such amount as may be necessary to carry out the said projects
subject to such terms and condition that may be imposed by the government, upon
recommendation of the NEDA Board: Provided, finally, That such amount as
may be necessary for the purpose is hereby authorized to be appropriated out of
the funds of the National Treasury not otherwise appropriated.

(h) To make an annual report to the stockholders regarding the operation of the
Authority more particularly a statement of its financial conditions, activities
undertaken, progress of projects and programs and plans of actions for the
incoming years: Provided, however, that a majority of the stockholders may
require the Authority to submit report or reports other than the annual report
herein required, which report must be submitted within a period of thirty (30) days

from notice thereof;
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(j) To lend or facilitate the extension of financial assistance and/or act as surety
or guarantor to worthwhile agricultural, industrial and commercial enterprises;

(j) The provisions of existing laws to the contrary notwithstanding, to engage in
fish production and other aqua-culture projects in bodies of water within its
jurisdiction and in pursuance thereof to conduct studies and make experiments,
whenever necessary, with the collaboration and assistance of the Bureau of
Fisheries and Aquatic Resources, with the end in view of improving present
techniques and practice. Provided, that until modified, altered or amended by the
procedure provided in the following sub-paragraph, the present laws, rules and
permits or authorizations remain in force;

(k) For the purpose of effectively regulating and monitoring activities, the
‘Authority shall have exclusive jurisdiction to issue new permit for the use of the
bay waters for any projects or activities in or affecting the said lake including
navigation, construction, and operation of fishpens, fish enclosures, fish corrals
and the like, and to impose necessary safeguards for lake quality control and
management and to collect necessary fees for said activities and
projects: Provided, That the fees collected for fisheries may be shared between
the Authority and other government agencies and political sub-divisions in such
proportion as may be determined by the President of the Philippine upon
recommendation of the Authority's Board: Provided, further, That the Authority's
Board may determine new areas of fisheries development or activities which it
may place under the supervision of the Bureau of Fisheries and Aquatic taking
into account the overall development plans and programs for all bodies of water
under its jurisdiction: Provided, finally, That the Authority shall, subject to the
approval of the President of the Philippines, promulgate such rules and
regulations which shall govern fisheries development activities, which shall take
into consideration among others the following: socioeconomic amelioration of
bonafide resident fisherman whether individually or collectively in the form of
cooperatives, lakeshore town development, a master plan for fishpen construction
and operation, communal fishing ground for lakeshore town residents, and
preference to lakeshore town residents in hiring laborers for fishery projects.

(1) The provisions of existing laws to the contrary notwithstanding, to exercise
water rights over public waters within all bodies of water under its jurisdiction,
whenever necessary to carry out the Authority's projects;

(m) To act in coordination with existing governmental agencies in establishing
water quality standards for industrial, agricultural and municipal waste discharges
into the lake and to cooperate with said existing agencies of the government of
the Philippines in enforcing such standards, or to separately pursue enforcement
and penalty actions as provided for in Section 4(d) and Section 39-A of this
Act: Provided, That in case of conflict on the appropriate water quality standard
to be enforced such conflict shall be resolved thru the NEDA Board;

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(n) To develop water supply from ground and/or lake water resources for
municipal, agricultural and industrial usages, in coordination with the National
Water Resources Council created by Presidential Decree No. 424 dated March
28, 1974 or its successors in interests, and to enter into agreements with
municipalities, governmental agencies and corporations and the private sector to
supply, distribute and market such water;

(0) Undertake studies on the improvement and maintenance of the desirable water
quality of all bodies of water under its jurisdiction and in pursuance thereof,
prepare a water quality management program on a continuing basis, subject to the
approval of the NEDA, which the Authority shall carry out with the assistance
and support of all national and local government units involved in water quality
management.

Section 7. _ Compensation for damages. Compensation for damages to the aquatic
resources in all bodies of water under the jurisdiction of the Authority resulting from failure to
meet established water and effluent quality standards or from such other wrongful act or omission
of a person, private or public, juridical or otherwise, punishable under the law shall be awarded
to the Authority to be earmarked for water quality control and management.

Section 8. Annual Fees. The Authority is hereby empowered to collect annual fees
as provided, for the use of the lake waters and its tributaries for all beneficial purposes including
recreation, municipal, industrial, agricultural, fisheries, navigation and waste disposal purposes.
All the fees so collected shall be used for the management and development of the lake and its
watershed areas: Provided, That the rates of the fees to be collected shall be subject to the
approval of the President of the Philippines.

Section 9. Capitalization and Financing. The Authority shall have an authorized
capital of One Hundred Million Pesos (P 100,000,000) of which the amount of Fifty-One Million
Pesos (P51,000,000) shall be subscribed by the national government and Forty-Nine Million
Pesos (P49,000,000) shall be subscribed by cities, provinces, municipalities, government
corporations and private investors; Provided, That at least twenty-five percent of the national
government's subscription shall be fully paid: Provided, further, That the authorized capital stock
may be increased upon the recommendation of NEDA.

The authorized capital stock of One Hundred Million pesos (P100M) shall be divided
into One Million (1,000,000) Shares of stock with a par value of One hundred Pesos (P100) per
share.

The shares of stock of the Authority shall be divided into (1) 700,000 common shares
(voting) and (2) 300,000 preferred shares (non-voting) with such fixed rates of return as shalll be
determined by the Board. Of the common shares of 700,000 a minimum of 400,000 shares shall
be subscribed by the national government and at least sixty per cent of the balance shall be
subscribed by the City of Manila, Quezon, Caloocan, Las Pinas, Makati, Malabon, Mandaluyong,
Marikina, Muntinlupa, Navotas, Paranaque, Pasay. Pasig, San Juan, Taguig, Valenzuela, the
municipality of Pateros, the Provinces of Bulacan, Cavite, Laguna, Rizal, Bataan in such
proportion as may be agreed upon by both provincial governments in accordance with their

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respective capacities. The remaining balance of the common shares shall be open for subscription
to cities, provinces, municipalities and private investors.

Of the preferred shares of stock of 300,000 a minimum of 110,000 shares shall be
subscribed by the national government. The balance of the preferred shares shall be available for
subscription to cities, provinces, municipalities, government corporations, and private
investors; Provided, however, that preferred shares shall enjoy preference with respect to
distribution of dividends and assets in case of dissolution.

Section 10. Powers of Municipal Corporations to Subscribe. For purposes of
attaining the purposes of this Authority, municipalities, cities and provinces are hereby
authorized to subscribe, own, buy and hold shares of stock of this Authority.

Section 11. Operating Expenses. For the operating expenses of the Authority, the sum
of Twenty Million Pesos (P20,000,000) is hereby appropriated annually for five (5) years from
the general fund of the National Government not otherwise appropriated from the date of
approval of this Decree.

The Board of Directors may appropriate out of the funds of the Authority such as may be
needed or necessary for its operating expenses.

Section 12. Power to Incur Debts and to Issue Bonds. Whenever the Board of
Directors may deem it necessary for the Authority to incur an indebtedness or to issue bonds to
carry out the provisions of this Act, it shall by resolution so declare and state the purpose for
which the proposed debt is to be incurred. The resolution shall be confirmed by the affirmative
vote of the stockholders representing a majority of the subscribed capital stock outstanding and
entitled to vote.

The Authority shall submit to the NEDA Board and the Monetary Board of the Central
Bank for approval its proposal to incur indebtedness or to issue bonds, this shall be considered
authorized upon approval of the President of the Philippines.

Section 13. Bond Limit. The bonds shall be issued in such amounts as will be needed
at any one time, taking into account the rate at which said bonds may be absorbed by the buying
public and the fund requirements of projects ready for execution, and considering further a proper
balanced productive and non-productive projects so that inflation shall be held to the minimum.

Section 14. Form, rates of interest, etc. of bonds. The Board of Directors, shall
prescribe the form, the rates of interest, the denominations, maturities, negotiability,
convertibility, call and redemption features, and all other terms and conditions of issuance,
placement, sale, servicing, redemption, and payment of all bonds issued by the Authority under
this Act.

The bonds issued by virtue of this Act may be made payable both as to principal and

interest in Philippine currency or any readily convertible foreign currency; Said bonds shall be
receivable as security in any transaction with the government in which such security is required.

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Section 15. Exemption from tax. The Authority shall be exempt from all taxes,
licenses, fees, and duties, incidental to its operations. This exemption shall extend to its
subsidiary corporation: Provided, That its subsidiary corporations shall be subject to all said
taxes, licenses, fees, and duties five (5) years after their establishment under a graduated scale as.
follows: twenty (20) per centum of all said taxes during the sixth year, forty (40) per centum of
all said taxes during the seventh year, sixty (60) per centum of ail said taxes during the eighth
year, cighty (80) per centum of all said taxes during the ninth year, and one hundred (100) per
Centum of all taxes during the tenth year, after said establishment. Such examination shall include
any tax or fee imposed by the government on the sale, purchase or transfer of foreign exchange
All notes, bonds, debentures and other obligations issued by the Authority shall be exempt from
all taxes both as to principal and interest, except inheritance and gift taxes.

Section 16. Sinking Fund. A sinking fund shall be established in such manner that the
total annual contribution thereto accrued at such rate of interest as may be determined by the
Board of Directors as confirmed by the stockholders representing a majority of the subscribed
capital stock outstanding and entitled to vote, shall be sufficient to redeem at maturity the bonds
issued under this Act.

Such funds shall be under the custody of the treasurer of the Authority who shall invest
the same in such manner as the Board of Directors may direct; charge all expenses of investment
to said sinking fund, and credit the same with the interest on investment and other income
belonging to it.

Section 17. Guarantee by the government. The Republic of the Philippines hereby
guarantees the payment by the Authority of both the principal and the interest of the bonds,
debentures, collaterals, notes or such other obligations issued by the Authority by virtue of this
‘Act, and shall pay such principal and interest in the event that the Authority fails to do so. In case
the Authority shall be unable to pay the said principal and interest, the Secretary of Finance shall
pay the amount thereof which is hereby appropriated out of any funds in the National Treasury
not otherwise appropriated, and thereupon, to the extent of the amounts so paid, the Government
of the Republic of the Philippine shall succeed to all rights of the holders of such bonds,
debentures, collaterals, notes or other obligations, unless the sum so paid by the Republic of the
Philippines shall be refunded by the Authority within a reasonable time.

Section 18. Incorporation. The members of the first Board of Directors shall be
elected by the stockholders and the incorporation shall be held to have been effected from the
date of the first meeting of such Board.

Section 19. Board of Directors: Composition. The corporate powers shall be vested
in and exercised by a Board of Directors, hereinafter referred to as the Board, which shall be
composed of nine (9) members, to wit: the Executive Secretary, the Secretary of Natural
Resources, the Secretary of Trade and Industry, a representative from the National Capital
Region, the Provinces of Bulacan, Cavite, Laguna, Rizal, Bataan, to be designated by its
Provincial Board; the General Manager of the Authority to be appointed by the President of the
Philippines, and a representative of the private investors, likewise to be appointed by the
President of the Philippines from among a list of recommendees to be submitted by the private
investors: Provided, That the incumbent representative of the private investors: shall continue as

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member until the President appoints his successor. The Board of Directors shalll elect annually
from among their members a Chairman and a Vice Chairman. There shall be a Corporate
Secretary who shall be appointed the Board.

The officials next in rank to the above-mentioned member shall serve as permanent
alternate members and shall attend meetings of the Board in the absence of their principals and
receive the corresponding per diems.

Section 20. Acting Chairman. In case of vacancy in the position of Chairman, or in
the absence of or temporary incapacity of the Chairman, the Vice-Chairman shall act as such
until a new Chairman is duly elected by the Board.

Section 21. Effect of vacancies; quorum. Vacancies in the Board as long as there
shall be four members in office, shall not impair the powers of the Board to execute the functions
of the Authority. The affirmative vote of four (4) members of the Board shall be necessary at all
times to pass or approve any act or resolution.

Section 22. Qualifications of Directors. All members of the Board shall be citizens
and residents of the Philippines. They shall have demonstrated executive competence and
experience in the field of public administration, economic planning, resource management, or in
the establishment and management of large agricultural, industrial or commercial enterprises. No
person shall be nominated as member of the Board unless he be of unquestioned integrity and
competence.

Section 23. Prohibition against "Conflict of Interest." No person member of the
Board shall be financially interested, directly or indirectly, in any contract entered into by the
Authority or in any special privileges granted by the Authority during his term of office. All
contracts entered into in violation of this provision shall automatically be null and void, Any
member of the Board found violating the provisions of this section by two-thirds (2/3) vote of
the Board shall automatically be disqualified from serving his unexpired term, and he shall
furthermore be perpetually disqualified for membership in the said Board.

Section 24. Removal, courtesy resignation. A member of the Board may be removed
from office by a vote of the stockholders holding or representing three-fourths (3/4) of the
subscribed capital stock outstanding and entitled to vote. No member of the Board shall be
required to submit a courtesy resignation at any time during his term of office.

Section 25. | Board Meetings. The Board shall meet at least once a month. The Board
shall be convoked by the Chairman or upon written request signed by a majority of the members.

Section 26. Powers and Functions of the Board of Directors.

a. To formulate, prescribe, amend and repeal rules and regulations to govern the
conduct of business of the Authority;

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b. To appoint and fix the compensation of all officials from division heads and
above, and others of comparable rank including the Assistant General Manager
upon the recommendation of the General Manager;

c. By a majority vote of all members of the Board, to suspend, remove or
otherwise discipline for just cause all officials appointed by the Board;

d. To approve the annual and/or supplemental budgets of the Authority; and

e. To do such other acts and perform such other functions as may be necessary to
carry out the provisions of this Charter.

Section 27. Powers and Functions of the General Manager. The General Manager
shall be the chief executive of the Authority. As such, he shall have the following powers and
duties:

a, Submit for consideration of the Board the policies and measures which he
believes to be necessary to carry out the purposes and provisions of this Act;

b, Execute and administer the policies, plans, programs and projects approved by
the Board;

c. Direct and supervise the operation and internal administration of the Authority.
The General Manager may delegate certain of his administrative responsibilities
to other officers of the Authority subject to the rules and regulations of the Board.

4. Appoint officials and employees below the rank of division heads to positions
in the approved budget upon written recommendation of the division head
concemed using as guide the standard set forth in the Authority's merit system;

ce. Submit quarterly reports to the Board on personnel selection, placement and
training;

£. Submit to the NEDA an annual report and such other reports as may be required,
including the details of the annual and supplemental budgets of the Authority, and
g. Perform such other functions as may be provided by law.

Section 28. _ Residence. The General Manager shall establish his residence within the
region. The General Manager shall not, during his term of office, engage in any business or
profession or calling other than those connected in the performance of his official duties as
General Manager of the Authority.

Section 31. Activities of the Authority: Key Officials. In carrying out the activities of
the Authority, the General Manager shall be assisted by an Assistant General Manager who shall
have such powers, duties, and functions that may be delegated to him by the General Manager,

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and shall act as General Manager in the absence of or during the temporary incapacity of and/or
until such time as a new General Manager is duly appointed.

‘The Authority shall have the following divisions under the direct supervision and control of the
General Manager;

a. An Administrative Division which shall be responsible for providing services
relating to personnel, training, information, records, supplies general services,
equipment and security;

b. A legal Division, to be headed by a Legal Counsel who shall represent the
Authority in legal actions and proceedings. This division shall be responsible for
providing staff advice and assistance on legal matters;

c. A Finance Division which shall be responsible for providing staff advice and
assistance on budgetary and financial matters, and safekeeping of corporate
assets;

4. A Project Management Division which shall be responsible for the operation
of approved projects, project evaluation and management improvement matters;

e. A Planning and Project development Division which shall be responsible for
providing services relating to planning, programming, statistics and project
development; and

f. An Engineering and Construction Division which shall be responsible for
providing services relating to detailed engineering plans and the construction and
maintenance of project facilities.

The business and activities of each of these divisions shall be directed by an officer to be known
as its division head.

The Board may create such other divisions and positions as may be deemed necessary for the
efficient, economical and effective conduct of the activities of the Authority.

Section 32. Merit and Compensation System. All officials, agents and employees of
the Authority shall be selected and appointed on the basis of merit and fitness in accordance with
a comprehensive and progressive merit system to be established by the Authority. The
recruitment, transfer, promotion and dismissal of all personnel of the authority, including
temporary workers, shall be governed by such merit system: Provided, That the regular
professional and technical personnel of the Authority shall be exempt from the coverage of the
classification and compensation plans of the WAPCO and Civil Service rules and
regulations: Provided, however, That such personnel shall be permanent instates and shall be
entitled to the benefits and privileges normally accorded to government employees, such as
retirement, GSIS insurance, leave and similar matters: Provided, further, That the Director
General of the NEDA shall review and recommend the approval of the staffing pattern for

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professional and technical personnel of the Authority including modifications thereof as may be
necessary for five years from the date of approval of this Decree.

Section 33. Supervision by the NEDA. The Authority shall be directly under the
NEDA for policy and program integration.

Section 34. Submission of Financial Statement to NEDA. The Authority shall
submit audited financial statements to NEDA within 60 days after the close of the fiscal year,
and it shall continue to operate on the basis of not more than the preceding year's budget until
the said financial statements shall have been submitted.

Section 35. | Management Audit by the NEDA. The NEDA, may, at its own instance,
initiate a management audit of the Authority when there is a reasonable ground to believe that
the affairs of the Authority have been mismanaged. Should such audit indicate mismanagement,
the NEDA shall take such appropriate measures as may be required by circumstances.

Section 36. Auditing. The Board of Directors shall provide and appoint an auditor
who shall formulate an auditing system for the Authority. The auditor shall make a semestral
and/or annual report covering the financial conditions and operation of the Authority to the
Board. These auditing reports shall contain a statement of the resources and liabilities, including
‘earnings and expenses, the amount of paid-up capital stock, surplus, reserves, and profits, as well
as losses, bad debts and such other facts which, under auditing rules and regulations, are
considered necessary to accurately described the financial conditions and operation of the
Authority. The auditor shall report and directly responsible to the Board.

Section 37. Penal and Civil Liability Clause. Any person, natural or juridical, who
shall violate any of the provisions of this Act or any rules or regulation promulgated by the
Authority pursuant thereto shall be liable to imprisonment of not exceeding three years or to a
fine not exceeding Five Thousand Pesos or both at the discretion of the Court.

If the violator be a corporation, partnership or association, the officer or officers of the
organization concerned shall be liable therefor.

The authority is hereby authorized to pursue separate civil actions for damages resulting from
infractions of the provisions of this Act, rules or regulations issued pursuant thereto and/or
conditions embodied in the clearances or permits issued by the Authority.

Section 38. Separability Clause. If any provision or part of this Act is declared
invalid or unconstitutional, the remaining parts or provisions not affected shall remain in full
force and effect.

Section 39. Repealing Clause. All laws, decrees, orders, rules and regulations and
other issuances or parts thereof which are inconsistent with the provisions of this Act are hereby
repealed or amended accordingly.

Vie


Section 40. Effectivity. This Act shall take effect fifteen (15) days after its publication
in the Official Gazette or in any newspaper of general circulation.

Approved,