An Act to Provide for the Issue of Bonds of the Government of the Philippines the Proceeds of Sale of Which will be Used for the Purchase of an Equivalent Amount of Bonds of the Metropolitan Water District

May 11, 1940

COMMONWEALTH ACT NO. 528

AN ACT TO PROVIDE FOR THE ISSUE OF BONDS OF THE GOVERNMENT OF THE PHILIPPINES THE PROCEEDS OF SALE OF WHICH WILL BE USED FOR THE PURCHASE OF AN EQUIVALENT AMOUNT OF BONDS OF THE METROPOLITAN WATER DISTRICT

SECTION 1. The President of the Philippines is authorized to issue in the name and in behalf of the Government of the Commonwealth of the Philippines bonds in an amount equivalent to that authorized for the Metropolitan Water District to issue, the proceeds of the sale of which shall be used by said government for the purchase of an equivalent par amount of first mortgage bonds of the Metropolitan Water District to be issued for the purpose of obtaining funds for further extension of the water supply and sewerage systems of said district and for other purposes. DHSCTI

The bonds so authorized to be issued shall bear such date and be in such form as the President of the Philippines may determine and shall bear such rate of interest and run for such length of time as may be determined by said official. Both principal and interest shall be payable in Philippine currency or its equivalent in United States currency, in the discretion of the Secretary of Finance, at the Treasury of the Philippines, and the interest shall be payable at such periods as the President of the Philippines may determine. Said bonds shall be issued at times and in amounts to be determined by the President of the Philippines upon the recommendation of the Secretary of Finance, and they may be coupon bonds or registered bonds, convertible, in the discretion of the President of the Philippines, into either form, and in the case of the issue or transfer of any registered bonds, the same shall be registered in the Treasury of the Philippines. These bonds may be issued in series bearing different dates.

Said bonds shall be exempt from taxation by the Government of the Commonwealth of the Philippines or by any political or municipal subdivisions thereof, which fact shall be stated upon their face, in accordance with this Act, under which the said bonds are issued.

SECTION 2. The President of the Philippines is further authorized to sell said bonds through the Treasurer of the Philippines upon such terms as in his judgment are most favorable to the Government of the Commonwealth of the Philippines and he shall deposit the proceeds of the sales thereof with the Treasurer of the Philippines, to the credit of the National Treasury.

SECTION 3. The proceeds of the sale of the bonds issued by virtue of this Act are appropriated for the purpose of purchasing first mortgage bonds issued by the Metropolitan Water District under the provisions of Act Numbered Twenty-eight hundred and thirty-two, as amended, which bonds of the Metropolitan Water District, the provisions of existing law to the contrary notwithstanding, shall be sold at the same price, shall bear the same date, the same rate of interest, and shall run for the same period of time as the bonds issued by virtue of this Act. The Treasurer of the Philippines is authorized to purchase said bonds of the Metropolitan Water District in such amounts and at such times as may be determined by the Secretary of Finance with the approval of the President of the Philippines, and at the same rate at which the President of the Philippines sold the bonds issued by virtue of this Act.

SECTION 4. A sinking fund is created for the payment of the bonds issued under the provisions of this Act, in such a manner that the total amount thereof at each annual due date of the bond issue shall be equal to the total of an annuity of such a sum, for each million pesos of bonds outstanding, as with interest at the rate of three and one-half per centum per annum shall be sufficient to retire said bonds at maturity. Such sinking funds shall be under the custody of the Treasurer of the Philippines, who shall invest the same, in such manner as the Secretary of Finance may approve in accordance with the provisions of Act Numbered Three thousand fourteen governing the investment of sinking funds, and shall charge all expenses incidental to such investment, to the said sinking fund.

SECTION 5. A standing annual appropriation is made out of the general funds in the National Treasury, not otherwise appropriated, of such sums as may be necessary to provide for the sinking funds created in the next preceding section hereof, for the interest on the bonds issued by virtue of this Act and for the expenses incidental to the investment of the sinking fund. A further appropriation is made out of any funds in the National Treasury, not otherwise appropriated, of a sufficient sum to cover the expenses of the issue and sale of the bonds issued by virtue of this Act: Provided, That the Metropolitan Water District shall reimburse the Government for such expenses within thirty days after the receipt of a statement of the same from the Treasurer of the Philippines.

SECTION 6. The Metropolitan Water District, in lieu of the establishment of a sinking fund for the redemption of the bonds sold to the Government of the Commonwealth of the Philippines under the provisions of this Act, shall obligate itself to pay into the Treasury of the Philippines annually a sufficient sum of money to meet the net requirements of the sinking fund set forth in section four of this Act, anything in the provisions of Act Numbered Twenty-eight hundred and thirty-two as amended, to the contrary notwithstanding; and the Treasurer of the Philippines, is authorized to apply payments so made, without further appropriation, to meet the requirements of the sinking fund established in section four hereof: Provided, That if the Metropolitan Water District shall fail, for any reason, to meet promptly the net requirements of the sinking fund set forth in section four hereof or to pay the interest on its bonds purchased by the Government of the Commonwealth of the Philippines in accordance with the provisions of section three hereof, the Secretary of Finance is authorized and directed to order the retention of any funds in the hands of any depository banks of the Metropolitan Water District, thirty days after said default, that may come into their possession as belonging to the said Metropolitan Water District, the sum necessary as may be determined by the Auditor General to meet any delinquencies in the sinking fund and interest requirements in this proviso above-mentioned and said officials shall deposit the sums so retained with the Treasurer of the Philippines. ADHaTC

SECTION 7. This Act shall take effect upon its approval.

Approved, May 11, 1940.