FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
7 fin\/ -fi ,? :nc 
First Regular Session 
) 
Introduced by Sen. Juan Ponce Enrile 
EXPLANATORY NOTE 
For more than 30 years now, the Local Water Utilities Administration 
(LWUA) has been mandated by law to establish, finance and administer as well as 
promote and develop potable water supply systems used nationwide. Since 1973, 
LWUA has been working in close cooperation with local government units in 
creating water districts to supply provincial residents with safe, dependable, 
sufficient and affordable water supply for their daily needs. 
As a result of this, more than 400 water districts have been formed covering 
680 cities and towns throughout the country. Potable water supply is being 
directly served to some 12.6 million Filipinos thereby bringing health, economic 
and other benefits to these communities. However, some 55% or 820 towns and 
cities all over the Philippines are still not yet serviced by water districts. 
Under its charter, LWUA's authorized capital stock in the form of national 
government subscription is P2 billion and, as early as 1990, this has already been 
fully subscribed by the agency. Since then, LWUA has been largely dependent on 
government subsidy for peso counterpart to their foreign loans. Cognizant of the 
urgent necessity and the vital role that improved water supply systems play in the 
overall socio-economic progress of the nation, there is indeed a need for LWUA to 
increase its capitalization. 
This bill, therefore, seeks to increase the authorized capitalization of LWUA 
to P25 billion to enable it to further spread the benefits of improved potable water 
systems particularly to the yet unserved areas of the country. Moreover, the bill 
proposes to amend the borrowing authority granted to LWUA and allow the same 
to borrow money from all domestic loan sources up to P10 billion, and from 
foreign sources up to $700 million. 
Apart from strengthening its financial capacity to implement its programs, 
the amendments proposed herein will effect a smoother and a more precise 
dispensation of LWUA functions and activities. 
In view of the foregoing, the immediate approval of this bill is earnestly 
sought. 


FOURTEENTH CONGRESS OF THE 
) 
7 NO\! -5 
f ?  ‘ p y  
REPUBLIC OF THE PHILIPPINES 
) 
c 
/ 
First Regular Session 
) 
Introduced by Sen. Juan Ponce Enrile 
AN ACT 
FURTHER AMENDING PRESIDENTIAL DECREE NO. 198, 
OTHERWISE KNOWN AS THE PROVINCIAL WATER UTILITIES ACT, 
AS AMENDED, PROVIDING FUNDS THEREFOR 
AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the 
Philippines in Congress assembled: 
SECTION 1. 
amended to read as follows: 
Section 67 of Presidential Decree 198, as amended, is hereby 
SEC. 67. Capital Stock. - The authorized capital stock of the Local 
Water Utilities Administration is [Two] TWENTY-FIVE billion 
[Five Hundred Thousand pesos] (~25,000,000,000.00) divided into 
[Twelve] 
SIXTY-TWO 
million 
Five 
Hundred 
Thousand 
(%2,500,000.00) shares of stock with a par value of Four Hundred 
Pesos per share which shall be subscribed by the National 
Government Financial Institutions and opened to subscription by 
private investors or government financial institutions. 
SEC. 2. Section 72 of Presidential Decree 198 shall be hereby amended to read as 
follows: 
SEC. 72. Domestic Borrowing Authority. - The Administration shall 
have the authority to borrow money from all domestic loan sources 
whether government or private: Provided, That its loans outstanding 
from domestic sources at any one time shall not exceed [One] TEN 
billion pesos (l2 10,000,000,000.00). 
SEC. 3. Section 73 of Presidential Decree 198 shall be hereby amended to read as 
follows: 
SEC. 73. Authority to Contract Foreign Loan. - The Administration is 
hereby authorized to contract loans, credits, in any convertible foreign 
currency or capital goods, and to incur indebtedness .from time to time 
with foreign governments, or any international financial institutions or 
fund sources, including suppliers credits or deferred payment 


3 
arrangements, the total outstanding amount of which, excluding 
interests, shall not exceed [five] SEVEN hundred million United 
States dollars (US$700,000,000.00) or the equivalent thereof in other 
currencies, on terms and conditions promulgated by the Secretary of 
Finance and the Monetary Board for the accomplishment of its 
objectives; and to enter into and execute contracts and other 
documents specifying such terms and conditions. 
The President of the Philippines, by himself, or through his duly 
authorized representative, is hereby authorized to negotiate and 
contract with foreign governments or any financial institution or fimd 
sources in the name and on behalf of the Administration, one or 
several loans for the purpose implementing the Administration’s 
program for the promotion and development of local water utilities 
through the Administration’s financing or lending operations. 
The President of the Philippines, by himself or through his duly 
authorized representative, is hereby hrther authorized to guarantee, 
absolutely and unconditionally, as primary obligor and not mere 
surety, in the name and on behalf of the Republic of the Philippines, 
the payments of the loans, credits and indebtedness up to the amount 
herein authorized, over and above the amounts which the President of 
the Philippines pursuant to loan agreements entered into with foreign 
governments or any international financial institution or h d  sources. 
The loans, credits and indebtedness contracted under this section shall 
be in accord with the provisions of the Foreign Borrowing Act as 
amended.” 
SEC. 4. Repealing Clause. - All or any provision of the Provincial Water Utilities 
Act of 1973 which are contrary or inconsistent with any provisions hereof are 
hereby repealed or modified accordingly. 
SEC. 5. Effectivity. - This Act shall take effect after fifteen (15) days following 
its publication in two (2) newspapers of general circulation. 
Approved ,