FIFTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
Senate Bill No. 2387 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
The Local Water Utilities Administration (LWUA) performs a vital role in 
the efficient delivery of one of the basic needs of man - water. As such the 
agency is mandated to establish, finance and administer as well as develop 
potable water supply systems throughout the country. 
This bill seeks to increase the capitalization of the LWUA from P2.5 Billion 
to P25 Billion to enable the agency to implement additional potable water supply 
systems nationwide. Presently, more than 80% of the communities in the country 
have no access to safe and potable water. 
Additionally, this measure shall grant authority to the agency to enable it to 
contract domestic and foreign loans amounting to an aggregate ceiling of $900.0 
Million. 
In order to enhance transparency and accountability in financial 
transactions, all domestic and foreign borrowings shall be approved by the 
Department of Finance (DO F), the Bangko Sentral ng Pilipinas (BSP) and other 
concerned entities. 
This measure is a consolidated/substituted bill drafted by the Committees 
on Public Works, Public Services and Finance during the 14th Congress. 
In view of the foregoing, approval of this bill is earnestly sought. 
Senator 


FIFTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
;J!E 1 
~:' 
SENATE 
Senate Bill No. 2387 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
FURTHER AMENDING PRESIDENTIAL DECREE NO. 198, AS AMENDED, 
OTHERWISE KNOWN AS "THE PROVINCIAL WATER UTILITIES ACT OF 
1973" 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Section 67 of Presidential Decree No. 198, as amended, is 
hereby further amended to read as follows: 
"SEC. 67. 
Capital Stock. - The authorized capital of the Local Water 
Utilities Administration is [Two] TWENTY-FIVE Billion [, Five Hundred Million] 
Pesos (P25,000,000,000.00) divided into [Twelve] SIXTY-TWO Million Five 
Hundred Thousand (62,500,000) shares of stocks with a par value of FOUR 
[Two] Hundred Pesos (P400.00) per share which shall be subscribed by the 
National Government AND GOVERNMENT FINANCIAL INSTITUTIONS and 
opened to subscription by private investors [or govemment financial institutions] 
SUBJECT TO THE APPROVAL BY THE DEPARTMENT OF FINANCE: 
PROVIDED, 
THAT ALL SUBSIDIES PREVIOUSLY PROVIDED BY THE 
NATIONAL GOVERNMENT TO LWUA AFTER THE FULL SUBSCRIPTION OF 
THE NATIONAL GOVERNMENT OF THE ORIGINAL CAPITAL STOCK OF 
TWO BILLION FIVE HUNDRED MILLION PESOS (P2,500,000,000.00), WHICH 
WERE USED AS LOANS OUTLAY TO WATER DISTRICTS SHALL BE 
CREDITED AS PART OF THE NATIONAL GOVERNMENT PAYMENT FOR 
SUBSCRIPTION 
TO 
THE 
ADDITIONAL 
CAPITAL 
STOCK 
OF 
THE 
ADMINISTRATION: PROVIDED, FURTHER, 
THAT PRIVATE SECTOR 
INVESTMENTS SHOULD NOT BE MORE THAN FORTY PERCENT (40%) OF 
THE TOTAL SUBSCRIBED CAPITAL STOCK." 
"SEC. 2. Section 72 of Presidential Decree No. 198, as amended, is 
hereby fur;ther amended to read as follows 
"Sec. 72. 
Domestic AND FOREIGN Borrowing Authority -
The 
Administration shall have the authority to borrow money from all domestic AND 
FOREIGN loan sources whether government or private: Provided, That its loans 
outstanding BOTH from domestic and FOREIGN sources [at anyone time] shall 
not exceed [One Billion Pesos] AN AGGREGATE CEILING OF NINE 
HUNDRED MILLION U.S. DOLLARS (US$900,000,000.00): PROVIDED, THAT 
ALL DOMESTIC AND FOREIGN BORROWINGS OF LWUA SHALL BE 
APPROVED BY THE DEPARTMENT OF 
FINANCE (DOF), 
BANGKO 


.. 
, 
SENTRAL NG PILIPINAS (BSP) AND OTHER ENTITIES AS REQUIRED BY 
PERTINENT LAWS AND REGULATIONS." 
SEC. 3. Paragraph 1 of Section 73 of Presidential Decree No. 198, as 
amended, is hereby further 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 
supplier's credits or deferred payment arrangements, the total outstanding 
amount of which, excluding interests, shall not exceed [five hundred million US$] 
ITS AGGREGATE DOMESTIC AND FOREIGN BORROWING AUTHORITY OF 
NINE HUNDRED MILLION US DOLLARS (US$900,000,000.00) or the 
equivalent thereof in other currencies, on terms and conditions promulgated by 
the Secretary of Finance and the Monetary Board for the accomplishments 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 or HER 
duly authorized representative, is hereby authorized to negotiate and contract 
with foreign governments or any international financial institution or fund sources 
in the name and on behalf of the administration, one or several loans, for the 
purpose of implementing the Administration's program for the promotion and 
development of local water utilities through the Administration's financing or 
lending institution. 
"The President of the Philippines, [by himself] or [through ]his OR HER 
duly authorized representative, is hereby further authorized to guarantee, 
absolutely and unconditionally, as primary obligor and not as 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 financing institution or 
fund sources. 
"The loan credits and indebtedness contracted under this section shall be 
in accord with the provisions of [the] 
REPUBLIC ACT NO. 4860, OR THE 
Foreign Borrowing Act as amended [.] (As amended by Sec. 36, PD 768); THE 
PROVISIONS OF SECTION 123 OF REPUBLIC ACT NO. 7653, OTHERWISE 
KNOWN AS THE NEW CENTRAL BANK ACT; THE PROVISIONS OF 
SECTION 23 OF CENTRAL BANK CIRCULAR NO. 1389, AS AMENDED; 
SECTION 20, ARTICLE VII AND SECTION 21, ARTICLE XII OF THE 1987 
CONSTITUTION AND OTHER PERTINENT LAWS AND REGULATIONS." 
SEC. 4. Repealing Clause - All or any provisions of the Provincial Water 
Utilities Act of 1973 which are contrary or inconsistent with any provision hereof 
are hereby deemed 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,