FOURTEENTH CONGRESS OF THE REPUBLIC 
) 
.. 
OF THE PHILIPPINES 
) 
First Regular Session 
1 
S E N A T E  
Senate Bill No. 589 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
One of the essential public services to our communities is the water 
supplies and utilities. 
The Provincial Water Utilities Act provides for the 
comprehensive administration of this service. However, the said law needs 
updates and amendments to be more responsive to the needs and demands of 
our people. 
This measure proposes amendments to the Provincial Water Utilities Act 
by increasing the authorized capital stock of Local Water Utilities Administration 
(LWUA) and allowing the government financial institutions to invest in it. Also, 
the bill proposes to grant foreign borrowing authority to LWUA. Further, it seeks 
to privatize water districts by converting themselves into either stock 
cooperatives under the Cooperative Code of the Philippines or stock corporation 
under the Corporation Code, and consequently, provide for the rights and 
privileges granted to such water districts cooperatives or corporations. 
The early passage of this measure is earnestly sought. 
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FOURTEENTH CONGRESS OF THE REPUBLIC 
1 
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OF THE PHILIPPINES 
1 
First Regular Session 
) 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
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 House of Represenfafives of the Philippines in 
Congress assembled: 
SECTION 1. Section 67 of Presidential Decree 198, as amended, is 
hereby amended to read as follows: 
"SEC. 67. Capital Stock. - The authorized capital 
stock of the Local Water Utilities Administration is 
FIFTY BILLION PESOS (P50,000,000,000.00) [two 
billion 
five 
hundred 
million 
pesos 
(P2,500,000,000.00)] divided into ONE HUNDRED 
TWENTY FIVE MILLION [twelve million five hundred 
thousand] shares of stocks with a par value of FOUR 
[two] hundred pesos per share which shall be 
subscribed by the National Government and opened 
to subscription by private investors or government 
financial institutions: PROVlDED HOWEVER, THAT 
GOVERNMENT FINANCIAL INSTITUTIONS MAY 
INVEST AT LEAST ONE PERCENT (1%) BUT NOT 
MORE THAN FIVE PERCENT (5%) OF THEIR NET 
INCOME 
FOR 
STOCK 
SUBSCRIPTION 
AS 
PROVIDED FOR UNDER THIS ACT: PROVlDED 
FURTHER, THAT THE ADMINISTRATION SHALL 
TAKE 
ACTIVE 
STEPS 
FOR 
THE 
PUBLIC 
OFFERING OF ITS SHARES." 
SEC 2. Section 72 of Presidential Decree No. 198 shall hereby amended 
to read as follows: 
"SEC. 72. Domestic AND f ORElGN 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 billion pesos, AND 


IN THE CASE OF FOREJGN LOANS, THE CEILING 
SHALL 
BE 
ONE 
BILLION 
U.S. 
DOLLARS 
(US$1,000,000,000.00): 
PROVIDED, 
HOWEVER, 
THAT 
THE 
ADMINISTRATION 
MAY 
ONLY 
PROCEED OR AVAIL OF FOREIGN LOANS WITH 
PRIOR CLEARANCE AND APPROVAL OF THE 
DEPARTMENT 
OF 
FINANCE: 
PROVIDED, 
FURTHER, THAT THE ADMINISTRATION MAY 
CONVERT ITS AUTHORIZED FOREIGN DEBT INTO 
PESO OR LOCAL LOANS WHENEVER IT DEEMS 
NECESSARY ." 
SEC. 3. A new provision after Section 47 under Exclusive Franchise shall 
be p~ in place and shall read, as 
follows: 
"SEC. 
47-A. 
PRIVATIZATION 
OF 
WATER 
DISTRICTS. - THE EXISTING WATER DISTRICTS 
SHALL CONVERT THEMSELVES INTO EITHER 
STOCK 
COOPERATIVES 
UNDER 
THE 
COOPERATIVE CODE OF THE PHILIPPINES OR 
STOCK 
CORPORATION 
UNDER 
THE 
CORPORATION CODE WITHIN FIVE (5) YEARS 
FROM THE PASSAGE OF THIS ACT: PROVIDED, 
THAT NOTHING CONTAINED IN THIS ACT SHALL 
DEPRIVE PRIVATIZED WATER DISTRICTS OF 
ANY PRIVILEGE OR RIGHT GRANTED TO THEM 
UNDER 
PRESIDENTIAL 
DECREE 
198, 
AS 
AMENDED, 
AND 
OTHER 
EXISTING 
LAWS: 
PROVIDED, FURTHER, THAT ALL ASSETS OF 
WATER DISTRICTS SHALL BE CONVERTED INTO 
CONTRIBUTIONS OF THE GOVERNMENT, AS 
REPRESENTED BY THE LOCAL GOVERNMENT 
UNIT, TO THE WATER COOPERATIVES OR 
CORPORATIONS. 
THE GOVERNMENT SHALL 
MAINTAIN IN THE SAID COOPERATIVE OR 
CORPORATION AT LEAST FORTY PERCENT 
(40%) OF THE STOCKS OR SHARES THEREIN: 
PROVIDED, FURTHERMORE, THAT NO SINGLE 
MEMBER OF THE WATER COOPERATIVE OR 
STOCKHOLDER 
SHALL 
OWN 
MORE 
THAN 
TWENTY PERCENT (20%) OF THE SHARES OR 
STOCKS THEREIN: PROVID€D, FINALLY, THAT 
NOTHING IN THIS ACT SHALL PREVENT ANY 
MERGER OR CONSOLIDATION BY AND BETWEEN 
ANY WATER UTILITY, WATER COOPERATIVE OR 
CORPORATION. 
"LWUA AND THE NATIONAL WATER RESOURCES 
BOARD (NWRB), IN CONSULTATION WITH THE 
SECURITIES 
AND 
EXCHANGE 
COMMISSION 
W C ) ,  
COOPERATIVES 
DEVELOPMENT 
AUTHORITY 
(CDA), 
REPRESENTATIVES 
OF 
PRIVATE 
WATER 
UTILITIES 
AND 
WATER 
DISTRICTS AND OTHER RELEVANT SECTORS 
AND 
GOVERNMENT 
AGENCIES, 
SHALL 


PROMULGATE THE NECESSARY IMPLEMENTING 
RULES AND REGULATIONS (IRR) TO IMPLEMENT 
THIS SECTION WITHIN SIX (6) MONTHS AFTER 
ITS APPROVAL. 
"SEC. 47-E. RIGHTS OF OTHER WATER UTILITIES. 
- ALL 
OTHER 
EXISTING PRIVATE WATER 
UTILITIES SHALL ACQUIRE THE RIGHTS AND 
PRIVILEGES GRANTED TO WATER DISTRICT 
COOPERATIVES OR CORPORATIONS UNDER 
THlS ACT: PROVIDED, THAT THEY ARE, OR HAVE 
CONVERTED 
THEMSELVES 
INTO, 
WATER 
COOPERATIVES OR CORPORATIONS WHETHER 
STOCK OR NON-STOCK." 
SEC 10. Separability Clause. - If any provision or part hereof is held 
invalid or unconstitutional, the remainder of the law or the provision not otherwise 
affected shall remain valid and subsisting. 
SEC 11. Repealing Clause. - Any law, presidential decree or issuance, 
executive order, letter of instruction, administrative order, rule or regulation 
contrary to or inconsistent with the provisions of this Act is hereby repealed, 
modified or amended accordingly. 
SEC 12. Effectivity Clause. - This Act shall take effect fifteen (15) days 
after its publication in at least two (2) newspapers of general circulation. 
Approved,