THIRTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
SECOND REGULAR SESSION 
1 
Senate 
S.B.No. 
k I G 5  
Introduced by Sen. Juan Ponce Enrile 
EXPLANATORY NOTE 
For more than 30 years now, the Local Water Utilities Administration (LWUA) has been 
inandated 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 coveriiig 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, among others, increase the authorized capitalization of 
LWUA froin P2 billion to P10 billion to enable it to firither spxead the benefits of improved 
potable water systems particularly to the yet unserved areas of the country. Moreover, the bill 
proposes to restore provisions on tax exemptions, as originally provided for in Presidential 
Decree 198, to enable LWUA to establish and activate about 100 more water districts by the year 
2010. 
Apart from strengthening its financial capacity to implement its programs, other 
amendments proposed herein will effect a smoother and a more precise dispensation of LWUA 
functions and activities. 
In view of the foregoing, the passage of this bill is earnestly sought 


THIRTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
SECOND REGULAR SESSION 
1 
Senate 
S.B.No. 
2165 
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 session 
assembled that: 
SECTION 1. Section 3(b) of Presidential Decree 198, as amended, is hereby amended to read 
as follows: 
SEC. 3. Definitions. - As used in this Decree, the following words and teims 
shall have the meanings herein set forth, unless a different meaning clearly appears from 
the context. The definition of a word or term applies to any of its variants. 
(a) Act - This Provincial Water Utilities Act of 1973 
(b) Appointing Authority - [The person empowered to appoint the majority 
members of the Board of Directors of a local water district depending 
upon the geographic coverage and population make-up of the particular 
district. In the event that more than seventy-five percent of the total active 
water service connections of a local water district are within the boundary 
of any city or municipality, the appointing authority shall be the mayor of 
the city or municipality, as the case may be; otherwise, the appointing 
authority shall be the governor of the province within which the district is 
located: Provided, That if the existing waterworks system in the city or 
municipality established as a water district under this Decree is operated 
and managed by the province, initial appointment shall be extended by the 
governor of the province. Subsequent appointments shall be as specified 
therein. 
If portions of more than one province are included within the boundary of 
the district, and the appointing authority is to be the governor, then the 
power to appoint shall rotate between the governors involved with the 
initial appointments made by the governor in whose province as the 
greatest number of service connections exists.] THIS SHALL REFER 
TO THE AUTHORITY TO APPOINT THE BOARD OF 
DIRECTORS 
WHICH 
IS 
HEREBY 
VESTED 
IN 
THE 
ADMINISTRATION AND IN THE CITY OR MUNICIPAL 
MAYOR, AS THE CASE MAY BE. 
(b) Administration. - The Local Water Utilities Administration chartered in 
Title I1 of this Decree. 
(d) NEDA - The National Economic and Development Authority. 
(e) Board or Board of Directors. -The Board of Directors of a district 


2 
(f) Contracts. - All agreements, including leases, conveyances and 
obligations. 
(g) Districts. - A  local water district formed pursuant to Title I1 of this Act 
(11) Local Water Utility - Any district, city, municipality, province, investor- 
owned public utility or cooperative corporation which owns or operates a 
water system serving an urban center in the Philippines, except that said 
term shall not include the Metropolitan Waterworks and Sewerage System 
(MWSS) or any system operated by the Bureau of Public Works as 
successor to the Wells and Springs Department of the National 
Waterworks and Sewerage Authority. 
(i) Person - A natural person, corporation, cooperative, partnership, 
association, city, municipality or other juridical entry. 
6) Property. - All real and personal property, including but not limited to: 
water, water rights, works, easements, rights of way. 
(k) Street - Includes road, alley, avenue, highway of other public way. 
(1) Trustees of Board of Trustees. - The Board of Trustees of the 
Administration. 
SEC. 2. Section 8 of Presidential Decree 198, as amended, is hereby amended to read as follows: 
SEC. 8. COMPOSITION [Number] and QunliJications OF THE 
BOARD OF DIRECTORS. - The Board of Directors of a WATER district, 
DEPENDING ON THE CLASSIFICATION OF SUCH WATER DISTRICT 
AS DETERMINED BY THE ADMINISTRATION, shall be composed of: 
A) five (5) MEMBERS FOR AREAS WHICH ARE CLASSIFIED AS 
SMALL, AVERAGE, MEDIUM AND BIG WATER DISTRICTS; 
OR. 
B) SEVEN 
(7) 
MEMBERS 
FOR 
AREAS 
WHICH 
ARE 
CLASSIFIED AS LARGE AND VERY LARGE. 
THE DIRECTORS MUST BE [who are] OF VOTING AGE AND 
MUST BE residents [within] OF THE AREA@) COVERED BY THE 
WATER DISTRICT AND THEY SHALL BE APPOINTED BY THE 
ADMINISTRATION: PROVIDED, THAT TWO (2) DIRECTORS SHALL 
BE APPOINTED BY THE CITY OR MUNICIPAL MAYOR, AS THE 
CASE MAY BE. 
THE ADMINISTRATION, IN COORDINATION WITH THE CITY 
OR MUNICIPAL MAYOR, SHALL ENSURE THAT THE FOLLOWING 
SECTORS SHALL BE ADEQUATELY REPRESENTED IN THE BOARD 
A) [one member shall be a representative ofl PROFESSIONAL 
OF DIRECTORS: 
ASSOCIATIONS; 
B) [one member a representative ofl BUSINESS, COMMERCIAL, OR 
FINANCIAL ORGANIZATIONS; 
C) [one member of] EDUCATIONAL INSTITUTIONS; AND, 


3 
D) [one member a representative ofl WOMEN’S ORGANIZATIONS: 
PROVIDED, THAT IN CASES WHERE THERE IS ALREADY 
A WOMAN REPRESENTATIVE, THE SLOT ALLOTTED FOR 
THE WOMEN SECTOR SHALL AUTOMATICALLY BE 
RESERVED FOR THE YOUTH SECTOR. 
No public official shall serve as director: Provided, however, that if the district 
has availed of the financial assistance of the Administration, the Administration 
may appoint any of its personnel to sit in the Board of Directors, IN AN 
INTERIM CAPACITY, with all the rights and privileges as pertaining to a 
regular member, DURING [for] such period as the indebtedness remains unpaid, 
in which case the Board shall be composed of six (6) OR EIGHT (8) members, 
AS THE CASE MAY BE. 
IN CASE OF NEWLY FORMED WATER DISTRICTS OR WATER 
DISTRICTS WHICH ARE SUFFERING FINANCIAL LOSSES, THE 
ADMINISTRATION SHALL HAVE THE RIGHT TO NAME AS 
DIRECTOR OF THE BOARD ANY INDIVIDUAL WITH SUPERIOR 
MANAGERIAL SKILLS AND EXPERIENCE WHO MAY NOT BE 
RESIDENT/S OF THE AREAIS COVERED BY THE WATER DISTRICT 
AND 
MAY 
NOT 
NECESSARILY BE 
EMPLOYEES 
OF 
THE 
ADMINISTRATION. 
SEC. 3. Section 9 of Presidential Decree 198 is hereby deleted 
SEC. 4. All succeeding provisions shall be hereby renumbered accordingly. 
SEC. 5. Section 10 of Presidential Decree 198, as amended, is hereby amended to read as 
follows: 
SEC. 10. Nominations - [On or before October 1 of each even numbered 
year, t]The secretary of the district shall contact [each known] OR NOTIFY ON 
OR BEFORE OCTOBER 1 OF EACH EVEN-NUMBERED YEAR, the 
association, organization, institntion or sector being represented by the director 
whose term will expire on December 31 and solicit nominations from these 
[organizations] SECTOWS to fill the position/S for the ensuing term. [One] 
[n]Nomination[/s] may be submitted [in writing by each such organizations1 to 
the secretary of the district on or before November 121 1 of such year. The list of 
nominees shall be transmitted by the secretary of the district to the office of the 
appointing authority, AS THE CASE MAYBE, on or before November 15 of 
such year and he shall make his appointment [from the list submitted] on or 
before December 15 FROM THE SUBMITTED LIST. [In the event the 
appointing authority fails to make his appointments on or before December 15, 
selection shall be made from said list of nominees by majority vote of the seated 
directors of the district constituting a quorum. 
Initial nominations for all five 
seats of the board shall be solicited by the legislative body or bodies at the same 
time of adoption of the resolution forming the district. Thirty days thereafter, a 
list of nominees shall be submitted to the provincial governor in the event the 
resolution forming the district is by a provincial board, or the mayor of the city or 
municipality in the event the resolution forming the adoption of the district is by 
the city or niunicipality board of councilors, who shall select the initial directors 
therefrom within 15 days after receipt of such nominations.] 
THE NAMES OF THE TWO (2) DIRECTORS, WHO SHALL BE 
NOMINATED AND APPOINTED BY THE CITY OR MUNICIPAL 
MAYOR, AS THE CASE MAY BE, SHALL BE SUBMITTED TO THE 
ADMINISTRATION 
FOR 
APPROVAL 
AND 
CONFIRMATION: 
PROVIDED, HOWEVER, THAT THE ADMINISTRATZON MAY 


4 
DISALLOW ANY DIRECTOR FROM ASSUMING HIS OR HER OFFICE 
IF HE OR SHE IS FOUND TO HAVE ANY PENDING CRTMINAL OR 
ADMINISTRATIVE CASE. 
FOR 
NEWLY 
FORMED 
WATER 
DISTRICTS, 
THE 
ADMINISTRATION AND THE CITY OR MUNICIPAL MAYOR SHALL 
NOMINATE, SCREEN AND APPOINT ONLY FIVE (5) BOARD OF 
DIRECTORS, UPON RECOMMENDATION BY THE CONCERNED 
SECTORS. 
IF NO NOMINATIONS ARE SUBMITTED, THE APPOINTING 
AUTHORITY SHALL APPOINT ANY QUALIFIED PERSON OF THE 
CATEGORY TO THE VACANT POSITION. 
SEC. 6. Sectioii 11 of Presidential Decree 198, as amended, is hereby amended to read as 
follows: 
SEC. 11. Term of Office - [Of the initial directors of each newly-formed 
district, two shall be appointed for a maximum term of two years, two for a 
maximum term of four years, and one for a maximum term of six years. Terms of 
office of all directors in a given district shall be such that the term of at least one 
director, but not more than two, shall expire on December 31 of each even- 
numbered year. Regular terms of office after the initial terms shall be for six 
years commencing on January 1 of odd-numbered years. Directors may be 
removed for a cause only, subject to review and approval of the Administration.] 
OF DIRECTORS SHALL SERVE FOR ONLY TWO (2) YEARS, ONE (1) 
DIRECTOR SHALL SERVE FOR A MAXIMUM OF FOUR (4) YEARS, 
AND THE OTHER TWO (2) SHALL SERVE FOR A MAXIMUM OF FIVE 
(5) YEARS. 
FOR NEWLY-FORMED WATER DISTRICTS, TWO (2)OF THE BOARD 
IN CASE OF THE EXISTING WATER DISTRICTS, THOSE WITH 
FIVE (5) DIRECTORS, ONE (1) SHALL SERVE FOR A PERIOD OF 
THREE YEARS (3), ANOTHER SHALL SERVE FOR FOUR (4) YEARS 
RESPECTIVELY, WHILE THE TENURE OF THE TWO (2) DIRECTORS 
OF THE MAYOR’S. 
AND THE THIRD MEMBER SHALL SERVE FOR FIVE (5) YEARS, 
APPOINTED BY THE MAYOR SHALL BE CO-TERMINUS WITH THAT 
IN WATER DISTRICTS WITH SEVEN (7) DIRECTORS, FIVE (5) 
OF THE BOARD OF DIRECTORS WHO SHALL BE APPOINTED BY 
THE ADMINISTRATOR SHALL SERVE AS FOLLOWS: THE FIRST 
THREE (3) DIRECTORS SHALL SERVE THE TERMS SIMILAR TO 
THOSE INDICATED IN THE PREVIOUS PARAGRAPH, WHILE THE 
OTHER TWO (2) SHALL BOTH SERVE FOR A MAXIMUM OF FIVE (5) 
YEARS. THE TWO (2) DIRFCTORS APPOINTED BY THE MAYOR 
SHALL BE CO-TERMINUS WITH THAT OF THE MAYOR’S. 
IN THE CASE OF THE TWO (2) CO-TERMINUS DIRECTORS, 
THEIR TENURE SHALL NOT EXCEED MORE THAN THREE (3) 
YEARS: PROVIDED, THAT THE CITY OR MUNICIPAL MAYOR MAY 
REPLACE THEM ANY TIME IF, IN HIS ASSESSMENT, ANY OR BOTH 
OF THEM FAILED TO MEET HIS EXPECTATIONS: 
PROVIDED, 
HOWEVER, THAT SUCH REPLACEMENT SHALE BE PRECEDED BY 
CONCERNED WITH COPIES FURNISHED TO THE SECRETARY OF 
THE DISTRICT AND THE ADMINISTRATION. 
A THIRTY (30) -DAY NOTICE DULY RECEIVED BY THE PARTY 


5 
BOARD OF DIRECTORS MAY BE RE-APPOINTED: PROVIDED, 
HOWEVER, THAT NO DIRECTOR SHALL SERVE FOR MORE THAN 
TEN (IO) CONSECUTIVE YEARS. 
SEC. 7. Section 39 of Presidential Decree 198, as amended, is hereby amended to read as 
follows: 
SEC. 39. Production Assessment. - In the event that the Board of a district 
finds, after notice and hearing, that production of groundwater by other entities 
within the district for commercial or industrial uses is injuring or reducing the 
district’s financial condition, the Board may REQUEST INTERVENTION BY 
THE ADMINISTRATION WHICH THE LATTER SHALL ACT ON 
WITHIN THIRTY (30) DAYS FROM NOTICE AND SHALL CONDUCT 
AN 
EVALUATION 
AND 
ASSESSMENT 
OF THE SITUATION. 
THEREAFTER, THE ADMINISTRATION may adopt and levy a groundwater 
production asmsment to compensate for such loss. In connection therewith, the 
[district may] ADMINISTRATION SHALL require necessary reports by the 
operator of any commercial or industrial well. Failure to pay said assessment 
shall constitute an invasion of the water of the district and shall entitle this district 
to an injunction and damages pursuant to Section 3 1 of this Title. 
ASSESSMENT FEES AND LEVIES WHICH MAYBE IMPOSED 
BY THE ADMINISTRATION SHALL BE PAID TO AND COLLECTED BY 
OF SUCH COLLECTION SHALL BE RETAINED BY THE DISTRICT AS 
REMITTED 
TO THE 
ADMINISTRATION 
AS 
SERVICE 
AND 
ASSESSMENT FEE AS PRODUCTION APPROVING AUTHORITY. 
THE DISTRICT: PROVIDED, THAT SEVENTY-FIVE PER CENT (75%) 
INCOME WHILE TWENTY-FIVE PER CENT (25%) SHALL BE 
DECISIONS OF THE ADMINISTRATION ON PRODUCTION 
ASSESSMENTS AND/OR WATER RATES SHALL NOT BE SUBJECT 
TO ANY APPEAL BEFORE ANY COURT, EXCEPT TO THE 
NATIONAL WATER RESOURCES BOARD. 
SEC. 8. Section 46 of Presidential Decree 198, as repealed by Presidential Decree 1177 and 
Presidential Decree 1955, shall now be adopted under this Act to read as follows: 
SEC. 46. Exemption from Taxes. - A WATER district CREATED 
UNDER THIS PRESIDENTIAL DECREE, AS AMENDED, shall BE 
EXEMPT FROM THE PAYMENT OF: 
[(l)] (A) [be exempt from paying] income taxes[; and], EXCEPT TAXES 
ON 
INTEREST 
INCOME 
FROM 
DEPOSITS 
AND 
ON 
INVESTMENTS THAT HAVE NO DIRECT RELATION WITH 
WATER SERVICE OPERATIONS; 
[(Z)] (B) [shall be exempt from payment of (a) all National Government, 
local government and municipal taxes and fees, including any franchise, 
filing, recordation, license or permit fees or taxes and any fees, charges or 
costs involved in any court or administrative proceeding which it may be a 
party] FRANCHISE TAXES; AND, 
(C) duties and taxes on imported machinery, equipment and materials 
required for its operations: PROVIDED, THAT SUCH MACHINERY, 
EQUIPMENT AND MATERIALS ARE NOT DOMESTICALLY 
MANUFACTURED AT COMPARABLE AND COMPETITIVE 
PRICES AND QUALITY. 


6 
ALL LANDS, BUILDINGS, AND OTHER REAL PROPERTY, 
INCLUDING EQUIPMENT ATTACHED THERETO, THAT ARE USED 
FOR WATER SUPPLY GENERATION AND DISTRIBUTION SHALL BE 
EXEMPTED FROM REAL PROPERTY TAXES: PROVIDED, THAT THE 
LAND OR BUILDING IS NOT USED FOR OFFICE OR ANY OTHER 
COMMERCIAL PURPOSES. 
THE TAX EXEMPTION PRIVILEGES PROVIDED FOR IN THIS 
SECTION TO ALL EXISTING WATER DISTRICTS SHALL BE 
ENJOYED ONLY FOR A PERIOD OF FIVE (5) YEARS FROM THE 
EFFECTIVITY OF THIS ACT: PROVIDED, HOWEVER, THAT NEWLY 
FORMED OR NEWLY ACTIVATED WATER DISTRICTS SHALL BE 
GRANTED TAX EXEMPTION PRIVILEGES FOR A PERIOD OF TEN 
(10) YEARS: PROVIDED, FURTHER, THAT THE WATER DISTRICTS 
SHALL ADOPT INTERNAL CONTROL RJZFORMS THAT WOULD 
BRING ABOUT THEIR ECONOMIC AND FINANCIAL VIABILITY: 
PROVIDED, FURTHERMORE, THAT, FOR A WATER DISTRICT TO 
BE ENTITLED TO THE TAX EXEMPTION, ITS APPROPRIATION FOR 
PERSONAL SERVICES, AS WELL AS TRAVEL, TRANSPORTATION, 
OR REPRESENTATION EXPENSES AND PURCHASE OF MOTOR 
VEHICLES, SHALL NOT BE INCREASED BY MORE THAN TWENTY- 
FIVE PERCENT (25%) A YEAR DURING THE PERIOD OF 
EXEMPTION. 
SEC. 9. Section 52 of Presidential Decree 198, as amended, is hereby amended to read as 
follows: 
SEC. 52. Appointment and Term of Of$ce. - [The Trustees, with the 
exception of the ex-officio member shall be appointed by the President of the 
Philippines. They shall have a term of five years each: Provided, That of the first 
four initially appointed, one shall serve a term of five years, another for four 
years, the third for three years, and the fourth for two years, the third for three 
years, and the fourth for two years. Trustees may be removed for cause only. 
The incumbent trustees holding office as such upon the effectivity of this 
amendment shall continue to hold such office until the expiration of their original 
terms as defined in their appointments.] 
THE BOARD OF TRUSTEES OF THE ADMINISTRATION 
SHALL BE APPOINTED BY THE PRESIDENT OF THE PHILIPPINES 
AND SHALL BE COMPOSED OF FIVE (5) MEMBERS, INCUDING THE 
ADMINISTRATOR WHO SHALL AUTOMATICALLY BE DESIGNATED 
AS THE VICE PRESIDENT. THE TRUSTEES SHALL SERVE FOR FIVE 
YEARS, EXCEPT FOR THE ADMINISTRATOR WHO SHALL SERVE 
AT THE PLEASURE OF THE PRESIDENT OF THE REPUBLIC. 
SEC. 10. A new paragraph under section 58 of Presidential Decree 198, as amended, is hereby 
introduced to read as follows: 
SEC. 58. The General Manager and Other Employees. - The Trustees 
shall not come from the appointed trustees. The general manager shall receive 
compensation in an amount as may be fixed by the Board, subject to the approval 
of the President of the Philippines, but in no case less than fifty-four thousand 
pesos per annum. The general manager shall employ and appoint all additional 
personnel: Provided, that the appointment of personnel in the supervisory level 
shall be subject to confirmation by the Board. 


7 
The incumbent manager holding office as such upon the effectivity of this 
amendment shall continue to hold such office unless sooner terminated by 
competent authority. 
The regular professional and technical personnel of the Administration 
shall be exempt from WAPCO and Civil Service rules and regulations; Provided, 
That the personnel shall be entitled to the benefits and privileges normally 
accorded to government employees, such as retirement, GSIS insurance, leave 
and similar matters. 
THE ADMINISTRATION AND WATER DISTRICTS SHALL BE 
EXEMPT FROM THE PROVISIONS OF REPUBLIC ACT NOS. 8244 
AND 9137, OR THE SALARY STANDARDIZATION LAWS, AND 
INSTEAD THE ADMINISTRATION SHALL HAVE THE AUTHORITY 
TO DETERMINE ITS OWN SALARY GRADE SYSTEM AS WELL AS 
ESTABLISH SALARY STANDARDS FOR THE OFFICERS AND 
EMPLOYEES OF THE WATER DISTRICTS CREATED UNDER THIS 
ACT. 
SEC. 11. A new section 67 is hereby introduced to read as follows: 
SEC. 67. TRANSFER OF WATER WORKS PROJECTS TO LWUA - 
ALL WATER WORKS PROJECTS, 
INCLUDING FUNDS 
AND 
EQUIPMENT, BEING ‘IJNDERTAKEN BY OTHER GOVERNMENT 
AGENCIES OUTSIDE METRO MANILA SHALL BE TRANSFERRED 
TO THE ADMINISTRATION ONE YEAR AFTER THE EFFECTIVITY 
OF THIS ACT. 
SEC. 12. 
follows: 
Section 67 of Presidential Decree 198, as amended, is also amended to read as 
SEC. 67. Capital Stock - The authorized capital stock of the Local Water 
Utilities Administration is [Two] TEN billion [Five Hundred Thousand] pesos 
divided into [Twelve] FIFTY million [Five Hundred Thousand] shares of stock 
with a par value of [Two] 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.]: 
PROVIDED, 
HOWEVER, 
THAT 
GOVERNMENT 
FINANCIAL 
INSTITUTIONS SHALL INVEST NOT LESS THAN THREE PER CENT 
INCOMES FOR STOCK SUBSCRIPTION AS PROVIDED FOR UNDER 
THIS ACT. 
(3%) BUT NOT MORE THAN FIVE PER CENT (5%) OF THEIR NET 
SEC. 13. 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, AND IN THE 
CASE OF FOmIGN LOANS, THE CEILING SHALL BE TWO BILLION 
(US) DOLLARS (US$2,000,000,000.00): PROVIDED, HOWEVER, THAT 
THE ADMINISTRATION MAY ONLY PROCEED OR AVAIL OF 
FOREIGN LOANS WITH PRIOR CLEARANCE AND APPROVAL OF 
THE DEPARTMENT OF FINANCE: 
PROVIDED, FURTHERMORE, 
THAT THE ADMINISTRATION MAY CONVERT ITS AUTHORIZED 
FOREIGN DEBT INTO PESO OR LOCAL LOANS WHENEVER IT 
DEEMS NECESSARY. 


8 
SEC. 14. Section 78 of Presidential Decree 198, as repealed by Presidential Decree 1177 and 
Presidential Decree 1955, shall now be adopted under this Act to read as follows: 
Sec. 78. Exemption from All Taes, Duties, Fees, Imposts and Other 
Charges by the Government. - [To enable the Administration to pay its 
indebtedness and obligations, and in furtherance and effective implementation of 
the policies and objectives of this Decree, t]The Administration is hereby declared 
exempt FROM THE FOLLOWING FOR A PERIOD OF TEN (10) YEARS 
UPON EFFECTIVITY OF THIS ACT: 
(A)From the payment of all taxes, fees, imposts, charges, costs and 
restrictions by the Government of the Republic of the Philippines, its 
provinces, cities, municipalities, and filing and service fees and other 
charges or costs in any court or administrative proceedings in which it 
may be a party; 
(B) From all income taxes, franchise taxes and realty taxes to be paid to 
the National Government, its provinces, cities, municipalities and 
other government agencies and instrumentalities; and, 
.(C) From all import duties, compensating taxes, wharfage fees on import 
of foreign goods and equipment required for its operations and 
projects. 
SEC. 15. Repealing Clause - All or any provisions of the Provincial Water Utilities Act 
of 1973 which are contrary or inconsistent to any provisions hereof are hereby deemed 
repealed or modified accordingly. 
SEC. 16. Effectivity - This Act shall take effect after fifteen (15) days following its publication 
in two (2) newspapers of general circulation. 
APPROVED