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FOURTEENTH CONGRESS OF THE REPUBLIC 
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First Regular Session 
1 1 
7 
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OF THE PHILIPPINES 
S E N A T E  
8Y :I ..+-- 
Introduced by Senator Manuel “Lito” M. Lapid 
EXPLANATORY NOTE 
The Philippine Millennium Development Goals call for, among others, the 
provision of safe potable water to 90 percent of all Filipinos and halving of the country’s 
population that lacks access to basic sanitation facilities by 201 5. 
In this light, Local Water Districts all over the country serve a vital need of many 
of the citizens of this nation. In addition to providing safe potable water supply to our 
citizens, our local water districts also play an active role in improving people’s access to 
adequate sanitation especially in the urban centers in the countryside to curb 
environmental pollution and the prevalence of waterborne diseases. 
To date, LWUA has now formed over 460 local water districts, serving 13 million 
rural Filipinos. In fact, there is now competition among lending agencies as to which one 
would lend to them. Some of the viable water districts are also being eyed by private 
companies for privatization. Also, our government is now starting the practice of 
benchmarking water utilities in the country, which resulted in professionalizing, and 
increasing efficiencies of, water operations in the countryside. 
Local Water Districts are entities engaged in business highly impressed with 
public interest. While definitely governed by public laws, there is now a pressing need to 
give them a level of autonomy in order for them to conduct their operations with 
optimum efficiency in order to respond to the needs of the general public. 
As such, regulatory reforms are being introduced in this bill in order to encourage 
LWUA and water districts nationwide to adopt innovative and technologically-sound 
approaches to better serve the consuming public. It is hoped that the reforms catalyzed 
under this proposed measure will result into strategic corporate and financial 
restructuring of local water districts in the Philippines in order for them to become more 
responsive to the needs of their clients. 
In view of the foregoing, the early passage of this bill is earnestly sought. 


FOURTEENTH CONGRESS OF THE REPUBLIC 
) 
7 yy -7 ; 
2 ’, -: 
OF THE PHILIPPINES 
1 
First Regular Session 
1 
‘7cI:C : v m  BY : __ 
“_ 
& 
S E N A T E  
Introduced by Senator Manuel “Lito” M. Lapid 
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 I. 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 TWENTY-FIVE BILLION PESOS 
(PHP 25,000,000,000.00) divided into SIXTY-TWO MILLION FIVE 
HUNDRED THOUSAND PESOS (PHP 62,500,000.00) shares of stocks 
with a par value of Four hundred pesos per share which shall be 
subscribed by the National Government and opened to subscription by 
private investors or government financial institutions.” 
SEC. 2. 
Section 72 of Presidential Decree No. 198 shall hereby be 
amended to read as follows: 
“SEC. 72. 
Domestic 
Borrowhg 
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 TEN 
BILLION PESOS (PHP lO,OOO,OOO,OOO.OO).” 


SEC. 3. 
read as follows: 
Section 73 of Presidential Decree No. 198 shall be amended to 
“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 SEVEN HUNDRED MILLION US 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 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 operations. 
The President of the Philippines, by himself/herself or through 
hislher duly authorized representative, is hereby further authorized to 
guarantee, absolutely and unconditionally, as primary obligor and not as a 
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 fund sources. 
The loan 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 lnconsistent with any provisions hereof are 
hereby repealed or modified accordingly. 
SEC. 5. 
Separability Clause. - if any provision of this Act is declared 
unconstitutional, the other provisions not affected thereby shall remain valid. 
SEC. 6. 
Effectivity Clause. - This Act shall take effect after fifteen (15) 
days following its publication in two (2) newspapers of general circulation. 
Approved,