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REPUBLIC OF THE PHILIPPINES ) 
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THIRTEENTH CONGRESS OF THE 
1 
THIRD REGULAR SESSION 
Introduced by Senator Magsaysay, Jr. 
EXPLANATORYNOTE 
After 33 years since its creation as a government financing institution (GFI), the 
Local Water Utilities Administration urgently needs amendments to its Charter to 
positively respond to the need of providing potable water to every Filipino in the country 
The rapidly increasing population in fast urbanizing towns and cities outside 
Metro Manila requires the water agency to quickly act before these areas experience an 
acute shortage of water supply. This means urgent expansion and modernization projects 
in the areas covered by the already existing 612 water districts. 
On the other hand, the close to a thousand municipalities with primitive or with 
no water systems, at all, would need the assistance of the Local Water Utilities 
Administration to establish or develop modern and sustainable water supply systems to 
save residents in these areas from the perennial threat of being victims of epidemic as a 
result of drinking contaminated water. 
The water agency has to align itself with the Millennium Development Goal 
(h4DG) of the government. Under this vision, LWUAs proposed investment program 
for the period 2005-2015 will amount to P97.6 Billion, of which an estimated 40% or P39 
Billion represents the required peso counterpart to be sourced from the inadequate 
LWUA capitalization. In the absence of GAA funds, LWUA intends to source the peso 
requirement from other local funding sources. Hence, the need to immediately and 
drastically increase the agency's capitalization from P2.5 Billion to P50 Billion. 
The incremental authorized stock of P47.5 Billion (the proposed P50 Billion less 
P2.5 billion already paid up) shall be applied to the P2.260 Billion NG subsidies 
previously appropriated and released to LWUA during the period 1993-2002 and the 
P30 Billion required Peso counterpart of the P97.6 Billion projected investment for the 
period 2005-2015 to meet the MDG targets. 
While the agency remains committed to provide continuing financial and 
technical assistance to its clientele (the local water districts), specifically to the less 
credit-worthy water service providers, the .lack of capitalization limits the agency's 
delivery of services unless remedial legislation is enacted. It is presently experiencing 
problems in sourcing its equity funding. Said equity funds are needed to build up and 
generate foreign funding support. 
It is also proposed hereto that the name of LWUA be changed to Philippine 
Water Utilities and Resources Development Authority (PWURDA) to reflect its 
actual functions and operational activities. 


In view of its urgent nature and to ensure that by the year 2015 the country’s 
towns and cities shall have safe supply of potable drinking water, the passage of this 
proposal is earnestly sought. 
MON B. MAGS L. 
2 


THIRTEENTH CONGRESS OF TWE 
) 
THIRD REGULAR SESSION 
1 
REPUBLIC OF THE PHKIPPPNES ) 
AN ACT 
FURTHER AMENDING 
$ I D E ~ T ~ 4 ~  
DE 
E NO. 198, ~ T ~ E R ~ I § E  
KNOWN AS THE PRO 
IES ACT A$ A ~ E N  
PROWDING FUNDS 
Be it enacted by the Se 
Philippines in session assembled that: 
SECTION I. Section 49, Chapter 11, Title I11 of Presidential Decree 198, as 
amended, is hereby amended to read as follows: 
Section 49. Chapter - There is hereby chartered, created and formed a 
government corporation to be known as the ~
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P
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WWTE 
AND RESOU 
ES D E ~ ~ ~ P M E ~ T  
AUTH 
in place of the "Local 
Water Utilities Administrations" as provided for in its original charter and 
which is hereby attached to the Ofice of the President. The provisions of this 
revised Title sliall be and constitute the charter of the A 
amended by Section 21, PD 768). 
Y. (As 
SECTION 2; Section 39 of Presidential Decree 198, as amended, is hereby 
amended to read as follows: 
Section 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 
THE 
INTERVENTION BY THE [AI"ISTRATION] AU 
TY WHICH TNIE 
LATTER SHALL ACT ON UPON EVALUATION AND ASSESSMENT OF 
THE 
SITUATION. 
THEREAFTER, 
THE 
[ A ~ ~ S T R A ~ ~ O N ]  
AUTHORITY MAY ADOPT AN 
production assessment to compensate for such loss. In connection therewith, the 
(district) AUTHQHTY S 
kL require necessary reports FROM the operator of 
any commercial or industrial well. Failure to pay said assessment shall constitute 
LEVY A GRBUN 
3 


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 LEWES WHICHr MAYBE IMPOSED 
BY THE AUTHORITY SHALL BE PAID TO AND COLLECTED BY THE 
DISTRICT; PROVIDED, THAT SEVENTY FIVE PER CENT (75%) OF 
SUCH COLLECTION SHALL BE RETAINED BY THE DISTRICT AS 
INCOME WHPLE TWENTY FPVE PER CENT (2§'%0) SEALL 
REMITTED TO THE AUTHORITY AS SERVICE, ASSESSMENT AND 
PRODUCTION FEE OF THE APPROVING AGENCE: 
IN CASES OF TOWNS AND CITIES WHERE THERE 
WATER DBTRICTS, THE AUTHORITY SHALE HAVE THE RIGHT TO 
DIRECTLY INTERVENE AND ENSURE PROPER ~ANAGEMENT, 
DEVELOPMENT AND CONTROL OF 
TER RESOURCES IN SUCH 
AREAS BY IMPOSING GUrDELINES ON C O ~ E R C ~ L  
AND 
INDUSTRIAL 
USE 
AND 
THERETO 
IMPOSE 
PRODUCTION 
ASSESSMENT 
FEES. 
PROCEEDS OF 
SUCH PRODUCTION 
ASSESSMENT FEES SMALL BE DIVIDED EQUALLY BY THE 
AUTHOMTY AND THE LOCAL G O V E ~ ~ N T  
UNIT (LGU). 
DECISION 
OF 
THE 
AUTHORITY 
ON 
P R O D U C T I ~ ~  
ASSESSMENTS AND/OR WATER RATES SHALL BE APPEALED 
BEFORE THE NATIONAL WATER RESOURCES BOARD (NWRB) 
WHTCH DECISION SHALL BE MMEDTATELY EXECUTORY. 
SECTION 3, Section 52 of PD 198, as amended, is hereby amended to read as 
follows: 
Section 52. Appointment and Term of Oflice - [The Trustees, with the 
exception of the ex-officio member shall be appointed by the President o f  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. Trustees may be 
removed for cause only. 
4 


The incumbent trustees holding office as s,uch upon the effectivity of this 
amendment shall continue to hold such office until vhe expiration of their original 
terms as defined in their appointments]. 
OF TRUSTEES OF 
APPOINTED BY THE PRESIDENT OF THE 
I~~IPPINES. 
IT SHALE 
BE COMPOSED OF SEVEN (7) MEMBERS, INCLUDING THE 
ADMINISTRATOR W 
LL AUTOMATICALU5Y BE 
AS EX-OFFICIO CHAI 
FINANCE, 
THE 
D 
ENT 
OF ENERGY, 
GOVERNMENT AGENCIES AND TWO (2) FROM 
SECTOR. THE TRUSTEES SHALL BE C 
APPOINTING AUTHO 
N, COMING  FRO^ THE DE 
SECTION 4. A new paragraph under Section 58 of PD 198, as amended, is 
hereby introduced to read as follows: 
Section 58. The Administrator und Other Employees. - The Administrator 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 Administrator 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. 
SECTION 5. 
amended to read as follows: 
Section 67 of Presidential Decree 198, as amended, is also 
Section 67. Cupitul Stock - The authorized capital stock of the (Local 
Water Utilities Administration) 
Philippine Water Utilities and Resources 
Development Authority 
is FIFTY BILLION pesos ( ~ ~ O , O O O ~ O O O , Q O ~ . O Q )  
divided into TWO Hundred Fifty Million shares to stock with a par value of TWO 
Hundred Pesos per share which shall he subscribed by the National Government 
Financial Institutions and opened to subscription by private investors or 
government financial institutions (J; 
OPTDED, ~
O
~
V
THAT 
GOVEFUMENT FINANCIAL IINSTITUTIO 
THAN OWE PER CENT (1 Yo) BUT NOT MO 
(5%) OF TEEIR NET 
OME FOR STOCK SUBS 
PROVIDED FO 
FIVE PER CENT 
5 


SECTION 6. Section 72 of Presidential Decree No 198 shall hereby amended to 
read as follows 
Section 72 - Domestic Borrowing Authority - The (Administration) 
AUTHORITY shall have the (authority) POjWE 
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) FIFTY 
billion pesos, AND JN THE CASE OF FOREIGN LOANS, THE CEILING 
SHALL BE TWO BILLION (US) DOLLARS ~US$2,000,000~000.00~: 
PROVIDED, HOWEVER, T 
T THE AUTHIICB 
Y MAY ONLY 
PROCEED OR AVAIL OF FO 
IGN 
LOANS 
W 
CLEARANCE AND APPROVAL OF THE D E P A ~ ~ ~ E ~ T  
OF F
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:
 
PROVLDED, 
FURTHE 
THAT THE 
AUTHO 
CONVERT ITS AUT 
XGN DEBT INTO PESO 
LOCAL LOANS ~
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IT DEEMS NECESSARY. 
SECTION 7. Repealittg Cla~se - 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. 
SECTION 8. Eflectivity 
~ 
This Act shall take effect afier Elfteen (15) days 
following its publication in two (2) newspapers of general circulation. 
APPROVED, 
6