Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 198)
The title of Presidential Decree No. 198 is the "Provincial Water Utilities Act of 1973."
The national policy favors local operation and control of water systems through the formation and operation of independent, locally controlled public water districts to ensure reliable, economically viable water supply and wastewater disposal systems.
The appointing authority depends on the district's geographic coverage and population but is either the mayor of the city/municipality if over 75% of water connections are within that city/municipality, or the provincial governor. If the district covers more than one province, the governors rotate the appointment power.
Board members must be citizens of the Philippines, of voting age, residents within the district, and represent specific sectors such as civic-oriented service clubs, professional associations, business organizations, educational/religious institutions, and women's organizations. They may not be elected government officials.
To acquire, install, improve, maintain, and operate water supply and distribution systems; provide and operate wastewater collection, treatment, and disposal facilities; and conduct other functions related to water resource development and disposal within the district.
Yes, a district may be dissolved by resolution of its board of directors provided that assets and obligations are transferred to another public entity, bondholders are notified and consent, and a court finds the dissolution in the public interest.
A district can purchase, construct, and acquire waterworks; sell water under uniform rates; require sewer connections within proximity; operate wastewater facilities; enter contracts; and take right-of-way for constructing and maintaining works.
LWUA is a national agency chartered to set minimum standards, provide technical assistance and training, monitor compliance, promote system integration, and finance local water utilities through loans and revolving funds.
The board has five members: two with banking or finance experience employed by the national government; two professionals employed by a local water utility; and one civil or sanitary engineer employed by the national government. They are appointed by the President for five-year terms.
Local water districts may issue negotiable promissory notes (up to 20% of annual gross revenues), borrow money, and issue revenue bonds payable solely from district revenues for funding capital improvements and operating expenses.
Yes, local water districts are exempt from income taxes, all national and local government taxes and fees, and duties on imported machinery, equipment, and materials required for their operations.
The utility must comply with LWUA's minimum standards on water quality, design, equipment, operations, personnel, organization, and accounting. LWUA reviews reports and investigations and issues the certificate upon finding compliance, which can be revoked for failure to maintain standards.
The district may declare the continued use of other sewerage means a public nuisance and, after proper notice, discontinue all district services to the property until connection is made.
Yes, directors receive compensation equal to 1% of a first-class city mayor’s monthly salary for each board meeting they attend, but no other compensation for services to the district.
Initial director terms are staggered (two for two years, two for four years, one for six years). Subsequent terms last six years beginning January 1 of odd-numbered years, with at least one director's term expiring on each even-numbered year's December 31.