Annual Report 2009 - LWUA

Annual Report 20091

Table ofContents3 Board of Trustees4 LWUA Corporate Performance6 Office of the Administrator10 Office of the Senior Deputy Administrator14 Office of the Deputy Administrator for AreaOperations18 Office of the Deputy Administrator forAdministrative Services21 Office of the Deputy Administrator forInvestment and Financial Services25 Audit Certificate26 Balance Sheet27 Income Statement28 Statement of Changes in Equity29 Cash Flow Statement30 Notes to Financial Statements2Local Water Utilities Administration

Annual Report 2009VisionThe Leader in building sustainable and self-reliant water districts and otherwater service providers serving the Filipino people in the countryside.MissionTo develop water districts and other water service providers into selfsustaininginstitutions by providing financial, technical, institutional andregulatory assistance by being viable, effective and world-classorganization.CredoWe are dedicated civil servants practicing the highest degree ofprofessionalism and ethical standards with passion for excellence.The Board of TrusteesEduardo A. BangayanTrusteeEnrique Senen G. Montilla IIITrusteeProspero A. Pichay, Jr.ChairmanAurelio O. PuentevellaTrusteeDaniel I. LandinginAdministrator / Ex-Officio Member3

Highlights of LWUA 2009 AccomplishmentsHerewith is LWUA’s accomplishments for the year 2009 which is the highest so far in the 36 years of theAgency’s existence.LWUA’s vision of providing sustainable water supply development in the countryside is anchored on thefollowing goals; (1) Expand water service provider (WSP) service coverage; (2) Develop self-sustaining waterservice providers; (3) Achieve efficiency and effectiveness by being a world class organization; and (4) AttainLWUA financial viabilityHighlights of LWUA’s achievements in CY 2009 as as follows:Goal 1 – Expand Water Service Provider (WSP) Service CoverageLWUA achieved remarkable gains in water supply development in 2009. An increase of 12 percentagepoints in LWUA’s service area coverage was realized as a result of its accelerated water supply program implementedduring the year. Formation of WDs, which is the initial step in water supply development was aggressively addressedby the Agency. In a span of one year, a total of 177 WDs were organized increasing the number of formed WDsfrom 623 in 2008 to 800 in 2009. The 800 WDs now cover a total of around 900 cities and towns out of LWUA’spotential market. LWUA’s service area coverage expanded to 60% in 2009 from 48% in 2008 or an increase of 12percentage points.With a total investment of P3.8 billion in 2009, LWUA has successfully implemented a total of 813 watersupply projects at various stages consisting of 120 completed construction projects, 162 ongoing constructionprojects, and 531 completed POW preparation projects. This year’s accomplishment of 813 surpassed the targetof 557 in 2009 and tripled the accomplishment of 260 in 2008.A total of 258 cities and towns nationwide are benefiting thru LWUA’s expansion and rehabilitation projects(120 completed construction and 162 ongoing construction projects). An estimated additional 1,125,580 millionFilipinos were given direct access to potable water with the completion of 120 water supply projects and additionalservice connections generated by existing WDs. To date (1973-2009), an estimated total population of 16.2 millionis being directly served with potable water.Meanwhile, as part of its contribution in addressing the Presidential Priority Program on Water (P3W),LWUA has undertaken water supply improvement projects at various stages for 64 waterless municipalities withinthe WD areas in 2009, which are targeted for completion in 2010. Since 2004, LWUA has developed/completedconstruction water supply projects in 51 waterless municipalities served by WDs.Towards achieving sustainable water supply development, LWUA started the following study/program in2009: (a) Development Study for Bulk Water Supply; and (b) Preservation and Development of Watershed in WDareas.Goal 2 – Develop Self-Sustaining Water Service ProvidersLWUA continues with its capacity building activities such as the provision of financial, management andtechnical trainings to water institutions. Likewise, it continues with the annual performance monitoring and evaluationof WDs. In 2009, it targeted to improve/enhance the operational and financial efficiency of around 85 waterdistricts by providing institutional development assistance in the form of trainings, installation of commercial practices4 4Local Water Utilities Administration

Annual Report 2009systems, management advisory services, water rates review/approval, and conduct of WD audit. Assessment of the 85 WDs using thecriteria on creditworthiness will be concluded in 2010.Goal 3 – Achieve Efficiency and Effectiveness by Being a World Class OrganizationAs part of its commitment to good governance, the LWUA Board of Trustees approved in 2009 an Anti-Graft Action Plan whichshall form part of the Moral Recovery Action Plan to be submitted to the Presidential Anti-Graft Commission. Likewise, the LWUA Boardapproved the Corporate Policy on the Ethical Leadership and Good Governance for LWUA. Further, two of our Board of Trustees participatedin orientation governance seminar.Goal 4 – Attain LWUA Financial ViabilityLWUA’s lending operations in 2009 was marked by new record gains. Financial assistance in the form of loans/grants committedby LWUA in 2009 reached P10.263 billion, consisting of P2.518 billion ICG Funds and P7.745 billion Non-LWUA Initiated Funds benefitinga total of 480 WDs. Out of P10 billion committed funds, P3.3 billion or 33% has been released in 2009. Compared with last year, loanreleases increased significantly from P.666 billion to P3.3 billion.Loan collection from WD amounted to P1.916 billion or 92% of the annual target of P2.072 billion. Collection ratio registered at90% exceeded this year’s target of 85%.Total revenues generated reached P1.731 billion of which 85% or P1.470 billion were realized from LWUA’s lending operationswhile 15% or P.261 billion were derived from other LWUA services and other miscellaneous income.Net income before non-cash charges amounted to P393.52 million.Project funds sourced to finance its water supply program for 2009 reached a total of around P2.45 billion.Project disbursement amounted to P3.800 billion or 84% of the P4.521 billion projected disbursement for the year. The amount(P3.8 billion) is significantly higher when compared with 2008’s P583 million which is attributed to LWUA’s accelerated water program.Meanwhile as part of LWUA’s initiative to serve poor communities, it introduced in 2009 the following financing reforms: (1)reduced interest rates and longer repayment period of loans; and (2) proper mix of funding assistance consisting of loans and grants.Moreover, the following measures were implemented by LWUA management to strengthen/enhance its financing activities: (1)Approval of the Acquisition of a Savings or Thrift Bank in view of the creation of Water and Energy Development Bank (WE Bank); (2)PGMA’s certification of LWUA Bill (Amendments of PD 198) as Administration’s Priority Bill; and (3) Creation of LWUA Consult Incorporation.DANIEL I. LANDINGINActing AdministratorLocal Water Utilities Administration5

OFFICE OF THEADMINISTRATORThe Office of the Administrator (OAD) executes and administers the policies and guidelinesapproved by the Board of Trustees, and is responsible for the corporate performance. The OAD iscomposed of the following offices: Management Services Office (MSO), Internal Control Office (ICO),the Legal Department, and the Public Affairs Department (PAD).Management Services OfficeAssisting Management in setting the overall direction of the agency and in providing timely andaccurate information is the function of the Management Services Office (MSO), which is composed of threedivisions namely: (a) Corporate Planning Division, (b) Management Information Systems Division (MISD),and (c) Network Facilities Management Division.The MSO, as representative of LWUA,continued to participate in various water supplysector initiatives and programs geared towardsaddressing effectively and efficiently the water needsof the country. In 2009, the MSO Manager servedas member of the Inter-Agency Steering Committeeon the Philippine Water Supply Sector AssessmentProgram which has the following objectives: (a)institute an effective and reliable sector monitoringprocess based on coherent and integrated baselineand standardized measurements; and (b) harmonizeinformation collection and sharing among policymakers, service providers, planners and the publicfrom the local and national level all linked towardsan actual performance monitoring and assessmentmechanism. Moreover, he participated in thefollowing task forces on water and sanitation: (a) TaskForce on Institutional Strengthening for Water Supplyand Sanitation; (b) Capacity DevelopmentFramework for Water Supply and Sanitation; and (c)Task Force on Financing and InfrastructureInvestment.In 2009, the Corplan Division articulatedLWUA’s 2009 corporate thrust including theobjectives, priorities and targets, given the Board/Management’s aspirations for the corporation. Thiswas approved as part of the 2009 CorporateOperating Budget. Thereafter, Corplan prepared/consolidated the 2009’s Workplan detailing theagency’s quarterly project implementation schedule.By year-end, it also completed the draft of the 2010corporate objectives/priorities/targets. It likewise66Local Water Utilities Administration

Annual Report 2009performed the task of monitoring the agency’sperformance by preparing periodic assessmentreports for top management’s use. In 2009, it playedan important role in monitoring the agency’sachievements in terms of attaining the goal of thenational government in providing water for the entirecountry by 2010. In line with this, it prepared/submitted reports to oversight agencies e.g. thePresidential Management Staff and the OversightCommittee (Congress). As part also of its monitoringfunction, the unit continued with the yearlyassessment of WDs’ performance thru thepreparation of annual WD Industry Average andmaintenance of WD Data Bank. It also conducted aspecial research on the remaining number of cities/municipalities without WDs nationwide.Likewise, it handled the preparation/submission of the following reports being requiredby external agencies e.g. (a) accomplishment reportsand other budgetary forms to DBM, (b) Quarterly IMFTable to DOF, (c) long-term financial projections toDOF, (d) medium-term project investment programor the Comprehensive and Integrated InfrastructureProgram (CIIP) to NEDA, (e) regionalaccomplishment reports to RDCs, (f) WD data toNSCB, and (g) annual performance evaluation reportto the General Government Administration Office(GGAO), Office of the President. In addition, the unithandled the following special assignments in 2009:(a) coordinated submission of questionnaire oncorporate governance required by the Institute ofCorporate Directors, (b) acted as secretariat to theLWUA-WD Coordinating Panel, and (c) participatedin the Gender and Development (GAD) conferences/workshops including those for pilot WDs, sponsoredby the LWUA Focal Point on GAD. Moreover, itcontinued to render assistance to various consultinggroups/researchers.In support of the various programs/projects being implemented by water sectoragencies, it participated and became an activemember of the Technical Assessment Team (TAT)of the Philippine Water Supply Sector AssessmentProgram. It was also involved in the workshop onCommunicating the MDGF 1919: Enhancing theAccess to and Provision of Water Services with theActive Participation of the Poor, and NSCB’sworkshop on National Accounts.Meanwhile, the ManagementInformation Systems Division (MISD), as memberof the ISSP Usability Assessment Task Force whoseproject ended in December 2008 with topmanagement’s directive “to continue working with theconsultants,” geared up for action in 2009 for itspivotal role in the ensuing ISSP Completion andRectification Project with the NJS/CEST Consultantsengaging the services of an outsourced DevelopmentTeam (DT). Side-by-side they have committed’ tocomplete the remaining works of the ManagementConsulting Services portion of the PCWSP V throughthe delivery of the fully operational 15 ApplicationSystems (AS) working as one integrated LWUAInformation System, with NJS/CEST, Inc.acknowledging and assuring that the Project’scompletion will be without cost and to LWUA’ssatisfaction. Being Task Force Members and/orSystem Integrators, as well as DT Counterparts, theentire MISD Staff concerted their efforts incoordinating with NJS/CEST Consultants’Development Team and Application System (AS)Owners / Users re: work schedule and system owner/ user attendance and participation in scheduledactivities. They got involved in attending andmonitoring such activities as: systems familiarizationand orientation; module testing; application testing,and; system-by-system / partial integration testingof some but not all of the 15 AS. In addition, MISDprepared and processed several ISSP-relatedcommunications / comments in response to theConsultants’ letters and requests from theConsultant-contracted DT, including notices ofmeetings and scheduled activities.For its share in the promotion of LWUAeffectiveness and efficiency through the developmentand maintenance of computerized systems, MISD’s2009 automation activities centered on the following:(a) completion of a program linking the ATMLandbank System to the existing LWUA PayrollSystem; (b) on-going investigation and analysis ofthe Personnel Budget System; (c) automatedpreparation of miscellaneous reports, such asPersonnel Budget, Personnel Salary Adjustments,and Special Payroll Accounts Information, amongothers; (d) completion of Gender and Development(GAD) System; (e) Water District Deposit PortfolioSystem (WDDPS) data monitoring and monthlyproduction of five (5) different reports; (f) userassistance in data management and generation ofvarious Fixed Assets System (FAS) and MedicinesInventory Control System (MICS) reports, and; (g)Payroll System maintenance and production / printingof registers and validation reports for ATM purposes,each for both purposes, as follows: 48 MonthlyPayrolls; 12 reports each of Allowance, COLA, andB-Day Payrolls, eight Special and four GroceryPayrolls, and; production / printing of 24 RemittanceReports each for PROFUND and LECC, and 12Liquidation Reports.To ensure conformance to / compliancewith existing office policies and procedures, mostlyinvolving research of related topics and at times draftrevisions, MISD reviewed a total of 152 proposedOffice Orders and prepared corresponding Briefs /Memos for the Acting Administrator / OriginatingUnits, covering varied subjects as: (a) creation ofand/or representation / participation to committees,action groups, tournaments, etc.; (b) personneldesignations/assignments / reassignments / details;(c) attendance / participation to various trainingcourses / seminars / workshops / forums / congress/ conventions, and; (d) other miscellaneous matters.Moreover, MISD undertook review/evaluation, and/or conduct of studies in response to managementinstructions and/or other units’ requests/ queries,involving coordination with concerned units gearedtowards the development / creation of new /7

enhanced procedures, as well as the formulation and/or revision of related policies, leading to thepreparation of OOs and Inter-Office Memos / Briefsdealing on such matters as: (a) Re--delegation ofDisbursement Voucher Approval, (b) Increase ofMeal Subsidy, and; (c) Designations of “Acting” and“OIC”.As part of its continuing staff developmentendeavors, MISD staff attended / participated in the:(a) NCC-conducted Information and CommunicationsTechnology (lCT) Resource Acquisition Seminar; (b)WSTC-conducted Basic Policy Makers’ Seminar andAdvanced Policy Makers’ Seminar; and HRDDconductedProtocol and Social Graces Seminar, andInstitutional Development Services RefresherCourse, and; (c) First Meeting and General Assemblyof the Chief Information Officers Forum, Inc. Lastly,two (2) MISD senior staff conducted an echo seminaron the formulation of a Citizen’s Charter, and incollaboration with HRDD, assisted in the creation ofa ‘Help Desk’ unit as required by the Citizen’s Charter.The Network Facilities ManagementDivision (NFMD), on the other hand continued withthe maintenance and management of the ISSPservers located in the NFMD office. It had beenmaintained effectively that local area connectionsbetween the Oracle Application Servers as well asDatabase Servers with the different oracle clientswere faultless, enabling on-time data entries,production, and report generation. The routinedatabase administration of Phase I and Phase IIapplication systems were carried competently.Various Oracle crucial errors were addressedeffectively, particularly in tuning and rectification ofapplication systems of Personnel Information System(PIS), Cash Management System (CMS), and FixedAssets Management System (F AMS). Meanwhile,as member of the ISSP Task Force TechnicalWorking Group, the NFMD installed and configuredclient workstations and assisted in the configurationof virtual servers, which are all located at the ISSPTask Force Room.In addition, the unit configured virtualserver for the use of Bentley WaterCAD v8i withDarwin Calibrator Software (Bentley Select Serverv8i) as well as assisted in the configuration andinstallation of needed softwares in the ProjectPlanning Divisions workstations of LWUA. Tofacilitate communication and interconnection of thedifferent workstations with the Bentley Select Server,the NFMD laid wired cables at the different floorsand activated the corresponding ports of theworkstations. As a continuing activity, theadministration, maintenance and upkeep of theBentley Select Server has become the unit’sresponsibility.The NFMD, had likewise provided internetservice connections to various departments ofLWUA. Using third party software, the load balancingand time-sharing scheme were implemented to meetthe demand for responsive on-line communicationbetween our agency and various organizations,namely the water districts, government offices, andprivate entities. This also gave way for the seamlesson-line communication within the different divisionsand departments of our agency using our e-mailsystem.As part of its regular function, the NFMDconducted evaluation and came up with decisiverecommendation regarding acquisition of variouscomputer hardware peripherals and softwarecomplements of the different units in LWUA.Troubleshooting of network and stand-alonecomputers were addressed extensively avoidingfurther deterioration and prolonging computer servicelife.Internal Control OfficeThe Internal Control Office is part of theoverall management control system of LWUA. It isprincipally responsible for evaluating the adequacyand effectiveness of the internal control system inLWUA to ensure that the agency resources aresafeguarded against loss, wastage and misuse, andare utilized consistent with laws, policies andregulations.For the year 2009, ICO fully detacheditself from performing functions of routine charactersuch as pre-audit of vouchers, development ofsystems and procedures and other activities ofsimilar nature. This change was implemented tocontribute to the program of the Agency to reducered tape and at the same time enhance internalcontrol system by clarifying the accountabilities ofofficials who are responsible for recommending funddisbursements to the LWUA Administrator.In connection with its post-audit functions,ICO validated the completeness of submitteddocuments to support fund disbursements. It securedcopies of these documents and stored selected dataelectronically to facilitate retrieval, analysis andreporting of audited transactions. Another initiativeof ICO was the daily monitoring of cash transactionsand generation of reports regarding the agency’s cashflow status as warranted. The update of the manualson the policies and procedures of the Agency’slending and technical services functions is a part ofthe continuing tasks of the ICO. Regarding itsoperations audit function, during the year ICO hasevaluated and reported to Management the result ofits review of 10 unit/operational activities.Based on the specific instruction of theAdministrator, as an exception to its non-pre--auditpolicy, the ICO reviewed several transactions priorto fund disbursements as a staff work for theAdministrator.Legal DepartmentThe Legal Department assists the Officeof the Administrator and the Board of Trustees inrendering legal advises and opinions in accordancewith LWUA charter, law, rules, regulations andpolicies. It also assists other units in the resolutionsof legal issues brought before them.For CY 2009, the ContractsAdministration and Review Division reviewed and8 Local Water Utilities Administration

Annual Report 2009recommended for approval: 407 Memoranda ofUnderstanding (MOAs) and Memoranda ofAgreement (MOAs); several Deeds of Undertaking(DOUs); 175 Financial Assistance Contracts (FACs);eight (8) Arrears Restructuring Agreements (ARAs)and Financial Relief Assistance Agreements(FRAAs); two (2) Service Contracts andMiscellaneous Contracts wherein L WUA was oneof the contracting parties or the approving authority.Moreover, there were 20 Notices of Award(NOA)/Notices to Proceed (NTP) served to thewinning contractors/suppliers and the correspondingContract Agreements were processed and notarized.Two (2) lawyers of the Department took charge ofthe notarization of the contracts/agreements.The lawyers and support staff of theDivision were appointed to various LWUACommittees either as legal member or subcommitteemember. The lawyers of the Divisionattended public hearings, served as resourcespeaker, attended dialogues and were alsodesignated as members of the Interim Board ofDirectors of taken-over water districts. Legal opinionson various issues were also rendered by them.The following cases are still pending invarious courts, most of which were handled incollaboration with the OGCC, being the statutorycounsel of all government-owned and controlledcorporations (GOCCs). (1) The LWUA Rationalizationvs. LWUA case, pending at the RTC, Quezon City;(2) The Buhi Rural Waterworks Association vs.LWUA, et. aI., pending at the RTC, Iriga City; (3)The dismissal in case of Atty. Rodolfo de Jesus,pending for resolution at the SC; (4) The dismissalof Ms. Alice Marie Osorio, pending at the Court ofAppeals; (5) The case of Sarmiento vs. LWUA andSan Pedro WD Board of Directors (G.R. No.1 06077)is still pending at the CA; (6) LWUA vs. Municipalityof Borbon, Cebu and,the Board of Directors of BorbonWD is still pending at the Bogo RTC, Cebu; (7)Bonbon RWSA vs. LWUA, et. aI., still pending at RTC,Naga City; and (8) Norma P. Somoray et. aI. vs.Serapia Oboyan, et. aI. is pending at the RTC,Catarman, Northern Samar.Public Affairs DepartmentIn pursuit of the Board and Management’sobjective of creating the greatest possible publicawareness on LWUA’s undertakings in keeping withthe National Administration’s goal to provide waterfor all Filipinos particularly the poor and the waterless,the Public Affairs Department intensified its publicinformation and education campaign through itsInstitutional and Media Relations Division, and theMedia Production Division, through a rigorousnetworking with the country’s reputable print andelectronic media outfits, production of variouspublications, and strengthening cyberspaceinteraction through the agency’s website.Amplifying the department’s high profilemedia campaign was the establishment of the LWUAMedia Lounge at the PAD office equipped with thestate of the art communication gadgets likecomputers with scanners, printers and internetconnections, fax and copying machines, telephoneswith local and national direct dial lines, and a largetelevision screen with cable channels.For its media relations’ activities,Institutional and Media Relations Division wasable to place media releases, special reports/features, special agency supplements, and corporateadvertisements in major broadsheets and tabloids;conduct press briefings and conferences for LWUAofficials; coordinate radio/TV interviews; produce andair TV features and documentaries; and producespecial LWUA anniversary documentary. Likewisethe division conducted special projects such as theBuhay Kyut- Health Hygiene and WaterConservation, and participated in inter-agency info/advocacy groups like Consumernet, DevComnet, andPGMA Serbisyo Muna Caravans.Similarly, the Media Production Divisionsustained the production of its regular publicationssuch as the quarterly Waterpoint, the monthlyWaterpoint Express, the corporate calendar and theAnnual Report. The division also came up with animproved edition of the Presidential Decree 198incorporating related issuances in the water supplysector, and an easy to read brochure on the natureand operation of LWUA, and a primer on the Agency’sregulatory functions.At the height of the preparation for themuch-welcomed visit of President Gloria MacapagalArroyo during the commemoration of the agency’s36 th anniversary, the division was actively involvedin the preparation and layout of tarpaulins for thestage background, banners and greetings. Likewise,several water districts referred by LWUA advisorsand engineers, requested the assistance of MPD inthe preparation of theirtarpaulins and otherproject informationmaterials.The divisionalso sustained thecorporate transparencyand accessibility to bothlocal and internationalaudiences through thecontinued developmentand maintenance of theLWUA Website.9

OFFICE OF THESENIOR DEPUTYADMINISTRATORThe Office of the Senior DeputyAdministrator (OSDA) comprise six (6) departments,namely: Water District Development Department(WDDD) - Luzon; WDDD - Visayas; WDDD -Mindanao; Loans and Water Rates EvaluationDepartment (LWRED) - Luzon; LWRED - Visayas/Mindanao; and the Water Resources Research &Training Department (WRRTD).Water District DevelopmentDepartmentInstitution-building being the key to successfuldevelopment, proper management, as well assustained operation and maintenance of potable watersupply systems in the provincial areas, WDDDLuzon, WDDD Visayas and WDDD Mindanao haveformed a total of 177 new Water Districts, reactivated45 Water Districts, and recategorized 20 Water Districts.As part of its duties and responsibilities, thethree departments have also provided advisory servicesto 577 Water Districts all over the country, coveringabout 746 cities and municipalities. Further, itfacilitated the efficienct collection of amortization fromWDs, which helped attain an average collection efficiencyof 90.08% for LWUA.10 10Local Water Utilities Administration

Annual Report 2009NEWLY FORMED WATER DISTRICTSName of CCCWater District NumberProvinceName of CCCWater District Number ProvinceName of CCCWater District NumberProvinceRosario 624 Northern SamarAbulug 625 CagayanCalayan 626 CagayanQuezon 627 BukidnonSocorro 628 Surigao del NorteDanglas 629 AbraJovellar 630 AlbayPulupandan 631 Negros OccidentalDaan-Bantayan 632 CebuMalitbog 633 BukidnonTagoloan 634 Misamis OrientalGutalac 635 Zamboanga del NorteSto. Tomas 626 PangasinanSto. Tomas 637 La UnionLubang 638 Occidental MindoroDamulog 639 BukidnonSibuco 640 Zamboanga del NorteNabas 641 AklanBucay 642 AbraTubo 643 AbraSan Quintin 644 AbraSta. Prexedes 645 CagayanCarmen 646 Surigao del SurMoises Padilla 647 Negros OccidentalSto. Nino 648 South CotabatoSan Isidro 649 IsabelaPolangui 650 AlbayCuyo 651 PalawanBulalacao 652 Oriental MindoroRizal 653 Occidental MindoroCamalanigan 654 CagayanLavesares 655 Northern SamarMaslog 656 Eastern SamarAmulung 657 CagayanTagbilaran City 658 BoholBurgos 659 Surigao del NorteMatanog 660 Sheriff KabunsulanMetro Basak 661 Lanao del SurPilar 662 AbraSto. Tomas 663 IsabelaLuba 664 AbraKapalong 665 Davao del NorteDatu Paglas 666 MaguindanaoSiay 667 Zamboanga-SibugayMabitac 668 LagunaMadalag 669 AklanBatan 670 AklanTangalan 671 AklanBanguingui 672 SuluCalatagan 673 BatangasDasol 674 PangasinanBoliney 675 AbraDumalinao 676 Zamboanga del SurSan Luis 677 BatangasDiplahan 678 Zamboanga-SibugayTabuan-Lasa 679 BasilanTaraka 680 Lanao del SurBarcelona 681 SorsogonSibagat 682 Agusan del SurPaombong 683 BulacanBatad 684 IloiloAsuncion 685 Davao del NorteBuluan 686 MaguindanaoDivilican 687 IsabelaSal-Lapadan 688 AbraLagayan 689 AbraPaglat 690 MaguindanaoLaguindingan 691 Misamis OrientalSan Isidro 692 AbraLangiden 693 AbraOroquieta City 694 Misamis OccidentalLicuan Baay 695 AbraLa Paz 696 AbraSan Rafael 697 IloiloCarles 698 IloiloSara 699 IloiloCalasiao 700 PangasinanMaco 701 Compostela ValleyBalud 702 MasbatePagalungan 703 MaguindanaoDatu Abdullah Sangki 704 MaguindanaoSan Teodoro 705 Oriental MindoroPagudpud 706 Ilocos NorteBingawan 707 IloiloSan Luis 708 AuroraIguig 709 CagayanTudela 710 Camotes Island, CebuBalangiga 711 Eastern SamarDumalag 712 CapizMina 713 IloiloPalimbang 714 Sultan KudaratSultan Sumagka 715 MaguindanaoSan Miguel 716 CatanduanesMadalum 717 Lanao del SurPualas 718 Lanao del SurSultan Mastura 719 MaguindanaoPlaridel 720 QuezonDona Remedios Trinidad 721 BulacanSapang Dalaga 722 Misamis OccidentalCorcuera 723 RomblonBadiangan 724 IloiloRizal 725 CagayanMabini 726 Compostela ValleyTubao 727 La UnionPantukan 728 Compostela ValleyMalangas 729 Zamboanga SibugayVincenzo Sagun 730 Zamboanga SibugayDumingag 731 Zamboanga del SurMidsalip 732 Zamboanga del SurTabina 733 Zamboanga del SurDingalan 734 AuroraTago 735 Surigao del SurSharif Aguak 736 MaguindanaoJosefina 737 Zamboanga del SurSan Miguel 738 Zamboanga del SurSta. Fe 739 Nueva VizcayaSan Pablo 740 Zamboanga del SurSta. Teresita 741 CagayanCajidiocan 742 RomblonFerrol 743 RomblonSta. Margarita 744 SamarGandara 745 SamarSan Pablo 746 IsabelaBuguey 747 CagayanTantangan 748 South CotabatoEnrile 749 CagayanDatu Salibo 750 MaguindanaoGen. S. K. Pendatun 751 MaguindanaoMama Sapano 752 MaguindanaoRajah Buayan 753 MaguindanaoLumbayanague 754 Lanao del SurAleosan 755 North CotabatoTampakan 756 South CotabatoNueva Era 757 Ilocos NorteAbucay 758 BataanKasibu 759 Nueva VizcayaBucloc 760 AbraBalankayan 761 Eastern SamarGanassi 762 Lanao del SurBacolod-Kalawi 763 Lanao del SurSaguday 764 QuirinoPamplona 765 CagayanSto. Nino 766 CagayanBalindong 767 Lanao del SurMaguing 768 Lanao del SurBayang 769 Lanao del SurLumba-Bayabao 770 Lanao del SurDumalongdong 771 Lanao del SurLabrador 772 PangasinanEchague 773 IsabelaPilar 774 BataanAlmagro 775 SamarPagayawan 776 Lanao del SurSolano 777 Nueva VizcayaPitogo 778 Zamboanga del SurTambulig 779 Zamboanga del SurMarogong 780 Lanao del SurNaguilian 781 IsabelaTarangnan 782 SamarPagsanghan 783 SamarBobon 784 Northern SamarLope de Vega 785 Northern SamarMagalang 786 PampangaParanas 787 SamarPantar 788 Lanao del NorteBurgos 789 IsabelaDinapigue 790 IsabelaJones 791 IsabelaGasan 792 MarinduqueDumalneg 793 Ilocos NorteBurgos 794 Ilocos NortePio V. Corpus 795 MasbateMonreal 796 MasbateRizal 797 KalingaDimasalang 798 MasbateBangui 799 Ilocos NorteLuna 800 Apayao11

Loans and Water Rates EvaluationDepartmentLWRED Luzon and LWRED Visayas/Mindanao have conducted a total of 68 water ratesreviews, and 115 economic and financial evaluations.Presentations and public hearings on proposedprojects and/or water rates review were conductedon 23 WDs. There were also 40 evaluations forfinancial relief assistance conducted.The said activities totalling 246 haveexceeded the programmed activities of LWRED forCY 2009 by about 33%. Further, as of December 31,2009, the following activities are on-going: 16 waterrates review, 46 economic and financial evaluation,and 18 financial relief evaluation.Water Resources Research &Training DepartmentIn 2009 the Training Division of WRRTDimplemented 43 training programs which wereattended by 1,551 WD personnel who logged 34,008man-hours of training. These programs were carriedout by WRRTD as well as the Regional TrainingCenters (RTCs) in line with its mission of conductingseminars, workshops and other courses designed todevelop policy-making, managerial and technicalcompetencies skills in the water districts, a majorfunction mandated by the agency’s charter. Thenumber of programs ran in 2009 (43) were higher thanthat of 2008 (35).Of the 43 training programs for the year, 21were run by WRRTD while 22 were conducted by theRTCs maintained by the WDs of Baguio, Cagayan deOro, Cebu, Davao, San Pablo and Zamboanga Cities.WRRTD trained a total of 673 WD personnel and theRTCs 878.In all, 26 management programs and 17technical courses were conducted by WRRTD andthe RTCs. Some of these are special programsrequested or sponsored by different WD/WDassociations. As part of the Task Force on WatershedList of Reactivated Water DistrictsName of CCCWater District Number ProvinceAglipay 354 OuirinoAgno 468 PanqasinanAllacapan 426 CagayanBenito Soliven 283 IsabelaBuguey 747 CagayanCaba 312 La UnionDelfin Albano 412 IsabelaLasam 374 CagavanLuna 460 IsabelaMagsingal 526 lIocos SurSaguday 764 OuirinoSan Guillermo 485 IsabelaSan Juan 453 AbraSan Mariano 338 IsabelaSanta 299 lIocos SurSta. Cruz 417 lIocos SurSta. Maria 311 lIocos SurSta. Maria 411 IsabelaSta. Teresita 741 CagayanBotolan 545 ZambalesGabaldon 493 Nueva EcijaRizal 326 Nueva EciiaBaras 455 CatanduanesMandaon 316 MasbateSan Pascual 342 MasbateBalasan 403 IloiloCuartero 616 CapizDao 346 CapizLemery 431 IloiloBabatngon 438 LevteDolores 312 Eastern SamarDulag 459 LeyteLlorente 220 Eastern SamarMondragon 275 Northern SamarOras 276 Eastern SamarVillareal 190 Western SamarGigaquit 594 Surigao Del NorteMagallanes 435 AQusan Del NorteSan Jose 578 Dinagat IslandsTubay 405 Agusan Del NorteMalalag 490 Davao Del SurLabason 205 Zamboanga Del NorthMapun 525 Tawi-TawiSimunul 415 Tawi-TawiWDD Summary of AccomplishmentsManagement created subsequent to the rising of theTripartite Memorandum of Agreement among LWUA,Department of Environment and Natural Resources(DENR) and Philippine Association of Water District(PAWD), a LWUA-WD Consultative Workshop onWatershed Management was conducted on November25-26, 2009.Towards the end of the year, WRRTD heldthe annual planning and evaluation conference withrepresentatives of the RTCs. The two sides reviewedthe accomplishments for 2009, set down the workprograms for 2010, and discussed various issuesaffecting the implementation of the WRRTD-RTCtraining programs. A seminar on Making WD’s TrainingPrograms Relevant to Changing Water Supply &Sanitation Demands was attended by both RTC andLWUA Training Division staff before the conference.WDDD WD Formed WD Reactivated Recaregorized Advisory to # WDs # of Municipality Coll. Eff. %Area 1 52 19 4 68 96 83.45Area 2 7 3 3 89 137 92.76Area 3 13 0 3 75 95 88.13Area 4 8 4 0 37 51 93.75Area 5 14 4 2 64 84 86.97Area 6 19 7 1 46 70 90.98Area 7 10 4 3 54 54 92.23Area 8 23 1 4 65 72 91.76Area 9 34 3 0 79 87 90.72TOTAL 180 45 20 577 746 90.0812 Local Water Utilities Administration

Annual Report 2009LWRED Summary of AccomplishmentsLWRED Public Hearing Rates Review Fin. Evaluation Fin. Relief Total Review Target % Accomp.Area 1 6 10 18 3 37 25 148.00Area 2 6 8 21 2 37 18 205.56Area 3 0 12 18 7 37 20 185.00Area 4 0 2 6 7 15 14 107.14Area 5 7 8 9 4 28 25 112.00Area 6 0 14 21 7 42 40 105.00Area 7 0 4 5 4 13 12 108.33Area 8 2 4 16 2 24 20 120.00Area 9 2 6 1 4 13 12 108.33TOTAL 23 68 115 40 246 186 133.26Standard Specifications for Water SystemDevelopment, and the Feasibility Study MethodologyManual. Preparation of the 2009 Cost EstimatingManual was not done since no bidding on waterworksmaterials and equipment was held by LWUA’s PBAC.Revision of the LWUA Standard Specifications, toconform to the Bidding Documents recently issuedby the Philippine Government, was completed inNovember.In 1991, LWUA implemented a UNDPfinancedproject which was aimed at establishing acomputerized countryside groundwater datageographic information system. Upon its completionin 1994, LWUA established the agency’s GroundwaterData Bank to institutionalize the activity. TheResearch Division was tasked to maintain andmanage the LWUA Groundwater Data Bank.A total of 750 well records were encoded inthe LWUA Groundwater Data Bank for the year 2009.The Groundwater Data Banking Reportsummarizes the water district’s available groundwaterdata encoded in the LWUA Groundwater Data Bank.The available data are processed to generate outputsthat could be utilized by professional hydrogeologistsin the assessment of groundwater availability andpotential. Three (3) Groundwater Data bankingReports were completed this year, bringing the totalto 37. The reports completed this year were for thefollowing water districts: Polomolok (South Cotabato),Mabalacat (Pampanga), and San Ildeponso (Bulacan).For the year 2009, Groundwater Data Banksystem software was installed in three water districts,namely, Polomolok, Mabalacat and San Ildeponso.To date, the software has been installed in 43 waterdistricts.The Research Division developed, andcontinues to maintain, a web site for the division. Thisincludes on-line access to available well record fromour groundwater data bank.The Division also develops/maintainsmanuals for use in water supply system development.These are the Cost Estimating Manual, the LWUACPS Division accomplishmentsPARTICULARSQUANTITYManual System Installation:1. CPS Installation 142. CPS Follow-up and Takeover Assistance 13Computerized System Installations:1. Billing and Collection System (BCS) Completed 82. Billing and Collection System (BCS) Follow-up and in-progress 20TOTAL 5513

OFFICE OF THEDEPUTYADMINISTRATORFORAREAOPERATIONSArea Operations is the primary provider of technical services from project inception to the currentoperating status of water districts nationwide. It handles the Agency’s over-all planning, design andimplementation of water supply infrastructure projects in line with LWUA’s potable water programs to provincialurban and rural areas.Five departments comprise AO namely:Area Operations Luzon North; Area Operations LuzonSouth; Area Operations Visayas; Area OperationsMindanao; and the Special Projects Office.Area Operations Luzon Northis composed of Areas 1 and 2 covering the IlocosRegion, Cagayan Valley, Cordillera AdministrativeRegion, and Central Luzon.For the year in review, Area OperationsLuzon North completed 142 Program of Worksconstructed 46 new water supply systems. Still,there are 54 on-going projects as of December 31,2009 which will be completed in 2010.In Area Operations LuzonSouth (composed of CALABARZON, MIMAROPAand Bicol Region) Project Planning Division (PPD)has prepared and completed 147 Programs of Works(POW) for 108 Water Districts (WDs) with a totalproject cost of P3.5 Billion for year 2009. Of thesePOWs, the Project Monitoring and EvaluationDivision (PMED) completed 20 POW-projects in 19WDs with a total cost P123.96M while 63 POWprojectsin 63 WDs with a total cost of P1.21B areon-going. These on-going projects are projected tobe completed in late 2010 or early 2011. Meanwhile,construction of about 44 POW projects in 41 WDswith a total cost of P1.51B will be started as soon asfunds are released.In Area Operations Visayas(comprising Eastern and Western Visayas) 121Programs of Work were prepared for a total projectcost of Php 2.605 Billion. The two Project Monitoring14 14Local Water Utilities Administration

Annual Report 2009and Evaluation Divisions have effected theimplementation of 53 projects, 17 of which havealready been completed. The rest of these projectswill mostly be commissioned in 2010. Total cost ofcompleted projects reached Php 138.8 Million whiletotal cost of on-going projects (under construction)amount to Php 766.55 Million.Total funding for on-going and completedprojects is estimated at Php 0.905 Billion. Shouldall the on-going projects be fully funded untilcompletion, still there is the need for Php 1.70 Billionto fund the project that are yet to be started withready Programs of Works.Area Operations Mindanao hasoperational coverage over the entire geographicalas well as political regions and provinces inMindanao. The Mindanao area is divided into three(3) operational areas: Area 7, Area 8, and Area 9,each Area fitted with separate units for planning anddesign works (Project Planning Division) andconstruction works (Project Monitoring & EvaluationDivision).For CY 2009, AO-Mindanao completed149 Programs of Work with a total estimated cost ofPhp 3,123.06M. There were 25 construction projectscompleted worth Php 137.70M and 15 on-goingprojects worth Php 173.37M at various stages ofconstruction. In addition, Operations Mindanaocompleted three (3) well drilling projects, each Areaaccounting for one (1) drilled well.For year 2009 Special Project Office(SPO) completed four (4) exploratory/productionwells for water districts amounting to an estimatedbillable cost of P3,407,936.00 and various wellrehabilitation projects amounting to P653,000.00 fora total of P4,060.936.00.The completed well drilling projects wereundertaken for the water districts located in: MetroNaga (Camarines Sur) WD – one (1) Well;Camalaniugan (Cagayan) – one (1) well; and AngelesCity WD – two (2) wells. The exploratory well forCalamaniugan (Cagayan) was abandoned due topoor aquifer potential.Well rehabilitation works, namely downthe-holecamera logging and airlift development weredone on four (4) wells of Metro Naga WD. The loggedwells are in San Felipe II, San Agustin, Canamanand Paco II. Airlift development was completed forthe wells located in San Felipe II and III, Del Rosarioand Carangcang.Camera logging and pumping tests werealso done to rehabilitate the well in Hacienda Doloresof Porac WD in Pampanga.As of the end of the year, there are five(5) on-going well drilling projects, one (1) well eachof Calamba (Laguna), Meycauayan (Bulacan), Tagum(Davao del Norte), Valencia (Bukidnon) and MetroNaga (Camarines Sur) Water Districts. The totaloriginal Program of Work for these projects amountsto P8,941,900.00.Except for the Meycauayan project whichwas charged against its loan and that of the Poracproject which was funded by a grant, all these welldrilling and rehabilitation projects were self-financedby the water districts themselves.15

ONGOING PROJECTS IN THE WATER DISTRICTSRegion IAbulug WDBalungao WDBalungao WD IIBasista WDBayambangBinalonanLal-lo WDLingayen Metro WDMapandan WDPozorrubio WD IIRosales WDRosario WDSanta WDSanta Maria WDSto. Tomas WDTagudin WDVillasis WDRegion IIAbulug WDAllacapan WDCabagan WDCabarroquis WDCalayan WDGamu WDReina Mercedes WDSan Isidro WDSanchez Mira WDSta. Praxedes WDCARBucay WDLubuagan WDSan Juan WDSan Quintin WDRegion IIIBagac WDBongabong WDBotolan WDDinalupihan WD IIDipaculao WDFloridablanca WDGen. Natividad WDGen. Tinio WDGuagua WD IIJaen WDLimay WDLupao WDLupao WD IIMacabebe WD IIMorong WDObando WDOrani WDPalayan WDPorac WDSan Ildefonso WDSan Narciso WDSasmuan WDSta. Rita WDCagayanPangasinanPangasinanPangasinanPangasinanPangasinanCagayanPangasinanPangasinanPangasinanPangasinanLa UnionIlocos SurPangasinanLa UnionIlocos SurPangasinanCagayanCagayanIsabelaQuirinoCagayanIsabelaIsabelaIsabelaCagayanCagayanAbraKalinga-ApayaoAbraAbraBataanNueva EcijaZambalesBataanAuroraPampangaNueva EcijaNueva EcijaPampangaNueva EcijaBataanNueva EcijaNueva EcijaPampangaBataanBulacanBataanNueva EcijaPampangaBulacanZambalesPampangaPampangaRegion IVAgoncillo WDAlitagtag WDAtimonan WDBalayan WDCarmona WDCatanauan WDCatanauan WD IICulion WDDolores WDGen. E. Aguinaldo WDIndang WDInfanta-Gen. Nakar WDLian WDLobo WDLopez WDLubang WDMabini WDMauban WD IIMendez WDNaujan WDNaujan WD IIPakil WDPililia WDPinamalayan WDPola WDPuerto Princesa City WDRosario WDRoxas WDTaal WD IITaysan WDTiaong WDTuy WD IIUnisan WDUnisan WD IIRegion VAroroy WDBaao WD IIBacacay WDBacacay WD IIBaras WDBarcelona WDBato WDBato WD IICalabanga WDCamalig WDCamarines Norte WDCasiguran WDDel Gallego WDDonsol WDIriga City WDIrosin WDJose Panganiban WDLibmanan WDMasbate-Mobo WDMatnog WDNabua WDParacale WDPsacao WDPilar WDRagay WDSan Andres WDSorsogon City WDSorsogon City WD IITabaco WDViga WDBatangasBatangasQuezonBatangasCaviteQuezonQuezonPalawanQuezonCaviteCaviteQuezonBatangasBatanagasQuezonOccidental MindoroBatangasQuezonCaviteOriental MindoroOriental MindoroLagunaRizalOriental MindoroOriental MindoroPalawanBatangasPalawanCaviteBatangasQuezonBatangasQuezonQuezonMasbateCamarines SurAlbayAlbayCatanduanesSorsogonCatanduanesCatanduanesCamarines SurAlbayCamarines NorteSorsogonCamarines SurSorsogonCamarines SurSorsogonCamarines NorteCamarines NorteMasbateSorsogonCamarines SurCamrines NorteCamarines SurSorsogonCamarines SurCatanduanesSorsogonSorsogonAlbayCatanduanesRegion VIBanate WDIloiloBelison WDAntiqueCalinog WDIloiloDingle-Pototan WDIloiloDumangas-Barotac Nuevo WD IloiloDumangas-Barotac Nuevo WD II IloiloEstancia WDIloiloJaniuay WDIloiloJordan WDGuimarasLambunao WDIloiloLeon WDIloiloMambusao WDCapizNew Lucena WDAklanNumancia WDAkalnNumancia WD IIAkalnPres. Roxas WDCapizPulupundan WDNegros OccidentalSan Juaquin WDIloiloSibalom WDAntiqueVictorias WDNegros OccidentalZarraga WDIloiloRegion VIIBalamban WDCebuToledo City WDCebuRegion VIIIBasey WDSamarGuiuan WDEastern SamarMerida WDLeyteMetro HilongosLeyteNaval WDLeyteRegion IXRizal WDZamboanga de NorteCARAGAButuan City WDAgusan del NorteCantillan WDSurigao del SurTagbina WDSurigao del SurTandag WDSurigao del SurRegion XIBaganga WDDavao OrientalSamal WD (IGCS) Davao del NorteRegion XIIMetro Midsayap WD North CotabatoMetro Kidapawan WD North CotabatoMetro Kidapawan WD II North CotabatoPikit WDNorth CotabatoARMMBongao WDTawi-TawiIsabela WDBasilanJolo Mainland WDSuluMarawi City WDLanao del Sur16 Local Water Utilities Administration

Annual Report 2009COMPLETED WATER PROJECTSJICA TCP - Small Water Districts Improvement ProjectNaujan WD Oriental Mindoro 4Pilar WD Capiz 6Basey WD Samar 8Calbiga WD Samar 8Tangub City WD Misamis Occidental 10Glan WD Saranggani 11M’lang WD North Cotabato 12Metro Siargao WD Surigao del Norte 13Hinatuan WD Surigao del Sur 13Wao WD Lanao del Sur ARMMLOCALLY FUNDED WATER PROJECTSRegion IVRegion XRegion IBalaoan WDBani WDDingras WDPozorrubio WDSan Manuel WDSan Nicolas WDSan Quintin WDSanta Maria WDSta. Lucia WDRegion IIRoxas WDGonzaga WDRegion IIIBacolor WDBalagtas WDBaliwag WDBocaue WDCabiao WDCandaba WDConcepcion WDCuyapo WDDinalupihan WDGapan WDGerona WDGerona WD IIGuagua WDGuagua WD IIHagonoy WDJaen WDLubao WDMacabebe WDMasantol WDMasantol WD IIMayantoc WDMeycauayan WDMoncada WDNorzagaray WDObando WDPalayan City WDPandi WDPorac WDSan Antonio WDSan Antonio WD IISan Rafael WDSta. Maria WDLa UnionPangasinanIlocos NortePangasinanPangasinanPangasinanPangasinanPangasinanIlocos SurIsabelaCagayanPampangaBulacanBulacanBulacanNueva EcijaPampangaTarlacNueva EcijaBataanNueva EcijaTarlacTarlacPampangaPampangaBulacanNueva EcijaPampangaPampangaPampangaPampangaTarlacBulacanTarlacBulacanBulacanNueva EcijaBulacanPampangaNueva EcijaNueva EcijaBulacanBulacanAmadeo WDBalayan WDCabuyao WDLaguna WDLian WDLobo WDMabini WDMabini WD IIMauban WDMendez WDNasugbu WDSan Jose WDSan Juan WDSiniloan WDTaal WDTiaong WDTuy WDRegion VBaao WDBato WDCasiguran WDDaraga WDIrosin WDRegion VICalinog WDDingle-Pototan WDDuenas WDDumarao WDJaniuay WDLambunao WDLemery WDLibacao WDLibacao WD IIMiag-Ao WDPandan WDTubungan WDRegion VIISta. Lucia WDToledo City WDRegion VIIIIsabel WDRegion IXIpil WDLabason WDPolanco WDPolanco WD IICaviteBatangasLagunaLagunaBatangasBatangasBatangasBatangasQuezonCaviteBatangasOccidental MindoroBatangasLagunaBatangasQuezonBatangasCamarines SurCamarines SurSorsogonAlbaySorsogonIloiloIloiloIloiloCapizIloiloIloiloIloiloAklanAklanIloiloAntiqueIloiloCebuCebuLeyteZamboanga del SurZamboanga del NorteZamboanga del NorteZamboanga del NorteGingoog City WDValencia City WDValencia City WD IIKapatagan WDKapatagan WD IITubod Baboy WDTubod Baboy WD IIRegion XIKoronadal WDNorala WDPolomolok WDPolomolok WD IISurallah WDRegion XIIAntipas WDMetro Kidapawan WDSultan Kudarat WDCARAGABuenavista WDBuenavista WD IIBuenavista WD IIIMadrid WDARMMJolo Mainland WDLamitan WDMisamis OrientalBukidnonBukidnonLanao del NorteLanao del NorteLanao del NorteLanao del NorteSouth CotabatoSouth CotabatoSouth CotabatoSouth CotabatoSouth CotabatoNorth CotabatoNorth CotabatoSultan KudaratAgusan del NorteAgusan del NorteAgusan del NorteSurigao del SurSuluBasilan17

OFFICE OF THEDEPUTYADMINISTRATORFORADMINISTRATIVESERVICESThe Office of the Deputy Administrator for Administrative Services, through the threedepartments, Human Resources Management Department, Property Management Department and GeneralServices Department, provides support services to its mostly internal clientele. The support services includetaking care of the professional career growth, working conditions and benefits of LWUA employees.Human Resources ManagementDepartmentAs a major caretaker of LWUA’sworkforce, the Human Resources ManagementDepartment’s (HRMD) implements the government’sprograms in line with the agency’s policies/directivesin so far as personnel matters are concerned, throughits three divisions, namely: Human ResourcesDevelopment Division; Personnel Division; andMedical/Dental Division.The Personnel Division processed 292applications and conducted battery tests for 204applicants which resulted to the hiring of 29 newengineers and engineering assistants, threeconsultants, and 10 contractual employees. Thisprocedure includes the processing (from posting ofneeds to actual selection and hiring) of 161prospective Cadets needed for a Cadetship TrainingProgram aimed at boosting and meeting workforcerequirements in the expansion of LWUA’s areacoverage. Other Benefits Administration Program ofthe Personnel Division in CY 2009 include thefollowing: (a) Completed documentation for 10 (sevencompulsory, two survivorship, and one optional)personnel retirement, and documentation for theseparation of eight employees; (b) Processed 905claims (RATA, allowances, salary refunds, etc.); (c)Facilitated processing and approval of 49 GSISconsolidated loans and eCash Advances (32confirmed approved while 17 remain pending as ofyearend); (d) Received/distributed 35 EduChild/CEAP/Memorial checks, 21 maturity/cash surrendervalue checks, and seven retirement/survivorshipchecks; and (e) Assisted three PAG-IBIG loan/maturity claims.In summary, the unit processed a total of379 GSIS loans/claims, bringing to a total of 514benefit claims (GSIS, PAG-IBIG and Philhealth)processed during the year.Personnel Division also providedsecretariat services to ARTA (Anti-Red Tape Act) andIDAP (Integrity Development Action Plan) workinggroups, and played a major role in the formulation,initiation and actual signing of the “Memorandum ofPrincipled Agreement on the Corporate Policy on18 18Local Water Utilities Administration

Annual Report 2009Ethical Leadership and Good Governance” betweenthe LEAP (LWUA Employees Association forProgress) thru its Chairperson, Mr. Melanio CuchapinII) and Management, thru Acting Administrator DanielI. Landingin and witnessed by Chairman ProsperoPichay, Jr.The division also processed 91 studentsunder the OJT (On the-Job-Training) scheme, andprovided a total of 106 consultations and otherassistance to five water districts.The Human Resources DevelopmentDivision successfully implemented two (2) In-housetraining flagship programs: the Cadetship Trainingfor newly-hired engineers and the InstitutionalDevelopment Services Refresher Course designedto enhance the effective and cognitive learningdomains of LWUA WDDD staff. During the year, thedivision also continued its wellness and fitnessprograms and supported the current schemes of R.A.9485 (Anti-Red Tape Act or ARTA) which coincidedwith the present Administration’s Moral RecoveryProgram and Integrity Development Action Program,all designed to curb/eliminate graft and corruption inthe public service.Programs such as public sector unionism,Gender and Development, skills enhancement forprofessional groups to earn CPE units/credits, andwater supply and IT related programs were likewisesupported. It facilitated and processed LWUAprofessionals’ participation to professional groups (forskills enhancement and to earn CPE units/credits)and water supply and IT related programs. Itfacilitated and processed LWUA officials’ participationto the American Water Works Association and otherrelevant courses on “Used Water Management”,“Operations and Maintenance of Urban WaterSupply” and “Wastewater Treatment Plants”.The Medical and Dental Division tookthe lead role in the relief operations initiated by LWUABoard of Trustees Chair Prospero Pichay for thevictims of Typhoons Ondoy and Pepeng. With thevaluable help from LWUA’s 501 st Water Battalion menand women and other volunteers, some P5 Millionworth of relief goods were distributed to the affectedareas in the cities of Marikina, Pasig, Antipolo andin San Mateo, Montalban (Rizal), Cainta, and in theprovince of Pangasinan.This life-saving effort was supplementedby its annual blood-letting program with the NationalKidney and Transplant Institute which produced atotal of 183 bags equivalent to 82,350 cc of preciousblood.In its regular activities, the division: (a)Attended to a total of 2,916 patients; (b) Facilitated13 medical loans (ten employees; three directdependents); (c) Distributed medicines to 2,584availers (medical-2,506; dental-78); and (d)Performed 32 minor surgical procedures; (e)Facilitated participation of 93 LWUAns (88 actualattendees) to the 2009 GRAND BIDA (Batang IwasDroga March); (f) Facilitated conduct of groupexercises every Wednesday; (g) Facilitated and ledin the implementation of the 2009 Butch Pichay Cup;(h) Facilitated the conduct of GCAA ChessTournament with the Land Bank of the Philippines;and (i) Facilitated the participation of the LWUABadminton Team to the annual GCAA BadmintonTournament (where LWUA garnered 3rd Place in bothseniors and junior divisions); (j) Facilitated conductof annual fire drill in March in coordination with otheroffices within the complex; (k) Coordinated anorientation program on A(H1N1) and the preparationof an official health advisory on the virus; (l) Held ananti-flu mass vaccination in June 17; and (m)Facilitated the renewal of LWUA’s corporation healthinsurance coverage with the Health Maintenance Inc.with 565 employees.Property Management DepartmentThe Property Management Department(PMD) is primarily tasked to provide all LWUA officialsand employees a working environment conducive toproductivity. It is composed of three divisions allheaded by an Acting Division Manager: the Buildingand Grounds Division (B&GD); the Property ControlDivision; and the Motorpool Division.For CY 2009, structures/facilities werekept in good operating condition notwithstanding theirage by the Building and Grounds Division. Repairsand maintenance costs rose from P4,101,277 toalmost P5,000,000 or an increase of almost 20% inactual cost. These facilities include electromechanical,office, electrical and plumbing fixturesand the cooling tower. Beautification andimprovement of building and grounds were alsoundertaken. Conservation measures were alsoadopted which resulted in less power consumptionfrom 156,860 KWH per month (benchmark set bythe Department of Energy) to 128,600 KWH permonth or a decrease of 18%. The total savings for19

electricity was 339,120 KWH or an equivalent amountof P2,7l2,960. Water consumption increased byalmost 5% due mainly to the operation of the WaterSupply Training Center which resulted to a totalincrease of 1,176 cu.m. with an equivalent amountof P70,384.Total consumption of office and computersupplies increased by 30.5% from P2,383,000 in2008 to P3,110,029 in 2009. This increase could beattributed to the higher prices of supplies andmaterials and higher demand due to theimplementation of more water supply projects by theagency.The Property Control Divisiontransferred without cost unneeded furniture andequipment to two water districts. It also contributedP201,100 to the agency’s miscellaneous income fromthe junk sale of unserviceable equipment and wastematerials including too old and uneconomical tomaintain vehicles which were awarded to interestedwater districts.The Motorpool Division providestransport services to the officials and employees ofLWUA as are necessary or in the exigency of theservice. In 2009 however, LWUA voluntarilydispatched trucks loaded with food and otheressential goods to various parts of Metro Manila andLuzon to conduct emergency relief operations for thevictims of Typhoon Ondoy and Pepeng.Notwithstanding this assistance, the agency incurredsavings for gas and diesel by 37% and 13.32%,respectively, over the January to June, 2005benchmarks set by the government. ‘On the otherhand, transport maintenance increased by 22% asa result of inflation and tne normal wear and tear ofaging vehicles.General Services DepartmentThe year 2009 saw the General ServicesDepartment stepping up its efforts to meet thechallenges brought about by new technologyintensiveenvironment and the increasing demandsof its internal clientele.The need to totally replace the old PABXtelephone system installed in 1980 was recognized.As a result thereof, a new IP (Internet Protocol) PBX(Private Business Exchange) Telephony System witha total of 230 IP telephone sets were installed withinthe LWUA Building (30 in 2008 and 200 in 2009).The features of the new technology are: Caller ID,Auto-Attendant, Teleconferencing, and voice callsthrough the internet (between or among IP phonesin different locations), among others. To enable GSDto cope with the new technology, an ICT (InformationCommunication & Technology) Specialist was hiredon Contract-of-Service basis.Another technology-intensive need ofLWUAns that was met last year was for faster internetaccess and connectivity. A second ICT Specialistwas hired to meet the required technical expertisein setting up the various internet hardware peripheralswithin the L WUA Building, which was hooked up tothe facilities of PLDT DSL (Digital Subscriber Line).Thus, LWUAns needing to access the internet withtheir desktop or laptop computer, do on-linetransactions, send their E-mails, and/or to doresearch work, etc. can now do so at a faster pace.The year 2009 saw more water districtsformed (177) and more projects undertaken.Consequently, more general support services weregenerated by the General Services Division, andthe Records and Communication Division. Thefollowing statistics reflect this increase: (a) No. ofTravel Orders processed and issued, 8% increase(from 2,875 to 3,112); . (b) No of flight reservationsand domestic place tickets purchased, 13% increase(from 1,134 to 1,284); (c) No. of CTCAs (Certificatesof Travel Completion & Acceptance) recorded &transmitted (to CMDiv.), 20% increase (from 2,237to 2,675); (d) No. of approved Purchase Requisitionprocessed, 30% increase (from 783 to 1,018); and(e) Value of Office Supplies and Services purchasedin-house, 100% increase (from P14.7M to P29.5M).Likewise, (a) No. of xerox copies reproduced, 32%increase (from 709,433 to 933,856); (b) No. of faxmessages transmitted, 52% increase (3,166 to4,821); (c) No. of printed materials bookbound, 128%increase (from 641 to 1,460); (d) No. of telephonesets repaired or installed, 28% increase (from 117to 150); and (e) No. of paging/airing requests served,11 % increase (from 257 to 286).Moreover, the GSD staff successfullyundertook the following activities: (a) theimplementation of the CTCA (Certificate of TravelCompletion and Appearance) documentaryrequirements; (b) continuing effort to pursue “5S”, tofurther improve filing systems and for an orderly andneat work environment; and (c) 19 out of 30 (or 63%of the total) GSD staffers attended at least onetraining seminar during the year as part of its staffdevelopment effort.20Local Water Utilities Administration

Annual Report 2009OFFICE OF THEDEPUTYADMINISTRATORFOR INVESTMENTAND FINANCIALSERVICESA specialized lending institution for water supply development, LWUA’s financial operation is handledby the Investment and Financial Services through its four departments, namely: Accounting; Treasury; LoansAdministratrion; and Water District Audit.Loans Administration DepartmentA. LOAN PORTFOLIOLWUA achieved a new height in 2009 forfinancing water supply development in thecountryside. The Loans Administration Departmentprocessed an unprecedented P10.263B in assistance,with P2.518B coming from internal generation andP7.745B in commitments from Non-LWUA InitiatedFunds (NLIF). A total of P2.650B in new loans wereapproved by the Agency and P1.144B were availedby the water districts during the year, bringing LWUA’scumulative loan portfolio as follows:AREA APPROVED AVAILED1 P 3.945 B P 3.052 B2 3.657 3.0613 3.530 2.4504 2.244 1.6485 3.810 3.2896 3.538 2.7707 3.221 2.8528 2.180 1.4349 1.171 1.062TOTAL P27.296 B P21.618 BThere were 407 water district beneficiaries underthe NLIF program, distributed as follows:WATERAREA DISTRICT AMOUNT1 76 P1.672 B2 70 1.3423 57 1.2164 31 0.4825 49 0.7296 35 0.7037 31 0.5718 27 0.4709 31 0.560TOTAL 407 P7.745 B21

Below is an outline of water district recipients of LWUA’s loan assistance program for the year:LUZONAREA 1LOAN AMOUNTAREA 2LOAN AMOUNTAbulug P 29.144 MBalungao 3.888Bugallon 3.235Calayan (Cagayan) 11.500Dagupan 100.000Dasol 8.125Dolores 0.400Gamu (Isabela) 23.442Gonzaga 5.000La Union 75.464Maddela 5.000Mapandan 13.990Naguilian (Isabela) 2.219Paracelis 5.000Santa 5.000Sta. Maria 3.777Sto. Tomas (Pangasinan) 15.038Villasis 5.000Dinalupihan P 5.000 MGeneral Tinio 10.794Gerona 5.000Guagua 5.000Hagonoy 5.000Limay 5.000Lubao 10.000Lupao 1.208Mabalacat 15.450Macabebe 10.000Marilao 5.000Masantol 5.000Meycauayan 5.000San Antonio (Nueva Ecija) 5.000Sta. Maria (Bulacan) 100.000Sta. Rita 3.058TOTAL P195.510 MTOTAL P315.222 MAREA 4LOAN AMOUNTAREA 3LOAN AMOUNTAtimonan P11.246 MCatanaoan 8.367Laguna 5.000Lopez 5.000Mendez 5.000Pinamalayan 67.518Puerto Princesa 541.974Rizal (Occidental Mindoro) 52.710Silang 60.000TOTAL P756.815 MVISAYASAREA 5LOAN AMOUNTBanate (Iloilo) P 5.000 MDumangas 12.904Janiuay 4.232Leon 5.000Libacao 1.400Moises Padilla 11.421Pulupandan 16.152TOTAL P56.109 MBato P 1.253 MCalabanga 3.828Camarines Norte 229.527Casiguran 0.700Del Gallego 7.950Donsol 12.850Masbate 88.374Nabua 27.317Pasacao 20.497Sorsogon 19.746TOTAL P412.042 MAREA 6LOAN AMOUNTBalamban (Cebu) P151.455 MBasey 5.000Can-avid 13.089Dumaguete City 20.000Gamay 0.850Guiwan 5.000Hernani 11.237Hilongos 5.000Isabel 11.894Lavezares 9.156Llorente 0.900Merida 10.899Naval 5.000Rosario (Northern Samar) 0.695Sibulan 5.000Tanjay 70.074Toledo City 73.710TOTAL P398.959 M22 Local Water Utilities Administration

Annual Report 2009MINDANAOAREA 7LOAN AMOUNTBacuag P 0.888 MCagayan de Oro City 4.604Gigagnit 7.791Kibawe 4.500Laguindingin 2.000Manolo Fortich 18.000Quezon 5.000Tagbina 2.063Valencia 5.000TOTAL P49.846 MNO. OF COLLECTIBLES COLLECTION COLLECTIONAREA WDs (P Million) (P Million RATIO (%)1 76 308.165 257.154 83.452 81 368.851 342.132 92.763 67 237.771 209.549 88.134 34 157.526 147.675 93.755 65 221.697 192.803 86.976 42 121.374 110.425 90.987 35 258.480 238.387 92.238 39 324.687 297.922 91.769 33 132.388 120.107 90.72TOTAL 472 2,130.939 1,916.154 89.92GRAND TOTAL: LUZON, VISAYAS, and MINDANAO= P2,649.758MAREA 9LOAN AMOUNTBungao P 7.780 MIpil-Titay 15.223TOTAL P23.003 MAREA 8LOAN AMOUNTBaganga P 4.582 MCarmen 2.774Koronadal 58.500Digos 4.814Kiblawan 3.750Manlungon 30.006Mati 43.250Metro Kidapawan 237.268Nabunturan 15.154Pikit 5.000Samal 5.000Tulunan 32.154TOTAL P442.252 MB. BILLING AND COLLECTIONThe Agency continued to enjoy a verysatisfactory collection performance in 2009, with a90% collection ratio as detailed in the table below:The stated ratios above consideredspecific WDs whose financial viability were severelyimpaired by system failure, marketing shortfalls,cessation of operations, and other operationalproblems that seriously affected their debt servicingcapability.Treasury DepartmentA. Project DisbursementLWUA has reached another milestone withits P3.833 Billion total project disbursement this year,the highest so far in the Agency’s thirty six (36) yearsof existence, surpassing the P2.396 Billion projectdisbursement level in 2004.The P3.833 Billion disbursement isequivalent to 84.79% of the P4.521 Billion ProjectedDisbursements (see Table 1) for the year, of which87.75% represents National Government SupportFund (see Table 2).The above result marks a remarkableturnaround of last year’s (2008) situation wherein only40% of the P1.437 Billion Project Disbursement forthe year was attained.The National Government infused a totalof P2.4 Billion funds to LWUA, of which P400 Millionrepresent subsidy funds to be classified later asGovernment Equity in LWUA and P2.0 Billion Non-LWUA Initiated Funds from the DOH and DPWH.These Government Support Funds are intended tofast track the implementation of the potable watersupply projects under the President’s priority Programthis year.Table 1 - Actual by ProjectProjects/% Actual toPackage Projected Actual Variance ProjectedForeign Assisted 110.867 10.653 (100.214) 9.61%FOREX 88.311 3.356 (84.955) 3.80%Local 199.178 14.009 (185.169) 7.80%Locally Funded 4,322.013 3,819.350 (502.663) 88.37%Grand Total 4,521.191 3,833.359 (687.832) 84.79%2223

Table 2 - Actual by Source% to Grand % to TotalParticulars Total Total LocalForeign 10.653 0.28%Local:NG Support 3,354.573 87.75%LBP Borrowings 24.468 0.64%WD Equity 2.600 0.07%ICG 441.065 11.54%Total Local 3,822.706 99.72% 100.00%Grand Total 3,833.359 100.00%The P26.8M difference between the(originally) Approved Budget (P833.0M) and theApproved Realigned Budget (P859.8M) representsthe supplemental budget for Local Travel and theincrease in RATA pursuant to National BudgetCircular No. 2009-520 covered by Board ResolutionNos. 051 s. 2009 and 532 s. the 2009 respectively.The favorable bottom line figures ofLWUA’s CY 2009 Corporate Operating Budget Statusare the results of the budgetary controls adopted bythe Management in pursuance to the continuedimplementation of the austerity measures underAdministrative Order No. 103.The budget balance represents portion ofthe forced budgetary cutback enunciated under theapproved Memorandum for the Administrator dated23 April 2009.Water District Audit DepartmentFor year 2009, the Water District AuditDepartment conducted 19 WD audits (operations/financial/special) and reviewed the operatingperformance of two water districts through financialanalysis.The audits were conducted basically inline with LWUA’s regular monitoring function, and inparticular cases, in response to the formal requestsof the concerned water districts and otherstakeholders. Among the operational problemsaddressed include internal conflicts, allegedirregularities, internal control system and institutionaldevelopment deficiencies, and debt servicearrearages. The financial analyses, on the otherhand, were made either to determine the progressso far attained by the WDs after the audit, or to reviewand evaluate the operational and financial status ofa district in lieu of an operations audit.B. Operating Expenses (OPEX)ApprovedRealignedExpense Account Approved Realigned Actual Budget % ActualBudget Budget Utilization Balance to BudgetPersonal Services 546.074 644.295 644.295 - 100.00%Maintenance & OtherOperating Expenses 220.342 164.220 134.490 29.730 81.90%Total Operating Expenses 766.416 808.515 778.785 29.730 96.32%Capital Outlays 66.622 51.304 43.254 8.050 84.31%Grand Total 833.038 859.819 822.039 37.780 95.61%24 Local Water Utilities Administration

Annual Report 2009AUDIT CERTIFICATERepublic of the PhilippinesCOMMISSION ON AUDITCommonwealth Avenue, Quezon City, PhilippinesINDEPENDENT AUDITOR’S REPORTThe Board of TrusteesLocal Water Utilities AdministrationKatipunan Road, BalaraQuezon CityWe have audited the accompanying financial statements of the Local Water Utilities Administration (LWUA) which comprise the balance sheet as ofDecember 31, 2009, and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significantaccounting policies and explanatory notes.Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with generally accepted accounting principlesin the Philippines. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation offinancial statements that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; andmaking accounting estimates that are reasonable in the circumstances.Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. Except as stated in the following paragraphs, we conducted ouraudit in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the auditto obtain reasonable assurance whether the financial statements are free from material misstatements.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selecteddepend on the auditor’s judgment, including the assessment of the risks of material misstatements of the financial statements, whether due to fraud or error.In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements inorder to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’sinternal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the financial statements.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.Basis for Qualified OpinionMiscellaneous Receivables arising from claims from Government of the Philippines amounting to P1.254 billion has no legal basis or document tosupport the claim contrary to the Accounting Principle on Objectivity. There was only a commitment on the part of the Office of the President thru thePresidential Social Fund to release the Subsidy to LWUA which represents 40% of the P3.166 billion net realizable value of Receivables as of December31, 2009.Qualified OpinionIn our opinion, except for the effects on the financial statements of the matters referred to in the preceding paragraph, the financial statements present fairly,in all material respects, the financial position of Local Water Utilities Administration as of December 31, 2009 and of its financial performance and its cashflows for the year then ended in accordance with generally accepted state accounting principles.Emphasis of MatterWithout further qualifying our opinion, we draw attention to Note 30 of the financial statements which stated that LWUA did not declare dividends for CYs2009 and 2008 in view of its pending request with the Department of Finance (DOF) for exception from dividend remittances because of its dire need forhuge capital to finance its projects. It is also worthy to note that upon the request, the Office of the President approved a reduced rate of 14% but not lowerthan P50 Million for CY 2005 only, and rate of 24% for CY 2006 only, which were paid in 2008 as stated in the Statement of Cash Flows.Pending the approval of the said request, LWUA is still liable to pay the dividends computed at 24% for both years which amounted to P91.216 million andP162.914 million for CYs 2009 and 2008, respectively.COMMISSION ON AUDITMay 28, 2010PRISCILLA DG. CRUZSupervising Auditor25

LOCAL WATER UTILITIES ADMINISTRATIONBALANCE SHEETDecember 31, 2009(With Comparative Figures for 2008)(in Philippine Pesos)(as restated )Notes 2009 2008ASSETSCurrent AssetsCash and cash equivalents 2, 3 920,911,227 1,650,526,074Receivables, net 2, 4 3,166,010,825 1,691,527,915Supplies inventory 5 3,015,912 3,092,915Other current assets 2, 6 100,430,432 105,525,719Total Current Assets 4,190,368,396 3,450,672,623Non-Current AssetsLong-term receivables, net 7 12,092,371,447 12,610,641,898Long-term investments 8 843,731,598 396,890,811Property and equipment, net 9 181,498,370 145,915,695Other non-current assets 10 253,392,772 171,284,131Total Non-Current Assets 13,370,994,187 13,324,732,535TOTAL ASSETS 17,561,362,583 16,775,405,158LIABILITIES AND EQUITYCurrent LiabilitiesAccounts payable 11 637,270,243 100,873,222Payables to government agencies 12 85,279,774 587,497,051Other current liabilities 2,13 2,029,604,154 1,142,860,875Total Current Liabilities 2,752,154,171 1,831,231,148Non-Current LiabilitiesLoans Payable, Government of the Phils 2, 14 2,372,837,063 2,594,688,000Loans Payable - Foreign, net of current portion 2, 15 5,452,169,682 5,763,459,807Loans Payable, Local 2, 16 516,626,666 608,280,000Deferred Credits 17 715,655,452 409,837,203Total Non-Current Liabilities 9,057,288,863 9,376,265,010TOTAL LIABILITIES 11,809,443,034 11,207,496,158EQUITY 5,751,919,549 5,567,909,000TOTAL LIABILITIES AND EQUITY 17,561,362,583 16,775,405,158See accompanying Notes to Financial Statements.26 Local Water Utilities Administration

Annual Report 2009LOCAL WATER UTILITIES ADMINISTRATIONINCOME STATEMENTFor the Year Ended December 31, 2009(in Philippine Pesos)2009 2008INCOMEInterest income 1,498,188,457 1,841,348,135Service income 195,852,987 30,673,902Fines and penalties 18,948,470 48,428,130Miscellaneous income 22 15,802,908 47,615,504GROSS INCOME 1,728,792,822 1,968,065,671OPERATING EXPENSES 23 (1,152,160,788) (1,010,645,237)FINANCIAL EXPENSES 24 (485,807,608) (399,293,309)NET INCOME FROM OPERATIONS 90,824,426 558,127,125OTHER INCOMESeminar fees 2,762,350 3,215,223Gain on disposal of assets - 195,358Dividend income 22,400 21,850TOTAL OTHER INCOME 2,784,750 3,432,431NET INCOME BEFORE INCOME TAX 93,609,176 561,559,556INCOME TAX EXPENSESCurrent tax 25 (106,730,540) (299,351,777)Deferred tax 25 82,420,390 106,207,119NET INCOME 69,299,026 368,414,898See accompanying Notes to Financial Statements.27

LOCAL WATER UTILITIES ADMINISTRATIONSTATEMENT OF CHANGES IN EQUITYFor the Year Ended December 31, 2009( in Philippine Pesos)Notes 2009 2008CAPITAL STOCKBalance at beginning of the year 18 2,500,000,000 2,500,000,000Additions/Deductions - -Balance end of the year 2,500,000,000 2,500,000,000DONATED SURPLUSBalance at beginning of the year 19 3,020,676,360 3,126,083,036Adjustment for IBRD Loan Packages - 142,220,702Adjustment - WSS PDEIF transferred toLiability for Special Funds (50,000,000) (250,000,000)Completed WSS projects funded by PDEIF 220,521,646 -Special funds for completed watersupply project closed to Donated Surplus - 2,372,622World Bank Local Government Support forRegional WSP Grant No. 057794 1,488,940 -Balance end of the year 3,192,686,946 3,020,676,360MISCELLANEOUS SURPLUSBalance at beginning of the year 20 61,370,305 61,370,305Additions/Deductions - -Balance end of the year 61,370,305 61,370,305DEFICITBalance at beginning of the year (14,137,665) (354,970,641)Prior-period adjustments 21 (57,299,063) 160,018,078Dividends paid 30 - (187,600,000)Net income 69,299,026 368,414,898Balance, end (2,137,702) (14,137,665)TOTAL EQUITY 5,751,919,549 5,567,909,000See accompanying Notes to Financial Statements.28 Local Water Utilities Administration

Annual Report 2009LOCAL WATER UTILITIES ADMINISTRATIONCASH FLOW STATEMENTFor the Year Ended December 31, 2009(With Comparative Figures for 2008)( in Philippine Pesos)Note 2009 2008CASH FLOWS FROM OPERATING ACTIVITIESInterest collected from loans and accountsof WDs/RWSAs 1,306,756,439 1,267,680,479Principal collected from loans and accounts receivable 433,895,994 387,071,724Other collections 131,312,441 139,001,939Cash received for engineering services rendered 65,828,665 57,312,092Interest collected from bank depositsand short-term investments 26,156,284 18,280,037Payment of income taxes (155,390,052) (478,241,113)Interest and other debt service charges 27 (419,844,524) (519,988,036)Cash paid to suppliers and employees (922,613,986) (680,897,133)Net cash from operating activities 466,101,261 190,219,989CASH FLOWS FROM INVESTING ACTIVITIESProceeds from Withdrawal of investments in securities 35,027,134 34,588,389Acquisition of property and equipment (35,429,792) (17,050,384)Loans to officers and employees (78,869,718) (42,511,054)Investments in agrarian reform bonds - (70,427,777)Investments in subsidiaries (80,003,070) -Advances to Express Savings Bank, Inc. (400,000,000) -Disbursements for projects: (3,050,668,254) (586,301,530)Others (1,460,341) -Net cash used in investing activities (3,611,404,041) (681,702,356)CASH FLOWS FROM FINANCING ACTIVITIESProceeds from water districts’ long-term loans 185,802,707 2,308,157,707Proceeds from PVB borrowings 11 500,000,000 -Payment to Water Districts of their deposits (2,012,920) -Proceeds from Water Districts’ deposits - 39,005,145Proceeds from government subsidies 28 2,440,368,125 10,400,000Proceeds from long-term debts 1,114,786 2,995,456Dividends paid to the National Government / BTr - (187,600,000)Principal payments of loans from foreign and locallending institutions (702,249,271) (797,923,032)Net cash provided by (used in) financing activities 2,423,023,427 1,375,035,276EFFECTS OF EXCHANGE RATE CHANGES ONCASH AND CASH EQUIVALENTS 29 (7,335,494) 5,229,492NET INCREASE (DECREASE) IN CASHAND CASH EQUIVALENTS (729,614,847) 888,782,401CASH AND CASH EQUIVALENTS ATBEGINNING OF YEAR 1,650,526,074 761,743,673CASH AND CASH EQUIVALENTS AT END OF YEAR 920,911,227 1,650,526,074See accompanying Notes to Financial Statements.29

LOCAL WATER UTILITIES ADMINISTRATIONNOTES TO FINANCIAL STATEMENTSAs of December 31, 2009(With comparative figures for 2008)1. AGENCY INFORMATIONPresidential Decree No. 198 dated May 25, 1973 (as amended by Presidential Decrees Nos. 768 and 1479), otherwise known as the ProvincialWater Utilities Act of 1973, created the Local Water Utilities Administration (LWUA) as a specialized lending institution for the promotion,development and financing of local water utilities. This law authorized LWUA to service major provincial urban areas with at least 20,000population through the water districts. Part of the mandate is to provide a composite of financial, technical and institutional development andregulatory services to water utilities. Meanwhile, Executive Order No. 124 issued in 1987, abolished the Rural Waterworks DevelopmentCorporation (RWDC) and transferred RWDC’s functions and responsibilities to LWUA. This issuance virtually placed all of the 1,500 cities/municipalities outside Metro Manila as LWUA’s target areas. Since 1987, the new beneficiaries of LWUA included relatively smaller waterdistricts than those in the 70’s or 80’s.Some of the major functions of LWUA include the following:• Prescribes minimum standards and regulations in order to assure acceptable standards of construction materials and supplies, maintenance,operation, personnel training, accounting and fiscal practices for local water utilities;• Furnishes technical assistance for personnel training program for local water utilities;• Monitors and evaluates local water standards;• Effects systems integration, joint investment and operations, district annexation and de-annexation whenever economically warranted.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe principal accounting policies adopted in preparing the financial statements of the Local Water Utilities Administration are as follows:Basis of PreparationThe financial statements of LWUA have been prepared using the historical cost basis in compliance with the accounting principles generallyaccepted in the Philippines.Functional and Presentation CurrenciesThe financial statements are stated in Philippine peso, rounded to the nearest peso.Statement of ComplianceThe Local Water Utilities Administration has adopted the following Philippine Accounting Standards (PAS) by the Accounting Standards Council(ASC) in preparation for the full adoption of PAS / Philippine Financial Reporting Standards (PFRS).• PAS 1 (Revised 2007) “Presentation of Financial Statements”, provides a framework within which an entity assesses how to present fairly theeffects of transactions and other events; provides the base criteria for classifying assets and liabilities as current and non-current; prohibitsthe presentation of items of income and expense as “extraordinary items”; and specifies the disclosures about the key sources ofestimation which management has made in the process of applying the entity’s accounting policies.• PAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” removes the concept of fundamental error to correct prior perioderrors. It defines material omission or misstatements, and describes how to apply the concept of materiality when applying accountingpolicies and correcting errors.• PAS 12, “Income Taxes”, which prescribes the accounting treatment for income taxes. It requires the recognition of deferred income taxliability for taxable temporary differences, with certain exceptions and deferred income tax asset for deductible temporary differences, withcertain exceptions, if it is probable, a tax benefit will be realized. It also deals with the presentation of income taxes in the financialstatements and the disclosure of information relating to income taxes.• PAS 16 “Property, Plant and Equipment”, provides additional guidance and clarification on recognition and measurement of items of property,plant and equipment. It also provides that each part of an item of property, plant and equipment with a cost that is significant in relation tothe total cost of the item shall be depreciated separately.• PAS 21 “The Effects of Changes in Foreign Exchange Rates”, provides additional guidance on the translation method and on determining thefunctional and presentation currencies.Restatement of Account Balances in CY 2008In compliance with Paragraphs 29 and 75b of PAS 1 regarding the fair presentation of financial statements, the line Item “Receivables, net”shown under the Current Asset caption, was segregated into two classes: (1) Trade Receivables and (2) Non-trade Receivables. In effect,“Receivables, net” was shown at P1,691,527,915 for CY 2008 figures in this Year’s 2009 Annual Audit Report (Note 4).Likewise, the Line item “Prepaid Expenses” shown under the Current Assets caption of the Balance Sheet for CY 2008 in the last year’spreviously published report in the amount of P361,609, was merged with Other Current Assets for the latter to aggregate P105,525,719 (Note 6).Also, to conform to Paragraphs 29 and 75b of PAS 1 regarding the fair presentation of financial statements, Long-term Liabilities net weresegregated into three (3) line items on the face of the Balance Sheet under the caption of Non-Current Liabilities, namely:30 Local Water Utilities Administration

Annual Report 20091. Loans payable, Government of the Philippines (Note 14)2. Loans payable – Foreign, net of current portion (Note 15)3. Loans Payable – Local (Note 16)And in adherence with Paragraphs 60 and 62 of PAS 1 on the distinction of a liability either as a current or a non-current liability, Loans Payable,Government of the Philippines decreased by P143,551,069 while Loans Payable, Foreign decreased by the same amount.The affected accounts were disclosed in detail under Notes 4, 6, and 13 of the Notes to Financial Statements.Revenue RecognitionThe Corporation employs the modified accrual basis of accounting where revenues are recognized to the extent that it is probable that theeconomic benefits associated with the transactions will flow to the corporation and the amount can be measured reliably.Cash EquivalentsCash Equivalents are short term highly liquid investments that are readily convertible to known amounts of cash with original maturities of threemonths or less from dates of acquisition and that are subject to insignificant risk of changes in value.InvestmentsInvestments in government bonds and treasury notes are valued at cost. The difference between the net proceeds from the sale of governmentsecurities and its cost is recorded under the “Income (Loss) on Sale of Government Securities” account. Realized gains or losses are includedin determining the net income for the period in which they occur.Bad DebtsFor performing loans, estimated uncollectible accounts are determined at 25% of interest receivable and current portion of long-term loansreceivable, and 4% of long-term portion of loans receivable. On the other hand, non-performing loans and loans to non-operational WaterDistricts are provided with a 40% allowance.Property, Plant and Equipment (PPE)Property and equipment are carried at cost, less accumulated depreciation, which is computed using the straight-line method over the estimateduseful lives of the assets ranging from five (5) to thirty (30) years. As of balance sheet date, there was no indication that an item of LWUA’sPPE is impaired , using the assessment procedure provided in IAS 36. LWUA uses the Cost Model in recognizing an item of PPE. Under thismodel, there is no need for appraisal or revaluation of PPE.Repairs and maintenance costs are charged to operations as incurred and significant renewals and betterments are capitalized. When assetsare retired or otherwise disposed of, the cost and the related accumulated depreciation are removed from the accounts and any resulting gain orloss is credited or charged to current operations.InventoriesInventories are stated at cost determined by the first-in, first-out method. Subsequent change in accounting policy from FIFO method to theMoving Average Method shall take place upon completion of the Computerized Supplies Inventory System.Income TaxDeferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financialreporting bases of assets and liabilities and their related tax bases. Deferred tax assets and liabilities are measured using the tax rates expectedto apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.The account “Deferred Tax Asset” is presented and classified under “Other Non-Current Assets”, net of the Deferred Tax Liability, as follows:2009 2008Deferred Tax Assets 485,544,555 403,124,165Deferred Tax Liability 261,681,142 261,681,142Net Deferred Tax 223,863,412 141,443,023Foreign Currency TransactionsOutstanding loans from USAID, DANIDA and other foreign currency denominated loans where the Corporation undertakes the foreign exchangefluctuation risk are stated at their current values.Engineering Services/Well DrillingTo ensure the successful implementation of the water supply system financed by the Corporation, well drilling and engineering services arerendered to the water districts for a fee. Expenses relative to these services are booked as “Deferred Charges” when incurred and eventuallytransferred to the receivable when billed or expense accounts when the implementation of the water supply system is discontinued.31

Unearned Income from Well Drilling ContractsThe income from Well Drilling Projects (WDP) is recorded under the Unearned Income from Well Drilling Contracts. The final revenue from WDPshall be based on the Final Well Drilling Cost Report submitted within thirty (30) days after project completion. The basis for determination ofcash generated from each completed WDP is the Income and Expense Report submitted by the Cost Accounting Division.Unearned Income from Engineering StudyThe costs for the Water District Financed Technical Services (WDFTS) of LWUA are recorded under Unearned Income from Engineering Study.The final revenue from the technical services shall be based on the final Technical Service Report submitted by LWUA to WD upon completionof the WDFTS. The basis for determination of cash generated from the service rendered is the difference between the collections from the WDand the actual disbursements of LWUA for the service rendered.3. CASH AND CASH EQUIVALENTSThis account consists of:2009 2008Cash on hand 62,829,558 33,428,280Cash in bank – local currency 792,052,381 1,426,081,624Cash in bank – foreign currency 23,390,650 146,917,191Short- term investments 42,638,638 44,098,9794. RECEIVABLESThis account consists of:920,911,227 1,650,526,074(as restated)2009 2008Trade Receivablesreceivables from GOCCs 1,656,779,080 1,274,695,582Interest receivables 935,240,281 949,848,687Receivables from Well Drilling Projects 7,201,883 7,600,253Receivables from Engineering Studies 1,394,829 1,939,103Total 2,600,616,073 2,234,083,625Less allowance for doubtful accounts 689,050,376 615,020,340Receivables 1,911,565,697 1,619,063,285LoansNet TradeNon-trade ReceivablesDue fromOfficers and employees 10,179,785 4,885,082Receivables from Government Agencies56,567,335 32,894,883Miscellaneous 1,192,739,479 39,726,136Total 1,259,486,599 77,506,101Less : allowance for doubtful accounts 5,041,471 5,041,471Net Non-trade Receivables 1,254,445,128 72,464,6303,166,010,825 1,691,527,915Loans receivable from GOCCs represents the current portion of outstanding long-term loans receivables due from Water Districts and the RuralWaterworks and Sanitation Association (RWSA) aged one year from the balance sheet date.Interest receivables represent receivables from interests earned on currently maturing portion of outstanding loans from Water Districts and theRWSA.Receivables from well drilling projects represent the amounts due from the water districts for its well drilling projects undertaken by the Corporation.32 Local Water Utilities Administration

Annual Report 2009Receivables from engineering studies represent the amounts due from the water districts for engineering studies undertaken by the CorporationDue from officers and employees represents receivables from various loans granted to LWUA officials and employees in the form of housingassistance, medical and multi-purpose loans.Receivables from Government Agencies represents those due from National Government Agencies (NGAs) in the amount of P51,854,754 andthose interest bearing loans due from the Local Government Units in the amount of P4,712,581. Due from NGAs pertains to the advances madeto the Bureau of Treasury (BTr) for the debt servicing of the Corporation’s foreign loans. An offsetting arrangement was earlier approved by theDepartment of Finance to effect immediate offsetting of these advances against other National Government relent loans to the Corporation.Miscellaneous receivables represent the amounts due from parties which do not fall under any of the other classes of receivables. This includesadvances made to contractors as mobilization fees and importation costs paid by LWUA on behalf of the contractors. The increase in thisaccount by P1.15B was due mainly to the recognition of funds committed to be released by the Office of the President thru the PresidentialSocial Fund.5. SUPPLIES INVENTORYThis account consists of:2009 2008Office supplies inventory 2,075,330 965,701Medical, dental and laboratory supplies 540,722 445,387Other supplies inventory 399,860 1,681,8273,015,912 3,092,915The Office supplies inventory consists of supplies purchased/held for consumption in the normal course of LWUA operations. Acquisitions ofsupplies from the Procurement Service pertaining to previous years and previously charged to Guaranty Deposits account in the amount ofP1,792,053 were reclassified to this account (See also Notes 6).The Medical, dental and laboratory supplies account consists of drugs and medicines purchased/held for issuance to LWUA officers andemployees in need of medical attention.The Other supplies inventory consists of water supply materials which are still not issued and are being kept in stock for future use of waterdistricts.6. OTHER CURRENT ASSETSThis account consists of:2009 2008Advances to contractors 38,888,309 41,052,297Advances to consultant 25,971,098 34,350,935Advances to water districts 33,567,483 26,567,483Prepaid expenses 549,306 361,809Guarantee Deposits 1,454,236 3,193,195100,430,432 105,525,719Advances to contractors account represents prepayments made to contractors for the mobilization of the government water supply projects.Advances to consultants account represents prepayments made to consultants for the preparation of detailed engineering designs and constructionsupervision of water supply projects funded by foreign loans.Advances to water districts include releases of funds to different water districts for earthquake rehabilitation and to defray take-over expenses.The amounts released to the various water districts shall be subject to liquidation or shall be reported on as soon as the purpose for which it wasgiven have been served.Prepaid expenses account pertains to payments of insurance premiums of LWUA vehicles and other insurable properties.Guarantee Deposits refers to prepayments made to various firms / individuals such as advances to Manila Electric Company, PLDT for TelephoneDeposit, Deposit to C. Lotti for the opening of a special account for feasibility study, etc. The decrease of P1.7M was due to reclassifi-33

cation of supplies acquired from Procurement Services in previous years into office supplies inventory. (See Notes 5)7. LONG-TERM RECEIVABLESThis account consists of:2009 2008Loans receivable from water districts (WD) 12,788,140,895 13,281,720,078Restructured receivables – WD 503,285,676 388,897,380Employees multipurpose loan receivables 201,761,398 138,429,967Unbilled loans and accounts receivables-WD 96,050,064 96,050,064Loans receivables- RWSA 30,173,156 31,879,55513,619,411,189 13,936,977,044Less: Allowance for bad debts 1,527,039,742 1,326,335,14612,092,371,447 12,610,641,898Loans receivable from water districts comprises of the peso and foreign cost releases to finance the development of various water supplyprojects in the provincial areas. They bear graduated interest rates ranging from 8.5% to 15% per annum depending on the amount of the loanwith a 26-year repayment period. Special loans as well as new service connection loans carry graduated interest rates ranging from 7.5% to 9%per annum.In an effort to improve its collection performance, the Corporation adopted the following policies:• Restructuring of water district loans;• Imposition of a 2% penalty charge on arrears by water districts with restructured accounts;• Requirement of post-dated checks to cover debt service remittances of water districts requesting for additional loans or financial assistance,those extended with restructuring concessions, and those seeking clearance for outside borrowing;• Adoption of the first-in, first-out method in the application of debt service payments;• Submission of the water districts’ annual budgets to the Corporation; and• Take-over of water districts defaulting on debt service payments.Restructured Receivables – Water Districts - these are loans collectible from water districts at reduced interest rates (7.5%-9%) to make loansaffordable and to fast track project implementation in small water district areas. Length of amortization payments was likewise modified to easepayment by water district borrowers.Unbilled loans and accounts receivable – WD represents project expenditures the billings of which have been deferred pending completion of thecontract and acceptance of the project.Loans receivable - RWSA represents receivable from interest bearing long-term loans extended to various rural waterworks and sanitationassociations for the development of water supply in the rural areas.8. LONG-TERM INVESTMENTSThis account consists of:2009 2008Advances to Express Savings Bank Inc 400,000,000 -Investments in Bonds 363,324,018 396,890,811Investments in Subsidiaries 80,003,070 -Advances to LWUA Consult, Inc. 404,510 -843,731,598 396,890,811Advances to Express Savings Bank……..P400,000,000In order to meet the requirements imposed by the Bangko Sentral ng Pilipinas, as part of Express Savings Bank ,Inc. (ESBI) rehabilitationprogram, the LWUA Board of Trustees, in Resolution No. 336 dated August 17, 2009, made advance payment to ESBI for stock subscription inthe amount of four hundred million pesos (P400,000,000.) In August 25, 2009, Manager’s Check No. 130424 was paid to the United CoconutPlanter’s Bank in the amount of P400,000,000 for LWUA’s stock subscription to ESBI. The payment was treated by LWUA as an advancepayment to the capital subscription, thus increasing the capital of ESBI. ESBI issued Official Receipt No. 56928 acknowledging receipt of theP400,000,000.Investments in Bonds…..P363,324,018This account represents placements in agrarian reform bonds. The interest rates are aligned with that of the 91-day Treasury Bills and payablewithin six (6) months from date of issue and every six (6) months thereafter. Ten percent (10%) of the bond’s original face value matures every34 Local Water Utilities Administration

year and paid to the bondholder until the tenth year/maturity date.Annual Report 2009Investments in Subsidiaries …..P80,003,070In June 2009, LWUA purchased sixty percent (60%) of the total issued and outstanding common shares of Express Savings Bank Inc. (ESBI), aprivate banking institution currently under a Bangko Sentral ng Pilipinas (BSP) administered rehabilitation. LWUA paid P80,003,070 for the445,377 shares to the various owners of these shares.LWUA’s decision to operate a quasi bank, to be later named as the Water and Energy Bank, was anchored on the following grounds:• Republic Act 7721 as implemented by Section 14 of BSP Circular No. 51 dated October 14, 1994, Under this Circular, LWUA may own up tosixty percent (60%) of the voting stock of a domestic bank;LWUA has been favored to invest /create a subsidiary and such act is within Its charter to do so, pursuant to the legal opinion from the Office of theGovernment Corporate Counsel (OGCC) dated September 23, 2009, OGCC citing Sections 50,59 and 71 of PD 198.Advances to LWUA Consult Inc. ……P404,510This represents the partial liquidation of cash advance for the registration of the incorporation of LWUA Consult, Inc. with the Securities andExchange Commission. The creation of the subsidiary was envisioned under Board Resolution No. 152 series of 2009 dated June 30, 2009 andResolution No. 608 series of 2009 dated November 10, 2009. The SEC approved its registration on December 7, 2009.9. PROPERTY AND EQUIPMENTThe roll forward analysis of this account follows:CY 2009furniture & Engineering &Land Building & Office Laboratory OtherImprovement Improvement Equipment Equipment Equipment TotalAt January 1 1,664,620 141,042,766 89,054,291 106,793,741 48,435,099 386,990,517Additions - 6,772,947 7,185,685 2,956,470 17,667,020 34,582,122Transfers - - 37,678,219 12,503 2,850,368 40,541,090Disposals - - (4,327,131) (199,146) (738,207) (5,264,484)At December 31 1,664,620 147,815,713 129,591,064 109,563,568 68,214,280 456,849,245Accumulated DepreciationAt January 1 - 56,117,450 43,838,956 98,262,288 42,856,128 241,074,822Depreciation - 6,519,682 29,272,872 166,025 4,328,633 40,287,212Disposals - - (3,927,923) (430,686) (1,652,550) (6,011,159)At December 31 - 62,637,132 69,183,905 97,997,627 45,532,211 275,350,875Net Book Value At December 31 1,664,620 85,178,581 60,407,159 11,565,941 22,682,069 181,498,370CY 2008CostAt January 1 1,664,620 127,247,555 89,206,180 108,180,174 41,493,759 367,792,288Additions - 13,795,211 1,911,083 480,000 7,909,457 24,095,751Transfers - - (104,723) (308,023) (968,117) (1,380,863)Disposals - - (1,958,249) (1,558,410) (3,516,659)At December 31 1,664,620 141,042,766 89,054,291 106,793,741 48,435,099 386,990,517Accumulated DepreciationAt January 1 - 53,820,635 38,286,290 99,979,113 37,066,306 229,152,344Depreciation - 2,296,815 7,606,138 149,608 6,370,903 16,423,464Disposals - (2,053,472) (1,866,433) (581,081) (4,500,986)At December 31 - 56,117,450 43,838,956 98,262,288 42,856,128 241,074,82235

Net Book Value At December 31 1,664,620 84,925,316 45,215,335 8,531,453 5,578,971 145,915,69510. OTHER NON-CURRENT ASSETSThis account consists of:2009 2008Deferred tax assets 223,863,413 141,443,023Deferred engineering study cost 10,243,816 6,140,302Restricted funds 956,313 8,863,407Deferred well drilling cost 4,027,712 531,662Other deferred charges 14,301,518 14,305,737253,392,772 171,284,131Deferred tax assets pertains to prepaid tax arising from certain expenses not currently deductible for income tax purposes pursuant to PAS 12,details of which are as follows:2009 2008Balance of Deferred Tax Asset 485,544,555 403,124,165Balance of Deferred Tax Liability 261,681,142 261,681,142Deferred Tax Assets. net 223,863,413 141,443,023Paragraph 72 of PAS 12 states : “Although current tax assets and liabilities are separately recognized and measured, they are offset in thebalance sheet subject to criteria similar to those established for financial instruments in IAS 32 Financial Instruments : Disclosure andPresentation.”Paragraph 74 of PAS 12 also states, “An entity shall offset deferred tax assets and deferred tax liabilities, if, and only if:(a) the entity has a legally enforceable right to set off current tax assets against current tax liabilities, and(b) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:(c) (1) the same taxable entity; or(d) Different taxable entities which intend either to settle current tax liabilities simultaneously, in each future period in which significant amountsof deferred tax liabilities or assets are expected to be settled or recovered.”Deferred engineering study cost refers to the expenses incurred in connection with the preparation of project feasibility studies and detailedengineering designs of unbilled on-going projects. The costs of billed projects are eventually transferred to the engineering study expenseaccount.Deferred well drilling cost includes the cost of manpower, travel, materials, rent, gas and oil, repairs and maintenance, and other expensesincurred in connection with in- house well drilling projects. Cost relative to this service is eventually transferred to the well drilling expenseaccount when billed or discontinued.Other deferred charges account is used to record deferred charges other than costs of engineering studies; construction supervision; and welldrillings that are held for future billing to various water supply projects.11. ACCOUNTS PAYABLEThis account consists of:2009 2008Notes and acceptances payable 500,000,000 -Interest payable 81,797,068 52,658,858Accounts payable 50,051,556 43,010,178Payable to officers and employees 5,421,619 5,204,186637,270,243 100,873,222Notes and acceptances payable pertains to the amount of loan with the Philippine Veterans Bank in the amount of P500,000,000, exclusively forthe financing of LWUA’s liquidity requirement for debt servicing of LWUA’s existing and maturing loans. This loan carries an interest rate of6.8421% per annum for a 90 days term which will fall due on February 24, 2010. In this regard, LWUA executed Promissory Note No. 104013703367last November 23, 2009 and it was secured by the assignment of LWUA’s Trade / Business receivables.12. PAYABLE TO GOVERNMENT AGENCIESThis account consists of amounts:2009 2008Due to Government Owned and Controlled Corporations (GOCCs) 81,778,935 573,938,742Due to Bureau of Internal Revenue (BIR) 3,500,839 13,558,30985,279,774 587,497,05136 Local Water Utilities Administration

Annual Report 2009Due to GOCCs pertains to collections of loans from Water Districts thru bank credits.Due to BIR pertains to the amount of income tax and tax withheld from contractors/suppliers and employees for remittance to the Bureau ofInternal Revenue (BIR).13. OTHER CURRENT LIABILITIESThis account consists of:2009 (as restated )2008Loans payable, current – foreign 302,608,052 286,484,317Loans Payable , current -GOP 135,283,775 143,551,069Loans payable, current – domestic 91,653,333 191,653,333Guaranty deposits payable 55,795,215 55,711,410Other payables 1,444,263,779 465,460,7462,029,604,154 1,142,860,875Loans payable, current- foreign represents the currently maturing portion of loans received through loan agreements executed by and betweenthe LWUA as the borrower and the foreign lending banks as the lenders mainly to finance, on a long-term basis, the development of various watersystems in different cities, municipalities and rural areas of the country.Loans Payable – current- Government of the Philippines is the current portion of loans executed by and between the Republic of the Philippines(RP)as the borrower and the foreign lending banks as the lender. Subsidiary loan agreements were likewise executed by and between the LWUA, asthe implementing agency and sub-borrower, and the RP as the sub- lender to LWUA.Guaranty deposits payable refers to the amount collected or withheld from contractor as 10% retention on contract payments to guaranteeperformance of the project and are refundable to the contractor.Other payables refers to the amount of advances made by the Bureau of Treasury for LWUA’s debt service obligation and to the amount of fundsreceived from sources other than the sale of capital stock for special or designated purpose. The very significant increase in the balance of thisaccount was attributed mainly to the net increase of P985,716,861 in Liability for Special Funds as a result of various cash subsidies receivedfrom the National Government, and by net decreases in Other Payable accounts such as Depository Liabilities –WDDP, Advances from PlaneFares, etc., to come up with a net increase in Other payables by P978,823,034.14. LOANS PAYABLE – GOVERNMENT OF THE PHILIPPINES (relent loans )This account consists of:2009 2008USAID 033 – US$15MAt 2% per annum from 1975 to 1985,3%, thereafter, payable in 30 annualinstallments of $286,330.88 startingJuly 17, 1985 and increasingthereafter, up to July 17, 2015. 231,353,597 258,560,653USAID 042 – US$ 20MAt 2% per annum from 1977 to 1987,3% thereafter payable in 30 annualinstallments of $305,410.85 startingApril 13, 1987 and increasing thereafter,up to April 13, 2017 302,306,638 330,120,843ADB 1056-PHI – US$14.06MAt 10% per annum payable in 25annual installments of US$247,600starting February 15, 2001, increasingthereafter up to August 15, 2025. 631,847,841 651,644,927ADB 1057-PHI – US$2.7MAt 10% per annum payable in 20 annualinstallments of $101,800 startingFebruary 15, 1995 increasing thereafterup to August 15, 2014. 74,832,117 84,157,015ADB 1599 - $292 TAt rate applicable to Republic loanplus the rate of 1% payable in 25 annual37

installments on May 15 and November 15in each year up to Nov. 15, 2022 13,118,922 13,118,922DANIDA V – DKr95MAt 0% interest payable in 17.5 annualinstallments of DKR5,280,000 starting onApril 1, 1992 to October 1, 2009. - 46,315,648IDA 920-PHI – US$14MAt 0.75% service charge per annumpayable in 40.5 annual installments of $96,086starting August 15, 1989, increasingthereafter up to February 15, 2029. 46,234,787 53,614,192OECF PH-P82 – Y.945BAt 8.7% per annum payable in 20 annual principalpayments of Y46,110,000 startingJanuary 20, 1998 to January 20, 2018. 103,334,836 112,119,793OECF PH-P124 – Y.789BAt 9% per annum payablein 20.5 annual principal payments of Y38,468,000starting April 20, 2000 to April 20, 2022. 45,941,669 65,138,439OECF PH-P149 – Y6.212BAt 4.9% per annum payable in 20.5 annual principalinstallments of Y151,520,000 startingDecember 20, 2004 and increasing thereafter up to December 20, 2024 970,742,519 1,028,740,493French Protocol – FF24MAt 3% Treasury Loan per annum payable in 30 annualinstallments of FF1,313,933.60starting December 31, 1990 to December 31, 2020 88,407,912 94,708,1442,508,120,838 2,738,239,069Less : Current Portion 135,283,775 143,551,069Loans Payable – GOP 2,372,837,063 2,594,688,000Loans Payable – Government of the Philippines are loans executed by and between the Republic of the Philippines (RP), as the borrower andthe foreign lending banks, as the lender. Subsidiary loan agreements were, likewise, executed by and between the LWUA, as the implementingagency or one of the implementing agencies, and sub-borrower, and the RP, as the sub- lender to LWUA.15. LOANS PAYABLE - FOREIGNThis account consists of:2009 2008ADB 1269-PHI – US$21.1MAt interest based on the cost to thebank of such currencies plus spreadwhich ranges from 6.3% to 6.7% per annumpayable in 20 annual installments of $733,100starting March 1, 1999, increasing,thereafter, up to September 1, 2018. 800,818,653 845,400,435ADB 1472-PHI – US$45MAt 6.79% per annum payable in 20 annualinstallments of $848,500 starting March 1, 2002,increasing, up to September 1, 2021. 1,070,480,361 1,111,073,503OECF PH-P154 – Y6.131BAt 2.5%, Principal (I) and 2.1%, Principal (II)per annum payable in 20 annual installments38 Local Water Utilities Administration

Annual Report 2009of Y149,600,000 on August 20, 2005 andY299,070,000 from February 20, 2006 through August 20, 2025. 862,606,880 906,291,515OECF PH-P181 – Y7.228BAt 2.5%, Principal (I) and 2.1%, Principal (II) per annumpayable in 20.5 annual installments of Y176,320,000 onMarch 20, 2007 and Y352,584,000 through March 20, 2027 1,900,980,910 2,014,469,585Australian Aid – US$14.8MAt 2.25% per annum payable in 9.5 annual installmentsof $740,000 starting July 15, 2001 to January 15,2011. 146,018,986 220,976,281KFW PTWSP I & II – Euro 14.700MGerman Financial Cooperation with the Philippinesaimed to upgrade the WSS of Water Districts 973,871,944 951,732,805Total Loans Payable Foreign 5,754,777,734 6,049,944,124Less : Current Portion 302,608,052 286,484,3175,452,169,682 5,763,459,807Loans payable – foreign represents loans received through loan agreements executed by and between the LWUA as the borrower and the foreignlending banks as the lenders mainly to finance, on a long-term basis, the development of various water systems in different cities, municipalitiesand rural areas of the country.16. LOANS PAYABLE - LOCALLoans payable - foreign represents loans received through loan agreements executed by and between the LWUA as the LWUA as the borrowerand the foreign lending banks as the lenders mainly to finance, on a long-term basis, the development of various water systems in different cities,municipalities and rural areas of the country.80% by the assignment of LWUA’s Trade Receivables; and20% by the assignment of LWUA’s Agrarian Reform BondsThe status of these term loans is as follows:1st Tranche – P500,000,000This Term Loan of P500 Million carries an interest rate equal to deposit rate plus 4% spread, subject to quarterly repricing but in no case shall therate be lower than 10% per annum. It is payable in 20 equal quarterly amortizations. The loan was availed of in one single drawdown.The following Table shows the year and corresponding amounts of availment and repaymentsDate Availment Repayment Balance2004 P500,000,000 500,000,0002005 100,000,000 400,000,0002006 100,000,000 300,000,0002007 100,000,000 200,000,0002008 100,000,000 100,000,0002009 100,000,000** current portion for 2008 loans2nd Tranche - P500,000,000This Term loan carries interest on LBP’s prime lending rate plus 2% spread, subject to quarterly repricing but in no case shall the rate be lowerthan 9.5% per annum. It is payable in 20 equal quarterly amortizations to commence at the end of the 8th quarter from the initial drawdown date,plus a balloon payment on the maturity of the loan. The full amount of the loan was availed in 2004 in five (5) drawdowns. Starting April 2010,the interest rate was reduced to 8.5% per annum upon the request of LWUA.The following Table shows the year and corresponding amounts of availment and repayments.Date Availment Repayment Balance2004 P500,000,000 500,000,0002005 500,000,00039

2006 25,000,000 475,000,0002007 33,333,333 441,666,6672008 33,333,334 408,333,3332009 33,333,333* 375,000,0002010 33,333,334** 341,666,6662011 341,666,666 -* current portion for 2008 loans** current portion for 2009 loans3rd Tranche – P291.60 MillionThe approved Term Loan is for P500 Million, but only P291.60 Million were availed of. It carries an interest rate equivalent to LBP’s prime lendingrate plus 2% spread, subject to quarterly repricing but in case shall the rate be lower than 9% per annum. Its repayment is equivalent to 20 equalquarterly amortizations to commence at the end of the 9th quarter from the initial drawdown date , the first quarter of 2006. There were two (2)drawdowns from the loan, one in 2006 and another in 2007. Starting April 2010, the interest rate of this loan was reduced to 8% per annum uponthe request of LWUA.Schedule below shows the year and corresponding amounts of availment and repaymentsDate Availment Repayment Balance2006 P220,000,000 P220,000,0002007 71,600,000 291,600,0002008 291,600,0002009 58,320,000* 233,280,0002010 58,320,000** 174,960,0002011 58,320,000 116,640,0002012 58,320,000 58,320,0002013 58,320,000 -* current portion for 2008 loans** current portion for 2009 loansTo summarize, the outstanding balances of the Term Loans are as follows:Outstanding Balances2009 20081st Tranche 100,000,0002nd Tranche 375,000,000 408,333,3333rd Tranche 233,280,000 291,600,000Total Loans Payable 608,280,000 799,933,333Less: Current Portion1st tranche - 100,000,0002nd tranche 33,333,334 33,333,3333rd tranche 58,320,000 58,320,00091,653,334 191,653,333Loans Payable Local,net of current portion 516,626,666 608,280,00017. DEFFERED CREDITSThis account consists of:2009 2008Interest earned but not collected 526,935,631 384,317,437Unearned income from well drilling contracts 169,966,980 7,329,779Deferred income from housing loans 18,044,139 13,990,591Unearned income from engineering study 708,702 4,199,396715,655,452 409,837,203The account Interest Earned but not collected pertains to uncollected past due interests of various water districts whose terms have beenmodified in accordance with the restructuring agreement.40 Local Water Utilities Administration

Annual Report 200918. CAPITAL STOCKThe Corporation’s authorized capital stock of 12,500,000 shares at P200 par value or P2.5 billion has been fully subscribed and paid in by theNational Government as of 1993.In early 2009, Senate Bill No. 2486 was sponsored by Senator Ramon ‘Bong’ Revilla, Jr. It sought to increase the authorized capitalization ofLWUA from P2.5 BIllion to P25 Billion and its domestic and foreign borrowing ceiling from P1 Billion and US$500 Million to an aggregate ofUS$900 Million. This LWUA bill is awaiting plenary debate, interpellation and approval on third and final reading in the Senate. It has alreadybeen certified by Her Excellency, President Gloria Macapagal Arroyo as an Administration priority bill and is now considered as one of the Senatepriority bills for legislation before the Senate will end its sessions on June 2010.LWUA did not declare dividends for CY 2009 in view of its pending requests with the Department of Finance (DOF) for the exemption in dividendremittances. LWUA justified that they are in dire need of huge capital to finance its on-going projects and they met one of the conditions forrequesting exemption which is a negative Retained Earnings.19. DONATED SURPLUSThis account represents subsidy support from the National Government and the cost of completed water supply projects funded out of theproceeds of grants from the National Government loaned out to water districts. Pursuant to the General Appropriations Act, said releases maybe treated as equity contribution of the National Government to the Corporation in the event that its authorized capitalization is increased by law.20. MISCELLANEOUS SURPLUSThis account represents the cost of Levels II and III water supply projects constructed by the Department of Public Works and Highways (DPWH)and turned-over to the Rural Waterworks Development Corporation (RWDC) pursuant to Executive Order No. 124 issued in January 1987 andfor documentation and collection pursuant to a Memorandum of Agreement dated January 27, 1983. It also includes the net assets of LWUA asa national government agency prior to its incorporation in 1975.21. PRIOR YEARS’ ADJUSTMENTSDetails of this account are as follows2009 2008Foreign exchange losses 32,354,477 —-Engineering Services 11,812,873 —-Penalty Billings to WDs 643,323 —-Personal Services 1,023 (20,000)Interest —- 129,226,926Penalty & Interest billings to WDs (4,864,810) 27,848,280Adjustments for Operating expenses —- 2,617,200Adjustments for taxes (69,019,434) —-Allowance for bad debts —- 345,672Adjustments for operating expenses (21,022,189) —-Advances by the Bureau of Treasury (7,204,326) —-Net adjustment 57,299,063 160,018,07822. MISCELLANEOUS INCOMEDetails of this account are as follows:2009 2008Pre-termination fees 11,350,207 34,378,650Billed foreign currency adjustments - 6,602,617Miscellaneous fees from reproduction, Xeroxing, sale of car stickers, etc. 4,452,701 6,634,23715,802,908 47,615,504Pre-termination fees represent income from loan accounts of Water Districts which accelerated their payments in full.23. OPERATING EXPENSESThis account consists of:PERSONAL SERVICES2009 2008Other bonuses and allowances 346,227,979 247,986,371Salaries and wages – Regular 157,133,908 146,209,684Additional compensation (ADCOM) 98,762,048 88,854,864Other personnel benefits 32,066,065 28,893,976Life and retirement insurance contributions 18,658,422 16,965,420Personnel Economic Relief Allowance (PERA) 14,502,874 14,853,315RATA 14,993,852 11,298,469Clothing / uniform allowance 3,561,160 3,407,62541

PHILHEALTH contributions 1,791,225 1,551,812PAG-IBIG contributions 679,928 809,592ECC contributions 728,143 739,870Terminal leave benefits 696,872 515,198Honoraria 180,600 72,276689,983,076 562,158,472MAINTENANCE AND OPERATING EXPENSESBad debts 274,734,633 303,448,913Professional ServicesProfessional Services 43,118,200 27,177,917Confidential, intelligence, extraordinary and miscellaneous expenses 38,217,958 26,586,469Depreciation 25,181,151 13,486,872Travelling 22,514,688 11,507,284Taxes, insurance premiums and other fees 12,108,495 9,163,905Utility expenses 12,029,521 14,597,509Subsidies and donations 8,053,946 10,289,009Repairs and maintenance 6,710,405 7,353,972Advertising expenses 5,086,743 3,011,266Supplies and materials expensesCommunication expenses 4,632,2783,066,167 15,898,7942,243,486Training and scholarship expenses 3,019,654 1,395,020Rent expenses 777,010 767,994Subscription expenses 673,903 87,771Other maintenance and operating expenses 2,252,960 1,470,584462,177,712 448,486,7651,152,160,788 1,010,645,23724. FINANCIAL EXPENSESThis account consists of:2009 2008Interest Expense 484,880,579 398,968,647Bank Charges 927,029 324,662485,807,608 399,293,30925. INCOME TAX EXPENSESComponents of income taxes are as follows:2009 2008Current tax 106,730,540 299,351,777Income tax benefit (82,420,390) (106,207,119)Deferred tax - -24,310,150 193,144,658Numerical reconciliation between tax expense and the product of accounting income multiplied by the tax rate of 30% in 2009 are as follows:2009 2008Accounting Income 93,609,176 561,559,556Tax expense at 30% for 2009, 35% for 2008 28,082,753 196,545,845Tax effect of non-deductible interest expense 2,911,840 2,431,245Tax effect on non-taxable interest income (6,684,443) (5,832,432)24,310,150 193,144,658Details of Current tax are as follows:2009 2008Sales/ Revenue/ Receipts/ Fees 1,665,990,814 1,851,648,065Less: Cost of Services 495,943,752 398,082,970Gross Income from Operations 1,170,047,062 1,453,565,095Non Operating , Taxable Other Income 40,044,297 101,570,000Total Gross Income 1,210,091,359 1,555,135,095Less: Deductions 854,322,893 699,844,305Net Taxable Income 355,768,466 855,290,790Tax Rate 30% 35%Current Tax 106,730,540 299,351,77742 Local Water Utilities Administration

Annual Report 2009The computed current tax does not include the deferred tax on Current Year 2009 “ Bad Debts” expense.Details of the computed Income Tax Benefit are as follows:2009 2008Allowance for Bad Debts end 2,216,090,118 1,941,355,485Less : Allowance for Bad Debts, beginning 1,941,355,485 1,637,906,573Provision for bad debts (debited to Deferred Tax Asset account ) 274,734,632 303,448,912Tax Rate 30% 35%Income Tax Benefit 82,420,390 106,207,119The computed Income Tax Benefit does not include the CY 2009 gain on foreign exchange.26. AUTHORIZATION TO ISSUE FINANCIAL STATEMENTSThe LWUA Board of Trustees adopted on March 09, 2010 Resolution No. 121 Series of 2010. Such authorized the issuance of LWUA’s CalendarYear 2009 Financial Statements, in compliance with the Philippine Accounting Standard No. 10.27. INTERESTS AND OTHER DEBT SERVICING CHARGESThe amounts presented in the Cash Flow Statement (P419.8M for 2009 and P519.9M for 2008) represent payments for interests andguarantee fees on LWUA’s existing loans. These were classified consistently as operating cash flows. Such events enter into the determinationof net income (loss) for the period, and is therefore classified within the Cash Flows from Operating Activities.28. PROCEEDS FROM GOVERNMENT SUBSIDIESThe amounts represent government subsidy support fund for the development of various water supply system projects given to LWUA thru theDepartment of Health (DOH) and the Department of Public Works and Highways (DPWH). These were neither presented under the IncomeStatement nor under the Statement of Changes in Equity. Rather, the same was taken up as credit to the account “Liability for Special Funds”upon receipt of the fund and debited upon release to the beneficiary water districts.In 2009, nine (9) cash subsidies were received from the National Government thru the issuance by the DBM of the Sub-allotment ReleaseOrder (SARO) namely:SARO Date SARO Number AmountFeb. 05/09 ROC -09-00757 P 195,000Nov. 19.2008 A-08-09271 28,412,161Nov. 19, 2008 A-08-09271 34,019,063Nov. 19, 2008 A-08-09271 5,606,901March 02, 2009 A-09-00673 211,067,500March 02, 2009 A-09-00673 211,067,500July 29, 2009 BMB-D-09-7019 400,000,000Aug. 04, 20099 D-0905960 50,000,000.00Sept. 25,,2009 F-09-07225 1,500,000,000Total Govt.Subsidies 2,440,365,12529. EFFECTS OF EXCHANGE RATES DIFFERENCES ON CASH AND CASH EQUIVALENTSThe effects of exchange rates differences on cash and cash equivalents were taken up as a direct charge against the liability account “Adjustmentin Foreign Exchange Values.”30. DIVIDENDS PAIDThe amount of P187,600,000 paid in 2008 represents dividends for current year 2005 (P50,000,000) at the rate of 14% or an amount not lowerthan P50,000,000 , and for CY 2006 (P137,600,000) at the rate of 24% as approved under Executive Order No. 740 dated July 16, 2008.LWUA did not declare dividends for CYs 2009 and 2008 in view of its pending requests with the Department of Finance (DOF) for theexemption in dividend remittances. LWUA justified that they are in dire need of huge capital to finance its on-going projects. Because of themagnitude of LWUA’s program for the next five to ten years, using the funds for the payment of dividend will significantly deprived LWUA ofproject financing.Pursuant to LWUA Board Resolution No. 446 dated September 15, 2009, LWUA will defer payment of dividend until it shall have accumulatedenough funds for the proposed increase in capitalization from P2.5B to P25 B43

44 Local Water Utilities Administration