Amending Presidential Decree No. 269, Increasing The Capitalization And Broadening The Lending And Regulatory Powers Of The National Electrification Administration And For Other Purposes

Case Overview and Summary

Summary of Presidential Decree No. 1645

Increasing Capitalization and Broadening Powers of NEA
- Increases the authorized capital of the National Electrification Administration (NEA) to 5 billion pesos, divided into 50 million shares with a par value of 100 pesos each. (Section 1)
- Appropriates at least 500 million pesos annually from the National Treasury starting fiscal year 1981 to pay for the government's subscription to NEA's capital stock until fully paid. (Section 1)

Expanded Lending and Investment Powers
- Allows NEA to invest and grant loans for developing power generation industries like dendro-thermal and mini-hydro plants, alcogas plantations, tree plantations, and associated facilities. (Section 2(p))
- Permits NEA to organize wholly or partly owned companies and subsidiaries for operating power generation and distribution systems. (Section 2(q))
- Allows NEA to organize subsidiaries for manufacturing materials and equipment for power generating systems. (Section 2(r))

Regulatory Powers over Electric Cooperatives
- Authorizes NEA Administrator to designate an Acting General Manager or Project Supervisor for a cooperative when vacancies occur or when required. (Section 3)
- Empowers NEA to issue orders, rules, regulations, conduct investigations, and take actions affecting electric cooperatives and other borrowers or supervised entities. (Section 5)
- Prohibits cooperatives from borrowing without NEA's prior approval, except for short-term loans under certain conditions. (Section 5)
- Gives NEA the right to be represented and participate in all board meetings and deliberations of cooperatives, and to approve policies and resolutions. (Section 7)

Foreign Indebtedness and Tax Exemptions
- Allows NEA to contract foreign indebtedness up to $800 million from foreign governments, international financial institutions, or private lenders. (Section 4)
- Authorizes the President to negotiate, contract, and guarantee the repayment of such foreign indebtedness on behalf of NEA and the Republic of the Philippines. (Section 4)
- Exempts any foreign indebtedness contracted by NEA, including principal, interest, and imports paid from the proceeds, from all direct and indirect taxes, fees, and charges in the Philippines. (Section 4)

Enforcement Powers and Remedies
- Outlines remedies for NEA if a cooperative fails to comply with orders, rules, regulations, decisions, or loan agreement terms, including: (Section 5)
- Refusing to make or approve loans or release funds
- Withholding advances or approvals for other lenders
- Withholding technical or professional assistance
- Foreclosing on mortgages or deeds of trust held on the borrower's properties
- Taking preventive or disciplinary measures, including suspension or removal of cooperative's board members, officers, or employees

Applicability to Power Generation Entities
- Extends the provisions governing cooperatives in Presidential Decree No. 269 to mini-hydro, dendro-thermal power plants, alcogas plantations, tree plantations, and other power generating entities supported by NEA. (Section 6)

Board of Directors and Officers of Cooperatives
- Specifies that the management of a cooperative is vested in its Board of Directors, subject to NEA's supervision and control. (Section 7)
- Prohibits board members from receiving salaries but allows reasonable per diems and expense reimbursements as specified by NEA. (Section 7)
- Requires the officers (President, Vice-President, Secretary, and Treasurer) of a cooperative to be elected annually by and from the Board of Directors. (Section 8)