Creating the Natural Resources Development Corporation, Defining Its Functions, Powers and Responsibilities and for Other Purposes

Case Overview and Summary

Summary of Executive Order No. 786

Creation of the Natural Resources Development Corporation (NRDC)
- Created under the Ministry of Natural Resources (Sec. 1)
- Corporate term of 50 years, renewable for another 50 years (Sec. 1)
- Principal office in Metro Manila, can establish branches elsewhere (Sec. 1)

Policy and Purposes of NRDC
- Promote and undertake development/use of technologies that complement utilization of natural resources with conservation and optimize resource utilization, on its own or through subsidiaries/joint ventures (Sec. 2)

Functions and Objectives of NRDC
- Engage in charcoal pig iron production, small/medium steel mills, and support fuel wood plantations (Sec. 3.1)
- Engage/encourage private sector in reforestation, industrial forestry through stumpage sale system (Sec. 3.2)
- Ensure stable market for natural resource-based products by coordinating production/marketing activities or engaging in production/marketing (Sec. 3.3)
- Promote investment in natural resource-based industries by providing financial, technical, management support (Sec. 3.4)
- Conduct research and development on natural resource-based products (Sec. 3.5)
- Engage in production and marketing of minor forest, aquatic, marine products (Sec. 3.6)

Powers of NRDC
- General powers under Corporation Law (Sec. 4)
- Acquire and dispose lands necessary for NRDC purposes as determined by the President and approved by Board of Directors (Sec. 4.1)
- Promulgate rules and regulations necessary for attaining objectives (Sec. 4.2)
- Enter into contracts with any person, firm, corporation, Philippine/foreign government (Sec. 4.3)
- Form, establish, operate subsidiaries, divisions, units necessary for furthering purposes (Sec. 4.4)
- Enter into joint ventures, profit sharing arrangements with entities worldwide (Sec. 4.5)
- Obtain funds to support objectives, invest idle funds in authorized government depository banks (Sec. 4.6)
- Arrange financing/credit assistance from government/private sources, domestic/international (Sec. 4.7)
- Secure obligations by guarantee, pledge, mortgage, charge, lien on NRDC property (Sec. 4.8)
- Guarantee loans/debts issued by subsidiaries and companies engaged in natural resource-based product business (Sec. 4.9)
- Accept/grant donations from/to any entity, private/government, domestic/foreign (Sec. 4.10)
- Acquire equipment, raw materials, supplies by purchase/lease/rent, contract services/projects with/without bidding (Sec. 4.11)
- Exercise power of eminent domain as necessary (Sec. 4.12)

Board of Directors
- Composed of Ministers and heads of government agencies (Sec. 5)

Powers and Functions of the Board
- Prescribe and amend By-Laws (Sec. 6.1)
- Formulate policies, plans, projects, rules and regulations (Sec. 6.2)
- Direct management, operations and administration (Sec. 6.3)
- Create committees/positions, fix salaries/allowances/honoraria (Sec. 6.4)
- Fix term of office of Board members and officers (Sec. 6.5)
- Submit annual report to the President (Sec. 6.6)
- Exercise other necessary powers to accomplish objectives (Sec. 6.7)
- Delegate powers and functions to officers (Sec. 6.8)

Management
- Headed by a President appointed by the Board of Directors (Sec. 7)
- Other officer positions may be created by the Board (Sec. 7)

Powers and Duties of the President
- Prepare agenda for Board meetings, submit proposed policies (Sec. 8.1)
- Recommend, execute and administer approved policies (Sec. 8.2)
- Represent NRDC in dealings with government/public/private entities (Sec. 8.3)
- Exercise other powers delegated/vested by the Board (Sec. 8.4)

Capitalization
- Authorized capital stock of ₱500,000,000 divided into 5 million shares at ₱100 par value (Sec. 9)
- Entire amount subscribed by National Government, paid up per project funding approved by Budget Minister (Sec. 9)
- ₱1,000,000 immediately released to start operations (Sec. 9)

Tax Exemptions for 10 Years
- Exempt from taxes, duties, fees under Tariff and Customs Code (Sec. 10.1)
- Exempt from income taxes, franchise taxes, realty taxes to national/local government (Sec. 10.2)
- Exempt from import duties, taxes on imported goods for operations (Sec. 10.3)
- Exempt from taxes, duties, fees on petroleum products used (Sec. 10.4)
- Donations, contributions to NRDC exempt from taxes and deductible from donor's income (Sec. 10)

Auditor
- Audited by corporate auditor appointed by Commission on Audit and approved by Board (Sec. 11)
- Subsidiaries audited by independent CPAs selected by Board (Sec. 11)

Separability Clause (Sec. 12)
Effectivity - Immediate effect (Sec. 13)