Reorganizing The National Development Company And Establishing A Revised Charter Therefor

Case Overview and Summary

Presidential Decree No. 1648

Reorganizing the National Development Company and Establishing a Revised Charter Therefor

- Declaration of Policy (Section 2)
• The State shall promote economic development through assistance to commercial, industrial, agricultural or mining ventures.
• The State may undertake vital projects on its own or in joint venture with the private sector when necessary.

- Corporate Existence (Section 3)
• The National Development Company (NDC) shall have a term of 50 years, renewable for another 50 years.
• A subsidiary called "NDC Holdings Company" is created to which existing personnel and assets of NDC may be transferred.

- Powers and Functions of NDC (Section 4)
• NDC shall have general powers provided in the Corporation Law and other necessary powers. (Section 4)
• It can engage, invest, extend loans/guarantees, or enter joint ventures in commercial, industrial, mining, agricultural enterprises for economic development. (Section 4.1)
• It can hold public agricultural and mineral lands in excess of areas permitted to private entities. (Section 4.2)
• It can acquire, hold, mortgage, alienate personal and real property. (Section 4.3)
• It can make contracts and arrangements for development, exploitation, operation of its land/mineral holdings and industrial enterprises. (Section 4.4)
• It can contract loans, issue bonds, mortgage/pledge properties as security. (Sections 4.5-4.7)
• It can purchase, hold, alienate shares/bonds of other corporations. (Section 4.8)
• It can exercise ownership rights including voting rights of shares owned. (Section 4.9)
• It can guarantee domestic/foreign loans of incorporated companies including subsidiaries. (Section 4.10)
• It can purchase bonds of companies engaged in desirable development projects. (Section 4.11)
• It can enter into contracts with/without public bidding for development projects. (Section 4.12)
• It can exercise the right of eminent domain. (Section 4.13)
• It can invest in ASEAN projects. (Section 4.14)
• It can organize subsidiary companies. (Section 4.15)
• It can hold public lands including logged over areas allocated by the President. (Section 4.16)
• It can determine its organizational structure, salaries, establish/reorganize offices, and separate employees with gratuity benefits. (Section 4.17)
• It can adopt and use a corporate seal. (Section 4.18)

- Public Lands Availability (Section 5)
• For NDC's priority projects certified by the President, the Bureau of Lands and Bureau of Forestry shall make available public land without delay.
• NDC's agricultural plantation projects certified as priority shall have preferential rights over logged over areas.

- Governing Body (Section 6)
• NDC shall be governed by a Board of Directors composed of the Minister of Industry as Chairman, Minister of Finance, Minister of Energy, Chairman of Development Bank of the Philippines, NDC General Manager, and two private sector representatives appointed by the President.

- Capital Stock (Section 7)
• NDC shall have a capital stock of 10 Billion Pesos subscribed by the National Government.
• NDC's existing assets may be revalued and reflected in its capitalization.
• NDC's existing liabilities due to the National Government are converted as capital.

- Duties and Responsibilities of the Chairman (Section 8)
• Prepare agenda, submit policies/measures to the Board.
• Execute, administer and implement Board-approved policies.
• Direct and supervise NDC's operations and administration.
• Represent NDC in dealings with government and other entities.
• Exercise other powers vested by the Board.
• The above powers may be delegated to the General Manager.

- Issuance of Tax-Exempt Bonds (Section 9)
• NDC can issue tax-exempt and government-guaranteed bonds to finance its operations upon recommendation of the Minister of Finance and approval of the President.

- Auditor (Section 10)
• The Commission on Audit shall appoint an Auditor for NDC, subject to Board approval.
• NDC subsidiaries registered with SEC shall be audited by independent CPAs approved by the Board.

- Compensation Law (Section 11)
• For compensation purposes, NDC shall be considered a government financial institution like the Central Bank and Development Bank of the Philippines.
• NDC shall be subject to the same regulations as government financial institutions for P.D. No. 985 and civil service requirements.

- Foreign Loans (Section 12)
• NDC can contract foreign loans, credits, indebtedness from foreign governments, international financial institutions, or other entities.
• The Philippine government can guarantee NDC's foreign loans and obligations.
• The guarantee amount can exceed the limit set by Republic Act No. 6142.

- Government Financial Institutions and Guarantees (Section 13)
• Government financial institutions other than Central Bank, GSIS and SSS shall give preference to NDC's loans.
• They can guarantee NDC's transactions, undertakings or obligations.

- Privileges and Incentives (Section 14)
• NDC subsidiaries registered with SEC shall be entitled to incentives and privileges granted to private enterprises.
• They shall not be subject to GSIS, leave absences, retirement privileges, regular working hours, and other government employee benefits.

- Appropriations (Section 15)
• Funds needed for NDC's additional capitalization are appropriated from the General Funds.

- Reports (Section 16)
• NDC shall submit an annual report to the President within 3 months after fiscal year end.
• It shall also submit other periodic reports as required.

- Separability Clause (Section 17)
• If any provision is held unconstitutional, other provisions shall not be affected.

- Repealing Clause (Section 18)
• All laws, decrees, orders, rules inconsistent with this Decree are repealed, amended or modified accordingly.

- Effectivity (Section 19)
• This Decree shall take effect immediately.