I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers in me vested by the Constitution, in order:

1. To integrate Government and private sector efforts and resources for a planned development and balanced growth of the Sab-A Basin in the Province of Leyte, as proposed in its 1975-1979 development program, through the combined and harmonized pursuit of entrepreneurial and social objectives on a self-sustaining basis;
2. To reclaim swamps, wastelands and drain waterlogged areas to minimize the scourge of schisto-somiasis and fasciolasis both endemic in the area;
3. To develop a food basket within the Province of Leyte and Region VIII by increasing agricultural productivity; and
4. To provide a model for the development of agricultural estates.

do hereby decree and order:

ARTICLE I. — Creation, Jurisdiction, Purposes and Powers

SECTION 1. Body Corporate Created. — For the purpose of carrying out and effecting the general objectives declared herein, there is hereby created a body corporate to be known as the Leyte Sab-A Basin Development Authority, hereinafter referred to as the Authority, which shall be organized by the President of the Philippines within three months from the effectivity of this Decree. The Authority shall execute and exercise all the functions and powers herein vested, as well as those vested by general law to juridical persons, in such a manner as will, in its Judgment, aid to the fullest extent the successful carrying out of the aims and objectives set forth hereinbelow.

SEC. 2. Territorial Jurisdiction. — The territorial jurisdiction of the Authority shall, without prejudice to established and pre-existing private proprietary rights, encompass all the lands, timber, vegetation, minerals and waters within the municipalities of Alang-Alang, Barugo, Palo, San Miguel, Sta. Fe and Babatñgon; that portion of the Municipality of Jaro covering the barrios of Parasan, Sarisari, Badiang, Villa Paz, Sta. Cruz, Pangi, San Roque Macanip, Batog, Alahag, Malobago, Buri Sagoahan, Buena-vista, Poblacion, Olatan, Caglawan and Bukid; and all the forestlands, timberlands, pasturelands and reforestation areas in the City of Tacloban. The lands herein embraced shall be referred to as the Basin.

The Directors of Lands is hereby directed to demarcate the metes and bounds of the territorial domain of the Authority in terms of geodetic longitude and latitude and/or by degrees and minutes reckoned in relation to a principal meridian traversing an initial reference point established in the City of Tacloban. This demarcation and description shall properly segregate all the public lands and waters within the identified boundaries.

All disposable public lands, within the area are hereby transferred and conveyed to the Authority and title thereto shall forthwith be issued by the Director of Lands to the Authority according to law. Additionally, the Authority is granted preventive jurisdiction over timber and mineral lands within the Basin to the end that the same may not be disposed of as favor of users or converted to agricultural, administration as timber or mineral lands, without the Authority's prior recommendation and the approval of the President of the Philippines.

All fees, rentals and charges and revenues derived from the exploitation, development, conservation and utilization of natural resources within the area shall pertain to the Authority.

SEC. 3. Principal Office. — The Authority shall establish its principal office within the Basin. It may set up branch offices in such other places as may be authorized by the Board of Directors.

SEC. 4. Purposes. — The Authority shall have the following purposes:

1. To undertake and continuously update a comprehensive survey and inventory of the physical and natural resources, problems and opportunities in the province of Leyte, more particularly those of the Sub-A Basin as delineated and described in Section 2, to provide the officials of the Province of Leyte and managers of the Authority up-to-date and accurate data and information for the most economic and socially beneficial development projects of the province and of the Basin;
2. To provide the manpower capabilities and facilities by extending the necessary planning, management and technical assistance to existing and prospective investors in the Basin, the Province of Leyte or elsewhere;
3. To arrange for and negotiate with the proper bodies and institutions, whether Governmental or private, domestic or foreign, and/or directly provide guaranty, venture or debt financing, technical support, or other form of assistance or service, to any entity, enterprise or project organized, operating or habitually engaged in substantial trade, with or within the Basin;
4. (d) To pass upon all plans, programs and projects within the Basin proposed by the national, provincial and municipal governmental agencies, public corporations and private enterprises where such plans, programs and/or projects are related to the development of the Basin as envisioned in this Decree. The Authority shall determine whether such plans programs and/or projects need its approval, modification or implementive supervision and where the Authority makes a decision in this respect, its decision shall be conclusive and final upon the parties concerned.
5. To engage in all projects and enterprises, whether in the agricultural, mining, forestry, fishery, commercial, industrial or service lines: Provided, That such projects or enterprises are located or doing substantial business in the Basin; for this purpose, whether by itself or in joint venture or cooperation with private persons or entities, to organize, finance, invest in the operate subsidiary corporations;
6. To plan, program and undertake the readjustment, relocation, resettlement of populations within the Basin as may be deemed necessary for the attainment of the objectives of this decree. A suitable relocation site will be developed for the residents thus displaced;
7. To undertake and/or provide social benefit services, works and facilities to and for the inhabitants of the Basin, particularly in the containment of endemic diseases to humans and animals, and in the creation of opportunities for gainful employment, housing, education and wholesome recreation for such inhabitants;
8. To dredge and otherwise undertake works on waterways, irrigate, inundate, dry or fill up natural water basins, and to undertake reclamation projects, as may be necessary to accomplish the aims and purposes of the Authority; and
9. To control and regulate the use of lands, rivers, waterfalls, springs and lakes in the Basin.

SEC. 5. Powers and Functions. — The Authority shall have the following powers and functions;

1. To have perpetual succession in its corporate name;
2. To sue and be sued;
3. To adopt, alter and use a corporate logo, seal arid/or emblem;
4. To adopt, amend and repeal its by-laws;
5. To enter into contracts of any kind and description to enable it to carry out its purposes and functions under this Decree;
6. To acquire, lease or hold real property and personal property as it deems necessary or convenient in the successful prosecution of its business, and may lease, mortgage, sell, alienate, or otherwise dispose of such personal and real property held by it, but may not dispose any of its real properties under conditions which would limit its developmental control over the area herein defined; and/or dispose of its capital assets for delivery or use outside of the Province of Leyte without the approval of the Governor, or outside of the Philippines without the approval of the President of the Philippines;
7. To exercise the power of eminent domain in the name of the Republic of the Philippines;
8. To adopt and implement measures designed to protect the life, liberty and properties of persons within the Basin: Provided, That such measures are approved by the President of the Philippines;
9. To perform prior screening functions, as a condition precedent to the approval by any national, provincial or municipal governmental agency, of any permit, license, lease, franchise or concession for the operation of any business or the exploitation, development or utilization of natural resources within the Basin;
10. To arrange and negotiate with the private landowners within the Basin, for the lease or other use of trancts of land required for extensive mechanized cultivation by private corporations;
11. To grant loans to farmers' cooperatives, implementing development projects previously approved by the Authority, subject to applicable requirements of law on the matter;
12. To negotiate and enter into management and/or consulting contracts with local and/or foreign management consulting firms for the management of the Authority and/or the planning and implementation of agro-industrial development projects in the Basin. Moreover, the Authority shall also have the power to effect advance payment of the stipulated fees;
13. To avail of the expertise of any particular employee, technician, or group of persons in any bureau, office or department of the National Government whose services are deemed urgently needed for the attainment of the goals of the Authority, with the consent and approval of the department head concerned;
14. To conduct scientific experiments, investigation and research to discover economical and practical methods of increasing agro-industrial production and other related endeavors;
15. To encourage and organize by arranging appropriate financing schemes, cooperative ventures in agriculture, agri-business, industry and commerce;
16. To arrange and negotiate on behalf of the Province of Leyte and for the Republic of the Philippines for local and/or foreign financing of projects undertaken by the Authority subject to the approval of the Governor of the province or the President of the Philippines as the case may be;
17. To engage in agro-industrial and business activities including the organization and/or financing of rural or cooperative banks;
18. To make such regulations as are necessary to execute the powers and functions vested in it by this Decree; and
19. To do such other things as are directly or indirectly necessary, incidental or conducive to the attainment of the objectives of this Decree.

ARTICLE II. — Capitalization Sourcing and Application of Funds

SEC. 6. Capital structure. — The authority shall have two (2) capital funds: (I) a Capital fund for Operations; and (II) a capital fund for Social Services.

1. The authorized Capital Fund for Operations shall be devoted primarily to the pursuit of profit-making or self liquidating (i.e. at least "break-even") projects, and shall be dealt with, accounted for and liquidated in case of dissolution in the same manner as the capital stock of an ordinary private commercial corporation. It shall have a maximum authorized capital of one hundred million pesos (P100,000,000.00) divided into one million shares with a par value of one hundred pesos (P100.00) per share.
2. The Capital Fund for Social Services shall be administered as a trust for investment, the income from which, but not the principal, shall be devoted to the financing of social benefits and/or public services to inhabitants of the area, such as but not limited to medical, dental and hospitalization services, construction of civil works and public infrastructure within the Area, free education and scholarship benefits, athletic and recreation facilities; and other free services and basic scientific research. The Capital Fund for Social Services shall be invested in fixed income securities in the money and capital markets or in the shares of stocks of corporations which have continuously paid dividends on such shares during the last preceding three years. The Capital Fund for Social Services shall consist of funds contributed from sources mentioned in Section 8. Upon the dissolution of the Authority, the remainder of the trust corpus and its income shall accrue to the General Fund of the Republic of the Philippines.

SEC. 7. Subscriptions to Capital Fund for Operations. — Of the one million shares of the Capital Fund for Operations, the following shall be alloted, taken up and/or paid for by the following subscribers as follows:

		SUBSCRIPTION IN P000
				Subscribed		Paid up		%
	National Government		20,000		5,000		888.7
	Province of Leyte		1,000		330		4.4
	City of Tacloban		550		251		2.3
	Municipalities:
		Palo	250		35		1.1
		Alang-Alang	250		35		1.1
		Barugo	125		15		0.6
		San Miguel	125		15		0.6
		Sta. Fe	75		5		0.4
		Babatngon	75		5		0.4
		Jaro	75		5		0.4
			_______		_______		______
			22,525		5,660		100

For the purposes of this Decree, municipalities, cities and provinces are hereby authorized to subscribe, own, buy or hold shares of stock of the Authority.

The total paid-up requirement shall be remitted to the treasury of the Authority upon its organization, with the National Government advancing the full requirement of five million six hundred sixty thousand pesos (P5,660,000) for and in its own behalf and that of the Province of Leyte, City of Tacloban and the municipalities of Alang-Alang, San Miguel, Sta. Fe, Palo, Barugo, Babatngon and Jaro. Yearly thereafter, for a period of four years, the National Government shall on each anniversary date of the organization of the Authority, advance to the Treasury of the Authority, for and in its own behalf and that of the local Governments concerned, one fourth of the balance of the total subscriptions until the whole subscription has been fully paid up. For this purpose, the necessary funds are hereby set aside and appropriated.

Beginning the sixth year of the Authority's operations, and every year thereafter up to the fifteenth year, the National Government shall liquidate its aforesaid advances by means of withholding, from the respective Internal Revenue allocation of each local government concerned, one-tenth of the full amount of paid-up subscription which the National Government may have advanced for each of the local governments mentioned.

Whenever demanded by the operation of the Authority, the Board of Directors may direct the public offering or private placement of the unissued shares of the Authority to private investors: Provided, That the total number of shares offered to private investors at any one time shall not exceed one-third of the total subscriptions of the Government in the Authority. Such offering may be made at such price and terms as the Board of Directors may at the time consider to be fair and reasonable.

SEC. 8. Participations in the capital fund, for social services. — The corpus of Capital Fund for Social Services shall consist of grants, endowments and bequests from, the Government, the private sector, foreign governments, and international institutions and foundations. All Social Services shall be exempted from gift, estate and inheritance taxes, and shall be fully deductible from the taxable income of the grantor.

The Capital Fund for Social Services shall be administered as a true trust fund, and shall for all legal purposes be invested with the attributes of a trust or estate subject to separate accounting and with capacity to borrow for and in its own behalf and account. The management of the fund may be turned over to a banking institution, investment house, or trust company at the discretion of the Board of Directors. From time to time, the Board of Directors shall specify that a mandatory portion of the income of the trust fund shall be ploughed back into the corpus (or principal) of the Fund to enlarge the investment base and compound its earning capacity.

ARTICLE III. — DIRECTORATE, MANAGEMENT AND PERSONNEL

SEC. 9. Board of Directors. — The powers of the Authority shall be vested in and exercised by a Board of Directors, hereinafter referred to as the Board, which shall be composed of at least five but not more than eleven members with the Provincial Governor of Leyte as Chairman, or his duly authorized representative to sit as member in his absence; the administrator of the Authority as Vice-Chairman; and the Provincial Agriculturist of Leyte, the President of the Visayas State College of Agriculture, and the President of the Leyte Federation of Farmers Cooperatives and members; and up to six other members elected every five years by the private shareholders, if there be such shareholders, to represent their interest in the Board. Unless otherwise required by the President of the Philippines, a person elected as director need not hold a qualifying share of stock in the Authority.

SEC. 10. Powers and Duties of the Board of Directors. — The Board of Directors shall have the following powers and duties:

1. To prescribe, amend and repeal rules and regulations governing the manner in which the general business of the Authority shall be conducted;
2. To appoint and fix the compensation of the Administrator, Deputy Administrators for Agricultural Development, Administration and Budget, Cooperative Management and Agri-business, and to create such other offices and appoint their incumbent as may be necessary from time to time;
3. To remove, suspend or otherwise discipline for cause, by a majority vote of all the members, any officer of the Authority;
4. To approve the budget of the Authority; and
5. To do such acts and perform such functions as are germane to the purposes as enumerated in Section 2 of this Decree.

SEC. 11. Administrator — Qualifications. — There shall be an Administrator who shall be a citizen of the Philippines with demonstrated executive competence and experience in the field of public administration, public infrastructure management or the management of industrial or commercial enterprises. Notwithstanding the foregoing and the other provisions of this Section, the management of the Authority may by Board Resolution contract the services of a firm of professional managers to manage the affairs of the Authority.

SEC. 12. Tenure of office of administrator. — The Administrator shall be appointed by the President upon recommendation of the Board of the Authority. The Administrator shall hold office at the pleasure of the appointing power. He shall receive an annual compensation set by the Board which in no case shall be less than P35,000 per annum: Provided, That he shall establish his residence within the basin area and shall reside therein during the entire tenure of his office.

SEC. 13. Powers and duties of the administrator. — The Administrator shall have the following powers and duties:

1. To submit for consideration of the Board such recommendation for policy formulation which he deems necessary to carry out the plans of the Authority;
2. To direct and manage the affairs and business of the Authority in consonance with the policies promulgated by the Board;
3. To submit for the approval of the Board the budget of the Authority;
4. To execute and administer the policies and measures approved by the Board;
5. To hire the personnel below officer level necessary for the attainment of the goals of the Authority and fix their compensation;
6. To remove, suspend, or otherwise discipline for cause, any subordinate employee of the Authority;
7. To delegate such authority as may be properly delegated: Provided, That such delegation is in writing, copies of which shall be furnished the Board;
8. To submit within ninety (90) days after the close of each fiscal year an annual report to the President of the Philippines through the Board; and
9. To perform such other duties as may be lawfully assigned to him by the Board.

SEC. 14. Other Officers, Tenure of Office and Compensation. — The Vice-Chairman of the Board shall act as Chairman in the absence of the latter.

There shall be a Board Secretary appointed by the Board upon recommendation of the Provincial Governor of Leyte. The Secretary shall receive an annual compensation set by the Board, charged against the annual budget of the Authority and in no case shall be less than P24,000 per annum.

SEC. 15. Effect of Vacancies. — Vacancies in the Board as long as there shall be three members in office shall not impair the powers of the Board to execute the functions of the Authority.

SEC. 16. Vacancy before expiration of term. — Any member appointed or elected to fill a vacancy in the Board occuring prior to the expiration of the term for which his predecessor was appointed shall serve only for the unexpired period.

SEC. 17. Disqualification. — No ex-officio member of the Board shall directly or indirectly engage in the practice of any profession or business which may be affected by, or related to, the exercise of the Authority's functions and powers.

SEC. 18. Prohibition against "conflict of interest". — No ex-officio member of the Board shall be financially interested, directly or indirectly, in any contract entered into by the Authority during his term of office.

SEC. 19. Quorum Board Meetings. — Three members of the Board in office shall constitute a quorum to transact business of the Authority. The Board shall meet at least once every month or more frequently as may be necessary to perform its duties, and shall be convoked by the chairman or upon written request signed by at least three of the members.

SEC. 20. Per Diems and Allowances. — Each member of the Board shall receive a per diem fixed by the President for actual attendance in meetings.

SEC. 21. Merit system. — All persons employed by the Authority shall be selected on the basis of merit and fitness in accordance with a merit promotion plan of the authority and approved by the Civil Service Commission, except positions that are policy-determining, highly technical and primarily confidential. However, the Authority may, by agreement, secure such services as it may deem necessary from other agencies of the National Government, and may make arrangements for the compensation of such services. The Authority may also employ and compensate, within appropriations available therefore, such consultants, experts, advisers or assistants on a full or part-time basis as maybe necessary, without subjecting these to WAPCO regulations.

ARTICLE IV. — FINANCE, ACCOUNTS, BUDGET AND AUDITS

SEC. 22. Start-up Funds. — For the start-up requirements of the Authority, there is hereby appropriated annually for two (2) years, in addition to the sum mentioned in Section Six, the amount of five hundred thousand pesos (P500,000.00). Beginning the third year, the Board shall, pursuant to a budget approved by it and submitted by the Administrator, authorize the expenditure of equity or leverage funds from the sources mentioned in Section Six pursuant to the guidelines and parameters established in said section.

SEC 23. Power to Issue Bonds. — Whenever the Board deems it necessary, the Capital Fund for Operations and/or the Capital Fund for Social Services may by resolution be authorized to incur indebtedness, and for this purpose float and issue bonds to carry out the provisions of this Decree. The resolution allowing either or both Capital Funds to incur indebtedness shall properly indicate the funds liable therefor, and the bond instruments, prospectuses, documents, and other flotation shall carry appropriate notices of this indication for the benefit of the public and other parties dealing with the Authority. The Capital Fund for Operations may guaranty or assume indemnity or suretyship obligations in respect of the indebtedness of the Capital Fund for Social Services with the approval of two-thirds of the entire Board. The Capital Fund for Social Services may not, however, guaranty or assume indemnity or suretyship obligation in respect of the indebtedness of the Capital Fund for Operation without the pines, a person elected as director need not hold a qualifying of bond issues or loans backed up by or secured for the Capital Fund for Social Services shall, unless otherwise specified in the covering deed or prospectus, form part of the corpus of the trust and shall be utilized solely for investments according to the provisions of Section Six, the income from which but not the principal shall be available for expenditure for social benefit projects in the Basin. Donations, grants, bequests or loans to the income portion of the trust shall be expendable directly for social or public service projects.

SEC. 24. Bond Features, etc. — The Board shall prescribe the form, rates of interest, the denominations, maturities, negotiability, convertibility, call and redemption features, tax exemption of interest, if desired, authority for which is hereby given, and all other terms and conditions of issuance, underwriting, placement, sale, servicing, and payment of all bonds issued by the Authority. The Bonds issued by virtue of this Decree may be made payable both as to principal and interest in Philippine currency and any readily convertible foreign currency.

SEC. 25. Government Guarantee. — The Republic of the Philippines hereby unconditionally guarantees the payment by the Authority of both the principal and interest of bonds, debentures, notes, drafts or such other evidence of indebtedness issued by the Authority by virtue of this Decree, and shall pay such principal and interest in the event that the Authority fails to do so. In case the-Authority shall be unable to pay the said principal and interest, the Secretary of Finance shall pay the amount thereof appropriated out of any funds in the National Treasury, and thereupon, to the extent of the amount so paid. The Government of the Republic of the Philippines shall succeed to all the rights of the holders of such bonds, debentures, notes, drafts or other evidence of indebtedness.

SEC. 26. Exemption from Taxes. — The Authority and its subsidiaries shall be exempt from all taxes, licenses fees, and duties incidental to their operation to the following extent:

1. With respect to all transactions, properties and effects pertaining to or attributable to the Capital Fund for Operation, except income which shall be gradually taxable at corporate sales to the following extent:

% of Income Subject to tax		Period Into Operation
—	...........................................................	1st to 2nd years
25	...........................................................	3rd to 4th years
50	...........................................................	5th to 6th years
75	...........................................................	7th to 8th years
100	...........................................................	9th year onwards

2. With respect to all transactions, properties, effects accruing, pertaining or attributable to subsidiaries, to the extent allowed to pioneer enterprises registered under Republic Act No. 5188, as amended, otherwise known as the Investments Incentives Act.

SEC. 27. Performance Budgetting. — The budgets of the Authority shall be performance budget which estimate target revenues and expenses for a given budget period. The same shall therefore not provide inflexible expenditure allocations but shall serve as a tool for gauging efficiency and effectiveness of the management staff of the Authority in attaining the objectives of the Authority with the most profit possible to the Capital Fund for Operations, and the maximum social benefits to Basin residents with the least cost to the Authority.

SEC. 28. Auditing Requirements. — The Auditor General shall appoint a representative, with the necessary personnel, who shall be the Auditor of the Authority. The number of positions and the salaries of such Auditor and personnel under him shall be determined by the Auditor General, subject to the concurrence of the Board. In case of disagreement, the matter shall be submitted to the President of the Philippines for resolution. The salaries and all other expenses in maintaining the Auditor's office shall be borne by the Authority.

SEC. 29. Report. — All financial transactions of the Authority shall be audited in accordance with law, administrative regulations, and the principles and procedures applicable to corporate transactions. A report of audit for each fiscal year shall be submitted to the Board by the Auditor within sixty (60) days after the close of the fiscal year, furnishing copies thereof to the President of the Philippines, the Auditor General and the Governor of Leyte. The report shall set forth the scope of the audit and shall include a statement of surplus or deficit analysis and a statement of income by sources and application of funds. It shall also include such comments and/or recommendations with respect to any impairment of Capital noted in audit showing specifically any program, undertaking expenditure or other financial transactions made and/or conducted without authority of law.

ARTICLE V. — Relocation

SEC. 30. Relocation of Affected Parties. — The Authority shall simultaneously with its development program, set aside a substantial portion of the public lands in its jurisdiction and relocate tenants and small landowners affected by mechanization or displaced by development, kaingeros and squatters within the Basin, dynamite fishermen residing in the city and municipalities involved and landless squatters in the City of Tacloban, under such terms and conditions specified by the Authority.

ARTICLE VI. — Woodlands and Nature Recreation Area

SEC. 31. Multipurpose Woodland and Nature Recreation Reservation. — The forested areas along the municipalities of Palo, Sta. Fe, Alang-alang, Babatñgon, San Miguel, and Tacloban City, comprising approximately 12,500 hectares presently being surveyed by the Bureau of Forest Development, the metes and bounds of which, will likewise be demarcated by the Bureau of Lands, is hereby declared the Leyte Multi-purpose Woodlands and Nature Recreation Reservation Area which shall be developed and maintained by the Bureau of Forest Development for sports, hunting, fishing, wildlife activities, nature observation, scientific and educational tours, bird watching, camping and mountain climbing. A start-off fund of TWO HUNDRED FIFTY THOUSAND PESOS (P250,000.00) is hereby appropriated for this purpose. The yearly appropriation of which shall be included in the budget for the Department of Natural Resources.

ARTICLE VII. — Miscellaneous Provisions

SEC. 32. Terra. — The Authority shall exist for a term of fifty (50) years, subject to extension by the President of the Philippines.

SEC. 33. Repealing Clause. — All acts, decrees, executive orders, administrative orders, rules and regulations which are inconsistent with the provisions of this Decree are hereby repealed or modified accordingly.

SEC. 34. Construction of this Decree. — If any part or section of this Decree shall be declared unconstitutional, such declaration shall not invalidate the other provisions thereof.

SEC. 35. Effectivity. — This Decree shall take effect immediately.

Done in the City of Manila, this 26th day of December, in the year of Our Lord, nineteen hundred and seventy-four.