WHEREAS, it is a declared policy to promote and accelerate the socio-economic growth and development of the Mindanao region;

WHEREAS, in pursuance of such policy there is an urgent need to strengthen and extend over-all support to the Mindanao Development Authority to enable it to meet the implementation requirements of its expanding programs and activities in its area of responsibility;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution as Commander-in-Chief of all the Armed Forces of the Philippines and pursuant to Proclamation No. 1081 dated September 21, 1972, and General Order No. 1 dated September 22, 1972, as amended and in order to effect the desired changes and reforms in the social, economic and political structure of our Society, do hereby order and decree as follows:

SECTION 1. Section 1 of Republic Act numbered thirty hundred and thirty-four is hereby amended to read as follows:

"SECTION 1. Declaration of policy. — It is hereby declared to be the policy to foster the accelerated and balanced growth of the Mindanao and Sulu region, hereinafter referred to as the region, within the context of national plans and policies for social and economic development, through the leadership, guidance and support of the government. To achieve this end, it is recognized that a government corporation should be created for the purpose of drawing up the necessary plans for regional development; providing leadership in the setting up of pioneering or groundbreaking industrial and agricultural enterprises; coordinating or integrating the diverse efforts of the various public and private entities directly engaged in implementing plans and projects affecting power, manufacturing, mining transportation and communication, conservation, resettlement, education, extension work, health and other activities leading to the rapid, socio-economic growth of the region; and extending or facilitating the extension of financial, management and technical support to worthwhile industrial and commercial ventures within the region.

SEC. 2. Section 5, Subsections (a), (d), (e), (f) and (g) of the said Act are hereby amended to read as follows:

"SEC. 5. Purposes.—The Authority shall have the following purposes:

1. To make a comprehensive survey of the physical and natural resources and potentialities of the region, including its social conditions, values and institutions, and special regional problems and, on the basis thereof, to draft a comprehensive and detailed plan designed to promote the region's rapid social and economic development along the general lines set forth by the National Economic and Development Authority.

4. To coordinate and/or integrated such projects or operations of local governments, governmental agencies, public corporations and, where clearly necessary and feasible, those of private entities, as bear directly upon the plans and activities of the Authority so as to make possible the accelerated and balanced development of the region within the context of the guidelines formulated by the National Economic and Development Authority; for this purpose, to set up a compact and well-trained staff for effective liaison and consultation or joint planning and/or implementation with such government and private entities: Provided, That disputes involving jurisdiction between the Authority and any department, bureau, office, or agency or instrumentality of the government within the area covered by this Act, and these arising in the coordination or integration of government plans, projects or operations in the area shall be settled by decisions of the President of the Philippines.
5. To engage in industry, agriculture or other enterprises within the region which may be necessary or directly contributory to the socio-economic development of the region and, for this purpose, whether by itself or in cooperation with private persons or entities, to organize, finance, invest in, and operate subsidiary corporations when such an arrangement is clearly necessary to implement the powers granted to it by this Act: Provided, That the Authority shall engage only in those activities as are in the nature of pioneering ventures or are demonstrably beyond the scope, capacity, or interest of purely private enterprises due to consideration of geography, technical or capital requirements, returns on investments, and risks : Provided, further, That the Authority may undertake and/or invest in social and/or invest in social and/or service-oriented projects upon the prior approval of the President, on recommendation of the National Economic and Development Authority [NEDA].
6. To advise, cooperate in and, if necessary, to undertake by itself the readjustment, relocation or resettlement of population in any part of the country that may be displace or affected by the socio-economic measures of the government in cooperation with the national, provincial, city and municipal agencies organized towards that end.
7. To make a report annually to the National Economic and Development Authority and the President, based upon its continuing assessment and evaluation, in the light of the Authority's approved plans and objectives, of the progress of its activities, including those done in collaboration with various government and private entities engaged in the implementation of socio-economic plans and projects in the region, including in such report, among other items, a general survey of the social economic conditions of the regions, socio-economic problems having special reference to work of the Authority, a comparison of the development targets set for the year ending and the manner in which actual accomplishments measure up to such targets, and appropriate administrative and legislative recommendations.

SEC. 3. Section 6, Subsections (f) and (h) of the same Act are hereby amended to read as follows:

"SEC. 6. Power, functions, eminent domain, etc. — Except as otherwise specifically provided in this act, the Authority-shall have the following powers and functions:

* * * * * * *

6. To acquire, lease, or hold such personal and real property as it deems necessary or convenient in the transaction of its business and may lease, mortgage, sell, alienate or otherwise dispose of any such personal and real property held by it.

8. To exercise the right of eminent domain in the name of the Republic of the Philippines, and in the acquisition of real estate by condemnation proceedings, the title to such real estate shall be taken in the name of the Republic of the Philippines, but thereafter the title to all such real estate shall be transferred to the Authority by presidential decree or proclamation to accomplish the aims and purpose of this Act.

SEC. 4. Section 7, Subsection (c) of the same Act is amended to read as follows:

"SEC. 7. Capitalization. — The Authority shall have an authorized capital of three hundred million pesos (P300,000,000) which shall be fully subscribed by the Republic of the Philippines and shall be paid out as follows:

3. In case the Authority shall undertake social and/or service-oriented projects as provided under Section 5 (e) of this Act, the Board of Directors may appropriate out of the Authority's revolving fund such amounts as may be necessary to prosecute the said projects. The National Government shall reimburse the authority for such expenses actually incurred in the prosecution of such projects which reimbursement shall accrue to the authority's revolving fund.

SEC. 5. Section 8 is hereby reapealed in its entirety and a new provision to be known as Section 8 is hereby inserted which shall read as follows:

"SEC. 8. Operating Expenses.—For the operating expenses of the authority, the Board of Directors may appropriate out of the authority's revolving fund a sum not exceeding two million pesos during the fiscal year. A standing annual appropriation of two million pesos is hereby authorized to be appropriated in the General Appropriations Act for the current fiscal year, which amount shall be used to reimburse the authority of the total expenses actually incurred out of the two million pesos for operating expenses during the preceding fiscal year, which reimbursement shall accrue to the revolving fund. The unexpended balance of the appropriation for operating expenses shall automatically revert to said revolving fund at the end of each fiscal year and whatever net income of the authority, if any, shall also accrue to the revolving fund. However, the Board of Directors may appropriate, in addition to the two million pesos operating expenses herein authorized, such amount as may be necessary to augment the operating expenses of the authority: Provided, That such additional appropriation shall be subject to the approval of the President, upon the recommendation of the National Economic and Development Authority.

SEC. 6. Section 9 of the same act is amended to read as follows:

"SEC. 9. Power to issue bonds. — Whenever the Board of Directors may deem it necessary for the Authority to incur an indebtedness or to issue bonds to carry out the provisions of this Act, it shall, by resolution, so declared and state the purpose for which the proposed debt is to be incurred. In order that such resolution be valid, it shall be passed by the affirmative vote of at least three members of such Board and approved by the President of the Philippines upon the recommendation of the National Economic and Development Authority, after consultation with the Monetary Board of the Central Bank.

SEC. 7. Section 21 of the same Act is amended to read as follows:

"SEC. 11. Form, rates of interest of bonds, etc. — The National Economic and Development Authority, in consultation with the Monetary Board, shall prescribe the form, the rates of interest, the denominations, maturities, negotiability, convertibility, call and redemption features, and all other terms and conditions of issuance, placement, sale servicing, redemption, and payment of all bonds issued under the Authority of this Act.

The bounds issued by virtue of this Act may be made payable both as to principal and interest in Philippine currency or any readily convertible foreign currency. Said bonds shall be receivable as security in any transactions with the Government in which such security is required.

SEC. 8. Section 12 of the same Act is amended to read as follows:

"SEC. 12. Exemption from tax. — The Authority shall be exempt from all taxes, fees, imports and duties of whatever nature, whether national, provincial, city or municipal, incidental to its operations: Provided, That its subsidiary corporations shall likewise be exempt from all said taxes, fees, imports and duties: Provided, further, That in the event the Authority shall have transferred control or ownership of such subsidiary corporation to the private sector, the same shall be subject to all said taxes after said transfer. All notes, bonds and debentures and other obligations issued by the Authority shall be exempt from all taxes, both as to principal and interest.

SEC. 9. Section 13 of the same Act is amended to read as follows:

"SEC. 13. Sinking Fund. — A sinking fund shall be established in such manner that the total annual contributions thereto, accrued at such rate of interest as may be determined by the National Economic and Development Authority in consultation with the Monetary Board, shall be sufficient to redeem at maturity the bonds issued under this Act. Said fund shall be under the custody of the Central Bank of the Philippines which shall invest the same in such manner as the Monetary Board may approve; charge all expenses of such investments to said sinking funds, and credit the same with the interest on investments and other income belonging to it.

SEC. 10. Section 15 of the same Act is amended to read as follows:

"SEC. 15. Board of Directors Composition. — The corporate 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 seven members appointed by the President. The President shall designate from among the members of the Board its Chairman: Provided, however, That the President may, in the interest of the service, designate the General Manager as Acting Chairman of the Board.

SEC. 11. Section 16 of the same Act is amended to read as follows:

"SEC. 16. Acting Chairman. — In case of vacancy in the position of Chairman and the President has not yet filled the same in accordance with the preceding section, or in the absence or incapacity of the Chairman, the most senior member of the Board in point of length of service as member thereof who meets the qualifications set forth in Section 27 of this Act shall act as Chairman.

SECTION 12. Section 17 of the same Act is hereby amended to read as follows:

"SEC. 17. Appointment and Tenure.—The term of office of the first members of the Board shall expire as designated by the President at the time of appointment: one at the end of the second year; two at the end of the fourth year; and two, including the Chairman, at the end of the sixth year after the approval of this Act. A successor to a member of the Board shall be appointed in the same manner as the original members and shall have a term of office expiring six years from the date of the expiration of the term for which his predecessor was appointed.

SECTION 13. Section 25 of the same Act is amended to read as follows:

SEC. 25. Per diems. — The members of the Board shall receive for every meeting attended a per diem of two hundred and fifty pesos; Provided, That in no case will the total amount received by each exceed the sum of one thousand pesos. Members of the Board shall be reimbursed by the Authority for actual expenses (including travelling and subsistence expenses) incurred by them in the performance of their duties."

SEC. 14. Section 26 of the same Act is hereby amended to read as follows:

"SEC. 26. The General Manager shall be nominated by the Board and appointed by the President. As such, he shall have the following powers and duties:

1. To prepare the agenda for the meetings of the Board and to submit for the consideration thereof the policies and measures which he believes to be necessary to carry out the purposes and provisions of this Act;
2. To execute and administer the policies and measures approved by the Board:
3. To direct and supervise the operations and internal administration of the Authority. The General Manager may delegate certain of his administrative responsibilities to other officers of the Authority subject to the rules and regulations of the Board; and
4. To exercise such other powers as may be vested in him by the Board.

SEC. 15. Section 28 of the same Act is amended to read as follows:

"SEC. 28. Compensation. — The General Manager shall receive a compensation of forty-eight thousand pesos per annum which shall be charged against the Authority's annual appropriation for operating expenses:

1. In case of vacancy in the position of General Manager and the President has not yet filled the same in accordance with Section 26 of this Act, or in the absence or incapacity of the General Manager, the Board may designate an Acting General Manager. In the meantime, the most senior department head in point of length of service as such in the authority shall act as General Manager and he shall receive the compensation fixed for the General Manager.

SEC. 16. Section 30 is hereby amended to read as follows:

"SEC. 30. Activities of the Authority; key officials. — The activities of the Authority shall be carried out under the supervision of the General Manager, through the following administrative officials who will be responsible directly to him:

1. An Assistant General Manager who shall head a Department of Planning and Research.
2. An Assistant General Manager who shall head a Program Implementation Department which shall take charge of implementating specific projects undertaken by the Authority.
3. A General Counsel who shall head the Legal Department to advise and represent the Authority on legal matters, procedures, and actions.
4. An Assistant General Manager who shall head a Finance Department which shall develop and implement plans and programs for the effective, efficient and economical utilization of the Authority's financial resources, and advise the General Manager on matters relating to finance.
5. An Assistant General Manager who shall head an administrative services department which shall plan, direct and supervise such administrative services as supply and records management, secretariat, duplicating, security, transportation, and building maintenance and repair, and develop and administer sound practices for personnel administration and advise the General Manager on all personal matters.
6. Such other officials as the Board of Directors may consider necessary for the efficient conduct of the Authority's activities.

SEC. 17. Section 31 of the same Act is amended to read as follows:

"SEC. 31. Merit System. — All officials, agents, and employees of the Authority shall be selected and appointed on the basis of merit and fitness in accordance with a comprehensive and progressive merit system to be established and administered by the Authority immediately upon its organization and in accordance with Civil Service rules and regulations. The recruitment transfer, promotion, and dismissal of all Authority's personnel, including temporary workers, shall be governed by such merit system.

SEC. 18. Section 32 of the same Act is amended to read as follows:

"SEC. 32. Appointment by Board. — Department heads shall be appointed by the Board, upon recommendation of the General Manager.

SEC. 19. Section 33 of the same Act is amended to read as follows:

"SEC. 33. Appointment by General Manager.— Employees and officials below the rank of department head shall be appointed to positions in the approved budget by the General Manager upon written recommendation of the head of the department concerned using as guide the standard set forth in the Authority's merit system: Provided, That the General Manager shall submit a quarterly report to the Board regarding personnel selection, placement and training.

SEC. 20. Section 37 of the same Act is amended to read as follows:

"SEC. 37. Other Benefits. — As far as applicable, the benefits granted by existing laws shall extend to persons given employment under the provisions of this Act.

SEC. 21. Section 40 of the same Act is amended to read as follows:

"SEC. 40. Authority under the National Economic and Development Authority. — Any provision of law to the contrary notwithstanding, the Authority shall operate as an independent corporation subject only to the supervision by the National Economic and Development Authority.

SEC. 22. Section 41 of the same Act is amended to read as follows:

"SEC. 41. Supplies and services other than personal.— All purchases of supplies or contracts for services, except personal services, shall be entered into by the Authority. In accordance with the rules and regulations prescribed and promulgated by the Board, subject to the approval of the President on recommendation of the National Economic and Development Authority.

SEC. 23. Section 42 of the same Act is hereby repealed entirely and a new provision to be known as Section 42 is inserted which shall read:

"SEC. 42. Auditing. — The Auditor General shall act as ex-officio auditor of the Authority and as such is empowered and authorized to appoint a representative who shall be the auditor thereof and fix his salary in an amount equal to the salary authorized for the first Assistant or next ranking Managing Head of the Authority. The Auditor General shall, upon recommendation of the Auditor of the Authority, appoint personnel, subject to the approval of the Board. The Personnel expenses and operating costs of his office shall be determined and paid by the Authority. Such salaries and number of auditing personnel may only thereafter be increased, diminished or altered by the Auditor General, subject to the approval of the Board, and said representative and his subordinate personnel may receive such allowances and privileges as may be authorized and approved by the Board upon recommendation of the Auditor General.

Such representative shall render an annual audit report on the financial condition and operations of the Authority to the Board thru the Auditor General. The Auditor General shall submit his annual report to the President and the National Assembly.

SEC. 24. This decree shall take effect immediately.

Done in the City of Manila, this 3rd day of December in the year of Our Lord, nineteen hundred and seventy-four.