3 
13!' Congress of the Republic 
) 
of the Philippines 
1 
First Regular Session 
) 
S E N A T E  
1147 
S. No. 
Introduced by Senator Aqziilino Q. Pirnentel, Jr. 
EXPLANATORY NOTE 
The proposed bill seeks the crkation of the Mindanao Development 
Corporation, abolishing for this purpose the Southern Philippine Development 
Administration created under Presidential Decree No. 690, as amended. 
Our 1987 Constitution, specifically Section 1 of Article XI1 mandates the 
State to promote industrialization based on sound agricultural development and 
agrarian reform. Thus, in the pursuit of this goal, all sectors of the economy and 
all regions of this country shall be given opportunity to develop. Optimum 
opportunity for development can be achieved with the creation of a government 
corporation equipped with the necessary governmental support and technical 
expertise to draw up the necessary framework for socioeconomic growth of the 
region comprising Mindanao, Sulu and Palawan, considering the strategic 
importance of the said areas in terms of location and natural wealth. This 
coinpreliensive and detailed plan designed to promote the region's rapid social 
and economic development must be in consonance with the policies set forth by 
the National Economic Development Authority. 
' 
Thus, accelerated economic growth and sustained development of the 
region is a response towards "national solidarity with the leadership, support 
and total commitment of the government." 
In view of the foregoing, approval of the proposed bill is earnestly 
recommended. 


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Introduced by Senator qqziilino Q. Pimentel, Jr. 
AN ACT 
CREATING 
THE 
MINDANAO 
DEVELOPMENT 
CORPORATION, 
PRESCRIBING 
ITS 
POWERS, 
FUNCTIONS 
AND 
DUTIES, 
AND 
APPROPRIATION OF FUNDS THEREFOR 
Be it enacted bit the Senate and House of Representatives of the Philippines in Congress 
assenzbied: 
- 
CHAPTER I 
CREATION AND ORGANIZATION OF CORPORATION 
SECTION 1. m. - This Act shall be known as "Mindanao Development 
Corporation act of 2004." 
SECTION 2. Declaration of Policy. - It is hereby declared to be the policy 
of the State to foster the accelerated and balanced growth of the Mindanao, Sulu 
and Palawan 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 ground-breaking industrial and agricultural 
enterprises; coordinating or integrating the diverse efforts of the various public 
and private entities directly engaged in implementing plans and projects 


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affecting power, manufacturing, mining, transportation and communication, 
conservation, resettlement, education, extension work, health and other activities 
leading to the rapid socioeconomic growth of the region; and extending or 
facilitating the extension of financial, management an4 technical support to 
worthwhile industrial and commercial ventures within the region. 
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SECTION 3. Mindanno Developineizt Corporation. - There is hereby 
created a body corporate to be known as the Mindanao Development 
Corporation, hereinafter referred to as the Corporation, which shall be organized 
within sixty days after tlie approval of this Act and shall exist for fifty years. The 
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corporation shall execute the powers and functions herein vested and conferred 
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upon it in such manner as will, in its judgment, aid to the fullest possible extent 
in carrying out the aims and purposes set forth below. 
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SECTION 4. Illcorporation. - The members of the Board of Directors first 
appointed shall be deemed tlie incorporators and the incorporation shall be held 
to have been effected from the date of the first meeting of such Board. 
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SECTION 5. Location qf Principal Office. - The Corporation shall 
maintain its principal office at a convenient place within the region, but it may 
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have branch offices in other places as are necessary for the proper conduct of its 
business. After tlie selection of the location of its principal office, or in the event it 
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later makes a change in such location, the Corporation shall publish notice of 
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such selection or change in the Ofiicial Gazette. 
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CHAPTER I1 
PURPOSES 


SECTION 6. Purposes. - The Corporation shall have the following 
purposes: 
a) To make a comprehensive survey of the physical and natural 
resources and potentialities of the region, inchding its social 
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conditions, values and institutions, and special regional problems and, 
on the basis thereof, to draft a comprehensive and detailed plan 
designed tu promote the region’s rapid social and economic 
development along the, general lines set forth by the National 
Economic Development Authority: Provided, That the said plan shall 
first be referred to the President who shall act upon it within a period 
of three months from the date of submission; 
b) To provide the machinery for extending tlie necessary planning, 
inanagement and teclmical assistaixce to prospective and existing 
investors in the area; 
c) To make recommendations to the proper agencies on the peso or 
dollar financing, technical support, physical assistance and, generally, 
the level of priority to be accorded industrial and agricultural projects 
soliciting or requiring direct help from or through the government or 
any of its instrumentalities; 
d) To coordinate and/or integrate 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 Corporation so as to make 
possible the accelerated and balanced development of tlie region 
within the context of the guidelines formulated by the National 
Economic Development Authority; for this purpose, to set up a 
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compact and well-trained staff for effective liaison and consultation or 
joint planning and/ or iinplementation with such government and 
private entities”: Provided, That disputes involving jurisdiction 
between the Corporation and any department, bureau, office, agency 
or instrumentality of the government within the area covered by this 
Act, and those arising in the coordiiiation or integration of 
government plans, projects, or operations in the area shall be settled 
by the President of the Philippines; 
e) To engage in industry, agriculture, or other enterprises within the 
region wlzich may be necessary or directly contributory to the 
socioeconomic development of tlie region and, for this purpose, 
whether by itsell or in cogperation with private persons or entities, to 
organize, finance, invest in, and operate subsidiary corpora tion when 
such an agreeineiit is clearly necessary to implement the powers 
granted to it by this Act: Provided, That the Corporation shall engage 
only in those activities as are in the nature of pioneering ventures or 
are demonstrably beyond tlie scope, capacity, or interest of purely 
private enterprise due to considerations of geography, tcclinical or 
capital requirements, returns on investment and risk; 
f) 
To advise and cooperate in the readjustment, relocation or 
resettleinent of population in any part of the country tliat may be 
displaced or affected by the socioeconomic measures of tlie 
government in cooperation with the national, provincial city and 
municipal agencies organized to wards that end; 
g) To inalte a report aimually to the National Economic Development 
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Authority and the Congress through the President, based up011 its 
continuing assessment and evaluation, in light of the Corporation’s 


approved plails and objectives, of tlie progress of its activities 
including those done in collaboration with the various government 
and private entities engaged in the implementation of socioeconomic 
plans and projects in the region, including in such report, among 
other items, a general survey of the social and economic conditions of 
tlie region, socioeconomic problems having special reference to the 
work of the Corporation, 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. 
CHAPTER 111 
CORPORATE POMrERS 
SECTION 7. Powers and Functions. - Except as otherwise specifically 
provided in this Act, the Corporation shall have the following powers and 
functions: 
a) To succeed in its corporate name; 
b) To sue and be sued in such corporate name; 
c) To adopt, alter, and use a corporation seal, which shall be judicially 
noticed; 
d) To make contracts of any kind and description to enable it to discharge 
its functions under this Act; 
e) To adopt, amend and repeal its by-laws; 
f) To acquire, lease, or hold such personal and real property as it deems 
necessary or coiivenieiit in the transaction of its business and lease, 
mortgage, sell, alienate, or otherwise dispose of any such personal and 


real property held by it, but it not sell its properties and products for 
delivery or use outside of the Philippines without the approval of the 
President; 
g) To hold agricultural lands in excess of the areas permitted to private 
’ corporations or associations by the Constitution; 
11) To exercise the right of eminept domain in the name of tlie 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, and thereupon all such real estate shall 
be entrusted to the Corporation as the agent of the Republic of the 
Philippines to accomplish the aims and purposes of this. Act; 
i) To make such regulations as are necessary to execute the power and 
functions vested in it by this Act; 
j) To borrow funds from any local . or foreign financial institution 
independent of the bonds it has issued or may still issue, to finance its 
projects: Provided, That the total loan outstanding pursuant to this 
provision shall not exceed three hundred inillion pesos at any one 
time; 
k) To purchase, hold, alienate, mortgage, pledge, or otherwise dispose of 
the shares of the capital stock, or any bond, security, or other evidence 
of indebtedness created by any other corporation or Copartnership of 
this or any other country, and while the owner of said stock, to 
exercise all the rights of ownership, including the right to vote thereon; 
1) For carrying on its business, or for tlie purpose of attaining or 
furthering any of its objectives, to perform any and all acts which a 
corporation, copartnership, or natural person is authorized to perform 
under the laws now existing or which may be enacted hereafter. 


CHAPTER IV 
CAPITALIZATION AND FINANCING 
SECTION 8. Capitalization, - The Corporation shall have an authorized 
capital of five hundred million pesos (@500,000,000.00) which shall be fully 
subscribed by the Republic of the Philippines and sliall be paid out as follows: 
a) . The sum of Fifty million pesos (P50,000,000.00), 
which is hereby 
authorized to be appropriated out of any general fund in the National 
Treasury not otherwise appropriated, and from proceeds of bond 
issues, loans and from any other sources of income of the National 
Government, upon approval of this Act; 
b) The sum of Fifty million pesos (~50,000,000.00) for every fiscal year 
thereafter for a period of nine years, from the same sources mentioned 
in paragraph (a) hereof, which is hereby au tlmrized to be appropriated 
and to be included in the General Appropriations Acts for such 
subsequent years beginning with tlic fiscal year 2002-2003. The 
authorized capital of Five hundred million pesos (P500,000,000.00) 
sliall constitute a revolving fund for the purpose of financing its 
business transaction, except as herein provided for. 
SECTION 9. Opeuatifzx 
- Expefzses. - For tlie operating expenses of the 
Corporation in fiscal year 2002-2003, the sum of 
ten million pesos 
(@10,000,000.00) is hereby authorized to be appropriated out of any general f uiid 
in tlie National Treasury not otherwise ayproyriated. For the succeeding fiscal 
years, the Board of Directors may appropriate out of tlie Corporation’s paid-in- 
capital a sum not exceeding ten million pesos (@10,000,000.00) during each fiscal 


year for operating expeiises and a standing aiiiiual appropriation is hereby inade 
out of any general fuiid in the National Treasury of such sum as may be 
necessary to reimburse the Corporation of the total amount actually expended 
out of the said ten million pesos for overhead expenses at tlie end of each fiscal 
year, which reimbursement shall accrue to the revolving fund. The unexpeiided 
balance of tlie appropriation for overhead expenses at the end of each fiscal year 
shall automatically revert to the said revolving fund and whqtever earnings of 
tlie Corporation, if any, shall also accrue to the revolving fund. 
SECTION 10. 
Poruer to Issue Boutds. - Whenever the Board inay 
deem it necessary for the Corporation to incur an indebtedness or to issue bonds 
to carry out the provisions of this Act, it shall, by resolution, so declare and state 
the purpose for which the proposed debt is to be illcurred. In order that such 
resolution be valid, it shall be passed by tlie affirmative vote of at least three 
members of such Board and approved by the President of the Philippiiies upon 
the recommendation of tlie Secretary of Finance, after consultation with tlie 
National Economic Development Authority and the Monetary Board of tlie 
Central Bank. 
SECTION 11. Bond Limits. - The bonds issued under this provision shall 
in no case exceed the amount of One liuiidred million pesos (P100,000,000.00): 
Provided, That no single issue shall exceed Twenty million pesos 
(~20,000,000.00) and that 110 further issue shall be made if eighty 77er cenhrm of tlie 
immediately preceding issue is not yet sold. 
The bonds shalI be issued in such amounts as will be needed at any one 
time, taking into account the rate at whicli said bonds inay be absorbed by the 


buying public and the fund requirements of projects ready for execution, and 
considering further a proper balance between productive and non-productive 
projects so that inflation shall be Iield to tlie minimum. 
SECTION 12. Form, rntes of interest, etc. of bonds. - The Secretary of 
Finance, in consultatio~i with the Monetary Board, shall prescribe tlie form, the 
rates of interest, tlie denoininations, matui-iiies, negotiability, convertibility, call 
and redemption features and all other terms and conditions of issuarice, 
placement, salc, servicing, redemption, and paynicn t of all bonds issued under 
the authority of this Act. 
The bonds issued by virtue of this Act may be inade payable both as to 
principal and interest in Philippine currency or any readily convertibly foreign 
currency. Said bonds shall be receivable as security in any transaction with the 
Governinent in which such security is required. 
SECTION 13. Exenzgtloir from Tnx. -- 'The Corporation shall be exempt 
from all taxes incidental to its operations: Provided, That its subsidiary 
corporations shall be subject to all said taxes five years after their establishment' 
under a graduated scale as follows: twenty per ceizfurrz of all said taxes during the 
sixth year, forty per centum of all said taxes during tlie seventh year, sixty peu 
centtiin of all said taxes during the eight year, eighty per ceizfi.mz of all said taxes 
during the ninth year, and oiie hundred per cetiirrrn of all said taxes during the 
tenth year. Such exeinption sliall include any tax or fee imposed by the 
government on the sale, purchase or transfer of foreign exchange. All notes, 
bonds and debentures and other obligations issued by tlie Corporation shall be 


exempt from all taxes, both as to principal aiid interest, except inheritance and 
gift taxes. 
SECTION 14. Sinkiizg Ftiiid. - A sinking fund shall be established in such 
manner that the total aniiual contributions thereto, accrued at such rate of 
interest as may be determined by the Secretary of Finance 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 inanner as the Monetary Board 
may approve; charge all expenses of such investments to said siiilting fund, and 
credit tlie same with the interest on investments and other income belonging to 
it. 
'SECTION 15. Guarantee bzi the povertz~rteizt. - The Republic of the 
Philippines hereby guarantees tlie payment by the Corporation of both the 
principal and tlie interest of the bonds, debentures, collaterals, notes or such 
other obligations issued by the Corporation by virtue of this Act, and shall pay 
such principal and interest in case the Corporation fails to do so. In [he event that 
tlie Corporation sliall be unablc to pay the said principal and interest, the 
Secretary of Finance shall pay h e  amount thereof which is hereby authorized to 
be appropriated out of any funds in the National Treasury not otherwise 
appropriated, and thereupon, to the extent of the amounts so paid, the 
Government of the Republic of the Philippines shall succeed to all the rights of 
the holders of such bonds, debentures, collaterals, notes or other obligations 
unless the sums so paid by the Republic of the Philippilies shall be refunded by 
the Corporation within a reasonable time. 


CHAPTER V 
MANAGEMENT AND PERSONNEL 
SECTION 16. Board of Directors; Composition. - The corporate powers 
of the Corporation shall be vested in and exercised by a Board of Directors, 
hereinafter referred to as the Board, which sl?all be composed of five members 
appointed by the President with the coiisciit of 
the Coniinission on 
Appoiiztments. The President sl~all designate from among the meinbers of the 
Board its Cl-tairinan, who shall at the same time be the General Manager of the 
Corporation, notwithstanding ai-ty provision of law to the contrary. 
SECTION 17. Actiqp. Chaimzan-Gemma1 Mmtn,qer. - In case of vacancy in 
the position of the Chairman-General Manager and the President has not yet 
filled the same in accordance with the Precediiig section, or in tl-te absence or 
incapacity of the Chairman-General Manager, ihe most senior ineinber of the 
Board in length of service as meunber thereof who meets the qualifications set 
forth in Section 28 of this Act shall act as Cliairman-General Manager. 
SECTION 18. Appointment aiid Tenure. - The term of office o€ the first 
members of the Board shall expire as designated by the President at the time of 
nomination: one at the end of the second year; two at the end of tl-te fourth year; 
and two, including the Chairinan-General Manager, at the end of the sixth year 
after the approval of this Act. A successor to a member of the Board sl-tall be 
appointed in the same manner as the original inember 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 19. 
Vacancil Before ExpiratiorP of Terin. - Any member 
appointed to fill a vacancy in tlie Board occurring prior to the expiration of tlie 
terms for which his predecessqr was appointed shall serve only for the 
unexpired period. 
SECTION 20. €[feet of Vacnmies; Q i i o r i ~ .  - Vacancies in the Board, as 
long as there shall be three meiiibers in office, shall not impair the powers of the 
Board to execute tlie functions of the Corporation; three of tlie members of the 
Board in office shall constitute a quorum for tlie transaction of the business of tlie 
Board. 
SECTION 21. Qiralificntio-ns of Directors. - All members of tlie Board 
shall be natural-born citizens of the Philippines. No person shall be appointed as 
a member of tlie Board unless he be of unquestioiied integrity and familiar with 
tlie teclinical aspects of socioeconomic developmeiit. 
Economists, planners, financial and management experts and other 
technical personnel employed in other government agencies shall not be barred 
from serving as members of thc Board and receiving per d i e m  therefor: Proviried, 
That their appointment is made with the consciit of their respective chiefs of 
offices. 
SECTION 22. DisquaZification. - No meinber of tlie Board shall directly 
or indirectly engage in partisan political activities or practice any profession or 
business, which may be affected by or related to the exercise of the Corporation’s 
functions and powers. Violation of this section shall constitute a ground for 
dismissal. 


SECTION 23. Pvohibitioii a,qainst 
- 
”conflict-of-interest”. - No member of 
the Board shall be financially interested, directly or indirectly, in any contract 
entered into by the Corporation or in any special privilege granted by the 
Corporation during his term of office. Violation of this prohibition shall 
constitute a ground for dismissal. 
SECTION 24. Removal for Cause; Courtesy .Resigzation. 
- 
- A ineinber of 
the Board may be suspended or removed by the President oidy for cause. No 
member of the Board shall be required to submit a courtesy resignation at any 
time during his term of office. 
SECTION 25. Boaid Meetings. - The Board shall meet as frequently as is 
necessary to perform his duties, but shall meet at least once every month. The 
Board shall be convoked by the Chairman or upon written request signed by a 
majority of the members. 
SECTION 26. Pev Diems. - The members of the Board, except the 
Chairman-General Manager, shall receive for every meeting attended a per diem 
of five hundred pesos: Provided, That in no case will the total amount received by 
each exceed the sum of Ten thousand pesos for any one month. The Corporation 
shall reimburse members of the Board for actual expenses (including traveling 
and subsistence expenses) incurred by them in the performance of their duties. 
SECTION 27. Powers qf’ General Mana2ev. - The General Manager shall 
be the chief executive of the Corporation. As such, he shall have the following 
powers and duties: 
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a) To prepare the agenda for the incetings of the Board and to submit for 
tlie consideration thereof the policies and measures which he believes 
to be necessary to carry out the purposes and provisions of this Act; 
b) To execute and administer the policies and measures approved by the 
Board; 
c) To direct and supervise the operations and internal administration of 
the Corporation. The General Manager may delegate certain of his 
administrative responsibilities to other officers of the Corporation 
subject to tlie rules and regulations of the Board; and 
d) To exercise such other power as may be vested in him by tlie Board. 
SECTION 28. Qualifications of GeneraI Manaqer. - In addition to the 
qualificatioiis for directors set forth in Section 20 of this Act, no person shall be 
appointed General Manager uidess lie be of demonstrated executive competence 
and experienced in the field of public administration or the management of 
agricultural, industrial, or commercial enterprises. 
SECTION 29. Comvensation. - The General Manager shall receive a 
compensation of One hundred eighty five thousand pesos (P185,OOO.OO) per 
annuin which shall be charged against tlie Corporation‘s annual appropriation 
for operating expenses. 
SECTION 30. Residence RPqziiremefit. - The General Manager shall be 
required to reside in the vicinity of the Corporation’s principaI office. He shall be 
prohibited from engaging in any business, calling or profession during the whole 
period of his office. 


SECTION 31. Activities of the Corporation: Key Officials. - The activities 
of the Corporation shall be carried out under the supervision of the General 
Manager through the following administeriiig officials who will be responsible 
directly to Iiiin: 
a) An assistant General Manager who shall head the Department of 
Planning and IZescarch; 
b) An assistant General Maiidger who sliall head the program 
Implementation Department which sliall take charge of implementing 
specific projects undertaken by the Corporation; 
c) A General Counsel with the rank of department head to advise and 
represent the Corporation on legal matters, procedures, and actions; 
d) Such other officials as the Boaid of Djrectors may consider necessary 
for the efficient conduct of the Corporation's activities. 
SECTION 32. Merit Siptenr. - All officials, agents and einployees of the 
Corporation shall be selected and appointed on the basis of merit and fitness in 
accordance with a comprehensive and progressive merit system to be established 
by the Corporation immediately upon its organization and in accordance with 
Civil Service rules and regulations. The recruitment, transfer, promotion and 
dismissal of all Corporation persoimel, iiicludiiig temporary workers, sliall be 
governed by such merit system. 
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SECTION 
33. 
Appointiizent 
bz/ 
Board. - The 
Board, 
upon 
recommendation of the General Manager shall appoint division chiefs and 
officials of higher rank. 


SECTION 34. Appointi~zent btj GerreraZ M a n a e .  - Einployees and 
officials below tlie rank of division chief shall be appointed to positions in tlie 
approved budget by the General Maiiager upon written reconunendation of tlie 
head of the department concerned using as guide the standards set forth in tlie 
Corporation’s inerit system: Provided, That the .General Maiiager shall submit a 
quarterly report to the Board regarding persoiiiiel selection, placement and 
training. 
SECTION 35. Mininzunz Waxe. - All contracts mitered into by the 
Corporation which require the ernployinent of persoiis shall contain provision 
that not less than the miniinuin wage fixed by law or tlie current rate of wage of 
work of a similar nature prevailing in the vicinity where such work is to be done, 
whicliever is higher’ shall be paid to such persons so employed. 
SECTION.36. Waze 
- Disvul;e. - In the event a djspute arises as to what are 
the prevailing rates of wages for a particular work in a particdar vicinity, tlie 
question shall be referred to the Sccretnry of Labor, who shall give due regard to 
those rates which have been secured through collective bargaining by the 
representatives of employees atid employers. 
SECTION 37. Provision for Equivalent Wages. - Wliere such work as 
described in the two preceding sections is done directly by tlie authority, tlie 
prevailing rates of wages shall be paid in the same inanner a though such work 
had been let by contract. 


SECTION 38. other Bcrzefits. - As far as applicable, the benefits granted 
by existing labor laws shall extend to persons given employineiit under tlie 
provisions of this Act. 
CHAPTER VI 
MISCELLANEOUS PROVISIONS 
SECTION 39. Plans fo be fomztrlnted zu.iLhJtiut Oite Year. - Upon its 
organization, tlie Corporation sliall formulate and report to the President of tlie 
Philippines, within one year, its plans and recommendations for the accelerated 
and balanced development of the region within the context of the guidelines set 
forth by the National Economic Development Authority and in accordance with 
the aims and purposes of this Act. 
SECTION 40. Approval of Plarrs. - Upon approval by the President of the 
plans and recommendations referred to iii the next preceding section in 
accordance with Chapter 11, Section 6 (a) of this Act, lie shall direct tlie 
Corporation to implement them with dispatch and efficiency. The President shall 
issue such executive orders or proclamations as may be necessary to reserve or 
transfer such lands or public property to the Corporation as are needed by it to 
accomplish the purposes of this Act. 
SECTION 41. Coupom tiori Directhi ui~ifer 
President.. - Any provision of 
law to the contrary notwithstaiidiiig, the Corporation shall operate as an 
independent corporation subject only to supervision by the President of the 
Philippines. 


SECTION 42. Supplies and Services other than Personal. - All purchases 
of supplies or contracts for services, except for personal services, entered into by 
the Corporation, shall be done only after the proper bidding is held: Provided, 
That bidding shall not be required when: (1) an einergency, as certified to by the 
General Manager, requires immediate delivery of the supplies or performance of 
the services, or (2) the aggregate amount involved in any purchase of supplies or 
procurement of services does not exceed Ten thousand pesos (PlO,OOO.OO), in 
which case, such purchase or procurement may be inade in the usual course of 
business: Provided, further, That the Corporation’s emergency purchases of 
supplies and services shall not exceed the amount of Ten tliousand pesos 
(@10,000.00) for any one month: Pmided, finally, ’That in comparing bids and in 
making awards, the Corporation shall coiisider such factors as the cost and 
relative quality and adaptability of supplies or services; tlie bidder’s financial 
responsibility, skill, experience, integrity, and ability to furnish repairs and 
maintenance services; the time of delivery or performance offered; and the 
bidder’s compliance with the specification desired. 
SECTION 43. Auditing. - The Auditor General shall be ex officio Auditor 
in charge of the auditing office of the Corporation. He shall appoint a 
representative who shall be the auditor thereof. The Auditor General shall, upon 
recommendation of the auditor of the Corporation, appoint or remove personnel 
of the said auditing office in accordance with the Corporation’s merit system. 
The operating expenses of this office and the salaries and traveling expenses of 
these officials and employees thereof shall be fixed by the Board and paid by the 
Corporation. Such representative sl-rall render a seinestral report on the financial 
condition aid operations of tlie Corporation to the Auditor General and the 


Board. The Auditor General shall submit to the President and the Congress an 
animal report covering the financial condition and operations of tlie Corporation. 
These auditing reports sIiaI1 contain a statement of the resources and 
liabilities including earnings and expenses, the amount of paid-up capital stock, 
surplus, reserves and profits, as well as losses, bad debts and such other facts 
which under auditing rules and regulations, are considered liecessary to 
accurately describe the financia1 condition and operations of the Corporation: 
Provided, That before such reports are made, the Corporation shall be given 
reasonable opportunity to examine the exception and criticisms of the auditor of 
tlie Corporation or the Auditor General, as the case may be, to point out, explain 
or answer any inaccuracies tlierein, if any, and to file a statement wliich sliall be 
appended by the Auditor of the Corporation and lhe Auditor General in their 
respective reports. 
SECTION 44. AboZiEion of Existing 
- A,qencij. - The Southern Philippine 
Development Administration created under Presidential Decree No. 690, as 
amended, is hereby abolished and all its appropriations, assets and liabilities as 
of the date of the approval of this Act are hereby transferred to the Corporation 
to be effected within a period of sixty (60) days after the constitution of the Board 
of Director: Pmuided, That all the qualified civil service einployees of the 
Southern Philippine Developinent Adininistration shall be given preference in 
tlie filling up of positions in tlw Corporation. 
All outstanding contracts of the Southern Philippine Developinent 
Corporation with other agencies and/ ot instrumentalities of the governinelit or 
those with private entities are assumed by tlw Corporation. 


SECTION 45. Gratuitzi. - An employee of officer of the Southern 
Philippine Development Administration not selected nor appointed by the 
Corporation or who reEuses such appointment shall be paid tlie money value of 
his accurriulated vacation and siclc leave, and such retirement gratuity as may be 
due him under existing retirement laws. Any of the employees and laborers who 
do not qualify under any existing retirement law shall be paid one inonth salary 
for every year of service, payable in lump sum. For this purpose, there is hereby 
authorized to the appropriated out of any funds in the National Treasury not 
otherwise appropriated, tlie sum of Five million pesos (~5,000,000.00) to provide 
for their separation gratuities, accumulated vacation and sick leaves and/ or 
retirement payable and due them. 
SECTION 46. Transfer of Appropriation, Power, Ftiiictions, etc. of the 
National Development Corporation. - Upon the effectivity of this Act, the 
management, authority, arid supervision of all projects situated in Miiidanao, 
Palawan and Sulu, whether finished or unfinished, belonging to the National 
Development Corporation, including its employees, balances of appropriations, 
funds, equipment, records and supplies, as well as all its assets and outstanding 
obligations, are hereby transferred to, assuined or absorbed by the Mindanao 
Development Corporation. 
SECTION 47. Separabilihl Clause. - The provisions of this Act are hereby 
, declared to be separable, arid in tlie event any one or more of such provisions are 
held unconstitutional, they shall not affect the validity of other provisions. 


SECTION 48. Laws Repealed. - All acts, charters, executive orders, 
administrative orders, rules and regulations, or parts thereof in conflict with this 
Act are hereby repealed or modified accordingly. 
SECTION 49. Effectivity. - This Act shall take effect fifteen days after its 
publication in two national newspapers of general circulation.. 
Approved,