THIRTEENTH CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
) 
First Regular Session 
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"04 Jgj 30 p2 3 4  
S E N A T E  
S. No. 
Introduced by Senator S. R. OsmeAa 111 
EXPLANATORY NOTE 
Mindanao, with its vast and largely untapped economic resources is 
rapidly becoming a symbol of the Philippines' wasted opportunities. The recent 
armed conflict in Mindanao is but a manifestation of the widespread unrest 
among the people of Mindanao after several decades of government neglect. 
Mindanao accounts for some 18'/0 of Gross Domestic Product, although it 
accounts for some 24% of employed persons. 
This bill seeks to create the Mindanao Development Authority, as the 
government agency mandated to catalyze the development of Mindanao through 
an integrated approach. 
Among the functions and responsibilities of the Mindanao Development 
Authority will be the conduct of feasibility studies for the realization of island-wide 
development initiatives such as power and railway corporations. It will coordinate 
industry, agriculture, infrastructure, communications and other enterprises of 
inter-regional character. 
It will also commence the proper and integrated 
utilization of Mindanao's resources including its navigable rivers, forest and 
timber lands. 
A piecemeal development approach promotes fragmented, if not negative 
growth. The MDA will serve as the central authority to chart a vision for Mindanao 
and coordinate all policies for a coherent, effective management approach. 
In view of the foregoing, early passage of this bill is earnestly requested. 
SERGIO OSMENA iii 
Senator 


THIRTEENTH CONGRESS OF THE REPUBLIC 
) 
“a art- 
OF THE PHILIPPINES 
) 
*&I 
JyJ 30 iQ L3-J 
First Regular Session 
1 
S E N A T E  
S. No. 
Introduced by Senator S. R. OsmeAa 111 
AN ACT 
CREATING THE MINDANAO DEVELOPMENT AUTHORITY, DEFINING ITS 
POWERS AND FUNCTIONS, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
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SECTION 
1. 
Tit/e. - This Act shall be known as the “Mindanao 
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Development Authority Act of 2004.” 
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SEC. 2. Declaration of Policy.- It is hereby declared the policy of the 
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whole; encourage greater processing of the products of its forests, mineral 
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resources, farms and waters and promote viable projects to manufacture 
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consumer goods for increased self sufficiency, while at the same time promoting 
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conservation of the ecology. To this end the Government will, in addition to 
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intrl a-regional development activities, plan and undertake or otherwise support 
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projects and programs which link Mindanao’s administrative regions with each 
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other by communications, transport, financial and commercial systems 
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SEC. 3. Creation of the Mindanao Developmenf Authority, - To help 
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implement the foregoing policy, there is hereby created a body corporate to be 
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known as the Mindanao Development Authority, hereinafter referred to as the 
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Authority, which shall be governed by the provisions of this Act. 
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SEC. 4. 
Territorial Jurisdiction. - The Authority shall cover all the 
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provinces and cities of regions 9, I O ,  11, I 2  and 13 as well as such provinces 
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and cities within the autonomous Region in Muslim Mindanao except those who 
have formally expressed their desire to be excluded therefrom. 
SEC. 5. Principal Office and Term. - The principal office of the Authority 
shall be in Davao City. It may however establish such branches, subsidiaries, 
offices or agencies as it may deem necessary to attain the objectives of this Act. 
Authority shall have a term of fifty (50) years from the effectivity hereof renewable 
for the same period unless otherwise provided by laws. 
SEC. 6. Purpose and Major Tasks. - The Authority is created to plan and 
catalyze the development of Mindanao as an integrated economy. Toward this 
end, the Authority shall: 
(I) 
Formulate plans for the socio-economic and development of 
Mindanao as a single integrated economy; 
(2) 
Conduct feasibility studies and explore sources of financing of 
priority programs and projects, whether governmental or private, that will support 
and encourage Mindanao-wide economic and social development, such as 
Mindanao Power Corporation, regional commercial banks, Mindanao railroad, 
petroleum refinery, skills and values promotion, accelerated reforestation; 
(3) 
Advocate 
to 
the 
people 
of 
Mindanao, 
to 
their 
elected 
representatives in Congress, and to central government national policies that will 
foster the integrated balanced development of Mindanao, in such policy areas as 
banking; investment and lending by GSIS, SSS and other government financing 
institutions; transport and communications infrastructure, exports of agricultural 
products, reforestation, education and skills training; 
(4) 
Integrate, prioritize and program major interregional projects 
contained in regional development plans formulated by Regional Development 
Councils and submit these directly to and for approval of the NEDA Board, where 
such projects are deemed by the Authority to affect substantially the integrated 
development of Mindanao. The NEDA Board shall expeditiously act on such 
projects submitted by the Authority within a reasonable period; 
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(5) 
Coordinate industry, agriculture, infrastructure construction and 
other enterprises of interregional character within Mindanao which may be 
necessary and/or directly contribute to the rapid socio-economic development of 
Mindanao as an integrated economy by itself or in cooperation with other 
government entities, andlor private persons or entities: Provided, That the 
authority shall directly engage only in those activities as are in the nature of 
catalytic or pioneering ventures and are demonstrably beyond the scope, 
capacity, and interest of purely private enterprises and existing government 
entities: Provided, further, That the authority shall engage only in such activities 
that are Mindanao-wide or interregional in character; 
(6) 
Formulate plans of improvement of the navigability of all the rivers 
in Mindanao and the provision of flood control; 
(7) 
Promote reforestation and proper use of marginal lands in 
Mindanao; 
(8) 
Promote investments in any field as would enhance the socio- 
economic development of Mindanao and uplift the living standards of the people 
and their socio-political activity; 
(9) 
Provide the machinery for extending the necessary planning, 
management and technical assistance to prospective and existing investors in 
Mindanao; and 
( I O )  
Coordinate and cooperate with the Autonomous Region in Muslim 
Mindanao on development projects affecting provinces and cities in the 
Autonomous Region, and on all other matters of mutual interest. 
SEC. 7. Powers and Functions. - In the exercise of those activities which 
are in the nature of catalytic or pioneering ventures, which are demonstrably 
beyond the scope, capacity and interest of purely private enterprises and existing 
government entities and are of Mindanao-wide and interregional in character, as 
a body corporate, the Authority shall have the following powers and functions: 


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(1) 
to sue and be sued, enter into contracts, acquire, purchase, hold, 
lease transfer, dispose of property of any kind or nature necessary to carry out 
the purposes of this Act; 
(2) 
to cause the reclamation of lands, including foreshore and 
submerged areas within its operation by dredging, filling or other means or to 
acquire reclaimed lands; 
(3) 
to . cause 
the 
development, 
improvement, 
acquisition, 
administration, dealing in, subdivision, disposition, leasing and selling of 
reclaimed areas and any all kinds of reclaimed lands owned, managed, 
controlled and/or operated under its jurisdiction, and to provide for such services 
as may be necessary for the efficient, economic, and beneficial utilization of the 
said properties; 
(4) 
to receive, take, and hold by bequest, devise, gift, purchase, loan, 
lease or by any lawful manner, and to manage or administer, either absolutely or 
in trust for any of its purposes, any asset, grant, or property, real or personal, 
from foreign or domestic sources, subject to such limitations as are provided in 
existing taws and regulations; and to convert such assets, grant or property; 
invest and reinvest the same under this provision and deal with the expand its 
assets and income in such manner as will best promote its objectives; 
(5) 
To acquire, purchase, alter, construct, enlarge, occupy, mortgage, 
manage and dispense by lease or sale or otherwise deal in lands and buildings 
of every kinds and character, whether belonging to or to be acquired by the 
Authority; 
(6) 
to issue such regulations as may be necessary for the proper use 
by private parties of any or all of the Authority’s properties and to impose or 
collect fees or tolls for their use; 
(7) 
to engage or invest on, or enter into joint venture with Filipino and 
foreign investors in such Mindanao-wide interregional projects as it may deem 
proper and necessary or contributory to the economic development of Mindanao; 
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(8) 
to exercise the right of eminent domain as may be necessary for 
the purpose for which the Authority is created; 
(9) 
Whenever essential to the proper transaction of its business or to 
carry out the purposes of its organization, to contract indebtedness and issue 
bonds; 
(IO) 
to acquire real estate and to construct therein dams, reservoirs, 
transmission lines, power houses, and 
other structures and infrastructure 
projects including site along the rivers or any of their tributaries; 
(1 I) to generate, distribute, and sell electric power and other forms of 
energy; 
(1 2) 
to build, operate, and transfer Mindanao-wide and interregional 
projects involving railroads, ports, highways, telephone and other transportation 
and communication systems, and to promote establishment of such projects 
through build-operate and transfer schemes; and 
(13) to review and recommend for approval by the NEDA Board such 
Mindanao-wide and interregional programs, projects and plans by national 
government agencies. 
SEC. 8. Creafion of Special Economic Zone. - The President of the 
Philippines shall create, by proclamation, Special Economic Zones, in specific 
sites in Mindanao, fixing and delimiting corresponding metes and bounds and 
subject to the mandate and limitations of the Constitution and the pertinent 
provisions of Local Government Code. 
SEC. 9. Capital Sfock. - The Authority shall have an authorized capital 
stock of One billion pesos (P1,000,000,000.00), the amount to be fully 
subscribed and paid by the National Government to be appropriated out of any 
funds in the National Treasury not otherwise appropriated. The Southern 
Philippines Development Authority is hereby abolished. All its assets and 
liabilities are hereby absorbed: Provided, That, existing liabilities of the Southern 
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Philippines Development Authority due the National Government are hereby 
converted into capital of the Authority. 
SEC. 
I O ,  Board of Direcfors and Advisory Council.- The affairs and 
business of the Authority shall be directed and is properties managed and 
preserved, unless provided otherwise in this Act, by a Board of Directors. The 
Board shall have nine (9) members with the NEDA Director-General as chairman 
and the following as members: Administrator, the five (5) chairmen of the 
Regional Development Councils of Regions 9, I O ,  11, 12 and 13 and the 
chairman of the regional planning and development board of ARMM and two (2) 
representatives of non-governmental organizations chosen by the Advisory 
Council for a terms of two (2) years. 
The Board shall receive policy guidance from an Advisory Council, 
hereinafter referied to as the Council, composed of Governors of the provinces 
and mayors of the cities covered by this Act, and not less than ten (IO) but not 
more than fifteen ( I S )  representatives from the private sector/NGOs who shall be 
chosen by majority vote of the elective members of the Council. 
The members of the Board shall have one (1) vote each. A majority of 
members shall constitute a quorum. A decisions shall, a far a practicable, be 
reached by consensus. If no consensus is reached, a decision shall be upon a 
vote of the majority of all members of the Board. 
The Board shall: 
1. 
Formulate policies, develop programs and promulgate rules and 
regulations to carry out the powers and functions of the Authority; 
2. 
Approve each year a budget to cover the operations of the 
Authority based upon; 
(a) 
Payment for the utilization of the Authority’s energy projects in the 
member-provinces and cities; 
(b) 
The annual appropriation and other funds which Congress may 
approve for the Authority; 
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3, 
Fix the compensation, emoluments, and allowances of the 
Administrator and other officers and personnel of the Authority; 
4. 
Perform such other functions as may be necessary to carry out the 
purposes of this Act. 
SEC. 'l'l. Duties and Functions of the Chairman of Board. - The 
Chairman shall: 
(?) 
Call and preside at the meetings of the Board and see to it that the 
policies, programs and rules and regulations developed and promulgated by it 
are implemented properly; 
(2) 
Present for approval by the Board: 
(a) 
(b) 
The annual budget of the Authority; 
The rules and regulations needed to carry out the provisions 
of this Act and the amendments thereto; 
(c) 
Other matters which he deems necessary or proper for the 
effective implementation of this Act; and 
(d) 
The annual report on the activities and finances of the 
Authority; copies of which upon approval by the Board and the Advisory 
Council, shall be furnished to the Office of the President of the Philippines 
and both Houses of Congress. 
(3) 
Perform such other functions which the Board on advice of 
the Advisory Council, may direct to carry out the provisions of this Act. 
SEC. 12. Organizational Structure. - The Board shall determine the 
organizational structure, staffing pattern, and pay scales subject to the Salary 
Standardization Law, of the Authority and the officers and employees thereof. 
The Board may reorganize the same and create or abolish divisions, offices, 
units, branches or agencies therein, as the exigencies of the affairs of the 
Authority may require. 
SEC. 13. Administrator. - The Board shall have an Administrator to be 
appointed by the President of the Philippines who shall be the Chief Executive 
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Officer of the Authority and ex-officio Vice Chairman of the Board with the rank of 
Presidential Assistant. 
The Administrator shall possess the qualifications of at least a degree in 
Economics or allied courses with ten (1 0) years experience in Mindanao. 
The Administrator shall have the following powers, duties and 
res po ns i b i I it ies : 
(a) 
to submit to the Board, through the Chairman, policies and 
measures which, in his judgement, are necessary to carry out the purpose and 
provisions of this Act; 
(b) 
(c) 
to prepare the budget of the Authority for approval of the Board; 
To execute and administer the policies and measures approved by 
the Board; 
(d) 
To direct and supervise the operations and internal administration 
of the Authority. He may delegate certain administrative responsibilities to other 
officers of the Authority subject to the rules and regulations of the Board; 
(e) 
to appoint all employees of the Authority except the heads of 
departments and divisions whose appointments shall be made by the Board 
upon his recommendation; and to remove, dismiss or otherwise discipline for 
cause, such employees in accordance with the standard guidelines for 
recruitment, employment, and discipline of personnel which shall be formulated 
by the Board; 
(f) 
to represent the Authority in all dealings with other offices, 
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agencies, and instrumentalities of the Government and with all persons and 
(9) 
subject to the approval of the Board to determine the rates of 
compensation, allowances, honoraria, and such other additional compensation 
which the authority is hereby authorized to grant its officers, technical staff, and 
consultants including the necessary detailed personnel; 
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(h) 
to exercise such other powers as may be granted to him by the 
Board. 
SEC. 
14. Power to lssue Bonds. - Whenever the Board deems it 
necessary for Authority to incur an indebtedness or to issues bonds to carry out 
the provisions of this Act, it shall, by resolution, so declare and state the 
purposes for which the proposed debt in to be incurred. 
In order that such resolution be valid, it shall be passed by the affirmative 
vote of at least a simple majority of all members of the Board, affirmed by the 
Advisory Council, and approved by the President of the Philippines upon the 
recommendation of the Secretary of Finance, after consultation with the National 
Economic and Development Authority and the Monetary Board of the Central 
Bank of the Philippines. 
SEC. 15. Sinking Fund. - A sinking fund shall be established by the 
Authority in such manner that the total annual 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 the provisions of 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, charging all expenses of such 
investment of said sinking fund, and crediting the same with the interest on 
investments and other income accruing thereto. 
SEC. 16. Foreign Loans. - The Authority is hereby authorized to contract 
loans, credit and indebtedness, in any convertible foreign currency or capital 
goods from time to time from foreign governments or any international financial 
institutions or fund sources. 
SEC. 17. Audifor. - The Chairman of the Commission on Audit shall be 
ex officio Auditor in charge of the audit of the Authority. He shall appoint a 
representative who shall be the auditor thereof. The Chairman of the 
Commission on Audit (COA) shall, upon recommendation of the Auditor of the 
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Authority, appoint or remove personnel of the said auditing office in accordance 
with the Authority’s merit system. The operating expenses of this office and the 
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salaries and travelling expenses of the officials and employees thereof shall be 
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fixed by the Board and paid by the Authority. Such representative shall render a 
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semestral report to the Chairman of the Commission on Audit and the Board 
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which shall furnish copies thereof to all members of the Advisory Council. The 
Chairman of the COA shall submit to the President of the Philippines and the 
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Congress an annual report covering the financial condition and operations of the 
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Authority. 
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These audit reports shall contain a statement of the resources and 
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liabilities including earnings and expenses, the amount of surplus, reserves and 
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profits as well as losses, bad debts and such other facts which under auditing 
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rules and regulations are considered necessary to accurately describe the 
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financial conditions and operations of the Authority: Provided, That before such 
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reports are made, the Authority shall be given reasonable opportunity to examine 
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the exceptions and criticisms of the auditor of the Authority or the Chairman of 
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the COA as the case maybe, to point out, explain or answer any inaccuracies 
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therein, if any, and to file a statement which shall be appended by the Auditor of 
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SEC. 18. Merit System. - All officials and employees of the Authority 
the Authority and the Chairman of the COA in their respective reports. 
The Authority shall publish annually its financial statements. 
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shall be selected and appointed on the bases of merit and fitness in accordance 
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with the comprehensive and progressive merit system to be established by the 
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Authority immediately upon its organization in accordance with Civil Service Law, 
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rules and regulations. Their qualifications being equal, long time residents of 
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Mindanao shall be preferred in recruiting Authority staff. The recruitment, 
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transfer, promotion, and dismissal of all its personnel including temporary 
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workers shall be governed by such merit system. 
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SEC. 19. Donations and Gifts. - The Authority shall have the right to 
receive donations or bequests which shall be utilized only for the implementation 
of the programs and projects of the' Authority: Provided, That programs and 
projects of the Authority financed by foreign grants of financial assistance with 
national security implications shall be approved the same if it fails to act on the 
request from the Authority for such approval within thirty (30) days from receipt 
thereof. Any such donations or bequests shall be exempt from the payment of gift 
taxes and the full amount of such donations or bequests shall be deductible from 
the gross income of the donor for the year during which the same is made. 
SEC. 20. Applicabilify offhe Corporation Law. - The provisions of the 
Corporation Law, as amended insofar as they are not inconsistent with this Act, 
shall be applicable to the operations of the Authority. 
SEC. 21. Abolifion of the Southern Philippines Developmenf Authority. - 
The Southern Philippines Development Authority (SPDA) offices outside the 
autonomous region created under Presidential Decree No. 1703, amending P. D. 
No. 690 are hereby abolished. All its budgetary appropriations, finances 
properties, records, rights equipment, chooses in action, and other assets as well 
as liabilities and accountabilities are hereby transferred to the Authority. The 
existing qualified SPDA personnel covered by Civil Service Law and rules and 
regulations shall be absorbed by the Authority. However, due to a larger scope of 
functions of the Authority, these personnel shall undergo training and take 
examinations for reorganization purposes. 
The Authority shall approve and prescribe its new staffing pattern and 
prescribe the authorized positions created there under. The same shall be filled 
with regular appointments in accordance with Civil Service Laws, rules and 
regulations. Those incumbents whose positions are not included therein or who 
are not re-appointed shall be deemed separated from the service or retired under 
existing laws and regulations. 
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SEC. 
22. Appropriations. - Such sums, in addition to the customary 
appropriations for the SPDA, as may be necessary for the continued operation of 
the Authority shall be included in the Annual General Appropriations Act. 
SEC. 23. Separabilify Clause. - Should any provisions of this Act be 
declared invalid or unconstitutional, any provision not affected thereby remain in 
full force and effect. 
SEC. 24. Repealing Clause.- Presidential Decree No. 690, as amended, 
is hereby repealed. All other laws, decrees, orders, rules and regulations and 
other issuances or parts thereof inconsistent with this Act are hereby repealed or 
modified accord i rig ly . 
SEC. 25. Effectivity. - This Act shall take effect upon its approval and 
publication in two (2) newspapers of general circulation in Mindanao and the 
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entire country. 
Approved , 
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