Republic of the Philippines
Congress of the Philippines
Metro Manila
Nineteenth Congress -
First Regular Session

House Bill No, 1972

Introduced by Rep. Juan Fidel Felipe F. Nograles
Fourth District
Province of Rizal

ecology i

EXPLANATORY NOTE

‘The 1987 Constitution provides for the people’s right to a healthful and balanced

accordance with the rhythm and harmony of nature as declared in Article 2, Section

16 thereof. The goals of national patrimony and ecanomy as enshrined in Art 12 of the 1987
Constitution allows for the exploitation and developrffedt of indigenous natural resources for
the benefit of the people subject to certain regulatory controls and limitations for the greater
interest of the nation. These provisions of the Constitution, when harmonized and properly

balanced

an help the country in its quest to leapfrog from the current state and transform to

a developed country.

economi

At the forefront of our daily sustenance, utilization of our indigenous resources and

development is the longest mountain range in the country, known as the Sierra

Madre Mountain Range. It is located in the eastern side of Luzon is spanning about 500

kilomete:
the easte
6,069 feet
Cagayan,
Quezon.

from the province of Cagayan to the north and Quezon to the south lying along
in part of Luzon in the Pacific coast. With the highest peak standing at a height of
, it has a land area of approximately 1.4 million hectares covering 10 provinces of
sabela, Nueva Vizcaya, Quirino, Nueva Ecija, Aurora, Rizal, Bulacan, Laguna and

‘The continuous forest landscape with remaining tract of old-growth tropical rainforest
represents about 40% of the country’s remaining forest cover. It is considered and known as,
the “backbone of Luzon” as the mountain range with its forest cover is a natural shield and
barrier protecting the island of Luzon by attenuating the entry of typhoons coming from the
Pacific Ocean even before reaching the mainland and protecting the island from storm surges

as well.
storm in
impacts
‘Mangkh
the comm
down to
of Sierra

In 2018, the Sierra Madre had stifled what could have been the world’s strongest
2018. The massive wall of the Sierra Mountain ranges protected and averted the
of devastation to the country of Typhoon Ompong (international code name
) in September 2018 as it was able to lessen the typhoon’s wind speed and protected
yunities from the potential devastation. It was reported that Ompong’s wind slowed
60 kilometers per hour from 220 kph sustained winds after battling the mountains
fadre with super typhoon category.

<REPR TN

¥ gz
* RECEIVED


A
and Typhi
Sierra Ma

Lawin was brought down to Category

aa

couple of years back also, Super typhoon Lawin (international code name Haima)

on Karen (international code name Sarika) also hit Northern Luzon and it was the

«ire mountains that curbed the effects of an imminent disaster From Category 5,
after slamming against the mountainous east coas

of Luzon, The role and importance of the mountain range a protective barrier against tropical
cyclones was unmistakable during the onslaught of these typhoons.

7
species th
country
to the oc
species o:
reptiles, o
crowned

threatenet
portions

Areas in
marine re)
the Nort
in the ps

¢ mountain range is also an important c&rité# of biodiversity with flora and fauna
iat are unique and endemic to the Philippines. There is no other wilderness in the
fat equals the Sierra Madre. With its vast ranges that stretches from the mountains
tan, the Sierra Madre is home to hundreds of wildlife species and has at least 201
mammals, 556 species of birds, over 85 species of amphibians and 252 species of
‘which 48 percent are endemic. The wildlife includes the Philippine eagle and golden
flying fox which are unique to the Philippines. However, many of these species are
, critical, vulnerable and highly endangered. Hence, laws have been passed declaring
f the entire mountain range as Protected Areas.

‘The mountain range encompasses the greatest number of sixty-eight (68) Protected

1¢ country, including national parks, watershed forest reserves, natural monuments,
erves, protected landscapes and seascapes. The country's largest protected area is
jern Sierra Madre Natural Park (NSMNP), situated at the northern part of the range
wince of Isabela and declared and designated as a natural park under RA 9125 in

2001. However, there are areas in the Sierra Madre mountain range region that have not been

declared

Protected Areas and that may be explored and used for economic activities and

that may contribute to development. While these areas may be explored and developed, they

also need

v
Peoples (
in the are:
in Nueva’
Ecija, Nu
Norte an
Cagayan,
Caraballo,

Fe
particulad

‘some regulation and safeguards in place.

¢ Sierra Madre is also home and a sacred ground to many different Indigenous
Ps). Itis a shared territory by different indigenous peoples in several ancestral lands
. There are eleven (11) IP tribes living on Sierra Madre, namely the Agta or Dumagat
Ecija, Nueva Vizcaya, Quirino, Isabela, Aurora and Quezon; Bungkalot in Nueva
va Vizeaya, Quirino and Aurora; Isinai in Nueva Ecija, Nueva Vizcaya and Dupax
Dupax Sur; Gaddang in Nueva Vizcaya, Isabela, Quirino and Cagayan; Tbanag in
‘Nueva Vizcaya and Isabela; Itawes in Northern Cagayan; Kalahan in Southern
and Central Sierra Madge; and Yogad in Isabela.

1 the longest time in centuries, the IPs have been the protector of the Sierra Madre,
ly their ancestral lands, against different forms of threats. By tradition, the IPs and

their communities have been protecting the environment and conserving their natural

resources,

which they consider their sacred tribal ground, from land and water, to the wildlife

that thrive within them. These IPs also need protection from any external interference and

exploitati

aT
itis less d
10 millio:
of the Sie

n.

¢ Sierra Madre is also one of the major drivers of the Philippine economy. Even if
veloped as the mountain ranges are inaccessible from shore, it directly serves around
people living within and around the Sierra Madre region. ‘The bountiful resources
‘a Madre provide us with food, water, shelter, energy and protection from typhoons.



Its watershed supports the water supply in Central Luzon and Cagayan Valley, including Metro
Manila. ‘The watersheds also provide services that support major infrastructure, including
irrigation dams, water utilities and power plants that supply the areas including Metro Manila

‘The communities in the eastern part of the mountain range and along the coast are so
remote that they are only accessible by plane or boat. Despite the difficulty of access to the
region, there are still human activities that threaten the Sierra Madre mountain range like illegal
logging, timber poaching, illegal mining, conversion of forest for agriculture, migration and
human eqcroachment. Unwarranted infrastructure projects and unregulated human activities
in the area are threats to the Sierra Made that will cause further forest degradation, ruin natural
parks and protected areas, displace indigenous peoples'that result in widespread slash-and-
burn farming or kaingin. By and large, the lack of implementation of environmental protection
Jaws vis-itvis the lack of regulation for human activities in the area, contribute to the continued
forest degradation and dissipation of natural resources. ‘There is absence or lack of an adequate
law that |will provide ample protection on those underlying areas outside the declared
Protected Areas in the Sierra Mountain region.

ce, it is necessary that all areas in the Sierra Madre region are clearly delineated and
classified so that human activities are well defined to determine whether these activities will

controls. Those areas in the Sierra Madre region that can be used for economic
Iso need immediate protection and proper regulation in order to further enhance
jent and economic growth, so that the general public can reap the full benefits of the
bountiful resources.

‘Towards this end, there is a need to provide further safeguards and protection and at
the same time develop the underlying areas in the Sierra Madre region that have not been
declared 4s Protected Areas. It is important that the government strengthen its campaigns to
stop illegal logging and promote forestation, avoid construction of unwarranted
infrastructures, enhance and develop indigenous resources in the areas that can be utilized for
developnjent and providing information/ information dissemination about the importance of
the Sierra Made in our daily living.

‘This bill, therefore, proposes the creation of a Sierra Made Development Authority,
define its functions and earmark funds for its operations. Through the Sierra Madre
Development Authority, we can further strengthen not only the protection that the Sierra
Madre deserves, but a wholistic approach to enhance development of indigenous resources in
the Sierra Madre region to its fullest potentials for economic development in order to raise the
standard of living of our peole.

Thus, the immediate enactment of this measure is respectfully requested.

REI «Ail Winks,

'4" District, Rizal



Republic of the Philippines
Congress of the Philippines
Metro Manila
Nineteenth Congress
First Regular Session

1972

House Bill No.

AN ACT TO ENHANCE THE PROTECTION AND DEVELOPMENT OF THE
IERRA MADRE REGION, CREATING THE SIERRA MADRE
DEVELOPMENT AUTHORITY FOR THE PURPOSE, DEFINING ITS
POWERS AND FUNCTIONS AND PROVIDING FUNDS THEREFORE,
AND FOR OTHER PURPOSES.

CHAPTER 1
DECLARATION OF POLICY AND CREATION OF AUTHORITY

Section 1. Declaration of Policy: It is hereby declared to be the policy of Government to
promote, and accelerate the development and balanced growth of the Sierra Madre mountain
region and the surrounding areas within the context of the national and regional goals and
policies for social and economic development and to carry out the development of the Sierra
Madre region with due regard and adequate provisions for environmental management and
protection, preservation of the quality of human life and ecological systems, and the
prevention of undue ecological disturbances, deterioration and illegal activities.
Itis likewise the declared policy of the Government to enhance the benefits to be derived
from the natural and indigenous resources in order to promote the economic and social
development of the region in particular and the country in general.

Section 2. Creation of the Sierra Madre Developmént Authority. For the purpose of carrying
out and éffecting the declared policy, as provided for in Section one hereof, there is hereby
created a government comporation to be known as the Sierra Madre Development Authority,
hereinafter referred to as the Authority, which shall be organized within ninety (90) days after
the approval of this Act.

‘The Authority shall execute the powers and functions herein vested and conferred upon it in
such a manner as will, in its judgment, aid to the fullest possible extent in carrying out the aims
and purposes set forth below. This Act may be known as the Sierra Madre Protection and
Developspent Act of 2019.



Sectior

n | Purpose and Functions of the Authority

‘The Authority shall have the following purpose and functions:

(@ To make a comprehensive survey of the physical and natural resources and
tentialities of the Sierra Madre region particularly its social and economic conditions,
drologic characteristics, power potentials, scenic and tourist spots, regional
blems, and on the basis thereof, to draft a comprehensive and detailed plan
signed to conserve and utilize optimally the resources within the Sierra Madre region

to promote the region's rapid social and economic development and upon approval
the National Economic and Development Authority (NEDA) Board of such plan,

to implement the same including projects in line with said plan: Provided, ‘That
implementation of all energy resources development programs and shall require prior
masensus of the Department of Energy to ensure that such plans and programs are
‘nsistent with the national energy programs and Philippine Development Plan,
vided further, That the areas declared as Protected Areas under existing laws are
subject to the monitoring and supervision of the Authority.

) ‘To provide the machinery for extending the necessary planning, management and
technical assistance to prospective and existing investors in the region;

|
(© To make recommendation to the proper agencies on the peso or dollar financing,
technical support, physical assistance and, generally, the level of priority to be accorded
agricultural, industrial and commercial projects, soliciting or requiring direct help from
ir through the government or any of its instrumentalities;

@ To pass upon and approve or disapprove all plans, programs, and projects
proposed by local government offices /agencies within the region, public corporations,
and private persons or enterprises where such plans, programs and/or projects are
related to those of the Authority for the development of the region as envisioned in
is Act. The Authority shall issue the necessary clearance for approved proposed
lans, programs, and projects within thirty days from submission thereof unless the
proposals are not in consonance with those of the Authority or that will cause
deforestation and any adverse impacts in the region: Provided, further, That the
‘Authority is hereby empowered to institute necessary legal proceeding against any
person who shall commence to implement or continue implementation of any project,
lan or program within the Sierra Madre Region without previous clearance from the
suthority: Provided, furthermore, That any local government office, agency, public
Jorporation, private person, or enterprise whose plans, programs and /or projects have
een disapproved by the Authority may appeal the decision of the Authority to the
EDA within fifteen (15) days from receipt of such disapproval whose decision on
the matter shall be final. Reasonable processing fees as may be fixed by the Authority's
rard of Directors shall be collected by the Authority for the processing of such plans,
rograms and/ot projects: Provide, finally, ‘The expansion plans shall be considered as
‘ew plans subject to review of the Authority and to payment of the processing fees.



‘The Authority and national and local government offices, agencies and public
corporations shall coordinate their plans, programs, projects and licensing procedures
with respect to the Sierra Madre region for the purpose of drawing up a Sierra Madre
region development plan which shall be binding upon all parties concerned upon
approval of the NEDA board.

© To engage in agriculture, industry, commerce, or other activities within the region
which may be necessary or directly contributory to the socio-economic development
of the region, and, for this purposes, whether by itself or in cooperation with private
persons or entities, to organize, finance, invest in, and operate subsidiary
corporations: Provided, ‘That the Authority shall engage only, unless public interest
quires otherwise, in those activities as are in the nature of new ventures or are clearly
tod the scope, capacity, or interest or private enterprises due to consideration of
ography, technical or capital requirements, returns on investment, and risk;

) To plan, program finance/or undertake infrastructure projects such as river, flood
and tidal control works, waste water and sewerage works, dams and water supply,
ads, irrigation, housing and related works, when so required within the context of
development plans and programs including the readjustment, relocation or
settlement of population within the region as may be necessary and beneficial by the
thority: Provided, ‘That should any project be financed wholly or in past by the
thority, it is hereby authorized to collect reasonable fees and tolls as may be fixed
its Board of Directors subject to the approval of the NEDA Board from users
\d/or beneficiaries thereof to recover costs of construction, operation and
aintenance of the projects: Provided, further, That if the Authority should find it
necessary to undertake such infrastructure projects which are classified, as social
vethead capital projects as determined by the NEDA, the Authority shall be
authorized to receive financial assistance from the government in such amount as may
be necessary to carry out the said projects subject to such terms and condition that
may be imposed by the government, upon recommendation of the NEDA
Board: Provided, finally, ‘That such amount as may be necessary for the purpose is hereby
alsthorized to be appropriated out of the funds of the National Treasury not otherwise
appropriated.

‘To lend or facilitate the extension of financial assistance and/or act as surety or
itor to worthwhile agricultural, industrial and commercial enterprises;

) To require the cities and municipalities embraced within the region to pass

ropriate zoning ordinances and other regulatory measures necessary to carry out
¢ objectives of the Authority and enforce the same with the assistance of the
thority.

58

‘The provisions of existing laws to the contrary notwithstanding, to exercise water
rights over public waters within the Sierra Madre region whenever necessary to carry
out the Authority's projects;



di

Section
provided,

Undertake studies on the conservation, improvement, exploration, development
1d maintenance of the region, subject to the approval of the NEDA, which the
luthority shall carry out with the assistance and support of all national and local
ernment units involved in natural resources conservation, exploration and
-velopment.

5. Regulatory Fees, The Authority is hereby empowered to collect annual fees as
for the use of all resources for all beneficial purposes including recreation, resource

extraction, energy development and disposal of all types of wastes purposes. All the fees so

collected
forest co
be subje

shall be used for the management and development of the Sierra Madre Region, its
vers and its watershed areas: Provided, That the rates of the fees to be collected shall
to the approval of the President of the Philippines.

CHAPTER II
COPORATE POWERS
Section 6. The Corporate Powers of the Authority. ‘The Authority shall have the following powers
tions:

and functic

a)

Q)

fe

To succeed on its corporate name;

b) To sue and be sued in such corporate name;

To adopt, alter and use a corporate seal;
|

4) To adopt, amend, and repeals its by-laws;

¢) To enter into contracts of any kind and description, to enable it to carry out its
Purposes and fonctions under this Acts

‘To acquire, buy, purchase, hold or lease, such personal and real property as it deems
essary or convenient in the transaction of its business and/or in relation with
1g Out its purposes under this Act; and to lease, mortgage, sell, alienate, or
.erwise encumber, utilize, exploit or dispose any such personal and real property
eld by it, subject to prior or existing individual or communal right of private pasties
of the government or any agency or enterprise thereof.

‘To exercise the right of eminent domain whenever the Authority deems it necessary
1 the attainment of the objectives of the Authority under this Act;

‘To borrow funds from any local or foreign financial institutions independent of the

bonds it may issue or may continue to issue, to carry out the purposes of this Authority
under this Act;


')/To purchase, hold, alienate, mortgage, pledge or otherwise dispose of the shares of
the capital stock of, or any bond, securities, or other evidence of indebtedness created
by any other corporation, co-partnership, or government agencies or instrumentalities;
and while the owner of said stock to exercise all the rights or ownership, including the
tight to vote thereon; Provided, That the Authority shall not invest its funds in any
highly risky debt instruments issued without recourse to commercial banks or
investment houses as well as in any highly speculative stocks.

For carrying on its business, or for the purpose of attaining or furthering any of its
jectives, to perform any and all acts which a corporation, co-partnership, or natural
-ts0n is authorized to perform under the laws now existing or which may be enacted
fereafter.

To issue such rules and regulations as may be necessary to effectively carry out the
»wers and purposes herein provided including the plans, programs and projects of
.¢ Authority, subject to the approval of the NEDA, the same to take effect thirty (30)
days after publication thereof, in a newspaper of general circulation.

Section 7. Capitalization and Financing, ‘The Authosity shall have an authorized capital of One

Billion

¥es08 (P1,000,000,000) which may be fully subscribed by the Republic of the

Philippines; Provided, That an initial operating capital in the amount of One Hundred Million
Pesos (P100,000,000) is hereby authorized to be appropriated out of any funds in the National
‘Treasury|not otherwise appropriated.

Section 8. Openating Expenses. For the operating expenses of the Authority, the sum of One
Hundred Million Pesos (P 100,000,000) is hereby appropriated annually for five (5) years from
the genefal fund of the National Government not otherwise appropriated from the date of
approval of this Act, unless the NEDA may recommend a higher amount.

Section 9. Exemption from tax. The Authority shall be exempt from all taxes, licenses, fees, and

duties,

incidental to its operations. ‘This exemption shall extend to its subsidiary

corporation: Provided, ‘That its subsidiary corporations shall be subject to all said taxes, licenses,
fees, and duties five (6) years after their establishment under a graduated scale as follows:
twenty (20) per centum of all said taxes during the sixth year, forty (40) per centum of all said
taxes duting the seventh year, sixty (60) per centum of all said taxes during the eighth year,

eighty

centum

exchan;
exempt

)) per centum of all said taxes during the ninth year, and one hundred (100) per
f all taxes during the tenth year, after said establishment. Such examination shall

. All notes, bonds, debentures and other obligations issued by the Authority shall be
1m all taxes both as to principal and interest, except inheritance and gift taxes.

include a tax or fee imposed by the government on the sale, purchase or transfer of foreign

Section 10. Guarantee by the government. ‘The Republic of the Philippines hereby guarantees the
payment by the Authority of both the principal and the interest of the bonds, debentures,
collaterals, notes or such other obligations issued by the Authority by virtue of this Act, 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 which is hereby 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 Philippine shall succeed to all rights of the holders of such
bonds, debentures, collaterals, notes or other obligations, unless the sum so paid by the
Republic of the Philippines shall be refunded by the Authority within a reasonable time.

Section 1. Subsidiaries. The Authority shall have the power to form, establish, organize and
maintain |a subsidiary corporation or corporations. Such subsidiary or subsidiaries shall be
formed in accordance with the Philippine Corporation Law and existing rules and regulations
promulgated by the Securities and Exchange Commission, unless otherwise provided in this
Act. In all cases, the Conversion Authority shall own initially at least fifty-one per centum
(61%) ofthe capital stock of a subsidiary. The Conversion Authority shall also initially have
the majotity of the Board of Directors of the subsidiaries, of which at least one (1) director
shall be the chairman of the Conversion Authority and a second director shall be the president
of the Conversion Authority or his designated representative. Such subsidiaries shall be
exempt from the coverage of the Civil Service Laws, rules and regulations.

CHAPTER III

BOARD OF DIRECTORS

Section |12. Board of Directors: Composition. The coxporate powers shall be vested in and
exercised by a Board of Directors, hercinafter referred to as the Board, which shall be
composeld of nine (9) members, to wit: the Executive Secretary, the Director General of the
National Economic and Development Authority, the Secretary of Environment and Natural
Resources, the Secretary of Trade and Industry, the Secretary of Energy, the Chaiperson of
the National Commission on Indigenous Peoples, a Provincial Governor representing the
provinces comprising the Sierra Madre Region, who shall be designated and elected by the
ten (10) provincial Governors, a City/Municipal Mayor representing the cities/municipalities
comprising the Sierra Madre Region, who shall be designated and elected by the mayors in the
region; the General Manager of the Authority to be appointed by the President of the
Philippines, Provided, That the Executive Secretary shall be appointed as the Chairperson and

ighated Provincial Governor as Vice Chairperson. There shall be a Corporate Secretary
be appointed the Board of Directors.

ials next in rank to the above-mentioned member shall serve as permanent alternate
and shall attend meetings of the Board in the absence of their principals and receive

presided by the Chaigperson or in his/her absence, the Vice-Chairperson.

Section 14. Qurounr, Effet of vacancies. ‘The majority of the members shall constitute a quorum
and the affirmative vote the majority of the members of the Board present shall be necessary
at all times to pass or approve any act or resolution. Vacancies in the Board as long as there


shall be 4 quorum in attendance, shall not impair the powers of the Board to execute the
functions of the Authority.

Section 15. Per Diems and Allowances. The members of the Board shall receive for every meeting
attended la per diem to be determined by the Board: Provided, That in no case will the total
amount received by each exceed 50% of their basic monthly pay.

Section 16. Powers and Functions of the Board of Directors.

a{ To formulate, prescribe, amend and repeal rules and regulations to govern the
conduct of business of the Authority;

b, To appoint and fix the compensation of all officials from division heads and above,
.d others of comparable rank including the Senior Deputy General Manager and six
(6) Deputy General Managers upon the recommendation of the General Manages;

c, By a majority vote of all members of the Board, to suspend, remove or otherwise
scipline for just cause all officials appointed by the Board;

4d, To approve the annual and/or supplemental budgets of the Authority; and

¢, To do such other acts and perform such other functions as may be necessary to
carry out the provisions of this Charter.

CHAPTER IV

| MANAGEMENT AND PERSONNEL
Section 17. Powers and Functions of the General Manager. The General Manager shall be the chief
executiv¢ of the Authority. As such, he/she shall have the following powers and duties:

a, Submit for consideration of the Board the policies and measures which he believes
to be necessary to carry out the purposes and provisions of this Act:
Execute and administer the policies, plans, programs and projects approved by the
ards

c, Direct and supervise the operation and internal administration of the Authority. The
jeneral Manager may delegate certain of his administrative responsibilities to other
ficers of the Authority subject to the rules and regulations of the Board.

Appoint officials and employees below the rank of Deputy General Managers to
sitions in the approved budget upon written recommendation of the Deputy
‘eneral Managers concerned in accordance with Civil Service Rules;


f]

&

Section
General
calling o

ibmit quarterly reports to the Board on personnel selection, placement and

tmining;

‘Submit to the Office of the President an annual report and such other reports as

aie be required, including the details of the annual and supplemental budgets of the

uuthority, and
Perform such other functions as may be provided by law.
8. Residence. The General Manager shall establish his residence within the region. The

lanager shall not, dusing his term of office, engage in any business or profession or
.er than those connected in the performance of his official duties as General Manager

of the Authority.

Section 19. Adtvties of he Authorip: Key Officials. In carrying out the activities of the Authority,

the Geng

shall act

ral Manager shall be assisted by a Senior Deputy General Manager who shall have

General Manager in the absence of or during the temporary incapacity of and/or

such cre duties, and functions that may be delegated to him by the General Manager, and

until sucl

time as a new General Manager is duly appointed.

The Author shall have the following departments under the direct supervision and control

of the G

al

e

neral Manager;

An Administrative Department which shall be responsible for providing services

relating to personnel, training, information, records, supplies general services,

juipment and security;

thority in legal matters and proceedings. This department shall be responsible for
‘oviding legal advice and assistance on legal matters;

i Legal Department, to be headed by a General Counsel who shall represent the

¢

‘A Finance Department which shall be responsible for providing staff advice and

assistance on budgetary and financial matters, and safekeeping of corporate assets;

A Project Management Department which shall be responsible for the operation of

approved projects, project evaluation and management improvement matters;

¢, A Planning and Project Development Department which shall be responsible for

wwiding services relating to planning, programming, statistics and project
lopment; and

{An Engineering and ‘Technical Department which shall be responsible for providing

se

vices relating to detailed engineering plans, technical advisory, the construction

aperations, and maintenance of project facilities.

‘The business and activities of each of these departments shall be directed by an officer to be

known

Deputy General Managers.



‘The Boafd may create such other departments, divisions and positions as may be deemed
necessary for the efficient, economical and effective conduct of the activities of the Authority.

Section 20. Auditing, The Board of Directors shall provide and appoint an Internal Auditor
who shall formulate an auditing system for the Authority. The auditor shall make a semestral
and/or annual report covering the financial conditions and operation of the Authority to the
Board. These auditing reports shall contain a statement of the resources and liabilities,
including earnings and expenses, the amount of paid-up capital stock, surplus, reserves, and
profits, 4s well as losses, bad debts and such other facts which, under auditing rules and
regulations, are considered necessary to accurately described the financial conditions and
operation of the Authority. The auditor shall report and directly responsible to the Board.

‘The Commission on Audit shall also appoint a representative who shall be the fall time auditor
of the Authority, its subsidiaries and such personnel as may be necessary to assist said
representative in the performance of his duties.

Section 21. Compensation, All personnel benefits and compensation shall be subject to the rules
of the Civil Service Commission.

Section 22. Authority of the Governance Commission on GOCC. The Authority shall be under the
general sipervision of the Governance Commission on GOCC.

Section 23. Legal Counsel. Without prejudice to the hiring of an outside counsel, the
Government Corporate Counsel shall be the ex-officio legal counsel of Authority.

CHAPTER V
MISCELLANEOUS PROVISIONS

Section 24. Supervision. The Authority shall be under the direct control and supervision of the
President of the Republic of the Philippines for purposes of policy direction and coordination.

Section 5 Implementing Rates and Regulations. The Office of the President shall promulgate the
Implementing Rules and Regulation with ninety (90) days from the effectivity of this Act.

Section 26. Separability Clause. If any provision of this Act shall be held unconstitutional or
invalid, the other provisions not otherwise affected shall remain in full force and effect.

Section |27. Repealing Clause, All laws, executive issuances or parts thereof which are
inconsistent herewith are hereby repealed or amended accordingly.

Section 28. Effctivity Clause. This Act shall take effect upon its publication in the Official
Gazette or at least two (2) newspapers of general circulation.