Laguna Lake Development Authority Act

Principal office and branches

Section 3 requires the Authority to maintain its principal office at a convenient place within the Region.
Section 3 allows the Authority to maintain branch offices in other places as necessary for proper conduct of its business.

Purpose and development mandate

Section 4 requires the Authority to make a comprehensive survey of the Region’s physical and natural resources and potentialities, including social conditions, hydrological studies, power potentials, development of scenic and tourist spots, conservation of water resources, and other regional problems.
Section 4 requires the Authority, based on the survey, to draft a comprehensive and detailed plan designed to promote rapid social and economic development and to implement such plan or plans.
Section 4 requires the Authority to provide machinery for extending planning, management, and technical assistance to prospective and existing investors in the Region.
Section 4 requires the Authority to recommend to proper agencies peso or dollar financing, technical support, physical assistance, and generally the level of priority accorded to agricultural, industrial, and commercial projects, including soliciting or requiring direct help from or through government or its instrumentalities.
Section 4 requires the Authority to pass upon plans, programs, and project developments proposed by local governmental agencies within the Region, public corporations, and private enterprises where such developments relate to the Region’s development as envisioned in the Act, and it provides that the Authority shall determine whether Authority approval is needed and that the Authority decision is final.
Section 4 authorizes the Authority to engage in agriculture, industry, commerce, or other activities within the Region necessary or directly contributory to socio-economic development, including organizing, financing, inventing in, and operating subsidiary corporations.
Section 4 limits such engagement by providing that the Authority engages only, unless public interest requires otherwise, in activities that are new ventures or clearly beyond the scope, capacity, or interest of private enterprises due to geography, technical or capital requirements, return on investment, and risk.
Section 4 authorizes the Authority to plan, program, and/or undertake readjustment, relocation, or resettlement of population within the Region as deemed necessary and beneficial by the Authority.
Section 4 requires the Authority to make an annual report to stockholders regarding operations, including statements of financial condition, activities undertaken, progress of projects and programs, and plans of action for incoming years.
Section 4 allows a majority of stockholders to require submission of other report(s) within thirty (30) days from notice thereof.
Section 4 authorizes the Authority to lend or facilitate financial assistance and/or act as surety or guarantor to worthwhile agricultural, industrial, and commercial enterprises.
Section 4 authorizes the Authority to reclaim or undertake reclamation projects and/or acquire bodies of lands from the lake necessary to accomplish the aims and purposes of the Authority.

Corporate powers and property authority

Section 5 provides that the Authority may succeed on its corporate name, sue and be sued in its corporate name, and adopt, alter, and use a corporate name.
Section 5 authorizes the Authority to adopt, amend, and repeal its by-laws.
Section 5 authorizes the Authority to enter into contracts of any kind and description to carry out its purposes and functions under the Act.
Section 5 authorizes the Authority to acquire—by purchase, hold, or lease—personal and real property deemed necessary or convenient, and to lease, mortgage, sell, alienate, or otherwise encumber or dispose of such property.
Section 5 grants the Authority the power of eminent domain whenever it deems it necessary to attain the Act’s objectives.
Section 5 authorizes the Authority to borrow funds from any local or foreign financial institution independent of the bonds it may issue or may continue to issue to carry out the Act’s purposes.
Section 5 authorizes the Authority to purchase, hold, alienate, mortgage, pledge, or otherwise dispose of the shares of another corporation, co-partnership, or government agency/instrumentality, and while the Authority owns the stock, to exercise all ownership rights, including the right to vote.
Section 5 authorizes the Authority to perform any and all acts a corporation, co-partnership, or natural person is authorized to perform under existing laws or laws enacted thereafter, for carrying on its business or attaining/furthering its objectives.

Capital structure, financing, and bonds

Section 6 establishes an authorized capital of P100,000,000.00, with P20,000,000.00 subscribed by stockholders of the subscribed capital and P5,000,000.00 fully paid up.
Section 6 provides that the authorized capital stock of P100,000,000.00 is divided into one (1) million shares with a par value of P100.00 per share.
Section 6 provides a capital share breakdown of 700,000 common shares (voting) and 300,000 preferred shares (non-voting).
Section 6 requires that of the subscribed common shares of 200,000, at least 60% are subscribed by the provinces of Laguna and Rizal equally, with 25% of such subscribed portion fully paid.
Section 6 provides that the remaining common shares are open for subscription to cities, municipalities, provinces, and private investors.
Section 6 provides that preferred shares (300,000) are available for subscription to cities, municipalities, provinces, government corporations, and private investors.
Section 6 requires private investors who subscribe to common shares to subscribe and/or purchase one (1) preferred share for every common share held.
Section 7 authorizes municipalities, cities, and provinces to subscribe, own, buy, or hold shares of stock of the Authority.
Section 8 authorizes P500,000.00 annually for two (2) years from the general fund of the National Government not otherwise appropriated for operating expenses.
Section 8 provides that thereafter the Board may appropriate from Authority funds sums needed for operating expenses.
Section 9 allows the Board, whenever it deems necessary for indebtedness or bond issuance to carry out the Act, to declare the purpose for the proposed debt by resolution, confirmed by the affirmative vote of stockholders representing a majority of the subscribed capital stock outstanding and entitled to vote.
Section 10 limits bond issuance to amounts needed at any one time, considering public absorption rate, fund requirements of projects ready for execution, and ensuring a proper balance of productive and non-productive projects so inflation is held to the minimum.
Section 11 authorizes the Board to prescribe bond form, rates of interest, denominations, maturities, negotiability, convertibility, call and redemption features, and all other issuance, placement, sale, servicing, redemption, and payment terms and conditions.
Section 11 allows bonds to be payable as to principal and interest in Philippine currency or any readily convertible foreign currency.
Section 11 states bonds are receivable as security in any government transaction where security is required.

Tax exemptions and sinking fund

Section 12 provides that the Authority is exempt from all taxes, licenses, fees, and duties incidental to its operations.
Section 12 extends exemption to subsidiary corporations, subject to a five (5) years post-establishment graduated tax exposure:
- 20% during the sixth year,
- 40% during the seventh year,
- 60% during the eight year,
- 80% during the ninth year,
- 100% during the tenth year.
Section 12 requires the exemption to include any tax or fee imposed by the government on the sale, purchase, or transfer of foreign exchange.
Section 12 exempts all notes, bonds, debentures, and other obligations issued by the Authority from all taxes as to principal and interest, except inheritance and gift taxes.
Section 13 requires the establishment of a sinking fund designed so total annual contributions, at an interest rate determined by the Board and confirmed by stockholders representing a majority of subscribed capital stock outstanding and entitled to vote, will be sufficient to redeem bonds at maturity.
Section 13 requires the sinking fund to be under custody of the Authority treasurer, invested as the Board directs, with investment expenses charged to the sinking fund and interest/income credited to it.

Government guarantee of bond payments

Section 14 guarantees the payment by the Republic of the Philippines of principal and interest on bonds, debentures, collaterals, notes, or other obligations issued by the Authority by virtue of the Act.
Section 14 requires the Republic to pay such principal and interest if the Authority fails to do so.
Section 14 provides that if the Authority cannot pay, the Secretary of Finance pays the required amount from national treasury funds not otherwise appropriated.
Section 14 provides that upon payment by the Republic, the Government succeeds to the rights of holders of the covered obligations to the extent of amounts paid, unless the Authority refunds the Government within a reasonable time.

Board, management, and personnel rules

Section 15 provides that the first Board of Directors is elected by stockholders and incorporation is deemed effected from the date of the first Board meeting.
Section 15 requires directors to be elected in accordance with Section 31 of Act No. 1459, as amended, otherwise known as the Corporation Law.
Section 16 vests corporate powers in and exercises them through a Board of Directors composed of seven (7) members.
Section 16 requires the Board to elect annually a Chairman, a Vice-Chairman, and a Secretary (who may not be a member of the Board).
Section 17 provides that if the Chairman position is vacant, or the Chairman is absent or temporarily incapacitated, the Vice-Chairman acts until a new Chairman is elected.
Section 18 provides that first Board members serve staggered terms: two end of the first year, two end of the second year, two end of the third year, and one end of the fourth year; thereafter succeeding directors serve four (4) years from election.
Section 19 provides that a director elected to fill a vacancy before expiration serves only the unexpired portion of the predecessor’s term.
Section 20 provides that Board vacancies do not impair Board powers as long as there are four (4) members in office.
Section 20 requires the affirmative vote of four (4) Board members to approve any act or resolution.
Section 21 requires all Board members to be natural born citizens of the Philippines and prohibits election of any Board member unless he is of unquestioned integrity and competence.
Section 21 allows management experts and technical personnel employed in government agencies to serve as Board members and receive per diem, provided government personnel appointments are with the consent of their respective chiefs of office.
Section 22 prohibits any Board member from being financially interested, directly or indirectly, in any contract entered into by the Authority or in special privileges granted by the Authority during his term.
Section 22 provides that contracts entered into in violation of the conflict-of-interest prohibition are automatically null and void.
Section 22 requires disqualification procedures: if a Board member is found violating the conflict-of-interest rule by a two-thirds (2/3) vote of the Board, he is automatically disqualified from serving his unexpired term and is perpetually disqualified from membership in the Board.
Section 23 allows removal of a Board member by a vote of stockholders holding or representing three-fourth (3/4) of subscribed capital stock outstanding and entitled to vote.
Section 23 prohibits requiring Board members to submit any courtesy resignation during their term.
Section 24 requires the Board to meet at least once a month and not more than once a week, and provides that the Board is convoked by the Chairman or upon written request signed by a majority of members.
Section 25 sets director per diem at P100.00 per meeting attended, capped so each director receives no more than P1,000.00 for only one month.
Section 25 requires the Authority to reimburse directors for actual expenses including traveling and subsistence expenses incurred in performance of duties as authorized by the Board.
Section 26 designates the General Manager as chief executive and assigns duties including preparing the Board agenda and submitting policies and measures for Board consideration, executing and administering Board-approved policies and measures, and directing and supervising operation and internal administration.
Section 26 permits the General Manager to delegate certain office administrative responsibilities subject to Board rules and regulations.
Section 26 authorizes the General Manager to exercise other powers vested in him by the Board.
Section 27 requires that no person be appointed General Manager unless he meets director qualification requirements plus demonstrated executive competence and experience in public administration or management of agricultural, industrial, or commercial enterprises; it further provides the General Manager appointed is an ex-officio member of the Board without right to vote.
Section 28 provides the General Manager serves a fixed term of six (6) years unless earlier removed by stockholders holding or representing two-thirds (2/3) of subscribed capital stock outstanding and entitled to vote.
Section 29 sets General Manager compensation at P24,000.00 per annum, charged against the Authority’s annual operating expenses appropriation, and requires the Board to provide per diems and allowances.
Section 30 requires the General Manager to establish residence within the Region and prohibits engagement during tenure in any business, profession, or calling other than those connected with official duties.
Section 31 requires Authority activities to be carried out under supervision of the General Manager through specified administrative officials directly responsible to him: an Assistant General Manager (who acts as General Manager in absence or temporary incapacity or until a new General Manager is appointed), division chiefs for operations and for planning/programming/research, and a corporate counsel at division-head rank for legal advice and representation; it also provides for a corporate treasurer at division-head rank with custody of funds and properties, plus other officials the Board may consider necessary.
Section 32 requires a merit system for selecting and appointing all officials, agents, and employees of the Authority, including temporary workers, under a comprehensive and progressive merit system established by the Authority.
Section 33 requires the Board to appoint the Assistant General Manager and division chiefs upon recommendation of the General Manager.
Section 34 requires the General Manager to appoint officials and employees below division-chief rank to positions in the approved budget upon written recommendation of the concerned division head, guided by merit system standards, and requires the General Manager to submit a quarterly report to the Board regarding personnel selection, placement, and training.
Section 35 requires all Authority contracts requiring employment of persons to provide that not less than the minimum wage fixed by law shall be paid to such persons.
Section 36 requires the Board, upon organization, to formulate and report plans and recommendations for accelerated and balanced development of the Region in accordance with the Act’s aims and purposes, to stockholders with utmost expeditious manner and in no case longer than one year.

Procurement, bidding, auditing, and reports

Section 37 requires that purchases of supplies and contracts for services (except personnel services) entered by the Authority must be preceded by proper bidding.
Section 37 exempts bidding when: (1) the amount involved is P5,000.00 or less or (2) an emergency, certified by the General Manager, requires immediate delivery of supplies or immediate performance of services.
Section 37 requires bid comparison and awards to consider cost and relative quality and adaptability, bidders’ financial responsibility, skill, experience, integrity, and ability to furnish repairs and maintenance, time of delivery/performance offered, and compliance with desired specifications.
Section 38 requires the Board to provide and appoint an auditor to formulate an auditing system for the Authority.
Section 38 requires auditing reports by the auditor to be semestral and/or annual, covering financial conditions and operation, including statements of resources and liabilities (including earnings and expenses), the amount of paid-up capital stock, surplus, reserved, profits, and losses, bad debts, and other necessary facts under auditing rules and regulations.
Section 38 requires the auditor to report and be directly responsible to the Board.
Section 39 requires the Board to retain and engage a reputable auditing firm as external auditor, which must render reports on financial conditions including a statement of resources and liabilities, earnings and expenses, paid-up capital stock, surplus, reserves, profits, losses, and bad debts, and other necessary facts under auditing rules and regulations.

Separability, definitions, and repeal/effectivity

Section 40 declares the Act’s provisions separable; if any provision is held unconstitutional, remaining provisions retain validity.
Section 41 defines key terms:
- “Act” means the enabling Act creating the Laguna Lake Development Authority.
- “Authority” means the Laguna Lake Development Authority.
- “Board” means the Board of Directors of the Laguna Lake Development Authority.
- “Region” means the Laguna Lake area proper comprising the provinces of Rizal and Laguna and the cities of San Pablo, Manila, Pasay, Quezon and Caloocan.
- “Government instrumentalities or agencies or entities” means instruments of national or local governments vested with powers to accomplish a definite government aim or purpose.
- “Municipal Corporation” means an entity organized for political purposes with political powers exercised for the good of the public, subject to legislative control, with officers of the government administering or discharging public duties.
- “Government Corporation” means corporations engaged in performing functions impressed with public interest.
- “Investor” includes public and private investors whether foreign or local.
- “External Auditor” means a firm or person hired outside the Authority or agency to audit another corporation’s or agency’s books of accounts, examine financial records, prepare audit reports on findings in operations, and review performance report statements of the Authority.
- “Subsidiary Corporation” means a corporation organized or already existing in which at least fifty-one per cent of its shares are owned or controlled by the Authority to carry out or accomplish the Authority’s purposes.
Section 42 repeals or modifies accordingly all Acts, charters, executive orders, administrative orders, proclamations, rules and regulations, or parts thereof in conflict with the Act.
Section 43 provides that the Act takes effect upon approval.
The Act is Approved, July 18, 1966 under the approval clause.