Executive Order No. 662





WHEREAS, indigenous and renewable energy sources are now necessary to provide adequate, reliable, cheap sources of energy for economic development;


WHEREAS, tree farms and dendro thermal power plants can now serve as a substantive fuel source for electric power, for industry, and ultimately for transportation;


WHEREAS, the farming of trees for energy purposes on land denuded of forest can likewise also achieve major ecological benefits, can expand the arable area of the country, allow landless farmers to have their farms, create new, income, thereby significantly alleviate the problems of the rural landless poor.


NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and direct the following:


(1)      There is hereby created a National Dendro Development Corporation (NDDC) to plan and implement a national dendro development program to attain national objectives in energy production, reforestation and rural employment.


(2)      The purpose of the Corporation shall be as follows:


(a)       establishment of fast growing tree farms utilizing for the purpose, lands currently unused or severely underutilized;


(b)       development of transportation systems to move the three products to processing plants and consumers;


(c)       development of processing plants and industries to convert the tree products to fuels and other products desired by the consumers;  


(d)      development and implementation of a marketing system to stabilize supply and prices and to interface between consumers and tree producers and processors; and


(e)      research and development on process to convert tree products into forms most suitable for use by consumers and on the agronomic aspects of improved tree farming techniques and improved tree varieties.


(3)      The Corporation shall have the following powers and functions:


(a)      To prepare, plan and implement a national dendro development program to carry out the above purposes.


(b)      To promote, encourage and assist public services and private entities and government agencies and corporations having related functions and purposes, in planning, developing, coordinating, establishing, operating, maintaining, repairing, and renovating facilities and systems for production, and for such purpose to furnish, to the extent possible and without charge therefore, technical and professional assistance and guidance, information, data and the results of any investigation, study, or report conducted or made by it.  


(c)      To invest and/or grant loans to public service and private entities for tree farms, the construction or acquisition, operation and maintenance of tree processing, marketing and transportation equipment plant, facilities and related properties, equipment machinery, fixtures and materials for the purpose of production and processing of trees into more readily marketed products to include conversion to coal, electricity, methanol and associated by-product chemicals, and thereafter to make loans for the restoration, improvement or enlargement of such facilities:  Provided, That the entity applying for a loan, must support the objectives of this Order.


(d)      To approve or disapprove any loan and advances of loans from other lenders to entities which at time are borrowers from the Corporation.


(e)      To organize wholly or partly owned companies and subsidiaries for the purposes of:


(i)       operating a tree product transportation system of operating a tree processing plant, and other related activities.


(ii)      manufacturing equipment and materials to supply any of the organizations involved in the production, processing and transport of the products under this Order.


(iii)     providing marketing and market stabilization services for the entities engaged in production under this Order.  The subsidiary so established may be authorized to purchase and store tree products as required to assure stable and attractive prices for both producer and consumer.


(f)      To acquire, by purchase or otherwise, real and physical properties, together with all appurtenant rights, easements, licenses and privileges, upon its determination that such acquisition is necessary to accomplish the purposes of this Order and, if such properties be in areas designated as reserved for fast growing tree production and said properties of at the same time of acquisition not producing a product valued at least 50% of that found on lands already under the fast growing tree program:  Provided, That the power herein granted shall be exercised by the Corporation solely as agent for and on behalf of one or more public service entities which shall timely receive, own and utilize or replace such properties for the purpose of growing fast growing trees, which entity or entities shall then be, or in connection with the acquisition shall become, borrowers from the Corporation:  and Provided, further, that the costs of such acquisition including the cost of any eminent domain proceedings, shall be borne either directly or by reimbursement to the Corporation, whichever the Corporation shall elect, by the public service entity or entities on whose behalf the acquisition in undertaken; and otherwise to acquire, improve, hold, transfer, sell, lease, rent, mortgage, encumber and otherwise dispose of property incident to, or necessary, convenient or proper to carry out the purposes of which the Corporation is created.


(g)      To borrow funds from any source, private or government, foreign or domestic, and, to issue bonds or other evidences of indebtedness therefor and to secure the lenders thereof by pledging, sharing or subordinating one or more of its own loan securities.


(h)      To so cooperate, coordinate and exchange such information, studies and reports with, and to seek such cooperation and coordination from other departments, agencies and instrumentalities of the National Government, as will most effectively conduce to the achievement of the purposes of the Corporation.  


(i)       To report at least annually to the Prime Minister and the National Assembly, on the status of the Dendro Development Program of the Philippines, including a comprehensive reporting of loans made, loan funds advanced, loans secured from other sources and the advances thereof, the names and locations of the borrowers, the number of hectares planted, amount of wood produced, number of processing plants established and the value of product as well as the energy produced in oil equivalent and other activities programmed for the ensuing year, and all such other information and data as will accurately reveal the progress being made toward the achievement of the purposes of this Order; and to publish such report for dissemination to and use by other interested departments, agencies and instrumentalities of the National Government and by borrowers under this Order.


(j)       To have a continuous succession under its corporate name until otherwise provided by law; prescribe and thereafter to amend and repeal its laws not inconsistent with this Order; adopt and use a seal and alter it as its pleasure; sue and be sued in any court:  Provided, That NDDC shall, unless it consents otherwise, be immune to suits for acts ex delicti; and make contract of every name and nature and to execute all instrument necessary or convenient for the carrying on of its business.


(k)      To exercise such powers and do such things as may be necessary to carry out the business and purposes for which the Corporation was established, or which from time to time may be declared by the Board of Directors to be necessary, useful, incidental or auxiliary to accomplish such purposes; and generally, to exercise all the powers of a corporation under the Corporation Law insofar as they are not inconsistent with the provision of this Order.


(4)      The Corporation shall be governed by a Board of Directors consisting of:


(a)      Minister of Human Settlements, as Chairman


(b)      The General Manager of the Corporation, as Vice Chairman


(c)       Minister of Industry


(d)       Minister of Natural Resources


(e)       Governor of the Central Bank


(f)        President of the National Development Company


(g)       General Manager of the Human Settlements Development Corporation


(h)       Administrator of the Farm Systems Development Corporation


(i)        Administrator of the National Electrification Administration.


(5)      The Board shall have the following specific powers and duties:


(a)      to implement the provisions and purposes of this order;


(b)      to formulate and adopt policies and plans and to promulgate rules and regulations, for the management, operation and conduct of the Corporation;


(c)      to adopt and, as may be necessary from time to time, to amend annual budgets for the Corporation’s borrowing and lending programs and for its administration;


(d)      to fix the compensation of the General Manager and to the Deputy General Manager, subject to the approval of the President of the Philippines; and


(e)      to establish policies and guidelines for employment on the basis of merit, technical competence and moral character, and upon the recommendation of the General Manager to organize or reorganize the Corporation’s staffing structure, to fix the salaries of personnel and to define their powers and duties.


(6)      The management of the Corporation shall be vested in the General Manager, who shall be appointed by the President of the Philippines and shall not be removed except for cause.


The General Manager shall have the following powers and duties:


(a)      to execute and administer policies, plans and programs, and the rules and regulations, approved or promulgated by the Board of Directors;


(b)      to submit for the consideration of the Board of Directors such policies, plans and programs as he deems necessary to carry out the provisions and purposes of this Order;


(c)       to direct and supervise the operation and internal administration of the Corporation and, for this purpose, to delegate same of any of this powers and duties to subordinate officials of the Corporation;


(d)      subject to the guidelines and policies established by the Board of Directors, to appoint and fix the number and compensation of subordinate officials and employees of the Corporation:  Provided, however, The provisions of the Civil Service Law and the Wage and Position Classification Law shall not apply to the appointment and compensation of any such subordinate official or employee;


(e)      for cause, to remove, suspend, or otherwise discipline any subordinate official or employee;


(f)       to prepare an annual report on the activities of the Corporation at the close of each fiscal year and submit a copy thereof to the Prime Minister; and


(g)      to exercise such other powers and duties as may be vested in him by the Board of Directors.


In the case of absence or disability of the General Manager, he shall designate any of the Deputy General Managers to act in his place.


(7)      The Auditor General shall be ex officio Auditor of the Corporation.  


(8)      The Corporation shall have an authorized capital stock of TWO BILLION PESOS (P 2,000,000,000.00) divided into 20 million shares having a par value of ONE HUNDRED Pesos (P 100.00) per share to be subscribed and paid for by the Government of the Republic of the Philippines and its instrumentalities as follows:  Government of the Republic of the Philippines, SIX HUNDRED AND EIGHTY MILLION PESOS (P 680,000,000.00); Human Settlements Development Corporation, EIGHTY MILLION PESOS (P 80,000,000.00); National Development Company, EIGHTY MILLION PESOS (P 80,000,000.00); Farm Systems Development Corporation, EIGHTY MILLION PESOS (P 80,000,000.00), and National Electrification Administration, EIGHTY MILLION PESOS (P 80,000,000.00).


(9)      With the approval of the Ministry of Finance, the Monetary Board and the President of the Philippines, the Corporation may borrow from foreign public or private financial institutions such amounts as may from time to time be required for its operations or issue bonds, promissory notes, debentures, certificates of indebtedness and other instrument.


With respect to domestic indebtedness to be incurred by the Corporation, the terms and conditions to be contained in such other evidences of indebtedness and other conditions privileges exemptions and guarantees attaching thereto, shall include the following:


(a)      such bonds or other evidences of indebtedness shall be in registered form and transferable at the Central Bank of the Philippines; shall not be sold at less than par; shall be payable ten years of more from date of issue, as may be determined by the Minister of Finance, before their issuance, but shall be redeemable, upon the election of the Board of Directors, after five years from such date of issue; and shall bear interest at an annual rate to be determined before their issuance by the Minister of Finance in consultation with the Monetary Board of the Central Bank of the Philippines before date of issuance, and both the principal and interest shall be payable in legal tender of the Philippines.


(b)      such bonds or other evidences of indebtedness shall be exempt from the payment of all taxes by the Republic of the Philippines, or by any authority, branch, division or political subdivision thereof, which facts shall be stated upon their face; and they shall be receivable as security in any transaction with the National Government or any of its branches, subdivisions, instrumentalities and its owned or controlled corporations in which a security is required.


(c)       a sinking funds shall be established by the Corporation in such manner that the total annual contributions thereto, accrued at such rate of interest as may be determined by the Minister of Finance in consultation with the Monetary Board, shall be sufficient to redeem at maturity the bonds issued under this subsection.  This sinking fund shall be under the custody of the Central Bank of the Philippines, which shall invest the same, subject to the approval of the Board of Directors and the Minister of Finance in consultation with the Monetary BoardProvided, That the proceeds thereof shall accrue to the Corporation.


(d)      the Republic of the Philippines hereby guarantee the payment by the Corporation of both the principal and the interest of the bonds or other evidences of indebtedness, and shall pay such principal and the interest in case the Corporation fails to do so; and there is hereby made a standing appropriation out of the general funds in the National Treasury not otherwise appropriated, the sums necessary to make the payment so guaranteed:  Provided, That the sums so paid by the Republic of the Philippines shall be refunded by the Corporation, and provided, further, that the Corporation, to assure such refunding, shall establish such reserves or sinking funds and comply with such other restrictions and conditions as the Minister of Finance may prescribe and establish for that purpose.


With respect to foreign indebtedness to be incurred by the Corporation such as may be contracted, in the form of loans, credits convertible to foreign currencies, or other forms of indebtedness, from foreign government or any international financial institution or fund source, including foreign private lenders the terms and conditions shall include the following:


(a)      the total outstanding amount of such indebtedness, exclusive of interest, shall not exceed TWO BILLION PESOS (P 2,000,000,000) or the equivalent thereof in other currencies;


(b)      the President of the Philippines, by himself or through his duly authorized representative, is hereby authorized to negotiate and to so contract with foreign governments or any international financial institution or fund source in the name and on behalf of the Corporation; and is further authorized to guarantee, absolutely and unconditionally, as primary obligor and not merely as a surety, in the name and or in behalf of the Republic of the Philippines, the repayment of any indebtedness thereby contracted and the payment thereof of any due interest charge, up to the limited amount authorized by the foregoing, which shall be over and above the amounts which the President is authorized to guarantee under R.A. 6152, and also to guarantee the performance of all or any of the obligations undertaken by the Corporation in the territory of the Republic of the Philippines pursuant to loan agreements entered into pursuant to this provision;


(c)      any indebtedness contracted under this provision and the payment of the principal thereof and of any interest of other charges thereon, as well as the importation of machinery, equipment, materials, supplies and services by the Corporation, paid from the proceeds of any such contracted indebtedness, shall also be exempt from all direct and indirect taxes, fees, imposts, other charges and restrictions, including import restrictions, by the Republic of the Philippines, or by any authority, branch, division or political subdivision thereof.


(10)    The Corporation shall execute all dendro projects that may be authorized in any Public Works Acts.


(11)    The Corporation shall devote all its returns from its capital investments as well as excess revenues from its operation to attain its objectives.  To enable the Corporation to pay its indebtedness and obligations and in furtherance and effective implementation of its programs and projects, the Corporation is hereby declared exempt:


(a)      from the payment of all taxes, duties, fees imposts, charges, costs and restrictions to the Republic of the Philippines, its provinces, cities, municipalities and other charges provided for under the Tariff and Customs Code of the Philippines, R.A. 1937, as amended by Presidential Decree No. 34 dated October 27, 1972, and Presidential Decree No. 69 dated November 24, 1972, and filing and service fees and other charges or costs in any court or administrative proceedings in which it may be a party;


(b)      from all income taxes, franchise taxes and realty taxes to be paid to the National Government, its provinces, cities, municipalities and other government agencies and instrumentalities;


(c)       from all import duties, compensating taxes and advance sale tax, wharfage fees on import of foreign goods required for its operations and projects; and


(d)      from all taxes, duties, fees, imposts and all other charges imposed directly or indirectly by the Republic of the Philippines, its provinces, cities and municipalities and other government agencies and instrumentalities on all petroleum products used by the Corporation in the production, processing and sale of its tree products.


(12)    For the purpose of organizing tree farms into units large enough for efficient production and transportation of trees, non-stock, non-profit member owned corporations (hereafter referred to as tree farmer association) or tree farmer corporation shall be encouraged by the Corporation and formed for registration with the Farms System Development Corporation.


(a)      Guiding principles in organizing such corporations will be the attaining of low cost, reliable tree production while assuring that the income earned for tree production be received in fair measure by the tree farmers.  Furthermore, no family shall receive the return from more than 20 hectares of tree land.


(b)      A corporation for the purpose of tree production will be vested with all powers necessary or convenient for the accomplishment of its corporate purpose.


(c)       The name of a corporation shall include the words “Dendro and Energy” and the abbreviation “Inc.”  The name of a corporation organized under this Order shall be distinct from the name of any other corporation already organized or converted under this Order.


(d)       Five or more persons may organize a corporation in the manner hereinafter provided.


(e)      Articles of Incorporation.  Each corporation will be organized under the rules of the Farms Systems Development Corporation with the appropriate formal incorporation.


(f)       The corporation so formed will adopt a written set of by-laws which will guide their operations.


(13)    The corporation shall have the authority in consultation with the Bureau of Forest Management and the Bureau of Lands to designate certain lands as suitable for dendro production:  Provided, That such designation be approved by the President.  The NDDC shall have the sole authority to approve application for the use of land so designated for use in dendro production.  Trees, charcoal and other products harvest from tree plantations or processed from the products of tree plantation shall be treated as farm products and shall specifically be exempted from the requirements for timber licenses, from forestry charges and from all other regulations and impositions normally applied by the government or its agencies on forest products.  


(14)    The Corporation shall promulgate rules and regulations to accomplish the objectives and purposes of this Order, particularly on the approval of applications for the use of land designated for dendro production, on the formation of tree farmer corporations, and on the granting of loans for the development of tree farms, construction, operation and acquisition of plants and equipment and production and processing of tree farm products.


This Order shall take effect immediately.


Signed in the City of Manila, this 12th day of March, in the year of Our Lord, nineteen hundred and eighty one.


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