FOURTEENTH CONGRESS OF THE 
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OCT -8 I.' 
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REPUBLIC OF THE PHILIPPINES 
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Second Regular Session 
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BY:_ 
SENATE 
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S. No. - 
2670 
Introduced by Senator FRANCIS C. ESCUDERO 
EXPLANATORY NOTE 
Despite the resolute plans and programs, the intended acceleration of the 
development of the local dairy industry has never materialized since the 
inception of the National Dairy Authority in 1995 by virtue of Republic Act (RA) 
No. 7884. This Dairy Law is never fully funded and thus has severely hampered 
the development efforts of the Authority. 
The Authority has struggled and made use of its very limited resources to 
move the local dairy industry, which resulted in very modest gains as manifested 
by the growing enthusiasm to go to dairy by the farmer sector, the cooperative 
sector, the local government sector and the non-government sector. Likewise, 
local consumers are now aware and appreciative of the health and economic 
contribution of having local milk on their tables, especially in the rural areas and 
in selected urban areas where local milk has been an important ingredient of 
well-known coffee brands/chain shops. 
The Authority however, is constrained to institute milk safety measures 
directly on miIk product imports because it does not have any regulatory power. 
At present, the regulation of milk products rests on the combined efforts of the 
Bureau of Animal Industry (BAI) for issuance of import permit clearance, the 
Burcau of Agriculture Rr Fishery Product Standards (BAFPS) €or fresh milk 
product standardization, the Bureau of Food and Urugs (HFAD) for registration, 
labeling and testing of processed mill products and the Department of Trade 
(DTI) for the monitoring of prices of milk products. 


We do not want, and we must never opt, another milk scare in our midst, 
where a significant number of children died in China due to melamine 
contamination, an obvious lapse in the observance of milk safety protocols. 
It is hoped that this legislation shall be instrumental in gearing up the 
Authority to act potently in steering the local dairy industry to the road to 
progress. Producing and buying local milk means rural development, and rural 
development means economic progress, and economic progress means a stable 
nation. 
Immediate approval of this Act is thus earnestly sought. 
FRANCIS G. ESCUDERO 


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FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
1 
8 
OCT -8 j ' j  ::<!G 
Second Regular Session 
1 
SENATE 
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*.._". 
S. No. ";B,h;7 0 
Introduced by Senator FRANCIS G. ESCUDERO 
AN ACT 
AMENDING REPUBLIC ACT NUMBERED 7884, OTHERWISE 
KNOWN AS THE "NATIONAL DAIRY DEVELOPMENT ACT 
OF 1995" 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION1. Sections 5, 6, 14, 16, 18 and 22 of Republic Act No. 7884 are 
hereby amended to read as follows: 
"Ser. 5. The Dainj Industry Board. - The National Dairy Authority shall 
be governed by a Dairy Industry Board, hereafter referred to as the "Board", to 
be composed of the following: 
(a) The Secretary of Agriculture, as chairperson; 
(b) The NDA Administrator, as an ex officio member; 
(c) The Secretary of Trade and Industry, as member; 
(d) The Secretary of Health, as member; 
(e) The Secretary of Education, Culture and Sports, as member; 
(9 The Secretary of Science and Technology, as member; 
(g) The Secretary of Agrarian Reform, as member; 
(h)The {Director of the Dairy Training and Research Institute, as 
member) SECRETARY OF THE DEPARTMENT OF .SOCIAL WELFARE 
AND DEVELOPMENT, as member; and 


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(i) Four (4) other members who shall be appointed by the President of 
the Philippines upon the recommendation of the chairperson: Provided, That 
one (1) shall come from the COMMERCIAL MILK PROCESSOR’S GROUP 
AND THE OTHER THREE (3) FROM THE dairy cooperatives and/or 
national dairy federation, with one representative each from Luzon, Visayas 
and Mindanao: Provided, further, That they will hold office for a period of 
three (3) years from the date of their respective appointments without 
reappointment; Provided, finally, That any member appointed to a vacancy 
shall serve only for the unexpired term of the member whom he succeeds. 
THE 
BOARD, 
AS 
THE 
GOVERNING 
AND 
POLICY 
DETERMINING BODY OF THE AUTHORITY, SHALL WAVE, AMONG 
OTHERS, THE POWER T O  
(A) CREATE RELEVANT ORGANIZATIONAL UNITS ALONG 
WITH THE REQUIRED MANPOWER RESOURCES AND LOGISTICS 
SUPPORT SO AS TO RESPOND TO THE DEMAND OF THE INDUSTRY; 
(B) REVIEW AND REORGANIZE THE AUTHORITY SO AS TO 
MAINTAIN EQUAL REPRESENTATION FROM THE GOVERNMENT 
AND THE PRIVATE SECTOR; 
(C) DESIGN AND IMPLEMENT PERSONNEL DEVELOPMENT 
AND 
COMPENSATION 
PACKAGES, 
PROVIDED 
THAT 
THE 
AUTHORITY HAS SUFFICIENT FUNDING TO DO SO COMING FROM 
ITS REVENUE GENERATING ACTIVITIES OR OPERATIONS; 
(D) ENACT SOUND AND REASONABLE POLICIES FOR THE 
AUTHORITY 
TO 
ENGAGE 
IN 
DAIRY 
RELATED 
BUSINESS 
ACTIVITIES, 
LIKE 
PRODUCTION, 
PROCESSING, 
PACKAGING, 
DISTRIBUTION, PROMOTION, TRADING, BUSINESS CONSULTING 
AND MANAGEMENT SERVICES; PROVIDED THAT THE ANNUAL 
NET INCOME GENERATED FROM SUCH ACTIVITIES DOES NOT 
EXCEED TEN PERCENT (lOo/o) OF THE COMBINED TOTAL DAIRY 
PRODUCTS SOLD IN THE MARKET BY DAIRY COOPERATIVES, 
COMMERCIAL MILK PROCESSORS, DAIRY IMPORTERS AND 
TRADERS BASED ON THEIR LATEST ANNUAL SALES RECORD, OR 
TEN PERCENT (10%) OF THE VALUE OF THE LAST YEAR’S TOTAL 
DAIRY IMPORTS MADE, WHICHEVER IS HIGHER; AND 
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(E) ESTABLISH SUBSIDIARIES OR INVEST IN PRIVATE 
CORPORATIONS, WHENEVER REASONABLY NECESSARY AND 
APPROPRIATE, PURPOSELY TO AUGMENT OR SUPPLEMENT THE 
OPERATIONS OF THE AUTHORITY PROVIDED THAT ITS TOTAL 
EXPOSURE DOES NOT EXCEED TWENTY FIVE PERCENT (25%) OF THE 
AUTHORITY'S CURRENT NET EQUITY.'' 
"Sec. 6. Powers and Functions of the National Dairy Authority. - The 
National Dairy Authority shall have the following powers and functions: 
(a)To formulate and execute dairy programs that will generate a 
national impact on rural as well as urban nutrition levels and incomes; 
(b) To assist in the purchase, importation, propagation, storage, 
distribution and sale of dairy equipment and engineering supplies and such 
other inputs as may be needed by the dairy industry; 
(c) To encourage the integration of dairy production and local milk and 
the distribution of dairy products into various rural livelihood and nutrition 
programs; 
(d) To assume control and supervision over all dairy-related 
government agency personnel and programs, including the Bureau of Animal 
Industry's Dairy Division, the Livestock Development Council's Dairy 
Division, the Philippine Dairy Corporation, Livelihood Corporation's Laguna 
Processing Center and other dairy related government agencies, division, 
councils subject to the guidelines prescribed by the Civil Service Commission; 
(e) To borrow, raise or obtain funds; to issue bonds and other 
instruments of indebtedness; or to enter into any financial or credit 
arrangement in order to support or carry out its objectives and purposes, 
subject to pertinent laws governing public debts and expenditures; 
(f) To receive grants, subsidies, donations or contributions from 
corporations, thrusts, foundations, associations and other sources from any 
private or government office, agency or corporation in the Philippines or 
abroad; 
(g) To establish, maintain or operate field units or offices in various 
parts of the country in order to utilize the objectives of this Act; 
(h) To help design and implement a credit system that will finance 
dairy farmers and dairy cooperatives or associations; 
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(i) To charge reasonable fees for services rendered for the attainment of 
the objectives of this Act; 
6) To promulgate rules and regulations to carry out the provisions and 
policy objectives of this Act; [and] 
(k) To adopt, alter and use a corporate seal; to sue and be sued; and 
otherwise to do and perform all acts or exercise all powers as may be 
necessary or incidental to carry out the objectives of this Act[.] ; 
(L) TO SET UP A ONE STOP SHOP INSPECTION AND 
SURVEILLANCE CENTER TO BE NAMED AS THE DAIRY INSPECTION 
AND SURVEILLANCE CENTER (DISC) AND ENLIST THE ASSISTANCE 
FOR SUCH PURPOSE OF THE MILK AND DAIRY INSTITUTE OF THE 
PHILIPPINE (MDIP), BUREAU OF AGRICULTURAL & FISHERIES 
PRODUCT STANDARDS (BAFPS), BUREAU OF FOOD & DRUGS 
(BFAD), FOOD DEVELOPMENT CENTER (FDC), FOOD & NUTRITION 
RESEARCH INSTITUTE (FNRI), PHILIPPINE NUCLEAR RESEARCH 
INSTITUTE (PNRI), NATIONAL CONSUMERS WELFARE GROUP AND 
OTHER LOCAL OR FOREIGN ENTITIES; 
(M) TO MONITOR, ON THE BASIS OF EXISTING SUBSTANTIVE 
EVIDENCE, ENTITY, NATURAL OR JURIDICAL, ENGAGED IN ANY 
DAIRY PRODUCTION AND MARKETING MALPRACTICE 
AS 
DEFINED HEREUNDER AND, FOR THE SAID PURPOSE, CALL UPON 
THE BUREAU OF CUSTOMS (BOC), THE PHILIPPINE PORTS 
AUTHORITY (PPA), THE PHILIPPINE COAST GUARD (PCG), THE 
PHILIPPINE NATIONAL POLICE (PNP), THE NATIONAL BUREAU OF 
INVESTIGATION (NBI) AND OTHER LAW ENFORCEMENT AGENCIES 
OF GOVERNMENT TO CONDUCT INTELLIGENCE AND COUNTER- 
INTELLIGENCE OPERATIONS; 
FOR 
PURPOSES 
OF THIS PROVISION, 
DAIRY 
PRODUCTION 
AND 
MARKETING 
MALPRACTICES SHALL 
CONSIST OF ANY OF THE FOLLOWING: A) UNHYGIENIC FARM 
AND PLANT PRACTICES WHICH TEND TO CONTAMINATE MILK 
AND MILK PRODUCTS; 8) ADULTERATION OF RAW MILK BY 
ADDING WATER; C) UNCLEAN HAND MILKING WHICH TEND 
TO CAUSE MASTITIS AND THUS CONTAMINATE MILK; D) 
DUMPING OF IMPORTED MILK PRODUCTS; E) UNDECLARED 
STOCKING OR INVENTORY, BUFFERING OR HOARDING; F) 
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UNFOUNDED PRICE HIKING; AND G) MISLABELING, AND 
OTHERS THAT MAYBE IDENTIFIED IN THE IMPLEMENTING 
RULES & REGULATIONS (IRR); 
(N) TO CONDUCT REGULAR VISITS OR, IF NECESSARY, DO 
SPOT INSPECTIONS OF DAIRY FACILITIES SUCH AS BUT NOT 
LIMITED TO LABORATORIES, PLANTS, MARKET OUTLETS AND 
WAREHOUSES; AND 
(0) TO REQUIRE OR ENJOIN ALL SECTORS INVOLVED IN 
DAIRY RELATED BUSINESSES TO SUBMIT REGULARLY RELEVANT 
REPORTS, ACTUAL AND PLANNED, SUCH AS, BUT NOT LIMITED 
TO, PRODUCTION, INVENTORY, DISTRIBUTION, MARKET, SALES, 
PRICING AND COSTS.” 
“Sec. 14. Dairy Development Fund. - To implement [Section 131 THE 
PROVISIONS of this Act, there is hereby created a Dairy Development Fund 
which shall be used exclusively for the [above-m&tioned] programs, 
PROJECTS AND ADDITIONAL FUNCTIONS AND DUTIES OF THE 
AUTHORITY AS PROVIDED FOR IN THIS ACT in the amount of [Two 
hundred 
million 
pesos 
(P200,000,000)] 
FIVE 
BILLION 
PESOS 
(P5,000,000,000.00) from the funds in the National Treasury not otherwise 
appropriated FOR A PERIOD OF FIVE (5) YEARS. [Annually thereafter, the 
amount of not less than One hundred forty million pesos (P140,000,000) shall 
be provided to augment the fund in the General Appropriations Act.] THE 
INITIAL RELEASE SHALL BE MADE UPON THE EFFECTIVITY OF THIS 
ACT WHICH SHALL NOT BE LESS THAN ONE BILLION PESOS 
(m,ooo,ooo,ooo.oo). 
IN ORDER TO REALIZE THIS FUNDING THERE 
SHALL 
BE, 
AMONG 
OTHERS, 
AN 
AUTOMATIC 
BUDGET 
ALLOCATION EQUIVALENT TO. TWENTY-FIVE (25%) PERCENT OF 
THE ANNUAL VALUE-ADDED TAX COLLECTIONS FROM THE SALE 
OF LOCAL AND IMPORTED DAIRY PRODUCTS, RAW MATERIALS, 
DAIRY EQUIPMENT AND OTHER DAIRY RELATED PRODUCTS.” 
“Sec. 16. Nutrition Programs. - [The government‘s] ALL nutrition 
programs requiring milk and dairy products shall be PRIMARILY sourced 
from small farmers [and], dairy cooperatives AND LOCAL PRIVATE 
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PRODUCERS AS DULY CERTIFIED BY [in coordination with] the 
Authority.” 
“Sec. 18. Exemption from Taxes and Duties. - The authority shall be 
exempt from the payment of customs duties and taxes on the importation of 
dairy animals, veterinary and other supplies, other farm inputs, dairy 
equipment and machineries, including its spare parts, for distribution to dairy 
cooperatives subject to the following conditions: 
(1) That said equipment and machineries, including its spare parts are 
not manufactured domestically in sufficient quantity, of comparable quality 
and reasonable prices; 
(2) That it shall be actually, directly and exclusively used by the dairy 
cooperatives in the manufacture of its products; 
(3) That it shall not be disposed within three (3) years from acquisition, 
without prior approval of the Authority; and 
(4) If it will be subsequently sold, transferred or exchanged in the 
Philippines to non-exempt persons or entities, the purchasers or recipients 
shall be considered the importers thereof, and shall be liable for the customs 
duties and internal revenue taxes due on such importations. The customs 
duties and internal revenue taxes due on such articles shall constitute a lien 
on the article itself, superior to all other charges or liens, irrespective of the 
possessors thereof. 
Any donation, contribution, bequest, subsidy or financial aid which 
may be made to the Authority shall constitute as allowable deduction from 
the income of the donor for income tax purposes and shall be exempt from 
donor’s tax, subject to such conditions as provided’ under the National 
Internal Revenue Code, as amended. 
Small farmers and small farmers’ dairy cooperatives shall be exempt 
from all taxes on proceeds from sale of raw milk and milk products. 
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small farmers’ dairy cooperatives. 
Milk processors shall enjoy a presumptive input tax credit of four 
percent (4%) of the value of their gross purchases from small farmers and 
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MILK PROCESSORS AND PRODUCERS SHALL BE GIVEN A TEN 
PERCENT (10%) TAX REBATE FOR THE COST OF ANNUAL DAIRY 
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ADVERTISEMENT EITHER IN PRINT, TELEVISION OR RADIO, 
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PROVIDED THAT SAID PROCESSORS AND PRODUCERS ARE USING 
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ONLY LOCAL MILK FOR THEIR PRODUCTS. 
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ENTITIES, NATURAL OR JURIDICAL, WHO SPONSOR SOCIAL 
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MILK FEEDING PROGRAM OF THE GOVERNMENT SHALL BE 
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ENTITLED TO A FULL TAX CREDIT DEDUCTION EQUIVALENT TO 
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THE ACTUAL COST OF SUCH SPONSORSHIP. 
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THE SAME FULL TAX CREDIT SHALL LIKEWISE BE ACCORDED 
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TO ENTITIES, NATURAL OR JURIDICAL, WHO ARE ENGAGED IN 
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FARM OPERATIONS THAT EXCLUSIVELY PRODUCE MILK FOR 
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DOMESTIC AND FOREIGN CONSUMPTION, COMMERCIALLY OR 
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OTHERWISE.’’ 
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“Sec. 22. Penalty Clause. - Any person or entity found guilty of 
violating any provision of this Act, shall be sentenced to an imprisonment of 
not more than six (6) months or a fine of [not more than Twenty thousand 
pesos (P20,OOO.OO) or both upon the discretion of the Court] ONE MILLION 
PESOS (l?l,OOO,OOO.OO) 
FOR THE FIRST OFFENSE, TWO MILLION PESOS 
(P2,000,000.00) FOR THE SECOND OFFENSE AND THREE MILLION 
PESOS (P3,000,000.00) AND THE REVOCATION OR CANCELLATION OF 
ALL PERTINENT LICENSES OR PERMITS FOR THE THIRD OFFENSE.” 
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SEC.2. 
Implementing Rules and Regulations. To effectively implement the 
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provisions of this Act, the Authority, in coordination with the concerned 
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agencies of government as well as the private sector, shall promulgate the 
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required implementing rules and regulations. 
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SEC.3. 
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Separability Clause. If any provision or part hereof is held invalid 
or unconstitutional, the remainder of the law or the provision not otherwise 
affected shall remain valid and subsisting. 
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SEC.4. 
Repealing Clause. 
All laws, presidential decrees, executive 
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orders, proclamations and/or administrative regulations which are 
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inconsistent with the provisions of this Act are hereby amended, modified, 
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superseded or repealed accordingly. 
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SEC.5. 
Efictivify Clause. This Act shall take effect fifteen (15) days 
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from its publication in at least two newspapers of national circulation. 
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Approved, 
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