FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
SENATE 
S.B.No. 101 
Introduced by Senator FRANCIS C. ESCUDERO 
EXPLANATORY NOTE 
10 
JUL -5 PI :14 
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 milk 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 
Bureau of Agriculture & Fishery Product Standards (J3AFPS) or fresh milk 
product standardization, the Bureau of Food and Drugs (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 


FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
SENATE 
S. B. No. 101 
Introduced by Senator FRANCIS G. ESCUDERO 
AN ACT 
HI 
JUL -5 Pl :14 
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: 
SECTION 1. Sections 5, 6, 14, 16, 18 and 22 of Republic Act No. 7884 
2 
are hereby amended to read as follows: 
3 
"Sec. 5. The DainJ Industry Board. - The National Dairy Authority shall 
4 
be governed by a Dairy Industry Board, hereafter referred to as the "Board", to 
5 
be composed of the following: 
6 
(a) The Secretary of Agriculture, as chairperson; 
7 
(b) The NDA Administrator, as an ex officio member; 
8 
(c) The Secretary of Trade and Industry, as member; 
9 
(d) The Secretary of Health, as member; 
10 
(e) The Secretary of Education, Culture and Sports, as member; 
II 
(f) The Secretary of Science and Technology, as member; 
12 
(g) The Secretary of Agrarian Reform, as member; 
13 
(h) The {Director of the Dairy Training and Research Institute, as 
14 
member} SECRETARY OF THE DEPARTMENT OF SOCIAL WELFARE 
15 
AND DEVELOPMENT, as member; and 


(i) Four (4) other members who shall be appointed by the President of 
2 
the Philippines upon the recommendation of the chairperson: Provided, That 
3 
one (1) shall come from the COMMERCIAL MILK PROCESSOR'S GROUP 
4 
AND THE OTHER THREE (3) FROM THE dairy cooperatives and/ or 
5 
national dairy federation, with one representative each from Luzon, Visayas 
6 
and Mindanao: Provided, further, That they will hold office for a period of 
7 
three (3) years from the date of their respective appointments without 
8 
reappointment; Provided, finally, That any member appointed to a vacancy 
9 
shall serve only for the unexpired term of the member whom he succeeds. 
10 
THE 
BOARD, 
AS 
THE 
GOVERNING 
AND 
POLICY 
II 
DETERMINING BODY OF THE AUTHORITY, SHALL HAVE, AMONG 
12 
OTHERS, THE POWER TO: 
13 
(A) CREATE RELEVANT ORGANIZATIONAL UNITS ALONG 
14 
WITH THE REQUIRED MANPOWER RESOURCES AND LOGISTICS 
15 
SUPPORT SO AS TO RESPOND TO THE DEMAND OF THE INDUSTRY; 
[6 
(B) REVIEW AND REORGANIZE THE AUTHORITY SO AS TO 
17 
MAINTAIN EQUAL REPRESENTATION FROM THE GOVERNMENT 
18 
AND THE PRIVATE SECTOR; 
19 
(C) DESIGN AND IMPLEMENT PERSONNEL DEVELOPMENT 
20 
AND 
COMPENSATION 
PACKAGES, 
PROVIDED 
THAT 
THE 
21 
AUTHORITY HAS SUFFICIENT FUNDING TO DO SO COMING FROM 
22 
ITS REVENUE GENERATING ACTIVITIES OR OPERATIONS; 
23 
(D) ENACT SOUND AND REASONABLE POLICIES FOR THE 
24 
AUTHORITY 
TO 
ENGAGE 
IN 
DAIRY 
RELATED 
BUSINESS 
25 
ACTIVITIES, 
LIKE 
PRODUCTION, 
PROCESSING, 
PACKAGING, 
26 
DISTRIBUTION, PROMOTION, TRADING, BUSINESS CONSULTING 
27 
AND MANAGEMENT SERVICES; PROVIDED THAT THE ANNUAL 
28 
NET INCOME GENERATED FROM SUCH ACTIVITIES DOES NOT 
29 
EXCEED TEN PERCENT (10%) OF THE COMBINED TOTAL DAIRY 
30 
PRODUCTS SOLD IN THE MARKET BY DAIRY COOPERATIVES, 
31 
COMMERCIAL 
MILK 
PROCESSORS, 
DAIRY 
IMPORTERS 
AND 
32 
TRADERS BASED ON THEIR LATEST ANNUAL SALES RECORD, OR 
33 
TEN PERCENT (10%) OF THE VALUE OF THE LAST YEAR'S TOTAL 
34 
DAIRY IMPORTS MADE, WHICHEVER IS HIGHER; AND 
2 


(E) ESTABLISH SUBSIDIARIES OR INVEST IN PRIVATE 
2 
CORPORATIONS, WHENEVER REASONABLY 
NECESSARY 
AND 
3 
APPROPRIATE, PURPOSELY TO AUGMENT OR SUPPLEMENT THE 
4 
OPERATIONS OF THE AUTHORITY PROVIDED THAT ITS TOTAL 
5 
EXPOSURE DOES NOT EXCEED TWENTY FIVE PERCENT (25%) OF THE 
6 
AUTHORITY'S CURRENT NET EQUITY." 
7 
8 
"Sec. 6. Powers and Functions of the National Dairy Authority. -
The 
9 
National Dairy Authority shall have the following powers and functions: 
10 
(a) To formulate and execute dairy programs that will generate a 
II 
national impact on rural as well as urban nutrition levels and incomes; 
12 
(b) To assist in the purchase, importation, propagation, storage, 
\3 
distribution and sale of dairy equipment and engineering supplies and such 
14 
other inputs as may be needed by the dairy industry; 
15 
(c) To encourage the integration of dairy production and local milk and 
16 
the distribution of dairy products into various rural livelihood and nutrition 
17 
programs; 
18 
(d) To assume control and supervision over all 
dairy-related 
19 
government agency personnel and programs, including the Bureau of Animal 
20 
Industry'S Dairy Division, the Livestock Development Council's Dairy 
21 
Division, the Philippine Dairy Corporation, Livelihood Corporation's Laguna 
22 
Processing Center and other dairy related government agencies, division, 
23 
councils subject to the gUidelines prescribed by the Civil Service Commission; 
24 
(e) To borrow, raise or obtain funds; to issue bonds and other 
25 
instruments of indebtedness; or to enter into any financial or credit 
26 
arrangement in order to support or carry out its objectives and purposes, 
27 
subject to pertinent laws governing public debts and expenditures; 
28 
(f) To receive grants,· subsidies, donations or contributions from 
29 
corporations, thrusts, foundations, associations and other sources from any 
30 
private or government office, agency or corporation in the Philippines or 
31 
abroad; 
32 
(g) To establish, maintain or operate field units or offices in various 
33 
parts of the country in order to utilize the objectives of this Act; 
34 
(h) To help design and implement a credit system that will finance 
35 
dairy farmers and dairy cooperatives or associations; 
3 


(i) To charge reasonable fees for services rendered for the attainment of 
2 
the objectives of this Act; 
3 
0) To promulgate rules and regulations to carry out the provisions and 
4 
policy objectives of this Act; [and] 
5 
(k) To adopt, alter and use a corporate seal; to sue and be sued; and 
6 
otherwise to do and perform all acts or exercise all powers as may be 
7 
necessary or incidental to carry out the objectives of this Act[.]; 
8 
(L) TO SET UP A ONE STOP SHOP INSPECTION AND 
9 
SURVEILLANCE CENTER TO BE NAMED AS THE DAIRY INSPECTION 
10 
AND SURVEILLANCE CENTER (DISC) AND ENLIST THE ASSIST ANCE 
11 
FOR SUCH PURPOSE OF THE MILK AND DAIRY INSTITUTE OF THE 
12 
PHILIPPINE (MDIP), BUREAU OF AGRICULTURAL & FISHERIES 
13 
PRODUCT STANDARDS (BAFPS), BUREAU OF FOOD & DRUGS 
14 
(BFAD), FOOD DEVELOPMENT CENTER (FDC), FOOD & NUTRITION 
15 
RESEARCH INSTITUTE (FNRI), PHILIPPINE NUCLEAR RESEARCH 
16 
INSTITUTE (PNRI), NATIONAL CONSUMERS WELFARE GROUP AND 
17 
OTHER LOCAL OR FOREIGN ENTITIES; 
18 
(M) TO MONITOR, ON THE BASIS OF EXISTING SUBSTANTIVE 
19 
EVIDENCE, ENTITY, NATURAL OR JURIDICAL, ENGAGED IN ANY 
20 
DAIRY PRODUCTION 
AND 
MARKETING MALPRACTICE 
AS 
21 
DEFINED HEREUNDER AND, FOR THE SAID PURPOSE, CALL UPON 
22 
THE BUREAU OF CUSTOMS (BOC), THE PHILIPPINE PORTS 
23 
AUTHORITY (PPA), THE PHILIPPINE COAST GUARD (PCG), THE 
24 
PHILIPPINE NATIONAL POLlCE (PNP), THE NATIONAL BUREAU OF 
25 
INVESTIGATION (NBI) AND OTHER LAW ENFORCEMENT AGENCIES 
26 
OF GOVERNMENT TO CONDUCT INTELLIGENCE AND COUNTER-
27 
INTELLIGENCE OPERATIONS; 
28 
FOR 
PURPOSES 
OF 
THIS 
PROVISION, 
DAIRY 
29 
PRODUCTION 
AND 
MARKETING 
MALPRACTICES 
SHALL 
30 
CONSIST OF ANY OF THE FOLLOWING: A) UNHYGIENIC FARM 
31 
AND PLANT PRACTICES WHICH TEND TO CONTAMINATE MILK 
32 
AND MILK PRODUCTS; B) ADULTERATION OF RAW MILK BY 
33 
ADDING WATER; C) UNCLEAN HAND MILKING WHICH TEND 
34 
TO CA-USE MASTITIS AND THUS CONTAMINATE MILK; D) 
35 
DUMPING OF IMPORTED MILK PRODUCTS; E) UNDECLARED 
36 
STOCKING OR INVENTORY, BUFFERING OR HOARDING; F) 
4 


UNFOUNDED PRICE HIKING; AND G) MISLABELING, AND 
2 
OTHERS THAT MAYBE IDENTIFIED IN THE IMPLEMENTING 
3 
RULES & REGULATIONS (IRR); 
4 
(N) TO CONDUCT REGULAR VISITS OR, IF NECESSARY, DO 
5 
SPOT INSPECTIONS OF DAIRY FACILITIES SUCH AS BUT NOT 
6 
LIMITED TO LABORATORIES, PLANTS, MARKET OUTLETS AND 
7 
WAREHOUSES; AND 
8 
(0) TO REQUIRE OR ENJOIN ALL SECTORS INVOLVED IN 
9 
DAIRY RELATED BUSINESSES TO SUBMIT REGULARLY RELEVANT 
10 
REPORTS, ACTUAL AND PLANNED, SUCH AS, BUT NOT LIMITED 
II 
TO, PRODUCTION, INVENTORY, DISTRIBUTION, MARKET, SALES, 
12 
PRICING AND COSTS." 
13 
14 
"Sec. 14. Dairy Development Fund. -
To implement [Section 13] THE 
15 
PROVISIONS of this Act, there is hereby created a Dairy Development Fund 
16 
which shall be used exclusively for the [above-mentioned] programs, 
17 
PROJECTS AND ADDITIONAL FUNCTIONS AND DUTIES OF THE 
18 
AUTHORITY AS PROVIDED FOR IN THIS ACT in the amount of [Two 
19 
hundred 
million 
pesos 
(P200,000,000)] 
FIVE 
BILLION 
PESOS 
20 
(P5,OOO,OOO,OOO.OO) from the funds in the National Treasury not otherwise 
21 
appropriated FOR A PERIOD OF FIVE (5) YEARS. [Annually thereafter, the 
22 
amount of not less than One hundred forty million pesos (P140,000,000) shall 
23 
be provided to augment the fund in the General Appropriations Act.] THE 
24 
INITIAL RELEASE SHALL BE MADE UPON THE EFFECTIVITY OF THIS 
25 
ACT WHICH SHALL NOT BE LESS THAN ONE BILLION PESOS 
26 
(P1,OOO,OOO,OOO.OO). IN ORDER TO REALIZE THIS FUNDING THERE 
27 
SHALL 
BE, 
AMONG 
OTHERS, 
AN 
AUTOMATIC 
BUDGET 
28 
ALLOCATION EQUIVALENT TO TWENTY-FIVE (25°/r)) PERCENT OF 
29 
THE ANNUAL VALUE-ADDED TAX COLLECTIONS FROM THE SALE 
30 
OF LOCAL AND IMPORTED DAIRY PRODUCTS, RAW MATERIALS, 
31 
DAIRY EQUIPMENT AND OTHER DAIRY RELATED PRODUCTS." 
32 
"Sec. 16. Nutrition Progrmlls. -
[The government's] ALL nutrition 
33 
programs requiring milk and dairy products shall be PRIMARILY sourced 
34 
from small farmers [and], dairy cooperatives AND LOCAL PRIVATE 
5 


PRODUCERS AS DULY CERTIFIED BY [in coordination with] the 
2 
Authority." 
3 
"Sec. 18. Exemption from Taxes and Duties. -
The authority shall be 
4 
exempt from the payment of customs duties and taxes on the importation of 
5 
dairy animals, veterinary and other supplies, other farm inputs, dairy 
6 
equipment and machineries, including its spare parts, for distribution to dairy 
7 
cooperatives subject to the following conditions: 
8 
(1) That said equipment and machineries, including its spare parts are 
9 
not manufactured domestically in sufficient quantity, of comparable quality 
10 
and reasonable prices; 
II 
(2) That it shall be actually, directly and exclusively used by the dairy 
12 
cooperatives in the manufacture of its products; 
13 
(3) That it shall not be disposed within three (3) years from acquisition, 
14 
without prior approval of the Authority; and 
15 
(4) If it will be subsequently sold, transferred or exchanged in the 
16 
Philippines to non-exempt persons or entities, the purchasers or recipients 
17 
shall be considered the importers thereof, and shall be liable for the customs 
18 
duties and internal revenue taxes due on such importations. The customs 
19 
duties and internal revenue taxes due on such articles shall constitute a lien 
20 
on the article itself, superior to all other charges or liens, irrespective of the 
21 
possessors thereof. 
22 
Any donation, contribution, bequest, subsidy or financial aid which 
23 
may be made to the Authority shall constitute as allowable deduction from 
24 
the income of the donor for income tax purposes and shall be exempt from 
25 
donor's tax, subject to such conditions as provided under the National 
26 
Internal Revenue Code, as amended. 
27 
Small farmers and small farmers' dairy cooperatives shall be exempt 
28 
from all taxes on proceeds from sale of raw milk and milk products. 
6 


Milk processors shall enjoy a presumptive input tax credit of four 
2 
percent (4%) of the value of their gross purchases from small farmers and 
3 
small farmers' dairy cooperatives. 
4 
MILK PROCESSORS AND PRODUCERS SHALL BE GIVEN A TEN 
5 
PERCENT (10%) TAX REBATE FOR THE COST OF ANNUAL DAIRY 
6 
ADVERTISEMENT EITHER IN PRINT, TELEVISION OR RADIO, 
7 
PROVIDED THAT SAID PROCESSORS AND PRODUCERS ARE USING 
8 
ONL Y LOCAL MILK FOR THEIR PRODUCTS. 
9 
ENTITIES, NATURAL OR JURIDICAL, WHO SPONSOR SOCIAL 
10 
MILK FEEDING PROGRAM OF THE GOVERNMENT SHALL BE 
11 
ENTITLED TO A FULL TAX CREDIT DEDUCTION EQUIVALENT TO 
12 
THE ACTUAL COST OF SUCH SPONSORSHIP. 
13 
THE SAME FULL TAX CREDIT SHALL LIKEWISE BE ACCORDED 
14 
TO ENTITIES, NATURAL OR JURIDICAL, WHO ARE ENGAGED IN 
15 
FARM OPERATIONS THAT EXCLUSIVELY PRODUCE MILK FOR 
16 
DOMESTIC AND FOREIGN CONSUMPTION, COMMERCIALLY OR 
17 
OTHERWISE." 
18 
"Sec. 22. Penalty Clause. -
Any person or entity found guilty of 
19 
violating any provision of this Act, shall be sentenced to an imprisonment of 
20 
not more than six (6) months or a fine of [not more than Twenty thousand 
21 
pesos (P20,OOO.OO) or both upon the discretion of the Court] ONE MILLION 
22 
PESOS (PI,OOO,OOO.OO) FOR THE FIRST OFFENSE, TWO MILLION PESOS 
23 
(P2,000,000.00) FOR THE SECOND OFFENSE AND THREE MILLION 
24 
PESOS (P3,000,OOO.00) AND THE REVOCATION OR CANCELLATION OF 
25 
ALL PERTINENT LICENSES OR PERMITS FOR THE THIRD OFFENSE." 
26 
SEC. 2. 
Implementing Pules lind Pegulillions. 
To effectively 
27 
implement the provisions of this Act, the Authority, in coordination with the 
28 
concerned agencies of government as well as the private sector, shall 
29 
promulgate the required implementing rules and regulations. 
30 
31 
SEC. 3. 
Separability Clause. If any provision or part hereof is held 
32 
invalid or unconstitutional, the remainder of the law or the provision not 
33 
otherwise affected shall remain valid and subsisting. 
7 


SEC. 4. 
Repealing Cilluse. All laws, presidential decrees, executive 
2 
orders, 
proclamations and/ or administrative 
regulations 
which are 
3 
inconsistent with the provisions of this Act are hereby amended, modified, 
4 
su perseded or repealed accordingly. 
5 
6 
SEC. 5. 
Effectivity Clause. This Act shall take effect fifteen (15) 
7 
days from its publication in at least two newspapers of national circulation. 
S 
9 
10 
Approved 
8