RECEIVES

Republic of the Philippines DAE
HOUSE OF REPRESENTATIVES tive: Se OM
‘Quezon City, Metro Manila py: Pea .

Seventeenth Congress feeigre wren Ut

Fst Regular Sesion diiiia ner metas
House Bi No 8087 _ -

Introduced by Representative Sharon S. Garin

EXPLANATORY NOTE

Although the government and stakeholders are united in their cause to save the coconut
industry, a divergence in action leads to cosmetic and fragmented solutions. A salient way of
\ging about fundamental and comprehensive change is restructuring the policy and institutional
framework, strengthening the very scaffolding on which the industry operates. And the core of such
an initiative is legislating a Coconut Industry Development Act which will provide the overall
strategic guidance to the industry and the Philippine Coconut Authority (PCA).

‘The coconut industry is one of the biggest agricultural industries in the country. It covers the
3.562 million hectares or 26% of total agricultural land in the country. An average of 15.2 billion or
coconuts is produced in a year. Carrying over 24 million direct and indirect stakeholders in over 69
provinces in the country, there is a genuine need for a strong and robust policy and institutional
foundations to support and guide the multitude of activities, operations, and interactions with the
industry.

Governmental issues, regulatory challenges, national and international economic realities,
and scientific reliability are but a few of the pressing concerns that need to be addressed by the
institution at the helm of the industry. But corollary to the responsibilities that the institution need
to fulfill are capacitating powers to effect change. In this, the PCA’s charter is undeniably deficient.

Presidential Decree 232 which created the Philippine Coconut Authority was enacted back in
1973. Subsequent legislations also touched on the PCA charter, the last being Presidential Decree
1468 in 1978. The existing law, thus, reflects the realities of around 35 years ago. As such, the meat
of the provisions of PD 1468 was mere monitoring. But the situation of the coconut industry and
the conditions of the farmers then are vastly different from today. What we need now are
corporate powers, regulatory powers, and a strong research and development strategy, among
others.

‘As a result of the outdated charter, the Philippine Coconut Authority carries its enormous
tasks on feeble arms. It is mandated to serve as platform in addressing the gaps that continue to
erode the positioning of the Philippine coconut industry in the global arena but its limited and

VCE



obsolete powers restrict their policy actions in bringing into b
both at the policy and operational levels.

ig the necessary transformations

This measure, thus, aims to revitalize the coconut industry primarily by equipping the PCA
with solid and multifaceted mandate, which focuses on developmental, governmental, regulatory,
research and development, and corporate powers and functions. Furthermore, acknowledging the
importance of the key stakeholders ~ the coconut farmers, the measure provides extension services
and marketing assistance to boost their yield and expand their income. It also provides
intermediation and arranging services for investment, financing, and trade, among others. The bill
also presents measures on rehabilitation and fertilization of coconut trees.

A highlight of the bill is the removal of corporate restriction of PCA to make it a profitable,
sustainable, and development-oriented agency. Right now, PCA only has a subsidy of around
P939.750 million, equivalent to a mere 1.86% of the total allocation of the Department of
Agriculture for FY 2013. Despite its best effort to implement programs and projects for the industry,
PCA can only do so much with its meager budget.

The bill also includes for potent provisions on research and development to cultivate a
culture of scientific excellence and professionalism in its agricultural and industrial research and
establish credence to the initiatives, findings, and innovations of PCA. The expanded powers also
allow for the development and propagation of new discoveries and technologies which we can
capitalize on. This would also allow us to make the most out of evolving opportunities especially
with the underdeveloped niches of the industry.

Another key feature of the bill is the inclusion of palm-based products and by-products,
particularly palm oil, seeing the need to provide policy direction and support to the industry.
Although it is acknowledged that oil palm and other palm trees and its products/by-products are
under the PCA’s supervision, it is not explicitly stated and detailed in the existing PCA charter,
inadvertently putting it on the sidelines of policy making.

The reorganization of PCA also allows for more representation from the farmers, processors,
traders, researches, scientists and academe comprising seven board seats out of the 11 board
seats. Moreover, since coconut is a long-gestating crop, it is also prudent to fix the term of the
administrator of PCA to ensure the full implementation of the policies and programs of the agency.
Hence, this measure fixes the term of the administrator to six years.

A competitive market and a plethora of socio-economic issues affecting the coconut
industry call for lasting, substantial, and comprehensive action. The band aid approaches have done
more damage than good the past decades, and as changes in the industry and the environment in
which it operates are becoming even more competitive and dynamic, it is high time that we
respond judiciously and assiduously.

In view of the foregoing, the passage of this measure is fervently sought.

AAMGISOwa Party-list


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Seventeenth Congress
First Regular Session

HOUSE BILL NO. 3537

Introduced by Rep. Sharon S. Garin

AN ACT
REVITALIZING THE COCONUT INDUSTRY, APPROPRIATING FUNDS
THEREFOR AND FOR OTHER PURPOSES

ARTICLE 1
GENERAL PROVISIONS

SECTION 1. Short Title. ~ This Act shall be known as “The Coconut Industry Development
Act of 2016.”

SECTION 2. Statement of Policy. — It is the policy of the State to recognize the essential
role of coconut as a strategic, indigenous, replenishable and renewable source of
livelihood for a great number of people. Towards this end, the State shall promote the
rapid, steady and continuous integrated development and growth of the coconut
industry in all its aspects and ensure that the coconut farmers, farm workers,
processors, lessees and tillers, and their families, shall become direct participants in,
and beneficiaries of, such development and growth thereby increasing their income and
uplifting their quality of life.

As used in this Act, “coconut” shall encompass coconut trees and oil palm trees,
and coconut and oil palm-based products and by-products.

SECTION 3. Goals and Objectives. ~ Pursuant to the above-mentioned policy, the effort
of government shall be directed towards the following goals and objectives:

a) Promote the steady, accelerated, and orderly development of the coconut
industry consistent with the agrarian reform policy of the government;

b) Develop and establish the coconut farming systems including but not limited to
the establishment of model coconut farms;


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Hasten and advance industrialization in the coconut industry and the
ersification and proper utilization of coconut products and by-products, and
oil palm products and by-products;

Promote the effective utilization and marketing of coconut products and by-
products and oil palm products and by-products in the domestic and foreign
markets and preserve the competitiveness and reliability of the country as a
major producer and supplier of said products, by establishing national
standards acceptable in the international market;

To increase production by expanding the planting and replanting program of
coconut trees in strategic areas identified as having the most potential and the
rehabilitation and fertilization of existing coconut trees;

Conduct scientific researches and investigations in all areas pertaining to
agricultural, industrial, marketing and socio-economic aspect of the coconut
industry and encourage the participation of small farm holders in research and
technology;

Encourage and promote the organization of coconut farmers cooperatives,
associations, and organizations and provide them credit and financing
schemes;

Generate and disseminate information and communication to farmers,
producers and other sectors to ensure the appreciation and adoption of
appropriate technology and practices, inventions, as well as the proper
awareness and correct understanding of issues and development in the
coconut industry; and

Coordinate and integrate all efforts of various agencies of government and
provide general direction for the steady and orderly development of the
industry.

ARTICLE II
POWERS AND FUNCTIONS OF THE
PHILIPPINE COCONUT INDUSTRY DEVELOPMENT AUTHORITY

SECTION 4. Philippine Coconut industry Development Authority. ~ To implement the
policy and objectives of this Act, there is hereby created and established a non-stock,
government corporate entity known as the Philippine Coconut Industry Development
Authority (PHILCIDA), hereinafter referred to as the Authority.

SECTION 5. Powers and Functions. - The Authority shall exercise the following core
powers and functions:


a) Developmental Power and Function

1) Formulate and adopt a general program of development geared towards
increased farm productivity, through planting or replanting of suitable
seedling varieties, rehabilitation and fertilization of coconut, integrated
coconut-based farming systems and product processing, and whenever
necessary, the construction of related support and infrastructure facilities.
For this purpose, the Authority shall adopt a special program to maximize
the yield of small coconut farmers and their farm families particularly those
farms covered by the agrarian reform program of the government;

b) Research and Development Powers and Functions

¢)

1) Undertake scientific researches and investigations on crop and varietal
improvement, pests and diseases, agronomy and mineral nutrition, coconut
wood utilization, virology and biochemistry and epidemiology of cadang-
cadang, and such other similar studies on varietal and crop improvement of
general or local suitability;

2) Undertake scientific researches and investigations on food, non-food
products and by-products including bio-diesel, directly or in collaboration
with other public agencies or the private sector;

3) Conduct intensive studies and data research, establish and maintain a
database of primary, accurate and reliable information on coconut culture,
production, pricing capacity, marketing, inventories as well as scientific
thesis and treaties in coordination with other government offices, the
private sector and international agencies and bodies;

4) Establish, maintain and operate such number of research centers and
experiment stations, including laboratories, seed gardens, nurseries, pilot
farms and industrial facilities as may be necessary to undertake extensive
research in coconut pests and diseases, improvement of copra,
manufacture of coconut products and by-products or oil palm products and
by-products, and the greater utilization of the coconut for traditional and
non-traditional uses;

5) Construct, invest, establish and operate integrated coconut centrals,
processing plants and integrated processing mills and other support
facilities in aid of its research and development function;

6) Secure or obtain registration of intellectual property rights on any
discoveries, new process, or utilization involving coconut products and by-
products or oil palm products and by-products resulting from its research
and studies;

7) Develop, package, utilize, promote, and transfer viable techniques and
technologies: Provided, however, That an appropriate royalty or
technological transfer fee shall be imposed, the amount of which shall be
determined by the PHILCIDA Board of Directors;

8) Purchase or fabricate such machineries, material, equipment and supplies
as may be necessary to execute successfully such researches, investigations
and experimental work as provided under this Act on its own or in
partnership with other agencies.

Regulatory Powers and Functions


1 1) Regulate the marketing and the exportation of coconut products and by-
2 products and oil palm products and by-products to conform with quality
3 or food standards recognized by both the domestic and international
4 market;

5 2) Take samples and conduct examination of any copra, coconut products
6 and by-products and oil palm products and by-products that are subject
vi to domestic and international standards; to conduct laboratory analysis
8 to determine the chemical characteristics of moisture content,
9 contaminants, including the presence of toxin and other contaminants

10 and issue the necessary commodity clearance and export permit:

i Provided, That the Authority may withhold the issuance of such

12 clearance or permit, or suspend or cancel any clearance or permit

B already issued in case of violation by the holder of any provision of this

4 Act or rules and regulations duly promulgated by the Authority;

15 3) Develop and recommend for the adoption of the Bureau of Plant

16 Industry and other concerned government agencies measures and

7 methodology quarantine for coconut products and by-products and oil

18 palm products and by-products; to impose such restrictions in the

19 transport movement or handling of the same in accordance with such

20 standards and quarantine procedure determined by the Authority;

21 4) Order the closure of any mill, refinery, processing firm, copra warehouse

22 or any place or building where coconut products and by-products or oil

23 palm products and by-products are stored or to intercept any vehicle or

24 ship or vessel carrying or transporting coconut products and by-products

25 or oil palm products and by-products, and seize the contents thereof,

26 where there is reasonable ground to believe that the owner, possessor

27 or person or persons in control of such place, building, vehicles, ship or

28 vessel, of such products have violated the provisions of this Act or any

29 rules and regulations promulgated thereto in a manner that is prejudicial

30 and detrimental to the coconut industry, or the consuming public;

31

32 d) Corporate Powers and Functions

3: 1) Create subsidiaries or enter into partnerships or joint ventures with any

34 public or private foreign or local entity, natural or juridical, and acquire,

35 own or hold shares of stock or interest therein for the purpose of fully

36 utilizing the commercial value of pioneer and new technology generated

37 in the industry, or of financing the manufacture, on commercial scale of

38 coconut products and by-products or oil palm products and by-products:

39 Provided, That such subsidiary, partnership, joint venture, which the

40 Authority is authorized to create, shall be governed by the provisions of

41 general laws applicable to corporations and such entities: Provided,

2 further, That after such partnership, subsidiary, or joint venture with

43 private Filipino citizens or entities authorized to be created shall have

44 become fully viable for commercial operation, and the Authority has

45 recovered its investments or contributions, the Authority shall

46 immediately divest itself of its interest over the partnership, subsidiary,

47 or joint venture in favor or any private person or entity. For purposes of

48 this paragraph, the Authority shall make studies and investigations of the

49 enterprises and projects for which the loans, contributions and

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2)

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subscriptions to the capital of the enterprise or investments mentioned
are needed, and determine the advisability of financing the same;

Lease real estate, lands and interest in lands owned and acquired by the
‘Authority including buildings or other structures with their
appurtenances in pursuance of any partnership or joint venture to
implement its technology or developmental projects and programs;
Borrow, raise or obtain funds; to issue bonds and other instruments of
indebtedness; or to enter into any financial or credit arrangement from
any financial or lending institutions, local or foreign, in order to support
or carry out its objectives and purposes, subject to pertinent laws
governing public debts and expenditures; and when necessary, subject to
the approval of the President;

Receive grants, subsidies, donations or contributions from corporations,
trusts, foundations, associations and other sources from any private or
government office, agency or corporation, local or foreign;

Purchase, own, lease, hold, or otherwise acquire real estate, lands and
interest in lands and to own, hold, improve, develop, and manage any
real estate so acquired and to erect, rebuild, enlarge, alter or improve
buildings or other structures with their appurtenances on any lands so
owned or occupied;

Purchase, own, lease, hold, or otherwise acquire such machineries,
equipment, tools, materials, supplies, or other parts as may be
necessary, convenient or appropriate for any of the purposes for which
the Authority is formed;

Invest and deal with the funds of the Authority in stocks, bonds and
other secured collaterals with skill, care, prudence and diligence, in order
not to make such funds idle and unproductive pending their full
utilization for the principal objects and purposes for which the Authority
has been organized: Provided, however, That such investment or
investments shall be subject to the approval of the President.

e) Extension Services and Market Development Powers and Functions

1)

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Render training, extension service programs and disseminate
information to coconut farmers, farm workers and processors relative to
production technology, marketing systems, entrepreneurial and other
technical skills and values, attitude formation and socio-economic
development strategies;

Promote, encourage and assist coconut [planters,] farmers, processors
and workers organize themselves into associations and cooperatives,
equip them with greater capability of marketing their products, and
assist them obtain more credit facilities; to register and accredit such
associations and cooperatives for purposes of participation in the
developmental programs of the Authority: Provided, That the Authority
shall not directly or indirectly influence the farmers in the exercise of
their choice or selection of candidates or leaders in the organizations;
Provide, in coordination with the private sector, a system of
accreditation of association of traders, millers, desiccators, farmers,
exporters and end-users of coconut products and by-products and oil
palm products and by-products;



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4)

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Undertake or participate in trade missions to obtain better preferential
trading arrangements with importing countries, and enter or otherwise
participate in behalf of the coconut trading industry in all agreements,
arrangements, missions or conventions with any foreign government or
entity with respect to trading relations, market quotas, tariff and non-
tariff barriers and such other matters affecting the export of coconut
products and by-products, and oil palm products and by-products;

Assist coconut farmers, organizations in marketing their products locally
or abroad when the need arises;

Assist coconut farmers organizations in establishing farmer owned
bonded warehouses and processing facilities;

Develop credit assistance programs and funding mechanisms for
coconut [planters,] farmers, processors, workers, and organizations;
Engage in the business of manufacture and merchandise of coconut
consumer products and by-products and distribute the same in the local
market to avert the short supply of such products for the interest of the
consumers;

promote the expansion and development of the domestic and foreign
market for coconut products and by-products and oil palm products and
by-products

f)_ Governmental Powers and Functions

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Impose and collect all fees, charges, assessments and imposts i
interests and surcharges authorized under this Act o
rules and regulations and disburse funds generated by the Authority
from its operations to carry out its functions;

Require exporters, traders, millers, refiners, desiccators, oleo-chemical
processor, other manufacturers and end-users of coconut products and
by-products, and oil palm products and by-products to submit periodic
reports of production, receipts of deliveries or purchases or both, sales,
inventory, contracts and such other data the Authority may deem
necessary to properly and effectively promote the development of the
industry;

Promulgate its own rules for investigation and procedure to investigate
complaints involving violations of this Act or any rules and regulations
issued pursuant thereto, or any such other laws, rules and orders
affecting the coconut industry; attribute or settle conflicting claims or
render the appropriate decision or award including the imposition and
administrative penalty of cancellation, revocation and suspension of
license, registration, permit or clearance issued in accordance with this
Act;

Call upon or deputize any official or law enforcement agency of the
government as may be necessary to assist the Authority in carrying out
and enforcing its functions under this Act;

Issue subpoena or subpoena duces tecum and/or subpoena ad
testificandum to summon witnesses to appear in any investigation or
hearing conducted by it;

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6) Enter into, make, conclude, perform, and carry out contracts of every
kind and nature and for any lawful purpose which are necessary, proper
or incidental to any business or purpose of the Authority; and

7) Adopt, alter and use a corporate seal; to sue and be sued; and otherwise
to do and perform all acts or exercise all powers and functions necessary
or incidental to attain the national policy and objectives under this Act.

ARTICLE IIL
BOARD OF DIRECTORS AND OTHER PERSONNEL,

SECTION 6, Board of Directors. - The corporate powers and duties of the Authority shall
be vested and exercised by a Board of Directors, hereinafter referred to as the Board,
composed of seven members to be appointed by the President, three of whom shall
represent the coconut farmer sector, one (1) from the trading and processing sector,
‘one (1) from the science and research sector, and two (2) from the government sector.
The Chairman shall be designated by the President from among the members
appointed. in his absence, the chairman may designate any member of the board to.
preside during the meeting.

SECTION 7. Tenure. - The members of the Board shall hold office for a term of six (6)
years or until their successors shall have been appointed and qualified or unless sooner
removed for cause. Appointment to vacant positions shall only be for the unexpired
term of the predecessor.

SECTION 8. Powers and Functions. - The Board shall exercise the following powers and
functions:

a) Formulate and adopt a national government plan for the coconut industry and
promulgate the necessary rules and regulations, policies and measures in
support of the plan;

b) Prescribe the organization of the Authority and fix the compensation and
allowances of all its personnel in accordance with law;

©) Reorganize the Authority when there is a need to institute reforms in the
organizational structure to effect economy and promote efficiency. For this
purpose, the Board may group, coordinate, consolidate or integrate positions
and create, reclassify, split and abolish positions;

d) Adopt, promulgate or amend, revise, modify or repeal rules and regulations
necessary to implement the provisions of this Act;

e) Appoint the Administrator and deputy administrators and other officers upon
the recommendation of the Chairman and Chief Executive Officer;

f) Approve the annual budget and such supplemental budgets of the Authority;

8) Review, revise, modify, increase or decrease the fees and assessment
authorized to be collected in this Act as current industry condition may warrant

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taking into account public interest, cost of services and the prices of coconut
products and by-products, and oil palm products and by-products; and

h) Perform such other duties as may be assigned to it by the President of the
Philippines, consistent with this act.

SECTION 9. Quorum and Meeting. — The Board shall meet as often as the exigency of
the service may demand. The presence of at least four (4) members shall constitute a
quorum and the vote of a majority of the members present constituting a quorum shall
be necessary for the adoption of any rule, resolution, decision or any other act of the
Board.

SECTION 10. Compensation. ~ The members of the Board shall each receive per diems
for every committee and board meetings actually attended in accordance with existing
rules and regulations: Provided, however, That the total per diem collected each month
shall not exceed the equivalent per diem for four (4) committee/board meetings.
Unless and until the President of the Philippines has fixed a higher per diem for the
members of the Board, such per diem shall not be more than six thousand for every
committee / board meeting.

SECTION 11. Officers and Personnel. — The Chairman of the Board, who shall have the
rank and privileges of a Department Secretary, shall be the head and Chief Executive
Officer of the Authority. Upon his recommendation, the Board shall appoint an
Administrator of the Authority who shall be the Chief Operating Officer, with the rank
and privileges of a Department Undersecretary. The Administrator shall have the
responsibility of managing the day-to-day affairs and operations of the Authority
subject to the supervision and control of the Chief Executive Officer and in accordance
with the policies established by the Board.

The Administrator shall have a term of six (6) years unless sooner removed.

There shall be such sufficient number of deputy administrators as the Board may
prescribe to assist the Administrator who shall be appointed or removed for cause by
the Board. The Administrator and the deputy administrator may be assigned with such
powers and duties as the Chairman and Chief Executive Officer may prescribe from time
to time.

SECTION 12. Application of the Civil Service Law. ~ All officers and employees of the
Authority shall be subject to the civil service laws, rules and regulations, and all
selection and appointments shall be based on merit and fitness.

ARTICLE IV
MANAGEMENT AND OPERATIONS,

SECTION 13. Management. - The management of the corporate affairs of the Authority
shall be the responsibility of the Chief Executive Officer with the assistance of the
Administrator, deputy administrator for planning and such other officers as may be
determined by the Board.


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SECTION 14. Duties of the Chief Executive Officer. - The Chief Executive Officer shall
exercise the following duties and responsibilitie

a) Initiate and develop corporate poli
the Boar

ies, programs and objectives for approval of

b) Establish general administrative and operating policies;

€) Appoint all other non-officer employees of the Authority;

d) Execute for and in behalf of the Authority contracts, obligations and
agreements which are required to be approved by the Board;

e) Appoint technical consultants;

f) Discipline officers and employees in accordance with civil service laws, rules
and regulations;

g) Submit the internal organizational structure of the Authority, financial
statements and other reports as may be required by the Board;

h) Delegate or assign any of the foregoing powers and duties except the power to
appoint any official in the hierarchy of authority and always subject to his
supervision and control; and

i) Exercise such other powers and duties as may be assigned by the Board.

SECTION 15. Corporate Planning Office. - To assist the Chief Executive Officer in the
formulation of general plans and programs, promulgation of policies, the monitoring
and evaluation of industry and corporate activities, there shall be a Corporate Planning
Office which shall serve as the technical arm under the office of the Chairman, having
the status of a branch which shall be headed by director for corporate planning with a
rank of deputy administrator. The term of the director for corporate planning shall be
co-terminus with the Chairman.

SECTION 16. Duties of the Chief Operating Officer. - The Chief Operating Officer shall
exercise the following duties and responsibilities:
a) Ensure that the administrative and operating policies are carried out under the
direction and control of the Chairman and Chief Executive Officer;

b) Prepare and submit to the Chief Executive Officer, within sixty (60) days before
the beginning of each calendar year, an annual operational budget of the
Authority; and

c) Monitor operational problems, adopt remedial measures and submit policy
proposals to improve the day-to-day affairs and operations of the Authority.

d) perform other duties and functions as may be assigned by the chairman of the
board.


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SECTION 17. Branch Offices. - The Authority shall have the following branches:

a) Agricultural and Industrial Research and Development Branch for the
execution and implementation of systematic, unified, and credible research
and development policies, plans and programs on coconut. production,

n, propagation, and related technologies as guided by principles of

scientific excellence and professionalism including the implementation of

policies, plans and programs relating to advancement in industrialization and
development for the coconut products and by products, and oil palm products
and by-products particularly on food, oleo-chemicals, fuels and lubricants;

b) Market Research and Development Branch for the formulation and
implementation of policies, plans and programs relating to domestic and
international markets development affecting the coconut industry including
the enforcement of market rules and regulations formulated by the Authority;

©) Field Operations Branch for execution and implementation of policies, plans
and programs relating to production, marketing and processing activities;

d) Administration and Finance Branch for developing and maintaining the delivery
of all necessary administrative, financial and manpower support for the whole
operations of the Authority; and

e) Development Information and Communication Branch for the execution and
implementation of policies, plans and programs relating to development
information and communication as well as other socio economic research and
development.

Every branch shall be headed by a deputy administrator or such qualified acting
or officer in charge as may be designated by the Chief Executive Officer.

SECTION 18. Regional Offices. - The Authority shall establish and organize regional
offices in coconut producing areas in the country in accordance with the political and
administrative regions in the country and such number of provincial or district offices,
or both, that will assist the Authority in the full implementation of this Act.

SECTION 19. Departments, Divisions and Units. —There shall be organized such
specialized departments, divisions, units or offices as may be necessary to provide the
needed administrative, technical and specialized services, as may be deemed proper
and expedient by the Board, which shall be headed by a person with the required
specialization or expertise as prescribed in the qualification standard for the positi
function.

ARTICLE V
SOURCES OF FUNDING

SECTION 20. Coconut Development Fund. ~ There is hereby established a national coconut
development fund to be administered by the authority for the purpose of financing the

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growth and development of the coconut industry, including human resource
development, training of farmers and other related activities. the sum of one billion pesos
(P1,000,000,000.00) is hereby appropriated from all taxes, duties, fees, charges and
impost on persons and entities engaged in business involving coconut products and by-
products and shall be utilized for the purpose above stated.

Thereafter, a continuing appropriation for five (5) years, subject to annual review,
is hereby authorized to be appropriated from the same source of the total industry
performance which shall not be less than one billion pesos (p1,000,000,000.00) per annum
to be made available by the Bureau of Treasury.

SECTION 21. Special Corporate Support Fund. ~ The Authority shall have a Special
Corporate Support Fund for its administrative operating expenses to be funded from
the following sources:

a) An assessment of twelve centavos (P0.12) per kilogram of copra or husked
nuts, or their equivalent in other coconut products and by-products, delivered
to and purchased by traders, exporters, millers, desiccators, processors and
other end-users of coconut products and by-products: Provided, That said
amount shall be subject to reassessment within three (3) years from the
effectivity of this Act and every three (3) years thereafter. Such assessment
shall be collected by the Authority and deposited with any government
depository bank which shall be used exclusively for the operational,
supplemental or special budget duly approved by the Board: Provided, further,
‘That no portion of the fund nor any unexpended balance thereof, including its
earnings, shall be transferred to the general or any special funds of the
government, but shall remain as corporate funds to be used in accordance with
the authorized purposes; and

b) The proceeds of regulatory and service fees or charges as may be determined
and imposed by the Board in the implementation of the provisions of this Act
to cover reasonable costs of service in the issuance of licenses, certificates,
export permits prior commodity clearances including other incomes to be
withdrawn in accordance with the immediately preceding paragraph. Such
regulatory and service fees or charges shall not be construed or interpreted
under any law or regulation, as special and/or fiduciary funds, or as part of the
general funds of the national government.

Such assessment and regulatory and service fees are subject to review by the
governing board of the Authority and may be increased from time to time to
cover cost of inflation or as the need arises.

SECTION 22. Other Sources of Funding. ~ In the event the funds as provided in Sections
20 and 21 of this Act become insufficient, an amount not less than the initial
appropriation mentioned in Section 20 hereof shall be appropriated from the following
sources:

a) The proceeds of loans which the Authority may obtain from financial
institutions: Provided, That should the total outstanding proceeds shall at any

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one time exceed One Billion Pesos (P1,000,000,000.00), the transaction shall be
subject to the approval of the President;

b) All other proceeds, income, and collections arising from transactions
authorized under this Act: Provided, That proceeds herein mentioned shall be
used to finance socio-economic, developmental, and research and
development programs and projects of the Authority;

©) The proceeds of the value-added tax imposed on all coconut products and by-
products; except copra, copra cake and meal which are hereby exempted from
payment of value added tax and on the services of coconut oil mills, desiccated
coconut factories and other processors of coconut products shall be collected
by the Bureau of Internal Revenue under Executive Order No. 273, entitled
“Adopting A Value-Added Tax, Amending For This Purpose Certain Provisions Of
the National internal Revenue Code, And For Other Purposes,”: Provided, That
such proceeds of the value added tax shall be deposited with the Treasurer of
the Philippines within the first ten (10) days of each quarter and shall be
automatically appropriated to finance the programs and projects of the
Authority;

d) All other funds as maybe provided for by Law, judicial determination or
executive declaration.

ARTICLE VI
REGISTRATION, LICENSE, PERMITS

SECTION 23. Application for Registration. — Any person directly or indirectly engaged in
the manufacture, processing, and other business involving coconut products and by-
Products, and other oil palm products and by-products to be determined by the

Authority pursuant to its rules and regulations shall apply for registration with the
Authority,

SECTION 24. License to Operate. ~ Upon approval of application for registration, the
Authority shall issue the corresponding license to operate under such rules and
regulations promulgated for the purpose. The application for registration and license
shall be mandatory for both the principal and his agents in the case of natural persons,
and the central or main offices and their branches or subsidiaries in the case of juridical
persons.

ARTICLE VII
COMMODITY SUPERVISION

SECTION 25. Application for Export Clearance. ~ Notwithstanding any provision of law
to the contrary, all exporters of copra, coconut oil, desiccated coconut, copra cake or
meal, and other coconut products and by-products shall file with the Authority, not
later than ten (10) days prior to the date of loading, an application for export clearance
Pursuant to such forms prescribed by the Authority under its implementing rules and
regulations.

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SECTION 26. Use of Moisture Meter. — For an accurate determination of moisture
content in the copra resecada, and in observation of the standard scale for moisture
content established by the Authority, all persons or firms engaged in the business
involving copra shall use moisture meters duly calibrated, serialized and sealed by the
Authority or any duly authorized office.

SECTION 27. Fees. - The Authority shall collect in addition to the fees for the issuance,
renewal or replacement of license and registration such reasonable fees to cover the
cost of services under this Act.

ARTICLE VIII
INCENTIVES

SECTION 28. Tax Incentives. The coconut industry, its institutions, members and
participants shall be entitled to all tax and non-tax incentives under existing applicable
laws, decrees, executive orders and similar issuances.

SECTION 29. Tax Exemption. - Notwithstanding the provisions of any law to the
contrary, all real properties, equipment and machinery acquired by the Authority for its
operations under this Act shall be exempt from all taxes, fees, duties, imposts and
assessments, both national and local except income tax.

ARTICLE IX
SPECIAL PROVISIONS.

SECTION 30. Conservation of Coconut Trees. — In order to conserve and protect the
resources devoted to coconut industry, the Authority shall regulate the cutting or
destruction of coconut trees in accordance with the provisions of Republic Act 8048,
otherwise known as the Coconut Preservation Act of 1995, including all amendments
thereto on the date this Act takes effect and to execute and enforce the police powers
granted under this Act.

SECTION 31. Measures to Protect the Industry. - When the general welfare of the
industry for national interest so requires, and when there exist unabated increase in
production capacity resulting, singly or collectively, in cutthroat competition,
overproduction, underselling, and smuggling of poor quality coconut products and by-
products, or oil palm products and by-products, thereby threatening the viability and
stability of the coconut industry or any sector thereof, the Authority shall regulate or
otherwise suspend the issuance of license for the establishment and operation of any
new coconut oil mill, desiccated coconut plant or refinery or the upgrading of capacities
of existing mill, plant or refinery. In granting the license, the Authority shall evaluate
and determine the need for the establishment of additional mills or plant or upgrading
the capacity of any existing mills or plant in relation to:

a) The existing market demand;

b) The production capacity prevailing in the country, locally or any sector of the
industry;

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¢)_ The level and flow of supply or raw materials; and

d) Such other circumstances which may affect the viability or stability of the
industry concerned.

ARTICLE X
PENALTIES

SECTION 32. Penalties. - Any person who wilfully or deliberately violates any of the
provisions of this Act or rules or regulations duly promulgated hereunder shall be
punished by a fine of not less than two hundred thousand pesos (P200,000.00), or by
imprisonment of not more than five (5) years, or both: Provided, That should the
violation constitute an act punishable under the Revised Penal Code, the pertinent
provision and penalty prescribed in the said Code shall apply.

If the violation be committed by an association, partnership, corporation or any
Juridical person, the officer or officers, director or employee responsible for the
violation shall be held liable and shall suffer the penalties provided herein. An alien
found guilty shall after having served his sentence be immediately deported and in case
of a naturalized citizen, his Certificate of Naturalization shall be cancelled. —

SECTION 33. Interest and Charges. — Assessment and regulatory or service fees or
charges which are not paid on the due date thereof shall be subject to penalty interest
of fourteen (14%) percent per annum. In addition thereto, a surcharge of twenty five
(25%) percent shall be imposed in case of wilful or fraudulent failure to pay as
determined by the court in a case filed therefor.

ARTICLE XI
TRANSITORY PROVISION

SECTION 34. Implementing Rules and Regulations. — The PHILCIDA is hereby given full
power and authority to promulgate such rules and regulations it may deem proper and
necessary for the effective implementation of this Act.

SECTION 35. Abolition. - The Philippine Coconut Authority is hereby abolished and its
powers and functions transferred to the Philippine Coconut Industry Development
Authority together with all the appropriations and funding from all sources, including all
its obligations, equipment and other assets and such personnel as are necessary:
Provided, That as a result or incident of the abolition , no personnel shall be terminated
or separated except when the Board shall exercise its authority to reorganize pursuant
to Article Ill, Section 8 of this Act: Provided further, That displaced personnel as a result
of the abolition shall be given compensation equivalent to twice their present salary for
every year of government service. Provide furthermore, that the Authority through the
Board, shall effect the transfer of absorbed personnel in a manner that will ensure the
least disruption of on-going programs and projects: Provided finally, that until such
reorganization is implemented, all officers and employees of the abolished agency shall
continue all functions and discharge all their duties and responsibilities.

ARTICLE XII

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MISCELLANEOUS

SECTION 36. Separability Clause. — If any part or provision of this Act is declared
unconstitutional, other parts or provisions thereof which are not affected thereby shall
continue to be in full force and effect.

SECTION 37. Repealing Clause. ~ All laws, decrees, executive orders, rules and
regulations and other issuances or parts thereof, inconsistent with the provisions of this
Act, are hereby repealed or modified accordingly.

SECTION 38. Effectivity. — This Act shall take effect fifteen (15) days after its publication
in at least two (2) national newspapers of general circulation.

Approved,

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