Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Sixteenth Congress
First Regular Session

nousepuno.__1705

Introduced by the Honorable Victoria G. Noel

EXPLANATORY NOTE

‘The islands that make up the Philippine archipelago is green with the graceful
leaves of the coconut tree. Sixty-eight of the seventy-nine provinces of the country are
coconut areas. Of 12 million hectares of farmland, 3.1 million hectares easily a fourth,
are coconut grown. The coconut industry is expectedly one of the major sources of
employment generation. Supposed to be one of the leading industries, it is strongly
depended upon for foreign exchange earnings.

But it has not given its full potential. The late Hon. Ramon Mitra, erstwhile
Secretary of Agriculture, statesman and at one time Speaker of the House sought to
correct the matter by filing HB 32445 during the 8" Congress. Unfortunately, for
reasons now difficult to explain the bill did not become a law. Over the years
stagnation has characterized the industry. Starting with senile or badly unhealthy trees
that give very low yield, costly and outdated processing methods that result in inferior
quality copra oil, the industry declined. No advantage has been taken of the many
high value by-products that coconut oil can give through technological development

Clearly, there is an urgent need for an agency mandated to oversee and
supervise an integrated approach that will result in the coconut industry producing and
yielding all it can. This agency if it is to succeed must be properly manned and full
funded so it can be the source of needed economic uplift the country badly needs.

Interested experts, pundits in science and technology, as well as
knowledgeable economic gurus have enumerated factors that need immediate
attention if the Philippines desire to be globally competitive, specifically in the copra
oil industry. First low yield, poor quality trees have to be substantially improved by
continuous study and experimentation. Added to this extensive research for more and
improved coco by-products must be sustained germane to this a close study of
improved copra soil extraction and processing and needs to be given priority. In this
way can high value copra oil be guaranteed to produce downstream excellent coco
products. Then knowledgeable marketing strategies and strong credit institutions need
to be brought in.

Our tree of life, properly nurtured and never neglected, can ensure a sustained
quality of life for always employed farmers, lessees and tillers who all can in the
process be direct participants in and beneficiaries of the industry. On thi



viability and sustained improvement in the areas of production processing and
marketing and intensive research depends and can well guarantee the economic well
being of a major part of the country’s population. In view of the foregoing immediate
approval of this bill is earnestly sought.

My predecessor, Honorable Florencio G. Noel, filed this proposed measure in
the previous congress. It was referred to the Committee on Agriculture and Food, and
further refined by the Technical Working Group (TWG) created by the same. The bill
however did not pass into law due to lack of material time.


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Sixteenth Congress
First Regular Session

1705
HOUSE BILL NO.

Introduced by the Honorable Victoria G. Noel

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

Be it enacted by the Senate and House of Representatives of the Philippines
in Congress assembled:

ARTICLE 1
GENERAL PROVISIONS
SECTION 1. Short Title. — This Act shall be known as “The
Coconut Industry Development Act of 2013."
SEC. 2. Statement of Policy. — \t 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.

SEC. 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 based farming systems including
but not limited to the establishment of model coconut farms;

c) Hasten and advance industrialization in the coconut industry and
the diversification and proper utilization of coconut products and by-products;

d) Promote the effective utilization and marketing of coconut 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


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of said products, by establishing national standards acceptable in the
international market

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

f) Conduct scientific researches and investigations in all areas

pertaining to agricultural, industrial, marketing and socio-economic

pect
of the coconut industry and encourage the participation of small farm

holders in research and technology;

g) Encourage and promote the organization of coconut farmers
cooperatives, associations, and organizations and provide them credit and

financing schemes;

h) 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

i) Coordinate and integrate all efforts of various agencies of
government and provide general direction for the steady and orderly

development of the industry.


ARTICLE I

PHILIPPINE COCONUT INDUSTRY DEVELOPMENT
AUTHORITY

SEC.4. Philippine Coconut Industry Development Authority. —
To implement the policy and objectives of this Act, there is hereby created
and established a corporate body known as the Philippine Coconut Industry
Development Authority (PHILCIDA), hereinafter referred to as the
Authority.

SEC. 5. Powers and Functions. — The Authority shall exercise the
following powers and functions:

a) 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;


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b) 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;

c) 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;

d) Establish, maintain and operate such number of research centers

and experiment stations, including laboratori

s, 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 and the greater utilization of the
coconut for traditional and non-traditional uses;

e) 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;

f) 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;

g) Promote the utilization and integration of in-house developed
technologies;

h) 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;

i) Create subsidiaries or enter into partnerships or joint ventures
with any public or private foreign or local entity, natural or juridical, and
acquire, own or hold shares of stock or interest therein for the purpose of
fully utilizing the commercial value of pioneer and new technology
generated in the industry, or of financing the manufacture, on commercial
scale, of coconut trees: Provided, That such subsidiary, partnership, joint
venture, which the Authority is authorized to create, shall be governed by
the provisions of general laws applicable to corporations and such entities:
Provided, further, That after such partnership, subsidiary, or joint venture
with private Filipino citizens or entities authorized to be created shall have
become fully viable for commercial operation, and the Authority has

recovered its investments or contributions the Authority shall immediately


divest itself of its interest over the partnership, subsidiary, or joint venture in
favor or any private person or entity. For purposes of this paragraph, the
Authority shall make studies and investigations of the enterprises and
projects for which the loans, contributions and subscriptions to the capital of
the enterprise or investments mentioned are needed, and determine the
advisability of financing the same;

j) Promote, encourage and help coconut planters, farmers,
processors and workers organize themselves into associations and
cooperatives to give them greater control in the marketing of their products
and to help 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;

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

1) Expand and develop the domestic and foreign market for coconut

products and by-products;


m) Regulate the marketing and the exportation of coconut products
and by-products to conform with quality or food standards recognized by
both the domestic and international market;

n) Take samplings and conduct examination of any copra product to
measure and determine its moisture content as required in the trade; conduct
laboratory analysis to determine the chemical characteristics of coconut
products and by-products including the presence of toxin and other
contaminations and issue the necessary commodity clearance and export
permit: Provided, That the Authority may withhold the issuance of such
clearance or permit, or suspend or cancel any clearance or permit already
issued in case of violation by the holder of any provision of this Act or rules
and regulations duly promulgated by the Authority;

0) Require exporters, traders, millers, refiners, desiccators, oleo-
chemical processor, other manufacturers and end-users of coconut 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. All information given to the Authority by
the individual firms shall be confidential in nature and could not be used

against them;


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p) Undertake, initiate 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;

q) 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;

r) To assist coconut farmers, organizations in marketing their

products locally or abroad when the need arise:

s) Assist coconut farmers organizations in establishing farmer-

owned bonded warehouses and processing facilities;

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

u) Grant or accept and receive donations of any kind for any

purpose not inconsistent with the purposes of this Act;


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v) Enter into, make and execute contracts of any kind as may be
necessary or incidental to the attainment of its purposes;

w) 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 suspension of license, registration, permit or
clearance issued in accordance with this Act;

x) Order the closure of any mill, refinery, processing firm, copra
warehouse or any place or building where coconut products are stored or to
intercept and seize any vehicle or ship or vessel carrying or transporting,
coconut products where there is reasonable ground to believe that the owner,
possessor or person or persons in control of such place, building, vehicles,
ship or vessel, of such products have violated the provisions of this Act or
any rules and regulations promulgated thereto in a manner that is prejudicial
and detrimental to the coconut industry, or the consuming public;

y) Develop and recommend measures and methodology quarantine

for coconut products and by-products and to impose such restrictions in the


transport movement or handling of the same in accordance with such
standards and quarantine procedure determined by the Authority;

z) 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;

aa) Obtain loans and grants from local and foreign sources to finance
or support the operations of the Authority under this Act;

bb) Issue subpoena or subpoena duces tecum to summon witnesses to
appear in any investigation or hearing conducted by it; and

cc) Exercise all powers and functions necessary or incidental to
attain the national policy and objectives under this Act.

ARTICLE Il
BOARD OF DIRECTORS AND OTHER PERSONNEL

SEC. 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 eleven (11) members to be
appointed by the President, five (5) of whom shall represent the coconut
farmer sector, the trading and processing sector and the science and research
sector. The chairman shall be designated by the President from among the

members appointed.


SEC.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. The first members of the
Board to be appointed under this Act shall hold office as follows: Three (3)
members for two years, Four (4) members for four years and Four (4)
members, inclusive of the chairman, for six years. Appointment to vacant
positions shall only be for the unexpired term of the predecessor.

SEC. 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 of all its personnel in accordance with law and determine and
grant such allowances and incentives as it may deem proper with the rates to
be approved by the Department of Budget and Management;

c) 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, classify, 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;

g) Review, revise, modify, increase or decrease the fees and
assessment authorized to be collected in this Act as market condition may
warrant taking into account public interest, cost of services and the prices of
coconut products and by-products; and

h) Perform such other duties as may be assigned to it by the
President of the Philippines.

SEC. 9. Quorum and Meeting. — The Board shall meet as often
as the exigency of the service may demand. The presence of at least six (6)
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.

SEC. 10. Compensation. - The members of the Board may receive

per diems for every meeting actually attended at such amount to be fixed by


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the Board but not to exceed Two Thousand Pesos (P2,000.00) per board
meeting: Provided, That it shall not exceed four (4) board meetings during
any month for each member.

SEC. 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.

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 delegated with such powers and duties as the chairman
and chief executive officer may prescribe from time to time.

SEC.12. Application of the Civil Service Law. — All officers and

employees of the Authority shall be subject to the civil service laws, rules


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and regulations, and all selection and appointments shall be based on merit
and fitness.
ARTICLE IV
MANAGEMENT AND OPERATIONS.

SEC. 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 and such other
officers as may be determined by the Board.

SEC. 14. Duties of the Chief Executive Officer. — The chief
executive officer shall exercise the following duties and responsibilities:

a) Initiate and develop corporate policies, programs and objectives

for approval of the Board;

b) Establish general administrative and operating policies;

c) 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 delegated by the
Board.

SEC.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 an executive director with a rank of a
deputy administrator. The executive director shall be co-terminous with the
chairman and with three (3) permanent managers performing the functions
of plans and programs development, policy research and analysis, and
monitoring and evaluation.

SEC. 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.

SEC. 17. Branch Offices. ~The Authority shall have the following
branches:

a) Agricultural Research and Development Branch for the execution
and implementation of policies, plans and programs relating to advancement
in industrialization and development;

b) Industrial Research and Development Branch for the execution
and implementation of policies, plans and programs relating to advancement
in industrialization and development for the coconut products and by-
products, particularly on food, oleo-chemicals, fuels and lubricants;

c) Market Research and Development Branch for the formulation

and implementation of policies, plans and programs relating to domestic and


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international markets development affecting the coconut industry including
the enforcement of market rules and regulations formulated by the
Authority;

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

e) 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

f) 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.

SEC. 18. Regional Offices. — The Authority shall establish and
organize regional offices 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.


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SEC. 19. Departments, Divisions and Units. — There shall be,
under the office of the chairman and chief executive officer, an administrator
and deputy administrators of 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.

ARTICLE V
SOURCES OF FUNDING

SEC. 20. Coconut Development Fund. — There is hereby
established a National Coconut Development Fund, herein referred to as the
“Coconut Fund,” to be administered by the Authority for the purpose of
financing the growth and development of the coconut industry, including
human resource development, training of farmers and other related activities.
As initial capitalization, the sum of ONE BILLION PESOS
(P1,000,000,000.00) is hereby appropriated to be made available within one
(1) year from the approval of this Act.

Thereafter, a continuing appropriation is hereby authorized to be
appropriated in the amount of not less than One Billion Pesos of the total

industry export performance of the immediately preceding year as reported


by the Bangko Sentral ng Pilipinas and to be deposited in a trust account
with an authorized government bank as may be determined by the Authority.
The amount shall be released annually by the said bank to the Authority
upon presentation of its approved budget and programs.

SEC.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, delivered to
and purchased by traders, exporters, millers, desiccators and other end-users
of coconut products: Provided, That 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
temain 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

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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 be
exempted from the provisions of Presidential Decree No. 1234, entitled
“Instituting A Procedure For The Management Of Special And Fiduciary
Funds Earmarked Or Administered By Departments, Bureaus, Offices And
Agencies of the National Government, Including Government-Owned Or
Controlled Corporations.”

SEC. 22. Other Sources of Funding. — \n 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 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;

b) The proceeds of the basic export and premium duties under
Section 514 (Export Products Subject To Duty and Rates) of the Tariff and
Customs Code levied on copra, coconut oil, copra meal or cake and
desiccated coconut exports, should the President of the Philippines reimpose
such duties under and by virtue of the flexible clause provision of Section
515 of such Code: Provided, That such proceeds shall be collected by the
Bureau of Customs and deposited with the Treasurer of the Philippines
within the first ten (10) days of each quarter and shall be automatically
appropriated and released to finance socio-economic and developmental
programs and projects of the Authority;

c) The proceeds of loans which the Authority may obtain from
financial institutions: Provided, That should the total outstanding proceeds
shall at any one time exceed One Billion Pesos (P1,000,000,000.00), the
transaction shall be subject to the approval of the President; and

d) The proceeds from sale of bonds and other certificates of

indebtedness issued by the Authority and duly approved by the Monetary

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Board, in an amount exceeding One Hundred Million Pesos
(P100,000,000.00) at any one time: Provided, That the bonds and other
certificates of indebtedness to be issued under this Act shall be exempt from
taxation: Provided, further, That proceeds of the bonds and other
certificates of indebtedness herein mentioned shall be used to finance socio-
economic and developmental programs and projects of the Authority as the
President of the Philippines may approve.
ARTICLE VI
REGISTRATION, LICENSE, PERMITS.

SEC. 23. Application for Registration. — Any person directly or
indirectly engaged in the business involving coconut products or by-products
shall apply for registration with the Authority. For purposes of this Act,
such person shall include:

a) Traders;

b) Processors;

c) Refiners;

d) Marine surveyors;

e) Trade intermediaries or brokers;

f) Laboratories dealing with the examination or analysis of coconut;

either whole or husked; copra and coconut oil such as, but not limited to,

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paring oil, cochin oil, acid oil, glycerine methy] ester, fatty alcohol, copra or
paring meal; other coconut products; and

g) Coconut lumber processors, sawmills and dealers.

SEC. 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.

SEC. 25. Limitation. — The license to operate shall be valid only
for the business, activity or function registered. Any additional business
covered by this Act not included in the registration shall be subject to a
separate application in which the Authority may issue a new or amended
license to operate.

SEC. 26. Denial of Registration and License. - The Authority
may refuse any application for registration and issuance of license, or
renewal thereof, if the applicant has been found by the Authority, after
inquiry or investigation, to have committed an act or acts violative of the

rules and regulations administered by the Authority.

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ARTICLE VII
COMMODITY SUPERVISION

SEC.27. 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 specifying the following:

a) Name of exporter;

b) Commodity;

c) Volume;

d) Value;

e) Name and address of consignee;

f) Authorized agent bank report of foreign sale reference number
for the report of foreign sales;

g) Date of sale;

h) Period of shipment;

i) Port of loading:

j) Name of vessel; and

k) Destination and port of discharge.

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SEC. 28. Issuance of Export Clearance. — The export clearance
shall be issued by the Authority upon satisfaction of the following:

a) The export price must not be less than ninety-five percent (95%),
of the prevailing market quotation or Bangko Sentral ng Pilipinas guiding
rate as determined by the Authority; and

b) The exporter has complied with the regulations governing the
products for export, including the payment of administrative fees and
assessment.

SEC. 29. Commodity Clearance. — Before shipment of coconut
products covered under Section 27 of this Act, the exporter shall obtain a
commodity clearance from the Authority showing the following:

a) An export clearance for the product issued to the exporter;

b) Inspection and sampling of the products by the inspector or
surveyor appointed or designated by the Authority;

c) Laboratory analysis of the samples attesting that the product is an
exportable quality, which analysis shall be valid only for one (1) month from
the date it is reported by the laboratory services of the Authority; and

d) Payment to the Authority of all fees related to the exportation of

the products.

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SEC. 30. Periodic Commodity Clearance. — A __ periodic
commodity clearance shall be issued to regular exporters of desiccated
coconut with existing plant facilities upon filing of an application on a plant
basis within thirty (30) days prior to the date of initial shipment covered by
said clearance. The periodic commodity clearance shall be valid for a period
of six (6) months from date of issuance unless sooner revoked or canceled.

SEC.31. 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 Department of Science and
Technology.

SEC. 32. 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 VIEL
INCENTIVES

SEC.33. Restoration of Tax Incentives. — Notwithstanding the

provisions of Executive Order No. 93, entitled “Withdrawing All Tax And

Duty Incentives, Subject To Certain Exceptions, Expanding The Powers Of

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The Fiscal Incentives Review Board And For Other Purposes,” the
following tax incentives granted to the coconut industry, its institutions,
members and participants are hereby restored:

a) Deductibility for income tax purposes of gifts, donations, and
contributions made to the Authority to be used directly in the
implementation of its development programs;

b) The tax and fee exemption privileges granted to agro-industrial
coconut cooperatives under Section 1 of Republic Act No. 4403, entitled
“An Act Encouraging The Organization Of Agro-Industrial Coconut
Cooperatives Under The Jurisdiction Of The Philippine Coconut
Administration, Amending For The Purpose Republic Act Numbered Eleven
Hundred Forty-Five,” as follows:

1. Agro-industrial coconut cooperatives with net assets of not
more than Five Hundred Thousand Pesos (P500,000.00) shall be
exempt from all taxes and government fees of whatever nature; and
those with net assets in excess of Five Hundred Thousand Pesos
(P500,000.00) shall be exempt from the payment of documentary
stamp tax, resident taxes, tax on banks and insurance companies and
municipal and city taxes, but shall be liable for the payment of income

tax at the full rate provided for under existing laws on the amount

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Sixty One;”

allocated for interest on capital, fixed and percentage taxes at the full
rate provided for under existing laws on gross sales to non-members;
and all other taxes provided for under existing laws;

2. Agro-industrial coconut cooperatives may deposit their
sealed cash boxes, documents and valuable papers in the safes of city
or municipal treasurer and other government offices free of charge
and the depository of said articles shall issue a receipt therefor; and

3. Agro-industrial cooperatives shall be represented in courts
by provincial or city fiscal or the government corporate counsel or his
representative in any case where they are a party either as a plaintiff
or defendant, except when the government is one of the parties;

c) Exemption from all assessments, levies, taxes and fees of

whatever nature arising from the sale or transfer to the Authority of coconut
seednut for the planting or replanting program under Presidential Decree

No. 1468, entitled “Revising Presidential Decree Numbered Nine Hundred

d) The deductibility as business expense for income tax purpose of

contributions, donations made by members of the coconut industry to
coconut farmers cooperatives or associations duly accredited by the

Authority;

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e) Exemption from payment of sales tax, special fund impost to
diesel, specific tax applied to diesel fuel, manufacturer’s tax on coconut oil
to be used as engine fuel, either in its pure state or as blending component
for diesel fuel under Section 1 of Executive Order No. 827, entitled
“Exempting Coconut Oil From The Coconut Levy And Sales Tax As Well As
From The Special Fund Impost To Diesel,” including the recognition as
exports of all sales of coconut oil to the Philippine National Oil Company
under the coco diesel program and for purposes of the grant of export
credits and other privileges per Executive Order No. 846, entitled
“Amending Executive Order No. 827” and Letter of Instructions No. 1332
to the Bangko Sentral ng Pilipinas, Philippine National Oil Company and
Philippine Coconut Authority and other agencies concerned to ensure the

f) success of the coco-diesel program of the government;

g) Exemption from any and all assessable taxes, including income
tax, duties, levies, imposts and other similar charges as well as ad valorem
duty imposed by Executive Order No. 860, entitled “/mposing An
Additional Duty Of Three Percent (3%) Ad Valorem On All Imports,” on
the purchase abroad and importation into the Philippines by coco-chemical
enterprises duly registered with the Board of Investment and the Authority

and the sale by foreign suppliers or contractors of all required, necessary

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and useful machinery, equipment and services for the establishment of a
chemical processing plant under Executive Order No. 880, entitled
“Declaring The Establishment Of A Coconut Chemical Industry As A
Means To Rationalize The Coconut Industry Of The Philippines And
Granting Additional Incentives Therefor;”

h) Exemption from all taxes, duty, imposts and other charges of
whatever nature arising from acquisition of capital equipment and
machinery including real estate tax on land and its improvement used by
any person or enterprise to undertake a private productivity program in
accordance with a farm development plan approved by the Authority, which
privileges shall be enjoyed for a period of ten (10) years from the date of
said approval: Provided, That the project shall be implemented and fully
developed within five (5) years from the date of approval of the farm
developmental plan; and

i) Generally, all other tax and non-tax incentives granted to the
coconut industry, its institutions, members and participants under other
existing applicable laws, decrees, executive orders and similar issuances.

SEC.34. Tax Exemption. — Notwithstanding the provisions of any
law to the contrary, all real and personal properties, equipment and

machinery acquired by the Authority for its operations under this Act shall

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be exempt from all taxes, fees, duties, imposts and assessments, both
national and local except income tax.
ARTICLE IX
SPECIAL PROVISIONS

SEC.35. 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, and in furtherance
thereof, no person shall convert public and agricultural lands primarily
devoted to coconut into other uses without the prior approval of the
Department of Agrarian Reform (DAR) and the Authority: Provided, That
the cutting or conversion may be allowed only in cases where it is shown
that majority of the coconut trees in the land have become senescent and
economically unproductive as determined and certified by the Authority:
Provided, further, That no coconut trees may be cut nor any coconut farms
be subject of conversion where such tree or farm is involved in the
productivity and rehabilitation program of the Authority: Provided,
furthermore, That the affected farmers, tenants, lessees and regular farm
workers shall be furnished of the findings of the Authority.

SEC. 36. Measures to Protect the Industry. — When the general

welfare of the industry for national interest so requires, and when there exist

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unabated increase in production capacity resulting, singly or collectively, in
cutthroat competition, overproduction, underselling, and smuggling of poor
quality coconut 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;
c) 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
SEC. 37. Penalties. — Any person who willfully or deliberately

violates any of the provisions of this Act or rules or regulations duly

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promulgated hereunder shall be punished by a fine of not less than Fifty
Thousand Pesos (P50,000.00) but not more than One Hundred Thousand
Pesos (P100,000.00), 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.

SEC. 38. 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 plus a
surcharge of twenty five (25%) percent in case of willful or fraudulent
failure to pay.

ARTICLE XI

TRANSITORY PROVISION

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SEC. 39. Abolition. — The Philippine Coconut Authority is hereby
abolished and its powers and functions transferred to the Philippine Coconut
Industry Development Authority together with all its appropriation and
funding from all sources, 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 III, Section 8 of this
Act: Provided, further, That the Authority, through its Board, shall effect the
transfer of the herein personnel in a manner that will insure the least
disruption of on-going programs and projects: Provided, furthermore, ‘That
until such a reorganization is implemented all officers and employees of the
abolished agency shall continue to exercise all functions and discharge all
their duties and responsibilities.

SEC. 40. Implementation. — The Secretary of Agriculture shall, in

coordination with the Secretary of Environment and Natural Resources,

issue the necessary rules and regulations for the effective implementation of
this Act.
ARTICLE XII

MISCELLANEOUS


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SEC. 41.  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.

SEC. 42. Repealing Clause. — All laws, decrees, executive orders,
tules and regulations and other issuances or parts thereof, inconsistent with
the provisions of this Act, are hereby repealed or modified accordingly.

SEC. 43. 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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