Policy and purpose
- The decree confirms that the Philippine Cotton Corporation’s first two years of operation have shown that commercial-scale cotton cultivation can be undertaken in the Philippines.
- The decree treats achieving self-sufficiency in essential agricultural commodities—including cotton—as a priority area of Government concern.
- The decree authorizes strengthening the Philippine Cotton Corporation and expanding its resources to implement a cotton development program that will make the country self-sufficient in cotton within the shortest time possible.
Core amendments to PD No. 350
- Section 1 amends Number 3 of Presidential Decree No. 350 by adding new powers for the Corporation.
- The Corporation is empowered:
- To administer such funds including trust funds that the National Government or any institution or entity—whether public or private, domestic or foreign—may set up or provide in connection with the National Cotton Development Program; and
- To accept donations and grants from governments and private entities, whether local or foreign, and administer them in accordance with the terms of the donation or grant, consistent with the Cotton Development Program, or in such manner as the Board deems appropriate.
- Section 2 deletes Number 4 of Presidential Decree No. 350, removing the former joint-venture structure and the specified 60-40 ownership ratio representation details.
- Section 3 deletes Number 5 of Presidential Decree No. 350, removing the former specified authorized and paid-up capital structure and the prior allocation of subscriptions and payments.
- Section 4 deletes Numbers 6 and 7 of Presidential Decree No. 350, removing the former initial contribution amounts, the required 60-40 ownership ratio maintenance, and the former detailed funding mechanics through PTRI trust funds and private sector cotton-consuming textile mill contributions.
Governance and leadership changes
- Section 5 amends Number 8 of Presidential Decree No. 350 to set the Board composition and selection/election mechanics.
- The Corporation is governed by a Board of eleven members.
- The Board’s representation is structured as follows:
- The government sector is represented by the Secretary of Agriculture and Natural Resources, the Director of the Philippine Textile Research Institute (PTRI), and four others appointed by the Secretary from the government service.
- The private sector is represented by two members from the textile president industry, including:
- the President of the Textile Millers Association of the Philippines (TMAP); and
- the other to be nominated by the TAMP Board.
- Three other members are elected by the stockholders.
- The Chairman and the Vice-Chairman of the Board are elected by the members thereof.
- Section 6 amends Number 9 of Presidential Decree No. 350 to direct corporate administration under a private-sector leader.
- The Corporation’s administration is directed by a qualified General Manager selected from the private sector and appointed by the Board.
- The Corporation is headed by a President appointed by the Board from among qualified individuals in the private sector.
- The Board may create positions of Executive Vice-President and/or General Manager, and such other vice-presidential positions as it deems necessary, with compensation and allowances determined by the Board.
Financing and research funding provisions
- Section 7 amends Number 11 of Presidential Decree No. 350 to authorize financing from external sources.
- For its financing, the Corporation may approach domestic and international sources of financing, including multilateral and bilateral sources, for assistance in the form of grants, loans, or both.
- Section 8 amends Number 12 of Presidential Decree No. 350 by establishing a PTRI grant for PCC research and feasibility studies.
- For additional financing for research and development or feasibility studies, PTRI must make available as a grant to PCC the minimum sum of PHP 500,000.
- The PTRI grant is due not later than 30 days after the beginning of each fiscal year.
- The PTRI grant should not prejudice PCC’s efforts to obtain financing from other sources.
- PTRI is authorized to invest the Special Textile Research Fund in financial instruments, including commercial papers, yielding sufficiently high earnings to enable the organization to assist the Philippine Cotton Corporation and other contemplated research projects under R.A. 4086.
Powers affecting credit, bonds, and government guarantees
- Section 9 adds new Numbers 14, 15, and 16 to Presidential Decree No. 350.
- Number 14 empowers government-owned or controlled financial institutions (except the Central Bank of the Philippines) to guarantee certain credit-related exposures of the Corporation.
- A government-owned or controlled financial institution, except the Central Bank, is empowered to guarantee the acceptance credits, loans, transactions, undertakings, or obligations of any kind incurred by the Corporation, whether directly or indirectly, in favor of any person, association or entity, whether domestic or foreign.
- Number 15 authorizes the Corporation to issue bonds and fixes approval and repayment guarantees.
- When the Board deems it necessary, the Corporation may issue bonds in Philippine currency or any convertible foreign currency by Board resolution.
- The Board resolution must declare and state the purpose for which the bond issue will be incurred.
- For validity, any such bond issue must be approved by the President of the Philippines upon the recommendation of the Secretary of Finance.
- The Republic of the Philippines guarantees payment of the principal and the interest on the bonds.
- Investments by banking institutions in such bonds are deemed investment in agricultural credit, in compliance with Presidential Decree No. 717 and its implementing rules and regulations.
- Number 16 provides a further government guarantee for Corporation obligations with government-owned or controlled financial institutions.
- The Republic of the Philippines guarantees payment of all obligations of the Corporation incurred with any government-owned or controlled financial institution.
- The Republic must pay the principal and interest on those obligations if the Corporation fails to do so.
Repeal and effect on inconsistent laws
- Section 10 repeals or modifies all laws, executive orders, administrative orders, proclamations, decrees, or parts thereof that are inconsistent with Presidential Decree No. 1063.
- Section 11 makes the decree effective immediately.