Film Development Council Act

Creation and abolition of bodies

A Film Development Council of the Philippines is created under the Office of the President to carry out the Act (Section 2).
The Film Development Foundation of the Philippines, Inc. (FDFPI) and the Film Rating Board (FRB) created under Executive Order No. 811 are abolished (Section 2).

Film Development Council powers and duties

The Council shall establish and implement a Cinema Evaluation System in accordance with the Act (Section 3).
The Council shall develop and implement an incentive and reward system for producers based on merit to encourage production of quality films (Section 3).
The Council shall establish, organize, operate, and maintain local and international film festivals, exhibitions, and similar activities (Section 3).
The Council shall encourage and undertake activities to promote the growth and development of the local film industry and promote its participation in domestic and foreign markets (Section 3).
The Council shall develop and promote programs to enhance skills and expertise of Filipino talents necessary for quality film production (Section 3).
The Council shall prescribe procedures for the exercise of its powers and functions and performance of its duties and responsibilities (Section 3).
The Council shall determine its organizational structure and staffing pattern and appoint officers and employees in accordance with Civil Service laws, rules, and regulations (Section 3).
The Council shall acquire, manage, and hold real and personal property necessary to carry out the Act’s purposes (Section 3).
The Council shall invest funds and other assets in activities or undertakings that directly and indirectly promote development of the film industry, including film production, under terms and conditions the Council deems wise (Section 3).
The Council shall ensure the establishment of a film archive to conserve and protect film negatives and/or prints as part of the nation’s historical, cultural, and artistic heritage (Section 3).
The Council shall perform other functions necessary to carry out the Act (Section 3).

Council composition, leadership, and governance

The Council shall be composed of a Chairperson and ten (10) members (Section 4).
Three (3) members shall be regular members, while seven (7) shall be ex-officio members (Section 4).
The Chairperson must be a person of proven administrative proficiency, independence, knowledgeable of technical and artistic aspects of film production, and fully committed to promoting and developing Philippine cinema as art (Section 4).
The Chairperson and the three (3) regular members are appointed by the President of the Philippines (Section 4).
The seven (7) ex-officio members are the: (1) Secretary of the Department of Trade and Industry (DTI) or designated representative; (2) Secretary of the Department of Education or designated representative; (3) Chairperson of the Film Academy of the Philippines; (4) President of the Cultural Center of the Philippines; (5) Commissioner of the Committee on Cinema of the National Commission on Culture and Arts; (6) President of the League of City Mayors or designated representative; and (7) Chairperson of the Metro Manila Development Authority or designated representative (Section 4).
The three (3) regular members shall be representatives from: (1) legally constituted filmmakers association; (2) legally constituted theater owners association; and (3) academe (Section 4).
The Chairperson and regular members hold office for three (3) years unless sooner removed by the President; they are eligible for reappointment after expiration (Section 5).
No Chairperson or member may serve for more than two (2) consecutive terms (Section 5).
If a Chairperson or member fails to complete the term, the replacement serves only for the unexpired portion of the term; such unexpired service is not counted as a term (Section 5).
The Council shall meet regularly at least once a month or as often as necessary when called by the Chairperson or by a majority of the members (Section 6).
A quorum exists when a majority of the members are present to do business (Section 6).
Members are entitled to honoraria based on existing government accounting and auditing rules and regulations (Section 6).
The Chairperson is the Chief Executive Officer and exercises overall administrative supervision to ensure effective and efficient implementation of the Council’s policies (Section 7).
The Chairperson has the same rank and salary as an Undersecretary of a Department under the Salary Standardization Law (Section 7).
The Chairperson is assisted by an Executive Director appointed by the Council upon the Chairperson’s recommendation; the Executive Director’s salary shall be comparable to equivalent rank under the Revised Compensation and Position Classification System (Section 8).
The Executive Director is coterminous with the Chairperson unless removed for cause (Section 8).

Chairperson role and internal supervision

The Chairperson shall execute and administer policies, plans, and programs approved by the Council (Section 9).
The Chairperson shall direct and supervise the Council’s operations and internal affairs (Section 9).
The Chairperson shall establish the Council’s internal organization and administrative procedures (Section 9).
The Chairperson shall recommend to the Council the appointment, transfer or detail, suspension, and dismissal for cause of subordinate officials and employees (Section 9).
The Chairperson shall perform other functions assigned by the Council from time to time (Section 9).

Cinema Evaluation Board and film grading system

A Cinema Evaluation Board is created to evaluate and grade films submitted to the Council under the Act (Section 10).
The Board shall be composed of a Board Chairperson and thirty (30) members, with twenty (20) from the film industry and ten (10) from arts, academe, business, and other sectors (Section 10).
The President appoints Board members from among forty (40) nominees submitted by the Council (Section 10).
Appointees must be knowledgeable of artistic and technical aspects of film-making and committed to promotion and development of cinematographic art along world-class standards and global marketability (Section 10).
The Board Chairperson and members have a two (2) year term and are eligible for reappointment for a second term (Section 10).
No Board member may serve for more than two (2) consecutive terms (Section 10).
If a member fails to complete a term, the replacement serves only for the unexpired portion, unless re-appointed; such unexpired service is not counted as a term (Section 10).
In initial appointments, the Board Chairperson and the first fifteen (15) members serve for two (2) years, and the next fifteen (15) members serve for one (1) year (Section 10).
The Board may transact business when the Board Chairperson (or duly designated representative who is also a Board member) and at least eleven (11) members are present (Section 10).
Board members receive a reasonable honorarium for each film actually evaluated, to be determined by the Council subject to government accounting and auditing rules and regulations (Section 10).
Board members must not participate in grading a film in which they or a family member or relative within the fourth degree of consanguinity or affinity has financial or any other interest (Section 10).
At the time of inhibition, a member must fully disclose the nature of the interest, including actual or potential conflict of interest, and the reasons for inhibition (Section 10).
The Board shall formulate and establish the standards, criteria, and procedures for the Cinema Evaluation System, subject to Council approval (Section 11).
The standards shall be primarily based on direction, screenplay, cinematography, editing, production design, music scoring, sound, and acting performances, and shall evaluate excellence in the art and craft of film-making in its totality, considering scenes in context, manner of presentation, and culture (Section 11).
A film must undergo pre-qualification before grading based on Council-prescribed pre-qualification procedures and requirements (Section 12).
Only films with a premiere screening held in the Philippines and with no previous theatrical release, free television broadcast, cable broadcast, or video release in any commercial medium anywhere in the world qualify for grading (Section 12).
The Board shall evaluate and grade only feature films intended for theatrical and other forms or exhibition charging admission fees, with a minimum length of eighty (80) minutes, and whose producer submits the film for grading at least seven (7) calendar days before the scheduled playdate (Section 12).
The Board must review, evaluate, and grade a film within five (5) working days after submission of the application (Section 12).
The Board shall transmit its decision to the Council within twenty-four (24) hours from rendering the decision (Section 12).
The Council shall inform the producer of the Board’s decision within twenty-four (24) hours upon receipt thereof (Section 12).
The Board and the Council may not cut, delete, shorten, or modify in any manner films being graded, and may not suggest cuts, deletions, or other modification to filmmakers and prerequisites for earning grading (Section 12).
The graded results must be given due weight and consideration by the Movie and Television Review and Classification Board (MTRCB), the Videogram Regulatory Board (VRB), the Department of Trade and Industry (DTI), and other government agencies for viewing, reproduction, exportation, and other purposes (Section 12).
The action taken by the Board on the film may be reconsidered by motion to the Board en banc within twenty-four (24) hours from receipt of notice of the action (Section 12).
The Board en banc shall render its decision within forty-eight (48) hours from receipt of the motion; the Board en banc must be composed of at least a majority of Board members (Section 12).
The grading submitted by the Board en banc to the Council is final (Section 12).

Privileges of A/B graded films

Films graded “A” or “B” by the Council are entitled to incentive rewards (Section 13).
An “A” or “B” film entitles its producer to an incentive equivalent to the amusement tax imposed and collected on the graded films in Metro Manila and other highly urbanized and independent component cities pursuant to Sections 140 and 151 of Republic Act No. 7160 (Section 13).
For grade “A” films, the incentive is 100% of the amusement tax collected on such films (Section 13).
For grade “B” films, the incentive is 65% of the amusement tax collected on such films (Section 13).
The remaining thirty-five (35%) for grade “B” accrues to the Council’s funds (Section 13).

Amusement tax deduction, withholding, remittances

All revenue from amusement tax on the graded film that would otherwise accrue to cities and municipalities in Metropolitan Manila and highly urbanized and independent component cities under Section 140 of Republic Act No. 7160 during exhibition shall be deducted and withheld by proprietors, operators, or lessees of theatres or cinemas (Section 14).
The amusement tax withheld must be remitted within thirty (30) days from termination of the exhibition to the Council (Section 14).
The Council must reward the corresponding amusement tax to producers within fifteen (15) days from receipt of the remittance (Section 14).
If proprietors, operators, or lessees fail to remit within the prescribed period, they are liable for a surcharge equal to five percent (5%) of the amount due for each month of delinquency, to be paid to the Council (Section 14).

Enforcement powers and sanctions

For implementing the preceding provisions, the Council may impose administrative fines and penalties of not more than PHP 100,000.00 for violation of the Act and/or Council implementing rules and regulations (Section 15).
The Council may cause or initiate criminal or administrative prosecution of violators of the Act and implementing rules and regulations (Section 15).
For prosecutions, the Council may issue subpoena duces tecum and may enlist the assistance or services of the Department of Justice or the Office of the Solicitor General (Section 15).
The Council may cause closure of any theatre or cinema that fails or unreasonably refuses to remit tax collected on a graded film for a period not exceeding fifteen (15) days, after which the closure period is automatically lifted without prejudice to criminal or administrative prosecution (Section 15).
The Council may call representatives of different government agencies and associations in the movie industry to help ensure compliance with the Act and its implementing rules and regulations (Section 15).
The Council may constitute Local Regulatory Councils composed of representatives from government and the private sector in cities and municipalities to implement the Act and implementing rules and regulations; such councils serve without compensation and for only the period the Chairperson determines (Section 15).
The Council may deputize any law enforcement agency and government instrumentality to assist in enforcement of its functions and orders (Section 15).

Funding, donations, and inter-agency support

The Executive Secretary shall immediately include implementation of the Act in the Office of the President’s program, with funding included in the annual General Appropriations Act (Section 16).
To augment operational expenses, the Council may use the remaining thirty-five (35%) percent of amusement tax collected during exhibition of grade “B” films as provided under Sections 13 and 14 (Section 16).
The Council may impose reasonable fees and charges for services rendered (Section 16).
Amounts actually collected from fees and charges must be deposited in the National Treasury as a special account in the General Fund and may be used to augment maintenance and other operating expenses, and capital outlays except the purchase of motor vehicles, subject to existing accounting and budgeting rules and regulations (Section 16).
The Council may accept donations, contributions, grants, bequests, or gifts in cash or in kind from domestic or foreign sources, except from movie producers and distributors, for purposes relevant to its functions (Section 17).
Donations are deemed automatically appropriated for purposes specified by the donor or, in the absence of specification, for programs and projects approved by the Council, subject to usual government accounting and auditing rules and regulations (Section 17).
Cash donations shall not be used to fund the personal services requirements of the Council (Section 17).
Donations, contributions, subsidies, or financial aid made to the Council are exempt from taxes of any kind and constitute allowable deductions in full from the income of donors, contributors, or givers for income tax purposes (Section 17).
The Council may request assistance from any department, bureau, office, agency, or instrumentality of the government as needed to perform its functions (Section 18).

Implementing rules, reporting, and transitions

The Council must issue necessary implementing rules and regulations within ninety (90) days after approval of the Act (Section 19).
For continuity, incumbent officials and employees of the FDFPI and FRB continue in holdover capacity to perform duties and receive salaries and benefits until the Council organization is completed, but the transition period shall not exceed six (6) months after effectivity (Section 20).
All officials and employees of the FDFPI and FRB are deemed resigned from service upon organization of the Council (Section 20).
Laid-off officials and employees receive preferential treatment in appointments to new positions they qualify for under the new staffing pattern (Section 20).
Those not given new appointments are entitled to compensation and benefits due them under existing laws (Section 20).
Books, assets, rights, privileges, records, obligations, and liabilities of the FDFPI and FRB are transferred to the Council (Section 20).
The Council shall submit an annual report within ninety (90) days after the end of every fiscal year to the President and Congress covering compliance or accomplishments under the Act, plans and recommendations to improve and develop capability to enforce the Act, and a complete accounting of transactions with respect to funds received under the Act (Section 21).

Repeal, separability, and effectivity

Executive Order No. 811 is repealed (Section 22).
Executive Order 1051 and Section 140 of Republic Act No. 7160 are amended accordingly (Section 22).
All laws, decrees, orders, issuances, rules, and regulations inconsistent with the Act are repealed, amended, or modified accordingly (Section 22).
If any provision or part of the Act is declared invalid or unconstitutional, remaining provisions not affected remain in force (Section 23).
The Act takes effect fifteen (15) days after publication in the Official Gazette and two (2) newspapers of national circulation (Section 24).
The Act is approved June 07, 2002 (Section 24).