Philippine Coconut Authority creation
- Article II, Section 1 creates the Philippine Coconut Authority (“Authority”) as an independent public corporation that directly reports to and is supervised by the President of the Philippines.
- Article II, Section 2 sets the Authority’s principal office in the Greater Manila Area, with authority to establish branches and agencies within the Philippines as necessary.
- Article II, Section 3 empowers the Authority to formulate and adopt a general development program for the coconut and other palm oil industry in all its aspects.
- Article II, Section 3 requires a nationwide replanting program using precocious high-yielding hybrid seednuts, with authority to include new areas provided existing coconut farmers are given priority.
- Article II, Section 3 authorizes the Authority to distribute, for free, the authorized hybrid coconut seednuts to coconut farmers.
- Article II, Section 3 authorizes the Authority to review, revise, and integrate into the adopted general development program the existing policies, projects, and activities of other governmental agencies directly relating to the industry.
- Article II, Section 3 authorizes genetic and agricultural research and investigations for improving coconut productivity, in coordination with the hybrid coconut seed farm to be established.
- Article II, Section 3 authorizes establishment and operation of one central experiment station and such sub-stations to research coconut diseases and pests and the method of making copra; research stations and centers of any government agency/instrumentality on relevant research are transferred to the Authority.
- Article II, Section 3 authorizes exploration and expansion of domestic and foreign markets for coconut products and by-products.
- Article II, Section 3 authorizes regulation of marketing and exportation of copra and its by-products by establishing standards for domestic trade and export, and conducting inspection of copra and its by-products proposed for export to determine conformity.
- Article II, Section 3 authorizes rules and regulations for a method of measuring moisture content of copra at first domestic sale and a scale of deduction based on moisture percentage.
- Article II, Section 3 authorizes imposition and collection of the levies it is empowered to collect.
- Article II, Section 3 authorizes a levy collection mechanism: the Authority may impose and collect a fee of ten centavos (10 centavos) for every one hundred kilos of desiccated coconut (paid by desiccating factories), coconut oil (paid by oil mills), and copra (paid by exporters), exclusively for the Authority’s operating expenses.
- Article II, Section 3 authorizes contracting generally to attain Authority purposes, while expressly prohibiting the Authority from engaging in commercial/industrial activities, including commercial production of hybrid coconut seednuts.
Authority governance and staffing
- Article II, Section 4 vests the Authority’s corporate powers and duties in a Board of seven (7) members appointed by the President.
- Article II, Section 4 provides Board composition:
- Two members represent the Government; the President designates one as Chairman and the other as Vice-Chairman.
- Three members are recommended by the Philippine Coconut Producers Federation.
- One member is recommended by the United Coconut Associations of the Philippines.
- One member is recommended by the owner and operator of the hybrid coconut seednut farm authorized to be established.
- Article II, Section 4 requires the Board to direct and manage Authority affairs, prepare and adopt an annual budget, disburse levy proceeds for authorized purposes, and establish the internal organization and fix compensation of officers and employees.
- Article II, Section 5 provides that the Board meets as often as required by exigencies of service.
- Article II, Section 5 sets quorum at the presence of at least four (4) members and requires the vote of four (4) members to adopt any rules, resolutions, decisions, or other Board acts.
- Article II, Section 6 provides Board per diem: Two hundred pesos (₱200) for each meeting actually attended, but not exceeding One thousand pesos (₱1,000) during any month for each member.
- Article II, Section 6 limits additional compensation to actual traveling expenses to and from residences to attend Board meetings.
- Article II, Section 7 makes the chief executive officer the Administrator, assisted by Deputy Administrators as the Board prescribes; the Board appoints or removes them and delegates their powers and duties.
- Article II, Section 7 requires officers and employees to be selected and appointed by the Board based on merit and fitness.
- Article II, Section 8 allows the Board to establish departments convenient for discharging duties, with the rule that only one agronomical research department may be created.
Coconut levies and funds
- Article III, Section 1 empowers the Authority to impose and collect the Coconut Consumers Stabilization Fund Levy on every one hundred kilos of copra resecada, or its equivalent in other coconut products, delivered to and/or purchased by copra exporters, oil millers, desiccators, and other end-users of copra or its equivalent.
- Article III, Section 1 requires payment of the levy by the liable entities under rules the Authority prescribes.
- Article III, Section 1 continues the current levy being collected until the Authority prescribes otherwise.
- Article III, Section 2 directs that Coconut Consumers Stabilization Fund collections be utilized for:
- a subsidy for coconut-based products when national interests so require; the subsidy amount is based on the base price of copra (or its equivalent) as fixed by the Authority and the relevant pieces of coconut-based products as fixed by the Price Control Council;
- refunding wholly or in part any premium duty collected on copra (or its equivalent) sold prior to February 17, 1974;
- financing the development and operating expenses of the Philippine Coconut Producers Federation, including scholarships for deserving children of coconut farmers; and
- financing the establishment and operation of industries and commercial enterprises related to the coconut and other palm oil industry as described in Section 9.
- Article III, Section 3 creates a permanent fund called the Coconut Industry Development Fund, deposited and administered/utilized through the Philippine National Bank through its subsidiary, the National Investment and Development Corporation, subject to P.D. No. 755, for specific purposes.
- Article III, Section 3 directs Coconut Industry Development Fund utilization for:
- financing a hybrid coconut seednut farm, with NIDC negotiating terms ensuring an adequate and continuous supply of high yielding hybrid seednuts at the earliest possible time (and confirming/ratifying the contract entered into by NIDC);
- purchasing all seednuts produced by the hybrid seednut farm for free distribution by the Authority pursuant to the nationwide replanting program, with priority for farmers paying the levy;
- defraying the cost of implementing the nationwide replanting program;
- financing extension services, model plantations, and other activities to ensure farmers are informed of proper replanting methods; and
- using any balance for investments for the benefit of coconut farmers as prescribed in Section 9.
- Article III, Section 4 provides initial funding for Coconut Industry Development Fund:
- the Authority must pay ₱100,000,000.00 from the Coconut Consumers Stabilization Fund; and
- thereafter, the Authority must pay at least twenty centavos (₱0.20) per kilogram of copra resecada (or its equivalent in other coconut products) from current collections of the Coconut Consumers Stabilization Fund Levy.
- Article III, Section 4 automatically imposes a permanent levy of ₱0.20 per kilogram when the Coconut Consumers Stabilization Fund Levy is lifted, collected and paid to the Coconut Industry Development Fund by copra exporters, oil millers, desiccators, and other end-users under rules prescribed by the Authority.
- Article III, Section 4 authorizes the Philippine National Bank to invest the idle portion in easily convertible investments, with all earnings forming part of the Fund.
- Article III, Section 4 declares exemption from coconut consumers stabilization levy and any and all taxes and fees for the sale or transfer of the hybrid coconut seednuts authorized to be acquired.
- Article III, Section 5 characterizes the Coconut Consumers Stabilization Fund and Coconut Industry Development Fund, and their authorized disbursements, in a way that governs their legal nature: they are not construed as special and/or fiduciary funds or part of the national government’s general funds under P.D. No. 711; they are not a subsidy, donation, levy, government funded investment, or government share under P.D. No. 898.
- Article III, Section 5 provides that the Funds and authorized disbursements for the benefit of coconut farmers are intended to be owned by coconut farmers in their private capacities.
- Article III, Section 5 authorizes the President to direct the Commission on Audit or any other government officer to audit the business affairs, administration, and condition of persons and entities receiving subsidy for coconut-based consumer products under Article III, Section 2(a) and entities required to pay the Coconut Consumers Stabilization Fund levy under Article III, Section 1.
Rules, reporting limits, penalties, and enforcement charges
- Article III, Section 6 grants the Authority full power to promulgate rules and regulations necessary for proper and effective collection of levies.
- Article III, Section 6 allows the Authority to require liable persons to submit periodic reports on receipt of deliveries and/or purchases of copra (or its equivalent).
- Article III, Section 6 prohibits requiring disclosure of competitive information and/or trade secrets, including names/identities of buyers and prices at which copra (or equivalents) were sold.
- Article III, Section 7 authorizes the Authority to impose and collect interest equal to 14% per annum on levies paid after the due date.
- Article III, Section 7 authorizes a surcharge of 25% in addition to assessable interest where willful or fraudulent failure to pay the levy is determined by the Authority.
- Article III, Section 7 allows the Authority, in disputed assessments where genuine issues of fact and/or law are raised, to enter into a compromise settlement in its discretion, waiving in whole or part the assessable levy, interest, and surcharges.
- Article III, Section 8 directs that all levy collections be deposited with the banking institutions prescribed by P.D. No. 755.
- Article III, Section 8 prohibits withdrawal of deposits made with the commercial bank acquired for the benefit of coconut farmers for purposes other than authorized until the nationwide replanting program is fully implemented and realized.
- Article III, Section 8 requires that deposits made with the NIDC be first utilized in the replanting program.
Investments and distribution to farmers
- Article III, Section 9 grants the bank acquired for the benefit of coconut farmers under P.D. No. 755 full power to make investments in the form of shares of stock in corporations established to engage in establishing and operating industries and commercial activities and allied business undertakings relating to the coconut and other palm oil industry, including research into commercial and industrial uses.
- Article III, Section 9 requires the Authority to ascertain from time to time how much of collections of the Coconut Consumers Stabilization Fund and/or Coconut Industry Development Fund is not required for replanting program and other authorized purposes, and directs the bank to use any ascertained surplus for authorized investments.
- Article III, Section 10 requires that investments made by the bank be equitably distributed, for free, to coconut farmers, subject to the bank retaining a portion necessary to ensure continuity and adequacy of financing of the particular endeavor.
- Article III, Section 10 requires the bank to provide measures to ensure the viability and stability of each enterprise and to achieve the widest distribution of investments among coconut farmers.
Criminal penalties for violations
- Article IV, Section 1 imposes a penalty of a fine of not more than ₱20,000.00 and imprisonment of not more than five years on persons or entities that willfully and deliberately violate any provision of this Decree or any rules or regulation legally promulgated by the Authority.
- Article IV, Section 1 provides that if the offender is a corporation, partnership, or juridical person, the penalty is imposed on the officer or officers authorizing, permitting, or tolerating the violation.
- Article IV, Section 1 mandates that aliens found guilty are immediately deported after serving the sentence.
- Article IV, Section 1 mandates that if the offender is a naturalized citizen, the certificate of naturalization is cancelled.
Reorganization, repeals, separability, effectivity
- Article V, Section 1 abolishes the Coconut Coordinating Council (CCC), Philippine Coconut Administration (PHILCOA), and Philippines Coconut Research Institute (PHILCORIN) and transfers their powers and functions to the Philippine Coconut Authority, including their appropriations, funding, equipment, and other assets, and such personnel necessary.
- Article V, Section 1 preserves the rights and privileges of separated personnel under the Integrated Reorganization Plan framework for other government employees separated as a result of that Plan.
- Article V, Section 1 directs the Authority’s Board to effect transfers ensuring the least disruption of ongoing programs and projects.
- Article V, Section 1 provides a transitional rule: until the Board assumes duties and functions, officers and employees of abolished agencies continue to perform their functions until ordered otherwise by the Board, except that the Board of PHILCORIN and PHILCOA and the Council itself immediately cease to exist upon effectivity, with their functions exercised by the Authority.
- Article V, Section 1 automatically appoints incumbent members of the Authority’s Governing Board as Board members until otherwise ordered by the President of the Philippines.
- Article V, Section 2 repeals or amends all laws, executive and administrative orders, rules and regulations inconsistent with the Decree, including Republic Act Nos. 1145, 1365, 1369 and 2282.
- Article V, Section 3 provides separability: if any provision is held unconstitutional, only that provision is affected while the remainder remains valid.
- Article V, Section 4 sets effectivity: the Act takes effect immediately.
- The Decree is dated July 14, 1976, issued in the City of Manila, and signed by Ferdinand E. Marcos.