Policy and purpose
- The State policy is to promote the rapid integrated development and growth of the coconut and other palm oil industry in all its aspects.
- The State policy requires ensuring that coconut farmers become direct participants in, and beneficiaries of, such development and growth.
Philippine Coconut Authority created
- Section 1, Article II creates an independent public corporation called the Philippine Coconut Authority, which is directly reporting to and supervised by the President of the Philippines.
- The Authority maintains its principal office in the Greater Manila Area and may establish branches and agencies within the Philippines as necessary.
Authority powers and functions
- The Authority formulates and adopts a general program of development for the coconut and other palm oil industry in all its aspects.
- The Authority formulates and implements a nationwide replanting program using precocious high-yielding hybrid seednuts, and may include new areas in its discretion while giving existing coconut farmers priority.
- The Authority distributes for free the authorized hybrid coconut seednuts to coconut farmers.
- The Authority reviews, revises, and integrates existing government policies, projects, and activities related to industry development into its adopted program.
- The Authority, in coordination with the authorized hybrid coconut seed farm, conducts genetical and agricultural researches and investigations to improve coconut palm productivity.
- The Authority establishes and maintains one central experiment station and such sub-stations as it prescribes to undertake research on control and eradication of coconut diseases and pests and on the method of making copra.
- All research stations and centers, facilities, and equipment operated by any government agency or instrumentality in genetical, agronomical, and disease-control research relating to coconut culture are transferred to the Authority for the purposes of its research work.
- The Authority explores and expands domestic and foreign markets for coconut products and by-products.
- The Authority regulates marketing and exportation of copra and its by-products by establishing standards and conducting inspection of copra and by-products proposed for export to determine conformance.
- The Authority prescribes, by rules and regulations, a method for measuring the moisture content of copra at its first domestic sale and a scale of deduction based on the moisture percentage.
- The Authority imposes and collects the levies it is authorized to collect.
- The Authority imposes and collects a fee of ten centavos (10 centavos) for every one hundred kilos of dessiccated coconut, and it collects:
- the ten centavos fee from the dessicating factory,
- the analogous levy/fee structure from coconut oil paid by the oil mills, and
- the analogous levy/fee structure from copra paid by the exporters,
with the fee used exclusively to defray the Authority’s operating expenses.
- The Authority may enter into, make, and execute contracts as necessary or incidental to its purposes and exercise all powers necessary to achieve its objectives.
- The Authority is prohibited from engaging in commercial/industrial activities, including commercial production of hybrid coconut seednuts, except as to entities owned or controlled by the government or by coconut farmers under Section 9 and 10, Article III.
- The Authority regulates production, distribution, and utilization of subsidized coconut-based products and may require submission of reports or documents necessary to verify levy payments and/or subsidy claims and ensure subsidized products are distributed among and utilized by the authorized consumers.
- The Authority may issue subpoenas and subpoena duces tecum, summon witnesses in investigations, and impose punishment for contempt in appropriate cases.
- The Authority may authorize officers or agents to enter any house, building, or place where subsidized products are stored or kept (or where there are reasonable grounds to believe they are stored or kept), examine such products, seize unlawfully possessed or kept products, and stop and search vehicles or other transportation when there are reasonable grounds to believe subsidized coconut-based products are unlawfully being carried.
- The Authority uses, for final assessment of authorized levies, Central Bank outturn reports of copra and by-products at the foreign port of destination, and the Central Bank must furnish copies to the Authority for that purpose.
- The Authority formulates a system for rewards to persons instrumental in the discovery of violations and in the conviction of violators, and provides for appropriate security of witnesses testifying against violators when necessary.
- The Authority exercises other necessary and proper powers for effective enforcement and implementation of the law and implementing rules.
Governing Board composition and operation
- The Authority’s corporate powers and duties are vested in and exercised by a Board of seven (7) members appointed by the President.
- The Board includes:
- Two representatives of the Government, one designated as Chairman and the other as Vice-Chairman;
- Three members recommended by the Philippine Coconut Producers Federation;
- One member recommended by the United Coconut Association of the Philippines;
- One member recommended by the owner and operator of the hybrid coconut seednut farm authorized to be established.
- The Board directs and manages the Authority’s affairs.
- The Board prepares and adopts the annual budget.
- The Board disburses levy proceeds for authorized purposes.
- The Board establishes the Authority’s internal organization and fixes salaries and other compensation of officers and employees.
- The Board meets as often as service exigencies demand.
- Quorum requires the presence of at least four (4) members.
- Adoption of any rule, resolution, decision, or other act of the Board requires the vote of four (4) members.
Board members’ compensation; officers
- Board members receive per diem of PHP 200 for each meeting actually attended.
- Per diems may not exceed PHP 1,000 during any month for each member.
- No other allowance or form of compensation is paid except actual travel expenses to and from residences to attend Board meetings.
- The chief executive officer is the Administrator, assisted by Deputy Administrators as the Board prescribes.
- The Administrator and Deputy Administrators are appointed or removed by the Board and delegated with powers and duties the Board prescribes.
- Officers and employees are selected and appointed by the Board based on merit and fitness.
- The Board may establish departments it considers convenient, but only one agronomical research department is created.
Coconut levies and fund uses
The Authority imposes and collects the Coconut Consumers Stabilization Fund Levy on every 100 kilos of copra rececada or its equivalent in other coconut products delivered to, purchased by, copra exporters, oil millers, dessicators, and other end-users of copra or its equivalent.
The levy is paid by these liable entities under the Authority’s rules and regulations.
Until the Authority prescribes otherwise, the current levy being collected continues.
The Authority utilizes all collections of the Coconut Consumers Stabilization Fund Levy for the following purposes:
- When the national interest so requires, to provide a subsidy for coconut-based products, with the subsidy amount determined based on the base price of copra (or equivalent) fixed by the Authority and the prices of coconut-based products fixed by the Price Control Council; and if coconut farmers have owned or controlled oil mills and/or refineries that manufacture coconut-based consumer products, only those oil mills and/or refineries are entitled to the authorized subsidy.
- To refund wholly or in part any premium duty collected on copra (or equivalent) sold prior to February 17, 1974.
- To finance the developmental and operating expenses of the Philippine Coconut Producers Federation, including scholarships for deserving children of coconut farmers.
- To finance the establishment and operation of industries and commercial enterprises relating to the coconut and other palm oil industry as described in Section 9, Article III.
- To finance the Coconut Farmers Refund, constituted as pooled savings of coconut farmers for mutual assistance, protection, and relief in the form of social benefits such as life and accident insurance coverage of farmers.
A permanent fund called the Coconut Industry Development Fund is created and is administered and utilized by the bank acquired for the benefit of coconut farmers under PD 755.
The Coconut Industry Development Fund finances:
- The establishment, operation, and maintenance of a hybrid coconut seednut farm under terms and conditions negotiated by the National Investment and Development Corporation (NIDC) with any private person, corporation, firm, or entity to ensure an early, proper, adequate, and continuous supply of selected high-yielding hybrid and indigenous precocious seednuts; the NIDC contract (and amendments and supplements) is confirmed and ratified, and the bank administers the contract and performs NIDC rights and obligations using the Coconut Industry Development Fund.
- Purchasing all seednuts produced by the hybrid coconut seednut farm for free distribution by the Authority to coconut farmers on a voluntary basis and for new coconut planting areas under the nationwide coconut replanting program, with farmers paying the levy given priority.
- Implementing the nationwide replanting program through a private non-profit foundation owned by coconut farmers, with prior approval of the President of the Philippines, including activities described in the Section’s enumerated sub-paragraphs.
- Establishment, operation, and maintenance of extension services, model plantations, and other activities to ensure coconut farmers are informed of proper replanting methods.
- Any balance, for investments for coconut farmers’ benefit as prescribed in Section 9.
The Authority pays PHP 100,000,000.00 from the Coconut Consumers Stabilization Fund as initial funding for the Coconut Industry Development Fund.
Thereafter, the Authority pays at least PHP 0.20 per kilogram of copra resecada (or its equivalent) from current Coconut Consumers Stabilization Fund levy collections to the Coconut Industry Development Fund.
If the Coconut Consumers Stabilization Fund levy is lifted, a permanent levy of PHP 0.20 per kilogram of copra (or its equivalent in other coconut products) automatically applies, collected and paid to the Coconut Industry Development Fund by copra exporters, oil millers, dessicators, and other end-users under Authority rules.
Sale or transfer of the authorized hybrid coconut seednuts is exempt from the payment of the Coconut Consumers Stabilization Fund levy and any and all taxes and fees of whatever kind and nature.
Rules on exemptions, deposit, reporting, and rates
The Coconut Consumers Stabilization Fund and the Coconut Industry Development Fund, and authorized disbursements, are not treated as special and/or fiduciary funds or as part of national government general funds under PD 711.
These funds and disbursements are not treated as subsidy, donation, levy government funded investment, or government share under PD 898, and the intent is that the fund and authorized disbursements for coconut farmers’ benefit are owned by coconut farmers in their private capacities.
The President may authorize the Commission on Audit or any other government officer to audit business affairs, administration, and condition of persons and entities receiving subsidies for coconut-based consumer products under the levy subsidy purpose, and persons required to pay the Coconut Consumers Stabilization Fund levy.
The Authority is empowered to promulgate rules and regulations for proper and effective collection of levies.
The Authority may require persons liable to pay levies to submit periodic reports of receipt of deliveries and/or purchases of copra or its equivalent.
The Authority has no power to require disclosure of competitive information and/or trade secrets such as names and identities of buyers and prices at which copra equivalents were sold.
The Authority may impose and collect interest equal to 14% per annum of levies paid after the due date.
For willful or fraudulent failure to pay levies (as determined by the Authority), the Authority may impose a surcharge of 25% in addition to assessable interest on late payments.
In disputes where genuine issues of fact and/or law are raised, the Authority may, in its discretion, enter into a compromise settlement waiving in whole or in part the assessable levy, interest, and surcharges.
All levy collections must be immediately deposited for the account of coconut farmers, interest-free, by the bank acquired for coconut farmers’ benefit under PD 755, under terms ensuring full credit service for coconut farmers.
Deposits cannot be withdrawn for purposes other than authorized purposes until the nationwide replanting program is fully implemented and realized.
Investments and distribution to farmers
- The bank acquired for coconut farmers’ benefit under PD 755 has full power to make investments in shares of stock in corporations that engage in establishing and operating industries, commercial activities, and allied business undertakings relating to the coconut and other palm oil industry and in establishing research into commercial and industrial uses of coconut and other palm oil.
- The Authority periodically determines how much of the collections of the Coconut Consumers Stabilization Fund and/or the Coconut Industry Development Fund is not required for replanting and other authorized purposes, and the bank uses such surplus for the authorized investments.
- Investments are equitably distributed for free by the bank to coconut farmers, except the bank may retain a portion necessary to ensure continuity and adequacy of financing for the particular enterprise.
- Distribution measures must ensure viability and stability of the particular enterprise and afford the widest distribution among coconut farmers.
Penalties and enforcement
Section 1, Article IV penalizes willful and deliberate violations of this decree or lawful rules and regulations promulgated by the Authority.
The penalty for responsible persons is a fine of not more than PHP 20,000.00 and imprisonment of not more than five years.
If the offender is a corporation, partnership, or other juridical person, the penalty is imposed on the officer or officers authorizing, permitting, or tolerating the violation.
Aliens found guilty must, after serving the sentence, be immediately deported; for a naturalized citizen, the certificate of naturalization is cancelled.
Section 2, Article IV penalizes any person or entity who owns, utilizes, and/or is found in possession of subsidized coconut-based products in violation of this decree and implementing rules.
The unlawfully possessed or removed subsidized products are confiscated and sold by the Authority.
The proceeds of confiscated sales form part of the Coconut Consumers Stabilization Fund.
Abolitions, repeals, and separability
The Coconut Coordinating Council (CCC), Philippine Coconut Administration (PHILCOA), and Philippine Coconut Research Institute (PHILCORIN) are abolished.
Their powers and functions transfer to the Philippine Coconut Authority, including appropriations, funding from all sources, equipment, other assets, and necessary personnel.
Separated personnel receive the same rights and privileges as other government employees separated under the Integrated Reorganization Plan.
The Authority, through its Board, effects the transfer to ensure the least disruption of ongoing programs and projects.
Prior to the Board’s actual assumption of duties, abolished-agency officers and employees continue exercising functions and discharging duties until ordered otherwise by the Board.
The Board of PHILCORIN and PHILCOA and their councils cease to exist upon the decree’s effectivity, and their functions are exercised by the Authority.
Until otherwise ordered by the President, the incumbent members of the Authority’s Governing Board are automatically appointed as Board members.
The decree repeals or amends accordingly all laws, executive and administrative orders, rules and regulations inconsistent with it, including Republic Act Nos. 1145, 1365, 1369, and 2282.
If any provision is held unconstitutional, only that provision is affected and the remainder remains valid.