State policy and purpose
- Section 2 declares the State policy to promote the rapid integrated development and growth of the coconut and other palm oil industry in all its aspects.
- Section 2 requires ensuring that coconut farmers become direct participants in, and beneficiaries of, the development and growth.
- Article II, Section 3 directs the Philippine Coconut Authority to implement this national policy through industry programs, research, market development, regulation of copra marketing/export, and enforcement mechanisms.
Philippine Coconut Authority created
- Article II, Section 1 creates an independent public corporation known as the Philippine Coconut Authority (Authority).
- Article II, Section 1 requires the Authority to directly report to, and be supervised by, the President of the Philippines.
- Article II, Section 2 mandates the Authority to maintain its principal office in the Greater Manila Area.
- Article II, Section 2 authorizes the Authority to establish branches and agencies within the Philippines as necessary for proper business conduct.
Authority powers and functions
- Article II, Section 3 empowers the Authority to formulate and adopt a general program of development for the coconut and other palm oil industry in all its aspects.
- Article II, Section 3 directs the Authority to formulate and implement a nationwide replanting program using precocious high-yielding hybrid seednuts, and allows inclusion of new areas in the discretion of the Authority provided existing coconut farmers are given priority.
- Article II, Section 3 requires the Authority to distribute for free the authorized hybrid coconut seednuts to coconut farmers.
- Article II, Section 3 authorizes the Authority to review and revise and then integrate into the adopted development program the policies, projects, and activities of other governmental agencies directly relating to industry development.
- Article II, Section 3 requires the Authority, in coordination with a hybrid coconut seed farm it is authorized to establish, to conduct genetical and agricultural researches and investigations to improve coconut productivity.
- Article II, Section 3 authorizes the Authority to establish and maintain one central experiment station and sub-stations to undertake research on control and eradication of coconut diseases and pests and methods of making copra.
- Article II, Section 3 provides that research stations and centers, facilities, and equipment of any governmental agency or instrumentality used for relevant genetical, agronomical, and disease-control research on coconut culture are transferred to the Authority.
- Article II, Section 3 empowers the Authority to explore and expand domestic and foreign markets for coconut products and by-products.
- Article II, Section 3 empowers the Authority to regulate marketing and exportation of copra and its by-products by establishing standards for domestic trade and export and then conducting inspection of copra and by-products proposed for export to determine conformity.
- Article II, Section 3 authorizes the Authority to prescribe, by rules and regulations, a method of measuring moisture content of copra at its first domestic sale and a scale of deduction based on the moisture percentage.
- Article II, Section 3 empowers and authorizes the Authority to impose and collect levies authorized under the decree.
- Article II, Section 3 requires imposition/collection of a fee of ten centavos (₱0.10) for every one hundred kilos of dessiccated coconut, with payment responsibilities allocated as follows:
- the dessicating factory pays for dessiccated coconut,
- oil mills pay for coconut oil,
- exporters pay for copra,
- and the collected fee is used exclusively to defray the Authority’s operating expenses.
- Article II, Section 3 authorizes the Authority to enter into contracts of any kind necessary or incidental to attain its purposes and to exercise all powers necessary for its organization objectives.
- Article II, Section 3 prohibits the Authority from engaging in commercial/industrial activities, including commercial production of hybrid coconut seednuts.
- Article II, Section 3 grants the Authority full power to regulate production, distribution, and utilization of all subsidized coconut-based products, and to require reports/documents necessary to verify whether levy payments and/or subsidy claims are due and correct and whether subsidized products are distributed to and used by authorized consumers—except where entities are owned or controlled by the Government or by coconut farmers under Sections 9 and 10 of Articles III.
- Article II, Section 3 authorizes the Authority to issue subpoenas and subpoena duces tecum, summon witnesses, and impose punishment for contempt in appropriate cases.
- Article II, Section 3 authorizes Authority officers/agents to enter houses, buildings, or places where subsidized products are stored or kept, when there are reasonable grounds, to examine them; seize unlawfully possessed or kept products; and stop and search vehicles when there are reasonable grounds that they unlawfully carry subsidized coconut-based products.
- Article II, Section 3 requires using Central Bank outturn reports of copra and by-products at the foreign port of destination as a basis for final assessment of the authorized levies, and directs the Central Bank to furnish the Authority copies.
- Article II, Section 3 directs the Authority to formulate a system for rewards and compensation of persons instrumental in discovery of violations and conviction of violators, and to provide appropriate security for witnesses when necessary.
- Article II, Section 3 authorizes the Authority to exercise other necessary and proper powers for enforcement of the decree and implementing rules.
Governing Board organization and governance
- Article II, Section 4 vests corporate powers and duties in a Board of seven (7) members.
- Article II, Section 4 requires Board members to be appointed by the President.
- Article II, Section 4 provides Board composition:
- Two representatives of the Government, with the President designating one as Chairman and one 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.
- Article II, Section 4 empowers the Board to direct and manage Authority affairs, prepare and adopt an annual budget, disburse proceeds of levies for authorized purposes, and establish internal organization and fix salaries and compensation of officers and employees.
- Article II, Section 5 mandates Board meetings as often as exigencies of service demand.
- Article II, Section 5 sets quorum at the presence of at least four members, and requires the vote of four members for adoption of any rule, resolution, decision, or other Board act.
- Article II, Section 6 sets per diem at Two hundred pesos (₱200) per meeting actually attended, with a cap of one thousand pesos (₱1,000) during any month per member.
- Article II, Section 6 prohibits other allowances or compensation except actual travelling expenses to and from residences for Board meetings.
- Article II, Section 7 makes the chief executive officer the Administrator, assisted by Deputy Administrators as prescribed by the Board, appointed/removed by the Board and delegated powers/duties by the Board.
- Article II, Section 7 requires officers and employees to be selected and appointed by the Board on the basis of merit and fitness.
- Article II, Section 8 authorizes the Board to establish departments, but requires that only one agronomical research department be created.
Levies, funds, and uses
- Article III, Section 1 empowers the Authority to impose and collect the Coconut Consumers Stabilization Fund Levy on every one hundred kilos of copra rececada or its equivalent in other coconut products delivered to or purchased by copra exporters, oil millers, dessicators, and other end-users of copra or its equivalent.
- Article III, Section 1 requires levy payment by copra exporters, oil millers, dessicators, and other end-users under rules the Authority prescribes.
- Article III, Section 1 provides that until otherwise prescribed by the Authority, the current levy being collected is continued.
- Article III, Section 2 requires utilization of Coconut Consumers Stabilization Fund Levy collections for the following purposes:
- providing a subsidy for coconut-based products when national interest so requires, with subsidy amount determined on the basis of the base price of copra (or equivalent) fixed by the Authority and the prices of coconut-based products fixed by the Price Control Council;
- restricting subsidy entitlement when coconut farmers who effectively shoulder levy burdens have owned or controlled oil mills and/or refineries manufacturing coconut-based consumer products: only those oil mills/refineries may be entitled to the subsidy;
- refunding wholly or in part any premium duty collected on copra (or its equivalent) sold prior to February 17, 1974;
- financing developmental and operating expenses of the Philippine Coconut Producers Federation, including scholarships for deserving children of coconut farmers;
- financing establishment and operation of industries and commercial enterprises relating to coconut and other palm oil industry as described in Section 9 of the decree;
- financing the Coconut Farmers Refund, constituted as pooled savings of coconut farmers, to be used for mutual assistance, protection, and relief in the form of social benefits such as life and accident insurance coverage for farmers.
- Article III, Section 3 creates a permanent fund called the Coconut Industry Development Fund administered and utilized by the bank acquired for the benefit of coconut farmers under PD 755.
- Article III, Section 3 requires the Coconut Industry Development Fund be used to:
- finance establishment, operation, and maintenance of a hybrid coconut seednut farm under terms negotiated by NIDC with private parties ensuring early, proper, adequate, continuous supply of selected high-yielding hybrid and indigenous precocious seednuts; confirms/ratifies the contract entered by NIDC and authorizes the bank to administer it and perform NIDC rights/obligations using the Coconut Industry Development Fund;
- purchase all seednuts produced by the hybrid coconut seednut farm to be distributed for free by the Authority to coconut farmers on a voluntary basis and for new areas opened for coconut planting, consistent with the nationwide coconut replanting program, with farmers paying the levy given priority;
- defray costs of implementing the nationwide replanting program, subject to prior approval of the President, implemented by the Authority through a private non-profit foundation owned by coconut farmers, in the manner prescribed by Sections 9 and 10 of the decree;
- finance extension services, model plantations, and other activities ensuring coconut farmers are informed of proper replanting methods;
- use any remaining balance for investments for coconut farmers as prescribed in Section 9.
- Article III, Section 4 provides initial capitalization and continuing payments:
- directs the Authority to pay from the Coconut Consumers Stabilization Fund an amount of One Hundred Million Pesos (₱100,000,000.00) to the Coconut Industry Development Fund;
- requires thereafter paying at least twenty centavos (₱0.20) per kilogram of copra resecada (or equivalent) out of current Coconut Consumers Stabilization Fund Levy collections to the Coconut Industry Development Fund.
- Article III, Section 4 provides that if the Coconut Consumers Stabilization Fund Levy is lifted, a permanent levy of twenty centavos (₱0.20) per kilogram is automatically imposed on every kilogram of copra (or equivalent in other coconut products), collected and paid to the Coconut Industry Development Fund by copra exporters, oil millers, dessicators, and other end-users under Authority rules.
- Article III, Section 4 declares that sale or transfer of the authorized hybrid coconut seednuts is exempt from payment of the Coconut Consumers Stabilization Fund levy and from any and all taxes and fees of whatever kind or nature.
Exemptions, accounting treatment, auditing, rules
- Article III, Section 5 declares that the Coconut Consumers Stabilization Fund, the Coconut Industry Development Fund, and authorized disbursements are not to be construed as special and/or fiduciary funds, or part of the general funds of the national government within PD 711.
- Article III, Section 5 declares that the funds and disbursements are not subsidies, donations, levy government-funded investments, or government share within the contemplation of PD 898.
- Article III, Section 5 states the intention that the funds and authorized disbursements for coconut farmers are to be owned by coconut farmers in their private capacities.
- Article III, Section 5 authorizes the President to authorize the Commission on Audit or any other government officer to audit the business affairs, administration, and condition of persons/entities receiving subsidies for coconut-based consumer products and entities required to pay the Coconut Consumers Stabilization Fund Levy under the decree.
- Article III, Section 6 grants the Authority full power to promulgate rules and regulations necessary for proper collection of authorized levies.
- Article III, Section 6 allows the Authority to require persons liable to pay levies to submit periodic reports of their receipt of deliveries and/or purchases of copra or its equivalent.
- Article III, Section 6 prohibits the Authority from requiring disclosure of competitive information and/or trade secrets, such as names and identities of buyers and prices at which copra was sold.
Interest, surcharges, disputes, deposits
- Article III, Section 7 empowers 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 when there is willful or fraudulent failure to pay levy, as determined by the Authority.
- Article III, Section 7 authorizes, for disputed assessments where genuine issues of fact and/or law are raised, the Authority to enter into a compromise settlement waiving in whole or in part the assessable levy, interest, and surcharges in its discretion.
- Article III, Section 8 mandates that all levy collections be immediately deposited for the account of coconut farmers interest-free with the bank acquired under PD 755, under terms ensuring the bank can service full credit requirements of coconut farmers.
- Article III, Section 8 provides that deposits shall not be withdrawn for purposes other than those authorized until the nationwide replanting program is fully implemented and realized.
Investments and distribution to farmers
- Article III, Section 9 grants the bank acquired under PD 755 full power to make investments by taking shares of stock in corporations organized to establish and operate industries and commercial activities and allied undertakings related to coconut and other palm oils, and to establish research into commercial and industrial uses.
- Article III, Section 9 requires the Authority to ascertain periodically how much of the collections of the Coconut Consumers Stabilization Fund and/or Coconut Industry Development Fund are not required to finance replanting and other authorized purposes, and to utilize that surplus through the bank for authorized investments.
- Article III, Section 10 requires that investments made by the bank be equitably distributed for free to coconut farmers.
- Article III, Section 10 allows the bank to retain a portion of investments it considers necessary to ensure continuity and adequacy of financing of the particular endeavor.
- Article III, Section 10 requires measures ensuring viability and stability of the enterprise and providing the widest distribution of investments among coconut farmers.
Penalties and enforcement for violations
- Article IV, Section 1 punishes willful and deliberate violations of the decree or of rules/regulations legally promulgated by the Authority with:
- a fine of not more than ₱20,000.00, and
- imprisonment of not more than five years.
- Article IV, Section 1 provides that when 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 provides that aliens found guilty, after serving sentence, are immediately deported.
- Article IV, Section 1 provides that for a naturalized citizen, the certificate of naturalization is cancelled.
- Article IV, Section 2 makes any person or entity owning, utilizing, and/or found in possession of subsidized coconut-based products in violation of the decree and implementing rules liable to the penalty in Section 1.
- Article IV, Section 2 requires confiscation and sale by the Authority of unlawfully possessed or removed subsidized products, and provides that proceeds form part of the Coconut Consumers Stabilization Fund.
Abolitions, repeals, separability, and effect
- Article V, Section 1 abolishes the Coconut Coordinating Council (CCC), Philippine Coconut Administration (PHILCOA), and Philippine Coconut Research Institute (PHILCORIN).
- Article V, Section 1 transfers to the Philippine Coconut Authority the abolished agencies’ powers and functions, appropriations, funding from all sources, equipment, other assets, and personnel necessary for operations.
- Article V, Section 1 requires that personnel separated from service receive the same rights and privileges accorded to other government employees separated under implementation of the Integrated Reorganization Plan.
- Article V, Section 1 requires the Authority, through its Board, to effect transfers in a manner ensuring the least disruption of ongoing programs and projects.
- Article V, Section 1 provides for continuity: before the Board and its functions actually assume duties, officers and employees of abolished agencies continue exercising functions and discharging duties and responsibilities until ordered otherwise by the Board of the Authority.
- Article V, Section 1 requires the Board of PHILCORIN and PHILCOA and their Council to cease immediately upon effectivity, with their functions exercised by the Authority.
- Article V, Section 1 automatically appoints, until otherwise ordered by the President, the incumbent members of the Authority’s Governing Board as Board members.
- 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 a separability rule: if any provision is held unconstitutional, only that provision is affected while the remainder remains valid.