COTTAGE INDUSTRIES DEVELOPMENT DECREE OF 1981

Amending and consolidating Republic Act Nos. 3470 and 5326 and Presidential
Decree No. 817 and other related law, Decrees, Executive Orders, Letters of
Instruction and Acts concerning the National Cottage Industries Development
Authority and for other purposes.

WHEREAS, cottage industry development and promotion is the
appropriate vehicle along the thrust of developing the countryside because of
its high labor intensity, low investment requirements and adaptability to
Philippine conditions owing to our abundant raw materials and superior
craftsmanship;

WHEREAS, it is of strategic importance to further develop
and vitalize the cottage industry sector to maintain the stability of our
economy and to accelerate the pace of industrialization;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers in me vested by the Constitution, do hereby
decree and order the following to be the revised charter of the National Cottage
Industries Development Authority:

SECTION 1. Title. — This act shall be known as the
Cottage Industries Development Decree of 1981.

SECTION 2. Declaration of Policy. — High employment
levels, growth and diversification of exports, and countryside development are
strategic aims of government in order to attain industrial stability and
growth.

The State, realizing the vital importance and special significance of cottage
industries towards improving the quality of life and spreading its benefits to
the people, mandates mandated the National Cottage Industries Development
Authority with the corporate mission to develop and promote cottage industries
to its fun potential.

SECTION 3. Creation. — To carry out the above
policy, a body corporate to be known as the NATIONAL COTTAGE INDUSTRIES
DEVELOPMENT AUTHORITY, hereinafter referred to as the NACIDA, is hereby created
and placed under the Ministry of Industry for policy, program and administrative
supervision.

SECTION 4. General Powers — The National Cottage
Industries Development Authority as an authority with corporate powers, is
hereby authorized to do or undertake the following:

To make or enter into contract; to lease or own real or personal property; to
sell or otherwise dispose of its real or personal property; to sue and be sued;
to acquire and no Id assets of all types and kind resulting directly from
operations authorized by this Decree or as are essential or incidental to the
proper conduct of such operations; to accept donations or development aids to be
used in furtherance of its objectives; to establish subsidiary corporations
and/or other institutional mechanism deemed necessary by the Board of Directors
to attain plan objective or program priorities under such scheme or design, as
it may adopt in accordance with existing laws, rules and regulations; to make
such expenditures to carry out the purposes and functions of the NACIDA; to
prescribe such rules and regulations and other issuances as are necessary to
carry out its functions vested on it by this Decree; to invest or make
investments in any financial undertaking, public or otherwise, for the purpose
of enhancing the interests of the cottage industries in general as may be deemed
necessary by the Board, and all such earnings accruing therefrom shall be held
in trust for the account of NACIDA.

SECTION 5. Functions. — The NACIDA shall perform
the following functions and duties:

1. to organize, strengthen encourage and promote the establishment of cottage
   industries;
2. to develop financial-assistance programs and funding mechanisms for the
   cottage industries;
3. to undertake a program of development and expansion of cottage industries
   nationwide particularly in less developed areas;
4. to plan, design and formulate viable, resource-based, low-budget, income
   generating and market oriented “training-production” livelihood projects;
5. to evolve and validate viable special projects which are
   employment-generating and income-producing to be collectively managed and
   operated by trainee-graduates;
6. to undertake industrial surveys of different craft skills needed by
   industry;
7. to conduct field surveys of indigenous raw materials and equipment;
8. to initiate, and if necessary, procure certified raw materials needed for
   production by cottage industries;
9. to help producers attain, competitive footing in the market;
10. to rationalize different aspects of cottage industry operations;
11. to establish and develop Cottage Industries Training Centers and undertake
    research and development;
12. to promote the quality assurance of cottage industries products;
13. to extend assistance to cottage industries producers in their problems
    relating to financing, production and marketing; and
14. to work in close coordination with the private sector.

SECTION. 6. Board of Directors. — The NACIDA shall
have a duly constituted Board of Directors which shall be the governing body
that shall define and promulgate the necessary policies affecting the NACIDA and
the cottage industry in general.

1. Term and Composition. — The affairs of the authority shall be
   managed by a Board of Directors of eleven (11) members composed of the following
   or their duly designated
   representatives.
   1. Minister of Industry – Chairman
   2. Minister of Trade – Vice-chairman
   3. Minister of Human Settlements – Member
   4. Minister of Education and Culture – Member
   5. Chairman of the National Manpower and Youth Council – Member
   6. Governor of the Central Bank of the Philippines – Member
   7. Chairman of the Development Bank of the Philippines – Member
   8. Administrator of the National Cottage Industries Development Authority –
      Member
   9. Three (3) representatives from the private sector – Member

   All members of the Board ox Directors shall be ex-officio members, except the
   representatives of the private sector, who shall be appointed by the
   President/Prime Minister of the Philippines for a term of four (4) years.

2. Powers and Duties — The Board of Directors shall have the following powers
   and duties:
   1. enunciate policies, determine objectives, establish priorities, allocate
      resources and provide overall direction and supervision over NACIDA operations;
   2. establish regional and sub-regional offices as may be necessary,
   3. approve the annual and other supplemental or special budgets of the NACIDA;
   4. determine and grant merit increases, hazard pay, bonuses, allowances, other
      employee fringe benefits and compensation of officers and employees of the
      NACIDA at rates comparable with or similar to salary or wage scales or levels
      approved for agencies or instrumentalities under the Ministry of Industry. In
      the case of the administrator and the Deputy Administrators, their compensation
      level shall be determined by the Board of directors;
   5. ban the export of any local raw material needed by cottage industries when
      available supply thereof is not sufficient to cover local demand;
   6. issue summons, sub-poenas, and/or sub-poena duces tecum in connection with
      formal complaints, charges, or cases under formal investigation or controversies
      for fact-finding purposes;
   7. adopt an accreditation scheme to upgrade and protect the industry along
      sectoral groupings pursuant to Section 10 of this Decree;
   8. review and approve programs and projects which are mainly funded from
      sources external to the NACIDA; and
   9. determine the uses, applications and expenditures to be made of earnings
      generated from investments made; by the NACID

SECTION 7. Administration. — The Minister of
Industry as Chairman of the NACIDA Board shall be the Chief Executive Officer of
NACIDA with full powers to restructure, reorganize and manage NACIDA. The
Chairman as Chief Executive Officer shall review, develop, supervise and direct
a revitalized national cottage industries development program.

The administrator snail be the Chief Operating Officer shall report to and be
responsible directly to the Chairman.

SECTION 8. Powers and Duties of the administrator.
— Administrator shall have the following powers and duties:

1. to administer the affairs of NACIDA under the supervision and direction of
   the Chairman;
2. to appoint subordinate officials and employees provided in the
   annual plantilla or budget necessary for the proper discharge of the duties and
   functions of the NACIDA
3. to submit within sixty (60) days before the beginning of each
   fiscal/calendar year an annual budget to the Board of Directors;
4. to submit within sixty (60) days before the close of the fiscal year an
   annual report to the President through the Board of Directors;
5. to perform such acts necessary in the exercise of the duties of this office
   and such others in the furtherance and attainment of the objectives, purposes or
   corporate mission of NACIDA; and
6. to perform other special duties as nay be assigned by the Board of
   Directors.

SECTION 9. Regional Offices.— The NACIDA shall
establish regional offices in accordance with the regional groupings of the
Integrated Reorganization Plan. – Each of these regional offices to be
established shall be headed by a Regional Manager and an Assistant Regional
Manager.

SECTION 10. Cottage Industry — The term “Cottage
Industry” shall mean a modest economic activity for profit using primarily
indigenous raw materials in the production of various articles that generally
involve craftsmanship, artistic skills and tradition of the country.
Provided, however, that all cottage industries shall be owned and
operated by Filipino citizens, or by corporations, partnerships, or cooperatives
at least seventy-five percent (75%) of the capital investment of which shall be
owned by Filipino citizens. Provided, further, that the total assets of
which shell not exceed one hundred thousand pesos (100,000.00) at the time of
registration with the NACIDA. Provided, finally, that the maximum total
assets allowable for cottage industries for purposes of registration may be
modified and/or increased accordingly by the NACIDA Board subject to the
approval of the President of the .Republic of the Philippines.

For facility of implementation, coordination and statistical gathering
cottage industries shall be classified as follows;

1. Handicraft Industry — That sector requiring manual dexterity and
   artistic skills in the production of utility products, decorative articles and
   items of personal use that generally highlights traditional and artistic
   features typical of a country;
2. Metalcraft Industry —The sector using metals or its alloys as
   principal raw materials component in producing articles such as brasswares,
   cutlery items, fabricated tools, implements and equipment and other items
   requiring a certain degree of craftsmanship in the making thereof including the
   making of jewelry items involving the use of metals and/or its alloys in
   combination with semiprecious or artificial stones;
3. Furniture Industry — That sector producing articles such as beds,
   chairs, tables, shelves, stools, sofas, cabinets and other similar movable items
   for home and office use of whatever raw material component or a combination
   thereof including the use of upholstery materials;
4. Garment Industry — That sector consisting of ready-made apparel of
   ready-to-wear garments including such related production activities like
   knitting, crocheting, embroidery, beadwork and the weaving of native clothing
   materials or fabrics;
5. Ceramics Industry — That sector consisting of such products or
   articles such as potteries, hollow blocks, tiles, firebricks, clay stoves and
   other products using1 clay, cement and/or plaster of paris as raw material
   components;
6. Food Processing Industry —That sector consisting: of products
   and/or food items arising from processing activities requiring knowledge or
   expertise on food technology and food preservation;
7. Complementation Industry — That sector responsible for the
   production or manufacture of articles which complement, supplement or form part
   of a separate or incomplete article or sub-assembly to make it whole or complete
   and/or to replace missing or defective parts of tools, implements, equipment or
   assemblies including the manufacture or fabrication of component parts, machine
   parts, car parts, electronics and radio parts, watch components and
   others.

The Board of Directors shall determine and issue more specific guidelines on
the classification and categorization of any other craft whose product lines are
produced on the level of cottage industries for the purposes of registration,
invalidation, and/or accreditation.

SECTION 11. Registration — All persons,
corporations, partnerships, cooperatives rand associations engaged in the
production or manufacture of cottage products may register with the NACIDA to
avail of the benefits granted by this Decree.

For purposes of this Decree, “registration” shall mean recognition by
government through inclusions in the official registry of persons, partnerships,
cooperatives, corporations and other establishments engaged in the production or
manufacture of cottage products to avail of incentives and/or benefits granted
under Section 14 of this Decree.

SECTION 12. Revalidation — producers registered
prior to this Decree shall be required to revalidate their privileges granted to
registered cottage industry producers by subsequent and related laws within one
(l) year from the effectivity date of this Decree, otherwise such firms shall be
deemed as having ceased operating or no longer in existence to warrant their
cancellation or deletion from the NACIDA Registry of Registered Producers.

SECTION 13. Accreditation — The Board of directors
may adopt an accreditation system as it may deem appropriate to attest to the
fulfillment of, or compliance with, certain standards or requirements set by the
government in consultation with appropriate industry sectors to attain a more
favored reputation or status on the basis of available and verified business
performance.

SECTION 14. Incentives and Benefits — To accelerate
the growth and development of cottage industries, the government may provide,
among others, the following incentives and benefits to persons, firms or
corporations registered with the NACIDA: tax privileges, promotion/marketing
assistance, production, assistance, skills development and technology
assistance, credit and loans assistance, equipment assistance, raw materials
assistance, and such other incentives or benefits as may be provided
for by subsequent laws.

SECTION 15. Tax Exemptions —The tax privileges
mentioned above shall mean exemption from all taxes except specific and income
taxes for a period of five (5) years from the date of registration of such
cottage industries with the NACIDA. Provided, However, that no
exemption from the percentage taxes shall be enjoyed for sales in excess of four
hundred thousand pesos (P400,000.00) aggregate each year. Provided, finally,
that this tax exemption, shall be withheld from any firm or entity which
has availed of this incentive under a previous registration for the same
activity in another name or another organizational set up.

SECTION 16. Tax-Free Importation — Subject to the
last proviso of the preceding section, NACIDA, is authorized to approve the
tax-free importation of tools, gadgets, machineries, or equipment not available
in the local market and which shall De used exclusively for production purposes
by the NACIDA registered entity.

SECTION 17. Withdrawal of Registration and Accreditation
— The Board, after due notice, can withdraw registration and accreditation
of a NACIDA. producer upon violation of this Decree, failure to maintain the
quality of its products if there are any government standards set for such
products and to comply with tile terms and conditions duly imposed by the Board
for its registration, including submission of reports to NACIDA.

SECTION 18. Penal Provision — Any person, firm or
corporation found violating Section 16 of this Decree shall, upon conviction by
a court of competent jurisdiction, be punished by imprisonment not exceeding
five years and/or a fine not exceeding five thousand pesos (P5,000.00). All
aliens found violating this provision of the Decree shall, in addition to the
aforementioned penalties, be subject to deportation.

SECTION 19 Incentive Pay — All officers and
personnel of the NACIDA shall be entitled to an incentive pay equivalent to one
month salary for every year of meritorious servi.ce rendered. Provided,
however, that an equivalent proportional fraction thereof shall be allowed
for all those who have rendered less than one year of meritorious
service.

SECTION 20. Memberships in Industry
associations — To facilitate coordination and consultation with the private
sector for planning and policy-formulation, the NACIDA shall encourage the
formation of cottage industry associations along sectoral lines as classified
under Section 10 of this Decree. The Board of Directors nay require, as
condition-precedent to registration or accreditation, membership in such
industry associations.

SECTION 21. Repealing Clause — All laws, Decree,
Letters of instruction, Executive Orders, Directives and other Acts or parts
thereof inconsistent herewith are hereby repealed or modified accordingly.

SECTION 22. Effectivity — This Act shall take
effect upon approval.

Done in the City of Manila, this l5th day of January, in the year of Our
Lord, nineteen hundred and eighty-one.

			(Sgd.) FERDINAND E. MARCOS President of the Philippines
	By the President:
	(Sgd.) JUAN C. TUVERA
		Presidential Executive Assistant

 

Vol. 25, Vital Documents, Presidential Decree 1980-1981