REVISING PRESIDENTIAL DECREE NUMBERED NINE HUNDRED SIXTY ONE

WHEREAS, Presidential Decree No. 961 was promulgated to
promote the development of the coconut and other palm oil industry and to ensure
that the coconut farmers become direct participants in, and beneficiaries of,
such development;

WHEREAS, there is a need to restructure the provisions of
Presidential Decree No. 961 in order to meet the changes of the times and to
provide more effective means of achieving the objectives of the coconut industry
as expressed in said Decree;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Republic of the Philippines, by virtue of the powers vested in me by the
Constitution, do hereby decree and order the following:

ARTICLE I

TITLE AND POLICY OF THE STATE

SECTION 1. Title.—This Decree shall be known as the
“Revised Coconut Industry Code”.

SECTION 2. Declaration of Policy.—It is hereby
declared to be the policy of the State to promote the rapid integrated
development and growth of the coconut and other palm oil industry in all its
aspects and to ensure that the coconut farmers become direct participants in,
and beneficiaries of, such development and growth.

ARTICLE II

SECTION 1. Creation of a Philippine Coconut
Authority.—To implement and attain the declared national policy, there is
hereby created an independent public corporation to be known as the Philippine
Coconut Authority, hereinafter referred to as Authority, directly reporting to,
and supervised by, the President of the Philippines.

SECTION 2. Principal Office.—The Authority shall
maintain its principal office in the Greater Manila Area but it may establish
branches and agencies within the Philippines as may be necessary for the proper
conduct of its business.

SECTION 3. Power.—In the implementation of the
declared national policy, the authority shall have the following powers and
functions:

1. To formulate and adopt a general program of development for the coconut and
   other palm oil industry in all its aspects;
2. To formulate and implement a nationwide replanting program using precocious
   high-yielding hybrid seednuts and, in the discretion of the authority, the
   program may include new areas provided that existing coconut farmers shall
   always be given priority;
3. To distribute, for free, to coconut farmers the hybrid coconut seednuts
   herein authorized to be acquired;
4. To review and revise, and thereafter integrate into the adopted general
   program of development the existing policies, projects and activities of all
   other governmental agencies directly relating to the development of the
   industry;
5. In coordination with the hybrid coconut seed farm herein authorized to be
   established, to conduct genetical and agricultural researches and investigations
   for the improvement of the coconut palm productivity;
6. To establish, operate and maintain one central experiment station and such
   sub-stations as it may prescribe to undertake extensive research in the control
   and eradication of coconut diseases and pests and in the method of making copra;
   and in connection therewith, all research stations and centers, facilities and
   equipment operated by any governmental agency or instrumentality in the
   researches on genetical, agronomical and disease control relating to coconut
   culture are all hereby transferred to the authority;
7. To explore and expand the domestic and foreign markets for coconut products
   and by-products;
8. To regulate the marketing and the exportation of copra and its by-products
   by establishing standards for domestic trade and export and, thereafter, to
   conduct on inspection of all copra and its by-products proposed for export to
   determine if they conform to the standards established;
9. To devise and thereafter prescribe by means of rules and regulations a
   method of measuring the moisture content of copra at its first domestic sale and
   a scale of deduction according to the percentage of the moisture content;
10. To impose and collect the levies herein authorized to be collected;
11. To impose and collect, under such rules that it may promulgate, a fee of ten
    centavos for every one hundred kilos of dessiccated coconut, to be paid by the
    dessicating factory, coconut oil to be paid by the oil mills and copra to be
    paid by the exporters, which shall be used exclusively to defray its operating
    expenses;
12. To enter into, make and execute contracts of any kind as may be necessary or
    incidental to the attainment of its purposes and, generally, to exercise all the
    powers necessary to achieve the purpose and objectives for which it is
    organized; provided, however, it shall not engage in
    commercial/industrial activities including the commercial production of hybrid
    coconut seednuts;
13. Except in respect of entities owned or controlled by the Government or by
    the coconut farmers under Section 9 and 10, Articles III hereof, the Authority
    shall have full power and authority to regulate the production, distribution and
    utilization of all subsidized coconut-based products, and to require the
    submission of such reports or documents as may be deemed necessary by the
    Authority to ascertain whether the levy payments and/or subsidy claims are due
    and correct and whether the subsidized products are distributed among, and
    utilized by, the consumers authorized by the Authority;
14. To issue subpoena and subpoena duces tecum; to summon
    witnesses to appear in any investigation conducted by the Authority pursuant to
    its powers granted herein; and, in appropriate cases, to impose punishment for
    contempt, direct or indirect;
15. To authorize officers or agents of the Authority to enter any house,
    building, or place where subsidized products are stored or kept, or when there
    are reasonable grounds to believe that said products are stored or kept thereat,
    so far as may be necessary to examine the same; to seize such products as are
    found to be unlawfully possessed or kept; and to stop and search any vehicle or
    other means of transportation when there are reasonable grounds to believe that
    the same unlawfully carries any subsidized coconut-based products;
16. To utilize hereafter, as the basis for final assessment of the levies herein
    authorized to be collected, the Central Bank outturn reports of copra and its
    by-products at the foreign port of destination and for that purpose, the Central
    Bank shall furnish the Authority with copies thereof;
17. To formulate a system for the reward of compensation of persons instrumental
    in the discovery of violations of this law or implementing rules and
    regulations, and conviction of the violators; and, whenever necessary, to
    provide for the appropriate security of the witnesses testifying against such
    violators; and
18. To exercise such other powers as may be necessary and proper for the
    effective enforcement of this law and the implementing rules and regulations.

SECTION 4. Governing Board.—The corporate powers
and duties of the Authority shall be vested in and exercised by Board of seven
(7) members to be appointed by the President, as follows:

1. Two representatives of the Government, one of whom shall be designated by
   the President as Chairman and the other as Vice-Chairman;
2. Three members recommended by the Philippine Coconut Producers Federation;
3. One member recommended by the United Coconut Association of the Philippines;
4. One member recommended by the owner and operator of the hybrid coconut
   seednut farm herein authorized to be established.

The Board shall have the following additional powers and duties:

1. To direct and manage the affairs of the Authority;
2. To prepare and adopt an annual budget;
3. To disburse the proceeds of the levies for the purposes herein authorized;
   and
4. To establish the internal organization of the Authority and fix the salaries
   and other compensation of its officers and employees.

SECTION 5. Meeting and Quorum.—The Board shall meet
as often as the exigencies of the service may demand. The presence of at least
four members shall constitute a quorum, and the vote of four members shall be
necessary for the adoption of any rule, resolution or decision or any other act
of the Board.

SECTION 6. Compensation of the Members of the
Board.—The members of the Board shall receive per diem of two hundred pesos
for each meeting actually attended; Provided, That such per diems shall
not exceed one thousand pesos during any month for each member; Provided,
further, That no other allowance or any form of compensation shall be paid
then, except actual expenses in travelling to and from their residences to
attend board meetings.

SECTION 7. Executive Officers and Personnel.—The
chief executive officer of the authority shall be the administrator assisted by
such Deputy Administrators as the Board may prescribe, all of whom shall be
appointed, or removed, by the Board and delegated with such powers and duties as
it may prescribe.

All officers and employees of the Authority shall be selected and appointed
by the Board on the basis of merit and fitness.

SECTION 8. Departments.—The Board may establish
such departments as it may be convenient for the discharge of its duties;
Provided, That only one agronomical research department shall be
created.

ARTICLE III

LEVIES

SECTION 1. Coconut Consumers Stabilization Fund
Levy.—The Authority is hereby empowered to impose and collect a levy, to be
known as the Coconut Consumers Stabilization Fund Levy, on every one hundred
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 in other coconut products. The levy shall be paid by
such copra exporters, oil millers, dessicators and other end-users of copra or
its equivalent in other coconut products under such rules and regulations as the
Authority may prescribe. Until otherwise prescribed by the Authority, the
current levy being collected shall be continued.

SECTION 2. Utilization of Fund.—All collections of
the Coconut Consumers Stabilization Fund Levy shall be utilized by the Authority
for the following purposes:

1. When the national interest so requires, to provide a subsidy for
   coconut-based products the amount of which subsidy shall be determined on the
   basis of the base price of copra or its equivalent as fixed by the Authority and
   the prices of coconut-based products as fixed by the Price Control Council;
   provided, however, that when the coconut farmers, who in effect
   shoulder the burden of the levies herein imposed, shall have owned or
   controlled, under Section 9 and 10 hereof, oil mills and/or refineries which
   manufacture coconut-based consumer products, only such oil mills and/or
   refineries shall be entitled to the subsidy herein authorized;
2. To refund wholly or in part any premium duty collected on copra or its
   equivalent sold prior to February 17, 1974;
3. To finance the developmental and operating expenses of the Philippine
   Coconut Producers Federation including projects such as scholarships for the
   benefit of deserving children of the coconut farmers; and
4. 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 hereof; and
5. To finance the Coconut Farmers Refund which is hereby constituted as the
   pooled savings of the coconut farmers, to be utilized for their mutual
   assistance, protection and relief in the form of social benefits, such as life
   and accident insurance coverage of the farmers.

SEC. 3. Coconut Industry Development Fund.—There is
hereby created a permanent fund to be known as the Coconut Industry Development
Fund, which shall be administered and utilized by the bank acquired for the
benefit of the coconut farmers under PD 755 for the following purposes:

1. To finance the establishment, operation and maintenance of a hybrid coconut
   seednut farm under such terms and conditions that may be negotiated by the
   National Investment and Development Corporation (NIDC) with any private person,
   corporation, firm or entity as would insure that the country shall have, at the
   earliest possible time, a proper, adequate and continuous supply of selected
   high-yielding hybrid as well as indigenous precocious seednuts and, for this
   purpose, the contract, including the amendments and supplements thereto as
   provided for herein, entered into by NIDC as herein authorized is hereby
   confirmed and ratified, and the bank acquired for the benefit of the coconut
   farmers under PD 755 shall administer the said contract, including its
   amendments and supplements, and perform all the rights and obligations of NIDC
   thereunder, utilizing for that purpose the Coconut Industry Development Fund;
2. To purchase all of the seednuts produced by the hybrid coconut seednut farm
   which shall be distributed, for free, by the Authority to coconut farmers on a
   voluntary basis as well as for new areas opened for coconut planting in
   accordance with, and in the manner prescribed in, the nationwide coconut
   replanting program, provided, that farmers who have been paying the
   levy herein authorized shall be given priority;
3. To defray the cost of implementing the nationwide replanting program which,
   including the activities described in sub-paragraphs (b) and (d) of this
   Section, shall upon prior approval of the President of the Philippines, be
   implemented by the Authority through a private non-profit foundation owned by
   the coconut farmers in the manner prescribed by Sections 9 and 10 hereof;
4. To finance the establishment, operation and maintenance of extension
   services, model plantations and other activities as would insure that the
   coconut farmers shall be informed of the proper methods of replanting; and
5. The balance, if any, shall be utilized for investments for the benefit of
   the coconut farmers as prescribed in Section 9 hereof.

SEC. 4. Coconut Industry Development Fund Levy.—As
the initial funds of the Coconut Industry Development Fund, the Authority is
hereby directed to pay to the Coconut Industry Development Fund the amount of
One Hundred Million Pesos (P100,000,000.00) out of the Coconut Consumers
Stabilization Fund and thereafter the Authority shall pay to the said Fund in
amount equal to at least twenty centavos (P0.20) per kilogram of copra resecada
or its equivalent out of its current collections of the Coconut Consumer
Stabilization Fund Levy. In the event that the Coconut Consumers Stabilization
Fund Levy is lifted, permanent levy of twenty centavos (P0.20) is thereafter
automatically imposed on every kilogram of copra or its equivalent in terms of
other coconut products which shall be collected and paid to the Coconut Industry
Development Fund by copra exporters, oil millers, dessicators and other
end-users of copra or its equivalent under rules prescribed by the
Authority.

The sale or transfer of the hybrid coconut seednuts herein authorized to be
acquired is hereby declared exempt from the payment of the coconut consumers
stabilization levy and any and all taxes and fees of whatever kind and
nature.

SECTION 5. Exemptions.—The Coconut Consumers
Stabilization Fund and the Coconut Industry Development Fund, as well as all
disbursements as herein authorized, shall not be construed or interpreted, under
any law or regulation, as special and/or fiduciary funds, or as part of the
general funds of the national government within the contemplation of PD 711; nor
as subsidy, donation, levy government funded investment, or government share
within the contemplation of PD 898, the intention being that said Fund and the
disbursements thereof as herein authorized for the benefit of the coconut
farmers shall be owned by them in their private capacities: Provided,
however, That the President may at any time authorize the Commission on
Audit or any other officer of the government to audit the business affairs,
administration, and condition of persons and entities who receive subsidy for
coconut-based consumer products as provided in sub-paragraph (a), Section 2,
Article III hereof and those required to pay the Coconut Consumers Stabilization
Fund levy as provided in Section 1, Article III hereof.

SEC. 6. Rules and Regulations.—For a proper and
effective collection of the levies herein authorized to be imposed and
collected, the Authority is hereby given full power and authority to promulgate
such rules and regulations it may deem proper and necessary. The authority may
require the persons liable to pay the levies to submit periodic reports of their
receipt of deliveries and/or purchases of copra or its equivalent; Provided,
however, That the authority shall have no power to require the disclosure
of competitive information and/or trade secrets such as names and identities of
their buyers and prices at which they sold the copra or its equivalents.

SEC. 7. Interest and Surcharges.—Hereafter, the
Authority shall have the power to impose and collect interest equal to 14% per
annum of the levies paid after the due date thereof: Provided, however,
that in cases of willful or fraudulent failure to pay the levy, as determined by
the Authority, the Authority may impose a surcharge of 25% in addition to the
assessable interest on late payments. In dispute assessments where genuine
issues of fact and/or law are raised the Authority may, in its discretion, enter
into a compromise settlement of the disputed assessment waiving in whole or part
the assessable levy, interest and surcharges.

SEC. 8. Deposit of Collections.—All collections of
the levies herein authorized to be imposed and collected shall, upon collection
thereof, be immediately deposited for the account of the coconut farmers,
interest-free by the Authority with the bank acquired for the benefit of such
coconut farmers under PD 755 under such terms and conditions as will insure that
said bank can service in full the credit requirements of the coconut farmers:
Provided, however, That the deposits shall not be withdrawn for
purposes other than those herein authorized until the nationwide replanting
program shall have been fully implemented and realized.

SECTION 9. Investments For the Benefit of the Coconut
Farmers.—Notwithstanding any law to the contrary, the bank acquired for the
benefit of the coconut farmers under PD 755 is hereby given full power and
authority to make investments in the form of shares of stock in corporations
organized, for the purpose of engaging in the establishment and the operation of
industries and commercial activities and other allied business undertakings
relating to the coconut and other palm oils industry in all its aspects and the
establishment of a research into the commercial and industrial uses of coconut
and other palm oil industry. For that purpose, the Authority shall, from time to
time, ascertain how much of the collections of the Coconut Consumers
Stabilization Fund and/or the Coconut Industry Development Fund is not required
to finance the replanting program and other purposes herein authorized and such
ascertained surplus shall be utilized by the bank for the investments herein
authorized.

SECTION 10. Distribution to Coconut Farmers.—The
investments made by the bank as authorized under Section 9 hereof shall all be
equitably distributed, for free, by the bank to the coconut farmers except such
portion of the investments which it may consider necessary to retain to insure
continuity and adequacy of financing of the particular endeavor. In effecting
the distribution of the investments to the coconut farmers, the bank shall
provide measures as would ensure the viability and stability of the particular
enterprise and afford the widest distribution of the investments among the
coconut farmers.

ARTICLE IV

PENALTIES

SECTION 1. Whenever any person or entity willfully and
deliberately violates any of the provisions of this Act, or any rule or
regulation legally promulgated hereunder by the Authority, the person or persons
responsible for such violation shall be punished by a fine of not more than
P20,000.00 and by imprisonment of not more than five years. If the offender be a
corporation, partnership or a juridical person, the penalty shall be imposed on
the officer or officers authorizing, permitting or tolerating the violation.
Aliens found guilty of any offense shall, after having served his sentenced, be
immediately deported and, in the case of a naturalized citizen, his certificate
of naturalization shall be cancelled.

SECTION 2. Unlawful Possession or Utilization of
Subsidized Products.—Any person or entity who owns, utilizes, and/or is
found in possession of subsidized coconut-based products in violation of the
provisions of this law and the implementing rules shall be liable to the penalty
prescribed in Section 1 above. In addition, such unlawfully possessed or removed
products shall be confiscated and sold by the Authority, and the proceeds
thereof shall form part of the Coconut consumers Stabilization Fund.

ARTICLE V

MISCELLANEOUS PROVISIONS

SEC. 1. Abolished Agencies.—The Coconut
Coordinating Council (CCC), the Philippine Coconut Administration (PHILCOA) and
the Philippine Coconut Research Institute (PHILCORIN) are hereby abolished and
their powers and functions transferred to the Philippine Coconut Authority,
together with all their respective appropriations, funding from all sources,
equipment and other assets, and such personnel as are necessary;
Provided, That personnel separated from the service hereby shall have
the same rights and privileges accorded to other government employees separated
as a result of implementation of the Integrated Reorganization Plan:
Provided, further, That the Authority, through its Board, shall effect
the transfer herein provided in a manner that will insure the least disruption
of on-going programs and projects; Provided, moreover, That in the
period prior to the actual assumption of duties by the Board and its functions
as such, all officers and employees of the abolished agencies shall continue to
exercise all their functions and discharge all their duties and responsibilities
until ordered otherwise by the Board of the Authority, except that the Board of
the PHILCORIN and the PHILCOA as well as the Council itself, shall immediately
cease to exist upon the effectivity of this Decree, and their functions shall be
exercised by the Authority; and Provided, Finally, That until otherwise
so ordered by the President of the Philippines, the incumbent members of the
Governing Board of the Authority are hereby automatically appointed as such
members of the Board.

SECTION 2. Repealing Clause.—All laws, executive
and administrative orders, rules and regulations inconsistent with the foregoing
provisions are hereby repealed or amended accordingly including Republic Act
Nos. 1145, 1365, 1369 and 2282.

SECTION 3. Separability Clause.—If any provision or
this Decree is held unconstitutional, the same shall apply only to that
provision and the remainder hereof remains valid.

SECTION 4. Effectivity.—This Act shall take effect
immediately.

Done in the City of Manila, this 11th day of June, in the year of Our Lord,
nineteen hundred seventy-eight.

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