CREATING THE PHILIPPINE COTTON CORPORATION AS A CENTRAL AUTHORITY TO UNDERTAKE, IMPLEMENT AND SUPERVISE COTTON PRODUCTION IN THE PHILIPPINES ON A COMMERCIAL SCALE

WHEREAS, the Philippines consumes 200,000 bales of cotton
worth $35 million annually requiring the expenditure of precious foreign
exchange;

WHEREAS, experiments and experts’ opinions have proven
conclusively that cotton can be grown in the Philippines on a commercial
scale with the proper effort and financing;

WHEREAS, growing of cotton locally will save foreign
exchange, provide additional employment, reduce the cost of cotton to
textile millers and assure the supply of cotton regardless of the
foreign exchange reserves position of the country;

WHEREAS, a cotton-growing program is fraught with complex
problems and requires massive capital, the solution of which will need
the cooperation and coordination of the Government and private sectors;
and

WHEREAS, the successful implementation of a program of this
magnitude will require a centralized direction, management, and
supervision;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers in me vested by the Constitution as
Commander-in-Chief of all the Armed Forces of the Philippines, and
pursuant to Proclamation No. 1081, dated September 21, 1972, and General
Order No. 1, dated September 22, 1972, as amended, do hereby create the
Philippine Cotton Corporation which shall be the central authority
vested with the responsibility of organizing and implementing the
Philippine cotton-growing program and which shall be organized in
accordance with the following guidelines:

1. The authority shall be called the “Philippine Cotton
   Corporation,”
2. The Corporation will be registered with the Securities and
   Exchange Commission in accordance with the Corporation Law.
3. The objective of the Corporation is “self-sufficiency of the
   Philippines in cotton.” To enable the Corporation to achieve this
   objective in the shortest possible time, the Corporation will have the
   following general powers:

1. To undertake all the appropriate studies and
   experiments necessary to select or develop the cotton strain(s) most
   suited to Philippine climatic and soil conditions;
2. To purchase, own, hold, lease, and dispose of all types of
   property, real or chattel, essential for carrying out its functions;
3. To hire, employ and dismiss personnel and to enter into
   contracts or agreements with them;
4. To enter into contracts with any person or juridical entity
   in the pursuit of its objective;
5. To coordinate the development of roads, irrigation,
   facilities and other infrastructure requirements necessary for the
   efficient growing and marketing of cotton;
6. To select the general areas for growing cotton, to educate
   fanners, to provide financing and agricultural services and generally to
   perform such activities as are necessary for the successful growing of
   cotton of high quality in commercial quantities;
7. To direct, supervise, coordinate or otherwise encourage the
   growing of cotton;
8. To purchase, store, gin, grade, bale, and market all cotton
   produced under the program; and
9. To perform such functions as are necessary to ensure a
   successful cotton-growing program in the Philippines.

Depending on the findings of subsequent studies, the Corporation
will have the option to exercise all or only some of the powers
enumerated above.

4. The Corporation will be a joint venture between the Philippine
   Government and the private sector on a 60-40 ownership ratio. The
   Philippine Government shall be represented by the Department of
   Agriculture and Natural Resources. The private sector shall be
   represented by the textile millers presently using cotton as a raw
   material in its textile-milling operations.

5. The Corporation will have an initial authorized capital stock
   of P20 million and an initial paid-up capital of million.
6. Initial contributions of the Philippine Government and the
   private sector will be P600.000 (60%) and P400,000 (40%), respectively.
   The 60-40 ownership ratio between the Government and private sector
   shall be maintained at all times.
7. The contribution of the Philippine Government shall be paid out
   of the funds held in trust by the Philippine Textile Research Institute
   (PTRI). The contribution of the private sector shall be made by the
   individual cotton-consuming textile millers through the Textile Millers
   Association of the Philippines. The share of each cotton-consuming
   textile mill in the capital contribution of the private sector shall be
   established pro rata based on the actual cotton consumption of
   the mills.
8. The Corporation shall be governed by a Board of eleven members,
   six from the government sector and five from the private sector.

   The government sector will be represented in the Board by the
   incumbent Secretary of Agriculture and Natural Resources, the Director
   of the PTRI, the Chairman of the Advisory Committee of the PTRI and
   three others who will be appointed by the Secretary of Agriculture and
   Natural Resources.

   The private sector shall be represented by the incumbent president of
   the Textile Millers Association and four others appointed by the Board
   of the Textile Millers Association. The Secretary of Agriculture and
   Natural Resources shall be the Chairman of the Board.

9. The administration of the Corporation will be directed by a
   qualified General Manager who will come from the private sector and who
   will be appointed by the Board.
10. The Corporation shall coordinate its research efforts with
    the PTRI and the National Science Development Board (NSDB).
11. In financing its developmental functions, the Philippine
    Cotton Corporation will approach international sources of financing,
    both multilateral and bilateral, for assistance in terms of either
    grants or loans, or both.
12. In order to provide additional financing for research and
    development or feasibility studies, the PTRI will make available as a
    grant to PCC, not later than 30 days after the beginning of each fiscal
    year, the minimum sum of P5 00,000. This funding from PTRI should, in no
    case, prejudice the efforts of PCC to obtain financing from other
    sources as mentioned in paragraph 11 above.
    The PTRI is hereby authorized to invest the Special Textile
    Research Fund in any financial instruments, including commercial papers,
    which will yield a sufficiently high level of earnings to enable the
    organization to assist the Philippine Cotton Corporation and other
    cotton research projects contemplated by Republic Act No. 4086.
13. Upon its organization, the Corporation will cause to be
    prepared a thorough feasibility study of the cotton-growing project
    which will be the basis for further action by the Corporation. The
    feasibility study should recommend specifically the detailed steps, the
    timetables and the financial requirements thereof, necessary to carry
    out the project. In general, the feasibility study should include the
    following:

1. the organization study of the Philippine Cotton Corporation,
   including manning requirements, personnel compensation and other
   organizational requirements;
2. financial study, including the timing of financial
   requirements and the sources of financing; and
3. technical study, including all agriculture and
   agronomic aspects of the project, such as what experiments to carry out,
   the areas to be planted with cotton, project timetables, etc.

The Corporation should be organized and registered with the
Securities and Exchange Commission before the end of January 1974.

This
Decree takes effect immediately.

Done in the City of Manila, this 22nd day of December, in
the year of Our Lord, nineteen hundred and seventy-three.