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PRESIDENTIAL DECREE NO. 1788
PRESIDENTIAL DECREE NO. 1788 -
COTTAGE INDUSTRIES DEVELOPMENT DECREE OF 1981
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chanroblesvirtualawlibrary
Amending
and consolidating Republic Act Nos. 3470 and 5326 and Presidential
Decree No. 817 and other related Laws, 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
craftsmanships;chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
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 strategicms of government in order to attain industrial
stability and growth. chanroblesvirtualawlibrary
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 the National Cottage Industries
Development Authority with the corporate mission to develop and promote
cottage industries to its full 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:cralaw:red
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 hold assets of all types
and kind resulting directly from operations authorized by this Decree
or as are essential or incidental to the proper conduct or such
operations; to accept donations or developmentds to be used in
furtherance of its objectives; to establish subsidiary corporations
and/or other institutional mechanisms 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: chanroblesvirtualawlibrary
a) to organize, strengthen encourage and promote the
establishment of cottage industries;chanroblesvirtualawlibrary
b) to develop financial-assistance programs and
funding mechanisms for the cottage industries;chanroblesvirtualawlibrary
c) to undertake a program of development and
expansion of cottage industries nationwide particularly in less
developed areas;chanroblesvirtualawlibrary
d) to plan, design and formulate viable,
resource-based, low-budget, income generating and market oriented
"training-production" livelihood projects;chanroblesvirtualawlibrary
e) to evolve and validate viable special projects
which are employment-generating and income-producing to be collectively
managed and operated by trainee-graduates;chanroblesvirtualawlibrary
f) to undertake industrial surveys of different
crafts skills needed by industry;chanroblesvirtualawlibrary
g) to conduct field surveys of indigenous raw
materials and equipment;chanroblesvirtualawlibrary
h) to initiate, and if necessary, procure certified
raw materials needed for production by cottage industries;chanroblesvirtualawlibrary
i) to help producers attain competitive footing in
the market;chanroblesvirtualawlibrary
j) to rationalize different aspects of cottage
industry operations;chanroblesvirtualawlibrary
k) to establish and develop Cottage Industries
Training Centers and undertake research and development; chanroblesvirtualawlibrary
l) to promote the quality assurance of cottage
industries products;chanroblesvirtualawlibrary
m) to extend assistance to cottage industries
producers in their problems relating to financing, production and
marketing; and
n) 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.
a) 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;chanroblesvirtualawlibrary
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 of 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. chanroblesvirtualawlibrary
(b) Powers and Duties. — The Board of Directors shall
have the following powers and duties:cralaw:red
1. enunciate policies, determine objectives,
establish priorities, allocate resources and provide overall direction
and supervision over NACIDA operations;chanroblesvirtualawlibrary
2. establish regional and sub-regional offices as may
be necessary:cralaw:red
3. approve the annual and other supplemental or
special budgets of the NACIDA;chanroblesvirtualawlibrary
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 to 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;chanroblesvirtualawlibrary
5. ban the export of any local raw material needed by
cottage industries when available supply thereof is not sufficient to
cover local demand;chanroblesvirtualawlibrary
6. issue summons, subpoenas, and/or subpoena duces
tecum in connection with formal complaints, charges, or cases under
formal investigation or controversies for fact-finding purposes;chanroblesvirtualawlibrary
7. adopt an accreditation scheme to upgrade and
protect the industry along sectoral groupings pursuant to Section 10 of
this Decree;chanroblesvirtualawlibrary
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 NACIDA.
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 shall be the Chief Operating Officer and shall report
to and be responsible directly to the Chairman.
Section 8. Powers and Duties of the Administrator. —
The Administrator shall have the following powers and duties:cralaw:red
a) to administer the affairs of NACIDA under the
supervision and direction of the Chairman;chanroblesvirtualawlibrary
b) to appoint subordinate officials and employees as
may be provided in the annual plantilla or budget necessary for the
proper discharge of the duties and functions of the NACIDA;chanroblesvirtualawlibrary
c) to submit within sixty (60) days before the
beginning of each fiscal/calendar year an annual budget to the Board of
Directors;chanroblesvirtualawlibrary
d) to submit within sixty (60) days before the close
of the fiscal year an annual report to the President through the Board
of Directors;chanroblesvirtualawlibrary
e) to perform such acts necessary in the exercise of
the duties of his office and such others in the furtherance and
attainment of the objectives, purposes or corporate mission of NACIDA;
and chanroblesvirtualawlibrary
f) to perform other special duties as may be assigned
by the Board of Directors;chanroblesvirtualawlibrary
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 per
cent (75%) of the capital investment of which shall be owned by
Filipino citizens. Provided, further, that the total assets of which
shall not exceed one hundred thousand pesos (P100,000.00) 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:cralaw:red
a) 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;chanroblesvirtualawlibrary
b) Metalcraft Industry. — That sector using metals or
its alloys as principal raw material 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 semi-precious
or artificial stones; chanroblesvirtualawlibrary
c) 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;chanroblesvirtualawlibrary
d) 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;chanroblesvirtualawlibrary
e) Ceramics Industry. — That sector consisting of
such products or articles such as potteries, hollow blocks, tiles,
firebricks, clay stoves and other products using clay, cement and/or
plaster of paris as raw material components;chanroblesvirtualawlibrary
f) 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;chanroblesvirtualawlibrary
g) Complementation Industry. — That sector
responsible for the production of 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, revalidation, and/or accreditation. chanroblesvirtualawlibrary
Section 11. Registration. — All persons,
corporations, partnerships, cooperatives and associations engaging 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 inclusion in the official registry of persons,
partnerships, cooperatives, corporations and other establishment
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. — All NACIDA producers
registered prior to this Decree shall be required to revalidate their
Certificates of Registration in order to avail of benefits and
privileges granted to registered cottage industry producers by
subsequent and related laws within one (1) 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 arrest
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 material assistance, and such
other incentives or benefits as may be provided for by subsequent
laws. chanroblesvirtualawlibrary
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 be 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 the terms
and conditions duly imposed by the Board for its registration,
including submission of reports to NACIDA.
Section 18. Penal Provisions. — 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
subjected 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 service
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. Membership 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 may
require, as condition-precedent to registration or accreditation,
membership in such industry associations.
Section 21. Repealing Clause. — All Laws, Decrees,
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
15th day of January, in the year of Our Lord nineteen hundred and
eighty-one.
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