COTTAGE INDUSTRIES DEVELOPMENT DECREE OF 1981

• Number: Presidential Decree No. 1788
• Sections: 23

Preamble

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.

SECTION 1. Title. — This act shall be known as the

Cottage Industries Development Decree of 1981.

Section 2 Declaration of Policy.

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.

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

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.

SECTION 5. Functions. — The NACIDA shall perform

the following functions and duties:

to organize, strengthen encourage and promote the establishment of cottage

industries;

to develop financial-assistance programs and funding mechanisms for the

cottage industries;

to undertake a program of development and expansion of cottage industries

nationwide particularly in less developed areas;

to plan, design and formulate viable, resource-based, low-budget, income

generating and market oriented “training-production" livelihood projects;

to evolve and validate viable special projects which are

employment-generating and income-producing to be collectively managed and

operated by trainee-graduates;

to undertake industrial surveys of different craft skills needed by

industry;

to conduct field surveys of indigenous raw materials and equipment;

to initiate, and if necessary, procure certified raw materials needed for

production by cottage industries;

to help producers attain, competitive footing in the market;

to rationalize different aspects of cottage industry operations;

to establish and develop Cottage Industries Training Centers and undertake

research and development;

to promote the quality assurance of cottage industries products;

to extend assistance to cottage industries producers in their problems

relating to financing, production and marketing; and

to work in close coordination with the private sector.

Section 6 Board of Directors.

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.

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.

Minister of Industry - Chairman

Minister of Trade - Vice-chairman

Minister of Human Settlements - Member

Minister of Education and Culture - Member

Chairman of the National Manpower and Youth Council - Member

Governor of the Central Bank of the Philippines - Member

Chairman of the Development Bank of the Philippines - Member

Administrator of the National Cottage Industries Development Authority -

Member

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.

Powers and Duties — The Board of Directors shall have the following powers

and duties:

enunciate policies, determine objectives, establish priorities, allocate

resources and provide overall direction and supervision over NACIDA operations;

establish regional and sub-regional offices as may be necessary,

approve the annual and other supplemental or special budgets of the NACIDA;

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;

ban the export of any local raw material needed by cottage industries when

available supply thereof is not sufficient to cover local demand;

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;

adopt an accreditation scheme to upgrade and protect the industry along

sectoral groupings pursuant to Section 10 of this Decree;

review and approve programs and projects which are mainly funded from

sources external to the NACIDA; and

determine the uses, applications and expenditures to be made of earnings

generated from investments made; by the NACID

Section 7 Administration.

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.

SECTION 8. Powers and Duties of the administrator.

— Administrator shall have the following powers and duties:

to administer the affairs of NACIDA under the supervision and direction of

the Chairman;

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

to submit within sixty (60) days before the beginning of each

fiscal/calendar year an annual budget to the Board of Directors;

to submit within sixty (60) days before the close of the fiscal year an

annual report to the President through the Board of Directors;

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

to perform other special duties as nay be assigned by the Board of

Directors.

Section 9 Regional Offices.

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

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;

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;

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;

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;

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;

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;

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;

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

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

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

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

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

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

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

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

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

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

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

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

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