AN ACT CREATING THE NATIONAL COTTAGE INDUSTRIES DEVELOPMENT AUTHORITY (NACIDA) UNDER THE DEPARTMENT OF COMMERCE AND INDUSTRY

Case Overview and Summary

Summary of Republic Act No. 3470

Creation of the National Cottage Industries Development Authority (NACIDA)
- Section 1: Establishes the National Cottage Industries Development Authority (NACIDA) under the Department of Commerce and Industry, composed of a chairman and four members appointed by the President.
- The chairman and members shall hold office for a term of six years and receive a per diem of 25 pesos per session, up to a maximum of 500 pesos per month.
- The President shall appoint the Administrator with a compensation of 15,000 pesos per annum and a Deputy Administrator with a compensation of 12,000 pesos per annum.

Duties and Functions of NACIDA
- Section 2: NACIDA shall perform the following duties:
• Organize, revive, encourage, and promote the establishment of cottage industries. (2a)
• Survey and evaluate existing skills, machinery, equipment, and raw materials available in industrial quantities. (2b)
• Promote effective merchandising of cottage products in domestic and foreign markets, and market the products if necessary. (2c)
• Promote standardization of cottage industries products and prescribe rules and regulations for grading, classifying, and inspecting products, especially for export. (2d)
• Grant small loans or arrange for necessary loans with public or private credit institutions and banks, including loans for planting, cultivation, and production of needed raw materials. (2e)
• Extend assistance to cottage industries producers in financing, production, and marketing. (2f)
• Render consultation services, provide technical know-how and field assistance to cottage industries producers. (2g)
• Undertake research and training programs to improve cottage industries products. (2h)
• Administer and maintain a tool and dye development program responsive to the technological needs of the cottage industries. (2i)
• Adopt necessary measures to carry out the purposes of this Act. (2j)

General Powers of NACIDA
- Section 3: NACIDA is authorized to make contracts, lease or own real and personal property, sue or be sued, prescribe necessary rules and regulations, make expenditures, and acquire and hold assets resulting from authorized operations.

Powers and Duties of the Board of Directors
- Section 4: The Board of Directors shall have the following powers and duties:
• Fix the compensation and number of officers and employees of the Board. (4a)
• Approve the annual and supplemental budget of the Board. (4b)
• Enunciate the policies that shall guide the operations of the Board. (4c)

Managing Head and Powers and Duties of the Administrator
- Section 5: The Head of the Technical Office of the Board shall be known as the Administrator, appointed by the President with the consent of the Commission on Appointments.
- Section 6: The Administrator shall have the following powers and duties:
• Manage the affairs of the Board subject to the policies of the Board of Directors. (6a)
• Submit an annual budget to the Board of Directors 60 days before the beginning of each fiscal year. (6b)
• Appoint subordinate officials and employees, with supervisory positions subject to confirmation by the Board of Directors. (6c)
• Submit an annual report to the President and Congress through the Board of Directors within 60 days after the close of the fiscal year. (6d)
• Perform other duties assigned by the Board of Directors. (6e)

Regional Institutes
- Section 7: At least nine regional institutes shall be established in various regions of the Philippines, charged with conducting research, determining which cottage industry products shall be produced in specific regions, standardizing products, and other functions related to the promotion of cottage industries.
- Each institute will be headed by a Director appointed by the President upon the recommendation of the Board, with a compensation of 6,000 pesos per annum.

Funds
- Section 8: An initial fund of 4 million pesos is appropriated for NACIDA, and necessary amounts shall be included in the annual General Appropriation Acts thereafter.

Procurement of Cottage Products by the Bureau of Supply
- Section 9: Within one year after the organization of NACIDA and from time to time thereafter, NACIDA shall furnish the Bureau of Supply with a list and samples of cottage industry products, and the Bureau of Supply shall give priority in procuring these products for government use.

Loan Assistance from Development Bank of the Philippines and Philippine National Bank
- Section 10: The Development Bank of the Philippines shall allocate 50 million pesos of its available funds for loans to cottage industries, with a guaranty of mortgage or pledge on cottage industries products considered sufficient security.
- The Philippine National Bank shall allocate 50 million pesos of its available funds for loans to cottage industries under similar terms and conditions.
- The loans shall bear interest not exceeding 4% annually, and real estate without Torrens Title may be accepted as security.

Definition of Cottage Industry and Cottage Products
- Section 11: The term "cottage industry" means a small-scale economic activity carried on mainly in homes or other places for profit, mainly done with the help of family members.
- The section lists 21 specific types of activities that are considered cottage industries, including fiber crafts, woodcrafts, hat weaving, mat weaving, metal crafts, ceramics, shell crafts, bamboo and rattan crafts, small agricultural hand tools, toy crafts, embroidery, needle crafts, loom weaving, machine parts manufacture, poultry and piggery, home cigar making, food preservation and canning, small mining operations, and other related crafts.
- Cottage industries must be owned and operated by Filipino citizens, or if a corporation, partnership or cooperative, at least 75% of its capital and stockholders/members and all members of its Board of Directors must be Filipino citizens.
- The term "cottage products" means products produced by cottage industries and shall be labeled as "Cottage Products Made in the Philippines."

Registration with NACIDA
- Section 12: Any person, corporation, partnership, or association who desires to avail of the benefits and assistance under this Act may register with NACIDA, and any registered entity that fails to comply with NACIDA's rules and regulations shall not be entitled to the assistance and benefits of this law, including those provided in Section 10.

Prohibition on Export of Local Raw Materials
- Section 13: Notwithstanding any provisions of law to the contrary, the export of any local raw materials needed for the promotion of cottage industries shall be prohibited as long as local demands have not yet been satisfied.

Producers and Marketing Cooperatives
- Section 14: NACIDA shall stimulate the organization and establishment of producers and marketing cooperatives in coordination with the Cooperatives Administration Office and train and develop competent management for the operation of producers and marketing cooperatives and cottage industries.

Priority Allocation from Reparations Commission
- Section 15: The Reparations Commission shall give priority allocation for capital goods and fields of studies intended for cottage industry projects certified by NACIDA.

Tax Exemption
- Section 16: The production, manufacture, and sale of cottage products shall be exempt from all taxes for a period of five years from the date of registration of the person or firm engaged in the production or manufacture of cottage products with NACIDA.

Penalties
- Section 17: Any person who utilizes or abstains from the utilization of any funds borrowed under the provisions of this Act for any purpose other than those applied for in their loans shall be punished by imprisonment of one year and a fine of 2,000 pesos.

Repealing Clause
- Section 18: All Acts, executive orders, administrative orders, proclamations, rules and regulations, or parts thereof, inconsistent with any of the provisions of this Act are repealed or modified accordingly.

Effectivity
- Section 19: This Act shall take effect upon its approval.