AN ACT TO PROMOTE ECONOMIC DEVELOPMENT BY GIVING INCENTIVES TO MARGINAL AND SUB-MARGINAL INDUSTRIES.

Case Overview and Summary

Summary of Republic Act No. 2261

An Act to Promote Economic Development by Giving Incentives to Marginal and Sub-Marginal Industries

- Allows the export of certain marginal and sub-marginal products on a commodity-to-commodity trade basis, provided:
• The products cannot be sold profitably for dollars or other freely convertible currency in foreign markets, taking into account sound business management and accepted business practices. (Section 1)
• An adequate supply of the products to meet local requirements is assured. (Section 1)

- The exportation of the enumerated products is not allowed without prior certification from the National Economic Council within 60 days after the approval of the Act, confirming that the conditions are met. (Section 1)

- The National Economic Council shall conduct a continuous study and survey of all marginal and sub-marginal industries and recommend to Congress annually which industries deserve to be given or deprived of the incentive granted under this Act. (Section 1)

- No exportation under this Act shall be allowed without a Commodity Trade Permit issued by the Producers Incentives Board. (Section 2)

- Commodity Trade Permit requirements:
• Granted only to natural-born Filipino citizens, associations, partnerships, or corporations organized and established prior to the Act's approval with at least 60% Filipino capital ownership, or wholly owned by natural-born Filipino citizens if organized after the Act's approval. (Section 2)
• Granted only to bona fide direct or original producers of the commodity to be exported, or associations of such producers, except for embroidery where Filipino contractors may be granted permits. (Section 2)
• Not transferable or amendable to authorize importation of other foreign commodities. (Section 2)
• Constitutes sufficient authority for the grantee to ship Philippine products and import the foreign commodities covered by the permit. (Section 2)

- Foreign commodities allowed to be imported are limited to Essential Producer Goods (EP), Semi-essential Producer Goods (SEP), and Essential Consumer Goods (EC), with EP and SEP comprising at least 60% of total imports. (Section 3)

- Imported commodities shall be delivered only to the person, association, partnership, or corporation named in the permit. (Section 3)

- The classification of commodities whose importation is allowed shall be governed by the Central Bank Statistical Classification of Commodities (SCC) as revised on December 1, 1958, or as may be revised in the future. (Section 3)

- Grantees of the permit shall undertake:
• To bring into the Philippines all the commodities acquired from abroad through the authorized trade. (Section 4)
• To ship the authorized export products only to the consignee and destination designated in the permit. (Section 4)
• Not to operate so as to alter the terms and conditions of the permit without prior authorization from the Board. (Section 4)

- For quota products exported to the United States, the Board shall require the grantee to post a sufficient bond in favor of legitimate quota holders whose rights may be affected, to cover the payment of corresponding tariff dues if the export is charged against the quota. (Section 4)

- The Producers Incentives Board is created, composed of the Secretary of Commerce and Industry as Chairman, and the Director of Mines, Director of Forestry, Director of Agricultural Extension, and a representative from the Central Bank of the Philippines as members. (Section 5)

- The Board's powers and functions include:
• Acting on applications for Commodity Trade Permits within 10 days from the date of filing, without unnecessary delay. (Section 6)
• Organizing the staff of the Board and appointing and fixing the compensation of personnel, subject to Civil Service rules and regulations. (Section 6)
• Promulgating rules and regulations necessary for the proper implementation of this Act, effective 15 days after publication in a newspaper of general circulation in Manila. (Section 6)

- The Board shall order the weekly publication of the list of applications pending, approved, or disapproved during the week, stating the names and addresses of the applicants, as well as the classification and value of the intended articles to be traded. (Section 7)

- Philippine consular officials abroad are directed to secure and send to the Board accurate official data regarding the exact description, quantity, and value of all goods or commodities actually exported from and imported to the Philippines through the ports under their jurisdiction. (Section 8)

- Violation of the terms of the permit shall result in immediate cancellation of the permit and seizure and confiscation of the commodities by the Commissioner of Customs, in addition to the penalties provided in Section 11. (Section 9)

- It is unlawful for any government officer or employee, or their relative within the third degree of affinity or consanguinity, to intervene or influence any officer or employee of the Board in connection with any application for a Commodity Trade Permit, except for government officers or employees who are qualified to trade under this Act and apply for a permit on their own behalf. (Section 10)

- Penalties for violations:
• Any person who makes material misrepresentations in documents required by this Act or violates any provision of this Act or any order, rule, or regulation issued pursuant thereto shall be punished by a fine of not less than ₱5,000 nor more than ₱100,000 and imprisonment of not less than 5 years nor more than 10 years. (Section 11)
• If the offender is a corporation, partnership, or association, the penalty shall be imposed on the general manager, managing partner, and manager, respectively, and any other responsible officer. (Section 11)
• If the offender is a public officer or employee, in addition to the penalties, they shall be permanently disqualified from holding public office. (Section 11)
• Any official or employee of the Board who delays, without justifiable cause, the processing or approval of any pending application shall, upon conviction, be perpetually disqualified from holding public office. (Section 11)
• If the offender is a naturalized Filipino citizen, the penalty shall be the payment of the fine, forfeiture of citizenship, and immediate deportation without further proceedings by the Deportation Board. (Section 11)
• If the offender is an alien, the penalty shall be the payment of the fine and immediate deportation without further proceedings by the Deportation Board. (Section 11)

- An appropriation of ₱150,000 is made for the salaries, wages, maintenance, equipment, and other operating expenses of the Board. (Section 12)

- The Board is authorized to impose a fee equivalent to 0.5% of the value of the exportation authorized in the approved permit, to be used exclusively for the payment of salaries, wages, maintenance, equipment, and other operating expenses of the Board. (Section 12)

- At the end of the first fiscal year after the approval of this Act, the National Treasury shall be reimbursed the sum of ₱150,000, and thereafter, any excess amounts collected from the fees over ₱150,000 shall accrue to the National Treasury. (Section 12)

- The exportation or importation of articles limited or prohibited by existing laws, orders, laws, or regulations shall not be allowed under this Act. (Section 13)

- For articles that may be exported or imported under conditions provided in specific laws, rules, or regulations, the provisions of said laws, rules, or regulations shall govern the exportation or importation of such articles under this Act. (Section 13)

- The provisions of this Act shall not affect goods or commodities in transit or authorized to be imported or exported by virtue of barter permits validly issued by the Secretary of Commerce and Industry before the approval of this Act. (Section 15)

- Nothing in this Act shall impair or abridge rights granted to citizens and juridical entities of the United States of America under existing treaties or agreements between the United States and the Philippines. (Section 16)

- The invalidity of any part or provision of this Act or its applicability to any person or circumstance shall not affect the validity of the other provisions or their applicability to other persons or circumstances. (Section 17)

- This Act shall take effect upon its approval. (Section 18)