October 7, 1985

EXECUTIVE ORDER NO. 1057

PRESCRIBING THE MANNER OF IMPLEMENTING THE COCONUT PRODUCTIVITY PROGRAM PRESCRIBED BY PD 1972

WHEREAS, those who conducted studies on the coconut industry including international agencies have unanimously recommended that the coconut replanting program be re-started and vigorously pursued as an urgent measure to save the coconut industry as a viable source of livelihood for a substantial portion of the citizenry and as a major foreign exchange earner for the country;

WHEREAS, an accelerated coconut productivity program involving the use of high-yielding and precocious coconut hybrid varieties as the initial planting materials is the recommended means to arrest, within the shortest possible time, the rapidly declining coconut productivity of the country;

WHEREAS, in view of its limited resources, the Government is constrained to mobilize the private sector and to call on private investors to contribute in this national endeavor to save and expand the coconut industry;

WHEREAS, to encourage the private sector to participate actively in this undertaking, tax and other fiscal incentives as prescribed or allowed by existing laws including, among others, PD 1972 and PD 1789, Title VII Article 57, be granted to persons or entities that engage in coconut planting/replanting program on a commercial scale;

NOW, THEREFORE, by virtue of the powers vested in me by the Constitution and the laws, I, FERDINAND E. MARCOS, President of the Philippines, do hereby order that the provisions of PD 1972 be implemented in the following manner: aIAHcE

SECTION 1. The coconut productivity program and its component parts herein prescribed are hereby declared to be part of the national priority economic development plan and are hereby constituted as registered pioneer agricultural activities under all applicable laws.

SECTION 2. The Philippine Coconut Authority (PCA) is hereby directed to immediately formulate and implement an accelerated coconut hybrid planting and replanting program (the "Program") aimed at increasing the farm productivity of small farm landholdings.

The Program shall include the rehabilitation of existing coconut trees as well as the intercropping of areas planted to coconut with suitable crops and shall involve approximately 30,000 hectares per annum. PCA shall implement the Program with the active assistance and participation of the recognized organization of coconut farmers pursuant to the provisions of RA 6260 and shall service the requirements of small coconut farmers owning not more than twenty four (24) hectares who volunteer to participate in the Program. Initially the devastated areas in Visayas and Mindanao shall be given priority.

SECTION 3. In order to finance the Program, all collections from the basic export duty imposed by Section 514 of PD 1464 and the additional export duty under Executive Order No. 920-A on coconut products shall be constituted as the initial fund to meet the requirements of the Program. To assure the continuity of the Program in the long term, Government shall allocate sufficient resources from the general revenues to finance the requirements of approximately 30,000 hectares per annum. The Minister of Budget is hereby directed to release to PCA all its funding requirements in accordance with the yearly development schedule duly approved by the PCA Governing Board and confirmed by the President.

SECTION 4. In order to accelerate coconut planting and replanting activities at a commercial scale, and particularly to encourage the private sector to participate actively in this endeavour, tax and other incentives defined and enumerated in Section 5 hereof are hereby granted to any person or entity, who shall engage and implement, singly or in association with others, a project for the planting or replanting with high yielding and precocious coconut and oil palm planting materials (the "Project").

For purposes of this section, the Project shall comply with the following guidelines:

a. The Project shall be defined and described in a farm development plan which shall include, among others, the total project cost and the method and sources of financing of the Project. The farm development plan shall be submitted to the President of the Philippines for his approval upon recommendation of the PCA.

b. The Project shall cover an area of not less than 1,000 hectares which may or may not be owned by the developer. For this purpose, farmers, land owners, financiers and others may organize associations, cooperatives, partnerships, corporations or other forms of organization to enable them to own and/or control the required minimum Project area and to which the contributions/financing herein envisioned shall be paid and disbursed for the approved Project.

c. Adjoining or reasonably proximate areas to the initial Project area may participate in the Project. Upon the execution of appropriate agreements for the development of these areas, the designated developer of the Project shall formulate a supplemental farm development plan in conformity with the original approved plan for the initial Project area and upon filing thereof with the PCA the same is automatically deemed part of the approved Project and entitled to the same benefits and incentives as herein prescribed.

d. The participants of the Project shall execute a valid and enforceable written contract(s) providing, among others, the following:

i) A designated developer of the Project which may or may not be a participant or which may be the organization of the participants;

ii) An unconditional undertaking by the contributors/financiers/capitalists to provide the entire cost of the Project for a minimum period of four (4) years counted from the date of the field planting; ISCTcH

iii) An unconditional undertaking by the landowner/farmer to transfer possession/control of his land/farm to the designated developer for such period of time as may be agreed upon among the participants but in no case less than the period required to develop fully the Project area;

iv) The manner of compensating the landowner/farmer in contributing his land to the Project;

v) The manner of sharing among the participants the benefits of the Project which may be in the form of a share in the actual production or other forms of compensation such as cash payment, share in the proceeds from the sale of the production or participation in the equity of the developer.

e. The approval of the Project by the President shall constitute the operative basis for the grant of incentives enumerated herein.

f. The Project areas or at least 1,000 hectares thereof shall be put into production within seven (7) years from approval of the Project.

SECTION 5. Any person or entity which contractually undertakes to contribute to the financing or participates in an approved Project or the Program as herein prescribed shall be granted the following incentive benefits:

a. An exporter of coconut products which participates in an approved Project by contributing thereto part of the cost of the Project as herein prescribed or which contributes to the Program shall be exempted from the payment of the basic and additional export duties under PD 1464 and Executive Order No. 920-A and such other export duties on coconut products as may hereafter be imposed to the extent of its actual contribution to the financing of an approved Project or the Program paid prior to the particular exportation as confirmed by the PCA.

b. Any person or entity other than an exporter of coconut products which contributes to the financing of an approved Project or the Program shall be granted a tax credit with a face value equal to its actual contribution. An exporter of coconut products shall likewise be granted a tax credit with a face value equal to its actual contribution less the export duty exemption actually availed by such exporter under the provisions of sub-paragraph (a) hereof.

 The designated developer shall issue registered official receipt acknowledging receipt of each contribution and report to PCA such contribution specifying the name of the contributor, the amount of its contribution and the number of the covering registered official receipt.

 A corresponding tax credit certificate shall be issued by the Ministry of Finance upon certification by PCA of the progress of development in accordance with the approved farm development plan. PCA shall verify on quarterly basis the progress of work on the approved Project and shall certify the extent of completion thereof and the amount of contribution paid by a participant. The certification by PCA shall be final and conclusive for the Ministry of Finance to issue tax credit certificate within ten (10) days from receipt thereof.

 No tax credit certificate shall be issued until and unless the PCA certification states that the particular work for a given quarter has been completed and no tax credit shall be granted for the cost of maintenance of a portion or portions of the Project area which have been brought to the productive stage.

 The tax credit certificate shall be negotiable and may be used or applied against any or all taxes including but not limited to income taxes, specific taxes, ad valorem taxes, sales taxes, percentage taxes, duties, charges, wharfage fees due the National Government. The tax credit issued pursuant herewith shall not form part of the gross income of the grantee/transferee and is therefore not taxable and shall be valid only for a period of ten (10) years from date of the tax credit certificate.

c. Any amount contributed to finance an approved Project or the Program shall be exempted from the payment of donor's and donor's taxes. Receipt by the participants of evidence of participation in an approved Project such as but not limited to associational rights, partnership interests, cooperative shares of stock, shares of stock in a corporation shall not form part of the gross income of the recipient participant and are likewise exempted from payment of any and all taxes, fees, imposts, charges, of whatever kind and nature, including but not limited to, income taxes and donor's and donor's taxes. 

 Nothing herein prescribed shall be construed or interpreted as exempting the developer or any participant in an approved Project from assessable or leviable taxes on the income derived or arising out of the sale of the production of the Project.

d. Within the development period of the Project as determined by the farm development plan, and upon certification of the PCA that the capital equipment to be imported shall be utilized for the development of the Project, all importations of the Project for capital equipment, vehicles, machinery and equipment shall be fully exempted from payment of tariff duties, compensating taxes, ad valorem taxes, stamp taxes, wharfage fees, and other import duties, taxes and fees.

e. For a period of ten (10) years from date of approval of the Project, no real property taxes shall be imposed and collected on the lands included in the Project as well as on all improvements introduced therein and all machinery and equipment therein located. HEacAS

f. The participants of an approved Project, or any corporation, association, cooperative or partnership they may organize may acquire lands or interests therein, notwithstanding any prohibitions or restrictions imposed by Commonwealth Act No. 141, as amended; otherwise known as the Public Land Law, provided, the proposed owners qualify under the nationality requirements of the Constitution of the Philippines.

SECTION 6. Any willfull and/or deliberate violation of the provisions of this Executive Order shall be punished and penalized in accordance with Section 1, Article IV of Presidential Decree No. 1468, as amended.

SECTION 7. All executive and administrative orders, and/or rules and regulations respectively issued by the governmental agencies concerned, inconsistent herewith, are hereby repealed, amended or modified accordingly, except those promulgated to implement the provisions and tax exemptions provided in Presidential Decree No. 1960 and Presidential Decree No. 1468, as amended by Presidential Decree No. 1841.

SECTION 8. This Order shall be effective immediately.

DONE in the City of Manila, this 7th day of October, in the year of Our Lord nineteen hundred and eight five.