WHEREAS, there is an imperative need to amend the NACIDA Law in order to update its provisions and make it attuned with the modern trends in the production and trading of cottage industry products;

WHEREAS, cottage industry products now rank as the No. 6. dollar earner among the commodity exports of the nation and deserve to be accorded more incentives for growth and viability;

WHEREAS, it is necessary to encourage the establishment and promotion of cottage industries in order to generate more employment opportunities.

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 amendment of Republic Act No. 3470, as amended by Republic Act No. 5326.

SECTION 1.—Section 1 of Republic Act No. 3470 is hereby amended to read as follows:

"SECTION 1.—Within thirty days after the approval of this Act, the President of the Philippines shall create a board known as the National Cottage Industries Development Authority, hereinafter referred to as the Board, under the Department of Trade, which shall be composed of a chairman and three members, one of whom shall be a representative of the private sector to be nominated by at least two (2) existing recognized cottage industry chambers or associations: Provided, That no person who is a candidate for a public elective office at the time of his appointment or was such a candidate at the general or special elections immediately preceding the same shall be eligible for appointment as administrator, deputy administrator or member of the board of directors. The Chairman and members of the Board, who shall be appointed by the President of the Philippines, shall hold office for a term of six years unless sooner removed or otherwise separated from the service for causes provided by law, in which case a successor may be appointed for the unexpired term. The chairman and members of the Board shall be entitled to a per diem of P200.00 for each cession actually attended by them: Provided, however, That in no case shall a regular or special session exceed ten cessions monthly and that their per diems shall not exceed P2,000 per month. They shall likewise receive commutable transportation and representation expenses not exceeding P1,000.00 monthly. The President of the Philippines shall appoint an administrator and a deputy administrator cf the Board with a compensation of P33,000.00 and P30,000.00 per annum, respectively. The other officers and personnel of the Board shall be appointed by the Administrator with the approval of the Board of Directors in accordance with the Civil Service Law: Provided, That all such officers and personnel shall be exempt from WAPCO rules and regulations, and provided, further, that they shall receive, in addition to their regular compensation, an incentive nay equivalent to ore month's salary for every year of meritorious service rendered."

SEC. 2.—Section 2, paragraph (d) of Republic Act No. 3470 is hereby amended to read as follows:

"(d) To promote the standardization of cottage industries products, prescribe rules and regulations governing the grading, classifying and inspecting of cottage industries products especially those for export: Provided, That notwithstanding the provisions of any law, decree, letter of instructions or executive order, the NACIDA shall establish an Accreditation Committee which shall be charged with regulating and supervising the activities of persons, firms or corporations engaged in the production or manufacture, trading locally or exporting of cottage products or raw materials thereof."

SEC. 3.—Section 4 of Republic Act No. 3470 is hereby amended to read as follows:

"SECTION 4.—Powers and Duties of the Board of Directors:

1. To fix the compensation and number of officers and employees of the Board;
2. To approve the annual and/or supplemental budget of the Board which may be submitted to it from time to time;
3. To administer the revolving marketing; fund; and
4. To enunciate the policies that shall guide the operations of the Board;

SEC. 4.—Section 7, second paragraph is hereby amended to read as follows:

"Each of these institutes shall be headed by a Cottage Industries Manager who shall be assisted by an Assistant Cottage Industries Manager, both of whom shall be appointed by the Administrator upon the recommendation of the Board of Directors, with compensation of eighteen thousand poses and twelve thousand pesos per annum, respectively."

SEC. 5.—Section 11 of Republic Act No. 3470, as amended by Section 1 of Republic Act No. 5326 paragraph 1, is hereby further amended to read as follows:

"SECTION 11.—Definition.—The term "cottage industry" as used in this Act shall mean an economic activity carried on in the homes or in other places for profit, with a capitalization of rot exceeding P100,000 at the time of registration. The term shall also include economic activities carried on by students of public and private schools, within school premises, as a cooperative effort, under supervision of a teacher or other person approved by and acting under the supervision and control of school authorities, either as part of or in addition to ordinary vocational training, provided all profits shall accrue to the students working therein. It shall include the following: (1) fiber crafts, such as making of abaca ropes and twines, buntal fiber extracting and buri leaf braiding; (2) woodcraft such as making of wooden slices, wooden fans, walking sticks (cares) and wood carving; (3) hat weaving such as calasiao. buri, raffia, karagomoy, buntal and bamboo hats, salakot and helmet; (4) mat weaving such as doormats, sleeping mats made of buri, pandan, balilan, and salutan and other similar materials; (5) metal craft such as making of jewelries, knives, bolces, scissors, razors, silverwares, and brassworks; (6) ceramics such as making of potteries, hallow blocks, tiles, firebricks, clay stoves and other ceramic products; (7) shell craft such as making sea shell buttons and coconut shell products; (8) bamboo and rattan crafts such as making of hammocks, basketry, making of sawali and other bamboo and rattan furniture and articles; (9) small agricultural hand tools such as plow points; (10) toy craft such as making of dolls and toys; (11) embroidery, dressmaking and tailoring industries; (12) needle craft (including knitting and crocheting); (13) loom weaving such as making of fish nets; making of mosquito nets, weaving of Ilocano cloth, Igorct weaving, piña 'barong Pilipino' jusi and sinamay; (14) machine parts manufacture such as wheels and stone mortars; (15) poultry including duck raising and 'balut' making; (16) piggery; (17) home cigar making; (18) food preservation and canning, including the making of vinegar wine, lambanog, 'bagoong', pili or peanuts confectionery or coconut candy (bucayo); (19) other related crafts such as making of brooms, pandan, nito and buri bags, 'Karagomoy' bags, bead making, guitar and other musical instruments; and (20) such other industries done in the home with the aid of electrical gadgets and/or by hand manipulations. All cottage industries shall be owned and operated by Filipino citizens or by a corporation, partnerships or cooperative, at least seventy-five per cent of the capital or investment of which is owned by Filipino citizens. All members of its Board of Directors shall be Filipino citizens.

SEC. 6.—Section 16, paragraph 1, as amended, is hereby further amended to read as follows:

"SECTION 16.—The production, manufacture and sale of cottage industry products shall be exempt from all taxes, except specific and income 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 Industry products with the Board; Provided, That seventy-five per cent of the total cost of raw materials utilized in the production or manufacture of cottage industry products consist of raw materials of Philippine origin: Provided, further, That the latter requirement as to raw materials shall not apply to embroidery, piggery, poultry, livestock and metal craft industries: Provided, furthermore, That no exemptions from the percentage taxes on sales shall be enjoyed for all sales in excess of four hundred thousand pesos each year: Provided, finally, That the provisions of the law on cooperatives shall not be affected by this Act."

SEC. 7.—Such sums as may be necessary to carry out the purposes of this Decree are hereby appropriated out of any funds in the National Treasury not otherwise appropriated. Thereafter, the sum necessary for said purposes shall be included in the annual General Appropriations Decree.

SEC. 8.—All laws, decrees, rules and regulations inconsistent herewith are hereby repealed or modified accordingly.

SEC. 9.—This Decree shall take effect immediately.

Done in the City of Manila, this 22nd day of October, in the year of Our Lord, nineteen hundred and seventy-five.