Custom territory

12 nautical miles -sea

24 nautical miles - Shore line
200 nautical miles - economic zone

The Bureau of Customs is headed by the Customs Commissioner. He is assisted by at least (4) but not more than six (6) Deputy Commissioners,
one (1) Assistant Commissioner and Deputy Commissioner

1. Internal Administration Group (IAG).

2. Revenue Collection Monitoring Group (RCMG)
3. Assessment and Operations Coordination Group (AOCG)
4. Intelligence Group (IG)
5. Enforcement Group (EG)
6. Management Information System and Technology Group (MISTG)
7. Post Clearance Audit Group (PCAG) -Assistant Commissioner

Seventeen (17) District Collectors who supervise the country’s principal ports of entry.
Custom district - ports of entry - 17
Custom district collector - 17

Deputy collector - depends on the need of port of entry

Main office of custom district collector - Manila

District collector - also known as head deputy

3 service provider
 E-Connect
 E-Trade
 E-commerce

2 types of smuggling
 Technical smuggling - knowledge that there is illegal act
 Pure smuggling - goods that was not undergo investigation or inspection.

Bureau - LODGEMENT and AMENDMENT of GOODS DECLARATION

Annual Report - shall submit to - before March 31

1.The President
2. The Congress
3. The National Economic and Development Authority (NEDA)

Promulgation of Rules and Regulations of Commissioners

1. The Congress
2. The Tariff Commission
3. The NEDA

Copies of Goods Declaration - shall submit to

1. The NEDA
2. The Philippine Statistics Authority (PSA)
3. The Bureau of Internal Revenue (BIR)
4. The Tariff Commission
 CHAPTER 1
SHORT TITLE

SEC. 100. SHORT TITLE

This Act shall be known as the "Customs Modernization and Tariff Act (CMTA)".

CHAPTER 2
GENERAL AND COMMON PROVISIONS

SEC. 101. DECLARATION OF POLICY

It is hereby declared the policy of the State to protect and enhance government revenue, institute fair
and transparent customs and tariff management that will efficiently facilitate international trade,
prevent and curtail any form of customs fraud and illegal acts, and modernize customs and tariff
administration. Towards this end, the State shall:

(a) Develop and implement programs for the continuous enhancement of customs systems and processes
that will harmonize customs procedures;

(b) Adopt clear and transparent customs rules, regulations, policies and procedures, consistent with
international standards and customs best practices;

(c) Establish a regime of transparency of and accessibility to customs information, customs laws, rules,
regulations, administrative policies, procedures and practices, in order to ensure informed and diligent
compliance with customs practices and procedures by stakeholders;

(d) Consult, coordinate and cooperate with other government agencies and the private sector in
implementing and developing customs policy;

(e) Provide a fair and expeditious administrative and judicial appellate remedy for customs related
grievances and matters;

(f) Employ modern practices in customs administration and utilize information and communications
technology in the implementation of customs functions; and (g) Institute professionalism and
meritocracy in customs tax administration by attracting and retaining competent and capable customs
officers and personnel to enforce the provisions of this Act.

SEC. 102. DEFINITION OF TERMS. - AS USED IN THIS ACT:

(a) Abatement refers to the reduction or diminution, in whole or in part, of duties and taxes where
payment has not been made;
(b) Actual or Outright Exportation refers to the customs procedure applicable to goods which, being in
free circulation, leave the Philippine territory and are intended to remain permanently outside it;

(c) Admission refers to the act of bringing imported goods directly or through transit into a free zone;

(d) Airway Bill (AWB) refers to a transport document for airfreight used by airlines and international
freight forwarders which specify the holder or consignee of the bill who has the right to claim
delivery of the goods when they arrive at the port of destination. It is a contract of carriage that
includes carrier conditions, such as limits of liability and claims procedures. In addition, it contains
transport instructions to airlines and carriers, a description of the goods, and applicable
transportation charges;

(e) Appeal refers to the remedy by which a person who is aggrieved or adversely affected by any
action, decision, order, or omission of the Bureau, seeks redress before the Bureau, the Secretary
of Finance, or competent court, as the case may be;

(f) Assessment refers to the process of determining the amount of duties and taxes and other charges
due on imported and exported goods;

(g) Authorized Economic Operator (ABO) refers to the importer, exporter, customs broker,
forwarder, freight forwarder, transport provider, and any other entity duly accredited by the
Bureau based on the World Customs Organization (WCO) Framework of Standards to Secure and
Facilitate Global Trade, the Revised Kyoto Convention (RKC), the WCO Supply Chain Management
Guidelines and the various national best practices to promote trade facilitation and to provide a
seamless movement of goods across borders through secure international trade supply chains with
the use of risk management and modern technology;

(h) Bill of Lading (B/L) refers to a transport document issued by shipping lines, carriers and
international freight forwarders or non-vessel operating common carrier for water-borne freight.
The holder or consignee of the bill has the right to claim delivery of the goods at the port of
destination. It is a contract of carriage that includes earner conditions, such as limits of liability
and claims procedures. In addition, it contains transport instructions to shipping lines and carriers,
a description of the goods, and applicable transportation charges;

(i) Bureau refers to the Bureau of Customs;

(j) Carrier refers to the person actually transporting goods or in charge of or responsible for the
operation of the means of transport such as airlines, shipping lines, freight forwarders, cargo
consolidators, non-vessel operating common carriers and other international transport operators;

(k) Clearance refers to the completion of customs and other government formalities necessary to allow
goods to enter for consumption, warehousing, transit or transshipment, or to be exported or placed
under another customs procedure;

(l) Commission refers to the Tariff Commission;

(m) Conditional Importation refers to the customs procedure known under the RKC as temporary
admission in which certain goods can be brought into a customs territory conditionally relieved,
totally or partially, from payment of import duties and taxes; such goods must be imported for a
specific purpose and must be intended for re-exportation within a specified period and without
having undergone any substantial change except due to normal depreciation;

(n) Customs Broker refers to any person who is a bona fide holder of a valid Certificate of
Registration/Professional Identification Card issued by the Professional Regulatory Board and
Professional Regulation Commission pursuant to Republic Act No. 9280, as amended, otherwise
known as the "Customs Brokers Act of 2004";

(o) Customs Office refers to any customs administrative unit that is competent and authorized to
perform all or any of the functions enumerated under customs and tariff laws;

(p) Customs Officer, as distinguished from a clerk or employee, refers to a person whose duty, not
being clerical or manual in nature, involves the exercise of discretion in performing the function of
the Bureau. It may also refer to an employee authorized to perform a specific function of the
Bureau as provided in this Act;

(q) Customs Territory refers to areas in the Philippines where customs and tariff laws may be
enforced;

(r) Entry refers to the act, documentation and process of bringing imported goods into the customs
territory, including goods coming from free zones;

(s) Exportation refers to the act, documentation, and process of bringing goods out of Philippine
territory;

(t) Export Declaration refers to a statement made in the manner prescribed by the Bureau and other
appropriate agencies, by which the persons concerned indicate the procedure to be observed for
taking out or causing to be taken out any exported goods and the particulars of which the customs
administration shall require;

(u) Flexible Clause refer to the power of the President upon recommendation of the National Economic
and Development Authority (NEDA): (1) to increase, reduce or remove existing protective tariff
rates of import duty, but in no case shall be higher than one hundred percent (100%) ad valorem; (2)
to establish import quota or to ban importation of any commodity as may be necessary; and (3) to
impose additional duty on all import not exceeding ten percent (10%) ad valorem, whenever
necessary;

(v) Foreign Exporter refers to one whose name appears on documentation attesting to the export of
the product to the Philippines regardless of the manufacturer's name in the invoice;

(w) Free Zone refers to special economic zones registered with the Philippine Economic Zone Authority
(PEZA) under Republic Act No. 7916, as amended, duly chartered or legislated special economic
zones and freeports such as Clark Freeport Zone; Poro Point Freeport Zone; John Hay Special
 Economic Zone and Subic Bay Freeport Zone under Republic Act No. 7227, as amended by Republic
Act No. 9400; the Aurora Special Economic Zone under Republic Act No. 9490, as amended; the
Cagayan Special Economic Zone and Freeport under Republic Act No. 7922; the Zamboanga City
Special Economic Zone under Republic Act No. 7903; the Freeport Area of Bataan under Republic
Act No. 9728; and such other freeports as established or may be created by law;

(x) Goods refer to articles, wares, merchandise and any other items which are subject of importation
or exportation;

(y) Goods Declaration refers to a statement made in the manner prescribed by the Bureau and other
appropriate agencies, by which the persons concerned indicate the procedure to be observed in the
application for the entry or admission of imported goods and the particulars of which the customs
administration shall require;

(z) Importation refers to the act of bringing in of goods from a foreign territory into Philippine
territory, whether for consumption, warehousing, or admission as defined in this Act;

(aa) Freight Forwarder refers to a local entity that acts as a cargo intermediary and facilitates
transport of goods on behalf of its client without assuming the role of a carrier, which can also
perform other forwarding services, such as booking cargo space, negotiating freight rates,
preparing documents, advancing freight payments, providing packing/crating, trucking and
warehousing, engaging as an agent/representative of a foreign non-vessel operating as a common
carrier/cargo consolidator named in a master bill of lading as consignee of a consolidated shipment,
and other related undertakings;

(bb) International Freight Forwarder refers to persons responsible for the assembly and consolidation
of shipments into single lot, and assuming, in most cases, the full responsibility for the international
transport of such shipment from point of receipt to the point of destination;

(cc) Jurisdictional Control refers to the power and rights of the Bureau in exercising supervision and
police authority over all seas within the jurisdiction of the Philippine territory and over all coasts,
ports, airports, harbors, bays, rivers and inland waters whether navigable or not from the sea;

(dd) Lodgement refers to the registration, of a goods declaration with the Bureau; r (ee) Non-Vessel
Operating Common Carrier (NVOCC) refers to an entity, which may or may not own or operate a
vessel that provides a point-to-point service which may include several modes of transport and/or
undertakes group age of less container load (LCL) shipments and issues the corresponding transport
document;

(ee) Non-Vessel Operating Common Carrier (NVOCC) refers to an entity, which may pr may not own or
operate a vessel that provides a point-to-point service which may include a several modes of
transport and/or undertakes group age of less container load (LCL) shipments and issues the
corresponding transport document;

(ff) Outright Smuggling refers to an act of importing goods into the country without complete customs
prescribed importation documents, or without being cleared by customs or other regulatory
 government agencies, for the purpose of evading payment of prescribed taxes, duties and other
government charges;

(gg) Perishable Good refers to goods liable to perish or goods that depreciate greatly in value while
stored or which cannot be kept without great disproportionate expense, which may be proceeded
to, advertised and sold at auction upon notice if deemed reasonable;

(hh) Port of Entry refers to a domestic port open to both domestic and international trade, including
principal ports of entry and subports of entry. A principal port of entry is the chief port of entry
of the Customs District wherein it is situated and is the permanent station of the District Collector
of such port. Subports of entry are under the administrative jurisdiction of the District Collector
of the principal port of entry of the Customs District. Port of entry as used in this Act shall include
airport of entry;

(ii) Port of Discharge, also called Port of Unloading, refers to a place where a vessel, ship, aircraft or
train unloads its shipments, from where they will be dispatched to their respective consignees;

(jj) Re-exportation means exportation of goods which have been imported;

(kk) Release of Goods refers to the action by the Bureau to permit goods undergoing clearance to be
placed at the disposal of the party concerned;

(ll) Refund refers to the return, in whole or in part, of duties and taxes paid on goods;

(mm)Security refers to any form of guaranty, such as a surety bond, cash bond, standby letter of credit
or irrevocable letter of credit, which ensures the satisfaction of an obligation to the Bureau;

(nn) Smuggling refers to the fraudulent act of importing any goods into the Philippines, or the act of
assisting in receiving, concealing, buying, selling, disposing or transporting such goods, with full
knowledge that the same has been fraudulently imported, or the fraudulent exportation of goods.
Goods referred to under this definition shall be known as smuggled goods;

(oo) Taxes refer to all taxes, fees and charges imposed under this Act and the National Internal
Revenue Code (NIRC) of 1997, as amended, and collected by the Bureau;

(pp) Technical Smuggling refers to the act of importing goods into the country by means of fraudulent,
falsified or erroneous declaration of the goods to its nature, kind, quality, quantity or weight, for
the purpose of reducing or avoiding payment of prescribed taxes, duties and other charges;

(qq) Tentative Release refers to a case where the assessment is disputed and pending review, an
importer may put up a cash bond equivalent to the duties and taxes due on goods before the
importer can obtain the release of said goods;

(rr) Transit refers to the customs procedure under which goods, in its original form, are transported
under customs control from one customs office to another, or to a free zone;
(ss) Transshipment refers to the customs procedure under which goods are transferred under customs
control from the importing means of transport to the exporting means of transport within the area
of one customs office, which is the office of both importation and exportation;

(tt) Traveler refers to any person who temporarily enters the territory of a country in which he or she
does not normally resides (non-resident), or who leaves that territory, and any person who leaves
the territory of a country in which he or she normally resides (departing resident) or who returns
to that territory (returning resident); and

(uu) Third Party refers to any person who deals directly with the Bureau, for and on behalf of another
person, relating to the importation, exportation, movement or storage of goods.

SEC. 103. When Importation Begins and Deemed Terminated.

Importation begins when the carrying vessel or aircraft enters the Philippine territory with the
intention to unload therein. Importation is deemed terminated when:

(a) The duties, taxes and other charges due upon the goods have been paid or secured to be paid, at the
port of entry unless the goods are free from duties, taxes and other charges and legal permit for
withdrawal has been granted: or

(b) In case the goods are deemed free of duties, taxes and other charges, the goods have legally left
the jurisdiction of the Bureau.

SEC. 104. When Duty and Tax are Due on Imported Goods.
Except as otherwise provided for in this Act or in other laws, all goods, when imported into the
Philippines, shall be subject to duty upon importation, including goods previously exported from the
Philippines.

Unpaid duties, taxes and other charges, shall incur legal interest of twenty percent (20%) per annum
computed from the date of final assessment under Section 429 of this Act, when payment becomes due
and demandable. The legal interest shall likewise accrue on any fine or penalty imposed.

Upon payment of the duties, taxes and other charges, the Bureau shall issue the necessary receipt or
document as proof of such payment.

SEC. 105. Effective Date of Rate of Import Duty.

Imported goods shall be subject to the import duty rates under the applicable tariff heading that are
effective at the date of importation or upon withdrawal from the warehouse for consumption. In case of
withdrawal from free zones for introduction to the customs territory, the duty rate at the time of
withdrawal shall be applicable on the goods originally admitted, whether withdrawn in its original or
advanced form.

In case of goods sold at customs public auction, the duty rates at the date of the auction, shall apply for
purposes of implementing Section 1143(a) of this Act.
SEC. 106. Declarant.
A declarant may be a consignee or a person who has the right to dispose of the goods. The declarant
shall lodge a goods declaration with the Bureau and may be:

(a) The importer, being the holder of the bill of lading; or

(b) The exporter, being the owner of the goods to be shipped out; or

(c) A customs broker acting under the authority of the importer or from a holder of the bill; or

(d) A person duly empowered to act as agent or attorney-in-fact for each holder.

In case the consignee or the person who has the right to dispose of the goods is a juridical person, it
may authorize a responsible officer of the company to sign the goods declaration as declarant on its
behalf.

The goods declaration submitted to the Bureau shall be processed by the declarant or by a licensed
customs broker: Provided, That for importations, a transition period of two (2) years from the
effectivity of this Act is hereby provided during which subparagraph (d) of this section shall not be
implemented by the Bureau: Provided, further, That after two (2) years from the effectivity of this
Act, subparagraph (d) of this section shall take into effect consistent with international standards and
customs best practices.

SEC. 107. Rights and Responsibilities of the Declarant.

The declarant shall be responsible for the accuracy of the goods declaration and for the payment of all
duties, taxes and other charges due on the imported goods. The licensed customs broker shall likewise
be responsible for the accuracy of the goods declaration but shall not be responsible for the payment of
duties, taxes and other charges due on the imported goods.

The declarant shall sign the goods declaration, even when assisted by a licensed customs broker, who
shall likewise sign the goods declaration.

SEC. 108. Penalties for Errors in Goods Declaration.

The Bureau shall not impose substantial penalties for errors when such errors are inadvertent and there
was no fraudulent intent or gross negligence in the commission thereof: Provided, That in order to
discourage repetition of such errors, a penalty may be imposed but shall not be excessive.

SEC. 109. Application of Information and Communications Technology.

In accordance with international standards, the Bureau shall utilize information and communications
technology to enhance customs control and to support a cost-effective and efficient customs operations
geared towards a paperless customs environment.
The Bureau shall communicate, exchange and process trade- and logistics-related information in the
national and regional level for the efficient and prompt clearance of goods and commodities in a
technology-neutral and secured infrastructure for business, industries, and government.

The security of data and communication shall be in a manner that is consistent with applicable local and
internationally accepted standards on information security.

The Bureau shall likewise include as part of its systems and processes, a disaster preparedness and
recovery plan to ensure business continuity by maintaining its uptime goal for its electronic and online
services.

For purposes of customs procedures, electronic documents, permits, licenses or certificates shall be
acceptable and shall have the legal effect, validity or enforceability as any other document or legal
writing: Provided, That when the prescribed requirements are duly complied with, the Bureau shall:

(a) Recognize the authenticity and reliability of electronic documents;

(b) Transmit approval in the form of electronic data messages or electronic documents; and

(c) Require and/or accept payments and issue receipts acknowledging such payments through systems
using electronic data messages or electronic documents.

The introduction and implementation of information and communications technology shall be undertaken
with due consultation with directly affected parties and stakeholders.

SEC. 110. Relationship Between the Bureau and Third Parties.

Parties may transact business with the Bureau either directly or through a designated third party to act
on their behalf.

The customs transactions directly transacted by a party shall not be treated less favorably or be
subject to more stringent requirements than those transacted through a designated third party.

A designated third party shall have the same rights and obligations as the designating party when
transacting business with the Bureau.

Subject to the provisions of existing laws, treaties, convention and international agreements, the
Secretary of Finance shall make the necessary guidelines for the defined relationship of the Bureau and
third parties.

SEC. 111. Information of General Application.

All laws, decisions, rulings, circulars, memoranda and orders of the Bureau shall be published in
accordance with law.

To foster an informed compliance regime, the Bureau shall ensure that all relevant and available
information of general application pertaining to customs operations and procedures which are not
confidential or intended for the Bureau's internal use only, shall be readily accessible to any interested
person.

Any new information, amendment or changes in customs law, administrative procedures or requirements,
shall, as far as practicable, be made readily available prior to its effective date of implementation unless
advance notice is precluded.

SEC. 112. Information of a Specific Nature.

The Bureau shall provide information, not otherwise confidential or for the Bureau's internal use only,
relating to a specific matter as may be requested by an interested party for legitimate use.

The Bureau may require the payment of a reasonable fee in providing such information. The requested
information shall be release d within reasonable time from the filing of the request and payment of the
required fee.

SEC. 113. Decision and Ruling.

The Bureau shall, consistent with Section 1502 of this Act, issue binding and advance decision and ruling
at the request of an interested party on matters pertaining to importation or exportation of goods.

Upon written request of the interested party, the Bureau shall notify the party of its decision in writing
within the period specified in this Act or by regulation. Should the decision be adverse to the requesting
interested party, the reasons thereof shall be indicated and the party shall be advised of the party's
right of appeal.

The ruling and decision shall be issued by the Bureau within thirty (30) days from the submission of the
necessary documents and information.

SEC. 114. Right of Appeal, Forms and Ground.

Any party adversely affected by a decision or omission of the Bureau pertaining to an importation,
exportation, or any other legal claim shall have the right to appeal within fifteen (15) days from receipt
of the questioned decision or order.

An appeal in writing shall be filed within the period prescribed in this Act or by regulation and shall
specify the grounds thereof.

The Bureau may allow a reasonable time for the submission of supporting evidence to the appeal.
 COURT OF APPEALS
Legal Basis
Republic Act No. 1125 (June 16, 1954) created the Court of Tax Appeals, a special Court mandated to
address the adjudication of appeals involving internal revenue tax and customs cases of the
Commissioner of Internal Revenue and the Commissioner of Customs, respectively Republic Act No. 9282
(March 30, 2004) expanded the jurisdiction of the Court of Tax Appeals, elevated its rank to the level
of a collegiate court with special jurisdiction, and enlarged its membership to a Presiding Justice and
five Associate Justices.

Mandate
The Court of Appeals (CTA) has exclusive appellate jurisdiction to review by appeal decisions or inaction
of the Commissioner of Internal Revenue or of the Commissioner of Customs involving their respective
responsibilities under the National Internal Revenue Code and the Customs Law, respectively, and those
of the Secretary of Finance in automatic review cases where the decisions of the Commissioner of
Internal Revenue or of Customs favorable to the taxpayer are elevated to the Finance Secretary; also
those of the Secretary of Trade and Industry, in the case of nonagricultural product, commodity or
article; or the Secretary of Agriculture, in the case of agricultural product, commodity or article, in
connection with the imposition of the Anti-Dumping Duty, Countervailing and Safeguard Duty. This
original and appellate jurisdiction includes criminal cases involving violations of the National Internal
Revenue Code or the Tariff and Customs Code; decisions of Regional Trial Courts (RTCs) in local tax
cases, and of the Central Board of Assessment Appeals (CBAA) in cases involving the assessment and
taxation of real property; and collection of taxes the assessment of which has already become final.

Creation, Elevation and Expansion

The Court of Tax Appeals (CTA) was created on June 16, 1954, through the enactment of Republic Act
No. 1125 (R.A. 1125). Considering its limited jurisdiction then, it had only three (3) Judges, which at
present is equivalent to one (1) Division.

With the passage of Republic Act Number 9282 (R.A. 9282) on April 23, 2004, the CTA became an
appellate Court, equal in rank to the Court of Appeals. The composition of the Court increased to six (6)
Justices with one (1) Presiding Justice and five (5) Associate Justices.

It shall sit En Banc, or in two (2) Divisions with three (3) Justices each. A decision of a division of the
CTA may be appealed to the CTA En Banc, and the latter's decision may further be appealed by verified
petition for certiorari to the Supreme Court.

However, Republic Act Number 9503 was enacted on June 12, 2008 and took effect on July 5, 2008.
This further enlarged the organizational structure of the CTA by creating a Third Division and providing
for three (3) additional Justices. Hence, the CTA is now composed of one (1) Presiding Justice and eight
(8) Associate Justices. The CTA may sit en banc or in three (3) divisions with each division consisting of
three (3) Justices. The CTA, as one of the Courts comprising the Philippine Judiciary, is under the
supervision of the Supreme Court.

Expanded Jurisdiction
Through the enactment of Republic Act No. 9282, the jurisdiction of the CTA has been expanded to
include not only civil tax cases but also cases that are criminal in nature, as well as local tax cases,
property taxes and final collection of taxes.

Pursuant to the provisions of Republic Act No. 1125 and other laws prior to R.A. 9282, the Court of Tax
Appeals retains exclusive appellate jurisdiction to review by appeal, the following:
1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto,
or other matters arising under the National Internal Revenue Code or other law or part of law
administered by the Bureau of Internal Revenue;
2. 2. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees
or other money charges; seizure, detention or release of property affected; fines, forfeitures or
other penalties imposed in relation thereto; or other matters arising under the Customs Law or
other law or part of law administered by the Bureau of Customs [Rep. Act. No. 1125, (1954), Sec.
7];
3. In automatic review cases where such decisions of the Commission of Customs favorable to the
taxpayer is elevated to the Secretary of Finance (Sec. 2315, TCC); and
4. Decisions of the Secretary of Trade and Industry, in the case of non-agricultural product,
commodity or article, or the Secretary of Agriculture, in the case of agricultural product,
commodity or article, in connection with the imposition of the Anti-Dumping Duty, Countervailing
and Safeguard Duty [Republic Act Nos. 8751 and 8752, (1999) Sec. 301 (a) and (p), and Republic
Act 8800].

Under Republic Act Number 9282, the CTA's original appellate jurisdiction was expanded to include the
following:
1. Under Republic Act Number 9282, the CTA's original appellate jurisdiction was expanded to
include the following:
2. Decisions of the Regional Trial Courts (RTC) in local tax cases;
3. Decisions of the Central Board of Assessment Appeals (CBAA) in cases involving the assessment
and taxation of real property; and
4. Collection of internal revenue taxes and customs duties the assessment of which have already
become final.
 PRELIM EXAM
1. Customs Modernization and Tariff Act (CMTA)
Republic Act No. 10863
2. Admission refers to the act of bringing __________ goods directly or through transit into a
free zone.
Imported
3. Who has the right to claim delivery of the goods at the port of destination.
Holder or Consignee of the bill of lading
4. In a contract of carriage, who is the consignor?
Exporter
5. Who among of the following is NOT considered as owner of imported goods?
Consignee in a master bill of lading
6. Imported goods shall be subject to the import duty rates under the applicable tariff heading
that are effective at the date of ______.
 Importation /
 Upon withdrawal from the warehouse for consumption /
 At the date of the auction
7. Who is considered as Declarant?
 The importer, being the holder of the bill of lading /
 The exporter, being the owner of the goods to be shipped out /
 Customs broker acting under the authority of the importer /
 A person duly empowered to act as agent or attorney-in-fact
8. Any party adversely affected by a decision or omission of the Bureau pertaining to an
importation, exportation, or any other legal claim shall have the right to appeal within?
15 days from receipt of the questioned decision or order
9. It refers to the registration of goods declarant with the Bureau of Customs.
Lodgment
10. Refers to the customs procedure under which goods, in its original form, are transported under
customs control from one customs office to another, or to a free zone;
Transit
11. Refers to the act, documentation and process of bringing imported goods into the customs
territory, including goods coming from free zones;
Entry
12. Refers to an act of importing goods into the country without complete customs prescribed
importation documents, or without being cleared by customs or other regulatory government
agencies, for the purpose of evading payment of prescribed taxes, duties and other government
charges;
Outright Smuggling
 13. Any adulterated or misbranded foods or goods for human consumption or any adulterated or
misbranded drug in violation of relevant laws and regulations.
Prohibited
14. Opium pipes or parts thereof, of whatever material;
Restricted
15. The Bureau shall be headed by a Commissioner and shall be assisted by at least _ but not more
than _ Deputy Commissioners.
4,6
16. The Commissioner shall submit annual report on the performance of the Bureau to?
 President /
 Congress /
 NEDA /
17. The District Collector shall have the following duties in their assigned Customs District except:
Border Control to prevent entry of smuggled goods
18. Who has the power to Open and Close Any Port?
President
19. The following persons are authorized to effect search, seizure, and arrest.
 Officials of the Bureau /
 District Collectors /
 Deputy District Collectors
20. Who shall define the scope, areas covered, procedures, and conditions governing the exercise of
such police authority including custody and responsibility for the seized goods.
Commissioner
21. How many Deputy Commissioner in the Bureau of Customs
6
22. Complete name of Commissioner of Customs
Rey Leonardo B. Guerrero
23.
24. District Collector of Port of Manila
Michael Angelo DC. Vargas
25. Deputy Commissioner for Intelligence Group
Raniel T. Ramiro

DIFFERENT OFFICES OF DEPUTY COMMISSIONER

 Internal Administration Group (IAG)
 Revenue Collection Monitoring Group (RCMG)
 Assessment and Operations Coordination Group (AOCG)
 Intelligence Group (IG)
 Enforcement Group (EG)
 Management Information System and Technology Group (MISTG)
 Post Clearance Audit Group (PCAG)
 Collection Districts

COLLECTION DISTRICTS
 P01 Port of San Fernando (La Union)
 P02A Port of Manila
 P02B Manila International Container Port (Tondo, Manila)
 P03 Ninoy Aquino International Airport (Parañaque City)
 P04 Port of Batangas
 P05 Port of Legazpi (Albay)
 P06 Port of Iloilo
 P07 Port of Cebu
 P08 Port of Tacloban
 P09 Port of Surigao
 P10 Port of Cagayan De Oro
 P11 Port of Zamboanga
 P12 Port of Davao (Davao Del Sur)
 P13 Port of Subic (Zambales)
 P14 Port of Clark (Pampanga)
 P15 Port of Apari (Cagayan)
 P16 Port of Limay
 DEPARTMENT OF FINANCE (DOF)
What is Department of Finance?
The Department of Finance (DOF) is the government’s steward of sound fiscal policy. It formulates revenue
policies that will ensure funding of critical government programs that promote welfare among our people and
accelerate economic growth and stability.

Secretary of Finance – Carlos “Sonny” Dominguez

He has a Master’s Degree in Business Administration from Ateneo De Manila University and attended the
Executive Management Program at the Stanford University. He also has over 40 years of experience managing
various organizations in the public and private sectors. He was a shareholder, and board chairman or member
of over a dozen corporations across various industries such as power, agriculture, mining, banking, hospitality,
real estate, and investment.

Notable positions held by Sonny were Cabinet Secretary of the Environment and Natural Resources and
Agriculture during the Presidency of Corazon Aquino, past president of leading Philippine corporations such as
the Philippine Airlines and the Philippine Associate Smelting and Refining Corporation, and the former Bank of
the Philippine Islands Agricultural Bank.

History of DOF
In 1936, DOF functions relative to the formulation and preparation of the Government's budget were
transferred to the newly created Budget Commission. The preparation of income and resource estimates
remained with the department. In 1949, the Central Bank of the Philippines was established, Secretary of
Finance Miguel Cuaderno relinquished the Finance portfolio to Pio Pedrosa to enable him to serve as Governor
of the Central Bank.
In the 1980s, as government policy turned increasingly interventionist in the economy, the Ministry became
the voice of caution. It spearheaded the creation of inter-agency committees to rationalize the otherwise free-
for-all system of allocating government resources. The Investment Coordination Committee (ICC) was created
to rationalize government investments, the Government Corporate. Monitoring and Coordinating Committee
(GCMCC) to reform the government corporate sector and the Fiscal to reverse the proliferation of the fiscal
incentives.

Through the Department's policies, which resulted in sound fiscal and monetary conditions, the Philippines
was hailed as "Asia's Newest Tiger" by various international credit institutions and in 1997, the National
Government
recorded a budget surplus for the third consecutive year, and the public sector generated its fiscal surplus
since the sector started to be monitored in 1985.
Vision
 A strong economy with stable prices and strong growth;
 A stable fiscal situation with adequate resources for government projects, infrastructure, education,
health, and other basic services;
 A borrowing program that is able to avoid the crowding-out effect on the private sector and minimizes
costs;
 A public sector debt profile with long maturities and an optimum mix of currencies that minimizes the
impact of currency movements; and
 A strong economic growth with equity and productivity.

Mission
 Formulation, institutionalization, and administration of sound fiscal policies;
 Improvement of tax collection efficiency and non-tax revenue efforts;
 Mobilization of adequate resources on most advantageous terms to meet budgetary requirements;
 Sound management of public sector debt; and
 Initiation and implementation of structural and policy reforms.

Mandate
Under Executive Orders 127, 127-A and 292, the Department of Finance is responsible for the following:
 Formulation, institutionalization and administration of fiscal policies in coordination with other
concerned subdivisions, agencies and instrumentalities of the government;
 Generation and management of the financial resources of government;
 Supervision of the revenue operations of all local government units;
 Review, approval and management of all public sector debt, domestic or foreign; and
 Rationalization, privatization and public accountability of corporations and assets owned, controlled or
acquired by the government.

Power and Functions

 Formulate goals, action plans and strategies for the Governments resource mobilization effort;
 Formulate, institutionalize and administer fiscal and tax policies;
 Supervise, direct and control the collection of government revenues;
 Act as custodian of, and manage all financial resources of Government
 Manage public debt;
 Review and coordinate policies, plans and programs of GOCCs;
 Monitor and support the implementation of policies and measures on local revenue administration;
 Coordinate with other government agencies on matters concerning fiscal, monetary, trade and other
economic policies
 Investigate and arrest illegal activities such as smuggling, dumping, illegal logging, etc. affecting
national economic interest

Relevance of DOF to BOC

The Department of Finance is a government institution that formulates fiscal policy. Carrying out its basic
function of revenue generation to ensure adequate financing for the needs of the country.
The Department of Finance (DOF) is supervising that the Bureau of Customs (BOC) is fulfilling its mandate of
assessing and collecting customs revenues from imported goods.

BOC is under DOF

The Bureau of Customs (BOC) is an attached agency of the Department of Finance. It is charged with assessing
and collecting customs revenues, curbing illicit trade and all forms of customs fraud, and facilitating trade
through an efficient and effective customs management system.

The Department of Finance (DOF) is responsible for supervising, directing, and controlling the collection of
government revenues and is in charge of managing all of the government's financial resources and acting as
their custodian.

The Department of Finance strictly adheres to the Philippine Government’s public procurement reform
agenda by following the rules and procedures as laid down in The Government Procurement Reform Act of
2003 (R.A. 9184) which provides the rules and regulations to modernize, standardize, and regulate the
procurement activities of the government.

Implementing Rules And Regulations Of Executive Order No. 313, Entitled

“Modifying The Rates Of Duty On Capital Equipment, Spare Parts And
Accessories Imported By Board Of Investments (Boi) Registered New And
Expanding Enterprises”
Section 5. Import Procedures with the DOF and BOC. For purposes of release of the shipment, the applicant
shall submit to the Department of Finance (DOF) official import documents indicating the description, quantity
and price of the machinery, equipment, spare parts or accessories imported, the names of the supplier and
carrying vessel and its anticipated or actual date of arrival, together with the Certificate of Authority. Upon
release of the DOF endorsement, the applicant shall file an import entry declaration with the Bureau of
Customs (BOC), supported by the following documents:
1) Commercial Invoice;
2) Bill of Lading;
3) BOI Certificate of Authority; and
4) Such other documents as BOC may require pursuant to laws, rules and regulations as may hereinafter
be issued.
The Customs Collector shall verify if the importation falls under the Chapter Headings provided under the E.O.
and record in the Import Report all pertinent data relative thereto. If, upon verification and inspection, of the
importation by the Bureau of Customs, the tariff classification is found to be different from the applicant’s
classification, the Bureau of Customs classification shall prevail however, the registered enterprise may appeal
the same to the Tariff Commission. The shipment shall be released upon payment under protest of the
appropriate duty rates or the posting a cash bond or a surety bond from any government bonding company
equivalent to the duties thereto. If the Bureau of Customs’ classification will still fall under the Chapter
Headings provided under the E.O., the modified duty rate shall apply subject to amendment of the Certificate
of Authority.
The BOC shall provide the DOF quarterly report on the import availment of BOI qualified registered
enterprises under this E.O.
DOF puts up a website on IRR of customs modernization law
These include concerns on de minimis importations, alert orders, and risk management in customs control, the
customs bonded warehousing system, post clearance audit, advance ruling system, and conditional tax- and
duty- exempt importations for balikbayans, overseas Filipino workers (OFWs), and returning residents, among
others.

Under the new customs law, the BOC is required to come up with an improved system on customs
administration and procedures that comply with international standards.

Amending certain provisions of the Tariff and Customs Code, the new law sets tougher penalties against
smuggling, with a maximum prison term of 20 to 40 years depending on the amount of goods illegally brought
into the country. The CMTA also increases the value on de minimis importations, which means shipments
valued at P10,000 or below will not be subjected to duties or taxes. Further, OFWs can now ship up to
P150,000 worth of goods of non-commercial quantities in balikbayan boxes duty- and tax-free.

Under RA 10863, Filipinos who have stayed in the country for at least 10 years and are returning to the
Philippines are granted duty and tax exemptions for personal and household effects worth P350,000 and
below that they will bring with them when they come home.

BUREAU OF INTERNAL REVENUE (BIR)

The BIR is tasked to assess and responsible for collecting all national internal revenue taxes, fees, and charges
and to enforce all forfeitures, penalties, and fines connected therewith including the execution of judgments
in all cases decided in its favor by the Court of Tax Appeals and the ordinary courts.

Mandate
The Bureau of Internal Revenue shall be under the supervision and control of the Department of Finance and
its powers and duties shall comprehend the assessment and collection of all national internal revenue taxes,
fees, and charges, and the enforcement of all forfeitures, penalties, and fines connected therewith, including
the execution of judgments in all cases decided in its favor by the Court of Tax Appeals and the ordinary
courts.

The Bureau shall give effect to and administer the supervisory and police powers conferred to it by this Code
or other laws. (Section 2 of the National Internal Revenue Code of 1997)

Mission
We collect taxes through just enforcement of tax laws for nation-building and the upliftment of the lives of
Filipinos

Vision
The Bureau of Internal Revenue is an institution of service excellence and integrity.

Guiding Principle
"Service Excellence with Integrity and Professionalism"

Core Values
 God-fearing
 Accountability
 Innovativeness
 Integrity
 Competency
 Transparency
 Patriotism

History
 Bureau of Internal Revenue (BIR) was created through the passage of Reorganization Act No. 1189
dated July 2, 1904 that was only during the term of second civil governor Luke E. Wright.
 On August 1, 1904, the BIR was formally organized and made operational under the Secretary of
Finance, Henry Ide (author of the Internal Revenue Law of 1904), with John S. Hord as the first
Collector (Commissioner).

Functions of the BIR

 Reduction and Collection of taxes, fees, and charges.
 Enforcement of all forfeitures, Penalties, and Fines connected therewith, including the execution of
judgements in all cases decided in its favor by the Court of Tax Appeals and the Ordinary courts.
 It shall also give effect to the administer supervisory and police powers conferred to it by the National
Internal Revenue Code and special laws.

Taxation
 It is an inherent power by which the sovereign state imposes financial burden upon persons and
property as means of raising revenues in order to defray the necessary expenses of government.
 Imposition of financial charges or other levies, upon a taxpayer by a state such that failure to pay is
punishable by law.
 The BIR is required by law to assess and collect all national internal revenue taxes, fees, and charges, as
well as to execute any forfeitures, penalties, and fines associated with them, including the execution of
judgments rendered in its favor by the courts.
 This agency governs all the finance, taxation, and monetary policies of the country with the purpose of
strengthening our national identity and improving the lives of Filipinos.

Types of Taxes
 Income Tax
 Estate and Donor's Tax
 Percentage Tax
 Excise Tax
 Documentary Stamp Tax

Tax Exemptions:
  Charitable Institutions, Churches and Non profit cemeteries
 Local Water District
 Cooperative duly registered under RA 6938 otherwise known as Cooperative Code of the Philippines
 Non-stock and non-profit hospitals and educational institutions
 Printer and/or publisher of books or other reading materials prescribed by DepEd.

There are also benefits that a business may receive once it is registered with the BIR, including financial
services
such as loan applications, tax incentives, and other financial assistance from the government.

Being registered is necessary for the growth and promotion of your brand and business; establishing a
reputation in the market is crucial for a company’s continuity and success.

The Bureaus of Internal Revenue (BIR) and of Customs (BOC) are set to forge an agreement on information
sharing and coordination, among other ways of cooperation, to strengthen their joint campaign against
smuggling and beef up collections on excise taxes on imports.

Sweeping reforms at the Bureaus of Internal Revenue (BIR) and of Customs (BOC) are underway to improve
taxpayer satisfaction, arrest official corruption and restore public trust in the government’s main revenue-
generating agencies, according to the Department of Finance (DOF).

Beyond their common mandate of revenue collection and association with corruption in the public mind,
however, the two agencies each have their idiosyncrasies. These differences affect the nature and extent of
internal corruption in each and should be considered in any project to reform them.

The first and biggest difference has to do with the timing of the transactions involved. Paying an income tax or
filing VAT returns is mostly a paper transaction that records business done ex post, or after the fact. The filer
has already made the money and is only deciding whether to state the amount truthfully or not. By contrast,
the entire Customs process — from lodging an import-entry declaration to the release of the cargo — is an ex
ante transaction before the cargo in question can be used to generate income. This implies that the potential
to hold the taxpayer hostage is greater at Customs than at BIR.

A second difference has to do with the number of actors involved and frequency with which they transact with
the agencies. Unlike at the BIR, the authority to transact with Customs is effectively monopolized by a “guild,”
namely licensed customs brokers. Congress has even foolishly passed a law cementing that monopoly. The
Customs Brokers’ Act (2004) mandates that only licensed customs brokers can act as “declarant.” Before this,
anyone could fill out and sign his own import entry declaration, just as anyone could file an income tax return
in one’s own name.

BANGKO SENTRAL NG PILIPINAS (BSP)

The Bangko Sentral ng Pilipinas was created under Section 2 of RA 7653, better known as “The New Central
Bank Act”.

BSP’s Objective
The BSP’s main primary objective is to maintain price stability conducive to balanced and sustainable
economic growth. The BSP also aims to promote and preserve monetary stability and the convertibility of the
national currency.

BSP’s Responsibilities
The BSP provides policy directions in the areas of money, banking, and credit. It supervises the operations of
banks and exercises regulatory powers over non-bank financial institutions with quasi-banking functions.
Functions of BSP
Under the New Central Bank Act of 1993, the BSP performs the following functions, all of which relate to its
status as the Republic’s central monetary authority.
 Liquidity Management.
 Currency Issue
 Lender of last resort
 Financial Supervision
 Management of foreign currency reserves
 Determination of exchange rate policy
 Other activities

BSP’s role in relation to Inflation

Movements in inflation can be driven by factors beyond the influence of the central bank. These include
inflation pressures arising from:
 Volatility in the prices of agricultural products;
 Natural calamities/events that affect a major part of the economy
 Volatility in the prices of all products; and
 Significant government policy changes in the tax structure, incentives, and subsidies.

The BSP controls inflation through its CONDUCT OF MONETARY POLICY which is done primarily by moving its
policy interest rate.

Adjustments in the interest rate for the BSP’s overnight reverse repurchase (RRP) facility typically led to
corresponding movements in market interest rates, thus affecting the demand by households and firms for
goods and services. This, together with the aggregate supply of goods and services, determines the level of
prices.

PRICE STABILITY. The BSP's main responsibility is to formulate and implement policy in the areas of money,
banking, and credit with the primary objective of preserving price stability. Price stability refers to a condition
of low and stable inflation. By keeping the price stable, the BSP helps ensure strong and sustainable economic
growth and better living standards.

FINANCIAL STABILITY. Financial systems play a critical role for consumers – both corporates and individuals –
because they bridge the aspirations of today with the economic fortunes of tomorrow. Historically, financial
systems develop through the banking industry because of the nature of fiat money. In this context, making
sure that banks operate in a safe and sound manner is in the public interest.

PAYMENTS AND SETTLEMENTS. Payment systems are essential to the effective functioning of financial systems
worldwide. They provide the channels through which funds are transferred among banks and other
institutions to discharge payment obligations arising from economic and financial transactions across the
entire economy.

Connection of BSP to BOC

Collection and reporting of customs duties and import processing fees. Participating banks are authorized to
accept payment of customs duties, taxes and other levies, and import processing fees under the following
procedures:
(a) The collecting bank shall acknowledge receipt of payments of customs duties, taxes and other levies,
and import processing fees by issuing Official Receipts (ORs) in forms to be requisitioned by the Head
Office from the General Services Division, Bureau of Customs, Manila;

(b) The collecting bank shall book all such collections and credit the same to the special account  “Due to
Bangko Sentral – Bureau of Customs”;

(c) The branch shall report by telephone, telex, or other means to its Head Office, at the end of each day,
total collections for the day and the inclusive serial numbers of ORs issued, to be used as a basis for the
preparation by the Head Office of the Consolidated Report of Daily Collections of Customs Duties,
Taxes and Other Levies (RC 82-005);

(d) The Head Office and its branches shall accomplish the Abstract of Daily Collections of Customs Duties,
Taxes and Other Levies (RC 82-006) and submit the same, duly supported with copies of Orders of
Payment (OPs), ORs, Release Certificates (RCs) and commercial invoices on the same day to the offices
indicated in the form; and

(e) The Head Office of the participating banks shall consolidate all reports of collections with those of its
branches and submit the original of the Consolidated Report on Daily Collections of Customs Duties,
Taxes and Other Levies (RC 82-005) to the Comptrollership Department, Bangko Sentral, Manila on the
10th calendar day following the date of collection. Simultaneously, the remaining copies shall be
distributed to the offices indicated in the form.

Collection and reporting of export/premium duties. Participating banks are authorized to accept payment of
export premium duties under the following procedures:
(a) The collecting bank shall deduct from the export proceeds the estimated amount of export/premium
duties due from the export shipment upon negotiation of the shipping documents but shall collect the
exact and correct amount of such duties upon presentation of the OP issued by the Export
Coordinating Division, Bureau of Customs (For Port of Manila) or the Collector of Customs concerned;
(b) The collecting bank shall issue the corresponding ORs in forms to be requisitioned by the Head Office
from the General Services Division, Bureau of Customs, Manila;
(c) The collecting bank shall book all such collections and credit the same to the special account  “Due to
Bangko Sentral-Export/Premium Duty”;
(d) The branch/extension office agency shall:
1. Report by telephone, telex, or other means to its Head Office, at the end of each day, total
collections for the day and the inclusive serial numbers of ORs issued, to be used as basis for
the preparation by the Head Office of the Consolidated Report on Daily Collections of
Export/Premium Duty (RC 82-007); and
2. Accomplish the Abstract of Daily Collections of Export/Premium Duty (RC 82-008) and submit
the same, duly supported with copies of OPs and ORs, within ten (10) calendar days from the
date of collection to the offices indicated in the form.
 (e) The Head Office of the collecting bank shall:
1. Consolidate its report of the collection with those of its branches/extension offices/agencies
and submit to the Bureau of Customs the Consolidated Report of Daily Collections of
Export/Premium Duty (RC 82-009) on the day following the date of collection; and
2. Consolidate the Abstract of Daily Collections of Export/Premium Duty (RC 82-010) with those
received from branches/extension offices/agencies. The original of the Consolidated Abstract of
Collection of Export/Premium Duty (RC 82-011) shall be submitted to the Comptrollership
Department, Bangko Sentral, Manila, on the 10th calendar day following the date of collection.
Remittances thru debit/credit advices. The Comptrollership Department of Bangko Sentral, Manila, shall debit
the DDAs of the banks concerned for the total daily collection, which is due for remittance on the 10th
calendar day from the date of collection (based on either forms RC 82-005, RC 82-007 or RC 82-011).

Reconciliation of revenue collections. The Bureau of Customs shall report to the appropriate supervising
department of the Bangko Sentral, Manila, any unreported collection or other discrepancies discovered for
proper examination.

Penalty for willful delay on the reporting of collections/remittances. In the event the Bureau of Customs shall
discover, in the course of its verification, any willful delay in the reporting of collections and remittances by
banks, said Bureau shall advise the Comptrollership Department of the Bangko Sentral to debit the DDA of the
bank concerned with the corresponding penalty therefor, in accordance with this Section (Fines for delayed
reports/remittances of collections).

Fines for delayed reports/remittances of collections. Any bank authorized to collect customs duties, taxes
and other levies and export/premium duty, which shall willfully delay the submission of reports and
remittance of its collection to the Bangko Sentral within the period prescribed thereon, shall pay fines in
accordance with the following schedule:

Per delay in
Per delay in remittance of collection
submission of report
a. Per day of default for the first 5 1/30 of 1% on the amount of delayed
days of default P60 plus
remittance
b. Per day of default for the next 5 1/15 of 1% on the amount of delayed
P90 plus
days of default remittance
c. Per day of default for the 1/10 of 1% on the amount of delayed
succeeding days of default P120 plus
remittance

 Liquidity floor requirement on revenue collections. Revenue collections of AABs shall be subject to the
liquidity floor requirement under Sec. 231 (Liquidity floor).

Collection of import duties at the time of opening of letters of credit. The following rules and regulations
shall govern the collection of import duties at the time of opening of letters of credit (LC) covering imports and
for other purposes:

Under Non-Electronic to Mobile (e2m) ports

(a) Collection of deposits of import duties. All FIs shall, upon opening of the LC covering imports, collect
from the applicant/importer a deposit equivalent to the full amount of import duties due on the
 importation covered by such LC. The deposit shall not be withdrawable and shall be utilized only by
crediting the same to the import duties due on the importation.
(b) Amount of import duties. The import duties due shall be determined and declared by the applicant for
the LC subject to the penalties prescribed under the Tariff and Customs Code.
(c) Other payment arrangements. The requirement of a deposit shall likewise apply even if the
importation is affected under other types of payment arrangements or on a deferred payment basis.
The deposit should be made upon presentation of the import documents to the agent bank
(d) Validation of official receipt. Such deposits shall be validated by official receipts of the FIs concerned
and shall be credited in the final computation of the import duties, taxes and other charges due on the
importation, upon the filing of the corresponding import entry.
(e) Collection of deficiency and refund of excess deposits. Any deficiency in the deposit made as against
the actual import duties, taxes and other charges due on the importation shall be collected by the
Bureau of Customs from the importer prior to the release or withdrawal of the shipment. Any excess
deposit shall be refunded by the Bureau of Customs to the importer.
(f) Remittance of collection. The Bangko Sentral DDA of the FIs concerned shall be debited for the
deposits collected, in accordance with Sec. 295 (Remittances thru debit/credit advices).

Under e2m ports

(a) Collection of deposits of import duties. All FIs shall, prior to the opening of the LC covering imports,
collect from the applicant/importer a deposit equivalent to the full amount of advance import duties
due on the importation covered by such LC.
(b) Amount of advance deposit. The import duties due shall be computed by the Electronic to Mobile
(e2m) system based on the applicant’s declared descriptions, ASEAN Harmonized Tariff Nomenclature
(AHTN), quantities, and values in the IED. The LC applicant must ensure that the particulars of the LC
application and the supporting Pro-forma invoice correspond to those declared in the IED and any
undervaluation, misclassification, and misdeclaration in the IED shall subject the LC applicant to the
penalties prescribed under Sec. 2503 of the Tariff and Customs Code, as amended.
(c) Duty exempt imports. If the importer/applicant declares in the IED that the importation is exempt
from duties, such claim shall be taken at face value in the determination by the Bureau of Customs
(BOC) of the amount of advance deposit.
(d) Transmittal of the ADPI to the AABs. The ADPI shall be transmitted by the BOC to the PCHC Payment
Gateway which shall have responsibility for forwarding the same to the AAB concerned.
(e) Collection by debit from a designated bank account. The collection of the advance deposit as well as
of the final duties, taxes, and other charges payable on the importation shall be by debit from the
applicant’s bank account designated in the ADPI or in the Final Payment Instruction (FPI) and credited
to the BOC’s account.
Validation of advance deposits. Payment of advance deposits shall be validated by official receipts,
such as electronic Advance Payment Confirmations (APC) prepared and transmitted by the AAB using
the payment subsystem of the e2m system via the PCHC Payment Gateway.
(f) Confirmation of advance duties collected. The e2m system shall provide the importer’s VASP with the
APC. The VASP shall in turn notify the importer by e-mail of its receipt of the APC and provide the
importer a printed copy thereof upon request.
(g) Collection of final duties and tax payable. The final duties and tax payable as computed by the e2m
system shall be notified to the AAB concerned thru an electronic FPI. After collecting the amount in the
FPI, the AAP shall transmit to BOC via the PCHC Payment Gateway a Final Payment Confirmation (FPC).
(h) Statement of duties and taxes availment (SDTA). Upon receipt of the FPC from the AAB, the BOC shall
provide the importer electronically an SDTA which shall be his proof of having settled all duties, taxes,
and other charges on the importation.
 (i) Phased implementation. The e2m system shall be rolled out nationwide in phases. Importations to be
cleared thru Customs Collection Districts already operating the e2m system shall be paid thru the
payment system prescribed under this Section.

Acceptance, encashment, or negotiation of checks drawn in favor of commissioner/Collector of Customs. All

checks payable to the Commissioner/Collector of Customs shall be accepted for deposit only to the account of
the Commissioner/Collector of Customs. Banks, where the Commissioner/Collector of Customs has no
account, shall not encash, accept or negotiate checks payable to the Commissioner/Collector of Customs.

DEPARTMENT OF TRADE AND

INDUSTRY (DTI)
The Department of Trade and Industry is the executive department of the Philippine government tasked as the
main economic catalyst that enables innovative, competitive, job generating, inclusive business, and
empowers consumers. It acts as a catalyst for intensified private sector activity in order to accelerate and
sustain economic growth through comprehensive industrial growth strategy, progressive and socially
responsible trade liberalization and deregulation programs and policymaking designed for the expansion and
diversification of Philippine trade – both domestic and foreign.

Purpose
The Department of Trade and Industry (DTI) is a prime mover of consumer welfare. It is committed
to protecting the rights and interests of the consumers and is also committed to developing policies and
programs aimed at sustaining the growth and development of the Philippine economy.

Mission
As the government’s main economic catalyst in Enabling innovative, competitive, job-generating, inclusive
business, and Empowering consumers.

Vision
Anchored on the Values of Passion, Integrity, Creativity, Competence, Synergy, and Love of Country

Role/Mandate
Is responsible for realizing the country’s goal of globally competitive and innovative industry and services
sector that contribute to inclusive growth and employment generation.

Connection of DTI to Bureau of Customs

Import Facilitation
Free Importation and Exportation – refers to goods that may be freely imported into and exported from the
Philippines without the need for import and export permits, clearances or licenses, unless otherwise provided
by law or regulation.

Regulated Importation and Exportation – goods which are subject to regulation shall be imported or exported
only after securing the necessary goods declaration, clearances, licenses, and any other requirements, prior to
importation.
Restricted Importation and Exportation – except when authorized by law or regulation, the importation and
exportation of the following restricted goods are prohibited: (Chapter 3, Section 119 CMTA)
a) Dynamite, gunpowder, ammunitions and other explosives, firearms and weapons of war, or parts
thereof;
b) Roulette wheels, gambling outfits, loaded dice, marked cards, machines, apparatus or mechanical
devices used in gambling or the distribution of money, cigars, cigarettes or other goods when such
distribution is dependent on chance, including jackpot and pinball machines or similar contrivances, or
parts thereof;
c) Lottery and sweepstakes tickets, except advertisements thereof, and lists of drawings therein;
d) Marijuana, opium, poppies, coca leaves, heroin or other narcotics or synthetic drugs which are or may
hereafter be declared habit forming by the President of the Philippines, or any compound,
manufactured salt, derivative, or preparation thereof, except when imported by the government of the
Philippines or any person duly authorized by the Dangerous Drugs Board, for medicinal purposes;
e) Opium pipes or parts thereof, of whatever material;
f) Any other goods whose importation and exportation are restricted;
g) Weapons of mass destruction and goods included in the national Strategic Goods list (NSGL) as
provided under Republic Act No. 10697 or the Strategic Trade Management Act (STMA);
h) Toxic and hazardous goods under Republic Act No. 6969 or the “Toxic Substances and hazardous and
Nuclear Wastes Control Act of 1990.”

Prohibited Importation and Exportation – the importation and exportation of the following goods are
prohibited: (Chapter 3, Section 118 CMTA)
a) Written or printed goods in any form containing any matter advocating or inciting treason, rebellion,
insurrection, sedition against the government of the Philippines, or forcible resistance to any law of the
Philippines, or written or printed goods containing any threat to take the life of, or inflict bodily harm
upon any person in the Philippines;
b) Goods, instruments, drugs and substances designed, intended or adapted for producing unlawful
abortion, or any printed matter which advertises, describes or gives direct or indirect information
where, how or by whom unlawful abortion is committed;
c) Written or printed goods, negatives or cinematographic films, photographs, engravings, lithographs,
objects, paintings, drawings or other representation of an obscene or immoral character;
d) Any goods manufactured in whole or in part of gold, silver or other precious metals or alloys and the
stamp, brand or mark does not indicate the actual fineness of quality of the metals or alloy;
e) Any adulterated or misbranded food or goods for human consumption or any adulterated or
misbranded drug in violation of relevant laws and regulations;
f) Infringing goods as defined under the Intellectual Property Code and related laws; and
g) All other goods or parts thereof which importation are explicitly prohibited by law or rules and
regulations issued by the competent authority.

BOC, DTI ink MOA to Enhance Trade of Strategic Goods

 In its bid to increase the overall efficiency of trade environment in the country, the Bureau of Customs
(BOC) expressed its support and cooperation to the programs and initiatives of Department of Trade
and Industry (DTI).
 On 15 December 2020, the BOC entered into a Memorandum of Agreement with the Strategic Trade
Management Office (STMO), Authority of the Freeport of Area Bataan (AFAB), Clark Development
Corporation (CDC), Philippine Economic Zone Authority (PEZA) and Subic Bay Metropolitan Authority
(SBMA).
  The partnership aims to establish an effective coordination and cooperation mechanism towards
enhanced trade facilitation, optimize information sharing, boost the capability of front liners to identify
strategic goods, and reduce the complexity of doing business of legitimate and compliant strategic
goods exporters.
 This effort, headed by the DTI, is in consonance with Republic Act No. 10697 otherwise known as the
“Strategic Trade Management Act” (STMA), authorizing the establishment of STMO to serve as the
executive and technical agency of the national government for the establishment of the management
systems for the trade in strategic goods.
 As part of the agreement, a Technical Working Group on Strategic Trade Facilitation (TWG-STF) was
created comprising of the contracting parties for the purpose of establishing communication
mechanisms and procedures, organize and implement Commodity Identification Training (CIT) for
Frontline and Enforcement Officers and streamline documentary requirements with BOC and IPAs.
 A mandatory application for authorization from STMO is also being implemented. Authorization refers
to a license issued by the STMO to any person who engages or intends to engage in the trade of
strategic goods. This shall be requested prior to export as this shall form part of the shipment
clearances and requirements of the BOC and IPAs as provided in the DTI Memorandum Circular No. 20-
47, series of 2020. The BOC and IPAs shall be responsible for verifying the authenticity of the
authorizations through the Quick Response (QR) Code system and or call or email to STMO’ designated
lines. A reach-back mechanism shall also be established among the parties to monitor compliance with
SMTA.
 In case the item for export does not meet the minimum technical specifications in the National
Strategic Goods List (NSGL) but are visually similar with the strategic items, the Non-Strategic Good
Certificate (NSGC) is issued by the STMO to requesting parties.
 The BOC and/ or IPAs shall ensure that all strategic goods have appropriate authorizations from the
STMO prior to export.
 To ensure the continuous compliance of BOC and IPAs to authenticity verification, the STMO shall
establish capacity building trainings/ programs for BOC and IPA personnel such as Commodity
Identification Training, Risk Profiling and Targeting Training and such other trainings that will build and
enhance the capacity of BOC and IPA personnel in the implementation of the STMA.
 The BOC, in line with the agreement and as provided by Republic Act No. 10863, otherwise known as
the Customs Modernization and Tariff Act of 2016 (CMTA), is in charge of assessing and collecting
customs revenues, curbing illicit trade and all forms of customs fraud, and facilitating trade, through an
efficient and effective customs management system.
 Furthermore, the Bureau of Customs’ Risk Management Office (BOC-RMO) shall be the responsible unit
to perform centralized risk management and targeting for strategic goods shipments. Meanwhile, the
IPA’s shall contribute to information sharing and other efforts in harmonizing the risk management of
strategic shipments.
 Commissioner Rey Leonardo Guerrero said that the BOC shall continue to strengthen its collaboration
with trade regulatory agencies to include DTI, to boost trade and ensure an environment of growth for
both government and stakeholders.

TARIFF COMMISSION
What is a Tariff?
A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of
goods. Besides being a source of revenue for the government, import duties can also be a form of regulation
of foreign trade and policy that taxes foreign products to encourage or safeguard domestic industry.

An example of a tariff could be a tariff on steel. This means that any steel imported from another country
would incur a tariff—for example, 5% of the value of the imported goods—paid by the individual or business
importing the goods.

Tariffs mainly benefit the importing countries, as they are the ones setting the policy and receiving the money.
The primary benefit is that tariffs produce revenue on goods and services brought into the country. Tariffs can
also serve as an opening point for negotiations between two countries.

What is the Tariff Commission?

The Tariff Commission (TC) is a government agency of the Republic of the Philippines. Its mandate and
functions are prescribed under Republic Act (RA) No. 10863, otherwise known as the Customs Modernization
and Tariff Act (CMTA).

The Tariff Commission is the principal and independent authority on tariff and trade remedies, and a key
adviser on non-tariff measures and international trade issues. The Commission shall submit its report of
findings and recommendation within thirty (30) days after the termination of the public consultation to the
National Economic and Development Authority ("NEDA") for consideration of the Committee on Tariff and
Related Matters ("CTRM"). The NEDA shall evaluate the report of the Commission and submit
recommendations to the President

Vision
TC shall be principal and independent authority in TARIFF and TRADE REMEDY MEASURES to enhance industry
competitiveness and promote consumer welfare.

Mission
The Tariff Commission a key adviser to the executive and legislative branches of government on tariff and
trade matters, an adjudicatory body on trade remedy cases and advocate a strong competition law and policy,
remains committed to the pursuit of good and effective governance.

Functions of the Tariff Commission

 Adjudicate cases on the application of trade remedies against imports;
 Study the impact of tariff policies and programs on national competitiveness and consumer welfare in
line with the economic objectives of the government;
 Issue advance rulings on tariff classification of imported goods and render rulings on disputes over
tariff classification of goods;
 Administer the Philippine tariff schedules and tariff nomenclatures;
 Provide the President and Congress with independent analysis, information and technical support on
matters related to tariff and non-tariff measures affecting Philippine industries and exports for policy
guidance;
 Analyze the nature and composition, and the classification of goods according to tariff commodity
classification and heading number for customs and other related purposes, which information shall be
furnished certain government agencies;
  Review the trade agreements for negotiation and trade agreements entered into by the Philippines
and make recommendations, if necessary, on the consistency of the terms of the agreements with the
national policy objectives;
 Conduct public consultations and public hearings pursuant to its functions.
 TC is an attached agency of the National Economic and Development Authority.

The Tariff Commission is distinctive among federal regulatory agencies. Practitioners familiar with the typical
administrative commission, patterned on the Interstate Commerce Commission, will find the Tariff
Commission's powers and procedures quite different from those encountered in other regulatory agencies.
Some of the striking differences that set the Tariff Commission.

While usually regarded as one of the" regulatory agencies," the Tariff Commission has no power to regulate. It
issues no orders, except procedural ones, such as those requiring the submission of information or the
attendance of witnesses, and the conclusion of its deliberations results, typically, in a recommendation to the
President, rather than a decision with operative force of its own.

NATIONAL ECONOMIC AND

DEVELOPMENT AUTHORITY (NEDA)
PAMBANSANG PANGASIWAAN SA KABUHAYAN AT PAGPAPAUNLAD

As the country’s highest socio-economic development planning and policy coordinating body,that ensures
plans and programs of various agencies in consonance with one another. It provides the strategic directions
that will guide government and the private sector in crafting development policies to attain sustainable
economic growth with equitable distribution of wealth.

Mission
National Economic and Development Authority’s mission is to formulate and fully integrated social and
economic policies, plans and programs to achieve the Filipino vision of a strongly rooted, comfortable, and
secure life for all.

Vision
NEDA envisions a country where public and private sectors perform respective roles efficiently such that
people have Equal access to opportunities, Inclusive Development, and Zero poverty.

Logo
The arrows represent the four major dimensions of development.
 Economic
 Social
 Political- Administrative
 Cultural
History
The National Economic and Development Authority traces its beginnings to the creation of its forerunner, the
NEC, under Commonwealth Act No. 2 that was approved by the National Assembly on 23 December 1935.
The NEC’s principal mandate was to advise the national government on the formulation and adoption of a
State economic program based on the policy of national independence. The Finance Secretary at that time
was appointed the acting Chairman. In 1943, during the Second World War, while the country was under
Japanese occupation, a National Planning Board was created under Executive Order No. 1, but this was
replaced by the Economic Planning Board created under EO No. 46 of 1944, tasked to recommend measures
for the economic development.

After the war, in response to the recommendation of the Government Reorganization Committee, the NEC
was reconstituted in 1947 under the Executive Order No. 94 of 1947, to serve as the government’s center of
national economic planning. However, a period of inactivity followed when NEC personnel were detailed to
the Philippine Council for United States Aid (PHILCUSA), which was organized in 1950 as part of the Quirino-
Foster Agreement on the United States assistance for the Philippine development.

A new National Economic Council was created under EO 119 of 1955, pursuant to RA997 of 1954, thereby
replace the old NEC, even as the PHILCUSA was abolished under the same EO 119. The new NEC now included
an Office of National Planning, Office of Foreign Aid Coordination, and the Office of Statistical Coordination
and Standards. In 1960 under RA2699, the membership of the NEC was increased. In 1962, the Program
Implement Agency, headed by a Director-General of Cabinet rank, was created under EO 17 to implement the
government’s socioeconomic program and to undertake economic planning as well.

Pursuant to RA 5435 of 1968, which authorized the Office of the President of the Philippines to reorganize the
executive department and the different government agencies, the Integrated Reorganization Plan of March
1972, was submitted to Congress. It provided for the creation of a National Economic Development Authority.
This was realized the following year with the issuance of Presidential Decree No. 107 dated 24 January 1973,
creating the National Economic and Development Authority (NEDA). With the creation of the NEDA, the
functions of various socioeconomic bodies created by past administrations were now integrated under once
government agency.

In 1987, the NEDA was reorganized under EO 230.

The National Historical Commission on the Philippines affirms NEDA’s founding date on December 23, 1935.

Various Planning Bodies

 Economic Planning Board
 Program Implementation Agency
 Presidential Economic Staff
 Other Ad Hoc Economic Bodies

Legal Basis
 Presidential Decree 1 (September 21, 1972), Integrated Reorganization Plan, organized the National
Economic Development Authority from the merger of the Presidential Economic Council and the
National Economic Staff.
  Presidential Decree No. 107 (January 24, 1973) provided for the activation of the existing National
Economic Development Authority into a National Economic and Development Authority, absorbing
thereby the NEDA as organized.
 Executive Order No. 230 (July 22, 1987) reorganized the NEDA to be composed of two separate and
distinct entities, the Board and the Secretariat.

7 Interagency Commitees
1. Infrastracure Committee
2. Investment Coordination Committee
3. Social Development Committee
4. Committee in Tariff and Related Matters
5. Regional Development Committee
6. National Land Use Committee
7. Development Budget Coordination Committee

Office Of The Socioeconomic Planning Secretary

 Planning And Policy Group
 Investment Programming Group
 Regional Development Group
 Corporate Affairs Group

NEDA Attached Agencies

 Philippine Statistics Authority (PSA)
The agency that serves as the central statistical authority of the Philippine government on the primary
data collection, prepares and conducts national censuses and surveys, gathering and publication of
sector statistics, consolidation of selected administrative recording systems, and compilation of
national accounts.
 Philippine Statistical Research and Training Institute (PSRTI)
The research and training arm of the Philippine Statistical System (PSS) that carries out its dual function
primarily for the development of statistical theories, concepts, and methodologies in support of a
statistical infrastructure that is compliant with the demands of national development.
 Philippine Institute for Development Studies (PIDS)
The Philippine government’s primary socioeconomic policy think tank. Since its establishment, PIDS has
been engaged in the conduct of policy-oriented studies to assist policymakers and planners in crafting
development policies, plans, and programs that are based on sound research evidence.
 Public-Private Partnership (PPP) Center
The central coordinating and monitoring agency for all PPP projects in the Philippines. It champions the
country’s PPP Program by enabling implementing agencies in all aspects of project preparation,
managing of the Project Development and Monitoring Facility (PDMF), providing projects advisory and
facilitation services, monitoring and empowering agencies through various capacity building activities.
 Tariff Commission (TC)
Principal and independent authority on tariff, trade remedy measures and competition policy. The TC
performs both governmental and quasi-judicial functions such as, adjudicate cases on the application
of trade remedies against imports, study the impact of tariff policies and programs on national
competitiveness and consumer welfare in line with the economic objectives of the government,
administer the Philippine tariff schedules and tariff nomenclatures, among others.
  Philippine National Volunteer Services Coordinating Agency (PNVSCA)
The government agency mandated to promote and coordinate volunteer programs and services in the
Philippines. PNVSCA closely works with other government agencies, non-government organizations,
the academe, the corporate group, the media and other partners in converging and linking the
different volunteering efforts and resources to align with national priorities and to assist the
marginalized sectors and communities. The agency also takes the lead in advocating and recognizing
the contributions of volunteers to nation-building and international cooperation.
 Commission on Population and Development (POPCOM)
Overall coordinating, monitoring, and policy making body of the population program. The POPCOM is
the lead agency promoting population activities.

COURT OF APPEALS
Legal Basis
Republic Act No. 1125 (June 16, 1954) created the Court of Tax Appeals, a special Court mandated to address
the adjudication of appeals involving internal revenue tax and customs cases of the Commissioner of Internal
Revenue and the Commissioner of Customs, respectively.

Republic Act No. 9282 (March 30, 2004) expanded the jurisdiction of the Court of Tax Appeals, elevated its
rank to the level of a collegiate court with special jurisdiction, and enlarged its membership to a Presiding
Justice and five Associate Justices.

Mandate
The Court of Appeals (CTA) has exclusive appellate jurisdiction to review by appeal decisions or inaction of the
Commissioner of Internal Revenue or of the Commissioner of Customs involving their respective
responsibilities under the National Internal Revenue Code and the Customs Law, respectively, and those of the
Secretary of Finance in automatic review cases where the decisions of the Commissioner of Internal Revenue
or of Customs favorable to the taxpayer are elevated to the Finance Secretary; also those of the Secretary of
Trade and Industry, in the case of nonagricultural product, commodity or article; or the Secretary of
Agriculture, in the case of agricultural product, commodity or article, in connection with the imposition of the
Anti-Dumping Duty, Countervailing and Safeguard Duty. This original and appellate jurisdiction includes
criminal cases involving violations of the National Internal Revenue Code or the Tariff and Customs Code;
decisions of Regional Trial Courts (RTCs) in local tax cases, and of the Central Board of Assessment Appeals
(CBAA) in cases involving the assessment and taxation of real property; and collection of taxes the assessment
of which has already become final.

Creation, Elevation and Expansion

The Court of Tax Appeals (CTA) was created on June 16, 1954, through the enactment of Republic Act No.
1125 (R.A. 1125). Considering its limited jurisdiction then, it had only three (3) Judges, which at present is
equivalent to one (1) Division.

With the passage of Republic Act Number 9282 (R.A. 9282) on April 23, 2004, the CTA became an appellate
Court, equal in rank to the Court of Appeals. The composition of the Court increased to six (6) Justices with
one (1) Presiding Justice and five (5) Associate Justices.
It shall sit En Banc, or in two (2) Divisions with three (3) Justices each. A decision of a division of the CTA may
be appealed to the CTA En Banc, and the latter's decision may further be appealed by verified petition for
certiorari to the Supreme Court.

However, Republic Act Number 9503 was enacted on June 12, 2008 and took effect on July 5, 2008. This
further enlarged the organizational structure of the CTA by creating a Third Division and providing for three (3)
additional Justices. Hence, the CTA is now composed of one (1) Presiding Justice and eight (8) Associate
Justices. The CTA may sit en banc or in three (3) divisions with each division consisting of three (3) Justices. The
CTA, as one of the Courts comprising the Philippine Judiciary, is under the supervision of the Supreme Court.

Expanded Jurisdiction
Through the enactment of Republic Act No. 9282, the jurisdiction of the CTA has been expanded to include not
only civil tax cases but also cases that are criminal in nature, as well as local tax cases, property taxes and final
collection of taxes.

Pursuant to the provisions of Republic Act No. 1125 and other laws prior to R.A. 9282, the Court of Tax
Appeals retains exclusive appellate jurisdiction to review by appeal, the following:
1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of
internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters
arising under the National Internal Revenue Code or other law or part of law administered by the
Bureau of Internal Revenue;
2. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other
money charges; seizure, detention or release of property affected; fines, forfeitures or other penalties
imposed in relation thereto; or other matters arising under the Customs Law or other law or part of law
administered by the Bureau of Customs [Rep. Act. No. 1125, (1954), Sec. 7];
3. In automatic review cases where such decisions of the Commission of Customs favorable to the
taxpayer is elevated to the Secretary of Finance (Sec. 2315, TCC); and
4. Decisions of the Secretary of Trade and Industry, in the case of non-agricultural product, commodity or
article, or the Secretary of Agriculture, in the case of agricultural product, commodity or article, in
connection with the imposition of the Anti-Dumping Duty, Countervailing and Safeguard Duty
[Republic Act Nos. 8751 and 8752, (1999) Sec. 301 (a) and (p), and Republic Act 8800].

Under Republic Act Number 9282, the CTA’s original appellate jurisdiction was expanded to include the
following:
1. Criminal cases involving violations of the National Internal Revenue Code and the Tariff and Customs
Code;
2. Decisions of the Regional Trial Courts (RTC) in local tax cases;
3. Decisions of the Central Board of Assessment Appeals (CBAA) in cases involving the assessment and
taxation of real property; and
4. Collection of internal revenue taxes and customs duties the assessment of which have already become
final.
 Republic Act No. 8502
AN ACT TO PROMOTE THE DEVELOPMENT OF THE JEWELRY MANUFACTURING INDUSTRY, PROVIDING
INCENTIVES THEREFOR AND FOR OTHER PURPOSES

Approved: February 13, 1998

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Title
This Act shall be known as the "Jewelry Industry Development Act of 1998."

Section 2. Declaration of policy

Recognizing that the jewelry industry has the potential for more employment generation, enhance tax
collection efficiency, increase the industry linkages with the other sectors of the economy, and to increase our
foreign exchange earnings through exports and import substitutes, it is hereby declared to be the policy of the
State to support, promote and encourage the growth and development of the predominantly, small and
medium scale jewelry industries. Toward this end, the State shall undertake to encourage the development of
the jewelry industry:

a. by promoting and encouraging local jewelers to join the formal sector by making the jewelry industry
sector a partner in the task of building up the small and medium enterprises through the establishment
of an adequate support structure and the creation of a business environment conducive to the
viability, legalization and development of the jewelry sector;

b. by adopting appropriate tax incentives and programs necessary for the acceleration and growth of the
industry; and

c. by promoting and institutionalizing the effective promotion and participation of associations of the
jewelry industry and cooperatives particularly in the advancement of the skills and craftsmanship of
Filipino workers therein.

Section 3. Development incentives

The following incentives shall be available to qualified jewelry enterprises in the jewelry industry:

a. Entitlement to zero (0) duty on imported raw materials which include precious metals, loose gems,
precious stones, jewelry parts, accessories and supplies for use by jewelry enterprise, as specifically
 mentioned in Chapter 5 of Sec. I, Chapter 12 of Sec. II, Chapters 25, 26 and 27 of Sec. V, Chapters 28,
34 and 38 of Sec. VI, Chapter 70 of Sec. XIII, Chapter 71 of Sec. XIV, Chapter 83 of Sec. XV, and Chapter
96 of Sec. XX of the Tariff and Customs Code, as amended;

b. Exemption from the imposition of excise tax on all goods commonly or commercially known as jewelry,
whether real or imitation pearls, precious and semi-precious stones and imitations thereof; all goods
made of, or ornamented, mounted or fitted with precious metals or imitations thereof, as specifically
mentioned in Sec. 150(a) of the National Internal Revenue Code of the Philippines, as amended;

c. Entitlement to zero (0) duty on imported capital equipment, including spare parts and tooling thereof
falling within Chapter 69 of Sec. XIII, Chapter 82 of Sec. XV, Chapters 84 and 85 of Sec. XVI, and Chapter
90 of Sec. XVIII of the Tariff and Customs Code, as amended;

d. Additional deduction from taxable income of fifty percent (50%) of expenses incurred in training
schemes approved by the appropriate agency and which shall be deductible during the financial year
the expenses were incurred;

e. Gold and silver sales by the Bangko Sentral ng Pilipinas to jewelry enterprises wider minimal margins;

f. Authority for jewelry enterprises to buy gold and silver directly from other sources;

g. Inclusion of locally-manufactured jewelry in the government's tourist duty free shops including the
promotion, advertisement and sale thereof; and

h. Jewelry enterprises availing of incentives provided under this Act shall still be eligible to incentives
provided by other special laws such as Republic Act No. 7844 (Export Development Act of 1994),
Republic Act No. 7916 (Special Economic Zone Act of 1995), Executive Order 226 (BOI Omnibus
Investments Code), among others: Provided, That the activity is export-oriented and that there is no
double availment of the same incentives.

Section 4. Eligibility for government assistance

To qualify for the assistance, counselling and other incentives envisioned in this Act, jewelry enterprises
availing of the same must be duly registered with the appropriate government agencies as presently provided
by law.

Jewelry enterprise as used in this Act shall refer to any enterprise engaged in any aspect in the manufacture of
goods commonly or commercially known as fine and imitation jewelry including those producing, cutting and
polishing, shaping, refining, forming or fabricating real or imitation pearls, precious and semi-precious stones
and imitations thereof, goods made of precious metal and imitations thereof, and other raw materials and
parts used in the manufacture of jewelry.

Section 5. Implementing body

The Department of Trade and Industry shall monitor, oversee, supervise and take responsibility for the
implementation of this Act and shall submit to Congress a yearly report thereof.

Section 6. Implementing rules and regulations

Within thirty (30) days from approval of this Act, the Secretary of Trade and Industry shall upon prior
consultation with the Secretary of Finance, promulgate the rules and regulations implementing the provisions
of this Act.

Section 7. Separability clause

The provisions of this Act are hereby declared to be separable. If any provisions thereof is declared
unconstitutional, the remaining provisions thereof not otherwise affected shall remain in full force and effect.

Section 8. Repealing clause

The second paragraph of said sub Sec. "q" of Sec. 105 of the Tariff and Customs Code of the Philippines, and
laws, executive orders, rules and regulations or parts thereof inconsistent herewith are hereby repealed or
modified accordingly.

Section 9. Effectivity
This Act shall take effect fifteen (15) days after its publication in two (2) newspapers of general circulation.

REPUBLIC ACT No. 8550

AN ACT PROVIDING FOR THE DEVELOPMENT, MANAGEMENT AND CONSERVATION OF THE FISHERIES AND
AQUATIC RESOURCES, INTEGRATING ALL LAWS PERTINENT THERETO, AND FOR OTHER PURPOSES

Begun and held in Metro Manila on Tuesday the 17th day of February, 1988

Approved on February 25, 1998

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled

SECTION 1. Title
This Act shall be known as “The Philippine Fisheries Code of 1998.”

CHAPTER I: Declaration of Policy and Definitions

SECTION 2. Declaration of Policy

It is hereby declared the policy of the State:

a. to achieve food security as the overriding consideration in the utilization, management, development,
conservation and protection of fishery resources in order to provide the food needs of the population.
A flexible policy towards the attainment of food security shall be adopted in response to changes in
 demographic trends for fish, emerging trends in the trade of fish and other aquatic products in
domestic and international markets, and the law of supply and demand;

b. to limit access to the fishery and aquatic resources of the Philippines for the exclusive use and
enjoyment of Filipino citizens;

c. to ensure the rational and sustainable development, management and conservation of the fishery and
aquatic resources in Philippine waters including the Exclusive Economic Zone (EEZ) and in the adjacent
high seas, consistent with the primordial objective of maintaining a sound ecological balance,
protecting and enhancing the quality of the environment;

d. to protect the rights of fisherfolk, especially of the local communities with priority to municipal
fisherfolk, in the preferential use of the municipal waters. Such preferential use, shall be based on, but
not limited to, Maximum Sustainable Yield (MSY) or Total Allowable Catch (TAC) on the basis of
resources and ecological conditions, and shall be consistent with our commitments under international
treaties and agreements;
e. to provide support to the fishery sector, primarily to the municipal fisherfolk, including women and
youth sectors, through appropriate technology and research, adequate financial, production,
construction of post-harvest facilities, marketing assistance, and other services. The protection of
municipal fisherfolk against foreign intrusion shall extend to offshore fishing grounds. Fish workers
shall receive a just share for their labor in the utilization of marine and fishery resources;

f. to manage fishery and aquatic resources, in a manner consistent with the concept of an integrated
coastal area management in specific natural fishery management areas, appropriately supported by
research, technical services and guidance provided by the State; and

g. to grant the private sector the privilege to utilize fishery resources under the basic concept that the
grantee, licensee or permittee thereof shall not only be a privileged beneficiary of the State but also
active participant and partner of the Government in the sustainable development, management,
conservation and protection of the fishery and aquatic resources of the country.

The state shall ensure the attainment of the following objectives of the fishery sector:

1. Conservation, protection and sustained management of the country’s fishery and aquatic resources;

2. Poverty alleviation and the provision of supplementary livelihood among municipal fisherfolk;

3. Improvement of productivity of aquaculture within ecological limits;

4. Optimal utilization of offshore and deep-sea resources; and

5. Upgrading of post-harvest technology.

SECTION 3. Application of its Provisions

The provisions of this Code shall be enforced in:

a. all Philippine waters including other waters over which the Philippines has sovereignty and jurisdiction,
and the country’s 200-nautical mile Exclusive Economic Zone (EEZ) and continental shelf;
 b. all aquatic and fishery resources whether inland, coastal or offshore fishing areas, including but not
limited to fishponds, fish pens/cages; and

c. all lands devoted to aquaculture, or businesses and activities relating to fishery, whether private or
public lands.

SECTION 4. Definition of Terms

As used in this Code, the following terms and phrases shall mean as follows:

1. Ancillary Industries — firms or companies related to the supply, construction and maintenance of
fishing vessels, gears, nets and other fishing paraphernalia; fishery machine shops; and other facilities
such as hatcheries, nurseries, feed plants, cold storage and refrigeration, processing plants and other
pre-harvest and post-harvest facilities.

2. Appropriate Fishing Technology — adaptable technology, both in fishing and ancillary industries, that is
ecologically sound, locally source-based and labor intensive.

3. Aquaculture — fishery operations involving all forms of raising and culturing fish and other fishery
species in fresh, brackish and marine water areas.

4. Aquatic Pollution — the introduction by human or machine, directly or indirectly, of substances or

energy to the aquatic environment which result or is likely to result in such deleterious effects as to
harm living and non-living aquatic resources, pose potential and/or real hazard to human health,
hindrance to aquatic activities such as fishing and navigation, including dumping/disposal of waste and
other marine litters, discharge of petroleum or residual products of petroleum or carbonaceous
materials/substances, and other, radioactive, noxious or harmful liquid, gaseous or solid substances,
from any water, land or air transport or other human-made structure. Deforestation, unsound
agricultural practices such as the use of banned chemicals and excessive use of chemicals, intensive
use of artificial fish feed, and wetland conversion, which cause similar hazards and deleterious effects
shall also constitute aquatic pollution.

5. Aquatic Resources — includes fish, all other aquatic flora and fauna and other living resources of the
aquatic environment, including, but not limited to, salt and corals.

6. Artificial Reefs — any structure of natural or man-made materials placed on a body of water to serve as
shelter and habitat, source of food, breeding areas for fishery species and shoreline protection.

7. Catch Ceilings — refer to the annual catch limits allowed to be taken, gathered or harvested from any
fishing area in consideration of the need to prevent overfishing and harmful depletion of breeding
stocks of aquatic organisms.

8. Closed Season — the period during which the taking of specified fishery species by a specified fishing
gear is prohibited in a specified area or areas in Philippine waters.

9. Coastal Area/Zone — is a band of dry land and adjacent ocean space (water and submerged land) in
which terrestrial processes and uses directly affect oceanic processes and uses, and vice versa; its
geographic extent may include areas within a landmark limit of one (1) kilometer from the shoreline at
 high tide to include mangrove swamps, brackish water ponds, nipa swamps, estuarine rivers, sandy
beaches and other areas within a seaward limit of 200 meters isobath to include coral reefs, algal flats,
seagrass beds and other soft-bottom areas.

10. Commercial Fishing — the taking of fishery species by passive or active gear for trade, business & profit
beyond subsistence or sports fishing, to be further classified as:

a. Small scale commercial fishing — fishing with passive or active gear utilizing fishing vessels of
3.1 gross tons (GT) up to twenty (20) GT;

b. Medium scale commercial fishing — fishing utilizing active gears and vessels of 20.1 GT up to
one hundred fifty (150) GT; and

c. Large commercial fishing — fishing utilizing active gears and vessels of more than one hundred
fifty (150) GT.

11. Commercial Scale — a scheme of producing a minimum harvest per hectare per year of milkfish or
other species including those raised in pens, cages, and tanks to be determined by the Department in
consultation with the concerned sectors;

12. Coral — the hard calcareous substance made up of the skeleton of marine coelenterate polyps which
include reefs, shelves and atolls or any of the marine coelenterate animals living in colonies where
their skeletons form a stony mass. They include: (a) skeletons of anthozoan coelenterates
characterized as having a rigid axis of compact calcareous or horny spicules, belonging to the genus
corallium as represented by the red, pink, and white corals which are considered precious corals; (b)
skeletons of anthozoan coelenterates characterized by thorny, horny axis such as the antipatharians
represented by the black corals which are considered semi-precious corals; and (c) ordinary corals
which are any kind of corals that are not precious nor semi-precious.

13. Coral Reef — a natural aggregation of coral skeleton, with or without living coral polyps, occurring in
intertidal and subtidal marine waters.

14. Demarcated Areas — boundaries defined by markers and assigned exclusively to specific individuals or
organizations for certain specified and limited uses such as:

a. Aquaculture, sea ranching and sea farming;

b. Fish aggregating devices;

c. Fixed and passive fishing gears; and

d. Fry and fingerlings gathering.

15. Department — shall mean the Department of Agriculture.

16. Electrofishing — the use of electricity generated by batteries, electric generators and other source of
electric power to kill, stupefy, disable or render unconscious fishery species, whether or not the same
are subsequently recovered.
17. Endangered Rare and/or Threatened Species — aquatic plants, animals, including some varieties of
corals and sea shells in danger of extinction as provided for in existing fishery laws, rules and
regulations or in the Protected Areas and Wildlife Bureau of the Department of Environment and
Natural Resources (DENR) and in the Convention on the International Trade of Endangered Species of
Flora and Fauna (CITES).

18. Exclusive Economic Zone (EEZ) — an area beyond and adjacent to the territorial sea which shall not
extend beyond 200 nautical miles from the baselines as defined under existing laws.

19. FARMCs — the Fisheries and Aquatic Resources Management Councils.

20. Farm-to-Market Roads — shall include roads linking the fisheries production sites, coastal landing
points and other post-harvest facilities to major market and arterial roads and highways.

21. Fine Mesh Net — net with mesh size of less than three centimeters (3 cm.) measured between two (2)
opposite knots of a full mesh when stretched or as otherwise determined by the appropriate
government agency.

22. Fish and Fishery/Aquatic Products — include not only finfish but also mollusks, crustaceans,
echinoderms, marine mammals, and all other species of aquatic flora and fauna and all other products
of aquatic living resources in any form.

23. Fish Cage — refers to an enclosure which is either stationary or floating made up of nets or screens
sewn or fastened together and installed in the water with opening at the surface or covered and held
in a place by wooden/bamboo posts or various types of anchors and floats.

24. Fish Corral or “Baklad” — a stationary weir or trap devised to intercept and capture fish consisting of
rows of bamboo stakes, plastic nets and other materials fenced with split bamboo mattings or wire
mattings with one or more enclosures, usually with easy entrance but difficult exit, and with or without
leaders to direct the fish to the catching chambers, purse or bags.

25. Fish fingerlings — a stage in the life cycle of the fish measuring to about 6-13 cm. depending on the
species.
26. Fish fry — a stage at which a fish has just been hatched usually with sizes from 1-2.5 cm.

27. Fish pen — an artificial enclosure constructed within a body of water for culturing fish and
fishery/aquatic resources made up of poles closely arranged in an enclosure with wooden materials,
screen or nylon netting to prevent escape of fish.

28. Fisherfolk — people directly or personally and physically engaged in taking and/or culturing and
processing fishery and/or aquatic resources.

29. Fisherfolk Cooperative — a duly registered association of fisherfolk with a common bond of interest,
who have voluntarily joined together to achieve a lawful common social or economic end, making
equitable contribution to the capital requirement and accepting a fair share of the risks and benefits of
the undertakings in accordance with universally accepted cooperative principles.
30. Fisherfolk Organization — an organized group, association, federation, alliance or an institution of
fisherfolk which has at least fifteen (15) members, a set of officers, a constitution and by-laws, an
organizational structure and a program of action.

31. Fisheries — refers to all activities relating to the act or business of fishing, culturing, preserving,
processing, marketing, developing, conserving and managing aquatic resources and the fishery areas,
including the privilege to fish or take aquatic resource thereof.

32. Fish Pond — a land-based facility enclosed with earthen or stone material to impound water for
growing fish.

33. Fishing Boat/Gear License — a permit to operate specific types of fishing boat/gear for specific
duration in areas beyond municipal waters for demersal or pelagic fishery resources.

34. Fishery Management Areas — a bay, gulf, lake or any other fishery area which may be delineated for
fishery resource management purposes.

35. Fishery Operator — one who owns and provides the means including land, labor, capital, fishing gears
and vessels, but does not personally engage in fishery.

36. Fishery Refuge and Sanctuaries — a designated area where fishing or other forms of activities which
may damage the ecosystem of the area is prohibited and human access may be restricted.

37. Fishery Reserve — a designated area where activities are regulated and set aside for educational and
research purposes.

38. Fishery Species — all aquatic flora and fauna including, but not restricted to, fish, algae, coelenterates,
mollusks, crustaceans, echinoderms and cetaceans.

39. Fishing — the taking of fishery species from their wild state of habitat, with or without the use of
fishing vessels.

40. Fishing gear — any instrument or device and its accessories utilized in taking fish and other fishery
species.

a. Active fishing gear — is a fishing device characterized by gear movements, and/or the pursuit of
the target species by towing, lifting, and pushing the gears, surrounding, covering, dredging,
pumping and scaring the target species to impoundments; such as, but not limited to, trawl,
purse seines, Danish seines, bag nets, paaling, drift gill net and tuna longline.

b. Passive fishing gear — is characterized by the absence of gear movements and/or the pursuit of
the target species; such as, but not limited to, hook and line, fishpots, traps and gill nets across
the path of the fish.

41. Fishing vessel — any boat, ship or other watercraft equipped to be used for taking of fishery species or
aiding or assisting one (1) or more vessels in the performance of any activity relating to fishing,
including, but not limited to, preservation, supply, storage, refrigeration, transportation and/or
processing.
42. Fishing with Explosives — the use of the dynamite, other explosives or other chemical compounds that
contain combustible elements or ingredients which upon ignition by friction, concussion, percussion or
detonation of all or parts of the compound, will kill, stupefy, disable or render unconscious any fishery
species. It also refers to the use of any other substance and/or device which causes an explosion that is
capable of producing the said harmful effects on any fishery species and aquatic resources and capable
of damaging and altering the natural habitat.

43. Fishing with Noxious or Poisonous Substances — the use of any substance, plant extracts or juice
thereof, sodium cyanide and/or cyanide compounds or other chemicals either in a raw or processed
form, harmful or harmless to human beings, which will kill, stupefy, disable or render unconscious any
fishery species and aquatic resources and capable of damaging and altering the natural habitat.

44. Fish worker — a person regularly or not regularly employed in commercial fishing and related
industries, whose income is either in wage, profit-sharing or stratified sharing basis, including those
working in fish pens, fish cages, fish corrals/traps, fishponds, prawn farms, sea farms, salt beds, fish
ports, fishing boat or trawlers, or fish processing and/or packing plants. Excluded from this category
are administrators, security guards and overseers.

45. Food Security — refers to any plan, policy or strategy aimed at ensuring adequate supplies of
appropriate food at affordable prices. Food security may be achieved through self-sufficiency (i.e.
ensuring adequate food supplies from domestic production), through self-reliance (i.e. ensuring
adequate food supplies through a combination of domestic production and importation), or through
pure importation.

46. Foreshore Land — a string of land margining a body of water; the part of a seashore between the low-
water line usually at the seaward margin of a low tide terrace and the upper limit of wave wash at high
tide usually marked by a beach scarp or berm.

47. Fully-developed Fishpond Area — a clean leveled area enclosed by dikes, at least one foot higher than
the highest floodwater level in the locality and strong enough to resist pressure at the highest flood
tide; consists of at least a nursery pond, a transition pond, a rearing pond or a combination of any or all
said classes of ponds, and a functional water control system and producing in a commercial scale.

48. Gross Tonnage — includes the underdeck tonnage, permanently enclosed spaces above the tonnage
deck, except for certain exemptions. In broad terms, all the vessel’s ‘closed-in’ spaces expressed in
volume terms on the bases of one hundred cubic feet (that equals one gross ton).

49. Inland Fishery — the freshwater fishery and brackish water fishponds.

50. Lake — an inland body of water, an expanded part of a river, a reservoir formed by a dam, or a lake
basin intermittently or formerly covered by water.

51. Limited Access — a fishery policy by which a system of equitable resource and allocation is established
by law through fishery rights granting and licensing procedure as provided by this Code.

52. Mangroves — a community of intertidal plants including all species of trees, shrubs, vines and herbs
found on coasts, swamps, or border of swamps.
53. Maximum Sustainable Yield (MSY) — is the largest average quantity of fish that can be harvested from
a fish stocks/resource within a period of time (e.g. one year) on a sustainable basis under existing
environmental conditions.

54. Migratory species — refers to any fishery species which in the course of their life could travel from
freshwater to marine water or vice versa, or any marine species which travel over great distances in
waters of the ocean as part of their behavioral adaptation for survival and speciation:

a. Anadromous species — marine fishes which migrate to freshwater areas to spawn;

b. Catadromous species — freshwater fishes which migrate to marine areas to spawn.

55. Monitoring, control and surveillance —

a. Monitoring — the requirement of continuously observing: (1) fishing effort which can be
expressed by the number of days or hours of fishing, number of fishing gears and number of
fisherfolk; (2) characteristics of fishery resources; and (3) resource yields (catch);

b. Control — the regulatory conditions (legal framework) under which the exploitation, utilization
and disposition of the resources may be conducted; and

c. Surveillance — the degree and types of observations required to maintain compliance with
regulations.

56. Municipal fisherfolk — persons who are directly or indirectly engaged in municipal fishing and other
related fishing activities.

57. Municipal fishing — refers to fishing within municipal waters using fishing vessels of three (3) gross
tons or less, or fishing not requiring the use of fishing vessels.

58. Municipal waters — include not only streams, lakes, inland bodies of water and tidal waters within the
municipality which are not included within the protected areas as defined under Republic Act No. 7586
(The NIPAS Law), public forest, timber lands, forest reserves or fishery reserves, but also marine waters
included between two (2) lines drawn perpendicular to the general coastline from points where the
boundary lines of the municipality touch the sea at low tide and a third line parallel with the general
coastline including offshore islands and fifteen (15) kilometers from such coastline. Where two (2)
municipalities are so situated on opposite shores that there is less than thirty (30) kilometers of marine
waters between them, the third line shall be equally distant from opposite shore of the respective
municipalities.

59. Non-governmental organization (NGO) — an agency, institution, a foundation or a group of persons

whose purpose is to assist peoples organizations/associations in various ways including, but not limited
to, organizing, education, training, research and/or resource accessing.

60. Payao — a fish aggregating device consisting of a loating raft anchored by a weighted line with
suspended materials such as palm fronds to attract pelagic and schooling species common in deep
waters.

61. Pearl Farm Lease — public waters leased for the purpose of producing cultured pearls.
62. People’s Organization — a bona fide association of citizens with demonstrated capacity to promote the
public interest and with identifiable leadership, membership and structure. Its members belong to a
sector/s who voluntarily band themselves together to work for and by themselves for their own
upliftment, development and greater good.

63. Person — natural or juridical entities such as individuals, associations, partnership, cooperatives or
corporations.

64. Philippine waters — include all bodies of water within the Philippine territory such as lakes, rivers,
streams, creeks, brooks, ponds, swamps, lagoons, gulfs, bays and seas and other bodies of water now
existing or which may hereafter exist in the provinces, cities, municipalities, and barangays and the
waters around, between and connecting the islands of the archipelago regardless of their breadth and
dimensions, the territorial sea, the sea beds, the insular shelves, and all other waters over which the
Philippines has sovereignty and jurisdiction including the 200-nautical miles Exclusive Economic Zone
and the continental shelf.

65. Post-harvest facilities — these facilities include, but are not limited to, fishport, fishlanding, ice plants
and cold storages, fish processing plants.

66. Purse Seine — a form of encircling net having a line at the bottom passing through rings attached to
the net, which can be drawn or pursed. In general, the net is set from a boat or pair of boats around
the school of fish. The bottom of the net is pulled closed with the purse line. The net is then pulled
aboard the fishing boat or boats until the fish are concentrated in the bunt or fish bag.

67. Resource Rent — the difference between the value of the products produced from harvesting a
publicly owned resource less the cost of producing it, where cost includes the normal return to capital
and normal return to labor.

68. Sea farming — the stocking of natural or hatchery-produced marine plants or animals, under
controlled conditions, for purposes of rearing and harvesting, but not limited to commercially-
important fishes, mollusks (such as pearl and giant clam culture), including seaweeds and seagrasses.

69. Sea ranching — the release of the young of fishery species reared in hatcheries and nurseries into
natural bodies of water for subsequent harvest at maturity or the manipulation of fishery habitat, to
encourage the growth of the wild stocks.

70. Secretary — the Secretary of the Department of Agriculture.

71. Superlight — also called magic light, is a type of light using halogen or metal halide bulb which may be
located above the sea surface or submerged in the water. It consists of a ballast, regulator, electric
cable and socket. The source of energy comes from a generator, battery or dynamo coupled with the
main engine.

72. Total Allowable Catch (TAC) — the maximum harvest allowed to be taken during a given period of time
from any fishery area, or from any fishery species or group of fishery species, or a combination of area
and species and normally would not exceed the MSY.
 73. Trawl — an active fishing gear consisting of a bag shaped net with or without otter boards to open its
opening which is dragged or towed along the bottom or through the water column to take fishery
species by straining them from the water, including all variations and modifications of trawls (bottom,
mid-water, and baby trawls) and tow nets.

CHAPTER II
Utilization, Management, Development, Conservation and Allocation
System of Fisheries and Aquatic Resources

SECTION 5. Use of Philippine Waters

The use and exploitation of the fishery and aquatic resources in Philippine waters shall be reserved exclusively
to Filipinos: Provided, however, That research and survey activities may be allowed under strict regulations,
for purely research, scientific, technological and educational purposes that would also benefit Filipino citizens.

SECTION 6. Fees and Other Fishery Charges.

The rentals for fishpond areas covered by the Fishpond Lease Agreement (FLA) and license fees for
Commercial Fishing Boat Licenses (CFBL) shall be set at levels that reflect resource rent accruing from the
utilization of resources and shall be determined by the Department: Provided, That the Department shall also
prescribe fees and other fishery charges and issue the corresponding license or permit for fishing gear, fishing
accessories and other fishery activities beyond the municipal waters: Provided, further, That the license fees
of fishery activity in municipal waters shall be determined by the Local Government Units (LGUs) in
consultation with the FARMCs. The FARMCs may also recommend the appropriate license fees that will be
imposed.

SECTION 7. Access to Fishery Resources

The Department shall issue such number of licenses and permits for the conduct of fishery activities subject to
the limits of the MSY of the resource as determined by scientific studies or best available evidence. Preference
shall be given to resource users in the local communities adjacent or nearest to the municipal waters.

SECTION 8. Catch Ceiling Limitations

The Secretary may prescribe limitations or quota on the total quantity of fish captured, for a specified period
of time and specified area based on the best available evidence. Such a catch ceiling may be imposed per
species of fish whenever necessary and practicable: Provided, however, That in municipal waters and fishery
management areas, and waters under the jurisdiction of special agencies, catch ceilings may be established
upon the concurrence and approval or recommendation of such special agency and the concerned LGU in
consultation with the FARMC for conservation or ecological purposes.

SECTION 9. Establishment of Closed Season

The Secretary may declare, through public notice in at least two (2) newspapers of general circulation or in
public service announcements, whichever is applicable, at least five (5) days before the declaration, a closed
season in any or all Philippine waters outside the boundary of municipal waters and in bays, for conservation
and ecological purposes. The Secretary may include waters under the jurisdiction of special agencies,
municipal waters and bays, and/or other areas reserved for the use of the municipal fisherfolk in the area to
be covered by the closed season: Provided, however, That this shall be done only upon the concurrence and
approval or recommendation of such special agency and the concerned LGU and FARMC: Provided, further,
That in municipal waters, fishery management areas and other areas reserved for the use of the municipal
fisherfolk, closed season may be established by the concerned LGU in consultation with the FARMC for
conservation or ecological purposes. The FARMCs may also recommend the establishment of closed seasons in
municipal waters, fisheries management and other areas reserved for the use of the municipal fisherfolk.

SECTION 10. Introduction of Foreign Aquatic Species

No foreign finfish, mollusk, crustacean or aquatic plants shall be introduced in Philippine waters without a
sound ecological, biological and environmental justification based on scientific studies subject to the bio-safety
standard as provided for by existing laws: Provided, however, That the Department may approve the
introduction of foreign aquatic species for scientific/research purposes.

SECTION 11. Protection of Rare, Threatened and Endangered Species

The Department shall declare closed seasons and take conservation and rehabilitation measures for rare,
threatened and endangered species, as it may determine, and shall ban the fishing and/or taking of rare,
threatened and/or endangered species, including their eggs/offspring as identified by existing laws in
concurrence with concerned government agencies.

SECTION 12. Environmental Impact Statement (EIS)

All government agencies as well as private corporations, firms and entities who intend to undertake activities
or projects which will affect the quality of the environment shall be required to prepare a detailed
Environmental Impact Statement (EIS) prior to undertaking such development activity. The preparation of the
EIS shall form an integral part of the entire planning process pursuant to the provisions of Presidential Decree
No. 1586 as well as its implementing rules and regulations.

SECTION 13. Environmental Compliance Certificate (ECC)

All Environmental Impact Statements (EIS) shall be submitted to the Department of Environment and Natural
Resources (DENR) for review and evaluation. No person, natural or juridical, shall undertake any development
project without first securing an Environmental Compliance Certificate (ECC) from the Secretary of the DENR.

SECTION 14. Monitoring, Control and Surveillance of Philippine Waters

A monitoring, control and surveillance system shall be established by the Department in coordination with
LGUs, FARMCs, the private sector and other agencies concerned to ensure that the fisheries and aquatic
resources in Philippine waters are judiciously and wisely utilized and managed on a sustainable basis and
conserved for the benefit and enjoyment exclusively of Filipino citizens.

SECTION 15. Auxiliary Invoices

All fish and fishery products must have an auxiliary invoice to be issued by the LGUs or their duly authorized
representatives prior to their transport from their point of origin to their point of destination in the Philippines
and/or export purposes upon payment of a fee to be determined by the LGUs to defray administrative costs
therefor.
ARTICLE I - Municipal Fisheries
SECTION 16. Jurisdiction of Municipal/City Government
The municipal/city government shall have jurisdiction over municipal waters as defined in this Code. The
municipal/city government, in consultation with the FARMC shall be responsible for the management,
conservation, development, protection, utilization, and disposition of all fish and fishery/aquatic resources
within their respective municipal waters.

The municipal/city government may, in consultation with the FARMC, enact appropriate ordinances for this
purpose and in accordance with the National Fisheries Policy. The ordinances enacted by the municipality and
component city shall be reviewed pursuant to Republic Act No. 7160 by the sanggunian of the province which
has jurisdiction over the same.

The LGUs shall also enforce all fishery laws, rules and regulations as well as valid fishery ordinances enacted by
the municipal/city council.

The management of contiguous fishery resources such as bays which straddle several municipalities, cities or
provinces, shall be done in an integrated manner, and shall not be based on political subdivisions of municipal
waters in order to facilitate their management as single resource systems. The LGUs which share or border
such resources may group themselves and coordinate with each other to achieve the objectives of integrated
fishery resource management. The Integrated Fisheries and Aquatic Resources Management Councils
(FARMCs) established under Section 76 of this Code shall serve as the venues for close collaboration among
LGUs in the management of contiguous resources.

SECTION 17. Grant of Fishing Privileges in Municipal Waters

The duly registered fisherfolk organizations/cooperatives shall have preference in the grant of fishery rights by
the Municipal/City Council pursuant to Section 149 of the Local Government Code: Provided, That in areas
where there are special agencies or offices vested with jurisdiction over municipal waters by virtue of special
laws creating these agencies such as, but not limited to, the Laguna Lake Development Authority and the
Palawan Council for Sustainable Development, said offices and agencies shall continue to grant permits for
proper management and implementation of the aforementioned structures.

SECTION 18. Users of Municipal Waters

All fishery related activities in municipal waters, as defined in this Code, shall be utilized by municipal fisherfolk
and their cooperatives/organizations who are listed as such in the registry of municipal fisherfolk.

The municipal or city government, however, may, through its local chief executive and acting pursuant to an
appropriate ordinance, authorize or permit small and medium commercial fishing vessels to operate within
the ten point one (10.1) to fifteen (15) kilometer area from the shoreline in municipal waters as defined
herein, provided, that all the following are met:

a. no commercial fishing in municipal waters with depth less than seven (7) fathoms as certified by the
appropriate agency;

b. fishing activities utilizing methods and gears that are determined to be consistent with national policies
set by the Department;

c. prior consultation, through public hearing, with the M/CFARMC has been conducted; and
 d. the applicant vessel as well as the shipowner, employer, captain and crew have been certified by the
appropriate agency as not having violated this Code, environmental laws and related laws.

In no case shall the authorization or permit mentioned above be granted for fishing in bays as determined by
the Department to be in an environmentally critical condition and during closed season as provided for in
Section 9 of this Code.

SECTION 19. Registry of Municipal Fisherfolk

The LGU shall maintain a registry of municipal fisherfolk, who are fishing or may desire to fish in municipal
waters for the purpose of determining priorities among them, of limiting entry into the municipal waters, and
of monitoring fishing activities an/or other related purposes: Provided, That the FARMC shall submit to the
LGU the list of priorities for its consideration.

Such list or registry shall be updated annually or as may be necessary, and shall be posted in barangay halls or
other strategic locations where it shall be open to public inspection, for the purpose of validating the
correctness and completeness of the list. The LGU, in consultation with the FARMCs, shall formulate the
necessary mechanisms for inclusion or exclusion procedures that shall be most beneficial to the resident
municipal fisherfolk. The FARMCs may likewise recommend such mechanisms.

The LGUs shall also maintain a registry of municipal fishing vessels by type of gear and other boat particulars
with the assistance of the FARMC.

SECTION 20. Fisherfolk Organizations and/or Cooperatives

Fisherfolk organizations/cooperatives whose members are listed in the registry of municipal fisherfolk, may be
granted use of demarcated fishery areas to engage in fish capture, mariculture and/or fish farming: Provided,
however, That an organization/cooperative member whose household is already in possession of a fishery
right other than for fish capture cannot enjoy the fishing rights granted to the organization or cooperative.

SECTION 21. Priority of Resident Municipal Fisherfolk

Resident municipal fisherfolk of the municipality concerned and their organizations/cooperatives shall have
priority to exploit municipal and demarcated fishery areas of the said municipality.

SECTION 22. Demarcated Fishery Right

The LGU concerned shall grant demarcated fishery rights to fishery organizations/cooperatives for mariculture
operation in specific areas identified by the Department.

SECTION 23. Limited Entry Into Overfished Areas

Whenever it is determined by the LGUs and the Department that a municipal water is overfished based on
available data or information or in danger of being overfished, and that there is a need to regenerate the
fishery resources in that water, the LGU shall prohibit or limit fishery activities in the said waters.

SECTION 24. Support to Municipal Fisherfolk

The Department and the LGUs shall provide support to municipal fisherfolk through appropriate technology
and research, credit, production and marketing assistance and other services such as, but not limited to
training for additional/supplementary livelihood.

SECTION 25. Rights and Privileges of Fish workers

The fish workers shall be entitled to the privileges accorded to other workers under the Labor Code, Social
Security System and other benefits under other laws or social legislation for workers: Provided, That fish
workers on board any fishing vessels engaged in fishing operations are hereby covered by the Philippine Labor
Code, as amended.

ARTICLE II - Commercial Fisheries

SECTION 26. Commercial Fishing Vessel License and Other Licenses
No person shall operate a commercial fishing vessel, pearl fishing vessel or fishing vessel for scientific,
research or educational purposes, or engage in any fishery activity, or seek employment as a fish worker or
pearl diver without first securing a license from the Department, the period of which shall be prescribed by
the Department: Provided, That no such license shall be required of a fishing vessel engaged in scientific,
research or educational purposes within Philippine waters pursuant to an international agreement of which
the Philippines is a signatory and which agreement defines the status, privileges and obligations of said vessel
and its crew and the non-Filipino officials of the international agency under which said vessel operates:
Provided, further, That members of the crew of a fishing vessel used for commercial fishing except the duly
licensed and/or authorized patrons, marine engineers, radio operators and cooks shall be considered as
fisherfolk: Provided, furthermore, That all skippers/master fishers shall be required to undertake an
orientation training on detection of fish caught by illegal means before they can be issued their fish worker
licenses: Provided, finally, That the large commercial fishing vessels license herein authorized to be granted
shall allow the licensee to operate only in Philippine waters seven (7) or more fathoms deep, the depth to be
certified by the NAMRIA, and subject to the conditions that may be stated therein and the rules and
regulations that may be promulgated by the Department.

SECTION 27. Persons Eligible for Commercial Fishing Vessel License

No commercial fishing vessel license shall be issued except to citizens of the Philippines, partnerships or to
associations, cooperatives or corporations duly registered in the Philippines at least sixty percent (60%) of the
capital stock of which is owned by Filipino citizens. No person to whom a license has been issued shall sell,
transfer or assign, directly or indirectly, his stock or interest therein to any person not qualified to hold a
license. Any such transfer, sale or assignment shall be null and void and shall not be registered in the books of
the association, cooperative or corporation.

For purposes of commercial fishing, fishing vessels owned by citizens of the Philippines, partnerships,
corporations, cooperatives or associations qualified under this section shall secure Certificates of Philippine
Registry and such other documents as are necessary for fishing operations from the concerned agencies:
Provided, That the commercial fishing vessel license shall be valid for a period to be determined by the
Department.

SECTION 28. Commercial Fishing Vessel Registration

The registration, documentation, inspection and manning of the operation of all types of fishing vessels plying
Philippine waters shall be in accordance with laws, rules and regulations.
SECTION 29. Registration and Licensing of Fishing Gears Used in Commercial
Fishing
Before a commercial fishing vessel holding a commercial fishing vessel license may begin fishing operations in
Philippine waters, the fishing gear it will utilize in fishing shall be registered and a license granted therefor. The
Department shall promulgate guidelines to implement this provision within sixty (60) days from approval of
this Code.

SECTION 30. Renewal of Commercial Boat License

The commercial fishing boat license shall be renewed every three (3) years.

The owner/operator of a fishing vessel has a period of sixty (60) days prior to the expiration of the license
within which to renew the same.

SECTION 31. Report of Transfer of Ownership

The owner/operator of a registered fishing vessel shall notify the Department in writing of the transfer of the
ownership of the vessel with a copy of such document within ten (10) days after its transfer to another person.

SECTION 32. Fishing by Philippine Commercial Fishing Fleet in International

Waters
Fishing vessels of Philippine registry may operate in international waters or waters of other countries which
allow such fishing operations: Provided, That they comply with the safety, manning and other requirements of
the Philippine Coast Guard, Maritime Industry Authority and other agencies concerned: Provided, however,
That they secure an international fishing permit and certificate of clearance from the Department: Provided,
further, That the fish caught by such vessels shall be considered as caught in Philippine waters and therefore
not subject to all import duties and taxes only when the same is landed in duly designated fish landings and
fish ports in the Philippines: Provided, furthermore, That landing ports established by canneries, seafood
processors and all fish landing sites established prior to the effectivity of this Code shall be considered
authorized landing sites: Provided, finally, That fishworkers on board Philippine registered fishing vessels
conducting fishing activities beyond the Philippine Exclusive Economic Zone are not considered as overseas
Filipino workers.

SECTION 33. Importation of Fishing Vessels or Construction of New Fishing

Boats
Prior to the importation of fishing vessels and the construction of new fishing vessels, the approval/clearance
of the Department must first be obtained.

SECTION 34. Incentives for Municipal and Small-Scale Commercial Fisherfolk

Municipal and small-scale commercial fisherfolk shall be granted incentives which shall include, but are not
limited to, the following:

a. at least ten percent (10%) of the credit and the guarantee funds of government financing institutions
shall be made available for post-harvest and marketing projects for the purpose of enhancing our
fisherfolk competitiveness by reducing post-harvest losses. Qualified projects shall include, but shall
 not be limited to, ice plants, cold storage, canning, warehouse, transport and other related
infrastructure projects and facilities; and

b. the Department shall undertake the following programs:

1. a capability-building program for targeted parties shall be developed by the Department to

promote greater bankability and credit worthiness of municipal and small-scale commercial fishers.
Such program shall include organizing activities, technology transfer, and skills training related to
commercial fishing as well as credit management. Groups and cooperatives organized under the
program shall have priority access over credit and guarantee funds established under this Code;
and

2. an information campaign shall be conducted to promote the capability building and credit
programs. The campaign shall ensure greater information dissemination and accessibility to
targeted fisherfolk.

SECTION 35. Incentives for Commercial Fishers to Fish Farther into the
Exclusive Economic Zone (EEZ)
In order to encourage fishing vessel operators to fish farther in the EEZ and beyond, new incentives for
improvement of fishing vessels and acquisition of fishing equipment shall be granted in addition to incentives
already available from the Board of Investments (BOI). Such incentives shall be granted subject to exhaustive
evaluation of resource and exploitation conditions in the specified areas of fishing operations. The incentive
shall include, but not be limited to:

a. long term loans supported by guarantee facilities to finance the building and acquisition and/or
improvement of fishing vessels and equipment;

b. commercial fishing vessel operators of Philippine registry shall enjoy a limited period of tax and duty
exemptions on the importation of fishing vessels not more than five (5) years old, equipment and
paraphernalia, the period of exemption and guidelines shall be fixed by the Department within ninety
(90) days from the effectivity of this Code;

c. commercial fishing operator of Philippine registry engaged in fisheries in the high seas shall be entitled
to duty and tax rebates on fuel consumption for commercial fisheries operations. Guidelines shall be
promulgated within ninety (90) days from the effectivity of this Code by the Department; and

d. all applicable incentives available under the Omnibus Investment Code of 1987: Provided, That the
fishing operation project is qualified for registration and is duly registered with the BOI.

SECTION 36. Complement of Fishing Vessels

Every commercial fishing vessel of Philippine registry when actually operated, shall be manned in accordance
with the requirements of the Philippine Merchant Marine rules and regulations.

SECTION 37. Medical Supplies and Life-Saving Devices

All fishing vessels shall be provided with adequate medical supplies and life-saving devices to be determined
by the Occupational Safety and Health Center: Provided, That a fishing vessel of twenty (20) GT or more shall
have as a member of its crew a person qualified as a first aider duly certified by the Philippine National Red
Cross.

SECTION 38. Reportorial Requirements

Each commercial fishing vessel shall keep a daily record of fish catch and spoilage, landing points, and quantity
and value of fish caught, and off-loaded for transshipment, sale and/or other disposal. Detailed information
shall be duly certified by the vessel’s captain and transmitted monthly to the officer or representative of the
Department, at the nearest designated landing point.

SECTION 39. Report of Meteorological and Other Data

All vessels and crafts passing navigational lanes or engaged in fisheries activity shall be required to contribute
to meteorological and other data, and shall assist the Department in documentation or reporting of
information vital to navigation and the fishing industry.

SECTION 40. Color Code and Radio Frequency

For administrative efficiency and enforcement of regulations, registered fishing vessels shall bear a color code
as may be determined by the Department and may be assigned a radio frequency specific and distinct to its
area of operation.

SECTION 41. Passage

Commercial and other passage not in the regular conduct of fisheries activity shall be made at designated
navigational lanes.

SECTION 42. Transshipment

Foreign fishing vessels wishing to avail of land, air and sea facilities available in the Philippines to transport
fishery products which are caught outside Philippine territorial waters to its final destination shall call only at
duly designated government-owned or -controlled regional fish port complexes after securing clearance from
the Department.

SECTION 43. Operation of Radio Communication Facilities on Board Fishing

Vessel
The Department shall promulgate guidelines in the operation of radio communication facilities on board
fishing vessels and the assignment of radio frequencies specific and distinct to area of operation in
coordination with the National Telecommunications Commission.

SECTION 44. Use of Superlight

The number and wattage of super lights used in commercial fishing vessels shall be regulated by the
Department: Provided, That the use of super lights is banned within municipal waters and bays.

ARTICLE III - Aquaculture

SECTION 45. Disposition of Public Lands for Fishery Purposes
Public lands such as tidal swamps, mangroves, marshes, foreshore lands and ponds suitable for fishery
operations shall not be disposed or alienated. Upon effectivity of this Code, FLA may be issued for public lands
that may be declared available for fishpond development primarily to qualified fisherfolk
cooperatives/associations: Provided, however, That upon the expiration of existing FLAs the current lessees
shall be given priority and be entitled to an extension of twenty-five (25) years in the utilization of their
respective leased areas. Thereafter, such FLAs shall be granted to any Filipino citizen with preference,
primarily to qualified fisherfolk cooperatives/associations as well as small and medium enterprises as defined
under Republic Act No. 8289: Provided, further, That the Department shall declare as reservation, portions of
available public lands certified as suitable for fishpond purposes for fish sanctuary, conservation, and
ecological purposes: Provided, finally, That two (2) years after the approval of this Act, no fish pens or fish
cages or fish traps shall be allowed in lakes.

SECTION 46. Lease of Fishponds

Fishpond leased to qualified persons and fisherfolk organizations/cooperatives shall be subject to the
following conditions:

a. Areas leased for fishpond purposes shall be no more than 50 hectares for individuals and 250 hectares
for corporations or fisherfolk organizations;

b. The lease shall be for a period of twenty-five (25) years and renewable for another twenty-five (25)
years: Provided, That in case of the death of the lessee, his spouse and/or children, as his heirs, shall
have preemptive rights to the unexpired term of his Fishpond Lease Agreement subject to the same
terms and conditions provided herein provided that the said heirs are qualified;

c. Lease rates for fishpond areas shall be determined by the Department: Provided, That all fees collected
shall be remitted to the National Fisheries Research and Development Institute and other qualified
research institutions to be used for aquaculture research development;

d. The area leased shall be developed and producing on a commercial scale within three (3) years from
the approval of the lease contract: Provided, however, That all areas not fully producing within five (5)
years from the date of approval of the lease contract shall automatically revert to the public domain
for reforestation;

e. The fishpond shall not be subleased, in whole or in part, and failure to comply with this provision shall
mean cancellation of FLA;

f. The transfer or assignment of rights to FLA shall be allowed only upon prior written approval of the
Department;

g. The lessee shall undertake reforestation for river banks, bays, streams, and seashore fronting the dike
of his fishpond subject to the rules and regulations to be promulgated thereon; and

h. The lessee shall provide facilities that will minimize environmental pollution, i.e., settling ponds,
reservoirs, etc: Provided, That failure to comply with this provision shall mean cancellation of FLA.

SECTION 47. Code of Practice for Aquaculture

The Department shall establish a code of practice for aquaculture that will outline general principles and
guidelines for environmentally-sound design and operation to promote the sustainable development of the
industry. Such Code shall be developed through a consultative process with the DENR, the fishworkers, FLA
holders, fishpond owners, fisherfolk cooperatives, small-scale operators, research institutions and the
academe, and other potential stakeholders. The Department may consult with specialized international
organizations in the formulation of the code of practice.

SECTION 48. Incentives and Disincentives for Sustainable Aquaculture

Practices
The Department shall formulate incentives and disincentives, such as, but not limited to, effluent charges, user
fees and negotiable permits, to encourage compliance with the environmental standards and to promote
sustainable management practices.

SECTION 49. Reversion of All Abandoned, Undeveloped or Underutilized

Fishponds
The DENR, in coordination with the Department, LGUs, other concerned agencies and FARMCs shall determine
which abandoned, underdeveloped or underutilized fishponds covered by FLAs can be reverted to their
original mangrove state and after having made such determination shall take all steps necessary to restore
such areas in their original mangrove state.

SECTION 50. Absentee Fishpond Lease Agreement Holders

Holders of fishpond lease agreements who have acquired citizenship in another country during the existence
of the FLA shall have their lease automatically cancelled and the improvements thereon to be forfeited in
favor of the government and disposed of in accordance with rules and regulations promulgated thereon.

SECTION 51. License to Operate Fish Pens, Fish Cages, Fish Traps and
Other Structures for the Culture of Fish and Other Fishery Products
Fish pens, fish cages, fish traps and other structures for the culture of fish and other fishery products shall be
constructed and shall operate only within established zones duly designated by LGUs in consultation with the
FARMCs concerned consistent with national fisheries policies after the corresponding licenses thereof have
been secured. The area to be utilized for this purpose for individual person shall be determined by the LGUs in
consultation with the concerned FARMC: Provided, however, That not over ten percent (10%) of the suitable
water surface area of all lakes and rivers shall be allotted for aquaculture purposes like fish pens, fish cages
and fish traps; and the stocking density and feeding requirement which shall be controlled and determined by
its carrying capacity: Provided, further, That fish pens and fish cages located outside municipal waters shall be
constructed and operated only within fish pen and fish cage belts designated by the Department and after
corresponding licenses therefor have been secured and the fees thereof paid.

SECTION 52. Pearl Farm Leases

The foregoing provisions notwithstanding, existing pearl farm leases shall be respected and allowed to operate
under the terms thereof. New leases may be granted to qualified persons who possess the necessary capital
and technology, by the LGUs having jurisdiction over the area.
SECTION 53. Grant of Privileges for Operations of Fish Pens, Cages,
Corrals/Traps and Similar Structures
No new concessions, licenses, permits, leases and similar privileges for the establishment or operation of fish
pens, fish cages, fish corrals/traps and other similar structures in municipal areas shall be granted except to
municipal fisherfolk and their organizations.

SECTION 54. Insurance for Fishponds, Fish Cages and Fish Pens
Inland fishponds, fish cages and fish pens shall be covered under the insurance program of the Philippine Crop
Insurance Corporation for losses caused by force majeure and fortuitous events.

SECTION 55. Non-Obstruction to Navigation

Nothing in the foregoing sections shall be construed as permitting the lessee, licensee, or permittee to
undertake any construction which will obstruct the free navigation in any stream, river, lakes, or bays flowing
through or adjoining the fish pens, fish cages, fish traps and fishponds, or impede the flow of the tide to and
from the area. Any construction made in violation hereof shall be removed upon the order of the Department
in coordination with the other government agencies concerned at the expense of the lessee, licensee, or
occupants thereof, whenever applicable. The Department shall within thirty (30) days after the effectivity of
this Code formulate and implement rules and regulations for the immediate dismantling of existing
obstruction to navigation.

SECTION 56. Non-Obstruction to Defined Migration Paths

Nothing in the foregoing sections shall be construed as permitting the lessee, permittee, or licensee to
undertake any construction which will obstruct any defined migration path of migratory fish species such as
river mouths and estuaries within a distance determined by the concerned LGUs in consultation with and upon
the recommendation of the FARMCs.

SECTION 57. Registration of Fish Hatcheries and Private Fishponds, etc

All fish hatcheries, fish breeding facilities and private fishponds must be registered with the LGUs which shall
prescribe minimum standards for such facilities in consultation with the Department: Provided, That the
Department shall conduct a yearly inventory of all fishponds, fish pens and fish cages whether in public or
private lands: Provided, further, That all fishpond, fish pens and fish cage operators shall annually report to
the Department the type of species and volume of production in areas devoted to aquaculture.

ARTICLE IV - Post-Harvest Facilities, Activities and Trades

SECTION 58. Comprehensive Post-harvest and Ancillary Industries Plan
The Department shall conduct a regular study of fisheries post-harvest operations and ancillary industries, in
the formulation of a comprehensive plan for post-harvest and ancillary industries. It shall take into account
among others, the following:

a. detailed and clear guidelines on the distribution, construction, maintenance and use of post-harvest
infrastructure facilities;

b. extension of credit and incentives for post-harvest operations;

 c. promotion and strengthening of semi-processing, processing and handling;

d. development of domestic fishmeal industry;

e. development of fisheries ship-building and repair as a viable industry;

f. development and strengthening of marketing facilities and activities, including the pricing system, with
emphasis on collective marketing and the elimination of middlemen;

g. increased participation of cooperatives and non-governmental organizations in post-harvest operations

and ancillary industries; and

h. integration of fisheries post-harvest operations into the national fisheries plan.

SECTION 59. Establishment of Post-Harvest Facilities for Fishing

Communities
The LGUs shall coordinate with the private sector and other concerned agencies and FARMCs in the
establishment of post-harvest facilities for fishing communities such as, but not limited to, municipal fish
landing sites, fish ports, ice plants and cold storage and other fish processing establishments to serve primarily
the needs of municipal fisherfolk: Provided, That such post-harvest facilities shall be consistent with the
Comprehensive Post-harvest and Ancillary Industries Plan.

SECTION 60. Registration and Licensing of all Post-Harvest Facilities

All post-harvest facilities such as fish processing plants, ice plants, and cold storages, fish ports/landings and
other fishery business establishments must register with and be licensed by the LGUs which shall prescribe
minimum standards for such facilities in consultation with the Department.

SECTION 61. Importation and Exportation of Fishery Products

a. Export of fishery products shall be regulated whenever such exportation affects domestic food security
and production: Provided, That exportation of live fish shall be prohibited except those which are
hatched or propagated in accredited hatcheries and ponds;

b. To protect and maintain the local biodiversity or ensure the sufficiency of domestic supply, spawners,
breeders, eggs and fry of bangus, prawn and other endemic species, as may be determined by the
Department, shall not be exported or caused to be exported by any person;

c. Fishery products may be imported only when the importation has been certified as necessary by the
Department in consultation with the FARMC, and all the requirements of this Code, as well as all
existing rules and regulations have been complied with: Provided, That fish imports for
canning/processing purposes only may be allowed without the necessary certification, but within the
provisions of Section 61(d) of this Code; and

d. No person, shall import and/or export fishery products of whatever size, stage or form for any purpose
without securing a permit from the Department.
The Department in consultation with the FARMC shall promulgate rules and regulations on importation and
exportation of fish and fishery/aquatic resources with the Government’s export/import simplification
procedures.

SECTION 62. Instruments of Weights and Measures, and Quality

Grades/Standards
Standards for weights, volume and other measurements for all fishery transactions shall be set by the
Department.

All fish and fishery products for export, import and domestic consumption shall meet the quality
grades/standards as determined by the Department.

The LGU concerned shall, by appropriate ordinance, penalize fraudulent practices and unlawful possession or
use of instruments of weights and measures.

CHAPTER III
Reconstitution of the Bureau of Fisheries and Aquatic Resources and
Creation of Fisheries and Aquatic Resources Management Councils

ARTICLE I -Reconstitution of the Bureau of Fisheries and Aquatic Resources

SECTION 63. Creation of the Position of Undersecretary for Fisheries and

Aquatic Resources
There is hereby created in the Department of Agriculture the position of Undersecretary for Fisheries and
Aquatic Resources, solely for the purpose of attending to the needs of the fishing industry, to be appointed by
the President. Such Undersecretary shall have the following functions:

a. set policies and formulate standards for the effective, efficient and economical operations of the
fishing industry in accordance with the programs of the government;

b. exercise overall supervision over all functions and activities of all offices and instrumentalities and
other offices related to fisheries including its officers;

c. establish, with the assistance of the director, such regional, provincial and other fishery officers as may
be necessary and appropriate and organize the internal structure of BFAR in such manner as is
necessary for the efficient and effective attainment of its objectives and purposes; and

d. perform such other functions as may be necessary or proper to attain the objectives of this Code.

SECTION 64. Reconstitution of the BFAR

The Bureau of Fisheries and Aquatic Resources (BFAR) is hereby reconstituted as a line bureau under the
Department of Agriculture.

SECTION 65. Functions of the Bureau of Fisheries and Aquatic Resources

As a line bureau, the BFAR shall have the following functions:

a. prepare and implement a Comprehensive National Fisheries Industry Development Plan;

b. issue licenses for the operation of commercial fishing vessels;

c. issue identification cards free of charge to fish workers engaged in commercial fishing;

d. monitor and review joint fishing agreements between Filipino citizens and foreigners who conduct
fishing activities in international waters, and ensure that such agreements are not contrary to
Philippine commitment under international treaties and convention on fishing in the high seas;

e. formulate and implement a Comprehensive Fishery Research and Development Program, such as, but
not limited to, sea farming, sea ranching, tropical/ornamental fish and seaweed culture, aimed at
increasing resource productivity, improving resource use efficiency, and ensuring the long-term
sustainability of the country’s fishery and aquatic resources;

f. establish and maintain a Comprehensive Fishery Information System;

g. provide extensive development support services in all aspects of fisheries production, processing and
marketing;

h. provide advisory services and technical assistance on the improvement of quality of fish from the time
it is caught (i.e. on board fishing vessel, at landing areas, fish markets, to the processing plants and to
the distribution and marketing chain);

i. coordinate efforts relating to fishery production undertaken by the primary fishery producers, LGUs,
FARMCs, fishery and organizations/cooperatives;

j. advise and coordinate with LGUs on the maintenance of proper sanitation and hygienic practices in fish
markets and fish landing areas;

k. establish a corps of specialists in collaboration with the Department of National Defense, Department
of the Interior and Local Government, Department of Foreign Affairs for the efficient monitoring,
control and surveillance of fishing activities within Philippine territorial waters and provide the
necessary facilities, equipment and training therefor;

l. implement an inspection system for import and export of fishery/aquatic products and fish processing
establishments, consistent with international standards to ensure product quality and safety;

m. coordinate with LGUs and other concerned agencies for the establishment of productivity enhancing
and market development programs in fishing communities to enable women to engage in other
fisheries/economic activities and contribute significantly to development efforts;
 n. enforce all laws, formulate and enforce all rules and regulations governing the conservation and
management of fishery resources, except in municipal waters, and to settle conflicts of resource use
and allocation in consultation with the NFARMC, LGUs and local FARMCs;

o. develop value-added fishery-products for domestic consumption and export;

p. recommend measures for the protection/enhancement of the fishery industries;

q. assist the LGUs in developing their technical capability in the development, management, regulation,
conservation, and protection of the fishery resources;

r. formulate rules and regulations for the conservation and management of straddling fish stocks and
highly migratory fish stocks; and

s. perform such other related functions which shall promote the development, conservation,
management, protection and utilization of fisheries and aquatic resources.

SECTION 66. Composition of BFAR

As a line bureau, the BFAR shall be headed by a Director and assisted by two (2) Assistant Directors who shall
supervise the administrative and technical services of the bureau respectively. It shall establish regional,
provincial and municipal offices as may be appropriate and necessary to carry out effectively and efficiently
the provisions of this Code.

SECTION 67. Fisheries Inspection and Quarantine Service

For purposes of monitoring and regulating the importation and exportation of fish and fishery/aquatic
resources, the Fisheries Inspection and Quarantine Service in the BFAR is hereby strengthened and shall have
the following functions:

a. conduct fisheries quarantine and quality inspection of all fish and fishery/aquatic products coming into
and going out of the country by air or water transport, to detect the presence of fish pest and diseases
and if found to harbor fish pests or diseases shall be confiscated and disposed of in accordance with
environmental standards and practices;

b. implement international agreements/commitments on bio-safety and bio-diversity as well as prevent

the movement or trade of endemic fishery and aquatic resources to ensure that the same are not
taken out of the country;

c. quarantine such aquatic animals and other fishery products determined or suspected to be with fishery
pests and diseases and prevent the movement or trade from and/or into the country of these products
so prohibited or regulated under existing laws, rules and regulations as well as international
agreements of which the Philippines is a State Party;

d. examine all fish and fishery products coming into or going out of the country which may be a source or
medium of fish pests or diseases and/or regulated by existing fishery regulations and ensure that the
quality of fish import and export meet international standards; and
 e. document and authorize the movement or trade of fish and fishery products when found free of fish
pests or diseases and collect necessary fees prescribed by law and regulations.

ARTICLE II - The Fisheries and Aquatic Resources Management Councils

(FARMCs)

SECTION 68. Development of Fisheries and Aquatic Resources in Municipal

Waters and Bays
Fisherfolk and their organizations residing within the geographical jurisdiction of the barangays, municipalities
or cities with the concerned LGUs shall develop the fishery/aquatic resources in municipal waters and bays.

SECTION 69. Creation of Fisheries and Aquatic Resources Management

Councils (FARMCs)
FARMCs shall be established in the national level and in all municipalities/cities abutting municipal waters as
defined by this Code. The FARMCs shall be formed by fisherfolk organizations/cooperatives and NGOs in the
locality and be assisted by the LGUs and other government entities. Before organizing FARMCs, the LGUs,
NGOs, fisherfolk, and other concerned POs shall undergo consultation and orientation on the formation of
FARMCs.

SECTION 70. Creation and Composition of the National Fisheries and Aquatic
Resources Management Council (NFARMC)
There is hereby created a National Fisheries and Aquatic Resources Management Council hereinafter referred
to as NFARMC as an advisory/recommendatory body to the Department. The NFARMC shall be composed of
fifteen (15) members consisting of:

a. the Undersecretary of Agriculture, as Chairman;

b. the Undersecretary of the Interior and Local Government;

c. five (5) members representing the fisherfolk and fish workers;

d. five (5) members representing commercial fishing and aquaculture operators and the processing
sectors;

e. two (2) members from the academe; and

f. one (1) representative of NGOs involved in fisheries.

The members of the NFARMC, except for the Undersecretary of Agriculture and the Undersecretary of the
Interior and Local Government, shall be appointed by the President upon the nomination of their respective
organizations.

SECTION 71. Terms of Office

The members of NFARMC, except the Undersecretary of Agriculture and the Undersecretary of the Interior
and Local Government, shall serve for a term of three (3) years without reappointment.

SECTION 72. Functions of the NFARMC

The NFARMC shall have the following functions:

a. assist in the formulation of national policies for the protection, sustainable development and
management of fishery and aquatic resources for the approval of the Secretary;

b. assist the Department in the preparation of the National Fisheries and Industry Development Plan; and

c. perform such other functions as may be provided by law.

SECTION 73. The Municipal/City Fisheries and Aquatic Resources

Management Councils (M/CFARMCs)
The M/CFARMCs shall be created in each of the municipalities and cities abutting municipal waters. However,
the LGU may create the Barangay Fisheries and Aquatic Resources Management Councils (BFARMCs) and the
Lakewide Fisheries and Aquatic Resources Management Councils (LFARMCs) whenever necessary. Such
BFARMCs and LFARMCs shall serve in an advisory capacity to the LGUs.

SECTION 74. Functions of the M/CFARMCs

The M/CFARMCs shall exercise the following functions:

a. assist in the preparation of the Municipal Fishery Development Plan and submit such plan to the
Municipal Development Council;

b. recommend the enactment of municipal fishery ordinances to the sangguniang bayan/sangguniang

panlungsod through its Committee on Fisheries;

c. assist in the enforcement of fishery laws, rules and regulations in municipal waters;

d. advise the sangguniang bayan/panlungsod on fishery matters through its Committee on Fisheries, if
such has been organized; and

e. perform such other functions which may be assigned by the sangguniang bayan/panlungsod.

SECTION 75. Composition of the M/CFARMC

The regular member of the M/CFARMCs shall be composed of:

a. Municipal/City Planning Development Officer;

b. Chairperson, Agriculture/Fishery Committee of the Sangguniang Bayan/Panlungsod;

c. representative of the Municipal/City Development Council;

 d. representative from the accredited non-government organization;

e. representative from the private sector;

f. representative from the Department of Agriculture; and

g. at least eleven (11) fisherfolk representatives (seven (7) municipal fisherfolk, one (1) fish worker and
three (3) commercial fishers) in each municipality/city which include representative from youth and
women sector.

The Council shall adopt rules and regulations necessary to govern its proceedings and election.

SECTION 76. The Integrated Fisheries and Aquatic Resources Management

Councils (IFARMCs)
The IFARMCs shall be created in bays, gulfs, lakes and rivers and dams bounded by two (2) or more
municipalities/cities.

SECTION 77. Functions of the IFARMCs

The IFARMC shall have the following functions:

a. assist in the preparation of the Integrated Fishery Development Plan and submit such plan to the
concerned Municipal Development Councils;

b. recommend the enactment of integrated fishery ordinances to the concerned sangguniang

bayan/panlungsod through its Committee on Fisheries, if such has been organized;

c. assist in the enforcement of fishery laws, rules and regulations in concerned municipal waters;

d. advice the concerned sangguniang bayan/panlungsod on fishery matters through its Committee on
Fisheries, if such has been organized; and

e. perform such other functions which may be assigned by the concerned sangguniang
bayan/panlungsod.

SECTION 78. Composition of the IFARMCs

The regular members of the IFARMCs shall be composed of the following:

a. the chairperson of the Committee on Agriculture/Fisheries of the concerned sangguniang

bayan/panlungsod;

b. the Municipal/City Fisheries Officers of the concerned municipalities/cities;

c. the Municipal/City Development Officers of the concerned municipalities/cities;

d. one (1) representative from NGO;

 e. one (1) representative from private sector; and

f. at least nine (9) representatives from the fisherfolk sector which include representatives from the
youth and women sector.

The Council shall adopt rules and regulations necessary to govern its proceedings and election.

SECTION 79. Source of Funds of the FARMCs

A separate fund for the NFARMC, IFARMCs and M/CFARMCs shall be established and administered by the
Department from the regular annual budgetary appropriations.

CHAPTER IV
Fishery Reserves, Refuge and Sanctuaries

SECTION 80. Fishing Areas Reserves for Exclusive Use of Government

The Department may designate area or areas in Philippine waters beyond fifteen (15) kilometers from
shoreline as fishery reservation for the exclusive use of the government or any of its political subdivisions,
agencies or instrumentalities, for propagation, educational, research and scientific purposes: Provided, That in
municipalities or cities, the concerned LGUs in consultation with the FARMCs may recommend to the
Department that portion of the municipal waters be declared as fishery reserves for special or limited use, for
educational, research, and/or special management purposes. The FARMCs may recommend to the
Department portions of the municipal waters which can be declared as fisheries reserves for special or limited
use for educational, research and special management purposes.

SECTION 81. Fish Refuge and Sanctuaries

The Department may establish fish refuge and sanctuaries to be administered in the manner to be prescribed
by the BFAR at least twenty-five percent (25%) but not more than forty percent (40%) of bays, foreshore lands,
continental shelf or any fishing ground shall be set aside for the cultivation of mangroves to strengthen the
habitat and the spawning grounds of fish. Within these areas no commercial fishing shall be allowed. All
marine fishery reserves, fish sanctuaries and mangrove swamp reservations already declared or proclaimed by
the President or legislated by the Congress of the Philippines shall be continuously administered and
supervised by the concerned agency: Provided, however, That in municipal waters, the concerned LGU in
consultation with the FARMCs may establish fishery refuge and sanctuaries. The FARMCs may also
recommend fishery refuge and sanctuaries: Provided, further, That at least fifteen percent (15%) where
applicable of the total coastal areas in each municipality shall be identified, based on the best available
scientific data and in consultation with the Department, and automatically designated as fish sanctuaries by
the LGUs in consultation with the concerned FARMCs.

CHAPTER V
Fisheries Research and Development
SECTION 82. Creation of a National Fisheries Research and Development
Institute (NFRDI)
In recognition of the important role of fisheries research in the development, management, conservation and
protection of the country’s fisheries and aquatic resources, there is hereby created a National Fisheries
Research and Development Institute (NFRDI).

The Institute shall form part of the National Research and Development Network of the Department of Science
and Technology (DOST).

The Institute, which shall be attached to the Department shall serve as the primary research arm of the BFAR.
The overall governance of the Institute shall be vested in the Governing Board which shall formulate policy
guidelines for its operation. The plans, programs and operational budget shall be passed by the Board. The
Board may create such committees as it may deem necessary for the proper and effective performance of its
functions. The composition of the Governing Board shall be as follows:

a. Undersecretary for Fisheries — Chairman

b. BFAR Director — Vice Chairman

c. NFRDI Executive Director — Member

d. PCAMRD Executive Director — Member

e. Representative from the academe — Member

f. four (4) representatives from the private sector who shall come from the following subsectors: —
Members
 Municipal Fisherfolk
 Commercial Fishing Operator
 Aquaculture Operator
 Post-Harvest/Processor

The NFRDI shall have a separate budget specific to its manpower requirements and operations to ensure the
independent and objective implementation of its research activities.

SECTION 83. Qualification Standard

The Institute shall be headed by an Executive Director to be appointed by the President of the Philippines
upon the recommendation of the governing board. The Executive Director shall hold a Doctorate degree in
fisheries and/or other related disciplines. The organizational structure and staffing pattern shall be approved
by the Department: Provided, however, That the staffing pattern and remunerations for scientific and
technical staff shall be based on the qualification standards for science and technology personnel.

SECTION 84. Research and Development Objectives

Researches to be done by the NFRDI are expected to result in the following:
 a. To raise the income of the fisherfolk and to elevate the Philippines among the top five (5) in the world
ranking in the fish productions;

b. to make the country’s fishing industry in the high seas competitive;

c. to conduct social research on fisherfolk families for a better understanding of their conditions and
needs; and

d. to coordinate with the fisheries schools, LGUs and private sectors regarding the maximum utilization of
available technology, including the transfer of such technology to the industry particularly the
fisherfolk.

SECTION 85. Functions of the NFRDI

As a national institute, the NFRDI shall have the following functions:

a. establish a national infrastructure unit complete with technologically-advanced features and modern
scientific equipment, which shall facilitate, monitor, and implement various research needs and
activities of the fisheries sector;

b. provide a venue for intensive training and development of human resources in the field of fisheries, a
repository of all fisheries researches and scientific information;

c. provide intensive training and development of human resources in the field of fisheries for the
maximum utilization of available technology;

d. hasten the realization of the economic potential of the fisheries sector by maximizing developmental
research efforts in accordance with the requirements of the national fisheries conservations and
development programs, also possibly through collaborative effort with international institutions; and

e. formally establish, strengthen and expand the network of fisheries-researching communities through
effective communication linkages nationwide.

CHAPTER VI
Prohibitions and Penalties

SECTION 86. Unauthorized Fishing or Engaging in Other Unauthorized

Fisheries Activities
No person shall exploit, occupy, produce, breed, culture, capture or gather fish, fry or fingerlings of any fishery
species or fishery products, or engage in any fishery activity in Philippine waters without a license, lease or
permit.

Discovery of any person in an area where he has no permit or registration papers for a fishing vessel shall
constitute a prima facie presumption that the person and/or vessel is engaged in unauthorized fishing:
Provided, That fishing for daily food sustenance or for leisure which is not for commercial, occupation or
livelihood purposes may be allowed.
It shall be unlawful for any commercial fishing vessel to fish in bays and in such other fishery management
areas which may hereinafter be declared as over-exploited.

Any commercial fishing boat captain or the three (3) highest officers of the boat who commit any of the above
prohibited acts upon conviction shall be punished by a fine equivalent to the value of catch or Ten thousand
pesos (P10,000.00) whichever is higher, and imprisonment of six (6) months, confiscation of catch and fishing
gears, and automatic revocation of license.

It shall be unlawful for any person not listed in the registry of municipal fisherfolk to engage in any commercial
fishing activity in municipal waters. Any municipal fisherfolk who commits such violation shall be punished by
confiscation of catch and a fine of Five hundred pesos (500.00).

SECTION 87. Poaching in Philippine Waters

It shall be unlawful for any foreign person, corporation or entity to fish or operate any fishing vessel in
Philippine waters.

The entry of any foreign fishing vessel in Philippine waters shall constitute a prima facie evidence that the
vessel is engaged in fishing in Philippine waters.

Violation of the above shall be punished by a fine of One hundred thousand U.S. Dollars (US$100,000.00), in
addition to the confiscation of its catch, fishing equipment and fishing vessel: Provided, That the Department
is empowered to impose an administrative fine of not less than Fifty thousand U.S. Dollars (US$50,000.00) but
not more than Two hundred thousand U.S. Dollars (US$200,000.00) or its equivalent in the Philippine
Currency.

SECTION 88. Fishing Through Explosives, Noxious or Poisonous Substance,

and/or Electricity

1. It shall be unlawful for any person to catch, take or gather or cause to be caught, taken or gathered,
fish or any fishery species in Philippine waters with the use of electricity, explosives, noxious or
poisonous substance such as sodium cyanide in the Philippine fishery areas, which will kill, stupefy,
disable or render unconscious fish or fishery species: Provided, That the Department, subject to such
safeguards and conditions deemed necessary and endorsement from the concerned LGUs, may allow,
for research, educational or scientific purposes only, the use of electricity, poisonous or noxious
substances to catch, take or gather fish or fishery species: Provided, further, That the use of poisonous
or noxious substances to eradicate predators in fishponds in accordance with accepted scientific
practices and without causing adverse environmental impact in neighboring waters and grounds shall
not be construed as illegal fishing.

It will likewise be unlawful for any person, corporation or entity to possess, deal in, sell or in any
manner dispose of, any fish or fishery species which have been illegally caught, taken or gathered.

The discovery of dynamite, other explosives and chemical compounds which contain combustible
elements, or noxious or poisonous substances, or equipment or device for electro-fishing in any fishing
vessel or in the possession of any fisherfolk, operator, fishing boat official or fishworker shall constitute
prima facie evidence, that the same was used for fishing in violation of this Code. The discovery in any
 fishing vessel of fish caught or killed with the use of explosive, noxious or poisonous substances or by
electricity shall constitute prima facie evidence that the fisherfolk, operator, boat official or fishworker
is fishing with the use thereof.

2. Mere possession of explosive, noxious or poisonous substances or electrofishing devices for illegal
fishing shall be punishable by imprisonment ranging from six (6) months to two (2) years.

3. Actual use of explosives, noxious or poisonous substances or electrofishing devices for illegal fishing
shall be punishable by imprisonment ranging from five (5) years to ten (10) years without prejudice to
the filing of separate criminal cases when the use of the same result to physical injury or loss of human
life.

4. Dealing in, selling, or in any manner disposing of, for profit, illegally caught/gathered fisheries species
shall be punished by imprisonment ranging from six (6) months to two (2) years.

5. In all cases enumerated above, the explosives, noxious or poisonous substances and/or electrical
devices, as well as the fishing vessels, fishing equipment and catch shall be forfeited.

SECTION 89. Use of Fine Mesh Net

It shall be unlawful to engage in fishing using nets with mesh smaller than that which may be fixed by the
Department: Provided, That the prohibition on the use of fine mesh net shall not apply to the gathering of fry,
glass eels, elvers, tabios, and alamang and such species which by their nature are small but already mature to
be identified in the implementing rules and regulations by the Department.

Violation of the above shall subject the offender to a fine from Two thousand pesos (P2,000.00) to Twenty
thousand pesos (P20,000.00) or imprisonment from six (6) months to two (2) years or both such fine and
imprisonment at the discretion of the court: Provided, That if the offense is committed by a commercial fishing
vessel, the boat captain and the master fisherman shall also be subject to the penalties provided herein:
Provided, further, That the owner/operator of the commercial fishing vessel who violates this provision shall
be subjected to the same penalties provided herein: Provided, finally, That the Department is hereby
empowered to impose upon the offender an administrative fine and/or cancel his permit or license or both.

SECTION 90. Use of Active Gear in the Municipal Waters and Bays and
Other Fishery Management Areas
It shall be unlawful to engage in fishing in municipal waters and in all bays as well as other fishery
management areas using active fishing gears as defined in this Code.

Violators of the above prohibitions shall suffer the following penalties:

1. The boat captain and master fisherman of the vessels who participated in the violation shall suffer
the penalty of imprisonment from two (2) years to six (6) years;

2. The owner/operator of the vessel shall be fined from Two thousand pesos (P2,000.00) to Twenty
thousand pesos (20,000.00) upon the discretion of the court.

If the owner/operator is a corporation, the penalty shall be imposed on the chief executive officer
of the Corporation.
 If the owner/operator is a partnership the penalty shall be imposed on the managing partner.

3. The catch shall be confiscated and forfeited.

SECTION 91. Ban on Coral Exploitation and Exportation

It shall be unlawful for any person or corporation to gather, possess, sell or export ordinary precious and semi-
precious corals, whether raw or in processed form, except for scientific or research purposes.

Violations of this provision shall be punished by imprisonment from six (6) months to two (2) years and a fine
from Two thousand pesos (P2,000.00) to Twenty thousand pesos (20,000.00), or both such fine and
imprisonment, at the discretion of the court, and forfeiture of the subject corals, including the vessel and its
proper disposition.

The confiscated corals shall either be returned to the sea or donated to schools and museums for educational
or scientific purposes or disposed through other means.

SECTION 92. Ban on Muro-Ami Other Methods and Gear Destructive to

Coral Reefs and Other Marine Habitat
It shall be unlawful for any person, natural or juridical, to fish with gear method that destroys coral reefs,
seagrass beds, and other fishery marine life habitat as may be determined by the Department. “Muro-Ami”
and any of its variation, and such similar gear and methods that require diving, other physical or mechanical
acts to pound the coral reefs and other habitat to entrap, gather or catch fish and other fishery species are
also prohibited.

The operator, boat captain, master fisherman, and recruiter or organizer of fish workers who violate this
provision shall suffer a penalty of two (2) years to ten (10) years imprisonment and a fine of not less than One
hundred thousand pesos (P100,000.00) to Five hundred thousand pesos (P500,000.00) or both such fine and
imprisonment, at the discretion of the court. The catch and gear used shall be confiscated.

It shall likewise be unlawful for any person or corporation to gather, sell or export white sand, silica, pebbles
and any other substances which make up any marine habitat.

The person or corporation who violates this provision shall suffer a penalty of two (2) years to ten (10) years
imprisonment and a fine of not less than One hundred thousand pesos (P100,000.00) to Five hundred
thousand pesos (P500,000.00) or both such fine and imprisonment, at the discretion of the court. The
substance taken from its marine habitat shall be confiscated.

SECTION 93. Illegal Use of Super lights

It shall be unlawful to engage in fishing with the use of super lights in municipal waters or in violation of the
rules and regulations which may be promulgated by the Department on the use of super lights outside
municipal waters.

Violations of this provision shall be punished by imprisonment from six (6) months to two (2) years or a fine of
Five thousand pesos (P5,000.00) per superlight, or both such fine and imprisonment at the discretion of the
courts. The superlight, fishing gears and vessel shall be confiscated.
SECTION 94. Conversion of Mangroves
It shall be unlawful for any person to convert mangroves into fishponds or for any other purposes.

Violation of the provision of this section shall be punished by imprisonment of six (6) years and one (1) day to
twelve (12) years and/or a fine of Eighty thousand pesos (P80,000.00): Provided, That if the area requires
rehabilitation or restoration as determined by the court, the offender should also be required to restore or
compensate for the restoration of the damage.

SECTION 95. Fishing in Overfished Area and During Closed Season

It shall be unlawful to fish in overfished area and during closed season.

Violation of the provision of this section shall be punished by imprisonment of six (6) months and one (1) day
to six (6) years and/or fine of Six thousand pesos (P6,000.00) and by forfeiture of the catch and cancellation of
fishing permit or license.

SECTION 96. Fishing in Fishery Reserves, Refuge and Sanctuaries

It shall be unlawful to fish in fishery areas declared by the Department as fishery reserves, refuge and
sanctuaries.

Violation of the provision of this section shall be punished by imprisonment of two (2) years to six (6) years
and/or fine of Two thousand pesos (P2,000.00) to Twenty thousand pesos (P20,000.00) and by forfeiture of
the catch and the cancellation of fishing permit or license.

SECTION 97. Fishing or Taking of Rare, Threatened or Endangered Species

It shall be unlawful to fish or take rare, threatened or endangered species as listed in the CITES and as
determined by the Department.

Violation of the provision of this section shall be punished by imprisonment of twelve (12) years to twenty (20)
years and/or a fine of One hundred and twenty thousand pesos (P120,000.00) and forfeiture of the catch, and
the cancellation of fishing permit.

SECTION 98. Capture of Sabalo and Other Breeders/Spawners

It shall be unlawful for any person to catch, gather, capture or possess mature milkfish or “sabalo” and such
other breeders or spawners of other fishery species as may be determined by the Department: Provided, That
catching of “sabalo” and other breeders/spawners for local breeding purposes or scientific or research
purposes may be allowed subject to guidelines to be promulgated by the Department.

Violation of the provision of this section shall be punished by imprisonment of six (6) months and one (1) day
to eight (8) years and/or a fine of Eighty thousand pesos (P80,000.00) and forfeiture of the catch, and fishing
equipment used and revocation of license.

SECTION 99. Exportation of Breeders, Spawners, Eggs or Fry

Exportation of breeders, spawners, eggs or fry as prohibited in this Code shall be punished by imprisonment of
eight (8) years, confiscation of the same or a fine equivalent to double the value of the same, and revocation
of the fishing and/or export license/permit.

SECTION 100. Importation or Exportation of Fish or Fishery Species

Any importation or exportation of fish or fisheries species in violation of this Code shall be punished by eight
(8) years of imprisonment, a fine of Eighty thousand pesos (P80,000.00) and destruction of live fishery species
or forfeiture of non-live fishery species in favor of the department for its proper disposition: Provided, That
violator of this provision shall be banned from being members or stock holders of companies currently
engaged in fisheries or companies to be created in the future, the guidelines for which shall be promulgated
by the Department.

SECTION 101. Violation of Catch Ceilings

It shall be unlawful for any person to fish in violation of catch ceilings as determined by the Department.
Violation of the provision of this section shall be punished by imprisonment of six (6) months and one (1) day
to six (6) years and/or a fine of Fifty thousand pesos (P50,000.00) and forfeiture of the catch, and fishing
equipment used and revocation of license.

SECTION 102. Aquatic Pollution

Aquatic pollution, as defined in this Code shall be unlawful.

Violation of the provision of this section shall be punished by imprisonment of six (6) years and one (1) day to
twelve (12) years and/or a fine of Eighty thousand pesos (P80,000.00) plus an additional fine of Eight thousand
pesos (P8,000.00) per day until such violation ceases and the fines paid.

SECTION 103. Other Violations

The following fisheries activities shall also be considered as a violation of this Code:

a. Failure to Comply with Minimum Safety Standards. — The owner and captain of a commercial fishing
vessel engaged in fishing who, upon demand by proper authorities, fails to exhibit or show proof of
compliance with the safety standards provided in this Code, shall be immediately prevented from
continuing with his fishing activity and escorted to the nearest port or landing point. The license to
operate the commercial fishing vessel shall be suspended until the safety standard has been complied
with.

b. Failure to Conduct a Yearly Report on all Fishponds, Fish Pens and Fish Cages. — The FLA of the holder
who fails to render a yearly report shall be immediately cancelled: Provided, That if the offender be the
owner of the fishpond, fish pen or fish cage, he shall be subjected to the following penalties: (1) first
offense, a fine of Five hundred pesos (P500.00) per unreported hectare; (2) subsequent offenses, a fine
of One thousand pesos (1,000.00) per unreported hectare.

c. Gathering and Marketing of Shell Fishes. — It shall be unlawful for any person to take, sell, transfer, or
have in possession for any purpose any shell fish which is sexually mature or below the minimum size
or above the maximum quantities prescribed for the particular species.
 d. Obstruction to Navigation or Flow and Ebb of Tide in any Stream, River, Lake or Bay. — It shall be
unlawful for any person who causes obstruction to navigation or flow or ebb of tide.

e. Construction and Operation of Fish Corrals/Traps, Fish Pens and Fish Cages. — It shall be unlawful to
construct and operate fish corrals/traps, fish pens and fish cages without a license/permit.

Subject to the provision of subparagraph (b) of this section, violation of the above-enumerated prohibited acts
shall subject the offender to a fine ranging from Two thousand pesos (P2,000.00) to Ten thousand pesos
(P10,000.00) or imprisonment from one (1) month and one (1) day to six (6) months, or both such fine and
imprisonment, upon the discretion of the court: Provided, That the Secretary is hereby empowered to impose
upon the offender an administrative fine of not more than Ten thousand pesos (P10,000.00) or to cancel his
permit or license, or to impose such fine and to cancel his permit or license, in the discretion of the Secretary:
Provided, further, That the Secretary, or his duly authorized representative, and law enforcement agents are
hereby empowered to impound with the assistance of the Philippine Coast Guard, PNP-Maritime Command:
Provided, finally, That any person who unlawfully obstructs or delays the inspection and/or movement of fish
and fishery/aquatic products when such inspection and/or movement is authorized under this Code, shall be
subject to a fine of not more than Ten thousand pesos (P10,000.00) or imprisonment of not more than two (2)
years, or both such fine and imprisonment, upon the discretion of the court.

Every penalty imposed for the commission of an offense shall carry with it the forfeiture of the proceeds of
such offense and the instruments or tools with which it was committed.

Such proceeds and instruments or tools shall be confiscated and forfeited in favor of the Government, unless
they be the property of a third person not liable for the offense, but those articles which are not subject of
lawful commerce shall be destroyed.

SECTION 104. Commercial Fishing Vessel Operators Employing Unlicensed

Fisherfolk or Fish worker or Crew
The owner/operator of a commercial fishing vessel employing unlicensed fisherfolk or fish worker shall be
fined Five hundred pesos (P500.00) each for every month that the same has been employed and/or One
thousand pesos (P1,000.00) for every month for each unlicensed crew member who has been employed.

SECTION 105. Obstruction of Defined Migration Paths

Obstruction of any defined migration paths of anadromous, catadromous and other migratory species, in
areas including, but not limited to river mouths and estuaries within a distance determined by the concerned
FARMCs shall be punished by imprisonment of seven (7) years to twelve (12) years or a fine from Fifty
thousand pesos (P50,000.00) to One hundred thousand pesos (P100,000.00)or both imprisonment and fine at
the discretion of the court, and cancellation of permit/license, if any, and dismantling of obstruction shall be at
his own expense and confiscation of same.

SECTION 106. Obstruction to Fishery Law Enforcement Officer

The boat owner, master or operator or any person acting on his behalf of any fishing vessel who evades,
obstructs or hinders any fishery law enforcement officer of the Department to perform his duty, shall be fined
Ten thousand pesos (P10,000.00). In addition, the registration, permit and/or license of the vessel including
the license of the master fisherman shall be canceled.
SECTION 107. Promulgation of Administrative Orders
For purposes of fishery regulation or other fishery adjustments, the Department in consultation with the LGUs
and local FARMCs, shall issue Fishery Administrative Orders or regulations for the conservation, preservation,
management and sustainable development of fishery and aquatic resources.

CHAPTER VII
General Provisions

SECTION 108. Fisherfolk Settlement Areas

The Department shall establish and create fisherfolk settlement areas in coordination with concerned agencies
of the government, where certain areas of the public domain, specifically near the fishing grounds, shall be
reserved for the settlement of the municipal fisherfolk. Nothing in this section shall be construed to vest
ownership of any resettlement area to a municipal fisherfolk for whom said areas may have been reserved for
or had been actually granted to.

SECTION 109. Municipal Fisheries Grant Fund

For the development, management and conservation of the municipal resources, there is hereby created a
Fishery Grant Fund to finance fishery projects of the LGUs primarily for the upliftment of the municipal
fisherfolk. The amount of One hundred million pesos (P100,000,000.00) is hereby appropriated out of the
Department’s allocation in the General Appropriations Act (GAA) to support the Grant Fund.

For this purpose, the Department may seek financial assistance from any source and may receive any donation
therefore.

SECTION 110. Fishery Loan and Guarantee Fund

Pursuant to Section 7, Article XIII of the Constitution, there is hereby created a Fishery Loan and Guarantee
Fund with an initial of One hundred million pesos (P100,000,000.00), which shall be administered by the Land
Bank of the Philippines. The fund shall be made available for lending to qualified borrowers to finance the
development of the fishery industry under a program to be prescribed by the Department.

For the same purpose, the Department may seek financial assistance from any source and may receive any
donation therefrom.

SECTION 111. Fishing Vessels Development Fund

There is hereby created a Fishing Vessels Development Fund to enhance the building and/or acquisition of
fishing vessels. This shall be a long-term loan facility that shall be administered by the Development Bank of
the Philippines. The amount of Two hundred and fifty million pesos (P250,000,000.00) per year for five (5)
years is hereby appropriated out of the Department’s allocation in the GAA to support this Development Fund.

SECTION 112. Special Fisheries Science and Approfishtech Fund

The Department shall provide subsidy for full technical and financial support to the development of
appropriate technology, both in fishery and ancillary industries, that are ecologically sound, locally source-
based and labor intensive, based on the requirement and needs of the FARMCs. An initial amount of One
hundred million pesos (100,000,000.00) shall be authorized for the purpose of a Special Fisheries Science and
Approfishtech Fund, and thereafter shall be included in the GAA.

SECTION 113. Aquaculture Investment Fund

An Aquaculture Investment Fund in the minimum amount of Fifty million pesos (P50,000,000.00) shall be
established for soft loans which shall be extended to municipal fisherfolk and their organization who will
engage in aquaculture, and for the development of underdeveloped or underutilized inland fishponds.

SECTION 114. Other Fisheries Financing Facilities

In addition to fisheries credit guarantee, grant and other similar facilities granted under this Code, qualified
Filipino fisherfolk and fisheries enterprises shall enjoy such other facilities granted them under existing and/or
new laws, especially as to rural credit, with preference being given to fisheries cooperatives.

SECTION 115. Professionalization of Fisheries Graduates

There is hereby created a Fisheries Board of Examiners in the Professional Regulation Commission to upgrade
the Fisheries Profession: Provided, however, That those who have passed the Civil Service Examination for
Fisheries shall automatically be granted eligibility by the Fisheries Board of Examiners: Provided, further, That
they have served the industry in either public or private capacity for not less than five (5) years: Provided,
finally, That the first Board Examination for B.S. Fisheries Graduates shall be conducted within one (1) year
from the approval of this Code.

SECTION 116. Upgrading of State Fisheries Schools/Colleges

The Department, in coordination with the Commission on Higher Education (CHED), Department of Education,
Culture and Sports (DECS), and Technical Education and Skills Development Authority (TESDA), shall upgrade
State Fisheries Schools/Colleges which provide both formal and non-formal education: Provided, however,
That the CHED shall incorporate Approfishtech in the curricula of fisheries schools/colleges.

The Department and the CHED shall jointly formulate standards to upgrade all fisheries schools/colleges.
Fisheries schools/colleges that do not meet minimum standards shall be closed.

SECTION 117. Inclusion of Fisheries Conservation Subjects in School

Curriculum
Fisheries conservation subjects shall be incorporated in the curricula of elementary and secondary schools
both private and public.

SECTION 118. Educational campaign at all levels

The Department, the CHED, the DECS and the Philippine Information Agency shall launch and pursue a
nationwide educational campaign to:
a. help realize the policies and implement the provisions of this Code;
b. promote the development, management, conservation and proper use of the environment;
c. promote the principle of sustainable development; and
d. promote the development of truly Filipino-oriented fishing and ancillary industries.
SECTION 119. Infrastructure Support
The Department in cooperation with concerned agencies shall:
a. prepare and implement a nationwide plan for the development of municipal fishing ports and markets;
b. prioritize the construction of farm-to-market roads linking the fisheries production sites, coastal
landing points and other post-harvest facilities to major market and arterial roads/highways;
c. identity community infrastructure facilities such as fish landing ports, ice plant and cold storage
facilities in consultation with fishery cooperatives/associations and prepare plans and designs for their
construction that would be consistent with international environmental impact;
d. establish and maintain quality laboratories in major fish ports and prescribe the highest standards for
the operation and maintenance of such post-harvest facilities;
e. arrange and make representations with appropriate funding institutions to finance such facilities for
the use of the fishery cooperatives/associations;
f. develop and strengthen marketing facilities and promote cooperative marketing systems; and
g. promote and strengthen local fisheries ship-building and repair industry.

SECTION 120. Extension Services

The Department shall develop cost-effective, practical and efficient extension services on a sustained basis, in
addition to those provided by state educational institutions, especially to municipal fisherfolk in undeveloped
areas, utilizing practicable and indigenous resources and government agencies available, and based upon a
system of self-reliance and self-help.

SECTION 121. Protection of Sensitive Technical Information

The Department shall take such measures as may be necessary in order to protect trade, industrial and policy
information of Filipino fisherfolk, fisheries owners/operators, entrepreneurs, manufacturers and researchers,
when disclosure of such information will injure the competitiveness or viability of domestic fisheries.

SECTION 122. Assistance in Collecting Information

The Department, in coordination with other government entities concerned, may require Filipino
representatives abroad and foreign-based personnel to assist in the collection of fisheries data and
information.

SECTION 123. Charting of Navigational Lanes and Delineation of

Municipal Waters
The Department shall authorize the National Mapping and Resource Information Authority (NAMRIA) for the
designation and charting of navigational lanes in fishery areas and delineation of municipal waters. The
Philippine Coast Guard shall exercise control and supervision over such designated navigational lanes.

SECTION 124. Persons and Deputies Authorized to Enforce this Code and
Other Fishery Laws, Rules and Regulations
The law enforcement officers of the Department, the Philippine Navy, Philippine Coast Guard, Philippine
National Police (PNP), PNP-Maritime Command, law enforcement officers of the LGUs and other government
enforcement agencies, are hereby authorized to enforce this Code and other fishery laws, rules and
regulations. Other competent government officials and employees, punong barangays and officers and
members of fisherfolk associations who have undergone training on law enforcement may be designated in
writing by the Department as deputy fish wardens in the enforcement of this Code and other fishery laws,
rules and regulations.

SECTION 125. Strengthening Prosecution and Conviction of Violators of

Fishery Laws
The Department of Justice (DOJ) shall embark on a program to strengthen the prosecution and conviction
aspects of fishery law enforcement through augmentation of the current complement of state prosecutors
and through their continuous training and reorientation on fishery laws, rules and regulations.

SECTION 126. Foreign Grants and Aids

All foreign grants, aids, exchange programs, loans, researches and the like shall be evaluated and regulated by
the Department to ensure that such are consistent with the Filipinization, democratization and
industrialization of fishing industry and the development of the entire country.

SECTION 127. Mandatory Review

The Congress of the Philippines shall undertake a mandatory review of this Code at least once every five (5)
years and as often as it may deem necessary, to ensure that fisheries policies and guidelines remain
responsive to changing circumstances.

CHAPTER VIII
Transitory Provisions

SECTION 128. Moratoria

The Department shall, upon the recommendation of the Bureau, have the power to declare a moratorium on
the issuance of licenses for commercial fishing vessels to operate in specified area or areas in Philippine
waters for a limited period of time if there are indications of overfishing brought about by a decrease in the
volume and sizes of fish caught therein or for conservation or ecological purposes.

No new licenses and similar privileges on exploitation of specific fishery areas in Philippine waters and
aquaculture production areas shall be issued in accordance with this Code. Such moratoria shall not exceed
five (5) years from the effectivity of this Code.

SECTION 129. Formulation of Implementing Rules and Regulations

An Inter-agency Committee is hereby created to formulate rules and regulations for the full implementation of
this Code within ninety (90) days of its effectivity: Provided, however, That the formulated rules and
regulations shall be submitted to both Houses of Congress for information and guidance. Such rules and
regulations shall take effect upon publication in a newspaper of general circulation.

The Inter-agency Committee shall be composed of the following:

a. Secretary of Agriculture as Chairman;
b. Secretary of the Interior and Local Government
c. Secretary of Environment and Natural Resources;
d. Secretary of Justice;
 e. Secretary of Finance;
f. Secretary of Budget and Management;
g. Secretary of Labor and Employment;
h. Secretary of National Defense;
i. Commissioner of Civil Service Commission;
j. Director of BFAR;
k. Executive Director of PCAMRD;
l. General Manager of PFDA;
m. One (1) representative from each of the following:
1. The League of Provinces;
2. The League of Cities;
3. The League of Municipalities;
4. The Liga ng mga Barangay;
n. Representative of the municipal fisherfolk;
o. Representative of the commercial fishers;
p. Representative of the non-government organizations involved in fishing concerns; and
q. A representative from the academe coming from the specialized fisheries institution.

CHAPTER IX
Final Provisions

SECTION 130. Appropriation

The sum necessary to effectively carry out the provisions of this Act during the first year of implementation
shall be sourced from the budget of the DA/BFAR and other agencies performing fisheries-related functions:
Provided, however, That such amount as may be necessary to carry out the provisions of Sections 79, 109,
110, 111, 112, 113 are hereby appropriated out of the unappropriated funds of the National Treasury. The
Congress of the Philippines shall provide for the appropriations of the Department, the NFRDI and the
Fisheries Scholarship Program for the succeeding years to be included in the annual GAA.

SECTION 131. Repealing Clause

Presidential Decree No. 704, as amended by Presidential Decree Nos. 1015 and 1058, Presidential Decree No.
977, as amended, Executive Order No. 967, Series of 1984, Executive Order No. 116, Series of 1987, Executive
Order No. 292, Series of 1987, Executive Order No. 473, Series of 1991 and other existing laws except Republic
Act No. 7611, decrees, executive orders, and rules and regulations or parts thereof, which are inconsistent
with this Code, are hereby repealed or modified accordingly.

SECTION 132. Separability Clause

If any portion or provision of this Code is declared unconstitutional or invalid, the other portions or provisions
hereof, which are not affected thereby, shall continue in full force and effect.

SECTION 133. Effectivity

This Code shall take effect fifteen (15) days after its publication in the Official Gazette or in two (2) newspapers
of general publication.
 Republic Act No. 8435
AN ACT PRESCRIBING URGENT RELATED MEASURES TO MODERNIZE THE AGRICULTURE AND FISHERIES
SECTORS OF THE COUNTRY IN ORDER TO ENHANCE THEIR PROFITABILITY, AND PREPARE SAID SECTORS FOR
THE CHALLENGES OF GLOBALIZATION THROUGH AN ADEQUATE, FOCUSED AND RATIONAL DELIVERY OF
NECESSARY SUPPORT SERVICES, APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES

Approved, December 22, 1997

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Short Title

This Act shall be known as the “Agriculture and Fisheries Modernization Act of 1997.”

Section 2. Declaration of Policy

The goals of the national economy are a more equitable distribution of opportunities, income and wealth; a
sustained increase in the amount of goods and services produced by the nation for the benefit of the people;
and an expanding productivity as the key to raising the quality of life for all, especially the underprivileged.

The State shall promote industrialization and full employment based on sound agricultural development and
agrarian reform, through industries that make full and efficient use of human and natural resources, and
which are competitive in both domestic and foreign markets. In pursuit of these goals, all sectors of the
economy and all regions of the country shall be given optimum opportunity to develop. Private enterprises,
including corporations, cooperatives, and similar collective organizations, shall be encouraged to broaden the
base of their ownership.

Thus, it is hereby declared the policy of the State to enable those who belong to the agriculture and fisheries
sectors to participate and share in the fruits of development and growth in a manner that utilizes the nation’s
resources in the most efficient and sustainable way possible by establishing a more equitable access to assets,
income, basic and support services and infrastructure.

The State shall promote food security, including sufficiency in our staple food, namely rice and white corn. The
production of rice and white corn shall be optimized to meet our local consumption and shall be given
adequate support by the State.

The State shall adopt the market approach in assisting the agriculture and fisheries sectors while recognizing
the contribution of said sectors to food security, environmental protection, and balanced urban and rural
development, without neglecting the welfare of the consumers, especially the lower income groups. The State
shall promote market-oriented policies in agricultural production to encourage farmers to shift to more
profitable crops.

The State shall empower the agriculture and fisheries sectors to develop and sustain themselves. Toward this
end, the State shall ensure the development of the agriculture and fisheries sectors in accordance with the
following principles:
 a) Poverty Alleviation and Social Equity – The State shall ensure that the poorer sectors of society have
equitable access to resources, income opportunities, basic and support services and infrastructure
especially in areas where productivity is low as a means of improving their quality of life compared
with other sectors of society;

b) Food Security – The State shall assure the availability, adequacy, accessibility and affordability of food
supplies to all at all times;

c) Rational Use of Resources – The State shall adopt a rational approach in the allocation of public
investments in agriculture and fisheries in order to assure efficiency and effectiveness in the use of
scarce resources and thus obtain optimal returns on its investments;

d) Global Competitiveness – The State shall enhance the competitiveness of the agriculture and fisheries
sectors in both domestic and foreign markets;

e) Sustainable Development – The State shall promote development that is compatible with the
preservation of the ecosystem in areas where agriculture and fisheries activities are carried out. The
State should exert care and judicious use of the country’s natural resources in order to attain long-term
sustainability;

f) People Empowerment – The State shall promote people empowerment by enabling all citizens through
direct participation or through their duly elected, chosen or designated representatives the
opportunity to participate in policy formulation and decision-making by establishing the appropriate
mechanisms and by giving them access to information; and

g) Protection from Unfair Competition – The State shall protect small farmers and fisherfolk from unfair
competition such as monopolistic and oligopolistic practices by promoting a policy environment that
provides them priority access to credit and strengthened cooperative-based marketing system.

Section 3. Statement of Objectives

This Act shall have the following objectives:

a) To modernize the agriculture and fisheries sectors by transforming these sectors from a resource-
based to a technology-based industry;

b) To enhance profits and incomes in the agriculture and fisheries sectors, particularly the small farmers
and fisherfolk, by ensuring equitable access to assets, resources and services, and promoting higher-
value crops, value-added processing, agribusiness activities, and agro-industrialization;

c) To ensure the accessibility, availability and stable supply of food to all at all times;

d) To encourage horizontal and vertical integration, consolidation and expansion of agriculture and
fisheries activities, groups, functions and other services through the organization of cooperatives,
farmers’ and fisherfolk’s associations, corporations, nucleus estates, and consolidated farms and to
enable these entities to benefit from economies of scale, afford them a stronger negotiating position,
pursue more focused, efficient and appropriate research and development efforts and enable them to
hire professional managers;
 e) To promote people empowerment by strengthening people’s organizations, cooperatives and NGOs
and by establishing and improving mechanisms and processes for their participation in government
decision-making and implementation;

f) To pursue a market-driven approach to enhance the comparative advantage of our agriculture and
fisheries sectors in the world market;

g) To induce the agriculture and fisheries sectors to ascend continuously the value-added ladder by
subjecting their traditional or new products to further processing in order to minimize the marketing of
raw, unfinished or unprocessed products;

h) To adopt policies that will promote industry dispersal and rural industrialization by providing incentives
to local and foreign investors to establish industries that have backward linkages to the country’s
agriculture and fisheries resource base;

i) To provide social and economic adjustment measures that increase productivity and improve market
efficiency while ensuring the protection and preservation of the environment and equity for small
farmers and fisherfolk; and

j) To improve the quality of life of all sectors.

Section 4. Definition of Terms

“Agrarian Reform Community” is a barangay at the minimum or a cluster of contiguous barangays where there
is a critical mass of farmers or farm workers and which features the main thrust of agrarian development: land
tenure improvement and effective delivery of support services.

“Agricultural Lands” refer to lands devoted to or suitable for the cultivation of the soil, planting of crops,
growing of trees, raising of livestock, poultry, fish or aquaculture production, including the harvesting of such
farm products, and other farm activities and practices performed in conjunction with such farming operations
by persons whether natural or juridical and not classified by law as mineral land, forest land, residential land,
commercial land, or industrial land.

“Agricultural Land Use Conversion” refers to the process of changing the use of agricultural land to non-
agricultural uses.

“Agricultural Sector” is the sector engaged in the cultivation of the soil, planting of crops, growing of fruit
trees, raising of livestock, poultry, or fish, including the harvesting and marketing of such farm products, and
other farm activities and practices.

“Agricultural Mechanization” is the development, adoption, manufacture and application of appropriate

location-specific, and cost-effective agricultural technology using human, animal, mechanical, electrical and
other non-conventional sources of energy for agricultural production and post-harvest operations consistent
with agronomic conditions and for efficient and economic farm management.
“Agriculture and Fisheries Modernization” is the process of transforming the agriculture and fisheries sectors
into one that is dynamic, technologically advanced and competitive yet centered on human development,
guided by the sound practices of sustainability and the principles of social justice.

“Agro-Processing Activities” refer to the processing of raw agricultural and fishery products into semi-
processed or finished products which include materials for the manufacture of food and/or non-food
products, pharmaceuticals and other industrial products.

“Banks,” collectively used, means government banks and private banks, rural banks and cooperative banks.

“Basic Needs Approach to Development” involves the identification, production and marketing of wage goods
and services for consumption of rural communities.

“Communal Irrigation System (CIS)” is an irrigation system that is managed by a bona fide Irrigators
Association.

“Competitive Advantage” refers to competitive edge in terms of product quality and/or price. It likewise refers
to the ability to produce a product with the greatest relative efficiency in the use of resources.

“Cooperatives” refer to duly registered associations of persons with a common bond of interest who have
voluntarily joined together to achieve a lawful common social and economic end, making equitable
contributions to the capital required and accepting a fair share of the risks and benefits of the undertaking in
accordance with universally accepted cooperative principles.

“Department” refers to the Department of Agriculture.

“Economic Scale” refers to the minimum quantity or volume of goods required to be efficient.

“Economies of Scale” refers to the decrease in unit cost as more units are produced due to the spreading out
of fixed costs over a greater number of units produced.

“Empowerment” involves providing authority, responsibility and information to people directly engaged in
agriculture and fishery production, primarily at the level of the farmers, fisherfolk and those engaged in food
and non-food production and processing, in order to give them wider choices and enable them to take
advantage of the benefits of the agriculture and fishery industries.

“Extension Services” refer to the provision of training, information, and support services by the government
and non-government organizations to the agriculture and fisheries sectors to improve the technical, business
and social capabilities of farmers and fisherfolk.

“Farmers’ and Fisherfolk’s Organizations or Associations” refer to farmers’ and fisherfolk’s cooperatives,
associations, or corporations duly registered with appropriate government agencies and which are composed
primarily of small agricultural producers, farmers, farm workers, agrarian reform beneficiaries, fisherfolk who
voluntarily join together to form business enterprises or non-business organizations which they themselves
own, control and patronize.

“Farm-to-Market Roads” refer to roads linking the agriculture and fisheries production sites, coastal landing
points and post-harvest facilities to the market and arterial roads and highways.
“Fisheries” refer to all systems or networks of interrelated activities which include the production, growing,
harvesting, processing, marketing, developing, conserving, and managing of all aquatic resources and fisheries
areas.

“Fisheries Sector” is the sector engaged in the production, growing, harvesting, processing, marketing,
developing, conserving, and managing of aquatic resources and fisheries areas.

“Fishing” refers to the application of techniques using various gear in catching fish and other fisheries
products.

“Fishing Grounds” refer to areas in any body of water where fish and other aquatic resources congregate and
become target of capture.

“Food Security” refers to the policy objective, plan and strategy of meeting the food requirements of the
present and future generations of Filipinos in substantial quantity, ensuring the availability and affordability of
food to all, either through local production or importation, or both, based on the country’s existing and
potential resource endowment and related production advantages, and consistent with the overall national
development objectives and policies. However, sufficiency in rice and white corn should be pursued.

“Fresh Agricultural And Fishery Products” refer to agricultural and fisheries products newly taken or captured
directly from its natural state or habitat, or those newly harvested or gathered from agricultural areas or
bodies of water used for aquaculture.

“Global Competitiveness” refers to the ability to compete in terms of price, quality and volume of agriculture
and fishery products relative to those of other countries.

“Gross Value-Added” refers to the total value, excluding the value of non-agricultural or fishery intermediate
inputs, of goods and services contributed by the agricultural and fisheries sectors.

“Headworks” refer to the composite parts of the irrigation system that divert water from natural bodies of
water such as rivers, streams, and lakes.

“Industrial Dispersal” refers to the encouragement given to manufacturing enterprises to establish their plants
in rural areas. Such firms normally use agricultural raw materials either in their primary or intermediate state.

“Irrigable Lands” refer to lands which display marked characteristics justifying the operation of an irrigation
system.

“Irrigated Lands” refer to lands serviced by natural irrigation or irrigation facilities. These include lands where
water is not readily available as existing irrigation facilities need rehabilitation or upgrading or where irrigation
water is not available year-round.

“Irrigation System” refers to a system of irrigation facilities covering contiguous areas.

“Irrigators’ Association (IA)” refers to an association of farmers within a contiguous area served by a National
Irrigation System or Communal Irrigation System.

“Land Use” refers to the manner of utilizing the land, including its allocation, development and management.
“Land Use Plan” refers to a document embodying a set of policies accompanied by maps and similar
illustrations which represent the community-desired pattern of population distribution and a proposal for the
future allocation of land to the various land-using activities, in accordance with the social and economic
objectives of the people. It identifies the location, character and extent of the area’s land resources to be used
for different purposes and includes the process and the criteria employed in the determination of the land
use.

“Land Use Planning” refers to the act of defining the allocation, utilization, development and management of
all lands within a given territory or jurisdiction according to the inherent qualities of the land itself and
supportive of sustainable, economic, demographic, socio-cultural and environmental objectives as an aid to
decision-making and legislation.

“Main Canal” refers to the channel where diverted water from a source flows to the intended area to be
irrigated.

“Market Infrastructure” refers to facilities including, but not limited to, market buildings, slaughterhouses,
holding pens, warehouses, market information centers, connecting roads, transport and communication and
cold storage used by the farmers and fisherfolk in marketing their produce.

“National Information Network (NIN)” refers to an information network which links all offices and levels of the
Department with various research institutions and local end-users, providing easy access to information and
marketing services related to agriculture and fisheries.

“National Irrigation System (NIS)” refers to a major irrigation system managed by the National Irrigation
Administration.

“Network of Protected Areas for Agricultural and Agro-industrial Development (NPAAAD)” refers to
agricultural areas identified by the Department through the Bureau of Soils and Water Management in
coordination with the National Mapping and Resource Information Authority in order to ensure the efficient
utilization of land for agriculture and agro-industrial development and promote sustainable growth. The
NPAAAD covers all irrigated areas, all irrigable lands already covered by irrigation projects with firm funding
commitments; all alluvial plain land highly suitable for agriculture whether irrigated or not; agro-industrial
croplands or lands presently planted to industrial crops that support the viability of existing agricultural
infrastructure and agro-based enterprises, highlands, or areas located at an elevation of five hundred (500)
meters or above and have the potential for growing semi-temperate and high-value crops; all agricultural
lands that are ecologically fragile, the conversion of which will result in serious environmental degradation,
and mangrove areas and fish sanctuaries.

“On-Farm Irrigation Facilities” refer to composite facilities that permit entry of water to paddy areas and
consist of farm ditches and turnouts.

“Primary Processing” refers to the physical alteration of raw agricultural or fishery products with or without
the use of mechanical facilities.

“Post-Harvest Activities” include, but is not limited to, threshing, drying, milling, grading, storing and handling
of produce and such other activities as stripping, winnowing, chipping and washing.
“Post-Harvest Facilities” include, but is not limited to, threshers, moisture meters, dryers, weighing scales,
milling equipment, fish ports, fish landings, ice plants and cold storage facilities, processing plants,
warehouses, buying stations, market infrastructure and transportation facilities.

“Premature Conversion of Agricultural Land” refers to the undertaking of any development activity, the results
of which modify or alter the physical characteristics of the agricultural lands to render them suitable for non-
agricultural purposes, without an approved order of conversion from the DAR.

“Resource Accounting” refers to a process of tracking changes in the environment and natural resources
biophysically and economically (in monetary terms).

“Resource-based” refers to the utilization of natural resources.

“Rural Industrialization” refers to the process by which the economy is transformed from one that is
predominantly agricultural to one that is dominantly industrial and service oriented. Agriculture provides the
impetus and push for industry and services through the market that it creates, the labor that it absorbs, and
the income that it generates which is channeled to industry and services. As development continues with
agriculture still an important sector, industry and services begin to generate income and markets and
concomitantly increase their share of total income.

“Strategic Agriculture and Fisheries Development Zones (SAFDZ)” refers to the areas within the NPAAAD
identified for production, agro-processing and marketing activities to help develop and modernize, with the
support of government, the agriculture and fisheries sectors in an environmentally and socio-culturally sound
manner.

“Secondary Canal” refers to the channel connected to the main canal which distributes irrigation to specific
areas.

“Secondary Processing” refers to the physical transformation of semi-processed agricultural or fishery

products.

“Shallow Tube Well (STW)” refers to a tube or shaft vertically set into the ground for the purpose of bringing
ground water to the soil surface from a depth of less than 20 meters by suction lifting.

“Small Farmers and Fisherfolk” refers to natural persons dependent on small-scale subsistence farming and
fishing activities as their primary source of income.

“Small and Medium Enterprise (SME)” refers to any business activity or enterprise engaged in industry,
agribusiness and/or services, whether single proprietorship, cooperative, partnership or corporation whose
total assets, inclusive of those arising from loans but exclusive of the land on which the particular business
entity’s office, plant and equipment are situated, must have value falling under the following categories:

Micro : not more than P1,500,000

Small : P1,500,001 to P15,000,000
Medium : P15,000,001 to P60,000,000

The Department, in consultation with the Congressional Oversight Committee on Agricultural and Fisheries
Modernization, may adjust the above values as deemed necessary.
“Socio-culturally Sound” means the consideration of the social structure of the community such as leadership
pattern, distribution of roles across gender and age groups, the diversity of religion and other spiritual beliefs,
ethnicity and cultural diversity of the population.

“Technology-based” refers to utilization of technology.

“Zoning Ordinance” refers to a local legislation approving the development/land use plan and providing for
the regulations and other conditions on the uses of land including the limitation on the infrastructure that may
be placed within the territorial jurisdiction of a city or municipality.

TITLE 1 - PRODUCTION AND MARKETING SUPPORT SERVICES

Chapter 1: Strategic Agricultural and Fisheries

Development Zones

Section 5. Declaration of Policy

It is the policy of the State to ensure that all sectors of the economy and all regions of the country shall be
given optimum opportunity to develop through the rational and sustainable use of resources peculiar to each
area in order to maximize agricultural productivity, promote efficiency and equity and accelerate the
modernization of the agriculture and fisheries sectors of the country.

Section 6. Network of Areas for Agricultural and Agro-Industrial

Development
The Department shall, within six (6) months after the approval of this Act, and in consultation with the local
government units, appropriate government agencies, concerned non-government organizations (NGOs) and
organized farmers’ and fisherfolk’s groups, identify the Strategic Agriculture and Fisheries Development Zones
(SAFDZ) within the network of protected areas for agricultural and agro-industrial development to ensure that
lands are efficiently and sustainably utilized for food and non-food production and agro-industrialization.

The SAFDZ, which shall serve as centers where development in the agriculture and fisheries sectors are
catalyzed in an environmentally and socio-culturally sound manner, shall be identified on the basis of the
following criteria:

a) Agro-climatic and environmental conditions giving the area a competitive advantage in the cultivation,
culture, production and processing of particular crops, animals and aquatic products;

b) Strategic location of the area for the establishment of agriculture or fisheries infrastructure, industrial
complexes, production and processing zones;

c) Strategic location of the area for market development and market networking both at the local and
international levels; and
 d) Dominant presence of agrarian reform communities (ARCs) and/or small owner-cultivators and
amortizing owners/ agrarian reform beneficiaries and other small farmers and fisherfolk in the area.

The SAFDZ shall have an integrated development plan consisting of production, processing, investment,
marketing, human resources and environmental protection components.

Section 7. Model Farms

The Department, in coordination with the local government units (LGUs) and appropriate government
agencies, may designate agrarian reform communities (ARCs) and other areas within the SAFDZ suitable for
economic scale production which will serve as model farms.

Farmer-landowners whose lands are located within these designated areas shall be given the option to enter
into a management agreement with corporate entities with proven competence in farm operations and
management, high-end quality production and productivity through the use of up-to-date technology and
collateral resources such as skilled manpower, adequate capital and credit, and access to markets, consistent
with existing laws.

Section 8. Mapping
The Department, through the Bureau of Soils and Water Management (BSWM), in coordination with the
National Mapping and Resource Information Authority (NAMRIA) and the Housing and Land Use Regulatory
Board (HLURB) shall undertake the mapping of the network of areas for agricultural and agro-industrial
development for all municipalities, cities at an appropriate scale. The BSWM may call on other agencies to
provide technical and other logistical support in this undertaking.

Sec. 9. Delineation of Strategic Agriculture and Fisheries Development Zones. – The Department, in
consultation with the Department of Agrarian Reform, the Department of Trade and Industry, the Department
of Environment and Natural Resources, Department of Science and Technology, the concerned LGUs, the
organized farmers and fisherfolk groups, the private sector and communities shall, without prejudice to the
development of identified economic zones and free ports, establish and delineate, based on sound resource
accounting, the SAFDZ within one (1) year from the effectivity of this Act.

All irrigated lands, irrigable lands already covered by irrigation projects with firm funding commitments, and
lands with existing or having the potential for growing high-value crops so delineated and included within the
SAFDZ shall not be converted for a period of five (5) years from the effectivity of this Act: Provided, however,
That not more than five percent (5%) of the said lands located within SAFDZ may be converted upon
compliance with existing laws, rules, regulations, executive orders and issuances, and administrative orders
relating to land use conversion: Provided, further, That thereafter: 1) a review of the SAFDZ, specifically on the
productivity of the areas, improvement of the quality of life of farmers and fisherfolk, and efficiency and
effectiveness of the support services shall be conducted by the Department and the Department of Agrarian
Reform, in coordination with the Congressional Oversight Committee on Agricultural and Fisheries
Modernization; 2) conversion may be allowed, if at all, on a case-to-case basis subject to existing laws, rules,
regulations, executive orders and issuances, and administrative orders governing land use conversion; and, 3)
in case of conversion, the land owner will pay the Department the amount equivalent to the government’s
investment cost including inflation.

Sec. 10. Preparation of Land Use and Zoning Ordinance. – Within one (1) year from the finalization of the
SAFDZ, in every city and municipality, all cities and municipalities shall have prepared their respective land use
and zoning ordinance incorporating the SAFDZ, where applicable. Thereafter, all land use plans and zoning
ordinances shall be updated every four (4) years or as often as may be deemed necessary upon the
recommendation of the Housing and Land Use Regulatory Board and must be completed within the first year
of the term of office of the mayor. If the cities/municipalities fail to comply with the preparation of zoning and
land use plans, the DILG shall impose the penalty as provided for under Republic Act No. 7160.

Sec. 11. Penalty for Agricultural Inactivity and Premature Conversion. – Any person or juridical entity who
knowingly or deliberately causes any irrigated agricultural lands seven (7) hectares or larger, whether
contiguous or not, within the protected areas for agricultural development, as specified under Section 6 in
relation to Section 9 of this Act, to lie idle and unproductive for a period exceeding one (1) year, unless due to
force majeure, shall by subject to an idle land tax of Three thousand pesos (P3,000) per hectare per year. In
addition, the violator shall be required to put back such lands to productive agricultural use. Should the
continued agricultural inactivity, unless due to force majeure, exceed a period of two (2) years, the land shall
be subject to escheat proceedings.

Any person found guilty of premature or illegal conversion shall be penalized with imprisonment of two (2) to
six (6) years, or a fine equivalent to one hundred percent (100%) of the government’s investment cost, or
both, at the discretion of the court, and an accessory penalty of forfeiture of the land and any improvement
thereon.

In addition, the DAR may impose the following penalties, after determining, in an administrative proceedings,
that violation of this law has been committed:

a) Cancellation or withdrawal of the authorization for land use conversion; and

b) Blacklisting, or automatic disapproval of pending and subsequent conversion applications that they may file
with the DAR.

Sec. 12. Protection of Watershed Areas. – All watersheds that are sources of water for existing and potential
irrigable areas and recharge areas of major aquifers identified by the Department of Agriculture and the
Department of Environment and Natural Resources shall be preserved as such at all times.

Chapter 2

Agriculture and Fisheries

Modernization Plan

Sec. 13. Agriculture and Fisheries Modernization Plan (AFMP). – The Department, in consultation with the
farmers and fisherfolk, the private sector, NGOs, people’s organizations and the appropriate government
agencies and offices, shall formulate and implement a medium- and long-term comprehensive Agriculture and
Fisheries Modernization Plan.

The Agriculture and Fisheries Modernization Plan shall focus on five (5) major concerns:

a) Food security;

b) Poverty alleviation and social equity;

c) Income enhancement and profitability, especially for farmers and fisherfolk;

d) Global competitiveness; and

e) Sustainability.

Sec. 14. Food Security, Poverty Alleviation, Social Equity and Income Enhancement. – The Department, in
coordination with other concerned departments or agencies, shall formulate medium- and long-term plans
addressing food security, poverty alleviation, social equity and income enhancement concerns based on, but
not limited to, the following goals and indicators of development:

a) Increased income and profit of small farmers and fisherfolk;

b) Availability of rice and other staple foods at affordable prices;

c) Reduction of rural poverty and income inequality;

d) Reduction of the incidence of malnutrition;

e) Reduction of rural unemployment and underemployment; and

f) Improvement in land tenure of small farmers.

Sec. 15. Global Competitiveness and Sustainability. – The Department shall formulate medium- and long-term
plans aimed at enhancing the global competitiveness and sustainability of the country in agriculture and
fisheries based on, but not limited to, the following goals and indicators of development:

a) Increase in the volume, quality and value of agriculture and fisheries production for domestic consumption
and for exports;

b) Reduction in post-harvest losses;

c) Increase in the number/types and quality of processed agricultural and fishery products;

d) Increase in the number of international trading partners in agriculture and fishery products;

e) Increase in the number of sustainable agriculture and fisheries firms engaged in domestic production,
processing, marketing and export activities;

f) Increase in and wider level of entrepreneurship among farmers and fisherfolk in the area;

g) Increase in the number of farms engaged in diversified farming; and

h) Reduced use of agro-chemicals that are harmful to health and the environment.

Sec. 16. Global Climate Change. – The Department, in coordination with the Philippine Atmospheric,
Geophysical and Astronomical Service Administration (PAGASA) and such other appropriate government
agencies, shall devise a method of regularly monitoring and considering the effect of global climate changes,
weather disturbances, and annual productivity cycles for the purpose of forecasting and formulating
agriculture and fisheries production programs.

Sec. 17. Special Concerns. – The Department shall consider the following areas of concerns, among others, in
formulating the AFMP:

a) Strategies and programs aimed to achieve growth and profitability targets in the contest of the constraints
and challenges of the World Trade Organization (WTO);

b) Programs arising from the implementation of the Agrarian Reform Program;

c) Identification of SAFDZ;

d) Infrastructure and market support of the SAFDZs;

e) Infrastructure support to make agriculture and fisheries production inputs, information and technology
readily available to farmers, fisherfolk, cooperatives and entrepreneurs;

f) Credit programs for small farmers and fisherfolk, and agricultural graduates;

g) Comprehensive and integrated agriculture and fisheries research, development and extension services;

h) Preservation of biodiversity, genetic materials and the environment;

i) Adequate and timely response against environmental threats to agriculture and fisheries;

j) Rural non-farm employment;

k) Access to aquatic resources by fisherfolk;

l) Basic needs program for the impoverished sectors of society who will be affected by liberalization;

m) Indigenous peoples;

n) Rural youth;

o) Women;

p) Handicapped persons; and

q) Senior citizens.

Sec. 18. Monitoring and Evaluation. – The Department shall develop the capability of monitoring the AFMP
through a Program Benefit Monitoring and Evaluation System (PBMES). In addition, it can secure the services
of independent consultants and external evaluators in order to assess its over-all impact. The Department
shall make periodic reports to the Congressional Oversight Committee on Agriculture and Fisheries
Modernization.
Sec. 19. Role of Other Agencies. – All units and agencies of the government shall support the Department in
the implementation of the AFMP.

In particular, the Department of Public Works and Highways shall coordinate with the Department with
respect to the infrastructure support aspect of the plan in order to accomplish networking of related
infrastructure facilities.

The Department of Interior and Local Government shall provide assistance to the Department in mobilizing
resources under the control of local government units.

The Departments of Trade and Industry, Agrarian Reform, Science and Technology, and Environment and
Natural Resources shall coordinate their investment programs and activities to complement the Department’s
implementation of the AFMP.

The Department of Education, Culture and Sports, the Technical Education and Skills Development Authority,
the Department of Health and the Department of Social Services and Development shall coordinate with the
Department to determine the financial requirements of small farmers and fisherfolk to adjust to the effects of
modernization as envisioned in the Agriculture and Fisheries Modernization Plan.

The Department of Environment and Natural Resources shall provide technical assistance and advice on the
delineation of the SAFDZ and on the development of the Department’s environmental protection plans.

The departments referred to above shall be required to identify in their budget proposals the allocation
intended for the improvement of the environmental and other conditions affecting agriculture and fisheries.

Congressional initiatives shall also be coordinated by the Committees on Agriculture of both Houses to
complement and enhance the programs and activities of the Department in the implementation of the AFMP.

Chapter 3

Credit

Sec. 20. Declaration of Policy. – It is hereby declared the policy of the State to alleviate poverty and promote
vigorous growth in the countryside through access to credit by small farmers, fisherfolk, particularly the
women involved in the production, processing and trading of agriculture and fisheries products and the small
and medium scale enterprises (SMEs) and industries engaged in agriculture and fisheries.

Interest rates shall be determined by market forces, provided that existing credit arrangements with agrarian
reform beneficiaries are not affected. Emphasis of the credit program shall be on proper management and
utilization.

In this regard, the State enjoins the active participation of the banking sector and government financial
institutions in the rural financial system.

Sec. 21. Phase-out of the Directed Credit Programs (DCPs) and Provision for the Agro-Industry Modernization
Credit and Financing Program (AMCFP). – The Department shall implement existing DCPs; however, the
Department shall, within a period of four (4) years from the effectivity of this Act, phase-out all DCPs and
deposit all its loanable funds including those under the Comprehensive Agricultural Loan Fund (CALF) including
new funds provided by this Act for the AMCFP and transfer the management thereof to cooperative banks,
rural banks, government financial institutions and viable NGOs for the Agro-Industry Modernization Credit
Financing Program (AMCFP). Interest earnings of the said deposited loan funds shall be reverted to the
AMCFP.

Sec. 22. Coverage. – An agriculture, fisheries and agrarian reform credit and financing system shall be designed
for the use and benefit of farmers, fisherfolk, those engaged in food and nonfood production, processing and
trading, cooperatives, farmers’/ fisherfolk’s organization, and SMEs engaged in agriculture and fisheries,
hereinafter referred to in this chapter as the “beneficiaries.”

Sec. 23. Scope of the Agro-Industry Modernization Credit and Financing Program (AMCFP). – The Agro-
Industry Modernization Credit and Financing Program shall include the packaging and delivery of various
credit assistance programs for the following:

a) Agriculture and fisheries production including processing of fisheries and agri-based products and farm
inputs;

b) Acquisition of work animals, farm and fishery equipment and machinery;

c) Acquisition of seeds, fertilizer, poultry, livestock, feeds and other similar items;

d) Procurement of agriculture and fisheries products for storage, trading, processing and distribution;

e) Acquisition of water pumps and installation of tube wells for irrigation;

f) Construction, acquisition and repair of facilities for production, processing, storage, transportation,
communication, marketing and such other facilities in support of agriculture and fisheries;

g) Working capital for agriculture and fisheries graduates to enable them to engage in agriculture and
fisheries-related economic activities;

h) Agribusiness activities which support soil and water conservation and ecology-enhancing activities;

i) Privately-funded and LGU-funded irrigation systems that are designed to protect the watershed;

j) Working capital for long-gestating projects; and

k) Credit guarantees on uncollateralized loans to farmers and fisherfolk.

Sec. 24. Review of the Mandates of Land Bank of the Philippines, Philippine Crop Insurance Corporation,
Guarantee Fund For Small and Medium Enterprises, Quedan and Rural Credit Guarantee Corporation,
Agricultural Credit Policy Council. – The Department of Finance shall commission an independent review of the
charters and the respective programs of the Land Bank of the Philippines (LBP), Philippine Crop Insurance
Corporation (PCIC), Guarantee Fund for Small and Medium Enterprises (GSFME), Quedan and Rural Credit
Guarantee Corporation (Quedancor), and Agricultural Credit Policy Council (ACPC), and recommend policy
changes and other measures to induce the private sector’s participation in lending to agriculture and to
improve credit access by farmers and fisherfolk: Provided, That agriculture and fisheries projects with long
gestation period shall be entitled to a longer grace period in repaying the loan based on the economic life of
the project.
The Land Bank of the Philippines, shall, in accordance with its original mandate, focus primarily on plans and
programs in relation to the financing of agrarian reform and the delivery of credit services to the agriculture
and fisheries sectors, especially to small farmers and fisherfolk.

The review shall start six (6) months after the enactment of this Act. Thereafter, the review shall make
recommendations to the appropriate Congressional Committees for possible legislative actions and to the
Executive Branch for policy and program changes within six (6) months after submission.

Sec. 25. Rationalization of Credit Guarantee Schemes and Funds. – All existing credit guarantee schemes and
funds applicable to the agriculture and fishery sectors shall be rationalized and consolidated into an
Agriculture and Fisheries Credit Guarantee Fund. The rationalization and consolidation shall cover the credit
guarantee schemes and funds operated by the Quedancor, the GFSME and the Comprehensive Agricultural
Loan Fund. The Agriculture and Fisheries Credit Guarantee Fund shall be managed and implemented by the
Quedancor: Provided, That representation to the Quedancor Board shall be granted to cooperatives, local
government units and rural financial institutions: Provided, further, That credit guarantee shall be given only
to small-scale agriculture and fisheries activities and to countryside micro-, small, and medium enterprises. It
may also cover loan guarantees for purchase orders and sales contracts.

The Agriculture and Fisheries Credit Guarantee Fund shall be funded by at least ten percent (10%) of the
funding allocation for the AMCFP.

Chapter 4

Irrigation

Sec. 26. Declaration of Policy. – It is the policy of the State to use its natural resources rationally and equitably.
The State shall prevent the further destruction of watersheds, rehabilitate existing irrigation systems and
promote the development of irrigation systems that are effective, affordable, appropriate, and efficient.

In the choice of location-specific irrigation projects, the economic principle of comparative advantage shall
always be adhered to.

Sec. 27. Research and Development. – Irrigation Research and Development (R&D) shall be pursued and
priority shall be given to the development of effective, appropriate and efficient irrigation and water
management technologies.

The Department shall coordinate with the Department of Environment and Natural Resources concerning the
preservation and rehabilitation of watersheds to support the irrigation systems.

Sec. 28. Criteria for Selection of Irrigation Development Scheme. – The selection of appropriate scheme of
irrigation development shall be location-specific and based on the following criteria:

a) Technical feasibility;

b) Cost-effectiveness;

c) Affordability, low investment cost per unit area;

d) Sustainability and simplicity of operation;

e) Recovery of operation and maintenance cost;

f) Efficiency in water use;

g) Length of gestation period; and

h) Potential for increasing unit area productivity.

All irrigation projects shall, in addition to the criteria enumerated above, be subjected to a social cost-benefit
analysis.

Sec. 29. Simplified Public Bidding. – The construction, repair, rehabilitation, improvement, or maintenance of
irrigation projects and facilities shall follow the Commission on Audit (COA) rules on simplified public bidding.

Irrigation projects undertaken by farmers, farmers’ organizations and other private entities whose funding is
partly or wholly acquired by way of loan from government financial institutions shall not be subject to the
bidding requirements of the government.

Sec. 30. National Irrigation Systems (NIS). – The National Irrigation Administration (NIA) shall continue to plan,
design, develop, rehabilitate and improve the NISs. It shall continue to maintain and operate the major
irrigation structures including the headworks and main canals.

In addition, the NIA is mandated to gradually turn over operation and maintenance of the National Irrigation
System’s secondary canals and on-farm facilities to Irrigators’ Associations.

Sec. 31. Communal Irrigation Systems (CIS). – The Department shall, within five (5) years from the effectivity of
this Act, devolve the planning, design and management of CISs, including the transfer of NIA’s assets and
resources in relation to the CIS, to the LGUs. The budget for the development, construction, operation and
maintenance of the CIS and other types of irrigation systems shall be prepared by and coursed through the
LGUs. The NIA shall continue to provide technical assistance to the LGUs even after complete devolution of the
Irrigation Systems to the LGUs, as may be deemed necessary.

Sec. 32. Minor Irrigation Schemes. – The Department shall formulate and develop a plan for the promotion of
a private sector-led development of minor irrigation systems, such as Shallow Tube Wells (STWs), Low-Lift
Pumps (LLPs) and other inundation systems. The plan shall be included in the Short-term Agriculture and
Fisheries Modernization Plan.

Sec. 33. Other Irrigation Construction Schemes. – The Government shall also encourage the construction of
irrigation facilities through other viable schemes for the construction of irrigation such as build-operate-
transfer, build-transfer and other schemes that will fast-track the development of irrigation systems.

Sec. 34. Guarantee of the National Government. – To make build-operate-transfer (BOT) projects for irrigation
attractive to proponents, the national government shall issue the needed payment guarantee for BOT projects
which shall answer for default of the National Irrigation Administration. Such amounts needed to answer for
the payment guarantee is hereby to be appropriated.
Sec. 35. Irrigation Service Fees (ISF). – Upon effectivity of this Act, the NIA shall immediately review the ISF
rates and recommend to the Department reasonable rates within six (6) months from the effectivity of this
Act.

Sec. 36. Monitoring and Evaluation. – The Department shall monitor the implementation of R&D programs and
irrigation projects. The Department shall review all existing irrigation systems every four (4) years, to
determine their viability or ineffectiveness. The Department shall employ the services of independent
evaluators to assess the over-all impact of the country’s irrigation development.

Sec. 37. Exemption from Election Ban. – The repair, maintenance and rehabilitation of irrigation facilities as
well as BOT irrigation projects shall be exempted from the scope of the election ban on public works.

Chapter 5

Information and Marketing Support Service

Sec. 38. Declaration of Policy. – It is hereby declared the policy of the State to empower Filipino farmers and
fisherfolk, particularly the women, involved in agriculture and fisheries through the provision of timely,
accurate and responsive business information and efficient trading services which will link them to profitable
markets for their products. They shall likewise be given innovative support toward the generation of maximum
income through assistance in marketing.

Sec. 39. Coverage. – A market information system shall be installed for the use and benefit of, but not limited
to, the farmers and fisherfolk, cooperatives, traders, processors, the LGUs and the Department.

Sec. 40. The Marketing Assistance System. – The Department shall establish a National Marketing Assistance
Program that will immediately lead to the creation of a national marketing umbrella in order to ensure the
generation of the highest possible income for the farmers and fisherfolk or groups of farmers and fisherfolk,
matching supply and demand in both domestic and foreign markets.

Sec. 41. National Information Network. – A National Information Network (NIN) shall be set up from the
Department level down to the regional, provincial and municipal offices within one (1) year from the approval
of this Act taking into account existing information networks and systems.

The NIN shall likewise link the various research institutions for easy access to data on agriculture and fisheries
research and technology. All departments, agencies, bureaus, research institutions, and local government
units shall consolidate and continuously update all relevant information and data on a periodic basis and make
such data available on the Internet.

Sec. 42. Information and Marketing Service. – The NIN shall provide information and marketing services
related to agriculture and fisheries which shall include the following:

a) Supply data;

b) Demand data;

c) Price and price trends;

d) Product standards for both fresh and processed agricultural and fisheries products;
e) Directory of, but not limited to, cooperatives, traders, key market centers, processors and business
institutions concerned with agriculture and fisheries at the provincial and municipal levels;

f) Research information and technology generated from research institutions involved in agriculture and
fisheries;

g) International, regional and local market forecasts; and

h) Resource accounting data.

Sec. 43. Initial Set-up. – The Department shall provide technical assistance in setting-up the NIN at the local
level through the cooperatives and the LGUs: Provided, That, at the local level, a system that will make
marketing information and services related to agriculture and fisheries will be readily available in the
city/municipal public market for the benefit of the producers, traders and consumers.

Sec. 44. Role of Government Agencies. – The Bureau of Agricultural Statistics will serve as the central
information server and will provide technical assistance to end-users in accessing and analyzing product and
market information and technology.

The Department of Transportation and Communications shall provide technical and infrastructure assistance
to the Department in setting up the NIN.

LGUs shall coordinate with the Department for technical assistance in order to accelerate the establishment
and training of information end-users in their respective jurisdictions.

The Cooperatives Development Authority shall coordinate with the Department for technical assistance in
order to provide training assistance to cooperatives in the use and analysis of market information and
technology.

Sec. 45. Role of Private Sector. – The NIN shall likewise be accessible to the private sector engaged in
agriculture and fisheries enterprises. The Department shall formulate guidelines and determine fees for
private sector entities that use the NIN.

Chapter 6

Other Infrastructure

Sec. 46. Agriculture and Fisheries Infrastructure Support Services. – The Department of Public Works and
Highways, the Department of Transportation and Communications, the Department of Trade and Industry and
the LGUs shall coordinate with the Department to address the infrastructure requirements in accordance with
this Act: Provided, That, the Department and the LGUs shall also strengthen its agricultural engineering groups
to provide the necessary technical and engineering support in carrying out the smooth and expeditious
implementation of agricultural infrastructure projects.

Sec. 47. Criteria for Prioritization. – The prioritization of government resources for rural infrastructure shall be
based on the following criteria:

a) Agro-industrial potential of the area;

b) Socio-economic contributions of the investments in the area;

c) Absence of public investment in the area; and

d) Presence of agrarian reform beneficiaries and other small farmers and fisherfolk in the area.

Sec. 48. Public Infrastructure Facilities. – Public infrastructure investments shall give preference to the kind,
type, and model of infrastructure facilities that are cost-effective and will be useful for the production,
conservation, and distribution of most commodities and should benefit the most number of agriculture and
fisheries producers and processors.

Sec. 49. Private Infrastructure Facilities. – For infrastructure facilities primarily benefiting private investors, the
State shall facilitate the purchase and use of such facilities and shall keep to the minimum the bureaucratic
requirements for these types of investments. Private investors include cooperatives or corporations of
agriculture and fisheries producers and processors.

Sec. 50. Public Works Act. – The Department of Public Works and Highways shall coordinate with the
Department for the purpose of determining the order of priorities for public works funded under the Public
Works Act which directly or indirectly affect agriculture and fisheries.

Sec. 51. Fishports, Seaports and Airports. – The Department of Transportation and Communications, Philippine
Ports Authority and Philippine Fisheries Development Authority shall coordinate with the Department for the
purpose of determining priority fishports, seaports and airports and facilitating the installation of bulk-
handling and storage facilities, and other post-harvest facilities needed in order to enhance the marketing of
agriculture and fisheries products: Provided, That fishports, seaports and airports are also equipped with
quarantine, sanitary and phytosanitary centers. The Department of Transportation and Communications
(DOTC) shall have the mandate to cancel arrastre and cargo handling franchises among operators whom it
deems inefficient and/or ineffective owing, but not limited to, a past history of under-capitalization, lack of
equipment and lack of professional expertise. The DOTC shall recommend to the Philippine Ports Authority
and consult with ship-owners and ship-operators in assessing the cargo-handling capabilities of cargo
operators prior to extending new franchises or awards.

Sec. 52. Farm-to-Market Roads. – The Department shall coordinate with the LGUs and the resident-farmers
and fisherfolk in order to identify priority locations of farm-to-market roads that take into account the number
of farmers and fisherfolk and their families who shall benefit therefrom and the amount, kind and importance
of agricultural and fisheries products produced in the area.

Construction of farm-to-market roads shall be a priority investment of the LGUs which shall provide a
counterpart of not less than ten percent (10%) of the project cost subject to their IRA level.

Sec. 53. Rural Energy. – The Department shall coordinate with the Department of Energy (DOE), the
Department of Public Works and Highways (DPWH), the National Electrification Administration (NEA) and the
National Power Corporation (NAPOCOR) for the identification and installation of appropriate types of energy
sources particularly in the use of non-conventional energy sources for the locality in order to enhance
agriculture and fisheries development in the area.
Sec. 54. Communications Infrastructure. – The Department shall coordinate with the DOTC to facilitate the
installation of telecommunication facilities in priority areas, in order to enhance agriculture and fisheries
development.

Sec. 55. Water Supply System. – The Department shall coordinate with the DPWH and the LGUs for the
identification and installation of water supply system in the locality for agro-industrial uses to enhance
agriculture and fisheries development in the area.

Sec. 56. Research and Technology Infrastructure. – The Department in coordination with other government
agencies shall give priority and facilitate the funding of infrastructure necessary for research ventures such as
farm laboratories and demonstration farms with State colleges and universities that derive their core funds
from the Department.

Sec. 57. Post-Harvest Facilities. – The Department shall coordinate with the Bureau of Post-Harvest for
Research and Extension and the Post-Harvest Horticulture, Training and Research Center of the University of
the Philippines Los Baños, to identify appropriate post-harvest facilities and technology needed to enhance
agriculture and fisheries development in the area.

Sec. 58. Public Market and Abattoirs. – The Department shall encourage the LGUs to turn over the
management and supervision of public market and abattoirs to market vendors’ cooperatives and for that
purpose, the appropriation for post-harvest facilities shall include the support for market vendors’
cooperatives.

The Department shall coordinate with the LGUs in the establishment of standardized market systems and use
of sanitary market facilities, and abattoirs, intended to ensure food safety and quality.

All markets shall have a sanitation unit, proper and adequate drainage and sewerage system, ample water
supply, public toilets with lavatories, garbage receptacles, ice plants and cold storage, adequate lighting and
ventilation and supply of electricity to ensure cleanliness and sanitation. Price monitoring bulletin boards for
selected commodities and weighing scales accessible to the public shall also be established.

Proper protection and preservation of agriculture and fisheries products being sold in the market shall also be
observed. All foods which require no further cooking shall be wrapped, covered, or enclosed in containers to
preserve the freshness and prevent contamination. Selling of products on market floors shall be prohibited.

Sec. 59. Agricultural Machinery. – The Department shall give priority to the development and promotion of
appropriate agricultural machinery and other agricultural mechanization technologies to enhance agricultural
mechanization in the countryside.

Chapter 7

Product Standardization and Consumer Safety

Sec. 60. Declaration of Policy. – It is the policy of the State that all sectors involved in the production,
processing, distribution and marketing of food and non-food agricultural and fisheries products shall adhere
to, and implement the use of product standards in order to ensure consumer safety and promote the
competitiveness of agriculture and fisheries products.
Sec. 61. Bureau of Agriculture and Fisheries Product Standards. – The Department, within six (6) months after
the approval of this Act, and in consultation with the Department of Trade and Industry and the Bureau of
Food and Drugs, shall establish the Bureau of Agriculture and Fisheries Product Standards (BAFPS).

Sec. 62. Coverage. – The BAFPS shall set and implement standards for fresh, primary- and secondary-
processed agricultural and fishery products.

Sec. 63. Powers and Functions. – The BAFPS shall have the following powers and functions:

a) Formulate and enforce standards of quality in the processing, preservation, packaging, labeling,
importation, exportation, distribution, and advertising of agricultural and fisheries products;

b) Conduct research on product standardization, alignment of the local standards with the international
standards; and

c) Conduct regular inspection of processing plants, storage facilities, abattoirs, as well as public and private
markets in order to ensure freshness, safety and quality of products.

Sec. 64. Pool of Experts and Advisers. – The BAFPS may coordinate, seek the services of, and consult with both
private and governmental agencies, research institutes, educational establishments and such other individuals
and entities with expertise in the field of product standards and consumer safety.

The Department of Trade and Industry, the Food and Nutrition Research Institute, and the Bureau of Food and
Drugs shall provide technical advice and form part of the pool of experts/ advisers of the BAFPS.

TITLE 2

HUMAN RESOURCE DEVELOPMENT

Sec. 65. Declaration of Policy. – It is hereby declared the policy of the State to give priority to education and
training on science and technology in order to accelerate social progress and promote total human liberation
and development.

The State shall promote industrialization and full employment, based on sound agriculture and fisheries
development and agrarian reform, through industries that make full and efficient use of human and natural
resources.

Sec. 66. National Agriculture and Fisheries Education System (NAFES). – The Commission on Higher Education
(CHED), in coordination with the Department and appropriate government agencies, shall establish a National
Agriculture and Fisheries Education System (NAFES) which shall have the following objectives:

a) To establish, maintain and support a complete and integrated system of agriculture and fisheries education
relevant to the needs of the economy, the community and society;

b) To modernize and rationalize agriculture and fisheries education from the elementary to the tertiary levels;

c) To unify, coordinate and improve the system of implementation of academic programs that are geared
toward achieving agriculture and fisheries development in the country; and
d) To upgrade the quality, ensure sustainability and promote global competitiveness, at all levels, of
agriculture and fisheries education.

Sec. 67. Education Program for Elementary and Secondary Levels. – There is hereby established an Agriculture
and Fisheries Education Program, under the NAFES, specially designed for elementary and secondary levels.
The program shall be formulated, organized and implemented by the DECS with the following objectives:

a) to develop appropriate values that form the foundation for sustained growth in agriculture and fisheries
modernization;

b) to increase the attractiveness of agriculture and fisheries education, so that more young and talented
persons will look at agriculture and fisheries as an acceptable option for career and livelihood;

c) to promote appreciation of science in agriculture and fisheries development;

d) to develop among students, positive attitudes towards entrepreneurship and global competition in the
agriculture and fisheries business;

e) to improve the present curriculum in the elementary and secondary levels by emphasizing the core values
necessary for agriculture and fisheries modernization; and

f) to develop an outreach program where students, parents and the schools become instruments in effecting
positive changes in the pupil’s home and community.

Sec. 68. Post-Secondary Education Program. – There is hereby established a Post-Secondary Education
Program for Agriculture and Fisheries under the NAFES, which shall be formulated and developed by TESDA in
coordination with the appropriate government agencies and the private sector. The program shall include,
among others, the following:

a) a mechanism for a flexible process of curriculum development;

b) integration of the dual training system in the various agricultural curricula and training programs;

c) integration of entrepreneurship and global competitiveness in the agro-fisheries curricula;

d) institutionalizing agriculture and fisheries skills standards and technician testing and certification;

e) regular upgrading of learning/training facilities, school buildings, laboratory equipment; and

f) development of a system for the strict enforcement of school regulations regarding standards and
requirements.

Sec. 69. Network of National Centers of Excellence for Tertiary Education. – There is hereby established a
Network of National Centers of Excellence in Agriculture and Fisheries Education, composed of qualified public
and private colleges and universities, duly accredited as National Centers of Excellence (NCE) in the field of
agriculture and fisheries.

For this purpose, the CHED shall formulate and implement a system of accreditation: Provided, That not more
than one provincial institute in every province and no more than one national university in each field in every
region shall be accredited as such: and Provided, further, That the system shall be based on the following
criteria:

a) institutional accessibility, population, economic contribution of agriculture and fisheries in the community,
and the needs or unique requirements of the area;

b) quantity and quality of research studies conducted;

c) degree of utilization of research results;

d) quantity and quality of faculty members;

e) type of facilities;

f) linkage with international organizations; and

g) potential contribution to agriculture and fisheries development in the target area.

Sec. 70. Rationalization Plan. – For the purpose of upgrading and maintaining a high degree of academic
excellence in the fields of agriculture and fisheries, all existing public and private colleges and universities that
are not hereinafter designated and accredited as centers of excellence shall be given adequate time to redirect
its program to non-agriculture and/or non-fisheries areas needed by the province or region and/or merge
their program with accredited NCEs in accordance with the Rationalization Plan to be jointly formulated by
CHED and the Philippine Association of State Universities and Colleges (PASUC) upon consultation with the
institution concerned.

The Rationalization Plan shall include a policy for the effective utilization of affected personnel and facilities,
and shall not be construed as to result in the decrease of the budget allocation for the State universities and
colleges concerned.

Sec. 71. Counterpart Funding from LGUs. – The LGUs shall, within two (2) years from the effectivity of this Act,
provide at least ten percent (10%) of the Maintenance and Other Operating Expenses (MOOE) budget for the
operation of the provincial institutes within their area of responsibility.

In consultation with the LGUs, the CHED shall develop a provincial-national partnership scheme for a
reasonable sharing of financial support taking into account social equity factors for poor provinces.

Sec. 72. National Integrated Human Resource Development Plan in Agriculture and Fisheries. – The CHED, in
coordination with the Department and appropriate government agencies, shall formulate, develop and
implement an integrated human resource development plan in agriculture and fisheries which shall serve as
an instrument that will provide over-all direction in setting priorities in curricular programs, enrollment,
performance targets, and investment programs.

Sec. 73. Output-Oriented Performance Standards. – In order to ensure institutional accountability, efficiency,
and quality, there shall be formulated and developed an Output-Oriented Performance Standards which shall
serve as the primary instrument for institutional evaluation.

For this purpose, all public and private universities and colleges, that are designated as centers of excellence,
shall cause to be installed a computerized monitoring and evaluation system that periodically collects and
regularly measures variables indicating institutional performance based on the Output-Oriented Performance
Standards.

Sec. 74. Evaluation System. – Not later than one (1) year from the effectivity of this Act, the CHED shall
establish a baseline information using the Output-Oriented Performance Standards referred to in Section 73 of
this Title. Once every five (5) years thereafter, all designated NCEs in agriculture and fisheries shall be subject
to a third party evaluation.

The evaluation shall include, among others, management and educational experts of national stature and
representatives of key sectors of the agriculture and fisheries industries, as well as representatives of the
Department, the Department of Environment and Natural Resources, the Department of Science and
Technology, and the National Economic and Development Authority.

Sec. 75. Agriculture and Fisheries Board. – There shall be created an Agriculture and Fisheries Board in the
Professional Regulation Commission to upgrade the Agriculture and Fisheries profession.

Those who have not passed the Civil Service Examination for Fisheries and Agriculture but have served the
industry in either private or public capacity for not less than five (5) years shall be automatically granted
eligibility by the Board of Examiners.

The first board examination for B.S. Fisheries and/or Agriculture graduates shall be conducted within one (1)
year from the approval of this Act.

Sec. 76. Continuing Agriculture and Fisheries Education Program. – The Commission on Higher Education, the
Department of Education, Culture and Sports and Technical Education and Skills Development Authority, in
coordination with the Department and the public and private universities and colleges, shall formulate and
develop a National and Integrated Continuing Agriculture and Fisheries Education Program, which shall
address the current education and training requirements of teachers, professors and educators in agriculture
and fisheries.

For this purpose, pre-service and in-service training of teachers in Home Economics Livelihood Education
(HELE) for the primary level and Technology and Home Economics (THE) for the secondary level, shall be
upgraded.

Sec. 77. Scholarship Program. – The CHED, in coordination with public and private universities and colleges,
TESDA and the DBM, shall develop a national scholarship program that provides opportunities for deserving
academic staff to pursue advanced degrees in agriculture and fisheries. Where appropriate, such scholarship
program shall also provide opportunities for graduate work in foreign universities.

Sec. 78. Merit System. – To promote the development of scientific excellence and academic scholarship, the
public and private universities and colleges, in cooperation with the CHED and the DBM, shall institute an
output-oriented unified system of promotion for academic personnel.

Sec. 79. Budgetary Allocation Scheme. – The Budgetary Allocation Scheme for NAFES shall be as follows:

a) The current appropriation or budgets of State universities and colleges, that are herein designated as NCEs,
shall continue and shall be modified and adjusted in succeeding years in order to meet the standards of the
rationalized programs of the institutions as approved by Congress and shall be included in the annual General
Appropriations Act;
b) NCEs that are created under this Act shall likewise be provided with budgetary support based on their
programs and new staffing pattern as approved by DBM and shall be included in the annual General
Appropriations Act.

TITLE 3

RESEARCH DEVELOPMENT AND EXTENSION

Chapter 1

Research and Development

Sec. 80. Declaration of Policy. – It is hereby declared the policy of the State to promote science and technology
as essential for national development and progress.

The State shall likewise give priority to research and development, invention, innovation, and their utilization
and to science and technology education, training, and services. In addition to appropriate and relevant
technology, the State shall support indigenous and self-reliant scientific and technological capabilities, and
their application to the country’s productive system and national life.

Sec. 81. The National Research and Development System in Agriculture and Fisheries. – The Department, in
coordination with the Department of Science and Technology and other appropriate agencies and research
institutions shall enhance, support and consolidate the existing National Research and Development System in
Agriculture and Fisheries within six (6) months from the approval of this Act: Provided, That fisheries research
and development shall be pursued separately, from but in close coordination with that of agriculture.

Sec. 82. Special Concerns in Agriculture and Fisheries Research Services. – Agriculture and Fisheries Research
and Development activities shall be multidisciplinary and shall involve farmers, fisherfolk and their
organizations, and those engaged in food and non-food production and processing, including the private and
public sectors.

Research institutions and centers shall enjoy autonomy and academic freedom. The Department, in
collaboration with the Department of Science and Technology and other appropriate agencies, shall
harmonize its merit and output-oriented promotion system governing the scientific community in order to
promote increased research excellence and productivity and provide the government research system a
competitive edge in retaining its scientific personnel.

Appropriate technology shall be used to protect the environment, reduce cost of production, improve product
quality and increase value-added for global competitiveness.

Sec. 83. Funds for Research and Development. – Considering the nature of research, development and
extension activities, funding shall be based on the following guidelines:

a) Allocation of multi-year budgets which shall be treated as research and development grants.

b) The budget for agriculture and fisheries research and development shall be at least one percent (1%) of the
Gross Value Added (GVA) by year 2001 allocating at least one percent (1%) of the total amount by 1999. The
Department of Finance (DOF) in consultation with the Department shall formulate revenue enhancement
measures to fund this facility.

c) At least twenty percent (20%) shall be spent in support of basic research and not more than eighty percent
(80%) shall be used for applied research and technology development, of which at least ten percent (10%)
shall be used for technology packaging and transfer activities.

d) A science fund shall be established from which the scientific community in agriculture and fisheries shall
draw its financial resource for sustained career development: Provided, That only the interest earnings of the
funds shall be used.

The Department and other research agencies, in the national interest, are encouraged to go into co-financing
agreements with the private sector in the conduct of research and development provided that the terms and
conditions of the agreement are beneficial to the country.

Sec. 84. Excellence and Accountability in Research and Development. – The Department, in collaboration with
the Department of Science and Technology and other appropriate government agencies, shall formulate the
national guidelines in evaluating research and development activities and institutions, which shall involve an
independent and interdisciplinary team of collegial reviewers and evaluators.

Sec. 85. Communication of Research Results and Research-Extension Linkage. – Research information and
technology shall be communicated through the National Information Network (NIN).

All government agencies including the State colleges and universities and private educational institutions
selected as NCEs shall be computerized, networked, provided with regular updated information, and shall
likewise provide, through the NIN, results of research and development activities and current available
technology relating agriculture and fisheries.

Chapter 2

Extension Services

Sec. 86. Declaration of Policy. – It is hereby declared the policy of the State to promote science and technology
as essential for national development and progress. The State shall give priority to the utilization of research
results through formal and non-formal education, extension, and training services. It shall support the
development of a national extension system that will help accelerate the transformation of Philippine
agriculture and fisheries from a resource-based to a technology-based industry.

Sec. 87. Extension Services. – Agriculture and Fisheries Extension Services shall cover the following major
services to the farming and fishing community:

a) Training services;

b) Farm or business advisory services;

c) Demonstration services; and

d) Information and communication support services through tri-media.

Sec. 88. Special Concerns in the Delivery of Extension Services. – The delivery of Agriculture and Fisheries
Extension Services shall be multidisciplinary and shall involve the farmers, fisherfolk, and their organizations,
and those engaged in food and non-food production and processing, including the private and public sectors.

There shall be a national merit and promotion system governing all extension personnel, regardless of source
of funding, to promote professionalism and achieve excellence and productivity in the provision of the
government extension services.

Sec. 89. The National Extension System for Agriculture and Fisheries (NESAF). – The Department, in
coordination with the appropriate government agencies, shall formulate a National Extension System for
Agriculture and Fisheries.

The National Extension System for Agriculture and Fisheries shall be composed of three (3) subsystems:

a) The national government subsystem which directly complements;

b) The local government subsystems; and

c) The private sector subsystem.

Sec. 90. The Role of Local Government Units. – The LGUs shall be responsible for delivering direct agriculture
and fisheries extension services.

The provincial governments shall integrate the operations for the agriculture extension services and shall
undertake an annual evaluation of all municipal extension programs.

The extension program of State colleges and universities shall primarily focus on the improvement of the
capability of the LGU extension service by providing

a) Degree and non-degree training programs;

b) Technical assistance;

c) Extension cum research activities;

d) Monitoring and evaluation of LGU extension projects; and

e) Information support services through the tri-media and electronics.

Sec. 91. Role of the Private Sector in Extension. – The Department shall encourage the participation of farmers
and fisherfolks cooperatives and associations and others in the private sector in training and other
complementary extension services especially in community organizing, use of participatory approaches,
popularization of training materials, regenerative agricultural technologies, agribusiness and management
skills.

The Department is hereby authorized to commission and provide funding for such training and extension
services undertaken by the private sector.
Sec. 92. The Role of Government Agencies. – The Department, together with State colleges and universities
shall assist in the LGUs’ extension system by improving their effectiveness and efficiency through capability-
building and complementary extension activities such as:

a) technical assistance;

b) training of LGU extension personnel;

c) improvement of physical facilities;

d) extension cum research; and

e) information support services.

Sec. 93. Funding for Extension Activities. – Extension activities shall be supported by the following measures:

a) allocation of multi-year budgets that shall be treated as grants;

b) allow transfer of funds from the Department to the local government units as extension grants, and

c) the budget for agriculture and fisheries extension services shall be at least one percent (1%) of the gross
value added (GVA) by year 2001.

Sec. 94. Excellence and Accountability in Extension. – The Department shall formulate the guidelines in
evaluating extension activities and institutions, which shall involve an independent and interdisciplinary team
of collegial reviewers and evaluators.

Sec. 95. Extension Communication Support for LGUs. – The Department, in coordination with the public and
private universities and colleges, shall develop an integrated multimedia support for national and LGU
extension programs. The Department shall assist the LGUs in the computerization of communication support
services to clients and linkages to the NIN.

TITLE 4

RURAL NON-FARM EMPLOYMENT

Chapter 1

Sec. 96. Declaration of Policy. – It is hereby declared the policy of the State to promote full employment.
Economic history, however, shows that as an economy modernizes the number of workers employed in its
agricultural sector declines. It is therefore necessary to formulate policies and implement programs that will
employ workers efficiently in rural areas in order to improve their standard of living, and reduce their
propensity to migrate to urban areas.

Sec. 97. Objectives. – Rural non-farm employment aims to

a) promote a basic needs approach to rural development;

b) make rural workers more adaptable and flexible through education and training;
c) promote rural industrialization and the establishment of agro-processing enterprises in rural communities;
and

d) increase the income of rural workers.

Chapter 2

The Basic Needs Program

Sec. 98. Principles. – The Department, in coordination with the appropriate government agencies, shall
formulate the Basic Needs Program to create employment and cushion the effects of liberalization based on
the following principles:

a) No credit subsidies shall be granted. The normal rules of banking shall apply to all enterprises involved,
provided that existing credit arrangements with ARBs shall not be affected.

b) Enterprises can use training, information, advisory and related services of the Government free of charge.

c) The participation of the private sector shall be voluntary.

Teams composed of specialists from government agencies and the private sectors shall develop pilot programs
in selected locales to establish the planning, implementation and evaluation procedures.

Sec. 99. Participation of Government Agencies. – The replication of the program shall be the responsibility of
the local government units concerned in collaboration with the appropriate government agencies, and the
private sector. The local government units shall bear the costs of promoting and monitoring the basic needs
program for which their IRA shall be increased accordingly as recommended by the Secretary of the
Department: Provided, That the appropriate national government agencies shall continue to provide the
necessary technical as well as financial assistance to the LGUs in the replication of the program.

The Cooperatives Development Authority shall encourage the establishment and growth of associations and
cooperatives as vehicles for the stable expansion of basic needs enterprises.

The Department of Education, Culture and Sports, Department of Health, and the Technical Education and
Skills Development Authority shall coordinate with the Department and Congress in the review, rationalization
and reallocation of their regular budgets as well as their budgets under the GATT-related measures fund to
finance education, training, health and other welfare services for farmers and fisherfolks.

Chapter 3

Rural Industrialization

Industry Dispersal Program

Sec. 100. Principles. – Rural industrialization and industry dispersal programs shall be based on the interplay of
market forces. The Board of Investments (BOI) is hereby required to give the highest priority to the grant of
incentives to business and industries with linkages to agriculture.
Sec. 101. Role of Government Agencies. – The appropriate government agencies, under the leadership of the
LGUs concerned, shall provide integrated services and information to prospective enterprises under the one-
stop-shop concept.

Local government units are authorized to undertake investment and marketing missions provided that the
costs of such missions are borne by the LGUs concerned. In making their land use plans, the LGUs, in
consultation with the appropriate government agencies concerned, shall identify areas for industrial parks.

The Department shall coordinate with the Department of Trade and Industry, in particular, the Board of
Investments, in the formulation of investment priorities for rural areas.

The Regional Wage Boards shall consult participating enterprises in this program before they issue wage
orders.

Sec. 102. Participating Enterprises. – Participating enterprises may request any government agency for
training, technical and advisory services free of cost.

A set of incentives shall be given to enterprises that subcontract part of their production to farmers,
fisherfolks and landless workers during periods when they are not engaged in agricultural activities.

Sec. 103. Financing. – Except for basic infrastructure and other goods that benefit all citizens, the facilities of
this program should be undertaken and financed by the private sector.

Chapter 4

Training of Workers

Sec. 104. Role of TESDA. – TESDA shall organize local committees that will advise on the scope, nature and
duration of training for the above-mentioned programs.

TESDA is authorized to request the additional budgetary resources for these programs: Provided, That after a
reasonable period, the task of coordinating the training is transferred to the LGUs concerned.

Sec. 105. Role of the DENR. – The Department and the DENR shall organize the training of workers in coastal
resources management and sustainable fishing techniques.

Sec. 106. Role of the Technology and Livelihood Resource Center (TLRC). – The TLRC shall undertake field
training in entrepreneurship and management of workers involved in the basic needs program.

Sec. 107. Special Training Projects for Women. – The Department, in collaboration with the appropriate
government agencies concerned, shall plan and implement special training projects for women for absorption
in the basic needs and rural industrialization programs.

TITLE 5

TRADE AND FISCAL INCENTIVES

Sec. 108. Taxation policies must not deter the growth of value-adding activities in the rural areas.
Sec. 109. All enterprises engaged in agriculture and fisheries as duly certified by the Department in
consultation with the Department of Finance and the Board of Investments, shall, for five (5) years after the
effectivity of this Act, be exempted from the payment of tariff and duties for the importation of all types of
agriculture and fisheries inputs, equipment and machinery such as, but not limited to, fertilizer, insecticide,
pesticide, tractor, trailers, trucks, farm implements and machinery, harvesters, threshers, hybrid seeds,
genetic materials, sprayers, packaging machinery and materials, bulk-handling facilities such as conveyors and
mini loaders, weighing scales, harvesting equipment, spare parts of all agricultural equipment, fishing
equipment and parts thereof, refrigeration equipment, and renewable energy systems such as solar panels:
Provided, however, That the imported agricultural and fishery inputs, equipment and machinery shall be for
the exclusive use of the importing enterprise.

The Department, in consultation with the Department of Finance and the Board of Investments, shall, within
ninety (90) days from the effectivity of this Act, formulate the implementing rules and regulations governing
the importation of agriculture and fishery inputs, equipment and machinery.

Sec. 110. Any person, partnership, corporation, association and other juridical entity found circumventing the
provisions of Section 109 of this Act shall suffer the penalty of imprisonment for a period of not less than six
(6) months but not more than one (1) year, or a fine equivalent to two hundred percent (200%) of the value of
the imported materials, or both, at the discretion of the court, and the accessory penalties of confiscation of
the imported goods in favor of the government and revocation of the privileges given under this title.

In cases where the violator is a juridical entity, the officers responsible in the violation of Section 109 shall
suffer the penalty of imprisonment prescribed in this section.

The importation of goods equivalent to or exceeding the declared assets of the enterprise, partnership, or the
authorized capital stock in case of corporations, and/or the resale of the imported goods shall be a prima facie
evidence of the violation of the provisions of Section 109 of this Act.

General Provisions

Sec. 111. Initial Appropriation. – For the first year of implementation of this Act, the amount of Twenty billion
pesos (P20,000,000,000) is hereby appropriated. The Department is hereby authorized to re-align its
appropriations in the current year of the date of effectivity of this Act to conform with the requirements of
this Act: Provided, That the amount shall be allocated and disbursed as follows:

1) Thirty percent (30%) for irrigation;

2) Ten percent (10%) for post-harvest facilities: Provided, That the Secretary of Agriculture may invest up to
fifty percent (50%) of the said amount to fund post-harvest facilities of cooperatives, especially market
vendors’ cooperatives, where said cooperatives exist and are operational: Provided, further, That if no
cooperatives are operational, said amount shall fund the post-harvest facilities of the market-assistance
system;

3) Ten percent (10%) for other infrastructure including fishports, seaports, and airports, farm-to-coast-to-
market roads, rural energy, communications infrastructure, watershed rehabilitation, water supply system,
research and technology infrastructure, public markets and abattoirs;
4) Ten percent (10%) for the Agro-industry Modernization Credit and Financing Program (AMCFP) to be
deposited by the Department in participating rural-based public and private financial institutions provided that
no less than fifty percent (50%) of said funds shall be deposited in rural banks and cooperative banks;

5) Eight percent (8%) for the implementation of the Farmer-Fisherfolk Marketing Assistance System and
support of market vendors’ cooperatives.

6) Ten percent (10%) for research and development, four percent (4%) of which shall be used to support the
Biotechnology Program;

7) Five percent (5%) for capability-building of farmers and fisherfolk organizations and LGUs for the effective
implementation of the agriculture and fisheries programs at the local level;

8) Six percent (6%) for salary supplement of Extension Workers under the LGUs;

9) Five percent (5%) for NAFES, for the upgrading of the facilities of State Universities and Colleges that will be
chosen as national centers of excellence in agriculture and fisheries education;

10) Four percent (4%) for the National Information Network (NIN) consisting of both the national and local
levels;

11) One-and-three-fourth percent (1.75%) for SUC- and TESDA- administered Rural Non-Farm Employment
Training; and

12) One-fourth percent (0.25%) for the identification of the SAFDZs.

Sec. 112. Continuing Appropriation. – The Department of Budget and Management (DBM) is hereby mandated
to include annually in the next six (6) years, in the President’s program of expenditures for submission to
Congress, and release an amount not less than Seventeen billion pesos (P17,000,000,000), for the
implementation of this Act.

Additional funds over and above the regular yearly budget of the Department shall be sourced from twenty
percent (20%) of the proceeds of the securitization of government assets, including the Subic, Clark land other
special economic zones.

Other sources of funds shall be from the following:

a) Fifty percent (50%) of the net earnings of the Public Estates Authority;

b) Loans, grants, bequest, or donations, whether from local or foreign sources;

c) Forty percent (40%) of the TESDA Skills Development Fund;

d) Net proceeds from the privatization of the Food Terminal, Inc. (FTI), the Bureau of Animal Industry (BAI),
the Bureau of Plant Industry (BPI), and other assets of the Department that will be identified by the DA
Secretary and recommended to the President for privatization;

e) Proceeds from the Minimum Access Volume (MAV) in accordance with the provisions of Republic Act No.
8178;
f) Poverty Alleviation Fund; and

g) Fifty percent (50%) of the Support Facilities and Services Fund under Republic Act No. 6657.

Sec. 113. Implementing Rules and Regulations. – The Secretary, within ninety (90) working days after the
effectivity of this Act, together with the Department of Agrarian Reform (DAR), Department of Environment
and Natural Resources (DENR), Department of Finance (DOF), Department of Science and Technology (DOST),
Department of Trade and Industry (DTI), Commission on Higher Education (CHED), Technical Education and
Skills Development Authority (TESDA), Department of Education, Culture and Sports (DECS), Department of
Social Services and Development (DSSD), National Economic and Development Authority (NEDA), Department
of Budget and Management (DBM), Department of Labor and Employment (DOLE), Commission on Audit
(COA), Civil Service Commission (CSC), in consultation with other agencies concerned, farmers, fisherfolk and
agri-business organizations, and in coordination with the Congressional Oversight Committee on Agriculture
and Fisheries Modernization, shall promulgate the rules and regulations for the effective implementation of
this Act.

The Secretary shall submit to the Committee on Agriculture of both Houses of Congress copies of the
implementing rules and regulations within thirty (30) days after their promulgation.

Any violation of this section shall render the official/s concerned liable under Republic Act No. 6713 otherwise
known as the “Code of Conduct and Ethical Standards for Public Officials and Employees” and other existing
administrative and/or criminal laws.

Sec. 114. Congressional Oversight Committee on Agricultural and Fisheries Modernization. – A Congressional
Oversight Committee on Agricultural and Fisheries Modernization is hereby created to be composed of the
Chairs of the Committee on Agriculture of both Houses, six (6) members of the House of Representatives and
six (6) members of the Senate, to be designated respectively by the Speaker of the House and the President of
the Senate, who shall endeavor to have the various sectors and regions of the country represented.

The Chairs of the Committees on Agriculture in the Senate and House of Representatives, shall be,
respectively, the Chair and Co-Chair of the Oversight Committee. The other members shall receive no
compensation; however, traveling and other necessary expenses shall be allowed.

The Committee shall oversee and monitor the implementation of the Congressional Commission on
Agricultural Modernization (AGRICOM) recommendations as well as all programs, projects and activities
related to agriculture and fisheries, and its allied concerns in both public and private sectors, with a view to
providing all legislative support and assistance within the powers of Congress to ensure their inclusion,
wherever feasible, in the national, regional, provincial, municipal, and sectoral development plans, to
recommend the disposal of assets no longer needed by the Department to fund the modernization program,
and to see them through their successful implementation.

Sec. 115. Powers and Functions of the Committee. – The Congressional Oversight Committee on Agriculture
and Fisheries Modernization shall have the following powers and functions:

a) Prescribe and adopt guidelines that will govern its work;

b) Hold hearings, receive testimonies and reports pertinent to its specified concerns;
c) Secure from any department, bureau, office or instrumentality of the Government such assistance as may
be needed, including technical information, preparation and production of reports and submission of
recommendations or plans as it may require;

d) Summon by subpoena any public or private citizen to testify before it, or require by subpoena duces tecum
to produce before it such records, reports or other documents as may be necessary in the performance of its
functions;

e) Use resource persons from the public and private sectors as may be needed;

f) Carry on the winding-up work of AGRICOM, such as editing and printing all technical reports and studies as
well as bibliographic cataloguing of its collection of source materials, continue its information and advocacy
work;

g) Cause to be transferred to the Committee all works, outputs, source materials and assets, funds, supplies
and equipment of AGRICOM;

h) Approve the budget for the work of the Committee and all disbursements therefrom, including
compensation of all personnel;

i) Organize its staff and hire and appoint such employees and personnel whether temporary, contractual or on
consultancy, subject to applicable rules; and

j) Generally, to exercise all the powers necessary to attain the purposes for which it is created.

Sec. 116. Periodic Reports. – The Committee shall submit periodic reports on its findings and make
recommendations on actions to be taken by Congress and the appropriate departments, and that in order to
carry out the objectives of this Act, an initial amount of Twenty million pesos (P20,000,000) is hereby
appropriated for the Oversight Committee for the first year of its operation.

Sec. 117. Automatic Review. – Every five (5) years after the effectivity of this Act, an independent review panel
composed of experts to be appointed by the President shall review the policies and programs in the
Agriculture and Fisheries Modernization Act and shall make recommendations, based on its findings, to the
President and to both Houses of Congress.

Sec. 118. Repealing Clause. – All laws, decrees, executive issuance, rules and regulations inconsistent with this
Act are hereby repealed or modified accordingly.

Sec. 119. Separability Clause. – The provisions of this Act are hereby declared to be separable, and in the event
one or more of such provisions are held unconstitutional, the validity of the other provisions shall not be
affected thereby.

Sec. 120. Effectivity. – This Act shall take effect thirty (30) days from the date of its publication in the Official
Gazette or in at least two (2) newspapers of general circulation.

Approved, December 22, 1997.

 SPECIAL EXAM
1. What is the short title of RA 8435?
Agriculture and Fisheries Modernization Act of 1997

2. Refer to the lands, devoted to or suitable for the cultivation of soil, planting of crops,
growing of trees, raising livestock, poultry, fish, or aquaculture production, including the
harvesting of such farm products, and other farm activities and practices performed in
conjunction with such farming operations by persons whether natural or juridical and
not classified by laws as mineral land, forest land, residential land, commercial land or
industrial land.
Agricultural Lands

3. Collectively used, means government banks and private banks, rural banks and
cooperative banks.
Banks

4. Refer to the manner of utilizing the land, including its allocation, development and
management.
Land Use

5. Give at least 1 Criterion for the Selection of Irrigation Development Scheme

a) Technical feasibility;
b) Cost-effectiveness;
c) Affordability, low investment cost per unit area;
d) Sustainability and simplicity of operation;
e) Recovery of operation and maintenance cost;
f) Efficiency in water use;
g) Length of gestation period; and
h) Potential for increasing unit area productivity.

6-10. The Agriculture and Fisheries Modernization Plan shall focus on five (5) major concerns:
a) Food security;
b) Poverty alleviation and social equity;
c) Income enhancement and profitability, especially for farmers and fisherfolk;
d) Global competitiveness; and
e) Sustainability.