Republic of the Philippines |
HOUSE OF REPRESENTATIVES
Constitution Hills
Quezon City

SEVENTEENTH CONGRESS
First Regular Sessii
irst Regular Session | REGISTRATION UNIT
BILLS AND INDEX SERVICE
ane 2249
House Bill No. © °*

Introduced by: Rep. Josephine Y. Ramirez Sato

EXPLANATORY NOTE

Our country used to be a major producer of coconut products. The growth in
world demand during the 1970s-80s increased the areas planted with coconut to about
25% of cultivated land with about 25% to 33% of population are dependent to the
sector as their source of income.

With high demand and rapid development in the sector, significant milestones
were made such as the merging of coconut-related government operations into the
Philippine Coconut Authority (PCA). The agency was mandated to collect and
manage coco levy collection that was placed into now more commonly known as coco
levy funds. The fund is classified according to the following: 1) Coconut Investment
Fund; 2) Coconut Consumers Stabilization Fund; 3) Coconut Industry Development
Fund; and 4) Coconut Industry Stabilization Fund. It was noted that the levy reached
to PhP9.625 billion.

Envisioned to benefit the coconut farmers and the whole industry, the funds
were intended to stabilize the sale of coconut-based products to finance various
coconut planting and replanting programs, research, extension and credit services
programs, establishment of model plantations, propagation of hybrids, and
acquisition of coconut related industries and the operations of such industries.

The coco levy funds however for decades have been a subject of numerous
court cases, The farmers have been continuously denied of the money and benefits
that rightfully belongs to them. It was estimated that the coco levy funds have grown
to approximately PhP200 billion inclusive of earnings, interests, and other increments.
The earnings could have been used to catalyze growth of the sector and improve the
lives of the small and marginalized farmers.


This bill aims to address the long and arduous struggle of coconut farmers. It
is the duty of the government to undertake necessary steps to ensure that funds are
used rightfully and for the benefit of coconut farmers. It is envisioned that this bill,
when passed into law, will provide strategic and systematic industry development

In view of this, the passage of this bill is earnestly sought.

HOM JOSEPHINE Y/IRAMIREZ SATO
fone District of Octiflental Mindoro


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

House Bill No, 2749

Introduced by: Rep. Josephine Y. Ramirez Sato

“AN ACT ESTABLISHING THE COCONUT FARMERS AND INDUSTRY TRUST.
FUND AND PROVIDING FOR ITS MANAGEMENT AND UTILIZATION”

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 “Coconut Farmers and Industry
Development Act”

Section 2. Declaration of National Policy. It is hereby declared the policy of the State to
attain the balanced, equitable, integrated and sustainable growth and development of
the coconut industry. Towards this end, the benefits cue to coconut farmers, especially
the poor and the marginalized, under various statutes shall be consolidated and their
delivery expedited.

CHAPTER I
DEFINITION OF TERMS

Section 3. Definition of Terms, As used in this Act:

(@ Coconut Industry Investment Fund (CIF) refers to the Fund created pursuant
to Presidential Decree No. 1468, which authorized the United Coconut Planters
Bank (UCPB) to utilize the surplus funds from the Coconut’ Cohsumers
Stabilization Fund (CCSF) and the Coconut Industry Development Fund
(CIDE) for investments in the form of shares of stock in corporations organized
for the purpose of engaging in the establishment and operation of industries,
commercial activities and other allied business undertakings relating to the
coconut and other palm oils industry in all its aspects and the establishment of
a research into the commercial and industrial uses of coconut and other palm
oil industry;


() CIF Holding Companies refer to the fourteen (14) holding companies, namely:
(1) Anglo Ventures Corporation; (2) ACS Investors, Incorporated; (3) Arc
Investors, Incorporated; (4) AP Holdings, Incorporated; (5) Fernandez
Holdings, Incorporated; (6) First Meridian Development, Incorporated; (7)
Randy Allied Ventures, Incorporated; (8) Rock Steel Resources, Incorporated;
(9) Roxas Shares, Incorporated; (10) San Miguel Officers Corporation,
Incorporated; (11) Soriano Shares, Incorporated; (12) Te Deum Resources,
Incorporated; (13) Toda Holdings, Incorporated; and (14) Valhalla Properties
Limited, Incorporated, created by the CIIF Oil Mills Group to acquire, hold and
manage the shares of stocks of San Miguel Corporation (SMC);

(©) CIIF Oil Mills Group refers to the six (6) CIIF companies, namely: (1) Southern
Luzon Coconut Oil Mills; (2) Cagayan de Oro Oil Company, Incorporated; (3)
lligan Coconut Industries, Incorporated; (4) San Pablo Manufacturing
Corporation; (5) Granexport Manufacturing Corporation; and (6) Legaspi Oil
Company, Incorporated, acquired by the UCPB using the CILE;

(d) CIIF SMC Block Shares refer to the thirty-three million, one hundred thirty-three
thousand and two hundred sixty-six (33,133,266) shares of stock in SMC,
sequestered by the Presidential Commission on Good Government (PCGG) in
April 1986 representing thirty-one percent (31%) of the total outstanding
capital stock of SMC;

1G

Converted SMC Series 1 Preferred Shares refer to that portion of the CUE SMC
Block Shares covering seven hundred fifty-three million, eight hundred. forty-
eight thousand and three hundred twelve (753,848,312) preferred shares
of stock in SMC representing twenty-four percent (24%) of the outstanding
capital stock of SMC;

(P Coconut farmer refers to:
(1) Farmer-owner of a coconut farm, which is not more than five (5) hectares,
who:
(i) Tills the land (owner-cultivator); or
(ii) Does not till the land, but has control and supervision over the
cultivation of a farm which is not more than five (5) hectares; and

(2) A non-owner of the coconut farm who is either a:
(i) Leaseholder or tenant who tills or supervises the cultivation of the farm;
or
(i) Farm worker or laborer, whether seasonal or itinerant, engaged in the
harvesting of the nuts and processing of copra as major means of
livelihood.

Coconut Levy Assets refer to any and all kinds of property, whether real or
personal, tangible or intangible, wherever situated, which have been acquired
through or otherwise funded by the Coconut Levy Funds, including those

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assets that may be recovered in favor of the Government, as well as the fruits
or income derived therefrom, including those acquired in exchange or
substitution thereof, including the following:

(1) The shares of stock in the UCPB determined to be owned by the
Government;

(2) The CIF Oil Mills Group;

(3) The CIF Holding Companies; and

(4) The Converted SMC Series 1 Preferred Shares,

C

Coconut Levy Funds refer to various funds generated from levies, taxes, charges,
and other fees exacted or imposed pursuant to or in connection with the sale
of copra rececada or its equivalent in other coconut products, and collected for
the most part from coconut farmers, planters, millers, refiners, processors,
exporters, desiccators and other end users of copra rececada or its equivalent
in other coconut products. These shall refer to any and all of the following:

(1) The Coconut Investment Fund created under Republic Act No. 6260;

(2) The Coconut Consumers Stabilization Fund, later renamed as the
Coconut Industry Stabilization Fund, created under Presidential Decree
No. 276; "i a

(3) The Coconut Industry Development Fund created" under
Presidential Decree No. 582; a,

(4) The Coconut Industry Investment Fund created pursuant to
Presidential Decree No. 1468; and

(5) The Coconut Reserve Fund under Presidential Decree No. 1468 and
Presidential Decree No. 1842.

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Investment guidelines refer to the investment management guidelines,
rules, procedures, and policies to be formulated by the Coconut Farmers and
Industry Trust Fund Committee created under Section 11 of this Act, and as
may be amended from time to time, which shall provide the parameters for
investments of the Trust Income or any portion thereof, and shall include,
among others, asset allocation, criteria for selection of fund managers, required
income from the fund, and other investment management threshold
requirements.

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Trust Income refers to the income, interest earnings, and other monetary
benefits, realized by and accruing to the Trust Fund or any portion thereof,

(b) Trust Principal refers to:
(1) The initial Trust Principal composed of dividends declared, paid, or
issued on the Converted SMC Series 1 Preferred Shares; the proceeds

from the redemption of the Converted SMC 1 Preferred Shares; all

income or interest derived therefrom as of the effectivity of this Act; any

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other cash Coconut Levy Asset deposited in the Bureau of the Treasury
(BTz) and the UCPB as administrator of the CIF; and any other cash
Coconut Levy Asset including amounts deposited in the UCPB as
Administrator of the CIF;

(2) Any and all proceeds of privatization of the Coconut Levy Assets
remitted thereto by the Privatization and Management Office (PMO),
organized under Article III of Executive Order No. 323 (Series of 2001);
and

(8) Proceeds of privatization of any or all properties or assets conveyed by
any person, group or entity to the Committee, from time to time, as
provided in Section 8 hereof,

CHAPTER II
AUDIT AND RECONVEYANCE OF COCONUT LEVY ASSETS

Section 4. Audit and Inventory of Coconut Levy Assets. ~ Upon the effectivity of this
Act, the PCGG, created under Executive Order No. 1 (Series of 1986), shall conduct a
complete accounting and inventory of the Coconut Levy Assets as well as the
investments, disbursements, and expenditures relating to the coconut levy fund and
submit a certified report to the BTr, the Commission on Audit (COA) and the Office
of the President (OP).

The COA shall audit the inventory of Coconut Levy Assets prepared and submitted
by the PCGG for the purpose of, among others, determining completeness of the
inventory, establishing the reasonableness of the asset valuation and tracing of the
flow of the coconut levy fund. The COA shall submit to the Coconut Farmers and
Industry Trust Fund Committee created under Section 11 hereof its initial audit report
within one hundred twenty (120) days upon completion of the audit. However,
further audit may be undertaken after the initial audit, as necessary,

The Committee shall, within fifteen (15) days from,its receipt of the audit report,

Publish the same in at least two (2) newspapers of national circulation.

Nothing herein shall be construed as preventing the PMO, created under Article IIT of
Executive Order No. 323 (eries of 2001), from procuring a third-party appraisal of
any of the Coconut Levy Assets prior to or in the course of preparing the privatization
or disposition plans for the said assets.

Section 5. Reconveyance of Coconut Levy Assets. - Immediately upon the effectivity of
this Act, the PCGG, the government representatives to the boards of
sequestered/surrendered corporations, and any government agency or person in
Possession, custody, control or administering any Coconut Levy Asset shall perform
or cause the performance of the following:

(a) Reconveyance of the title of such asset to the Republic of the Philippines;

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(©) Delivery of all stock certificates and other evidence of ownership to the BTr for
safekeeping; and
(©) Deposit all cash assets in the Trust Fund.

Any provision of law to the contrary notwithstanding, the BTr and the UCPB shall
directly remit the initial Trust Principal to the Trust Fund,

The COA shall conduct an audit to determine compliance with pertirient laws, rules
and regulations on reconveyance of the Coconut Levy Assets to the Republic of the
Philippines.

CHAPTER III
COCONUT FARMERS AND INDUSTRY TRUST FUND

Section 6, The Coconut Farmers and Industry Trust Fund, - There is hereby created a
trust fund to be known as the Coconut Farmers and Industry Trust Fund, hereinafter
referred to as the Trust Fund, which shall consist of the Trust Principal and the Trust
Income. No portion of the Trust Fund shall accrue to the general fund of the National
Government. It shall be capitalized, managed, utilized and accounted for in the
manner provided in this Act. Nothing in this Act shall be understood to prevent or
prohibit any person, group or entity from conveying to the Committee other
Properties and/or additional assets either for the use of the coconut industry, or for
purposes of privatization, in which case, the proceeds of such privatization shall form
part of the Trust Fund.

Section 7. Purpose of the Trust Fund. - The Trust Fund shall be used exclusively for the
ultimate benefit,of coconut farmers and farm workers as embodied in the Coconut
Farmers and Industry Development Plan prepared pursuant to Section 20 hereof,

Section 8, Capitalization of the Trust Fund. - All assets and/or properties derived from
all coco levy recovered assets; and alll dividends, interest earnings and incomes that
are available upon the effectivity of this Act shall form part of the initial capital of the
Trust Fund. The Trust Fund shall thereafter be augmented with all proceeds of
privatization/ disposition of the Coconut Levy Assets remitted directly thereto by the
PMO in accordance with this Act, including any and all forms of income, interests,
earnings, yields, or any monetary benefit derived therefrom prior to the
privatization/ disposition of these Coconut Levy Assets.

In order to ensure the enduring character of the Trust Fund, the Principal thereof shall
be augmented by grants, donations and other lawful transfers by public or private
entities. At the end of the year, all unspent portion of the Trust Income for the year
shall accrue to the Trust Principal


Section 9. Management and Utilization of the Trust Fund. - The Trust Fund shall be
available and may be utilized only for the purpose for which it was created and upon
authorization of the Committee, subject to the following conditions:

(a) The Trust Principal shall be preserved and maintained at all times and only the
Trust Income may be used.

(b) The Trust Income shall be disbursed only on the basis of the funding
requirement of the program, activity or project;

(©) The Trust Fund may also be disbursed to pay for the expenses of the Committee
for the administration, monitoring, evaluation, information services, and other
necessary activities for the effective performance of its functions under this Act;
and

(d) No part of the Trust Fund shall be utilized for the payment of salaries and other
personnel benefits.

All releases from the Trust Fund approved by the Committee shall be released directly
to the implementing agencies: Provided, That coconut productivity and developmental
programs and projects shall be implemented by the Philippine Coconut Authority
(PCA) created under Presidential Decree No, 232 Geries of 1973), as amended by
Presidential Decree No. 1468 (Series of 1978). _ a:
Section 10, Designation of the Bureau of the Treasury as Depository of the Trust Fund, ~
The Trust Fund shall be deposited in the BTr. The BTr shall account for the Trust Fund
in the manner provided by the Committee and shall perform such duties as may be
determined by the Committee.

CHAPTER IV
COCONUT FARMERS AND INDUSTRY TRUST FUND COMMITTEE

Section 11. Creation of the Coconut Farmers and Industry Trust Fund Committee. ~ The
Coconut Farmers and Industry Trust Fund Committee, hereinafter referred to as the
Committee, is hereby created under the Office of the President.

‘The Committee shall have the following powers and functions:

(a) Coordinate and monitor the implementation of the Coconut Farmers and
Industry Development Plan;

(b) Approve any allowable disbursement out of the Trust Fund;

() Formulate the Investment Guidelines including the Prohibited Investments;

(a) Appoint a fund manager, if necessary, to handle the investment of the Trust
Principal;

(e) Identify the Coconut Levy Assets that will be privatized, retained, or abolished
and submit its recommendation to the President;

() Approve the marketing and disposition program for the Coconut Levy Assets
approved for privatization;


(g) Authorize the sale and other mode of privatization of Coconut Levy Assets
approved for privatization;

(h) Authorize the rehabilitation of Coconut Levy Assets approved for privatization
pending actual disposition;

(i) Facilitate access by coconut farmers and their organizations from the most
poverty afflicted areas of the country to the services, programs and benefits
implemented pursuant to the Coconut Farmers and Industry Development
Plan. For purposes of this Act, those already accredited farmers organizations
need not go through another accreditation process;

() Submit to the President reports and recommendations in connection with its
functions under this Act; and

(K) Exercise such other incidental powers and functions as may be necessary to
attain the objectives of this Act.

Section 12. Composition. ~ The Committee shall be composed of the following:
(a) Seven (7) representatives from the government who shall be serving in ex
Officio capacity:

(1) The Secretary of the Department of Agriculture (DA) as Chairperson;

(2) The Secretary of the Department of Finance (DOF) as Vice Chairperson;

(3) The Secretary of the Department of the Interior and Local Government
(PILG);

(4) The Secretary of the Department of Trade and Industry (DTI);

(©) The Secretary of the National Anti-Poverty Commission (NAPC); (6) The
Director-General of the National Economic and Development Authority
(NEDA); and

(6) The Administrator of the PCA,

(b) Six (6) representatives from the coconut farmers’ organizations who have
considerable experience and reputable track records, allocated as follows:
(1) Two (2) representatives from Luzon; -
(2) Two (2) representatives from Visayas; and
(3) Two (2) representatives from Mindanao.

Within thirty (80) days following the effectivity of this Act, the PCA shall promulgate
a selection process of nominees as representatives of the coconut farmers’
organizations in the Committee. The nominees of the coconut farmers’ organizations
shall be validated and shortlisted by the PCA, in consultation with the NAPC. The list
of nominees shall be submitted to the President not later than sixty (60) days from the
start of the selection process.

The government representatives in the Committee shall serve only during their
respective terms in office, while the six (6) representatives from coconut farmers’
organizations shall each hold a term of one (1) year, unless sooner removed for cause.
Any of the representatives shall continue to hold office until their successor is


appointed: Provided, That any appointment to fill a vacancy in the Committee shall be
only for the unexpired term.

Section 13. Ex Officio Alternates. - The ex officio members of the Committee may
designate their respective alternates who shall be the officials next-in-rank-to them.
and their acts shall be considered the acts of their principals. .

Section 14. Meetings of the Committee. - The Committee shall meet at least once a
month, or as often as deemed necessary and expedient to discharge its responsibilities.
The presence of at least a majority of the members of the Committee shall constitute a
quorum, and the concurrence of a majority of the members present at a meeting at
which a quorum exists shall be adequate for any decision by the Committee: Provided,
That the approval of at least a majority of the members of the Committee shall be
required on matters involving the following:

(a) Any disbursement of funds involving more than fifty million pesos
(P50,000,000.00);

(©) Any proposed investment involving more than one hundred million pesos
(P100,000,000.00); and

(©) Any disposition or privatization proposal involving more than five hundred
million pesos (P500,000,000.00).

The Chairperson, if unavailable, may designate the Vice Chairperson to convene the
Committee and preside over the Committee's meeting on behalf of the Chairperson.

Section 15. Obligations of the Members of the Committee. - The members of the
Committee shall act with due care, diligence, skill, and good faith in all its dealings
with the Trust Fund and the Coconut Levy Assets. They shall avoid contflicts of interest
and declare before the Committee any interest they may have in any particular matter,

Where a member of the Committee receives any profit or benefit by virtue of the office,
including acquiring shares in corporations that form part of the Coconut Levy Assets,
using the Coconut Levy Assets for one’s benefit, receiving commission on contracts
from the Coconut Levy Assets, or taking advantage of corporate opportunities
involving the Coconut Levy Assets, all such profits or benefits shall be returned to the
Trust Fund without prejudice to any administrative, civil or criminal action against
such member. This provision shall be applicable notwithstanding the fact that such
member of the Committee used one’s own funds in the venture.

Section 16. Executive Director of the Committee. - The President, upon recommendation

of the Committee, shall appoint an Executive Director who shalll exercise the following

powers and functions: . =

(a) Administer the programs approved or promulgated by the Committee;

(b) Direct and supervise officials, employees, representatives and agents for the
Committee;

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() Prepare an annual report on the activities of the Committee at the close of each
fiscal year and to submit a copy thereof to the President and Congress;

(4) Keep and maintain official records and reports of the proceedings of the
Committee;

(©) Administer oaths in all matters falling within the jurisdiction of the Committee;
and

( Exercise such other duties as may be vested by the Committee that are
consistent with the provisions of this Act.

The PCA shall provide Secretariat support to the Committee.

Section 17, Cooperation with the Committee, - The Committee may also call upon any
department, bureau, office, agency, and instrumentality of the government, including
government-owned and -controlled corporations for any assistance it may need in the
discharge of its functions and responsibilities.

Section 18. Accounting and Auditing, - The Committee shall maintain’ recérds and
accounts of all investments, income, receipts, disbursements and other transactions
relating to the management, administration and disposition of the’ Trust Fund, ‘These
records and accounts shall be maintained in accordance with existing accounting and
auditing laws, rules and regulations, The Trust Fund shall be audited by the COA.

Section 19 Legal Counsel. - The Secretary of Justice shall be the ex officio counsel
of the Committee on legal matters,

CHAPTER V
COCONUT FARMERS AND INDUSTRY DEVELOPMENT PLAN

Section 20. Preparation of the Coconut Farmers and Industry Development Plan,
~ An Ad Hoc Committee is hereby created to be composed of the Secretaries of the
DA, the Department of Agrarian Reform (DAR), the DTI, the Department of Science
and Technology (DOST), the Department of Energy (DOE), the Department of Public
Works and Highways (DPWH), the DILG, the NAPC, the NEDA, anda representative
from the farmers’ groups. The Administrator of the PCA shall act as the Ad Hoc
Committee’ Chairperson.

The Ad-Hoc Committee, in consultation with the coconut farmers and representatives
of the coconut industry, shall indicate in an integrated coconut industry strategy map
the policies for the development and rehabilitation of the coconut industry and shall
prepare, every five (6) years, a medium term plan of programs, activities and projects
which shall be funded out of the Trust Fund and which shall be known as the Coconut
Farmers and Industry Development Plan. The Plan shall be consistent with the
Philippine Development Plan and shall be subject to mandatory review every year.

qd


In the formulation of the Plan, the Ad-Hoc Committee shall be guided by the
following objectives:

(a) The increase in the income of coconut farmers and increase coconut
productivity including intercropping and livestock-raising;

(b) The promotion of coconut-based enterprises including integrated processing of
coconut products and downstream products;

(c) The provision of timely and critical support to coconut farmers organization
and development; and

(d) The establishment of social protection programs that directly benefit coconut
farmers and farm workers, in case these social protection programs are not
funded by an appropriations law or any other special law, or where funding is
insufficient,

The Plan shall provide an indicative funding requirement or allocation for the
implementation of any and all of the programs and projects to be funded by the Trust
Income, which funding or allocation shall be itemized or broken down on a project
to-project basis: Provided, That (a) for projects which are recurring, or to be
implemented on a regular basis, the allocation shall indicate the annual fund that may
be required to implement the project; and (b) for projects that are to be implemented
or concluded within a period of time, the allocation shalll indicate the total fund that
may be required for the implementation of the whole project, itemized according to
the phases or stages of the project.

Within sixty (60) days from the effectivity of this Act, the Plan shall be submitted by
the Ad Hoc Committee to the Coconut Farmers and Industry Trust Fund Committee
which shall, in turn, submit the Plan to the President for approval. Immediately upon
its approval, the Plan shall be returned to the Committee for the disburserhentof funds
in accordance with the provisions of this Act. Any amendment to the Plan shall
require the approval of the President. :

If the President has any objection or any amendment thereto, the President shall notify
the Committee within thirty (30) days from receipt thereof, otherwise the Plan shall
be deemed approved.

CHAPTER VI
PRIVATIZATION OF THE COCONUT LEVY ASSETS

Section 21. Privatization of the Coconut Levy Assets. ~ The Committee shall determine
the Coconut Levy Assets that shall be privatized. For this purpose, the Committee
shall be guided by the following factors:

(a) The functions or purposes for which the entity was created are no longer

relevant to the State or no longer consistent with the national development
policy of the State;

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(b) The functions or purposes of the entity duplicate or unnecessarily overlap with
the functions, programs, activities or projects already provided by:another
agency;

(c) The entity is not producing the desired outcomes, or is no longer achieving the
objectives for which it was originally designed and implemented;

(ad) The entity is dormant or nonoperational;

(ce) The entity is involved in an activity which is best carried out by the private
sector; and.

(f) The function, purpose, or nature of operations of any group of entities requires
consolidation under a holding company.

The Committee shall submit its recommendation to the President for approval. The
Committee shall also arrange for the transfer of the Coconut Levy Assets approved
for privatization to the PMO, unless the President, upon the recommendation of the
Committee, designates another agency to preserve such Coconut Levy Assets pending
privatization.

Section 22. Additional Mandate of the Privatization and Management Office (PMO). - In
addition to its powers and functions under Executive Order No. 323 dated December
6, 2000, the PMO is authorized to dispose the Coconut Levy Assets that have been
approved for privatization.

In the discharge of its mandate, the PMO shall:

(a) Formulate and implement the marketing and disposition program after
securing prior approval of the Committee;

(b) Take possession of and preserve such assets on behalf of the National
Government;

(©) Execute and deliver, on behalf of the National Government, deeds of sale,
contracts, trust instruments, and other legally operative documents as may be
necessary or appropriate to convey title to, take possession of, and conserve
such assets;

(a) Engage external expertise as may be necessary in the fulfillment of its tasks
under this Act; and

() Adopt internal rules and regulations.

Any and all sales and other modes of privatization or disposition shall“not be
considered final unless and until approved by the Committee.

Section 23. Powers of the Privatization and Management Office (PMO). - The PMO is
also empowered to enter into sales through public bidding, negotiated sale, lease, or
any form of divestment or transmission of rights over the Coconut Levy Assets:
Provided, That no Coconut Levy Asset shall revert to the previous owners or their
nominees or be sold to individuals who, as determined by final judgment of a court
of law, have mismanaged or diverted such assets.

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Prior to the implementation of any privatization plan, the PMO shall exercise the
following powers:

(a) Require anyone or the subject corporations to adopt and implement cost-
reduction measures to enhance the viability, and therefore the
disposability of the corporations to potential buyers, including measures
requiring personnel retrenchment plans or other forms of corporate
downsizing;

(b) Direct anyone or all of the subject corporations to submit to the PMO, within
fixed timetables, such reports and information as the PMO may require in the
exercise of its functions under this Act; and

(0) Cause the subject corporations to undergo merger, consolidation, spin-off, or
other corporate acts of reformatory nature as it may deemynecessary or
desirable to expedite the disposition and privatization under this Act.

Inall such cases, no corporate measure shall be implemented without the approval of
the Committee.

Nothing herein shall be construed as authorizing the Committee or the PMO to
rehabilitate or allow investments of any and all Coconut Levy Assets transferred to
the National Government.

Section 24. Committee to Determine Transfer Value. - The Committee is hereby vested
with full and complete powers and prerogatives to determine transfer values and
related valuations at which the Coconut Levy Assets shall be transferred and
conveyed to the PMO pursuant to the mandate of this Act and upon reasonable
consultation with a third-party appraiser: Provided, That any valuation approved by
the Committee for purposes of the transfer to the PMO shall not be deemed a
condonation, waiver, or extinguishment of any obligation by any party whose vested
rights may be impaired by such transfer.

Section 25. Remittance of Proceeds of Privatization. - All proceeds or receipts from the
sale of Coconut Levy Assets shall be remitted to the Trust
Fund.

Section 26. Reporting Requirements. - The Committee shall, on a semiannual basis,
submit to the President and to Congress a report on the status of disposition of the
Coconut Levy Assets, which shall include, among others, a description of the
individual assets disposed of, the purchasers thereof, the consideration received
therefor, and the agreed terms of payment.

The PMO shall, within three (3) months following the closure of books at the end of

each fiscal year, submit a comprehensive annual report duly approved or endorsed
by the Committee, to the President and Congress on the status of its privatization

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efforts and its disposition program for the Coconut Levy Assets, which shall include
the items described in the immediately preceding paragraph

Section 27. Retention and Dissolution of Coconut Levy Assets. - ‘The Committee shall
identify the Coconut Levy Assets that should be retained by the National Government
or reorganized or abolished, guided by the same standards mentioned in Section 21
of this Act. The Committee shall submit its recommendation to the President for
approval.

Coconut Levy Assets that have been approved for retention shall be transferred to
such agency as may be designated by the President, ij

The Governance Commission on Government-Owned or -Controlled Corporations
(GCG), created under Republic Act No. 10149, shall implement the dissolution of
those Coconut Levy Assets that have been approved for abolition.

Section 28. Allowable Investments. ~ The Committee shall manage the Trust Principal
with the skill, care, prudence, and diligence necessary under the circumstances that a
prudent person acting in like capacity and familiar with such matters would exercise
in the conduct of an enterprise of a like character and with similar aims, Pursuant
thereto, and in line with the basic principles of safety, growth, and liquidity, the Trust
Principal shall only be invested in any or all of the following:

(a) Bonds, securities, promissory notes or other evidence of indebtedness
of the Government of the Philippines, or in bonds, securities, promissory notes
and other evidence of indebtedness to which full faith, credit and unconditional
guarantee of the Republic of the Philippines is pledged;

(b) Bonds, securities, promissory notes or other evidence of indebtedness
of government financial institutions or government corporations with
acceptable credit or guarantee: Provided, That such investments shall be
subject to a ceiling to be fixed by the Committee in the implementing rules and
regulations; and

(©) Deposits and loans and/or investments in any domestic bank doing business
in the Philippines and in good standing with the Bangko Sentral ng Pilipinas:
Provided, That in case of such deposits, these shall not exceed at any time the
unimpaired capital and surplus or total private deposits of the depository bank,
whichever is smaller: Provided, further, That the bank shall have been first
designated as a depository for this purpose by the Monetary

Board of the Bangko Sentral ng Pilipinas: Provided, finally, That such investments

shall be subject to a ceiling to be fixed by the Committee in the implementing rules
and regulations.

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CHAPTER VII -
FINAL PROVISIONS

Section 29. Suppletory on Applicability of Republic Act No. 10149 and Executive Order No.
323, ~ In the interpretation of the provisions of this Act, the provisions of Republic
Act No. 10149, otherwise known as the “GOCC Governance Act of 2011”, and
Executive Order No. 323, entitled, “Constituting an Inter-Agency Privatization
Council (PC) and Creating a Privatization and Management Office (PMO) under the
Department of Finance for the Continuing Privatization of Government Assets and
Corporations”, except for Sections 2 and 3 of Article IV of Executive Order No. 323,
shall apply suppletorily.

Section 30. Implementing Rules and Regulations. ~ Within thirty (30) days from the date
of the effectivity of this Act, the Committee, in consultation with the PMO, shall
formulate and promulgate the rules and regulations for the proper implementation of
this Act.

Section 31. Congressional Oversight. - The Congressional Oversight Committee on
Agricultural and Fisheries Modernization (COCAFM) shall exercise oversight
functions over the implementation of this Act. The financial review of the program in
relation to its pe#formance indicators shall be subject to the oversight functions of the
Joint Congressional Oversight Committee on Public Expenditures.

Section 32. Separability Clause. - If any provision of this Act is declared invalid
or unconstitutional, the other provisions not affected by such declaration shall remain
in full force and effect.

Section 33. Repealing Clause. - All laws, executive and administrative orders, rules
and regulations inconsistent with this Act are hereby repealed or amended

accordingly.

Section 34. Effectivity. - This Act shall take effect fifteen (15) days after its publication
in the Official Gazette or in a newspaper of general circulation.

‘

Approved,

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