Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

5629

HOUSE BILL NO.

Introduced by Rep. Josephine R. Sato, Rep. Kaka J. Bag-ao, Rep. Teddy Brawner Baguilat, Jr.,
Rep. Leni Gerona Robredo, Rep. Ibarra M. Gutierrez, Rep. Anthony M. Bravo,
Rep. Cresente C. Paez, Rep. Vicente J. Alcala, Rep. Sitti Djalia A. Turabin-Hataman,
Rep. Jim Hataman-Salliman, Rep. Sherwin N. Tugna, and Rep. Peter M. Unabia

EXPLANATORY NOTE,

In 1973, then President Marcos issued Presidential Decree 276, imposing & levy of P1S
per 100 kilograms of copra resecada or its equivalent in other coconut products on every first sale
begining August 20, 1973. The tax was supposed to contribute towards the Coconut Consumers
Stabilization Fund (CCSF) which was an intended subsidy for the domestic consumption of
coconut-based commodities—ostensibly to cushion against an impending crisis brought about by
exorbitant prices in the world market for fats and oils.

Over the succeeding decade since the levy's imposition, the charge was hiked to as much
as P100 per 100 kilos of copra depending upon the prevailing export prices averaging around
P60. This amount was shouldered by all the coconut farmers as their contributions, based on
existing levy rates, by deducting from the price of their copra sales. Other presidential decrees
soon followed amending PD 276, and eventually the primary purpose of the C
transformed into a supposed “investment for coconut farmers” with the creation of thi
Industry Investment Fund. Thus began the long and harrowing odyssey of coconut farmers in
attempting to reclaim the CIIF, now known as the Coco Levy Fund.

‘The Coco Levy has since been the subject of numerous court cases. A number of these
court cases finally resulted into definitive conclusions by the Supreme Court and the
Sandiganbayan, to wit

‘The Supreme Court categorically stated in Presidential Commission on Good
Government (PCGG) vs. Philippine Coconut Producers Federation, Inc. (COCOFED),
GR. Nos. 147062-64 December 14, 2001, pp.24-25, that:

“To avoid misunderstanding and confusion, this Court will even be more
categorical and positive than its earlier pronouncements: the coconut levy
funds are not only affected with public interest; they are in fact, prima
‘facie public funds.

‘The Supreme Court further stated in the above quoted decision that:


6. Laws Governing Coconut Levies Recognize Their Public Nature.

Finally and tellingly, the very laws governing the coconut levies recognize their
public character. Thus, the third Whereas clause of PD No. 276 treats them as
special funds for a specific public purpose. Furthermore, PD No. 711 transferred
to the general funds of the State all existing special and fiduciary funds including
the CCSE. On the other hand, PD No, 1234 specifically declared the CCSF as a
special fund for a special purpose, which should be treated as a special account
in the National Treasury.

On December 28, 2004, the Sandiganbayan passed a resolution denying the motion for
reconsideration filed by Eduardo M, Cojuangeo, Jr, et al last May 25, 2004 and the
motion for reconsideration filed by COCOFED, et al. and Ballares et al, last May 26,
2004 on the graft court’s decision last May 7, 2004 on the SMC shares of stock, further
stating that;

“It is high time that the real beneficiaries of the coconut levy funds, the
coconut farmers who contributed to it, and the entire coconut industry be
given a chance to reap the benefits that are due them.”

The Sandiganbayan previously decided on May 7, 2004 that:

outhern Luzon Coconut Oil Mills
(SOLCOM); Cagayan de Oro Oil Co., Inc. (CAGOIL); Higan Coconut
Industries, Inc, (ILICOCO); San Pablo Manufacturing Corp. (SPMC);
Granex Manufacturing Corp. (GRANEX); and Legaspi Oil Co., Inc:
(LEGOIL), as well as the 14 Holding Companies, namely: Soriano
Shares, Inc.; ASC Investors, Inc.; Roxas Shares, Inc.; Are Investors, 1
Toda Holding, Inc.; AP Holdings, Inc.; Fernandez Holdings, Ine. SMC
Officers Corps, Inc.; Te Deum Resources, Inc.; Anglo Ventures, Inc.;
Randy Allied Ventures, Inc.; Rock Steel Resources, Inc.; Vathalla
Properties Ltd., Inc; and First Meridian Development, Inc., and the CIF
Block of San Miguel Corporation (SMC) shares of stock totaling
33,133,266 shares as of 1983, together with all dividends declared, paid
‘and issued thereon as well as any increments thereto arising from, but not
limited to, exercise of pre-emptive rights are declared owned by the
government in trust for all the coconut farmers and ordered reconveyed to
the government. (Republic of the Philippines vs. Cojuangco et al, Civil
Case No, 0033-F, May 7, 2004)

“The CHF Companies namely:

‘The Sandiganbayan further clarified in the same ruling that:

“The UCPB shares of stock of the alleged fronts, nominees and dummies
of defendant Eduardo M, Cojuangco, Jr. which form part of the 72.7%
shares of the FUB/UCPB paid for by the PCA with public funds later
charged to the coconut levy funds, particularly the CCSE, belong to the
plaintiff Republic of the Philippines as their true and beneficial owner.”

‘The Sandiganbayan ruling on Civil Case No. 0033-A (Republic of the Philippines vs.
Eduardo M. Cojuangco, Jr, et al.) dated July 11, 2003 stated that:


“The so-called “Farmers' UCPB shares” covered by 64.98% of the
UCPB shares of stock, which formed part of the 72.2% of the shares of
stock of the former FUB and now of the UCPB, the entire consideration of
which was charged by PCA to the CSE. are hereby declared conclusively
owned by the Plaintiff Republic of the Philippines.”

Partial Summary Judgments in Civil Case Nos. 33-A, 33-B, and 33-F (27% CIIF-SMC
shares) had found finality in the Sandiganbayan in 2007,

On 24 January 2012, the Supreme Court finally decided on the public ownership of the coconut
levy funds by declaring that the coconut levy funds are in the nature of taxes and can only be used
for a public purpose, the dispositive portion in part reads:

WHEREFO.

in view of the foregoing, we hold that:

The Motion for Partial Summary Judgment (Re
Defendants CIF Companies, 14 Holding Companies and
Cocofed, etal) —filed~=—sby~—~Plaintiff = is
hereby GRANTED. ACCORDINGLY, THE cur
COMPANIES, NAMELY:

Southern Luzon Coconut Oil Mills (SOLCOM);
Cagayan de Oro Oil Co,, Inc. (CAGOIL);

igan Coconut Industries, Ine. (ILICOCO);

San Pablo Manufacturing Corp. (SPMC
Granexport Manufacturing Corp. (GRAN
Legaspi Oil Co., Ine, (LEGOIL),

Jy and:

aevaeEn

ASWELLAS THE 14 HOLDING COMPANIE
NAMELY:

1. Soriano Shares, Ine.s
2. ACS Investors, Inc.
3, Roxas Shares, Inc.;
4, Are Investors; Inc.;
5. Toda Holdings, Inc.;
6. AP Holdings, Inc

gs, Inc.;

8. SMC Officers Corps, Inc.;

9. Te Deum Resources, Inc.;

10. Anglo Ventures, Ine.;

11, Randy Allied Ventures, Ine.;

12. Rock Steel Resources, Inc.;

13. Valhalla Properties Ltd,, Inc.; and
14, First Meridian Development, Ine,

AND THE CIF BLOCK OF SAN MIGUEL CORPORATION

(SMC) SHARES OF STOCK TOTALING 33,133,266
SHARES AS OF 1983 TOGETHER WITH ALL DIVIDENDS

" COCOFED vs. Republic, G.R. Nos. 177857-58, 24 January 2013


DECLARED, PAID AND ISSUED THEREON AS WELL AS
ANYINCREMENTS THERETO ARISING FROM, BUT
NOT LIMITED TO, EXERCISE OF PRE-EMPTIVE
RIGHTS ARE DECLARED OWNED BY THE
GOVERNMENT TO BE USED ONLY FOR THE BENEFIT
OF ALL COCONUT FARMERS AND FOR THE
DEVELOPMENT OF THE COCONUT INDUSTRY, AND
ORDERED RECONVEYED TO THE GOVERNMENT.

THE COURT AFFIRMS THE RESOLUTIONS ISSUED BY THE
SANDIGANBAYAN ON JUNE 5, 2007 IN CIVIL CASE NO. 0033-4 AND ON MAY Il,
2007 IN CIVIL CASE NO, 0033-F, THAT THERE IS NO MORE NECESSITY OF
FURTHER TRIAL WITH RESPECT TO THE ISSUE OF OWNERSHIP OF (1) THE
SEQUESTERED UCPB SHARES, (2) THE CIF BLOCK OF SMC SHARES, AND (3)
THE CIF COMPANIES. AS THEY HAVE FINALLY BEEN ADJUDICATED IN THE,
AFOREMENTIONED PARTIAL SUMMARY JUDGMENTS DATED JULY 11, 2003 AND
MAY 7, 2004,

Then on 27 November 2013, the Supreme Court further declared that UCPB shares in the name
of Eduardo Cojuangco, Jr, are owned by the Republic of the Philippines and are ordered
reconveyed, the dispositive portion in part reads:

WHEREFORE, Part C of the appealed Partial Summary
Judgment in Sandiganbayan Civil Case No. 0033-A
with modification. As MODIFIED, the dispositive
portion in Part C of the Sandiganbayan’s Partial Summary
Judgment in Civil Case No. 0033-A, shall read as follows:

C, Re: MOTION FOR PARTIAL SUMMARY JUDGMENT (RE:
EDUARDO M. COJUANGCO, JR.) dated September 18, 2002
filed by Plaintiff.

3. The transfer by PCA to defendant Eduardo M. Cojuango, Jr. of
14,400 shares of stock of FUB (later UCPB) from the “Option
Shares” and the additional FUB shares subscribed and paid by
PCA, consisting of

a, Fifteen Thousand Eight Hundred Bighty-Four (15,884) shares
out of the authorized but unissued shares of the bank, subscribed
and paid by PCA;

b, Sixty Four Thousand Nine Hundred Eighty (64,980) shares of
the increased capital stock subscribed and paid by PCA; and

c, Stock dividends declared pursuant to paragraph 5 and paragraph
11 Gv)(d) of the PCA-Cojuangeo Agreement dated May 25, 1975
or the so-called “Cojuangco-UCPB shares”

is declared unconstitutional, hence null and void.

4. The above-mentioned shares of stock of the FUB/UCPB
transferred to defendant Cojuangco are hereby declared


conclusively owned by the Republic of the Philippines to be used
only for the benefit of all coconut farmers and for the
development of the coconut industry, and ordered reconveyed to
the Government.

5. The UCPB shares of stock of the alleged fronts, nominees and
dummies of defendant Eduardo M. Cojuangeo, Jr, which form part
of the 72.2% shares of the FUB/UCPB paid for by the PCA with
public funds later charged to the coconut levy funds, particularly
the CCSF, belong to the plaintiff Republic of the Philippines as
their true and beneficial owners.

In January 2012, the Supreme Court ruled in favor of the government that a good portion
of San Miguel Corporation shares was bought using the coconut levy funds which constitute
public money with a caveat that the money should be used solely for the benefit of the farmers
and the coconut industry. The ruling became final on September 4, 2012.

The Office of the Solicitor General then filed a motion for partial entry of judgment on.
October 14, 2014, It likewise filed a manifestation and supplemental motion for partial entry of
judgment on October 20, 2014, Both motions addressed the court's September 4, 2012 resolution
which affirmed the earlier ruling dated Jan. 24, 2012 which awarded the shares to the
government.

It took the KILUS Magniniyog to march from Davao City to Malacanang, Congtess and
the Supreme Court in November 2014 (o highlight the issue once more and bring the coconut
farmers’ pleas to the attention of the government, In response, the Supreme Court sitting En Bane
voted unanimously on December 2014 granting the request of the Office of the Solicitor General
to issue an entry of judgment of the abovementioned resolution. ‘The decision stamped a final seal
on the ruling that the shares bought using the coconut levy finds and registered in the names of
the Coconut Industry Investment Fund (CITE), dubbed "CHF block" of SMC shares, are owned by
the government and to be used exclusively for the benefit of the coconut farmers and the
development of the coconut industry. The decision on the CIIF block of San Miguel Corporation,
shares, its subsequent conversion to preferred shares, and the redemption by SMC had placed
‘over 71 billion pesos in the hands of government since October 2012.

Notwithstanding the Entry of Judgment issued by the High Court there has been no
significant and actual gain by the coconut farmers and farm workers or the industry up to this day.
The real benefit of the coconut farmers and the industry merely gets entangled in political debates
instcad of its long-overdue delivery to millions of impoverished coconut farmers.

The intendment of this bill may be summed up as follows: first, to enact a positive law for
the disposition and management starting with the CIF block of shares in San Miguel
Corporation; and second, by taking concrete steps towards the attainment of the original purpose
of the fund which was to provide the coconut farmers with much-needed assistance and
strengthen the coconut industry against the vagaries of the export markets.

This legislative measure aims to promote the development of the coconut industry
through direct benefits of the marginalized coconut farmers and farm workers via the creation of
the Coconut Famers Trust Fund. The bill likewise provides better policy alternatives to resolve
the continuing hardships experienced by the farmers. The mechanism for the judicious
management, use, and disposition of the coconut levy funds including the UCPB shares and CUP

5


SMC shares as outlined in this bill serves to address with urgency the problems besetting the
coconut industry, spur rural development, and alleviate the socio-economic well-being of the
millions of impoverished coconut farmers.

Passage of this measure is earnestly sought.

c

Rep. Teddy Brawner Baguilat, Jr.

Ch.
Rep. ibn

—
“er
Ben Ge * Paez Rep. Vicente J. Alcala

Rep. Pi gba ‘urabin-Hataman Rep. Jim iislaman Salina)

win N. Tagna



wIaneens

im
12

13
14
15
16
7
18
19
20
21
22

23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
Second Regular Session

5629

HOUSE BILL NO.

Introduced by Rep. Josephine R. Sato, Rep. Kaka J. Bag-ao, Rep. Teddy Brawner Baguilat,
dr. Rep. Leni Gerona Robredo, Rep. Ibarra M. Gutierrez, Rep. Anthony M. Bravo,
Rep. Cresente C, Paez, Rep. Vicente J. Alcala, Rep. Sitti Djalia A. Turabin-Hataman,
Rep. Jim Hataman-Salliman, Rep. Sherwin N. Tagna, and Rep. Peter M. Unabia

AN ACT TO ADDRESS POV! 'Y IN THE COCONUT SECTOR BY ESTABLISHING
THE COCONUT FARMERS' TRUST FUND, PROVIDING FOR THE MANAGEMENT
THEREOF, AND FOR OTHER PURPOSES

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

Congress assembled:

Section 1. Short Title, This act shall be known as the “Coconut Farmers’ Trust Fund Act”.
Section 2. Declaration of Policy. It is hereby declared the policy of the State to consolidate the
benefits due to coconut farmers, especially the poor and marginalized, under various statutes ancl
to expedite the delivery thereof and eradicate poverty in order to attain a balanced, equitable,
integrated and sustainable growth and development of the coconut industry.

Section 3. Definition of Terms. The following terms shall mean:

(a) "CIF" shall refer to the Coconut Industry Investment Fund created by virtue of Presidential

Decree 1468.

(b) "CIIF Oil Mills Group" shall refer to the six (6) CIIF companies, namely, Southern Luzon
Coconut Oil Mill

Cagayan de Oro Oil Co. Inc.; Higan Coconut Industries, Inc.; San Pablo

Manufacturing Corporation; Granexport Manufacturing Corporation; and Legaspi Oil Co, Inc.

(c) "CIIF Holding Companies" shall refer to the fourteen (14) holding companies; namely, Anglo

1


Carano N

10
I
12
13
14
15
16
7
18
19
20
21
22
ay
24
25
26
27
28
29
30
31
32
33
34
35

Ventures Corporation; ASC Investors, Inc.; ARC Investors, Inc.; AP Hol

ings, Inc.; Fernandez
Holdings, Ine.; First Meridian Development, Inc.; Randy Allied Ventures, Inc.; Rock Steel
Resources, Inc.; Roxas Shares, Inc.; San Miguel Officers Corporation, Inc.; Soriano Shares, Inc.;

‘Te Deum Resources, Inc.; Toda Holdings, Inc.; and Valhalla Properties Limited, Inc.

(@) "CIF SMC Block Shares" shall refer to the 33,133,266 shares of stock in San Miguel
Corporation (“SMC”) sequestered by the PCGG in 1986 representing 31% of the then total
ital stock of SMC.

outstanding c:

(e) “Converted SMC Series 1 Preferred Shares” shall refer to that portion of the CIIF SMC Block
Shares covering 753,848,312 preferred shares of stock in SMC.

(f) “Coconut Farmers” shall refer to one:

rmer-owner of a coconut farm, which is not more than five (5) hectares, who;
a. Tills the land (owner-cultivator), or
b. Does not till the land, but have control and supervision over the cultivation of a
farm which is not more than five hectares; and
ii, A non-owner of the coconut farm who is either a:
a. Leascholder or tenant who tills or supervises the cultivation of the farm, or
b. Farm worker or laborer, whether seasonal or itinerant, engaged in the harvesting

of the nuts and processing of copra as major means of livelihood,

(g) "Coconut Levy Assets" shall 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 means of the Coconut Levy Funds, as well as the fiuits and income derived therefrom,

including those acquired in exchange or substitution thereof.

This shall include, but shall not be limited to the following:

i, the shares in UCPB determined to be owned by the Government;
ii, the CIF Oil Mills Group;

iii, the CIF Holding Companies; and

iv, the Converted SMC Series 1 Preferred Shares.


(h) "Coconut Levy Funds" shall 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. This shall include the following:

i, the Coconut Investment Fund (“CIF”) under Republic Act No. 6260;

ii, the Coconut Consumers Stabilization Fund (“CCSF”), later renamed as the Coconut
Industry Stabilization Fund (“CISF”), under Presidential Decree No. 276, Presidential
Decree No. 961, Presidential Decree No. 1468, Presidential Decree No. 1841, and
Presidential Decree No. 1842;

iii, the Coconut Industry Development Fund (“CIDF”) under Presidential Decree No.582,
Presidential Decree No. 961, and Presidential Decree No, 1468;

i!
Presidential Decree No. 1468, and Letters of Instruction No. 926; and

iv. the Coconut Industry Investment Fund (“CIF”) under Presidential Decree No. 961,

v. the Coconut Reserve Fund (“CRF”) under Presidential Decree No, 1468 and

Presidential Decree No. 1842.

(i) "Committee" shall refer to the Coconut Farmers Trust Fund Committee created under Section
10 of this Act.

(j) “GCG” shall refer to the Governance Commission on Government-Owned and Controlled

Corporations created under Republic Act No, 10149.

(k) "Investment Guidelines" shall refer to the investment management guidelines, rules,
procedures, and policies to be formulated by the Committee, 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,

and required income from the fund, and other investment management threshold requirements.

() "PCA" shall refer to the Philippine Coconut Authority created under Presidential Decree No.
232 as amended by Presidential Deoree No. 1468.

(m) "PCGG" shall refer to the Presidential Commission on Good Government created under
Executive Order No.1 (S. 1986).


32
33
34
35

(n) "PMO" shall refer to the Privatization and Management Office organized under Article III of
Executive Order No, 323 (8. 2001).

(0) “Roadmap" shall refer to the Coco Levy Roadmap to be prepared under Section 19 of this
Act.

Trust Fund" shall refer to the Coconut Farmers Trust Fund created under Section 6 of this

(q) "Trust Income" shall refer to the income or interest accruing to the Trust Fund.

(«) "Trust Principal” shall refer to (i) 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 Series 1 Preferred Shares, and all income or interest derived
therefrom up to the date of the Entry of Judgment in Philippine Coconut Producers Federation,
Ine, (COCOFED), et al. vs. Republic of the Philippines, et al. (G.R. Nos. 177857-177858 and
GAR. No. 178193); (ii) any other cash Coconut Levy Asset including amounts deposited in UCPB

as administrator of the CIIF; and (iii) proceeds from the privatization of any Coconut Levy Asset.

Section 4. Audit and Inventory of Coconut Levy Assets. Upon the effectivity of this Act, the
Commission on Audit, in coordination with the PCA, the PCGG, and the Office of the Solicitor
General, shall conduct an inventory and accounting of the Coconut Levy Assets as well as the

investments, disbursements, and expenditures relating to the Coconut Levy Funds.

Within one hundred twenty (120) days from the effecti

ity of this Act, the Commission on

Audit shall submit to the Committee its report, which shall include a complete list of the Coconut

Levy Assets, their valuation, and the empirical basis and the methodologies employed for the said

valuation,

Within fifteen (15) days from receipt of the report, the Committee shall publish the same

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

Nothing herein shall be construed as preventing the PMO from procuring a third-party

appraisal prior to or in the course of preparing the privatization or disposition plans for the

Coconut Levy Assets.


er aAaunrene

RF
12
13
14
+
16
7
18
19
20
21
2
23
24
25
26
27
28
29
30
31
32
33

35

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 having any Coconut Levy Asset in its

administration, authority, custody or control, shall perform or cause the performance of the
following:

a) reconvey title to the Republic of the Philippines over the Coconut Levy Assets;

b) deliver all stock certificates and other evidence of ownership to the Bureau of

Treasury for safekeeping; and

¢) deposit all cash Coconut Levy Assets in the Trust Fund.

For the avoidance of doubt, any provision of law to the contrary notwithstanding, the

Bureau of Treasury and the UCPB shall directly remit the initial Trust Principal to the Trust Fund.

Section 6. Creation of the Coconut Farmers Trust Fund. There is hereby created a trust fund to
be known as the Coconut Farmers Trust Fund. The Trust Fund shall consist of the Trust Principal

and the 1

ust Income. No portion of the Trust Fund shall accrue to the general fund of the
National Government. Nothing in this Act shall be understood to prohibit any person from

conveying to the Committee other assets for the use of the coconut industry.

Section 7. Purpose of the Trust Fund. The Trust Fund is exclusively for the development of the

coconut industry for the ultimate benefit of coconut farmers as embodied in the Roadmap.

Section 8. 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 and subject to the following conditions:

a) The Trust Principal shall be preserved at all times and only the Trust Income may
be used: Provided, That an aggregate amount not exceeding five percent (5%) of
the initial Trust Principal may be used during the first two years following the

effectivity of this Act.

b) Funds shall be disbursed only on the basis of the program, activity or project and


RwUne

Socawray

i

13
4
15
16
7
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35

funding requirements,

©) Funds may also be disbursed to pay for (i) 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 (ii)
reimbursements to the PMO for reasonable expenses actually, directly, and
exclusively incurred in connection with the privatization. Such administrative
expenses shall not exceed Thirty Million Pesos (P30,000,000.00) for the initial
year and, for the succeeding years, three percent (3%) of the Trust Income
accruing during the immediately preceding year. If the expenses in any year are

less than the maximum amount permissible, the difference shall not be availed of

as additional expenses in the following years.

d) No funds shall be ut

ed to pay for the salary of PMO personnel,

Section 9, Designation of the Bureau of Treasury as Depository of the Trust Fund. The Trust
Fund shall be deposited in the Bureau of Treasury. The Bureau of Treasury shall disburse and
account for the Trust Fund in the manner provided by the Committee and shall perform such

duties as may be determined by the Committee.

Section 10, The Coconut Farmers Trust Fund Committee. A Coconut Farmers Trust Fund

Committee is hereby created under the Office of the President for the management and

administration of the trust fund and the disposition and the utilization of the earnings and incomes
thereof for the development of the coconut industry and ultimate benefit of the small coconut

farmers and farm workers.

‘The Coconut Farmers Trust Fund Committee (herein referred to as the “Committee”)

shall be composed of the following:

(a) Five (5) representatives from the government, who shall be the Secretary of
Agriculture, Secretary of Finance, Secretary of the National Anti-Poverty

Commission, Director General of the National Econon

and Development Authority,
and Administrator of the Philippine Coconut Authority;

(b) Five (5) representatives from coconut farmers’ organizations which have considerable
experience and reputable track record; and,

(©) One (1) representative from a civil society organization with focus on uplifting the

6


Sewer aH Rene

i

13
14
15
16
17
18
19

small coconut farmers and the industry, and which have considerable experience and

reputable track record in building community-based coconut enterprises;

The nominees of the coconut farmers’ organizations and the civil society organizati

shall be validated and shortlisted by the Philippine Coconut Authority in consultation with the

National Anti-Poverty Commission

The Chair and the members of the Committee shall be appointed by the President. The
term of the government representatives in the Committee is co-terminus with their respective

terms in office while the rest of the members of the Committee shall each hold a term of one (1)

year, unless sooner removed for cause. Any of such representatives shall continue to hold office
until the successor is appointed. Any appointment to fill a vacancy in the Committee shall be

only for the unexpired term,

Section 11. 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 12. Functions and Responsibilities of the Committee. To ensure that the benefits and

gains arising out of the Trust Fund directly redound to, and are received by, the small coconut

farmers and farm workers, the Committee shall;

a) Coordinate and monitor the implementation of the Roadmap;

b) Approve any disbursement out of the Trust Fund;

©) Formulate the Investment Guidelines including the prohibited investments;

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

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

1) 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) Submit to the President reports and recommendations in connection with its functions


Socwrvavneene

nN

13
14
15
16
7
18
19
20
21
22
23
24
25
26
27
28
29
30
oa
32
33
34
35

under this Act;

i) Appoint, transfer, suspend or otherwise remove for cause personnel of the Committee and
fix their remuneration in accordance with the Salary Standardization Law; and

k) Exercise such other incidental powers and functions as may be necessary to attain the

objectives of this Act

Section 13, Meetings of the Committee. The Committee shall meet at least once a month, or as
often as deemed necessary by the Chairperson, 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 all members of the Committee

shall be required in cases involving the approval of (i) any

isbursement of funds involving more
than Fifty Million Pesos (P50,000,000,00), (ii) any proposed privatization involving more than
Five Hundred Million Pesos (P500,000,000,00), and (iii) any proposed investment involving
more than One Hundred Million Pesos (PI00,000,000.00).

In case of unavailability of the Chairman, the Chairman may designate the Vice Chairman

to convene the Committee and chair the meeting on behalf of the Chairman,

Section 14. Obligations of the Members of the Commitee. 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 conflicts of interest and declare before the Committee an

interest they may have in any particular matter

Where a member of Committee receives any profit or benefit by virtue of the office,
including, but not limited to, 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

ci

any administrative, civil or criminal action against such member. This provision shall be
applicable notwithstanding the fact that such member of the Committee risked one’s own funds in

the venture.

Section 15. Executive Director of the Committee. The President, upon recommendation of the

Committee, shall appoint an Executive Director who shall have the following powers and

8


1

won

we Aa

10
a
12
13
14
15
16
7
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35

functions

a) Administer the implementation of the plans, activities, and programs approved in
accordance with the provisions of this Act;

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

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

d) Maintain official records and reports of the proceedings of the Committee;

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

f) Exercise such other duties as may be vested by the Committee that are consistent

with the provisions of this Act.

Section 16. Cooperation with the Committee. The Committee may call upon any department,
bureau, office, agency and instrumentality of the Government, including government-owned and
controlled corporations, for such assistance as it may need in the pursuit of the purposes of the
‘Trust Fund and in the discharge of its powers and functions, including the implementation of the

Roadmap.

Section 17. Accounting and Auditing. The Committee shall maintain appropriate records and
accounts of all investments, income, receipts, disbursements and other transactions relating to the

management, administration and disposition of the Trust Fund,

The Trust Fund shall be audited annually by the Commission on Audit.

Section 18. Legal Counsel. The Secretary of Justice shall be the ex officio adviser to the

Committee on legal matters

Section 19. Preparation of the Coco Levy Roadmap. An ad hoc committee is hereby created to
be composed of the heads of the Department of Agriculture, Department of Agrarian Reform,
Department of Energy, Department of the Interior and Local Government, Department of Public
Works and Highways, Department of Science and Technology, Department of Trade and Industry,
National Anti-Poverty Commission, National Economic and Development Authority, and PCGG,

with the Director-General of the National Economic and Development Authority as Chairman.


20
21
22
23
24
25
26
21
28
29
30
31
32
33
34
35

‘The ad-hoc committee, in consultation with 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 a five-year plan
of programs, activities and projects which shall be funded out of the Trust Fund and which

shall be known as the Coco Levy Roadmap.

In the formulation of the Roadmap, the ad hoc committee shall be guided by the

following objectives:

(1) increased income of coconut farmers and increased coconut productivity including

intercropping and livestock-raising:

(2) promoting coconut-based enterprises including integrated processing of coconut

products and downstream products; and

(3) coconut farmers organization and development.

‘The coco levy Roadmap shall provide an indicative funding requirement or allocation for
the implementation of all programs, activities, and projects included therein, which funding or
allocation shall be itemized or broken down on a project-to-project basis: Provided, That, (i) 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 said project; and (ii) for projects that are to be
implemented or completed over a period of time, the allocation shall indicate the total fund that
may be required for the implementation of the whole project, itemized according to the phases of

said project.

Section 20. Approval of the Coco Levy Roadmap. Within sixty (60) days from the effectivity of
this Act, the Roadmap shall be submitted to the President, through the Committee, for approval.
Immediately upon approval, the Roadmap shall be retumed to the Committee for the
disbursement of funds in accordance with the provisions of this Act. Any amendment to the

Roadmap shall likewise be submitted to the President, through the Committee, for approval.

If the President has any objection to the Roadmap or any amendment thereto, the President
shall notify the Committee within thirty (30) days from receipt; otherwise, the Roadmap or the

amendment shall be deemed approved.

10


we wn

Seocamraa

i

13
14
15
16
Tt
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35

Section 21. Privatization of Coconut Levy Assets. The Committee shall determine the Coconut
Levy Assets that should be privatized. For this purpose, the Committee shall be guided by any of

the following standards:

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;

b) The functions or purpos

s of the entity duplicate or unnecessarily overlap with functions,
programs, activities or projects already provided by an agency;

c) The entity is not producing the desired outcomes, or is no longer achieving the objectives
and purposes for which it was originally designed and implemented, or is not cost
efficient and does not generate the level of social, physical and economic returns vis-A-vis

the resource inpu

d) The entity is dormant or non-operational;

¢). The entity is involved in an activity 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 recommendation to the President for approval. The

Committee shall also arrange for the transfer to the PMO of the Coconut Levy As:

approved
for privatization, unless the President, upon 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
s of the PMO under Executive Order No. 323 (S. 2000),

the PMO shall be the disposition entity for the Coconut Levy Assets that have been approved for

addition to the powers and responsibilit

privatization,

The PMO shall be authorized to (i) formulate and implement the marketing and

ion program after securing prior approval of the Committee;

preserve such assets on behalf of the National Government; (iii) execute and deliver, on behalf of
the National Government, such contracts and documents as may be necessary to convey title to
and take possession of such assets; (iv) engage external advisors as may be necessary in fulfilling

its tasks; and (v) adopt internal rules and regulations.

Ml


19

Section 23. Powers of the Privatization and Management Office. The PMO is empowered to
enter into sales through public bidding, negotiated sale, lease, or any form of divestment or
tran

mission of rights over the Coconut Levy Assets. Any such transaction shall not be final

unless approved by the Committee: Provided, That no Coconut Levy Asset shall revert to
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.

Prior to the implementation of any privatization plan, the PMO shall have the following

powers in relation to corporations transferred to the PMO as provided in Section 22 of this Act:

(1) Require any of the subject corporations to adopt and implement cost-reduction
measures to enhance the viability, and therefore the disposability of such
corporations, 10 potential buyers, including measures requiring personnel

retrenchment plans or other forms of corporate downsizing;

(2) Direct any of the subject corporations to submit such reports and information as the

PMO may require in the exercise of its functions under this Act; and

(3) Cause the subject corporations to undergo rehabilitation, merger, consolidation, spin-
off, or other corporate acts of reformatory nature as it may deem necessary or
desirable to expedite the privatization under this Act: Provided, That no corporate

‘measure shall be implemented without the approval of the Committee.

Section 24. Remittance of Proceeds of Privatization. All proceeds or receipts from the sale of

Coconut Levy Assets shall be remitted to the Trust Fund.

Section 25, Reporting Requirements. The Committee shall, on a semi-annual basis, submit to the
President and Congress a report on the status of privatization program, including a description of
the individual assets disposed of, the purchasers, the consideration received, and the 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 efforts and its disposition program

for the Coconut Levy Assets, which shall include the items described in the immediately

12


Seward sAuneon

iW
12
13
14
15
16
17
18
19
20

22
23
24
25
26
27
28
29
30

32
33
34
35

preceding paragraph.

Section 26. Retention and Dissolution of Coconut Levy Assets. The Committee shall identify the

Coconut Levy Assets that should be re

ied by the National Government and/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.

The GCG shall implement the dissolution of those Coconut Levy Assets that have been

approved for abolition.

Section. 27. Allowable Investments, The Committee shall manage the Trust Principal with the

skill, care, prudence, and diligence necessary under the circumstances then prevailing that a
prudent man 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 uncon¢

nal guarantee of the Republic of the

Philippines is pledged;

b) Bonds, securities, promissory notes or other evidence of indebtedness of government
fina

ial institutions or government corporations with acceptable credit or guarantee:
Provided, That such investments shall be subject to a ceiling (o be fixed by the Committee

in the implementing rules and regulations; and

©) Deposits and loans to or securities in any domestic bank doing business in the Philippines
and in good standing with the Bangko Sentral ng Pilipinas: Provided, That in the case of
such deposits, this 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 said

bank shall first have been designated as a depository for this purpose by the Monetary

13


er aAauronea

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,

Section 28. Applicability of Republic Act No. 10149 and Executive Order 323. In case of doubt

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 323 or
"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" shall apply suppletorily: Provided, That Section 2,
Article TV of EO 323 (utilization of funds) and Section 3, Article IV of EO 323 (sale of small

local investors) shall not be applicable

Section 29, Implementing Rules and Regulations. Within thirty (30) days from the date of
effectivity of this Act, the Committee, in consultation with the PMO, shall formulate the rules and

regulations for the proper implementation of this Act.
Section 30. 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 31. Repealing Clause. All laws, Presidential Decrees, ordinances, rules and regulations

inconsistent herewith are hereby revoked, amended, revised and superseded accordingly.

Section 32. Effectivity Clause, This Act shall take eff

fifteen (15) days after its complete

publication in the Official Gazette or in two (2) newspapers of general circulation,

Approved,

14