Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

2657

House Bill No._

Introduced by REP. IAN PAUL L. DY

EXPLANATORY NOTE

Coconut, popularly known as the “Tree of Life “ is one of the top ten export produce of
the country. About one third of the country’s arable agricultural land or 3.26 million hectares is
planted to coconut representing sixty four (64) out of seventy nine (79) provinces, and one
thousand and one hundred ninety-five (1,195) out of one thousand and five hundred fifty-four
(1.554) municipalities in the country.

Despite this, the coconut industry is confronted with various challenges including low
productivity, lack of information on appropriate technologies, and high poverty incidence among
our coconut farmers.

The coconut industry has been waiting for a legislative action that will finally enable the
sector to address the serious concerns that it has been confronted with for so long. The Coconut
Levy Funds has still to be utilized for the benefit of the coconut farmers and for the development
of the coconut industry.

This bill was filed in 17" Congress and this Representation considered the importance of
refiling as itis one of the priority programs of the Duterte administration.

In view of the foregoing, the approval of this bill is earnestly sought.

REP-IAN, L. DY
bela



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

2657
House Bill No.

Introduced by REP. IAN PAUL L. DY

AN ACT
ESTABLISHING THE COCONUT FARMERS AND INDUSTRY
DEVELOPMENT TRUST FUND AND PROVIDING FOR ITS
MANAGEMENT AND UTILIZATION

Section 1. Short Title. This Act shall be known as the "Coconut Farmers and Industry
Development Trust Fund Act."

Section 2. Declaration of Policy. It is hereby declared the policy of the State to pursue
and attain the balanced, equitable, integrated, and sustainable growth and development of
the coconut industry. Towards this end, the State shall adopt the necessary measures to
immediately address the serious problems besetting the coconut industry, protect the
socio-economic well-being of coconut farmers, and ensure that the benefits due them,
especially the poor and the marginalized, under various statutes shall be consolidated
and their delivery expedited. Any measure or program undertaken in accordance to this
‘Act shall be deemed complementary to and shall not be a replacement for existing and
potential coconut development programs already conducted by other agencies.

Chapter I
Definition of Terms

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

a. Coconut Industry Investment Fund (CIIF) refers to the Fund created
pursuant to Presidential Decree (PD) No. 1468, which authorized the United
Coconut Planters Bank (UCPB) to utilize the surplus funds from the Coconut
Consumers Stabilization Fund (CCSF) and the Coconut Industry Development
Fund (CIDF) 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 related
to the coconut industry in all its aspects and the establishment of a research
program into the commercial and industrial uses of coconut

b. CIF Holding Companies refer to the fourteen (14) holding companies, namely:
(1) Anglo Ventures Corporation; (2) ASC Investors, Inc.; (3) Arc Investors,

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Incorporated; (4) AP Holdings, Incorporated; (5) Fernandez Holdings,
Incorporated; (6) First Meridian Development, Inc.; (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)

CUF 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
CIE.

CIF 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.

Converted SMC Series I Preferred Shares refer to that portion of the CIIF
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.

Coconut Farmer refers to:
1. Farmer-owner of a coconut farm who:

) Tills the land (owner-cultivator); or
b) Does not till the land but has control and supervision over the
cultivation of a farm; and

2. A non-owner of the coconut farm who is either a:

@) Leaseholder 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.

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 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 but not limited to 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 CIIF Holding Companies;

4. The Converted SMC Series 1 Preferred Shares; and

5. Remaining CIF SMC Block Shares or the proceeds of their sale.

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, dessicators, and other end users of copra rececada ot
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 (RA) No. 6260;

2. The Coconut Consumer Stabilization Fund, later renamed as the Coconut
Stabilization Fund, created under PD No. 276;

3. The Coconut Industry Development Fund created under PD No. 582;

4. The Coconut Industry Investment Fund created pursuant to PD No. 1468;
and

5. The Coconut Reserve Fund under PD No. 1468 and PD No. 1842.

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,
hereinafter referred to as the Committee, and as may be amended from time
to time, which shall provide the parameters for investments of the Trust Fund
‘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.

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

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; or any other
cash Coconut Levy Asset deposited in the Bureau of the Treasury (BTr)
and the UCPB as administrator of the CIIF;

2. Any and all proceeds of privatization of the Coco Levy Assets remitted
thereto by the Privatization and Management Office (PMO) organized
under Article Ill of Executive Order (EO) No. 323 (s. 2001); and

3


3. 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 IL
Audit and Reconveyance of Coconut Levy Assets

Section 4. Audit and Inventory of Coconut Levy Assets. Upon the effectivity of this
‘Act, the PCGG shall conduct a complete accounting and inventory of the Coconut Levy
Assets as well as the investments, disbursement, 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 Report on the Accounting and Inventory of the Coconut Levy
Assets prepared and submitted by the PCGG for the purpose of, among others,
determining completeness of said inventory, the existence of the subject assets, establishing
the reasonableness of the asset valuation, and tracing of the flow of the coconut levy
fund.

The COA shall submit to the PCGG its initial audit report, the reviewed Report on the
Accounting and Inventory of the Coconut Levy Assets, and the valuation as well as the
empirical basis and methodologies employed for said valuation, together with its
observations for revision and compliance, within ninety (90) days from submission of the
Report on the Accounting and Inventory of the Coconut Levy Assets. However, if necessary,
further audit may be undertaken after the initial audit.

The PCGG shall then incorporate the COA’s observations for revision and compliance in the
Report on the Accounting and Inventory of the Coconut Levy Assets and submit the revised
version to the COA within thirty (30) days, subject to reasonable time extension, from the
submission of the COA’s observations for revision and compliance.

After determining that the observations for revision and compliance were incorporated in the
revised Report on the Accounting and Inventory of the Coconut Levy Assets by the PCGG,
the COA shall submit the final version of the Report on the Accounting and Inventory of the
Coconut Levy Assets to the Committee, as well as the empirical basis and methodologies
employed for the valuation.

The Committee shall publish the same, within fifteen (15) days from its receipt of the final
version of the Report on the Accounting and Inventory of the Coconut Levy Assets, in at
least two (2) newspapers of national circulation.

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;

b. Delivery of all stock certificates and other evidence of ownership to the
BTr for safekeeping; and

¢. Deposit all cash assets in the Trust Fund.

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Any provision of the law to the contrary notwithstanding, the BTr and the UCPB shall
directly remit the initial Trust Principal to the Trust Fund; Provided, That the BTr shall
transfer the remaining cash assets from the special account in the General Fund within a
period of five (5) years in equal amounts each year.

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

The COA shall also conduct the regular financial and compliance audit of the Coconut Levy
Assets, and submit the annual audit report thereon as mandated by the government auditing
rules and regulations, until said assets are privatized.

Chapter Ill
Coconut Farmers and Industry Development Trust Fund

Section 6. The Coconut Farmers and Industry Development Trust Fund. There is
hereby created a trust fund to be maintained for a period not to exceed thirty (30) years or
until the fund is fully utilized to be known as the Coconut Farmers and Industry
Development 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 be
derived from the General Fund of the National Government; Provided That, any unutilized
balance in the Trust Fund after thirty (30) years shall revert to the General Fund of the
National Government, and 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 the 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 for the development of the coconut industry, as
embodied in the Coconut Farmers and Industry Development Plan to be prepared
pursuant to Section 21 hereof.

Section 8. Capitalization of the Trust Fund. All assets and/or properties derived from
all coconut levy recovered assets; and all 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 the 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. Ten Billion Pesos (PHP 10,000,000,000.00) of the initial trust principal, which
shall be known as the Jumpstart Fund, may be used within two (2) years
commencing from the approval of the plan by the President to jumpstart the
development of the industry;

b. All disbursements shall only be made on the basis of the funding requirement
of the program, activity, or project by the Committee as provided in the
Coconut Farmers and Industry Development Plan; Provided, That an annual
allocation of at least Five Billion Pesos shall be released for the programs and
projects provided under this Act; and

C. The ceiling for expenses of the Committee for the administration, monitoring,
evaluation, information services, and other necessary act ies for the effective
performance of its functions under this Act shall be provided in the
Implementing Rules and Regulations under Section 26 of this Act

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 PD No. 232 (s. 1973), as amended by PD No. 1468 (s. 1978). Other
coconut productivity and developmental programs and projects implemented by other
agencies shall be closely coordinated with the PCA.

Disbursements or expenditures by the concerned implementing agencies in violation of the
purpose of the Trust Fund shall be void and shall subject the erring officials and
employees to disciplinary actions in accordance with existing laws, and to
appropriate criminal action under existing penal laws. Disbursements of the funds should
be done in accordance with the Government Accounting Manual and all other related laws,
rules, and regulations.

Section 10. Designation of the Bureau of the Treasury as Depository of the Trust
Fund. Any law to the contrary notwithstanding, the BTr is hereby designated as the
depository of the Trust Fund, which shall:

@. Hold and account the Trust Fund in the manner set forth by the Committee;

b. Release funds directly to the implementing agencies upon the instruction of the
Committee;

©. When so appointed by the Committee, act as a fund manager of the
investments of the Trust Fund with the authority and accountability as that of a
private fund manager; and

d. Perform other tasks as may be authorized by the Committee.

The Committee may designate alternative depository banks which shall perform the same
functions as that of the BTr.


Chapter IV

Coconut Farmers and Industry Development and Industry Trust Fund

Committee

Section 11. Creation of the Coconut Farmers and Industry Development Trust Fund
Committee. The Coconut Farmers and Industry Development Trust Fund Committee is
hereby created under the OP.

The Committee shall have the following powers and functions:

a.
b.

c.

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

Approve any allowable disbursement out of the Trust Fund pursuant to Section
14 of this Act;

Formulate the Investment Guidelines pursuant to the allowable investment
stated in Section 28 of this Act;

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

Identify the Coconut Levy Assets that will be privatized, retained, or
abolished and submit its recommendation to the President for approval;
Approve the marketing and disposition program for the Coconut Levy Assets
approved for privatization;

After obtaining the approval of the President, authorize the sale and other
mode of privatization of Coconut Levy Assets approved for privatization;
Authorize the rehabilitation of Coconut Levy Assets approved for
privatization pending actual disposition;

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

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

The PCA shall provide Secretariat support to the Committee.

Section 12. Composition. The Commitee sball be composed of the following

Six (6) representatives from the government who shall be serving in ex officio
capacities:

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

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

3. Secretary of the Department of Trade and Industry (DTI);

4. Secretary of the National Economic and Development Authority (NEDA)

5. Administrator of the PCA; and

6. A representative from the Office of the Executive Secretary.

Three (3) representatives from the coconut farmers’ organizations, one (1)
from Luzon, one (1) from Visayas, and one (1) from Mindanao, who have
considerable experience, substantial membership, and reputable track records.
Two (2) representatives from the coconut industry sector who have
considerable experience and reputable track records.

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The nominees of the coconut farmers’ organizations shall be validated and shortlisted
by the PCA. The list of nominees, which shall number at least three (3) per island group,
shall be submitted to the President not later than thirty (30) days following the
effectivity of this Act. The representatives of the coconut industry sector shall be
appointed by the President from a list of nominees, which shall number at least six (6),
submitted by the PCA.

The government representatives in the Committee shall serve only during their respective
terms in office. The representatives from the coconut farmers’ organizations and the
coconut industry sector shall each hold a term of three (3) years, unless sooner removed
for cause, and may be reappointed once. 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 permanent alternates who shall be the officials next-in-rank to
them and their acts shall be considered acts of their principals.

Section 14, Meetings of the Committee. The Committee shall meet 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 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 single disbursement of funds involving more than Fifty Million Pesos
(Php 50,000,000.00);

b. Any proposed investment involving more than One Hundred Million Pesos
(Php 100,000,000.00); and

¢. All dispositions or privatization proposals

Provided further, That the disbursements requiring the approval of at least a majority of the
members of the Committee may be subject to the President's disallowance.

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. Compensation of the Members of the Committee. The members of the
Committee may be entitled to per diems and reimbursable expenses, in accordance with the
COA rules and regulations.

Section 16. 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 conflicts 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 his 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

8


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.

The Committee shall recommend to the President the removal and replacement of the
member who performs such acts

Section 17. Executive Director of the Committee. The administrator of the PCA shall be
appointed as Executive Director of the Committee.

The Executive Director shall have the following powers and functions:

@. Execute policies and administer the programs approved or promulgated by the
Committee;

b. Monitor the progress of the implementation of the Plan and submit periodic
reports to the Committee;

C. 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;

d. 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

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

Section 18. Cooperation with the Committee. The Committee may also call upon any
department, bureau, office, agency, and instrumentality of the Government, including
Government-Owned or -Controlled Corporations (GOCCs), for any assistance it may
need in the discharge of its functions and responsibilities as well as in the
implementation of its programs and projects.

Section 19. Accounting and Auditing. The Committee shall maintain records 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 20. Legal Counsel. The Solicitor-General shall be the ex officio
counsel of the Committee on legal matters.

Chapter V
Coconut Farmers and Industry Development Plan

Section 21. Preparation of the Coconut Farmers and Industry Development Plan. An
Ad Hoc Committee is hereby created to be composed of technical officials from the
Department of Agriculture, the Department of Agrarian Reform, the Department of the


Interior and Local Government, the Department of Finance, the Department of Public
Works and Highways, the Department of Science and Technology, the Department of
Social Welfare and Development, Department of Health, the Department of Trade and
Industry, the Department of Budget and Management, the National Economic and
Development Authority, the National Anti-Poverty Commission, the Technical Education
and Skills Development Authority, the Land Bank of the Philippines, and the Development
Bank of the Philippines.

In addition, twelve (12) representatives from the coconut farmers’ organizations
composed of four (4) from Luzon, four (4) from Visayas, and four (4) from Mindanao;
and four (4) representatives from the different coconut industry sectors who all have
considerable experience, substantial membership, and reputable track records, shall also
be members of the Ad Hoc Committee.

The nomination process of the representatives from the coconut farmers organizations
and the different coconut industry sectors shall be the same as that in Chapter IV,
Section 12 of this Act; Provided, That, the list of nominees from the coconut farmers’
organizations shall number at least twelve (12) per island group; Provided, also, that
eight (8) of the twelve (12) representatives from the Coconut Farmers’ Organizations
must not have more than five (5) hectares of coconut farm landholding; Provided
Further, That, the list of nominees from the coconut industry sector shall number at least
twelve (12).

The Administrator of the PCA shall act as the Ad Hoc Committee's Chairperson.

The members of the Ad Hoc Committee shall be compensated in the same manner as that of
the Committee under Chapter IV, Section 15 of this Act.

The Ad Hoc Committee, in consultation with coconut farmers’ organizations, industry
associations, civil society organizations, academe, concerned government agencies, and
other stakeholders in the coconut industry shall indicate in an integrated coconut
industry strategy the policies for the development and rehabilitation of the coconut
industry. It shall prepare every five (5) years, or as determined by the Committee, 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, hereinafter referred to as the Plan. The Plan shall be consistent with the
Philippine Development Plan and shall be subject to mandatory review every year.

The Administrator of the PCA shall submit an annual report to the Committee on the status
of the implementation of the Plan and its corresponding programs/projects.

The PCA shall commission an independent study on the third year, or any other date as may
be determined by the Committee, to assess the impact of the programs and projects in the
Plan. The results of the independent study shall be one of the bases to update the Plan. The
conduct of the study shall be chargeable to the regular funds of the PCA.

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

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a. Increase in the income of coconut farmers and increase coconut productivity
including intercropping and livestock-raising:

b. _ Establishment of coconut-based enterprises including integrated processing of
coconut products and downstream products;

c. Rehabilitation and modernization of the coconut industry towards global
competitiveness;

d. Provision of timely and critical support to coconut farmers organization; and

e. Establishment of social protection programs that directly benefit the coconut
farmers and farm workers, in case these social protection programs are not
funded by an appropriations law or any other special laws, or where funding
is insufficient. The social protection programs shall include: (1) social
services such as life, medical, and accident insurance coverage of the coconut
farmers and farm workers; (2) scholarships for the benefit of the deserving
descendants of the coconut farmers and farm workers; and (3) livelihood
programs.

The Plan shall provide an indicative funding requirement or allocation for the
implementation of any and all of the programs and projects, 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
shall 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. The Plan shall also
include the contribution of the regular budget of the PCA.

Within ninety (90) days from the appointment of all farmer-representatives and the
industry representatives, the Plan shall be submitted by the Ad Hoc Committee to the
Committee which shall, in turn, submit the Plan to the President, as endorsed by the
Economic Development Cluster, for approval. Immediately upon its approval, the Plan
shall be returned to the Committee for the disbursement of funds in accordance with the
provisions of this Act. Any amendment to the Plan shall require the approval of the
President, as endorsed by the Economic Development Cluster.

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 22. Privatization of Coconut Levy Assets. Pursuant to the national policy on the
efficient and transparent privatization of government assets (including GOCCs) which are
unnecessary or inappropriate for the government sector to maintain:

a. The Governance Commission for Government-Owned or -Controlled Corporations
shall determine whether it is to the best interest of the Government to privatize any
non-cash Coco Levy Asset and recommend to the President the privatization and
the mode of the divestment, taking into account the need to generate maximum
cash recovery and the implications of such divestment on the coconut industry.

1


The PMO shall be the disposition entity for non-cash Coconut Levy Assets which
shall have been approved for divestment by the President and shall expeditiously
sell, alienate, or dispose of the same upon securing the favorable recommendation
of the Privatization Council pursuant to EO No. 323 (s. 2000) and other relevant
laws, orders, rules, and regulations, and the prior approval of the Committee. In the
discharge of this additional mandate, the PMO is hereby empowered to implement
the actual marketing/disposition program for the non-cash Coconut Levy Assets, to
execute and deliver, on behalf of the Government, the deeds of sale, contracts, and
other instruments as may be necessary or appropriate to convey title to such assets
to take possession of and conserve the non-cash Coco Levy Assets transferred to it,
and engage external expertise as may be necessary in the fulfillment of its tasks
under this Act. Any sale and other mode of privatization shall not be considered
final unless favorably recommended by the Privatization Council and approved by
the Committee.

The PMO shall, within three (3) months from the closure of its books at the end of
each fiscal year, submit a comprehensive annual report to the President, through
the Privatization Council, on the status of its privatization efforts and its
disposition program for the non-cash Coco Levy Assets, which report shall include
a description of the assets privatized and disposed of, the purchasers, the
consideration received, and the agreed terms of payment.

Section 23. Proceeds from Privatization. All proceeds and receipts or revenues arising out of
or in connection with the privatization of the Coconut Levy Assets shall be deposited to the
Trust Fund, after deducting reasonable expenses actually, directly, and exclusively incurred
by the PMO in connection with such privatization as stated under Section 22 hereof.

Section 24, Allowable Investment. 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 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, 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:

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 25. Suppletory Application of Republic Act No. 10149 and Executive Order No.
323. In the interpretation of the provisions of this Act, the provisions of RA No. 10149,
otherwise known as the “GOCC Governance Act of 2011,” shall apply suppletorily. EO No.
323, entitled, “Constituting an Inter-Agency Privatization Council and Creating a
Privatization and Management Office under the Department of Finance for the Continuing
Privatization of Government Assets and Corporations,” shall also apply suppletorily.

Section 26. Implementing Rules and Regulations. Within thirty (30) days from the date of
the constitution of the Committee, it shall formulate and promulgate the rules and regulations
for the proper implementation of this Act, in consultation with the PMO.

Section 27. Congressional Oversight. The Congressional Oversight Committee on
Agricultural and Fisheries Modernization shall exercise oversight functions over the
implementation of this Act. The financial review of the program in relation to its
performance indicators shall be subject to the oversight functions of the Joint Congressional
Oversight Committee on Public Enterprises.

Section 28. 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 29. Repealing Clause. All laws, executive and administrative orders, rules and
regulations inconsistent with this Act are hereby repealed or amended accordingly.

Section 30. Effectivity. This Act shall take effect fifteen (15) days after its publication in the
Official Gazette or in a newspaper of general circulation.

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