&ii i( c[ ;l’c !&i'- riia
EIGHTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
rr
‘19 OCT 29 PI 37
SENATE
S.B. No. 
1127
Rcu.
Introduced by SENATOR IMEE R. MARCOS
AN ACT ESTABLISHING THE COCONUT TRUST FUND, PROVIDING FOR H S  
MANAGEMENT AND U n L IZ A T IO N , RECO NSTm /TING  THE PHILIPPINE 
COCONUT AUTHORITY, AND FOR OTHER PURPOSES
EXPLANATORY NOTE
Section 21, Article II of the 1987 Constitution provides that, "th e  State s h a ll 
prom ote com prehensive ru ra l developm ent a n d  agrarian re fo rm ."
The Coco-Levy Fund is estimated to have accrued a total of 30 billion pesos in 
assets, along with 76 billion pesos in cash, following a series of Supreme Court rulings 
declaring that these amounts constitute "public fund" to be used only for the benefit 
o f coconut farmers and the development of the coconut industry. In 2015, President 
Benigno Aquino III issued Executive Order 179 and 180 to disburse the fund. However, 
the Supreme Court declared the disbursement to be unconstitutional, saying that 
Congress must first enact a law to disburse the funds.
Making the decades-long suffering of the coconut sector endure, the price o f 
copra, the main product of the Philippine Coconut Industry, have collapsed by almost 
65% on the past 2 years, from PhP 39.06 per kilogram last January 2017 to PhP 13.73 
per kilogram this June 2019, with some parts of Samar and Zamboanga reporting 
prices as low as PhP 7.80 per kilogram. Much of the decrease in value is due to low 
price of coconut oil in the world market, which already drove down the value of the 
country's coconut-related exports from US$ 2.1 billion in 2017 to US$ 1.6 billion in 
2018 and is expected to further go down in 2019.
As if dismal market forces were not enough, Philippine Coconut Authority (PCA), 
the government agency established to manage the coconut industry, has been mired 
in controversy, allegations of corruption and ineptitude, and very little effective action. 
Finally, on December 2018, President Rodrigo Roa Duterte demanded the courtesy 
resignation of the five (5) members o f the PCA board to reorganize the agency.
This bill seeks to reinvigorate the PCA, safeguard with the Department of 
Finance (DOF) and the Privatization and Management Office (PMO) the Coco-Levy 
Assets, and finally initiate the distribution of the long-awaited coco-levy funds, if only


partially and very prudently. The cash collections shall remain at the Bureau o f 
Treasury. A management group composed o f the Department of Rnance (DOF), the 
Bureau of Treasury (BTr), the Privatization and Management Office (PMO), the 
Philippine Coconut Authority (PCA), the Commission on Audit (COA), the Presidential 
Commission on Good Governance (PCGG), and farm er representatives will be 
constituted to manage and most conservatively invest the funds. The PMO, with the 
PCGG and COA's assistance, will assess, value, and dispose of assets. The PCA shall 
be modestly reconstituted as the Coconut Farmers and Industry Development Fund's 
implementing arm for the annual five billion pesos (PhP 5,000,000,000.00) o f 
development projects annually. The consolidated and confirmed National Registry o f 
Coconut Farmers will be the basis for the further five billion pesos (PhP 
5,000,000,000.00) to be given as social assistance, livelihood, and job programs fo r 
small marginalized coconut farmers.
Given the abovementioned circumstances, the immediate passage of this bill is 
necessary.
EE fL MARCOS


EIGHTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHIUPPINES ) 
First Regular Session 
)
SENATE
S.B. No. 1127
lull I.
0 fT iC f cf il)r a > i. 
P
'19 OCT 29 PI :37
R£“; 
' F-1 ^ ^
Introduced by SENATOR IMEE R. MARCOS
AN ACT ESTABLISHING THE COCONUT TRUST FUND, PROVIDING FOR ITS 
MANAGEMENT AND UTILIZATION, RECONSTITUTING THE PHILIPPINE 
COCONUT AUTHORITY, AND FOR OTHER PURPOSES
Be it  enacted by the Senate and the House o f Representatives o f the Philippines in 
Congress assembled.
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Section 1. Short Title. -  This Act shall be known as the " Coconut Farmers and 
Industry Development A ct o f 2019'.
Section 2. Declaration o f Policy. -  The State shall prioritize the welfare of the 
coconut farmers, among the poorest and most vulnerable sectors in the rural areas, 
and to expedite the distribution of the coconut levy through the decades in order to 
attain increased farm productivity and income of coconut farmers through the 
rehabilitation, expansion, and modernization of the Philippine coconut industry.
Section 3. Definition o f Terms. -  The following terms shall mean: 
a) 
"  Coconut F arm ef shall refer to:
1) An owner of a coconut farm, that 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 the coconut farm;
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2) A leaseholder or tenant who tills or supervises the cultivation of the farm; or
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3) A farm worker or laborer, whether seasonal or itinerant, engaged in the
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harvesting of the nuts and processing of copra as a major means of livelihood.
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b ) " Coconut Levy Assets" s\\s\\ refer to any and all kinds of property, whether real
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or personal, tangible or intangible, wherever situated, which have been acquired
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through the Coconut Levy Funds as defined in this Section, including those assets that
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may be recovered in favor of the government, as well as the fruits, or income
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therefrom, including those acquired in exchange or substitution thereof. These shall
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include, among others, the following:
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i. The shares of stock in the United Coconut Planters Bank (UCPB) that
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were determined to be owned by the government;
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ii. The OIF - Oil Mills Group which shall refer to the OIF companies,
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namely: Southern Luzon Coconut Oil Mills; Cagayan de Oro Oil Co. Inc.;
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lligan Coconut Industries, Inc.; San Pablo Manufacturing Corp.;
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Granexport Manufacturing Corp.; and Legaspi Oil Co, Inc., acquired by
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the UCPB using the CIIF;
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iii. The CIIF Holding Companies which shall refer to the fourteen (14)
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holding 
companies; 
namely: 
Anglo Ventures 
Corporation; 
ASC
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Investors, Inc.; A.R.C. Investors, Inc.; AP Holdings, Inc.; Fernandez
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Holdings, Inc.; 
Rrst Meridian 
Development, Inc.; 
Randy Allied
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Ventures, Inc.; Rock Steel Resources, Inc.; Roxas Shares, Inc.; San
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Miguel Officers Corps., Inc.; Soriano Shares, Inc.; Te Deum Resources,
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Inc.; Toda Holdings, Inc.; and Valhalla Properties Limited, Inc.; and
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iv. The Converted SMC Series 1 Preferred Shares which shall refer to the
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753,848,312 preferred shares of stock in San Miguel Corporation
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(SMC), declared owned by the government, together with all the
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dividends declared, paid or issued thereon, as well as any increments
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thereto arising from, but not limited to, the exercise of pre-emptive
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rights; and
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V. Remaining CIIF Block Shares which shall refer to the 33,133,266 shares
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of stock in SMC, sequestered by the PCGG in April 1986 and


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representing 31% of the total outstanding capital stock of SMC or the
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proceeds of their sale.
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c) "Coconut Levy Funds" 
refer to various funds generated from levies, taxes,
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charges, and other fees exacted or imposed pursuant to or in connection with the sale
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of copra rececada or its equivalent in other coconut products, and collected for the
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most part from coconut farmers, planters, millers, refiners, processors, exporters,
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desiccators and other end-users of copra rececada or its equivalent in other coconut
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products.
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Specifically, the term shall refer to any or all the following:
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i. Coconut Investment Fund created under Republic Act No. 6260;
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ii. Coconut Consumers Stabilization Fund, later renamed as the Coconut
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Industry Stabilization Fund, created under Presidential Decree No. 276;
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iii. Coconut Industry Development Fund created under Presidential Decree
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No. 582;
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iv. Coconut Industry Investment Fund created under Presidential Decree
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No. 1468; and
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V. Coconut Reserve Fund under Presidential Degree No. 1468 and
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Presidential Decree No. 1842.
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Section 4. The Coconut Trust Fund. -  There is hereby created a "Coconut Trust
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Fund," herein referred to as the 'Trust Fund," which shall be capitalized, managed,
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invested, utilized, and accounted for in the manner provided in this Act. The Trust
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Fund shall be used exclusively for the benefit of the coconut farmers and the coconut
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industry. No portion of the Trust Fund shall be derived from the General Fund of the
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National Government.
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The proceeds from the redemption of the Converted SMC Series 1 Preferred
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Shares, its dividends declared, paid, or issued and all income or interest derived
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therefrom as of the effectivity of this Act, and any other cash Coconut Levy Asset, that
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are held by the BTr as a special account in the general fund and as an escrow account,
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and cash held by UCPB, as administrator of the CIIF, shall form part of the Trust Fund.


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For this purpose, any provision of law to the contrary notwithstanding, the BTr and 
UCPB shall transfer any and all monies to the Trust Fund.
The Trust Fund shall thereafter be augmented with all proceeds from 
privatization or disposition of the Coconut Levy Assets remitted directly thereto by the 
Privatization and Management Office (PMO), in accordance with this Act, and all forms 
of income, interests, earnings, yields, or any monetary benefit derived prior to the 
privatization or disposition of any of the Coconut Levy Assets, any and all forms of 
income, interests, earnings, yields, or any monetary benefit derived from retained 
Coconut Levy Assets, and any and all forms of income, interests, earnings, yields, or 
any monetary benefit derived from the management of the Trust Fund, as provided 
in this Act.
Nothing in this Act shall be understood to prevent or prohibit any person, group, 
or entity from conveying to the BTr 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 shall form part of the Trust Fund.
All dispositions or utilization of the Trust Fund or any portion thereof shall be 
in accordance with the Coconut Farmers and Industry Development Plan, as provided 
in Section 7 of this Act.
Section 5. CocoTrust Management -  The Department of Finance (DOF), 
Bureau of Treasury (BTr), Privatization and Management Office (PMO), Philippine 
Coconut Authority (PCA), Presidential Commission for Good Governance (PCGG), the 
Department of Agriculture (DA), the Commission on Audit (COA), (4) representatives 
from coconut farmers sectors in the PCA Board, and the representative of the coconut 
industry sector in the PCA board, shall herein after be constituted as the "CocoTrust 
Management'. The Secretary of the Department of Finance shall be the Chairman of 
the CocoTrust Management.


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Section 6. Functions o f the CocoTrust Management - The CocoTrust 
Management shall manage and invest the Trust Fund with extraordinary prudence and 
responsibility. The Trust Fund shall be placed only in Philippine government securities 
to ensure the safety of the funds assure returns. The BTr is hereby designated as the 
depository of the Trust Fund. Immediately upon the effectivity of this Act, the BTr 
shall invest all cash Coconut Levy Assets under its administration in government 
securities that will provide the best possible return for the Trust Fund.
For the purpose of the management and investment of the Trust Fund, the 
CocoTrust Management shall have the following powers and functions:
a. Approve disbursements from the Trust Fund, including the funding for:
(i) the formulation of the Coconut Development Plan as stated in Section 
7, and
(ii) the conduct of the inventory and audit of the Coconut Levy Assets, 
which shall be charged against the Trust Fund;
b. Exercise on behalf of the national government all rights and incidents of 
ownership to the coconut levy assets, including the right to vote, whether 
directly or through duly authorized nominees, shares of stock held in the name 
of the national government;
c. Approve or disapprove, on behalf of the national government and without 
need of any further approval by, or other action from any other government 
institution or agency, the sale, disposition, or dissolution of such assets, which 
shall be conducted by the PMO.
d. Issue policies, rules, and guidelines as may be necessary to implement the 
provisions of this Act;
e. Maintain records and accounts of all investments, receipts, disbursements 
and other transactions relating to the management, administration, and 
utilization of the Trust Fund; and
f. Exercise such other powers and functions, as may be necessary, to attain the 
objectives of this Act.


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Section 7. Coconut Development Plan. - The CocoTrust Management 
shall prepare the Coconut Development Plan, herein referred to as the "Plan". The 
formulation of the Plan shall be guided by the following objectives: increased farm 
productivity and incomes of coconut farmers, intensive effort on intercropping and 
livestock raising, establishment of coconut-based enterprises, including integrated 
processing of coconut products and downstream products, rehabilitation and 
modernization of the coconut industry towards global competitiveness, and poverty 
alleviation and social protection that directly benefit coconut farmers, farm workers, 
and their families.
Provided that, the Plan shall consider the feedstock demand for biofuels and 
other existing policies on the use of coconuts. The Plan shall provide the criteria for 
targeting 
beneficiaries, 
indicators 
in 
determining 
the 
attainment 
of 
the 
abovementioned objectives, and mechanisms for monitoring and evaluating impact of 
the different components of the program.
The Plan shall also include strategic and inclusive training programs dedicated 
for our coconut farmers based from a comprehensive review of existing training 
programs. Programs relating to planting, replanting, fertilization, research and 
development, market promotion, farm-to-market roads, and direct lending, shall be 
funded through regular appropriations.
The 
Plan 
shall 
provide a funding 
requirement or allocation for the 
implementation of any and all the programs and projects to be funded by the Trust 
Fund, which 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 amount that may be 
required to implement said project;
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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


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the implementation of the whole project, itemized according to the 
phases or stages of said project; and
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That all projects shall be evaluated based on financial returns and 
increased farmers income.
Within one hundred eighty (180) days from the effectivity of this Act, the Plan 
shall be submitted to the President, as endorsed by the DOF, for approval. Any 
amendment or revision to the Plan shall require the approval of the President.
Section 8. Accounting, Inventory, and Audit o f Coconut Levy Assets. -  W ithin 
thirty (30) days from the effectivity of this Act, the Presidential Commission on Good 
Government shall conduct a complete accounting and inventory of the Coconut Levy 
Assets, including the amount, value, description, and nature of such funds, properties, 
assets, records, choses in action, and other rights, claims, or causes of action 
pertaining thereto, as well as the investments, disbursements and expenditures 
relating to the Coconut Levy Funds and submit a report to the Office of the President, 
Commission on Audit (COA), and the BTr.
The COA shall audit the accounting and inventory of the Coconut Levy Assets 
prepared by the PCGG, for the purpose of, among others, determining the 
completeness and accuracy of the inventory, existence of the subject assets, 
reasonableness of the asset valuation, and tracing the flow of the Funds.
Within sixty (60) days from the submission of the accounting and inventory of 
the Coconut Levy Assets, the COA shall submit to the BTr its audit report, together 
with a complete list of the Assets, their valuation, and the empirical basis and the 
methodologies employed for the said valuation. The BTr shall, within fifteen (15) days 
from its receipt of the audit report, publish the same in at least two (2) newspapers 
of general circulation.
Section 9. Reconveyance and Vaiuation o f the Coconut Levy Assets. -  
Immediately 
upon 
the 
effectivity of this Act, 
the 
PCGG, 
the 
government 
representatives to the boards of sequestered or surrendered corporations, and any


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government agency or person having any Coconut Levy Asset in its administration, 
authority, custody or control which have been finally declared by the Supreme Court 
as belonging to the government, shall perform or cause the performance of the 
following:
a. Reconvey title over the Coconut Levy Assets to the Republic of the
Philippines; and
b. Deliver for safekeeping all stock certificates and other evidence of ownership
to the PMO.
The PCGG 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 the COA or a third-party appraiser. Provided that, 
any valuation approved by the PCGG for purposes of the transfer to the PMO shall not 
be deemed a condonation, waiver, or extinguishment of any obligation by any third 
party whose vested rights may be impaired by such transfer.
Section 10. Privatization o f die Coconut Levy Assets. -  Pursuant to the direction 
and policies set in the Plan, the PCGG shall arrange the transfer of Coconut Levy Assets 
to be privatized to the PMO. In addition to its powers, duties and functions under 
Executive Order No. 323 (S. 2000), the PMO, shall, for and in behalf of the National 
Government, take title to, possession of, conserve, provisionally manage, and dispose 
of the Coconut Levy Assets.
In the discharge of its mandate, the PMO is hereby empowered to; (i) 
implement the marketing and disposition program of the Coconut Levy Assets; (ii) 
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; (iii) 
engage external expertise as may be necessary in the fulfillment of its tasks under this 
Act; and (iv) to adopt internal rules and regulations in relation to the marketing and


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disposition of the Coconut Levy Assets. Any and all sales and other modes of 
privatization or disposition shall not be considered final unless approved or ratified by 
the President.
The PMO is hereby accorded discretionary powers regarding the preparation of 
the privatization plans and policies of the Coconut Levy Assets transferred to it. The 
PMO is 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, 
including a partnership with the private sector in the management or operation of the 
Coconut Levy Assets prior its actual sale or disposition.
Prior to the implementation of any privatization plan, the PMO shall have the 
following powers:
(i) Require any one or more of the subject corporations to adopt and 
implement cost-reduction measures to enhance the viability, and 
therefore the disposability of such corporations to potential buyers 
including measures requiring personnel retrenchment plans or other forms 
of corporate downsizing;
(ii) Direct any 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 ownership, administrative, and disposition; and
(iii) 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 disposition and 
privatization under this Act.
Any provision of law to the contrary notwithstanding, all proceeds or receipts 
from the sale of Coconut Levy Assets, except portions thereof for reimbursable 
custodianship and operational expenses, shall be remitted to the Coconut Farmers and 
Industry Trust Fund.
Section 11, 
Philippine Coconut Authority (PCA). -  The PCA, an independent 
public corporation created under Presidential Decree No. 1468, shall be reconstituted


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and expanded to include coconut farmers in the implementation the Coconut Farmers
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and Industry Development Plan.
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The composition of the PCA Board is hereby amended and the same shall now
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be composed of the following:
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(a) Six (6) representatives from the Government which shall be the following:
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Department of Agriculture (DA) Secretary as Chairperson; DOF Secretary as
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Vice Chairperson; 
and as members, the 
Department of Budget and
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Management (DBM) Secretary, the Department of Social Welfare and
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Development (DSWD) Secretary, 
PCA Administrator, and the National
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Statistician; and
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(b) Four (4) representatives from the coconut farmers sector, divided into one (1)
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representative each from Luzon and Visayas, and two (2) representatives from
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Mindanao, as members. Provided that, the four (4) representatives from the
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coconut farmers sector must be Filipino citizens, registered with the National
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Coconut Farmers Registry, have considerable experience and reputable track
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record in promoting coconut farmers interests and welfare, and nominated by
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coconut farmers organizations or cooperatives that are active for the past three
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(3) years in farmer organization and development or community enterprise
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development. They shall be appointed by the President from a list of four (4)
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nominees for each island grouping. They shall each hold a term of three (3)
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years and may be reappointed once. Any appointment to fill the vacancy arising
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from death, removal, retirement or resignation of the representative of the
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coconut farmer sector shall only be for the unexpired term. Within thirty (30)
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days following the effectivity of this act, the Board shall promulgate a
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nomination and screening process of nominees as representatives of the
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coconut farmers sector in the board, in consultation with coconut farmers
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organizations.
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(c) One (1) representative from the coconut industry sector who have considerable
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experience and reputable track record. Provided that, the representative of the
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coconut industry sector must be a Filipino Citizen, have considerable experience
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and reputable track record in the coconut industry, and is nominated by a 
coconut industry organization that is active for the past three (3) years. He/she 
shall be appointed by the President from a list of six (6) nominees. He/she shall 
hold a term of three (3) years and may be reappointed once. Any appointment 
to fill the vacancy arising from death, removal, retirement or resignation of the 
representative of the coconut industry sector shall only be for the unexpired 
term. Within thirty (30) days following the effectivity of this Act, the Board shall 
promulgate a nomination and screening process of nominees as representatives 
of the coconut farmers sector in the board, in consultation with coconut industry 
organizations.
Members as mentioned in subparagraph (a) shall be considered as ex officio 
members of the Committee.
Section 12. Coconut Farmers Registry. -  The Philippine Statistics Authority 
(PSA), in coordination with the PCA, and the Department of Agriculture, shall be
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responsible for the preparation of the Coconut Farmers Registry which shall thereafter
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be referred to as the "Registry. On a nationwide basis, the PSA shall register farmers
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in the Registry using a standardized targeting system. It shall conduct a regular
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revalidation of the Registry every two (2) years. Initially, the Registry shall be
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constituted from the Registry System for Basic Sectors in Agriculture (RSBSA) under
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the DBM and the National Coconut Farmers Registry System (NCFRS) under the PCA.
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The PSA shall, within six (6) months from the effectivity of this act, complete the
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Registry. Nothing in this Act shall be understood to prohibit the PSA from using any 
other registry system or coordinating with another government agency in the 
preparation of the Registry.
A Local Verification Committee shall be created in every municipality or city 
composed of the local city/municipality agricultural officer, a representative from the 
PCA-accredited local coconut cooperative, and the barangay captain from the 
barangay. The Local Farmers Verification Committee shall be tasked to ensure that 
the Registry satisfies the eligibility requirements set forth under this Act.
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Section 13. Annual Disbursement from  the CocoTrust Fund. - The annual 
amount of ten billion pesos (P 10,000,000,000.00) shall be released from the Trust 
Fund, to be utilized as follows:
(a) Fifty percent (50% ) -  Industrial development projects for the coconut 
industry, such as new vegetable oil product development, establishment 
of state-of-the-art mills, setting up new oleo-chemical factories, and 
other similar programs and efforts towards large-scale industrial 
development of the industry to be implemented by the PCA in 
accordance with the Plan; and
(b) Fifty Percent (50% ) -  Social protection to coconut farmers through social 
assistance, health and life insurance, job development, and other labor 
market interventions including micro, small, and medium enterprise's 
(MSMEs) grants and loans.
Section 14. Human Resource and Industrial Development fo r the Coconut
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Industry. -  The PCA, in coordination with the Technical Education and Skills
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Development Authority (TESDA) shall endeavor to establish coconut industry farm
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schools in every coconut producing province to support and enlarge the trained human
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resource pool of coconut farmers and help them become more productive, more
competitive and adept to intercropping with such alternative farm crops such as cacao, 
coffee, banana and other suitable activities as livestock raising. Further, industrial 
processing and product development of coconut shall be undertaken by the PCA in 
partnership with State Universities and Colleges and other research institutions.
Section 15. Reportoria!Requirements. -T h e  PMO shall, on a semi-annual 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 as disposed of, their purchasers, consideration, and the terms of payment 
agreed upon.
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The PMO shall, within three (3) months following the closure of books at the 
end of each fiscal year, submit a comprehensive annual report to the President and 
Congress the status of its privatization efforts and its disposition program for the 
Coconut Levy Assets, which shall include the items described in the immediately 
preceding paragraph.
Section 16. Suppletory Application o f Republic A ct No. 10149. -  The provisions 
of Republic Act No. 10149, otherwise known as the "GOCC Governance Act of 2011", 
insofar as they are not inconsistent with the provisions of this Act, shall apply 
suppletorily.
Section 17. 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 18. Repealing Clause. -  All laws, executive orders, administrative 
orders, and rules and regulations inconsistent with this Act are hereby repealed or 
amended accordingly.
Section 19. Effectivity Clause. -  This Act shall take effect fifteen (15) days after 
its complete publication in the Official Gazette or in two (2) newspapers of general 
circulation.
Approved,
13