26 AUG 2014

Republic of the Philippines \ > PM
HOUSE OF REPRESENTATIVE!
Quezon City, Metro Manila

Sixteenth Congress
Second Regular Session

4900

HOUSE BILL NO.

Introduced by Representative Sharon 8. Garin

EXPLANATORY NOTE

From 1971 to 1982, small and marginalized coconut farmers have been remitting
coconut levy funds to the government. These funds were intended to support and advance the
development of the coconut industry for the benefit of coconut farmers,

Various laws and issuances were signed to ensure that coconut levy funds were
collected throughout the years, These include:

1) On June 19, 1971, Republic Act 6260, known as the “Coconut Investment Fund”
(CIF) was implemented and authorized the collection from coconut farmers a sum
equivalent to PO.55 on the first domestic sale for every 100kg of copra;

2) On August 20, 1973, P.D. 276
(CCSF) which imposed an additional of P15 for every 100kg sale of copra
resecada;

3) On November 14, 1974, the Coconut Industry Development Fund (CIDF) was
established to finance the establishment, operation, and maintenance of hybrid
coco seed farm and replanting program, The levy was made permanent; and

4) On October 2, 1981, PD 1841 (the Coconut Industry Stabilization Fund) revised
levies and imposed the amount of P50 for every 100kg of copra resecada and later
was raised to P100 per 100kg of copra.

As a testament to the effectivity of collections during the first decade of its
implementation, through the blood and sweat of the coconut farmers, the levy accumulated
the amount of P9.625 billion.

After the EDSA Revolution of 1986, the administration of the late former President
Corazon Aquino, through the Presidential Commission on Good Government, sequestered all
assets acquired by Marcos and his cronies including the coco levy funds. But despite the huge
amount of existing coconut levy funds, the genuine stakeholders — the small and marginalized


coconut farmers, remain underprivileged and the coconut industry remains stagnant and
dragged down.

It is estimated that the coco levy funds, inclusive of earings, interests and other
increments, have grown to some P200 billion according to a July 11, 2013 report of the
Philippine Daily Inquirer.

It was a great moment when after almost four decades, the highest court of the land
affirmed that the funds were indeed owned by the small coconut farmers and should be
treated as public funds.

On January 24, 2012, the Supreme Court declared the CIF block of shares as having
been purchased by means of the coconut levy funds and therefore should be treated as public
funds.

Executive Orders 312 and 313 of former President Estrada, which sought to privatize
shares in San Miguel Corporation that were bought with coco levy funds, were junked by the
Supreme Court in April 2012.

The series of promulgations of the Supreme Court in September and November 2012
declared that the Cojuangco’s claims to the UCPB and SMC stocks that were bought with the
coco levy funds are public funds. On October 5, 2012, San Miguel Corporation formally paid
the government, through the PCGG, the sum of almost P58 billion for the preferred shares it
bought,

In the most recent ruling of the Supreme Court dated July 9, 2013, the high court
upheld its decision that shares in the UCPB of Cojuangco were owned by the government,
The coconut levy funds should be used for the benefit of the small and marginalized coconut
farmers and farm workers,

The abovementioned decisions by the courts regarding the coco levy funds affirm the
nieed to return these funds to their rightful owners. This bill seeks to address the decades-long
struggle of coconut farmers by enacting a genuine law on the use of the coconut levy funds. It
is meant to provide a mechanism to protect the rights, welfare and interest of the small and
‘marginalized coconut farmers and farm workers. '

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



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Sixteenth Congress
Second Regular Session

House BILL No._4909 ;

Introduced by Representative Sharon S, Garin

AN ACT PROVIDING AN ADEQUATE FINANCIAL PROTECTION
TO THE COCONUT INDUSTRY AND ITS WORKERS, 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, 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 promote the
welfare and benefits due to coconut farmers, especially the poor and marginalized, under
various statutes and to expedite the delivery thereof in order to attain a balanced, equitable,
integrated and sustainable growth and development of the coconut industry.

Towards this end, the State shall utilize the coconut levy funds to promote higher
levels of productivity, income and employment for the coconut industry and maintains the
nature of the funds as public property,

Section 3. Coconut Farmers’ Trust Fund. There is hereby constituted a trust fund, to be
known as the Coconut Farmers’ Trust Fund, herein referred to as the “Trust Fund.”

Section 4. Purpose of the Trust Fund. The Trust Fund shall be established for the
development of the coconut industry for the ultimate benefit of small coconut farmers and
farm workers such as but not limited to the following:

(a) A social fund for the farmers which shall include insurance coverage, scholarship
funds and social security concerns of the small coconut farmers, farm workers and
their families;

(b) A development fund which will guarantee the productivity income and employment
drive of the government among farmers;

(¢) A marketing fund that will promote the varied products of individual coconut farmers,
farmers’ cooperatives, and small and medium-scale coconut enterprises;

(d) A research and development fund to accelerate the implementation of value-adding
activities and full value recovery of the coconut industry; and



(©) A credit and investment fund that will assist the coconut farmers to increase the
productivity in terms of intercropping and integrated farming.

Section 5. The Coconut Farmers’ Trust Fund Council, There is hereby a Coconut
Farmers’ Trust Fund Council to administer the trust fund and the disposition and the
utilization of the earnings and incomes thereof,

‘The Coconut Farmers’ Trust Fund Council, herein referred to as the “Council,” shall
be headed by the Board of Trustees (BOT) and supported by Fund Managers,

The Council shall be composed of President of the Philippines sitting as its
chairperson, and seventeen (17) other members, as follows:

(a) The regular members of the Couneil (11)

a. Four (4) representatives from coconut farmers’ organizations (one from
Luzon, one from Visayas and two from Mindanao);

b, ‘Two (2) representatives from non-government organizations (NGOs) involved
in rural development advocacy;

¢. Two (2) representatives from the finance and banking sector, who must have
extensive experience and proven expertise in finance, banking and trust
management;

d, Two (2) from the CHF Companies; and

. One (1) from the Civil Society Organizations (CSO) with « broader and global
view of the coconut industry,

(b) Ex-Officio members (6)
a. The Secretary of the Department of Agriculture (DA);
b. The Secretary of the Department of Finance (DOF);
c. The Secretary of the Department of Science and Techiiology (DOST);
d. The Secretary of the Department of Social Welfare and Development
(DSWD);
€. The Secretary of the Department of Trade and Industry (DTT); and
f. The Administrator of the Philippine Coconut Authority (PCA).

The ex-officio members including the Chairperson of the Council have no voting power.

The regular members of the Council shall be appointed by the President from the short
list provided from the general assembly of various coconut farmers’ organization and NGOs
facilitated by the PCA.

‘The members of the Council shall serve for a term of three (3) years. While the ex-officio
members shall serve as coterminous with that of his/her appointing authority.

All trustees, with the exception of the chairperson, shall serve for maximum of two
consecutive terms of office.

Section 6. Functions and Responsibilities of the Council. 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 Council shall:



(a) Determine the disposition, utilization and allocation of the said funds with regard to
the administration and management of the trust fund;

(b) Formulate, implement and set policies to alleviate poverty incidence among the small
coconut farmers and farm workers;

(© Formulate sustainable means in increasing the productivity of small coconut farmers,
including but not limited to intercropping and integrated farming;

(d) Conduct intensive research and development for a full scale rehabilitation of the
coconut industry and promotion of coconut-based farm systems;

(©) Establish coconut-industrial estates in every strategic province or region which will
serve as processing plants and provide advance technologies to coconut farmers;

(f) Provide health and life insurance services to small coconut farmers, farm workers and
their families;

(g) Provide education assistance and technical/skills trainings for the dependents of the
coconut farmers;

(h) Formulate and fund the pension plan of retired small coconut farmers and farm
workers;

(i) Establish priorities for the referential assistance to small coconut farmers and farm
workers, which shall be reviewed periodically and revised as necessary in accordance
with changing conditions;

(@ Formulate the rules and regulations governing the allocation, utilization and
disbursements of the Fund;

(k) Formulate the Implementing Rules and Guidelines of this Act; and

(1) Perform such other acts and things as may be necessary, proper or conducive to attain
the purposes of the Fund,

Section 7. Philippine Coconut Farmers Framework for Development. The PCA, in
consultation with the DA, DSWD, DTI, DOST, DOF, coconut farmers organizations,
research centers, and private sector, shall formulate a ten-year Framework for Development,
to be validated and updated annually. Such Framework shall serve as a guide in the
formulation and implementation of plans, programs and projects for the development of the
coconut industry, coconut farmers and farm workers, as envisioned in this Act. The
Framework shall likewise provide for the following:

a. Social Service Development - The PCA, in coordination with the DSWD, shall
develop and implement programs that would support educational assistance, provide
insurance coverage and other related social security concerns of the small coconut
farmers, farm workers and their famili

b. Support and Development ~ The PCA, in coordination with the DA, shall formulate
and adopt a comprehensive program for the development of farm productivity, such
as but not limited to planting or replanting of seedling varieties, rehabilitation and
fertilization of coconut, integrated coconut-based farming systems and product
processing, livelihood, and construction of related support and infrastructure facilities,
The PCA shall adopt a special program to maximize the yield of small coconut
farmers and their farm families;

¢. Market Promotion and Development — The PCA, in coordination with the DTI, shall
link-up with agribusiness cooperatives and organizations directly with consumers’



cooperatives and organizations, agro-processing companies, or exporters to provide
marketing outlets and assure relatively higher and stable prices of coconut, This also
includes exploring national and international markets and facilitating the participation
of coconut farmers in Jocal and international conferences, trade fairs, expositions, and
exhibits;

d. Research and Development ~ The PCA, in coordination with the DOST, shall
strengthen research collaboration among state universities and colleges and other
research institutions for technical support that will promote the development of the
coconut industry. The PCA and DOST shall establish and maintain a comprehensive
farming system on coconut industry;

e, Credit and Investment Development ~ The PCA, in coordination with the Land Bank
of the Philippines, shall develop establishing links between the coconut farmers and
their families in the Government Financial Institutions (GFIs) and other financial
‘cooperatives.

Section 8. Capitalization of the Trust Fund. All assets and/or properties emanated from all
coco levy recovered assets shall form the initial capital of the Trust Fund. All dividends,
interest earnings and incomes that are available upon the effectivity of this act shall likewise
form part of the initial funds.

Nothing in this Act shall be understood to prevent or prohibit any person, group or
entity from conveying to the Council other properties and/or additional assets which shall
form part of the Trust Fund.

In order to insure the enduring character of the Fund, the principal thereof shall be
augmented from time to time by grants, donations and other lawful transfers by public or
private entities. The disposition of the income from which shall be governed by the terms and
conditions hereinafter specified, as well as the rules and regulations promulgated by the
Committee pursuant to Section 7 hereof, as follows:

(a) The Trust Fund shall be maintained and preserved to ensure the full implementation
and realization of the objectives identified and sought to be attained under this;

(b) In the event any property or asset of the Trust Fund or any portion hereof, as the case
may be, is subsequently sold, alienated or disposed of, the proceeds and revenues
arising out of and realized from such sale, alienation or dispositions, shall form part of
the Trust Fund;

(©) Only the income, interest, earnings and monetary benefit realized by and accruing on
the Trust Fund shall be used and disposed of by the Council for such purposes and
endeavors specific under the provisions of this Act.

‘The Trust Fund shall be managed and administered so as to maximize its eamings in a
prudent manner consistent with its character as a perpetual fund in accordance to the purpose
stated in Section 4 of this Act.

Section 9. Extent of the Trust Fund, The ‘Trust Fund shall include the following:
(@) All properties and assets intended and conveyed or transferred to the Council
emanating from all coco levy recovered assets;


a. All funds established from the proceeds of the levies, including but not limited
to the Coconut Investment Company (CIC), the Coconut Consumers
Stabilization Fund (CCSF), the Coconut Industry Development Fund (CIDF),
the Coconut Development Fund (CDF), the Coconut Industry Stabilization
Fund (CISF), the Coconut Reserve Fund (CRD), and the Coconut Industry
Investment Fund (CIF) Companies;

b. All recovered assets from the San Miguel Corporation (SMC) and the United
Coconut Planters Bank (UCP) preferred shares.

(b) Such other funds, properties and assets lawfully conveyed or transferred to the
committee for the purposes herein stated.

Section 10, Designation of Trustee Banks. The Council shall designate the Land Bank of
the Philippines as the depository bank of the Trust Fund, which shall have the following
duties and responsibilities:

(@) Manage, disburse and account for the Trust Fund or @ portion thereof in the manner
hereinafter provided by the Couneil; and
(b) Exercise the tasks, functions and duties determined and established by the:Council,

A trustee bank must be a government-owned and controlled corporation which shall serve
as the depository and disbursement institution of the Trust Fund. It shall also serve as a credit
financial institution to coconut farmers provided and allowed under the provisions of this Act,

Section 11, Use and Disposition of the Trust Income. The Council, on an annual basis,
shall determine and establish an amount comprising the Trust Income. After such
determination, the Council shall determine the utilization of the Trust Income,

All income and expenses of the Council shalt be audited by the Commission on Audit
(COA).

Section 12, Fund Managers. The direct management of the fund is entrusted to the
Managing Director who is the Administrator of the Philippine Coconut Authority,

The Managing Director will be assisted by five Fund Managers selected from the
rank-in-file personnel of PCA who must have extensive knowledge and experience in
planning, research and development, finance, and management,

The Fund Managers, appointed by the President, will assume the functions and
responsibilities in planning, research and development, finance and management of the Trust
Fund,

Section 13. Cooperation with the Council. The Council may call upon any department,
bureau, office, agency and instrumentality of the government of the Republic of the
Philippines, including government-owned and controlled corporations, for such assistance as
it may desire and need, in pursuit of the purpose and objectives of the Trust Fund, and in the
discharge of its functions and responsibilities.


Section 14, Meetings of the Couneil. The Council shall meet at least once in every three
months, or as often as deemed necessary by the Chairperson, For any decision, resolution,
policy or rule to be made, the presence of nine (9) members shalll constitute a quorum.

Section 15, Accounting and Auditing. The Council shall maintain appropriate records and
accounts of all investment, income, receipts, disbursements and other transactions relating to
the management, administration and disposition of the Coconut Farmers’ ‘Trust Fund and
‘Trust Income.

For the proper accounting of the assets of the coconut levy fund, the following
procedures should be followed:

a, The list of assets, accounts receivables and unliquidated advances out of the
Coco Levy Fund should be accounted for by the Presidential Commission on
Good Government (PCGG) and the PCA;

b. The immediate audit by COA is a must;

c. A parallel review should be conducted by the Department of Justice (DON) as
a management audit;
d. The PCGG must immediately turn over identified and cleared assets to the

Coconut Farmers’ Trust Fund,
‘The Council shall make a public disclosure of all assets stated in Section 9 of this Act.
The Trust Fund shall be audited annually by the COA.
Section 16. Implementation. The PCGG, the Office of the Solicitor General and other
appropriate government instrumentalities are hereby directed to take all the necessary steps to
implement the purpose and objectives of this Act.
Section 17. Repealing Clause. All laws, decrees, executive orders, rules and regulations,
issuances or parts thereof inconsistent with this Act are hereby repealed or amended

accordingly.

Section 18, Separability Clause. If any of the provisions of this Act is declare invalid, the
other provisions not affected thereby shall remain in fall force and effect,

Section 19. Effectivity Clause. This Act shall take effect immediately following its
publication in a newspaper of general circulation and in the Official Gazette,

Approved,