1.8 NOV 2014
Republic of the Philippines Vo lo PH.

HOUSE OF REPRESENTATIVES =a pe

Quezon City

SIXTEENTH CONGRESS
Second Regular Session.

HOUSE BILL NO.__ 5208

Introduced by: Hon. Angelina “Helen” D.L. Tan, M.D.

EXPLANATORY NOTE

In 1971, Republic Act No. 6260 imposed the first levy on coconut farmers. The levies collected
from the coconut farmers, for which they were issued receipts to be converted into shares of stock,
were primarily used to establish the Coconut Investment Fund (CIF). The CIF sought to provide
adequate medium and capital investment in the coconut industry. Presidential Decree No, 232
created the Philippine Coconut Authority (PCA), which took over the collection of the coco levy.

By 1973, abnormal global market fluctuations for fats and oils prompted the issuance of
Presidential Decree No. 276, which established a Coconut Consumers Stabilization Fund (CCSF).
The CCSF which was funded by imposing an initial levy of P15.00 per 100 kilos of copra resicada
or its equivalent on every first sale, shall be utilized to subsidize the sale of coconut-based products,

By April 1974, Presidential Decree No. 414 granted the PCA additional powers such as the
authority to adjust the levy imposed. It also expanded the use of the CCSF for investment, research
and development, and extension o f services to the coconut industry.

A few months after the issuance of PD 414, Presidential Decree No. 582 created the Coconut
Industry Development Fund (CIDF). The CIDR, unlike the CCSP, is a permanent fund, thereby
making the collection of the coco levy permanent as well. ‘The CIDF shall serve to finance the
establishment, operation and maintenance of a hybrid coconut seed nut farm,

By July 1975, Presidential Decree No. 755 empowered PCA to acquire the United Coconut Planters
Bank (UCPB) as a permanent solution to the perennial credit problems of the coconut industry. The
said issuance also mandated that all CCSF collections to the UCPB shall be made interest free.

Presidential Decree No. 961, which codified all laws pertaining to the coconut industry; provided a
number of amendments to prior laws and issuances. The CCSF levy, for instance, was passed on to
the end users (Le. copra exporters and oil millers) from the coconut farmers. The Presidential
Decree also declared that both CCSF and CIDF shall be owned by coconut farmers in their own
private capacities. By virtue of the said legislation, UCPB was granted full authority to make
investments using the CIDF and CCSF surplus. Presidential Decree No. 1468 also gave UCPB the
sole right to administer the Coco Levy Funds. Such mandate led to the creation of the Coconut
Industry Investment Fund (CIF).

The levy, primarily intended to insulate the local coconut industry and its consumers from global
market fluctuations for fats and oils, further expanded over time by virtue of succeeding presidential
decrees to provide funding for a comprehensive development program to cnable the industry to
compete in the international market, Such funds were then transferred to the Coconut Industry
Development Fund (CIDF) and the Coconut Industry Investment Fund (CIF). The CHIP, for
instance, was used to acquire the oil mills which now comprise the CIIF - Oil Mills Group (CIIF-
OMG). The CCSF, along with the CIDF and the CIIF, constitute what is now known as the Coco
Levy Funds.

‘Substantial collections have been accumulated from the imposition of the coco levy. By 1986, the
Coco Levy Funds have amounted to as much as 9.7 Billion Pesos.



Almost forty years since its establishment, the Coco Levy Funds is now estimated to be worth One
Hundred Billion Pesos (Php100,000,000,000.00) in aggregate market value, comprising various
assets and entities such as the CIIF-OMG, including its 14 holding companies, as well as the UCPB,
United Coconut Chemicals (Cocochem), United Coconut Planters International (UCPB), United
Coconut Planters Assurance Corporation (Cocolife), and the shares of stocks in San Miguel
Corporation (SMC) that are owned by the CIIF-OMG Companies.

To date, most if not all of the objectives for the creation of these funds have yet to be realized.
Under sequestration by the Presidential Commission on Good Government (PCGG), the ownership
of the assets acquired through the use of Coco Levy Funds remains in question. As a result, neither
the coconut industry nor the public benefited from the Coco Levy Funds

With regard to the ownership issue of the Coco Levy Funds, a partial summary judgment of the
Sandiganbayan on the Republic v. COCOFED, et. al. (Civil Case No. 0033-F) dated May 7, 2004,
stated that:

"WHEREFORE, in view of the foregoing, we hold tha

"The Motion for Partial Summary Judgment (Re: Defendants CIIF Companies, 14 Holding
Companies and Cocofed, et al.) filed by Plaintiffs hereby GRANTED. ACCORDINGLY, THE
CHF, NAMELY:

1, Southern Coconut Oil Mil
2, Cagayan de Oro Oil Co., Ine. (CAGOIL)
3. Iligan Coconut Industries, Ine. (ILICOCO);
4, San Pablo Manufacturing Corp. (SPMC);
ranexport Manufacturing Corp. (GRAN
6, Legaspi Oil Co., Ine. (LEGOIL)

“AS WELL AS THE 14 HOLDING COMPANIES, NAMELY:

Roxas Shares, Inc.
4, Are Investors, Inc.;
5. Toda Holdings, Inc.;
6. AP Holdings, Int
7. Fernandez Holdings, Ine.;

8. SMC Officers Corps, Inc.;

9. Te Deum Resources, Inc.;

10. Anglo Ventures, Inc.;

11, Randy Allied Ventures, Ine.;

12. Rock Steel Resources, Inc.;

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

"AND THE CIIF 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 LIMI1 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.

"The aforementioned Partial Summary Judgment is now deemed a separate appealable
judgment which finally disposes of the ownership of the CIIF Block of SMC Shares, without
prejudice fo the continuation of proceedings with respect to the remaining claims particularly those
pertaining to the Cojuangco, et al. block of SMC shares."


Furthermore, a Supreme Court decision on Republic v. COCOFED-et. al. provides that:
XXX

The Supreme Court, in its decision dated January 24, 2012, upheld the aforementioned partial
summary judgment of the Sandiganbayan, declaring that the six (6) CF~OMG companies, their 14
holding firms, and the CIIF~OMG block of SMC shares as "owned by the Government to be used
only for the benefit of all coconut farmers and for the development of the coconut industry”. Hence,
putting finality on the legal battles as to the ownership and nature of the Coco Levy Funds,

Despite such decisions by the Judiciary, the disposition of Coco Levy Funds remains unsettled,
Therefore, a legislative action on the disposition of the Coco Levy Funds is warranted,

This measure mandates the Privatization and Management Office (PMO) to privatize all assets
acquired through the use of the Coco Levy Funds. Upon privatization, the funds generated shall
then be transferred to a Trust Fund to be known as the Coconut Farmers and Industry Fund, to be
created under this proposed legislation. The use and disposition of the funds shall be tasked to the
Coconut Farmers and Industry Fund Committee to be created by this bill. The Committee shall be
led by the Director General of the National Economic and Development Authority (NEDA), and
composed of government officials and industry representatives, including accredited coconut farmer
organizations,

The Trust Fund shall be used to finance the immediate rehabilitation and development of the
coconut and palm oil industry, under a Coconut Industry Rationalization Plan, to be implemented
by the Committee. The Rationalization, Plan shall accelerate the development of the industry, to the
utmost benefit of the coconut farmers throughout the country.

‘Most of the coconut farmers during the time the levies were exacted are already approaching their
twilight years and there is an urgent need for government to fulfill its promise that they be the
ultimate beneficiaries of such funds.

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

ANGELINA nl, TAN, M.D.

4" District, Quezon


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
Second Regular Session

5208

HOUSE BILL NO.

Introduced by: Hon, Angelina “Helen” D.L. Tan, M.D.

AN ACT
PROVIDING FOR THE DISPOSITION OF THE COCONUT LEVY ASSETS BY THE
PRIVATIZATION AND MANAGEMENT OFFICE, ESTABLISHING THE COCONUT
FARMERS AND INDUSTRY FUND, AND PROVIDING FOR THE MANAGEMEN
INVESTMENT, AND USE OF PROCEEDS OF SUCH ASSETS FOR AND IN BEHALF OF
‘THE COCONUT FARMERS

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 Levy Assets Disposition and
Utilization Act".

. 2. Declaration of Policy. - \t is hereby declared the policy of the State to consolidate the
renefits 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.

I
Definition of Terms
SEC. 3. Definition of Terms. — The following terms shall mean:

(a) "CIIF" shall refer to the Coconut Industry Investment Fund created by virtue of’ Presidential
Decree 1468;

(b) "CHF - Oil Mills Group" shall refer to the CUF companies, namely, Southern Luzon Coconut
Oil Mills; Cagayan de Oro Oil Co. Inc.; Iligan Coconut Industries, Inc.; San Pablo Manufacturing
Corp.; Granexport Manufacturing Corp.; and Legaspi Oil Co, Inc.:

(©) "CIF Holding Companies" shall refer to the fourteen (14) holding companies; namely:
i. Anglo Ventures Corporation

ASC Investors, Ine

ARC Investors, Inc.

iv. AP Holdings, In
mandez Holdings, Inc.

First Meridian Development, Inc.
Randy Allied Ventures, Inc.
Rock Steel Resources, Inc.
Roxas Shares, Ine

San Miguel Officers Corp., Inc.
Soriano Shares, Inc.

Te Deum Resources, Inc.

Toda Holdings, Inc.

. Valhalla Properties Limited, Inc.



(@) "CIIF SMC Block Shares" shall refer to the 753,848,312 preferred shares in San Miguel
Corporation (SMC), representing 24% of the total outstanding capital stock of SMC;

(e) "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 the Coconut Levy
Funds as defined in this Section, as well as the fruits, or income therefrom, including those acquired
in exchange or substitution thereof.

‘This shall include, among others, the following:

i, The 72.2% shares of UCPB's outstanding capital stock;
ii, The CIF - Oil Mills Group;

iii, ‘The CIF Holding Companies; and

iv. ‘The CIF Block Shares;

() "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.

Specifically, the term shall refer to any or all of the following:

i, The Coconut Investment Fund created under Republic Act No. 6260;

ii, The Coconut Consumers Stabilization Fund created under Presidential Decree No. 276;

iii, The Coconut Industry Development Fund created under Presidential Decree No.582;

iv. The Coconut Industry Stabilization Fund created under Presidential Decree No, 1841; and
vy. The Coconut Industry Investment Fund created under Presidential Decree No. 1468;

(g) "Coconut Farmers and Industry Development Plan" or "Plan" shall refer to the plan to be
prepared for the development and rehabilitation of the coconut industry;

(h) "Committee" shall refer to the Coconut Farmers and Industry Fund Committee created under
Section 11 of this Act;

(i) "GOP" shall mean the Government of the Philippines;

(j) "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;

(k) "PMO" shall refer to the Privatization and Management Office orga
Executive Order No. 323 (S. 2001);

(1) "PCA" shall refer to the Philippine Coconut Authority, created under Presidential Decree 232 (S.
1973) as amended by Presidential Decree 1468 (S. 1978);

(m) "PCGG" shall refer to the Presidential Commissit
Executive Order No.1 (S. 1986);

(n) "President" shall refer to the President of the Republic of the Philippines;

(0) "Prohibited Investments" shall refer to any of the following: direct investments into companies,
private placements and direct lending, derivatives (options, warrants), margin purchases, short sales,
and investments in real estate;

(p) "Trust Fund" shall refer to the Coconut Farmers and Industry Fund created under Section 6 of
this Act;

(q) "Trust Income" shall refer to the income, interest earnings, and other monetary benefits, realized
by and accruing from the Trust Fund or any portion thereof; and

(x) "Trust Principal" shall refer to (i) the proceeds from the sale or redemption of the CIIF SMC
Block Shares, (ii) any and all proceeds of privatization of the Coconut Levy Assets remitted thereto
by the Privatization and Management Office, as provided under Section 8 of this Act, and (iii)
proceeds of privatization of any or an properties or assets conveyed by any person, group or entity
to the Committee, from time fo time; as provided in Section 8 hereof.

ed under Article III of

on on Good Government, created under



UW
Audit of Coconut Levy Assets

SEC. 4. Audit and Inventory of Coconut Levy Assets. - Upon the effectivity of this Act, the
Commission on Audit (COA), in coordination with the PCA and the PCGG, shall conduct a
complete accounting and inventory of the Coconut Levy Assets. The audit shall determine and
ascertain 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. Likewise, the COA shall
conduct an audit of all investments, disbursements or expenditures arising from Coconut Levy
Funds.

Within one hundred twenty (120) days from the effectivity of this Act, the COA shall submit to the
mmittee its audit report, together with a complete list of Coconut Levy Assets and their
valuation, together with the empirical basis and’ the methodologies employed for the said valuation.

The Committee shall, within fifteen (15) days from its receipt of the audit report, publish the same
in at least two (2) newspapers of national circulation,

Nothing herein shall be construed as preventing the PMO from procuring a third-party appraisal of
any of the Coconut Levy Assets prior to or in the course of preparing the privatization or disposition
plans for the said assets,

Establishment of the Coconut Farmers and Industry Fund, its Purposes, and Utilization

SEC. 5. Creation of the Coconut Farmers and Industry Fund. - There is hereby created an
irrevocable trust fund to be known as the Coconut Farmers and Industry Fund, hereinafter referred
to as the "Trust Fund," which shall be capita managed, utilized and accounted for in the
manner provided by this Act. The Trust Fund shall be perpetually maintained and the Trust
Principal shall be preserved to ensure the full implementation and realization of the objectives
identified and ought to be attained under this Act.

SEC. 6. Purpose of the Trust Fund. - The Trust Fund shall be established for the development of the
coconut industry for the ultimate benefit of coconut farmers and farm workers. It shall be used to
fund the implementation of programs and projects identified in the Plan, described under Section
18 of this Act.

SEC. 7. Capitalization of the Trust Fund - Any and all monies deposited with the United Coconut
Planters Bank under the name of the CIIF pursuant to the provisions of Presidential Decree No.
1468, as amended, and any and all proceeds for the redemption or sale of the CIIF SMC Block
Shares and all dividends accruing or have accrued thereto shall form part of the initial capital of the
Trust Fund. The Trust Fund shall thereafter be augmented with all proceeds of
privatization/disposition of the Coconut Levy Assets remitted thereto by the PMO in accordance
with this Act, including any and all forms of income, interests, earnings, yields, or any monetary
benefit which accrues to the Trust Fund pursuant to the investments made pursuant to Section 10 of
this Act.

Nothing in this Act shall be understood to prevent or prohibit any person, group or entity from
conveying to the Committee other properties and/or additional assets either for the use of the
coconut industry, or for purposes of privatization, in which case, the proceeds of such privatization
shall form part of the Trust Fund.

SEC. 8. Management and Utilization of the Trust Fund and Trust Income. - The Trust Fund shall be
managed, allocated, used and disbursed only as provided and in accordance with this Act. The Trust,
Principal shall be preserved and maintained at all times and, for this purpose, shall be invested in


Republic of the Philippines bonds. Only the Trust Income may be used for the implementation of
the Plan or for any or all purposes allowed under this Act.

‘A portion of the Trust Income shall be earmarked by the Committee for long-term investments,
provided such investment shall only be made in global fixed income securities and highly liquid
diversified equity-indexed funds with a view towards ensuring capital preservation, protection of
principal and receiving inflation adjusted returns to meet the minimum required by the Committee.
Inno case shall the Trust Income or any portion thereof be invested in Prohibited Investments.

For purposes of the initial implementation of the Plan and its programs and projects, and to fund the
allowable expenses under Sections 17 and 23 of this Act pending the accrual of or availability of the
Trust Income; the Committee is hereby authorized to use a portion of the Trust Principal which
shall in no case exceed ten percent (10%) of the amount constituting the initial capital of the Trust
Fund as provided under Section 7 hereof. Other than as otherwise provided in this Section, only the
‘Trust Income shall be used by the Committee for the purposes allowed under this Act, including
any and all amount required or allocated for the implementation of the Plan. Allocation and
utilization of the Trust Income by the Committee shall be based solely on the funding requirements
established or provided under the Plan.

SEC. 9. Designation of Trustee Bank/s. - Any law to the contrary notwithstanding, the Committee
shall designate the reputable depository bank/s, which shall (i) manage, utilize and account for the
Trust Fund in the manner and within the parameters set forth by the Committee, and (ii) exercise the
tasks, functions and duties determined and established by the Committee. For the avoidance of
doubt, the Committee shall not be limited to government depository banks but may designate
private depository bank/s provided that said private bank/s are domestic banks whose long-term
ocal currency rating is at least that of a GOP.

Iv
‘The Coconut Farmers and Industry Fund Committee

SEC. 10. Creation of the Coconut Farmers and Industry Fund Committee. - There is hereby created
the Coconut Farmers and Industry Fund Committee which shall be attached to the Office of the
President.

‘The Committee shall have the following powers and functions:

1) Implement the Coconut Farmers and Industry Development Plan for the development of the
coconut industry and the coconut farmers; -

2) Identify the Coconut Levy Assets for disposition and arrange for the transfer to the National
Government and/or to the Privatization and Management Office for privatization or disposition;

3) Formulate and amend from time to time the Investment Guidelines: Provided, That, no funds
shall be invested in Prohibited Investments.

4) Designate the depository bank/s that will receive, hold, and administer the Trust Fund, or any
portion thereof;

5) Make, approve, or disapprove, any and all disbursements or expenditures of the Trust Income or
any portion thereof in accordance with this Act;

6) Appoint and procure fund managers in such number as it deems necessary to manage the
investments of the Trust Fund;

7) Establish mandatory as well as indicative guidelines for the conservation, rehabilitation, and
disposition of the Coconut Levy Assets by the PMO;

8) Approve or disapprove, subject to the availability of funds for such purpose, the rehabilitation of
Coconut Levy Assets pending their disposition by the PMO with the approval of the Committee:
Provided, That the budget for each rehabilitation project shall likewise be approved by the
Committee;

9) 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 or disposition
of the Coconut Levy Assets identified for disposition or privatization, in each case on terms and to


purchasers recommended by the PMO: Provided, That neither the Committee itself, nor any of its
members, shall undertake the marketing of any such assets, participate in the negotiation for their
sale, or make the sale itself, nor yet bring about any situation which may give rise to a conflict of
interest;

10) Exercise on behalf of the National Government all rights and incidents of ownership with
respect to such assets, including the right to vote, whether directly or through duly authorized
nominees, shares of stock held in the name of the National Government;

11) Approve and revise, from time to time, the financial requirements of the PMO in relation to its
functions set forth in this Act, including its annual budget for operations, conservation, management
and disposition of the Coconut Levy Assets transferred and entrusted under its care;

12) Appoint, transfer, remove, and fix the remuneration of personnel of the Committee; and

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

SEC. 11. Composition. - The Committee shall be composed of the Director-General of the National
Economic and Development Authority as Chairman, the Secretary of Finance as Vice-Chairman,
with the following as members: the Secretary of Justice, Secretary of Agriculture, the Secretary of
the Governance Commission for GOCCs, Administrator of the Philippine Coconut Authority,
Chairman of PCGG, the National Treasurer, two (2) representatives from the private sector who,
shall have extensive experience and proven expertise in finance, banking and trust management, and
six (6) representatives of duly accredited coconut farmers' organizations, one (1) of which shall
come from the coconut women-farmers sector, and two (2) representatives from non-government
organizations (NGOs) actively involved in rural development advocacy or in legal assistance
service to small coconut farmers: Provided, That, the Chairman of PCGG and the National
Treasurer shall be non-voting members.

The six (6) representatives from the coconut farmers’ organizations shall be appointed by the
President from the list of nominees submitted jointly by the PCA and the National Anti-Poverty
Commission (NAPC), which nominees shall be chosen from private organizations of coconut
farmers and NGOs, determined and accredited by the PCA under the criteria of having the largest
membership of coconut farmers, pursuant to an accreditation process to be implemented by PCA
under Section 26 of this Act. The two (2) representatives from the private sector and two (2)
representatives from NGOs shall be appointed by the President upon recommendation of the
Secretary of the Department of Finance and the Secretary of Agriculture respectively, who shall
cach serve for a term of one (1) year.

The representatives from the coconut farmers’ organizations shall serve for a term of three years. Of
those first appointed, two (2) representatives shall serve for three (3) years, two (2) representatives
shall serve for two (2) years, and the other two (2) representatives shall serve for one (1) year.

Any appointment to fill the vacancy in the Committee arising from the, removal, retirement or
resignation shall be made only for the unexpired term.

SEC 12. Executive Director of the Committee. - The President, upon recommendation of the
Committee, shall appoint an Executive Director who shall have the following powers and functions:

a) Execute, administer and implement the plans and programs approved or promulgated by the
Committee;

b) Submit for the consideration of the Committee such plans and programs deemed necessary to
carry out the provisions and purposes of this Act;

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

d) 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;

e) 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

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


SEC. 13. Meetings. The Committee shall meet as frequently as may be necessary and expedient to
discharge its responsibilities: Provided, That it shall meet at least once a month. 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, where the matter involves the approval of (i) any
disposition or privatization proposal involving more than Five Hundred Million Pesos
(Php$00,000,000.00), (ii) any proposed investment involving more than One Hundred Million
Pesos (Php100,000,000.00), and (ii) the utilization of the Trust Income in amounts exceeding One
Hundred Million Pesos (Php100,000,000.00), the approval of at least a majority of all voting
members of the Committee shall be required.

SEC. 14. Cooperation with the Committee, - The Committee 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.

SEC. 15. 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 and Trust Income.

ion on Audit.

The Trust Fund shall be audited annually by the Commi:

SEC. 16. Legal Counsel. - The Secretary of Justice shall be the ex officio adviser to the Committee
‘on legal matters,

SEC. 17. Funding. - For the initial year, the amount of Thirty Million Pesos (Php 30,000,000.00), to
cover expenses of the Committee in connection with the discharge of its responsibilities under this
Act, is hereby authorized to be charged against the initial capital of the Trust Fund in accordance
with Section 8 of this Act. Subsequent annual expenses of the Committee shall be charged against
the Trust Income: Provided, That not more than three percent (3%) of the Trust Income shall be
used for administrative expenses.

v
Coconut Farmers and Industry Development Plan

SEC. 18. Preparation of the Coconut Farmers and Industry Development Plan. - The heads of the
Department of Agriculture, National Economic and Development Authority, Department of
Agrarian Reform, Department of Trade and Industry, Department of Science and Technology,
Department of Energy, Department of Public Works and Highways, Department of the Interior and
Local Government, National Anti-Poverty Commission, Presidential Commission on Good
Government, are herein constituted as an ad-hoc committee with the Director-General of the
National Economic and Development Authority as Chairman, ‘The ad-hoc committee, in
consultation with representatives of the coconut industry, including accredited coconut farmers!
organizations, shall jointly prepare a rationalization and development plan for the coconut industry
which shall be known as the "Coconut Farmers and Industry Development Plan.

The Plan shall include, among others, a national program for coconut productivity, replanting,
rehabilitation, scientific and medical research, integrated downstream processing, and market
promotion. It shall explicitly provide for appropriate programs or services that directly benefit small
coconut farmers and farm workers, such as but not limited to the following:

a) medical and health;

b) life insurance;

©) pension;

4) livelihood; and

¢) educational scholarships and technical education and skills development for deserving students


coming from families of coconut farmers, or beneficiaries of the Coconut Levy Funds;
In the formulation of the Plan, the Committee shall be guided by the following objectives:

a) poverty alleviation and social equity;

b) sustainable and increased productivity of small coconut farmers;

©) full-scale rehabilitation of the coconut industry and promotion of coconut-based farm
systems;

d) modernization of the coconut industry towards global competitiveness; and

€) protection of small coconut farmers and farm workers from unfair competition.

The Plan shall set the directions and policies for the rehabilitation and development of the coconut
industry, including the identification of Coconut Levy Assets that need to be retained by the
National Government in order to support said rehabilitation and development. The Plan shall
provide an indicative funding requirement or allocation for the implementation of any and all of the
programs 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, ot 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 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 said project.

The Plan shall be submitted to the President for approval, subject to Section 29 of this Act
Immediately upon the approval of the President, the same shall be submitted to the Committee for
implementation of the disbursements from the Trust Income, or to the extent allowed under Section
8, from the Trust Principal, of the amount required for the implementation of the Plan. Any and all
amendments to the Plan shall be with the prior approval of the President.

VI
Privatization of the Coconut Levy Assets

SEC. 19. Privatization of the Coconut Levy Assets, -The Committee shall determine the Coconut
Levy Assets, identified by the COA pursuant to Section 4, which need to be privatized and which
should be retained by the National Government to support the coconut farmers and the development
of the coconut industry. All Coconut Levy Assets identified by the Committee for privatization
shall be transferred to the Privatization and Management Office according to Section 20 hereof.
Coconut Levy Assets identified by the Committee for retention and use of the National Government
shall be transferred to the appropriate government agency that will use, manage or otherwise take
custody of the said assets,

BC. 20, Additional Mandate of the Privatization and Management Office (PMO). - In addition to
its powers, duties and functions under Executive Order No. 323 dated December 6, 2000, the PMO,
shall, for and in behalf of the National Government, take title to and possession of, conserve,
provisionally manage, and dispose of the Coco Levy Assets which have been identified for
privatization and disposition.

In the discharge of its mandate, the PMO is hereby empowered to implement the marketing and
disposition program of the Coco Levy Assets; to 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; to
engage external expertise as may be necessary in the fulfillment of its tasks under this Act; to adopt
internal rules and regulations in relation to the marketing and disposition of the Coconut Levy
Assets; and to submit periodic reports to the Committee on the status of the disposition program.
Any and all sales and other modes of privatization or disposition shall not be considered final unless
and until approved by the Committee,


SEC. 21. Powers of the Privatization and Management Office. - The PMO is hereby accorded
discretionary powers with regard to 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 these Coconut Levy Assets prior to actual sale or disposition

In case of corporations transferred to the PMO, pursuant to the implementation of the privatization
program for the Coconut Levy Assets, the PMO is empowered to dissolve, consolidate, or merge
said corporations, subject to the provisions of Section 31 of Republic Act 10149.

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

(i) require anyone 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 o f corporate
downsizing;

(ii) direct anyone or all of the subject corporations to submit to the PMO, within fixed time-tables,
such reports and information as the PMO may require in the exercise of its ownership,
administrative, and disposition over such corporations or their assets; 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. In all such cases, no corporate measure shall be
implemented without the approval of the Committee.

SEC. 22. Committee to Determine Transfer Value. - The Committee is hereby vested with full and
complete powers and prerogatives to determine transfer values and related valuations at which the
Coconut Levy Assets shall be transferred and conveyed to the PMO pursuant to the mandate of this
Act and upon reasonable consultation with the COA or a third-party appraiser: Provided, That any
valuation approved by the Committee for purposes of the transfer to the PMO shall not be deemed a
condonation, waiver, or extinguishment of any obligation by any third party whose vested rights
may be impaired by such transfer.

SEC. 23. Reimbursement and Retention. - In order to fulfill its additional mandate under this Act,
the PMO shall be reimbursed for actual reasonable expenses incurred in the management and
disposition of the Coconut Levy Assets. Likewise, it shall be allowed to retain commissions, due
diligence fees and proceeds from the sale of assets according to asset bidding rules, information
memoranda and similar documents, as well as a portion or percentage of proceeds from disposition
efforts, all not to exceed ten percent (10%), to be approved by the Contmittee. Such amount shall be
utilized for the payment of fees and reimbursable expenses and of the costs and expenses incurred
by the PMO in the performance of its responsibilities under this Act.

SEC. 24. Remittance of Proceeds of Privatization. - All proceeds or receipts from the sale of
Coconut Levy Assets, except portions thereof for reimbursable custodianship and operational
expenses, or such amount approved by the Committee to be retained by the PMO under Section 22,
shall be remitted to the Trust Fund.

SEC. 25. Reporting Requirements. - The Committee 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 disposed of, their purchasers
thereof, the consideration received therefor, and the agreed terms of payment.

The PMO shall, within three (3) months following the closure of books at the end of each fiscal
year, submit a comprehensive annual report duly approved or endorsed by the Committee, to the
President and Congress on the status of its privatization efforts and its disposition program for the
Coconut Levy Assets, which shall include the items described in the immediately preceding
paragraph.


Vit
Miscellaneous

SEC. 26. Accreditation of Coconut Farmers, - Within thirty (30) days following the date of
ty of this Act, the PCA, in coordination with NAPC, shall formulate and implement an
accreditation program for coconut farmers’ organizations in order to determine the legitimate
coconut farmers’ organizations from which nominees may be drawn for purposes of comprising the
requisite seats in the Committee pursuant to Section 11 of this Act. The PCA shall, after
determining the six (6) coconut farmers organizations haying the largest membership of coconut
farmers in accordance with this accreditation process, shall submit to the President the list of
nominees to be appointed as coconut farmers’ representatives in the Committee.

SEC. 27. 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.

SEC. 28. Implementing Rules and Regulations. - Within ninety (90) 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.

SEC. 29. Congressional Oversight. - The Congressional Oversight Committee on Agricultural and
Fisheries Modernization (COCAFM) shall exercise oversight on the implementation of this Act.
‘The COCAPM shall have the following functions:

a) Monitor and ensure the proper implementation of this Act;

b) Assess and endorse the draft Coconut Farmers and Industry Development Plan for the President's
approval and ensure its proper implementation;

) Monitor and review the performance of the Committee and the PMO; and

4) Perform such other functions as may be necessary.

SEC. 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.

SEC. 31. Repealing Clause. - All laws, executive and administrative order, rules and regulations
inconsistent with the foregoing provisions are hereby amended accordingly. Executive Order No.
277, s. of 1995, Executive Order No. 481, s. of 1998, Executive Order No. 482, s, of 1998 and
Executive Order No. 313, s. of 2000 are hereby repealed.

SEC, 32. 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,