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

EIGHTEENTH CONGRESS
First Regular Session

House Bill No.

INTRODUCED BY REPRESENTATIVE ALAN PETER “COMPANERO” S. CAYETANO

AN ACT
DECLARING THE COCONUT LEVY ASSETS AS A TRUST FUND, PROVIDING FOR ITS
MANAGEMENT AND UTILIZATION, AUTHORIZING THE PRIVATIZATION AND MANAGEMENT.
OFFICE TO DISPOSE THE COCONUT LEVY ASSETS, AND FOR OTHER PURPOSES

EXPLANATORY NOTE

Ir cannot be denied that the coconut industry is one of the major industries supporting
the national economy. It is, therefore, the State's concern to make it a strong and
secure source not only of the livelihood of a significant segment of the population, but
also of export earnings the sustained growth of which is one of the imperatives of
economic stability.

Republic v. COCOFED, G.R. No. 147062-64, December 14, 2001

The coconut industry is one of the great economic pillars of our nation, and coconuts and
their byproducts occupy a leading position among the country’s export products, About one third of
the country’s arable agricultural land or 3.26 million hectare is planted with coconut. Sixty-eight
Cut of 81 provinces and 1,195 out of 1,554 municipalities are coconut areas? In 2014 the
Philippines’ share in the world coconut export is at 49.4%, with the country producing an average
of 15.34 billion nuts per year.? However, the coconut industry's contribution to the economy has
hot been properly rewarded with appropriate investments either in the form of infrastructure or
other form of support for coconut farmers.

It has been four decades since 1971 when the small coconut industries were first taxed
through a PhP0.55 levy on the sale of every 100 kilogram of copra, as required by Republic Act No.
6260 creating the Coconut Investment Fund (CIF). The coconut levy fund has since come under
various names, with the establishing laws stating the avowed purpose for the exaction and the
different denominations, supposedly to be used “to accelerate the growth and development of the
Coconut industry and achieve its vertical integration,"* but this declared national policy of helping
our coconut farmers never materialized.

Through the years, a part of the coconut levy funds went directly or indirectly to various
Projects and/or was converted into different assets or investments. A portion of the funds was used
to acquire the First United Bank (FUB), later renamed the United Coconut Planters Bank (UCPB),
and the acquisition by UCPB, through the Coconut Industry Investment Fund (CIIF) companies, of a

_ https:/ /www-bar-gov.ph/index.php/agfishtech-home/crops/206-plantation-crops/1279-coconut
2 http://www-senate.gov.ph/press_release/2015/0302_villar2.asp

5 http://edition.cnn.com/2015/11/30/asia/philippines-coconuts/

‘Presidential Decree No. 755



large block of shares of stock of San Miguel Corporation (SMC). In Cocofed v. PCG; the Court
observed that certain agencies or enterprises were organized and financed with revenues derived
from coconut levies, with former President Ferdinand Marcos and his cronies as the suspected
authors and chief beneficiaries of the resulting coconut industry monopoly.

When the Presidential Commission on Good Government (PCG) was tasked to recover ill-
gotten wealth reportedly amassed by the Marcos family and their cronies, it issued numerous
orders of sequestration against various assets and properties, including the shares of stock in UCPB
purportedly owned by or registered in the names of more than a million coconut farmers and the
CIIF companies, including the SMC shares held by the CIIF companies. After years of litigation, the
Supreme Court definitively ruled that the coconut levy funds are in the nature of taxes and can only
be used for public purpose: “To hold, even by law, that the revenues received from the imposition of
the coconut levies be used purely for private purposes to be owned by private individuals in their
private capacity and for their benefit, would contravene the rationale behind the imposition
of taxes or levies.”” The Supreme Court also declared that the coconut levy funds are owned by the
Government, viz:

“the so-called “Farmers' UCPB shares” covered by 64.98% of the UCPB shares of stock,
which formed part of the 72.2% of the shares of stock of the former FUB and now of
the UCPB xxx are hereby declared conclusively owned by the Plaintiff Republic of the
Philippines”

and that:

“the CIIF companies, xxx as well as the 14 holding companies, and the converted SMC
Series 1 Preferred Shares totaling 753,848,312 shares subject of the Resolution of the
Court dated September 17, 2009 together with all dividends declared, paid or issued
thereon as well as any increments thereto arising from, but not limited to, exercise of
pre-emptive rights are declared owned by the government to be used only for the
benefit of all coconut farmers and for the development of the coconut industry

and ordered reconveyed to the government.”

The funds from the SMC shares, valued at more or less PhP71-billion, deposited in the
National Treasury (P56.5 Billion) and the UCPB (P14 Billion), are now consolidated in the Bureau of
‘Treasury earning 2% per annum. It is high time that these funds are appropriated for the benefit of
all coconut farmers and for the development of the coconut industry.

This bill aims to fulfill a campaign promise of the Duterte-Cayetano tandem, expressed in a
Panata para sa Malilit na Magniniyog: we will make sure that the coconut farmers benefit from the
coco levy fund; that, aside from the coco levy funds, there will be more funds for infrastructure,
research to strengthen the coconut industry; and that we will support efforts to recover the
remaining funds. This is our expression of solidarity with the coconut farmers and their loved ones,
Now is the season for them to truly feel the assistance of a government that will bring bold
solutions and swift actions for genuine change.

In view of the foregoing, the immediate enactment of this measure is sought.

“COMPANERO" S. CAYETANO
Representative
1* District of Taguig-Pateros

5 Republic v. Sandiganbayan, G.R. No. 118661, January 22, 2007, 512 SCRA 25.

®G.R. No. 75713, October 2, 1989, 178 SCRA 236.

7 Supreme Court Resolution in COCOFED v. Republic, G.R. No. 177857-58, January 24, 2012.
® Supreme Court Decision in COCOFED v. Republic, G.R. No. 177857-58, September 4, 2012.


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

EIGHTEENTH CONGRESS
First Regular Session

10

House Bill No.

INTRODUCED BY REPRESENTATIVE ALAN PETER “COMPANERO" S. CAYETANO

AN ACT
DECLARING THE COCONUT LEVY ASSETS AS A TRUST FUND, PROVIDING FOR ITS
MANAGEMENT AND UTILIZATION, AUTHORIZING THE PRIVATIZATION AND MANAGEMENT
OFFICE TO DISPOSE THE COCONUT LEVY ASSETS, AND FOR OTHER PURPOSES

Beit enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the “Coconut Farmers and Industry Trust
Fund Act.”

SECTION 2. Declaration of Policy. - It is hereby declared the policy of the State to consolidate the
benefits due to coconut farmers, especially the poor and marginalized, under vations statutes and
to expedite the delivery thereof to attain increased incomes for coconut farmers, alleviare poverty,
and achieve social equality.

I
DEFINITION OF TERMS

SECTION 3. Definition of Terms. - As used in this Act:
(@) Coconut Farmer shall refer to:

(1) An owner of a coconut farm, who:
@___Tills the land (owner-cultivator), or

Does not till the land, but has control and supervision over the cultivation of the

coconut farm;

2) Aleaseholder or tenant who tlls or supervises the cultivation of the coconut farm; or

G3) A farm worker or laborer, whether seasonal or itinerant, engaged in the harvesting of the

nuts and processing of copra as a major means of livelihood.

(b) 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, including those assets that may be recovered in favor of the
Government, as well as the fruits or income therefrom, including those acquired in exchange or
Substitution thereof. These shall include, among others, the following:

(The shares of stock in United Coconut Planters Bank (UCPB) that were determined
to be owned by the Government;

(ii) The CIIF-Oil Mills Group, which refers to the CIF companies, namely: Southern
Luzon Coconut Oil Mills; Cagayan de Oro Oil Co. Inc; lligan Coconut Industries, Inc;


San Pablo Manufacturing Corp.; Granexport Manufacturing Corp; and Legaspi Oil
Co, Inc;

(iii) The CIIF Holding Companies, which refers to the fourteen (14) holding companies,
namely: Anglo Ventures Corporation; ASC Investors, Inc, Arc Investors, Inc; AP
Holdings, Inc; Fernandez Holdings, Inc. First Meridian Development, Inc; Randy
Allied Ventures, Inc; Rock Steel Resources, Inc; Roxas Shares, Inc; San Miguel
Officers Corps., Inc; Soriano Shares, Inc,; Te Deum Resources, Inc,, Toda Holdings,
Inc; and Valhalla Properties Limited, Inc;

(iv) The Converted San Miguel Corporation (SMC) Series 1 Preferred Shares, which
refers to the 753,848,312 preferred shares of stock in SMC declared owned by the
Government, together with all the dividends declared, paid, or issued thereon, as.
well as any increments thereto arising from, but not limited to, the exercise of pre-
emptive rights;

(©) 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:

(@ The Coconut Investment Fund created under Republic Act No. 6260;

(ii) The Coconut Consumers Stabilization Fund, later renamed as the Coconut Industry
Stabilization Fund, created under Presidential Decree No. 276;

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

(iv) The Coconut Industry Investment Fund created under Presidential Decree No. 1468;

Any person having any Coconut Levy Asset and/or Fund 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:

(2) Reconvey title to the Republic of the Philippines;

(2) Deliver all stock certificates and other evidence of ownership to the Bureau of the Treasury
(BTr) for safekeeping; and

(3) Transfer all cash Coconut Levy Assets to the Trust Fund;

Provided, that no temporary restraining order (TRO) or any injunction order can be issued except
by the Supreme Court.

The Commission on Audit, in coordination with the Presidential Commission on Good Government,
shall conduct an inventory and audit to determine compliance with pertinent laws, rules and
regulations on the reconveyance of the Coconut Levy Assets and/or Fund to the Republic.

(@)__ Designated Disposition Entity refers to Government Financial Institutions (GFls) which, at
the time of enactment of this Act, are one hundred percent (100%) owned by the Government, or
National Government Agencies (NGAs), which are approved by the Trust Fund Management
Committee, upon recommendation of the Trust Fund Manager, to perform similar functions as the
BTr under Section 11 of this Act.

ci
COCONUT FARMERS AND INDUSTRY DEVELOPMENT PLAN

SECTION 4. Preparation of the Coconut Farmers and Industry Development Plan. - The
utilization of the Trust Fund created under this Act, or any portion thereof, shall be in accordance
with a Coconut Farmers and Industry Development Plan, which shall be prepared by the Philippine


Coconut Authority (PCA) and approved by the President of the Philippines. In the performance of
its functions, the PCA shall consult coconut farmers and their organizations, industry associations,
civil society organizations, academe, government agencies concerned, and other stakeholders in the
coconut industry. The Plan shall set the directions and policies for the development and
rehabilitation of the coconut industry within ninety-nine (99) years.

In the formulation of the Plan, the PCA shall be guided by the following objectives:
(a) Increased incomes of coconut farmers;
(>) Poverty alleviation and social equity; and
() Rehabilitation and modernization of the coconut industry towards farm productivity.

The Plan shall include a national program for:

(a) community-based enterprises, including integrated processing of products and
downstream products intended to increase incomes of coconut farmers;

(b) social protection that directly benefit coconut farmers, farm workers, and their families,
taking into consideration existing social protection programs of the government; and

(© coconut farmers organization and development.

The Plan shall provide the criteria for targeting beneficiaries, the indicators in determining the
attainment of the abovementioned objectives, and the mechanisms for monitoring and evaluating
the impact of the different components of the program.

The Plan shall provide an indicative funding requirement or allocation for the implementation of
any and all of the programs and projects to be funded by the initial Trust Fund Principal and the
Trust Fund Income, which funding or allocation shall be itemized or broken down on a Project-to-
project basis, Provided, That:

(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;

(ii) for projects that are to be implemented or concluded within a period of time, the
allocation shall indicate the total amount that may be required for the implementation
of the whole project, itemized according to the phases or stages of said project; and

(iti) all projects shall be evaluated on the basis of financial returns and increased farmers
income,

The Plan shall also include strategic and inclusive training programs dedicated for the coconut
farmers based on 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 take into account the utilization of the annual Trust Fund under the following
allocations:

(a) Shared facilities program, thirty percent (30%);

(b) Farm improvement to encourage self-sufficiency, thirty percent (30%);

() Empowerment of coconut farmer organization and their cooperatives, fifteen percent
(15%);

(@) Scholarship program, fifteen percent (15%); and

(e) Health and medical program, ten percent (10%).

Within one hundred twenty (120) days from the effectivity of this Act, the Plan shall be submitted
by the PCA to the President, for approval. The PCA shall, within ninety (90) days from the effectivity
of this Act, complete the Coconut Farmers Registry.

Before the Plan is submitted to the President for approval, the Department of Budget and
Management, Department of Finance, Department of Trade and Industry, and the National


Economic and Development Authority shall provide their advisory opinions on the following
matters:

(@) Whether the Plan is supportive of and consistent with socio-economic development plans
and oriented towards the achievement of explicit objectives and expected results, to eneura
that the utilization of Coco Levy Fund is conducted effectively;

(b) Whether the Plan manages Coco Levy Assets and Funds judiciously and in a manner
supportive of development objectives;

(©) Whether the Plan accelerates and sustains economic growth for the coconut industry;

(4) Whether the Plan is programmed within the context of well-formulated and consistent long,
medium, and short-term development plans and policies that will promote both the growth

Vv

(@) The Secretary of the Department of Agriculture (DA), as Chairperson;
(b) The Secretary of the Department of Finance (DOF), as Vice Chairperson;
(©) The Secretary of the Department of Budget and Management (DBM);
(4) The Secretary of the Department of Science and Technology (DOST);
(e) The Secretary of the Department of Trade and Industry (DT!);

(0 The Administrator of the Authority; and

(6) Three (3) members from the coconut farmers sector (one each from Luzon, Visayas, and
Mindanao);

Provided, that the representatives from the coconut farmers sector shall be Filipino citizens,
reaistered with the PCA’s Coconut Farmers Registry, have considerable experience and reputable
frack record in promoting coconut farmers’ interest and welfare, and nominated by coconut
farmers organizations or cooperatives that are active for the past three (3) years in farmer
Grganization and development or community enterprise development. They shall be appointed by
the President of the Philippines from a list of four (4) nominees for each island grouping, Provided,
further, That any appointment to fill a vacancy in the Board arising from the death, removal,
retirement, or resignation of the appointive members of the Board shall only be for the unexpired
term: Provided, finally, That the term of office of the appointive members of the Board shall be for
one (1) year, unless sooner removed for cause,

The government representatives in the reconstituted PCA Board shall coordinate with the PCA in
Promulgating a nomination and screening process for the nominees of representatives of the
coconut farmers in consultation with their respective organizations or associations,


v
COCONUT FARMERS AND INDUSTRY TRUST FUND

SECTION 6. The Coconut Farmers and Industry Trust Fund. - There is hereby created a Trust
Fund to be known as the “Coconut Farmers and Industry Trust Fund,” referred to in this Act as the
“Trust Fund,” which shall be capitalized, managed, invested, utilized, and accounted for in the
manner provided in this Act.

The Trust Fund shall be maintained in such manner for ninety-nine (99) years under the Coconut
Farmers and Industry Development Plan to be formulated under Section 4 of this Act, and shall be
used for the benefit of the coconut farmers and the development of the coconut industry.

SECTION 7. Nature and Capitalization of the Trust Fund. - The Coconut Farmers and Industry
‘Trust Fund is separate and distinct from the regular funds appropriated to the PCA through the
annual General Appropriations Act (GAA). As such, the PCA shall continue to pursue its mandate of
implementing programs and projects from the regular GAA appropriations and from funds under
the Trust Fund.

The proceeds from the redemption of the Converted SMC Series 1 Preferred Shares, dividends
declared, paid, or issued on the Converted SMC Series 1 Preferred Shares, and all income or interest
derived therefrom as of the effectivity of this Act, and any other cash Coconut Levy Asset, that are
held by the BTr as a special account in the General Fund and as an escrow account, and cash held by
UCPB as administrator of the CIIF, shall form part of the initial Trust Fund Principal of the Trust
Fund.

For this purpose, any provision of law to the contrary notwithstanding, all government agencies
holding Coco Levy Funds and/or Assets shall transfer any and all monies to the Trust Fund within a
period not exceeding five (5) years from the effectivity of this Act. Immediately upon the enactment
of this Act, the BTr shall transfer Five Billion Pesos (P5,000,000,000.00) to a separate Trust Fund
Account.

The Trust Fund shall thereafter be augmented with all proceeds of privatization or disposition of
the Coconut Levy Assets remitted directly thereto by the BTr, Privatization and Management Office
(PMO), or other Designated Disposition Entities in accordance with this Act, including any 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, and any and all forms of income,
interests, earnings, yields, or any monetary benefit derived from retained Coconut Levy Assets.

SECTION 8. Utilization of the Trust Fund. - The 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 4 of this Act, Provided, That for purposes of the implementation of the Plan, for the
execution of programs and projects identified in the Plan that are allowed to be funded out of the
Trust Fund, pending the accrual or availability of the Trust Fund Income, and subject to annual
Governmental audit, an initial allocation of Five Billion Pesos (P5,000,000,000.00) shall be available
to the PCA, which shall include disbursements for the formulation of the Coconut Farmers and
Industry Development Plan.

The PCA shall have the following powers and functions:

(a) Approve disbursements from the Trust Fund including the funding for:
(i) the formulation of the Coconut Farmers and Industry Development Plan; and
(il) the disbursements in accordance with the Coconut Farmers and Industry
Development Plan.

(b) Issue policies, rules and guidelines as may be necessary to implement the provisions of this
Act.


SECTION 9. Creation of a Trust Fund Management Committee. - There is hereby created a Trust

Fund Management Committee, which shall be comprised of authorized representatives of the

Department of Finance (DOF), Department of Budget and Management (DBM), and Department of

Justice (DOJ). The Trust Fund Management Committee shall be responsible for setting the

Investment Strategy of the Trust Fund, which includes the following, among others:

Setting of investment priorities;

Setting of investment themes;

Evaluation of assets to determine portfolio size;

Setting of asset allocation;

Setting of policies with respect to particular asset types;

Guidelines for portfolio turnover;

Guidelines for Trust Fund Management Expenses;

Set the annual allocation of the Trust Fund available for disbursement to the PCA;

Approval of the financial requirements of Designated Disposition Entities in relation to

its functions set forth under this Act, including its annual budget for operations,

management, and privatization/disposition of Coconut Levy Assets and/or Funds

transferred and entrusted in its care;

j. Designation of alternative Designated Disposition Entities as defined in Section 3 of this
Act; and

k. Other guidelines as may be necessary to fulfill its mandate under this Act.

rR mp an ep

‘The BTr shall act as the Trust Fund Management Committee Secretariat and shall maintain records
and accounts of all investments, receipts, disbursements, and other transactions relating to the
management, administration, and utilization of the Trust Fund; Provided, That these records and
accounts shall be maintained in accordance with existing accounting and auditing laws, rules and
regulations, and shall be audited by the Commission on Audit (COA).

For the above purposes, an amount of one-half of one percent of the Trust Fund Principal shall be
utilized as Trust Fund Management Expense, which shall be sourced from the Trust Fund. The Trust
Fund Management Expense shall answer for all expenses directly incurred in the management of
the Trust Fund, including but not limited to transaction fees, redemption fees, placement fees,
investment fees, transaction costs, and other operating expenses.

SECTION 10. Designation of DOF as Trust Fund Manager. - The DOF is hereby designated as
Manager of the Trust Fund. As Manager, it shall be responsible for implementing the Investment
Strategy set by the Trust Fund Committee and managing the portfolio of the Trust Fund.

In the performance of its functions, the DOF shall have the following functions:

a. Monitor market and economic trends and track securities in order to make informed
investment decisions;

b. Recommend its portfolio strategy to the Trust Fund Committee;

In managing the portfolio, track financial results of the companies in the portfolio and its
various metrics, such as but not limited to, price-to-earnings ratios, inflation-adjusted
return, sales, earnings, and dividends; and

d. Recommend to the Trust Fund Committee the designation of alternative Designated
Disposition Entities defined in Section 3 of this Act; and

e. Perform other acts necessary to fulfill its mandate under this Act.

SECTION 11. Management and Custodianship of the Trust Fund. - Any law to the contrary
notwithstanding, the BTr is hereby designated as the depository of the Trust Fund. As depository,
the BTr shall have the following functions:

a. Hold, account, and collect on a timely basis all income and other payments with respect to
securities and other assets to which the Trust Fund shall be entitled to in the manner set
forth by the Department of Finance as Trust Fund Manager;


b. Release and deliver out securities and other assets of the Trusts Fund upon receipt of
proper instructions from the Trust Fund Manager, specifying the securities or assets to be
delivered out and the person or persons to whom the delivery is to be made;

¢. Release funds directly for the implementation of projects as instructed by the PCA pursuant
to the implementation of the Coconut Farmers and Industry Development Plan as approved
by the President under Section 4 of this Act; and

d. Perform any act as may be directed by the Trust Fund Manager in accordance with the
Investment Guidelines set forth by the Trust Fund Committee.

All cash Coconut Levy Assets shall be invested in Philippine government securities and other
securities guaranteed by the National Government. On the other hand, the BTr may hold, manage
and invest non-cash Coco Levy Assets, only upon approval of the DOF. Any income, earning or
interest obtained from said investments shall be deposited to the Trust Fund Account.

The Trust Fund Management Committee may designate alternative Designated Disposition Entities
as defined in Section 3 of this Act.

The Trust Fund Management Committee is hereby directed to draft the implementing rules and
regulations in order to effectuate Sections 9 to 11 of this Act.

vi
DISPOSITION OF NON-CASH COCONUT LEVY ASSETS

SECTION 12. Disposition of Non-Cash Coconut Levy Assets, ~ Pursuant to the mandate and the
direction and policies set by relevant regulatory agencies, Coco Levy Assets defined in Section 3
hereof, which are assigned by the Trust Fund Management Committee to Designated Disposition
Entities, shall be privatized or disposed subject to the regulatory approvals as required by law.

This Act shalll in no case exempt Coco Levy Assets from the respective jurisdictions of the various
applicable regulators, particularly the Governance Commission for Government-owned and ~
Controlled Corporations (GCG), the Bangko Sentral ng Pilipinas (BSP), the Philippine Deposit
Insurance Corporation (PDIC), and the Insurance Commission (IC).

SECTION 13. Additional Mandate of Designated Disposition Entities. - In addition to its powers,
duties and functions, Designated Disposition Entities as may be assigned by the Trust Fund
Management Committee shall, for and in behalf of the National Government, take title to and
Possession of, conserve, provisionally manage, and dispose the Coconut Levy Assets which have
been identified for privatization and disposition.

Subject to the approval of the Trust Fund Management Committee, the Designated Disposition
Entities are hereby empowered to:

(@ Implement the marketing and disposition program of the Coconut Levy Assets and/or
Funds;

(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;

(ji) Engage external expertise as may be necessary in the fulfillment of its tasks under this
Act; and

(iv) Adopt internal rules and regulations in relation to the marketing and disposition of the
Coconut Levy Assets and/or Funds.

‘The Designated Disposition Entities shall prepare the disposition plans and policies of the Coconut
Levy Assets transferred to it. They are 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 and/or Funds, including a partnership with the private sector in the management or
operation of these Coconut Levy Assets and/or Funds prior to actual sale or disposition in
accordance with the Investment Guidelines approved by the Trust Fund Management Committee.


Prior to the implementation of any disposition plan for corporations transferred to it, the
Disposition Entities may recommend the following:

(@ Require any 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;

(i) Direct any of the subject corporations to submit to the Disposition Entity, within
fixed time-tables, such reports and information as the Disposition Entity 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.

Any of the above-enumerated, as well as the final disposition of such assets, shall be subject to the
approval of the Trust Fund Management Committee.

SECTION 14. Remittance of Proceeds of Privatization. - Any provision of law to the contrary
notwithstanding, all proceeds or receipts from the sale of Coconut Levy Assets and/or Funds,
except portions thereof for reimbursable custodianship and operational expenses, or such amount
approved by the Trust Fund Management Committee to be retained by the Designated Disposition
Entity, shall be remitted to the Trust Fund.

SECTION 15. Reporting Requirements. - The Trust Fund Management Committee shall, on a semi-
annual basis, submit to the President 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, the consideration received, and the agreed terms of payment.

The Designated Disposition Entities 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 PCA to the President 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.

vi
FINAL PROVISIONS

SECTION 16. Suppletory Application of Republic Act 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. - 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,