Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

1327

HOUSE BILL NO.

INTRODUCED BY ANAKPAWIS PARTY-LIST REPRESENTATIVE,
FERNANDO L. HICAP

EXPLANATORY NOTE

In 1971, the Marcos regime started collecting a levy on small coconut
farmers. On the strength of Republic Act 6260, it imposed a levy on the
production of copra. This was followed by Presidential Decree 276 which levied
on the sale of copra. Both of these levies, extracted from the sweat of small
coconut farmers, were justified as revenue-raising measures for the
development of the local coconut industry.

What happened to the more than P 9.625 billion coco levy funds collected
from small coconut farmers in more than a decade by the Marcos regime is now
a matter of history, presenting a veritable case wherein remedial legislation of
the first instance is called for to protect the interests of the real owners of the
fund - the small coconut farmers.

First, the funds were used by Marcos cronies to capture vital sectors of
the coconut industry and to expand to other interests, such as the acquisition
of the United Coconut Planters Bank, the putting up of several coconut oil mills,
and the purchase of controlling interests in San Miguel Corporation. Oblivious
of the public character of the coco levy funds, Marcos’ cronies made these
industries into their private domain of economic monopoly, with nary a share of
the returns for the small coconut farmers. It is estimated that such funds and
their increments have now reached some P 200 billion.

Second, in the aftermath of the fall of the Marcos regime, the funds
became the subject of multiple drawn-out recovery suits initiated by the
government against Marcos cronies, foremost among them being Mr, Eduardo
Cojuangco, Jr. In the course of the recovery suits, the government entered into
a series of “compromise agreements” with the Cojuangco camp which enabled
the government to control about 27 per cent of SMC shares sourced from the
coco levy funds. But in all these “compromise agreements", the small coconut
farmers were left out on the sides. As the government had acquired interests to
the funds which are separate from the interests of small coconut farmers, the
interests of the latter remain hanging in a precarious balance.

Meanwhile, the local coconut industry lies in a state of deterioration, a
testimony of how the professed intent of the levy was bungled by the


government and by Marcos cronies who anointed themselves as the “leaders of
the industry. Production and the prices of copra are dismally low if not volatile.
‘The potential of the coconut sector for growth and development has been wasted
by the government’s neglect, pursuance of agriculture liberalization and
promotion of land use conversion. Cutting coconut trees is rampant. Given the
state of coconut industry, the small coconut farmers are wallowing in poverty.
Denied of their due as owners of the funds, they continue to be victims of
exactions such as resicada and other semi-feudal exploitation.

The Supreme Court had adjudged the coco levy funds as being ‘imbued
with public character’, affirming what coconut farmers had been saying all
along. Notwithstanding this decision, the coco levy funds remain in limbo. In
the backdrop of a local coconut industry lying on its death bed, the funds are
still under the effective control of Mr. Eduardo Cojuangco, Jr. and his cohorts,
with the government showing to have its own distinct interest in the funds,
relegating to the background the rights and interests of small coconut farmers
to the funds. The funds remain out of reach of small coconut farmers which
constitute a grievous denial of their rights and interests to those funds.

On January 24, 2012, the Supreme Court ruled that the 24 percent
Coconut Industry Investment Fund (CIIF) block of SMC shares as having been
purchased with the coconut levy funds which were in turn declared to be
public.

On October 5, 2012, the Presidential Commission on Good Government
remitted P56,538,623,400.00 to the National Treasury after the redemption of
the 753,848,312 SMC Series 1 Preferred Shares. Along with the escrowed
dividend payments and accrued interest which total an additional
P13,700,669,652.86, these monies are be used “only for the benefit of all
coconut farmers and for the development of the coconut industry.”

This bill seeks to address this concern of small coconut farmers, It is
meant to effect the return of the control of the coco levy funds to their rightful
‘owners, the millions of small coconut farmers; providing therefor a mechanism
so that their rights and interest to those funds shall be protected; and so they
may exercise their ownership rights over the funds and may dispose these as
they see fit in line with the development of the local coconut industry.

‘The passage of this bill is earnestly sought.

[ANDO 1 HICAP


Republic of the Philippines
HOUSE OF REPRESENTATIVES

Quezon City

SIXTEENTH CONGRESS
First Regular Session

1327

HOUSE BILL NO. _

INTRODUCED BY ANAKPAWIS PARTY-LIST REPRESENTATIVE
FERNANDO L. HICAP

AN ACT
CREATING THE GENUINE SMALL COCONUT FARMERS’ FUND
AND FOR OTHER PURPOSES

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

TITLE
PRELIMINARY TITLE

SECTION 1. Title. - This Act shall be known as the "Genuine Small
Coconut Farmers’ Fund Act of 2013".

SECTION 2. Declaration of Policies. - It is the policy of the State to
promote the welfare of coconut farmers especially the genuine small coconut
farmers. The State shall give highest consideration to the promotion of social
justice among coconut farmers in accordance with sound rural development
and industrialization.

‘The State shall adopt necessary measures to immediately address the
serious problems besetting the coconut industry and protect the socio-economic
well-being of coconut farmers especially the genuine small coconut farmers.

To this end, the State shall recognize the right of coconut farmers
especially the genuine small coconut farmers as defined in this Act, to
participate in the planning, organization, administration and management for
the integrated development of the coconut industry, and shall provide support
in whatever form.

SECTION 3. Definitions. - For the purpose of this Act, unless the
context indicates otherwise:

(a) Asset refers to all properties, real or personal, acquired in
whatever form from the coconut levy funds by natural or juridical person.


[bl Coconut Farm includes individually-owned coconut farms or
coconut farms wholly or partially owned, controlled or operated by corporations,
partnerships or joint ventures.

(c) Coconut Levy Funds refer to all collected and unrecovered funds
including all income, interests, proceeds or profits derived therefrom created by
legislations for the support and development of the coconut industry and for the
benefit of the coconut farmers.

[e] Cultivation in coconut lands pertains to the clearing of the
landholding, the gathering of coconuts, their piling, husking and handling as
well as the processing thereof into copra, although at times with the aid of hired
laborers. It likewise includes the periodic cleaning of the coconut plantation to
improve its production.

() Farmworker is a natural person who renders services for value as
an employee or laborer in a coconut farm regardless of whether his/her
compensation is paid on a daily, weekly, monthly, or "pakyaw” basis. The term
includes an individual whose work has ceased as a consequence of, or in
connection with, a pending agrarian dispute and who has not obtained a
substantially equivalent and similar farm employment. A farmworker is either
regular or seasonal farmworker.

(£1) Regular Farmworker is a natural person who is employed
on a permanent basis in a coconut farm.

(£2) Seasonal Farmworker is a natural person who is employed
in a coconut farm on quota or piece-rate basis or is employed on a
recurrent, periodic or intermittent basis in a coconut farm, such as
"dumaan’, "sacada’, and the like.

{g) Genuine Small Coconut Farmer refers to a natural person who
actually cultivates or perform such labor as necessary in the production of
coconuts in a given farm or agricultural land. A coconut farmer may be any of
the following: 1) owner-cultivator; 2) leasehold or sharecropping tenant; 3)
farmworker, regular or seasonal, on a coconut farm of any size.

(h) Landowner refers to a natural or juridical person who owns the
coconut land but does not participate in the actual farm work or labor involved
in the production of coconuts.

(i) Leasehold or Sharecropping Tenant refers to a natural person
who, by himself/herself and/or with the aid available from his/her immediate
farm household, cultivates the land belonging to, or possessed by, another with
the latter's consent for purpose of production, for a price certain in money or in
produce or both.

(j) _ Owner-Cultivator refers to natural person who owns the farm or
agricultural land and who also does actual farm work thereon.


(k)_ Unrecovered levies refer to such amounts that that have already
been paid by or withheld from coconut farmers at the time of the sale of copra
or other coconut products at the farmgate, used by to capture vital sectors of
the coconut industry and to expand to other interests and still subject to
recovery suits.

TITLE I
(CREATING THE GENUINE SMALL COCONUT FARMERS’ FUND

SECTION 4. Coconut Levies and Assets are Public Funds, - All
coconut levies and assets acquired or established therefrom are hereby declared
as public funds in the nature of a genuine small coconut farmers’ fund. Any
future similar exaction imposed on genuine small coconut farmers shall be
public funds of the same nature as understood in this Act.

SECTION 5. Genuine Small Coconut Farmers’ Fund (GSCFF). - All the
funds established from the proceeds of the levies, including but not limited to
the Coconut Investment Fund (CIF), 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 (CRF) as well as all the assets acquired or established
therefrom - such as but not limited to the United Coconut Planters Bank
(UCPB) established and/or acquired under Presidential Decree 755, the
Coconut Industry Investment Fund Companies (CIIFC), and all other assets
acquired, established or set up using the coconut levy collections shall form
part of a single fund which is hereby created to be known as the Genuine Small
Coconut Farmers’ Fund (hereafter to be referred to as GSCFF).

SECTION 6. Nature and Primary Purpose of GSCFF. - The Genuine
Small Coconut Farmers’ Fund shall not be a part of the general funds of the
national government and shall be used exclusively for the benefit of genuine
small coconut farmers.

The GSCFF shall be apportioned to all coconut farmers without
discrimination /prejudice in the form of cash and other social benefits including
but not limited to:

a. Pension benefits;
b. Medical and hospitalization benefits;
ic. Maternity benefits; and
d. Educational assistance including scholarships.
‘The GSCFF shall be used to finance socio-economic projects initiated by

‘small coconut farmers and their organizations and/or cooperatives. The socio-
economic projects referred to in this Act shall primarily focus on:

a. _ Livelihood programs and projects meant to provide
additional incomes to small coconut farmers;


b. Small and medium-scale coconut enterprises, marketing and
trading mechanisms, inventions and innovations of
machineries and equipment for the development of high-
quality coconut and improvement of local coconut
production; and

c. Programs that would provide loan facilities for small coconut
farmers.

SECTION 7. Administration and Management of the GSCFF. - The
GSCFF shall be held, administered, managed, utilized, and/or disposed under
the provisions of Section 25 of this Act.

SECTION 8. Inventory of Coconut Levy-Funded Assets. - The Council
created pursuant to Section 11 hereof, and the Commission on Audit shall
immediately conduct a thorough audit and inventory of all assets acquired,
established and/or funded by the coconut levy collections within six (6) months
after the effectivity of this Act. The audit and inventory shall include earnings,
profits, and all other increments from investments and purchase of stocks by
any person or entity using coconut levy funds. The Council and the Commission
on Audit shall make public disclosure of their findings through publication in at
least two (2) newspapers of general circulation.

SECTION 9. Audit of expenditure made out of the Coconut Levy
Collections. - The Commission on Audit shall conduct an audit of all the
disbursements or expenditures made out of the levy collections with the
objective of determining whether those expenditures are in accordance with the
purposes for which the levies were collected and the rules and regulations
concerning disbursement of public funds. The audit report shall be published
in at least two (2) newspapers of general circulation,

SECTION 10. Recovery of Improperly or Illegally Used Levy
Collections. — Upon the findings and recommendations of the inventory and
audit provided in Secs. 8 and 9, improperly or illegally used levy collections
shall be recovered with the immediate institution of necessary actions within six
(6) months after the inventory and audit. The actions to recover may be
instituted singly, jointly or collectively, by the Presidential Commission on Good
Government, the Commission on Audit, the Philippine Coconut Authority, the
Office of the Solicitor General, and other concerned government agencies.

TITLE 11
CREATING THE SMALL COCONUT FARMERS’ COUNCIL

SECTION 11. The Small Coconut Farmers’ Council; Creation;
Funding; Primary Functions. - There is hereby created a Small Coconut
Farmers’ Council, hereinafter referred to as the Council, which shall be charged
with the primary functions of administration and management of the Genuine
Small Coconut Farmers’ Fund (GSCFF).


SECTION 12. Composition of the Council. - The Council shall be
composed of eleven (11) members to be selected as follows:

[a] The Council shall have nine (9) regular members composed of seven
(7) representatives from the genuine small coconut farmers sector and
at least two (2) of which shall come from the coconut women-farmers
sector, and two (2) representatives from non-government
organizations (NGO) involved in rural development advocacy and in
legal assistance service to coconut farmers;

[b] The Council shall have two (2) ex-officio members as follows:

b.1 the Administrator of the Philippine Coconut Authority as ex-
officio member; and

b.2 the Chairperson of the Presidential Commission on Good
Government or of whatever agency eventually takes over its
mandate and functions.

b.3. the two ex-officio members do not have voting rights in the
Council.

SECTION 13. Selection of Representatives. - The seven (7) and two (2)
women representatives from the genuine small coconut farmers and two (2)
from the non-government organizations, respectively, shall be selected from
among the nominees to be drafted by genuine small coconut farmers!
organizations in a general assembly. For this purpose, the Philippine Coconut
Authority shall facilitate the holding of a general assembly of small coconut
farmers’ organizations within three (3) months after the effectivity of this Act.
‘The small coconut farmers’ organization shall nominate their respective
delegates to the general assembly.

‘The expenses of the general assembly shall be defrayed by the Philippine
Coconut Authority from its current and available savings.

SECTION 14. Selection of the Chairperson. - The Chairperson of the
Council shall be selected by the nine (9) genuine small coconut farmer
representatives from among themselves. The Philippine Coconut Authority shall
facilitate the calling of a meeting for this purpose.

SECTION 15. Term of Office. - The regular members of the Council
shall hold office at the pleasure of the farmers’ organization which drafted them,
Their recall and replacement shall be determined by the guidelines to be
approved in the general assembly. The term of office of the Philippine Coconut
Authority Administrator and Presidential Commission on Good Government
Chairman as ex-officio members of the Council shall be co-terminus with their
incumbency.

SECTION 16. Funding. - The operations of the Council shall be funded
by recovered coconut levies and assets and by such other funds as the Council
may generate in the future.


SECTION 17. Meeting and Decision. — The Council shall meet once in
three (3) months and as often as the exigencies of service may demand, The
presence of at least six (6) members shall constitute a quorum, and the majority
vote of members present shall be necessary for the adoption of any policy, rule,
resolution, or decision, or any other act of the Council.

SECTION 18. Performance of Function and Duty. - The Council shall
perform the powers and functions set forth in Section 19 hereof, with the skill,
care, prudence and diligence in the interest of small coconut farmers.

SECTION 19. Personnel - The Council is authorized to hire
administrative, technical and/or support personnel as may be required to
enable it to effectively perform its functions, duties, and responsibilities.

SECTION 20. Powers and Functions of the Council. - The Council
shall have the following powers and functions:

(a) formulate, implement and set policies with regard to the
administration and management of the coconut levy funds and
assets heretofore acquired, recovered and/or pooled into the
Genuine Small Coconut Farmers’ Fund (GSCFF);

(b) formulate the rules and regulations governing the allocation,
utilization and disbursement of the GSCFI

()__ establish priorities for assistance giving preference to genuine
small coconut farmers to be reviewed periodically and revised as
necessary in accordance with changing conditions;

(a) receive, process and approve project proposals for financing by the
GSCFF;

(ce) decide on the use of the GSCFF income or net earnings including
final action on applications for assistance, grants and/or loans;

() inform and make coconut farmers more aware of their situation
and problems, as a whole, as well as of the opportunities and
prospects thereof;

(@) the Council shall encourage and assist the formation and/or
strengthening of coconut farmers’ voluntary and independent
organizations, eliminating thereof the obstacles to the exercise of
said farmers’ right to self-organization;

(h) cooperate with the coconut farmers, either individually or
organizationally, in the monitoring of cutting of coconut trees,
land use conversions of coconut lands to other agricultural or non-
agricultural purposes, and cases of ejectment or exploitation of
genuine small coconut farmers, and assist them in the filing and


@

@)

(s)

Q)

(m)

prosecution of appropriate administrative and judicial cases to
help protect their rights;

extend all possible assistance to genuine small coconut farmers in
pressing for the immediate and thorough implementation of
genuine agrarian reform in all coconut lands;

facilitate consultations with the genuine small coconut farmers
especially on matters related to policies and decision-making in
the coconut industry;

review, and, if necessary, redefine or redirect the policies of the
corporations, institutions, establishments, or any other entity
acquired or established through the proceeds of the coconut levies
imposed by various decrees, orders and other issuance, in order
that the purpose/s for which the same were set up may be
effectively pursued and/or achieved;

conduct liaison and coordinating activities between various
government agencies, including local government units as regards,
programs, projects, and activities that would involve the genuine
small coconut farmers and the coconut industry; and

perform such other acts as may be necessary, proper or conducive
to attain the purposes of this Act.

SECTION 21. Guidelines for Council Decisions. - In arriving at
decisions on concrete project applications or for financial assistance, grants,
loans, or other forms of financing from the GSCFF, the Council shall be guided
by the following considerations:

(a)

(b)

(©)

the project's relations and impact on the development of genuine
small coconut farmers and the coconut industry, in general;

the amount of funds requested for the project as consistent with
the fund assistance to as many institutions and/or associations as
possible; and

an assessment of the organization-applicant’s past and current
efforts to improve the quality of life of the genuine small coconut
farmers and the rehabilitation and development of the coconut
industry and agriculture in the Philippines.

SECTION 22. Take-over of Coconut Levy-Funded Assets. - The Council
shall take-over the funds referred to in Section 5 of this Act. The Council shall
direct any department, bureau, office, agency or instrumentality of the
Government of the Republic of the Philippines, including government-owned or
controlled corporations, for such assistance as it may desire and need in
drawing up plans of action for the immediate transfer of the coconut levy-
funded assets to the Council as administrator and manager of the GSCFF.

9


SECTION 23. Safeguarding and Utilization of Levy-Funded Assets. -
‘The Council shall, in coordination with and with the consent of, the genuine
small coconut farmers and their organizations, study and implement in the best
manner by which each of these coconut levy-funded assets can be safeguarded
and eventually utilized for the programs to be implemented that put priority on
the upliftment of the lives of the genuine small coconut farmers.

SECTION 24. Recovered Levies. - The Council shall make a public
disclosure of the coconut levies that have not yet been recovered. Whatever
coconut levies recovered and/or proceeds thereof shall be added to the GSCFF.

SECTION 25. Administration and Disposition of All Funds and
Assets. - All funds and assets held or to be held by the Council in trust for, and
for the benefit of, the genuine small coconut farmers shall be administered,
managed, utilized and/or disposed of, wholly or partially, under the following
guidelines:

(a) In general, the coconut levy funds and assets constituted as the
GSCFF shall be retained by the Council;

(b) The UCPB's continued operation shall be steered by overriding
concern of providing effective and sustainable solution to the
genuine small coconut farmers’ credit problems, for which
purpose, the bank shall retain such portions of the GSCFF, or
profits therefrom, to be made available under a credit facility or
scheme for the benefit of genuine small coconut farmers, as herein
defined;

() Portions of the profits derived by UCPB and CIIF-acquired
companies not needed for operation, authorized financial
commitments, or their credit facility/scheme for genuine small
coconut farmers shall be transferred to the Council for inclusion to
the GSCFF;

(d) The Council, as mandated in this Act, shall allocate funds
necessary for the attainment of Section 6 of this Act; and

(e) The Council shall promulgate the rules and regulations for the
enforcement of the guidelines under this Section and shall publish
the same in at least two (2) national newspapers of general
circulation.

SECTION 26. Genuine Small Coconut Farmer Representation in the
Respective Boards of the UCPB and CIIF-Acquired Companies, etc. ~ Upon
the findings of the audit and inventory mentioned in Sec. 8 regarding
investments and/or acquisitions of corporations or shares of stocks by any
person or entity using coco levy funds, the Council shall nominate such number
of representatives of genuine small coconut farmers to the Board of such
corporations in accordance with their entitlements as determined by the audit
and inventory. Such representatives shall sit in the Board of such corporations
at the pleasure of the Council.

10


SECTION 27. Criminal Liability. - Any person who is criminally liable
for acts inconsistent with the proper disposition of coco levy funds or in
violation of any law, decree, executive order, rules and regulations implementing
the coco levy that may have been repealed by this Act, shall remain criminally
liable and nothing herein shall extinguish such criminal liability.

SECTION 28. Repealing Clause. - All laws, decrees, exccutive orders,
rules and regulations, issuances or parts thereof inconsistent with this Act are
hereby repealed or amended accordingly.

SECTION 29. Separability Clause. - If, for any reason, any section or
provision of this Act is declared null and void, no other section or provision, or
part thereof shall be affected and the same shall remain in full force and effect.

SECTION 30. Effectivity Clause. - This Act shall take effect immediately
after publication in at least two (2) national newspapers of general circulation.

Approved.

"