Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

18TH CONGRESS
First Regular Session

House Bill No.2299

Introduced by Representatives Michael L. Romero and
Enrico A. Pineda

EXPLANATORY NOTE

The Supreme Court ruled in COCOFED, Et. Al. vs. Republic of the
Philippines (GR No. 177857-58) that the coco levy funds and assets which
consist primarily of the 753,848,312 SMC shares and their accumulated
dividends are owned by the government in trust for the coconut farmers. It is
ruled that said coco levy funds and assets are to be used exclusively for the
benefit of all the coconut farmers and the development of the coconut industry.
The funds are therefore public trust funds - with government as trustee for the
beneficial owners who are the coconut farmers. And the exclusive purpose of the
trust is the development of a coconut industry (where hitherto there is coconut
“anarchy’) to the benefit of all the coconut farmers.

However, the Supreme Court decision does not provide for an
administrative mechanism to ensure that the coco levy funds are managed
prudently and properly as intended by law. The decision does not provide
guidelines for the management and use of the coco levy funds for the benefit of
the coconut industry and the coconut farmers. This is a dangerous situation for
the coconut farmers who bore the burden of the coconut levy.

In fact, other sectors have started posturing to get their hand on the coconut
levy funds. Worse, these “other sectors” are not even connected to the coconut
industry, and the proposed use of the funds is not for the benefit of the coconut
industry and the coconut farmer.

Hence, there is a great need to constitute the coconut levy funds and assets
into a Coconut Industry Trust Find and provide the administrative structure that


will manage the trust funds and ensure that its use will benefit the coconut
industry and the coconut farmers. That structure is proposed to be a
Corporation to be called the Philippine Coconut Farmers Welfare and Industry
Development Corporation.

A public trust fund of the magnitude of the coconut levy funds and assets
will need not a mere committee but a full-fledged government-owned corporation
that has the requisite characteristics of stability, flexibility, autonomy,
transparency, accountability and therefore the capacity for good and effective
governance.

A mere committee can never exhibit the properties of such a corporation
but can easily be subject to the politics and vagaries of express executive
governmental approval and desire.

When the “Coconut Investment Act” or R.A. 6260 was enacted in 19 June
1971 with the avowed policy of aiding the development of the coconut industry
through the establishment of a Coconut Investment Fund or “CIF” it stipulated
in the same law that not a passing committee but a more permanent Coconut
Investment Company or “CIC” be established to manage that Fund. One could
expect nothing less.

This House Bill seeks to foster that the coconut levy funds and assets

are to be used exclusively for the development of the coconut industry, to the
benefit of all the coconut farmers in the country.

Approval of this bill is thergfore sought.

MICI ‘L L. ROMERO Ph.D. a, ICO A. PINEDA


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

18TH CONGRESS
First Regular Session

House Bill No. 3299

Introduced by Representatives Michael L. Romero and
Enrico A. Pineda

AN ACT
CREATING THE COCONUT INDUSTRY TRUST FUND,
PROVIDING FOR ITS MANAGEMENT, AND
FOR OTHER PURPOSES

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

ARTICLE I

SECTION 1. Short Title - This act shall be known as “The Coconut
Industry Trust Fund Act”.

SECTION 2. Definition of Terms. - The following terms shall mean:

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

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


(c)

(a)

(e)

“CIF Holding Companies" shall refer to the fourteen (14)
holding companies; namely: Anglo Ventures Corporation; ACS
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 Corp., Inc.; Soriano Shares,
Inc.; Te Deum Resources, Inc.; Toda Holdings, Inc.; and
Valhalla Properties Limited, Inc.;

"CIIF SMC Block Shares" shall refer to the 33,133,266 shares
of stock in San Miguel Corporation (SMC), sequestered by the
PCGG in April 1986 and representing 31% of the total
outstanding capital stock of SMC;

“Converted SMC 1 Preferred Shares” shall refer to that portion
of the CIF SMC Block Shares covering 753,848,312 preferred
shares of stock in SMC and representing 24% of the
outstanding capital stock of SMC;

"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;

This shall include, among others, the following:

i. The 72.2% shares of United Coconut Planters Bank’s
(UCPB's) outstanding capital stock;
ii, The CIIF - Oil Mills Group;

iii. The CIIF Holding Companies; and
iv. The CIIF SMC 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, 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; and

v. The Coconut Reserve Fund under Presidential Decree
No. 1468 and Presidential Decree No. 1842.

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

(i) "PCGG" shall refer to the Presidential Commission on Good
Government, created under Executive Order No.1 (S. 1986);

() “Corporation” shall refer to the “Philippine Coconut Farmers
Welfare and Industry Development Corporation (the Corporation).”

(&) “CITF” shall refer to the “Coconut Industry Trust Fund (CITF).”

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

(m) “Trust Principal" shall refer to (i) the initial Trust
Principal composed of the proceeds from the redemption of the
Converted SMC 1 Preferred Shares, dividends declared, paid, or issued
on the Converted SMC 1 Preferred Shares, and all income or interest
derived therefrom as of the effectivity of this Act; and any other cash
Coconut Levy Asset deposited in the Bureau of Treasury and UCPB as
administrator of the CIIF; (ii) any and all proceeds of privatization of the
Coconut Levy Assets remitted thereto by the Privatization and
Management Office, and (iii) proceeds of privatization of any or all


properties or assets conveyed by any person, group orentity to the
Corporation from time to time, as provided for in this Act.

SECTION 3. Declaration of Policy - It is hereby declared to be the
national policy to accelerate the development and vertical integration of the
coconut industry,through the provision of adequate medium and long-term
financing for capital investment in the industry, social services for the coconut
farmers and assistance for the coconut farmers’ organizations by instituting a
Coconut Industry Trust Fund capitalized with the coconut levy funds and assets
and administered by the Philippine Coconut Farmers Welfare and Industry
Development Corporation (the Corporation).

SECTION 4. Objectives - Pursuant to the above-mentioned policy,
this Act has the following objectives:

a) Promote the steady, accelerated and orderly development and
vertical integration of the coconut industry;

b)

Develop and establish coconut based farming systems including but
not limited to the establishment of model coconut farms;

°)

Hasten and advance industrialization in the coconut industry and
the diversification and proper utilization of coconut products and
by-products;

dq)

Promote the effective utilization and marketing of coconut products
and by-products in the domestic and foreign markets and preserve
the competitiveness and reliability of the country as a major
producer and supplier of said products;

e)

Increase production by expanding the planting and replanting
program of coconut trees in strategic areas identified as having the
most potential;

f) Conduct scientific researches and investigations in all areas
pertaining to the agricultural, industrial, marketing and socio-
economic aspect of the coconut industry and encourage the
participation of small farm holders in research and technology;

g) Encourage and promote the organization of coconut farmers’
cooperatives, associations and organizations and provide them
grants, credits and financing schemes;


h) Generate and disseminate information and communication to
farmers, producers and other sectors to ensure the appreciation and
adoption of appropriate technology and practices, inventions, as well
as the proper awareness and correct understanding of issues and
development in the coconut industry; and [any other additional].

ARTICLE I

SECTION 5. Creation of the “Coconut Industry Trust Fund” -
There is hereby created a trust fund to be known as the Coconut Industry Trust
Fund (CITF) from the funds and assets of the so-called coconut levy funds
consisting of the 753,848,312 CIIF Preferred SMC shares and their
accumulated dividends; the United Coconut Farmers Bank (UCPB); the CIIF
Oil Mills; the 14 Holding Corporations; the United Coconut Planters Life
Assurance Corporation (COCOLIFE); and all their respective assets,
subsidiaries or their cash equivalent if sold, and affiliates to the extent that the
Supreme Court has ruled or may rule in other cases to be owned by the

government in trust for the coconut industry and the coconut farmers.

Included in these funds and assets are all the coconut levy funds
consisting of the following:

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

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

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

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

The Coconut Reserve Fund under Presidential Decree No. 1468 and
Presidential Decree No. 1842.

Immediately upon the effectivity of this Act, the Government (Trust Owner)
and the Beneficial Owners shall cause the transfer of Ten Billion Pesos (Php


10,000,000,000.00) from the Coconut Levy Funds to the Corporation to fund its
operations and the programs.

The registered owners/stockholders of the assets/shares/corporations
above-mentioned shall cause the transfer thereof to the Corporation created in
Article III hereof.

They are hereby declared to be special trust funds with the government as
trustee for the beneficial owners who are the coconut farmers, The CITF shall
not form part of the general fund of the government and shall be used only for
the purposes and uses of the Fund as provided by this Act.

The PCGG, the government representatives to the boards of
sequestered/surrendered corporations, and any government agency or person
having any Coconut Levy Asset in its administration, authority, custody or
control, shall perform or cause the performance of the following:

reconvey title to this Corporation of the Republic of the Philippines
over the Coconut Levy Assets;

deliver all stock certificates and other evidence of ownership to the
Corporation for safekeeping;

deposit all cash equivalent of the Coconut Levy Assets in the Trust
Fund.

SECTION 6. Audit and Inventory of Coconut Levy Assets. - Upon
the effectivity of this Act, the Commission on Audit (COA), in coordination with
the Presidential Commission on Good Government(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 Corporation its audit report, together with a complete

list of Coconut Levy Assets and their valuation, and the empirical basis and the

methodologies employed for the said valuation.

The Corporation 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 Corporation from

procuring a third-party appraisal of any of the Coconut Levy Assets.

SECTION

7. Purposes and Uses of Fund - The CITF shall be used

only for the following:

1.

SECTION

To finance the development/operating expenses of
legitimate /recognized coconut famer organizations including
projects such as scholarships for the benefit of deserving
children of the coconut farmers and the establishment of
coconut seedling nurseries and the —_ farmers
planting/replanting program;

. To finance the establishment and operation of industries and

commercial enterprises as well as research relating to the
coconut industry;

. To finance social services for the coconut farmers for their

mutual assistance, protection and relief in the form of social
benefits, such as life, medical, and accident insurance
coverage of the coconut farmers.

. In general to finance the attainment of the objectives

enumerated in Art. 1. Sec. 3 of this Act.

8. Limitation of Usage of the Fund - Subject to the

provision of Section 8 hereof only the income of the CITF shall be used and only

for the purposes and uses provided in Sec. 6 hereof, except for the initial amount

provided for in Article II, Section 5 hereof.


SECTION 9. Allocation of Income of the Fund — The net income of
the CITF shall be allocated as follows:
- 5% of the net income of the Trust Fund shall be allocated for
the administrative / operating expenses of the Corporation;

- 25% of the net income of the Trust Fund shall be allotted back
to the Trust Fund;

- 70% of the net income of the Trust Fund shall be used to fund
the programs/projects enumerated in Section 6 hereof.

SECTION 10. Depository of the Fund - Pursuant to Sec. 5. PD 755,
the United Coconut Planters Bank (UCPB) as long as it is principally owned by
the government and the coconut farmers shall be the depository of the CITF, the
principal and income thereof, subject to the terms and conditions as the
Corporation and UCPB may stipulate. In the event the UCPB is sold to a private
entity, the Corporation shall choose the new depository of CITF provided that the

new depository shall be a government owned and controlled bank.

SECTION 11. Investment of the CITF - The CITF shall be invested
or allowed to be invested by the Corporation only in the following:

a) Shares of stock of corporations which have been at least annually
declaring dividends thereon for at least three consecutive years;

b) Evidence of indebtedness of the Republic of the Philippines or
any other government agency or corporation guaranteed by the
Republic of the Philippines which pay interest quarterly/semi-
annually;

°)

Bonds, debentures, preferred shares or guaranteed stocks of any
solvent corporations or institutions created or existing under the
laws of the Philippines which pay interest quarterly/semi-
annually;

d)

Time deposits and other investment products of reputable
banking institutions, including institutions in the international
complex of Sovereign Wealth Funds, that are non-speculative in
nature and which pay interest quarterly/semi-annually.

ARTICLE II


SECTION 12. Creation of the Philippine Coconut Farmers Welfare
and Industry Development Corporation - There is hereby created under the
office of the President of the Philippinesthe Philippine Coconut Farmers Welfare
and Industry Development Corporation which shall manage, administer, utilize
or dispose certain assets of the Coconut Industry Trust Fund (CITF) established
in Art. II, Sec.5 hereof. It shall be organized by the appointment of its 15-man
Board of Trustees within 6 months from the effectivity of this Act.

SECTION 13. Principal Office - The Corporation shall have its
principal place of business in Makati City, Metro Manila which shall be its
domicile, and such branches or agencies or subsidiaries within or outside the

Philippines as may be necessary for the proper conduct of its operations.

SECTION 14. Purposes and Objectives - The Corporation shall have

the following purposes and objectives:

a) To fully tap the potential of the coconut farmers in order to
maximize their production and give them greater responsibility
in directing and developing the coconut industry;

b) To accelerate the growth and vertical integration of the coconut
industry and other related coconut products from the raw
material stage to the semi-finished and finally, the finished
product stage;

c) To improve, develop and expand the marketing system; and
d) To ensure stable and better incomes for coconut farmers;

e)

In general to promote the attainment of the objectives if this Act
as provided in Art. I, Sec.3 and Art. II, Sec. 6 hereof.

SECTION 15. Specific and General Powers - In order to carry out
the purposes mentioned in the preceding Section, the Corporation shall have
the following purposes:
a) To invest in shares of stock of corporations, at least sixty percent
(60%) of the capital stock of which is owned by Filipinos for the

purpose of financing the establishment, development and
expansion of new and/or existing coconut industrial, financial


and marketing enterprises with proven profitability or great profit
potential;

b) To organize subsidiaries for the purpose of constructing,
establishing and operating coconut centrals or mills and other
collateral and support enterprises which will enhance the
development, integration and modernization of the coconut
industry;

¢)

To provide financing or grants for technical and economic
research studies, promotional programs, scholarship and social
benefits and industrial manpower development projects for the
coconut industry and the coconut farmers;

d)

To enter into contracts and execute such other acts and exercise
such powers as may be necessary to carry the purpose of this
Act;

To provide funds for the implementation of Art I Sec.3 and Art. II
Sec.6 of this Act;

f) To appoint the members of the Board of Directors of the
companies/entities it administers/manages enumerated in Sec.5
Art. I] of this Act.

e)

SECTION 16. Composition of the Board of Directors, Term of
Office, Compensation - The corporate powers of the Corporation shall be vested
in a Board of Directors to be appointed by the President of the Philippines
consisting of fifteen (15) trustees eight (8) of whom shall represent government
sector provided that the Philippine Coconut Authority (PCA) Administrator shall
be a Director, and seven (7) of whom shall come from the coconut industry sector
provided that the three largest nationwide coconut farmers organization, the
Philippine Coconut Producers Federation, Inc. (COCOFED), the Philippine
Association of Small Coconut Farmers Organizations (PASCFO) and the
Pambansang Koalisyon ng mga Samahang Magsasaka at Manggagawa sa
Niyugan (PKSMMN) shall have one nominee each. The depository bank - United
Coconut Planters Bank (UCPB) subject to Sec. 5. Art. II hereof shall have one
nominee as well as the coconut industry umbrella organization United Coconut
Association of the Philippines, Inc. (UCAP). Other nationwide coconut farmer
organizations duly recognized and accredited by the Philippine Coconut


Authority may be represented in the Board, provided that in their absence, in
the meantime, the COCOFED, PASCFO and PKSMMN shall jointly nominate
such Directors.

SECTION 17. Term of Office - The members of the Board of Directors
shall have a term of office of six (6) years except those coming from the
government sector whose term shall be co-terminus with their respective
government position. The term of office of those appointed to replace these
government Directors shall also be co-terminus. In any case, they shall hold
office only for a maximum of six (6) years. The President may reappoint any of
the private sector Directors. Those appointed to replace the private sector

Director shall serve only the remaining term of the vacating Director.

SECTION 18. Powers of the Board of Directors - Unless otherwise
provided by law, the corporate powers of the Corporation shall be exercised, all
business conducted and all property of the Corporation controlled and held by
the Board of Directors.

SECTION 19. Compensation of the Directors - The Directors shall
receive no salaries except when serving as officers of the corporation. They shall
however receive for every board meeting per diems as fixed by the Board as well
as monthly representation, transportation, and other allowances. Their travel
and lodging expenses incurred for every meeting shall be borne by the

Corporation.

SECTION 20. Officers/Professional Management of the
Corporation - Except for the Chairman and Vice-Chairman the Corporation
shall be managed and operated by professional managers who have a record of
proven competence and experience of at least five (5) years in their respective
fields of competence in managing a corporation, for profit or non-profit, or a
department or division hereof. These Officers are hereby classified as
professional managers and shall be exempt from the rules and regulations of the

Civil Service Commission:


. Chairman

. Vice-Chairman
. President/Chief Operating Officer

. The Treasurer/Chief Financial Officer

The Corporate Secretary

. Comptroller/Internal Auditor

a.
b.
©.
d. Vice President
e.
f.
&.
h.

. Compliance Officer

Chief Legal Counsel
Such other officers as may be necessary and appointed by the

Board of Trustees.

SECTION 21. Powers and Duties of the Officers of the Corporation.

1.

THE CHAIRMAN. The Chairman of the Board who shall

be a Director shall preside at all meetings of the Board of Directors,
in his absence or inability to so preside, the meeting shall be
presided over by the Vice-Chairman, and in the absence of both, by
the President.

The Chairman of the Board shall be the CHIEF EXECUTIVE
OFFICER of the Corporation and shall have such other powers as
may be prescribed by the Board.

a.
b.
c

2.

To preside at all meetings of the Board of Directors;
To direct the implementation of the policies of the Board;

To take active supervision and control over the property,
interest, business and affairs of the Corporation, and
subject to the approval of the Board, may appoint, suspend
or remove any appointive officer or employee whenever in
his judgment it may become necessary to do so;

. To present to the Board at any regular or special meeting

or at such other times as it may require, a report in the
state of the business of Corporation;

. To attend meetings of the Board, and render such

assistance or advice as it may need concerning the state of
the business of the Corporation.

THE VICE-CHAIRMAN - The Vice-Chairman who shall be

a Director and who comes from the coconut farmer’s organizations
shall have such powers and perform such duties as the Board of


Directors may from time to time prescribe and as may be delegated
to him by the Chairman. In the absence of the Chairman, the Vice-
Chairman shall act in his stead and shall perform any and all such
powers and duties pertaining to the office.

3, THE PRESIDENT - The President who shall be elected by
the Board shall be the CHIEF OPERATING OFFICER of the
Corporation under the supervision of the Chief Executive Officer.
Aside from those which have been assigned to him by the Board, his
powers and duties shall include the following:

a, To implement the policies formulated by the Board;

b. To supervise, control and direct subordinate officers
and employees in the discharge of their duties;

c. To ensure that operations of the Corporation comply
with the rules and regulations of the Securities and
Exchange Commission, Bureau of Internal Revenue,
the Commission On Audit, Corporation Code, other
laws and regulatory agencies;

d. To act as an Ex-Officio Member of all Committees of
the Board;

e. To recommend salary adjustments, promotions of
officers and staff;

f. To sign documents representing the Corporation in
all its transactions.

The President may delegate to any other officer any of his
powers and duties whenever in his judgment such delegation is
expedient and practicable.

4. THE VICE-PRESIDENT. The Board of Directors may elect
one or more Vice-Presidents who may or may not be members of the
Board, whose powers and duties in general, shall be determined by
the Board. In the absence or inability of the President, the Board
shall designate the Vice-President, to perform and discharge the
powers and duties of the Office of the President. If the Vice-
Presidents are not members of the Board, the Board shall designate
who among the Board members shall act in place of the President.

5. THE TREASURER. The Treasurer shall be elected by the
Board and shall have the care and custody of the funds, securities
and properties of the Corporation. He shall deposit all moneys and
other valuable effects in the name and to the credit of the
Corporation in the designated depository Bank, or with such other
depositories as the Board may from time to time designate, and any
funds so deposited shall be withdrawable only by checks or other


instruments signed by duly authorized officers of the Corporation.
He shall render to the Board of Directors or the President whenever
required an account of the financial condition of the Corporation
and of all his transactions as a Treasurer. He shall perform such
other duties as the Board of Directors may from time to time assign
to him or are incident to his office. In the absence of the Treasurer
or his inability to act, his duties shall be performed by such person
as may be designated by the Board of Directors.

6. THE SECRETARY. The Secretary shall be elected by the
Board, must be a Filipino citizen, be a lawyer of good standing and
a resident of the Philippines. He shall have the following powers and
duties:

a) He shall keep accurate minutes of all meetings of the
Board;

He shall be custodian of the corporate seal, record,
documents and papers of the Corporation;

b)

°)

He shall perform such other duties as may be assigned to
him from time to time by the Board or the Chairman, or
the President, and such other duties incidental to his
office;

d)

He shall prepare such reports and statements as are
required by the Board and/or the President.

During the absence or inability of the Secretary, the Board
shall select the person to act in his stead.

7. THE COMPTROLLER/INTERNAL AUDITOR. The
Comptroller/Internal Auditor who shall be a Certified Public
Accountant shall be elected by the Board and shall be directly
responsible only to the Board of Directors. He shall have the
following duties, in addition to those which may be prescribed by
the Board, to wit:

a) To see to it that adequate records of all assets, liabilities
and transactions of the Corporation are maintained and
safeguarded;

b) To see that adequate audits thereof are currently and
regularly made;

c) To pass upon all vouchers, payrolls and other accounts
payable, and to determine that they are properly
authorized and certified;

dq)

To initiate and enforce measures and procedures relating
to all accounting/auditing matters, including clerical and
office methods, records, reports, to the end that the


business of the Corporation shall be conducted in
accordance with the law, lawful rules, regulations and
directive of the Commission on Audit and with the
maximum safety efficiency and economy;

e)

To assess the accuracy and reliability of the accounting
and auditing systems, and certify such statements of
financial conditions/ income statements, as required by the
Board or as requested by the President;

f) To act as budget director and, in conjunction with other
officers and heads of departments, to prepare annual
budget covering all activities of the Corporation and to
submit the same to the Board before the calendar year
begins;

To attend meetings of the Board of Directors and the
standing committee when so required by the Chairman of
the Board and to render such assistance and advice as the
Chairman, President, or Board may desire concerning the
books, accounts, and systems of financial transactions of
the Corporation, and all its branches, and of any person,
entity or Corporation in which the Foundation may be
interested;

g)

h) In case of any defalcation, default, or dereliction of duty
coming to his knowledge at any time to notify at once the
Chairman and the President.

In the absence of the Comptroller/Internal Auditor or his
inability to act, his duties shall be performed by such persons as
may be designated by the Board.

8. COMPLIANCE OFFICER - The Compliance Officer of the
Corporation who shall be elected by the Board shall have the
following duties, to wit:

a) To oversee and coordinate the implementation of the
Corporation’s compliance system and to provide a
compliance update, at least on a quarterly basis;

b) To establish an effective and efficient regulatory program
and coordinate its implementation;

°)

To report to the Board or its various committees thru the
President, all significant compliance issues requiring
immediate corrective actions;

dq)

To monitor compliance with the corporate governance
manual;


e) To disseminate new laws, rules and regulations upon
receipt from _—regulatory —bodies, +—_provide
highlights/synopsis/clarifications pertinent to the new
regulatory issuance in a timely and accurate manner;

f) To serve as the primary contact with the regulators and to
review, consolidate and submit management replies to the
findings/exceptions of regulatory bodies;

g) To develop and maintain a constructive working
relationship with regulatory agencies who will be called
upon from time to time to clarify specific provisions of laws,
rules and regulations and to discuss/clarify compliance
findings/ exceptions;

9. CHIEF LEGAL COUNSEL - The Chief Legal Counsel
shall be a member of good standing of the Integrated Bar of
the Philippines (IBP). He shall be the chief legal adviser of the
Board of Trustees and its officer-ship and he shall
liaise/coordinate with the Office of the Government Corporate
Counsel (OGCC) and/or the Office of the Solicitor General
(OSG) concerning legal issues that may affect PCFF for which
the assistance of these offices may be necessary.

SECTION 22. Tenure of Office, Subject to the provision of Sec.17
hereof all executive officers shall hold office at the pleasure of the Board and all
other officers, agents and employees shall hold office for such time as provided
for in their contracts of employments and if none is provided, at the pleasure of
the Board.

SECTION 23. Other Officers. The Board of Trustees may appoint
such other officers as may be deemed necessary, provide for their powers and
duties, and fix their compensation.

ARTICLE IV

SECTION 24. Members/ Beneficiaries of the Corporation - The
following are the minimum requirements to be defined as a coconut farmer and

be a member of the Corporation:


a) Coconut Farmer - Any coconut farmer may apply as a Coconut
Farmer Member/Beneficiary of the Corporation. A coconut
farmer is a natural person who:

1. Owns and tills the coconut farm by himself and /or with
the assistance of member of his family, or farm laborers;

2. Owns the coconut farm but does not till it by himself but
with the assistance of farm laborers;

3. As lessee, usufructuary, who tills the coconut farm by
himself and/or with the assistance of the farm laborers;

4. As mortgagee, who tills the coconut farm by himself and/or
with the assistance of the farm laborers;

5. Harvests and processes the coconut products and is
compensated in the form of the produce which he sells as
his own; or

6. Works in the coconut farm and is compensated either in
cash or in kind.

SECTION 25. All the coconut farmers of the Philippines who respond
to the Ground Survey authorized under this Act and who express their desire to
be members shall be the members of the Corporation subject to the provision of
Sec. 1 hereof.

ARTICLE V

SECTION 26. Ground Survey - For purposes of determining the
respective identities and addresses of coconut farmers who will be eligible to
become members of the Corporation, a ground survey of coconut farmers
(Ground Survey) under the supervision of the Philippine Coconut Authority (PCA)
through its Coconut Development Officers who are stationed in all municipalities
of the coconut regions of the country shall be conducted and completed within
two (2) years after the appointment of the Board of Directors of the Corporation
subject to these rules:

a) There is hereby created a Ground Survey Working Committee
(‘Survey Committee”) which shall be composed of:


1. An official representative of PCA who shall act as the
Chairman;

2. A representative of the COCOFED - Philippine Coconut
Producers Federation, Inc.;

3. A representative of Pambansang Koalisyon ng mga
Samahang Magsasaka at Manggagawa sa Niyugan
(PKSMMN); and

4. A representative of Philippine Association of Small Coconut
Farmers Organizations (PASCFO).

b) The Survey Committee shall, within thirty (30) days from the
formal organization of the Corporation, meet to start the drafting
of the rules and regulations to govern the conduct of the Ground
Survey and the computerization of its results which shall be
submitted for the approval of the Board of Trustees of the
Corporation.

°)

Simultaneously, the Survey Committee shall also prepare the
Budget for the Ground Survey and the computerization of the
results thereof which prepared budget shall be submitted to the
Board of Directors of the Corporation for its final approval.

dq)

The results of the survey shall be computerized under the Office
of the Corporate Secretary of the Corporation for the preparation
of the Membership Book of the Corporation and for use of the
Board of Directors in determining the viability, sustainability and
impact of development projects for the benefit of the coconut
farmers submitted for its approval and financing.

The result of the Ground Survey may also be used by the PCA
and the UCPB in the discharge of their statutory functions.

e)

f) Thereafter, the Board of Directors may require periodic ground
surveys of coconut farmers for the purpose of updating the
Membership Book of the Corporation and such other purposes
as the Board of Directors may deem appropriate, The Corporation
shall provide a mechanism for the admission of new members as
a result of new ground surveys.

SECTION 27. Use of Survey Results - The results of the survey
herein authorized shall become the official list of coconut farmers in the country
and the official members of the Corporation. Only these farmers shall be
recipients, and beneficiaries of any and all projects/programs that the

Corporation directly or through their own farmers’ organization may undertake.


SECTION 28. Content of Survey - The survey shall among others,
identify the coconut farmer either as landowner, landowner tiller, tenant, lessee,
mortgagee, trustee, or worker either paid in cash or in kind. The coconut farmer
shall also be asked to which coconut farmer organization they belong and
whether they agree to be a member of the Corporation.

SECTION 29. Identification Cards - All the surveyed coconut
farmers shall be issued the Corporation’s tamper proof Membership ID’s which
shall indicate to what category of coconut farmer they belong and the mother
coconut farmer organization to which they belong.

SECTION 30. Survey Committee Rules - The Survey Committee
shall promulgate the rules and regulations for the survey and prepare the
necessary survey forms which shall observe the provision of this Article.

SECTION 31. Funds for the Survey - The Corporation shall
appropriate the Funds necessary to conduct the ground survey herein
authorized from the funds authorized by this Act to be used for the Corporation’s
projects and programs.

SECTION 32. Survey Committee - may seek the assistance from the
National Statistics Office in the formulation and implementation of its survey
methodologies, analyses and computerization.

ARTICLE VI

SECTION 33. Commission on Audit — The funds and disbursements
of the Corporation shall be subject to the rules and regulations of the
Commission on Audit.

ARTICLE VII

SECTION 34. Exemption from Civil Service Rule - The officers and
employees of the Corporation shall be exempt from the rules and regulations of


the Civil Service Commission. Further, they shall be exempt from the Salary
Standardization Law (RA 6758) as well as the Law on Compensation in
Government Corporations (RA 10149).

ARTICLE VII

SECTION 35. The Corporation may sell any of its trust fund
assets. Any sale however shall be by open and transparent public bidding and
pursuant to the existing rules and regulations on the disposition of government

assets,

SECTION 36. All the proceeds of any sale authorized under this act
shall form part of the capital trust fund (CITF).

SECTION 37. Any sale authorized under this Act shall respect and
shall not result in the diminution of the rights of private, non-sequestered
stockholders of any of the assets of the CITF subject of the sale. Said private
non-sequestered stockholders may however be invited to sell their assets

separately to the winning bidder at mutually agreed terms and conditions.

SECTION 38. Intervention in the sale process by any persons or

groups who have no interest in the coconut levy funds, shall not be allowed.

ARTICLE IX

SECTION 39. Immediately upon the effectivity of this Act, the parties
to Sandiganbayan Case # 033 and its subdivided complaints shall sit down and
negotiate an Amicable Settlement of the cases which shall result in the lifting of

the sequestration of corporation’s/assets subject matter of said cases.

SECTION 40. The Amicable Settlements resulting in the
implementation of Sec. 1 shall be jointly submitted by the parties to the

SandiganBayan for approval and subsequent dismissal of the cases.


SECTION 41. Intervention in the process by any persons or groups
who are not parties to the cases shall not be allowed.

ARTICLE X

SECTION 42. Repealing Clause - All laws, decrees, executive orders,
rules and regulations and other issuances or parts thereof, inconsistent with the
provisions if this Act, are hereby repealed or modified accordingly; PD 1469 in
so far as it is suppletory to this Act shall remain in effect.

SECTION 43. Separability Clause - If any part or provision of this Act
is declared unconstitutional, other parts or provisions thereof which are not
affected thereby shall continue to be in full force and effect.

SECTION 44. Effectivity Clause - This Act shall take effect upon its

publication in at least two (2) national newspapers of general circulation.

Approved.