Republic of the Philippines
House of Representatives
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

2434
HOUSE BILL NO.

Introduced by Hon. Sabiniano S. Canama
COOP-NATCCO PARTYLIST

EXPLANATORY NOTE

Itis hereby declared the policy of the state to consolidate the benefits due to the farmers especial-
ly the poor and marginalised, under the various statutes and the Coco Levy Fund and to expedite
thereof to attain a balanced, equitable, integrated and sustainable growth and development of the
coconut industry.

Due to reasons cited above, the expeditious approval of this bill is earnestly sought.

SABINIANQ/S. CANAMA

COOP NATCCO PARTY-LIST


Republic of the Philippines

House of Representatives
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO_ 2434

Introduced by Hon. Sabiniano S. Canama
COOP-NATCCO PARTYLIST

AN ACT ESTABLISHING THE COCONUT FARMERS AND INDUSTRY DEVELOPME)
TRUST FUND AND PROVIDING FOR ITS MANAGEMENT AND UTILIZATION

Be it 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
Development Trust Fund Act”.

SEC. 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 various statutes and
the Coco Levy Fund, and to expedite the delivery thereof to attain a balanced, equitable, integrated
and sustainable growth and development of the coconut industry.

CHAPTER I
DEFINITION OF TERMS
SEC. 3. Definition of Terms. — As used in this ActCoconut Industry Investment Fund (CHF)
refers to the Fund created pursuant to Presidential Decree No. 1468, which authorized the United
Coconut Planters Bank (UCPB) to utilize the surplus funds from the Coconut Consumers Stabiliza-
tion Fund (CCSF) and the Coconut industry Development Fund (CIDF) tor investments in the form
Of shares of stock in corporations organized for the purpose of engaging in the establishment and
operation of industries, commercial activities and other allied business undertakings related to the
coconut industry in alll its aspects and the establishment of a research program into the commercial
and industrial uses of coconut;C1/F Holding Companies refer to the fourteen (14) holding companies,
namely: (1) Anglo Ventures Corporation; (2) ASC Investors, Incorporated; (3) Arc Investors, Incor-
Porated; (4) AP Holdings, Incorporated; (5) Fernandez Holdings, Incorporated; (6) First Meridian
Development, Incorporated; (7) Randy Allied Ventures, incorporated; (8) Rock Steel Resources,
Incorporated; (9) Roxas Shares, Incorporated; (10) San Miguel Officers Corporation, Incorporated;
(11) Soriano Shares, incorporated, (12) Te Deum Resources, incorporated; (13) Toda Holdings,
Incorporated; and (14) Valhalla Properties Limited, Incorporated, created by the CIIF Oil Mills
Group to acquire, hold and manage the shares of stock of San Miguel Corporation (SMC)
(a) CIF Oil Mills Group refers to the six (6) CIIF companies, namely: (1) Souther Luzon
Coconut Oil Mills; (2) Cagayan de Oro Oil Company, Incorporated; (3) Iligan Coconut Indus-


tries, Incorporated; (4) San Pablo Manufacturing Corporation; (5) Granexport Manufacturing
Corporation; and (6) Legaspi Oil Company, Incorporated, acquired by the UCPB using the CIF;
(b) CIF SMC Block Shares refer to the thirty-three million one hundred thirty-three thousand
two hundred sixty-six (33,133,266) shares of stock in SMC, sequestered by the Presidential
Commission on Good Government (PCGG) in April 1986 representing thirty-one percent (31%)
of the total outstanding capital stock of SMC;

(©) Converted SMC Series 1 Preferred Shares refer to that portion of the CIIF SMC Block
Shares covering seven hundred fifty-three million eight hundred forty-eight thousand three hun-
dred twelve (753,848,312) preferred shares of stock in SMC representing twenty-four percent
(24%) of the outstanding capital stock of SMC;

(4) Coconut farmer refers to:

(1) Farmer-owner of a coconut farm, who:

(i) Tills the land (owner-cultivator) who shall be entitled to direct benefits for being disadvan-
taged and marginalized; or

(ii) Does not till the land, but has control and supervision over the cultivation of a farm; and

(2) A non-owner of the coconut farm who is either a:

(i) Leaseholder or tenant who tills or supervises the cultivation of the farm; or

(ii) Farm worker or labourer, whether seasonal or itinerant, engaged in the harvesting of the
nuts and processing of copra as major means of livelihood (g) Coconut Levy Assets refer to any
and all kinds of property, whether real or personal, tangible or intangible, wherever situated,
which have been acquired through or otherwise funded by the Coconut Levy Funds, including
those assets that may be recovered in favor of the government, as well as the fruits or income
derived therefrom, including those acquired in exchange or substitution thereof, including the
following:

(1) The shares of stock in the UCPB determined to be owned by the government;

(2)The CIF Oil Mills Group;

(3)The CIF Holding Companies; and

(4)The Converted SMC Series | Preferred Shares;

(h) Coconut Levy Funds 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 re-
cecada or its equivalent in other coconut products. These shall refer to any and all of the follow-
ing:

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

(2) The Coconut Consumers Stabilization Fund, later renamed as the Coconut Industry Stabi-

lization Fund, created under Presidential Decree No. 276;

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

(4) The Coconut Industry Investment Fund created pursuant to Presidential Decree No. 1468;

and

(5) The Coconut Reserve Fund under Presidential Decree No. 1468 and Presidential Decree

No. 1842;

(i) Investment guidelines refer to the investment management guidelines, rules, procedures,
and policies to be formulated by the Coconut Farmers and Industry Development Trust Fund
Committee created under Section 11 of this Act, hereinafter referred to as the Committee, and as
may be amended from time to time, which shall provide the parameters for investments of the


Trust Fund or any portion thereof, and shall include, among others, asset allocation, criteria for
selection of fund managers, required income from the fund, and other investment management
threshold requirements;

(0) Trust Income refers to the income, interest earnings, and other monetary benefits, re
alized by and accruing to the Trust Fund or any portion thereof; and

(k) Trust Principal refers to:

(1) The initial Trust Principal composed of dividends declared, paid, or issued on the Con-
verted SMC Series 1 Preferred Shares; the proceeds from the redemption of the Converted
SMC Series | Preferred Shares; all income or interest derived therefrom as of the effectivity of
this Act; any other cash Coconut Levy Asset deposited in the Bureau of the Treasury (BTr) and
the UCPB as administrator of the CIIF; and any other cash Coconut Levy Asset including
amounts deposited in the UCPB as Administrator of the CIF;

(2) Any and all proceeds of privatization of the Coconut Levy Assets remitted thereto by the
Privatization and Management Office (PMO), organized under Article III of Executive Order
No. 323 (Series of 2001); and

(3) Proceeds of privatization of any or all properties or assets conveyed by any person, group
or entity to the Committee, from time to time, as provided in Section 8 hereof.

AACHAPTER II
AUDIT AND RECONVEYANCE OF COCONUT LEVY ASSETS

SEC. 4. Audit and Inventory of Coconut Levy Assets. — Upon the effectivity of this Act, the
PCGG, created under Executive Order No. 1 (Series of 1986), shall conduct a complete accounting
and inventory of the Coconut Levy Assets as well as the investments, disbursements, and expendi-
tures relating to the Coconut Levy Fund and submit a certified report to the BTr, the Commission on
Audit (COA), the Office of the President (OP), the Senate of the Philippines and the House of Rep-
resentatives.

The COA shall audit the inventory of Coconut Levy Assets prepared and submitted by the
PCGG for the purpose of, among others, determining the completeness of the inventory, establishing
the reasonableness of the asset valuation and tracing of the flow of the Coconut Levy Fund. The
COA shall submit to the Coconut Farmers and Industry Development Trust Fund Committee, creat-
ed under Section 11 hereof, its initial audit report within one hundred twenty (120) days upon com-
pletion of the audit. However, further audit may be undertaken after the initial audit, as necessary.

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

SEC. 5. Reconveyance of Coconut Levy Assets. — Immediately upon the effectivity of this
Act, the PCGG, the government representatives to the boards of sequestered/surrendered corpora-
tions, and any government agency or person in possession, custody, control or administering any
Coconut Levy Asset shall perform or cause the performance of the following:

(a) Reconveyance of the title of such asset to the Republic of the Philippines;

(b) Delivery of all stock certificates and other evidence of ownership to the BTr for safekeep-

ing; and

(c) Deposit all cash assets in the Trust Fund.

Any provision of law to the contrary notwithstanding, the BTr and the UCPB shall directly
remit the initial Trust Principal to the Trust Fund.

‘The COA shall conduct an audit to determine compliance with pertinent laws, rules and regu-
lations on reconveyance of the Coconut Levy Assets to the government.

CHAPTER III


COCONUT FARMERS AND INDUSTRY DEVELOPMENT TRUST FUND

SEC. 6. The Coconut Farmers and Industry Development Trust Fund. — There is hereby
created a perpetual trust fund to be known as the Coconut Farmers and Industry Development Trust
Fund, hereinafter referred to as the Trust Fund, which shall consist of the Trust Principal and the
Trust Income. No portion of the Trust Fund shall accrue to the general fund of the national govern-
ment. It shall be capitalized, managed, utilized and accounted for in the manner provided in this
Act. Nothing in this Act shall be understood to prevent or prohibit any person, group or entity from
conveying to the Committee other properties and/or additional assets either for the use of the co-
Conut industry or for purposes of privatization, in which case, the proceeds of such privatization
shall form part of the Trust Fund.

SEC. 7. Purpose of the Trust Fund. — The Trust Fund shall be used exclusively for the
ultimate benefit of coconut farmers and farm workers as embodied in the Coconut Farmers and In-
dustry Development Plan prepared pursuant to Section 21 hereof.

SEC. 8. Capitalization of the Trust Fund. — All assets and/or Properties derived from all
coconut levy recovered assets, and all dividends, interest earnings and incomes that are available
upon the effectivity of this Act shall form part of the initial capital of the Trust Fund. The Trust
Fund shall thereafter be augmented with all Proceeds of privatization/disposition of the Coconut
Levy Assets remitted directly thereto by the PMO in accordance with this Act, including any and all
forms of income, interests, earnings, yields, or any monetary benefit derived therefrom prior to the
Privatization/disposition of these Coconut Levy Assets.

In order to ensure the enduring character of the Trust Fund, the Trust Principal thereof shall be
augmented by grants, donations and other lawful transfers by public or private entities. At the end
of the year, all unspent portion of the Trust Income for the year shall accrue to the Trust Principal.

SEC. 9. Management and Utilization of the Trust Fund. — The Trust Fund shall be available
and may be utilized only for the purpose for which it was created and upon authorization of the
Committee, subject to the following conditions:

(a) The Trust Principal shall be preserved and maintained at all times and only the Trust In-
come may be used: Provided, That twenty billion pesos _ (Php20,000,000,000.00) of the Trust
Principal shall be set aside and to be known as the Jumpstart Fund which shall be used to accel-
erate the development of the industry for the ultimate benefit of the coconut farmers and farm
workers: Provided, further, That at least seven billion five hundred million pesos (Ph-
P7,500,000,000.00) of the Jumpstart Fund shall be used for the social Protection programs as
Provided for in Section 21 (e) of this Act;

(b) The Trust Income shall be disbursed only on the basis of the funding requirement of the
Program, activity or project as approved by the Committee;

(c) The Trust Income may also be disbursed to pay for the expenses of the Committee for the
administration, monitoring, evaluation, information services, and other necessary activities for
the effective performance of its functions under this Act; and

(4) No part of the Trust Fund shall be utilized for the payment of salaries and other personnel
benefits unless otherwise provided in this Act

All releases from the Trust Fund approved by the Committee shall be released di-
rectly to the implementing agencies: Provided, That coconut productivity and developmental pro-
grams and projects shall be implemented by the Philippine Coconut Authority (PCA) created under
Presidential Decree No. 232 (Series of 1973), as amended by Presidential Decree No. 1468
(Series of 1978). Other coconut productivity and developmental programs and projects implement-
ed by other agencies shall be closely coordinated with the PCA.


Disbursements or expenditures by the concerned implementing agencies in violation of the
purpose of the Trust Fund shall be void and shall subject the erring officials and employees
to disciplinary actions in accordance with Section 43, Chapter 5 and Section 80, Chapter 7, Book VI
of Executive Order No. 292, and to appropriate criminal action under existing penal laws.

SEC. 10.Designation of the Bureau of the Treasury (BTr) as Depository of the Trust Fund, —
Any law to the contrary notwithstanding, the BTr is hereby designated as the depository of the Trust
Fund which shall: (a) hold and account the Trust Fund in the manner set forth by the Committee; (b)
release funds directly to the implementing agencies upon the instruction of the Committee; (c) when
‘so appointed by the Committee, act as a fund manager of the investments of the Trust Fund with the
authority and accountability as that of a private fund manager; and (d) perform other tasks as may
be authorized by the Committee.

The Committee may designate alternative depository banks which shall perform the same
functions as that of the BTr.

CHAPTER IV
COCONUT FARMERS AND INDUSTRY DEVELOPMENT TRUST FUND COMMITTEE

SEC. 11. Creation of the Coconut Farmers and Industry Development Trust Fund Committee.
— The Coconut Farmers and Industry Development Trust Fund Committee is hereby created under
the Office of the President.

‘The Committee shall have the following powers and functions:

(a) Coordinate and monitor the implementation of the Coconut Farmers and Industry Devel-

‘opment Plan;

(b) Approve any allowable disbursement out of the Trust Fund pursuant to Section 14 of this
Act;

(c) Formulate the Investment Guidelines pursuant to the allowable investments stated in Sec-
tion 28 of this Act;

(d) Appoint a fund manager, if necessary, to handle the investment of the Trust Principal;

(e) Identify the Coconut Levy Assets that will be privatized, retained, or abolished and sub-
mit its recommendation to the President;

() Approve the marketing and disposition program for the Coconut Levy Assets approved
for privatization;

(g) Authorize the sale and other mode of privatization of Coconut Levy Assets approved for
privatization;

(h) Authorize the rehabilitation of Coconut Levy Assets approved for privatization pending
actual disposition;

(i) Facilitate access by coconut farmers and their organizations from the most poverty afflict-
ed areas of the country to the services, programs and benefits implemented pursuant to the Co-
conut Farmers and Industry Development Plan;

G) Submit reports and recommendations to the President in connection with its functions un-
der this Act;

(k) Conduct periodic review of the Coconut Farmers and Industry Development Plan; and

())_Exercise such other incidental powers and functions as may be necessary to attain the ob-
jectives of this Act.

The PCA shall provide Secretariat support to the Committee.

SEC. 12.Composition. — The Committee shall be composed of the following:

(a) Six (6) representatives from the government who shall be serving in ex officio capacities:

(1) Secretary of the Department of Agriculture (DA) as Chairperson;


(2) Secretary of the Department of Finance (DOF) as Vice Chairperson;

(3) Secretary of the Department of Trade and Industry (DTI);

(4) Secretary of the National Economic and Development Authority (NEDA);

(5) Secretary of the Department of Agrarian Reform (DAR); and

(6) Administrator of the PCA or the office where PCA is attached;

(b) Nine (9) representatives from the coconut farmers’ organizations who have considerable

experience, substantial membership and reputable track records allocated as follows:

(1) Three (3) representatives from Luzon;

(2) Three (3) representatives from Visayas; and

(3) Three (3) representatives from Mindanao; and

(c) Two (2) representatives from the coconut industry sector who have considerable experi-

ence and reputable track record.

‘The nominees of the coconut farmers’ organizations shall be validated and shortlisted by the
PCA, in consultation with the National Anti-Poverty Commission (NAPC). The list of nominees
shall be submitted to the President not later than thirty (30) days following the effectivity of this
Act. The representatives of the coconut industry sector shall be appointed by the President from a
list of nominees submitted by the Committee.

The government representatives in the Committee shall serve only during their respective
terms of office. The nine (9) representatives from the coconut farmers’ organizations and the two
(2) representatives from the coconut industry sector shall each hold a term of three (3) years unless
sooner removed for cause, and may be reappointed once. Any of the representatives shall continue
to hold office until their successor is appointed: Provided, That any appointment to fill a vacancy in
the Committee shall be only for the unexpired term.

SEC. 13.Ex Officio Alternates. — The ex officio members of the Committee may designate
their respective permanent alternates who shall be the officials next-in-rank to them and their acts
shall be considered the acts of their principals.

SEC. 14. Meetings of the Committee. — The Committee shall meet at least once a month, or
as often as deemed necessary and expedient to discharge its responsibilities. The
presence of at least a majority of the members of the Committee shall constitute a quorum, and the
concurrence of a majority of the members present at a meeting at which a quorum exists shall be
adequate for any decision by the Committee: Provided, That the approval of at least a majority of
the members of the Committee shall be required on matters involving the following:

(a) Any single disbursement of funds involving more than fifty million pesos (Ph-

p50,000,000.00),

(b) Any proposed investment involving more than one hundred million pesos (Ph-

p100,000,000.00); and

(c) All dispositions or privatization proposals

The Chairperson, if unavailable, may designate the Vice Chairperson to convene the Commit-
tee and preside over the Committee’s meetings on behalf of the Chairperson.

SEC. 15.Compensation of the Members of the Committee. — The members of the Committee
may be entitled to per diems and reimbursable expenses, in accordance with COA rules and regula-
tions.

SEC. 16.Obligations of the Members of the Committee. — The members of the Committee
shall act with due care, diligence, skill, and good faith in all its dealings with the Trust Fund and the
Coconut Levy Assets, They shall avoid conflicts of interest and declare before the Committee any
interest they may have in any particular matter.


Where a member of the Committee receives any profit or benefit by virtue of the office, in-
cluding acquiring shares in corporations that form part of the Coconut Levy Assets, using the Co-
conut Levy Assets for one’s benefit, receiving commission on contracts from the Coconut Levy As-
sets, or taking advantage of corporate opportunities involving the Coconut Levy Assets, all such
profits or benefits shall be returned to the Trust Fund without prejudice to any administrative, civil
or criminal action against such member. This provision shall be applicable notwithstanding the fact
that such member of the Committee used one’s own funds in the venture.

The Committee shall recommend to the President the removal and the replacement of the
member who performs such acts,

SEC. 17. Executive Director of the Committee. — The President, upon recommendation of the
Committee, shall appoint an Executive Director who must be a Filipino citizen, a college degree
holder, has professional experience preferably in public finance, investment management, program
and policy development, or project monitoring and evaluation, and knowledgeable with the devel-
opment of the coconut industry.

The Executive Director shall have the following powers and functions:

(a) Execute policies and administer the programs approved or promulgated by the Commit-

tee;

(b) Monitor the progress of the implementation of the Plan, and submit periodic reports to the

Committee;

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

(d) Prepare an annual report on the activities of the Committee at the close of each fiscal year

and to submit a copy thereof to the President and to Congress;

(©) Keep and maintain official records and reports of the proceedings of the Committee;

(£) Administer oaths in all matters falling within the jurisdiction of the Committee; and

(g) Exercise such other duties as may be vested by the Committee that are consistent with the

provisions of this Act

The Committee shall determine the salary of the Executive Director in accordance with the
existing Salary Standardization Law and shall be taken from the Trust Income.

SEC. 18.Cooperation with the Committee. — The Committee may also call upon any de-
partment, bureau, office, agency, and instrumentality of the government, including government-
owned and -controlled corporations, for any assistance it may need in the discharge of its functions
and responsibilities as well as in the implementation of the programs and projects

SEC. 19. Accounting and Auditing. — The Committee shall maintain records and accounts of
all investments, income, receipts, disbursements and other transactions relating to the management,
administration and disposition of the Trust Fund. These records and accounts shall be maintained in
accordance with existing accounting and auditing laws, rules and regulations. The Trust Fund shall
be audited by the COA.

SEC. 20.Legal Counsel. — The Solicitor-General shall be the ex officio counsel of the
Committee on legal matters.

CHAPTER V
COCONUT FARMERS AND INDUSTRY DEVELOPMENT PLAN

SEC. 21.Preparation of the Coconut Farmers and Industry Development Plan. — An Ad Hoe
Committee is hereby created to be composed of the Secretaries of the DA, DAR, Department of the
Interior and Local Government (DILG), Department of Finance (DOF), Department of
Public Works and Highways (DPWH), Department of Science and Technology (DOST), Depart-
ment of Social Welfare and Development (DSWD), Department of Trade and Industry (DTI),


NAPC, NEDA, Commission on Higher Education (CHED), nine (9) representatives from the farm-
ers’ groups and two (2) representatives from the coconut industry sector who are members of the
Coconut Farmers and Industry Development Trust Fund Committee. The Administrator of the PCA
shall act as the Ad Hoc Committee’s Chairperson.

The Ad Hoc Committee, in consultation with the coconut farmers’ organizations, industry as-
sociations, civil society organizations, academe, concerned government agencies and other stake-
holders in the coconut industry shall indicate in an integrated coconut industry strategy map the
Policies for the development and rehabilitation of the coconut industry. It shall prepare, every ten
(10) years, a medium-term plan of programs, activities and projects which shall be funded out of the
Trust Fund and which shall be known as the Coconut Farmers and Industry Development Plan.
The Plan shall be consistent with the Philippine Development Plan and shall be subject to mandato-
Ty review every year.

In the formulation of the Plan, the Ad Hoc Committee shall be guided by the following objec-
tives:

(a) Increase in the income of coconut farmers and increase in coconut productivity including
intereropping and livestock-raising;

(b) Establishment of coconut-based enterprises including integrated processing of coconut
products and downstream products;

(c) Rehabilitation and modernization of the coconut industry towards global competitiveness;

(d) Provision of timely and critical support to coconut farmers” organizations; and

(e) Establishment of social protection programs that directly benefit the poor and mar-
ginalized coconut farmers and farm workers, in case these social Protection programs are not funded
by an appropriations law or any other special law, or where funding is insufficient. ‘The social pro-
tection programs shall include: (1) social services such as life, free medical care and services which
may not be covered by PhilHealth, and accident insurance coverage of the coconut farmers and farm
workers; (2) scholarships for the benefit of the deserving descendants of the coconut farmers and
farm workers other than payment of tuition fees but inclusive of monthly stipend, allowance for
books and instructional materials and other allied components of a scholarship grant; (3) livelihood
programs; and (4) opening a lending window in a government bank for the extension of concession-
ary loans of not more than two per centum (2%) interest per annum exclusively to poor
and marginalized coconut farmers and farm workers.

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 Jumpstart Fund and Trust Income,
which funding or allocation shall be itemized or broken down on a project-to-project basis: Provid-
ed, That: (i) for projects which are recurring, or to be implemented on a regular basis, the allocation
shall indicate the annual fund that may be required to implement the project; and (ii) for projects
that are to be implemented or concluded within a period of time, the allocation shall indicate the to-
tal fund that may be required for the implementation of the whole project, itemized according to the
phases or stages of the project.

Within ninety (90) days from the appointment of all farmer-representatives and the industry
representatives, the Plan shall be submitted by the Ad Hoc Committee to the Coconut Farmers and
Industry Development Trust Fund Committee which shall, in turn, submit the Plan to the President
for approval. Immediately upon its approval, the Plan shall be returned to the Committee for the
disbursement of funds in accordance with the provisions of this Act. Any amendment to the Plan
shall require the approval of the President.


a

a

oa If the President has any objection or any amendment thereto, the President shall notify the
Committee within thirty (30) days from receipt thereof, otherwise, the Plan shall be deemed ap-
proved.
CHAPTER VI
PRIVATIZATION OF THE COCONUT LEVY ASSETS

SEC. 22. Privatization of the Coconut Levy Assets. — The Committee shall determine the
Coconut Levy Assets that shall be privatized and/or retained. For this Purpose, the Committee shall
be guided by the following factors:

(a) Functions or purposes for which the entity was created are no longer relevant to coconut

farmers and the industry;

(b) Functions or purposes of the entity duplicate or unnecessarily overlap with the functions,
Programs, activities or projects already provided by another agency;

(c) Entity is not producing the desired outcomes, or is no longer achieving the objectives for
which it was originally designed and implemented. Entities which are producing the desired
outcomes shall not be privatized;

(4) Entity is dormant or non-operational;

(©) Entity is involved in an activity which is best carried out by the private sector; and

(8) Function, purpose, or nature of operations of any group of entities require consolidation
under a holding company.

The Committee shall submit its recommendation to the President for approval. The Commit-
tee shall also arrange for the transfer of the Coconut Levy Assets approved for privatization to the
PMO.

SEC. 23. Additional Mandate of the Privatization and Management Office (PMO). — In
addition to its powers and functions under Executive Order No. 323 dated December 6, 2000, the
PMO is authorized to dispose the Coconut Levy Assets that have been approved for privatization in
accordance with Section 22 of this Act.

In the discharge of its mandate, the PMO shall:

(2) Formulate and implement the marketing and disposition program after securing prior ap

Proval of the Committee;

(b) Take possession of and preserve such assets on behalf of the Committee;

(©) Execute and deliver, on behalf of the Committee, deeds of sale, contracts, trust instru-
ments, and other legally operative documents as may be necessary or appropriate to convey title
to, take possession of, and conserve such assets;

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

(©) Perform any other acts necessary for the discharge of its functions.

Any and all sales and other modes of privatization or disposition shall not be considered final
unless and until approved by the Committee.

‘SEC. 24. Powers of the Privatization and Management Office (PMO). — The PMO is also
empowered to enter into sales through public bidding, negotiated sale, lease, or any form of divest.
ment or transmission of rights over the Coconut Levy Assets: Provided, That no Coconut Levy As-
set shall revert to the previous owners or their nominees or be sold to individuals who, as deter-
mined by final judgment of a court of law, have mismanaged or diverted such assets.

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


(a) Require anyone or the subject corporations to adopt and implement cost-reduction mea-
sures to enhance the viability, and therefore the disposability of the corporations to potential
buyers, including measures requiring personnel retrenchment plans or other forms of corporate
downsizing:

(b) Direct anyone or all of the subject corporations to submit to the PMO, within fixed timeta-
bles, such reports and information as the PMO may require in the exercise of its functions under
this Act; and

(c) Cause the subject corporations to undergo merger, consolidation, spin-off, or other corpo-
Tate acts of reformatory nature as it may deem necessary or desirable to expedite the disposition
and privatization under this Act.

In all such cases, no corporate measure shall be implemented without the approval of the

Committee.

SEC. 25.Committee to Determine Transfer Value. — The Committee is hereby vested with
full and complete powers and prerogatives to determine transfer values and related valuations at
which the Coconut Levy Assets shall be transferred and conveyed to the PMO pursuant to the man-
date of this Act and upon reasonable consultation with a third-party appraiser: Provided, That any
valuation approved by the Committee for purposes of the transfer to the PMO shall not be deemed a
condonation, waiver, or extinguishment of any obligation by any party whose vested rights may be
impaired by such transfer.

SEC. 26.Remittance of Proceeds of Privatization. — All proceeds or receipts from the sale of
Coconut Levy Assets shall be remitted to the Trust Fund to be utilized solely for the purpose for
which it was created.

SEC. 27.Reporting Requirements. — The Committee shall, on a semiannual basis, submit to
the President and to Congress a report on the status of disposition of the Coconut Levy Assets,
which shall include, among others, a description of the individual assets disposed of, the purchasers
thereof, the consideration received therefor, and the agreed terms of payment.

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

SEC. 28. Allowable Investments. — The Committee shall manage the Trust Principal with the
skill, care, prudence, and diligence necessary under the circumstances that a prudent person acting
in like capacity and familiar with such matters would exercise in the conduct of an enterprise of a
like character and with similar aims. Pursuant thereto, and in line with the basic principles of safety,
growth, and liquidity, the Trust Principal shall only be invested in any or all of the following:

(a) Bonds, securities, promissory notes or other evidence of indebtedness of the Government
of the Philippines, or in bonds, securities, promissory notes and other evidence of indebtedness
to which full faith, credit and unconditional guarantee of the Republic of the Philippines is
pledged;

() Bonds, securities, promissory notes or other evidence of indebtedness of government fi-
nancial institutions or government corporations with acceptable credit or guarantee: Provided,
That such investments shall be subject to a ceiling to be fixed by the Committee in the imple-
menting rules and regulations;

(c) Deposits and loans and/or investments in any domestic bank doing business in the Philip-
pines and in good standing with the Bangko Sentral ng Pilipinas: Provided, That in case of such


deposits, these shall not exceed at any time the unimpaired capital and surplus or total private
deposits of the depository bank, whichever is smaller: Provided, further, That the bank shall
have been first designated as a depository for this purpose by the Monetary Board of the Bangko
Sentral ng Pilipinas: Provided, finally, That such investments shall be subject to a ceiling to be
fixed by the Committee in the implementing rules and regulations; and

(@) Investment in profitable coconut-based enterprises including integrated processing of co-

conut products and downstream products consistent with one of the objectives of the Coconut
Farmers and Industry Development Plan as provided for in Section 21, subject to the following
conditions: (1) preparation and validation of pertinent feasibility studies; (2) investment
ceiling to be fixed by the Committee; and (3) the proceeds or income of the investment shall au-
tomatically accrue to the Trust Principal.

CHAPTER VII

FINAL PROVISIONS

SEC. 29.Suppletory Application of Republic Act No. 10149 and Executive Order No. 323. —
In the interpretation of the provisions of this Act, the provisions of Republic Act No. 10149, other-
wise known as the “GOCC Governance Act of 2011”, shall apply suppletorily. Executive Order No.
323, entitled “Constituting an Inter-Agency Privatization Council (PC) and Creating a Privatization
and Management Office (PMO) under the Department of Finance for the Continuing Privatization
of Government Assets and Corporations”, except for Sections 2 and 3 of Article IV thereof, shall
also apply suppletorily.

SEC. 30./mplementing Rules and Regulations. — Within thirty (30) days from the date of the
constitution of the Committee, it shall formulate and promulgate the rules and regulations for the
proper implementation of this Act, in consultation with the PMO.

SEC. 31.Congressional Oversight. — The Congressional Oversight Committee on Agri-
cultural and Fisheries Modernization (COCAFM) shall exercise oversight functions over
the implementation of this Act. The financial review of the program in relation to its perfor-
mance indicators shall be subject to the oversight functions of the Joint Congressional Oversight
Committee on Public Expenditures.

SEC. 32.Separability Clause. — If any provision of this Act is declared invalid or uncon-
stitutional, the other provisions not affected by such declaration shall remain in full force and effect.

SEC. 33.Repealing Clause. — All laws, executive and administrative orders, rules and
regulations inconsistent with this Act are hereby repealed or amended accordingly.

SEC. 34. Effectivity. — This Act shall take effect fifteen (15) days after its publication in the
Official Gazette or in a newspaper of general circulation.

Approved,

HON. SABI NO S. CANAMA
COOP NATCCO PARTY-LIST