Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

2522

HOUSE BILL

INTRODUCED BY HON. JERICHO JONAS B. NOGRALE:

EXPLANAT! OTE

‘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 u
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, accountabili
the capacity for good and effective governance.

and therefore



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 «
passing committee but a more permanent Coconut Investment Company or “CIC” be

tablished to manage that Fund. One could expect nothing less.

This bill seeks to give teeth to the decision of the Supreme Court 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.

The passage of this bill is earnestly sought.

JERICHY JONAS B. N LES


Republic of the Philippines
HOUSE OF REPRESENTATIV!
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 2522

INTRODUCED BY REP. JERICHO JONAS B. NOGRALES

AN ACT CREATIN¢

HE 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

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

Sec. 2 Definition of Terms, — The following terms shall mean:

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

(b) "CIF - Oil Mills Group" shall refer to the CHF companies, namely. Southern Luzon
Coconut Oil Mills; Cagayan de Oro Oil Co. Ine.: Il
San Pablo Manufacturing Corp.:
Oil Co. Inc.:

(c) "CIF Holding Companies" shall refer to the fourteen (14) holding companies:
namely: Anglo Ventures Corporation: ACS Investors. Inc.: Are Investors. Ine.: 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.:

(d) "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 representi
31% of the total outstanding capital stock of SMC:

Coconut Industries, Ine.:
Sranexport Manufacturing Corp.: and Legaspi



(e) “Converted SMC 1 Preferred Shares” shall refer to that portion of the CIIF 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 CHF - Oil Mills Group:

The CIF Holding Companies; and
iv. The CIF SMC Block Shares:

(g) “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);

(j) “Corporation” shall refer to the “Philippine Coconut Farmers Well
Industry Development Corporation (the Corporation).”

e and,

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


ad “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 | Preferred Shares. dividends declared.
paid, or issued on the Converted SMC | 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 CIF: (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 or entity to the Corporation from time to time. as provided for
in this Act.

Sec. 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 tunds and assets
and administered by the Philippine Coconut Farmers Welfare and Industry Development
Corporation (the Corporation).

Sec. 4 Objectives — Pursuant to the above-mentioned policy, this Act has the following

objectives:

a) Promote the steady, accelerated and orderly development and vertical inte

the coconut industry;

b) Develop and establish coconut based farming systems including but not limited to the

establishment of model coconut farms:

c) Hasten and advance industrialization in the coconut industry and the diversification

and proper utilization of coconut products and by-products:

d) 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:

©) Increase production by expanding the planting and replanting program of coconut

trees in strategic areas identified as having the most potential:


f) Conduct scienti

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

2) 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 additionals}

ARTICLE IL

Sec. 1 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 s

called coconut levy funds consisting of the 753,848,312 CHF
Preferred SMC shares and their accumulated dividends: the United Coconut
Farmers Bank (UCPB); the CHF 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:

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:


v. 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 IIL

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:

(1) reconvey title to this Corporation of the Republic of the Philippines
over the Coconut Levy Assets:

(2) deliver all stock certificates and other evidence of ownership to the
Corporation for safekeeping:

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

See.

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 circulatic

Nothing herein shall be construed as preventing the Corporation trom

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

Sec. 3 Purposes and Uses of Fund — The CITF shall be used only for the following

1. 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:

2. To finance the establishment and operation of industries and commercial

enterprises as well as research relating to the coconut industry:

3. 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.

4. In general to finance the attainment of the objectives enumerated in Art. |
Sec. 3 of this Act.

Sec. 4 Limitation of Usage of the Fund - Subject to the provision of Sec. 4. hereot

only the income of the CITF shall be used and only for the purposes and uses

provided in Sec. 2 hereof. except for the initial amount provided for in Article IL

Section | hereof .

Sec. 5 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 exper

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 enumerate

Sec. 2 hereof

Sec.6 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.

Sec. 7 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:

c) 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:

) 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 I

Sec. 1 Creation of the Philippine Coconut Farmers Welfare and Industry

Development Corporation - There is hereby created under the office of the President

‘of the Philippines the Philippine Coconut Farmers Welfare and Industry

ister, u

Development Corporation which shall manage. adm ze or dispose certain

assets of the Coconut Industry Trust Fund (CITF) established in Art. II, Sec. 1 hereof


It shall be organized by the appointment of its 15-man Board of Trustees within 6

months from the effectivity of this Act.

See 2 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.

Sec. 3 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:
©) 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, See.3 and Art. II, Sec. 2 hereof.

Sec. 4 Specific and General Powers ~ In order to carry out the purposes mentioned in

the preceding Section, the Corporation shall have the following purposes:

a)

b)

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:

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;


c) 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:

e) To provide funds for the implementation of Art I Sec. 3 and Art. II Sec. 2 of
this Act:

1) To appoint the members of the Board of Directors of the companies/entities it

administers/manages enumerated in Sec] Art. II of this Act.

See. 5 Compo:

ion 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 fifieen (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, Ine

(COCOFED), the Philippine Association of Small Coconut Farmers Organizations
(PAS

FO) 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 See. 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 aceredi

d 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.

Sec. 6 Term of Office — The members of the Board of Directors shall have a term of

office of six (6) yea

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 rej

private sector Director shall serve only the remaining term of the vacating Director
Sec. 7 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.

Sec. 8 Compensation of the Directors — The Directors shall receive no sala

ries

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.

Sec. 9 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 al
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:
a. Chairman
b. Vice-Chairman
c. President/Chief Operating Officer
d. Vice President
ce. The Treasurer/Chief Financial Officer
f. The Corporate Secretary
g. Comptroller/Internal Auditor
h. Compliance Officer
i. Chief Legal Counsel

j. Such other officers as may be necessary and appointed by the Board of

Trustees.


Sec. 9 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

UTIVE OFFICER of the
Corporation and shall have such other powers as may be prescribed by the Board.

a. To preside at all meetings of the Board of Directors:

b. 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;

d. To present to the Board at any regular or special meeting or at. such other times as

it may require. a report in the st

te of the business of Corporation:

e. To attend meetings of the Board, and render such a:

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

2. THE VICE-CHAIRMAN - The Vice-Chairman who shall be a Director and who.

comes from the coconut farmers 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 Chie!

Executive Officer. Aside from those wi

h 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 Commi

on, Bureau of
Internal Revenue. the Commission On Audit, Corporation Code. other

laws and regulatory agencies:

d. To act as an

-Officio Member of all Committees of the Board:
¢. To recommend salary adjustments, promotions of officers and staff:

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

whenever in his judgment such delegation is expedient and practicable

lent may delegate to any other officer any of his powers and duties

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. Ifthe 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 s

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 financi

i
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;


b)

2)

d)

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

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;

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/ANTERNAL 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)

b)

)

d)

To see to it that adequate records of all assets, liabilities and transactions of the

Corporation are maintained and safeguarded:
To see that adequate audits thereof are currently and regularly made:

To pass upon all vouchers, payrolls and other accounts payable. and to determine

that they are properly authorized and certified:

To initiate and enforce measures and procedures relating tall

accounting/auditing matters. including clerical and office methods. records

reports, to the end that the b

iness 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:

To assess the accuracy and reliability of the accounting and auditing systems. and
certify such statements of financial conditionsincome statements. as required by

the Board or as requested by the President:

To act as budget director and, in conjunction with other officers and heads of

departments, to prepare annual budget covering all activities of the Corporatio

and to submit the same to the Board before the calendar year begins:


2)

h)

In the absence of the Comptroller/Intenal Auditor or

Yo 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

tems of financial transactions of the Corporation, and all its branches, and of

any person, entity or Corporation in which the Foundation may be interested:

In case of any defalcation, default, or dereliction of duty coming to his knowledy:

at any time to notify at once the Chairman and the President.

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)

b)

¢)

d)

e)

To oversee and coordinate the implementation of the Corporation's compliance

system and to provide a compliance update, at least on a quarterly basi

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:
To monitor compliance with the corporate governance manual:

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:

To serve as the primary contact with the regulators and to review. consolidate and

submit management replies to the findings/exceptions of regulatory bodies:

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/elarify 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 officership 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 PCFE for which
the assistance of these offices may be necessary

Sec. 10 Tenure of Office, Subject to the provision of Sec. 6 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

Sec. 11 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

Sec. | Members/ Beneficiaries of the Corpora

in - 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 les:

e, 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,

Sec. 2 All the coconut farmers of the Philippines who respond to the Ground

Survey authorized under th

Act and who express their desire to be members shall be

the members of the Corporation subject to the provision of Sec. | hereof
ARTICLE V

Sec. | 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 alter 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.

d) 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.

e) The result of the Ground Survey may also be used by the PCA and the

UCPB in the discharge of their statutory functions.

f) Thereafier, 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 mec

anism for the admission

of new members as a result of new ground surveys,

Sec. 2 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.

c. 3 Content of

survey — The survey shall among other

. identify the coconut

e. trustee. oF

her as landowner, landowner tiller, tenant. lessee. mortgags

worker either paid in cash or in kind. The coconut farmer

shall also be asked to whi

coconut farmer organization they belong and whether they agree to be a member of

the Corporation.

Sec. 4 Identification Cards — All the surveyed coconut farmers shall be issued the

Corporation's tamper proof Member

ID's which shall indicate to what category of
coconut farmer they belong and the mother coconut farmer organization to which they

belong,


Sec. 5 Survey Committee Rules

1¢ 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.

Sec. 6 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.

Sec. 7 The Survey Committee may seek the

stance from the National Statistics
Office in the formulation and implementation of its survey methodologies. analyses

and computerization

ARTICLE VI

Sec. | Commis

ion on Audit — The funds and disbursements of the Corporation shal!

ject to the rules and regulations of the Commission on Audit

ARTICLE VIL

Sec. | 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 VIII

Sec. | 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.

See. 2 Alll the proceeds of any sale authorized under this act shall form part of the

capital trust fund (CITP).

Sec. 3 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-sequest

ered stockholders may


however be invited to sell their assets separately to the winning bidder at mutually

agreed terms and conditions.

Sec. 4 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

Sec. | 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

corporations/assets subject matter of said cases.

Sec. 2 The Amicable Settlements resulting in the implementation of Sec. | shall be

jointly submitted by the parties to the Sandiganbayan for approval and subsequent
dismissal of the cases.

Sec. 3 Intervention in the process by any persons or groups who are not parties to the
hall not be allowed.

ARTICLE X

Sec. 1 Repealing Clause - All laws, decrees, executive orders, rules and regulations

and other issuances or parts thereof, inconsistent with the provisi

ns if this Act, are

hereby repealed or modified according!

PD 1469 in so far as it is suppletory to this
Act shall. remain in effect.

Sec. 2 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.

Sec. 3 Effeetivity - This Act shall take effect upon its publication in at least two (2)

national newspapers of general circulation.

Approved.