FIFTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PI-IILlPPINES 
) 
Second Regular Sessioll 
) 
'11 
SENATE 
S. B. NO. 2378 
Introduced by Senator Juan Ponce Enrile 
Explanatory Note 
The Philippines used to be one of the largest producers of coconut products. 
Land devoted to cultivation of coconuts increased in the 70s and 80s as a response 
to the increasing world demand. About 25 percent of cultivated land was planted to 
coconut trees, and it is estimated that between 25 percent and 33 percent of the 
population was at least partly dependent on coconuts for their livelihood. 
However, for the same period coconut oil prices in the world market also increased 
dramatically prompting the government to collect a levy from coconut farmers to 
stabilize the retail prices of coconut-based consumer products at that time. 
In 1973 coconut-related government operations were merged within a single 
agency, the Philippine Coconut Authority (PCA). The PCA was authorized to 
collect and manage the coco levy collection which was placed into a fund 
popularly known now as the coco levy funds. 
These funds fall into four (4) 
general classes which were created by a series of presidential decrees and 
issuances namely, (a) the Coconut Investment Fund created under R.A. 6260 
(effective June 19, 1971); (b) the Coconut Consumers Stabilization Fund created 
under PD 276 (effective August 20, 1973); (c) the Coconut Industry Development 
Fund created under PD 582 (effective November 14,1974); and Cd) the Coconut 
Industry Stabilization Fund created under P .D. 1841 (effective October 2, 1981). 
The coco levy funds were intended to subsidize the sale of coconut-based 
products and to finance various coconut planting and replanting programs, coconut 
research, extension and credit services programs, establishment of model 
plantations including the propagation of hybrids, and acquisition of coconut related 
industries and the operations of such industries, all for the benefit of the coconut 
industry in general and coconut farmers in the country in particular. 
However, these reforms were never completely implemented and the 
benefits were not fully enjoyed by the coconut farmers. The coco levy funds were 
even invested supposedly on behalf of coconut farmers but were allegedly 
redirected to investments that effectuated their misuse. The most controversial 
investment of the coco levy is the acquisition of the 33.133 Million common shares 
in San Miguel Corporation (SMC), representing 27 percent share. For decades, 


coconut farmers have been beleaguered with reclaiming the coco levy funds, which 
have now been a subject of numerous and han-owing cOUli cases. 
On May 7, 2004, the Sandiganbayan (First Division) in Civil Case No. 
0033-F, had already rendered a Patiial Summary Judgment declaring the SMC 
Shares, the Coconut Industry Investment Fund (CnF) Oil Mills Group (CIIF), and 
the 14 cnF Holding companies as owned by the government "in trust for all the 
coconut farmers", thus ordering their reconveyance to the government. However, 
this judgment has not been implemented pending final detennination of the case 
involving said assets. 
Until the final resolution of the case, farmers will be 
continually denied of the money and the benefits that would have lightfully 
belonged to them. 
To ultimately put the issue to rest, this bill seeks to declare the CIIF OMG 
block of shares in SMC as well as all other properties and/or assets intended and 
conveyed or transferred to emanating from all coco levy recovered assets as public 
funds and placing them in a Coconut Farmers Trust Fund for the financing of 
programs for the benefit of the coconut farmers, for increased productivity of the 
coconut industry, and for the development of coconut-based enterprises. It is 
imperative that government undertake the necessary steps to prevent the 
dissipation and assure the preservation and conservation of these funds for the 
benefit of the coconut farmers of the country. 
In view ofthe foregoing, the passage of this bill is earnestly sought. 


FIFTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
Second Regular Session 
) 
'11 
OCT -3 F 2 :17 
SENATE 
S. B. NO. 2978 
Introduced by Senator Juan Ponce Enrile 
AN ACT 
ESTABLISHING THE COCONUT FARMERS' TRUST FUND 
TO PROVIDE ADEQUATE FINANCIAL PROTECTION 
TO THE COCONUT INDUSTRY AND ITS WORKERS, 
PROVIDING FOR THE MANAGEMENT THEREOF, 
AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the 
Philippines in Congress assembled: 
Section 1. Short Title. This act shall be known as the "Coconut Farmers' 
Trust Fund Act of2011". 
Section 2. Declaration of Policy. It is hereby declared the policy of the State 
to consolidate the benefits due to coconut farmers, especially the poor and 
marginalized, under various statutes and to expedite the delivery thereof in order to 
attain a balanced, equitable, integrated and sustainable growth and development of 
the coconut industry. 
Section 3. Constitution of the Coconut Farmers Trust Fund. Pursuant to 
the provisions of the Presidential Decrees and other issuances creating the coconut 
levy trust fund and in line with the decisions of the courts affirming the trust 
character of the fund, there is hereby constituted an irrevocable trust fund, to be 
known as the Coconut Farmers Trust Fund (hereinafter referred to as the "Trust 
Fund"), which shall be capitalized, managed, utilized and accounted for in the 
manner hereinafter provided. 
Section 4. Purpose of the Trust Fund. The Fund shall be established for the 
development of the coconut industry for the ultimate benefit of the small coconut 
farmers and farm workers. Its purpose shall include the financing of programs or 
assistance for the benefit of the coconut farmers, for increased productivity of the 
cocoanut industry, and for development of coconut-based enterprises and 
promotion of anti-poverty programs. 


Section 5. Capitalization of the Trust Fund. The 27 percent CIlF SMC 
Shares and all other available funds shall form the initial capital of the Trust Fund. 
For this purpose, the CIlF shall convey the aforesaid CIIF SMC Shares to the Trust 
Fund Committee as provided in Section 6 hereof, under such terms and conditions 
not inconsistent with this Act. The ClIF shall assign, execute and deliver such 
documents, deed or contract not inconsistent with this Act, as may be necessary or 
desirable to implement the provisions ofthis Act. 
Nothing in this Act shall be understood to prevent or prohibit any person, 
group or entity from conveying to the Committee other propelties andlor additional 
assets which shall form part of the Trust Fund. 
In order to insure the enduring character of the Fund, the principal thereof 
shall be augmented from time to time by grants, donations and other lawful 
transfers by public or private entities, the disposition of the income from which 
shall be governed by the terms and conditions hereinafter specified, as well as the 
rules and regulations promulgated by the Committee pursuant to Section 7 hereof: 
(a) The Trust Fund shall be perpetually maintained and preserved to ensure 
the full implementation and realization of the objectives identified and 
sought to be attained under this; 
(b) In the event any property or asset of the Trust Fund (or any portion 
hereof, as the case may be) is subsequently sold, alienated or disposed of, 
the proceeds and revenues arising out of and realized from such sale, 
alienation or dispositions, shall form part of the Trust Fund; 
(c) Only the income, interest, earnings and monetary benefit realized by and 
accruing on the Trust Fund shall be used and disposed of by the 
Committee for such purposes and endeavors specific under the provision 
of this Act. 
Provided, however, that any obligation of the capital forming part of the 
Trust Fund shall be limited exclusively to the obligation arising from the 27 
percent CIIF-SMC Shares declared by final adjudication and judgment of the 
Supreme Court; Provided, further, that any payment of such obligation shall, at the 
option of the Trust Fund Committee, be satisfied, first, through the conveyance or 
reconveyance of the CIIF SMC Shares, and second, from the proceeds and 
revenues of the Trust Fund after the Trust Fund Committee shall have determined 
and allocated in accordance with the provisions of the Act, sufficient fund balance 
necessary to implement and realize the purpose and utilization of the Trust Fund. 
The Trust Fund shall be managed and administered so as to maximize its 
earnings in a prudent manner consistent with its character as a perpetual fund. 
Section 6. Extent oftlte Trust Fund. The Trust Fund shall be composed of 
the following: 


(a) The ClIF SMC Shares consisting of approximately 27% of the outstanding 
capital stock of SMC, including all accrued cash and stock dividends; and 
(b) All properties and/or assets intended and conveyed or transferred to the 
Committee emanating from all coco levy recovered assets. 
(c) Such other funds, properties and/or assets lawfully conveyed or transferred 
to the committee for the purposes herein stated. 
Section 7. Designation of Trustee Bank/s. The Committee shall designate 
reputable depository bank/s of the Trust Fund, which shall: 
(a) Manage, disburse and account for the Trust Fund or a portion thereof in 
the manner hereinafter provided by the Committee, and 
(b) Exercise the tasks, functions and duties determined and established by 
the Committee created under the provisions of this Act, to the extent 
allowed under applicable laws. 
Section 8. The Coconut Farmers Trust Fund Committee. A Coconut 
Farmers Trust Fund Committee is hereby created for the administration of the trust 
fund and the disposition and the utilization of the earnings and incomes thereof in 
accordance with the existing statute creating the coconut levies for the 
rehabilitation and development of the coconut industry and for the ultimate benefit 
of the small coconut farmers and farm workers. 
The Coconut Fal111ers Trust Fund Committee (herein referred to as the 
"Committee") shall be composed of the President of the Philippines sitting as its 
chairperson, and twelve (12) other members, as follows: 
(a) Three (3) representatives from the government, who shall be the Secretary of 
Agriculture and the Secretary of Finance and the Administrator of the 
Philippine Coconut Authority; 
(b) Three (3) representatives from the finance and banking sector, who must 
have extensive experience and proven expertise in finance, banking and trust 
management; 
(c) Three (3) representatives from coconut farmers' organizations; and 
(d) Two (2) representatives from the CIIF group; 
(e) One (1) representative from Civil Society Organization. 
The members of the Committee shall be appointed by the President and shall 
serve for a term of three (3) years. 
All trustees, with the exception of the Chairperson, shall serve for maximum 
of two consecutive terms of office. 


Section 9. Functions and responsibilities of the Committee. To ensure that 
the benefits and gains arising out of the Trust Fund directly redound to, and are 
received by, the small coconut farmers and farm workers, the Committee shall: 
(a) decide on the disposition, utilization and allocation of the said funds and 
assets for the foregoing special purpose taking into consideration and 
priority of the funding requirements to implement the coconut productivity, 
research and extension program of the Philippine Coconut Authority; 
(b )set the investment policy of the Trust Fund in consideration of all existing 
coconut industry development studies and plans; provided that this will not 
be inconsistent with the following objectives: 
1. 
poverty alleviation and social equity; 
II. 
increase in the productivity of small coconut farmers 
sustainable means; 
through 
111. 
full scale rehabilitation of the coconut industry and promotion of 
coconut-based farm systems; 
IV. 
modernization 
of 
the 
coconut 
industry 
towards 
global 
competitiveness; 
v. 
protection of small coconut farmers and farm workers from unfair 
competition; and 
VI. 
medical and/or health and life insurance services for small coconut 
fanners and farm workers; and 
(c) establish priorities for the referential assistance to small coconut farmers and 
farm workers, which shall be reviewed periodically and revised as necessary 
in accordance with changing conditions; 
(d) formulate the rules and regulations governing the allocation, 
and disbursements of the Fund; 
utilization 
(e) formulate the Implementing Rules and Guidelines of this Act; and, 
(f) perform such other acts and things as may be necessary, proper or conducive 
to attain the purposes of the Fund. 
Section 10. Use and Disposition of the Trust Income. The Committee, on 
an annual basis, shall determine and establish an amount comprising the Trust 
Income, which determination shall be audited by the Commission on Audit. After 
such determination, the Committee shall determine the utilization of the Trust 
Income. 


Section 11. Cooperation with the Committee. The Committee may call 
upon any department, bureau, office, 
agency and instrumentality of the 
government of the Republic of the Philippines, including government-owned and 
controlled corporations, for such assistance as it may desire and need, in pursuit of 
the purpose and objectives of the Trust Fund, and in the discharge of its functions 
and responsibilities. 
Section 12. Meetings of the Committee. The Committee shall meet at least 
once a month, or as often as deemed necessary by the Chairperson. 
Section 13. Accounting and Auditing. The Committee shall maintain 
appropriate records and accounts of all 
investments, income, 
receipts, 
disbursements and other transactions relating to the management, administration 
and disposition of the Trust Fund and Trust Income. 
The Trust Fund shall be audited annually by the Commission on Audit. 
Section 14. 
Implementation. The Presidential Commission on Good 
Government, the Office of the Solicitor General and other appropriate government 
instrumentalities are hereby directed to take all the necessary steps to implement 
the purpose and objectives of this Act. 
Section 15. Repealing Clause. This Act repeals Executive Order Number 
312 dated 3 November 2000, and Executive order Number 313 dated 8 November 
2000 
respectively. All laws, presidential decrees, ordinances, rules and 
regulations, or any provisions thereof, inconsistent with the provisions of this Act 
are hereby revoked, amended, revised and superseded accordingly. 
Section 16. Separabiity Clause. The provisions of this Act are hereby 
declared to be separable and in the event one or more of such provisions are held 
unconstitutional, the validity of the other provisions shall not be affected thereby. 
Section 17. Effectivity. This Act shall take effect after fifteen (15) days 
following its complete publication in at least two (2) national newspapers of 
general circulation. 
Approved,