Republic of the Philippines
HOUSE OF REPRESENTATIVI

NINETEENTH CONGRESS
First Regular Session
My BeOS

HOUSE BILL NO.

Introduced by Representative Lex Anthony Cris A. Colada

EXPLANATORY NOTE

From 1971 to 1982, small and marginalized coconut farmers have been remitting
coconut levy funds to the government. These funds were intended to support and advance
the development of the coconut industry for the benefit of coconut farmers

Various laws and issuances were signed to ensure that coconut levy funds were
collected throughout the years. These include:

1) On June 19, 1971, Republic Act 6260, known as the “Coconut Investment Fund”

(CIF) was implemented and authorized the collection from coconut farmers a sum

equivalent to P0.55 on the first domestic sale for every 100kg of copra;

On August 20, 1973, P.D. 276 created the Coconut Consumers Stabilization

Fund (CCSF) which imposed an additional of P45 for every 100kg sale of copra

resecada;

On November 14, 1974, the Coconut Industry Development Fund (CIDF) was

established to finance the establishment, operation, and maintenance of hybrid

coco seed farm and replanting program. The levy was made permanent; and

4) On October 2, 1981, PD 1841 (the Coconut Industry Stabilization Fund) revised
levies and imposed the amount of P50 for every 100kg of copra resecada and
later was raised to P100 per 100kg of copra.

2

3

As a testament to the effectivity of collections during the first decade of its
implementation, through the blood and sweat of the coconut farmers, the levy accumulated
the amount of P9.625 billion.

After the EDSA Revolution of 1986, the administration of the late former President
Corazon Aquino, through the Presidential Commission on Good Government, sequestered
all assets acquired by Marcos and his cronies including the coco levy funds. But despite the


huge amount of existing coconut levy funds, the genuine stakeholders - the small and
marginalized coconut farmers, remain underprivileged and the coconut industry remains
stagnant and dragged down

It is estimated that the coco levy funds, inclusive of earnings, interests and other
increments, have grown to some P200 billion according to a July 11, 2013 report of the
Philippine Daily inquirer.

It was a great moment when after almost four decades, the highest court of the land
affirmed that the funds were indeed owned by the small coconut farmers and should be
treated as public funds.

On January 24, 2012, the Supreme Court declared the CIIF block of shares as
having been purchased by means of the coconut levy funds and therefore should be treated
as public funds.

Executive Orders 312 and 313 of former President Estrada, which sought to privatize
shares in San Miguel Corporation that were bought with coco levy funds, were junked by
the Supreme Court in April 2012.

The series of promulgations of the Supreme Court in September and November
2012 declared that the Cojuangco’s claims to the UCPB and SMC stocks that were bought
with the coco levy funds are public funds, On October 5, 2012, San Miguel Corporation
formally paid the government, through the PCGG, the sum of almost P58 billion for the
preferred shares it bought.

In the most recent ruling of the Supreme Court dated July 9, 2013, the high court
upheld its decision that shares in the UCPB of Cojuangco were owned by the government.
The coconut levy funds should be used for the benefit of the small and marginalized
coconut farmers and farm workers.

The abovementioned decisions by the courts regarding the coco levy funds affirm
the need to return these funds to their rightful owners. It is ironic that coconut, popularly
dubbed as the “tree of life,” has been the source of so much bitterness and hardship for our
small and marginalized farmers.

This bill seeks to address the decades-long struggle of coconut farmers by enacting
a genuine law on the use of the coconut levy funds. It is meant to provide a mechanism to
protect the rights, welfare and interest of the small and marginalized coconut farmers and
farm workers. ad

In view of the forgoing, the passage of this bill is earnestly sought,

LEX ANTHONY CRIS A.COLADA
AAMBIS-Owa Party-list


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

NINETEENTH CONGRESS
First Regular Session
° 258
House Bill No

Introduced by Representative Lex Anthony Cris A. Colada

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

Section 1. Short Title. This Act shall be known as the "Coconut Farmers and
Industry Development Trust Fund Act."

Section 2. Declaration of Policy. It is hereby declared the policy of the State to
pursue and attain the balanced, equitable, integrated, and sustainable growth and
development of the coconut industry. Towards this end, the State shall adopt
the necessary measures to immediately address the serious problems besetting
the coconut industry, protect the socio-economic well-being of coconut farmers,
and ensure that the benefits due them, especially the poor and the
marginalized, under various statutes shall be consolidated and their delivery
expedited. Any measure or program undertaken in accordance to this Act shall
be deemed complementary to and shall not be a replacement for existing and
potential coconut development programs already conducted by other agencies.

Chapter 1
Definition of Terms

Section 3. Definition of Terms. As used in this Act:

a. Coconut Industry Investment Fund (CIIF) refers to the Fund created
pursuant to Presidential Decree (PD) No. 1468, which authorized the
United Coconut Planters Bank (UCPB) to utilize the surplus funds from
the Coconut Consumers Stabilization Fund (CCSF) and the Coconut
Industry Development Fund (CIDF) for investments in the form of
shares of stock in corporations organized for the purpose of engaging
in the establishment and operation of industries, commercial acti
and other allied business undertakings related to the coconut industry

1


in all its aspects and the establishment of a research program into the
commercial and industrial uses of coconut.

CIF Holding Companies refer to the fourteen (14) holding companies,
namely: (1) Anglo Ventures Corporation; (2) ASC Investors, Inc. ; (3) Arc
Investors, Incorporated; (4) AP Holdings, Incorporated; (5) Fernandez
Holdings, Incorporated; (6) First Meridian Development, Inc.; (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 stocks of San
Miguel Corporation (SMC).

CIIF Oil Mills Group refers to the six (6) CIIF companies, namely: (1)
Southern Luzon Coconut Oil Mills; (2) Cagayan de Oro Oil Company,
Incorporated; (3) lligan Coconut Industries, Incorporated; (4) San Pablo
Manufacturing Corporation; (5) Granexport Manufacturing Corporation;
and (6) Legaspi Oil Company, Incorporated, acquired by the UCPB
using the CIIF.

CIF SMC Block Shares refer to the thirty-three million one hundred
thirty-three thousand and 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 | Preferred Shares refer to that portion of
the CIIF SMC Block Shares covering seven hundred fifty-three million
eight hundred forty-eight thousand and three hundred twelve
(753,848,312) preferred shares of stock in SMC representing twenty-
four percent (24%) of the outstanding capital stock of SMC.

Coconut Farmer refers to:
4. Farmer-owner of a coconut farm who:

a) Tills the land (owner-cultivator); or
b) 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:

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

b) Farm worker or laborer, whether seasonal or itinerant, engaged
in the harvesting of the nuts and processing of copra as major
means of livelinood.


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 but not limited to the
following:

4, The shares of stock in the UCPB determined to be owned by the
Government;

2. The CIIF Oil Mills Group;

3. The CIIF Holding Companies;

4, The Converted SMC Series 1 Preferred Shares; and

5, Remaining ClIF SMC Block Shares or the proceeds of their sale.

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, dessicators,
and other end users of copra rececada or its equivalent in other
coconut products. These shall refer to any and all of the following:

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

2. The Coconut Consumer Stabilization Fund, later renamed as the
Coconut Stabilization Fund, created under PD No. 276;

3. The Coconut Industry Development Fund created under PD No. 582;

4. The Coconut Industry Investment Fund created pursuant to PD No.
1468; and

5. The Coconut Reserve Fund under PD No. 1468 and PD No. 1842.

Investment Guidelines refer to the investment management
guidelines, rules, procedures, and policies to be formulated by the
Coconut Farmers and Industry 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.

Trust Income refers to the income, interest earnings, and other
monetary benefits realized by and accruing to the Trust Fund or any
portion thereof,

Trust Principal refers to:


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

2. Any and all proceeds of privatization of the Coco Levy Assets
remitted thereto by the Privatization and Management Office (PMO)
organized under Article Ill of Executive Order (EO) No. 323 (s.
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.

Chapter Il
Audit and Reconveyance of Coconut Levy Assets

Section 4, Audit and Inventory of Coconut Levy Assets. Upon the effectivity
of this Act, the PCGG shall conduct a complete accounting and inventory of the
Coconut Levy Assets as well as the investments, disbursement, and
expenditures relating to the coconut levy fund and submit a certified report to the
BTr, the Commission on Audit (COA), and the Office of the President (OP).

The COA shall audit the Report on the Accounting and Inventory of the Coconut
Levy Assets prepared and submitted by the PCGG for the purpose of, among
others, determining completeness of said inventory, the existence of the subject
assets, establishing the reasonableness of the asset valuation, and tracing of
the flow of the coconut levy fund.

The COA shall submit to the PCGG its initial audit report, the reviewed Report on
the Accounting and Inventory of the Coconut Levy Assets, and the valuation as welll
as the empirical basis and methodologies employed for said valuation, together with
its observations for revision and compliance, within ninety (80) days from
submission of the Report on the Accounting and Inventory of the Coconut Levy
Assets. However, if necessary, further audit may be undertaken after the initial
audit

The PCGG shall then incorporate the COA’s observations for revision and
compliance in the Report on the Accounting and Inventory of the Coconut Levy
Assets and submit the revised version to the COA within thirty (30) days, subject to
reasonable time extension, from the submission of the COA’s observations for
revision and compliance.

After determining that the observations for revision and compliance were
incorporated in the revised Report on the Accounting and Inventory of the Coconut
Levy Assets by the PCGG, the COA shall submit the final version of the Report on
the Accounting and Inventory of the Coconut Levy Assets to the Committee, as well
as the empirical basis and methodologies employed for the valuation.


The Committee shall publish the same, within fifteen (15) days from its receipt of
the final version of the Report on the Accounting and Inventory of the Coconut Levy
Assets, in at least two (2) newspapers of national circulation.

Section 5. Reconveyance of Coconut Levy Assets. immediately upon the
effectivity of this Act, the PCGG, the government representatives to the boards
of sequestered/surrendered corporations, 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 safekeeping: and

c. Deposit all cash assets in the Trust Fund.

Any provision of the law to the contrary notwithstanding, the BTr and the UCPB
shall directly remit the initial Trust Principal to the Trust Fund; Provided, That the
BTr shall transfer the remaining cash assets from the special account in the General
Fund within a period of five (5) years in equal amounts each year.

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

The COA shall also conduct the regular financial and compliance audit of the
Coconut Levy Assets, and submit the annual audit report thereon as mandated by
the government auditing rules and regulations, until said assets are privatized.

Chapter Ill
Coconut Farmers and Industry Development Trust Fund

Section 6. The Coconut Farmers and Industry Development Trust Fund.
There is hereby created a trust fund to be maintained for a period not to exceed
thirty (30) years or until the fund is fully utilized 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 be derived from the General Fund of the National
Government; Provided That, any unutilized balance in the Trust Fund after thirty (30)
years shall revert to the General Fund of the National Government, and 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 coconut industry or for the purposes
of privatization, in which case the proceeds of such privatization shall form part of
the Trust Fund.

Section 7. Purpose of the Trust Fund. The Trust Fund shall be used
exclusively for the ultimate benefit of coconut farmers and for the development of


the coconut industry, as embodied in the Coconut Farmers and Industry
Development Plan to be prepared pursuant to Section 21 hereof.

Section 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 the 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 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.

Section 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. Ten Billion Pesos (PHP 10,000,000,000.00) of the initial trust principal,
which shall be known as the Jumpstart Fund, may be used within two
(2) years commencing from the approval of the plan by the President
to jumpstart the development of the industry;

b. All disbursements shall only be made on the basis of the funding
requirement of the program, activity, or project by the Committee as
provided in the Coconut Farmers and Industry Development Plan:
Provided, That an annual allocation of at least Five Billion Pesos shall be
released for the programs and projects provided under this Act; and

c. The ceiling for 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 shall
be provided in the Implementing Rules and Regulations under Section 26
of this Act.

All releases from the Trust Fund approved by the Committee shall be released
directly to the implementing agencies; Provided That, coconut productivity and
developmental programs and projects shall be implemented by the Philippine
Coconut Authority (PCA) created under PD No. 232 (s. 1973), as amended by PD
No. 1468 (s. 1978). Other coconut productivity and developmental programs and
projects implemented by other agencies shall be closely coordinated with the PCA.

Disbursements or expenditures by the concemed 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
existing laws, and to appropriate criminal action under existing penal laws.
Disbursements of the funds should be done in accordance with the Government
Accounting Manual and all other related laws, rules, and regulations.

6


Section 10. Designation of the Bureau of the Treasury 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.

b.

d.

Hold and account the Trust Fund in the manner set forth by the
Committee;

Release funds directly to the implementing agencies upon the
instruction of the Committee;

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

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 and Industry Trust Fund

Committee

Section 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 OP.

The Committee shall have the following powers and functions:

a

b.

©.

Coordinate and monitor the implementation of the Coconut Farmers and
Industry Development Plan;

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

Formulate the Investment Guidelines pursuant to the allowable
investment stated in Section 28 of this Act;

Appoint a fund manager, if necessary, to handle the investment of the
Trust Principal

Identify the Coconut Levy Assets that will be privatized, retained, or
abolished and submit és recommendation to the President for approval;
Approve the marketing and disposition program for the Coconut Levy
Assets approved for privatization;

After obtaining the approval of the President, authorize the sale and other
mode of privatization of Coconut Levy Assets approved for privatization;
Authorize the rehabilitation of Coconut Levy Assets approved for
privatization pending actual disposition;

Submit reports and recommendations to the President in connection with
its functions under this Act: and

Exercise such other incidental powers and functions as may be
necessary to attain the objectives of this Act.

The PCA shall provide Secretariat support to the Committee

iz


Section 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:
Secretary of the Department of Agriculture (DA), as Chairperson;

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

|. Secretary of the Department of Trade and Industry (DTI);

. Secretary of the National Economic and Development Authority

(NEDA) ;

. Administrator of the PCA; and

. A representative from the Office of the Executive Secretary.

b. Three (3) representatives from the cocanut farmers’ organizations, one (1)
from Luzon, one (1) from Visayas, and one (1) from Mindanao, who have
considerable experience, substantial membership, and reputable track
records

c. Two (2) representatives from the coconut industry sector who have
considerable experience and reputable track records.

Rone

on

The nominees of the coconut farmers’ organizations shall be validated and
shortlisted by the PCA. The list of nominees, which shall number at least three (3)
per island group, 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 froma list of nominees, which
shall number at least six (6), submitted by the PCA

The government representatives in the Committee shall serve only during their
respective terms in office. The representatives from the coconut farmers’
organizations and 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.

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

Section 14. Meetings of the Committee. The Committee shall meet 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 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 (Php 50,000,000.00);

b, Any proposed investment involving more than One Hundred Million
Pesos (Php 100,000,000.00); and

c. All dispositions or privatization proposals.


Provided further, That the disbursements requiring the approval of at least a majority
of the members of the Committee may be subject to the President's disallowance.

The Chairperson, if unavailable, may designate the Vice Chairperson to convene
the Committee and preside over the Committee's meeting on behalf of the
Chairperson.

Section 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 the COA rules and regulations.

Section 16. Obligations of the Members of the Committee. The members of
the Committee shall act with due care, diligence, skill, and good faith in alll 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 his
office, including acquiring shares in corporations that form part of the Coconut
Levy Assets, using the Coconut Levy Assets for one’s benefit, receiving
commission on contracts from the Coconut Levy Assets, 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 replacement
of the member who performs such acts.

Section 17. Executive Director of the Committee. The administrator of the PCA
shall be appointed as Executive Director of the Committee.

The Executive Director shall have the following powers and functions:

a. Execute policies and administer the programs approved or promulgated
by the Committee;

b. Monitor the progress of the implementation of the Plan and submit
periodic reports to the Committee;

©. 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 Congress;

d. 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

f. Exercise such other duties as may be vested by the Committee that
are consistent with the provisions of this Act.


Section 18. Cooperation with the Committee. The Committee may also call
upon any department, bureau, office, agency, and instrumentality of the
Government, including Government-Owned or -Controlled Corporations (GOCCs),
for any assistance it may need in the discharge of its functions and
responsibilities as well as in the implementation of its programs and projects.

Section 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.

Section 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

Section 21. Preparation of the Coconut Farmers and Industry Development
Plan. An Ad Hoc Committee is hereby created to be composed of technical
officials from the Department of Agriculture, the Department of Agrarian Reform,
the Department of the Interior and Local Government, the Department of
Finance, the Department of Public Works and Highways, the Department of
Science and Technology, the Department of Social Welfare and Development,
Department of Health, the Department of Trade and Industry, the Department of
Budget and Management, the National Economic and Development Authority, the
National Anti-Poverty Commission, the Technical Education and Skills
Development Authority, the Land Bank of the Philippines, and the Development
Bank of the Philippines.

in addition, twelve (12) representatives from the coconut farmers’ organizations
composed of four (4) from Luzon, four (4) from Visayas, and four (4) from Mindanao;
and four (4) representatives from the different coconut industry sectors who all have
considerable experience, substantial membership, and reputable track records, shall
also be members of the Ad Hoc Committee.

The nomination process of the representatives from the coconut farmers
organizations and the different coconut industry sectors shall be the same as that in
Chapter IV, Section 12 of this Act; Provided, That, the list of nominees from the
coconut farmers’ organizations shall number at least twelve (12) per island group;
Provided, also, that eight (8) of the twelve (12) representatives from the Coconut
Farmers’ Organizations must not have more than five (5) hectares of coconut farm
landholding; Provided Further, That, the list of nominees from the coconut industry
sector shall number at least twelve (12).

The Administrator of the PCA shall act as the Ad Hoc Committee's Chairperson.


The members of the Ad Hoc Committee shall be compensated in the same manner
as that of the Committee under Chapter !V, Section 15 of this Act.

The Ad Hoc Committee, in consultation with coconut farmers’ organizations,
industry associations, civil society organizations, academe, concerned government
agencies, and other stakeholders in the coconut industry shall indicate in an
integrated coconut industry strategy the policies for the development and
rehabilitation of the coconut industry. It shall prepare every five (5) years, or as
determined by the Committee, 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, hereinafter referred to as
the Plan. The Plan shall be consistent with the Philippine Development Plan and
shall be subject to mandatory review every year.

The Administrator of the PCA shall submit an annual report to the Committee on the
status of the implementation of the Plan and its corresponding programs/projects.

The PCA shall commission an independent study on the third year, or any other date
as may be determined by the Committee, to assess the impact of the programs and
projects in the Plan. The results of the independent study shall be one of the bases
to update the Plan. The conduct of the study shall be chargeable to the regular funds
of the PCA.

In the formulation of the Plan, the Ad Hoc Committee shall be guided by the
following abjectives:

a. Increase in the income of coconut farmers and increase coconut
productivity including intercropping 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 organization;
and

e. Establishment of social protection programs that directly benefit the
coconut farmers and farm workers, in case these social protection
programs are not funded by an appropriations law or any other special
laws, or where funding is insufficient. The social protection programs shall
include: (1) social services such as life, medical, 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; and (3) livelihood programs.

The Plan shall provide an indicative funding requirement or allocation for the
implementation of any and all of the programs and projects, which funding or
allocation shall be itemized or broken down on a project-to-project basis; Provided,
That (a) 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 (b) for projects that are to be implemented or concluded within a period
of time, the allocation shall indicate the total fund that may be required for the

cb


implementation of the whole project, itemized according to the phases or stages of
the project. The Plan shall also include the contribution of the regular budget of the
PCA,

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 Committee which shall, in turn, submit the Plan to the President, as endorsed by
the Economic Development Cluster, 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, as endorsed by the Economic Development Cluster.

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 approved,

Chapter VI
Privatization of the Coconut Levy Assets

Section 22. Privatization of Coconut Levy Assets. Pursuant to the national policy
on the efficient and transparent privatization of government assets (including
GOCCs) which are unnecessary or inappropriate for the government sector to
maintain:

a. The Governance Commission for Government-Owned or -Controlled
Corporations shall determine whether it is to the best interest of the
Government to privatize any non-cash Coco Levy Asset and recommend to
the President the privatization and the mode of the divestment, taking into
account the need fo generate maximum cash recovery and the implications
of such divestment on the coconut industry.

b. The PMO shall be the disposition entity for non-cash Coconut Levy Assets
which shall have been approved for divestment by the President and shall
expeditiously sell, alienate, or dispose of the same upon securing the
favorable recommendation of the Privatization Council pursuant to EO No.
323 (s. 2000) and other relevant laws, orders, rules, and regulations, and
the prior approval of the Committee. In the discharge of this additional
mandate, the PMO is hereby empowered to implement the actual
marketing/disposition program for the non-cash Coconut Levy Assets, to
execute and deliver, on behalf of the Government, the deeds of sale,
contracts, and other instruments as may be necessary or appropriate to
convey title to such assets to take possession of and conserve the non-
cash Coco Levy Assets transferred to it, and engage external expertise as.
may be necessary in the fulfillment of its tasks under this Act. Any sale and
other mode of privatization shall not be considered final unless favorably
recommended by the Privatization Council and approved by the
Committee.

c. The PMO shall, within three (3) months from the closure of its books at the
end of each fiscal year, submit a comprehensive annual report to the
President, through the Privatization Council, on the status of its
privatization efforts and its disposition program for the non-cash Coco Levy

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Assets, which report shall include a description of the assets privatized and
disposed of, the purchasers, the consideration received, and the agreed
terms of payment.

Section 23. Proceeds from Privatization. All proceeds and receipts or revenues
arising out of or in connection with the privatization of the Coconut Levy Assets shall
be deposited to the Trust Fund, after deducting reasonable expenses actually,
directly, and exclusively incurred by the PMO in connection with such privatization
as stated under Section 22 hereof.

Section 24. Allowable Investment. The Committee shall manage the Trust Principal
with the skill, care, prudence, and diligence necessary under the circumstances that
@ prudent person acting in like capacity and familiar with such matters would
exercise in the conduct of an enterprise of a like character 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

@. Bonds, securities, 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

b. Bonds, securities, promissory notes, or other evidence of indebtedness of
government financial 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 implementing rules
and regulations; and

©. Deposits and loans and/or investments in any domestic bank doing
business in the Philippines 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.

Chapter Vit
Final Provisions

Section 25. Suppletory Application of Republic Act No. 10149 and Executive
Order No. 323. In the interpretation of the provisions of this Act, the provisions of RA
No. 10149, otherwise known as the "GOCC Governance Act of 2011,” shall apply
suppletorily. EO No. 323, entitled, “Constituting an Inter-Agency Privatization
Council and Creating a Privatization and Management Office under the Department
of Finance for the Continuing Privatization of Government Assets and Corporations,”
shall also apply suppletorily.

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Section 26. Implementing 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.

Section 27, Congressional Oversight. The Congressional Oversight Committee on
Agricultural and Fisheries Modernization shall exercise oversight functions over the
implementation of this Act. The financial review of the program in relation to its
performance indicators shall be subject to the oversight functions of the Joint
Congressional Oversight Committee on Public Enterprises.

Section 28. Separability Clause. \f any provision of this Act is declared invalid or
unconstitutional, the other provisions not affected by such declaration shall remain in
full force and effect.

Section 29. Repealing Clause. All laws, executive and administrative orders, rules
and regulations inconsistent with this Act are hereby repealed or amended
accordingly.

Section 30. Effectivity. This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.