HOUSE °F REPRESENTATI

Republic of the Philippines RECEIVED

HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 102 | REISTRATION UNIT

| BILLS AND INDEX SERVICE
Introduced by: Hon. Angelina “Helen” D.L. Tan, ¥<D-———_—________!

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

EXPLANATORY NOTE

In 1971, Republic Act No. 6260 imposed the first levy on coconut farmers. The levies
collected from the coconut farmers, for which they were issued receipts to be converted into
shares of stock, were primarily used to establish the Coconut Investment Fund (CIF). The CIF
sought to provide adequate medium and capital investment in the coconut industry. Presidential
Decree No. 232 created the Philippine Coconut Authority (PCA), which took over the collection
of the coco levy.

By 1973, abnormal global market fluctuations for fats and oils prompted the issuance of
Presidential Decree No. 276, which established a Coconut Consumers Stabilization Fund
(CCSF). The CCSF which was funded by imposing an initial levy of Ps.00 per 100 kilos of copra
resicada or its equivalent on every first sale, shall be utilized to subsidize the sale of coconut-
based products.

By April 1974, Presidential Decree No. 414 granted the PCA additional powers such as
the authority to adjust the levy imposed. It also expanded the use of the CCSF for investment,
research and development, and extension 0 f services to the coconut industry.

A few months after the issuance of PD 414, Presidential Decree No. 582 created the
Coconut Industry Development Fund (CIDF). The CIDF, unlike the CCSF, is a permanent fund,
thereby making the collection of the coco levy permanent as well. The CIDF shall serve to
finance the establishment, operation and maintenance of a hybrid coconut seed nut farm.

By July 1975, Presidential Decree No. 755 empowered PCA to acquire the United
Coconut Planters Bank (UCPB) as a permanent solution to the perennial credit problems of the
coconut industry. The said issuance also mandated that all CCSF collections to the UCPB shall
be made interest free.

Presidential Decree No. 961, which codified all laws pertaining to the coconut industry;
provided a number of amendments to prior laws and issuances. The CCSF levy, for instance, was
passed on to the end users (Le. copra exporters and oil millers) from the coconut farmers. The
Presidential Decree also declared that both CCSF and CIDF shall be owned by coconut farmers
in their own private capacities. By virtue of the said legislation, UCPB was granted full authority
to make investments using the CIDF and CCSF surplus. Presidential Decree No. 1468 also gave
UCPB the sole right to administer the Coco Levy Funds. Such mandate led to the creation of the
Coconut Industry Investment Fund (CIIF).

The levy, primarily intended to insulate the local coconut industry and its consumers
from global market fluctuations for fats and oils, further expanded over time by virtue of
succeeding presidential decrees to provide funding for a comprehensive development program
to enable the industry to compete in the international market. Such funds were then transferred
to the Coconut Industry Development Fund (CIDF) and the Coconut Industry Investment Fund
(CIIF). The CIIF, for instance, was used to acquire the oil mills which now comprise the CIIF -
Oil Mills Group (CIIF-OMG). The CCSF, along with the CIDF and the CIIF, constitute what is
now known as the Coco Levy Funds.

Substantial collections have been accumulated from the imposition of the coco levy. By
1986, the Coco Levy Funds have amounted to as much as 9.7 Billion Pesos.


Almost forty years since its establishment, the Coco Levy Funds is now estimated to be
worth One Hundred Billion Pesos (Php100,000,000,000.00) in aggregate market value,
comprising various assets and entities such as the CIIF-OMG, including its 14 holding
companies, as well as the UCPB, United Coconut Chemicals (Cocochem), United Coconut
Planters International (UCPB), United Coconut Planters Assurance Corporation (Cocolife), and
the shares of stocks in San Miguel Corporation (SMC) that are owned by the CIIF-OMG
Companies.

Most, if not all, of the objectives for the creation of these funds have yet to be realized.
Under sequestration by the Presidential Commission on Good Government (PCGG), the
ownership of the assets acquired through the use of Coco Levy Funds remains in question. As a
result, neither the coconut industry nor the public benefited from the Coco Levy Funds.

With regard to the ownership issue of the Coco Levy Funds, a partial summary judgment
of the Sandiganbayan on the Republic v. COCOFED, et. al. (Civil Case No. 0033-F) dated May 7,
2004, stated that:

"WHEREFORE, in view of the foregoing, we hold that:

"The Motion for Partial Summary Judgment (Re: Defendants CIIF Companies, 14
Holding Companies and Cocofed, et al.) filed by Plaintiffs hereby GRANTED. ACCORDINGLY,
THE CIIF, NAMELY:

1. Southern Coconut Oil Mills (SOLCOM);

2. Cagayan de Oro Oil Co., Inc. (CAGOIL);

3. Iligan Coconut Industries, Inc. (ILICOCO);

4. San Pablo Manufacturing Corp. (SPMC);

5. Granexport Manufacturing Corp. (GRANEX); and
6. Legaspi Oil Co., Inc. (LEGOIL)

"AS WELL AS THE 14 HOLDING COMPANIES, NAMELY:

1. Soriano Shares, Inc.;
2. ACS Investors, Inc.;
3. Roxas Shares, Inc.;
4. Arc Investors, Inc.;
5. Toda Holdings, Inc.;
6. AP Holdings, In
7. Fernandez Holdings, Inc.;
8. SMC Officers Corps, In

9. Te Deum Resources, Inc.;
10. Anglo Ventures, Inc.;

11, Randy Allied Ventures, Inc.;
12. Rock Steel Resources, Inc.;
13. Valhalla Properties Ltd., Inc.; and
14, First Meridian Development, Inc.

"AND THE CIIF BLOCK OF SAN MIGUEL CORPORATION (SMC) SHARES OF STOCK
TOTALING 33,133,266 SHARES AS OF 1983 TOGETHER WITH ALL DIVIDENDS
DECLARED, PAID AND ISSUED THEREON AS WELL AS ANY INCREMENTS THERETO
ARISING FROM, BUT NOT LIMITED TO, EXERCISE OF PRE-EMPTIVE RIGHTS ARE
DECLARED OWNED BY THE GOVERNMENT IN TRUST FOR ALL THE COCONUT
FARMERS AND ORDERED RECONVEYED TO THE GOVERNMENT.

"The aforementioned Partial Summary Judgment is now deemed a separate appealable
judgment which finally disposes of the ownership of the CIIF Block of SMC Shares, without
prejudice to the continuation of proceedings with respect to the remaining claims particularly
those pertaining to the Cojuangco, et al. block of SMC shares.”

Furthermore, a Supreme Court decision on Republic v. COCOFED-et. al. provides that:

xxx


‘The Supreme Court, in its decision dated January 24, 2012, upheld the aforementioned
partial summary judgment of the Sandiganbayan, declaring that the six (6) CIIF~OMG
companies, their 14 holding firms, and the CIIF~OMG block of SMC shares as "owned by the
Government to be used only for the benefit of all coconut farmers and for the development of
the coconut industry”. Hence, putting finality on the legal battles as to the ownership and nature
of the Coco Levy Funds.

By December 2014, the Supreme Court has directed that an entry of judgment be made
on the case involving the 24-percent block of sequestered shares in San Miguel Corporation
acquired using coco levy funds during the martial law years, thus, stamping the final seal on the
ruling that the shares, bought using coconut levy funds and registered in the names of the
Coconut Industry Investment Fund, dubbed "CIIF block" of SMC shares, are owned by
government and to be used exclusively for the benefit of coconut farmers and the development
of the local coconut industry.

By March 2015, President Benigno S. Aquino III issued Executive Orders 179 and 180 on
the privatization and reconveyance of the coco levy funds that the Court had recently declared to
be public funds. EO 179 particularly requires the inventory, privatization and reconveyance in
favor of the government of all coconut levy assets, including but not limited to the shares of
stock in the United Coconut Planters Bank (UCPB), Coconut Industry Investment Fund (CIF)
Companies and CIIF Holding Companies, as well as the 5,500,000 San Miguel Corporation
shares registered in the name of the Presidential Commission on Good Government. EO 180, on
the other hand, ordered the immediate transfer and reconveyance of the coconut levy assets to
the government and use them for the Integrated Coconut Industry Roadmap and the Roadmap
for Coco Levy.

The Supreme Court, however, temporarily stopped the implementation of these orders
based on the petition filed by the Confederation of Coconut Farmers Organizations of the
Philippines, which argued that the disposition of the coco levy funds cannot be made without
prior legislative imprimatur and that they cannot be hastily and prematurely ‘implemented’ by
the President through mere EOs. The petitioners also contend that the executive orders were
“rushed” and would expose the fund to plunder.

To date, the disposition of coco levy funds remains unsettled. Therefore, a legislative
action on the disposition of the Coco Levy Funds is warranted.

This measure, which was approved on Third Reading by the House of Representatives on
October 9, 2015, comes at a critical time of the Philippine coconut industry. It is a product of
lengthy and careful deliberations with various stakeholders, more importantly, the coconut
farmers.

This is urgent because our coconut farmers have long been clamoring to see the purpose
by which the coconut levy was created, that is, to benefit the coconut farmers and the industry as
a whole. This has been long over due. It is important because a law that will govern the
utilization of the coconut levy fund is primordial in ensuring that the fund would only be utilized
for the benefit of the coconut farmers.

The Technical Working Group of the Committee on Agriculture and Food, which was
headed by this representation as its Chairperson, throughout the various deliberations that
produced this important piece of legislation is keenly aware of the letter and spirit which was
clearly enunciated in the January 24, 2012 decision of the Supreme Court. That is, “the coconut
levy funds are public funds” and that “coconut levies are treated as special funds by the very laws
which created them.” Accordingly, “These shares shall belong to the Government, which shall be
used only for the benefit of the coconut farmers and for the development of the coconut
industry.”

Among the important features of the bill are the following:

First, it consolidates all the coconut levy assets into a trust fund called the Coconut
Farmers and Industry Trust Fund.

Second, it delineates the Trust Fund from the General Fund, hence, preventing the
marriage of the two.


‘Third, it creates the Coconut Farmers and Industry Trust Fund Committee under the
Office of the President and to be chaired by the Secretary of Agriculture. It shall be tasked to
monitor the implementation of the Fund and the Coconut Industry Development Plan, which
shall be used as a guide in the utilization of the trust income.

Fourth, it empowers the Privatization and Management Office as the sole entity to
dispose of the coconut levy assets that have been approved for privatization.

Finally, it mandates the Presidential Commission on Good Government to conduct a
complete accounting and inventory of all coconut levy assets and for the Commission on Audit
to audit the inventory of coconut levy assets prepared by the PCGG.

Itis unfortunate that most of the coconut farmers during the time the levies were exacted
are already approaching their twilight years. Hence, the urgent need for government to fulfill its
promise that they be the ultimate beneficiaries of such funds.

In view of the foregoing, the passage of this bill is earnestly sought.

y
ANGELINA abcde. TAN, M.D.
4 District, Quezon


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 102

Introduced by: Hon. Angelina “Helen” D.L. Tan, M.D.

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

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

SECTION 1. Short Title. This Act shall be known as the "Coconut Farmers and Industry
Development Act.”

SEC. 2. Declaration of Policy. It is hereby declared the policy of the State to attain the
balanced, equitable, integrated and sustainable growth and development of the coconut
industry. Towards this end, the benefits due to coconut farmers, especially the poor and
marginalized, under various statutes shall be consolidated and their delivery expedited.

I
Definition of Terms

SEC. 3. Definition of Terms. - As used in this Act:

(a) Coconut Industry Investment Fund (CIIF), refers to the Fund created pursuant to
Presidential Decree No. 1468, which authorized the United Coconut Planters Bank (UCPB) to
utilize the surplus funds from the Coconut Consumers 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 activities and other allied business undertakings relating to the coconut
and other palm oils industry in all its aspects and the establishment of a research into the
commercial and industrial uses of coconut and other palm oil industry;

(b) CIF Holding Companies refer to the fourteen (14) holding companies, namely:
Anglo Ventures Corporation; ACS Investors, Incorporated; Arc Investors, Incorporated; AP
Holdings, Incorporated; Fernandez Holdings, Incorporated; First Meridian Development,
Incorporated; Randy Allied Ventures, Incorporated; Rock Steel Resources, Incorporated; Roxas
Shares, Incorporated; San Miguel Officers Corporation, Incorporated; Soriano Shares,
Incorporated; Te Deum Resources, Incorporated; Toda Holdings, Incorporated; and 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);

(©) _ CIF - Oil Mills Group refers to the six (6) CIIF companies, namely, Southern Luzon
Coconut Oil Mills; Cagayan de Oro Oil Company, Incorporated; Iligan Coconut Industries,
Incorporated; San Pablo Manufacturing Corporation; Granexport Manufacturing Corporation;
and Legaspi Oil Company, Incorporated, acquired by the UCPB using the CIIF;

(@_CIIF SMC Block Shares refer to the 33,133,266 shares of stock in SMC, sequestered
by the PCGG in April 1986 representing 31% of the total outstanding capital stock of SMC;

(©) Converted SMC Series 1 Preferred Shares refer to that portion of the CIIF SMC Block
Shares covering 753,848,312 preferred shares of stock in SMC representing 24% of the
outstanding capital stock of SMC;

() Coconut farmer refers to:

(4) Farmer-owner of a coconut farm, which is not more than five (5) hectares, who:


(i) ___ tills the land (owner-cultivator), or
(ii) does not till the land, but has control and supervision over the cultivation of a farm
which is not more than five (5) hectares; and

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

@__leaseholder or tenant who tills or supervises the cultivation of the farm; or
(ii) farm worker or laborer, whether seasonal or itinerant, engaged in the harvesting of
the nuts and processing of copra as major means of livelihood.

(g) Coconut Levy Assets refer to any and all kinds of property, whether real or personal,
tangible or intangible, wherever situated, which have been acquired through or otherwise
funded by the Coconut Levy Funds, including those assets that may be recovered in favor of the
government, as well as the fruits or income derived therefrom, including those acquired in
exchange or substitution thereof, including the following:

(a) _ the shares of stock in UCPB determined to be owned by the Government;
(2) the CIIF Oil Mills Group;

(3) _ the CIIF Holding Companies; and

(4) _ the Converted SMC Series 1 Preferred Shares.

(h) Coconut Levy Funds refer to various funds generated from levies, taxes, charges, and
other fees exacted or imposed pursuant to or in connection with the sale of copra rececada or its
equivalent in other coconut products, and collectedfor 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. These shall refer to any and all of the
following:

(2) the Coconut Investment Fund created under Republic Act No. 6260;

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

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

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

(5) the Coconut Reserve Fund under Presidential Decree No. 1468 and Presidential
Decree No. 1842.

() Investment Guidelines refer to the investment management guidelines, rules,
procedures, and policies to be formulated by the Coconut Farmers and Trust Fund Committee
created under Section 11 of this Act, and as may be amended from time to time, which shall
provide the parameters for investments of the Trust Income or any portion thereof, and shall
include, among others, asset allocation, criteria for selection of fund managers, and 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.

(k) Trust Principal refers to:

(1) 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, 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 the Treasury (BTr) and
the UCPB as administrator of the CIIF; any other cash Coconut Levy Asset including amounts
deposited in UCPB as Administrator of the CIF;

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

1
Audit and Reconveyance of Coconut Levy Assets


SEC. 4. Audit and Inventory of Coconut Levy Assets. - Upon the effectivity of this Act, the
Presidential Commission on Good Government (PCGG), created under Executive Order No. 1
(8.1986), shall conduct a complete accounting and inventory of the Coconut Levy Assets as well
as the investments, disbursements, 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 inventory of Coconut Levy Assets prepared and submitted by the
PCGG for the purpose of, among others, determining completeness of the inventory,
establishing the reasonableness of the asset valuation and tracing of the flow of the coconut levy
fund. The COA shall submit to the Coconut Farmers and Trust Fund Committee created under
Section 11 hereof its initial audit report within one hundred twenty (120) days upon completion
of the audit. However, further audit may be undertaken after the initial audit, as necessary.

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

Nothing herein shall be construed as preventing the PMO, created under Article III of
Executive Order No. 323 (S.2001), from procuring a third-party appraisal of any of the Coconut
Levy Assets prior to or in the course of preparing the privatization or disposition plans for the
said assets.

SEC. 5. Reconveyance of Coconut Levy Assets. - Immediately upon the effectivity of this
‘Act, the PCGG, the government representatives to the boards of sequestered/surrendered
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

(©) deposit all cash assets in the Trust Fund.

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

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

Ur
Coconut Farmers and Industry Trust Fund

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

SEC. 7. Purpose of the Trust Fund. - The Trust Fund shall be used exclusively for the
ultimate benefit of coconut farmers and farm workers as embodied in the Coconut Farmers and
Industry Development Plan prepared pursuant to Section 20 hereof.

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

In order to ensure the enduring character of the Trust Fund, the Principal thereof shall be
augmented by grants, donations and other lawful transfers by public or private entities.


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

(a) The Trust Principal shall be preserved and maintained at all times and only the Trust
Income may be used.

(b) The Trust Fund shall be disbursed only on the basis of the funding requirement of
the program, activity or project.

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

(d) No part of the Trust Fund shall be utilized for the payment of salaries and other
personnel benefits.

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
Presidential Decree 232 (8.1973), as amended by Presidential Decree No. 1468 (8.1978).

SEC. 10. Designation of the Bureau of the Treasury as Depository of the Trust Fund. -
‘The Trust Fund shall be deposited in the Bureau of the Treasury (BTr). The BTr shall account for
the Trust Fund in the manner provided by the Committee and shall perform such duties as may
be determined by the Committee.

Vv
Coconut Farmers and Industry Trust Fund Committee

SEC. 11. Creation of the Coconut Farmers and Industry Trust Fund Committee. - The
Coconut Farmers and Industry Trust Fund Committee, hereinafter referred to as the Committee,
is hereby created under the Office of the President.

The Committee shall have the following powers and functions:

(@) coordinate and monitor the implementation of the Coconut Farmers and Industry
Development Plan;

(b) approve any allowable disbursement out of the Trust Fund;

(c) formulate the Investment Guidelines including the Prohibited Investments;

(d) 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 its recommendation to the President;

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

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

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

(i) facilitate access by coconut farmers and their organizations from the most poverty
afflicted areas of the country to the services, programs and benefits implemented pursuant to
the Coconut Farmer and industry Development Plan. For purposes of this Act, those already
accredited farmers organizations need not go through another accreditation process;

(submit to the President reports and recommendations in connection with its
functions under this Act;

(k) appoint, transfer, suspend, or remove for cause, personnel of the Committee, and fix
their remuneration in accordance with the Salary Standardization Law; and

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

SEC. 12. Composition. - The Committee shall be composed of the following:
(a) Seven (7) representatives from the government who shall be serving in ex-officio

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


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

3) _ Secretary of the Department of Interior and Local Government (DILG);
(4) _ Secretary of the Department of Trade and Industry (DTD;

(5) Secretary of the National Anti-Poverty Commission (NAPC);

(6) _ Director-General of the National Economic Development Authority (NEDA); and
(7) Administrator of the PCA.

(b) Six (6) representatives from the coconut farmers’ organizations who have
considerable experience and reputable track records, allocated as follows:

(a) _ two (2) representatives from Luzon;

(2) two (2) representatives from Visayas; and

(3) two (2) representatives from Mindanao

Within thirty (30) days following the effectivity of this Act, the PCA shall promulgate a
selection process of nominees as representatives of the coconut farmers’ organizations in the
Committee. The nominees of the coconut farmers’ organizations shall be validated and
shortlisted by the PCA, in consultation with the NAPC. The list of nominees shall be submitted
to the President not later than sixty (60) days from the start of the selection process.

‘The government representatives in the Committee shall serve only during their respective
terms in office, while the six (6) representatives from coconut farmers organization shall each
hold a term of one (1) year, unless sooner removed for cause. Any of the representatives shall
continue to hold office until the successor is appointed: Provided, That any appointment to fill a
vacancy in the Committee shall be only for the unexpired term.

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

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

(a) any disbursement of funds involving more than Fifty million pesos
(PhP50,000,000.00);

(b) any proposed investment involving more than One hundred million pesos
(PhP100,000,000.00); and

(©) _ any disposition or privatization proposal involving more than Five hundred million
pesos (PhP500,000,000.00).

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

SEC. 15. Obligations of the Members of the Committee. - The members of the Committee
shall act with due care, diligence, skill, and good faith in all its dealings with the Trust Fund and
the Coconut Levy Assets. They shall avoid conflicts of interest and declare before the Committee
any interest they may have in any particular matter.

Where a member of the Committee receives any profit or benefit by virtue of the office,
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.

SEC. 16. Executive Director of the Committee. - The President, upon recommendation of
the Committee, shall appoint an Executive Director who shall exercise the following powers and
functions:

(a) administer the programs approved or promulgated by the Committee;


(b) direct and supervise officials, employees, representatives and agents for 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;

(@ keep and maintain official records and reports of the proceedings of the Committee;

(e) administer oaths in all matters falling within the jurisdiction of the Committee; and

(8) exercise such other duties as may be vested by the Committee that are consistent
with the provisions of this Act.

‘The PCA shall provide Secretariat support to the Committee.

SEC. 17. Cooperation with the Committee. - The Committee may also call upon any
department, bureau, office, agency, and instrumentality of the government, including
government-owned and controlled corporations for any assistance it may need in the discharge
of its functions and responsibilities.

SEC. 18. Accounting and Auditing. - The Committee shall maintain records and accounts
of all investments, income, receipts, disbursements and other transactions relating to the
management, administration and disposition of the Trust Fund. These records and accounts
shall be maintained in accordance with existing accounting and auditing laws, rules and
regulations. The Trust Fund shall be audited by the COA.

SEC. 19. Legal Counsel. - The Secretary of Justice shall be the ex-officio counsel to the
Committee on legal matters.

v
Coconut Farmers and Industry Development Plan

SEC. 20. Preparation of the Coconut Farmers and Industry Development Plan. - An Ad
Hoe Committee is hereby created to be composed of the Secretaries of the DA, the Department
of Agrarian Reform (DAR), the DTI, the Department of Science and Technology (DOST), the
Department of Energy (DOE), the Department of Public Works and Highways (DPWH), the
DILG, the NAPC, the National Economic Development Authority (NEDA), a representative from
the farmers’ groups. The Administrator of the PCA shall act as the Ad Hoc Committee's
Chairperson.

‘The Ad-Hoc Committee, in consultation with the coconut farmers and representatives of
the coconut industry, shall indicate in an integrated coconut industry strategy map the policies
for the development and rehabilitation of the coconut industry and shall prepare a five (5) year
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.

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

1) _ the increase in the income of coconut farmers and increase coconut productivity
including intercropping and livestock-raising;

2) the promotion of coconut-based enterprises including integrated processing of
coconut products and downstream products;

3) _ the provision of timely and critical support to coconut farmers organization and
development; and

4) the establishment of social protection programs that directly benefit coconut farmers
and farm workers, in case these social protection programs are not funded by an appropriations
law or any other special law, or where funding is insufficient.

The Plan shall provide an indicative funding requirement or allocation for the
implementation of any and all of the programs and projects to be funded by the Trust Income,
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 implementation of the whole
project, itemized according to the phases or stages of the project.


Within sixty (60) days from the effectivity of this Act, the Plan shall be submitted by the
Ad Hoc Committee to the Coconut Farmers and Industry Trust Fund Committee who shall, in
turn, submit the Plan to the President for approval. Immediately upon its approval, the Plan
shall be returned to the Committee for the disbursement of funds in accordance with the
provisions of this Act. Any amendment to the Plan shall require the approval of the President.

Ifthe 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.

VI
Privatization of the Coconut Levy Assets

SEC. 21. Privatization of the Coconut Levy Assets. - The Committee shall determine the
Coconut Levy Assets that shall be privatized. For this purpose, the Committee shall be guided by
the following factors:

(a) _ the functions or purposes for which the entity was created are no longer relevant to
the State or no longer consistent with the national development policy of the State;

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

(©) the entity is not producing the desired outcomes, or is no longer achieving the
objectives for which it was originally designed and implemented;

(d) _ the entity is dormant or non-operational;

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

(Q the function, purpose, or nature of operations of any group of entities requires
consolidation under a holding company.

The Committee shall submit its recommendation to the President for approval. The
Committee shall also arrange for the transfer of the Coconut Levy Assets approved for
privatization to the PMO, unless the President, upon the recommendation of the Committee,
designates another agency to preserve such Coconut Levy Assets pending privatization.

SEC. 22. Additional Mandate of the Privatization and Management Office (PMO). - In
addition to its powers and functions under Executive Order No. 323 dated December 6, 2000,
the PMO is authorized to dispose the Coco Levy Assets that have been approved for
privatization.

In the discharge of its mandate, the PMO shall:

(a) formulate and implement the marketing and disposition program after securing
prior approval of the Committee;

(b) _ take possession of and preserve such assets on behalf of the National Government;

(©) _ execute and deliver, on behalf of the National Government, deeds of sale, contracts,
trust instruments, and other legally operative documents as may be necessary or appropriate to
convey title to, take possession of, and conserve such assets;

(@ engage external expertise as may be necessary in the fulfillment of its tasks under
this Act; and

() adopt internal rules and regulations.

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

SEC. 23. Powers of the Privatization and Management Office. - The PMO is also
‘empowered to enter into sales through public bidding, negotiated sale, lease, or any form of
divestment or transmission of rights over the Coconut Levy Assets, Provided; That no Coconut
Levy Asset shall revert to the previous owners or their nominees or be sold to individuals who,
as determined by final judgment of a court of law, have mismanaged or diverted such assets.

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


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

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

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

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

Nothing herein shall be construed as authorizing the Committee or the PMO to
rehabilitate or allow investments of any and all Coconut Levy Assets transferred to the National
Government.

SEC. 24. Committee to Determine Transfer Value. - The Committee is hereby vested with
full and complete powers and prerogatives to determine transfer values and related valuations at
which the Coconut Levy Assets shall be transferred and conveyed to the PMO pursuant to the
mandate of this Act and upon reasonable consultation with a third-party appraiser: Provided,
That any valuation approved by the Committee for purposes of the transfer to the PMO shall not
be deemed a condonation, waiver, or extinguishment of any obligation by any party whose
vested rights may be impaired by such transfer.

SEC. 25. Remittance of Proceeds of Privatization. - All proceeds or receipts from the sale
of Coconut Levy Assets shall be remitted to the Trust Fund.

SEC. 26. Reporting Requirements. - The Committee shall, on a semi-annual basis, submit
to the President and to Congress a report on the status of disposition of the Coconut Levy Assets,
which shall include, among others, a description of the individual assets disposed of, the
purchasers thereof, the consideration received therefor, and the agreed terms of payment.

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

SEC. 27. Retention and Dissolution of Coconut Levy Assets. - The Committee shall identify
the Coconut Levy Assets that should be retained by the National Government or reorganized or
abolished, guided by the same standards mentioned in Section 21 of this Act. The Committee
shall submit its recommendation to the President for approval.

Coconut Levy Assets that have been approved for retention shalll be transferred to such
agency as may be designated by the President.

The Governance Commission on Government Owned or Controlled Corporations (GCG),
created under Republic Act No. 10149, shall implement the dissolution of those Coconut Levy
Assets that have been approved for abolition.

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

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

(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 first have been 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.

VI
Final Provisions

SEC. 29. Suppletory on Applicability of Republic Act No. 10149 and Executive Order 323.
- In the interpretation of the provisions of this Act, the provisions of Republic Act No. 10149,
otherwise known as the "GOCC Governance Act of 2011," and Executive Order 323, entitled
"Constituting an Inter-Agency Privatization Council (PC) and Creating A Privatization and
Management Office (PMO) Under The Department of Finance For The Continuing Privatization
of Government Assets and Corporations," except for Sections 2 and 3 of Article IV of E. 0. 323,
shall apply suppletorily.

SEC. 30. Implementing Rules and Regulations. - Within thirty (30) days from the date of
the effectivity of this Act, the Committee, in consultation with the PMO, shall formulate and
promulgate the rules and regulations for the proper implementation of this Act.

SEC. 31. Congressional Oversight. - The Congressional Oversight Committee on
Agricultural and Fisheries Modernization (COCAFM) 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 oversight functions of the Joint Oversight Committee on Public
Expenditures.

SEC. 32. Separability Clause. - If 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.

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

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

Approved,