49
50
5]
52
53
54
55
56
57
358
59

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

FIFTEENTH CONGRESS
First Regular Session

House BiilNo. 469

Introduced by AKBAYAN Party-List Representatives
Hon. Kaka Bag-ao and Hon. Walden Bello

EXPLANATORY NOTE

Since 1971 up to 1982, several coconut levies were collected from the production of
copra. The levy was based on the per kilo price of copra.

The first coconut levy started in 1971 upon the enactment of Republic Act 6260, other
wise known as the Coconut Investment Fund Law. It was collected to establish the Coconut
Investment Fund which. shall be used to support the coconut industry through the financing of
the producers and processors of coconut. The levy at that time was pegged at Php 0.55 for
every 100 kilograms of copra sold. The amount was to be collected for a period of ten (10)
years or until the amount of Php 100 million shall have been reached. Coconut receipts were
supposed to have been given but the manner by which they were issued made it difficult to
ascertain the effective owners resulting to the anomalous registration of receipts even to non-
copra producers.

In 1973 a Coconut Industry Stabilization Fund (CCSF) was established by virtue of P.D.
No. 276 imposing a levy of Php 15.00 for every 100 kilograms of copra. During the nine (9)
year period of its implementation, the levy ballooned to Php 100.00 per 100 kilo grams
depending on the export price, or Php 60.00 on the average. From the original CCSF, various
other funds sprouted such as the Coconut Industry Development Fund (CIDF) and the Coconut
Industry Investment Fund (CIF).

In October 1981 and by virtue of P.D. No. 1851, a Php 50.00 assessment was imposed
for every 100 kilo grams of copra. The collection was placed under the Coconut Industry
Stabilization Fund (CISF) for economic and development projects in the coconut industry.

While a miniscule part of the funds was used to for programs that benefited real
coconut farmers, the bigger portion was utilized to set-up a coconut monopoly (UCPB and
UNICOM included) that benefited Marcos and his cronies. Some PhP 4.75 billion administered
by the UCPB as well as the PhP 2.57 billion CIF were utilized to put up and/or buy out various
companies as a mechanism for total control all businesses within the coconut industry through
an interlocking directorate. Investments were made even to non-coconut related firms such as
the San Miguel Corporation.

Since the start of coco levy, total collection amounted to approximately PhP 9.7 billion,
The money invested in various companies has been earning income. To date the entire coco
levy is now estimated to be worth between PhP 120-130 billion.

There is much controversy as to the nature of the coconut levy fund. Under P.D. No.
276, the CCSF was declared as a public fund, but was not considered as part of the general
fund of the Philippine Government. Furthermore, under this law, it was earmarked as a trust
fund for the benefit of the coconut industry.


However, former President Marcos declared through Executive Order No. 490 and P.D.
No. 1468 that the nature of the funds shall be private

During the Aquino Administration, the change of the nature of the coco levy funds from
public to private was criticized for being unconstitutional because no tax can be imposed for a
private purpose.

Both the Ramos and Estrada administrations attempted to free the coco levy funds by
way of their respective E.0.s but to 10 avail.

The nature of the funds has been the subject of a legal battle between the government
and the private corporations and entities utilizing the coco levy funds. As a consequence, the
funds could not be utilized and were in fact not used for the benefit of their true owners, the
coconut farmers. It is ironic that after almost eighteen (18) years, the cases related to the coco
levy scam had never been concretely resolved in our courts to the great disadvantage of
millions of small coconut farmers and farm workers from whom the levy was collected.

During the Arroyo administration, the Presidential Commission on Good Governance and
the Office of the Solicitor-General have taken the position of resolving the issue through an out-
of-court settlement. This is a position that disregards the breakthrough jurisdiction issued by
the Supreme Court in favor of declaring the coco levy funds as public funds way back in
December 2001 that declares that the coco levy funds are prima facie public funds.

Unfortunately, the controversy over ownership of the coconut levy funds remains a
judicial question and cases are currently pending before the Supreme Court and the
Sandiganbayan. In the meantime, the industry and the more than 20 million people directly
and indirectly dependent on it continue to suffer.

We have decided to file this bill in order for Congress to be able to finally declare and
affirm that the coconut levy funds and the assets acquired through these funds are public in
nature. This affirmation and declaration is essential in achieving a just resolution of one of the
biggest issue of corruption in our country’s history and expedite the utilization of these funds to
serve the interests of the small coconut farmer,

In this light, immediate passage of this bill is earnestly sought.

CLL

Hon. AO Hon. WALDEN BELLO
tative, Akbayah Party-list Representative, Akbayan Party-list



106 Republic of the Philippines

107 HOUSE OF REPRESENTATIVES
108 , Quezon City, Metro Manila

109

110 FIFTEENTH CONGRESS

i First Regular Session

12

113 ; 463

14 House Bill No.

us

116

7 ;
ls Introduced by AKBAYAN Party-List Representatives
119 Hon. Kaka Bag-ao and Hon. Walden Bello
120

121

AN ACT
DECLARING AND REAFFIRMING THE COCO LEVY FUNDS AND ASSETS AS PUBLIC
FUND AND CREATING THE PRESIDENTIAL COCONUT INDUSTRY DEVELOPMENT
COUNCIL FOR PURPOSES OF MANAGEMENT THEREOF

&e it enacted by the Senate and House of Representatives in Congress assembled:

PRELIMINARY TITLE

SECTION 1. Short Title. This Act shall be known as the “Coco Levy Funds And Assets Are
Public Funds Act”

SEC. 2. Declaration of Policy. tis the policy of the State to:

(a) Adopt the necessary measures that will address the serious problems that beset industry,
threatening its viability;

() Promote the rapid integrated development and growth of the coconut and other palm oil
industry in all its aspects and to ensure that the coconut farmers, especially the small
coconut farmers, tillers, workers and owner-cultivators who comprise the overwhelming
majority of the people in the coconut industry, become direct participants in, and
beneficiaries of, such development and growth;

(C) Promote and institutionalize the participation of people's organizations and non-government
‘organizations in the coconut industry development process.

SEC. 3. Definition of Terms.

(a) Coconut Farmer ~ refers to one who actually does the act of farming or performing labor
in the production of coconuts in the farm. The farm work includes clearing, planting, caring
for trees, harvesting, gathering, and piling of nuts, hauling, husking, and copra-making.
Such farm activities, separately or otherwise, may also be referred to as “cultivation.” A
coconut farmer may be any of the following: (1) share tenant; (2) leasehold tenant or
lessee; (3) owner-farmer/owner-cultivator; or (4) farmworker as herein defined.

(b) Landowner — refers to a person who owns a parcel / parcels of coconut land but who does
Not participate in the farm work or labor involved in the production of coconuts;

(c) Owner-Farmer/Owner-Cultivator — refers to one wio owns the farm and who also
does actual farm work thereon;



162
163

164
165

166
167
168
169
170
171

172
173
174
175
176
177
178
179
180
181

182
183
184
185

(d) Leasehold Tenant/Lessee — refers to a person who, by himself or with the aid of his
immediate farm household, cultivates the land belonging to, or possessed by another with
the latter’s consent for purposes of agricultural production, for a price certain in money or in
produce or both. -

(e) Share Tenant — refers to a person who, by himself or with the aid of his immediate farm
household, cultivates the land belonging to, or possessed by another (landholder) pursuant
to a joint undertaking for agricultural production wherein one party furnishes land and the
other (share tenant) his labor, with either of both party contributing one or several of the
other items of production, and where the produce of the land is divided between the
landholder and the tenant.

(f) Farmworker ~ refers to one who does not own the farm he cultivates or works on, but is
remunerated in terms of wages for farm work or labor conducted on the farm;

(g) Small Coconut Farmer - refers to a person who is a share or leasehold tenant on a coconut
farm of any size, or an owner-cultivator on a coconut farm of an area of not more than five
(5) hectares. For the purposes of this Act, al! farmworkers shall be considered as small
coconut farmers regardless of the area of the farm being worked by him/ her.

SEC. 4. The whole Article III, entitled "Levies" of Presidential Decree No. 1468, as amended, is
hereby renumbered as Article IV and substituted to read as follows:

"ARTICLE IV
“LEVIES

"SECTION 1. LEVIES AND PUBLIC FUNDS. - ALL COCONUT LEVIES ARE HEREBY
REAFFIRMED AND DECLARED AS PUBLIC FUNDS. ANY FUTURE SIMILAR EXACTION
IMPOSED ON SMALL COCONUT FARMERS SHALL ALSO BE PUBLIC FUNDS.

“SEC. 2. COCONUT INDUSTRY REHABILITATION AND DEVELOPMENT FUND. - ALL THE
FUNDS ESTABLISHED FROM THE PROCEEDS OF THE LEVIES, INCLUDING THE
COCONUT INVESTMENT FUND (CIF), THE COCONUT CONSUMERS STABILIZATION
FUND (CCSF), THE COCONUT INDUSTRY DEVELOPMENT FUND (CIDF), THE COCONUT
DEVELOPMENT FUND (CDF), THE COCONUT INDUSTRY STABILIZATION FUND (CISF),
THE COCONUT RESERVE FUND (CRF) AND OTHERS, AS WELL AS ALL THE ASSETS
ACQUIRED OR ESTABLISHED THEREFROM - SUCH AS THE UNITED COCONUT
PLANTERS BANK ESTABLISHED AND/OR ACQUIRED UNDER PD 755, AND THE
COCONUT INDUSTRY INVESTMENT FUND COMPANIES -- AND ALL THE OTHER ASSETS
SET UP USING THE COCONUT LEVY COLLECTIONS SHALL FORM PART OF A SINGLE
FUND WHICH IS HEREBY CREATED TO BE KNOWN AS THE COCONUT INDUSTRY
REHABILITATION AND DEVELOPMENT FUND (CIRDF).

"SEC. 3. NATURE AND PRIMARY PURPOSE OF CIRDF. - THE COCONUT INDUSTRY
REHABILITATION AND DEVELOPMENT FUND SHALL NOT BE PART OF THE GENERAL
FUNDS OF THE NATIONAL GOVERNMENT AND SHALL BE USED EXCLUSIVELY FOR THE
REHABILITATION AND DEVELOPMENT OF THE COCONUT INDUSTRY AND THE
UPLIFTMENT OF THE LIVES OF THOSE DEPENDENT ON IT, PARTICULARLY THE SMALL
COCONUT FARMERS. THE CIRDF SHALL BE SUBJECT TO AUDITING RULES AND
REGULATIONS OF THE COMMISSION ON AUDIT.

"SEC. 4, ADMINISTRATION OF THE CIRDF - THE COCONUT INDUSTRY
REHABILITATION AND DEVELOPMENT FUND SHALL BE HELD, ADMINISTERED,
UTILIZED, AND/OR DISPOSED UNDER THE PROVISIONS OF TITLE III OF THIS ACT.

"SEC. 5. INVENTORY OF COCONUT LEVY-FUNDED ASSETS. - THE AUTHORITY AND
THE COMMISSION ON AUDIT SHALL IMMEDIATELY CONDUCT A THOROUGH
INVENTORY OF ALL ASSETS ACQUIRED OR FUNDED BY THE COCONUT LEVY
COLLECTIONS. WITHIN SIX (6) MONTHS AFTER THE EFFECTIVITY OF THIS ACT, THE
AUTHORITY AND THE COMMISSION ON AUDIT SHALL MAKE PUBLIC DISCLOSURE OF
THEIR FINDINGS.


"SEC. 6. AUDITING OF EXPENDITURES MADE OUT OF THE LEVY COLLECTIONS. - THE
COMMISSION ON AUDIT SHALL CONDUCT AN AUDIT OF ALL THE DISBURSEMENTS OR
EXPENDITURES MADE OUT OF THE LEVY COLLECTIONS WITH THE OBJECTIVE OF
DETERMINING WHETHER THOSE EXPENDITURES ARE IN ACCORDANCE WITH THE
PURPOSES FOR WHICH THE LEVIES WERE COLLECTED AND THE RULES AND
REGULATIONS CONCERNING THE DISBURSEMENT OF PUBLIC FUNDS. THE AUDIT
REPORT SHALL BE PUBLISHED IN AT LEAST TWO NEWSPAPERS OF NATIONAL
CIRCULATION. ON THE IMPROPER OR ILLEGAL USE OF THE LEVY COLLECTIONS, THE
COMMISSION ON AUDIT, THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT,
THE AUTHORITY, THE OFFICE OF THE SOLICITOR GENERAL, AND OTHER CONCERNED
GOVERNMENT AGENCIES SHALL IMMEDIATELY INSTITUTE THE NECESSARY ACTIONS
WITH THE PRIMARY OBJECTIVE OF RECOVERING THE AMOUNT(S) IMPROPERLY
USED.”

SEC. 5. Articles IV and V of the same Decree are hereby renumbered as Articles V and VI,
respectively.

SEC. 6. The Presidential Coconut Industry Development Council: Creation, Funding,
Main Functions. There is hereby created a Presidential Coconut Industry Development
Council, hereinafter referred to as the Council or PCIDC, under the immediate supervision of the
Office of the President, funded by recovered coconut levies and charged with the main
functions of: (a) administration and management of the coconut industry rehabilitation and
development fund (CIRDF), as established under the immediately foregoing Article; and (b)
implementation of the social component of the development of the coconut industry, as will be
specifically defined under Section 16 (d) of this Title.

SEC. 7. Composition of the Presidential Coconut Industry Development Council. The
Council shall be composed of nine (9) members, and assisted by a national secretariat. It shall
have provincial officers that shall primarily take charge of the functions and activities of the
Council at their respective jurisdictions.

SEC. 8. Composition of the Council. The Council shall be composed of nine (9) members,
as follows:

(a) Five (5) small coconut farmers, who shall be selected from among the nominees to be
drafted by genuine small coconut farmers’ organizations accredited by the Philippine
Coconut Authority (PCA);

(b) One (1) Non-government organization representative to be selected from among nominees
of national non-government organizations working for the upliftment of the coconut
farmers’ sector;

(c) The Chairperson of the UCPB-CIIF;

(d) The Chairperson of the Presidential Commission on Good Government or of whatever
agency eventually takes over its mandate and functions; and

(e) The Administrator of the PCA.

(f) At least four (4) of the Council's members shall be women.

‘The President shall designate the Chairperson of the Council.

The Council shall.meet as often as the exigencies of service may demand. The presence
of at least five (5) members shall constitute a quorum, and the vote of four members shall be
necessary for the adoption of any policy, rule, resolution, or decision, or any other act of the
Council.

The President of the Philippines may, after due consultation with coconut farmers’
organizations and non-government organizations working for the upliftment of the coconut
farmers’ sector, revise the membership of the Council, whenever the President deems it
necessary for the effective performance of the Council's functions, through an Administrative

der.


Except for the PCA Administrator, Chairpersons of the PCGG and UCPB-CIIF whose
membership in the Council shall be co-terminus with their incumbency, the other members of
the Council shall hold office for a term of three (3) years. Their performance shall be made
subject to a regular evaluation process. Membership to the Council shall only be to a maximum
of six years.

The benefits, privileges and emoluments of the Council shall be consistent with that of
the members of the PCA Governing Board.

SEC. 9, Powers and Functions of the Council. The Council shall have the following
powers and functions:

(a) In general, to formulate and implement policies in regard to the administration and
management of the coconut levy funds and assets heretofore pooled into the Coconut
Industry Rehabilitation and Development Fund (CIRDF);

(b) To inform and make coconut farmers more aware of their situation and problems and those
of the coconut industry, as a whole, as well as of the opportunities and prospects thereof;

(c) To review, and, if necessary, to redefine or redirect the policies of the establishments,
institutions, corporations, or any other entity acquired or established through the proceeds
of the coconut levies imposed by various decrees, in order that the purpose/s for which the
same were set up may be effectively pursued and/ or achieved;

(d) To formulate and implement programs for the social component of the development of the
coconut industry or such programs pertaining to: (1) organizing; (2) capacity and
capability-building; (3) cooperatives and entrepreneurial formations; (4) support services
for tenurial development; and (5) other relevant areas of concern germane to the social
aspect of the development of the industry;

With respect to organizing activities, the Council shall encourage and assist the formation
and/ or strengthening of coconut farmers’ voluntary and independent organizations,
eliminating therefor the obstacles to the exercise of said farmers’ right to self-organization;

(e) To cooperate with the coconut farmers, either individually, or organizationally, in the
monitoring of illegal cutting of coconut trees, illegal conversions of coconut lands to other
agricultural or nonagricultural purposes, and cases of illegal ejectment or exploitation of
coconut farmers, tenants, lessees, workers and owner-cultivators, and assisting them in the
filing and prosecution of, appropriate administrative and judicial cases to help protect their
rights;

(f) To extend all possible assistance to coconut farmers in pressing for the immediate and
thorough implementation of agrarian reform in all coconut lands. This includes the
implementation of both the land transfer scheme, and the non-land transfer scheme ~ such
as leasehold implementation -- of the reform program;

(g) To serve as the core consultative mechanism on matters relative to the coconut industry;

(h) To conduct liaison and coordinating activities between various government agencies,
including local government units as regards, programs, projects, and activities that would
involve the coconut industry.

SEC. 10. United Coconut Planters Bank. The Council, as administrator of the CIRDF, shall
redefine or redirect the policies of the United Coconut Planters Bank towards pursuance of the
very purpose for which ‘it was established.

SEC. 11. Transfer Of Coconut Levy-Funded Assets to the Council. In coordination with
the Office of the Solicitor General, the PCA, and other appropriate government agencies, the
Presidential Coconut Industry Development Council, shall draw up plans of action for the
immediate transfer of the coconut levy-funded assets to the Council as administrator of the
CIRDF.

SEC. 12. Safeguarding and Utilization of Levy-funded Assets. The Council shall, in
Coordination with and with the consent of, the coconut farmers and their organizations, study
and implement the best manner by which each of these coconut levy-funded assets can be


safeguarded and eventually utilized for the programs to be implemented for the development of
the coconut industry, the same programs being understood as ones that put emphasis on and
priority for the upliftment of the lives of the coconut farmers.

SEC. 13. Collection of Uncollected Levies. The Council shall make a public disclosure of
the coconut levies that have not yet been coliected. It shall draw up and implement a more
effective and efficient way of collecting the same, with the phrase “uncollected levies” being
understood to refer to any of the following: (a) such amounts that have already been paid by
or withheld from coconut farmers at the time of the sale of copra or other coconut products at
the farmgate but have not been remitted by the end-users of said products; or (b) such
amounts that have not yet been paid by end-users of copra and other coconut products at the
time the burden of the levy was transferred -- by various Decrees -- from coconut farmers to
coconut product end-users. Proceeds of the collection shall be added to the CIRDF.

SEC. 14. Administration and Disposition of all Funds and Assets. A\\ funds and assets
held or to be held by the Council in trust for, and for the benefit of, the coconut farmers shall
be administered, utilized and/or disposed of wholly or partially under the following guidelines:

(a) In general, the coconut levy furds and assets hitherto constituted as the Coconut Industry
Rehabilitation and Development Fund (CIRDF) shall be retained by the Council;

(b) The United Coconut and Planters Bank (UCPB) shall remain to be the financing / investment
arm of the coconut industry, in crder to secure reasonable returns for such portion of the
funds capitalized for investment ventures authorized by the Council. For this purpose, the
UCPB as well as the Coconut Industry Investment Fund - acquired companies shall retain
such amounts or portion of the funds — to be determined by the Council ~ as will ensure the
entities’ continued operation, the viability of investment returns from on-going transactions,
and the availability of funds necessary for the implementation of future projects;

(c) Notwithstanding the foregoing, the UCPB's continued operation shall be steered by the
‘overriding concern of providing effective and sustainable solution to the coconut farmers’
credit problems, for which purpose, the bank shall retain such portions of the CIRDF, or
profits therefrom, to be made available under a credit facility or scheme for the benefit of
coconut farmers, priority being given to small coconut farmers, as herein defined;

(d) Portions of the profits derived by UCPB and CIIF companies not needed for operation,
authorized financial commitments, or the credit facility/scheme for coconut farmers shall be
transferred to the Council for inclusion in the CIRDF;

(e) The Philippine Coconut Authority, being the body in charge of the technical aspect of the
development and rehabilitation of the coconut industry shall be allotted by the Council such
amounts or portions of the CIRDF as will enable it to implement programs and projects
relative to: (1) enhancement of coconut production; (2) preservation of the coconut
industry's resources; (3) promotion of coconut products; (4) research and development;
(5) prices and subsidies; and (6) exports and marketing, in general, all such areas of
concern being provided for under PD 1468;

(f) The Council, which is mandated to formulate and implement programs for the social
component of the development and rehabilitation of the coconut industry, shall allocate
funds necessary for the following: (1) organizing; (2) capacity and capability-building; (3)
cooperatives and entrepreneurial formations; (4) support services for tenurial development;
and (5) other relevant areas of concern germane to the social aspect of the development of
the industry;

(g) he implementation of the programs and projects of the PCA and the Council may be carried
out through or with the assistance of non-government organizations with proven capability
to undertake the same;

(h) The Council shall promulgate the rules and regulations for the enforcement of aforesaid
guidelines and shall publish the same in at least two (2) newspapers of general circulation.

SEC. 15. Farmers’ Representation in the respective Boards of the UCPB and CIIF-
acquired Companies, etc. The Board of the United Coconut Planters Bank, and that of the
Coconut Industry Investment Fund-acquired companies, and all other institutions or entities,
tasked to implement or monitor programs and projects for the coconut industry rehabilitation


397
398
399
400
401
402
403
404
405
406
407
408
409
410
41
412
413
4l4
AIS
416
417
418
419
420
421
422

and development, are hereby reconstituted to include such number of genuine coconut farmer
representatives, as will be determined by the PCA.

The PCA shall, within six months from the effectivity of this law, issue and implement its
guidelines concerning the coconut farmers’ representation in the respective Boards of aforesaid
institutions.

SEC. 16. Criminat Liability. Any person who is criminally liable as of the effectivity to the
coconut levies herein repealed or amended shall remain criminally liable, and nothing herein
shall extinguish such criminal liability.

SEC. 17. Separability Clause. If, for any reason, a provision of this Act is held void or
unconstitutional, the same shall not effect the validity of the rest of the provisions of this Act.

SEC. 18. Repealing Clause. All laws, decrees, executive orders, rules and regulations, and
other issuances or parts thereof inconsistent with this Act are hereby repealed, amended or
modified accordingly.

SEC. 19. Effectivity. This Act shall take effect fifteen (15) days from its publication in the
Official Gazette or in a national newspaper of general circulation.

APPROVED,