Coconut Investment Fund and Company Act

National policy and purposes

Section 2 declares the national policy to accelerate the development of the coconut industry by providing adequate medium and long-term financing for capital investment in the industry.
Section 2 establishes a financing mechanism through a Coconut Investment Fund capitalized and administered by coconut farmers through a Coconut Investment Company.
Section 4 makes the Company responsible for maximizing coconut planters’ potential and giving them greater responsibility in directing and developing the coconut industry.
Section 4 directs the Company to accelerate growth of the coconut industry and related products from raw material to semi-finished and finally to finished product stages.
Section 4 mandates improvement, development, and expansion of the marketing system.
Section 4 requires ensuring stable and better incomes for coconut farmers.

Coconut Investment Company: creation and organization

Section 3 creates a corporation known as the “Coconut Investment Company” to administer the Coconut Investment Fund established under Section 8.
Section 3 requires the Company to be organized within six (6) months after the approval of the Act.
Section 3 sets the principal place of business in the Greater Manila area, which is the Company’s domicile.
Section 3 authorizes the Company to establish branches or agencies within or outside the Philippines as necessary.

Corporate capitalization and transition to private corporation

Section 6 capitalizes the Company at PHP 100,000,000, divided into 10,000,000 common shares with a par value of PHP 10 each.
Section 6 requires subscription by the Government of the Republic of the Philippines for and on behalf of coconut farmers.
Section 6 provides that initial capitalization is paid from the proceeds of the levy imposed under Section 8.
Section 7 provides for a transition mechanism: after full payment of authorized capital stock (evidenced by receipts for levies paid) or upon termination of a ten-year period from the start of levy collection under Section 8, whichever comes first, government-held shares for and on behalf of coconut farmers are transferred.
Section 7 requires coconut farmers to incorporate as a private entity under Act Numbered One thousand four hundred fifty-nine, as amended after the transfer.
Section 7 provides that all powers, privileges, and rights initially endowed on the Company transfer to the new corporation, together with all outstanding assets and liabilities, except the right to levy.
Section 7 terminates the levy upon issuance of a certification of registration by the Securities and Exchange Commission to the Coconut Investment Company as a private corporation.

Company powers and permitted financing activities

Section 5 authorizes the Company to grant medium and long term loans to Filipino citizens or enterprises with at least seventy percent (70%) Filipino ownership.
Section 5 limits loan use to financing establishment, development, and expansion of new and/or existing coconut agricultural, industrial, or other productive enterprises with proven profitability or great profit potential.
Section 5 requires that priority in loan grants be given to bona-fide coconut farmers or associations owned or controlled by such farmers.
Section 5 requires that loans be properly secured in accordance with existing banking laws.
Section 5 mandates allocation: not less than sixty percent (60%) of total loanable funds to coconut farmers must go to coconut farmers owning not more than ten hectares.
Section 5 authorizes the Company to invest in shares of stock of corporations with at least seventy percent (70%) Filipino ownership for financing coconut industrial, financial, and marketing enterprises with proven profitability or great profit potential.
Section 5 authorizes organizing subsidiaries to construct, establish, and operate coconut centrals or mills and other collateral and support enterprises enhancing development, integration, and modernization of the coconut industry.
Section 5 authorizes financing technical and economic research studies, promotional programs, scholarship grants, and industrial manpower development projects for the coconut industry.
Section 5 authorizes issuing bonds and other certificates of indebtedness of an amount not exceeding one hundred million pesos (P100,000,000), with proceeds used exclusively in lending and investment operations, subject to approval of the Monetary Board.
Section 5 grants tax and process exemptions for bonds issued under the Act: the bonds are exempt from taxation, attachment, execution and seizure.
Section 5 authorizes entering into contracts and executing acts necessary to carry out the Act’s purposes.

Coconut Investment Fund levy and required allocations

Section 8 imposes on the coconut farmer a levy equivalent to fifty-five centavos (P0.55) on the first domestic sale of every one hundred kilograms of copra, or its equivalent in other coconut products, with a receipt to be issued.
Section 8 provides that the receipts are converted into shares of stock of the Company upon incorporation as a private corporation under Section 7.
Section 8 requires that for every P0.55 collected, P0.50 is set aside to constitute the Coconut Investment Fund, used exclusively to pay the Philippine Government’s subscription for and on behalf of coconut farmers to the Company’s capital stock.
Section 8 requires the levy to continue until the authorized capital stock of PHP 100,000,000 is fully paid.
Section 8 limits levy collection to not longer than ten years from the start of collection.
Section 8 requires PHILCOA to prescribe and promulgate, in consultation with the recognized national association of coconut producers with the largest number of membership as determined by PHILCOA, the rules and procedures for collecting the levy and issuing receipts.
Section 8 makes receipts and/or certificates non-transferable except to coconut farmers only and to the company.
Section 8 limits operational expenses of the Company to be charged against the earnings and/or profits of the Fund.
Section 8 mandates that one-tenth of the Fund’s earnings for each year is used to finance technical and economic research studies, promotional programs, scholarship grants, and industrial manpower development programs for the coconut industry.

PHILCOA collection, trustee functions, and Fund expenses

Section 9 designates PHILCOA as the entity to collect the levy and immediately deposit proceeds in an interest-earning account with the Development Bank of the Philippines or any other government-owned or controlled banking institution, credited to the Fund.
Section 9 provides that deposits made by PHILCOA to the credit of the Fund must be transferred to the Company immediately upon its establishment.
Section 9 requires PHILCOA, within six (6) months from approval, to completely set up the legal and administrative structure for collection and issuance of receipts, in consultation with the recognized national association of coconut producers with the largest number of membership as determined by PHILCOA.
Section 9 provides that payments accrue from the time the structure functions, as determined by PHILCOA.
Section 9 requires allocation from every P0.55 collected: three centavos (P0.03) are set aside exclusively to defray expenses for:
- setting up and continued operation of machinery for collection and acknowledgment of payment;
- organization of municipal and provincial conventions of coconut planters;
- organization, supervision, and conduct of regional coconut conventions and a national coconut congress;
- production and dissemination of information.
Section 9 requires the remaining two centavos (P0.02) to be placed at the disposition of the recognized national association of coconut producers with the largest number of membership as determined by PHILCOA for maintenance and operation of its principal office, responsible for continuing liaison with different sectors of the industry and the government and its mass base.

Board composition, selection, and convening

Section 10 vests corporate powers in a board of directors consisting of eleven (11) members.
Section 10 provides that while shares held by the Philippine Government for and on behalf of coconut planters have not been transferred under Section 7, the board includes:
- the PHILCOA Board Chairman;
- the duly elected president of the recognized national association of coconut producers with the largest number of membership as determined by PHILCOA;
  as ex-officio members.
Section 10 provides that nine (9) other board members must be natural-born Filipino citizens and are appointed by the President with the consent of the Commission on Appointments, upon recommendation of the National Coconut Congress, serving a term of three years, subject to rules on the first election.
Section 10 sets director compensation as a per diem of PHP 100.00 for every meeting actually attended, not to exceed four (4) meetings a month.
Section 10 directs PHILCOA to organize and supervise, within six (6) months from approval and every year thereafter, three regional conventions (Luzon, Visayas, Mindanao) to select delegates to a national coconut congress, and to hold a national congress to elect officers and select six members nominated for appointment to the Board.
Section 10 requires the President to choose and appoint three members representing the three regions within sixty (60) days from election and nomination by the national coconut congress.
Section 10 governs the first national coconut congress: it elects eighteen (18) instead of six members, with nine (9) appointed as board members; three are appointed for one year, three for two years, and three for three years.
Section 10 provides that all terms are reckoned from the date the first board is appointed and qualified.
Section 10 requires PHILCOA, in consultation with the recognized national association, to formulate rules and procedures for accreditation of delegations to municipal, provincial, and regional conventions and the national congress based on accepted principles of equal and just representation.
Section 10 provides that in delegate elections from municipal level to provincial convention, any bona fide coconut land owner, coconut tenant operator, or copra processor holding COCOFUND receipts and/or certificates has one vote.

Board powers and internal governance

Section 11 authorizes the Board to elect a Chairman by majority vote from among themselves for a term of one (1) year.
Section 11 authorizes the Board to formulate policies necessary to carry out the Act and adopt bylaws, rules, and regulations for effective company operations in conformity with the Act and existing law.
Section 11 authorizes determining the company’s organizational structure by creating essential departments or offices.
Section 11 authorizes determining the number and fixing compensation of officers and employees, including the general manager, and provides that existing civil service salary plans and laws, rules, and regulations governing civil service do not apply to fixing compensation and appointments.
Section 11 requires the Board to approve the annual and/or supplemental budgets submitted by management from time to time.
Section 11 requires the Board to conduct and maintain an up-to-date census of the number of coconut trees owned by coconut farmers and such other data as may be deemed necessary.

Penal provisions and disqualification

Section 12 prohibits no member of the Board, official, or employee of the Company from having any financial interest in or connection with enterprises invested in by the Company.
Section 12 punishes any person found guilty of fraud or intent or conspiracy to defraud in connection with any transaction or agreement related to operation or administration of the Company or the Fund.
Section 12 punishes any person seeking to circumvent the provisions, intent, or purposes of the Act.
Section 12 provides penalties in addition to penalties under general laws, consisting of:
- a fine of not less than PHP 1,000.00 but not more than PHP 2,000.00, or
- imprisonment of not less than two months but not more than two (2) years, or
- both, at the discretion of the court.

Separability

Section 13 provides that if any provision or provisions are held unconstitutional, the other provisions remain unaffected.