FOURTEENTH CONGRESS OF THE 
1 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
1 
S E N A T E  
S. B. No. 
Introduced by Senator Loren Legarda 
. 
EXPLANATORY NOTE 
This bill seeks to re-organize the National Food Authority (NFA) by dividing its 
commercial and regulatory functions and creating two agencies in lieu of the NFA to make 
it more efficient and effective in pursuing its mandate to ensure food security and stabilize 
supply and prices of staple food-rice. 
The NFA pursues its mandate by performing commercial and regulatory functions 
in the cereal/grains sector. Its commercial function involves procurement and distribution 
programs. The procurement program involves buying from produce of individual and 
organized farmers at prices that reflect government support to ensure that farmers earn a 
reasonable rate on their investment. The distribution program on the other hand seeks to 
make available affordable food supply to consumers. This twin program is directed at 
making food supply accessible and sufficient. 
The productivity of the agriculture sector in the country is not sufficient to provide 
the needs of the consumers. This is brought about by inadequate support mechanisms to 
farmers such as access to irrigation, affordable credit, low-priced farm inputs, basic post- 
harvest facilities and reliable infrastructures such as farm-to-market roads. It has thus been 
difficult, under these conditions, for the country to attain self-sufficiency in staple food 
supply. Under these conditions, the NFA is forced to import rice to which has put a strain 
on government coffers. 
Presently, the NFA rice importation program is sourced through borrowings which 
are guaranteed by the national government. In 2006, the NFA posted a deficit of P16 billion, 
the main cause of which is the Iosses it has incurred from its importation program as it is 
forced to buy at higher prices to meet the demands of the nation. 
This bill seeks to address the need to re-structure the NFA and strengthen the 
management of its commercial functions for it to perform its core mandate in an efficient 
and sustainable manner. Separating the commercial functions under one entity and 
ensuring appropriations for such a function will lessen dependence on borrowings, would 
instill transparency and better handling of its finances. On the other hand, its regulatory 
functions (ex. price monitoring, licensing, registration), to be performed by a separate 
entity, shall be immune from losses due to the operations of the commercial activities. 
In view of the foregoing, the immediate passage of this bill is earnestly sought. 
Senator 


._ 
FOURTEENTH CONGRESS OF THE 
1 
REPUBLIC OF THE PHILIPPINES 
1 
7 :li: 
2s: “I !. 
FIRST REGULAR SESSION 
) 
Introduced by Senator Loren Legarda 
AN ACT 
REORGANIZING THE NATIONAL FOOD AUTHORITTY INTO THE NATIONAL 
FOOD CORPORATION, REDEFINING ITS POWERS, AND CREATING THE 
FOOD 
DEVELOPMENT 
AND 
REGULATORY 
ADMINISTRATION, 
APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES 
Be if enacted by fke Senate and House of Representatives of the Philippines in Congress 
assembled: 
SECTION. 1. Short Title - This Act shall be known as the ”National Food 
Authority Reorganization Act of 2007”. 
SECTION. 2. Declaration of Policies - (a) It shall be the policy of the State to 
ensure that all Filipinos, at all times, have physical and economic access to sufficient, 
safe and nutritious food that meets their dietary needs and food preferences for an 
active and healthy life. Towards this end, the State shall endeavor to increase the 
productivity of the grains industry and provide appropriate support to local farmers 
and agricultural producers to increase their efficiency and competitiveness. 
SECTION. 3. Statement of Goals and Objectives - To carry out the foregoing 
policy, the government shall orient its programs towards the immediate attainment of 
the following goals and objectives. 
1. To provide and make available production, financing and marketing technical 
services and infrastructures that will ensure sustainable food security by 
making Filipino Farmers globally competitive; 
2. To provide rice farmers initially with a market for their pdny and eventually 
the skills to market their own produce at remunerative prices; 
3. To encourage the adoption in the processing and marketing phases of such 
proven systems as will reduce costs and improve the quality of there 
foodgrains and thereby bring about ultimately reasonable prices within the 
reach of great masses of the people; 
4. To provide appropriate and adequate support aimed at integrating, improving 
and modernizing food grains marketing systems and facilities; 
5. To provide and make available services including but not limited to marketing 
and technical services; 
6. To promote modernization and optimum utilization of food grains post- 
harvest facilities and technology; 
7. To promote developmental regulation aimed at enhancing competitiveness, 
transparency and responsibility in the food grains marketing industry; 


8. To improve existing services and linkages in all sectors of the industry; to 
adopt all other measures for the foodgrains marketing industry as may be 
necessary achieve the foregoing policy. 
SECTION. 4. Definition of Terms. For purposes of this Act, the definition of the 
following terms shall be used: 
1. 
2. 
3. 
4. 
5. 
6. 
7. 
8. 
9. 
”Calamities” are fortuitous events which include acts of God such as but not 
limited to typhoons, floods, drought, earthquakes, volcanic eruptions, lahar 
flows, and acts of man such as political and/or civil disturbances, and 
widespread civil unrest; 
”Capitalization” refers to the resources invested in the different lines of activity 
in the rice and corn business. For purposes of this Act, capitalization includes 
the cost of stocks, whether on consignment or bought on cash basis, cost of 
facilities and equipment, loans used in the business and amount of working 
capital. 
”Diversion” shall mean any fact of the following circumstances: 
a. unreasonable depletion of stocks; 
b. selling or lending government stocks to another grains businessman; 
c. selling or lending government stocks to beyond the maximum quantity 
or price allowed by the Administration; 
d. storing and/or selling the government stocks in other places/stalls, 
other than duly authorized by law. 
Foodgrains” refers to palay, rice, white corn and corngrits. 
I/ 
”Food security” refers to the policy objective, plan and strategy of substantially 
meeting the food’ requirements of the present and future generations of 
Filipinos, ensuring that food is affordable and available to all, though a 
combination of local production and importation, and consistent with the 
overall national government objectives; It shall imply people’s access to food 
supplies on a year-round basis at stable and reasonable prices. 
“Hoarding” shall mean the undue accumulation by any person or a 
combination of persons of any foodgrain beyond his or their normal inventory 
levels or the unreasonable limitation or refusal to dispose or, seIl or distribute 
the stocks of any basic necessity or prime commodity to the general public or 
the unjustified taking out of any basic necessity or prime commodity from the 
channels of production, trade, commerce and industry. 
”Licensing” shall mean the act granting an authority/privilege to a qualified 
applicant to engage in a particular line of activity in the rice and/or corn 
industry. 
Price Manipulation” shall mean the act of causing prices of essential 
commodities to fall or rise for one’s own profit by changing or falsifying 
figures, accounts and other related information. 
”Price Stabilization” refers to measures which ensure that realized fluctuations 
of foodgrains prices conform to people’s expectations of such price movements. 
10. ”Rice Buffer Stock” is the inventory of rice equivalent to at least thirty (30) days 
national rice consumption by July 1 of every year. For stabilization purposes 
particularly in deficit areas and during lean production periods. This is 
inclusive of the 15 day Strategic Rice Reserve. 
11. ”Strategic rice reserve” is the inventory of rice to be maintained as a matter of 
national policy to ensure food security equivalent to a minimum of fifteen (15) 
days national rice consumption maintained year round in government depots 
to respond to calamities/emergencies. 


Strategic Rice Reserve is inventory of rice to be maintained as a matter of 
national policy to ensure food security. 
SECTION. 5. Policy Implementation - To execute the foregoing policy, there is 
hereby created a reconstituted body corporate known as the National Food Corporation 
(NFC) hereinafter referred to as the Corporation, which will be under the Office of the 
President, and the Food Development and Regulatory Administration (FDRA) attached 
to the Department of Agriculture. 
SECTION. 6. The NFC Board - The powers and functions of the Corporation shall 
be vested in the Board which shall have the overall responsibility for formulating and 
coordinating a comprehensive for the development of the grains industry. 
The Board shall be composed of eleven (11) members, seven (7) of which will be 
following: 
1. Secretary of Department of Agriculture 
2. Secretary of Department of Social Welfare and Development 
3. Secretary of Department of Budget and Management 
4. Secretary of Department of Trade and Industry 
5. President of the Corporation 
6. Representative from the Farmer Sector 
7. Representative from the Agri-Business Sector 
And the rest will be appointed by the President of the Philippines the Board shall 
elect. From among themselves the Chairman, the Vice-chairman shall however be the 
President of the Corporation. 
In the Absence of the Chairman, the President of the National Food Corporation 
shall act as the Chairman of the Board. 
Within sixty (60) days from the approval of this Act, the President of the 
Philippines shall constitute the Board. 
The Board shall meet regularly at least once a month on any date to be 
determined by the Chairman: Provided, That the Chairman may convene special 
meetings to discuss any urgent matters needing immediate resolution. The Board 
members shall be entitled to a minimum per diem of P10,OOO.OO for each meeting 
actually attended by them and other remuneration as may be determined by the Board. 
If the Department of Secretaries are unable to attend Board meetings they can send a 
representative which should however be the next rank of their respective offices. 
The Board shall adopt rules and regulations to govern its proceedings and 
determine its official location and address. 
SECTION. 7. Organization - The Corporation shall be governed by the NFC 
Board which shall approve the organizational structure and staffing pattern for officers 
and employees of the Corporation upon recommendation of the President of the 
Corporation, fix remuneration, emoluments, performance incentives and fringe 
benefits: Provided, that the President of the Corporation as may be assigned and 
delegated to him by the Board, any provision of existing law to the contrary 
notwithstanding. 


SECTION. 8. Management - The management of the Corporation shall be 
vested in President who shall be appointed by, the President of thg Philippines for a 
fixed term of three (3) years within sixty (60) days from approval of this Act, and who 
shall direct and manage the affairs or the Corporation subject to the policy supervision 
of,the Board. 
There shall be two (2) Executive Vice Presidents (EVPs) appointed by the Board, 
also for term of three (3) years, who shall assist the President in the performance of his 
functions. The President and Executive Vice-presidents shall be persons of recognized 
competence and integrity with experience in the trading aspects of grains. Either one of 
the Executive Vice Presidents upon designation by the President of the Corporation 
shall perform the duties and exercise the powers and functions of the President in the 
absence of the latter. 
There shall also be four (4) Vice Presidents (VPs), who shall be Career Officials 
and enjoy security of tenure provided they are Career Executive Service eligible. Lower 
ranking officials shall be also Career Executive Service Officials and/or Civil Service 
eligible and have security tenure. 
The President, EVPs and VPs shall be natural-born citizens of the Philippines, not 
less than thirty-five years of age, of proven honestly and integrity and of recognized 
managerial competence. 
The President shall receive a compensation to be determined by the Board but 
not less than Eight Hundred Forty Thousand Pesos (P840,OOO.OO) per annum. The EVP 
shall receive a salary to be determined by the Board but not less than Seven.Hundred 
Twenty Thousand Pesos (P720,OOO.OO) per annum The Vice-president shall each receive 
a salary to be determined by the Board but not less than Six Hundred Thousand Pesos 
(P600,OOO.OO) per annum. 
SECTION. 9. Power, Functions and Responsibilities of the Corporation. 
1. To maintain and manage a national strategic rice reserve equivalent' to at least 
fifteen (15) days of the national consumption at any time each year. The reserve 
shall be augmented by July 1 of each year to a total equivalent: of around thirty 
(30) days national rice consumption or a volume to be determined by the 
President of the Philippines; 
2. To exclusively undertake importation of rice for government duty/tariff free. 
Importation of other commodities may also be duty/tariff free subject to the 
approval of the President of the Philippines; 
3. To own, or acquire ownership by purchase or otherwise, or to invest in, hold, 
sell or otherwise dispose of stocks or bonds or any interest in either or any 
obligation or evidence of indebtedness of any person, partnership, firm or 
corporation; 
4. To issue debt instruments that are agri-agra eligible and guaranteed by the 
national government up to a maximum amount of Ten (10) Billion Pesos 
(PZO,OOO,OOO,OOO.OO). 
Borrowings beyond this amount that are to be agri-agra 
eligible and guaranteed by the national government must be already approved 
by the President of the Philippines; 
5. To own, lease, operate or otherwise hold land, buildings, equipment, facilities 
and such other properties as may be necessary to carry out its functions; 


6. To enter into contracts in the procurement and distribution,,of commodities in 
quantities and in location as may be determined by the concerned 
department/agencies; 
7. To enter into, make, perform and carry out contracts of every class and 
description otherwise not prohibited by law; 
8. To provide incentives to farmers in the form of shares of stocks; 
9. To establish and structure its own internal organization as the need arises and 
to its the remuneration, emoluments allowances and other fringe benefits of its 
officers and employees as the Board may applicable. The personnel of the 
Corporation shall be covered by the rules and regulations of the Civil Service 
Commission and the Government Service Insurance (GSIS). This shall include 
the power to create contractual or project hire without need of DBM approval; 
10. To create and establish subsidiaries, when deemed necessary by the Board; 
11. To sue and be sued; 
12, To exercise all the rights and powers of a domestic Corporation duly organized 
and registered with the Securities and Exchange Commission not otherwise 
prohibited by law; 
13. Subject to the guidelines to be formulated by the Board, the Corporation is 
allowed to immediately negotiate with private or government entities in the 
business or trading, marketing, importing and exporting commodities. 
SECTION. 10. Capitalization - The National Food Corporation shall start as a 
corporation on a clean slate. All liabilities of NFA shall be transferred to the National 
Government. The Corporation shall have a total authorized capitalization of Twenty 
(20) Billion pesos (P20,000,000,000.00) shall be in assets from the defunct NFA and Ten 
Billion Pesos (P10,000,000,000.00) shall be in cash of which P5 Billion should be 
immediately provided by the national government, the balance to be given at P 1 Billion 
a year for the next 5 years. The DBM is obliged to put there amounts in the President’s 
Budget submitted to Congress. 
The assets and unexpended appropriations of the defunct NFA are hereby 
transferred to the National Food Corporation, Food Development and Regulatory 
Administration or National Government to carry out the purpose of this Act. Land 
where NFA assets that maybe considered by the Corporation or Administration as 
critical and owned by other government entities are deemed transferred to the 
Administration or the Corporation. 
SECTION. 11. The remaining functions, resources and personnel of the defunct 
National Food Authority (NFA) created under Presidential Decree No. 4 as amended, 
shall evolve into the Food Development and Regulatory Administration. 
SECTION. 12. Food Development and Regulatory Administration (FDRA) - 
there is hereby create a Food Development an Regulatory Administration herein 
referred to as FDRA which shall carry out regulatory as well as scientific and 
developmental functions for strengthening the efficiency of the food supply chain in 
order to increase the value of farmer’s produce as a component of food products for 
export as well as against imports. 
FDRA shall be responsible for the implementation and enforcement of the 
regulatory’ powers of the former National Food Authority in relation to grains and the 
functions of the Bureau of Agriculture and Fisheries Product Standards (BAFPS) in 
relation to non-grains food commodities and shall assume new development functions. 
It shall carry out activities which are not within the mandates and/or which need to 


overarch the mandates of the various bureaus in the Department of Agriculture and 
other government agencies. 
To formulate and monitor the implementation of the policies of the 
Administration, there is hereby create a Food Development and Regulatory 
Administration Council, hereinafter referred to as the Council. 
SECTION. 13. Composition of 
Food Development and Regulatory 
Administration Council (FDRAC) - The Secretary of Agriculture shall serve as 
Chairman of the Council, with the Bureau Executive Director as Vice-chairman and 
with the following as members: 
1. Secretary of the Department of Justice 
2. Secretary of the Department of Trade and Industry 
3. Secretary of the Department of Interior and Local Government 
4. Secretary of the Department of Budget and Management 
5. A Representative from the Farmer Sector 
6. A Representative from the Consumer Sector 
7. A Representative from a Federation of Grains Business Organization 
The Council shall meet regularly at least once every quarter on any date to be 
determined by the Chairman; provided, that the Chairman may convene special 
meetings to discuss any urgent matters needing immediate resolutions. The Council 
members shall be entitled to a per diem of Ten Thousand Pesos (PlO,OOO.OO) for each 
meeting actually attended by them and other remuneration as may be deterhined by 
the Council. 
If for any reason a member of the Council is unable to attend a meeting he shall 
be represented therein by the next ranking officer of the office or agency he represents. 
The Council shall adopt rules and regulations to govern its proceedings, call on 
any government agency or institutions for assistance or support, and determine it 
official location and address. 
The Administration shall be headed by an Administration with the rank of an 
Undersecretary and be assisted by two (2) deputy Administration with the rank of an 
Undersecretary and be assisted by two (2) Deputy Administrators with the rank of 
Assistant Secretaries. One Deputy Administrator shall be a lawyer and a member of the 
Philippine Bar shall be responsible for the regulatory functions while the other Deputy 
Administrator shall take charge of the developmental functions of the Administration. 
SECTION. 14. Powers and Functions of the Administration - in order to 
effectively carry out its functions and responsibilities under this Act, the Administration 
which shall be governed by the Food Development and Regulatory Administration 
shall have the following duties and powers: 
1. To register, license and supervise persons, natural or juridical who shall engage 
in the business of providing goods and services in support of the different 
activities involved in the production, processing, transporting, marketing and 
trading of grains and/or their substitutes and to prescribe, impose and collect 
fees, charges and/or surcharges in licensing and regulating the operations of 
such persons. 


2. To register, license.and supervise natural or juridical, engaged in the wholesale 
and/or retail business of rice, corn and other grains and their substitutes and 
their by-products/end -products and to impose and collect fees to be 
determined by the Administration. 
3. To register, license and supervise natural or juridical, engaged in the 
processing or manufacture of goods where rice, corn and other grains and/or 
by products in which case it shall impose the nominal fees to be determined by 
the Adminisbation. 
4. To promote and organize interrelationships among industry stakeholders, 
5. To inspect foodgrains stored in private warehouse for purposes of taking 
inventory and monitoring commercial stocks, prices and stocks movement. 
6. To register and license persons in the grains business, including their facilities 
and equipment. 
7. To introduce more efficient postharvest systems and technologies; and 
8. To coordinate research and development activities on foodgrains. 
9. To regulate the foodgrains quedan system. 
10. To register, license and supervise warehouse used for foodgrains storage, 
whether bonded or not, and mills; and to prescribe, impose and collect fees, 
charges, and/or surcharges in licensing and regulating warehouses and mills. 
11. To establish rules and regulations governing the importation of rice and to 
license, impose and collect fees and charges for said importation for the 
purpose of equalizing the selling price of such imported rice with the normal 
prevailing domestic prices. 
12. To establish rules and regulations governing the export of rice, corn and other 
grains and/or their substitutes and their by-products/end-products and to 
collect fees and charges for such exportation at rates to be determined by the 
Administration. 
13. To identify, develop and implement regulations, standards codes of practice 
that will increase the competitiveness of food exports and or local food 
products against imports, and to establish and/or collect data in support of 
making regulations and standards. 
14. To certify to the quality and safety of fresh and processed foods meeting the 
standards and codes of practices established by FDRA. 
15. To establish networks with international and national institutions for 
developing and accessing up-to-date technologies. 
16. To organize members of the food supply chain and promote their interaction in 
the use of new technologies and systems. 
17. To engage professional consultants to facilitate the in-house development of 
expertise and development of expertise and the rapid transfer of technology 
and information to stakeholders. 
18. To avail of foreign grants and development aid to support its development 
thrusts and to ensure that technologies and expertise are up-to-date. 
19. To charge fees to regulatory and development tasks as necessary, to ensure 
appropriate implementation of activities and functions and to utilize these fees 
for its operations. 
20. To provide for the enforcement of the provisions of this Act or any Regulations 
issued or which may hereafter be issued pursuant thereto, the implementation 
and enforcement of which is vested with and Administration, and for violation 
thereto, shall impose administrative fines and penalties, to conduct 
investigations and to requires by subpoenas and/or subpoena "duces tecum" 
the attendance and testimony of witnesses the production of books, papers 
documents, exhibits, records, evidence; to administer oath by himself or his 
duly authorized representative, and make arrests. Any case of contumacy shall 


be dealt with in accordance with the provisions of Section Five Hundred Eighty 
(580) of the revised Administrative Code. Any fine imposed and collected 
under this paragraph shall form part of Administration’s funds 
21. To own, lease operate or otherwise hold hands, buildings, equipment and such 
other immovable properties, as may be necessary to carry out its functions. 
22.To enter into, make, perform and carry out contacts of every class and 
description necessary or incidental to the realization of its function with other 
person, firm or corporation, private or public. 
23. To inspect palay, rice, corn, corn grits and other grains and their substitutes 
and or their by- products/end-products stored by any person, partnership, 
corporation or association, for purposes of taking inventory and record of such 
commodities, and to enter the premises thereof by the use of reasonable means. 
24. To order the seizure, whenever there is concerning, hoarding, or improper 
acquisition of stocks as may be defined by the Administration of rice and/or 
corn and/or other grains and substitutes and/or their by-products/en- 
products thereof, including facilities and equipment used in said activities, or 
whenever the is a scarcity of supply of such commodity in the consumer 
market an/or an unwarranted increase in the price thereof, of the hoarded 
commodity and its public sale in such quantity as may be needed to stabilize 
prices to normal levels. 
25. To immediately auction perishable stocks and hold the proceeds in trust while 
legal proceedings are being undertaken. 
26. To establish and enforce standards in grading, sampling and inspection, tests 
and analysis, specification, nomenclature, units of measurement, code of 
practice and packaging, conservation, and transport for food items and to effect 
a transition of standards in measurement for food from volume to weight, and 
in metric system. 
27. To coordinate the activities of all government agencies engaged in the study, 
research and promotion of measures desired to enhance the integrated growth 
and development of the foodgrains industry and to improve the processing 
and marketing the standards of rice, corn and other foodgrains, such as 
methods of dying, handling, hauling, storage, milling, packaging, distributing 
and shipping these foodgrains and their byproducts. 
28. To call upon and/or deputize any official of such government agencies as may 
be necessary to assist the Administration in carrying out its functions. 
29. To sell, lease, mortgage, pledge or otherwise dispose of the property assets or 
undertaking of the Administration or any part thereof as the Administration 
may deem fit. 
30. To adopt, alter and use a corporate seal which shall be judicially noticed to sue 
and be sue; and otherwise to do and perform any and all powers as may be 
necessary to carry into effect the provisions of this Act or as are essential to 
proper conduct of its operations. 
31. To promulgate such rules and regulations as may be necessary to carry out the 
provisions of this Act. Such rules and regulations shall take effect fifteen (15) 
days following their publication once in at least one daily newspaper of 
national circulation. 
32.To promulgate its own rules and procedures and operations in general, 
including matters of quorum and of organization and appointment of 
subcommittees throughout the Philippines and to keep a record of its meetings 
with reference to the standards of foodgrains whether passed or not, if passed 
and classification thereof. 
33. To retain revenues and fees generated to finance reward and incentive system 
for program such. as but not limited to anti-hoarding, anti-smuggling and 


agriculture development programs subject to guideline to be formulated by the 
Council. 
34. To establish and structure its own internal organization as the need arises and 
to .fix remuneration, emoluments, allowances, and other fringe benefits of its 
officers and employees as the Council may deem fit. 
35. Undertake the division of the country into regions or districts and promote the 
grouping of existing fragmented private foodgrains establishments therein into 
organized foodgrains corporation or cooperatives that can serve as the pattern 
or base for foodgrain milling districts to certain grain production potential 
and/or for economic sized foodgrain warehousing, milling, packaging and 
distribution complex. 
36. To regulate other agricultural and fishery commodities that the Council may 
assign to the Administration. 
37. To be exempted from real estate taxes for its properties. 
SECTION. 15. Offenses and penalties - Notwithstanding the provisions of any 
law or regulations to the contrary, and for purposes of carrying out the provisions of 
this Act, the following acts or missions are hereby considered as serious, less serious 
and light offenses and corresponding penalties therefore are herein prescribed: 
a) Serious Offenses - Any of the following acts or omissions shall constitute a 
serious offense: 
1. Cornering or hoarding of foodgrains resulting in artificial shortage or 
scarcity of supply and increase of prices thereof in any part of the country; 
2. Any act of the following circumstances: unreasonable depletion of stocks; 
selling or lending government stock to another grains businessmen; 
selling or offering to sell the government stocks beyond the maximum 
quantity or price allowed by the Administration; storing and/or selling 
the government stocks in other places/stalls, other than duly authorized 
law. 
3. The act of causing prices of essential commodities to fall or rise for one’s 
own profit by changing or falsifying figures, accounts and other related 
information. 
4. Printing issuing, or knowingly using, processing or negotiating a 
canceled, unauthorized, illegal, counterfeit or falsified warehouse receipt. 
5. Failure or refusal of the responsible officials to turn over or remit the 
collection. 
6. Failure or refusal of foodgrains warehouseman, without any lawful 
excuse, to deliver foodgrains deposited with him: provided, however, that 
the warehouseman shall be entitled to the allowance authorized for 
depreciation of the foodgrains deposited. 
The Offender shall, upon conviction, be punished by imprisonment of not less 
than six(6) years and one (1) day or nor more than twelve (12) years, or a fine of not less 
than two hundred thousand pesos (P200,OOO.OO) nor more than two million 
(P2,000,000.00) Pesos or both such fine and imprisonment at the discretion of the court. 
b) Less Serious Offenses 
1. Connivance in the concealment o fa stock shortage in a foodgrains 
warehouse; 
2. Knowingly submitting any report containing false information or data; 


3. Misrepresentation in connection with any application for license to do 
business as foodgrains warehouseman, miller, exporter or importer or 
trader, manufacturer or processor; 
4. Failure or refusal of a warehouseman to allow the inspection or 
examination of this foodgrain stocks to conceal shortage or to 
misrepresent the quantity or quality of his foodgrain stocks, including the 
impending of such inspection and examination by abandonment, absence 
or otherwise; 
5. Engaging in the business of foodgrains threshing, shelling warehousing, 
milling, exporting, trading, growing and selling of certified seed, 
manufacturing or processing without a valid license; 
The offender shall, upon conviction, be punished by imprisonment of not less 
than (4) years and one day nor more than eight (8) years, or by fine of not less than one 
hundred thousand pesos 
(PlOO,OOO.OO), 
nor more than One Million Pesos 
(Pl,OOO,OOO.OO), or both such fine and imprisonment, at the discretion of the court. 
c) Light Offenses - Any of the following acts or omissions shall constitute a 
light offense: 
1. Noncompliance with the rules, regulations, decisions, order circulars or 
directives lawfully issued by the Council, provided noncompliance does 
not constitute a higher offense as herein above provided; 
2. Selling or offering to sell to the Corporation by any person of palay or 
corn or other foodgrains other than that directly produced by him as 
farmer or shared by him as tenant or landlord, knowingly buying such 
foodgrains by any personnel for the Corporation; connivance by any 
person in the selling or buying of such foodgrains; and 
3. Any other violation of the provision of this Act for which no specific 
penalty is prescribed and which not punished under 'any other existing 
laws. 
The offender shall, upon conviction, be punished by imprisonment of not 
less than two (2) years nor more than four (4) months, or a fine of not less than fifty 
thousand (P50,OOO.OO) Pesos nor more than Five Hundred Thousand (P500,OOO.OO) or 
both such fine and imprisonment, at the discretion of the court. 
SECTION. 16. Transfer of Mandates - the following other mandates of the 
defunct National Food Authority shall be transferred to the following agencies; 
1. Programs directly relating to food subsidies for the poor particularly the 
targeted Rice Distribution Program (CFFAP) to the Department of Social 
Welfare and Development. 
2. Stabilization of prices and supply of grains at the farm fate to Department 
of Agriculture (DA) 
3. Stabilization of supply and prices of rice at consumer level will be the 
responsibility of the DTI. 
These government agencies shall be responsible for sourcing of funds for these 
programs and shall exclusively commission the NFC to perform and above service for a 
fee which shall include but not be limited to losses/subsidies to be incurred by the 
program, overhead expenses plus a reasonable margin for the Corporation. 


SECTION. 17. Appropriation of the Administration - the amount necessary to 
finance the initial implementation of this Act insofar as the Food Development and 
Regulatory Administration is concerned shall be charged against the existing 
appropriations/resources of the NFA. Thereafter, such sums as may be needed for the 
Administration operations and maintenance shall be included by DBM as part of the 
President’s budget proposal each year including the farm-gate palay price stabilization 
and targeted rice distribution programs of the government. 
SECTION. 18. RestructuringlReorganizing of the National Food Authority - 
Permanent officials and employees of the national Food Authority who choose to leave 
government service or who prefer to retire, it qualified for retirement shall be given a 
Separation Incentive Package (SIP) equivalent to the following scale: 
1-20 years - 1 . 5 ~  
gross monthly pay of service for the first 20 years 
21-30 years - 2 . 0 ~  
gross monthly pay x yr of service in excess of 1st 20 
More than 30 years - 2 . 5 ~  
gross monthly pay x yr. of service in excess of 1st 30 
years 
years 
In addition to other retirement benefits to which they are entitled to under 
existing laws and regulation. Employees who opted to retire under RA 1616 shall 
receive only 1.5 gross monthly pay for every year of service under SIP. For those who 
want to stay and are not absorbed in the Corporation shall be automatically placed in 
the Administration. They shall retain their remuneration and seniority. No new hiring 
in the Administration and Corporation shall be 
Gross monthly pay = Basic Pay + PERA + LOP 
Allowed until all NFA employees have been properly placed. No NFA personnel 
shall be involuntarily separated. For the purpose of SIP there is hereby appropriated a 
sum to be determined by Finance Group or so much thereof as may be necessary, out of 
any funds or resources of NFA, any deficiency ha11 be automatically appropriated in the 
succeeding year’s GAA. If for any reason funding for the SIP is inadequate people who 
have chosen to be separated but not received their benefits can choose to stay or be 
reinstated and will retain their previous remuneration and rank. 
To provide continuity in the operation of the Corporation, all incumbent 
personnel of the defunct National Food Authority shall continue to exercise their 
respective duties and functions and receive their corresponding salaries and benefits 
until the organizational structures and staffing patterns of the National Food 
Corporation and Food Development and Regulatory Administration have been 
approved by the Corporation and the Administration respectively. 
SECTION. 19 Transitory Provisions - to effect a smooth transaction officials and 
employees of NFA who choose to avail of the SIP may be requested to temporarily stay 
on for a period of not longer than three (3) years without losing their right to avail SIP. 
Employees and Officials of the Administration not yet properly placed within three (3) 
years can still choose to avail SIP during this period. The Board and the Council shall 
appoint three (3) representatives each to constitute a group that will act as mediators in 
setting issues as to which assets and personnel will go to which organization. In any 
event the right and privileges of officials and employees of NFA and FDRA shall be 
adequately protected. The Corporation will, however has priority in deciding which 
asset will comprise the P10,billion of capitalization. The Chairman of this group will be 
appointed by the President of the Philippines. 


SECTION. 20. Repealing Clause - All laws, decrees, executive orders, rules and 
regulations issuance or parts thereof inconsistent with the provisions of this Act are 
hereby repealed or modified accordingly. 
SECTION. 21. Separability Clause - the provisions of this Act are hereby 
declared to be separable and in the event one or more such provisions are held 
unconstitutional, the validity of the other provisions shall not be affected thereby. 
SECTION. 22. Effectivity Clause - this Act shall take effect fifteen (15) days after 
its complete publication in at least two (2) national newspapers of general circulation. 
Approved,