Introduced by Senator Magsaysay, Jr. 
* 
Explanatory Note 
Agriculture accounts for a fifth of the country's gross domestic product (GDP), about 14 
% of total exports, and employs 44 % of the total labor force. The significance of agriculture is 
mirrored in the fact that it means food sufficiency. 
As such, as the very backbone of the 
country's economy, it requires substantial support. 
The same is the very essence of this legislation. The bill ensconced the policy that the 
State shall ensure food security for all Filipinos, protecting farmers income, creating 
an 
environment that is conducive to market-based development, ensuring sufficient supply of staple 
food for domestic consumption and relief operations, and motivating farmers to increase their 
productivity and competitiveness. 
Likewise, the bill is aimed at ensuring the stability of both 
supply and prices of staple food. 
These the legislation wants to achieve through the reengineering of the National Food 
Authority by establishing a National Food Corporation and the Food Development and 
Regulatory Administration. 
Among the rationalizations supporting the enactment of the bill are as follows: 
0 
0 
To provide rice farmers initially with a market for their palay and eventually the 
skills to market their own produce at remunerative prices; 
To encourage the adoption, in the processing and marketing phases, 
of such 
proven systems as will reduce costs and improve the quality of food grains and 
thereby bring about ultimately reasonable prices within the reach of the great 
masses of the people; 
To encourage private sector participation in the country's food security and price 
stabilization programs; 
To streamline government intervention in the rice sector so that these are effective 
and efficient; 
To promote transparency in the costs of government interventions to stabilize rice 
supplies, stabilize palay farm gate prices, and subsidize rice for the poor; 
To focus government price subsidies to disadvantaged families. 
To promote developmental regulations aimed at enhancing competitiveness , 
transparency, and responsibility in the food grains marketing industry; 
0 
* 
0 
Early approval of this legislation is earnestly sought. ,$ 


'04 
AUG -5 
P2 :03 
THIRTEEN CONGRESS OF THE PHILIPPINES 
First Regular Session 
OF TJ3E PHILIPPINES 
S. B. No. 
Introduced by Senator Magsaysay, Jr. 
AN ACT 
REORGANIZING THE NATIONAL FOOD AUTHORlTy INTO THE NATIONAL 
FOOD CORPORATION AND THE FOOD DEVELOPMENT AND REGULATORY 
ADM1(NISTRATION, REDEFINING THEIR POWERS, APPROPRIATING FUNDS 
THEREFOR AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress 
assembled: 
SECTION I. 
Reorganization Act of 2004 ". 
Short Title. This Act shall be known as the "National Food Authority 
SECTION 2. Declaration of Policies. - It shall be the policy of the State to ensure food 
security for all Filipinos, to protect farmers income, to create an environment that is conducive to 
market-based development, to ensure sufficient supply of staple food for domestic consumption 
and relief operations, and to motivate farmers to increase their productivity and competitiveness. 
Towards this end, its shall also ensure the stability of both the supply and prices of staple food. 
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 rice farmers initially with a 
market for their palay and 
eventually the skills to market their own produce at remunerative prices; 
2. 
of 
such proven systems as will reduce costs and improve the quality of these foodgrains 
and thereby bring about ultimately reasonable prices within the reach of the great masses 
of the people; 
To encourage private sector participation in the country's food security 
and price stabilization programs; 
To provide and make available services including but not limited to 
marketing and technical services; 
To improve existing services and linkages in all sectors of the industry; 
To streamline government intervention in the rice sector so that these are 
To promote transparency in the costs of government interventions to 
To focus government price subsidies to disadvantaged families. 
To encourage the adoption, in the processing and marketing phases, 
3. 
4. 
5. 
6. 
7. 
8. 
9. 
To 
promote 
developmental 
regulations 
aimed 
at 
enhancing 
effective and efficient; 
stabilize rice supplies, stabilize palay farm gate prices, and subsidize rice for the poor; 
competitiveness , transparency, and responsibility in the food grains marketing industry; 


SECTION 4. Definition of Terms 
a) “Calamities” are fortuitous events which include acts of God such as but not l i t e d  to 
typhoons, floods, droughts, earthquakes, volcanic eruptions, lahar flows, and acts of 
man such as political and/or civil disturbances, and widespread civil unrest. 
b) “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. 
c) “Diversion” shall mean any act of the following circumstances: 
(a) 
unreasonable depletion of stocks; 
(b) 
(c) 
(d) 
selling or lending government stocks to another grains businessmen; 
selling or offering to sell the government stocks beyond the maximum 
quantity or price allowed by the Administration; and 
storing and/or selling the government stocks in other places/stalls, other 
than duly authorized by law. 
d) “Farmgate Price” - the prevailing buying price of a certain commodity at the farm level 
in a certain locality at a given specific time. 
e) “Farmers” - agricultural producers of palay and/or white corn grain. They can be 
tillers ofthe land themselves or administrators or supervisors ofthe process. 
f) “Foodgrains” refers to palay, rice, white corn and corngrits 
g) “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, through a combination of local 
production and importation, and consistent with the overall national development 
objectives; 
h) “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 of, sell 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. 
i) “Licensing” - shall mean the act of granting an authority/privilege to a qualified 
applicant to engaged in a particular line of activity in the rice and/or corn industry. 
j) “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. 
k) “Price Stabilization” refers to measures which ensures that realized fluctuations of 
foodgrains prices conform to people’s expectations of such price movements. 
1) “Government 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. 
3 


m) ”Service Corporation - a concept of the corporate operating orientation of a 
government owned corporation operating like a private business but performing the 
food security function of the State with minimum government subsidy. 
n) “Strategic Rice Reserve’’ is the minimum inventory of rice equivalent to at least fifteen 
days (15) national rice consumption to be 
maintained all year round under 
government control as a matter of national policy to ensure food security during times 
of calamities I emergencies whether natural or man made. 
SECTION 5. Reorganization of the National Food Authority. - To execute the foregoing 
policy, goals and objectives there is hereby created a reconstituted body corporate hown as the 
National Food Corporation (NFC), herein after referred to as the Corporation, and a Food 
Development and Regulatory Administration (FTIRA) both of which are 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 program for the development of the grains industry. The NFC shall be governed 
by a Board of Directors composed of the Chairman, the President of the Corporation, and three 
(3) members to be appointed by the President of the Republic of the Philippines. The Chairman, 
President and Board Members shall be Filipino citizens, at least, 35 years of age, with sufficient 
experience in agri-business, management, of proven honesty, integrity, and recognize 
competence, and with familiarity with the Philippine market environment. The appointed 
Chairman, President and one member shall serve for a term of three (3) years, another for a term 
of two (2) years and the last for a term of one (1) year. Subsequent appointments to the Board 
shall be for terms of three (3) years. 
The Corporation Code shall govern all matters regarding the Corporation that are not 
specifically governed by this law. 
In the absence of the Chairman, the President of the National Food Corporation shall act 
as the Chairman of the Board. Both the Chairman and the President of the Corporation shall be 
appointed 
by the President of the Philippines from nominees to be recommended by the 
Secretary of DA upon consultation with concerned sector to be submitted within 30 days from 
the creation of the NFC and when a vacancy is created. 
Within thirty (30) days, the Secretaries of DA, DSWD, DTI shall recommend fiReen (15) 
nominees from which the President of the Philippines shall choose the remaining three (3) 
members of the Board from among the recommendees from concerned sector. At least one 
nominee from each sector or the nominees identified by each Secretary of DA, DTI and DSWD 
shall be appointed to the Board. Subsequent vacancies in the Board will be filled up with the 
above Secretaries submitting three (3) nominees for each vacancy from which the President of 
the Philippines will choose the replacement(s). 
Within thirty (30) days from the submission of the list of recommendees, 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 per diem for 
each meeting actually attended by them and other remuneration as may be determined by the 
Board in accordance with existing policies of the government. 
The Board shall adopt rules and regulations to govern its proceedings and determine its 
official location and address. 
4 


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 within 90 days from the creation of the Board. Upon recommendation of the 
President of the Corporation, the Board shall fix remuneration, emoluments, performance 
incentives and fr-inge benefits of the Corporation: Provided, that the President of the Corporation 
shall have the authority to appoint, promote, transfer, assign, reassign, remove, suspend or 
otherwise discipline officers and employees of the Corporation as may be assigned and delegated 
to him by the Board. 
SECTION 8. Management - The management of the Corporation shall be vested in a 
President who shall be appointed by, the President of the 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 of the Corporation subject to the policy supervision of the Board. The President of the 
Corporation shall receive the same salary and allowances received by a Department Secretary. 
There shall be two (2) Executive Vice Presidents (EVPs), appointed by the Board, also 
for a term of three (3) years, who shall assist the President in the performance of his functions. 
Either one of the Executive Vice Presidents upon designation by the President of the Corporation 
shall perform the duties and exercise the powers and hnctions of the President in the absence of 
the latter, The EVP shall receive the salary and allowances of an Undersecretary. In the event 
the NFC experiences a loss, the President and Executive Vice President shall lose their security 
of tenure and may be immediately replaced by the President of the Philippines. 
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 eligibles. Lower ranking 
officials shall be also Career Executive Service Officials and/or Civil Service eligibles and have 
security of tenure. The Vice President shall receive the salary and allowances of an Assistant 
Secretary. 
The President, EVPs and VPs shall be natural-born citizens of the Philippines, not less 
than thirty-five years of age, of proven honesty and integrity with experience in the trading 
aspects of grains and of recognized managerial competence. 
SECTION 9. Powers, Functions and Responsibilities of the Corporation. 
To maintain and manage the national Strategic Rice Reserve and the 
government Rice Buffer Stock throughout the year when commissioned by the FDRA; 
To undertake importation of rice for government duty/tariff free in order 
to maintain the appropriate volume of Strategic Rice Reserve and Government Rice 
Buffer Stock by July of each year. Upon recommendation of the FDRA Council, the 
President may approve importation aside from the above situation and for other 
commodities also dutyhariff free; 
1. 
2. 
3. 
4 
5. 
To terminate the implementation of the " buy high and sell low" policy; 
To engage in the business of trading, marketing, importing and exporting 
basic and prime food products; 
To own, lease, 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; 
To issue debt instruments that are agri-agra eligible and guaranteed by the 
national government up to a maximum amount of Five (5) Billion Pesos 
(P5,000,000.000.00). Borrowings beyond this amount that are to be agri-agra eligibles 
and guaranteed by the national government must be already approved by the President 
of the Philippines; 
7. 
To own, lease, operate or otherwise hold land, buildings, equipment, 
facilities and such other properties as may be necessary to carry out its functions; 
8. 
To enter into, make, perform and carry out contracts of every class and 
description otherwise not prohibited by law; 
6. 
5 


9. 
To establish and structure its own internal organization defining as the 
need arises and to fix the remuneration, emoluments, allowances, and other Eringe 
benefits of its officers and employees as the Board may deem fit. For this purpose, the 
latest salary grades schedule of the salary standardization law shall be applicable, except 
with respect to the authority of the Board to give performance incentives/ bonuses to 
officials and employees of the Corporation, provided that the Corporation registers a 
profit and that the yearly amount does not exceed 10% of the Corporation's net income 
before taxes and does not go beyond 100% of each of the Corporation's officials and 
employees gross pay; 
10. 
11. 
To sue and be sued; 
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; and 
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 of 
trading, marketing, importing and exporting of commodities. 
SECTION 10. Capitalization. - 
12. 
The National Food Corporation shall have a total 
authorized capitalization of fifteen (15) Billion Pesos (P15.0 Billion) in the form of I50,000,000 
per shares with a par value of PlOO per share. Twelve (12) Billion Pesos (P12.0 Billion) shall be 
in the form of assets from the defunct NFA and Three (3) Billion Pesos (P3.0 Billion) shall be in 
cash to be given by the National Government over a period no longer than ten (10) years. The 
DBM shall however include during the three (3) years transition period the yearly amount of 
P500 MIllion in the President's Budget submitted to Congress. 
SECTION 11. Transfer of Assets and Liabilities. - The National Food Corporation shall 
start as a Corporation on a clean slate basis. All assets and liabilities of NFA not transferred to 
NFC or FDRA shall be retained and administered, disposed of and liquidated by the NFA itself 
which shall continue to exist as the NFA Board of Liquidator (BOL). NFA-BOL shall be 
financially assisted by the National Government in the disposition of assets and liquidation of 
liabilities. It shall be manned by personnel detailed from FDRA. It shall be deemed abolished 
upon full disposition of assets and liquidation of all liabilities but not later than ten (10) years. 
All remaining assets and liabilities after ten (10) years shall be transferred to the National 
Government. 
Assets pertaining to the regulatory, developmental research function shall be transferred to 
FDRA. 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 Corporation or the 
Administration with the appropriate consideration. 
SECTION 12. Food Development and Regulatory Administration (FDRA)- There is 
hereby created a Food Development and Regulatory Administration herein referred to as FDRA 
which shall carry out regulatory as well as scientific and development 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. 
The remaining functions, resources and personnel of the deJirnct National Food Authority 
(MA) created under Presidential Decree No. 4, as amended, shall evolve into the Food 
Development and Regulatory Administration. 
FDRA shall be responsible for the implementation and enforcement of the regulatory 
powers of the former National Food Authority in relation to grains and of BAFPS in relation to 
non-grains food commodities and shall also assume the latter's developmental functions. . 
6 


SECTION 13. Composition of the Food Development and Regulatory Administration 
Council (FDRAC). To formulate and monitor the implementation of the policies of the 
Administration, there is hereby created a Food Development and Regulatory Administration 
Council, hereinaRer referred to as the Council. 
The Secretary of Agriculture shall serve as Chairman of the Council, and with the 
a. 
b. 
c. 
d. 
e. 
Administrator of FDRA 
E 
g. 
h. 
The selection process for representative from the farmer and 
representative from a federation of grains business organization shall be as follows: 
a. 
following as members: 
Secretary of the Department of Justice 
Secretary ofthe Department of Trade and Industry; 
Secretary of the Department of Interior and Local Government; 
Secretary of the Department of Budget and Management 
A Representative from the Farmer Sector 
A Representative from the Consumer Sector 
A Representative from a Federation of Grains Business Organization 
consumer sector and 
National Agricultural and Fishery Council (NAFC) and the National Fanners 
Action Council W A C )  shall recommend three (3) nominees each from the 
farmer sector from which the DA Secretary can choose one (1) representative; 
The DTI Secretary shall recommend three (3) nominees from the consumer sector 
from which the DA Secretary can choose one (1) representative; and 
Philippine Confederation of Grains Millers Association (PHCLCONGRAINS) and 
the Confederation of Grains Retailers Association (GRECON) shall recommend 
three (3) nominees each from a Federation of Grains Business Organization from 
which the DA Secretary can choose one (1) representative. 
b. 
c. 
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 (I' 
10,000.00) for each meeting actually attended by them and 
other remuneration as may be determined by the Council in accordance with existing policies of 
government. The per diem will only be paid for each meeting actually attended. 
If for any reason an ex-officio 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 elect from among its members a vice-chairman and adopt rules and 
regulations to govern its proceedings, call on any government agency or institution for assistance 
or support, and determine its official location and address. 
The Administration shall be headed by an Administrator 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: 
To formulate and review, on an annual basis, the strategic rice reserve 
requirements at the national and local levels; 
To cause the maintenance of the National Strategic Rice Reserve of at 
least fiReen (15) days national rice consumption throughout the year and the Government 
1. 
2. 


Rice Buffer Stock of at least thirty (30) days national rice consumption by July 1 of each 
year; 
To establish a mechanism to stabilize rice prices through effective stock 
management and trade policy including but not limited to the following: a) determine the 
volume of rice imports required to stabilize rice prices; b) recommend to the President 
any modifications in the tariff rate of rice necessary to stabilize rice prices; and c) to 
impose other parameters that the government may see fit for attaining food security; 
To establish rules and regulations governing the importation of rice, and to 
license, impose penalties and fines for non - compliance with established rules and 
procedures 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; 
To establish rules and regulations governing the allocation of tariff import 
quotas for grains or all MAV among private sector entities and farmer cooperatives, and 
impose fees and charges for said transactions; 
To establish rules and regulations governing the export of rice, and/or its 
substitutes and its by-productdend-products and to collect fees and charges for such 
exportation at rates to be determined by the Administration; 
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; 
To register and license persons in the grains business, including their 
facilities and equipment; 
To monitor supply and demand indicators of food grains including the 
imports and exports of the private sector in coordination with the Bureau of Agricultural 
Statistics, National Statistics Office and the Bureau of Customs; 
10. 
To monitor rice imports and recommend to the President of the 
Philippines through the Council the adoption of safeguard measures when necessary to 
protect domestic producers; 
To inspect foodgrains stored in private warehouses for purposes of taking 
inventory and monitoring commercial stocks, prices and stocks movement. 
To regulate other agricultural and fishery commodities that the Council 
may assign to the Administration; 
To certify to the quality and safety of fresh and processed foods meeting 
standards and codes of practice established by FDRA; 
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. In the seizure, 
whenever there is cornering, 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- productdend-products thereot including facilities and equipment used in 
said activities, or whenever there is a scarcity of supply of such commodity in the 
consumer market and/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; 
To provide for the enforcement of the provisions of this Act or any 
Regulations issued or which may hereafter be issued pursuant 
thereto, the 
impIementation and enforcement of which is vested with the Administration, and for 
violation thereto, shall impose administrative fines and penalties, to conduct 
investigations and to require by subpoena 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 to make arrests. Any case of violation 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 the 
Administration's funds: 
3. 
4. 
5. 
6. 
7. 
8. 
9. 
11. 
12. 
13. 
14. 
15. 
8 


16. 
17. 
To regulate the foodgrains quedan system; 
To register, license and supervise warehouses used for foodgrains storage, 
whether bonded or not, and mills; and to prescribe, impose and collect fees, charges, 
andor surcharges in licensing and regulating warehouses and mills; 
To promote and organize interrelationships among food grains industry 
stakeholders; 
To introduce more efficient post harvest systems and technologies; 
To establish and enforce standards in grading, sampling and inspection, 
test 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 of food from volume to weight and in metric system; 
18. 
19. 
20. 
21. 
22. 
To establish networks with international and national institutions for 
developing and accessing up-to-date technologies and regulatory systems; 
23. 
To avail of foreign grants and development aid to support its development 
thrusts and to ensure that technologies and expertise are up-to-date; 
24. 
To own, lease, operate or otherwise hold lands, buildings, equipment and 
such other immovable properties, as may be necessary to cany out its knctions; 
25. 
To enter into, make, perform and carry out contracts of every class and 
description necessary or incidental to the realization of its knction with other person, 
firm or corporation, private or public, otherwise not prohibited by the law; 
To immediately auction perishable stocks and hoId the proceeds in trust 
while legal proceedings are being undertaken; 
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; 
To adopt, alter and use an official seal which shall be judicially noticed, to 
sue and be sued; 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 the proper 
conduct of its operations; 
To retain revenues and fees generated to finance reward and incentive 
systems for programs such as but not limited to anti-hoarding, anti-smuggling and 
agricultural development programs subject to guidelines to be formulated by the Council; 
To establish and structure its own internal organization as the need arises 
and to fix the remuneration, emoluments, allowances, and other fringe benefits of its 
officers and employees as the Council may deem fit, subject to the provisions of Salary 
Standardization Law , Civil Service Law and other existing laws, rules and regulations on 
compensation; and 
3 1. 
To coordinate research and development activities on foodgrains. 
26. 
27. 
28. 
29. 
30. 
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 omissions are hereby considered as serious, less serious and light offenses and 
corresponding penalties therefore are herein prescribed: 
a) 
offense: 
Serious Offenses- Any of the following acts or omissions shall constitute a serious 
Cornering or hoarding of foodgrains resulting in artificial shortage 
or scarcity of supply and increase of prices thereof in any part of the country; 
Any act of the following circumstances: unreasonable depletion of 
stocks; selling or lending government stocks 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 by law; 
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; 
i) 
ii) 
iii) 
9 


iv) 
Printing, issuing, or knowingly using, possessing or negotiating a 
canceled, unauthorized, illegal, counterfeit or falsified warehouse receipt; 
v) 
Failure or refusal of the responsible officials to turn over or remit 
the collection; and 
vi) 
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 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 - Any of the following acts of omissions shall constitute a 
less serious offense: 
Connivance in the concealment of a stock shortage in a foodgrains 
warehouse; 
Knowingly submitting any report containing false information or 
data; 
Misrepresentation in connection with any application for license to 
do business as foodgrains warehouseman, miller, exporter or importer or trader, 
manufacturer or processor; 
Failure or refusal of a warehouseman to allow the inspection or 
examination of this foodgrain stocks to conceal shortages or to misrepresent the 
quantity or quality of his foodgrain stocks, including the impending of such 
inspection and examination by abandonment, absence or otherwise; and 
v) 
Engaging in the business of foodgrains threshing, shelling, 
warehousing, milling, exporting, importing, trading, growing and selling of 
certified seed, manufacturing or processing without a valid license; 
i) 
ii) 
iii) 
iv) 
The offender shall, upon conviction, be punished by imprisonment of not less than four (4) 
yeas 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: 
i) 
Non-compliance with the rules, regulations, decisions, order, 
circulars or directives lawfully issued by the Council, provided non-compliance 
does not constitute a higher offense as herein above provided; 
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 
Any other violation of the provision of this Act for which no 
specific penalty is prescribed and which is not punished under any other existing 
law. 
ii) 
iii) 
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 FiRy 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. 
10 


SECTION 16. Transfer of Mandates. The following other mandates of the dehnct 
a) 
Programs directly relating to food subsidies for the poor particularly the 
Targeted Rice Distribution Program (TRDP) and Coconut Farmers Food Access 
Program (CFFAP) to the Department of Social Welfare and Development. 
b) 
Stabilization of prices and supply of grains at the farm gate to the 
Department of Agriculture (DA) 
c) 
Stabilization of supply and prices of rice at consumer level will also be the 
responsibility of the DA. 
National Food Authority shall be transferred to the following agencies; 
These government agencies shall be responsible for sourcing of hnds for these 
programs and shall exclusively commission the NFC as a Service Corporation, to perform the 
above services for a fee which shall include but not be limited to losseshbsidies to be incurred 
by the program, overhead expenses plus a reasonable margin for the Corporation. To allow for 
the continued implementation of the above mandates and programs, the DBM during the three 
(3) year transition period shall include yearly in the President's budget proposal, the minimum 
amounts of One (1) Billion pesos (P 1,000,000,000,000.00) for DA farmgate price and supply 
stabilization and Two Hundred Fifty (250) Million pesos (P250,000,000.00) for DA supply and 
price stabilization of rice at consumer level and Five Hundred (500) Million pesos 
(P500,000,000.00) for DSWD. 
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 appropriationdresources of the 
NFA. 
Thereafter, such sums as may be needed for the Administration operations and 
maintenance including at least One Billion pesos (€'1,000,000,000.00) 
as service fee to NFC to 
maintain the Strategic Rice Reserve and the Government Rice Buffer Stock shall be included by 
DBM as part of the President's budget proposal each year. 
SECTION 18. RESTRUCTURTNG/REORGANIZATION 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, if qualified for retirement shall be given a 
Separation Incentive Package (SIP) equivalent to the following scale: 
1-20 years 
21-30years 
- 1.5 x gross monthly pay' x yr. of service for the first 20 years 
- 2.0 x gross monthly pay x yr. of service in excess of 1st 20 years 
- 2.5 x gross monthly pay x yr. of service in excess of 1st 30 years 
more than 30 years 
In addition to other retirement benefits to which they are entitled to under existing laws 
and regulations. 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. The existing number of NFA personnel shall not be 
increased and no new hiring in the Administration and Corporation shall be allowed until all 
NFA employees have been properly placed. No NFA personnel shall be dislocated and 
involuntarily separated. For the purpose of SIP there is hereby appropriated the necessary 
amount out of any funds or resources of NFA. Any deficiency shall be automatically 
appropriated in the succeeding year's GAA. If for any reason funding for the S P  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 operations 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. 
'Gross monthly pay = Basic Pay + P E W  + LOP 
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SECTION 19. Transitory Provisions. To effect a smooth transition, 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 of the SIP. Employees and 
Officials of the Administration not yet properly placed within three (3) years can still choose to 
avail of 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 settling issues as to which assets and 
personnel will go to which organization. In any event, the rights and privileges of officials and 
employees of NFC and FDRA shall be adequately protected. The Corporation will, however, 
have priority in deciding which asset will comprise the P5 B 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, issuances 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. 
complete publication in at least two (2) national newspapers of general circulation. 
Effectivity Clause. - This Act shall take effect fifieen (15) days after its 
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