Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

pe ENOV. 2012,
FIFTEENTH CONGRESS | te; 4c
Third Regular Session \

6707 Ne

House Bill No.

Introduced by Representatives
DIOSDADO MACAPAGAL ARROYO and GLORIA MACAPAGAL ARROYO

AN ACT

STRENGTHENING THE QUEDAN AND RURAL CREDIT GUARANTEE
CORPORATION, BROADENING ITS POWERS AND RESOURCES TO
SUPPORT MICRO, SMALL AND MEDIUM ENTERPRISES, FARMERS,
FISHERFOLK, AND WORKERS BY RECONSTITUTING IT AS THE
AGRICULTURAL CREDIT GUARANTEE CORPORATION, AMENDING FOR
THE PURPOSE REPUBLIC ACT NO. 7393, OTHERWISE KNOWN AS THE
QUEDAN AND RURAL CREDIT GUARANTEE CORPORATION ACT AND
FOR OTHER PURPOSES

EXPLANATORY NOTE

Guaranteeing agricultural credit is still an effective intervention by the
National Government by which small farmers and fishers become bankable
partners in economic development. QUEDANCOR is the potent arm of the
government in providing agricultural credit though its time-tested guarantee
operations, thus making credit more affordable and accessible to the agri-fishery
sector.

QUEDANDCOR's renewed and strengthened guarantee business
addresses a niche in the agrifishery economy which it once was performing
successfully. The need to revisit QUEDANCOR's mandate in consonance with
present policy thrusts merits preferential attention, more particularly in the aspect
of fund support considering that its continued guarantee operation provides
livelihood and employment that increases productivity and rural income.


Through this proposed bill, the QUEDANCOR shall be reconstituted into
the Agricultural Credit and Guarantee Corporation or AGRICORP with a
proposed authorized capitalization of P25 Billion.

The AGRICORP shall be given a clean slate and a strengthened mandate
in implementing a renewed agricultural guarantee business by separating and
transferring the liabilities and obligations of the old QUEDANCOR to the National
Government. In so doing, the liabilities incurred shall be separately dealt with
through the assistance of the national government's expert agencies while the
needed agricultural guarantee intervention by the government to the agri-fishery
sector shall be strengthened further in the over-all objective of national progress
and economic development.

QUEDANCOR has a unique mandate and potency in triggering
countryside growth and employment through the provision of guarantee services
to the agri-fishery sector — the sector which has been given less priority though
pregnant with remarkable potentials. And the way to survive this unique and
noble mandate is to skin QUEDANCOR from its trappings and baggage, letting
its core mandate of providing guarantees to the agri-fishery sector transcend to
its full potentials under the reconstituted AGRICORP. The complex problems
associated with the old QUEDANCOR shall be left with the National Government
for a more focused management of liabilities, without affecting the over-all
investment relation with the banking industry and other creditor institutions.

As a government financial institution, AGRICORP needs close supervision
by the National Government's fiscal and financial regulators, particularly the
Department of Finance, Bangko Sentral ng Pilipinas and the Department of
Budget and Management whose representation in the AGRICORP Board shall
provide better financial assessment and policy guidance. Moreover, considering
the broad national objective of increasing credit and guarantees in the agri-
fishery sector, the Chairmanship and Vice-Chairmanship of the AGRICORP.
Board necessitates the expert guidance from the Office of the President and the
National Economic Development Authority, respectively. These institutional
memberships in the AGRICORP’s Governing Board shall help ensure strict
regulation and full guidance on the precise, updated and proper policies as
regards agricultural credit and guarantee operations.

Finally, increasing AGRICORP's authorized capitalization provides
preferential advantage in better recovering the lost trust and confidence from the
banking sector and capital market in once again evolving a workable and
complementary beneficial relationship in spurring the flow of investments and
credit resources into the countryside as a joint undertaking for nation-building
and development. The rich resources of the banking industry and capital market
lay awaiting the National Government's intervention to access the same for the
remarkable potency of the Philippine agri-fishery sector. What remains to be
done is to trigger active cooperation among the stakeholders by evolving a strong


mechanism and policy on agricultural credit guarantee anchored on the new
AGRICORP.

In view of the paramount importance of this bill, we urge our colleagues to
ensure its immediate passage into law.

Ue

Zz
DIOSDADO MACARAGAL ARROYO GLORI#/MACAPAGAL ARROYO
Second District, Camarines Sur SeCond District, Pampanga


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
Third Regular Session

House Bill No. 6707

Introduced by Representatives
DIOSDADO MACAPAGAL ARROYO and GLORIA MACAPAGAL ARROYO

AN ACT

STRENGTHENING THE QUEDAN AND RURAL CREDIT GUARANTEE
CORPORATION, BROADENING ITS POWERS AND RESOURCES TO
SUPPORT MICRO, SMALL AND MEDIUM ENTERPRISES, FARMERS,
FISHERFOLK, AND WORKERS BY RECONSTITUTING IT AS THE
AGRICULTURAL CREDIT GUARANTEE CORPORATION, AMENDING FOR
THE PURPOSE REPUBLIC ACT NO. 7393, OTHERWISE KNOWN AS THE
QUEDAN AND RURAL CREDIT GUARANTEE CORPORATION ACT AND
FOR OTHER PURPOSES

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

SECTION 1. Title. — This Act shall be known as the “Agricultural Credit
Guarantee Corporation (AGRICORP) Act of 2012.”

SECTION 2. Declaration of Policy. — Sections 10 and 20 of Article II of the
Philippine Constitution mandate one methodology on how the State shall perform
its task of accelerating the flow of investments and credit resources to the
populace so as to trigger vigorous growth and development, productivity,
employment and enterprises thereby generating more livelihood and means
opportunities for the disadvantaged populace.

Consonant to this, the State shall set up a convenient credit-support
mechanism, a reliable guarantee system and a specially emplaced credit and/or
guarantee facility that shall effectively:


(a) Provide avenues of access of urban and rural workers, their
cooperatives, the small urban and rural enterprises to credit or credit
institutions and providers;

(b) Encourage the participation of private enterprises to support the
undertaking of such persons by providing incentives for them, to focus
upon, to trust and/or increase the flow of credit resources and investments
into these areas of concerns;

(c) Institutionalize the Quedan Purchase Order/Job Order (PO/JO) and
other instruments such nature as evidence of guarantees and in providing
credit assistance;

(d) Institutionalize the quedan or warehouse receipt and other negotiable
instruments, evidencing existence of commodities stored in the
Corporation's bonded warehouses, as convenient collateral for accessing
credit;

(e) Prioritize financing support and/or grant of assistance to small
enterprises engaged and or will engage in small production, processing
and developmental activities and to those businesses directly supporting
such endeavors either as their markets or partners;

(f) Support and encourage dynamic cooperativism, groupings, capital
formation and savings mobilization among the populace;

(g) Ascertain income from the above-stated activities in recognition of
committed, honest undertakings and services by promoting, adopting or
institutionalizing a system that rewards these efforts or by-passes or
merges the unnecessary layers of marketing through linkages and
voluntary arrangements among its players;

(h) Harmonize, involve, coordinate and/or team up with other government
institutions, | nongovernmental organizations, private —_—- voluntary
organizations, self-help groups and other aggrupations involved in
providing support services to these sectors and areas.

(i) Maximize access to credit and credit providers for rural workers, their
cooperatives, associations and groups, formal or informal; and

() institutionalize different schemes to accelerate the flow of credits to
rural workers, their cooperatives, associations and groups, and forms of
instruments as evidence of loan and other monetary obligations;

v


SECTION 3. Definition of Terms. — The following terms as used in this Act
shall mean

(a) “Corporation” —- The Agricultural Credit Guarantee Corporation or
AGRICORP.

(b) “Farmer” — Any natural person whose primary livelihood is cultivation of
land or the production of agricultural crops, livestock and aquaculture
products, in small or commercial scale, either by himself or primarily with
the assistance of his immediate farm household or workers for the
secondary purpose of gaining profit, or any juridical person, such as but
not limited to corporations, cooperatives or associations, whose primary
purpose is cultivation of land or the production of agricultural crops,
livestock and aquaculture products with the assistance of farm workers,
whether the land is owned by him/it or by another person, under a
leasehold tenancy agreement or arrangement with the owner thereof

(c) “Fisherfolk” — Refers to any natural person whose primary livelihood is
fishing or the catching and/or gathering of other marine products, in small
or commercial scale, either by himself or with the assistance of his
immediate household or workers for the secondary purpose of gaining
profit, or any juridical person whose primary purpose is fishing or the
catching and/or gathering of other marine products, engaging in such
activity either by himself or with the assistance of workers, whether the
vessel, banca, fishpond and other equipment used is owned by him or by
another person under lease or other arrangement with the owner thereof
and there is no employer-employee relationship.

(a) “Worker” — Refers to any natural person whose primary livelihood is
employment whether with an employer or by himself engaging or will
engage in a livelihood activity in small scale either by himself or with the
assistance of his immediate household or family members for the primary
purpose of augmenting their family income which may not be necessarily
to gain profit.

(e) “Farm-Workers” — Refers to any natural person not being a member of
the household, whose primary and secondary source of livelihood is giving
assistance to farmers and fisherfolk

(f) “Enterprise” — Refers to an activity of a production, processing or
development-based undertaking, or of such combination or trading
thereof, engaged either for profit, or as a source of daily sustenance or for
addition thereto

(9) “Banks” — Refer to entity or entities which per authority from the
Bangko Sentral ng Pilipinas are authorized to lend and accept deposits.


(h) “Credit Providers” — Refers to banks, quasi-banking institutions, or any
institutions, private or government owned, that provide credit or financial
assistance to any member of the agricultural sector thru the Corporation

(i) “Providers” - Refer to legally operating businesses that render services
or that provide merchandise to clients or borrowers of the Corporation for
an undertaking

() “Clients and Borrowers” — Refer to any person or persons whether
natural, juridical or recognized aggrupations that avail or are availing of
the loan or guarantee services of the Corporation

(k) “Partners” — Refer to any person, natural or juridical, that supports the
tealization and implementation of the loan and guarantee programs of the
Corporation other than a client, borrower or provider.

(I) “Recognized Lending Entities’ — Refer to any person, natural or
juridical, other than banks, that lend its cash, goods or services to the clients or
borrowers under any of the programs of the Corporation, which loan is intended
to be covered by the guarantee of the Corporation:

SECTION 4. Reorganization. - The Quedan and Rural Credit Guarantee
Corporation is hereby reorganized in accordance with the provisions of this Act
and renamed as Agricultural Credit Guarantee Corporation and hereafter referred
to as the Corporation

The Corporation, in consideration of its role in national development, is
hereby attached to the Office of the President of the Republic of the Philippines
and subject to the regulatory powers of the Securities and Exchange
Commission insofar as allowed under Sections 6, 7, 9, 10, 13 and 31 hereof

SECTION 5. Place of Business. — The Corporation shall have its principal
place of business in Metro Manila and may establish as many branches or
smaller units of organization in any part of the Philippines as may be necessary
in carrying out efficiently and effectively its operations

SECTION 6. Term of Existence. — The term of existence of the
Corporation shall be fifty (50) years from the date of effectivity of this Act.

SECTION 7. Authorized Capital Stock. — The authorized capital stock of
the Corporation is hereby increased from Two Billion Pesos (P2,000,000,000.00)
to Twenty-Five Billion Pesos (P25,000,000,000.00) to be divided into twenty five
billion common and voting shares, with the par value of One peso (P1.00) per
share, sixty percent (60%) thereof to be subscribed solely by the National
Government, government-owned or controlled corporations and/or any other


government instrumentalities as allowed by their respective charters and forty
percent (40%) by private investors: Provided, however, That the shares of the
National Government, government-owned or controlled corporations or any other
government instrumentalities may be sold to one another but not to private
investors.

SECTION 8. Subscription by National Government. — Upon the effectivity
of this Act, the National Government shall be deemed to have subscribed to such
number of shares of the Corporation equivalent in par value to, and considered
paid for by, the net assets of Quedan and Rural Credit Guarantee Corporation,
as determined and certified by the Commission on Audit within three (3) months
from the effectivity hereof.

All other Government Agencies whose heads are ex-officio members of
the Governing Board of the Corporation are mandated to subscribe in the stocks
of the Corporation to cover a total of at least one fourth (1/4) of the required
subscriptions of the government in pro rata basis as is necessary to cover the
tequired subscriptions of the Government and which may be sourced from their
annual budgets. Ten percent (10%) of such subscriptions shall be paid in the
immediate year succeeding the approval of this Act. The remaining shall be paid
at Ten percent (10%) yearly from their approved budgets or from the dividend of
their subscriptions in accordance with the succeeding paragraph hereof until the
subscribed stocks shall have been fully paid

Subject to the approval of the majority of members of the Governing
Board, in a meeting called for the purpose, profit accruing to the investment of
the above-mentioned agencies, in accordance to the provision of Section 22 of
this Act, may be used as part of their compliance to the required subscriptions.
The permanent representative of the Office of the President of the Republic of
the Philippines or his duly authorized representative shall vote corresponding to
the National Government's shareholding.

SECTION 9. Subscription by Private Investors. — No private person,
natural or juridical, shall directly or indirectly, by interlocking directorate or other
forms of combinations, by trust, subscriptions, purchase, lease, mortgage,
pledge, or other means of acquisition or encumbrance, own at any one time more
than ten percent (10%) of the portion of the Corporation's authorized capital
stock that can be subscribed solely by private investors. The Corporation in
consultation with the Securities and Exchange Commission shall prescribe within
ninety (90) days from the effectivity of this Act, implementing rules and
Tegulations which will assure strict observance of the herein section by private
investors and stock exchanges, stockbrokers, traders and personnel thereof, if
the Corporation is listed in such exchanges for the trading of its shares therein
under Section 10 hereof. Violation of any provision of the herein section or its
implementing rules and regulations shall be punishable under Section 185 of the

wo


Revised Penal Code or, whenever applicable, the Anti-graft and Corrupt
Practices Act.

SECTION 10. Submission to the Securities and Exchange Commission. —
The concerned officers of the Corporation are mandated to submit to the
Securities and Exchange Commission a copy of this Act not later than six (6)
months from its effectivity

Failure to comply with the provisions herein shall be prima facie evidence
of bad faith on the part of the Corporation's personnel responsible therefor

SECTION 11. Corporate Powers. ~ The Corporation, as a body corporate,
shall have the following powers and purposes

(a) Establish a credit-support mechanism for the benefit of and assistance
to its clients, borrowers and partners;

(b) Establish, institutionalize and implement a guarantee system to
promote inventory financing of storable commodities; establishment of
production and post-production facilities; issuances of bonds and notes to
finance the co-lending and guarantee activities of the Corporation as
authorized under this Act

(c) Evolve and provide agri-fishery credit and guarantee options for start
ups and/or pioneering ventures which ordinarily fail to pass stringent
banking lending requirements or which no financial institution would be
willing to lend, including borrowers and clients who have been thrice
denied to access and avail loan from banks;

(d) Set up a system for accrediting the participation in the Corporation's
various programs by borrowers, lending banks, financing institutions,
bonding and insurance companies;

(e) Franchise-bonded warehouses intended for quedan inventory
financing, issue and enforce rules and regulations therefor;

(f) Print and provide uniform negotiable quedan or warehouse receipt
forms for the purpose of quedan financing which shall be serially
numbered, on security notepaper, in specific quantity denominations of
such unit of measurement of subject commodities; and shall contain the
name and business address of the warehouseman, the variety,
classification, moisture content and quality of the commodity deposited,
the warranties of the warehouseman as prescribed by existing laws, rules
and regulations, the charges and authorized liens on the stocks in deposit,


(g) Prescribe fees and charges for the Corporation's services; fix, lower,
condone or waive interest and penalty charges for delinquent accounts;
and/or impose fines and sanctions for violations of its rules and
regulations;

(h) Acquire by purchase or otherwise ownership of and invest in, hold, sell
or otherwise dispose of stocks or bonds of any interest in either or any
obligation or evidence or indebtedness of any person, firm or corporation;
and as owner of such stocks, bonds or interest therein, or other
obligations or evidences of indebtedness, exercise the rights, powers and
privileges or ownership, including the right to vote thereon or consent in
respect thereto for any and all lawful purposes;

(i) Purchase or otherwise acquire, sell, lease, convey, mortgage or
encumber and otherwise deal with any property, real or personal, or any
interest therein;

() Develop or otherwise improve the properties acquired by the
corporation, real or personal, either directly or in coordination with and
assistance of any government agency or private institutions through any
form of contracts, for the purpose of enhancing the value and marketability
of the property;

(k) Act as a receiver,

(\) Adopt and use a corporate seal;

(m) Sue and be sued;

(n) Prescribe, repeal and alter its own bylaws; determine its operating
policies and issue such rules and regulations as may be necessary and
incidental to implement its various policies, programs and projects; and

(0) Carry on any lawful business whatsoever and do everything suitable,
convenient and proper for the exercise of any of the foregoing powers and

promote the interests of the Corporation or its properties.

SECTION 12. Governing Board. — The affairs and business of the

Corporation shall be directed, its properties managed and preserved, and its
corporate powers exercised, unless otherwise provided in this Act, by a

governing Board consisting of fifteen (15) members composed initially of the
following

(1)a permanent representative from the Office of the President of the
Republic of the Philippines;


(2) the Director General of the National Economic Development
Authority (NEDA);

(3) the Secretary of the Department of Budget and Management (DBM);
(3) the Secretary of the Department of Finance (DOF);
(4) the Secretary of the Department of Agriculture (DA);

(5) the Secretary of the Department of Interior and Local Government
(DILG):

(6) the Governor of Bangko Sentral ng Pilipinas;

(7) the President of the Philippine Chamber of Commerce and Industry
(PCCI);

(8) the President and Chief Executive Officer (CEO) of the Corporation,
and three (3) other members: (a) a small farmer or fisherfolk to be
endorsed by the Department of Agriculture, (b) a worker to be
endorsed by the Department of Labor and Employment and (c) a
government employee to be endorsed by the Civil Service Commission
and approved by the other members of the Governing Board after
having been nominated by a nationally organized association of
farmers or fisherfolk, workers and employees, respectively. Said
representatives shall serve for a term of two (2) years

Members of the Governing Board who would proportionately represent the
private investments in the Corporation shall be decided upon by the initial
members of the Governing Board as provided for under Section 13 hereof.

In the interest of the State, the representative of the Office of the President
of the Republic of the Philippines and the Director General of NEDA shall be the
Chairman and Vice Chairman, respectively, which functions shall not be
delegated through representation.

The Chairman shall preside over the meetings of the governing Board
where aside from voting regularly he shall vote to break a tie, He shall likewise
preside over the stockholders’ meetings.

The Vice-Chairman of the Board shall assist the Chairman and act in his
stead in case of the latter's absence or incapacity. In case of incapacity or
absence of both the Chairman and Vice-Chairman, the Governing Board shall,
upon determination of a quorum and counting the present representatives of the
Chairman and Vice-Chairman, but who must not vote, by the corporate secretary,
shall elect from among themselves a temporary Chairman from among its


members and whose authority to act as such shall be for the particular instance
and/or duration only.

After the determination of the quorum, recognized representatives of any
of the members of the Governing Board shall be allowed to share their views,
present propositions and motions which can be voted upon and vote on matters
requiring such during their representation: Provided, however, that delegation of
representation to attend a meeting by any member of the Governing Board shall
only be valid for not more than two (2) consecutive meetings.

SECTION 13. Election, Terms of Office of Elective Board Members. —
The additional members of the Governing Board to be elected by the initial
members of the Governing Board and henceforth shall serve for a term of one (1)
year each and can be reelected to serve for a continuous and maximum term of
three (3) years. The election shall be presided over by the Board Chairman,
which shall be held in Metro Manila, in a place accessible to the public, and shall
be in accordance with provisions of the Corporation code of the Philippines and
other pertinent laws. The first election after the effectivity of this Act shall be held
when the initial members of the governing Board shall have been duly constituted
and twenty-five percent (25%) of the counterpart shares for private investors
shall have been subscribed, the exact date, time and place to be determined by
the governing Board then incumbent. The governing Board of the Corporation, in
consultation with the Securities and Exchange Commission, shall prescribe the
rules and regulations for the efficient and effective implementation of this section

SECTION 14. Specific Duties and Powers of Governing Board. - The
Governing Board shall have the following specific duties and powers:

(a) Determine the general policies of the Corporation within the scope of
its powers, objectives and financial resources;

(b) Approve and adopt annually the Corporation's budget at least three (3)
months before the start of the fiscal period in conformity with the
guidelines prescribed by the Department of Budget and Management, the
Department of Finance and the Government Corporate Monitoring and
Coordinating Committee; the Corporation's plan of operation for the year,
as well as its medium-and long-term plans, programs and projects;

(c) Monitor the implementation of the Corporation's general policies, plans,
budgets, and projects;

(d) Upon the recommendation of its President and CEO of the
Corporation, approve, reorganize or otherwise alter the position structure,
staffing pattern, qualifications, powers and functions of the Corporation's
officers and employees in consultation with the Civil Service Commission
and the Department of Budget and Management;


(e) With the same power as that of other Goverment Owned and
Controlled Corporation, rationalize the rates of salaries, wages,
allowances, per diems, consultant's fees, overtime pay and other forms of
compensation, including gratuities and fringe benefits, without prejudice to
the compensation, fringe benefits and gratuities enjoyed by or provided for
incumbent personnel at the effectivity of this Act;

(f) Approve, upon the recommendation of its President and CEO, the
appointment of senior corporate officials from the rank of Vice Presidents,
in accordance with the pertinent provisions of the Civil Service Law, rules
and regulations;

(g) Evaluate the financial reports of the Corporation and the comments of
the Auditor thereon;

(h) Submit to the President of the Philippines, the Congress of the
Philippines, the National Economic Development Authority, Department of
Finance, the Department of Budget and Management, and the
Government Corporate Monitoring and Coordinating Committee, an
annual report of the Corporation’s operations which shall include the
following audited financial statements: balance sheet or statement of
assets and liabilities; income statement or statement of income and
expenditures; and statement of sources and application of funds

Such reports shall also include an analysis of any surplus or deficit of the
Corporation and other additional statements and information necessary to make
known the financial conditions and operations of the Corporation such as the
outstanding domestic and foreign borrowings, the amount of government capital
and/or dividend that will be credited to the Bureau of Treasury during the fiscal
year, and pursuant to Section 7 hereof the appropriations needed to restore
capital impairments, if any, subject to pertinent laws, rules and regulations; and
such other reports and statements that the Government Corporate Monitoring
and Coordinating Committee may prescribe;

(i) Establish a competitive selection process to ensure that the key
executives of the Corporation have the necessary motivation,
integrity, competence and professionalism;

(i) Adopt a professional development program for officers and employees,
and succession planning for key executives;

k) Monitor and manage potential conflicts of interest of management,
board members and shareholders, including misuse of corporate assets
and abuse of related party transactions;


(I) Ensure the integrity of Quedancor's accounting and financial reporting
systems, including independent audit, and that appropriate systems of
control are in place, in particular, systems for risk management, financial
and operational control, and compliance with the law and relevant
standards;

(m) Implement a system of intemal checks and balances that must be
regularly reviewed and updated: and

(n) Constitute an Audit Committee and such other specialized committees
as may be necessary to assist the board in discharging its functions

SECTION 15. President. - The management of the day-to-day operation
of the Corporation shall be vested in the President as its Chief Executive Officer.

No person shall be appointed President by the Governing Board unless he
is of good moral character and reputation, in the government career service, is at
least forty (40) years of age and has proven expertise in banking, finance,
economics, law, agriculture, business management, or public administration and
is recommended by at least two nationally recognized farmer's association and
the employees association of the Corporation. The tenure of the President and
CEO of the Corporation shall be four (4) years subject to renewal or
reappointment by the appointing authority and with the confirmation of the
Commission on Appointments

In no case shall the Corporation be headed by an officer-in-charge for a
period of not more than three (3) months, counted cumulatively from the time of
his/her first assumption to such post.

SECTION 16. Powers and Duties of President. - The President of the
Corporation shall have the following powers and duties

(a) Direct and manage the affairs and business of the Corporation;

(b) Implement or cause the implementation of its budget, policies,
programs and projects approved by the Governing Board;

(c) Represent and enter into and execute, in behalf of the Corporation, all
contracts and authorized transactions;

(d) Appoint, promote, remove, suspend or otherwise discipline for cause,
any subordinate officer or employee of the Corporation pursuant to the
Civil Service Law, rules and regulations: Provided, however, that with
respect to officers and with rank equivalent to or higher than Vice-
President, such action shall be subject to the approval of the governing
Board;

1


(e) Ensure that the officers concerned prepare the annual and financial
reports, including the analysis required in Section 14 hereof on or before
the time fixed therein; and

(g) Perform such other powers or duties as may be appropriately and
reasonably assigned to him by the governing Board from time to time.

SECTION 17. Solicitation of Grants. - The Chairman or President and
CEO of the Corporation is hereby authorized, subject to the approval of the
governing Board, to directly solicit; negotiate for and receive grants or fund in
trust for the Corporation from any source, domestic or foreign, public or private,
in accordance with existing laws

For the purposes of this Act, grants shall include legacies, devises, gifts,
donations, endowments and other transfers from any source, domestic or
foreign, public or private, or the ownership and/or possession of real or personal
properties, which are free from any monetary considerations except for the cost
of its transfer to the Corporation and which ownership is deemed transferred to
the Corporation.

With respect to such grants, the following are hereby prescribed:

(a) No grant shall be accepted if its term and conditions are patently and
grossly disadvantageous to the Corporation or the Government;

(b) The disbursement or use by the Corporation of any cash grant shall
be, pursuant to a special budget approved by the governing Board, in
consultation with the Department of Budget and Management, and subject
to accounting and auditing laws, rules and regulations;

(c) In case of foreign sourced items that need to pass through the Bureau
of Customs, the Bureau shall give priority for the expeditious, safe,
efficient and effective release from its premises of grants given to the
Corporation under this Act;

(d) The President and CEO of the Corporation may, upon authority of the
Governing Board, in his sound discretion, deputize members of deputize
the Philippine National Police, Armed Forces of the Philippines (AFP) and
other security forces of the Government to escort and/or guard the grants
given to the Corporation under this Act in order to ensure their safe and
speedy transportation, delivery and custody by the Corporation's
representatives;


(e) Grants given to the Corporation under this Act shall be accorded
utmost priority in transportation by national flag carriers and domestic
common carriers; and

() Not later than forty (40) days from the start of or receipt thereof, the
President and CEO of the Corporation shall submit to the Director General
of the National Economic and Development Authority a report about the
grants being negotiated for and/or received by the Corporation, specifying
therein the peso value, general descriptions, sources, summaries of terms
and conditions, purposes, and date of start of negotiation or receipt of
such grants

SECTION 18. Operating Principles. - The Corporation in the exercise of
its powers shall be guided by the following operating principles:

(a) The guarantee cover and loan under its various programs shall be
scaled progressively in favor of agri-fishery micro-enterprises vis-a-vis
small and medium-sized businesses;

(b) The rate of guarantee fees and other corporate charges shall be
commensurate to the risk covered;

(c) Yearly fund allocations for its programs shall be always on a sixty/forty
(60/40) basis in favor of its sole guarantee versus its guaranteed co-
financing programs;

(d) The aggregate contingent liability, that is, its outstanding guarantee
obligation at any given time, shall not exceed three (3) times its available
guarantee fund;

(e) The guarantee for storable commodities stored in bonded warehouses
covered by a quedan or warehouse receipt shall be based on their
physical presence;

(f) The guarantee program for production and post-production facilities,
farm-aqua machineries, equipment and implements, shall be on the loan
extended by a bank or lending institution on the basis of a mortgage
thereon, without prejudice to the requirement for an additional or substitute
collateral;

(9) The guarantee for production inputs and labor or provision of goods
and/or services for an undertaking may either be on the loan if granted by
a bank or recognized lending entity or over the obligation of the
performance of the Corporation's clients and/or borrower to pay its value
without prejudice to the requirement for a counter-guarantee from non-
governmental organizations, or for some form of acceptable collaterals;


(h) The credit-support mechanism may be in the form of assistance or any
of the combination thereof in client prospecting, credit evaluation,
collateral appraisal, account monitoring, special time deposit, co-financing
arrangement, co-guarantee, interest stabilization, liquidity access or a
combination of any thereof and other similar incentives whichever is
applicable;

() The guarantee cover, credit-support system and the credit to be
extended by the Corporation shall be oriented to promote capital
formation, savings mobilization investment and private participation;

(i) Secondary trading market and liquidity access for participating banks
and lending institutions, especially for those operating in small
municipalities, shall be developed and promoted by the Corporation for its
guaranteed loan papers;

(k) Working relationships shall be harmonized with other government
institutions, agencies and instrumentalities engaged in national
development; and

(\) Program evaluation shall be made on a yearly basis with the operations
officers as the main sources of information in cooperation with program
recipients. Recommendations of the operations officers shall be the basis
for the furtherance, modification or cancellation or the program. A
feedback mechanism to this effect shall be defined by the Governing
Board within ninety (90) days from its first meeting.

SECTION 19. Sovereign Guarantee. — In accordance with pertinent laws,
tules and regulations, the Republic of the Philippines shall answer for the
payment of guarantee obligations duly incurred by the Corporation under the
provisions of this Act: Provided, however, that the Corporation's assets shall
have been first fully exhausted to satisfy its guarantee obligations.

Pursuant to the above, the Department of Budget and Management and
the Congress of the Republic of the Philippines shall include in its yearly
appropriations a fund for the Corporation in consonance with Sections 7 and 14
of this Act, the approval of which shall not be delayed. In the same manner,
Congress shall give preferential consideration to budgets presented by
Government agencies intended for investment to the stocks of the Corporation or
in trust to the Corporation under Section 23 hereof.

SECTION 20. Compliance with Agri-Agra Law. — Other than those
incentives already provided by the Government, investment by any banking
institution in the authorized capital stock of the Corporation shall be considered
compliance with Presidential Decree No. 717 of 1975, otherwise known as the


Agri-Agra Law, in such equivalent as to their equity holdings in the Corporation
and yearly computed at its present market value. Likewise, loans extended by a
bank and covered by a guarantee of the Corporation shall be deemed as
compliance with the Agri-Agra Law. Rediscounting by secondary banks of
originating banks’ loan receivables having the guarantee cover of the Corporation
shall likewise be deemed compliance with the same law and loans released by a
bank to an entity acting as partner of the Corporation shall likewise be
considered as compliance of the Agri-Agra Law to the value of the loan granted.

SECTION 21. Protection for Corporation's Guarantees and Other
Accommodations. — The provisions of any local, regional, national, special or
general law to the contrary notwithstanding, securities on guarantees and/or
accommodations granted by, or subrogated to, the Corporation or its
predecessors-in-interest shall not be subject to attachment, execution or any
other court process, nor shall they be included in the property of insolvent
persons or institutions, unless all debts and obligations of the debtor to the
Corporation and its predecessors-in-interest shall have been previously paid,
including accrued interest, penalties, collection expenses, and other charges.

The right of the Corporation over the indebtedness of its clients or
borrowers shall, except for the payment of matured taxes, the payment of
salaries and wages for work already rendered by workers of the subject entities,
are considered superior over any other rights in the attachments and
garnishments of the properties of its clients and borrowers that may be filed by
other creditors for obligation still contracted by the Corporation's clients and
borrowers after the existence of the borrowers’ loan with the Corporation.

SECTION 22. Dividend for Government Shareholdings. — Subject to the
provisions of Sections 7 and 14 (i) hereof, the annual dividends that may be
declared by the Corporations pertaining to the National Government
shareholdings shall be in the form of stock dividends in order to build up the
capital base of the Corporation in accordance with Section 8 hereof.

In no instance, however, shall the subscription of the National Government
exceed the authorized share in the authorized stock of the Corporation.

SECTION 23. Funds as Trust to the Corporation. — The National
Government and all other government instrumentalities including government
owned and controlled corporations in pursuance of their mandates, are hereby
authorized to place funds in the Corporation in the nature of trust for credit and/or
guarantee programs in such arrangements and purposes as may be agreed
upon by the entrustee and entrustor to service particular clients, borrowers and
activities.


Countrywide Development Funds of the members of Congress may
likewise be placed in the Corporation in the nature and purpose as herein
contemplated

Subject to rules and procedures, foreign entities are also allowed to place
funds to the Corporation in the same nature of trust in accordance with this Act.

SECTION 24. Corporate Secretary. ~ The Corporate Secretary, who shall
be a lawyer, and who shall have a regular item as one officer of the Corporation
that must be appointed by the Governing Board and under the supervision of its
Chairman, shall record the deliberations and other official actions of the
governing Board and shall take custody of the records and other papers
pertaining to it.

Unless replaced for cause, the Corporate Secretary, who can be
reappointed, shall have a tenure of three (3) years

SECTION 25. Legal Affairs. - The Corporation shall have its own Legal
Affairs Department to be headed by the Corporate Legal Counsel, with the rank
not lower than Senior Vice President, and whose nature and terms of
appointment shall be the same as that of other senior officers of the Corporation
under Section 14 (f) hereof.

In appropriate cases, the Corporation may also avail of the legal services
of any government legal office authorized to render such services to government:
‘owned or-controlled corporations or subject to rules and regulations, hire private
law firms to support its collection activities.

The Corporation may, upon the recommendation of its Corporate Legal
Counsel, deputize any member of its legal staff to act as special sheriff in
foreclosure cases, in the sale or attachment of the debtor's properties, and in the
enforcement of court writs and processes in cases involving the Corporation
Such special sheriff of the Corporation shall make a report to the proper court on
any action taken by him, which shall treat such action as if it were an act of its
own sheriffs in all respects.

SECTION 26. Internal Audit. — An Internal Audit Unit to be attached to the
Office of the President and CEO of the Corporation and must be headed by a
person whose salary grade shall not be lower that the rank of Senior Vice-
President and to be appointed by the President and CEO of the Corporation
upon the recommendation of the Governing Board, shall also be established in
this Act as a tool of both the Governing Body and the management for the
evaluation of corporate programs, policies and directions.

Reports and recommendations of the said unit shall be directly given to
the President and CEO of the Corporation, to the next in rank post in the


Corporation and to the Governing Body for their reference and basis in their
decision for Corporate efficiency.

SECTION 27. COA Personnel and Expenditures. - The number of
personnel to be assigned by the Commission on Audit in the Corporation and the
concomitant expenses to be incurred in the performance of their duties shall be
determined in such manner as to harmonize equitably the need of the
Commission on Audit to undertake efficiently and effectively its constitutional
powers and functions and the obligation of the Corporation to economize in the
use of its funds, considering that it is the Corporation which shall defray the
expenses for the audit of its operations. In case of disagreement between the
Commission on Audit and the Corporation as to the reasonableness of the
number of such personnel and their auditing expenditures, the opinion of the
former shall prevail.

As much as possible, the nature, function and accomplishments of the
mandate of the Corporation being performed by it shall be more on service and
economic stimulation rather than on proprietary basis and as being inept of
governmental power, must be given due weight by its audit as proper as it can be
in comparison to those government instrumentalities which inherently have been
accorded governmental powers or of those which are primarily established by it
primarily for its proprietary function

SECTION 28. Transitory Provisions. - The incumbent President of the
Quedan and Rural Credit Guarantee Corporation shall be the President of the
Agricultural Credit Guarantee Corporation until a new President who shall have
fulfilled the requirements of the position subject to the provisions of Section 15 of
this Act shall have been appointed by the President of the Republic of the
Philippines. The President and CEO shall, as soon as possible, prepare and
submit to the Governing Board such plans and programs which will ensure
harmonious and effective transitional activities towards the full operation of the
Corporation

Notwithstanding any law to the contrary, the Corporation shall continue to
be the Corporation being referred to under Chapter 3 of the Agriculture and
Fisheries Modernization Act (AFMA) particularly Section 25 thereof, and shall
likewise be the fund manager of all agricultural guarantees and loan funds issued
by the government for developmental purposes.

SECTION 29. Transfer of Assets and Liabilities. - Upon the effectivity of
this Act, the Secretary of Agriculture, the Secretary of Finance, the Secretary of
Budget and Management, the Governor of the Bangko Sentral in representation
of the National Government, and the Chairmen of the Committees on
Government Enterprises of the Senate and the House of Representatives shall
determine the assets and liabilities of the Quedancor which may be transferred to
or assumed by the Department of Agriculture. The Committee shall complete its


work within ninety (90) days from the constitution of the Agricultural Credit and
Guarantee Corporation submitting a comprehensive report with all its findings
and justification.

The following guidelines shall be strictly observed in the determination of
which assets and liabilities shall be transferred to the Department of Agriculture:

(a) the Governor of the Bangko Sentral ng Pilipinas and the Secretary of
Finance shall have primary responsibility for working out creative
monetary and financial solutions to retire the Quedancor liabilities and
losses at the least cost to the Government;

(b) collections from Quedancor's trade receivables shall be remitted to a
special deposit account (sinking fund) until such time as the net liabilities
of the Central Bank shall have been liquidated through generally accepted
finance mechanisms such as, but not limited to, write-offs, set-offs,
condonation, collections, reappraisal, revaluation and bond issuance by
the National Government, or to the National Government as dividends,

(c) the transfer of Quedancor's assets and liabilities, to be certified by the
Commission on Audit (COA), shall not commence until the initial required
capitalization of the Agricultural Credit and Guarantee Corporation shall
have been funded;

All actions taken under this section shall be reported to Congress and the
President within thirty (30) days.

SECTION 30. Mandate to Organize. - The Agricultural Credit and
Guarantee Corporation shall be organized by the Governing Board without being
subject to the provisions of Republic Act No. 7430, by adopting if it so desires, an
entirely new staffing pattern on organizational structure to suit the operations of
the Agricultural Credit and Guarantee Corporation under this Act. No preferential
or priority right shall be given to or enjoyed by any personnel for appointment to
any position in the new staffing pattern, nor shall any personnel be considered as
having prior or vested rights with respect to retention in the Agricultural Credit
and Guarantee Corporation or in any position which may be created in the new
staffing pattern, even if he should be the incumbent of a similar position prior to
organization. The formulation of the program of organization shall be completed
within six (6) months after the effectivity of this Act, and shall be fully
implemented within a period of six (6) months thereafter. Personnel who may not
be retained are deemed separated from the service.

SECTION 31. Separation Benefits. — Pursuant to Section 15 of this Act,
the Governing Board is authorized to provide separation incentives, and all those
who shall retire or be separated from the service on account of reorganization
under the preceding section shall be entitled to such incentives, which shall be in


addition to all gratuities and benefits to which they may be entitled under existing
laws.

SECTION 32. Suppletory Application of Corporation Code. - The
provisions of Republic Act 7393, otherwise known “An Act Reorganizing The
Quedan Guarantee Fund Board, Renaming It As Quedan and Rural Credit
Guarantee Corporation, Enlarging Its Powers And Resources To Support
Farmers And Rural Enterprises, And For Other Purposes” shall serve as
suppletory to the provisions of this act in so far as it is not in full conflict with the
provisions of this Act. Moreover, matters not provided for in this Act shall be
governed by the Corporation Code of the Philippines and on the other accepted
incidents of a principle of a corporation, in suppletory character insofar as it is
applicable

SECTION 33. Separability Clause. - Any portion or provision of this Act
that may be unconstitutional or invalid shall not have the effect of nullifying other
portions or provisions hereof as long as such portions or provisions can still
subsist and be given legal force and effect in their entirety.

SECTION 34. Repealing Clause. — All laws, ordinances, rules, regulations
and other issuances or parts thereof, contrary to or inconsistent herewith, are
hereby repealed or modified accordingly

SECTION 35. Effectivity. — This Act shall take effect fifteen (15) days after
its publication in at least two (2) newspapers of general circulation.

Approved,