Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City

SIXTEENTH CONGRESS

First Regular Session

9
House BILLNo_ 2628

Introduced by Honorable EMIL L. ONG

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EXPLANATORY NOTE

The bill seeks to reorganize the National Food Authority (NFA) into the National
Food Corporation (NFC), and the Food Development and Regulatory Administration
(FDRA) in order to further rationalize and strengthen the present mandate of the NFA.

The NFC will continue to pursue buffer stock functions and ensure food security,
and the stabilization of supply and prices of palay and rice at the farm gate and
consumer levels. On the other hand, the FDRA shall carry out regulatory powers of the
present NFA in relation to grains, and the Bureau of Agricultural Fisheries and Product
Standards in relation to non-grains food commodities. The FDRA shall likewise
undertake scientific researches and development activities for the efficiency of the food
supply chain in order to increase the value of the farmers produce for export and
against imports.

Most importantly, the bill proposes certain financial restructuring to allow the NFC.
to start on a clean slate, by transferring the financial liabilities of the NFA to the National
Government. The NFC will then have a new capitalization in the amount of Php 15
Billion.

The bill also envisions the NFC to intervene and properly respond to calamity
and emergency situations by ensuring the stability of supply and prices of palay/rice,
and implement poverty alleviation programs whenever commissioned by the
Department of Agriculture or the Department of Social Welfare and Development.

Itis hereby prayed that this bill be immediately passed into law.

Second District, Northern Samar

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Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City

SIXTEENTH CONGRESS
First Regular Session

2628

House Bill NO.

Introduced by Honorable EMIL L. ONG

REORGANIZING THE NATIONAL FOOD AUTHORITY INTO THE NATIONAL FOOD
CORPORATION AND THE FOOD DEVELOPMENT AND REGULATORY
ADMINISTRATION, 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 1. Short Title. - This Act shall be known as the “National Food
Authority Reorganization Act of 2013”

SEC. 2. Declaration of Policy. — 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 foodgrains for
domestic consumption and relief operations, and to motivate farmers to increase their
productivity and competitiveness. Towards this end, it shall also ensure the stability of
both the supply and prices of foodgrains.

SEC. 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 grain farmers initially with a market for their palay and corn
and eventually the skills to market their own produce at remunerative prices;

2) To encourage the adoption, in the processing and marketing phases,
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;

3) To encourage the private sector and Local Government Units (LGUs)
participation in the country's food security and price stabilization programs;

4) To provide and make available services including but not limited to
marketing and technical services;

5) To improve existing services and linkages in all sectors of the industry;

6) To promote effective and efficient government intervention in the
foodgrains sector;

7) To promote transparency in the costs of government interventions;

8) To focus government price subsidies to disadvantaged families; and

9) To promote developmental regulations aimed at enhancing
competitiveness, transparency, and responsibility in the food grains marketing
industry.

SEC. 4. Definition of Terms. - As used in this Act, the following terms

shall mean:


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1) ‘Basic food products” — refers to rice, corn, bread, fresh and dried fish
and other marine products, fresh vegetables, rootcrops, sugar, fresh pork, beef
and poultry meat.

2) *Calamities” - refers to fortuitous events which include acts of God
such as but not limited to typhoons, floods, droughts, earthquakes, volcanic
eruptions, lahar flows, and acts of man such as political and/or civil disturbances,
and widespread civil unrest.

3) “Capitalization” - refers to 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,

4) “Diversion’ - refers to any act of the following circumstances:

(a) unreasonable depletion of stocks;

(b) selling or lending government stocks to another grains businessmen;

(c) selling or offering to sell the government stocks beyond the maximum

quantity or price allowed by the Administration; and

(d) storing and/or selling the government stocks in other places/stalls,

other than those duly authorized by law.

5) “Farmgate Price” ~ refers to the prevailing buying price of a certain

commodity at the farm level in a certain locality at a given specific time.


6) "Farmers" — refers to producers of agricultural food products. They
can be tillers of the land themselves or administrators or supervisors of the
process

7) 'Foodgrains” - refers to palay, rice, white corn and corngrits

8) ‘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

9) "Government Rice Buffer Stock” - refers to the government's inventory
of rice equivalent to at least thirty (30) days national rice consumption by July 1
of every year inclusive of the 15-day Strategic Rice Reserve, for stabilization
purposes particularly in deficil areas and during Jean production periods.

10) “Hoarding” - refers to the undue accurnulation by any person or a
combination of persons of any foodgrains 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

11) ‘Licensing’ - refers to the act of granting an authority/privilege to a
qualified applicant to engage in a particular line of activity in the rice and/or com

industry.


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12) “Minimum Access Volume (MAV)"  — refers to the volume of a
specific agricultural product that is allowed to be imported with a lower tariff as
committed by the Philippines to the World Trade Organization (WTO) under the
Uruguay Round Final Act.

13) "Price Manipulation" ~ refers to 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.

14. “Price Stabilization’ refers to measures which ensures that realized
fluctuations of foodgrains prices conform to people's expectations of such price
movements.

15. “Prime food products ” — refers to fresh fruits, onions and garlic.

16. "Service Corporation" ~ refers to 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.

17. “Strategic Rice Reserve" - refers to 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/emergencies whether natural or man
made.

SEC. 5. Reorganization of the National Food Authority. - To execute the

foregoing policy, goals and objectives, there is hereby created a body corporate


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to be known as the National Food Corporation (NFC), herein after referred to as.
the Corporation, and a Food Development and Regulatory Administration
(FDRA), hereinafter referred to as Administration. Both of these agencies shall
be attached to the Department of Agriculture (DA).

SEC. 6. The NFC Board. - The powers and functions of the Corporation
shall be vested in a Board which shall have the overall responsibility of
formulating and coordinating a comprehensive program for the development of
the grains industry. The NFC Board of Directors shall be composed of the
Chairman, the President of the Corporation, and three (3) members, all to be
appointed by the President of the Republic of the Philippines. The Chairman,
President and Board Members shall be Filipino citizens, al least 35 years of age,
with sufficient experience in agri-business and management, of proven honesty,
integrity, and recognized competence, and familiarity with the Philippine market
environment. The appointed Chairman, President and one of the members of
the Board shall serve for a term of three (3) years. Of the remaining two (2)
members, one shall serve 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 a term of three
(3) years.

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 thirly (30) days from the creation of the NFC, the Secretaries of
DA, Department of Social Welfare and Development (DSWD), and Department of
Trade and Industry (DT!) shall each recommend five (5) nominees from which
the President of the Philippines shall choose the remaining three (3) members of
the Board; Provided, That at any given time, each of the sector recommended by
the departments shall be represented in the Board. Subsequent vacancies in the
Board shall be filled up with the concerned Secretary of the sector which is
vacant submitting three (3) nominees from which the President of the Philippines
will choose the replacement.

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 its own rules and regulations to govern its

proceedings and determine its official location and address.


SEC. 7. Organization - The Corporation shall be governed by the NEC
Board which shall approve the organizational structure and staffing pattern for
officers and employees of the Corporation within ninety (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 fringe
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 in accordance with existing
civil service rules and regulations.

SEC. 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 functions of the President in the absence of the latter.

The EVP shall receive the salary and allowances of an Undersecretary. In the


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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
eligible. Lower ranking officials shall be also Career Executive Service Officials
and/or Civil Service eligible 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.

SEC. 9. Powers, Functions and Responsibilities of the Corporation. -
The Corporation shall have the following powers, functions and responsibilities:

1) To maintain and manage the national Strategic Rice Reserve and the
Government Rice Buffer Stock throughout the year when commissioned by the
FDRA;

2) 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 July1 of each year. Upon the recommendation of the FDRA
Council, the President may approve the importation of other commodities that are

also duty/tariff free;


3) To discontinue the implementation of the “buy high and sell low” policy;

4) To engage in the business of trading, marketing, importing and
exporting basic and prime food products;

5) 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;

6) To issue debt instruments that are agri-agra eligible: Provided,
however, That the debt instruments may be guaranteed by the National
Government subject to the approval of the President of the Philippines: Provided,
further, That the National Government guarantee shall not exceed the amount of
Ten billion pesos (P10,000,000,000.00): Provided, finally, That the ceiling of Ten
billion pesos shall apply only to new debts that the Corporation will incur;

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;

9) To establish and structure its own internal organization defining as the
need arises and to fix the remuneration, emoluments, allowances, and other
fringe 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


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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) To sue and be sued;

11) To exercise all the rights and powers of a domestic corporation duly
incorporated and registered with the Securities and Exchange Commission. The
Corporation Code shall govern all matters regarding the Corporation not
‘specifically governed by this Act; and

12) To negotiate with private or government entities in the business of
trading, marketing, importing and exporting of commodities subject to the
guidelines to be formulated by the Board.

SEC. 10. Capitalization. - The National Food Corporation shall have a
total authorized capitalization of Fifteen billion pesos (P15,000,000,000.00) in the
form of existing assets of the defunct National Food Authority (NFA) pursuant to
Section 19 of this Act. In the event that the assets of the NFA are not sufficient to
cover the P15 Billion authorized capitalization, the National Govemment shall
provide the balance in the form of equity contributions through the General
Appropriations Act.

SEC. 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 Liquidators (BOL): Provided, That the liabilities of NFA
with National Govemment Guarantee that are transferred to the NFA-BOL or
NFC shall continue to be covered by said guarantee and its agri-agra eligibility
shall also be maintained.

The 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. The Personnel Services (PS) and the Maintenance and Other Operating
Expenses (MOOE) of the NFA-BOL shall be provided for by the FDRA and NFC,
respectively.

SEC. 12. Food Development and Regulatory Administration (FDRA)-
There is hereby created a Food Development and Regulatory Administration
hereinafter 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.

The remaining powers, functions and personnel of the defunct NFA
created under Presidential Decree No. 4, as amended, shall be transferred to the

FDRA.

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The FDRA shall be responsible for the implementation and enforcement of
the regulatory powers of the former NFA in relation to grains and of Bureau of
Agricultural Fisheries and Product Standard (BAFPS) in relation to non-grains
food commodities and shall also assume the latter's developmental functions.

SEC. 13. Food Development and Regulatory Administration Council.- In

” order to assist the FDRA on policy matters with respect to food security issues,

there is hereby created a Food Development and Regulatory Administration
Council, hereinafter referred to as the Council.

The Secretary of Agriculture shall serve as Chairman of the Council, with

the following as members:

(a) Secretary of the Department of Justice;

(b) Secretary of the Department of Trade and Industry;

(c) Secretary of the Department of Interior and Local Government;

(d) Secretary of the Department of Budget and Management;

(e) The Administrator of FDRA;

(f) A Representative from the farmers sector,

(g) A Representative from the consumers sector, and

(h) A Representative from the grains business sector.

The selection process for the representatives from the farmers,
consumers, and the grains business sectors shall be as follows:

4) The National Agricultural and Fishery Council (NAFC) and the National

Farmers Action Council (NFAC) shall recommend three (3) nominees each from


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the farmers sector from which the Secretary of the DA shall choose one (1)
representative;

2) The Secretary of the DTI shall recommend three (3) nominees from
the consumers sector from which the Secretary of the DA shall choose one (1)
representative; and

3) The NFC President shall recommend three (3) nominees from the
grains business sector from which the Secretary of the DA shall choose (1)
representative.

The Council 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 resolutions. The
Council members shall be entitled to a per diem of Ten Thousand pesos (P
40,000.00) for each meeting actually attended by them and other remuneration
as may be determined by the Council in accordance with existing policies of
government.

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, adopt
tules and regulations to gover its proceedings, call on any government agency
or institution for assistance or support, and determine its official location and

address.

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The Administration shall be headed by an Administrator with the rank of
an Undersecretary and shall be assisted by two (2) Depuly Administrators with
the rank of Assistant Secretaries. One Deputy Administrator shall be a member
of the Philippine Bar who shall be responsible for the regulatory functions while
the other Deputy Administrator shall take charge of the developmental functions
of the Administration.

SEC. 14. Powers and Functions of the Administration The
‘Administration shall have the following powers and functions:

1) To formulate and review, on an annual basis, the strategic rice reserve
requirements at the national and local levels;

2) To cause the maintenance throughout the year of the Strategic Rice
Reserve equivalent to at least fifteen (15) days national rice consumption, for
food security purposes, and the Government Rice Buffer Stock equivalent to at
least thirty (30) days national rice consumption by July 1 of each year; for price
stabilization purposes.

3) 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: Provided, That the President may issue the
needed Executive Order to implement the recommendation: Provided, further,

That such tariff change shall be effective for one year: Provided, however, That it


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may be extended to a longer period subject to existing laws, rules and
regulations, and;

(c) adopt measures that will protect domestic producers.

4) To establish rules and regulations goveming the importation of rice,
and to license, impose penalties and fines for non-compliance with established
tules 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;

5) To establish rules and regulations governing the allocation of tariff
import quotas for grains as well as other commodities with Minimum Access
Volume (MAV) among private sector entities and farmer cooperatives, and
impose fees and charges for said transactions, when necessary,

6) To establish rules and regulations goveming the export of rice, and/or
its substitutes and its by-products/end-products and to collect fees and charges
for such exportation at rates to be determined by the Administration;

7) 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;

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8) 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;

9) To inspect foodgrains stored in private warehouses for purposes of
taking inventory and monitoring commercial stocks, prices and stocks movement.

10) To regulate other agricultural and fishery commodities that the
Secretary of DA may assign to the Administration;

11) 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 comering, 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/end-products
thereof, 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;

12) 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 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,

7


documents, exhibits, records, evidence; to administer oath by himself or his duly
authorized representative, and to make arrests. Any case of contumacy shall be
dealt with in accordance with the procedure prescribed in 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;

13) To regulate the foodgrains quedan system;

14) To promote and organize interrelationship among food grains industry
stakeholders;

15) To introduce more efficient post harvest systems and technologies,
and to coordinate research and development activities in foodgrains processing
and marketing;

16) 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;

17) To establish networks with international and national institutions for
developing and accessing up-to-date technologies and regulatory systems;

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;

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19) To own, ease, operate or otherwise hold lands, buildings, equipment
and such other immovable properties, as may be necessary to carry out its
functions;

20) To enter into, make, perform and carry out contracts of every class
and description necessary or incidental to the realization of its function with other
person, firm or corporation, private or public, otherwise not prohibited by the law;

21) To auction off agricultural perishable stocks held by the Bureau of
Customs upon the approval of the Secretary of DA and hold in trust the proceeds
of the auction while legal proceedings are being undertaken;

22) 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 appropriate;

23) 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 acts as
may be necessary to carry into effect the provisions of this Act or as are essential
to the proper conduct of its operations;

24) To create a revolving fund from revenues and fees generated to
finance reward and incentive systems for programs such as but not limited to
anti-hoarding, anti-smuggling and to support agricultural development programs,
subject to guidelines to be formulated by the Secretary of DA; and

25) To establish and structure its own internal organization as the need

arises and to fix the remuneration, emoluments, allowances, and other fringe


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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.

SEC. 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) “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 diversion which refers to the following circumstances:
unreasonable depletion of stocks; selling or lending govemment 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;

3) The act of manipulating the prices of essential commodities to fall or
tise for one's own profit by changing or falsifying figures, accounts and other

elated information;


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4) Printing, issuing, or knowingly using, possessing or negotiating a
cancelled, unauthorized, illegal, counterfeit or falsified warehouse receipt;

§) Failure or refusal of the responsible officials to turn over or remit the
collection; and

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 nor more than twelve (12) years, or a fine
of not less than Two hundred thousand pesos (P200,000.00) nor more than One
million (P1,000,000.00) Pesos or both 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:

1) Connivance in the concealment of a 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 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

5) 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.

The offender shall, upon conviction, be punished by imprisonment of not
less than four (4) years and one day nor more than eight (8) years, or by fine of
not less than Two hundred thousand pesos (P200,000.00), nor more than Five
hundred thousand pesos (P500,000.00), or both 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) 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;

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

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3) 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.

The offender shall, upon conviction, be punished by imprisonment of not
less than two (2) years nor more than four (4) years, or a fine of not less than
Five Thousand (P5,000.00) Pesos nor more than Two Hundred Thousand
(P200,000.00) or both such fine and imprisonment, at the discretion of the court.

In addition to the foregoing penalties, the Administrator is hereby
authorized to prescribe and impose administrative sanctions, fines, and
penalties.

SEC. 16. Transfer of Mandates. - The following other mandates of the
defunct NFA shall be transferred to the following agencies:

(a) Programs directly relating to food subsidies for the poor to the
DSWD.

(b) Stabilization of price of palay at the farm gate to DA, and

(c) Stabilization of supply and price of rice at consumer level to the DA.

These government agencies shall be responsible for sourcing of funds for
these programs and shall exclusively commission the NFC as a service
corporation. The NFC shall perform the above services 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. 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

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20

21

budget proposal, the minimum amounts of One Billion pesos
(P1,000,000,000.00) for DA farmgate price stabilization and Two Hundred Fifty
Million pesos (P250,000,000.00) for DA supply and price stabilization of rice at
consumer level and Five Hundred Million pesos (P500,000,000.00) for DSWD
food subsidies for the poor.

SEC. 17. Appropriation of the Administration - The amount necessary to
finance the initial implementation of this Act insofar as the FDRA 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 including at least One Billion pesos (P1,000,000,000.00) 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.

SEC 18. Separation Incentive Package - Permanent officials and
employees of the NFA 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 - 1.5 x gross monthly pay 1/ x yr. of service for the first 20
years;

21-30 years - 2.0 x gross monthly pay 1/ x yr. of service in excess of 1st

20 years;

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2

2

23

more than 30 years - 2.5 x gross monthly pay 1/ x yr. of service in
excess of 1st 30 years.

In addition to other retirement benefits to which they are entitled to under
existing laws and regulations, employees who opt to retire under RA 1616 shall
receive only 1.5 gross monthly pay for every year of service under SIP. Those
who opt 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 SIP is inadequate, officials and employees who have opted to be
separated but have not received their benefits may choose to stay or be
reinstated and shall retain their previous remuneration and rank, provided that
the option shall be exercised within three (3) years.

To provide continuity in the operations of the Corporation, all incumbent

personnel of the defunct NFA shal! continue to exercise their respective duties
and functions and receive their corresponding salaries and benefits until the
organizational structures and staffing patterns of the NFC and FDRA have been

approved by the Corporation and the Administration, respectively.

41 Gross monthly Pay= Basic Pay + PERA + LOP


SEC. 19. Transitory Provisions. - 10 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. Officials and employees of the National Food
Authority not absorbed either by the Corporation or the Administration may still

choose to avail of the SIP during the period. The S

etary of DA, the Secretary
of DOF, and the President of the NEC shall appoint two (2) representatives each
to constitute @ group that will act as mediators in seiiling issues as to which
assets and personnel will go {o which organization, In any event, the rights and
privileges of officials and employees of NFC and FORA shall be adequately
protected. The Corporation will, however, have priority in deciding which asset
will comprise the Fifteen Billion Pesos (P15,000,000,000.00) of capitalization
The Chairman of this group will be appointed by the President of the Philippines.

SEC. 20. Repealing Clause. - Provisions of Presidential Decree No. 4,
as amended, and the Agriculture and Fisheries Modernization Act and all other
laws, decrees, executive orders, rules and regulations, issuances or parts thereof
inconsistent with the provisions of this Act are hereby expressly repealed or
modified accordingly.

SEC. 24. Seperability 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 vaiidity of the other provisions shall not be affected thereby.

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1 SEC. 22. Effectivity Clause. - This Act shall take effect fifteen (15) days
2 after its complete publication in at least two (2) national newspapers of general
3 circulation.

4 — Approved: