HOUSE OF RI

ATIVES
RECEIVED

Republic of the Philippines. 03 AUG 2016

HOUSE OF REPRESENTATIVE!

Quezon City
SEVENTEENTH CONGRESS
First Regular Session preemsinn use
co AND iNDT 2 E
House Bill No._ 2459 aoe SURVICE

INTRODUCED BY REPRESENTATIVE ARTHUR C. YAP

EXPLANATORY NOTE

In 2008, during my stint as Secretary of Agriculture, we recognized the need to overcome
small farmers’ problems in obtaining access to credit. Hence, the Department of
Agriculture spearheaded the issuance of Administrative Order 225-A, which mandated
government-owned and controlled corporations, government financial institutions,
including the Philippine Amusement and Gaming Corporation, the Philippine Charity
Sweepstakes Office, the Social Security System, the Government Service Insurance
system, the National Power Corporation and the Philippine National Oil Company, to
allocate five percent (5%) of their 2007 surplus for projects in rice and food production,
and as contribution to an Agricultural Guarantee Fund Pool (AGEP).

Since then, the AGEP has been used to mitigate the risks involved in agriculture lending
by the guarantee of unsecured loans made by lending institutions or their conduits to small
farmers and fisher folks engaged in small-scale livestock, poultry or fisheries. It covers up
to 85% of the loan exposure of accredited lending institutions against all types of risks of
non-repayment by farmer-borrowers, except fraud.

As of March 2016, AGFP was able to provide a guarantee coverage of loans amounting to
PhP32.4 billion involving 499,165 loan transactions to small farmers and fisherfolk. AGFP
now has a total of 88 active partner-lending institutions. From the initial capitalization of
4.4 billion, AGFP has now increased to 6 billion.

Recognizing the significant contribution AGFP has made to the welfare of our small

farmers and fisherfolk, there is now a need to institutionalize and strengthen this program,
to expand its coverage and thus breathe corporate life into it,

In view of the foregoing, the immediate passage of this bill is earnestly urged.

ARTHUR C. YAP
Representative


Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

House Bill No._ 2499

INTRODUCED BY REPRESENTATIVE ARTHUR C. YAP

AN ACT INSTUTIONALIZING THE AGRICULTURAL GUARANTEE FUND
POOL AND RENAMING IT AS THE AGRICULTURAL GUARANTEE
CORPORATION, EXPANDING ITS COVERAGE TO GUARANTEE POST
PRODUCTION AND FOR OTHER PURPOSES

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

TITLE AND DECLARATION OF POLICY

SECTION 1. Title. - This Act shall be known as the “Agricultural Guarantee
Corporation Act of 2016”.

SECTION 2. Declaration of Policy. - It is hereby declared the policy of the State to
establish an environment where opportunities for higher income and employment are
created for resource-poor farmers, to promote the gradual privatization and independence
of financial intermediaries serving rural areas, to build an efficient and internationally
competitive agricultural sector and to support the emergence of a more diverse structure

of production with a large increase in the numbers of successful small farming

enterprises. Pursuant to this, a guarantee system shall be put in place to encourage
lending institutions to extend loans to farmers and investors of agricultural based
production and post production.

SECTION 3. Definition of Terms.

3.01 Agricultural Food Commodity Production - refers to crop, fishery poultry and
livestock production,

3.02 Amount to be guaranteed - amount of principal loan disbursed to the borrowers by
the PLI as indicated in the promissory note (PN).

3.03 Collection Agreement - an agreement that binds the PLI or other collecting agents
to collect from the borrowers in behalf of the AGC.

3.04 Deed of Subrogation - an agreement signed by the PLI transferring its right of
claims from the principal debtor to the AGC.


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3.05 Guarantee - is an agreement under which one party (AGC) agrees to pay the loan
obligation of the borrower jf the borrower fails to pay the loan after its maturity.
3.06 Guarantee Fee - amount paid by the PLI to AGC to enroll loan to SFF for
guarantee coverage.
3.07 Partner Lending Institutions (PLIs) - are Banks, Cooperatives, Corporations,
Non-Government Organizations (NGOs) or Farmers Organizations (FOs] with juridical
personality, which provide financial assistance to farmers and fisherfolk
3.08 Past Due Ratio - total uncollected principal loan amount after the loan maturity net
of valuation reserve against the total loan pordolio of the PLI.
3.9 Small Farmers - refer to .small crop growers and small livestock and poultry raisers
as defined below:
3.9.1 Smalt Crop Growers - refer to owner-cultivator, tenants, leaseholders, etc.
who are tilling not more than five (5) hectares of agricultural lands (RA 6657).
3.9.2 Small Poultry and Livestock Raisers - refer to those having the following
maximum hog poultry and livestock inventory at the time of accreditation by the
PLI:
a. Poultry - 2,000 layers or 5,000 broilers;
b. Swine -10 sows or 50 fatteners;
c. Goat/Sheep - up to 50 heads for meat and/or dairy
d. Cattle - 10 fatteners or 5 breeders;
e. Dairy - 10 milking cows/carabaos
3.10 Small Fisherfolk - refers to the following:
3.10.1 Coastal Fisherman - owns or operates a fishing boat, including
paraphernalia with total weight of not more than three (3) gross tons and conducts
fishing activities within fifteen (15) kilometers from the shoreline.
3.10.2 Fishpond Operator — owner/operator of fishpond(s) of not more than five
(5) hectares including those under fishpond lease agreement (FLA).
3.10.3 Fisheage Operator - owner/operator of fish cage(s) with total area of not
more than 400 square meters,
3.10.4 Those engaged in aquaculture, which covers all forms of raising and
culturing fish, shellfish, seaweed production, and other fishery species in brackish

and marine areas of not more than five (5) hectares.

3.11 Unsecured Loan - refers to the amount of loan not covered by Real Estate Mortgage
(REM) and/or chattel mortgage, or any other form of acceptable collateral.

CHAPTER IL
AGRICULTURAL GUARANTEE CORPORATION


SECTION 4. Agricultural Guarantee Corporation, - The Agricultural Guarantee Fund
Pool is hereby renamed as the Agricultural Guarantee Corporation, hereinafter referred to
as the Corporation, which shall have its principal office in Metropolitan Manila and shall
exist for a period of fifty (50) years from December 2016. The Corporation may establish
such offices, agencies, subsidiaries or branches anywhere in the Philippines as its

operations would require and its Board of Directors would determine.

SECTION 5. Corporate Powers and Functions. - The Corporation, in addition to the
regular powers and functions provided under Section 36 of the Corporation Code, shall

have the following powers and functions, subject to the limitations hereinafter provided:

1. To promote agriculture and fisheries production, giving primary preference to the
small farmers and fisherfolk:

2. To guarantee the payment in favor of any natural or juridical person, of any and
all forms of unsecured loans and other forms of credit facilities and receivables
arising from financial contracts exclusively for agriculture and fisheries

production and post production;

To encourage lending institutions to finance small farmers and fisherfolk thru a
viable system of long-term mortgages, guaranties and other incentives;

4. To underwrite, purchase, own, sell, mortgage or otherwise dispose of stocks,
bonds, debentures, securities and other evidence of indebtedness issued in
connection with the powers enumerated in this Act; Provided, That, it shall not
engage in direct mortgage lending activities;

5. To borrow money and/or to issue bonds, debentures, securities, collaterals, notes,

and other obligations in local currencies with the approval of the President of the
Philippines after consultation with the Monetary Board of the Bangko Sentral ng
Pilipinas, and in foreign currencies, here or abroad, with the approval of the
President of the Philippines in consultation with the Monetary Board of the
Bangko Sentral ng Pilipinas and the Secretary of Finance, but in no case to exceed
at any one time the aggregate amount of the principal obligations of all mortgages
and accounts guaranteed under this Act. These bonds and other obligations shall
be issued under such terms and conditions as provided in this Act and the rules
and regulations prescribed by the Corporation, and in such manner as may be
stipulated therein and shall bear such rate of interest as may be fixed by the
Corporation. Such obligations shall be secured by the assets of the Corporation
including the stocks, bonds, debentures and other securities underwritten,
purchased or held by it under the provisions of this Act. Such obligations may be
issued and offered for sale at such price as the Corporation may determine, and
shall be exempt from taxation as hereinafter provided as to principal and interest,


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except estate, inheritance and gift taxes. Bonds issued by the Corporation shall be

registered at the request of the holder thereof under such rules and regulations as
may be prescribed by the Corporation;

6. To adopt, alter, and use a corporate seal; to enter into contracts; and to sue and be
sued in any court of competent jurisdiction;

7. To acquire, purchase, own, hold, manage, administer, operate, develop, lease,
pledge, mortgage, exchange, sell, transfer or otherwise dispose of, in any manner
permitted by law, real and personal property with every kind and description,
monies and funds, or any interests therein as may be necessary to carry out the
purposes and objectives of the Corporation; and

8. To do any and all acts and things and to exercise all powers which may be
necessary or convenient to the accomplishment or furtherance of its purposes and
objectives, or which a natural person can do and exercise and which may now be

or hereafter be authorized by law.

SECTION 6. Authorized Capital Stock. - The Corporation shall have an authorized
capital stock of Ten Billion Pesos (P10,000,000,000.00), divided into Ten Million
(10,000,000) shares of common stock with a par value of One Thousand Pesos
(P1,000.00) per share.

The shares shall be subscribed by the Government of the Republic of the Philippines
upon the approval of this Act, the funds shall be taken from the already existing funds of
the AGEP, and the remaining amount shall be appropriated out of the funds of the
National Treasury, not otherwise appropriated.

No portion of the authorized capital stock of the Corporation shall accrue to any agency

or instrumentality of the National Government, including government-owned or -

controlled corporations.
SECTION 7. Use of Net Worth. - The use of the net worth of the Corporation shall be
subject to the following limitations:

1. At least fifty percent (50%) shall be allocated exclusively for rice and corn
production, to be distributed equitably among all the regions, to the extent
practicable;

2. At least twenty five percent (25%) shall be allocated exclusively for high value
crops and other agricultural and fisheries production, to be distributed equitably
among all the regions, to the extent practicable; and

3. At least twenty percent (25%) shall be allocated exclusively for the unsecured
portion of post-production facilities, to be distributed equitably among all the
regions, to the extent practicable.


Investments, if any, by the Corporation in any establishment or enterprise, whether public

or private, shall be subject to the same limitation.

SECTION 8. Board of Directors - The Corporation shall be governed and its activities
be directed, controlled and managed by a Board of Directors, hereinafter referred to as
the Board, which shall be composed of nine (9) members, as follows:

1. The Secretary of the Department of Agriculture as the ex officio Chairman;
The Secretary of Finance as the ex officio Vice Chairman;
The Secretary of Agrarian Reform;
The Secretary of the National Anti-Poverty Commission;
. The President of Land Bank;
The Executive Director of Agricultural Credit Policy Council;

. The President of the Corporation; and

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Two (2) other members from the Monetary Board and partner lending institution
(PLI) to be appointed by the President of the Philippines, who shall serve for a
term of five (5) years;
Provided, That the person appointed shall be of good moral character, of
unquestionable integrity, of known probity and patriotism and with expertise and
experience of at least ten (10) years in business, finance and the professions:
Provided, further, That in the event of a vacancy; the successor appointed to fill
the same shalll serve only the unexpired portion of the term of the member he
succeeds to.
Cabinet-rank members of the Board shall designate an undersecretary, and the President
of Land Bank or his representative, as their permanent representative in case they fail to
attend meetings of the Board.
The decisions of the Board shall be made by a vote of the majority of all its members.
The Chairman of the Corporation shall preside over meetings of the Board of Directors.
The Vice Chairman of the Board shall assist the Chairman and act in his stead in case of
the latter’s absence or incapacity.
The Chairman, Vice Chairman, and the Members of the Board shall be entitled to per
diem for each meeting actually attended at such amount as may be fixed by the Board in
accordance with existing laws, rules and regulations.
SECTION 9. Powers, Functions and Duties of the Board of Directors. - The Board
shall have the following powers, functions and duties:

1. To adopt the by-laws of the Corporation and to revise or amend the same as may
be expedient;

2. To direct the management, operations and administration of the Corporation;


3. To authorize such expenditures by the Corporation as are in the interest of the
effective administration and operations of the Corporation;

4. To formulate, revise or adjust periodically all policies, plans and projects, and to
promulgate the necessary rules and regulations and manuals of procedures for the
effective implementation of the provisions of this Act, in any event to conform to
the prevailing economic and financial conditions: Provided, That anything
contained herein to the contrary notwithstanding, all such policies, rules and
regulations, manuals of procedures, on ceilings and limitations shall be subject to
the concurrence of the Monetary Board of the Bangko Sentral ng Pilipinas;

5. To create offices or positions necessary for the efficient management, operation
and administration of the Corporation: Provided, That all positions in the
Agricultural Guarantee Corporation (AGC) shall be governed by a compensation
and position classification system and qualifications standards approved by the
Corporation’s Board of Directors based on a comprehensive job analysis and
audit of actual duties and responsibilities: Provided, further, That the
compensation plan shall be comparable with the prevailing compensation plans in
the private sector and which shall be exempt from Republic Act No. 6758,
otherwise known as the Salary Standardization Law, and from other laws, rules
and regulations on salaries and compensations; and to establish a Provident Fund
and determine the Corporation’s and the employee's contributions to the Fund;
and

6. To exercise such other powers as may be necessary and proper for the effective
enforcement of this Act and to accomplish the purposes for which the Corporation
was organized; and to do and perform any and all acts and deeds as are necessary

and incidental to the attainment of the purposes of the Corporation.

SECTION 10. President of the Corporation. - The President of the Corporation shall be
appointed by the President of the Philippines for a term of five (5) years unless sooner
removed for cause. He shall be a person of good moral character, of unquestionable
integrity, of known probity and patriotism, and with expertise and experience of at least
ten (10) years in business, finance and the profession. He shall receive such
compensation, allowances and other emoluments as may be determined by the Board.
SECTION 11. Powers and Duties of the President, - The President shall have the

following powers and duties:

1. To prepare the agenda for meetings of the Board and to submit for its
consideration the policies and measures which are necessary to carry out the
purposes and provisions of this Act;

2. To execute and administer the policies and measures approved by the Board;


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3. To represent the Corporation in all dealings with other offices, agencies and

instrumentalities of the Government and with all persons and entities, public or
private, domestic or foreign; and
4. To exercise such other powers, functions, and duties as may be delegated by the
Board.
SECTION 12. Executive Vice President and General Manager of the
Corporation, - The Executive Vice President, who shall be the General Manager of the
Corporation, shall be appointed by the Board of Directors. He shall act as President of the

Corporation in the latter’s absence.

CHAPTER IL
POLICIES ON GUARANTEE COVERAGE AND CLAIMS

SECTION 13. Guarantee Coverage —
For farmers and fisherfolk engaged in agricultural food production and post production,
the guarantee cover shall be up to 85% of the unsecured portion of the principal balance
at the time of claim but not to exceed the amount of credit ceiling per commodity. The
Board may increase it up to 90% if the PLI shall have a lower interest rate compared to
the average prevailing rate under such terms and conditions to be determined by the
Board.
Ceilings per commodity/activity type shall be based on the average cost of production per
commodity used by Land Bank of the Philippines in its credit evaluation or as may be set
by the Board.
Section 14, Eligible Borrowers and Loans for Guarantee Cover
14.1 Eligible Borrowers for Guarantee Cover
Eligible borrowers for guarantee cover are farmers and fisherfolk (SFFJ or group
of farmers/fisherfolk borrowers who are engaged in agricultural food production
and post production.

14.2 Eligible Accounts for Guarantee Cover

Accounts eligible for guarantee coverage must meet the following conditions:

a. Unsecured loans/accounts of eligible borrowers not covered by real estate
mortgage (REM) and/or chattel mortgage (CM), or any other form of
acceptable collateral. If partially secured, only the unsecured portion shall be
eligible for guarantee coverage;

b. Loan purpose is to finance palay and other food crops/commodities

production; and


¢. Accounts which were released to the borrowers by the PLIs not more than
sixty (60) days prior to enrolment for guarantee coverage, provided there is no

damage to the crop at the time of enrolment for guarantee cover.

Section 15. Guarantee Fee - The PLI shall pay the guarantee fee based on the amount of

the loan as indicated in the PN and the guarantee period of the crop/commodity as may be

determined by the Board. The guarantee fee may be reviewed and approved by the

Governing Board as the Board may deem necessary.

Section 16. Eligible PLIs The following are the eligible PLIs:

a.

Banks (e.g. Universal Banks, Commercial Banks, Rural Bank, Cooperative Banks,
Thrift Banks

. Cooperatives
. Corporations that lend to SFF

. Non-Government Organizations and Farmers' Organizations

Farmers’/People’s Organizations other than Cooperatives

Section 17. Eligibility Requirements for PLIs

The PLI must pass the following:

Banks

i, Satisfactory credit standing with creditors, if any;

ii, CAMELS Rating of at least 3;

iii, Past due ratio net of valuation reserve, of not more than 25%;
iv. At least two-year track record in lending to farmers;

v. Capital adequacy ratio of at least 10%;

vi. Adequate reserve requirement; and

vii, Profitable on the year preceding the application and as of the time of

application for guarantee line;

. Cooperatives

Registered with Cooperative Development Authority (CDA)
Satisfactory credit standing with creditors, ifany;

Past due ratio net of valuation reserve, of not more than 25%;

iv. At least tvvo-year track record in lending to farmers;
v. Risk asset ratio (for credit cooperative) of not less than 10%;
vi. Complete part-time or full-time core management team; and

vii. Profitable on the year preceding the application and as of the time of
application for guarantee line;

. Corporations that lend to farmers and fisherfolk

i, No ownership and/or labor dispute for the past three (3) years;


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ii. Past due ratio net of valuation reserve, of not more than 15%;

iii. Satisfactory credit standing with creditors, if any

iv. Profitable on the year preceding the application and as of the time of
application for guarantee line;

v. Atleast 60% Filipino-owned;

vi. Debt-equity ratio of not more than 80:20;

vii. At least two-year track record in lending to farmers.

Non-government Organizations

i, Registered (SEC) with Securities and Exchange Commission

ii, Past due ratio net of valuation reserve, of not more than 25%

iii, Satisfactory credit standing with creditors, if any;

iv. Complete part-time or full-time core management team:

v. Net Surplus on the year preceding the application and as of the time of

application for guarantee line, if applicable;

vi. At least two-year track record in lending to farmers’

Farmers’/People’s Organizations other than Cooperatives
Registered with a registering entity (e.g. SEC, NIA, etc);

Operational and with satisfactory credit standing with its cieditors, if any or
with supervising government agencies/ entities such as NIA, DoLE, DAR, ete;
With functioning Board of Directors or its equivalent’ and presence of core
management team (e.g. manager, bookkeeper and treasurer or officially
designated officers to manage the lending program);

Positive net worth on the year preceding the application and as of the time of
application for guarantee line

With lending policies and guidelines and with basic recording system (e.g. loan
disbursement and collection systems, ete.):

At least two-year track record in lending to farmers; and

Past due ratio net of valuation reserve, of not more than 25%.

Section 18. Guarantee Line Approval and Renewal

a.

‘A guarantee line shall be established for an eligible PLI, subject to the approval of
the Corporation’s approving authorities. The approved guarantee line shall be the
maximum amount of guarantee cover that can be extended to the PLI at any given
time. A guarantee line shall be valid for a period of one year.

Renewal shall be subject to the satisfactory performance of the PLI based on the
criteria set by the Board.

All PLIs with approved guarantee line shall execute a guarantee agreement with the

Corporation.


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d. The Corporation may terminate the guarantee line for breach or violation by the
PLI of any of the terms and conditions in the guarantee agreement and of the
provisions of this Act and its IRR.

e. The PLI may terminate the same for any justifiable cause upon serving notice to
the Corporation at least fifteen (15) days prior written notice to such effect
notwithstanding any provision herein or as ordered by the Board.

SECTION 19. Guarantee Premiums, Appraisal Fees and other Charges. - The
Corporation shall fix in accordance with sound actuarial practice and the risk
characteristics involved, the rates of guarantee premiums to be imposed. Such guarantee
premiums shall be payable by the mortgagee or guaranteed entity, either in cash or in
debentures issued by the Corporation at its present value, in such manner as may be
prescribed by the Corporation. In addition, the Corporation may charge and collect from
the mortgagee or guaranteed entity, such fees and amounts as may be reasonable to

implement its guarantee programs

SECTION 20. Guarantee Limitations- Any and all guaranties issued by the Corporation
shall be subject to the following limitations, anything to the contrary notwithstanding:

1. The extension of guarantee or guaranties shall not, at any time, exceed three (3)
times the net worth of the Corporation;

2. The extension of guarantee shall not exempt banks and other financial institutions
regulated by the Bangko Sentral ng Pilipinas from complying with the pertinent
single borrowers limit as provided by the Monetary Board of the Bangko Sentral
ng Pilipinas;

3. The aggregate amount of the outstanding obligations shall not, at any time, exceed
twenty (20) times the capital and surplus of the Corporation;

4. All guaranteed bonds, debentures, commercial papers and other securities issued
by individual persons which are sold to the public shall still be subject to the
registration requirements under the Revised Securities Act;
and

5. All rules and regulations on ceilings and limitations under this Act shall be
‘subject to the concurrence of the Monetary Board of the Bangko Sentral ng
Pilipinas.

SECTION 21. Payment of Guarantee Calls-

1. In the event of a default on the guaranteed obligation in accordance with the
regulations of the Corporation, the guaranteed entity shall be entitled to receive
the benefit of the guarantee as herein provided, upon (1) submission of complete
documentary requirements to support the request for claims payment; (2)the


prompt conveyance to the Corporation of the right to the property securing the
guaranteed obligations; and (3) the assignment to the Corporation of all claims of
the mortgagee against the mortgagor under the guaranteed obligation.

2. For the purpose of the above subsection (a), the balance outstanding and due on
the guaranteed mortgage shall be determined in accordance with the rules and
regulations prescribed by the Corporation;

3. Debentures issued under this Section shall be subject to such terms and
conditions, and shall include such provisions for redemption, if any, as may be
prescribed by the Corporation, and may be in coupon or registered form;

SECTION 22. Guarantee of the Republic of the Philippines. -

1. The Republic of the Philippines hereby fully and unconditionally guaranties to
payment by the Corporation both of the principal sums and interest of the bonds,
debentures, collateral, notes, or other such obligations of the Corporation, issued
or incurred by virtue of this Act and shall pay such principal sums and interest in
the event that the Corporation fails to do so: Provided, That such guarantee shall
be expressed on the face of the certificate of indebtedness.

2. The Republic of the Philippines shall succeed to all the rights of the holders of
such bonds, debentures, collateral, notes or other instruments to the extent of the
payments made, unless the sums so paid by the Republic of the Philippines shall
be refunded by the Corporation within a reasonable time.

SECTION 23.Tax Exemption. - Interest and yields earned or accumulated on mortgage,
debentures, bonds, notes, mortgage and asset-backed securities, interest under a lease,
and other credit instruments, whether issued by the Corporation or covered by its
guarantee in favor of natural or juridical person, in cash or in bonds, shall be exempt from
all taxation: Provided, however, That the Corporation shall have the authority to increase
the limit of such exemption in such varying amounts as shall be reflective of the social
concerns of the State: Provided, further, That the exercise of said authority shall be
subject to the approval of the President of the Philippines upon the recommendation of
the Monetary Board of the Bangko Sentral ng Pilipinas: Provided, finally, That the

Corporation shall not exercise such authority more often than once every five (5) years.

SECTION 24. Penalties. -

1. Whoever, for the purpose of obtaining any loan or advance of credit from any
person, partnership, association, or corporation with the intent that such loan or
advance of credit shall be offered to or accepted by the Corporation for guarantee,
or for the purpose of credit, or mortgage guaranteed by the said Corporation, or the


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acceptance, release, or substitution of any security on such loan, advance of credit,

or for the purpose of influencing in any way the action of the said Corporation under

this Act,

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2. Whoever

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makes, passes, utters, or publishes, or causes to be made, passed,
uttered, or published any statement, knowing the same to be false, or
alters, forges, or counterfeits, or causes or procures to be altered, forged,
or counterfeited, any instrument, paper, or document, or

utters, publishes, or passes as true or causes to be uttered, published or

passed as true, any instrument, paper or documents, knowing it to have

been altered, forged or counterfeited, or
willfully overvalues any security, asset, or income, shall be punished by
a fine of not less than the amount of the loan or loans involved or by

imprisonment for not more than ten (10) years or both.

falsely makes, forges, or counterfeits any obligation or coupon, in
imitation of or purporting to be an obligation or coupon issued under
authority of this Act, or

passes, utters, or publishes, or attempts to pass, utter, or publish, any
false, forged, or counterfeited obligation or coupon purporting to have
been so issued knowing the same to be false, forged, or counterfeited,
or

falsely alters any obligation or coupons so issued or purporting to have
been so issued, or

passes, utters, or publishes, or attempts to pass, utter, or publish, as
true, any falsely altered or spurious obligation or coupon, so issued or
purporting to have been so issued, knowing the same to be falsely
altered or spurious shall be punished by a fine of not less than the
amount of loan involved, or by imprisonment for not more than five

(5) years, or both,

3. Any person

ii,

who willfully and knowingly makes, circulates, or transmits to another
or others any statement, or rumor written, printed or by word of
mouth, which is untrue in fact and is directly or by inference
derogatory to the financial condition or affects the solvency or
financial standing of the Corporation, or

who knowingly counsels, aids, procures, or induces another to start,

transmit, or circulate any such statement of rumor, is guilty of felony


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punishable by a fine of not less than the amount of loan involved or by
imprisonment of not exceeding one year, or both.

SECTION 25. Fund Sources for Operation. - The Bangko Sentral ng Pilipinas may
extend to the Corporation advances which may be needed for its operations and/or grant
loans secured by any assets which are defined as acceptable securities by the Monetary
Board.

SECTION 26. Exemptions. - The Corporation is exempt from the coverage of the
regulations of Bangko Sentral ng Pilipinas governing quasi-banking functions.
SECTION 27. Legal Counsel. - The Office of the Government Corporate Counsel shall
be the General Counsel of the Corporation.

SECTION 28. Resident Auditor. - The Resident Auditor of the Corporation shall be
appointed by the Chairman of the Commission on Audit, who shall also appoint and for
cause, remove, upon the recommendation of the Resident Auditor, the personnel of the
Auditing Office. The Auditor shall submit, through the Commission, an annual report on
the financial condition and the result of the operations of the Corporation to the President
of the Republic of the Philippines, each member of the Senate and the House of

Representatives, the National Economic and Development Authority and the Chairman of

the Commission on Audit.
SECTION 29. Reports, - The Corporation shall submit a quarterly report to the President
of the Philippines and to each member of the Congress of the Philippines, within the first
forty-five (45) days of the succeeding quarter, regarding its activities under this Act for
the previous quarter.

SECTION 30. Transitory Provision.- Any and all policies, guidelines, programs,
ceilings and limits currently in effect with respect to the issuance of guarantee shall be
submitted to the Monetary Board of the Bangko Sentral ng Pilipinas for concurrence
within six (6) months after the effectivity of this Act.

SECTION 31. Sunset Review. - Every year after the effectivity of this Act, Congress
shall conduct a sunset review which shall entail a systematic evaluation of the
Corporation to determine whether or not its performance, impact or accomplishment with
respect to its mandates merit its continued existence. Such review shall be undertaken by
the Committee on Agriculture and the COCAFM.

SECTION 32. Suppletory Application of the Corporation Code. - The provisions of the
Corporation Code shall have suppletory application in matters not provided in this Act.
SECTION 33. Implementing Rules and Regulations.- The Corporation, with the
Department of Agriculture, Land Bank of the Philippines, Department of Finance, ACPC
and the Department of Budget and Management shall promulgate the rules and
regulations necessary for the implementation of and consistent with this Act.


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SECTION 34. Repeal. All other laws, orders and proclamations, rules and regulations,
or parts thereof, inconsistent with or contrary to the provisions of this Act or its purposes
are hereby amended or modified accordingly

SECTION 35. Separability Provisions. - If for any reason, any provision of this Act, or
the application thereof to any person or circumstances, is held invalid, the remaining
provisions not affected thereby shall continue to be in full force and effect.

SECTION 36. Effectivity. - This Act shall take effect fifteen (15) days after its

publication in the Official Gazette or in at least two (2) newspapers of general

circulation.

Approved.