of keeablestne Priore
ESENTATIVES

Introduced by REP. AUGUSTO BOBOY SYJUCO, Ph.D.

EXPLANATORY NOTE

icle li of the Philippine Constitution mandate one methodology

perform its task of accelzrating the flow of investments and credit

Svations 10
vi How the State shail
jesources to the populace so as to trigger vigorous growth and development, productivity,
employment and enterprises thereby generating more livelihood and income opportunities for

tne disadvantaged populace

This bill is crafted to strengthen and broaden the function of Quedan and Rural Credit
3uerantee Corporation in order for it to become more responsive to the needs of and provide a

{suppor mechanism, a reliable guarantee system and a specially emplaced

vorkers, their cooperatives, the small urban

judit andlor guarentee facility for urban an

uf

ic providers.

iit Fura amerprises tw credit or credit i

in this regard, the approval of this bill is earnestly sought.

ae
ee al

AUGUSTO BOBOY SYJUCO, Ph.D.
Second District, Province of lisilo


pines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

2072

House’ Bill No

GUSTO BOBOY SYJUCO, Ph.D.

AN ACT STRENGTHENING QUEDAN AND RURAL CREDIT GUARANTEE
CORPORATION, BROADENING ITS POWERS AND RESOURCES TO SUPPOR'
MICRO, SMALL AND MEDIUM ENTERPRISES, FARMERS, FISHERFOLKS, AND
WORKERS, AMENDING FOR THE PURPOSE REPUBLIC ACT NO, 7393,
OTHERWISE KNOWN AS THE QUEDAN AND RURAL CREDIT GUARANTEE
CORPORATION ACT AND FOR OTHER PURPOSE:

House of Representatives of the Philippines in Congress

CTION i

Act shall be known as the “Quedan Guarantee and Credit
Corporation Act.”

SE — Sections 10 and 20 of Article I] of the Philippine

2. Declaration of Polic

Co

tution mandate one methodology on how ihe State shall perform its task of accelerating

she How 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

iacome opportunities for the disadvantaged populace.

Consonant to this, the State shall be set up a convenient credit-support mechanism, a

guarantee system and a specially emplaced credit and/or guarantee facility that shall
clleetively;

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

(6) Lncourage the participation of private enterprises to support the undertakings of

ior increase the How of

wich persons by provid ‘tives for them, to focus upon, to trust

sures and inve into th

& Instiutionalize the Quedan Purchase Order/Job Order (POO) and other

ents o such nature as evidh

ices and in providir ance;

(d) — Institutionalize the quedan or warehouse receipt and other negotiable instruments.

evidencing

stence of commodities stored in the Corporation’s bonded warehouses, as

convenient collateral for acce
Fk
we (Ee) agus cag 403 vy _ \2

DANV8) Lee. RON

ing credit;


rant of assistance to small enterprises

all production, processing and developmental activities and to

those businesses direetly supporting such endeavors either as their markets or partners;
(Support and encourage dynamic cooperativism, groupings, capital formation and

mobilization among the populace;

neome from the above-stated activities in recognition of committed,

adopting or institutionalizing a system. that

the unne

layers of marketing through

wmonize, involve, coordina

by © and/or team up with other government

institutions, nongovernmental organizations, private voluntary organizations, self-help groups

and other

uupations involved in providing support services to these sectors and areas.

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

(a) “Corporation” — The Quedan Credit and Guarantee and Corporation;

(b) "Farmer" — Any natural person whose primary livelihood is cultivation of land ot
the production of agricultural crops, livestock and aquaculture products, in small or commercial
Seale, either by himselt

¢ primarily with the stance of his immediate farm household or

workers for the

‘ondary purpose of gaining profit, whether the land is owned by him or by
another person, under a leasehold tenancy agreement or arrangement with the owner thereof;

(©) "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

‘ning profit. whether the vessel, banca, and other equipment used is owned by him or by

auother person under lease or othe

atrangement with the owner thereof and there is no

employer-eniployee r

stionship:

"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.

©) Merprise” — Refers to an activity of a production, processing or development-
based undertakings, of of such combination or trading thereof, engaged either for profit, or as a

source of daily sustenance or for addition thereto:

Refer (o entity or entities which per authority from the Bangko Sentral

Pilipinas are author

zed to lend and aecept deposi

(zg) “Providers” — Refer to k

lly operating businesses that render services or that

provide merchandise to clients or borrowers of the Corporation for an undertaking:



(h) “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:

() — *Partmers” — Refer to any person, natural or juridical, that supports the realization

ad implementation of the loan and guarantee programs of the Corporation other than a client,

borrower or provider:

() “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,

> 4. Reorganization, — The Quedan and Rural Credit Guarantee Corporation is

hereby reorganized in accordance with the provisions of this Act and renamed as Quedan Credit

und Guarantee Corporation and hereatier referred to as the Corporation.

Uhe Corporation, in consideration of its role in national development, is hereby attached
1o the Oltice 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.

SEC. 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,
E

SEC. 6. Term of Existence. The term of

istence of the Corporation shall be fifty

(50) years trom the date of effectivity of this Act.

SEC. 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) 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

goverment 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.

SEC. 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
soar 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 th

2 required subscriptions of the government in pro rata basis
as is necessary to cover the required subscriptions of the Government and which may be sourced
from their annual budgets. Ten (10) percent of such subscriptions shall be paid in the immediate
year succeeding the approval of this Act. The remaining shall be paid at ten (10) percent yearly

from their approved budgets or from the dividend of their subscriptions in accordance with the

suceeed aph hereof until the subscribed stoc!

par

shall have been fully paid.

Subje:

0 the approval of the majority of members of the Governing Board, in a meeting

{or the purpose, profit aceruing to the investment of the above-mentioned agencies, in

oxiane 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
Republie of the Philippines or his duly authorized representative shall vote corresponding to the
National Government's shareholding.

SEC. 9, Subscription by Private Investors. — No private person, natural or juridical,
shall divectly or indireetly, by interlocking directorate or other forms of combinations, by trust,

subscription, purchase, les

e, mortgage, pledge. or other means of acquisition or encumbrance,

ed

own at any one time more than ten percent (10%) of the portion of the Corporation's authori

capital stock that can be subscribed solely by private investors. The Corporation in consultation

\Wwith the Securities and Exchange Commission shall prescribe within ninety (90) days from the

effectivity of this Act, implementing rules and regulations which will assure strict observance of

the herein section by private investors and stock exchanges, stock-brokers, traders and personnel

thereof, if the

‘orporation is listed in such exchanges for the trading of its shares therein under
Seetion 10 hereof. Violation of any provision of the herein section or its implementing rules and

regulations shall be punishable under Section 185 of the Revised Penal Code or, whenever

applicable, the Anti

graft and Corrupt Practices Act.
SEC. 10. Submission to the Securities and Exchange Commission. — The concerned

office

s 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.
SEC. 11. Corporate Powers. — The Corporation, as a body corporate, shall have the

following powers and purposes

(a) Establish a cred

upport mechanism for the benefit of and assistance to its
clients, borrowers and partners:

(b)

ablish, 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.

SEC. 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: a permanent representative from the Office of the President
of the Republic of the Philippines, the Director General of the National Economic Development
Authority (NEDA), the Secretaries of the Department of Budget and Management (DBM,
Department of Finance (DOF), Department of Interior and Local Government (DILG), the
Governor of Bangko Sentral ng Pilipinas, the president of the Philippine Chamber of Commerce
and Industry (PCCD, the president and Chief Executive Officer (CEO) of the Corporation and
three (3) other members: a small farmer or fisherfolk to be endorsed by the Department of

culture, worker to be endorsed by the Department of Labor and Employment and a
goverment 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 fisherfolks, workers and employees, respectively. Said representatives
shall serve for a term of two (2) year. 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 stockholder's
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

Alter 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 yote 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.


SEC. 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 term of three (3) years. The election shall be presided 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.

SEC. 14. Specifie Duties and Powers of Governing Board. — The Governing Board shall

have the following specific duties and power

(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 operations for the year, as well as its
medium- and long-term plans, programs and projects;

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

(d) Upon the reconimendation 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 Government 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; and


(2) 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

5C. 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 Quedan and Credit Guarantee
Corporation, The tenure of the President and CEQ of the Corporation shall be four (4) years
subject 10 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 first assumption to such
post.

SEC. 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;

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

(@) 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;


(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;

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

SEC. 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 terms 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 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 git

en to the Corporation under this Act shall be accorded utmost priority in
transportation by national flag carriers and domestic common carriers; and

(f) 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.

SEC. 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 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 (60)/ forty (40)
basis in favor of its sole guarantee versus its guaranteed co-financing programs.

(4) 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.

() 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;

(g) 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
cntity 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;

(j) 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 of the
program. A feedback mechanism to this effect shall be defined by the Governing Board within
90 days from its first meeting.

SEC. 19. Sovereign Guarantee. — In accordance with pertinent laws, rules 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 for trust to
the Corporation under Section 23 hereof.

SEC. 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
(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.

SEC. 21. Protection for Corporation's Guarantees and Other Accommodations. — ‘The

provisions of any local, regional, national, special or general law to the contrary notwithstanding,

urities on guarantees and/or accommodations granted by, or subrogated to, the Corporation or
its predecessors-in-interest shall not be subject t© 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 gernishments 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.

SEC. 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 Govenment exceed the
authorized share in the authorized stock of the Corporation.


SEC. 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.

SEC. 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,

Si
to be headed by the Corporate Legal Counsel, with the rank not lower than Senior Vice

25. Legal Affairs. — The Corporation shall have its own Legal Affairs Department

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 my 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

SEC. 26. internal Audit. — An Intemal 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 than 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

6

(O 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.

SEC. 27, COA Personne! 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.

SEC. 28. Transitory Provisions. — Upon the effectivity of this Act, the Governing Board
shall immediately be constituted and convened. All incumbent officers and employees of the
Quedan Credit and Guarantee Corporation shall continue in office as personnel of the
Corporation without demotion in rank or diminution in compensation and fringe benefits. All
contractual employees who have rendered at least 2 years of continuous service to the
corporation shall be given régular permanent status within 90 days from effectivity of this Act.

‘The incumbent President of the Quedan and Credit Guarantee Corporation shall be the
President of the 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.

Collections and recoveries from the loan programs of Quedan and Rural Credit Guarantee
Corporation sourced from loans or bonds issued by it to fund the same shall be immediately
returned by the Corporation to its sources as part of its strategy to liquidate its obligations from
such sources. Gains from operations of the Corporation under this Act may be additionally used
by the Corporation to pay off the indebtedness previously contracted by Quedan and Rural Credit
Guarantee Corporation.

Notwithstanding any law to the contrary, the Corporation shall continue to be the

Corporation being referred to under the Agriculture and Fisheries Modernization Act (AFMA)


and as the fund manager of Guarantees and loan funds for the government as issued by the same
{or developmental purposes.

SEC. 29. Authority to Expand Personnel Complement. — In view of the expanded scope
of the operations of the Corporation, it is hereby authorized to reorganize and expand its
personnel complement, in consultation with the Civil Service Commission and in accordance
with Section 14 hereof, in order to achieve efficiency and effectiveness in the delivery of its
mandated services,

SEC. 30. Obligations and Liabilities. — All rights, claims and interests of the Quedan
Guarantee Fund Board, upon the effectivity of this Act, shall be deemed transferred to the
Corporation and all existing obligations and liabilities of the former shall be assumed by the
latter.

SEC. 31. 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.

SEC. 32. Separability. — 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 ca still subsist and be given legal force and effect
in their entirety.

SEC. 33. Repeal. — All laws, ordinances, rules, regulations and other issuances or parts
thereof, contrary to or inconsistent herewith, are hereby repealed or modified accordingly.

SEC. 34. Effectivity. — This Act shall take effect upon its approval.

Approved,