REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
QUEZON CITY

FIFTEENTH CONGRESS “
First Regular Session

_ HOUSE BILL NO. 4284

Introduced by Rep. Feliciano Belmonte, Jr. and Rep. Neptali M. Gonzales IT

EXPLANATORY NOTE

Under Presidential Decree No. 4, the National Grains Authority (NGA) was created
on September 26, 1972 to promote the integrated growth and development of the grains
The NGA was reconstituted into the National Food Authority (NFA) through

industry.
Presidential Decree No. 1770 on January 14, 1981.

‘Tasked with the mandate to maintain food security, provide subsidy to rice farmers and
of rice, the NFA buys palay from farmers at prices which ate

Then it sells rice to consumers at prevailing
relail prices. Such a practice over the years resulted in mounting financial losses and debis.

Based on 2009 Annual Report, NFA has incurred a total outstanding financial obligation of

stabilize the supply and pric
ustially higher than the prevailing farm gate pri

Php146.87 Billion, 4

In view of these mounting losses and in line with our efforts to trim the national
budgetary deficit, it is deemed necessary to restructure the NFA; streamline its procedures and

current trade concepts and practices

processes;

; and redefine its regulatory powers

‘The proposed measure therefore, seeks to reorganize the NFA and to create a National
Food Corporation (NFC) which shall maintain and manage a National Strategic Rice Reserve
and Government Rice Buffer Stock. It shall be engaged in the business of trading, marketing,

importing and exporting basic and prime food commodities.

There shall also be created a Food Development and Regulatory Administration (FDRA)
which shall carry out regulatory and developmental functions for strengthening the efficiency

and adequacy of food supply.

In view of the foregoing, approval of this measure is urgently sought.

FELICIANO BELMONTE, JR.

NEPTALI M.(GONZALES II


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REPUBLIC OF THE PHILIPPINES:
HOUSE OF REPRESENTATIVES
QUEZON CITY

FIFTEENTH CONGRESS
First Regular Session
House BILLNO. 4284

Introduced by Rep. Feliciano Belmonte, Jr. and Rep. Neptali M. Gonzales I]

AN ACT REORGANIZING THE NATIONAL FOOD AUTHORITY INTO THE
NATIONAL FOOD CORPORATION AND THE FOOD DEVELOPMENT AND
REGULATORY ADMINISTRATION, REDIFINING THEIR POWERS,
APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES

Be it enacted by the Senate and 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 2003.”

SECTION 2. Declaration of Policies ~ It shall be the policy of the State to ensure food
secutity for all Filipinos, to protect farmers’ income, to create an environment that is conducive
to market-based development, to ensure sufficient supply of staple food for domestic
consumption and relief operations, and to motivate farmers to increase their productivity and

competitiveness. Towards this end, it shall also ensure the stability of both the supply and process
of staple food.

SECTION 3. Statement of Goals and Objectives — To carry out the foregoing policy, the

government shall orient its programs towards the immediate attainment of the following goals
and objectives.

(@) To provide rice farmers initially with a market for their palay and eventually the skills to
market their own produce at remunerative prices;

(b) 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 process within reach of the great masses of the people;

(©) To encourage private sector participation in the country’s food security and price

stabilization programs;

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

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

(8 To streamline goverment intervention in the rice sector so that these are effective and
efficient;

(g) To promote transparency in the costs of government interventions to stabilize rice
supplies, stabilize palay farm gate prices, and subsidize rice for the poor;

(h) To focus government price subsidies to disadvantaged families;


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BURGEORS

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(i)

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to promote development regulations aimed at enhancing competitiveness,
transparency, and responsibility in the food grains marketing industry;

SECTION 4. Definition of Terms.

“Calamities” are fortuitous event 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

“Capitalization’- refers to the resources invested in the different lines of activity in
the rice and cor 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

“Diversion” shall mean any act of the following circumstances:

1) unreasonable depletion of stocks;
2) selling or lending government stocks to another grains businessmen;

3) selling or offering to sell government stocks beyond the maximum quantity or
price by the Administration; and,

storing and/or selling the government stocks in other places/stalls, other than
duty authorized by law.

4

“Farmgate Price" — the prevailing buying price of a certain commodity at the farm
level in a certain locality at a given specific time.

“Farmers” — agricultural producers of palay and/or white corn grain. They can be
tillers of the land themselves or administrators or supervisors of the process.

“Foodgrains" refers to palay, rice, white com and corngrits.

“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.

“Hoarding” — shall mean the undue accumulation by any person or a combination
of persons of any foodgrain beyond his or their normal inventory levels or the
unreasonable limitation or refusal to dispose of, sell or distribute the stocks of
any basic necessity or prime commodity to the general public or the unjustified

taking out of any basic necessity or prime commodity from the channels of
production, trade, commerce and industry

“Licensing” — shall mean the act of granting an authority/privilege to a qualified
applicant to engaged in a particular line of activity in the rice and/or corn industry.

“Price Manipulation" shall mean the act of causing prices of essential

commodities to fall or rise for one's own profit by changing or falsifying figures,
accounts and other related information.

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


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() “Government Rice Buffer Stock” is the inventory of rice equivalent to at least
thirty (30) days national rice consumption by July 1 of every year, for stabilization
purposes particularly in deficit areas and during lean production periods. This is
inclusive of the 15-day Strategic Rice Reserve

(m) ‘Service Corporation” — a concept of the corporate operating orientation of a
government owned corporation operating like a private business but performing
the food security function of the state with minimum government subsidy.

(n)

“Strategic Rice Reserve" is the minimum inventory of rice equivalent to at least
fifteen days (15) national rice consumption to be maintained all year round under
government control as a matter of national policy to ensure food security during
times of calamities/emergencies whether natural or man made

SECTION 5. Reorganization of the National Food Authority. - To execute the
foregoing policy, goals and objectives there is hereby created a reconstituted body
corporate known as the National Food Corporation (NFC), herein after referred to as the

Corporation, and a Food Development and Regulatory Administration (FDRA) both of
which are attached tom the Department of Agriculture.

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

years and the last for a term of one (1) year. Subsequent appointments to the Board
shall be for terms of three (3) years.

The Corporation Cade shall govern all matters regarding the Corporation that are
not specifically governed by this law.

In the absence of the Chairman, the President of the National Food Corporation
shall act as the Chairman of the Board. Both the Chairman and the President of the
Corporation shall be appointed by the President of the Philippines from nominees to be
recommended by the Secretary of DA upon consultation with concerned sector to be
submitted within 30 days from the creation of the NFC and when a vacancy is created

Within thirty (30) days, the Secretaries of DA, DSWD, DTI shall recommend
fifteen (15) nominees from which the President of the Philippines shall choose the
remaining three (3) members of the Board from among the recommendees from
concerned sector. At least one of the nominee from each sector or the nominees
identified by each Secretary of DA, DTI and DSWD shall be appointed to the Board.
Subsequent vacancies in the Board will be filled up with the above Secretaries

submitting three (3) nominees for each vacancy from which the President of the
Philippines will choose the replacement(s).

Within thirty (30) days from the submission of the list of recommendees, the
President of the Philippines shall constitute the Board.

The Board shall meet regularly at least once a month on any date to be
determined by the Chairman: Provided, That the Chairman may convene special
meetings to discuss any urgent matters needing immediate resolution. The Board


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members shall be entitled to a per diem for each meeting actually attended by them

and other remuneration as may be determined by the Board in accordance with existing
policies of the government

The Board shall adopt rules and regulations to govern the proceedings and
determine its official location and address.

SECTION 7. Organization. — The Corporation shall be governed by the NFC
Board which shall approve the organizational structure and staffing pattern for officers
and employees of the Corporation within 90 days from the creation of the Board. Upon
recommendation of the President of the Corporation, the Board shall fix remuneration,
emoluments, performance incentives and 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

SECTION 8. Management. — The management of the Corporation shall be
vested in a President who shall be appointed by, the President of the Philippines for a
fixed term of three (3) years within sixty (60) days from approval of this Act, and who
shall direct and manage the affairs of the Corporation subject to the policy supervision
of the Board, The President of the Corporation shall receive the same salary and
allowances received by a Department Secretary.

There shall be two (2) Executive Vice President (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 event the NFC experiences a loss, the
President and Executive Vice President shall lose their security of tenure and may be
immediately replaced by the President of the Philippines

There shall also be four (4) Vice Presidents (VPS), who shall be Career Officials
and enjoy security of tenure provided they are Career Executive Service eligibles.
Lower ranking officials shall be also Career Executive Service Officials and/or Civil

Service eligibles and have security of tenure. The Vice President shall receive salary
and allowances of an Assistant Secretary.

The President, EVPs and VPs shall be natural-born citizens of the Philippines,
not less than thirty-five years of age, of proven honesty and integrity with experience in
the trading aspects of grains and of recognized managerial competence.

SECTION 9. Powers, Functions and Responsibilities of the Corporation.

(a) To maintain and manage the National Strategic Rice Reserve and the
government Rice Buffer Stock throughout the year when commissioned by the
FORA:

(b)

To undertake importation of rice for government duty/tariff free in order to
maintain the appropriate volume of Strategic Rice Reserve and Government Rice
Buffer Stock by July of each year. Upon recommendation of the FDRA Council,

the President may approve importation aside from the above situation and for
other commodities also duty/tarif free.

(c) To terminate the implementation of the “buy high and sell low policy,”


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

(e) To own, lease, or acquire ownership by purchase or otherwise, or to invest in,
hold, sell or otherwise dispose of stocks or bonds or any interest in either or any
obligation or evidence of indebtedness of any person, partnership, firm or
corporation;

() To issue debt instruments that are agri-agra eligible and guaranteed by the
national government up to a maximum amount of Five (5) Billion Pesos
(P5,000,000,000.00). Borrowings beyond this amount that are to be agri-agra

eligibles and guaranteed by the national government must be already approved
by the President of the Philippines;

(9) To own, lease, operate or otherwise hold land, buildings, equipment, facilities
and such other properties as may be necessary to carry out its functions;

(h) To enter into, make, perform and carry out contracts of every class and
description otherwise not prohibited by law;

(i) 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
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;

() To sue and be sued;

(k) To exercise all the rights and powers of a domestic Corporation duly organized
and registered within the Securities and Exchange Commission not otherwise
prohibited by law; and,

()

Subject to the guidelines to be formulated by the Board, the Corporation is
allowed to immediately negotiate with private or government entities in the
business of trading, marketing, importing and exporting of commodities

SECTION 10. Capitalization. - The National Food Corporation shall have a total
authorized capitalization of fifteen (15) Billion Pesos (P15.0 Billion) in the form of
150,000,000 shares with a par value of P100 per share. Twelve (12) Billion Pesos
(P12.0 Billion) shall be in the form of assets from the defunct NFA and Three (3) Billion
Pesos (P3.0 Billion) shall be in cash to be given by the National Government over a
period no longer than ten (10) years. The DBM shall however include during the three

(3) years transition period the yearly amount of P500 Million in the President's Budget
submitted to Congress.

SECTION 11. Transfer of Assets and Liabilities. - The National Food Corpoartion
shall start as a Corporation on a clean state basis. All assets and liabilities of NFA not
transferred to NFC or FDRA shall be retained and administered, disposed of and
liquidated by the NFA itself which shall continue to exist as the NFA Board of Liquidator
(BOL). NFA-BOL shall be financially assisted by the National Government in the
disposition of assets and liquidation of liabilities. It shall be manned by personnel
detailed from FORA. It shall be deemed abolished upon full disposition of assets and

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liquidation of all liabilities but not later than ten (10) years. All remaining assets and
liabilities after ten (10) years shall be transferred to the National Government.

Assets pertaining to the regulatory, developmental research function shall be
transferred to FDRA. Land where NFA assets maybe considered by the Corporation or
Administration as critical and owned by other government entities are deemed
transferred to the Corporation or the Administration with the appropriate consideration

SECTION 12. Food Development and Regulatory Administration (FDRA). —
There is hereby created a Food Development and Regulatory Administration herein
referred to as FDRA which shall carry out regulatory as well as scientific and
development functions fro strengthening the efficiency of the food supply chain in order

to increase the value of farmer's produce as a component of food products for export as
well as against imports.

The remaining functions, resources and personnel of he defunct National Food
Authority (NFA) created under Presidential Decree No. 4 as amended, shall evolve into
the Food Development and Regulatory Administration.

FDRA shall be responsible for the implementation and enforcement of the
regulatory powers of the former National Food Authority in relation to grains and BAFPS

in relation to non-grains food commodities and shall also assume the latter's
developmental functions.

SECTION 13. Composition of the Food Development and Regulatory
Administration Council (FDRAC). To formulate and monitor the implementation of the
policies of the Administration, there is hereby created a Food Development and
Regulatory Administration Council, hereinafter referred to as the Council.

The Secretary of Agriculture shall serve as Chairman of the Council, and 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) Administrator of FORA

(f) A Representative from the Farmer Sector

(9) A Representative from the Consumer Sector

A Representative from a Federation of Grains Business Organization

The selection process for representative from the farmer and consumer sector
and representative from a federation of grains business organization shall be as follows
(a) National Agricultural and Fishery Council (NAFC) and the National Farmers
Action Council (NFAC) shall recommend three (3) nominees each from the
farmer sector from which the DA Secretary can choose one (1) representative;
(b) The DTI Secretary shall recommend three (3) nominees from the consumer
sector from which the DA Secretary can choose one (1) representative; and,


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(c) Philippine Confederation of Grains Millers Association (PHILCONGRAINS) and
the Confederation of Grains Retailers Association (GRECON) shall recommend
three (3) nominees each from a Federation of Grains Business Organization from
which the DA Secretary can choose one (1) representative.

The Council shall meet regularly at least once every quarter on any date to be
determined by the Chairman: Provided, That the Chairman may convene special
meetings to discuss any urgent matters needing immediate resolutions.

The Council members shall be entitled to a per diem of Ten Thousand pesos
(P10, 000.00) for each meeting actually attended by them and other remuneration as
may be determined by the Council in accordance with existing policies of government
The per diem will only be paid for each meeting actually attended

If for any reason an ex-officio member of the Council is unable to attend a

meeting, he shall be represented therein by the next ranking officer of the office or
agency he represents.

The Council shall elect from among its members a vice-chairman and adopt rules
and regulations to govern its proceedings, call on any government agency or institution
for assistance or support, and determine its official location and address.

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

SECTION 14. Powers and Functions of the Administration. \n order to effectively
carry out its functions and responsibilities under this Act, the Administration which shall

be governed by the Food Development and Regulatory Administration shall have the
following duties and powers

(a)

To formulate and review, on an annual basis, the strategic ice reserve

requirements at the national and local levels;
(b) To cause the maintenance of the national Strategic Rice Reserve of at least
fifteen (15) days national rice consumption throughout the year and the

Government Rice Buffer Stock of at least thirty (30) days national rice
consumption by July 1 of each year;

To establish a mechanism to stabilize rice prices through effective stock
management to and trade policy including but not limited to the following: 1)
determine the volume of rice imports required to stabilize rice prices; 2)
recommend to the President any modifications in the tariff rate of rice necessary

to stabilize rice prices; and 3) to impose other parameters that the government
may see fit for attaining food security;

To establish rules and regulations governing the importation of rice, and to
license, impose penalties and fines for non-compliance with established rules
and procedures and collect fees and charges for said importation for the purpose

of equalizing the selling price of such imported rice with the normal prevailing
domestic prices;


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To establish rules and regulations governing the allocation of tariff import quotas
for grains or all MAV among private sector entities and farmer cooperatives, and
impose fees and charges for said transactions;

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

To register, license and supervise persons, natural or juridical who shall engage
in the business of providing goods and services in support of the different
activities involved in fhe production, processing, transporting, marketing and
trading of grains and/or their substitutes and to prescribe, impose and collect

fees, charges and/or surcharges in licensing and regulating the operations of
such persons;

To register and license persons in the grains business, including their facilities
and equipment;

To monitor, supply and demand indicators of food grains including the imports
and exports of the private sector in coordination with the Bureau of Agricultural
Statistics, National Statistics Office and the Bureau of Customs;

To monitor rice imports and recommend to the President of the Philippines

through the Council the adoption of safeguard measures when necessary to
protect domestic producers;

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

To regulate other agricultural and fishery commodities that the Council may
assign to the Administration;

To certify to the quality and safety of fresh and processed foods meeting
standards and codes of practice established by FDRA;

To call upon and/or deputize any official of such government agencies as may be
necessary to assist the Administration in carrying out its functions. In the seizure,
whenever there is cornering, hoarding, or improper acquisition of stocks as may
be defined by the Administration of rice and/or corn and/or other grains and
Substitutes and/or their by-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 unwarranted increase in the
Price thereof, of the hoarded commodity and its public sale in such quantity as
may be needed to stabilize prices to normal levels;

To provide for the enforcement of the provisions of this Act or any Regulations
issued or which may hereafter be issued pursuant thereto, the 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, documents, exhibits,
tecords, evidence; to administer oath by himself or his duly authorized
representative, and to make arrests. Any case of violation shall be dealt with in
accordance with the provisions of Section Five Hundred Eighty (580) of the
Revised Administrative Code. Any fine imposed and collected under this
paragraph shall form part of the Administration's funds;


(p)

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(s)
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(cc)

(dd)

(ee)

To regulate the foodgrains quedan system;

To register, license and supervise warehouses used for foodgrains storage,
whether bonded or not, and mills; and to prescribe, impose and collect fees,
charges, and/or surcharges in licensing and regulating stakeholders;

To promote and organize interrelationships among food grains industry
stakeholders;

To introduce more efficient post harvest systems and technologies;

To establish and enforce standards in grading, sampling and inspection, Test
and analysis, specification, nomenclature, units of measurement, code of
practice and packaging, conservation, and transport for food items and to effect a

transition of standards in measurement of food from volume to weight and in
metric system;

To coordinate research and development activities on foodgrains;

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

To avail of foreign grants and development aid to support its development
thrusts and to ensure that technologies and expertise are up-to-date;

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

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;

To immediately auction perishable stocks and hold the proceeds in trust while
legal proceedings are being undertaken;

To sell, lease, mortgage, pledge or otherwise dispose of the property, assets or

undertaking of the Administration or any part thereof as the Administration may
deem fit;

To adopt, alter and use an official seal which shall be judicially noticed, to sue
and be sued, and otherwise to do and perform any and all powers as may be

necessary to carry into effect provisions of this Act or as are essential to the
proper conduct of its operations;

To retain revenues and fees generated to finance reward and incentive systems
for programs such as but not limited to anti-hoarding, anti-smuggling and

agricultural development programs subject to guidelines to be formulated by the
Council;

To establish and structure its own internal organization as the need arises and to
fix the remuneration, emoluments, allowances, and other fringe benefits of its
officers and employees as the Council may deem fit, subject to the provisions of

the Salary Standardization Law, Civil Service Law and other existing laws, rules
and regulations on compensation; and,

To be exempted from real estate taxes for its properties.


SECTION 15. Offenses and penalties. — Notwithstanding the provisions of any
law or regulations to the contrary, and for purposes of carrying out the provisions of this
Act, the following acts or omissions are hereby considered as serious, less serious and
light offenses and correspanding penalties therefore are herein prescribed:

(a)

(b)

Serious Offenses- any of the following acts or omissions shall constitute a
serious offense:

1)

2)

3)

5)

8)

Cornering or hoarding of foodgrains resulting in artificial shortage or

scarcity of supply and increases of prices thereof in any part of the
country;

Any act of the following circumstances; unreasonable depletion of
stocks; selling or lending government stocks to another grains
businessmen; selling or offering to sell the government stocks
beyond the maximum quantity or price allowed by the
Administration; storing and/or selling the government stocks in
other places/stalls, other than duly authorized by law;

The act of causing prices of essential; commodities to fall or rise for

one's own profit by changing or falsifying figures, accounts and
other related information;

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,

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 two million (P2,000,000,00) Pesos or both such fine and
imprisonment at the discretion of the court.

Less serious Offenses — Any of the following acts of omissions shall
constitute a less serious offense:

1)

2)

3)

4)

Connivance in the concealment of a stock shortage in a foodgrains
warehouse;

Knowingly submitting any report containing false information or
data;

Misrepresentation in connection with any application for license to
do business as foodgrains warehouseman, miller, exporter or
importer or trader, manufacturer or processor;

Failure or refusal of a warehouseman to allow the inspection or

examination of this foodgrain stocks to conceal shortages or
misrepresent the quantity or quality of his foodgrain stocks,

10


34

(a)

(b)

(c)

(c)

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 one hundred, thousand pesos (P100,000.00), nor
more than One Million Pesos (P1,000,000.00), or both such fine and
imprisonment, at the discretion of the courts.

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

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) months, or a fine of not less
than Fifty Thousand (P50,000.00) Pesos nor more than Five Hundred

Thousand (P500,000.00) or both such fine and imprisonment, at the
discretion of the court.

SECTION 16. Transfer of Mandates. The following other mandates of the defunct
National Food Authority shall be transferred to the following agencies:

Programs directly relating to food subsidies for the poor particularly the Targeted
Rice Distribution Program (TRDP) and Coconut Farmers Food Access Program
(CFFAP) to the Department of Social Welfare and Development.

Stabilization of prices and supply of grains at the farm gate to the Department of
Agriculture (DA)

Stabilization of supply and prices of rice at consumer level will also be the
responsibility of 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, to
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

i


30

40

4%
44
45
46
47
48
49
50
St.
Ss
33
S4

include yearly in the President's budget proposal, the minimum amounts of One (1)
Billion pesos (P 1,000,000,000.00) for DA farmgate price and supply stabilization and
Two Hundred Fifty (250) Million pesos (250,000,000.00) for DA supply and price

stabilization of rice at consumer level and Five Hundred (500) Million pesos
(600,000,000.00) for DSWD

SECTION 17. Appropriation of the Administration. - The amount necessary to
finance the initial implementation of this Act insofar as the Food Development and
Regulatory Administration is concerned shall be charged against the existing
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.

SECTION 18. Restructuring/reorganization of the National Food Authority.
Permanent officials and employees of the National Food Authority who choose to leave
government service, or who prefer to retire, if qualified for retirement shall be given a
Separation Incentive Package (SIP) equivalent to the following scale:

1-20 years — 1.5 x gross monthly pay x yr. of service for the first 20 years
21-30years — 2.0 x gross monthly pay x yr. of service in excess of 1*' 20 years

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

\n addition to other retirement benefits to which they are entitled to under existing
laws and regulations. Employees who opted to retire under RA 1616 shall receive only
1.5 gross monthly pay for every year of service under SIP. For those who want to stay
and are not absorbed in the Corporation shall be automatically placed in the
Administration. They shall retain their remuneration and seniority. The existing number
of NFA personnel shall not be increased and no new hiring in the Administration and
Corporation shall be allowed until all NFA employees have been properly placed, No
NFA personnel shall be dislocated and involuntarily separated. For the purpose of SIP
there is hereby appropriated the necessary amount out of any funds or resources of
NFA. Any deficiency shall be automatically appropriated in the succeeding year's GAA.
If for any reason funding for the SIP is inadequate people who have chosen to be

separated but not received their benefits can choose to stay or be reinstated and will
retain their previous remuneration and rank

To prove continually in the operations of the Corporation, all incumbent
personnel of the defunct National Food Authority shall continue to exercise their
tespective duties and functions and receive their corresponding salaries and benefits
until the organizational structures and staffing patterns of the National Food Corporation
and Food Development and Regulatory Administration have been approved by the
Corporation and the Administration, respectively

SECTION 19. Transitory Provisions. To effect a smooth transition, officials and
employees of NFA who choose to avail of the SIP may be requested to temporarily stay
on for a period of not longer than three (3) years without losing their right to avail of the
SIP. Employees and Officials of the Administration not yet properly placed within three
'3) years can still choose to avail of SIP during this period. The Board and the Council
shall appoint three (3) representatives each to constitute a group that will act as
mediators in settling issues as to which assets and personnel will go to which
organization. In any event, the rights and privileges of officials and employees of NFC
and FDRA shall be adequately protected. The Corporation will, however, have priority in


deciding which asset will comprise the P5 B of capitalization. The Chairman of this
group will be appointed by the President of the Philippines.

SECTION 20. Repealing Clause. — All laws, decrees, executive orders, rules

and regulations, issuances or parts thereof inconsistent with the provisions of this Act
are hereby or modified accordingly.

SECTION 21. Separability Clause. — The provisions of this Act are hereby
declared to be separable, and in the event one or more such provisions are held
unconstitutional, the validity of the other provisions shall not be affected thereby

SECTION 22. Effectivity Clause. — This Act shall take effect fifteen (15) days

after its complete publication in at least two (2) national newspapers of general
circulation.

Approved,