REPUBLIC ACT NO. 7393 - 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
Section 1. Title. — This Act shall be known as the "Quedan
and Rural Credit Guarantee Corporation Act."
Sec. 2. Declaration of Policy. — It shall be the
policy of the State to accelerate the flow of investments and credit
resources into the countryside so as to trigger the vigorous growth and
development of rural productivity, employment and enterprises thereby
generating more livelihood and income opportunities for the
disadvantaged rural populace. Pursuant to this policy, there shall be
set up a convenient credit-support mechanism and reliable guarantee
system that shall effectively;
(a) Improve the bankability of and access by rural
workers, their cooperatives and small rural enterprises to formal
credit institutions;
(b) Provide incentives for the banking sector to
focus upon and enlarge the flow of credit funds and investments into
the rural areas;
(c) Institutionalize the quedan or warehouse receipt
and other negotiable instruments, evidencing stored agri-aqua produce
in bonded warehouses, as the more convenient collateral for obtaining
credit financing;
(d) Prioritize financing support to agrarian reform
beneficiaries and their cooperatives for their production inputs and
labor costs and their acquisition of farm equipment and post-harvest
facilities;
(e) Support dynamic cooperativism, capital formation
and savings mobilization among the rural populace;
(f) Increase farm income by promoting a system that
by-passes unnecessary layers of middlemen and links producers more
closely to end-users through auction markets, trading centers, consumer
cooperatives and the like; and
(g) Harmonize and coordinate with all government
institutions, nongovernmental organizations, private voluntary
organizations, self-help groups and other aggrupations involved in
providing support services to rural inhabitants.
Sec. 3. Definition of Terms. — The following terms
as used in this Act shall mean:
(a) "Corporation" — The Quedan and Rural Credit
Guarantee Corporation;
(b) "Farmer" — Any natural person whose primary
livelihood is cultivation of land or the production of agricultural
crops, livestock and aquaculture products, in small or commercial
scale, either by himself or primarily with the assistance of his
immediate farm household or workers, whether the land is owned by him
or by another person, under a leasehold tenancy agreement or
arrangement with the owner thereof;
(c) "Fisherfolk" — Refers to any natural person whose
primary livelihood is fishing or the catching and/or gathering of other
marine products, in small or commercial scale, either by himself or
with the assistance of his immediate household or workers, whether the
vessel, banca, and other equipment used is owned by him or by another
person under lease or other arrangement with the owner thereof and
there is no employer-employee relationship; and
(d) "Cooperative" — Refers to a duly registered
association of persons, with a common bond of interest, who have
voluntarily joined together to achieve a lawful common social or
economic end, making equitable contributions to the capital required
and accepting a fair share of the risks and benefits of the undertaking
in accordance with universally accepted cooperative principles.
Sec. 4. Reorganization. — The Quedan Guarantee
Fund Board is hereby reorganized in accordance with the provisions of
this Act, renamed as the Quedan and Rural Credit Guarantee Corporation
and hereafter referred to as the Corporation. The Corporation is hereby
attached to the Department of Agriculture pursuant to Administrative
Order No. 59 (1988), but subject to the regulatory powers of the
Securities and Exchange Commission insofar as allowed under Section s 9,
10 and 13 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.
Sec. 6. Term of Existence. — The term of existence
of the Corporation shall be fifty (50) years from the date of
effectivity of this Act.
Sec. 7. Authorized Capital Stock. — The authorized
capital stock of the Corporation shall be Two billion pesos
(P2,000,000,000) to be divided into two 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 and/or
government-owned or -controlled corporations and forty percent (40%)
thereof solely by small farmers, fisherfolk, their cooperatives and
other private investors: provided, however, that the shares of the
National Government and government-owned or-controlled corporations 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 the Quedan Guarantee Fund Board, as determined and certified by the
Commission on Audit within three (3) months from the effectivity
hereof. Additional subscriptions, insofar as allowed by this Act, may
be made by the National Government with the profits of the Corporation
upon the majority vote of its governing Board in a meeting specially
called for that purpose. The Secretary of Agriculture or his
representative duly authorized in writing shall vote the shares owned
by the National Government. The Chief Executive Officers of the
government institutions referred to in Sec. 23 shall vote their
respective shareholdings.
Sec. 9. Subscription by Private Investors. — No
private person, natural or juridical, shall directly or indirectly, by
interlocking directorate or other forms of combinations, by trust,
subscription, purchase, lease, mortgage, pledge, or other means of
acquisition or encumbrance, own at any one time more than ten percent
(10%) of the portion of the Corporation's authorized capital stock that
can be subscribed solely by small farmers, fisherfolk, their
cooperatives and other private investors. The Corporation in
consultation with the Securities and Exchange Commission shall
prescribe within sixty (60) 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 Corporation is
listed in such exchanges for the trading of its shares therein under
Section 10 hereof. Violation of any provision of the herein section or
its implementing rules and regulations shall be punishable under
Section 185 of the Revised Penal Code or, whenever applicable, the
Anti-graft and Corrupt Practices Act.
SECTION 10. Listing in Stock Exchanges. — The
Corporation shall comply with all the requirements and shall apply for
listing in stock exchanges for the purpose of trading its shares within
one (1) year and six (6) months from the effectivity of this Act.
Failure to comply with the provisions herein shall be prima facie
evidence of bad faith on the part of the Corporation's personnel
responsible therefore.
SECTION 11. Corporate Powers. — The Corporation, as a
body corporate, shall have the following powers and purposes:
(a) Establish a credit-support mechanism for the
benefit of farmers, fishermen, rural workers, cooperatives, retailers,
wholesalers and primary processors of agricultural and aquatic
commodities;
(b) Implement a guarantee system to promote inventory
financing of agri-aqua commodities; establishment of production and
post-production facilities; acquisition of farm and fishery
machineries, equipment and implements; and investments in production
inputs and labor;
(c) Set up a system for accrediting the participation
in the Corporation's various programs by borrowers, lending banks,
financing institutions, bonding and insurance companies;
(d) Franchise-bonded warehouses intended for quedan
inventory financing, issue and enforce rules and regulations therefore;
(e) Print and provide uniform negotiable quedan or
warehouse receipt forms for the purpose of quedan financing which shall
be serially numbered, on security notepaper, in specific quantity
denominations of such unit of measurement of subject commodities; and
shall contain the name and business address of the warehouseman, the
variety, classification, moisture content and quality of the commodity
deposited, the warranties of the warehouseman as prescribed by existing
laws, rules and regulations, the charges and authorized liens on the
stocks in deposit;
(f) Prescribe fees and charges for the Corporation's
services; fix interest and penalty charges for delinquent accounts; and
impose fines and sanctions for violations of its rules and regulations;
(g) Acquire by purchase or otherwise ownership of and
invest in, hold, sell or otherwise dispose of stocks or bonds of any
interest in either or any obligation or evidence or indebtedness of any
person, firm or corporation; and as owner of such stocks, bonds or
interest therein, or other obligations or evidences of indebtedness,
exercise the rights, powers and privileges or ownership, including the
right to vote thereon or consent in respect thereto for any and all
lawful purposes;
(h) Purchase or otherwise acquire, sell, lease,
convey, mortgage or encumber and otherwise deal with any property, real
or personal, or any interest therein;
(i) Act as a receiver;
(j) Adopt and use a corporate seal;
(k) Sue and be sued;
(l) Prescribe, repeal and alter its own bylaws;
determine its operating policies and issue such rules and regulations
as may be necessary and incidental to implement its various policies,
programs and projects; and
(m) Carry on any lawful business whatsoever and do
everything suitable, convenient and proper for the exercise of any of
the foregoing powers and promote the interests of the Corporation or
its properties.
SECTION 12. Governing Board. — The affairs and
business of the Corporation shall be directed, its properties managed
and preserved, and its corporate powers exercised, unless otherwise
provided in this Act, by a governing Board consisting of fifteen (15)
members composed initially of the following: the Secretary of
Agriculture, the Secretary of Agrarian Reform, the Governor of the
Central Bank, the Administrator of the National Food Authority, the
Chairman of the Cooperative Development Authority, the President of the
Corporation and three (3) other members: a small farmer, a fisherfolk
and an agricultural worker to be endorsed by the Department of
Agriculture, the Department of Agrarian Reform and by the Cooperative
Development Authority and approved by the other members of the
governing Board after having been nominated by a nationally organized
association of farmers, fisherfolk and farm workers, respectively. Said
representatives shall serve for a term of one (1) 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.
The Secretary of Agriculture and the President of the Corporation
because of some governmental functions of the Corporation, shall be
permanent ex officio Chairman and Vice-Chairman, respectively.
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 President of the Corporation, as 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 designate a
temporary Chairman from among its members.
The governing Board shall prescribe the rules and regulations governing
its deliberations and other official actions.
SECTION 13. Election, Terms of Office of Elective
Board Members. — The additional members of the governing Board to be
elected by the initial members of the governing Board shall serve for a
term of one (1) year each. 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.
SECTION 14. Specific Duties and Powers of Governing
Board. — The governing Board shall have the following specific duties
and powers:
(a) Determine the general policies of the Corporation
within the scope of its powers, objectives and financial resources;
(b) Approve and adopt annually the Corporation's
budget at least three (3) months before the start of the fiscal period
in conformity with the guidelines prescribed by the Department of
Budget and Management, the Department of Finance and the Government
Corporate Monitoring and Coordinating Committee; the Corporation's plan
of operations for the year, as well as its medium- and long-term plans,
programs and projects;
(c) Monitor the implementation of the Corporation's
general policies, plans, budgets, and projects;
(d) Upon the recommendation of its President,
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) Rationalize the rates of salaries, wages,
allowances, per diems, consultant's fees, overtime pay and other forms
of compensation, including gratuities and fringe benefits, which shall
be determined in accordance with the position classification and
compensation scheme or policy formulated under existing laws, rules and
regulations and in consultation with the Civil Service Commission and
the Department of Budget and Management, 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, the appointment of senior corporate officials 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, after approval of such financial reports, consider each
item thereof in respect of which the Auditor has expressed a
reservation, or made an observation, or has refrained from expressing
an opinion; and
(h) Submit to the President of the Philippines, the
Congress of the Philippines, the Department of Finance, the Department
of Budget and Management, the Department of Agriculture, 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 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.
SECTION 15. President. — The management of the
day-to-day operations 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 in the government career service, is at least thirty-five (35) years
of age and has expertise in banking, finance, economics, law,
agriculture, business management, or public administration.
SECTION 16. Powers and Duties of President. — The
President of the Corporation shall have the following powers and
duties:
(a) Direct and manage the affairs and business of the
Corporation;
(b) Implement the budget, policies, programs and
projects approved by the governing Board;
(c) Enter into and execute, in behalf of the
Corporation, all contracts and authorized transactions;
(d) Appoint, promote, remove, suspend or otherwise
discipline for cause, any subordinate officer or employee of the
Corporation pursuant to the Civil Service Law, rules and regulations:
provided, however, that with respect to officers and with rank
equivalent to or higher than Vice-President, such action shall be
subject to the approval of the governing Board;
(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.
SECTION 17. Solicitation of Grants. — The Chairman or
President of the Corporation is hereby authorized, subject to the
approval of the governing Board, to directly solicit, negotiate for and
receive grants 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 transfers are free
from any monetary considerations, it being understood that counterpart
funding for such grants shall not be deemed as such consideration.
With respect to such grants, the following are hereby prescribed:
(a) No grant shall be accepted if its terms and
conditions are 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) The Bureau of Customs 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 Chairman or President of the Corporation may,
in his sound discretion, deputize members of the Integrated Police,
Philippine Constabulary and other security forces of the Government to
escort and/or guard the grants given to the Corporation under this Act
in order to ensure their safe and speedy transportation, delivery and
custody by the Corporation's representatives;
(e) Grants given to the Corporation under this Act
shall be accorded utmost priority in transportation by national flag
carriers and domestic common carriers; and
(f) Not later than forty (40) days from the start of
or receipt thereof, the President shall submit to the Director General
of the National Economic and Development Authority a report about the
grants being negotiated for and/or received by the Corporation,
specifying therein the peso value, general descriptions, sources,
summaries
of terms and conditions, purposes, and date of start of negotiation or
receipt of such grants.
SECTION 18. Operating Principles. — The Corporation
in the exercise of its powers shall be guided by the following
operating principles:
(a) The loanable value and guarantee cover under its
various programs shall be scaled progressively in favor of rural-based
cooperatives and micro-enterprises vis-a-vis small and medium-size
businesses;
(b) The rate of guarantee fees and charges shall be
commensurate to the risk covered;
(c) Aggregate contingent liability, that is, its
outstanding guarantee obligation at any given time, shall not exceed
five (5) times its net worth;
(d) For agri-aqua commodities stored in bonded
warehouses, the guarantee shall be their physical existence when
covered by a quedan or warehouse receipt, chattel mortgage, deed of
assignment, trust receipt, and other forms of collateral instruments on
said commodities;
(e) For production and post-production facilities,
farm machineries, equipment and implements, the guarantee 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;
(f) For production inputs and labor, the guarantee
shall be on the loan, provided that it is granted to rural
cooperatives, without prejudice to the requirement for a
counter-guarantee from non-governmental organizations, or for some form
of acceptable collaterals;
(g) The credit-support mechanism, as contemplated
herein, may be in the form of assistance in client prospecting, credit
evaluation, collateral appraisal, account monitoring, special time
deposit, co-financing arrangement, co-guarantee, interest
stabilization, liquidity access and other similar incentives for rural
borrowers and lending institutions;
(h) The guarantee and credit-support system shall be
oriented to promote capital formation and savings mobilization in the
rural areas;
(i) Secondary trading market and liquidity access for
participating banks and lending institutions, especially for those
operating in small municipalities, shall be developed and promoted by
the Corporation for its guaranteed loan papers; and
(j) Working relationships shall be harmonized with
other government institutions, agencies and instrumentalities engaged
in agricultural or rural development.
SECTION 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.
Sec. 20. Compliance with Agri-Agra Law. —
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, to the
extent of its equity holdings in the Corporation. Likewise, loans
extended by banking institutions to farmers, fishermen, cooperatives,
rural workers and rural enterprises covered by the guarantees 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.
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,
securities on guarantees and/or accommodations granted by, or
subrogated to, the Corporation or its predecessors-in-interest shall
not be subject to attachment, execution or any other court process, nor
shall they be included in the property of insolvent persons or
institutions, unless all debts and obligations of the debtor to the
Corporation and its predecessors-in-interest shall have been previously
paid, including accrued interest, penalties, collection expenses, and
other charges.
Sec. 22. Dividend for Government Shareholdings. —
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: provided, however, that this provision shall not operate
to prejudice the declaration of cash dividends to private
stockholders.
Sec. 23. Investment by Other Government Entities.
— The Department of Agriculture, the Department of Agrarian Reform, the
Technology and Livelihood Resource Center, the Philippine Amusement and
Gaming Corporation, the Philippine National Bank, the Development Bank
of the Philippines, the Land Bank of the Philippines, the Government
Service Insurance System, the Social Security System, other government
agencies and government-owned or-controlled corporations, are hereby
authorized to invest in the capital stock of the Corporation in
conformity with Section s 8, 10, and 12 hereof, and may, in a trust,
provide the Corporation with credit or guarantee fund to service
particular clients, cooperatives and rural aggrupations, as may be
specified by any of these institutions, in accordance with their
respective charters.
Sec. 24. Corporate Secretary. — The Corporate
Secretary, who shall be a lawyer, 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.
Sec. 25. Legal Affairs. — The Corporation shall
have its own Legal Affairs Department to be headed by the Corporate
Legal Counsel who shall be appointed by the governing Board upon the
recommendation of the President.
In appropriate cases, the Corporation may also avail of the legal
services of any government legal office authorized to render such
services to government-owned or-controlled corporations.
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. COA Personnel and Expenditures. — The
number of personnel to be assigned by the Commission on Audit in the
Corporation and the concomitant expenses to be incurred in the
performance of their duties shall be determined in such manner as to
harmonize equitably the need of the Commission on Audit to undertake
efficiently and effectively its constitutional powers and functions and
the obligation of the Corporation to economize in the use of its funds,
considering that it is the Corporation which shall defray the expenses
for the audit of its operations. In case of disagreement between the
Commission on Audit and the Corporation as to the reasonableness of the
number of such personnel and their auditing expenditures, the opinion
of the former shall prevail.
Sec. 27. 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 Guarantee Fund Board shall continue in office as personnel of
the Corporation without demotion in rank nor diminution in compensation
and fringe benefits. The incumbent Executive Director of the Quedan
Guarantee Fund Board shall be the President of the Corporation until a
new President shall have been elected by the governing Board. The
President 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 operations of
the Corporation.
Sec. 28. 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. 29. 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. 30. Suppletory Application of Corporation
Code. — Matters not provided for in this Act shall be governed by the
Corporation Code of the Philippines in a suppletory character insofar
as it is applicable.
Sec. 31. 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 can still subsist and be given legal force
and effect in their entirety.
Sec. 32. Repeal. — All laws, ordinances, rules,
regulations and other issuances or parts thereof, contrary to or
inconsistent herewith, are hereby repealed or modified accordingly.
Sec. 33. Effectivity. — This Act shall take effect
upon its approval.
Approved: April 13, 1992
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