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[ PRESIDENTIAL DECREE NO. 4, September 26, 1972 ]

PROCLAIMING THE CREATION OF THE NATIONAL GRAINS INDUSTRY DEVELOPMENT ADMINISTRATION AND PROVIDING FUNDS THEREFOR.

Pursuant to Proclamation No. 1081, dated September 21, 1972, I, FERDINAND E. MARCOS, President of the Philippines and Commander-in-Chief of all the Armed Forces by virtue of the powers vested in me by the Constitution of the Republic of the Philippines, do hereby declare as a law of the land, the creation of the National Grains Industry Development Administration which shall be directly under the Department of Agriculture and Natural Resources in accordance with the pertinent provisions of the Integrated Reorganization Plan. The provisions of this Decree are contained herein below.

SEC. 1. Title of the Act. — This Act shall be known as the National Grains Industry Development Act.

SEC. 2. Declaration of Policy. — It shall be the policy of the State to promote the integrated growth and development of the grains industry (rice and corn and other grains) so that it can adequately function as an institution conscious of its social responsibilities and capable of providing adequate and continuous food supply to the nation and of contributing to its proper share to the national economy.

SEC. 3. Policy 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:

(a) Encourage increased and efficient productivity by assuring a fair return on investment to producers and their enjoyment of a decent rising level of income.

(b) Provide comprehensive guidance for the development of the industry in all its aspects, delineating and coordinating the respective roles of both Government and private sectors and their respective components and earmarking adequate financing from credit resources to support the program: Provided, however, That the credit resources contemplated in this Act for the development of the grains industry shall be complementary and supplementary to those earmarked under existing laws.

(c) Encourage the adoption, in the production, processing and marketing phases, of such proven systems as will reduce costs and improve the quality of these grains and thereby bring about ultimately reasonable prices within the reach of the great masses of the people.

(d) Institute measures to fully establish the integrity and assure the negotiability of warehouse receipts evidencing grains in storage.

(e) limit its participation only to such extent and in such phases of the operations of the industry as the private sector has not shown capability to adequately perform its function and discharge its responsibility, particularly in the stabilization of producers' and consumers' prices.

(f) Adopt measures of the grains industry.

SEC. 4. Policy Implementation. — To execute the foregoing policy, there is hereby created a body corporate known as the National Grains Industry Development Administration, hereinafter simply referred to as the Administration, which shall be governed by a Board of Directors, known as the National Grains Industry Development Council, hereinafter referred to as the Council. The powers and functions of the Administration shall be vested in the Council which shall have the overall responsibility for formulating and coordinating a comprehensive program for the development of the grains industry. The Council shall be composed of the following:

Secretary of Agriculture and Natural Resources
Chairman
 

The Administrator, National Grains Industry Development
Administration

Member
 

The Governor of the Central Bank

Member
 
The President of the Philippine National Bank
Member
 

The Governor of the Development Bank of the Philippines

Member
 

The Executive Secretary

Member
 

The Secretary of the Department of Trade and Tourism

Member
 

A representative from the consuming sector

Member
 

A representative of rice producers

Member
 

A representative of rice &c com millers and traders

Member
 

Within thirty days from the approval of this Decree, the President of the Philippines shall constitute the Council.

The representatives of the rice producers, rice and corn millers and traders, and the representative of the corn producers shall not be less than thirty-five years of age, with sufficient education and with at least five years experience in the rice and corn industry, of proven honesty, integrity and recognized competence. They shall be appointed, together with the consumer representative, by the President of the Philippines, to hold office for a term of four years unless sooner removed for cause or until their successors shall have been appointed and qualified.

The Council shall meet regularly on the first Wednesday of each month: Provided, That the Chairman may convene special meetings to discuss any urgent matters needing immediate resolution. The Council members shall not be entitled to per diem, for any meeting in excess of four meetings every month.

If for any reason a member of the Council, who is a public official, is unable to attend a meeting, he shall be represented therein by the next ranking official or officer of the office, agency or organization he represents.

The Council shall adopt rules and regulations to govern its proceedings, call on any government agency or institution for secretariat assistance or support, and determine its official location and address.

Each member of the Council who is not a fulltime national gover nment official shall be entitled to per diems of not more than two hundred pesos (P200.00) for each meeting actually attended and each member shall be entitled to actual and necessary transportation expenses.

SEC. 5. Implementing Agencies. — Within the framework of the grains industry development program adopted by the Council, primary and direct responsibilities and functions shall be vested in specified agencies, as follows:

a) The Department of Agriculture and Natural Resources shall assume primary responsibility for undertaking and coordinating all government activities directly relating to grain production. It shall—

(i) Determine the comparative productivity of the lands cultivated or proposed to be cultivated to rice and corn, and cropping patterns, for the purpose of establishing priorities and optimizing their utilization;

(ii) Maintain a system for regularly obtaining information on current and future production;

(iii) Draw up the funding requirements in support of production programs, and recommend to the Council a schedule of priorities in the use of credit made available under this Act;

(iv) Coordinate, with the government agencies concerned, the program of extension services and infrastructural facilities in support of the industry;

(v) Study and recommend to the Council a system of crop insurance; and

(vi) Coordinate all other activities directly related to or in support of grain production.

b) The Administration as created and organized in this Act shall undertake and assume primary responsibility for all government activities relating to the processing, storage, transport and marketing of grains. It shall—

(i) Determine the floor price for the grain crop which shall assure the farmer or producer a fair return on his investment: Provided, That the floor price for the grain crop of any season shall be the total sum of the season's anticipated cost of production per cavan, as determined by the Council, plus five pesos (P5.00): Provided, further, That whatever agricultural minimum wage may be specified by law shall be included in the computation of the anticipated production cost even for work performed by operators and/or owners of farms: And provided, further, That in the first five years, the floor price shall not be lower than sixty centavos (P0.60) per kilogram for corn grain: Provided, further, That in the first five years, the retail price for the approved variety shall not be more than one peso and twenty-five centavos (P1.25) per kilogram for milled rice and ninety centavos (P0.90) for com grit: Provided, further, That thereafter these ceilings shall be adjusted in direct relation to significant changes in the Consumer Price Index (CPI) periodically prepared by the Central Bank of the Philippines: Provided, further, That the Administration shall give preference to producers cooperatives in the procurement of grains so as to promote the development of cooperatives in the country: Provided, further, That only palay, corn or other grains deposited in a duly accredited warehouse shall be entitled to price support as hereinafter provided: And provided finally, That the price support shall cover only such quantity of palay, corn or other grains as was actually produced by the farmer in his own farm.

(ii) Announce, in accordance with the above-mentioned guidelines, the floor price of palay, corn or other grains, by region when required, for the guideline of the producer before the start of the crop season and of the market in anticipation of the crop harvest: Provided, That subject to changes in the crop pattern, said floor price shall be announced not later than May and October every year;

(iii) Procure and control or cause the procurement or control of such stock of grains in quantities and in locations, as may foreseeably be needed, to maintain the floor price or manage as buffer stocks to stabilize consumer prices;

(iv) Promote the organized inter-relationship among the components of the industry; particularly storage agreements between producers and warehousemen, milling agreements between producers and processors, lease agreements between millers and warehousemen - lessees, financing agreements among producers, processors or warehousemen and the financial institutions, marketing agreements between farmers' organizations and grouped processors, arrangements embracing elements of the marketing system to the end that the entire industry shall attain institutionalized efficiency as to be able to meet its assigned role;

(v) Device a system by which it can insure the adequacy of supply and stability of consumer prices at levels within the reach of the low-income families, while maintaining the announced floor price for the producers;

(vi) Introduce more efficient ways, systems and facilities for harvesting, threshing or shelling, drying, storage, milling, packaging, and post harvest handling of rice and corn and other grains and their by-products;

(vii) Introduce more efficient, regular, adequate suitable and economical means of transporting and/or shipping the foregoing products, for purposes of reducing marketing costs and insuring stable consumer supply;

(viii) Devise and maintain a system for regularly obtaining information on current stock positions of grains in commercial supply, their prices, and movements in trade;

(ix) Study and promote, as a supplementary scheme of wider-based grain distribution, a system of marketing utilizing the pattern of barrio councils;

(x) Undertake the division of the country into regions or districts and promote the grouping of existing fragmented private grain establishments therein into organized grain corporations or cooperatives that can serve as the pattern or base for grain milling districts to contain grain production potential and/or for economic-sized grain warehousing, milling, packaging and distribution complexes; and

(xi) Perform such other functions as may be necessary to carry into effect the provisions of this Act.

c) The Central Bank of the Philippines shall undertake and assume primary responsibility for making available the financial requirements of the grains program. It shall—

(i) Formulate its credit policy for the production, storage, processing and marketing aspects of the grain program so as to extend to banking institutions preferential assistance in terms of volume, costs, availability and character of bank credits;

(ii) Adopt the necessary measures to ensure that all production loans given by banks to producers of rice, corn and other grains are given preference in its rediscounting policy and that the rediscounting rate shall be the lowest preferential rate for the period.

All banks participating hereunder shall extend production loans to the extent of at least eighty (80%) per cent of the floor price all determined under paragraph (b) of this section: Provided, That said production loans shall be released on a staggered basis on such amounts and at such times as may properly be determined as adequate to cover the costs of the following phases of the crop season: (a) start of cultivation, (b) start of planting, (c) start of fertilization, harvesting and milling.

(iii) Perform such other functions as may be necessary to achieve the maximum participation of banks in the financing of the grains industry.

d) The other agencies, public or private, called upon to participate in the implementation of the grains program shall:

(i) Submit to the Council a detailed proposal on how best they can contribute to the successful prosecution of the program, and of the manner in which their participation will contribute to the effective implementation of the total grains program; and

(ii) Call upon the other government agencies under their supervision and in the case of private organizations, their affiliates and members to extend maximum cooperation.

SEC. 6. Administration—Powers, Organization and Management. — The powers, organization and management of the Administration shall be as follows:

a) Powers. — In order to effectively carry out its functions and responsibilities as provided in this Act, the Administration shall have the following powers: (i) To institute the negotiable warehouse receipt or quedan system in palay, com and other grains not later than two years after the approval of this Act. Pending the institution of said quedan system, however, the Administration shall implement the price support by procuring grains at the announced floor price in such quantities and in such places as may be necessary: Provided, That no such grains shall be procured unless they are stored in a warehouse bonded by the Government Service Insurance System under a bond of not less than thirty-three and one-third (33-1/3%) percent of the value of the stocks of said grains: Provided, however, That in areas where there are no bonded warehouses or adequate space in bonded warehouses, the Administration shall start to purchase grains at the beginning of every harvest and for this purpose shall send its men and facilities to the places of harvest where the farmers can directly sell their harvested grains: Provided, further, That the Government Service Insurance System may call upon private bonding companies or pool of bonding companies to participate in the coverage: Provided, however, That the Administration shall take measures to expedite the establishment of bonded warehouses in areas where they are needed but do not exist: Provided, further, That such stocks shall be fully insured against loss due to fire: And provided, finally. That the Administration shall not sell its stocks below procurement cost, including the expenses incurred in the handling, hauling, storing, drying, transportation and distribution thereof and an allowance determined by the Council for shrinkage and sweepings,

(ii) To maintain and manage a national buffer stock the quantity and locations of which shall be determined by the Council;

(iii) To own, lease, operate or otherwise hold lands, buildings, equipment and such other immovable properties as may be necessary to carry out its functions and to sell the same: Provided, That the Administration shall not acquire agricultural land proper as defined in the Public Land Act for the production of grains;

(iv) To enter into, make, perform and carry out contracts of every class and description necessary or incidental to the realization of its functions with any person, firm or corporation, private or public, or initiate contracts and/or agreements in behalf of the industry between the Philippine Government and any foreign government or institution;

(v) To oversee and coordinate with the grains industry development program the activities of the Rice and Corn Board pursuant to the provisions of Republic Act Numbered Three thousand eighteen;

(vi) To inspect palay, rice, com and corn grits stored by any person, partnership, corporation or association, for purposes of taking inventory and record of such commodities, and to enter the premises thereof by the use of reasonable means;

(vii) To order the seizure, whenever there is cornering or hoarding, as may be defined by the Council, of rice and corn or other grains or whenever there is an artificial scarcity of supply of such a commodity in the consumer market and an unwarranted increase in the price thereof, of the hoarded commodity and its public sale in such quantity as may be needed to stabilize the supply in the area of scarcity and restore prices to normal levels;

(viii) To effect a transition of standards in measurement of grains from volume to weight, and in metric system;

(ix) To coordinate the activities of all government agencies engaged in the study, research, and promotion of measures designed to improve the processing and marketing standards of rice, corn and other grains, such as the methods of drying, handling, hauling, storage, milling, packaging, distributing and shipping these grains and their by-products;

(x) 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;

(xi) To register, license and supervise warehouses and mills; and to prescribe, impose and collect fees, charges and/or surcharges in licensing and regulating warehouses and mills;

(xii) To license, impose and collect fees and charges in the private importation of rice and corn for the purpose of equalizing the selling price of the imported grains with the normal prevailing domestic prices for such grains: Provided, That no importer shall sell the imported grains at less than the selling price of grains of equivalent commercial grade in the domestic market established by the Council but in no case higher than one peso and twenty-five centavos (P1.25) per kilogram for milled rice and ninety centavos (P0.90) for corn grit, such selling price to be determined by the Council in such a manner as to allow reasonable profit to the importer.

In the exercise of this power, the Council after consultation with the Office of the President shall first certify to a grain shortage that may occur as a result of a shortfall in production, a critical demand-supply gap, a state of calamity, or other verified reasons that may warrant the need for importation. The Administration shall allocate import quotas among certified importers: Provided, That if the retail price of grains in any two successive months shall rise by twenty-five (25%) per cent or over, the Administration shall undertake the direct importation of grains and the distribution thereof through cooperatives and other marketing channels: And provided, finally, That in case of extreme hardships to the people brought about by widespread disorders, natural calamities or disasters, such as storms, earthquakes, long drought, and the like, which threaten the occurrence of famine due to lack of rice and corn or other grains, and these are duly certified to by the Council, the Government, to relieve the people of these hardships, may directly import these grains to be distributed at prices to be determined by the Council regardless of any existing floor prices determined under this paragraph;

(xiii) To establish rules and regulations governing the export of rice, corn and other grains and to license, impose and collect fees and charges for such exportations at rates to be determined by the Council;

(xiv) To register, license and supervise private regional grain corporations that may be established to engage in the business of providing goods and services in support of the different activities involved in the production, processing, marketing and trading of grains and to prescribe, impose and collect fees, charges and/or surcharges in licensing and regulating the operations of such corporations or cooperatives;

(xv) To register, license and supervise persons natural or juridical engaged in the retail business of rice and corn and to impose and collect nominal fees to be determined by the Council;

(xvi) To register, license and supervise persons, natural or juridical, engaged in the processing or manufacture of goods where rice or corn or other grains are used as ingredients in the manufacture of starch, oil, and animal feeds in which case it shall impose the nominal fees to be determined by the Council;

(xvii) To promulgate such rules and regulations as may be necessary to carry out the provisions of this Act. Such rules and regulations shall take effect fifteen days following the publication twice in at least two daily newspapers of national circulation;

(xviii) To adopt, alter, and use a corporate seal which shall be judicially noticed; to sue and be sued; and otherwise to do and perform any and all acts, and to exercise any and all powers as may be necessary to carry into effect the provisions of this Act or are as essential to the proper conduct of its operations.

b) Organization.— The Administration shall be governed by the Council which shall create and administer, through an Administrator as hereinafter provided, the necessary staff and line units of the Administration, whose personnel shall be exempt from the rules and regulations of the Wage and Position Classification Office.

c) Management.— The management of the Administration shall be vested in an Administrator who shall, upon recommendation of the Council, be appointed by the President of the Philippines within sixty (60) days from the approval of this Act, and who shall direct and manage the affairs of the Administration, subject to the supervision of the Council. The Administrator shall hold office for a term of four (4) years, except when earlier removed for cause, or until his successor shall have been appointed and qualified.

There shall be two deputy administrators, one for rice operations and the other for corn and other grains, appointed by the Council, who shall assist the Administrator in the performance of his functions. The deputy Administrator for Rice Operations shall be a person of recognized competence and experience in the production, processing and marketing aspects of rice, and the Deputy for Corn & other Grains Operations shall be one of recognized competence and experience in the production, processing, marketing and trading aspects of corn and other grains. Either one of the Deputy Administrators, upon designation by the Council, shall perform the duties and exercise the powers and functions of the Administrator in the absence of the latter.

The Administrator shall appoint, remove, suspend or otherwise discipline, with the consent of the Council, other officers and employees of the Administration, and shall perform such other functions as may be assigned and delegated to him by the Council.

The Administrator and the Deputy Administrators shall be natural-born citizens of the Philippines, not less than thirty-five (35) years of age, of proven honesty and integrity and of recognized managerial competence.

The Administrator shall receive a compensation of sixty thousand (P60,000) pesos per annum. The Deputy Administrators shall each receive salary to be determined by the Council but not exceeding thirty-six thousand (P36,000) pesos per annum.

SEC. 7. Development and Stabilization Fund. — There is hereby established the .National Grains Industry Development and Stabilization Fund, herein referred to as the "Fund," for the purpose of financing the growth and development of the industry and the stabilization of the domestic market in grains, to be administered in trust by the Central Bank of the Philippines, and derived in the manner herein below cited from the following sources:

a) An additional tax on rice and corn mills as provided in Section ten of this Act;

b) Stabilization fees which shall be collected from the warehousemen by the Administration on all grains covered by negotiable warehouse receipts or quedans at the rate of ten centavos (P0.10) per cavan or fifty kilograms of grain per month but not to exceed fifty centavos (P0.50) per year;

c) A surtax on corporations as provided in Section eight of this Act;

d) Such borrowings as may be obtained from PL480, international institutions and other outside foreign agencies;

e) Such funds, profits, cash, and stocks of the Rice and Corn Administration (RCA) as will be turned over to the Administration;

f) Fees for licensing bonded warehouses at rates which shall be determined by the Council and collected by the Administration per cubic meter bonded capacity;

g) Fees, charges and/or surcharges hereby imposed in the issuance of licenses for importation of rice and corn and other grains, to be collected by the Administration at rates which shall be determined by the Council: Provided, That the rate of any surcharge to equalize the wholesale price of imported grain with the prevailing selling price of the equivalent commercial grain the domestic market shall be as determined by the Council under subparagraph (xii) of Section six of this Act; and

h) A tax on the sale, exchange or transfer of real property as provided in Section nine of this Act.

The taxes, fees, charges, surcharges and other levies aforestated in this section, including surcharges and penalties, if any, shall be turned over to the Central Bank of the Philippines to form part of the Fund. For this purpose, the agencies charged with the collection thereof shall remit their monthly collections to the Central Bank of the Philippines for the account of the Fund within fifteen (15) days of every succeeding month: Provided, however, That said taxes, fees, charges, surcharges and levies as provided for in this section shall take effect upon instruction of the President to the Council. Failure or refusal by any person to turn over or remit the collections within the period mentioned in this section shall be treated as a serious offense punishable under Section Twenty-nine of this Act.

In order to enhance the usefulness of the Fund, the Central Bank of the Philippines is hereby authorized to invest the resources thereof and the proceeds or increments arising out of such investments shall form part of the Fund.

Thirty (30%) per cent of the amount received every month shall be turned over within five (5) days from receipt to the Agricultural Guarantee Fund created under Republic Act Numbered Six thousand three hundred ninety to be disposed of in accordance with Section eleven of this Act.

The remaining seventy (70%) percent of the Fund shall be utilized by the Administration for funding the requirements of the development of the grains industry starting with the production of grains and the stabilization of supply and prices including the following:

a) Procurement of palay, rice, com and other grains in such quantities and places as may be necessary to stabilize the supply and price thereof;

b) Implementation of price support programs for palay, com and other grains.

The disposition, allocation and utilization of this portion of the Fund for the purposes envisioned in this Act shall be the exclusive prerogative of the Council.

SEC. 8. Surtax on Corporations. — In addition to the regular income tax imposed under Section twenty-four of the National Internal Revenue Code, as amended, for five years after the approval of this Act, there is hereby imposed for each taxable year on the net income of every corporation surtax of five (5%) per cent upon the amount by which such total net income minus regular income tax payable exceeds two hundred thousand (P200,000) pesos.

The provision of existing general and special laws to the contrary notwithstanding, there shall .be no exemption from this additional income tax. All corporate in excess of the minimum amount provided for in this section shall pay the surtax provided in this section.

SEC. 9. There shall be levied, assessed, collected, and paid during the next five years from the approval of this Act on every sale, exchange, transfer, or similar transaction intended to convey ownership of or title to any real property or rights thereto, a tax equivalent to two and a half (2-1/2%) per cent of the gross selling price of the real property or rights thereto, which shall be paid by the seller or transferor, except when the value of the property is ten thousand (PI 0,000) pesos or less. This tax shall not apply to transfers which are subject to tax under Title III of the National Internal Revenue Code.

SEC. 10. Imposition of Additional Taxes on Rice and Corn Mills.— In addition to the graduated fixed tax imposed in Section one hundred eighty-two (mm) of the National Internal Revenue Code, as amended, there is hereby imposed an additional tax on operators or owners of rice or corn mills in accordance with the following schedule:

RICE MILLS:

Kiskisan Type

Not exceeding 50 cavans of palay per 12-hour capacity with automotive power not
exceeding 12 H.P.

P20.00
 
Not exceeding 100 cavans of palay per 12-hour capacity not included in the preceding category
65.00
 
Exceeding 100 cavans of palay per 12-hour capacity
135.00
 

Cono Type

Not exceeding 100 cavans of palay per 12—hour capacity
200.00
 
Not exceeding 200 cavans of palay per 12—hour capacity
600.00
 
Not exceeding 300 cavans of palay per 12—hour capacity
1,000.00
 
Not exceeding 400 cavans of palay per 12—hour capacity
1,500.00
 
Not exceeding 500 cavans of palay per 12—hour capacity
2,100.00
 
Not exceeding 600 cavans of palay per 12—hour capacity
2,700.00
 
Not exceeding 700 cavans of palay per 12—hour capacity
3,500.00
 
Not exceeding 800 cavans of palay per 12—hour capacity
4,500.00
 
Not exceeding 900 cavans of palay per 12—hour capacity
5,500.00
 
Not exceeding 1,000 cavans of palay per 12 hour capacity
6,500.00
 
Not exceeding 1,000 cavans of palay per 12—hour capacity
7,500.00
 

CORN MILLS:

Grinder Type

More than 36 but not exceeding 100 cavans corn grit per 12-hour capacity
P100.00
 

Exceeding 100 cavans corn grit per 12-hour capacity

135.00
 

Roller Type

More than 36 cavans but not exceeding 100 cavans corn grit per 12-hour capacity
100.00
 
101—250 cavans com grit per 12-hour capacity
200.00
 
251—500 cavans corn-grit per 12-hour capacity
500.00
 
501—750 cavans com grit per 12-hour capacity
1,000.00
 
751—1,000 cavans corn grit pel 12-hour capacity
1,500.00
 
1,000—2,500 cavans com grit per 12-hour capacity
2,000.00
 
Above 2,500 cavans corn grit per 12-hour capacity
3,000.00
 

SEC. 11. Disposition of Funds turned over to the Agricultural Guarantee Fund. — The Agricultural Guarantee Fund Board created in Section thirteen of Republic Act Numbered Six thousand three hundred ninety shall administer the Funds turned over to the Agricultural Guarantee Fund under Section seven of this Act.

The Agricultural Guarantee Fund Board shall lay down, the policies governing the portion of the Agricultural Guarantee Fund contributed by this Act pursuant to the objectives stated therein. It shall promulgate such rules and regulations as may be necessary to insure the effective and efficient implementation of such policies.

The portion of the Agricultural Guarantee Fund funded by this Act shall be kept in a separate account at all times and shall be applied to cover losses for production loans extended to producers of rice and corn and other grains, guaranteed pursuant to rules and regulations promulgated in accordance with this section: Provided, That seventy (70%) per cent of the losses for production loans extended by banks shall be absorbed by the Agricultural Guarantee Fund and thirty (30%) per cent of such losses shall be absorbed by the Banks. The Agricultural Guarantee Fund Board shall submit to the President of the Philippines not later than the end of February, an annual report regarding the portion of the Fund contributed by this Act.

SEC. 12. Warehousing of Grains. — For purposes of this Act, the term "warehouseman" shall mean any person or entity engaged in the business of accepting rice, corn and other grains, milled or unmilled, for deposit or storage, imposing a charge or charges by reason (.hereof, and engaging to deliver the grain deposited upon surrender of the receipt therefor: Provided, That the warehouseman shall be entitled to allowance for depreciation of the stocks deposited at a rate to be determined by the Administration and approved by the Council.

SEC. 13. Registry, Licensing of Warehouses. — No warehouseman shall engage in the business of grain storage unless duly registered and licensed by the Administration: Provided, That no warehouseman shall be issued a license who has not complied with the rules and regulations to be hereinafter promulgated by the Administration, or be a person convicted of a crime involving moral turpitude.

It shall not be prohibited for a person, natural or juridical, who owns or operates a mill for rice or corn registered and licensed under this Act, to own and/or operate a warehouse engaged in the business of accepting palay, corn or other grains for storage and deposit under the quedan system and vice-versa: Provided, That the licensees shall be required to keep separate accounts or contracts for the milling and the warehousing operations to forestall the possible violation of this provision, thereby keeping wholly separable the milling operations and warehousing operations.

In order to further strengthen the quedan system, the Council shall promulgate such policy and/or restrictions as may be desired to guarantee the integrity of the quedan system and to encourage the banking system to finance and support such quedan system.

With the approval of the Central Bank of the Philippines, and subject to the registration and licensing authority of the Administration, private banks or consortiums thereof may lease or own and operate warehouses any law to the contrary notwithstanding.

SEC. 14. Warehouse Receipts. — For purposes of this Act, a warehouse receipt issued by a warehouseman for rice or corn or other grains to the depositor thereof shall be on forms provided by the Administration, and its issuance by the warehouseman shall be in accordance with the rules and regulations and procedures prescribed by the Administration. A negotiable warehouse receipt for rice or corn or other grains shall be printed, serially numbered, on security notepaper, in specific quantity in denominations of 5, 10, 20, 50 or 100 cavans, contain the name and business address of the warehouseman, the variety, classification, moisture content and quality of the grain deposited, the warranties of the warehouseman prescribed by existing laws, and the charges and authorized liens on the stocks in deposit.

SEC. 15. Uniform Warehousing Records. — Warehousemen engaged in the business of accepting rice and corn and other grains in deposit, shall adopt a uniform system of accounting and keeping records of deposit and withdrawals in the manner and form to be prescribed by the Administration.

SEC. 16. Failure to deliver Prima Facie Evidence of Shortage. — The provisions of existing laws to the contrary, notwithstanding, failure of any warehouseman engaged in the business of accepting grain for storage or deposit to deliver the stock of grains on deposit upon surrender of the warehouse receipt therefor, shall render the warehouseman liable for the crime of estafa.

SEC. 17. Unit Measurement of Grains. — The Administration shall implement the early transition from the present volumetric measurement of rice and corn and other grains, to the standard weight measurement by kilogram.

The metric standard of weight measurement shall be adopted and the "cavan" of rice and corn, whether milled or unmilled, shall be a unit containing fifty kilograms of such grains net weight. The use of bags or other containers containing one cavan or a fraction or a multiple thereof, shall be encouraged in the handling and packaging of these grains. The use of Containers, bags or packaging materials containing the milled grains in one kilogram, two or ten kilograms shall be encouraged in the retail trade of these grains.

SEC. 18. Guidelines for the Annual Grains Program. — The Council shall, on or before the first day of March every year:

a) furnish the institutions cited herein the financial requirements for the production of rice and corn and other grains for the crop seasons;

b) require from the Department of Agriculture and Natural Resources the estimate of consumption of rice and corn for the coming crop year; and

c) require the Department of Agriculture and Natural Resources to submit the annual program of agricultural production in grains, indicating therein the areas of production, the kind of grains to be produced, with estimate of the financial requirement of such production program. In the preparation of the corn aspect of the said program, the Department of Agriculture and Natural Resources shall be guided by the objective of achieving increased productivity of the white flint varieties of corn with high milling recoveries of grit for human consumption and the white and yellow dent varieties for industrial uses and for livestock-and poultry feeds.

The Council shall prepare a schedule for processing the expected crop output, its primary storage, a plan of redistribution of marketing of the milled grains and an estimate of the financial requirements for such schedules.

Upon prior consultation with the Department of Agrarian Reform and the National Food and Agriculture Council, the Council shall likewise prepare a program for developing the grains industry, indicating therein the short, medium and long-term financing needed, the roles of the governmental agencies in support of said development program, and the pattern of industry organization sought to be encouraged.

SEC. 19. Role of Financing Institutions. — After approval by the Council of the annual program for the industry, the Development Bank of the Philippines and the Philippine National Bank shall extend production loans to all rice and corn producers: Provided, That not more than eighty (80%) per cent of the price support shall be extended as crop loans to the producers: Provided

1) That it shall be mandatory to all rural banks and government-owned or controlled lending institutions to extend production loans to small land-owners cultivating an area of not more than twenty-four (24) hectares; and

2) That it shall be mandatory for all government-owned or controlled financing institutions to extend production loans to leaseholders who belong to duly registered producers' cooperatives.

For this purpose, within the next five years, all production loans extended to rice and corn producers by banks shall be given preference in the rediscounting policy of the Central Bank of the Philippines, and that the rediscounting rate shall be the lowest preferential rate extended by the Central Bank for the period.

Financial institutions named herein shall extend loans to warehousemen and millers for the construction, improvement and repair of warehouses or for the purchase of driers.

Private lending institutions who shall participate in this program, shall be entitled to the rediscounting privileges and coverage under the Agricultural Guarantee Fund.

All loans under this program shall be extended under supervised credit as prescribed under Republic Act Numbered Sixty-three hundred and ninety; Provided, That no farmer shall be extended loans under this program unless he warrants in the application for loan in the loan agreement that he shall deposit his produce with a duly accredited warehouse or where no such warehouse is available in the meantime, in the nearest storage facility designated by lending bank or the Administration. In this connection, the Administration is empowered to call upon all agencies of the Government with agricultural extension technicians to assist lending banks in the implementation of the supervised credit program without prejudice to the employment by the lending institutions of their own technicians.

SEC. 20. Collaterals Acceptable for Loans. — For purposes of this Act, loans shall be granted with any or a combination of the following collaterals, namely: (1) real estate property, if available; (2) chattel mortgage on standing crops in bonded warehouses; and/or existing livestock or poultry; (3) stored crops in bonded warehouses; (4) two co-makers acceptable to the bank: Provided, That in case a farmer is a member of a group or "selda," the cooperative or "selda" may act as a co-maker: And provided, further, That in the case of multi-purpose cooperatives, no co-maker shall be required; (5) leasehold rights arising from leasehold contracts, subject to the following conditions:

(a) That the landowner-lessor consents to the mortgage of the applicant's leasehold rights;

(b) That the applicant belongs to a duly-registered producers' or farmers' cooperative;

(c) That at the time of filing of the application for loan, the financial institution concerned shall explain to the applicant in the language or dialect understood by him that his leasehold contracts may be foreclosed in the event of willful or neglectful non-payment of all or part of the loan extended to him and the explanation shall be evidenced by a written notice to the applicant;

(d) That the association, cooperative or "selda" to which the applicant belongs certifies, accredits or co-makes the accommodation for loan;

(e) That in case of crop failure due to furtuitous events and/or force majeure, a refinancing scheme shall be devised or instituted for the benefit of the farmer-borrower;

(f) That if the farmer-borrower fails to pay the amount due on his loan despite a normal crop yield and such failure of payment was due to his diversion or misuse of the proceeds of his crop, the creditor-financial institution may foreclose the leasehold contract not later than six months from the due date of the loan; and

(g) That notwithstanding the provisions of any law or regulation to the contrary, the termination of the foreclosure proceeding on the lease-hold contract shall ipso facto extinguish the farmer-borrower's right thereunder and shall be cause for his ejectment from the land covered therein.

Upon termination of the foreclosure proceedings, the leasehold contract foreclosed shall be disposed of in accordance with the following order of priorities:

(a) It shall be offered for redemption to the association, cooperative or "selda" to which the applicant belongs;

(b) If the farmer waives his right and/or fails to redeem the foreclosed leasehold contract, it shall be offered to any qualified farmer residing in the locality even though the farmer concerned is not yet a member of any of the above organizations ;

(c) If the association, cooperative, "selda," or the qualified farmer waives such right and/or fails to redeem the foreclosed leasehold contract, it shall be offered to the Land Bank for redemption; and

(d) Finally, if neither the Land Bank nor any party in the locality manifests interest in the redemption of such right, the same shall be offered to the original landowner who shall redeem said loan by paying the charges, principal and interest due.

SEC. 21. Grain Exchange. — The Administration shall study and report to the Council within one year after the passage of this Act the advisability and feasibility of establishing a grain exchange as an instrumentality to support the development of agribusiness in rice and corn.

SEC. 22. Organization of Farmers, Grain Producers.—The Administration shall encourage the organization of farmers for the purpose of improving their production. In irrigated land, the Administration shall encourage the formation of cooperatives composed of farmers on land serviced by irrigation. Upon formation of such cooperatives, the maintenance of the irrigation system may, subject to the approval of the Administration and the other government authorities concerned, be turned over to said cooperatives,

A farmer or producer who is beneficiary of any irrigation system shall be charged on irrigation fees, which shall include the amount needed to maintain the system and amortize the cost of the system, and such other amount deemed to be a reasonable contribution to the expansion of the system, which fee shall be determined and collected by the National Irrigation Administration: Provided, That irrigation fees shall have priority lien on the land over all encumbrances but second only to land taxes.

In areas not accessible to irrigation systems, the Department of Agriculture and Natural Resources, the Department of Agrarian Reform, the Department of Public Works and Communications and the Council shall promote and take steps for the installation of necessary irrigation pumps or other means of providing a steady supply of water for farm purposes. Such alternative systems may be operated and maintained by organizations of farmers in the area covered.

Millers of rice or corn and other grains shall be encouraged to enter into regular milling and marketing contracts with farmers in their respective areas or provinces.

SEC. 23. Citizen Volunteer Service for Grain Production. — The Department of Agriculture and Natural Resources shall actively promote the early and effective involvement of citizen volunteers in agricultural production, particularly rice and corn and other grains, utilizing organized and reputable local volunteer organizations to recruit, select, train, organize, deploy and manage volunteers for projects and to areas designated by the Administration. The services of the Philippine National Volunteer Service Committee shall be availed of in the implementation of this program: Provided, That the department shall not directly engage in the commercial production of rice and corn or other crops nor indirectly through the use of volunteers.

SEC. 24. Warehousing, Milling Agreements. — The Administration shall encourage the entry of organized farmers or producers and warehousemen or of warehousemen into a storage agreement, renewable yearly, for the purpose of institutionalizing the primary storage of rice and corn in a region or suitable area: Provided, That said organization of farmers or producers, more particularly cooperatives, shall be encouraged to enter into a milling contract, for the purpose of developing regular and orderly milling schedules of crop production by area or region.

In the exercise of its powers to license, register and supervise grain warehousemen, millers and traders, the Administration shall undertake measures that will prevent collusion between or among them so as to maintain at all times the credibility or integrity of the quedan system in grains.

SEC. 25. Funding of the Administration. — There is hereby appropriated, out of the funds of the National Treasury not otherwise appropriated, the sum of fifteen million pesos for the expenditure of the National Grains Industry Development Administration: Provided, That for the succeeding five fiscal years following the approval of this Act, the Administration shall submit to the President of the Philippines a budget of its expenditures for consideration and inclusion in the annual General Appropriations Act. Thereafter, the Administration shall derive its funds from sources provided by the industry. The proceeds of all other collections made by the Administration from levies, fees, charges or surcharges authorized in this Act but not specifically mentioned in Section seven hereof shall be retained and used by the Administration as a source of funds to finance its annual budgetary requirements.

SEC. 26. Abolition of the Rice and Corn Administration. — The Rice and Corn Administration is hereby considered abolished three months from the date of approval of this Act to allow the RCA to wind up its operations: Provided, That its properties, assets, records and . unexpended appropriations are transferred to the Administration, including the stocks of imported rice and corn already in the country and such other stocks thereof as may arrive as a result of current importation, which shall be disposed of by the Administration in accordance with the supply and price stabilization policy of the Council: Provided, further, That all advances made by financial institutions in relation to such importations made in 1971 and 1972 shall be satisfied from the proceeds of the sale.

No official or employee of the Rice and Corn Administration shall be appointed to any position in the Administration unless he shall have been properly screened and cleared by a Selection Board which shall be formed by the Administrator and shall be composed of five members, two members to be designated by the Administrator, one member by the Office of the President, and two members representing the Employees Associations of the Rice and Com Administration who do not possess any of the disqualifications for absorption in the Administration listed in this paragraph: Provided, That the Selection Board shall screen the said officials and employees at a date not later than one month following the appointment of the Administrator: And provided, further, That the following persons shall not be absorbed by the Administration:

(a) Those who have pending administrative or criminal cases filed against them;

(b) Those who have previous records of gross inefficiency and incompetence;

(c) Those who are deemed by the Screening Board to be morally unfit to be appointed to positions requiring persons of good moral character; and

(d) Those who may be considered in excess of the personnel required in the staffing pattern of the Administration.

Permanent officials and employees of the Rice and Corn Administration who cannot be absorbed by the Administration, or who cannot transfer or be transferred to other agencies, or who prefer to retire, if qualified for retirement, or to be laid off, shall be given gratuity equivalent to one month salary for every year of service but in no case more than twenty-four months salary, in addition to all other benefits to which they are entitled under existing laws and regulations. For this purpose, there is hereby appropriated the sum of fifteen million pesos or so much thereof as "may be necessary, out of the funds of the National Treasury not otherwise appropriated.

The outstanding obligations of the Rice and Corn Administration, except as hereinabove indicated for the importations of 1971 and 1972, bearing the guarantee of the National Government shall be settled by the National Government. For this purpose, the President of the Philippines, upon the recommendation of the Secretary of Finance, is hereby authorized to issue treasury bonds, notes or securities, in such amounts as may be necessary for the settlement of the said obligations. The Secretary of Finance, in consultation with the Monetary Board and the Financial Fiscal Policy Committee created under Executive Order Numbered 97, dated October 26, 1967, as amended, shall prescribe the rules and regulations that shall govern the issuance of such bonds, notes or securities, including the form, the rate of interest, the denominations, maturities, negotiability, convertibility, call and redemption features, and all other terms and conditions and issuance, placement, sale, servicing and payment of all bonds, notes or securities issued under the authority of this Act. The said bonds, notes and securities to be issued under this Act shall he tax exempt and such fact shall be stated on their face and shall be exempt from attachment, execution or seizure. There is hereby appropriated, out of the funds of the National Treasury not otherwise appropriated, such sum or sums as may from year to year be necessary to amortize the payment ot the bonds, notes or securities issued under this Act. All appropriations for this purpose shall accrue to a special bond sinking fund, which is hereby created, to be managed by the Central Bank of the Philippines under rules and regulations that it may promulgate for the purpose,

SEC. 27. Transfer of the Rice and Corn Board. — The functions, personnel, properties, assets and unexpended appropriations of the Rice and Corn Board are hereby transferred to the Administration under which the Board shall continue to carry out the purpose of Republic Act Numbered Three thousand eighteen in synchronization with the grains industry development program.

SEC. 28. Annual Reports. — Before the end of March of each year, the Administration shall submit to the President of the Philippines, and shall publish, a comprehensive annual report on the condition of the grains industry and a review of the policies and measures adopted by the Council during the past year and an analysis of the economic and financial circumstances which give rise to said policies and measures.

The Administration shall also submit a separate Administration report to the President of the Philippines at the end of each fiscal year.

SEC. 29. Offenses and Penalties. — Notwithstanding the provisions of any law or regulation to the contrary, and for purposes of carrying out the provisions of this Act, the following acts or omissions are hereby considered as serious, less serious, and light offenses and corresponding penalties therefor are herein prescribed:

(a) Serious Offenses. — Any of the following acts or omissions shall constitute a serious offense:

(1) Failure or refusal of the responsible officials to turn over or remit to the Fund the collection under and within the period provided for in Section seven of this Act;

(2) Failure or refusal of a grains warehouseman, without any lawful excuse, to deliver grains deposited with him: Provided, however, That the warehouseman shall be entitled to the allowance authorized for depreciation of the grains deposited;

(3) Cornering or hoarding of grains resulting in artificial shortage or scarcity of supply and increase of prices thereof in any part of the country;

(4) Printing, issuing, or knowingly using, possessing or negotiating a cancelled unauthorized, illegal, counterfeit or falsified warehouse receipt. The offender shall upon conviction, be -punished by imprisonment of not less than four years and one day nor more than six years, and a fine of not less than twelve thousand pesos nor more than fifteen thousand pesos.

(b) Less Serious Offenses. — Any of the following acts or omissions shall constitute a less serious offense:

(1) Connivance in the concealment of a stock shortage in a grains warehouse;

(2) Knowingly submitting any report containing false information or data;

(3) Misrepresentation in connection with any application for license to do business as grains warehouseman, miller, exporter or importer or trade, manufacturer or processor;

(4) Failure or refusal of a warehouseman to allow the inspection or examination of his grain stocks to conceal shortages or to misrepresent the quantity or quality of his grain stocks, including the impending of such inspection and examination by abandonment, absence or otherwise;

(5) Failure or refusal of any government bank or financial institution, without any lawful excuse, to grant a loan applied for by a qualified farmer who meets the conditions for the loan;

(6) Engaging in the business of grains warehousing, milling, exporting, importing, trading, growing and selling of certified seeds, manufacturer or processor without a valid license.

The offender shall, upon conviction, be punished by imprisonment of not less than two years and one day to four years, and by fine of not less than eight thousand pesos nor more than ten thousand pesos.

(c) Light Offenses. — Any of the following acts or omissions shall constitute a light offense:

(1) Issuance by a warehouseman of warehouse receipts showing an aggregate quantity of grains stock in excess of the quantity permissible in his bond coverage;

(2) Issuance by a warehouseman of warehouse receipts showing an aggregate quantity of grain stocks not covered by fire insurance at full value as required by this Act;

(3) Failure or refusal to give information required by the Administration, provided such failure or refusal does not constitute a higher offense as herein-above provided;

(4) Non-compliance with the rules, regulations, decisions, orders, circulars or directives lawfully issued by the Administration, provided non-compliance does not constitute a higher offense as hereinabove provided;

(5) Fraudulent misrepresentation by the applicant in, or by any other person in connection with, an application for a production loan;

(6) Selling or offering to sell to the Administration by any person of palay or corn or other grains other than that directly produced by him as fanner or shared by him as tenant or landlord; knowingly buying such grains by any Administration personnel for the Administration; connivance by any person in the selling or buying of such grains;

(7) Any other violation of the provisions 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 one year nor more than two years, and by a fine of not less than four thousand pesos nor more than six thousand pesos.

(d) Additional Penalties. — (1) The license of any warehouseman, miller, exporter or importer, trader, certified seeds producer or sellor, found guilty of a serious, less serious, or light offense, shall also be cancelled: Provided, however, That the license of the offender shall not be renewed during the pendency of any investigation or prosecution for the commission of any of such offenses.

If the offender is a public officer or employee, including an officer or employee of any government-owned or controlled corporation, he shall, upon conviction, be disqualified from holding public office.

(2) Acts or omissions not specifically penalized under this Act but are punishable under any other existing law shall be punished under such law.

If any act or omission constitutes an offense under this Act as well as a violation of another existing law, the law which imposes as heavier penalty shall be made to apply.

(3) If the violation or offense is committed by a corporation, partnership, association, cooperative, or other juridical entity, whether public or private, the penalties provided for in this Act shall be imposed upon the directors, officers, employees or other officials or persons therein responsible for the offense.

(4) The prosecution of any offense under this Act shall be without prejudice to the civil or administrative liabilities for the offense.

SEC. 30. Repealing Clause. — All Acts, executive orders and proclamations, rules and regulations, or parts thereof, inconsistent with the provisions of this Act are hereby repealed, amended or modified accordingly.

SEC. 31. This Act shall take effect upon its approval, and it may be amended in part or in whole at any time by Presidential Decree.

APPROVED, in the City of Manila, this 26th day of September in the year of Our Lord, nineteen hundred and seventy-two.

(Sgd.) FERDINAND E. MARCOS
President
Republic of the Philippines
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