QuestionsQuestions (Republic Act No. 85)
RA 85 creates a body corporate named the Rehabilitation Finance Corporation to provide credit facilities for the rehabilitation and development of agriculture, commerce and industry, reconstruction of property damaged by war, and broadening/diversification of the national economy. Its principal place of business is in the City of Manila, and it exists for a period of fifty years.
It may grant loans for: (1) home building and rehabilitation/establishment/development of agricultural, commercial, industrial enterprises (including public utilities); (2) loans to provincial/city/municipal governments for rehabilitation/construction/reconstruction of public markets, waterworks, toll bridges, slaughterhouses, and other self-liquidating or income-producing services; (3) loans to government-owned/controlled agencies and corporations for electrical power, purchase/subdivision of estates, housing projects, irrigation/waterworks systems, and other essential industrial/agricultural enterprises; and (4) loans to cooperative associations to facilitate production, marketing of crops, and acquisition of essential commodities.
It may underwrite, purchase, own, sell, mortgage, or otherwise dispose of stocks, bonds, debentures, securities, and other evidences of indebtedness issued for or in connection with the projects/enterprises covered by its loan powers.
They require Presidential approval and cannot exceed at any one time an aggregate amount equivalent to 100% of the Corporation’s subscribed capital and surplus. Obligations are redeemable at the Corporation’s option at or before maturity; they are secured by the Corporation’s assets; the Corporation must provide reserves for redemption/retirement; they are exempt from taxation as to principal and interest; and they are fully and unconditionally guaranteed by the Government, with the guaranty expressed on the face.
If the Corporation is unable to pay the issued bonds/debentures/collaterals/notes/other obligations, the Secretary of Finance shall pay the amount, appropriated from the National Treasury not otherwise appropriated. Upon payment, to the extent paid, the Government succeeds to all rights of the holders.
In no case may maturity exceed ten (10) years.
Capital stock is PHP 300,000,000 divided into 300,000 shares with a par value of PHP 1,000 each. It is fully subscribed by the Government of the Philippines, and payment is made by authority of the President from appropriations provided by law.
A Board of Governors consisting of the Chairman and six other members, appointed by the President with consent of the Commission on Appointments. The Chairman and three other members render full-time service. Terms are seven years, except the first appointees whose terms are staggered from one to seven years as specified in their appointments.
The Chairman is the chief executive officer of the Corporation. On behalf of the Board, he has direction and control of the business in all matters not specifically reserved to the Board by the Act/by-laws.
The Secretary of Justice is ex-officio legal adviser of the Corporation. He appoints a representative who is the legal counsel, and assistants/personnel of the legal counsel are also appointed by the Secretary of Justice. Their operating expenses and salaries/traveling expenses are fixed by the Board and paid by the Corporation.
The Auditor General is ex-officio auditor. He appoints a representative who heads the auditing office. The Auditor General appoints/removes auditing office personnel upon recommendation of the auditor of the Corporation. A quarterly report is required on resources, liabilities, capital stock, surplus, reserve, profits, losses/bad debts/suspended-overdue paper, and plantilla, submitted to the President, Senate (through its President), House of Representatives (through its Speaker), Secretary of Finance, Auditor General, and the Board.
Powers/duties under CA 459 (as amended), funds and properties, capital, assets, accounts, contracts, and choses in action are transferred to the Corporation, which exercises them under RA 85. The Corporation assumes all liabilities of the Agricultural and Industrial Bank (as such or as trustee, as the case may be). Unimpaired capital of the Agricultural and Industrial Bank is credited to Government subscription to the Corporation’s capital stock, and the Agricultural and Industrial Bank is abolished when the Corporation begins operations.
Authority/control/administration of those rehabilitation funds are transferred to the Corporation, which becomes owner and has sole power of disposition and control. Disposition/control must follow the provisions of CA 726 and EO 107 until their purposes are accomplished. Stocks previously issued to the Government in exchange for contributions/subscriptions are transferred and issued in the Corporation’s name, and the total amount is credited to the Government’s subscription to the Corporation’s capital stock. The Financial Rehabilitation Board’s powers/functions are assumed by the Board of Governors.
Section 11 states obligations on the Corporation are lawful investments and may be accepted as security for fiduciary, insurance, trust, and public funds whose investment/deposit is under Government authority/control/supervision.
They may not participate in deliberations/determinations affecting personal interests or interests of corporations/partnerships/associations where they are directly or indirectly interested. Violation: summary removal from office and, upon conviction, a fine not exceeding PHP 10,000 and imprisonment not exceeding five years.
They cannot borrow money from the Corporation, cannot become guarantor/indorser/surety for loans from it to others, and cannot be obligors for amounts borrowed from it. Violators are immediately removed and punished by imprisonment of not less than one year and not more than five years, and a fine of not less than PHP 1,000 and not more than PHP 5,000.
Only by unanimous vote of the Board members excluding the interested member, and with approval of the President.
No fee/commission/gift/charge of any kind may be exacted/demanded/paid for obtaining loans. Any officer/employee/agent exacting demanding/receiving any fee is punished with a fine of not less than PHP 1,000 nor more than PHP 3,000 and imprisonment of not less than one year nor more than three years.