Section 17Republic Act No. 6758, otherwise known as the Salary Standardization Law, and from other laws, rules and regulations on salaries and compensations; and to establish a Provident Fund and determine the , Sec./Art. 17

Payments of Guaranty Calls.

(a) In the event of a default on the guaranteed obligation in accordance with the regulations of the Corporation, the guaranty entity shall be entitled to receive the benefit of the guaranty as herein provided, upon (1) the prompt conveyance to the Corporation of the right to the property securing the guaranteed obligations; and (2) the assignment to the Corporation of all claims of the mortgagee against the mortgagor under the guaranteed obligation. Upon such conveyance and assignment, the obligation of the guaranty entity to pay the premium charges for guaranty shall cease and the Corporation shall, at its option, pay in cash and/or issue to the guaranteed entity, debenture bonds equivalent to the guaranteed obligations;

(b) For the purpose of the above subsection (a), the balance outstanding and due on the guaranteed mortgage shall be determined in accordance with the rules and regulations prescribed by the Corporation;

(c) Debentures issued under this Section shall be subject to such terms and conditions, and shall include such provisions for redemption, if any, as may be in coupon or registered form;

(d) Debentures issued under this Section to any mortgagee with respect to mortgages or loans guaranteed under Chapters III and IV shall be executed in the name of the Home Guaranty as obligor, and signed for the Corporation by the President of the Corporation, either by his written or engraved signature, and shall be negotiable, exempt from taxation to the extent specified in this Act, attachment, execution or seizure, redeemable at the option of the Corporation at or before maturity and fully guaranteed as to principal and interest by the Republic of the Philippines. All such debentures shall be dated as of the date the mortgagee conveys and assigns to the Corporation its right under the mortgage and valid claims against the mortgagor and shall bear interest not exceeding the interest rate established for the principal obligation.

The interest of the debentures shall be payable semi-annually on the first day of January and the first day of July of each year. The debenture shall mature ten (10) years after date on which the debentures were issued or three (3) years after July first following the maturity of the mortgage on the property on exchange for the debentures were issued whichever is the shorter period, and may be used at the option of the mortgagee in the payment of the guaranty premium due to Corporation.

(e) If the net amount realized from the sale or disposition of any property conveyed to the Corporation under this section and the claims assigned therewith, after deducting all expenses incurred by the corporation in handling, dealing with, and disposing of such property and in collecting such claims, exceeds the face value of the debentures issued and the cash paid in exchange for such property plus all interest paid on such debentures, such excess shall be paid to the mortgagor of the property;

(f) The aggregate amount at any time of all such debentures, securities, and other evidences of indebtedness issued under this Section, shall be determined by the Corporation with the approval of the President of the Philippines after consultation with the Monetary Board of the Bangko Sentral ng Pilipinas, which shall in no case exceed the aggregate amount of the outstanding principal obligations of all mortgages insured under this Act; and

(g) The Corporation may, in accordance with the provisions of the mortgage, or in the absence thereof, upon such term and conditions as it may prescribe, release part or parts of the mortgage property from the lien of the mortgage.