FOURTEENTH CONGRESS OF THE REPUBLIC 
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OR THE PHILIPPINES 
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First Regular Session 
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SENATE 
S. No. 8 3 4  
Introduced by Senator Rodolfo G. Biazon 
EXPLANATORY NOTE 
The biggest challenge the current administration faces right now is how to ensure that 
society’s poorest sectors reap the benefits of development. Almost half of the country’s 86 
million Filipinos live below the poverty line. Of these, nearly three quarters live in rural areas. 
These figures tell us that if we are to win the battle against poverty, we must wage it in 
the countryside. The micro-credit programs done in Bangladesh, Brazil and a few other countries 
have proven its worth as a vehicle for economic empowerment for those who least expect it. 
Micro-entrepreneurs thrive in the rural areas - sari-sari .store operators, pedicab and 
tricycle drivers, candy vendors and our daily newspaper suppliers, to name a few. Despite their 
limited business scopes, micro-enterprises have a significant and positive effect on the economy. 
That’s because, first, they maximize resources abundant in their community. Second, they bank 
on locally available human resources. 
The most appropriate vehicle for countryside-led growth micro-finance remains the land 
Bank of the Philippines. Land Bank of the Philippines was created under RA 3844, originally for 
the purpose of financing the purchase of agricultural estates offered for sale, and to resell the 
lands to farmer beneficiaries under a long-term amortization scheme. PD 25 1 subsequently gave 
Landbank commercial banking powers to cross-subsidize agrarian land transfer and loans to 
small farmers and fisher folk. As a government universal bank, Landbank’s vision is to be a 
dominant financial institution in the countryside leading the nation to economic prosperity. 
This measure hopes to reinforce Landbank’s development mission by amending RA 3844 
to institutionalize micro-credit financing as part of the Bank’s key operations. It authorizes the 
Bank to grant collateral-free loans ranging from Two Thousand Pesos (P2,OOO.OO) to Twenty 
Thousand Pesos (P20,OOO.OO) to private individuals or informal groups of persons to finance 
self-help ventures and small-scale businesses or crafts. 
To ensure the effective enforcement of this Act, Landbank would be required to allocate 
25% of its loan portfolio to micro-lending and to submit an annual report to Congress on its 
micro-lending operations to enable the government to monitor the success of micro-financing as 
a poverty-reduction scheme. To instill fiscal discipline 
I warranted by these amendments, the penalty imposed for violation of the provisions of 
this Act is increased to Fifty Thousand Pesos (P50,OOO.OO) from the current Ten Thousand Pesos 
(P10,000.00). 


Financial services for the poor have proved to be a powerful instrument for poverty 
reduction that enables the poor to build assets, increase incomes, and reduce their vulnerability to 
economic stress. However, the challenge of providing financial services to them remains. 
In view of the foregoing, the approval of this bill is earnestly requested. 
RODOLFO GUIAZON 
Senator 


FOURTEENTH CONGRESS OF THE REPUBLIC 
) 
7 Ju\, -3 
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OF THE PHILIPPINES 
1 
First Regular Session 
1 
SENATE 
S. No. 834 
~~~ 
Introduced by Senator Rodolfo G. Biazon 
AN ACT 
PURPOSE REPUBLIC ACT NO. 3844, AS AMENDED, OTHERWISE KNOWN AS 
“THE CODE OF AGRARIAN REFORM IN THE PHILIPPINES.” APPROPRIATING 
FUNDS THEREFOR, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Republic of the 
Philippines in Congress assembled: 
TO INSTITUTIONALIZE MICRO-CREDIT FINANCING AMENDING FOR THIS 
SECTION I. Paragraph 6 of Section 75 of Republic Act No. 3844, as amended, is hereby 
further amended to read as follows: 
x x x  
“6. To grant loans for farmers’ cooperatives/ associations to facilitate production, 
MARKETING AND DELIVERY AND/OR DISTRIBUTION of crops and 
acquisition of essential EQUIPMENT, MACHINERY, TOOLS AND commodities AS 
WELL AS TO EXTEND UNCOLLATERALIZED LOANS OF NOT LESS THAN 
TWO THOUSAND PESOS (P2,OOO.OO) AND NOT MORE THAN TWENTY 
THOUSAND PESOS (P20,OOO.OO) TO PRIVATE INDIVIDUALS OR GROUPS 
OR AGGRUPATIONS OF PERSONS TO FINANCE MICRO-VENTURES, 
LIVELIHOOD PROJECTS, SMALL-SCALE CRAFTS, CAPITAL FOR RETAIL 
OR OTHER SMALL-SCALE BUSINESSES OR OCCUPATIONS PROVIDED 
THAT SUCH PRIVATE GROUPS OR AGGRUPATIONS ARE REGISTERED 
WITH THE DEPARTMENT OF FINANCE.” 


SEC. 2. Sec. 80 of the same Act, as amended, is hereby further amended to read as 
f ~ l l ~ w s :  
“Sec. 80. Modes ofPayment. - The Bank shall finance the acquisition of farm lots 
as WELL AS MICRO-PROJEXTS, VENTURES AND UNDERTAKINGS 
PROVIDED IN PAR. 6 OF SECTION 75 OF THIS ACT under any of the following 
modes of settlement: 
x x x” 
SEC. 3. Sec. 81 of the same Act is hereby further amended, by adding two new 
paragraphs to be known as par. 81-A and SI-B, to read as follows: 
“Sec. 81-A-. - TO FINANCE THE MICRO-LENDING UNDERTAKINGS 
AND TO SUPPORT THE MICRO-FINANCE OPERATIONS OF THE BANK AS 
ENVISIONED 
IN 
THIS 
ACT, 
INCLUDING 
THE 
EMPLOYMENT, 
DEPLOYMENT AND TRAINING OF ADDITIONAL PERSONNEL AS WELL 
AS THE CREATION OF NEW OFFICERS OR BRANCHES, THERE IS 
HEREBY APPROPRIATED THE SUM OF FIFTY MILLION PESOS 
(P50,000,000.00) OUT OF THE FUNDS OF THE NATIONAL TREASURY NOT 
OTHERWISE APPROPRIATED, WHICH SUM SHALL FORM PART OF THE 
CAPITALIZATION OF THE BANK.” 
“SEC. 81-B. - THE BANK SHALL ALLOCATE 25% OF ITS LOAN 
PORTFOLIO TO FINANCE MICRO-LOANS AUTHORIZED UNDER THIS 
ACT.” 
SEC. 4. Sec. 86-A of the same Act is hereby further amended to read as follows: 
“Sec. 86-A. Powers and Responsibilities of the Board. - The Board of Directors 
shall have, among others, the following specific powers and responsibilities: 
“1. Formulate policies, rules and regulations for the effective operation of the Bank, AS 
WELL AS TO CARRY OUT THE PROVISIONS OF THIS ACT; 
“2. x x x 


“3. Establish such branches, [and] agencies OR OFFICES as may be deemed necessary 
and convenient FOR THE EFFECTIVE IMPLEMENTATION OF ITS MANDATE 
FOR THE AGRI-LENDING AND MICRO-LENDING FINANCING; 
”4. x x x 
”5. x x x 
“6. x x x 
“7. TO PROVIDE FOR THE RECRUITMENT OF ADDITIONAL OR FIELD 
PERSONNEL TO CONDUCT INFORMATION AND TRAINING PROGRAMS 
ON 
MICRO-FINANCING, PROPER ENFORCEMENT 
OF PROGRAM 
POLICIES AND 
PROCEDURES, AND 
THE NECESSARY LENDING 
TECHNOLOGY TERMS OR MECHANISM FOR MICRO- LENDING AS 
PROVIDED IN THIS ACT; AND 
“8. TO SUBMIT TO CONGRESS AN ANNUAL REPORT OF ITS MICRO- 
LENDING OPERATIONS WITH EMPHASIS ON THE NUMBER OF 
BENEFICIARIES, REPAYMENT RATES, REACH OUT ACTIVITIES AND 
SUCH OTHER RELEVANT MATTERS.” 
SEC. 5. Sec. I00 of the same Act is hereby amended to read as follows: 
“Sec. 100. Penalty for Violation of the Provisions of this Chapter. - Any director, 
officer, employee or agent of the Bank who violates or permits the violation of any of the 
provisions of this Chapter or any person aiding or abetting the violation of any of the 
provisions of this Chapter, shall be punished by a fine of not to exceed [ten] FIFTY 
thousand pesos (P50,OOO.OO) or by imprisonment of not more than five years, or both, 
such fine and imprisonment at the discretion of the Court.” 
SEC; 6. - The Department of Finance shall, in consultation with the Land Bank of the 
Philippines and the Department of Trade and Industry, Department of Social Welfare and 
Development, Department of Science and Technology, Department of Labor and Employment, 
Department of Agriculture and the Department of Agrarian Reform, promulgate the necessary 
rules and regulations for the immediate and effective implementation of this Act within thirty 
(30) days from the effectivity of this Act 


SEC. 7. Separability CZause. - In the event that any provision of this Act, or part thereof, 
it is hereby declared invalid or unconstitutional, the remaining provisions thereof shall be 
considered valid and binding. 
SEC. 8. Eflectivity. - This Act shall take effect fifteen (15) days after its publication in 
the Official Gazette or in at least two (2) newspapers of general circulation whichever comes 
earlier. 
Approved,