Republic of the Philippines
House of Representatives
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
1* Regular Session

House BILLNo. 5983

Introduced by
Hon. Sabiniano S. Canama
COOP-NATCCO PARTYLIST

EXPLANATORY NOTE

Countryside rural development is predominant and more pronounced by the programs of
the Department of Agriculture and the Department of Agrarian Reform. These programs
include the Credit Assistance Program — Program Beneficiaries Development Program and
Credit Program Scheme of the Department of Agrarian Reform; and the Agricultural credit
secured through Microfinance Program of the People’s Credit and Finance Corporation.

A grand total of roughly P3.7 billion inclusive of interest was released by all of these
government agencies. Collections as of December 2011 amounted to P1.3 billion which is
35% of the total amount of the loan. It is for this reason that we take measures in order
to apply leniency to this unpopular agrarian reform beneficiaries by condoning all
interests, surcharges and other penalties from the commencement of the loan. Needless
to say, all the payments made subsequent to the credit application shall be applied
retroactively to the principal amount only.

It is to be noted that famers and agrarian reform beneficiaries are not only entrepreneurs
on bucolic areas but are also partners in the evolution of a better and brighter country. It
is therefore imperative upon us to take an overwhelming care and attention by condoning
these interests that burdened the debt.

It is for the reason that the approval of this bill be given an immediate positive response.

HON. SABINIANO S. CANAMA


Republic of the Philippines
House of Representatives
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
1% Regular Session

HOUSE BILLNo, _ 5083

Introduced by
Hon. Sabiniano S. Canama
COOP-NATCCO PARTYLIST

AN ACT

PROVIDING FOR THE RESTRUCTURING AND CONDONATION OF UNPAID INTERESTS,

PENALTIES, AND SURCHARGES ON LOANS SECURED BY FARMERS, FISHERFOLK AND
AGRARIAN REFORM BENEFICIARIES FROM THE DEPARTMENT OF AGRARIAN REFORM.
(DAR), THE DEPARTMENT OF AGRICULTURE (DA), THE PEOPLE’S CREDIT AND FINANCE

CORPORATION (PCFC), THE COOPERATIVE DEVELOPMENT AUTHORITY (CDA), THE
NATIONAL FOOD AUTHORITY (NFA) AND THE QUEDAN AND RURAL CREDIT
GUARANTEE CORPORATION (QUEDANCOR).

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress
assembled.

SECTION 1. Short Title — This Act shall be known as the “Agrarian and Agricultural Loan
Restructuring and Condonation Act.”

SECTION 2. Declaration of Policy - The state shall promote comprehensive rural
development and agrarian reform through the provision of measures that will release
farmers, fisherfolk and agrarian reform beneficiaries from the bondage of debt. Towards
this end, it shall be the objective of the State to provide farmers, fisherfolk and agrarian
reform beneficiaries the opportunity to regain access to government and commercial
credit facilities through the condonation of unpaid interests, penalties and surcharges on
their existing loans obtained through government lending programs.


SECTION 3. Definition of Terms — As used in this Act:

a) Agrarian Reform Beneficiaries refer to farmers who were granted lands under
Presidential Decree No. 27, known as the Emancipation of Tenants and Transfer
of Ownership of Land Act and RA 6657 known as the “Comprehensive Agrarian
Reform Law of 1988”, as amended, and other existing agrarian reform laws.
These include regular farm workers, irrespective of tenurial arrangement who
benefited from the redistribution of lands, including their organizations and
cooperatives which have availed of the credit programs enumerated in Section
5 hereof;

b) Agricultural and Agrarian Reform Credit refers to loans granted for agricultural

production; promotion of agricultural business and exports including but not

limited to the acquisition of work animals, farm equipment and machinery,
seeds, fertilizers, poultry, livestock, feeds construction, acquisition and repair of
agricultural facilities.

Condonation refers to the relief granted by law in the payment of unpaid

interests, penalties and surcharges.

d) Delinquent Borrower refers to borrower with at least Three (3) consecutive
unpaid amortizations or whose total unpaid amortization reaches Twenty
percent (20%) of the total outstanding balance of the loan regardless of the
number of unpaid amortizations as of the effectivity of this Act;

e) Farmer refers to any natural personal whose primary livelihood is cultivation of
land or the production of agricultural crops, livestock and agricultural products,
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 agreement or other similar arrangements;

f) Fisherfolk refers to people directly or personally and physically engaged in taking

and/or culturing and processing fishery and/or aquatic resources.

Force Majeure refers to events whether natural or political, beyond the

reasonable control of a loan borrower, which have a material adverse effect on

the ability of the borrower to pay an obligation;

h) Market Aberrations refer to unusual adverse movements in market prices which

have detrimental effects on the yield and income of farmers, fisherfolk and

agrarian reform beneficiaries;

Loan Restructuring refers to a process where the principal terms and conditions

of the original loan are modified in accordance with an agreement setting forth

a new plan or schedule of payment;

Terminated Lending Programs refer to lending programs instituted by the

government which are no longer existing and operational yet with intractable

records of loans.

“)


SECTION 4. Condonation — All unpaid interests, penalties and surcharges of agricultural
and agrarian reform credit secured by farmers, fisherfolk and agrarian reform
beneficiaries from the Department of Agrarian Reform (DAR), Department of Agriculture
(DA), the People’s Credit and Finance Corporation (PCFC), the Cooperative Development
Authority (CDA), the National Food Authority (NFA), and the Quedan and Rural Credit
Guarantee Corporation (QUEDANCOR) prior to the effectivity of this Act are hereby
condoned upon approval of the application for condonation of a borrower qualified under
this act: Provided, That the bases for the condonation shall be limited to force majeure or
market aberration and shall, in no case, be applied for the willful default of the borrower
to pay such loans; Provided, further, That accumulated payments of not less than Five
percent (5%) of the loan principal shall have been paid at the time of application for
condonation: Provided, furthermore, That, to encourage borrowing discipline and
enhance credit worthiness, a graduation process shall be followed in consonance with the
plan of payment such that a borrower shall be granted a one-time condonation only:
Provided, finally, That the condonation of unpaid interests, penalties and surcharges from
loans acquired through conduit banks and financial institutions and the agencies
mentioned above shall be in conformity with the applicable general banking laws and
regulations of the Bangko Sentral ng Pilipinas (BSP).

SECTION 5. Coverage. — The following accounts are covered by the condonation program:

(a) Agricultural and Agrarian Reform credit secured through the Credit Assistance
Program — Program Beneficiaries Development of the DAR;

(b) Agricultural and Agrarian Reform credit secured through the terminated credit
program schemes of the DAR, such as the Dutch Rural Development Assistance
Program (DRDAP), DAR Direct Lending Financing Program (DDLFP), DAR Special
Projects Officer (SPO) Direct, and the SPO Window III Financing Program for
Agrarian Reform Beneficiaries of the DAR and the Development Bank of the
Philippines;

(c) Resettlement Loan Assistance Program of the DAR for individual agrarian reform
beneficiaries;

(d) Agricultural credit secured through the High Yield Crop Loan Assistance Program
of the DA;

(e) Agricultural credit secured through Microfinance Program for Small Farmers and
Fisherfolk and the Household of the PCFC;

(f) Cooperative Development Loan Fund of the CDA;

(g) Farmers Level Grain Center of the NFA; and

(h) Comprehensive Agrarian Reform Program — Barangay Marketing Center (CARP-
BMC) and all agri-credit guarantee programs of QUEDANCOR


SECTION 6. Qualified Beneficiaries — Delinquent farmers, fisherfolk or agrarian reform
beneficiaries and agrarian reform beneficiary organizations who secured agricultural and
agrarian reform credit under any of the accounts enumerated in Section 5 of this Act and
who are delinquent borrowers may apply for condonation of unpaid interests, penalties,
and surcharges with the concerned government agency or corporation.

SECTION 7. Approval of Application for Condonation. - The government agency or
corporation managing the accounts enumerated in Section 5 hereof, shall review and
approve an application for condonation and loan restructuring. The period for payment
of the restructured loan shall be determined according to the financial capacity of the
farmers, fisherfolk and agrarian reform beneficiaries upon the approval of the application.
The approval of the application for condonation shall serve as the basis for the concerned
government agency/corporation to write-off the unpaid interests, penalties and
surcharges condoned.

SECTION 8. Collection of Payment — The annual collection from payments of loans under
the terminated credit programs as provided in Section 5(b) of this Act shall be remitted
to the Bureau of Treasury under the Agrarian Reform Fund.

SECTION 9. Restoration of Non-performing Loans to Status of Good Standing — Loans
restructured under this Act shall be restored to status of good standing upon Three (3)
consecutive payments by the borrower of the required periodic amortizations under the
restructures loan. Government agencies may issue the appropriate certifications to the
borrower upon satisfaction of the said condition, thereby facilitating their reintegration
into the financial and banking system by allowing them to access to government and
private credit programs.

SECTION 10. Write-off Loans from the Books of Terminated Lending Programs. - The
concerned agencies shall write-off from their books the loans of borrowers of the
terminated lending programs provided that the programs are clearly identified, and the
accounts involved are past due. The procedure for the writing-off of loans from the books
terminated lending programs shall be provided for in the implementing rules and
regulations of this Act.

SECTION 11. Implementing Rules and Regulations (IRR) — Within Sixty (60) days from the

effectivity of this Act. The Secretary of the Department of Agrarian Reform, in

consultation with the secretaries and heads of offices of the Department of Agriculture

(DA), Cooperative Development Authority (CDA), People’s Credit and Finance Corporation

(PCFC), the Agriculture Credit Policy Council (ACPC) and the Bangko Sentral ng Pilipinas
5


shall promulgate the implementing rules and regulations for the effective implementation
of this Act.

SECTION 12. Repealing Clause — All laws, executive orders, issuances or parts thereof
inconsistent with the provisions of this Act are hereby amended, repealed and modified
accordingly.

SECTION 13. Separability Clause — \f any provision of this Act is declared unconstitutional,
the remainder of this Act, or any provisions not affected thereby shall remain in full force
and effect.

SECTION 14. Effectivity Clause — This Act shall take effect Fifteen (15) days after its
publication in the Official Gazette or in newspaper of general circulation.

Approved,