Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS

First Regular Session

1703

House Bill No.

Introduced by Hon. 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
population lives 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 afew other
countries have proven its worth as a vehicle for economic empowerment for those who least
expect it.

Micto-entrepreneurs thrive in the rural areas - sari-sari store operators, pedicab and
irieycle 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- credit finance should
be one of the functions of the Land Bank of the Philippines which 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 251 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
(P2,000.00) to Twenty Thousand Pesos (P20,000.00) 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 micto-lending operations to enable the government to monitor the success of micro-
financing as a poverty-reduction scheme. To instill fiscal discipline

If warranted by these amendments, the penalty imposed for violation of the provisions
of this Act is increased to Fifty Thousand Pesos (P50,000.00) from the current Ten Thousand
Pesos (P 10,000.00).

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 eamestly requested.

LFO
Represertidive
Lone District, Muntinlupa City


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS

First Regular Session

1703

House Bill No.

Introduced by Hon. Rodolfo G. Biazon

AN ACT
TO INSTITUTIONALIZE MICRO-CREDIT FINANCING, AMENDING FOR THIS
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:
SECTION I. Paragraph 6 of Section 75 of Republic Act No. 3844, as amended, is
hereby further amended to read as follows:
XXX
“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 (P2,000.00) AND NOT MORE
THAN TWENTY THOUSAND PESOS (P20,000.00) 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
follows:

“Sec. 80. Modes of Payment. - The Bank shall finance the acquisition of farm

lots as WELL AS MICRO-PROJECTS, VENTURES AND UNDERTAKINGS

PROVIDED IN PAR. 6 OF ‘TION 75 OF THIS ACT under any of the

following modes of settlement:

XXX”

3. Sec. 81 of the same Act is hereby further amended, by adding two new
paragraphs to be known as par. 81-A and 81-B, to read as follows:

ANCE THE —MICRO-LENDING

“Sec. 8I-An = TO

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 BRANCHE: IERE 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

|ALL 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. 86-4. Powers and Responsibilities of the Board. - The Board of

Directors shall have, among others, the following specific powers and responsibiliti

“1, Formulate policies, rules and regulations for the effective operation of the Bank,

1

AS WELL AS TO CARRY OUT THE PROVISIONS OF THIS ACT;

#2. xxx

Establish such branches, [and] agencies OR OFFICES as may be deemed

necessary and convenient FOR THE EFFECTIVE IMPLEME!

‘TATION OF ITS

MANDA‘

FOR TH AGRI-LENDING AND MICRO-LENDING
FINANCING;
M4, xxx

5. Xxx

6. XXX

‘0 PROVIDE FOR THE RECRUITME

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

3


BENEFICIARIES, REPAYMENT RATES, REACH OUT ACTIVITIES AND
RELEVANT MATTERS.”
SEC. 5. Sec. 100 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 (P50,000.00) 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 eff:

ty of this Act

SEC. 7. 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,