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THIRTEENTH CONGRESS OF THE REPUBLIC 
FIRST REGULAR SESSION 
OF THE PHILIPPINES 
I~ c,. 
: \. ,,,EIVED 
: _. 
SENATE 
S.B. No. 
’1883 
EXPLANATORY NOTE 
All livelihood and technological loan institutions in the likes of the 
Technology tk Livelihood Resource Center (TLRC), Livelihood Corporation, 
Quedan & Rural Credit Guarantee Corporation, GSIS & SSS Business 
Loan: are just among the numbers of small business loan facilities being 
set-up and run by the government principally to provide assistance to 
aspiring small business investors which cannot afford the high rates 
offered by its private counterpart. 
Aside from being a third world country our impoverishing situation 
prompted the government leadership to set-up these facilities to help 
alleviate poverty by way of encouraging our own citizenry not to fully rely 
on government in sustaining a decent living. 
Unlike the private financial and banking institutions, government 
finance and Credit Corporations are not geared towards earning profits 
but the services it will ultimately deliver to the society as its major 
thrust. 
Indeed, many of our ordinary citizens which started their small 
ventures with the aid of government run credit and finance corporations 
have already succeeded. Aside from finishing off with their loans, most 
have expanded their businesses that incidentally help create and provide 
jobs. 
It is saddening to note however, that on the other hand, many of 
those that availed of small business loans became unfortunate not to 
make a payoff at the time of loan maturity. We should understand that 


. 
the very volatile business environment coupled with the nation’s 
recurring economic crisis made a direct hit on their modest venture. 
These inopportune cases pushed this representation to come up 
with this legislation that will provide protection to small borrowers of all 
government livelihood loans by way of putting in place and allowing 
condonation of loans that have applied for restructuring. Through this, 
those ventures that did not hit it off on time will be given a second 
chance to recuperate. 
If some government finance institutions can afford to provide 
restructuring of housing loans, I don’t see any other reason why a 
livelihood loan that is earning cannot be accorded with the same 
dispensation. 
The immediate approval of this bill is earnestly sought. 


THIRTEENTH CONGRESS OF THE REPUBLIC 
FIRST REGULAR SESSION 
OF THE PHILIPPINES 
5 JAN 12 ”1 
I 
INTRODUCED BY SENATOR MAGSAYSAY, JR. 
I 
AN ACT 
ESTABLISHING THE LIVELIHOOD AND TECHNOLOGY RELATED 
LOAN CONDONATION ACT OF THE 
ILIPPINES 
Be it enacted by the Senate and House of Representatives of the 
Philippines in Congress assembled: 
SECTION 1. Title - This Act shall be known as the “Livelihood 
and Technology-Related Loan Condonation Act of 2004”. 
SEC. 2. Definition of Terms - Unless the context indicates 
otherwise, the following terms shall mean: 
a. Amortization - the amount to be paid by the borrower, which 
may include principal, interest, value-added tax (VAT), 
insurance premium and service fee; 
b. Amortization Schedule 
- 
the payment schedule showing 
amount of principal, interest, VAT, insurance premium, service 
fee and outstanding balances that is due at regular date 
interval within the loan term; 
c. Borrower - any individual or entity who availed of a livelihood 
or technology related loan from any government institution or 
agency involved in livelihood and technology-related program of 
the government; 
d. Collateral - the property or security offered to secure the 
amount of loan availed or granted; 
e. Livelihood Loan - financial or funding assistance extended by 
a government institution or agency involved in livelihood and 
technology-related programs of the government to individuals 
or 
groups, 
for 
the purpose 
of 
creating 
employment 
opportunities with the establishment of income-generating 
activities in the poverty/marginal industry sector; 
f. Loan Matured/Past Due Accounts 
- 
loans which remain 
outstanding after maturity date and loans declared due and 
demandable; 
g. Outstanding Balance - the balance of the account which may 
include the principal, interest, surcharges, penalties, additional 
interest and service fee as of the period indicated; 
h. Outstanding Principal - the balance of the loan granted; 
i. Penalty - the amount charged on loans that have matured or 
classified as past due; 
j. Principal - the amount of the loan granted; 
k. Real Estate - the titled land, all rights and interests thereto, 
and all emoluments, such as, buildings and other structures 
affzed to the land, to include condominium units; 


1. Regular Interest - interest charged based on the principal from 
date of release up to maturity date; 
m. Restructuring - an amendment to the existing terms of loan 
repayment; 
n. Restructured Amount 
- the amount to be restructured and 
which shall be composed of unpaid “principal and interest;” 
0. Surcharge - the amount charged on the unpaid amortization 
before the maturity date; 
p. Technology loan - financial or funding assistance extended by 
any government institution or agency involved in livelihood and 
technology-related programs of the government to individuals 
or groups with projects which utilizes the appropriate 
technology [refers to knowledge, tools and machines) for 
product manufacturing and delivery process application and 
rendering and delivery of services that leads to: 
(a) 
new/improved products/service; 
(b) increased productivity; 
and (c) enhanced competitiveness. 
SEC. 3. Condonation Clause - All penalties and surcharges on 
all livelihood or technology-related loans from any government 
institutions and agencies involved in livelihood and technology-related 
programs of the government, including but not limited to the Technology 
and Livelihood Resource Center, Livelihood Corporation, Quedan and 
Rural Credit Guarantee Corporation, Small Business Guarantee and 
Finance Corporation, and People’s Credit and Finance Corporation shall 
be condoned upon filing of the restructuring application under this Act: 
Provided, That all due and demandable arrearages composed of the 
principal and interest are restructured and paid within the prescribed 
repayment period. 
In the event that a borrower is able to pay only part of his/her due 
and demandable arrearages, only the penalties corresponding to the 
portion paid shall be condoned. 
SEC. 4. Restructuring of Delinquent Loans - The term of a 
livelihood and/or technology-related loan account being applied for 
restructuring may be extended for a period longer than its original term 
in order to lower the amount of the amortization due as may be 
determined by the government agency concerned for a period not 
exceeding five (5) years from the approval of the application, after which, 
the amount of amortization due will revert back to its original amount or 
whichever is higher. The unserviced portion ensuing from the extended 
period provided for in the restructuring shall be paid on the last year of 
the term of the livelihood and/or technology-related loan along with the 
last due amortization. In the event that the borrower fails to pay any 
amortization during the extended period granted, he/ she shall 
voluntarily surrender his/her property without need of judicial 
proceedings; 
b. The interest rate for restructured amount shall be that of the 
interest rate stated in the promissory note or the interest rate 
prevailing at the time of the approval of the restructuring, 
whichever is higher. 
In case of incapacity of a borrower, his/her legal heirs and 
successor- in-interest may assume payment of his/her 
outstanding livelihood and/or technology-related loan; and 
c. 


d. Loan restructuring under this Act may be availed of only once. 
SEC. 5. 
Coverage 
- 
All due and demandable arrearages 
composed of the principal and the interest as of the effectivity of this Act 
shall be covered by this Act: Provided, however, That in no instance 
shall the following livelihood and/or technology related loan accounts be 
covered by this Act: 
1. Any account without a single payment, which shall be 
equivalent to one amortization due payment, since loan take 
out; and 
2. An account that has been foreclosed, the sheriff's certificate of 
sale had already been issued. 
SEC. 6. 
Remedies Against Delinquent Accounts 
- 
The 
creditor-government agencies shall continue to exercise their right to 
foreclose properties covered by accounts excluded as provided for under 
Section 5 hereof or of delinquent accounts of borrowers who shall fail to 
avail of the benefits of this Act. 
SEC. 7. Implementing Rules and Regulations - Within ninety 
(90) days from the effectivity of this Act, the Department of Finance, in 
consultation with the creditor-government agencies concerned, shall 
promulgate the rules and regulations necessary for the effective 
implementation of the provisions of this Act. Such rules and regulations 
shall take effect fifteen (15) days following the completion of its 
publication for two (2) consecutive weeks in a newspaper of general 
circulation. 
SEC. 8. Repealing Clause - All laws, decrees, executive orders, 
rules and regulations, or any part thereof, inconsistent with any 
provision of this Act are hereby repealed or modified accordingly. 
SEC. 9. Separability Clause - The provisions of this Act are 
hereby declared separable and, in the event any such provision is 
declared unconstitutional or invalid, the other provisions which are not 
affected thereby shall remain in force and effect. 
SEC. 10. Effectivity - This Act shall take effect fifteen (15) days 
Official 
following its publication for two (2) consecutive weeks in the 
Gazette or in at least two (2) newspapers of general circulation. 
Approved,