FOURTEENTH CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
First Regular Session 
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S. No. 8 3 3  
Introduced by Senator Biazon 
EXPLANATORY NOTE 
Congress has already enacted into law such landmark legislations as R.A. No. 6810, the 
Magna Carta for Countryside and Barangay Business Enterprises otherwise known as 
“Kalakalan 20”, and R.A. No. 7368, the Countrywide Industrialization Act of 1992. What is 
needed, however, is to make small and medium scale enterprises and industries thrive in the 
countryside is by giving them access to capital and credit. Under the Agri-Agra Law 
(Presidential Decree No. 717) the inadequacy of credit would be alleviated by requiring the 
banks to set aside 25% of their loanable h d s  for agricultural lending - 15% for agricultural 
production and 10% for agrarian reform. Presidential Decree No. 717, however, allowed banks 
to divert the 10% agrarian reform share to government securities, which most commercial banks 
use to purchase government securities. 
Moreover, a substantial portion of the 45% share for agricultural production is lent to 
large agri-related multinational corporations. 
This bill seeks to redirect the 25% loanable funds in favor of small farmers and small and 
medium scale enterprises. With credit available in the countryside, business enterprises are 
expected to thrive, thus, providing more jobs and livelihood opportunities to our people. 
The immediate passage of this bill is urged. 
RODOLFO GUIAZON 
Senator 


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FOURTEENTH CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
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First Regular Session 
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SENATE 
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Introduced by Senator Rodolfo G. Biazon 
AN ACT 
AMENDING PRESIDENTIAL DECREE NO. 717, OTHERWISE KNOWN AS THE 
STRICT EMPHASIS ON RURAL CREDIT FOCUSING ON SMALL FARMERS. 
FISHERMEN AND ENTERPRISES WITH CAPITALIZATIONS NOT EXCEEDING 
FIVE HUNDRED THOUSAND PESOS (P500,OOO.OO) 
Be it enacted by the Senate and the House of Representutives of the Philippines in Congress 
assembled: 
AGRI-AGRA LAW, TO MAXIMIZE THE USAGE OF THE AGRI-AGRA FUND, WITH 
SECTION 1. Title. - This Act shall be known as the "Revised Agri-Agra Act of 2007." 
SEC. 2. Declaration of Policy. - It is hereby declared the policy of the State to alleviate 
poverty and promote vigorous growth in the countryside through full extension of, and access to 
rural credit by small fanners, fishermen and enterprises, 
SEC. 3. Definition of Term. - For the purposes of this Act, Small Farmers and Fishermen 
shall refers to farmers and fishermen whose earnings do not exceed Three Thousand Pesos 
(P3,OOO.OO) per month with 1989 as the base year. 
SEC. 4. Coverage and Allocation of Funds. 
(a) It shall be mandatory for all banks to apportion at least twenty-five percent (25%) of 
their loanable funds for agriculture-agrarian reform beneficiaries. 
(b) At least seventy-five percent (75%) of this Agri-Agra Fund shall be clearly set aside 
and strictly utilized for rural credit. The Land Bank of The Philippines, the Philippine National 
Bank and the Development Bank of the Philippines shall act as the lead lending and collection 
conduits of financial institutions with special attention to commercial banks. 
(c) The use of the remaining twenty-five percent (25%) of the Agri-Agra Funds shall be 
left to the discretion of the financial institutions involved. 


(d) Financial institutions shall no longer be allowed to use the Agri-Agra Funds to buy 
government securities. (In effect, Section 4(a) of Presidential Decree No. 71 7 is hereby 
repealed.) 
(e) Enterprises and cooperative organizations qualified to avail of the Agri-Agra Funds 
are those with capitalization not exceeding Five hundred thousand pesos (P5OO,OOO.O0) 
SEC. 5. Network. 
(a) The Bangko Sentral ng Pilipinas (BSP) shall immediately allow the LBP, the DBP 
and the PNB to increase their branches in the countryside to strengthen their roles as the main 
conduits of the Agri-Agra Funds. 
(b) The Bangko Sentral ng Pilipinas (BSP) shall also encourage the establishment of new 
rural banks to hrther facilitate the easy dispersal of the Agri-Agra funds. 
(c) Rural banks shall be allowed to give accreditations to existing informal lenders. These 
informal money lenders can now integrate into the formal banking system with the following 
incentives: 
(1) These lenders shall have easy access to credit supply from the banks they affiliate 
with; 
(2) The banks involved shall shoulder part of the lenders' collection losses; and 
(3) As agents of rural banks, the moneylenders shall be entitled to commissions that will 
be determined by the Bangko Sentral ng Pilipinas (BSP). 
(d) In exchange for the above incentives, the accredited moneylenders shall charge the 
same lending rate as the rate of the rural banks, which accredit them. 
SEC. 6, Drawdown of Funds. 
(a) In cognizance of the size of the whole Agri-Agra Funds, the hll drawdown of the 
Agri-Agra Fund from the financial institutions shall be done gradually within a period of five (5) 
years from the approval of this Act. 
(b) The LBP, the DBP, and the PNB shall formulate a program that will allow 
countryside financial establishments to adequately disperse the Agri-Agra Fund within the time 
limit set by the law. 
SEC. 7. Agricultural Promissory Notes. 
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(a) The LBP, the DBP, the PNB, and interested commercial banks are hereby authorized 
to create a special instrument herein referred to as the Agricultural Promissory Note (APN), with 
an annual interest rate of three percent (3%), which shall be the investment instrument for 
participating banks, who are willing to place their funds in accordance with this Act, 
(b) Funds invested in the APN shall be used exclusively for agricultural loans and for the 
benefit of agrarian reform beneficiaries. 
(c) A special accreditation committee shall be created by the President to accredit 
commercial banks qualified to issue APNs. 
SEC. 8. Monitoring. - The Bangko Sentral ng Pilipinas (BSP), the LBP, the DBP and the 
PNB shall strengthen their monitoring functions in coordination with all relevant entities in the 
rnral areas to ensure the efficient distribution of the Agri-Agra Fund to small farmers, fishermen 
and producers' cooperatives. 
SEC. 9. Penal Clause. - The Bangko Sentral ng Pilipinas (BSP) shall impose the heavy 
penalties on erring commercial banks, rural banks, accredited cooperatives and accredited 
moneylenders for any abusive use of the Agri-Agra Fund. The penalties shall be in the form of 
imprisonment of the bank president, bank manager, cooperative head and moneylenders for 
misuse of the Agri-Agra Fund or a fine of not less than Three hundred thousand pesos (P300, 
000.00). 
SEC. 10. Implementing Guidelines. - The Central Bank, in coordination with LBP and 
other relevant agencies, shall formulate the necessary guidelines and/or mechanisms within 
fifteen (I 5) working days after approval of this Act. 
SEC. 11. Repealing Clause. - Any other provisions of laws, decrees and regulations 
inconsistent with the provisions of this Act are hereby repealed or modified accordingly. 
SEC. 12. Eflecthify. - This Act shall take effect upon its approval. 
Approved, 
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