EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
tPffiCv’ cf lijc & ffi,tarp
20 
FEB 12 f  2 ;15
S E N A T E
Introduced by SENATOR RAMON BONG REVILLA, JR.
AN ACT
MANDATING BANKING INSTITUTIONS TO STRENGTHEN THE FINANCING 
SYSTEM FOR AGRICULTURAL, FISHERIES AND RURAL DEVELOPMENT IN 
THE PHILIPPINES
EXPLANATORY NOTE
Over the years, the Philippines has proved its exhibition of eminent biodiversity 
to the world, rich in both flora and fauna. Although agriculture plays a vital role in the 
economy of the Philippines, its relative contribution to gross domestic product (GDP) 
has been declining over the years.1 From 1998 to 2009, the sector accounted for 13% 
to 14% of the total GDP. This steadily declined to 10% by 2017. This is below the 2.5 
to 3.5 percent annual growth rate target for the sector under the 2017-2022 Philippine 
Development Plan 
of the 
National 
Economic 
and 
Development Authority.2
Furthermore, according to the Food and Organization of the United Nations, the 
Philippines, the world's largest archipelagic state with more than 7,100 islands, is a 
major fishing nation.3 In 2012, the Philippines ranked among the major fish-producing 
countries in the world with a total production of 3.1 million tons offish, crustaceans, 
mollusks and other aquatic animals. Unquestionably, the fisheries sector is one of the
1 Brown, E.O., Ebora,R.V., Decena, F.C. (2018, November 21) FFTC Agricultural Platform. 
http://ap.fftc.agnet.org/ap db.php?id=941
1 Ocampo, K.R. (2018, August 9). Decline o f Crop Output Slows Q2 Growth ofA gri Sector.
https://business.inquirer.net/255375/decline-crop-output-slows-a2-growth-agri-sector-agriculture-business-
psa-crops-farm-output
3 Food and Agriculture of the United Nations. (2014, May). Fishery and Aquaculture Country Profiles: Republic 
o f the Philippines. http://www.fao.org/fisherv/facp/PHL/en


main sources of food in the country, but through the years, the output in of the 
fisheries sector in the Philippines continues to decline as well.
The lack of a policy that should regulate, manage and finance involved parties 
of both the agricultural and fisheries sectors may decelerate the development and 
sustainability of our economic resources as well as further delaying rural incomes and 
social development. This proposed Rural Agricultural and Fisheries Enhancing System 
Act aims to overhaul Republic Act No. 10000 to strengthen rural development by 
providing for a holistic approach that addresses the root causes of the challenges 
faced by the agricultural and fisheries sector and taking into account the broader 
agricultural financing ecosystem and rural community development requirements.
Foregoing considered, passage of this Bill is earnestly sought.
A'
RAM Oy BONG REVILLA JR.


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
S E N A T E
^CiUV;
20 
12 P2 :15
Introduced by SENATOR RAMON BONG REVILLA, JR.
AN ACT
MANDATING BANKING INSTITUTIONS TO STRENGTHEN THE FINANCING 
SYSTEM FOR AGRICULTURAL, FISHERIES AND RURAL DEVELOPMENT IN THE 
PHILIPPINES
Be it enacted by the Senate and House o f Representatives o f the Philippines in Congress 
assembled:
ARTICLE I
GENERAL PROVISIONS
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Section 1. S h o rt Title. -  This Act shall be known as the "Rural Agricultural and 
Fisheries Financing Enhancement System Act of 2020".
Sec. 2. D eclaration o f  Policy. -  It is hereby declared the policy of the State to 
promote inclusive and broad-based economic growth by ensuring equal access to 
opportunities under an environment of sustained growth and expanding productivity as 
the key to raising the quality of life for al. Towards this end, the State shall promote rural 
development by enhancing access of rural communities and agricultural and fisheries 
households to financial services and programs that increase productivity, enhance market 
efficiency, promote modernization and improve the welfare and economic prospects of 
beneficiaries in rural communities through active participation of banking institutions.


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mean:
Sec. 3. D e fin itio n  o f  Terms. -  As used in this Act, the following terms shall
(a) Agrarian Reform Beneficiary (ARB) refers to a farmer who was granted land 
under Presidential Decree NO. 27, the Comprehensive Agrarian Reform Law 
and Republic Act No. 9700 or the "Comprehensive Agrarian Reform Extension 
with Reforms" and a regular farm worker who is landless, irrespective of 
tenurial arrangement, who benefited from the redistribution of land, regardless 
of crops or fruits produced, to include the totality of factors and support 
services designed to lift the economic status of the beneficiary and all other 
alternative arrangements to the physical distribution of shares of stock which 
will allow the beneficiary to receive a just share of the fruits of the lands one 
works. The term shall also include registered agrarian reform beneficiaries' 
cooperatives/associations/other 
farm 
groups, 
respectively 
endorsed 
as 
comprising of agrarian reform beneficiaries by the nearest office of the DAR, 
as well as ARB households.
(b) Agrarian Reform Community (ARC) refers to a barangay or a cluster of 
barangays primarily composed and managed by agrarian reform beneficiaries 
who shall be willing to be organized and undertake the integrated development 
of an area and/or their organizations/cooperatives.
{c) Agri-Business refers to agriculture and fishery-related activities that put 
farmers, fisherfolk processors, distributors, and consumers within a system that 
produces, processes, transports, markets, and distributes agricultural and 
fishery products. It encompasses input production, farm and fishery operations 
and management, equipment and supplies, manufacturing, food/non-food 
processing, trading, and retailing.
(d) Agri-Tourism d\so referred to as "Farm Tourism" under Republic Act No. 10816, 
refers to the practice of attracting visitors and tourists to farm areas for 
production, educational and recreational purposes. It involves any agricultural 
or fishery-based operation or activity that brings to a duly-accredited farm


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tourism camp, visitors, tourists, farmers and fisherfolk who want to be 
educated and trained on farming and its related activities.
(e) Agricultural Lessee refers to any person who, with or without help from his/her 
immediate farm household, cultivates the land owned by another for a certain 
price in money, in produce, or in both.
(f) Agricultural or Fisheries Household refers to a household that is considered to 
be an agricultural or fisheries household when at least one member of the 
household is a farmer, a fisherman, an agrarian reform beneficiary, a settler, 
an agricultural lessee, an amortizing owner, a farmworker, a fish worker, an 
owner-cultivator, a compact farmer, or a tenant farmer.
(g ) Agricultural Value Chain (AVC) refers to a set of actors/players, such as 
producers (farmers, fisherfolks), traders, suppliers, processors, aggregators, 
who conduct linked sequence of value-adding activities involved in converting 
an agricultural product from its raw material to final form and bringing it to 
consumers.
Agricultural Value Chain Financing (AVCF) refers to financing to an AVC 
following the identification and analysis of AVC and the design of appropriate 
financial products and services for actors/players that form part of the AVC.
(h) Agro-Industry Modernization Credit and Financing Program (AMCF) refers to 
the umbrella credit/financing program of the government for the agriculture 
and fisheries sector created under Republic Act No. 8435.
(i) Amortizing Owners refer to landowners who amortize payment for the land to 
a private individual or to the State.
(j) Compact Farmers refer to those farmers with adjoining farmers operating as a 
single unit under one management, farm plan and budget.
(k) Farmer refers to a natural person whose primary livelihood is cultivation of land 
or the poor production of agricultural crops, agro-forest products, or livestock, 
either by oneself, or primarily with the assistance of their immediate farm 
household, whether the land is owned by them or by another person under a 
leasehold or share tenancy agreement or arrangement with the owner thereof.


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(l) Farmworker refers to a natural person who renders service for value as an 
employee or labourer in an agricultural enterprise or farm regardless of 
whether their compensation is paid on a daily, weekly, monthly or "pakyaw" 
basis. The term includes an individual whose work has ceased as a 
consequence of, or in connection with, a pending agrarian dispute who has not 
obtained a substantially equivalent and regular farm employment.
(m) 
Farmers' Cooperatives refer to organizations composed primarily of small 
agricultural producers, farmers, farmworkers, or other agrarian reform 
beneficiaries who voluntarily organize themselves for the purpose of pooling 
land, manpower, technological, financial or other economic resources, and 
operate on the principle of one member, one vote. A juridical person may be a 
member of a cooperative, with the same rights and duties as a natural person.
(n) Farmer's and Fisherfolk's Organizations or Associations refer to farmer's and 
fisherfolk's cooperatives, associations or corporations duly registered with 
appropriate government agencies and which are composed primarily of small 
agricultural producers, farmers, farmworkers, agrarian reform beneficiaries, 
fisherfolk who voluntarily join together to form business enterprises or non­
business organizations which they themselves own, control and patronize.
(o) Farm-to-Market Road refers to a road linking the agriculture and fisheries 
production sites, coastal landing point and post-harvest facility to the market 
and arterial road and highway.
(p) Financial Services refer to services extended by banks/financial institutions 
such as, but not limited to, credit/lending, deposits, rediscounting, and 
insurance.
(q) Fisherfolk refers to people directly or personally and physically engaged in 
catching
(r) Fisherworkerrefers to people whether or not regularly employed in commercial 
fishing and related industries, whose income is either from wages, profit 
sharing or stratified sharing basis, including those working in fish pens, fish 
corral/traps, fishponds, prawn farms, sea farms, salt beds, fish ports, fishing


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boat or trawlers, or fish processing and/or packing plants, but excluding 
administrators, security guards and overseers.
(s) Green Finance refers to financial services and products designed to promote 
the flow of finance towards green economic activities and projects. Aside from 
financing to promote climate change adaptation and mitigation, green finance 
also covers environmental improvement and efficiency improvement in natural 
capital preservation an resource mobilization.
(t) Micro, Small and Medium Enterprise (MSME) refers to any business activity or 
enterprise defined as such under existing laws.
(u) Newiy-Estabiished Bank refers to a domestic or foreign bank without banking 
presence in the Philippines prior to the issuance of its certificate of authority to 
operate. It shall not include banks that have been formed through the 
acquisition, purchase of ownership of the voting stock of an existing domestic 
bank or the merger or consolidation of banks.
(v) Owner-Cultivators refer to natural persons who own lands by purchase, 
inheritance or land distribution by the State. Owner-Cultivators can operate the 
farm themselves, supervise wage labor or delegate operations to farmers.
(w) 
Philippine Corp Insurance Corporation (PCIC) refers to a government- 
owned and controlled corporation which provides insurance protection to the 
country's agricultural producers, particularly the subsistence farmers against 
crop losses arising from natural calamities such as typhoons, rising seal levels, 
floods drought, earthquakes, volcanic eruptions, plant diseases and pest 
infestation, and non-crop agricultural asset losses due to perils for which the 
asset has been insured against.
(x) Post-Harvest Activities refer to threshing, drying, milling, grading, storing, and 
handling of produce and such other activities of a similar nature such as 
stripping, winnowing chipping and washing.
(y) Post-Harvest Facilities refer to threshers, moisture meters, dryers, weighing 
scales, milling equipment, fish ports, fish landings, ice plants and cold storage 
facilities, processing plants, warehouses, buying stations, market infrastructure


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and transportation facilities, and such other facilities, supporting post-harvest
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activities.
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(z) Public Rural Infrastructure refers to infrastructure in rural communities such as
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highways, streets, bridges, tunnels, railways, railroad, transport systems, ports,
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airports, hydropower projects, canals, dams, irrigation, government buildings
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and housing projects, public schools, public hospitals, public health centers,
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public markets, slaughterhouses, warehouses, solid waste management,
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sewerage, flood control, drainage, dredging and other similar infrastructure
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projects.
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(aa) 
Rural Community refers to areas that are defined as such by the Philippine
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Statistics Authority (PSA).
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(ab) Rural Financial Institution (RFI) refers to any financial institution established
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and is operating in a rural community.
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(ac) Settlers refer to persons who range from the forest-clearing pioneers,
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including indigenous people, with a subsistence economy to the better equipped
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and more experienced farmers.
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(ad) Tenant Farmer refers to one who cultivates another's land under a sharing or
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leasehold agreement.
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ARTICLE I I
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AGRICULTURAL FISHERIES AND RURAL FINANCING SYSTEM
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Sec. 4. A griculture^ Fisheries a n d  R u ra l Financing System . -  There shall be
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an 
agricultural, 
fisheries and 
rural financing 
system to 
improve the welfare,
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competitiveness, 
income and 
productivity of the rural community beneficiaries,
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particularly the farmers, fisherfolk, agrarian reform beneficiaries, agrarian reform
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communities, 
settlers, 
agricultural 
lessees, 
amortizing 
owners, 
farmworkers,
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fisherworkers, owner-cultivators, compact farmers, tenant farmers, and members of their
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households and their MSMEs, as well as farmers' and fisherfolk's cooperatives,
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organizations and associations, through government and private banking institutions.
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Agricultural, fisheries and rural financing, as used herein, shall consist of loans, 
investments and grants to finance activities shall enhance productivity and increase 
income of an agricultural and fisheries household, thereby promoting agricultural sector 
productivity and competitiveness, as well as sustainable development of rural 
communities. These shall include, but not be limited to, activities identified under the 
AMCFP as enumerated under Chapter 3 Section 23 of Republic Act No. 8435, off- 
farm/fishery activities, agricultural mechanization/modernization, agri-tourism, green 
finance projects, acquisition of land authorized under the Agrarian Reform Code of the 
Philippines and its amendments, efficient and effective marketing, processing, distribution 
and storage of agricultural and fishery commodities, public rural infrastructure, as well as 
programs that shall address the development needs of rural communities, such as, but 
not limited to, projects that promote the livelihood, skills enhancement, and all other 
capacity-building activities of the rural community beneficiaries and all other activities 
consistent or analogous to the foregoing, as may be determined by the Agricultural and 
Fisheries Finance and Capacity-Building Council (AFFCC).
Sec. 5. R u ra l C om m unity Beneficiaries. -  The financing mentioned in the 
preceding section shall be extended to the rural community beneficiaries named therein 
or to cooperatives, associations, MSMEs or organizations in good standing of such 
beneficiaries, regardless of capitalization based on the feasibility of the project and their 
paying capacity, their estimated production, and/or securities they can provide as well as 
assets as may be acquired by the from the proceeds of the loan, investments and grants.
Sec. 6. C redit Quota, -  All banking institutions, whether government or private, 
except newly established banks for a period of five (5) years from date of commencement 
of the banks' operations, shall set aside a credit quota, or a minimum mandatory 
agricultural and fisheries financing requirement of at least twenty-five percent (25%) of 
their total loanable funds.


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The total loanable funds generated by banking institutions shall be defined by the 
BSP. During the first year of effectivity of this Act, the total loanable funds generated 
shall be computed started from the 20th of April 2010, the effectivity of Republic Act No. 
10000, after which the bank's total loanable funds shall be determined based on funds 
generated starting from the second year of effectivity of this Act.
Sec. 7. M odes o f  Compliance. -  Banks may comply with the mandatory credit 
requirement by lending to rural community beneficiaries, to finance agriculture and 
fishery-related activities identified under the AMCFP as enumerated under Chapter 3 
Section 
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of Republic Act 
No. 
8435, 
off-farm/fishery 
activities, 
agricultural 
mechanization/modernization, 
agri-tourism, 
green 
finance 
projects, 
marketing, 
processing, distribution and storage of agricultural and fishery commodities, livelihood 
projects, skill enhancement or capacity-building projects.
Banks may also comply with the mandatory financing requirement through other 
means as follows:
(a) Invest in debt securities, including those issued by the Development Bank of 
the Philippines (DBP) and the Landbank of the Philippines (LBP): Provided, That 
the proceeds from said debt securities shall be used to finance activities under 
Section $ hereof: Provided, further, That the proceeds from debt securities 
issued by the DBP and LBP shall be separately accounted for and shall not be 
considered for purposes of computing the loanable funds under Section 6 
hereof of the said banks;
(b) Open Deposit accounts with rural financial institutions: Provided, That the 
deposit accounts shall be separately accounted for by the depository bank and 
shall not be considered for purposes of computing the loanable funds under 
Section 6 hereof of the said banks;


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(c) Rediscount with banks eligible paper covering agriculture, fisheries and
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agrarian reform credits: Provided, That rediscounted paper shall no longer be
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eligible as compliance on the part of the originating bank;
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(d) Invest directly in the shares of stock of rural financial institutions, subject to
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prevailing laws, rules or regulations or lend wholesale to rural institutions:
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Provided, That the wholesale loans shall be credited as compliance of the bank
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acting as wholesale lender alone;
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(e) Lend for the construction and upgrading of infrastructure, including but not
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limited to, farm-to-market roads, as well as the provision of post-harvest
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facilities and other public rural infrastructure that will benefit the agriculture,
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fisheries and agrarian reform sector;
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(f) Lend to agri-business enterprises that maintain agricultural commodity supply
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chain arrangements directly with rural community beneficiaries;
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(g) Undertake agricultural value chain financing to actors/players in the AVC that
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benefits rural communities; and
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(h) Invest in shares of stock of the PCIC or in companies that primarily engage in
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activities under Section 4 hereof that benefit rural community beneficiaries:
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Provided That, the loans and investments that are counted as compliance are not
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funded by proceeds from the issuance of debt securities, and/or lending of other banks
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that have been counted as compliance with the mandatory credit: Provided Further, that
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loans to finance activities that shall generally benefit agrarian reform beneficiaries,
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agrarian reform communities, or other priority sectors, as may be determined by the
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AFFCC, shall be counted at not more than ten times (lOx) their outstanding amount, or
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as otherwise prescribed by the BSP, for purposes of determining compliance with the
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mandatory agricultural and fisheries financing requirement.
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Sec. 8. The modes of compliance enumerated in the preceding section shall be
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subject to review by the AFFCC after implementation to determine whether these are


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adequate to support the financing requirements of rural communities and recommend to 
Congress for appropriate action.
Sec. 9. A n n u a l R eports.-V c\e BSP shall furnish reports on the compliance with 
the mandatory agricultural and fisheries financing requirement to the Congress on a 
yearly basis. The BSP shall, as part of it regulator/ functions, monitor the compliance by 
the banks with the requirements of this Act.
Sec. 10. P ena lty Clause. -  The BSP shall impose administrative sanctions and 
other penalties on the lending institutions for violation of any provisions of this Act. 
Penalties on non-compliance or under-compliance with the mandatory agricultural and 
fisheries financing requirement shall be computed at one-half of one percent (0.5%) of 
non-compliance or under-compliance, or at any rates prescribed by the BSP Monetary 
Board. Upon collection of the penalties, the BSP shall remit the same to the AFFCC for 
deposit to the special fund created under Article III of this Act. Ten percent (10%) of the 
penalties collected shall be retained by the BSP to cover administrative expenses.
ARTICLE I I I
AGRIBUSINESS MANAGEMENT CAPACITY AND INSTITUTION­
BUILDING FUND AND PROGRAM
Sec. 11. There shall be created an Agribusiness Management Capacity and 
Institution-Building Fund (Special Fund) to finance agricultural- and fishery-related 
activities as well as organizational-, capacity- and institution-building programs of 
cooperatives and other duly-registered organizations of rural agricultural and fisheries 
households. The special fund shall be sufficient to ensure effective implementation of the 
aforementioned activities and programs. For this purpose, banks may comply with the 
mandatory credit requirement by providing contributions to the Special Fund.
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Sec. 12. The initial amount of the Special Fund shall at least be PIO billion and 
shall include penalties due from banks on their non-compliance or under-compliance with 
the mandatory Agri-Agra credit requirement under Republic Act No. 10000, collected after 
the effectivity of this Act, net of the ten percent (10%) amount to be retained by BSP. In 
case of a shortfall, the banks shall advance a maximum amount of P2 billion, which shall 
be chargeable against future penalties under this Act, and shall not be considered as a 
mode of compliance under Section 11 hereof.
Sec. 13. Banks, duly-registered training and capacity-building organizations, 
cooperatives and other duly-registered organizations of, or that support rural agricultural 
and fisheries household may apply with the AFFCC for funding for their capacity and 
institution-building programs and activities.
ARTICLE IV
AGRICULTURAL AND FISHERIES FINANCE AND CAPACITY-BUILDING
COUNCIL (AFFCC)
Sec. 14. A g ric u ltu ra l a n d  Fisheries Finance a n d  C apacity-B uilding C ouncil 
(AFFCC). -  There shall be created an Agricultural and Fisheries Finance and Capacity- 
Building Council (AFFCC) which shall be composed of the Fleads, or their designated 
representatives, of the following agencies: the Department of Agriculture (DA), as Chair; 
the Bangko Sentra! ng Pilipinas (BSP); the Department of Agrarian Reform (DAR); the 
Department of Trade and Industry (DTI); the Cooperative Development Authority (CDA); 
the Landbank of the Philippines (LBP); the Development Bank of the Philippines (DBP); 
and nine (9) representatives from the private sector as members, one of whom shall be 
appointed as Vice-Chair. The private sector representatives shall include the heads, or 
their designated representatives, of: the Bankers Association of the Philippines (BAP), as 
Vice-Chair; the Rural Bankers Association of the Philippines (RBAP); the Chamber of Thrift 
Banks (CTB); the Cooperative Banks Federation of the Philippines (BANGKOOP); the 
Microfinance Council of the Philippines, Inc. (MCPI); the Philippine Chamber of Commerce
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and Industry (PCCI); and a representative each from the cooperative sector, the farmers, 
and the fisherfoik sector.
Sec. 15. Powers/ D uties a n d  Function o f  the AFFCC. -  The AFFCC shall have 
the following powers, duties, and functions;
(a) to set the target amount for the Special Fund to meet the organizational- and 
capacity-building requirements of cooperatives and other duly-registered 
organizations of rural agricultural and fisheries households over a period often 
(10) years;
(b ) to determine the annual requirement of the Special Fund;
(c) to identify eligible recipients of the Special Fund;
(d ) to identify eligible agricultural- and fishery-related activities and capacity 
building programs that may be financed by the Special Fund;
(e) to ensure the effective implementation and programs financed by the Special 
Fund and, for this purpose, to employ outsource resources and expertise from 
the banking industry that can provide project coordination and fund 
management services;
(f) to periodically assess the adequacy of the fund capital in financing the capacity­
building 
requirements of rural cooperatives and other duly-registered 
organizations of rural agricultural and fisheries households; and
(g ) to ensure compliance with the reporting, monitoring, evaluation and audit 
requirements of the Special Fund and activities financed.
ARTICLE V
MISCELLANEOUS PROVISIONS
Sec. 16. A u d it -  The Special Fund shall be audited by the Commission on Audit 
(COA) in accordance with existing auditing laws, rules, and regulations.
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Sec. 17. Oversight Committee. -  There shall be an oversight committee 
composed of the following: the Chairperson of the Committee on Banks and Financial 
Intermediaries of the House of Representatives, Chairperson of the Committee on Banks, 
Financial Institutions and Currencies of the Senate, a representative from the Office of 
the President and a representative from the Commission on Audit (COA); to oversee the 
implementation of the provisions of this Act.
Sec. 18. Sunset Provisions. - The provisions related to the mandatory credit 
quota under Article III as well as the management and administration of the Special Fund 
under Article III shall cease to have effect, ten (10) years from approval of this Act.
Sec. 19. Repealing Clause. -  Any law, presidential decree or issuance, executive 
order, letter of instruction, rule or regulation inconsistent or contrary to the provisions of 
this Act is hereby repealed or modified accordingly.
Sec. 20. Separability Clause. -  If any part, section or provision of this Act is 
held invalid or unconstitutional, other provisions not affected thereby shall remain in force 
and effect.
Sec. 21. Transitory Provision. -  The BSP shall promulgate such rules and 
regulations as may be necessary to implement Articles I and II of this Act within ninety 
(90) days after effectivity of this Act. Prior to the effectivity of the implementing rules 
and regulations of Articles I and II of this Act, the provisions of Republic Act No. 10000 
shall remain in force.
The BSP shall organize a Task Force which shall promulgate such rules and 
regulations as may be necessary to implement Articles III and IV within ninety (90) days 
after effectivity of this Act.
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Sec. 22. E ffectivity. -  This Act shall effect fifteen (15) days after its publication 
in the Official Gazette or in a newspaper of general circulation.
Approved,
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