FOURTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
SENATE 
Senate Bill No. f82 
INTRODUCED BY HON. MANNY VILLAR 
EXPLANATORY NOTE 
Most small farmer-borrowers fall prey to informal lenders who are notorious for 
their usurious lending rates, ranging from as low as 60% to 240% per annum. Against 
this background of social inequity, this bill seeks to redirect credit to where it is direly 
needed. 
This proposed measure mandates that fifty percent (50%) of the twenty-five 
percent (25%) of a bank's total loanable funds reserved for agricultural and agrarian 
reform credits be extended to the small farmers and fisherfolk and their cooperatives. 
Moreover, it removes the provision in P.D. 717 which allows banks to divert to 
government securities the ten percent (10%) agrarian reform share aforecited. And for 
its strict compliance by the financial institutions, a penalty provision is included. 
The approval of this bill is earnestly sought. 


FOURTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
SENATE 
Senate Bill No.'=8 
~ 
INTRODUCED BY HON. MANNY VILLAR 
AN ACT EXPANDING THE COVERAGE OF AND THE CONDUIT NETWORK FOR 
FOR LENDING TO SMALL FARMERS AND FISHERFOLK, AND FOR OTHER 
PURPOSES THEREBY AMENDING PRESIDENTIAL DECREE NO. 717 
AGRl-AGRA CREDITS, PRESCRIBING A FIXED PERCENTAGE OF THE FUNDS 
OTHERWISE KNOWN AS THE AGRI-AGRA LAW 
Be it enacted by the Senate and House of Representatives of tbe Philippines in 
SECTION 1. Section 1 of Presidential Decree No. 717 is hereby amended to 
"Section 1. There shall be evolved an AGRICULTURE AND 
agrarian reform credit and financing system TO IMPROVE THE 
PRODUCTIVITY OF THE AGRICULTURE AND FISHERIES SECTORS, 
PARTICULARLY THE FARMERS AND FISHERFOLK, AND [for the 
beneficiaries of] agrarian reform BENEFICIARIES, namely: tillers, tenant- 
farmers, settlers, agricultural lessees, amortizing owners, owner- 
cultivators, farmers cooperatives and compact farms, through government 
and private banking institutions. 
AGRICULTURE AND agrarian reform credit, as used herein, shall 
include production or other types of loans for acquisition of work animals, 
farm AND FISHERY equipment and machinery, seeds fertilize poultry,) 
livestock, feeds and other similar items, acquisition of lands authorized 
under the Agrarian Reform Code of the Philippines and its amendments; 
construction [and/or], acquisition AND REPAIR of facilities for production, 
processing, storage and marketing AND SUCH OTHER FACILITIES IN 
SUPPORT OF AGRICULTURE AND FISHERIES; and efficient and 
effective merchandising of agricultural AND FISHERY commodities stored 
and/or processed by the facilities aforecited in domestic and foreign 
commerce. 
Section 2. Section 2 of the same decree is hereby amended to read as follows: 
Congress assembled: 
read as follows: 
"SEC. 2. The credit mentioned in the next preceding Section may 
be extended to the beneficiaries named therein WITH CAPITALIZATION 
OF NOT MORE THAN TEN MILLION PESOS (PI0 MILLION) OR TO 
COOPERATIVES OF SUCH BENEFICIARIES REGARDLESS OF 
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CAPITALIZATION based on the feasibility of the project and their paying 
capacity their estimated production, and/or securities they can provide as 
well as such assets as may be acquired by them from the proceeds of the 
loan. 
SEC. 3. Section 3 of the same decree is hereby amended to read as follows: 
"SEC. 3. All banking institutions, whether government or private, 
shall set aside at least twenty-five percent (25%) of their loanable funds 
for LENDING TO THE AGRICULTURE AND FISHERIES SECTORS 
[agricultural credit in general of which at least ten percent (10%) of the 
loanable funds shall be made available. for] AND agrarian reform [credit 
to] beneficiaries mentioned in Section 1 hereof, OF WHICH FIFTY 
PERCENT (50%) SHALL BE MADE AVAILABLE FOR LENDING TO 
SMALL FARMERS AND FISHERFOLK AS WELL AS SMALL FARMERS 
AND FISHERFOLK COOPERATIVES. THE SMALL FARMERS AND 
FISHERFOLK AS USED IN THIS SECTION SHALL REFER TO 
FARMING/ FISHING ACTIVITIES AS THEIR PRIMARY SOURCE OF 
INCOME AND WHOSE SALE, BARTER OR EXCHANGE OF AGRICUL 
TURALIFISHERY PRODUCTS DO NOT EXCEED A GROSS VALUE OF 
ONE HUNDRED EIGHTY THOUSAND PESOS (P180,OOO) PER 
ANNUM BASED ON 1992 CONSTANT PRICES; Provided, however, That 
loanable funds as used in this Section shall refer to funds generated from 
the date of effectivity .of this Decree[;]. [Provided, Further, that the 
National Economic Development Authority may increase or decrease such 
percentages whenever so recommknded by the Department of Agrarian. 
Reform and the Central Bank of the Philippines taking into consideration 
the magnitude of the credit needs of the beneficiaries of agrarian reform.] 
SEC. 4. Section 4 of the same decree is hereby amended to read as follows: 
NATURAL PERSONS DEPENDENT ON SMALL-SCALE SUBSISTENCE 
"SEC. 4. The [Central Bank of the Philippines) BANGKO SENTRAL 
NG PILIPINAS in consultation with [and/or upon the recommendation ofl 
the DEPARTMENT OF AGRICULTURE AND THE Department of 
Agrarian Reform shall promulgate such rules and regulations as may be 
necessary to implement the provisions of this ACT [Decree]. Subject to 
such rules and regulations banking institutions may be allowed to: 
[(a) Invest, in such government securities as may be declared 
eligible by the Central Bank of the Philippines, any portion of the amount 
set aside for agrarian reform credit not actually loaned out; Provided, 
however, that the issuing government entity shall stand ready to monetize, 
encash or repurchase such securities whenever funds are needed by the 
banks holding the said securities, for lending to the beneficiaries of 
agrarian reform; and] 
(A) INVEST IN-BONDS ISSUED BY THE DEVELOPMENT BANK OF 
THE PHILIPPINES (DBP) AND LAND BANK OF THE PHIL. (LBP) 
AND/OR OPEN SPECIAL DEPOSIT ACCOUNTS (SDA's) WITH 
THRIFT BANKS LOCATED OUTSIDE THE NATIONAL CAPITAL 
REGION (NCR), WITH COOPERATIVE BANKS AND RURAL 
BANKS: PROVIDED THAT THE PROCEEDS FROM SAID BONDS 
TO THE AGRICULTURE AND AGRARIAN REFORM SECTORS; 
PROVIDED, FURTHER, THAT PROCEEDS FROM SAID BONDS 
AND SDA's SHALL BE SEPARATELY ACCOUNTED FOR BY THE 
AND SDA'S SHALL BE USED EXCLUSIVELY FOR ON-LENDING 
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DBP, 
LBP 
AND 
THE 
DEPOSITORY 
THRIFT 
BANKS, 
COOPERATIVE BANKS AND RURAL BANKS AND SHALL NOT BE 
CONSIDERED 
FOR 
PUR.POSES 
OF 
COMPUTING 
THE 
LOANABLE FUNDS UNDER SECTION 3 H,EREOF OF THE SAID 
BANKS. 
(B) Rediscount with the [Central Bank of the Philippines] 
COMMERCIAL BANKS eligible paper covering AGRICULTURE AND 
agrarian reform credits; PROVIDED THAT SUCH REDISCOUNTED 
PAPER SHALL NO’LONGER BE ELIGIBLE AS COMPLIANCE ON 
THE PART OF THE ORIGINATING BANK; 
(C) LEND IN BUILD-OPERATE-TRANSFER (BOT) SCHEMES 
INFRASTRUCTURE INCLUDING FARM- TO-MARKET ROADS AS 
FOR 
THE 
CONSTRUCTION 
AND 
UPGRADING 
OF 
WELL AS THE PROVISION OF i POST HARVEST FACILITIES 
THAT WILL BENEFIT THE AGRICULTURE AND FISHERIES 
SECTORS, 
AND 
AGRARIAN 
REFORM 
BENEFICIARIES; 
PROVIDED THAT THE P1.5 MILLION CEILING’ FOR QUALIFIED 
BENEFICIARIES DOES NOT APPLY IN THIS INSTANCE; 
(D) LEND TO FARMERS, FARMERS ASSOCIATIONS OR 
COOPERATIVES FOR THE PRODUCTION, MARKETING AND 
DISTRIBUTION OF HIGH VALUE CROPS UNDER REPUBLIC ACT 
NO. 7900; 
SEC. 5. THE PROVISION IN THE SECOND PARAGRAPH OF SECTION 8 OF 
REPUBLIC ACT NO. 7900, WHICH STATES THAT “BANKS LENDING AT LEAST 
FIVE PERCENT (5%) OF THEIR LOANABLE FUNDS DIRECTLY TO FARMERS 
ASSOCIATIONS OR COOPERATIVES ARE EXEMPTED FROM THE COMPLIANCE 
REQUIREMENT OF PRESIDENTIAL DECREE 717”, is hereby repealed. All other laws, 
executive decrees or issuances, or any parts thereof, which are inconsistent with the 
provisions of this Act, are hereby repealed or amended accordingly. 
SEC. 6. PENALTY CLAUSE. THE BANK0 SENTRAL NG PILIPINAS SHALL 
IMPOSE ADMINISTRATIVE SANCTIONS AND OTHER PENALTIES ON THE 
THIS ACT. IN ADDITION, THE PRESIDENT, MEMBERS OF THE BOARD OF 
DIRECTORS AND OTHER OFFICERS OF THE ERRING LENDING INSTITUTIONS 
SHALL BE INDIVIDUALLY LIABLE FOR IMPRISONMENT OF NOT LESS THAN SIX 
(6) MONTHS AND A FINE OF NOT MORE THAN FIVE HUNDRED THOUSAND 
PESOS (P500, 000.00) EACH. THE SAID ERRING BANK OFFICERS SHALL BE 
BARRED 
FROM 
OCCUPYING 
POSITIONS 
IN 
BANKING 
INSTITUTIONS 
THEREAFTER. 
LENDING INSTITUTIONS FOR NON-COMPLIANCE WITH THE PROVISIONS OF 
SEC. 7. SEPARABILITY CLAUSE. The provision of this act are hereby declared 
separable, if any provision of this act shall be held unconstitutional, the remainder of the 
act not otherwise affected shall remain in full force and effect. 
SEC. 8. EFFECTIVITY. This act shall take effect fifteen (15) days after its 
publication in the official Gazette or two (2) newspapers of general circulation. 
Approved, 
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