Republic of the Philippines
House of Representatives
Quezon City, Metro Manila

Sixteenth Congress
Second Regular Session

HOUSE BILL NO. 5428

Introduced by Henry S. Oaminal

EXPLANATORY NOTE

This bill seeks to consolidate the Land Bank of the Philippines (LBP) and
the Development Bank of the Philippines (DBP) into a new single government
banking institution to be known as the Philippine Agricultural and Development
Bank (PADB).

Financing institutions play a vital role in the quest for sustainable growth
and development in the country. However, it is likewise recognize that the creation
of more financially-stable banks has become imperative after the Asian currency
crisis, thereby encouraging mergers, consolidations and acquisitions in the
Philippine banking industry.

Government banks are not spared of this need for financial viability and
strength, the merger or consolidation of government banks is encouraged to be at
par with other commercial and universal banks.

The consolidation of the Land Bank of the Philippines and the
Development Bank of the Philippines into a new single banking institution is
highly commendable and highly lucrative as well for both state-owned banks. For
one, the Governance Commission for GOCCS says that the purposes of both banks
“duplicate and unnecessarily overlap with one another”. For instance, both banks
provide financing to agricultural and industrial enterprises among many other
functions, These two banks operating under one banking institution should give the
State and the Filipinos one bank to focus on when operating and availing these
financing services.


Other benefits of the consolidation include:

¢ Both banks combined branch networks will give PADB a wider reach. LBP
has 337 branches while DBP has 104. More branches across the Philippines
will be beneficial to the consumers

¢ Redundant branches on the same area may be closed down, This will mean
additional savings that can be used to improve existing branches or open
more branches on remote areas

© The consolidated bank will be more effective, efficient and sustainable in
carrying out the mandates of both banks against foreign banks that may enter
the Philippine market after the Southeast Asia integration by 2015.

The fusion of the LBP and DBP will allow these two banks to continue
fulfilling their development and social mandate meaningfully and vigorously this
time. The consolidation of the banking activities of the two banks is therefore
expected to result in the financial and administrative efficiency of banking
ions. The consolidation of the two banks into a new single banking
institution will move the PADB to a more competitive position and is
expected to help a greater number of people and reach out more areas of concern.

In view of the foregoing considerations, immediate approval of this bill is
earnestly sought.



Republic of the Philippines
House of Representatives
Queson City, Metro Manila

Sixteenth Congress
Second Regular Session

HOUSE BILL NO. 5423,

Introduced by Honorable Henry S. Oaminal

AN ACT
3 THE LAND BANK OF THE PHILIPPINES AND THE
DEVELOPMENT BANK OF THE PHILIPPINES INTO A NEW SINGLE
BANKING INSTITUTION TO BE KNOWN AS THE PHILIPPINE
AGRICULTURAL AND DEVELOPMENT BANK.

CONSOLIDAT!

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1, Declaration of Policy.- It is hereby declared the policy of the
state to rationalize the operation of government agencies and Government
financial Institutions (GFIs) to strengthen their financial capabilities, to improve
the delivery of services, to achieve economic efficiency and to support the
development trust of the government. Thus, the State shall

a. Recognize the importance to strengthen the government financial insti-
tutions to give it a competitive edge over other banks not only in the domestic but
in the global market as well;

b. Encourage sustainable growth and development in capital and credit

facilities in our government financial institution thereby achieving a sound, stable



and efficient government banking facility for the protection of the public: and

¢. Ensure that the social mandate of providing assistance to priority sectors
are continuously fulfilled and investments are amply protected.

SEC. 2. Consolidation of the Land Bank of the Philippines and the
Development Bank of the Philippines.- The Land Bank of the Philippines (LBP)
and the Development Bank of the Philippines (DBP) are hereby consolidated into
a new single government banking institution to be known as the Philippine
Agricultural and Development Bank (PADB).

All assets and liabilities of LBP and DBP are hereby consolidated and
transferred to PADB

The LDBP shall exercise all the powers of LBP under Republic Act No.
3844 otherwise known as the “Agricultural land Reform Code” as amended and
the DBP under Executive Order No. 81 dated December 3, 1986 also known as
the 1986 Revised Charter of DBP as amended by Republic Act No.8523 dated
February 14, 1998

SEC.3. Capital Structure. — The existing capital of LBP and DBP shall be
consolidated , provided, however, that the consolidated existing authorized stock
of LBP and DBP which is in the amount of Sixty Billion Pesos
(Php60,000,000,000.00) shall be increased to One Hundred Billion Pesos

(Php 100,000,000,000.00). The increased of Forty Billion Pesos


(Php40,000,000,000.00) shall consist of 400,000 common shares with par value
of One Hundred Pesos (Php 100.00) per share.

SEC.4, Tax exemption.- The consolidation of LBP and DBP including all
aspects of implementation thereof shall be exempt from the payment of all
national and local taxes, fees and charges, including, the income
tax, capital gains tax, creditable withholding tax, gross receipts tax, local transfer
tax, documentary stamp taxes, and registration fees. The shares of stock to be
issued out of the increase of the authorized capital stock of DBP shall be

exempt from the payment of the documentary stamp taxes.

S| 5. Implementing Agenci

of the Consolidation. ~ The Bangko
Sentral ng Pilipinas, the Department of Finance and the Bureau of Internal
Revenue are hereby directed to promptly implement the provisions of this Act.

SEC. 6. Effects of the Consolidation to existing Laws.- The provisions of
the Corporation Code of the Philippines on Consolidation shall have suppletory
effect on this Act

The provisions of Republic Act No. 3844 otherwise known as the
“Agricultural land Reform Code” as amended by Republic Act No. 6389, and
Executive Order No. 81 also known as the “1986 Revised Charter of the
Development Bank of the Philippines as amended, are hereby amended

accordingly


SEC. 7. Repealing Clause. — Republic Act No. 3844, Republic Act No.
6389, and Executive Order No, 81 are hereby amended accordingly. All other
laws, orders, decrees, issuances, rules and regulations inconsistent herewith are
repealed or modified accordingly.

SEC. 8. Effeetivity. - This Act shall take effect fifleen (15) days after
publication in the Official Gazette or in a newspaper of general circulation.

Approved,