Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No._1163

Introduced by Representatives Michael L. Romero and
Enrico A. Pineda

EXPLANATORY NOTE

It is a declared policy of the state under Republic Act No. 10000, otherwis:
known as the Agri-Agra Reform Credit Act of 2009“ to promote equal acce:

to
opportunities under an environment of sustained growth and expanding

productivity as the key to raising the quality of life for all. Towards this end, the
State shall promote rural development by enhancing access of the rural

agricultural sector to financial services and programs that incre: market
efficiency and promote modernization in the rural agricultural sector”

Section 6 of the said law provides that “all banking institutions, whether
government or private, shall set aside at least twenty-five percent (25%) of their
total loanable funds for agriculture and fisheries credit in general, of which at
least ten percent (10%) of the loanable funds shall be made available for agrarian
reform beneficiaries mentioned in Section 5 hereof”. Unfortunately, records from
the Bangko Sentral ng Pilipinas (BSP) show that the combined loanable
allocations of all banking institutions for agriculture sector and agrarian reform
beneficiaries since the effectivity of the act is way below the mandated threshold

The noble objective of the law is thwarted by the unwillingness of most
banking institutions to assume the perceived risk to otherwise qualified
borrowers and instead opted to pay the penalties as provided for in section 10 of
the said act. While we recognize the inherent right of financial institutions t
implement what they consider as sound fiscal/lending policy, they have equal
duties to obey, in utmost good faith, the mandates of the law rather than deciding
to pay the penalties for non-compliance thereof.



The qualified credit beneficiaries from the agricultural and fisheries sector
have not been able to fully use the credit services provided by the banks and
other Accredited Rural Financial Institutions as mandated by law, because such
banks and other lending institutions have imposed strict requirements and high
standards on the borrowers' ability to pay off their loans, thus making it difficult
for them to obtain the necessary credit. In so doing, not only has the twenty-five
percent (25%) of the supposed to be total loanable funds for agriculture and
fisheries credit in general have not been made attainable but the net effect is
that it has severely hampered the agricultural and fisheries development in the
rural sector.
This proposed act is not aimed at penalizing the banking institutions but
to encourage them to dig deep into their financial ingenuity to come up with

alternative or special credit programs for those usually coming from the marginal
sectors.

Approval of this bill is therefore sught

MICHAEL L. ROMERO Ph.D. El [CO A. PINEDA

Z


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

Introduced by Representatives Michael L. Romero and
Enrico A. Pineda

AN ACT

INCREASING THE PENALTIES ON THE LENDING INSTITUTIONS
FOR NON-COMPLIANCE AND UNDERCOMPLIANCE WITH THE
PROVISIONS OF R.A. No. 10000, OTHERWISE KNOWN AS “THE
AGRI-AGRA REFORM CREDIT ACT OF 2009”, AMENDING FOR
THE PURPOSE SECTION 10 THEREOF, AND FOR OTHER
PUSPOSES

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

SECTION 1. Article III, Section 10 of Republic Act No. 10000 is
hereby amended to read

"Section 10. Penalty Clause

a) The BSP shall impose administrative sanctions and other penalties on the
lending institutions for noncompliance with the provisions of this Act. Penalties
on noncompliance shall be computed at (one-half of one percent (0.5%) TWO-
AND A HALF PERCENT ( 2.5%) of noncompliance and under compliance shall
be directed to the development of the agri-agra sector. Ninety percent (90%) of
the penalties collected shall be allocated between the AGFP and the PCIC
according to the needs of the agri-agra

tor as provided for in the


implementing rules and regulations of this Act and the remaining ten percent
(10%) shall be given to the BSP to cover administrative expenses.

b) OFFICIALS LIABLE FOR NONCOMPLIANCE AND.
UNDERCOMPLIANCE OF THE PROVISIONS OF THIS ACT SHALL BE CHARGED
ADMINISTRATIVELY AND CIVILLY IN THE MANNER THAT SHALL BE
FORMULATED AND DECREED IN THE IMPLEMENTING RULES AND
REGULATIONS OF THE AGRI AGRA REFORM CREDIT ACT OF 2009 ( RA 10000
). LIKEWISE, PENALTIES SHALL BE IMPOSED ON BSP OFFICIALS WHO REFUSE
OR FAIL TO SANCTION ERRING BANK OFFICIALS."

SECTION 2. AMENDMENTS. Any amendments to the
administrative sanctions and their penalties shall be proposed by and ratified

by and the same shall take effect upon approval by the Monetary Board of the
Bangko Sentral ng Pilipinas.

SECTION 3. SEPARABILITY CLAUSE. If any provision or
section of this Act or the application thereof to any person or circumstances is
held invalid, the other provisions or sections of this Act shall remain valid, and
the application of such remaining provisions or sections to the other persons or
circumstances, shall not be affected thereby

SECTION 4. REPEALING CLAUSE. All provisions of Republic Act

No.10000 and any other provisions inconsistent with the provision of this Act
are hereby amended accordingly

SECTION 5. EFFECTIVITY. This Act shall take effect fifteen (15)
days from the date of its publication in the Official Gazette or in at least two (2)
newspapers of general circulation.

Approved.