Republic of the Philippines.
HOUSE OF REPRESENTATIVES
Quezon City

Sixteenth Congress
Ast Regular Session

House Bill No. 466

Introduced By
HON. AGAPITO H. GUANLAO.

EXPLANATORY NOTE

This bill was filed before the 15th Congress as House Bill 6561 and passed the latter's
3rd Reading

The condonation of unpaid interests, penalties and surchages on loans secured by
farmers, fisherfolk and Agrarian Reform Beneficiaries from the DAR, DA and other
financial institutions as stipulated in the proposed measure provide for a clean bill of
health for the farming sectors their organizations and associations, so that they could
acquire for loans anew.

This provides small farmers and fisherfolk a “new leash on life” in terms of acquiring
new loans or other support from government financial institutions. It is noteworthy that
some loan and support programs administered by the subject agencies have gone
through various circumstances, such as “poor programming”, projects that were affected
by natural and man-made disasters among others, had made difficult for the agricultural
sectors to complete the prescribed program components.

This proposed measure remains relevant and important so as to ease the burgeoning

effects of loans especially to small farmers and fisherfolk, thus the enactment of this bill
is ardently sought for.

HON. IT! GUANLAO


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Sixteenth Congress
4st Regular Session

BGI
House Bill No,__ 466

Introduced By
HON. AGAPITO H. GUANLAO

AN ACT

PROVIDING FOR THE CONDONATION OF UNPAID INTERESTS, PENALTIES AND
SURCHARGES ON LOANS SECURED BY FARMERS, FISHERFOLK AND
AGRARIAN REFORM BENEFICIARIES FROM THE GEPARTMENT OF AGRARIAN
REFORM (DAR), THE DEPARTMENT OF AGRICULTURE (DA), THE PEOPLE’S
CREDIT AND FINANCE CORPORATION (PCFC) THE COOPERATIVE
DEVELOPMENT AUTHORITY (CDA), THE NATIONAL FOOD AUTHORITY (NAFA)
AND THE QUEDAN AND RURAL CREDIT GUARANTEE CORPORATION
(QUEDANCOR)

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

Section 1 Title. — This Act shall be known as the “Agrarian and Agricultural
Condonation Act of 2013”.

Section 2. Declaration of Policy. - The State shall promote comprehensive rural
development and agrarian reform through the provision of measures that
will release the farmers, fisherfolk and agrarian reform beneficiaries
fromtheir bondage to debt. Towards this end, it shall be the objective of
the State to provide beneficiaries the opportunity to regain access to
government and commercial credit facilities through the condonation of
unpaid interests, penalties and surcharges on their existing loans obtained
through government lending programs and their eventual restructuring

Section 3. Definition of Terms. — For the purpose of this Act, the following terms shall
be difined as follows:

a. Agrarian Reform Beneficiaries refer to farmers who were granted lands
under the Presidential Decree No. 27, known as the Comprehensive
Agrarian Reform Law and Republic Act 9700 or the Comprehensive
Agrarian Reform Law Extention with Reforms, and the other existing
agrarian reform laws and regular farmworkers, irrespective of tenurial
arrangement who benefitted from the redistribution of lands.

b. Agricultural and agrarian reform credit refers to loan activities and
purposes including, but not limited to, agricultural production;
promotion of agribusiness and exports; acquisition of work animals,
farm equipment and machinery, seeds, fertilizers, poultry, livestock,
feeds and other similar items; construction, acquisition and repair of
facilities for production, processing, storage and marketing, and such
other facilities in support of agricultural and farm commodities.


Section 4.

Section 5.

c. Condonation refers to the relief granted by law in the payment of
unpaid interests, penalties and surcharges.

d. Delinquent borrower referas to the borrower with at least three (3)
consecutive unpaid amortization or whose total unpaid amortization
reaches 20% of the total outstanding balance of the loan regardless of
the number of unpaid amortizations as of the effectivity of this Act.

e. Farmer refers to any natural person whose primary livelihood is the
cultivation of land or the production of agricultural crops, livestock and
agricultural products, either by himself or primarily with the assistance
of his immediate farm household or workers, whether the land is
owned by him or by another person, under a leasehold agreement or
other similar arragements.

f. Fisherfolk refers to people directly or personally and physically
engaged in taking and/or cultring and processing fishery and/or aquatic
resources.

g. Force majeur refers to events whether natural or political, beyond the
reasonable control and incurred not as a result of the negligence or
willful act of the delinquent borrower, which has a material adverse
effect on his/her ab lity to pay its obligation.

h. Market aberrations refer to unusual adverse movements in market
prices which have detrimental effects on the yield and income of
farmers, fisherfolk and agrarian reform beneficiaries.

i. Loan restructuring refers to a process where the principal terms and
conditions of the original loan are modified in accordance with an
agreement setting forth a new plan or schedule of payment,

Condonation. — All unpaid interests, pemalties and surcharges of
agricultural and agrarian reform credit secured by farmers, fisherfolk and
agrarian reform bemeficiaries from the Department of Agrarian Reform
(DAR), the Department of Agriculture (DA), thePeople's Credit and
Financing Corporation (PCFCuthority (NFA), the Cooperative
Development Authority (CDA), and the Quedan and Rural Credit
Guarantee Corporation (QUEDANCOR) prior to the effectivity of this Act
are hereby condoned upon approval of the application for condonation of
a borrower qualified under this Act: Provided, That the basis for the
condonation shall be limited to force majeur or market aberration and
shall, in no case, be applied for the willful default of the borrower to pay
such loans: Provided further, That accumulated payments of not less than
five (5%) percent of the loan principal shall have been paid at the time of
application for condonation: Provided, furthermore, That, to encourage
borrowing discipline and enhance credit worthiness, a graduation process
shall be followed in consonance with the plan of payment such that a
borrower shall only be granted a one-time condonation: Provided finally,
That the condonation of unpaid interests, penalties and surcharges from
loans acquired through conduit banks and financial institutions shall be in
conformity with the applicable general banking laws and regulations of the
Bangko Sentral ng Pilipinas (BSP).

Coverage of Condonation Program. — The following accounts are covered
by the condonation program:


Section 6.

Section 7

Section 8.

Section 9.

a. Agricultural and agrarian reform credit secured through the Credit
Assistance Program — Program Beneficiaries Development of the
DAR;

b. Agricultural and agrarian reform credit secured through the terminated
credit program schemes of the DAR, i.e., Dutch Rural Development
Assistance Program (DRDAP); DAR Direct Lending Financing
Program (DDLFP); DAR Special Projects office (SPO) Direct; and
DAR-DBP SPO Window Ill Finaciang Progra for Agrarian Reform
Beneficiaries:

c. Resettlement Loan Assistance Program of the DAR for individual
agrarian reform beneficiary;

d. Agricultural credit secured through the High Yield Crop Loan
Assistance Program of the DA;

e. Agricultural credit secured through the Microfinance Program for Small
Farmers and fisherfolks and the household of the PCFC;

f. Cooperative Development Loan Fund of the CDA;
g. Farmers Level Green Center of the NFA; and,

h. CARTP-Barangay Marketing Center (CARP-BMC) of the
QUEDANCOR,

Qualified Beneficiaries. — Delinquent farmers, fisherfolks or agrarian
reform beneficiaries who secured agricultural and agrarian reform credit
under any of the accounts enumerated in Section 5 of this Act may apply
for condonation of unpaid interests, penalties and surcharges with the
concer government agency or corporation.

Approvas! of Application for the Condonation of Unpaid Interests,
Penalties and Surcharges and Loan Restructuring. - The government
agency or corporation managing the account enumerated in Section 5
hereof shall review and approve an application for condonation and
restructuring of the loan balance. The period of payment of the
restructured shall be determined according to the financial capacity of the
farmers, fisherfolk or agrarian reform beneficiaries upon the approval of
the application. The approval of the application for condonation shall serve
as the basis for the concerned government agency/corporation to write-off
the unpaid interests, penalties and surcharges condoned

Collection of Payments. — The annual collection of payments of loans
under Section 5(b) by the Task Force Collection shall be remitted to the
Bureau of Treasury and held as trust fund to be called the Agrarian
Reform Fund.

Restoration of the Non-Performing Loansto Performinf Status. — Laons
restructured under the implementation of this Act shall be restored to
performing status of good standing upon three (3) consecutive payments
by the borrower of the unpaid periodic amortizations. Government
agancies may issue appropriate certifications to the borrowers upon
satisfaction of the said condition, thereby facilitating the reintegration into
the financial and banking system by allowing them to access new and
additional credit and other government programs.


Section 10.

Section 11

Section 12.

Section 13.

Approved,

Implementation Rules and Regulations (IRR). — The DAR, the DA, the
PCFC, the Agricultural Credit Policy Council (ACPC) and the BSP are
hereby directed to issue the IRR of this Act within sixty (60) days after its
effectivity.

Separability Clause. — If, for any reason, any section or provision of this
Act shall be held unconstitutional or invalid by a competent authority, no
other section, provsion or part hereof shall be affected and the same shall
remain in full force and effect

Repealing Clause. — Section 36 of Presidential Decree No. 1445, all other
laws, executive orders, issuances or part thereof inconsistent with the
provisions of this Act are hereby amended, repealed and modified
accordingly.

Effectivity Clause. — This Act shall take effect fifteen (15) days following its
publication in the Offical Gazette or in at least two (2) newspapers of
general circulation.