Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
19TH CONGRESS 
First Regular Session 
 House Bill No.___ 
Introduced Representative Michael L. Romero 
EXPLANATORY NOTE 
The Constitution provides protection for farmers and other members of the 
agriculture sector. Unfortunately, financial institutions were established for them 
and yet proved not to cater to their needs the way they should.   
This House bill seeks to create the Philippine Farmers' Bank to which shall 
be available to every Filipino farmer. It shall have the same functions as that of 
commercial banks regulated by the Bangko Sentral ng Pilipinas (BSP) so it can 
still earn and generate its own funds but it will establish its office in the far flung 
rural areas in our countryside. 
The Philippine Farmer's Bank shall be the known banks for all farmers, 
fisherfolks, farm workers, growers of domesticated animals and any other 
agricultural activities for the purpose of supplying food in the nation. 
Earnest approval of this bill is hereby requested. 
MICHAEL L. ROMERO
2:43 pm
September 6, 2022
4476


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
19TH CONGRESS 
First Regular Session 
House Bill No. 
Introduced by Representative Michael L. Romero 
   AN ACT 
CREATING THE PHILIPPINE FARMER'S BANK, PROVIDING 
FUNDS THEREFOR, DEFINING ITS POWERS AND FUNCTIONS, 
AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines 
in Congress assembled: 
   ARTICLE I 
GENERAL PROVISIONS 
SECTION 1. 
TITLE. — This Act shall be known as the "Philippine 
Farmers' Bank Act". 
SECTION 2. 
DECLARATION OF POLICY. — It is shall hereby be a 
declared policy of the state to provide for sustainable agricultural development by 
creating true and viable social and economic productivity of the Filipino farmers, 
with the end view of achieving dignified existence and financial subsidies to the 
farmers for the nation's food security and reaching out to the unserved, 
underserved and unbanked areas of the country. 
4476


 
SECTION 3. 
ESTABLISHMENT. — The Philippine Farmer's Bank is 
hereby created and established primarily to provide for all kinds of credit system 
to the Filipino farmers most especially those located in the unbanked and 
unserved areas. It shall have its principal place of business in Manila and its legal 
existence shall be for a period of fifty (50) years from the effectivity of this Act.  
The Bank shall be subject to such rules and regulations as the Bangko 
Sentral ng Pilipinas (BSP) may from time to time promulgate. 
SECTION 4. 
POWERS AND FUNCTIONS - To carry out this main 
purpose, the Bank shall have the power: 
(1) 
To prescribe, repeal, and alter its own by laws, to determine its 
operating policies, and to issue such rules and regulations as may be 
necessary to achieve the main purpose for the creation of the Bank; 
(2) 
To adopt, alter and use a corporate seal; 
(3) 
To acquire and own real and personal property and to sell, 
mortgage or otherwise dispose of the same; 
(4) 
To sue and be sued, make contracts, and borrow money from 
both local and foreign sources. Such loans shall be subject to 
approval by the President of the Philippines and shall be fully 
guaranteed by the Government of the Philippines; and 
(5) 
Upon recommendation of the Committee on Investments, to 
hold, own, purchase, acquire, sell or otherwise invest, or reinvest in 
stocks, bonds or other securities capable of giving the Bank a 
reasonably assured income sufficient to support its financing 
activities and give its private stockholders a fair return on their 
holdings:  
Provided, however, That pending the organization of the 
Committee on Investments, the Bank may exercise the powers 
herein provided without the recommendation of said Committee 
on Investments:  
Provided,  further, That in case of the dissolution of the Farmer's 
Bank of the Philippines all unsold public lands transferred to it 
which may be allocated to the Government of the Philippines in 


 
the course of liquidation of the business of the Bank shall revert 
to the Department of Agriculture. 
 
  ARTICLE II 
 
 
 
SUPPLETORY PROVISIONS 
 
SECTION 5. 
PLEDGES AND BONDS – Philippine Farmer's Bank shall, 
upon recommendation by the Board of Trustees and approval of the Monetary 
Board of the BSP, issue bonds, debentures and other evidences of indebtedness 
at such terms, rates and conditions as the Bank may determine up to an aggregate 
amount not exceeding, at any one time, five times its unimpaired capital and 
surplus.  
Such bonds and other obligations shall be secured by the assets of the Bank 
and shall be fully tax exempt both as to principal and income. Said income shall 
be paid to the bondholder every six (6) months from the date of issue.  
These bonds and other obligations shall be fully negotiable and 
unconditionally guaranteed by the Government of the Republic of the Philippines 
and shall be redeemable at the option of the Bank at or prior to maturity, which 
in no case shall exceed twenty-five (25) years.  
These negotiable instruments of indebtedness shall be mortgageable in 
accordance with established banking procedures and practices to government 
institutions not to exceed sixty per centum of their face value to enable the holders 
of such bonds to make use of them in investments in productive enterprises.  
They shall also be accepted as payments for reparation equipment and 
materials. 


 
The Board of Trustees shall have the power to prescribe rules and regulations for 
the registration of the bonds issued by the Bank at the request of the holders 
thereof. 
SECTION 6. 
EXCLUSIVE GUARANTEE FUND - In the event that the 
Bank shall be unable to pay the bonds, debentures, and other obligations issued 
by it, a fixed amount thereof shall be paid from a special guaranty fund to be set 
up by the Government, to guarantee the obligation of the Farmer's Bank, and 
established in accordance with this Section, and thereupon, to the extent of the 
amounts so paid, the Government of the Republic of the Philippines shall succeed 
to all the rights of the holders of such bonds, debentures or other obligations:  
Provided, however, That for the next four years after the establishment of 
the Bank, the payment to the special guaranty fund should not exceed one million 
pesos per year, after which period, the Government shall pay into the guaranty 
fund the sum of five hundred thousand pesos each year until the cumulative total 
of such guaranty fund is no less than twenty percent of the outstanding net 
obligation of the Philippine Farmer's Bank at the end of any single calendar year. 
The guaranty fund shall be administered by the BSP in the manner most 
consistent with its charter.  
For the purpose of such fund, there shall be appropriated annually the sum of one 
million pesos out of any moneys in the National Treasury not otherwise 
appropriated, until the total amount of twenty million pesos shall have been 
attained. 
SECTION 7. 
PAYMENTS AND TIME DEPOSITS - The Bank, under the 
supervision of the Monetary Board and subject to the provisions of the General 
Banking Act, shall receive savings and time deposits from any person and, for this 
purpose, establish, and maintain branches and offices in such areas as may be 
necessary to service such deposits.  


 
The Monetary Board shall supervise and authorize the Bank to receive 
savings and time deposits from the public in areas where facilities for such a 
service do not exist or cannot be adequately provided by other deposit institutions. 
SECTION 8. 
AUTHORIZED 
CAPITALIZATION - The authorized 
capital stock of the Bank shall be Three Billion pesos (₱3,000,000,000.00) divided 
into ninety million shares with a par value of ten pesos each, which shall be fully 
subscribed by the Government and sixty million preferred shares with a par value 
of ten pesos each which shall be issued in accordance with the provisions of the 
prevailing laws.  
Of the total capital subscribed by the Government, Two hundred million 
(₱200,000,000.00) pesos shall be paid by the Government within one year from the 
approval of this Act, and One hundred million (₱100,000,000.00) pesos every year 
thereafter for two years for which purpose the amount of two hundred million 
pesos is hereby appropriated upon the effectivity of this Act, and one hundred 
million pesos every year for the next two years thereafter, out of the funds in the 
National Treasury not otherwise appropriated for the purpose:  
Provided, That if there are not enough funds in the National Treasury 
for the appropriation herein made, the Secretary of Finance, with the 
approval of the President of the Philippines, shall issue bonds or other 
evidence of indebtedness to be negotiated either locally or abroad in such 
amount as may be necessary to cover any deficiency in the amount above-
appropriated but not exceeding four hundred million pesos, the proceeds of 
which are hereby appropriated:  
Provided, further, That the bonds to be issued locally shall not be 
supported by the Central Bank:  
Provided, finally, That there is automatically appropriated out of the 
unappropriated funds in the National Treasury such amounts as is 
necessary to cover the losses which shall include among other things loss of 
earnings occasioned by the limitation of the resale cost herein provided such 
that said amount together with the administrative expenses mentioned in 


 
this Act hereof shall not exceed in the aggregate the equivalent of two and 
one-half per centum of its assets limited therein. 
SECTION 9. 
GOVERNMENT SHARES - All shares of stock in the Bank 
subscribed or owned by the Government shall not be entitled to participate in the 
income earned by the Bank from its investments and other operations, whether in 
the form of cash or stock dividends or otherwise.  
Amounts expended for the administration of the Bank shall not be deemed 
as a participation of the Government in income. 
SECTION 10. 
PREFERRED SHARES - All preferred shares of stock 
issued under this Act shall be entitled to the income earned by the Bank on its 
investments and other operations and shall have a limited right to elect annually 
one member of the Board of Trustees and one member of the Committee on 
Investments:  
Provided, That the holders of such preferred shares of stock shall not 
bring derivative suits against the Bank. Such preferred shares shall be fully 
transferable:  
Provided, further, That upon the liquidation of the Bank, the 
redemption of such preferred shares shall be given priority and shall be 
guaranteed at par value. 
SECTION 11. 
VOTING OF SHARES - The voting power of all the shares 
of stock of the Philippine Farmer's Bank owned or controlled by the Government 
shall be vested in the President of the Philippines or in such person or persons as 
he may from time to time designate. 
SECTION 12. 
BoARD OF TRUSTEES - The affairs and business of the 
Bank shall be directed, its powers exercised and its property managed and 
preserved by a Board of Trustees.  


 
Such Board shall be composed of one Chairman and four members. The 
Chairman and two members of the Board of Trustees shall serve on full-time basis 
with the Bank.  
The Chairman and all members of the Board shall be appointed by the 
President with the consent of the Commission on Appointments for a term of seven 
(7) years, except that the first Chairman and members to be appointed under this 
Act shall serve for a period of three, five and seven years, such terms to be specified 
in their respective appointments.  
Thereafter the Chairman and members, with the exception of the ex-officio 
member, appointed after such initial appointment shall serve for a term of seven 
(7) years including any Chairman or member who is appointed in place of one who 
resigns or is removed or otherwise vacates his position before the expiration of his 
seven-year term.  
The Chairman and the two full-time members of the Board shall act as the 
heads of such operating departments as may be set up by the Board under the 
authority granted by this Act.  
The Chairman shall have authority, exercisable at his discretion, to 
determine from time to time the organizational divisions to be headed by each 
member serving full time and to make the corresponding shifts in designations 
pursuant thereto.  
The compensation of the Chairman and the members of the Board of 
Trustees serving full time shall be Forty thousand (₱40,000.00) and Thirty 
thousand (₱30,000.00) pesos, respectively.  
The other members of the Board shall receive a per diem of Two hundred 
pesos for each session of the Board that they attend. 
 


 
ARTICLE III 
 
   COMPOSITION AND QUALIFICATIONS 
 
SECTION 13. 
THE CHAIRMAN AND VICE-CHAIRMAN - The Chairman 
of the Board shall be the chief executive officer of the Bank.  
He shall have direct control and supervision of the business of the Bank in 
all matters which are not by this Act or by the by-laws of the Bank specifically 
reserved to be done by the Board of Trustees.  
He shall be assisted by an Executive Vice-Chairman and one or more vice-
chairman who shall be chosen and may be removed by the Board of Trustees.  
The salaries of the Vice-Chairmen shall be fixed by the Board of Trustees 
with the approval of the President of the Philippines. 
SECTION 14. 
CREDENTIALS - No person shall be appointed Chairman 
or member of the Board unless he is a man of accepted integrity, probity, training 
and experience in the field of banking and finance, at least thirty-five years of age 
and possessed of demonstrated administrative skill and ability. 
SECTION 15. 
COMMITTEE ON INVESTMENTS - There shall be a 
Committee on Investments composed of three members; the member of the Board 
of Trustees elected by the holders of preferred shares as Chairman, one member 
to be appointed by the President of the Philippines from among the government 
members of the Board of Trustees, and another member to be selected by the 
holders of preferred shares under Section eighty-three of this Code.  
The Committee on Investments shall recommend to the Board of Trustees 
the corporations or entities from which the Farmer's Bank of the Philippines shall 
purchase shares of stock. 


 
The Philippine Farmers' Bank shall not invest in any corporation, partnership or 
company wherein any member of the Board of Trustees or of the Committee on 
Investments or his spouse, direct descendant or ascendant has substantial 
pecuniary interest or has participation in the management or control of the 
enterprise except with the unanimous vote of the members of the Board of Trustees 
and of the Committee on Investments, excluding the member interested, in a joint 
meeting held for that purpose where full and fair information of the extent of such 
interest or participation has been adequately disclosed in writing and recorded in 
the minutes of the meeting:  
Provided, That such interested member shall not in any manner 
participate in the deliberations and shall refrain from exerting any pressure 
or influence whatever on any official or member of the Bank whose functions 
bear on or relate to the investment of the funds of the Bank in the enterprise:  
Provided, further, That the total investment in any single corporation, 
partnership, company, or association shall not exceed five per centum of the 
total investible funds. 
  
ARTICLE IV 
 
 
  ORGANIZATION AND STAFFING 
 
SECTION 16. 
WORKFORCE AND COST OF MANAGEMENT - The 
Administrative expenses of the Bank during any single fiscal year shall not in any 
case exceed two and one-half per centum of its total assets.  
The Board of Trustees shall provide for an organization and staff of officers 
and employees necessary to carry out the functions of the Bank, fix their 
compensation, and appoint and remove such officers and employees for cause.  
The Bank officers and employees shall be subject to the rules and 
regulations issued by the Civil Service Commission but shall not fall under the 
Salary Standardization Law.  


 
The Board of Trustees shall recommend to the Civil Service Commission 
rules and regulations for the recruitment, appointment, compensation, 
administration, conduct, promotion and removal of all Bank officers and 
employees under a strict merit system and prepare and conduct examinations 
under the supervision of said Commission. 
SECTION 17. 
LEGAL COUNSEL - The Secretary of Justice shall be ex-
officio legal adviser of the Bank. Any provision of law to the contrary 
notwithstanding, the Philippine Farmers' Bank shall have its own Legal 
Department, the chief and members of which shall be appointed by the Board of 
Trustees.  
The composition, budget and operating expenses of the Office of the Legal 
Counsel and the salaries and traveling expenses of its officers and employees shall 
be fixed by the Board of Trustees and paid by the Bank. 
SECTION 18. 
AUDITOR - The Commissioner of the Commission on 
Audit (COA) shall be the ex-officio auditor of the Bank and shall appoint a 
representative, who shall be the auditor in charge of the auditing office of the 
Bank.  
The COA Commissioner shall, upon the recommendation of the auditor of 
the Bank, appoint or remove the personnel of the auditing office. The 
compensation, budget and operating expenses of the auditing office and the 
salaries and traveling expenses of the officers and employees thereof shall be 
fixed by the Board of Trustees and paid by the Bank notwithstanding any 
provision of law to the contrary. 
                        
ARTICLE V 
 
 
 
PROGRESS REPORT 
 


 
SECTION 19. 
STATUS REPORT - The representative of the COA shall 
make a quarterly report on the condition of the Bank to the President of the 
Philippines, to the Senate through its President, to the House of Representatives 
through its Speaker, to the Secretary of Finance, to the COA and to the Board of 
Trustees of the Bank.  
The report shall contain, among other things, a statement of the resources 
and liabilities including earnings and expenses, the amount of capital stock, 
surplus, reserve and profits, as well as losses, bad debts, and suspended and 
overdue paper carried in the books as assets of the Bank, and a plantilla of the 
Bank. 
SECTION 20. 
IMPLEMENTING RULES AND REGULATIONS - The 
COA shall, with respect to the Bank, formulate improved and progressive auditing 
rules and regulations designed to expedite the operations of the Bank and prevent 
the occurrence of delays and bottlenecks in its work. 
 
ARTICLE VI 
 
 
 
PARITY PROVISIONS 
 
SECTION 21. 
EJECTION OF MEMBERS - The President of the 
Philippines may, at any time, remove the Chairman or any member of the Board 
appointed by him if the interest of the Bank so requires, for any of the following 
causes: 
(1) Mismanagement, grave abuse of discretion, infidelity in the 
conduct of fiduciary relations, or gross neglect in the performance 
of duties; 
(2) Dishonesty, corruption, or any act involving moral turpitude; and 
(3) Any act or performance tending to prejudice or impair the 
substantial rights of the stockholders. 


 
Conviction of the Chairman or a member for a crime carrying with it a penalty 
greater than arresto mayor shall cause the removal of such Chairman or member 
without the necessity of Presidential action. 
The Chairman or member may, in any of the above cases, be civilly liable for any 
damage that may have been suffered by the stockholders. 
SECTION 22. 
DIRECTIVE - The Bank shall not be subject to the laws, 
rules and regulations governing banks and other financial institutions of 
whatever type except with respect to the receipt of savings and time deposits in 
accordance with Section 7 of this Act, in which case the legal reserve and other 
requirements prescribed by the BSP for such deposits shall apply.  
The Bank shall be operated as an autonomous body and shall be under the 
supervision of the BSP. 
SECTION 23. 
TAX EXCEPTION - The operations, as well as holdings, 
equipment, property, income and earnings of the Bank from whatever sources 
shall be fully exempt from taxation. 
SECTION 24. 
ASSOCIATION OF BANK - The Bank shall be organized 
within one year from the date that this Act takes effect. 
SECTION   25. 
DEFINITE MARKET – The Philippine Farmers Bank shall 
cater to far flung areas, the unbanked, the unserved and underserved.  
 
ARTICLE VII 
 
 
 
PENAL PROVISIONS 
 
SECTION 26. 
PENALTIES AND SANCTIONS. - Any trustee, officer, 
employee or agent of the Bank who violates or permits the violation of any of the 


 
provisions of this Chapter, or any person aiding or abetting the violations of any 
of the provisions of this Chapter, shall be punished by a fine not less than One 
hundred (₱100,000.00) thousand pesos or by imprisonment of not less than five 
years, or both such fine and imprisonment at the discretion of the Court. 
    ARTICLE VIII 
 
 
 
 
 FUNDING 
 
SECTION 27. 
APPROPRIATIONS - There shall hereby appropriate the 
amount of Two Billion (₱2,000,000,000.00) pesos for salaries, wages, purchase 
of motor vehicles, supplies, equipment, and other sundry expenses.  
The amount appropriated herein shall be carried in the appropriations for 
the General Appropriations Acts of the Department of Agriculture for succeeding 
fiscal years. 
 
ARTICLE IX 
 
 
MISCELLANOUS PROVISIONS 
 
SECTION 28. 
SEPARABILITY CLAUSE. — If, for any reason, any 
provision of this Act is declared invalid or unconstitutional, the remaining 
provisions not affected thereby shall continue to be in force and effect. 
SECTION 29. 
REPEALING CLAUSE. — All laws, decrees, executive 
orders, proclamations, rules and regulations, and other issuance, or parts 
thereof, which are inconsistent with the provisions of this Act are hereby repealed 
or modified accordingly. 


 
SECTION 30. 
EFFECTIVITY CLAUSE. — This Act shall take effect 
fifteen (15) days after its complete publication in the Official Gazette or in at least 
two (2) newspapers of general circulation, whichever is earlier. 
 
Approved,