NINETEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

3428

H. B. No.

Introduced by Representative Ralph G. Recto

AN ACT
IMPROVING THE ACCESS OF RURAL COMMUNITY BENEFICIARIES TO THE
AGRICULTURE, FISHERIES, AND RURAL DEVELOPMENT FINANCING
SYSTEM, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 11901,
OTHERWISE KNOWN AS “THE AGRICULTURE, FISHERIES AND RURAL
DEVELOPMENT FINANCING ENHANCEMENT ACT OF 2022”

EXPLANATORY NOTE

The experience in the implementation of Republic Act No. 10000, otherwise
known as The Agri-Agra Reform Credit Act of 2009, shows that the provision of
alternative modes of compliance may have an adverse effect on the extension of direct
loans to the agricultural sector. For instance, the low 42.6% compliance with Republic
Act No. 10000 recorded by the Bangko Sentral ng Pilipinas in the last quarter of FY
2021 is further aggravated by the fact that alternative compliance accounts for 34.0%
and 49.6% of total compliance to the agrarian reform credit requirement and other
agricultural credit requirement, respectively. Unfortunately, Republic Act No. 11901,
otherwise known as The Agriculture, Fisheries afd Rural Development Financing
Enhancement Act of 2022, which repealed Republic Act No. 10000 has further
expanded the modalities for alternative compliance that lending institutions can
exploit, which could be detrimental to farmers, fisherfolk, and others in the agricultural

sector who desperately need access to formal sources of financing.

This bill seeks to remedy this situation by limiting compliance to the minimum
mandatory agricultural and fisheries financing requirement to direct loans extended to

rural community beneficiaries and by removing the sunset provision on such

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mandatory credit allocation. The proposed measure, in turn, grants tax incentives to
lending institutions by exempting them from the payment of gross receipts tax on
interests, commissions, discounts and all other items treated as gross income from the
loans granted to rural community beneficiaries. It is hoped that these interventions
can help in realizing the goal of Republic Act No. 11901, which is to promote rural
development by enhancing access of rural communities and agricultural and fisheries
households to financial services and programs that increase productivity, enhance
market efficiency, promote modernization and improve the welfare and economic
prospects of beneficiaries in rural communities through active participation of banking
institutions.

In view of the foregoing, the approval of this bill is ears sought.

/mdg


NINETEENTH CONGRESS OF THE )

REPUBLIC OF THE PHILIPPINES )
First Regular Session )
way a
HOUSE OF REPRESENTATIVES
H. B. No. 3428

Introduced by Representative Ralph G. Recto

AN ACT
IMPROVING THE ACCESS OF RURAL COMMUNITY BENEFICIARIES TO THE
AGRICULTURE, FISHERIES, AND RURAL DEVELOPMENT FINANCING
SYSTEM, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 11901,
OTHERWISE KNOWN AS “THE AGRICULTURE, FISHERIES AND RURAL
DEVELOPMENT FINANCING ENHANCEMENT ACT OF 2022”

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

Section 1. Section 7 of Republic Act No. 11901 is hereby amended to read as
follows:

*Sec. 7. Modes of Compliance. ~ Banks [ray] SHALL comply

with the mandatory credit requirement by lending to rural community

beneficiaries, to finance agricultural and fishery-related activities as

enumerated under Section 4 of this Act[Banks-may-also-comply-with:



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That loans to finance activities that shall generally benefit ARBS, ARCS,

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or other priority sectors, as may be determined by the Agricultural Credit
Policy Council (ACPC), shall be counted at ten times (10x) their
outstanding amount, or as otherwise prescribed by the ACPC, for
purposes of determining compliance with the mandatory agricultural and
fisheries financing requirement.

[The medes-of compli erated-in-this-seetion- shat-be

“Further, the BSP-shalt-be authorized to-identify-oth ws that
y-be-considered-as-eligibh des- oF compliance with the mandatory
credit te-ruratcommunity beneficiaries: ]

Sec. 2. A new Section 8 shall be inserted after Section 7 of Republic Act No.
11901 to read as follows:

“SEC. 8. EXEMPTION OF LOANS GRANTED TO RURAL
COMMUNITY BENEFICIARIES FROM GROSS RECEIPTS TAX. —
LENDING INSTITUTIONS SHALL BE EXEMPT FROM THE
PAYMENT OF GROSS RECEIPTS TAX IMPOSED UNDER
SECTIONS 121 AND 122 OF THE NATIONAL INTERNAL
REVENUE CODE OF 1997, AS AMENDED, ON INTERESTS,
COMMISSIONS, DISCOUNTS AND ALL OTHER ITEMS TREATED
AS GROSS INCOME FROM LOANS GRANTED TO RURAL
COMMUNITY BENEFICIARIES IN COMPLIANCE WITH SECTION
7 OF THIS ACT.”

The succeeding sections of Republic Act No. 11901 are hereby renumbered
accordingly.
Sec. 3. Section 12 of Republic Act No. 11901 is hereby repealed and the

succeeding sections thereof are renumbered accordingly.


Sec. 4. Implementing Rules and Regulations. — Within ninety (90) days from
the effectivity of this Act, the Bangko Sentral ng Pilipinas shall, in consultation with
the Land Bank of the Philippines, Development Bank of the Philippines, Al-Amanah
Islamic Investment Bank of the Philippines, Cooperative Development Authority,
Department of Agriculture, Department of Agrarian Reform, the banking industry,
microfinance organizations and other relevant agencies, promulgate the necessary
rules and regulations for the effective implementation of this Act.

Sec. 5. Separability Cause. — The provisions of the Act are hereby declared to
be separable. If any provision of this Act shall be held unconstitutional, the remainder
of the Act not otherwise affected thereby shall remain in full force and effect.

Sec. 6. Repealing Clause. — All laws, executive orders, rules and regulations,
or parts thereof, inconsistent herewith are hereby repealed, amended or modified
accordingly.

Sec. 7. Effectivity Clause. — This Act shall take effect within fifteen (15) days
from its publication in at least two (2) national newspapers of general circulation or
in the Official Gazette.

Approved,