FIFTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
Second Regular Session 
) 
"12 
MAY -7 f' 2 :25 
SENATE 
S.B.No. 3180 
Introduced by Senator Ralph G. Recto 
EXPLANATORY NOTE 
The country's approach to economic development should be anchored on the strategy of 
inclusive growth which addresses the increasing concern that the benefits of progress are not 
shared equitably by the poor and the vulnerable sectors of society. 
The pursuit of inclusive growth apart from allowing the marginalized members of society 
to share in the fruits of development, must also allow them to participate in productive endeavors 
in order to ensure the attainment of a rapid and sustainable growth and development. 
The success of poverty reduction programs becomes more attainable under the policy of 
inclusive growth as it creates economic opportunities for the hitherto excluded poor sector of 
society, which in the Philippines forms part of the majority of the people. Hence, they are 
considered as active contributors to the development process and not just mere beneficiaries of 
government welfare programs. 
The goal of inclusive growth is best achieved through the pursuit of financial inclusion 
which should provide mainstream financial institutional services to the disadvantaged and low-
income people to free them from the clutches of unscrupulous money lenders. In the Philippines, 
it is recognized that most poor people stiJIlack access to sustainable banking services especially 
credit facilities that can help improve their lives. 
Hence, this bill revisits the charter of the Land Bank of the Philippines to focus on the 
provision of affordable credit facilities to the agriculture sector where most of the poor people of 
the country belong. This will promote inclusive growth that will allow the poor to share in the 
responsibility and fruits of growth and development. 
The Land Bank of the Philippines (LBP) is a government financial institution that ranks 
among the top five commercial banks in the Philippines in terms of deposits, assets, loans and 
capital. It has the most visible presence in the countryside among formal credit institutions. 
In the fulfillment of its social mandate, it strikes a balance between promoting 
countryside development while remaining financially viable. 
The LBP was conceived as the financing arm of the agrarian reform program of the 
government with a specific mandate to fulfill this purpose. It has since been expanded into a full-
service commercial bank and provides financing for farmers and fisher folk, small and medium 
enterprises, microenterprises, livelihood and agri-business, agricultural infrastructure, agriculture 
projects, environment-related projects, socialized housing, schools and hospitals, among others. 
In 1963, Republic Act 3844 otherwise known as the Agricultural Land Reform Code 
created the LBP. The initial purpose of the LBP was limited to financing the acquisition by the 
Government of land for division and resale to small landholders as well as the purchase of the 
landholding by the agricultural lessee as provided for under the Code. 


\ 
By 1973, the LBP had proved to be deficient and inadequate both in capitalization and in 
organizational structure to meet the implementation requirements of the government's agrarian 
reform program. In an effort to revitalize the Bank, Presidential Decree No. 251 was issued on 
21 July 1973 which expanded the purpose and powers of LBP. The Bank's new but broadly 
stated mandate under P.D. 251 was to provide timely and adequate financial support in all phases 
involved in the execution of needed agrarian reform. Among the expanded powers given, LBP 
could now grant short, medium and long term loans and advances against security of real estate 
and/or other acceptable assets for the establishment, development or expansion of agricultural, 
industrial, home building or home financing projects and other productive enterprises. 
The LBP under P.D. 251 now had specific power to grant loans to farmers' 
cooperatives/associations to facilitate production, marketing of crops and acquisition of essential 
commodities. It could also guarantee acceptance(s), credits, loans, transactions or obligations of 
any person, co-partnership, association or corporation in favor of any financing or banking 
institution, whether foreign or domestic, so long as the proceeds of such acceptances, credits, 
loans, transactions or obligations were to be utilized or earmarked for the development and/or 
expansion of agriculture and industry. 
Additionally, P.D. 251 authorized the LBP to act as trustee in accordance with the law 
governing trust corporations, and to exercise the general powers mentioned in the Corporations 
Law and the General Banking Law, so long as those powers were not inconsistent with PD 251. 
In effect, the LBP could now operate as a commercial bank. 
In 1982, Executive Order 816 was issued abolishing the Agricultural Credit 
Administration (ACA) created under RA 3844 and its functions (loans to small farmers) were 
transferred to LBP. The rationale for this was to adopt an integrated approach in the provision of 
financial assistance to farmer-beneficiaries for which a single institution was now preferred. 
This bill seeks to restore the original intent for the creation of the Land Bank of the 
Philippines and that is to assist mainly farmers and agricultural development projects. Hence, the 
bill amends the charter of the bank by giving priority to the agriculture sector and puts a cap of 
20 percent to the total loan portfolio that the Bank may grant for programs and projects in sectors 
other than agriculture. At the moment, about 40 percent of the Bank's loan portfolio is made 
available for non priority sectors. 
In order to serve as a deterrent to the grant of behest loan, a new provision is added such 
that loans to individuals or corporate borrowers amounting to 100 Million Pesos or more shall 
need the approval of the President who shall act on the recommendation of the Bank Board 
within three months otherwise, the loan shall be considered granted. 
The review by a higher authority of the loans of significant amounts will prevent the 
grant of behest loans that are not covered by sufficient collateral and have a high probability of 
payment default. However, in order that the grant of legitimate loans is not unduly delayed, the 
Office of the President is given only three months to act on the loan application elevated for final 
approval. 
In view ofthe foregoing the approval of this bill is earnestly sought. 


FIFTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
Second Regular Session 
) 
SENATE 
S.B.No. 3180 
Introduced by Senator Ralph G. Recto 
AN ACT 
'12 
f1AY -7 P 2 :25 
AMENDING CERTAIN PROVISIONS OF REPUBLIC ACT NUMBERED THREE 
THOUSAND EIGHT HUNDRED FORTY-FOUR, AS AMENDED, WHICH CREATED 
THE LAND BANK OF THE PHILIPPINES, AMONG OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
1 
SECTION 1. Section seventy-five of Republic Act 3844, as amended by Presidential Decree 
2 
Number 251, is hereby further amended to read as follows: 
3 
"Sec. 75. Powers in General. The bank shall have the power: 
4 
"xxx 
5 
"5. To grant short, medium and long term loans and advances against security 
6 
of real estate and/or other acceptable assets for the establishment, 
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development or expansion of agricultural, industrial, home building or home 
financing projects and other productive enterprises: PROVIDED, THAT THE 
TOTAL AMOUNT OF LOANS GRANTED FOR PROGRAMS AND 
PROJECTS IN SECTORS OTHER THAN AGRICULTURE SHALL NOT 
EXCEED TWENTY PERCENT (20%) OF THE TOTAL BANK LOAN 
PORTFOLIO: PROVIDED, FURTHER, THAT LOANS TO INDIVIDUAL 
OR CORPORATE BORROWERS AMOUNTING TO ONE HUNDRED 
MILLION PESOS (PHP 100,000,000) OR MORE SHALL NEED THE 
APPROVAL OF THE PRESIDENT OF THE PHILIPPINES WHO SHALL 
ACT ON THE RECOMMENDATION OF THE BANK BOARD WITHIN 
THREE 
(3) 
MONTHS 
OTHERWISE, 
THE 
LOAN 
SHALL 
BE 
CONSIDERED GRANTED;" 
1 


x x x" 
2 
SEC. 2. Savings Clause. - Nothing in this Act, shall affect the validity or legality of any 
3 
right, duty, or obligation created by or in respect of the Bank by virtue of its loan operations as a 
4 
commercial bank prior to this Act. Any receivables pertaining to loans granted prior to this Act, 
5 
which might be affected by this Act, shall be valid and enforceable upon the terms and 
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conditions under which the loans were made, including the pledge of collateral against which 
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they were issued, and all loans made and security or collateral therefore held by the bank shall 
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remain enforceable according to the terms unless they may be lawfully terminated in accordance 
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with this Act, nor shall this Act supersede the operation of any law protecting or preserving 
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vested contractual rights or be construed to change the terms of any legal contract between the 
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bank and any third party or to impose any new conditions thereon, or to dispense with any 
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condition expressed or authorized in any such contract entered into and taking effect prior to this 
13 
Act. 
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SEC. 3. Separability Clause. -
If any provision of this Act is held invalid or 
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unconstitutional, the same shaH not affect the validity and effectivity of the other provisions 
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hereof. 
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SEC. 4. Repealing Clause. 
-
Pertinent provisions of all other laws, decrees, 
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executive orders and rules and regulations contrary to or inconsistent with the provisions 
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of this Act are hereby repealed or modified accordingly. 
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SEC. 5. Effectivity Clause. - This Act shall take effect fifteen (15) days after its 
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publication in the Official Gazette or in two (2) newspapers of general circulation. 
Approved, 
I 
" 
2