Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

HOUSE Bit No4480

Introduced by REP. Michael L. Romero

EXPLANATORY NOTE

The Department of Budget and Management (DBM) had provide an additional
P30 billion in capitalization—P20 billion to Land Bank of the Philippines (LBP) and
P10 billion to DBP—to improve the resiliency and stability of the state-owned
banks.

This additional capital would help these banks better comply with the higher
Capital ratios implemented in 2014 under the stricter Basel Ill

Basel Ill is an updated set of reforms meant to strengthen the regulation,
supervision and risk management of banks.

Since January 2014, the Bangko Sentral ng Pliiginas (BSP) required banks to
maintain a minimum Tier 1 capital of 7.8 percent, a minimum common equily
Tier | ratio of six percent, and a capital conservation buffer of 2.5 percent, The
capital adequacy ratio (CAR), meanwhile, has been kept at 10 percent.

Latest data from the BSP showed universal and commercial banks kept their
capital ratios above the mandated levels in end-2014, showing they have
sufficient buffer against their risk-taking activities,

LBP, meanwhile, saw its net income jump 24 percent to P3.6 billion from January
to March from P2.9 billion a year ago, latest data showed.


Thus, the early passage of this bill is earnestly requested,

ICHHEL L. ROMERO Ph.D


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

4480

HOUSE BILL NO.

Introduced by REP. Michael L. Romero

AN ACT

MANDATING THE LAND BANK OF THE PHILIPPINES (LBP) TO PROVIDE
ADDITIONAL FUND ALLOTMENT FOR THE FULL IMPLEMENTATION OF RA
NO. 3844 OTHERWISE KNOWN AS “THE AGRICULTURAL LAND REFORM

CODE”, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representative of the
Philippines in congress assembled:

SECTION 1. Declaration of Policy — As in Section 81 of RA 3844, as
amended by Section 4 of RA 7907, provides that the LBP Board, upon the
recommendation of the Secretary of the Department of Finance (DOF) and with
ihe approval of the President, may increase the capitalization of LBP up to such

amount as may be necessary to attain the objectives of RA 3844

There is hereby authorized the Land Bank of the Philippines (LBP) to
appropriate an additional Two(2) billion pesos (P2,000,000,000.00) of funds

necessary to carry-out into effect the provisions of this act.


SECTION 2. Capitalization -- the DOF Secretary has endorsed and
recommended the approval of the request of LBP to increase its authorized
capital stock from P25 Billion to P200 Billion as stated in Executive Order (EO) 198
series of 2016.

This shall be issued in accordance with the provisions of Sections 77 and 83 of
RA3844, 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, the proceeds of

which are hereby appropriated:

Provided, further, That the bonds to be issued locally shall not be supporied by
the BSP.

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 eamings
occasioned by the limitation of the resale cost herein provided such that said
amount together with ihe administrative expenses mentioned in Section 9 of
RA2844, hereof shall not exceed in the aggregate the equivalent of two and
one-half per cenium of its assets limited therein

SECTION 3, Government Shares — A\ll shares of stock in the Land Bank of
the Philippines (LBP) subscribed or owned by the Government shall not be
entitled to participate in the income earned by the LBP from its investments and


other operations, whether in the form of cash or stock dividends or otherwise.
Amounts expended for the administration of the LBP shall not be deemed as a

participation of the Government in income.

SECTION 4. Preferred Shares — All preferred shares of stock issued under
this Act shall be entitled to the income earned by the LBP 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 Ihe Committee on Invesiments:

Provided, That the holders of such preferred shares of stock shall not bring

derivative suits against the LBP. Such preferred shares shall be fully transferable:

Provided, further, That upon the liquidation of the LBP, the redemption of such

preferred shares shall be given priority and shall be guaranteed at par value.

SECTION 5. Voting of Shares — The voting power of all the shares of stocks
of the LBP owned or controlled by the Govemment shall be vested in the
President of the republic of the Philippines or in such person or persons as he

may from time to time designate.

SECTION 6. Use of Bonds — The bonds issued by the LBP may be used by
the holder thereof and shall be accepted in the amount of their face value as

any of the following:

(1) Payment for agricultural lands or other real properties purchased
from the Government;


(2) Payment for the purchase of shares of stock of all or substantially
all of the assets of the following Government Owned or Controlled
Corporations (GOCC) stated in Section 85 of RA3844.

Upon offer by the bondholder, the corporation owned or controlled
by the Government shall, through its Board of Directors, negotiate
with such bondholder with respect to the price and other terms and
conditions of the sale.

In case there are various bondholders making the offer, the one
willing to purchase under terms and conditions most favorable to
the corporation shall be

preferred.

'f no price is acceptable to the corporation, the same shall be
determined by a Committee of Appraisers composed of three
members, one to be appointed by the corporation, ariother by the
bondholder making the highest or only offer, and the third by the
two members so chosen. The expenses of appraisal shall be borne

equally by the corporation and the successful purchaser.

Should the Government offer for sale to the public any or all of the
shares of stock or the assels of any of the Government owned or
controlled corporations enumerated herein, the bidder who offers
fo pay in bonds of the LBP shall be preferred provided that the
various bids be equal in every respect except in the medium of
payment,


(3) Surety or performance bonds in all cases where the Government

May require or accept real properly as bonds; and

(4) Payment for, reparations goods.

SECTION 7. Repealing Clause. All laws, executive orders, issuances, rules

and regulations inconsistent with this Act are hereby amended, repealed or
modified accordingly.

SECTION 8. Separability Clause. If, for any reason or reasons, any portion
oF provision of this Act shall be held unconstitutional or invalid, the remaining

provisions not affected thereby shall continue to be in full force and effect.

SECTION 9. Effectivity Clause. This Act shall take effect fifteen (15) days

atter its publication in any newspaper of general circulation

Approved,