“RECEIVED
"30 JON 2016

Republic of the Philippines
House of Representative:

Quezon City
SEVENTEENTH CONGRESS REGISTRATION UNTT
First Regular Session BILLS AND INDEX SERVICE

HOUSE BILL No. 187

Introduced by Hon. Anthony M. Bravo
and Hon. Sabiniano S, Canama
COOP-NATCCO PARTYLIST

EXPLANATORY NOTE

Countryside rural development is predominant and more pronounced by the programs of
the Department of Agriculture and the Department of Agrarian Reform. ‘These programs include
the Credit Assistance Program ~ Program Beneficiaries Development Program and Credit
Program Scheme of the Department of Agrarian Reform; and the Agricultural credit secured
through Microfinance Program of the People’s Credit and Finance Corporation

A grand total of roughly P 3.7 billion inclusive of interest was released by all of these
government agencies. Collections as of December 2011 amounted to P 1.3 billion which is 35 %
of the total amount of the loan. It is for this reason that we take measures in order to apply
leniency to this unpopular agrarian reform beneficiaries by condoning all interests, surcharges
and other penalties from the commencement of the loan. Needless to say, all the payments made
subsequent to the credit application shall be applied retroactively to the principal amount only.

It is to be noted that farmers and agrarian reform beneficiaries are not only entrepreneurs
in bucolic areas but are also partners in the evolution of a better and brighter country. It is
therefore imperative upon us to take an overwhelming care and attention by condoning these
interests that burdened the debt.

It is for this reason that the approval of this bill be given an immediate positive response.

HON. SABINJANO S. CANAMA



Republic of the Philippines

House of Representatives
Quezon City

SEVENTEENTH CONGR
First Regular Session

‘SS

HOUSE BILL NO. 187

Introduced by Hon. Anthony M. Bravo
and Hon. Sabiniano S. Canama
COOP-NATCCO PARTYLIST

AN ACT.
[RUCTURING AND CONDONATION OF UNPAID
AND SURCHARGES ON LOANS SURED BY
i

PROVIDING FOR THE
i PENALT!

FARM
DEPART
AGRICULTURE (DA), THE PEOPLE’ CORPORATION
(PCFC), THE COOPERATIVE T AUTHORITY (CDA), THE
NATIONAL FOOD AUTHORITY (NFA) AND THE QUEDAN AND RURAL CREDIT
GUARANTEE CORPORATION (QUEDANCOR)

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

SECTION 1, Short Title - This Act shall be known as the “Agrarian and Agricultural Loan
Restructuring and Condonation Act.”

SECTION 2. Declaration of Policy ~ The State shall promote comprehensive rural
development and agrarian reform through the provision of measures that will release farmers,
fisherfolk and agrarian reform beneficiaries from the bondage of debt. Towards this end, it shall
be the objective of the State to provide farmers, fisherfolk and agrarian reform 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.

SECTION 3, Definition of Terms ~ As used in this Act
a) Agrarian reform beneficiaries refer to farmers who were granted lands under Presidential
Decree No. 27, known as the Emancipation of Tenants and Transfer of Ownership of
Land Act and RA 6657 known as the Comprehensive Agrarian Reform Law of 1988, as
amended, and other existing agrarian reform laws, These include regular farm workers,

irrespective of tenurial arrangement who benefited from the redistribution of lands,
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including their organizations and cooperatives which have availed of the credit programs
enumerated in Section 5 hereof,

b) Agricultural and agrarian reform credit refers to loans granted for agricultural
production; promotion of agricultural business and exports including but not limited to
the acquisition of work animals, farm equipment and machinery, seeds, fertilizers,
poultry, livestock, feeds construction, acquisition and repair of agricultural facilities.

©) Condonation refers to the relief granted by law in the payment of unpaid interests,
penalties and surcharges;

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

©) Farmer refers to any natural person whose primary livelihood is 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
arrangements;

1) Fisherfolk refers to people directly or personally and physically engaged in taking and/or
culturing and processing fishery and/or aquatic resources.

2) Force majeure refers to events whether natural or political, beyond the reasonable control
of a loan borrower, which have a material adverse effect on the ability of the borrower to
pay an 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;

) Terminated Lending Programs tefer to lending programs instituted by the government

which are no longer existing and operational yet with intractable records of loans.

SECTION 4. Condonation ~ All unpaid interests, penalties and surcharges of agricultural and

agrarian reform credit secured by farmers, fisherfolk and agrarian reform beneficiaries from the

Department of Agrarian Reform (DAR), Department of Agriculture (DA), the People’s Credit

and Finance Corporation (PCFC), the Cooperative Development Authority (CDA), the National
Food Authority (NFA), 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 bases for

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the condonation shall be limited to force majeure 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 percent (5%) 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 be granted a one-time
condonation only: Provided finally, That the condonation of unpaid interests, penalties and
surcharges from loans acquired through conduit banks and financial institutions and the agencies
mentioned above shall be in conformity with the applicable general banking laws and regulations

of the Bangko Sentral ng Pilipinas (BSP).

SECTION 5. Coverage. ~ The following accounts are covered by the condonation program:
(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, such as the Dutch Rural Development Assistance Program
(DRDAP), DAR Direct Lending Financing Program (DDLFP), DAR Special Projects
Office (SPO) Direct, and the SPO Window III Financing Program for Agrarian Reform
Beneficiaries of the DAR and the Development Bank of the Philippines;

(6) Resettlement Loan Assistance Program of the DAR for individual agrarian reform
beneficiaries;

(a) Agricultural credit secured through the High Yield Crop Loan Assistance Program of the
DA;

(e) Agricultural credit secured through Microfinance Program for Small Farmers and
Fisherfolk and the Household of the PCFC;

(f) Cooperative Development Loan Fund of the CDA;

(g) Farmers Level Grain Center of the NFA; and

(h) Comprehensive Agrarian Reform Program-Barangay Marketing Center (CARP-BMC)
and all agri-credit guarantee programs of QUEDANCOR

SECTION 6. Qualified Beneficiaries — Delinquent farmers, fisherfolk or agrarian. reform
beneficiaries and agrarian reform beneficiary organizations who secured agricultural and
agrarian reform credit under any of the accounts enumerated in Section 5 of this Act and who are
delinquent borrowers may apply for condonation of unpaid interests, penalties, and surcharges

with the concerned government agency or corporation.

SECTION 7. Approval of Application for Condonation. — The government ageney ot corporation

managing the accounts enumerated in Section 5 hereof, shall review and approve an application
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for condonation and foan restructuring. The period for payment of the restructured loan shall be
determined according to the financial capacity of the farmers, fisherfolk and 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

SI
terminated credit programs as provided in Section 5(b) of this Act shall be remitted to the Bureau

ION 8. Collection of Payment ~ The annual collection from payments of loans under the

of Treasury under the Agrarian Reform Fund.

SECTION 9. Restoration of Non-performing Loans to Status of Good Standing — Loans
restructured under this Act shall be restored to status of good standing upon three (3) consecutive
payments by the borrower of the required periodic amortizations under the restructures loan.
Government agencies may issue the appropriate certifications to the borrower upon satisfaction
of the said condition, thereby facilitating their reintegration into the financial and banking system
by allowing them to access to government and private credit programs.

SECTION 10, Write-off Loans from the Books of Terminated Lending Programs. ~ The
concerned agencies shall write-off from their books the loans of borrowers of the terminated
lending programs provided that the programs are clearly identified, and the accounts involved are
past due, The procedure for the writing-off of loans from the books terminated lending programs
shall be provided for in the implementing rules and regulations of this Act.

SECTION 11. /mplementing Rules and Regulations (IRR) — Within sixty (60) days from the
effectivity of this Act. The Secretary of the Department of Agrarian Reform, in consultation with
the secretaries and heads of offices of the Department of Agriculture, Cooperative Development
Authority (CDA), People’s Credit and Finance Corporation (PCFC), the Agriculture Credit
Policy Council (ACPC) and the Bangko Sentral ng Pilipinas shall promulgate the implementing
rules and regulations for the effective implementation of this Act.

SECTION 12 . Repealing Clause ~ All laws, executive orders, issuances or parts thereof
inconsistent with the provisions of this Act are hereby amended, repealed and modified
accordingly.

SECTION 13, Separability Clause - If any provision of this Act is declared unconstitutional, the
remainder of this Act, or any provisions not affected thereby shall remain in full force and effect.
SECTION 14, Effectivity Clause ~ This Act shall take effect fifteen (15) days after its publication
in the Official Gazette or ina newspaper of general circulation,

Approved,