Republic of the Philippines
House of Representatives
Quezon Gity

Sixteenth Congress

Second Regular Session

House EIENE,.... OA OU

Introduced by Representative Nelson “Sonny” P, Collantes

EXPLANATORY NOTE

It is the policy of the present administration to rationalize the operations of existing
government agencies, including government financial institutions, to improve the delivery of services,
achieve operational and financial efficiency and support the development thrusts of government. Such
rationalization may be achieved by merging government agencies with overlapping functions.

‘The merger of DBP and LBP is necessary as the functions or purposes of both banks duplicate
and/or unnecessarily overlap with one another, which is one of the standards for implementing a
merger under Republic Act No. 10149. The merger is also in line with the current regulatory thrust to
encourage the consolidation of banks to achieve higher lending capacities, diversify risks and improve
the quality of their services.

The merger will also result in synergies in the operations of the two government financial
institutions. Although DBP and LBP have different mandates under their respective charters, they have
similar authority to engage in universal banking activities. The fusion of the universal banking activities
of the two banks is therefore expected to result in the economies of scale of banking operations. Said
merger will improve the balance sheet capabilities of the merged bank thus resulting in a stronger bank
which will have a competitive edge over other banks not only in the domestic and global markets.

The consolidated entity will be more effective, efficient and sustainable in carrying out the
mandates of both banks, particularly in anticipation of the wave of foreign banks that may enter the
Philippine market upon the occurrence of ASEAN integration in 2015.

WL? le.

NELSON P. COLLANTES

Hence, the passage of this bill is earnestly requested


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‘Republic af the Bhiippines
Bouse Of Representatives
Quezon City

Sixteenth Congress
Second Regular Session

5350

HOUSE BILL No,

Introduced by Representative Nelson “Sonny” P. Collantes

AN ACT AUTHORIZING THE MERGER OF THE DEVELOPMENT BANK OF THE PHILIPPINES AND.
THE LAND BANK OF THE PHILIPPINES WITH DBP AS THE SURVIVNG ENTITY

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

assembled.

Section 1. Declaration of Policy. There is a need to rationalize the operation of
government agencies and Government Financial Institutions (GFIs) to strengthen their
financial capabilities, to improve the delivery of services, to achieve economic efficiency and
to support the development thrust of the government. Towards the end, the State shall
therefore:

a, Recognize the importance of strengthening the government financial institutions
to give it a competitive edge over other banks not only in the domestic but in the global
market as well;

b. Encourage sustainable growth and development in capital and credit facilities in
our government financial institution thereby achieving a sound, stable and efficient
government banking facility for the protection of the public.;

c. Ensure that the social mandate of providing assistance to priority sectors are
continuously fulfilled and investments are amply protected.

Section 2. Merger of the Development Bank of the Philippines and the Land Bank of
the Philippines. The Development Bank of the Philippines (DBP) and the Land Bank of the
Philippines (LBP) are hereby merged,

LBP as the surviving entity,
Alll assets and liabilities of DBP are hereby transferred to LP


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In addition to the powers of LBP under Republic Act No. 3844, as amended, the LBP
as the surviving entity, shall also exercise the powers of DBP under its 1986 Revised Charter
(E.0. No. 81 dated December 3, 1986, as amended by R.A. No. 8523 dated February 14,
1998)

Section 3. Capital Structure. The existing capital of DBP and LBP shall be combined,

provided, however, that the combined existing authorized stock of DBP and LBP which is in
the amount of Sixty Billion Pesos (P 60,000,000,000.00) shall be increased to 100 Billion
Pesos (P 100,000,000,000,00), Said increase of Forty Billion Pesos (Php 40, 000, 000, 000.00)
shall consist of 400, 000.00 common shares with par value of P100.00 per share.

Section 4, Tax Exemption. The merger of DBP and LBP including all aspects of
implementation thereof shall be exempt from the payment of all national and local taxes,
fees and charges, including, but not limited to, the income tax, capital gains tax, creditable
withholding tax, gross receipts tax, local transfer tax, documentary stamp taxes, and
registration fees, The shares of stock to be issued out of the increase of the authorized
capital stock of DBP shall be exempt from the payment of the documentary stamp taxes.

Section 5. Implementation of the Merger by Concerned Government
Offices/Agencies. The Bangko Sentral ng Pilipinas , the Bureau of Internal Revenue and
other government offices/agencies concerned are hereby directed to promptly take such
actions as may be necessary to fully implement the provisions of this Act.

Section 6. Effects of the Merger of Existing Laws. The provisions of the Corporation
Code on Mergers shall have suppletory effect on this Act.

The provisions of Republic Act No. 3844, as amended, the Code of Agrarian Reform
of the Philippines, and Executive Order No, 81 as amended or the 1986 Revised Charter of
DBP, are hereby amended accordingly.

Section 7. Repealing Clause. All laws, decrees, issuances, rules, and regulations
inconsistent with the provisions of this Act are hereby deemed amended accordingly.

Section 8. Effectivity. This Act shall take effect within fifteen (15) days after its
publication in at least two (2) newspapers of general circulation.

Approved,