JUNE 30, 2016

NR # 4247

House bill strengthening Land Banks credit support for

farmers & fisherfolk awaits PNoy signature
A House proposal to strengthen and institutionalize the direct credit support of the Land
Bank of the Philippines (LBP) to agrarian reform beneficiaries, small farmers and fisherfolk is
now awaiting the approval and signature of President Aquino.
The proposal embodied in House Bill 3785 would further amend Republic Act. 3844,
otherwise known as the Agricultural Land Reform Code, as amended.
The House approved on third and final reading HB 3785 in February 2014 while the
Senate approved on final reading the bill with amendments on February 1, 2016. The House
concurred with the Senate amendments last May 23, 2016 prior to the sine die adjournment.
Then on June 16, 2016, enrolled copies of HB 3785 were sent by the Presidential
Legislative Liaison Office (PLLO) to President Aquino for his approval and signature to become
a new law.
The bill for one, amends Section 74 of Republic Act No. 3844, as amended by RA 10374,
otherwise known as the Agricultural Land Reform Code, which extended the legal existence of
the LBP for a period of 50 years from the expiration of its original term on August 8, 2013.
The bill provides the LBP shall be subject to such rules and regulations as the Bangko
Sentral ng Pilipinas may from time to time promulgate.
The amendment further provides the LBP shall allocate five percent of its regular loan
portfolio (net of loans to the BSP, interbank loans and availments from domestic bills purchase
line) for socialized credit to qualified small farmers, fisherfolk and agrarian reform beneficiaries
(ARBs).
This facility shall solely finance agricultural projects pursuant to the provisions of Section
4 of RA 10000, otherwise known as The Agri-Agra Reform Credit Act of 2009.
Credits extended to the beneficiaries named therein under this facility shall be based on
the feasibility of the project and their paying capacity, their estimated production, and/or
securities they can provide as well as assets as may be acquired by them from the proceeds of the
loan.
This facility will be funded through the operations of the LBP itself and will not require
additional government funding. All loans extended through this special socialized credit facility
shall qualify as part of LBPs compliance with the Agri-Agra Law.
Credit under this special socialized credit facility shall be extended through the farmers
and fisherfolks cooperatives; farmers and fisherfolks organizations or associations;
nonagricultural cooperatives (credit and multipurpose); cooperative banks; rural banks; thrift

banks; agribusiness firms or anchor firms providing credit support to ARBs, and small farmers
and fisherfolk; and duly accredited micro-finance nongovernment organizations by the
Microfinance NGO Regulatory Council.
Loans under this special socialized credit facility shall have an interest rate equivalent to
not more than 75 percent of the bank's prevailing rates for loans to cooperatives.
These conduits shall have an interest spread of not more than five percentage points. The
interest spread shall exclude crop insurance premiums and guarantee fees. Moreover, a conduit
cannot lend to another conduit.
The criteria for eligibility under this special socialized credit facility shall be determined
by the LBP and shall be reflected in the Implementing Rules and Regulations (IRR).
Secondly, the bill amends Section 75 of RA 3844, as amended, by adding a new
subsection (15) which provides for an additional power of the LBP which is To offer and issue
common and preferred shares of stocks to ARBs, small farmers and fisherfolk through their
organizations, cooperatives, federations and cooperative banks; development partners and
strategic investors such as multilateral and bilateral institutions; and rural banks and their
associations, in quantities to be determined by the Board of Directors and in accordance with
applicable laws, rules and regulations.
The amendment further provides The national government shall maintain, at all times, at
least two-thirds ownership of the total outstanding common shares of the LBP. Preferred shares
of stock shall be non-voting. Other features of preferred shares shall be determined by the Board
of Directors in accordance with applicable laws and regulations.
The BSP, in consultation with Land Bank, shall formulate the rules and regulations
necessary for the implementation of the Act.
House Bill 3785 is authored by Reps. Agapito Guanlao, Teddy Baguilat, Magnolia Rosa
Antonino-Nadres, Fernando Gonzalez, Fernando Hicap, Noel Jesus Villanueva, Sharon Garin,
Lilia Macrohon-Nuo, Carlos Padilla, Anthony Bravo, Jonathan dela Cruz, Victor Yu, Edcel
Grex Lagman, Cresente Paez, Christopher Co and Rodel Batocabe. (30) rbb