Republic of the Philippines

CONGRESS OF THE PHILIPPINES

Metro Manila
Fourteenth Congress
Third Regular Session
Begun and held in Metro Manila, on Monday, the twenty-seventh day
of July, two thousand nine.
REPUBLIC ACT NO. !!!!
AN ACT PRO"I#ING FOR AN AGRICULTURE AN# AGRARIAN
REFOR$ CRE#IT AN# FINANCING S%STE$ THROUGH
BAN&ING INSTITUTIONS
Be it enacted by the Senate and House of Representatives of the
Philippines in ongress asse!bled"
ARTICLE I
GENERAL PRO"ISIONS
Se'tion . Short #itle. - #his $ct shall be %nown as (The Agri)Agra
Re*or+ Credit A't o* ,!!-(.
Se'tion ,. &eclaration of Policy. - 't is hereby declared the policy of
the State to pro!ote e(ual access to opportunities under an
environ!ent of sustained growth and e)panding productivity as the
%ey to raising the (uality of life for all. #owards this end, the State
shall pro!ote rural develop!ent by enhancing access of the rural
agricultural sector to financial services and progra!s that increase
!ar%et efficiency and pro!ote !oderni*ation in the rural agricultural
sector.
Se'tion .. &efinition of #er!s. - $s used in this $ct, the ter!"
+a, $ccredited Rural -inancial 'nstitution refers to any financial
institution accredited by the Bang%o Sentral ng Pilipinas +BSP,
whose portfolios are substantially agri-agra related as defined by
the i!ple!enting rules and regulations.
+b, $grarian Refor! Beneficiary refers to far!ers who were
granted lands under Presidential &ecree .o. /0, the
o!prehensive $grarian Refor! 1aw and Republic $ct .o. 2033
or the 4o!prehensive $grarian Refor! 5)tension with Refor!s4
and regular far! wor%ers who are landless, irrespective of
tenurial arrange!ent, who benefited fro! the redistribution of
lands, regardless of crops or fruits produced, to include the
totality of factors and support services designed to lift the
econo!ic status of the beneficiaries and all other alternative
arrange!ents to the physical distribution of lands, such as
production or profit sharing, labor ad!inistration, and the
distribution of shares of stoc% which will allow beneficiaries to
receive a 6ust share of the fruits of the lands they wor%.
+c, $gricultural 7uarantee -und Pool +$7-P, refers to the five
percent +89, of the /330 surplus of the govern!ent-owned
and:or --ontrolled corporations and govern!ent financial
institutions including the Philippine $!use!ent and 7a!ing
orporation +P$7;R,, the Philippine harity Sweepsta%es ;ffice
+PS;,, the Social Security Syste! +SSS,, and the 7overn!ent
Service 'nsurance Syste! +7S'S, as !andated by $d!inistrative
;rder .o. //8-$, series of /33<, and the penalties collected fro!
ban%ing institutions for nonco!pliance and underco!pliance as
provided under this $ct.
+d, $gricultural 1essee refers to any person who, with or without
help fro! his:her i!!ediate far! household, cultivates the land
owned by another for a certain price in !oney, in produce, or in
both.
+e, $gro-'ndustry Moderni*ation redit and -inancing Progra!
+$M-P, refers to the u!brella credit:financing progra! of the
govern!ent for the agriculture and fisheries sector created under
Republic $ct .o. <=>8, otherwise %nown as the 4$griculture and
-isheries Moderni*ation $ct of ?2204. By design, $M-P funds
are provided as loans to govern!ent financial institutions +7'-s,
called @credit wholesalers@, which in turn relend the! to (ualified
@credit retailers@ that include rural ban%s, thrift ban%s, cooperative
ban%s, nongovern!ent organi*ations +.7;s,, .ational -ood
$uthority +.-$, and other associations:people@s organi*ations
engaged in lending to s!all far!ers and fisherfol%.
+f, $!orti*ing ;wners refer to landowners who still a!orti*e
pay!ent for the land to a private individual or to the State.
+g, o!pact -ar!ers refer to those far!ers with ad6oining far!s
operating as a single unit under one !anage!ent, far! plan and
budget.
+h, -ar!er refers to a natural person whose pri!ary livelihood is
cultivation of land or the production of agricultural crops,
agroforest products, livestoc% and:or fisheries, either by
hi!self:herself, or pri!arily with the assistance of his:her
i!!ediate far! household, whether the land is owned by
hi!:her or by another person under a leasehold or share tenancy
agree!ent or arrange!ent with the owner thereof.
+i, -ar!wor%er refers to a natural person who renders service for
value as an e!ployee or laborer in an agricultural enterprise or
far! regardless of whether his:her co!pensation is paid on daily,
wee%ly, !onthly or 4pa%yaw4 basis. #he ter! includes an
individual whose wor% has ceased as a conse(uence of, or in
connection with, a pending agrarian dispute who has not
obtained a substantially e(uivalent and regular far! e!ploy!ent.
+6, -ar!er@s ooperatives refer to organi*ations co!posed
pri!arily of s!all agricultural producers, far!ers, far!wor%ers, or
other agrarian refor! beneficiaries who voluntarily organi*e
the!selves for the purpose of pooling land, !anpower,
technological, financial or other econo!ic resources, and operate
on the principle of one !e!ber, one vote. $ 6uridical person !ay
be a !e!ber of a cooperative, with the sa!e rights and duties
as a natural person.
+%, -ar!er@s and -isherfol%@s ;rgani*ation or $ssociations refers
to far!er@s and fisherfol%@s cooperatives, associations or
corporations duly registered with appropriate govern!ent
agencies and which are co!posed pri!arily of s!all agricultural
producers, far!ers, far!wor%ers, agrarian refor! beneficiaries,
fisherfol% who voluntarily 6oin together to for! business
enterprises or non-business organi*ations which they the!selves
own, control and patroni*e.
+l, -inancial Services refer to services e)tended by
ban%s:financial institutions such as, but not li!ited to,
credit:lending, deposits and rediscounting.
+!, -isherfol% refers to people directly or personally and
physically engaged in ta%ing and:or culturing and processing
fishery and:or a(uatic resources.
+n, -ishwor%er refers to a person whether or not regularly
e!ployed in co!!ercial fishing and related industries, whose
inco!e is either fro! wages, profit sharing or stratified sharing
basis, including those wor%ing in fishpens, fish corral:traps,
fishponds, prawn far!s, sea far!s, salt beds, fish ports, fishing
boat or trawlers, or fish processing and:or pac%ing plants, but
e)cluding ad!inistrators, security guards and overseers.
+o, ;wner-ultivators refer to natural persons who own lands by
purchase, inheritance, or land distribution by the State. ;wner-
ultivators can operate the far! the!selves, supervise wage
labor or delegate operations to far!ers.
+p, Philippine rop 'nsurance orporation +P', refers to a
govern!ent-owned and -controlled corporation which provides
insurance protection to the country@s agricultural producers,
particularly the subsistence far!ers against crop losses $rising
fro! natural cala!ities such as typhoons, rising sea levels,
floods, drought, earth(ua%es, volcanic eruptions, plant diseases
and pest infestation, and non-crop agricultural asset losses due
to perils for which the asset has been insured against.
+(, Auedan and Rural redit 7uarantee orporation
+AB5&$.;R, refers to a non-ban% govern!ent financing
institution +7-', under the policy supervision of the &epart!ent
of $griculture +&$, created under Republic $ct .o. 0>2> geared
towards the establish!ent of an effective credit delivery syste!
and a guarantee facility that would pro!ote inventory financing
of agri-a(ua co!!odities, production and post-harvest
production facilities, far! and fishery !achineries and
e(uip!ent, invest!ent in production inputs and labor and the
develop!ent of rural livelihood enterprise.
+r, Settlers refer to persons who range fro! the forest-clearing
pioneers, including indigenous people, with a subsistence
econo!y to the better e(uipped and !ore e)perienced far!ers.
+s, #enant -ar!er refers to one who cultivates another@s land
under a sharing or leasehold agree!ent.
ARTICLE II
AGRICULTURAL CRE#IT/ INSURANCE AN# FINANCING
S%STE$
Se'tion 0. $griculture, -isheries and $grarian Refor! redit,
'nsurance and -inancing Syste!. - #here shall be evolved an
agriculture, fisheries and agrarian refor! credit, insurance and
financing syste! to i!prove the productivity of the agriculture and
fisheries sectors, particularly the far!ers, fisherfol% and agrarian
refor! beneficiaries, settlers, agricultural lessees, a!orti*ing owners,
far!wor%ers, fishwor%ers, owner-cultivators, co!pact far!ers,
far!er@s and fisherfol%@s cooperatives, organi*ations and associations,
through govern!ent and private ban%ing institutions.
$griculture and agrarian refor! credit, as used herein, shall consist of
loans activities and purposes including, but not li!ited to, agricultural
production, pro!otion of agribusiness and e)ports, ac(uisition of
wor% ani!als, far! and fishery e(uip!ent and !achinery, seeds,
fertili*ers, poultry, livestoc%, feeds and other si!ilar ite!s, ac(uisition
of lands authori*ed under the $grarian Refor! ode of the Philippines
and its a!end!entsC construction, ac(uisition and repair of facilities
for production, processing, storage and !ar%eting and such other
facilities in support of agriculture and fisheriesC and efficient and
effective !erchandising of agricultural and fishery co!!odities stored
and:or processed by the facilities aforecited in do!estic and foreign
co!!erce.
Se'tion 1. $griculture and $grarian Refor! redit Beneficiaries. -
#he credit !entioned in the preceding section shall be e)tended to
the beneficiaries na!ed therein or to cooperatives and associations in
good standing of such beneficiaries regardless of capitali*ation based
on the feasibility of the pro6ect and their paying capacity, their
esti!ated production, and:or securities they can provide fro! the
proceeds of the loan.
Se'tion 2. redit Auota. - $ll ban%ing institutions, whether
govern!ent or private, shall set aside at least twenty-five percent
+/89, of their total loanable funds for agriculture and fisheries credit
in general, of which at least ten percent +?39, of the loanable funds
shall be !ade available for agrarian refor! beneficiaries !entioned in
Section 8 hereof" Provided, however, #hat total loanable funds as
used in the section shall refer to funds generated fro! the date of
effectivity of this $ct" Provided, further, #hat the twenty -five percent
+/89, credit (uota is sub6ect to a 6oint review by the &epart!ent of
$griculture +&$,, the &epart!ent of $griculture Refor! +&$R, and
the Bang%o Sentral ng Pilipinas +BSP, after three +>, years of
i!ple!entation to deter!ine whether the law has been effective in
acco!plishing its goals. #he findings shall be sub!itted to ongress.
Se'tion 3. Modes of o!pliance. - #he BSP, the &$ and the &$R, in
consultation with concerned agencies and sectors, shall pro!ulgate
such rules and regulations as !ay be necessary to i!ple!ent the
provisions of this $ct within ninety +23, days after the approval of this
$ct. Such rules and regulations shall ta%e effect fifteen +?8, days after
its publication in a newspaper of general circulation in the Philippines.
Sub6ect to such rules and regulations, ban%ing institutions !ay be
allowed to"
+a, 'nvest in bonds issued by the &evelop!ent Ban% of the
Philippines +&BP, and the 1and Ban% of the Philippines +1BP,
and:or open special deposit accounts +S&$s, with accredited rural
financial institutions defined by the i!ple!enting rules and
regulations" Provided, #hat the proceeds fro! said bonds and
S&$s shall be used e)clusively for on-lending to the agriculture
and agrarian refor! sector" Provided, further,#hat proceeds fro!
said bonds and S&$s shall be separately accounted for by the
&BP, the 1BP and the depository thrift ban%s, cooperative ban%s
and rural ban%s and shall not be considered for purposes of
co!puting the loanable funds under Section D hereof of the said
ban%s" Provided, further!ore, #hat loanable funds channelled as
co!pliance under subsections +b,, +c,, +d,, +e, and +f, even if
said funds are later used by conduit ban%s in activities si!ilar to
those provided for in subsections +b,, +c,, +d,, +e, and +f,C
+b, Rediscount with the universal ban%s and co!!ercial ban%s,
including local branches of foreign ban%s eligible paper covering
agriculture, fisheries and agrarian refor! credits, including loans
covered by guarantees of the AB5&$.;R, and the
P#" Provided, #hat rediscounted paper shall no longer be
eligible as co!pliance on the part of the originating ban%C
+c, 1end for the construction and upgrading of infrastructure
including, but not li!ited to, far!-to !ar%et roads, as well as the
provision of post harvest facilities and other public infrastructure
that will benefit the agriculture, fisheries and agrarian refor!
sector.
+d, 'nvest directly in preferred shares of stoc% in rural financial
institutions li%e rural ban%s, cooperative ban%s, far!er@s
cooperatives and far!er@s cooperatives and far!er@s cooperative
insurance or !utual benefit associations or lend wholesale to
rural financial institutions accredited by the BSP" Provided, #hat
credit facility shall be e)clusively used for on-lending to the
agriculture, fisheries and agrarian refor! sector"Provided,
further, #hat the wholesale loans shall be credited as co!pliance
of the wholesale lender alone"Provided, finally, #hat allowable
alternative !odes of co!pliance should directly target the
agriculture, fisheries and agrarian refor! sectorC
+e, 'nvest in shares of stoc% of the AB5&$.;R and the P'C
and
+f, 1oans or invest!ents in the activities identified under the
$M-P as enu!erated under hapter > redit Section /> of
Republic $ct .o. <=>8 or the $griculture and -isheries
Moderni*ation $ct +$-M$,.
Se'tion 4. #he alternative co!pliance enu!erated in the preceding
section shall also be sub6ect to 6oint review by the &$, the &$R and
the BSP after three +>, years of the i!ple!entation to deter!ine
whether the !odes of co!pliance directly target the agriculture,
fisheries and agrarian refor! sector. #he -indings shall be sub!itted
to ongress.
ARTICLE III
$ISCELLANEUS PRO"ISIONS
Se'tion -. $nnual Reports. - #he BSP shall furnish reports on the
co!pliance with the !andatory credit allocation to the &$, the &$R
and ongress on a yearly basis.
Se'tion !. Penalty lause. - #he BSP shall i!pose ad!inistrative
sanctions and other penalties on the lending institutions for
nonco!pliance with the provisions of this $ct. Penalties on
nonco!pliance shall be co!puted at one-half of one percent +3.89,
of nonco!pliance and underco!pliance and shall be directed to the
develop!ent of the agri-agra sector. .inety percent+239, of the
penalties collected shall be allocated between the $7-P and P'
according to the needs of the agri-agra sector as provided for in
i!ple!enting rules and regulations of this $ct and the re!aining ten
percent +?39, shall be given to the BSP to cover ad!inistrative
e)penses.
Se'tion . Repealing lause. - Presidential &ecree 0?0, the second
paragraph under Section <of Republic $ct .o. 0233, otherwise %nown
as High-Ealue rops &evelop!ent $ct of ?228, and Section 2 of
Republic $ct .o. 00/?, otherwise %nown as liberali*ing the 5ntry and
Scope of ;perations of -oreign Ban%s in the Philippines, are all hereby
repealed. ;ther laws, presidential decrees, e)ecutive orders, rules and
regulations, or parts thereof inconsistent with the provisions of this
$ct are hereby repealed or !odified accordingly.
Se'tion ,. Separability lause. - 'f any part, section or provision of
this $ct is held invalid or unconstitutional, other provisions not
affected thereby shall re!ain in force and effect.
Se'tion .. #ransitory Provision. - Prior to the effectivity of the
i!ple!enting rules and regulations of this $ct, the provisions of
Presidential &ecree .o. 0?0 shall re!ain in force.
Se'tion 0. 5ffectivity. - #his $ct shall ta%e effect fifteen +?8, days
after its publication in the ;fficial 7a*ette or in a newspaper of
general circulation.
$pproved,
+Sgd., PROSPERO C.
NOGRALES
Spea%er of the House of
Representatives
+Sgd., 5UAN PONCE ENRILE
President of the Senate
#his $ct which is a consolidation of Senate Bill .o. >=>? and House
Bill .o. D328 was finally passed by the Senate and the House of the
Representatives on &ece!ber ?D, /332 and &ece!ber ?8, /332,
respectively.
+Sgd., $ARIL%N B. BARUA)
%AP
Secretary 7eneral
House of Representatives
+Sgd., E$$A LIRIO)RE%ES
Secretary of Senate
$pproved" FEB ,./ ,!!
+Sgd., GLORIA $ACAPAGAL)ARRO%O
President of the Philippines