House approves bill on agrarian and agricultural loan restructuring and condonation of interests

The House of Representatives approved House Bill No. 5702, or the Agrarian and Agricultural Loan Restructuring and Condonation Act, with 271 votes. This bill aims to alleviate the financial burdens of hundreds of thousands of agricultural land tillers and fisherfolks by writing off millions in accumulated interest, penalties, and surcharges on their loans. It would grant those covered a clean credit record, thereby enabling them to once again access government credit for production and other agricultural needs.

The bill covers loans from the Department of Agrarian Reform (DAR), Department of Agriculture (DA), People’s Credit and Finance Corp., Cooperative Development Authority (CDA), National Food Authority (NFA), and Quedan and Rural Credit Guarantee Corp., with conditions including three consecutive payments on restructured loans.

Eligible individuals will be required to apply for condonation to the agencies from which they obtained their loans. The condonation is based on “force majeure” or “market aberrations,” and those refusing to pay do not qualify. Under the law, force majeure is defined as events, whether natural or political, beyond the reasonable control of a borrower, which have a material adverse effect on the ability of the borrower to pay an obligation. Implementing rules and regulations will be issued by the DAR secretaries in consultation with the Bangko Sentral ng Pilipinas and the heads of the five other lending agencies.

The current status of the bill is detailed as follows: approved by the House on January 31, 2023, transmitted to the Senate on February 1, 2023, and received by the Senate on the same date.