Senate Bill No. 2744: Offering one-time condonation of unpaid interests, penalties, and surcharges on agri and agrarian loans

Senate Bill No. 2744, introduced by Senator Risa Hontiveros on July 23, 2024, is known as the Agrarian and Agricultural Loan Restructuring and Condonation Act. This proposed legislation aims to alleviate the financial burdens of farmers, fisherfolk, and agrarian reform beneficiaries (ARBs) by offering a one-time condonation of unpaid interests, penalties, and surcharges on their existing loans. The loans eligible for this condonation are those secured from various government agencies, including the Department of Agrarian Reform (DAR), Department of Agriculture (DA), People's Credit and Finance Corporation (PCFC), Cooperative Development Authority (CDA), National Food Authority (NFA), and the Quedan and Rural Credit Guarantee Corporation (QUEDANCOR). 

Key Objectives and Provisions of the Bill:

• Condonation of Debt: The bill seeks to forgive all unpaid interests, penalties, and surcharges on agricultural and agrarian reform loans obtained from the specified government agencies prior to the act's effectivity. This measure is intended to provide financial relief and encourage borrowers to resume regular payments. 

• Eligibility Criteria: To qualify for the condonation, borrowers must have paid at least 2% of the loan principal. The condonation will apply to loans acquired through the mentioned agencies, provided the borrower has not engaged in willful deceit regarding loan payments. 

• Scope of Application: The condonation covers loans from both existing and terminated lending programs of the DAR and DA. It also extends to loans obtained through conduit banks and financial institutions, in compliance with applicable banking laws and regulations set by the Bangko Sentral ng Pilipinas (BSP). 

• Regulatory Compliance: The condonation process will adhere to the general banking laws and regulations of the BSP, ensuring that the measure aligns with existing financial policies and maintains the integrity of the financial system. 

Legislative Progress:

As of February 4, 2025, Senate Bill No. 2744 has been consolidated and substituted in the Committee Report, indicating progress toward potential enactment. The bill has undergone discussions and is awaiting further legislative actions. 

Context and Rationale:

The bill addresses the longstanding issue of farmers and agrarian reform beneficiaries being burdened by accumulated debts, which hinder their access to further credit facilities and impede agricultural productivity. By condoning a portion of these debts, the government aims to revitalize the agricultural sector, promote sustainable local production, and foster comprehensive rural development. Senator Hontiveros emphasizes that this measure is part of a broader effort to uplift the livelihoods of farmers, fisherfolk, and ARBs, enabling them to regain access to government and commercial credit facilities. 

Stakeholder Engagement:

The bill has undergone discussions in various legislative hearings, with stakeholders emphasizing the importance of clarifying the specifics of the condonation program. Senator Cynthia A. Villar, chair of the agriculture, food, and agrarian reform committee, highlighted the need for a technical working group to ensure that the condonation effectively addresses the challenges faced by farmers and fisherfolk. The goal is to ease their debt payment burdens and boost local agricultural production. 

In summary, Senate Bill No. 2744 represents a significant legislative effort to support the agricultural sector by restructuring and condoning certain debts, thereby promoting financial stability and encouraging sustainable agricultural practices among farmers, fisherfolk, and agrarian reform beneficiaries.