Press Release
December 17, 2012

Senate extends Land Bank corporate life to another 50 years

The Senate today passed on third and final reading a bill seeking to extend the corporate life of the Land Bank of the Philippines for another 50 years.

The bill was approved with 19 affirmative votes, zero negative vote and zero abstention.

"The Land Bank of the Philippines, which was created under Republic Act No. 3844, was granted corporate life of 50 years from its approval until Aug. 8, 2013," Sen. Serge Osmeña, chair of the committee on Banks, Financial Institutions and Currencies, said in his sponsorship speech.

He said Senate Bill No. 2944, otherwise known as the agricultural land reform code, seeks to extend the life of Land Bank for another 50 years after its life expires next year.

Osmeña said the Land Bank currently ranks fourth among the top five commercial banks in the country in terms of deposits, assets, loans and capital.

He said Landbank has been a major contributor in the national government's fiscal consolidation efforts through its contribution of cash dividends in the amount of P17.843 billion, Return on Equity (ROE) at 14 percent and its Capital Adequacy Ratio is at 20 percent.

"Land Bank has total deposits of P490 billion, assets amounting to P630 billion, loans of P247 billion and P73 billion in capital," Osmeña said.

The bill was approved on second reading without amendments last December 10.

Meanwhile, the Senate also approved a local bill seeking the condonation of the interest cost on the fuel compensation charge and incremental cost charge incurred by the Zamboanga del Norte Electrical Cooperative, Inc. or ZANECO, payable to then National Power Corporation but is now transferred to the Power Sector Assets and Liabilities Management Corp. (PSALM).

Sen. Ralph Recto, chairman of the Committee on Government Corporations and Public Enterprises and sponsor of House Bill No. 6058, said the obligations incurred by ZANECO including the principal and interest, arose in compliance with several court orders.

"The principal amounting to P30,557,622 has already been paid. What are condoned under this bill are the interest charges which amounts to P515,747,289 for the period July 1991 to September 2011," Recto explained.

ZANECO, a non-profit electric cooperative, is the sole distributor of electricity to 21 municipalities, the cities of Dipolog and Dapitan and 585 barangays with a total of 91,048 households, according to Recto.

"PSALM has expressed no objection to the condonation of the interest receivable and has entered into a restructuring agreement with ZANECO exluding the interest receivable of P515 million and discontinued further charging interest," Recto said, adding:

" Writing off this obligation incurred through no fault of ZANECO will be appreciated by the people of Zamboanga del Norte which has consistently been in the list of provinces with high incidence of poverty." (OLIVE CAUNAN)

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