Sugar Restitution Law

August 27, 1993

RULES AND REGULATIONS IMPLEMENTING R.A. NO. 7202

Pursuant to the authority granted to the Bangko Sentral ng Pilipinas under Section 9 of Republic Act No. 7202, otherwise known as AN ACT AUTHORIZING THE RESTITUTION OF LOSSES SUFFERED BY SUGAR PRODUCERS FROM CROP YEAR 1974-1975 TO CROP YEAR 1984-1985 DUE TO THE ACTIONS OF GOVERNMENT-OWNED AND CONTROLLED AGENCIES, the following rules and regulations are hereby granted for guidance and compliance by all concerned:

CHAPTER 1

Title and Definitions

SECTION 1. Title. — These Rules shall be known collectively as the Rules and Regulations Implementing Republic Act No. 7202.

SECTION 2. Definitions of Terms. — As used in these Implementing Rules and Regulations, the following terms shall have their respective meanings as set forth below:

a. ACT shall refer to Republic Act No. 7202.

b. E.O. 31 shall refer to Executive Order No. 31 dated October 29, 1992 directing all government lending financial institutions to implement the Act.

c. E.O. 114 shall refer to Executive Order No. 114 dated July 23, 1993 amending Section 2 of E.O. 31.

d. IMPLEMENTING RULES shall refer to these rules and regulations implementing the Act.

e. PCGG shall refer to the Presidential Commission on Good Government or any succeeding agency to which its functions and responsibilities may be transferred.

f. BSP shall refer to the Bangko Sentral ng Pilipinas which is the implementing Agency and the Trustee of the Sugar Restitution Fund.

g. GOVERNMENT-OWNED AND CONTROLLED FINANCIAL INSTITUTIONS of GFIs shall refer, individually or collectively to the Philippine National Bank (PNB), Development Bank of the Philippines (DBP), PNB Republic Bank (PNB-RB) and other financial institutions wholly or partially owned or controlled by the government, either directly or indirectly.

h. LENDING BANKS shall refer to the government-owned-and-controlled financial institutions (GFIs) and banks under liquidation or receivership by the BSP which may have extended loans to sugar producers and have been tasked to implement E.O. 31 as amended by E.O. 114 and Chapter 3 (Condonation and Restructuring) of these Implementing Rules.

i. PERIOD COVERED shall refer to Crop Year 1974-1975 up to and including Crop Year 1984-1985.

j. SUGAR PRODUCERS shall refer to all persons, natural and juridical, who were engaged in the production of sugar in the Philippines either as sugar planters or millers at any time during the period covered.

k. LOANS SUBJECT TO RECOMPUTATION shall refer to borrowings of sugar producers related to the production and milling of sugar which were granted by lending banks during the period covered. EcDTIH

l. LOAN PAYMENTS shall refer to all payments in respect of loans as defined in Section 2.k to a lending bank whether in the form of: (1) cash actually collected; (2) proceeds from sale of assigned sugar quedans; and (3) value realized or credited to payment of the sugar producer's loan account from properties acquired thru dacion en pago, foreclosure of collaterals or execution against other assets of the sugar producer whether or not such properties are eventually acquired by the lending bank or a third party.

m. RECOMPUTED LOAN BALANCE shall refer to the balance of the loan as defined in Section 2.k after deducting therefrom the excess interest and all penalties and surcharges.

n. EXCESS INTEREST shall mean charged and/or collected by the lending bank over and above the twelve percent (12%) interest per annum on the amount of the principal of loan as defined in Section 2.k as such amount is determined from the original promissory note.

o. PENALTIES AND SURCHARGES shall mean all penalties and surcharges charged and/or collected by the lending bank.

p. EXCESS PAYMENT shall mean the overage of the excess interest as defined in Section 2.n and penalties and surcharges as defined in Section 2.0 after applying them against the outstanding loan balance appearing in the books of the lending bank.

q. SUGAR LOSSES shall refer to the losses suffered by sugar producers due to the actions of government-owned and-controlled agencies during the period covered.

r. SUGAR RESTITUTION FUND shall refer to the ill-gotten wealth recovered by the Government through the PCGG or any other agency or from any other source within the Philippines or abroad, and whatever assets or funds that may be recovered, or already recovered, which have been determined by PCGG or any other competent agency of the Government to have been stolen or illegally acquired from the sugar industry whether such recovery be the result of a judicial proceeding or by a compromise agreement.

s. RESTITUTION shall refer to the act of compensating the sugar producers for their sugar losses in accordance with these Implementing Rules.

t. PRO-RATA SHARE shall refer to the proportionate amount restituted to sugar producers for their sugar losses as may be determined by the BSP.

u. RECOMPUTATION means the procedure provided for in Chapter 3 of these Implementing Rules.

v. ORIGINAL PROMISSORY NOTE shall mean the evidence of indebtedness or similar debt instrument issued to, or executed in favor of, the lending bank for loans granted or incurred during the period covered, whether or not the loans have subsequently been the subject of restructuring, refinancing, or other similar arrangements.

CHAPTER 2

Coverage

SECTION 3. The benefits provided herein shall apply to all sugar producers as defined hereinbefore. The lending banks shall determine the identity of sugar producers who borrowed from them, whether with or without outstanding loans as well as the excess payments, if any, of said borrowers.

SECTION 4. For sugar producers who obtained loans from the lending banks during the period covered, the benefits provided herein shall be extended to those loans at the time of the effectivity of the Act:

a. Are still outstanding; or

b. Had been partially or fully paid, whether in cash, from proceeds of sale of assigned sugar quedans, through dacion en pago, or by way of execution against assets of the sugar producer other than the loan collaterals; or

c. Had been subjected to foreclosure of loan collaterals whether or not the foreclosure is a subject of litigation; or

d. Had been transferred or assigned to other government-owned and-controlled agencies of institutions; or

e. Had been the subject of restructuring or other similar arrangements, whether with the lending bank or with their assignees of transferees.

SECTION 5. The benefit of this Act shall not be extended to any sugar producer with a pending sequestration or ill gotten wealth case before any administrative or judicial body. Any recovery shall be placed in escrow until the case has been finally resolved.

CHAPTER 3

Recomputation, Condonation and Restructuring

SECTION 6. E.O. 31, as amended by E.O. 114 provides as follows:

"SECTION 1. The Philippine National Bank, the Republic Planters Bank, the Development Bank of the Philippines, and other government-owned and-controlled financial institutions shall, individually or collectively, immediately formulate and implement a comprehensive program for the immediate write off from their respective books of interest in excess of twelve per cent (12%) per annum and all penalties and surcharges due from sugar producers on account of loan obligations they incurred from Crop Year 1974-1975 up to and including Crop Year 1984-1985.

"The said financial institutions shall coordinate with sugar producers concerned to facilitate the recomputation of their loan obligations, which shall be payable in accordance with the schedule prescribed under Section 3 (b) of Republic Act No. 7202.

"SECTION 2. In cases, however, where sugar producers have no outstanding loan balance with said financial institutions as of the date of effectivity of RA No. 7202 (i.e. sugar producers who have fully paid their loans either through actual payment or foreclosure of collateral, or who have partially paid their loans and after the recomputation of the interest charges, they end up with excess payment to said financial institutions), said producers shall be entitled to the benefits of recomputation in accordance with Sections 3 and 4 of RA No. 7202, but the said financial institutions, instead of refunding the interest in excess of twelve (12%) per cent per annum, interests, penalties and surcharges, apply the excess payment as an offset and/or as payment for the producers' outstanding loan obligations. Applications of restructuring banks under Section 6 of RA No. 7202 shall be filed with the Central Monetary Authority of the Philippines within one (1) year from application of excess payment.

"SECTION 3. The respective Presidents or their equivalent of the said financial institutions shall be responsible for carrying out the provisions of this Order. They shall submit to the Executive Secretary, as soon as practicable, a compliance report, which shall include a summary of the action taken pursuant to this Order. . . "

In accordance with the abovementioned provisions, all sugar producers shall file with the lending banks their applications for condonation and restructuring.

Pursuant to Section 5 of R.A. 7202, accounts of sugar producers pertaining to Crop Year 1974-1975 up to and including Crop year 1984-1985 with banks under liquidation or receivership by the Central Bank shall likewise be covered by the abovestated provisions.

SECTION 7. Lending banks shall recompute the outstanding loans at twelve percent (12%) simple interest per annum based on the original promissory notes and shall condone interest in excess of twelve per cent (12%) and all penalties and surcharges that were not paid. Excess interest and all penalties and surcharges which had been paid shall be applied against the outstanding loan obligations of the sugar producers in accordance with Section 6 of these Implementing Rules.

SECTION 8 After this recomputation, principal balances and accrued interests shall be restructured over a period not exceeding 13 years, to be reckoned from date of restructuring with these terms:

a. Principal — With interest at 12% per annum payable starting at the end of the first year, while the principalshall be payable in equal annual installments commencing at the end of the fourth year; and

b. Capitalized interest on the restructured loans balance — Non-interest bearing payable in equal annual installments starting at the end of the first year.

CHAPTER 4

Restitution

SECTION 9. The following sugar producers shall be entitled to restitution:

a. Those who have no loan accounts with the lending banks but have suffered trading losses; and

b. Those who borrowed from the lending banks as enumerated in Section 4 of these Implementing Rules and have net excess payments after recomputation of their loans as defined in Section 2.k and application of excess interest, penalties and surcharges against them other outstanding loan obligations in accordance with Section 6 of these Implementing Rules. ACTESI

SECTION 10. The BSP shall arrange with the PCGG, its successors-in-interest, or any other agency which may have recovered ill-gotten wealth from whatever sources, or any assets and/or funds which may have been determined to have been stolen or illegally acquired, directly or indirectly, from the sugar industry to deliver or transfer such recovered assets, funds, and/or interest earned or other increments thereto. All further recoveries by aforementioned agencies, which assets, funds, and/or ill-gotten wealth recovered shall be delivered by the recovering agency to the BSP as soon as may be possible but not later than sixty (60) calendar days. The BSP and the PCGG shall work out the details for the transfer of such funds/recoveries.

SECTION 11. All assets, funds, and/or ill-gotten wealth turned over to the BSP pursuant hereto shall constitute the Sugar Restitution Fund from which restitution shall be affected by the BSP pursuant to Section 2 of the Act. Such Fund shall be held in trust by the BSP for the sugar producers pending distribution thereof. The BSP shall take all necessary steps, consistent with its responsibility as Trustee to preserve and maintain the value of all such recovered assets, funds, and/or ill-gotten wealth.

SECTION 12. The Restitution Fund shall be distributed in accordance with these guidelines:

a. Within one hundred eighty (180) calendar days from the effectivity of these Implementing Rules sugar producers shall file their claims for restitution of sugar losses with the BSP. The BSP in the implementation of these rules may request the assistance/advise from representatives of the GFIs, sugar producers, PCGG and other government agencies. Claims received during the period shall be the basis for the pro-rata distribution.

b. The BSP, shall, upon receipt of the application for reimbursement of excess payments, request from lending banks (a) statement of excess payments of claimant-sugar producer duly audited and certified to by the Commission on Audit (COA) indicating the amount of excess interest, penalties and surcharges due the sugar producer; and (b) a certification that the sugar producer has no outstanding loans with the bank.

 In cases where the loan records which will serve as the basis for computing the excess payments of the sugar producer are no longer available, the lending bank shall immediately notify the BSP. The BSP shall then direct the claimant sugar producer to submit documents in his possession which are acceptable to COA to substantiate his claim. Such documents shall be submitted by the sugar producer to the lending bank within sixty (60) calendar days from receipt of notification from the BSP.

SECTION 13. Sugar producers with foreclosed collaterals which are covered by the CARL shall also be entitled to restitution from the Sugar Restitution Fund and/or recomputation, condonation and restructuring.

SECTION 14. The BSP shall issue additional guidelines as may be necessary and on the manner of the computation of the pro-rata distribution of the Sugar Restitution Fund consistent with the provisions of the Act.

CHAPTER 5

Miscellaneous Provisions

SECTION 15. The BSP shall provide, when necessary, restructuring banks with adequate refinancing package, in consonance with the terms and intentions of Section 6 of the Act.

SECTION 16. These Implementing Rules shall take effect after fifteen (15) days following the completion of their publication in a newspaper of general circulation.

Published in The Philippine Star on September 17, 1993.