AMENDING CERTAIN PROVISIONS OF REPUBLIC ACT NUMBERED THREE THOUSAND EIGHT HUNDRED FORTY-FOUR, AS AMENDED, ENTITLED “THE CODE OF AGRARIAN REFORM IN THE PHILIPPINES.”

WHEREAS, there is imperative need for immediate
implementation of agrarian reform envisioned under Presidential Decree Nos. 27
and 85, dated October 21, 1972 and December 25, 1972, respectively;

WHEREAS, the implementation of such a revolutionary program
of rural change demands an effective administrative machinery financially and
organizationally equipped to mobilize and harness properly all available
government resources for the realization of desired agrarian reform; and

WHEREAS, the Land Bank, the only financial institution
established for agrarian reform, is presently deficient and inadequate both in
capitalization and in organization structure to meet the implementation
requirements of the agrarian reform program;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers in me vested by the Constitution as
Commander-in-Chief of all the Armed Forces of the Philippines, and pursuant to
Proclamation No. 1081, dated September 21, 1972, and General Order No. 1, dated
September 22, 1972, as amended, do hereby order and decree:

SECTION 1. Section seventy-four of Republic Act Numbered
Three Thousand Eight Hundred and Forty-Four, as amended, is hereby further
amended to read as follows:

“SEC. 74. Creation. — To provide timely and
adequate financial support in all phases involved in the execution of needed
agrarian reform, there is hereby established a body corporate and government
instrumentality to be known as the ‘Land Bank of the Philippines, hereinafter
called the ‘Bank,’ which shall have its principal place of business in Greater
Manila. The legal existence of the Bank shall be for a period of fifty (50)
years from the date of approval hereof.”

SEC. 2. Section seventy-five of the same Act is hereby
amended to read as follows:

“SEC. 75. Powers in General. — The Bank shall have
the power:

“1. To prescribe, repeal and alter its own by-laws to determine its operating
policies, and to issue such rules and regulations as may be necessary;

“2. To adopt, alter and use a corporate seal;

“3. To hold, purchase, acquire and own real and personal property, introduce
necessary improvements thereon to enhance and develop their social and economic
values, and to sell, mortgage or otherwise dispose of the same;

“4. To sue and be sued, make contracts, negotiate and secure loans from both
local and foreign sources. Before undertaking any such credit operation, the
Bank, through the Secretary of Finance, shall request the opinion, in writing,
of the Monetary Board on the monetary implications of the contemplated action.
All loans from foreign sources shall be subject to approval by the President of
the Philippines and shall be fully guaranteed by the Philippine Government;

“5. To grant short, medium and long term loans and advances against security
of real estate and/or other acceptable assets for the establishment, development
or expansion of agricultural, industrial, home building or home financing
projects and other productive enterprises;

“6. To grant loans to farmers’ cooperatives/associations to facilitate
production, marketing of crops and acquisition of essential commodities;

“7. To finance and/or guarantee the acquisition, under Presidential Decree
No. 85, dated December 25, 1972, of farm lots transferred to tenant-farmers
pursuant-to
Presidential Decree No. 27, dated October 21, 1972;

“8. To underwrite, hold, own, purchase, acquire, sell, mortgage, dispose or
otherwise invest or reinvest in stocks, bonds, debentures, securities and other
evidences of indebtedness of other corporations and of the Government or its
instrumentalities which are issued for or in connection with any project or
enterprises;

“9. The provision of any law to the contrary notwithstanding, to guarantee
acceptance(s), credits, loans, transactions or obligations of any person
co-partner ship, association or corporation in favor of any financing or banking
institution whether Foreign or domestic: Provided, That the proceeds of
such acceptances, credits, loans, transactions or obligations are utilized or
earmarked for the development and/or expansion of agriculture and industry;

“10. To borrow from, or rediscount notes, bills of exchange and other
commercial papers with, the Central Bank. The rate of interest to be charged and
the conditions on such obligations or borrowings shall be subject to the rules
and regulations of the Monetary Board;

“11. To act as trustee, or administer any trust or hold property in trust in
accordance with the provisions of law governing trust corporations; and

“12. To exercise the general powers mentioned in the Corporation Law and the
General Banking Act, as amended, insofar as they are not inconsistent or
incompatible with this Decree.”

SEC. 3. Section seventy-six of the same Act is hereby
amended to read as follows:

“SEC. 76. Issuance of Bonds. — The Bank shall, upon
recommendation of the Secretary of Finance and after consultation with the
National Economic and Development Authority and the Monetary Board, and with the
approval of the President of the Philippines, issue bonds, debentures,
securities, collaterals and other evidences of indebtedness and/or the renewal
or refunding thereof, at such terms, rates and conditions as the Bank may
determine, up to an aggregate amount not exceeding, at any one time, ten times
its paid-in capital and surplus. These bonds and other obligations shall be
redeemable at the option of the Bank at or before maturity and in such manner as
may be stipulated therein and shall bear such rate of interest as may be fixed
by the Bank. Such obligations shall be secured by the assets of the Bank
including the stocks, bonds, debentures, and other securities underwritten,
purchased or held by it under the provisions of this Decree. Such obligations
may be issued in payment and/or replacement of certain assets transferred to the
Bank and/or offered for sale at such price or prices as the Bank may determine,
and shall be exempt from taxation both as to principal and interest, and shall
be fully guaranteed by the Government of the Republic of the Philippines, and
such guarantee shall be expressed on the face thereof. These instruments of
indebtedness shall be negotiable and may be mortgaged in accordance with
established banking procedures and practices with government institutions, their
existing charters and/or laws to the contrary notwithstanding, to enable the
holders of such bonds to make use of them in investments in productive
enterprises. The Board of Directors shall have the power to prescribe rules and
regulations for the issuance, reissuance, servicing, placement and redemption of
the bonds herein authorized to be issued as well as the registration of such
bonds at the request of the holders thereof.”

SEC. 4. Section seventy-seven of the same Act is hereby
amended to read as follows:

“SEC. 77. Issuance of Preferred Shares of Stock to
Finance Acquisition of Farm Lots and Other Assets. — The Bank shall issue,
from time to time, preferred shares of stock in such quantities as may be
necessary to pay the landowners in accordance with Sections eighty and
eighty-one of this Code, and for acquisition of other assets should the seller
elect to accept such payment. The amount of shares that the Bank may issue shall
not exceed the aggregate amount needed to pay the landowners in the proportion
prescribed in said Section eighty of this Code. The Board of Directors shall
include as a necessary part of the by-laws that it shall issue under Section
seventy-five of this Code, such formula as it deems adequate for determining the
net asset value of its holdings as a guide and basis for the issuance of
preferred shares. The shares of stock issued under the authority of this
provision shall be guaranteed a rate of return of at least six per centum per
annum. In the event that the earnings of the Bank for any single fiscal year are
not sufficient to enable the Bank, after making reasonable allowance for
administration, contingencies and growth, to declare dividends at the guaranteed
rate, the amount equivalent to the difference between the Bank’s earnings
available for dividends and that necessary to pay the guaranteed rate shall be
paid by the Bank out of its own assets but the Government shall, on the same day
that the Bank make such payment reimburse the latter in full, for which purpose
such amounts as may be necessary to enable the Government to make such
reimbursements are hereby appropriated out of any moneys in the National
Treasury not otherwise appropriated. The Bank shall give sufficient notice to
the Budget Commissioner and the Secretary of Finance in the event that it is not
able to pay the guaranteed rate of return on any fiscal period. The guaranteed
rate of return on these shares shall not preclude the holders thereof from
participating at a percentage higher than six per centum should the earnings of
the Bank for the corresponding fiscal period exceed the guaranteed rate of
return. The Board of Directors shall declare and distribute dividends within
three months after the close of each fiscal year at the guaranteed rate unless a
higher rate of return is justified by the Bank’s earnings after making
reasonable allowance for administration, contingencies and growth, in which
case, dividends shall be declared and distributed at a higher rate. The capital
gains derived from the sale or transfer of such shares and all income derived
therefrom in the form of dividends shall be fully tax-exempt.”

SEC 5. Section seventy-eight of the same Act is hereby
amended to read as follows:

“SEC. 78. Special Guaranty Fund. — In the event
that the Bank shall be unable to pay the bonds, debentures and other obligations
issued by it, a fixed amount thereof shall be paid from a special guaranty fund
to be set up by the Government, to guarantee the obligation of the Bank, and
established in accordance with this Section and, thereupon, to the extent of the
amounts so paid, the Government of the Republic of the Philippines shall succeed
to all the rights of the holders of such bonds, debentures or other obligations:
Provided, however, That the Government shall pay into the guaranty fund
the sum of five million pesos each year until the cumulative total of such
guaranty fund is no less than twenty percent of the outstanding net obligation
of the Bank at the end of any calendar year.

“The special guaranty fund shall be administered by the Central Bank of the
Philippines in the manner most consistent with its Charter. For the purpose of
such funds, the sum of five million pesos is hereby appropriated annually out of
any moneys in the National Treasury not otherwise appropriated, until the total
amount of one hundred million pesos shall have been attained
therefrom.”

SEC. 6. Section seventy-nine of the same Act is hereby
amended to read as follows:

“SEC. 79. Receipt of Deposits. — The Bank, subject
to the provisions of the General Banking Act, as amended, is authorized to
receive demand, savings and time deposits.

“The Secretary of Finance, the National Treasurer and his authorized
representatives, city and municipal treasurers as well as custodians of funds or
those belonging to government-owned or controlled corporations, may be
authorized by the Monetary Board to make and actually maintain deposits of any
government or corporate funds with the Land Bank.”

“SEC. 79-A. Administration of Agricultural Guarantee Funds. — All
agricultural guarantee funds shall be converted into a trust fund to be
administered by the Bank.”

SEC. 7. Section eighty of the same Act is hereby amended to
read as follows:

“SEC. 80. Modes of Payment. The Bank shall finance the
acquisition of farm lots under any of the following modes of settlement:

“1. Cash payment of 10% and balance in 25-year tax-free 6% Land Bank
bonds;

“2. Payment of 30% in preferred shares of stock issued by the Bank and
balance in 25-year tax-free 6% Land Bank bonds;

“3. Full guarantee on the payment of the fifteen (15) equal annual
amortizations to be made by the tenant/farmer;

“4. Payment through the establishment of annuities or pensions with
insurance;

“5. Exchange arrangement for government stocks in government-owned or
controlled corporations or private corporations where the Government has
holdings;

“6. Such other modes of settlement as may be further adopted by the Board of
Directors and approved by the President of the Philippines.

“In the event there is existing lien or encumbrance on the land in favor of
any Government lending institution at the time of acquisition by the Bank, the
landowner shall be paid the net value of the land (i.e., the value of the land
determined under Presidential Decree No. 27 minus the outstanding balance/s of
the obligation/s secured by the lien/s or encumbrance/s), and the outstanding
balance/s of the obligations to the lending institution/s shall be paid by the
Land Bank in Land Bank bonds or other securities, existing charters of those
institutions to the contrary notwithstanding. A similar settlement may be
negotiated by the Land Bank in the case of obligations secured by liens or
encumbrances in favor of private parties or institutions.

“Whenever the Bank pays the whole or a portion of the total cost of farm
lots, the Bank shall be subrogated by reason thereof, to the right of the
landowner to collect and receive the yearly amortizations on farm lots or the
amount paid including interest thereon, from tenant-farmers in whose favor said
farm lots had been transferred pursuant to Presidential Decree No. 27, dated
October 21, 1972.

“The profits accruing from payment shall be exempt from tax on capital
gains.”

SEC. 8. Section eighty-one of the same Act is hereby amended
to read as follows:

“SEC. 81. Capital — The authorized capital stock of
the Bank shall be three billion pesos, divided into one. hundred and eighty
million common shares with a par value of ten pesos each, which shall be fully
subscribed by the Government, and one hundred and twenty million preferred
shares with a par value of ten pesos each, which shall be issued in accordance
with the provisions of Sections seventy-seven and eighty-three of this Code.
These preferred shares shall be non-voting. The Board, upon the recommendation
of the Secretary of Finance and with the approval of the President of the
Philippines, may increase the capitalization of the Bank up to such an amount as
may be necessary to attain the objectives of this Act. The total capital stock
subscribed by the Government shall be paid by the Agrarian Reform Fund
Commission created under Presidential Decree No. 85, hereinafter referred to as
the Commission, as follows: four hundred million pesos within sixty (60) days
from the approval of this Decree, and at least one hundred million pesos every
year thereafter until the total subscription of the Government, is fully paid:
Provided, That the common and preferred shares of the Bank which have
been issued, including those already subscribed, shall form part of the
increased capitalization of the Bank: Provided, further, That the
Government is authorized to appropriate funds out of the National Treasury for
this purpose.”

SEC. 9. Section eighty-three of the same Act is hereby
amended to read as follows:

“SEC. 83. Preferred Shares. — All preferred shares
of stock issued under Section seventy-seven of this Code shall be entitled to
the income earned by the Bank on its investments and other operations:
Provided, That the holders of such preferred shares of stock shall not
bring derivative suits against the Bank. Such preferred shares shall be fully
transferable: Provided, further, That upon the liquidation of the Bank,
the redemption of such preferred shares shall be given
priority.”

SEC. 10. Section eighty four of the same Act is hereby
amended to read as follows:

“SEC. 84. Voting of Shares. — The voting power of
all the common shares of stock of the Bank owned and controlled by the
Government shall be vested in the President of the Philippines or in any ex
officio member of the Board of Directors of the Bank as he may designate.”

SEC. 11. Section eighty-five of the same Act is hereby
amended to read as follows:

“SEC. 85. Use of Bonds. — The bonds issued by the
Bank may be used by the holder thereof and shall be accepted for any of the
following:

“1. Payment for agricultural lands or other real properties purchased from
the Government.

“2. Payment for the purchase of shares of stock or assets of government-owned
or controlled corporations.

“Upon offer by the bondholders, the corporation owned or controlled by the
Government shall, through its Board of Directors, negotiate with such bondholder
with respect to the price and other terms and conditions of the sale. In case
there are various bondholders making the offer, the one willing to purchase
under terms and conditions most favorable to the corporation shall be preferred.
If no price is acceptable to the corporation, the same shall be determined by
the Committee of Appraisers composed of three members, one to be appointed by
the corporation, another by the bondholder making the highest or only offer, and
the third by the two members so chosen. The expense of appraisal shall be borne
equally by the corporation and the successful purchaser.

“Should the Government offer for sale to the public any or all the shares of
stock or the assets of any of the government-owned or controlled corporations,
the bidder who offers to pay in bonds of the Land Bank shall be preferred
provided that the various bids be equal in every respect except in the
medium of payment.

“3. Surety, bail bonds for the provisional release of accused persons or
performance bonds in all cases where the Government may require or accept real
property as bonds.

“4. Security for loans applied with the Philippine National Bank, Development
Bank of the Philippines, Government Service Insurance System, Social Security
System, and other government financial institutions, existing charters of these
institutions to the contrary notwithstanding.

“5. Payment for reparations goods, the provisions of Republic Act No. 1789,
as amended, to the contrary notwithstanding.

SEC. 12. Section eighty-six of the same Act is hereby
amended to read as follows:

“SEC. 86. Board of Directors; Membership; Per Diem.
— The affairs and business of the Bank shall be directed and its property
managed and preserved by a Board of Directors consisting of seven (7) members to
be composed of the Secretary of Finance as Chairman, the President of the Bank
as Vice-Chairman, the Secretary of Agrarian Reform and the Secretary of Labor as
ex officio members, and three members to be elected as hereinafter
provided.

“Annually, on the first Tuesday after the First Monday in December, the
stockholders shall meet to take up, among others, the election of three (3)
members of the Board of Directors for the succeeding year, each common
shareholder or proxy to beentitled to as many votes he may have shares of stock
registered in his name on the 31st day of October last preceding and held by him
at the time of the election.

“The Board shall convene as frequently as is necessary to discharge its
responsibilities properly, but shall meet at least once every two weeks. The
Board may be convoked either by the Chairman or, in his absence, the
Vice-Chairman. “The presence of four (4) members shall constitute a quorum. “AH
decisions of the Board shall require the concurrence of at least four (4)
members.

“The Chairman and the members of the Board shall receive a per diem of two
hundred fifty pesos for each session of the Board attended, but in no case to
exceed two thousand pesos a month.”

“SEC. 86-A. Powers and Responsibilities of the Board.
— The Board of Directors shall have, among others, the following specific
powers and responsibilities:

“1. Formulate policies, rules and regulations for the effective operation of
the Bank;

“2. Take decisions concerning loans as well as fix the rates of interest
thereon, guarantees, investments, borrowing by the Bank, furnishing of technical
assistance and other operations of the Bank;

“3. Establish such branches and agencies as may be deemed necessary and
convenient;

“4. Provide for the appointment and removal and fix the reasonable
compensations of such personnel as may be necessary for the expeditious conduct
of the business of the Bank; and

“5. Approve the budget of the Bank.”

SEC. 13. Section eighty-seven of the same Act is hereby
amended to read as follows:

“SEC. 87. Executive Officers; Compensation. — The
Chief Executive of the Bank shall be the President, who shall be chosen and may
be removed by the Board of Directors with the advice and consent of the
President of the Philippines. His salary shall be fixed by the Board of
Directors with the approval of the President of the Philippines. The President
shall be assisted by Vice Presidents as may be required, whose appointments and
removal shall be approved and whose salaries shall be fixed by the Board of
Directors upon recommendation of the President of the Bank.

“SEC. 87-A. Duties and Powers of the President. —
The President of the Bank shall, among others, execute the policies, measures,
orders and resolutions promulgated by the Board of Directors and supervise and
administer the operations of the Bank. He shall be the legal representative of
the Bank and shall make all contracts, enter into all necessary obligations on
behalf of the Bank required or permitted by this Decree. He shall report
periodically to the Board of Directors the main facts concerning the operations
of the Bank, and recommend changes of policies which may to him seem best. He
shall furnish, upon request of the President of the Philippines, any information
in his possession regarding the operations of the Bank.

SEC. 14. Section eighty-eight of the same Act is hereby
amended to read as follows:

“SEC. 88. Qualifications of Executive Officers. —
No person shall be appointed to any executive position in the Bank mentioned in
the preceding Section unless he be of good moral character and of unquestionable
integrity and responsibility, and who is of recognized competence in the field
of economics, agriculture, industry, banking and/or finance, at least
thirty-five (35) years of age and possessed of demonstrated administrative skill
and ability.”

SEC. 15. Section eighty-nine of the same Act is hereby
amended to read as follows:

“SEC. 89. Withdrawal of Persons Having Personal Interest.
-Whenever any member attending a meeting of the Board has a personal interest of
any sort in the discussion or resolution of any given matter, or any of his
relatives within the fourth degree of consanguinity or a second degree of
affinity has such interest, said member shall not participate in the discussion
or resolution of the matter and must retire from the meeting during the
deliberations thereon. The subject matter, when resolved, and the fact that a
member had a personal interest in it, shall be made available to the public. The
minutes of the meeting shall note the withdrawal of the member concerned.”

SEC. 16. Section ninety of the same Act is hereby amended to
read as follows:

“SEC. 90. Personnel. — The Board of Directors shall
provide for an organization and staff of officers and employees of the Bank and
upon recommendation of the President of the Bank, appoint and fix their
remunerations and other emoluments, and remove such officers and employees:
Provided, That the Board shall have exclusive and final authority to
promote, transfer, assign or reassign personnel of the Bank, any provisions of
existing law to the contrary notwithstanding.

“The Bank officers and employees, including all members of the Board, shall
not engage directly or indirectly in partisan activities or take part in any
election except to vote.

“No officer or employee of the Bank subject to the Civil Service Law and
regulations shall be removed or suspended except for cause as provided
by law.”

SEC. 17. Section ninety-one of the same Act is hereby
amended to read as follows:

“SEC. 91. Legal Counsel. — Any provision of
existing law or executive order to the contrary notwithstanding, the Bank shall
have its own Legal Department, the chief and members of which shall be appointed
by the Board of Directors.”

SEC. 18. Section ninety-two of the same Act is hereby
amended to read as follows:

“SEC. 92. Auditor. — The Chairman of the Commission
on Audit shall act as the ex officio Auditor of the Bank and, as such, he is
empowered and authorized to appoint a representative who shall be the auditor in
charge of the auditing office of the Bank and, in accordance with law, fix his
salary, and to appoint and fix the salaries and number of personnel to assist
said representative in his work, but in all cases subject to the approval of the
Board of Directors. The salaries and all other expenses of maintaining the
auditor’s office shall be paid by the Bank. The Auditor of the Bank and
personnel under him may be removed only by the Commission on Audit.”

SEC. 19. Section ninety-three of the same Act is hereby
amended to read as follows:

“SEC. 93. Report on Condition of the Bank. — The
representative of the Commission on Audit shall make a quarterly report on the
condition of the Bank to the President of the Philippines, to the Secretary of
Finance, to the Chairman of the Commission on Audit, and to the Board of
Directors of the Bank. The report shall contain, among other things, a statement
of the resources and liabilities, including earnings and expenses, the amount of
capital stock, surplus, reserve and profits, as well as losses, bad debts, and
suspended and overdue paper carried in the books and assets of the
Bank.”

SEC. 20. Section ninety-five of the same Act is hereby
repealed.

SEC. 21. Section ninety-seven of the same Act is hereby
amended to read as follows:

“SEC. 97. Central Bank Supervision. — The Bank
shall be under the supervision and regulation of the Central Bank of the
Philippines.”

SEC. 22. Section ninety-eight of the same Act is hereby
amended to read as follows:

“SEC. 98. Tax Exemptions. — The Land Bank shall be
exempt from all national, provincial, municipal and city taxes and assessments
now enforced or hereinafter established.

“The exemption authorized in the preceding paragraph of this Section shall
apply to all property of the Bank, to the resources, receipts, expenditures,
profits and income of the Bank, as well as to all contracts, deeds, documents
and transactions related to the conduct of the business of the Bank:
Provided, That said exemptions shall apply only to such taxes and
assessments payable by persons or other entities doing business with the
Bank.”

SEC. 23. Section ninety-nine of the same Act is hereby
amended to read as follows:

“SEC. 99. Reorganization of the Bank. — The Bank
shall be reorganized within ninety (90) days from the date this Decree takes
effect. The present personnel complement of the Bank shall in the interim
continue to discharge their respective functions. Officials and personnel whose
services may be dispensed with as a result of this reorganization shall be paid
the usual gratuities to which they may be entitled under existing law.”

SEC. 24. Section one hundred of the same Act is hereby
amended to read as follows:

“SEC. 100. Penalty for Violation of the Provisions of
this Chapter. — Any director, officer, employee or agent of the Bank who
violates or permits the violation of any of the provisions of this Chapter or
any person aiding or abetting the violation of any of the provisions of this
Chapter, shall be punished by a fine of not to exceed ten thousand (P10,000)
pesos or by imprisonment of not more than five (5) years, or both such fine and
imprisonment at the discretion of the Court.”

SEC. 25. Applicability of Republic Act No. 337, as
amended, and Presidential Decree No. 129. — The provisions of the General
Banking Act (R.A. No. 337, as amended) and of Presidential Decree No. 129
insofar as they are not in conflict or inconsistent with the provisions of this
Act shall apply to this Bank.

SEC. 26. Repealing Clause. — All laws, executive
orders, rules and regulations or parts thereof inconsistent with this Decree are
hereby repealed and/or modified accordingly.

SEC. 27. Effectivity. — This Decree shall take
effect immediately.

Done in the City of Manila, this st day of July, in the year of Our Lord,
nineteen hundred and seventy-three.

			(Sgd.) FERDINAND E. MARCOS President Republic of the Philippines
	By the President:
	(Sgd.) ROBERTO V. REYES
		Assistant Executive Secretary