Code of Agrarian Reforms

Section 101

The administrative machinery of the Agricultural Credit Administration, shall be reorganized to enable it to align its activities with the requirements and objectives of this Code: Provided, That the Board of Governors established by Republic Act Numbered Eight hundred and twenty-one, as amended, shall be composed of a chairman and four (4) members, three (3) of whom shall be the Undersecretary of Agrarian Reform who shall be the Chairman ex-officio, the Administrator of the Agricultural Credit Administration who shall be the Vice-Chairman ex-officio and the Vice-President in charge of agricultural loans of the Philippine National Bank, who shall be ex-officio member thereof. The two other members shall be appointed by the President of the Philippines with the consent of the Commission on Appointments for a term of three years, one of whom shall represent the farmers-beneficiary of the Agrarian Reform Program and shall be appointed upon recommendation of either or both the farmers and/or cooperatives movement, federation or league existing at the time such recommendation is submitted, and the other to represent the political party receiving the second highest number of votes in the immediately preceding presidential elections: Provided, however, That the term of the farmers' representative shall ipso facto terminate when such member cease to be in the farmers and/or cooperatives movement, federation or league, and that of the minority party at the pleasure of the nominating political party. The Administrator shall be the Chief Executive of the Administration and shall serve for a term of six years unless he resigns or is removed for cause. The compensation of the Administrator shall be fixed by the President but shall not be less than twenty-four thousand pesos per annum. The members of the Board shall receive per diems of not more than fifty pesos for each session of the Board that they attend: Provided, however, That the total per diems, including all other remunerations, shall not exceed six hundred pesos a month. No person shall be appointed as Administrator unless he is a natural-born citizen of the Philippines, with proven executive ability and experience in the field of agricultural cooperatives and/or banking and finance, adequate background and experience in land reform here and/or elsewhere for at least five (5) years, and at least thirty-five years of age: Provided, however, That he shall have, among other qualifications, demonstrated interest in, and concern for, the needs and problems of the rural population and/or peasantry and the solutions thereto: Provided, further, That no person who owns any farmholding shall be appointed as Administrator unless such farmholding is under the leasehold system or the system of agricultural land ownership-transfer direct to the tiller. (Amendments to RA No. 3844 (Agricultural Land Reform Code), Republic Act No. 6389, [September 10, 1971])

Section 102

To finance the additional credit functions of the Agricultural Credit Administration as a result of the land reform program laid down in this Code, there is hereby appropriated the sum of one hundred fifty million pesos out of funds in the National Treasury not otherwise appropriated in addition to existing appropriations for the Agricultural Credit and Cooperative Financing Administration.

Section 103

The Agricultural Credit Administration is hereby granted the privilege of rediscounting with the Central Bank of the Philippines, the Development Bank of the Philippines and the Philippine National Bank eligible evidence of indebtedness acquired by it in carrying on its authorized activities, at an interest rate equal to the lowest charged by the above financing institution on any private person or entity.

Section 104

Nothing in this Section shall limit the power of the Agricultural Credit Administration to obtain from the Central Bank of the Philippines, the Development Bank of the Philippines, the Philippine National Bank and other financing institutions, such additional funds as may be necessary for the effective implementation of this Act: Provided, That such additional funds are to be utilized as loans to farmers and/or farmers' cooperatives.

Section 105

Loaning activities of the Agricultural Credit Administration shall be directed to stimulate the development and operation of farmers' cooperatives. The term "Farmers Cooperatives" shall be taken to include all cooperatives relating to the production and marketing of agricultural products and these formed to manage and/or own, on a cooperative basis, agricultural farmlands, services and facilities, such as irrigation and transport systems, established to support production and/or marketing of agricultural products. Under such rules and regulations in accordance with generally accepted banking practices and procedures as may be promulgated by the Agricultural Credit Administration, Rural Banks, Cooperative Banks, and Development Banks may, in their respective localities, be designated to act as agents of the Agricultural Credit Administration in regard to its loaning activities.

Section 106

Production loans and loans for the purchase of work animals, tillage equipment, seeds, fertilizers, poultry, livestock, feed and other similar items, may be extended to small farmers as defined in Republic Act Numbered Eight hundred twenty-one and/or tillers of the land, based upon their paying capacity and such securities as they can provide, and under such terms and conditions as the Agricultural Credit Administration may impose, provided the amount thereof does not exceed two thousand pesos, or such amount as may be fixed by the President at any given agricultural year: Provided, That his total outstanding obligations shall not exceed five thousand pesos, but in no case shall the amount of loan exceed eighty per centum of the value of the collateral pledged. In instance where credit is extended for items which are not consumed in their use, such items may be pledged as security therefor. The Agricultural Credit Administration shall promulgate such rules and regulations as may be necessary in the extension of the loans herein authorized so as to assure their repayment:Provided, That such rules and regulations shall follow and be in accordance with generally accepted financing practices and procedures. (Amendments to RA No. 3844 (Agricultural Land Reform Code), Republic Act No. 6389, [September 10, 1971])

Section 107

The production of the borrower, after deducting the lease rental and/or liens thereon, shall be accepted as security for loans: Provided, That said production is pledged to the Agricultural Credit Administration with appropriate safeguards to insure against its unauthorized disposition: Provided, further, That the amount of loan shall not exceed sixty per centum of the value of the estimated production.

Section 108

The Agricultural Credit Administration is hereby authorized to extend such types of loans as it may deem necessary for the effective implementation of this Code to eligible farmers' cooperatives as herein defined, under such terms and conditions as it may impose and with such securities as it may require: Provided: That the said Administration is hereby authorized to extend production loans to cooperatives at not more than eight per cent interest per calendar year and directly to the farmers at not more than twelve per cent per calendar year: Provided, further, That cooperatives are hereby authorized to extend loans directly to their members at not more than twelve per cent per calendar year. A farmers' cooperative that has been registered with the Agricultural Credit Administration shall be eligible for loans if, in the judgment of the latter, its organization, management and business policies are of such character as will insure the safety and effective use of such loans. (Amendments to RA No. 3844 (Agricultural Land Reform Code), Republic Act No. 6389, [September 10, 1971])

Section 109

Loans for the construction or acquisition by purchase of facilities of farmers' cooperatives may be granted by the Agricultural Credit Administration.

Section 110

The total charges including interest, insurance fees and inspection, notarization and other service charges on all kinds of loans shall not be more than twelve per centum per calendar year: Provided, That if an impairment of the capitalization of the Agricultural Credit Administration is imminent by reason of the limitation of the interest herein provided, there is automatically appropriated out of the unappropriated funds in the National Treasury such amounts as is necessary to cover the losses of the Agricultural Credit Administration, but not exceeding six million pesos for any one year. (Amendments to RA No. 3844 (Agricultural Land Reform Code), Republic Act No. 6389, [September 10, 1971])

Section 111

To provide for the effective use of credit by farmers, the Agricultural Credit Administration may institute a program of supervised credit in cooperation with the Agricultural Productivity Commission.

Section 112

The Agricultural Credit Administration shall have the power to register, finance and supervise all agricultural cooperatives, including multi-purpose cooperatives, and farm associations or organizations; and provide credit guidance or assistance to all agricultural, irrigation, and other cooperative associations, multi-purpose cooperatives, farm organizations or fund corporations: Provided, That all cooperatives, associations or organizations registered under this Section shall have juridical personality. (Amendments to RA No. 3844 (Agricultural Land Reform Code), Republic Act No. 6389, [September 10, 1971])

Section 113

For the effective supervision of farmers' cooperatives, the head of the Agricultural Credit Administration shall have the power to audit their operations, records and books of account and to issue subpoena and subpoena duces tecum to compel the attendance of witnesses and the production of books, documents and records in the conduct of such audit or of any inquiry into their affairs. Any person who, without lawful cause, fails to obey such subpoena or subpoena duces tecum shall, upon application of the head of Agricultural Credit Administration with the proper court, be liable to punishment for contempt in the manner provided by law and if he is an officer of the association, to suspension or removal from office.

Section 114

The Agricultural Credit Administration, through the appropriate provincial or city fiscal, shall have the power to file and prosecute any and all actions which it may have against any and all officials or employees of farmers' cooperatives arising from misfeasance or malfeasance in office.

Section 115

Any justice of the peace, in his capacity as notary ex-officio, shall render service free of charge to any person applying for a loan under this Code either in administering the oath or in the acknowledgment of instruments relating to such loan.

Section 116

Any register of deeds shall accept for registration, free of charge any instrument relative to a loan made under this Code.

Section 117

Subject to the approval of the President upon recommendation of the Auditor General, the Agricultural Credit Administration may write-off from its books, unsecured and outstanding loans and accounts receivable which may become uncollectible by reason of the death or disappearance of the debtor, should there be no visible means of collecting the same in the foreseeable future, or where the debtor has been verified to have no income or property whatsoever with which to effect payment. In all cases, the writing-off shall be after five years from the date the debtor defaults.

Section 118

The Agricultural Credit Administration is hereby exempted from the payment of all duties, taxes, levies, and fees, including docket and sheriff's fees, of whatever nature or kind, in the performance of its functions and in the exercise of its powers hereunder.