General Powers of the Land Bank
- Authority to prescribe its own bylaws and operating policies.
- Power to hold, acquire, and dispose of real and personal properties.
- Legal standing to sue, contract, and secure loans locally and internationally with approvals.
- Grant loans for agricultural, industrial, and housing projects, including to farmers' cooperatives.
- Finance acquisition of farm lots transferred to tenant-farmers.
- Invest and underwrite securities and guarantee financial obligations linked to agriculture and industry.
- Borrow from and rediscount commercial papers with the Central Bank subject to regulations.
- Act as trustee and exercise general corporate and banking powers compatible with this decree.
Issuance and Regulation of Bonds
- Authorized to issue bonds, debentures, and other securities up to 10 times its paid-in capital and surplus.
- Bonds redeemable before maturity and bear interest rates fixed by the Bank.
- All obligations secured by Bank assets and guaranteed by the Philippine Government.
- Bonds are negotiable and may be mortgaged to facilitate investments in productive enterprises.
- Board to establish detailed rules for bond issuance and redemption.
Issuance of Preferred Shares for Land Payments
- Preferred shares issued to pay landowners as part of farm lot acquisitions.
- Number of shares limited to needs specified by law.
- Guaranteed minimum dividend rate of 6% per annum.
- Shortfalls in dividend payments covered by the Bank’s assets with government reimbursement.
- Dividends may exceed the guaranteed rate based on earnings.
- Capital gains and dividends on preferred shares are tax-exempt.
Special Guaranty Fund
- Government to establish a fund guaranteeing bond payments if Bank defaults.
- Annual contributions of five million pesos until fund reaches 20% of Bank's net obligations.
- Fund administered by the Central Bank consistent with its Charter.
- Appropriations allocated from the National Treasury for this purpose.
Deposit Receiving Authority
- Permitted to receive demand, savings, and time deposits.
- Authorized to hold government and government-controlled corporation funds subject to Monetary Board approval.
Administration of Agricultural Guarantee Funds
- Agricultural guarantee funds converted into trust funds administered by the Land Bank.
Payment Modes for Farm Lot Acquisition
- Various modes include cash down payment with bonds, preferred shares plus bonds, guaranteed amortizations, annuities, government stock exchange, and other Board-approved methods.
- Settlement arrangements address liens or encumbrances on land with payment adjustments accordingly.
- Bank subrogated to landowner’s rights to collect amortizations from tenant-farmers.
- Profits on such payments exempt from capital gains tax.
Capital Structure and Funding
- Authorized capital stock of three billion pesos divided into common and preferred shares.
- Government fully subscribes to common shares and issues preferred shares according to provisions.
- Capitalization may be increased upon recommendation and Presidential approval.
- Payment schedule for subscription outlined with appropriations from the National Treasury authorized.
Rights and Transferability of Preferred Shares
- Preferred shares entitled to income but holders cannot file derivative suits.
- Fully transferable with priority on redemption upon liquidation.
Voting Rights
- Common shares owned by the Government vested in the President or designated Board member.
Use of Land Bank Bonds
- Bonds acceptable as payment for agricultural land, shares or assets of government corporations.
- Procedures for negotiation and appraisal established in case of multiple offers.
- Bonds usable as surety or performance bonds and security for loans with government financial institutions.
- Bonds also accepted for reparations goods.
Board of Directors: Composition and Powers
- Seven members including Secretary of Finance (Chair), Bank President (Vice-Chair), Secretaries of Agrarian Reform and Labor (ex officio), and three elected members.
- Annual election of three members by shareholders.
- Meetings convened at least biweekly with quorum of four members.
- Decisions require concurrence of at least four members.
- Members receive per diem compensation with monthly cap.
- Board responsible for policy formulation, loan decisions, branch establishments, personnel matters, and budget approval.
Executive Officers and Their Duties
- President of the Bank appointed by Board with Presidential approval; salary fixed by Board and President.
- Vice Presidents appointed with similar protocols.
- President oversees operations, represents Bank legally, executes Board policies, enters contracts, reports operations, and furnishes information to the President of the Philippines.
Qualifications for Executive Positions
- Executives must possess good moral character, integrity, competence in economics/agriculture/industry/banking/finance, be at least 35 years old, and demonstrate administrative skill.
Conflict of Interest Provisions
- Board members must withdraw from discussions on matters with personal or close familial interests.
- Such withdrawals must be recorded publicly in meeting minutes.
Personnel Management
- Board appoints, fixes compensation, promotes, transfers, and removes Bank personnel.
- Personnel and Board members prohibited from partisan political activities except voting.
- Removal or suspension subject to Civil Service Law.
Legal Counsel
- Bank maintains its own Legal Department appointed by the Board.
Auditor and Auditing Requirements
- Commission on Audit Chairman serves as ex officio Auditor.
- Auditor appoints representative and staff with Board approval; paid by the Bank.
- Auditor removable only by Commission on Audit.
Reporting
- Quarterly reports on Bank condition submitted to President of the Philippines, Secretary of Finance, Commission on Audit Chairman, and Bank Board.
- Reports detail financial status including assets, liabilities, earnings, losses, and debts.
Bank Reorganization
- Bank to be reorganized within 90 days of the decree’s effectivity.
- Current personnel to continue interim functions with gratuity payments for dismissed staff.
Penalties
- Directors, officers, employees, or agents violating provisions face fines up to 10,000 pesos, imprisonment up to 5 years, or both.
Application of Other Laws
- General Banking Act and other decrees apply unless inconsistent with this law.
Repealing Clause
- All inconsistent laws, orders, rules, or regulations are repealed or modified accordingly.
Effectivity
- The decree takes effect immediately upon issuance.