REPUBLIC ACT No.

6389 AN ACT AMENDING REPUBLIC ACT NUMBERED THIRTY-EIGHT HUNDRED AND FORTYFOUR, AS AMENDED, OTHERWISE KNOWN AS THE AGRICULTURAL LAND REFORM CODE, AND FOR OTHER PURPOSES Se !"o# $. Section 1, 2, 3 and 4 of Republic Act No. thirty eight hundred and forty-four, otherwise nown as the Agricultural !and Refor" #ode, are hereby a"ended to read as follows$ %Sec. 1. &itle. - &his Act shall be nown as the #ode of Agrarian Refor"s of the 'hilippines.% %Sec. 2. (eclaration of 'olicy. - )t is the policy of the State$ %*1+ &o establish cooperati,e-culti,atorship a"ong those who li,e and wor on the land as tillers, owner-culti,atorship and the econo"ic fa"ily-si-e far" as the basis of 'hilippine agriculture and, as a conse.uence, di,ert landlord capital in agriculture to industrial de,elop"ent/ %*2+ &o achie,e a dignified e0istence for the s"all far"ers free fro" pernicious institutional restraints and practices/ %*3+ &o create a truly ,iable social and econo"ic structure in agriculture conduci,e to greater producti,ity and higher far" inco"e through a cooperati,e syste" of production, processing, "ar eting, distribution, credit and ser,ices/ %*4+ &o apply all labor laws e.ually and without discri"ination to both industrial and agricultural wage e earners/ %*1+ &o pro,ide a "ore ,igorous and syste"atic land resettle"ent progra" and public land distribution/ %*2+ &o "a e the s"all far"ers "ore independent, self-reliant and responsible citi-ens, and a source of genuine strength in our de"ocratic society/ %*3+ &o gi,e first priority to "easures for the ade.uate and ti"ely financing of the Agrarian Refor" 'rogra" pursuant to 4ouse 5oint Resolution Nu"bered &wo, otherwise nown as the 6agna #arta of Social 5ustice and 7cono"ic 8reedo"/ e0isting laws/ e0ecuti,e and ad"inistrati,e orders/ and rules and regulations to the contrary notwithstanding/ %*9+ &o in,ol,e local go,ern"ents in the i"ple"entation of the Agrarian Refor" 'rogra"/ and %*:+ &o e,ol,e a syste" of land use and classification.% %Sec. 3. #o"position of #ode. - )n pursuance of the policy enunciated in Section two, the following are established under this #ode$ %*1+ An agricultural leasehold syste" to replace all e0isting share tenancy syste"s in agriculture/

%*2+ A syste" of crediting rental as a"orti-ation pay"ent on purchase price/ %*3+ A declaration of rights for agricultural labor/ %*4+ A "achinery for the ac.uisition and e.uitable distribution of agricultural land/ %*1+ An institution to finance the ac.uisition and distribution of agricultural land/ %*2+ A "achinery to e0tend credit and si"ilar assistance to agricultural lessees, a"orti-ing owners-culti,ator, and cooperati,es/ %*3+ A "achinery to pro,ide "ar eting, "anage"ent, and other technical assistance and;or ser,ices to agricultural lessees, a"orti-ing owners-culti,ator, owners-culti,ator, and cooperati,es/ %*9+ A "achinery for cooperati,e de,elop"ent/ %*:+ A depart"ent for for"ulating and i"ple"enting pro<ects of agrarian refor"/ %*1=+ An e0panded progra" of land capability sur,ey, classification, and registration/ %*11+ A <udicial syste" to decide issues arising under this #ode and other related laws regulations/ and %*12+ A "achinery to pro,ide legal assistance to agricultural lessees, a"orti-ing ownersculti,ator, and owners-culti,ator.% %Sec. 4. Auto"atic #on,ersion to Agricultural !easehold. - Agricultural share tenancy throughout the country, as herein defined, is hereby declared contrary to public policy and shall be auto"atically con,erted to agricultural leasehold upon the effecti,ity of this section. %&he credit assistance traditionally e0tended by a land-owner and a local lender to a tenant under the share tenancy syste"s in agriculture for production loans and loans for the purchase of wor ani"als, tillage e.uip"ent, seeds, fertili-ers, poultry, li,estoc feed and other si"ilar ite"s, and ad,ances for the subsistence of a lease and his fa"ily, "ay be continued by said landowner and local lender$ 'ro,ided, &hat the total charges on these loans, including interest and ser,ice, inspection and issuance fees, shall not e0ceed fourteen per cent per calendar year and the principal thereof shall not be sub<ect to upward ad<ust"ent e,en in case of e0traordinary inflation and;or de,aluation$ 'ro,ided, further, &hat on all loans or ad,ances other than "oney, the interest shall be co"puted on the basis of current price of the goods at the ti"e when the loans or ad,ances were "ade. %Any wor ani"al and tillage e.uip"ent in the possession of a share tenant but owned by a landowner shall auto"atically be sold to said tenant on install"ent for a period not e0ceeding fi,e years and at a price agreed upon by the parties$ 'ro,ided, howe,er, &hat the tenant shall pay in ad,ance ten per cent of the price agreed upon. %70isting share tenancy contracts "ay continue in force and effect in any region or locality, to be go,erned in the "eanti"e by the pertinent pro,isions of Republic Act Nu"bered 7le,en hundred and ninety-nine, as a"ended, until the end of the agricultural year when the 'resident of the 'hilippines shall ha,e organi-ed by e0ecuti,e order the (epart"ent of Agrarian Refor" in

accordance with the pro,isions of this a"endatory Act, unless such contracts pro,ide for a shorter period or the tenant sooner e0ercises his option to elect the leasehold syste"$ 'ro,ided, &hat in order not to <eopardi-e international co""it"ents, lands de,oted to crops co,ered by "ar eting allot"ents shall be "ade the sub<ect of a separate procla"ation by the 'resident upon the reco""endation of the depart"ent head that ade.uate pro,isions, such as the organi-ation of cooperati,es, "ar eting agree"ent, or other si"ilar wor able arrange"ents, ha,e been "ade to insure efficient "anage"ent on all "atters re.uiring synchroni-ation of the agricultural with the processing phases of such crops. %)n case so"e agricultural share tenants do not want to beco"e agricultural lessees of their respecti,e landholding, they shall, with the assistance of the >ureau of Agrarian !egal Assistance, notify in writing the landowners concerned. )n such a case, they shall ha,e one agricultural year fro" the date of the notice to accept leasehold relationship, otherwise the landowner "ay proceed to their e<ect"ent.% Se !"o# %. Sections 11 and 12 of the sa"e #ode are hereby a"ended to read as follows$

hundred eighty days fro" notice in writing which shall be ser,ed by the ,endee on all lessees affected and the (epart"ent of Agrarian Refor" upon the registration of the sale, and shall ha,e priority o,er any other right of legal rede"ption. &he rede"ption price shall be the reasonable price of the land at the ti"e of the sale. %@pon the filing of the corresponding petition or re.uest with the depart"ent or corresponding case in court by the agricultural lessee or lessees, the said period of one hundred and eighty days shall cease to run. %Any petition or re.uest for rede"ption shall be resol,ed within si0ty days fro" the filing thereof/ otherwise, the said period shall start to run again. %&he (epart"ent of Agrarian Refor" shall initiate, while the !and >an shall finance, said rede"ption as in the case of pre-e"ption.% Se !"o# 3. Section fourteen of the sa"e #ode is hereby repealed.

%Sec. 11. !essee?s Right of 're-e"ption. - )n case the agricultural lessor decides to sell the landholding, the agricultural lessee shall ha,e the preferential right to buy the sa"e under reasonable ter"s and conditions$ 'ro,ided, &hat the entire landholding offered for sale "ust be pre-e"pted by the (epart"ent of Agrarian Refor" upon petition of the lessee or any of the"$ 'ro,ided, further, &hat where there are two or "ore agricultural lessees, each shall be entitled to said preferential right only to the e0tent of the area actually culti,ated by hi". &he right of pree"ption under this Section "ay be e0ercised within one hundred eighty days fro" notice in writing, which shall be ser,ed by the owner on all lessees affected and the (epart"ent of Agrarian Refor". %)f the agricultural lessee agrees with the ter"s and conditions of the sale, he "ust gi,e notice in writing to the agricultural lessor of his intention to e0ercise his right of pre-e"ption within the balance of one hundred eighty day?s period still a,ailable to hi", but in any case not less than thirty days. 4e "ust either tender pay"ent of, or present a certificate fro" the land ban that it shall "a e pay"ent pursuant to section eighty of this #ode on, the price of the landholding to the agricultural lessor. )f the latter refuses to accept such tender or present"ent, he "ay consign it with the court. %Any dispute as to the reasonableness of the ter"s and conditions "ay be brought by the lessee or by the (epart"ent of Agrarian Refor" to the proper #ourt of Agrarian Relations which shall decide the sa"e within si0ty days fro" the date of the filing thereof$ 'ro,ided, &hat upon finality of the decision of the #ourt of Agrarian Relations, the !and >an shall pay to the agricultural lessor the price fi0ed by the court within one hundred twenty days$ 'ro,ided, further, &hat in case the !and >an fails to pay within that period, the principal shall earn an interest e.ui,alent to the pri"e ban rate e0isting at the ti"e. %@pon the filing of the corresponding petition or re.uest with the depart"ent or corresponding case in court by the agricultural lessee or lessees, the said period of one hundred and eighty days shall cease to run. %Any petition or re.uest for pre-e"ption shall be sol,ed within si0ty days fro" the filing thereof/ otherwise, the said period shall start to run again.% %Sec. 12. !essee?s right of Rede"ption. - )n case the landholding is sold to a third person without the nowledge of the agricultural lessee, the latter shall ha,e the right to redee" the sa"e at a reasonable price and consideration$ 'ro,ided, &hat where there are two or "ore agricultural lessees, each shall be entitled to said right of rede"ption only to the e0tent of the area actually culti,ated by hi". &he right of the rede"ption under this Section "ay be e0ercised within one

Se !"o# &. Section 32 of the sa"e #ode is hereby a"ended to read as follows$ %Sec. 32. #ost of )rrigation Syste". - &he cost of construction of a per"anent irrigation syste", including distributary canals, "ay be borne e0clusi,ely by the agricultural lessor who shall be entitled to an increase in rental proportionate to the resultant increase in production$ 'ro,ided, &hat if the agricultural lessor refuses to bear the e0penses of construction the agricultural lessee;or lessees "ay shoulder the sa"e, in which case the for"er shall not be entitled to an increase in rental and shall, upon the ter"ination of the relationship, pay the lessee or his heir the reasonable ,alue of the i"pro,e"ent at the ti"e of the ter"ination$ 'ro,ided, further, &hat if the irrigation syste" constructed does not wor , it shall not be considered as an i"pro,e"ent within the "eaning of this Section$ 'ro,ided, further"ore, &hat the lessees, either as indi,iduals or as groups, shall underta e the "anage"ent and control of irrigation syste"s with their respecti,e <urisdiction. 4owe,er, those constructed and operated by the go,ern"ent "ay be gi,en to the lessees either as indi,iduals or as groups at their option with the right to "aintain, "anage and operate such irrigation syste"s and to collect and recei,e rentals therefro"$ 'ro,ided, still further, &hat the lessees, either as indi,iduals or as groups, shall allocate not "ore than twenty-fi,e per cent of their collection for rentals to the go,ern"ent if the irrigation syste"s has obligations to "eet until paid, otherwise such irrigation syste" will be "aintained, "anaged and operated solely by the lessees either as indi,iduals or as groups, sub<ect to such rules on water rights and water use pro"ulgated by the National )rrigation Ad"inistration or such other go,ern"ent agencies authori-ed by law$ 'ro,ided, finally, &hat if the irrigation syste" is installed and;or constructed at the e0pense of the landowner or agricultural lessor, the (epart"ent of Agrarian Refor" shall initiate, while the !and >an shall finance, the ac.uisition of such irrigation syste" at its current fair "ar et ,alue so that the ownership thereof "ay be ,ested in the lessees as indi,iduals or groups.% Se !"o# '. Section 34 of the sa"e #ode is hereby a"ended to read as follows$ %Sec. 34. #onsideration for the !ease of Riceland and !ands (e,oted to Ather #rops. - &he consideration for the lease of riceland and lands de,oted to other crops shall not be "ore than the e.ui,alent of twenty-fi,e per centu" of the a,erage nor"al har,est or if there ha,e been no nor"al har,ests, then the esti"ated nor"al har,est during the three agricultural years i""ediately preceding the date the leasehold was established after deducting the a"ount used for seeds and the cost of har,esting, threshing, loading, hauling and processing, whiche,er are applicable$ 'ro,ided, &hat if the land has been culti,ated for a period of less than three years, the initial consideration shall be based on the a,erage nor"al har,est or if there ha,e been no nor"al har,ests, then the esti"ated nor"al har,est during the preceding years when the land was actually culti,ated, or on the har,est of the first year in the case of newly culti,ated lands, if that har,est is

nor"al har,ests, the final consideration shall be based on the a,erage nor"al har,est during these three preceding agricultural years. %)n the absence of any agree"ent between the parties as to the rental, the #ourt of Agrarian Relations shall su""arily deter"ine a pro,isional rental in pursuance of e0isting laws, rules and regulations and production records a,ailable in the different field units of the depart"ent, ta ing into account the e0tent of the de,elop"ent of the land at the ti"e of the con,ersion into leasehold and the participation of the lessee in the de,elop"ent thereof. &his pro,isional rental shall continue in force and effect until a fi0ed rental is finally deter"ined. &he court shall deter"ined the fi0ed rental within thirty days after the petition is sub"itted for decision. %)f capital i"pro,e"ents are introduced on the far" not by the lessee to increase its producti,ity, the rental shall be increased proportionately to the conse.uent increase in production due to said i"pro,e"ents. )n case of disagree"ent, the #ourt shall deter"ine the reasonable increase in rental.% Se !"o# 6. A new section is hereby inserted after Section 34, to be designated as Section %34-A%, which shall read as follows$ %Sec. 34-A. Rental credited as a"orti-ation pay"ent on purchase price. - &he rental paid under the preceding section after the appro,al of this a"endatory Act shall be credited as a"orti-ation pay"ent on the purchase price of the landholding tilled by the lessee in any of the following instances$ %*1+ Bhen the landholding is e0propriated by the go,ern"ent for the lessee/ and

%&he pay"ent of all loans obtained pursuant to the pro,isions of this section shall be guaranteed by the !and >an and for this purpose, it shall set aside a sin ing fund in such a"ount as "ay be necessary to be deter"ined by its >oard of &rustees. %)n case of default in the pay"ent of three consecuti,e install"ents on the loan, the lender shall i""ediately notify, a"ong others, the !and >an and the depart"ent of such default, and thereafter, these agencies shall ta e the appropriate steps either$ %*1+ &o answer for the default in case the reason therefor is due to fortuitous e,ent, or %*2+ )n any other case, to ta e o,er the ownership and ad"inistration of said property. %)n the latter case "entioned under the preceding paragraph, the go,ern"ent shall endea,or to substitute the defaulting a"orti-ing owner with a new one who does not own any land and who shall be subrogated to the rights, and shall assu"e the obligations, of the for"er a"orti-ing owner. %&he rules prescribed in the two i""ediately preceding paragraphs shall apply in case the lessee defaults in the pay"ent of at least three consecuti,e rental a"orti-ations, with the for"er landowner gi,ing the re.uired notice in proper cases. %)n all instances where default is due to fortuitous e,ents the !and >an shall be answerable for such default and the far"ers shall be released fro" the obligations to pay such install"ent or install"ents due together with interest thereon.% Se !"o# (. Section 32*1+ of the sa"e #ode is hereby a"ended to read as follows$

%*2+ Bhen it is redee"ed. %&he purchase price of the landholding shall be deter"ined by the parties or the go,ern"ent agencies concerned on the sa"e basis prescribed under section fifty-si0 of this #ode$ 'ro,ided, &hat whate,er balance re"ains after crediting as a"orti-ation the rental paid, the sa"e "ay be financed by the !and >an in the sa"e ratio and "ode of pay"ent as pro,ided under section eighty of this #ode. %&he pro,isions of Act Nu"bered 8our hundred ninety-si0, as a"ended, and other laws to the contrary notwithstanding, the !and Registration #o""ission is hereby authori-ed concurrently with the >ureau of !ands to appro,e sur,ey plans of lands intended for original registration and to issue transfer certificate of title in fa,or of the new a"orti-ing-owner-beneficiaries under this section and the Registries of (eeds to register the sa"e. 8or this purpose, the !and Registration #o""issioner shall issue the necessary rules and regulations for the i"ple"entation of this pro,ision. %&he (epart"ent and;or the >an , in appropriate cases, shall facilitate the i""ediate issuance of the corresponding transfer certificate of title of the landholding to the new a"orti-ing owner with the encu"brance thereof duly annotated. %'ro,isions of e0isting laws, rules and regulations to the contrary notwithstanding, any a"orti-ing owner "ay use this transfer certificate of title to obtain a loan fro" any public or pri,ate lending institution and he shall be entitled to borrow therefor an a"ount not less than si0ty per centu" of the fair "ar et ,alue of the property$ 'ro,ided, &hat the proceeds of such loan shall be applied as follows$ fifty per centu" as partial pay"ent of any unpaid balance on the landholding and the re"aining fifty per centu" for the capital i"pro,e"ent of the land and operating capital for far" operations of the a"orti-ing owner. %*1+ &he landholding is declared by the depart"ent head upon reco""endation of the National 'lanning #o""ission to be suited for residential, co""ercial, industrial or so"e other urban purposes$ 'ro,ided, &hat the agricultural lessee shall be entitled to disturbance co"pensation e.ui,alent to fi,e ti"es the a,erage of the gross har,ests on his landholding during the last fi,e preceding calendar years/% Se !"o# 8. Section 3:*2+ of the sa"e #ode is hereby a"ended to read as follows$ %*2+ Right to engage in concerted acti,ities as defined under Republic Act Nu"bered 7ight hundred and se,enty-fi,e.% Se !"o# 9. &he &itles of #hapter ))) and Article ) and Section 4: and 1= of the sa"e #ode are hereby a"ended to read as follows$ %#hapter ))) (epart"ent of Agrarian Refor". %Article ) Argani-ation and 8unctions of the (epart"ent of Agrarian Refor". %Sec. 4:. #reation of the (epart"ent of Agrarian Refor". - 8or the purpose of carrying out the policy of establishing owner-culti,atorship and the econo"ic fa"ily si-e far" as the basis of 'hilippine agriculture and other policies enunciated in this #ode, there is hereby created a (epart"ent of Agrarian Refor", hereinafter referred to as (epart"ent, which shall be directly under the control and super,ision of the 'resident of the 'hilippines. )t shall ha,e authority and

responsibility for i"ple"enting the policies of the state on agrarian refor"s as pro,ided in this #ode and such other e0isting laws as are pertinent thereto. %&he (epart"ent shall be headed by a Secretary who shall be appointed by the 'resident with the consent of the #o""ission on Appoint"ents. %4e shall be assisted by one @ndersecretary who shall be appointed by the 'resident with the consent of the #o""ission on Appoint"ents. %Sec. 1=. Cualifications and #o"pensations of Secretary and @ndersecretary. - No person shall be appointed Secretary or @ndersecretary of the (epart"ent unless he is a natural born citi-en of the 'hilippines, with pro,en e0ecuti,e ability and ade.uate bac ground and e0perience in land refor" here and;or elsewhere for at least fi,e *1+ years, and at least thirty-fi,e years of age$ 'ro,ided, howe,er, &hat the @ndersecretary shall be a career ad"inistrator and, at the ti"e of his appoint"ent, shall not be "ore than fifty-se,en *13+ years of age, unless the 'resident has deter"ined that he possesses special .ualifications and his ser,ices are needed. %&he Secretary and the @ndersecretary shall ha,e, a"ong other .ualifications, de"onstrated interest in, and concern for, the needs and proble"s of the rural and far" populations and the solutions thereto$ 'ro,ided, &hat no person who owns any far"holding shall be appointed as Secretary or @ndersecretary unless such far"holding is under the leasehold syste" or the syste" of agricultural land ownership transfer direct to the tiller. %&he Secretary shall recei,e an annual co"pensation e.ui,alent to any other e0ecuti,e depart"ent secretary/ the @ndersecretary shall recei,e an annual co"pensation e.ui,alent to any other e0ecuti,e depart"ent undersecretary.% Se !"o# $). &he following new sections are hereby inserted after Section 1=, to be designated as Sections %1=-A to 1=-),% which shall read as follows$ %Sec. 1=-A. 'owers and functions of the Secretary. - )n addition to the powers and functions specified in this #ode, the Secretary shall e0ercise such powers and perfor" such functions and duties as are re.uired of any e0ecuti,e depart"ent secretary under e0isting laws.% %Sec. 1=->. 'owers and functions of the @ndersecretary. - )n addition to the powers and functions specified in this #ode, the @ndersecretary shall e0ercise such powers and perfor" such functions and duties as are re.uired of any e0ecuti,e (epart"ent @ndersecretary under e0isting laws.% %Sec. 1=-#. Dacancy in office or incapacity. - )n case of ,acancy in the office of Secretary or inability of the Secretary to e0ercise his powers and perfor" his functions and duties due to his illness, absence or any other cause, the @ndersecretary shall te"porarily perfor" the functions of the said office.% %Sec. 1=-(. Affice of the Secretary/ Appoint"ent of 'ersonnel. - &he office of Secretary shall be co"posed of the Secretary, the @ndersecretary, the chiefs of the staff ser,ices or units directly under the depart"ent proper, together with the personnel thereof. %All personnel of the depart"ent proper shall be appointed by the Secretary in accordance with applicable ci,il ser,ice law and rules.% %Sec. 1=-7. #reation of Staff Ser,ices/ 8unctions. - &here shall be created in the depart"ent a planning ser,ice, a financial and "anage"ent ser,ice, an ad"inistrati,e ser,ice, and such other

staff ser,ices as the Secretary "ay dee" necessary to establish in accordance with this section, each to be headed by a chief, which shall be organi-ed and shall perfor" the functions as follows$ %*1+ 'lanning Ser,ice %&he 'lanning Ser,ice shall be responsible for pro,iding the depart"ent with econo"ical, efficient, and effecti,e ser,ices relating to planning, progra""ing and pro<ect de,elop"ent. %*2+ 8inancial and 6anage"ent Ser,ice %&he 8inancial and 6anage"ent Ser,ice shall be responsible for pro,iding the depart"ent with staff ad,ice and assistance on budgetary, financial, and "anage"ent i"pro,e"ent "atters. %*3+ Ad"inistrati,e Ser,ice %&he Ad"inistrati,e Ser,ices shall be responsible for pro,iding the depart"ent with econo"ical, efficient, and effecti,e ser,ices relating to personnel, legal assistance, infor"ation, records, supplies, e.uip"ent, collection, disburse"ents, security, and custodial wor . %Sec. 1=-8. #reation of >ureaus/ 8unctions. - &here shall be under the depart"ent the following bureaus each to be headed by a (irector who shall be assisted by an Assistant (irector, charged with the direct i"ple"entation of the progra"s and policies of the (epart"ent$ %*1+ &he >ureau of 8ar" 6anage"ent which shall be responsible for the de,elop"ent and i"ple"entation of progra"s on increased producti,ity, ho"e i"pro,e"ent, and rural youth de,elop"ent/ %*2+ &he >ureau of !and Ac.uisition, distribution and de,elop"ent which shall be responsible for the distribution of lands to bona fide far"ers, for conducting land capability sur,ey and classification, and for the i"pro,e"ent of lands ac.uired by the (epart"ent/ %*3+ &he >ureau of Resettle"ent which shall be responsible for the resettle"ent of displaced far"ers, landless fa"ilies, and urban wor ers in the settle"ent pro<ects of the (epart"ent, the construction of houses, roads and other facilities, and the ta ing of a census of all proclai"ed and unproclai"ed resettle"ents/ and %*4+ &he >ureau of Agrarian !egal Assistance which shall be responsible for e0tending legal assistance to far"ers including those pro,ided under Republic Act Nu"bered 8orty-eight hundred and eighty-si0, the e0ecution of leasehold contracts and apprising the far"ers with their rights and duties under the law. %7ach of these bureaus "ay establish such di,isions as are necessary for the econo"ical, efficient and effecti,e perfor"ance of its functions.% %Sec. 1=-E. Appoint"ent, Cualifications and #o"pensations of (irectors and the Assistant (irectors/ Appoint"ent of 'ersonnel. - &he (irector of a >ureau and his assistant shall each recei,e the e.ui,alent co"pensation and shall be appointed in the sa"e "anner as any other director or assistant director of a bureau.

%No person shall be appointed director or assistant director of a bureau unless he is a natural-born citi-en of the 'hilippines, with pro,en e0ecuti,e ability and ade.uate bac ground and e0perience in land refor" here and;or elsewhere for at least three *3+ years, and at least twenty-fi,e years of age/ 'ro,ided, &hat the (irector or Assistant (irector shall be a career ad"inistrator and/ at the ti"e of his appoint"ent, shall not be "ore than fifty-se,en *13+ years of age, unless the 'resident has deter"ined that he possesses special .ualifications and his ser,ices are needed$ 'ro,ided, further, &hat the (irector or Assistant (irector shall ha,e, a"ong other .ualifications, de"onstrated interest in, and concern for, the needs and proble"s of the rural and far" population and the solutions thereto$ 'ro,ided, finally, &hat no persons who owns any far"holding shall be appointed as (irector or Assistant (irector unless such far"holding is under the leasehold syste" or the syste" of agricultural land ownership-transfer direct to the tiller. %All personnel of the >ureaus shall be appointed by the Secretary, upon reco""endation of their respecti,e (irector, in accordance with applicable ci,il ser,ice law and rules.% %Sec. 1=-4. 8unctions of (irectors and Assistant (irectors. - &he (irector or in his absence, the Assistant (irector, shall e0ercise such powers and perfor" such functions and duties as are pro,ided for under e0isting laws, in addition to the powers and functions pro,ided for in this #ode.% %Sec. 1=-). Regional and 8ield Affices. - &he (epart"ent "ay ha,e regional and other field offices, the nu"ber, location and organi-ation of which shall be deter"ined by the (epart"ent in confor"ity with the area pattern prescribed hereunder$ %*1+ &he (epart"ent, in the establish"ent of regional and other field offices, shall follow the field ser,ice area pattern authori-ed below. &here are established ten regions, each with definite regional centers within the region as follows$ %a. Region No. 1 is called the )locos Region, and co"prises the pro,inces of >atanes, )locos Norte, )locos Sur, Abra, !a @nion, >enguet, and 6ountain 'ro,ince and the cities of >aguio, and !aoag, with the regional center at San 8ernando, !a @nion/ %b. Region No. 2 is called the #agayan Dalley Region, and co"prises the pro,inces of #agayan, )sabela, Nue,a Di-caya, Cuirino *Sub-pro,ince+, )fugao, and Falinga-Apayao, with the regional center at &uguegarao, #agayan/ %c. Region No. 3 is called the #entral !u-on Region, and co"prises the pro,inces of 'angasinan, &arlac, Nue,a 7ci<a, 'a"panga, Ga"bales, >ulacan, >ataan, and the cities of Angeles, #abanatuan, (agupan, Alongapo, 'alayan, San #arlos *'angasinan+ and San 5ose *Nue,a 7ci<a+, with the regional center at San 8ernando, 'a"panga/ %d. Region No. 4 is called the Southern &agalog Region, and co"prises the pro,inces of Ri-al, #a,ite, !aguna, >atangas, Cue-on, 6arindu.ue, Ariental 6indoro, Accidental 6indoro, Ro"blon, Aurora *Sub-pro,ince+, and 'alawan, and the cities of >atangas, #aloocan, #a,ite, !ipa, !ucena, 6anila, 'asay, 'uerto 'rincesa, Cue-on, San 'ablo, &agaytay, and &rece 6artires with the regional center at greater 6anila/ %e. Region No. 1 is called the >icol Region, and co"prises the pro,inces of #a"arines Norte, #a"arines Sur, Albay, #atanduanes, 6asbate, and Sorsogon, and the cities of )riga, !ega-pi and Naga, with the Regional center at !ega-pi #ity/

%f. Region No. 2 is called the Bestern Disayas Region, and co"prises the pro,inces of Negros Accidental, )loilo, Eui"aras *Sub-pro,ince+, Anti.ue, A lan and #api-, and the cities of >acolod, >ago, #adi-, )loilo, !a #arlota, Ro0as, San #arlos *Negros Accidental+ and Silay, with regional center at )loilo #ity/ %g. Region No. 3 is called the #entral and 7astern Disayas Region, and co"prises the pro,inces of Negros Ariental, Si.ui<or *Sub-pro,ince+, #ebu, >ohol, Northern Sa"ar, 7astern Sa"ar, Bestern Sa"ar, !eyte, Southern !eyte, and >iliran *Sub-pro,ince+ and the cities of >ais, #albayog, #anlaon, #atbalogan, #ebu, (anao, (u"aguete, !apu-lapu, Ar"oc, 6andawe, &acloban, &agbilaran, and &oledo, with the regional center at #ebu #ity/ %h. Region No. 9 is called the Bestern 6indanao Region, and co"prises the pro,inces of 6isa"is Accidental, !anao del Norte, !anao del Sur, Ga"boanga del Norte, Ga"boanga del Sur, and Sulu, and the cities of >asilan, (apitan, (ipolog, )ligan, 6arawi, Aro.uieta, A-a"is, 'agadian, &angub, and Ga"boanga with the regional center at Ga"boanga #ity/ %i. Region No. : is called the #entral 6indanao Region, and co"prises the pro,inces of #a"iguin, 6isa"is Ariental, >u idnon, #otabato, and South #otabato, and the cities of #agayan de Aro, #otabato, Eeneral Santos, and Eingoog, with the Regional center at #agayan de Aro #ity/ %<. Region No. 1= is called the 7astern 6indanao Region, and co"prises the pro,inces of Surigao del Norte, Surigao del Sur, Agusan del Norte, Agusan del Sur, (a,ao del Norte, (a,ao Ariental, and (a,ao del Sur, and the cities of >utuan, (a,ao, and Surigao, with the regional center at (a,ao #ity/ %*2+ &he (epart"ent shall organi-e an integrated and depart"ent-wide field ser,ices as the e0igencies of the Agrarian Refor" 'rogra" "ay re.uire$ 'ro,ided, &hat the (epart"ent shall establish in e,ery regional or other field office organi-ed, a consultati,e and coordinating body which shall include in its "e"bership a tiller-lessee representing the agricultural lessees and a representati,e fro" the local go,ern"ents of the area where said office is operating. %*3+ &he regional office shall be headed by a Regional (irector who "ay be assisted, whene,er necessary, by an Assistant Regional (irector. &he Regional (irector and Assistant (irector, if any, shall be appointed by the Secretary in accordance with applicable ci,il ser,ice law and rules/ 'ro,ided, howe,er, &hat the Regional (irector and Assistant Regional (irector shall ha,e the sa"e .ualifications as >ureau (irector and Assistant (irector, respecti,ely. %All personnel of the Regional and other offices shall be appointed by the Secretary upon reco""endation of their respecti,e regional director, in accordance with applicable ci,il ser,ice law and rules$ 'ro,ided, &hat applicants fro" the region, who possess the re.uired .ualifications, shall be appointed to ,acant positions in the said region, unless nobody a"ong the said applicants is .ualified/ in which case, applicants fro" other regions "ay be considered. %*4+ &he Regional (irector shall be responsible in carrying out the policies and i"ple"enting the plans and progra"s of the (epart"ent in the regional area under his <urisdiction$ 'ro,ided, howe,er, &hat when the depart"ent?s function or acti,ity

transcends regional boundaries and re.uires central and;or inter-regional action, said functions "ay be perfor"ed under the direct super,ision and control of the depart"ent. %*1+ &he Regional offices shall ha,e units on agricultural e0tension, credit and legal assistance, as well as cooperati,e de,elop"ent/ or personnel in which the functional areas of the depart"ent "ay be represented. &here shall be in these regional units as "uch co"bination of related functions as possible. %*2+ &he functions of a regional office shall be as follows$ %a. )"ple"ent laws, policies, plans, progra"s, rules and regulations of the (epart"ent in the regional areas/ %b. 'ro,ide econo"ical, efficient, and effecti,e ser,ice to the people in the area/ %c. #oordinate with regional offices of other depart"ents, bureaus, agencies in the area/ %d. #oordinate with local go,ern"ent units in the area/ and %e. 'erfor" such related functions as "ay be pro,ided by other e0isting laws.% Se !"o# $$. &he !and Refor" 'ro<ect Ad"inistration and its go,erning body, the National !and Refor" #ouncil, under the Affice of the 'resident, are hereby abolished/ and their functions are transferred to the (epart"ent, together with applicable appropriations, records, e.uip"ent, property and all the organic, contributed and;or assigned personnel to the !and Refor" 'ro<ect Ad"inistration pursuant to this #ode, other e0isting laws and 70ecuti,e Arder Nu"bered Se,entyfi,e, Series of Nineteen hundred and si0ty-four, as well as such personnel as "ay be necessary fro" its go,erning body, the National !and Refor" #ouncil. Se !"o# $%. &he !and Authority under the Affice of the 'resident and a "e"ber-agency of the !and Refor" 'ro<ect Ad"inistration is hereby abolished/ and its functions are transferred to the (epart"ent, together with applicable appropriations, records, e.uip"ent, property, and such personnel as "ay be necessary. Se !"o# $3. &he Secretary shall, in consultation with the @ndersecretary and >ureau (irectors, allocate by (epart"ent Arder to the different bureaus, agencies and regional offices of the (epart"ent the functions of the agencies, offices and;or units abolished and not otherwise assigned by this A"endatory Act or by the organi-ation plan of the (epart"ent to a particular agency or office. Se !"o# $&. &he !and >an of the 'hilippines is hereby attached to the (epart"ent as its land financing ar" and shall de,ote all of its resources to agrarian refor"s. &he !and >an of the 'hilippines and the Agricultural #redit Ad"inistration, in addition to the functions and duties assigned to the" under e0isting laws, e0ecuti,e and ad"inistrati,e orders, and rules and regulations, shall be responsible for rendering staff ad,ice and assistance to the Secretary of the (epart"ent. &he regional offices or field units of these entities and;or instru"entalities shall li ewise coordinate and cooperate with the regional office or field units of the (epart"ent, respecti,ely.

Se !"o# $'. Bithin si0ty *2=+ days fro" the appro,al of this A"endatory Act, the 'resident by 70ecuti,e Arder shall, upon reco""endation of the Special &echnical #o""ittee created under Special Arder Nu"bered 7le,en, Series of Nineteen hundred and se,enty-one, of the !and Refor" 'ro<ect Ad"inistration, and the #o""ission on Reorgani-ation created pursuant to Republic Act No. 1431, as a"ended, organi-e the said (epart"ent in accordance with the pro,isions of this A"endatory Act with the end in ,iew of achie,ing econo"y and "a0i"u" efficiency and effecti,eness and of strictly obser,ing the "erit syste" in the retention and pro"otion of the best .ualified personnel$ 'ro,ided, &hat the ad"inistrati,e "achineries of the entities attached and;or re.uired under this #ode to coordinate and cooperate with the (epart"ent, as well as the agencies ser,icing the sa"e, shall also be reorgani-ed to enable the" to align their acti,ities with the re.uire"ents and ob<ecti,es of this #ode$ 'ro,ided, further, &hat not "ore than ten per cent of the personnel of the (epart"ent and the bureaus, offices, agencies and;or entities under, coordinating or ser,icing it shall be stationed in the #entral Affice/ 'ro,ided, finally, &hat not "ore that fi,e per cent of the total personnel in the regional, tea", resettle"ent agency or e.ui,alent field offices shall be stationed in such offices. Se !"o# $6. Section 11 of the sa"e #ode is hereby a"ended to read as follows$ %Sec. 11. 'owers and 8unctions. - )t shall be the responsibility of the (epart"ent$ %*1+ to initiate and prosecute e0propriation proceedings for the ac.uisition of pri,ate agricultural lands as defined in Section one hundred si0ty-si0 of #hapter H) of this #ode for the purpose of subdi,ision into econo"ic fa"ily-si-e far" units and resale of said far" units to bona fide tenants, occupants and .ualified far"ers$ 'ro,ided, &hat the powers herein granted shall apply only to pri,ate agricultural lands sub<ect to the ter"s and conditions and order of priority herein below specified. %a. all idle or abandoned pri,ate agricultural lands, e0cept those held or purchased within one year fro" the appro,al of this #ode by pri,ate indi,iduals or corporations for the purpose of resale and subdi,ision into econo"ic fa"ily-si-e far" units of not "ore than si0 *2+ hectares each in accordance with the policies enunciated in this #ode$ 'ro,ided, &hat the subdi,ision and resale shall be substantially carried out within one year fro" the appro,al of this #ode/ %b. all pri,ate agricultural lands suitable for subdi,ision into econo"ic fa"ilysi-e far" units of not "ore that si0 *2+ hectares owned by pri,ate indi,iduals or corporation wor ed by lessees, no substantial portion of whose landholding in relation to the area sought to be e0propriated, is planted to per"anent crops under labor ad"inistration, in e0cess of twenty-four hectares e0cept all pri,ate agricultural lands under labor ad"inistration$ 'ro,ided, &hat pri,ate agricultural lands occupied and culti,ated continuously for not less that ten years by tillers or their ascendants who are not far" laborers or lessees "ay be sub<ect to e0propriation under this #ode$ 'ro,ided, further, &hat any court action filed for the e<ect"ent of the tiller shall not interrupt the running of the ten-year period unless such action is filed within three years fro" the date of occupancy$ 'ro,ided, finally, &hat if the final decision rendered in the court action is fa,orable to the tiller, the ten-year period shall be considered as continuous and uninterrupted/ and %c. in e0propriating pri,ate agricultural lands declared by the (epart"ent of Agrarian Refor" to be necessary for the i"ple"entation of the pro,isions of this #ode, the following order of priority shall be considered/ 1. idle or abandoned lands/

2. those whose area e0ceeds of 1,=24 hectares/ 3. those whose area e0ceeds 1== hectares but is not "ore than 1,=24 hectares/ 4. those whose area e0ceeds 144 hectares but is not "ore than 1== hectares/ 1. those whose area e0ceeds 31 hectares but is not "ore than 144 hectares/ and 2. those whose area e0ceeds 24 hectares but is not "ore than 31 hectares. %*2+ &o ac.uire pri,ate agricultural lands regardless of area through negotiated purchase sub<ect to appro,al of the court as to price for distribution and sale at cost to their actual occupants who are tillers of the land in lots of not "ore than si0 hectares$ 'ro,ided, &hat where there are se,eral groups or indi,iduals of such tillers petitioning for the ac.uisition of their respecti,e occupancy, priority shall be gi,en to the group with a greater nu"ber of tillers who first filed the petition o,er a group with a lesser nu"ber of tillers, and the latter o,er indi,idual tillers$ 'ro,ided, further, &hat the group or indi,idual who has continuously tilled the land longest shall ha,e the first priority/ %*3+ &o help bona fide far"ers without lands or agricultural owner-culti,ators of unecono"ic si-e far"s to ac.uire and own econo"ic fa"ily-si-e far" units of not "ore than si0 hectares each/ %*4+ &o ad"inister and dispose of agricultural lands of the public do"ain under the custody and ad"inistration of the National Resettle"ent and Rehabilitation Ad"inistration and the 7cono"ic (e,elop"ent #orps of the Ar"ed 8orces of the 'hilippines prior to the appro,al of this A"endatory Act and such other public agricultural lands as "ay hereafter be reser,ed by the 'resident of the 'hilippines or by law for resettle"ent and sale, in accordance with such ter"s and conditions as are set forth under this chapter$ 'ro,ided, &hat the e0ercise of the authority granted herein, as well as the preceding subparagraph, shall not contra,ene public policy on the per"anency of forest reser,es or other laws intended for the preser,ation and conser,ation of public national and "unicipal forests, par s and watersheds$ 'ro,ided, further, &hat said authority shall not be construed to e0clude the other "odes of disposition of public agricultural lands under the public land Act or to contra,ene the authority granted by law to the (epart"ent of Agriculture and Natural Resources o,er all public agricultural lands not co,ered by the Agrarian Refor" 'rogra"$ 'ro,ided, finally, &hat the Secretary of the (epart"ent of Agriculture and Natural Resources shall within a period of ten years fro" the appro,al of this A"endatory Act, release to the (epart"ent of Agrarian Refor" for resettle"ent and sale all lands of the public do"ain reser,ed for agricultural resettle"ent and sale e0cept public agricultural lands which are reser,ed as settle"ents for the national cultural "inorities under the ad"inistration of the #o""ission on National )ntegration/ %*4+ &o de,elop plans and initiate actions for the syste"atic opening of alienable and disposable lands of the public do"ain for speedy distribution to and de,elop"ent by deser,ing and .ualified persons who do not own any land in si-es of not "ore than si0 hectares/

%*1+ &o reco""end to the 'resident, fro" ti"e to ti"e after pre,ious consultation with the Secretary of Agriculture and Natural Resources, what portion of the alienable, or disposable public lands shall be reser,ed for resettle"ent or disposition under this #hapter/ %*2+ &o gi,e econo"ic fa"ily-si-e far"s of not "ore than si0 hectares to landless citi-ens of the 'hilippines who need, deser,e, and are capable of culti,ating the land personally, through organi-ed resettle"ent, under the ter"s and conditions the (epart"ent "ay prescribe, gi,ing priority to .ualified and deser,ing far"ers in the pro,ince where such lands are located/ %*3+ &o reclai" swa"ps and "arshes for agricultural purposes only, obtain titles thereto whene,er feasible and subdi,ide the" into econo"ic fa"ily-si-e far"s of not "ore than si0 hectares for distribution to deser,ing and .ualified far"ers/ %*9+ &o underta e "easures which will insure the early issuance of titles to persons or corporations who ha,e actually settled and culti,ated alienable lands of the public do"ain/ %*:+ &o sur,ey, subdi,ide and set aside lands or areas of land-holdings under its custody and ad"inistration for econo"ic fa"ily-si-e far"s, large-scale far" operations, town sites, roads, par s, go,ern"ent centers and other ci,ic i"pro,e"ents as circu"stances "ay warrant$ 'ro,ided, &hat the >ureau of !ands and the !and Registration #o""ission, as the case "ay be, shall ,erify the said sur,eys or subdi,isions, and after such ,erifications, appro,e or disappro,e the sa"e/ and issue, in case of appro,al of said sur,eys or subdi,isions, the corresponding patents and titles thereto/ %*1=+ &o infor" the Agricultural 'roducti,ity #o""ission and the (epart"ent of Agriculture and Natural Resources of the proble"s of settlers and far"ers on lands under its ad"inistration and in land refor" areas$ 'ro,ided, &hat it is "andatory for the said #o""ission and (epart"ent to pro,ide field agricultural e0tension ser,ice to these areas upon being infor"ed of the proble"s obtaining$ 'ro,ided, further, &hat settle"ent pro<ects and lands refor" areas, especially pri,ate agricultural lands ac.uired by the go,ern"ent, shall be gi,en first priority in the diffusion of useful and practical infor"ation, nowledge and s ills on agriculture, soil conser,ation, li,estoc , fisheries, forest conser,ation, public lands and natural resources laws, ho"e econo"ics and rural life, in order to encourage their application through field de"onstrations, lectures and conferences, publications and other "eans of i"parting infor"ation, sti"ulation, pro"otion and organi-ation of agricultural cooperati,es and encourage"ent in the for"ation and growth of pri,ate associations, study clubs, co""ittees and other groups of far"ers and "e"bers of their fa"ily that will enhance their social and econo"ic conditions/ %*11+ &o ac.uire for agricultural lessees e0ercising their right to pre-e"ption and rede"ption under #hapter ) of this #ode, any land-holdings "entioned thereunder/ %*12+ &o conduct land capability sur,ey and classification of the entire country and print "aps/ %*13+ &o "a e such arrange"ents with the !and >an with respect to titles of agricultural lands of the public do"ain under its ad"inistration as will be necessary to carry out the ob<ecti,es of this #ode/

%*14+ &o e0propriate ho"e lots occupied by agricultural lessees outside their landholdings for resale at cost to said agricultural lessees/ %*11+ &o see to it that all agricultural lands, either public or pri,ate, distributed by the go,ern"ent to the beneficiaries of the Agrarian Refor" 'rogra" shall be sold only by the said beneficiaries to the go,ern"ent/ and %*12+ &o sub"it to the 'resident of the 'hilippines and to both 4ouses of #ongress through their presiding officers, to the Secretary of 8inance and to the Auditor Eeneral within si0ty days of the close of the fiscal year, an annual report showing its Acco"plish"ents during the year/ the e0propriation proceedings it has underta en/ the e0penditures it has incurred and other financial transactions underta en with respect thereto/% Se !"o# $(. Section 12 of the sa"e #ode is hereby a"ended to read as follows$ %Sec. 12. 5ust #o"pensation. - )n deter"ining the <ust co"pensation of the land to be e0propriated pursuant to this #hapter, the #ourt shall consider as basis, the fair "ar et ,alue, without pre<udice to considering the assessed ,alue and other pertinent factors. %&he owner of the land e0propriated shall be paid in accordance with Section eighty of this #ode by the !and >an and pursuant to an arrange"ent herein authori-ed.% Se !"o# $8. Section 31 of the sa"e #ode is hereby a"ended to read as follows$ %Sec. 31. 'ower of the (epart"ent of Agrarian Refor" to sell to 4olders of >onds )ssued to 8or"er !andowners whose !and ha,e been 'urchased for Redistribution. - &he (epart"ent of Agrarian Refor" shall sell, for a price not less than the appraised ,alue, any portion not e0ceeding one hundred forty-four hectares in the case of indi,iduals of the public agricultural lands transferred to the !and >an which is suitable for large-scale far" operations to any holder, who is .ualified to ac.uire agricultural lands through purchase, of bonds issued to for"er landowners whose lands ha,e been purchased for redistribution under this #ode, sub<ect to condition that the purchaser shall, within two years after ac.uisition, place under culti,ation at least thirty per centu" of entire area under plantation ad"inistration and the re"aining se,enty per centu" within fi,e years fro" the date of ac.uisition. &he Secretary shall issue the title of said land upon showing that the purchaser has de,eloped and culti,ated at least one-fourth of his land under plantation ad"inistration. Any public agricultural land sold as hereinabo,e specified shall not be the ob<ect of any e0propriation as long as the sa"e is de,eloped and culti,ated for large-scale production under far" labor "anage"ent$ 'ro,ided, howe,er, &hat after the capital in,ested therein for de,elop"ent, plus a reasonable "argin of profit shall ha,e been fully reco,ered, or after the lapse of twenty-fi,e years fro" the date of ac.uisition, whiche,er co"es earlier, said land shall beco"e e0propriable. &he selling price of the portion of the public agricultural land sold under this Section shall be credited to the !and >an . As pay"ent for the land sold under this Section, the !and >an shall accept as sole instru"ents of pay"ent the bonds issued pursuant to Section se,enty-si0. )ssued bonds accepted as pay"ent for the land sold shall be cancelled to the e0tent of the a"ount paid. All sales under this #ode shall be sub<ect to the rules and regulations which the (epart"ent of Agrarian Refor" in consultation with the !and >an , shall prescribe insofar as they are not inconsistent with the pro,isions of this #ode.

Se !"o# $9. Sec 32 of the sa"e #ode is hereby a"ended to read as follows$ %Sec. 32. )ssuance of >onds. - &he !and >an shall, upon reco""endation by the >oard of &rustees and appro,al of the 6onetary >oard of the #entral >an , issue bonds, debentures and other e,idences of indebtedness at such ter"s, rates and conditions as the >an "ay deter"ine up to an aggregate a"ount not e0ceeding, at any one ti"e, fi,e ti"es its uni"paired capital and surplus. Such bonds and other obligations shall be secured by the assets of the >an and shall be fully ta0 e0e"pt both as to principal and inco"e. Said inco"e shall be paid to the bondholders e,ery si0 *2+ "onths fro" the date of issue. &hese bonds and other obligations shall be fully negotiable and unconditionally guaranteed by the Eo,ern"ent of the Republic of the 'hilippines and shall be redee"able at the option of the >an at or prior to "aturity, which in no case shall e0ceed twenty-fi,e years. &hese negotiable instru"ents of indebtedness shall be "ortgageable in accordance with established ban ing procedures and practice to go,ern"ent institutions, e0isting charters and;or laws to the contrary notwithstanding, not to e0ceed si0ty per centu" of their face ,alue to enable the holders of such bonds to "a e use of the" in in,est"ents in producti,e enterprises. &hey are eligible as legal reser,es against deposit liabilities of ban s, sub<ect to the ter"s and conditions which the #entral >an of the 'hilippines "ay i"pose. &hey shall also be accepted as pay"ents for reparation e.uip"ent and "aterials, the pro,isions of Republic Act Nu"bered Se,enteen hundred and eighty-nine, as a"ended, to the contrary notwithstanding. &he >oard of &rustees shall ha,e the power to prescribe rule and regulations for the registration of the bonds issued by the >an at the re.uest of the holders thereof.% Se !"o# %). Section 9= of the sa"e #ode is hereby a"ended to read as follows$ %Sec. 9=. 6a ing 'ay"ent to Awners of !anded 7states. - &he !and >an shall "a e pay"ents in the for" herein prescribed to the owners of the land ac.uired by the (epart"ent of Agrarian Refor" for di,ision and resale under this #ode. Such pay"ent shall be "ade in the following "anner$ twenty per centu" in cash and the re"aining balance in si0 per cent, ta0-free, redee"able bonds issued by the >an in accordance with Section twenty-si0, unless the landowner desires to be paid in shares of stoc issued by the !and >an in accordance with Section se,enty-se,en in an a"ount not e0ceeding thirty per centu" of the purchase price. %)n the e,ent there is an e0isting lien or encu"brance on the land in fa,or of any Eo,ern"ent institution at the ti"e of ac.uisition by the !and >an , the bonds and;or shares, in that order, shall be accepted as substitute collaterals to secure the indebtedness, e0isting charters of these institutions to the contrary notwithstanding. %&he profits accruing fro" pay"ent shall be e0e"pt fro" the ta0 on capital gains.% Se !"o# %$. Section 91 of the sa"e #ode is hereby a"ended to read as follows$ %Sec. 91. @se of >onds. - &he bonds issued by the !and >an "ay be used by the holder thereof and shall be accepted in the a"ount of their face ,alue as any of the following$ %*1+ 'ay"ent for agricultural lands or other real properties purchased fro" the Eo,ern"ent/ %*2+ 'ay"ent for the purchase of shares of stoc of all or substantially all of the assets of the following Eo,ern"ent owned or controlled corporations$ &he National (e,elop"ent #o"pany/ 'hilippine National >an / 'hilippine National Railways/ #ebu 'ortland #e"ent #o"pany/ National Shipyards and Steel #orporations/ 6anila Eas #orporation/ and the 6anila 4otel #o"pany.

%@pon offer by the bondholder, the corporation owned or controlled by the Eo,ern"ent shall, through its >oard of (irectors, negotiate with such bondholders with respect to the price and other ter"s and conditions of the sale. )n case there are ,arious bondholders "a ing the offer, the one willing to purchase under ter"s and conditions "ost fa,orable to the corporations shall be preferred. )f no price is acceptable to the corporation, the sa"e shall be deter"ined by the #o""ittee of Appraisers co"posed of three "e"bers, one to be appointed by the corporation, another by the bondholder "a ing the highest or only offer, and the third by the two "e"bers, so chosen. &he e0pense of appraisal shall be borne e.ually by the corporation and the successful purchaser. %Should the Eo,ern"ent offer for sale to the public any or all of the shares of stoc or the assets of any of the Eo,ern"ent owned or controlled corporation enu"erated herein, the bidder who offers to pay bonds of the !and >an shall be preferred pro,ided that the ,arious bids be e.ual in e,ery respect e0cept in the "ediu" of pay"ent. %*3+ Surety, bail bonds for the pro,isional release of accused persons or perfor"ance bonds in all cases where the go,ern"ent "ay re.uire or accept real property as bonds/ %*4+ 'ay"ent for reparations goods, the pro,isions of Republic Act Nu"bered Se,enteen hundred and eighty-nine, as a"ended, to the contrary notwithstanding/ %*1+ Security for loans applied with the 'hilippine National >an , (e,elop"ent >an of the 'hilippines, Eo,ern"ent Ser,ice )nsurance Syste", Social Security Syste", and other go,ern"ent financial institution, e0isting charters of these institutions to the contrary notwithstanding/ and %*2+ !egal reser,es against deposit liabilities of ban s, sub<ect to the ter"s and conditions which the #entral >an of 'hilippines "ay i"pose pursuant to the Eeneral >an ing Act.% Se !"o# %%. Section 1=1 of the sa"e #ode is hereby a"ended to read as follows$ %Sec. 1=1. Reorgani-ation of A#A to align its acti,ities. - &he ad"inistrati,e "achinery of the Agricultural #redit Ad"inistration, shall be reorgani-ed to enable it to align its acti,ities with the re.uire"ents and ob<ecti,es of this #ode$ 'ro,ided, &hat the >oard of Eo,ernors established by Republic Act Nu"bered 7ight hundred and twenty-one, as a"ended, shall be co"posed of a chair"an and four *4+ "e"bers, three *3+ of who" shall be the @ndersecretary of Agrarian Refor" who shall be the #hair"an e0-officio, the Ad"inistrator of the Agricultural #redit Ad"inistration who shall be the Dice-#hair"an e0-officio and the Dice-'resident in charge of agricultural loans of the 'hilippine National >an , who shall be e0-officio "e"ber thereof. &he two other "e"bers shall be appointed by the 'resident of the 'hilippines with the consent of the #o""ission of Appoint"ents for a ter" of three years, one of who" shall represent the far"ers-beneficiary of the Agrarian Refor" 'rogra" and shall be appointed upon reco""endation of either or both the far"ers and;or cooperati,es "o,e"ent, federation or league e0isting at the sa"e ti"e such reco""endation is sub"itted, and the other to represent the political party recei,ing the second highest nu"ber of ,otes in the i""ediately preceding presidential elections$ 'ro,ided, howe,er, &hat the ter" of the far"ers? representati,e shall ipso facto ter"inate when such "e"ber cease to be in the far"ers and;or cooperati,es "o,e"ent, federation or league, and that of the "inority party at the pleasure of the no"inating political party. %&he Ad"inistrator shall be the #hief 70ecuti,e of the Ad"inistration and shall ser,e for a ter" of si0 years unless he resigns or is re"o,ed for cause. &he co"pensation of the Ad"inistrator shall be fi0ed by the 'resident but shall not be less that twenty-four thousand pesos per annu". &he "e"bers of the >oard shall recei,e per die"s of not "ore than fifty pesos for each session of the

>oard that they attend$ 'ro,ided, howe,er, &hat the total per die"s, including all other re"unerations, shall not e0ceed si0 hundred pesos a "onth. %No person shall be appointed as Ad"inistrator unless he is a natural-born citi-en of the 'hilippines, with pro,en e0ecuti,e ability and e0perience in the field of agricultural cooperati,es and;or ban ing and finance, ade.uate bac ground and e0perience in land refor" here and;or elsewhere for at least fi,e *1+ years, and at least thirty-fi,e years of age$ 'ro,ided, howe,er, &hat he shall ha,e, a"ong other .ualifications, de"onstrated interest in, and concern for, the needs and proble"s of the rural population and;or peasantry and the solutions thereto$ 'ro,ided, further, &hat no person who owns any far"holding shall be appointed as Ad"inistrator unless such far"holding is under the leasehold syste" or the syste" of agricultural land ownership-transfer direct to the tiller.% Se !"o# %3. Section 1=1 and 1=2 of the sa"e #ode are hereby a"ended to read as follows$ %Sec. 1=1. !oaning Acti,ities. - !oaning acti,ities of the Agricultural #redit Ad"inistration shall be directed to sti"ulate the de,elop"ent and operation of far"ers? cooperati,es. &he ter" %8ar"ers #ooperati,es% shall be ta en to include all cooperati,es relating to the production and "ar eting of agricultural products and these for"ed to "anage and;or own, on a cooperati,e basis, agricultural far"lands, ser,ices and facilities, such as irrigation and transport syste"s, established to support production and;or "ar eting of agricultural products. %@nder such rules and regulations in accordance with generally accepted ban ing practices and procedures as "ay be pro"ulgated by the Agricultural #redit Ad"inistration, Rural >an s, #ooperati,e >an s, and (e,elop"ent >an s "ay, in their respecti,e localities, be designated to act as agents of the Agricultural #redit Ad"inistration in regard to its loaning acti,ities.% %Sec. 1=2. #redit to S"all 8ar"ers and;or &illers of the land. - 'roduction loans and loans for the purchase of wor ani"als, tillage e.uip"ent, seeds, fertili-ers, poultry, li,estoc , feed and other si"ilar ite"s, "ay be e0tended to s"all far"ers as defined in Republic Act Nu"bered 7ight hundred twenty-one and;or tillers of the land, based upon their paying capacity and such securities as they can pro,ide, and under such ter"s and conditions as the Agricultural #redit Ad"inistration "ay i"pose, pro,ided the a"ount thereof does not e0ceed two thousand pesos, or such a"ount as "ay be fi0ed by the 'resident at any gi,en agricultural year$ 'ro,ided, &hat his total outstanding obligations shall not e0ceed fi,e thousand pesos, but in no case shall the a"ount of loan e0ceed eighty per centu" of the ,alue of the collateral pledged. )n instance where credit is e0tended for ite"s which are not consu"ed in their use, such ite"s "ay be pledged as security thereof. &he Agricultural #redit Ad"inistration shall pro"ulgate such rules and regulations as "ay be necessary in the e0tension of the loans herein authori-ed so as to assure their repay"ent$ 'ro,ided, &hat such rules and regulations shall follow and be in accordance with generally accepted financing practices and procedures.% Se !"o# %&. Section 1=9 of the sa"e #ode is hereby a"ended to read as follows$ %Sec. 1=9. !oans to #ooperati,es. - &he Agricultural #redit Ad"inistration is hereby authori-ed to e0tend such types of loans as it "ay dee" necessary for the effecti,e i"ple"entation of this #ode to eligible far"ers? cooperati,es as herein defined, under such ter"s and conditions as it "ay i"pose and with such securities as it "ay re.uire$ 'ro,ided$ &hat the said Ad"inistration is hereby authori-ed to e0tend production loans to cooperati,es at not "ore than eight per cent interest per calendar year and directly to the far"ers at not "ore than twel,e per cent per calendar year$ 'ro,ided, further, &hat cooperati,es are hereby authori-ed to e0tend loans directly to their "e"bers at not "ore than twel,e per cent per calendar year. A far"ers? cooperati,e that has been registered with the Agricultural #redit Ad"inistration shall be eligible for loans if, in the <udg"ent of the latter, its organi-ation, "anage"ent and business policies are of such character as will insure the safety and effecti,e use of such loans.%

Se !"o# %'. Section 11= of the sa"e #ode is hereby a"ended to read as follows$ %Sec. 11=. &otal charges on !oans. - &he total charges including interest, insurance fees and inspection, notari-ation and other ser,ice charges on all inds of loans shall not be "ore than twel,e per centu" per calendar year$ 'ro,ided, &hat if an i"pair"ent of the capitali-ation of the Agricultural #redit Ad"inistration is i""inent by reason of the li"itation appropriated out of the unappropriated funds in the National &reasury such a"ounts as is necessary to co,er the losses of the Agricultural #redit Ad"inistration, but not e0ceeding si0 "illion pesos for any one year.% Se !"o# %6. Section 112 of the sa"e #ode is hereby a"ended to read as follows$ %Sec. 112. Registration of and guidance to #ooperati,es, Associations and Argani-ations. - &he Agricultural #redit Ad"inistration shall ha,e the power to register, finance and super,ise all agricultural cooperati,es, including "ulti-purpose cooperati,es, and far" associations or organi-ations/ and pro,ide credit guidance or assistance to all agricultural, irrigation, and other cooperati,e associations, "ulti-purpose cooperati,es, far" organi-ations or fund corporations$ 'ro,ided, &hat all cooperati,es, associations or organi-ations registered under this Section shall ha,e <uridical personality.% Se !"o# %(. Section 124 of the sa"e #ode is hereby a"ended to read as follows$

Se !"o# %8. Sections Ane hundred twenty-si0 and Ane hundred twenty-se,en of the sa"e #ode is hereby repealed. Se !"o# %9. A new section is hereby inserted after Sec. 129, to be designated therein as %Section 129-A,% which shall read as follows$ %Sec. 129-A. 'articipation of !ocal Eo,ern"ents. - &he (epart"ent of Agrarian Refor" shall, in e,ery way possible to insure the successful i"ple"entation of the Agrarian Refor" 'rogra", in,ol,e local go,ern"ents and secure their participation in the ,arious aspects of the progra", such as the leasehold syste", the ac.uisition and distribution of pri,ate and public agricultural lands, the de,elop"ent of cooperati,es and s"all-scale industries and the li e, and the other corollary operational acti,ities that should be carried out through barrio, "unicipal, pro,incial and city go,ern"ents. %)n pursuing this approach, howe,er, the (epart"ent shall for"ulate the policies and progra"s necessary in the i"ple"entation of this #ode. %&he (epart"ent shall also render technical assistance to local go,ern"ents necessary to carry out the ob<ecti,e of agrarian refor"s.% Se !"o# 3). Section 111 of the sa"e #ode is hereby a"ended to read as follows$

%Sec. 124. 8unction of 70tension Bor ers. - )n addition to their functions under Republic Act Nu"bered si0 hundred eighty, it shall be the duty of e0tension wor ers$ %*1+ &o reside in the locality where they are assigned, to disse"inate technical infor"ation to far" fa"ilies, and to de"onstrate i"pro,ed far" and ho"e "anage"ent practices and techni.ues/ %*2+ &o wor with indi,idual far"ers in far" planning and budgeting, guide the" in the proper conduct of far" business and wor out schedules of re-pay"ent of loans obtained by far"ers/ %*3+ &o assist far"ers in securing the ser,ices or assistant of other agencies, or their personnel, ha,ing to do rele,ant acti,ities and proble"s of far"ers/ %*4+ &o ,isit newly-established independent far" operators either singly or collecti,ely at least once a "onth/ %*1+ &o pro"ote and sti"ulate the growth and de,elop"ent of the youth towards i"pro,ed far" and ho"e "anage"ent practices and techni.ues, as well as the de,elop"ent of their s ills for s"all-scale industries and the li e/ %*2+ &o encourage the for"ation and growth of pri,ate associations, study clubs, co""ittees and other organi-ed groups of far"ers, fa"iliari-e the" with "odern "ethods of far"ing and interest the" to acti,ely participate, collaborate or ta e the initiati,e in agricultural research, e0peri"entation and i"ple"entation of pro<ects in cooperation with the Agricultural 'roducti,ity #o""ission and other agencies/ and %*3+ &o pro"ote, sti"ulate and assist in the organi-ation of far"ers? cooperati,es, including "ulti-purpose cooperati,es.%

%Sec. 111. 'owers of the #ourt/ Rules of 'rocedure. - &he #ourts of Agrarian Relations shall ha,e all the powers and prerogati,es inherent in or belonging to the #ourt of 8irst )nstance. %&he #ourts of Agrarian Relations shall be go,erned by the Rules of #ourt$ 'ro,ided, &hat in the hearing, in,estigation and deter"ination of any .uestion or contro,ersy pending before the", the #ourts without i"pairing substantial rights, shall not be bound strictly by the technical rules of e,idence and procedure, e0cept in e0propriation cases$ 'ro,ided, further, &hat in case the persons referred to under Section one hundred si0ty-three hereof, are not represented by a lawyer of their own choice, the duly authori-ed leaders of duly registered far"ers organi-ations "ay enter their appearances as counsel for their respecti,e "e"ber and;or organi-ation before the #ourt of Agrarian Relations, if the #ourt is fully con,inced that the said leader could co"petently protect the interest of his client sub<ect to the basic duties and obligations as officers of the #ourt. %&he #ourt of Agrarian Relations is hereby authori-ed to conduct co"pulsory arbitration between agricultural labor and agricultural "anage"ent, agricultural share tenants and agricultural landlords, and agricultural lessees and agricultural lessors in conflicts arising out of, and in connection with, their agrarian relations upon certification by the Secretary of 5ustice. %&he rights and duties of the parties to the proceedings, the functions and responsibilities of the #ourt, and the bidding effect of awards, orders and processes of the #ourt shall be co,ered by Section si0 to twenty-four of #o""onwealth Act Nu"bered Ane hundred three. %Bhere the litigant is an agricultural tenant, tiller or lessee, he shall be entitled to the rights of a pauper litigant under the rules of #ourt and the pri,ileges of an indigent litigant under Republic Act Nu"bered Si0ty hundred and thirty-fi,e, without further proof thereof.% Se !"o# 3$. Section 123 of the sa"e #ode, as a"ended by Republic Act No. 4992, is further a"ended to read as follows$

%Sec. 123. 8unctions of the Affice of the Agrarian #ounsel. - )t shall be the responsibility of the Affice of the Agrarian #ounsel upon proper notification by the party concerned or by the association or organi-ation to which he belong, to represent tenants, agricultural lessees, agricultural far" wor ers and agricultural owner-culti,ators or the "e"bers of their i""ediate far" household referred to in this #ode who cannot engage the ser,ices of co"petent pri,ate counsel in cases before the #ourt of Agrarian Relations. &his responsibility shall include representation before courts, including appellate, in cases ci,il or cri"inal, instituted by or against said tenant, agricultural lessees, far" wor ers or owners-culti,ator or the "e"bers of their i""ediate far" household, where the cases arise fro" or are connected with, or results or effects of an agrarian dispute. &he decision of the Affice of the Agrarian #ounsel to pro,ide legal assistance shall be final.% Se !"o# 3%. Section 124 of the sa"e #ode is hereby a"ended to read as follows$ %Sec. 124. Authority to Ad"inister Aath and Ac nowledg"ent. - &he Agrarian #ounsel, the (eputy Agrarian #ounsel and the Special Attorneys of the Affice of the Agrarian #ounsel are hereby authori-ed to ad"inister oaths and ac nowledg"ent free of charge.% Se !"o# 33. Section 123 of the sa"e #ode is hereby a"ended by adding after paragraph *1+ thereof, the following two paragraphs which shall read as follows$ %*2+ Any collusion between an agricultural lessee and an agricultural lessor and between a ,endor and a ,endee on install"ent sales to si"ulate agricultural contracts, agricultural loans, or any application for benefits under the Agrarian Refor" progra" shall be punishable by i"prison"ent of not "ore than fi,e years and a fine not e0ceeding fi,e thousand pesos. %&he period for filing the corresponding cri"inal action for any cri"inal ,iolation falling under the foregoing pro,isions of this section shall cease to run, whene,er a case is filed before the #ourt of Agrarian Relations for the deter"ination of a pre<udicial .uestion in relation to the cri"inal action, until said deter"ination has beco"e final.% Se !"o# 3&. &o carry out the ob<ecti,es of this A"endatory Act, and notwithstanding any pro,isions of e0isting laws, rules and regulations to the contrary, all lending institutions, whether public or pri,ate, shall set aside at least twenty-fi,e per cent of their loanable funds and "a e it a,ailable for agricultural credit to agricultural lessees, owner-culti,ator, a"orti-ing owners, and cooperati,es, including "ulti-purpose cooperati,es and far" associations and organi-ations owned and operated by those who li,e and wor on the land as tillers and registered with the Agricultural #redit Ad"inistration. Se !"o# 3'. Notwithstanding any pro,ision of e0isting laws, rules and regulations to the contrary, the (epart"ent of Agrarian Refor" is hereby authori-ed to segregate any area of three thousand hectares out of any of its reser,ations as de"onstration far" or pilot pro<ect for the resettle"ent progra" of the (epart"ent on the "osha,e-type of co""unal agriculture. Se !"o# 36. &he personnel of the agencies, offices and;or units abolished, "erged, rena"ed and;or reorgani-ed under this A"endatory Act shall ha,e the sa"e rights and pri,ileges afforded to the personnel of abolished or reorgani-ed agencies under the Agricultural !and Refor" #ode and in pursuance of Section Ane hundred si0ty-nine thereof. &o carry out the pro,isions of this Section, there is hereby appropriated the su" of Ane "illion pesos out of the unappropriated funds in the National &reasury$ 'ro,ided, &hat ten per cent of this appropriation or so "uch thereof as "ay be necessary is hereby set aside for the e0penses of the organi-ing staff created under Section 11 hereof.

Se !"o# 3(. Any reference to the !and Refor" 'ro<ect Ad"inistration, the National !and Refor" #ouncil and the !and Authority in the Agricultural Refor" #ode or under any other e0isting laws shall be understood to refer to the (epart"ent of Agrarian Refor". Se !"o# 38. )f, for any reason, any section or pro,isions of this A"endatory Act shall be held unconstitutional or in,alid, no other section or pro,ision of the sa"e shall be affected thereby. All laws or parts of any law inconsistent with the pro,isions of this A"endatory Act are hereby repealed and;or "odified accordingly. Se !"o# 39. &his Act shall ta e effect upon its appro,al. Appro,ed$ Septe"ber 1=, 1:31