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Chan Robles Virtual Law Library
PRESIDENTIAL DECREE NO. 681
PRESIDENTIAL DECREE NO. 681 -
CREATING THE "FARM DEVELOPMENT CORPORATION", PRESCRIBING ITS POWERS AND
ACTIVITIES, PROVIDING FUNDS THEREFOR AND FOR OTHER PURPOSES
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WHEREAS, it
is the desired goal of the government to hasten rural development and
to provide substantial opportunities to Filipino farmers to attain
economic well-being and lead a dignified life; chanroblesvirtualawlibrary
WHEREAS, in the pursuit of this desire, the government shall pool the
collective efforts of the public and private sectors in order to effect
the necessary changes and reforms in the social, economic and political
structures of our society;chanroblesvirtualawlibrary
WHEREAS, there is an imperative need to increase food production in
order to cope with the demand by an expanding population;chanroblesvirtualawlibrary
WHEREAS, the government is cognizant of the role the farmers play in
the process of modernizing the agricultural sector;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of
the Philippines, by virtue of the powers vested in me by the
Constitution, do hereby decree, order and make as part of the law of
the land the following:cralaw:red
CHAPTER I
Title, Purpose and Definitions
Section 1. Title. — This Decree shall be referred to
as the "THE FARM SYSTEMS DEVELOPMENT CORPORATION DECREE".
Section 2. Policy/Purpose. — The commitment of the
farmers to participate in the efforts to improve farming, processing
and marketing methods is vital in the process of increasing food
production and hastening rural development. It is hereby declared to be
the policy of the State to pursue and foster in an orderly and
expeditious manner, the attainment of this objective.
For this purpose, the FSDC shall promote the organization and assist
all irrigation associations and other farm-based related entities which
are willing to pursue diligently the above purpose. chanroblesvirtualawlibrary
To become effectively established and operationally stable, the
irrigation association, and other farm-related entities shall be given
every tenable support and assistance by the national government, its
instrumentalities and agencies to the fullest extent of which they are
capable. Being by their nature substantially self-regulating and
Congress having by the enactment of this Decree, they should be subject
to minimal regulations by other administrative agencies in all phases
of their organization and operation requiring and justifying
regulation, in order to further encourage and promote their development.
Section 3. Definition. — As used in this Decree, the
following words or terms shall have the following meaning, unless a
different meaning clearly appears from the context:cralaw:red
a) "FSDC" shall mean the Farm Systems Development
Corporation, "Board of Administrators" shall mean the Board of
Administrators and "Administrator" shall mean the Administrator, all as
provided for in this Decree.
b) "Corporation" shall mean the FSDC.
c) "NIA" shall mean the National Irrigation
Administration, "NEA" shall mean the National Electrification
Administration, "DAP" shall mean the Development Academy of the
Philippines, "NPC" shall mean the National Power Corporation, and "NGA"
shall mean the National Grains Authority.
d) "Association" shall mean a corporation organized
or existing under Act No. 1459, or a corporation thereafter organized,
that manages, runs and provide water for irrigation purposes, and other
concomitant services.
e) "Person" shall mean any natural person, firm,
association, corporation, business trust, partnership, the National
Government, or any political subdivision, agency or instrumentality
thereof.
f) "Service" shall mean irrigation service including
the providing of any auxiliary or related service.
g) "Area" shall mean: (1) the geographic area covered
or serviced by an irrigation association, or (2) any lesser geographic
area for the furnishing of irrigation service for which an association,
person, or any entity pursuant to this Decree, borrows, or may apply to
borrow, funds from FSDC, or may secure loans with the approval of the
FSDC, to finance the acquisition or construction and operation,
maintenance of irrigation and farm-related facilities.
h) "Interest rate per centum per annum" shall mean an
interest rate that is accrued solely upon the unpaid balance of any
principal loan which has actually been advanced to a borrower and upon
any interest payment which has become due or been paid by the
borrowers, computed on an annual basis.
i) "Loan" shall mean a loan, the total principal
amount of which, as when required for application to the purpose
thereof, is at the time of the making thereof, assured from funds that
are or will become available therefor.
j) "Congress" shall mean the President during his
exercise of Martial Law, or the National Assembly under the new
Constitution, whichever is the case at any given time.
k) "President" shall mean the President of the
Philippines during the existence of Martial Law, or the Prime Minister
when the National Assembly comes into existence.
CHAPTER II
The Farm Systems Development Corporation
Section 4. FSDC Authorities, Powers and Directives.
— The FSDC is hereby authorized, empowered and directed to promote the
organization of, and assist farmer-associations particularly irrigation
associations to the end of achieving the objectives of hastening rural
development, and for such purpose it is hereby, without limiting the
generality of the foregoing and in addition to their authorization,
powers and directives established by this Decree, specifically
authorized, empowered and directed:cralaw:red
a) to have a continuous succession under its
corporate name otherwise provided by law;chanroblesvirtualawlibrary
b) to prescribe and thereafter to amend and repeal
its By-laws not inconsistent with this Decree;chanroblesvirtualawlibrary
c) to adopt and use a seal and alter it at its
pleasure;chanroblesvirtualawlibrary
d) to sue and be sued;chanroblesvirtualawlibrary
e) to make contract of every name and nature and to
execute all instruments necessary or convenient for the carrying on of
its business; chanroblesvirtualawlibrary
f) to make loans to irrigation or related
associations for the construction or acquisition, operation and
maintenance of irrigation systems and all related farm properties such
as equipment, machinery, fixtures and materials. And thereafter, to
make loans for the restoration, improvement or enlargement of such
facilities;chanroblesvirtualawlibrary
g) to assist irrigation-based associations and
coordinate with government agencies and corporations having related
functions and purposes in planning, developing, establishing,
operating, maintaining, repairing and renovating association's
facilities and systems;chanroblesvirtualawlibrary
h) to prepare feasibility studies, engineering plans
for integrating farm-based systems development including the
procurement of modern and improved facilities, devices and accessory
equipment;chanroblesvirtualawlibrary
i) to provide managerial or administrative expertise
including the rendering of professional training services for
association's staff and employee development;chanroblesvirtualawlibrary
j) to cooperate, coordinate and exchange such
information, studies and reports with and to seek such cooperation and
coordination from other departments, agencies and instrumentalities of
the National Government including the National Irrigation
Administration (NIA), the National Grains Authority (NGA), the National
Electrification Administration (NEA), the Development Academy of the
Philippines (DAP), and the National Power Corporation (NPC), as will
most effectively conduce to the achievement of the purposes of this
Decree;chanroblesvirtualawlibrary
k) to borrow funds from any source, private or
government, foreign or domestic, and to issue bonds or other evidence
of indebtedness;chanroblesvirtualawlibrary
l) to appoint, through its Board of Administrators,
such officers and employees as are not otherwise provided in this
Decree, to define their duties, fix their compensation, and require
bonds of them;chanroblesvirtualawlibrary
m) to acquire, by purchase or otherwise, real and
personal properties as may be required, advisable or desirable for the
proper conduct of its business;chanroblesvirtualawlibrary
n) to prescribe rules and regulations in which its
general business may be conducted as well as to fix and implement terms
and conditions of loans for irrigation and related activities;chanroblesvirtualawlibrary
o) to establish branch offices;chanroblesvirtualawlibrary
p) to invest its funds or other assets in such
undertaking as it may deem wise or necessary to carry out its purposes
and objectives;chanroblesvirtualawlibrary
q) to report to the President at least annually, not
later than June 30, and when the same comes into existence, the Prime
Minister and the National Assembly on the status of its operation in
the Philippines including a comprehensive reporting of loans made
advanced, loans secured from other sources and the advance thereof, the
names and locations of the borrowers, the number of farmers receiving
service as a result of such loans;chanroblesvirtualawlibrary
r) to do and perform any other acts and things, and
to have and exercise any other powers with may be necessary, incidental
or appropriate to accomplish the purpose for which the FSDC is
organized.
Section 5. FSDC Board of Administrators,
Administrator. —chanroblesvirtualawlibrary
a) For the purpose of administering the provisions of
this Decree, there is hereby established a public corporation, to be
known as the FARM SYSTEMS DEVELOPMENT CORPORATION. All the powers of
the corporation shall be vested in and exercised by a Board of
Administrators, which shall be composed of: the Executive Secretary,
the NIA Administrator, the NEA Administrator, the NGA Administrator,
the DAP President, the NPC General Manager as regular members and the
administrator as ex-officio member, and that the term of the ex-officio
member shall be co-terminous with his term as the Administrator. The
Chairman shall be appointed by the President from among the regular
members. The Chairman and every member of the Board of Administrators
shall be entitled to a per diem of not more than P300.00 for such
meeting actually attended by them. Provided that the total of such per
diems shall not exceed one thousand five hundred pesos (P1,500.00) per
month per member.
b) The Board of Administrators shall meet regularly
at least twice a month and as often as the exigencies of Corporation's
affairs demand. The presence of at least four members shall constitute
a quorum which shall be necessary for the transaction of any business.
The affirmative votes of a majority of the members present shall be
necessary for the approval of any resolution, decision or order, except
when a greater number of votes is required as sometimes hereinafter
provided. When the Chairman is absent at a meeting duly called, the
Administrator as ex-officio member shall preside.
c) The Board shall, without limiting the generality
of the foregoing, have the following powers and functions:cralaw:red
1) to implement the provisions and purposes of this
Decree;chanroblesvirtualawlibrary
2) to formulate and adopt policies and plan, and to
promulgate rules and regulations for the management, operation and
conduct of the affairs and business of the FSDC;chanroblesvirtualawlibrary
3) to raise and/or borrow the necessary funds from
local and international financing sources or institutions and to secure
the same by any guarantee, pledge, mortgage, deed or trust, or
assignment of the property of the Corporation for the purpose of
financing the programs and projects deemed vital for the attainment of
its goals and objectives;chanroblesvirtualawlibrary
4) to enter into, make and execute contracts of any
kind or nature as may be necessary or incidental to the accomplishment
of its purposes and, generally, to exercise all the powers necessary to
achieve the corporation's purposes and objectives;chanroblesvirtualawlibrary
5) to prescribe terms and conditions in the loan
agreement and other related contracts that the borrower's rates,
charges, rules and regulations, policies, and all other terms and
condition affecting its extension and furnishing of service shall be
such as to assure achievement of the loan purposes, and that the same
shall be filed with and for such purpose approved by the Board of
Administrators before being put into effect or changed by the borrower;chanroblesvirtualawlibrary
6) to approve the budget of the corporation and to
appoint and fix the salaries of such executive officers and other
officials of the corporation as may be necessary for the accomplishment
of its corporate purposes;chanroblesvirtualawlibrary
7) to establish policies and guidelines for
employment on the basis of merit, technical competence, and moral
character, and upon the recommendation of the Administrator to organize
or re-organize FSDC's staffing pattern and personnel and to define
their powers and duties.
8) to establish and maintain such reasonable employee
and executive benefit plans (including life, accident, or special
individual insurance policies) as the exigencies or resources of the
Corporation shall permit and its Board of Administrators shall
authorize.
d) The management of the FSDC shall be vested in the
Administrator who shall be a person of known integrity, competence in
technical and executive fields related to the purposes of this Decree.
He shall be appointed by the President of the Philippines and shall not
be removed except for cause.
The Administrator shall have the following powers and duties:cralaw:red
1) to execute and administer the policies, plans and
programs and the rules and regulations, approved or promulgated by the
Board of Administrators;chanroblesvirtualawlibrary
2) to submit for the consideration of the Board of
Administrator such policies, plans and programs as he deems necessary
to carry out the provisions and purposes of this Decree;chanroblesvirtualawlibrary
3) to direct and supervise the operations and
internal administration of the FSDC and, for this purpose, to delegate
some or any of his powers and duties to subordinate officials of the
Corporation;chanroblesvirtualawlibrary
4) to appoint and fix the number and compensation of
subordinate officials and employees of the FSDC, including appointments
on a part-time basis notwithstanding Section 259 of the Revised
Administrative Code.
Provided, however, the provisions of the Civil Service Law and the Wage
and Position Classification Laws shall not apply to the appointment and
compensation of any such officials and employees;chanroblesvirtualawlibrary
5) for cause, to remove, suspend, or otherwise,
discipline any subordinate official or employee;chanroblesvirtualawlibrary
6) to prepare an annual report on the activities of
the FSDC at the close of each fiscal year and to submit a copy thereof
to the President of the Philippines and when it comes into existence,
the Prime Minister and the appropriate committee of, and as determined
by the National Assembly; and
7) to exercise such other powers and duties as
may be vested in him by the Board of Administrators.
In case of absence or disability of the Administrator, he shall
designate any of the Directors who shall act in his place.
Section 6. Power to Issue Bonds. — Whenever the
Board of Administrators may deem it necessary for the corporation incur
any indebtedness or to issue bonds to carry out the provisions of this
Decree, it shall, by resolution, so declare and state the purpose for
which the proposed debt is to be incurred. The resolution shall be
confirmed by the affirmative vote of at least four (4) members of the
Board and approved by the President of the
Philippines. chanroblesvirtualawlibrary
Section 7. Sinking Fund. — A sinking fund shall be
established in such manner that the total annual contribution thereto
accrued at such rate of interest as may be determined by the Board of
Administrators, shall be sufficient to redeem at maturity the bonds
issued under this Decree.
Such fund shall be under the custody of the Treasury of the FSDC which
shall invest the same in such manner as the Board of Administrators may
direct; charge all expenses of investment to said sinking fund, and
credit the same with the interest on investment and other income
belonging to it.
Section 8. Guarantee by the Government. — The
Republic of the Philippines hereby guarantees the payment by the FSDC
of both principal and the interest of the bonds, debentures,
collaterals, notes or such other obligations issued by the FSDC by
virtue of this Decree, and shall pay such principal and interest in the
event that the Corporation fails to do so. In case the Corporation
shall be unable to pay the said principal and interest, the Secretary
of Finance shall pay the amount thereof which is hereby appropriated
out of any funds in the National Treasury not otherwise appropriated
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, collaterals, note or other
obligations, unless the sum so paid by the Republic of the Philippines
shall be refunded by the Corporation within a reasonable time.
Section 9. Commissioner on Audit. — The Commissioner
on Audit shall be ex-officio auditor of the FSDC, and to give autonomy
to the governing board of the FSDC in the management and operation of
the corporation, the provisions of Section 584 of the Revised
Administrative Code, as amended by Republic Act Nos. 2266 and 2716 as
further amended by Presidential Decree No. 61, shall apply to the
Office of the Representative of the Commissioner on Audit. chanroblesvirtualawlibrary
Section 10. Capital Stock. — The authorized Capital
Stock of the FARM SYSTEMS DEVELOPMENT CORPORATION is eight hundred
million pesos divided into eight million shares of no par value, which
shares are not to be transferred, negotiated, pledged, mortgaged or
otherwise given as security for the payment of any obligation. The sum
of fifty million pesos (P50 M) of the capital stock shall be subscribed
and paid wholly by the Government of the Philippines which amount is
hereby appropriated and programmed immediately for FY 1976.
The remaining seven hundred fifty million pesos shall be wholly
subscribed by the Government of the Philippines and shall be
appropriated, programmed, and paid as follows:cralaw:red
a) the sum of fifty-five million pesos (P55 M) for
the FY 1976-1977.
b) the sum of seventy-two million pesos (P72 M) for
the FY 1977-1978 and FY 1978-1979.
c) the sum of sixty-seven million pesos (P67 M) for
each succeeding fiscal year until fiscal year 1985-1986.
d) and such sums as may be appropriated, programmed,
and/or allocated by the President or the National Assembly when it
comes to existence from time to time as the financial needs of the FSDC
so requires and until the authorized capital is fully paid up.
Section 11. Foreign Loans. — The Corporation is
hereby authorized to contract loans, credits, any convertible foreign
currency of capital goods, and indebtedness from time to time from
foreign governments, or any international financial institutions or
fund sources or to issue bonds, the total outstanding amount of which
exclusive of interests, shall not exceed TWO HUNDRED FIFTY MILLION
UNITED STATES DOLLARS or the equivalent thereof in other currencies, on
such terms and conditions as it shall deem appropriate for the
accomplishment of its purposes and to enter into and execute agreements
and other documents specifying such terms and conditions. chanroblesvirtualawlibrary
The President of the Philippines, by himself, or through his duly
authorized representative, is hereby authorized to negotiate and
contract with foreign governments or any international financial
institutions of fund sources, in the name and in behalf of the
Corporation, one of several loans, for the accomplishment of its
purposes.
The President of the Philippines, by himself, or through his duly
authorized representative, is hereby further authorized to guarantee,
absolutely and unconditionally, as primary obligor and not as surety
merely in the name and in behalf of the Republic of the Philippines,
the payment of the loans, credits, indebtedness and bonds issued over
and above the amount of which the President of the Philippines is
authorized to guarantee under Republic Act numbered sixty one hundred
forty two, as amended, as well as the performance of all or any of the
obligations undertaken by the corporation in the territory of the
Republic of the Philippines pursuant to loan agreements entered into
with foreign governments or any international financial institutions or
fund sources.
The loans, credits and indebtedness contracted under this subsection
and the payment of the principal, interest and other charge thereon, as
well as the importation of machinery, equipment, materials, supplies
and services, by the Corporation, paid form the proceeds of any loans,
credit or indebtedness incurred under this Act, shall also be exempt
from all direct and indirect taxes, fees, imports, other charges and
restrictions, including import restrictions previously and presently
imposed and to be imposed by the Republic of the Philippines, or any of
its agencies and political subdivisions.
Section 12. Enforcement Powers. — If any association
which has borrowed funds from FSDC, or from any other lender with
FSDC's lawfully required prior approval, shall default in its principal
or interest payment, or shall fail, after notice from the FSDC to
comply with any other term or condition of loan agreement or of any
rule or regulation promulgated by the FSDC in administering the
provision of this Decree, the Board of Administrators is hereby
authorized and empowered in its direction to do any or any combination
of the following: chanroblesvirtualawlibrary
a) Refuse to make or give any lawfully required
approval to any new loan to the borrower;chanroblesvirtualawlibrary
b) Withhold without limitations the FSDC advancement,
or withhold its approval for any other lender with respect to which the
FSDC has such approving power to make advancement of funds pursuant to
any loan already made to the borrower;chanroblesvirtualawlibrary
c) Withhold any technical or professional assistance
otherwise being furnished or that might be furnished to the borrower;chanroblesvirtualawlibrary
d) Foreclose any mortgage or deed or trust or other
security held by the FSDC on the properties of such borrower, in
connection with which the FSDC may subject to any superior or co-equal
rights in such lien held by any other lenders, (1) bid for and purchase
or otherwise acquire such properties, (2) pay the purchase price
thereof and any cost and expenses incurred in connection therewith out
of the revolving fund, (3) accept title to such properties in the name
of the Republic of the Philippines, and (4) even prior to the
institution of foreclosure proceedings, operate or lease such
properties for such period, and in such manner as may be deemed
necessary or advisable to protect the investment therein, including the
improvement, maintenance and rehabilitation of facilities and systems
to be foreclosed, but the FSDC shall, within five years after acquiring
such properties in foreclosure proceedings sell the same for such
consideration as it determines most conducive to the purposes of this
Decree; or
e) Take any other remedial measure for which the loan
agreement may provide.
In addition to the foregoing, the Board of Administrators, may at its
own instance and in the name of the FSDC, petition any court having
jurisdiction for such purpose or any administrative agency possessing
regulatory powers for such purpose (including the Board of Power and
Waterworks and Securities and Exchange Commission) to issue such order
and afford such lawful relief as may be necessary. chanroblesvirtualawlibrary
No borrower shall, without the approval of the Board of Administrators,
and of any other lender holding or sharing a lien on such borrower's
properties, sell or dispose of the property, rights, franchises,
permits or any other assets acquired and/or mortgaged pursuant to the
provisions of this Decree until all outstanding indebtedness to the
FSDC and any other such lender, including all interest owing thereon,
shall have been repaid; Provided, that the FSDC may be appropriate rule
or regulation grant general permission to borrowers, to dispose of
incidental properties (excluding real property), rights, franchises,
permits or other assets no longer deemed necessary or useful in
conducting the borrower's operations.
No association with outstanding loan with FSDC shall borrow money from
any source without the Board of Administrators' prior approval;
Provided, That the Board of Administrators may, by appropriate rule or
regulation, grant general permission to such associations to secure
short term loans not requiring the encumbering of their real properties
or a substantial portion of other properties or assets.
Section 13. Exemption from all Taxes, Duties, Imposts
and other Charges by Government Instrumentalities. — The FSDC
shall devote all its returns from its capital investments as well as
excess revenues from its operation to attain its objectives. To enable
the FSDC to pay its indebtedness and obligations and in furtherance and
effective implementation of the policy enunciated in this Decree, the
FSDC is hereby declared exempt for a period of ten years from the
effectivity of this Decree.
a) From the payment of all taxes, duties, fees,
imposts, charges, costs and restrictions to the Republic of the
Philippines, its provinces, cities, municipalities, and other
government agencies and instrumentalities, including taxes, duties,
fees, imposts and other charges provided for under the Tariff and
Customs Code of the Philippines, R.A. 1937 as amended by the
Presidential Decree No. 34 dated October 27, 1972, and Presidential
Decree No. 69 dated November 24, 1972, and filing and service fee and
other charges or costs in any court of administrative proceedings in
which it may be a party;chanroblesvirtualawlibrary
b) From all income taxes, franchise taxes and realty
taxes to be paid to the National Government, its provinces, cities,
municipalities, and other government agencies and instrumentalities;chanroblesvirtualawlibrary
c) From all import duties, compensating taxes and
advance sales tax, wharfage fees on import of foreign goods required
for its operations and projects; and
d) From all taxes, duties, fees, imposts and all
other charges imposed directly or indirectly by the Republic of the
Philippines, its provinces, cities, municipalities, on all petroleum
and related products used by the FSDC.
Any provision of existing laws to the contrary notwithstanding, any
donation, contribution, bequest, subsidy or financiald which may be
made to the Corporation shall be exempt from taxes of any kind, and
shall constitute allowable deductions in full from the income of the
donors or givers for income tax purposes.
Section 14. Expenditures and Disbursements. — The
expenditures and disbursements made by the Corporation in the conduct
of its affairs shall not be subject to the procurement requirements and
restrictions imposed by existing laws upon government agencies,
instrumentalities and government-owned or controlled corporations.
Section 15. Supervision. — The FSDC shall be under
the direct supervision of the Office of the President for the purposes
of policy direction and coordination.
CHAPTER III
Transitory Provisions
Section 16. Transitory Provision. — The properties,
rights, assets, choses inaction, obligation, liabilities, records and
contracts of the Barrio Irrigators' Service Association (BISA) Program,
now under the joint sponsorship of NEA, NIA, PDAP, and DAP, shall be
transferred to the Corporation.
Section 17. Repealing Clause. — All laws, executive
orders, administrative rules and regulations inconsistent with the
foregoing provisions are hereby repealed or accordingly modified.
Section 18. Separability Clause. — The provisions of
this Decree are hereby declared separable, and if any provision of the
Decree is held invalid or unconstitutional the remainder thereof shall
not be affected.
Section 19. Effectivity. — This Decree shall take
effect immediately.
Done in the City of Manila,
this 4th day of April, in the year of Our Lord, nineteen hundred and
seventy-five.
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