Republic of the Philippines

Tarlac State University

College of Education
Lucinda Campus, Tarlac City

Topic: Land Bank of the Philippines

(Self- Instruction Module Approach)

Submitted by:
Danica L. Perez
BSEd III-E Filipino

Submitted to:
Mr. Jose Angel D. Zaballa
(Instructor)
August 13, 2013

Objectives:
1. To describe the creation of the Land Bank of the Philippines.
2. To enumerate the features of Land Bank.
3. To state the general powers of Land Bank.
4. To identify Land Bank’s guiding principles and major roles.
5. To discuss the programs of Land Bank in helping the farmers.

Rationale:
This module aims to learn more about the Land Bank of the Philippines, its
signifance to the Filipinos and to our country, not just only solely on the farmers,
entrepreneurs, etc. It also seeks to understand the different features, roles and programs
the bank has that can contribute to the welfare of Filipinos and especially on the
development of our country.

Target Population:
This module is greatly relevant first and foremost to the professionals or anyone
who has dealings with lands, businesses, and other transactions regarding with the Land
Bank, in order for them to fully understand anything that Land Bank has to offer. It is
also intended for the students so that they have knowledge or insights about Land Bank
since it is also considered as one of the top banks in our country. The information that the
students will gain about Land Bank can be helpful for them wherein they can use these
insights in their future dealings.

Questions (50 points):

Test I: True or False. (15 points)
Write T if the statement is correct, otherwise; write F if the statement is false.
1. Land Bank of the Philippines (LBP) was created by Republic Act 3844 (Agricultural
Land Reform Code) on 8 August 1963
2. In 1987, President Cory Aquino launched a land reform program that promised to
break up large landholdings and redistribute them to tenants.
3. Land Bank is managed and directed by a Board of Directors composed of a Chairman,
a Vice-Chairman, Secretary and five(5) members.
4. In Single Business Unit (SBU), small farms are organized into a single business project
for joint operation and management as a large and economically viable unit of
production.
5. The Land Bank of the Philippines is the body corporate and instrumentality established
by the Code of Agricultural Reforms to provide timely and adequate financial support in
all phases involved in the execution of needed agrarian reform.
6. Land Bank is committed towards the development of the cooperative system.
7. In Lease-Purchase Agreement, the Land Bank allows farmers to acquire necessary
farm facilities by the lease or lease-purchase method, in cases where they cannot qualify
for loan financing.
8. The Land Bank is exempt from all international, national, provincial, municipal and
city taxes and assessments now enforced or hereinafter established.
9. In view of the massive financing requirements of the agrarian reform program, the land
bank was reorganized under Presidential Decree No. 250 which granted to the bank full
banking powers and increased its resources to serve as the financial arm of Agrarian
Reform.
10. Land Bank is an implementing agency of CARP involved in land evaluation,
compensation to owners of private agricultural lands, and collection of amortizations
from CARP farmer-beneficiaries.
11. In Conversion Projects, Land Bank assists farmers convert these landholdings to
fishponds, sugar, and other suitable projects.
12. These earlier institutions, ACCFA and CARPA were designed to finance agricultural
cooperatives and ended up bankrupt due to poor management and imprudent lending
schemes.
13. Land Bank is by far the largest formal credit institution in the urban areas.
14. Land Bank is subjected to the supervision and regulation of the Central Bank of the
Philippines, now Bangko Sentral ng Pilipinas.
15. Land Bank is the official depository of commercial banks.

Test II: Identification. (10 points)

Identify the answers of the following questions. Write the answer before the space
provided.
__________1. It was created by Republic Act 3844 (Agricultural Land Reform Code) on
August 1963, as amended.
__________2. In this program, small farms are grouped into an integrated “estate” and
made the object of a complete development program.
__________3. In this program, small farms are organized into a single business project
for joint operation and management as a large and economically viable unit of
production.
__________4. Land Bank was reorganized and it granted the Land Bank full banking
powers and increased its resources to serve as the financial arm of Agrarian Reform
because it was deficient and inadequate both in capitalization.
__________5. In this program, the Land Bank allows farmers to acquire necessary farm
facilities by the lease or lease-purchase method, in cases where they cannot qualify for
loan financing.
__________6. It is the official depository bank of the Republic of the Philippines and it is
a government financial institution that strikes a balance in fulfilling its social mandate of
promoting countryside development while remaining financially feasible.
__________7. He launched a land reform program that promised to break up large
landholdings and redistribute them to tenants.
__________8. He declared a more substantial land reform program that allowed a
breakup of large agricultural land holdings with seven hectare land retention to owners.
__________9. How many hectares allowed as retention to owners hardly made an
advance in the land reform program way back in Diosdado Macapagal’s regime.
__________10. In this program, the Land Bank assists farmers convert these
landholdings to fishponds, sugar, and other suitable projects.
Test III: Enumeration (15 points)
1-5: Enumerate at least 5 features of Land Bank.
6-10: What are the general powers of Land Bank? Give at least 5 general powers of the
bank.
11-15: Give the five guiding principles of Land Bank
Test IV: Essay (10 points)
1. State how Land Bank was created.
2. Give the programs of Land Bank that help farmers. Explain each program.

Learning Cell:
Land Bank of the Philippines (LBP) was created by Republic Act 3844
(Agricultural Land Reform Code) on 8 August 1963, as amended. It is the official
depository bank of the Republic of the Philippines and it is a government financial
institution that strikes a balance in fulfilling its social mandate of promoting countryside
development while remaining financially feasible. This dual function makes Land Bank
unique. The profits derived from its commercial banking operations are used to finance
the Bank’s developmental programs and initiatives. Over the years, Land Bank has
successfully managed this tough balancing act as evidenced by the continued expansion
of its loan portfolio in favor of its priority sectors: the farmers and fisherfolk, small and
medium enterprises and microenterprises, livelihood loans and agribusiness, agri-
infrastructure and other agri- and environment-related projects.

Creation of the Land Bank of the Philippines

The Land Bank of the Philippines is the body corporate and instrumentality
established by the Code of Agrarian Reforms to provide timely and adequate financial
support in all phases involved in the execution of needed agrarian reform. It extends
financing to three key areas of the agrarian reform program, namely:

 Transfer of agricultural lands and landowners to tenant farmers

  Shifting the capital of former landowner to industry and other productive business
enterprises; and

 Improving the productivity and income of farmer-beneficiaries

In 1963, President Diosdado Macapagal launched a land reform program that

promised to break up large landholdings and redistribute them to tenants. The minimum
75 hectares allowed as retention to owners hardly made an advance in the land reform
program. In all the cases in which a president had tried to institute land reform before, the
landlord controlled legislature frustrated the effort. That reform program also created the
Land Bank of the Philippines but it was inadequately capitalized and it was conceived
primarily as a financial institution that would facilitate and finance the transfer of land
titles from landlords to tenants. With that limited function, the bank was destined in the
way of failed financial institutions before it, like ACCFA (agricultural credit and
cooperative farmer’s association) and its successor, ACA (the agricultural credit
administration). These earlier institutions were designed to finance agricultural
cooperatives and ended up bankrupt due to poor management and imprudent lending
schemes.

President Ferdinand Marcos changed all these when he declared a more

substantial land reform program that allowed a breakup of large agricultural land
holdings with seven hectare land retention to owners. He also amended the charter of the
Land Bank. The new charter came on the heels of a study of what could be done to make
the Land Bank financially stable so that it might better carry out its mission of being an
arm of the land reform program. In view of the massive financing requirements of the
agrarian reform program, the Land Bank was reorganized under Presidential Decree No.
251 which granted to the bank full banking powers and increased its resources to serve as
the financial arm of Agrarian Reform because it was deficient and inadequate both in
capitalization and in organization structure to meet the implementation requirements of
agrarian reform, so the bank was revitalized. In line with its charter, it is engaged in
commercial banking operations not only to finance business and industry but also to
generate more resources for the program. LBP expands its powers to include lending to
agricultural, industrial, home-building or home-financing projects and other productive
enterprises, to grant loans to farmers’ cooperatives/associations to facilitate production,
marketing of crops and acquisition of essential commodities.

Today, Land Bank is by far the largest formal credit institution in the rural areas.
Its credit delivery system is able to penetrate a substantial percentage of the country’s
total number of municipalities. It also ranks among the top five commercial banks in the
country in terms of deposits, assets, loans and capital. From its initial role as the
financing arm of the agrarian reform, Land Bank has evolved into a full-service
commercial bank but the essence of its existence has not changed at all – and that is to
make the countryside continuously throb with life.

Features of the bank

 It is attached to the Department of Agrarian Reform as its land financing and

credit arm, to devote all of its resources to agrarian reforms.

 It is subject to the supervision and regulation of the Central Bank of the

Philippines, now Bangko Sentral ng Pilipinas.

 It is authorized to receive demand, savings and time deposits

 It is managed and directed by a Board of Directors composed of a Chairman, a

Vice-Chairman, and five(5) members wherein these 7 members of the board of
directors play the roles of the following: The Secretary of Finance as Chairman,
the President of the Bank as Vice-Chairman, the Secretary of Agrarian Reform
and the Secretary of Labor and Employment, as ex officio members, and three(3)
members, one(1) member to be appointed by the President to represent the
agrarian reform beneficiaries, and the two(2) remaining members to be elected as
hereinafter provided. The appointive member holds a term of office for one year
and shall have been appointed and qualified. Under the law, the farmers are given
a voice in the governing body of the Land Bank, “consistent with the policy on
 farmer’s participation and involvement in securing the benefits of agrarian
reforms.”

 It administers all agricultural guarantee funds which by law shall be converted

into a trust fund

 It is exempt from all taxes and assessments now enforced or subsequently

The Land Bank of the Philippines, being the financial intermediary of Comprehensive
Agrarian Reform Program (CARP), has the following functions;

 a. Provide production loans to beneficiaries in private agricultural lands.

 b. Determine the land evaluation and compensation for all lands covered under
R.A No. 6657, pursuant to Executive Order No. 405 dated June 14, 1990.

 c. Handle payment of landowners covered by CARP.

General Powers of the Bank

According to Presidential Decree No. 251, the powers of the Land Bank are: “1.)
To prescribe, repel and alter its own by-laws to determine its operating policies, and to
issues such rules and regulations as may be necessary, “2.) To adopt, alter and use a
corporate seal; 3.) To hold, purchase , acquire and own real and personal property,
introduce necessary improvements thereon to enhance and develop their social and
economics values and to sell, mortgage or otherwise dispose of the same; 4.) To sue and
be sued, make contracts, negotiate and secure loans from both local and foreign sources.
Before undertaking such credit operation, the Bank through the [Minister] of Finance,
shall request the opinion, in writing, of the Monetary Board on the monetary implications
of the contemplated action. All loans from foreign sources shall be subject to approval by
the President of the Philippines and shall be fully guaranteed by the Philippine
Government; 5.) To grant short, medium and long term loans and advances against
security of real estate and/or other acceptable assets for the establishment, development
or expansion of agricultural, industrial, home building or home financing projects and
other productive enterprises; 6.) To grant loans to farmers’ cooperatives associations, to
facilitate production, marketing of crops and acquisition of essential commodities; 7.) To
finance and/or guarantee the acquisition under Presidential Decree No. 85 dated
December 25, 1972, of farm lots transferred to tenant-farmers pursuant to Presidential
Decree No. 27, dated October 21, 1972; 8.) To underwrite , hold, own , purchase, acquire,
sell, mortgage, dispose or otherwise invest or re-invest in stocks, bonds, debentures,
securities and other evidences of indebtedness of other corporations and of the
government or its instrumentalities which are issued for or in connection with any
project or enterprise; 9.) The provision of any law to the contrary notwithstanding, to
guarantee acceptances, credits, loans, transactions or obligations of any person, co-
partnership, association or corporation in favor of any financing or banking institution,
whether foreign or domestic; Provided, that the proceeds of such acceptances, credits,
loans, transactions or obligations are utilized or earmarked for the development and/or
expansion of agriculture and industry; 10.) To borrow from, or rediscount notes, bills of
exchange and other commercial papers with the Central Bank. The rate of interest to be
charged and the conditions on such obligations or borrowings shall be subject to the rules
and regulations of the Monetary Board, and 11.) To act as trustee, or administer any trust
or hold property in trust in accordance with the provisions of law governing trust
corporation; and 12.) To exercise the general powers mentioned in the Corporation Law
and the General Bank Act, as amended, insofar as they are not inconsistent or
incompatible with the Code (as it was amended by P.D. No. 251, dated July 21, 1973.)

Guiding Principles of Land Bank

 Catalyst of countryside development and poverty alleviation

 Commitment towards the development of the cooperative system

 Self- sustainability through cross-subsidy operations(commercial banking profits

supporting agrarian operations)

 Self-reliant government institution with no budgetary support

  Commitment towards environmental protection

Major Roles of Land Bank

 An implementing agency of CARP involved in land evaluation, compensation to

owners of private agricultural lands, and collection of amortizations from CARP
farmer-beneficiaries

 Provision of credit assistance to small farmers and fisherfolk and agri-related

business

 An official depository of government funds

 A government bank with a social mandate to spur countryside development.

Programs of the Bank to help farmers

In line with the government’s efforts of solving the problems of rural

underdevelopment and poverty, democratizing wealth, and narrowing the gap between
the rich and the poor, the Land Bank has developed various programs to help farmers
increase their productivity and income.

Among these programs are:

 Integrated Estate Development Program (IEDP) - Small farms are grouped into an
integrated “estate” and made the object of a complete development program. All
components of development are taken into account, such as land tenure questions,
institutional development in cooperative training, infrastructure, subsidiary or off-
farm activities production and post-harvest facilities, financing and price
structures.
  Single Business Unit (SBU) - Small farms are organized into a single business
project for joint operation and management as a large and economically viable
unit of production. The Land Bank capitalizes and manages the SBU by putting
up the fixed facilities, providing production inputs and paying wages of farmers
who contribute their labor and land to the project. The farmers retain ownership of
their respective farm lots, which form the basis of their participation in the net of
the SBU.

 Conversion Projects- There are many cases where, due to environmental and other
factors, agrarian farms have become unproductive for rice and corn cultivation.
The Land Bank assists farmers convert these landholdings to fishponds, sugar,
and other suitable projects.

 Lease-Purchase Agreement- The Land Bank allows farmers to acquire necessary

farm facilities by the lease or lease-purchase method, in cases where they cannot
qualify for loan financing. The bank puts up the facilities for the farmers through
their cooperative.

Tax exemptions

The Land Bank is exempted from all national, provincial, municipal and city taxes and
assessments now enforced or hereinafter established.

The exemptions authorized apply to all property of the bank, to the resource, receipts,
expenditures, profits, and income of the bank, as well as to all contracts, deeds,
documents and transactions for which the bank itself would otherwise be liable and shall
not apply to assessments or taxes payable by persons or their entities doing business with
the bank.
 15. F

Test II

Answers: 1. Land bank of the Philippines

Test 1 2. Integrated Estate Development

1. T Program (IEDP)
2. F
3. F 3. Single Business Unit (SBU)
4. T
5. F 4. Presidential Decree No. 251
6. T
7. T
8. F 5. Lease-Purchase Agreement
9. T
10. T 6. Land bank of the Philippines
11. T
12. F 7. President Diosdado Macapagal
13. F
14. T 8. President Ferdinand Marcos

9. Minimum of 75 hectares,

10. Conversion Projects

Test III

1-5: The five features of Land Bank are as follows: 1.) It is attached to the Department of
Agrarian Reform as its land financing and credit arm, to devote all of its resources to
agrarian reforms. 2.) It is subject to the supervision and regulation of the Central Bank of
the Philippines, now Bangko Sentral ng Pilipinas. 3.) It is authorized to receive demand,
savings and time deposits. 4.) It is managed and directed by a Board of Directors
composed of a Chairman, a Vice-Chairman, and five members wherein these 7 members
of the board of directors play the roles of the following: The Secretary of Finance as
Chairman, the President of the Bank as Vice-Chairman, the Secretary of Agrarian
Reform and the Secretary of Labor and Employment, as ex officio members, and three
members, one member to be appointed by the President to represent the agrarian reform
beneficiaries, and the two remaining members to be elected as hereinafter provided. 5.) It
administers all agricultural guarantee funds which by law shall be converted into a trust
fund.
6-10: The general powers of the Land Bank are:

 To hold, purchase/acquire and own real and personal property, introduce

necessary improvements thereon to enhance and develop their social and
economic values, and to sell, mortgage or otherwise dispose of the same

 To negotiate and secure loans from local and foreign resources. All loans from
foreign sources shall be subject to approval by the President of the Philippines
Government

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

 To grant loans to farmers’ cooperatives/associations to facilitate production,

marketing of crops and acquisition of essential commodities

 To borrow from, or rediscount notes, bills of exchange and other commercial

papers with the Central Bank.
11-15: The five guiding principles of Land Bank are: 1.) Catalyst of countryside
development and poverty alleviation; 2.) Commitment towards the development of the
cooperative system; 3.) Self- sustainability through cross-subsidy operations (commercial
banking profits supporting agrarian operations); 4.) Self-reliant government institution
with no budgetary support; and 5.) Commitment towards environmental protection.

Test IV
1. On August 8, 1963, Land Bank of the Philippines was established in accordance with
Republic Act 3844 (Agricultural Land Reform Code) as amended wherein President
Diosdado Macapagal launched a land reform program that promised to break up large
landholdings and redistribute them to tenants. The minimum 75 hectares allowed as
retention to owners hardly made an advance in the land reform program. That reform
program also created the Land Bank of the Philippines but it was inadequately capitalized
and it was conceived primarily as a financial institution that would facilitate and finance
the transfer of land titles from landlords to tenants. With that limited function, the bank
was destined in the way of failed financial institutions before it, like ACCFA (agricultural
credit and cooperative farmer’s association) and its successor, ACA (the agricultural
credit administration). These earlier institutions were designed to finance agricultural
cooperatives and ended up bankrupt due to poor management and imprudent lending
schemes. President Ferdinand Marcos changed all these when he declared a more
substantial land reform program that allowed a breakup of large agricultural land
holdings with seven hectare land retention to owners. He also amended the charter of the
Land Bank. The new charter came on the heels of a study of what could be done to make
the Land Bank financially stable so that it might better carry out its mission of being an
arm of the land reform program. In view of the massive financing requirements of the
agrarian reform program, the land bank was reorganized under Presidential Decree No.
251 which granted to the bank full banking powers and increased its resources to serve as
the financial arm of Agrarian Reform because it was deficient and inadequate both in
capitalization and in organization structure to meet the implementation requirements of
agrarian reform, so the Bank was revitalized. Over the years, Land Bank has successfully
managed this tough balancing act as evidenced by the continued expansion of its loan
portfolio in favor of its priority sectors: the farmers and fisherfolk, small and medium
enterprises and microenterprises, livelihood loans and agribusiness, agri-infrastructure
and other agri- and environment-related projects. It also ranks among the top five
commercial banks in the country in terms of deposits, assets, loans and capital.

2. The programs of Land Bank in helping the farmers are the following: In Integrated
Estate Development Program (IEDP), small farms are grouped into an integrated “estate”
and made the object of a complete development program. All components of
development are taken into account, such as land tenure questions, institutional
development in cooperative training, infrastructure, subsidiary or off-farm activities
production and post-harvest facilities, financing and price structures. While in Single
Business Unit (SBU), small farms are organized into a single business project for joint
operation and management as a large and economically viable unit of production. The
land bank capitalizes and manages the SBU by putting up the fixed facilities, providing
production inputs and paying wages of farmers who contribute their labor and land to the
project. The farmers retain ownership of their respective farm lots, which form the basis
of their participation in the net of the SBU. In Conversion Projects, there are many cases
where, due to environmental and other factors, agrarian farms have become unproductive
for rice and corn cultivation so the Land Bank assists farmers convert these landholdings
to fishponds, sugar, and other suitable projects. Lastly, the Lease-Purchase Agreement, in
here, the Land Bank allows farmers to acquire necessary farm facilities by the lease or
lease-purchase method, in cases where they cannot qualify for loan financing. The bank
puts up the facilities for the farmers through their cooperative.

Summary:

The Land Bank of the Philippines is the body corporate and instrumentality
established by the Code of Agrarian Reforms to provide timely and adequate financial
support in all phases involved in the execution of needed agrarian reform. It was created
by Republic Act 3844 (Agricultural Land Reform Code) on 8 August 1963, as amended.

In 1963, President Diosdado Macapagal launched a land reform program that

promised to break up large landholdings and redistribute them to tenants. That reform
program also created the Land Bank of the Philippines but it was inadequately capitalized
and it was conceived primarily as a financial institution that would facilitate and finance
the transfer of land titles from landlords to tenants. After how many years, President
Ferdinand Marcos changed all these when he declared a more substantial land reform
program that allowed a breakup of large agricultural land holdings with seven hectare
land retention to owners. The Land Bank was reorganized under Presidential Decree No.
251 which granted to the bank full banking powers and increased its resources to serve as
the financial arm of Agrarian Reform because it was deficient and inadequate both in
capitalization and in organization structure to meet the implementation requirements of
agrarian reform, so the Bank was revitalized.

As of now, Land Bank is by far the largest formal credit institution in the rural
areas wherein it is inclined with the government’s efforts of solving the problems of rural
underdevelopment and poverty, democratizing wealth, and narrowing the gap between
the rich and the poor so the Land Bank has developed various programs to help farmers
increase their productivity and income. It is also exempted from all national, provincial,
municipal and city taxes. It also ranks among the top five commercial banks in the
country in terms of deposits, assets, loans and capital. From its initial role as the
financing arm of the agrarian reform, Land Bank has evolved into a full-service
commercial bank but the essence of its existence has not changed at all – and that is to
make the countryside continuously throb with life.

Bibliography:

Books:

Clavel, Leopoido Leothiny., Agrarian Reform in the Philippines. New Mercury Press.

De Leon, Hector., Textbook on Agrarian Reform and Taxation(with cooperatives)11 th

Editioni. REX Book Store.
Joven, Jose Romero., Agrarian Reform Laws in the Philippine Setting with Supreme
Court Decisions on Agrarian Cases, Executive and Administrative Order. REX Book
Store.

Internet:

https://www.landbank.com

http://www.soemco.coop/land-bank-of-the-philippines

http://www.philstar.com/business/724105/building-national-institutions-land-bank-
philippines