MALACAŅANG
M a n i l a
PRESIDENTIAL DECREE No. 1595
AMENDING PRESIDENTIAL DECREE NUMBER SIX HUNDRED EIGHTY-ONE ENTITLED "CREATING THE FARM SYSTEMS DEVELOPMENT CORPORATION PRESCRIBING ITS POWERS AND ACTIVITIES PROVIDING FUNDS THEREFOR AND FOR OTHER PURPOSES"
WHEREAS, under Presidential Decree No. 681, the Farm Systems Development Corporation has been created to bolster the government efforts to hasten rural development and to provide substantial opportunities to Filipino farmers to attain economic well-being and to lead a dignified life pursuant to the national policy declared under said Decree;
WHEREAS, in order to effectivity fulfill its purposes and to enable it to undertake and implement special projects in the pursuit of its objectives, it is imperative that the Farm Systems Development Corporation be endowed with certain powers and conferred with certain privileges to the end that its activities be undertaken with greater vigor, resources and direction:
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and decree:
Section 1. Section 2 of Presidential Decree No. 681 is hereby amended to read as follows:
"Sec. 2. POLICY/PURPOSE. The commitment of the farmers to actively participate in the efforts to improve methods and develop entrepreneurial capabilities in the areas of resource management, farming, fishing, forestry, agro-industrial production, processing, marketing, drainage, rural waterworks and land reclamation for agricultural production 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 of and assist association and other rural-based entities which are willing to pursue diligently and the above purpose.
To become effectively established and operationally stable, the associations and other rural-based 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 substantially covered all phases of their organization and operation requiring or justifying regulation, and in order to further encourage and promote their development, they should be subject to minimal regulation by all administrative agencies."
Section 2. The following definitions shall be included in Section 3 of Presidential Decree No. 681:
"Sec. 3. DEFINITIONS. . . .
(c) "NFAC" shall mean the National Food and Agriculture Council.
(d) "Farmers" shall mean persons actively engaged in agriculture, forestry, or fishing."
Section 3. DEFINITIONS. . . .
(e) "Association" shall mean an organization of farmers duly registered under the provisions of this Decree.
(g) "Service" shall mean services provided by the association, including the providing of any auxiliary or related services."
Section 4. The existing Section 3 (d), (e), (f), (g), (h), (i), (j), and (k) of Presidential Decree No. 681 are hereby relettered as Section 3 (e), (f), (g), (h), (i), (j), (k), and (l), respectively
Section 5. "Irrigation associations" and "farmer-associations" under Presidential Decree No. 681 shall read "association(s)". "Irrigation services" shall read service(s)". Farm-based entities" shall read "rural-based entities."
Section 6. Section 4 of the Presidential Decree No. 681 is hereby amended to read as follows:
"Sec. 4. FSDC AUTHORITIES, POWERS AND DIRECTIVES. The FSDC is hereby authorized, empowered and directed to promote the organization of, and assist 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 the authorization, powers and directives established by this Decree, specifically authorized empowered and directed:
(a) to have a continuous succession under its corporate name until otherwise provided by law;
(b) to prescribe and thereafter amend and repeal its by-laws not inconsistent with this Decree;
(c) to adopt and use a seal and alter it at its pleasure;
(d) to sue and be sued;
(e) to make contract of every name and nature, to execute all instruments necessary or convenient for the carrying on of its business;
(f) to make loans to associations or rural based entities for the construction or acquisition, operation and maintenance of irrigation and other water systems, cold-storage and warehousing facilities, and all related properties such as equipment, buildings and structures, machinery, fixtures and materials, and other support items such as transportation equipment and pre and post-harvest facilities; and thereafter, to make loans for the restoration, improvement or enlargement of such facilities;
(g) to make short-term production loans to associations or rural-based entities;
(h) to receive from associations all articles of incorporation, amendments, consolidation, merger, conversion or dissolution and all certificates of changes in location of principal offices and of elections to dissolve, and, upon determining that such are in conformity, with this Decree, to certify the same, to file them in the records of the FSDC, and to maintain a registry of such filings, the provisions of Act No. 1459, as amended, and Presidential Decree No. 902-A to the contrary notwithstanding;
(i) to assist associations and other rural-based entities and coordinate with government agencies and corporations having related functions and purposes in planning, developing, establishing, operating, maintaining, repairing and renovating the association's facilities and systems;
(j) to prepare feasibility studies, engineering plans for integrating rural-based systems development including the procurement of modern and improved facilities, devices and accessory equipment;
(k) to provide managerial or administrative expertise including the rendering of professional training services for the association's staff and employee development;
(l) 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), the National Power Corporation (NPC), and the National Food Agriculture Council (NFAC), as will most effectively conduce to the achievement of the purposes of this Decree;
(m) to borrow funds from any source, private or government foreign or domestic, and to issue bonds or other evidence of indebtedness;
(n) 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;
(o) to investigate and study the feasibility of using, and to use when feasible, irrigation equipment not only for irrigation but also for small-scale power generation purposes;
(p) to investigate and study all available water resources in the Philippines in coordination with the National Water Resources Council and the National Irrigation Administration;
(q) to enter into agreements or relationships with other institutions or organizations, both national and international, in furtherance of the purposes and objectives of the Corporations;
(r) to acquire, by purchase or otherwise (including the right of eminent domain, which is hereby granted to the FSDC, to be exercised in the manner provided by law for the institution and completion of expropriation proceedings by the national and local governments), real and physical properties, together with all appurtenant rights, easement, licenses and privileges, whether or not the same be already devoted to public use, upon the determination of the FSDC that such acquisition is necessary to accomplish the purposes of this Decree and, if such properties be already devoted to public use, that such use will be better served and accomplished by such acquisition; Provided, that the power herein granted shall be exercised by the FSDC solely as agent for and on behalf of one or more associations, which entity or entities shall become borrowers from the FSDC under subparagraph (f) of this section; and provided further, that the costs of such acquisition, including the cost of any eminent domain proceedings, shall be borne, either directly or by reimbursement to the FSDC, whichever the FSDC shall elect, by the association or entities on whose behalf the acquisition is undertaken; and otherwise to acquire, improve, hold, transfer, sell, lease, rent mortgage, encumber or otherwise dispose of the property to carry out the purposes for which the FSDC was created;
(s) 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;
(t) to establish branch offices;
(u) to invest its funds or other assets in such undertakings as it may deem wise or necessary to carry its purposes and objectives;
(v) to report to the President at least annually, not later than June 30th, 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, and the number of farmers receiving services as a result of such loans;
(w) to do and perform any other acts and things, and to have and exercise any other powers which may be necessary, incidental or appropriate to accomplish the purpose for which the FSDC is organized, including the powers to establish and maintain subsidiaries, and in general, to exercise all the powers of a corporation under the Corporation Law, insofar as they are inconsistent with the provisions of this Decree."
Section 7. Section 5(a) and (b) of Presidential Decree No. 681 is hereby amended to read as follows:
"Sec. 5. FSDC BOARD OF ADMINISTRATORS; ADMINISTRATOR
(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 Minister of Public Works, Transportation and Communications, the NIA Administrator, the NGA Administrator, the NEA Administrator, the DAP President, and the NFAC Executive Director as regular members, and the FSDC Administrator as ex-officio member. 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 Administrator be entitled to a per diem of mot more than P500.00 for such meeting actually attended by them; Provided that the total of such per diems shall not exceed two thousand five hundred pesos (P2,500) per month per member.
(b) The Board of Administrators shall meet regularly at least twice a month and as often as the exigencies of the Corporation's affairs demand. The presence 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."
Section 8. A new section is hereby inserted after Section 10 of Presidential Decree No. 681, to be designated as Section 11, which shall read as follows:
"Sec. 11. SPECIAL ANNUAL APPROPRIATIONS. FSDC shall be provided special annual appropriations from the Social Pricing and Development Adjustment Fund of the Budget Commission to support its yearly operating expenses. Expenses that are non-income-producing such as customs duties on imported equipment, training of farmers and other expenses directly related to the institutional development program of FSDC shall be supported by contributions from the National Government."
Section 9. Section 15 of the Presidential Decree No. 681 is hereby amended to read as follows:
"Sec. 15. SUPERVISION. The FSDC shall be attached to the Office of the Ministry of Public Works, Transportation and Communications for purposes of policy direction and coordination."
Section 10. The existing Sections 11, 12, 13, 14 and 15 of Presidential Decree No. 681 are hereby renumbered as Sections 12, 13, 14, 15 and 16, respectively.
Section 11. A new chapter is hereby inserted after the existing Section 15 of the Presidential Decree No. 681 to be designated as Chapter III, which shall read as follows:
"CHAPTER III"
ASSOCIATIONS
Sec. 17. ORGANIZATION AND PURPOSES. Non-stock, non-profit associations may be organized and registered, and irrigators' associations heretofore formed or registered under Act No. 1459, as amended and Presidential Decree No. 902-A may be converted to an association, under the provisions of this Decree to pursue activities in line with the purposes and objectives provided for under this Decree.
Sec. 18. POWERS. An association is hereby vested with all powers necessary or convenient for the accomplishment of its corporate purposes. Such powers shall include, but not limited to, the power:
(a) to sue and be sued in its corporate name;
(b) to have an existence for a period of fifty years;
(c) to adopt a corporate seal and alter the same;
(d) to construct, acquire, own, hold, manage, control, operate, and maintain a canal irrigation system; to acquire water rights; to acquire, hold, own, maintain and control water from source; to do any and all things necessary in providing water for irrigation and domestic use; or to pursue activities in line with the purposes and objectives provided for under this Decree.
(e) to assist members of the association in improving their methods of production and the marketing and distribution of their products;
(f) to acquire, purchase, own, hold, develop, lease, mortgage, pledge, exchange, sell, transfer, or otherwise invest, trade or deal in any manner permitted by law, real or personal property as may be necessary for the accomplishment of its purposes;
(g) to borrow money and otherwise contract indebtedness and issue notes, bonds and other evidence of indebtedness and to secure payment thereof by mortgage pledge or deed of trust of, or any encumbrance upon, any or all of its then owned of after-acquired real or personal property and assets; Provided, that any borrowing from, or any encumbering of its properties as security in favor of any lending source other than the FSDC shall require the prior approval of the FSDC Administrator who shall certify that such is in furtherance of the purposes and its consistent with the provisions of this Decree, and that such borrowing and/or encumbering will not diminish the security of, or of the ability of the association to repay any then-outstanding indebtedness of the association to the FSDC or any other lending source below the level of such security and ability were such additional borrowing not being undertaken;
(h) to enter into contract for any lawful purpose;
(i) to adopt, amend and repeal its by-laws;
(j) to do and perform any other acts and things, and to have and exercise any other powers which may be necessary, convenient and appropriate to accomplished the purpose for which the association is organized.
Sec. 19. INCORPORATIONS. Five or more persons may form and organize an association.
Sec. 20. ARTICLES OF INCORPORATION. The articles of incorporation shall recite that they are executed pursuant to this Decree and shall state:
(a) the name of the association;
(b) the address of its principal office;
(c) the names and addresses of the incorporators;
(d) the names and addresses of its original directors who shall constitute the board until the first election of the board by the members. Such articles shall be signed by each incorporator and acknowledged by at least two of the incorporators.
(e) such other provisions not inconsistent with the provisions of this Decree necessary for the proper conduct of the business of the association.
Sec. 21. BY-LAWS The power to adopt and thereafter amend or repeal by-laws shall be vested with the majority of all the members of the association. The by-laws shall set forth the basic rights and duties of members and board of directors and may contain any other provisions for the regulation and management of the affairs of the association not inconsistent with the articles of incorporation or this Decree.
Sec. 22. MEMBERS. The by-laws shall prescribe the qualifications and limitations with respect to membership not inconsistent with the purposes and provisions of this Decree.
Sec. 23. MEETINGS OF MEMBERS. An annual meeting of the members of the association shall be held at such time and place as may be provided for in the by-laws. Special meetings may be called as may be provided for in the by-laws.
Sec. 24. BOARD OF DIRECTORS. The business of the association shall be managed by a Board of Directors which shall not be less than 5 nor more than 15 members. The by-laws shall prescribe the number of directors, their qualifications, the manner of holding meetings of the board, and electing successors to directors who shall resign, die or otherwise be incapable of acting.
Sec. 25. OFFICERS. The officers of the association shall consist of a president, a secretary, a treasurer, an auditor and a counselor. The board may also elect or appoint such other officers, agents or employees as it deems necessary or advisable and shall prescribe their powers and duties. Any officer may be removed from office and his successor elected in the manner prescribed in the by-laws.
Sec. 26. AMENDMENTS OF ARTICLES OF INCORPORATION. An association may amend its articles of incorporation by complying with the following requirements: The proposed amendment shall be presented to a meeting of the members, the notice of which shall set forth or have attached thereto the proposed amendment or an accurate summary thereof. If the proposed amendment with any changes, is approved by the affirmative vote of not less than two-thirds of all the members, the articles of amendment shall be executed and acknowledged on behalf of the association by its president and attested by its secretary. The articles of amendment shall recite that they have been executed pursuant to this Decree and shall state:
(a) the name of the association;
(b) the address of its principal office;
(c) the amendment to its articles of incorporation
The president executing such articles of amendment shall execute an affidavit stating that the provisions of this section with respect to the amendment set forth in such articles were duly complied with.
Sec. 27. CONSOLIDATION. Any two or more associations each of which is hereinafter designated a ("consolidating association") may be consolidated into a new association (hereinafter designated as the "new association"), by complying with the following requirements:
(a) the proposition for the consolidation of the consolidating associations into a new association and proposed articles of consolidation to give effect thereto shall be submitted to a meeting of the members of each consolidating association, the notice of which shall have attached thereto a copy of the proposed articles of consolidation or an accurate summary thereof.
(b) if the proposed consolidation and the proposed articles of consolidation, with any amendments, are approved by the affirmative vote of not less than two-thirds of all the members, the articles of consolidation in the form approved shall be executed and acknowledged on behalf of each consolidating association by its president and its seal shall be affixed thereto and attested by its secretary. The articles of consolidation shall recite that they are executed pursuant to this Decree and shall state:
(1) the name of each consolidating association and the address of its principal office;
(2) the name of the new association and the address of its principal office;
(3) a statement that each consolidating association agrees to the consolidation;
(4) the names and addresses of the directors of the new association; and
(5) the terms and conditions of the consolidation and the mode of carrying the same into effect, including the manner in which members of the consolidating association may become members of the new association, and may contain any other provisions not inconsistent with the Decree that are deemed necessary or advisable for the conduct of the business of the new association.
The president of each consolidating association executing such articles of consolidation shall make and annex thereto an affidavit stating that the provisions of this section were duly complied with.
Sec. 28. MERGER. Any one or more associations (each of which is hereinafter designated a "merging association") may merge with one or more other associations by complying with the following requirements:
(a) The proposition for the merger of the merging associations into the surviving association and proposed articles of merger to give effect thereto shall be submitted to a meeting of the members of each merging association and of the surviving association, the notice of which shall have attached thereto a copy of the proposed articles of merger or an accurate summary thereof.
(b) If the proposed merger and the proposed articles of merger, with any amendments, are approved by the affirmative vote of not less than two-thirds of all the members, articles of merger in the form approved shall be executed and acknowledged on behalf of each such association by its president and its seal shall be affixed thereto and attested by its secretary. The articles of consolidation shall recite that they are executed pursuant to this Decree and shall state:
(1) the name of each merging association and the address of its principal office;
(2) the name of the surviving association and the address of its principal office;
(3) a statement that each merging association and the surviving association agree to the merger;
(4) the names and addresses of the directors of the surviving association; and
(5) the terms and conditions of the merger and the mode of carrying the same into effect, including the manner in which members of the merging association may or shall become members of the surviving association and may contain any other provisions not inconsistent with this Decree that are deemed necessary or advisable for the conduct of the business of the surviving association.
The president of each association executing such articles of merger shall make and annex thereto an affidavit stating that the provisions of this section were duly complied with.
Sec. 29. EFFECTS OF CONSOLIDATION AND MERGER.
(a) In the case of consolidation, the existence of the consolidating association shall cease and the articles of consolidation shall be deemed to be the articles of incorporation of the new association and in the case of merger, the separate existence of the merging association shall cease and the articles of incorporation of the surviving association shall be deemed to be amended to the extent, if any, that changes therein are provided for in the articles of merger without further act or deed;
(b) All rights, privileges, and immunities, and all property, real and personal, including applications for membership all debts due on whatever account and all other choses in action of each of the consolidating or merging associations shall be deemed to be transferred to and vested in the new or surviving association without further act or deed;
(c) The new or surviving association shall be responsible and liable for all the liabilities and obligations of each of the consolidating or merging associations and any claim existing or action or proceeding pending by or against any of the consolidating or merging associations may be prosecuted as if the consolidation or merger had not taken place, but the new or surviving association shall be substituted in its place; and
(d) Neither the rights of creditors nor any liens upon the property of any such association shall be impaired by such consolidation or merger.
Sec. 30. CONVERSION OF EXISTING CORPORATION. Any irrigators' association heretofore organized or registered under Act No. 1459, as amended, and Presidential Decree No. 902-A may convert itself into an association under this Decree by complying with the following requirements, and shall thereupon become subject to this Decree with the same effect as if it were originally organized hereunder.
(a) The proposition for the conversion of such corporation and the proposed articles of conversion to give effect thereto shall be submitted to a meeting of the members of such corporation, the notice of which shall have attached thereto a copy of the proposed articles of conversion of an accurate summary thereof.
(b) If the proposition for the conversion and the proposed articles of conversion, with any amendments, are approved by the affirmative vote of not less than a majority of all the members, the articles of conversion in the form approved shall be executed and acknowledged on behalf of such corporation by its president and its seal shall be affixed thereto and attested by its secretary. The articles of conversion shall recite that they are executed pursuant to this Decree and shall state:
(1) the name of the corporation and the address of its principal office prior to the conversion into an association;
(2) a statement that such corporation elects to become an association, non-profit, membership corporation subject to this Decree;
(3) its name as an association;
(4) the address of the principal office of the association;
(5) the names and addresses of the directors of the association; and
(6) the manner in which members of such corporation may or shall become members of the association; and may contain any other provisions not inconsistent with this Decree that are deemed necessary or advisable for the conduct of the business of the association.
The president executing such articles of conversion shall make and annex thereto an affidavit stating that the provisions of this section were duly complied with respect to such articles. The articles of conversion shall be deemed to be the articles of incorporation of the association.
Sec. 31. DISSOLUTION. An association may be dissolved by a resolution adopted by the affirmative vote of not less than three-fourths of all the members at a regular or special meeting called for the purpose. A certificate of dissolution shall be executed by the president of the association under its seal, attested, by its secretary, and duly acknowledged and sworn to before a notary public, stating: (1) the name of the association; (2) the address of its principal office; and (3) that the members of the association have duly voted that the association be dissolved. Upon the filing of the certificate as provided for in Section 32, the association shall cease to carry on its business except to the extent necessary for the winding up thereof, but is corporate existence shall continue until the articles of dissolution shall have been filed. The board shall immediately cause notice of the dissolution proceedings to be mailed to each known creditor of and claimant against the association and to be published once a week for two successive weeks in a newspaper of general circulation in the territory in which the principal office of the association is located. The board shall wind up and settle the affairs of the association, collect sums owing to it, liquidate its property and assets, and pay and discharge its debts, obligations and liabilities, any remaining sums and/or unliquidated assets shall then be distributed in such manner as provided in the association's articles of incorporation or by-laws. The board shall thereupon authorize the execution of the articles of dissolution which shall be executed and acknowledged on behalf of the association by its president and attested by its secretary. The articles of dissolution shall recite that they are executed pursuant to this Decree and shall state:
(1) the name of the association;
(2) the address of it principal office;
(3) the date on which the certificate of election dissolve was filed;
(4) that there are no actions or suits pending against the association;
(5) that all debts, obligations, and liabilities of the associations have been paid and discharged or that provision to the extent possible has been made therefor; and
(6) that the provisions of this section have been duly complied with.
The president executing the articles of dissolution shall make and annex thereto an affidavit stating that the statements made therein are true.
Sec. 32. FILING OF ARTICLES AND CERTIFICATES. Articles of incorporation, amendments, consolidation, merger, conversion or dissolution and certificates of changes in the location of principal offices and of elections to dissolve, when executed and acknowledged and accompanied by such affidavits as may be required by the applicable provisions of this Decree, shall be presented to the Administrator for filing in the records of his office. If he shall find that such conform to the requirements of this Decree, he shall so certify and shall file the same in the records of his office. Upon such certification and filing, the incorporation, amendment, consolidation, merger, conversion, dissolution or certificate provided for therein shall be in effect.
Sec. 33. APPROVAL OF FS BOARD OF ADMINISTRATORS. Any proposition by any association for consolidation, merger, conversion or dissolution must have the prior approval of the FSDC Board of Administrators.
Sec. 34. DISPOSITION OF PROPERTY. The association may not otherwise sell, lease or, except in the case of consolidation and merger, otherwise dispose of the property, unless such sale, lease, or except in the case of consolidation and merger, other disposition is:
(1) authorized by the affirmative vote of not less than two-thirds of all the members of the association; and
(2) consented by FSDC and any other lending source which then holds a lien on any of the association's properties.
Sec. 35. EXEMPTION FROM THE SECURITIES AND EXCHANGE COMMISSION.
(a) The association shall be exempt from regulation by the Securities and Exchange Commission;
(b) The provisions of the Securities Act shall not apply to any note, bond, or other evidence of indebtedness issued by any association, or to any mortgage, deed or trust, indenture or other instrument executed to secure the same. The provisions of said Act shall not apply to the issuance of membership certificates by an association."
Section 12. The existing Chapter III, Sections 16, 17, 18 and 19 of Presidential Decree No. 681 are hereby renumbered as Chapter IV, Sections 36, 37, 38 and 39, respectively.
Section 13. All provisions of existing laws, executive and administrative orders or parts thereof in conflict with this Decree are hereby modified and/or repealed accordingly.
Section 14. This Decree shall take effect immediately.
DONE in the City of Manila, this 11th day of June, in the year of Our Lord, nineteen hundred and seventy-eight.
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