RA 11901 unlocks bigger, flexible bank loans for rural MSMEs and agri-businesses.

Imagine you are given a bicycle so you can go to school. That's good—but what if you don't have

money for repairs, fuel for a motorbike, or safety gear? The bicycle alone may not be enough.

The same is true for farmers. Giving them land is important, but they also need money, training, equipment, and support to make their farms productive.

That is what Republic Act No. 11901, or the Agriculture, Fisheries and Rural Development Financing Enhancement Act of 2022, tries to do. It helps farmers, fisherfolk, and agrarian reform beneficiaries (ARBs) gain better access to loans and financial services so they can improve their livelihoods.

What does the law require?

Banks are encouraged and required to support agriculture, fisheries, and rural development by providing financing for:

• Farming and fishing activities
• Farm machinery and equipment
• Food processing and marketing
• Rural businesses
• Modern technologies and digital agriculture
• Environmental and climate-friendly projects

What happens if banks do not comply?

If banks fail to meet the required financing targets, they must pay penalties. Instead of letting the money sit idle, the law creates a Special Fund from these penalties.

Why does DAR receive 35% of the Special Fund?

Many farmers under agrarian reform were given land through a Collective Certificate of Land Ownership Award (Collective CLOA). This means a large piece of land was awarded to a group of farmers. Think of it like five siblings inheriting one big cake without clearly marking each person's slice.

This can create problems:

• Unclear boundaries
• Disagreements among owners
• Difficulty obtaining loans
• Complicated land records

To solve this, DAR divides the land into clearly defined individual parcels and issues individual titles to each farmer. This process is called parcelization and titling.

Because this work is expensive, RA 11901 provides that 35% of the Special Fund shall be allocated to DAR for the titling and parcelization of landholdings covered by collective CLOAs. 

With individual titles:

• Farmers know exactly which land is theirs.
• Land disputes are reduced.
• Government services are easier to deliver.
• Farmers may find it easier to access formal financing.  

 RA 11901 helps farmers, fisherfolk, and rural communities obtain financing, and it uses part of the penalties paid by non-compliant banks to help DAR give individual land titles to agrarian reform beneficiaries through the parcelization of collective CLOAs.

The DAR Project SPLIT (Support to Parcelization of Lands for Individual Titling) is a World Bank-funded initiative to subdivide collective land titles into individual Electronic Titles (e-Titles) for farmer-beneficiaries. RA 11901 (Agriculture, Fisheries, and Rural Development Financing Enhancement Act) supports this by allocating a portion of agricultural loan funds directly to the DAR for this titling process. 

Republic Act No. 11901 and DAR Project SPLIT are complementary Philippine government initiatives designed to uplift agrarian reform beneficiaries (ARBs), but they operate through completely different mechanisms: RA 11901 handles financial credit and bank compliance, while Project SPLIT focuses on land titling and property subdivision.

Republic Act No. 11901 (The Financing Pillar)

Lapsed into law on July 28, 2022, RA 11901 repealed the old Agri-Agra Reform Credit Act of 2009 (RA 10000). It restructures how the banking sector provides financial support to rural communities. 

• The 25% Quota: All banking institutions must allocate at least 25% of their total loanable funds to agriculture, fisheries, and rural development. 
• Flexibility for Banks: It removes the rigid split from the old law (10% agrarian reform, 15% agricultural credit). Banks can now invest across the whole value chain, including agri-tourism, rural infrastructure, and green finance. 
• Penalty Reallocation: Banks that fail to meet the 25% credit quota face penalties from the BSP. A portion of these collected penalty funds is legally channeled to help fund DAR's land titling programs. 

DAR Project SPLIT (The Land Ownership Pillar)

Project SPLIT is an active field project implemented by the DAR to resolve legal and operational vulnerabilities created by decades-old land policies.

• Parcelization: It breaks down Collective Certificates of Land Ownership Award (CCLOAs). In the past, groups of farmers were given a single shared title; Project SPLIT subdivides this land so each farmer gets an individual electronic title (e-Title). 
• Economic Security: Holding an individual title provides ARBs clear property rights. This eliminates boundary disputes and gives farmers total control over their plot. 
• Collateral Creation: Landowners cannot easily use a collective title to secure credit. Individual titles turn land into a legal asset that can be leveraged for production support.

How They Intersect

These two initiatives form a legal and economic cycle that directly empowers smallholder farmers. 

1. SPLIT gives the asset: Through DAR Project SPLIT, a farmer transitions from co-owning a massive block of land to holding an individual, legal e-Title. 
2. RA 11901 unlocks the capital: With an individual land title in hand, the farmer becomes a viable, low-risk borrower for banks looking to fulfill their mandatory 25% lending quota under RA 11901. 
3. Funding the pipeline: The operational costs of running Project SPLIT's extensive mapping and surveying are supported in part by the bank compliance penalties collected through RA 11901.

Cooperatives: Open & Voluntary Membership vs Associational Membership

Open and Voluntary Membership vs. Associational Membership in Philippine Cooperatives: Explanation and Reconciliation

I. The Legal Principle of Open and Voluntary Membership

One of the universally accepted cooperative principles adopted in the Philippines is Open and Voluntary Membership.

Under the Philippine Cooperative Code of 2008 (Republic Act No. 9520), cooperatives are voluntary organizations open to all persons who can use their services and are willing to accept the responsibilities of membership, without discrimination based on social, political, racial, or religious considerations.

The principle means:

1. No person can be compelled to join a cooperative.
2. Qualified persons should not be arbitrarily excluded.
3. Membership is based on willingness to participate and comply with the cooperative’s requirements.
4. Members may voluntarily withdraw subject to legal and bylaw requirements.

This principle protects the cooperative from becoming an exclusive club while ensuring democratic participation.

II. What is Associational Membership?

RA 9520 introduced the concept of Associational Members.

Section 5(2) of RA 9520 defines an associational member as:

A member who has no right to vote nor be voted upon and shall be entitled only to such rights and privileges as provided by the bylaws.

An associational member is therefore a limited member who may enjoy services and benefits but does not possess the full governance rights of a regular member.

Examples include:

• Patron members
• Affiliate members
• Youth members
• Institutional partners
• Beneficiaries in transition to regular membership

Associational members are often admitted to broaden participation without immediately granting ownership and control rights.

III. Apparent Conflict

At first glance, a question arises:

If membership is open and voluntary, why are some members classified merely as associational members and denied voting rights?

This appears contradictory because cooperative principles emphasize equality and democratic control.

IV. Legal Reconciliation

There is actually no conflict.

1. Open Membership Refers to Admission

The principle of open and voluntary membership governs access to the cooperative.

It answers the question:

“Who may join?”

Associational membership expands rather than restricts access because it allows individuals or entities to participate even if they do not yet qualify for regular membership.

Thus, associational membership is often a mechanism for inclusion.

2. Democratic Control Refers to Governance

Another cooperative principle is Democratic Member Control.

This principle answers:

“Who governs the cooperative?”

Governance rights are generally reserved to regular members because they:

• Own the cooperative;
• Assume full obligations;
• Subscribe and pay share capital;
• Bear risks and responsibilities.

Associational members may enjoy services but do not necessarily bear the same level of ownership responsibility.

3. Different Classes of Membership are Permitted by Law

RA 9520 expressly recognizes:

• Regular members
• Associate members (often referred to in practice as associational members)

The law allows different rights and privileges provided such distinctions are stated in the bylaws.

The distinction is therefore not discriminatory but statutory.

4. Associate Members May Become Regular Members

Section 5 of RA 9520 further provides that:

An associate member who meets the minimum requirements of regular membership and continues to patronize the cooperative for two years shall become a regular member.

This provision demonstrates that associate membership is intended as a pathway rather than a permanent exclusion.

The law encourages progression toward full membership.

V. Practical Examples

Example 1: Farmers’ Cooperative

A newly settled farmer wishes to join but has not yet completed the required cooperative education training.

The cooperative may admit him as an associate member while he completes the requirements.

This promotes openness while preserving governance standards.

Example 2: Multi-Purpose Cooperative

A cooperative permits family members of regular members to avail themselves of certain services.

These family members may be admitted as associate members without voting rights.

This expands service reach without altering democratic control.

Example 3: Credit Cooperative

A depositor may initially become an associate member before meeting the share capital requirements for regular membership.

The cooperative remains open while ensuring that voting power remains with member-owners.

VI. Jurisprudential and Policy Perspective

The essence of cooperativism is not merely admission but member ownership and democratic control.

Open membership prevents exclusion.

Associational membership facilitates inclusion.

Regular membership protects democratic governance.

Accordingly:

Open and voluntary membership determines who may enter the cooperative, while associational membership determines the extent of participation until full membership qualifications are met.

The two concepts complement rather than contradict each other.

VII. Conclusion

There is no legal inconsistency between the cooperative principle of Open and Voluntary Membership and the statutory concept of Associational Membership.

Open and voluntary membership ensures that qualified persons are not unfairly denied entry into the cooperative. Associational membership, on the other hand, is a lawful classification that allows broader participation while reserving governance rights for regular members who have assumed full ownership responsibilities.

In effect:

• Open Membership = Access
• Associational Membership = Membership Classification
• Regular Membership = Full Ownership and Democratic Control

Thus, associational membership serves as an instrument for inclusion and growth while preserving the cooperative’s democratic character.

Bibliography

1. Republic Act No. 9520. Philippine Cooperative Code of 2008.
2. Cooperative Development Authority. Revised Rules and Regulations Implementing Certain Provisions of RA 9520.
3. International Cooperative Alliance. Statement on the Cooperative Identity and Cooperative Principles.
4. Cooperative Development Authority. Memorandum Circulars and Governance Guidelines on Cooperative Membership and Democratic Control.
5. Commentaries and Jurisprudence on Philippine Cooperative Law. Various legal commentaries discussing membership rights, associate membership, and cooperative governance under RA 9520.