Republic of the Philippines
HOUSE OF REPRESENTATIVES
‘Quezon City

Eighteenth Congress

First Regul Saasiog
House Bill No.

Introduced by Representative Ferdinand L. Hernandez

EXPLANATORY NOTE

The establishment of the rural banking system in 1992 was aimed to
provide countryside basic financial services to aide in the development of small
communities, especially in regions with high poverty levels. It endeavored to
make credit readily available on reasonable terms to farmers, fisherfolk, and
small entrepreneurs so that they will not need to resort to unscrupulous
financing schemes. And while rural banks have actually served the country's
small communities, there is an alarming decrease in their number by reason of
insufficient capital — resulting in unbanked areas in the country.

This bill seeks to promote the continuous operation of rural banks in
small communities and enable them to sustain the financial needs of their
clientele. It also aims to relax the stringent regulation of rural banks by the
Banko Sentral ng Pilipinas and instead, mandate the infusion of capital by the
Landbank of the Philippines, Development Bank of the Philippines and other
government-owned and controlled banks and financial institutions through a
comprehensive financial development program.

This bill is a step towards ensuring the existence of strong and
sustainable rural banks in small communities which will be instrumental in
achieving the government's agenda of promoting inclusive economic growth
and development.

In view of the foregoing, the passage of tis billis eamestly urges



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Eighteenth Congress
First Regular Session

House Bill No, 4622

Introduced by Representative Ferdinand L. Hernandez

Be it enacted by the Senate and the House of Representatives in
Congress assembled:

AN ACT STRENGTHENING RURAL BANKS IN THE PHILIPPINES
AMENDING FURTHER FOR THE PURPOSE REPUBLIC ACT NO. 7353
OTHERWISE KNOWN AS THE RURAL ACT OF 1992, AS AMENDED

SECTION 1. This Act shall be known and cited as the "Rural and
Community Banking Act.”

SEC. 2. Section 2 of the Republic Act No. 7353, as amended, is hereby
amended to read as follows :

“SEC. 2. The State hereby recognizes the need to promote
comprehensive LOCAL COMMUNITY [rural] development
ACROSS THE COUNTRY with the end in view of attaining
equitable distribution of opportunities, income and wealth; a
sustained increase in the amount of goods and services produced
by LOCAL COMMUNITIES [the nation of the benefit of the
people|] and in expanding productivity as a key OBJECTIVE TO
[raising] IMPROVE the quality of life for all, especially the
underprivileged.

‘Towards these ends, the State hereby encourages and assists in
the establishment of rural banking system [designed to make
needed credit available and readily accessible in the rural areas
on reasonable terms] AND THE CONTINUOUS OPERATION OF
RURAL BANKS, BEING THE MAIN CHANNEL FOR FINANCIAL
INCLUSION - IN THE PURSUIT OF MAKING FINANCIAL
SERVICES ACCESSIBLE TO ALL INDIVIDUALS AND


BUSINESS ENTITIES, ESPECIALLY IN THE RURAL AREAS,
IRRESPECTIVE OF NET WORTH AND SIZE.”

SEC. 3. Section 3 of the Republic Act No. 7353, as amended, is hereby
amended to read as follows

“SEC. 3. In furtherance of this policy, the Monetary Board of the
[Central Bank of the Philippines] BANGKO SENTRAL NG
PILIPINAS shall formulate the necessary rules and regulations
governing the establishment, SUPERVISION and operation of
tural banks [for the purpose of providing adequate credit facilities
to farmers and merchants, or to cooperatives of such farmers and
merchants and in general, the people of the rural communities,
and to supervise the operation of such banks] TO ENSURE THAT
THEY CAN PERFORM THEIR MANDATE.”

SEC. 4. Section 4 of the Republic Act No. 7353, as amended, is hereby
amended to read as follows :

“SEC. 4, [No rural bank shall be operated without a Certificate of
Authority from the Monetary Board of the Bangko Sentral ng
Pilipinas. Rural banks shall be organized in the form of stock
corporations. No less than forty percent (40%) of the voting stocks
of a rural bank shall be owned by citizens of the Philippines or
corporations or associations organized under the laws of the
Philippines at least sixty percent (60%) of whose capital is owned
by such citizens. Non-Filipino citizens may own, acquire or
purchase up to sixty percent (60%) of the voting stocks in a rural
bank. The percentage of foreign-owned voting stocks shall be
determined by the citizenship of the individual or corporate
stockholders of the rural bank. Upon consultation with the rural
banks in the area, duly established cooperatives and corporations
primarily organized to hold equities in rural banks may organize a
rural bank and/or subscribe to the shares of stock of any rural
bank: Provided, That a cooperative or corporation owning or
controlling the whole or majority of the voting stock of the rural
bank shall be subject to special examination and to such rules
and regulations as the Monetary Board may prescribe. If
subscription of a private shareholders to the capital stock of a rural
bank cannot be secured or is not available, or insufficient to meet
the normal credit needs of the locality, the Land Bank of the
Philippines, the Development Bank of the Philippines, or any
government-owned or controlled bank or financial institution, on
representation of the said private shareholders abut subject to the
investment guidelines, policies and procedures of the bank or
financial institution and upon approval of the Monetary Board of
the Bangko Sentral ng Pilipinas, shall subscribe to the capital
stock of such rural bank, which shall be paid in full at the time of
subscription, in an amount equal to the fully paid subscribed and
unimpaired capital of the private stockholders or such amount as



the Monetary Board may prescribe as may be necessary to
promote and expand rural economic development: Provided,
however, That such shares of stock subscribed by the Land Bank
of the Philippines or any government-owned or controlled bank or
financial institution may be sold at any time at adjusted book
value: Provided, finally, That in the sale of shares of stock
subscribed by the Land Bank of the Philippines, the Development
Bank of the Philippines or any government-owned or controlled
bank or financial institution, the registered stockholders shall have
the right of preemption within one (1) year from the date of offer
in proportion to their respective holdings, but in the absence of
such buyer, preference, however, shall be given to the residents
of the locality or province where the rural bank is located. ]

RURAL BANKS SHALL BE ORGANIZED IN THE FORM OF
STOCK CORPORATIONS, AND NO RURAL BANK SHALL BE
OPERATED WITHOUT A CERTIFICATE OF AUTHORITY
FROM THE MONETARY BOARD OF THE BANGKO SENTRAL
NG PILIPINAS.

UPON CONSULTATION WITH THE RURAL BANKS IN THE
AREA, DULY ESTABLISHED COOPERATIVES AND
CORPORATIONS PRIMARILY ORGANIZED TO HOLD
EQUITIES IN RURAL BANKS MAY ORGANIZE A RURAL BANK
AND/OR SUBSCRIBE TO THE SHARES OF STOCK OF ANY
RURAL BANK; PROVIDED, THAT A COOPERATIVE OR
CORPORATION OWNING OR CONTROLLING THE WHOLE
OR MAJORITY OF THE VOTING STOCK OF THE RURAL BANK
SHALL BE SUBJECT TO SPECIAL EXAMINATION AND TO
SUCH RULES AND REGULATIONS AS THE MONETARY
BOARD MAY PRESCRIBE.”

SEC. 5. A new Section 4.1 is hereby inserted after Section 4 of the
Republic Act No. 7353, as amended, to read as follows ©

SEC. 4.1 WITH THE EXCEPTION OF SHAREHOLDINGS OF
CORPORATIONS ORGANIZED PRIMARILY TO HOLD
EQUITIES IN RURAL BANKS AS PROVIDED FOR UNDER
SECTION 12-C OF REPUBLIC ACT NO. 337 - GENERAL
BANKING LAW, AS AMENDED, AND OF FILIPINO-
CONTROLLED DOMESTIC BANKS, AT LEAST 60% OF THE
CAPITAL STOCK OF ANY RURAL BANK SHALL BE OWNED
AND HELD DIRECTLY OR INDIRECTLY BY CITIZENS OF THE
PHILIPPINES OR CORPORATIONS, ASSOCIATIONS OR
COOPERATIVES QUALIFIED UNDER PHILIPPINE LAWS TO
OWN AND HOLD SUCH CAPITAL STOCK EXCEPT FOR:

(1) INVESTORS FROM ASEAN COUNTRIES UNDER
THE ASEAN INTEGRATION PROGRAM;


(2) EXISTING RURAL BANKS WITH FOREIGN EQUITY
UNDER REPUBLIC ACT NO. 10641: AN ACT ALLOWING
FULL ENTRY OF FOREIGN BANKS IN THE
PHILIPPINES, AND;

(3) ALL OTHER BANKS IN THE PROCESS OF
ACCEPTING FOREIGN EQUITY WITHIN ONE YEAR
FROM THE EFFECTIVITY OF THIS ACT.

SEC. 6. A new Section 4.2 is hereby inserted after Section 4 of the
Republic Act No. 7353, as amended, to read as follows :

“SEC. 4.2 IN CASE THE FOLLOWING CONDITIONS ARE
PRESENT, THE LAND BANK OF THE PHILIPPINES, THE
DEVELOPMENT BANK OF THE PHILIPPINES, OR ANY
GOVERNMENT-OWNED OR CONTROLLED BANK OR
FINANCIAL INSTITUTION MUST SUBSCRIBE TO THE
CAPITAL STOCK OF SUCH RURAL BANK, WHICH SHALL BE
PAID IN FULL AT THE TIME OF SUBSCRIPTION, IN AN
AMOUNT EQUAL TO THE FULLY PAID, SUBSCRIBED AND
UNIMPAIRED CAPITAL OF THE PRIVATE STOCKHOLDERS,
OR SUCH AMOUNT AS THE MONETARY BOARD MAY
PRESCRIBE AS MAY BE NECESSARY TO PROMOTE AND
EXPAND RURAL ECONOMIC DEVELOPMENT:

(1) TO COMPLY WITH THE MINIMUM CAPITAL
REQUIREMENTS AS ESTABLISHED BY THE BANGKO
SENTRAL NG PILIPINAS;

(2) TO PROVIDE ADDITIONAL FUNDS OF AN EXISTING
RURAL BANK TO MEET THE NORMAL CREDIT NEEDS
OF THE LOCALITY.

PROVIDED, HOWEVER, THAT SUCH SHARES OF STOCK
SUBSCRIBED BY THE LAND BANK OF THE PHILIPPINES,
THE DEVELOPMENT BANK OF THE PHILIPPINES OR ANY
GOVERNMENT-OWNED OR CONTROLLED BANK OR
FINANCIAL INSTITUTION MAY BE SOLD AT ANY TIME AT
MARKET VALUE TO QUALIFIED INDIVIDUALS AND
JURIDICAL ENTITIES WHO ARE CITIZENS OF THE
PHILIPPINES.

PROVIDED, FINALLY, THAT IN THE SALE OF SHARES OF
STOCK SUBSCRIBED BY THE LAND BANK OF THE
PHILIPPINES, THE DEVELOPMENT BANK OF THE
PHILIPPINES OR ANY OF SUCH BUYER, PREFERENCE,
HOWEVER, SHALL BE GIVEN TO RESIDENTS AND
JURIDICAL ENTITIES OF THE LOCALITY OR PROVINCE
WHERE THE RURAL BANK IS LOCATED.”


SEC. 7. Section 5 of the Republic Act No. 7353, as amended, is hereby
amended to read as follows :

“SEC 5. [Non-Filipino citizens may become members of the
Board of Directors of a rural bank but their participation in the
Board shall be limited to their proportionate share in the equity of
the rural bank: Provided, however, That at least one (1)
independent director shall be elected to the Board of Directors.

No director or officer of any rural bank shall, either directly or
indirectly, for himself or as the representative or agent of another,
borrow any of the deposits or fund of such banks, nor shall be
become a guarantor, indorser, or surety for loans from such bank
to others, or in any manner be an obligor for money borrowed from
the bank or loaned by it except with the written approval of the
majority of the directors of the bank, excluding the director
concemed. Any such approval shall be entered upon the records
of the corporation and a copy of such entry shall be transmitted
forthwith to the appropriate supervising department. The
director/officer of the bank who violates the provisions of this
section shall immediately dismissed from his office and shall be
penalized in accordance with Section 26 of this Act.

The Monetary Board may regulate the amount of credit
accommodations that may be extended directly to the directors,
officers or stockholders of rural banks of banking institutions.
However, the outstanding credit accommodations which a rural
bank may extend to each stockholder owning two percent (2%) or
more of the subscribed capital stock, its directors, or officers shall
be limited to an amount equivalent to the respective outstanding
deposits and book value of the paid-in capital contributions in the
bank]

AT LEAST 60% OF THE MEMBERS OF THE BOARD OF
DIRECTORS OF THE RURAL BANK SHALL BE CITIZENS OF
THE PHILIPPINES AT THE TIME OF THEIR ASSUMPTION TO
OFFICE, SUBJECT TO THE PROVISIONS STATED IN
SECTION 4.2 OF THIS ACT.

PROVIDED, HOWEVER, THAT NOTHING IN THIS ACT SHALL
BE CONSTRUED AS PROHIBITING ANY APPOINTIVE OR
ELECTIVE PUBLIC OFFICIAL FROM SERVING AS DIRECTOR,
OFFICER, CONSULTANT OR IN ANY CAPACITY IN THE
BANK.”

‘SEC. 8. A new Section 5.1 is hereby inserted after Section 5 of the
Republic Act No. 7353, as amended, to read as follows :

“SEC. 5.1 NO DIRECTOR OR OFFICER OF ANY RURAL BANK


SHALL, EITHER DIRECTLY OR INDIRECTLY, FOR HIMSELF
OR AS THE REPRESENTATIVE OR AGENT OF ANOTHER,
BORROW ANY OF THE DEPOSITS OR FUNDS OF SUCH
BANKS, NOR SHALL HE BECOME A GUARANTOR,
ENDORSER, OR SURETY FOR LOANS FROM SUCH BANK TO
OTHERS, OR IN ANY MANNER BE AN OBLIGOR FOR MONEY
BORROWED FROM THE BANK OR LOANED BY IT EXCEPT
WHEN IT IS WITH THE WRITTEN APPROVAL OF THE
MAJORITY OF THE DIRECTORS OF THE BANK, EXCLUDING
THE DIRECTOR CONCERNED.

ANY SUCH APPROVAL SHALL BE ENTERED UPON THE
RECORDS OF THE CORPORATION AND A COPY OF SUCH
ENTRY SHALL BE TRANSMITTED FORTHWITH TO THE
APPROPRIATE SUPERVISING DEPARTMENT.

THE DIRECTOR/OFFICER OF THE BANK WHO VIOLATES
THE PROVISIONS OF THIS SECTION SHALL BE
IMMEDIATELY DISMISSED FROM HIS OFFICE AND SHALL BE
PENALIZED IN ACCORDANCE WITH SECTION 25 OF THIS
ACT.

SEC. 9. A new Section 5.2 is hereby inserted after Section 5 of the
Republic Act No. 7353, as amended, to read as follows :

SEC. 5.2 THE MONETARY BOARD MAY REGULATE THE
AMOUNT OF CREDIT ACCOMMODATIONS THAT MAY BE
EXTENDED DIRECTLY TO THE DIRECTORS, OFFICERS OR
STOCKHOLDERS OF RURAL BANKS OF BANKING
INSTITUTIONS.

HOWEVER, THE OUTSTANDING CREDIT
ACCOMMODATIONS WHICH A RURAL BANK MAY EXTEND
TO EACH OF ITS STOCKHOLDERS OWNING ONE PERCENT
(1%) OR MORE OF THE SUBSCRIBED CAPITAL STOCK, ITS
DIRECTORS, OR OFFICERS SHALL BE LIMITED TO AN
AMOUNT EQUIVALENT TO THE RESPECTIVE UNIMPAIRED
OUTSTANDING DEPOSITS AND BOOK VALUE OF THE PAID-
IN CAPITAL CONTRIBUTIONS IN THE BANK.”

‘SEC. 10. Section 6 of the Republic Act No. 7353, as amended, is hereby
amended to read as follows :

“SEC. 6 [Loans or advances extended by rural banks organized
and operated under this Act shall be primarily for the purpose of
meeting the normal credit needs of farmers, fishermen or farm
families owning or cultivating land dedicated to agricultural
production as well as the normal credit needs of cooperatives and
merchants. In granting of loans, the rural bank shall give


preference to the application of farmers and merchant whose
cash requirements are small.

Loans may be granted by rural banks on the security of lands
without Torrens Title where the owner of private property can
show five (5) years on more peaceful, continuous and
uninterrupted possession in concept of owner; or of portions of
friar land estates or other lands administered by the Bureau of
Lands that are covered by sales contracts and the purchase have
paid at least five (5) years installment thereon, without the
necessity of prior approval and consent by the Director of lands;
or of portions of other estates under the administration of the
Department of Agrarian Reform or other government agency
which are likewise covered by sales contracts and the purchasers
have paid at least five (5) years installment thereon, without the
necessity of prior approval and consent of the Department of
Agrarian Reform or corresponding government agency; or of
homesteads or free patent lands pending the issuance of titles
but already approved, are issued, the provisions of any law or
regulations to the contrary notwithstanding: Provided, That when
the corresponding titles are issued, the same shall be delivered
to the Register of Deeds of the province where such lands are
situated to the annotation of the encumbrance: Provided, further,
That in the case of lands pending homestead of free patent titles,
copies of notices for the presentation of the final proof shall also
be furnished the creditor rural bank and, if the borrower applicants
fail to present the final proof within thirty (30) days from date of
notice, the creditor rural bank may do so for them at their
expense: Provided, furthermore, That the applicant for
homestead or free patent has already made improvements on the
land and the loan applied for is to be used for further development
of the same or for other productive economic activities: Provided,
finally, That the appraisal and verification of the status of a land
is a full responsibility of the rural bank and any loan granted on
any land which shall be found later to be within the forest zone
shall be for the sole account of the rural bank.

The foreclosure of mortgage covering loans granted by rural
banks and executions of judgment thereon involving real
properties levied upon by a sheriff shall be exempt from the
publications in newspaper now required by law where the total
amount of loan, excluding interest due and unpaid, does not
exceed One hundred thousand pesos (P100,000) or such amount
as the Monetary Board may prescribe as may be warranted by
prevailing economic conditions. It shall be sufficient publication in
such cases if the notices of foreclosure and execution of judgment
are posted in the most conspicuous area of the municipal
building, the municipal public market, the rural bank, the barangay
hall, the barangay public market, if any, where the land
mortgaged is situated during the period of sixty (60) days


immediately preceding the public auction or execution of
judgment. Proof of publication as required herein shall be
accomplished by an affidavit of the sheriff or officer conducting
the foreclosure sale or execution of judgment and shall be
attached with the records of the case: Provided, That when a
homestead or free patent is foreclosed, the homesteader or free
patent holder, as well as his heirs shall have the right to redeem
the same within one (1) year from the date of the registration of
the foreclosure in the case of land covered by a Torrens Title:
Provided, finally, That in any case, borrowers, especially those
who are mere tenants, need only to secure their loans with the
procedure corresponding to their share.

A rural bank shall be allowed to foreclose lands mortgaged to it
including lands covered by Republic Act No.
6657(Comprehensive Agrarian Reform Law of 1988) as
amended: Provided, That said lands shall be subject to the
retention limits provided under Republic Act No. 6657,

Rural banks which are not qualified to acquire or hold land in the
Philippines shall be allowed to bid and take part in foreclosure
sales of real property mortgaged to them, as well as to avail of
enforcement and other proceedings, and accordingly to take
possession of the mortgaged property, for a period not exceeding
five (5) years from actual possession: Provided, That in no event
shall title to the property be transferred to such rural bank. Incase
the rural bank is the winning bidder; it shall, during the said five
(6) year period, transfer its rights to a qualified Philippine national,
without prejudice to a borrower's rights under applicable laws
Should a rural bank be not able to transfer such property within
the five (5) year period, the rural bank shall be penalized one-half
(1/2) of one percent (1%) per annum of the price at which the
property was foreclosed until the rural bank is able to transfer the
property to a qualified Philippine national.]

RURAL BANKS ORGANIZED AND OPERATED UNDER THIS
ACT SHALL BE THE PRIMARY CONDUIT OF GOVERNMENT
FUNDS INTENDED FOR THE PURPOSE OF MEETING THE
NORMAL CREDIT NEEDS OF INDIVIDUALS, RESIDENTS,
ENTREPRENEURS, FARMERS, FISHERMEN AND/OR FARM
FAMILIES AS WELL AS FOR THEIR HOUSING AND OTHER
PERSONAL CONSUMPTION LOANS AND CREDIT NEEDS.

(1) LOANS MAY BE GRANTED BY RURAL BANKS ON
THE SECURITY OF LANDS WITHOUT TORRENS TITLE
WHERE THE OWNER OF PRIVATE PROPERTY CAN
SHOW FIVE (5) YEARS OR MORE OF PEACEFUL,
CONTINUOUS AND UNINTERRUPTED POSSESSION IN
CONCEPT OF OWNER; OR


(2) PORTIONS OF FRIAR LAND ESTATES OR OTHER
LANDS ADMINISTERED BY THE BUREAU OF LANDS
THAT ARE COVERED BY SALES CONTRACTS AND
THE PURCHASERS HAVE PAID AT LEAST FIVE (5)
YEARS INSTALMENT THEREON, WITHOUT THE
NECESSITY OF PRIOR APPROVAL AND CONSENT BY
THE DIRECTOR OF LANDS, OR OF PORTIONS OF
OTHER ESTATES UNDER THE ADMINISTRATION OF
THE DEPARTMENT OF AGRARIAN REFORM OR
OTHER GOVERNMENTAL AGENCY WHICH ARE
LIKEWISE COVERED BY SALES CONTRACTS AND THE
PURCHASERS HAVE PAID AT LEAST FIVE (5) YEARS
INSTALMENT THEREON, WITHOUT THE NECESSITY
OF PRIOR APPROVAL AND CONSENT OF THE
DEPARTMENT OF AGRARIAN REFORM OR
CORRESPONDING GOVERNMENTAL AGENCY; OR

(3) HOMESTEAD TAX DECLARATIONS OR_ FREE
PATENT LANDS PENDING THE ISSUANCE OF TITLES
BUT ALREADY APPROVED, THE PROVISIONS OF ANY
LAW OR REGULATIONS TO THE CONTRARY
NOTWITHSTANDING: PROVIDED, THAT WHEN THE
CORRESPONDING TITLES ARE ISSUED, THE SAME
SHALL BE DELIVERED TO THE REGISTER OF DEEDS
OF THE PROVINCE WHERE SUCH LANDS ARE
SITUATED FOR THE ANNOTATION OF THE
ENCUMBRANCE.”

SEC. 11. A new Section 6.1 is hereby inserted after Section 6 of the
Republic Act No. 7353, as amended, to read as follows

“SEC. 6.1 IN THE CASE OF LANDS PENDING ISSUANCE OF
HOMESTEAD TAX DECLARATIONS OR FREE PATENT
TITLES, COPIES OF THE NOTICES FOR THE
PRESENTATION OF THE FINAL PROOF SHALL ALSO BE
FURNISHED THE CREDITOR RURAL BANK AND, IF THE
BORROWER APPLICANTS FAIL TO PRESENT THE FINAL
PROOF WITHIN THIRTY (30) DAYS FROM DATE OF NOTICE,
THE CREDITOR RURAL BANK MAY DO SO FOR THEN AT
THEIR EXPENSE:

PROVIDED, HOWEVER, THAT THE APPLICANT FOR
HOMESTEAD OR FREE PATENT HAS ALREADY MADE
IMPROVEMENTS ON THE LAND AND THE LOAN APPLIED
FOR IS TO BE USED FOR FURTHER DEVELOPMENT OF THE
SAME OR FOR OTHER PRODUCTIVE ECONOMIC
ACTIVITIES:

PROVIDED, FURTHER, THAT THE RESPONSIBILITY FOR
THE APPRAISAL AND VERIFICATION OF THE STATUS OF A


LAND SHALL BE INCUMBENT UPON THE RURAL BANK; AND
ANY LOAN GRANTED ON ANY LAND WHICH SHALL BE
FOUND LATER TO BE WITHIN THE FOREST ZONE SHALL BE
FOR THE SOLE ACCOUNT OF THE RURAL BANK.”

SEC. 12. A new Section 6.2 is hereby inserted after Section 6 of the
Republic Act No. 7353, as amended, to read as follows :

“SEC. 6.2 ASIDE FROM THE GRANTING OF LOANS AGAINST
LANDS WITHOUT TORRENS TITLE, THE SERVICING RURAL
BANK MAY INCLUDE AS ADDITIONAL SERVICE TO THE
BORROWER IN EXCHANGE FOR REASONABLE FEES THE
FACILITATION WORK IN THE ISSUANCE OF TITLE
THROUGH PREPARATION OF PERTINENT DOCUMENTS,
GATHERING OF SUPPORTING ARTICLES AND FILING OF
APPROPRIATE APPLICATION WITH. CONCERNED
GOVERNMENT AGENCIES IN BEHALF OF THE OWNER. IN
RELATION TO THE REQUIREMENTS IN THE ISSUANCE OF
TITLES, THE DEPARTMENT OF ENVIRONMENT NATURAL
RESOURCES (DENR) OR OTHER GOVERNMENT AGENCIES
WITH LAND SURVEYING FUNCTIONS SHALL PROVIDE FREE
LAND SURVEYING SERVICES IN FAVOR OF SMALL
FARMERS AND MICRO-ENTREPRENEURS ON THE
CONDITION THAT BENEFICIARIES DO NOT HAVE ANY
OTHER EXISTING OWNERSHIP OF RESIDENTIAL LAND AND
IN THE CASE OF AGRICULTURAL LAND, IT SHOULD NOT BE
MORE THAN THREE HECTARES IN AGGREGATE SIZE TO
GIVE PREFERENTIAL TREATMENT FOR SMALL FARMERS
AND OTHER MARGINALIZED SECTORS.”

SEC. 13. A new Section 6.3 is hereby inserted after Section 6 of the
Republic Act No. 7353, as amended, to read as follows

“SEC. 6.3 THE FORECLOSURE OF MORTGAGES COVERING
LOANS GRANTED BY RURAL BANKS AND EXECUTIONS OF
JUDGMENT THEREON INVOLVING REAL PROPERTIES
LEVIED UPON BY SHERIFF SHALL BE EXEMPT FROM THE
PUBLICATIONS IN NEWSPAPERS REQUIRED BY LAW
WHERE THE TOTAL AMOUNT OF LOAN, EXCLUDING
INTERESTS DUE AND UNPAID, DOES NOT EXCEED ONE
MILLION PESOS (P1,000,000.00) OR SUCH AMOUNT AS THE
MONETARY BOARD MAY PRESCRIBE AS MAY BE
WARRANTED BY PREVAILING ECONOMIC CONDITIONS.
FURTHER, RURAL BANKS MAY BE EXEMPT FROM PAYING
"DOCUMENTARY STAMPS (DSTS).

IT SHALL BE DEEMED SUFFICIENT PUBLICATION IN SUCH
CASES WHERE THE NOTICES OF FORECLOSURE AND
EXECUTION OF JUDGMENT ARE POSTED IN THE MOST
CONSPICUOUS AREA OF THE MUNICIPAL BUILDING, THE


MUNICIPAL PUBLIC MARKET, THE RURAL BANK, THE
BARANGAY HALL, AND THE BARANGAY PUBLIC MARKET, IF
ANY, WHERE THE LAND MORTGAGED IS SITUATED DURING
THE PERIOD OF SIXTY (60) DAYS IMMEDIATELY
PRECEDING THE PUBLIC AUCTION OR EXECUTION OF
JUDGMENT.

PROOF OF PUBLICATION AS REQUIRED HEREIN SHALL BE
ACCOMPLISHED VIA AN AFFIDAVIT OF THE SHERIFF OR
OFFICER CONDUCTING THE FORECLOSURE SALE OR
EXECUTION OF JUDGMENT AND SHALL BE ATTACHED
WITH THE RECORDS OF THE CASE;

PROVIDED, THAT WHEN A HOMESTEAD OR FREE PATENT
IS FORECLOSED, THE HOMESTEADER OR FREE PATENT
HOLDER, AS WELL AS HIS HEIRS SHALL HAVE THE RIGHT
TO REDEEM THE SAME WITHIN ONE (1) YEAR FROM THE
DATE OF FORECLOSURE IN THE CASE OF LAND NOT
COVERED BY A TORRENS TITLE OR ONE (1) YEAR FROM
THE DATE OF THE REGISTRATION OF THE FORECLOSURE
IN THE CASE OF LAND COVERED BY A TORRENS TITLE,
OTHER LAWS NOTWITHSTANDING.

PROVIDED, HOWEVER, THAT IN ANY CASE, BORROWERS,
ESPECIALLY THOSE WHO ARE MERE TENANTS, NEED
ONLY TO SECURE THEIR LOANS WITH THE PROCEDURE
CORRESPONDING TO THEIR SHARE.

SEC. 14. A new Section 6.4 is hereby inserted after Section 6 of the
Republic Act No. 7353, as amended, to read as follows

“SEC. 6.4 FOR AGRARIAN LANDS FORECLOSED BY A
RURAL BANK, THE DISPOSAL OF THE SAME TO ANOTHER
QUALIFIED BENEFICIARY UNDER REPUBLIC ACT 6557 -
COMPREHENSIVE AGRARIAN REFORM LAW OF 1988 SHALL
BE MADE THROUGH THE SAME RURAL BANK. FURTHER,
THE AMORTIZATION OF THE BENEFICIARY IN FAVOR OF
DAR SHALL BE COURSED THROUGH THE SERVICING
RURAL BANK. ALL COSTS OF THE TRANSFER, INCLUDING
TAXES, SHALL BE FREE.

PROVIDED, HOWEVER, THAT RURAL BANKS SHALL BE
EXEMPT FROM LANDHOLDING LIMITS AS PRESCRIBED BY
DEPARTMENT OF AGRARIAN REFORM (DAR) OR ANY
OTHER LAW REQUIRING THE SAME.”

SEC. 15. Section 7 of the Republic Act No. 7353, as amended, is hereby
amended to read as follows :


“Sec. 7. [With the view to ensuring the balanced rural economic
growth and expansion, rural banks may, within limits and
conditions fixed by the Monetary Board, devote a portion of their
loanable funds to meeting the normal credit needs of small
business enterprises: provided, That loans shall not exceed
fifteen percent (15%) of the net worth of a rural bank of such
amount as the Monetary Board may prescribe as may be
warranted by prevailing economic conditions, and of essential
enterprises or industries, other than those which are strictly
agricultural in nature.]

FOR RURAL BANKS GRANTED BY THE BANGKO SENTRAL
NG PILIPINAS WITH ACCREDITATION AS RURAL FINANCIAL
INSTITUTION (RFI) UNDER REPUBLIC ACT 10000, THE
FOLLOWING PRIVILEGES SHALL BE AWARDED:

(1) UNRESTRICTED BRANCHING RIGHTS TO SET-UP
AGRICULTURE-ORIENTED BRANCHES IN UNBANKED
MUNICIPALITIES. AND PREDOMINANTLY
AGRICULTURAL COMMUNITIES, SUBJECT TO
EXISTING REGULATIONS ON MINIMUM.
CAPITALIZATION FOR BANKS AND THE SIZE OF
BRANCH NETWORK;

(2) AUTOMATIC ELIGIBILITY WITH PHILIPPINE
GUARANTEE CORPORATION (WITH RESPECT TO
AGRICULTURAL CREDIT GUARANTEE), PHILIPPINE
CROP INSURANCE CORPORATION (PCIC), AND
GOVERNMENTAL AGENCIES PROVIDING SERVICES
TOWARDS RISK-MITIGATION IN THE AGRICULTURE
SECTOR;

(3) PRIORITY STATUS AS CREDIT DELIVERY
PARTNER OR CONDUIT OF GOVERNMENT DIRECTED
PROGRAMS FOR AGRICULTURAL THROUGH THE
DEPARTMENT OF AGRICULTURE AND OTHER
GOVERNMENT AGENCIES; AND

(4) ENTITLEMENT TO PARTICIPATE FREE OF
CHARGE IN CAPABILITY-BUILDING ACTIVITIES IN
AGRICULTURE LENDING SUCH AS, BUT NOT LIMITED
TO, EXCHANGE OF BEST-PRACTICE EXPERIENCES,
STUDY TOUR, TECHNOLOGY TRANSFER AMONG
ASEAN MEMBERS STATES AND OTHER FORUM OF
INTERNATIONAL COOPERATION.”

‘SEC. 16. Section 8 of the Republic Act No. 7353, as amended, is hereby
amended to read as follows :


“Sec. 8. [To provide supplemental capital to any rural bank until it
has accumulated enough capital of its own or stimulate private
investments in rural banks, the Land Bank of the Philippines or
any government-owned or controlled bank or financial institution
shall subscribe within thirty (30) days to the capital stock of any
tural bank from time to time in an amount equal to the total equity
investment of the private shareholders which shall be paid in full
at the time of the subscription of such amount as may be
necessary to promote and expand rural economic development
Provided, however, That shares of stock issued to the Land Bank
of the Philippines, the Development Bank of the Philippines or any
government-owned or -controlled bank or financial institution,
may, pursuant to this section, at any time, be paid off at par and
retired in whole or in part if the rural bank has accumulated
‘enough capital strength to permit retirement of such shares; or if
an offer is received from private sources to replace the equity
investment of the Land Bank of the Philippines, the Development
Bank of the Philippines or any government-owned or —controlled
bank or financial institution with an equivalent investment or more
in the equity of such bank. In case of retirement of stock or
replacement of equity investment of the Land Bank of the
Philippines, the Development Bank of the Philippines or any
government-owned or ~controlled bank or financial institution, the
registered private shareholders of the rural bank shall have the
right of preemption within one (1) year from the date of offer in
proportion to their respective holdings.

Stock held by the Land Bank of the Philippines, the Development
Bank of the Philippines or by any government-owned or —
controlled bank or financial institution, under the terms of this
section, shall be made preferred only as to assets upon
liquidation and without power to vote and shall share in dividend
distribution from the date of issuance in the amount of four
percent (4%) on the first and second years, six percent (6%) on
the third and fourth years, eight percent (8%) on the fifth and sixth
years, ten percent (10%) on the seventh and eighth years and
twelve percent (12%) on the ninth to the fifteen years without
preference: Provided, however, That is such stock of the Land
Bank of the Philippines, the Development bank of the Philippines
or any govemment-owned or -controlled bank or financial
institution is sold to private shareholders, the same may be
converted into common stock of the class provide for in Section
10 hereof: Provided, further, That pending the amendment of
Articles of Incorporation of the rural bank, if necessary, for the
purpose of reflecting the conversion into common stock of
preferred stock sold to private stockholders, the transfer shall be
recorded by the rural bank in the stock and transfer book and such
shareholders shall thereafter enjoy all the rights and privileges of
common stockholders. The preferred stocks so transferred shall


be surrendered and cancelled and the corresponding common
stocks shall be issued.]

TO PROVIDE THE CAPITALIZATION REQUIREMENT AND
NECESSARY CAPITAL EXPENDITURES, ESPECIALLY
INVESTMENTS IN TECHNOLOGY OF RURAL BANKS, THE
LAND BANK OF THE PHILIPPINES, THE DEVELOPMENT
BANK OF THE PHILIPPINES OR ANY GOVERNMENT-OWNED
OR CONTROLLED BANK OR FINANCIAL INSTITUTION SHALL
SUBSCRIBE WITHIN THIRTY (30) DAYS TO THE CAPITAL
STOCK OF ANY RURAL BANK FROM TIME TO TIME IN AN
AMOUNT EQUAL TO THE TOTAL EQUITY INVESTMENT OF
THE PRIVATE SHAREHOLDERS WHICH SHALL BE PAID IN
FULL AT THE TIME OF THE SUBSCRIPTION OR SUCH
AMOUNT AS MAY BE NECESSARY IN ACCORDANCE WITH
THE BOARD APPROVED STRATEGIC PLANS OF THE BANK
TO PROMOTE AND EXPAND RURAL ECONOMIC
DEVELOPMENT. :

PROVIDED, HOWEVER, THAT SHARES OF STOCK ISSUED
TO THE LAND BANK OF THE PHILIPPINES, THE
DEVELOPMENT BANK OF THE PHILIPPINES OR ANY
GOVERNMENT-OWNED OR CONTROLLED BANK OR
FINANCIAL INSTITUTION, MAY, PURSUANT TO THIS
SECTION, AT ANY TIME, BE PAID OFF AT PAR AND RETIRED
IN WHOLE OR IN PART IF THE RURAL BANK HAS
ACCUMULATED ENOUGH CAPITAL STRENGTH TO PERMIT
RETIREMENT OF SUCH SHARES, OR IF AN OFFER IS
RECEIVED FROM PRIVATE SOURCES TO REPLACE THE
EQUITY INVESTMENT OF THE LAND BANK OF THE
PHILIPPINES, THE DEVELOPMENT BANK OF THE
PHILIPPINES OR ANY GOVERNMENT OWNED OR
CONTROLLED BANK OR FINANCIAL INSTITUTION WITH AN
EQUIVALENT INVESTMENT OR MORE IN THE EQUITY OF
SUCH BANK.

IN CASE OF RETIREMENT OF STOCK, REPLACEMENT OF
EQUITY INVESTMENTS OR COMMON SHARES OF THE
LAND BANK OF THE PHILIPPINES, THE DEVELOPMENT
BANK OF THE PHILIPPINES OR OF ANY GOVERNMENT-
OWNED OR CONTROLLED BANK OR_ FINANCIAL
INSTITUTION, THE REGISTERED PRIVATE SHAREHOLDERS:
OF THE RURAL BANK SHALL HAVE THE RIGHT OF
PREEMPTION WITHIN ONE (1) YEAR FROM THE DATE OF
OFFER IN PROPORTION TO THEIR RESPECTIVE
HOLDINGS.”

‘SEC. 17. A new Section 8.1 is hereby inserted after Section 8 of the
Republic Act No. 7353, as amended, to read as follows


“SEC. 8.1 STOCKS HELD BY THE LAND BANK OF THE
PHILIPPINES, THE DEVELOPMENT BANK OF THE
PHILIPPINES OR BY ANY GOVERNMENT-OWNED OR
CONTROLLED BANK OR FINANCIAL INSTITUTION, UNDER
THE TERMS OF THIS SECTION, SHALL BE MADE
PREFERRED ONLY AS TO ASSETS UPON LIQUIDATION AND
WITHOUT THE POWER TO VOTE AND SHALL SHARE IN
DIVIDENDS DISTRIBUTION AS DECLARED BY THE BOARD
BUT NOT TO EXCEED THE PREVAILING 90-DAY T-BILL
RATES AT THE DATE OF DECLARATION. DIVIDEND RATES
FOR PREFERRED SHARES SHALL FOLLOW THE SAME
LIMITS. THE PREFERRED SHARES HELD BY GOVERNMENT
FINANCIAL INSTITUTIONS IN THE EQUITY STOCK OF RURAL
BANKS ARE DEEMED PERPETUAL AND CUMULATIVE IN
NATURE AS RETIREMENT OF SUCH SHARES IS PRE-
CONDITIONED WITH A REPLACEMENT OF AN EQUIVALENT
INVESTMENT FROM PRIVATE SOURCES AS PROVIDED FOR
UNDER SECTION 8 OF THIS ACT. THESE PREFERRED
SHARES SHALL BE CLASSIFIED AND RECORDED UNDER
TIER 2 CAPITAL THUS INCLUDED IN THE COMPUTATION OF
CAPITAL ADEQUACY RATIO OF RURAL BANKS.

PROVIDED, HOWEVER, THAT IF SUCH STOCK OF THE LAND
BANK OF THE PHILIPPINES, THE DEVELOPMENT BANK OF
THE PHILIPPINES OR ANY GOVERNMENT OWNED OR
CONTROLLED BANK OR FINANCIAL INSTITUTION 1S SOLD
TO PRIVATE SHAREHOLDERS, THE SAME MAY BE
CONVERTED INTO COMMON STOCK AND/OR PREFERRED
STOCKS OF THE CLASS PROVIDED FOR IN SECTION 9
HEREOF:

PROVIDED, FURTHER, THAT PENDING THE AMENDMENT
OF THE ARTICLES OF INCORPORATION OF THE RURAL
BANK, IF NECESSARY, FOR THE PURPOSE OF REFLECTING
THE CONVERSION INTO COMMON STOCK OF PREFERRED
STOCK SOLD TO PRIVATE STOCKHOLDERS, THE
TRANSFER SHALL BE RECORDED BY THE RURAL BANK IN
THE STOCK AND TRANSFER BOOK AND SUCH
SHAREHOLDERS SHALL THEREAFTER ENJOY ALL THE
RIGHTS AND PRIVILEGES OF COMMON STOCKHOLDERS.

THE PREFERRED STOCKS SO TRANSFERRED SHALL BE
SURRENDERED AND CANCELLED AND THE
CORRESPONDING COMMON STOCKS SHALL BE ISSUED.”

SEC. 18. A new Section 8.2 is hereby inserted after Section 8 of the
Republic Act No. 7353, as amended, to read as follows :

“SEC. 8.2 THE CORPORATE SECRETARY OF THE RURAL
BANK SHALL SUBMIT TO THE BANGKO SENTRAL NG


PILIPINAS (BSP) AND THE SECURITIES AND EXCHANGE
COMMISSION (SEC) A REPORT ON EVERY TRANSFER OF
PREFERRED STOCK TO PRIVATE SHAREHOLDERS, AND
SUCH REPORT RECEIVED BY THE SECURITIES AND
EXCHANGE COMMISSION SHALL FORM PART OF THE
CORPORATE RECORDS OF THE RURAL BANK. WHEN ALL
THE PREFERRED SHARES OF STOCK OF RURAL BANK
HAVE BEEN SOLD TO PRIVATE SHAREHOLDERS, THE
ARTICLES OF INCORPORATION OF THE RURAL BANK
SHALL BE AMENDED TO REFLECT THE CONVERSION OF
THE PREFERRED SHARES OF STOCK INTO COMMON
STOCK.

FOR THIS PURPOSE, THE PRESIDENT, THE CORPORATE
SECRETARY, AND A MAJORITY OF THE BOARD OF
DIRECTORS SHALL ISSUE A CERTIFICATE THAT ALL
PREFERRED SHARES HAVE BEEN SOLD TO PRIVATE
SHAREHOLDERS WHICH, TOGETHER WITH A COPY OF THE
ARTICLES OF INCORPORATIONS, AS AMENDED, AND A
MAJORITY OF THE BOARD OF DIRECTORS CONCURRING,
SHALL BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE SAME SHALL THEN BE ATTACHED TO
THE ORIGINAL ARTICLES OF INCORPORATION ON FILE
WITH SAID OFFICE.

THE SECURITIES AND EXCHANGE COMMISSION SHALL
NOT REGISTER THE AMENDED ARTICLES OF
INCORPORATION UNLESS ACCOMPANIED BY THE
CERTIFICATE OF AUTHORITY REQUIRED UNDER SECTION
9 OF REPUBLIC ACT NO. 337 OTHERWISE KNOWN AS THE
GENERAL BANKING LAW, AS AMENDED.”

SEC. 19. A new Section 8.3 is hereby inserted after Section 8 of the
Republic Act No. 7353, as amended, to read as follows :

“SEC. 8.3 THE LAND BANK OF THE PHILIPPINES AND THE
DEVELOPMENT BANK OF THE PHILIPPINES SHALL WITHIN
60 DAYS FROM THE EFFECTIVITY OF THIS ACT, SUBSCRIBE
AND PAY IN FULL, TO PREFERRED OR COMMON SHARES
OF ALL RURAL BANKS, EQUIVALENT TO ALL PAST DUE AND
RESTRUCTURED PAST DUE LOANS, INCLUDING THOSE
COVERED UNDER EXISTING REHABILITATION PROGRAMS
FOR ANY REASON EXCEPT FRAUD.

SUBSEQUENT REQUIREMENTS FOR ADDITIONAL LOAN
LOSS PROVISIONING THAT WILL RESULT TO CAPITAL
IMPAIRMENT ARISING FROM CALAMITIES OR REGULATORY
REQUIREMENTS IN COMPLIANCE WITH INTERNATIONAL
STANDARDS SHALL LIKEWISE BE FUNDED ACCORDINGLY,
AT THE CALL OF THE RURAL BANK.


PROVIDED, HOWEVER, THAT RURAL BANKS THAT PREFER
TO SETTLE THEIR ARREARAGES UNDER A PLAN OF
PAYMENT OR A COMBINATION OF BOTH PLAN OF PAYMENT
AND CONVERSION MAY DO SO IN ACCORDANCE WITH
EXISTING REGULATIONS AND PROVISIONS OF THIS ACT.

PROVIDED, FURTHER, THAT RURAL BANKS SHALL MATCH
THESE PREFERRED STOCKS WITH PRIVATE EQUITY IN
EQUAL ANNUAL INSTALLMENTS OVER A PERIOD OF
FIFTEEN (15) YEARS TO BEGIN THREE (3) YEARS AFTER
CONVERSION;

PROVIDED, FINALLY, THAT THE BANGKO SENTRAL NG
PILIPINAS, THE LAND BANK OF THE PHILIPPINES, THE
DEVELOPMENT BANK OF THE PHILIPPINES AND ANY
GOVERNMENT-OWNED OR CONTROLLED BANK OR
FINANCIAL INSTITUTION SHALL CONTINUE TO REDISCOUNT
SUBJECT TO THEIR RESPECTIVE PROGRAMS, POLICIES
AND GUIDELINES AGAINST PAPERS EVIDENCING A LOAN
GRANTED BY A RURAL BANK IN ORDER TO ACHIEVE THE
DECLARED POLICY AND PROMOTE THE OBJECTIVES OF
THIS ACT.

SEC. 20. A new Section 8.4 is hereby inserted after Section 8 of the
Republic Act No. 7353, as amended, to read as follows :

“SEC. 8.4 IN ORDER TO DEFRAY THE HIGHER COST OF
ADMINISTERING LOANS TO SMALL FARMERS AND MICRO-
ENTREPRENEURS WITH THEIR SMALL LOAN SIZES AND
SHORT MATURITIES AND THE COST OF RISK OF DEFAULT
ARISING FROM VULNERABILITY OF FARM PRODUCTION
AND MICROENTERPRISES TO ADVERSE NATURAL
FACTORS AND UNFAVORABLE MARKET FORCES, A RISK
PREMIUM SHALL BE AWARDED TO RURAL BANKS. THIS
PREMIUM SHALL BE IN THE FORM OF 50% REDUCTION OF
THE PREVAILING REDISCOUNTING RATE OF THESE
GOVERNMENT FINANCIAL INSTITUTIONS ON THE
CONDITION THAT THE REDISCOUNTED NOTES ARE LENT
TO THESE SECTORS.”

SEC. 21. Section 9 of the Republic Act No. 7353, as amended, is hereby
amended to read as follows

SEC. 9. The Land Bank of the Philippines, the Development Bank
of the Philippines, or any government-owned or -controlled bank
or financial institution may obtain from any source as may be
authorized under existing laws and regulations such amount as it
may require for the purpose of subscribing to the shares of stock
of rural [bank: as provided in Section 13 of this Act] BANKS, AND


OF GRANTING LOANS TO SUCH BANKS AS PROVIDED IN
SECTION 14 OF THIS ACT.

SEC. 22. Section 11 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:

“SEC. 11. [The power to supervise the operation of any rural bank
by the Monetary Board as herein indicated shall consists in
placing limits to the maximum credit allowed to any individual
borrower; in prescribing the interest rate; in determining the loan
period and loan procedures; in indicating the manner in which
technical assistance shall be extended to rural banks; in imposing
‘uniform accounting system and manner of keeping the accounts
and records of rural banks; in instituting periodic surveys of loan
and lending procedures, audits, test-check of cash and other
transactions of the rural banks; and, in general in supervising the
business operations of the rural banks.

The Central bank shall have the power to enforce the laws,
orders, instructions, rules and regulations promulgated by the
Monetary Board applicable to rural banks; to require rural banks,
their directors, officers and agents to conduct and manage the
affairs of the rural banks in a lawful and orderly manner, and, upon
proof that the rural bank of its Board of Directors, or officers are
conducting and managing the affairs of the banking in a manner
contrary to the laws, orders, instructions, rules and regulations
promulgated by the Monetary Board or in a manner substantially
Prejudicial in the interest of the Government, depositors or
creditors, to take over the management of such bank when
specifically authorized to do so by the Monetary Board after due
hearing process until a new board of directors and officers are
elected and qualified without prejudice to the prosecution of the
persons for such violations under the provisions of Sections 32,
33 and 34 of Republic Act No. 265, as amended.

‘The management of the rural bank by the Central Bank shall be
without expense to the rural bank, except such as is actually
necessary for its operation, pending the election and qualification
of a new board of directors and officers to take place of those
responsible for the violations or acts contrary to the interest of the
Government, depositors or creditors

The director and the examiners of the department of the Central
Bank charged with the supervision of rural banks are hereby
authorized to administer oaths to any director, officer or employee
of any rural bank or to any voluntary witness and to compel the
presentation of all books, documents, papers or records
necessary in his or their judgment to ascertain the facts relative
to the true condition of any rural bank or to any loan.]


THE POWER TO SUPERVISE THE OPERATION OF ANY
RURAL BANK BY THE MONETARY BOARD AS HEREIN
INDICATED SHALL EXCLUSIVELY BE THROUGH THE
DEPARTMENT OF RURAL BANKS (DRB) OF THE BANGKO
SENTRAL NG PILIPINAS, WHOSE FUNCTIONS SHALL
INCLUDE:

(1) PLACING LIMITS ON THE MAXIMUM CREDIT
ALLOWED TO ANY INDIVIDUAL BORROWER;

(2) DETERMINING THE LOAN PERIOD AND LOAN
PROCEDURES;

(3) PROVIDING TECHNICAL ASSISTANCE TO RURAL
BANKS, INCLUDING BUT NOT LIMITED TO CORE
BANKING SYSTEMS, ACCOUNTING AND REPORTING
SYSTEM, RECORD RETENTION SYSTEM AND ALL
OTHER APPLICATIONS AND TOOLS, TO ENSURE
BUSINESS AND OPERATIONAL SUSTAINABILITY AND
CONTINUITY;

(4) INSTITUTING PERIODIC SURVEYS ON LOAN AND
LENDING PROCEDURES, AUDITS, TEST-CHECKS OF
CASH AND OTHER TRANSACTIONS OF THE RURAL
BANKS;

(5) CRAFTING UNIFORM OPERATING MANUALS
SPECIFICALLY FOR RURAL BANKS’ AND
CONDUCTING TRAINING COURSES THEREON;

(6) CRAFTING SEPARATE PERFORMANCE RATING
SYSTEM WHICH SHALL BE GEARED TOWARDS
ACHIEVEMENT OF THE SOCIAL MISSION OF RURAL
BANKS TO COMPLEMENT FINANCIAL INDICATORS
AS APPLIED TO OTHER BANKS; AND

(7) IN GENERAL, SUPERVISING THE BUSINESS
OPERATIONS OF THE RURAL BANKS;

THE DEPARTMENT OF RURAL BANKS OF THE BANGKO
SENTRAL NG PILIPINAS, WHICH SHALL BE FORMED WITHIN:
ONE YEAR FROM THE APPROVAL OF THIS ACT, SHALL
HAVE THE POWER TO ENFORCE THE LAWS, ORDERS,
INSTRUCTIONS, RULES AND REGULATIONS.
PROMULGATED BY THE MONETARY BOARD APPLICABLE
TO RURAL BANKS IN FURTHERANCE OF SECTIONS 2 AND
3 OF THIS ACT; TO REQUIRE RURAL BANKS, THEIR
DIRECTORS, OFFICERS AND AGENTS TO CONDUCT AND
MANAGE THE AFFAIRS OF THE RURAL BANKS IN A LAWFUL
AND ORDERLY MANNER.


UPON PROOF AND AFTER DUE HEARING WITH THE
MONETARY BOARD, THAT THE RURAL BANK OR ITS BOARD
OF DIRECTORS, OR OFFICERS ARE CONDUCTING AND
MANAGING THE AFFAIRS OF THE BANK IN A MANNER
CONTRARY TO LAWS, ORDERS, INSTRUCTIONS, RULES
AND REGULATIONS PROMULGATED BY THE MONETARY
BOARD OR INA MANNER SUBSTANTIALLY PREJUDICIAL TO
THE INTEREST OF THE GOVERNMENT, DEPOSITORS OR
CREDITORS, THE DEPARTMENT OF RURAL BANKS OF THE
BANGKO SENTRAL NG PILIPINAS SHALL TAKE OVER THE
MANAGEMENT OF SUCH BANK, WITH APPROVAL OF THE
MONETARY BOARD.

THE MANAGEMENT TAKEOVER SHALL BE ONLY FOR A
MAXIMUM PERIOD OF TWO (2) YEARS OR UNTIL A NEW
BOARD OF DIRECTORS AND OFFICERS ARE ELECTED AND
QUALIFIED, OR A NEW SET OF OWNERS ARE INSTALLED
THROUGH BUYOUT, CONSOLIDATION OR MERGER,
WITHOUT PREJUDICE TO THE PROSECUTION OF THE
PERSONS RESPONSIBLE FOR SUCH VIOLATIONS UNDER
THE PROVISIONS OF EXISTING LAWS;

THE MANAGEMENT OF THE RURAL BANK BY THE
DEPARTMENT OF RURAL BANKS SHALL BE WITHOUT
EXPENSE TO THE RURAL BANK, EXCEPT SUCH AS IS
ACTUALLY NECESSARY FOR ITS OPERATION, PENDING
THE ELECTION AND QUALIFICATION OF A NEW BOD AND
OFFICERS TO TAKE PLACE OF THOSE RESPONSIBLE FOR
THE VIOLATIONS OR ACTS CONTRARY TO THE INTEREST
OF THE GOVERNMENT, DEPOSITORS OR CREDITORS; OR
PENDING THE TAKEOVER OF NEW MANAGEMENT AS A
RESULT OF BUYOUT, MERGER OR CONSOLIDATION;

THE DIRECTOR AND EXAMINERS OF THE DEPARTMENT OF
RURAL BANKS CHARGED WITH THE SUPERVISION OF
RURAL BANKS ARE HEREBY AUTHORIZED TO ADMINISTER
OATHS TO ANY DIRECTOR, OFFICER OR EMPLOYEE OF
ANY RURAL BANK OR TO ANY VOLUNTARY WITNESS AND
TO COMPEL THE PRESENTATION OF ALL BOOKS,
DOCUMENTS, PAPERS OR RECORDS NECESSARY IN HIS
OR THEIR JUDGMENT TO ASCERTAIN THE FACTS
RELATIVE TO THE TRUE CONDITION OF ANY RURAL BANK
OR TO ANY LOAN.

SEC. 23. Section 12 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:

“SEC. 12. In addition to the operations especially authorized in
this Act, any rural bank may:


(a) Accept saving and time deposit;

(b) Open current or checking accounts, provided the rural
bank has net assets of at least’ Five _ million
(P5,000,000) subject to such guidelines as may be

established by the Monetary Board

(©) Act as correspondent for other financial institutions;
(d) Act as a collection agent;

{(e) Act as official depositary of municipal, city or provincial
funds in the municipality, city or province where it is
located, subject to such guidelines as may be established
by the Monetary Board:]

(e) ACT AS OFFICIAL DEPOSITORY OF MUNICIPAL,
CITY, PROVINCIAL OR GOCC FUNDS IN THE
MUNICIPALITY, CITY, AND PROVINCE WHERE THE
RURAL BANK IS LOCATED IN AREAS WHERE THERE
ARE NO GOVERNMENT BANKS SUBJECT TO SUCH
GUIDELINES AS MAY BE ESTABLISHED BY THE
MONETARY BOARD; FURTHER, IF THE FUNDS
DEPOSITED DO NOT EXCEED THE INSURED
DEPOSIT LIMITS OF THE PHILIPPINE DEPOSIT
INSURANCE CORPORATION (PDIC), THERE SHALL
BE NO NECESSITY FOR MONETARY BOARD
APPROVAL ALTHOUGH THE BANK MUST REPORT TO.
THE DEPARTMENT OF RURAL BANKS THE FACT OF
SUCH DEPOSIT BY THE SAID LGU OR AGENCY;

[(f) Rediscount paper with the Philippine National Bank, the
Land Bank of the Philippines, the Development Bank of the
Philippines, or any other banking institution, including _ its
branches and agencies. Said institution shall specify the nature of
paper deemed acceptable for rediscount, as well as the rediscount
rate to be charged by any of these institutions;]

(f) TO ACT AS CONDUIT BANK FOR THE
DISBURSEMENT OF GOVERNMENT FUNDS: INTENDED
FOR LENDING TO AGRICULTURE, SMALL-MEDIUM

ENTERPRISES (SMES) AND PROJECTS FOR LOCAL
ECONOMIC DEVELOPMENT;

I(g) Offer other banking service as provided in Section 72
of Republic Act No. 337, as amended, and]

(g) TO BE AUTOMATICALLY ELIGIBLE TO
PARTICIPATE IN GOVERNMENT PROGRAM
ALLOCATIONS FOR AGRICULTURAL LENDING,


SOCIAL HOUSING, LOANS TO RURAL MICRO
ENTERPRISES AND OTHER INITIATIVES TOWARDS
INCLUSIVE GROWTH;

{(h) Extend financial assistance to public and private
employees in accordance with the provisions of Section 5
of Republic Act No. 3779, as amended.]

(h) GRANT LOANS TO PRIVATE EMPLOYEES AND BE
GIVEN PRIORITY IN GRANTING SALARY LOANS TO
PUBLIC EMPLOYEES IN THEIR RESPECTIVE
COMMUNITIES WHERE THE RURAL BANK IS
LOCATED, SUBJECT TO THE RULES AND
REGULATIONS OF THE BANGKO SENTRAL NG
PILIPINAS AND RECEIVE PAYMENT THROUGH
SALARY DEDUCTION IN ACCORDANCE WITH THE
RULES AND REGULATIONS OF THE CONCERNED
AGENCY OR ENTITY. PROVIDED, THAT THE
TREASURER, CASHIER, OR PAYMASTER OF THE
OFFICE EMPLOYING SUCH PUBLIC OR PRIVATE
EMPLOYEE IS MANDATED, NOTWITHSTANDING THE
PROVISION OF ANY EXISTING LAW, RULE AND
REGULATION TO THE CONTRARY, TO MAKE
DEDUCTIONS FROM HIS SALARY, WAGE, INCOME OR
RETIREMENT PENSION PURSUANT TO THE TERMS
OF HIS LOAN AND ALL OTHER DEDUCTIONS
AUTHORIZED BY THE PUBLIC OR PRIVATE
EMPLOYEE, TO REMIT SUCH DEDUCTIONS TO THE
RURAL BANK CONCERNED, AND TO COLLECT SUCH
REASONABLE FEE FOR HIS SERVICES AS MAY BE
AUTHORIZED BY THE RULES OF THE BANGKO
SENTRAL NG PILIPINAS: PROVIDED, FURTHER, THAT
OBLIGATIONS DUE TO RURAL BANKS AND OTHER
ENTITIES AUTHORIZED UNDER EXISTING LAWS TO
MAKE SUCH DEDUCTIONS SHALL BE SATISFIED IN
THE ORDER BY WHICH THEY WERE INCURRED BY
THE PUBLIC OR PRIVATE EMPLOYEE;

(i) ACT AS DEPOSITORY BANK OF GOCC’'S AND
GOVERNMENT AGENCIES AS TO FUNDS ALLOCATED
FOR PROGRAMS AWARDED TO THE RURAL BANK IN
AN AMOUNT EQUIVALENT TO APPROVED
GUARANTEE OR CREDIT LINE;

(j) REDISCOUNT PAPER WITH THE LBP, DBP OR ANY
BANKING INSTITUTION, INCLUDING ITS BRANCHES
AND AGENCIES. SAID INSTITUTION SHALL SPECIFY


THE NATURE OF PAPER DEEMED ACCEPTABLE FOR
REDISCOUNTING. IN THE CASE OF LBP OR DBP, THE
REDISCOUNTING RATE SHALL BE NOT MORE THAN
90-DAY T-BILL RATE LESS 1 PERCENTAGE POINT;

(k) OFFER OTHER BANKING SERVICES AS MAY BE
ALLOWED BY LAW SUCH AS BUT NOT LIMITED TO
TRUST, FOREIGN CURRENCY LOANS AND
DEPOSITS, FOREIGN AND DOMESTIC REMITTANCES,
LETTERS OF CREDIT;

() ACT AS TRUSTEE OVER ESTATES OF PROPERTIES
OF FARMERS AND MERCHANTS, WITH WRITTEN
PERMISSION OF THE MONETARY BOARD.

[ith written permission of the Monetary Board of the Central
bank, any rural bank may act as trustee over estates or properties
of farmer and merchants }

MOREOVER, A RURAL BANK SHALL BE EXEMPTED FROM
ANY MANDATORY CREDITS.

Nothing in this section shall be construed as precluding a rural
bank from performing, with prior approval of the Monetary Board,
all the services ALLOWED OF THRIFT AND COMMERCIAL
BANKS [authorized and mortgage banks, of for commercial
banks,] under an expanded banking authority as provided in
[Section 21-B] SECTION 20 of the same Act.

SEC. 24. Section 13 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:

“Sec. 13. [Subject to such guidelines as may be established by
the Monetary, rural banks may invest in equities of the allied
undertakings are hereinafter enumerated: Provided, That: (a) the

total investment in equities shall not exceed twenty-
five percent (25%) of the net worth of the rural bank; (b)
the equity investment in any single enterprise shall be limited to
fifteen percent (15%) of the net worth of the rural bank; and
(©) the equity investment of the rural bank in any _ single.
enterprise shall remain a minority holding in that enterprise:
Provided, further, That equity investment shall not be
permitted in non-related activities,

Allied undertaking shall include:
a. banks, financial institutions and non-bank ‘financial

intermediaries;
b. Warehousing and other post-harvested facilities;


°

. Fertiizer and agricultural chemical and pesticides
distribution;
Farm equipment distribution;
Trucking and transportation of agricultural products;
Marketing and agricultural products;
Leasing; and Other undertakings as may be determined by
the Monetary Board]

e>7oa

ALL AGRICULTURAL LOANS GRANTED BY RURAL BANKS
SHALL BE COVERED BY CROP GUARANTY INSURANCE TO
BE PROVIDED BY THE PHILIPPINE GUARANTEE
CORPORATION WITH AN EXPANDED COVERAGE OF THE
ENTIRE AGRICULTURE VALUE-CHAIN FROM PRODUCTION,
PROCESSING AND MARKETING OF FOOD, NON-FOOD
CROPS SUCH AS_AGRO-FORESTRY PRODUCTS,
CULTIVATED FLORA FOR INDUSTRIAL USE INCLUDING
MEDICINAL HERBAL PLANTS WITH COMMERCIAL VALUE,
ORNAMENTAL AND HORTICULTURAL PLANTS FOR
GARDENING, LANDSCAPING AND OTHER PROJECTS

RURAL BANKS SHALL BE ENTITLED TO FULL INSURANCE
SUBSIDY BY PHILIPPINE CROP INSURANCE CORPORATION
(PCIC) IN FINANCING SMALL FARMERS REGARDLESS OF
CROP TYPE ON THE CONDITION THAT AGGREGATE FARM
SIZE DOES NOT EXCEED THREE (3) HECTARES. THIS
INSURANCE SUBSIDY SHALL ALSO APPLY TO LOANS
GRANTED TO SMALL FISHER-FOLKS AND LIVESTOCK
RAISERS AS DEFINED BY AGRICULTURAL CREDIT POLICY
COUNCIL OR OTHER PERTINENT GOVERNMENT BODY.

SEC. 25. Section 14 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:

“SEC. 14. [The Land Bank of the Philippines, the Development
Bank of the Philippines or any government-owned or controlled
bank or financial institution shall, within sixty (60) days of
certification of the Monetary Board, which shall be final, extend to
a rural bank a loan or loans from time to time repayable in ten (10)
years, with concessional rates of interest, against security which
may be offered by any stockholders or stockholders of the rural
bank: Provided:

a. That the Monetary Board is convinced that the resources of
the rural bank are inadequate to meet the legitimate credit
requirements of the locality wherein the rural bank is
established. ;

b. That there is a dearth of private capital in the said locality;
and

c. That it is not possible for the stockholders of the rural bank to
increase the paid-up capital thereof.)


SUBJECT TO SUCH GUIDELINES AS MAY BE ESTABLISHED
BY THE MONETARY BOARD, RURAL BANKS MAY INVEST IN
EQUITIES OF ALLIED UNDERTAKINGS AS HEREINAFTER
ENUMERATED:

PROVIDED, THAT: (A) THE TOTAL INVESTMENT TO EQUITIES
SHALL NOT EXCEED TWENTY-FIVE PERCENT (25%) OF THE
NET WORTH OF THE RURAL BANK; (B) THE EQUITY
INVESTMENT IN ANY SINGLE ENTERPRISE SHALL BE
LIMITED TO FIFTEEN PERCENT (15%) OF THE NET WORTH
OF THE RURAL BANK; AND (C) PROVIDED, THAT IN THE
CASE OF EQUITY INVESTMENTS IN ANOTHER RURAL BANK
FOR THE PURPOSE OF CAPITAL INFUSION, THERE SHALL
BE NO CEILING AS TO HOLDING IN ANY SINGLE
ENTERPRISE;

PROVIDED, FURTHER, THAT EQUITY INVESTMENT SHALL
NOT BE PERMITTED IN NON-RELATED ACTIVITIES.

ALLIED UNDERTAKINGS SHALL INCLUDE:

(A) BANKS, FINANCIAL INSTITUTIONS AND NON-BANK
FINANCIAL INTERMEDIARIES;

(B) WAREHOUSING AND OTHER POST-HARVEST
FACILITIES;

(C)FERTILIZER AND AGRICULTURAL CHEMICAL AND
PESTICIDES DISTRIBUTION;

(D)FARM EQUIPMENT DISTRIBUTION;

(E) TRUCKING AND TRANSPORTATION OF
AGRICULTURAL PRODUCTS;

(F) MARKETING OF AGRICULTURAL PRODUCTS;
(G)LEASING; AND.

(H)LAND DEVELOPMENT OF ROPA FOR PURPOSES OF
SOCIAL HOUSING AND EQUITABLE DISTRIBUTION OF
LAND;

(1) SECURITY AND MANPOWER SERVICES AND OTHER
ACTIVITIES AS MAY BE OUTSOURCED BY THE BANK.

SEC. 26. A new Section 14.1 is hereby inserted after Section 14 of the
Republic Act No. 7353, as amended, to read as follows :


“SEC. 14.1 ASIDE FROM ALLIED UNDERTAKINGS, RURAL
BANKS MAY ALSO ENTER JOINT-VENTURE PROJECTS WITH
GOVERNMENT OR PRIVATE AGENCIES AND INDIVIDUALS
USING ITS PHYSICAL, HUMAN AND OTHER ASSETS AS
COUNTERPART IN ECONOMIC, SOCIAL AND CULTURAL
INITIATIVES IN PURSUIT OF BUSINESS OBJECTIVES OR
DEMONSTRATION OF CORPORATE SOCIAL
RESPONSIBILITY FOR THE DEVELOPMENT AND BENEFIT
COMMUNITIES THEY SERVE.”

SEC. 27. Section 15 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:

“Sec. 15. [All rural banks created and organized under the provisions of
this Act shall be exempt from the payment of all taxes, fees and charges of
whatever nature and description, except the corporate income tax and local
taxes, fees and charges, for a period of five (5) years fromthe date of
commencement of operations.

All rural banks in operation as of the date of approval of this Act shall be
exempt from the payment of all taxes, fees and charges of
whatsoever nature and description, except the corporate income tax and local
taxes, fees and charges, for a period of five (5) years from the approval
of this Act]

THE LAND BANK OF THE PHILIPPINES, THE DEVELOPMENT
BANK OF THE PHILIPPINES OR ANY GOVERNMENT-OWNED
OR CONTROLLED BANK OR FINANCIAL INSTITUTION SHALL
WITHIN SIXTY (60) DAYS OF CERTIFICATION OF THE
DEPARTMENT OF THE RURAL BANKS, WHICH SHALL BE
FINAL, EXTEND TO A RURAL BANK A LOAN OR LOANS
FROM TIME TO TIME REPAYABLE IN TEN (10) YEARS, WITH
CONCESSIONAL RATES OF INTEREST, AGAINST SECURITY
WHICH MAY BE OFFERED BY ANY STOCKHOLDER OR
STOCKHOLDERS OF THE RURAL BANK:

PROVIDED, THAT THE DEPARTMENT OF RURAL BANKS
(DRB) IS CONVINCED THROUGH A FULL SUBSTANTIATION
THAT THE RESOURCES OF THE RURAL BANK ARE
INADEQUATE TO MEET THE LEGITIMATE CREDIT
REQUIREMENTS OF THE LOCALITY WHEREIN THE RURAL
BANK IS ESTABLISHED: PROVIDED, HOWEVER, THAT
THERE IS A DEARTH OF PRIVATE CAPITAL IN THE SAID
LOCALITY: PROVIDED, FURTHER, THAT IT IS NOT
POSSIBLE FOR THE STOCKHOLDERS OF THE RURAL BANK
TO INCREASE THE PAID-UP CAPITAL THEREOF.”

SEC. 28. Section 16 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:


“Sec. 16. [In an emergency or when a financial crisis is imminent,
the Central Bank may give a loan to any rural bank against assets
of the rural bank which may be considered acceptable by a
concurrent vote of at least four (4) members of the Monetary
Board.

In normal times the Central bank may rediscount against paper
evidencing a loan granted by a rural bank to any of its customers
which can be liquefied for a period of three hundred sixty (360)
days: Provided, however, That for the purpose of implementing a
nationwide program of agricultural and industrial development,
tural banks are hereby authorized, under such terms and
conditions as the Central bank shall prescribe, to borrow, on a
medium — or long-term basis, funds that the Central Bank or any
other government financing institution shall borrow from the
Development Bank of the Philippines or other international or
foreign-lending institutions for the specific purpose of financing
the abovestated agricultural and industrial program. Repayment
of loans obtained by the Central Bank of the Philippines or any
other government financing institutions from said foreign-lending
institutions under this section shall be guaranteed by the Republic
of the Philippines. ]

NOTWITHSTANDING ANY LAW TO THE CONTRARY:

A. ALL RURAL BANKS CREATED AND ORGANIZED
UNDER THE PROVISIONS OF THIS ACT SHALL BE
EXEMPT FROM THE PAYMENT OF ALL TAXES, FEES
AND CHARGES OF WHATEVER NATURE AND
DESCRIPTION, EXCEPT LOCAL TAXES, FEES AND
CHARGES, FOR A PERIOD OF FIVE (5) YEARS FROM
THE DATE OF COMMENCEMENT OF OPERATIONS.

B. ALL RURAL BANKS IN OPERATION AS OF THE
DATE OF APPROVAL OF THIS ACT SHALL BE EXEMPT
FROM THE PAYMENT OF ALL TAXES, FEES AND
CHARGES OF WHATEVER NATURE AND
DESCRIPTION, EXCEPT LOCAL TAXES, FEES AND
CHARGES, FOR A PERIOD OF FIVE (5) YEARS FROM
THE APPROVAL OF THIS ACT.

C. ALLOW IMMEDIATE FULL TAX DEDUCTIBILITY OF
ANY ADDITIONS TO THE ALLOWANCE FOR CREDIT
LOSS, UP TO 150% OF THE ACTUAL PAST-DUE LOANS.
AND LOANS-IN-LITIGATION. FOR ADDED GUARANTEE,
50% OF THE LOAN LOSS ALLOWANCE MUST BE
DEPOSITED WITH THE BANGKO SENTRAL NG
PILIPINAS WITH CORRESPONDING INTEREST.”


SEC. 29. Section 17 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:

“SEC. 17. [Deposits of rural banks with government-owned or —
controlled financial institutions like the Land Bank of the
Philippines, the Development Bank of the Philippines, and the
Philippine national Bank are exempted from the Single Borrower's
Limit imposed by the General Banking Act.

In areas where there are no government banks, rural banks may
deposit in private banks more than the amount prescribed by the
Single Borrower's Limit subject to Monetary Board regulations.]

IN AN EMERGENCY OR WHEN A FINANCIAL CRISIS |S
IMMINENT, THE BANGKO SENTRAL NG PILIPINAS MAY GIVE
A LOAN TO ANY RURAL BANK AGAINST ASSETS OF THE
RURAL BANK WHICH SHALL BE CONSIDERED ACCEPTABLE
BY A CONCURRENT VOTE OF A LEAST FOUR (4)
MONETARY BOARD MEMBERS.

IN NORMAL TIMES, THE BANGKO SENTRAL NG PILIPINAS.
MAY REDISCOUNT AGAINST PAPER EVIDENCING A LOAN
GRANTED BY A RURAL BANK TO ANY OF ITS CUSTOMERS.
WHICH CAN BE LIQUEFIED UP TO THE MATURITY DATE OF
THE REDISCOUNTED NOTE (NOT JUST WITHIN A PERIOD
OF THREE HUNDRED SIXTY (360) DAYS);

PROVIDED, THAT FOR THE PURPOSE OF IMPLEMENTING A
NATIONWIDE PROGRAM OF AGRICULTURAL AND MSME
DEVELOPMENT, RURAL BANKS ARE HEREBY AUTHORIZED
TO BORROW FROM THE BANGKO SENTRAL NG PILIPINAS.
ON A MEDIUM OR LONG-TERM BASIS. FOR THIS PURPOSE,
THE BANGKO SENTRAL NG PILIPINAS OR ANY OTHER
GOVERNMENT FINANCING INSTITUTION MAY BORROW OR
SOURCE-OUT GRANTS AND DONATIONS FROM ANY LOCAL
OR INTERNATIONAL INSTITUTION.

REPAYMENT OF LOANS OBTAINED BY THE BANGKO
SENTRAL NG PILIPINAS OR ANY OTHER GOVERNMENT-
FINANCING INSTITUTION FROM SAID FOREIGN LENDING
INSTITUTIONS UNDER THIS SECTION SHALL BE
GUARANTEED BY THE REPUBLIC OF THE PHILIPPINES.

SEC. 30. Section 17 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:

“SEC. 18. [To encourage consolidation and mergers of rural
banks, if there are five (5) or more rural banks within the region
that merge and consolidate within three (3) years from the


enactment of this Act, the merged or consolidated entity will be given the
following incentives for a period of seven (7) years:

a. Its deposit liabilities shall be subjected to only one-third
(1/3) of reserves normally required for rural banks;

b. Its reserve requirement can all be maintained under
interest-bearing government securities but kept
unencumbered with government financial institutions or the
Central Bank; and

c. It shall have unrestricted branching right within the region,
free from any assessment or surcharge required in setting
up a branch but under coordination with the Central bank
which will have to assess that there are qualified personnel,
control and procedures to operate the branch]

DEPOSITS OF RURAL BANKS WITH GOVERNMENT-
OWNED OR CONTROLLED FINANCIAL INSTITUTIONS
LIKE THE LAND BANK OF THE PHILIPPINES, AND THE
DEVELOPMENT BANK OF THE PHILIPPINES, ARE
EXEMPTED FROM THE SINGLE BORROWER'S LIMIT
IMPOSED BY THE GENERAL BANKING ACT.

MOREOVER, ALL DEPOSITS OF RURAL BANKS TO
THE BANGKO SENTRAL NG PILIPINAS INCLUDING
RESERVE REQUIREMENTS, SHALL EARN THE
PREVAILING REDISCOUNTING RATES ESTABLISHED
AT THE TIME OF PLACEMENT.

IN AREAS WHERE THERE ARE NO GOVERNMENT
BANKS, RURAL BANKS MAY DEPOSIT IN PRIVATE
BANKS MORE THAN THE AMOUNT PRESCRIBED BY
THE SINGLE BORROWER'S LIMIT OR ONE HUNDRED
MILLION PESOS (P100,000,000.00), WHICHEVER IS
HIGHER, SUBJECT TO MONETARY BOARD
REGULATIONS.

SEC. 31. Section 17 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:

“Sec. 19. [The Central Bank of the Philippines shall extend
technical assistance to any rural bank in the process of
organization or during the course of operations whenever it is
requested to do so or whenever the Monetary Board deems it
necessary to preserve, protect and promote the objectives of this
Act: Provided, however, That said assistance shall be without
cost or obligation on the part of the rural bank.]

TO ENSURE THE CONTINUOUS OPERATION OF A RURAL
BANK, CONSOLIDATION, MERGERS, AND ACQUISITIONS
OF RURAL BANKS SHALL BE ENCOURAGED. IN EVERY


CASE OF CONSOLIDATION, MERGER AND ACQUISITION,
THE FOLLOWING BENEFITS SHALL BE GIVEN FOR A
PERIOD OF SEVEN YEARS:

(A) DEPOSIT LIABILITIES SUBJECTED TO ONLY 1/3 OF
THE RESERVES NORMALLY REQUIRED FOR RURAL
BANKS;

(B) RESERVE REQUIREMENTS CAN ALL BE
MAINTAINED UNDER INTEREST BEARING
GOVERNMENT SECURITIES BUT KEPT
UNENCUMBERED WITH GOVERNMENT FINANCIAL
INSTITUTIONS OR THE BANGKO SENTRAL NG
PILIPINAS;

(C) TAX BENEFIT UNDER SECTION 16 FOR A PERIOD
OF SEVEN YEARS.”

‘SEC. 32. A new Section 19.1 is hereby inserted after Section 19 of the
Republic Act No. 7353, as amended, to read as follows :

“SEC. 19.1 IN CASES OF NATURAL CALAMITIES OR
DISASTERS, EMERGENCIES OR SIMILAR OCCURRENCES
AS DEFINED UNDER SECTION 3 (Il) OF REPUBLIC ACT 10121
(AN ACT STRENGTHENING THE PHILIPPINE DISASTER RISK
REDUCTION AND MANAGEMENT SYSTEM, PROVIDING FOR
THE NATIONAL DISASTER RISK REDUCTION AND
MANAGEMENT FRAMEWORK AND_INSTITUTIONALIZING
THE NATIONAL DISASTER RISK REDUCTION AND
MANAGEMENT PLAN, APPROPRIATING FUNDS THEREFOR
AND FOR OTHER PURPOSES) , RURAL BANKS WHOSE
HEAD OFFICES OR BRANCHES ARE LOCATED IN THE
LOCALITY WHERE A STATE OF CALAMITY IS DECLARED BY
COMPETENT AUTHORITY, ARE HEREBY ENTITLED TO THE
FOLLOWING:

(A) AUTOMATIC REGULATORY RELIEF GRANTED BY
THE BANGKO —_-SENTRAL NG PILIPINAS AND OTHER
REGULATORY AGENCIES, FOR A PERIOD OF ONE
YEAR FROM THE TIME OF DECLARATION OF A STATE OF
CALAMITY;

(B) EXEMPTED FROM PAYMENT OF ALL TAXES, FEES
AND CHARGES OF WHATEVER NATURE AND
DESCRIPTION, EXCEPT LOCAL TAXES, FEES AND
CHARGES, FOR A PERIOD OF ONE (1) YEAR FROM THE
DATE OF DECLARATION OF A STATE OF CALAMITY;

(C) GRANTED A NO INTEREST LOAN BY THE LAND
BANK OF THE PHILIPPINES OR DEVELOPMENT BANK


OF THE PHILIPPINES PAYABLE IN A PERIOD OF FIVE (5)
YEARS IN SUCH AMOUNT AS MAY BE NECESSARY To
REPAIR ITS FACILITIES DESTROYED BY THE CALAMITY OR
DISASTER.

PROVIDED, THAT THE PROVISIONS OF THIS
SECTION SHALL ONLY APPLY TO THE BRANCHES THAT
ARE AFFECTED BY THE CALAMITY.

SEC. 33. Section 20 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:

“Sec. 20. [Any city or municipal trial court in his capacity as notary
public ex officio shall administer the oath to or acknowledgement
the instruments of any rural bank and to borrowers or mortgagor,
fee from all charges, fees and documentary stamp tax, collectible
under existing laws, relative to any loan or transaction not
exceeding Fifty thousand pesos (P50,000), or such amount as
the Secretary of Finance, upon recommendation of the Monetary
Board may prescribe as may be necessary to promote and
expand the rural economy.]

THE DEPARTMENT OF RURAL BANKS OF THE BANGKO
SENTRAL NG PILIPINAS SHALL EXTEND TECHNICAL
ASSISTANCE TO ANY RURAL BANK IN THE PROCESS OF
ORGANIZATION OR DURING THE COURSE OF OPERATIONS
WHENEVER IT IS REQUESTED TO DO SO OR WHENEVER
THE MONETARY BOARD DEEMS IT NECESSARY TO
PRESERVE, PROTECT AND PROMOTE THE OBJECTIVES OF
THIS ACT, PROVIDED, HOWEVER, THAT SAID ASSISTANCE
SHALL BE WITHOUT COST OR OBLIGATION ON THE PART
OF THE RURAL BANK.

SEC. 34. A new Section 20.1 is hereby inserted after Section 20 of the
Republic Act No. 7353, as amended, to read as follows :

“SEC. 20.1 THE DEPARTMENT OF AGRICULTURE,
DEPARTMENT OF TRADE AND INDUSTRY, NATIONAL
HOUSING AUTHORITY AND OTHER GOVERNMENT
AGENCIES INCLUDING THEIR ATTACHED BUREAUS SHALL
PROVIDE RURAL BANKS THE SERVICES OF THEIR FIELD
TECHNICIANS AND OTHER PROFESSIONALS IN THE
CONDUCT OF SUPERVISED CREDIT PROGRAMS IN SMALL
AGRICULTURAL PRODUCTION, ENTREPRENEURSHIP,
SOCIAL HOUSING AND OTHER LIVELIHOOD PROJECTS
FOR LOW-INCOME SEGMENTS WITHOUT EXPENSE TO THE
RURAL BANK, EXCEPT SUCH AS IS ACTUALLY NECESSARY
FOR THE CONDUCT OF TECHNICAL ASSISTANCE.”


SEC. 35. Section 17 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:

“Sec. 21. [Any Register of Deeds shall accept from any rural bank
and its borrowers and mortgagors for registration, free from all
charges, fees and documentary stamp tax, collectible under
existing laws, any instrument, whether voluntary or involuntary,
relating to loans or transaction extended by a rural bank in an
amount not exceeding Fifty thousand pesos (P50,000): Provided,
however, That charges, if any, shall be collectible on the amount
in excess of Fifty thousand pesos (P50,000); and that in
instruments related to assignments of several mortgage
consolidated in a single deed, if any, shall be levied only on the
amount in excess of Fifty thousand pesos (P50,000) of the
consideration in the assignments of each mortgage, of such
amount as the Secretary of Finance, upon recommendation of the
Monetary Board may prescribe as may be necessary to promote
and expand the rural economy.]

ALL PUBLIC OFFICERS COMMISSIONED TO ACT AS
NOTARY PUBLIC EX OFFICIO SHALL ADMINISTER THE
OATH TO OR ACKNOWLEDGE THE INSTRUMENTS OF ANY
RURAL BANK AND ITS BORROWERS OR MORTGAGORS,
FREE FROM ALL CHARGES, FEES AND DOCUMENTARY
STAMP TAX, COLLECTIBLE UNDER EXISTING LAWS,
RELATIVE TO ANY LOAN OR TRANSACTION NOT
EXCEEDING ONE MILLION PESOS (1M) OR SUCH AMOUNT
AS THE SECRETARY OF FINANCE, UPON
RECOMMENDATION OF THE MONETARY BOARD, MAY
PRESCRIBE AS MAY BE NECESSARY TO PROMOTE AND
EXPAND THE RURAL ECONOMY.”

SEC. 36. Section 22 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:

“Sec. 22. [Any rural bank organized under this Act may, pursuant
to regulations promulgated for the purpose by the Monetary Board,
be required to contribute to the Central Bank an annual fee to help
defray the cost of maintaining the appropriate supervising
department within the central bank in an amount to be determined
by the Monetary Board but in no case to exceed one-fortieth of one
percent (1/40 of 1%) of its average total assets during the
preceding year, as shown on its end-of-month balance sheets,
after deducting its cash on hand and amounts due from banks,
including the Central Bank.]

ANY REGISTER OF DEEDS SHALL ACCEPT FROM ANY
RURAL BANK AND ITS BORROWERS AND MORTGAGORS
FOR REGISTRATION, FREE FROM ALL CHARGES, FEES AND
DOCUMENTARY STAMP TAX, COLLECTIBLE UNDER


EXISTING LAWS, ANY INSTRUMENT, WHETHER VOLUNTARY
OR INVOLUNTARY, RELATING TO LOANS OR TRANSACTION
EXTENDED BY A RURAL BANK IN AN AMOUNT NOT
EXCEEDING ONE MILLION PESOS (P1,000,000.00);

PROVIDED, HOWEVER, THAT CHARGES, IF ANY, SHALL BE
COLLECTIBLE ON THE AMOUNT IN EXCESS OF ONE MILLION
PESOS; AND THAT IN INSTRUMENTS RELATED TO
ASSIGNMENTS OF SEVERAL MORTGAGES CONSOLIDATED
IN A SINGLE DEED, IF ANY, SHALL BE LEVIED ONLY ON THE
AMOUNT IN EXCESS OF ONE MILLION PESOS OF THE
CONSIDERATION IN THE ASSIGNMENT OF EACH
MORTGAGE, OR SUCH AMOUNT AS THE SECRETARY OF
FINANCE, UPON RECOMMENDATION OF THE MONETARY
BOARD, MAY PRESCRIBE AS MAY BE NECESSARY TO
PROMOTE AND EXPAND THE RURAL ECONOMY.”

SEC. 37. Section 23 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:

“Sec. 23. [Every individual acting as officer or employee of a rural
bank and handling funds or securities amounting to Five thousand
pesos (P5,000) or more than one (1) year, shall be covered by an
adequate bond as determined by the Monetary Board; and the
bylaws of the rural bank may also provide for the bonding of other
employees or officers of rural banks.]

ANY RURAL BANK ORGANIZED UNDER THIS ACT MAY,
PURSUANT TO REGULATIONS PROMULGATED FOR THE
PURPOSE BY THE MONETARY BOARD, BE REQUIRED TO
CONTRIBUTE TO THE BANGKO SENTRAL NG PILIPINAS AN
ANNUAL FEE TO HELP DEFRAY THE COST OF MAINTAINING
THE APPROPRIATE SUPERVISING DEPARTMENT WITHIN
THE BANGKO SENTRAL NG PILIPINAS IN AN AMOUNT TO BE
DETERMINED BY THE MONETARY BOARD BUT IN NO CASE
TO EXCEED ONE FORTIETH OF ONE PERCENT (1/40 OF 1%)
OF ITS AVERAGE TOTAL ASSETS DURING THE PRECEDING
YEARS, AS SHOWN ON ITS END-OF-MONTH BALANCE
SHEETS, AFTER DEDUCTING ITS CASH ON HAND AND
AMOUNTS DUE FROM BANKS, INCLUDING THE BANGKO
SENTRAL NG PILIPINAS.”

SEC. 38. Section 25 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:

Sec. 24. [For the purpose of carrying out the objectives of this
Act, the Central Bank is authorized to require the services and
facilities of any department or instrumentality of the Government
or any officer or employee of any such department or government
instrumentality.]


EVERY INDIVIDUAL ACTING AS OFFICER OR EMPLOYEE OF
A RURAL BANK AND HANDLING FUNDS OR SECURITIES
AMOUNTING TO FIFTY THOUSAND PESOS (P50,000) OR
MORE, IN ANY ONE (1) YEAR, SHALL BE COVERED BY AN
ADEQUATE BOND AS DETERMINED BY THE MONETARY
BOARD; AND THE BYLAWS OF THE RURAL BANK MAY ALSO
PROVIDE FOR THE BONDING OF OTHER EMPLOYEES OR
OFFICERS OF RURAL BANKS.

SEC. 39. Section 25 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:

“Sec. 25. [Rural banks organized and operated under the
provisions of this Act shall act as agents of the Philippine National
Bank, the Land Bank of the Philippines and the Development
Bank of the Philippines in places where these banks have no
offices, subject to accreditation guidelines.)

FOR THE PURPOSE OF CARRYING OUT THE OBJECTIVES
OF THIS ACT, THE DEPARTMENT OF RURAL BANKS OF THE
BANGKO SENTRAL NG PILIPINAS IS AUTHORIZED TO
REQUIRE THE SERVICES AND FACILITIES OF ANY
DEPARTMENT OR INSTRUMENTALITY OF THE
GOVERNMENT OR ANY OFFICER OR EMPLOYEE OF ANY
SUCH DEPARTMENTS OR GOVERNMENT
INSTRUMENTALITY FREE OF CHARGE EXCEPT FOR
NECESSARY OPERATIONAL COSTS.”

SEC. 40. Section 26 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:

“SEC. 26. [Without prejudice to any prosecution under any law
which may have been violated a fine of not more than ten
thousand pesos (P10,000) or imprisonment of not less than six
(6) months but not more than ten (10) years, or both, at the
discretion of the court, shall imposed upon:

a. Any officer, employee, or agent of a rural bank who shall:

1. Make fake entries in any bank report or statement thereby
affecting the financial interest of or causing damage to, the
bank or any person;

2. Without order of a court of competent jurisdiction, disclose
any information relative to the funds or properties in the
custody of the bank belonging to private individuals,
corporations, or any other entity;

3. Accept gifts, fees or commission or any other form of
remuneration in connection with the approval of a loan from
said bank; or


4. Overvalue or aid in overvaluing any security for the purpose
of influencing in any way the action of the bank on any loan;
or

5. Appear and sign as guarantor, indorser, or surety for loans
granted; or

6. Violate any of the provisions of this Act.

b. Any applicant for a loan from, or borrower of a rural bank
who shall:

1. Misuse, misapply, or divert the proceeds of the loan obtained
by him from its declared purpose; or

2. Fraudulently overvalue property offered as security for loan
from said bank; or

3. Give out or furnish false misrepresentation of material facts
for the purpose of obtaining, renewing, or increasing a loan
or extending the period thereof, or

4. Attempt to defraud the said bank in the event of court action
to recover a loan; or

5. Offer any officer, employee, or agent of a rural bank as a gift,
fee, commission, or other form of compensation in order to
influence such bank personality in approving an application;
or

6. Dispose or encumber the property or the crops offered as
security for the loan.

c. Any examiner, or officer or employee of the Central Bank of the
Philippines or other department, bureau, office, branch or agency
of the Government who is assigned to examine, supervise, assist
or render technical services to rural banks and who shall connive
or aid in the commission of the same.]

RURAL BANKS ORGANIZED AND OPERATED UNDER THE
PROVISIONS OF THIS ACT SHALL ACT AS AGENTS OR
CONDUITS OF THE LAND BANK OF THE PHILIPPINES, THE
DEVELOPMENT BANK OF THE PHILIPPINES IN PLACES
WHERE THESE HAVE NO OFFICES, SUBJECT TO
ACCREDITATION GUIDELINES.”

SEC. 41. Section 27 of the Republic Act No. 7353, as amended, is
hereby amended to read as foliows:

“Sec. 27. [Any municipal trial court judge or register of deeds who
shall demand or accept, directly or indirectly, any gift, fee,
commission or other form of compensation in connection with the
service, or the registration of documents required to be as
provided in Section 20 and by said register of deeds as proposed
in Section 21 of this Act, shall be punished by One thousand pesos
(P1,000) or by imprisonment for not more than one (1) year, or
both, at the discretion of the court]


WITHOUT PREJUDICE TO ANY PROSECUTION UNDER ANY
LAW WHICH MAY HAVE BEEN VIOLATED, A FINE OF NOT
MORE THAN ONE MILLION PESOS OR A PENALTY OF NOT
LESS THAN PRISON CORRECTIONAL AND NOT MORE THAN
RECLUSION TEMPORAL, OR BOTH, AT THE DISCRETION OF
THE COURT, SHALL BE IMPOSED UPON:

1. ANY OFFICER, EMPLOYEE, OR AGENT OF A RURAL BANK
WHO SHALL:

(A) MAKE FALSE ENTRIES IN ANY BANK REPORT OR
STATEMENT THEREBY AFFECTING THE FINANCIAL
INTEREST OF, OR CAUSING DAMAGE TO, THE BANK
OR ANY PERSON;

(B) WITHOUT ORDER OF A COURT OF COMPETENT
JURISDICTION, DISCLOSE ANY INFORMATION
RELATIVE TO THE FUNDS OR PROPERTIES IN THE
CUSTODY OF THE BANK BELONGING TO PRIVATE
INDIVIDUALS, CORPORATIONS, OR ANY OTHER
ENTITY; OR

(C) ACCEPT GIFTS, FEES OR COMMISSION OR ANY
OTHER FORM OF REMUNERATION IN CONNECTION
WITH THE APPROVAL OF A LOAN FROM SAID BANK;
OR

(D) OVERVALUE OR AID IN OVERVALUING ANY
SECURITY FOR THE PURPOSE OF INFLUENCING IN
ANY WAY OF THE ACTION OF THE BANK ON ANY
LOAN; OR

(E) APPEAR AND SIGN AS GUARANTOR, ENDORSER,
OR SURETY FOR LOANS GRANTED; OR

(F) VIOLATE ANY OF THE PROVISIONS OF THIS ACT.

2. ANY APPLICANT FOR A LOAN FROM, OR BORROWER OF
A RURAL BANK WHO SHALL:

(A) MISUSE, MISAPPLY, OR DIVERT THE PROCEEDS
OF THE LOAN OBTAINED BY HIM FROM ITS
DECLARED PURPOSE; OR

(B) FRAUDULENTLY OVERVALUE PROPERTY
OFFERED AS SECURITY FOR A LOAN FROM SAID
BANK; OR

(C) GIVE OUT OR FURNISH FALSE OR WILLFUL
MISREPRESENTATION OF MATERIAL FACTS FOR THE


PURPOSE OF OBTAINING, RENEWING, OR
INCREASING A LOAN OR EXTENDING THE PERIOD
THEREOF; OR

(0) ATTEMPT TO DEFRAUD THE SAID BANK IN THE
EVENT OF COURT ACTION TO RECOVER A LOAN; OR

(E) OFFER ANY OFFICER, EMPLOYEE OR AGENT OF A
RURAL BANK AS A GIFT, FEE, COMMISSION OR
OTHER FORM OF COMPENSATION IN ORDER TO
INFLUENCE SUCH BANK PERSONNEL INTO
APPROVING A LOAN APPLICATION; OR

(F) DISPOSE OR MONETARY BOARD THE PROPERTY
OR THE CROPS OFFERED AS SECURITY FOR THE
LOAN; OR

(G) WILLFULLY REFUSES TO PAY THE LOAN.

3. ANY EXAMINER, OR OFFICER OR EMPLOYEE OF THE
BANGKO SENTRAL NG PILIPINAS OR OF ANY DEPARTMENT,
BUREAU, OFFICE, BRANCH OR AGENCY OF THE
GOVERNMENT WHO IS ASSIGNED TO _ EXAMINE,
SUPERVISE, ASSIST OR RENDER TECHNICAL SERVICE TO
RURAL BANKS AND WHO SHALL CONNIVE OR AID IN THE
COMMISSION OF THE VIOLATIONS BY BANK OFFICERS,
DIRECTORS, EMPLOYEES AND BANK CLIENTS, SHALL BE
LIABLE UNDER THIS ACT WITHOUT PREJUDICE TO THE
PENALTIES UNDER THE CIVIL SERVICE LAW.

SEC. 42. Section 28 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:

“Sec. 28. [Any bank not organized under this Act and any person,
association, or corporation doing the business of banking, not
authorized under this Act which shall use the words "Rural Bank"
as part of the name or title of such bank or of such person,
association, or corporations, shall be punished by a fine of not
less than Fifty pesos (P50) for each day during which said words
are so used]

ANY MUNICIPAL TRIAL COURT JUDGE OR REGISTER OF
DEEDS WHO SHALL DEMAND OR ACCEPT, DIRECTLY OR
INDIRECTLY, ANY GIFT, FEE, COMMISSION OR OTHER
FORM OF COMPENSATION IN CONNECTION WITH THE
SERVICE, OR SHALL ARBITRARILY OR WITHOUT
REASONABLE CAUSE DELAY THE ACKNOWLEDGMENT OR
ADMINISTRATION OF OATH OR THE REGISTRATION OF
DOCUMENTS REQUIRED TO BE PERFORMED BY SAID
JUDGE AS PROVIDED IN SECTION 21 AND BY SAID


REGISTER OF DEEDS AS PROVIDED IN SECTION 22 OF
THIS ACT, SHALL BE PUNISHED UNDER THE REPUBLIC ACT
3019 OTHERWISE KNOWN AS THE ANTI-GRAFT AND
CORRUPT PRACTICES ACT.

SEC. 43. Section 29 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:

“Sec. 29. [The Monetary Board of the Central Bank shall submit
a report to the Congress of the Philippines as the end of each
calendar year of all the rules and regulations promulgated by it in
accordance with the provisions of this Act, as well as its other
actuations in connection with rural banks, together with an
explanation of its reasons therefor.]

ANY BANK NOT ORGANIZED UNDER THIS ACT AND ANY
PERSON, ASSOCIATION, OR CORPORATION DOING THE
BUSINESS OF BANKING, NOT AUTHORIZED UNDER THIS
ACT WHICH SHALL USE THE WORDS "RURAL BANK OR
COMMUNITY BANK" AS PART OF THE NAME OR TITLE OF
SUCH BANK OR OF SUCH PERSON, ASSOCIATION, OR
CORPORATION, SHALL BE PUNISHED BY A FINE OF NOT
LESS THAN FIVE THOUSAND PESOS (P5,000) FOR EACH
DAY DURING WHICH SAID WORDS ARE SO USED.”

SEC. 44. Section 30 of the Republic Act No. 7353, as amended, is
hereby amended to read as follows:

“Sec. 30. [If any provision or section of this Act or the application
thereof to any person or circumstances is held invalid, the other
provisions or sections of this Act, and the application of such
provision or section to other persons or circumstances, shall not
be affected thereby.)

THE MONETARY BOARD OF THE BANGKO SENTRAL NG
PILIPINAS SHALL SUBMIT A REPORT TO CONGRESS AT
THE END OF EACH CALENDAR YEAR OF ALL THE RULES
AND REGULATIONS PROMULGATED BY IT IN
ACCORDANCE WITH THE PROVISIONS OF THIS ACT, AS
WELL AS ITS OTHER ACTUATIONS IN CONNECTION WITH
RURAL BANKS, TOGETHER WITH AN EXPLANATION OF ITS
REASONS THEREOF. FAILURE TO SUBMIT THIS ANNUAL
REPORT SHALL BE CONSIDERED A VIOLATION OF THIS
ACT.

ANY RULE OR REGULATION THAT IS INCONSISTENT WITH
THE PROVISIONS OF THIS ACT SHALL BE CONSIDERED
ULTRA VIRES AND OF NO EFFECT. ITS IMPLEMENTATION
THEREFORE SHALL BE HELD IN ABEYANCE UNTIL A COURT


OF COMPETENT JURISDICTION SHALL RULE ON THE
MATTER.”

SEC. 45. Implementing Rules and Regulations. - The Bangko Sentral
ng Pilipinas, and the Department of Finance shall promulgate the rules and
regulations for the effective enforcement of the provisions of this Act.

SEC. 46. Separability Clause. - Shoud any provision of this Act or any
part thereof be declared invalid, the other provisions, insofar as they are
‘separable from the invalid ones, shall remain in full force and effect.

SEC. 47. Repealing Clause. — All laws, executive orders, rules and
regulations or parts thereof which are inconsistent with this Act are hereby
repealed or amended accordingly.

SEC. 48. Effectivity. - This Act shall take effect fifteen (15) days after
its complete publication in at least two (2) newspapers of general circulation.

Approved,