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Republic of the Philippines 3 REC E WED 2
HOUSE OF REPRESENTATIVES * ou 15 2097)
Quezon City "we
EIGHTEENTH CONGRESS be q S
First Regular Session ex. wZ
House Bill No. 9143

Introduced by Representative MARIA LOURDES O. ACOSTA-ALBA

EXPLANATORY NOTE

Undeniably, rural banks have substantial contribution in the
countryside development. Having sufficient capital, rural banks can
provide its clientele with banking services responsive to its needs, and
reach out to our marginalized constituents in rural areas.

‘As mandated by law, rural banks primarily serve the agriculture
and fisheries sector. Agriculture sector is said to be the second largest
generator of employment in the country. However, workers from
agriculture sectors are also among the poorest citizen. Hence,
investment in the sector can help alleviate poverty in the country.

This bill seeks to encourage the establishments of rural banking
system in remote and far-flung areas of the country which cannot be
catered by other financial institutions. It also aims to primarily sustain
the credit needs of farmers, fisherfolks and similar agricultural workers
by mandating the Landbank of the Philippines, Development Bank of
the Philippines and other government-owned and controlled banks and
financial institutions to subscribe to the capital stock of the rural bank
requiring the need for funding. Among others, the measure provides for
an easier way in the agricultural sector or workers to have access to
financial resources for their livelihood needs.

The presence of sustainable rural banks capable of providing
much-needed capital to boost agricultural activities can economically
empower farmers, fisher folk and small entrepreneurs, and stir
economic activities in the rural areas.

In view of the foregoing, the passage of this bill is earnestly urged.

1 Se a


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL No. _ 5143

Introduced by Representative

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 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 rural 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
arural 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 BANK3S 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 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 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. In case the
rural bank is the winning bidder; it shall, during the said


five (5) 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
ALAND 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
ofa 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 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 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 government-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 IS 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 fbank: 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 a 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 IN A
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:

(c) 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;

{() 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;]

() 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;

[(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.

[With 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 (c) 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;

c. Fertilizer and agricultural chemical and pesticides
distribution;

d. Farm equipment distribution;

e. Trucking and transportation of agricultural
products;

f. Marketing and agricultural products;

g. Leasing; and Other undertakings as may be
determined by the Monetary Board.]

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;

(I) 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:

“See. 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, rural 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 IS
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 CONSOLI”DATION, 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 (II) 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, FORA 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:

“See. 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 mortgagors, 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 follows:

“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

(D) 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. - Should 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,