FIFTEENTH CONGRESS OF THE REPUBLIC 
.) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
Introduced by Senator Miriam Defensor SantiagO
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EXPLANATORY NOTE 
Republic Act No. 7353, Section 8, aims to provide ailing rural banks and supplemental 
capital until they have accumulated enough capital of their own or have simulated enough private 
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investments.: This section mandates that the Land Bank of the Philippines, the Development 
Bank of the Philippines or any government-owned or controlled bank or financial institution, 
shall subscribe to the capital stock of any rural bank from time to time. 
The second paragraph of Section 8 further provides the graduated dividend rates to be 
paid to the Land Bank of the Philippines, the Development Banle of the Philippines or any 
government-owned or controlled bank or financial institution for their respective equity 
investments. These prescribed rates, however, have proven to be too onerous for the banks. 
There is a need for a more reasonable dividend rate to provide for and to help rehabilitate ailing 
rural banks.! 
1 This bill was originally filed during tbe Thirteenth Congress, First Regular Session. 
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FIFTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
,', 
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Introduced by Senator Miriam Defensor Santiago 
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AN ACT 
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AMENDING SECTION 8 OF REPUBLIC ACT NO. 7353, ALSO KNOWN AS THE RURAL 
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BANKS OF 1992 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
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SECTION 1. Republic Act No. 7353, Section 8, Paragraph 2 is hereby amended to read 
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as follows: 
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"Stocks held by the Land Bank of the Philippines, the Development Bank 
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of the Philippines or by any govermnent-owned or controlled bank or financial 
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institution, under the terms of this Section, shall be made preferred only as to 
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assets upon liquidation and without the power to vote and shall share in dividend 
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distributions from the date of issuance in the amount of four percent (4%) on the 
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first and second years, six percent (6%) on the third and fourth years, eight 
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perc'ent (8%) on the fifth and sixth years, ten percent (10%) on the seventh and 
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eighth years and twelve percent (12%) on the ninth to the fifteenth years without 
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preference;) SIX PERCENT (6%) FROM THE FIRST YEAR UP TO THE 
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FIFTEENTH (1 5%) YEARS WITHOUT PREFERENCE: Provided, however, 
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that if such stock 0 f the Land Bank of the Philippines, the Development Bank of 
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the Philippines or any govermnent-owned or controlled bank or financial 
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institution is sold to private shareholders, the same may be converted into 
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common stock of the class provided for in Section 10 hereof: Provided, 
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further, That pending the amendment of the Articles of Incorporation of the rural 
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bank, if necessary, for the purpose of reflecting the conversion into common stock 
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of preferred stock sold to private shareholders, the transfer shall be recorded by 
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the rural bank ins the stock and transfer book and such shareholders shall 
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thereafter enjoy all the rights and privileges of common stockholders. The 
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preferred stocks so transferred shall be surrendered and cancelled and the 
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corresponding common stocks shall be issued." 
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SECT-ION 2. Separability Clause. - If any provision or part hereof is held invalid or 
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unconstitutional, the remainder of the law or the provision not otherwise affected shall remain 
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valid and SUbsisting. 
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SECTION 3. Repealing Clause. - Any law, presidential decree or issuance, executive 
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order, letter of instruction, administrative order, rule or regulation contrary to or inconsistent 
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with, the provisions of this Act is hereby repealed, modified or amended accordingly. 
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SECTION 4. Effectivity Clause. - This Act shall take effect fifteen (15) days after its 
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pUblication in at least two (2) newspapers of general circulation. 
Approved, 
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