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Republic of the Philippines
HOUSE OF REPRESENTATIVES

5
Quezon City Sy

Eighteenth Congress

First Regular Session

House Bill No.__ 4256

Introduced by Representatives Sharon S. Garin, Alfredo A. Garbin, Jr.,
and Claudine Diana D. Bautista

EXPLANATORY NOTE

Undeniably, rural banks have substantial contribution in the countryside development.
Having sufficient capital, rural banks can provide its clientele banking services responsive to
its needs, and reach out to the unbanked and undeserved population.

‘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
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. 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 institution to subscribe to the capital stock of the rural bank requiring the needs of

funds. Among others, the measure provides for an easier way in the agricultural sector or A
workers to borrow money 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 Lys ge De

ALFREDO/A. GARBIN, JR.
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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Eighteenth Congress
First Regular Session

House Bill No. 4256

Introduced by Representative Sharon S. Garin

Be jit 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
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. 10841: 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 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 halll, 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
tural 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 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 [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 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;

[(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:]

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;

() 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;

Fertilizer 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.]

°

e700

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 tural 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;

() 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 from the 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) 1S 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, 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:

“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 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
(PS0,000); 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

4. 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


UIABLE 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,