PHILIPPINE LAWS, STATUTES, CODES & ISSUANCES
PHILIPPINE LAWS, STATUTES AND CODES - CHAN ROBLES VIRTUAL LAW LIBRARY
MGA BATAS PAMBANSA
BATAS PAMBANSA BLG. 65 - AN ACT
AMENDING FURTHER REPUBLIC ACT NUMBERED SEVEN HUNDRED TWENTY, AS
AMENDED, OTHERWISE KNOWN AS THE "RURAL BANKS' ACT" |
Section 1.
Sec. 3 of Republic Act No. 720, as amended, is hereby further
amended to read as follows: "Sec. 3. In
furtherance of this policy, the Monetary Board of the Central Bank of
the Philippines shall formulate the necessary rules and regulations
governing the establishment and operation of Rural Banks for the
purpose of providing adequate credit facilities to farmers or
merchants, or to cooperatives of such farmers or merchants and, in
general, to the people of the rural communities, and to supervise the
operation of such banks."
Sec. 2. Sec. 4 of Republic Act No. 720, as amended, is hereby further amended to read as follows: "Sec. 4. No
Rural Bank shall be operated without a Certificate of Authority of the
Monetary Board of the Central Bank. Rural Banks shall be organized in
the form of stock corporations. 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 subject to such rules as the Monetary Board may prescribe.
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, as amended, and of Filipino-controlled domestic
banks, the capital stock of any Rural Bank shall be owned and held
directly or indirectly by citizens of the Philippines. If subscription
of private shareholders to the capital stock of a Rural Bank cannot be
secured or is not available, or is insufficient to meet the normal
credit needs of the locality, the Development Bank of the Philippines,
on representation of the said private shareholders, and upon approval
of the Monetary Board of the Central Bank, 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
capital of the private shareholders but not exceeding one million pesos
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 Development Bank of the
Philippines may be sold at any time at par to private individuals who
are citizens of the Philippines: Provided, finally, That in the sale of
shares of stock subscribed by the Development Bank of the Philippines,
the registered stockholders shall have the right of pre-emption within
one 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 residents of the locality or province where the Rural Bank
is located.
"All members of the Board of
Directors of the Rural Bank shall be citizens of the Philippines:
Provided, however, That no appointive or elective official, whether
full-time or part-time, shall at the same time serve as officer of any
Rural Bank except in cases where such service is incident to financial
assistance provided by the Government or a government-owned or
controlled corporation to the bank."
Sec. 3. Sec. 5 of the same Act is hereby amended to read as follows: "Sec. 5.
Loans or advances extended by Rural Banks organized and operated under
this Act shall be primarily for the purpose of meeting normal credit
needs of farmers or farm families owning or cultivating land dedicated
to agricultural production as well as the normal credit needs of
cooperatives and merchants. In the granting of loans, the Rural Bank
shall give preference to the application of farmers and merchants whose
cash requirements are small.
"Loans may be granted by Rural
Banks on the security of lands without Torrens titles where the owner
of private property can show five years or more or 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 purchasers have paid at
least five 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 Ministry 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
Ministry of Agrarian Reform or corresponding governmental agency; or of
homestead 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: Provided, further, That in the case of lands pending
homestead or 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-applicant 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
on 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 for the sole account of the Rural Bank to the exclusion of the
Central Bank counterpart.
"The foreclosure of mortgages
covering loans granted by Rural Banks and executions of judgments
thereon involving real properties levied upon by a sheriff shall be
exempt from the publications in newspapers now required by law where
the total amount of loan, including interests due and unpaid, does not
exceed Ten Thousand Pesos (P10,000.00) 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 Rural Bank and the
Barangay Hall where the land mortgaged is situated during the period of
sixty days immediately preceding the public auction or execution of
judgment. Proof of publications as required herein shall be
accomplished by 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
land is foreclosed, the homesteader or free patent holder, as well as
his heirs shall have the right to redeem the same within two years from
the date of foreclosure in the case of land not covered by a Torrens
title or two years from the date of registration of the foreclosure in
the case of land covered by a Torrens title: Provided, finally, That in
the case of borrowers who are mere tenants, the produce corresponding
to their share may be accepted as security."
Sec. 4. Sec. 7 of the same Act is hereby amended to read as follows: "Sec. 7. 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 Development Bank of the Philippines shall, upon
certification of the Monetary Board which shall be final, of the
existence of such need, subscribe within thirty days to 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 subscription but not exceeding one million pesos or
such amount as the Monetary Board may prescribe as may be necessary to
promote and expand rural economic development. Provided, however, That
shares of stock issued to the Development Bank of the Philippines,
pursuant to this section, may at any time, be paid off at par and
retired in whole or in part if, in the opinion of the Monetary Board,
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 Development Bank of the
Philippines with an equivalent investment or more in the equity of such
Bank. In case of such retirement of stock of replacement of equity
investments of the Development Bank of the Philippines, the registered
private shareholders of the Rural Bank shall have the right of
pre-emption within one year from date of offer in proportion to their
respective holdings.
"Stock held by the Development
Bank of the Philippines, under the terms of this section, shall be made
preferred only as the assets upon liquidation and without the power to
vote and shall share in the dividend distributions not exceeding two
percent thereof without preference: Provided, however, That if such
stock of the Development Bank of the Philippines be converted into
common stock of the class provided for in section nine: 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
shareholders, 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
stock so transferred shall be surrendered and cancelled and the
corresponding common stocks shall be issued.
"The corporate secretary of the
Rural Bank shall submit to the Central Bank and the Securities and
Exchange Commission 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 a 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 and
transferred to private shareholders which, together with a copy of the
Articles of Incorporation, as amended, duly certified correct by the
said President, corporate secretary, and a majority of the Board of
Directors, shall be filed with the Securities and Exchange Commission,
which shall attach the same to the original Article 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 nine of the Republic Act Numbered Three Hundred and Thirty-seven, as amended." Sec. 5. Sec. 9 of the same Act is hereby amended to read as follows: "Sec. 9.
Stock preferred as to assets upon liquidation shall be issued to
represent the contributions to capital stock of the Rural Bank by the
Government through the Development Bank of the Philippines, and by
qualified persons under such terms and conditions as the Monetary Board
may prescribe. The powers of the Monetary Board over Rural Banks shall
extend to prescribing the amount, value and class of stock issued by
any Rural Bank, organized under this Act."
Sec. 6. Section 11 of the same Act is hereby amended to read as follows: "Section 11. In
addition to the operations specifically authorized in this Act, any
Rural Bank may perform the following services:
"(a) Accept savings and time deposits; "(b) Act as correspondent for other financial institutions; "(c) Act as a
collection agent;
"(d) Offer other banking services as provided in Sec. 72 of Republic Act No. 337, as amended. "With written permission of the Monetary Board of the Central Bank, any Rural Bank may: "(a) Open current or checking accounts; "(b) Act as trustee over estates or properties of farmers and merchants; "(c) Act as official depository of municipal, city or provincial funds in the municipality, city or province where it is located, when so authorized by the Monetary Board in accordance with the provisions of Republic Act Numbered Two hundred sixty-five, as amended, and subject to such limitations as may be deemed necessary for the protection of said funds. "(d) Rediscount
paper with the Philippine National Bank or the Development Bank of the
Philippines, or other banks and their branches and agencies. The
Central Bank shall specify the nature of paper deemed acceptable for
rediscount, as well as the rediscount rate to be charged by any of
these institutions.
"Nothing in this section shall be construed as precluding a Rural Bank from performing, with prior approval of the Monetary Board, all the services authorized for savings and mortgage banks, or for commercial banks, under Republic Act Numbered Three hundred and thirty-seven, as amended, or from operating under an expanded banking authority as provided in section 21-B of the same Act." Sec. 7. Section 11-A of the same Act is hereby amended to read as follows: "Section 11-A.
Rural Banks may invest in equities of allied undertakings as may be
approved by the Monetary Board: Provided, That (a) the total investment
in equities shall not exceed twenty-five percent of the net worth of
the Rural Bank; (b) the equity investment in any single enterprise
shall be limited to fifteen percent 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 except
where the enterprise is not financial intermediary: Provided, further,
That where such allied undertaking is a wholly or majority-owned
subsidiary of a Rural Bank, the same may be subject to examination by
the Central Bank: Provided, finally, That equity investments shall not
be permitted in non-related activities."
Sec. 8. Section 19 of the same Act is hereby amended to read as follows: "Section 19.
Every individual acting as officer or employee of a Rural Bank and
handling funds or securities amounting to five thousand pesos or more,
in any one year, shall be covered by an adequate bond as determined by
the Monetary Board; and the by- laws of the Rural Bank may also provide
for the bonding of other employees or officers of Rural Banks."
Sec. 9. All acts inconsistent herewith are hereby repealed or modified accordingly. Sec. 10. This Act shall take effect upon its approval. Approved: April 1, 1980. |
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Since 19.07.98.