Article 158Supplement v1, p. 158

COMMERCIAL LAWS SUPPLEMENT

agrarian reform sector: Provided, further, That proceeds

from said bonds and SDAs shall be separately accounted

for by the DBP, the LBP and the depository thrift banks,

cooperative banks and rural banks and shall not be

considered for purposes of computing the loanable funds

under Section 6 hereof of the said banks: Provided,

furthermore,

That

loanable

funds

channelled

as

compliance under subsections (b), (c), (d), (e) and (f) even

if said funds are later used by conduit banks in activities

similar to those provided for in subsections (b), (c), (d), (e)

and (f);

(b) Rediscount with the universal banks and commercial

banks, including local branches of foreign banks eligible

paper covering agriculture, fisheries and agrarian reform

credits, including loans covered by guarantees of the

QUEDANCOR, and the PCTC: Provided, That rediscounted

paper shall no longer be eligible as compliance on the

part of the originating bank;

(c)

Lend

for

the

construction

and

upgrading

of

infrastructure

including,

but

not

limited

to,

farm-to

market roads, as well as the provision of post harvest

facilities and other public infrastructure that will benefit

the agriculture, fisheries and agrarian reform sector.

(d) Invest directly in preferred shares of stock in rural

financial institutions like rural banks, cooperative banks,

farmer's

cooperatives

and

farmer's

cooperatives

and

farmer's

cooperative

insurance

or

mutual

benefit

associations

or

lend

wholesale

to

rural

financial

institutions accredited by the BSP: Provided, That credit

facility shall be exclusively used for on-lending to the

agriculture,

fisheries

and

agrarian

reform

sector:

Provided,

further, That the wholesale loans shall be

credited as compliance of the wholesale lender alone:

Provided, finally, That allowable alternative modes of

compliance

should

directly

target

the

agriculture,

fisheries and agrarian reform sector;

(e) Invest in shares of stock of the QUEDANCOR and the

PCIC; and

(f) Loans or investments in the activities identified under

the

AMCFP

as enumerated under Chapter 3 Credit

Section 23 of Republic Act No. 8435 or the Agriculture and

Fisheries Modernization Act (AFMA).

Section 8. The alternative compliance enumerated in the

preceding section shall also be subject to joint review by

the DA, the DAR and the BSP after three (3) years of the

implementation to determine whether the modes of

compliance directly target the agriculture, fisheries and

agrarian reform sector. The Findings shall be submitted

to Congress.

ARTICLE III MISCELLANEOUS PROVISIONS

Section 9. Annual Reports. - The BSP shall furnish reports

on the compliance with the mandatory credit allocation

to the DA, the DAR and Congress on a yearly basis.

Section 10. Penalty Clause. - The BSP shall impose

administrative

sanctions and other penalties on the

lending

institutions

for

noncompliance

with

the

provisions of this Act. Penalties on noncompliance shall

be

computed

at

one-half

of

one

percent (0.5%) of

noncompliance

and

under compliance and shall be

directed to the development of the agri-agra sector.

Ninety percent(90%) of the penalties collected shall be

allocated between the AGFP and PCIC according to the

needs

of

the

agri-agra

sector

as

provided

for

in

implementing rules and regulations of this Act and the

remaining ten percent (10%) shall be given to the BSP to

cover administrative expenses.

Section 11. Repealing Clause. - Presidential Decree 717,

the second paragraph under Section 8 of Republic Act

No.

7900,

otherwise

known

as

High-Value

Crops

Development Act of 1995, and Section 9 of Republic Act

No. 7721, otherwise known as liberalizing the Entry and

Scope of Operations of Foreign Banks in the Philippines,

are all hereby repealed. Other laws, presidential decrees,

executive orders, rules and regulations, or parts thereof

inconsistent with the provisions of this Act are hereby

repealed or modified accordingly.

Section 12. Separability Clause. - If any part, section or

provision of this Act is held invalid or unconstitutional,

other provisions not affected thereby shall remain in force

and effect.

Section 13. Transitory Provision. - Prior to the effectivity of

the implementing rules and regulations of this Act, the

provisions of Presidential Decree No. 717 shall remain in

force.

Section 14. Effectivity. - This Act shall take effect fifteen

(15) days after its publication in the Official Gazette or in a

newspaper of general circulation.

RA No 7353 | The Rural Bank Act of 1992

As amended by RA No 10574

AN

ACT

PROVIDING

FOR

THE

CREATION,

ORGANIZATION AND OPERATION OF RURAL BANKS,

AND FOR OTHER PURPOSES

Be

it

enacted

by

the

Senate

and

House

of

Representatives

of

the

Philippines

in

Congress

assembled:

Section 1. This Act shall be known and cited as the "Rural

Act of 1992."

Section 2. The State hereby recognizes the need to

promote comprehensive rural development with the end

in

view

of

attaining

acquitable

distribution

of

opportunities, income and wealth; a sustained increase in

the amount of goods and services produced by the

nation of the benefit of the people; and in expanding

productivity as a key raising 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.

Section 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

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.

Section 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

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

© Compiled by RGL

158 of 203