Section 20Republic Act No. 6758, otherwise known as the Salary Standardization Law, and from other laws, rules and regulations on salaries and compensations; and to establish a Provident Fund and determine the , Sec./Art. 20

Building and Loans Associations.

(a) In order to encourage the accumulation of savings and the financing of homes through the local mutual thrift institutions, The Corporation is authorized, under such rules and regulations as it may prescribed, to issue contracts of guaranty for the accounts of such buildings and loan associations in accordance with the best practices of known mutual thrift and home financing institutions.

(b) Whenever guaranteed by the Corporation and where the loan is intended for housing development, such association shall lend their funds only on the security of first clients of real estate located within an area to be determined by the Corporation.

(c) The Corporation is authorized to subscribed for preferred shares in such associations as to assets of the associations and which shall be entitled to a dividend, if earned, after payment of expenses and provision of reasonable reserves, to the same extent or other shareholders: Provided, however, That no such subscription shall be made unless in the judgement of the Corporation the funds are necessary for encouragement of reasonable local home financing in the community to be served. In case of liquidation of such associations, the shares held by the corporation shall be retired on the same basis as payments are made to other shareholders in accordance with other laws.

(d) When guaranteed by the Corporation, such associations including their franchises, capital, reserves, surplus, and their loans, receipts and incomes shall be exempt from all taxation now or hereafter imposed by the government.