[ PRESIDENTIAL DECREE NO. 1794, January 16, 1981 ]

AMENDING FURTHER REPUBLIC ACT NO. 720, AS AMENDED. OTHERWISE KNOWN AS THE RURAL BANKS ACT".

WHEREAS, to effectively supervise rural banks controlled by
a cooperative or a corporation, the Central Hank should exercise some form of
authority over such cooperative or corporation;

WHEREAS, the Central Bank should be able to act with
deliberate speed in preventing erosion of public confidence in mismanaged
banks.

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested in me by the Constitution do hereby
decree and order as follows:

SECTION 1. Section 4 of Republic Act No. 720, as amended, is
hereby amended further 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
Hanks 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. 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 stocks subscribed by the
Development Hank 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
public 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. 2. The second paragraph of Section 10 of the same
Decree is hereby amended further to read as follows:

The Director of the Department of the Central Bank designated by the Monetary
Board to supervise Rural Banks 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 Bank in a lawful and orderly manner;
and, upon proof 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 interests 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 responsible for such violations
under the provisions of sections thirty-two, thirty-three and thirty-four of
Republic Act Numbered Two Hundred Sixty-Five, as amended."

SEC. 3. All laws, decrees, rules and regulations
inconsistent with this Decree are hereby repealed or modified accordingly.

SEC. 4. This Decree shall take effect immediately.

Done in the City of Manila this 16th day of January, in the year of Our Lord,
nineteen hundred and eighty-one.

	(Sgd.) FERDINAND E. MARCOSPresident of the Philippines
	By the President:
	(Sgd.) JUAN C. TUVERA
		Presidential Executive Assistant

 

Vol. 25, Vital Documents, Presidential Decree 1980-1981

Source: Supreme Court E-Library