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PRESIDENTIAL DECREE NO. 1794
PRESIDENTIAL DECREE NO. 1794
- AMENDING FURTHER REPUBLIC ACT NO. 720, AS AMENDED, OTHERWISE KNOWN AS
THE "RURAL BANKS ACT"
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WHEREAS, to
effectively supervise rural banks controlled by a cooperative or a
corporation, the Central Bank should exercise some form of authority
over such cooperative or corporation; chanroblesvirtualawlibrary
WHEREAS, the Central Bank should be able to act with deliberate speed
in preventing erosion of public confidence is 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:cralaw:red
Section 1. Section 4 of Republic Act No. 720, as
amended, is hereby amended further to read as follows:cralaw:red
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: 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 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 preemption 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.
Section 2. The second paragraph of Section 10 of the
same Decree is hereby amended further to read as follows: chanroblesvirtualawlibrary
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.
Section 3. All laws, decrees, rules and regulations
inconsistent with this Decree are hereby repealed or modified
accordingly.
Section 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.
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