Presidential Decree No. 1403 (PD 1403) — Amending Further Republic Act Numbered Seven Hundred Twenty, Otherwise Known as the Rural Banks' Act
WHEREAS, the expansion of the rural economy must be promoted
by providing the means of facilitating and improving the productive capacities
of the people of the rural communities; and
WHEREAS, the law should adapt to changing conditions in
order to attain its objectives and to better serve the credit requirements of
small farmers, small merchants, small business enterprises, essential rural
enterprises or industries and cooperatives.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested in me by the Constitution, do hereby
order and decree the amendment of Republic Act No. 720, as amended, as
follows:
SECTION 1. Section 5 of Republic Act No. 720, as amended, 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 the
normal credit needs of any small farmer or farm family owning or cultivating, in
the aggregate, not more than fifty hectares of land dedicated to agricultural
production as well as the normal credit needs of cooperatives and small
merchants. For the purposes of this Act, a small merchant shall be one whose
capital investment does not exceed one hundred thousand pesos or such amount as
the monetary board may prescribe as may be warranted by prevailing economic
conditions. 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 of
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 (Land Authority) Department of Agrarian Reform or other
governmental 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 Department of Agrarian Reform or
corresponding governmental agency; or of homesteads 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 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 the full responsibility of the rural bank and any loan granted on any
land which shall be found later to be within the forest zone 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 shall be
exempt from the publication 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 are posted in at least three of the
most conspicuous public places in the municipality and barrio where the land
mortgaged is situated during the period of sixty days immediately preceding the
public auction. Proof of publication as required herein shall be accomplished by
affidavit of the sheriff or officer conducting the foreclosure sale 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 the 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. 2. Section 6 of the same Act, as amended, is hereby
amended to read as follows:
"SEC. 6. With the view to insuring balanced rural economic
growth and expansion, Rural Banks may, within limits and conditions fixed by the
Monetary Board, devote a portion of their loanable funds to meeting the normal
credit needs of small business enterprises whose capital investment does not
exceed One hundred thousand pesos, or such amount as the Monetary Board may
prescribe as may be warranted by prevailing economic conditions, and of
essential enterprises or industries, other than those which are strictly
agricultural in nature."
SEC. 3. Section 16 of the same Act, as amended, is hereby
amended to read as follows:
"SEC. l6. Any city or municipal judge, in his capacity as
notary public ex-officio shall administer the oath to or acknowledge
the instruments of any Rural Bank and its borrowers or mortgagors, free from all
charges, fees and documentary stamp tax, collectible under existing laws,
relative to any loan or transaction not exceeding Ten thousand pesos, or such
amount as the Secretary of Finance, upon the recommendation of the Monetary
Board, may prescribe as may be necessary to promote and expand the rural
economy."
SEC. 4. Section 17 of the same Act, as amended, is hereby
amended to read as follows:
"SEC. 17. Any Register of Deeds shall accept from any Rural
Bank and its borrowers or mortgagors for registration, free from all charges,
fees and documentary stamp tax, collectible under existing laws, any instrument,
whether voluntary or involuntary, relating to loans or transactions extended by
a Rural Bank in an amount not exceeding Ten thousand pesos: Provided,
however, That charges, if any, shall only be collectible on the amount in
excess of Ten thousand pesos; and that in instruments related to assignments of
several mortgages consolidated in a single deed, charges or fees, if any, shall
be levied only on the amount in excess of Ten thousand pesos of the
consideration in the assignment of each mortgage, or such amount as the
Secretary Board, may prescribe as may be necessary to promote and expand the
rural economy."
SEC. 5. This Decree shall take effect immediately.
Done in the City of Manila, this 6th day of June, in the year of Our Lord,
nineteen hundred and seventy-eight.
(Sgd.) FERDINAND E. MARCOS
President of the
Philippines
By the President:
(Sgd.) JACOBO C. CLAVE
Presidential Executive
Assistant
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).
