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PRESIDENTIAL DECREE NO. 1403
PRESIDENTIAL DECREE NO. 1403 -
AMENDING FURTHER REPUBLIC ACT NUMBERED SEVEN HUNDRED TWENTY, OTHERWISE
KNOWN AS THE RURAL BANKS' ACT
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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 adopt 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;chanroblesvirtualawlibrary
Section 1. Section 5 of Republic Act No. 720, as
amended, is hereby 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
investments 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
on 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 of the Director of
Land; 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 of free
patent lands pending the insurance 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. chanroblesvirtualawlibrary
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 and 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.
Section 2. Section 6 of the same Act, as amended, is
hereby amended to read as follows:cralaw:red
"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 for essential
enterprises or industries, other than those which are strictly
agricultural in nature."phil
Section 3. Section 6 of the same Act, as amended, is
hereby amended to read as follows:cralaw:red
"Sec. 16. 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."
Section 4. Section 17 of the same Act, as amended,
is hereby amended to read as follows:cralaw:red
"Sec. 17. Any Register of Deeds shall accept from
any Rural Bank and its borrowers or mortgagors for registrations, free
from all charges, fees and documentary stamp tax, collectible under
existing laws, any instrument, whether voluntary or involuntary,
relating to loans or transaction 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."
Section 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.
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