RURAL Banks (RB), over 600 of them, serve as front line financial support facilities for the 60 million rural population of the country. Their mission, as defined by laws setting them up, is to help promote and expand the Philippines’ rural economy. As such, rural banks are engaged in financial services to the rural folks overwhelmingly involving agricultural land and the bounties of the Philippines seas, essential in food production and security for the nation. Thus, the rural banking sector has always been reserved by the Constitution for Filipino ownership and control. But a recent law, stealthily passed with the conspiracy of the country’s Legislature and the Chief Executive, has now opened up 60% ownership of RBs, rural banks, to Alien Invaders, and concomitantly control of large swathes of rural lands and billions of U.S. Dollars of OFW remittances. E.T. Comes In E.T. in this setting is not Extra-Terrestrials but Extra-Territorials, aliens coming in from foreign lands to take control of the Philippines’ extensive network of grassroots rural banks. Signed into law by President BS Aquino III on May 24, 2013, it is described as “An Act allowing the infusion of foreign equity in the capital or rural banks, amending R.A. No. 7353, otherwise known as ‘The Rural Bank Act of 1992’, as amended, and for other purposes.” From R.A. 7353’s provision saying “… the capital stock of any rural bank shall be fully owned and held directly or indirectly by citizens of the Philippines or corporations…” the law now states that: “No less than forty percent (40%) of the voting stocks of a rural bank shall be owned by citizens of the Philippines or corporations or associations organized under the laws of the Philippines at least sixty percent (60%) of whose capital is owned by such citizens…” In the new law, foreign controlled rural banks “shall be allowed to bid and take part in foreclosure sales of real property mortgaged to them… take possession…. For a period not exceeding five (5)-years… should a rural bank be not able to transfer such property (to qualified Filipinos) within the five (5)-year period the rural bank shall be penalized one-half (1.2) of one percent (1%) per annum of the price at which the property was foreclosed…” Thus control it in perpetuity consider the meager penalty and huge appreciations in real estate values. Legal Opposition In a discussion on GNN (Global News Network) TV, Ateneo Law Professor Atty. Alan Paguia critiqued R.A. 10574 as a derogation of the Philippines’ sovereignty, threatening its food security and control of its territory. Another law professor, Atty. Rafael Tuvera of the Philippine Christian University provided us with his legal brief on the constitutionality of the law: “Under Sec. 3 which amends Sec. 6 of RA 7353, even lands without Torrens Titles may be used as collateral for loans from Rural Banks. This means that lands considered as belonging to the public domain may be used as collateral by mere farmer/occupants/possessors of such lands. It is a known fact that many farmers who borrow money fail to pay back the loans because of crop failure brought about by expensive farm inputs and low prices for their products. In this case, Rural Banks will end up with lots of real estate in their control. In my opinion, this is an indirect way of allowing foreigners to control agricultural lands, something that our constitution prohibits. 1. The same provision also covers lands covered by RA 6657 (Comprehensive Agrarian Reform Law of 1988). Since this law came into being, hundreds of thousands of hectares have been awarded to farmer beneficiaries. These lands too are in danger of being under foreign control through Rural Banks. 2. The last paragraph of this section allows the Rural Banks to participate in foreclosure sales as bidders. In the event, however, that the Rural Bank/bidder wins the bid, the title to the foreclosed property shall not be transferred to the Rural Bank/bidder. The law requires the Rural Bank to transfer its rights to the property to a qualified Philippine national. This may easily be circumvented by a foreign individual using a Filipino dummy (i.e. marrying a Filipina who will pretend to be the transferee of the property) or through the dual citizenship law where an individual is allowed to remain a Filipino citizen while also being a citizen of a foreign country. This dual citizen is not prohibited from owning agricultural property because he enjoys all the rights of a Filipino citizen. Furthermore, in case the Rural Bank fails to transfer the title to a qualified Philippine national, the only sanction it faces is a penalty of “one-half of one percent per annum of the price at which the property was foreclosed until the Rural Bank is able to transfer the property to a qualified Philippine national.” The Rural Bank can easily pay the penalty since this is very miniscule. The property can be left untransferred for many years, thereby giving them full control. 3. In my opinion, RA 10574 is unconstitutional for the following reasons: a. This law indirectly allows what the constitution directly prohibits. The constitution prohibits non-Filipinos from owning (and controlling) real property (except in certain cases). Foreign owned Rural Banks are allowed to skirt this prohibition by mere foreclosure. b. This law violates Sec. 19 Article II of the Constitution which calls for the State to develop a self-reliant and independent national economy effectively controlled by Filipinos. Rural Banks are a vital part of the economy and should be controlled by Filipinos. c. The Supreme Court in the case of Manila Prince Hotel v. GSIS said that the Manila Hotel is part of our national economy and patrimony and should be reserved to Filipinos under the Filipino-First Policy. By analogy, Rural Banks which is part of the national economy, should remain controlled by Filipinos. d. The Constitution also commands that mass media and advertising agencies remain controlled by Filipinos. By analogy, banks of whatever kind, should remain controlled by Filipinos. Sophisticated Finance Scam? Newspapers reported that Sen. Sergio Osmeña was a major proponent of R.A. 10574 to open RBs to foreign ownership “… to make the industry healthier and at par with its bigger counterparts”, quoting the senator: ““This legislation will open a new source of equity infusion, particularly for the smallest lenders that cannot expand and who cannot affordsophisticated forms of financial services…” Sophisticated financial services are defined in the financial sectors industry the likes of debt securities, mutual funds, futures and hedge funds, derivatives among many other exotic items. But the rural banks’ clients need basic banking services and not such “sophisticated services” which since the 2008 Wall Street financial crash has gained the notorious reputation as ponzi schemes. What Sen. Osmeña may know but fails to reveal to the public is the discovery by OpinYon investigative reporter Bernie Lopez of a shadowy Singaporean group which has been behind the lobby for R.A. 10574 with backing from British financial entities. The hidden agenda of the lobby group is the capture of OFW Dollar remittances that will be massively be rechanneled through to the RBs with the Bangko Sentral ng Pilipinas’ 2011 project Philippine Payments and Settlements System (PhilPass) which brings down transaction cost to P 50 from the P 100 to P500 charged by other money transfer systems. The OFW remittances through officials channels now amount to over $ 20-billion and most OFWs are from the rural areas. RB’s Short on Funds? The main argument of the proponents of R.A. 10574 is the insufficiency of capital and funds of and for the RBs. The Bangko Sentral ng Pilipinas (BSP) and the government financial institutions such as the Land Bank of the Philippines and the Development Bank of the Philippines are mandated to support the RBs, and these entities are not short of funds. The BSP has at its disposal various funds such as the Special Deposit Account, of over P 1.7-Trillion or about US$ 4 Billion in deposits it pay 2% interest to private depositors which can be rechanneled. Likewise, the DBP and Landbank, which could extend a scandalous behest loan of around P 1-Billion in late 2009 to a Gloria Arroyo crony corporation GAS which had only $2 capitalization. The rural banking laws provide that “If subscription of private shareholders to the capital stock of a rural bank cannot be secured or is not available, or insufficient to meet the normal credit needs of the locality, the Land Bank of the Philippines, the Development Bank of the Philippines, or any government-owned or -controlled bank or financial institution, on representation of the said private shareholders…. shall subscribe to the capital stock of such rural bank, …. as the Monetary Board may prescribe as may be necessary to promote and expand rural economic development …”, and with government provide exemptions from taxes, fees, charges, rediscounting, long term loans, and guarantees for foreign loans. RBs Afraid to Speak While the formal leadership of the rural banking community ostensibly supports R.A. 10574 and pays tribute to the BSP and the national political leadership’s passage of the law and 60% ownership and control of RBs, fearful voices among the Filipino RB owners are brought to our attention. One rural banker expressed fears of foreign interest forcing acceptance of GMOs upon rural agricultural farmers using the foreign controlled RBs. Another expressed fears of foreign political interference in local, rural politics as rural politicians mortgaging properties for election campaign fund will be at the mercy of foreign money lenders. One Southern Tagalog Region RB owner argues that the BSP and Philippine commercial banks have more than enough resources to be compelled to buy into the RBs to keep Filipino control, but the foreign lobby stymies even large Philippine commercial banks. Overall, Filipino RBs unconvinced by the logic behind R.A. 10574 are fearful of the BSP’s power to persecute and prosecute recalcitrant RBs that would resist the implementation of the law. The rural banking community will not resist the alien invaders, and it is left to the conscientious Filipino to pick up the cudgels and bring the question to the people and to the highest court of the land to protect and sustain the constitutional protection for the National Economy.
Posted on: Thu, 25 Jul 2013 11:09:37 +0000