RESTORING THE TAX PRIVILEGES GRANTED TO RURAL BANKS, AND AMENDING FOR THE PURPOSE SECTION 1 OF PRESIDENTIAL DECREE NO. 1955

WHEREAS, rural banks play a vital role in the agricultural
development program of the Government, as they serve the vast majority of the
population in the rural areas;

WHEREAS, rural banks had earlier been granted tax privileges
to strengthen and ensure their viability;

WHEREAS, however, Presidential Decree No. 1955 withdrew the
duty and tax privileges granted to private business, enterprises and or persons
engaged in any economic activity, including rural banks;

WHEREAS, the withdrawal of the tax exemption previously
extended to rural banks, has adversely affected the profitability and viability
of more than ninety percent (90%) of all rural banks operating throughout the
country, especially in view of the prevailing economic conditions;

WHEREAS, the restoration of the tax exemption of rural
banks, will certainly help them weather the present economic crisis;

WHEREAS, Parliamentary Bill No. 4531 introduced by MPs
Emilio C. Macias II and Ricardo D. Abiera, was pending in the Batasang Pambansa,
but was not passed before the Batasan’s adjournment, for lack of material
time;

WHEREAS, considering the urgent representations of the rural
bankers, and in order to ensure their survival in the face of the grave
emergency caused by present economic difficulties, there is a need to act
expeditiously to save the rural banking system from total collapse;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested upon me by the Constitution, do
hereby decree:

SECTION 1. Section 1 of Presidential Decree No. 1955, is
hereby amended by adding a new paragraph thereto, as follows:

“(f) Rural banks whose net assets are less than thirty Million Pesos
(P30,000,000.00) Provided, That the tax privileges shall be extended
only for a period of five years from the date of the effectivity of this Decree,
subject to further extension as may be recommended by the Minister of
Finance.”

SEC. 2. All laws, orders, rules, regulations and issuances
Inconsistent with the provisions of this Decree, are hereby repealed, amended,
or modified accordingly.

SEC. 3. This Decree shall take effect immediately.

Done in the City of Manila, this 3rd day of February, in the year of Our
Lord, nineteen hundred and eighty-six.

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