That happen because you are drawing the white rectangle over your image. You are creating a bitmpa object from the image file and then drawing on it. Instead, create a new Bitmap object but not from a file but rather 700x500 size like you want, then create Graphics object from that. Now use the DrawImage method of the Graphics object to draw another Bitmap object you declared which contains your image.
Dim back As New Bitmap(700,500) 'create bitmap with the size you want
Dim gr As Graphics = Graphics.FromImage(back) 'get graphics for it
Dim img As New Bitmap("file path") 'load your image
gr.FillRectangle(New SolidBrush(Color.White), New Rectangle(0,0,700,500)) 'fill the background
gr.DrawImage(img, xpos, ypos) 'draw the image at specified position
'draw whatever else you need ....
back.Save("file path") 'save it
img.Dispose() 'dont forget to dispose!
back.Dispose()