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ChanRobles Virtual Law Library






CHANROBLES VIRTUAL LAW LIBRARY




Chan Robles Virtual Law Library


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A collection of Philippine laws, statutes and codes
not included or cited in the main indices
of the Chan Robles Virtual Law Library

This page features the full text of
Presidential Decree No. 1828
AMENDING FURTHER REPUBLIC ACT NO. 337, AS AMENDED, OTHERWISE KNOWN AS THE "GENERAL BANKING ACT"
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PRESIDENTIAL DECREE NO. 1828
 
 
AMENDING FURTHER REPUBLIC ACT NO. 337, AS AMENDED, OTHERWISE KNOWN AS THE "GENERAL BANKING ACT"
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WHEREAS, it is recognized that business stability in the financial system is vital to the economic growth and development of the country;
 

WHEREAS, recent developments in the banking and financial industry indicated a need to install further stability in the financial system;

WHEREAS, such stability can be achieved by strengthening and giving more flexibility to the supervisory and regulatory authority of the Central Bank over the financial system.  . chanrobles virtual law library

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and decree the further amendment of Republic Act No. 337, as amended, as follows: 

Sec. 1. Section 4 of Republic Act No. 337, as amended, is hereby amended to read as follows:  . chanrobles virtual law library

"Sec. 4. The determination of whether a person or an entity is (a) performing banking or quasi-banking functions, or (b) engaged in other types of financial intermediation shall be decided by the Monetary Board subject to judicial review. For the purpose of resolving such issue; the Monetary Board may, through appropriate supervising department of the Central Bank, examine inspect or investigate the books and records of such person or entity. The department head and the examiners of said appropriate supervising department are hereby authorized to administer oaths to any such person or director, officer or employee of any such entity and to compel the presentation or production of all books, documents, papers or records necessary in their judgment to ascertain the facts relative to the true functions and operations of such person or entity. Failure or refusal to comply with the required presentation or production of such books, documents, papers or records shall subject the persons responsible therefor to the penal sanctions provided under Section 34 of R.A. No. 265, as amended. Persons or entities found by the Monetary Board to be performing banking or quasi-banking functions without the required prior authorization of the Monetary Board may, in addition to the proceedings provided under Section 34 of Republic Act No. 265, as amended, be subject to the imposition of fine of not in excess of P500 per day reckoned from the date the unauthorized banking or quasi-banking functions were performed and may be referred to the Securities and Exchange Commission for the revocation of its license to do business." . chanrobles virtual law library

Sec. 2. Section 12-B of the same Act is hereby amended by adding a new paragraph after the second paragraph thereof to read as follows:  . chanrobles virtual law library

"The Monetary Board may, however, exempt voting stockholdings of corporations from the application of the above prescribed ceilings, in exceptional cases and when the circumstances warrant, such as but not limited to, purchases in the equity of distressed banks for purposes of rehabilitation." 

Sec. 3. Section 12-D of the same Act is hereby amended by adding a new paragraph after the last paragraph thereof to read as follows: 

"The Monetary Board may, however, exempt voting stockholdings of any person, or persons related to each other within the third degree of consanguinity or affinity or corporations from the application of the above prescribed ceilings in exceptional cases and when the circumstances warrant, such as but not limited to, purchases in the equity of distressed banks for purposes of rehabilitation." 

Sec. 4. Section 32 of the same Act is hereby amended by adding a new paragraph after the last paragraph thereof to read as follows:chanroblesvirtuallawlibrary

"Loan accommodations granted by savings and mortgage banks to any other bank as well as deposits maintained by them in any bank licensed to do business in the Philippines, shall be subject to the loan limit of any single borrower as herein prescribed."  . chanrobles virtual law library

Sec. 5. The third paragraph of Section 56 of the same Act is hereby amended to read as follows:  . chanrobles virtual law library

"No trust company or bank engaged in the business of a trust company shall, for the account of the trustor or the beneficiary of the trust, purchase or acquire property from, or sell, transfer, assign or lend money or property to, or purchase debt instruments of, any of the departments, directors, officers, stockholders, or employees of the trust company or bank, or relatives within the first degree of consanguinity or affinity, or the related interests, of such directors, officers and stockholders, unless the transaction is specifically authorized by the trustor and the relationship of the trustee and the other party involved in the transaction is fully disclosed to the trustor or beneficiary of the trust prior to the transaction." . chanrobles virtual law library

Sec. 6. Section 58 of the same Act is hereby amended by adding a new provision after Item (e) thereof to read as follows: 

"(f) To establish and manage common trust funds, subject to such rules and regulations as may be prescribed by the Monetary Board." 

Sec. 7. Section 61 of the same Act is hereby amended to read as follows:  . chanrobles virtual law library

"Sec. 61. All moneys, properties, or securities received by any trust company as executor of the will of any deceased person or as administrator, with or without the will annexed, of the estate of any deceased person, or as guardian, receiver, trustee, or depositary, of the estate of any minor, insane persons, idiot, habitual drunkard, or other incompetent or irresponsible person, or as receiver or depositary under and by virtue of any order or appointment of any court, or under any instrument constituting it as trustee shall be kept separate and distinct from all other funds, properties, and assets of its general business. The accounts of all such money, properties, or securities shall likewise be kept separate and distinct from the accounts of its general business."  . chanrobles virtual law library

Sec. 8. Section 66 of the same Act is hereby amended by making the last sentence thereof as its last paragraph and by adding a new paragraph as a second paragraph thereof to read as follows: 

"Sec. 66. Every trust company, before the declaration of a dividend, shall carry to surplus ten per cent (10%) of its net profit accruing since the last preceding dividend until the surplus shall amount to twenty per cent (20%) of its authorized capital stock and no part of the surplus shall at any time be paid out in dividends, but losses accruing in the course of its business may be charged against the surplus. 
"In the case of a bank authorized to engage in trust operations, before the declaration of dividends, it shall carry to surplus ten per cent (10%) of its net profits arising from its trust operations, accruing since the last preceding dividend until the surplus shall reach such amount as may be prescribed by the Monetary Board on the basis of the volume of its trust business and such other factors as may be considered by the Monetary Board.  . chanrobles virtual law library

"Nothing herein contained shall prevent the accumulation of a larger surplus than that above prescribed should the directors so decide." 


Sec. 9. Section 72 of the same Act is hereby amended by adding a new provision after Item (c) thereof to read as follows: 

"(d) Upon prior approval of the Monetary Board, act as managing agent, adviser, consultant or administrator of investment management/advisory/consultancy accounts."  . chanrobles virtual law library

Sec. 10. The first paragraph of Section 78 of the same Act is hereby amended to read as follows: 

"Sec. 78. Loans against real estate security shall not exceed seventy percent (70%) of the appraised value of the respective real estate security, plus seventy percent (70%) of the appraised value of the insured improvements, and such loans shall not be made unless title to the real estate shall be in the mortgagor. In the event of foreclosure, whether judicially or extrajudicially, of any mortgage on real state which is security for any loan granted before the passage of this Act or under the provisions of this Act, the mortgagor or debtor whose real property has been sold at public auction, judicially or extrajudicially, for the full or partial payment of an obligation to any bank, banking or credit institution, within the purview of this Act shall have the right, within one year after the sale of the real estate as a result of the foreclosure of the respective mortgage, to redeem the property by paying the amount fixed by the court in the order of execution, or the amount due under the mortgage deed, as the case may be, with interest thereon at the rate specified in the mortgage, and all the costs, and judicial and other expenses incurred by the bank or institution concerned by reason of the execution and sale and as a result of the custody of said property less the income received from the property. However, the purchaser at the auction sale concerned in a judicial foreclosure shall have the right to enter upon and take possession of such property immediately after the date of the confirmation of the auction sale by the court and administer the same in accordance with law." . chanrobles virtual law library

Sec. 11. This Decree shall take effect immediately. . chanrobles virtual law library

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Done in the City of Manila this 16th day of January, in the year of Our Lord, nineteen hundred and eighty-one. . c

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