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PRESIDENTIAL DECREE NO. 113
PRESIDENTIAL DECREE NO. 113 -
AMENDING FURTHER CERTAIN Sections OF REPUBLIC ACT NUMBERED THREE
THOUSAND SEVEN HUNDRED SEVENTY-NINE, AS AMENDED, OTHERWISE KNOWN AS THE
"SAVINGS AND LOAN ASSOCIATION ACT"
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WHEREAS, there were pending before Congress
prior to the promulgation of Proclamation No. 1081, dated September 21,
1972, certain bills proposing amendments to Republic Act No. 3779,
entitled "Savings and Loan Association Act"; chanroblesvirtualawlibrary
WHEREAS, the recommendation resulting from an extensive survey and
study of the financial system undertaken for the purposes of assessing
its adequacy in Philippine economic growth, and of facilitating the
savings-investment process in development have been accepted, with
modifications by monetary authorities;chanroblesvirtualawlibrary
WHEREAS, savings and loan associations have proved to be very effective
instrument in encouraging the thrift-savings habit especially of small
savers and in providing additional credit assistance to small scale
entrepreneurs, home builders and consumers; chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers in me vested by the Constitution as
Commander-in-Chief of the Armed Forces of the Philippines, and pursuant
to Proclamation No. 1081, dated September 21, 1972, and General Order
No. 1, dated September 22, 1972, as amended, and in order to effect the
desired changes and reforms in the social, economic, and political
structure of our society, do hereby order and decree the amendment of
Republic Act No. 3779, as amended, as follows:cralaw:red
Section 1. Section three (a) of Republic Act Numbered
Three thousand seven hundred seventy-nine, as amended, is hereby
amended, to read as follows:cralaw:red
"Sec. 3(a). "Savings and loan association"
hereinafter called the association shall include any corporation
engaged in the business of accumulating the savings of its members or
stockholders, and using such accumulations, together with its capital
in the case of stock corporation, for loans and/or for investment in
securities of productive enterprises or in securities of the
Government, or any of its political subdivisions, instrumentalities or
corporations: Provided, That they shall be primarily engaged in
servicing the needs of households by providing personal finance and
long-term financing for home building and development;"
Section 2. Section four (b) of the same Act is hereby
amended to read as follows:cralaw:red
"Sec. 4(b). The Monetary Board shall fix the minimum
paid-up capital of a savings and loan association organized as a stock
corporation in such amount as said Board may consider necessary for the
safe and sound operation of such association: Provided, however, That
in no case shall such paid-up capital be less than one hundred thousand
pesos: Provided, further, That at least seventy per centum of the
voting stock of a savings and loan association which may be established
after the approval of this Act shall be owned by citizens of the
Philippines, except where a new association is established as a result
of the consolidation of existing associations in which there are
foreign- owned voting stocks at the time of consolidation: Provided,
furthermore, That the percentage of foreign-owned voting stocks in
stock savings and loan associations existing upon the effectivity of
this Act, if such percentage is in excess of thirty per cent (30%) of
the voting stock of the savings and loan association, shall not be
increased, but may be reduced, and, once reduced, shall not be
increased thereafter beyond thirty per cent (30%) of the voting stock
of the savings and loan association. The percentage of foreign-owned
stocks in an association shall be determined by the citizenship of the
individual stockholders in that association. In the case of
corporations owning shares in the association, the citizenship of each
stockholder in that corporation shall be the basis of computing the
percentage. Such association is authorized to receive deposits from,
and extend loans to, the general public." chanroblesvirtualawlibrary
Section 3. Section five of the same Act is hereby
amended to read as follows:cralaw:red
"Sec. 5. Powers of savings and loan associations. — A
savings and loan association shall be incorporated under the
Corporation Law, and in addition to the powers therein granted whenever
applicable, it shall exercise the following:cralaw:red
(a) To grant loans of not exceeding the amount
deposited by the borrower plus his four months' salary or regular
income in the case of a permanent employee or wage earner, or seventy
per cent of the fair market value of any property acceptable as
collateral on first mortgage that he may put up by way of security:
Provided, That no loan shall have a maturity date of more than three
years, except loans on the security of unencumbered real estate for the
purpose of home building and home development which may be granted with
maturities not exceeding twenty years subject to regulations prescribed
by the Monetary Board: Provided, further, That in the case of a
borrower who is a permanent employee or wage earner, the treasurer,
cashier or paymaster of the office employing him is authorized. The
provisions of any existing law, rule and regulation to the contrary
notwithstanding, to make deductions from his salary wage, or income
pursuant to the terms of his loan, to remit deductions to the savings
and loan association, and to collect such reasonable fee for his
services as may be authorized by rules promulgated by the Monetary
Board.
"(b) To charge interest within the limits allowed by
law, and collect such necessary fees incidental to the grant of loans
as may, by regulation, be authorized by the Monetary Board; chanroblesvirtualawlibrary
"(c) Subject to such rules as the Monetary Board may
approve, to discount with reasonable commercial papers and accounts
receivables;chanroblesvirtualawlibrary
"(d) To invest its funds in any sound non-speculative
enterprise, as well as in bonds, securities, and other obligations
issued by the Government of the Philippines, or any of its political
subdivisions, instrumentalities or corporations including
government-owned or controlled corporations subject to the rules and
regulations of the Monetary Board: Provided, That stock savings and
loan associations may invest in equities only of such allied
undertakings as may be approved by the Central Bank for banks of their
category as provided for in Section 6-A of Republic Act No. 337, as
amended: Provided, further, That (a) the total investment in equities
shall not exceed twenty-five per cent (25%) of the net worth of the
association; (b) the equity investment in any single enterprise shall
be limited to fifteen per cent (15%) of the net worth of the
association; (c) the total equity investment of the association in any
single enterprise shall remain a minority holding in that enterprise,
except where the enterprise is not a financial intermediary; and (d)
the equity investment in other banks, if allowed by the Monetary Board,
shall be subject to the same limitations imposed on similar investments
of commercial banks and shall be deducted from the investing stock
savings and loan association's net worth for purposes of computing the
prescribed ratio of net worth to risk assets. Equity investments shall
not be permitted in non-related activities. Where the allied
undertaking is a wholly or majority-owned subsidiary of the investing
association, it may be subject to examination by the Central Bank.
"(e) To allow member-depositors to participate in the
profits of the savings and loan association on the basis of their
deposits on the date dividends are declared; and chanroblesvirtualawlibrary
"( f ) To borrow money or incur such obligations not
exceeding twenty per centum of the total assets of the association,
from any public lending institutions, such as the Development Bank of
the Philippines, thru Philippine National Bank, the Government Service
Insurance System, the Social Security System, and from such private
lending institutions as may be approved by the Monetary Board,
including other stock savings and loan associations. The Monetary Board
may, in meritorious cases, raise the ceiling on the borrowing capacity
of a savings and loan association to an amount not exceeding thirty per
centum of its total assets: Provided, That in the case of a non-stock
savings and loan association organized by employees of an entity or a
corporation, such association may borrow funds from said entity or
corporation but not vice versa.
"( f-1) To maintain deposits with banks and other
stock savings and loan associations: Provided, That the amount of such
deposits shall be subject to the loan limit to a single borrower as
prescribed herein or by other special laws or regulations. chanroblesvirtualawlibrary
"A savings and loan association may, subject to such rules as the
Monetary Board may promulgate, also borrow from, or rediscount notes,
bills of exchange and other commercial papers with the Central Bank.
The rate of interest on such obligations or borrowings to be charged
such associations shall not be more than that charged rural banks."
Section 4. Subsection (b) of section six of the same
Act is hereby amended to read as follows:cralaw:red
"Sec. 6(b). No non-stock savings and loan
associations shall advertise or represent itself to the public as a
bank. A stock savings and loan association may be use the word "bank"
in connection with its business name only upon compliance with such
requirements as may be imposed by, and prior approval of, the Monetary
Board." chanroblesvirtualawlibrary
Section 5. Section fourteen of the same Act is hereby
amended to read as follows:cralaw:red
"Sec. 14. Qualifications for directors. — No person
shall be eligible as director of an association unless he is a member,
in case of non-stock associations, or an owner in his own right of
stocks in the association with an aggregate par value of at least five
thousand pesos, in case of stock associations: Provided, That at least
two-thirds of the members of the board of directors of any stock
savings and loan association which may be established after the
approval of this Act shall be citizens of the Philippines: Provided,
however, That no full-time appointive or elective public official shall
at the same time serve as officer, director, legal counsel or
consultant of any stock savings and loan association, except in cases
where such service is incident to financial assistance provided by the
government or a government-owned or controlled corporation to such
association: Provided, further, That in the case of a merger or
consolidation of savings and loan associations duly approved by the
Monetary Board, the limitation on the maximum number of directors in a
corporation, as provided for in Section 28 of the Corporation Law (Act
No. 1459), shall not be applied so that membership in the new board may
include up to the total number of directors provided for in the
respective articles of incorporation of the merging or consolidating
savings and loan associations." chanroblesvirtualawlibrary
Section 6. Section eighteen of the same Act is hereby
amended to read as follows:cralaw:red
"Sec. 18. Limitations on lending authority. — (a) An
association shall not commit itself to make any loans for amounts in
excess of the total of the following amounts:cralaw:red
(1) amount of cash available for loan purposes;chanroblesvirtualawlibrary
(2) amount of cash which can be readily realized upon
the sale or redemption of permissible investments made by the
association:cralaw:red
(3) amount of credit available for loan purposes from
government or private financing institutions. chanroblesvirtualawlibrary
"(b) No association shall directly or indirectly make
any loans to any director, or officer of such association, either for
himself or as agent or as partner of another, except with the written
approval of the majority of the directors of the association, excluding
the director concerned: Provided, That in the case of a non-stock
association, the aggregate loans, direct or indirect, granted at any
one time to such directors and officers shall not exceed twenty per
centum of the total paid-up capital of the association: Provided,
further, That in the case of a stock association, the Monetary Board
may regulate the amount of credit that the association may extend,
directly or indirectly, to its directors, officers or stockholders. In
any case, however, the outstanding credit accommodations which a stock
association may extend to each of its stockholders owning two per cent
(2%) or more of the subscribed capital stock, its directors or its
officers, shall be limited to an amount equivalent to the respective
outstanding deposits and book value of the paid-in capital contribution
in the association. In all cases of credit accommodations granted to
directors and officers under this subsection, the written approval of
the majority of the directors of the association, excluding the
director concerned, shall be entered upon the records of the
association and a copy of such entry shall be transmitted forthwith to
the appropriate supervising department of the Central Bank. chanroblesvirtualawlibrary
"The office of any director or officer of an association who violates
the provisions of this subsection shall immediately become vacant and
the director or officer shall be punished by imprisonment of not less
than one year nor more than ten years and by a fine of not less than
one thousand nor more than ten thousand pesos.
"(c) No association shall make any loan to any
corporation of which a majority of the stock is owned or controlled
directly or indirectly, by any one or more of the directors or officers
of such association collectively except with the written approval of
the majority of the directors of the association excluding the director
or directors concerned. Any such approval shall be entered upon the
records of the association and a copy of such entry shall be
transmitted forthwith to the appropriate supervising department of the
Central Bank. chanroblesvirtualawlibrary
"The Monetary Board may regulate the amount of credit that an
association may extend to a corporation referred to in this subsection
in the same manner as it may regulate credit accommodations to
directors and officers of the association under the preceding
subsection.
"(d) No association shall loan any of its funds upon
the security of its own stock."
Section 7. Section twenty-one of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 21. Limitations on investment. — (a) No
association at any one time shall have invested in bonds and securities
an aggregate amount in excess of ten per centum of the total assets of
such association;chanroblesvirtualawlibrary
"(b) No non-stock savings and loan association at any
one time shall have invested in real property an aggregate amount in
excess of five per centum of the total assets of such association;chanroblesvirtualawlibrary
"(c) No non-stock savings and loan association at any
one time shall invest in furniture, fixture, furnishings and equipment
and leasehold improvements for its offices, more than ten per centum of
its aggregate paid-up capital; chanroblesvirtualawlibrary
"(d) No stock savings and loan association, at any
one time, shall have an investment in real estate and improvements
thereon, including equipment, in an aggregate amount in excess of fifty
per cent of its net worth: Provided, That real estate used for the
stock savings and loan association's purposes owned by another
corporation in which that associations owns equity shall be considered
as part of the association's total investment in real estate."
Section 8. Section 29 of the same Act is hereby
amended by adding the following subsections after subsection (c)
thereof, which read as follows:cralaw:red
"Sec. 29(c-1). Whenever any officer, employee, or
agent of a savings and loan association makes false entries in any
association report or statement thereby affecting the financial
interest of, or causing damage to the association or any person; or
without order of a court of competent jurisdiction, discloses to any
unauthorized person any information relative to the funds or properties
in the custody of the association belonging to private individuals,
corporations, or any other entity: Provided, That with respect to bank
deposits, Section 4(a) of this Act shall prevail; or accept gifts, fees
or commissions or any other form of remuneration in connection with the
approval of a loan from said association; or overvalues or in
overvaluing any security for the purpose of influencing in any way the
action of the association on any loan, such officer, employee or agent
shall be punished by a fine of not more than two thousand pesos or
imprisonment for not more than one year, or both, at the discretion of
the court; chanroblesvirtualawlibrary
"(c-2). Whenever any applicant for a loan from, or
borrower of, a savings and loan association fraudulently overvalues
property offered as security for a loan from the said association; or
furnishes false, or makes willful misrepresentation of material facts
for the purpose of obtaining, renewing, or increasing a loan or
extending the period thereof; or attempts to defraud the said
association in the event of a court action to recover a loan; or offers
any officer, employee or agent of a savings and loan association any
gift, fee, commission, or other form of compensation in order to
influence such association personnel into approving a loan application,
such applicant or borrower shall be punished by a fine of not more than
two thousand pesos or imprisonment for not more than one year, or both,
at the discretion of the court;chanroblesvirtualawlibrary
"(c-3). Whenever any examiner, officer or employee of
the Central Bank of the Philippines, who is assigned to examine,
supervise, assist or render technical service to a savings and loan
association, commits any of the acts enumerated in subsection c-1 of
this section or connives or in the commission of the same, he shall be
punished by a fine of not more than two thousand pesos or imprisonment
of not more than one year or both, at the discretion of the court."
Section 9. The same Act is hereby further amended by
adding the following section immediately after section twenty-nine
thereof, which reads as follows:cralaw:red
"Sec. 29-A. The provisions of Republic Acts Numbered
Two hundred and sixty-five, as amended, and Three hundred thirty-seven,
as amended, insofar as they are applicable and not in conflict with any
provision of this Act, shall apply to savings and loan associations
organized hereunder.
Section 10. All Acts and parts of Acts inconsistent
with the provisions of this Act are hereby repealed.
Section 11. This Decree shall take effect immediately.
Done in the City of Manila,
this 29th day of January, in the year of Our Lord, nineteen hundred and
seventy-three.
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