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PRESIDENTIAL DECREE NO. 119
PRESIDENTIAL DECREE NO. 119 -
AMENDING FURTHER CERTAIN Sections OF REPUBLIC ACT NUMBERED FOUR
THOUSAND NINETY-THREE, AS AMENDED, OTHERWISE KNOWN AS THE "PRIVATE
DEVELOPMENT BANKS' ACT"
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WHEREAS, there were pending before Congress
prior to the promulgation of Proclamation No. 1081, dated September 21,
1972, urgent banking measures proposing amendments to Republic Act No.
4093, as amended, otherwise known as "The Private Development Banks'
Act," which are vital to the national development program of the
Government;chanroblesvirtualawlibrary
WHEREAS, an extensive survey and study of the banking and credit system
had been undertaken for the purpose of assessing its adequacy in
Philippine economic growth, and of facilitating the savings-investment
process in development.
WHEREAS, the result of the survey was an integrated set of
recommendations which were accepted, with modifications by the monetary
authorities, and made the basis for this Decree to effect reforms in
the banking system, and to render monetary and credit policies more
responsive to the requirements of economic development;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. 4093, as follows:cralaw:red
Section 1. Section four of Republic Act Numbered Four
thousand ninety-three, as amended, is hereby amended to read as
follows: chanroblesvirtualawlibrary
"Sec. 4. A private development bank shall be
organized in the form of a stock corporation and its paid-up capital
shall not be less than four million pesos for Class A, two million
pesos for Class B, and one million pesos for Class C: Provided, That at
least seventy per cent of the voting stock subscribed by the private
sector shall be owned and held by citizens of the Philippines, except
where a new bank is established as a result of the consolidation of
existing private development banks in any of which there are
foreign-owned voting stocks at the time of consolidation: Provided,
however, That the Monetary Board may, with the approval of the
President of the Philippines, reduce the required minimum percentage of
Philippine ownership prescribed herein from seventy per cent (70%) to
sixty per cent (60%): Provided, further, That if said subscription of
private shareholders to the initial capitalization of a private
development bank cannot be secured or is not available, the Development
Bank of the Philippines on representation of the said private
shareholders and with the approval of its Board of Governors shall,
within thirty days from date of approval by the Board of Governors, and
after compliance by the private stockholders with the conditions of
said approval, subscribe to the capital stock of such development
banks, which shall be paid in full at the time of subscription out of
the trust fund provided in section three, paragraph three, of Republic
Act Numbered Two thousand eighty-one, in an amount equal to the
difference between the required paid-up capital and to the fully-paid
subscribed capital of the private stockholders but not exceeding the
latter: Provided, furthermore, That the Board of Governors shall act,
on the representation made by the private shareholders within thirty
days from the date it is filed: Provided, still further, That such
shares of stock subscribed by the bank shall be preferred shares
entitled to cumulative dividends at the yearly rate of one per cent
during the first five years, two per cent during the following five
years, and three per cent thereafter, shall be preferred as against
common and other preferred stockholders in the distribution of assets
in the event of liquidation, and shall be entitled to voting
privileges: Provided, finally, That such preferred shares of the bank
may be sold at any time at par to private individuals who are citizens
of the Philippines, and in the sale thereof, the qualified registered
stockholders shall have the right of preemption within one year from
the date of offer in proportion to their respective holdings, but in
the absence of such buyers, preference shall be given to residents of
the province or city where the development bank is located. All members
of the board of directors of the private development bank 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 private
development bank, except in cases where such service is incident to
financial assistance provided by the government or a government-owned
or controlled corporation to the bank: Provided, further, That, in case
of merger or consolidation of private development banks duly approved
by the Monetary Board, the limitation on the maximum number of
corporate directors in a corporation, as provided for in section
twenty-eight 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 consolidation private development banks." chanroblesvirtualawlibrary
Section 2. Section five-A of the same Act is hereby
amended to read as follows:cralaw:red
"Sec. 5-A. Equipment or livestock loans granted by
private development banks need not be secured by the chattel, equipment
or livestock acquired out of the proceeds of the loan if the borrower
offers to constitute a lien or mortgage on real estate properties
seventy percent (70%) of the appraised value of which equals or exceeds
the loan granted."
Section 3. The same Act is further amended by adding
the following section immediately after Section seven thereof, the new
section to read as follows: chanroblesvirtualawlibrary
"Sec. 7-a. Any private development bank may invest in
equities of such allied undertakings as may be approved by the Central
Bank for banks of their category as provided in section 6-A of Republic
Act No. 337, as amended: Provided, however, That (1) of the total
investment in equities shall not exceed twenty-five per cent (25%) of
the net worth of the private development bank; (2) the equity in any
single enterprise shall be limited to fifteen per cent (15%) of the net
worth of the private development bank; (3) the total equity investment
of the private development bank in any single enterprise shall remain a
minority holding in that enterprise except where the enterprise is not
a financial intermediary; and (4) 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 bank's net worth for purposes of
computing the prescribed ratio of net worth to risk assets: Provided,
further, That equity investments shall not be permitted in non-related
activities: Provided, finally, That where the allied undertaking is a
wholly or majority-owned subsidiary of the development bank, the same
may be subject to examination by the Central Bank."
Section 4. 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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