WHEREAS,
the Charter of the Philippine National Bank was revised by Presidential
Decree No. 694 to enable it to effectively carry out its assigned role
providing the necessary financing for economic development of the
country under the program of the New Society;chanroblesvirtualawlibrary
WHEREAS, said Charter needs further amendment to enable the Bank to
strengthen its abovementioned role in the economic development of the
country;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution, do hereby
decree and order the following:cralaw:red
Section 1. Section 3, Paragraphs (a and (e), of
Presidential Decree No. 694 is hereby amended to read as follows:cralaw:red
"Sec. 3. Corporate Powers. — The Philippine National
Bank, upon its organization, shall be a body corporate and shall have
power:cralaw:red
"a. To engage in the business of commercial banking
by accepting drafts and issuing letters of credit, discounting and
negotiating promissory notes, drafts, bills of exchange, and other
evidence of debts, receiving deposits, buying and selling foreign
exchange and gold or silver bullion, by acting as financial agent, by
financing of personality-leasing, and by lending money against personal
security or against securities consisting of personal property of first
mortgages on improved real estate and the insured improvements thereon;chanroblesvirtualawlibrary
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"e. To issue either in the Philippines or
externally, for purposes of augmenting its capital, and/or fund
generation requirements, all types of bonds, promissory notes,
debentures, certificates of indebtedness or other debt instruments
whether senior, unsecured or subordinated obligations, including but
not limited to capital notes under such terms and conditions as may be
determined by the Board of Directors, which may be: chanroblesvirtualawlibrary
"1. Secured by credits against real estate or other
assets of the Bank but not in excess of 90% thereof, or without such
security and purely on an unsecured or subordinated basis;chanroblesvirtualawlibrary
"2. Long-term, medium-term or short-term;chanroblesvirtualawlibrary
"3. With fixed interest rate or floating interest
rate;chanroblesvirtualawlibrary
"4. Denominated either in the lawful legal tender of
the Philippines or in such foreign currencies which are eligible for
the foreign exchange reserves of the Central Bank of the Philippines;
and
"5. With such other features and requirements which
in its discretion are deemed necessary.
"These bonds, debentures, promissory notes, certificates of
indebtedness, or other debt instruments shall be unconditionally
guaranteed as to principal and interest by the Republic of the
Philippines; Provided, however, that the Bank is also authorized to
issue these instruments without the guaranty of the Republic of the
Philippines; chanroblesvirtualawlibrary
"These bonds, debentures, promissory notes, certificates of
indebtedness, or other instruments, shall be exempt, both as to
principal and interest, from any and all taxes imposed by the
Government or any of its subdivisions;"
Section 2. Section 4 of Presidential Decree No. 694
is hereby amended to read as follows:cralaw:red
"Sec. 4. Authorized Capital Stock-Par Value —
Government Subscription and Payment-Sale of Shares. — The authorized
capital stock of the Bank shall be further increased to Five Billion
Pesos to be divided into fifty million shares at par value of One
Hundred Pesos each. The Government shall increase its paid-in
subscription of One Billion Pesos to Two Billion Pesos. Payment for the
additional capital contribution by the Government shall be made as
follows:cralaw:red
"a. P500 Million in the form of cash to be
authorized under the corresponding appropriation upon recommendation of
the Secretary of Finance and payable within three (3) years.
"b. The balance in cash or in exchange for the bonds
or other government securities which the Secretary of Finance is hereby
authorized to issue under such terms and conditions as he may prescribe.
"The bank's authorized capital stock shall be divided into the
following classes of shares:cralaw:red
"a. Preferred "A" shares which shall consist of one
million shares available for sale to or subscription by the general
public. These shares shall have the following features:cralaw:red
"1. preferred as to dividends at ten per cent (10%);chanroblesvirtualawlibrary
"2. cumulative;chanroblesvirtualawlibrary
"3. participating;chanroblesvirtualawlibrary
"4. non-voting;chanroblesvirtualawlibrary
"5. dividends thereon shall be exempt from income
tax;chanroblesvirtualawlibrary
"6. redeemable at the option of the Bank at the
prevailing book of value but in no case less than par after five (5)
years from issuance thereof; and
"7. convertible to Common shares at the option of
the holder in case the Bank fails to pay dividends thereon for two
consecutive years; Provided, however, that if the holder thereof
signifies his intention to convert the Preferred "A" shares to Common
shares, the Bank may, at its option, redeem said shares even before the
lapse of five (5) years counted from date of their issuance.
"b. Preferred "B" shares which shall consist of two
million shares available for sale to or subscription by citizens of the
Philippines only. These shares shall have the following features:cralaw:red
"1. preferred as to dividends;chanroblesvirtualawlibrary
"2. cumulative;chanroblesvirtualawlibrary
"3. participating;chanroblesvirtualawlibrary
"4. non-voting;chanroblesvirtualawlibrary
"5. dividends thereon shall be exempt from income
tax; and
"6. convertible to Common at the option of the
holder in case the Bank fails to pay dividends thereon for two
consecutive years.
"c. Common "A" shares which shall consist of five
hundred thousand (500,000) shares exclusively available for
subscription at par by officers and employees of the Bank. These shares
shall have the following features:cralaw:red
"1. preferred as to dividends;chanroblesvirtualawlibrary
"2. cumulative;chanroblesvirtualawlibrary
"3. participating;chanroblesvirtualawlibrary
"4. voting;chanroblesvirtualawlibrary
"5. dividends thereon shall be exempt from income
tax; and
"6. non-transferable except to qualified holders as
herein provided.
"Transfer of any kind, including that by hereditary succession, to any
person other than officers or employees of the Bank shall not be valid
and shall not be registered in the books of the Bank. Moreover, such
transfer shall give rise to the Bank's right to acquire the shares so
transferred at par. The Board of Directors of the Bank shall prescribed
the terms and conditions for the distribution of common "A" shares to
officers and employees of the Bank as well as for the Bank's
reacquisition of said shares from the holders thereof upon their
separation from the Bank or upon the transfer of said shares to any
person other than officers or employees of the Bank.
"d. The remaining balance of the authorized capital
stock shall be in common shares.
"The Board of Directors of the Bank may, at its discretion, increase
the number of any of the preferred shares as well as the Common "A"
shares by converting outstanding Common shares, if there are any
available, to such shares desired to be increased.
Said increase shall be subject to the approval of the President of the
Philippines upon recommendation of the Secretary of Finance. The Bank
may take the necessary steps to have its preferred shares listed in any
duly registered stock exchange.
"Existing private stockholders may exercise their pre-emptive
right. chanroblesvirtualawlibrary
"Upon full payment in cash, or with bonds or other government
securities, of its subscription of Two Billion Pesos, the government
shall thereafter, subscribe to the balance of the common shares at the
rate of at least Two Hundred Fifty Million Pesos per annum: Provided,
however, That at any time, the government may, upon recommendation by
the Secretary of Finance and the approval of the President of the
Philippines, increase or decrease such rate of subscription: Provided,
further, that upon the lapse of five years from the listing of the
preferred shares in any duly registered stock exchange, but not later
than December 31, 1980, such preferred shares remaining unsold or
unsubscribed shall be automatically converted to Common shares and
subscribed to by the Government.
"Payment of these government subscriptions may likewise be in the form
of cash to be authorized under the corresponding appropriation that may
be made from time to time or in exchange for bonds or other government
securities which the Secretary of Finance is hereby authorized to issue
under such terms and conditions as he may prescribe. These bonds or
other government securities may be retired in the manner provided for
in this Decree. chanroblesvirtualawlibrary
"The Bank is also authorized to purchased its own shares that are held
privately.
"Holders of Land Bank bonds may, under such terms and conditions as may
be prescribed by the Board of Directors of the Bank, exchange such
bonds, for shares of the Bank offered for sale to the public."
Section 3. Section 6, paragraph (f) of Presidential
Decree No. 694, is hereby amended to read as follows: chanroblesvirtualawlibrary
"Sec. 6. Loans and credit accommodations authorized.
— The Philippine National Bank is hereby authorized:cralaw:red
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"f. To make loans to any branch, subdivision or
agency of the Republic of the Philippines or to government-owned or
controlled corporations, subject to the condition that such loans
should be for productive, revenue producing or socio-economic projects
pursuant to the priorities established in the development program, as
prepared, by the National Economic and Development Authority, in an
amount within the borrowing entity's paying capacity, duly guaranteed
by the National Government through the Secretary of Finance upon
authority of the President of the Philippines with respect to
principal, interest and other charges: Provided, however, that the
government guaranty may be dispensed with by the Board of Directors if
such branch, subdivision, or agency or government-owned or controlled
corporation can offer sufficient and acceptable collaterals in lieu of
the guaranty: Provided, further, that the requirement of government
guaranty shall be considered complied with in case of loans made to any
branch, subdivision or agency of the Republic of the Philippines or to
government-owned or controlled corporations which, by virtue of the law
creating them or their respective charters or the law authorizing their
borrowings, are not required to secure the guaranty of the national
government through the Secretary of Finance: Provided, furthermore,
that loans covered by government guarantees shall not exceed the
ceiling prescribed by the Monetary Board: Provided, finally, that such
ceiling on government guarantees shall exclude loans to government
corporations with acceptable collateral. However, such loans to
government corporations shall nonetheless be subject to the lending
ceiling on loans to government agencies and entities provided for in
paragraph (d) of Section 7."
Section 4. All laws, executive orders, decrees,
rules and regulations, or parts thereof, inconsistent with the
provisions of this Decree are hereby repealed, amended or modified
accordingly.
Section 5. This Decree shall take effect immediately.
Done in the City of Manila,
this 11th day of June, in the year of Our Lord, nineteen hundred and
seventy-eight.
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