WHEREAS, President Decree No. 5 of the
September 27, 1972 adopted and approved into law House Bill No. 2483
which was pending before Congress at the time of the promulgation of
Proclamation No. 1081, dated September 21, 1972;chanroblesvirtualawlibrary
WHEREAS, it has been found necessary to incorporate certain changes and
modifications to the Charter of the Philippine National Bank,
particularly certain proposals recommended by an official banking
survey commission which recently submitted its report;chanroblesvirtualawlibrary
WHEREAS, for clarity and accuracy, it is deemed essential to set forth
hereunder the text of the pertinent provisions of the Charter of the
Philippine National Bank, together with the above-mentioned changes and
modifications, which shall supersede the entire text of the said House
Bill No. 2483 as adopted and approved into law by Presidential Decree
No. 5;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, Commander-in-Chief of all the
Armed Forces of the Philippines, pursuant to Proclamation No. 1081,
dated September 21, 1972, as amended, and in order to effect desired
changes and reforms in the social, economic and political structures of
our society, do hereby order and decree as follows:cralaw:red
Section 1. Subsection (g) of Section two of Republic
Act Numbered Thirteen hundred, as amended, is further amended to read
as follows:cralaw:red
"CORPORATE POWERS
"Sec. 2. Corporate powers and duties. — The said
National Bank, upon its organization, shall be a body corporate and
shall have power:cralaw:red
"(g) To grant long-term loans and advances against
security of real estate and/or other acceptable assets for the
establishment, rehabilitation or expansion of agricultural, export,
industrial and other productive enterprises: Provided, That the
aggregate of such loans shall not exceed the sum of the paid-up capital
and unimpaired surplus, long-term indebtedness and obligations and
thirty percent of the total deposits: Provided, further, That notarial
services in connection with loan application of not more than one
thousand pesos shall be free, and in places where the bank has no
lawyers, notarial services shall be performed by municipal judges and
other government notaries public free of charge;"
Section 2. Section three of Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:cralaw:red
"CAPITAL
"Sec. 3. Authorized Capital Stock-Par Value —
Government Subscription and payment. — The authorized capital stock of
the Philippine National Bank shall be one billion pesos divided into
ten million per value shares of one hundred pesos each, which shall
include its present capitalization; Provided, further, That five
hundred million pesos of the authorized capital shall be fully
subscribed by the Government and said subscription shall be paid in the
following manner: Two hundred twenty-five million of surplus and
reserves of the Bank as of December thirty-one nineteen hundred and
seventy-one shall be applied by the Bank in payment of the outstanding
unpaid subscribed shareholdings of the Government which together with
the present paid-up capital of one hundred fifty million pesos,
including private stockholdings, shall be considered as part of the
paid-in capital of the Bank and the balance from funds from the
Treasury not otherwise appropriated. Provided, furthermore, That three
hundred million pesos of the authorized capital shall be offered for
sale to the public, subject to the proportionate pre-emptive rights of
existing private stockholders, and the Bank may within one year from
approval hereof take necessary steps to have these shares listed in any
duly registered stock exchange: Provided, furthermore, That private
holders of Land Bank bonds may exchange such bonds for shares of the
Bank offered for sale to the public: Provided, finally, That upon the
lapse of five years from the listing of these shares in any duly
registered stock exchange, the shares remaining unsold shall be
automatically subscribed and paid for by the Government and the
Secretary of Finance, with the approval of the President of the
Philippines shall issue Government bonds in exchange for such shares of
stock subscribed by the Government."
Section 3. Section five of Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:cralaw:red
"BANKING OPERATIONS IN GENERAL
"Sec. 5. Loans and investments authorized — Total
liabilities of a single borrower — Additional liabilities and security
required. — Said National Bank is hereby authorized;chanroblesvirtualawlibrary
"(a) To purchase or discount promissory notes,
drafts, and bills of exchange issued or drawn for agricultural, export,
industrial or commercial purposes, with securities required by the
Bank, or the proceeds of which have been used or are to be used for
such purposes;chanroblesvirtualawlibrary
"(b) To make loans on, or to discount notes, secured
by, harvested and stored crops: Provided, That no loan on the security
of such harvested and stored crops shall exceed eighty per centum of
the market value thereof on the date of the loan: Provided, further,
That the crops so mortgaged shall be insured by the mortgagor for the
benefit of the National Bank for their entire market value: and
Provided, finally, That if, owing to any circumstance whatever, the
value of the crops given as security shall diminish the mortgagor shall
obligate himself to furnish additional security or refund such part of
the loan as the Bank may deem necessary. Such loans shall be granted
for a period of not to exceed one year, subject to extension, in the
discretion of the Bank;chanroblesvirtualawlibrary
"(c) To make loans to agriculturists in installments,
on standing crops of the natural products of the Philippines such as
rice, hemp, copra, sugar, tobacco, corn, maguey, etc., not in excess of
seventy per centum of the estimated value of such crops: Provided,
however, That before granting such loans, the National Bank may require
additional security in the nature of mortgages on real estate duly
registered in the name of the debtor, or chattel mortgage, including
those upon livestock, machinery, and agricultural implements, or
personal bonds with sufficient surety or sureties, satisfactory to the
Bank;chanroblesvirtualawlibrary
"(d) To make loans to any branch or subdivision 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 socio-economic development project
pursuant to the priorities established in the development program, as
certified to by the National Economic Development Authority in an
amount within the borrowing entry'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 and
interest: Provided, however, That loans covered by government
guarantees shall not exceed the ceiling prescribed by the Monetary
Board: Provided, finally, That such a ceiling shall exclude loans to
government corporations with acceptable and sufficient collateral which
shall however be subject to the limitation herein under provided.
"The aggregate obligation of all these government agencies and entities
for the loans herein authorized shall at no time exceed the advance,
deposits, and paid-in capital contribution of the Government except in
cases of emergency situations.
"(e) Generally, to make advances or discount paper
for agricultural, export, manufacturing, industrial, or commercial
purposes: Provided, That loans, discounts or advances made under this
section shall have maturities not exceeding one year, renewable from
year to year, in the discretion of the Bank.
"(f) To engage or participate in the development of
secondary markets for medium and long-term papers.
"(g) To invest in equities of the following allied
undertakings: warehousing companies, leasing companies, storage
companies, safe deposit box companies, trust companies, companies
engaged in the management of mutual funds but not in the mutual funds
themselves, banks other than rural banks, and such other similar
activities as the Monetary Board of the Central Bank of the Philippines
may declare as appropriate from time to time: Provided, however, That
(a) the total investment in equities shall not exceed twenty-five
percent (25%) of the net worth of the Bank; (b) the investment in any
one enterprise shall not exceed ten per cent (10%) net worth of the
Bank; (c) the investment of the Bank in any single enterprise, except
where that enterprise is not a financial intermediary and (d) the
investment in other banks shall be deducted from the Bank's 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-owned or majority controlled
subsidiary of the Bank, it shall be subject to examination by the
Central Bank."
(h) To grant loans to cooperatives as well as to
individual members of such cooperatives: Provided, That in the grant of
said loans the collateral requirements elsewhere required in this Act
may be waived in appropriate cases.
"The aggregate amount of loan for any single industry shall at no time
exceed twenty (20%) per cent of the Bank's lending capacity.
"The total liabilities to the Bank of any individual, including the
liabilities of the individual's spouse for money borrowed shall at no
time exceed two-and-a-half percent of the unimpaired capital and
surplus of the Bank. The total liabilities to the Bank of any company,
corporation, or firm, for money borrowed including in the liabilities,
of the company or firm, the liabilities of the several members thereof,
shall at no time exceed ten (10%) per centum of the unimpaired capital
and surplus of the Bank. But the discount of bills of exchange drawn in
good faith against actually existing values and the discount of
commercial or business paper actually owned by the person negotiating
the same shall not be considered as money borrowed, and in addition to
the ten (10%) per centum of the unimpaired capital and surplus of the
Bank provided such additional liabilities are secured by shipping
documents, warehouse receipts or other similar documents transferring
or securing title covering readily marketable, non-perishable stocks,
when such staples have a value equal to at least one hundred
twenty-five per centum of such additional liabilities.
Provided, further, That the total contingent liabilities to the Bank of
any person, whether natural or juridical, under any form or type of
letters of credit accommodations, whether domestic or foreign, or under
any other form of financing shall at no time exceed ten (10%) per
centum of the unimpaired capital and surplus of the Bank. chanroblesvirtualawlibrary
The Bank shall not make any loan upon the stock of any other
corporation as collateral if the aggregate market value of all such
stocks held as collateral exceeds an amount equal to ten (10%) per
centum of the unimpaired capital stock and surplus of the Bank.
The term 'loan' whenever used in this Act shall include overdrafts and
the limitations contained in this section shall apply to any loan of
any kind whenever secured wholly or partly by real estate mortgage.
Section 4. Section six of Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:cralaw:red
"BOARD OF DIRECTORS — COMPOSITION AND
ORGANIZATION
"Sec. 6. Board of Directors — Composition — Per diems
— tenure. — The affairs and business of the National Bank shall be
directed and its property managed and preserved, unless otherwise
provided in the Act by a Board of Directors consisting of nine members
duly elected as hereinafter provided for terms of three years who shall
be paid a per diem of Two Hundred Fifty pesos for each session of the
Board of Directors: Provided, however, That the first members elected
under the provisions of this section shall have terms of office of one,
two, and three years, respectively."
Section 5. Section seven of Republic Act Numbered
Thirteen hundred, as amended is further amended to read as follows:cralaw:red
"Sec. 7. Election of Board of Directors — Election of
Chairman and Vice-Chairman of the Board. — Who may be elected members
of the Board of Directors. — Annually on the first Tuesday after the
first Monday in March, the stockholders shall meet to elect the members
of the Board of Directors whose terms have expired, each stockholder or
proxy to be entitled to as many votes as he may have shares of stocks,
registered in his name on the thirty-first of January last preceding
and held by him at the time of the election. Immediately after the
election, the directorate shall be organized as such and elect from
amongst themselves a chairman, the President of the Bank shall be
ex-officio vice-chairman, who shall assist the chairman and act in his
stead in case of absence or incapacity. In case of incapacity or
absence of both the chairman and vice-chairman, the Board of Directors
shall designate a temporary chairman from among its members: Provided,
That no director, shareholder or employee of any other bank shall be
eligible as member of the Board of Directors of the National Bank:
Provided, further, That no person shall be elected director of the Bank
unless he is a natural born citizen of the Philippines, not less than
thirty-five years of age, of good moral character and has attained
proficiency, expertise and recognized competence in one or more of the
following: banking, finance, economics, law, agriculture, business
management, public utility or government administration."
Section 6. Section eight of Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:cralaw:red
"Sec. 8. President and Vice-President — Appointment
and removal — Salaries. — The chief executive of the Bank shall be the
President, who shall be elected by the Board of Directors from amongst
themselves for a term of three (3) years unless earlier removed for
cause or by reason of incapacity. No person shall be elected President
of the Bank unless he is at least forty years of age of good moral
character and reputation, with at least ten years previous experience
in banking, and has a reputed proficiency, expertise and recognized
competence in banking and economics, or finance, or management, or
government administration, or law, or agriculture, or industry. He
shall be assisted by an executive vice-president who shall have the
same qualifications as the President and such number of senior
vice-presidents and vice-presidents as may be necessary for the
efficient operation of the business of the Bank, and who shall be
chosen and may be removed for cause by the Board of Directors. The
salaries of the President, Executive Vice-President, the Senior
Vice-Presidents and Vice-Presidents shall be fixed by the Board of
Directors in line with the policy declared by the President of the
Philippines."
Section 7. Section nine of the Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:cralaw:red
"BOARD OF DIRECTORS
"Sec. 9. The Board of Directors shall have, among
other duties, powers and authority:cralaw:red
"(a) To formulate policies necessary to carry out
effectively the provisions of this Act and adopt such by-laws, rules
and regulations for the effective operation of the Bank, in conformity
with this Act and existing laws;chanroblesvirtualawlibrary
"(b) To establish branches or agencies in other
countries and at such points within the Philippines as it may deem
advisable which shall perform functions as may be delegated to them by
the Board of Directors: Provided, however, That there shall be
established branch banks or agencies in every provincial capital. AND
PROVIDED, FINALLY, THAT THE BANK SHALL NOT OPEN BRANCHES, AGENCIES OR
EXTENSION OFFICES WITHOUT PRIOR APPROVAL OF THE MONETARY BOARD OF THE
CENTRAL BANK OF THE PHILIPPINES.
"With the authorization of the proper department Secretary first had,
the Board of Directors may appoint as agents of said Bank the
provincial or municipal treasurers, who shall receive such additional
compensation as the board may determine."
"(c) To adopt an annual budget for the effective
operation and administration of the Bank, the expenses for personnel of
which shall not exceed thirty (30%) percent of the gross income of the
Bank for the preceding calendar year, including all salaries,
allowances, benefits and other emoluments of whatever kind or nature;"
Section 8. Section eleven of Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:cralaw:red
"LEGAL COUNSEL
"Sec. 11. Chief Legal Counsel. — Any provision of
laws, existing executive orders and administrative orders to the
contrary notwithstanding, all legal cases and matters of the Philippine
National Bank shall be exclusively handled, controlled and supervised
by a Chief Legal Counsel of the Bank who shall be chosen and may be
removed for cause by the Board of Directors."
Section 9. Section twelve of Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:cralaw:red
"AUDITING DEPARTMENT
"Sec. 12. Bank Auditor, salaries and expenses of the
Auditing Department; reports. — The Auditor General shall be the
ex-officio auditor of the National Bank and shall with the advice and
consent of the President of the Philippines appoint a Bank auditor who
shall be the chief of the Auditing Department of the Bank, and shall
receive the salary in an amount equal to the salary of the Executive
Vice-President of the Bank. All the other employees of the department
shall be appointed by the Auditor General, who with the approval of the
President of the Philippines, shall fix the salaries of the same in
accordance with the job evaluation program of the Bank. Any provision
of law or charter to the contrary notwithstanding, such salaries and
number of Auditing Personnel, once fixed, shall not be thereafter
increased, diminished or altered unless initiated by the Auditor
General. The Bank Auditor and his subordinate personnel shall also
receive such allowances and privileges as are or shall be authorized to
management personnel having the same rank and/or salary.
"The operating expenses of the department and the salaries and
traveling expenses of the employees thereof shall be payable by the
Bank and the Board of Directors shall make the necessary appropriation
therefor which shall not exceed three (3%) per cent of the gross income
of the Bank during the preceding calendar year.
"The appointment and removal of the Bank Auditor and subordinate
officials and employees of the Auditing Department shall be made by the
Auditor General in accordance with the established personnel policies
of the Bank; Provided, however, That in the promotion of subordinate
officials and employees of the department, the Auditor General shall be
guided by a list of qualified and eligible personnel to be submitted by
the Bank Auditor with a certification that merit and seniority have
been strictly observed.
"The Bank Auditor shall make a quarterly audit report, or as often as
the exigencies of the service may require, on the condition of the
Bank, to the President of the Philippines, through the Secretary of
Finance, to the Auditor General and to the Board of Directors of the
Bank. The report shall contain, among other things, a statement of
resources and liability, including earnings and expenses, the amount of
capital stock, dividends paid, surplus reserve, and undivided profits,
as well as the losses, bank debts and suspended and overdue paper
carried in the Bank's assets as of the day in which the statements are
compiled."
Section 10. Section thirteen of Republic Act Numbered
thirteen hundred, as amended, is further amended to read as follows:cralaw:red
"APPOINTMENT AND REMOVAL OF OTHER OFFICERS AND EMPLOYEES OF THE
NATIONAL BANK
"Sec. 13. Other officers and employees, appointment
and removal — Salaries — Non-applicability of the Civil Service Law. —
All other officers and employees of the Bank shall be appointed and
removed by the Board of Directors, on recommendation of the President.
Said officers and employees shall not be subject to the Civil Service
Law. Officers may be transferred or re-assigned according to the sound
judgment of the Board of Directors. Duties and compensation of said
officers and employees shall be fixed by the President with the
approval of the Board of Directors: Provided, That whenever the
Chairman or the Vice-Chairman, by order of the Board of Directors,
shall temporarily or permanently perform duties incumbent upon other
officers or employees, they may be granted compensation therefor
subject to the written approval of the President of the Philippines.
"Provided, That it is declared to be the policy of this Act that the
Bank is an instrument of the national monetary policy of the government
and its operation affects national interest and all the officers and
employees of the Bank shall not strike for the purpose of securing
changes or modifications in their terms and conditions of employment
but such officers and employees may belong to any labor organization
which does not impose the obligation to strike or to join in strike."
Section 11. Section sixteen of Republic Act Numbered
Thirteen hundred, as amended, if further amended to read as follows:cralaw:red
"Sec. 16. Confidential information. — The
Superintendent of the Banks and the Auditor General, or other officers
designated by law to inspect or investigate the condition of the
National Bank and officers and employees of the National Bank shall not
reveal to any person other than the President of the Philippines, the
Secretary of Finance, and the Board of Directors the details of the
inspection or investigation or give any information relative to any
bank transaction of any private individuals, corporations, or any other
entity, except by order of a Court of competent jurisdiction."
Section 12. Section eighteen of Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:cralaw:red
"Sec. 18. Loans to officers, directors and employees
prohibited. — The National Bank shall not directly or indirectly grant
loans to any director, officer, employee or agent of the Bank and no
loan shall be granted to a corporation, partnership or company wherein
any member of the Board of Directors is a shareholder, agent or
employee in any manner."
Section 13. Republic Act Numbered Thirteen hundred,
as amended, is amended by adding the following section immediately
after Section 22 thereof, which reads as follows:cralaw:red
"Sec. 22-A. Prohibition against writing-off of loans
without prior Central Bank approval. — Writing-off of loans and
advances with outstanding amount of one hundred thousand pesos or more
shall require the prior approval of the Monetary Board of the Central
Bank of the Philippines."
Section 14. Section twenty-five of Republic Act
Numbered Thirteen hundred, as amended, is further amended to read as
follows:cralaw:red
"NET PROFITS
"Sec. 25. Allocation of Net profit. — At the close of
each calendar year, the Bank shall determine the net result of its
operations, in the Calculation of which, adequate allowances shall be
made for probable losses. From the net profit arrived thereat
seventy-five (75%) percent thereof shall be set aside for declaration
of dividends corresponding to the Government and the private
stockholders and the remaining twenty-five (25%) percent shall be
accumulated in the surplus account which shall be utilized for such
purposes as may be authorized by the Board of Directors."
Section 15. Section twenty-six of Republic Act
Numbered Thirteen hundred, as amended, is further amended to read as
follows: chanroblesvirtualawlibrary
"PAYMENT OF DIVIDENDS OF GOVERNMENT
SHARES
"Sec. 26. Payment of dividends corresponding to
Government-owned shares. — The dividends declared corresponding to the
shares of the Government as provided for in Section twenty-five hereof,
shall be set aside and is hereby appropriated to form a special bond
sinking fund which shall be used for the purpose only of retiring the
Government bonds issued pursuant to the last paragraph of Section three
of this Act. The Bank shall be the trustee of these funds until the
purpose for which it was created shall have been accomplished. Any and
all income that may accrue shall form part of the fund. This special
fund shall be deposited with the Bank. After the retirement and payment
of the bonds including interest thereon from the special fund shall
have been made, whatever residue remaining shall be used to pay for
additional Government subscription on the unissued shares of authorized
capital stock. Thereafter, all profits assigned as dividends to the
shares of the Government shall be paid into the Treasury of the
Philippines for the general funds thereof.
Section 16. If any provision or section of this Act
or the application thereof to any person, association or circumstances
is held invalid, the other pertinent provisions or sections of this Act
and their application to such person, association or circumstances
shall not be affected thereby.
Section 17. Repealing Clause. — All acts, executive
orders, administrative orders, proclamations, rules and regulations or
parts thereof inconsistent with any of the provisions of this Act are
hereby repealed or modified accordingly.
Section 18. This Decree shall take effect
immediately. chanroblesvirtualawlibrary
Done in the City of Manila,
this 20th day of November, in the year of Our Lord, nineteen hundred
and seventy-two.
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