REPUBLIC ACT NO. 4093 - PRIVATE
DEVELOPMENT BANK'S ACT
Section 1. This Act shall be known as "The Private
Development Banks' Act."
Sec. 2. It shall be the declared policy of
Congress to promote and expand the economy of the country pursuant to
the socio-economic program of the Government; to expand the industrial
and agricultural growth; and to encourage the establishment of more
private development banks in order to meet the needs for capital and to
meet the demands for adequate investment credit or medium and long term
loans for Filipino entrepreneurs. Toward this end, the Government shall
encourage and assist in the establishment of a system of private
development banks which will promote agriculture and industry and at
the same time place within easy reach to the people the medium and long
term credit facilities at reasonable cost. The Development Bank of the
Philippines, the Philippine National Bank, the Government Service
Insurance System, the Social Security System, the National Economic
Council, the Department of Agriculture and Natural Resources, the
Department of Commerce and Industry, and other appropriate agencies,
corporations, or instrumentalities of the Government may, in
cooperation with the private development banks, provide adequate
assistance in the form of saving deposits, and technical know-how in
agriculture and industry.
Sec. 3. A private development bank shall be
incorporated under the provisions of the General Banking Act for
mortgage banks and shall exercise all the powers and shall assume all
the obligations of a shortage bank as defined in the said Act, except
as otherwise provided herein: provided, that no private development
bank shall be operated without a certificate of authority from the
monetary board of the Central bank which shall be issued upon
compliance with the provisions of this law.
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 sixty per cent of the capital stock subscribed by the private
sector shall be owned and held by citizens of the Philippines:
provided, further, that if said subscription of private shareholders to
the capital stock 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 the 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 paragraph 3,
Sec. 3 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 cumulate dividends at a 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.
Sec. 5. Seventy-five per centum of the loanable
funds of the private development bank shall be invested in medium and
long term loans for economic development purposes and in no case shall
the Bank invest more than twenty-five per centum of the loanable funds
in short term loans for miscellaneous purposes.
Sec. 6. For the purpose of attaining the
objectives of this Act and the policy of Congress as provided for in
Sec. 2 of this Act, the sum of ten million pesos may be appropriated
yearly in case of need from the net profit of the Central Bank paid
into the general fund of the government under Section Forty-one,
Paragraph (d) of the Central Bank Act, which sum shall constitute a
revolving fund to be made available to the Development Bank of the
Philippines which shall be used, together with the funds already
provided under paragraph 2 of Sec. 3 of Republic Act 2081, for the
following purposes:
(a) To pay for its subscription to preferred shares
of stock in said private development banks in the manner and subject to
the terms and conditions prescribed in Section four hereof;
(b) To rediscount promissory notes and other credit
instruments held by the private development bank under the following
conditions and limitations:
(1) It shall charge such rediscount or interest rates
as it may determine taking into account that the main objective of the
private development bank is to engage in medium and long term loans for
economic development. The determination of such rediscount or interest
rates acceptable to the bank for the purpose of this provision shall be
made by the said bank upon or immediately after the commencement of
operations of a private development bank; and
(2) Funds so acquired shall be used only to finance
the establishment and operation of projects within the development
program of the National Economic Council or along such projects and
activities as the National Economic Council may, from time to time,
approve.
Sec. 7. Any private development bank may, with the
approval of the Monetary Board:
(a) Accept savings and time deposits;
(b) Act as correspondent for other financial
institution and as collection agent whenever there is no rural or
commercial bank existing in the locality;
(c) Rediscount paper with the Central Bank,
Philippine National Bank or other Banks and their branches or agencies.
The Central bank shall specify the nature of papers deemed acceptable
for rediscount as well as the rediscount rate to be charged by any of
these institutions.
Sec. 8. To augment and supplement the capital of
any private development bank, the Development Bank of the Philippines
shall be permitted to extend to the private development banks a loan or
loans from time to time repayable in ten years with interest at the
rate that may be agreed upon against security which may be offered by
the private development bank or any stockholders of the private
development bank: provided, that
(a) The Development Bank of the Philippines is
convinced that the resources of the private development bank are
inadequate to meet the legitimate credit requirements of the locality
wherein the private development bank is established;
(b) There is a dearth of private capital in the said
locality;
(c) It is not possible for the stockholders of the
private development bank to increase the paid-up capital thereof.
Sec. 9. In an emergency or when a financial crisis
is imminent, the Central Bank may give a loan to any private
development bank against the assets of the private development bank
which may be considered acceptable by a concurrent vote of the members
of the Monetary Board.
SECTION 10. All existing private development banks
shall be totally exempted from the payment of income and gross receipts
taxes for a period of three (3) years after the effectivity of this
Act. Thereafter, they shall be taxed on a gradually increasing basis of
twenty-five percent (25%) per year for the next succeeding four (4)
years after the end of which period they shall pay all taxes in full.
Those banks that may be established within three (3) years from the
date of effectivity of this Act, shall be totally exempted from income
and gross receipts taxes for three years from the date of their
organization. Thereafter they shall be taxed on a gradually increasing
basis of twenty-five per cent (25%) per year for the next succeeding
four (4) years after the end of which period they shall pay all such
taxes in full.
SECTION 11. Private development banks organized under
this Act shall be known by any name not otherwise appropriated:
provided, however, that the words "Development Bank" is made a part
thereof, and the name is approved by the Securities and Exchange
Commission.
A private development bank may establish branches and agencies subject
to the approval of the Monetary Board of the Central bank. For the
purpose of this Act, a private development bank, together with its
branches and agencies, shall be considered as a unit.
SECTION 12. Every individual acting as officer or
employee of a private development bank and handling fund or securities
amounting to one thousand pesos or more, in any one year, shall be
covered by an adequate bond as determined by the Monetary Board; and
the by-laws of the private development bank may also provide for the
bonding of other employees or officers thereof.
SECTION 13. For the purpose of carrying out the
objectives of this Act, the Development Bank of the Philippines is
authorized to require the services and facilities of any Department or
instrumentality of the Government or any officer or employee of any
such Department or government instrumentality.
SECTION 14. 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, shall be imposed upon:
1. Any officer, employee or agent of private
development bank who shall:
(a) make false entries in any bank report or
statement thereby affecting the financial interest or causing damage
to, the Bank or any person; or
(b) without order of court of competent jurisdiction,
disclose any information relative to the funds or properties in the
custody of the bank belonging to private individuals, corporation or
any other entity; or
(c) accept gifts, fees, or commission or any other
form of remuneration in connection with the approval of a loan from
said bank; or
(d) overvalue or aid in overvaluing any security for
the purpose of influencing in any way the action of the Bank or any
loan; or
(e) appear and sign as guarantor, indorser or surety
for loans granted by the bank; and
2. Any application for a loan from or borrower of a
private development bank who shall;
(a) misuse, misapply, or divert the proceeds of the
loan obtained by him from its declared purpose; or
(b) fraudulently overvalue property offered as
security for a loan from the said bank; or
(c) give out or furnish false or willful
misrepresentation of material facts for the purpose of obtaining,
renewing or increasing a loan extending the period thereof; or
(d) attempt to defraud the said bank in the event of
court action to recover a loan; or
(e) offer any officer, employee or agent of a private
development bank a gift, fee, commission, of other form of compensation
in order to influence such bank personnel into approving a loan
application; or
(f) dispose or encumber the property or the crops
offered as security for the loan.
3. Any examiner, or officer, or employee of the
Central Bank of the Philippines or any department, bureau, office,
branch or agency of the Government who is assigned to examine,
supervise, assist or render technical service to private development
bank and who shall commit any of the acts, enumerated in paragraph (1)
of this section or connive or aid in the commission of the same.
SECTION 15. The Development Bank of the Philippines
shall submit a report to Congress as of the end of each calendar year
of all its actuations in connection with private development banks,
together with an explanation or its reasons therefor.
SECTION 16. Any Bank not organized under this Act
except those organized under Republic Act 2081 and any person,
association, or corporation doing the business of banking, not
authorized under this Act who shall use the words "Development Bank" as
part of the name or title of such bank or of such person, association
or corporation, shall be punished by a fine of not less than fifty
pesos for each day during which said words are so used.
SECTION 17. 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 associations, or
circumstances shall not be affected thereby.
SECTION 18. The provision of Republic Act Numbered
Two hundred sixty-five, as amended, Republic Act Numbered Three hundred
and thirty-seven, as amended and Republic Act Numbered Two thousand
eighty-one as amended, insofar as they are applicable to, and not in
conflict with any provision of this Act are hereby made parts hereof;
and certain provisions of Republic Act Numbered Two thousand and
eighty-one, as amended, governing private development bank and in
conflict with any provision of this Act are hereby repealed.
SECTION 19. This Act shall take effect upon its
approval.
Approved: June 19, 1964
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