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PHILIPPINE LAWS, STATUTES & CODES
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REPUBLIC ACTS
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REPUBLIC ACT NO. 337 - AN
ACT REGULATING BANKS AND BANKING INSTITUTIONS AND FOR OTHER PURPOSES |
CHAPTER I Section 1. The short title of this Act shall be "The General Banking Act." Sec. 2. Only duly authorized persons and entities
may engage in the lending of funds obtained from the public through the
receipt of deposits or the sale of bonds, securities, or obligations of
any kind, and all entities regularly conducting such operations shall
be considered as banking institutions and shall be subject to the
provisions of this Act, of the Central Bank Act, and of other pertinent
laws. The terms "banking institution" and "bank," as used in this Act,
are synonymous and interchangeable and specifically include banks,
banking institutions, commercial banks, savings banks, mortgage banks,
trust companies, building and loan associations, branches and agencies
in the Philippines of foreign banks, hereinafter called Philippine
branches, and all other corporations, companies, partnerships, and
associations performing banking functions in the Philippines. Sec. 3. Insurance companies are exempted from the provisions of this Act, but such companies shall present to the Central Bank such information, data or reports as the Monetary Board may require in order to ascertain the effects of the operations of insurance companies on the monetary, credit, and exchange situation in the Philippines. Sec. 4. Cases of doubt as to the banking character of the activities of any person or entity, and to the consequent applicability of this Act, shall be decided by the Monetary Board subject to judicial review. The Board may, through the Superintendent of Banks, examine, inspect or investigate the books and records of such person or entity for the purpose of resolving the question. Sec. 5. The following terms shall be held to be
synonymous and interchangeable: Sec. 6. No person, association or corporation not
conducting the business of a commercial banking corporation, trust
corporation, savings and mortgage bank, or building and loan
association, as defined in this Act, shall advertise or hold itself out
as being engaged in the business of such bank, corporation or
association, or use in connection with its business title the word or
words "bank," "banking," "banker," "building and loan association,"
"trust corporation," "trust company," or words of similar import, or
solicit or receive deposits of money for deposit, disbursement,
safekeeping, or otherwise, or transact in any manner the business of
any such bank, corporation or association, without having first
complied with the provisions of this Act in so far as it relates to
commercial banking corporations, trust corporations, savings and
mortgage banks, or building and loan associations, as the case may be.
For any violation of the provisions of this section by a corporation,
the officers and directors thereof shall be jointly and severally
liable. Any violation of the provisions of this section shall be
punished by a fine of five hundred pesos for each day during which such
violation is continued or repeated, and in default of the payment
thereof, subsidiary imprisonment as prescribed by law. CHAPTER II Sec. 7. Domestic banking institutions, except building and loan associations, shall be organized in the form of stock corporations. Sec. 8. No banking institution shall issue no par value stock. Sec. 9. The Securities and Exchange Commissioner shall not register the articles of incorporation of any bank, or any amendment thereto, unless accompanied by a certificate of authority issued by the Monetary Board, under its official seal. Such certificate shall not be issued unless the Monetary Board is satisfied from the evidence submitted to it: (a) that all the requirements of existing laws and regulations to engage in the business for which the applicant is proposed to be incorporated have been complied with; (b) that the public interest and economic conditions, both general and local, justify the authorization; and (c) that the amount of capital, the financing organization, direction and administration, as well as the integrity and responsibility of the organizers and administrators reasonably assure the safety of the interests which the public may entrust to them. Section 10. The Securities and Exchange Commissioner shall not register the by-laws of any bank or banking institution, or any amendment thereto, unless accompanied by a certificate of the Monetary Board to the effect that such by-laws or amendment thereto are in accordance with law. Section 11. After the approval of this Act, no bank which may be established and licensed to do business in the Philippines shall receive deposits, unless incorporated under the laws of the Republic of the Philippines: Provided, however, That this prohibition shall not apply to branches and agencies of foreign banks which, at the time of the approval of this Act, are actually receiving deposits: And provided, further, That, after the passage of this Act, all deposits so received by such branches and agencies of foreign bank shall not be invested in any manner outside the territorial limits of the Republic of the Philippines. Section 12. At least sixty per cent (60%) of the capital stock of any banking institution which may be established after the approval of this Act shall be owned by citizens of the Philippines. Section 13. At least two-thirds of the members of the
board of directors of any bank or banking institution which may be
established after the approval of this Act shall be citizens of the
Philippines. CHAPTER III Section 14. No foreign bank or banking corporation formed, organized or existing under the laws other than those of the Republic of the Philippines shall be permitted to transact business in the Philippines, or maintain by itself or assignee any suit for the recovery of any debt, claims, or demand whatsoever, until after it shall have obtained, upon order of the Monetary Board, a license for that purpose from the Securities and Exchange Commissioner. Any officer, director or agent of any such corporation who transacts business in the Philippines without the said license shall be punished by imprisonment for not less than one year nor more than ten years and by a fine of not less than one thousand pesos nor more than ten thousand pesos. For the issuance of such license to any foreign bank, the Securities and Exchange Commissioner shall collect a fee in proportion to the corporate capital of such bank in accordance with the schedule established in section eight of Act Numbered Fourteen hundred and fifty-nine, as amended. No order for a license shall be issued by the Monetary Board unless and until it is convinced that the public interest and economic conditions, both general and local, justify the issuance of such order; that the foreign bank or banking corporation is solvent and in sound financial condition; and that a duly appointed agent in the Philippines has been authorized to accept summons and legal processes. Section 15. No foreign building and loan association or building and loan association not formed, organized, or existing under the laws of the Philippines shall be permitted to transact business in the Philippines. Section 16. The Monetary Board, by the affirmative
vote of at least five of its members and with the approval of the
President of the Philippines, may revoke the license to transact
business in the Philippines of any foreign bank or banking corporation
not formed, organized, or existing under the laws of the Philippines,
if the said Board finds after due investigation at which such bank or
banking corporation is given a chance to be heard by itself or counsel,
that the foreign bank or banking corporation is in imminent danger of
insolvency or that its continuance in business will involve probable
loss to those transacting business with it. After the revocation of its
license, it shall be unlawful for any such foreign bank or banking
corporation to transact business in the Philippines unless its license
is renewed or reissued. After the revocation of such license the
Solicitor General shall take such proceedings as may be proper to
protect creditors of such foreign bank or banking institution and the
public. Section 18. In all matters not specifically covered by special provisions applicable only to foreign banks, or their branches and agencies in the Philippines, any foreign banking corporation or foreign bank not formed, organized, or existing under the laws of the Philippines but lawfully doing business in the Philippines shall be bound by all laws, rules, and regulations applicable to domestic banking corporations of the same class, except such laws, rules and regulations as provide for the creation, formation, organization, or dissolution of corporations or as fix the relation, liabilities, responsibilities, or duties of members, stockholders, or officers of corporations, to each other or to the corporation. Section 19. Residents and citizens of the Philippines
who are creditors of a branch or agency in the Philippines of a foreign
bank or banking corporation shall have preferential rights to the
assets of such branch or agency. CHAPTER IV Sec. 20. A commercial banking corporation shall be any corporation which accepts or creates demand deposits subject to withdrawal by check. Sec. 21. A commercial banking corporation, in
addition to the general powers incident to corporations, shall have all
such powers as shall be necessary to carry on the business of
commercial banking, by accepting drafts and issuing letters of credit,
by discounting and negotiating promissory notes, drafts, bills of
exchange, and other evidences of debt; by receiving deposits; by buying
and selling foreign exchange and gold or silver bullion, and by lending
money against personal security or against securities consisting of
personal property or first mortgages or improved real estate and the
insured improvements thereon. No loan on the security of real estate
shall have a maturity in excess of fifteen years but the aggregate of
such loans on real estate security shall not exceed seventy per cent
(70%) of the total savings deposits of the bank. Sec. 22. The combined capital accounts of each
commercial bank shall not be less than an amount equal to fifteen per
cent (15%) of its total assets, excluding the following assets: Sec. 23. Except as the Monetary Board may
otherwise prescribe, the total liabilities of any person, company,
corporation or firm, to a commercial banking corporation for money
borrowed, with the exception of money borrowed against obligations of
the Central Bank or of the Philippine Government, or borrowed with the
full guarantee by the Government of payment of principal and interest,
shall at no time exceed fifteen per cent (15%) of the unimpaired
capital and surplus of such bank. Sec. 24. No commercial bank shall make any loan or discount on the security of shares of its own capital stock, nor be the purchaser or holder of any such shares, unless such security or purchase be necessary to prevent loss upon a debt previously contracted in good faith, and the stock so purchased or acquired, or purchased or acquired for any other reason in the course of its operations, shall, within six months from the time of its purchase or acquisition, be sold or disposed of at public or private sale or in default thereof, a receiver shall be appointed to close up the business of the bank in accordance with law. Sec. 25. Any commercial bank may purchase hold,
and convey real estate for the following purposes: Sec. 26. The deposit liabilities of commercial banks, including the Philippine National Bank, shall be subject to the reserve requirements and other conditions prescribed by the Monetary Board in accordance with the authority granted to it under the provisions of the Central Bank Act. Sec. 27. Any commercial bank organized under the
laws of the Philippines may, with the prior approval of the Monetary
Board, establish branches in the Philippines or branches or agencies
outside the Philippines, and the bank shall be responsible for all
business conducted in such branches to the same extent and in the same
manner as though such business had all been conducted in the head
office. Sec. 28. The Monetary Board, by the affirmative
vote of at least five of its members, may compel the head office of any
commercial bank organized under the laws of the Philippines to
liquidate the business of any branch or agency if the business of such
branch or agency is being conducted unlawfully or in a manner likely to
prejudice the interests of the creditors of the branch or agency or of
the head office. CHAPTER V Sec. 29. A savings and mortgage bank shall be any corporation organized primarily for the purpose of accumulating the small savings of depositors and investing them, together with its capital, in bonds or in loans secured by bonds, real estate mortgages, and other forms of security, as hereinafter provided. Sec. 30. The combined capital accounts of each
savings and mortgage bank shall not be less than an amount equal to
fifteen per cent (15%) of its total assets, after deducting the
following assets: Sec. 31. The loans and investments of savings and
mortgage banks shall be limited to the following: Sec. 32. Except as the Monetary Board may otherwise prescribe, the direct indebtedness to a savings and mortgage bank of any person, company, corporation or firm, including in the indebtedness of the company or firm the indebtedness of the several members thereof, for money borrowed, with the exception of money borrowed against obligations of the Central Bank or of the Philippine Government, or borrowed with the full guarantee by the Government of payment of principal and interest, shall at no time exceed twenty-five per cent (25%) of the unimpaired capital and surplus of the bank: Provided, however, That this limitation shall not apply to loans made under subsection (f) of section thirty-one. Sec. 33. Any savings and mortgage bank may, with
the approval of the Monetary Board, issue mortgage and chattel mortgage
certificates, buy and sell them for its own account or for the account
of others, or accept and receive them in payment or as amortization of
its loans. Sec. 34. Savings and mortgage banks may purchase, hold and convey real estate under the same conditions as those governing commercial banks as specified in section twenty-five of this Act. Sec. 35. Married women and minors may, in their own right and in their own names, make deposits and withdraw the same, and may receive dividends and interest: Provided, however, That if any guardian shall give notice in writing to any savings bank not to make payments of deposits, dividends, or interest to the minor of whom he is guardian, then such payment shall be made only to the guardian. Sec. 36. Savings deposits shall be returned to the depositors or to their legal representatives upon their petition in the manner and at the time and under the conditions which shall be determined by the board of directors and stipulated in regulations which shall be in conformity with law and with such regulations as the Monetary Board may prescribe. Sec. 37. All savings and mortgage banks shall maintain on deposit with the Central Bank of the Philippines such reserves against their deposit liabilities as the Monetary Board shall determine in accordance with the pertinent provisions of the Central Bank Act. Sec. 38. Whenever there is a call by depositors of
a savings bank for repayment of their deposits and the call so made
shall result in reducing its legal reserves below the amount required
by the Monetary Board, such bank shall not make any new loans or
investment of the funds or depositors or earnings of such funds until
the call of the depositors has been satisfied and its legal reserves
have been restored to the required minimum. CHAPTER VI Sec. 39. All corporations whose capital stock is required or is permitted to be paid in by the stockholders in regular, equal periodical payments and whose purpose is to accumulate the savings of its stockholders, to repay to said stockholders their accumulated savings and profits upon surrender of their shares, to encourage industry, frugality, and home building among its stockholders, and to loan its funds, and funds borrowed for the purpose, to stockholders of the security of unencumbered real estate and with the pledge of shares of the capital stock owned by such stockholders as collateral security, shall be known as building and loan associations, and the words "mutual building and loan association" shall form part of the name of every such association. It shall be unlawful for any building and loan association to make any loan upon property that is suitable for only as theater, public hall, church, convent, school, club, hotel, garage, or other public building: Provided, however, That to facilitate the investment of the idle funds of a building and loan association, the Monetary Board may, in special instances, waive the provisions of this paragraph, in cases of public hall, school, hotel and other public buildings. With the approval of the Monetary Board, a building and loan association may also invest such of its funds as may otherwise remain idle, in bonds and obligations of the Republic of the Philippines, or of any of its political subdivisions, or of any government-owned or controlled corporation, including the Central Bank. Sec. 40. The articles of incorporation shall state the purpose of the association as set forth in section thirty-nine. Sec. 41. Any person may become a stockholder of any building and loan association by subscribing for one or more shares therein and signing the by-laws of the association, following his signature with his post office address, but no member may borrow upon the security of real estate from any such association having assets of one hundred thousand pesos or more an amount in excess of ten per cent (10%) of the total assets of the association, nor may any such association make a loan upon any one piece of real estate amounting to more than ten per cent (10%) of the total assets of the association. In the case of a building and loan association having assets amounting to less than one hundred thousand pesos, no loan to any one borrower and no loan upon any one piece of real estate shall exceed ten thousand pesos. The Monetary Board shall have the power to issue regulations governing the manner of determining such assets as the basis for computing the foregoing limitations. Sec. 42. The capital stock of such associations shall be paid in by the stockholders in regular, equal, periodical payments known as dues, at such times and in such amounts as shall be provided in the by-laws of the association. The dues on each share of stock subscribed for by a stockholder shall continue to be paid by the stockholder to the association until the share has been duly withdrawn, cancelled, or forfeited or until the share has reached its matured value; that is to say, when the dues paid on each share and the net earnings thereof in accordance with the by-laws shall amount to the matured value of the share, but such association may issue and sell paid-up stock for each and also investment stock to be paid in installments, and may pay to the holders of such paid-up stock out of the net profits such rates of dividends as may be fixed from time to time by the board of directors of the association, which shall be expressed in the stock certificates and shall not participate further in the profits or accretions of the association. Paid-up stock issued after the date when this Act shall become effective shall not be entitled to vote. The dividends payable upon such paid-up stock shall not be cumulative in the sense of being a charge upon the future earnings of the association should the earnings of the association not be sufficient in any particular year to meet the dividend requirements of such stock in that year. Either paid-up or investment stock may be surrendered by the holder at any time upon the giving of such notice as the association may require. Sec. 43. The capital stock of every association shall be divided into shares of the matured or par value of two hundred pesos each. Sec. 44. Certificates of stock shall be issued to each stockholder upon the payment of the membership fee and first installment of the dues. The association may charge a membership or entrance fee not exceeding one peso on each share of stock issued and may also charge a transfer fee not exceeding twenty centavos on each share transferred, all of which shall be paid into the treasury and accounted for as funds of the association. Shares which have not been pledged as security for the payment of a loan shall be called "free shares," and shares which have been so pledged shall be called "pledged shares." Sec. 45. Payment of dues on shares of stock shall commence from the time of issue of such shares. Sec. 46. Whenever any stockholder shall be six months in arrears in the payment of his dues upon free shares, the secretary or clerk of the association shall give him notice in writing of his arrearages by mailing to him at the last post office address given by him to the association a statement of all such arrearages. If the stockholder fails to pay within two months after receipt of such notice the full amount of his arrearages the board of directors may, at its option, declare his shares forfeited. At the time of the forfeiture the withdrawal value of the forfeited shares shall be determined and stated by the board of directors, and the defaulting stockholder shall be entitled to receive such value without interest upon such notice as is required of a withdrawing stockholder. Sec. 47. When the stock shall have reached its matured value, payment of dues thereon shall cease and holders of such matured shares shall be paid out of the funds of the association the matured value of their shares with interest thereon at the rate prescribed in the by-laws, from the time the board of directors shall declare such shares to have matured until payment is made. The order of payment of matured shares shall be prescribed in the by-laws and at no time shall more than one-third of the receipts of the association be applied to the payment of matured shares without the consent of the board of directors and the approval of the Monetary Board: Provided, however, That if shares pledged to the association as security for loans shall mature before the loan is repaid the matured value may be credited to the loan. The withdrawal value of the pledged shares shall not be returned to the stockholders unless such value is applied in liquidation of the loan which the shares secure. Sec. 48. By the affirmative vote of a majority of all its directors the association may borrow money for such temporary uses and purposes as the exigencies of the business may demand provided such action is consistent with the objects of the association. The aggregate amount of the outstanding indebtedness of any such association shall not at any time exceed fifty per cent (50%) of its capital stock actually paid in: Provided, however, That such limitation shall not include indebtedness to the Central Bank. Sec. 49. In addition to the other requirements established in this Act, every loan made by the association must be properly evidenced by a note or other instrument in writing and must be secured by a first mortgage or deed of trust on unencumbered real estate and also by the pledge to the association of shares of stock of the association the matured value of which shall at least equal the amount loaned: Provided, however, That loans may be made on the security of free shares pledged to the association for the payment of the loan in case, at the time that the loan is made, the withdrawal value of such free shares under the by-laws shall exceed the amount borrowed and interest thereon for six months. Sec. 50. In the discretion of the board of directors a loan may be repaid by the surrender of pledged shares whose withdrawal value equals the amount loaned and all interest and fines due thereon. Sec. 51. The rates of interest on loans may be fixed in the by-laws or may be prescribed from time to time by the board of directors, subject to the provisions of the Usury Law and to any regulations which the Monetary Board may issue with respect thereto. Sec. 52. Whenever a borrowing stockholder shall be three months in arrears in the payment of his dues on stock or in the interest or premium or installments of premium on any loan, the whole loan, at the option of board of directors, shall become due and payable and the board may proceed by action to enforce collection upon the securities held by the association. The withdrawal value of all shares pledged as collateral security at the time of the commencement of the action shall be applied to the payment of the loan, and such shares from the time of such application shall be deemed to be surrendered to the association. Sec. 53. Mutual building and loan associations may purchase, hold, and convey real estate under the same conditions as those specified with reference to commercial banks in section twenty-five of this Act. Sec. 54. Stockholders may surrender their shares and withdraw from the association after paying twelve monthly installments of dues upon giving sixty days' notice in writing to the board of directors, and the withdrawal value of such shares shall be the total sum of the dues paid thereon plus not less than ninety per cent of all dividends earned by such shares up to the end of the last preceding fiscal period plus such interest for the time elapsed since the end of that period as shall be allowed by the board of directors. Stockholders who have not paid twelve monthly installments of dues may, after giving sixty days' notice in writing to the board of directors, surrender their shares and withdraw from the association, and the withdrawal value of such shares shall be the total sum of the dues paid thereon plus such dividend or interest as may be allowed by the board of directors. In no event, however, shall more than one-third of the total receipts of the association be paid in any one month to retire such shares. Payment for such surrendered shares shall be made in the order in which notices of withdrawal have been received by the board of directors: Provided, That should the business of the association during the period such withdrawing member has been a stockholder show a loss in excess of the reserve available for meeting such loss, the withdrawal value of such shares shall be charged with their proportion of such loss: And provided, finally, That any fines or charges lawfully chargeable against such shares may be deducted before making payment to the stockholder. Except in cases of voluntary or forced liquidation of a building and loan association or forfeitures as provided in section forty-six of this Act, the board of directors of such association shall not have power to force the surrender and withdrawal of unmatured shares. Sec. 55. At least once a year the profits on all
business transacted shall be determined by the board of directors and
apportioned to all the shares in each series outstanding at the time of
such apportionment on the basis of the actual value of such shares, as
distinguished from their withdrawal value, but in determining the
profits which may be so apportioned, there shall be deducted from the
gross earnings of the association all expenses and losses incurred in
conducting its business. Five per cent (5%) of the net earnings shall
be credited to a reserve account until the reserve equals five per cent
(5%) of the total assets of the association. The reserve shall be
maintained at five per cent (5%) of the total assets and shall be
available for meeting losses incurred by the association. The remainder
of the net earnings shall be available for apportionment among the
stockholders. In the event of the liquidation of a building and loan
association there shall escheat to the State any part of the reserve
remaining after charging off all losses and defraying all expenses of
liquidation. CHAPTER VII Sec. 56. Any corporation formed or organized for the purpose of acting as trustee or administering any trust or holding property in trust or on deposit for the use, benefit, or behoof of others, shall be known as a trust corporation or company. Sec. 57. A trust company may, with the approval of
the Monetary Board, do a commercial banking business but such business
must be kept separate and distinct from its trust business. All
relevant provisions of Chapter IV of this Act governing the business of
commercial banking corporations shall be held to apply to the
commercial banking activities of a trust company. Sec. 58. A trust company, in addition to the
general powers incident to corporations, shall have power: Sec. 59. Except as may otherwise be provided in
this Act, no bond or other security shall be required from any trust
company for the faithful performance of its duties as trustee,
executor, administrator, guardian, receiver, or depositary: Provided,
however, That the court officer appointing such company as trustee,
executor, administrator, guardian, receiver, or depositary may, upon
proper application, showing special cause therefor, require any
corporation which shall seek to be or shall have been so appointed to
give adequate security for the protection of the funds or property
confided to the corporation and, upon failure of such corporation to
give the security required, its appointment as trustee, executor,
administrator, guardian, receiver or depositary shall be revoked. Sec. 60. Upon the application of any executor, administrator, guardian, trustee, receiver, or depositary or any other person in interest, any court having jurisdiction over such officer, trustee, receiver, or depositary and over the subject matter of the trust or deposit may, upon such notice to the parties in interest as the court shall direct and after hearing the application and all parties in interest desiring to be heard, order said officer, receiver, trustee, or depositary to deposit with some trust company lawfully doing business in the Philippines the whole or any part of the moneys or personal property held by such officer, receiver, trustee, or depositary. Upon presentation to the court of the receipt or written acknowledgment of the trust company that the deposit of said moneys and personal property has been made in accordance with the order of the court, the court may order that the bond given or required to be given by such officer, trustee, receiver or depositary for the faithful performance of his duties be reduced to such sum as the court may deem proper: Provided, however, That the reduced bond shall be sufficient to secure adequately the proper administration and care of any property remaining in the hands or under the control of such officer, trustee, receiver, or depositary, and the proper accounting for such property. Property deposited with any trust company in conformity with this section shall be held by said company under the orders and direction of the court. Sec. 61. All moneys, properties, or securities received by any trust company as executor of the will of any deceased person or as administrator, with or without the will annexed, of the estate of any deceased person, or as guardian, receiver, trustee, or depositary, of the estate of any minor, insane person, idiot, habitual drunkard, or other incompetent or irresponsible person, or as receiver or depository under and by virtue of any order or appointment of any court, shall be kept separate and distinct from all other funds, properties, and assets of its general business. The accounts of all such moneys, properties, or securities shall likewise be kept separate and distinct from the accounts of its general business. Sec. 62. No trust company shall have the right to accept any trust whatever which it would be unlawful for any individual to make, accept, or execute, and it shall be the duty of a trust company, acting as trustee of any legal trust, to execute such trust in accordance with the lawful terms of the trust. Sec. 63. The lending or investment of deposits or moneys received by any trust company as executor of the will of any deceased person or as administrator, with or without the will annexed, or as guardian, receiver, trustee, or depositary of the estate of any minor, insane person, idiot, habitual drunkard, or other incompetent or irresponsible person, or as receiver or depositary under and by virtue of any order or appointment of any court, or as trustee under any instrument in writing constituting the company a trustee, unless otherwise directed by the instrument creating the trust, shall be limited to the loans and investments enumerated in section thirty-one of Chapter V (Savings and Mortgage Banks). Any officer or director of any trust company authorizing or making any loan on security otherwise than as provided in this section 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. Sec. 64. The capital stock and funds of a trust
company may be loaned or otherwise invested as its by-laws prescribe;
if it does a commercial banking business in addition to its trust
business, the investment of its funds other than trust funds shall be
governed by the relevant provisions of Chapter IV of this Act. Sec. 65. As security for the faithful performance
of its trust duties, every trust company, before transacting trust
business, shall carry on deposit with the Central Bank of the
Philippines, cash or securities approved by the Monetary Board in an
amount equal to not less than two hundred and fifty pesos: Provided,
however, That the Monetary Board shall require any trust company to
increase the amount of its securities on deposit with the Central Bank
whenever in the judgment of the Monetary Board such increase is
necessary by reason of the growth of the trust business of the company:
And provided, further, That the paid-up capital and surplus of the
company must be at least equal to the amount required to be deposited
with the Central Bank in accordance with the provisions of this
paragraph. Should the capital and surplus fall below said amount, the
Monetary Board shall have the same authority as that granted to it
under the provisions of the last paragraph of section twenty-two of
this Act. Sec. 66. Every trust company, before the declaration of a dividend, shall carry to surplus ten per cent (10%) of its net profits accruing since the last preceding dividend until the surplus shall amount to twenty per cent (20%) of its authorized capital stock and no part of the surplus shall at any time be paid out in dividends, but losses accruing in the course of its business may be charged against the surplus. Nothing herein contained shall prevent the accumulation of a larger surplus than the above prescribed should the directors so decide. Sec. 67. The ordinary business of a trust company
shall be transacted at the place of business specified in its articles
of incorporation. But any trust company may, with the prior approval of
the Monetary Board, establish branches in the Philippines, and the said
company shall be responsible for all business conducted in such
branches to the same extent and in the same manner as though such
business had all been conducted in the head office. CHAPTER VIII Sec. 68. In the case of a foreign bank which has more than one branch or agency in the Philippines, all such branches and agencies shall be treated as a unit for the purpose of this Act, and all references to Philippine branches and agencies of foreign banks shall be held to refer to such units. Sec. 69. In the case of Philippine branches of
foreign banks, the provisions of this section shall replace those of
sections twenty-two and thirty of this Act, except insofar as is
specified to the contrary in the last paragraph of this section. Sec. 70. In the case of Philippine branches of
foreign banks, the present section shall replace sections twenty-three
and thirty-two of this Act. CHAPTER IX Sec. 71. Any opinion, ruling, or regulation made or issued by the Superintendent of Banks may be appealed to the Monetary Board, which shall have the power and authority to confirm, modify or repeal such opinion, decision, ruling or regulation made or issued as aforesaid; but the action of the Monetary Board with respect thereto shall be subject to judicial review. Sec. 72. In addition to the operations
specifically authorized elsewhere in this Act, banking institutions
other than building and loan associations may perform the following
services: Sec. 73. Banking institutions shall not engage in insurance business as the insurer. Sec. 74. No bank or banking institution shall enter, directly or indirectly, into any contract of guaranty or suretyship, or shall guarantee the interest or principal of any obligation of any person, co-partnership, association, corporation or other entity. The provisions of this section shall, however, not be held to apply to the borrowing of money by any such bank or institution through the rediscounting of its receivables, or otherwise, as may be permitted by law, nor to the granting or guaranteeing of acceptance credits in the ordinary course of its business. Nor shall the provisions of this section apply to the certification of checks or to transactions involving the release of documents attached to items received for collection, nor to any other transaction which may properly be regarded as common usage and accepted banking practice. Sec. 75. Banks shall grant loans only in the amounts and for the periods of time essential for the effective completion of the operations to be financed. Sec. 76. Before granting a loan, banks must
exercise proper caution to ascertain that the debtor is capable of
fulfilling his commitments to the bank. Sec. 77. The purpose of all loans shall be stated in the contract between the bank and the borrower. If the bank finds that the funds have been employed, without its approval, for purposes other than those agreed upon with the bank, the bank shall have the right to terminate the loan and demand immediate repayment of the obligation. Sec. 78. Loans against real estate security shall
not exceed seventy per cent (70%) of the appraised value of the
respective real estate security, plus seventy per cent (70%) of the
appraised value of insured improvements, and such loans shall not be
made unless title to the real estate, free from all encumbrances, shall
be in the mortgagor. In the event of foreclosure, whether judicially or
extrajudicially, of any mortgage on real estate which is security for
any loan granted before the passage of this Act or under the provisions
of this Act, the mortgagor or debtor whose real property has been sold
at public auction, judicially or extrajudicially, for the full or
partial payment of an obligation to any bank, banking, or credit
institution, within the purview of this Act, shall have the right,
within one year after the sale of the real estate as a result of the
foreclosure of the respective mortgage, to redeem the property by
paying the amount fixed by the court in the order of execution, with
interest thereon at the rate specified in the mortgage, and all the
costs and other judicial expenses incurred by the bank or institution
concerned by reason of the execution and sale and as a result of the
custody of said property less the income received from the property.
However, the purchaser at the auction sale concerned shall have the
right to enter upon and take possession of such property immediately
after the date of the confirmation of the auction sale and administer
the same in accordance with law. Sec. 79. The amortization schedule of bank loans
shall be adapted to the nature of the operations to be financed. Sec. 80. Borrowers may at any time prior to the agreed maturity date prepay, in whole or in part, the unpaid balance of any bank loan. Sec. 81. The Monetary Board may by regulation prescribe the conditions and limitations under which banks may grant extensions or renewals of their loans. Sec. 82. Banks and banking institutions
incorporated under the laws of the Philippines shall not advertise the
amount of their authorized or subscribed capital stock without
indicating, at the same time and with equal prominence, the amount of
their capital actually paid-up. Sec. 83. No director or officer of any banking
institution shall, either directly or indirectly, for himself or as the
representative or agent of others, borrow any of the deposits of funds
of such bank, nor shall he become a guarantor, indorser, or surety for
loans from such bank to others, or in any manner be an obligor for
moneys borrowed from the bank or loaned by it, except with the written
approval of the majority of the directors of the bank, excluding the
director concerned. Any such approval shall be entered upon the records
of the corporation and a copy of such entry shall be transmitted
forthwith to the Superintendent of Banks. The office of any director or
officer of a bank who violates the provisions of this section 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. Sec. 84. If losses have at any time been sustained by any banking institution equal to or exceeding the undivided profits on hand, no dividend shall be declared; and no dividend shall ever be declared by any such bank while it continues in banking operations to an amount greater than its net profits then on hand, deducting therefrom its losses and bad debts. All debts due to any such bank on which interest is past due and unpaid for a period of six months, unless the same are well-secured and in process of collection, shall be considered bad debts within the meaning of this section. Sec. 85. Any director or officer of any banking institution who receives or permits or causes to be received in said bank any deposit, or who pays out or permits or cause to be paid out any funds of said bank, or who transfers or permits or causes to be transferred any securities or property of said bank, after said bank becomes insolvent, shall be punished by fine of not less than one thousand nor more than ten thousand and by imprisonment for not less than two nor more than ten years. Sec. 86. In case of the voluntary liquidation of any bank or banking institution incorporated under the laws of the Philippines, or of any branch in the Philippines of a foreign bank or banking corporation, written notice of such liquidation shall be sent to the Monetary Board before such liquidation is undertaken, and the Monetary Board shall have the right to intervene and take such steps as may be necessary to protect the interests of the creditors. Sec. 87. Unless otherwise herein provided, the
violation of any of the provisions of this Act shall be punished by a
fine of not more than two thousand pesos or by imprisonment for not
more than two years, or by both. If the violation is committed by a
corporation, the same shall, upon such violation being proved, be
dissolved by quo warranto proceedings instituted by the Solicitor
General: Provided, That nothing in this section shall be construed as
repealing the other causes for the dissolution of corporations
prescribed by existing law, and the remedy provided for in this section
shall be considered as additional to the remedies already existing. CHAPTER X Sec. 88. All authority now vested in the Bank Commissioner and the Bureau of Banking with respect to the establishment, operation or liquidation of banking and credit institutions, and branches or agencies thereof, are hereby transferred to the Central Bank. Sec. 89. All authority now vested in the Secretary of Finance with respect to the establishment, operation or liquidation of banking and credit institutions, or branches or agencies thereof, shall be transferred to, and exercised by the Monetary Board of the Central Bank. Sec. 90. Section s one hundred seventy-five to one hundred eighty-three and one hundred ninety-nine to two hundred seventeen of the Code of Commerce, as amended; sections one hundred three to one hundred forty-six and one hundred seventy-one to one hundred ninety of Act Numbered Fourteen hundred and fifty-nine, as amended; Acts Numbered Thirty-one hundred and fifty-four and Thirty-five hundred and twenty, and all laws or parts thereof, including those parts of special charters of the Philippine National Bank and of other banking institutions in the Philippines which are inconsistent herewith, are hereby repealed. Sec. 91. This Act shall take effect on the same
day that the Central Bank commences operation. Approved: July 24, 1948 |
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