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REPUBLIC ACT NO. 3779

REPUBLIC ACT NO. 3779 - AN ACT TO PROVIDE FOR THE REGULATION OF THE ORGANIZATION AND OPERATIONS OF SAVINGS AND LOAN ASSOCIATIONS
(AS AMENDED BY RA 4378, PD 113, PD 450, PD 1318 AND PD 1539)

 

Section 1.    Title. — The short title of this Act shall be the "Savings and Loan Association Act."

Sec. 2.    Declaration of Policy. — It is hereby declared to be the policy of the State:

(a)    To regulate and supervise the activities of savings and loan associations in order to place their operations on a sound, stable, and efficient basis to the end that they may be able to better provide for the establishment of additional credit and savings facilities in a fair manner to the consuming public and to industry, commerce, and agriculture and to curtail or prevent acts or practices of these savings and loan associations which are prejudicial to the public interest;

(b)    To lay down the minimum requirements and the standards under which savings and loan associations may be established and do business;

(c)    To maximize the protection of the public, and of members and stockholders of savings and loan associations against misfeasance and malfeasance of the directors and officers thereof; and

(d)    To encourage industry, frugality and the accumulation of savings among the public, and the members and stockholders of savings and loans associations.


Sec. 3.    Definition of terms. — For the purpose relative to the implementation of this Act, the following definitions shall apply.

(a)    "Savings and loan association" hereinafter called the association shall include any corporation engaged in the business for accumulating the savings of its members or stockholders, and using such accumulations, together with its capital in the case of a stock corporation, for loans and/or for investment in the securities of productive enterprises or in securities of the Government, or any of its political subdivisions, instrumentalities or corporations: Provided, That they shall be primarily engaged in servicing the needs of households by providing personal finance and long-term financing for home building and development. 

(b)    "Monetary Board" shall mean Central Bank of the Philippines.

(c)    "Central Bank" shall mean Central Bank of the Philippines.


Sec. 4.    Organization of savings and loan association. —

(a)    A savings and loan association shall be organized either as a stock or non-stock corporation:

(b)    The Monetary Board shall fix the minimum paid-up capital of a savings and loan association organized as a stock corporation in such amount as said Board may consider necessary for the safe and sound operation of such association: Provided, however, That in no case shall such paid-up capital be less than one hundred thousand pesos: Provided, further, That at least seventy per centum of the voting stock of a savings and loan association which may be established after the approval of this Act shall be owned by citizens of the Philippines, except where a new association is established as a result of the consolidation of existing associations in which there are foreign-owned voting stocks at the time of consolidation: Provided, furthermore, That the percentage of foreign-owned voting stocks in stock savings and loan associations existing upon the effectivity of this Act, if such percentage is in excess of thirty per cent (30%) of the voting stock of the savings and loan association, shall not be increased, but may be reduced, and once, reduced, shall not be increased thereafter beyond thirty per cent (30%) of the voting stock of the savings and loan association. The percentage of foreign-owned voting stocks in an association shall be determined by the citizenship of the individual stockholders in that association. In the case of corporations owning shares in the association, the of each stockholder in that corporation shall be the basis of the computing the percentage. Such association is authorized to receive deposits from, and extend loans to, the general public.  

(c)    A savings and loan association organized as a non-stock corporation shall confine its membership to a well-defined group of persons and shall not transact business with the general public. It shall accept deposits from, and grant loans to, only its member-depositors; and

(d)    No entrance fees of any kind may be charged by any association without first securing the approval of the Monetary Board. In no case shall the total amount of fees exceed one percent of the amount deposited, contributed, or otherwise paid in by the particular shareholder, stockholder, or member.

Sec. 4-(a)    Prohibition against inquiry into, or disclosure of deposits. — All deposits of whatever nature with savings and loan associations in the Philippines are hereby considered as of an absolutely confidential nature and may not be examined, inquired or looked into by any person, government official, bureau or office, except when the examination is conducted by the Monetary Board or the official of the Central Bank in charge of savings and loan associations or his deputies pursuant to the provisions of this Act, or upon written permission of the depositor, or in cases of impeachment, or upon order of a competent court in cases of bribery or dereliction of duty of public officials, or in cases where the money deposited or invested is the subject matter of the litigation.

It shall be unlawful for any official or employee of savings and loan association to disclose to any person any information concerning said deposits, except in the cases mentioned in the preceding paragraph of this section.

(b)    Deposit insurance. — Deposits in savings and loan associations shall be eligible for insurance coverage under Republic Act Numbered Three thousand five hundred and ninety-one, otherwise known as an Act Establishing the Philippine Deposit Insurance Corporation.

Sec. 5.    Powers of savings and loan association. — A savings and loan association shall be incorporated under the Corporation Law, and in addition to the powers therein granted whenever applicable, it shall exercise the following:

(a)    To grant loans not exceeding the borrower's savings and time deposits in the association, plus his four months' salary or regular income whether from employment or from his own business, or seventy per cent (70%) of the fair market value of any property acceptable as collateral on first mortgage that he may offer as security: Provided, That no loan shall have a maturity of more than five years, except loans on the security of unencumbered real estate for the purpose of home building and home development which may be granted with maturities not exceeding twenty years and medium-or long-term loans to finance agricultural projects, subject to regulations, prescribed by the Monetary Board: Provided, further, That in case of a borrower who is a permanent employee or wage earner, the treasurer, cashier or paymaster of the office employing him is authorized, notwithstanding the provisions of any existing law, rule and regulation to the contrary, to make deductions from his salary, wage, or income pursuant to the terms of his loan, to remit deductions to the savings and loan association concerned, and collect such reasonable fee for his services as may be authorized by rules promulgated by the Monetary Board.  

(b)    To charge interest within the limits allowed by law, and collect such necessary fees incidental to the grant of loans as may, by regulation, be authorized by the Monetary Board;

(c)    Subject to such rules as the Monetary Board may approve, to discount with recourse commercial papers and accounts receivables;

(d)    To invest its funds in any sound non-speculative enterprise, as well as in bonds, securities, and other obligations issued by the Government of the Philippines, or any of its political subdivisions, instrumentalities or corporations including government-owned or controlled corporations subject to the rules and regulations of the Monetary Board: Provided, That stock savings and loan associations may invest in equities only of such allied undertakings as may be approved by the Central Bank for banks of their category as provided for in Sec. 6-A of Republic Act No. 337, as amended: Provided, further, That (a) the total investment in equities shall not exceed twenty-five per cent (25%) of the net worth of the association; (b) the equity investment in any single enterprise shall be limited to fifteen per cent (15%) of the net worth of the association (c) the total equity investment of the association in any single enterprise shall remain a minority holding in that enterprise, except where the enterprise is not a financial intermediary; and (d) the equity investment in other banks, if allowed by the Monetary Board, shall be subject to the same limitations imposed on similar investments of commercial banks and shall be deducted form the investing stock savings and loan association's net 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 or majority owner subsidiary of the investing association, it may be subject to examination by the Central Bank.

(e)    To allow member-depositors to participate in the profits of the savings and loan association on the basis of their deposits on the date dividends are declared; and

(f)    To borrow money or incur such obligations not exceeding twenty per centum of the total assets of the association, from any public lending institutions, such as the Development Bank of the Philippines, the Philippine National Bank, the Government Service Insurance System, the Social Security System, and from such private lending institutions as may be approved by the Monetary Board, including other stock savings and loan associations. The Monetary Board may, in meritorious cases, raise the ceiling on the borrowing capacity of a savings and loan association to an amount not exceeding thirty per centum of its total assets.

(f-1)    To maintain deposits with banks and other stock savings and loan associations: Provided, That the amount of such deposits shall be subject to the loan limit to a single borrower as prescribed herein or by other special laws or regulations.

A savings and loan associations may, subject to such rules as the Monetary Board may promulgate, also borrow from, or rediscount notes, bills of exchange and other commercial papers with the Central Bank. The rate of interest on such obligations or borrowings to be charged such associations shall not be more than that charged rural banks.


Sec. 6.    Restriction on savings and loan associations. — (a) No non-stock association shall have or carry upon its books for any person any demand, commercial or checking account, or any credit to be withdrawn upon the presentation of any negotiable check or draft.  

(b)    No non-stock savings and loan associations shall advertise or represent itself to the public as a bank. A stock savings and loan association may use the word 'bank' in connection with its business name only upon compliance with such requirements as may be imposed by, and prior approval of the Monetary Board.

(c)    No association shall issue, publish or cause or permit to be issued, or published, any advertisement that it is doing or permitted to do any business which is prohibited by law to an association, or which misrepresents its shares, stocks, investment certificates, or the rights of investors or depositors in respect thereto.

Sec. 7.    Prerequisite approval of articles of incorporation and by-laws. — The articles of incorporation and by-laws of a proposed savings and loan association shall not be filed in the Office of the Securities and Exchange Commissioner unless there is attached thereto a certificate of the Monetary Board approving such articles and by-laws: Provided, however, That this requirement shall not apply to savings and loan associations duly incorporated or registered prior to the approval of this Act and which are actually existing and operating as such: Provided, further, That such existing savings and loan associations shall file an information sheet within sixty days after the approval of this Act with the Central Bank in a form prescribed by the Monetary Board.

No person, association, partnership or corporation shall do business, or hold itself out as doing business, as a savings and loan association, or shall use the term "savings and loan association" or any other title or name tending to give the public the impression that it is engaged in the operations and activities of a savings and loan association unless so authorized under this Act.

Sec. 8.    Application for approval; contents. — The articles of incorporation of a proposed association shall be submitted to the Monetary Board together with a copy of the proposed by-laws and an application, signed by a majority and verified by one of the directors, requesting approval. The application shall set forth:

(a)    the names and addresses of the incorporators, directors, and officers, with a statement of their character, experience, and general fitness to engage in the savings and loan business;

(b)    an itemized statement of the estimated receipts and expenditures of the proposed association for the first year;

(c)    a showing that the public convenience and advantage will be promoted by the formation of the proposed association;

(d)    any other matters the Monetary Board may require. 


A filing fee of two hundred pesos shall be paid to the official of the Central Bank in charge of savings and loan associations with each application for approval of proposed article of incorporation and by-laws, but in the case of non-stock savings and loan associations, the filing fee shall be five pesos.

Sec. 9.    Hearing on Application. — Upon the receipt of an application to form a proposed savings and loan association, the Monetary Board shall give written notice to each existing association that an application has been made. The notice shall state the name of the proposed association, and the time and place that a hearing will be held. The hearing shall be conducted not less than ten days after the mailing of the notice. Any person may appear at such hearing in person or by agent or attorney, and orally or in writing show cause why such application should not be approved.

If after public hearing, the Monetary Board believes that the requirements of this Act have been complied with and that no valid reasons exist for the disapproval of the application, it shall favorably endorse such application to the Securities and Exchange Commissioner who shall issue articles of incorporation to the association.

Sec. 10.    Ground for refusal to execute certificate of approval. — The Monetary Board may refuse to approve the application, if upon examination and investigation, it finds that:

(a)    the corporation is to be formed for any business other than the legitimate savings and loan business, or

(b)    the association's financial program is unsound, or

(c)    the area where the association is to be located is adequately served by one or more existing associations.


Sec. 11.    Prior licensing. — All associations, prior to transacting any business, shall procure a license to transact business from the Monetary Board. After due notice and hearing, the Monetary Board may revoke, or suspend for such period as it determines, the license of any association, the solvency of which is imperiled by losses or irregularities or of any association which wilfully violates any provisions of this Act or any regulation issued thereunder.

Sec. 12.    Branch offices and agencies. — (a) No association shall open, maintain or operate a branch without first applying for and obtaining from the Monetary Board a license for such branch.

(b)    The application for a branch license shall be in such form as the Monetary Board shall require, including an itemized statement of the estimated receipts and expenditures of the association in connection with such branch for the first year or such longer periods as the Monetary Board requires, and a showing that the public convenience and advantage will be promoted by the operation of such branch. A filing fee of fifty pesos shall be paid to the Monetary Board with each application for a branch license.

(c)    . . .

Sec. 13.    Agents and salesmen. — No person shall act as an agent salesman of an association or operate an agency without obtaining a license from the Monetary Board. No license is required for a collector of an association but no person shall hold himself out or act as a collector unless he is authorized as a collector in writing by such association.

Sec. 14.    Qualification of directors. — No person shall be eligible as directors of an associations unless he is a member, in case of non-stock associations, or an owner is his own right of stocks in the association with an aggregate par value of at least five thousand pesos, in case of stock associations: Provided, That at least two-thirds of the members of the board of directors of any stock savings and loan association which may be established after the approval of this Act shall be citizens of the Philippines: Provided, however, That no full-time appointive or elective public official shall at the same time serve as officer, director, legal counsel or consultant of any stock savings and loan association, except in cases where such service is incident to financial assistance provided by the government or a government-owned or controlled corporation to such association: Provided, further, That in the case of a merger or consolidation of savings and loan associations duly approved by the Monetary Board, the limitation on the maximum number of directors in a corporation, as provided for in Sec. 28 for the Corporation Law (Act No. 1459), shall not be applied so that membership in the new board may include up to the total number of directors provided for in the respective articles of incorporation of the merging or consolidating savings and loan associations.  

Sec. 15.    Bond of officers and employees. — All officers and employees of an association, who have access to money, or negotiable securities of the association, or who issue stock or shares of the association in the regular discharge of their duties shall, before entering upon the duties, furnish to the employing association a good an sufficient bond, the form and amount of which shall be prescribed by the Monetary Board, indemnifying the association against loss of money or securities by reason of their dishonesty and against any loss arising from their dishonest issue to stock or shares.

Sec. 16.    Compensation of directors, officers and employees. — No director, officer, or employee of an association shall receive from such association, and no association shall pay to any director, officer, or employee of such association, any commission, emolument, gratuity or reward based on the volume or number of loans made, or based on the interest or fees collected thereon. Nothing in this section prohibits or limits any of the following:

(a)    Receipt or payment of salaries of directors, officers, and employees.

(b)    Receipt or payment of commissions to agents whether or not based on the volume of number of loans or on the interest or fees collected thereon.

(c)    Receipt or payment of bonuses to directors, officers or employees if such bonuses are based on the profits and not on the volume or number of loans made or on the interest or fees collected thereon.

Sec. 17.    Shares of stock of officers, directors, or employees. — No officer, director, or employee of any association shall acquire any certificate or shares issued by the association with which he is connected by a method other than by investing his funds directly with the association, or by gift, bequest, or descent, or purchase in any amount not exceeding at any one time three thousand pesos, unless such other mode of acquisition has the prior approval of the Monetary Board, and the Auditor of the Central Bank.

Sec. 18.    Limitations on lending authority. —

(a) An association shall not commit itself to make any loans for amounts in excess of the total of the following amounts:


(1)    amount of cash available for loan purposes;

(2)    amount of cash which can be readily realized upon the sale or redemption of permissible investments made by the association;  

(3)    amount of credit available for loan purposes from government or private financing institutions.


(b)    No association shall directly or indirectly make any loans to any director or officer of such association, either for himself or as agent or as partner of another, except with the written approval of the majority of the directors of the association, excluding the director concerned: Provided, That in the case of non-stock association, the aggregate loans, direct or indirect, granted at any one time to such directors and officers shall not exceed twenty per centum of the total paid-up capital of the association: Provided, further, That in the case of stock association, the Monetary Board may regulate the amount of credit that the association may extend, directly or indirectly, to its directors, officers or stockholders. In any case, however, the outstanding credit accommodations which a stock association may extend to each of its stockholders owning two percent (2%) or more of the subscribed capital stock, its directors or its officers, shall be limited to an amount equivalent to the respective outstanding deposits and book value of the paid-in capital contribution in the association. In all cases of credit accommodations granted to directors and officers under this subsection, the written approval of the majority of the directors of the association, excluding the director concerned, shall be entered upon the records of the association and a copy of such entry shall be transmitted forthwith to the appropriate supervising department of the Central Bank.

The office of any director or officer of an association who violates the provisions of this subsection 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.

(c)    No association shall make any loan to any corporation of which a majority of the stock is owned or controlled directly or indirectly, by any one or more of the directors or officers of such association collectively except with the written approval of the majority of the directors of the association excluding the director or directors concerned. Any such approval shall be entered upon the records of the association and a copy of such entry shall be transmitted forthwith to the appropriate supervising department of the Central Bank.

The Monetary Board may regulate the amount of credit that an association may extend to a corporation referred to in this subsection in the same manner as it may regulate credit accommodations to directors and officers of the association under the preceding subsection.

(d)    No association shall loan any of its funds upon the security of its own stock.

Sec. 19.    Execution of loan agreement. — For each loan made by an association, a written note or other obligation expressing a rate of interest must be executed by the borrower.

Sec. 20.    Liability of officers for loans contrary law. — No association shall make or purchase any loan or investment not authorized or permitted under this Act, and any director, officer or employee who, on behalf of any such association, knowingly makes or purchases any such loan or investment or who knowingly consents thereto shall be personally liable to the association for the full amount of any such loan or investment.

Sec. 21.    Limitations on investment. — (a) No association at any one time shall have invested in bonds and securities an aggregate amount in excess of ten per centum of the total assets of such association;  

(b)    No non-stock savings and loan association at any one time shall have invested in real property an aggregate amount in excess of five per centum of the total assets of such association;

(c)    No non-stock savings and loan association at any one time shall invest in furniture, fixture, furnishings and equipment and leasehold improvements for its offices, more than ten per centum of its aggregate paid-up capital;

(d)    No stock savings and loan association, at any one time, shall have an investment in real estate and improvements thereon, including equipment, in an aggregate amount in excess of fifty per cent of its net worth: Provided, That real estate used for the stock savings and loan association's purposes owned by another corporation in which that association owns equity shall be considered as part of the association's total investment in real estate.

Sec. 22.    Reserves. — Every non-stock savings and loan association shall create a withdrawable share reserve which shall consists of three per centum of the aggregate capital contributions of the members.

Five per centum of the net earnings of a stock savings and loan association shall credited to a reserve account until the reserve equals five per centum of the total assets of the association and shall be available for meeting losses incurred by the association.

Sec. 23.    When dividends not distributable. — The withdrawable share reserve shall be set up from the profits of the non-stock association, and no association shall pay any dividends or distribute any profits to its members if its withdrawable share reserve is less than, of if by such payment or distribution would be reduced below, the amount specified in Section twenty-two hereof.

Sec. 24.    Annual reports. — Every association shall, within sixty days after the close of its fiscal year furnish the Monetary Board and mail to each of its investors, a copy of its financial statement showing, in such form and detail as the Monetary Board shall require, the amount and character of the assets and liabilities of the association at the end of the preceding fiscal year. Any association may, in lieu of mailing, publish such financial statement in any newspaper of general circulation in the city or town in which its principal and branch offices are located. The Monetary Board may, in addition to the foregoing, require the publication of such other information as it shall deem necessary for the protection of the investors in these associations.

Sec. 25.    Monetary Board's authority to order discontinuance of unlawful or unsafe or injurious practices of associations. — If the Monetary Board finds at the result of any examination from any report made to it or to any of its investors, that the association is violating the provisions of its articles of incorporation, charter, by-laws, or any law, or is conducting its business in an unsafe or injurious manner, or is insolvent, it may by an order addressed to such association direct a discontinuance of such violations or unsafe or injurious practices and a conformity with all the requirements of law.

Sec. 26.    When Monetary Board authorized to demand and take possession of association. — The Monetary Board may demand and take possession of the property, business and assets of an association if any of the following occur:

(a)    The association does not comply with the order given pursuant to Section twenty-five, within the time specified therein;

(b)    It appears to the Monetary Board that the association is in an unsafe condition or is conducting its business in an unsafe or injurious manner such as to render its further operations hazardous to the public or to any or all of its investors;

(c)    The Monetary Board finds that the association's assets, after deducting all liabilities, do not equal or exceed the sum of par value of its outstanding shares of stock or the amount contributed to the capital of the association.

(d)    The association refuses to submit its books, papers, and accounts to the inspection of the Monetary Board or any of its examiners, deputies, or assistants;

(e)    Any officer of the association refuses to be examined upon oath concerning the affairs of the association.

Sec. 27.    Time Monetary Board authorized to retain possession of association; liquidation. — The Monetary Board may retain possession of the property, business and assets of an association until the association resumes business with the consent of and subject to the conditions imposed by the Monetary Board, or until its affairs are liquidated; in case of liquidation, the Monetary Board shall be governed by the provisions of the Central Bank Act for liquidation of banks.

Sec. 28.    Supervisory powers over savings and loan association. — In addition to whatever powers have been conferred by the foregoing provisions, the Monetary Board shall have the power to exercise the following:

(a)    To see to it that the capital, financing, direction and administration, as well as the integrity, responsibility, and ability of the organizers, administrators, directors and officers of every savings and loan association being organized under this Act, shall reasonably assure the safety of the interests which the public and/or its members and stock holders shall entrust to them;

(b)    To supervise the operations and activities of savings and loan associations, which shall consist, among others (1) in placing limits to the maximum credit allowed any individual borrower; (2) in determining the loan period and loan procedures; (3) in prescribing in higher rate of the interest which associations may pay on deposits received by them, which shall not be more than one per centum over and above the rate which banking institutions are authorized or shall be authorized to pay; (4) in imposing a uniform accounting system, and manner of keeping the accounts and records of savings and loan associations; (5) in instituting periodic surveys of loan and lending procedures, audits, test check of each and other transaction of savings and loan associations; and (6) whenever necessary in conducting training courses for personnel of savings and loan associations;

(c)    To conduct at least once a year, and whenever necessary, any inspection, examination or investigation of the books and records, business affairs, administration, and financial condition of any savings and loan association with or without prior notice but always with fairness and reasonable opportunity for the association or any of its officials to give their side of the case. Whenever an inspection, examination or investigation is conducted under this grant of power, the person authorized to do so may seized books and records and keep them under his custody after giving proper receipts therefor; may make any marking or notation on any paper, record, document or book to show that it has been examined and verified; and may padlock or seal shelves, vaults, safes, receptacles or similar containers and prohibit the opening thereof without first securing authority therefor, for as long as may be necessary in connection with the investigation or examination being conducted. The official of the Central Bank in charge of savings and loan associations and his deputies are hereby authorized to administer oaths to any director, officer or employee of any association under the supervision of the Monetary Board.


Stock savings and loan associations which are subject to examination by the Monetary Board, shall, after having been in operation for five years, reimburse the Central Bank for the cost of maintaining the department of savings and loan associations, and for this purpose, shall pay to the Central Bank, within the first thirty days of each year after the fifth year of their existence, an annual fee in an amount to be determined by the Monetary Board in the manner provided in the next paragraph of this subsection.

The fee to be paid by each stock savings and loan association shall be an amount equal to a prescribed percentage of its average total assets during the preceding years, as shown on its end-of-month balance sheets, after deducting its cash on hand and amounts due from banks, including the Central Bank: Provided, however, That said percentage may not exceed one twentieth of one per cent. If the total of maximum fees authorized under this paragraph should be insufficient to defray the entire costs of the department, the difference shall be borne by the Central Bank.

(d)    After proper notice and hearing, to suspend a savings and loan association for violation of law, for unsafe and unsound practices or for reason of insolvency. The Monetary Board may likewise, upon proof that a savings and loan association or its board of directors or officers are conducting and managing its affairs in a manner contrary to laws, orders, instructions, rules and regulations promulgated by the Monetary Board or in a manner substantially prejudicial to the interest of the government, depositors or creditors, take over the management of the savings and loan association after due hearing, until a new board of directors and officers are elected and qualified without prejudice to the prosecution of the persons responsible for such violations. The management by the Monetary Board shall be without expense to the savings and loan association, except such as is actually necessary for its operation, pending the election and qualifications of a new board of directors and officers to take the place of those responsible for the violation or acts contrary to the interest of the government, depositors and creditors;

(e)    To require all accountable officers and employees of every savings and loan association to post bonds for the faithful performance of their duties in such reasonable sums and with such sureties as the Monetary Board may approve;

(f)    To decide, after appropriate notice and hearings any controversy as to the rights or obligations of the savings and loan association, its directors, officers, stockholders and members under its character, and, by order, to enforce the same;

(g)    To fix rules or by order, in specific cases, after notice and hearing, the limits of loanable funds, amount for investment and for discounting, and reserves for withdrawals and other contingencies;

(h)    To issue rules and regulations for the proper implementation of this Act, effective administration of savings and loan associations, and to render advisory assistance to all interested parties in order to carry out the intents and purposes of this Act;

(i)    To conduct such investigations, take such remedial measures, impose such disciplinary action and exercise all powers which are now or may hereafter be conferred upon it by Republic Act Numbered Two hundred sixty-five, otherwise known as the Central Bank Act, in the enforcement of this legislation. 


Sec. 29.    Penalties. —

(a) Any owner, agent, manager, or other officer in charge of any savings and loan association who, being thereunto required in writing by the Monetary Board or by the official of the Central Bank in charge of savings and loan associations to comply with the requirements of this Act, shall wilfully refuse any lawful examination into the affairs of such institution shall be punished by a fine of not more than ten thousand pesos or by imprisonment of not more than two years, or both, in the discretion of the court.


(b)    The willful making of a false statement to the Monetary Board or to the official of the Central Bank in charge of savings and loan associations or to his examiners shall be punished by a fine not to exceed fifteen thousand pesos or by imprisonment of not more than three years, or both, in the discretion of the court.

(c)    Whenever any person or entity wilfully violates this Act or any order, instruction, rule or regulation legally issued by the Monetary Board, the person or persons responsible for such violation shall be punished by a fine of not more than five thousand pesos or by imprisonment of not more than one year, or both, in the discretion of the court.

(c-1).    Whenever any officer, employee, or agent of a savings and loan association makes false entries in any association report or statement thereby affecting the financial interest of, or causing damage to, the association or to any person, or without order of a court of competent jurisdiction, discloses to any unauthorized person any information relative to the funds or properties in the custody of the association belonging to private individuals, corporations, or any other entity. Provided, That with respect to bank deposits, Sec. 4(a) of this Act shall prevail; or accepts gifts, fees or commissions or any other form of remuneration in connection with the approval of a loan from said association; or overvalues or aids in overvaluing any security for the purpose of influencing in any way the action of the association on any loan, such officer, employee or agent shall be punished by 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.  

(c-2).    Whenever any applicant for a loan from, or borrower of, a savings and loan association fraudulently overvalues property offered as security for a loan from the said association; or furnishes false, or makes wilful misrepresentation of, material facts for the purpose of obtaining, renewing, or increasing a loan or extending the period thereof; or attempts to defraud the said association in the event of a court action to recover a loan; or offers any officer, employee or agent of a savings and loan association any gift, fee, commission, or other form of compensation in order to influence such association personnel into approving a loan application, such applicant or borrower shall be punished by 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. 

(c-3).    Whenever any examiner, officer or employee of the Central Bank of the Philippines, who is assigned to examine, supervise, assist or render technical service to a savings and loan associations, commits any of the acts enumerated in subsection c-1 of this section or connives or aids in the commission of the same, he shall be punished by a fine of not more than one year or both, at the discretion of the court.


(d)    Whenever a savings and loan association persists in violating its charter or by-laws or any law, or orders, instructions, rules or regulations legally issued by the Monetary Board or whenever a savings and loan association persists in carrying on its business in an unlawful or unsafe manner, the Board shall, by the Solicitor General, and without prejudice to the penalties provided in the preceding paragraph of this section, file a petition in the Court of First Instance praying the assistance of the court to compel the savings and loan association to discontinue the violations or practices objected to in the petition of the Board. The Monetary Board may, with the approval of the Court, take such action as the court may deem necessary to compel the savings and loan association complained against to discontinue the violations or practices set forth in the Board's petition, and, if necessary, the Board may, under order of the court, direct the official of the Central Bank in charge of savings and loan associations to liquidate the business of the institution.


Sec. 29-A.    The provisions of Republic Acts Numbered Two hundred and sixty-five, as amended, and Three hundred thirty-seven, as amended, insofar as they are applicable and not in conflict with any provision of this Act, shall apply to savings and loan associations organized hereunder.

Sec. 30.    Effectivity. — This Act shall take effect upon its approval.

Approved: June 22, 1963



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