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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 |
Section 1. Title. — The short title of this Act shall
be the "Savings and Loan Association
Act." (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; 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. 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: 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. 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. 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; 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. 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 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. 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. 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; (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; 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. 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; 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; 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. 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-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. (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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