REPUBLIC ACT NO. 4378 - AN ACT TO
AMEND CERTAIN SECTIONS OF REPUBLIC ACT NUMBERED THREE THOUSAND SEVEN
HUNDRED AND SEVENTY-NINE, OTHERWISE KNOWN AS THE SAVINGS AND LOAN
ASSOCIATION ACT
Section 1. Paragraph (b) of Section four of Republic Act
Numbered Three thousand seven hundred and seventy-nine is hereby
amended to read as follows:
"(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: and provided, further, that at least sixty per centum of the
capital 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. Such association is authorized to receive deposits
from, and extend loans to, the general public."
Sec. 2. Section s four-a and four-b, which read as
follows, are hereby added after Section four of said Act:
"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 a 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."
"Sec. 4-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. 3. Paragraphs (a) and (f) of Section five of
the same Act are hereby amended to read as follows:
"(a) To grant loans of not exceeding the amount
deposited by the borrower plus his four month's salary or regular
income in the case of a permanent employee or wage earner, or seventy
percent of the fair market value of any property acceptable as
collateral on first mortgage that he may put up by way of security:
provided, that no loan shall have a maturity date of more than one
year, except loans on the security of unencumbered real estate, for the
purpose of building, acquiring, or repairing residential houses and/or
the purchase of land on which to build such houses, which may be
granted with maturity dates not exceeding ten years: and provided,
further, that in the case of a borrower who is a permanent employee or
wage earner, the treasurer, cashier or paymaster of the office
employing him is authorized, the provisions of any existing law, rule
and regulation to the contrary notwithstanding, 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, and to collect such
reasonable fee for his services as may be authorized by rules
promulgated by the Monetary Board. For the purpose of this Act,
deposits made by an association to a bank shall not constitute a loan;"
"(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 other than another savings and loan association as
may be approved by the Monetary Board; 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.
"A savings and loan association may, subject to such rules as the
Monetary Board may promulgated, 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 changed
such associations shall not be more than that charged rural banks."
Sec. 4. Section seven of said Act is hereby
amended to read as follows:
"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,
of 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. 5. The last paragraph of Section eight of
said Act is hereby amended to read as follows:
"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. 6. Section nine of said Act is hereby amended
to read as follows:
"Sec. 9. Hearing an application. — Upon receipt of an
application to form a proposed stock savings and loan association, the
Monetary Board shall give written notice to each existing stock
association in the area or areas to be served by the proposed
association, that an application has been made. In case the application
is for the establishment of a nonstock association, such notice shall
be given to each existing nonstock association in, or to employees of,
the office, firm or entity in which the non-stock association is
proposed to be established. 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. The official of the Central Bank
in-charge of savings and loan associations or his duly authorized
representative is hereby authorized to administer oaths to any
applicant and witnesses in such hearing.
"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
Commission who shall issue articles of incorporation to the
association."
Sec. 7. Section eleven of said Act is hereby
amended to read as follows:
"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 if 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. 8. Section fourteen of said Act is hereby
amended to read as follows:
"Sec. 14. Qualifications of directors. — No person
shall be eligible as director of an association unless he is a member,
in case of nonstock associations, or an owner in 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."
Sec. 9. Paragraph (c) of Section sixteen of said
Act is hereby amended to read as follows:
"(c) Receipt or payment of bonuses of 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 of fees
collected thereon."
SECTION 10. Paragraph (b) of Section eighteen of said
Act is hereby amended to read as follows:
"(b) No association shall directly or indirectly make
any loans to any director or officer or employee of such association,
either for himself or as agent or as partner of another, except in the
case of a nonstock savings and loan association which may grant loans
to any director, officer, or employee thereof: provided, that the
written approval of the majority of the directors of the nonstock
association, excluding the director concerned shall be secured: and
provided, further, that 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. Any
such approval shall be entered upon the records of the association and
a copy of the written approval shall be transmitted immediately to the
official of the Central Bank in charge of savings and loan
associations."
SECTION 11. Section twenty-two of said Act is hereby
amended to read as follows:
"Sec. 22. Reserves. — Every nonstock 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 be 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."
SECTION 12. Section twenty-three of said Act is
hereby amended to read as follows:
"Sec. 23. When dividends not distributable. — The
withdrawable share reserve shall be set up from the profits of the
nonstock association, and no association shall pay any dividends or
distribute any profits to its members if its withdrawable share reserve
is less than, or if by such payment or distribution would be reduced
below, the amount specified in Section twenty-two hereof."
SECTION 13. Paragraph (c) of Section twenty-six of
said Act is hereby amended to read as follows:
"(c) The Monetary Board finds that the association's
assets, after deducting all liabilities, do not equal or exceed the sum
of the par value of its outstanding shares of stock or the amount
contributed to the capital of the association;"
SECTION 14. Paragraphs (b) and (c) of Section twenty-eight of said Act are hereby amended to read as follows:
"(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 borrowers;
(2) in determining the loan period and loan procedures; (3) in
prescribing a higher rate of 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 banks and 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
transactions 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 every 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 seize books and
records and keep them under his custody after giving proper receipts
therefor; may make any marking or notation or 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 the 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;"
SECTION 15. Paragraphs (a), (b) and (d) of Section twenty-nine of said Act are hereby amended to read as follows:
"(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.
"(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."
SECTION 16. This Act shall take effect upon its
approval.
Approved: June 19, 1965
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