Amending Further Republic Act No. 337, As Amended, Otherwise Known As The "General Banking Act"
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Amending Further Republic Act No. 337, As Amended, Otherwise Known As The "General Banking Act"
Presidential Decree No. 1828
January 16, 1981
Case Overview and Summary
Summary of Presidential Decree No. 1828Determination of Banking and Quasi-Banking Functions
- The Monetary Board has the authority to determine if a person or entity is performing banking or quasi-banking functions, or engaged in other types of financial intermediation, subject to judicial review. (Section 1)
- The Monetary Board can examine, inspect, or investigate the books and records of such person or entity to resolve this issue. (Section 1)
- Failure or refusal to comply with the required presentation or production of books, documents, papers, or records is subject to penal sanctions under Section 34 of R.A. No. 265, as amended. (Section 1)
- Persons or entities found to be performing unauthorized banking or quasi-banking functions may be subject to a fine of not more than P500 per day and may have their license to do business revoked by the Securities and Exchange Commission. (Section 1)
Exemptions for Voting Stockholdings
- The Monetary Board may exempt voting stockholdings of corporations from the prescribed ceilings in exceptional cases, such as purchases in the equity of distressed banks for rehabilitation purposes. (Section 2)
- The Monetary Board may exempt voting stockholdings of any person, or persons related within the third degree of consanguinity or affinity, or corporations from the prescribed ceilings in exceptional cases, such as purchases in the equity of distressed banks for rehabilitation purposes. (Section 3)
Loan Limit for Savings and Mortgage Banks
- Loan accommodations granted by savings and mortgage banks to any other bank, as well as deposits maintained by them in any bank licensed to do business in the Philippines, shall be subject to the loan limit of any single borrower as prescribed. (Section 4)
Trust Company Transactions
- No trust company or bank engaged in the trust business shall, for the account of the trustor or beneficiary, purchase or acquire property from, or sell, transfer, assign or lend money or property to, or purchase debt instruments of, any of the departments, directors, officers, stockholders, or employees of the trust company or bank, or relatives within the first degree of consanguinity or affinity, or the related interests, of such directors, officers and stockholders, unless the transaction is specifically authorized by the trustor and the relationship is fully disclosed to the trustor or beneficiary prior to the transaction. (Section 5)
- Trust companies are authorized to establish and manage common trust funds, subject to rules and regulations prescribed by the Monetary Board. (Section 6)
- All moneys, properties, or securities received by any trust company as executor, administrator, guardian, receiver, trustee, or depositary shall be kept separate and distinct from all other funds, properties, and assets of its general business. (Section 7)
- Before declaring dividends, a trust company shall carry 10% of its net profit to surplus until the surplus reaches 20% of its authorized capital stock. (Section 8)
- In the case of a bank authorized to engage in trust operations, before declaring dividends, it shall carry 10% of its net profits arising from its trust operations to surplus until the surplus reaches an amount prescribed by the Monetary Board based on the volume of its trust business and other factors. (Section 8)
- Upon prior approval of the Monetary Board, trust companies can act as managing agent, adviser, consultant, or administrator of investment management/advisory/consultancy accounts. (Section 9)
Real Estate Security and Foreclosure
- Loans against real estate security shall not exceed 70% of the appraised value of the real estate security, plus 70% of the appraised value of the insured improvements. (Section 10)
- In the event of foreclosure, whether judicially or extrajudicially, of any mortgage on real estate, the mortgagor or debtor shall have the right, within one year after the sale of the real estate, to redeem the property by paying the amount fixed by the court or the amount due under the mortgage deed, with interest at the specified rate, and all costs, judicial and other expenses incurred by the bank or institution, less the income received from the property. (Section 10)
- The purchaser at the auction sale in a judicial foreclosure shall have the right to enter upon and take possession of the property immediately after the date of the confirmation of the auction sale by the court and administer the property in accordance with law. (Section 10)
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Executive Issuances
Presidential Decrees
banking
quasi-banking
financial intermediation
Monetary Board
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voting stockholdings
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trust company
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surplus
investment management
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Amending Further Republic Act No. 337, As Amended, Otherwise Known As The "General Banking Act"
Presidential Decree No. 1828
•January 16, 1981
MALACAÑANGM a n i l a
PRESIDENTIAL DECREE No. 1828
AMENDING FURTHER REPUBLIC ACT NO. 337, AS AMENDED, OTHERWISE KNOWN AS THE "GENERAL BANKING ACT"
WHEREAS, it is recognized that business stability in the financial system is vital to the economic growth and development of the country;
WHEREAS, recent developments in the banking and financial industry indicated a need to install further stability in the financial system;
WHEREAS, such stability can be achieved by strengthening and giving more flexibility to the supervisory and regulatory authority of the Central Bank over the financial system.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and decree the further amendment of Republic Act No. 337, as amended, as follows:
Section 1. Section 4 of Republic Act No. 337, as amended, is hereby amended to read as follows:
"Sec. 4. The determination of whether a person or an entity is (a) performing banking or quasi-banking functions, or (b) engaged in other...
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