Amending Presidential Decree No. 694 Providing For The 1975 Revised Charter Of The Philippine National Bank

Case Overview and Summary

Summary of Presidential Decree No. 1478

Amending the Philippine National Bank Charter

- Corporate Powers (Section 1, amending Section 3 of PD 694):
• Engage in commercial banking activities like accepting deposits, issuing letters of credit, discounting notes, buying/selling foreign exchange, etc. (Section 3a)
• Issue various debt instruments like bonds, debentures, promissory notes, etc. for capital augmentation/fund generation, which can be:
    • Secured or unsecured (Section 3e.1)
    • Long-term, medium-term or short-term (Section 3e.2)
    • Fixed or floating interest rate (Section 3e.3)
    • Denominated in Philippine peso or eligible foreign currencies (Section 3e.4)
• These debt instruments can be guaranteed by the Philippine government or issued without government guarantee (Section 3e)
• These debt instruments are exempt from taxes on principal and interest (Section 3e)

- Authorized Capital Stock (Section 2, amending Section 4 of PD 694):
• Authorized capital stock increased to ₱5 billion divided into 50 million shares at ₱100 par value (Section 4)
• Government subscription increased to ₱2 billion, payable as:
    • ₱500 million in cash within 3 years (Section 4a)
    • Balance in cash or exchange for government bonds/securities (Section 4b)
• Capital stock divided into classes of shares:
    • 1 million Preferred "A" shares for public (Section 4a)
    • 2 million Preferred "B" shares for Filipino citizens (Section 4b)
    • 500,000 Common "A" shares for bank officers/employees (Section 4c)
    • Remaining as common shares (Section 4d)
• Government to subscribe to remaining common shares at ₱250 million per year, subject to increase/decrease (Section 4)
• Unsold preferred shares after 5 years to be converted to common shares and subscribed by the government (Section 4)
• Bank authorized to purchase its own privately held shares (Section 4)
• Land Bank bondholders can exchange bonds for bank shares (Section 4)

- Loans and Credit Accommodations (Section 3, amending Section 6f of PD 694):
• Loans to government branches/agencies/corporations allowed for productive/revenue-generating projects (Section 6f)
• Loans require government guarantee through Secretary of Finance, unless sufficient collateral is offered or not required by borrower's charter (Section 6f)
• Loans with government guarantees subject to Monetary Board ceiling, excluding loans to corporations with acceptable collateral (Section 6f)