Providing For The 1975 Revised Charter Of The Philippine National Bank.
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Providing For The 1975 Revised Charter Of The Philippine National Bank.
Presidential Decree No. 694
May 8, 1975
Case Overview and Summary
Summary of the 1975 Revised Charter of the Philippine National BankName, Domicile, and Place of Business (Section 2):
- The Philippine National Bank is created with its principal domicile and place of business in the Greater Manila Area.
- It may open branches, agencies, or other offices in the Philippines or abroad with the approval of the Monetary Board of the Central Bank of the Philippines.
Corporate Powers (Section 3):
- The Bank has the power to engage in commercial banking activities, trust business, investment in stocks and securities, and other related operations.
- It can organize and incorporate investment, development financing, and commercial banking subsidiaries with certain conditions.
- It can issue various types of bonds, notes, and debt instruments, which may be guaranteed by the Philippine government.
Capital (Section 4):
- The authorized capital stock is increased to 2 billion pesos, divided into 20 million shares at 100 pesos par value.
- The government shall increase its paid-in subscription to 1 billion pesos.
- The increase in authorized capital stock is divided into Preferred "A" shares (1 million shares), Preferred "B" shares (2 million shares), Common "A" shares (500,000 shares for officers and employees), and Common shares.
- The government may subscribe to the remaining Common shares, and private stockholders may exercise their pre-emptive rights.
Voting Power (Section 5):
- The voting power of all government-owned stock is vested in the President of the Philippines or designated person(s).
Loans and Credit Accommodations (Sections 6-9):
- The Bank is authorized to grant various types of loans for agricultural, export, industrial, commercial, and other allied purposes, subject to specified conditions and collateral requirements.
- Lending ceilings are established for individual borrowers (Section 7a), stock collateral (Section 7b), single industry (Section 7c), government agencies and entities (Section 7d), and long-term loans (Section 7e).
- Certain transactions are excluded from the lending ceilings (Section 8).
- Additional lending ceilings are provided for secured loans and loans for export trade and industry (Section 9).
Board of Directors (Sections 10-11):
- The Bank's affairs are directed by a 9-member Board of Directors elected annually by stockholders.
- The Board elects a Chairman from among themselves, and the Bank President is the ex-officio Vice-Chairman.
- Directors must meet certain qualifications, including being a natural-born Filipino citizen, at least 35 years old, and having expertise in relevant fields.
President and Other Officers (Sections 12-17):
- The President is the Chief Executive elected by the Board with the consent of the President of the Philippines and must meet specific qualifications.
- The President is assisted by Executive Vice Presidents, Senior Vice Presidents, and Vice Presidents appointed by the Board.
- Other officers and employees are appointed and removed by the Board on the recommendation of the President and belong to the exempt category under the Civil Service Law.
- Officers and employees are prohibited from striking (Section 18).
Confidential Information (Sections 19-21):
- The Bank is subject to inspection by the appropriate department of the Central Bank.
- Details of inspections and banking transactions, deposits, and other confidential matters cannot be revealed, except in specific situations outlined in the law.
- Officers and employees are prohibited from revealing confidential information, with exceptions for credit information exchange among financial institutions.
Prohibited Transactions (Sections 22-23):
- Certain government officials, Central Bank officials, and Bank personnel are prohibited from owning stock or incurring indebtedness to the Bank (Section 22).
- The Bank cannot grant loans to its directors, officers, employees, or agents, except under specific conditions and limitations (Section 23).
Disposal of Acquired Properties (Sections 24-27):
- Real estate and other properties acquired by the Bank in debt collection must be sold or disposed of within 5 years of acquisition, either by private negotiations or public bidding (Section 24).
- The mortgagor has the right to redeem the foreclosed property within 1 year by paying all claims, costs, and expenses (Section 25).
- The Bank can demand additional collaterals if existing collaterals decline in value, declare obligations due, and sell collaterals to cover deficiencies (Section 26).
- The debtor is entitled to any surplus from the sale proceeds and is liable for any deficiency (Section 27).
Write-off of Loans (Section 28):
- Writing off loans and advances with an outstanding amount of 100,000 pesos or more requires the prior approval of the Monetary Board of the Central Bank.
Prohibited Interest or Fees (Section 30):
- Bank directors, officers, employees, or agents cannot have a pecuniary interest in any loan from the Bank or charge fees for obtaining loans.
Net Profits (Section 31):
- At least 50% of the net profits shall be set aside for the declaration of dividends for government and private stockholders.
- The remaining net profits shall be accumulated in the surplus account for purposes authorized by the Board.
Dividends of Government Shares (Section 32):
- Dividends declared for government-owned shares shall be set aside in a special securities sinking fund to retire government bonds and securities issued for the Bank's capital.
- After retiring the bonds, any residue shall be used for additional government subscription to the Bank's unissued shares.
- Thereafter, dividends for government-owned shares shall be paid into the Philippine Treasury.
Tax Exemptions (Section 33):
- Documents, instruments, stock certificates, checks, and other similar instruments made by the Bank in favor of the Philippine government or its agencies are exempt from documentary and science stamp taxes upon approval of the Secretary of Finance.
Legal Existence (Section 34):
- The legal existence of the Bank is for a period of 50 years from the date of approval of this Revised Charter.
Illegal Use of the Word "National" (Section 35):
- Banks other than the Philippine National Bank and those already licensed with "National" in their name are prohibited from using the word "National" in their name, subject to a penalty of at least 100 pesos per day of violation.
Penalties (Section 37):
- Any director, officer, employee, or agent of the Bank who violates or permits the violation of any provision of this Decree, or any person aiding or abetting such violations, shall be punished by a fine not exceeding 10,000 pesos, imprisonment of not more than 5 years, or both.
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Providing For The 1975 Revised Charter Of The Philippine National Bank.
Presidential Decree No. 694
•May 8, 1975
MALACAÑANGM a n i l a
PRESIDENTIAL DECREE No. 694 May 8, 1975
PROVIDING FOR THE 1975 REVISED CHARTER OF THE PHILIPPINE NATIONAL BANK.
WHEREAS, the Philippine National Bank is an instrument of national monetary policy with a significant role in the economic development of the country under the program of the New Society;
WHEREAS, there is a pressing need for further revising the Charter of the Philippine National Bank to enable it to effectively carry out the task of providing the necessary financing for economic development:
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, de hereby decree and order the 1975 Revised Charter of the Philippine National Bank as follows:
THE 1975 REVISED CHARTER OF THE PHILIPPINE NATIONAL BANK
Section 1. This Decree shall be known as "THE 1975 REVISED CHARTER OF THE PHILIPPINE NATIONAL BANK."
Section 2. Name Domicile and place of business Branches, agencies and other offices. There is hereby created a bank to be known as the Philippine...
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