Republic Act No. 2081

REPUBLIC ACT No. 2081

AN ACT TO AMEND REPUBLIC ACT NUMBERED EIGHTY-FIVE AND OTHER PERTINENT LAWS, TO PROVIDE FACILITIES FOR INTERMEDIATE AND LONG-TERM CREDIT BY CONVERTING THE REHABILITATION FINANCE CORPORATION INTO THE DEVELOPMENT BANK OF THE PHILIPPINES, AUTHORIZING THE SAID BANK TO AID IN THE ESTABLISHMENT OF PROVINCIAL AND CITY PRIVATE DEVELOPMENT BANKS, AND FOR OTHER PURPOSES.

Section 1. Sections one, two and three of Republic Act Numbered Eighty-five are amended to read as follows:

Section 2. The same Act is amended by adding after section three thereof the following new sections:

Section 3. Section four to seventeen of the same Act are hereby redesignated as Section fourteen to twenty-seven, respectively.

Section 4. After section seventeen of the same Act, herein redesignated as section twenty-seven, the following new sections are added:

Section 5. This Act shall take effect upon its approval.

Approved: June 14, 1958

"Sec. 1. Purposes, Name and Domicile. To provide credit facilities for the rehabilitation and development and expansion of agriculture and industry, the reconstruction of property damaged by war and the broadening and diversification of the national economy, and to promote the establishment of private development banks in provinces and cities, there is hereby created a body corporate to be known as the development bank of the Philippines, hereinafter called the Bank, which shall have its principal place of business in the City of Manila and shall exist for a period of fifty years.

"Sec. 2. Corporate powers. The Development Bank of the Philippines shall have the power:

"Sec. 3. Capital Stock. The capital stock of the Bank shall be five hundred million pesos divided into five hundred thousand shares having a par value of one thousand pesos each. The said capital stock shall be fully subscribed by the Government of the Republic of the Philippines.

"The provisions of section three of Republic Act Numbered Seventeen hundred eighty-nine to the contrary notwithstanding, an amount equivalent to fifty per cent of the proceeds from the sale of reparations goods and services for fifteen years following the approval of this Act, is hereby appropriated to cover the payment of the unpaid subscription of the government to the capital stock of the Bank: Provided, That seventy-five million pesos of such amount shall be set aside as a trust fund for the purpose of aiding the establishment of private provincial and city development banks as provided in this Act.

"Sec. 4. Loans. The Bank may grant loans against security of real estate and/or other acceptable assets including, subject to the provision of existing laws, leasehold rights and permits from the government: Provided, That not more than forty-five per cent of its authorized capital stock shall be available for industrial loans, not more than thirty-five per cent of such capital stock shall be available for agricultural loans and not more than twenty per cent of such capital stock shall be available for miscellaneous loans including loans for home building or home financing projects: Provided, further, That the same proportion hereinabove stated shall be observed in the grant of loans for industrial, agricultural and miscellaneous purpose: Provided, further, That of the amount available for agricultural loans, not more than twenty per cent thereof shall be made available for any agricultural crop and that of the latter amount not more than five per cent thereof shall be loaned to any individual, association or corporation: Provided, further, That no person shall be granted a loan for home building in excess of thirty thousand pesos: Provided, further, That any provision of law to the contrary notwithstanding the Bank is authorized to grant loans on the security of real estate without torrens title if the said real estate has been declared for purposes of taxation continuously for at least ten years and the applicant for loan and his predecessors in interest have been in continuous and uninterrupted possession thereof in the concept of owner for at least ten years, such possession to be established by affidavits of the owners of all the properties adjoining such real estate and other evidences that the board of governors may deem necessary: Provided, further, That the Bank shall set aside twenty-five per cent of its loanable funds for each quarter for the purchase of such mortgage bonds as the Philippine National Bank shall issue for the grant of medium and long-term development loans: Provided, finally, That such bonds sold by the Philippine National Bank to the Bank shall be guaranteed by the government both as to principal and interest.

"Sec. 5. The provision of any law to the contrary notwithstanding, twenty-five per cent of the investible funds of the Government Service Insurance System and the Social Security System accumulating monthly shall be invested by the said systems in bonds issued by the Bank.

"Sec. 6. The establishment of private development banks in provinces and cities shall be encouraged and shall be given preference and assistance by the government as herein below provided.

"Sec. 7. There shall be three classes or categories of private development banks, namely: class A, class B, and class C.

Class A private development banks shall have a paid-up capital of at least four million pesos; class B shall have a paid-up capital of at least two million pesos; and Class C shall have a paid-up capital of at least one million pesos.

"Sec. 8. A private development bank shall be incorporated under the provisions of the General Banking Act for mortgage banks and shall exercise all the powers and shall assume all the obligations of a mortgage bank as defined in the said Act, except as otherwise provided herein: Provided, That no private development bank shall be operated without a certificate of authority from the monetary board of the Central Bank which shall be issued upon compliance with the provisions of this law.

"Any existing domestic bank may be converted into a private development bank in the province or city in which it is located: Provided, That it complies with the requirements prescribed in this Act: Provided, further, That at least sixty per cent of its capital stock is owned by citizens of the Philippines.

"Sec. 9. A private development bank shall be organized in the form of a stock corporation and its paid-up capital stock shall not be less than four million pesos for class A, two million pesos for class B, and one million pesos for class C: Provided, That at least sixty per cent of the capital stock subscribed by the private sector shall be owned and held by citizens of the Philippines: Provided, further, That if said subscription of private shareholders to the capital stock of a private development bank cannot be secured or is not available, the Bank on representation of the said private shareholders and with the approval of its Board of Governors shall, with thirty days from date of said approval by the Board of Governors, subscribe to the capital stock of such development banks, which shall be paid in full at the time of subscription out of the trust fund hereinabove mentioned, in an amount equal to the full paid subscribed capital of the private stockholders: Provided, further, That the Board of Governors shall act on the representation made by the private shareholders within thirty days from the date it is filled: Provided, further, That such shares of stock subscribed by the bank shall be preferred shares entitled to cumulative dividends at a rate of one per cent during the first five years, two per cent during the following five years, and three per cent thereafter, shall be preferred as against common and other preferred stockholders in the distribution of assets in the event of liquidation, and shall be entitled to voting privileges: Provided, finally, That such preferred shares of the bank may be sold at any time at par to private individuals who are citizens of the Philippines, and in the sale thereof the qualified registered stockholders shall have the right of preemption within one year from the date of offer in proportion to their respective holdings, but in the absence of such buyers, preference shall be given to residents of the province or city where the development bank is located. All members of the board of directors of the private development banks shall be citizens of the Philippines.

"Sec. 10. Private development banks organized under this Act shall be known by the name of the province or city it is to operate followed by the words "Development Bank." Should there be in a province or city more than one such private development bank, the name of the banks organized subsequently shall be preceded by the word second or third and so on following the order of their authorization.

"In the implementation of the provisions of this Act, the Central Bank and the bank shall see to it that, before a second or subsequent private development bank is organized in a particular province or city, ample provision be made to provide for capital assistance in the organization of private development banks in other provinces and cities still without such banks.

"Sec. 11. The Central Bank shall advance, within thirty days from the date of the organization and authorization of the first provincial or city private development bank, sums of money not to exceed at any one time ten million pesos for the trust fund payment of the same to be guaranteed by the reparations payments prescribed above.

The loanable funds of the private development bank shall be invested in medium and long-term loans for economic development purpose and in no case shall the bank invest more than twenty-five per cent of such loanable funds in short-term loans.

"Sec. 12. The trust fund shall be used by the Bank in assisting private development banks as follows:

"Sec. 13. The provisions of Republic Act Numbered Three hundred and thirty-seven, insofar as they are applicable and not in conflict with any provision of this Act, are hereby made applicable to private development banks.

"Sec. 28. Whenever the phrase "Rehabilitation Finance Corporation" and the word 'corporation' appear in Republic Act Numbered Eighty-five or in any other Act or Executive Order, the same shall mean and refer to the 'Development Bank of the Philippines' and the 'Bank', respectively.

"Upon the approval of this Act, all the assets and liabilities as well as the personnel of the Rehabilitation Finance Corporation are hereby transferred to the Bank.

"Sec. 29. Nothing in this Act shall authorize the Bank to layoff or separate from the service any official or employee of the Rehabilitation Finance Corporation by reason of the approval of this Act.

"Sec. 30. In the event that any provision of this Act or the applicability of such provision to any person or circumstance is declared invalid, the remainder of the Act or the application of said provision to other persons or circumstances shall not be affected by such declaration."