An Act Revising the Charter of the Philippine National Bank

REPUBLIC ACT No. 1300

An Act Revising the Charter of the Philippine National Bank

Be it enacted by the Senate and House of Representatives of the Philippine Congress Assembled:

Section 1. Name—Domicile and place of business.— There is hereby created a bank to be known as the Philippine National Bank. Its principal domicile and place of business shall be in the City of Manila.

Corporate Powers

Section 2. Corporate powers and duties. -The said National Bank, upon its organization, shall be a body corporate and shall have power:

Capital

Section 3. Authorized capital stock—Par value.— The authorized capital stock of the Philippine National Bank shall be two hundred million pesos divided into two million par value shares of one hundred pesos each, which shall include its present capitalization: Provided, That the Bank may purchase the shares held privately at a price not exceeding their par value: Provided, further, That the increase in the authorized capital shall be fully subscribed by the Government. For the immediate payment of not less than one hundred million pesos of the said subscription, the Secretary of Finance with the approval of the President of the Philippines, shall issue bonds or other evidences of indebtedness to be negotiated either locally or abroad, the proceeds of which are hereby appropriated for the purpose.

Section 4. Who may vote Government-owned stock.— The voting power of all the stock of the National Bank owned and controlled by the Republic of the Philippines shall be vested in the President of the Philippines, or in such person or persons as he may from time to time designate.

Banking Operations in General

Section 5. Loans and investments authorized—Total liabilities of a single borrower—Additional liabilities and security required.— Said National Bank is hereby authorized:

The aggregate amount of loan for any single industry shall at no time exceed twenty per cent of the Bank’s lending capacity.

The total liabilities to the Bank of any person, or of any company, corporation, or firm for money borrowed, including in the liabilities of the company or firm, the liabilities of the several members thereof, shall at no time exceed fifteen per centum of the unimpaired capital and surplus of the Bank. But the discount of bills of exchange drawn in good faith against actually existing values and the discount of commercial or business paper actually owned by the person negotiating the same shall not be considered as money borrowed, and in addition to the fifteen per centum of the unimpaired capital and surplus of the Bank, hereinbefore provided for, the total liabilities of any borrower may amount to a further fifteen per centum of the unimpaired capital and surplus of the Bank provided such additional liabilities are secured by shipping documents, warehouse receipts or other similar documents transferring or securing title covering readily marketable, non-perishable stocks, when such staples are fully covered by insurance and when such staples have a market value equal to at least one hundred twenty-five per centum of such additional liabilities.

The Bank shall not make any loan upon the stock of any other corporation as collateral if the aggregate market value of all such stock held as collateral exceeds an amount equal to fifteen per centum of the unimpaired capital stock and surplus of the Bank.

The term "loan" whenever used in this Act shall include overdrafts and the limitations contained in this section shall apply to any loan of any kind whenever secured wholly or partly by real estate mortgage.

Board of Directors—Composition and Organization

Section 6. Board of Directors—Membership—Per diems.— The affairs and business of the National Bank shall be directed and its property managed and preserved, unless otherwise provided in this Act, by a Board of Directors consisting of nine members duly elected as hereinafter Provided, who shall be paid a per diem of thirty pesos for each session of the Board of Directors attended by them.

Section 7. Election of Board of Directors—Election of chairman and vice-chairman of the Board—Who may not be elected member of the Board of Directors.— Annually on the first Tuesday after the first Monday in March, the stockholders shall meet to elect the members of the Board of Directors for the current year, each stockholder or proxy to be entitled to as many votes as he may have shares of stock, registered in his name on the thirty-first of January last preceding and held by him at the time of the election. Immediately after the election, the directorate shall organize as such and elect from amongst themselves a chairman and a vice-chairman, which latter shall assist the chairman and act in his stead in case of absence or incapacity. In case of incapacity or absence of both the chairman and vice-chairman, the Board of Directors shall designate a temporary chairman from among its members: Provided, That no director, shareholder or employee of any other bank shall be eligible as member of the Board of Directors of the National Bank.

Section 8. President and Vice-President—Appointment and removal—Salaries.— The chief executive of the Bank shall by the President, who shall be chosen and may be removed by the Board of Directors with the advice and consent of the President of the Philippines. He shall be assisted by an executive Vice-President and one or more Vice-Presidents who shall be chosen and may be removed by the Board of Directors. The salaries of the President and the Vice-President shall be fixed by the Board of Directors with the approval of the President of the Philippines.

Powers of Board of Directors

Section 9. The Board of Directors shall, among other duties, powers, and authority:

With the authorization of the proper department Secretary first had, the Board of Directors may appoint as agents of said Bank the provincial or municipal treasurers, who shall receive such additional compensation as the board may determine.

President—Powers and Duties

Section 10. Duties and powers of the President.— The President of the Bank shall among others execute and administer the policies, measures, orders and resolutions approved by the Board of Directors and direct and supervise the operations and administration of the Bank.

Particularly, he shall have the power and duty:

Legal Counsel

Section 11. Legal Counsel.— Any provision of law or existing executive order to the contrary notwithstanding, the Philippine National Bank shall have its own legal department, the chief and members of which shall be appointed by the Board of Directors.

Auditing Department

Section 12. Bank Auditor—Salaries and expenses of Auditing Department—Reports.— The Auditor General shall be ex officio Auditor of the National Bank and shall, with the advice and consent of the President of the Philippines, appoint a representative who shall be the Chief of the Auditing Department of the Bank. All the other employees of the department shall be appointed by the Auditor General, who with the approval of the President of the Philippines, shall fix the salaries of the same as well as that of his representative, the chief of the department. The operating expenses of the department and the salaries and traveling expenses of the employees thereof shall be payable by the Bank, and the Board of Directors shall make the necessary appropriation therefor. The representative of the Auditor General shall make a quarterly report on the condition of the Bank to the President of the Philippines through the Secretary of Finance, to the Auditor General and to the Board of Directors of the Bank. The report shall contain among other things a statement of the resources and liabilities, including earnings and expenses, the amount of capital stock, dividends paid, surplus reserve, and undivided profits, as well as the losses, bad debts, and suspended and overdue paper carried in the Bank’s assets as of the day in which the statements are compiled.

Appointment and Removal of the Other Officers and Employees of the National Bank

Section 13. Other officers and employees, appointment and removal—Salaries—Non-applicability of the Civil Service Law.— All the other officers and employees of the Bank shall be appointed and removed by the Board of Directors, on recommendation of the President. Said officers and employees shall not be subject to the Civil Service Law, and their duties and compensation shall be fixed by the President with the approval of the Board of Directors: Provided, That whenever the Chairman or the vice-chairman, by order of the Board of Directors, shall temporarily or permanently perform duties incumbent upon other officers or employees, they may be granted compensation therefor subject to the written approval of the President of the Philippines.

Section 14. Fidelity bond for officers and employees.— The Board of Directors may require the officers and employees of the Bank and its branches, before entering upon the performance of their duties, to furnish a fidelity bond for the benefit of the Bank, in the form and amount prescribed by said Board of Directors. For this purpose, and for this purpose alone, all officers and employees of whom a bond is required shall be deemed public officers and employees, respectively, and the provisions of the Public Bonding Law, Chapter Fifteen of the Administrative Code and related legislation are hereby made applicable to the same.

Inspection of the Bank

Section 15. Inspection by Department of Supervision and Examination of the Central Bank.— The National Bank shall be subject to inspection by the Department of Supervision and Examination of the Central Bank.

Section 16. Confidential information.— The Superintendent of Banks and the Auditor General, or other officers designated by law to inspect or investigate the condition of the National Bank, shall not reveal to any person other than the President of the Philippines, the Secretary of Finance, and the Board of Directors the details of the inspection or investigation, nor shall they give any information relative to the funds in its custody, its current accounts or deposits belonging to private individuals, corporations, or any other entity, except by order of a Court of competent jurisdiction.

Prohibition Against Owning Stocks or Being Indebted to Bank

Section 17. Prohibition against owning stock in or incurring indebtedness to the Bank.— The Secretary of Finance, the Superintendent of Banks, the Auditor General, and the latter’s representative, the chief of the auditing department of the Bank, are hereby prohibited from owning stock in the National Bank, or from becoming indebted to said National Bank, directly or indirectly.

Prohibited Loans

Section 18. Loans to officers, directors and employees—Restriction and limitations.— The National Bank shall not directly or indirectly, grant loans to any director, officer, employee, or agent of the Bank, and no loan shall be granted to a corporation, partnership, or company wherein any member of the Board of Directors is a shareholder, agent, or employee in any manner, except by the unanimous vote of the members of the Board present, excluding the member interested: Provided, That the total liabilities to the Bank of any corporation wherein any of the members of the Board of Directors is a shareholder, agent or employee in any manner, shall at no time exceed five per centum of the surplus and paid-up capital of the Bank.

Acquisition and Disposal of Real Estate

Section 19. Right to purchase, hold and dispose real estate.— The National Bank is hereby authorized to purchase and own such real estate as may be necessary for the purpose of carrying on its business. It is also authorized to hold such real estate as it may find necessary to acquire in the collection of debts due to the said Bank or to its branches; but real estate acquired in the collection of debts shall be sold by said Bank within five years after the date of its acquisition.

Redemption of Mortgaged Property

Section 20. Right of redemption of property foreclosed.— The mortgagor shall have the right, within the year after the sale of real estate as a result of the foreclosure of a mortgage, to redeem the property by paying the amount fixed by the court in the order of execution, with interest thereon at the rate specified in the mortgage, and all the costs and other judicial expenses incurred by the Bank by reason of the execution and sale and for the custody of said property.

Section 21. Right to demand additional securities; Disposal of same—Advanced maturity of credits—Right to collect deficiency.— If, from any cause whatsoever, any of the securities specified for the loans provided for in this Act or accepted by said Bank as security for loans or discounts should decline or depreciate in market value in part or as a whole, or upon non-performance of any promise made to secure the loan or discount, or bills of exchange, notes, and checks, the said Bank may demand additional securities or may forthwith declare any such obligation due and payable and upon three day’s notice, demand, sell, assign, transfer, and deliver the whole of said securities or any part thereof, or any substitutes therefor, or any addition thereto, or any other securities or property given unto or left in the possession of, or hereafter given unto or left in the possession of the said Bank for safekeeping or otherwise, at any broker’s board or at public or private sale, at the option of said Bank, and at such sale, if public, the said Bank may itself purchase the whole or any part of the property sold, free from any right of redemption on the part of the mortgagor or pledgor. In case of sale for any cause, after deducting all costs or expenses of any kind for collection, sale or delivery, the said Bank may apply the residue of the proceeds of the sale so made, to pay the said Bank, as its President shall deem proper, whether then due or not due, making proper rebate for interest on liabilities not then due, returning the overplus, if any, to the mortgagor or pledgor, who shall remain liable to and pay to said Bank any deficiency arising upon such sale or sales.

Liability of Debtor for Deficiency Right Over the Overplus

Section 22. Action to collect balance of indebtedness.— If the proceeds of the sale of securities held as collateral for loans by said Bank do not cover the full amount of the loan, together with the interest and other charges thereon, the Bank may proceed against the debtor for the difference, but any amount exceeding the full indebtedness to the Bank shall be paid to the debtor.

Section 23. Application of the Revised Penal Code.— The provisions of Title Four, Chapter One, of Act Numbered Thirty-eight hundred and fifteen, known as the Revised Penal Code, are hereby made applicable to violations of the law consisting in the making, or causing to be made, and circulating, or causing to be circulated, forged notes and bonds in imitation of those of the National Bank.

Prohibited Remuneration

Section 24. Prohibition against charging of fees in securing loans—Penalties for violation.— No fee, charge or commission in any form shall be exacted, demanded or paid, for obtaining loans, directly or indirectly, by any director, officer, employee, or agent of the bank. Any such director, officer, employee, or agent exacting, demanding, or receiving any fee for service or for the use of his influence in obtaining a loan shall be punished as hereinafter established for violation of this Act.

Net Profit

Section 25. Allocation of . -At the close of each calendar year, the Bank shall determine the net result of its operations, in the calculation of which, adequate allowances shall be made for probable losses. The net profit arrived thereat shall be accumulated in the surplus account which shall be utilized for such purposes as may be authorized by the Board of Directors: Provided, However, That the accumulated surplus shall not exceed the authorized capital stock.

Payment of Dividends of Government Shares

Section 26. Payment into the Philippine Treasury of dividends corresponding to Government-owned shares. -All profits assigned as dividends to the shares of the Government shall be paid into the Treasury of the Philippines for the general funds thereof.

Legal Existence

Section 27. Term of Legal Existence.— The legal existence of the Bank under this Act shall be for a period of fifty years, counting from the date of approval hereof.

Illegal Use of the Word "National"

Section 28. Prohibition against use of word "National"—Penalty for violation.— All banks other than the Philippine National Bank and such other banks now licensed to do business in the Philippines whose name already includes the word "National" are prohibited from using the word "National" as a portion of their name or title, and any violation of this prohibition shall subject the party chargeable therewith to a penalty of not less than one hundred pesos for each day during which it is committed or repeated.

Section 29. Repeal of Acts inconsistent herewith.— All acts or parts of Acts inconsistent or incompatible with the provisions of this Act are hereby repealed.

Penalties

Section 30. Penalties for violation of the provisions of this Act.— Any director, officer, employee, or agent of the Bank, who violates or permits the violation of any of the provisions of this Act, or any person aiding or abetting the violations of any of the provisions of this Act, shall be punished by a fine not to exceed ten thousand pesos or by imprisonment of not more than five years, or both such fine and imprisonment.

Section 31. This Act shall take effect upon its approval.

Approved: June 16, 1955.