Charters
established by the Central Bank;
Philippine Veterans Bank
AN ACT CREATING THE PHILIPPINE VETERANS' BANK, AND FOR OTHER PURPOSES.
Section 1. Name Domicile and place of business. There is hereby created a bank to be known as the
Philippine Veterans Bank, which shall be commonly called the Veterans Bank. Its principal domicile and
place of business shall be in the City of Manila but branches or agencies may be established in the
provinces and cities as the Board of Directors may decide.
CORPORATE POWERS
Section 2. Corporate powers and duties. The said Veterans Bank shall be a body corporate and shall
have the power:
(a) To prescribe is by-laws;
(b) To adopt and use a seal;
(c) To sue and be sued;
(d) To carry on a trust business is accordance with the provisions of laws governing trust
corporations;
(e) To grant long-term loans and advances preferably to veterans, their widows, orphans or
compulsory heirs against security and real estate and/or other acceptable assets including
backpay certificates issued by the National Treasurer pursuant to Republic Act No. 304 and
Republic Act No. 897 at the discretion of the Board of Directors for the establishment,
rehabilitation or expansion of agriculture, industrial, and other productive
enterprises: Provided, That the aggregate of such loans shall not exceed the sum total of the
paid-up capital and unimpaired surplus, long-term indebtedness and thirty per cent of the total
deposits:Provided, further, That notarial services in connection with loan applications of not
more than one thousand pesos (P1,000.00) shall be furnished by the Bank free of charge and
in case where the Veterans Bank has no lawyers, notarial services shall be performed by the
justice of the peace and other government notaries public, free of charge;
(f) To invest in stocks other than shares of stock in mining companies, government
guaranteed bonds, and secured collaterals having maturities of not more than thirty (30)
years: Provided, That the priorities in the grant of loans for secured collaterals having
maturities of not more than thirty years shall be in accordance with the rules and regulations
(g) With the approval of the President of the Philippines, to issue bonds and other certificates
of indebtedness against its credits secured by real estate but not in excess of ninety per cent
of the value thereof. The proceeds from the sale of such bonds and/or certificates of
indebtedness are to be used in its lending operations for the industrial and agricultural
development of the country.
The Board of Directors shall determine the interest rates, maturities, and other requirements
of said obligations;
(h) To contract any obligation, or enter into any agreement essential to the proper
management of its corporate powers and to carry out its aims and purposes;
(i) To appoint and dismiss its officers and employees;
(j) To grant loans to cooperative associations to facilitate production, the marketing of crops,
and the acquisition of essential commodities: Provided, That preference should be given to
such cooperative associations which are owned or controlled by the veterans, their widows,
orphans or compulsory heirs;
(k) To grant loans to government employees and employees of government-owned or
controlled corporations, and to employees of private corporations or entities for the purpose
of enabling said employee to buy shares of stocks in corporations or industries engaged in
the development and/or expansion of agriculture and industries: Provided, That the yearly
amortization of such loans shall not exceed ten per cent (10%) of the total annual salaries
and wages of the employees: Provided, further, That such loan shall be payable in full within
a period of not exceeding five years and that preference be given to employees who are
veterans;
(l) To exercise the powers granted in this Act and such incidental owners as may be
necessary to carry on and engage in the business of general banking;
(m) To exercise the general powers mentioned in the Corporation Law and the General
Banking Act, insofar as they are not inconsistent or incompatible with the provisions of this
Act.
Section 3. Authorized capital stock Par value.
(a) The capital stock of the Veterans shall be one hundred million pesos (P100,000,000.00)
divided into five hundred ten thousand (510,000) common shares and four hundred ninety
thousand (490,000) preferred shares with a par value of one hundred (P100.00) pesos each.
 (b) At least fifty-one per cent (51%) of the capital stock of the Veterans Bank shall be divided
into common shares which shall be fully subscribed by the government of the Republic of the
Philippines for and in behalf of the veterans, their widows, orphans or compulsory heirs as
defined and determined under Section 4, subsection (e) of this Act, and shall be initially paid
from the Veterans Trust Fund provided for in Section 2, subsection (d) of Republic Act
Numbered Seventeen hundred and eighty-nine as amended, and from or out of earnings,
dividends, or profits from the operations of the Veterans Bank; and for the payment of said
subscription, all the available cash deposits with the Philippine National Bank and/or any
other banks to the credit of the Veterans Trust Fund shall be transferred immediately to the
Veterans Bank: Provided, That after the approval of this Act and notwithstanding the
provisions of any existing law and/or executive orders, rules and regulations to the contrary,
every and all additional cash payments on account of the said Veterans' Trust Fund shall be
remitted and paid directly and exclusively to the said Veterans' Bank to be applied as
additional paid-up payments of the aforesaid common shares subscription: Provided, further,
That nothing shall be transferred to, or received by, the said Veterans' Bank representing any
portion of the proceeds of the aforesaid Veterans' Trust Fund except cash payments only of
the peso equivalent thereof at the prevailing rate of exchange: And provided, finally, That
within five years from the organization of the Bank all shares of stock equivalent to fifty-one
per cent subscription of the capital stock held by the government of the Republic of the
Philippines for and in behalf of the veterans, their widows, orphans or compulsory heirs shall
be transferred to and in the name of the veterans who shall thereafter vote said common
shares. The shares shall be divided equally among the veterans at the rate of one share of
one hundred pesos for each veteran or fraction thereof. The balance of about forty-nine
(49%) per cent shall be divided into preferred shares which shall be opened for subscription
by any recognized veteran, widow, orphans or compulsory heirs of said veteran at the rate of
one (1) preferred share per veteran: Provided, That in case of failure of any particular veteran
to subscribe for any preferred share of stock so offered to him as herein provided, within thirty
(30) days from the date of receipt of notice, said share of stock shall be available for
subscription to other veterans in accordance with such rules or regulations as may be
promulgated by the Board of Directors. Any share of stock corresponding to the capital stock
subscribed and paid by the Republic of the Philippines in the manner aforementioned, shall
be issued in the name of the Republic of the Philippines, in trust for the benefit of veterans,
their widows, orphans or compulsory heirs as determined in this Act, and any share of stock
subscribed and paid by individual veteran shall be issued in the name of the individual
veteran, his widow, orphan or compulsory heir. The sale or transfer of a share or stock of a
veteran, widow, orphan or compulsory heir of a veteran to a party not a veteran, widow,
orphan or compulsory heir of a veteran shall not be allowed under any circumstances. Any
share may be sold or transferred to the Bank which shall issue the same to the stockholders
who are veterans, their widows, orphans or compulsory heirs: Provided, That no veterans,
widow, orphan or compulsory heir shall be issued a total of more than twenty shares.
Section 4. Determination of veterans entitled to benefit from this Act.
(a) The term "veteran or veterans" shall include any person or persons who served in the
regularly constituted air, land, or naval services or arms, or in such non-regularly organized
military units in the Philippines during World War II, and whose services with such units are
duly recognized by the Republic of the Philippines or by the Government of the United
States: Provided, That for the purposes of this Act, the term "veteran or veterans" also include
the widow, orphan or a compulsory heir of a deceased veteran, as determined by existing
laws;
(b) The term "organized or acknowledged veterans organizations" as used in this Act shall
mean a veterans organization duly recognized or acknowledged as such by the Philippine
Veterans Administration which shall keep an official roster of such veterans organizations;
(c) On the basis of the acknowledged or duly established official records and data from the
Treasury of the Philippines and any other record or evidence admissible under the rules of
evidence, such as the records of the Philippine Veterans Administration and of the Armed
Forces of the Philippines, the Philippine Veterans Administration shall determine immediately
after the approval of this Act, who and how many are the veterans of the Philippines of World
War II and their widows, orphans or compulsory heirs as determined by existing laws who are
entitled to the benefits of this Act. The decision of the Philippine Veterans Administration on
the matter shall be final, unless appeal for review, within fifteen days from notice thereof, is
made to the President of the Philippines or to the Supreme Court whose decision shall be
final. The appeal shall be perfected in the same manner as in other proceedings and it may
be prosecuted by the interested party or by the head of any acknowledged veterans
organization;
(d) The reckoning day for determining the status and number of such veterans, their widows,
orphans or compulsory heirs shall be the date of approval of this Act;
(e) The share of each beneficiary, war veteran or widow, orphan or compulsory heir of a
deceased veteran, in the distribution of the benefits accruing to the Republic of the
Philippines, will be equal regardless of rank and services rendered: Provided, That in the
case of orphan or orphans of a deceased veteran, they shall be counted as one unit only and
the share of all of them regardless of their number will be the same or equal to that of a
surviving war veteran or surviving widow;
(f) Notice of the decision of the Philippine Veterans Administration on the question of who are
entitled to participate in the benefits accruing to the Veterans Trust Fund shall immediately be
served on the interested parties, either directly on thru the organization to which they belong
in writing and by registered mail. In addition, the Philippine Veterans Administration shall
publish for three consecutive weeks a notice in two newspapers of general circulation in the
Philippines to the effect that the Philippine Veterans Administration has already completed its
work of determining the number and the identity of those entitled to participate in the trust
fund and advising any party interested who has not received yet the notice of the decision
served upon him that he may verify his inclusion or exclusion from the official register in the
Philippine Veterans Administration. This Office shall keep a complete list and official register
of those included and excluded from the enjoyment of the benefit, which list shall be available
 for inspection during office hours. The official registry book shall constitute an irrevocable
public record, certified true copies of which may be released by the custodian of records for
official purpose only.
BANKING OPERATION IN GENERAL
Section 5. Loans, investigation and liabilities. The Veterans Bank is hereby authorized:
(a) To grant loans for the establishment, rehabilitation, expansion or development of any
agricultural, commercial or industrial enterprise, or personal service including public utilities,
under such rules and regulations as may be prescribed by the Board of Directors and that
preference be given to applicants who are veterans;
(b) To make loans on, or to discount notes and/or receipts secured by, harvested and stored
crops:Provided, That no loans on the security of such harvested and stored crops shall
exceed eighty per cent of the market value thereof on the date of the loans: Provided, further,
That the crops so mortgaged shall be insured by the mortgagor for the benefit of the Veterans
Bank for their entire market value at the discretion of the Board of Directors: Provided,
furthermore, That if owing to any circumstances the value of the crops given as security shall
diminish, the mortgagor shall furnish the Veterans Bank with additional security or refund
such part of the loan as the Bank may deem necessary: Provided, finally, That such loans
shall be granted for a period of not to exceed one year, subject to extension, in the discretion
of the Board of Directors;
(c) To make loans to agriculturists in installments, on standing crops of the natural products of
the Philippines such as palay, copra, sugar, tobacco, corn, abaca and maguey, of not
exceeding seventy per centum of the estimated value of such crops: Provided, however, That
before granting such loans, the Veterans Bank may require additional security in the nature of
mortgage on landed estate duly registered in the name of the debtor, or chattel mortgage
including those upon livestock, machineries and agricultural implements or personal bonds
with sufficient surety or sureties satisfactory to the bank;
(d) Generally, to make advances or discount paper for agricultural, manufacturing, industrial
or commercial purposes: Provided, That loans, discounts, or advances made under this
section shall have maturities of not exceeding one year, renewable from year to year, in the
discretion of the Board of Directors:
(e) The aggregate amount of loans for any single industry shall at no time exceed twenty per
cent of the Banks 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 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, nonperishable 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 security of the stock of any other corporation if the
aggregate market value of all such stocks as collateral exceeds an amount equal to ten 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 party by real estate mortgage.
BOARD OF DIRECTORS COMPOSITION AND ORGANIZATION
Section 6. Qualifications and per diems of the Board of Directors.
(a) Within the first five years from the organization of the Veterans Bank or until the transfer of
the common shares of its capital stock to the veterans as provided in Section three of this Act,
the affairs and business of the Veterans Bank shall be directed and its property managed,
controlled and preserved, unless otherwise provided in this Act, by a Board of Directors
consisting of eleven (11) members to be composed of three ex-officio members to wit: the
Philippine Veterans Administrator, the President of the Veterans Federation of the Philippines,
and the Secretary of National Defense, and the remaining members who shall be veterans of
good standing with formal business training and/or experience in banking and finance, shall,
upon the recommendation of the Supreme Council of the Veterans Federation of the
Philippines, be appointed by the President of the Philippines with the consent of the
Commission on Appointments. The Supreme Council of the Veterans Federation of the
Philippines shall submit to the President of the Philippines a list of sixteen veterans from
which list the President shall choose eight who shall hold office for one year and until their
successors are duly appointed and qualified. After the transfer of the common shares of the
capital stock of the Veterans Bank to the veterans as provided for in Section three of this Act,
the members of the Board of Directors shall be elected annually by the stockholders in the
manner prescribed by the Corporation Law: Provided, That no director, officer, or employee of
any bank shall be eligible as member of the Board of Directors of the Veterans
Bank: Provided, further, That no member of the Supreme Council of the Veterans Federation
of the Philippines who participated in the election of a member of the Board of Directors other
than the Federation President who is an ex officio member can be appointed to the Board
unless he first resigns as a member of the Supreme Council. The members of the Board shall
receive a per diem allowance of fifty pesos (P50.00) for every meeting of the Board actually
attended by them.
 (b) The Board of Directors, shall upon a majority vote of all its members, elect its Chairman,
Vice-Chairman, and Secretary which Secretary may or may not be a member of the Board, at
such a time and place as shall be provided for in its By-Laws. Pending the election of its
Chairman, the President of the Veterans Bank shall preside over the Board of Directors.
POWER AND AUTHORITY OF THE BOARD OF DIRECTORS
Section 7. The Board of Directors shall
(a) Formulate policies necessary to carry out effectively the provisions of this Act and adopt
such By-Laws rules and regulations for the effective operation of the Bank in conformity with
this Act and other existing laws;
(b) Determine the organization of the Bank by creating the necessary departments or offices
as are essential for the efficient operation of the Bank;
(c) Subject to prior approval of the Monetary Board, establish branches or agencies in other
countries; and,
(d) That during the first five years of transition; mentioned in Section three (a) of this Act, with
the authorization of the proper Department Secretary first had, the Board of Directors may
appoint as agents of the Bank the provincial or municipal treasurers, who shall receive such
additional compensation as the Board may determine.
THE EXECUTIVE OFFICERS
Section 8. President and Vice-Presidents Appointment and removal Salaries. The chief executive of the
Bank shall be the President who shall be chosen by the Board of Directors and, during the first five years
of Transition already mentioned, with the advice and consent of the President of the Philippines. He shall
be assisted by an Executive Vice-President and such number of Vice-Presidents who shall be elected
and may be removed by the Board of Directors. The President and the Executive Vice-President shall
possess practical experience in banking or finance as executives for at least five years. The salaries of
the President and the Executive Vice-President shall be fixed by the Board of Directors but, in no case,
shall it be more than thirty thousand (P30,000.00) pesos and twenty-five thousand (P25,000.00) pesos
yearly, respectively.
THE PRESIDENT POWERS AND DUTIES
Section 9. 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 operation and administration of the Bank.
Particularly, he shall have the power and duty:
(a) To make loans on commercial paper for such period of time not to exceed four months, in
sums not exceeding ten thousand pesos (P10,000.00) to anyone person, company,
corporations, or firm, but he is required to submit a report on such loans to the Board of
Directors at its succeeding session: Provided, That the total amount of such loans shall not
exceed five (5%) per cent of the paid-up capital and surplus;
(b) To make, with the advice and consent of the Board of Directors, all contracts on behalf of
the said Bank and to enter into all necessary obligations that this Act requires or permits:
(c) To report weekly to the Board of Directors the main facts concerning the operations of the
Bank during the preceding week and to suggest changes in rates of discount of interest,
exchange, or policy which to him may seem best;
(d) To exercise such other powers and perform such other duties as may be directed by the
Board of Directors from time to time.
LEGAL DEPARTMENT
Section 10. Legal Counsel. The Veterans Bank shall have its own legal department, the chief and
members of which shall be appointed by the Board of Directors.
AUDITING DEPARTMENT
Section 11. Bank Auditor Reports. The Veterans Bank shall have its own auditing department, the chief
of which shall be appointed by the Board of Directors from among recognized veterans of good standing
who are certified public accountants and with actual experience in the work of a comptroller. The auditor
may not be removed except for cause and neither may his salary be reduced during his term of office. All
other employees of the auditing department shall be appointed by the auditor with the advice and
consent of the Board of Directors. Unless otherwise prescribed by the Board of Directors, the auditor of
the Veterans Bank shall have the rank and pay of a Vice-President and shall receive a salary of eighteen
thousand pesos (P18,000.00) per annum. The auditor, with the approval of the Board of Directors, shall
fix the salaries of the employees of the auditing department.
The auditor shall make an annual report of the condition of the Bank to the Board of Directors, to the
President of the Veterans Federation of the Philippines, and to the Administrator of the Philippine
Veterans Administration. 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
reserved, and undivided profits, as well as the losses, bad debts and suspend and overdue papers
carried in the Bank's assets as of the day in which the statements are compiled.
APPOINTMENTS, REMOVAL AND SALARIES OF THE OTHER OFFICERS AND EMPLOYEES OF
THE VETERANS
Section 12. Appointments, removal and salaries of other officers and employees. All other officers and
employees of the Bank shall be appointed and removed by the Board of Directors upon recommendation
of the President of the Bank: Provided, however, That all other circumstances being equal, preference
shall be given to veterans, or their widows, orphans or compulsory heirs in the appointment of said
personnel. Said officers and employees shall have duties and compensation which shall be fixed by the
President with the approval of the Board of Directors.
Section 13. Fidelity bond of officers and employees. The Board of Directors may require any officer 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 the Board of Directors.
For this purpose, and for this purpose only, 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 legislations are hereby made applicable to them.
Section 14. Inspection by Department of Supervision and Examination of the Central Bank. The
Veterans Bank shall be subject to inspection by the Department of Supervision and Examination of the
Central Bank in accordance with Republic Act Numbered Two hundred sixty-five and Republic Act
Numbered Three hundred thirty-seven.
Section 15. Prohibition against owing stock in or incurring indebtedness to the Bank. The Secretary of
Finance. the Governor of the Central Bank, all other members of the Monetary Board, and the Chief of
the Auditing Department of the Veterans Bank are hereby prohibited from owing stock in the Veterans
Bank, or from becoming indebted to said Bank, directly or indirectly.
PROHIBITED LOANS
Section 16. Loans to officers, directors, and employees; restriction and limitation. The Veterans Bank
shall not directly or indirectly, grant loans to any director, officer, employee, or agent of the Bank, and no
loans 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 matter, 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 member of the Board of Directors of the Veterans Bank is a
shareholder, agent or employee in any manner, shall at no time exceed five (5%) per centum of the
surplus and paid-up capital of the Bank.
ACQUISITION AND DISPOSAL OF REAL ESTATE
Section 17. The Veterans 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 the Bank within five (5) years after the date of
its acquisition.
REDEMPTION OF MORTGAGED PROPERTY
Section 18. Right of redemption of property foreclosed. The mortgagor shall have the right, within one
year after the sale of the 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 mortgaged, 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 19. 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 bill 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 days' notice, demand, sell,
assign, transfer, and deliver the whole of said securities or any part thereof, or any substitute therefor, or
any addition thereto, or any other securities 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 or 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.
Section 20. 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.
PROHIBITED REMUNERATION
Section 21. Prohibition against charging 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 Veterans Bank. Any director, officer, employee or agent so
exacting, demanding or receiving any fee for his service or for the use of his influence in obtaining a loan
shall be punished as hereinafter provided for, for the violation of this Act.
NET PROFIT
Section 22. Allocation of net Profits. 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, and the net profit arrived thereat shall be distributed as follows:
(a) Twenty (20%) per cent of such net profit shall accrue to the reserve account: Provided,
That should the accumulated reserves equal to or in excess of the authorized capital of the
 Bank, the twenty per cent herein authorized to be accumulated shall be distributed under the
subsection immediately following:
(b) From the remaining eighty (80%) per cent of the net profit shall be deducted the
guaranteed earning of the preferred shares of stock owned by individual veterans, their
widows, orphans or compulsory heirs:Provided, That the share in the net profits
corresponding to the Republic of the Philippines shall first be applied in payment of its capital
stock subscription, until said shares shall have been fully paid. Thereafter, twenty per centum
of the net profits after deducting the guaranteed earnings of the preferred shares shall be
paid in cash to the Board of Trustees as hereinafter provided in Section 23 hereof for
disposition and shall be available for 'grants-in-aid' to veterans, their widows, orphans, or
compulsory heirs, for educational, social, charitable, and rehabilitation purposes, to
organization doing service for the cause of the veterans, and for such other purposes
beneficial to the veterans.
The remaining profits shall be paid as dividends on common shares held by the individual veterans as
provided in Section three of this Act.
Section 23. Board of Trustees of World War II. There is hereby created a Board of Trustees for the
veterans of World War II to be known as "The Board of Trustees of the Veterans of World War II",
consisting of eleven (11) members to be selected from among the veterans of World War II by the
Supreme Council of the Veterans Federation of the Philippines organized pursuant to Republic Act
Numbered Twenty-six hundred and forty.
The Board of Trustees shall be organized within ninety (90) days after the approval of this Act.
Immediately after its organization the members of the Board of Trustees shall elect from among
themselves a Chairman and a Vice-Chairman. The members of the Board of Trustees shall serve
without compensation other than actual and necessary expenses incurred either in attendance upon
meetings of the Board or upon other official business authorized by resolution thereof, but a vote of the
majority of all the members shall be necessary to authorize the disposal of the funds held by the Board.
The Board shall appoint a secretary and such necessary other officials and employees and fix their
compensations.
LEGAL EXISTENCE
Section 24. Term of legal existence. The legal existence of the Bank under this Act shall be for a period
of fifty (50) years, from and after the date of the approval of this Act.
Section 25. Prohibition against the use of the word "Veterans" Penalty for violation. All banks other than
the Veterans Bank, and such other banks now licensed to do business in the Philippines whose names
already include the word "veterans" are prohibited from using the word "veterans" as a portion of their
names or titles. Any party violating this provision shall be subject to a fine of not less than one hundred
(P100.00) pesos for each day during which said violation is committed or repeated.
PENALTIES
Section 26. 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 violation of any provision of this Act, shall be punished by a fine not exceeding ten
thousand (P10,000.00) pesos or imprisonment of not more than five (5) years, or both, in the discretion
of the court.
VETERANS BANK A GOVERNMENT DEPOSITORY
Section 27. Veterans Bank authorized to receive deposit of government funds as a Government
Depository. The Secretary of Finance, the National Treasurer and his authorized representatives, city
and municipal treasurers as well as official custodians of public funds or those belonging to government-
owned or controlled corporations are hereby authorized if they so desire to make and actually maintain
deposits of any government or corporate funds with the Veterans Bank, which is hereby declared to be a
government depository.
GENERAL PROVISIONS
Section 28. Articles of incorporation. This Act, upon its approval, shall be deemed and accepted to all
legal intents and purposes as the statutory articles of incorporation or Charter of the Philippine Veterans'
Bank; and that, notwithstanding the provisions of any existing law to the contrary, said Bank shall be
deemed registered and duly authorized to do business and operate as a commercial bank as of the date
of approval of this Act.
Section 29. By-laws. Within one month after the approval of this Act, the by-laws of the Philippine
Veterans' Bank for its organizational, functional and operational government and procedures shall be
adopted by the affirmative vote of the stockholders representing a majority of all the subscribed capital
stock entitled to vote, whether paid or unpaid, subject to certification by the Monetary Board pursuant to
Section ten of Republic Act Numbered Three hundred thirty-seven.
The by-laws, duly certified by the Monetary Board as aforesaid, shall be signed by the stockholders
voting for them and shall be kept in the principal office of the Bank, subject to the inspection of the
stockholders during office hours, and a copy thereof, duly certified by a majority of the directors and
countersigned by the Bank secretary, shall be filed and registered with the Securities and Exchange
Commissioner.
Section 30. Any law or part of law inconsistent with the provisions of this Act is hereby repealed.
Section 31. This Act shall take effect upon its approval.
Approved: June 18, 1963
 retirees of the Armed Forces of the Philippines who served in the post World War II military service for
at least ten years: Provided, That, the said veterans or retirees have been honorably discharged or
PRESIDENTIAL DECREE NO. 1855 separated from the service or continue in the active military service or are carried in the military roster
on inactive reserve: Provided, further, That for purposes of this Act, the term "veteran or veterans" shall
also include the widows, orphans and compulsory heirs of deceased veterans in the direct ascending
PRESIDENTIAL DECREE NO. 1855 - AN ACT AMENDING Section FOUR OF THE CHARTER OF line and direct descending line, excluding their grandchildren and great-grandchildren.
THE PHILIPPINE VETERANS BANK
(b) The term "organized or acknowledged veterans organizations" as used in this Act shall mean a
veteran organization duly recognized or acknowledged as such by the Philippine Veterans Affairs
Office, and Armed Forces of the Philippines which shall keep official rosters of such veterans
organizations;
WHEREAS, the Philippine Veterans Bank was created pursuant to its Charter (Republic Act No. 3518),
(c) On the basis of the acknowledged or duly established official records and data from the Treasury of
as amended, for the benefit solely of the veterans of World War II;
the Philippines and any other record or evidence admissible under the rules of evidence, such as the
records of the Philippine Veterans Affairs Office and of the Armed Forces of the Philippines, the said
WHEREAS, the term "veteran or veterans under paragraph (a), Sec. 4 of the PVB Charter include any
government entities shall determine immediately after the approval of this Act who and how many are
person or persons who served in the regularly constitutedr, land or naval services or arms, or in such
the veterans of the Philippines as enumerated in Paragraph (a) of this section, who are entitled to the
non-regularly organized military units in the Philippines during World War II, and whose services with
benefits of this Act. The decision of the Philippine Veterans Affairs Office and the Armed Forces of the
such units are duly recognized by the Republic of the Philippines or by the Government of the United
Philippines on the matter shall be final, unless appeal for review within fifteen days from notice thereof,
States;
is made to the President of the Philippines or to the Supreme Court whose decision shall be final. The
appeal shall be perfected in the same manner as in other proceedings and it may be prosecuted by the
WHEREAS, Sec. 3 of Republic Act No. 2640, otherwise known as the Charter of the Veterans
interested party or by the head of any acknowledged veteran organization;
Federation of the Philippines, the umbrella of all accredited veterans organizations, provides that the
members of the said Federation are not only veterans of World War II, but also those who served in the
(d) The reckoning date for determining the status and number of such veterans, their widows, orphans
Philippine Expeditionary Force to Korea (PEPTOK) or in any armed conflict in which the Philippines
or compulsory heirs shall be the date of approval of this Act.
may be involved in the future, and the retirees of the Armed Forces of the Philippines who served in the
military service after World War II for ten years or more;
(e) The share of each beneficiary, war veteran or widow, orphan or compulsory heir of a deceased
veteran, in the distribution of the benefits accruing to the Republic of the Philippines, shall be equal
WHEREAS, if only World War II veterans and their widows, orphans and compulsory heirs shall remain
regardless of rank and services rendered; Provided, That in case of orphan or orphans of a deceased
the stockholders of the PVB, there will come a time in the near future that the number of stockholders
veteran, they shall be counted as one unit only and the share of all of them regardless of their number
will be greatly reduced because of their inevitable death, taking into account that for purposes of the
shall be the same or equal to that of a surviving war veteran or surviving widow;
PVB Charter, only the heirs of the veterans in the direct ascending line and direct descending line
(excluding their grandchildren) are qualified to succeed to the shares of stock upon the death of the
(f) Notice of the decision of the Philippine Veterans Affairs Office and the Armed Forces of the
stockholders;
Philippines on the question of who are entitled to participate in the benefits accruing to the Veterans
Trust Fund shall immediately be served on the interested parties, either directly or thru the organization
WHEREAS, in order to insure the perpetuity of the Philippine Veterans Bank, there is an urgent
to which they belong in writing and by registered mail. In addition, the Philippine Veterans Affairs Office
necessity of including in the definition of the term "veteran or veterans" those who served in the
and the Armed Forces of the Philippines shall publish for three consecutive weeks a notice in two
Philippine Expeditionary Force to Korea or in any armed conflict in which the Philippines may be
newspapers of general circulation in the Philippines to the effect that the Philippine Veterans Affairs
involved in the future, and the retirees of the Armed Forces of the Philippines.
Office and the Armed Forces of the Philippines have already completed their work of determining the
number and the identity of those entitled to participate in the trust fund and advising any party
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers
interested who has not received yet the notice of the decision served upon him that he may verify his
in me vested by the Constitution, do hereby decree and make the following as part of the law of the
inclusion or exclusion from the official register in the Philippine Veterans Affairs Office and the Armed
land:
Forces of the Philippines. These offices shall keep complete lists and official register of those included
and excluded from the enjoyment of the benefit, which lists shall be available for inspection during office
Section 1. Section four of Republic Act No. 3518 is amended to read as follows:
hours. The official registry books shall constitute as irrevocable public record, certified true copies of
which may be released by the custodian of records for official purpose only."
"Sec. 4. Determination of veterans entitled to benefit from this Act. (a) The term "veteran or veterans"
shall include any person or persons who served in the regularly constitutedr, land or naval services or
Sec. 2. This decree shall take effect immediately.
arms, or in such non-regularly organized military units in the Philippines during World War II and whose
services with such units are duly recognized by the Republic of the Philippines or by the Government of
Done in the City of Manila, this 26th day of December, in the year of Our Lord, nineteen hundred and
the United States, those who serve in the Philippine Expeditionary Force to Korea during the Korean
Campaign, or in any armed conflict in which the Philippines may be involved in the future, and the
eighty-two.
Presidential Decree No. 1906
AMENDING THE CHARTER OF THE PHILIPPINE VETERANS BANK AND RENAMING IT THE
PHILIPPINE MILITARY AND VETERANS BANK.
WHEREAS, it is desirable that the objective of establishing and developing a commercial bank which
shall ultimately be a privately run bank for the benefit of veterans now be accelerated;
WHEREAS, it is desirable that the benefits through such a banking institution which are available to
veterans and their beneficiaries shall also be made to military personnel even before their retirement or
honorable discharge from the Armed Forces of the Philippines;
WHEREAS, it is desirable that the ultimate goal of becoming an expanded commercial bank should be
facilitated through participation of other military personnel, through their various retirement and mutuald
funds or through any other arrangements, thus taking advantage of economies of scale; and
WHEREAS, under Presidential Decree No. 1416, as amended, the President is empowered to
undertake such organizational and related improvements as may be appropriate in the light of changing
circumstances and new developments.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers
vested in me by the Constitution and the authority vested in me by Presidential Decree No. 1416, as
amended, do hereby decree and ordain:
Section 1. Republic Act No. 3518 entitled "An Act Creating the Philippine Veterans Bank, and For
Other Purposes," as amended, is hereby further amended to read as follows:
"Sec. 1. Name Domicile and Place of Business Branches. The Philippine Veterans Bank
is hereby reorganized and renamed as the Philippine Military and Veterans Bank. Its principal domicile
and place of business shall be in Metropolitan Manila but branches, agencies, offices, or extensions may
be established in the provinces and cities in the Philippines or abroad as the Board of Directors may
decide, upon prior approval of the Monetary Board.
"Sec. 2. Corporate Powers. The Philippine Military and Veterans Bank, upon its organization,
shall be a body corporate and shall have the power to carry on and engage in the business of
commercial banking and, with prior approval of the Monetary Board, expanded commercial banking; to
have and exercise, subject to the laws of the Philippines, all rights, privileges, powers and attributes of a
commercial bank; to engage in and carry on the business of a trust company; to exercise the general
powers of corporations as provided by law insofar as they are not inconsistent and incompatible with the
provisions of this act; and to adopt such by-laws and formulate policies, rules and regulations for the
effective operation of the Bank in conformity with this Act and other existing laws.
"Sec. 3. Authorized Capital Stock, Par Value of Shares.
(a) The authorized capital stock of the Philippine Military and Veterans Bank shall be one Billion Pesos
(P1,000,000,000) divided into seventy million (70,000,000) common shares and thirty million
(30,000,000) preferred shares with a par value of Ten Pesos (P10.00) each: Provided, That the
stockholders may, in accordance with the applicable provision of the Corporation Code and subject to
the approval by the Monetary Board, increase the capital stock of the Bank: Provided, further, that any
such increase shall be registered with the Securities and Exchange Commission.
The seventy million (70,000,000) common shares shall consist of the shares subscribed and fully paid by
the National Government for and in behalf of veterans known and determined as of June 30, 1983, and
the balance to be subscribed by veterans, military personnel, retirees and pensioners from the Armed
Forces of the Philippines, any duly incorporated organization, institution, association or entity formed or
organized by or for the benefit of military personnel or retirees or pensioners from the Armed Forces of
the Philippines and any other interested investor from the private sector: Provided, That the corporate
and individual stockholdings in the Bank shall be within the ceilings prescribed in Sections 12(b) and (d)
of Republic Act No. 337, as amended.
The thirty million (30,000,000) preferred shares shall consist of the shares subscribed and fully paid by
the National Government in behalf of veterans known and determined as of June 30, 1983 and the
balance shall be open for subscription by those who are eligible to subscribe to common shares as
provided in the preceding paragraph hereof: Provided, That the preferred shares shall have such
features and terms as may be decided upon by the Board of Directors of the Bank, subject to the
provisions of existing applicable laws and regulations.
(b) Shares of stock, common and/or preferred, outstanding as of the date of the effectivity of this Act,
fully subscribed and paid by the Government of the Republic of the Philippines for and in behalf of the
veterans, their widows, orphans or compulsory heirs as defined and determined under Section 4 hereof
shall be distributed equally among the veterans at the rate of one common and/or preferred share for
each veteran: Provided, That all common shares of stock which were subscribed by the National
Government for and in behalf of veterans of World War II known and determined as of June 30, 1983
which are still in the name of the Republic of the Philippines, including common shares of stock already
issued in the name of veterans, their widows, orphans or compulsory heirs but which have not actually
been delivered to said veterans, their widows, orphans or compulsory heirs for any reason whatever,
shall forthwith be held in trust for the veterans, their widows, orphans or compulsory heirs in whose
names said shares are issued, or who shall eventually be determined by the Philippine Veterans Affairs
Office to be entitled to said shares, and the voting and other rights pertaining to said shares shall be
exercised by the President of the Philippines until such time as the shares have been delivered to their
rightful owners.
"Sec. 4. Definition of Terms. The term "veteran or veterans" shall include any person or persons
who served in the regularly constitutedr, land, or naval services or army, or in such non-regularly
organized military units in the Philippines during World War II and whose services with such units are
duly recognized by the Republic of the Philippines or by the Government of the United States, those who
served in the Philippine Expeditionary Force to Korea and Vietnam, or in any armed conflict in which the
Philippines may be involved in the future, and the "retirees and pensioners" of the Armed Forces of the
Philippines, and the military personnel who served in the post World War II military service for at least
ten years: Provided, That the said veterans or retirees have been discharged under honorable conditions
from the service or continue in the active military service or are carried in the military roster on inactive
reserve: Provided, further, That for purposes of this Act, the term "veteran or veterans" shall also include
the widows, orphans and compulsory heirs of deceased veterans in the direct ascending line and direct
descending line, excluding their grandchildren and great-grandchildren.
"Military personnel" shall refer to those persons in active service in any branch of the Armed Forces of
the Philippines.
"Retirees and pensioners" shall include military personnel who have retired or who have been
honorably separated from active service in any branch of the Armed Forces of the Philippines.
"Sec. 5. Board of Directors, Composition, Tenure and Qualification.
(a) The Board of Directors of the Philippine Military and Veterans Bank shall consist of eleven (11)
members, with a representative of the Ministry of National Defense designated by the Minister of
National Defense and the President of the Bank as ex-officio members. The remaining nine other
members shall be elected in accordance with the provisions of the Corporation Code of the Philippines
governing election of members of the Board of Directors and shall possess the qualifications prescribed
by the Monetary Board: Provided, That the number of members of the Board of Directors may be
increased to not more than 15 or to such number as may be allowed under the provisions of the
Corporation Code or Republic Act No. 337, as amended, as may be decided by the stockholders of the
Bank in accordance with existing applicable laws and regulations.
"Sec. 6. Powers and Functions of the Board of Directors. The Board of Directors shall have the
following powers and functions: (a) Exercise all the corporate powers provided in this Act and such other
powers of a corporation provided in the Corporation Code not inconsistent with the provisions of this Act,
direct the affairs and business of the Philippine Military and Veterans Bank and manage, control and
preserve its property;
(b) Formulate policies necessary to carry out effectively the provisions of this Act and adopt such by-
laws, rules and regulations for the effective operation of the Bank in conformity with this Act and other
existing laws: Provided, That policies on the granting of loans shall take into consideration the credit
requirements of military personnel, veterans, and pensioners or their direct ascendants or descendants.
(c) Determine the organization of the Bank by creating the necessary departments or offices as are
essential for the efficient operation of the Bank; and
(d) Subject to prior approval of the Monetary Board, establish branches or agencies in provinces or
cities within the country and/or in other countries.
"Sec. 7. President and Vice Presidents. The chief executive officer of the Philippine Military and
Veterans Bank shall be the President, who shall be chosen by the Board of Directors. He shall be
concurrently the Vice Chairman of the Board of Directors, and shall be assisted by such Vice Presidents
as may be appointed by the Board of Directors upon the recommendation of the President. The
President and the Vice Presidents shall possess the qualifications, integrity, and expertise in banking
and finance prescribed by Central Bank regulations. The salaries of the President and the Vice
Presidents shall be fixed by the Board of directors.
"Sec. 8. Duties and Powers of the President. The President of the Philippine Military and
Veterans Bank shall, among others, execute and administer the policies, measures, orders, and
resolutions approved by the Board of Directors, and direct and supervise the operation and
administration of the Bank, and he shall have and exercise the powers and duties as may be provided in
the by-laws or authorized him by the Board of Directors.
"Sec. 9. Legal Counsel. The Philippine Military and Veterans Bank shall have its own legal
department, the chief of which shall be appointed by the Board of Directors. The Board may engage the
professional services of private external legal counsel whenever deemed necessary.
"Sec. 10. Auditor. The Philippine Military and Veterans Bank shall have its own auditor, who shall
be appointed and removed by the Board of Directors.
"Sec. 11. Appointment and Removal of Other Officers and Employees. All other officers and
employees of the Philippine Military and Veterans Bank shall be appointed and removed by the Board of
Directors upon recommendation of the President of the Bank: Provided, however, That in the
appointment of said personnel, preference shall be given to persons who possess the qualifications,
integrity, experience and expertise in banking and finance as determined under pertinent Central Bank
regulations.
"Sec. 12. Supervision and Examination by the Central Bank. The Philippine Military and
Veterans Bank shall be subject to supervision and examination by the Central Bank in accordance with
Republic Act No. 265, as amended, and Republic Act No. 337, as amended.
"Sec. 13. Prohibition Against Charging Fees in Securing Loans, and Penalties for Violation.
No fee, charge or commission in any form shall be exacted, demanded, or received, for obtaining loans,
directly or indirectly, by any director, officer, employee, or agent of the Philippine Military and Veterans
Bank for his service or for the use of his influence in obtaining a loan from the Bank. Any director, officer,
employee or agent so exacting, demanding or receiving any fee in violation of this provision shall be
punished by a fine of not exceeding P10,000 or by imprisonment of not more than five years, or both,
such fine or imprisonment to be imposed at the discretion of the Court.
"Sec. 14. Distribution of Net Profits. Distribution of net profits resulting from operations shall be
in accordance with the provisions of the Corporation Code, and the rules and regulations of the Central
Bank.
"Sec. 15. Term of Legal Existence. The legal existence of the Philippine Military and Veterans
Bank under this Act shall be for a period of fifty (50) years, from and after the date of the approval of this
Act: Provided, That, thereafter, the shareholders may, in accordance with the appropriate provisions of
the Corporation Code, apply for renewal or extension of the corporate life of the Bank with the Securities
and Exchange Commission.
"Sec. 16. Philippine Military and Veterans Bank Authorized to Receive Deposits of Government
Funds as a Government Depository. The Philippine Military and Veterans Bank is hereby
authorized to accept deposits from and to render general banking services to the Ministry of National
Defense, its subordinate units, and its attached entities. The Bank may be authorized as a government
depository or providing general banking services for other government offices and entities in accordance
with applicable law and rules.
"Sec. 17. Membership in the Government Service Insurance System or the Social Security
System. Officials and employees already in the service of the Philippine Military and Veterans Bank
at the time of the approval of this amended Charter, who are members of the Government Service
Insurance System (GSIS), may continue such membership at the option of the Board of Directors and
the Bank shall pay the corresponding employer's (government) share of the premia: Provided, That
eligibility to benefits arising from such membership shall be in accordance with the applicable GSIS rules
and regulations: Provided, however, That officials and employees appointed thereafter shall be covered
by the Social Security System for purposes of insurance and retirement.
"Sec. 18. Articles of Incorporation. This Act, upon its approval, shall be deemed and accepted,
for all legal intents and purposes as the statutory articles of incorporation or Charter of the Philippine
Military and Veterans Bank; and notwithstanding the provisions of any existing law to the contrary, the
Bank shall be deemed registered and duly authorized to do business and operate as a commercial
banking corporation and exercise the powers and functions of a corporation as provided in the
Corporation Code not inconsistent with the provisions of this Act as of the date of approval of this Act.
"Sec. 19. By-Laws. Within one month after the approval of this Act, the by-laws of the Philippine
Military and Veterans Bank, for its organizational, functional and operational government and
procedures, shall be adopted by the affirmative vote of the stockholders representing a majority of all the
subscribed capital stock entitled to vote, whether paid or unpaid, and registered with the Securities and
Exchange Commission in accordance with law, subject to certification by the Monetary Board pursuant
to Section 10 of Republic Act No. 337, as amended.
The by-laws, duly certified by the Monetary Board and registered with the Securities and Exchange
Commission as aforesaid, shall be kept in the principal office of the Philippine Military and Veterans
Bank, subject to the inspection by the stockholders, during the office hours.
"Sec. 20. Any law or part of law inconsistent with the provisions of this Act is hereby repealed."
Section 2. The Minister of Finance, the Minister of the Budget and the Governor of the Central Bank,
immediately after the issuance of this Presidential Decree, shall take the necessary steps to implement
the restructuring of the capital of the Philippine Military and Veterans Bank so that the book value of the
746,223 common and preferred shares of stock of the Bank issued to and/or reserved for veterans
known and determined as of June 30, 1983 shall be Ten Pesos (10.00) per share before the infusion of
other new equity funds. For this purpose, the Central Bank shall determine, on the basis of the results of
its examination of the Bank as of June 30, 1983, the amount necessary to raise to P10.00 the book
value per share of stock in the Bank and such determination shall be final and conclusive. The Bank
shall issue a share of stock of the recognized Bank in exchange for each outstanding share of stock. The
Corporate Secretary of the Bank shall, within the soonest time practicable after the issuance of this
Presidential Decree, prepare and submit to the Ministry of Finance, the Ministry of the Budget and the
Central Bank, a certified list of the 746,223 shares issued and outstanding, particularly indicating the
names of veteran to whom the share were issued, the number thereof and whether the shares have
been delivered or are yet to be delivered to the veterans in whose names the shares are issued.
The Philippine Veterans Administration shall similarly within the same period of time submit a certified
copy of the roster of veterans duly recognized and acknowledged as such by the Philippine Veterans
Administration as of June 30, 1983. Additional shares of stock, common or preferred, may be issued to
each veteran, widow, orphan or compulsory heir corresponding to his pro rata entitlement from any
additional fund infusion arising from a release from the General Fund pursuant to an appropriation for
the purpose specifically for the benefit of veterans shareholders determined and named at the time of
approval of this Presidential Decree or other resources as many be generated by the old veterans
stockholders' group. Any such additional share shall be issued in the name of the individual veteran
beneficiary. Similarly, collections from accounts previously identified and classified by the Central bank
as losses shall be credited pro rata to the equity holdings of the veterans-stockholders known and
determined as such as of June 30, 1983.
Section 3. The paid-in capital of the Philippine Military and Veterans Bank shall be increased through
the initial investment of at least Two Hundred Million Pesos (P200,000,000) by other investors, including
organizations, institutions, association or entities formed or organized by or for the benefit of military
personnel or relatives of pensioners from the Armed Forces of the Philippines, such as, but not limited
to, the Armed Forces Retirement and Separation Benefits System.
Section 4. The Board of Directors of the Bank is hereby authorized to negotiate and enter into any
agreement with prospective investors for the purpose of restructuring and further strengthening the
capital base of the Bank, subject to the provisions of this Presidential Decree.
Section 5. The Bank shall be reorganized within six months from the issuance of this Presidential
Decree and the present personnel complement of the Bank may be transferred, reassigned or laid off.
Officials and employees who are laid off as a result of the reorganization shall be entitled to all benefits
and gratuities provided under existing applicable laws. Pending the adoption of a new bargaining
agreement, the terms of employment of those who will remain with the Bank after the reorganization
shall be determined by the Board of Directors, the provisions of any law or agreement to the contrary
notwithstanding.
Section 6. The restructuring and reorganization of the Bank is hereby declared as affecting the
national interest and to ensure the attainment of the objectives of this Decree and to facilitate the quasi-
reorganization of the Bank, the Minister of Labor shall assume jurisdiction over all labor dispute causing
or likely to cause strikes or lockouts in the Bank which may occur within a period of three (3) years from
the date of issuance of this Decree and decided it or certify the same to the National Labor Relations
Commission for compulsory arbitration. Such assumption or certification shall have the effect of
automatically enjoining the intended or impending strike or lockout, any provision of law to the contrary
notwithstanding: Provided, however, that nothing in the provisions of this Presidential Decree shall
preclude or militate against the right of any employee of the Bank to form or belong to any labor
organization.
Section 7. All laws, decrees, orders, proclamations, rules, regulations, or parts thereof, which are
inconsistent with any of the provisions of this Presidential Decree, are hereby repealed or modified
accordingly.
Section 8. Any portion or provision of this Presidential Decree that may be declared unconstitutional
shall not have the effect of 'ifying the other provisions thereof: Provided, That such remaining portions
can still stand and be given effect in their entirety to accomplish the objectives of this Decree.
Section 10. This Presidential Decree shall take effect immediately.
Done in the City of Manila, this 29th day of February, in the year of our Lord, Nineteen Hundred
and Eighty-Three.
REPUBLIC ACT NO. 7169
January 2, 1992
AN ACT TO REHABILITATE THE PHILIPPINE VETERANS BANK CREATED UNDER REPUBLIC
ACT NO. 3518, PROVIDING THE MECHANISMS THEREFOR, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
Section 1. Declaration of Policy. In order to give meaning and realization to the constitutional
mandate to provide immediate and adequate care, benefits and other forms of assistance to war
veterans and veterans of military campaigns, their surviving spouses and orphans, it is hereby declared
the policy of the Government to provide the necessary mechanisms to rehabilitate the Philippine
Veterans Bank, hereinafter known as the Veterans Bank, a bank owned by the Filipino veterans of World
War II and deeply imbued and impressed with public interest.chanrobles virtualaw library
Sec. 2. Settlement of Liabilities. The National Government deposit of One billion four hundred
eighty-nine million pesos (P1,489,000,000.00) with the Veterans Bank is hereby restructured into a
seven-year promissory note of the said bank, carrying an interest rate of four percent (4%) per annum
effective on the date of actual operation: Provided, That only the interest shall be paid in the first three
(3) years: Provided, further, That repayment of the principal shall be divided into four (4) equal
amortizations: Provided, finally, that the said promissory note shall be exempted from the reserve
equipment rule of commercial banks.
The accrued interests due to the National Government deposits up to and during the time of the
Veterans Bank's closure in 1985 and the tax liabilities incurred by the Veterans Bank also up to and
during the time of the Veterans Bank's closure are hereby condoned and extinguished.
The obligations of the Veterans Bank with the Central Bank of the Philippines and the Philippine Deposit
Insurance Corporation are hereby restructured in the same manner governing National Government
deposits provided in the first paragraph of this section.
With respect to deposits of local government units and other private deposits with the Veterans Bank, the
terms and conditions for the retention or withdrawal thereof shall be negotiated individually but may carry
more favorable terms in favor of the Veterans Bank.chanrobles virtualaw library
Sec. 3. Operations and Changes in the Capital Structure of the Veterans Bank and other
Amendments. The operations and changes in the capital structure of the Veterans Bank, as well as
other amendments to its articles of incorporation and bylaws as prescribed under Republic Act No. 3518,
shall be in accordance with the Corporation Code, the General Banking Act, and other related
laws.chanrobles virtualaw library
Sec. 4. Repeal of Amendatory Presidential Decrees. Presidential Decree Nos. 236, 1637, 919 and
1906 which are inconsistent with this Act are hereby repealed, thus restoring the full force and legal
effect of Republic Act No. 3518.chanrobles virtualaw library
Sec. 5. Reopening of the Veterans Bank and Its Branches. Pursuant to and within ninety (90) days
from the effectivity of this Act, the Central Bank is hereby authorized to reopen within the period of three
(3) years from the date of the reopening of the head office with no branch licensing cost to the said
bank.chanrobles virtualaw library
Sec. 6. Veterans Bank as a Government Depository. The Secretary of Finance, the National
Treasurer and his authorized representatives, city and municipal treasurers, as well as custodians of
public funds or those belonging to government-owned or controlled corporations, are hereby authorized
if they so desire to make and actually maintain deposits, of any government of corporate funds with the
Veterans Bank, which is hereby declared to be a government depository.chanrobles virtualaw library
Sec. 7. Rehabilitation Committee. To facilitate the implementation of the provisions of this Act, there
is hereby created a rehabilitation committee which shall have a term of three (3) months from the date of
the approval of this Act composed of the following: the Executive Secretary, as Chairman, and the
Administrator of the Philippine Veterans Affairs Office, the President of the Veterans Foundation of the
Philippines, a representative from the executive board of the Veterans Federation of the Philippines and
a representative from the Board of Trustees of the Veterans of World War II or their respective
representatives, as members.
Specifically, the committee shall:
(a) Prepare, finance and submit a viable rehabilitation plan to the Monetary Board of the Central
Bank;cralaw
(b) Select and organize an initial manning force headed by a management team to be composed of
competent, experienced and professional managers who must possess all qualifications and none of the
disqualifications provided under Central Bank rules and regulations. The management team shall be
staffed by a trained work force: Provided, That preference shall be given to the veterans and their
dependents, other qualifications being equal;cralaw
(c) Exercise management oversight and liaison with Central Bank officers for a period which shall not
exceed three (3) months reckoned from the date of approval by the Monetary Board to reopen the
Veterans Bank; and
(d) Submit to the Monetary Board of the Central Bank other recommendations for the successful
reopening and operations of the Veterans Bank.chanroblesvirtuallawlibrary
Sec. 8. Transitory Provisions. Without requiring new capital infusion either from the Government or
from outside investigators, the Filipino veterans of World War II who are real owners-stockholders of the
Veterans Bank shall cause the said bank to have at least Seven hundred fifty million pesos
(P750,000,000.00) in total unimpaired capital accounts prior to reopening pursuant to this Act as a
commercial bank.
It is hereby provided that the Board of Trustees of the Veterans of World War II (BTVWW II) created
under Republic Act No. 3518 is hereby designated as trustee of all issued but undelivered shares of
stock.chanrobles virtualaw library
Sec. 9. Repealing Clause. All laws or parts of any law inconsistent with the provisions of this Act are
hereby repealed or modified accordingly.chanrobles virtualaw library
Sec. 10. Effectivity. This Act shall take effect upon its approval.
Approved: January 2, 1992
Land Bank of the Philippines
AN ACT TO ORDAIN THE AGRICULTURAL LAND REFORM CODE AND TO INSTITUTE LAND
REFORMS IN THE PHILIPPINES, INCLUDING THE ABOLITION OF TENANCY AND THE
CHANNELING OF CAPITAL INTO INDUSTRY, PROVIDE FOR THE NECESSARY IMPLEMENTING
AGENCIES, APPROPRIATE FUNDS THEREFOR AND FOR OTHER PURPOSES
PRELIMINARY CHAPTER
TITLE
DECLARATION OF POLICY AND COMPOSITION OF CODE
Section 1. Title - This Act shall be known as the Agricultural Land Reform Code.
Section 2. Declaration of Policy - It is the policy of the State:
(1) To establish owner-cultivatorship and the economic family-size farm as the basis of
Philippine agriculture and, as a consequence, divert landlord capital in agriculture to industrial
development;
(2) To achieve a dignified existence for the small farmers free from pernicious institutional
restraints and practices;
(3) To create a truly viable social and economic structure in agriculture conducive to greater
productivity and higher farm incomes;
(4) To apply all labor laws equally and without discrimination to both industrial and agricultural
wage earners;
(5) To provide a more vigorous and systematic land resettlement program and public land
distribution; and
(6) To make the small farmers more independent, self-reliant and responsible citizens, and a
source of genuine strength in our democratic society.
Section 3. Composition of Code - In pursuance of the policy enunciated in Section two, the following are
established under this Code:
(1) An agricultural leasehold system to replace all existing share tenancy systems in
agriculture;
(2) A declaration of rights for agricultural labor;
(3) An authority for the acquisition and equitable distribution of agricultural land;
(4) An institution to finance the acquisition and distribution of agricultural land;
 (5) A machinery to extend credit and similar assistance to agriculture;
(6) A machinery to provide marketing, management, and other technical services to
agriculture;
(7) A unified administration for formulating and implementing projects of land reform;
(8) An expanded program of land capability survey, classification, and registration; and
(9) A judicial system to decide issues arising under this Code and other related laws and
regulations.
CHAPTER IV
LAND BANK
Section 74. Creation - To finance the acquisition by the Government of landed estates for division and
resale to small landholders, as well as the purchase of the landholding by the agricultural lessee from
the landowner, there is hereby established a body corporate to be known as the "Land Bank of the
Philippines", hereinafter called the "Bank", which shall have its principal place of business in Manila. The
legal existence of the Bank shall be for a period of fifty years counting from the date of the approval
hereof. The Bank shall be subject to such rules and regulations as the Central Bank may from time to
time promulgate.
Section 75. Powers in General - To carry out this main purpose, the Bank shall have the power:
(1) To prescribe, repeal, and alter its own by laws, to determine its operating policies, and to
issue such rules and regulations as may be necessary to achieve the main purpose for the
creation of the Bank;
(2) To adopt, alter and use a corporate seal;
(3) To acquire and own real and personal property and to sell, mortgage or otherwise dispose
of the same;
(4) To sue and be sued, make contracts, and borrow money from both local and foreign
sources. Such loans shall be subject to approval by the President of the Philippines and shall
be fully guaranteed by the Government of the Philippines;
(5) Upon recommendation of the Committee on Investments, to hold, own, purchase, acquire,
sell or otherwise invest, or reinvest in stocks, bonds or other securities capable of giving the
Bank a reasonably assured income sufficient to support its financing activities and give its
private stockholders a fair return on their holdings: Provided, however, That pending the
organization of the Committee on Investments, the Bank may exercise the powers herein
provided without the recommendation of said Committee on Investments: Provided, further,
That in case of the dissolution of the Land Bank all unsold public lands transferred to it which
may be allocated to the Government of the Philippines in the course of liquidation of the
business of the Bank shall revert to the Department of Agriculture and Natural Resources;
and
(6) To provide, free of charge, investment counselling and technical services to landowners
whose lands have been acquired by the Land Bank. For this purpose, the Land Bank may
contract the services of private consultants.
Section 76. Issuance of Bonds - The Land Bank shall, upon recommendation by the Board of Trustees
and approval of the Monetary Board of the Central Bank, issue bonds, debentures and other evidences
of indebtedness at such terms, rates and conditions as the Bank may determine up to an aggregate
amount not exceeding, at any one time, five times its unimpaired capital and surplus. Such bonds and
other obligations shall be secured by the assets of the Bank and shall be fully tax exempt both as to
principal and income. Said income shall be paid to the bondholder every six (6) months from the date of
issue. These bonds and other obligations shall be fully negotiable and unconditionally guaranteed by the
Government of the Republic of the Philippines and shall be redeemable at the option of the Bank at or
prior to maturity, which in no case shall exceed twenty-five years. These negotiable instruments of
indebtedness shall be mortgageable in accordance with established banking procedures and practices
to government institutions not to exceed sixty per centum of their face value to enable the holders of
such bonds to make use of them in investments in productive enterprises. They shall also be accepted
as payments for reparation equipment and materials.
The Board of Trustees shall have the power to prescribe rules and regulations for the registration of the
bonds issued by the Bank at the request of the holders thereof.
Section 77. Issuance of Preferred Shares of Stock to Finance Acquisition of Landed Estates - The Land
Bank shall issue, from time to time, preferred shares of stock in such quantities not exceeding six
hundred million pesos worth of preferred shares as may be necessary to pay the owners of landed
estates in accordance with Sections eighty and eighty-one of this Code. The amount of shares that the
Bank may issue shall not exceed the aggregate amount need to pay for acquired estates in the
proportions prescribed in said Section eighty of this Code. The Board of Trustees shall include as a
necessary part of the by-laws that it shall issue under Section seventy-five of this Code, such formula as
it deems adequate for determining the net asset value of its holdings as a guide and basis for the
issuance of preferred shares. The shares of stock issued under the authority of this provision shall be
guaranteed a rate of return of six per centum per annum. In the event that the earnings of the Bank for
any single fiscal year are not sufficient to enable the Bank, after making reasonable allowance for
administration, contingencies and growth, to declare dividends at the guaranteed rate, the amount
equivalent to the difference between the Bank's earnings available for dividends and that necessary to
pay the guaranteed rate shall be paid by the Bank out of its own assets but the Government shall, on the
same day that the Bank makes such payment, reimburse the latter in full, for which purpose such
amounts as may be necessary to enable the Government to make such reimbursements are hereby
appropriated out of any moneys in the National Treasury not otherwise appropriated. The Bank shall give
sufficient notice to the Budget Commissioner and the President of the Philippines in the event that it is
not able to pay the guaranteed rate of return on any fiscal period. The guaranteed rate of return on these
shares shall not preclude the holders thereof from participating at a percentage higher than six per
centum should the earnings of the Bank for the corresponding fiscal period exceed the guaranteed rate
of return. The Board of Trustees shall declare and distribute dividends within three months after the
close of each fiscal year at the guaranteed rate unless a higher rate of return in justified by the Bank's
earnings after making reasonable allowance for administration, contingencies and growth, in which case
dividends shall be declared and distributed at a higher rate. The capital gains derived from the sale or
transfer of such shares and all income derived therefrom in the form of dividends shall be fully exempt
from taxes.
Section 78. Special Guaranty Fund - In the event that the Bank shall be unable to pay the bonds,
debentures, and other obligations issued by it, a fixed amount thereof shall be paid from a special
guaranty fund to be set up by the Government, to guarantee the obligation of the Land Bank, and
established in accordance with this Section, and thereupon, to the extent of the amounts so paid, the
Government of the Republic of the Philippines shall succeed to all the rights of the holders of such
bonds, debentures or other obligations: Provided, however, That for the next four years after the
establishment of the Bank, the payment to the special guaranty fund should not exceed one million
pesos per year, after which period, the Government shall pay into the guaranty fund the sum of five
hundred thousand pesos each year until the cumulative total of such guaranty fund is no less than
twenty percent of the outstanding net obligation of the Land Bank at the end of any single calendar year.
The guaranty fund shall be administered by the Central Bank of the Philippines in the manner most
consistent with its charter. For the purpose of such fund, there shall be appropriated annually the sum of
one million pesos out of any moneys in the National Treasury not otherwise appropriated, until the total
amount of twenty million pesos shall have been attained.
Section 79. Receiving Payments and Time Deposits - The Bank, under the supervision of the Monetary
Board and subject to the provisions of the General Banking Act, shall receive savings and time deposits
from the small landholders in whose favor public lands or landed estates acquired by the Land Authority
have been sold and, for this purpose, establish, and maintain branches and offices in such areas as may
be necessary to service such deposits. The Monetary Board shall supervise and authorize the Bank to
receive savings and time deposits from the public in areas where facilities for such a service do not exist
or cannot be adequately provided by other deposit institutions.
Section 80. Making Payment to Owners of Landed Estates - The Land bank shall make payments in the
form herein prescribed to the owners of land acquired by the Land Authority for division and resale under
this Code. Such payment shall be made in the following manner: ten per centum in cash and the
remaining balance in six percent, tax-free, redeemable bonds issued by the Bank in accordance with
Section seventy-six, unless the landowner desires to be paid in shares of stock issued by the Land Bank
in accordance with Section seventy-seven in an amount not exceeding thirty per centum of the purchase
price.
In the event there is an existing lien on encumbrance on the land in favor of any Government institution
at the time of acquisition by the Land Bank, the bonds and/or shares, in that order, shall be accepted as
substitute collaterals to secure the indebtedness.
The profits accruing from payment shall be exempt from the tax on capital gains.
Section 81. Capital - The authorized capital stock of the Bank shall be one billion five hundred million
pesos divided into ninety million shares with a par value of ten pesos each, which shall be fully
subscribed by the Government and sixty million preferred shares with a par value of ten pesos each
which shall be issued in accordance with the provisions of Sections seventy-seven and eighty-three of
this Code. Of the total capital subscribed by the Government, two hundred million pesos shall be paid by
the Government within one year from the approval of this Code, and one hundred million pesos every
year thereafter for two years for which purpose the amount of two hundred million pesos is hereby
appropriated upon the effectivity of this Code, and one hundred million pesos every year for the next two
years thereafter, out of the funds in the National Treasury not otherwise appropriated for the purpose:
Provided, That if there are not enough funds in the National Treasury for the appropriation herein made,
the Secretary of Finance, with the approval of the President of the Philippines, shall issue bonds or other
evidence of indebtedness to be negotiated either locally or abroad in such amount as may be necessary
to cover any deficiency in the amount above-appropriated but not exceeding four hundred million pesos,
the proceeds of which are hereby appropriated: Provided, further, That the bonds to be issued locally
shall not be supported by the Central Bank: Provided, finally, That there is automatically appropriated out
of the unappropriated funds in the National Treasury such amounts as is necessary to cover the losses
which shall include among other things loss of earnings occasioned by the limitation of the resale cost
herein provided such that said amount together with the administrative expenses mentioned in Section
ninety hereof shall not exceed in the aggregate the equivalent of two and one-half per centum of its
assets limited therein.
Section 82. Government Shares - All shares of stock in the Bank subscribed or owned by the
Government shall not be entitled to participate in the income earned by the Bank from its investments
and other operations, whether in the form of cash or stock dividends or otherwise. Amounts expended
for the administration of the Bank shall not be deemed as a participation of the Government in income.
Section 83. Preferred Shares - All preferred shares of stock issued under Section seventy-seven of this
Code shall be entitled to the income earned by the Bank on its investments and other operations and
shall have a limited right to elect annually one member of the Board of Trustees and one member of the
Committee on Investments: Provided, That the holders of such preferred shares of stock shall not bring
derivative suits against the Bank. Such preferred shares shall be fully transferable: Provided, further,
That upon the liquidation of the Bank, the redemption of such preferred shares shall be given priority and
shall be guaranteed at par value.
Section 84. Voting of Shares - The voting power of all the shares of stock of the Land Bank owned or
controlled by the Government shall be vested in the President of the Philippines or in such person or
persons as he may from time to time designate.
Section 85. Use of Bonds - The bonds issued by the Land Bank may be used by the holder thereof and
shall be accepted in the amount of their face value as any of the following:
(1) Payment for agricultural lands or other real properties purchased from the Government;
(2) Payment for the purchase of shares of stock of all or substantially all of the assets of the
following Government owned or controlled corporations: The National Development
Company; Cebu Portland Cement Company; National Shipyards and Steel Corporation;
Manila Gas Corporation; and the Manila Hotel Company.
Upon offer by the bondholder, the corporation owned or controlled by the Government shall,
through its Board of Directors, negotiate with such bondholder with respect to the price and
other terms and conditions of the sale. In case there are various bondholders making the
offer, the one willing to purchase under terms and conditions most favorable to the
corporation shall be preferred. If no price is acceptable to the corporation, the same shall be
determined by a Committee of Appraisers composed of three members, one to be appointed
by the corporation, another by the bondholder making the highest or only offer, and the third
by the two members so chosen. The expenses of appraisal shall be borne equally by the
corporation and the successful purchaser.
Should the Government offer for sale to the public any or all of the shares of stock or the
assets of any of the Government owned or controlled corporations enumerated herein, the
bidder who offers to pay in bonds of the Land Bank shall be preferred provided that the
various bids be equal in every respect except in the medium of payment.
(3) Surety or performance bonds in all cases where the Government may require or accept
real property as bonds; and
(4) Payment for, reparations goods.
Section 86. Board of Trustees - The affairs and business of the Bank shall be directed, its powers
exercised and its property managed and preserved by a Board of Trustees. Such Board shall be
composed of one Chairman and four members, one of whom shall be the head of the Land Authority
who shall be an ex-officio member of such Board and another to be elected by the holders of preferred
shares. The Chairman and two members of the Board of Trustees shall serve on full-time basis with the
Bank. With the exception of the head of the Land Authority and the member elected by the holders of
preferred shares, the Chairman and all members of the Board shall be appointed by the President with
the consent of the Commission on Appointments for a term of seven years, except that the first
Chairman and members to be appointed under this Code shall serve for a period of three, five and seven
years, such terms to be specified in their respective appointments. Thereafter the Chairman and
members, with the exception of the ex-officio member, appointed after such initial appointment shall
serve for a term of seven years including any Chairman or member who is appointed in place of one who
resigns or is removed or otherwise vacates his position before the expiration of his seven-year term. The
Chairman and the two full-time members of the Board shall act as the heads of such operating
departments as may be set up by the Board under the authority granted by Section eighty-seven of this
Code. The Chairman shall have authority, exerciseable at his discretion, to determine from time to time
the organizational divisions to be headed by each member serving full time and to make the
corresponding shifts in designations pursuant thereto. The compensation of the Chairman and the
members of the Board of Trustees serving full time shall be twenty-four thousand and eighteen thousand
pesos, respectively. The other members of the Board shall receive a per diem of one hundred pesos for
each session of the Board that they attend.
Section 87. The Chairman and Vice-Chairman - The Chairman of the Board shall be the chief executive
officer of the Bank. He shall have direct control and supervision of the business of the Bank in all matters
which are not by this Code or by the by-laws of the Bank specifically reserved to be done by the Board of
Trustees. He shall be assisted by an Executive Vice-Chairman and one or more vice-chairman who shall
be chosen and may be removed by the Board of Trustees. The salaries of the Vice-Chairmen shall be
fixed by the Board of Trustees with the approval of the President of the Philippines.
Section 88. Qualifications of Members - No person shall be appointed Chairman or member of the
Board unless he is a man of accepted integrity, probity, training and experience in the field of banking
and finance, at least thirty-five years of age and possessed of demonstrated administrative skill and
ability.
Section 89. Committee on Investments - There shall be a Committee on Investments composed of three
members; the member of the Board of Trustees elected by the holders of preferred shares as Chairman,
one member to be appointed by the President of the Philippines from among the government members
of the Board of Trustees, and another member to be selected by the holders of preferred shares under
Section eighty-three of this Code. The Committee on Investments shall recommend to the Board of
Trustees the corporations or entities from which the Land Bank shall purchase shares of stock.
The Land Bank shall not invest in any corporation, partnership or company wherein any member of the
Board of Trustees or of the Committee on Investments or his spouse, direct descendant or ascendant
has substantial pecuniary interest or has participation in the management or control of the enterprise
except with the unanimous vote of the members of the Board of Trustees and of the Committee on
Investments, excluding the member interested, in a joint meeting held for that purpose where full and fair
information of the extent of such interest or participation has been adequately disclosed in writing and
recorded in the minutes of the meeting: Provided, That such interested member shall not in any manner
participate in the deliberations and shall refrain from exerting any pressure or influence whatever on any
official or member of the Bank whose functions bear on or relate to the investment of the funds of the
Bank in the enterprise: Provided, further, That the total investment in any single corporation, partnership,
company, or association shall not exceed five per centum of the total investible funds.
Section 90. Personnel; Cost of Administration - The Administrative expenses of the Bank during any
single fiscal year shall not in any case exceed two and one-half per centum of its total assets. The Board
of Trustees shall provide for an organization and staff of officers and employees necessary to carry out
the functions of the Bank, fix their compensation, and appoint and remove such officers and employees
for cause. The Bank officers and employees shall be subject to the rules and regulations issued by the
Civil Service Commission but shall not fall under the Wage and Position Classification Office. The Board
of Trustees shall recommend to the Civil Service Commission rules and regulations for the recruitment,
appointment, compensation, administration, conduct, promotion and removal of all Bank officers and
employees under a strict merit system and prepare and conduct examinations under the supervision of
said Commission.
Section 91. Legal counsel - The Secretary of Justice shall be ex-officio legal adviser of the Bank. Any
provision of law to the contrary notwithstanding, the Land Bank shall have its own Legal Department, the
chief and members of which shall be appointed by the Board of Trustees. The composition, budget and
operating expenses of the Office of the Legal Counsel and the salaries and traveling expenses of its
officers and employees shall be fixed by the Board of Trustees and paid by the Bank.
Section 92. Auditor - The Auditor General shall be the ex-officio auditor of the Bank and shall appoint a
representative, who shall be the auditor in charge of the auditing office of the Bank. The Auditor General
shall, upon the recommendation of the auditor of the Bank, appoint or remove the personnel of the
auditing office. The compensation, budget and operating expenses of the auditing office and the salaries
and traveling expenses of the officers and employees thereof shall be fixed by the Board of Trustees and
paid by the Bank notwithstanding any provision of law to the contrary.
Section 93. Report on Condition of Bank - The representative of the Auditor General shall make a
quarterly report on the condition of the Bank to the President of the Philippines, to the Senate through its
President, to the House of Representatives through its Speaker, to the Secretary of Finance, to the
Auditor General and to the Board of Trustees 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,
surplus, reserve and profits, as well as losses, bad debts, and suspended and overdue paper carried in
the books as assets of the Bank, and a plantilla of the Bank.
Section 94. Auditing Rules and Regulations - The Auditor General shall, with respect to the Bank,
formulate improved and progressive auditing rules and regulations designed to expedite the operations
of the Bank and prevent the occurrence of delays and bottlenecks in its work.
Section 95. Removal of Members - The President of the Philippines may, at any time, remove the
Chairman or any member of the Board appointed by him if the interest of the Bank so requires, for any of
the following causes:
(1) Mismanagement, grave abuse of discretion, infidelity in the conduct of fiduciary relations,
or gross neglect in the performance of duties;
(2) Dishonesty, corruption, or any act involving moral turpitude; and
(3) Any act or performance tending to prejudice or impair the substantial rights of the
stockholders.
Conviction of the Chairman or a member for a crime carrying with it a penalty greater than arresto mayor
shall cause the removal of such Chairman or member without the necessity of Presidential action.
The Chairman or member may, in any of the above cases, be civilly liable for any damage that may have
been suffered by the stockholders.
Section 96. Transfer of Claims and Liabilities - The assets of the former Land Tenure Administration and
the National Resettlement and Rehabilitation Administration in the form of claims and receivables arising
from the sale or transfer of private and public lands, agricultural equipment, machinery, tools and work
animals, but excluding advances made for subsistence, to small landholders shall, after an exhaustive
evaluation to determine their true asset value, be irrevocably transferred to the Bank under such
arrangements as the Land Authority and the Bank shall agree upon. Thereafter, the Bank shall have
authority and jurisdiction to administer the claims, to collect and make adjustments on the same and,
generally, to do all other acts properly pertaining to the administration of claims held by a financial
institution. The Land Authority, upon request of the Bank, shall assist the latter in the collection of such
claims. The Land Authority shall be entitled to collect from the Bank no more than the actual cost of such
collection services as it may extend. The claims transferred under this Section shall not be considered
as part of the Government's subscription to the capital of the Bank.
Section 97. Regulation - The Bank shall not be subject to the laws, rules and regulations governing
banks and other financial institutions of whatever type except with respect to the receipt of savings and
time deposits in accordance with Section seventy-nine of this Code, in which case the legal reserve and
other requirements prescribed by the Central Bank for such deposits shall apply. The Bank shall be
operated as an autonomous body and shall be under the supervision of the Central Bank.
Section 98. Tax Exemption - The operations, as well as holdings, equipment, property, income and
earnings of the Bank from whatever sources shall be fully exempt from taxation.
Section 99. Organization of Bank - The Bank shall be organized within one year from the date that this
Code takes effect.
Section 100. Penalty for Violation of the Provisions of this Chapter - Any trustee, officer, employee or
agent of the Bank who violates or permits the violation of any of the provisions of this Chapter, or any
person aiding or abetting the violations of any of the provisions of this Chapter, 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 at the discretion of the Court.
Section 173. Effective Date - This Code shall take effect upon its approval.
Approved: August 8, 1963
REPUBLIC ACT NO. 7907
AN ACT AMENDING REPUBLIC ACT NUMBERED THIRTY-EIGHT HUNDRED FORTY-FOUR, AS
AMENDED, OTHERWISE KNOWN AS THE "CODE OF AGRARIAN REFORM IN THE PHILIPPINES."
. "commission" as follows: four hundred million pesos within sixty (60) days from the approval of this
. Decree, and at least one hundred million pesos every year thereafter until the total subscription of the
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
Section 1. Sec. 75 of Republic Act No. 3844, as amended, is hereby further amended by adding the
following subsections to read as follows:
"(12) to act as an official government depository with full authority to maintain deposits of the
government, its branches, subdivisions and instrumentalities, and of government-owned or controlled
corporations which deposits shall be subjected to liquidity floor and/or reserve requirements as may be
imposed by the Monetary Board upon other commercial banks;
"(13) for the strengthening of the capital base of the bank, to establish a national marketing umbrella for
farmers and fisheries cooperatives to attract massive capital formation from savings deposits of the
cooperative member nationwide."
The existing subsection 12 is hereby renumbered as subsection 14.
Sec. 2. Section 78 of the same Act is hereby further amended by adding a new paragraph thereto to
read as follows:
"Apart from the foregoing which pertains to the twenty-five years bonds previously issued by the bank
and pursuant to its role as the financial intermediary of the Comprehensive Agrarian Reform Program,
mandated under Republic Act No. 6657, the National Government through the Presidential Agrarian
Reform Council (PARC), shall provided and/or allocate from the existing Agrarian Reform Fund or other
unappropriated funds of the National Treasury an amount sufficient to pay all maturing bonds,
debentures and all other obligations together with interest due thereon issued and/or incurred by the
bank as compensation to the landowners including expenses related thereto. In the apportionment and
distribution of funds from the Agrarian Reform Fund, the PARC shall give priority and preference to the
payment of landowner compensation in the chronological sequence or order at which the voluntary
offers of sale were made by the landowners."
Sec. 3. Section 80 of the same Act is hereby further amended by adding a new subsection thereto to
read as follows:
"(7) At least sixty percent (60%) of the proceeds of the sale of the stocks, securities and other assets of
the government now under administration by the Assets Privatization Trust (APT) shall be transferred to
the land Bank of the Philippines for use in the payment of agricultural lands acquired pursuant to
Presidential Decree No. 27 and Republic Act No. 6657."
Sec. 4. Section 81 of the same Act is hereby amended to read as follows:
"Sec. 81. Capital.- The authorized capital stock of the Bank shall be nine billion pesos, divided into
seven hundred and eighty million common shares with a par value of ten pesos each, which shall be
fully subscribed by the government, and one hundred and twenty million preferred shares with a par
value of ten pesos each, which shall be issued in accordance with the provisions of Section seventy-
seven and eighty-three of this Code. These preferred shares shall be non-voting. The Board, upon the
recommendation of the Secretary of Finance and with the approval of the President of the Philippines,
may increase the capitalization of the Bank up to such an amount as may be necessary to attain the
objectives of this Act. The total capital stock subscribed by the Government shall be paid by the Agrarian
Reform Fund Commission created under Presidential Decree No. 85, hereinafter referred to as the
Government is fully Paid: Provided,That the common and preferred shares of the Bank which have been
issued, including those already subscribed, shall form part of the increased capitalization of the
Bank: Provided, further, That the additional common shares subscribed by the Government shall be paid
by the bank through its banking operations in an amount equivalent to at least ten percent (10%) of its
annual net income or any form of retained earnings until fully paid: Provided, Finally,That the dividends
due the Government shall first be paid."
Sec. 5. Sec. 86 of the same Act relating to the Membership of it Board of Directors, as amended, is
hereby further amended to read as follows:
"Sec. 86. The Board of Directors; Membership; Per Diem.- The affairs and business of the Bank shall be
directed and its property managed and preserve by a board of Directors consisting of nine (9) members
to be composed of the Secretary of Finance, as Chairman, the President of the bank as Vice-Chairman,
the Secretary of Agrarian Reform, the secretary of Labor, and the Secretary of Agriculture as ex
officio members. The President of the Philippines shall appoint two (2) members of the Board who shall
represent the the agrarian reform beneficiaries and two (2) members who shall represent the private
sector. The two (2) remaining members shall be elected from the shareholders coming from the public
sector to the extent that they may be entitled to two (2) seats in proportion to the outstanding capital
stock.
"Annually, on the first Tuesday after the first Monday in December, the stockholders shall meet to take
up, among others, the election of two (2) members of the Board of Directors for the succeeding year.
Each shareholder or proxy shall be entitled to as many votes as he may have shares of stock registered
in his name on the 31st day of October last preceding and held by him at the time of the election. The
two (2) members of the Board of Directors shall be elected preferably from the holders of the preferred
shares as follows:
"(a) Not exceeding P100.00 M - one member
"(b) Exceeding P100.00 M - two members
"The appointive members of the Board shall hold a term of office for one (1) year and shall continue to
hold office until their successor shall have been appointed and qualified. The board shall convene as
often as necessary to discharge its responsibilities properly, but shall meet at least once every two (2)
weeks. The Board may be convoked either by the Chairman or in his absence, the Vice-Chairman.
"The majority of the board members shall constitute a quorum. All decisions of the Board shall require
the concurrence of at least a majority.
"No Person shall be elected or appointed director of the Bank unless he is natural born citizens of the
Philippines, not less than thirty-five (35) years of age, of good moral character, and has attained
proficiency, expertise and recognized competence in one or more of the following: banking, finance ,
economics, law, agriculture, agrarian reform, business management : Provided, Further, That no director,
shareholder or employee of any other bank shall be eligible for election or appointment as member of
the Board of Directors of the Bank.
"The Chairman and the members of the Board shall receive a per diem of One thousand five hundred
pesos (P1,500) for each session of the Board attended but in no case not to exceed Seven thousand
five hundred (P7,500) a month."
Sec. 6. Section 86-A of the same Act relating to the powers and responsibilities of the Board is hereby
amended by adding subsection 6 which reads as follows:
"6. To compromise or release, in whole or in part, any claim or liability whatsoever for or against the
bank, including interest, penalties, fees and/or other charges, under such terms and conditions as the
board may find acceptable and practicable subject to their best business judgment and to the best
interest of the corporation in accord with standard banking practices."
Sec. 7. A new Section 86-B is hereby added to read as follows:
"Section 86-b. Foreclosure of collateral and disposal of bank acquired properties.
"1. Foreclosures of Mortgage Collaterals. Foreclosure of mortgage collaterals to loans may be made
either judicially or extra-judicially.
"2. Deputization of Legal Staff. The bank may, with the approval of the court, deputize any member of its
legal staff to act as special sheriff in foreclosure cases, in the sale or attachment of debtor's properties
and in the enforcement of court writs and processes in cases in involving the bank. The special Sheriff of
the bank shall make a report to the proper court after any action has been taken by him, which court
shall treat such actions as if it were an act of its own sheriffs in all respect.
"3. Disposal of Real Estate and Other Properties in the Collection of Debt. Real estate and other
properties acquired by the Bank in the collection of debts or investment by way of foreclosure or other
means shall be sold or disposed of in accordance with law, within five (5) years after date of acquisition.
The sale or disposal shall be effected through public bidding, in accordance with the law.
"4. Exemption from Attachment. The provisions of any law to the contrary notwithstanding, securities on
loans and/or other credit accommodations granted by the bank shall not be subjected to attachment,
executions to any other court process, nor shall they be included in the property of insolvent persons or
institutions, unless all debts and obligations of the debtors to the bank have been paid, including accrued
interest, penalties, collection expenses and other charges.
"5. Right of Redemption of Foreclosed Property; Right of Possession during Redemption Period. Within
one (1) year from the registration of the foreclosure sale of real estate, the mortgagor shall have the right
to redeem the property by paying all claims of the bank against him on the date of the sale including all
the cost and other expenses incurred by reason of the foreclosure sale and custody of the property, as
well as charges and accrued interest. The bank may take possession of the foreclosed property during
the redemption period. The bank shall be eligible to post a bond for the purpose of such possession."
Sec. 8. Section 87 is hereby amended to read as follows:
"Section 87. Executive officers; Compensation. The Chief Executive of the Bank shall be the President,
who shall be chosen and may be removed by the Board of Directors with the advises and consent of the
President of the Philippines. His salary shall be fixed by the Board of Directors with the approval of the
President of the Philippines. The President shall be assisted by Vice-Presidents as may be required,
whose appointments and removal shall be fixed in accordance with Section 90 hereof by the Board of
Directors upon recommendation of the President of the Bank."
SEC . 9. Section 88 of the same Act prescribing the qualifications of Executive Officers is also hereby
amended to read as follows:
"No persons shall be appointed to any executive position in the Bank mentioned in the preceding section
unless he be of good moral character and of unquestionable integrity and responsibility, and who is of
recognized competence in the field of economics, agriculture, industry, law, banking and/or finance, and
possessed of demonstrated administrative skill and ability."
Sec. 10. Section 90 of the same Act is hereby amended to read as follows:
"Section 90. Personnel. The Board of Directors shall provided for an organization and staff of officers
and employees of the Bank and upon recommendation of the President of the Bank, appoint and fix their
remunerations and other emoluments, and remove such officers and employees: Provided, That the
Board shall have exclusive and final authority to promote, transfer, assign or reassign personnel of the
Bank, any provisions of existing law to the contrary notwithstanding.
"All positions in the Bank shall be governed by a compensation, position classification system and
qualification, standards approved by the Bank's Board of Directors based on a comprehensive job
analysis and audit of actual duties and responsibilities. The compensation loan shall be comparable with
the prevailing compensation plans in the private sector and shall be subjected to periodic review by the
Board no more than once every two (2) years without prejudices to yearly merit reviews or increases
based on productivity and profitability. The bank shall therefore be exempt from existing laws, rules and
regulations on compensation, position classification and qualification standards. It shall however
endeavor to make its system conform as closely as possible with the principle under Republic Act No.
6758.
"The Bank officer and employees, including all members of the Board, shall not engage directly or
indirectly in partisan activities or take part in any election except to vote.
"No officer or employee of the Bank subject to the Civil Service Law and Regulations shall be removed
or suspended except for cause as provided by law."
Sec. 11. Separability Clause. If any provision or part hereof is held invalid, the other provisions not
affected thereby shall remained continue in full force and effect.
Sec. 12. Repealing Clause. All laws, executive orders, rules and regulations or parts thereof inconsistent
with any provision hereof hereby repealed or modified accordingly.
Sec. 13. Effectivity. This Act shall take effect upon its approval.
Approved: 23 February 1995.
[REPUBLIC ACT NO. 10374]
AN ACT EXTENDING THE LIFE OF THE LAND BANK OF THE PHILIPPINES, FURTHER AMENDING
REPUBLIC ACT NO. 3844. OTHERWISE KNOWN AS THE AGRICULTURAL LAND REFORM
CODE. AS AMENDED
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
SECTION 1. Section 74 of Republic Act No. 3844 is amended to read as follows:
SEC. 74. Creation. To finance the acquisition by the Government of landed estates for division and
resale to small landholders, as well as the purchase of the landholding by the agricultural lessee from
the landowner, there is hereby established a body corporate to be known as the Land Bank of the
Philippines, hereinafter called the Bank, which shall have its principal place of business in Manila. The
legal existence of the Bank is extended for a period of fifty (50) years from the expiration of its original
term on 08 August 2013, renewable for another fifty (50) years. The Bank shall be subject to such rules
and regulations as the Central Bank may from time to time promulgate.
SEC. 2. Separability Clause. If, for any reason, any provision of this Act is declared invalid or
unconstitutional, the remaining provisions not affected thereby shall continue to be in force and effect.
SEC. 3. Repealing Clause. All laws, decrees, executive orders, proclamations, rules and regulations,
and other issuances, or parts thereof, which are inconsistent with the provisions of this Act are hereby
repealed or modified accordingly.
SEC. 4. Effectivity Clause. This Act shall take effect fifteen (15) days after its complete publication in
the Official Gazette or in at least two (2) newspapers of general circulation, whichever is earlier.
Approved: MAR 05 2013
Development Bank of the Philippines
AN ACT CREATING THE REHABILITATION FINANCE CORPORATION
CHAPTER I
ESTABLISHMENT AND FUNCTIONS
Section 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 Bank, which shall have its principal place
of business in the Municipality of Makati, Province of Rizal, and shall exist for a period of fifty years. (As
amended by Republic Act No. 2081, June 14, 1958.)
Section 2. Corporate powers. - The Development Bank of the Philippines shall have power:
(a) To grant loans for home building or home financing projects and for the rehabilitation,
establishment or development of any agricultural and/or industrial enterprise, including public
utilities, mining, livestock industry and fishing, whether offshore or inland; (As amended by
Republic Act No. 2081, June 14, 1958.)
(b) To purchase preferred redeemable shares of stock, securities, other than shares of stock,
and obligations of, and to grant loans to, any agricultural and industrial enterprises mentioned
in paragraph (a) to finance their fixed and operating capital requirements. All purchases of
preferred redeemable shares, securities and obligations and all loans shall be of such sound
value or so secured, as reasonably to assure retirement of such shares, securities or
obligations or repayment of the loan; and shall be granted only under such terms, conditions
and restrictions as the bank shall determine; (As amended by Republic Act No. 3147, June
17, 1961.)
(c) To grant loans to provincial, city and municipal governments for the rehabilitation,
construction or reconstruction of public markets, irrigation, waterworks, toll bridges,
slaughterhouses, for cadastral surveys and other self-liquidating or income-producing
services, or the purchase and acquisition and machineries and to agencies and corporations
owned or controlled by the Government of the Republic of the Philippines for the production
and distribution of electrical power, for the purchase and subdivision of rural and urban
estates, for housing projects, for irrigation and waterworks system, and for other essential
industrial and agricultural enterprises; (As amended by Republic Act Nos. 2081 and 3157.)
(d) To grant loans to cooperative associations to facilitate production, the marketing of crops,
and the acquisition of essential commodities;
(e) To grant loans to individual employees in a government-owned or controlled corporation or
private corporation engaged in the development and/or expansion of agriculture or industry,
for the purpose of buying shares of stock directly from such corporation for the purpose of
enabling them to participate in the ownership and to share in the profits thereof; Provided,
That the yearly amortization of such loans shall not exceed ten percent of the total annual
salary and wages of the borrower: Provided, further, That such loans shall be payable in full
within a period no exceeding ten years: Provided, finally, That if the borrower should sell any
share of stock acquired by him from the proceeds of such loans, the corporation that issued
said share of stock shall have preference to purchase the same; (As amended by Republic
Act No. 3147.)
(f) To underwrite, purchase, own, sell, mortgage or otherwise dispose of stocks, bonds,
debentures, securities and other evidences of indebtedness issued for or in connection with
any project or enterprise referred to in the preceding paragraphs;
(g) To issue bonds, debentures, securities, collaterals, and other obligations and/or renewal
or the refunding of the same upon the recommendation of the Secretary of Finance and with
the approval of the President, but in no case to exceed at any one time an aggregate amount
equivalent to ten times of its paid-in capital and surplus. These bonds and other obligations
shall be redeemable at the option of the Bank at or before maturity and in such manner as
may be stipulated therein and shall bear such rate of interest as may be fixed by the Bank.
Such obligations shall be secured by the assets of the Bank, including the stocks, bonds,
debentures and other securities underwritten, purchased or held by it under the provisions of
this Act. The Bank shall provide for appropriate reserves for the redemption or retirement of
said obligations. Such obligations may be issued and offered for sale at such price or prices
as the Bank may determine, and shall be exempt from taxation both as to principal and
interest. The said obligations shall be and are hereby fully and unconditionally guaranteed
both as to principal and interest by the Government of the Republic of the Philippines and
such guaranty shall be expressed on the face thereof.
In the event that the Bank shall be unable to pay debentures, bonds, collaterals, notes or
other such obligations issued by it, the Secretary of Finance shall pay the amount thereof,
which is hereby appropriated out of any moneys in the National Treasury not otherwise
appropriated, and thereupon, to the extent of the amounts so paid, the Government of the
Republic of the Philippines shall succeed to all the rights of the holders of such bonds, notes,
debentures, collaterals, or other obligations.
Subject to the above provisions, the Bank is also authorized to issue "Rehabilitation and
development bonds" in denominations of not less than fifty pesos nor more than one
thousand pesos redeemable by the Bank on demand at the option of the holder of said
bonds, which may be of the following types: (1) rehabilitation and development bonds at
progressive staggered interest with cumulative face value; and (2) rehabilitation and
development bonds bearing interests as may be determined by the Board of Governors with
the advise and consent of the Secretary of Finance and upon approval by the Monetary
Board, said interest to become due and payable semi-annually and payment thereof to be
annotated on the back of each bond certificate. Maturity of both types of bonds shall be fixed
by the Board of Governors but in no case to exceed ten years.
The Board of Governors shall have the power to prescribe rules and regulations for the
issuance, reissuance, servicing placement and redemption of the bonds herein authorized to
be issued by the Bank as well as the registration of such bonds at the request of the holders
thereof, with the approval of the Monetary Board of the Philippines.
(h) To adopt, alter, and use a corporate seal which shall be judicially noticed; to make
contracts; to borrow money; to issue or own real and personal property, and to sell, mortgage
or otherwise dispose of the same; to sue and be sued; to employ such officers and personnel
as may be necessary to carry out the business of the bank; and otherwise to do and perform
any and all things that may be necessary or proper to carry out the purposes of the Bank. (As
amended by Republic Act No. 2081.)
(i) To subscribe out of its funds to the capital stock of private provincial and city development
banks created pursuant to the provisions of this Act: Provided, That the aggregate of such
subscriptions shall not exceed twenty-five million pesos; (Added by Republic Act No. 2081.)
(j) To rediscount intermediate and long term notes, loans and/or mortgages of the Philippine
National Bank; and (As amended by Republic Act No. 3147.)
(k) The provision of any law to the contrary notwithstanding, to guarantee acceptance credits,
loans, transactions, or obligations of any person, co-partnership, association or corporation in
favor of any financing or banking institution, whether foreign or domestic: Provided, That the
proceeds of such acceptance credits, loans, transactions or obligations have been utilized or
are earmarked for the development and/or expansion of agriculture or industry. (Inserted by
Republic Act No. 3147.)
 (l) The provision of any law to the contrary notwithstanding, the total liabilities of any person,
company, corporation or firm, or political subdivision of the Government, with the exception of
money borrowed against obligations of the Central Bank or of the Philippine Government or
borrowed with the full guarantee by the Government of payment of principal and interest,
shall, exclusive of guarantees under paragraph (k), of Section 2 hereof, at no time exceed
thirty per cent (30%) of the paid-in capital and surplus of the bank. (Inserted by Republic Act
No. 3517, June 14, 1963.)
Section 3. Capital stock. - The capital stock of the Bank shall be three billion pesos divided into three
million 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, and payment of the said subscription
shall be as follows:
At least fifty per centum (50%) of the surplus account of the Bank as of June 30, 1962 and at least
twenty per centum (20%) of the net profits that may hereafter be realized as well as the profits that may
be assigned as dividends to the shares of the Government shall be automatically applied to the payment
of the subscribed capital stock of the government until the said capital stock shall have been fully paid
for, in which case the said profit shall be utilized for such purposes as may be authorized by the Board of
Governors. (As amended by Presidential Decree No. 195, May 19, 1973.)
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.
Section 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 granting 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 when the interest of the national economy so requires and
upon approval of the President of the Philippines for a specified and limited period, the proportions
hereinabove stated need not be observed in the granting of loans; 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, finally, That the bank may invest
funds for the purchase of such mortgage bonds as the Philippine National Bank shall issue for the grant
of medium and long term development loans, which bonds must be guaranteed by the government both
as to principal and interest.
Section 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. (Inserted by Republic Act
No. 2081.)
Section 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. (Inserted by
Republic Act No. 2081.)
Section 7. There shall be three classes or categories of private development banks, namely: class A,
class B, and class C. (Inserted by Republic Act No. 2081.)
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. (Inserted by Republic Act No. 2081.)
Section 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. (Inserted by
Republic Act No. 2081.)
Section 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. (Inserted by Republic Act No. 2081.)
Section 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. (Inserted by Republic Act No. 2081.)
Section 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. (Inserted by Republic Act No. 2081.)
Section 12. The trust fund shall be used by the Bank in assisting private development banks as follows:
(a) To pay for its subscription to preferred shares of stock in said private development banks
in the manner and subject to the terms and conditions prescribed in Section nine hereof;
(b) To rediscount promissory notes and other credit instruments held by the private
development bank under the following conditions and limitations:
(1) It charges such rediscount or interest rates as it may determine taking into
account that the main objective of the private development banks is to engage in
medium and long-term loans for economic development. The determination of
such rediscount or interest rates acceptable to the bank for purposes of this
provision shall be made by the said bank upon or immediately after the
commencement of operations of a private development bank;
(2) Funds so acquired shall be used only to finance the establishment and
operation of projects within the development program of the National Economic
Council or along such projects and activities as the National Economic Council
may, from time to time, approve. (Inserted by Republic Act No. 2081.)
Section 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. (Inserted by Republic Act No. 2081.)
CHAPTER II
OFFICERS AND EMPLOYEES
Section 14. Board of Governors. - The affairs and business of the Corporation shall be directed, its
powers exercised, and its property managed and preserved by a Board of Governors consisting of the
Chairman and six other members to be appointed by the President of the Philippines with the consent of
the Commission on Appointments. The Chairman and three other members of the Board to be
designated by the President shall render full time service to the Corporation. The term of office of the
Chairman and other members of the Board shall be seven years, except that of the first members which
shall be one, two, three, four, five, six, and seven years and which shall be specified in their respective
appointments. The compensation of the Chairman and other members of the Board of Governors shall
be fixed by the President of the Philippines, who may remove any of them for cause.
The President may designate as Vice-Chairman one of the eight members of the Board who shall
preside the meetings of the Board in the absence or temporary incapacity of the Chairman.
No person shall be appointed Chairman or member of the Board of Governors unless he be of good
moral character and unquestionable integrity and be of recognized competence in economics,
agriculture, industry, finance and/or banking. (Originally Section 4, renumbered by Republic Act No.
2081.)
Section 15. Duties and powers of the Board. - The Board of Governors shall have the following
powers:
(a) To prescribe, amend and repeal, with the approval of the President of the Philippines, by-
laws, rules and regulations governing the manner in which the general business of the
Corporation may be conducted and the powers granted by law to the Corporation may be
exercised, including a provision for the formation of such committee or committees as the
Board of Governors may deem necessary to facilitate its business;
 (b) To fix the rates of interest on loans in accordance with the different classes of transaction
and securities provided in this Act;
(c) To establish such branches and agencies as may be deemed necessary and convenient;
(d) To provide for the appointment and removal and to fix reasonable compensation of such
personnel as may be necessary for the expeditious conduct of the business of the
Corporation. (Originally Section 5, renumbered by Republic Act No. 2081.)
Section 16. The Chairman. - The Chairman of the Board shall be the chief executive officer of the
Corporation. He shall, on behalf of the Board, have the direction and control of the business of the
Corporation in all matters which are not by this Act or by the by-laws of the Corporation specifically
reserved to be done by the Board of Governors or other officers of the Corporation. (Originally Section 6,
renumbered by Republic Act No. 2081.)
Section 17. Legal counsel. - The Secretary of Justice shall be ex officio the legal adviser of the
Corporation. He shall appoint a representative, who shall be the legal counsel of the Corporation. The
assistant and personnel of the legal counsel shall also be appointed by the Secretary of Justice. The
operating expenses of the office of the legal counsel and the salaries and traveling expenses of the
officers and employees thereof shall be fixed by the Board of Governors and paid by the Corporation.
(Originally Section 7, renumbered by Republic Act No. 2081.)
Section 18. The Auditor. - The Auditor General shall be ex officio auditor of the Corporation and shall
appoint a representative, who shall be the auditor in charge of the auditing office of the Corporation. The
Auditor General shall upon the recommendation of the auditor of the Corporation, appoint or remove the
personnel of the auditing office. The operating expenses of the auditing office and the salaries and
traveling expenses of the officers and employees thereof shall be fixed by the Board of Governors and
paid by the Corporation. The representative of the Auditor General shall make a quarterly report on the
condition of the Corporation to the President of the Philippines, to the Senate through its President and
the House of Representatives through its Speaker, to the Secretary of Finance, to the Auditor General
and to the Board of Governors of the Corporation. The report shall contain, among other things, a
statement of the resources and liabilities including earnings and expenses, the amount of capital stock,
surplus, reserve and profits, as well as the losses, bad debts, and suspended and overdue paper carried
in the books as assets of the Corporation, and plantilla of the Corporation.(Originally Section 8,
renumbered by Republic Act No. 2081.)
Section 19. Transfer of functions, assets and liabilities of the Agricultural and Industrial Bank. -
All the powers vested in and the duties conferred upon the Agricultural and Industrial Bank by
Commonwealth Act No. 459, as amended, the funds and properties heretofore placed under the
administration of the said Agricultural and Industrial Bank by said Act, and all its capital, assets,
accounts, contracts, and choses in action, are transferred to the Rehabilitation Finance Corporation,
which shall exercise said powers and duties in accordance with the provisions of said Act, except as
herein otherwise provided, and shall administer, dispose of, handle and execute said funds, properties,
capital, assets, accounts, contracts, or agreements and choses in action in the manner the Corporation
may determine in the interest of the funds concerned, and the Corporation shall assume all the liabilities
of the Agricultural and Industrial Bank as such or as trustee, as the case may be. The total amount of the
unimpaired capital of the Agricultural and Industrial Bank shall be credited to the subscription of the
Government of the Republic of the Philippines to the capital stock of the Corporation. The Agricultural
and Industrial Bank shall stand abolished on the date when the Corporation shall begin its operations.
(Originally Section 9, renumbered by Republic Act No. 2081.)
CHAPTER III
MISCELLANEOUS PROVISIONS
Section 20. Rehabilitation funds for Domestic Banks and Insurance Companies. - All authority,
control and administration of the rehabilitation funds provided in Commonwealth Act Numbered Seven
hundred twenty-six and in Executive Order No. 107 dated April 20, 1946, as amended, are hereby
transferred to the Rehabilitation Finance Corporation, which shall hereafter be the owner of and have the
sole power of disposition and control over said funds. Such disposition and control shall be in
accordance with the provisions of said Act and Executive Order until the purposes thereof shall have
been accomplished. All stock heretofore issued to the Government in exchange for contributions or
subscriptions made out of said funds shall be transferred to and issued in the name of the Corporation,
and the total amount of said funds shall be credited to the subscription of the Government of the
Republic of the Philippines to the capital stock of the Corporation. The powers and functions heretofore
conferred upon the Financial Rehabilitation Board shall be assumed and exercised by the Board of
Governors of the Corporation. (Originally Section 10, renumbered by Republic Act No. 2081.)
Section 21. Obligations of the Corporation. - Obligations of the Corporation shall be lawful
investments, and may be accepted as security of all fiduciary, insurance, trust, and public funds the
investment or deposit of which are under the authority, control or supervision of the Government or any
of its officer or officers. (Originally Section 11, renumbered by Republic Act No. 2081.)
Section 22. Prohibitions and penalties. - No member of the Board of Governors, officer, attorney,
agent, or employee of the Corporation shall in any manner, directly or indirectly, participate in the
deliberation upon or the determination of any question affecting his personal interests, or the interests of
any corporation, partnership, or association in which he is directly or indirectly interested. Any person
violating the provisions of this Section shall be summarily removed from office and shall upon conviction
be punished with a fine not to exceed ten thousand pesos and with imprisonment not to exceed five
years. (Originally Section 12, renumbered by Republic Act No. 2081.)
Section 23. No officer or employee of the bank nor any government official who may exercise executive
or supervisory authority over the said bank, either directly or indirectly, for himself or as the
representative or agent of others, shall, except when the same shall be in the form of advances
appropriated or set aside by the bank itself in order to provide for housing for the benefit of its officials
and employees, borrow money from the bank, nor shall he become a guarantor, endorser, or surety for
loans from the bank to others, or in any manner be an obligor for moneys borrowed from the said bank.
Any such officer or employee who violates the provisions of this Section shall be immediately removed
by competent authority and said officer or employee shall be punished by imprisonment not less than
one year nor exceeding five years and by a fine of not less than one thousand nor more than five
thousand pesos. (Originally Section 13, renumbered by Republic Act No. 2081.)
Section 24. No loan shall be granted by the Corporation to a corporation, partnership, or company
wherein any member of its Board of Governors is a shareholder, agent or employee in any capacity,
except by the unanimous vote of the members of the Board of Governors, excluding the member
interested, and with the approval of the President. Any member of the Board of Governors who violates
the provisions of this Section shall immediately be removed by the President of the Philippines and he
shall, furthermore, be punished as provided in the next preceding section. (Originally Section 14,
renumbered by Republic Act No. 2081.)
Section 25. No fee, commission, gift, or charge of any kind shall be exacted, demanded, or paid, for
obtaining loans from the Corporation, and any officer, employee, or agent of the Corporation exacting,
demanding, or receiving any fee for service in obtaining a loan, shall be punished by a fine of not less
than one thousand nor more than three thousand pesos and imprisonment for not less than one year nor
more than three years. (Originally Section 15, renumbered by Republic Act No. 2081.)
Section 26. Any person who, for the purpose of obtaining, renewing, or increasing a loan or the
extension of the period thereof in his own or another's behalf, should give any false information or cause,
through his intrigue or machination, the existence and production of any false information with regard to
the identity, situation, productivity, or value of the security, or with regard to a point which would affect the
granting or denial of the loan, whether the latter has been consummated or not, and every officer or
employee of the Corporation who, through connivance or negligence, should allow by action or omission
such false information to pass unnoticed, thereby causing damage to the Corporation or exposing the
latter to the danger of suffering such damage, shall be punished with imprisonment for not less than
three months nor more than three years, and a fine of not less than the amount of the loan obtained or
applied for, nor more than three times such amount. (Originally Section 16, renumbered by Republic Act
No. 2081.)
Section 27. Any officer or employee of the Corporation who violates, or permits any of the officers,
agents, or servants of said Corporation or any other person to violate any of the provisions of this Act not
specifically punished in the preceding sections, and any person violating any provision of this Act or
aiding and abetting the violation thereof, shall be punished with a fine not to exceed ten thousand pesos
and with imprisonment not to exceed five years. (Originally Section 17, renumbered by Republic Act No.
2081.)
Section 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. (Inserted by Republic Act No. 2081.)
Section 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. (Inserted by
Republic Act No. 2081.)
Section 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. (Inserted by Republic Act No. 2081.)
Section 31. This Act shall take effect upon its approval.
Approved: October 29, 1946
EXECUTIVE ORDER NO. 81 December 3, 1986
Repealed Sec. 11 and Amended Sec. 7,8,10,12 & 13 by RA 8523
PROVIDING FOR THE 1986 REVISED CHARTER OF THE DEVELOPMENT BANK OF THE
PHILIPPINES
WHEREAS, it is the policy of the State that the national interest in both the maintenance of economic
stability and the promotion of economic development is best served by a system of financial
intermediation that places primary reliance on the private sector, on the maintenance of conditions of
competition, and on the market mechanism for its effective operations.
WHEREAS, within the context of the general policy there nevertheless exists a clear role for direct
government participation in the banking system through a government development bank, particularly in
servicing the medium and long term requirements of agriculture, and small and medium scale industry,
export development, and the government sector;
WHEREAS, in pursuit of this national policy there is need to restructure the government financial
institutions, particularly the Development Bank of the Philippines, to achieve a more efficient and
effective use of available resources, to improve their viability, and avoid unfair competition with the
private sector; and
NOW, THEREFORE, I, CORAZON C. AQUINO, President of the Philippines, do hereby order.
Sec. 1. This Executive Order shall be known as " THE 1986 REVISED CHARTER OF THE
DEVELOPMENT BANK OF THE PHILIPPINES".
Sec. 2. Name, Purpose and Domicile. The Development Bank of the Philippines, hereinafter called the
Bank, operating under the provisions of Republic Act No. 85, as amended, shall henceforth operate
under the provisions of this 1986 Revised Charter. The Bank shall be a body corporate and shall exist for
a period of fifty years.
The primary purpose of the Bank shall be to provide banking services principally to service the medium
and long term needs of agricultural and industrial enterprises, particularly in the country-side and
preferably for small and medium scale enterprises; Provided, however, that the pursuit of these
objectives shall be undertaken within the context of a financially viable and stable banking institutions;
Provided, further that the Bank shall continue to be classified as a development Bank, Provided, finally,
that unless otherwise provided herein, the Bank may perform all other functions of a thrift bank.
The Bank's principal office and place of business shall be in the National Capital Region, also known as
Metro Manila. It may open and maintain branches, agencies or other offices at such places in the
Philippines as its Board of Directors may deem advisable, with the prior approval of the Monetary Board
of the Central Bank of the Philippines.
Sec. 3. Corporate Powers. The Development Bank of the Philippines shall have the power.
(a) To accept such deposits as are allowed thrift banks under existing law and Central Bank
regulations, including but not limited to demand, savings, and time deposits.
(b) To grant loans for the establishment, development or expression of any agricultural or
industrial enterprise;
(c) To accept and manage trust funds and properties and carry on the business of a trust
corporation;
(d) To act as official government depository with authority to maintain deposits of the
government, its subdivisions, branches, and instrumentalities, and of government-owned or
controlled corporations, subject to such rules and regulations as the Monetary Board may
prescribe;
(e) To acquire, assign, or otherwise dispose of marketable securities and other debt
instruments which are essential to the effective conduct of its general banking activities;
(f) To enter into such contracts of guaranty on suretyship as are generally allowed domestic
banking institutions under the General Banking Act; and
(g) To adopt, amend, or charge its By-laws; to adopt, alter and use a seal; to make contracts;
to sue and be sued; and to exercise the general powers of a corporation mentioned in the
Corporation Code of the Philippines, and of a thrift bank under the General Banking Act,
insofar as such powers are not inconsistent or incompatible with the provisions of this
Charter.
Unless otherwise provided in this Charter, the exercise of the above-mentioned powers on banking shall
be subject to applicable law, as well as regulations promulgated by the Central Bank of the Philippines.
Sec. 4. Loans and other Investments. Loans and other investments of the Bank shall be subject to the
same limits and ceilings applicable to thrift banks under existing provisions of law and regulations
promulgated by the Monetary Board, including but not limited to prescribed limits and ceilings; Provided,
that loans and investments existing as of the date of the effectivity of this Charter and which loans and
investments would exceed the prescribed limits as a result of the implementation of its rehabilitation
program, as well as those investment authorized under Section 6 hereof which are in excess of the
prescribed limits shall be reduced within five years in accordance with such program of reduction as may
be approved by the Monetary Board. The period of reduction may be extended up to another five years
by the President of the Philippines upon recommendation by the Monetary Board.
Sec. 5. Issuance of Bonds. The Bank may issue all kinds of bonds, debentures, and securities, and/or
the renewal or refunding thereof (hereinafter called "Bonds"), within and/or outside the Philippines, at
such terms, rates, and conditions as the Board of Directors of the Bank may determine, subject to
compliance with the provisions of applicable law, and rules and regulations promulgated by the Monetary
Board.
The Bank shall provide for appropriate reserves for the redemption or retirement of the bonds. These
bonds and other obligations shall be redeemable at the option of the Bank at or before maturity and in
such manner as may be stipulated therein and shall bear such rate of interest as may be fixed by the
Bank.
Such obligations shall be secured by the assets of the Bank, including the stocks, bonds, debentures,
and other securities purchased or held by it under the provisions of this Charter. These bonds and
debentures may be long-term, medium, or short-term, with fixed interest rate or floating interest rate.
Sec. 6. Private Development Banks, Other Thrift Banks and Rural Banks. The Bank may assist private
development banks and other privately owned banks in the thrift bank category, as well as rural banks,
through general credit accommodations including but not limited to conduit lending and rediscounting
operations, and extension of technical and managerial assistance; Provided, That the Bank may likewise
make equity investments in private development banks and other private owned banks in the thrift bank
category, as well as rural banks, if such investment is in connection with the privatization of certain
branches of the Bank; Provided, further, That the extent of such equity investment may, with the prior
approval of the Monetary Board, exceed the ceilings prescribed in Section 4 hereof; and, Provided,
finally, That after five years from effectivity of this Charter, any equity investment shall not exceed thirty
(30%) per cent of the equity in any such bank nor shall its total equity investments exceed the prescribed
aggregate ceiling on such investments.
Sec. 7. Authorized Capital Stock Par value. The capital stock of the Bank shall be Five Billion Pesos to
be divided into Fifty Million common shares with par value of P100 per share. These are available for
subscription by the National Government. Upon the effectivity of this Charter, the National Government
shall subscribe to Twenty-Five Million common shares of stock worth Two Billion Five Hundred Million
which shall be deemed paid for by the Government with the net asset values of the Bank remaining after
the transfer of assets and liabilities as provided in Section 30 hereof.
Sec. 8. Board of Directors Composition Tenure Per Diems. The affairs and business of the Bank shall be
directed and its properties managed and preserved and its corporate powers exercised, unless
otherwise provided in this Charter, by a Board of Directors consisting of nine members, to be appointed
by the President of the Philippines. The term of office of the Chairman, Vice-Chairman, and the members
of the Board of Directors shall be for a period of one year or until such time as their successors are
appointed.
The Chairman and the Vice Chairman of the Board shall be appointed by the President of the
Philippines. The Vice Chairman of the Board 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.
No person shall be elected director of the Bank unless he is a natural-born citizen of the Philippines, not
less than thirty-five years of age, of good moral character and has attained proficiency, expertise and
recognized competence in one or more of the following: banking, finance, economics, law, agriculture,
business management, public utility or government administration.
At least four of the members of the Board shall come from the private sector.
Except for the Chairman and the Vice Chairman of the Board, no officer or employee of the Bank may be
appointed as a member of the Board of Directors of the Bank; nor shall any director, officer, or employee
of any other bank be eligible as a member of the Board of Directors of the Bank.
Unless otherwise set by the Board and approved by the President of the Philippines, members of the
Board shall be paid a per diem of one thousand pesos for each meeting of the Board of Directors
actually attended: Provided, that the total amount of per diems for every single months shall not exceed
the sum of Five Thousand Pesos.
Sec. 9. Powers and Duties of the Board of Directors. The Board of Directors shall have, among others,
the following duties, powers and authority:
(a) To formulate policies necessary to carry out effectively the provisions of this Charter and
to prescribe, amend, and repeal by-laws, rules and regulations for the effective operation of
the Bank, and the manner in which the general business of the Bank may be conducted and
the powers granted by law to the Bank exercised;
(b) To approve loans, to fix rates of interest on loans and to prescribe such terms and
conditions for loans and credits as may be deemed necessary, consistent with the provisions
of this Charter; Provided, that the Board may delegate the authority to approve loans to such
officers as may be deemed necessary;
(c) To adopt an annual budget for the effective operation and administration of the Bank;
(d) To create and establish a "Provident Fund" which shall consist of contributions, made both
by the Bank and its officers or employees, to a common fund for the payment of benefits to
such officers or employees, or their heirs, under such terms and conditions as the Board of
Directors may fix;
(e) To compromise or release, in whole or in part, any claim or settled liability to the Bank
regardless of the amount involved, under such terms and conditions it may impose to protect
the interests of the Bank. This authority to compromise shall extend to claims against the
Bank; and
(f) To appoint, promote or remove officers from the rank of Vice President or its equivalent,
and other more senior officer positions, excluding the Chairman and the Vice Chairman.
Sec. 10. Chairman and Chief Executive Officer. The Chairman shall be the Chief Executive Officer of the
Bank and, as such, shall, on behalf of the Board, have the direction and control of the business affairs
and properties of the Bank in all matters which are not by this Charter or by the By-Laws of the Bank
specifically reserved to be done by the Board or other officers of the Bank. For this purpose, he shall,
among other powers and duties, execute, carry out, and administer the policies, measures, orders, and
resolutions approved by the Board; direct and supervise the operation and administration of the Bank;
and exercise such other powers and perform such other functions or duties as may be directed or
assigned to him by law or by the Board from time to time.
Particularly, he shall have the power and duty:
(a) To sign and execute all contracts concluded by the Bank and enter into all necessary
obligations required or permitted by this Charter, upon proper authorization by the Board; and
sign all notes, securities certificates, and other major documents of the Bank;
(b) To exercise, as Chief Executive Officer of the Bank, the powers of control and supervision
over decisions and actions of subordinate officers and all other powers that may be granted
by the Board;
(c) To report to the Board the main facts concerning the operations of the Bank and to
recommend changes in policies which he may deem advisable;
(d) To submit an annual report to the President of the Philippines on the result of the
operations of the Bank;
(e) To recommend to the Board the appointment, promotion, or removal of all officers of the
Bank, with the rank of at least vice-president or its equivalent;
 (f) To appoint, promote or remove employees and officers below the rank of vice-president or
its equivalent; Provided, that promotions, transfers, assignments or reassignments of officers
and personnel of the Bank are personnel actions deemed made in the interest of the service
and not disciplinary, any provision of the Civil Service Law to contrary notwithstanding; and
(g) As required by circumstances, to delegate any of his powers, duties or functions to any
officer or director of the Bank, with the approval of the Board.
Sec. 11. Vice Chairman and Chief Operating Officer. The Vice Chairman shall be the Chief Operating
Officer of the Bank and shall assume and exercise such specific duties and responsibilities as may be
delegated to him by the Chairman.
Sec. 12. Legal Matters and Cases. The Bank shall have its own Legal Department, the head of which
shall be appointed by the Board of Directors of the Bank upon recommendation of the Chairman.
In appropriate cases, the Bank may avail also of the legal services of any government legal office
authorized to render such services to government-owned or controlled corporations.
The Bank may, upon the recommendation of its Chief Legal Counsel, deputize any member of its legal
staff to act as special sheriff in foreclosure cases, in the sale or attachment of the debtor's properties and
in the enforcement of court writs and processes in cases involving the Bank. The special sheriff of the
Bank shall make a report to the proper court after any action taken by him, which shall treat such action
as if it were an act of its own sheriffs in all respects.
Sec. 13. Other Officers and Employments. The Board of Directors shall provided for an organization and
staff of officers and employees of the Bank and upon recommendation of the Chairman of the Board, fix
their remunerations and other emoluments.
No Officer or employee of the Bank subject to Civil Service Law shall be dismissed except as provided
by law.
Sec. 14. Exemption from Attachment. The provisions of any law to the contrary notwithstanding,
securities on loans and/or other accommodation granted by the Bank or its predecessors-in-interest shall
not be subject to attachment, execution or any other court process, nor shall they be included in the
property of insolvent persons or institutions, unless all debts and obligations of the debtor to the Bank
and its predecessors-in-interest have been previously paid, including accrued interest, penalties,
collection expenses, and other charges, subject to the provisions of paragraph (e) of Section 9 of this
Charter.
Sec. 15. Officer to Conduct Sale. In case of sale of mortgaged properties under the provisions of existing
laws or of this Charter, such sale shall be conducted under the direction of the sheriff of the Province or
any special sheriff of the Bank, or of a municipal judge or notary public of the City or Municipality where
the sale is to be made, who shall be entitled to collect the fees provided for in the Rules of the Court with
respect to sale of properties under execution.
Sec. 16. Right of Redemption. Any mortgagor of the Bank whose real property has been extrajudicially
sold at public auction shall, within one (1) year counted from the date of registration of the certificate of
sale, have the right to redeem the real property by paying to the Bank all of the latter's claims against
him, as determined by the Bank.
The Bank may take possession of the foreclosed property during the redemption period. When the Bank
takes possession during such period, it shall be entitled to the fruits of the property with no obligation to
account for them, the same being considered compensation for the interest that would otherwise accrue
on the account. Neither shall the Bank be obliged to post a bond for the purpose of such possession.
Sec. 17. Inhibition from Board Meeting of Member with Personal Interest. Whenever any member
attending a meeting of the Board of Directors has a direct personal interest in the discussion or
resolution of any given matter, or any of his relatives within the second civil degree or consanguinity or
second civil degree of affinity has such an interest, said member shall not participate in the discussion or
resolution of the matter and must retire from the meeting during the deliberation thereon. The minutes of
the meeting, which shall note the subject matter, when resolve, the fact that a member had a personal
interest in it, and the withdrawal of the member concerned, may be made available to the public.
For this purpose, the member of the Board shall, at the beginning of their respective terms, disclose to
the board any and all interests they may have in any corporation, partnership. or association and shall,
thereafter, disclosed to the Board, any charges thereto.
Sec. 18. Prohibition on Persons with Personal Interest. No member of the Board, officer, attorney, agent,
or employee of the Bank shall in any manner, directly participate in the deliberation upon or the
determination of any question affecting his direct personal interest or the personal interests of his
relatives within the second civil degree of consanguinity or second civil degree of affinity, or of any
corporation, partnership, or association in which he has a direct interest. Any person violating the
provisions of this section shall be summarily removed from office and shall upon conviction be punished
with a not less than one thousand pesos nor more than ten thousand pesos or with imprisonment of not
less than one year nor more than five years, or by both fine and imprisonment at the discretion of the
court.
Sec. 19. Borrowing by Directors, Officer and Employees Restriction and Limitation. No director or officer
or employees of the Bank or any corporation, partnership, or company wherein any member of the
Board of Directors, officer or employee, and/or their respective immediate family is a controlling
shareholder, or wherein he is a director or officer shall, either directly or indirectly, for himself or as
representative or agent of others, borrow any of the deposits of funds from the bank, nor shall he
become a guarantor, or in any manner be an obligator for money borrowed from the bank or loaned by it:
Provided, That this prohibition on loans to directors, officers and employees shall not include loans
allowed in the form of fringe benefits granted in accordance with rules and regulations as may be
prescribed by the Monetary Board of the Central Bank.
Sec. 20. Rules and Regulations on Conflict of Interest. The foregoing provisions notwithstanding and in
addition thereto, the Board of Directors is hereby authorized to issue rules and regulations for the
purposes of determining and resolving conflict of interest questions, which rules shall, in particular,
include the requirement on all officers and employees of the Bank to disclose any shareholdings they, or
their relatives within the second civil degree of consanguinity or second civil degree of affinity, may have
in any corporation, partnership, or company in excess of 2% of the equity of said corporation,
partnership, or company.
Sec. 21. Examination of the Bank. The Bank shall be subject to supervision and examination by the
appropriate department of the Central Bank of the Philippines.
Sec. 22. Prohibition on Officers and Employees of the Bank. Except as required by law, or upon order of
a court of competent jurisdiction, or the express order of the President of the Philippines or written
permission of the client, no officer or employee of the Bank shall reveal to, nor allow to be examined,
inquired or looked into, by any third person, government official, bureau or office any information relative
to details of individual accounts or specific banking transactions: Provided, that in respect to deposits or
whatever nature, the provisions of existing law shall apply.
This prohibition shall not apply to the exchange of confidential credit information among government
financial institutions or among banks, in accordance with established banking practices or as may be
allowed by law.
Sec. 23. Exaction of Fee, Commission, Gift or Charge. No authorized fee, commission, gift, or charge of
any kind shall be exacted, demanded, or paid, for obtaining loans from the Bank, and any officer,
employee, or agent of the Bank found guilty of exacting, demanding, or receiving any fee services in
obtaining a loan, shall be punished by a fine of not less than one thousand nor more than twenty
thousand pesos, imprisonment for not less than one year nor more than ten years, and perpetual
disqualification from public office.
Sec. 24. Penal Provisions of General Banking Act. The penal provisions of Section 87-A of the General
Banking Act shall be applicable to officers, employees and borrowers of the Bank.
Sec. 25. General Penal Provisions. Any officer or employee of the Bank who violates, or permits any of
the officers, employees or agents of said Banks or any other person to violate, any of the provision of
this Chapter not specifically punished in the preceding section and any person violating any provision of
this Charter or aiding and abetting the violation thereof, shall be punished with a fine not less than one
thousand nor more than ten thousand pesos and with imprisonment not less than one year nor more
than five years.
Sec. 26. Other Liability of Guilty Officer or Employee. Any member of the Board of Directors or officer or
employee of the Bank who willfully violates any of the provisions of this Charter shall in, addition to the
criminal and administrative liability resulting from such act, be held liable for any loss or injury suffered
by the Bank as a result of such violation.
Sec. 27. Liability of Directors, Officers or Partners of Offending Corporation or Partnership. If the
violation of the provisions of this Charter is committed by a corporation or partnership, the directors,
officers or partners hereof who participated in the violation shall be criminally liable for such violation.
Sec. 28. Applicability of Banking Laws. The provisions of Republic Act No. 265, as amended, and
Republic Act No. 337, as amended, insofar as applicable and not in conflict with any provision of this
Charter, shall apply to the Bank.
TRANSITORY PROVISIONS
Sec. 29. Preparatory Work. Upon the effectivity of this Charter, the Board of Directors and management
of the Bank shall undertake the appropriate steps to establish its current financial condition for the
purpose of determining its net asset values and the book value of shares thereof. The shares of stock
held by the Government of the Philippines in the Bank are deemed cancelled and exchange for common
voting shares of the Bank.
Sec. 30. Transfer of Assets and Liabilities of the Development Bank of the Philippines. The Bank shall
transfer to the National Government such of its assets and liabilities as may be necessary to rehabilitate
the bank and to start its operations under the Revised Charter on a viable basis, as determined by the
appropriate authorities, such assets to include but need not be limited to its acquired assets and non-
performing accounts and such liabilities to include real as well as contingent liabilities. The National
Government is hereby authorized to accept the same under terms and conditions as may be mutually
acceptable to the Bank and the National Government.
Sec. 31. Maintenance, Care and Preservation of Assets Transferred to the National Government. The
Bank is hereby authorized to enter into an agreement with the National Government as transferee of
assets from the Bank as hereinabove provided, either as an interim arrangement or otherwise and under
such terms and conditions as may be necessary to preserve and/or to maintain and/or to dispose of
such assets transferred to the National Government.
Sec. 32. Authority to Reorganize. In view of the new scope of operations of the Bank, a reorganization of
the Bank and a reduction in force are hereby authorized to achieve simplicity and economy in
operations, including adopting a new staffing pattern to suit the reduced operations envisioned. The
formulation of the program of reorganization shall be completed within six months after the approval of
this Charter, and the full implementation of the reorganization program within thirty months thereafter.
Sec. 33. Implementing Details; Organization and Staffing of the Bank. Upon the effectivity of this Charter,
the Board of Directors of the Bank shall be constituted and its Chairman appointed. The Chairman is
hereby authorized, subject to the approval of the Board of Directors as appropriate, to issue such orders,
rules and regulations as may be necessary to implement the provisions of this Charter including those
relative to the financial aspects, if any, and to the reorganization of the Bank as hereinabove authorized
which will involve the determination and adoption of (1) the new internal structure of the Bank as
reorganized down to the divisional section or lowest organizational levels, including such appropriate
units as may be needed to handle caretaking activities such as the disposition of certain assets and the
collection of certain accounts; (2) a new staffing pattern including appropriate salary rates, and (3) the
initial operating budget.
In the implementation of the reorganization of the Bank, as authorized under the preceding section,
qualified personnel of the Bank may be appointed to appropriate positions in the new staffing pattern
thereof and those not so appointed are deemed separated from the service. No preferential or priority
rights shall be given to or enjoyed by any officer or personnel of the Bank for appointment to any position
in the new staffing pattern nor shall any officer or personnel be considered as having prior or vested
rights with respect to retention in the Bank or in any position as may have been created in its new
staffing pattern, even if he should be the incumbent of a similar position thereon.
Pending the completion of the personnel actions above provided and the issuance of the appropriate
implementing orders, all present remaining incumbents of position in the Bank shall continue to exercise
their usual functions, duties and responsibilities.
Sec. 34. Separation Benefits. All those who shall retire from the service or are separated therefrom on
account of the reorganization of the Bank under the provisions of this Charter shall be entitled to all
gratuities and benefits provided for under existing laws and/or supplementary retirement plans adopted
by and effective in the Bank: Provided, that any separation benefits and incentives which may be
granted by the Bank subsequent to June 1, 1986, which may be in addition to those provided under
existing laws and previous retirement programs of the Bank prior to the said date, for those personnel
referred to in this section shall be funded by the National Government; Provided, further, that, any
supplementary retirement plan adopted by the Bank after the effectivity of this Chapter shall require the
prior approval of the Minister of Finance.
Sec. 35. Banking Operations under 1986 Revised Charter, Government Laws. The banking operations of
the Bank shall be governed by the provisions of the 1986 Revised Charter beginning on January 2, 1987
on such subsequent date as may be determined by the President of the Philippines upon the
recommendation of the Minister of Finance.
Sec. 36. Separability Clause. In the event that any provision of this Charter or the applicability of such
provisions to any person or circumstances is declared invalid, the remainder of the Charter or the
application of said provision to other persons or circumstances shall not be affected by such declaration.
Sec. 37. Repealing Clause. All acts, executive, orders, administrative orders, proclamations, rules and
regulations or parts thereof inconsistent with any of the provisions of this charter are hereby repealed or
modified accordingly.
Sec. 38. Effectivity. This Charter shall take effect upon its approval.
Done in the City of Manila, this 3rd day of December, in the year of Our Lord, Nineteen Hundred and
Eighty-six.
Republic Act No. 8523 February 14, 1998
AN ACT STRENGTHENING THE DEVELOPMENT BANK OF THE PHILIPPINES, AMENDING FOR
THE PURPOSE EXECUTIVE ORDER NO. 81
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled::
Section 1. Sec. 7 of Executive Order No. 81, entitled "Providing for the 1986 Revised Charter of the
Development Bank of the Philippines" is hereby amended, as follows:
"Sec. 7. Authorized capital stock-par value. The capital stock of the Bank shall be Thirty-five
billion pesos (P35,000,000,000.00) to be divided into Three hundred fifty million
(350,000,000) common shares with par value of P100.00 per share, which shall be fully
subscribed by the national government. Upon the effectivity of this Charter, the National
Government shall initially subscribe to One hundred twenty-five million (125,000,000)
common shares of stock worth Twelve billion five hundred million pesos
(P12,500,000,000.00), Five billion pesos (P5,000,000,000.00) of which shall be deemed paid
for by the government and the balance shall be paid for by the government out of the stock
dividends to be declared by the Bank from its unappropriated retained
earnings: Provided, That the dividends due the national government pursuant to Republic Act
No. 7656 shall first be paid."
Section 2. Sec. 8 of the same Charter is hereby amended to read as follows:
"Sec. 8. Board of Directors; Composition; Tenure; Per Diems. The affairs and business of
the Bank shall be directed and its properties managed and preserved and its corporate
powers exercised, unless otherwise provided in this Charter, by a Board of Directors
consisting of nine (9) members, to be appointed by the President of the Philippines. The term
of office of the Chairman, President and the members of the Board of Directors shall be for a
period of one year or until such time as their successors are appointed.
"The Chairman of the Board shall be appointed by the President of the Philippines from
among the members of the Board: Provided, That the position of chairman of the Board and
president of the Bank shall not be held by the same person.
"The Chairman shall preside at meetings of the Board and of the stockholders
"The President of the Bank shall be vice-chairman of the Board, and as such, 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 the Vice-chairman, the Board of Directors shall designate
a temporary chairman from among its members.
 "No person shall be appointed director of the Bank unless he is a natural-born citizen of the
Philippines, not less than thirty-five (35) years of age, of good moral character and has
attained proficiency, expertise and recognized competence in one or more of the following:
banking, finance, economics, law, agriculture, business management or government
administration.
"At least four of the members of the Board shall come from the private sector.
"Except for the Chairman and the President, no officer or employee of the Bank may be
appointed, as a member of the Board of directors of the Bank; nor shall any director, officer or
employee of any other bank be eligible as a member of the Board of Directors of the Bank.
"Unless otherwise set by the Board and approved by the President of the Philippines,
members of the Board shall be paid a per diem of One thousand pesos (P1,000.00) for each
meeting of the Board of Directors actually attended: Provided, That the total amount of per
diems for every single month shall not exceed the sum of Seven thousand five hundred
pesos (P7,500.00)."
Section 3. Sec. 10 of the same Charter is hereby amended to read as follows:
"Sec. 10. President and Chief Executive Officer. The Chief Executive Officer of the Bank
shall be the President who shall be elected by the Board of Directors from among themselves
with the advice and consent of the President of the Philippines. No person shall be appointed
President of the Bank unless he is at least forty (40) years of age, of good moral character
and reputation, with at least ten (10) years previous experience in banking, and has a reputed
proficiency, expertise and recognized competence in banking or financial management.
"The President shall, among other powers and duties, execute, carry out and administer the
policies, measures, orders and resolutions approved by the Board; direct and supervise the
operation and administration of the Bank; and exercise such other powers and perform such
other functions or duties as may be directed to assigned to him by law or by the Board from
time to time.
"Particularly, he shall have the power and duty:
"(a) To sign and execute all contracts concluded by the Bank and enter into all
necessary obligations required or permitted by this Charter, upon proper
authorization by the Board; and sign all notes, securities, certificates and other
major documents of the Bank;
"(b) To exercise, as Chief Executive Officer of the Bank, the powers of control and
supervision over decisions and actions of subordinate officers and all other powers
that may be granted by the Board;
"(c) To report to the Board the main facts concerning the operations of the Bank
and to recommend changes in policies which he may deem advisable;
"(d) To submit an annual report to the President of the Philippines on the result of
the operations of the Bank;
"(e) To recommend to the Board the appointment, promotion, or removal of all
officers of the Bank, with the rank of at least vice-president or its equivalent;
"(f) To appoint, promote or remove employees and officers below the rank of vice
president or its equivalent: Provided, That promotions, transfers, assignments or
reassignments of officers and personnel of the Bank are personnel actions
deemed made in the interest of the service and not disciplinary, any provision of
the Civil Service Law to the contrary notwithstanding; and
"(g) As required by circumstances, to delegate any of his powers, duties or
functions to any officer or director of the Bank, with the approval of the Board."
Section 4. Sec. 11 of the same Charter is hereby repealed.
Section 5. Sec. 12 of the same Charter is hereby amended to read as follows:
"Sec. 12. Legal matters and cases. The Bank shall have its own Legal Department, the
head of which shall be appointed by the Board of Directors of the Bank upon
recommendation of the President of the Bank.
"In appropriate cases, the Bank may avail also of the legal services of any government legal
office authorized to render such services to government-owned or -controlled corporations.
"The Bank may, upon the recommendation of its Chief Legal Counsel, deputize any member
of its legal staff to act as special sheriff in foreclosure cases, in the sale or attachment of the
debtor's properties, and in the enforcement of court writs and processes in cases involving
the Bank. The special sheriff of the Bank shall make a report to the proper court after any
action taken by him, which shall treat such action as if it were an act of its own sheriffs in all
respects."
Section 6. Sec. 13 of the same Charter is hereby amended to read as follows:
"Sec. 13. Other officers and employees. The Board of Directors shall provide for an
organization and staff of officers and employees of the Bank and upon recommendation of
the President of the Bank, fix their remunerations and other emoluments. All positions in the
Bank shall be governed by the compensation, position classification system and qualification
standards approved by the Board of Directors based on a comprehensive job analysis of
 actual duties and responsibilities. The compensation plan shall be comparable with the
prevailing compensation plans in the private sector and shall be subject to periodic review by
the Board of Directors once every two (2) years, without prejudice to yearly merit or increases
based on the Bank's productivity and profitability. The Bank shall, therefore, be exempt from
existing laws, rules, and regulations on compensation, position classification and qualification
standard. The Bank shall however, endeavor to make its system conform as possible with the
principles under Compensation and Position Classification Act of 1989 (Republic Act No.
6758, as amended).
"No officer or employee of the Bank subject to Civil Service Law shall be dismissed except for
cause as provided by law."
Section 7. Separability clause. 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.
Section 8. Repealing clause. All acts, executive orders, administrative orders, proclamations, rules
and regulations or parts thereof inconsistent with any of the provisions of this Act are hereby repealed or
modified accordingly.
Section 9. Effectivity. This Act shall take effect fifteen (15) days following the completion of its
publication in the Official Gazette or in two (2) national newspapers of general circulation.
Approved: February 14, 1998
Philippine Amanah Bank
Republic Act No. 6848 January 26, 1990
AN ACT PROVIDING FOR THE 1989 CHARTER OF THE AL-AMANAH ISLAMIC INVESTMENT
BANK OF THE PHILIPPINES, AUTHORIZING ITS CONDUCT OF ISLAMIC BANKING BUSINESS,
AND REPEALING FOR THIS PURPOSE PRESIDENTIAL DECREE NUMBERED TWO HUNDRED
AND SIXTY-FOUR AS AMENDED BY PRESIDENTIAL DECREE NUMBERED FIVE HUNDRED AND
FORTY-TWO (CREATING THE PHILIPPINE AMANAH BANK)
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled::
WHEREAS, the State, in Section 20, Article II of the Constitution, encourages private enterprise and
provides incentives to needed investments;
WHEREAS, under the Constitution, the use of property bears a social function so that the consequences
in law also must be defined by policy objectives related to property rights in productive enterprises;
WHEREAS, toward this end, the Government has committed itself to the establishment of an Islamic
bank that operates within a legal framework permitting the investors or participants the rights to equitable
or beneficial share in the profits realized from financing productive activities and other operations: Now,
therefore.
THE CHARTER OF THE AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILIPPINES
Section 1. Title. - This Act shall be known as "The Charter of the Al-Amanah Islamic Investment
Bank of the Philippines."
ESTABLISHMENT AND FUNCTIONS
Section 2. Name, Domicile and Place of Business. - There is hereby created the Al-Amanah Islamic
Investment Bank of the Philippines, which shall be hereinafter called the Islamic Bank.ts principal
domicile and place of business shall be in Zamboanga City. It may establish branches, agencies or other
offices at such places in the Philippines or abroad subject to the laws, rules and regulations of the
Central Bank.
Section 3. Purpose and Basis. - The primary purpose of the Islamic Bank shall be to promote and
accelerate the socio-economic development of the Autonomous Region by performing banking, financing
and investment operations and to establish and participate in agricultural, commercial and industrial
ventures based on the Islamic concept of banking.
All business dealings and activities of the Islamic Bank shall be subject to the basic principles and
rulings of Islamic Shari'a within the purview of the aforementioned declared policy. Any zakat or "ithe"
paid by the Islamic Bank on behalf of its shareholders and depositors shall be its obligation to
appropriate said zakat fund and to disburse it in legitimate channels to be ascertained first by the Shari'a
Advisory Council.
Section 4. Shari'a Advisory Council. - There is hereby created a Shari'a Advisory Council of the
Islamic Bank which shall be composed of not more than five (5) members, selected from among Islamic
scholars and jurists of comparative law.
The members shall be elected at a general shareholders meeting of the Islamic Bank every three (3)
years from a list of nominees prepared by the Board of Directors of the Islamic Bank. The Board is
hereby authorized to select the members of the first Shari'a Advisory Council and to determine their
remunerations.
Section 5. Functions of the Shari'a Advisory Council. - The functions of the Shari'a Advisory Council
shall be to offer advice and undertake reviews pertaining to the application of the principles and rulings
of the Islamic Shari'a to the Islamic Bank's transactions, but it shall not directly involve itself in the
operations of the Bank.
Any member of the Shari'a Advisory Council may be invited to sit in the regular or special meetings of
the Board of Directors of the Islamic Bank to expound his views on matters of the Islamic Shari'a
affecting a particular transaction but he shall not be entitled to vote on the question presented before the
board meetings.
CORPORATE POWERS
Section 6. Islamic Bank's Powers. - The Al-Amanah Islamic Investment Bank of the Philippines, upon
its organization, shall be a body corporate and shall have the power:
(1) To prescribe its bylaws and its operating policies;
(2) To adopt, alter and use a corporate seal;
(3) To make contracts, to sue and be sued;
(4) To borrow money; to own real or personal property and introduce improvements thereon,
and to sell, mortgage or otherwise dispose of the same;
(5) To employ such officers and personnel, preferably from the qualified Muslim sector, as
may be necessary to carry Islamic banking business;
(6) To establish such branches and agencies in provinces and cities in the Philippines,
particularly where Muslims are predominantly located, and such correspondent offices in
other areas in the country or abroad as may be necessary to carry on its Islamic banking
business, subject to the provisions of Section 2 hereof;
(7) To perform the following banking services:
(a) Open current or checking accounts;
(b) Open savings accounts for safekeeping or custody with no participation in
profit and losses except unless otherwise authorized by the account holders to be
invested;
(c) Accept investment account placements and invest the same for a term with the
Islamic Bank's funds in Islamically permissible transactions on participation basis;
(d) Accept foreign currency deposits from banks, companies, organizations and
individuals, including foreign governments;
(e) Buy and sell foreign exchange;
(f) Act as correspondent of banks and institutions to handle remittances or any
fund transfers;
(g) Accept drafts and issue letters of credit or letters of guarantee, negotiate notes
and bills of exchange and other evidence of indebtedness under the universally
accepted Islamic financial instruments;
(h) Act as collection agent insofar as the payment orders, bills of exchange or
other commercial documents are exclusive of riba or interest prohibitions;
(i) Provide financing with or without collateral by way of leasing, sale and
leaseback, or cost plus profit sales arrangement;
(j) Handle storage operations for goods or commodity financing secured by
warehouse receipts presented to the Bank;
(k) Issue shares for the account of institutions and companies assisted by the
Bank in meeting subscription calls or augmenting their capital and/or fund
requirements as may be allowed by law;
(l) Undertake various investments in all transactions allowed by Islamic Shari'a in
such a way that shall not permit the haram (forbidden), nor forbid the halal
(permissible);
(8) To act as an official government depository, or its branches, subdivisions and
instrumentalities and of government-owned or controlled corporations, particularly those
doing business in the autonomous region;
(9) To issue investment participation certificates, muquaradah (non-interest-bearing bonds),
debentures, collaterals and/or the renewal or refinancing of the same, with the approval of the
Monetary Board of the Central Bank of the Philippines, to be used by the Bank in its financing
operations for projects that will promote the economic development primarily of the
Autonomous Region;
(10) To carry out financing and joint investment operations by way of mudarabah partnership,
musharaka joint venture or by decreasing participation, murabaha purchasing for others on a
cost-plus financing arrangement, and to invest funds directly in various projects or through
the use of funds whose owners desire to invest jointly with other resources available to the
Islamic Bank on a joint mudarabah basis;
(11) To invest in equities of the following allied undertakings:
 (a) Warehousing companies;
(b) Leasing companies;
(c) Storage companies;
(d) Safe deposit box companies;
(e) Companies engaged in the management of mutual funds but not in the mutual
funds themselves; and
(f) Such other similar activities as the Monetary Board of the Central Bank of the
Philippines has declared or may declare as appropriate from time to time, subject
to existing limitations imposed by law;
(12) To exercise the powers granted under this Charter and such incidental powers as may
be necessary to carry on its business, and to exercise further the general powers mentioned
in the Corporation Law and the General Banking Act, insofar as they are not inconsistent or
incompatible with the provisions of this Charter.
CAPITAL RESOURCES OF THE BANK
Section 7. Authorized Capital Stock. - The authorized capital stock of the Islamic Bank shall be One
billion pesos (P1,000,000,000) divided into ten million par value shares of One hundred pesos each. All
shares are nominative and indivisible. The subscription to and ownership of such shares, including the
transfer thereof to third parties, shall be limited to persons and entities who subscribe to the concept of
Islamic banking.
Section 8. Classification of Shares:s Features. - The Islamic Bank's authorized capital stock shall
have the following classifications and features in relation to its Islamic banking operation:
(1) Series "A" shares shall comprise five million one hundred thousand shares equivalent to
Five hundred ten million pesos (P510,000,000) to be made available for subscription by the
present stockholders of the Philippine Amanah Bank namely: the National Government, and
such other financial entities as it may designate.
(2) Series "B" shares shall comprise nine hundred thousand shares equivalent to Ninety
million pesos (P90,000,000) to be made available for subscription by the Filipino individuals
and institutions.
(3) Series "C" shares shall comprise four million shares equivalent to Four hundred million
pesos (P400,000,000) to be made available for subscription by Filipino and foreign individuals
and/or institutions or entities.
Anyone of the shareholders may exercise its preemptive right to consolidate ownership of the
outstanding shares as hereinafter increased: provided, that the common shares of the Philippine
Amanah Bank which have been issued and outstanding shall form part of the increased capitalization of
the Islamic Bank, subject to the concurrence of the existing shareholders of the Philippine Amanah Bank.
The Islamic Bank is authorized to reacquire its common shares that are held privately.
The Islamic Bank may take the necessary steps to have its series "B" shares listed in any duly registered
stock exchange.
Section 9. Board of Arbitration. - The Board of Directors, acting as an arbitrator, shall settle by the
majority decision of its members any dispute between and among shareholders of the Islamic Bank,
whether individuals or entities, where such dispute arises from their relations as shareholders in the
Islamic Bank. The Board shall not be bound in this respect to the procedures of laws on civil and
commercial pleadings, except in regard to the basic principles of due process.
If the dispute is between the Islamic Bank and any of the investors or the shareholders, a Board of
Arbitration shall settle such dispute.n this case, the Board of Arbitration, consisting of three (3) members,
shall be formed by two (2) parties to the dispute within forty-five (45) days from receipt of written notice
by either party to the dispute. The three (3) members shall be selected as follows: one (1) arbitrator from
each party who shall then select a casting arbitrator as the third member of the board. The three (3) shall
select one of them to preside over the Board of Arbitration. The selection by each party of its arbitrator
shall be deemed as an acceptance of the arbitrator's decision and of its finality.
In the event that one of the two parties shall fail to select its arbitrator or in the case of nonagreement on
the selection of the casting arbitrator or the presiding member of the Board of Arbitration within the
period specified in the preceding paragraph, the matter shall be submitted to the Shari'a Advisory
Council to select the arbitrator, the casting arbitrator or the presiding member, as the case may be.
The Board of Arbitration shall meet at the Islamic Bank's principal office and shall set up the procedure of
arbitration which it shall follow in hearing and deciding the dispute. The decision shall include the method
of its execution and the party that shall incur the costs of arbitration. The final judgment shall be
deposited with the office of the Corporate Secretary of the Bank and the Securities and Exchange
Commission.
The Board of Arbitration's decision, shall in all cases, be final and executory.t shall be valid for execution
in the same manner as final judgments are effected under Republic Act No. 876 otherwise known as the
Arbitration Law.
Section 10. Incentives to Islamic Banking. - Subject to the provisions of Section 74 of the Central
Bank Act, the provisions of the Omnibus Investment Code on the basic rights and guarantees of
investors are made applicable to the commercial operations of the Islamic Bank in respect to repatriation
or remittance of profits from investments, and to protection against nationalization, sequestrations, or
expropriation proceedings. Any proceedings of judicial or administrative seizure may not be taken
against the said property or investment except upon a final court judgment.
Section 11. Grants and Donations. - The Islamic Bank shall accept grants, donations, endowments,
and subsidies, or funds and/or property offered by individuals and organizations, who may earmark such
grants for a specific purpose or for such other purposes beneficial to the Muslim communities, without
prejudice to the general objectives of the Islamic Bank.
The financial statement and books of accounts of such funds shall be maintained separately but may be
supplemented to the Islamic Bank's balance sheet.
Under special circumstances in which the Board of Directors considers it advisable to promote or
facilitate Islamic banking business and commercial operations, the Islamic Bank may seek financing
from governments, organizations, individuals or banks always without prejudice to the provisions of
Section 43 of this Charter.
PLACEMENTS AND INVESTMENTS OF FUNDS
Section 12. Non-Interest Bearing Placements. - The Islamic Bank is authorized to accept deposits
from governments, banks, organizations or other entities and individuals from within the Philippines or
abroad which shall form under any of the following non-interest bearing placements:
(1) Saving accounts
(2) Investment participation accounts
(3) Current accounts and other deposit liabilities.
Any deposit received by the Islamic Bank without authorization to invest shall be treated as current
accounts and savings accounts and may be withdrawn wholly or partly at any time.
All deposits received with authorization to invest for a given period of time shall form part of the general
pool of placements allocated for investment portfolios of the Islamic Bank and may be added to its
working capital to be invested in any special projects or in general areas of investments or commercial
operations of the Bank.
Section 13. Investment of Funds. - The Islamic Bank shall have the capacity of agent or attorney and
shall act with full authority on behalf of the group of depositors in general in investing their co-mingled
deposits without prejudice to the following section and shall ensure a degree of liquidity to be determined
by the Board of Directors to meet the current obligations of the Islamic Bank including drawings from
savings accounts and current accounts: provided, that such degree of liquidity shall be subject to the
reserve requirement as may be determined by the Central Bank. The Board of Directors shall determine
the period for an investment participation account.nvestment of funds shall be undertaken by the Islamic
Bank acting on behalf of the group of depositors or investors in selected areas of investment under such
terms and conditions as the Board of Directors may determine by way of mudarabah or other forms of
joint investment permitted by Islamic Shari'a principle.
Section 14. Return on Investment Funds. - The depositors or investors in joint investment participation
accounts shall be entitled to a portion of the return on investment according to the deposit balances and
its period. The profits on participation account with authorization to invest in specific transaction shall be
calculated on the same basis as on the capital funds invested as determined by the Board of Directors
pursuant to Section 35 of this Act.
Section 15. Allocation of Resources. - Any provision of law to the contrary notwithstanding, the Islamic
Bank may allocate part of its own investable funds or of the deposits on hand to finance investment
projects and carry on its Islamic banking business directly or indirectly under its own supervision. For this
purpose, it may create and finance investment companies or affiliates which shall manage investment
projects on behalf of and under the supervision of the Islamic Bank and for its own account.
The Islamic Bank shall ascertain the viability and soundness of investment projects which it may directly
supervise and those in which it may participate with part of its own funds, with the general pool of
investors funds with authorization. The Islamic Bank shall have the right to inspect and supervise the
projects which it shall finance or in which it is the majority shareholder. The original capital and related
profits shall be remitted in the same currency it was originally contributed or in one of the convertible
currencies, as the Board of Directors shall determine in accordance with this Charter.
ISLAMIC BANK OPERATIONS IN GENERAL
Section 16. Authorized Banking Services. - The Islamic Bank shall exercise all the powers and
perform all the services of a bank, except as otherwise prohibited by this Act: provided, that no
transactions by any customer, company, corporation or firm with the said Islamic Bank shall be permitted
for discounts by the Central Bank of the Philippines.
Section 17. Authorized Commercial Operations. - Notwithstanding the provisions of any law to the
contrary, the Islamic Bank is hereby authorized to operate an Investment House pursuant to Presidential
Decree No. 129, as amended, and as a Venture Capital Corporation pursuant to Presidential Decree No.
1688 and, by virtue thereof, carry on the following types of commercial operations:
(1) The Islamic Bank may have a direct interest as a shareholder, partner, owner or any other
capacity in any commercial, industrial, agricultural, real estate or development project under
mudarabah form of partnership or musharaka joint venture agreement or by decreasing
participation, or otherwise invest under any of the various contemporary Islamic financing
techniques or modes of investment for profit sharing;
(2) The Islamic Bank may carry on commercial operations for the purpose of realizing its
investment banking objectives by establishing enterprises or financing existing enterprises, or
otherwise by participating in any way with other companies, institutions or banks performing
 activities similar to its own or which may help accomplish its objectives in the Philippines or
abroad, under any of the contemporary Islamic financing techniques or modes of investment
for profit sharing; and
(3) The Islamic Bank may perform all business ventures and transactions as may be
necessary to carry out the objectives of its charter within the framework of the Islamic Bank's
financial capabilities and technical considerations prescribed by law and convention:
provided, that these shall not involve any riba or other activities prohibited by the Islamic
Shari'a principles.
Section 18. Employee Share Schemes. - The Board of Directors may adopt an employee profit sharing
scheme under any of the following ways:
(1) Any arrangement under which the directors, officers and employees of the Islamic Bank
receive in addition to their salaries and wages a share, fixed beforehand, in the profits
realized by the Islamic Bank or by affiliate companies of the Islamic Bank to which the profit
sharing scheme relates; and
(2) Any arrangement under which the Islamic Bank facilitates the acquisition by its directors,
officers and employees of common shares of stock either as share-incentives, share-bonus
options, or any other share-saving schemes as the Board of Directors may determine.
No scheme shall be approved by the Board of Directors under this section unless it is satisfied that the
participant in the profit sharing scheme is bound by a contract with the Islamic Bank by virtue of which an
appropriation of shares has been made for the purpose. The shares so purchased or appropriated shall
be deposited in escrow with the Bank.
The Islamic Bank shall then constitute the trustees of an approved scheme, whose functions with
respect to the common shares held by them are regulated by Chapter VII of the General Banking Act
and other pertinent laws, and terms of which are embodied in a deed of instrument as the Board may
require.
Section 19. Investment Ceilings; Business Limits. - The Islamic Bank shall observe the following
investment ceilings and business limits in its operations:
(1) The aggregate credit facilities or any other liabilities of any customer of the Islamic Bank
shall not exceed at all times fifteen per centum (15%) of the unimpaired capital and surplus of
the Bank;
(2) The aggregate amount of investment portfolios for any single industry shall at no time
exceed thirty per centum (30%) of the Islamic Bank's investment capacity.nvestment capacity
of the Islamic Bank being the Islamic equivalent of commercial lending and overall credit
ceilings shall be defined as the maximum expansion for investments and credits that the
Islamic Bank is authorized to grant or extend as may be determined and computed by the
Central Bank in relation to the unimpaired capital and surplus of the bank;
(3) The outstanding unsecured loans or credit accommodations which the Islamic Bank may
extend at any time without security, or in respect of any advance, loan or credit facility made
with the security wholly or partly, whenever at any time it exceeds the aggregate market value
of the assets constituting the security, shall be limited to Fifty thousand pesos (P50,000.00) to
any person, company, corporation or firm. The term loan whenever used in this paragraph
shall represent qard hasan benevolent loan; and
(4) The Islamic Bank shall not grant any credit facility to any person for the purpose of
financing the acquisition of the holding of shares in any company, corporation or firm in
excess of fifty percent (50%) of the appraised valued of the shares at the time the credit
facility is granted.
Section 20. Loans to Directors, Officers or Employees Restrictions. - Subject to the limitations
provided herein, the Islamic Bank may grant to any of its officers or employees a loan as provided under
its scheme of service and, whenever the Islamic Bank is satisfied that special circumstances exist, a
loan not exceeding at any one time an amount equivalent to six (6) months remuneration of each officer
or employee on such terms and conditions as the Islamic Bank deem fit. The Islamic Bank shall not,
directly or indirectly, grant an advance loan or credit facility to any of its directors, officers or employees,
or any other person for whom any of them is a guarantor or in any manner to be an obligor for money
granted by the Islamic Bank. No loan or credit facility shall be granted by the Islamic Bank to a company,
corporation, partnership or firm wherein any member of the Board of Directors or auditors is a
shareholder, partner, manager, agent or employee in any manner, except with the written approval of
and by the unanimous vote of no less than two-thirds (2/3) of all the members of the Board of the
Directors excluding the director concerned: provided, that the total liabilities to the Islamic Bank shall be
limited to the director or auditor's outstanding deposits or the book value of his or her paid-in capital in
the Islamic Bank. Any such approval shall be entered upon the records of the Islamic Bank and a copy of
such entry shall be transmitted forthwith to the appropriate supervising department of the Central Bank
of the Philippines.
The office of any director, officer or auditor of the Islamic Bank who violates the provisions of this section
shall automatically become vacant and the persons who acted in contravention thereof shall be subject
to criminal prosecution and suffer the penalties provided by law.
Section 21. Special Cash Account. - The Islamic Bank shall open a special cash account with the
Central Bank in which its liquid funds shall be deposited. Any transfer of funds from this account to the
other accounts shall be made only upon prior consultation with the Islamic Bank.
Section 22. Capital Funds Requirement. - The Islamic Bank shall maintain its combined capital
accounts in proportion to its assets as prescribed by the Central Banking Act and subject to the rules and
regulations of the Central Bank.
Section 23. Investment Risk Fund. - The Islamic Bank shall maintain general reserves appropriations
pursuant to the profit and loss distributions made under Section 35 of this Act. All amounts appropriated
for the Investment Risk Fund out of the net profits of each year shall be invested for the benefit of the
Islamic Bank only in safe non-interest-bearing transactions by authority of the Board of Directors.
Section 24. Periodic Reports. - The Islamic Bank shall, in addition to periodic reports which may be
required pursuant to the provisions of any other law, be required to submit to the Central Bank a report of
any changes relating to the Islamic Bank's employee profit sharing scheme approved by the Board of
Directors.
The Islamic Bank shall likewise make a report to the Central Bank whenever a change is about to take
place in relation to the ownership or control of the Islamic Bank. The approval of the Monetary Board
shall be required in the following changes:
(1) Any proposal for the sale or disposal of its share or business, or other matters related
thereto, which will result in a change of the control or management of the Islamic Bank; and
(2) Any scheme for reconstruction or for consolidation or merger, or otherwise, between the
Islamic Bank and any other company wherein the whole or any part of the undertaking or the
property of the Islamic Bank is to be transferred to another corporation.
BANK MANAGEMENT AND GENERAL MEETING
Section 25. Board of Directors. - The Board of Directors composed of nine (9) members duly elected
by the General Shareholders Meeting, as provided for in this Act, shall convene at the principal office
once every three (3) months at the most upon due notice by the Chairman or, whenever the need arises,
upon the request of three (3) members of the Board of Directors. The Board may convene outside the
Islamic Bank's principal office as the members shall determine in the bylaws of the Islamic Bank.
Section 26. Powers of the Board. - The Board of Directors shall have the broadest powers to manage
the Islamic Bank, except such matters as are explicitly reserved for the general shareholders meeting.
The Board shall adopt policy guidelines necessary to carry out effectively the provisions of this Charter
as well as internal rules and regulations necessary for the conduct of its Islamic banking business and all
matters related to personnel organization, office functions and salary administration.
The Board of Directors shall have the power to appoint managers, authorize agents or legal
representatives and shall vest them with signing authority on behalf of the Bank either severally or jointly
in accordance with the operational procedures of the Bank.
The Board shall cause the preparation of the Islamic Bank's balance sheet for each financial year within
three (3) months at the latest from the end of each accounting period as well as the profit and loss
statement according to accounting rules established and based on Islamic criteria. Copies of the audited
annual balance sheet, profit and loss account, together with any note thereon, and the report of the
auditor and the director's own report shall be provided to the shareholders before the date of the general
meeting.
Section 27. Chief Executive Officer; Other Officers and Employees. - The Chief Executive Officer of
the Islamic Bank shall be the Chairman who shall be chosen by the Board of Directors from among
themselves. All other officers and employees of the Islamic Bank shall be appointed and removed by the
Board upon recommendation of the Chief Executive Officer which shall not be subject to Civil Service
Law.
The Chief Executive Officer of the Islamic Bank shall, among others, execute and administer the
policies, measures, orders and resolutions approved by the Board of Directors.n particular, he shall have
the power and duty: to execute all contracts in behalf of the Islamic Bank and to enter into all necessary
obligations by this Charter required or permitted; to report weekly to the Board of Directors the main
facts concerning the operations of the Islamic Bank during the proceeding week and suggest changes in
policy or policies which will serve the best interest of the Islamic Bank.
Section 28. Business Development Office. - The Islamic Bank shall have a Business Development
Office which shall be responsible for the following:
(1) To conduct periodic economic surveys and studies of the investment climate and
opportunities in the Islamic Bank's sphere of operations and identify the viable projects which
may be sponsored by the people of the Autonomous Region;
(2) To offer technical consultancy services in the preparation of project studies and in meeting
other technical credit requirements of the Islamic Bank, including the provision of the
management consultants at rates to be determined by the Board of Directors to projects
financially assisted by the Islamic Bank; and
(3) To perform such other functions as may be directed by the Board of Directors.
Section 29. General Shareholders Meeting. - The general shareholders meeting shall convene
annually at the latest within six (6) months following the end of the financial year of the Bank at the
place, date and time fixed in the notice for the meeting. The attendance of shareholders representing at
least sixty per centum (60%) of the capital of the Islamic Bank shall constitute a quorum to do business.
Section 30. Purpose of General Meeting. - The general shareholders meeting shall convene purposely
to hear the Board of Directors' report on the activities of the Islamic Bank, its financial condition, the
auditor's report and to approve the balance sheet for the financial year ended and the profit and loss
statement, to determine the portion of dividends to be distributed to the shareholders and the method of
distribution, to appoint the auditors, and to elect the members of the Shari'a Advisory Council.
Section 31. Ordinary and Extraordinary Sessions. - The general shareholders meeting shall be
presided over by the Chairman of the Board of Directors. All resolutions adopted by the general meeting
in ordinary session assembled shall be taken by a vote of majority of the shareholders represented
therein and in case of votes being equal, the Chairman shall cast his vote to break the tie. The
resolutions of the general meeting adopted in accordance therewith shall be binding on all shareholders
including those not in attendance or opposing the resolution.
An extraordinary general meeting shall be required to pass resolutions related to the increase or
decrease of capital of the Bank, the extension of its legal existence or matters affecting amendment of
the Charter. Resolutions of the extraordinary general meeting shall be deemed adopted when a majority
vote of at least sixty-six and two-thirds plus one per centum (66 & 2/3 + 1%) of the capital shares shall
have been cast.
In no case shall the general meeting resolve to modify the object of the Bank as an Islamic Investment
Bank.
Section 32. Bank Auditor: Reports. - Notwithstanding the provisions of any existing law to the contrary,
the Islamic Bank is hereby authorized to appoint an external auditor approved by the general
shareholders meeting whose qualification and remunerations shall be fixed by the Board of Directors.
The external auditor appointed under this section shall assume his functions from the date of his
appointment until the date of the next general shareholders meeting.n case a vacancy occurs at any
time during the year for any reason, the Board of Directors shall immediately appoint a replacement.
The duties of the auditor shall be to conduct an audit of the accounts of the Bank and to make a report to
the Board of Directors.
In the exercise of his auditing functions, all Bank books, accounts and documents shall be made
available to the auditor for inspection to ascertain the Bank's assets and obligations. Copies of the latest
audited balance sheet, profit and loss statement, together with any note thereon, and the reports of the
auditor to the Board of Directors shall be forwarded by the Islamic Bank, within the prescribed time to the
Central Bank.
CONFIDENTIAL INFORMATION
Section 33. Confidential Information. - Banking transactions relating to all deposits of whatever nature
are confidential and may not be examined, inquired or looked into by any person, government official,
bureau or office except as provided in the preceding section, or upon written permission by the
depositor, or in cases where the money deposited or the transaction concerned is the subject of a court
order.
It shall be unlawful for any official or employee of the Islamic Bank or any person as may be designated
by the Board of Director to examine or audit the books of the Bank to disclose or reveal to any person
any confidential information except under the circumstances mentioned in the preceding paragraph.
PROFIT AND LOSS POLICY
Section 34. Accounting Period. - The Financial Year of the Islamic Bank shall be based on the
Gregorian calendar, but the corresponding Islamic Hijra date shall be mentioned on all correspondence,
contracts, printed materials, forms and records of the Islamic Bank. The accounting period shall
commence from the first day of January and close at the end of December each year.
Section 35. Determination of Profits and Losses. - At the close of each financial year, the Islamic
Bank shall determine the results of its operation, in the determination of which the portion of profits due
to the Islamic Bank and the inventors shall be allocated pursuant to the provisions of this Act.
The Board of Directors shall, after deducting the general and administrative expenses of the Bank and
all its operating expenses including remunerations of the Board of Directors and the Shari'a Advisory
Council, determine annually what part of the income shall be appropriated to reserves, investors and
shareholders.
All accounts relating to financing and joint investment operations shall be kept separately from the
accounts from that of the other banking activities and services offered by the Islamic Bank. The same
rule in respect to the accounts of specific investments shall apply where such specific projects may have
a separate account.
Allocation of joint investment profits shall be made after deducting an amount equal to ten per centum
(10%) of the profits realized from various operations during the financial year to be transferred to a
reserve account known as Investment Risk Fund for the purpose of meeting any losses exceeding the
total profits derived from investments of that year: provided, however, that should the accumulated
reserves equal the authorized capital of the Islamic Bank, the Board of Directors may reduce the amount
of the annual deduction to a minimal percentage until the aggregate reserves become double the
amount of the capital after which the herein authorized deductions shall cease to accrue to the reserve
account.
Losses incurred, if any shall be deducted from the total profits realized for the financial year in which
such losses are incurred but any excess of losses over the profits which have been actually realized
during that year may be deducted from the Investment Risk Fund opened for covering the risks of
investment: provided, that should the total profits realized in the year together with the reserves
accumulated from previous year be insufficient to cover the losses incurred, the Islamic Bank shall carry
out a comprehensive assessment to arrive at estimated profit and loss based on market rates, from
operations which are financed by mudarabah funds and which have not reached the stage of final
settlement by the end of the financial year.
Section 36. Sharing Between the Bank and the Investors. - Not later than the end of the first month
of each financial year, the Board of Directors shall determine and publish the general percentages of
profit to be allocated to the total funds participating in joint investments of the Islamic Bank.
The Islamic Bank as a joint venturer (mudarib) shall be entitled to certain percentage after deducting the
amount allotted to investors. The Bank shall likewise be entitled to a share in the profits of joint
investments in proportion to its own invested funds.
For the purpose of calculating funds employed in financing operations priority shall be given to joint
investment accounts and the holders of muquaradah bonds.
All zakat due the shareholder's capital and reserves represented by the pecuniary value of shares and
the zakat due on the investor's funds or profits accruing to every depositor shall be paid to the zakat
fund, subject to their instructions.
Section 37. Tax Exemption. - The Islamic Bank assets, profits distributions and all contracts, deeds
documents and transactions related to the conduct of business of the Islamic Bank shall be exempted
from all taxes under the National Internal Revenue Code to commence from the first taxable year,
following its actual Islamic banking operation as certified by the Central Bank, to the extent as herein
made allowable:
(1) One hundred per centum (100%) for the first five (5) years; and
(2) Seventy-five per centum (75%) for the sixth through the eight year: provided, however,
that said exemption shall apply only to such taxes, fees, charges and assessments for which
the Islamic Bank would otherwise be liable, and shall not apply to the taxes, fees, charges or
assessments payable by persons or other entities doing business with the Islamic Bank.
An investment in Islamic banking business to the extent of actual participation in profit and loss sharing
scheme, paid in cash or property, shall be granted an exemption from all taxes under the National
Internal Revenue Code, except income tax: provided, that an investment tax allowance shall be
permitted as a deduction from taxable income under such transactions to the extent that the Islamic
Bank pays out zakat on the income of investors capital and surplus reserves for the duration of the joint
investment period.
Section 38. Exemption from Customs Duties. - Within the first five (5) years of operation of the
Islamic Bank, all importations by the Bank of machinery, equipment, calculators and computers and
accompanying spare parts, as may be necessary for its operation, shall be exempted from customs
duties and compensating taxes payable thereon: provided, however, that same shall not be disposed of
domestically unless payment is made of all duties thereof at the tariff rates and according to their
condition at the time of disposal and upon compliance with all import and exchange procedures.
Section 39. Non-Applicability of Selected Acts. - In order to achieve the international and domestic
objectives of Islamic banking business, the provisions of the following acts and laws shall not apply to
the Islamic Bank to the extent as herein rendered inoperative:
(1) The provisions of the Central Bank Act and the General Banking Act with particular
reference to the determination of bank interest rates, loans and discounts, and any interest-
bearing instruments or charge: provided, that nothing contained herein shall be construed to
impair the powers of the Central Bank to supervise and regulate the activities of the Islamic
Bank;
(2) The General Auditing Act and any other enactments thereon inconsistent with this Act; and
(3) The provision of Republic Act Numbered Three thousand five hundred ninety-one, as
amended, and all laws, regulating insurance companies: provided, however, that nothing
contained herein shall preclude the Islamic Bank from the establishment of contemporary
Islamic tafakul (solidarity services) free of riba premiums or interests.
Section 40. Employment of Foreign Nationals. - Subject to the provisions of Section 29 of
Commonwealth Act No. 613, and the Anti-Dummy Law, as amended, the Islamic Bank may employ
foreign nationals in supervisory, technical or advisory positions for a period not exceeding five (5) years
extendible for limited periods upon the recommendation of the Governor of the Central Bank.
Foreign nationals under employment contract within the purview of this Act, their spouses and unmarried
children under twenty-one (21) years of age, who are not excluded by Section 29 of Commonwealth Act
No. 613, shall be permitted to enter and reside in the Philippines during the period of employment of
such foreign nationals.
Section 41. Training of Technical Personnel. - The Islamic Bank shall promote and sponsor the
training of technical personnel in the field of Islamic banking, finance and insurance. Towards this end,
the Islamic Bank is hereby authorized to defray the costs of study, at home or abroad of outstanding
employees of the Islamic Bank, of promising university graduates or of any other qualified persons who
shall be determined by proper competitive examinations. The Board of Directors shall prescribe rules
and regulations to govern the training program of the Islamic Bank.
LEGAL EXISTENCE
Section 42. Terms of Legal Existence. - The legal existence of the Islamic Bank shall be for a period of
fifty (50) years, from and after the date of the approval of this Act, renewable upon resolution of the
general shareholders meeting called for said purpose.
At the expiration of the Islamic Bank's corporate existence or in the event of its dissolution before this
date, the general shareholders meeting shall, upon the request of the Board of Directors, define the
method of dissolution as provided for in its bylaws.
GENERAL PROVISIONS
Section 43. Application of the Islamic Shari'a. - The Monetary Board of the Central Bank of the
Philippines shall formulate the necessary rules and regulations to carry out the provisions of this Charter
for the purpose of providing adequate credit facilities primarily to the people of the Autonomous Region,
and supervise the operation of the Islamic Bank in accordance with the universal principle of the Islamic
Shari'a.
Section 44. Definition of Terms. - For the purposes of this Act, the following definition of terms is
hereby adopted:
(1) Islamic Bank means the bank created under this Act;
(2) Islamic banking business means banking business whose aims and operations do not
involve interest (riba) which is prohibited by the Islamic Shari'a principles;
(3) Shari'a has the meaning assigned to it by Islamic law and jurisprudence as expounded by
authoritative sources; in the context of this Act, it is construed by reference to pertinent
Quranic ordinances and applicable rules in Islamic jurisprudence on business transactions;
(4) Riba has the meaning assigned to it by Islamic law and jurisprudence as expounded by
authoritative sources; in the context of banking activities, the term includes the receipt and
payment of interest in the various types of lending and borrowing and in the exchange of
currencies on forward basis;
(5) Zakat has the meaning assigned to it by Islamic law and jurisprudence as expounded by
authoritative sources; in the context of this Act, it represents an annual "ithe" payable by the
Bank on behalf of its shareholders and investors in compliance with Islamic Shari'a principles;
(6) Depositor means a person or entity who has an account at an Islamic Bank, whether the
account is a current account, a savings account, an investment account or any other deposit
account; unless the context requires another meaning, a depositor corresponds to an investor
in joint investment of the Islamic Bank;
(7) Current account liabilities in relation to Islamic banking services means the total deposits
at the bank which are repayable on demand;
(8) Savings account liabilities in relation to Islamic banking services means the total deposits
at the Islamic Bank which normally require the presentation of passbooks or such other
legally acceptable documents in lieu of passbooks as approved by the Central Bank for
deposit or withdrawal of money;
(9) Investment account liabilities in relation to Islamic banking services means the total
deposit liabilities at the Islamic Bank in respect of funds placed by a depositor with that bank
for a fixed period of time under an agreement to share the profits and losses of that bank on
the investment of such funds;
(10) Other deposit liabilities in relation to an Islamic Bank means the deposit liabilities at that
bank other than savings account, investment account, current account liabilities and deposit
liabilities from any Islamic Bank or any other licensed bank; (11) Participation in relation to
Islamic banking and commercial operations means any agreement or arrangement under
which the mode of joint investments or specific transactions shall not involve the element of
interest charge other than as percentage share in profits and losses of business;
(12) Share means share in the capital of the Bank or a corporation and includes a stock,
except where a distinction between stock and share is expressed or implied.
PENALTIES
Section 45. Penalties for Violation. - Any director, officer, employee, auditor, or agent of the Islamic
Bank who violates or permits the violation of any provision of this Act shall be punished by a fine not
exceeding Ten thousand pesos (P10,000.00) or an imprisonment of not more than five (5) years, or both
at the discretion of the court.
TRANSITORY AND MISCELLANEOUS PROVISIONS
Section 46. Supervision and Regulation by the Central Bank. - The Islamic Bank shall be under the
supervision and regulation of the Central Bank. All provisions of this Act, except those which pertain to
the principles of Islamic Shari'a, shall be subject to all banking and pertinent laws of the Philippines and
Central Bank Rules and Regulations which shall include proper safeguards to depositors and investors
in the investments, partnerships, agencies and other operation of the bank.
Section 47. Privatization. - Nothing in this Act shall be construed to preclude the Islamic Bank from
privatizing its ownership. For this purpose, any limitation on the transfer of shares shall not be applicable
with respect to the shareholdings of the National Government, Social Security System, Government
Service Insurance System, Philippine National Bank and Development Bank of the Philippines.
Section 48. Transformation to Islamic Banking Business. - Upon approval of this Act, all the assets,
liabilities and capital accounts of the Philippine Amanah Bank are hereby transferred to the Al-Amanah
Islamic Investment Bank.
Nothing in this Act be construed to preclude the Islamic Bank from transforming its investment portfolios,
accounts or assets for the conduct of Islamic banking business.f, for any reason, such portfolios,
accounts or assets granted under the authority of the Philippine Amanah Bank Charter are not eligible
for this purpose, the same may be transferred, swapped, sold or otherwise disposed of in any manner
deemed feasible following the effectivity of this Act.
Section 49. Reorganization of the Bank. - The Islamic Bank shall commence its reorganization within
six (6) months from the date this Act takes effect. The present personnel complement of the Philippine
Amanah Bank shall in the interim continue to discharge their respective functions. Officials and
personnel whose services may be dispensed with as a result of this reorganization shall be paid the
usual gratuities to which they may be entitled under the existing laws.
Section 50. Statutory Articles of Incorporation. - This Act, upon its effectivity, shall be deemed
accepted for all legal intents and purposes as the Statutory Articles of Incorporation of the Al-Amanah
Islamic Investments Bank of the Philippines; and that notwithstanding the provisions of any existing law
to the contrary, said Islamic Bank shall be deemed registered and duly authorized to do business and
operate as an Islamic Bank as of the date of approval of this Act.
Section 51. By-laws. - Within sixty (60) days upon effectivity of this Act, the by-laws of the Islamic Bank
for its organizational, functional and operational government and procedure shall be adopted by
affirmative vote at the general shareholders meeting representing a majority of all subscribed capital
stock entitled to vote, whether paid or unpaid, subject to certification by the Monetary Board pursuant to
Section Ten of the General Banking Act.
the shareholders during office hours, and a copy thereof, duly certified by a majority of the directors and
countersigned by the Corporate Secretary of the Islamic Bank, shall be filed and registered with the
Securities and Exchange Commission.
Section 52. Repealing and Separability Clauses. - Presidential Decree No. 264, as amended by
Presidential Decree No. 542, creating the Philippine Amanah Bank is hereby repealed.
All acts, executive orders, administrative orders, proclamations, rules and regulations or parts thereof
inconsistent with any of the provisions of this Act are hereby repealed or modified accordingly.
If any provision or section of this Act or the application thereof to any person, association or
circumstances is held invalid, the other pertinent provisions or section of this Act and their application to
such person, association or circumstances shall not be affected thereby.
Section 53. Effectivity. - This Act shall take effect fifteen (15) days after its publication in at least two (2)
newspapers of general circulation.
Approved: January 26, 1990.

The by-laws, duly certified by the Monetary Board as aforesaid, shall be signed by the shareholders
voting for them and shall be kept in the principal office of the Islamic Bank, subject to the inspection of