AMENDING PRESIDENTIAL DECREE NO. 694 PROVIDING FOR THE 1975 REVISED CHARTER OF THE PHILIPPINE NATIONAL BANK.

• Number: Presidential Decree No. 1478
• Sections: 6

Preamble

WHEREAS, the Charter of the Philippine National Bank was

revised by Presidential Decree No. 694 to enable it to effectively carry out its

assigned role of providing the necessary financing for economic development of

the country under the program of the New Society;

WHEREAS, said Charter needs further amendment to enable the

Bank to strengthen its above-mentioned role in the economic development of the

country;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the

Philippines, by virtue of the powers vested in me by the Constitution, do hereby

decree and order the following:

Section 1

SECTION 1. Section 3, Paragraphs (a) and (e), of

Presidential Decree No. 694 is hereby amended to read as follows:

"SECTION 3. Corporate Powers.—The Philippine

National Bank, upon its organization, shall be a body corporate and shall have

power:

"a. To engage in the business of commercial banking by accepting drafts and

issuing letters of credit, discounting and negotiating promissory notes, drafts,

bills of exchange, and other evidences of debts, receiving deposits, buying and

selling foreign exchange and gold or silver bullion, by acting as financial

agent, by financing or personality leasing, and by lending money against

personal security or against securities consisting of personal property or first

mortgages on improved real estate and the insured improvements thereon;

* * *

"e. To issue either in the Philippines or externally, for purposes of

augmenting its capital and/or fund generation requirements, all types of bonds,

promissory notes, debentures, certificates of indebtedness, or other debt

instruments whether senior, unsecured or subordinated obligations, including but

not limited to capital notes under such terms and conditions as may be

determined by the Board of Directors, which may be:

"1. Secured by credits against real estate or other assets of the Bank but

not in excess of 90% thereof, or without such security and purely on an

unsecured or subordinated basis;

"2. Long-term, medium-term or short-term;

"3. With fixed interest rate or floating interest rate;

"4. Denominated either in the lawful legal tender of the Philippines or in

such foreign currencies which are eligible for the foreign exchange reserves of

the Central Bank of the Philippines; and

"5. With such other features and requirements which in its discretion are

deemed necessary.

"These bonds, debentures, promissory notes, certificates of indebtedness, or

other debt instrument shall be unconditionally guaranteed as to principal and

interest by the Republic of the Philippines: Provided, however, That

the Bank is also authorized to issue these instruments without the guaranty of

the Republic of the Philippines;

"These bonds, debentures, promissory notes, certificates of indebtedness, or

other instruments, shall be exempt, both as to principal and interest, from any

and all taxes imposed by the Government or any of its

subdivisions."

Section 2

SEC. 2. Section 4 of Presidential Decree No. 694 is hereby

amended to read as follows:

"SECTION 4. Authorized Capital Stock—Par

Value—Government Subscription and Payment.—Sale of Shares.—The authorized

capital stock of the Bank shall be further increased to Five Billion Pesos to be

divided into fifty million shares at par value of One Hundred Pesos each. The

Government shall increase its paid-in subscription of One Billion Pesos to Two

Billion Pesos. Payment for the additional capital contribution by the Government

shall be made as follows:

''a. P500 Million in the form of cash to be authorized under the

corresponding appropriation upon recommendation of the Secretary of Finance and

payable within three (3) years.

"b. The balance in cash or in exchange for the bonds or other government

securities which the Secretary of Finance is hereby authorized to issue under

such terms and conditions as he may prescribe.

"The bank's authorized capital stock shall be divided into the following

classes of shares:

"a. Preferred "A" shares which shall consist of one million shares available

for sale to or subscription by the general public. These shares shall have the

following features:

"1. preferred as to dividends at ten per cent (10%);

"2. cumulative;

"3. participating;

"4. non-voting;

"5. dividends thereon shall be exempt from income tax;

"6. redeemable at the option of the Bank at the prevailing book of value but

in no case less than par after five (5) years from issuance thereof; and

"7. convertible to Common shares at the option of the holder in case the Bank

fails to pay dividends thereon for two consecutive years; Provided,

however, That if the holder thereof signifies his intention to convert the

Preferred "A" shares to Common shares, the Bank may, at its option, redeem said

shares even before the lapse of five (5) years counted from date of their

issuance.

"b. Preferred "B" shares which shall consist of two million shares available

for sale to or subscription by citizens of the Philippines only. These shares

shall have the following features:

"1. preferred as to dividends;

"2. cumulative;

"3. participating;

"4. non-voting;

"5. dividends thereon shall be exempt from income tax; and

"6. convertible to Common at the option of the holder in case the Bank fails

to pay dividends thereon for two consecutive years.

"c. Common "A" shares which shall consist of five hundred thousand (500,000)

shares exclusively available for subscription at par by officers and employees

of the Bank. These shares shall have the following features:

"1. preferred as to dividends;

"2. cumulative;

"3. participating;

"4. voting;

"5. dividends thereon shall be exempt from income tax; and

"6. non-transferable except to qualified holders as herein

provided.

"Transfer of any kind, including that by hereditary succession, to any person

other than officers or employees of the Bank shall not be valid and shall not be

registered in the books of the Bank. Moreover, such transfer shall give rise to

the Bank's right to acquire the shares so transferred at par. The Board of

Directors of the Bank shall prescribe the terms and conditions for the

distribution of Common "A" shares to officers and employees of the Bank as well

as for the Bank's reacquisition of said shares from the holders thereof upon

their separation from the Bank or upon the transfer of said shares to any person

other than officers or employees of the Bank.

"d. The remaining balance of the authorized capital stock shall be in common

shares.

"The Board of Directors of the Bank may, at its discretion, increase the

number of any of the preferred shares as well as the Common "A" shares by

converting outstanding Common shares, if there are any available, to such shares

desired to be increased. Said increase shall be subject to the approval of the

President of the Philippines upon recommendation of the Secretary of Finance.

The Bank may take the necessary steps to have its preferred shares listed in any

duly registered stock exchange.

"Existing private stockholders may exercise their pre-emptive right.

"Upon full payment in cash, or with bonds or other government securities, of

its subscription of Two Billion Pesos, the government shall thereafter,

subscribe to the balance of the common shares at the rate of at least Two

Hundred Fifty Million Pesos per annum: Provided, however, that at any

time, the government may, upon recommendation by the Secretary of Finance and

the approval of the President of the Philippines, increase or decrease such rate

of subscription: Provided, further, that upon the lapse of five years

from the listing of the preferred shares in any duly registered stock exchange,

but not later than December 31, 1980, such preferred shares remaining unsold or

unsubscribed shall be automatically converted to Common shares and subscribed to

by the Government.

"Payment of these government subscriptions may likewise be in the form of

cash to be authorized under the corresponding appropriation that may be made

from time to time or in exchange for bonds or other government securities which

the Secretary of Finance is hereby authorized to issue under such terms and

conditions as he may prescribe. These bonds or other government securities may

be retired in the manner provided for in this Decree.

"The Bank is also authorized to purchase its own shares that are held

privately.

"Holders of Land Bank bonds may, under such terms and conditions as may be

prescribed by the Board of Directors of the Bank, exchange such bonds, for

shares of the Bank offered for sale to the

public."

Section 3

SEC. 3. Section 6, paragraph (f) of Presidential Decree No.

694, is hereby amended to read as follows:

"SECTION 6. Loans and credit accommodations

authorized.—The Philippine National Bank is hereby authorized:

* * *

"f. To make loans to any branch, subdivision or agency of the Republic of the

Philippines or to government-owned or controlled corporations, subject to the

condition that such loans should be for productive, revenue producing or

socio-economic projects pursuant to the priorities established in the

development program, as prepared, by the National Economic and Development

Authority, in an amount within the borrowing entity's paying capacity, duly

guaranteed by the National Government through the Secretary of Finance upon

authority of the President of the Philippines with respect to principal,

interest and other charges: Provided, however, that the government

guaranty may be dispensed with by the Board of Directors if such branch,

subdivision, or agency or government-owned or controlled corporation can offer

sufficient and acceptable collaterals in lieu of the guaranty: Provided,

further, that the requirement of government guaranty shall be considered

complied with in case of loans made to any branch, subdivision or agency of the

Republic of the Philippines or to government-owned or controlled corporations

which, by virtue of the law creating them or their respective charters or the

law authorizing their borrowings, are not required to secure the guaranty of the

national government through the Secretary of Finance: Provided,

furthermore, that loans covered by government guarantees shall not exceed

the ceiling prescribed by the Monetary Board: Provided, finally, that

such ceiling on government guarantees shall exclude loans to government

corporations with acceptable collateral. However, such loans to government

corporations shall nonetheless be subject to the lending ceiling on loans to

government agencies and entities provided for in paragraph (d) of Section

7."

Section 4

SEC. 4. All laws, executive orders, decrees, rules and

regulations, or parts thereof, inconsistent with the provisions of this Decree

are hereby repealed, amended or modified accordingly.

Section 5

SEC. 5. This Decree shall take effect immediately.

Done in the City of Manila, this 11th day of June in the year of Our Lord,

nineteen hundred and seventy-eight.

(Sgd.) FERDINAND E. MARCOS

President of the

Philippines

By the President:

(Sgd.) JUAN C. TUVERA

Presidential

Assistant