SEC. 16. (a) In order to provide local mutual thrift institutions for the accumulation of savings and for the financing of homes, the Commission is authorized, under such rules and regulations as it may .prescribe, and in accordance with the provisions of existing laws, to encourage, aid or initiate the organization and incorporation of associations to be known as Building and Loan Associations, to provide for their examination, regulation, and operation when insured by the Commission, and to issue contracts of insurance for the accounts of such associations in accordance with the best practices of known mutual thrift and home financing institutions.
(b) Such associations shall raise their capital only in the form of payments on such shares as are authorized in their charter or articles of incorporation. No deposit shall be accepted and no certificates of indebtedness shall be issued except for such borrowed money as may be authorized by regulations of the Commission.
(c) Whenever insured by the Commission and where the loan is intended for housing development, such associations shall lend their funds only on the security of their shares, or on the security of first liens upon homes located within an area to be determined by the Commission: Provided, however, That no loan exceeding fifty thousand pesos shall be made on the security of first liens upon any one such property nor in any case an aggregate of ten per centum of the assets of such association on the security of such first liens on one property: And provided, further, That a portion of the assets of such associations may be invested in bonds and obligations issued or guaranteed by the Republic of the Philippines.
(d) The Commission shall have full power to provide in the rules and regulations herein authorized for the reorganization, consolidation, merger, or liquidation of such associations in accordance with existing laws, including the power to appoint a conservator or a receiver to take charge of the affairs of any such association, and to require an equitable readjustment of the capital structure of the same; and to release any such association from such control and permit its further operation.
(e) The Commission is authorized to subscribe for preferred shares in such associations which shall be preferred as to the assets of the association and which shall be entitled to a dividend, if earned, after payment of expenses and provision for reasonable reserves, to the same extent as other shareholders: Provided, however, That the subscription by the Commission to the shares of any one such association shall not exceed one hundred thousand pesos, and no such subscription shall be made unless in the judgment of the Commission the funds are necessary for the encouragement of reasonable local home financing in the community to be served. In case of the liquidation of any such association, the shares held by the Commission shall be retired on the same basis as payments are made to other shareholders in accordance with existing laws.
(f) When insured by the Commission, such associations including their franchises, capital, reserves, surplus, and their loans, receipts, and incomes, shall be exempt from all taxation now or hereafter imposed by the Government.
SEC. 17. (a) The Commission may insure the accounts of any Building and Loan Association and upon such term as the Commission may prescribe, to make commitments for the insuring of the accounts of such associations prior to the date of their organization and chartering. Notwithstanding the foregoing provisions, the total amount of accounts of Building and Loan Associations insured under this chapter shall not exceed the sum of five hundred million pesos at any one time.
(b) Each institution whose application for insurance is approved by the Commission shall pay to the Commission in such manner as it shall prescribe, a premium charge for such insurance at the rate set by the Commission under the provisions of this Act on the basis of the total amount of all accounts of the insured members of such institutions plus any creditor obligations of such institutions. Such premium shall be paid at the time the certificate is issued by the Commission and thereafter annually or semi-annually as the Commission may prescribe until a reserve fund has been established by the Commission equal to ten per centum of all insured accounts and creditor obligations of all insured institutions. If at any time such reserve fund falls below such ten per centum, the payment of such annual premium charge for insurance shall be resumed and shall be continued until the reserve is brought back to ten per centum. For the purposes of this subsection, the amount in all accounts of insured members and amount of creditor obligations of any institution may be determined from adjusted statements made within one year prior to the approval of the application of such institution for insurance, or in such other manner as the Commission may by rules and regulations prescribe.
(c) The Commission is further authorized to raise the rate of premiums for insurance until the amount of such premiums is sufficient to cover the amount of all losses and expenses of the Commission: Provided, however, That the total amount of such premiums in any one year shall not exceed one per centum of the total amount of the accounts of its insured members and its creditor obligations.
SEC. 18. Each institution whose application for insurance under this Chapter is approved by the Commission shall be entitled to insurance up to the full withdrawal or repurchasable value of the accounts of each of its shareholders: Provided, however, That no shareholder shall be insured for an aggregate amount in excess of ten thousand pesos in any one association.
SEC. 19. The Commission is hereby authorized to prescribe, in accordance with existing laws, rules and regulations governing the procedure to be followed in the event of a default by any insured institution including the rehabilitation or liquidation of such insured institution.
SEC. 20. To enable the Commission to encourage local thrift and local home financing and to promote, organize and develop the association herein provided for, the Commission is hereby authorized to use money from the Fund. The sums expended under this section shall be used impartially in the promotion and development of local thrift and home financing institutions.
SEC. 21. Each association organized under this Chapter shall use the words "Building and Loan Association" in their corporate names in addition to any other specific designation that may be used, and, further, that no other corporation or association other than those organized under this Chapter shall be permitted to use the words "Building and Loan Association".
