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SEC. 29. A savings and mortgage bank shall be any corporation organized primarily for the purpose of accumulating the small savings of depositors and investing them, together with its capital, in bonds or in loans secured by bonds, real estate mortgages, and other forms of security, as hereinafter provided.
SEC. 30. The combined capital accounts of each savings and mortgage bank shall not be less than an amount equal to fifteen per cent (15%) of its total assets, after deducting the following assets: (a) Cash on hand; (b) Amounts due from banks, both at home and abroad, including all deposits with the Central Bank; and (c) Evidences of indebtedness of the Republic of the Philippines and of the Central Bank, and any other evidences of indebtedness or obligations the servicing and repayment of which are fully guaranteed by the Republic of the Philippines. The Monetary Board shall prescribe the manner of determining the total assets of banking institutions for the purposes of this section, but contingent accounts shall not be defined as being included among total assets. Whenever the capital accounts of a bank are deficient with respect to the requirements of the preceding paragraph, the Monetary Board, after considering a report of the Superintendent of Banks on the state of solvency of the institution concerned, shall limit or prohibit the distribution of net profits and shall require that part or all of net profits be used to increase the capital accounts of the institution until the minimum requirement has been met. The Monetary Board may, after considering the aforesaid report of the Superintendent of Banks and if the amount of the deficiency justifies it, restrict or prohibit the making of new investments of any sort by the bank, with the exception of purchases of the evidences of indebtedness included under subsection (c) of this section until the minimum required capital ratio has been restored.
SEC 31. The loans and investments of savings and mortgage banks shall be limited to the following: (a) Loans with the security of their own savings deposit obligations or of mortgage and chattel mortgage bonds which they have issued, or with the security of savings deposit obligations of other banks doing business in the Philippines; (b) Medium-term loans of the following types: (1) Loans for the encouragement of cattle, carabao and other livestock breeding, with maturities up to three years. Such loans shall be repaid in regular installments and shall have as principal security a lien on the animals, the bank being empowered, however, to require, in addition, real estate and other securities to its satisfaction. The amount of any such loan shall not exceed fifty per cent (50%) of the commercial value of the animals at the time the loan is made, but similar additional loans, up to fifty per cent (50%) may be made as the value of the stock increases. (2) Equipment loans, with maturities up to five years, for the acquisition of fertilizers and any instruments, machinery and other movable equipment used in the production, processing, transformation, handling ,or transportation of agricultural and industrial products. Such loans shall constitute a first lien on the assets acquired with the proceeds of the loan, the bank being empowered, however, to require as additional security' a lien or mortgage on other properties of the debtor. (e) Mortgage loans, with maturities up to ten years, for the conservation, enlargement or improvement of productive properties, or the acquisition of machinery or other fixed installations. Such loans shall be secured by a first mortgage on the property. (d) Real estate mortgage loans with maturities of not more than twenty years, for the following purposes only: (1) For the construction, acquisition, expansion or improvement of rural and urban properties; (2) For the refinancing of similar loans and mort gages; and (3) For such other purposes as may be authorized by the Monetary Board. (e) High-grade bonds and other evidences of indebtedness, and loans against such obligations; (f) Drafts, bills of exchange, acceptances, or notes arising out of current commercial transactions which are endorsed or accepted by any solvent bank operating in the Philippines. The aggregate investments in this class shall not exceed ten per cent (10%) of the total assets of the bank; (g) Collateral trust bonds or notes, or obligations secured by such bonds or notes, secured by a first mortgage or by a participating interest in a first mortgage on improved urban or rural real estate in cities and municipalities of the Philippines, provided that such bonds and notes shall have been outstanding for at least three years prior to their purchase by the savings bank, and provided that during that period the earnings of the property mortgaged and available for paying interest have been equal to at least two hundred per cent (200%) of the annual interest payable on account of all first mortgage obligations outstanding. No such bonds or notes, or obligations secured thereby, shall be purchased by the bank if the aggregate of first mortgage obligations outstanding against the property exceeds seventy per cent (70%) of the appraised value thereof. (h) Loans secured by the pledge to the corporation of gold or silver bullion: Provided, That the loans shall not exceed ninety per cent (90%) of the value of the pledge by which the loan is secured; (i) Loans with first mortgages transferred to the corporation as collateral security on improved and otherwise unencumbered real estate in cities and municipalities in the Philippines: Provided, however, That the mortgage transferred to the corporation as collateral security with interest accrued and due shall not exceed sixty per cent (60%) of the appraised value of the real estate and insured improvements which secure such mortgage. Notwithstanding any provisions in this or any other Act to the contrary, any savings and mortgage bank, existing or doing business on the date of the approval of this Act and engaged in the business of lending of money against the pledge of jewelry, precious stones and articles of similar nature, may continue to engage in such business.
SEC. 32. Except as the Monetary Board may otherwise prescribe, the direct indebtedness to a savings and mortgage bank of any person, company, corporation or firm, including in the indebtedness of the company or firm the indebtedness of the several members thereof, for money borrowed, 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 at no time exceed twenty-five per cent (25%) of the unimpaired capital and surplus of the bank: Provided, however. That this limitation shall not apply to loans made under subsection (f) of section thirty-one.
SEC. 33. Any savings and mortgage bank may, with the approval of the Monetary Board, issue mortgage and chattel mortgage certificates, buy and sell them for its own account or for the account of others, or accept and receive them in payment or as amortization of its loans. Such mortgage and chattel mortgage certificates shall be issued exclusively in national currency and exclusively for the financing of the loans enumerated in subsections (b) (c) and (d) of section thirty-one. The Monetary Board may issue such regulations as it deems necessary with respect to the maturities, rates of interest, denominations and other conditions pertaining to such certificates. The bank shall strive to co-ordinate the amounts and maturities of its certificates with those of its loans, so as to ensure adequate cash receipts for the payment of principal and interest at the time they become due. Savings and mortgage banks shall accept their own certificates at least at the actual price of issue, in any prepayment of loans which mortgage or chattel mortgage debtors may wish to make, provided that the date of maturity of the certificates is not later than the date on which the payment would otherwise become due, in the absence of the aforesaid prepayment.
SEC. 34. Savings and mortgage banks may purchase, hold and convey real estate under the same conditions as those governing commercial banks as specified in section twenty-five of this Act.
SEC. 35. Married women and minors may, in their own right and in their own names, make deposits and withdraw the same, and may receive dividends and interest: Provided, however, That if any guardian shall give notice in writing to any savings bank not to make payments of deposits, dividends, or interest to the minor of whom he is guardian, then such payment shall be made only to the guardian.
SEC. 36. Savings deposits shall be returned to the depositors or to their legal representatives upon their petition in the manner and at the time and under the conditions which shall be determined by the board of directors and stipulated in regulations which shall be in conformity with law and with such regulations as the Monetary Board may prescribe.
SEC. 37. All savings and mortgage banks shall maintain on deposit with the Central Bank of the Philippines such reserves against their deposit liabilities as the Monetary Board shall determine in accordance with the pertinent provisions of the Central Bank Act.
SEC. 38. Whenever there is a call by depositors of a savings bank for repayment of their deposits and the call so made shall result in reducing its legal reserves below the amount required by the Monetary Board, such bank shall not make any new loans or investment of the funds of depositors or earnings of such funds until the call of the depositors has been satisfied and its legal reserves have been restored to the required minimum. Any officer or director of a savings and mortgage bank who makes or causes to be made any loan or investment or funds of depositors or of the earnings of such funds in violation of this section shall be punished by imprisonment for not less than one year nor more than ten years and by a fine of not less than one thousand nor more than ten thousand pesos.
Provisions on this page are reproduced verbatim from official open data. See the attribution line.
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).