Section 31
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.