AMENDING FURTHER CERTAIN SECTIONS OF REPUBLIC ACT NUMBERED FOUR THOUSAND NINETY-THREE, AS AMENDED, OTHERWISE KNOWN AS THE “PRIVATE DEVELOPMENT BANKS’ ACT”

WHEREAS, there were pending before Congress prior to the
promulgation of Proclamation No. 1081, dated September 21, 1972, urgent
banking measures proposing amendments to Republic Act No. 4093, as
amended, otherwise known as “The Private Development Banks’ Act,” which
arc vital to the national development program of the Government;

WHEREAS, an extensive survey and study of the banking and
credit system had been undertaken for the purpose of assessing its
adequacy in Philippine economic growth, and of facilitating the
savings-investment process in development; and

WHEREAS, the result of the survey was an integrated set of
recommendations which were accepted, with modifications by the monetary
authorities, and made the basis for this Decree to effect reforms in the
banking system, and to render monetary and credit policies more
responsive to the requirements of economic development;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers m me vested by the Constitution as
Commander-in-Chief of the Armed forces of the Philippines, and pursuant
to Proclamation No. 1081, dated September 21, 1972, and General Order
No. 1, dated September 22, 1972, as amended, and in order to effect the
desired changes and reforms in the social, economic, and political
structure of our society, do hereby order and decree the amendment of
Republic Act No. 4093, as amended, as follows:

SECTION 1. Section four of Republic Act Numbered Four
thousand ninety-three, as amended, is hereby amended to read as follows:

“SEC. 4. A private development bank shall be organized in
the form of a stock corporation and its paid-up capital 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
seventy per cent of the voting stock subscribed by the private sector
shall be owned and held by citizens of the Philippines, except where a
new bank is established as a result of the consolidation of existing
private development banks in any of which there are foreign-owned voting
stocks at the time of consolidation: Provided, however, That
the Monetary Board may, with the approval of the President of the
Philippines, reduce the required minimum percentage of Philippine
ownership prescribed herein from seventy percent (70%) to sixty percent
(60%); Provided, further, That if said subscription of private
shareholders to the initial capitalization of a private development bank
cannot be secured or is not available, the Development Bank of the
Philippines on representation of the said private shareholders and with
the approval of its Board of Governors shall, within thirty days from
date of approval by the Board of Governors, and after compliance by the
private stockholders with the conditions of said approval, 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 provided in section
three, paragraph three of Republic Act Numbered Two thousand eighty-one,
in an amount equal to the difference between the required paid-up
capital and to the fully-paid subscribed capital of the private
stockholders but not exceeding the latter: Provided, furthermore,
That the Board of Governors shall act on the representation made by the
private shareholders within thirty days from the date it is filed: Provided,
still further, That such shares of stock subscribed by the bank
shall be preferred shares entitled to cumulative dividends at the yearly
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 bank shall be citizens of the Philippines: Provided,
however, That no full-time appointive or elective public
official shall at the same time serve as officer, director, legal
counsel, or consultant of any private development bank, except in
cases where such service is incident to financial assistance provided by
the government or a government-owned or controlled corporation to the
bank: Provided, further, That, in the case of merger or
consolidation of private development banks duly approved by the Monetary
Board, the limitation on the maximum number of corporate directors in a
corporation, as provided for in Section twenty-eight of the Corporation
Law (Act No. 1459), shall not be applied so that membership in the new
board may include up to the total number of directors provided for in
the respective articles of incorporation of the merging or consolidating
private development banks.”

SEC. 2. Section five-A of the same Act is hereby amended to
read as follows:

“SEC. 5-A. Equipment or livestock loans granted by
private development banks need not be secured by the chattel, equipment
or livestock acquired out of the proceeds of the loan if the borrower
offers to constitute a lien or mortgage on real estate properties
seventy percent (70%) of the appraised value of which equals or exceeds
the loan granted.”

SEC. 3. The same Act is further amended by adding the
following section immediately after Section seven thereof, the new
section to read as follows:

“SEC. 7-A. Any private development bank may invest in
equities of such allied undertakings as may be approved by the Central
Bank for banks of their category as provided in Section 6-A of Republic
Act No. 337, as amended: Provided, however, That (1) the total
investment m equities shall not exceed twenty-five percent (25%)of the
net worth of the private development bank; (2) the equity investment in
any single enterprise shall be limited to fifteen percent (15%) of the
net worth of the private development bank; (3) the total equity
investment of the private development bank in any single enterprise
shall remain a minority holding in that enterprise except where the
enterprise is not a financial intermediary; and (4) the equity
investment in other banks, if allowed by the Monetary Board, shall be
subject to the same limitations imposed on similar investments of
commercial banks and shall be deducted from the investing bank’s net
worth for purposes of computing the prescribed ratio of net worth to
risk assets: Provided, further, That equity investments shall
not be permitted in non-related activities: Provided, finally,
That where the allied undertaking is a wholly or majority-owned
subsidiary of the development bank, the same may be subject to
examination by the Central Bank.”

SEC. 4. This Decree shall take effect immediately.

Done in the City of Manila, this 29th day of January, in the year
of Our Lord, nineteen hundred and seventy-three.