AMENDING PRESIDENTIAL DECREE NO. 5 RELATIVE TO THE CHARTER OF THE PHILIPPINE NATIONAL BANK

WHEREAS, Presidential Decree No. 5, of September 27,
1972, adopted and approved into law House Bill No. 2483 which was
pending before Congress at the time of the promulgation of Proclamation
No. 1081, dated September 21, 1972;

WHEREAS, it has been found necessary to incorporate
certain changes and modifications to the Charter of the Philippine
National Bank, particularly certain proposals recommended by an official
banking survey commission which recently submitted its report;

WHEREAS, for clarity and accuracy, it is deemed
essential to set forth hereunder the text of the pertinent provisions of
the Charter of the Philippine National Bank, together with the
abovementioned changes and modifications, which shall supersede the
entire text of the said House Bill No. 2483 as adopted and approved into
law by Presidential Decree No. 5;

NOW, THEREFORE, I, FERDINAND E. MARCOS, Commander-in-Chief
of all the Armed Forces of the Philippines, pursuant to Proclamation
Order No. 1081, dated September 21, 1972, as amended, and in order to
effect desired changes and reforms in the social, economic and political
structures of our society, do hereby order and decree as follows:

SECTION 1. Subsection (g) of Section two of Republic
Act Numbered Thirteen hundred, as amended, is further amended to read
as follows:

“CORPORATE POWERS”

“SEC. 2. Corporate powers and duties.
—The said National Bank, upon its organization, shall be a body
corporate and shall have power:

“(g) To grant long-term loans and advances against security of real
estate and/or other acceptable assets for the establishment,
rehabilitation or expansion of agricultural, export, industrial and
other productive enterprises: Provided, That the aggregate of
such loans shall not exceed the sum of the paid-up capital and
unimpaired surplus, long-term indebtedness and obligations and thirty
per cent of the total deposits: Provided, further, That
notarial services in connection with loan application of not more than
one thousand pesos shall be free, and in places where the bank has no
lawyers, notarial services shall be performed by municipal judges and
other government notaries public free of charge;”

SEC. 2. Section three of Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:

“CAPITAL”

“SEC. 3. Authorized Capital Stock — Par Value —
Government Subscription and payment. — The authorized capital
stock of the Philippine National Bank shall be one billion pesos divided
into ten million per value shares of one hundred pesos each, which
shall include its present capitalization: Provided, That the
Bank may purchase the shares held privately: Provided, further, That
five hundred million pesos of the authorized capital shall be fully
subscribed by the Government and said subscription shall be paid in the
following manner: Two hundred twenty-five million of surplus and
reserves of the Bank as of December thirty-one nineteen hundred and
seventy-one shall be applied by the Bank in payment of the outstanding
unpaid subscribed shareholdings of the Government which together with
the present paid-up capital of one hundred fifty million pesos,
including private stockholdings, shall be considered as part of the
paid-in capital of the Bank and the balance from funds from the Treasury
not otherwise appropriated: Provided, furthermore, That three
hundred million pesos of the authorized capital shall be offered for
sale to the public, subject to the proportionate preemptive rights of
existing private stockholders, and the Bank may within one year from
approval hereof take necessary steps to have these shares listed in any
duly registered stock exchange: Provided, furthermore, That
private holders of Land Bank bonds may exchange such bonds for shares of
the Bank offered for sale to the public: Provided finally,
That upon the lapse of five years from the listing of these shares in
any duly registered stock exchange, the shares remaining unsold shall be
automatically subscribed and paid for by the Government and the
Secretary of Finance, with the approval of the President of the
Philippines shall issue Government bonds in exchange for such shares of
stock subscribed by the Government.”

SEC. 3. Section five of Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:

“BANKING OPERATIONS IN GENERAL”

“SEC. 5. Loans and investments
authorized-Total liabilities of a single borrower—Additional
liabilities and security required. – Said National Bank is hereby
authorized;

“(a) To purchase or discount promissory notes, drafts, and bills of
exchange issued or drawn for agricultural, export, industrial or
commercial purposes with securities required by the Bank, or the
proceeds of which have been used or are to be used for such purposes;

“(b) To make loans on or to discount notes, secured by, harvested
and stored crops: Provided, That no loan on the security of
such harvested and stored crops shall exceed eighty per centum of the
market value thereof on the date of the loan: Provided, further.
That the crops so mortgaged shall be insured by the mortgagor for the
benefit of the National Bank for their entire market value: And provided,
finally, That if, owing to any circumstance whatever the value of
the crops given as security shall diminish, the mortgagor shall obligate
himself to furnish additional security or refund such part of the loan
as the Bank may deem necessary. Such loans shall be granted for a period
of not to exceed one year, subject to extension, in the discretion of
the Bank;

“(c) To make loans to agriculturists in installments, on standing
crops of the natural products of the Philippines such as rice, hemp,
copra sugar tobacco corn, maguey, etc., not in excess of seventy per
centum of the estimated value of such crops: Provided, however,
That before granting such loans the National Bank may require
additional security in the nature of mortgage’s on real estate duly
registered in the name of the debtor, or chattel mortgage including
those upon livestock, machinery, and agricultural implements, or
personal bonds with sufficient surety or sureties, satisfactory to the
Bank;’

“(d) To make loans to any branch or subdivision 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 socio-economic development project pursuant to the
priorities established in the development program, as certified to by
the National Economic 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 and interest:
Provided, however, That loans covered by government guarantees
shall not exceed the ceiling prescribed by the Monetary Board: Provided,
finally, That such a ceiling shall exclude loans to government
corporations with acceptable and sufficient collateral which shall
however be subject to the limitation hereinunder provided.

“The aggregate obligation of all these government agencies and
entities for the loans herein authorized shall at no time exceed the
advances, deposits, and paid-in capital contribution of the Government
[plus twenty percent (20%)], except in cases of emergency situations.

“(e) Generally, to make advances or discount paper for
agricultural, export, manufacturing, industrial, or commercial purposes:
Provided, That loans, discounts or advances made under this
section shall have maturities not exceeding one year, renewable from
year to year, in the discretion of the Bank;

“(f) To engage or participate in the development of secondary
markets for medium and long-term papers.

“(g) To invest in equities of the following allied, undertakings:
warehousing companies as provided for under Section 2
subsection (h), leasing companies, storage companies, sate deposit box
companies, trust companies, companies, engaged in the management of
mutual funds but not in the mutual funds themselves, banks other than
rural banks, and such other similar activities as the Monetary Board of
the Central Bank of the Philippines may declare as appropriate from time
to time: Provided, however. That (a) the total investment in
equities shall not exceed twenty-five percent (25%) of the net worth of
the Bank, (b) the investment in any one enterprise shall not exceed ten
per cent (10%) of the net worth of the Bank; (c) the investment of the
Bank in any single enterprise, except where that enterprise is not a
financial intermediary; and (d) the investment in other banks shall be
deducted from the Bank’s net worth for purposes of computing the
prescribed ratio of net worth to risk assets. Equity investments shall
not be permitted in non-related activities.

“Where the allied undertaking is a wholly-owned or majority
controlled subsidiary of the Bank, it shall be subject to examination by
the Central Bank.”

“(h) To grant loans to cooperatives as well as to individual
members of such cooperatives: Provided, That in the grant of
said loans the collateral requirements elsewhere required in this Act
may be waived in appropriate cases.

“The aggregate amount of loan for any single industry shall at no
time exceed twenty (20%) per cent of the Bank’s lending capacity.

“The total liabilities to the Bank of any individual, including the
liabilities of the individual’s spouse for money borrowed shall at no
time exceed two-and-a-half per cent of the unimpaired capital and
surplus of the Bank. The total liabilities to the Bank of any company
corporation, or firm, for money borrowed including in the liabilities,
of the company or firm, the liabilities of the several members thereof,
shall at no time exceed ten (10%) per centum of the unimpaired capital
and surplus of the Bank. But the discount of bills of exchange drawn in
good faith against actually existing values and the discount of
commercial or business paper actually owned by the person negotiating
the same shall not be considered as money borrowed, and in addition to
the ten (10%) per centum of the unimpaired capital and surplus of Bank provided
such additional liabilities are secured by shipping documents,
warehouse receipts or other similar documents transferring or securing
title covering readily marketable, nonperishable stocks, when such
staples have a market” value equal to at least one hundred twenty-five
per centum of such additional liabilities.

“Provided, further, That the total contingent liabilities
to the Bank of any person, whether natural or juridical, under any form
or type of letters of credit accommodations, whether domestic or
foreign, or under any other form of financing shall at no time exceed
ten (10%) per centum of the unimpaired capital and surplus of the Bank.

“The Bank shall not make any loan upon the stock of any other
corporation as collateral if the aggregate market value of all such
stocks held as collateral exceeds an amount equal to ten (10%) per
centum of the unimpaired capital stock and surplus of the Bank.

”The term ‘loan’ whenever used in this Act shall include
overdrafts and the limitations contained in this section shall apply to
any loan of any kind whenever secured wholly or partly by real estate
mortgage.”

SEC. 4. Section six of Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:

“BOARD OF DIRECTORS – COMPOSITION AND ORGANIZATION”

“SEC. 6. Board of Directors — Composition — Per
diems — Tenure. — The affairs and business of the National
Bank shall be directed and its property managed and preserved unless
otherwise provided in the Act by a Board of Directors
consisting of nine members duly elected as hereinafter provided
for terms of three years who shall be paid a per diem of Two
Hundred Fifty pesos for each session of the Board of Directors: Provided,
however, That the first members elected under the provisions of
this section shall have terms of office of one, two, and three years,
respectively.”

SEC. 5. Section seven of Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:

“SEC. 7. Election of Board of Directors —
Election of Chairman and Vice-Chairman of the Board. — Who may be
elected members of the Board of Directors.— Annually on the first
Tuesday after the first Monday in March, the stockholders shall meet to
elect the members of the Board of Directors whose terms have expired,
each stockholder or proxy to be entitled to as many votes as he may have
shares of stocks, registered in his name on the thirty-first of January
last preceding and held by him at the time of the election. Immediately
after the election, the directorate shall be organized as such and
elect from among themselves a chairman, the President of the Bank shall
be ex officio vice-chairman, who shall assist the chairman and act in
his stead in case of absence or incapacity. In case of incapacity or
absence of both the chairman and vice-chairman, the Board of Directors
shall designate a temporary chairman from among its members: Provided,
That no director, shareholder or employee of any other bank shall be
eligible as member of the Board of Directors of the National Bank: Provided,
further, That no person shall be elected director of the Bank
unless he is a natural born citizen of the Philippines, not less than
thirty-five years of age, of good moral character and has attained
proficiency, expertise and recognized competence in one or more of the
following: banking, finance, economics, law, agriculture, business
management, public utility or government administration.

SEC. 6. Section eight of Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:

“SEC. 8. President and Vice-President –
Appointment and removal — Salaries. — The Chief executive of the
Bank shall be the President, who shall be elected by the Board of
Directors from amongst themselves for a term of four years unless
earlier removed for cause or by reason of incapacity. No person shall be
elected President of the Bank unless he is at least forty years of age,
of good moral character and reputation, with at least ten years
previous experience in banking, and has a reputed proficiency, expertise
and recognized competence in banking and economics, or finance, or
management, or government administration, or law, or agriculture, or
industry. He shall be assisted by an executive vice-president and such
number of senior vice-presidents and vice-presidents as may be necessary
for the efficient operation of the business of the Bank, who shall have
the same qualifications as the President and who shall be chosen and
may be removed for cause by the Board of Directors. The salaries of the
President, Executive Vice-President, the Senior Vice-Presidents and
Vice-Presidents shall be fixed by the Board of Directors in line with
the policy declared by the President of the Philippines.”

SEC. 7. Section nine of the Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:

“BOARD OF DIRECTORS”

“SEC. 9. The Board of Directors shall have, among
other duties, powers and authority:

“(a) To formulate policies necessary to carry out effectively the
provisions of this Act and adopt such by-laws, rules and regulations
for the effective operation of the Bank, in conformity with this Act and
existing laws;

“(b) To establish branches or agencies in other countries and at
such points within the Philippines as it may deem advisable, which shall
perform functions as may be delegated to them by the Board of
Directors: Provided, however, That there shall be established
branch banks or agencies in every provincial capital. AND
PROVIDED, FINALLY, THAT THE BANK SHALL NOT OPEN BRANCHES, AGENCIES OR
EXTENSION OFFICES WITHOUT PRIOR APPROVALOF THE MONETARY BOARD OF THE
CENTRAL BANK OF THE PHILIPPINES.

“With the authorization of the proper department Secretary first
had, the Board of Directors may appoint as agents of said Bank, the
provincial or municipal treasurers, who shall receive such additional
compensation as the Board may determine.”

“(c) To adopt an annual budget for the effective operation and
administration of the Bank, the expenses for personnel of which shall
not exceed thirty (30%) per cent of the gross income of the Bank for the
preceding calendar year, including all salaries, allowances, benefits
and other emoluments of whatever kind or nature.”

SEC. 8. Section eleven of Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:

“LEGAL COUNSEL”

“SEC. 11. Chief Legal Counsel — Any
provision of laws, existing executive orders and administrative orders
to the contrary notwithstanding, all legal cases and- matters of the
Philippine National Bank shall be exclusively handled, controlled and
supervised by a Chief Legal Counsel of the Bank who shall be chosen and
may be removed for cause by the Board of Directors.”

SEC. 9. Section twelve of Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:

“AUDITING DEPARTMENT”

“SEC. 12. Bank Auditor, salaries and expenses
of the Auditing Department, reports. — The Auditor General shall be
the ex officio auditor of the National Bank and shall with the advice
and consent of the President of the Philippines appoint a Bank auditor
who shall be the chief of the Auditing Department of the Bank, and shall
receive the salary in an amount equal to the salary of the Executive
Vice-President of the Bank. All the other employees of the department
shall be appointed by the Auditor General, who with the approval of the
President of the Philippines, shall fix the salaries of the same in
accordance with the job evaluation program of the Bank. Any provision
of- law or charter to the contrary notwithstanding, such salaries and
number of Auditing Personnel, once fixed, shall not be thereafter
increased, diminished or altered unless initiated by the Auditor
General. The Bank Auditor and his subordinate personnel shall also
receive such allowances and privileges as are or shall be authorized to
management personnel having the same rank and/or salary.

“The operating expenses of the department and the salaries and
traveling expenses of the employees thereof shall be payable by the bank
and the Board of Directors shall make the necessary appropriation
therefor which shall not exceed three (3%) per cent of the gross income
of the Bank during the preceding calendar year.

“The appointment and removal of the Bank Auditor and subordinate
officials and employees of the Auditing Department shall be made by the
Auditor General in accordance with the established personnel policies of
the Bank; Provided, however, That in the promotion of
subordinate officials and employees of the department, the Auditor
General shall be guided by a list of qualified and eligible personnel to
be submitted by the Bank Auditor with a certification that merit and
seniority have been strictly observed.

“The Bank Auditor shall make a quarterly audit report, or as often
as the exigencies of the service may require, on the condition of the
Bank, to the President of the Philippines, through the Secretary of
Finance, to the Auditor General and to the Board of Directors of the
Bank. The report shall contain, among other things, a statement of
resources and liability, including earnings and expenses, the amount of
capital stock, dividends paid, surplus reserve, and undivided profits,
as well as the losses, bank debts and suspended and overdue paper
carried in the Bank’s assets as of the day in which the statements are
compiled.”

SEC. 10. Section thirteen of Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:

“APPOINTMENT AND REMOVAL OF OTHER OFFICERS AND
EMPLOYEES OF THE NATIONAL BANK”

“SEC. 13. Other officers and employees, appointment and
removal — Salaries — Non-applicability of the Civil Service Law. —
All other officers and employees of the Bank shall be appointed and
removed by the Board of Directors, on recommendation of the President.
Said officers and employees shall not be subject to the Civil Service
Law. Officers may be transferred or re-assigned according to the sound
judgment of the Board of Directors. Duties and compensation of said
officers and employees shall be fixed by the President with the approval
of the Board of Directors: Provided, That whenever the
Chairman or the Vice-Chairman, by order of the Board of Directors, shall
temporarily or permanently perform duties incumbent upon other officers
or employees, they may be granted compensation therefor subject to the
written approval of the President of the Philippines.

“Provided, That it is declared to be the policy of this
Act that the Bank is an instrument of the national monetary policy of
the Government and its operation affects national interest and all the
officers and employees of the Bank shall not strike for the purpose of
securing changes or modifications in their terms and condition of
employment but such officers and employees may belong to any labor
organization which does not impose the obligation to strike or to join
in strike.”

SEC. 11. Section sixteen of Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:

“SEC. 16. Confidential information. — The
Superintendent of the Banks and the Auditor General, or other officers
designated by law to inspect or investigate the condition of the
National Bank and officers and employees of the National Bank shall not
reveal to any person other than the President of the Philippines, the
Secretary of Finance, and the Board of Directors the details of the
inspection or investigation or give any information relative to any bank
transaction of any private individuals, corporations, or any other
entity, except by order of a Court of competent jurisdiction.”

SEC. 12. Section eighteen of Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:

“SEC. 18. Loans to officers, directors and
employees prohibited. — The National Bank shall not directly or
indirectly grant loans to any director, officer, employee or agent of
the Bank and no loan shall be granted to a corporation, partnership or
company wherein any member of the Board of Directors is a shareholder,
agent or employee in any manner.”

SEC. 13. Republic Act Numbered Thirteen hundred, as
amended, is amended by adding the following section immediately after
Section 22 thereof, which reads as follows:

“SEC. 22-A. Prohibition against writing-off of
loans without prior Central Bank approval. — Writing-off of loans
and advances with an outstanding amount of one hundred thousand pesos or
more shall require the prior approval of the Monetary Board of the
Central Bank of the Philippines.”

SEC. 14. Section twenty-five of Republic Act
Numbered Thirteen hundred, as amended, is further amended to read as
follows:

“NET PROFITS”

“SEC. 25. Allocation of Net Profit. — At
the close of each calendar year, the Bank shall determine the net result
of its operations, in the Calculation of which, adequate allowances
shall be made for probable losses. From the net profit arrived thereat
seventy-five (75%) per cent thereof shall be set aside for declaration
of dividends corresponding to the Government and the private
stockholders and the remaining twenty-five (25%) per cent shall be
accumulated in the surplus account which shall be utilized for such
purposes as may be authorized by the Board of Directors.”

SEC. 15. Section twenty-six of Republic Act Numbered
Thirteen hundred, as amended, is further amended to read as follows:

“PAYMENT OF DIVIDENDS OF GOVERNMENT SHARES”

“SEC. 26. Payment of dividends corresponding to
Government-owned shares. — The dividends declared corresponding to the
shares of the Government as provided for in Section twenty-five
hereof, shall be set aside and is hereby appropriated to form a special
bond sinking fund which shall be used for the purpose only of retiring
the government bonds issued pursuant to the last paragraph of Section
three of this Act. The Bank shall be the trustee of these funds until
the purpose for which it was created shall have been accomplished. Any
and all income that may accrue shall form part of the fund. This special
fund shall be deposited with the Bank. After the retirement and payment
of the bonds including interest thereon from the special fund shall
have been made, whatever residue remaining shall be used to pay for
additional government subscription on the unissued shares of authorized
capital stock. Thereafter, all profits assigned as dividends to the
shares of the Government shall be paid into the Treasury of the
Philippines for the general funds thereof.

SEC. 16. If any provision or section of this Act or
the application thereof to any person, association or circumstances is
held invalid, the other pertinent provisions or sections of this Act and
their application to such person, association or circumstances shall
not be affected thereby.

SEC. 17. Repealing Clause. — All Acts,
executive orders, administrative orders, proclamations, rules and
regulations or parts thereof inconsistent with any of the provisions of
this Act are hereby repealed or modified accordingly.

SEC. 18. This Decree shall take effect immediately.

Done in the City of Manila, this 20th day of November, in the year of
Our Lord, nineteen hundred and seventy-two.

			(Sgd.) FERDINAND E. MARCOS President Republic of the Philippines
	By the President:
	(Sgd.) ALEJANDRO MELCHOR
		Executive Secretary