AMENDING FURTHER CERTAIN SECTIONS OF REPUBLIC ACT NUMBERED THREE THOUSAND SEVEN HUNDRED SEVENTY-NINE, AS AMENDED, OTHERWISE KNOWN AS THE “SAVINGS AND LOAN ASSOCIATIONS ACT”

WHEREAS, there were pending before Congress prior
to the promulgation of Proclamation No. 1081, dated September 21, 1972,
certain bills proposing amendments to Republic Act No. 3779, entitled
“Savings and Loan Associations Act”;

WHEREAS, the recommendations resulting from an
extensive survey and study of the financial system undertaken for the
purposes of assessing its adequacy in Philippine economic growth, and of
facilitating the savings-in vestment process in development have been
accepted, with modifications by monetary authorities; and

WHEREAS, savings and loan associations have
proved to be a very effective instrument in encouraging the
thrift-savings habit especially of small savers and in providing
additional credit assistance to small scale entrepreneurs, home builders
and consumers;

NOW, THEREFORE, I, FERDINAND E. MARCOS,
President of the Philippines, by virtue of the powers in 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. 3779, as amended, as follows:

SECTION 1. Section three (a) of Republic Act
Numbered Three thousand seven hundred seventy-nine, as amended, is
hereby amended to read as follows:

“SEC. 3(a). ‘Savings and loan association
hereinafter called the association shall include any corporation engaged
in the business of accumulating the savings of its members or
stockholders, and using such accumulations, together with its capital in
the case of a stock corporation, for loans and/or for investment in the
securities of productive enterprises or in securities of the
Government, or any of its political subdivisions, instrumentalities or
corporations: Provided, That they shall be primarily engaged in
servicing the needs of households by providing personal finance and
long-term financing for home building and development”;

SEC. 2. Section four (b) of the same Act is
hereby amended to read as follows:

“SEC. 4(b). The Monetary Board shall fix the
minimum paid-up capital of a savings and loan association organized as a
stock corporation in such amount as said Board may consider necessary
for the safe and sound operation of such association: Provided,
however, That in no case shall such paid-up capital be less than
one hundred thousand pesos: Provided, further, That at least
seventy per cent (70%) of the voting stock of a savings and loan
association which may be established after the approval of this Act
shall be owned by citizens of the Philippines, except where a new
association is established as a result of the consolidation of existing
associations in which there are foreign-owned voting stocks at the time
of consolidation: Provided, furthermore, That the percentage of
foreign-owned voting stocks in stock savings and loan associations
existing upon the effectivity of this Act, if such percentage is in
excess of thirty per cent (30%) of the voting stock of the savings and
loan association, shall not be increased, but may be reduced, and, once
reduced, shall not be increased thereafter beyond thirty per cent (30%)
of the voting stock of the savings and loan association. The percentage
of foreign-owned voting stocks in an association shall be determined by
the citizenship of the individual stockholders in that association. In
the case of corporations owning shares in the association, the
citizenship of each stockholder in that corporation shall be the basis
of computing the percentage. Such association is authorized to receive
deposits from, and extend loans to, the general public.”

SEC. 3. Section five of the same Act is
hereby amended to read as follows:

“SEC. 5. Powers of savings and loan
association. — A savings and loan association shall be incorporated
under the Corporation Law, and in addition to the powers therein
granted whenever applicable, it shall exercise the following:

“(a) To grant loans of not exceeding the amount deposited by
the borrower plus his four months’ salary or regular income in the case
of a permanent employee or wage earner, or seventy per cent of the fair
market value of any property acceptable as collateral on first mortgage
that he may put up by way of security: Provided, That no loan
shall have a maturity date of more than three years, except loans on the
security of unencumbered real estate for the purpose of home building
and home development which may be granted with maturities not exceeding
twenty years subject to regulations prescribed by the Monetary Board: Provided,
further, That in the case of a borrower who is a permanent
employee or wage earner, the treasurer, cashier or paymaster of the
office employing him is authorized, the provisions of any existing law,
rule and regulation to the contrary notwithstanding, to make deductions
from his salary, wage, or income pursuant to the terms of his loan, to
remit deductions to the savings and loan association, and to collect
such reasonable fee for his services as may be authorized by rules
promulgated by the Monetary Board.

“(b) To charge interest within the limits allowed by law, and
collect such necessary fees incidental to the grant of loans as may, by
regulation, be authorized by the Monetary Board;

“(c) Subject to such rules as the Monetary Board may approve,
to discount with recourse commercial papers and accounts receivables;

“(d) To invest its funds in any sound non-speculative
enterprise, as well as in bonds, securities, and other obligations
issued by the Government of the Philippines, or any of its political
subdivisions, instrumentalities or corporations including
government-owned or controlled corporations subject to the rules and
regulations of the Monetary Board: Provided, That stock savings
and loan associations may invest in equities only of such allied
undertakings as may be approved by the Central Bank for banks of their
category as provided for in Section 6-A of Republic Act No. 337, as
amended: Provided, further, That (a) the total investment in
equities shall not exceed twenty-five percent (25%) of the net worth of
the association; (b) the equity investment in any single enterprise
shall be limited to fifteen per cent (15%) of the net worth of the
association; (c) the total equity investment of the association in any
single enterprise shall remain a minority holding in that enterprise,
except where the enterprise is not a financial intermediary;, and (d)
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 stock
savings and loan association’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 or majority-owned subsidiary of the investing association,
it may be subject to examination by the Central Bank.

“(e) To allow member-depositors to participate in the profits
of the savings and loan association on the basis of their deposits on
the date dividends are declared; and

“(f) To borrow money or incur such obligations not exceeding
twenty per centum of the total assets of the association, from
any public lending institutions, such as the Development Bank of the
Philippines, the Philippine National Bank, the Government Service
Insurance System, the Social Security System, and from such private
lending institutions as may be approved by the Monetary Board, including
other stock savings and loan associations. The Monetary Board may, in
meritorious cases, raise the ceiling on the borrowing capacity of a
savings and loan association to an amount not exceeding thirty per
centum of its total assets: Provided, That in the case of a
non-stock savings and loan association organized by employees of an
entity or a corporation, such association may borrow funds from said
entity or corporation but not vice versa.

“(f-1) To maintain deposits with banks and other stock savings
and loan associations: Provided, That the amount of such
deposits shall be subject to the loan limit to a single borrower as
prescribed herein or by other special laws or regulations.

“A savings and loan association may, subject to such rules as the
Monetary Board may promulgate, also borrow from, or rediscount notes,
bills of exchange and other commercial papers with the Central Bank. The
rate of interest on such obligations or borrowings to be charged such
associations shall not be more than that charged rural banks.”

SEC. 4. Subsection (b) of Section six of the
same Act is hereby amended to read as follows:

“SEC. 6(b). No non-stock savings and loan
association shall advertise or represent itself to the public as a bank.
A stock savings and loan association may use the word bank in
connection with its business name only upon compliance with such
requirements as may be imposed by, and prior approval of, the Monetary
Board.”

SEC. 5. Section fourteen of the same Act
hereby amended to read as follows:

“SEC. 14. Qualification for directors. —
No person shall be eligible as director of an association unless he is a
member, in case of nonstock associations, or an owner in his own right
or stocks in the association with an aggregate par value of at least
five thousand pesos, in case of stock associations: Provided,
That at least two-thirds of the members of the board of directors of any
stock savings and loan association which may be established after the
approval of this Act 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 stock savings and loan association except in cases
where such service is incident to financial assistance provided by the
Government or a government-owned or controlled corporation to such
association: Provided, further, That in the case of a merger or
consolidation of savings and loan associations duly approved by the
Monetary Board, the limitation on the maximum number of directors in a
corporation, as provided for in Section 28 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
savings and loan associations.”

SEC. 6. Section eighteen of the same Act is
hereby amended to read as follows:

“SEC. 18. Limitations on lending authority.
— (a) An association shall not commit itself to make any loans for
amounts in excess of the total of the following amounts:

1. amount of cash available for loan purposes;
2. amount of cash which can be readily realized upon the sale or
   redemption of permissible investments made by the association;
3. amount of credit available for loan purposes from
   government or private financing institutions.

“(b) No association shall directly or indirectly make any loans
to any director or officer of such association, either for himself or
as agent or as partner of another, except with the written approval of
the majority of the directors of the association, excluding the director
concerned: Provided, That in the case of a nonstock
association, the aggregate loans, direct or indirect, granted at any one
time to such directors and officers shall not exceed twenty per
centum of the total paid-up capital of the association: Provided,
further. That in the case of a stock association, the Monetary
Board may regulate the amount of credit that the association may extend,
directly or indirectly, to its directors, officers or stockholders. In
any case, however, the outstanding credit accommodations which a stock
association may extend to each of its stockholders owning two percent
(2%) or more of the subscribed capital stock, its directors or its
officers, shall be limited to an amount equivalent to the respective
outstanding deposits and book value of the paid-in capital contribution
in the association. In all cases of credit accommodations granted to
directors and officers under this subsection, the written approval of
the majority of the directors of the association, excluding the director
concerned, shall be entered upon the records of the association and a
copy of such entry shall be transmitted forthwith to the appropriate
supervising department of the Central Bank.

“The office of any director or officer of an association who
violates the provisions of this subsection shall immediately become
vacant and the director or officer shall be punished by imprisonment of
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.

“(c) No association shall make any loan to any corporation of
which a majority of the stock is owned or controlled directly or
indirectly, by any one or more of the directors or officers of such
association collectively except with the written approval of the
majority of the directors of the association excluding the director or
directors concerned. Any such approval shall be entered upon the records
of the association and a copy of such entry shall be transmitted
forthwith to the appropriate supervising department of the Central Bank.

‘”The Monetary Board may regulate the amount of credit that an
association may extend to a corporation referred to in this subsection
in the same manner as it may regulate credit accommodations to directors
and officers of the association under the preceding subsection.

“(d) No association shall loan any of its funds upon the
security of its own stock.”

SEC. 7. Section twenty-one of the same Act is
hereby amended to read as follows:

“SEC. 21. Limitations on investment. —
(a) No association at any one time shall have invested in bonds and
securities an aggregate amount in excess of ten per centum of
the total assets of such association;

“(b) No non-stock savings and loan association at any one time
shall have invested in real property an aggregate amount in excess of
five per centum of the total assets of such association;

“(c) No nonstock savings and loan association at any one time
shall invest in furniture, fixture, furnishings and equipment and
leasehold improvements for its offices, more than ten per centum
of its aggregate paid-up capital;

“(d) No stock savings and loan association, at any one time,
shall have an investment in real estate and improvements thereon,
including equipment, in an aggregate amount in excess of fifty per cent
of its net worth: Provided, That real estate used for the stock
savings and loan association’s purposes owned by another corporation in
which that association owns equity shall be considered as part of the
association’s total investment in real estate.”

SEC. 8. Section 29 of the same Act is hereby
amended, by adding the following subsections after Subsection (c)
thereof, which read as follows:

“SEC. 29(c-1). Whenever any officer, employee, or
agent of a savings and loan association makes false entries in any
association report or statement thereby affecting the financial interest
of, or causing damage to, the association or any person; or without
order of a court of competent jurisdiction, discloses to any
unauthorized person any information relative to the funds or properties
in the custody of the association belonging to private individuals,
corporations, or any other entity: Provided, That with respect
to bank deposits, Section 4(a) of this Act shall prevail; or accepts
gifts, fees or commissions or any other form of remuneration in
connection with the approval of a loan from said association; or
overvalues or aids in overvaluing any security for the purpose of
influencing in any way the action of the association on any loan, such
officer, employee or agent shall be punished by a fine of not more than
two thousand pesos or imprisonment for not more than one year, or both,
at the discretion of the court;

“(c-2). Whenever any applicant for a loan from, or
borrower of, a savings and loan association fraudulently overvalues
property offered us security for a loan from the said association; or
furnishes false, or makes willful misrepresentation of, material facts
for the purpose of obtaining, renewing, or increasing a loan or
extending the period thereof; or attempts to defraud the said
association in the event of a court action to recover a loan; or offers
any officer, employee or agent of a savings and loan association any
gift, fee, commission, or other form of compensation in order to
influence such association personnel into approving a loan application,
such applicant or borrower shall be punished by a fine of not more than
two thousand pesos or imprisonment for not more than one year, or both,
at the discretion of the court;

“(c-3). Whenever any examiner, officer or employee
of the Central Bank of the Philippines, who is assigned to examine,
supervise, assist or render technical service to a savings and loan
association, commits any of the acts enumerated in subsection c-1 of
this section or connives or aids in the commission of the same, he shall
be punished by a fine of not more than two thousand pesos or
imprisonment of not more than one year or both, at the discretion of the
court.”

SEC. 9. The same Act is hereby further amended,
by adding the following section immediately after Section twenty-nine
thereof, which reads as follows:

“SEC. 29-A. The provisions of Republic Acts
Numbered Two hundred and sixty-five, as amended, and Three hundred
thirty-seven, as amended, insofar as they are applicable and not in
conflict with any provision of this Act, shall apply to savings and loan
associations organized hereunder.”

SEC. 10. All acts and parts of acts inconsistent
with the provisions of this Act are hereby repealed.

SEC. 11. 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.