Supreme Court E-Library
Information At Your Fingertips

  View printer friendly version

Be it enacted by the Senate and House of Representatives of the Philippines in Legislature assembled and by the authority of the same:

SECTION 1. Articles II, V, XXIV, XXVI, XXVIII, XXIX, and XXXI of Act Numbered Seventeen hundred and ninety, as amended by Act Numbered Twenty-one hundred and thirty-two, are hereby amended to read as follows:

"That the Banco Espanol-Filipino, now known as Bank of the Philippine Islands, shall be a body corporate with power to adopt a corporate seal and shall have succession for the period herein provided; that its corporate existence shall be extended for forty years from January first, nineteen hundred and three, it being understood, however, that the Government is not obliged to grant any further extension. The Bank may make contracts, sue and be sued, complain and defend, in any court of law or equity, as fully as a natural person."

"The bank is authorized to engage in the following classes of transactions:

"1. Discounting bills of exchange whose maturity does not exceed six months, and commercial promissory notes whose maturity does not exceed one year.

"2. Making collection of drafts and other current negotiable paper, and advancing money thereon.

"3. Receiving deposits and opening current accounts'in currency or upon the deposit of public, provincial, municipal, industrial, agricultural, or railway securities issued by legally constituted corporations.

"4. Receiving and caring for money deposited in trust, arising from legacies, voluntary and other trusts, and judicial decrees, or in any other manner.

"5. Receiving in the same manner as under paragraph four, gold and silver bars, jewelry with or without precious stones, and stocks and bonds and other securities issued by corporations.

"6. Negotiating or drawing bills of exchange, whether domestic or foreign.

"7. Dealing in gold and silver.

"8. Making loans upon the security of deposit with the bank, as collateral of precious metals, articles of commerce, products of the country, negotiable securities, and industrial and commercial bills which are easily and safely realized upon at any time: Provided, That all such loans shall be made under regulations established by the board of directors. Such collateral securities shall be accepted only at a rate not exceeding three-fourths of their market or appraised value, except that when the person or legal entity to which a loan is to be made is, in the judgment of the board of directors, sufficiently solvent, apart from the collateral furnished, loans may be made to the amount of ninety per centum of the market value of said collateral security: Provided, That said security is easily convertible into cash and the person to whom the advance is made is a client of the bank; but said person shall, upon the demand of the bank, pay in cash or deposit first-class securities to cover any depreciation in the market value of the securities furnished.

"9. Making loans on bills of lading, when invoices and insurance policies satisfactory to the bank are attached thereto: Provided, That the amount of such loans shall not exceed three-fourths of the current market value of the articles covered by such bills of lading.

"10. Granting current credit accounts in favor of clients who have been approved by the board of directors, such accounts paying to the bank a commission upon the sums Upon which they are entitled to draw, in addition to the interest upon amounts actually used.

"11. Buying and selling or otherwise negotiating securities, and borrowing money upon securities owned by the bank.

"12. Making loans upon real estate but the amount invested at any one time in such loans, or in any loans upon real estate security, shall not exceed twenty per centum of the paid-up capital of the bank, and if such investments are now in excess of that sum, they shall be reduced as rapidly as the interests of the bank are deemed to justify under the  direction of the Treasurer of the Philippine Islands.

"13. Making loans upon vessels which are insured and free from encumbrance, provided such loans do not exceed half the value of the ship nor run for more than one year. Such loans shall not exceed ten per centum of the paid-up capital of the bank.

"14. Making loans to individuals, firms and corporations established in the Philippine Islands and which, in the opinion of the board of  directors, are of undoubted solvency, provided such loans shall not exceed ninety days in duration.

"No loans shall be made by the bank directly or indirectly to any director or officer thereof except by a vote of a majority of the directors of the bank, and any officer or director of the bank authorizing, receiving or making any such loan without the authority prescribed shall be punished by imprisonment for not less than five years and not more than ten years, and by a fine of not less than two thousand pesos and not more than twenty thousand pesos.

"15. Undertaking on commission the purchase and sale of securities, and such other banking operations, under regulations established by the board of directors, as may be within the incidental powers of a bank but no powers shall be exercised which are not expressly granted by this Act, if such exercise is prohibited by the Governor-General of the Philippine Islands.

"16. Preparing, issuing, and circulating bank notes under the provisions of this Act.

"17. Engaging in the safe-deposit business.

"18. Acting as trustee on any mortgage or bond issued by any municipality, body politic, or corporation, and accepting and executing any other municipal or corporate trust not inconsistent with law.

"19. Acting under the order or appointment of any court of record as guardian, receiver, trustee, or depository of the estate of any minor, insane person, idiot, habitual drunkard, or other incompetent or irresponsible person, and as receiver and depository of any moneys  paid into court by parties to any legal proceedings and of property of any kind which may be brought under the jurisdiction of the court by proper legal proceedings.

"20. Acting as the executor of any last will or testament when it is named in the last will and testament as the executor thereof.

"21. Acting under appointment of a court of competent jurisdiction as administrator of the estate of any deceased person, with the will annexed, or as administrator of the estate of any deceased person when there is no will and when in either case there is no person qualified, competent, willing, able, and entitled to accept such administration.

"22. Acting as agent for the purpose of issuing or countersigning the bonds or obligations of any corporation, association, municipality or other public authority, and receiving and managing any sinking fund on such terms as may be agreed upon.

"23. Accepting and executing any legal trust confided to it by any court of record of by any person or corporation for the holding, management, and administration of any estate, real or personal, and the rent, issues, and profits thereof.

"No bond or other security shall be required from the bank for the faithful performance of its duties as trustee, executor, administrator, guardian, receiver or depository, and the capital of the bank shall be security for the faithful performance of all the trust duties of the same: Provided, however, That claims on the bank as executor of the will of any deceased person, or as administrator with or without the will annexed of any deceased person or as guardian, receiver, trustee, or depository under any by virtue of an order or appointment  of any court shall have priority over all other claims except as provided in Article XXV of this Act.

"The authority conferred upon the bank under paragraphs eighteen, nineteen, twenty, twenty-one, twenty-two, and twenty-three of this article shall be subject to amendment, alteration, or repeal by the Philippine Legislature; and the bank shall keep separate books and acounts for the transactions had and money received under said paragraphs; and the money so received shall be kept separate and distinct from the capital of the bank and shall not be counted as a part of the legal reserve which the bank is required to have under Article XXXI.

"24. Reserving forty per centum of its capital for investment in loans to agriculturists, for agricultural purposes: Provided, That such loans shall be granted for a term of mnot more than five years, in the discretion of the board of directors of said bank."

"The bank is hereby authorized to keep in circulation, secured by its paid-up capital, the notes it has so far issued in accordance with law, subject to the following limitations:

"Up to a sum not to exceed nine million pesos, which shall represent the paid-up and unimpaired capital of the bank; and if in the course of the operations of the bank such paid-up and unimpaired capital shall fall below the amount of notes in circulation, then the Governor-General shall require that said capital be increased or said circulation decreased, or both, until the circulation shall no longer exceed the value of the paid-up and unimpaired capital, and that in the meantime commercial paper conforming to the Philippine Legislature. Act No. 3330. 1926 statutes of the bank and acceptable to the Governor-General be deposited with the Treasurer of the Philippine Islands, for any excess in the amount of circulation above the value of the paid-up and unimpaired capital as determined by him.

"It being the intention that the total circulating notes issued under this Act shall never exceed in amount the paid-up and unimpaired capital of the bank and in no case the sum of nine million pesos."

"The bank renounces all claim to the exclusive privilege of issuing notes in the Philippine Islands, or to any other exclusive privilege not set forth in this Act.

"That the notes issued under the provisions of article XXIV of these statutes shall pay such tax as the law imposes or may hereafter impose on the circulation of the banks."

"That whenever the bank desires to withdraw circulating notes which are not in its possession, it may deposit with the Treasurer of the Philippine Islands in the lawful money of the Philippine Islands or of the United States an amount equal to the face value of the circulating notes which are to be withdrawn and retired, and if such notes are represented by securities in  the custody of said Treasurer, he may surrender such portion of said securities as, in his opinion, will represent a just proportion of the securities held to secure circulating notes, and thereupon the taxes imposed by law upon circulating notes shall cease upon an amount thereof equal to the amount of lawful money deposited, and such lawful money shall be repaid  from time to time to the bank upon the presentation and surrender to said Treasurer of the Philippine Islands of notes which have been received or redeemed."

"That the  bank shall maintain at all times a reserve for its circulation consisting in lawful money of the Philippine Islands or of the United States in an amount equal to twenty-five per centum of the aggregate amount of its notes in circulation. The reserve so maintained by the bank on January first, nineteen hundred and twenty-eight, shall be increased at the end of said year and at the end of each of the fourteen years following by an annuity equal to five per centum of the aggregate value of its notes in circulation on January first, nineteen hundred and twenty-eight, so that after fifteen years the original reserve together with the fifteen annuities shall represent an amount equal to the aggregate of the notes of the bank in circulation on January first, nineteen hundred and twenty-eight. Said reserve and the annuities added to it shall be deposited in the Insular Treasury and shall only be available for the purpose of redeeming the notes of said bank. Whenever one of the annuities above provided for is paid into the  reserve, the Insular Treasurer shall withdraw from circulation, for final cancellation, notes of the Bank of the Philippine Islands in an amount equal to one-fifteenth of the total value of the circulation on January first, nineteen hundred and twenty-eight. The tax on one-fifteenth of the circulation on January first, nineteen hundred and twenty-eight, shall cease to accrue each time one of the annuities provided for in this section has been paid.

"When the original reserve together with the annuities provided for in this section and the deposits, if any, made under Article XXIX of  these statutes, shall amount to a sum equal to the circulation on January first, nineteen hundred and twenty-eight, with the reduction or reductions that may have been made under Article XXIV, then such sum shall be transferred in its entirety to the Government of the Philippine Islands to constitute a special fund which shall be known as 'Redemption Fund for the Notes of the Bank of the Philippine Islands' and shall be available exclusively for the redemption of said notes. Upon the making of such transfer, the Government of the Philippine Islands shall ipso facto assume the obligation of redeeming upon their presentation any notes of the Bank of the Philippine Islands remaining in. circulation, and the Governor-General shall publish this fact by proclamation: Provided, however, That the Government does not assume any obligation with regard to the notes issued by said bank under the name of Banco Espanol-Filipino, which fact shall also be stated in the proclamation.

"In addition to said reserve, the bank shall at all time have on hand, in lawful money of the Philippine Islands or of the United States, twenty per centum of its deposits in current accounts which are  payable on demand and of the fixed deposits due within thirty days."

SEC. 2. Article LIX of the statutes of the Banco Espanol-Filipino, now known as Bank of the Philippine Islands, as contained in Act Numbered Seventeen hundred and ninety, is hereby repealed.

SEC. 3. As express condition for the extension of the franchise granted in this Act, the Bank of the Philippine Islands shall increase its paid-up capital on or before January first, nineteen hundred and thirty-one, up to the amount of its notes in circulation. Until this condition is complied with, the Bank of the Philippine Islands shall cover the entire excess of its circulation over its paid-up and unimpaired capital by depositing with the Insular Treasurer commercial paper, bonds of the United States, bonds or certificates of the Government of the Philippine Islands or the provinces, municipalities or cities thereof, railroad or mortgage bank stocks or bonds on which the Government of the Philippine Islands has guaranteed the interest and capital, or other securities acceptable to the Governor-General, who shall determine the value at which such bonds or securities may be  accepted. And in case the paid-up capital is increased, the Insular Treasurer shall return to the bank the securities deposited with him to cover the notes in circulation in accordance with this section:  Provided, That  in  case the Bank of  the Philippine Islands fails to comply with the condition imposed in this section within the time prescribed, the term of its legal existence shall ipso facto expire.

SEC. 4.  This Act shall take effect upon the presentation by the Board of Directors of the Bank of the Philippine Islands to the Secretary of Finance of the acceptance in writing by the Bank of the provisions of this Act, which acceptance of the Bank shall be sent to the Insular Treasurer and the Bureau of Commerce and Industry for registration and filing.

Approved, December 7, 1926.