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[ Act No. 3154, March 08, 1924 ]
AN ACT TO AUTHORIZE THE ORGANIZATION OF CERTAIN BANKS IN THE PHILIPPINE ISLANDS, AND FOR OTHER PURPOSES
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. The provisions of existing law to the contrary notwithstanding, banks may be organized hereunder in the Philippine Islands, provided that the incorporators show under oath that they are residents of the Philippine Islands, that the capital subscribed amounts to fifty thousand pesos or more, and that of such subscribed capital, fifty per centum or more has been paid in in cash and is in the possession of the treasurer of the bank. The Bureau of Commerce and Industry shall not register the articles" of incorporation of a banking corporation organized hereunder nor certify to its incorporation, unless the Insular Treasurer certifies that the capital required by this section has been subscribed and paid in.
SEC. 2. Any banking corporation organized under this Act, in addition to the general powers incident to corporations as set forth in Act Numbered Fourteen hundred and fifty-nine and its amendments, shall have all such incidental powers as shall be necessary to carry on the business of banking, by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt; by receiving deposits; by buying and selling exchange, coin and bullion, and by loaning money on personal security or real estate, or on bonds or evidences of debt of the Government of the United Stales, the Philippine Islands or the City of Manila, or of any province or municipality of the Philippine Islands authorized by law to issue bonds: Provided, That such banking corporation shall not invest more than sixty per centum of its paid-up capital and fifty per centum of the money received for deposit in loans on. real estate: Provided, That no loan shall be for a longer period than one year: Provided, further, That no loan shall be made on real estate unless it be secured:
(a) By a duly registered mortgage or deed of trust to the corporation of unincumbered improved or actually cultivated real estate: Provided, however, That the amount loaned shall not exceed forty per centum of the reasonable market value of the real estate which is security for the loan or of the assessed value thereof, whichever may be the smaller; or
(b) By first mortgages transferred to the corporation as collateral security on improved and otherwise unincumbered real estate: Provided, however, That the mortgage transferred to the corporation as collateral security with interest accrued and due shall not exceed forty per centum of the reasonable market value of the real estate which secures such mortgage, or of the assessed value thereof, whichever may be the smaller.
SEC. 3. Said bank is hereby further authorized:
(a) To purchase or discount promissory notes, drafts, and bills of exchange, issued or drawn for agricultural, industrial or commercial purposes, or the proceeds of which have been used or are to be used for such purposes, with the security required by the bank.
(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 sixty 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 bank for the amount of the loan: 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 more than three months.
(c) To make loans to agriculturists on standing crops of the natural products of the Philippine Islands, such as rice, copra, sugar, tobacco, corn, maguey, etc., not in excess of one-half of the estimated value of such crops: Provided, however, That before granting such loans, the bank may require additional security in the nature of mortgages on real estate, duly registered in the name of the debtor, or chattel mortgages, including those upon live stock, machinery, and agricultural implements, or personal bonds with sufficient surety or sureties, satisfactory to the bank.
SEC. 4. No loan on the security of real estate shall be made unless the title to such real estate, free from all incumbrance, is registered in the register of property in the name of the mortgagor and unless the mortgage shall be a preferred claim on the property therein described as against the whole world.
SEC. 5. The capital stock and assets of every bank organized under this Act constitute the security of depositors and depositors have the priority of right over all others to such assets. The directors of the bank shall not create any debt or liability against the corporation for any purpose whatever other than for deposits made with it and the reasonable and necessary current and running expenses of said bank: Provided, However, That banks organized under this Act may contract loans on the security of property mortgaged to the same, and all money so obtained may be loaned out, the provisions of section two to the contrary notwithstanding".
SEC. 6. The said banks may purchase, hold, and convey personal and real property, as follows:
(a) The lot with the building thereon in which the bank conducts and carries on its business.
(b) Such property, personal or real, as may have been mortgaged, pledged or conveyed to it in good faith in trust for its benefit by reason of money loaned by it in pursuance of the regular business of the bank; and such personal or real property as may have been purchased by it at sales to satisfy pledges, mortgages or deeds of trust executed to it on account of money loaned by it, and such personal or real property as may have been conveyed to it by borrowers in satisfaction and discharge of loans made by the bank to them: Provided, That, if at the public auction held as result of the foreclosure of a mortgage, no bidder offers for the property being sold a sum equal to the amount of the loan the interest, and the costs of the litigation, the bank may purchase said property: Provided, however, That the bank shall sell real estate purchased at such auction within a period of three years.
SEC. 7. Married women and minors may, in their own right and in their own names, make deposits and receive and receipt for deposit dividends, and interest: Provided, however, That in case any natural guardian or guardian appointed by the court shall give notice in writing to the bank not to make payment.of deposits, dividends or interest to the minor of whom he is guardian, then such payment shall be made only to the guardian.
SEC. 8. Before declaring any dividend, twenty per centum of the net profits must be deducted and set aside as a part of the reserve fund, and of the reserve fund thereby created, not more than sixty per centum shall be invested in loans.
SEC. 9. Every bank organized under this Act shall at all times have on hand, in lawful money of the Philippine Islands or of the United States, an amount equal to at least twenty per centum of the aggregate amount of its deposits. The term "lawful money of the Philippine Islands" shall include the Treasury certificates authorized by Act Numbered Three thousand and fifty-eight, and the term "lawful money of the United States" shall include gold and silver certificates of the United States and bank notes issued by the Federal Reserve Banks.
SEC. 10. Whenever the lawful money as defined in the last preceding section of any bank shall be below the amount of twenty per centum of its deposits, such bank shall not diminish the amount of such lawful money by making any new loans or discounts, nor make any dividends of its profits until the required proportion between the aggregate amount of its deposits and its lawful money has been restored. In case of the violation of this provision the business of the bank may be wound up in the manner provided in Article Eight, Chapter XLI of the Administrative Code of nineteen hundred and seventeen.
SEC. 11. None of said banks shall, directly or indirectly, loan money to a director or officer of the same. The violation of this section shall be punished by imprisonment for not less than six months nor more than two years, and by a fine of not less than one thousand pesos nor more than five thousand.
SEC. 12. Whenever there is a call by depositors for repayment of their deposits and the call so made equals or exceeds the moneys actually available in the bank and disposable for the purpose of paying deposits, the bank shall not make any new loans or investment of the funds of the depositors or of the earnings of such funds until the call of the depositors has been satisfied. Any officer or director of a bank organized under this Act making or authorizing the making of any loan or investment of funds of depositors or of the earnings of such funds in violation of this section shall be punished by imprisonment for not less than one year nor more than five years and by a fine of not less than one thousand nor more than five thousand pesos.
SEC. 13. Any banking corporation when advertising the amount of its capital stock shall in the advertisement state the specific amount of such capital which has actually been paid in in cash.
SEC. 14. Any director or officer of a bank organized under this Act who receives or permits or causes to be received in said bank any deposit or who pays out or permits or causes to be paid out any funds of said banks or who transfers or permits or causes to be transferred any securities or property of said bank after said bank has been declared insolvent shall be punished by a fine of not less than one thousand nor more than ten thousand pesos and by imprisonment for not less than two nor more than ten years.
SEC. 15. Upon recommendation of a Bureau chief, the Secretary of the Department concerned may grant written authority to any officer or employee of the Philippine Government to take an active part in the organization and operation of these banks and to occupy and perform the duties of any position in the same, outside of Government office hours, and to receive the salary or emoluments thereof.
SEC. 16. It shall be the duty of the board of directors, or in default thereof, of the manager, of any mercantile bank, mortgage and savings bank, credit corporation, and banking institution of any kind, to order an audit, for its information, of its banking accounts and business by a certified public accountant at least once per annum, and to submit a full certified copy of the audit of said accountant to the Insular Treasurer.
SEC. 17. This Act shall take effect on its approval.
Approved, March 8, 1924.
SECTION 1. The provisions of existing law to the contrary notwithstanding, banks may be organized hereunder in the Philippine Islands, provided that the incorporators show under oath that they are residents of the Philippine Islands, that the capital subscribed amounts to fifty thousand pesos or more, and that of such subscribed capital, fifty per centum or more has been paid in in cash and is in the possession of the treasurer of the bank. The Bureau of Commerce and Industry shall not register the articles" of incorporation of a banking corporation organized hereunder nor certify to its incorporation, unless the Insular Treasurer certifies that the capital required by this section has been subscribed and paid in.
SEC. 2. Any banking corporation organized under this Act, in addition to the general powers incident to corporations as set forth in Act Numbered Fourteen hundred and fifty-nine and its amendments, shall have all such incidental powers as shall be necessary to carry on the business of banking, by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt; by receiving deposits; by buying and selling exchange, coin and bullion, and by loaning money on personal security or real estate, or on bonds or evidences of debt of the Government of the United Stales, the Philippine Islands or the City of Manila, or of any province or municipality of the Philippine Islands authorized by law to issue bonds: Provided, That such banking corporation shall not invest more than sixty per centum of its paid-up capital and fifty per centum of the money received for deposit in loans on. real estate: Provided, That no loan shall be for a longer period than one year: Provided, further, That no loan shall be made on real estate unless it be secured:
(a) By a duly registered mortgage or deed of trust to the corporation of unincumbered improved or actually cultivated real estate: Provided, however, That the amount loaned shall not exceed forty per centum of the reasonable market value of the real estate which is security for the loan or of the assessed value thereof, whichever may be the smaller; or
(b) By first mortgages transferred to the corporation as collateral security on improved and otherwise unincumbered real estate: Provided, however, That the mortgage transferred to the corporation as collateral security with interest accrued and due shall not exceed forty per centum of the reasonable market value of the real estate which secures such mortgage, or of the assessed value thereof, whichever may be the smaller.
SEC. 3. Said bank is hereby further authorized:
(a) To purchase or discount promissory notes, drafts, and bills of exchange, issued or drawn for agricultural, industrial or commercial purposes, or the proceeds of which have been used or are to be used for such purposes, with the security required by the bank.
(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 sixty 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 bank for the amount of the loan: 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 more than three months.
(c) To make loans to agriculturists on standing crops of the natural products of the Philippine Islands, such as rice, copra, sugar, tobacco, corn, maguey, etc., not in excess of one-half of the estimated value of such crops: Provided, however, That before granting such loans, the bank may require additional security in the nature of mortgages on real estate, duly registered in the name of the debtor, or chattel mortgages, including those upon live stock, machinery, and agricultural implements, or personal bonds with sufficient surety or sureties, satisfactory to the bank.
SEC. 4. No loan on the security of real estate shall be made unless the title to such real estate, free from all incumbrance, is registered in the register of property in the name of the mortgagor and unless the mortgage shall be a preferred claim on the property therein described as against the whole world.
SEC. 5. The capital stock and assets of every bank organized under this Act constitute the security of depositors and depositors have the priority of right over all others to such assets. The directors of the bank shall not create any debt or liability against the corporation for any purpose whatever other than for deposits made with it and the reasonable and necessary current and running expenses of said bank: Provided, However, That banks organized under this Act may contract loans on the security of property mortgaged to the same, and all money so obtained may be loaned out, the provisions of section two to the contrary notwithstanding".
SEC. 6. The said banks may purchase, hold, and convey personal and real property, as follows:
(a) The lot with the building thereon in which the bank conducts and carries on its business.
(b) Such property, personal or real, as may have been mortgaged, pledged or conveyed to it in good faith in trust for its benefit by reason of money loaned by it in pursuance of the regular business of the bank; and such personal or real property as may have been purchased by it at sales to satisfy pledges, mortgages or deeds of trust executed to it on account of money loaned by it, and such personal or real property as may have been conveyed to it by borrowers in satisfaction and discharge of loans made by the bank to them: Provided, That, if at the public auction held as result of the foreclosure of a mortgage, no bidder offers for the property being sold a sum equal to the amount of the loan the interest, and the costs of the litigation, the bank may purchase said property: Provided, however, That the bank shall sell real estate purchased at such auction within a period of three years.
SEC. 7. Married women and minors may, in their own right and in their own names, make deposits and receive and receipt for deposit dividends, and interest: Provided, however, That in case any natural guardian or guardian appointed by the court shall give notice in writing to the bank not to make payment.of deposits, dividends or interest to the minor of whom he is guardian, then such payment shall be made only to the guardian.
SEC. 8. Before declaring any dividend, twenty per centum of the net profits must be deducted and set aside as a part of the reserve fund, and of the reserve fund thereby created, not more than sixty per centum shall be invested in loans.
SEC. 9. Every bank organized under this Act shall at all times have on hand, in lawful money of the Philippine Islands or of the United States, an amount equal to at least twenty per centum of the aggregate amount of its deposits. The term "lawful money of the Philippine Islands" shall include the Treasury certificates authorized by Act Numbered Three thousand and fifty-eight, and the term "lawful money of the United States" shall include gold and silver certificates of the United States and bank notes issued by the Federal Reserve Banks.
SEC. 10. Whenever the lawful money as defined in the last preceding section of any bank shall be below the amount of twenty per centum of its deposits, such bank shall not diminish the amount of such lawful money by making any new loans or discounts, nor make any dividends of its profits until the required proportion between the aggregate amount of its deposits and its lawful money has been restored. In case of the violation of this provision the business of the bank may be wound up in the manner provided in Article Eight, Chapter XLI of the Administrative Code of nineteen hundred and seventeen.
SEC. 11. None of said banks shall, directly or indirectly, loan money to a director or officer of the same. The violation of this section shall be punished by imprisonment for not less than six months nor more than two years, and by a fine of not less than one thousand pesos nor more than five thousand.
SEC. 12. Whenever there is a call by depositors for repayment of their deposits and the call so made equals or exceeds the moneys actually available in the bank and disposable for the purpose of paying deposits, the bank shall not make any new loans or investment of the funds of the depositors or of the earnings of such funds until the call of the depositors has been satisfied. Any officer or director of a bank organized under this Act making or authorizing the making of any loan or investment of funds of depositors or of the earnings of such funds in violation of this section shall be punished by imprisonment for not less than one year nor more than five years and by a fine of not less than one thousand nor more than five thousand pesos.
SEC. 13. Any banking corporation when advertising the amount of its capital stock shall in the advertisement state the specific amount of such capital which has actually been paid in in cash.
SEC. 14. Any director or officer of a bank organized under this Act who receives or permits or causes to be received in said bank any deposit or who pays out or permits or causes to be paid out any funds of said banks or who transfers or permits or causes to be transferred any securities or property of said bank after said bank has been declared insolvent shall be punished by a fine of not less than one thousand nor more than ten thousand pesos and by imprisonment for not less than two nor more than ten years.
SEC. 15. Upon recommendation of a Bureau chief, the Secretary of the Department concerned may grant written authority to any officer or employee of the Philippine Government to take an active part in the organization and operation of these banks and to occupy and perform the duties of any position in the same, outside of Government office hours, and to receive the salary or emoluments thereof.
SEC. 16. It shall be the duty of the board of directors, or in default thereof, of the manager, of any mercantile bank, mortgage and savings bank, credit corporation, and banking institution of any kind, to order an audit, for its information, of its banking accounts and business by a certified public accountant at least once per annum, and to submit a full certified copy of the audit of said accountant to the Insular Treasurer.
SEC. 17. This Act shall take effect on its approval.
Approved, March 8, 1924.