WHEREAS, it is recognized that the attainment of development
goals for industry and agriculture depends, to a large extent, on the capability
of banks to sustain the investment and credit requirements of industrial and
agricultural projects;
WHEREAS, to insure that funds are available for investment
and credit requirements, there is a need to increase the resources of banks;
and
WHEREAS, to create the ideal climate conducive to the
increased capitalization of banks, certain changes in the fiscal regime appeal
warranted;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers in me vested by the Constitution, do hereby
order and decree:
SECTION 1. The banking industry is hereby declared as
indispensable to the growth of national economy and, the provisions of the
National Internal Revenue Code to the contrary notwithstanding, gain realized
from the following sales or exchanges of property for a period of five years
from the date of approval of this Decree shall not be subject to tax:
- Gains arising from merger or consolidation whereby: (i) a bank, a non-bank
financial intermediary or a finance company exchanges property solely for stock
in another bank, a nom-bank financial intermediary or a corporation organized
primarily for the purpose of owning equity in banks and (ii) a shareholder
exchanges stocks in a bank, a non-bank financial intermediary or a finance
company solely for the stocks of another bank, an no-bank financial intermediary
or a corporation organized primarily for the purpose of owning equity in banks:
Provided, That the shares of stocks which are subject of the exchanges
are not disposed of, transferred, assigned or conveyed, except in cases of
transmission on account of death, within a period of five (5) years from the
date of issue; otherwise all the taxes due including interest on the gains
realized from the original transfer, sale or disposition of the assets shall
immediately become due and payable, subject to the provisions of Section 51 (d)
of the National Internal Revenue Code.
- Gains arising from the disposition of property, real or personal, that
corresponds to the portion of the proceeds of the sale that is invested, within
six (6) months form the date the gains were realized, in new issues of capital
stock of banks, non-bank financial intermediaries existing as of the date
approval of this Decree, or a corporation organized primarily for the purpose of
owning equity in banks; Provided, (i) That the disposition and the
investment of the proceeds thereof are registered with the Central Bank and the
Bureau of Internal Revenue; and (ii) that the shares of stock representing the
investments are not disposed of, transferred, assigned or conveyed, except in
cases of transmission on account of death, within a period of five (5) years
from the date of issue otherwise all the taxes due including interest on the
gains realized form the original transfer, sale or disposition of the assets
shall immediately become due and payable, subject to the provisions of Section
51 (d) of the National Internal Revenue Code: Provided, further, That
the final scheduler income tax income tax under the National Internal Revenue
Code paid on gains from the disposition of real estate, that corresponds to the
proceeds of the sale that is invested, shall be refunded by the Bureau of
Internal Revenue within six (6) months from the date of payment but subject to
the same conditions as in (i) and (ii) above.
- Gains realized from exchange of property, real or personal, for new issues
of capital stock in banks or non-bank financial intermediaries existing as of
the date of approval of this Decree, or a corporation organized primarily for
the purpose of owning equity in banks if as a result of such exchange, the
paid-in capital of such institution is increased: Provided, That the
shares of stocks are not disposed of, transferred, assigned or conveyed, except
in case of transmission on account of death within a period of five (5) years
from the date of issue; otherwise all the taxes due including interest on the
gains realized from the original sale or disposition of the assets shall
immediately become due and payable, subject to the provisions of Section 51(d)
of the National Internal Revenue Code.
For purposes of paragraphs (a), (b), and (c) above –
- Every original share of capital stock issued shall be stamped on its face
with the words “EXEMPT UNDER PRESIDENTIAL DECREE NO.”, and no bank, non-bank
financial intermediary or a corporation organized primarily for the purpose of
owning equity in banks shall cause the transfer of ownership of the same in its
stock and transfer book within five (5) years counted from the date of issue,
without evidence of tax payment inclusive of interest. Any bank or corporate
official who shall cause the transfer of ownership of shares of stock in its
stock and transfer book contrary to the provisions of this Decree, shall be
punished by a fine of not less than Five Thousand pesos and imprisonment of not
less than two (2) years.
- a bank or a non-bank financial intermediary resulting from a consolidation
or merger effective after April 1, 1980 of an existing bank, a non-bank
financial intermediary or a corporation organized primarily for the purpose of
owning equity in banks shall also be considered as a bank, non-bank financial
intermediary or a corporation primarily organized for the purpose of owning
equity in banks as of the date of approval of this Decree.
- a corporation organized primarily for the purpose of owning equity in banks
must register and be authorized by the Central Bank of the
Philippines.
SEC. 2. For purposes of this Decree, the following
definitions of terms shall apply:
- The term “bank” means every banking institution as defined in Section 2 of
the General Banking Act, Republic Act No. 337, as amended. A bank may either be
a commercial bank, a thrift bank, a rural bank or a specialized government bank.
- The term “non-bank” financial intermediary” means financial intermediary as
defined in Section 2-D(c) of the General Banking Act, Republic Act No. 337, as
amended, authorized by the Central Bank of the Philippines to perform
quasi-banking functions.
- The term “quasi-banking functions” means borrowing funds, for the borrower’s
own account, through the issuance, endorsement or acceptance of debt instruments
of any kind other than deposits, or through the issuance of participations,
certificates of assignment, or similar instrument with recourse, trust
certificated, or of repurchase agreements, from twenty or more lenders at any
one time, for purposes of relending or purchasing of receivables and other
similar obligations: Provided, however, That commercial, industrial,
and other non-financial companies, which borrow funds through any of these means
for the limited purpose of financing their own needs or the needs of their
agents or dealers, shall not be considered as performing quasi-banking
functions.
- The term “finance companies” refers to corporations or partnerships other
than a bank, or insurance company primarily organized for the purpose of
extending credit facilities to consumers and to industrial, commercial or
agricultural enterprises whether by granting direct loans or by discounting or
factoring commercial papers or accounts receivables for profit, buying and
selling contracts, leases, chattel mortgages and other evidences of indebtedness
arising out of one or more of the steps in the distribution and sale of
commodities.
SEC. 3. The Ministry of Finance, upon the recommendation of
the Bureau of Internal Revenue and in consultation with the Central Bank of the
Philippines, shall promulgate the implementing rules and regulations which shall
include appropriate provisions for an independent appraisal of the property
sold, transferred or exchange under the provisions of this Decree.
SEC. 4. This Decree shall take effect immediately.
Done in the City of Manila, this 17th day of September, in the year of Our
Lord, nineteen hundred and eighty.
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(Sgd.) FERDINAND E. MARCOS President of the
Philippines |
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By the President: |
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(Sgd.) JOAQUIN T. VENUS, JR. |
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Presidential
Assistant |