Republic Act No. 337 | Senate of the Philippines Legislative Reference Bureau

WHEREAS, the Central Bank should be given more flexibility
in order to make the financial system more responsive to the needs of the
development program of the Government;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Republic of the Philippines, by virtue of the powers vested in me by the
Constitution, do hereby order and decree the amendment of Republic Act No. 337,
as amended, as follows:

SECTION 1. Paragraph 4 of Section 21-B of Republic Act No.
337, as amended, is hereby amended to read as follows:

"In order to avoid undue concentration of economic power, the total equity
investments of banks, quasi-banks and their subsidiaries in any single
non-allied enterprise or industry may be subject to such limitations as may be
prescribed by the Monetary Board, but shall in any case remain a minority in any
such enterprise except as may be otherwise approved by the President (Prime
Minister)."

SEC. 2. Section 21-C of the same Act is hereby amended by
adding a second paragraph to read as follows:

"Any of these entities owning or controlling the whole or majority of the
voting stock of a thrift bank and/or rural bank may be required to submit
statements of condition and other reports necessary to determine compliance with
the provisions of this Section and the pertinent laws and rules and regulations,
and subjected to special examination or investigation. ''

SEC. 3. The second paragraph of Section 22 of the same Act
is hereby amended to read as follows:

"The Monetary Board shall prescribe the manner of determining the total
assets of banking institutions for the purposes of this
Section,

SEC. 4. The third paragraph of Section 23 of the same Act is
hereby amended to read as follows:

"The term 'liabilities' as used herein, shall mean the direct liability of
the maker or acceptor of paper discounted with or sold to such bank and the
liability of the indorser, drawer or guarantor who obtains a loan from or
discounts paper with or sells papers under his guaranty to such bank and shall
include in the case of liabilities of a co-partnership or association the
liabilities of the several members thereof and shall include in the case of
liabilities of a corporation, all liabilities of all subsidiaries thereof in
which such corporation owns or controls a majority interest: Provided,
That even if the parent corporation, co-partnership or association has no
liability to the bank, the Monetary Board may prescribe the combination of the
liabilities of subsidiary corporations or members of the co-partnership or
association under certain circumstances, including but need not be limited to
any of the following situations: (a) the parent corporation, co-partnership or
association guarantees the repayment of the liabilities; (b) the liabilities
were incurred for the accommodation of the parent corporation or another
subsidiary or of the co-partnership or association; or (c) the subsidiaries
through separate entities operate merely as departments or divisions of a single
entity: Provided, further, That 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 for the purpose of this Section: Provided,
finally, That certain types of contingent liabilities of borrowers may be
included among total liabilities as may be determined by the Monetary
Board."

SEC. 5. The second paragraph of Section 30 of the same Act
is hereby amended to read as follows:

"The Monetary Board shall prescribe the manner of determining the total
assets of banking institutions for the purposes of this
Section."

SEC. 6. The first paragraph of Section 32 of the same Act is
hereby amended to read as follows:

"SEC. 32. Except as the Monetary Board may otherwise
prescribe, the direct indebtedness to a savings and mortgage bank of any person,
company, corporation, or firm, including in the indebtedness of the several
members thereof, formoney borrowed, excluding (a) loans secured by
obligations of the Central Bank or of the Philippine Government, (b) loans fully
guaranteed by the Government as to the payment of principal and interest, (c)
loans to the extent covered by holdout on, or assignment of, deposits maintained
in the lending bank and held in the Philippines, and (d) other loans or credits
as the Monetary Board may, from time to time, specify as non-risk assets, shall
at no time exceed fifteen percent (15%) of unimpaired capital and surplus of the
bank."

SEC. 7. The third paragraph of Section 32 of the same Act is
hereby amended to read as follows:

"The term 'liabilities', as used herein, shall mean the direct liability of
the maker or acceptor of paper discounted with or sold to such bank and the
liability of the indorser, drawer or guarantor who obtains a loan from or
discounts paper with or sells papers under his guaranty to such bank and shall
include in the case of liabilities of a co-partnership or association the
liabilities of the several members thereof and shall include in the case of
liabilities of a corporation, all liabilities of all subsidiaries thereof in
which such corporation owns or controls a majority interest: Provided,
That even if the parent corporation, co-partnership or association has no
liability to the bank, the Monetary Board may prescribe the combination of the
liabilities of subsidiary corporations or members of the co-partnership or
association under certain circumstances, including but need not be limited to
any of the following situations: (a) the parent corporation, co-partnership or
association guarantees the repayment of the liabilities; (b) the liabilities
were incurred for the accommodation of the parent corporation or another
subsidiary or of the co-partnership or association; or (c) the subsidiaries
through separate entities operate merely as departments or divisions of a single
entity: Provided, further, That 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 for the purpose of this Section: Provided,
finally, That certain types of contingent liabilities of borrowers may be
included among the total liabilities as may be determined by the Monetary
Board."

SEC. 8. Section 36 of the same Act is hereby amended to read
as follows:

"SEC. 36. Deposits shall be returned to the depositors or to
their legal representatives in the manner and at the time and under the
conditions which shall be determined by the board of directors and stipulated in
regulations which shall be in conformity with law and with such regulations as
the Monetary Board may prescribe."

SEC. 9. Section 63 of the same Act is hereby amended to read
as follows:

"SEC. 63. The lending or investment of deposits or moneys
received by any trust company as executor of the will of any deceased person or
as administrator, with or without the will annexed, or as guardian, receiver,
trustee, or depositary of the estate of any minor, insane person, idiot,
habitual drunkard, or other incompetent or irresponsible person, or as receiver
or depositary under and by virtue of any order or appointment of any court, or
as trustee under any instrument in writing constituting the company as trustee,
unless otherwise directed by the instrument creating the trust, shall be limited
to the loans and investments as may be prescribed by the Monetary Board. Any
officer or director of any trust company authorizing or making any loan or
security otherwise than as provided in this Section 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."

SEC. 10. The second paragraph of Section S3 of the same Act
is hereby amended to read as follows:

"The Monetary Board may regulate the amount of credit accommodations that may
be extended, directly or indirectly, by banking institutions to their directors,
officers, or stockholders. However, the outstanding credit accommodations which
a bank 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 bank: Provided, however,
That loans and advances to officers in the form of fringe benefits granted in
accordance with rules and regulations as may be prescribed by Monetary Board
shall not be subject to the preceding limitation.

SEC. 11. All laws, decrees, rules and regulations
inconsistent with this Decree are hereby repealed or modified accordingly.

SEC. 12. This Decree shall take effect immediately.

Done in the City of Manila this 16th day of January, in the year of Our Lord
nineteen hundred and eighty-one.

(Sgd.) FERDINAND E. MARCOSPresident of the
Philippines

By the President:

(Sgd.) JUAN C. TUVERA

Presidential Executive Assistant

Vol. 25, Vital Documents, Presidential Decree 1980-1981

Source: Supreme Court E-Library

	(Sgd.) FERDINAND E. MARCOSPresident of the Philippines

	By the President:

	(Sgd.) JUAN C. TUVERA
		Presidential Executive Assistant