EXECUTIVE ORDER NO. 1078
EXECUTIVE ORDER NO. 1078 -
PROVIDING FOR THE REORGANIZATION OF THE DEVELOPMENT BANK OF THE
PHILIPPINES, THE TRANSFER AND DIVESTMENT OF ITS NON-PERFORMING
ACCOUNTS, AND FOR OTHER PURPOSES
WHEREAS, the Development Bank of
the Philippines is a government financing institution charged with
providing credit facilities for the expansion and development of
agriculture and industry;
WHEREAS, the Bank is now financing severe liquidity problems due to the
large accumulation of non-performing accounts in its portfolio
resulting largely from the present economic crisis;
WHEREAS, there is an urgent need to reorganize the Bank to enable it to
meet present exigencies;
WHEREAS, the Bank’s rehabilitation entails the transfer of its
non-performing accounts to the National Government, together with the
liabilities corresponding but not limited to such non-performing
accounts as well as the restructuring of its present organization;
WHEREAS, once it is allowed to implement its proposed rehabilitation
program, the Bank can pursue its role more vigorously as a development
bank involved in countryside development, especially as regards the
agricultural and small and medium-scale industrial sectors;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested upon me by the Constitution and by law,
particularly Presidential Decree No. 1416, as amended, do hereby order;
Section 1. Rehabilitation Program. — Upon the
effectivity of this Executive Order, the Development Bank of the
Philippines, hereinafter referred to as the Bank, shall embark on a
rehabilitation program consisting of the following strategies; transfer
to and assumption by the National Government of the non-performing
accounts of the Bank together with identified liabilities, retention of
performing assets as the Government’s fresh equity, and restructuring
of its organization.
Sec. 2. Transfer of Non-Performing Accounts. — The
non-performing accounts in the portfolio of the Bank, together will all
the assets, rights, close-in-action, obligations, liabilities and
contracts appurtenant thereto, and other liabilities of the Banks, as
determined by its Board, shall be removed and divested from its
portfolio and transferred to, and assumed by, the National Government,
or such entity as it may create or designate, for their management
and/or disposition.
Sec. 3. Lending Operations. — The Banks shall in
its lending operations and grant of loans and financial assistance,
concentrate on and give preference to agricultural projects, small and
medium-scale industrial projects, and home building and/or home
financing projects, and to such other projects which, in the
determination of the Board of the Bank, are essential or will
contribute to the early economic recovery of the country: Provided,
That all operations, functions and powers of the Bank not herein
affected shall remain, and the Bank shall continue to perform and
exercise the same.
Sec. 4. Capitalization. — The capital stock of the
Bank shall remain at Fifty Billion Pesos (P50,000,000,000.00) divided
into Fifty Million (50,000,000) shares having a par value of One
Thousand Pesos (P1,000.00) each. The said capital stock shall be fully
subscribed by the Government of the Republic of the Philippines, and
payment of said subscription shall be as follows:
a)
The initial paid-up capital shall be Seven Billion Fifty Seven Million
Pesos (P7,057,000,000.00) which amount shall be equivalent to the value
of the assets of the reorganized Bank remaining after the transfer of
the non-performing accounts less certain identified liabilities to be
retained.
b) All net
income of the Bank shall be automatically applied by the Bank to
payment of the Government’s subscription to the capital stock until the
said capital stock has been fully paid for, after which said net income
shall be utilized for such purposes as may be authorized by the Board
of the Bank.
c) The amount
of taxes due on the income of the Bank beginning with CY 1985 as well
as of such other taxes, duties, fees, assessments, charges and imposts
due to all transactions or operations of the Bank, is hereby
appropriated under this Executive Order to be automatically applied to
the payment of the subscription of the Government in the capital stock
of the Bank until said capital stock is fully paid for.
Sec. 5. Borrower’s Limit. — The provisions of any
law to the contrary notwithstanding, the total liabilities to the Bank
of any person, company, corporation or firm, or political subdivision,
agency or instrumentality of the Government, or corporation owned or
controlled by the Government, including in the liabilities of the
individual, those of his spouse and children, and in the liabilities of
the company, corporation or firm, those of the several members,
partners or stockholders thereof, with the exception of money borrowed
against obligations of the Central Bank or the Philippine Government,
or borrowed with full guarantee by the Government of payment of
principal, interest, and other charges, but inclusive of guarantees
under paragraph (1) of Sec. 2 of the Bank’s Charter, shall at no
time exceed ten (10%) percent of the unimpaired capital and surplus of
the Bank.
Sec. 6. Equity Investments. — The equity
investments of the Bank shall comply with the limitations prescribed by
existing laws, rules and regulations, including but not limited to the
limits on individual and aggregate equity investments: Provided,
however, That equity investments in excess of the limitations as of the
date of the effectivity of this Executive Order shall be reduced within
five years in accordance with such program of reduction as may be
approved by the Monetary Board. The period of reduction may be extended
for another five years by the President of the Philippines upon
recommendation by the Monetary Board.
Sec. 7. Board of Directors and Officers. — The
Board of Governors of the Bank is hereby renamed and reconstituted as
Board of Directors, hereinafter referred to as the Board, and shall
hereafter be composed of a Chairman, a Vice-Chairman and seven other
members who shall be appointed or designated by the President of the
Philippines from the government or the private sector. The members of
the Board shall serve at the pleasure of the President of the
Philippines.
No person shall be appointed or designated Chairman, Vice-Chairman or
members of the Board of Directors unless he be a natural-born citizen
of the Philippines, of good moral character and unquestionable
integrity, and has attained proficiency, expertise and recognized
competence in economics, agriculture, industry, banking, management,
public administration and/or law.
The Chairman shall also be the President of the Bank, and shall preside
at all meetings of the Board. In the absence or temporary incapacity of
the Chairman, the Vice-Chairman shall act as Chairman. In case of
absence or temporary incapacity of both the chairman and the
Vice-Chairman, the remaining members of the Board shall designate an
acting Chairman from among themselves.
The President of the Bank shall be its Chief Executive Officer. He
shall, on behalf of the Board, have the direction and control of the
business affairs and properties of the Bank in all matters which are
not by the Charter or by the By-laws of the Bank specifically reserved
to be done by the Board or other officers of the Bank. For this
purpose, he shall, among others, execute, carry out, and administer the
policies, measures, orders, and resolutions approved by the Board;
direct and supervise the operation and administration of the Bank; sign
and execute contracts concluded by the Bank and notes, securities ,
certificates and other major documents of the Bank; recommend the
appointment, promotion, transfer or removal of all subordinate officers
and employees of the Bank; exercise the powers of general supervision
and administration attached to the position of the President; delegate
any of his powers, duties and functions to any officer of the Bank,
with the approval of the Board; and exercise such other powers and
perform such other duties as may be directed or assigned to him by law
or the Board from time to time.
The President shall receive a compensation, and the other members of
the Board shall receive a per diem for every meeting attended, in such
amount as may be fixed by the Board with the approval of the President
of the Philippines.
President of the Bank shall be assisted by one or more Executive
Vice-Presidents, who shall have the same qualifications as the members
of the Board, and such member of Senior Vice-Presidents,
Vice-Presidents and Assistant Vice-Presidents as may be required or
necessary for the effective operations of the Bank. The Executive
Vice-Presidents, Senior Vice-Presidents, Vice- Presidents and Assistant
Vice-Presidents shall be appointed and may be removed for any cause,
and their salaries fixed, by the Board, upon recommendation of the
President of the Bank.
Except for the Chairman, no other member of the Board shall perform, or
be charged with, any administrative function or responsibility.
The present Board of Governors shall continue to exist and perform its
functions until the Chairman, Vice-Chairman man and three (3) members
of the new Board of Directors are appointed or designated by the
President of the Philippines, and have qualified.
Sec. 8. Legal Adviser. — The Minister of Justice
shall be the ex-officio legal adviser of the Bank. He shall appoint,
and may remove for cause, upon recommendation of the Board, a
representative, who shall be the Chief Legal Counsel of the Bank and
head of its Legal Department. All the other personnel in the Legal
Department shall be appointed, and may be removed for any cause, by the
Minister of Justice, upon recommendation of the Board. Except as herein
provided, all personnel in the Legal Department shall be subject to the
policies and regulations of the bank as are applicable to Bank
personnel in general.
Whenever necessary, and on a case to case basis, the Bank may, upon
recommendation of the Chief Legal Counsel, engage the services of an
external counsel. The Bank may, in appropriate cases, also avail of the
legal services of the Office of the Solicitor General, the Officer of
the Government Corporate Counsel, or any government legal office
authorized to render such services to government- owned or controlled
corporations. For the services of the aforesaid offices, the Bank shall
appropriate and pay such amounts as may be assessed by them, in
addition to the allowances which the Bank may grant to defray the
transportation and representation expenses of lawyers who may be
assigned to handle the legal affairs of the Bank.
Sec. 9. Reorganization. — The Board of the Bank is
hereby authorized and empowered to reorganize the Bank within six (6)
months from the date this Executive Order takes effect, and for this
purpose, it shall prepare and adopt an organizational structure and
staffing pattern consonant with its reduced lending operations and
internal restructuring to make it more cost-effective and more
responsive to its new thrusts. The Board shall have the power to
create, classify and abolish, positions in line with the Bank’s stated
functions, responsibilities and demands: Provided, That in no case
shall the rates of compensation of the officers and employees of the
Bank be lower than the rates provided under the classification
established by the Office of Compensation and
Classification.
The present personnel complement of the Bank shall, in the interim,
continue to discharge their respective functions.
Sec. 10. Affected Personnel. — All officers and
employees of the Development Bank of the Philippines, who may be
separated from the service by reason or as a consequence of the
reorganization of the Bank as herein authorized, shall be entitled to a
separation gratuity, which shall be paid in one lump sum, at a rate
equivalent to one month’s basic salary for every year of service, or
equivalent nearest fraction thereof favorable to them, rendered to the
Bank or any other branch of the government, including government-owned
or controlled corporations, on the basis of the highest salary
received; and to such other benefits as the Board may grant or
hereafter authorize: Provided, That any such officer or employee shall,
in lieu of availing of the operation gratuity, have the option to
retire under the general retirement laws, if he otherwise meets or
satisfies the requirements therefor. The separation gratuity herein
granted shall be exempt from any and all taxes: Provided, further, That
in case of subsequent reinstatement in the government service or in any
government-owned or controlled corporation of any officer or employee
who has been paid the separation gratuity, he shall refund to the
National Government the value of the gratuity which he would not have
received had it been paid to him in monthly installments.
Sec. 11. Re-enactment of Applicable Provisions in
Old Charter. — Except as modified herein, all the provisions of the
Charter of the Development Bank of the Philippines, as amended, shall
remain in full force and effect.
Sec. 12. Repealing Clause. — All laws, decrees,
orders, proclamations, rules, regulations, or parts thereof, which are
inconsistent with any of the provisions of this Executive Order are
hereby repealed, amended or modified accordingly.
Sec. 13. Separability Clause. — Any portion or
provisions of this Executive Order that may be declared
unconstitutional shall not have the effect of nullifying the other
provisions thereof: Provided, That the latter provisions can stand
alone and be enforced in their entirety.
Sec. 14. Effectivity. — This Executive Order shall
take effect immediately.
Done in the City of Manila,
this 20th day of January, in the year of our Lord Nineteen Hundred and
Eighty-Six.
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Since 19.07.98.