EXECUTIVE ORDER NO. 80
EXECUTIVE ORDER NO. 80 - PROVIDING
FOR THE 1986 REVISED CHARTER OF THE PHILIPPINE NATIONAL BANK
WHEREAS,
it is the policy of the state that the national interest in both the
maintenance of economic stability and the promotion of economic
development is best served by a system of financial intermediation that
places primary reliance on the private sector, on the market mechanism,
and on the maintenance of conditions of competition;
WHEREAS, within the context of the general policy there nevertheless
exists a clear role for direct government participation in the banking
system, particularly in servicing the requirements of agriculture,
small and medium scale industry, export development, and the government
sector;
WHEREAS, in pursuit of this national policy there is need to
restructure the government financial institutions, particularly the
Philippine National Bank, to achieve a more efficient and effective use
of available scarce resources, to improve its viability, and to avoid
unfair competition with the private sector; and
WHEREAS, the reorganization and rehabilitation of the Philippine
National Bank into a smaller but stronger and more operationally viable
bank is an important competent of the nationalization programs for both
the financial system and the government corporation sector;
NOW, THEREFORE, I, CORAZON C. AQUINO, President of the Republic of the
Philippines, do hereby order:
Section 1. This Executive Order shall be known as
“The 1986 Revised Charter of the Philippine National Bank.”
Sec. 2. Name, Place of Business; Branches;
Agencies and Other Offices. — The Philippine National Bank (hereinafter
referred to as the “Bank”), a bank created under Act No. 2612, as
amended, and operating under the provisions of Presidential Decree No.
694, as amended, shall henceforth operate under the provisions of this
1986 Revised Charter.
The Bank’s principal office and place of business shall be in the
National Capital Region, also known as Metro Manila. It may open and
maintain other branches, agencies or other offices at such places in
the Philippines or abroad as its Board of Directors may deem advisable,
with the prior approval of the Monetary Board of the Central Bank of
the Philippines.
Sec. 3. Corporate Powers and Purposes. — The Bank
shall be a body corporate and shall have the following powers and
purposes:
(a)
To perform commercial banking, as well as expanded commercial banking
functions; and, within the context of a financially viable and stable
banking institution, to provide banking services for the development of
agriculture and small and medium scale commercial and industrial
enterprises particularly in the countryside, as provided in Sec. 4;
to provide banking services to the National Government, other
government entities and Local governments; and to engage in
international banking activities, particularly in the promotion of
exports;
(b) To accept
foreign currency deposits and operate foreign currency deposit unit as
established under Republic Act No. 6426, as amended;
(c) To accept
and administer trusts and to carry on a general trust business;
(d) To act as
official government depository with authority to maintain deposits of
the government, its branches, subdivisions and instrumentalities, and
of government owned or controlled corporations, subject to the
provisions of Sec. 6 hereof and such rules and regulations as the
Monetary Board may prescribed; and
(e) To adopt,
amend or change its By-laws, to adopt, alter and use a seal, to make
contracts; to sue and be sued, and to exercise the general powers of a
corporation as provided in the Corporation Code of the Philippines and
the powers of a bank of its category under the General Banking Act.
The exercise of the above-mentioned powers on banking shall be subject
to applicable law, as well as regulations promulgated by the Central
Bank of the Philippines.
Sec. 4. Granting of Loans; Exposure Ceilings and
Limits on Equity Investments. — In the exercise of its lending
authority, the Bank shall give preference to loans for agricultural and
small-and medium-scale commercial and industrial enterprises,
particularly in the countryside.
Unless otherwise provided in this Charter, loans and other credit
accommodations granted by the Bank shall be subject to the appropriate
applicable loan limits to any single borrower as provided for under
Republic Act No. 337, as amended.
The aggregate amount of loans, guarantees and contingent accounts, to
Government agencies and entities including government owned and
controlled corporations, shall at no time exceed the deposits and book
value of the shareholdings of the Government, including government
agencies and entities, government owned or controlled corporations plus
twenty percent (20%) of such total.
The authority of the Bank to invest in equities of allied undertakings,
financial or non-financial, as well as in non-allied undertakings,
shall be governed by the provisions of Republic Act No. 337, as
amended.
Sec. 5. Authorized Capital Stock; Par Value; Scale
of Shares. — The authorized capital stock of the Bank shall be Ten
Billion Pesos to be divided into One Hundred Million common shares with
par value of P100 per share which are available for subscription by the
National Government. The common shares may be offered for sale to or
subscription by private investors; Provided, that, the investment of
private investors shall be subject to the applicable provisions of the
General Banking Act.
The Board of Directors shall have authority to convert such number of
unissued common voting shares into preferred non-voting shares to be
issued for sale or subscription, with such features, terms, and
restrictions as it may determine.
The issue and offering for sale of additional shares to private
investors which will result in more than one-third of the common voting
shares being eligible for acquisition by such investors shall require
prior approval of the President of the Philippines; provided, that,
where the sale of shares will result in a majority ownership by the
private sector, the prior approval of the President shall also be
required.
Sec. 6. Change in Ownership of the Majority of the
Voting Equity of the Bank. — When the ownership of the majority of the
issued common voting shares passes to private investors, the
stockholders shall cause the adoption and registration with the
Securities and Exchange Commission of the appropriate Articles of
Incorporation and revised by-laws within three (3) months from such
transfer of ownership. Upon the issuance of the certificate of
incorporation under the provisions of the Corporation Code, this
Charter shall cease to have force and effect, and shall be deemed
repealed. Any special privileges granted to the Bank such as the
authority to act as official government depository, or restrictions
imposed upon the Bank, shall be withdrawn, and the Bank shall
thereafter be considered a privately organized bank subject to the laws
and regulations generally applicable to private banks. The Bank shall
likewise cease to be a government owned or controlled corporation
subject to the coverage of service-wide agencies such as the Commission
on Audit and the Civil Service Commission.
The fact of the change of the nature of the Bank from a
government-owned and controlled financial institution to a
privately-owned entity shall be given publicity.
Sec. 7. National Government Subscription. — Upon
the effectivity of this Charter, the National Government shall
subscribe to Twenty-Five Million common shares of stock worth Two
Billion Five Hundred Million Pesos which shall be deemed paid for by
the Government with the net asset values of the Bank remaining after
the transfer of assets and liabilities as provided in Sec. 29
hereof.
Sec. 8. Who may Vote Government Owned Stock. — The
voting rights of all the stock of the Bank owned and controlled by the
National Government shall be vested to the President of the
Philippines, or in such person or persons as the President may from
time to time designate.
Sec. 9. Board of Directors; Compositions: Tenure;
Per Diems. — The affairs and business of the Bank shall be directed and
its properties managed and preserved and its corporate powers
exercised, unless otherwise provided in this Charter, by a Board of
Directors consisting of nine members, duly elected as herein provided
for a term of one year or until their successors are duly elected and
qualified.
The Chairman of the Board shall be appointed by the President of the
Philippines from among member of the Board: Provided, That the position
of Chairman of the Board and President of the Bank shall not be held by
the same person.
The Chairman shall preside at meetings of the Board and of the
Stockholders.
The President of the Bank shall be vice-chairman of the Board and, as
such, shall assist the chairman and act in his stead in case of absence
or incapacity. In case of incapacity or absence of both the chairman
and vice-chairman, the Board of Directors shall designate a temporary
chairman from among its members.
Unless otherwise set by the Board and approved by the President of the
Philippines, members of the Board shall be paid a per diem of one
thousand pesos for each meeting of the Board of Directors as actually
attended: Provided, That the total amount of per diems for every single
months shall not exceed the sum of Five Thousand Pesos.
Sec. 10. Election and Qualification of Members of
the Board of Directors. — Annually on the first Tuesday after the first
Monday in March, the stockholders shall meet to elect the members of
the Board of directors for the current year. Each stockholder or proxy
will be entitled to as many votes as he may have shares of stock
register his name on the thirty-first of January last preceding and
held by him at the time of the election multiplied by the number of
directions be elected. In the election of the members of the Board,
stockholders shall have the right of cumulative voting as recognized by
law.
No person shall be elected director of the Bank unless he is a
natural-born citizen of the Philippines, not less than thirty-five
years of age, of good moral character and has attained proficiency
expertise and recognized competence in one more of the following
banking, finance, economics, law, agriculture, business management,
public utility or government administration.
At least four of the elective members of the Board shall concurrently
hold appointive or elective positions in the National Government, any
government-owned or controlled corporation, or in any local
government.
No director, officer or employee of any other bank shall be eligible as
a member of the Board of Directors of the Bank.
Sec. 11. Powers of the Board of Directors. — The
Board of Directors shall have, among others, the following duties,
powers and authority.
(a)
To formulate policies necessary to carry out effectively the provisions
of this Charter;
(b) To adopt,
amend or change the by-laws as well as such rules and regulations as
may be necessary for the effective operation of the Bank, in conformity
with this Charter and existing laws;
(c) To
prescribe such terms and conditions to govern the granting of loans and
credits, consistent with the provisions of this Charter;
(d) To adopt
an annual budget for the effective operation and administration of the
Bank;
(e) To create,
establish and operate a “Self-Insurance System” in order to offset
possible damage or loss of cash-in-transit that the Bank may suffer on
account of cash and check remittances to its branches and agencies and
vice-versa, as well as those that may arise from irregular encashment
or negotiation of checks, drafts, telegraphic transfer and similar
instruments, or losses arising from other forms of fraud;
(f) To create
and establish a Provident Fund which shall consist of contributions
made both by the Bank and its officers or employees to a common fund
for the payment of benefits to such officer or employee or his heirs
under such terms and conditions as the Board of Directors may fix;
(g) To
compromise or release, in whole or in part, any claim, liability, or
demand for or against the Bank, regardless of the amount involved,
under such terms and conditions as it may impose to protect the
interests of the Bank;
(h) To
determine the procedure and requirements for the acquisition of
properties necessary for the business of the Bank; and
(i) To dispose
of properties of the Bank, whether used in the conduct of its business
or acquired as a result of its banking operations, by public bidding or
private negotiations as provided in Sec. 21 of this Charter.
The Board shall meet as frequently as necessary and the presence of
five members shall constitute a quorum.
Sec. 12. President of the Bank. — The Chief
Executive Officer of the Bank shall be the President who shall be
elected by the Board of Directors from among themselves with the advise
and consent of the President of the Philippines. No person shall be
appointed President of the Bank unless he is at least forty years of
age, of good moral character and reputation, with at least ten years
previous experience in banking, and has a reputed proficiency,
expertise and recognized competence in banking or financial management.
The President of the Bank shall, among other powers and duties, execute
and administer the policies, measures, orders and resolutions approved
by the Board of Directors, and direct and supervise the operations and
administration of the Bank. Particularly, he shall have the power and
duty:
(a)
To execute all contracts and to enter into all authorized transactions
in behalf of the Bank;
(b) To
exercise, as Chief Executive Officer; the power of supervision and
control over decisions or actions of subordinate officers and all other
powers that may be granted by the Board;
(c) To
recommend to the Board the appointment, promotion, or removal of all
officers of the Bank with the rank of at least Vice President or its
equivalent;
(d) To
appoint, promote or remove employees and officers below the rank of
Vice-President;
(e) To
transfer, assign or reassign officers and personnel of the Bank in the
interest of the service;
(f) To report
periodically to the Board of Directors on the operations of the Bank;
(g) To submit
annually a report on the result of the operations of the Bank to the
President of the Philippines and to the private shareholders in the
Bank, if any; and
(h) To
delegate any of his powers, duties or functions to unto any official of
the Bank, with the approval of the Board of Directors.
Sec. 13. Legal Matters and Cases. — The Bank shall
have its own Legal Department, the head of which shall be appointed by
the Board of Directors of the Bank upon recommendation of the President
of the Bank.
The Bank may, subject to court approval, deputize any member of its
legal staff to act as Special Sheriff in the enforcement of court writs
and processes in cases involving the Bank.
Sec. 14. Bank Auditor. — The Commission on Audit
shall be ex-officio auditor of the Bank and shall designate a
representative to the Bank.
Sec. 15. Other Officers and Employees. — The Board
of Directors shall provide for an organization and staff of officers
and employees of the Bank and upon recommendation of the President of
the Bank, fix their remunerations and other emoluments.
No officer or employee of the Bank subject to the Civil Service Law
shall be dismissed or suspended except as provided by law.
Sec. 16. Examination of the Bank. — The Bank shall
be subject to supervision and examination by the appropriate department
of the Central Bank of Philippines.
Sec. 17. Inhibition from Board Meeting of Member
with Personal Interest. — Whenever any member attending a meeting of
the Board of Directors has a personal interest directly or indirectly,
in the discussion or resolution of any given matter, said member shall
not participate in the discussion or resolution of the matter and must
retire from the meeting during the deliberation thereon. The minutes of
the meeting, which shall note the subject matter, when resolved, the
fact that a member had a personal interest in it, and the withdrawal of
the member concerned, may be made available to the public.
Sec. 18. Prohibition on Officers and Employees of
the Bank. — Except as required by law, or upon order of a court of
competent jurisdiction, or express order of the client, no officer or
employee of the Bank shall reveal to, nor allow to be examined,
inquired or looked into by any third person, government official,
bureau or office any information relative to details of individual
accounts or specific banking transactions: Provided, that in respect to
deposits of whatever nature, the provisions of existing laws shall
apply.
This prohibition shall not apply to the exchange of confidential credit
information among government financial institutions or among banks, in
accordance with established banking practices or as may allowed by law.
Sec. 19. Borrowing by Directors, Officers and
Employees — Restriction and Limitations. — No directors or officers or
employee of the Bank or any corporation, partnership, or company
wherein any member of the Board of Directors, officer or employee,
and/or their respective relatives within the second degree of
consanguinity or affinity, is a director, officer, or controlling
shareholder, shall either directly or indirectly, for himself or as
representative or agent of others, borrow any of the deposits of funds
from the Bank, nor shall he become a guarantor, indorser, or surety for
loans from the Bank to others, or in any manner be an obligator for
money borrowed from the Bank or loaned by it: Provided, That this
provision on loans to directors, officers and employees shall not
include loans allowed in the form of fringe benefits granted in
accordance with rules and regulations as may be prescribed by the
Monetary Board of the Central Bank.
The Bank shall not grant, directly or indirectly, any loans or credit
accommodations to the head or to any officer or personnel directly
exercising supervisory or regulatory authority over the activities of
the Bank such as those of the Central Bank of the Philippines or of the
Commission on Audit.
Sec. 20. Prohibited Interest or Fees with
Reference to Obtaining Loans. — No Director, officer or employee of the
Bank shall, except as provided in the preceding Section , directly or
indirectly, have any pecuniary interest in any loan from the Bank.
Neither shall he charge, exact, demand or receive any fee, charge or
commission in any form for his service or the use of his influence in
obtaining a loan. Any violation of this Section shall be punished as
hereinafter provided in Sec. 27 of this Charter.
Sec. 21. Disposal of Real Estate and Other
Properties in the Collection of Debts. — Real and other properties
acquired by the Bank in the collection of debts, receivables or
investment by way of foreclosure or other means shall be sold or
otherwise disposed of in accordance with the policies and guidelines
adopted by the Board of Directors within five years after date of their
acquisition.
Sec. 22. Right of Redemption of Foreclosure
Property — Right of Possession During Redemption Period. — Within one
year from the registration of the foreclosure sale of real property,
the mortgagor shall have the right to redeem the property by paying the
principal, interests, charges, commissions and all claims of whatever
nature of the Bank outstanding and due as of the date of the sale
including all the costs and other expenses incurred by reason of the
foreclosure sale and custody of the property, as well as charges and
accrued interest.
The Bank may take possession of the foreclosure property during the
redemption period. When the Bank takes possession during such period,
it shall be entitled to the fruits of the property with no obligation
to account for them, the same being considered compensation for the
interest that would otherwise accrue on the account.
Neither shall the Bank be obliged to post a bond for the purpose of
such possession.
Sec. 23. Allocation of Current Net Profits. — At
the close of the calendar year, the Bank shall determine the net
results of its operations in the calculation of which adequate
allowances shall be made for probable losses. Of the net profits
arrived at, least fifty percent (50%) shall be set aside and
accumulated in the earned surplus account. The remaining current net
profits may after an examination of the financial condition of the Bank
be used for the declaration of Dividends corresponding to the shares of
the Government and the private stockholders. Dividends may either be in
the form of cash or stock as the Board of Directors shall determine.
Sec. 24. Payment of Cash Dividends Corresponding
to Government-Owned Shares. — Cash Dividends corresponding to the
shares of the National Government shall first be set aside and used for
the purpose of rehiring the government securities which may have been
issued by the Minister of Finance for additional Government
subscriptions to the unissued shares of the capital stock of the Bank
prior to the effectivity of this Charter. Thereafter, cash dividends
corresponding to the Government-owned shares shall be paid unto the
Treasury of the Philippines to become part of the general funds.
Sec. 25. Terms of Legal Existence. — The legal
existence of the Bank shall be for a period of fifty years, counted
from the date the Bank operates under the provisions of this Chapter.
Sec. 26. Applicability of Banking Laws. — The
provisions of Republic Acts No. 265, as amended, and No. 337, as
amended, insofar as applicable and not in conflict with any provisions
of this Charter, shall apply to the Bank.
Sec. 27. Penalties for Violation of the Provisions
of this Charter. — Any director, officer or employee of the Bank who
violates or knowingly permits the violation and any person aiding or
abetting any violations of any of the provisions of this Charter, shall
be punished by a fine not to exceed ten thousand pesos or by
imprisonment of not more than five years or both such fine and
imprisonment.
TRANSITORY
PROVISIONS
Sec. 28. Preparatory Work. — Upon the effectivity
of this Executive Order, the Board of Directors and management of the
Bank shall undertake the appropriate steps to establish its current
financial condition for the purpose of determining its net asset values
and the book value of shares thereof.
All shares of stock held by the Government of the Philippines in the
Bank are deemed cancelled and exchanged for Twenty-Five Million common
shares of stock subscribed and paid-in by the Government, pursuant to
Sec. 7 hereof.
The ratio of the shareholdings of the Government of the Philippines to
the shareholdings of the private shareholders before the effectivity of
this Charter shall be maintained.
Private shareholders of the Bank, including holders of Common “A”
shares, shall exchange their shares for such number of shares of stock
of the Bank computed on the basis of the ratio of the common shares
held by the Government immediately prior to the effectivity of this
Charter to the new shares of stock subscribed and paid-in by the
Government pursuant to Sec. 7 hereof.
Sec. 29. Transfer of Assets and Liabilities of the
Philippine National Bank. — The Bank shall transfer to the National
Government such of its assets and liabilities as may be necessary to
rehabilitate the Bank and to start its operations under the Revised
Charter on a viable basis, as determined by the appropriate
authorities, such assets to include but not necessarily be limited to
its acquired assets and non-performing accounts, and such liabilities
to include real as well as contingent liabilities. The National
Government is hereby authorized to accept the same under terms and
conditions as may be mutually acceptable to the Bank and the National
Government.
Sec. 30. Maintenance, Care and Preservation of
Assets Transferred to the National Government. — The Bank is hereby
authorized to enter into an agreement with the National Government as
transferee of assets from the Bank as hereinabove provided, either as
an interim arrangement or otherwise and under such terms and conditions
as may be necessary to preserve and/or to maintain and/or dispose of
such assets transferred to the National Government.
Sec. 31. Banking Operations under the 1986 Revised
Charters; Governing Laws. — The Banking operations of the Bank shall be
governed by the provisions of this Charter beginning on January 1,
1987, or on such subsequent date as may be determine by the President
of the Philippine upon the recommendation of the Minister of Finance.
Sec. 32. Loans and Other Investments, and
Liabilities in Excess of Prescribed Limits. — Loans and other
investments as well as liabilities existing as of the date of the
effectivity of this Revised Charter which as a result of the assets and
liabilities transfer under Sec. 29 hereof will exceed the limits
prescribed under the provisions of this Act, the General Banking Act or
Central Bank regulations shall not be subject to such prescribed limits
but shall be reduced within a period of two years unless a longer
period is prescribed by the Monetary Board, and once reduced, shall not
be increased beyond the prescribed limits.
Sec. 33. Authority to Reorganize. — In view of
reduced operations contemplated under this Charter in pursuance of the
national policy expressed in the “whereas” clauses hereof, a
reorganization of the Bank and a reduction in force are hereby
authorized to achieve greater efficiency and economy in operations,
including the adoption of a new staffing pattern to suit the reduced
operations envisioned. The program or reorganization shall begin
immediately after the approval of this Order, and shall be completed
within six months and shall be fully implemented within eighteen months
thereafter.
Sec. 34. Implementing Details, Organization and
Staffing of the Bank. — Upon the effectivity of this Charter, the
incumbent Board of Directors and President of the Bank shall continue
in office unless or until replaced by the President of the Philippines,
provided, that the provisions of Section 10 of this Charter shall be
observed. The President of the Bank is hereby authorized, subject to
the approval of the Board of Directors as appropriate, to issue such
orders, rules and regulations as may be necessary to implement the
provisions of this Charter, including those relative to the financial
aspects, if any, and to the reorganization of the Bank as hereinabove
authorized under Sec. 33 which will involve the determination and
adoption of (1) the new internal structure of the Bank as reorganized
down to the divisional, section or lowest organizational levels,
including such appropriate units as may be needed to handle caretaking
activities such as the disposition of certain assets and the collection
of certain accounts; (2) a new staffing pattern including appropriate
salary rates; and (3) the initial operating budget.
In the implementation of the reorganization of the Bank as authorized
under Sec. 33, and in appointments to appropriate positions in the
new staffing pattern of the Bank, no personnel of the Bank shall have
vested rights to any position in the new staffing pattern or to be
otherwise retained in the Bank even if should be the incumbent of the
same or similar position in the new staffing pattern.
Sec. 35. Recall of External Personnel in the Bank.
— Effective on the date the Bank commences to operate in accordance
with this Charter, all representatives and/or personnel of other
government offices, Commission and government corporations assigned to
or on detail with the bank are considered recalled to their respective
offices and/or units. New designations to the Bank shall made by the
respective government offices or Commissions conformably with the
mandate of law and the requirements of the Bank.
Sec. 36. Separation Benefits. — All those who are
separated from the Bank as result of its reorganization in pursuance of
Sec. 33 hereof shall be entitled to all gratuities and benefits
provided for under existing laws and/or supplementary retirement plans
adopted by and effective in the Bank.
Sec. 37. No legal action or suit brought by or on
behalf of any aggrieved officer or personnel of the Bank in connection
with any matter treated in any court unless the verified complaint
shows on its face that the cause has first has been submitted to, and
adversely resolved by, the Civil Service Commission.
Sec. 38. Repealing Clauses. — Subject to Sec. 31 of this Charter, Presidential Decree No. 694, as amended, is hereby
repealed. All other laws, decrees, acts, executive orders,
administrative orders, proclamations, rules and regulations or parts
thereof inconsistent with any of the provisions of this Charter are
hereby repealed or modified accordingly.
Sec. 39. Separability Clause. — If any provisions
or section of this Charter or the application thereof to any person,
association or circumstances is held invalid, the other pertinent
provisions or sections of this Charter and their application to such
person, association or circumstances shall not be affected thereby.
Sec. 40. Effectivity. — This Executive Order shall
take effect upon its approval.
Done in the City of Manila, on
the 3rd day of December, in the year of Our Lord, nineteen hundred and
eighty-six.
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