EXECUTIVE ORDER NO. 81
EXECUTIVE ORDER NO. 81 - PROVIDING
FOR THE 1986 REVISED CHARTER OF THE DEVELOPMENT BANK OF THE PHILIPPINES
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 maintenance of
conditions of competition, and on the market mechanism for its
effective operations.
WHEREAS, within the context of the general policy there nevertheless
exists a clear role for direct government participation in the banking
system through a government development bank, particularly in servicing
the medium and long term requirements of agriculture, and 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
Development Bank of the Philippines, to achieve a more efficient and
effective use of available resources, to improve their viability, and
avoid unfair competition with the private sector; and
NOW, THEREFORE, I, CORAZON C. AQUINO, President of the Philippines, do
hereby order.
Section 1. This Executive Order shall be known as “
THE 1986 REVISED CHARTER OF THE DEVELOPMENT BANK OF THE PHILIPPINES”.
Sec. 2. Name, Purpose and Domicile. — The
Development Bank of the Philippines, hereinafter called the Bank,
operating under the provisions of Republic Act No. 85, as amended,
shall henceforth operate under the provisions of this 1986 Revised
Charter. The Bank shall be a body corporate and shall exist for a
period of fifty years.
The primary purpose of the Bank shall be to provide banking services
principally to service the medium and long term needs of agricultural
and industrial enterprises, particularly in the country-side and
preferably for small and medium scale enterprises; Provided, however,
that the pursuit of these objectives shall be undertaken within the
context of a financially viable and stable banking institutions;
Provided, further that the Bank shall continue to be classified as a
development Bank, Provided, finally, that unless otherwise provided
herein, the Bank may perform all other functions of a thrift bank.
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 branches, agencies or other offices at such places in the
Philippines 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. — The Development Bank
of the Philippines shall have the power.
(a)
To accept such deposits as are allowed thrift banks under existing law
and Central Bank regulations, including but not limited to demand,
savings, and time deposits;
(b) To grant
loans for the establishment, development or expression of any
agricultural or industrial enterprise;
(c) To accept
and manage trust funds and properties and carry on the business of a
trust corporation;
(d) To act as
official government depository with authority to maintain deposits of
the government, its subdivisions, branches, and instrumentalities, and
of government-owned or controlled corporations, subject to such rules
and regulations as the Monetary Board may prescribe;
(e) To
acquire, assign, or otherwise dispose of marketable securities and
other debt instruments which are essential to the effective conduct of
its general banking activities;
(f) To enter
into such contracts of guaranty on suretyship as are generally allowed
domestic banking institutions under the General Banking Act; and
(g) To adopt,
amend, or charge 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 mentioned in the Corporation Code of the Philippines, and
of a thrift bank under the General Banking Act, insofar as such powers
are not inconsistent or incompatible with the provisions of this
Charter.
Unless otherwise provided in this Charter, 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. Loans and other Investments. — Loans and
other investments of the Bank shall be subject to the same limits and
ceilings applicable to thrift banks under existing provisions of law
and regulations promulgated by the Monetary Board, including but not
limited to prescribed limits and ceilings; Provided, that loans and
investments existing as of the date of the effectivity of this Charter
and which loans and investments would exceed the prescribed limits as a
result of the implementation of its rehabilitation program, as well as
those investment authorized under Sec. 6 hereof which are in excess
of the prescribed limits 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 up to another
five years by the President of the Philippines upon recommendation by
the Monetary Board.
Sec. 5. Issuance of Bonds. — The Bank may issue
all kinds of bonds, debentures, and securities, and/or the renewal or
refunding thereof (hereinafter called “Bonds”), within and/or outside
the Philippines, at such terms, rates, and conditions as the Board of
Directors of the Bank may determine, subject to compliance with the
provisions of applicable law, and rules and regulations promulgated by
the Monetary Board.
The Bank shall provide for appropriate reserves for the redemption or
retirement of the bonds. These bonds and other obligations shall be
redeemable at the option of the Bank at or before maturity and in such
manner as may be stipulated therein and shall bear such rate of
interest as may be fixed by the Bank.
Such obligations shall be secured by the assets of the Bank, including
the stocks, bonds, debentures, and other securities purchased or held
by it under the provisions of this Charter. These bonds and debentures
may be long-term, medium, or short-term, with fixed interest rate or
floating interest rate.
Sec. 6. Private Development Banks, Other Thrift
Banks and Rural Banks. — The Bank may assist private development banks
and other privately owned banks in the thrift bank category, as well as
rural banks, through general credit accommodations including but not
limited to conduit lending and rediscounting operations, and extension
of technical and managerial assistance; Provided, That the Bank may
likewise make equity investments in private development banks and other
private owned banks in the thrift bank category, as well as rural
banks, if such investment is in connection with the privatization of
certain branches of the Bank; Provided, further, That the extent of
such equity investment may, with the prior approval of the Monetary
Board, exceed the ceilings prescribed in Sec. 4 hereof; and,
Provided, finally, That after five years from effectivity of this
Charter, any equity investment shall not exceed thirty (30%) per cent
of the equity in any such bank nor shall its total equity investments
exceed the prescribed aggregate ceiling on such investments.
Sec. 7. Authorized Capital Stock — Par value. —
The capital stock of the Bank shall be Five Billion Pesos to be divided
into Fifty Million common shares with par value of P100 per share.
These are available for subscription by the National Government. 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 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. 30 hereof.
Sec. 8. Board of Directors — Composition — 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, to be appointed by the President
of the Philippines. The term of office of the Chairman, Vice-Chairman,
and the members of the Board of Directors shall be for a period of one
year or until such time as their successors are appointed.
The Chairman and the Vice Chairman of the Board shall be appointed by
the President of the Philippines. The Vice Chairman of the Board 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.
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 or more of the following:
banking, finance, economics, law, agriculture, business management,
public utility or government administration.
At least four of the members of the Board shall come from the private
sector.
Except for the Chairman and the Vice Chairman of the Board, no officer
or employee of the Bank may be appointed as a member of the Board of
Directors of the Bank; nor shall any director, officer, or employee of
any other bank be eligible as a member of the Board of Directors of the
Bank.
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 actually
attended: Provided, that the total amount of per diems for every single
months shall not exceed the sum of Five Thousand Pesos.
Sec. 9. Powers and Duties 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 and to prescribe, amend, and repeal by-laws, rules and
regulations for the effective operation of the Bank, and the manner in
which the general business of the Bank may be conducted and the powers
granted by law to the Bank exercised;
(b) To approve
loans, to fix rates of interest on loans and to prescribe such terms
and conditions for loans and credits as may be deemed necessary,
consistent with the provisions of this Charter; Provided, that the
Board may delegate the authority to approve loans to such officers as
may be deemed necessary;
(c) To adopt
an annual budget for the effective operation and administration of the
Bank;
(d) 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 officers or employees, or their
heirs, under such terms and conditions as the Board of Directors may
fix;
(e) To
compromise or release, in whole or in part, any claim or settled
liability to the Bank regardless of the amount involved, under such
terms and conditions it may impose to protect the interests of the
Bank. This authority to compromise shall extend to claims against the
Bank; and
(f) To
appoint, promote or remove officers from the rank of Vice President or
its equivalent, and other more senior officer positions, excluding the
Chairman and the Vice Chairman.
Sec. 10. Chairman and Chief Executive Officer. —
The Chairman shall be the Chief Executive Officer of the Bank and, as
such, 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 this 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 other powers and duties, 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; and exercise such other powers and perform
such other functions or duties as may be directed or assigned to him by
law or by the Board from time to time.
Particularly, he shall have the power and duty:
(a)
To sign and execute all contracts concluded by the Bank and enter into
all necessary obligations required or permitted by this Charter, upon
proper authorization by the Board; and sign all notes, securities
certificates, and other major documents of the Bank;
(b) To
exercise, as Chief Executive Officer of the Bank, the powers of control
and supervision over decisions and actions of subordinate officers and
all other powers that may be granted by the Board;
(c) To report
to the Board the main facts concerning the operations of the Bank and
to recommend changes in policies which he may deem advisable;
(d) To submit
an annual report to the President of the Philippines on the result of
the operations of the Bank;
(e) 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;
(f) To
appoint, promote or remove employees and officers below the rank of
vice-president or its equivalent; Provided, that promotions, transfers,
assignments or reassignments of officers and personnel of the Bank are
personnel actions deemed made in the interest of the service and not
disciplinary, any provision of the Civil Service Law to contrary
notwithstanding; and
(g) As
required by circumstances, to delegate any of his powers, duties or
functions to any officer or director of the Bank, with the approval of
the Board.
Sec. 11. Vice Chairman and Chief Operating
Officer. — The Vice Chairman shall be the Chief Operating Officer of
the Bank and shall assume and exercise such specific duties and
responsibilities as may be delegated to him by the
Chairman.
Sec. 12. 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 Chairman.
In appropriate cases, the Bank may avail also of the legal services of
any government legal office authorized to render such services to
government-owned or controlled corporations.
The Bank may, upon the recommendation of its Chief Legal Counsel,
deputize any member of its legal staff to act as special sheriff in
foreclosure cases, in the sale or attachment of the debtor’s properties
and in the enforcement of court writs and processes in cases involving
the Bank. The special sheriff of the Bank shall make a report to the
proper court after any action taken by him, which shall treat such
action as if it were an act of its own sheriffs in all respects.
Sec. 13. Other Officers and Employments. — The
Board of Directors shall provided for an organization and staff of
officers and employees of the Bank and upon recommendation of the
Chairman of the Board, fix their remunerations and other emoluments.
No Officer or employee of the Bank subject to Civil Service Law shall
be dismissed except as provided by law.
Sec. 14. Exemption from Attachment. — The
provisions of any law to the contrary notwithstanding, securities on
loans and/or other accommodation granted by the Bank or its
predecessors-in-interest shall not be subject to attachment, execution
or any other court process, nor shall they be included in the property
of insolvent persons or institutions, unless all debts and obligations
of the debtor to the Bank and its predecessors-in-interest have been
previously paid, including accrued interest, penalties, collection
expenses, and other charges, subject to the provisions of paragraph (e)
of Sec. 9 of this Charter.
Sec. 15. Officer to Conduct Sale. — In case of
sale of mortgaged properties under the provisions of existing laws or
of this Charter, such sale shall be conducted under the direction of
the sheriff of the Province or any special sheriff of the Bank, or of a
municipal judge or notary public of the City or Municipality where the
sale is to be made, who shall be entitled to collect the fees provided
for in the Rules of the Court with respect to sale of properties under
execution.
Sec. 16. Right of Redemption. — Any mortgagor of
the Bank whose real property has been extrajudicially sold at public
auction shall, within one (1) year counted from the date of
registration of the certificate of sale, have the right to redeem the
real property by paying to the Bank all of the latter’s claims against
him, as determined by the Bank.
The Bank may take possession of the foreclosed 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. 17. Inhibition from Board Meeting of Member
with Personal Interest. — Whenever any member attending a meeting of
the Board of Directors has a direct personal interest in the discussion
or resolution of any given matter, or any of his relatives within the
second civil degree or consanguinity or second civil degree of affinity
has such an interest, 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 resolve, 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.
For this purpose, the member of the Board shall, at the beginning of
their respective terms, disclose to the board any and all interests
they may have in any corporation, partnership. or association and
shall, thereafter, disclosed to the Board, any charges
thereto.
Sec. 18. Prohibition on Persons with Personal
Interest. — No member of the Board, officer, attorney, agent, or
employee of the Bank shall in any manner, directly participate in the
deliberation upon or the determination of any question affecting his
direct personal interest or the personal interests of his relatives
within the second civil degree of consanguinity or second civil degree
of affinity, or of any corporation, partnership, or association in
which he has a direct interest. Any person violating the provisions of
this section shall be summarily removed from office and shall upon
conviction be punished with a not less than one thousand pesos nor more
than ten thousand pesos or with imprisonment of not less than one year
nor more than five years, or by both fine and imprisonment at the
discretion of the court.
Sec. 19. Borrowing by Directors, Officer and
Employees — Restriction and Limitation. — No director or officer or
employees of the Bank or any corporation, partnership, or company
wherein any member of the Board of Directors, officer or employee,
and/or their respective immediate family is a controlling shareholder,
or wherein he is a director or officer 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, or in any manner be an obligator for money borrowed from the
bank or loaned by it: Provided, That this prohibition 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.
Sec. 20. Rules and Regulations on Conflict of
Interest. — The foregoing provisions notwithstanding and in addition
thereto, the Board of Directors is hereby authorized to issue rules and
regulations for the purposes of determining and resolving conflict of
interest questions, which rules shall, in particular, include the
requirement on all officers and employees of the Bank to disclose any
shareholdings they, or their relatives within the second civil degree
of consanguinity or second civil degree of affinity, may have in any
corporation, partnership, or company in excess of 2% of the equity of
said corporation, partnership, or company.
Sec. 21. Examination of the Bank. — The Bank shall
be subject to supervision and examination by the appropriate department
of the Central Bank of the Philippines.
Sec. 22. Prohibition on Officers and Employees of
the Bank. — Except as required by law, or upon order of a court of
competent jurisdiction, or the express order of the President of the
Philippines or written permission 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 or whatever
nature, the provisions of existing law 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 be allowed by
law.
Sec. 23. Exaction of Fee, Commission, Gift or
Charge. — No authorized fee, commission, gift, or charge of any kind
shall be exacted, demanded, or paid, for obtaining loans from the Bank,
and any officer, employee, or agent of the Bank found guilty of
exacting, demanding, or receiving any fee services in obtaining a loan,
shall be punished by a fine of not less than one thousand nor more than
twenty thousand pesos, imprisonment for not less than one year nor more
than ten years, and perpetual disqualification from public office.
Sec. 24. Penal Provisions of General Banking Act.
— The penal provisions of Sec. 87-A of the General Banking Act shall
be applicable to officers, employees and borrowers of the Bank.
Sec. 25. General Penal Provisions. — Any officer
or employee of the Bank who violates, or permits any of the officers,
employees or agents of said Banks or any other person to violate, any
of the provision of this Chapter not specifically punished in the
preceding section and any person violating any provision of this
Charter or aiding and abetting the violation thereof, shall be punished
with a fine not less than one thousand nor more than ten thousand pesos
and with imprisonment not less than one year nor more than five
years.
Sec. 26. Other Liability of Guilty Officer or
Employee. — Any member of the Board of Directors or officer or employee
of the Bank who wilfully violates any of the provisions of this Charter
shall in, addition to the criminal and administrative liability
resulting from such act, be held liable for any loss or injury suffered
by the Bank as a result of such violation.
Sec. 27. Liability of Directors, Officers or
Partners of Offending Corporation or Partnership. — If the violation of
the provisions of this Charter is committed by a corporation or
partnership, the directors, officers or partners hereof who
participated in the violation shall be criminally liable for such
violation.
Sec. 28. Applicability of Banking Laws. — The
provisions of Republic Act No. 265, as amended, and Republic Act No.
337, as amended, insofar as applicable and not in conflict with any
provision of this Charter, shall apply to the Bank.
TRANSITORY
PROVISIONS
Sec. 29. Preparatory Work. — Upon the effectivity
of this Charter, 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. The shares of stock held by the
Government of the Philippines in the Bank are deemed cancelled and
exchange for common voting shares of the Bank.
Sec. 30. Transfer of Assets and Liabilities of the
Development Bank of the Philippines. — 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 need not 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. 31. 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 to dispose of
such assets transferred to the National Government.
Sec. 32. Authority to Reorganize. — In view of the
new scope of operations of the Bank, a reorganization of the Bank and a
reduction in force are hereby authorized to achieve simplicity and
economy in operations, including adopting a new staffing pattern to
suit the reduced operations envisioned. The formulation of the program
of reorganization shall be completed within six months after the
approval of this Charter, and the full implementation of the
reorganization program within thirty months thereafter.
Sec. 33. Implementing Details; Organization and
Staffing of the Bank. — Upon the effectivity of this Charter, the Board
of Directors of the Bank shall be constituted and its Chairman
appointed. The Chairman 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 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 the preceding section, qualified personnel of the Bank may be
appointed to appropriate positions in the new staffing pattern thereof
and those not so appointed are deemed separated from the service. No
preferential or priority rights shall be given to or enjoyed by any
officer or personnel of the Bank for appointment to any position in the
new staffing pattern nor shall any officer or personnel be considered
as having prior or vested rights with respect to retention in the Bank
or in any position as may have been created in its new staffing
pattern, even if he should be the incumbent of a similar position
thereon.
Pending the completion of the personnel actions above provided and the
issuance of the appropriate implementing orders, all present remaining
incumbents of position in the Bank shall continue to exercise their
usual functions, duties and responsibilities.
Sec. 34. Separation Benefits. — All those who
shall retire from the service or are separated therefrom on account of
the reorganization of the Bank under the provisions of this Charter
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: Provided, that any separation benefits and
incentives which may be granted by the Bank subsequent to June 1, 1986,
which may be in addition to those provided under existing laws and
previous retirement programs of the Bank prior to the said date, for
those personnel referred to in this section shall be funded by the
National Government; Provided, further, that, any supplementary
retirement plan adopted by the Bank after the effectivity of this
Chapter shall require the prior approval of the Minister of Finance.
Sec. 35. Banking Operations under 1986 Revised
Charter, Government Laws. — The banking operations of the Bank shall be
governed by the provisions of the 1986 Revised Charter beginning on
January 2, 1987 on such subsequent date as may be determined by the
President of the Philippines upon the recommendation of the Minister of
Finance.
Sec. 36. Separability Clause. — In the event that
any provision of this Charter or the applicability of such provisions
to any person or circumstances is declared invalid, the remainder of
the Charter or the application of said provision to other persons or
circumstances shall not be affected by such declaration.
Sec. 37. Repealing Clause. — All 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. 38. Effectivity. — This Charter shall take
effect upon its approval.
Done in the City of Manila,
this 3rd day of December, in the year of Our Lord, Nineteen Hundred and
Eighty-six.
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