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Republic Act No. 8367.
REPUBLIC ACT NO.
THE REGULATION OF THE ORGANIZATION AND OPERATION OF NON-STOCK SAVINGS
AND LOAN ASSOCIATIONS.
Section 1. Title. —
short title of this Act shall be the "Revised Non-Stock Savings and
Loan Association Act of 1997".
Sec. 2. Declaration
of policy. — It is hereby declared the policy of the State to:cralaw:red
and the accumulation of savings, and judicious utilization of credit
the members of non-stock savings and loan associations;
b) regulate and
the activities of non-stock savings and loan associations in order to
their operations on a sound, stable, and efficient basis to the end
they may be able to better provide for the establishment of additional
savings and credit facilities in a fair manner to their members and to
curtail or prevent acts or practices of these Associations which are
to their members' interest;
c) lay down the
requirements and the standards under which non-stock savings and loan
may organize and operate; and
d) maximize the
of members of non-stock savings and loan associations against
and malfeasance of the trustees and officers thereof.
Sec. 3. Definition of
terms. — For the purposes of implementing this Act, the following
loan association shall mean a non-stock, non-profit corporation engaged
in the business of accumulating the savings of its members and using
accumulations for loans to members to service the needs of households
providing long term financing for home building and development and for
b) Association shall
only to non-stock savings and loan associations organized under this
and the Corporation Code of the Philippines;
c) Monetary Board
mean the Monetary Board of the Bangko Sentral ng Pilipinas; and
d) Bangko Sentral
mean the Bangko Sentral ng Pilipinas.
Sec. 4. Organization of
an Association. — At least five (5) but not more than fifteen (15)
members of a well-defined group as provided herein may form an
under this Act. An Association, prior to transacting any business,
secure a license from the Monetary Board and register with the
and Exchange Commission (SEC). The application for a license, signed by
a majority of the incorporators and verified by one of the trustees,
of incorporation and bylaws together with names and addresses of the
trustees and officers, with a statement of their character, experience
and general fitness to engage in the non-stock savings and loan
b) an itemized
of the estimated receipts and expenditures of the proposed Association
for the first year;
c) a filing fee in
amount as may be determined by the Monetary Board; and
d) such other
as the Monetary Board may require.
The SEC shall not register the
articles of incorporation and bylaws of a proposed Association unless
application is accompanied by a certificate of the Monetary Board
the same. The Monetary Board may deny the application to organize an
under this Act if it finds that the Association is being organized for
any purpose other than to engage in the business of a legitimate
savings and loan association or that the Association's financial
is unsound, or that the proposed members are adequately served by one
more existing Associations.
The Association shall
its membership to a well-defined group of persons and shall not
business with the general public. A "well-defined group" shall be
by the Monetary Board, and shall consist of, but not be limited to, any
of the following:cralaw:red
and directors of one company, including member-retirees;
belonging to the same department/branch/office, including
3) immediate members
the families (up to second degree of consanguinity or affinity) of
falling under paragraphs 1 and 2 above.
Associations whose articles
of incorporation and bylaws were approved and registered prior to the
of this Act and which allow membership coverage broader than the
definition, shall be allowed to continue as such, unless otherwise
by the Monetary Board.
The Monetary Board may,
as circumstances warrant, require Associations mentioned in the
preceding paragraph to amend their bylaws to comply with the concept of
a "well-defined group."
In no case shall the
amount of entrance fees exceed one percent (1%) of the amount to be
or otherwise paid in by the particular member: Provided, That
new members, the said fee shall be based on the amount of contribution
computed in accordance with the revaluation of the assets of the
No person, association,
partnership or corporation shall do business, or hold itself out as
business, as an Association, or shall use the term "Savings and
Association" or any other title or name tending to give the public
the impression that it is engaged in the operations and activities of
Association, unless so authorized under this Act.
Sec. 5. Tax
— An Association shall be exempt from payment of tax in respect to
it receives, including interest on its deposits with any bank: Provided,
however, That income derived from any of its properties, real or
or any activity conducted for profit, regardless of the disposition
is subject to the corresponding internal revenue taxes imposed under
National Internal Revenue Code.
Interest earnings on
of members with Associations as well as the shares of its members from
the net income of the Associations shall be exempt from income tax.
Sec. 6. Prohibition
against inquiry into or disclosure of deposits. — All deposits of
nature with an Association in the Philippines are hereby considered as
of an absolutely confidential nature and may not be examined, inquired
or looked into by any person, government official, bureau or office,
upon written permission of the depositor, or in cases of impeachment,
upon order of a competent court in cases of bribery or dereliction of
of public officials, or in cases where the money deposited or invested
is the subject matter of litigation.
It shall be unlawful
any official or employee of an Association to disclose to any person
information concerning said deposits, except in the cases mentioned in
the preceding paragraph of this Sec.. Any official or employee of an
Association who violates this Sec. shall be punished under Republic
Act No. 1405, as amended.
Sec. 7. Powers of
Associations. — The Association shall accept deposits from and
loans only to its members, subject to such rules and regulations as the
Monetary Board may promulgate to ensure sound, stable and efficient
Provided, That no deposits shall be sourced or deducted from the loans
granted to a member without his or her written consent.
The loans shall not
the members' deposits and contributions in the Association, plus twelve
(12) months of his regular salary as the Association may allow or
percent (70%) of the fair market value of any property acceptable as
on first mortgage that he may offer as security: Provided, That
no loan shall have the maturity date of more than five (5) years,
loans on the security of unencumbered real estate for the purpose of
building and home development, which may be granted with maturities not
exceeding twenty-five (25) years, and medium and long-term loans to
agricultural projects, subject to regulations prescribed by the
Board: Provided, further, That the treasurer, cashier, or
of the office employing a member is required, notwithstanding the
of any existing law, rule and regulation to the contrary, to make
from his salary, wage, income or retirement pension pursuant to the
of his loan, and all other deductions authorized by the member, to
such deductions to the Association concerned, and to collect such
fee for his services as may be authorized by rules promulgated by the
In addition to the
granted it by this Act and existing laws, any Association may:cralaw:red
and collect such necessary fees and charges incidental to the grant of
b) invest its funds
sound non-speculative enterprises as well as in bonds, security, and
obligations issued by the Government of the Philippines, or any of its
political subdivisions, instrumentalities, or corporations including
or -controlled corporations, subject to the rules and regulations of
c) allow members to
in the profits of the Association;
d) borrow money or
such obligations not exceeding twenty percent (20%) of the total assets
of the Association, from any lending institution. The Monetary Board,
in meritorious cases, raise the ceiling on the borrowing capacity of an
Association to an amount not exceeding thirty percent (30%) of its
assets: Provided, That any such Association organized by
of an entity or corporation may borrow funds from said entity or
but not vice-versa: Provided, further, That the number of the
creditors shall not exceed nineteen (19) at any one time;
e) maintain deposits
banks: Provided, That the amount of such deposits shall be
to the loan limit to a single borrower as prescribed herein or by other
special laws or regulations;
f) require the
or corporation to provide it with adequate office space within which it
can conduct its business; and
g) engage in death
program meant exclusively for the mutual benefit of its members.
Sec. 8. Restrictions on
Associations. — a) No Association shall have or carry upon its
for any person any demand, commercial or checking account, or any
to be withdrawn upon the presentation of any negotiable check or draft.
b) No Association shall
advertise or represent itself to the public as a bank.
c) No Association shall
issue, publish or cause or permit to be issued or published, any
that it is doing or permitted to do any business which is prohibited by
law for an Association.
Sec. 9. Service
— An Association shall open, maintain and operate service units as may
be necessary in order to deliver services to its members subject to
of the Monetary Board.
Sec. 10. Agents and
salesmen. — No person shall act as an agent or sales representative
of an Association or operate an agency without obtaining a license from
the Monetary Board. No license is required for a collector of an
but no person shall hold himself out or act as collector unless he is
as a collector in writing by such Association.
Sec. 11. Merger or
consolidation of Associations. — To achieve simplicity, economy and
efficiency, different associations of one company or department or
may merge or consolidate upon approval of the Monetary Board.
Sec. 12. Trustees.
— Only members are eligible as trustees of an Association: Provided,
in the case of a merger or consolidation of Associations duly approved
by the Monetary Board, the limitation on the maximum number of trustees
in a corporation, as provided for in the Corporation Code, shall not be
applied for a maximum period of three (3) years so that membership in
new board may include up to the total number of trustees provided for
the respective articles of incorporation of the merging or
Sec. 13. Bond of
and employees. — All officers and employees of an Association who,
in the regular discharge of their duties have access to money or
securities shall, before entering upon such duties, furnish to the
Association a good and sufficient bond, the form and amount of which
be prescribed by the Monetary Board, and providing for indemnity to the
Association against the loss of money or securities, by reason of their
Sec. 14. Compensation
of trustees, officers and employees. — No trustee, officer, or
of an Association shall receive from such Association, and no
shall pay to any trustee, officer, or employee of such Association, any
commission, emolument, gratuity or reward based on the volume or number
of loans made, or based on the interest or fees collected thereon.
in this Sec. prohibits or limits any of the following:cralaw:red
or payment of
salaries of trustees, officers and employees;
b) receipt of payment
commissions to agents whether or not based on the volume or number of
or on the interest or fees collected thereon; and
c) receipt or payment
bonuses to trustees, officers or employees if such bonuses are based on
the performance and not on the volume or number of loans made or on the
interest or fees collected thereon.
All increase in the
in any form, of all trustees and trustee-officers in excess of ten
(10%) thereof per annum shall require the approval of the Bangko
Sec. 15. Limitations on
lending authority. — a) An Association shall not commit itself to
any loans for amounts in excess of the total of the following amounts:cralaw:red
1) amount of
for loan purposes;
2) amount of cash
can be readily realized upon the sale or redemption of permissible
made by the Association; and
3) amount of credit
for loan purposes from government or private financing institutions.
b) No Association shall
or indirectly make any loans to any trustee or officer of such
either for himself or as agent or as partner of another, except with
written approval of the majority of the trustees of the Association,
the trustee concerned: Provided, That the total loans, direct
indirect, granted at any one time to such trustees and officers shall
exceed twenty percent (20%) of the total capital contributions of the
in all cases of the credit accommodations granted to trustees and
under this subSec., the written approval of the majority of the
of the Association, excluding the trustee concerned, shall be entered
the records of the Association and a copy of such entry shall be
forthwith to the Bangko Sentral.
The transactions of all
trustee-officers with the Association shall not be under terms more
than those transacted with other members. The office of any trustee or
trustee-officer of an Association who violates the provisions of this
shall immediately become vacant and the trustees or officers shall be
by imprisonment of not less than one (1) year nor more than ten (10)
and by a fine of not less than Five thousand pesos (P5,000) nor more
Fifty thousand pesos (P50,000).
Sec. 16. Execution
of loan agreement. — For each loan made by an Association, a
note or other obligation expressing a rate of interest must be executed
by the borrower.
Sec. 17. Liability
of officers for loans contrary to law. — No Association shall make
or purchase any loan or investment not authorized or permitted under
Act, and any trustee, officer or employee, who on behalf of any such
knowingly makes or purchases any such loan or investment or who
consents thereto shall be personally liable to the Association for the
full amount of any such loan or investment.
Sec. 18. Limitations
on investment. — a) No Association at any one time shall invest in
bonds and securities in a total amount in excess of ten percent (10%)
the total assets of such Association without prior written approval of
the Bangko Sentral.
b) No Association at
one time shall invest in real property in a total amount in excess of
percent (5%) of the total assets of such Association.
c) No Association at
one time shall invest in furniture, fixture, furnishings and equipment
and leasehold improvements for its offices, in an amount more than ten
percent (10%) of its total capital contribution.
Sec. 19. Reserves.
— Every Association shall create a withdrawable share reserve which
consist of two percent (2%) of the total capital contributions of the
which the Monetary Board may increase to a maximum of three percent
as the situation warrants.
No Association shall
to its members any portion of its net income if its withdrawable share
reserve is less than the minimum requirement, or if by such payment or
distribution, such reserve will be reduced to an amount below the
requirement provided herein.
Sec. 20. Withdrawal
by a member. — For the sole purpose of allowing an equitable
and distribution of assets for withdrawing members, an Association
upon the effectivity of this Act, impute revalued surplus to be added
the withdrawn capital, subject to such rules as the Monetary Board may
prescribe. Such rules shall allow a reasonable period between
of capital and payment of the share of the member from the revalued
Sec. 21. Annual
by the Association. — Every Association shall, within one hundred
(120) calendar days after the close of its fiscal year furnish the
Board and post in any of the Association's bulletin board or in any
conspicuous place a copy of its financial statement showing, in such
and detail as the Monetary Board shall require, the amount and
of the assets and liabilities of the Association at the end of the
fiscal year. The Monetary Board may, in addition to the foregoing,
the disclosure of such other information as it shall deem necessary for
the protection of the members of the Association.
Sec. 22. Regulatory
powers over Associations. — Notwithstanding the provisions of Sec.
130 of Republic Act No. 7653, the power to regulate the operations of
Association by the Monetary Board shall continue and consist of the
a) in seeing
to it that
the capital, financing, direction and administration, as well as the
responsibility, and ability of organizers, administrators, trustees,
officers of all Associations organized and operated under this Act,
reasonably assure the safety of the interests which its members entrust
b) in regulating the
and activities of Associations, which include, among others: 1) in
limits to the maximum credit allowed any individual borrower; 2) in
the loan repayment period and loan procedures; 3) in imposing a uniform
accounting system and manner of keeping the accounts and records of
4) in instituting periodic surveys of loan and lending procedures,
test check of each and other transactions of Associations; and 5)
necessary, in conducting training courses for personnel of Associations;
c) in requiring all
officers and employees of every Association to post bonds for the
performance of their duties in reasonable sums and with such sureties
the Monetary Board may require;
d) in fixing, by
by orders, in specific cases, after notice and hearing, the limits of
funds, amounts for investment and reserves for withdrawals and other
e) in issuing rules
regulations for the proper implementation of this Act, effective
of the Associations, and to render advisory assistance to all
parties in order to carry out the intents and purposes of this Act; and
f) in conducting such
taking such remedial measures and exercising all powers under Republic
Act No. 7653, insofar as they are applicable in the enforcement of this
The Bangko Sentral shall have
the power to enforce the laws, orders, instructions, rules and
promulgated by the Monetary Board applicable to Associations; to
Associations, their trustees, officers and agents to conduct and manage
the affairs of the Association in a lawful and orderly manner. After
notice and hearing, the Monetary Board may revoke or suspend the
of any Association, for such period as it determines necessary,
when the solvency of an Association is imperiled by losses or
and/or when an Association willfully violates any provisions of this
or any rule or regulations promulgated hereunder.
The director and
of the department of the Bangko Sentral charged with the regulation of
Associations are hereby authorized to administer oaths to any trustee,
officer or employee of any Association or to any voluntary witness and
to compel the presentation of all books, documents, papers or records
in his judgment to ascertain the facts relative to the true condition
any Association or to any loan.
Sec. 23. Penalties.
— a) The provisions of Sec. 34 of Republic Act No. 7653 shall
apply to any agent, manager, or other officer-in-charge of any
who willfully refuses any lawful examination into the affairs of such
b) The willful making
a false statement or misleading statement on a material fact to the
Board or to the director of the department of the Bangko Sentral
with the regulation of Associations or to his examiners shall be
in accordance with Sec. 35 of Republic Act No. 7653.
c) Whenever any
person or entity willfully violates this Act or any order, instruction,
rule or regulation issued by the Monetary Board applicable to
the persons responsible for such violation shall be punished in
with Sec. 36 of Republic Act No. 7653.
d) Whenever any
employee, or agent of an Association accepts gifts, fees or commissions
or any other form of remuneration in connection with the approval of a
loan from said Association; or overvalues or aids in overvaluing any
for the purpose of influencing in any way the action of the Association
on any loan, such officer, employee or agent shall be punished by a
of not more than Ten thousand pesos (P10,000) or three times the loan
involved, whichever is higher, or imprisonment for not more than one
year, at the discretion of the court.
e) Whenever any
for a loan, or borrower of an Association fraudulently overvalues
offered as security for loan from the said Association; or furnishes
or makes willful misrepresentation of material facts for the purpose of
obtaining, renewing, or increasing a loan or extending the period
or attempts to defraud the said Association in the event of a court
to recover a loan; or offers any officer, of a court action to recover
a loan; or offers any officer, employee or agent of an Association any
gift, fee, commission, or other form of compensation in order to
such Association personnel into approving a loan application; such
or borrower shall be punished by a fine of not more than Five thousand
pesos (P5,000) or three times the loan amount involved, whichever is
or imprisonment for not more than one (1) year, at the discretion of
f) Whenever any
officer or employee of the Bangko Sentral, who is assigned to examine,
assist or render technical service to an Association, overvalues or
in overvaluing any security for the purpose of influencing in any way
action of the Association on any loan or connives or aids in the
of the same, he shall be punished by a fine of not more than Ten
pesos (P10,000) or three times the loan amount involved, whichever is
or imprisonment for not more than one (1) year, at the discretion of
Sec. 24. Annual fees.
— Consistent with the provisions of Sec. 28 of Republic Act No.
any Association organized under this Act may, pursuant to regulations
for the purpose by the Monetary Board, be required to contribute to the
Bangko Sentral an annual fee to be determined by the Monetary Board.
Sec. 25. Implementation.
— For the purpose of carrying the objectives of this Act, the Bangko
is authorized to require the services and facilities of any department
or instrumentality of the government or any officer or employee of any
such department or instrumentality.
Sec. 26. Annual
of the Monetary Board. — The Monetary Board shall submit a report
the Congress of the Philippines as of the end of each calendar year of
all the rules and regulations promulgated by it in accordance with the
provisions of this Act, together with the explanations of its reasons
Sec. 27. Industry
Association. — Membership in an existing association of
duly accredited and recognized by the Bangko Sentral, is hereby
Sec. 28. Applicability
of other laws. — The provisions of Republic Act No. 7653 and
Act No. 337, as amended, insofar as they are applicable and not in
with any provision of this Act, shall apply to Associations organized
Sec. 29. Separability
clause. — If any provision of this Act or the application thereof
any persons or circumstances is held invalid, the other provisions of
Act and the application of such provisions to other persons and
shall not be affected thereby.
Sec. 30. Repealing
clause. — Republic Act No. 3779, as amended, is hereby repealed.
law or parts of law inconsistent with the provisions of this Act are
repealed. In all matters affecting the price stability of the peso, the
provisions of Republic Act No. 7653 shall prevail.
Sec. 31. Effectivity.
— This Act shall take effect fifteen (15) days following the completion
of its publication in the Official Gazette or in two (2) national
of general circulation.
October 21, 1997.
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