[ Act no. 2747, February 20, 1918 ]
AN ACT TO AMEND IN CERTAIN PARTICULARS ACT NUMBERED TWENTY-SIX HUNDRED AND TWELVE, ENTITLED "AN ACT CREATING THE PHILIPPINE NATIONAL BANK."
Be it enacted by the Senate and House of Representatives of the Philippines in
Legislature assembled and by the authority of the same:
Section 1. In order to explain certain provisions, increase the stability of the institution, and extend its powers, Act Numbered Twenty-six hundred and twelve, entitled "An Act creating the Philippine National Bank," is hereby amended in certain particulars, so that hereafter the said Act shall read as follows:
"Section 1. There is hereby created a bank to be known as the Philippine National Bank, the short title of which shall be the National Bank. Its principal domicile and place of business shall be in the city of Manila.
"Section 2. The said National Bank, upon its organization, shall be a body corporate and shall have power:
"(a) To prescribe its by-laws;
"(b) To adopt and use a seal;
"(c) To make contracts;
"(d) To sue and be sued;
"(e) To exercise the powers granted in this Act and such incidental powers as may be necessary to carry out the business of banking within the limitations prescribed by this Act; and
"(f) To exercise, further, the general powers mentioned in the Corporation Law in so far as they are not inconsistent or incompatible with the provisions of this Act.
"Section 3. The capital of the National Bank shall be twenty million pesos,' Philippine currency, divided into two hundred thousand shares of the value at par, of one hundred pesos, Philippine currency, each.
"Shares of stock subscribed from the passage of this Act until January thirty-first, nineteen hundred and seventeen, shall be paid as follows:
"Sixty per cent of the value at the time of the subscription ;
"Ten per cent on or before January thirty-first, nineteen hundred and eighteen;
"Ten per cent on or before January thirty-first, nineteen hundred and nineteen;
"Ten per cent on or before January thirty-first, nineteen hundred and twenty; and the remaining
"Ten per cent on or before January thirty-first, nineteen hundred and twenty-one.
"Shares subscribed after January thirty-first, nineteen hundred and seventeen shall be paid in the form and manner prescribed by the board of directors of the bank.
"Section 4. The Government of the Philippine Islands not later than January thirty-first, nineteen hundred and seventeen, shall purchase one hundred and one thousand shares, at par, of the said National Bank, the payment for said shares of the Government to be made as hereinafter provided. Ninety-nine thousand shares of said capital stock may be offered to the provincial and municipal governments or to the public at a price not below par which the board of directors of the bank shall from time to time determine.
"The voting power of all the stock of the National Bank owned and controlled by the Government of the Philippine Islands shall be vested exclusively in a committee consisting of the Governor-General, the President of the Senate, and the Speaker of the House of Representatives.
"Section 5. There are hereby appropriated, out of any funds in the Insular Treasury not otherwise appropriated, such sums as may be necessary for the payment of the shares to be purchased by the Government of the Philippine Islands: Provided, That the capital and surplus of' the Agricultural Bank of the Philippine Islands shall be applied primarily to said payment: And provided, further, That no sum shall be set up on the books of the Auditor until it, shall be necessary to make the payment or payments authorized by this Act.
"Section 6. All the assets and liabilities of the Government Agricultural Bank of the Philippine Islands, created under Act Numbered Eighteen hundred and sixty-live, as amended, shall be transferred to the National Bank: Provided, That the transfer of the assets of the Agricultural Bank represented by the capital and the net profits thereof shall be made as part payment of the one hundred and one thousand shares subscribed by the Government of the Philippine Islands. This transfer shall be understood as taking place upon the inauguration of the National Bank in conformity with the provisions of section nine of this Act, after which the National Bank shall be subrogated to all the rights, actions, and obligations of the Agricultural Bank, and the Agricultural Bank shall thereafter be deemed abolished.
"Section 7. Any loan or credit account transferred to the National Bank by the Agricultural Bank which, in the judgment of the board of directors of the National Bank, is found upon demand after its maturity to be uncollectible, shall be both as to principal and as to interest due thereon redeemed by the Government and become the property thereof: Provided, That by agreement between the Insular Treasurer and the National Bank, the said National Bank may renew any such credits for a period not exceeding five years without losing the benefit of the above guaranty. There are hereby appropriated, out of any funds in the Insular Treasury not otherwise appropriated, such sums as may be necessary from time to time to make such payments.
"Section 8. At ri6r time shall shares be sold to the public if, as a result thereof, the part of the capital stock held by private investors will equal or exceed the part owned by the Government of the Philippine Islands.
"Section 9. The National Bank shall be inaugurated within one hundred and eighty days from and after the passage of this Act, and the Governor-General shall fix such inauguration by proclamation upon the certificate of the Insular Auditor and the president of the bank that said institution is ready to begin operations.
"Section 10. Said National Bank is hereby authorized to loan not to exceed fifty per cent of its capital and surplus and all amounts realized from the sale of real estate bonds, as provided in sections twelve and thirteen herein, on notes secured by real estate mortgages. Payment of such notes shall be secured by first mortgages on farm lands in the Philippine Islands, and in no case shall such loans exceed sixty per cent of the actual value of said land, including the value of the permanent improvements thereon, such as buildings and machinery if the same form an integral part of the agricultural development: Provided, however, That whenever the bank may deem it advisable, the mortgages shall contain a clause obliging the mortgagor to insure to their full value in the name of the National Bank such buildings and improvements. The due date of said mortgages shall not be less than one year from the date thereof, nor more than thirty years. The said mortgages may, by their terms, be made payable at one time or in installments: Provided, That when the due date of the mortgage is five years or more after the date of its execution, the principal and interest of the loan shall be made payable by its terms in equal installments of not more than one year each. Loans made by the National Bank on real estate security shall be made for the purpose of promoting agriculture. Applications for such loans shall be in writing and under oath, and shall contain, among other things:
"(a) A detailed description of the real estate;
"(b) An appraisal thereof at its reasonable market value;
"(c) A full statement of the purposes for which the loan is desired.
"It shall be unlawful to use the proceeds of said loan, or any part thereof, for any purpose or purposes except the purpose or purposes set out in said application. Any violation of this clause shall be sufficient cause for the rescission of the contract and the foreclosure of the mortgage.
"Section 11. Said National Bank is hereby authorized:
"(A) To purchase or discount promissory notes, drafts and bills of exchange issued or drawn for agricultural, industrial or commercial purposes, or the proceeds of which have been used or are to be used for such purposes.
"(B) To make loans on, or to discount notes secured by, harvested and stored crops: Provided, That no loan on the security of such harvested and stored crops shall exceed seventy per centum of the market value thereof on the date of the loan : Provided, further, That the crops so mortgaged shall be insured by the mortgagor for the benefit, of the National Bank for their entire market value: And provided finally, That if, owing to any circumstance whatever, the value of the crops given as security shall diminish, the mortgagor shall obligate himself to furnish additional security or refund such part of the loan as the bank may deem necessary. Such loans shall be granted for a period of three months, subject to three months' extension, in the discretion of the bank.
"(C) To make loans to agriculturists in installments, on standing crops of the natural products of the Philippine Islands, such as rice, hemp, copra, sugar, tobacco, corn, maguey, etc., not in excess of three-fifths of the estimated value of such crops: Provided, however. That before granting such loans, the National Bank may require additional security in the nature of mortgages on real estate duly registered in the name of the debtor or chattel mortgages, including those upon live stock, machinery, and agricultural implements, or personal bonds with sufficient surety or sureties, satisfactory to the bank.
''(D).To make loans to the several provincial and municipal governments and to any other branch or subdivision of the Government of the Philippine Islands on promissory notes guaranteed by the Central Government, as shown by the endorsement thereon of the Secretary of Finance, approved by the Governor-General of the Philippine Islands, or to purchase bonds lawfully issued by such provincial and municipal governments and any other branch or subdivision of the Government of the Philippine Islands.
"(E) Generally, to make advances or discount paper for agricultural, manufacturing, industrial, or commercial purposes: Provided, That loans, discounts, or advances made under this section shall have maturities not exceeding one year, renewable from year to year, in the discretion of the Bank.
"Section 12. The National Bank is hereby authorized to issue real estate bonds in any sum not to exceed ninety per cent of the amount of real estate loans held by said bank, under section ten herein. Said bonds shall be engraved. Said bonds shall be signed by the president of the bank, authenticated by the Insular Auditor and shall bind the bank to pay the bearer thereof on the date therein named the principal sum mentioned in said bond with interest payable semiannually at such rate as the board of directors may fix. Said bonds shall be payable, both principal and interest, in gold coin of the United States: Provided, however, That bonds held by persons or corporations resident in the Philippine Islands shall be payable in lawful money of the Philippine Islands, or in gold coin of the United States at the option of the said bank. The amount of said real estate bonds outstanding as herein provided, falling due on any given date or prior to such given date, shall never at any time exceed the real estate notes as described in section ten herein held by the said bank, which fall due on the said given date or prior thereto.
"Said real estate bonds shall be receivable by the Insurance Commissioner under section one hundred and seventy-eight of Act Numbered Twenty-four hundred and twenty-seven. Said bonds shall also be receivable by way of security in all customs and internal revenue transactions where security is required, and in any and all cases where by statute security may be required in dealings with the Government. Said: bonds shall be exempt from any and all taxes levied or assessed by the Government of the Philippine Islands, or any department, division, or subdivision thereof.
"'Said real estate securities against which bonds are issued as provided herein shall be deposited with the Treasurer of the Philippine Islands, and each of said bonds when issued shall bear on its face a certificate of the Insular Treasurer in words and figures as follows:
"I hereby certify that there are on deposit in the Treasury of the Philippine Islands first mortgage real estate farm securities in the sum of one hundred eleven and one-ninth per cent (111 1/9%) covering farm land of an appraised value of one hundred eighty-five and five twenty-sevenths per cent (185 5/27%) of the face value of this bond; which said real estate farm securities or other first mortgage real estate farm securities of equal value or the proceeds thereof are to be held by me as security, additional to the promise of the Philippine National Bank for the prompt payment of this bond, principal and interest.
___________________________
"'Treasurer of the Philippine Islands.'
"Changes in this Act or in the laws of the Philippine Islands which may hereafter be made shall not in any manner affect the real estate bonds issued hereunder which may be outstanding at the time of such change or changes, nor shall any such change or changes affect the rights of any holder or holders thereof.
"The principal and interest of said real estate bonds shall be payable in Manila or New York, at the option of the holder thereof except as hereinafter provided.
"Section 13. Said bonds shall be issued in such amounts and form, at such times, and for such periods as may be expressly provided by resolution of the board of directors of the Philippine National Bank. Said bonds shall be redeemable at par on or before the date of their maturity and shall contain a provision to the effect that they are subject to redemption by lot at such date as the bank may designate: Provided, however. That such of the bonds so chosen by lot for redemption as have not been outstanding for at least three-fourths of the period for which issued shall be retired with a premium of five per centum of the par value thereof. The bonds so chosen for redemption shall cease to bear interest beginning with the date set for their withdrawal, and the aforesaid selection by lot shall take place at least one hundred days before the date of the withdrawal: And provided, That the serial numbers of the bonds so selected shall be published for a period of not less than three months in two daily newspapers of general circulation in the Philippine Islands, and by notification of the Bureau of Insular Affairs at least three months before said redemption.
"Section 14. The board of directors may, at the request of the holder, authorize the payment of the interest on any bond at the branches or agencies of the bank in the municipalities of the Philippine Islands or in the United States.
"Section 15. Said National Bank is hereby authorized to issue circulating notes. Said notes shall never be issued in any amount exceeding the paid-up capital stock and surplus of said bank plus the amount of gold coin of the United States held in the Bank's own vaults or to its order in the Treasury of the Philippine Islands, or of the United States or in solvent National Banks of the United States or in any Federal Reserve Bank.
"The securities described in section eleven, subsection (A), of this Act, and the proceeds thereof shall be held inviolable for the payment and redemption of said circulating notes. Said circulating notes shall be engraved and shall be payable on demand to the bearer in lawful money of the Philippine Islands. There shall at all times be held by said National Bank a sum not less than thirty-three and one-third per cent of the total amount of said circulating notes issued and outstanding and not covered by gold coin of the United States as herein provided for in lawful money of the Philippine Islands.
"Said sum shall be available only for the purpose of redeeming the circulating notes herein provided for.
"It is hereby further provided that in addition to the circulating notes above provided for, said National Bank shall have authority to issue its circulating notes against gold coin of the United States to the full value thereof: Provided, however, That such gold coin against which circulating notes have been issued shall be held by said bank and used for no other purpose except the redemption of said circulation notes. The said bank, however, shall have the privilege of redeeming said circulating notes in any lawful money of the Philippine Islands. Such circulating notes shall be exempt from any and all taxes levied or assessed by the Philippine Government, or any department, division or subdivision thereof.
"The said circulating notes shall be receivable by the Philippine Government in payment of all taxes, dues or other claims due or owing to said Government, and shall be redeemed by the bank on demand, in lawful money of the Philippine Islands, at the Central Office in Manila.
"Section 16. The Philippine National Bank is hereby authorized to receive deposits of funds of the Insular Government, the provinces, municipalities, Postal Savings Bank, associations, corporations, and private persons, and it is hereby made obligatory for the aforesaid Insular, provincial, and municipal governments to make their deposits in the National Bank. The interest paid by said bank on deposits so made shall not exceed four per centum per annum: Provided, however, That whenever in the judgment of the Secretary of Finance, it is in the public interest to make deposits from public funds in other banks or institutions legally authorized to receive such deposits he is hereby authorized to cause the same to be done under such terms and conditions as he may deem proper.
"Section 17. The affairs and business of the National Bank shall be managed by a board of directors consisting of the president of the bank, who shall be chief executive thereof and chairman of the board at the same time, one vice-president, who shall assist the president and act in his stead in case of absence or incapacity, and five members elected as hereinafter provided.
"The president of the bank shall have power to make loans on commercial paper for periods of time not to exceed '' four months and in sums not exceeding fifty thousand pesos in any one case, but he is required to submit a report on each such loan to the board of directors at its next succeeding session. It shall also be his duty-
"(a) To make, with the advice and consent of the board of directors, all contracts on behalf of the said bank and to enter into all necessary obligations by this Act required or permitted;
"(b) To report weekly to the board of directors the main facts concerning the operations of the bank during the preceding week and to suggest changes in rates of discount, exchange, or of policy which may to him seem best;
"(c) To furnish, upon request of the Secretary of Finance or of the Governor-General of the Philippine Islands, any information in his possession regarding the operations of said Bank.
"Section 18. The president and vice-president shall be appointed by the Governor-General, by and with the consent of the Philippine Senate, and may be removed for cause by said Governor-General, by and with the same consent. ' The five remaining members shall be elected and may be removed in accordance with the provisions of Act Numbered Fourteen hundred and fifty-nine, the Corporation Law. The president may, with the authorization of the board of directors, delegate from time to time any of his duties or functions to any officer of the bank.
"Section 19. All the other officers and employees of said National Bank shall be appointed and removed by the president thereof: Provided, however, That for the appointment and removal of those receiving more than two thousand pesos per annum, the approval of the board of directors shall be required. The officers and employees of said bank shall not be subject to the Civil Service Law, and their duties and compensations shall be fixed by the president with the approval of the board of directors: Provided, further, That whenever the president or vice-president, by order of the board of directors, shall temporarily or permanently perform duties incumbent upon other officers or employees, they may be granted compensation additional to the salary fixed by this Act for the president and vice-president; but the resolution of said Board shall not take effect until the written approval of the Governor-General and of the presiding officers of both Houses of the Philippine Legislature has been secured. The orders of the said board of directors in this respect may be modified or repealed at any time, provided they are approved in each case by the Governor-General and the presiding officers of both Houses of the Legislature.
"Section 20. The president of the National Bank shall, " before assuming charge of the government thereof, furnish bond in a sum of not less than two hundred and fifty thousand pesos, and the vice-president shall furnish bond in the sum of one hundred thousand pesos for the faithful performance of their duties.
"Section 21. All the other officers and employees of said National Bank or any branch thereof, shall, if and as required by the board of directors of said bank, before entering upon the performance of their duties, furnish a fidelity bond for the benefit of said National Bank, in the form and amount prescribed by the board of directors of the National Bank. For this purpose, and for this purpose alone, all officers and employees of the National Bank of whom a bond is required shall be deemed public officers and employees, respectively, and the provisions of Act Numbered Twenty-four hundred and thirty-six, of the Philippine Legislature, creating the fidelity fund, are hereby made applicable to all said officers and employees.
"Section 22. The Attorney-General of the Philippine Islands shall be attorney for said National Bank and may, whenever he may deem it proper, in specific cases delegate his duties to the fiscal of the city of Manila or any provincial fiscal, as the case may be: Provided, however, That the board of directors of said bank shall have power to employ such additional attorneys as may be necessary.
"Section 23. The Insular Auditor shall be ex officio auditor of the National Bank and it shall be his duty to make an examination of the books pf the bank and report thereon at least once each year to the Governor-General of the Philippine Islands, through the Secretary of Finance, and to the board of directors of said bank. The cost of such examination and report shall be reimbursed by said bank.
"Section 24. The National Bank shall be subject to inspection by the Insular Treasurer with regard to its solvency in the manner provided by law.
"Section 25. The Secretary of Finance, the Insular Treasurer, and the Insular Auditor are hereby prohibited from owning stock in the National Bank, or from becoming indebted to said National Bank, directly or indirectly, in any sum.
"Section 26. The Insular Treasurer and Auditor, or other officers designated by law to inspect or investigate the condition of said National Bank, shall not reveal to any person other than the Governor-General, the Secretary of Finance, and the board of directors the details of the inspection or investigation, nor shall they give any information relative to the funds in its custody, its current accounts or deposits belonging to private individuals, corporations, or any other entity, except by order of a court of competent jurisdiction.
"Section 27. The president of the National Bank shall be appointed for a term of six years, and shall receive an annual salary of twenty-four thousand pesos. The vice-president shall hold office for a like term as the president and shall receive a salary of twelve thousand pesos: Provided, however, That the vice-president shall receive the same salary as the president when acting in the stead of the latter. The other five members of the board of directors shall hold office for one year and receive per diems of twenty pesos for each meeting actually attended by them.
"Section 28. The stockholders shall meet on the first Tuesday after the first Monday in March of each year to elect the five directors or members of the board of directors for the current year, each stockholder or his authorized proxy being entitled to as many votes as there were shares registered in his name on January thirty-first immediately preceding and owned by him on the date of election.
"Section 29. The board of directors created by section seventeen of this Act shall have general supervision, management, and control of the affairs of said bank and shall from time to time fix the rate of interest, discount or exchange to be charged by said bank and make public announcement of the same at the head office. The board of directors may also fix different rates of interest on loans in accordance with the different classes of securities herein specified: Provided, That the said National Bank shall require definite security in written form to protect each and every loan, discount, or other advance of funds made by it. The board of directors shall make and publish semiannually a general balance of the business of said bank.
"Section 30. The said National Bank, by this Act created, may establish branches or agencies in the United States of America and in other countries at such points as may be determined upon by the board of directors of the said National Bank. It shall be the function of each of the said agencies-
"(a) To receive, transmit, and disburse any funds of the Philippine Government payable in the United States.
"(b) To receive, transmit, and disburse any funds of the United States Government which may be placed on deposit with, or entrusted to it.
"(c) To receive, transmit, and disburse any funds of individuals, firms/ companies, or corporations engaged in business with the Philippine Islands, or having interests therein..
"(d) To engage in business to the extent permitted by law of the United States with the Federal Reserve Bank of the district in which said branches or agencies may be located, and if and when permitted by law of the United States, to conduct a deposit and discount business with the said Federal Reserve Bank to the extent that conditions may require, under the instructions of the board of directors of said National Bank.
"Section 31. The National Bank may establish branch banks in the provincial capitals and in those municipalities in which, in the judgment of the board of directors, the industrial, commercial, or agricultural movement may require it. The agents and other officers and employees of said branch banks shall be appointed and may be removed in accordance with the provisions of section nineteen of this Act, and shall furnish bond in a sum to be fixed in each case by the Board of Directors.
"With the authorization of the Secretary of the Interior first had, the board of directors may appoint as agents, cashiers, or tellers of said banks the provincial or municipal treasurers, who shall in this case furnish such bond and receive such additional compensation as the bank may determine, and shall be removable from office, not only as such agents, cashiers, or tellers, but also as such provincial or municipal treasurers, by the Governor-General, for violation of the provisions of this Act or of the by-laws of the bank or any instructions received by them from said bank.
"Section 32. The branch banks of the National Bank are authorized to exercise the powers conferred upon them by the board of directors of the bank.
"Section 33. The branch banks shall make detailed daily reports of their transactions to the Central Office of the National Bank at Manila, and shall submit to a periodical examination by an examiner to be designated by the board of directors of the National Bank.
"Section 34. Nothing contained in this Act shall be construed to prevent the National Bank from taking over and extending upon terms and conditions which to the board of directors shall seem just for a period of not exceeding five years the loans already made and outstanding at the time of the passage of this Act by private banks with Government funds deposited in said banks, but in no event shall the amount of said loans thus taken over by the National Bank exceed one million five hundred thousand pesos, and no part of such loans so taken over shall be considered as subject to any restrictions elsewhere provided in this Act as to the amount of its capital which may be used by said bank for any specific purpose, and in this case it shall be the duty of the Insular Treasurer to keep on deposit in the National Bank a sum equivalent to the total amount of said loans for a period of time not exceeding five years.
"Section 35. The National Bank shall not, directly or indirectly, grant loans to any of the members of the board of directors of the bank nor to agents of the branch banks.
"Section 36. The National Bank is hereby authorized to purchase and own such real estate as may be necessary for the purpose of carrying on its business. It is also authorized to hold such real estate as it may find necessary to acquire in the collection of debts due to the said bank or to its branches; but real estate acquired in the collection of debts shall be sold by the said bank within five years after the date of its acquisition.
"Section 37. The bank is hereby authorized to erect bonded warehouses for depositing therein the goods given to it in pledge, in any provincial capital or any municipality where the commercial movement or industrial or agricultural importance of the place may require it.
"Section 38. The mortgagor shall have the right, within one year after the sale of real estate as a result of the foreclosure of a mortgage, to redeem the property by paying the amount fixed by the court in the order of execution, with interest thereon at the rate specified in the mortgage, and all the costs and other judicial expenses incurred by the bank by reason of the execution and sale and for the custody of said property.
"Section 39. If, from any cause whatsoever, any of the securities specified for the loans provided for in this Act or accepted by said bank as security for loans or discount decline or depreciate in market value in part or as a whole, or on nonperformance of any promise made to secure the loan or discount, or upon nonpayment of any liability under a loan or discount, or upon bills of exchange, notes, and checks, the said bank may demand additional securities or may forthwith declare any such obligation due and payable and upon twenty-four hours' notice, if practicable, or without such notice, if otherwise demand, sell, assign, transfer, and deliver the whole of said securities or any part thereof, or any substitutes therefor, or any additions thereto, or any other securities or property given unto or left in the possession of, or thereafter given unto or left in the possession of the said bank for safekeeping or otherwise, at any brokers' board or at public or private sale, at the option of said bank, without either demand, advertisement, or notice of any kind, and at such sale, if public, the said bank may itself purchase the whole or any part of the property sold, free from any right of redemption on the part of the mortgagor or pledgor. In case of sale for any cause, after deducting all costs or expenses of any kind for collection, sale or delivery, the said bank may apply the residue of the proceeds of the sale so made, to pay one or more or any or all of the said liabilities to the said bank, as its President shall deem proper, whether then due or not due, making proper rebate for interest on liabilities not then due, returning the over plus, if any, to the mortgagor or pledgor who shall remain liable to and pay to said Bank for any deficiency arising upon such sale or sales.
"Section 40. If the proceeds of the sale of securities held as collateral for loans by said bank do not cover the full amount of the loan, together with interest and other charges thereon, the bank may proceed against the debtor for the difference, but any amount exceeding the full indebtedness to the bank shall be paid to the debtor.
"Section 41. The provisions of Act Numbered Seventeen hundred and fifty-four and its amendments are hereby made applicable to violations of the law consisting in the making, or causing to be made, and circulating, or causing to be circulated, forged notes and bonds in imitation of those of the National Bank.
"Section 42. No fee or charge of any kind by way of commission shall be exacted, demanded or paid, for obtaining loans, and any officer, employee, or agent of the bank exacting, demanding, or receiving any fee for service in obtaining a loan or for use of his influence to obtain a loan shall be punished as hereafter established for violation of this Act.
"Section 43. After deduction of the administration expenses, the net profits or gains resulting from the operations of said National Bank shall be apportioned semiannually as follows:
"For the creation and maintenance of a reserve, a sum equal to fifty per centum of the net profits.ℒαwρhi৷ The remaining fifty per centum shall be distributed among the stockholders in the form of dividends: Provided, however, That the dividends so to be distributed shall not exceed in any calendar year twelve per centum of the paid up capital: And provided, further, That in case there is a surplus after the necessary provision has been made for the reserve and dividend above mentioned, such surplus shall be transferred to the account of undivided profits.
"Section 44. All profits assigned as dividends to the shares of the Government shall be paid into the Insular Treasury, for the general funds thereof.
"Section 45. The legal existence of the Philippine National Bank created by this Act shall be for a period of fifty years, counting from the day on which it began officially its operations. This period may be extended for fifty years more by an Act of the Philippine Legislature.
"Section 46. All banks not organized and transacting business under a charter granted by the Philippine Legislature expressly exempting them from the restrictions and penalties of this section, and all persons or corporations doing the business of bankers, brokers, or savings institutions, are prohibited from using the word "national" as a portion of the name or title of such bank, corporation, firm or partnership; and any violation of this prohibition committed after ninety days subsequent to the date of enactment of this Act shall subject the party chargeable therewith to a penalty of not less than one hundred pesos for each day during which it is committed or repeated.
"Section 47. The board of directors of the National Bank is hereby authorized to adopt the necessary regulations for its operation, in conformity with this Act and the Corporation Law.
"Section 48. All Acts or parts of Acts inconsistent or incompatible with the provisions of this Act are hereby repealed.
''Section 49. Any person who shall violate any of the provisions of this Act shall be punished by a fine not to exceed ten thousand pesos, or by imprisonment not to exceed five years, or by both such fine and imprisonment.
"Section 50. The Philippine National Bank shall at all times keep on hand in its vaults or with the Treasury of the Philippine Islands a sum in lawful money either of the Philippine Islands or of the United States which shall be computed as follows:
"Thirty-three and one-third per cent of the circulating-notes outstanding not covered by gold coin as provided in section eighteen of Act Numbered Twenty-six hundred and twelve, as amended by this Act.
"Twenty-five per cent of the demand deposits outstanding and credited on its books, except such funds as are on deposit with solvent banks in the United States and collate rated by securities approved by the Insular Treasurer, or in solvent banks approved by the Insular Treasurer; ten per cent of the certificates of fixed deposit maturing within one year from the date upon which the computation is made, or sixty-six and two-thirds per cent of those maturing within thirty days from such date : Provided, That if the Philippine National Bank shall have funds subject to check with National Banks or Federal Reserve Banks of the United States, such funds may be considered as constituting a part of the twenty-five per cent and ten per cent specified in this section up to a sum to be fixed from time to time by the Secretary of Finance, with the approval of the Governor-General.
"Section 51. The Philippine National Bank is hereby authorized to guarantee, both as to principal and interest, or either, bonds issued by duly incorporated companies for the erection of and addition or additions to industrial plants or manufactories principally used for the manufacture and preparation of the products of the Philippine Islands: Provided, however, That such guarantee shall only be lawful when approved by a committee composed of the Governor-General of the Philippine Islands and the Presiding Officers of the two Houses of the Philippine Legislature.
"Subject to the same approval, the National Bank is hereby authorized to purchase bonds issued by any duly incorporated company engaged in the manufacture or preparation of products of the Philippine Islands. Such bonds shall be secured by a first mortgage or deed of trust on the property of the company. The face value of the bonds issued and secured by such mortgage or deed of trust shall not exceed sixty per cent (60%) of the fair value of the property securing the bonds. The property serving as security for the bonds shall consist of land, buildings, machinery, and equipment of such company in the Philippine Islands."
Section 2. This Act shall take effect on its approval.
Approved, February 20, 1918.
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