Anti-Money Laundering Act of 2001 (RA 9160)

AN ACT DEFINING THE CRIME OF MONEY LAUNDERING, PROVIDING PENALTIES THEREFOR AND FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: SECTION 1. Short Title. This Act shall be known as the "Anti-Money Laundering Act of 2001." SEC. 2. Declaration of Policy. It is hereby declared the policy of the State to protect and preserve the integrity and confidentiality of bank accounts and to ensure that the Philippines shall not be used as a money laundering site for the proceeds of any unlawful activity. Consistent with its foreign policy, the State shall extend cooperation in transnational investigations and prosecutions of persons involved in money laundering activities wherever committed. SEC. 3. Definitions. For purposes of this Act, the following terms are hereby defined as follows: (a) "Covered institution" refers to: (1) banks, non-banks, quasi-banks, trust entities, and all other institutions and their subsidiaries and affiliates supervised or regulated by the Bangko Sentral ng Pilipinas (BSP); (2) insurance companies and all other institutions supervised or regulated by the Insurance Commission; and (3) (i) securities dealers, brokers, salesmen, investment houses and other similar entities managing securities or rendering services as investment agent, advisor, or consultant, (ii) mutual funds, close-end investment companies, common trust funds, pre-need companies and other similar entities, (iii) foreign exchange corporations, money changers, money payment, remittance, and transfer companies and other similar entities, and (iv) other entities administering or otherwise dealing in currency, commodities or financial derivatives based thereon, valuable objects, cash substitutes and other similar monetary instruments or property supervised or regulated by Securities and Exchange Commission and Exchange Commission (b) "Covered transaction" is a single, series, or combination of transactions involving a total amount in excess of Four million Philippine pesos (Php4,000,000.00) or an equivalent amount in foreign currency based on the prevailing exchange rate within five (5) consecutive banking days except those between a covered institution and a person who, at the time of the transaction was a properly identified client and the amount is commensurate with the business or financial capacity of the client; or those with an underlying legal or trade obligation, purpose, origin or economic justification. It likewise refers to a single, series or combination or pattern of unusually large and complex transactions in excess of Four million Philippine pesos (Php4,000,000.00) especially cash deposits and investments having no credible purpose or origin, underlying trade obligation or contract. (c) "Monetary instrument" refers to: (1) coins or currency of legal tender of the Philippines, or of any other country; (2) drafts, checks and notes; (3) securities or negotiable instruments, bonds, commercial papers, deposit certificates, trust certificates, custodial receipts or deposit substitute instruments, trading orders, transaction tickets and confirmations of sale or investments and money market instruments; and (4) other similar instruments where title thereto passes to another by endorsement, assignment or delivery. (d) "Offender" refers to any person who commits a money laundering offense. (e) "Person" refers to any natural or juridical person. (f) "Proceeds" refers to an amount derived or realized from an unlawful activity.

(g) "Supervising Authority" refers to the appropriate supervisory or regulatory agency, department or office supervising or regulating the covered institutions enumerated in Section 3(a). (h) "Transaction" refers to any act establishing any right or obligation or giving rise to any contractual or legal relationship between the parties thereto. It also includes any movement of funds by any means with a covered institution. (i) "Unlawful activity" refers to any act or omission or series or combination thereof involving or having relation to the following: (1) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise known as the Revised Penal Code, as amended; (2) Sections 3, 4, 5, 7, 8 and 9 of Article Two of Republic Act No. 6425, as amended, otherwise known as the Dangerous Drugs Act of 1972; (3) Section 3 paragraphs B, C, E, G, H and I of Republic Act No. 3019, as amended; otherwise known as the Anti-Graft and Corrupt Practices Act; (4) Plunder under Republic Act No. 7080, as amended; (5) Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of the Revised Penal Code, as amended; (6) Jueteng and Masiao punished as illegal gambling under Presidential Decree No. 1602; (7) Piracy on the high seas under the Revised Penal Code, as amended and Presidential Decree No. 532; (8) Qualified theft under Article 310 of the Revised Penal Code, as amended; (9) Swindling under Article 315 of the Revised Penal Code, as amended; (10) Smuggling under Republic Act Nos. 455 and 1937; (11) Violations under Republic Act No. 8792, otherwise known as the Electronic Commerce Act of 2000; (12) Hijacking and other violations under Republic Act No. 6235; destructive arson and murder, as defined under the Revised Penal Code, as amended, including those perpetrated by terrorists against non-combatant persons and similar targets; (13) Fraudulent practices and other violations under Republic Act No. 8799, otherwise known as the Securities Regulation Code of 2000; (14) Felonies or offenses of a similar nature that are punishable under the penal laws of other countries. SEC. 4. Money Laundering Offense. Money laundering is a crime whereby the proceeds of an unlawful activity are transacted, thereby making them appear to have originated from legitimate sources. It is committed by the following: (a) Any person knowing that any monetary instrument or property represents, involves, or relates to, the proceeds of any unlawful activity, transacts or attempts to transact said monetary instrument or property. (b) Any person knowing that any monetary instrument or property involves the proceeds of any unlawful activity, performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to in paragraph (a) above. (c) Any person knowing that any monetary instrument or property is required under this Act to be disclosed and filed with the Anti-Money Laundering Council (AMLC), fails to do so. SEC. 5. Jurisdiction of Money Laundering Cases. The regional trial courts shall have jurisdiction to try all cases on money laundering. Those committed by public officers and private persons who are in conspiracy with such public officers shall be under the jurisdiction of the Sandiganbayan.

SEC. 6. Prosecution of Money Laundering. (a) Any person may be charged with and convicted of both the offense of money laundering and the unlawful activity as herein defined. (b) Any proceeding relating to the unlawful activity shall be given precedence over the prosecution of any offense or violation under this Act without prejudice to the freezing and other remedies provided. SEC. 7. Creation of Anti-Money Laundering Council (AMLC). The Anti-Money Laundering Council is hereby created and shall be composed of the Governor of the Bangko Sentral ng Pilipinas as chairman, the Commissioner of the Insurance Commission and the Chairman of the Securities and Exchange Commission as members. The AMLC shall act unanimously in the discharge of its functions as defined hereunder: (1) to require and receive covered transaction reports from covered institutions; (2) to issue orders addressed to the appropriate Supervising Authority or the covered institution to determine the true identity of the owner of any monetary instrument or property subject of a covered transaction report or request for assistance from a foreign State, or believed by the Council, on the basis of substantial evidence, to be, in whole or in part, wherever located, representing, involving, or related to, directly or indirectly, in any manner or by any means, the proceeds of an unlawful activity; (3) to institute civil forfeiture proceedings and all other remedial proceedings through the Office of the Solicitor General; (4) to cause the filing of complaints with the Department of Justice or the Ombudsman for the prosecution of money laundering offenses; (5) to initiate investigations of covered transactions, money laundering activities and other violations of this Act; (6) to freeze any monetary instrument or property alleged to be proceeds of any unlawful activity; (7) to implement such measures as may be necessary and justified under this Act to counteract money laundering; (8) to receive and take action in respect of, any request from foreign states for assistance in their own antimoney laundering operations provided in this Act; (9) to develop educational programs on the pernicious effects of money laundering, the methods and techniques used in money laundering, the viable means of preventing money laundering and the effective ways of prosecuting and punishing offenders; and (10) to enlist the assistance of any branch, department, bureau, office, agency or instrumentality of the government, including government-owned and -controlled corporations, in undertaking any and all anti-money laundering operations, which may include the use of its personnel, facilities and resources for the more resolute prevention, detection and investigation of money laundering offenses and prosecution of offenders. SEC. 8. Creation of a Secretariat. The AMLC is hereby authorized to establish a secretariat to be headed by an Executive Director who shall be appointed by the Council for a term of five (5) years. He must be a member of the Philippine Bar, at least thirty-five (35) years of age and of good moral character, unquestionable integrity and known probity. All members of the Secretariat must have served for at least five (5) years either in the Insurance Commission, the Securities and Exchange Commission or the Bangko Sentral ng Pilipinas (BSP) and shall hold full-time permanent positions within the BSP. SEC. 9. Prevention of Money Laundering; Customer Identification Requirements and Record Keeping. (a) Customer Identification. - Covered institutions shall establish and record the true identity of its clients based on official documents. They shall maintain a system of verifying the true identity of their clients and, in case of corporate clients, require a system of verifying their legal existence and organizational structure, as well as the authority and identification of all persons purporting to act on their behalf.The provisions of existing laws to the contrary notwithstanding, anonymous accounts, accounts under fictitious names, and all other similar accounts shall be absolutely prohibited. Peso and foreign currency non-checking numbered accounts shall be allowed.

The BSP may conduct annual testing solely limited to the determination of the existence and true identity of the owners of such accounts. (b) Record Keeping. - All records of all transactions of covered institutions shall be maintained and safely stored for five (5) years from the dates of transactions. With respect to closed accounts, the records on customer identification, account files and business correspondence, shall be preserved and safely stored for at least five (5) years from the dates when they were closed. (c) Reporting of Covered Transactions. - Covered institutions shall report to the AMLC all covered transactions within five (5) working days from occurrence thereof, unless the Supervising Authority concerned prescribes a longer period not exceeding ten (10) working days. When reporting covered transactions to the AMLC, covered institutions and their officers, employees, representatives, agents, advisors, consultants or associates shall not be deemed to have violated Republic Act No. 1405, as amended; Republic Act No. 6426, as amended; Republic Act No. 8791 and other similar laws, but are prohibited from communicating, directly or indirectly, in any manner or by any means, to any person the fact that a covered transaction report was made, the contents thereof, or any other information in relation thereto. In case of violation thereof, the concerned officer, employee, representative, agent, advisor, consultant or associate of the covered institution, shall be criminally liable. However, no administrative, criminal or civil proceedings, shall lie against any person for having made a covered transaction report in the regular performance of his duties and in good faith, whether or not such reporting results in any criminal prosecution under this Act or any other Philippine law. When reporting covered transactions to the AMLC, covered institutions and their officers, employees, representatives, agents, advisors, consultants or associates are prohibited from communicating, directly or indirectly, in any manner or by any means, to any person, entity, the media, the fact that a covered transaction report was made, the contents thereof, or any other information in relation thereto. Neither may such reporting be published or aired in any manner or form by the mass media, electronic mail, or other similar devices. In case of violation thereof, the concerned officer, employee, representative, agent, advisor, consultant or associate of the covered institution, or media shall be held criminally liable. SEC. 10. Authority to Freeze. Upon determination that probable cause exists that any deposit or similar account is in any way related to an unlawful activity, the AMLC may issue a freeze order, which shall be effective immediately, on the account for a period not exceeding fifteen (15) days. Notice to the depositor that his account has been frozen shall be issued simultaneously with the issuance of the freeze order. The depositor shall have seventy-two (72) hours upon receipt of the notice to explain why the freeze order should be lifted. The AMLC has seventy-two (72) hours to dispose of the depositors explanation. If it fails to act within seventy-two (72) hours from receipt of the depositors explanation, the freeze order shall automatically be dissolved. The fifteen (15)-day freeze order of the AMLC may be extended upon order of the court, provided that the fifteen (15)-day period shall be tolled pending the courts decision to extend the period. No court shall issue a temporary restraining order or writ of injunction against any freeze order issued by the AMLC except the Court of Appeals or the Supreme Court. SEC. 11. Authority to Inquire into Bank Deposits. Notwithstanding the provisions of Republic Act No. 1405, as amended; Republic Act No. 6426, as amended; Republic Act No. 8791, and other laws, the AMLC may inquire into or examine any particular deposit or investment with any banking institution or non-bank financial institution upon order of any competent court in cases of violation of this Act when it has been established that there is probable cause that the deposits or investments involved are in any way related to a money laundering offense: Provided, That this provision shall not apply to deposits and investments made prior to the effectivity of this Act. SEC. 12. Forfeiture Provisions. (a) Civil Forfeiture. - When there is a covered transaction report made, and the court has, in a petition filed for the purpose ordered seizure of any monetary instrument or property, in whole or in part, directly or indirectly, related to said report, the Revised Rules of Court on civil forfeiture shall apply. (b) Claim on Forfeited Assets. - Where the court has issued an order of forfeiture of the monetary instrument or property in a criminal prosecution for any money laundering offense defined under Section 4 of this Act, the offender or any other person claiming an interest therein may apply, by verified petition, for a declaration that the same legitimately belongs to him and for segregation or exclusion of the monetary instrument or property

corresponding thereto. The verified petition shall be filed with the court which rendered the judgment of conviction and order of forfeiture, within fifteen (15) days from the date of the order of forfeiture, in default of which the said order shall become final and executory. This provision shall apply in both civil and criminal forfeiture. (c) Payment in Lieu of Forfeiture. - Where the court has issued an order of forfeiture of the monetary instrument or property subject of a money laundering offense defined under Section 4, and said order cannot be enforced because any particular monetary instrument or property cannot, with due diligence, be located, or it has been substantially altered, destroyed, diminished in value or otherwise rendered worthless by any act or omission, directly or indirectly, attributable to the offender, or it has been concealed, removed, converted or otherwise transferred to prevent the same from being found or to avoid forfeiture thereof, or it is located outside the Philippines or has been placed or brought outside the jurisdiction of the court, or it has been commingled with other monetary instruments or property belonging to either the offender himself or a third person or entity, thereby rendering the same difficult to identify or be segregated for purposes of forfeiture, the court may, instead of enforcing the order of forfeiture of the monetary instrument or property or part thereof or interest therein, accordingly order the convicted offender to pay an amount equal to the value of said monetary instrument or property. This provision shall apply in both civil and criminal forfeiture. SEC. 13. Mutual Assistance among States. (a) Request for Assistance from a Foreign State. - Where a foreign State makes a request for assistance in the investigation or prosecution of a money laundering offense, the AMLC may execute the request or refuse to execute the same and inform the foreign State of any valid reason for not executing the request or for delaying the execution thereof. The principles of mutuality and reciprocity shall, for this purpose, be at all times recognized. (b) Powers of the AMLC to Act on a Request for Assistance from a Foreign State. - The AMLC may execute a request for assistance from a foreign State by: (1) tracking down, freezing, restraining and seizing assets alleged to be proceeds of any unlawful activity under the procedures laid down in this Act; (2) giving information needed by the foreign State within the procedures laid down in this Act; and (3) applying for an order of forfeiture of any monetary instrument or property in the court: Provided, That the court shall not issue such an order unless the application is accompanied by an authenticated copy of the order of a court in the requesting State ordering the forfeiture of said monetary instrument or property of a person who has been convicted of a money laundering offense in the requesting State, and a certification or an affidavit of a competent officer of the requesting State stating that the conviction and the order of forfeiture are final and that no further appeal lies in respect of either. (c) Obtaining Assistance from Foreign States. - The AMLC may make a request to any foreign State for assistance in (1) tracking down, freezing, restraining and seizing assets alleged to be proceeds of any unlawful activity; (2) obtaining information that it needs relating to any covered transaction, money laundering offense or any other matter directly or indirectly related thereto; (3) to the extent allowed by the law of the foreign State, applying with the proper court therein for an order to enter any premises belonging to or in the possession or control of, any or all of the persons named in said request, and/or search any or all such persons named therein and/or remove any document, material or object named in said request: Provided, That the documents accompanying the request in support of the application have been duly authenticated in accordance with the applicable law or regulation of the foreign State; and (4) applying for an order of forfeiture of any monetary instrument or property in the proper court in the foreign State: Provided, That the request is accompanied by an authenticated copy of the order of the regional trial court ordering the forfeiture of said monetary instrument or property of a convicted offender and an affidavit of the clerk of court stating that the conviction and the order of forfeiture are final and that no further appeal lies in respect of either. (d) Limitations on Requests for Mutual Assistance. - The AMLC may refuse to comply with any request for assistance where the action sought by the request contravenes any provision of the Constitution or the execution of a request is likely to prejudice the national interest of the Philippines unless there is a treaty between the Philippines and the requesting State relating to the provision of assistance in relation to money laundering offenses. (e) Requirements for Requests for Mutual Assistance from Foreign States. - A request for mutual assistance from a foreign State must (1) confirm that an investigation or prosecution is being conducted in respect of a money launderer named therein or that he has been convicted of any money laundering offense; (2) state the grounds on which any person is being investigated or prosecuted for money laundering or the details of his conviction; (3) give sufficient particulars as to the identity of said person; (4) give particulars sufficient to

identify any covered institution believed to have any information, document, material or object which may be of assistance to the investigation or prosecution; (5) ask from the covered institution concerned any information, document, material or object which may be of assistance to the investigation or prosecution; (6) specify the manner in which and to whom said information, document, material or object obtained pursuant to said request, is to be produced; (7) give all the particulars necessary for the issuance by the court in the requested State of the writs, orders or processes needed by the requesting State; and (8) contain such other information as may assist in the execution of the request. (f) Authentication of Documents. - For purposes of this Section, a document is authenticated if the same is signed or certified by a judge, magistrate or equivalent officer in or of, the requesting State, and authenticated by the oath or affirmation of a witness or sealed with an official or public seal of a minister, secretary of State, or officer in or of, the government of the requesting State, or of the person administering the government or a department of the requesting territory, protectorate or colony. The certificate of authentication may also be made by a secretary of the embassy or legation, consul general, consul, vice consul, consular agent or any officer in the foreign service of the Philippines stationed in the foreign State in which the record is kept, and authenticated by the seal of his office. (g) Extradition. - The Philippines shall negotiate for the inclusion of money laundering offenses as herein defined among extraditable offenses in all future treaties. SEC. 14. Penal Provisions. (a) Penalties for the Crime of Money Laundering. The penalty of imprisonment ranging from seven (7) to fourteen (14) years and a fine of not less than Three million Philippine pesos (Php 3,000,000.00) but not more than twice the value of the monetary instrument or property involved in the offense, shall be imposed upon a person convicted under Section 4(a) of this Act. The penalty of imprisonment from four (4) to seven (7) years and a fine of not less than One million five hundred thousand Philippine pesos (Php1,500,000.00) but not more than Three million Philippine pesos (Php3,000,000.00), shall be imposed upon a person convicted under Section 4(b) of this Act. The penalty of imprisonment from six (6) months to four (4) years or a fine of not less than One hundred thousand Philippine pesos (Php100,000.00) but not more than Five hundred thousand Philippine pesos (Php500,000.00), or both, shall be imposed on a person convicted under Section 4(c) of this Act. (b) Penalties for Failure to Keep Records. The penalty of imprisonment from six (6) months to one (1) year or a fine of not less than One hundred thousand Philippine pesos (Php100,000.00) but not more than Five hundred thousand Philippine pesos (Php500,000.00), or both, shall be imposed on a person convicted under Section 9(b) of this Act. (c) Malicious Reporting. Any person who, with malice, or in bad faith, reports or files a completely unwarranted or false information relative to money laundering transaction against any person shall be subject to a penalty of six (6) months to four (4) years imprisonment and a fine of not less than One hundred thousand Philippine pesos (Php100, 000.00) but not more than Five hundred thousand Philippine pesos (Php500, 000.00), at the discretion of the court: Provided, That the offender is not entitled to avail the benefits of the Probation Law. If the offender is a corporation, association, partnership or any juridical person, the penalty shall be imposed upon the responsible officers, as the case may be, who participated in the commission of the crime or who shall have knowingly permitted or failed to prevent its commission. If the offender is a juridical person, the court may suspend or revoke its license. If the offender is an alien, he shall, in addition to the penalties herein prescribed, be deported without further proceedings after serving the penalties herein prescribed. If the offender is a public official or employee, he shall, in addition to the penalties prescribed herein, suffer perpetual or temporary absolute disqualification from office, as the case may be. Any public official or employee who is called upon to testify and refuses to do the same or purposely fails to testify shall suffer the same penalties prescribed herein. (d) Breach of Confidentiality. The punishment of imprisonment ranging from three (3) to eight (8) years and a fine of not less than Five hundred thousand Philippine pesos (Php500,000.00) but not more than One million Philippine pesos (Php1,000,000.00), shall be imposed on a person convicted for a violation under Section 9(c).

SEC. 15. System of Incentives and Rewards. A system of special incentives and rewards is hereby established to be given to the appropriate government agency and its personnel that led and initiated an investigation, prosecution and conviction of persons involved in the offense penalized in Section 4 of this Act. SEC. 16. Prohibitions Against Political Harassment. This Act shall not be used for political persecution or harassment or as an instrument to hamper competition in trade and commerce. No case for money laundering may be filed against and no assets shall be frozen, attached or forfeited to the prejudice of a candidate for an electoral office during an election period. SEC. 17. Restitution. Restitution for any aggrieved party shall be governed by the provisions of the New Civil Code. SEC. 18. Implementing Rules and Regulations. Within thirty (30) days from the effectivity of this Act, the Bangko Sentral ng Pilipinas, the Insurance Commission and the Securities and Exchange Commission shall promulgate the rules and regulations to implement effectively the provisions of this Act. Said rules and regulations shall be submitted to the Congressional Oversight Committee for approval. Covered institutions shall formulate their respective money laundering prevention programs in accordance with this Act including, but not limited to, information dissemination on money laundering activities and its prevention, detection and reporting, and the training of responsible officers and personnel of covered institutions. SEC. 19. Congressional Oversight Committee. There is hereby created a Congressional Oversight Committee composed of seven (7) members from the Senate and seven (7) members from the House of Representatives. The members from the Senate shall be appointed by the Senate President based on the proportional representation of the parties or coalitions therein with at least two (2) Senators representing the minority. The members from the House of Representatives shall be appointed by the Speaker also based on proportional representation of the parties or coalitions therein with at least two (2) members representing the minority. The Oversight Committee shall have the power to promulgate its own rules, to oversee the implementation of this Act, and to review or revise the implementing rules issued by the Anti-Money Laundering Council within thirty (30) days from the promulgation of the said rules. SEC. 20. Appropriations Clause. The AMLC shall be provided with an initial appropriation of Twenty-five million Philippine pesos (Php25,000,000.00) to be drawn from the national government. Appropriations for the succeeding years shall be included in the General Appropriations Act. SEC. 21. Separability Clause. If any provision or section of this Act or the application thereof to any person or circumstance is held to be invalid, the other provisions or sections of this Act, and the application of such provision or section to other persons or circumstances, shall not be affected thereby. SEC. 22. Repealing Clause. All laws, decrees, executive orders, rules and regulations or parts thereof, including the relevant provisions of Republic Act No. 1405, as amended; Republic Act No. 6426, as amended; Republic Act No. 8791, as amended and other similar laws, as are inconsistent with this Act, are hereby repealed, amended or modified accordingly. SEC. 23. Effectivity. This Act shall take effect fifteen (15) days after its complete publication in the Official Gazette or in at least two (2) national newspapers of general circulation.

Republic Act 9194

Republic of the Philippines Congress of the Philippines Metro Manila Twelfth Congress Second Regular Session Begun and held in Metro Manila, on Monday, the twenty-second day of July, two thousand two.

[ REPUBLIC ACT NO. 9194 ] AN ACT AMENDING REPUBLIC ACT NO. 9160, OTHERWISE KNOWN AS THE "ANTI-MONEY LAUNDERING ACT OF 2001" Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: SECTION 1. Section 3, paragraph (b), of Republic Act No. 9160 is hereby amended as follows: "(b) 'Covered transaction' is a transaction in cash or other equivalent monetary instrument involving a total amount in excess of Five hundred thousand pesos (P500,000.00) within one (1) banking day." SEC. 2. Section 3 of the same Act is further amended by inserting between paragraphs (b) and (c) a new paragraph designated as (b-1) to read as follows: "(b-1) 'Suspicious transaction' are transactions with covered institutions, regardless of the amounts involved, where any of the following circumstances exist: "1. there is no underlying legal or trade obligation, purpose or economic justification; "2. the client is not properly identified; "3. the amount involved is not commensurate with the business or financial capacity of the client; "4. taking into account all known circumstances, it may be perceived that the clients transaction is structured in order to avoid being the subject of reporting requirements under the Act; "5. any circumstance relating to the transaction which is observed to deviate from the profile of the client and/or the clients past transactions with the covered institution; "6. the transaction is in any way related to an unlawful activity or offense under this Act that is about to be, is being or has been committed; or "7. any transaction that is similar or analogous to any of the foregoing." SEC. 3. Section 3(i) of the same Act is further amended to read as follows: "(i) 'Unlawful activity' refers to any act or omission or series or combination thereof involving or having direct relation to the following: "(1) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise known as the Revised Penal Code, as amended; "(2) Sections 4, 5, 6, 8, 9, 10, 12, 13, 14, 15, and 16 of Republic Act No. 9165, otherwise known as the Comprehensive Dangerous Drugs Act of 2002; "(3) Section 3 paragraphs B, C, E, G, H and I of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices Act; "(4) Plunder under Republic Act No. 7080, as amended; "(5) Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of the Revised Penal Code, as amended; "(6) Jueteng and Masiao punished as illegal gambling under Presidential Decree No. 1602; "(7) Piracy on the high seas under the Revised Penal Code, as amended and Presidential Decree No. 532; "(8) Qualified theft under Article 310 of the Revised Penal Code, as amended; "(9) Swindling under Article 315 of the Revised Penal Code, as amended; "(10) Smuggling under Republic Act Nos. 455 and 1937;

"(11) Violations under Republic Act No. 8792, otherwise known as the Electronic Commerce Act of 2000; "(12) Hijacking and other violations under Republic Act No. 6235; destructive arson and murder, as defined under the Revised Penal Code, as amended, including those perpetrated by terrorists against non-combatant persons and similar targets; "(13) Fraudulent practices and other violations under Republic Act No. 8799, otherwise known as the Securities Regulation Code of 2000; "(14) Felonies or offenses of a similar nature that are punishable under the penal laws of other countries." SEC. 4. Section 4 of the same Act is hereby amended to read as follows: "SEC. 4. Money Laundering Offense. Money laundering is a crime whereby the proceeds of an unlawful activity as herein defined are transacted, thereby making them appear to have originated from legitimate sources. It is committed by the following: "(a) Any person knowing that any monetary instrument or property represents, involves, or relates to, the proceeds of any unlawful activity, transacts or attempts to transact said monetary instrument or property. "(b) Any person knowing that any monetary instrument or property involves the proceeds of any unlawful activity, performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to in paragraph (a) above. "(c) Any person knowing that any monetary instrument or property is required under this Act to be disclosed and filed with the Anti-Money Laundering Council (AMLC), fails to do so." SEC. 5. Section 7 of the same Act is hereby amended as follows: "SEC. 7. Creation of Anti-Money Laundering Council (AMLC). The Anti-Money Laundering Council is hereby created and shall be composed of the Governor of the Bangko Sentral ng Pilipinas as chairman, the Commissioner of the Insurance Commission and the Chairman of the Securities and Exchange Commission as members. The AMLC shall act unanimously in the discharge of its functions as defined hereunder: "(1) to require and receive covered or suspicious transaction reports from covered institutions; "(2) to issue orders addressed to the appropriate Supervising Authority or the covered institution to determine the true identity of the owner of any monetary instrument or property subject of a covered transaction or suspicious transaction report or request for assistance from a foreign State, or believed by the Council, on the basis of substantial evidence, to be, in whole or in part, wherever located, representing, involving, or related to, directly or indirectly, in any manner or by any means, the proceeds of an unlawful activity. "(3) to institute civil forfeiture proceedings and all other remedial proceedings through the Office of the Solicitor General; "(4) to cause the filing of complaints with the Department of Justice or the Ombudsman for the prosecution of money laundering offenses; "(5) to investigate suspicious transactions and covered transactions deemed suspicious after an investigation by AMLC, money laundering activities, and other violations of this Act; "(6) to apply before the Court of Appeals, ex parte, for the freezing of any monetary instrument or property alleged to be the proceeds of any unlawful activity as defined in Section 3(i) hereof; "(7) to implement such measures as may be necessary and justified under this Act to counteract money laundering; "(8) to receive and take action in respect of, any request from foreign states for assistance in their own antimoney laundering operations provided in this Act;

"(9) to develop educational programs on the pernicious effects of money laundering, the methods and techniques used in money laundering, the viable means of preventing money laundering and the effective ways of prosecuting and punishing offenders; "(10) to enlist the assistance of any branch, department, bureau, office, agency or instrumentality of the government, including government-owned and -controlled corporations, in undertaking any and all anti-money laundering operations, which may include the use of its personnel, facilities and resources for the more resolute prevention, detection and investigation of money laundering offenses and prosecution of offenders; and "(11) to impose administrative sanctions for the violation of laws, rules, regulations and orders and resolutions issued pursuant thereto." SEC. 6. Section 9(c) of the same Act is hereby amended to read as follows: "(c) Reporting of Covered and Suspicious Transactions. Covered institutions shall report to the AMLC all covered transactions and suspicious transactions within five (5) working days from occurrence thereof, unless the Supervising Authority prescribes a longer period not exceeding ten (10) working days. "Should a transaction be determined to be both a covered transaction and a suspicious transaction, the covered institution shall be required to report the same as a suspicious transaction. "When reporting covered or suspicious transactions to the AMLC, covered institutions and their officers and employees shall not be deemed to have violated Republic Act No. 1405, as amended, Republic Act No. 6426, as amended, Republic Act No. 8791 and other similar laws, but are prohibited from communicating, directly or indirectly, in any manner or by any means, to any person, the fact that a covered or suspicious transaction report was made, the contents thereof, or any other information in relation thereto. In case of violation thereof, the concerned officer and employee of the covered institution shall be criminally liable. However, no administrative, criminal or civil proceedings, shall lie against any person for having made a covered or suspicious transaction report in the regular performance of his duties in good faith, whether or not such reporting results in any criminal prosecution under this Act or any other law. "When reporting covered or suspicious transactions to the AMLC, covered institutions and their officers and employees are prohibited from communicating directly or indirectly, in any manner or by any means, to any person or entity, the media, the fact that a covered or suspicious transaction report was made, the contents thereof, or any other information in relation thereto. Neither may such reporting be published or aired in any manner or form by the mass media, electronic mail, or other similar devices. In case of violation thereof, the concerned officer and employee of the covered institution and media shall be held criminally liable." SEC. 7. Section 10 of the same Act is hereby amended to read as follows: "SEC. 10. Freezing of Monetary Instrument or Property. The Court of Appeals, upon application ex parte by the AMLC and after determination that probable cause exists that any monetary instrument or property is in any way related to an unlawful activity as defined in Section 3(i) hereof, may issue a freeze order which shall be effective immediately. The freeze order shall be for a period of twenty (20) days unless extended by the court." SEC. 8. Section 11 of the same Act is hereby amended to read as follows: "SEC. 11. Authority to Inquire into Bank Deposits. Notwithstanding the provisions of Republic Act No. 1405, as amended, Republic Act No. 6426, as amended, Republic Act No. 8791, and other laws, the AMLC may inquire into or examine any particular deposit or investment with any banking institution or non-bank financial institution upon order of any competent court in cases of violation of this Act, when it has been established that there is probable cause that the deposits or investments are related to an unlawful activity as defined in Section 3(i) hereof or a money laundering offense under Section 4 hereof; except that no court order shall be required in cases involving unlawful activities defined in Sections 3(i)(1), (2) and (12). "To ensure compliance with this Act, the Bangko Sentral ng Pilipinas (BSP) may inquire into or examine any deposit or investment with any banking institution or non-bank financial institution when the examination is made in the course of a periodic or special examination, in accordance with the rules of examination of the BSP." SEC. 9. Section 14, paragraphs (c) and (d) of the same Act is hereby amended to read as follows:

"(c) Malicious Reporting. Any person who, with malice, or in bad faith, reports or files a completely unwarranted or false information relative to money laundering transaction against any person shall be subject to a penalty of six (6) months to four (4) years imprisonment and a fine of not less than One hundred thousand Philippine pesos (Php 100,000.00) but not more than Five hundred thousand Philippine pesos (Php 500,000.00), at the discretion of the court: Provided, That the offender is not entitled to avail the benefits of the Probation Law. "If the offender is a corporation, association, partnership or any juridical person, the penalty shall be imposed upon the responsible officers, as the case may be, who participated in, or allowed by their gross negligence, the commission of the crime. If the offender is a juridical person, the court may suspend or revoke its license. If the offender is an alien, he shall, in addition to the penalties herein prescribed, be deported without further proceedings after serving the penalties herein prescribed. If the offender is a public official or employee, he shall, in addition to the penalties prescribed herein, suffer perpetual or temporary absolute disqualification from office, as the case may be. "Any public official or employee who is called upon to testify and refuses to do the same or purposely fails to testify shall suffer the same penalties prescribed herein. "(d) Breach of Confidentiality. The punishment of imprisonment ranging from three (3) to eight (8) years and a fine of not less than Five hundred thousand Philippine pesos (Php 500,000.00) but not more than One million Philippine pesos (Php 1,000,000.00) shall be imposed on a person convicted for a violation under Section 9(c). In the case of a breach of confidentiality that is published or reported by media, the responsible reporter, writer, president, publisher, manager and editor-in-chief shall be liable under this Act." SEC. 10. Section 15 of Republic Act No. 9160 is hereby deleted. SEC. 11. Section 23 of the same Act is hereby amended to read as follows: "SEC. 23. Effectivity. This Act shall take effect fifteen (15) days after its complete publication in the Official Gazette or in at least two (2) national newspapers of general circulation." SEC. 12. Transitory Provision. Existing freeze orders issued by the AMLC shall remain in force for a period of thirty (30) days after the effectivity of this Act, unless extended by the Court of Appeals. SEC. 13. Effectivity. This Act shall take effect fifteen (15) days after its complete publication in the Official Gazette or in at least two (2) national newspapers of general circulation.

Republic Act No. 7353 (An Act Providing for the Creation, Organization and Operation of Rural Banks, and for Other Purposes)
Republic of the Philippines Congress of the Philippines Metro, Manila Fifth Regular Session Begun and held in Metro, Manila, on Monday, the twenty- second day of July, nineteen hundred and ninetyone. ____ REPUBLIC ACT NO. 7353 AN ACT PROVIDING FOR THE CREATION, ORGANIZATION AND OPERATION OF RURAL BANKS, AND FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. This Act shall be known and cited as the "Rural Act of 1992." Sec. 2. The State hereby recognizes the need to promote comprehensive rural development with the end in view of attaining acquitable distribution of opportunities, income and wealth; a sustained increase in the amount of goods and services produced by the nation of the benefit of the people; and in expanding productivity as a key raising the quality of life for all, especially the underprivileged. Towards these ends, the State hereby encourages and assists in the establishment of rural banking system designed to make needed credit available and readily accessible in the rural areas on reasonable terms. Sec. 3. In furtherance of this policy, the Monetary Board of the Central Bank of the Philippines shall formulate the necessary rules and regulations governing the establishment and operation of rural banks for the purpose of providing adequate credit facilities to farmers and merchants, or to cooperatives of such farmers and merchants and in general, the people of the rural communities, and to supervise the operation of such banks. Sec. 4. No rural bank shall be operated without a Certificate of Authority from the Monetary Board of the Central Bank. Rural banks shall be organized in the form of stock corporations. Upon consultation with the rural banks in the area, duly established cooperatives and corporations primarily organize to hold equities in rural banks may organize a rural bank and/or subscribe to the shares of stock of any rural bank: Provided, That a cooperative or corporation owning or controlling the whole or majority of the voting stock of the rural bank shall be subject to special examination and to such rules and regulations as the Monetary Board may prescribe. With exception of shareholdings of corporations organized primarily to hold equities in rural banks as provided for under Section 12-C of Republic Act 337, as amended, and of Filipino-controlled domestic banks, the capital stock of any rural bank shall be fully owned and held directly or indirectly by citizens of the Philippines or corporations, associations or cooperatives qualified under Philippine laws to own and hold such capital stock: Provided, That any provisions of existing laws to own and hold such capital stock: Provided, That any provision of existing laws to the contrary notwithstanding, stockholdings in a rural bank shall be exempt from any ownership ceiling for a period of ten (10) years from the approval of this Act: Provided, further, That any such exemption shall require the approval of the Monetary Board. If subscription of private shareholders to the capital stock of rural cannot be secured or is not available, or insufficient to meet the normal credit needs of the locality, the Land Bank of the Philippines, the Development Bank of the Philippines, or any government-owned or controlled bank or financial institution, on representation of the said private shareholders but subject to the investment guidelines, policies and procedures of the bank or financial institution and upon approval of the Monetary Board of the Central Bank, shall subscribe to the capital stock of such rural bank, which shall be paid in full at the time of subscription, in an amount equal to the fully paid subscribe and unimpaired capital of the private stockholders or such amount as the Monetary Board may prescribed as may be necessary to promote and expand rural economic development: Provided, however, That such shares of stock subscribe by the Land Bank of the Philippines, the Development Bank of the Philippines or any government-owned or controlled bank or financial institution may be sold at any time at market value to private individuals who are citizens of the Philippines: Provided, finally, That in the sale of shares of stock subscribed by the Land Bank of the Philippines, the Development bank of the Philippines or any government-owned or controlled bank or financial institution, the registered stockholders shall have the right of preemption within one (1) year from the date of offer in proportion to their respective holdings, but in the absence of such buyer, preference, however, shall be given to residents of the locality or province where the rural bank is located. Sec. 5. All members of the Board of Directors of the rural bank shall be citizens of the Philippines at the time of their assumption to office: Provided, however, That nothing in this Act shall be construed as prohibiting any appointive or elective public official from serving as director, officer, consultant or in any capacity in the bank. No Director or officer of any rural bank shall, either directly or indirectly, for himself or as the representative or agent of another borrow any of the deposits or funds of such banks, nor shall he become a guarantor, indorser, or surety for loans from such bank to others, or in any manner be an obligor for money borrowed from the bank or loaned by it except with the written approval of the majority of the directors of the bank, excluding the director concerned. Any such approval shall be entered upon the records of the corporation and a copy of such entry shall be transmitted forthwith to the appropriate supervising department. The director/officer of the bank who violates the provisions of this section shall be immediately dismissed from his office and shall be penalized in accordance with Section 26 of this Act. The Monetary Board may regulate the amount of credit accommodations that may be extended directly to the directors, officers or stockholders of rural banks of banking institutions. However, the outstanding credit accommodations which a rural bank may extend to each of its stockholders owning two percent (2%) or more of

the subscribed capital stock, its directors, or officers shall be limited to an amount equivalent to the respective outstanding deposits and book value of the paid-in capital contributions in the bank. Sec. 6. Loans or advances extended by rural banks organized and operated under this Act shall be primarily for the purpose of meeting the normal credit needs of farmers, fishermen or farm families owning or cultivating land dedicated to agricultural production as well as the normal credit needs of cooperatives and merchants. In granting of loans, the rural bank shall give preference to the application of farmers and merchant whose cash requirements are small. Loans may be granted by rural banks on the security of lands without Torrens Title where the owner of private property can show five (5) years on more peaceful, continuous and uninterrupted possession in concept of owner; or of portions of friar land estates or other lands administered by the Bureau of Lands that are covered by sales contracts and the purchase have paid at least five (5) years installment thereon, without the necessity of prior approval and consent by the Director of lands; or of portions of other estates under the administration of the Department of Agrarian Reform or other government agency which are likewise covered by sales contracts and the purchasers have paid at least five (5) years installment thereon, without the necessity of prior approval and consent of the Department of Agrarian Reform or corresponding government agency; or of homesteads or free patent lands pending the issuance of titles but already approved, are issued, the provisions of any law or regulations to the contrary notwithstanding: Provided, That when the corresponding titles are issued, the same shall be delivered to the Register of Deeds of the province where such lands are situated to the annotation of the encumbrance: Provided, further, That in the case of lands pending homestead of free patent titles, copies of notices for the presentation of the final proof shall also be furnished the creditor rural bank and, if the borrower applicants fail to present the final proof within thirty (30) days from date of notice, the creditor rural bank may do so for them at their expense: Provided, furthermore, That the applicant for homestead or free patent has already made improvements on the land and the loan applied for is to be used for further development of the same or for other productive economic activities: Provided, finally, That the appraisal and verification of the status of a land is a full responsibility of the rural bank and any loan granted on any land which shall be found later to be within the forest zone shall be for the sole account of the rural bank. The foreclosure of mortgage covering loans granted by rural banks and executions of judgment thereon involving real properties levied upon by a sheriff shall be exempt from the publications in newspaper now required by law where the total amount of loan, excluding interest due and unpaid, does not exceed One hundred thousand pesos (P100,000) or such amount as the Monetary Board may prescribe as may be warranted by prevailing economic conditions. It shall be sufficient publication in such cases if the notices of foreclosure and execution of judgment are posted in the most conspicuous area of the municipal building, the municipal public market, the rural bank, the barangay hall, the barangay public market, if any, where the land mortgaged is situated during the period of sixty (60) days immediately preceding the public auction or execution of judgment. Proof of publication as required herein shall be accomplished by an affidavit of the sheriff or officer conducting the foreclosure sale or execution of judgment and shall be attached with the records of the case: Provided, That when a homestead or free patent is foreclosed, the homesteader or free patent holder, as well as his heirs shall have the right to redeem the same within one (1) year from the date of the registration of the foreclosure in the case of land covered by a Torrens Title: Provided, finally, That in any case, borrowers, especially those who are mere tenants, need only to secure their loans with the procedure corresponding to their share. A rural bank shall be allowed to foreclose lands mortgaged to it: Provided, That said lands shall be covered under Republic Act No. 6657. Sec. 7. With the view to ensuring the balanced rural economic growth and expansion, rural banks may, within limits and conditions fixed by the Monetary Board, devote a portion of their loanable funds to meeting the normal credit needs of small business enterprises: provided, That loans shall not exceed fifteen percent (15%) of the net worth of a rural bank of such amount as the Monetary Board may prescribe as may be warranted by prevailing economic conditions, and of essential enterprises or industries, other than those which are strictly agricultural in nature. Sec. 8. To provide supplemental capital to any rural bank until it has accumulated enough capital of its own or stimulate private investments in rural banks, the Land Bank of the Philippines or any government-owned or controlled bank or financial institution shall subscribe within thirty (30) days to the capital stock of any rural bank from time to time in an amount equal to the total equity investment of the private shareholders which shall be paid in full at the time of the subscription of such amount as may be necessary to promote and expand rural economic development: Provided, however, That shares of stock issued to the Land Bank of the Philippines, the Development Bank of the Philippines or any government-owned or -controlled bank or financial institution,

may, pursuant to this section, at any time, be paid off at par and retired in whole or in part if the rural bank has accumulated enough capital strength to permit retirement of such shares; or if an offer is received from private sources to replace the equity investment of the Land Bank of the Philippines, the Development Bank of the Philippines or any government-owned or controlled bank or financial institution with an equivalent investment or more in the equity of such bank. In case of retirement of stock or replacement of equity investment of the Land Bank of the Philippines, the Development Bank of the Philippines or any government-owned or controlled bank or financial institution, the registered private shareholders of the rural bank shall have the right of preemption within one (1) year from the date of offer in proportion to their respective holdings. Stock held by the Land Bank of the Philippines, the Development Bank of the Philippines or by any government-owned or controlled bank or financial institution, under the terms of this section, shall be made preferred only as to assets upon liquidation and without power to vote and shall share in dividend distribution from the date of issuance in the amount of four percent (4%) on the first and second years, six percent (6%) on the third and fourth years, eight percent (8%) on the fifth and sixth years, ten percent (10%) on the seventh and eighth years and twelve percent (12%) on the ninth to the fifteen years without preference: Provided, however, That is such stock of the Land Bank of the Philippines, the Development bank of the Philippines or any government-owned or controlled bank or financial institution is sold to private shareholders, the same may be converted into common stock of the class provide for in Section 10 hereof: Provided, further, That pending the amendment of Articles of Incorporation of the rural bank, if necessary, for the purpose of reflecting the conversion into common stock of preferred stock sold to private stockholders, the transfer shall be recorded by the rural bank in the stock and transfer book and such shareholders shall thereafter enjoy all the rights and privileges of common stockholders. The preferred stocks so transferred shall be surrendered and cancelled and the corresponding common stocks shall be issued. The corporate secretary of the rural bank shall submit to the Central Bank and the Securities and Exchange Commission a report on every transfer of preferred stock to private shareholders, and such report received by the Securities and Exchange Commission shall form part of the corporate records of rural bank. When all the prepared shares of stock of a rural bank have been sold to private shareholders, the Articles of Incorporation of the rural bank shall be amended to reflect the conversion of the preferred shares of stock into common stock. For this purpose, the President, the corporate secretary, and a majority of the Board of Directors, shall be filed with the Securities and Exchange Commission, which shall attach the same to the original Articles of Incorporation on file with said office. The Securities and Exchange Commission shall not register and amended Articles of Incorporation unless accompanied by the Certificate of Authority required under Section 9 of Republic Act No. 337, as amended. All supervised past due and restructured past due loans, including those covered under existing rehabilitation programs of the Central Bank, and fifty percent (50%) of non-supervised past due and restructured past due loans including accrued interest thereon on rural banks organized under Republic Act No. 720, as amended, as of December 31, 1986, shall be converted into preferred stocks, of the rural bank and issued in favor of the Land Bank of the Philippines, the Development Bank of the Philippines or any government-owned or controlled bank or financial institution: Provided, That penalties thereon are hereby warned except accrued interest on arrearages: Provided, further, That rural banks that prefer to settle their arrearages under a plan or payment or a combination of both plan of payment and conversion may do so in accordance with existing regulations and provisions of this Act: Provided, furthermore, That rural banks shall match these preferred stocks with private equity in equal annual installments over a period of fifteen (15) years to begin three (3) years after conversion: Provided, finally, That the Central Bank, the Land Bank of the Philippines, the Development Bank of the Philippines and any government-owned and controlled bank or financial institution shall continue to rediscount subject to their respective programs, policies and guidelines against papers evidencing a loan granted by a rural bank in order to achieve the declared policy and promote the objectives of this Act. Sec. 9. The Land Bank of the Philippines, the Development Bank of the Philippines, or any government-owned or controlled bank or financial institution may obtain from any source as may be authorized under existing laws and regulations such amount as it may require for the purpose of subscribing to the shares of stock of rural bank: as provided in Section 13 of this Act. Sec. 10. Stock certificates shall be issued to represent the contributions to capital stock of the rural bank by the Government through the Land Bank of the Philippines, the Development Bank of the Philippines or through any government-owned or controlled bank or financial institutions, and by qualified persons under such terms and conditions as the Monetary Board mat prescribe. The powers of the Monetary Board over rural banks shall extend to prescribing the amount, value and class of stock issued by any rural bank, organized under this Act.

Sec. 11. The power to supervise the operation of any rural bank by the Monetary Board as herein indicated shall consists in placing limits to the maximum credit allowed to any individual borrower; in prescribing the interest rate; in determining the loan period and loan procedures; in indicating the manner in which technical assistance shall be extended to rural banks; in imposing a uniform accounting system and manner of keeping the accounts and records of rural banks; in instituting periodic surveys of loan and lending procedures, audits, test-check of cash and other transactions of the rural banks; and, in general in supervising the business operations of the rural banks. The Central bank shall have the power to enforce the laws, orders, instructions, rules and regulations promulgated by the Monetary Board applicable to rural banks; to require rural banks, their directors, officers and agents to conduct and manage the affairs of the rural banks in a lawful and orderly manner, and, upon proof that the rural bank of its Board of Directors, or officers are conducting and managing the affairs of the banking in a manner contrary to the laws, orders, instructions, rules and regulations promulgated by the Monetary Board or in a manner substantially prejudicial in the interest of the Government, depositors or creditors, to take over the management of such bank when specifically authorized to do so by the Monetary Board after due hearing process until a new board of directors and officers are elected and qualified without prejudice to the prosecution of the persons for such violations under the provisions of Sections 32, 33 and 34 of Republic Act No. 265, as amended. The management of the rural bank by the Central Bank shall be without expense to the rural bank, except such as is actually necessary for its operation, pending the election and qualification of a new board of directors and officers to take place of those responsible for the violations or acts contrary to the interest of the Government, depositors or creditors. The director and the examiners of the department of the Central Bank charged with the supervision of rural banks are hereby authorized to administer oaths to any director, officer or employee of any rural bank or to any voluntary witness and to compel the presentation of all books, documents, papers or records necessary in his or their judgment to ascertain the facts relative to the true condition of any rural bank or to any loan Sec. 12. In addition to the operations especially authorized in this Act, any rural bank may: a. Accept saving and time deposit; b. Open current or checking accounts, provided the rural bank has net assets of at least Five million (P5,000,000) subject to such guidelines as may be established by the Monetary Board: c. Act as correspondent for other financial institutions; d. Act as a collection agent; e. Act as official depositary of municipal, city or provincial funds in the municipality, city or province where it is located, subject to such guidelines as may be established by the Monetary Board; f. Rediscount paper with the Philippine National Bank, the Land Bank of the Philippines, the Development Bank of the Philippines, or any other banking institution, including its branches and agencies. Said institution shall specify the nature of paper deemed acceptable for rediscount, as well as the rediscount rate to be charged by any of these institutions; g. Offer other banking service as provided in Section 72 of Republic Act No. 337, as amended, and h. Extend financial assistance to public and private employees in accordance with the provisions of Section 5 of Republic Act No. 3779, as amended. With written permission of the Monetary Board of the Central bank, any rural bank may act as trustee over estates or properties of farmer and merchants. Nothing in this section shall be construed as precluding a rural bank from performing, with prior approval of the Monetary Board, all the services authorized and mortgage banks, of for commercial banks, under an expanded banking authority as provided in Section 21-B of the same Act. Sec. 13. Subject to such guidelines as may be established by the Monetary, rural banks may invest in equities of the allied undertakings are hereinafter enumerated: Provided, That: (a) the total investment in equities shall not exceed twenty- five percent (25%) of the net worth of the rural bank; (b) the equity investment in any single enterprise shall be limited to fifteen percent (15%) of the net worth of the rural bank; and (c) the equity investment of the rural bank in any single enterprise shall remain a minority holding in that enterprise: Provided, further, That equity investment shall not be permitted in non-related activities. Allied undertaking shall include:

a. b. c. d. e. f. g.

banks, financial institutions and non-bank financial intermediaries; Warehousing and other post-harvested facilities; Fertilizer and agricultural chemical and pesticides distribution; Farm equipment distribution; Trucking an transportation of agricultural products; Marketing and agricultural products; Leasing; andOther undertakings as may be determined by the Monetary Board.

Sec. 14. The Land Bank of the Philippines, the Development Bank of the Philippines or any government-owned or controlled bank or financial institution shall, within sixty (60) days of certification of the Monetary Board, which shall be final, extend to a rural bank a loan or loans from time to time repayable in ten (10) years, with concessional rates of interest, against security which may be offered by any stockholders or stockholders of the rural bank: Provided: a. That the Monetary Board is convinced that the resources of the rural bank are inadequate to meet the legitimate credit requirements of the locality wherein the rural bank is established.; b. That there is a dearth of private capital in the said locality; and c. That it is not possible for the stockholders of the rural bank to increase the paid-up capital thereof. Sec. 15. All rural banks created and organized under the provisions of this Act shall be exempt from the payment of all taxes, fees and charges of whatever nature and description, except the corporate income tax and local taxes, fees and charges, for a period of five (5) years from the date of commencement of operations. All rural banks in operation as of the date of approval of this Act shall be exempt from the payment of all taxes, fees and charges of whatsoever nature and description, except the corporate income tax and local taxes, fees and charges, for a period of five (5) years from the approval of this Act. Sec. 16. In an emergency or when a financial crisis is imminent, the Central Bank may give a loan to any rural bank against assets of the rural bank which may be considered acceptable by a concurrent vote of at least four (4) members of the Monetary Board. In normal times the Central bank may rediscount against paper evidencing a loan granted by a rural bank to any of its customers which can be liquefied for a period of three hundred sixty (360) days: Provided, however, That for the purpose of implementing a nationwide program of agricultural and industrial development, rural banks are hereby authorized, under such terms and conditions as the Central bank shall prescribe, to borrow, on a medium or long-term basis, funds that the Central Bank or any other government financing institution shall borrow from the Development Bank of the Philippines or other international or foreign-lending institutions for the specific purpose of financing the abovestated agricultural and industrial program. Repayment of loans obtained by the Central Bank of the Philippines or any other government financing institutions from said foreign-lending institutions under this section shall be guaranteed by the Republic of the Philippines. Sec. 17. Deposits of rural banks with government-owned or controlled financial institutions like the Land Bank of the Philippines, the Development Bank of the Philippines, and the Philippine national Bank are exempted from the Single Borrowers Limit imposed by the General Banking Act. In areas where there are no government banks, rural banks may deposit in private banks more than the amount prescribed by the Single Borrowers Limit subject to Monetary Board regulations. Sec. 18. To encourage consolidation and mergers of rural banks, if there are five (5) or more rural banks within the region that merge and consolidate within three (3) years from the enactment of this Act, the merged or consolidated entity will be given the following incentives for a period of seven (7) years: a. Its deposit liabilities shall be subjected to only one-third (1/3) of reserves normally required for rural banks; b. Its reserve requirement can all be maintained under interest-bearing government securities but kept unencumbered with government financial institutions or the Central Bank; and c. It shall have unrestricted branching right within the region, free from any assessment or surcharge required in setting up a branch but under coordination with the Central bank which will have to assess that there are qualified personnel, control and procedures to operate the branch. Sec. 19. The Central Bank of the Philippines shall extend technical assistance to any rural bank in the process of organization or during the course of operations whenever it is requested to do so or whenever the Monetary

Board deems it necessary to preserve, protect and promote the objectives of this Act: Provided, however, That said assistance shall be without cost or obligation on the part of the rural bank. Sec. 20. Any city or municipal trial court in his capacity as notary public ex officio shall administer the oath to or acknowledgement the instruments of any rural bank and to borrowers or mortgagors, fee from all charges, fees and documentary stamp tax, collectible under existing laws, relative to any loan or transaction not exceeding Fifty thousand pesos (P50,000), or such amount as the Secretary of Finance, upon recommendation of the Monetary Board may prescribe as may be necessary to promote and expand the rural economy. Sec. 21. Any Register of Deeds shall accept from any rural bank and its borrowers and mortgagors for registration, free from all charges, fees and documentary stamp tax, collectible under existing laws, any instrument, whether voluntary or involuntary, relating to loans or transaction extended by a rural bank in an amount not exceeding Fifty thousand pesos (P50,000): Provided, however, That charges, if any, shall be collectible on the amount in excess of Fifty thousand pesos (P50,000); and that in instruments related to assignments of several mortgage consolidated in a single deed, if any, shall be levied only on the amount in excess of Fifty thousand pesos (P50,000) of the consideration in the assignments of each mortgage, of such amount as the Secretary of Finance, upon recommendation of the Monetary Board may prescribe as may be necessary to promote and expand the rural economy. Sec. 22. Any rural bank organized under this Act may, pursuant to regulations promulgated for the purpose by the Monetary Board, be required to contribute to the Central Bank an annual fee to help defray the cost of maintaining the appropriate supervising department within the central bank in an amount to be determined by the Monetary Board but in no case to exceed one-fortieth of one percent (1/40 of 1%) of its average total assets during the preceding year, as shown on its end-of-month balance sheets, after deducting its cash on hand and amounts due from banks, including the Central Bank. Sec. 23. Every individual acting as officer or employee of a rural bank and handling funds or securities amounting to Five thousand pesos (P5,000) or more than one (1) year, shall be covered by an adequate bond as determined by the Monetary Board; and the bylaws of the rural bank may also provide for the bonding of other employees or officers of rural banks. Sec. 24. For the purpose of carrying out the objectives of this Act, the Central Bank 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 government instrumentality. Sec. 25. Rural banks organized and operated under the provisions of this Act shall act as agents of the Philippine National Bank, the Land Bank of the Philippines and the Development Bank of the Philippines in places where these banks have no offices, subject to accreditation guidelines. Sec. 26. Without prejudice to any prosecution under any law which may have been violated a fine of not more than ten thousand pesos (P10,000) or imprisonment of not less than six (6) months but not more than ten (10) years, or both, at the discretion of the court, shall imposed upon: a. Any officer, employee, or agent of a rural bank who shall: 1. Make fake entries in any bank report or statement thereby affecting the financial interest of or causing damage to, the bank or any person; 2. Without order of a court of competent jurisdiction, disclose any information relative to the funds or properties in the custody of the bank belonging to private individuals, corporations, or any other entity; 3. Accept gifts, fees or commission or any other form of remuneration in connection with the approval of a loan from said bank; or 4. Overvalue or aid in overvaluing any security for the purpose of influencing in any way the action of the bank on any loan; or 5. Appear and sign as guarantor, indorser, or surety for loans granted; or 6. Violate any of the provisions of this Act. b. Any applicant for a loan from, or borrower of a rural bank who shall: 1. Misuse, misapply, or divert the proceeds of the loan obtained by him from its declared purpose; or 2. Fraudulently overvalue property offered as security for loan from said bank; or

3. Give out or furnish false misrepresentation of material facts for the purpose of obtaining, renewing, or increasing a loan or extending the period thereof; or 4. Attempt to defraud the said bank in the event of court action to recover a loan; or 5. Offer any officer, employee, or agent of a rural bank as a gift, fee, commission, or other form of compensation in order to influence such bank personality in approving an application; or 6. Dispose or encumber the property or the crops offered as security for the loan. c. Any examiner, or officer or employee of the Central Bank of the Philippines or other department, bureau, office, branch or agency of the Government who is assigned to examine, supervise, assist or render technical services to rural banks and who shall connive or aid in the commission of the same. Sec. 27. Any municipal trial court judge or register of deeds who shall demand or accept, directly or indirectly, any gift, fee, commission or other form of compensation in connection with the service, or the registration of documents required to be as provided in Section 20 and by said register of deeds as proposed in Section 21 of this Act, shall be punished by One thousand pesos (P1,000) or by imprisonment for not more than one (1) year, or both, at the discretion of the court. Sec. 28. Any bank not organized under this Act and any person, association, or corporation doing the business of banking, not authorized under this Act which shall use the words "Rural Bank" as part of the name or title of such bank or of such person, association, or corporations, shall be punished by a fine of not less than Fifty pesos (P50) for each day during which said words are so used. Sec. 29. The Monetary Board of the Central Bank shall submit a report to the Congress of the Philippines as the end of each calendar year of all the rules and regulations promulgated by it in accordance with the provisions of this Act, as well as its other actuations in connection with rural banks, together with an explanation of its reasons therefor. Sec. 30. If any provision or section of this Act or the application thereof to any person or circumstances is held invalid, the other provisions or sections of this Act, and the application of such provision or section to other persons or circumstances, shall not be affected thereby. Sec. 31. Republic Act No. _____, as amended, is hereby repealed. The provisions of Republic Act No. 265, as amended, and Republic Act No. 337, as amended, insofar as they are applicable and not in conflict with any provision of this Act, are hereby made a part of this Act. Sec. 32. This Act shall take effect upon its approval.

REPUBLIC ACT NO. 4093 PRIVATE DEVELOPMENT BANKS ACT

SECTION 1. This Act shall be known as The Private Development Banks Act. SEC. 2. It shall be the declared policy of Congress to promote and expand the economy of the country pursuant to the socio-economic program of the Government; to expand the industrial and agricultural growth; and to encourage the establishment of more private development banks in order to meet the needs for capital and to meet the demands for adequate investment credit or medium and long term loans for Filipino entrepreneurs. Toward this end, the Government shall encourage and assist in the establishment of a system of private development banks which will promote agriculture and industry and at the same time place within easy reach to the people the medium and long term credit facilities at reasonable cost. The Development Bank of the Philippines, the Philippine National Bank, the Government Service Insurance System, the Social Security System, the National Economic Council, the Department of Agriculture and Natural Resources, the Department of Commerce and Industry, and other appropriate agencies, corporations, or instrumentalities of the Government may, in cooperation with the private development banks, provide adequate assistance in the form of saving deposits, and technical know-how in agriculture and industry. SEC. 3. A private development bank shall be incorporated under the provisions of the General Banking Act for mortgage banks and shall exercise all the powers and shall assume all the obligations of a shortage bank as defined in the said Act, except as otherwise provided herein: provided, that no private development bank shall be operated without a certificate of authority from the monetary board of the Central bank which shall be issued upon compliance with the provisions of this law.

SEC. 4. A private development bank shall be organized in the form of a stock corporation and its paid-up capital shall not be less than four million pesos for class A, two million pesos for class B, and one million pesos for class C: provided, that at least sixty per cent of the capital stock subscribed by the private sector shall be owned and held by citizens of the Philippines: provided, further, that if said subscription of private shareholders to the capital stock of a private development bank cannot be secured or is not available, the Development Bank of the Philippines on representation of the said private shareholders and with the approval of its Board of Governors shall, within thirty days from the date of approval by the Board of Governors, and after compliance by the private stockholders with the conditions of said approval, subscribe to the capital stock of such development banks, which shall be paid in full at the time of subscription out of the trust fund provided in paragraph 3, Section 3 of Republic Act Numbered Two thousand eighty-one, in an amount equal to the difference between the required paid-up capital and to the fully paid subscribed capital of the private stockholders but not exceeding the latter: provided, furthermore, that the Board of Governors shall act on the representation made by the private shareholders within thirty days from the date it is filed: provided, still further, that such shares of stock subscribed by the bank shall be preferred shares entitled to cumulate dividends at a rate of one per cent during the first five years, two per cent during the following five years, and three per cent thereafter, shall be preferred as against common and other preferred stockholders in the distribution of assets in the event of liquidation, and shall be entitled to voting privileges: provided, finally, that such preferred shares of the bank may be sold at any time at par to private individuals who are citizens of the Philippines, and in the sale thereof the qualified registered stockholders shall have the right of preemption within one year from the date of offer in proportion to their respective holdings, but in the absence of such buyers, preference shall be given to residents of the province or city where the development bank is located. All members of the board of directors of the private development bank shall be citizens of the Philippines. SEC. 5. Seventy-five per centum of the loanable funds of the private development bank shall be invested in medium and long term loans for economic development purposes and in no case shall the Bank invest more than twenty-five per centum of the loanable funds in short term loans for miscellaneous purposes. SEC. 6. For the purpose of attaining the objectives of this Act and the policy of Congress as provided for in Section 2 of this Act, the sum of ten million pesos may be appropriated yearly in case of need from the net profit of the Central Bank paid into the general fund of the government under Section Forty-one, Paragraph (d) of the Central Bank Act, which sum shall constitute a revolving fund to be made available to the Development Bank of the Philippines which shall be used, together with the funds already provided under paragraph 2 of Section 3 of Republic Act 2081, for the following purposes: a) To pay for its subscription to preferred shares of stock in said private development banks in the manner and subject to the terms and conditions prescribed in Section four hereof; b) To rediscount promissory notes and other credit instruments held by the private development bank under the following conditions and limitations: 1) It shall charge such rediscount or interest rates as it may determine taking into account that the main objective of the private development bank is to engage in medium and long term loans for economic development. The determination of such rediscount or interest rates acceptable to the bank for the purpose of this provision shall be made by the said bank upon or immediately after the commencement of operations of a private development bank; and 2) Funds so acquired shall be used only to finance the establishment and operation of projects within the development program of the National Economic Council or along such projects and activities as the National Economic Council may, from time to time, approve. SEC. 7. Any private development bank may, with the approval of the Monetary Board: a) Accept savings and time deposits;

b) Act as correspondent for other financial institution and as collection agent whenever there is no rural or commercial bank existing in the locality; c) Rediscount paper with the Central Bank, Philippine National Bank or other Banks and their branches or agencies. The Central bank shall specify the nature of papers deemed acceptable for rediscount as well as the rediscount rate to be charged by any of these institutions.

SEC. 8. To augment and supplement the capital of any private development bank, the Development Bank of the Philippines shall be permitted to extend to the private development banks a loan or loans from time to time repayable in ten years with interest at the rate that may be agreed upon against security which may be offered by the private development bank or any stockholders of the private development bank: provided, that a) The Development Bank of the Philippines is convinced that the resources of the private development bank are inadequate to meet the legitimate credit requirements of the locality wherein the private development bank is established; b) There is a dearth of private capital in the said locality;

c) It is not possible for the stockholders of the private development bank to increase the paid-up capital thereof. SEC. 9. In an emergency or when a financial crisis is imminent, the Central Bank may give a loan to any private development bank against the assets of the private development bank which may be considered acceptable by a concurrent vote of the members of the Monetary Board. SEC. 10. All existing private development banks shall be totally exempted from the payment of income and gross receipts taxes for a period of three (3) years after the effectivity of this Act. Thereafter, they shall be taxed on a gradually increasing basis of twenty-five percent (25%) per year for the next succeeding four (4) years after the end of which period they shall pay all taxes in full. Those banks that may be established within three (3) years from the date of effectivity of this Act, shall be totally exempted from income and gross receipts taxes for three years from the date of their organization. Thereafter they shall be taxed on a gradually increasing basis of twenty-five per cent (25%) per year for the next succeeding four (4) years after the end of which period they shall pay all such taxes in full. SEC. 11. Private development banks organized under this Act shall be known by any name not otherwise appropriated: provided, however, that the words Development Bank is made a part thereof, and the name is approved by the Securities and Exchange Commission. A private development bank may establish branches and agencies subject to the approval of the Monetary Board of the Central bank. For the purpose of this Act, a private development bank, together with its branches and agencies, shall be considered as a unit. SEC. 12. Every individual acting as officer or employee of a private development bank and handling fund or securities amounting to one thousand pesos or more, in any one year, shall be covered by an adequate bond as determined by the Monetary Board; and the by-laws of the private development bank may also provide for the bonding of other employees or officers thereof. SEC. 13. For the purpose of carrying out the objectives of this Act, the Development Bank of the Philippines 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 government instrumentality. SEC. 14. A fine of not more than two thousand pesos or imprisonment for not more than one year or both, at the discretion of the court, shall be imposed upon: 1) Any officer, employee or agent of private development bank who shall:

a) make false entries in any bank report or statement thereby affecting the financial interest or causing damage to, the Bank or any person; or b) without order of court of competent jurisdiction, disclose any information relative to the funds or properties in the custody of the bank belonging to private individuals, corporation or any other entity; or c) accept gifts, fees, or commission or any other form of remuneration in connection with the approval of a loan from said bank; or d) overvalue or aid in overvaluing any security for the purpose of influencing in any way the action of the Bank or any loan; or e) appear and sign as guarantor, indorser or surety for loans granted by the bank; and

2) a) b)

Any application for a loan from or borrower of a private development bank who shall; misuse, misapply, or divert the proceeds of the loan obtained by him from its declared purpose; or fraudulently overvalue property offered as security for a loan from the said bank; or

c) give out or furnish false or willful misrepresentation of material facts for the purpose of obtaining, renewing or increasing a loan extending the period thereof; or d) attempt to defraud the said bank in the event of court action to recover a loan; or

e) offer any officer, employee or agent of a private development bank a gift, fee, commission, of other form of compensation in order to influence such bank personnel into approving a loan application; or f) dispose or encumber the property or the crops offered as security for the loan.

3) Any examiner, or officer, or employee of the Central Bank of the Philippines or any department, bureau, office, branch or agency of the Government who is assigned to examine, supervise, assist or render technical service to private development bank and who shall commit any of the acts, enumerated in paragraph (1) of this section or connive or aid in the commission of the same. SEC. 15. The Development Bank of the Philippines shall submit a report to Congress as of the end of each calendar year of all its actuations in connection with private development banks, together with an explanation or its reasons therefor. SEC. 16. Any Bank not organized under this Act except those organized under Republic Act 2081 and any person, association, or corporation doing the business of banking, not authorized under this Act who shall use the words Development Bank as part of the name or title of such bank or of such person, association or corporation, shall be punished by a fine of not less than fifty pesos for each day during which said words are so used. SEC. 17. If any provision or section of this Act or the application thereof to any person, association or circumstances is held invalid, the other pertinent provisions or associations, or circumstances shall not be affected thereby. SEC. 18. The provision of Republic Act Numbered Two hundred sixty-five, as amended, Republic Act Numbered Three hundred and thirty-seven, as amended and Republic Act Numbered Two thousand eighty-one as amended, insofar as they are applicable to, and not in conflict with any provision of this Act are hereby made parts hereof; and certain provisions of Republic Act Numbered Two thousand and eighty-one, as amended, governing private development bank and in conflict with any provision of this Act are hereby repealed. SEC. 19. This Act shall take effect upon its approval. REPUBLIC ACT NO. 3779 AN ACT TO PROVIDE FOR THE REGULATION OF THE ORGANIZATION AND OPERATIONS OF SAVINGS AND LOAN ASSOCIATIONS (AS AMENDED BY RA 4378, PD 113, PD 450, PD 1318 AND PD 1539) Section 1. Title. - The short title of this Act shall be the Savings and Loan Association Act. Sec. 2. Declaration of Policy. - It is hereby declared to be the policy of the State: a) To regulate and supervise the activities of savings and loan associations in order to place their operations on a sound, stable, and efficient basis to the end that they may be able to better provide for the establishment of additional credit and savings facilities in a fair manner to the consuming public and to industry, commerce, and agriculture and to curtail or prevent acts or practices of these savings and loan associations which are prejudicial to the public interest; b) To lay down the minimum requirements and the standards under which savings and loan associations may be established and do business; c) To maximize the protection of the public, and of members and stockholders of savings and loan associations against misfeasance and malfeasance of the directors and officers thereof; and

d) To encourage industry, frugality and the accumulation of savings among the public, and the members and stockholders of savings and loans associations. Sec. 3. Definition of terms. - For the purpose relative to the implementation of this Act, the following definitions shall apply. a) Savings and loan association hereinafter called the association shall include any corporation engaged in the business for accumulating the savings of its members or stockholders, and using such accumulations, together with its capital in the case of a stock corporation, for loans and/or for investment in the securities of productive enterprises or in securities of the Government, or any of its political subdivisions, instrumentalities or corporations: Provided, That they shall be primarily engaged in servicing the needs of households by providing personal finance and long-term financing for home building and development. b) Monetary Board shall mean Central Bank of the Philippines. c) Central Bank shall mean Central Bank of the Philippines. Sec. 4. Organization of savings and loan association. a) A savings and loan association shall be organized either as a stock or non-stock corporation: b) The Monetary Board shall fix the minimum paid-up capital of a savings and loan association organized as a stock corporation in such amount as said Board may consider necessary for the safe and sound operation of such association: Provided, however, That in no case shall such paid-up capital be less than one hundred thousand pesos: Provided, further, That at least seventy per centum of the voting stock of a savings and loan association which may be established after the approval of this Act shall be owned by citizens of the Philippines, except where a new association is established as a result of the consolidation of existing associations in which there are foreign-owned voting stocks at the time of consolidation: Provided, furthermore, That the percentage of foreignowned voting stocks in stock savings and loan associations existing upon the effectivity of this Act, if such percentage is in excess of thirty per cent (30%) of the voting stock of the savings and loan association, shall not be increased, but may be reduced, and once, reduced, shall not be increased thereafter beyond thirty per cent (30%) of the voting stock of the savings and loan association. The percentage of foreign-owned voting stocks in an association shall be determined by the citizenship of the individual stockholders in that association. In the case of corporations owning shares in the association, the of each stockholder in that corporation shall be the basis of the computing the percentage. Such association is authorized to receive deposits from, and extend loans to, the general public. c) A savings and loan association organized as a non-stock corporation shall confine its membership to a welldefined group of persons and shall not transact business with the general public. It shall accept deposits from, and grant loans to, only its member-depositors; and d) No entrance fees of any kind may be charged by any association without first securing the approval of the Monetary Board. In no case shall the total amount of fees exceed one percent of the amount deposited, contributed, or otherwise paid in by the particular shareholder, stockholder, or member. Sec. 4- a) Prohibition against inquiry into, or disclosure of deposits. - All deposits of whatever nature with savings and loan associations 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, except when the examination is conducted by the Monetary Board or the official of the Central Bank in charge of savings and loan associations or his deputies pursuant to the provisions of this Act, or upon written permission of the depositor, or in cases of impeachment, or upon order of a competent court in cases of bribery or dereliction of duty of public officials, or in cases where the money deposited or invested is the subject matter of the litigation. It shall be unlawful for any official or employee of savings and loan association to disclose to any person any information concerning said deposits, except in the cases mentioned in the preceding paragraph of this section. b) Deposit insurance. - Deposits in savings and loan associations shall be eligible for insurance coverage under Republic Act Numbered Three thousand five hundred and ninety-one, otherwise known as an Act Establishing the Philippine Deposit Insurance Corporation.

Sec. 5. Powers of savings and loan association. - A savings and loan association shall be incorporated under the Corporation Law, and in addition to the powers therein granted whenever applicable, it shall exercise the following: a) To grant loans not exceeding the borrowers savings and time deposits in the association, plus his four months salary or regular income whether from employment or from his own business, or seventy per cent (70%) of the fair market value of any property acceptable as collateral on first mortgage that he may offer as security: Provided, That no loan shall have a maturity of more than five years, except loans on the security of unencumbered real estate for the purpose of home building and home development which may be granted with maturities not exceeding twenty years and medium-or long-term loans to finance agricultural projects, subject to regulations, prescribed by the Monetary Board: Provided, further, That in case of a borrower who is a permanent employee or wage earner, the treasurer, cashier or paymaster of the office employing him is authorized, notwithstanding the provisions of any existing law, rule and regulation to the contrary, to make deductions from his salary, wage, or income pursuant to the terms of his loan, to remit deductions to the savings and loan association concerned, and collect such reasonable fee for his services as may be authorized by rules promulgated by the Monetary Board. b) To charge interest within the limits allowed by law, and collect such necessary fees incidental to the grant of loans as may, by regulation, be authorized by the Monetary Board; c) Subject to such rules as the Monetary Board may approve, to discount with recourse commercial papers and accounts receivables; d) To invest its funds in any sound non-speculative enterprise, as well as in bonds, securities, and other obligations issued by the Government of the Philippines, or any of its political subdivisions, instrumentalities or corporations including government-owned or controlled corporations subject to the rules and regulations of the Monetary Board: Provided, That stock savings and loan associations may invest in equities only of such allied undertakings as may be approved by the Central Bank for banks of their category as provided for in Section 6-A of Republic Act No. 337, as amended: Provided, further, That (a) the total investment in equities shall not exceed twenty-five per cent (25%) of the net worth of the association; (b) the equity investment in any single enterprise shall be limited to fifteen per cent (15%) of the net worth of the association (c) the total equity investment of the association in any single enterprise shall remain a minority holding in that enterprise, except where the enterprise is not a financial intermediary; and (d) the equity investment in other banks, if allowed by the Monetary Board, shall be subject to the same limitations imposed on similar investments of commercial banks and shall be deducted form the investing stock savings and loan associations net worth for purposes of computing the prescribed ratio of net worth to risk assets. Equity investments shall not be permitted in nonrelated activities. Where the allied undertaking is a wholly or majority owner subsidiary of the investing association, it may be subject to examination by the Central Bank. e) To allow member-depositors to participate in the profits of the savings and loan association on the basis of their deposits on the date dividends are declared; and f) To borrow money or incur such obligations not exceeding twenty per centum of the total assets of the association, from any public lending institutions, such as the Development Bank of the Philippines, the Philippine National Bank, the Government Service Insurance System, the Social Security System, and from such private lending institutions as may be approved by the Monetary Board, including other stock savings and loan associations. The Monetary Board may, in meritorious cases, raise the ceiling on the borrowing capacity of a savings and loan association to an amount not exceeding thirty per centum of its total assets. f-1) To maintain deposits with banks and other stock savings and loan associations: Provided, That the amount of such deposits shall be subject to the loan limit to a single borrower as prescribed herein or by other special laws or regulations. A savings and loan associations may, subject to such rules as the Monetary Board may promulgate, also borrow from, or rediscount notes, bills of exchange and other commercial papers with the Central Bank. The rate of interest on such obligations or borrowings to be charged such associations shall not be more than that charged rural banks. Sec. 6. Restriction on savings and loan associations. - a) No non-stock association shall have or carry upon its books for any person any demand, commercial or checking account, or any credit to be withdrawn upon the presentation of any negotiable check or draft.

b) No non-stock savings and loan associations shall advertise or represent itself to the public as a bank. A stock savings and loan association may use the word bank in connection with its business name only upon compliance with such requirements as may be imposed by, and prior approval of the Monetary Board. c) No association shall issue, publish or cause or permit to be issued, or published, any advertisement that it is doing or permitted to do any business which is prohibited by law to an association, or which misrepresents its shares, stocks, investment certificates, or the rights of investors or depositors in respect thereto. Sec. 7. Prerequisite approval of articles of incorporation and by-laws. - The articles of incorporation and by-laws of a proposed savings and loan association shall not be filed in the Office of the Securities and Exchange Commissioner unless there is attached thereto a certificate of the Monetary Board approving such articles and by-laws: Provided, however, That this requirement shall not apply to savings and loan associations duly incorporated or registered prior to the approval of this Act and which are actually existing and operating as such: Provided, further, That such existing savings and loan associations shall file an information sheet within sixty days after the approval of this Act with the Central Bank in a form prescribed by the Monetary Board. No person, association, partnership or corporation shall do business, or hold itself out as doing business, as a savings and loan association, or shall use the term savings and loan association or any other title or name tending to give the public the impression that it is engaged in the operations and activities of a savings and loan association unless so authorized under this Act. Sec. 8. Application for approval; contents. - The articles of incorporation of a proposed association shall be submitted to the Monetary Board together with a copy of the proposed by-laws and an application, signed by a majority and verified by one of the directors, requesting approval. The application shall set forth: a) the names and addresses of the incorporators, directors, and officers, with a statement of their character, experience, and general fitness to engage in the savings and loan business; b) an itemized statement of the estimated receipts and expenditures of the proposed association for the first year; c) a showing that the public convenience and advantage will be promoted by the formation of the proposed association; d) any other matters the Monetary Board may require. A filing fee of two hundred pesos shall be paid to the official of the Central Bank in charge of savings and loan associations with each application for approval of proposed article of incorporation and by-laws, but in the case of non-stock savings and loan associations, the filing fee shall be five pesos. Sec. 9. Hearing on Application. - Upon the receipt of an application to form a proposed savings and loan association, the Monetary Board shall give written notice to each existing association that an application has been made. The notice shall state the name of the proposed association, and the time and place that a hearing will be held. The hearing shall be conducted not less than ten days after the mailing of the notice. Any person may appear at such hearing in person or by agent or attorney, and orally or in writing show cause why such application should not be approved. If after public hearing, the Monetary Board believes that the requirements of this Act have been complied with and that no valid reasons exist for the disapproval of the application, it shall favorably endorse such application to the Securities and Exchange Commissioner who shall issue articles of incorporation to the association. Sec. 10. Ground for refusal to execute certificate of approval. - The Monetary Board may refuse to approve the application, if upon examination and investigation, it finds that: a) the corporation is to be formed for any business other than the legitimate savings and loan business, or b) the associations financial program is unsound, or c) the area where the association is to be located is adequately served by one or more existing associations. Sec. 11. Prior licensing. - All associations, prior to transacting any business, shall procure a license to transact business from the Monetary Board. After due notice and hearing, the Monetary Board may revoke, or suspend

for such period as it determines, the license of any association, the solvency of which is imperiled by losses or irregularities or of any association which wilfully violates any provisions of this Act or any regulation issued thereunder. Sec. 12. Branch offices and agencies. - a) No association shall open, maintain or operate a branch without first applying for and obtaining from the Monetary Board a license for such branch. b) The application for a branch license shall be in such form as the Monetary Board shall require, including an itemized statement of the estimated receipts and expenditures of the association in connection with such branch for the first year or such longer periods as the Monetary Board requires, and a showing that the public convenience and advantage will be promoted by the operation of such branch. A filing fee of fifty pesos shall be paid to the Monetary Board with each application for a branch license. c) . . . Sec. 13. Agents and salesmen. - No person shall act as an agent salesman of an association or operate an agency without obtaining a license from the Monetary Board. No license is required for a collector of an association but no person shall hold himself out or act as a collector unless he is authorized as a collector in writing by such association. Sec. 14. Qualification of directors. - No person shall be eligible as directors of an associations unless he is a member, in case of non-stock associations, or an owner is his own right of stocks in the association with an aggregate par value of at least five thousand pesos, in case of stock associations: Provided, That at least twothirds of the members of the board of directors of any stock savings and loan association which may be established after the approval of this Act shall be citizens of the Philippines: Provided, however, That no fulltime appointive or elective public official shall at the same time serve as officer, director, legal counsel or consultant of any stock savings and loan association, except in cases where such service is incident to financial assistance provided by the government or a government-owned or controlled corporation to such association: Provided, further, That in the case of a merger or consolidation of savings and loan associations duly approved by the Monetary Board, the limitation on the maximum number of directors in a corporation, as provided for in Section 28 for the Corporation Law (Act No. 1459), shall not be applied so that membership in the new board may include up to the total number of directors provided for in the respective articles of incorporation of the merging or consolidating savings and loan associations. Sec. 15. Bond of officers and employees. - All officers and employees of an association, who have access to money, or negotiable securities of the association, or who issue stock or shares of the association in the regular discharge of their duties shall, before entering upon the duties, furnish to the employing association a good an sufficient bond, the form and amount of which shall be prescribed by the Monetary Board, indemnifying the association against loss of money or securities by reason of their dishonesty and against any loss arising from their dishonest issue to stock or shares. Sec. 16. Compensation of directors, officers and employees. - No director, officer, or employee of an association shall receive from such association, and no association shall pay to any director, 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. Nothing in this section prohibits or limits any of the following: a) Receipt or payment of salaries of directors, officers, and employees. b) Receipt or payment of commissions to agents whether or not based on the volume of number of loans or on the interest or fees collected thereon. c) Receipt or payment of bonuses to directors, officers or employees if such bonuses are based on the profits and not on the volume or number of loans made or on the interest or fees collected thereon. Sec. 17. Shares of stock of officers, directors, or employees. - No officer, director, or employee of any association shall acquire any certificate or shares issued by the association with which he is connected by a method other than by investing his funds directly with the association, or by gift, bequest, or descent, or purchase in any amount not exceeding at any one time three thousand pesos, unless such other mode of acquisition has the prior approval of the Monetary Board, and the Auditor of the Central Bank. Sec. 18. Limitations on lending authority. -

a) An association shall not commit itself to make any loans for amounts in excess of the total of the following amounts: 1) amount of cash available for loan purposes; 2) amount of cash which can be readily realized upon the sale or redemption of permissible investments made by the association; 3) amount of credit available for loan purposes from government or private financing institutions. b) No association shall directly or indirectly make any loans to any director or officer of such association, either for himself or as agent or as partner of another, except with the written approval of the majority of the directors of the association, excluding the director concerned: Provided, That in the case of non-stock association, the aggregate loans, direct or indirect, granted at any one time to such directors and officers shall not exceed twenty per centum of the total paid-up capital of the association: Provided, further, That in the case of stock association, the Monetary Board may regulate the amount of credit that the association may extend, directly or indirectly, to its directors, officers or stockholders. In any case, however, the outstanding credit accommodations which a stock association may extend to each of its stockholders owning two percent (2%) or more of the subscribed capital stock, its directors or its officers, shall be limited to an amount equivalent to the respective outstanding deposits and book value of the paid-in capital contribution in the association. In all cases of credit accommodations granted to directors and officers under this subsection, the written approval of the majority of the directors of the association, excluding the director concerned, shall be entered upon the records of the association and a copy of such entry shall be transmitted forthwith to the appropriate supervising department of the Central Bank. The office of any director or officer of an association who violates the provisions of this subsection shall immediately become vacant and the director or officer shall be punished by imprisonment of not less than one year nor more than ten years and by a fine of not less than one thousand nor more than ten thousand pesos. c) No association shall make any loan to any corporation of which a majority of the stock is owned or controlled directly or indirectly, by any one or more of the directors or officers of such association collectively except with the written approval of the majority of the directors of the association excluding the director or directors concerned. Any such approval shall be entered upon the records of the association and a copy of such entry shall be transmitted forthwith to the appropriate supervising department of the Central Bank. The Monetary Board may regulate the amount of credit that an association may extend to a corporation referred to in this subsection in the same manner as it may regulate credit accommodations to directors and officers of the association under the preceding subsection. d) No association shall loan any of its funds upon the security of its own stock. Sec. 19. Execution of loan agreement. - For each loan made by an association, a written note or other obligation expressing a rate of interest must be executed by the borrower. Sec. 20. Liability of officers for loans contrary law. - No association shall make or purchase any loan or investment not authorized or permitted under this Act, and any director, officer or employee who, on behalf of any such association, knowingly makes or purchases any such loan or investment or who knowingly consents thereto shall be personally liable to the association for the full amount of any such loan or investment. Sec. 21. Limitations on investment. - a) No association at any one time shall have invested in bonds and securities an aggregate amount in excess of ten per centum of the total assets of such association; b) No non-stock savings and loan association at any one time shall have invested in real property an aggregate amount in excess of five per centum of the total assets of such association; c) No non-stock savings and loan association at any one time shall invest in furniture, fixture, furnishings and equipment and leasehold improvements for its offices, more than ten per centum of its aggregate paid-up capital; d) No stock savings and loan association, at any one time, shall have an investment in real estate and improvements thereon, including equipment, in an aggregate amount in excess of fifty per cent of its net worth: Provided, That real estate used for the stock savings and loan associations purposes owned by another

corporation in which that association owns equity shall be considered as part of the associations total investment in real estate. Sec. 22. Reserves. - Every non-stock savings and loan association shall create a withdrawable share reserve which shall consists of three per centum of the aggregate capital contributions of the members. Five per centum of the net earnings of a stock savings and loan association shall credited to a reserve account until the reserve equals five per centum of the total assets of the association and shall be available for meeting losses incurred by the association. Sec. 23. When dividends not distributable. - The withdrawable share reserve shall be set up from the profits of the non-stock association, and no association shall pay any dividends or distribute any profits to its members if its withdrawable share reserve is less than, of if by such payment or distribution would be reduced below, the amount specified in Section twenty-two hereof. Sec. 24. Annual reports. - Every association shall, within sixty days after the close of its fiscal year furnish the Monetary Board and mail to each of its investors, a copy of its financial statement showing, in such form and detail as the Monetary Board shall require, the amount and character of the assets and liabilities of the association at the end of the preceding fiscal year. Any association may, in lieu of mailing, publish such financial statement in any newspaper of general circulation in the city or town in which its principal and branch offices are located. The Monetary Board may, in addition to the foregoing, require the publication of such other information as it shall deem necessary for the protection of the investors in these associations. Sec. 25. Monetary Boards authority to order discontinuance of unlawful or unsafe or injurious practices of associations. - If the Monetary Board finds at the result of any examination from any report made to it or to any of its investors, that the association is violating the provisions of its articles of incorporation, charter, bylaws, or any law, or is conducting its business in an unsafe or injurious manner, or is insolvent, it may by an order addressed to such association direct a discontinuance of such violations or unsafe or injurious practices and a conformity with all the requirements of law. Sec. 26. When Monetary Board authorized to demand and take possession of association. - The Monetary Board may demand and take possession of the property, business and assets of an association if any of the following occur: a) The association does not comply with the order given pursuant to Section twenty-five, within the time specified therein; b) It appears to the Monetary Board that the association is in an unsafe condition or is conducting its business in an unsafe or injurious manner such as to render its further operations hazardous to the public or to any or all of its investors; c) The Monetary Board finds that the associations assets, after deducting all liabilities, do not equal or exceed the sum of par value of its outstanding shares of stock or the amount contributed to the capital of the association. d) The association refuses to submit its books, papers, and accounts to the inspection of the Monetary Board or any of its examiners, deputies, or assistants; e) Any officer of the association refuses to be examined upon oath concerning the affairs of the association. Sec. 27. Time Monetary Board authorized to retain possession of association; liquidation. - The Monetary Board may retain possession of the property, business and assets of an association until the association resumes business with the consent of and subject to the conditions imposed by the Monetary Board, or until its affairs are liquidated; in case of liquidation, the Monetary Board shall be governed by the provisions of the Central Bank Act for liquidation of banks. Sec. 28. Supervisory powers over savings and loan association. - In addition to whatever powers have been conferred by the foregoing provisions, the Monetary Board shall have the power to exercise the following: a) To see to it that the capital, financing, direction and administration, as well as the integrity, responsibility, and ability of the organizers, administrators, directors and officers of every savings and loan association being

organized under this Act, shall reasonably assure the safety of the interests which the public and/or its members and stock holders shall entrust to them; b) To supervise the operations and activities of savings and loan associations, which shall consist, among others (1) in placing limits to the maximum credit allowed any individual borrower; (2) in determining the loan period and loan procedures; (3) in prescribing in higher rate of the interest which associations may pay on deposits received by them, which shall not be more than one per centum over and above the rate which banking institutions are authorized or shall be authorized to pay; (4) in imposing a uniform accounting system, and manner of keeping the accounts and records of savings and loan associations; (5) in instituting periodic surveys of loan and lending procedures, audits, test check of each and other transaction of savings and loan associations; and (6) whenever necessary in conducting training courses for personnel of savings and loan associations; c) To conduct at least once a year, and whenever necessary, any inspection, examination or investigation of the books and records, business affairs, administration, and financial condition of any savings and loan association with or without prior notice but always with fairness and reasonable opportunity for the association or any of its officials to give their side of the case. Whenever an inspection, examination or investigation is conducted under this grant of power, the person authorized to do so may seized books and records and keep them under his custody after giving proper receipts therefor; may make any marking or notation on any paper, record, document or book to show that it has been examined and verified; and may padlock or seal shelves, vaults, safes, receptacles or similar containers and prohibit the opening thereof without first securing authority therefor, for as long as may be necessary in connection with the investigation or examination being conducted. The official of the Central Bank in charge of savings and loan associations and his deputies are hereby authorized to administer oaths to any director, officer or employee of any association under the supervision of the Monetary Board. Stock savings and loan associations which are subject to examination by the Monetary Board, shall, after having been in operation for five years, reimburse the Central Bank for the cost of maintaining the department of savings and loan associations, and for this purpose, shall pay to the Central Bank, within the first thirty days of each year after the fifth year of their existence, an annual fee in an amount to be determined by the Monetary Board in the manner provided in the next paragraph of this subsection. The fee to be paid by each stock savings and loan association shall be an amount equal to a prescribed percentage of its average total assets during the preceding years, as shown on its end-of-month balance sheets, after deducting its cash on hand and amounts due from banks, including the Central Bank: Provided, however, That said percentage may not exceed one twentieth of one per cent. If the total of maximum fees authorized under this paragraph should be insufficient to defray the entire costs of the department, the difference shall be borne by the Central Bank. d) After proper notice and hearing, to suspend a savings and loan association for violation of law, for unsafe and unsound practices or for reason of insolvency. The Monetary Board may likewise, upon proof that a savings and loan association or its board of directors or officers are conducting and managing its affairs in a manner contrary to laws, orders, instructions, rules and regulations promulgated by the Monetary Board or in a manner substantially prejudicial to the interest of the government, depositors or creditors, take over the management of the savings and loan association after due hearing, until a new board of directors and officers are elected and qualified without prejudice to the prosecution of the persons responsible for such violations. The management by the Monetary Board shall be without expense to the savings and loan association, except such as is actually necessary for its operation, pending the election and qualifications of a new board of directors and officers to take the place of those responsible for the violation or acts contrary to the interest of the government, depositors and creditors; e) To require all accountable officers and employees of every savings and loan association to post bonds for the faithful performance of their duties in such reasonable sums and with such sureties as the Monetary Board may approve; f) To decide, after appropriate notice and hearings any controversy as to the rights or obligations of the savings and loan association, its directors, officers, stockholders and members under its character, and, by order, to enforce the same; g) To fix rules or by order, in specific cases, after notice and hearing, the limits of loanable funds, amount for investment and for discounting, and reserves for withdrawals and other contingencies;

h) To issue rules and regulations for the proper implementation of this Act, effective administration of savings and loan associations, and to render advisory assistance to all interested parties in order to carry out the intents and purposes of this Act; i) To conduct such investigations, take such remedial measures, impose such disciplinary action and exercise all powers which are now or may hereafter be conferred upon it by Republic Act Numbered Two hundred sixtyfive, otherwise known as the Central Bank Act, in the enforcement of this legislation. Sec. 29. Penalties. a) Any owner, agent, manager, or other officer in charge of any savings and loan association who, being thereunto required in writing by the Monetary Board or by the official of the Central Bank in charge of savings and loan associations to comply with the requirements of this Act, shall wilfully refuse any lawful examination into the affairs of such institution shall be punished by a fine of not more than ten thousand pesos or by imprisonment of not more than two years, or both, in the discretion of the court. b) The willful making of a false statement to the Monetary Board or to the official of the Central Bank in charge of savings and loan associations or to his examiners shall be punished by a fine not to exceed fifteen thousand pesos or by imprisonment of not more than three years, or both, in the discretion of the court. c) Whenever any person or entity wilfully violates this Act or any order, instruction, rule or regulation legally issued by the Monetary Board, the person or persons responsible for such violation shall be punished by a fine of not more than five thousand pesos or by imprisonment of not more than one year, or both, in the discretion of the court. c-1). Whenever any officer, employee, or agent of a savings and loan association makes false entries in any association report or statement thereby affecting the financial interest of, or causing damage to, the association or to any person, or without order of a court of competent jurisdiction, discloses to any unauthorized person any information relative to the funds or properties in the custody of the association belonging to private individuals, corporations, or any other entity. Provided, That with respect to bank deposits, Section 4(a) of this Act shall prevail; or 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 security 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 fine of not more than two thousand pesos or imprisonment for not more than one year, or both, at the discretion of the court. c-2). Whenever any applicant for a loan from, or borrower of, a savings and loan association fraudulently overvalues property offered as security for a loan from the said association; or furnishes false, or makes wilful misrepresentation of, material facts for the purpose of obtaining, renewing, or increasing a loan or extending the period thereof; or attempts to defraud the said association in the event of a court action to recover a loan; or offers any officer, employee or agent of a savings and loan association any gift, fee, commission, or other form of compensation in order to influence such association personnel into approving a loan application, such applicant or borrower shall be punished by a fine of not more than two thousand pesos or imprisonment for not more than one year, or both, at the discretion of the court. c-3). Whenever any examiner, officer or employee of the Central Bank of the Philippines, who is assigned to examine, supervise, assist or render technical service to a savings and loan associations, commits any of the acts enumerated in subsection c-1 of this section or connives or aids in the commission of the same, he shall be punished by a fine of not more than one year or both, at the discretion of the court. d) Whenever a savings and loan association persists in violating its charter or by-laws or any law, or orders, instructions, rules or regulations legally issued by the Monetary Board or whenever a savings and loan association persists in carrying on its business in an unlawful or unsafe manner, the Board shall, by the Solicitor General, and without prejudice to the penalties provided in the preceding paragraph of this section, file a petition in the Court of First Instance praying the assistance of the court to compel the savings and loan association to discontinue the violations or practices objected to in the petition of the Board. The Monetary Board may, with the approval of the Court, take such action as the court may deem necessary to compel the savings and loan association complained against to discontinue the violations or practices set forth in the Boards petition, and, if necessary, the Board may, under order of the court, direct the official of the Central Bank in charge of savings and loan associations to liquidate the business of the institution.

Sec. 29-A. The provisions of Republic Acts Numbered Two hundred and sixty-five, as amended, and Three hundred thirty-seven, as amended, insofar as they are applicable and not in conflict with any provision of this Act, shall apply to savings and loan associations organized hereunder. Sec. 30. Effectivity. - This Act shall take effect upon its approval. PRESIDENTIAL DECREE No. 679 April 2, 1975 AMENDING ACT NUMBERED THIRTY NINE HUNDRED AND THIRTY SIX, AN ACT REQUIRING BANKS, TRUST CORPORATIONS, AND BUILDING AND LOAN ASSOCIATIONS, TO TRANSFER UNCLAIMED BALANCES HELD BY THEM TO THE TREASURER OF THE PHILIPPINES AND FOR OTHER PURPOSES. WHEREAS, Act No. 3936 requires the publication of a sworn statement of unclaimed balances in banks once a week of three consecutive weeks in at least two newspapers of general circulation in the locality where the banks are situated, if there be any, and if there is none, in the City of Manila, one in English and one in Spanish, the cost of which shall be paid by the Bureau of Treasury, which shall be reimbursed out of the escheated funds; WHEREAS, the law also provides for the publication of summons and a notice upon the commencement of the prescribed judicial proceedings for the escheat of unclaimed balances; WHEREAS, past experience has shown that the cost of publication required by law, the increase of which has been substantial the past few years, is more than the aggregate amount of the unclaimed balances to be escheated, the average amount of which is small; WHEREAS, there is a felt need to simplify the procedure for the escheat of unclaimed balances for the purpose of reducing the expenses therefor; NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers in me vested by the Constitution, do hereby decree and order: Section 1. Sections 1, 2, 3, 4, and 5 of Act No. 3936 are hereby amended to read as follows: "Sec. 1. "Unclaimed balances", within the meaning of this Act, shall include credits or deposits of money, bullion, security or other evidence of indebtedness of any kind, and interest thereon with banks, buildings and loan associations, and trust corporations, as hereinafter defined, in favor of any person known to be dead or who has not made further deposits or withdrawals during the preceding ten years or more. Such unclaimed balances, together with the increase and proceeds thereof, shall be deposited with the Treasurer of the Philippines to the credit of the Government of the Republic of the Philippines to be used as the National Assembly may direct. "Banks", "building and loan associations" and "trust corporations", within the meaning of this Act, shall refer to institutions defined under Section two, thirty-nine and fifty-six, respectively, of Republic Act Numbered Three Hundred Thirty Seven, otherwise known as the General Banking Act, as amended, whether organized under special charters or not. "Sec. 2. Immediately after the taking effect of this Act and within the month of January of every odd year, all banks, building and loan associations, and trust corporations shall forward to the Treasurer of the Philippines a statement, under oath, of their respective managing officers, of all credits and deposits held by them in favor of persons known to be dead, or who have not made further deposits or withdrawals during the preceding ten years or more, arranged in alphabetical order according to the names of creditors and depositors, and showing: "(a) The names and last known place of residence or post office addresses of the persons in whose favor such unclaimed balances stand; "(b) The amount and the date of the outstanding unclaimed balance and whether the same is in money or in security, and if the latter, the nature of the same; "(c) The date when the person in whose favor the unclaimed balance stands died, if known, or the date when he made his last deposit or withdrawal; and "(d) The interest due on such unclaimed balance, if any, and the amount thereof.

"A copy of the above sworn statement shall be posted in a conspicuous place in the premises of the bank, building and loan association, or trust corporation concerned for at least sixty days from the date of filing thereof: Provided, That immediately before filing the above sworn statement, the bank, building and loan association, and trust corporation shall communicate with the person in whose favor the unclaimed balance stands at his last known place of residence or post office address. "It shall be the duty of the Treasurer of the Philippines to inform the Solicitor General from time to time the existence of unclaimed balances held by banks, building and loan associations, and trust corporations. "Sec. 3. Whenever the Solicitor General shall be informed of such unclaimed balances, he shall commence an action or actions in the name of the People of the Republic of the Philippines in the Court of First Instance of the province or city where the bank, building and loan association or trust corporation is located, in which shall be joined as parties the bank, building and loan association or trust corporation and all such creditors or depositors. All or any of such creditors or depositors or banks, building and loan association or trust corporations may be included in one action. Service of process in such action or actions shall be made by delivery of a copy of the complaint and summons to the president, cashier, or managing officer of each defendant bank, building and loan association or trust corporation and by publication of a copy of such summons in a newspaper of general circulation, either in English, in Filipino, or in a local dialect, published in the locality where the bank, building and loan association or trust corporation is situated, if there be any, and in case there is none, in the City of Manila, at such time as the court may order. Upon the trial, the court must hear all parties who have appeared therein, and if it be determined that such unclaimed balances in any defendant bank, building and loan association or trust corporation are unclaimed as hereinbefore stated, then the court shall render judgment in favor of the Government of the Republic of the Philippines, declaring that said unclaimed balances have escheated to the Government of the Republic of the Philippines and commanding said bank, building and loan association or trust corporation to forthwith deposit the same with the Treasurer of the Philippines to credit of the Government of the Republic of the Philippines to be used as the National Assembly may direct. "At the time of issuing summons in the action above provided for, the clerk of court shall also issue a notice signed by him, giving the title and number of said action, and referring to the complaint therein, and directed to all persons, other than those named as defendants therein, claiming any interest in any unclaimed balance mentioned in said complaint, and requiring them to appear within sixty days after the publication or first publication, if there are several, of such summons, and show cause, if they have any, why the unclaimed balances involved in said action should not be deposited with the Treasurer of the Philippines as in this Act provided and notifying them that if they do not appear and show cause, the Government of the Republic of the Philippines will apply to the court for the relief demanded in the complaint. A copy of said notice shall be attached to, and published with the copy of, said summons required to be published as above, and at the end of the copy of such notice so published, there shall be a statement of the date of publication, or first publication, if there are several, of said summons and notice. Any person interested may appear in said action and become a party thereto. Upon the publication or the completion of the publication, if there are several, of the summons and notice, and the service of the summons on the defendant banks, building and loan associations or trust corporations, the court shall have full and complete jurisdiction in the Republic of the Philippines over the said unclaimed balances and over the persons having or claiming any interest in the said unclaimed balances, or any of them, and shall have full and complete jurisdiction to hear and determine the issues herein, and render the appropriate judgment thereon. "Sec. 4. If the president, cashier or managing officer of the bank, building and loan association, or trust corporation neglects or refuses to make and file the sworn statement required by this action, such bank, building and loan association, or trust corporation shall pay to the Government the sum of five hundred pesos a month for each month or fraction thereof during which such default shall continue. "Sec. 5. Any bank, building and loan association or trust corporation which shall make any deposit with the Treasurer of the Philippines in conformity with the provisions of this Act shall not thereafter be liable to any person for the same and any action which may be brought by any person against in any bank, building and loan association, or trust corporation for unclaimed balances so deposited with the Treasurer of the Philippines shall be defended by the Solicitor General without cost to such bank, building and loan association or trust corporation." Section 2. This Decree shall take effect immediately.