An Act Amending Act Numbered Seventeen Hundred and Ninety of the Philippine Commission, Enacted October Twelfth, Nineteen Hundred and Seven, Entitled "An Act to Confirm Certain Rights and Franchises of the Banco Espanol Filipino and to Amend Its Statutes," For the Purpose of Extending the Corporate Powers of the Said Banco Espanol-Filipino, and for Other Purposes

February 1, 1912

ACT NO. 2132

AN ACT AMENDING ACT NUMBERED SEVENTEEN HUNDRED AND NINETY OF THE PHILIPPINE COMMISSION, ENACTED OCTOBER TWELFTH, NINETEEN HUNDRED AND SEVEN, ENTITLED "AN ACT TO CONFIRM CERTAIN RIGHTS AND FRANCHISES OF THE BANCO ESPANOL FILIPINO AND TO AMEND ITS STATUTES," FOR THE PURPOSE OF EXTENDING THE CORPORATE POWERS OF THE SAID BANCO ESPANOL-FILIPINO, AND FOR OTHER PURPOSES

SECTION 1. The following articles of the articles of incorporation of the Banco-Espa√±ol-Filipino, now known as the Bank of the Philippine Islands, embodied in Act Numbered Seventeen hundred and ninety, are hereby amended so as to read as follows:

"ARTICLE V

"The bank is authorized to engage in the following classes of transactions:

"1. Discounting bills of exchange whose maturity does not exceed six months, and commercial promissory notes whose maturity does not exceed one year.

"2. Making collection of drafts and other current negotiable paper, and advancing money thereon.

"3. Receiving deposits and opening current accounts in currency or upon the deposit of public, provincial, municipal, industrial, agricultural, or railway securities issued by legally constituted corporations.

"4. Receiving and caring for money deposited in trust, arising from legacies, voluntary and other trusts, and judicial decrees, or in any other manner.

"5. Receiving in the same manner as under paragraph four, gold and silver bars, jewelry with or without precious stones, and stocks bonds and other securities issued by corporations.

"6. Negotiating or drawing bills of exchange, whether domestic or foreign.

"7. Dealing in gold and silver.

"8. Making loans upon the security of deposit with the bank, as collateral, of precious metals, articles of commerce, products of the country, negotiable securities, and industrial and commercial bills which are easily and safely realized upon at any time: Provided, That all such loans shall be made under regulations established by the board of directors. Such collateral securities shall be accepted only at a rate not exceeding three-fourths of their market or appraised value, except that when the person or legal entity to which a loan is to be made is, in the judgment of the board of directors, sufficiently solvent, apart from the collateral furnished, loans may be made to the amount of ninety per centum of the market value of said collateral security: Provided, That said security is easily convertible into cash and the person to whom the advance is made is a client of the bank; but said person shall, upon the demand of the bank, pay in cash or deposit first-class securities to cover any depreciation in the market value of the securities furnished.

"9. Making loans on bills of lading, when invoices and insurance policies satisfactory to the bank are attached thereto: Provided, That the amount of such loan shall not exceed three-fourths of the current market value of the articles covered by such bills of lading.

"10. Granting current credit accounts in favor of clients who have been approved by the board of directors, such accounts paying to the bank a commission upon the sums upon which they are entitled to draw, in addition to the interest upon amounts actually used.

"11. Buying and selling or otherwise negotiating securities, and borrowing money upon securities owned by the bank.

"12. Making loans upon real estate but the amount invested at any one time in such loans, or in any loans upon real estate security, shall not exceed twenty per centum of the paid-up capital of the bank, and if such investments are now in excess of that sum, they shall be reduced as rapidly as the interests of the bank are deemed to justify under the direction of the Treasurer of the Philippine Islands.

"13. Making loans upon vessels which are insured and free from encumbrance, provided such loans do not exceed half the value of the ship nor run for more than one year. Such loans shall not exceed ten per centum of the paid-up capital of the bank.

"14. Making loans to individuals, firms and corporations established in the Philippine Islands and which, in the opinion of the board of directors, are of undoubted solvency, provided such loans shall not exceed ninety days in duration.

"No loans shall be made by the bank directly or indirectly to any director or officer thereof except by a vote of a majority of the Directors of the Bank, and any officer or Director of the Bank authorizing, receiving or making any such loans without the authority prescribed shall be punished by imprisonment for not less than five years and not more than ten years, and by a fine of not less than two thousand pesos and not more than twenty thousand pesos.

"15. Undertaking on commission the purchase and sale of securities, and such other banking operations, under regulations established by the board of directors, as may be within the incidental powers of a bank; but no powers shall be exercised which are not expressly granted by this Act, if such exercise is prohibited by the Governor-General of the Philippine Islands.

"16. Preparing, issuing, and circulating bank notes under the provisions of this Act.

"17. Engaging in the safe-deposit business.

"18. Acting as trustee on any mortgage or bond issued by any municipality, body politic, or corporation, and accepting and executing any other municipal or corporate trust not inconsistent with law. ATICcS

"19. Acting under the order or appointment of any court of record as guardian, receiver, trustee, or depository of the estate of any minor, insane person, idiot, habitual drunkard, or other incompetent or irresponsible person, and as receiver and depository of any moneys paid into court by parties to any legal proceedings and of property of any kind which may be brought under the jurisdiction of the court by proper legal proceedings.

"20. Acting as the executor of any last will or testament when it is named in the last will and testament as the executor thereof.

"21. Acting under appointment of a court of competent jurisdiction as administrator of the estate of any deceased person, with the will annexed, or as administrator of the estate of any deceased person when there is no will and when in either case there is no person qualified, competent, willing, able, and entitled to accept such administration.

"22. Acting as agent for the purpose of issuing or countersigning the bond or obligations of any corporation, association, municipality or other public authority, and receiving and managing any sinking fund on such terms as may be agreed upon.

"23. Accepting and executing any legal trust confided to it by any court of record or by any person or corporation for the holding, management, and administration of any estate, real or personal, and the rents, issues, and profits thereof.

"No bond or other security shall be required from the bank for the faithful performance of its duties as trustee, executor, administrator, guardian, receiver, or depositor, and the capital of the bank shall be security for the faithful performance of all the trust duties of the same: Provided, However, That claims on the bank as executor of the will of any deceased person, or as administrator with or without the will annexed of any deceased person or as guardian, receiver, trustee, or depository under and by virtue of an order or appointment of any court shall have priority over all other claims except as provided in Article XXV of this Act.

"The authority conferred upon the bank under paragraphs eighteen, nineteen, twenty, twenty-one, twenty-two and twenty-three of this article shall be subject to amendment, alteration, or reepal by the Philippine Legislature; and the bank shall keep separate books and accounts for the transactions had and money received under said paragraphs; and the money so received shall be kept separate and distinct from the capital of the bank and shall not be counted as a part of the legal reserve which the bank is required to have under Article XXXI."

"ARTICLE VII

All notes and bills of exchange discounted by the bank must bear at least two signatures of known solvency and must comply in other respect with the provisions of the existing laws except that such transactions may, with the approval of the president of the bank, be for a longer period than ninety days, and one signature may be dispensed with when loans are made on negotiable securities, as provided by paragraph 8 of Article V.

"Warrants or drafts drawn by the Treasurer of the Philippine Islands or of the United States may be accepted without the signatures and conditions required in the case of private parties."

"ARTICLE XV

"The bank may order the sale of collateral security in its custody, consisting of securities or merchandise, or any other thing, three days after having called upon the debtor, by written notice, to increase the amount of such security, if in the meantime he has failed to comply with such requirement, or after the maturity of a loan if the loan has not been paid. These sales may be made at private sales with the written consent of the debtor, or at public auction, with the assistance of a notary or exchange agent or broker, and without the requirements of any judicial order or process; and in order to avoid delay or difficulty in the disposal of such collateral security, and that the bank may accomplish the sale without interference on the part of the debtor, it shall set forth in the note or evidence of indebtedness that the collateral security given is to be considered as transferred to the bank without any further formality by the fact of delivery, under the conditions set forth therein.

"All such securities registered in the name of the owner shall be transferred in due form to the bank, which shall issue therefor a receipt setting forth the terms of the delivery and the purposes for which such transfer has been made.

"If the proceeds of the sale of such securities do not cover the full amount of the loan, together with interest and other charges thereon, the bank may proceed against the debtor for the difference, but any amount exceeding the full indebtedness to the bank shall be paid over the debtor.

"Parties obtaining loans on bills of lading must increase the amount of security with the bank whenever a fall of ten per centum takes place in the market value of the merchandise, and if upon maturity of the amount has not been paid, or the vessel has not arrived with the merchandise consisting such security, the bank may, at its option, proceed against the debtor, or await the arrival of the vessel, in order to make a sale of such merchandise, with the understanding that if the bank shall elect the former remedy, such action shall not impair the right of the bank to proceed against the security itself at such time and in such manner as it may deem proper."

"ARTICLE XXI

"The shares of the bank may be transferred by indorsement on each share, or title to shares, duly signed by the person making the transfer before an authorized public official, or in the presence of a mercantile broker. The filing with the president of the bank of said shares, or title to shares, indorsed as above provided, when made by the person in whose favor the indorsement has been made shall be proof of the right to their inscription in the books of the bank and the rights of said person as a stockholder."

"ARTICLE XXIII

"Stock of the bank may be held by persons and corporations without regard to domiciles and officers and directors may be chosen without regard to nationality, except that a majority of the board of directors shall be made up of citizens of the United States or of the Philippine Islands, but money in current account and securities and other articles of value deposited in the bank which are the property of foreigners, shall not be subject to attachment, confiscation, or seizure because of war between their respective nations, except as such processes would lie in the ordinary course of law against citizens of the United States or of the Philippine Islands." TIADCc

"ARTICLE XXV

"All outstanding circulating notes of the bank issued after January first, nineteen hundred and eight, shall constitute a preferred lien upon the assets of the bank except as to such securities as have been specifically deposited under special agreements with public officials for the safekeeping of public moneys; and any bonds or other securities deposited with the Treasurer of the Philippine Islands, as hereinbefore provided, for the security of the circulating notes of the bank, shall be held exclusively for that purpose until such notes shall be redeemed; but the Treasurer of the Philippine Islands shall give to the bank powers of attorney to receive and appropriate to its own use the interest and dividends on such securities in the custody of said Treasurer; but such powers shall become inoperative whenever the bank shall fail to redeem its circulating notes, and said Treasurer of the Philippine Islands, under regulations prescribed by the Governor-General, may permit or require an exchange to be made of any of the securities in his custody."

"ARTICLE XLIV

"The duties of the board of directors shall be as follows:

"1. To supervise the issue and transfer of certificates of stock, and establish regulations therefor.

"2. To determine from time to time the number and amount of circulating notes to be issued under the provisions of this Act.

"3. To fix the rate of discounts and loans.

"4. To prepare confidential lists of the firms and corporations to which it considers discounts may properly be accorded, fixing the amount of credit to be expended to each.

"5. To appoint agents and correspondents and to designate the points where they are to be stationed.

"6. To authorize the establishment of branch banks at such points as will serve the public interest and that of the bank, in accordance with Article IV of these statutes.

"7. To ratify, if satisfactory to it, all transactions between the bank and the Government.

"8. To take care that in all the offices of the bank the statutes, by-laws, orders, and resolutions in force are strictly observed.

"9. To examine and consider, at each regular meeting the transactions of the officers of the bank and the operations of the bank.

"10. To elect the secretary and cashiers of the bank.

"11. To appoint, on recommendation of the president of the bank, bookkeepers, and minor employees of the bank, and of its branches.

"12. To remove or suspend employees of the bank, with or without the recommendation of the officers.

"13. To draw up the annual report concerning the operations of the bank, which shall be read at the general assembly of the stockholders.

"14. To examine and audit the accounts submitted by the officers and to approve the general balance sheet.

"15. To declare semiannually, in accordance with such balance sheet the dividend to be paid to the stockholders.

"16. To examine into and take under advisement recommendations made by stockholders in general assembly for the welfare of the bank, and to present the same, with their report thereon, to the next general assembly.

"17. To make of its own motion to said general assembly all suggestions which it deems proper for he advantage of the bank."

"ARTICLE L

"The powers of the president of the bank shall be:

"1. To direct all the operations of the bank and to give orders and instructions to all the employees thereof who are to take part in said operations.

"2. To execute all contracts entered into on behalf of the bank, and to perform all other duties customarily incident to his office.

"3. To authenticate by his signature all administrative acts and obligations and documents issued by the bank.

"4. To consider and pass upon applications for discounts and loans.

"5. To institute and prosecute, in the name of the bank, all judicial proceedings that may be necessary for the collection of debts due to the bank and for the preservation of its rights.

"6. To make recommendation to the board of directors in regard to transactions not provided for by these statutes.

"7. To recommend to the board of directors the appointment of all subordinate employees and servants of the bank.

"8. To supervise and direct the conduct of the employees of the bank in the performance of their duties, and to temporarily suspend for just cause those who are delinquent therein, with the exception of those elected by the general assembly of stockholders and by the board of directors, who can only be suspended by the latter.

"9. To call the regular general assemblies of the stockholders and such extraordinary general assemblies as may be requested by not less than five members of the board of directors.

"10. To convene the board of directors in extraordinary session whenever he deems it necessary, either upon his own motion or at the request of any three members of said board.

"11. To preside at general assemblies of the stockholders and meetings of the board of directors with a vote.

"12. To make visits of inspection to the offices of the bank, and to address to the board of directors such recommendations as he may deem proper concerning its conditions.

"13. To verify the monthly balance sheet and to sign his approval of the same in the records of the bank.

"14. To sign stock certificates and to certify by his signature notes issued payable to bearer. AIDSTE

"15. To examine the report to be made to the general assembly relative to the condition of the bank, and to approve the same before it is read to the meeting, satisfying himself in advance of the correctness of its contents."

"ARTICLE LXIII

"The bank shall be dissolved, (1) upon the expiration of its legal term unless extended in accordance with the provisions of this Act, (2) upon the loss of one-half of the capital subscribed in which case the board of directors shall immediately call, within as short a period as possible, an extraordinary general assembly of the stockholders to report the condition of the bank.

"The general assembly of the stockholders may direct that the bank shall continue, in which case it may determine the necessary steps to be taken to fix the status of the bank, provided those present and voting represent two-thirds of the capital."

"ARTICLE LXVI

"Nothing in this Act shall be held to prevent the exercise by the Governor-General and the Treasurer of the Philippine Islands of the powers conferred upon them by Acts Numbered Fifty-two and Five hundred and fifty-six of the Philippine Commission, or, such amendments of said Acts as may have been enacted or as may hereafter be enacted."

SECTION 2. Wherever in the articles of incorporation of the Bank of the Philippine Islands the words "general board of directors," or "general board" appear, the word "general" is hereby stricken out.

SECTION 3. This Act shall take effect upon the filing with the Executive Secretary by the board of directors of the Bank of the Philippine Islands of the written acceptance by the bank of the provisions hereof.

ENACTED, February 1, 1912.