Increase in Authorized Capital Stock and Appropriation of Funds for Paid-Up Capital of the Development Bank of the Philippines

May 19, 1973

PRESIDENTIAL DECREE NO. 195

AUTHORIZING THE INCREASE IN AUTHORIZED CAPITAL STOCK AND APPROPRIATING FUNDS FOR PAID-UP CAPITAL OF THE DEVELOPMENT BANK OF THE PHILIPPINES

WHEREAS, in line with the objectives of rapid economic growth, it is necessary for the Government to provide massive credit financing for the development and expansion of industry and agriculture;

WHEREAS, the Development Bank of the Philippines is one of the primary agencies of the Government which provides credit facilities for economic development;

WHEREAS, under its Charter (Republic Act No. 2081, as amended) the Development Bank of the Philippines has an authorized capital of P2 billion fully subscribed by the Government of which only P408.7 million has been paid;

WHEREAS, in accordance with the findings of the Performance Evaluation Team which conducted an audit of the financial affairs and operations of the Development Bank of the Philippines pursuant to Presidential Memorandum Order No. 247, Series of 1971, it is desirable to increase the capital stock and paid-up capital of the said Bank to enable it to sustain the credit requirements of a rapidly expanding economy; cd i

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers in me vested by the Constitution as Commander-in-Chief of all the Armed Forces of the Philippines, and pursuant to Proclamation No. 1081, dated September 21, 1972 and General Order No. 1 dated September 22, 1972 as amended, and in order to effect the desired changes and reforms in the social, economic, and political structure of our Society, do hereby order and decree the amendment of Republic Act No. 2081, as amended, as follows:

SECTION 1. Section Three of R.A. 2081, as amended is hereby amended to read as follows:

"Sec. 3. Capital Stock. — The capital stock of the Bank shall be three billion pesos divided into three million shares having a par value of one thousand pesos each. The said capital stock shall be fully subscribed by the Government of the Republic of the Philippines and payment of the said subscription shall be as follows:

"(a) At least fifty per centum (50%) of the surplus account of the Bank as of June 30, 1962 and at least twenty per centum (20%) of the net profits that may hereafter be realized as well as profits that may be assigned as dividends to the shares of the Government shall be automatically applied of the payment of the subscribed capital stock of the Government until the said capital stock shall have been fully paid for, in which case the said profits shall be utilized for such purposes as may be authorized by the Board of Governors."

"(b) The provisions of Section three of Republic Act Numbered Seventeen hundred eighty-nine to the contrary notwithstanding, an amount equivalent to fifty per cent of the proceeds from the sale of reparations goods and services for fifteen years following the approval of this Act, is hereby appropriated to cover the payment of the unpaid subscription of the government to the capital stock of the Bank: Provided, That seventy-five million pesos of such amount shall be set aside as a trust fund for the purpose of aiding the establishment of private provincial and city development banks as provided in this Act."

(c) The portion of the stabilization tax allocated for deposit to a Special Account with the Development Bank of the Philippines, pursuant to Section 4 (c) of Republic Act Numbered Six Thousand One Hundred Twenty Five, as amended, otherwise known as the Stabilization Tax Law, shall be automatically applied to the payment of the Government's subscription to the Capital Stock of the Bank effective as of the date of receipt thereof.

"(d) The obligations of the Development Bank of the Philippines as of April 30, 1973 represented by bonds issued by said Bank and held by Central Bank of the Philippines including interest thereon, rounded to the nearest thousand, and loans or advances made under R.A. No. 265 and R.A. 2081, together with interest thereon, rounded to the nearest thousand, shall be converted into paid-in capital by the Government which shall assume said obligations; and for this purpose, the President of the Philippines, upon recommendation of the Secretary of Finance, shall issue in favor of the Central Bank of the Philippines treasury bonds, notes or securities, in such amounts as may be necessary for the settlement of said obligations and under such terms and conditions as shall be recommended by the Secretary of Finance in consultation with the Monetary Board.

SECTION 2. This Decree shall take effect immediately.

DONE in the City of Manila, this 19th day of May, in the year of Our Lord, Nineteen Hundred and Seventy-Three.