QuestionsQuestions (DOLE DEPARTMENT ORDER NO. 2)
The bank is the “Agricultural and Industrial Bank of the Philippines,” with the short name “Agricultural and Industrial Bank.” Its principal place of business is the City of Manila, and it is to exist for a period of fifty (50) years.
The bank must begin to operate within one hundred eighty (180) days from the date of approval of the Act. The President fixes the exact date by proclamation upon certification by the Auditor-General and the General Manager that the bank is ready to begin operations.
Among others, the bank may grant agricultural, industrial, and real estate loans; establish and operate bonded warehouses; underwrite/guarantee certain bonds; act as a trust corporation to manage funds formerly entrusted to the National Investment Board; issue bonds; accept savings and time deposits; and exercise powers reasonably necessary to carry on its business (including suing and being sued, power of succession, and holding/disposing of certain real properties and bonds).
The Government of the Philippines exclusively and fully subscribes. Capital stock is P150,000,000 divided into 150,000 shares at par value of P1,000 each. Payment is: P25,000,000 upon subscription, and the remainder upon calls of the Board of Directors upon certification by the Secretary of Finance, approved by the President, subject to annual calls not exceeding P15,000,000.
The voting power is vested in the President of the Philippines, or in such person or persons as the President may designate.
Agricultural loans secured by real estate mortgages must not exceed 60% of the appraised value of the securities (including improvements and other assets acquired with proceeds). Maturity cannot be less than 1 year or more than 30 years from the date of the loan.
Applications must be in writing and under oath and must include: (a) detailed description of real estate/assets; (b) appraisal at reasonable market value; and (c) full statement of purposes. It is unlawful to use proceeds for any purposes other than those stated; misuse can lead to criminal liability, rescission of the contract, and foreclosure of the mortgage.
Industrial loans must be for promotion of industry secured by mortgage or deed of trust on assets of an industrial establishment. They must not exceed 60% of the market value of the securities (including improvements and other assets acquired with proceeds). Maturity must be at least 1 year from the date.
All powers, duties, funds, properties, assets, accounts, contracts, and choses in action of the National Investment Board are transferred to the bank, which will exercise them per the relevant Acts, except as provided. The bank assumes the liabilities of the National Investment Board as trustee of the transferred funds. The National Investment Board is abolished on the date the bank begins operations.
It may act as trustee on any mortgage or bond issued by municipalities, bodies politic, or corporations, and may accept and execute other municipal or corporate trusts not inconsistent with law.
The bank may issue real estate bonds with face value not less than P25, in any sum not to exceed 90% of the amount of real estate loans held by the bank under Section 7.
The real estate securities (against which the real estate bonds are issued) must be deposited with the Treasurer of the Philippines, and the bonds must bear a certification on their face regarding the deposited first mortgage real estate securities and required coverage ratios stated in the section.
Under Section 24, deposits may be loaned or invested only as specified (e.g., mortgages on unencumbered improved real estate; certain government and guaranteed bonds; loans secured by transferred first mortgages as collateral; collateral trust bonds/notes meeting specified seasoning and coverage conditions). Under Section 25, real property without Torrens title may be accepted if the bank is satisfied the debtor is the possessor/owner and possession has been continuous and uninterrupted for the last 10 years, the land has been cleared/improved during that time, and real estate tax has been paid by the debtor and predecessors during the same period.
If the securities decline/depreciate, become insufficient/unsecured, or if promises are not performed, the bank may demand additional securities and upon failure declare the obligation due and sell/assign/transfer securities or substitutes. If the securities consist of a real estate mortgage, sale may follow the foreclosure procedure referenced (including Act 3135 as amended). Under Section 30, extra-judicial sale need not publish in newspapers if assessed value does not exceed P1,000; if it exceeds that amount, notice is to be published in the Official Gazette, and notice is sent by registered mail to the debtor and the local treasurer.
The mortgagor/debtor has one (1) year from the auction date to redeem by paying to the bank all amounts owed on the date of sale, plus interest at the rate agreed in the obligation from that date, subject to exceptions if the bidder took material possession or the property was delivered to the bidder.
Total liabilities of any person/company/corporation/firm for money borrowed from the bank must not exceed 15% of the bank’s unimpaired capital and surplus, except for government instrumentalities.
Key prohibitions include: (1) officers/employees and certain government officials may not borrow from the bank or be guarantors/indorsers/sureties for others’ bank loans; knowing violations lead to removal and penalties of imprisonment up to 5 years plus fines. (2) No loan to a corporation/partnership/company where a board member is a shareholder/agent/employee unless by unanimous board vote excluding the interested member; directors violating can be removed and penalized. (3) No fees/commissions/gifts/charges for obtaining loans; offenders face fines and/or imprisonment. (4) Providing false information to obtain/renew/increase loans, or permitting false information to pass unnoticed through connivance/negligence causing damage/danger to the bank, is punished with imprisonment and fines tied to loan amounts. (5) General violation of any other provisions not specifically covered earlier is punished with fines and/or imprisonment at the court’s discretion.