Question & AnswerQ&A (Commonwealth Act No. 726)
The Act provides for the rehabilitation of Philippine banks by appropriating funds for this purpose and establishing a mechanism for financial assistance and management of such funds to aid banks.
It is a special fund appropriated with ten million pesos from the National Treasury to purchase preferred shares of stock in banks for rehabilitation purposes.
Two million five hundred thousand pesos of the fund are immediately transferred to the Postal Savings Bank to be used as an asset to meet its liabilities and guarantee deposits.
The Board is composed of five members nominated by the President and appointed with the consent of the Commission on Appointments.
The Board manages and invests the fund, limits salaries and expenses for aided banks, issues rules and regulations, and authorizes disbursements.
Yes, the Board may sell any or all of its preferred shares to the highest bidder in the open market.
All dividends revert to the general fund of the National Treasury.
If the financial condition warrants it, banks may retire preferred shares by paying the par value plus accumulated dividends provided unimpaired capital and surplus remains adequate.
The Commissioner may order that an insolvent bank resume operations by converting excess liabilities into deferred payment credits payable from future net profits instead of liquidating it.
Creditors representing at least 25% of liabilities can file a Supreme Court action within 10 days after notification to annul or modify the order.
They can issue preferred stock, common stock, or both to rehabilitate themselves even without aid from the fund.
The Act took effect upon its approval on January 15, 1946.