QuestionsQuestions (Republic Act No. 3779)
Section 2 declares the policy of the State: to regulate and supervise savings and loan association activities for sound, stable, efficient operations; to lay down minimum requirements/standards for establishing and doing business; to maximize protection of the public, members, and stockholders against misfeasance and malfeasance; and to encourage industry, frugality, and accumulation of savings.
It includes any corporation engaged in accumulating the savings of its members or stockholders and using those accumulations (and corporate capital for stock corporations) for loans and/or investment in securities of productive enterprises or in government securities, or securities of political subdivisions/instrumentalities/corporations.
A savings and loan association may be organized either as a stock corporation or as a non-stock corporation.
A stock association must have fully paid-up capital of at least PHP 100,000 and is authorized to receive deposits from and extend loans to the general public.
They must confine membership to a well-defined group and must not transact business with the general public; they accept deposits and grant loans only to member-depositors.
No entrance fees may be charged without Monetary Board approval. In no case may total fees exceed 1% of the amount deposited, contributed, or otherwise paid by the particular shareholder/stockholder/member.
No loan shall have a maturity date of more than one year.
(1) Not exceeding the amount deposited plus the borrower's four months' salary or regular income. (2) Not exceeding 70% of the fair value of acceptable property acceptable as collateral on first mortgage.
The treasurer, cashier, or paymaster of the office employing the borrower may deduct from salary/wage/income according to the loan terms, remit deductions to the association, and collect a reasonable authorized fee—notwithstanding contrary provisions of existing laws, rules, or regulations.
No association shall carry on its books for any person any demand/commercial/checking account or any credit withdrawable upon presentation of any negotiable check or draft.
No advertisement may be issued/published/permitted that the association does any business prohibited by law, or that misrepresents its shares/stock/investment certificates or the rights of investors or depositors.
Before transacting any business, the association must procure a license to transact business from the Monetary Board. The license may be revoked or suspended after notice and hearing.
If, upon examination/investigation, it finds: (a) it will be formed for a business other than legitimate savings and loan business; (b) the financial program is unsound; or (c) the area is adequately served by one or more existing associations.
For non-stock associations: the person must be a member. For stock associations: must be an owner in his own right of stocks with aggregate par value of at least PHP 5,000.
They cannot receive or be paid any commission/emolument/gratuity/reward based on the volume or number of loans made, or based on interest or fees collected.
Bonds and securities: no more than 10% of total assets at any one time. Real property: no more than 5% of total assets at any one time.
When it finds the association is violating its articles/by-laws/law or conducting business in an unsafe or injurious manner, or is insolvent—then it may order discontinuance of violations/unsafe practices and conformity with legal requirements.
Examples include: failure to comply with Section 25 order within time; unsafe condition/injurious practices; impaired assets such that after deducting liabilities other than to investors, assets do not equal or exceed outstanding shares/investment certificates and par value of stock; refusal to submit books/papers/accounts for inspection; or refusal by an officer to be examined upon oath.