Deposit taking and interest ceiling
- Section 3 authorizes the bank to receive deposits of funds from provinces, municipalities, the Postal Savings Bank, societies, corporations, and private persons.
- Section 3 authorizes the Postal Savings Bank and provincial and municipal governments to make such deposits.
- Section 3 limits the bank’s interest on these deposits to not exceeding 4% per annum.
Board of directors and quorum rules
- Section 4 provides that the bank is administered by a board of directors composed of:
- the Secretary of Finance and Justice (or, in his absence or disability, the Acting Secretary of Finance and Justice);
- the Insular Treasurer (or, in his absence or disability, the Acting Insular Treasurer);
- three citizens of the Philippine Islands or the United States, resident within the Philippine Islands, appointed by the Governor-General with the advice and consent of the Philippine Commission.
- Section 4 makes the Secretary of Finance and Justice (or acting) the ex officio president of the board.
- Section 4 sets three members as the required quorum for any board meeting.
Manager, bonds, and staffing powers
- Section 5 designates the Insular Treasurer (or the Acting Insular Treasurer in his absence or disability) as manager of the bank.
- Section 5 requires the manager to perform duties under the Act and the by-laws adopted under Section 8.
- Section 5 imposes liability on the official bond of the Insular Treasurer and, when applicable, the Acting Insular Treasurer for faithful performance as manager.
- Section 6 authorizes, with the approval of the Governor-General, the Insular Treasurer to constitute provincial and municipal treasurers as agents of the bank.
- Section 6 makes provincial and municipal treasurers, once constituted as agents, accountable for faithful performance and for safekeeping and accounting of money or property of the bank in their custody, with their bonds liable for such duties.
- Section 6 allows the Governor-General (on request of the board of directors at the bank or of the manager) to require any government officer or employee to perform services or render assistance to the bank.
- Section 6 authorizes the manager to appoint other personnel required for proper operation, subject to the Civil Service Act and the bank’s by-laws, with appointees performing duties and receiving salaries prescribed in the by-laws.
- Section 7 makes the Attorney-General the bank’s legal adviser, rendering services required by the manager or the board.
- Section 7 authorizes the Attorney-General, in performing duties, to require services from provincial fiscals as he deems best in the interest of the bank.
By-laws, remuneration, and approvals
- Section 8 empowers the board of directors to adopt by-laws for prudent and successful operation of the bank that do not conflict with the Act.
- Section 8 allows the board to amend or repeal by-laws.
- Section 8 requires Governor-General approval before by-laws (or any amendment or repeal) take effect.
- Section 9 provides that each board member appointed by the Governor-General with advice and consent receives PHP 10 for each day of board meeting actually attended.
Lending limits and eligible borrowers
- Section 10 limits the bank’s lending to loans for:
- payment or satisfaction of incumbrances on agricultural lands;
- construction of drainage and irrigation works;
- purchase of fertilizers, agricultural seeds, machinery, implements, and animals to be used exclusively for agricultural purposes by the borrower.
- Section 10 prohibits the bank from making any loan to any person or corporation not engaged in agricultural pursuits.
- Section 11 requires that no loan shall be made except upon a resolution of the board of directors.
- Section 11 sets borrower loan limits:
- no borrower may be permitted to borrow less than PHP 50 or more than PHP 25,000.
- Section 11 mandates a set-aside: 50% of the capital of the bank must be set apart for loans of not more than PHP 5,000 to any one person or corporation.
Loan security requirements and covenants
- Section 12 requires that no loan shall be made except under one of the following security arrangements:
- (a) Real property mortgage:
- secured by a first mortgage on unincumbered, improved urban property, or on incumbered agricultural land;
- limited to not exceeding 40% of the value of the property.
- requires Attorney-General certification and board satisfaction that the offered real estate is free from all incumbrances and that title is in the mortgagor.
- requires all mortgages to include a covenant requiring the mortgagor to insure for the benefit of the mortgagee all buildings of strong materials on the property for an amount equal to their value as fixed by the board of directors.
- (b) Chattel mortgage on harvested crops:
- secured by a chattel mortgage to the bank on crops already harvested, gathered, and stored.
- limits such crop loans to not exceeding 40% of the market value of the crops on the date of the loan.
- requires the mortgagor to insure the mortgaged crops for the benefit of the mortgagee for the full amount of the loan.
- (a) Real property mortgage:
Mortgage and chattel mortgage registration
- Section 13 requires that all mortgages on real property and chattel mortgages on harvested, gathered, and stored crops be registered with the register of deeds in the jurisdiction where the property is situated.
- Section 13 imposes on the register of deeds the duty to endorse on the mortgage and on the record the date and hour of reception.
- Section 13 provides that registration constitutes notice to all the world of the lien and the terms and conditions of the mortgage.
- Section 13 requires the expenses of registration to be paid by the borrower.
Interest and fee prohibitions
- Section 14 caps the bank’s charges on loans: the bank shall not exact more than 10% per annum on any loan it makes.
- Section 16 prohibits the bank from exacting or paying any fee or charge of any kind by way of commission for granting or obtaining loans.
- Section 16 punishes any official who exacts, demands, or receives any fee for obtaining a loan or for using influence to obtain a loan by imprisonment for not less than 1 year nor more than 5 years, at the court’s discretion.
Loan term, installment payment
- Section 15 limits loan duration: loans shall not be made for a period exceeding 10 years.
- Section 15 allows installment payments, payable as the board of directors determines in each case.
Foreclosure redemption right
- Section 17 grants the mortgagor a right to redeem the foreclosed property.
- Section 17 requires redemption to be exercised within 1 year after foreclosure sale is accomplished.
- Section 17 requires redemption payment to include:
- the amount found due by the court in the decree of foreclosure;
- interest at the rate specified in the mortgage;
- all costs incurred by the bank due to foreclosure and sale and the care of the property.
Corporate powers and relationship to general law
- Section 18 grants the agricultural banking corporation the general powers mentioned in Section 13 of “The Corporation Law”, to the extent those powers are not in conflict or inconsistent with the Act.
Repeal and effectivity
- Section 19 repeals all Acts or parts of Acts inconsistent with the Act.
- Section 20 provides for effectivity on July 1, 1908.