Revised Charter of Philippine Veterans Bank

Corporate powers and principal authority

The Veterans Bank has power to promulgate its bylaws, adopt and use a seal, and sue and be sued.
The Veterans Bank may carry on a trust business, subject to compliance with pertinent laws and in accordance with Bangko Sentral ng Pilipinas (BSP) rules and regulations.
The Veterans Bank may grant loans and advances in accordance with Republic Act No. 8791 (General Banking Law of 2000) and BSP rules and regulations, with preference given to veterans defined under Section 6(a).
The Veterans Bank may invest in stocks and other investment instruments, and may issue bonds and other certificates of indebtedness, in accordance with Republic Act No. 8791 and BSP rules and regulations.
The Veterans Bank may contract obligations and enter into agreements essential to proper management and to carry out its aims and purposes.
The Veterans Bank may appoint and dismiss its officers and employees.
The Veterans Bank may create and/or make equity investments to subsidiaries and affiliates or privately owned financial institutions, subject to limitations under Republic Act No. 8791 and BSP rules and regulations.
The Veterans Bank may exercise general powers granted in Republic Act No. 11232 (Revised Corporation Code of the Philippines) and Republic Act No. 8791, insofar as these are not inconsistent or incompatible with the Act.

Capital stock and veteran share structure

The authorized capital stock is Ten billion pesos (P10,000,000,000.00) divided into seventy-five million (75,000,000) common shares and twenty-five million (25,000,000) preferred shares, each with a par value of One hundred pesos (P100.00).
The Board of Directors and stockholders are authorized to increase the authorized capital stock and provide features of preferred shares, subject to pertinent laws and BSP and Securities and Exchange Commission (SEC) rules and regulations.
The common shares include:
- 510,000 original common shares subscribed and fully paid by the government for and in behalf of World War II veterans and already issued/transferred to them; and
- stock dividends on common shares issued as subscription on authorized capital stock increases approved by the SEC as of the Act’s effectivity date.
The unsubscribed balance of increases in authorized capital stock for common shares is opened for subscription by the existing stockholders and the other veterans entitled to benefit under Section 6(a).
The preferred shares include:
- 490,000 original preferred shares subscribed and fully paid by veterans; and
- stock dividends on preferred shares issued to stockholders.
The unsubscribed shares from approved preferred-share increases are opened for subscription by existing stockholders and other veterans entitled under Section 6(a).
Transfer of shares of a veteran to the veteran’s widow, orphan, or compulsory heir by succession or donation is not subject to tax.
Shares may be opened for investment to non-veterans, provided that majority of the common shares is held at all times by veterans defined under the Act.
The Board of Trustees of the Veterans of World War II (BTVWW II) continues as trustee of all issued but undelivered common and preferred shares, and that Board traces back to its original designation under Section 8 of Republic Act No. 7169.

Who qualifies as “veteran” and beneficiaries

Section 6(a) defines “veteran or veterans” primarily as persons who served in the regularly constituted air, land, or naval services or arms, or in non-regularly organized military units in the Philippines during World War II, with services duly recognized by the Republic of the Philippines or the Government of the United States of America.
For purposes of the Act, “veteran or veterans” includes:
- the widow, orphan, or compulsory heir of a deceased veteran, as determined by existing laws; and
- veterans referred to under Republic Act No. 6948, as amended by Republic Act No. 9396.
Post-World War II veterans and AFP retirees enjoy the benefits and privileges of the Act after they have invested in the Philippine Veterans Bank.
“Organized or acknowledged veterans organizations” are veterans organizations duly recognized or acknowledged by PVAO and the AFP, both keeping an official roster of such organizations.
Share and benefit distribution is equal among each beneficiary—war veteran or widow/orphan/compulsory heir—regardless of rank and services rendered.
Orphans of a deceased veteran are counted as one (1) unit only; all orphans together share an equal amount to that of a surviving war veteran or surviving widow.

Board, officers, and internal governance

The Veterans Bank is directed by a Board of Directors of fifteen (15) members, with five (5) independent directors.
The Board of Directors is elected in proportion to the shareholdings of veterans and non-veterans, and is elected annually in the manner under Section 22 of Republic Act No. 11232.
Directors must have formal business training and/or expertise in banking and finance and must possess qualifications and none of the disqualifications required under BSP rules and regulations.
Unless allowed under BSP rules and regulations, no director, officer, or employee of any other bank is eligible as a member of the Veterans Bank Board except independent directors.
Directors receive a per diem or allowance for every board meeting they actually attend; the amount must be within acceptable banking industry rates and is set under Republic Act No. 11232.
Upon a majority vote of all members, the Board of Directors elects its chairperson, vice-chairperson, and secretary per the bylaws.
The chief operating officer is the President, chosen by the Board of Directors.
The President is assisted by Vice Presidents elected and removable by the Board of Directors.
The President must have at least ten (10) years experience; Vice Presidents must have at least five (5) years experience in banking and finance as top executives.
The President and Vice Presidents receive reasonable salaries set and approved by the Board in line with applicable laws and sound corporate governance practices.
The Board of Directors formulates policies and adopts bylaws, and it determines the organization by creating departments or offices essential to efficient operations.
Subject to prior approval of the Monetary Board, the Board may establish branches or agencies in other countries.
The Board may create an executive committee and other committees, with composition, powers, and duties it prescribes, subject to BSP rules and regulations.
The President executes and administers board-approved policies and directs and supervises operations and administration.
The President must approve loans, investments, and other instruments in accordance with Republic Act No. 8791 and BSP rules, but the total amount must not exceed five percent (5%) of the paid-up capital and surplus; anything beyond that requires Board approval.
The President reports monthly to the Board the main facts concerning preceding-month operations and suggests changes in rates of discount of interest, exchange, or policy.
The Board appoints a legal department head and members for the Veterans Bank legal department; the Board may engage private external counsel when necessary.
The Veterans Bank has an auditing department; its head is appointed by the Board, preferably a certified public accountant with actual experience in comptroller or auditor work; the auditor may not suffer diminution of salary and may not be removed except for cause.
The auditor must report to the Board and government regulatory authorities on the Veterans Bank’s condition, and the Board sets the reporting frequency subject to BSP rules and regulations.
Other officers are appointed and removed by the Board upon recommendation of the human resources committee; preference is given (all other circumstances equal) to veterans or their widows/orphans/compulsory heirs with the required banking and finance qualifications, integrity, experience, and expertise under BSP rules.

Authorized lending and operational limits

The Veterans Bank is authorized to grant loans, advances, or other credit accommodations for establishment, rehabilitation, expansion, or development of agricultural, commercial, and industrial enterprises, or personal services including public utilities, subject to Republic Act No. 8791, BSP rules and the terms set by the Board, with preference to veterans under Section 6(a).
The Veterans Bank is authorized to invest in stocks and other investment instruments subject to Republic Act No. 8791 and BSP rules.
The Veterans Bank is authorized to issue bonds and other certificates of indebtedness subject to Republic Act No. 8791 and BSP rules.

Oversight by BSP and restrictions on conflicts

The Veterans Bank is subject to BSP supervision and examination under Republic Act No. 7653 (New Central Bank Act), as amended, and Republic Act No. 8791.
The Secretary of Finance, the Governor of the BSP, other Monetary Board members, and the head of the Auditing Department of the Veterans Bank (except when that head is a veteran stockholder or heir) are prohibited from owning stock in the Veterans Bank or becoming indebted to it, directly or indirectly.

Related-party lending limits

The Veterans Bank is prohibited from granting loans directly or indirectly to any director, officer, employee, or agent of the Veterans Bank.
Loans are prohibited to any corporation, partnership, or company where any member of the Board of Directors is a shareholder, agent, or employee, in any manner.
Loans to such persons or entities are allowed only by unanimous vote of the members of the Board present in a meeting, excluding the interested member.
Total liabilities to the Veterans Bank of any corporation where any Board member is a shareholder, agent, or employee must never exceed five percent (5%) of the surplus and paid-up capital of the Veterans Bank.

Real estate from debt collection

The Veterans Bank may hold real estate it finds necessary to acquire in the collection of debts due to it or its branches.
Real estate acquired in debt collection must be sold within five (5) years from the date of acquisition.
After foreclosure sale of real estate due to a mortgage, the mortgagee has a right to redeem within one (1) year by paying:
- the amount fixed by the court in the order of execution;
- interest at the rate specified in the mortgage;
- and all costs and other judicial expenses incurred by the Veterans Bank for execution, sale, and custody.

Collateral remedies and deficiency collection

The Veterans Bank may demand additional securities, dispose of them, and advance the maturity of credits in cases of loss or decline in market value of collaterals, default or non-performance of obligations by the debtor.
The Veterans Bank may collect any deficiency for loans and other credit accommodations granted under or against securities and collaterals, subject to Republic Act No. 8791 and applicable laws on collaterals, mortgage, foreclosure, redemption, and their implementing rules and regulations.
If proceeds of collateral sale do not cover the full loan amount plus interest and other charges, the Veterans Bank may proceed against the debtor for the difference, and any excess over the full indebtedness must be paid to the debtor.

Loan solicitation fee ban and penalties

No fee, charge, or commission may be exacted, demanded, or paid for obtaining loans, directly or indirectly, by any director, officer, employee, or agent of the Veterans Bank.
No director, officer, employee, or agent may receive a fee for service or for the use of influence in obtaining a loan.
Violations are punished by a fine of not exceeding One hundred thousand pesos (P100,000.00) or imprisonment of not more than five (5) years, or both, at the discretion of the court.

Net profit allocation and BTVWW II funds

At the close of each calendar year, the Veterans Bank determines net profit by including provisions for impairment allowances in accordance with BSP rules and regulations.
Twenty percent (20%) of net profit accrues to the reserve account.
From the remaining net profit after the reserve accrual, the Veterans Bank deducts guaranteed earnings of the preferred shares and ten percent (10%) dividends on common shares.
Declarations and payouts are made from unrestricted and free retained earnings in accordance with Republic Act No. 11232, Republic Act No. 8791, and BSP rules and regulations.
After deducting guaranteed preferred-share earnings and ten percent (10%) common-share dividends, twenty percent (20%) of net profit, or Thirty million pesos (P30,000,000.00), whichever is lower, is paid in cash to BTVWW II for disposition.
Paid cash to BTVWW II is available for grants-in-aid to veterans, widows, orphans, or compulsory heirs for educational, social, charitable, and rehabilitation purposes, for organizations serving the veterans’ cause.
The maximum grant-in-aid limit may be increased by mutual agreement between the Veterans Bank and BTVWW II.
BTVWW II must render an accounting of funds received from the Veterans Bank and must have the funds audited annually by a reputable external auditing firm.
The remaining profits are disposed of by the Board of Directors in accordance with Republic Act No. 11232, Republic Act No. 8791, and BSP rules and regulations.

Reorganization of trustees board

When shareholdings of post-World War II veterans and AFP retirees surpass shareholdings of World War II veterans and their compulsory heirs, BTVWW II reorganizes into the Board of Trustees of Veterans defined under Section 6(a).
The reorganized Board consists of eleven (11) members elected from among all veterans by the stockholders during the annual stockholders meeting.
Immediately after election, the members elect from among themselves a Chairperson and Vice-Chairperson.
Trustees serve without compensation other than actual and necessary expenses incurred in attending meetings or other authorized official business.
A majority vote of all members authorizes disposal of funds held by the Board.
The Board appoints a Secretary and other necessary officials and employees; compensation must be reasonable and follow applicable laws and sound corporate governance practices.
All powers, privileges, duties, and responsibilities of the prior BTVWW II transfer to the reorganized Board of Trustees of Veterans.

Long-term existence and official depository

The Veterans Bank’s legal existence under the Act is perpetual in accordance with Section 11 of Republic Act No. 11232.
The Secretary of Finance, the National Treasurer, authorized representatives, city and municipal treasurers, and official custodians of public funds, or those belonging to government-owned or controlled corporations are authorized to make and actually maintain deposits of any government or corporate fund with the Veterans Bank, which is declared an official government depository.

Restrictions on naming “Veterans”

All banks other than the Veterans Bank, and other banks already licensed in the Philippines whose names include the word “veterans,” are prohibited from using the word “veterans” as part of their names or titles.
Any party violating this prohibition is subject to a fine of not less than Ten thousand pesos (P10,000.00) for each day during which the violation is committed or repeated, enforced by the Veterans Bank.

General penalties for Act violations

Any director, officer, employee, or agent of the Veterans Bank who violates or permits violation of any provision of the Act, or any person aiding or abetting such violation, is punished by a fine of not exceeding One hundred thousand pesos (P100,000.00) or imprisonment of not more than five (5) years, or both, at the discretion of the court.

Formation effect, articles acceptance, and business authority

Upon approval, the Act is deemed accepted as the statutory articles of incorporation or charter of the Veterans Bank for all legal intents and purposes.
The Veterans Bank continues to be deemed registered and duly authorized to operate as a private commercial bank as of the Act’s approval date, notwithstanding any existing law to the contrary.

Government publication, separability, and repeal

If any provision of the Act is held unconstitutional or invalid, the other provisions not affected remain valid under the separability rule (Section 30).
Republic Act No. 3518, as amended, is repealed.
Republic Act No. 7169 and the existing Articles of Incorporation of the Veterans Bank approved by the BSP and SEC are repealed or modified to the extent inconsistent with the Act.
Capital structure changes, license upgrade/downgrade, and changes in principal office address and other amendments to Articles of Incorporation and Bylaws must follow Republic Act No. 11232, Republic Act No. 8791, and other related laws insofar as not inconsistent with the Act.
Existing bylaws of the Veterans Bank approved by BSP and SEC are repealed or modified to the extent inconsistent with the Act.
All laws, acts, executive orders, administrative orders, proclamations, rules and regulations, or parts thereof inconsistent with the Act are repealed or modified accordingly.

Effectivity and timeline

The Act takes effect fifteen (15) days after its publication in the Official Gazette or in a newspaper of general circulation (Section 32).
Passage of the consolidated bills occurred on September 28, 2021 (House of Representatives) and September 29, 2021 (Senate).