Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
Third Regular Session

HOUSE BILLNO, __9166

Introduced by REP. HENRY C. ONG

EXPLANATORY NOTE

Republic Act No. 3518 (1963), as amended by Republic Act No. 7169 (1992),
created the Philippine Veterans Bank ("PVB”) to serve as a bank primarily for the
benefit of Filipino veterans of World War II, their widows, orphans, and compulsory
heirs.

However, the law likewise restricts equity holdings strictly to such
beneficiaries. If only World War II veterans and their beneficiaries are allowed to
subscribe to the capital stock of PVB, its ability to raise capital to keep up with
regulatory requirements and the competitive banking environment will be greatly
impaired. With originally 200,000 war veterans that fought and were involved during
World War II, at present, there are only around 5,000 veterans living. These are at
least 90 years old.’ Coupled with the increasing competition in today’s banking
industry greatly driven by the advent of technology, limiting capital source to a
select group is highly disadvantageous.

Hence, to assure the bank’s financial growth and stability, there is a need to
open up equity ownership to a broader base of shareholders and to adapt new
approaches to governance and management to increase profitability. This will enable
PVB to better serve the needs of the intended beneficiaries as well as other
stakeholders.

Likewise, it is the intention of this bill to expand the benefits of PVB’s banking

operations not only to World War II veterans but also to veterans of other Philippine
wars and to active and retired military personnel.

* https://www.sunstar.com.ph/article/1746794. Accessed March 10, 2019



Thus, in order to achieve said purposes and to ensure the financial viability of
the Philippine Veterans Bank, this bill proposes amendments to the bank's charter to
effect structural and organizational changes in light of changing economic
circumstances and trends in the field of banking. This is especially vital in light of the
call of the BSP to innovate and encourage competition.? By adopting these
innovations, we not only increase the bank’s future viability, but more importantly,
we give tribute to our thousands of veterans who risked their lives for the country by
ensuring that the specialized bank created for them continue to thrive.

In view of the foregoing reasons, approval of this bill is earnestly sought.

My 4

HENRY C. ones

® nttps://www.philstar.com/business/banking/20 18/03/13/1796080/bangko-sentral-ng-pilipinas-
encourages-competition-innovation-banking-sector. Accessed March 10, 2019


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

SEVENTEENTH CONGRESS
Third Regular Session

HOUSE BILL NO. _9166

Introduced by REP. HENRY C. ONG

“AN ACT CONSOLIDATING ALL SUBSEQUENT AMENDMENTS TO THE
CHARTER OF THE PHILIPPINE VETERANS BANK, REENACTING FOR THE
SAID PURPOSE THE PERTINENT PORTIONS OF REPUBLIC ACT NO. 3518,
AS AMENDED, AND INTRODUCING FURTHER AMENDMENTS THERETO”

Be it enacted by the Senate and the House of Representatives of the
Philippines in Congress assembled:

SECTION. 1. Short Title. - This Act shall be known as the “Philippine
Veterans Bank Act of 2019.”

SECTION 2. Declaration of Policy. - In order to give meaning and
realization to the constitutional mandate of providing immediate and adequate
benefits and other forms of assistance to all Filipino war veterans, as well as
active and retired military personnel, in recognition of their patriotic services in
times of war and peace for the cause of freedom and democracy, including their
surviving spouses and orphans, it is hereby declared the policy of the Government
to execute a viable plan that will promote the welfare of all Filipino war veterans
and military personnel; in line with the policy of the State to foster their socio-
economic security and general well-being, by extending to them substantial support
for their livelihood and income-generating projects, through the efficient and
effective revitalization of the Philippine Veterans Bank, hereinafter known as the
Veterans Bank, which is deeply imbued and impressed with public interest.

SECTION 3. Section 2 of Republic Act Number Thirty-Five Eighteen (R.A.
No. 3518) is amended, renumbered and further amended to read as follows:

“SECTION 3. Corporate Powers. — The Philippine Veterans Bank, upon
its organization, shall be a body corporate and shall have the power to
carry on and engage in the business of commercial banking and, with
prior approval of the Monetary Board, expanded commercial banking;
to have and exercise, subject to the laws of the Philippines, all rights,
privileges, powers and attributes of a commercial bank; to engage in
and carry on the business of a trust company; to exercise the general


powers of corporations as provided by law insofar as they are not
inconsistent and incompatible with the provisions of this act; and to
adopt such by-laws and formulate policies, rules and regulations for
the effective operation of the Bank in conformity with this Act and
other existing laws.

The presence of majority of all active stockholders, as determined by
the Board of Directors, and notified prior to either a regular or special
meeting called for the purpose shall constitute a quorum to do
business.

SECTION 4. Section 3 of R.A. No. 3518 is hereby further amended and
renumbered to read as follows:

“SECTION 4. Authorized capital stock — Par value. —

(a) The capital stock of the Veterans Bank shall be Twelve Billion
Pesos (P 12,000,000,000.00) divided into Eighty-Four Million
(84,000,000) common shares and  Thirty-Six Million
(36,000,000) preferred shares with a par value of One Hundred
Pesos (P100.00) each. The 84,000,000 common shares shall
include: (i) the original Five Hundred Ten Thousand (510,000)
common shares subscribed and fully paid by the National
Government for and in behalf of World War II veterans known
and determined, whether delivered or undelivered; and (ii) the
additional common shares issued by way of increases in the
authorized capital stock of the Veterans Bank, approved by the
Monetary Board and the Securities and Exchange Commission as
of the date of the effectivity of this Act. The unsubscribed
balance of the 84,000,000 common shares shall be open for
subscription by veterans, retirees and pensioners from the
Armed Forces of the Philippines, military personnel in active
service, and any other interested investor from the private
sector: Provided, That the corporate and _ individual
stockholdings in the Bank shall be within the ceilings prescribed
in Sections 12(b) and (d) of Republic Act No. 337, as amended;
and provided further, that the total private sector investment
subscription shall not exceed forty-nine percent (49%) of the
authorized capital stock.

(b) | The 36,000,000 preferred shares shall include: (i) the original
Four Hundred Ninety Thousand (490,000) shares subscribed
and fully paid by the National Government in behalf of veterans
known and determined and (ii) the additional preferred shares
issued by way of subsequent increases in the authorized capital
stock of the Veterans Bank, and approved by the Monetary
Board and the Securities and Exchange Commission as of the
date of the effectivity of this Act. The unsubscribed balance of

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the 36,000,000 preferred shares shall be open for subscription
by those who are eligible to subscribe to common shares as
provided in the preceding paragraph hereof: Provided, That the
preferred shares shall have such features and terms as may be
decided upon by the Board of Directors of the Veterans Bank,
subject to the provisions of existing applicable laws and
regulations.

(c) Shares of stock, common and/or preferred, outstanding as of
the date of the effectivity of Republic Act No. 7169, fully
subscribed and paid by the Government of the Republic of the
Philippines for and in behalf of the veterans, their widows,
orphans or compulsory heirs as defined and determined under
Section 5 hereof; which are still in the name of the Republic of
the Philippines, including common shares of stock already issued
in the name of veterans, their widows, orphans or compulsory
heirs but which have not actually been delivered to said
veterans, their widows, orphans or compulsory heirs, for any
reason whatsoever, shall be held in trust by the Board of
Trustees of Philippine Veterans, as provided under Section 21
hereof, for the veterans, their widows, orphans or compulsory
heirs in whose names said shares are issued, or who shall
eventually be determined by the Philippine Veterans Affairs
Office to be entitled to said shares; and the voting and other
rights pertaining to said subscribed shares shall be exercised by
the President of the Philippine Veterans Bank until such time as
the shares have been delivered to their rightful owners.

(d) Shares of stock may be sold or transferred to any party veteran,
widow, orphan or compulsory heir of a veteran, to a party who
is qualified to subscribe under Section 4 (a) and (b) hereof. Any
share may likewise be sold or transferred to the Bank, which
may issue the same to the stockholders, including those from
the private sector; Provided that private sector ownership does
not exceed the 49% ceiling under Section 3(b) hereof.

(e) The stockholders may, in accordance with the applicable
provision of the Corporation Code and subject to the approval
by the Monetary Board, increase the capital stock of the
Veterans Bank: Provided that, any such increase shall be
registered with the Securities and Exchange Commission; and
Provided further, that such increase shall not be subject to any
pre-emptive rights on the part of the existing stockholders.”

SECTION 5. Pursuant to subsequent amendatory laws particularly,
Presidential Decree 1855, and other related laws, Section 4 of R.A. No. 3518 is
hereby further re-numbered and amended to read as follows:


“SECTION 5. Determination of veterans entitled to benefit from this Act. —

(a) The term "veteran or veterans" shall include: (i) any person or
persons who served in the regularly constituted air, land or naval
services or arms, or in such non-regularly organized military units in
the Philippines during World War II and whose services with such
units are duly recognized by the Republic of the Philippines or by
the Government of the United States, (ii) those who served in the
Philippine Expeditionary Force to Korea during the Korean
Campaign, or in any armed conflict in which the Philippines may be
involved in the future, and (iii) the retirees of the Armed Forces of
the Philippines who served in the military service for at least ten
years: Provided, That, the said veterans or retirees have been
honorably discharged or separated from the service or continue in
the active military service or are carried in the military roster on
inactive reserve: Provided, further, That for purposes of this Act,
the term "veteran or veterans" shall also include the widows,
orphans and legal heirs of deceased veterans;

(b) The term "organized or acknowledged veterans organizations" as
used in this Act shall mean a veteran organization duly recognized
or acknowledged as such by the Philippine Veterans Affairs Office,
and Armed Forces of the Philippines which shall keep official rosters
of such veterans organizations;

(c)On the basis of the acknowledged or duly established official
records and data from the Treasury of the Philippines and any other
record or evidence admissible under the rules of evidence, such as
the records of the Philippine Veterans Affairs Office and of the
Armed Forces of the Philippines, the aforementioned government
entities shall determine immediately after the approval of this Act
who and how many are the veterans of the Philippines as
enumerated in Paragraph (a) of this section, who are entitled to the
benefits of this Act. The decision of the Philippine Veterans Affairs
Office and the Armed Forces of the Philippines on the matter shall
be final, unless appeal for review within fifteen days from notice
thereof, is made to the President of the Philippines or to the
Supreme Court whose decision shall be final. The appeal shall be
perfected in the same manner as in other proceedings and it may
be prosecuted by the interested party or by the head of any
acknowledged veteran organization;

(d) The share of each beneficiary, war veteran or widow, orphan or
legal heir of a deceased veteran, in the distribution of the benefits
accruing to the shares in the name of, or previously in the name of
the Republic of the Philippines, shall be equal regardless of rank
and services rendered; Provided, That in case of a widow, orphans,
or legal heirs of a deceased veteran, they shall be counted as one

4


unit only and the share of all of them regardless of their number
shall be the same or equal to that of a surviving war veteran;

(e) Notice of the decision of the Philippine Veterans Affairs Office and
the Armed Forces of the Philippines on the question of who are
entitled to participate in the benefits accruing to the Veterans Trust
Fund shall immediately be served on the interested parties, either
directly or thru the organization to which they belong in writing and
by registered mail. In addition, the Philippine Veterans Affairs Office
and the Armed Forces of the Philippines shall publish for three
consecutive weeks a notice in two newspapers of general
circulation in the Philippines to the effect that the Philippine
Veterans Affairs Office and the Armed Forces of the Philippines
have already completed their work of determining the number and
the identity of those entitled to participate in the trust fund and
advising any party interested who has not received yet the notice of
the decision served upon him that he may verify his inclusion or
exclusion from the official register in the Philippine Veterans Affairs
Office and the Armed Forces of the Philippines. These offices shall
keep complete lists and official register of those included and
excluded from the enjoyment of the benefit, which lists shall be
available for inspection during office hours. The official registry
books shall constitute as irrevocable public record, certified true
copies of which may be released by the custodian of records for
Official purpose only.”

SECTION 6. Section 6 of R.A. No. 3518 is hereby amended as follows:

“SECTION 6. Qualifications and per diems of the Board of Directors. —

(a) The Board of Directors of the Philippine Veterans Bank shall consist of
FIFTEEN (15) members, who shall be elected in accordance with the
provisions of the Corporation Code of the Philippines, as amended,
governing election of members of the Board of Directors; and shall
Possess the qualifications, and none of the disqualifications prescribed
by the Monetary Board. The members of the Board shall receive a per
diem allowance for every meeting of the Board actually attended by
them; as determined by the Board of Directors.

(b) The Board of Directors, shall upon a majority vote of all its members,
elect its Chairman, Vice-Chairman, and Secretary which Secretary may
or may not be a member of the Board, at such a time and place as
shall be provided for in its By-Laws. Pending the election of its
Chairman, the President of the Veterans Bank shall preside over the
Board of Directors.”

SECTION 7. Section 7 of R.A. No. 3518 is hereby amended, as follows:

“SECTION 7. The Board of Directors shall have the power and authority to:
5


(a) Exercise all the corporate powers provided in this Act and such
other powers of a corporation provided in the Corporation Code
not inconsistent with the provisions of this Act, direct the affairs
and business of the Philippine Veterans Bank and manage,
control and preserve its property;

(b) Formulate policies necessary to carry out effectively the
provisions of this Act and adopt such By-Laws rules and
regulations for the effective operation of the Bank in conformity
with this Act and other existing laws;

(©) _ Declare stockholders or subscribed shares of stock inactive for
purposes of quorum under Section 6 or re-purchase by the Bank
in accordance with Section 21 hereof;

(d) Determine the organization of the Bank by creating the
necessary departments or offices as are essential for the
efficient operation of the Bank; and

(e) Subject to prior approval of the Monetary Board, establish
branches or agencies in other countries.”

SECTION 8. Section 8 of R.A. No. 3518 is hereby amended, as follows:

“SECTION 8. President and Vice-Presidents — Appointment and
Removal — Salaries. — The chief executive of the Bank shall be the
President who shall be chosen by the Board of Directors and who need
not be a stockholder. He shall be assisted by an Executive Vice-
President and such number of Vice-Presidents who shall be appointed
and may be removed by the Board of Directors. The President and the
Executive Vice-President shall possess practical experience in banking
or finance as executives for at least five years. The salaries of the
President and the Executive Vice-President shall be fixed by the Board
of Directors.”

SECTION 9. Section 9 of R.A. No. 3518 is hereby amended, as follows:

“SECTION 9. Duties and powers of the President. — The President of
the Philippine Veterans Bank shall, among others, execute and
administer the policies, measures, orders, and resolutions approved by
the Board of Directors, and direct and supervise the operation and
administration of the Bank, and he shall have and exercise the powers
and duties as may be provided by law, in the by-laws, or authorized by
the Board of Directors.”

SECTION 10. Section 10 of R.A. No. 3518 is hereby amended, as follows:


“SECTION 10. Legal Counsel. — The Philippine Veterans Bank
shall have its own legal department, the chief of which shall be
appointed by the Board of Directors. The Board may engage the
professional services of private external legal counsel whenever
deemed necessary.”

SECTION 11. Section 11 of R.A. No. 3518 is hereby amended, as follows:

“SECTION 11. Bank Auditor — The Philippine Veterans Bank shall have
its own auditor, who shall be appointed and removed by the Board of
Directors.”

SECTION 12. Section 12 of R.A. No. 3518 is hereby amended, as follows:

“SECTION 12. Appointment and Removal of Other Officers and
Employees. — All other officers and employees of the Philippine
Veterans Bank shall be appointed and removed by the Board of
Directors upon recommendation of the President of the Bank:
Provided, however, That in the appointment of said personnel,
preference shall be given to relatives of veterans, retirees of the Armed
Forces of the Philippines, or military personnel in active service, who
must likewise possess the qualifications, integrity, experience and
expertise in banking and finance as determined under pertinent Central
Bank regulations.”

SECTION 13. Section 13 of R.A. No. 3518 is hereby re-enacted, as follows:

“SECTION 13. Supervision and Examination by the Central Bank. —
The Philippine Veterans Bank shall be subject to supervision and
examination by the Central Bank in accordance with Republic Act No.
265, as amended, and Republic Act No. 337, as amended.”

SECTION 14. Section 14 of R.A. No. 3518 is hereby reenacted in toto:

“SECTION 14. Prohibition against owing stock in or incurring
indebtedness to the Bank. — The Secretary of Finance, the Governor
of the Bangko Sentral ng Pilipinas, all other members of the Monetary
Board, and the Chief of the Auditing Department of the Veterans Bank
are hereby prohibited from owing stock in the Veterans Bank, or from
becoming indebted to said Bank, directly or indirectly.”

SECTION 15. Section 21 of R.A. No. 3518 is now Section 15 hereof and
further amended, as follows:

“SECTION 15. Prohibition Against Charging Fees in Securing Loans,
and Penalties for Violation. — No fee, charge or commission in any
form shall be exacted, demanded, or received for obtaining loans,
directly or indirectly, by any director, officer, employee, or agent of the

7


Philippine loan from the Bank. Any director, officer, employee or agent
so exacting, demanding or receiving any fee in violation of this
provision shall be punished by a fine of not exceeding P10,000 or by
imprisonment of not more than five years, or both, such fine or
imprisonment to be imposed at the discretion of the Court.”

SECTION 16. Section 22 of R.A. No. 3518 is hereby amended and-
renumbered, as follows:

“SECTION 16. Allocation of Net Profits. — At the close of each calendar
year, the Bank shall determine the net result of its operations, in the
calculation of which, adequate allowances shall be made for probable
losses. From the net profit arrived at, twenty percent (20%) per cent,
or such other percentage as may be determined by the Board of
Directors to assure the Bank’s financial growth and viability, shall be
earmarked and reserved by the Bank and shall be available for 'grants-
in-aid' to veterans, their widows, orphans, or heirs, for educational,
social, charitable, and rehabilitation purposes, to organizations doing
service for the cause of the veterans, and for such other purposes
beneficial to the veterans. The remaining net profit shall be distributed
according to the Corporation Code, as amended.

SECTION 17. Section 23 of R.A. No. 3518 is hereby amended and re-
numbered, as follows:

“SECTION 17. Board of Trustees of Philippine Veterans — There is
hereby created a Board of Trustees for all Philippine veterans as
defined in Section 4(a) to be known as "The Board of Trustees of
Philippine Veterans ", consisting of eleven (11) members to be selected
from among the current veteran members of the Veterans Federation
of the Philippines by the Supreme Council pursuant to Republic Act
Numbered Twenty-six hundred and forty.”

The Board of Trustees of Philippine Veterans shall be organized within
ninety (90) days after the approval of this Act. Immediately after its
organization the members of the Board of Trustees shall elect from
among themselves a Chairman and a Vice-Chairman. The members of
the Board of Trustees shall serve without compensation other than
actual and necessary expenses incurred either in attendance upon
meetings of the Board or upon other official business authorized by
resolution thereof, but a vote of the majority of all the members shall
be necessary to authorize the disposal of the funds held by the Board.

The Board shall appoint a secretary and such necessary other officials
and employees and fix their compensations.

The Board of Trustees of Philippine Veterans shall act as trustee of all
undelivered shares that are still in the name of the Republic of the

8


Philippines or those already transferred in the name of veterans, their
widows, orphans or legal heirs, but have not been delivered. The
Board of Trustees will receive the proceeds and benefits of the stocks
in trust for the benefit of the real owners.

The Board of Trustees shall hold the undelivered shares until such time
that the undelivered shares are declared inactive by the Board of
Directors of the Bank at a meeting held for the purpose. The Board of
Trustees is hereby authorized to sell the inactive shares to the Bank to
revitalize its financial structure and facilitate decision making; the
proceeds of which shall be held in trust for the named owners of the
inactive stocks. After selling the inactive shares to the Bank, the Board
of Directors may proceed with the re-issuance pursuant to Section 4(d)
hereof.

The members of the Board of Trustees of World War II under Section
23 of RA 3518 shall serve as members of the Board of Trustees of
Philippine Veterans until their successors are selected.”

SECTION 18. Section 24 of R.A. No. 3518 is hereby amended and re-
numbered as follows:

“SECTION 18. Term of legal existence. — The legal existence of the
Bank under this Act shall be for a period of fifty (50) years, extendible
for another fifty (50) years, from and after the date of the approval of
this Act.”

SECTION 19. Section 25 of R.A. No. 3518 is hereby amended and re-
numbered as follows:

“SECTION 19. Prohibition against the use of the word "Veterans" —
Penalty for violation. — All banks other than the Veterans Bank, and
such other banks now licensed to do business in the Philippines whose
names already include the word "veterans" are prohibited from using
the word "veterans" as a portion of their names or titles. Any party
violating this provision shall be subject to a fine of not less than Ten
Thousand Pesos (P10,000.00) pesos for each day during which said
violation is committed or repeated.”

SECTION 20. Section 27 of R.A. No. 3518 is hereby amended and re-
numbered as follows:

“SECTION 20. Veterans Bank authorized to receive deposit of
government funds as a Government Depository. — The Secretary of
Finance, the National Treasurer and his authorized representatives,
heads of government agencies, city and municipal treasurers, as well
as official custodians of public funds, including government-owned or
controlled corporations are hereby authorized, if they so desire, to

9


make and actually maintain deposits of any government or corporate
funds with the Veterans Bank, which is hereby declared to be a
government depository.”

SECTION 21. Section 28 of R.A. No. 3518 is hereby re-enacted and re-
numbered as follows:

“SECTION 21. Articles of incorporation. — This Act, upon its approval,
shall be deemed and accepted, for all legal intents and purposes, as
the statutory articles of incorporation or Charter of the Philippine
Veterans’ Bank; and that, notwithstanding the provisions of any
existing law to the contrary, said Bank shall be deemed registered and
duly authorized to do business and operate as a commercial bank as of
the date of approval of this Act.”

SECTION 22. Section 29 of R.A. No. 3518 is hereby re-enacted and re-
numbered as follows:

“SECTION 22. By-laws. — Within one month after the approval of this
Act, the by-laws of the Philippine Veterans' Bank for its organizational,
functional and operational government and procedures shall be
adopted by the affirmative vote of majority of the stockholders present
at a meeting called for the purpose, whether paid or unpaid, subject to
certification by the Monetary Board pursuant to Section ten of Republic
Act Numbered Three hundred thirty-seven.”

The by-laws, duly certified by the Monetary Board as aforesaid, shall
be signed by the stockholders voting for them and shall be kept in the
principal office of the Veterans Bank, subject to the inspection of the
stockholders during office hours, and a copy thereof, duly certified by a
majority of the directors and countersigned by the Bank secretary,
shall be filed and registered with the Securities and Exchange
Commissioner.

SECTION 23. All Sections of R.A. No. 3518 that were not re-enacted or
amended are deemed expressly repealed; particularly, Sections 13, 16, 17, 20, 21,
and 26. Any law or part of laws inconsistent with the provisions of this Act is hereby
repealed.

SECTION 24. Batas Pambansa Big. 68, as amended, Republic Act No. 337
as amended, Republic Act No. 7653, Republic Act No. 8791 as amended, and all
related laws not inconsistent with the provisions of this Act shall apply suppletorily.

SECTION 25. This Act shall take effect fifteen (15) days after complete
publication in a newspaper of general circulation.

10