Banking Laws - Dizon

CHAPTER 1

I. DECLARED Policy of the State (Sec. 2, GBL) - The State recognizes the vital role of banks in providing an
environment conducive to the sustained development of the national economy and the fiduciary nature of
banking that requires high standards of integrity and performance. In furtherance thereof, the State shall promote
and maintain a stable and efficient banking and financial system that is globally competitive, dynamic and
responsive to the demands of a developing economy.

II. Definition of Banks (Sec. 3.1, GBL) - "Banks" shall refer to entities engaged in the lending of funds obtained
in the form of deposits. Note: Banks may engage in other activities allowed by law.

III. Nature of Banking Business

A. Debtor-Creditor Relationship The relationship existing between a depositor and bank is that of a
creditor and debtor. The contract between the bank and its depositor is governed by the provisions of
the Civil code on simple loan.
B. Fiduciary Duty
1. Simex Intl., Inc. vs. CA: The State recognizes the fiduciary nature of banking that requires high
standards of integrity and performance. Banks are required to treat the accounts of its
depositors with meticulous care, always having in mind the fiduciary nature of their relationship.
2. This banks obligation is deemed written into every deposit agreement between a bank and its
depositor.
C. Not A Trust Agreement
1. The fiduciary nature of bank-depositor relationship does NOT convert the contract between the
bank and its depositors FROM a SIMPLE LOAN TO a TRUST AGREEMENT. This is because
Banks do not accept deposits to enrich depositors but to earn money for themselves.
2. Failure by the bank to pay the depositor is failure to pay a simple loan, and NOT a breach of
trust.
D. Indispensable Institution
1. Banks are an indispensable institution in the modern world and plays vital role in the
economic life of every citizen. People have come to regard them with respect, gratitude, and
confidence.
2. Even a humble wage-earner does not hesitate to entrust his life savings
3. An ordinary person usually maintains an account for security and convenience in settling his bills
4. As for business entities, the bank is trusted to help them in running their affairs, not only in the
form of loans, but in their day-to-day transactions like encashing a check.
E. Impressed with Public Interest (Simex vs. CA) a depositor expects a bank to treat his account with
utmost fidelity, whether such account consists only of a few hundred pesos or millions.
F. Degree of Diligence (Simex vs. CA)
Art. 1172 of NCC states that the degree of diligence required of an obligor is that prescribed by law or
contract, and in the absence of such, that of a good father to a family
NOTE: Due diligence is required of banks extend even to persons or institutions, regularly engaged in
the business of lending money secured by real estate mortgage.
G. Treatment of Accounts with Meticulous Care There is NO LAW mandating banks to call up their clients
whenever their representatives withdraw significant amounts from their accounts.
H. Duty to Keep Records
1. Banks shall have a true and accurate account, record, statement of their daily transactions
especially those of deposit liabilities.
2. The making of a false entry or willful omission of entries is a ground for the imposition of
administrative sanctions and disqualification from office.
I. Banks are NOT Gratuitous Bailees Banks solicit deposits in order that they can use the money to gain.
J. Banks are NOT Expected to be Infallible, but must bear the blame for NOT discovering mistakes despite
established procedures.

Q: Sps. A and V opened a joint current account in C Bank with an initial deposit of P2,250. Prior thereto, A
had a personal account with the same bank. When the spouse opened their joint current account, the New
Accounts teller pulled out the old signature card of A and placed the old personal account number of A in
the deposit slip. V issued two checks and one of these was dishonored for IF. They were deducted P20 from
their account. The bank tried to call the spouses, but they were in Pampanga. Is the bank liable for
damages?
 A: Yes.
- A depositor expects a bank to treat his account with utmost fidelity, whether such account consists only
of a few hundred pesos or millions.
- Bank must record every transaction accurately.
- A blunder on the part of the bank such as dishonor of check without good reason can cause the
depositor embarrassment, financial loss, and perhaps civil and criminal litigation
Note: Exemplary damages are awarded if there is malice and bad faith.

K. Dealing with Registered Lands The rule that persons dealing with registered lands can rely solely on
the certificate of title does NOT APPLY to banks. Banks should exercise more care and prudence in
dealing with registered lands than private individuals, for their business is one affected by public interest.
Q: A sold is unregistered parcel of land to B. Subsequently; an Orig. Cert.Title (OCT) was issued. A
surrendered it to X bank as a consequence of a mortgage. B died w/o knowing that an OCT has been
issued. Upon learning of his right, C (Bs heir) confronted A and went to X bank. C asked to photocopy the
owners duplicate certificate outside the banks premises. C then brought it to the Register of Deeds with the
Deed of Sale and he was issued a Transfer Cert of Title. Is the bank liable for damages to A?
A: Yes.
- Bank failed to foresee the risk of its act of entrusting C with the OCT without notifying A and verifying the
veracity of Cs claim and character.
- This acts runs afoul of the banks mandate to observe the highest diligence
- A has also the right to due process. Notice and hearing are indispensable elements of this right which
the bank ignored
Q: A bank accepted a property as mortgage despite existence of structures and occupants other than the
mortgagor. Is the bank negligent?
A: Yes. Banks, being in the business of extending loans, are familiar with the rules on land registration.
They are expected to exercise more care and prudence in dealing with registered lands than private
individuals, for their business is one affected by public interest. The bank should have conducted
investigation since there are occupants other than the owner of the land mortgaged. This constitutes gross
negligence amounting to bad faith.

L. Banks may Exclude Persons in their Premises No employees must be spared by banks and their
officers and employees to ensure and preserve the trust and confidence of the general public.

IV. Liability For Acts and Employees Bank is LIABLE for the wrongful acts of its officers done WITHIN
the scope of their authority.

A. Negligence of Manager
Bank is liable for the negligence or misdeed of the branch manager since confidence in the banking
system necessarily includes reliance on bank managers. (BPI vs. First Metro Investment Corp.)
B. Negligence of Officers if within the scope of authority, bank is liable
C. Negligence of Tellers returning the passbook ONLY to the depositor or his authorized representative. If
given to the wrong person, bank is liable since they would be clothing that person presumptive
ownership of the passbook.
Note: Appropriation of money by a bank teller is NOT ESTAFA. Such is only MATERIAL POSSESSION. The
bank still has JURIDICAL POSSESSION. If for personal gain, THEFT. If the teller has possession of the
money since he occupies a position of confidence, QUALIFIED THEFT.

D. Right to Recover from Employees Banks may recover from their employees. (Art. 2181 of NCC)
E. Liabilities other than Actual
1. Exemplary by way of example. Malice and bad faith must be attendant
2. Moral when the good reputation of the client was besmirched or his financial credit.
Note: Banks are NOT responsible for such damages in the ABSENCE of fraud, bad faith, malice, or wanton
attitude.
F. Respondeat superior, Diligence in the Selection, and Supervision of Employees
- A bank is bound by negligence of its employees under the principle of Respondeat superior or command
responsibility.

V. Classification of Banks (CUT RICO)

Sec. 3.2. Banks shall be classified into:

(a) Universal banks;
(b) Commercial banks;
(c) Thrift banks, composed of:
(i) Savings and mortgage banks;
(ii) Stock savings and loan associations; and
(iii) Private development banks, as defined in the Republic Act No. 7906 (hereafter the Thrift Banks
Act);
(d) Rural banks, as defined in Republic Act No. 7353 (hereafter the "Rural Banks Act");
(e) Cooperative banks, as defined in Republic Act No 6938 (hereafter the "Cooperative Code");
(f) Islamic banks as defined in Republic Act No. 6848, otherwise known as the Charter of Al Amanah Islamic
Investment Bank of the Philippines; and
(g) Other classifications of banks as determined by the Monetary Board of the Bangko Sentral ng Pilipinas.

A. Business Name
- Only a bank that is granted universal/ commercial banking authority may represent itself to the public as
such in connection with its business name
- Thrift Banks: allowed to use and adopt any name, provide the ff words are affixed: A thrift bank, Savings
bank, A Private Development Bank, or A Stock Savings and Loan Association
- Rural or Commercial Banks: allowed to use and adopt any name, provide the ff words are affixed: Rural or
Coop, A Cooperative Bank, or A Rural Bank.
o The size of the letters of such phrase shall be at least of the size of the business name
when shown on letterheads, billboards, and other advertising materials.

B. Universal Banks
1. powers authorized for a commercial bank
2. powers of an investment house
3. power to invest in non-allied enterprises

C. Commercial Banks
1. general powers incident to corporations
2. powers of commercial banks: (A BREAD)

A accepting drafts and issuing letters of credit

B buying and selling foreign exchange and fold or silver bullion; acquiring marketable bonds & other debt
securities
R receiving other types of deposits and deposit substitutes
E extending credit (subject to rules the MB may promulgate)
A accepting or creating demand deposits
D discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt

D. Rural Banks
- designed to make needed credit available and readily accessible in the rural areas on reasonable terms
- primary purpose is to meet the normal credit needs of farmers, fishermen, or farm families

E. Thrift Banks
- include savings and mortgage banks, private devt. banks, and stock savings and loans associations.
- Providing short-term working capital, medium and long term financing to business engaged in agriculture,
services, industry, and housing
Powers of a Thrift Bank:
1. Accept savings and time deposits
2. Open current/checking accounts (prov. Net assets at least 20M, subject to guidelines by MB, be allowed to
directly clear its demand deposit operations with the BSP & Philippine Clearing House Corporation)
3. Act as correspondent for other financial institutions
4. Act as collection agent for government (SSS, BIR, Bureau of Customs)(*MB)
5. Official depositary of national agencies, municipal/city/provincial funds (*MB)
6. Rediscount paper with PNB, LBP, DBP, GOCC
7. Issue mortgage and chattel mortgage certificates, buy and sell them for its own account or for the account
of others or accept and receive them in payment or as amortization of its loan
8. Purchase, hold and convey real estate under the same conditions as those governing commercial banks
9. Engage in quasi-banking and money market operations
10. Open domestic letters of credit
11. Extend credit facilities to private and government employees
12. Extend credit against the security of jewelry precious stones and articles of similar nature (*MB)
F. Cooperative Banks
- one organized by, the majority shares of which is owned and controlled by, cooperatives primarily to
provide financial and credit services to cooperatives
- cooperative bank shall include cooperative rural banks
- Membership shall include ONLY cooperatives and federations of cooperatives
Functions of a Cooperative Bank
1. To carry on banking and credit services for cooperative
2. Receive financial aid or loans from the Government and Central Bank and to supervise the lending and
collection of loans
3. Mobilize savings of members
4. Balancing medium for the surplus funds
5. Discount bills and promissory notes issued and drawn by cooperatives
6. Issue negotiable instruments to facilitate activities of cooperatives
7. Issue debentures (approval/conditions/guarantees prescribed by Gov.)
8. Borrow money from banks and other financial institutions
9. Others prescribed by Cooperative Development Authority

G. Islamic Banks (Al-Amanah Islamic Investment Bank of the Philippines)

- in Zamboanga City
- primary purpose shall be to promote and accelerate the socio-economic devt of the Autonomous Region by
performing banking and financing operations and to establish and participate in the agricultural, commercial,
and industrial ventures based on the Islamic concept of banking

H. Other Banks
- Philippine Veterans Bank private commercial bank owned by veterans
- Land Bank of the Philippines finance the acquisition and distribution of agricultural estates for division and
resale to small landholders as well as the purchase of the landholding by the agricultural lessee
- Development Bank of the Philippines was created as Rehabilitation Finance Corp. (RFC); took over the
functions of Agricultural Industrial Bank

I. Non-Stock Saving And Loan Associations a non-stock, non-profit corp engaged in the business of
accumulating the savings of its members and using such accumulations for loans to members for home
building or personal finance

J. Quasi-banks refer to entities engaged in the borrowing of funds through the issuance, endorsement or
assignment with recourse or acceptance of deposit substitutes for purposes of relending or purchasing of
receivables and other obligations

"deposit substitutes" is defined as an alternative form of obtaining funds from the public, other than
deposits, through the issuance, endorsement, or acceptance of debt instruments for the borrower's own account,
for the purpose of relending or purchasing of receivables and other obligations.

K. Offshore Banking refers to the conduct of banking transactions in foreign currencies involving the receipt
of funds from external sources and the utilization of such funds

VI. Authority to Engage in Banking and Quasi-Banking (QB) Functions

A. Authority from Bangko Sentral

- No person shall engage in banking operations or QB functions WITHOUT authority from the Bangko Sentral
- No articles of incorporation or amendment to articles of incorporation of banks, banking and quasi-
banking institutions, building and loan associations, trust companies and other financial intermediaries,
insurance companies, public utilities, educational institutions, and other corporations governed by special
laws shall be accepted or approved by the Commission unless accompanied by a favorable
recommendation of the appropriate government agency to the effect that such articles or
amendment is in accordance with law. (Corporation Code Sec. 17 of BP 68)
- The Securities and Exchange Commission shall not accept for filing the by-laws or any amendment
thereto of any bank, banking institution, building and loan association, trust company, insurance company,
public utility, educational institution or other special corporations governed by special laws, unless
accompanied by a certificate of the appropriate government agency to the effect that such by-laws
or amendments are in accordance with law. (Sec. 46 of BP 68)
B. Whether a person or entity is performing banking or quasi-banking functions W/O the BS authority shall be
decided by the Monetary Board by examining and investigating the books and records of such person or
entity. Upon issuance of authority, may commence to engage in functions until authority is suspended,
revoked or annulled by BS. Existence of a victim actually injured is not necessary in determining whether
entity is engaged in illegal banking.

C. The dept head and the examiners of the supervising and examining dept shall:
1. administer oath to any such person or entity
2. compel presentation of books, records, and documents
failure to do so would subject such to appropriate sanctions under NCBA

D. BS shall, when examining a bank, have the authority to examine an enterprise which is wholly or majority-
owned by the bank.

E. Certificate of Authority to Register

- The SEC shall not register the articles of incorporation or any amendment unless accompanied by a
certificate of authority issued by the MB, under its seal. The MB shall be satisfied from the evidence
submitted to it: (RPC)
o All Requirements of law have been complied with
o Public interest and economic conditions justify the authorization
o The amount of Capital as well as the integrity of the organizers reasonable assure the safety of deposits
and the public interest

- The SEC shall not register the by-laws of any bank or any amendment unless accompanied by a
certificate of authority issued by the MB, under its seal.
- An investment company engaged in the purchase of receivables at a discount. Did it engage in banking
business without authority from the BS? NO. Purchase of receivables at a discount, is well within the
purview of investing, reinvesting or trading in securities which an investing comp. may perform w/o violating
banking laws.
VII. Service of Summons Upon Banks

A. Service under Rules of Court

Sec. 11, Rule 114 - Service upon domestic private juridical entity. Made on the president, managing
partner, general manager, corp. secretary, treasurer, in-house counsel.
Sec. 12, Rule 114 Service upon foreign private juridical entity. Made on resident agent, government
official designated by law, or any of its officers or agents w/in Philippines.

B. Strict Compliance is Necessary

- Officer whom service is made must be one who is named in the statute; if not, insufficient
- Service of summons on a BRANCH MANAGER INVALID
- Defect in service of summon is cured by proper service of new summons
- A case should not be dismissed simply because an original summons was wrongfully served
- Alias summons can be served

CHAPTER 2: ORGANIZATION, MANAGEMENT & ADMINISTRATION OF BANKS, QUASI-BANKS AND

TRUST ENTITIES

I. Organization of Banks

A. Conditions
The MB may authorize the organization of a bank and quasi-bank: [SPC]
1. Entity is a Stock corporation
2. Funds are obtained from the Public, 20 or more persons
3. Minimum Capital requirements by MB are satisfied

B. Capabilities [BD-POI]
- The MB shall take into consideration their capability in terms of their financial resources and
technical expertise and integrity.
1. Banks ownership structure
 2. Directors and senior management
3. Its operating plan
4. Internal control
5. Its projected financial condition and capital base

C. Capital Requirements
1. Banks shall comply with the required minimum capital by MB:
Universal Bank- 4,950M
Commercial Bank- 2,400M
Thrift Banks
w/n MM- 325.0M
Outside MM- 52.0M
Rural Banks
w/n MM- 26.0M
Cities of Cebu and Davao- 13.0M
In 1st, 2nd & 3rd class cities and 1st class municipalities- 6.5M
In 4th, 5th & 6th class cities and in the 2nd, 3rd & 4th class municipalities- 3.9M
In 5th & 6th class municipalities- 2.6M

2. At least 25% of the total authorized capital stock shall be subscribed by the subscribers of the
proposed bank, and at least 25% of such subscription shall be paid-up that it must not be less than
the minimum required capital.

D. Incorporators/ Subscribers
1. Must be persons of integrity and of good credit standing in the business community. Subscribers
must have adequate financial strength to pay for their proposed subscriptions in the bank.
2. Must not have been convicted of any crime involving moral turpitude unless otherwise allowed.
3. A bank may be organized with not less than 5 or more than 15 persons in organizing or investing in
the proposed bank.
*If there is excess, may be listed among the original subscribers in the Articles of Corp.

QUERY: MAY COOPERATIVES ORGANIZE A BANK?

Yes, established cooperatives and corporations may organize a bank and/or subscribe to the shares of
stock of any rural bank. Provided, that it shall be subject to special examination and to such rules and
regulations prescribed by the MB.

E. Bank Branches
1. UB & CB may open branches or other offices within or outside the Philippines upon prior approval of
the BS.
2. A bank authorized to branch out shall be responsible for all business conducted in such branches
because a bank and its offices shall be treated as one unit.

II. Stockholdings

A. Treasury Stocks
1. No bank shall
Purchase/ acquire shares of its own capital stock or
Accept its own shares as a security for a loan
EXCEPT: when authorized by the MB.
- Stocks purchased shall be sold or disposed of at a public or private sale w/in 6months

2. At common law, a corporation has no lien upon the shares of stockholders for any indebtedness of
the corporation.
3. Sec.35 of the US National Banking At of 1864, if banking corporations were given a lien on their own
stock for the indebtedness of the stockholders, the prohibition against granting loans or discounts
upon the security of the stock would become largely ineffective.

A. Foreign Stockholdings
1. Foreign individuals and non-bank corporations may own or control up to 40% of the voting stock of a
domestic bank. It shall apply to Filipinos and domestic non-bank corporations.
QUERY: PROVISION IS AMBIGUOUS. IF IT APPEARS THAT FOREIGN INDIVIDUALS AND NON-BANK
CORPORATIONS MAY ONLY CONTROL UP TO 40% OF THE VOTING STOCK. ON THE OTHER HAND,
FILIPINOS AND DOMESTIC NON-BANK CORPORATIONS MAY ALSO CONTROL ONLY UP TO 40% OF
THE VOTING STOCK. WHAT HAPPENS THEN TO THE 20%?

- Foreign individuals and non-bank corporations may own or control up to 40% of the voting stock of a domestic
bank Provided, that the aggregate foreign-voting stocks owned by them shall not exceed 40% of the
outstanding voting stock of the bank. The percentage of foreign-owned voting stock shall be determined by the
citizenship of the individual stockholders in the bank.

-Filipino individual and domestic non-bank corporation may each own up to 40% of the voting stock of a
domestic bank. There shall be no aggregate ceiling on the ownership by such individuals and corporations in a
domestic bank.

2. The percentage of foreign-owned voting stock shall be determined by the citizenship of the individual
stockholders in the bank shall follow the citizenship of the controlling stockholders of the
corporation, irrespective of the place of incorporation.

*CONTROLLING STOCKHOLDER- refers to individuals holding more than 50% of the voting stock
of the corporate stockholders of the bank.

3. At least 60% of voting stock of any commercial bank shall be owned by Filipino citizens. For thrift
banks, at least 40% of its voting stock shall be owned by Filipinos. In rural banks, all of the capital
stock.

NOTE: In determining the nationality of banks, the CONTROL TEST is applied. The following tests do not:
1. War-time test
2. Investment test
3. Place of incorporation test
4. Grandfather rule
5. Principal place of usefulness test

B. Acquisition of Voting Stock in a Domestic Bank

1. Within 7years from the effectivity of the GBL and subject to guidelines issued pursuant to the
Foreign Banks Liberalization Act, the MB may authorize a foreign bank to acquire up to 100% of the
voting stock of only one bank organized under the laws of the Republic of the Philippines.
2. Within the same period, MB may authorize any foreign bank, which prior to the effectivity of the GBL
availed itself of the privilege to acquire up to 60% of the voting stock of a bank under the Foreign
Banks Liberalization Act and the Thrift Banks Act, to further acquire voting shares of such bank to
the extent necessary for it to own 100% of the voting stock thereof.
3. MB shall adopt measures necessary to ensure that at all times the control of 70% of the resources
or assets of the entire banking system is held by banks which are at least majority-owned by
Filipinos.

C. Family Groups or Related Interests

1. Stockholdings of individuals related to each other within the fourth degree of consanguinity or
affinity, legitimate or common-law shall be considered family groups or related interests and must
be fully disclosed in all transactions by such an individual with the bank.
2. Two or more corporations owned or controlled by the same family group or same group of persons
shall be considered related interests and must be fully disclosed in all transactions by such
corporations or related groups of persons with the bank.

I. Board of Directors

A. Number of Directors
1. Shall be at least 5, and a maximum of 15 members of the board of directors of bank, 2 shall be
independent directors. (except)
-all be of legal age
-majority are residents of the Phil.
-form a private corporation for any lawful purpose
 2. INDEPENDENT DIRECTOR- means a person other than an officer or employee of the bank, its
subsidiaries or affiliates or related interests.
*Non-Filipino citizens may become members of the board of directors of a bank to the extent of the
foreign participation in the equity of said bank.

a. not or has not been an officer or employee of the bank/quasibank/trust entity, its subsidiaries and
affiliates or related interests during the past 3 years counted from the date of his election
b. not a director of officer of related companies of the institutions majority stockholder
c. not a majority shareholder of the institutions, any of its related companies or of its majority
shareholder
d. not a relative w/n 4th degree of consanguinity or affinity, legitimate or common law of any director,
officer or majority shareholder of the bank/quasibank/trust entity, its subsidiaries and affiliates or related
companies
e. not acting as a nominee or representative of any director or substantial holder
f. free from any business or other relationship which could materially interfere with the exercise of his
judgment

B. Directors of Merged or Consolidated Banks

- The number of directors shall not exceed 21.

C. Meetings
1. May be conducted through modern technologies such as teleconferencing and video-conferencing
*Banks shall include in their bylaws a provision that meetings of their board of directors shall be held
only within the Philippines.

2. Corporate officers, quorum:

- Immediately after election, directors must formally organize the election of the
a. president who shall be the director
b. treasurer, who may or may not be a director
c. secretary who shall be a resident and citizen of the Philippines
d. other officers provided for in the by-laws

*Any 2 or more positions may be held concurrently by the same person EXCEPT that no one shall act as
a president and secretary or as president and treasurer at the same time.

*Directors or trustees cannot attend or vote by proxy at board meetings.

D. Compensation and other Benefits of Directors and Officers

1. MB may regulate the payment by the bank to its directors and officers of compensation, allowance,
fees, bonuses, stock options, profit sharing and fringe benefits only in the exceptional cases and
when the circumstances warrant, such as but not limited to the following:
a. When a bank is under comptrollership or conservatorship;
b. When found by the MB to be conducting business in an unsafe or unsound manner;
c. When found to be in an unsatisfactory financial condition.

2. REMEDY: Sec.30 of the Corporation Code

Directors shall not receive any compensation except for reasonable per diems. Provided, that
any such compensation other than per diems maybe granted to directors by the vote of the
stockholders representing at least a majority of the outstanding capital stock at a regular or
special stockholders meeting. It shall not exceed 10% of the net income before income tax of
the corporation during the preceding year.

II. Fit and Proper Rule

A. Powers of the MB
1. To maintain the quality of bank management and afford better protection to depositors and the
public in general.
-MB shall prescribe, pass upon and review the qualifications and disqualifications of individuals
elected or appointed bank directors or officers and disqualify those found unfit.

2. After due notice to the board of directors of the bank, the MB may disqualify, suspend or remove any
bank director or officer who commits or omits an act which render him unfit for the position.
 3. If found fit and proper, shall be given to his integrity, experience, education, training and
competence.

B. Disqualification

a. Permanently Disqualified Directors

1. Have been convicted by final judgment of a court for offenses involving dishonesty or breach of
trust (ex. Estafa, extortion, forgery, malversation, swindling, BP22)
2. Have been convicted by final judgment of a court sentencing them to serve a maximum term of
imprisonment of more than 6 years.
3. Have been convicted by final judgment of a court for violation of banking laws, rules and
regulations
4. Those who have been judicially declared insolvent, spendthrift or incapacitated to contract
5. Those directors, officers or employees of banks, quasi banks or trust entities who were found to
be culpable for such institutions closure
6. Those directors, officers or employees of banks, quasi banks or trust entities who were found by
the MB as administratively liable for violation of banking law, rules an regulations
7. Those directors, officers or employees of banks, quasi banks or trust entities who were found to
be unfit for the position of directors and officers

b. Temporarily Disqualified Directors:

1. Person who refuses to fully disclose the extent of their business interests to the appropriate
supervising and examining department.
2. Directors who have been absent or who have not participated in more than 50% of all meetings,
both regular and special, and those who failed to physically attend at east 25% of all meetings in
a year except those with notarized certification executed by the corporate secretary.
3. Persons who are delinquent in the payment of their obligations:
a. DELINQUENT IN THE PAYMENT OF OBLIGATIONS- an obligation of a person with a
bank/quasibank/trust entity where he is a director or officer, or at least 2 obligations with
other banks/financial institutions, under different credit lines or loan contracts, are past
due.
b. Obligations shall include all borrowings from a bank/quasibank obtained by:
1. Director or officer for his own account or acts as guarantor, endorser or surety of
loans
2. The spouse or child under the parental authority of the director or officer
3. Any person whose loan proceeds were credited to an account for the benefit of a
director or officer.
4. His spouse is the managing partner or a general partner owning a controlling
interest in the partnership.
5. A corporation, association or firm wholly owned by any group of persons
4. Have been convicted by final judgment of a court for offenses involving dishonesty or breach of
trust (ex. Estafa, extortion, forgery, malversation, swindling, BP22)
5. Directors of officers of closed banks/quasibanks/trust entities pending their clearance by the MB
6. Directors disqualified for failure to observe/discharge their duties & responsibilities
7. Directors who failed to attend the special seminar for board of directors
8. Persons dismissed/terminated from employment for cause.
9. Those under preventive suspension
10. Persons with derogatory records as certified by, or on the official files of, the judiciary, National
Bureau of Investigation, Philippine National Police, quasi-judicial bodies.
11. Those are administratively liable for violation of banking laws, rules and regulations.
12. Any person found by MB to be unfit for the position of directors or officers.
13. When penalty is suspension from office or fine is imposed, such is found to be administratively
liable.

C. Disqualification/ Prohibitions under the Corporation Code

Sec.27. No person convicted by final judgment of an offense punishable by imprisonment for a period
exceeding 6years or a violation of this Code within 5years prior to date of is election or appointment shall
qualify as a director, trustee or officer of any corporation.

D. Disqualification? Prohibitions under NCBA

 III. Banking Days and Hours
A. Number of Days and Hour
1. Shall transact business on all working days for at least 6 hours a day, even before 8am or after
8pm. May open for business on Sat, Sun or holidays for at least 3 hours a day.
2. If so, must repot to the Bangko Sentral the additional days
3. Working days mean Mon-Fri except holidays.
4. Branches at international airport or major fish port are allowed to operate on flexible banking
hours provided that will inform BSP of the schedule of the banking hours that is not less than 6
hrs a day.

IV. Automated Teller Machines

A. Off-site Automated Teller Machines (ATMs)

1. Must submit a report to the appropriate department of the BSP on ATMs which they
establish
2. Shall be installed only in the centers of activity like shopping, supermarkets, hospitals,
university campuses. Provided, that adequate internal control and security measures shall
be adopted and submitted to BSP.
3. Must comply with these, to all to open off site ATMS.

B. Mobile ATMs
1. Should allowed to visit only centers of activity and should confine their itinerary to Metro
Manila until further notice.
2. Shall secure insurance coverage or adopt a self-insurance scheme to protect itself against
losses of whatever nature in its mobile ATM operations
3. Banks shall notify the supervising and examining department of the BSP of the actual date a
mobile ATM become operational and when terminated.

V. Independent Auditor
1. MB shall require a bank etc. To engage the services of an independent auditor to be chosen by
a bank etc. From a list of certified public accountants acceptable to the MB
2. Term of engagement shall be prescribed by MB, whether as continuing basis or special
engagements.
3. Board of Directors shall also conduct an annual balance sheet audit of the bank etc. To review
the internal audit and control system of the bank etc, and to submit a report of such audit.

VI. Financial Statements

- Every bank etc. Shall submit to the appropriate supervising and examining dept. Of the BSP
financial statements.
- It shall be of a specific date designated by BSP and shall show actual financial conditions of the
institution submitting the statements, and of its branches, offices, subsidiaries and affiliates,
- and shall contain such information as required in the BSP regulations.

PUBLICATION:
- In English or Filipino
- At least once every quarter in a newspaper of general circulation in the city or province
- BSP may prescribe where it shall be published
- Shall make available to the public an shall prescribe the complete set of its audited financial
statements
- If there is local emergency or imminent panic, the MB by vote of at least 5 of its members may allow
to defer for a stated period of time the publication of the statement of financial condition.

NOTES: page 54-55 (IMPORTANT)

VII. Publication of Capital Stock

- It shall not publish the amount of its authorized or subscribed capital stock without indicating at the
same time and with equal prominence, the amount of its capital actually paid-up.
 - No branch of any foreign bank doing business in the Phil shall in any way announce the amount of
the capital and surplus of its had office.

VIII. Settlement of Disputes

- BSP shall be consulted by other gov. Agencies in actions and proceedings brought before them
involving controversies in banks etc., as well as disputes between any all or all of them which they
are the directors, officers or stockholders.

IX. Strikes and Lockouts

A. Unsettles Labor Disputes
- The banking industry is indispensable to the national interest.
- If unsettled after 7 days shall be reported by the BSP to the Sec. Of Labor who may assume
jurisdiction over the dispute and decide it or certify the same.
- The President may intervene and assume jurisdiction over such labor dispute in order to settle and
terminate the same.

B. Reports of Strikes and lockouts

The bank shall disclose pertinent info:
1. Cause of the strike/lockout and bank managements position on its legality
2. Bank operations affected

X. Laws Governing other Types of Banks

- Thrift Banks Act, Rural Banks Act, Cooperative Code
- For Islamic banks- special laws
- For purposes of prescribing the minimum ratio which the net worth of a thrift bank must bear to its
total risk assets, the provisions of the GBL shall govern.

CHAPTER 3: DEPOSIT FUNCTIONS OF BANKS

Demand deposits are all those liabilities of the BSP and other banks, which are denominated in Phil.
Currency and are subject to payment in legal tender upon demand by presentation of checks.

The followings are prohibited from maintaining demand deposits or current accounts with the bank office in
which they are assigned;
a. All officers;
b. Employees of the banks cash department/cash units
c. Others employees who have direct and immediate responsibility in the handling of transactions/records
pertaining to demand deposits or current accounts.
nd
Includes also; The spouse, relatives within 2 degree of consanguinity and affinity of the officers and
employee covered by the prohibition.

DUTY OF BANK TO HONOR CHECKS

Where the bank possesses funds of a depositor it is bound to honor his checks to the extent of the
amount of his deposits. Failure of the bank to pay the check, entitles the drawer to substantial damage without
any proof of actual damages.

RESPONSIBILITY OF THE DRAWER

He must personally keep track of his available balance in the bank and not rely on the bank to notify him
of the necessity to fund certain checks he previously issued.

DUTY OF BANKS TO KNOW SIGNATURES

A bank is bound to know the signatures of its customers.

NO OBLI. TO PAY PARTIAL PAYMENT

A bank is under no obligation to make part payment on the check up to only the amount of the drawers
fund where the check is drawn for an amount larger than what the drawer has on deposit.

WITHDRAWALS: BANKS ARE PROHIBITED FROM ISSUING/ACCEPTING Withdrawals slips without requiring
the depositors to present their passbooks and accomplishing necessary withdrawal slips except for banks
authorized by BSP to adopt the no passbook withdrawal system.
 Negotiable Order of Withdrawal (NOW) are interest bearing deposits of accounts that combine the
payable on demand feature of the checks and investment feature of a savings acct.

Time deposits one the payment of which cannot legally be required within such a specified number of days

NEGOTIABLE CERTIFICATES OF TIME DEPOSITS (NCTDs)

a. Universal banks / commercial banks may issue NCTDs without approval of BSP
b. Thrift banks/Rural banks/Cooperative banks need approval of BSP
NON NEGOTIABLE CTD - Banks may issue long-term negotiable tax exempt certificates of time deposit
without approval of the BSP.

QUASI BANKING FUNCTIONS:

Essential elements of quasi-banking are:
A. Borrowing of funds for the borrowers own account;
B. 20 or more lenders at any one time;
C. Methods of borrowing are issuance, endorsement, or acceptance of debt instruments of any kind, other
than deposits
D. The purpose of which is (1) relending, or (2) purchasing receivables or other obligations

Any person, natural or juridical may deposit with such Phil. Bank in good standing foreign currencies
which are acceptable as part of the international reserve except those which are required by the central bank
to be surrendered.

Anonymous accounts or accounts under fictitious name should not be kept allowed.

II. Administration of deposits

All banking institutions are required to set a minimum of 3 specimens of their depositors and to update the
specimen of signatures every 5 years or sooner, at the discretion of the bank.

Minors are vested with special capacity and power to make savings, and withdraw the same without the
assistance of their parents or guardians, provided the ff. requirements are met;

1. at least 7 years of age;

2. able to read and write;
3. have sufficient discretion;
4. not otherwise disqualified by any other incapacity;

Parents may nevertheless deposit for their minor children and guardians for their wards.

Corporations
a. Incorporation Stage payment of subscription is in cash, the SEC requires a bank certificate of deposit
of paid-up capital notarized in place where signed.
b. Post Incorporation in opening a bank account, the board of directors issues a resolution authorizing
the signatories and specifying the depository bank.

Clearing cut off time

General rule: all deposits and withdrawals during regular banking hours shall be credited or debited to
deposit liability accounts on the date of receipt or payment thereof; provided, however, that a bank may set a
clearing cut off time for its head office not earlier than 2 hours before the start of clearing at the BSP and
not earlier than 3-1/2 hours before the start of clearing for all its branches, agencies, and extension office
doing business in the Philippines. Provided, further that banks are located in areas where there are no BSP
regional/clearing arrangement may set a clearing cut-off time not earlier than 2 hours before the start of their
local clearing after which time, deposits received shall be booked likewise.

III. Survivorship Agreement

Definition:
Joint owners of a deposit agree that either of them could withdraw any part or the whole of said account
during the lifetime of both, and the balance, if any, upon the death of either, belonged to the survivor.
 Although survivorship agreement is per se not contrary to law, its operation or effect may be violative of the
law.

IV. Duties of Banks

A. METICULOUS CARE
A bank is required to take meticulous care of the deposits of its clients, who have the right to expect high
standards of integrity and performance from it.
In every case the depositor expects the bank to treat his account with the utmost fidelity, whether such
account consists only of a few hundred pesos or of millions.

B. PAYMENT TO PROPER PARTY

C. IN CASE OF DEATH OF DEPOSITOR

National revenue code provides:

If a bank has knowledge of the death of the depositor, it shall not allow any withdrawal from said deposit
account unless the commissioner has certified that the taxes imposed thereon by this title have been paid.
Provided, however, that the administrator of the estate or any 1 of the heirs of the decent may upon
authorization of the commissioner withdraw an amount not exceeding 20,000 without the said certification.

V. Secrecy of bank Deposits

Purposes
a. to give encouragement to the people to deposit their money in banking institutions;
b. to discourage private hoarding so that the same may be properly utilized by banks in authorized
loans to assist in the economic development of the country.
R.A. 8367 Absolute Confidentiality
All deposits of whatever nature with an Association in the Philippines are hereby considered as of an
absolutely confidential nature and may not be examined, inquired or looked into by any person,
government official, bureau or office except upon;
1. written permission of the depositor;
2. in case of impeachment;
3. upon order of a competent court in cases of bribery or dereliction of duty of public officials;
4. in cases, where the money deposited or invested is the subject matter of the litigation.

Authority to inquire into bank deposits under the ANTI MONEY LAUNDERING ACT
The AMLC may inquire into or examine any particular deposit or investment with any banking
institution or non- bank financial institution upon order of any competent court in cases of violation, when
it has been established that;
a. there is probable cause that the deposits or investments are related to an unlawful activity;
b. a money laundering offense.

Authority of the Commissioner of Internal Revenue to inquire into deposits

a. a decedent to determine his gross estate;
b. any taxpayer who has filed an application for compromise of his tax liability by reason of financial
incapacity to pay his tax liability.

CHAPTER 4: INVESTMENTS, LOANS AND OTHER FUNCTIONS OF BANKS

Operations of a Universal Bank

a. Powers of a commercial bank
b. Powers of an investment house
c. Power to invest in non-allied enterprises
II. Equity Investments of a Universal Bank
a. Allied or non-allied
i. Allied enterprises: financial or non-financial
ii. Total investment shall not exceed 50% of the net worth of the bank
iii. Total investment in one enterprise shall not exceed 25% of the net worth of the bank
iv. Net worth- total of the unimpaired paid-in capital including paid-in surplus, retained
earnings and undivided profit, net of valuation, reserves and other adjustments
b. Acquisition is subject to prior approval of the Monetary Board
 III. Equity investments of a Universal Bank in Financial Allied Enterprises
a. Can own up to 100% of the equity in a thrift bank, a rural bank or others within this category
b. A publicly-listed universal or commercial bank can own only one other universal or commercial
bank
c. Financial Allied: leasing companies, banks, investment houses, financing companies, credit card
companies, insurance companies, holding company, etc.
IV. Equity Investments of a Universal Bank in Non-financial allied enterprises
a. May own up to 100%
b. Warehousing, storage, safe deposit box, management of mutual funds, providing computer
services, insurance agencies, home building and home development
c. Rural/Cooperative Banks may invest, as a non-financial allied undertaking in the ff:
i. Warehousing and postharvest facilities
ii. Farm equipment distribution
iii. Transportation of agricultural products
iv. Marketing of agricultural products
v. Leasing
V. Investments in Non-Allied Enterprises
a. Shall not exceed 35% of the total equity in that enterprise nor shall it exceed 35% of the voting
stock
b. Only universal banks can invest in non-allied enterprises:
i. Industrial park projects, financial and commercial complex projects, activities in
agriculture, mining, manufacturing, etc.
VI. Investments in Quasi-Banks
a. Shall not exceed 40% equity.
Operations of Commercial Banks
I. Powers
a. Powers incident to corporations
b. Such powers necessary to carry on the business of commercial banking:
i. Accepting drafts and issuance of letters of credit
ii. Accepting or creating demand deposits
iii. Receiving deposit substitutes
iv. Extending credit
v. Buying and selling foreign exchange and gold or silver
vi. Discounting negotiating promissory notes, etc.
II. Letters of Credit
a. 3 relationships created: bank and buyer, bank and seller, buyer and seller
b. Independence Principle- assures the seller of prompt payment even if buyer has not yet
reimbursed as long as the seller presents the necessary documents; the bank determines
compliance with the letter of credit only by examining the shipping documents presented; it is
precluded from determining whether the main contract is actually accomplished or not
III. Investments of a Commercial Bank
a. Only equities in allied enterprises: either financial or non-financial
b. Total investments in allied enterprises shall not exceed 35% of the net worth of the bank
c. Total investment in any one enterprise shall not exceed 25% of the net worth of the bank.
IV. Investments in Financial Allied
a. 100% of the equity of a thrift bank or a rural bank
b. In other financial allied enterprises, investment shall only be a minority holding
V. Investments in non-financial allied
a. May own up to 100%

Risk-Based Capital
I. Minimum Ratio- monetary board shall prescribe; ratio of the net worth of the bank to its total risk
assets which may include contingent accounts
a. May be altered or suspended for a maximum of one year when necessary
b. Uniformly applied for banks in the same category
II. Effect of Non-Compliance
a. Limit or prohibit the distribution of net profits
b. Restrict or prohibit acquisition of major assets
Limits on Loans, Credit Accommodations and Guarantees
I. Single Borrowers Limit- the total amount of loans, credit accommodations and guarantees as may
be defined by MB that may be extended by a bank to any person, partnership, association,
corporation or other entity shall not exceed 20% of the net worth of the bank
 a. Except:
i. As provided by the monetary board for reasons of national interest
ii. Deposits of rural banks with GOC financial institutions
b. The limit maybe increased by 10% provided the additional loans are secured
II. SBL should include:
a. Direct liability of the maker of paper sold or discounted with the bank
b. If the borrower owns a majority interest in a corporation, the liabilities of said corporation is
included
c. Liabilities of subsidiaries of a corporation who is borrowing from the bank
d. In case of partnership or association, the liabilities of the members thereof
III. SBL should exclude:
a. Loans secured by the BSP or government
b. Loans covered by assignment of deposits maintained in the bank
c. Loans under letters of credit covered by margin deposits
d. Loans specified as non-risk items
IV. Bank Guarantee- irrevocable commitment of bank binding itself to pay in the event of non-
performance by a third party; it shall also be subject to the limits herein prescribed
V. Contingent Accounts of borrowers may be included among those subject to the limits
VI. Assignment of Credit- agreement by virtue of which the owner of a credit, by a legal cause, such as
sales, dation in payment, donation, and without the need of the consent of the debtor, transfers his
credit to another who acquires the power to enforce it to the same extent as the creditor could have.
VII. Pacto Commissorio- automatic appropriation of the pledged or mortgaged property by the creditor in
payment of the loan upon its maturity. It is not allowed in assignment of deposits.
DOSRI
I. Prohibits the ff:
a. Direct or indirectly borrow from the bank
b. Become a guarantor or indorses or surety for loans from such bank to others
c. Be an obligor to the bank except with the written approval of the majority of all the directors of
the bank
II. The approval entered on the records of the bank
III. Arms Length Rule-Dealings with DOSRI shall be upon terms not less favorable to the bank
IV. Directors:
a. Names in the articles of incorporation
b. Elected in meetings of the stockholders
c. Elected to fill vacancies
V. Officers:
a. Pres, VP, EVP, Sr. VP, GM, Secretary, Treasurer, Trust Officer
b. Chairman, vice-chairman or any other position who performs functions of management
VI. Stockholder- stockholder or record in the books of the bank
a. Includes:
st
i. Spouse and/or relative within the 1 degree or consanguinity or affinity
ii. Corporation owned by the stockholder or his wife
VII. Related Interests
st
a. Spouse and/or relative within the 1 degree or consanguinity or affinity
b. Partnership where DOSRI of those in a) above are general partners
c. co-owner with a DOSRI or those in a) of a property used as a security
d. Corporation or association where the DOSRI or those in a) are is also a director
e. Corporation wholly or majority owned or owned by at least 20% by the DOSRI or those in a)
VIII. Effect of Violation- after due notice, the office of the person violating shall be declared vacant and
shall be subject to the penal provisions of NCBA
Securities on Loans
I. Secured by Real Estate
a. Shall not exceed 75% of the appraised value plus 60% of the insured improvements
II. Secured by Chattels and Intangible Properties
a. Shall not exceed to 75%
Grant and Purpose of Loans
I. Amount and Purpose
a. Only in the amount and for the period of time essential for the completion of the operations to be
financed. This shall be done consistent with safe and sound banking practice
b. The purpose shall be stated in the application
c. If the purpose stated was not followed, the bank may terminate the loan and demand immediate
repayment
 II. Requirements:
a. Statement of assets and liabilities
b. Statement of their income and expenditure
c. Other information prescribed by law or by the Monetary Board
d. Even in the absence of this provision, the bank may still demand immediate repayment because
the borrower has lost the benefit of the period under Art. 1198 of the Civil Code
III. Reason for Stringent Rules in Granting Loans- The bank invests the money it holds in trust for the
depositors. For this reason, a bank is expected to ascertain the identities of the persons transacting
with them to protect both the interest of the bank and the depositors.
IV. Unsecured Loans or Other Credit Accommodations- The MB is authorized to issue regulations with
respect to unsecured loans
V. Other Security Requirements- The MB may prescribe further security requirements shall be subject
to
VI. Authority to Prescribe Terms and Conditions of Loans
VII. Amortization on Loans
a. Shall be adapted to the nature of the operations to be financed
b. With those whose maturities are more than 5 years- periodic amortization but must be made
annually
c. Loans are used for purposes not initially producing revenue- amortization may be deferred until
such time as said revenues are sufficient but in no case shall it be later than 5 years
d. Microfinance- take into consideration the projected cash flow of the borrower
e. Escalation clause- raising of interest
i. Only allowed when the monetary board has increased the rate of interest provided that
there is also a stipulation that interest will be lowered if MB has lowered the rate of
interest
ii. Both instances should be present before escalation clause is allowed
iii. Exception: if the creditor unilaterally decreased the interest even if it was not stipulated,
escalation will be allowed
f. Unconscionable and exorbitant interests- SC: 5.5% per month or 66% per annum. Will be
considered as void. Hence, the court may reduce the interest rate
VIII. Prepayment of Loans- prior to the maturity date, borrower may pay subject to such reasonable terms
agreed upon with the bank
IX. Development Assistance Incentive- BSP shall give incentives to banks who extend loans to
education, cooperatives, hospitals, low-cost housing, and LGUs
X. Renewal of Extension of Loans- maybe regulated by the MB and prescribe conditions and limitations
XI. Banks cannot extend peso loans to non-residents
XII. Provisions for losses and write-off
a. Bad debts- debts due to on which interest is past due and unpaid
b. MB shall fix the amount of reserves for bad debts

Truth In Lending (RA 3765- Disclosure of Finance Charges)

I. Policy- protect the citizens from a lack of awareness of the true cost of credit by assuring a full
disclosure of such cost
II. Disclosure shall include:
a. The cash price of the property or service to be acquired
b. Amounts for down payment
c. Charges which are paid in connection with the transaction
d. Amount to be financed
e. Finance charge
III. Definitions:
a. Credit-
i. Any loan, mortgage, deed of trust, advance or discount
ii. Any conditional sales contract
iii. Rental-purchase contract
b. Finance Charge- interest and fees incident to the extension of credit
c. Creditor: any person engaged in the business of extending credit who requires as an incident to
the extension of credit, the payment of a finance charge
IV. Penalty- either civil or criminal (1k-5k fine or imprisonment for 6-12 months, or both)
V. Government is exempted from the punishment or penalty
Foreclosure of Real Estate
I. The mortgagor or debtor has the right within one year after the sale of the real estate, to redeem the
property by paying the amount due in the mortgage w/ interest and all the cost and expenses
II. However, the purchaser at the auction shall have the right to take possession immediately after the
date of the confirmation of the auction sale
III. Any petition in court to restrain the auction shall only be given due course upon the filing of a bond in
an amount fixed by the court
IV. Juridical Persons shall have the right to redeem the property until, but not after, the registration of
the certificate of foreclosure with the Register of Deeds within 3 months
V. Equity of Redemption v. Right of Redemption
a. Right of Redemption exists only in extrajudicial foreclosure sale
i. In a judicial foreclosure sale where the mortgagee is the PNB or a banking institution,
right of redemption exits
ii. Equity of Redemption- right of the mortgagor to extinguish the mortgage and retain
ownership by paying the secured debt within a period not less than 90 days nor more
than 120 days after the judgment becomes final. (Rule 68, Rules of Court)
iii. Right of Redemption may be extended
Major Investments
I. The MB shall establish a criteria for reviewing major acquisitions by a bank
II. Ceiling on Investments
a. Acquire real estate necessary for its own use in the conduct of its business
i. Bank premises- land, buildings, construction, leasehold rights, improvement, fixtures,
furniture
ii. Real property, equipment, chattel purchased by the bank in its name
b. Total investment in real estate including improvements shall not exceed 50% of combined
capital accounts
c. Investments by a bank in a real estate corporation shall be considered as part of the total
investment in real estate by the bank
III. Acquisition of Real Estate by way of satisfaction of claims
a. Notwithstanding the limitations given above, a bank may acquire real estate under the ff
circumstances:
i. Shall be mortgaged to it in good faith by way of security of debts
ii. Conveyed to it in satisfaction of debts previously contracted
iii. Purchased at sales under judgments, decrees, mortgages, or trust deeds held by it
b. Real Property acquired under this provision shall be disposed by the bank within a period of 5
years
c. However, it may continue to hold such property beyond the period given if the limitations given in
the previous provision are not yet reached.
Other Banking Services
I. Receive in custody funds, documents and other objects
II. Act as financial agent and buy and sell for their customers
III. Make collection and payments for the account of others
IV. Act as managing agent, adviser, consultant or administrator of an investment management with the
approval of the MB
V. Rent out safety deposit boxes
VI. Safety Deposit Box- Special Kind of Deposit because it cannot be characterized as a contract of
lease since the guard key of the box remains with the bank.
VII. If a box is rented by two persons, the agreement between them shall govern
VIII. The SC said that the rent of a safety deposit box is that of a bailor an bailee
Electronic Transactions
I. BSP shall have full authority to regulate the use of electronic devices used in connection with the
operations of a bank including the delivery of services and products to customers
II. Outsourcing of IT systems- can be done with prior approval of the MB except:
a. Strategic planning for the use of IT
b. Determination of system functionalities
c. Change management inclusive of quality assurance and testing
d. Service level and contract management
e. Security policy and administration
Outsourcing of other functions
I. With approval of the MB, banks may outsource the ff:
a. Data imaging
b. Clearing and processing of checks not in the Philippine Clearing House system
 c. Printing of bank deposit statement, bank loan statements, bank forms and promotional materials
d. Credit card services
e. Credit investigation
f. Janitorial services
g. Procurement services
h. Legal services

Questions:

Whether or not an alien-owned bank can acquire ownership of a residential lot by virtue of a deed of transfer as
settlement of a debt.
No. For the purpose of the constitution is to place and keep in the hands of the people the ownership of
private lands in order not to endanger the integrity of the nation