Regulation of Banks and Banking Institutions

Domestic banks (except building and loan associations) must be stock corporations.
Banks must not issue no par value stock.
Securities and Exchange Commissioner must ensure Monetary Board authorization before registering banks' incorporation or amendments.
Monetary Board assesses legal compliance, public interest, economic conditions, capitalization, and the integrity of organizers.
Banks must be Philippine-incorporated to accept deposits, except certain existing foreign bank branches.
At least 60% capital and two-thirds of board members must be Filipino citizens.

Foreign banks require a license from the Monetary Board and Securities and Exchange Commissioner to transact in the Philippines.
Unauthorized foreign bank operations attract imprisonment and fines.
License issuance depends on public interest, bank solvency, and authorized Philippine agent acceptance of legal processes.
Foreign building and loan associations are prohibited from transacting.
The Monetary Board may revoke licenses of foreign banks under threat of insolvency or probable loss.
Courts have jurisdiction over foreign banks via their Philippine agents.
Absent an authorized agent, summons may be served to the Superintendent of Banks.
Foreign banks operating in the Philippines are subject generally to domestic bank laws, excluding corporate formation matters.
Filipino creditors of foreign bank branches have preferential rights to assets.

Defined as corporations accepting demand deposits payable by check.
Powers include accepting drafts, issuing letters of credit, discounting negotiable instruments, foreign exchange dealings, and lending against personal or first mortgage securities.
Loans on real estate security must mature within 15 years and limited to 70% of total savings deposits.
Capital must be at least 15% of total assets excluding cash, interbank amounts, and Philippine government obligations.
Monetary Board may restrict dividends, investments, and require capital restoration if deficient.
Lending limit to any borrower is 15% of unimpaired capital and surplus, with an additional 15% allowed if secured by marketable staples.
Prohibits loans or share purchases of its own capital stock except to prevent losses.
Banks may hold real estate under specified conditions and up to 25% of paid-up capital.
Deposit liabilities subject to reserve requirements.
Banks may establish branches domestically or abroad with Monetary Board approval and are responsible for branch activities.
Monetary Board may compel liquidation of unlawful or prejudicial branches.

Organized to accumulate small savings and invest primarily in bonds and mortgage loans.
Capital requirements similar to commercial banks (15% of total assets excluding specified assets).
Investments and loans limited to: secured savings deposit loans, specific medium-term loans (e.g., livestock breeding, agricultural equipment), real estate mortgages, bonds, commercial papers, and loans secured by bullion.
Lending limits generally 25% of unimpaired capital and surplus; exceptions apply.
May issue mortgage and chattel mortgage certificates.
May hold real estate under conditions similar to commercial banks.
Married women and minors have rights over their deposits.
Savings deposits returned according to board regulations.
Must maintain reserves with the Central Bank.
Lending or investing upon unsatisfactory reserve call is punishable by imprisonment and fines.

Corporations aimed at accumulating savings, repaying stockholders, encouraging homebuilding, and lending on real estate security.
Prohibited from lending on properties suitable only for public or institutional use except with Monetary Board waiver.
Capital stock paid by periodic dues; shares have mature value and dividends.
Loans limited as to amount relative to total assets.
Loans must be secured by real estate mortgage and pledged shares equal to the loan amount.
Default in dues may lead to share forfeiture after notice.
Profits apportioned annually with reserve fund maintenance.
May borrow money subject to conditions.

Corporations acting as trustees, executors, guardians, administrators, or depositaries.
May engage in commercial banking with Monetary Board approval but must separate trust and banking businesses.
Powers include acting under court orders, managing estates, accepting and executing trusts.
Not required to post bond unless court orders it.
Must keep trust assets separate from business assets.
Prohibited from accepting unlawful trusts.
Investment of trust deposits limited to enumerated loans and investments.
Capital stock and funds invested as prescribed; real estate governed by specific provisions.
Must deposit securities or cash with Central Bank as security for trust duties.
Required to accumulate surplus up to 20% of capital before dividends.
May establish branches with Monetary Board approval.

Multiple foreign bank branches/agencies treated as a single unit.
Head office guarantees prompt payment of liabilities of Philippine branches to protect depositors.
Monetary Board monitors guarantee adequacy and may require capital assignment.
Lending limits to borrowers defined relative to head office guarantees and assigned capital.
Restrictions do not apply to loans made for and funded by the head or other branches.

Appeals from the Superintendent of Banks go to the Monetary Board, subject to judicial review.
Banks (other than building and loan associations) may provide custodial, agency, collection, and securities trading services as agents.
Banks prohibited from engaging directly in insurance business.
Guaranty or suretyship contracts generally prohibited with limited exceptions.
Loans must be necessary, with proper debtor evaluation.
Loan contracts must specify purposes; unauthorized use permits bank to demand repayment.
Loans secured by real estate limited to 70% of appraised value plus improvements; chattel loans limited to 50%.
Borrowers may prepay loans anytime.
Capital stock advertised must indicate paid-up amounts.
Bank officers/directors cannot borrow bank funds without approval; violations result in vacancy and penalties.
Dividend restrictions apply under loss conditions.
Penalties for improper receipt or payment of funds in insolvency.
Monetary Board may intervene in bank liquidations.
Violations punishable by fines, imprisonment, or corporate dissolution.