Article 146p. 146

COMMERCIAL LAWS NEGOTIABLE INSTRUMENTS, CORPORATION, INSURANCE, TRANSPORTATION, BANKING

14.2. That the public interest and economic conditions,

both general and local, justify the authorization; and

14.3.

That

the

amount

of

capital,

the

financing,

organization, direction and administration, as well as the

integrity

and

responsibility

of

the

organizers

and

administrators reasonably assure the safety of deposits

and the public interest. (9)

The

Securities

and

Exchange

Commission

shall

not

register the by-laws of any bank, or any amendment

thereto, unless accompanied by a certificate of authority

from the Bangko Sentral. (10)

SECTION 15. Board of Directors . — The provisions of the

Corporation Code to the contrary notwithstanding, there

shall be at least five (5), and a maximum of fifteen (15)

members of the board of directors of a bank, two (2) of

whom shall be independent directors. An "independent

director" shall mean a person other than an officer or

employee of the bank, its subsidiaries or affiliates or

related interests. (n)

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. (Sec. 7, RA 7721 )

The meetings of the board of directors may be conducted

through modern technologies such as, but not limited to,

teleconferencing and video-conferencing. (n)

SECTION 16. Fit and Proper Rule . — To maintain the

quality of bank management and afford better protection

to depositors and the public in general, the Monetary

Board

shall

prescribe,

pass

upon

and

review

the

qualifications and disqualifications of individuals elected

or appointed bank directors or officers and disqualify

those found unfit.

After due notice to the board of directors of the bank, the

Monetary Board may disqualify, suspend or remove any

bank director or officer who commits or omits an act

which render him unfit for the position.

In determining whether an individual is fit and proper to

hold the position of a director or officer of a bank, regard

shall be given to his integrity, experience, education,

training, and competence. (9-Aa)

SECTION 17. Directors of Merged or Consolidated Banks .

— In the case of a bank merger or consolidation, the

number of directors shall not exceed twenty-one (21). (13a)

SECTION

18.

Compensation

and

Other Benefits of

Directors

and

Officers .

—

To

protect the funds of

depositors

and

creditors,

the

Monetary

Board

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

exceptional cases and when the circumstances warrant,

such as but not limited to the following:

18.1.

When

a

bank

is

under

comptrollership

or

conservatorship; or

18.2. When a bank is found by the Monetary Board to be

conducting business in an unsafe or unsound manner; or

18.3. When a bank is found by the Monetary Board to be

in an unsatisfactory financial condition. (n)

SECTION 19. Prohibition on Public Officials . — Except as

otherwise provided in the Rural Banks Act , no appointive

or elective public official, whether full-time or part-time

shall at the same time serve as officer of any private bank,

save in cases where such service is incident to financial

assistance

provided

by

the

government

or

a

government-owned or controlled corporation to the bank

or unless otherwise provided under existing laws. (13)

SECTION 20. Bank Branches . — Universal or commercial

banks may open branches or other offices within or

outside

the

Philippines

upon

prior

approval

of

the

Bangko Sentral.

Branching by all other banks shall be governed by

pertinent laws.

A bank may, subject to prior approval of the Monetary

Board, use any or all of its branches as outlets for the

presentation and/or sale of the financial products of its

allied undertaking or of its investment house units.

A bank authorized to establish branches or other offices

shall be responsible for all business conducted in such

branches and offices to the same extent and in the same

manner as though such business had all been conducted

in the head office. A bank and its branches and offices

shall be treated as one unit. (6-B; 27)

SECTION

21.

Banking

Days

and

Hours .

—

Unless

otherwise

authorized

by

the Bangko Sentral in the

interest of the banking public, all banks including their

branches

and

offices

shall

transact

business

on all

working days for at least six (6) hours a day. In addition,

banks or any of their branches or offices may open for

business on Saturdays, Sundays or holidays for at least

three (3) hours a day: Provided , That banks which opt to

open on days other than working days shall report to the

Bangko Sentral the additional days during which they or

their branches or offices shall transact business.

For purposes of this Section, working days shall mean

Mondays to Fridays, except if such days are holidays.

(6-Ca)

SECTION

22. Strikes and Lockouts . — The banking

industry

is hereby declared as indispensable to the

national interest and, notwithstanding the provisions of

any law to the contrary, any strike or lockout involving

banks, if unsettled after seven (7) calendar days shall be

reported by the Bangko Sentral to the Secretary of Labor

who may assume jurisdiction over the dispute or decide it

or certify the same to the National Labor Relations

Commission for compulsory arbitration. However, the

President of the Philippines may at any time intervene

and assume jurisdiction over such labor dispute in order

to settle or terminate the same. (6-E)

CHAPTER IV Deposits, Loans and Other

Operations

ARTICLE I Operations of Universal Banks

SECTION 23. Powers of a Universal Bank . — A universal

bank shall have the authority to exercise, in addition to

the powers authorized for a commercial bank in Section

29, the powers of an investment house as provided in

existing laws and the power to invest in non-allied

enterprises as provided in this Act. (21-B)

SECTION 24. Equity Investments of a Universal Bank . —

A universal bank may, subject to the conditions stated in

the succeeding paragraph, invest in the equities of allied

and non-allied enterprises as may be determined by the

Monetary

Board.

Allied

enterprises

may

either

be

financial or non-financial.

Except as the Monetary Board may otherwise prescribe:

24.1.

The

total

investment

in

equities

of allied and

non-allied enterprises shall not exceed fifty percent (50%)

of the net worth of the bank; and

24.2.

The

equity

investment

in

any

one

enterprise,

whether allied or non-allied, shall not exceed twenty-five

percent (25%) of the net worth of the bank.

As used in this Act, "net worth" shall mean the total of the

unimpaired

paid-in

capital including paid-in surplus,

retained earnings and undivided profit, net of valuation

reserves and other adjustments as may be required by

the Bangko Sentral.

The acquisition of such equity or equities is subject to the

prior

approval

of

the

Monetary

Board

which

shall

promulgate

appropriate

guidelines

to

govern

such

investments. (21-Ba)

SECTION 25. Equity Investments of a Universal Bank in

Financial Allied Enterprises . — A universal bank can own

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