Bank shall refer to entities engage in the lending of funds obtained in the form of deposit.

Essence of banking is the taking of deposits from the public and lending out of funds. The basic function is mobilization of savings through deposit taking and allocating resources through lending. No. person or entity shall engage in banking operations without authority of BSP sec 6 GBL. No non-stock corporation is authorized to engage in banking only a stock corporation. Any bank may acquire real estate as shall be necessary for its own use in he conduct of its business; provided that the total investment in such real estate and improvements thereof, including bank equipment, shall not exceed fifty percent of combined capital accounts. D between Universal bank and Commercial bank A universal bank can exercise all the powers and functions of a commercial bank. In addition, a universal bank can perform the functions of an investment house as well as invest in non-allied enterprises without prior approval of MB of the BSP, unlike a commercial bank which needs prior BSP approval. A unibank is a commercial bank with the authority to exercise the powers of an investment house and invest in non-allied enterprise. Non-allied enterprise is an activity that has no relation at all to banking, e.g construction, trading, manufacturing mining. Allied enterprise ex. Credit card, leasing companies, investment houses, financing insurance. Net worth = the total and unimpaired paid-in capital including paid-in surplus , retained earnings and undivided profit, net valuation of reserves and other adjustments as may be required by the BSP. -No commercial banks can invest non-allied enterprise only in allied enterprises. - A bank may act as financial security or agent and buy and sell, by order of and for account of their customers, shares, evidences of indebtedness and all type of securities. - A bank shall not directly engage in insurance business as the insurer. Hence it is possible for a bank to indirectly engage in insurance business by distributing products of insurance. Prohibited transaction acts/ Bank officials or employees are prohibited to disclose to any unauthorized person any information relative to the funds or properties in the custody of the banks belonging to private individuals, corporation or any other entity, unless there is an order of a court of competent jurisdiction sec 55 ,4GBL. Quasi banks, they are entities in the barrowing of funds through the insurance, endorsement or assignment with recourse or acceptance of deposit substitutes for purposes of relending or purchasing of receivables and other obligations.

Deposit substitutes are alternative from of obtaining funds from the public, other than deposits, through issuance, endorsement, or acceptance of debt instruments for the borrowers own accounts for the purpose of relending or purchasing of receivables and other obligations. With recourse Term which may be used in indorsing negotiable instrument by which the endorser indicates that the remains liable for payment of the instrument. Foreign individuals and non-bank corporations may own or control up to forty percent of the voting stock of domestic bank. Non- Filipino citizen may become members of the board of directors of a bank to the extent of the foreign participation in the equity of the said bank. As a rule the BSP cannot regulate the compensation and other benefits of directors and officers of the bank Exception 1 When the bank is under receivership or conservatorship, 2 when a bank is found by the MB to be conducting business in unsafe or unsound manner 3when bank is by the MB TO BE UNSATISFACTORY FINANCIAL CONDITION.

-No appointive or elective public officials, whether fulltime or part-time shall the same time serve as officer of any private bank.exeption a) when the service of the public official is incidental to financial assistance provided by the govt b) when the law provides otherwise. - A foreign bank may be allowed to operate in the country the ff modes ;1 by acquiring or owning 60 precent of an existing bank; By investing up to 60 percent of the voting stock of a new local banking subsidiary; and By establishing branches with full banking authority. - A foreign may avail only one modes of entry. - A foreign may acquire up to 100 percent of the voting stock of a Philippine bank. however its only allowed within 7 years from the effectively of GBL. - BSP through MB supervises the operation and activities of banks.. - The BSP has the authority and shall examine a bank. - Subsidiary A corporation more than 50% of the voting stock of which is owned by a bank or quasi bank. - Affiliate- one in which the stockholding of a bank or quasi-bank is less than 50% through common stockholders or such other factors as may be determined by the MB. - Primary responsibilities of the BSP shall provide policy directions in the areas of money, banking and credit. It shall have supervision over the operations of banks and exercise such regulatory powers over the operations of finance companies and non-bank financial institutions performing quasi-banking functions. - Powers and function of BSP and their composition:

The power and functions of the BSP shall exercise by the MB.it composed of 7 members appointed by the president of the phil. 1)the governor of the BSP as chairman 2) a member of the cabinet designated by the President of the phil and 3)5 members who shall come from the private sector. -Conservatorship of banks, it is an attempt to save the bank from bankruptcy and ultimate liquidation. -Under conservatorship. Whenever on the basis of the report of the MB, the bank or quasi-bank is in a state of inability or unwillingness to maintain a condition of liquidity deemed adequate to protect the interest of depositors and creditors. -Conservatorship is the appointed person after a bank is place under conservatorship, to take over the management of the bank and shall assume exclusive powers to reverse every aspect of the banks operation and affairs. And should be competent and knowledgeable in banking operations and management. Its powers 10 to take charge of the assets, liabilities of the bank; Recognized the management of the bank; Collect all monies and debt due to the bank/ quasi-bank; exercise all powers necessary to restore the viability of the bank/quasi-bank. The conservatorship shall not exceed 1 year. - Bank place under conservatorship and receivership by the MB such action is final and executory and may not be restrained or set aside by the court Except petition for certiorari on the ground that the action was in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess jurisdiction. The remedy of the bank is to file petition for certiorari within 10 days from receipt by the board of directors of the situation of the order directing receivership, liquidation or conservatorship. -Receivership Its a summary closure of a bank by the BSP without prior notice and hearing after a finding that the continuance in business would involve probable loss to its depositors and creditors. - The receiver is not allowed to disposed or sell any assets of the bank. The appointive receiver does not dissolve the bank as a corporation nor does interfere with the exercise of corporate rights. - upon the determination of the receiver that the bank cannot be rehabilitated the receiver shall file exparte with the proper RTC , without need of prior notice or any other action, a petition for assistance in the liquidation of the bank. -no. Conservatorship is not a pre-condition before receivership or liquidation. - The nature of relationship is created is FEDUCIARY- One assume to act as an agent for another and the other repose confidence in him, although there is no written contract or no contract at all. - Degree of diligence a bank should exercise its functions and treat the accounts of their clients not only with the diligence of a good father of the family but it should do so with the highest degree of care considering the fiduciary nature of their relationship with their directors. Depositors expect to treat his account with most fidelity. The bank is under obligation to treat the accounts of its depositors with meticulous care. BANKS are expected to exercise the highest degree of diligence in the selection and supervision of their employees.

- Demand deposits are known as CURRENT ACCOUNTS. Means all those liabilities of the BSP and of other banks which are denominated in Phil currency and are subject to payment in legal tender upon demand by the presentation of checks. R.A 1405 Secrecy of Bank Deposits (SBD) the rule that all deposits of whatever nature with banks are considered as absolutely confidential in nature and may not be examined, inquired, or looked into by any person, government official, bureau or office. Apply to all deposits of whatever nature including investment in government bonds. - Fruit of poisonous tree- according to this rule, once the primary source (the tree) is show to have been unlawfully obtained, any secondary or derivative evidence ( the fruit) derived from it is also inadmissible.