ORDINARY CORPORATION BANKING CORPORATION

(Corporation Code, Sec. 41) Of said shares within six months from the time of
acquisition at a public or private sale (GBL, Sec.
10)
As to Dissolution
Requires a certificate of tax clearance as prior Does not require a certificate of tax clearance
requirement for the approval of the dissolution by before BSP can approve dissolution (In Re:
the SEC (NIRC, Sec. 52 (c)) Petition for Assistance in the Liquidation of the
Rural Bank of Bokod, Benguet, Inc., G.R. No.
158261, Dec. 18, 2006)

Certificate of Authority to Engage in Banking or Quasi-Banking Functions from BSP

A person or entity cannot engage in banking or quasi-judicial banking functions without a certificate of
authority from the BSP (GBL, Sec. 6).

The SEC shall not register the Articles of Incorporation of any bank, or any amendment thereto, unless
accompanied by a certificate of authority issued by the Monetary Board, under its seal (GBL, Sec. 14).

Upon issuance of the certificate of authority, such person or entity may commence to engage in banking
operations or quasi-banking function and shall continue to do so unless such authority is sooner
surrendered, revoked, suspended, or annulled (GBL, Sec. 6, par 2).

When Certificate of Authority is Issued

The certificate of authority shall not be issued unless the Monetary Board is satisfied that:
1. All requirements of existing laws and regulations to engage in the business for which the applicant
is proposed to be incorporated have been complied with;
2. The public interest and economic conditions, both general and local, justify the authorization; and
3. The amount of the capital, and 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 (GBL, Sec. 14).

Effect of Lack of Authority from the BSP

Persons or entities found to be performing banking or quasi-banking functions without authority from the
BSP shall be subject to appropriate sanctions under the NCBA and other applicable laws (GBL, Sec. 6, par.
4).

The determination of whether a person or entity is performing banking or quasi-banking functions without
BSP authority shall be decided by the Monetary Board (GBL, Sec. 6, par 2).

Conditions for Corporate Organization of a Domestic Bank or Quasi-Bank:

1. The entity is a stock corporation;
2. Its funds are obtained from the public, which shall mean 20 or more persons; and
3. The minimum capital requirements prescribed by the Monetary Board are satisfied (GBL, Sec. 8).

Classification of Banks
1. Commercial banks;
2. Universal banks;
3. Thrift banks, composed of:
a. Stock savings and loan associations
b. Private development banks (R.A. No. 7906)
c. Savings and mortgage banks
4. Rural banks (R.A. No. 7353);
5. Islamic banks (R.A. No. 6848);
6. Cooperative banks (R.A. No. 6938); and
7. Other classification of banks as determined by the Monetary Board (MB) of the BSP (GBL, Sec.
3.2).

1. Commercial Banks
These are the banks that have all the powers necessary to engage in commercial banking, in
addition to general corporate powers, such as:
a. Accept drafts and issue letters of credits,
b. Discounting, and negotiating negotiable instruments and other evidence of debt;
c. Accepting or creating demand deposits;
d. Receiving other types of deposits and deposit substitutes;
e. Buying and selling foreign exchange, gold or silver bullion; marketable bonds, and other debt
securities;
f. Extending credit (GBL, Sec. 29).

2. Universal Banks
Banks that have the authority to exercise the powers of a commercial bank and an investment
house, invest in non-allied enterprises (GBL, Sec. 23).