bank takes precautionary actions
BDO Unibank has made the necessary arrangements for its clients in Cebu City to be serviced in alternative locations just in case the threat to close its branches here pushes through.
In a statement on Monday, the bank apologized for “whatever inconvenience the recent threat of branch closures in Cebu City has created.”
“This is a local issue and has no bearing on the operation of the Bank as a whole,” the statement read.
Cebu City Mayor Tomas Osmeña earlier hinted at the possible closure of 26 BDO branches in Cebu City, all of which have yet to secure their renewed business permits.
At present, City Hall is withholding the branches’ applications for business permit pending the investigation on BDO’s Magallanes branch.
Last month, Osmeña filed a case against the branch for allegedly underdeclaring its gross annual income in 2016.
According to the mayor, establishments without business permits are not allowed to operate under the law.
The bank said it has complied with the requirements of the city government, but the latter has refused to accept payments for local taxes and fees as well as issue permits contrary to what it did in the past.
BDO Magallanes branch manager Joseph Lao, in a letter to the Office of the Mayor dated Feb. 3, maintained that the branch has made faithful and truthful representations in its 2016 business permit application.
He said the branch has “faithfully complied with the requirements under the Local Government Code, its implementing Rules and Regulations, the Cebu City Tax Ordinance, and other applicable rules and/or issuances on the determination of gross receipts.”
Furthermore, he said that with respect to the branch’s 2017 business permit application, it has submitted the additionally required documents last Feb. 3 to the Office of the City Treasurer.
“As such, we believe that this Honorable Office has no ground to withhold/revoke BDO-Magallanes’ business permit, not order its closure,” said Lao.
Lao explained that for banks, gross receipts are limited to interest, commissions, and discounts because these are the bank’s compensation for its services.
Deposits received by the bank from its clients do not count as gross receipts as these are not a bank’s income, but are loans for which the bank pays interest unlike manufacturers, wholesalers, or retailers, whose entire gross receipts are considered taxable.
“Given the foregoing, and taking into account all the documents provided by BDO-Magallanes, it is submitted that BDO-Magallanes did not commit any irregularity,” said Lao.
BDO Unibank, a member of the SM Group owned by Henry Sy, is the largest bank in the Philippines, 116th largest bank in Asia, and the 234th largest bank globally.
In 2015, the bank posted a net income of P25 billion and total assets of P2 trillion.