Due Diligence Report on Legal Counseling

Submitted by: Falsis, John Elbert R.

Submitted to: Prosecutor Macababbad

Legal Counseling 3-E

S.Y. 2015 - 2016

Rural Bank of Calaca is now in danger of a bank run and possibly a closure. Met and

exchanged ideas regarding a possible merger/acquisition with the rural bank it is an

important aspect to dwell and study the history and trend of the bank for us to be able to

decide whether or not to acquire or merge with the rural bank.

Although there are reasons not to pursue with the merger or expansion due to not

only financial issues but also the legal workload that we about to endure once we

proceed with the acquisition.

But as the corporate lawyer of the bank it is a great opportunity to acquire the Rural

Bank of Calaca for the following reasons:

Expansion

Acquire mortgaged properties & Existing Investments

Gain confidence and trust of the depositors

These are only a few of the many issues to be discussed during mergers and

acquisitions but these factors are essential regarding the compliance or application of

law in our country. Now this presentation is made to discuss the said reasons for the

merger or acquisition of the Rural Bank of Calaca:

Expansion

The need to scout and look for prospective place to establish a bank will be

greatly attended to in engaging in this merger. Not only we have cut-down on costs on

searches but it already has established its key locations in the rural areas making it

easily and immediately accessible to its current depositors.

Under the General Banking Law, the rural bank’s clientele are mostly composed

of agricultural workers like fishermen, farmers, planters, business that are engaged in

the production of chemicals used in agricultural purposes and other undertakings as

may be determined by the Monetary Board.

The client history of the Rural Bank of Calaca will shed light on the trend of

banking practices of the people in the area, therefore obtaining such needed information

and data for our legal aspect will give aid to our decision-making in considering the

acquisition of the bank.

It is also an advantage to our company as well because these branch locations

will be able to cater as well our existing depositors and will definitely bring about positive

change and convenience in their banking practices but of course for us there will be

additional legal works for the existing cases of the rural bank and possible influx or

lawsuits from the current events of the liquidity issues.

The General Banking law also states that in the event of a merger of acquisition,

the number of directors will be limited at twenty-one (21).

Acquisition of mortgaged properties & Existing Investments

The acquisition of the mortgaged properties will also add up to the legal workload

that our company have but the existing lawyers already has the necessary paper works

for the respective cases therefore it is just a matter of continuing the procedure for us to

be able to turn these properties in liquid assets.

The General Banking Law on rural banks under the non-allied investments

provides that they can engage themselves in warehousing, fertilizers, agricultural

chemicals, equipments used in agriculture, transportation or marketing of agricultural

products to name some of the investment option that they can join in.

Rural Bank of Calaca perhaps made some of these investments and there is a

need to investigate on these investments to ensure our protection from any possible

illegal activities which might have arisen in these engagements. Performing security

checks and other forms of due diligence will serve to shield us from any lawsuit or

violation that may arise from the said investments.

Gain the confidence and trust of the depositors

In merging with the Rural Bank of Calaca, it may also be an opportunity to gain

the trust of their depositors even those who have already filed legal cases and we may

be able to provide for them settlements which will be beneficial not only for them but

also for the acquisition/merger.

As provided by the General Banking Law it requires the bank to assume a

degree of a diligence higher than that of a good father to a family. It just simply states

that banks should be able to address not only the needs of the depositors but also

maintain their trust and confidence to the banking system.

By merging and acquiring Rural Bank of Calaca, we retain this trust back from

their previous and current clients which brings about opportunity for us to serve them as

well and make them prefer to stay in our service rather than to choose another banking

facility.

In conclusion, the acquisition of the Rural Bank of Calaca is a positive trend for

the company given the three factors that have been presented. The legal issues of

acquiring the bank is an ordinary day in the business but the opportunities that are

included in the merger is a risk we should be more than willing to take.