This paper finds strong empirical evidence that Philippine universal and commercial banks (UKBs) exhibit heterogeneity in their response to monetary policy both in terms of their decisions on lending rates and their decisions on lending levels—indicative that the bank lending channel is at work in the Philippines. Heterogeneity not only stemmed from differences in size but also in other bank characteristics particularly from the presence of foreign ownership—a novel finding in this study. In addition, we tested for heterogeneity not only in terms of banks’ decisions on lending levels, but also in terms of banks’ decisions on lending rates—with an additional distinction between low-quoted (prime) and high-quoted (subprime) lending rates. On this aspect, an additional contribution of the paper is finding evidence that domestic banks’ lending rates respond more to policy rate changes than those of foreign bank branches, most likely due to the latter’s access to additional parent company funds. Further, bank lending growth and the high-quoted or subprime lending rates are relatively more responsive to the policy rate, to bank characteristics and in their interactions, than is the case for low-quoted or prime lending rates.