1. Republic Act No.

8791
2. TITLE AN ACT PROVIDING FOR THE REGULATION OF THE ORGANIZATION AND
OPERATIONS OF BANKS, QUASI-BANKS, TRUST ENTITIES AND FOR OTHER
PURPOSES (The General Banking Law of 2000)
3. Information • Republic Act 8791 contains: • 10 chapters • 97 sections • It was a
consolidation of Senate Bill No. 1519 and House Bill No. 6814 and was passed by
the senate and house of representatives on April 12, 2000, and was then
approved by the president on May 23, 2000
4. Information • Main people involved in passing the act: • Manuel Villar Jr. –
speaker of the house of representatives • Franklin Drilon– senate president •
Roberto Nazareno– secretary general, house of representatives • Oscar Yabes–
senate secretary • Joseph Estrada - president
5. Declaration of policy • The State recognizes the vital role of banks in providing
an environment conducive to the sustained development of the national economy
and the fiduciary nature of banking that requires high standards of integrity and
performance. • the State shall promote and maintain a stable and efficient
banking and financial system that is globally competitive, dynamic and responsive
to the demands of a developing economy
6. BankS Refer to entities engaged in the lending of funds obtained in the form of
deposits.
7. Quasi BankS Refer to entities engaged in the borrowing of funds through the
issuance, endorsement or assignment with recourse or acceptance of deposit
substitutes for purposes of re-lending or purchasing of receivables and other
obligations
8. Classification of banks • Universal banks • Commercial banks • Thrift banks •
Savings and mortgage banks • Stock savings and loan associations • Private
development banks • Rural banks • Cooperative banks • Islamic banks (Charter of
Al Amanah Islamic Investment Bank of the Philippines) • Others as determined by
BSP
9. BANGKO SENTRAL NG PILIPINAS
10. BSP’s Vision, Mission & Objective
11. BSP’s Supervisory Powers • The issuance of rules of conduct or the
establishment of standards of operation for uniform application to all institutions
• To conduct examination to determine compliance with laws and regulations •
Overseeing to ascertain that laws and regulations are complied with
12. BSP’s Supervisory Powers • Regular investigation to determine whether an
institution is conducting its business on a safe or sound basis: • Inquiring into the
solvency and liquidity of the institution • Enforcing prompt corrective action
13. Conditions for organization • The Monetary Board may authorize the
organization of a bank or quasi-bank subject to the following conditions: • That
the entity is a stock corporation • That its funds are obtained from the public,
 which shall mean 20 or more persons • That the minimum capital requirements
prescribed by the Monetary Board for each bank category are satisfied
14. Foreign stockholdings • Foreign individuals and non-bank corporations may own
or control up to 40% of the voting stock of a domestic bank. • This rule shall apply
to Filipinos and domestic non-bank corporation
15. Foreign stockholdings • The percentage of foreign-owned voting stocks in a bank
shall be determined by the citizenship of the individual stockholders in that bank.
The citizenship of the corporation which is a stockholder in a bank shall follow the
citizenship of the controlling stockholders of the corporation, irrespective of the
place of incorporation
16. corporate stockholdings • Two or more corporations owned or controlled by the
same family group or same group of persons shall be considered related interests
and must be fully disclosed in all transactions by such corporations or related
groups of persons with the bank.
17. Board of directors • The provision of the Corporation Code to the contrary
notwithstanding, there should be at least 5 and maximum of 15 members of the
board of directors of bank, 2 of whom shall be *independent directors * A person
other than an officer or employee of the bank
18. Fit and proper rule • To maintain the quality of bank management and afford
better protection to depositors and the public in general, the Monetary Board
shall prescribe, pass upon and review the qualifications and disqualifications of
individuals elected or appointed bank directors or officers and disqualify those
found unfit. • In determining whether an individual is fit and proper to hold the
position of a director or officer of a bank, regard shall be given to his integrity,
experience, education, training, and competence
19. Consolidated banks • In the case of a bank merger or consolidation, the number
of directors shall not exceed twenty-one
20. Prohibition on public officials • General Rule • No appointive or elective public
official whether full-time or part-time shall at the same time serve as an officer of
any private bank • Exceptions • When the service of the public official is incident to
financial assistance provided by the government or a government owned or
controlled corporation to the bank • When the law provides otherwise
21. Bank branches • Universal or commercial banks may open branches or other
offices within or outside the Philippines upon prior approval of the BangkoSentral
• A bank authorized to establish branches or other offices shall be responsible for
all business conducted in such branches and offices to the same extent and in the
same manner as though such business had all been conducted in the head office.
A bank and its branches and offices shall be treated as one unit
22. Banking days & hours • All banks shall transact business on all working days for
at least 6 hours a day • Banks may open for business on Saturdays, Sundays or
holidays for at least 3 hours a day, provided that they would report to the
 BangkoSentral the additional days, other than the working days, which their
branches will transact business
23. Article I – Operations of Universal Banks • Article II – Operations of Commercial
Banks • Article III – Provisions Applicable to all Banks, Quasi-banks, and Trust
Entities
24. Article I Operations of Universal Banks
25. Operations of Universal Banks • Powers of a Universal Bank • Power to
authorize commercial bank • Power of an investment house • Power to invest in
non-allied enterprise
26. Operations of Universal Banks • Equity Investments of a Universal Bank • The
total investment in the equities shall not exceed 50% of the net worth of the bank
in allied and non-allied enterprises • The equity investment in any one enterprise,
whether allied or non-allied, shall not exceed 25% of the net worth of the bank. • A
universal bank can own up to 100% of the equity in a thrift bank, rural bank or a
financial allied enterprise and 100% of the voting stock of any other universal or
commercial bank
27. Operations of Universal Banks • Equity Investment of a Universal Bank • A
universal bank may own up to 100% of the equity in a non-financial allied
enterprise • shall not exceed 35% of the total equity in that enterprise nor shall it
exceed 35% of the voting stock in non-allied enterprise • Limit to 40% equity
investments of universal banks in quasi-banks and commercial banks
28. Operations of Universal Banks • Net worth- total of the unimpaired paid-in
capital including paid-in surplus, retained earnings and undivided profit, net of
valuation reserves and other adjustments as may be required by the
BangkoSentral
29. Article II Operations of Commercial Banks
30. Operations of Commercial Banks • Powers of a Commercial Bank • Accepting
drafts and issuing letter of credit • Discounting and negotiating promissory notes,
drafts, bills of exchange, and other evidences of debt • Accepting or creating
demand deposits • Receiving other types of deposits and deposit substitutes •
Buying and selling foreign exchange and gold or silver bullion • Acquiring
marketable bonds and other debt securities • Extending credit depending on the
Monetary Board
31. Operations of Commercial Banks • Equity Investments of a Commercial Bank •
The total investment in equities of allied enterprises shall not exceed 35% of the
net worth of the bank • The equity investment in any one enterprise shall not
exceed 25% of the net worth of the bank • 100% of the equity of a thrift bank or a
rural bank a financial and non-financial allied enterprise
32. Article III Provisions Applicable to all Banks, Quasi-Banks and Trust Entities
33. Provisions Applicable to all Banks, Quasi-Banks and Trust Entities •
Acceptance of Demand Deposits • Only Universal or Commercial bank • Risk-
 Based Capital • Minimum ratio which the net worth of a bank must bear to its
total risk assets which may include contingent accounts
34. Provisions Applicable to all Banks, Quasi-Banks and Trust Entities • Risk-Based
Capital • If a bank does not comply with prescribed minimum ratio: • the Monetary
Board may limit or prohibit the distribution of net profits and the making of new
investments by such banks • May require that part or all of the net profits be used
to increase the capital accounts of the bank until the minimum requirement has
been met
35. Provisions Applicable to all Banks, Quasi-Banks and Trust Entities • Limit on
Loans, Credit Accommodations and Guarantees • Shall at no time exceed 20% of
the net worth of such bank. • May be increased by an additional 10% of the net
worth of such bank provided the additional liabilities of any borrower are secured
by trust receipts, shipping documents, warehouse receipts securing title covering
readily marketable, non-perishable goods which must be fully covered by
insurance
36. Provisions Applicable to all Banks, Quasi-Banks and Trust Entities • Limit on
Loans, Credit Accommodations and Guarantees • Excluding loans and other credit
accommodations • secured by obligations of the BangkoSentralor of the
Philippine Government • fully guaranteed by the government as to the payment of
principal and interest • covered by assignment of deposits maintained in the
lending bank and held in the Philippines • under letters of credit to the extent
covered by margin deposits • Non-risk items
37. Provisions Applicable to all Banks, Quasi-Banks and Trust Entities • Loans and
Other Credit Accommodations Against Real Estate • shall not exceed seventy-five
percent (75%) of the appraised value of the respective real estate security, plus
sixty percent (60%) of the appraised value of the insured improvements,
38. Provisions Applicable to all Banks, Quasi-Banks and Trust Entities • Grant and
Purpose of Loans and Other Credit Accommodations • A bank shall grant loans
and other credit accommodations only in amounts and for the periods of time
essential for the effective completion of the operations to be financed
39. Provisions Applicable to all Banks, Quasi-Banks and Trust Entities •
Amortization on Loans and Other Credit Accommodations • In case of more than
5 years maturity • Payment must be made annually • Provided, that when the
borrowed funds are to be used for purposes which do not initially produce
revenues for regular amortization payments there form, the bank may permit the
initial amortization payment to be deferred until such time as said revenues are
enough for such purpose
40. Provisions Applicable to all Banks, Quasi-Banks and Trust Entities •
Foreclosure of Real Estate Mortgage • To redeem the property, it must be paid
within 1 year with interest and expense received by the bank. • However, the
buyer at the auction sale concerned whether in a judicial or extrajudicial
foreclosure shall have the right to enter upon and take possession of such
 property immediately after the date of the confirmation of the auction sale and
administer the same in accordance with law.
41. Provisions Applicable to all Banks, Quasi-Banks and Trust Entities • Ceiling on
Investments in Certain Assets • Total investment shall not exceed 50% of
combined capital accounts
42. Provisions Applicable to all Banks, Quasi-Banks and Trust Entities • Prohibited
Transactions • No director, officer, employee, or agent of any bank shall • Make
false entries in any bank reports • Disclose to any unauthorized person any
information relative to the funds in the custody of the bank without order of a
court • Accept fees to approve a loan or other credit accommodation • Outsource
inherent banking functions
43. Provisions Applicable to all Banks, Quasi-Banks and Trust Entities • Prohibited
Transactions • No borrower • Make misrepresentation of material facts for the
purpose of obtaining a loan or other credit accommodation • Attempt to defraud
the said bank • Offer any director or employee of a bank any gift or money •
Fraudulently overvalue property offered as security for a loan or other credit
accommodation
44. Provisions Applicable to all Banks, Quasi-Banks and Trust Entities • Financial
Statement • Every bank, quasi-bank or trust entity shall submit financial
statements to the BangkoSentral which include the results o its operation, and
other information required by the BangkoSentral • Must publish at least once
every quarter in a newspaper of general circulation on the city or province
45. Provisions Applicable to all Banks, Quasi-Banks and Trust Entities • Capital
Stock • Shall not publish the amount of its authorized capital stock without
indicating at the same time and with equal prominence, the amount of its capital
actually paid up
46. Provisions Applicable to all Banks, Quasi-Banks and Trust Entities • Penalty for
Violation of this Act • If the offender is a director or officer of a bank, Monetary
Board may also suspend or remove such director or officer • If a corporation
violates the Act, it may be dissolved by quo warranto proceedings instituted by
Solicitor General
47. Voluntary Liquidation • In case of the voluntary liquidation* written notice of
such liquidation shall be sent to the Monetary Board before such liquidation is
undertaken, and the Monetary Board shall have the right to intervene and take
such steps as may be necessary to protect the interests of creditor *to sell
property to pay off debts
48. Acquisition of Voting Stock • Within 7 years of effectivity, the Monetary Board
may authorize any foreign bank the privilege to acquire up to sixty percent (60%)
of the voting stock of a bank under the Foreign Banks Liberalization Act and the
Thrift Banks Act
49. Trust entity A trust entity shall administer the funds or property under its
custody with the diligence that a prudent man would exercise in the conduct of an
enterprise of a like character and with similar aims.
50. Trust entity A trust entity shall have the power to: • Act as trustee on any
mortgage or bond issued by any municipality, corporation, or any body politic and
to accept and execute any trust consistent with law; • Act under the order or
appointment of any court as guardian, receiver, trustee, or depositary of the
estate of any minor or other incompetent person, and as receiver and depositary
of any moneys paid into court by parties to any legal proceedings and of property
of any kind which may be brought under the jurisdiction of the court; • Act as the
executor of any will when it is named the executor thereof;
51. Trust entity • Act as administrator of the estate of any deceased person, with the
will annexed, or as administrator of the estate of any deceased person when
there is no will; • Accept and execute any trust for the holding, management, and
administration of any estate, real or personal, and the rents, issues and profits
thereof; and • Establish and manage common trust funds, subject to such rules
and regulations as may be prescribed by the Monetary Board.
52. Trust entity • Before transacting trust business, every trust entity shall deposit
with the BangkoSentralas security for the faithful performance of its trust duties,
cash or securities approved by the Monetary Board in an amount equal to not less
than Five hundred thousand pesos (P500,000.00) or such higher amount as may
be fixed by the Monetary Board • A trust entity so long as it shall continue to be
solvent and comply with laws or regulations shall have the right to collect the
interest earned on such securities deposited with the BangkoSentral and, from
time to time, with the approval of the BangkoSentral, to exchange the securities
for others
53. RA 10641 An Act Allowing the Full Entry of Foreign Banks in the Philippines
54. RA 10641 • Approved by President Benigno Aquino III last July 15, 2014 • Amends
RA 7721 that allowed the entry of foreign banks either through ownership up to
60% of the voting stock of an existing domestic bank, of a new banking subsidiary
or establishment of branches with full banking authority • This will give advantage
to the Philippines in the economic integration of the ASEAN in 2015.
55. Amended RA 7721 AN ACT LIBERALIZING THE ENTRY AND SCOPE OF
OPERATIONS OF FOREIGN BANKS IN THE PHILIPPINES AND FOR OTHER
PURPOSES • Section 2 • Section 3 • Section 4 • Section 6 • Section 8 • Section 9 •
Section 12 • Section 13
56. Modes of Entry • Foreign banks can operate in the country through • Acquiring,
buying or owning up to 100% of the voting stock of an existing bank • Investing up
to 100% of the voting stock of a new banking subsidiary incorporated under the
laws of the Philippines • Establishing branches with full banking authority
57. Guidelines for Approval • Approving Entry Applications: Monetary Board shall •
Ensure the geographic representation and complementation • Consider strategic
trade and investment relationships between the Philippines and the county of
 incorporation of the foreign bank • Study the demonstrated capacity, global
reputation for financial innovations and stability in a competitive environment of
the applicant • See to it that reciprocity rights are enjoyed by the Philippine banks
in the applicant’s country • Consider willingness to fully share their technology
58. Capital Requirements • For Locally Incorporated Subsidiaries • The minimum
capital required for locally incorporated subsidiaries of foreign banks shall be
equal to that prescribed by the Monetary Board for domestic banks of the same
category • For Foreign Bank Branches • Shall be authorized to establish branches
pursuant to Section 2 of this Act shall permanently assign capital of an amount
not less than the minimum capital required for domestic banks of the same
category.
59. Equal Treatment • Foreign banks authorized to operate under Section 2 of this
Act, shall perform the same functions, enjoy same incentive and be subject to the
same limitations imposed upon a Philippines bank of the same category. • The
single borrower’s limit of a foreign bank branch shall be aligned with that of a
domestic bank.
60. Applicability of Other Banking Laws The provisions of RA 7653 (New Central
Bank Act) and the provisions of RA 8791 (The General Banking Law of 2000),
insofar as they are applicable and not in conflict with any provision of this Act
shall apply to banks authorized pursuant to this Act.
61. Rule Making Powers of the Monetary Board of the BSP and Compliance
Report • Monetary Board shall issue rules and regulations as may be needed by
Banks Committees, on the developments in implementation of this Act. On or
before May 30 of each year, the Monetary Board shall file a written report to
Congress and its representatives to implement the provisions of this Act. • The
rules must be published in at least 2 newspapers of general circulation.
On 02 March 2022, President Rodrigo Duterte signed Republic Act No. 11647 (Act 11647),
which amended the Foreign Investment Act (FIA), also known as Republic Act No. 7042. The
amendments aim to promote and attract foreign investments by allowing international investors
to set up and fully own domestic enterprises (including micro and small enterprises) in the
Philippines.

The amendments make it easier for foreign businesses to invest in the Philippine market, with the
investments expected to not only contribute to sustainable, inclusive, resilient and innovative
economic growth, but to increase competition in the Philippine market, resulting in lower prices
and better products and services for the consumers.

WHAT ARE THE AMENDMENTS TO THE FOREIGN INVESTMENT ACT?

FOREIGN OWNERSHIP OF SMALL AND MEDIUM-SIZED ENTERPRISES

Under the FIA, micro, small, and medium-sized enterprises (MSME) with paid-in capital of less
than USD200,000.00 are reserved for Philippine nationals; however, under the amendments,
foreign nationals can own an MSME with a minimum paid-in capital of USD100,000.00,
provided that the enterprises meet the following conditions:

1. Utilize advanced technology (to be determined by the Department of Science and

Technology);
2. Are endorsed as startup enablers or as a startup in accordance with the Innovative Startup
Act; or
3. The company hires no less than 15 Filipino employees, a reduction from the previous
requirement of 50.

THE NEW INTER-AGENCY INVESTMENT PROMOTION COORDINATION

COMMITTEE (IIPC)

Under the amended FIA, the government will create the Inter-Agency Investment Promotion
Coordination Committee (IIPCC) which is a body that integrates all the promotion and
facilitation efforts to encourage foreign investments. An inter-agency body will provide a
uniform approach to foreign investment promotion, since various government agencies may have
different strategies when it comes to foreign investment promotion and facilitation.

The IIPC will be under the Department of Trade and Industry (DTI).

POWER OF THE PRESIDENT TO SUSPEND, PROHIBIT, OR LIMIT FOREIGN

INVESTMENTS

To safeguard national interests, the amened FIA gives the President of the Philippines power to
order the IIPCC to review foreign investments that may threaten the safety, security, and well-
being of Filipinos. Examples include foreign investments involving cyberinfrastructure, military-
related industries, and pipeline transportation, among others.
UNDERSTUDY OR SKILLS DEVELOPMENT PROGRAM FOR FOREIGN
NATIONALS

Foreign businesses employing foreign nationals and are enjoying fiscal incentives must devise an
understudy or skills development program that benefits Filipino workers. This ensures that local
workers receive the knowledge and skills from their foreign colleagues.

The program that companies develop will be monitored by the Department of Labor and
Employment.

STRENGTHENING THE PHILIPPINES’ NATIONAL SECURITY ALONGSIDE

ECONOMIC GROWTH

Along with this push for economic growth, RA 11647 also balances the need to strengthen the
country’s national security. Under this law, the IIPCC, in coordination with the National Security
Council (NSC) and the National Economic Development Authority (NEDA), shall review
foreign investments involving military-related industries, cyber infrastructure, pipeline
transportation, or other activities that may threaten territorial integrity and the safety, security
and well-being of Filipino citizens in certain instances.

Republic Act No. 7042, also known as the “Foreign Investments Act of 1991,” is a law
regulating foreign investments in the Philippines. The act allows foreign investors to invest up to
100% equity in domestic market enterprises, but also sets restrictions. The goal of this law is to
encourage foreign investors to provide employment opportunities, develop resources, increase
the value of exports, and help fuel the overall economy.

THE FOREIGN INVESTMENTS NEGATIVE LIST (FINL)

The (FINL) is a list of areas or activities that set limits on foreign ownership. It is divided into two:
List A and List B.

WHAT IS COVERED IN LIST A?

List A consists of areas of investment reserved for Philippine nationals. The Philippine Constitution
restricts foreign ownership in some of these investment areas to a maximum of 40%. Foreign
ownership is prohibited in the following areas:

 Mass media, except recording

 Practice of licensed professions
 Retail trade
 Cooperatives
 Private security agencies
Limited foreign ownership is allowed in the following areas:

 Private radio communication networks

 Private recruitment
 Advertising
 Ownership of private lands and condominium units
 Exploration, development, and utilization of natural resources

WHAT IS COVERED IN LIST B?

List B indicates limits in foreign ownership for reasons of security, defense, risk to health and
morals, and protection of small and medium-scale enterprises. They include but are not limited to:

 Manufacture, repair, storage, and/or distribution of products and/or ingredients requiring

Philippine National Police (PNP) clearance such as firearms, gunpowder, and dynamite
 Manufacture, repair, storage, and/or distribution of products and/or ingredients requiring
Department of National Defense (DND) clearance such as guns and ammunition for warfare,
gunnery, bombing, fire control systems, and military communication equipment
 Telescopic sights, sniper scopes, and other similar devices
 All forms of gambling, except those covered by investment agreements with the Philippine
Amusement and Gaming Corporation (PAGCOR)

The standard setup for companies with both Filipino and foreign ownership is 60% / 40%, with
Filipinos owning the larger share. The company must also be serving the local market. Under this,
paid-up capital can be less than USD200,000.00. However, some foreign entities may be interested in
owning a bigger stake in a locally registered company. For this, the following conditions have to be
met:

 The foreign entity wants to own more than 40% of the domestic company;
 The area in which the foreign entity wants to enter is not among those stated in the FINL;
 The area will serve the domestic market.

The required capital for the endeavor should not be less than US$200 thousand. It can be lowered to
US$100 thousand if the activities involve advanced technology or the company has at least 50 direct
employees.

FORM OF INVESTMENTS

Foreign investments can come in these forms:

 Capital goods
 Patents
 Formulae
 Other technological rights or processes

BASIC RIGHTS AND GUARANTEES FOR THE SAFETY OF FOREIGN

INVESTORS
Under the Philippine Constitution, all foreign investors have the right to:

 Repatriation of investments. If there is a need for repatriation of investments, it has to be in

the same currency as what was used when it was first invested, as well as in the same
exchange rate of said currency during that time
 Remittance of earnings. Interest payments, payment of loans made to foreign entities, and
other obligations should also follow the same kind and exchange rate of currency for this
remittance.
 Freedom from expropriation. The government cannot seize properties stemming from foreign
investments unless these are meant for public use or for national In that case, the foreign
investor can avail of just compensation, still with the conditions of using the same currency at
the time of investment and the prevailing exchange rate of that time.
 Non-requisition of investment. No requisition of property stemming from foreign
investments is allowed unless it was done in the event of war or a national emergency, and
only for that time. However, just compensation must still be made with the same conditions
as set in the above-mentioned instances.