General Banking Law of 2020

• Republic Act No. 8791 regulates the organization and operations of banks, quasi-banks, and trust entities.
• The General Banking Law of 2020 aims to sustain the national economy and maintain high integrity in banking.
• The State promotes a stable, efficient, and globally competitive banking system.
• Banks are entities that lend funds acquired through deposits.
• Banks are classified into universal, commercial, thrift, rural, cooperative, and Islamic banks.
• Other bank classifications are determined by the Monetary Board of the Bangko Sentral ng Pilipinas (BSP).
• Operations and activities of banks are supervised by the Bangko Sentral.
• The Bangko Sentral provides policy direction for money, banking, and credit.
• Engaging in banking or quasi-banking functions requires Bangko Sentral's consent.
• Foreign individuals and non-bank corporations may own or control up to 40% of a domestic bank's voting stock.
• This 40% rule applies to Filipinos and domestic non-bank corporations.
• The Securities and Exchange Commission registers bank articles of incorporation only with proper authority.
• Universal or commercial banks can open branches within/outside the Philippines with Bangko Sentral's approval.
• Banks must operate at least 6 hours on all working days.
• Banks must be open at least 3 hours on Saturdays, Sundays, or holidays.
• Strikes unsettled after 7 days are reported by BSP to the Secretary of Labor.
• The President of the Philippines may intervene in labor disputes.
• Universal banks have the authority to exercise additional powers for commercial banks.
• Commercial banks possess general powers incident to corporations.
• Total loans, credit accommodations, and guarantees are capped at 20% of a bank's net worth.
• Bank directors/officers cannot borrow from their bank or act as guarantors for loans to others.
• Borrowers can prepay loans and other credit accommodations.
• Banks, quasi-banks, and trust entities publish statements of their financial condition, including those of its subsidiaries and affiliates.
• Thrift, rural, and cooperative banks are governed by the Thrift Banks Act, the Rural Banks Act, and the Cooperative Code.
• Foreign banks operating in the Philippines are governed by the Foreign Banks Liberalization Act.
• Foreign banks licensed in the Philippines adhere to provisions of the Banking Law with some exceptions.

Rehabilitation of Banks

• According to Republic Act 7653 "The New Central Bank Act", there are three levels of bank rehabilitation: Conservatorship, Receivership and Liquidation.
• Conservatorship involves a state of continuing inability, where The Monetary Board may reorganize the management.
• Conservatorship shall not exceed 1 year, and The Monetary Board can terminate the conservatorship if the institution can operate on its own and the institution would involve probable loss to its depositors and creditors.
• Receivership occurs when the bank is unable to pay its liabilities, has insufficient realizable assets, cannot continue business without probable losses to its depositors and creditors, and has willfully violated a cease and desist order.
• Liquidation occurs when an institution cannot be rehabilitated or permitted to resume business.
• The liquidator shall file ex-parte with RTC, assist the enforcement of individual liabilities of stockholders, directors and officers, and institute actions to collect and recover accounts and assets of the institution which shall be deemed in custodia legis in the hands of the receiver.
• The banking franchise of a bank under liquidation may be awarded if the bank or its branches were previously operating. (Section 33)
• All claims against a bank are pursued in liquidation proceedings.
• Decisions of the Monetary Board regarding liquidations are final and executory.
• The Peso is the unit of monetary value in the Philippines.
• Currency encompasses all Philippine notes and coins issued or circulating.
• Republic Act No. 3591, also known as PDIC Law (Philippine Deposit Insurance Corporation Law) protects depositors and maintain stability in the Philippine banking system acting as a safety net, fostering confidence in the banking system.
• The PDIC insures deposits up to PHP 500,000 per depositor per bank.
• If a bank closes, the PDIC liquidates assets and pays insured deposits.
• Republic Act No. 9160, or AMLA (Anti-Money Laundering Act) aims to prevent money laundering and combat terrorism financing.
• Financial institutions perform due diligence to verify customers' identity and assess money laundering risks.
• The AMLA aims to ensure the Philippines' financial system isn't used for illegal activities.
• In Banco de Oro Universal, Inc. v. Liza A. Seastres, February 13, 2023, emphasizes that banks must exercise diligence and integrity due to their role in transactions.
• In Jose Apolinario, Jr. Y Llanuder v. PEOPLE OF THE PHILIPPINES, October 13, 2021, it was discussed that banking institutions are businesses imbued with public interest with trust in the system as paramount importance.