EXECUTIVE ORDER NO. 289 July 25, 1987
FURTHER AMENDING REPUBLIC ACT NO. 265, AS AMENDED, OTHERWISE KNOWN AS "THE CENTRAL BANK ACT"
I, CORAZON C. AQUINO, President of the Philippines do hereby order the further amendment of Republic Act No. 265, as amended as follows:
Sec. 1. Section 29 of the same Act is hereby amended to read as follows:
"Sec. 29. Proceeding upon Insolvency. Whenever, upon examination by the head of the appropriate supervising or examining department or his examiners or agents into the condition of any bank or non-bank financial intermediary performing quasi-banking functions, it shall be disclosed that the condition of the same is one of insolvency, or that its continuance in business would involve probable loss to its depositors or creditors, it shall be the duty of the department head concerned forthwith, in writing, to inform the Monetary Board of the facts. The Board may, upon finding the statements of the department head to be true, forbid the institution to do the business in the Philippines and...
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Executive Orders
Further Amending Republic Act No. 265, as Amended, Otherwise Known as "The Central Bank Act"
Executive Order No. 289
Summary of Executive Order No. 289
Proceedings upon Insolvency of Banks and Non-Bank Financial Intermediaries (Sec. 1):
- If a bank or non-bank financial intermediary performing quasi-banking functions is found to be insolvent or its continuance in business would involve probable loss to depositors or creditors, the Monetary Board may:
- Forbid the institution from doing business in the Philippines.
- Appoint a receiver from the Central Bank or a competent person to take charge of its assets and liabilities. (Sec. 1)
- Determine within 60 days whether the institution can be reorganized or permitted to resume business under certain conditions. (Sec. 1)
- If the institution cannot resume business safely, order its liquidation and approve a liquidation plan, which may involve disposition of assets in exchange for assumption of liabilities. (Sec. 1)
- Designate a liquidator from the Central Bank or a competent person to take over the functions of the receiver and convert the assets to money or dispose of them to pay debts. (Sec. 1)
- The assets under receivership or liquidation are exempt from garnishment, levy, attachment, or execution. (Sec. 1)
- The actions of the Monetary Board are final and executory, and can only be set aside by a court if there is convincing proof of arbitrary and bad faith action, within 10 days of receivership or notice of conservatorship/liquidation, and upon filing of a bond. (Sec. 1)
- Insolvency is defined as realizable assets being insufficient to meet liabilities, as determined by the Central Bank. (Sec. 1)
Interbank Settlements (Sec. 2):
- Deposit reserves maintained by banks in the Central Bank shall serve as a basis for clearing checks and settling interbank balances, subject to rules by the Monetary Board. (Sec. 2)
- Any bank with an overdraft in its deposit accounts with the Central Bank must fully cover it by the next clearing day. (Sec. 2)
- Settlement of clearing balances shall not be effected for any account with overdrafts for 5 consecutive banking days until the overdraft is covered or converted into an emergency loan or advance. (Sec. 2)
- Banks with existing overdrafts as of the effectivity of this amendment must convert the overdraft into an emergency loan or advance with a payment plan, or settle the overdrafts within the prescribed period by the Monetary Board, or face action by the Central Bank. (Sec. 2)
Proceedings upon Insolvency of Banks and Non-Bank Financial Intermediaries (Sec. 1):
- If a bank or non-bank financial intermediary performing quasi-banking functions is found to be insolvent or its continuance in business would involve probable loss to depositors or creditors, the Monetary Board may:
- Forbid the institution from doing business in the Philippines.
- Appoint a receiver from the Central Bank or a competent person to take charge of its assets and liabilities. (Sec. 1)
- Determine within 60 days whether the institution can be reorganized or permitted to resume business under certain conditions. (Sec. 1)
- If the institution cannot resume business safely, order its liquidation and approve a liquidation plan, which may involve disposition of assets in exchange for assumption of liabilities. (Sec. 1)
- Designate a liquidator from the Central Bank or a competent person to take over the functions of the receiver and convert the assets to money or dispose of them to pay debts. (Sec. 1)
- The assets under receivership or liquidation are exempt from garnishment, levy, attachment, or execution. (Sec. 1)
- The actions of the Monetary Board are final and executory, and can only be set aside by a court if there is convincing proof of arbitrary and bad faith action, within 10 days of receivership or notice of conservatorship/liquidation, and upon filing of a bond. (Sec. 1)
- Insolvency is defined as realizable assets being insufficient to meet liabilities, as determined by the Central Bank. (Sec. 1)
Interbank Settlements (Sec. 2):
- Deposit reserves maintained by banks in the Central Bank shall serve as a basis for clearing checks and settling interbank balances, subject to rules by the Monetary Board. (Sec. 2)
- Any bank with an overdraft in its deposit accounts with the Central Bank must fully cover it by the next clearing day. (Sec. 2)
- Settlement of clearing balances shall not be effected for any account with overdrafts for 5 consecutive banking days until the overdraft is covered or converted into an emergency loan or advance. (Sec. 2)
- Banks with existing overdrafts as of the effectivity of this amendment must convert the overdraft into an emergency loan or advance with a payment plan, or settle the overdrafts within the prescribed period by the Monetary Board, or face action by the Central Bank. (Sec. 2)