Further Amending Sections 29 And 34 Of Republic Act No. 265, As Amended, Otherwise Known As The Central Bank Act
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Further Amending Sections 29 And 34 Of Republic Act No. 265, As Amended, Otherwise Known As The Central Bank Act
Presidential Decree No. 1007
September 22, 1976
Case Overview and Summary
Summary of Presidential Decree No. 007Proceedings upon Insolvency of Banking Institutions (Section 1, amending Section 29 of RA 265):
- If a banking institution is found insolvent or its continuance would involve probable loss to depositors or creditors, the Monetary Board shall:
• Forbid the institution from doing business in the Philippines.
• Designate a Central Bank official as receiver to take charge of assets and liabilities. (Section 29)
- The Monetary Board shall determine within 60 days whether the institution can be reorganized or resume business safely. If so, it shall prescribe conditions and time for resumption. (Section 29)
- If the Monetary Board determines the institution is insolvent or cannot resume business safely, it shall order liquidation if public interest requires, and approve a liquidation plan. (Section 29)
- The Central Bank shall file a petition in the Court of First Instance for assistance in liquidation. The court shall adjudicate claims, enforce liabilities, and preserve assets. (Section 29)
- The Monetary Board shall designate a Central Bank official as liquidator to take over from the receiver. (Section 29)
- The liquidator shall convert assets to cash, sell or assign assets, and institute actions to collect accounts. (Section 29)
- The Monetary Board's actions are final and executory, can only be set aside by the court if proven plainly arbitrary and in bad faith. (Section 29)
- No restraining order or injunction shall be issued against the Central Bank unless proven plainly arbitrary and in bad faith, and a bond is filed by the petitioner. (Section 29)
- Insolvency is defined as inability to pay liabilities as they fall due, excluding inability caused by extraordinary demands or financial panic. (Section 29)
Proceedings upon Violations (Section 2, amending Section 34):
• Willful violation of the Act, orders, instructions, rules or regulations shall be punished by a fine of not more than ₱20,000 and imprisonment of not more than 5 years. (Section 34)
• If a banking institution persists in violating laws, orders, instructions, rules or regulations, or carries on business in an unlawful or unsafe manner, the Monetary Board may take action under Section 29 (insolvency proceedings) after due hearing. (Section 34)
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Further Amending Sections 29 And 34 Of Republic Act No. 265, As Amended, Otherwise Known As The Central Bank Act
Presidential Decree No. 1007
•September 22, 1976
MALACAÑANGM a n i l a
PRESIDENTIAL DECREE No. 007 September 22, 1976
FURTHER AMENDING SECTIONS 29 AND 34 OF REPUBLIC ACT NO. 265, AS AMENDED, OTHERWISE KNOWN AS THE CENTRAL BANK ACT
WHEREAS, the Central Bank is entrusted with the responsibility of administering the monetary, banking and credit system of the Philippines;
WHEREAS, in view of the special character of banks, there is need for the monetary and banking supervisory authorities to act with dispatch where the continuance in business of a bank would involve probable loss to its depositors or creditors;
WHEREAS, where a bank has become insolvent or cannot institute to resume business with safety to its depositors and other creditors, its assets must be preserved and its debts and accounts settled as expeditiously as possible; and
WHEREAS, the action of the Central Bank in connection with the above should not be hampered by unnecessarily tedious and protracted court litigations;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers in me vested by the Constitution, do...
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