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PRESIDENTIAL DECREE NO. 1007
PRESIDENTIAL DECREE NO. 1007 -
FURTHER AMENDING SectionS 29 AND 34 OF REPUBLIC ACT NO. 265, AS
AMENDED, OTHERWISE KNOWN AS THE CENTRAL BANK ACT
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WHEREAS,
the Central Bank is entrusted with the responsibility of administering
the monetary, banking and credit system of the Philippines;chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
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 chanroblesvirtualawlibrary
WHEREAS, the action of the Central Bank in connection with the above
should not be hampered by unnecessarily tedious and protracted court
litigations;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers in me vested by the Constitution, do hereby
decree and order the amendment of Republic Act No. 265, as amended, as
follows: chanroblesvirtualawlibrary
Section 1. Section twenty-nine of Republic Act
Numbered Two hundred sixty-five, as amended, is hereby amended to read
as follows:cralaw:red
"Sec. 29. Proceedings upon insolvency. — Whenever,
upon examination by the head of the appropriate supervising and
examining department or his examiners or agents into the condition of
any banking institution, 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, and the Board may, upon finding
the statements of the department head to be true, forbid the
institution to do business in the Philippines and shall designate an
official of the Central Bank as receiver to immediately take charge of
its assets and liabilities, as expeditiously as possible collect and
gather all the assets and administer the same for the benefit of its
creditors, exercising all the powers necessary for these purposes
including, but not limited to, bringing suits and foreclosing mortgages
in the name of the banking institution.
"The Monetary Board shall thereupon determine within sixty days whether
the institution may be reorganized or otherwise placed in such a
condition so that it may be permitted to resume business with safety to
its depositors and creditors and the general public and shall prescribe
the conditions under which such resumption of business shall take place
as well as the time for fulfillment of such conditions. In such case,
the expenses and fees in the collection and administration of the
assets of the institution shall be determined by the Board and shall be
paid to the Central Bank out of the assets of such banking
institution. chanroblesvirtualawlibrary
"If the Monetary Board shall determine and confirm within the said
period that the banking institution is insolvent or cannot resume
business with safety to its depositors, creditors and the general
public, it shall, if the public interest requires, order its
liquidation, indicate the manner of its liquidation and approve a
liquidation plan. The Central Bank shall, by the Solicitor General,
file a petition in the Court of First Instance reciting the proceedings
which have been taken and praying the assistance of the court in the
liquidation of the banking institution. The court shall have
jurisdiction in the same proceedings to adjudicate disputed claims
against the bank and enforce individual liabilities of the stockholders
and do all that is necessary to preserve the assets of the banking
institution and to implement the liquidation plan approved by the
Monetary Board. The Monetary Board shall designate an official of the
Central Bank as liquidator who shall take over the functions of the
receiver previously appointed by the Monetary Board under this Section.
The liquidator shall, with all convenient speed, convert the assets of
the banking institution to money or sell, assign or otherwise dispose
of the same to creditors and other parties for the purpose of paying
the debts of such bank and he may, in the name of the banking
institution, institute such actions as may be necessary in the
appropriate court to collect and recover accounts and assets of the
banking institution. chanroblesvirtualawlibrary
"The provisions of any law to the contrary notwithstanding, the actions
of the Monetary Board under this section and the second paragraph of
Section 34 of this Act shall be final and executory, and can be set
aside by the court only if there is convincing proof that the action is
plainly arbitrary and made in bad faith. No restraining order or
injunction shall be issued by the court enjoining the Central Bank from
implementing its actions under this section and the second paragraph of
Section 34 of this Act, unless there is convincing proof that the
action of the Monetary Board is plainly arbitrary and made in bad faith
and the petitioner of plaintiff files with the clerk or judge of the
court in which the action is pending a bond executed in favor of the
Central Bank, in an amount to be fixed by the court. The restraining
order or injunction shall be refused or, if granted, shall be dissolved
upon filing by the Central Bank of a bond, which shall be in the form
of cash or Central Bank cashier's check, in an amount twice the amount
of the bond of the petitioner or plaintiff, conditioned that it will
pay the damages which the petitioner or plaintiff may suffer by the
refusal or the dissolution of the injunction. The provisions of Rule 58
of the New Rules of Court insofar as they are applicable and not
inconsistent with the provisions of this section shall govern the
issuance and dissolution of the restraining order or injunction
contemplated in this section. chanroblesvirtualawlibrary
"Insolvency, under this Act, shall be understood to mean the inability
of a banking institution to pay its liabilities as they fall due in the
usual and ordinary course of business, provided, however, that this
shall not include the inability to pay of an otherwise non-insolvent
bank caused by extraordinary demands induced by financial panic
commonly evidenced by a run on the banks in the banking community."
Section 2. Section thirty-four of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 34. Proceedings upon violation of laws and
regulations. — Whenever any person or entity willfully violates this
Act or any order, instruction, rule or regulation issued by the
Monetary Board, the person or persons responsible for such violation
shall be punished by a fine of not more than twenty thousand pesos and
by imprisonment of not more than five years.
"Whenever a banking institution persists in violating its charter or
by-laws or any law, or orders, instructions, rules or regulations
issued by the Monetary Board, or whenever a banking institution
persists in carrying on its business in an unlawful or unsafe manner,
the Board may, without prejudice to the penalties provided in the
preceding paragraph of this section and the administrative sanctions
provided in Section 34-A of this Act, after due hearing, take action
under Section 29 of this Act."
Section 3. This Decree shall take effect immediately.
Done in the City of Manila,
this 22nd of September, in the year of Our Lord, nineteen hundred
and seventy-six.
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