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BANKING BUSINESS,
CONSERVATORSHIP,
RECEIVERSHIP AND
LIQUIDATION
ATTY. MARIA LULU G. REYES
Importance of Banks to
Economy
BANKS
QUASI-BANKS
Classes of Banks
Banks
Banks
Universal
Universal
Banks
Banks
Commercial
Commercial
Banks
Banks
Thrift
Thrift
Banks
Banks
General
Banking Law
(RA 8791)
General
Banking Law
(RA 8791)
Thrift Banks
Act
(RA 7906)
Savings
Savingsand
and
Mortgage
Mortgage
Banks
Banks
Stock Savings
And Loan
Associations
Rural
RuralBanks
Banks
Rural Banking
Act
(RA 7353)
Private
Private
Development
Development
Banks
Banks
Cooperative
Cooperative
Banks
Banks
Islamic
Islamic
Banks
Banks
Cooperative
Act
(RA 6938)
Charter of Al
Amanah
Islamic
Investment
Bank of the
Philippines
(RA 6848)
Importance of Banks to
Economy
4,545
4,019
3,578
424
17
526
441
71
14
1,339
2,779
2,617
162
8,663
Importance of Banks to
Economy
The banking system is an indispensable institution in the modern
world and plays a vitalrolein the economic life of every civilized
nation. Whether as mere passive entities for the safekeeping and
saving of money or as active instruments of business and commerce,
banks have become an ubiquitous presence among the people, who
have come to regard them with respect and even gratitude and, most
of all, confidence. Thus, even the humble wage-earner has not
hesitated to entrust his life's savings to the bank of his choice,
knowing that they will be safe in its custody and will even earn some
interest for him.
Simex International (Manila), Inc. vs. CA 183 SCRA 360 (1990)
Capitalization
Minimum
capitalization
Risk-based capital
Reserves
Reserve
requirements
Provision for losses and write offs
Minimum
Capitalization
P 5.4 Billion
P 2.8 Billion
P 650 Million
P 64 Million
P 2.6-20 Million
P 2.6-20 Million
5.Loan
Restrictions
Single Borrowers Limit
Rules on DOSRI Loans
Importance of
Banks to Economy
Protection of
Depositors
Banks in Distress
How do we know that a bank is in
distress?
Examination
(Sec.
Sec. 25, RA 7653, The New Central Bank Act; Sec. 8 (eighth),
RA 3591, as amended, PDIC Charter)
Declaration
Order
the
placement
of
bank
under
receivership
(Sec. 30, RA
7653)
Resumption of Business
Receivership
Rehabilitation
Liquidation
State
of
continuing
inability
or
unwillingness of bank/QB to maintain a
condition of liquidity adequate to protect
the interest of depositors and creditors, as
found by the Supervising and Examination
Department (SED). (Sec. 29, R.A. 7653)
2. Reorganize management
Take over management
Overrule or revoke actions of previous
perfected
When MB is satisfied
that the institution
can continue to
operate on its own
and the conservatorship is no longer
necessary. (Sec. 29,
R.A. 7653)
When MB determines
that the continuance in
business of the bank
would involve probable
loss to its depositors or
creditors. In which case,
bank will be placed
under
receivership.
(Sec. 29, R.A. 7653)
The Remedy of
Receivership
The Remedy of
Receivership
The Remedy of
Receivership
Grounds for Receivership
1.
Insolvency
Illiquidity:
The Remedy of
Receivership
Grounds for Receivership
3.
Dissipation of Assets
Bank/QB willfully violated a final cease-
of
bank
holiday
or
suspension of payment of deposits for
30 days.
The Remedy of
Receivership
The MBs closure order need not arise
from an examination under RA 7653
(the new Central Bank Act). MB could
rely on the 50-page report of the head
of SED, which detailed the facts and an
extensive
chronology
of
events
revealing the multitude of problems
facing the rural bank.
- Rural Bank of San Miguel v. Monetary Board, G.R. No.
150886, February 16, 2007.
The Remedy of
Receivership
Rationale
The
for
The Remedy of
Receivership
MB receivership order is final and
executory
thus
Effect of Receivership
Monetary Board will Summarily
forbid bank from doing business in
the Philippines
a continuity of commercial dealings and
arrangements, and contemplates to that
extent, the performance of acts or words or
the exercise of some of the functions normally
incident to, and in progressive prosecution of,
the purpose and object of its organization
Effect of Receivership
Forbidding a bank fromdoing
businessmeans
it cannot accept new deposits
it cannot grant new loans
Effect of Receivership
Effect of Receivership
Effect of Receivership
Stay of execution against the
assets of bank. Lipana vs. Development Bank
of Rizal, G.R. No. 73884 September 24, 1987.
The Remedy of
Receivership
Who
may
resolution?
contest
MB
Only
stockholders
of
record
representing majority of the capital
stock
may
bring
petition
for
certiorari, within 10 days from receipt
by the board of the institution of the
order.
The Remedy of
Receivership
What can the majority stockholders
assail?
The Remedy of
Receivership
The Remedy of
Receivership
Duties of Receiver
1.
2.
3.
The Remedy of
Receivership
Specific
receiver
1.
2.
3.
4.
powers
of
PDIC
as
bank
The Remedy of
Receivership
Specific powers of PDIC as bank
receiver
5. Collect or restructure loans and claims
6. Reduce unusually high interest rates
for unpaid interest
7. Retain private counsel
8. Borrow money and encumber asset to
prevent
dissipation,
redeem
foreclosed assets, or minimize losses
to depositors and creditors
The Remedy of
Receivership
Limitation to powers of PDIC as bank
receiver
The Remedy of
Receivership
Effect of receivership on banks directors and
officers
The authority of the bank and its directors and
officers over its property and effects is
suspended, such authority being reposed in
the receiver. Allowances and remunerations
are also suspended.
In this respect, the receivership is equivalent
to an injunction to restrain the bank officers
from meddling with the property of the bank in
any way.
EFFECTS of Receivership
On right to foreclose
EFFECTS of Receivership
On unpaid time deposit in the bank
An
OUTCOME of Receivership
Rehabilitation remedy
Nature of rehabilitation
Rehabilitation remedy
Effect on management and control of
the bank
Rehabilitation remedy
Effect
on
liquidation
pending
receivership
Rehabilitation
suspends
a
pending
liquidation.
To allow the liquidation
proceedings
to
continue
when
rehabilitation has already been mandated
by RA 7169 would seriously hinder the
rehabilitation of the subject bank. Philippine
Veterans Bank v. Vega, GR 105364, 28 June 2001)
or
Liquidation Steps
Petition for Assistance in
Petition for Assistance in
Liquidation
Liquidation
Adjudication of
Adjudication of
disputed claims
disputed claims
Approval of Project of
Approval of Project of
Distribution of Assets
Distribution of Assets
Payment of claims and
Payment of claims and
distribution of assets
distribution of assets
Termination of
Termination of
proceedings
proceedings
Goal of Liquidation
.
Payment of Claims
These
credits
constitute
liens
or
encumbrances on the specific movable or
immovable property to which they relate.
mortgages or pledges of real or personal
property, or liens within the purview of
legal provisions governing insolvency.
(Art. 2243, CC)
Mandate of PDIC
under R.A. 3591 as amended
by R.A. 9576
Insurer of deposits
Receiver of banks
Mandate of PDIC
as insurer of deposits
Maximu
m
Insuranc
e Cover
Joses
Pilars
Anitas
Share in
max.
Insurance
cover
Share in
max.
Insurance
cover
Share in
max.
Insurance
cover
600
600
500
500
n/a
n/a
500
250
500
250
250
800
400
500
250
250
600
300
500
250
250
1. Jose
Individual
2. Jose Joint
Accounts
Total DEPOSIT
2,500
1,250
650
300
1,750
1,000
500
250
750
250
150
50
Joses total share is P1,250,000 but his maximum insurance cover is only P1,000,000.00
--P500,000 for his individual account and another P500,000.00 for all his joint accounts. The
P250,000 excess of P500,000 is part of his uninsured deposit which must be claimed during
the liquidation proceedings of the bank.
Share in
Insurance
Cover
Insured
Deposit
Uninsured
Deposit
Jose
1550
1250
1000
250
Pilar
650
500
500
150
Anita
300
250
250
50
______
_____
______
2,500
1750
450
Total
OVERVIEW OF ANTI-MONEY
LAUNDERING ACT
RA 9160 as amended by RA 9194,
RA 10167 and most recently RA
10365 (signed into law 15
February 2013)
Republic Act No. 9160 otherwise known as The AntiMoney Laundering Act of 2001 was signed into law on
September 29, 2001 and took effect on October 17, 2001
. The Implementing Rules and Regulations took effect on
April 2, 2002 . On March 7, 2003 , R.A. No. 9194 (An Act
Amending R.A. No. 9160) was signed into law and took
effect on March 23, 2003 . The revised Implementing
Rules and Regulations took effect on September 7, 2003.
Two additional amendatory laws have been enacted:
Republic Act No. 10167 and most recently, Republic Act
No. 10365. It is one of the most dynamic statutes in
Philippine history, constantly reviewed and updated in
order to cover emerging trends and patterns in financial
crimes.
Significant Amendments
to the Original Law
Significant Amendments
to the Original Law
Violation of Presidential Decree No. 1612, otherwise known as the AntiFencing Law;
Violation of Section 6 of Republic Act No. 8042, otherwise known as the
Migrant Workers and Overseas Filipinos Act of 1995, as amended by Republic
Act No. 10022;
Violation of Republic Act No. 8293, otherwise known as the Intellectual
Property Code of The Philippines;
Violation of Section 4 of Republic Act No. 9995, otherwise known as the AntiPhoto and Video Voyeurism Act of 2009;
Violation of Section 4 of Republic Act No. 9775, otherwise known as the AntiChild Pornography Act of 2009;
Violations of Sections 5, 7, 8, 9, 10(c), (d) and (e), 11, 12, and 14 of Republic
Act No. 7610, otherwise known as the Special Protection of Children Against,
Abuse, Exploitation and Discrimination;
Fraudulent practices and other violations under Republic act No. 8799,
otherwise known as the Securities Regulation Code of 2000; and
Felonies or offenses of similar nature that are punishable under the penal
laws of other countries.
Other Offenses/Penalties
Breach of confidentiality.
PURPOSES (Sec. 1)
SCOPE
The
The
E XCEPTIONS:
E XCEPTIONS:
FOREIGN CURRENCY
DEPOSITS ACT
(Republic Act No. 6426, as
amended)
PRIVILEGES
ABSOLUTE CONFIDENTIALITY
GSIS v. CA, 8 June 2011
China Banking v. CA, 511 S 110
Intengan v. CA, 377 S 63
NUMBERED ACCOUNTS
RATE OF INTEREST
TAXES
EXEMPTION FROM COURT ORDER OR PROCESS
Salvacion v. Central Bank, 278 S 27
Benedicto v. CA, 4 September 2001
EXCEPTIONS TO ABSOLUTE
CONFIDENTIALITY