CONSERVATORSHIP; RECEIVERSHIP AND LIQUIDATION:
1. CONSERVATORSHIP:
In case where a bank or quasi-bank is in a state of inability to maintain its
condition of liquidity to protect the interests of its depositors and creditors,
the MB shall appoint a conservator for a period not exceeding one year.
A. POWERS OF A CONSERVATOR:
To take charge of all the assets, liabilities and management of the subject
bank;
To reorganize the management of the subject bank;
To perform powers as may be necessary to restore the viability of the bank.
2. RECEIVERSHIP:
A. GROUNDS:
That the bank cannot pay its liabilities as they become due in the ordinary
course of business unless the inability to pay is caused by extraordinary
circumstances due to financial panic in the banking community;
The bank has insufficient realizable assets;
The bank cannot continue its operation without causing probable losses to
its depositors or creditors;
Violated a cease-and-desist order which has become final for acts
amounting to fraud or dissipation of the assets of the institution.
PDIC is designated as the statutory receiver of a bank.
B. CLOSE NOW-HEAR LATER SCHEME:
Prior hearing is not necessary for the appointment of a receiver and closing a
bank.
C. EFFECTS OF RECEIVERSHIP AND LIQUIDATION:
Banks closed by the Monetary Board shall not be rehabilitated. The PDIC
shall proceed with the takeover and liquidation of the bank.
Upon placing the bank under liquidation, its corporate existence shall
continue for 3 years only for the purpose of liquidation and winding up of
all its corporate affairs.
Any action by or against the corporation shall be prosecuted and defended
by the receiver.
A bank placed under liquidation shall not be permitted to resume its
business.
The rights, duties, privileges and functions of the stockholders, directors
and officers of the bank shall cease upon its closure.
The assets of the closed bank are considered as under custodia legis of the
receiver.
No attachment, garnishment, levy, execution or other court processes shall
be issued against the assets of the bank.
Collaterals given as security for the loan and advances made by the BSP
shall not form part of the assets of the closed bank and shall not be
distributed to its creditors.
Employer-employee relationship between the employees and the bank
shall be deemed terminated upon service of the notice of closure of the
bank.
Separation pay and payment of other benefits shall be made out of the
available assets of the bank.
The receiver may terminate contracts with the bank which are not
necessary for the orderly liquidation of the bank or those which are grossly
disadvantageous to the bank.
The obligation of the bank to pay interests upon deposits shall cease upon
its closure.
The receiver may assign to secured creditors assets of the banks which are
collateral for loan secured, without the prior approval of the liquidation
court.
Upon its closure, the bank shall not be liable for penalties and surcharges in
case of late payment or non-payment of taxes.
Actions pending in any court or quasi-judicial agency against the closed
bank shall be suspended for a period not exceeding 180 days and shall be
referred for mandatory mediation.
Upon the termination of the mediation, the case shall be referred back to
the court or quasi-judicial agency for appropriate action.
Final decisions against the closed bank shall be stayed.
The prevailing party shall file his claim with the liquidation court and shall
be settled in accordance with the rules on concurrence and preference of
credits.
Docket fees for actions filed by the receiver in any judicial or quasi-judicial
agencies shall be deferred. In case of a favorable judgment for the closed
bank, the docket fees shall constitute as a lien thereon, in case of an
unfavorable judgment, the docket fees shall be paid as liquidation costs and
expenses during the distribution of assets of the closed bank.
NOTA BENE:
During liquidation proceedings, a bank cannot be permitted to resume its
business.
The acceptance of deposits and grant of loans are functions of the bank in
the course of its business.
D. REMEDIES:
The decision of the MB shall be final and executory and may not be
restrained or set aside by any court action except by a petition for
certiorari.
Ground: That the MB committed an act in excess of its jurisdiction or with
grave abuse of discretion amounting to lack or excess of jurisdiction.
Who may file; When filed:
The petition shall be filed by the majority of the stockholders representing the
capital stocks within 10 days from receipt by the BOD of the institution of the
order of conservatorship, receivership and liquidation.
