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Chapter 5: Prohibited Transactions and Cessation of Banking Business I. Prohibited Transactions A. Prohibition To Act As Insurer
Chapter 5: Prohibited Transactions and Cessation of Banking Business I. Prohibited Transactions A. Prohibition To Act As Insurer
BANKING BUSINESS
I. Prohibited Transactions
A. Prohibition to Act as Insurer
-A bank shall not directly engage in insurance business as the insurer.
The term “doing insurance business” or “transacting an insurance
business”,shall include:
B. Prohibited Acts
1. No director, officer, employee or agent of any bank shall—
1. continuing inability, or
2. reorganize management;
D. Period of Conservatorship
-does not exceed one (1) year
E. Expenses of Conservatorship
-shall be borne by the bank or the quasi-bank concerned
F. Terminations of Conservatorship
-MB is satisfied that the institution can continue to operate on its
own
-MB shall, on the basis of the report of the C or its own findings,
determine that the continuance thereof would involve probable loss
to its depositors or creditors
4. PROHIBITED ACTS:
a. Refusing to turn over the bank’s record and assets to the designated
receivers;
b. Tampering with bank records;
c. Appropriating for himself or another party, or destroying or causing
misappropriation and destruction of the bank’s assets;
d. Paying out or permitting or causing to be paid out any fund of said
bank; and
e. Transferring or permitting or causing to be transferred any securities
or property of said bank.
5. WHEN INSTITUTION CANNOT BE REHABILITATED
The actions of the Monetary Board shall be final and executor, and
may not be restrained or set aside by the court except on petition for
certiorari on the ground that the action taken was in excess of
jurisdiction or with such grave abuse of discretion as to amount to
lack or excess of jurisdiction.
WHO WILL FILE: Stockholders of record representing the majority
of the capital stock within 10 days from the receipt by the board of
directors of the institution of the order directing receivership,
liquidation or conservatorship.
7. EXCLUSIVE POWER TO APPOINT – vested exclusively with the
Monetory Board.
The law does not contemplate prior notice and hearing before a bank
may be directed to stop operations and placed under receivership.
A previous hearing nor due process demand that the correctness of
Monetary Board’s Resolution to stop operation and proceed to
liquidation of first adjudged before making the resolution effective.
CLOSE NOW HEAR LATER SCHEME – is grounded on practical
and legal considerations to prevent unwarranted dissipation of the
bank’s assets and as a valid exercise of police power to protect the
depositors, creditors, stockholders and the general public.
D. EFFECT OF FILING FOR PETITION FOR REVIEW
4. Stay of execution
- is warranted if a bank was placed under receivership. The assets of the
insolvent banking institution are held in trust for equal benefit of all
creditors, and after its insolvency, one cannot obtain an advantage or a
preference over another by an attachment, execution or otherwise.
D. LIABILITIES
The bank is bound by the acts, or failure to act of the receiver. At the
same time, the receiver is liable to the bank for the culpable or
negligent failure to collect the assets of such bank and to safeguard
said assets.