Section 16Sec./Art. 16

Notification in Case of Insolvency of Participant in a Payment System. - The participant of a payment system shall notify in writing the operator of such payment system upon the issuance of a stay order or the declaration of insolvency, bankruptcy, rehabilitation or placement under receivership or liquidation of the participant on the day of the receipt of the order or resolution issued by the court or quasi-judicial agency. Upon receipt by the operator of such notice, the operator shall immediately stop the processing of any pending payment order involving said participant.

The operator of a payment system shall notify in writing its participants and the Bangko Sentral upon the issuance of a stay order or the declaration of its insolvency, bankruptcy, rehabilitation or placement under liquidation on the day of the receipt of the order or resolution issued by the court or quasi-judicial agency. Section 17.

Designation of a Manager to Manage the Operations of the Operator of a Designated Payment System. - In order to avert disruptions in payment systems which may adversely affect the country's monetary and financial stability, the Bangko Sentral may, upon determination of the existence of any of the circumstances enumerated below, based on the report of the head of the supervising or examining department, and with prior approval of the Monetary Board, designate without need for prior hearing a manager of recognized competence in payment systems to manage the operations of the operator of a designated payment system, as may be necessary or expedient.

A threat to the safety, efficiency and reliability of the designated payment system exists as a result of any of the following:

(a) The violation of existing laws, rules and regulations by the operator;

(b) The failure of the operator to comply with any order of the Monetary Board;

(c) The assets of the operator are not sufficient to give adequate protection to its participants or end-users; (d) The capital of the operator has reached a level or is eroding in a manner that may detrimentally affect its participants, users or the public in general; or

(e) Any other financial or business condition of the operator which may be considered by the Monetary Board to be prejudicial to the interests of its participants, users or the public in general.

The actions of the Monetary Board taken under this section shall be final and executory, 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. The petition for certiorari may only be filed by the stockholders of record representing the majority of the capital stock within ten (10) days from receipt by the board of directors of the operator of the designated payment system of the notice from the Bangko Sentral advising of the designation of a manager to manage the operations of such operator.

The designation of a manager who will manage the operations of the operator of a designated payment system shall only be for such period during which any of therefore mentioned circumstances exists. The Monetary Board, however, may replace the manager as it may deem necessary. The manager so designated shall immediately control, manage, and administer the operations of the operator of a designated payment system. Effective immediately upon designation, the powers, functions, and duties, as well as allowances, remunerations and perquisites of the incumbent directors shall be suspended.

The suspension shall also apply to the officers of such operator of a designated payment system, unless the manager gives its approval in writing for any officer to continue acting as such under such terms and conditions as the manager may determine. The relevant provisions of the articles of incorporation and by-laws of such operator are likewise suspended.

The manager so designated shall determine within the period prescribed by the Monetary Board, but not to exceed one (1) year from the designation, whether any of the aforementioned circumstances still exists or whether the operator of a designated payment system may be permitted to resume management with safety to its payment system participants and end-users: Provided, That any determination for the resumption of management of the operator of a designated payment system shall be subject to prior approval of the Monetary Board.

If the manager so designated determines that the operator of a designated payment system cannot continue its operation without causing damage to its participants, end-users or the public in general, the manager so designated shall notify the Monetary Board in writing of its findings and recommend the revocation of the certificate of authority of an operator of a designated payment system. Once the certificate of authority is revoked by the Monetary Board, the provisions of Republic Act No. 10142 shall apply. For this purpose, the Bangko Sentral may initiate the appropriate action under the aforesaid law.

The costs and expenses in managing the operations of the operator of a designated payment system, including the remuneration of the designated manager, shall be paid first before other claims out of the funds and properties of the operator of a designated payment system.

The Monetary Board shall issue implementing guidelines to govern the management of the operations of the operator of a designated payment system by the designated manager, including but not limited to:

(a) The responsibilities of the designated manager;

(b) The information required to be given by the operator, its directors and officers to the designated manager to facilitate the management of the operations of the operator;

(c) The circumstances, terms, and conditions when the assets of the operator may be sold or disposed of; and

(d) Other matters related to the effective management of the operations of the operator and the appropriate performance of the duties of the designated manager to manage the operations of the operator.