Other Special Laws

Financial Rehabilitation and Insolvency Act (FRIA of 2010)

Remedies for Individual Debtors who are NOT Businessmen:

Suspension of Payment (TA > TL)
Effect of issuance by court of an Order:
 No creditor shall sue or collect claim except Filing of
o Creditors with claims for personal labor Petition
o Fully secured creditors

Duration of Suspension: 3 months Action by

the Court
Meeting of Creditors:
Quorum: 3/5 of the Liabilities
Approval of Proposal (Double Majority) Meeting of Debor cannot sell
or transfer
Publication
Creditors properties of Order
 2/3 of the creditors voting
 Claims represented by said majority
amounts to at least 3/5 of total liability Approved: court shall order that all parties are
No creditor who incurred his credit within 90 bound. Other orders necessary may be enforced
days prior to filing shall be entitled to vote Failure: All rights creditor rights are revested. Debtor
may be made subject to liquidation.
 Liquidation of Individual Debtor (TL > TA)
Voluntary
Debtor owing debts EXCEEDING ₱500,000
 May apply to be discharged from debts by
filing a verified petition with the court of the
province or city
 If the court finds the petition sufficient in
form and substance, it shall WITHING 5
WORKING DAYS, issue liquidation order
Requirements:
1. Total Liabilities > Total Assets
2. Debts exceed ₱500K
Involuntary
Creditor/s with claims AT LEAST ₱500,000
 Acts of insolvency must be alleged by the
creditors in the petition
 Posting of bond by creditors
o If debtor not insolvent, creditors are liable
Orders the court may issue during IL
 Court shall issue Show Cause Order
 Forbid debtor from making payments.
o No order may impair the rights of
secured creditor

Remedies for Insolvent Businessmen

Rehabilitation
Court-supervised Pre-negotiated Out-of-Court Restructuring
 Voluntary  Pre-negotiated by the debtor  Allowed as long as the
 Involuntary – claims AT and its creditors requisites of FRIA are present
LEAST ₱1,000,000

Voluntary Court Supervised Involuntary Court Supervised

 Required vote
o Majority of partners
(Partnership)
o Majority of BOD and 2/3
Stockholders (Corporation)
o 2/3 of members (Nonstock)
 Grounds
o Debtor unable to pay
o Total liabilities > total assets
 Minimum Allegations
o Establish the insolvency
o Establish viability of
rehabilitation
 Required vote (higher) Petition for Rehabilitation
o Creditor claims of AT
LEAST ₱1,000,000 or establish the insolvency of debtor and
viability of rehabilitation
o 25% of subscribed capital
stock or partner’s
contribution
Commencement Order
 Grounds If sufficient in form and substance, a
CO shall be issued within 5 days
o No issue with creditors’
claims. The claim is due
and demandable, and
Receivership
payments have not been
A qualified natural or juridical person
made for AT LEAST 60 may serve as receiver. Can be
days appointed or nominated.
o A creditor, other than
petitioners, has initiated
foreclosure proceedings Conservatorship
Elected liquidator by creditors or
court-appointed
 Banking Laws
Philippine Deposit Insurance Law (RA 3591)
Insurable Deposits Not Covered by PDIC
 Savings deposits  NOW  Investment products (bonds, securities)
 Special savings  Time Deposits  Deposits that are fraudulent, emanate from
 Demand/Checking  FC Deposit unsafe/unsound practices and unlawful proceeds

Required to File Insurance Claim (w/i 2 years) Other Procedures

 Accounts with deposits more than 100,000
 Those with outstanding obligations
 Those without updated addresses
 Those who maintain their accounts under the name
of business entities
 Account not eligible for early payment
Period of payment – as soon as possible
Mode of payment – cash or money order
Requirement before payment – proof of claims or, if not
satisfied, final determination of court
Period of payment – within 6 months from filing
PDIC will be legally subrogated to all rights.

General Banking Law Bank Secrecy Law

Banks – lending of funds in the form of deposits Instances of Violations
Quasi-banks – borrowing of funds through acceptance of  Public prosecutor handling estafa case
substitute deposits  BIR officer auditing the VAT of accused
 Credit investigator of lending institution
Single Borrower’s Limit – 20% of Net Worth of Bank and
may be increased by an additional 10%
 the current rate was raised to 25% in 2004.
 Batas Pambansa 22 (Bouncing Check
Law)
 Penalty
o imprisonment of not less than 30 days but not
more than 1 year or
o fine of not less than, but not more than twice the
amount of the check, in no case shall exceed
₱200,000 or
o both imprisonment and fine
 Quantum of Evidence
o To convict: proof beyond reasonable doubt
o To prove civil damages: preponderance of
evidence
o To sue: prima facie/probable cause
Anti-Money Laundering Council
Covered Transactions
 Cash or other equivalent exceeding 500K
 Transaction exceeding 1M for jewelry dealers
 Casino Cash transaction of excess of 5M
 Real estate transactions exceeding 500K
Record keepings – 5 years
Transaction reporting – within 5 working days unless
AMLC prescribes a different period not exceeding 15
days
Suspicious Transactions – not more than 10 calendar
days to determine