Quicknotes on 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 Involuntary
Debtor owing debts EXCEEDING ₱500,000 Creditor/s with claims AT LEAST ₱500,000
 May apply to be discharged from debts by  Acts of insolvency must be alleged by the
filing a verified petition with the court of the creditors in the petition
province or city  Posting of bond by creditors
 If the court finds the petition sufficient in o If debtor not insolvent, creditors are liable
form and substance, it shall WITHING 5
WORKING DAYS, issue liquidation order Orders the court may issue during IL
 Court shall issue Show Cause Order
Requirements:  Forbid debtor from making payments.
1. Total Liabilities > Total Assets o No order may impair the rights of
2. Debts exceed ₱500K 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 Petition for Rehabilitation
 Required vote  Required vote (higher)
o Majority of partners o Creditor claims of AT establish the insolvency of debtor and
viability of rehabilitation
(Partnership) LEAST ₱1,000,000 or
o Majority of BOD and 2/3 o 25% of subscribed capital
Stockholders (Corporation) stock or partner’s
Commencement Order
o 2/3 of members (Nonstock) contribution
If sufficient in form and substance, a
CO shall be issued within 5 days
 Grounds  Grounds
o Debtor unable to pay o No issue with creditors’
o Total liabilities > total assets claims. The claim is due
Receivership
and demandable, and
 Minimum Allegations payments have not been A qualified natural or juridical person
may serve as receiver. Can be
o Establish the insolvency made for AT LEAST 60 appointed or nominated.

o Establish viability of days

rehabilitation o A creditor, other than
petitioners, has initiated Conservatorship
foreclosure proceedings 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 Period of payment – as soon as possible
 Those with outstanding obligations Mode of payment – cash or money order
 Those without updated addresses Requirement before payment – proof of claims or, if not
 Those who maintain their accounts under the name satisfied, final determination of court
of business entities Period of payment – within 6 months from filing
 Account not eligible for early payment PDIC will be legally subrogated to all rights.

Bank Secrecy Law

Instances of Violations
 Public prosecutor handling estafa case
 BIR officer auditing the VAT of accused
 Credit investigator of lending institution
 Batas Pambansa 22 (Bouncing Check Anti-Money Laundering Council
Law)
 Penalty Covered Transactions
o imprisonment of not less than 30 days but not  Cash or other equivalent exceeding 500K
more than 1 year or  Transaction exceeding 1M for jewelry dealers
o fine of not less than, but not more than twice the  Casino Cash transaction of excess of 5M
amount of the check, in no case shall exceed  Real estate transactions exceeding 500K
₱200,000 or
o both imprisonment and fine Record keepings – 5 years
 Quantum of Evidence Transaction reporting – within 5 working days unless
o To convict: proof beyond reasonable doubt AMLC prescribes a different period not exceeding 15
o To prove civil damages: preponderance of days
evidence Suspicious Transactions – not more than 10 calendar
o To sue: prima facie/probable cause days to determine