AMLA

Rule 3.a. "Covered Institution" refers to:

Rule 3.a.2. Insurance companies, insurance agents, insurance brokers, professional reinsurers,
reinsurance brokers, holding companies, holding company systems and all other persons and
entities supervised and/or regulated by the Insurance Commission (IC).

(a) An insurance company includes those entities authorized to transact insurance business in
the Philippines.

(b) An insurance agent includes any person who solicits or obtains insurance on behalf of
any insurance company.

(c) An insurance broker includes any person who acts or aids in any manner in spliciting,
negotiating or procuring the making of any insurance contract.

(d) A professional reinsurer includes any person, partnership, association or corporation that
transacts solely and exclusively reinsurance business in the Philippines.

(e) A reinsurance broker includes any person who, not being a duly authorized agent,
employee or officer of an insurer in which any reinsurance is effected.

(f) A holding company includes any person who directly or indirectly controls any
authorized insurer.

Rule 5.1. Jurisdiction over Money Laundering Cases. – The Regional Trial Courts shall have the
jurisdiction to try all cases on money laundering. Those committed by public officers and private
persons who are in conspiracy with such public officers shall be under the jurisdiction of the
Sandiganbayan

Rule 6.1.b. Any proceeding relating to the unlawful activity shall be given precedence over the
prosecution of any offense or violation under the AMLA without prejudice to the issuance by the
AMLC of a freeze order with respect to the deposit, investment or similar account involved
therein and resort to other remedies provided under the AMLA.

Rule 7.1.a. Composition. – The Anti-Money Laundering Council is hereby created and shall be
composed of the Governor of the Bangko Sentral ng Pilipinas as Chairman, the Commissioner of
the Insurance Commission and the Chairman of the Securities and Exchange Commission as
members.

Rule 10.1.a. Title. – The AMLC is authorized under Sections 7 (6) and 10 of the AMLA to
freeze any account or any monetary instrument or property subject thereof, irrespective of the
amount or value involved, upon determination that probable cause exists that the same is in any
way related to any unlawful activity and/or money laundering offense. The AMLC may issue a
freeze order on any account or any monetary instrument or property subject thereof prior to the
institution, or in the course of, the criminal proceedings involving the unlawful activity and/or
money laundering offense to which said account, monetary instrument or property is any way
related.

Rule 10.1.b. The freeze order on such account shall be effective immediately for a period not
exceeding fifteen (15) days.

Rule 10.3. Remedy when AMLC is Unable to Secure Addresses of Account Owners/Holders. –
If, after exercising diligence in obtaining the addresses of the owners or holders of the accounts
sought to be frozen, the AMLC is not able to secure said addresses, and there is extreme urgency
necessitating the immediate issuance of the freeze orders, the covered institution concerned shall,
upon request of the AMLC, supply the needed addresses based on their updated records. If,
notwithstanding this procedure, the needed addresses cannot be obtained, service of the freeze
order on the owners or holders of the subject accounts shall be deemed made upon notice by the
bank on them that their accounts have been frozen in accordance with the order of the AMLC.

Rule 10.4.a. The AMLC shall serve notice of the freeze order upon the covered institution
concerned and the owner or holder of the account, simultaneously.

Rule 10.4.b. Upon receipt of the notice of the freeze order, the covered institution concerned
shall immediately freeze the account and the monetary instrument or property subject thereof.

Rule 10.4.c. Within twenty-four (24) hours from receipt of the freeze order, the covered
institution concerned shall submit to the AMLC, by personal delivery, a detailed written return
on the freeze order, specifying the account number, name of the account owner or holder, the
balance of the account as of the time it was frozen, and the time when the freeze thereon was
effectuated.

Rule 10.5. Notice to Account Owner/Holder. – The owner/holder of the account or depositor so
notified shall have a non-extendible period of seventy-two (72) hours upon receipt of the notice
to explain why the freeze order should be lifted. Such explanation shall be in writing and
verified. Failure of the owner or holder of the account to file such verified explanation shall be
deemed a waiver of his right to question the freeze order.

Rule 10.7. Procedure for Determination of whether Freeze Order should be Lifted. – The AMLC
shall have seventy-two (72) hours to dispose of the depositor's explanation. If it fails to act
within seventy-two (72) hours from receipt of the depositor's explanation, the freeze order shall
automatically be dissolved. However, the covered institution shall not lift the effects of the freeze
order without securing official confirmation from the AMLC. Before the fifteen (15)-day period
expires, the AMLC may apply in court for an extension of said period. Upon the timely filing of
such application and pending the decision of the court to extend the period, said period shall be
suspended and the freeze order shall remain effective.

Rule 10.9. Prohibition against Issuance of Temporary Restraining Orders. – No court shall issue
a temporary restraining order or writ of injunction against any freeze order issued by the AMLC
or any court order extending period of effectivity of the freeze order except the Court of Appeals
or the Supreme Court.

Rule 14.3. Penalties for Malicious Reporting. – Any person who, with malice, or in bad faith,
reports or files a completely unwarranted or false information relative to money laundering
transaction against any person

Penalty: 6 months – 4 years imprisonment and a fine of 100T-500T

GBL

SECTION 6. Authority to Engage in Banking and Quasi-Banking Functions. — No person or

entity shall engage in banking operations or quasi-banking functions without authority from the
Bangko Sentral: Provided, however, That an entity authorized by the Bangko Sentral to perform
universal or commercial banking functions shall likewise have the authority to engage in quasi-
banking functions.

Persons or entities found to be performing banking or quasi-banking functions without authority

from the Bangko Sentral shall be subject to appropriate sanctions under the New Central Bank
Act and other applicable laws. (4a)

The determination of whether a person or entity is performing banking or quasi-banking

functions without Bangko Sentral authority shall be decided by the Monetary Board. To resolve
such issue, the Monetary Board may, through the appropriate supervising and examining
department of the Bangko Sentral, examine, inspect or investigate the books and records of such
person or entity.

The department head and the examiners of the appropriate supervising and examining
department are hereby authorized to administer oaths to any such person, employee, officer, or
director of any such entity and to compel the presentation or production of such books,
documents, papers or records that are reasonably necessary to ascertain the facts relative to the
true functions and operations of such person or entity. Failure or refusal to comply with the
required presentation or production of such books, documents, papers or records within a
reasonable time shall subject the persons responsible therefore to the penal sanctions provided
under the New Central Bank Act.

SECTION 19. Prohibition on Public Officials. — Except as otherwise provided in the Rural
Banks Act, no appointive or elective public official, whether full-time or part-time shall at the
same time serve as officer of any private bank, save in cases where such service is incident to
financial assistance provided by the government or a government-owned or controlled
corporation to the bank or unless otherwise provided under existing laws.

SECTION 23. Powers of a Universal Bank. — A universal bank shall have the authority to
exercise, in addition to the powers authorized for a commercial bank in Section 29, the powers of
an investment house as provided in existing laws and the power to invest in non-allied
enterprises as provided in this Act. (21-B)
SECTION 24. Equity Investments of a Universal Bank. — A universal bank may, subject to the
conditions stated in the succeeding paragraph, invest in the equities of allied and non-allied
enterprises as may be determined by the Monetary Board. Allied enterprises may either be
financial or non-financial. Except as the Monetary Board may otherwise prescribe: 24.1. The
total investment in equities of allied and non-allied enterprises shall not exceed fifty percent
(50%) of the net worth of the bank; and 24.2. The equity investment in any one enterprise,
whether allied or non-allied, shall not exceed twenty-five percent (25%) of the net worth of the
bank.

SECTION 25. Equity Investments of a Universal Bank in Financial Allied Enterprises. — A

universal bank can own up to one hundred percent (100%) of the equity in a thrift bank, a rural
bank or a financial allied enterprise. A publicly-listed universal or commercial bank may own up
to one hundred percent (100%) of the voting stock of only one other universal or commercial
bank.

SECTION 28. Equity Investments in Quasi-Banks. — To promote competitive conditions in

financial markets, the Monetary Board may further limit to forty percent (40%) equity
investments of universal banks in quasi-banks. This rule shall also apply in the case of
commercial banks.

SECTION 29. Powers of a Commercial Bank. — A commercial bank shall have, in addition to
the general powers incident to corporations, all such powers as may be necessary to carry on the
business of commercial banking, such as accepting drafts and issuing letters of credit;
discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of
debt; accepting or creating demand deposits; receiving other types of deposits and deposit
substitutes; buying and selling foreign exchange and gold or silver bullion; acquiring marketable
bonds and other debt securities; and extending credit, subject to such rules as the Monetary
Board may promulgate. These rules may include the determination of bonds and other debt
securities eligible for investment, the maturities and aggregate amount of such investment.

SECTION 30. Equity Investments of a Commercial Bank. — A commercial bank may, subject
to the conditions stated in the succeeding paragraphs, invest only in the equities of allied
enterprises as may be determined by the Monetary Board. Allied enterprises may either be
financial or non-financial. Except as the Monetary Board may otherwise prescribe: 30.1. The
total investment in equities of allied enterprises shall not exceed thirty-five percent (35%) of the
net worth of the bank; and 30.2. The equity investment in any one enterprise shall not exceed
twenty-five percent (25%) of the net worth of the bank.

SECTION 31. Equity Investments of a Commercial Bank in Financial Allied Enterprises. — A

commercial bank may own up to one hundred percent (100%) of the equity of a thrift bank or a
rural bank. Where the equity investment of a commercial bank is in other financial allied
enterprises, including another commercial bank, such investment shall remain a minority holding
in that enterprise.

SBD
SECTION 2. All deposits of whatever nature with banks or banking institutions in the
Philippines are hereby considered as of an absolutely confidential nature and may not be
examined, inquired or looked into by any person, government official, bureau or office, except
upon:

1. Written permission of the depositor

2. In cases of impeachment

3. Upon order of a competent court in cases of bribery or dereliction of duty of public

officials

4. In cases where the money deposited or invested is the subject matter of the litigation

R.A. 10021

Section 3. Authority of the Commissioner of Internal Revenue to Inquire into Bank Deposit Accounts
and Related Information Held by Financial Institutions. - Section 6(F) of Republic Act No. 8424, as
amended, otherwise known as the National Revenue Code of 1997, as amended, is hereby further
amended to read as follows:

"SEC. 6. Power of the Commissioner to Make Assessments and Prescribe

Additional Requirements for Tax Administration and Enforcement. -

"xxx

"(F) Authority of the Commissioner to Inquire into Bank Deposit Accounts and

Other Related Information Held by Financial Institutions. - Notwithstanding any contrary

provision of Republic Act No. 1405, Republic Act No. 6426, otherwise known as the Foreign
Currency Deposit Act of the Philippines, and other general and special laws, the Commissioner is
hereby authorized to inquire into the bank deposits and other related information held by financial
institutions of:

"(1) A decedent to determine his gross estate.

"(2) Any taxpayer who has filed an application for compromise of his tax liability under Sec.
204 (A)(2) reason of financial incapacity to pay his tax liability.

"In case a taxpayer files an application to compromise the payment of his tax liabilities on his
claim that his financial position demonstrates a clear inability to pay the tax assessed, his
application shall not be considered unless and until he waives in writing his privilege under
Republic Act No. 1405, Republic Act No. 6426, otherwise known as the Foreign Currency
Deposit Act of the Philippines, or under other general or special laws, and such waiver shall
constitute the authority of the Commissioner to inquire into the bank deposits of the taxpayer.
 "(3) A specific taxpayer or taxpayers subject of a request for the supply of tax information
from a foreign tax authority pursuant to an international convention or agreement on tax
matters to which the Philippines is a signatory or a party of: Provided, That the information
obtained from the banks and other financial institutions may be used by the Bureau of
Internal Revenue for tax assessment, verification, audit and enforcement purposes.

"In case of request from a foreign tax authority for tax information held by banks and financial
institutions, the exchange of information shall be done in a secure manner to ensure confidentiality
thereof under such rules and regulations as may be promulgated by the Secretary of Finance, upon
recommendation of the Commissioner.

BP 22
Section 1. Checks without sufficient funds. - Any person who makes or draws and issues any check to
apply on account or for value, knowing at the time of issue that he does not have sufficient funds in or
credit with the drawee bank for the payment of such check in full upon its presentment, which check is
subsequently dishonored by the drawee bank for insufficiency of funds or credit or would have been
dishonored for the same reason had not the drawer, without any valid reason, ordered the bank to stop
payment, any person who, having sufficient funds in or credit with the drawee bank when he makes or
draws and issues a check, shall fail to keep sufficient funds or to maintain a credit to cover the full
amount of the check if presented within a period of ninety (90) days from the date appearing thereon

Penalty: 30 days – 1 year imprisonment and/or fine not l less than but not more than double the amount
of the check which fine shall in no case exceed

If check is drawn by a corporation, company or entity, the person or persons who actually signed the
check in behalf of such drawer shall be liable.

To be liable for violation of B.P. 22, the following essential elements must be present: (1) the making,
drawing, and issuance of any check to apply for account or for value; (2) the knowledge of the maker,
drawer, or issuer that at the time of issue he does not have sufficient funds in or credit with the drawee
bank for the payment of the check in full upon its presentment; and (3) the subsequent dishonor of the
check by the drawee bank for insufficiency of funds or credit or dishonor for the same reason had not
the drawer, without any valid cause, ordered the bank to stop payment.

Section 2. Evidence of knowledge of insufficient funds. - The making, drawing and issuance of a check
payment of which is refused by the drawee because of insufficient funds in or credit with such bank,
when presented within ninety (90) days from the date of the check, shall be prima facie evidence of
knowledge of such insufficiency of funds or credit unless such maker or drawer pays the holder thereof
the amount due thereon, or makes arrangements for payment in full by the drawee of such check within
(5) banking days after receiving notice that such check has not been paid by the drawee.

PDIC

SEC. 8. (a) Whenever upon examination by the Corporation into the condition of any insured bank, it
shall be disclosed that an insured bank or its directors or agents have committed, are committing or
about to commit unsafe or unsound practices in conducting the business of the bank, or have violated,
are violating or about to violate any provisions of any law or regulation to which the insured bank is
subject, the Board of Directors shall submit the report of the examination to the Monetary Board to
secure corrective action thereon. If no such corrective action is taken by the Monetary Board within
forty-five (45) days from the submission of the report, the Board of Directors shall, motu proprio,
institute corrective action which it deems necessary. The Board of Directors may thereafter issue a cease
and desist order, and require the bank or its directors or agents concerned to correct the practices or
violations within forty-five (45) days. However, if the practice or violation is likely to cause insolvency or
substantial dissipation of assets or earnings of the bank, or is likely to seriously weaken the condition of
the bank or otherwise seriously prejudice the interests of its depositors and the Corporation, the period
to take corrective action shall not be more than fifteen (15) days. The order may also include the
imposition of fines provided in Section 26(g) hereof. The Board of Directors shall duly inform the
Monetary Board of the Bangko Sentral ng Pilipinas of action it has taken under this subsection with
respect to such practices or violations.“(b) The actions and proceedings provided in the preceding
subsections may be undertaken by the Corporation if, in its opinion, an insured bank or its directors or
agents have violated, are violating or about to violate any provision of this Act or any order, rule or
instruction issued by the Corporation or any written condition imposed by the Corporation in connection
with any transaction with or grant by the Corporation.“(c) The Corporation may terminate the insured
status of any bank that fails or refuses to comply, within thirty (30) days from notice, with any cease-
and-desist order issued by the Corporation, or with any corrective action imposed by the Monetary
Board, under this section pertaining to a deposit-related unsafe and/or unsound banking practice.

“Such termination shall be final and executory, and shall be effective upon publication of the notice of
termination in a newspaper of general circulation.

“The deposits of each depositor in the bank on the effective date of the termination of insurance
coverage, less all subsequent withdrawals, shall continue to be insured up to the maximum deposit
insurance coverage for a period of one hundred eighty (180) days. Additions to, or renewal of, existing
deposits and new deposits in such bank after the effective date of termination of insured status of the
bank shall not be insured by the Corporation.

“The bank shall not advertise or represent that additions to, or renewal of, existing deposits and new
deposits made after the effective date of termination aye covered by deposit insurance.

SECTION 44. Section 26 paragraph (f) of the same Act, as renumbered, is hereby amended to read as
follows:

Penalty: 6 - 12 years or fine of 50T – 10M or both shall be imposed upon:

“(1) Any director, officer, employee or agent of a bank for:

“(a) Any willful refusal to submit reports as required by law, rules and regulations;

“(b) Any unjustified refusal to permit examination and audit of the deposit records or the affairs of the
institution;

“(c) Any willful making of a false statement or entry in any bank report or document required by the
Corporation;
“(d) Submission of false material information in connection with or in relation to any financial assistance
of the Corporation extended to the bank;

“(e) Splitting of deposits or creation of fictitious or fraudulent loans or deposit accounts.

“Splitting of deposits occurs whenever a deposit account with an outstanding balance of more than the
statutory maximum amount of insured deposit maintained under the name of natural or juridical
persons is broken down and transferred into two (2) or more accounts in the name/s of natural or
juridical persons or entities who have no beneficial ownership on transferred deposits in their names
within one hundred twenty (120) days immediately preceding or during a bank-declared bank holiday,
or immediately preceding a closure order issued by the Monetary Board of the Bangko Sentral ng
Pilipinas for the purpose of availing of the maximum deposit insurance coverage;

“(f) Refusal to receive the notice of closure as provided under Section 14 of this Act;

“(g) Refusal to allow the Corporation to take over a closed bank or obstructing such action of the
Corporation;

“(h) Refusal to turn over or destroying or tampering bank records;

“(i) Fraudulent disposal, transfer or concealment of any asset, property or liability of the closed bank;

“(j) Violation of, or causing any person to violate, the exemption from garnishment, levy, attachment or
execution provided under this Act and the New Central Bank Act;

“(k) Any willful failure or refusal to comply with, or violation of any provision of this Act, or commission
of any other irregularities, and/or conducting business in an unsafe or unsound manner as may be
determined by the Board of Directors in relation to Section 56 of Republic Act No. 8791, or ‘The General
Banking Law of 2000’.

“Notwithstanding any law to the contrary, the foregoing acts of directors, officers, employees or agents
of the bank shall be considered as additional grounds for disqualification under the fit and proper rules
of the Bangko Sentral ng Pilipinas.“(1) Other acts inimical to the interest of the bank or the Corporation,
such as, but not limited to, conflict of interest, disloyalty, authorizing related party transactions with
terms detrimental to the bank and its stakeholders, and unauthorized disclosure of confidential
information, as may be determined by the Corporation.

“(2) Any person for:

“(a) Refusal to disclose information, records or data pertaining to the bank accounts of a closed bank to
the receiver;

“(b) Refusal to turn over possession or custody of the asset and record of the closed bank to the
receiver, notwithstanding any agreement to the contrary;

“(c) Refusal or delaying the:

“(i) Verification of authenticity of the ownership documents;

“(ii) Registration of interest of the closed bank on a specific property;

“(iii) Consolidation of ownership over an asset of the closed bank;

“(iv) Act of securing certified true copies of documents in relation to an asset of the closed bank;

“(v) Act of securing the appropriate certification from the agencies or entities stated in Section 16 of this
Act in relation to an asset of the closed bank;

“(vi) Conduct of a physical or ocular inspection of the properties owned by, or mortgaged to, the closed
bank, to determine their existence and present condition; or

“(vii) Other related activities of the receiver; or

“(d) Allowing the withdrawal from deposits or disposition of any asset of the closed bank other than by
the receiver;

“(e) Willfully violating any provision of this Act;

“(f) Conspiring or willfully participating in any of the offenses enumerated in Paragraph

1 of this section;

“(3) Any law enforcement officer or local government official who refuses or fails to assist the receiver in
the service of the notice of closure, as provided under Section 14 of this Act.”

Depositors with valid deposit accounts with balances of P100,000.00 and below are not required to file
claims, provided they: (1) have no obligations with the closed bank, or have not acted as co-makers of
these obligations, or are not spouses of the borrowers; (2) have complete mailing address found in the
bank records or have updated their addresses through the Mailing Address Update Form (MAUF) of
PDIC before the start of the onsite claims settlement operation; and (3) have not maintained the
account under the name of business entities

FAQs Coins and Notes

 Philippine currency notes have no limit to their legal tender power. In particular, all notes and
coins issued by the BSP shall be fully guaranteed by the Government of the Republic of the
Philippines and shall be legal tender in the Philippines for all debts, both public and private, as
stipulated under Section 52 of R.A No. 7653. However, in the case of coins in denomination of
1-, 5-, and 10-Piso they shall be legal tender in amounts not exceeding PHP1,000.00 while coins
in denomination of 1-, 5-, 10-, and 25-Sentimo shall be legal tender in amounts not exceeding
PHP100.00.
 Mutilated banknotes and coins shall be presented at any bank which will subsequently forward
these banknotes and coins to the Bangko Sentral ng Pilipinas (BSP) for analysis and
determination of redemption value. Mutilated currency must be placed in appropriate
containers to avoid disintegration or further deterioration while in transit.

For mutilated notes, these shall be valid for redemption only if all the following requirements have been
met:

1. The remaining surface area is no less than 3/5 of the original size of the banknote;
2. A portion of any one of the signatures of the President of the Philippines or the Governor of the BSP
remains; and

3. Presence of the Embedded Security Thread (EST) or Windowed Security Thread (WST), unless the
same has been lost or damaged due to fire, water, chemical or bitten by termites/rodents and the like. A
note whose EST or WST has been willfully removed shall not be valid for redemption.

It is unlawful to willfully deface, mutilate, tear, burn or destroy, in any manner whatsoever, currency
notes and coins issued by the BSP.

Penalty: Fine not more than P20,000 and/or imprisonment not more than five years

FRIA

SEC. 4. Definition of Terms. — As used in this Act, the term:

(a) Administrative expenses shall refer to those reasonable and necessary expenses:

(1) incurred or arising from the filing of a petition under the provisions of this Act;

(2) arising from, or in connection with, the conduct of the proceedings under this Act,
including those incurred for the rehabilitation or liquidation of the debtor;

(3) incurred in the ordinary course of business of the debtor after the commencement
date;

(4) for the payment of new obligations obtained after the commencement date to
finance the rehabilitation of the debtor;

(5) incurred for the fees of the rehabilitation receiver or liquidator and of the
professionals engaged by them; and

(6) that are otherwise authorized or mandated under this Act or such other expenses as
may be allowed by the Supreme Court in its rules.

(ii) Rehabilitation Plan shall refer to a plan by which the financial well-being and viability
of an insolvent debtor can be restored using various means including, but not limited to,
debt forgiveness, debt rescheduling, reorganization or quasi-reorganization, dacion en
pago, debt-equity conversion and sale of the business (or parts of it) as a going
concern, or setting-up of new business entity as prescribed in Section 62 hereof, or
other similar arrangements as may be approved by the court or creditors.

SEC. 5. Exclusions. — The term debtor does not include banks, insurance companies,
pre-need companies, and national and local government agencies or units.

For purposes of this section:

(a) Bank shall refer to any duly licensed bank or quasi-bank that is potentially or actually
subject to conservatorship, receivership or liquidation proceedings under the New
Central Bank Act (Republic Act No. 7653) or successor legislation;

(b) Insurance company shall refer to those companies that are potentially or actually
subject to insolvency proceedings under the Insurance Code (Presidential Decree No.
1460) or successor legislation; and

(c) Pre-need company shall refer to any corporation authorized/licensed to sell or offer
to sell pre-need plans.

Provided, that government financial institutions other than banks and government-

owned or -controlled corporations shall be covered by this Act, unless their specific
charter provides otherwise.

SEC. 12. Petition to Initiate Voluntary Proceedings by Debtor. — When approved by the

owner in case of a sole proprietorship, or by a majority of the partners in case of a
partnership, or, in case of a corporation, by a majority vote of the board of directors or
trustees and authorized by the vote of the stockholders representing at least two-thirds
(2/3) of the outstanding capital stock, or in case of nonstock corporation, by the vote of
at least two-thirds (2/3) of the members, in a stockholder’s or member’s meeting duly
called for the purpose, an insolvent debtor may initiate voluntary proceedings under this
Act by filing a petition for rehabilitation with the court and on the grounds hereinafter
specifically provided. The petition shall be verified to establish the insolvency of the
debtor and the viability of its rehabilitation, and include, whether as an attachment or as
part of the body of the petition, as a minimum, the following:

(a) Identification of the debtor, its principal activities and its addresses;

(b) Statement of the fact of and the cause of the debtor’s insolvency or inability to pay
its obligations as they become due;

(c) The specific relief sought pursuant to this Act;

(d) The grounds upon which the petition is based;

(e) Other information that may be required under this Act depending on the form of relief
requested;

(f) Schedule of the debtor’s debts and liabilities including a list of creditors with their
addresses, amounts of claims and collaterals, or securities, if any;

(g) An inventory of all its assets including receivables and claims against third parties;

(h) A Rehabilitation Plan;

(i) The names of at least three (3) nominees to the position of rehabilitation receiver;
and

(j) Other documents required to be filed with the petition pursuant to this Act and the
rules of procedure as may be promulgated by the Supreme Court.

A group of debtors may jointly file a petition for rehabilitation under this Act when one or
more of its members foresee the impossibility of meeting debts when they respectively
fall due, and the financial distress would likely adversely affect the financial condition
and/or operations of the other members of the group and/or the participation of the other
members of the group is essential under the terms and conditions of the proposed
Rehabilitation Plan.

(2) Involuntary Proceedings.

SEC. 13. Circumstances Necessary to Initiate Involuntary Proceedings. — Any creditor

or group of creditors with a claim of, or the aggregate of whose claims is, at least One
million pesos (Php1,000,000.00) or at least twenty-five percent (25%) of the subscribed
capital stock or partners’ contributions, whichever is higher, may initiate involuntary
proceedings against the debtor by filing a petition for rehabilitation with the court if:

(a) there is no genuine issue of fact or law on the claim/s of the petitioner/s, and that the
due and demandable payments thereon have not been made for at least sixty (60) days
or that the debtor has failed generally to meet its liabilities as they fall due; or

(b) a creditor, other than the petitioner/s, has initiated foreclosure proceedings against
the debtor that will prevent the debtor from paying its debts as they become due or will
render it insolvent.

SEC. 14. Petition to Initiate Involuntary Proceedings. — The creditor/s’ petition for

rehabilitation shall be verified to establish the substantial likelihood that the debtor may
be rehabilitated, and include:

(a) identification of the debtor, its principal activities and its address;

(b) the circumstances sufficient to support a petition to initiate involuntary rehabilitation

proceedings under Section 13 of this Act;

(c) the specific relief sought under this Act;

(d) a Rehabilitation Plan;

(e) the names of at least three (3) nominees to the position of rehabilitation receiver;

(f) other information that may be required under this Act depending on the form of relief
requested; and
(g) other documents required to be filed with the petition pursuant to this Act and the
rules of procedure as may be promulgated by the Supreme Court.

SEC. 16. Commencement of Proceedings and Issuance of a Commencement Order. —

The rehabilitation proceedings shall commence upon the issuance of the
Commencement Order, which shall:

(a) identify the debtor, its principal business or activity/ies and its principal place of
business;

(b) summarize the ground/s for initiating the proceedings;

(c) state the relief sought under this Act and any requirement or procedure particular to
the relief sought;

(d) state the legal effects of the Commencement Order, including those mentioned in
Section 17 hereof;

(e) declare that the debtor is under rehabilitation;

(f) direct the publication of the Commencement Order in a newspaper of general

circulation in the Philippines once a week for at least two (2) consecutive weeks, with
the first publication to be made within seven (7) days from the time of its issuance;

(g) if the petitioner is the debtor, direct the service by personal delivery of a copy of the
petition on each creditor holding at least ten percent (10%) of the total liabilities of the
debtor as determined from the schedule attached to the petition within five (5) days; if
the petitioner/s is/are creditor/s, direct the service by personal delivery of a copy of the
petition on the debtor within five (5) days;

(h) appoint a rehabilitation receiver who may or may not be from among the nominees
of the petitioner/s, and who shall exercise such powers and duties defined in this Act as
well as the procedural rules that the Supreme Court will promulgate;

(i) summarize the requirements and deadlines for creditors to establish their claims
against the debtor and direct all creditors to file their claims with the court at least five
(5) days before the initial hearing;

(j) direct the Bureau of Internal Revenue (BIR) to file and serve on the debtor its
comment on or opposition to the petition or its claim/s against the debtor under such
procedures as the Supreme Court may hereafter provide;

(k) prohibit the debtor’s suppliers of goods or services from withholding the supply of
goods and services in the ordinary course of business for as long as the debtor makes
payments for the services or goods supplied after the issuance of the Commencement
Order;
(l) authorize the payment of administrative expenses as they become due;

(m) set the case for initial hearing, which shall not be more than forty (40) days from the
date of filing of the petition for the purpose of determining whether there is substantial
likelihood for the debtor to be rehabilitated;

(n) make available copies of the petition and rehabilitation plan for examination and
copying by any interested party;

(o) indicate the location or locations at which documents regarding the debtor and the
proceedings under this Act may be reviewed and copied;

(p) state that any creditor or debtor, who is not the petitioner, may submit the name or
nominate any other qualified person to the position of rehabilitation receiver at least five
(5) days before the initial hearing;

(q) include a Stay or Suspension Order which shall:

(1) suspend all actions or proceedings, in court or otherwise, for the enforcement of
claims against the debtor;

(2) suspend all actions to enforce any judgment, attachment or other provisional
remedies against the debtor;

(3) prohibit the debtor from selling, encumbering, transferring or disposing in any
manner any of its properties except in the ordinary course of business; and

(4) prohibit the debtor from making any payment of its liabilities outstanding as of the
commencement date except as may be provided herein.

SEC. 17. Effects of the Commencement Order. —shall, in addition to the effects of a

Stay or Suspension Order described in Section 16 hereof:

(a) vest the rehabilitation receiver with all the powers and functions provided for in this
Act, such as the right to review and obtain all records to which the debtor’s
management and directors have access, including bank accounts of whatever nature of
the debtor, subject to the approval by the court of the performance bond filed by the
rehabilitation receiver;

(b) prohibit, or otherwise serve as the legal basis for rendering null and void the results
of any extrajudicial activity or process to seize property, sell encumbered property, or
otherwise attempt to collect on or enforce a claim against the debtor after the
commencement date unless otherwise allowed in this Act, subject to the provisions of
Section 50 hereof;
(c) serve as the legal basis for rendering null and void any set-off after the
commencement date of any debt owed to the debtor by any of the debtor’s creditors;

(d) serve as the legal basis for rendering null and void the perfection of any lien against
the debtor’s property after the commencement date; and

(e) consolidate the resolution of all legal proceedings by and against the debtor to the
court: Provided, however, That the court may allow the continuation of cases in other
courts where the debtor had initiated the suit.

Attempts to seek legal or other recourse against the debtor outside these proceedings
shall be sufficient to support a finding of indirect contempt of court.

SEC. 18. Exceptions to the Stay or Suspension Order. — The Stay or Suspension

Order shall not apply:

(a) to cases already pending appeal in the Supreme Court as of commencement

date: Provided, that any final and executory judgment arising from such appeal shall be
referred to the court for appropriate action;

(b) subject to the discretion of the court, to cases pending or filed at a specialized
court or quasi-judicial agency which, upon determination by the court, is capable
of resolving the claim more quickly, fairly and efficiently than the
court: Provided, That any final and executory judgment of such court or agency shall be
referred to the court and shall be treated as a non-disputed claim;

(c) to the enforcement of claims against sureties and other persons solidarily
liable with the debtor, and third party or accommodation mortgagors as well as
issuers of letters of credit, unless the property subject of the third party or
accommodation mortgage is necessary for the rehabilitation of the debtor as determined
by the court upon recommendation by the rehabilitation receiver;

(d) to any form of action of customers or clients of a securities market participant

to recover or otherwise claim moneys and securities entrusted to the latter in the
ordinary course of the latter’s business as well as any action of such securities
market participant or the appropriate regulatory agency or self-regulatory organization to
pay or settle such claims or liabilities;

(e) to the actions of a licensed broker or dealer to sell pledged securities of a

debtor pursuant to a securities pledge or margin agreement for the settlement of
securities transactions in accordance with the provisions of the Securities Regulation
Code and its implementing rules and regulations;

(f) the clearing and settlement of financial transactions through the facilities of a
clearing agency or similar entities duly authorized, registered and/or recognized by
the appropriate regulatory agency like the Bangko Sentral ng Pilipinas (BSP) and the
SEC as well as any form of actions of such agencies or entities to reimburse
themselves for any transactions settled for the debtor; and

(g) any criminal action against the individual debtor or owner, partner, director or officer
of a debtor shall not be affected by any proceeding commenced under this Act.

SEC. 22. Action at the Initial Hearing. — At the initial hearing, the court shall:

(a) determine the creditors who have made timely and proper filing of their notice of
claims;

(b) hear and determine any objection to the qualifications or the appointment of the
rehabilitation receiver and, if necessary, appoint a new one in accordance with this Act;

(c) direct the creditors to comment on the petition and the Rehabilitation Plan, and to
submit the same to the court and to the rehabilitation receiver within a period of not
more than twenty (20) days; and

(d) direct the rehabilitation receiver to evaluate the financial condition of the debtor and
to prepare and submit to the court within forty (40) days from the initial hearing the
report provided in Section 24 hereof.

SEC. 25. Giving Due Course to or Dismissal of Petition, or Conversion of Proceedings.

— Within ten (10) days from receipt of the report of the rehabilitation receiver mentioned
in Section 24 hereof, the court may:

(a) give due course to the petition upon a finding that:

(1) the debtor is insolvent; and

(2) there is a substantial likelihood for the debtor to be successfully rehabilitated;

(b) dismiss the petition upon a finding that:

(1) debtor is not insolvent;

(2) the petition is a sham filing intended only to delay the enforcement of the rights of
the creditor/s or of any group of creditors;

(3) the petition, the Rehabilitation Plan and the attachments thereto contain any
materially false or misleading statements; or

(4) the debtor has committed acts of misrepresentation or in fraud of its creditor/s or a
group of creditors;

(c) convert the proceedings into one for the liquidation of the debtor upon a finding that:
(1) the debtor is insolvent; and

(2) there is no substantial likelihood for the debtor to be successfully rehabilitated as

determined in accordance with the rules to be promulgated by the Supreme Court.

SEC. 28. Who May Serve as a Rehabilitation Receiver. — Any qualified natural or
juridical person may serve as a rehabilitation receiver: Provided, That if the
rehabilitation receiver is a juridical entity, it must designate a natural person/s who
possess/es all the qualifications and none of the disqualifications as its representative, it
being understood that the juridical entity and the representative/s are solidarily liable for
all obligations and responsibilities of the rehabilitation receiver.

SEC. 29. Qualifications of a Rehabilitation Receiver. — The rehabilitation receiver shall

have the following minimum qualifications:

(a) A citizen of the Philippines or a resident of the Philippines in the six (6) months
immediately preceding his nomination;

(b) Of good moral character and with acknowledged integrity, impartiality and
independence;

(c) Has the requisite knowledge of insolvency and other relevant commercial laws, rules
and procedures, as well as the relevant training and/or experience that may be
necessary to enable him to properly discharge the duties and obligations of a
rehabilitation receiver; and

(d) Has no conflict of interest: Provided, That such conflict of interest may be waived,
expressly or impliedly, by a party who may be prejudiced thereby.

Other qualifications and disqualifications of the rehabilitation receiver shall be set forth
in procedural rules, taking into consideration the nature of the business of the debtor
and the need to protect the interest of all stakeholders concerned.

SEC. 31. Powers, Duties and Responsibilities of the Rehabilitation Receiver. — The

rehabilitation receiver shall be deemed an officer of the court with the principal duty of
preserving and maximizing the value of the assets of the debtor during the rehabilitation
proceedings, determining the viability of the rehabilitation of the debtor, preparing and
recommending a Rehabilitation Plan to the court, and implementing the approved
Rehabilitation Plan. To this end, and without limiting the generality of the foregoing, the
rehabilitation receiver shall have the following powers, duties and responsibilities:

(a) To verify the accuracy of the factual allegations in the petition and its annexes;

(b) To verify and correct, if necessary, the inventory of all of the assets of the debtor,
and their valuation;
(c) To verify and correct, if necessary, the schedule of debts and liabilities of the debtor;

(d) To evaluate the validity, genuineness and true amount of all the claims against the
debtor;

(e) To take possession, custody and control, and to preserve the value of all the
property of the debtor;

(f) To sue and recover, with the approval of the court, all amounts owed to, and all
properties pertaining to the debtor;

(g) To have access to all information necessary, proper or relevant to the operations
and business of the debtor and for its rehabilitation;

(h) To sue and recover, with the approval of the court, all property or money of the
debtor paid, transferred or disbursed in fraud of the debtor or its creditors, or which
constitute undue preference of creditor/s;

(i) To monitor the operations and the business of the debtor to ensure that no payments
or transfers of property are made other than in the ordinary course of business;

(j) With the court’s approval, to engage the services of or to employ persons or entities
to assist him in the discharge of his functions;

(k) To determine the manner by which the debtor may be best rehabilitated, to review,
revise and/or recommend action on the Rehabilitation Plan and submit the same or a
new one to the court for approval;

(l) To implement the Rehabilitation Plan as approved by the court, if so provided under
the Rehabilitation Plan;

(m) To assume and exercise the powers of management of the debtor, if directed by the
court pursuant to Section 36 hereof;

(n) To exercise such other powers as may, from time to time, be conferred upon him by
the court; and

(o) To submit a status report on the rehabilitation proceedings every quarter or as may
be required by the court motu proprio, or upon motion of any creditor, or as may
be Provided, in the Rehabilitation Plan.

Unless appointed by the court, pursuant to Section 36 hereof, the rehabilitation receiver
shall not take over the management and control of the debtor but may recommend the
appointment of a management committee over the debtor in the cases provided by this
Act.
SEC. 105. Petition; Acts of Insolvency. — Any creditor or group of creditors with a claim
of, or with claims aggregating, at least Five hundred thousand pesos (Php500,000.00)
may file a verified petition for liquidation with the court of the province or city in which
the individual debtor resides.

The following shall be considered acts of insolvency, and the petition for liquidation shall
set forth or allege at least one of such acts:

(a) That such person is about to depart or has departed from the Republic of the
Philippines, with intent to defraud his creditors;

(b) That being absent from the Republic of the Philippines, with intent to defraud his
creditors, he remains absent;

(c) That he conceals himself to avoid the service of legal process for the purpose of
hindering or delaying the liquidation or of defrauding his creditors;

(d) That he conceals, or is removing, any of his property to avoid its being attached or
taken on legal process;

(e) That he has suffered his property to remain under attachment or legal process for
three (3) days for the purpose of hindering or delaying the liquidation or of defrauding
his creditors;

(f) That he has confessed or offered to allow judgment in favor of any creditor or
claimant for the purpose of hindering or delaying the liquidation or of defrauding any
creditor or claimant;

(g) That he has willfully suffered judgment to be taken against him by default for the
purpose of hindering or delaying the liquidation or of defrauding his creditors;

(h) That he has suffered or procured his property to be taken on legal process with
intent to give a preference to one or more of his creditors and thereby hinder or delay
the liquidation or defraud any one of his creditors;

(i) That he has made any assignment, gift, sale, conveyance or transfer of his estate,
property, rights or credits with intent to hinder or delay the liquidation or defraud his
creditors;

(j) That he has, in contemplation of insolvency, made any payment, gift, grant, sale,
conveyance or transfer of his estate, property, rights or credits;

(k) That being a merchant or tradesman, he has generally defaulted in the payment of
his current obligations for a period of thirty (30) days;
(l) That for a period of thirty (30) days, he has failed, after demand, to pay any moneys
deposited with him or received by him in a fiduciary capacity; and

(m) That an execution having been issued against him on final judgment for money, he
shall have been found to be without sufficient property subject to execution to satisfy the
judgment.

The petitioning creditor/s shall post a bond in such sum as the court shall direct,
conditioned that if the petition for liquidation is dismissed by the court, or withdrawn by
the petitioner, or if the debtor shall not be declared an insolvent, the petitioners will pay
to the debtor all costs, expenses, damages occasioned by the proceedings, and
attorney’s fees.

SEC. 118. Qualifications of the Liquidator. — The liquidator shall have the qualifications
enumerated in Section 29 hereof. He may be removed at any time by the court for
cause, either motu proprio or upon motion of any creditor entitled to vote for the election
of the liquidator.

SEC. 119. Powers, Duties and Responsibilities of the Liquidator. — The liquidator shall
be deemed an officer of the court with the principal duty of preserving and maximizing
the value and recovering the assets of the debtor, with the end of liquidating them
and discharging to the extent possible all the claims against the debtor. The powers,
duties and responsibilities of the liquidator shall include, but not be limited to:

(a) to sue and recover all the assets, debts and claims, belonging or due to the debtor;

(b) to take possession of all the property of the debtor except property exempt by law
from execution;

(c) to sell, with the approval of the court, any property of the debtor which has come into
his possession or control;

(d) to redeem all mortgages and pledges, and to satisfy any judgment which may be an
encumbrance on any property sold by him;

(e) to settle all accounts between the debtor and his creditors, subject to the approval of
the court;

(f) to recover any property or its value, fraudulently conveyed by the debtor;

(g) to recommend to the court the creation of a creditors’ committee which will assist
him in the discharge of his functions and which shall have powers as the court deems
just, reasonable and necessary; and

(h) upon approval of the court, to engage such professionals as may be necessary and
reasonable to assist him in the discharge of his duties.
In addition to the rights and duties of a rehabilitation receiver, the liquidator shall have
the right and duty to take all reasonable steps to manage and dispose of the debtor’s
assets with a view towards maximizing the proceedings therefrom, to pay creditors and
stockholders, and to terminate the debtor’s legal existence. Other duties of the liquidator
in accordance with this section may be established by procedural rules.

A liquidator shall be subject to removal pursuant to procedures for removing a

rehabilitation receiver.

NCIB

"Sec. 2. Creation of the Bangko Sentral.— There is hereby established an independent central
monetary authority, which shall be a body corporate known as the Bangko Sentral ng Pilipinas,
hereafter referred to as the Bangko Sentral. "The capital of the Bangko Sentral shall be Two
hundred billion pesos (₱200,000,000,000), to be fully subscribed by the Government of the
Republic of the Philippines, hereafter referred to as the Government: Provided, That the increase
in capitalization shall be funded solely from the declared dividends of the Bangko Sentral in
favor of the National Government. For this purpose, any and all declared dividends of the
Bangko Sentral in favor of the National Government shall be deposited in a special account in
the General Fund, and earmarked for the payment of Bangko Sentral’s increase in capitalization.

Obligations and Contracts

 GENERAL RULE: the action to claim rescission must be commenced within four years
from the date the contract was entered into.
EXCEPTIONS:
1. For persons under guardianship, the period shall begin from the termination of
incapacity
2. For absentees, from the time the domicile is known