Reviewer in RFBT Part 1 New Law Topics for CPA Board Exam October 2017
Contains:
Insolvency Law Corporate Rehabilitation Bouncing Checks Law Securities Regulations Code Code of Corporate Governance PDIC Law Secrecy of Bank Deposits Unclaimed Balances Law
Batch Dobyvatel, CPA October 2017
kcbdeleon
INSOLVENCY LAW (Act No. 1956) INSOLVENCY DEFINED -
-
-
Under the Insolvency Law, a person is insolvent when his liabilities are more than his assets. Under the Civil Code, a person is insolvent when even though he possesses sufficient assets to cover his liabilities, he is unable to regularly pay said obligations as they fall due. In general terms, it is the state wherein a debtor, possessing sufficient property to cover all his debts, be it an individual person, be it a sociedad or corporation, foresees the impossibility of meeting them when they respectively fall due.
When a debtor is in the state of insolvency, he may petition that he be declared in the state of suspension of payments by the court, or the judge thereof in vacation, of the province or of the city in which he has resided for six months next preceding the filing of his petition. The petition must have an attached schedule and inventory of: a. Statement of debts and liabilities b. Description of real and personal property c. Verification d. Proposed agreement requested with Creditors 2. Issuance by the court of an order calling a meeting of creditors -
PHILOSOPHY BEHIND THE INSOLVENCY LAW There are times when a person wants to pay his debts but cannot pay them despite his efforts and desire to do so. The philosophy behind the Insolvency Law is to allow such debtor to turn over all his assets, except those exempt from execution, for distribution among his creditors and, thereafter, to turn a new leaf in his economic life. Then he can start anew without being bothered by his old creditors. SUSPENSION OF PAYMENTS (SOP) is the postponement by court order of the payment of debts of one who, while possessing sufficient property to cover his debts, foresees the impossibility of meeting them when they respectively fall due.
-
-
3. Publication of the order and service of summons -
PURPOSE & BASIS OF SOP -
-
The purpose of a suspension of payments is to suspend or delay the payment of debts the amount of which isn’t affected although a postponement is declared The basis is the probability of the debtor’s inability to meet his obligation when they respectively fall due, despite the fact that he has sufficient assets to cover all his liabilities.
STEPS IN SUSPENSION OF PAYMENTS 1. Filing of petition by the debtor
The meeting must take place in not less than 2 weeks nor more than 8 weeks from the calling of such order The order must designate the day, hour, and place of meeting of said creditors as well as a newspaper of general circulation published in the province or city in which the petition is filed Said order shall further contain an absolute injunction forbidding the petitioning debtor from disposing in any manner of his property, or making payments for expense, except those in the ordinary course of the business.
A copy of said order shall immediately be published 1 by the clerk of said court. Copies of orders must also be sent to all the creditors declared in the attachments to the petition.
4. Meeting of creditors for the consideration of the debtor’s proposition -
The presence of the creditors representing at least three-fifths of the liabilities shall be necessary for holding a meeting.
5. Approval of the creditors of the debtor’s proposition
6. Objections, if any, to the decision which must be made within 10 days following the meeting GROUNDS FOR OBJECTION TO DECISION: a. Defects in the call for the meeting, in the holding thereof, and in and the deliberations had thereat which prejudice the rights of the creditors; b. Fraudulent connivance between one or more creditors and in debtor to vote in favor of the proposed agreement; c. Fraudulent conveyance of claims for the purpose of obtaining a majority. 7. Issuance of order by the court directing that the agreement be carried out in case the decision is declared valid, or when no objection to said decision has been presented. KINDS OF INSOLVENCY VOLUNTARY INSOLVENCY - an insolvent debtor owing debts exceeding in amount in the sum of P1000, may apply to be discharged from his debts and liabilities by petition to the RTC of the province or city in which he has resided for 6 months next preceding the filing of the petition. STEPS IN VOLUNTARY INSOLVENCY a. Filing of the petition by the debtor praying for the declaration of insolvency b. Issuance of order of adjudication declaring the petitioner insolvent c. Publication and service of the order d. Meeting of the creditors to elect the assignee in insolvency e. Conveyance of the debtor’s property by the clerk of court to the assignee f. Liquidation of the debtor’s assets and payment of his debts g. Composition, if agreed upon h. Discharge of the debtor on his application, except a corporation i. Objection, if any, to the discharge j. Appeal to the SC in certain cases In voluntary insolvency, a debtor is deemed insolvent upon filing of the petition. The filing of such petition on the part of the debtor is considered an admission of insolvency on his part.
In simple terms, it is called “voluntary” insolvency because the debtor admits that he cannot pay his obligations as they come due. He is declared insolvent from the time he admits such (i.e. submission of petition). ASSIGNEE IN INSOLVENCY -
role is in a nature of a receiver. gathers all the assets of the debtor, and proceeds to make the inventory. If he discovers some properties of the debtor to be in the possession of third parties, he must take action to recover them. His main function is to preserve the property and convert the assets into cash to await the order of the court for the payment of approved claims.
INVOLUNTARY INSOLVENCY - an adjudication of insolvency may be made by the petition of 3 or more creditors, residents of the Philippines, whose credits or demands accrued in the Philippines, for the amount of which credits or demands are in the aggregate of not less than P1000. NATURE OF INVOLUNTARY PROCEEDINGS
INSOLVENCY
- An involuntary insolvency isn’t a mere personal action against the insolvent for the collection of debts; but its purpose is to impound all of his non-exempt property, to distribute it equitably among his creditors and to release him from further liability. It is an action in rem and action in persona. STEPS IN INVOLUNTARY INSOLVENCY a. Filing of the petition by three or more creditors b. Issuance of order requiring the debtor to show cause why he shouldn’t be adjudged insolvent c. Service of order to show cause d. Filing of answer or motion to dismiss e. Hearing of the case f. Issuance of order or decision adjudging debtor insolvent g. Publication and service of order h. Meeting of creditors for election of an assignee in insolvency i. Conveyance of debtor’s property by clerk of court j. Liquidation of assets and payments of debts k. Composition, if agreed upon
l. Discharge of the debtor on his application, except a corporation m. Objection if any to the discharge n. Appeal to the SC in certain cases
END
CORPORATE REHABILITATION (A.M. NO. 00-8-10-SC) DEFINITION OF TERMS "Administrative expenses" shall refer to those expenses incurred in the ordinary course of business of the debtor after the issuance of the stay order, excluding interest payable to creditors. "Affidavit of General Financial Condition" shall refer to a verified statement on the general financial condition of the debtor required in Section 2, Rule 4 of these Rules. "Board of Directors" shall include the executive committee or the management of a partnership or association. "Claim" shall include all claims or demands of whatever nature or character against a debtor or its property, whether for money or otherwise. "Creditor" shall mean any holder of a Claim. "Court" shall refer to the proper Regional Trial Court designated to hear and decide the cases contemplated under these Rules. "Debtor" shall mean any corporation, partnership, or association, whether supervised or regulated by the Securities and Exchange Commission or other government agencies, on whose behalf a petition for rehabilitation has been filed under these Rules. "Stockholder" shall include a member of a non-stock corporation or association, in a partnership. STAY ORDER A stay order is sometimes essential to the survival of a distressed company. A stay order keeps at bay the pack of unhappy and understandably impatient creditors and prevents them from tearing apart and bringing about the certain death of the helpless company.
If the court finds the petition to be sufficient in form and substance, it shall, not later than five (5) days from the filing of the petition, issue a Stay Order: (a) appointing a Rehabilitation Receiver and fixing his bond; (b) staying enforcement of all claims (c) prohibiting the debtor from selling, encumbering, transferring, or disposing in any manner any of its properties except in the ordinary course of business; (d) prohibiting the debtor from making any payment of its liabilities outstanding as at the date of filing of the petition; (e) prohibiting the debtor's suppliers of goods or services from withholding supply of goods and services in the ordinary course of business for as long as the debtor makes payments for the services and goods supplied after the issuance of the stay order; (f) directing the payment in full of all administrative expenses incurred after the issuance of the stay order; (g) fixing the initial hearing on the petition not earlier than forty five (45) days but not later than sixty (60) days from the filing thereof; (h) directing the petitioner to publish the Order in a newspaper of general of general circulation in the Philippines once a week for two (2) consecutive weeks; (i) directing all creditors and all interested parties (including the SEC) to file and serve on the debtor a verified comment on or opposition to the petition, with supporting affidavits and documents, not later than ten (10) days before the date of the initial hearing and putting them on notice that their failure to do so will bar them from participating in the proceedings; and (j) directing the creditors and interested parties to secure from the court copies of the petition and its annexes within such time as to enable themselves to file their comment on or opposition to the petition and to prepare for the initial hearing of the petition. The petitioner shall immediately serve a copy of the stay order on the Rehabilitation Receiver appointed by the court, who shall manifest his acceptance or non-acceptance of his appointment not later than ten (10) days from receipt of the order.
Period of the Stay Order. - The stay order shall be effective from the date of its issuance until the dismissal of the petition or the termination of the rehabilitation proceedings.
or creditors holding at least twenty-five percent (25%) of the debtor's total liabilities, may petition the proper Regional Trial Court to have the debtor placed under rehabilitation.
The petition shall be dismissal if no rehabilitation plan is approved by the court upon the lapse of one hundred eighty (180) days from the date of the initial hearing. The court may grant an extension beyond this period only if it appears by convincing and compelling evidence that the debtor may successfully be rehabilitated. In no instance, however, shall the period for approving or disapproving a rehabilitation plan exceed eighteen (18) months from the date of filing of the petition.
CONTENTS OF PETITION
REHABILITATION RECEIVER The Rehabilitation Receiver shall not take over the management and control of the debtor but shall closely oversee and monitor the operations of the debtor during the pendency of the proceedings, and for this purpose shall have the powers, duties and functions of a receiver under Presidential Decree No. 902-A, as amended, and the Rules of Court. The Rehabilitation Receiver shall be considered as an officer of the court. He shall be primarily tasked to study the best way to rehabilitate the debtor and to ensure that the value of the debtor's property is reasonably maintained pending the determination of whether or not the debtor should be rehabilitated, as well as implement the rehabilitation plan after its approval. REHABILITATION PLAN The rehabilitation plan shall include 1. the desired business targets or goals and the duration and coverage of the rehabilitation; 2. the terms and conditions of such rehabilitation 3. the material financial commitments to support the rehabilitation plan; 4. the means for the execution of the rehabilitation plan 5. a liquidation analysis 6. such other relevant information A petition for rehabilitation may be made by any debtor who foresees the impossibility of meeting its debts when they respectively fall due, or any creditor
The petition filed (5 copies) by the debtor must be verified and must set forth with sufficient particularly all the following material facts: (a) the name and business of the debtor; (b) the nature of the business of the debtor; (c) the history of the debtor; (d) the cause of its inability to pay its debts; (e) all the pending actions or proceedings known to the debtor and the courts or tribunals where they are pending; (f) threats or demands to enforce claims or liens against the debtor; and (g) the manner by which the debtor may be rehabilitated and how such rehabilitation may benefit the general body of creditors, employees, and stockholders. The petition shall be accompanied by the following documents: a. An audited financial statement of the debtor at the end of its last fiscal year; b. Interim financial statements as of the end of the month prior to the filing of the petition; c. Schedule of Debts and Liabilities d. Any Inventory of Assets e. A rehabilitation plan f. A Schedule of Payments and disposition of assets g. A Schedule of the Cash Flow h. A Statement of Possible Claims by or against the debtor i. An Affidavit of General Financial Condition j. At least three (3) nominees for the position of Rehabilitation Receiver k. A Certificate attesting, under oath, that the - filing of the petition has been duly authorized; and - the directors and stockholders have irrevocably approved such petition END
BOUNCING CHECKS LAW (BP 22) 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, shall be punished by: imprisonment of not less than thirty days but not more than one (1) year or - by a fine of not less than but not more than double the amount of the check which fine shall in no case exceed Two Hundred Thousand Pesos, - or both such fine and imprisonment at the discretion of the court. The same penalty shall be imposed upon 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, for which reason it is dishonored by the drawee bank.
the check, shall be prima facie evidence of knowledge of such insufficiency of funds or credit. Exceptions: - 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. Duty of the Drawee - to cause to be written, printed, or stamped in plain language thereon, or attached thereto, the reason for drawee's dishonor or refusal to pay the same Where there are no sufficient funds in or credit with such drawee bank, such fact shall always be explicitly stated in the notice of dishonor or refusal. Not withstanding receipt of an order to stop payment, the drawee shall state in the notice that there were no sufficient funds in or credit with such bank for the payment in full of such check, if such be the fact. Credit construed The word "credit" as used herein shall be construed to mean an arrangement or understanding with the bank for the payment of such check.
Where the 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 under this Act. Evidence of knowledge of insufficient funds General Rule: 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
END
SECURITIES REGULATION CODE (R.A. 8799) RATIONALE OF ENACTING THE SRC - establish a socially conscious, free market that regulates itself - encourage the widest participation of ownership in enterprises - enhance the democratization of wealth - promote the development of the capital market - protect investors - ensure full and fair disclosure about securities - minimize if not totally eliminate insider trading and other fraudulent or manipulative devices and practices which create distortions in the free market. Securities - are shares, participation or interests in a corporation or in a commercial enterprise or profitmaking venture and evidenced by a certificate, contract, instruments, whether written or electronic in character Kinds of Securities a. Debt Instruments - shares of stocks, bonds, debentures, notes evidences of indebtedness, asset-backed securities; b. Equity Instruments - shares of stock, certificate of deposit for a future subscription, proprietary or non-propriety membership certificates in corporations; c. Investment Instruments – investment contracts, fractional undivided interests in oil, gas or other mineral rights; d. Derivatives - like options and warrants; e. Trust Instruments certificates of assignments, certificates of participation, trust certificates, voting trust certificates or similar certificates; f. Catch-All - other instruments as may in the future determined by the Commission DEFINITION OF TERMS
"Issuer" is the originator, maker, obligor, or creator of the security. "Broker" is a person engaged in the business of buying and selling securities for the account of others. "Dealer" means many person who buys sells securities for his/her own account in the ordinary course of business. "Associated person of a broker or dealer" is an employee therefor whom, directly exercises control of supervisory authority, but does not include a salesman, or an agent or a person whose functions are solely clerical or ministerial. "Clearing Agency" is any person who acts as intermediary in making deliveries upon payment effect settlement in securities transactions. "Exchange" is an organized market place or facility that brings together buyers and sellers and executes trade of securities and/or commodities. "Insider" means (a) the issuer; (b) a director or officer (or any person performing similar functions) of, or a person controlling the issuer; (c) gives or gave him access to material information about the issuer or the security that is not generally available to the public; (d) A government employee, director, or officer of an exchange, clearing agency and/or selfregulatory organization who has access to material information about an issuer or a security that is not generally available to the public; or (e) a person who learns such information by a communication from any forgoing insiders. "Pre-need plans" are contracts which provide for the performance of future services of or the payment of future monetary considerations at the time actual need, for which plan holders pay in cash or installment at stated prices, with or without interest or insurance coverage and includes life, pension,
education, interment, and other plans which the Commission may from time to time approve. "Promoter" is a person who, acting alone or with others, takes initiative in founding and organizing the business or enterprise of the issuer and receives consideration therefor. "Prospectus" is the document made by or an behalf of an issuer, underwriter or dealer to sell or offer securities for sale to the public through registration statement filed with the Commission. "Registration statement" is the application for the registration of securities required to be filed with the Commission. "Salesman" is a natural person, employed as such as an agent, by a dealer, issuer or broker to buy and sell securities.
c. The person intends to acquire shares that would result in ownership of more than 50% of the equity shares of a public company. Securities deposited may be withdrawn at any time throughout the period that the tender offer remains open and if deposited have not been previously accepted for payment, and at any time after 60 days from the date of the original tender offer or request or invitation. Unlawful and Prohibited Acts Relating to Tender Offers: to make an untrue statement of a material fact or omit to state any material fact in order to make the statements made, not misleading to engage in any fraudulent, deceptive, or manipulative act or practices. Unlawful Sale of Securities
"Uncertificated security" is a security evidenced by electronic or similar records. "Underwriter" is a person who guarantees on a firm commitment and/or declared best effort basis the distribution and sale of securities of any kind by another company. TENDER OFFER - A publicly announced intention by a person acting alone or in concert with other persons to acquire equity securities of a “public company”. - It is mandatory to make a tender offer for equity shares of a public company in an amount equal to the number of shares that the person intends to acquire in the following circumstances: a. The person intends to acquire 15%or more of the equity shares of a public company pursuant to an agreement made between or among the person and one or more sellers; b. The person intends to acquire 30%or more of the equity shares of a public company within a period of 12 months; or
It shall be unlawful for any such beneficial owner, director, or officer, directly or indirectly, to sell any equity security of such issuer if person selling security or his principal: a. does not own the security sold b. if owning the security, does not deliver it against such sale within 20 days thereafter, or does not within 5 days after such sale deposit it in the mails or other usual channels of transportation. Prohibition does NOT apply to a dealer in the ordinary course of his business and incident to the establishment or maintenance by him of a primary or secondary market, otherwise than in an Exchange, for such security. INSIDER TRADING - The selling or buying of a security by an insider while in possession of material nonpublic information with respect to the issuer or the security. - It is considered unlawful unless:
1.
The insider proves that the information was not gained from such relationship; or 2. If the other party selling to or buying from the insider (or his agent) is identified, the insider proves: a. that he disclosed the information to the other party; or b. that he had reason to believe that the other party otherwise is also in possession of the information.
where applicable, the requirements of relevant regulatory agencies. (vi) Observe confidentiality. FILING OF GIS AND AFS
Presumption: A purchase or sale made by an insider, his spouse, or relatives, shall be presumed to have been effected while in possession of material non-public information if transacted after such information came into existence but prior to public dissemination of such information. CODE OF CORPORATE GOVERNANCE Specific Duties and Responsibilities of a Director A director’s office is one of trust and confidence. A director should act in the best interest of the corporation in a manner characterized by transparency, accountability and fairness. He should also exercise leadership, prudence and integrity in directing the corporation towards sustained progress. A director should observe the following norms of conduct: (i) Conduct fair business transactions with the corporation, and ensure that his personal interest does not conflict with the interests of the corporation. (ii) Devote the time and attention necessary to properly and effectively perform his duties and responsibilities. (iii) Act judiciously. (iv) Exercise independent judgment. (v) Have a working knowledge of the statutory and regulatory requirements that affect the corporation, including its articles of incorporation and by-laws, the rules and regulations of the Commission and,
The GIS, AFS, General and Special FS reports should be printed on an A4-sized (8.27”x11.69”) bond paper under a standard cover page or sheet. The original and all conformed pages should use only one side of the paper. GENERAL INFORMATION SHEET (GIS) The GIS should be certified and sworn to by the corporate secretary. In the submission of the General Information sheet (GIS), the 30- calendar day period shall be counted from the date the annual stockholders’ meeting was actually held.
If the corporation is unable to hold the meeting for the calendar year, the GIS shall be filed not later than January of the following year. If the corporation is not in operation, it should submit an Affidavit of Non-Operation within 120 calendar days after the end of the fiscal year as specified in the by-laws, with the GIS and FS. ANNUAL FINANCIAL STATEMENTS (AFS) 1) The FS of the following domestic corporations shall be audited by an independent certified public accountant (CPA) registered with the Board of Accountancy: a) stock corporations with paid-up capital of PhP50,000.00 or more; and b) non-stock corporations with annual gross receipts of PhP100,000.00 or more, or total assets of PhP50,000,000.00 or more
4) The FS of the following foreign corporations shall, at the minimum, be certified under oath by the treasurer of the of the corporation: a) branch office of a stock foreign corporation with assigned capital of less than PhP50,000.00; b) branch office of a non-stock foreign corporation with total assets of less than PhP500,000.00; c) representative office of a foreign corporation with total assets of less than PhP500,000.00; d) regional operating headquarters of multinational companies with assigned capital of less than PhP500,000.00; e) regional operating headquarters of multinational companies with total assets of less than PhP500,000.00
END 2) The FS of the following domestic corporations shall, at the minimum, be certified under oath by the treasurer of the corporation: a) stock corporations with paid-up capital of less than PhP50,000.00; and b) non-stock corporations with annual gross receipts of less than PhP100,000.00 or a total assets of less than PhP500,000.00. 3) The FS of the following foreign corporations shall be audited by an independent CFA registered with the Board of Accountancy: a) branch office of a stock foreign corporation with total assets of PhP500,000.00 or more; b) branch office of a non-stock foreign corporation with total assets of PhP500,000.00 or more; c) representative office of a foreign corporation with total assets of PhP500,000.00 or more; d) regional operating headquarters of multinational companies with assigned capital of PhP50,000.00 or more; e) regional headquarters of multinational companies with total assets of PhP50,000.00 or more.
PDIC LAW (R.A. 9576) PDIC is a government instrumentality created in 1963 by virtue of Republic Act 3591 to insure the deposits of all banks which are entitled to the benefits of insurance. The latest amendments to RA 3591 are contained in RA 10846 signed into law on May 23, 2016. RA 10846 empowered PDIC with stronger authorities to protect the depositing public and promote financial stability. The new law also includes important provisions to ensure that the PDIC remains financially and institutionally strong to fulfill its mandate under its Charter. The PDIC now has the authority to help depositors have quicker access to their insured deposits should their bank close; resolve problem banks while still open; hasten the liquidation process for closed banks; and mete out stiffer sanctions and penalties against those who engage in unsafe and unsound banking practices. The PDIC is an attached agency of the Department of Finance. INSURED DEPOSITS The term ‘insured deposit’ means the amount due to any bona fide depositor for legitimate deposits in an insured bank net of any obligation of the depositor to the insured bank as of date of closure, but not to exceed P500,000.00. A joint account shall be insured separately from any individually-owned deposit account. Except for the exclusions stipulated in RA 9576, deposits of all commercial banks, savings and mortgage banks, rural banks, private development banks, cooperative banks, savings and loan associations, as well as branches and agencies in the Philippines of foreign banks and all other corporations authorized to perform banking functions in the Philippines, are insured with PDIC.
subject to the approval of the Board of Directors, any insured bank with branch outside the Philippines may elect to include for insurance its deposit obligations payable at such branch. Foreign currency deposits are also insured by PDIC pursuant to RA 6426 (“An act instituting a foreign currency deposit system in the Philippines, and for other purposes”) and Central Bank (CB) Circular No. 1389. Depositors may receive payment in the same currency in which the insured deposit is denominated R.A. No. 9576 stipulates that PDIC will not pay deposit insurance for the following accounts or transactions: 1. Investment products such as bonds, securities and trust accounts; 2. Deposit accounts which are unfunded, fictitious or fraudulent; 3. Deposit products constituting or emanating from unsafe and unsound banking practices; 4. Deposits that are determined to be proceeds of an unlawful activity as defined under the Anti-Money Laundering Law. MAXIMUM LIABILITY Effective June 1, 2009, the maximum deposit insurance coverage is P500,000 per depositor. All deposit accounts by a depositor in a closed bank maintained in the same right and capacity shall be added together. Under R.A. No. 9576, the PDIC may propose to adjust the MDIC, subject to the approval of the President of the Philippines, in case of a condition that threatens the monetary and financial stability of the banking system that may have systemic consequences. FILING OF CLAIMS
As for Philippine banks with branches outside the country, RA 9576 stipulates that
Who are NOT required to file claims?
Depositors with valid deposit accounts with balances of Php100,000 and below are not required to file claims provided they have no obligations with the closed bank and have complete and updated addresses in the bank records or have updated these through the Mailing Address Update Form (MAUF) issued by the PDIC. When are claims filed? Claims are filed during the claims settlement operations period, as announced in the Notice to Depositors published in national or local newspapers. Depositors have two (2) years from PDIC’s takeover of the closed bank to file their deposit insurance claims. Who are REQUIRED to file claims? 1. Depositors with valid deposit accounts with balances of more than Php100,000. 2. Depositors who have outstanding obligations with the closed bank regardless of amount of deposits. 3. Depositors with account balances of less than Php100,000 who have no updated addresses in the bank records or who have not updated their addresses through the Mailing Address Update Form (MAUF) issued by the PDIC. 4. Depositors who maintain their accounts under the name of business entities, regardless of type of account and account balance. 5. Depositors with accounts not eligible for early payment, regardless of type of account and account balance per advice of PDIC.
- in the case of joint accounts such as “Or”, “And/Or” or “And” accounts REQUIRED DOCUMENTS - Original evidence of deposits such as savings passbook, certificate of time deposit, bank statement, unused checks, and ATM card. - Two (2) valid photo-bearing IDs with signature of the depositor/claimant. Relevant Notes 1. Claims should be filed within the two-year prescriptive period after PDIC’s takeover of the closed bank. 2. The PDIC will not accept claims that are incomplete or lacking in requirements. 3. The PDIC may also require additional documents in the course of claims processing. 4. The PDIC, as Receiver, has the authority to adjust the interest rate on unpaid interests on deposits if such rate is deemed unreasonably higher compared to market rates. 5. The standard procedures for claims settlement may not apply if the closed bank fails to properly turn over to the PDIC the closed bank’s complete records. Without the complete records, the PDIC will not be able to conduct the validation process for bank deposits, a requirement before deposit insurance claims are paid.
WHO should sign the Claim Form? 1. DEPOSITOR of the account - for depositors 18 years old and above 2. PARENT - if the depositor is below 18 years old 3. AGENT - in the case of “By” accounts 4. TRUSTEE - in the case of “In Trust For (ITF)” accounts 5. EACH DEPOSITOR
END
SECRECY OF BANK DEPOSITS (R.A. 1405) RATIONALE OF THE LAW: 1) The Government encourages people to deposit their money in banking institutions, and 2) Discourages private hoarding to help the proper circulation of money in the country, and aid in economic development. It will aid in the efficiency of the banking system as the money saved will be properly utilized to authorize loans. It could also decrease government costs. In relation to this, the government must secure the confidentiality of citizens’ money. Thus, the provision enacted. THE PROVISION STATES:
Exceptions: 1. Upon the written permission of the depositor 2. In cases of impeachment 3. Upon the 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. Other Exceptions not expressly mentioned:
General Rule/ Prohibited Acts: 1. the EXAMINATION AND INQUIRY OR LOOKING into o all deposits of whatever nature with banks or banking institutions in the Philippines (including investments in bonds issued by the Governments or its political subdivisions and instrumentalities) by - any person or - any government official - any bureau or - any office 2. the DISCLOSURE by - any OFFICIAL of any banking institution or - any EMPLOYEE of any banking institution to ANY UNAUTHORIZED PERSON of any information concerning the said deposit Precepts: “All deposits of whatever nature with banks or banking institutions in the Philippines including investments in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities, 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.”
In case of violation of the anti-graft and corrupt practice act; Violation of the unexplained wealth law Violation of the Anti-Money Laundering Law Garnishment Upon the order of the CIR in respect of the bank deposits of a decedent for the purpose of determining such decedent’s gross estate Upon the order of the Commissioner of Internal Revenue in respect of the bank deposits of a taxpayer who has filed an application for compromise of his tax liability. Upon the order of the ombudsman
PENALTIES/SANCTIONS: Any violation of this law will subject offender upon conviction, to an imprisonment of not more than five years or a fine of not more than twenty thousand pesos or both, in the discretion of the court. Key Terms: Private Hoarding - To accumulate as much of (something) as one can, as when fearing a shortage. Dereliction of Duty – when a person has willfully refused to perform his duties (or follow a given order) or has incapacitated himself in such a way that he cannot perform his duties. Deposits - refer to money or funds placed with bank that can be withdrawn on the depositor’s order or demand, such as deposit accounts in the form of savings, current and time deposits. Investments in government bonds - refer to investments in bonds issued by the government and its instrumentalities. RA 1405 DOES NOT COVER: 1. Safety Deposit Boxes 2. Trust Funds 3. Money Market Placements.
END
UNCLAIMED BALANCES LAW (R.A. 3936) Amended by PD No. 679
A copy of the above sworn statement shall be posted in a conspicuous place in the premises of the bank, building and loan association, or trust corporation concerned for at least sixty days from the date of filing thereof.
Elements of Unclaimed Balances 1. Includes credits or deposits of: a. Money b. Bullion c. Security d. Other evidence of indebtedness of any kind, and interest thereon 2. The credit or deposit is made with banks, buildings and loan associations, and trust corporations 3. The credit or deposit is in favor of any person known to be a. dead or b. who has not made further deposits or withdrawals during the preceding ten years or more. Unclaimed Balances shall be forwarded to the Treasurer of the Philippines with a statement, under oath, showing the: (a) The names and last known place of residence or post office addresses of the persons in whose favor such unclaimed balances stand; (b) The amount and the date of the outstanding unclaimed balance and whether the same is in money or in security, and if the latter, the nature of the same; (c) The date when the person in whose favor the unclaimed balance stands died, if known, or the date when he made his last deposit or withdrawal; and (d) The interest due on such unclaimed balance, if any, and the amount thereof.
It shall be the duty of the Treasurer of the Philippines to inform the Solicitor General from time to time the existence of unclaimed balances held by banks, building and loan associations, and trust corporations. Whenever the Solicitor General shall be informed of such unclaimed balances, he shall commence an action or actions in the name of the People of the Republic of the Philippines in the Court of First Instance of the province or city where the bank, building and loan association or trust corporation is located. If the president, cashier or managing officer of the bank, building and loan association, or trust corporation neglects or refuses to make and file the sworn statement required by this action, such bank, building and loan association, or trust corporation shall pay to the Government the sum of five hundred pesos a month for each month or fraction thereof during which such default shall continue. END
