I.

Distinguish a Joint Account from a Partnership.

The following are the distinctions between joint account and partnership: 1) A partnership has a firm name while a joint account has none and is conducted in the name of the ostensible partner. 2) While a partnership has juridical personality and may sue or be sued under its firm name, a joint account has no juridical personality and can sue or be sued only in the name of the ostensible partner. 3) While a partnership has a common fund, a joint account has none. 4) While in a partnership, all general partners have the right of management, in a joint account, the ostensible partner manages its business operations. 5) While liquidations of a partnership may, by agreement, be entrusted to a partner or partners, in joint account liquidation thereof can only be done by the ostensible partner. II. What is a proxy? The written authority to act or speak for another party. Proxies are sent to stockholders by corporate management in order to solicit authority to vote the stockholders' shares at the annual meetings. Sec 58 of B.P. 68 provides that, no proxy shall be valid and effective for a period longer than five (5) years at any one time. III. Explain the Trust Fund Doctrine.

IV.

Distinguish Articles of Incorporation from By-laws. Articles of Incorporation By- laws

- Charter or fundamental law - Merely rules and regulations of the corporation adopted by the corporation Executed incorporation incorporators by before - Usually after incorporation by the the stockholders or members

- Filing is condition precedent - Filing is a condition subsequent to corporate existence

V.

What are the legal consequences of the following:

a)

when there the certificate of stock reflects a greater volume of shares than the actual number of shares issued and there is an over issue - THE EXCESS ISSUANCE (OVER THE AUTHORIZED CAPITAL STOCK OR THE STATED CAPITAL) SHALL BE VOID AS BEING ULTRA VIRES. b) when there the certificate of stock reflects a greater volume of shares than the actual number of shares issued and there is no over-issue - IF THERE IS NO OVERISSUE, BUT NOPAYMENT HAS BEEN MADE TO COVER THE PAR OR STATED VALUE OF THE EXCESS SHARES, THE LATTER WOULD CONSTITUTE WATERED STOCKS c.)when there the certificate of stock reflects a greater volume of shares than the actual number of shares issued and there is no over-issue And no watered stock

Trust Fund doctrine the requirement of unrestricted retained earnings is because subscription to the capital of a corporation constitute a fund to which creditors have a right to look for the satisfaction of their claims (Phil. Trust Co. v. Rivera, 1923) - p. 224

- THE CORPORATION MAY BE BOUND TO HONOR THE CERTIFICATE (IF DULY SIGNED AND RELEASED BY ITS AUTHORIZED OFFICERS) IN THE HANDS OF A HOLDER IN GOOD FAITH, RESERVING A RIGHT OF RECOURSE THAT AN AGGRIEVED PARTY MAY PURSUE AGAINST THE CULPABLE OR UNJUSTLY ENRICHED PARTY.

a.

voluntary dissolution when creditors are NOT affected;

and

VI. What is the effect of a merger or consolidation to existing employees of the DISSOLVED Corporation? Provide legal basis (case and law). Employees of an absorbed corporation are neither assets nor liabilities that are deemed absorbed by the surviving corporation. The Corporation Code does not mandate the absorption of the employees of the non- surviving corporation. The absorption of the employees may, however, be provided for in Merger Plan. In the absence of stipulation, the surviving corporation may not judicially compelled to absorb the employees of the non-surviving corporation. -- p. 250 (f) VII. May a stock corporation be converted into a nonstock corporation? Provide the procedure if any.

A stock corporation may be converted into a non-stock corporation by mere amendment provided all the requirements are complied with. Its rights and liabilities will remain. (p. 264 Sundiang)

Section 118. Voluntary dissolution where no creditors are affected. - If dissolution of a corporation does not prejudice the rights of any creditor having a claim against it, the dissolution may be effected by majority vote of the board of directors or trustees, and by a resolution duly adopted by the affirmative vote of the stockholders owning at least two-thirds (2/3) of the outstanding capital stock or of at least two-thirds (2/3) of the members of a meeting to be held upon call of the directors or trustees after publication of the notice of time, place and object of the meeting for three (3) consecutive weeks in a newspaper published in the place where the principal office of said corporation is located; and if no newspaper is published in such place, then in a newspaper of general circulation in the Philippines, after sending such notice to each stockholder or member either by registered mail or by personal delivery at least thirty (30) days prior to said meeting. A copy of the resolution authorizing the dissolution shall be certified by a majority of the board of directors or trustees and countersigned by the secretary of the corporation. The Securities and Exchange Commission shall thereupon issue the certificate of dissolution. (62a)

b.

voluntary dissolution when creditors are affected

VIII.

May a non- stock corporation be converted into a stock corporation? Provide the procedure if any. A non- stock corporation cannot be converted into a stock corporation by mere amendment of the articles of incorporation. It must be dissolved first under the methods specified in Title XIV, and thereafter, the members may organize as a stock corporation IX. Enumerate the steps (Short enumeration) for

a. the petition for dissolution shall be filed with the Securities and Exchange Commission.

B. signed by a majority of its board of directors or trustees or other officers having the management of its affairs,

c. verified by its president or secretary or one of its directors or trustees, and shall set forth all claims and demands against it, and that its dissolution was resolved upon by the affirmative vote of the stockholders representing at least two-thirds (2/3) of the

outstanding capital stock or by at least two-thirds (2/3) of the members at a meeting of its stockholders or members called for that purpose.

X.

Differentiate liquidation from dissolution.

Liquidation Section 119. Voluntary dissolution where creditors are affected. Where the dissolution of a corporation may prejudice the rights of any creditor, the petition for dissolution shall be filed with the Securities and Exchange Commission. The petition shall be signed by a majority of its board of directors or trustees or other officers having the management of its affairs, verified by its president or secretary or one of its directors or trustees, and shall set forth all claims and demands against it, and that its dissolution was resolved upon by the affirmative vote of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock or by at least two-thirds (2/3) of the members at a meeting of its stockholders or members called for that purpose. If the petition is sufficient in form and substance, the Commission shall, by an order reciting the purpose of the petition, fix a date on or before which objections thereto may be filed by any person, which date shall not be less than thirty (30) days nor more than sixty (60) days after the entry of the order. Before such date, a copy of the order shall be published at least once a week for three (3) consecutive weeks in a newspaper of general circulation published in the municipality or city where the principal office of the corporation is situated, or if there be no such newspaper, then in a newspaper of general circulation in the Philippines, and a similar copy shall be posted for three (3) consecutive weeks in three (3) public places in such municipality or city. Upon five (5) day's notice, given after the date on which the right to file objections as fixed in the order has expired, the Commission shall proceed to hear the petition and try any issue made by the objections filed; and if no such objection is sufficient, and the material allegations of the petition are true, it shall render judgment dissolving the corporation and directing such disposition of its assets as justice requires, and may appoint a receiver to collect such assets and pay the debts of the corporation. (Rule 104, RCa) A liquidation of a corporation occurs when all its assets have been sold. In the context of a corporate dissolution, the liquidation of corporate assets involves the distribution of the assets -- in the form of cash or property -- to the shareholders in exchange for their shares of stock in the corporation. This distribution of assets to the shareholders is the final step in the process of dissolving the corporation. If the corporation's debts and obligations were properly resolved, the shareholders are free of any liability for corporate debts. State law will generally hold each shareholder liable for any unpaid corporate debts up to the value of the assets distributed to the shareholder. Dissolution Each state's corporate law specifies the requirements for dissolving a corporation. The dissolution process is typically initiated by the board of directors submitting a resolution to dissolve the corporation at a meeting of the corporation's shareholders. If the shareholders vote to approve the resolution, the directors are authorized to commence the dissolution process. In general, the requirements for dissolution include filing an appropriate document with the state, such as articles of dissolution in Arizona. The document usually requires a statement that the dissolution was approved by an appropriate vote of the shareholders. XI. When is a corporation deemed to be doing business in the Philippines based on the Foreign Investments Act? Sec 3 (d) RA 7042- The praise "doing business" shall include soliciting orders, service contracts, opening offices, whether called "liaison" offices or branches; appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country for a period or periods totalling one

hundred eighty (180) days or more; participating in the management, supervision or control of any domestic business, firm, entity or corporation in the Philippines; and any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization: Provided, however, That the phrase "doing business: shall not be deemed to include mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business, and/or the exercise of rights as such investor; nor having a nominee director or officer to represent its interests in such corporation; nor appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account;

functions normally incident to, and in the progressive prosecution of, the purpose and object of its organization. Mentholatum Co., Inc., v. Mangaliman 72 Phil. 524 (1941) XIV. Enumerate the requisites for an intra-corporate dispute.

The essential requisites for filing a derivative suit as set forth in Rule 8 of the Interim Rules of Procedure Governing Intra-Corporate Controversies: (1) He was a stockholder or member at the time the acts or transactions subject of the action occurred and at the time the action was filed; (2) He exerted all reasonable efforts, and alleges the same with particularity in the complaint, to exhaust all remedies available under the articles of incorporation, by-laws, laws or rules governing the corporation or partnership to obtain the relief he desires; (3) No appraisal rights are available for the act or acts complained of; and (4) The suit is not a nuisance or harassment suit. Securities and Regulation Code

XII.

Explain briefly the substance test of doing business in the Philippines. The true test, however, seems to be whether the foreign corporation is continuing the body or substance of the business or enterprise for which it was organized, or whether it has substantially retired from it and turned it over to another. The term implies a continuity of commercial dealings and arrangements, and contemplates to that extent the performance of acts or works or the exercise of the functions normally incident to and in the progressive prosecution of the purpose and object of its organization. Mentholatum Co., Inc., v. Mangaliman (1941) XIII. Explain briefly the continuity test of doing business in the Philippines.

XV.

What are the exempt securities and exempt transactions under the Securities and Regulation Code? SEC. 9. Exempt Securities. -

continuity test, expressed thus: The term [doing business] implies a continuity of commercial dealings and arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of some of the

9.1. The requirement of registration under Subsection 8.1 shall not as a general rule apply to any of the following classes of securities:

(a) Any security issued or guaranteed by the Government of the Philippines, or by any political subdivision or agency thereof, or by any person controlled or supervised by, and acting as an instrumentality of said Government. (b) Any security issued or guaranteed by the government of any country with which the Philippines maintains diplomatic relations, or by any state, province or political subdivision thereof on the basis of reciprocity: Provided, That the Commission may require compliance with the form and content of disclosures the Commission may prescribe. (c) Certificates issued by a receiver or by a trustee in bankruptcy duly approved by the proper adjudicatory body. (d) Any security or its derivatives the sale or transfer of which, by law, is under the supervision and regulation of the Office of the Insurance Commission, Housing and Land Use Regulatory Board, or the Bureau of Internal Revenue. (e) Any security issued by a bank except its own shares of stock. 9.2. The Commission may, by rule or regulation after public hearing, add to the foregoing any class of securities if it finds that the enforcement of this Code with respect to such securities is not necessary in the public interest and for the protection of investors.

(c) An isolated transaction in which any security is sold, offered for sale, subscription or delivery by the owner thereof, or by his representative for the owners account, such sale or offer for sale, subscription or delivery not being made in the course of repeated and successive transactions of a like character by such owner, or on his account by such representative and such owner or representative not being the underwriter of such security. (d) The distribution by a corporation, actively engaged in the business authorized by its articles of incorporation, of securities to its stockholders or other security holders as a stock dividend or other distribution out of surplus. (e) The sale of capital stock of a corporation to its own stockholders exclusively, where no commission or other remuneration is paid or given directly or indirectly in connection with the sale of such capital stock. (f) The issuance of bonds or notes secured by mortgage upon real estate or tangible personal property, where the entire mortgage together with all the bonds or notes secured thereby are sold to a single purchaser at a single sale. (g) The issue and delivery of any security in exchange for any other security of the same issuer pursuant to a right of conversion entitling the holder of the security surrendered in exchange to make such conversion: Provided, That the security so surrendered has been registered under this Code or was, when sold, exempt from the provisions of this Code, and that the security issued and delivered in exchange, if sold at the conversion price, would at the time of such conversion fall within the class of securities entitled to registration under this Code. Upon such conversion the par value of the security surrendered in such exchange shall be deemed the price at which the securities issued and delivered in such exchange are sold. (h) Brokers transactions, executed upon customers orders, on any registered Exchange or other trading market. (i) Subscriptions for shares of the capital stock of a corporation prior to the incorporation thereof or in pursuance of an increase in

SEC. 10. Exempt Transactions. - 10.1. The requirement of registration under Subsection 8.1. shall not apply to the sale of any security in any of the following transactions:chanroblesvirtualawlibrary (a) At any judicial sale, or sale by an executor, administrator, guardian or receiver or trustee in insolvency or bankruptcy. (b) By or for the account of a pledge holder, or mortgagee or any other similar lien holder selling or offering for sale or delivery in the ordinary course of business and not for the purpose of avoiding the provisions of this Code, to liquidate a bona fide debt, a security pledged in good faith as security for such debt.

its authorized capital stock under the Corporation Code, when no expense is incurred, or no commission, compensation or remuneration is paid or given in connection with the sale or disposition of such securities, and only when the purpose for soliciting, giving or taking of such subscriptions is to comply with the requirements of such law as to the percentage of the capital stock of a corporation which should be subscribed before it can be registered and duly incorporated, or its authorized capital increased. (j) The exchange of securities by the issuer with its existing security holders exclusively, where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange. (k) The sale of securities by an issuer to fewer than twenty (20) persons in the Philippines during any twelve-month period. (l) The sale of securities to any number of the following qualified buyers:chanroblesvirtualawlibrary (i) Bank; chan robles virtual law library (ii) Registered investment house; (iii) Insurance company; (iv) Pension fund or retirement plan maintained by the Government of the Philippines or any political subdivision thereof or managed by a bank or other persons authorized by the Bangko Sentral to engage in trust functions; (v) Investment company; or (vi) Such other person as the Commission may by rule determine as qualified buyers, on the basis of such factors as financial sophistication, net worth, knowledge, and experience in financial and business matters, or amount of assets under management. XVI. Enumerate the procedure for registration of securities under the SRC.

SEC. 12. Procedure for Registration of Securities. 12.1. All securities required to be registered under Subsection 8.1 shall be registered through the filing by the issuer in the main office of the Commission, of a sworn registration statement with respect to such securities, in such form and containing such information and documents as the Commission shall prescribe. The registration statement shall include any prospectus required or permitted to be delivered under Subsections 8.2, 8.3 and 8.4.

12.2. In promulgating rules governing the content of any registration statement (including any prospectus made a part thereof or annexed thereto), the Commission may require the registration statement to contain such information or documents as it may, by rule, prescribe. It may dispense with any such requirement, or may require additional information or documents, including written information from an expert, depending on the necessity thereof or their applicability to the class of securities sought to be registered.chan robles virtual law library 12.3. The information required for the registration of any kind, and all securities, shall include, among others, the effect of the securities issue on ownership, on the mix of ownership, especially foreign and local ownership. 12.4. The registration statement shall be signed by the issuers executive officer, its principal operating officer, its principal financial officer, its comptroller, principal accounting officer, its corporate secretary or persons performing similar functions accompanied by a duly verified resolution of the board of directors of the issuer corporation. The written consent of the expert named as having certified any part of the registration statement or any document used in connection therewith shall also be filed. Where the registration statement includes shares to be sold by selling shareholders, a written certification by such selling shareholders as to the accuracy of any part of the registration statement contributed to by such selling shareholders shall also be filed.

12.5. (a) Upon filing of the registration statement, the issuer shall pay to the Commission a fee of not more than one-tenth (1/10) of one per centum (1%) of the maximum aggregate price at which such securities are proposed to be offered. The Commission shall prescribe by rule diminishing fees in inverse proportion to the value of the aggregate price of the offering. (b) Notice of the filing of the registration statement shall be immediately published by the issuer, at its own expense, in two (2) newspapers of general circulation in the Philippines, once a week for two (2) consecutive weeks, or in such other manner as the Commission by rule shall prescribe, reciting that a registration statement for the sale of such security has been filed, and that the aforesaid registration statement, as well as the papers attached thereto are open to inspection at the Commission during business hours, and copies thereof, photostatic or otherwise, shall be furnished to interested parties at such reasonable charge as the Commission may prescribe. 12.6. Within forty-five (45) days after the date of filing of the registration statement, or by such later date to which the issuer has consented, the Commission shall declare the registration statement effective or rejected, unless the applicant is allowed to amend the registration statement as provided in Section 14 hereof. The Commission shall enter an order declaring the registration statement to be effective if it finds that the registration statement together with all the other papers and documents attached thereto, is on its face complete and that the requirements have been complied with. The Commission may impose such terms and conditions as may be necessary or appropriate for the protection of the investors. 12.7. Upon effectivity of the registration statement, the issuer shall state under oath in every prospectus that all registration requirements have been met and that all information are true and correct as represented by the issuer or the one making the statement. Any untrue statement of fact or omission to state a

material fact required to be stated therein or necessary to make the statement therein not misleading shall constitute fraud. XVII. Enumerate the grounds for rejection or revocation under the Securities and Regulation Code. SEC. 13. Rejection and Revocation of Registration of Securities. 13.1. The Commission may reject a registration statement and refuse registration of the security thereunder, or revoke the effectivity of a registration statement and the registration of the security thereunder after due notice and hearing by issuing an order to such effect, setting forth its findings in respect thereto, if it finds that:chanroblesvirtualawlibrary (a) The issuer:chanroblesvirtualawlibrary (i) Has been judicially declared insolvent; (ii) Has violated any of the provisions of this Code, the rules promulgated pursuant thereto, or any order of the Commission of which the issuer has notice in connection with the offering for which a registration statement has been filed; (iii) Has been or is engaged or is about to engage in fraudulent transactions; (iv) Has made any false or misleading representation of material facts in any prospectus concerning the issuer or its securities; (v) Has failed to comply with any requirement that the Commission may impose as a condition for registration of the security for which the registration statement has been filed; or (b) The registration statement is on its face incomplete or inaccurate in any material respect or includes any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading; or (c) The issuer, any officer, director or controlling person of the issuer, or person performing similar functions, or any underwriter

has been convicted, by a competent judicial or administrative body, upon plea of guilty, or otherwise, of an offense involving moral turpitude and/or fraud or is enjoined or restrained by the Commission or other competent judicial or administrative body for violations of securities, commodities, and other related laws.chan robles virtual law library For purposes of this subsection, the term competent judicial or administrative body shall include a foreign court of competent jurisdiction as provided for under the Rules of Court.

XVIII. What is a tender offer? Briefly enumerate the procedure for a tender offer. Tender Offer means a publicly announced intention by a person acting alone or in concert with other persons to acquire equity securities of a public company. (p. 285 sundiang)

13.2. The Commission may compel the production of all the books and papers of such issuer, and may administer oaths to, and examine the officers of such issuer or any other person connected therewith as to its business and affairs. 13.3. If any issuer shall refuse to permit an examination to be made by the Commission, its refusal shall be ground for the refusal or revocation of the registration of its securities. 13.4. If the Commission deems it necessary, it may issue an order suspending the offer and sale of the securities pending any investigation. The order shall state the grounds for taking such action, but such order of suspension although binding upon the persons notified thereof, shall be deemed confidential, and shall not be published. Upon the issuance of the suspension order, no further offer or sale of such security shall be made until the same is lifted or set aside by the Commission. Otherwise, such sale shall be void. 13.5. Notice of issuance of such order shall be given to the issuer and every dealer and broker who shall have notified the Commission of an intention to sell such security. 13.6. A registration statement may be withdrawn by the issuer only with the consent of the Commission.

Section 19 of R.A. 8799 .Any person or group of persons acting in concert who intends to acquire at least 15% of any class of any equity security of a listed corporation of any class of any equity security of a corporation with assets of at least fifty million pesos (50,000,000.00) and having two hundred(200) or more stockholders at least one hundred shares each or who intends to acquire at least thirty percent(30%) of such equity over a period of twelve months(12) shall make a tender offer to stockholders by filling with the Commission a declaration to that effect; and furnish the issuer, a statement containing such of the information required in Section 17 of this Code as the Commission may prescribe. Such person or group of persons shall publish all request or invitations or tender offer or requesting such tender offers subsequent to the initial solicitation or request shall contain such information as the Commission may prescribe, and shall be filed with the Commission and sent to the issuer not alter than the time copies of such materials are first published or sent or given to security holders.

A.M No. 00-8-10-SC XIX. Explain the concept of corporate rehabilitation under A.M No. 00-8-10-SC.

Corporate rehabilitation as a process to try to conserve and administer [the corporations assets in the hope that it may

eventually be able to return from financial stress to solvency. It contemplates of the continuation of corporate life and activities so that it may be able to return to its former condition of successful operations and financial stability. Blacks Law Dictionary Rehabilitation contemplates a continuance of corporate like and activities in an effort to restore and reinstate the corporation to its former position of successful operation and solvency. Ruby Industrial Corp v. CA (284 SCRA 445) XX. Enumerate the qualifications of a rehabilitation receiver.

XXII.

What is a stay order under A.M No. 00-8-10-SC.

Section 11. Qualifications of Rehabilitation Receiver. (a) In the appointment of the rehabilitation receiver, the following qualifications shall be taken into consideration by the court: (1) Expertise and acumen to manage and operate a business similar in size and complexity to that of the debtor; (2) Knowledge in management, finance and rehabilitation of distressed companies; (3) General familiarity with the rights of creditors in suspension of payments or rehabilitation and general understanding of the duties and obligations of a rehabilitation receiver; (4) Good moral character, independence and integrity; (5) Lack of conflict of interest as defined in this Section; and (6) Willingness and ability to file a bond in such amount as may be determined by the court.

XXI.

Enumerate the disqualifications of a rehabilitation receiver.

Section 7. Stay Order. - If the court finds the petition to be sufficient in form and substance, it shall; not later than five (5) working days from the filing of the petition, issue an order: (a) appointing a rehabilitation receive and fixing his bond; (b) staying enforcement of all claims, whether for money or otherwise and whether such enforcement is by court action or otherwise, against the debtor, its guarantors and persons not solidarily liable with the debtor; provided, that the stay order shall not cover claims against letters of credit and similar security arrangements issued by a third party to secure the payment of the debtor's obligations; provided, further, that the stay order shall not cover foreclosure by a creditor of property not belonging to a debtor under corporate rehabilitation; provided, however, that where the owner of such property sought to be foreclosed is also a guarantor or one who is not solidarily liable, said owner shall be entitled to the benefit of excussion as such guarantor; (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 except as provided in items (e), (f) and (g) of this Section or when ordered by the court pursuant to Section 10 of Rule 3; (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) directing the payment of new loans or other forms of credit accommodations obtained for the rehabilitation of the debtor with prior court approval; (h) fixing the dates of the initial hearing on the petition not earlier than forty-five (45) days but not later than sixty (60) days from the filing thereof; (I) directing the petitioner to publish the Order in a newspaper of general circulation in the Philippines once a week for two (2) consecutive weeks; (j) directing the petitioner to furnish a copy of the petition and its annexes, as well as the stay order, to the creditors named in the petition and the appropriate regulatory agencies such as, but not limited to, the

Securities and Exchange Commission, the Bangko Sentral ng Pilipinas, the Insurance Commission, the National Telecommunications Commission, the Housing and Land Use Regulatory Board and the Energy Regulatory Commission; (k) directing the petitioner that foreign creditors with no known addresses in the Philippines be individually given a copy of the stay order at their foreign addresses; (l) directing all creditors and all interested parties (including the regulatory agencies concerned) to file and serve on the debtor a verified comment on or opposition to the petition, with supporting affidavits and documents, not later than fifteen (15) days before the date of the first initial hearing and putting them on notice that their failure to do so will bar them from participating in the proceedings; and (m) 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 issuance of a stay order does not affect the right to commence actions or proceedings insofar as it is necessary to preserve a claim against the debtor. XXIII. What are the contents of a rehabilitation plan.

reasonable investor to make an informed decision on the feasibility of the rehabilitation plan. XXIV. Briefly enumerate the steps for corporate rehabilitation. 1. Filing verified petition with the appropriate RTC by a. corporate debtor who foresees the impossibility of meeting its debts when they respectively fall due; or b. creditors holding at least 25% of the debtors total liabilities. 2. The following shall be annexed to the petition: a. audited financial statements at end of its last fiscal year; b. interim financial statement; c. Schedule of debts and liabilities; d. Inventory of assets; e. Rehabilitation plan; f. Schedule of payments and disposition of assets effected within 3 months preceding the filing of the petition; g. Schedule of cash flow for the last 3 months; h. Statement of possible claims; i. Affidavit of general financial condition; j. At least 3 nominations for rehabilitation receiver; k. Certificate under oath that directors and stockholders have irrevocably approved/consented to all actions/matters necessary under the rehabilitation plan. 3. The court shall issue the stay order not later than 5 days from the filing of the petition, which among others shall: a. appoint a rehabilitation receiver; b. stay all actions for claims against the debtor, which shall cover both secured and unsecured creditors; c. set an initial hearing for the petition (not earlier than 45 days but not later 60 days from filing of the petition); and d. direct the creditors to file their verified comment or opposition not later than 10 days before the initial; their failure to do so would bar them from participating in the proceedings. 4. Publication of the stay orders in a newspaper of general circulation for 2 consecutive weeks;

Section 18. Rehabilitation Plan. - The rehabilitation plan shall include (a) the desired business targets or goals and the duration and coverage of the rehabilitation; (b) the terms and conditions of such rehabilitation which shall include the manner of its implementation, giving due regard to the interests of secured creditors such as, but not limited, to the non-impairment of their security liens or interests; (c) the material financial commitments to support the rehabilitation plan; (d) the means for the execution of the rehabilitation plan, which may include debt to equity conversion, restructuring of the debts, dacion en pago or sale exchange or any disposition of assets or of the interest of shareholders, partners or members; (e) a liquidation analysis setting out for each creditor that the present value of payments it would receive under the plan is more than that which it would receive if the assets of the debtor were sold by a liquidator within a six-month period from the estimated date of filing of the petition; and (f) such other relevant information to enable a

5. Referral of rehabilitation plan to rehabilitation receiver; 6. Meetings between corporate debtor with creditors. Discussions on the rehabilitation plans; 7. Submission of final rehabilitation plan to the RTC for approval; 8. The petition shall be discussed (which result into the automatic lifting of the stay order unless RTC ordered otherwise) if no rehabilitation plan is approved 180 days from initial hearing. 9. Approval or disapproval of the rehabilitation plan by RTC. XXV. Explain the concept of debtor in place.

rehabilitation court. Only to this extent can the order of suspension be considered obligatory upon any court, tribunal, branch or body where there are pending actions for claims against the distressed corporation. (Rosario v. Co G.R. No. 133608, August 26, 2008, 563 SCRA 239) XXVIII. What is the effect of corporate rehabilitation on pending criminal cases of the corporation? Provide legal basis. The rehabilitation of SIHI and the settlement of claims against the corporation is not a legal ground for the extinction of petitioners criminal liabilities. There is no reason why criminal proceedings should be suspended during corporate rehabilitation, more so, since the prime purpose of the criminal action is to punish the offender in order to deter him and others from committing the same or similar offense, to isolate him from society, reform and rehabilitate him or, in general, to maintain social order.As correctly observed in Rosario, it would be absurd for one who has engaged in criminal conduct could escape punishment by the mere filing of a petition for rehabilitation by the corporation of which he is an officer. (Rosario v. Co G.R. No. 133608, August 26, 2008, 563 SCRA 239) XXIX. Explain the Serious Situation Test. It merely provides that receivers may be appointed whenever: (1) necessary in order to preserve the rights of the parties-litigants; and/or (2) protect the interest of the investing public and creditors. The situations contemplated in there instances are serious in nature. There must exist a clear and imminent danger of losing the corporate assets if a receiver is not appointed. Absent such danger, such as where there are sufficient assets to sustain the rehabilitation plan and both investors and creditors are amply protected, the need for appointing a receiver does not exist. Simply put, the purpose of the law in directing the appointment of receivers is to protect the interests of the corporate investors and creditors. (Pryce Corporation vs. Court of Appeals and China Banking Corporation, G.R. No. 172302, February 4, 2008

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.

XXVI. Explain the principle of equality is equity under A.M No. 00-8-10-SC. As between creditors, the key phrase is "equality is equity." When a corporation threatened by bankruptcy is taken over by a receiver, all the creditors should stand on an equal footing. Not anyone of them should be given any preference by paying one or some of them ahead of the others. This is precisely the reason for the suspension of all pending claims against the corporation under receivership. Instead of creditors vexing the courts with suits against the distressed firm, they are directed to file their claims with the receiver who is a duly appointed officer of the SEC. XXVII. What is the effect of corporate rehabilitation on pending civil cases of the corporation? Provide legal basis. However, any civil indemnity awarded as a result of their conviction would be subject to the stay order issued by the

[Sandoval-Gutierrez, J.], citing Rizal Banking Corporation vs. Intermediate Appellate Court) General Banking Law XXX. Enumerate and define the classes of bank provided in the General Banking law. 1) Universal Banks- banks that have authority to exercise, in addition to the powers and functions of commercial banks, powers of an investment house and the power to invest in non- allied enterprises. 2) Commercial Banks- banks that are given all such power necessary to engage in commercial banking in addition to general corporate powers; commercial banking includes the power to accept drafts, issue letters of credits, discounting and negotiation of negotiable instruments and evidence of debt, accept and create demand deposits and the like. 3) Rural Banks banks that are created to make needed credit available and readily accessible in the rural areas for the purpose of promoting comprehensive rural development. 4) Thrift Banks include savings and mortgage banks, private development banks, and stock savings and loan associations. 5) Cooperative Banks- banks that primarily provide financial, banking and credit services to cooperative organizations and their members 6) Islamic Banks 7) Other classification of banks as determined by the MB of the BSP. XXXI. Define deposits.

DEMAND DEPOSITS deposits payable on demand and transferable by check or otherwise usable in making payments. (Bangko Sentral ng Pilipinas) Deposits refer to money or funds placed with a bank that can be withdrawn on the depositors order or demand, such as deposit accounts in the form of savings, current and time deposits. Deposits are characterized as being in the nature of a simple loan. The placing of deposits in a bank creates a creditor-debtor relationship between the depositor and the bank. As such, the bank, being the debtor, has the obligation to pay a certain sum of money to the depositor, being the creditor. XXXII. Define deposit substitutes. DEPOSIT SUBSTITUTES instruments used as an alternative form of obtaining funds from the public other than deposits, through the issuance, endorsement or acceptance of debt instruments for the borrowers own account. These represent all types of money market borrowings by banks like promissory notes, repurchase agreements, commercial papers/securities and certificates of assignment/participation with recourse. (Bangko Sentral ng Pilipinas)

XXXIII.

What is the legal relationship between banks and owners of safety deposit boxes rented by the bank? Provide legal basis. (jurisprudence) In the case of rent of safety deposit box. The contract is a special kind of deposit and cannot be characterized as an ordinary contract of lease because the full and absolute possession and control of the deposit box is not given to the renters. The prevailing rule is that the relation between the bank renting out and the renter is that of bailer and bailee the bailment being for hire and mutual benefiit. [CA Agro-industrial Dev. Corp. v. CA, 219 SCRA 426 (1983)] General Rule: The relationship between a bank and a safe deposit customer is similar to a bailee/bailor relationship.

Presumption: There is a rebuttable presumption of negligence if the customers items are missing. Lev v. Chase Manhattan Bank, 300 A.D.2d 155 (1st Dept 2002); Greco v. First Union Natl Bank Corp., 267 A.D.278 (2dDept 1999). XXXIV. Differentiate enterprise. an allied enterprise from a non-allied

d. e.

Non-financial allied enterprise Quasi-banks allied enterprises Total investment -The total investment in equities of allied enterprises shall not exceed thirty-five percent (35%) of the net worth of the bank; -The equity investment in any one enterprise shall not exceed twenty-five percent (25%) of the net worth of the bank. non-allied enterprises Thrift bank, rural bank, or financial-allied enterprise Non-financial enterprise Quasi-banks allied may own percent equity may own percent equity up to one hundred (100%) of the up to one hundred (100%) of the

Distinction between allied and non-allied enterprises (Secs. 23, et seq.) 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. (21-B; 21CA) SECTION 26. EQUITY INVESTMENTS OF A UNIVERSAL BANK IN NON-FINANCIAL ALLIED ENTERPRISES. - A UNIVERSAL BANK MAY OWN UP TO ONE HUNDRED PERCENT (100%) OF THE EQUITY IN A NON-FINANCIAL ALLIED ENTERPRISE. (21-BA) SECTION 27. EQUITY INVESTMENTS OF A UNIVERSAL BANK IN NON-ALLIED ENTERPRISES. - THE EQUITY INVESTMENT OF A UNIVERSAL BANK, OR OF ITS WHOLLY OR MAJORITY-OWNED SUBSIDIARIES, IN A SINGLE NON-ALLIED ENTERPRISE SHALL NOT EXCEED THIRTY-FIVE PERCENT (35%) OF THE TOTAL EQUITY IN THAT ENTERPRISE NOR SHALL IT EXCEED THIRTY-FIVE PERCENT (35%) OF THE VOTING STOCK IN THAT ENTERPRISE. (21-B)

XXXVI.

Make the table required above but provide the equity investment allowed for a UNIVERSAL bank. allied enterprises Total investment - The total investment in equities of allied and nonallied enterprises shall not exceed fifty percent (50%) of the net worth of the bank; -The equity investment in any one enterprise, whether allied or non-allied, shall not

XXXV.

Make a table showing the total investments that is allowed to be made by a Commercial Bank in: a. allied enterprises b. non-allied enterprises c. Thrift bank, rural bank, or financial-allied enterprise

non-allied enterprises

exceed twenty-five percent (25%) of the net worth of the bank. - The total investment in equities of allied and nonallied enterprises shall not exceed fifty percent (50%) of the net worth of the bank; -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. can own up to one hundred percent (100%) may own up to one hundred percent (100%) limit to forty percent (40%) equity investments

XXXVIII.

What are the exemptions for single borrowers limit?

Exclusions (NON-RISK LOANS): 1. Loans secured by obligations of the Bangko Sentralor the Philippine Government; 2. Loans fully guaranteed by the government; 3. Loans covered by assignment of depositsmaintained in the lending bank and held in the Philippines; 4. Loans, credit accommodations and acceptancesunder letters of credit to the extent covered bymargin deposits; and 5. Other loans or credit accommodations which theMB may specify as non-risk items.

Thrift bank, rural bank, or financial-allied enterprise Non-financial enterprise Quasi-banks allied

XXXIX.

Explain in full the concept of DOSRI Accounts under section 36 of the General Banking Law. DORSI Accounts (Directors, Officers,Stockholders, and Related Interests) Requisites: (BSP Circular No. 170 ): a. The borrower is director, officer, or anystockholder of a bank and related interest. b. He contracts a loan or any form of financial accommodation c. The loan or financial accommodation is from (1) his bank or; (2) a bank that is a subsidiary of abank holding company of which both is bank andlending bank are subsidiaries; (3) a bank inwhich a controlling proportion of the shares is owned by the same interest that owns acontrolling proportionof the shares of his bank;and d. The loan or financial accommodation of the DOS, singly or with that of his relatedinterest, is in excess of 5% of the capital

XXXVII. Define single borrowers limit as provided in the General Banking Law. Single Borrowers Limit (SBL) Rules The total amount of loans extended by a bank to any person, partnership, association, corporation or other entity shall at no time exceed 20% of the net worth of such bank. The total amount of loans may be increased by an additional 10% of the net worth of such bank provided the additional liabilities of any borrower are adequately secured by trust receipts, shipping documents, warehouse receipts or other similar documents transferring or securing title covering readily marketable, nonperishable goods which must be fully covered by insurance;

andsurplus of the lending bank or in the maximumamount permitted by law, whichever is lower.

XLI.

Explain briefly the Arms Length Rule.

XL.

Based on BSP Circular No. 170, who are covered by the DOSRI Prohibition? Who are covered (BSP Circular No. 170): 1. Directors Directors of the lending bank 2. Officers Either identified in the by-laws or are generally known as such 3. Stockholders those whose stockholdings, individually and/or together with any of the following persons, amount to 2% or more of the total subscribed capital stock of the bank: a. His spouse or relative within the first degree of affinity/consanguinity or relative by legal adoption, partnership wherein any of the foregoing is a general partner; and b. A co-owner, with the stockholder or the stockholders spouse, or relative mentioned above, of property/right/interest (mortgaged, pledged or assigned to secure the loan or credit accommodations, except when the mortgage, pledge or assignment covers only said co-owners undivided interest. 4. Related Interest a. Spouse, relatives within first degree of consanguinity or affinity, or relative by legal adoption of a DOS, partnerships of which a DOS or any of the foregoing is a general partner. b. Co-owner, with the DOS or his spouse or relative within the first degree of consanguinity or affinity, or relative by legal adoption, of the property/interest/ right mortgaged, pledged, assigned to secure the loans or credit accommodations, except when the mortgage, pledge or assignment covers only said coowners undivided interest. c. Corporation with inter-locking directors or where 20% of the capital stock is owned by the DOS and/or their spouses or relatives mentioned above, or wholly or majority owned or controlled by any related entity or a group of related entities in items (b), (d), and (e).

Arms Length Rule - The account should be upon terms not less favorable to the bank than those offered to others. (p. 308 Sundiang)

New central bank act XLII. What is legal tender under the New Central Bank Act.

SECTION 52. Legal Tender Power. All notes and coins issued by the Bangko Sentral 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: Provided, however, That, unless otherwise fixed by the Monetary Board, coins shall be legal tender in amounts not exceeding Fifty pesos (P50.00) for denominations of Twenty-five centavos and above, and in amounts not exceeding Twenty pesos (P20.00) for denominations of Ten centavos or less. Secrecy of Bank Deposits Law XLIII. Provide the prohibited acts under the Secrecy of Bank Deposits Law. Prohibited Acts and Persons Liable The following are liable under this law: (i) Any person or government official who, or any government bureau or office that, examines, inquires or looks into a bank deposit or government bond investment in any of the instances not allowed in Section 2;

(ii) Any official or employee of a banking institution who makes a disclosure concerning bank deposits to another in any instance not allowed by law (Sec. 3, Rep. Act No. 1405); and (iii) Any person who commits a violation of any of the provisions of the law (Sec. 5, Rep. Act No. 1405). Any bank official, director, employee or agent who discloses information relative to funds or properties in the custody of the bank may also be held liable XLIV. What are the exemptions to the secrecy of bank deposits?

REPUBLIC ACT No. 6426 Section 8. Secrecy of foreign currency deposits. All foreign currency deposits authorized under this Act, as amended by PD No. 1035, as well as foreign currency deposits authorized under PD No. 1034, are hereby declared as and considered of an absolutely confidential nature and, except upon the written permission of the depositor, in no instance shall foreign currency deposits be examined, inquired or looked into by any person, government official, bureau or office whether judicial or administrative or legislative, or any other entity whether public or private; Provided, however, That said foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever. (As amended by PD No. 1035, and further amended by PD No. 1246, prom. Nov. 21, 1977.) Insolvency Law XLVI. Who may file a Petition for Suspension of Payments? Provide the conditions. ACT NO. 1956 Sec. 2. Petition. The debtor who, 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, 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. XLVII. Enumerate the steps in a Petition for Suspension of Payments.

As stated in the Law, deposit records may be disclosed only (a) upon written permission of the depositor, (b) in cases of impeachment, and (c) upon order of a competent court in the case of bribery or dereliction of duty of public officials or when the money deposited or invested is the subject matter of the litigation. Additional exemptions were introduced since then as contained in other laws: (a) the Courts were authorized to examine bank deposits of spouse and unmarried children of government officials found to have unexplained wealth under the Anti-Graft and Corrupt Practices Act of 1960; (b) the Commissioner of Internal Revenue was granted powers to inquire into bank deposits of a decedent for estate tax purposes under the amended National Internal Revenue Code of 1985, and (c) the Ombudsman was allowed to examine and have access to bank accounts and records of government officers and employees under the Ombudsman Act of 1989. The Law also retained the right of the Treasurer of the Philippines under the Unclaimed Balances Act of 1932, to receive depositor information from banks on all deposits on behalf of persons known to be dead. - LAW ON SECRECY OF BANK DEPOSITS

STEPS IN SUSPENSION OF PAYMENTS 1. Filing of petition by the debtor

XLV. When may Foreign currency deposits be examined under Ra 6426?

2. Issuance by the court of an order calling a meeting of creditors 3. Publication of the order and service of summons 4. Meeting of creditors for the consideration of the debtors proposition 5. Approval of the creditors of the debtors proposition 6. Objections, if any, to the decision which must be made within 10 days following the meeting 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

charges collected at the time the credit is extended, if any 2. The amounts, if any, to be credited as down payment and/or trade-in. DOWN PAYMENT amount paid by the debtor at the time of the transaction in partial payment for the property or service purchased TRADE-IN value of an asset, agreed upon by the creditor and debtor, given at the time of the transaction in partial payment for the property or service purchased 3. The charges, individually itemized, which are paid or to be paid by such person in connection with the transaction but which are not incident to the extension of credit. Meaning of non-finance charges: - amounts advanced by the creditor for items normally associated with the ownership of the property or of the availment of the service purchased which are not incident to the extension of credit. -in the case of the purchase of an automobile on credit, the creditor may advance the insurance premium as well as the registration fee for the account of the debtor 4. The total amount to be financed. Meaning of amount financed: - consists of the cash price plus nonfinance charge less the amount of the down payment and value of the trade-in 5. The finance charge expressed in terms of pesos and centavos. Meaning of finance charge: - includes interest, fees, collection charges, discounts, and such other charges incident to the extension of credit as the Board may by regulation prescribe represents the amount to be paid by the debtor incident to the extension of credit such as interest or discounts, collection fees, credit investigation fees, attorney's fees, and other service charge the total finance charge represents the difference between (1) the aggregate consideration (down payment plus installments) on the part of the debtor, and (2) the sum of the cash price and non-finance charges

XLVIII. What is the double majority rule under the Insolvency Law. for there to be a valid certification election, majority of the bargaining unit must have voted AND the winning union must have garnered majority of the valid votes cast. (G.R. No. 181531)

Truth in Lending Act XLIX. What are the facts required to be disclosed by a creditor under the Truth in Lending Act? INFORMATION REQUIRED TO BE STATED [Sec. 4, RA 3765] Any creditor shall furnish to each person to whom credit is extended, prior to the consummation of the transaction, a clear statement in writing setting forth the following: 1. The cash price or delivered price of the property or service to be acquired. Meaning of cash price or delivered price: in case of trade transactions, it is the amount of money which would constitute full payment upon delivery of the property or service purchased at the creditors place of business in financial transactions, it is the amount of money received by the debtor upon consummation of the credit transaction, net of finance

6. The percentage that the finance bears to the total amount to be financed expressed as a simple annual rate on the outstanding unpaid balance of the obligation.

SECTION 3. DEFINITIONS. (B) 'COVERED TRANSACTION' IS A TRANSACTION IN CASH OR OTHER EQUIVALENT MONETARY INSTRUMENT INVOLVING A TOTAL AMOUNT IN EXCESS OF FIVE HUNDRED THOUSAND PESOS (PHP 500,000.00) WITHIN ONE (1) BANKING DAY. REPUBLIC ACT NO. 9160 Sec. 3(b) "Covered transaction" is a single, series, or combination of transactions involving a total amount in excess of Four Million Philippine pesos (PhP4,000,000.00) or an equivalent amount in foreign currency based on the prevailing exchange rate within five (5) consecutive banking days except those between a covered institution and a person who, at the time of the transaction was a properly identified client and the amount is commensurate with the business or financial capacity of the client; or those with an underlying legal or trade obligation, purpose, origin or economic justification. It likewise refers to a single, series or combination or pattern of unusually large and complex transactions in excess of Four Million Philippine pesos (PhP4,000,000.00) especially cash deposits and investments having no credible purpose or origin, underlying trade obligation or contract. LIII. What are covered institutions under the AMLA?

L. What is the effect of non-disclosure under the Truth in Lending Act? Section 6. (a) Any creditor who in connection with any credit transaction fails to disclose to any person any information in violation of this Act or any regulation issued thereunder shall be liable to such person in the amount of P100 or in an amount equal to twice the finance charged required by such creditor in connection with such transaction, whichever is the greater, except that such liability shall not exceed P2,000 on any credit transaction. Anti-Money Laundering Act LI. Define money laundering. RA 9160 Sec. 4. Money Laundering Offense. Money laundering is a crime whereby the proceeds of an unlawful activity are transacted, thereby making them appear to have originated from legitimate sources. It is committed by the following: (a) Any person knowing that any monetary instrument or property represents, involves, or relates to, the proceeds of any unlawful activity, transacts or attempts to transact said monetary instrument or property. (b) Any person knowing that any monetary instrument or property involves the proceeds of any unlawful activity, performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to in paragraph (a) above. (c) Any person knowing that any monetary instrument or property is required under this Act to be disclosed and filed with the AntiMoney Laundering Council (AMLC), fails to do so. LII. What are covered transactions under the Anti-money laundering act?

Covered institution" refers to: 1) banks, non-banks, quasi-banks, trust entities, and all other institutions and their subsidiaries and affiliates supervised or regulated by the Bangko Sentral ng Pilipinas (BSP); (2) insurance companies and all other institutions supervised or regulated by the Insurance Commission; and (3) a. securities dealers, brokers, salesmen, investment houses and other similar entities managing securities or rendering services as investment agent, advisor, or consultant;

b. mutual funds, close-end investment companies, common trust funds, pre-need companies and other similar entities; c. foreign exchange corporations, money changers, money payment, remittance, and transfer companies and other similar entities; and d. other entities administering or otherwise dealing in currency, commodities or financial derivatives based thereon, valuable objects, cash substitutes and other similar monetary instruments or property supervised or regulated by the Securities and Exchange Commission. LIV. Enumerate the unlawful activities under the AMLA.

Code, as amended, including those perpetrated by terrorists against non-combatant persons and similar targets; (13) Fraudulent practices and other violations under Republic Act No. 8799, otherwise known as the Securities Regulation Code of 2000; (14) Felonies or offenses of a similar nature that are punishable under the penal laws of other countries.

LV.

What are the suspicious transactions under the AMLA?

"Unlawful activity" refers to any act or omission or series or combination thereof involving or having relation to the following: (1) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise known as the Revised Penal Code, as amended; (2) Sections 3, 4, 5, 7, 8 and 9 of Article Two of Republic Act No. 6425, as amended, otherwise known as the Dangerous Drugs Act of 1972; (3) Section 3 paragraphs B, C, E, G, H and I of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices Act; (4) Plunder under Republic Act No. 7080, as amended; (5) Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of the Revised Penal Code, as amended; (6) Jueteng and Masiao punished as illegal gambling under Presidential Decree No. 1602; (7) Piracy on the high seas under the Revised Penal Code, as amended and Presidential Decree No. 532; (8) Qualified theft under Article 310 of the Revised Penal Code, as amended; (9) Swindling under Article 315 of the Revised Penal Code, as amended; (10) Smuggling under Republic Act Nos. 455 and 1937; (11) Violations under Republic Act No. 8792, otherwise known as the Electronic Commerce Act of 2000; (12) Hijacking and other violations under Republic Act No. 6235; destructive arson and murder, as defined under the Revised Penal

'Suspicious transaction' are transactions with covered institutions, regardless of the amounts involved, where any of the following circumstances exist: "1. there is no underlying legal or trade obligation, purpose or economic justification ; "2. the client is not properly identified; "3. the amount involved is not commensurate with the business or financial capacity of the client; "4. taking into account all known circumstances, it may be perceived that the clients transaction is structured in order to avoid being the subject of reporting requirements under the Act; "5. any circumstance relating to the transaction which is observed to deviate from the profile of the client and/or the clients past transactions with the covered institution; "6. the transaction is in any way related to an unlawful activity or offense under this Act that is about to be, is being or has been committed; or "7. any transaction that is similar or analogous to any of the foregoing." LVI. Who may issue freeze orders for money laundering? Provide legal basis.

RA 9194 "SEC. 10. Freezing of Monetary Instrument or Property. The Court of Appeals, upon application ex parte by the AMLC and after determination that probable cause exists that any monetary instrument or property is in any way related to an unlawful activity as defined in Section 3(i) hereof, may issue a freeze order which shall be effective immediately. The freeze order shall be for a period of twenty (20) days unless extended by the court." RA 9160 Sec. 10. Authority to Freeze. Upon determination that probable cause exists that any deposit or similar account is in any way related to an unlawful activity, the AMLC may issue a freeze order, which shall be effective immediately, on the account for a period not exceeding fifteen (15) days. Notice to the depositor that his account has been frozen shall be issued simultaneously with the issuance of the freeze order. The depositor shall have seventytwo (72) hours upon receipt of the notice to explain why the freeze order should be lifted. The AMLC has seventy-two (72) hours to dispose of the depositors explanation. If it fails to act within seventy-two (72) hours from receipt of the depositors explanation, the freeze order shall automatically be dissolved. The fifteen (15)-day freeze order of the AMLC may be extended upon order of the court, provided that the fifteen (15)-day period shall be tolled pending the courts decision to extend the period. No court shall issue a temporary restraining order or writ of injunction against any freeze order issued by the AMLC except the Court of Appeals or the Supreme Court.

LVIII. Briefly enumerate the steps for the different types of rehabilitation proceedings for sole proprietorships, partnerships and corporations provided in the Financial Rehabilitation and Insolvency Act.

R.A. 10142 Section 10. Liability of Individual Debtor, Owner of a Sole Proprietorship, Partners in a Partnership, or Directors and Officers. - Individual debtor, owner of a sole proprietorship, partners in a partnership, or directors and officers of a debtor shall be liable for double the value of the property sold, embezzled or disposed of or double the amount of the transaction involved, whichever is higher to be recovered for benefit of the debtor and the creditors, if they, having notice of the commencement of the proceedings, or having reason to believe that proceedings are about to be commenced, or in contemplation of the proceedings, willfully commit the following acts: (a) Dispose or cause to be disposed of any property of the debtor other than in the ordinary course of business or authorize or approve any transaction in fraud of creditors or in a manner grossly disadvantageous to the debtor and/or creditors; or (b) Conceal or authorize or approve the concealment, from the creditors, or embezzles or misappropriates, any property of the debtor. The court shall determine the extent of the liability of an owner, partner, director or officer under this section. In this connection, in case of partnerships and corporations, the court shall consider the amount of the shareholding or partnership or equity interest of such partner, director or officer, the degree of control of such partner, director or officer over the debtor, and the extent of the involvement of such partner, director or debtor in the actual management of the operations of the debtor.

LVII. Who composes the anti-money laundering council.

R.A. Section 7. Creation of Anti-Money Laundering Council (AMLC). 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.

Financial Rehabilitation and Insolvency Act Real Estate Investment Trust Law

LIX. What is a REAL ESTATE INVESTMENT TRUST? Enumerate the requisites to qualify as such. RA 9856 Real Estate Investment Trust or REIT is a stock corporation established in accordance with the Corporation Code of the Philippines and the rules and regulations promulgated by the Commission principally for the purpose of owning incomegenerating real estate assets. For purposes of clarity, a REIT, although designated as a trust, does not have the same technical meaning as trust under existing laws and regUlations but is used herein for the sole purpose of adopting the internationally accepted description of the company in accordance with global best practices. Implementing Rules and Regulations of REIT Act of 2009

The shares may be registered under a nominee and the nominee shall make available to the transfer agent the names of the shareholders in such frequency as may be necessary for the transfer agent to perform its basic functions. Compliance with the minimum public ownership requirement under this section shall be duly certified by the transfer agent upon listing, as of record date for any dividend declaration or any corporate action requiring shareholder approval and other relevant times as may be required by the Commission. b. Capitalization. A REIT shall have a minimum paid-up capital of Three Hundred Million Pesos (Php300,000,000.00) at the time of incorporation which can either be in cash and/or property. c. Independent Directors. At least one-third (1/3) or at least two (2), whichever is higher, of the board of directors of a REIT shall be independent directors. d. Organization and Governance. As a public company, the REIT shall have such organization and governance structure that is consistent with the Revised Code of Corporate Governance and pertinent provisions of the SRC and its IRR. The REIT shall hold such meetings as provided for in its Constitutive Documents pursuant to the Corporation Code. 5.2 Executive Compensation. The total annual compensation of all directors and Principal Officers of the REIT shall not exceed ten percent (10%) of the net income before regular corporate income tax of the REIT during the immediately preceding taxable year, and shall be governed by the disclosure requirements of PAS 24. 5.3 Fund Manager and Property Manager Fees. The REIT shall engage a Fund Manager and a Property Manager in accordance with these Rules. The fees received by the Fund Manager and the Property Manager from the REIT shall not exceed one percent (1%) of the Net Asset Value of the Assets under their respective management.

Section 5. Requirement. The REIT shall comply with the following requirements: 5.1 Body Corporate. a. Minimum Public Ownership. A REIT shall be a public company and to be considered as such, a REIT shall: (a) maintain its status as a listed company; and (b) upon and after listing, have at least one thousand (1,000) Public Shareholders each owning at least fifty (50) shares of any class of shares, and who, in the aggregate, own at least one-third (1/3) of the outstanding capital stock of the REIT. A REIT shall, from the time of incorporation, issue shares to, or record the transfer of all its shares into the name of shareholders, investors or, securities intermediary in the form of uncertificated shares. It shall engage the services of a duly licensed transfer agent to monitor subsequent transfer of the shares. Said registrar shall ensure that the shares are traceable to the names of the shareholders or investors and for their own benefit and not for the benefit of any of the non-public shareholders.