REPUBLIC ACT No.

1405

AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO, DEPOSITS WITH ANY

BANKING INSTITUTION AND PROVIDING PENALTY THEREFOR.

Purpose:

Section 1. It is hereby declared to be the policy of the Government to give encouragement to the people to
deposit their money in banking institutions and to discourage private hoarding so that the same may be
properly utilized by banks in authorized loans to assist in the economic development of the country.

Section 2. 1 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, except upon
written permission of the depositor, or in cases of impeachment, or upon order of a competent court in
cases of bribery or dereliction of duty of public officials, or in cases where the money deposited or invested
is the subject matter of the litigation.

Acts Prohibited by the Law:

Section 3. It shall be unlawful for any official or employee of a banking institution to disclose to any
person other than those mentioned in Section two hereof any information concerning said deposits.

Section 4. All Acts or parts of Acts, Special Charters, Executive Orders, Rules and Regulations which are
inconsistent with the provisions of this Act are hereby repealed.

Section 5. 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.

Section 6. This Act shall take effect upon its approval.

When Can Deposit Information Be Given:

Except upon written permission of the depositor, or in cases of impeachment, or upon order of a competent
court in cases of bribery or dereliction of duty of public officials, or in cases where the money deposited or
invested is the subject matter of the litigation.

REPUBLIC ACT No. 6426

AN ACT INSTITUTING A FOREIGN CURRENCY DEPOSIT SYSTEM IN THE PHILIPPINES,

AND FOR OTHER PURPOSES.

Section 1. Title.– This act shall be known as the "Foreign Currency Deposit Act of the Philippines."

Section 2. Authority to deposit foreign currencies. – Any person, natural or juridical, may, in accordance
with the provisions of this Act, deposit with such Philippine banks in good standing, as may, upon
application, be designated by the Central Bank for the purpose, foreign currencies which are acceptable as
part of the international reserve, except those which are required by the Central Bank to be surrendered in
accordance with the provisions of Republic Act Numbered two hundred sixty-five (Now Rep. Act No.
7653).

Section 3. Authority of banks to accept foreign currency deposits. – The banks designated by the Central
Bank under Section two hereof shall have the authority:

(1) To accept deposits and to accept foreign currencies in trust Provided, That numbered accounts
for recording and servicing of said deposits shall be allowed;

(2) To issue certificates to evidence such deposits;

(3) To discount said certificates;

(4) To accept said deposits as collateral for loans subject to such rules and regulations as may be
promulgated by the Central Bank from time to time; and

(5) To pay interest in foreign currency on such deposits.

Section 4. Foreign currency cover requirements. – Except as the Monetary Board may otherwise prescribe
or allow, the depository banks shall maintain at all times a one hundred percent foreign currency cover for
their liabilities, of which cover at least fifteen percent shall be in the form of foreign currency deposit with
the Central Bank, and the balance in the form of foreign currency loans or securities, which loans or
securities shall be of short term maturities and readily marketable. Such foreign currency loans may include
loans to domestic enterprises which are export-oriented or registered with the Board of Investments, subject
to the limitations to be prescribed by the Monetary Board on such loans. Except as the Monetary Board
may otherwise prescribe or allow, the foreign currency cover shall be in the same currency as that of the
corresponding foreign currency deposit liability. The Central Bank may pay interest on the foreign currency
deposit, and if requested shall exchange the foreign currency notes and coins into foreign currency
instruments drawn on its depository banks. (As amended by PD No. 1453, June 11, 1978.)

Depository banks which, on account of networth, resources, past performance, or other pertinent criteria,
have been qualified by the Monetary Board to function under an expanded foreign currency deposit system,
shall be exempt from the requirements in the preceding paragraph of maintaining fifteen percent (15%) of
the cover in the form of foreign currency deposit with the Central Bank. Subject to prior Central Bank
approval when required by Central Bank regulations, said depository banks may extend foreign currency
loans to any domestic enterprise, without the limitations prescribed in the preceding paragraph regarding
maturity and marketability, and such loans shall be eligible for purposes of the 100% foreign currency cover
prescribed in the preceding paragraph. (As added by PD No. 1035.) (Unique Feature)

Section 5. Withdrawability and transferability of deposits. – There shall be no restriction on the withdrawal
by the depositor of his deposit or on the transferability of the same abroad except those arising from the
contract between the depositor and the bank.

Section 6. Tax exemption. – All foreign currency deposits made under this Act, as amended by PD No.
1035, as well as foreign currency deposits authorized under PD No. 1034, including interest and all other
income or earnings of such deposits, are hereby exempted from any and all taxes whatsoever irrespective
of whether or not these deposits are made by residents or nonresidents so long as the deposits are eligible
or allowed under aforementioned laws and, in the case of nonresidents, irrespective of whether or not they
are engaged in trade or business in the Philippines. (As amended by PD No. 1246, prom. Nov. 21, 1977.)
Section 7. Rules and regulations. – The Monetary Board of the Central Bank shall promulgate such rules
and regulations as may be necessary to carry out the provisions of this Act which shall take effect after the
publications in the Official Gazette and in a newspaper of national circulation for at least once a week for
three consecutive weeks. In case the Central Bank promulgates new rules and regulations decreasing the
rights of depositors, rules and regulations at the time the deposit was made shall govern.

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.)

Section 9. Deposit insurance coverage. – The deposits under this Act shall be insured under the provisions
of Republic Act No. 3591, as amended (Philippine Deposit Insurance Corporation), as well as its
implementing rules and regulations: Provided, That insurance payment shall be in the same currency in
which the insured deposits are denominated.

Section 10. Penal provisions. – Any willful violation of this Act or any regulation duly promulgated by the
Monetary Board pursuant hereto shall subject the offender upon conviction to an imprisonment of not less
than one year nor more than five years or a fine of not less than five thousand pesos nor more than twenty-
five thousand pesos, or both such fine and imprisonment at the discretion of the court.

Section 11. Separability clause. – The provisions of this Act are hereby declared to be separable and in the
event one or more of such provisions are held unconstitutional, the validity of other provisions shall not be
affected thereby.

Section 12. Repealing clause. – All acts, executive orders, rules and regulations, or parts thereof, which are
inconsistent with any provisions of this Act are hereby repealed, amended or modified accordingly, without
prejudice, however, to deposits made thereunder.

Section 12-A. Amendatory enactments and regulations. – In the event a new enactment or regulation is
issued decreasing the rights hereunder granted, such new enactment or regulation shall not apply to foreign
currency deposits already made or existing at the time of issuance of such new enactment or regulation, but
such new enactment or regulation shall apply only to foreign currency deposits made after its issuance. (As
added by PD No. 1246, prom. Nov. 21, 1977.)

Section 13. Effectivity. – This Act shall take effect upon its approval.
PRESIDENTIAL DECREE No. 115 January 29, 1973

PROVIDING FOR THE REGULATION OF TRUST RECEIPTS TRANSACTIONS

Purpose of the Law:

Section 2. Declaration of Policy. It is hereby declared to be the policy of the state (a) to encourage and
promote the use of trust receipts as an additional and convenient aid to commerce and trade; (b) to provide
for the regulation of trust receipts transactions in order to assure the protection of the rights and enforcement
of obligations of the parties involved therein; and (c) to declare the misuse and/or misappropriation of goods
or proceeds realized from the sale of goods, documents or instruments released under trust receipts as a
criminal offense punishable under Article Three hundred and fifteen of the Revised Penal Code.

Trust Receipt Transaction:

Section 4. What constitutes a trust receipt transaction. A trust receipt transaction, within the meaning of
this Decree, is any transaction by and between a person referred to in this Decree as the entruster, and
another person referred to in this Decree as entrustee, whereby the entruster, who owns or holds absolute
title or security interests over certain specified goods, documents or instruments, releases the same to the
possession of the entrustee upon the latter's execution and delivery to the entruster of a signed document
called a "trust receipt" wherein the entrustee binds himself to hold the designated goods, documents or
instruments in trust for the entruster and to sell or otherwise dispose of the goods, documents or instruments
with the obligation to turn over to the entruster the proceeds thereof to the extent of the amount owing to
the entruster or as appears in the trust receipt or the goods, documents or instruments themselves if they are
unsold or not otherwise disposed of, in accordance with the terms and conditions specified in the trust
receipt, or for other purposes substantially equivalent to any of the following:

1. In the case of goods or documents, (a) to sell the goods or procure their sale; or (b) to manufacture
or process the goods with the purpose of ultimate sale: Provided, That, in the case of goods
delivered under trust receipt for the purpose of manufacturing or processing before its ultimate sale,
the entruster shall retain its title over the goods whether in its original or processed form until the
entrustee has complied fully with his obligation under the trust receipt; or (c) to load, unload, ship
or tranship or otherwise deal with them in a manner preliminary or necessary to their sale; or

2. In the case of instruments,

a) to sell or procure their sale or exchange; or

b) to deliver them to a principal; or

c) to effect the consummation of some transactions involving delivery to a depository or

register; or

d) to effect their presentation, collection or renewal

The sale of goods, documents or instruments by a person in the business of selling goods,
documents or instruments for profit who, at the outset of the transaction, has, as against the buyer,
 general property rights in such goods, documents or instruments, or who sells the same to the buyer
on credit, retaining title or other interest as security for the payment of the purchase price, does not
constitute a trust receipt transaction and is outside the purview and coverage of this Decree.

ACT NO. 1508 – AN ACT PROVIDING FOR THE MORTGAGING OF PERSONAL PROPERTY AND
FOR THE REGISTRATION OF THE MORTGAGES SO EXECUTED
Section 1. The short title of this Act shall be “The Chattel Mortgage Law.”
Sec. 2. All personal property shall be subject to mortgage, agreeably to the provisions of this Act, and a
mortgage executed in pursuance thereof shall be termed chattel mortgage.
Sec. 3. Chattel mortgage defined. – A chattel mortgage is a conditional sale of personal property as security
for the payment of a debt, or the performance of some other obligation specified therein, the condition being
that the sale shall be void upon the seller paying to the purchaser a sum of money or doing some other act
named. If the condition is performed according to its terms the mortgage and sale immediately become
void, and the mortgagee is thereby divested of his title.
Sec. 4. Validity. – A chattel mortgage shall not be valid against any person except the mortgagor, his
executors or administrators, unless the possession of the property is delivered to and retained by the
mortgagee or unless the mortgage is recorded in the office of the register of deeds of the province in which
the mortgagor resides at the time of making the same, or, if he resides without the Philippine Islands, in the
province in which the property is situated: Provided, however, That if the property is situated in a different
province from that in which the mortgagor resides, the mortgage shall be recorded in the office of the
register of deeds of both the province in which the mortgagor resides and that in which the property is
situated, and for the purposes of this Act the city of Manila shall be deemed to be a province.
Sec. 5. Form. – A chattel mortgage shall be deemed to be sufficient when made substantially in accordance
with the following form, and shall be signed by the person or persons executing the same, in the presence
of two witnesses, who shall sign the mortgage as witnesses to the execution thereof, and each mortgagor
and mortgagee, or, in the absence of the mortgagee, his agent or attorney, shall make and subscribe an
affidavit in substance as hereinafter set forth, which affidavit, signed by the parties to the mortgage as above
stated, and the certificate of the oath signed by the authority administering the same, shall be appended to
such mortgage and recorded therewith.
FORM OF CHATTEL MORTGAGE AND AFFIDAVIT.
“This mortgage made this ____ day of ______19____ by _______________, a resident of the municipality
of ______________, Province of ____________, Philippine Islands mortgagor, to ____________, a
resident of the municipality of ___________, Province of ______________, Philippine Islands, mortgagee,
witnesseth:
“That the said mortgagor hereby conveys and mortgages to the said mortgagee all of the following-
described personal property situated in the municipality of ______________, Province of ____________
and now in the possession of said mortgagor, to wit:
(Here insert specific description of the property mortgaged.)
“This mortgage is given as security for the payment to the said ______, mortgagee, of promissory notes for
the sum of ____________ pesos, with (or without, as the case may be) interest thereon at the rate of
___________ per centum per annum, according to the terms of __________, certain promissory notes,
dated _________, and in the words and figures following (here insert copy of the note or notes secured).
“(If the mortgage is given for the performance of some other obligation aside from the payment of
promissory notes, describe correctly but concisely the obligation to be performed.)
“The conditions of this obligation are such that if the mortgagor, his heirs, executors, or administrators shall
well and truly perform the full obligation (or obligations) above stated according to the terms thereof, then
this obligation shall be null and void.
“Executed at the municipality of _________, in the Province of ________, this _____ day of 19_____
____________________
(Signature of mortgagor.)
“In the presence of
“_________________
“_________________
(Two witnesses sign here.)
FORM OF OATH.
“We severally swear that the foregoing mortgage is made for the purpose of securing the obligation
specified in the conditions thereof, and for no other purpose, and that the same is a just and valid obligation,
and one not entered into for the purpose of fraud.”
FORM OF CERTIFICATE OF OATH.
“At ___________, in the Province of _________, personally appeared ____________, the parties who
signed the foregoing affidavit and made oath to the truth thereof before me.
“_____________________________”
(Notary public, justice of the peace, 1 or other officer, as the case may be.)
Sec. 6. Corporations. – When a corporation is a party to such mortgage the affidavit required may be made
and subscribed by a director, trustee, cashier, treasurer, or manager thereof, or by a person authorized on
the part of such corporation to make or to receive such mortgage. When a partnership is a party to the
mortgage the affidavit may be made and subscribed by one member thereof.
Sec. 7. Descriptions of property. – The description of the mortgaged property shall be such as to enable the
parties to the mortgage, or any other person, after reasonable inquiry and investigation, to identify the same.
If the property mortgaged be large cattle,” as defined by section one of Act Numbered Eleven and forty-
seven, 2 and the amendments thereof, the description of said property in the mortgage shall contain the
brands, class, sex, age, knots of radiated hair commonly known as remolinos, or cowlicks, and other marks
of ownership as described and set forth in the certificate of ownership of said animal or animals, together
with the number and place of issue of such certificates of ownership.
If growing crops be mortgaged the mortgage may contain an agreement stipulating that the mortgagor binds
himself properly to tend, care for and protect the crop while growing, and faithfully and without delay to
harvest the same, and that in default of the performance of such duties the mortgage may enter upon the
premises, take all the necessary measures for the protection of said crop, and retain possession thereof and
sell the same, and from the proceeds of such sale pay all expenses incurred in caring for, harvesting, and
selling the crop and the amount of the indebtedness or obligation secured by the mortgage, and the surplus
thereof, if any shall be paid to the mortgagor or those entitled to the same.
A chattel mortgage shall be deemed to cover only the property described therein and not like or substituted
property thereafter acquired by the mortgagor and placed in the same depository as the property originally
mortgaged, anything in the mortgage to the contrary notwithstanding.
Sec. 8. Failure of mortgagee to discharge the mortgage. – If the mortgagee, assign, administrator, executor,
or either of them, after performance of the condition before or after the breach thereof, or after tender of
the performance of the condition, at or after the time fixed for the performance, does not within ten days
after being requested thereto by any person entitled to redeem, discharge the mortgage in the manner
provided by law, the person entitled to redeem may recover of the person whose duty it is to discharge the
same twenty pesos for his neglect and all damages occasioned thereby in an action in any court having
jurisdiction of the subject-matter thereof.
Sec. 9-12. (inclusive) 3
Sec. 13. When the condition of a chattel mortgage is broken, a mortgagor or person holding a subsequent
mortgage, or a subsequent attaching creditor may redeem the same by paying or delivering to the mortgagee
the amount due on such mortgage and the reasonable costs and expenses incurred by such breach of
condition before the sale thereof. An attaching creditor who so redeems shall be subrogated to the rights of
the mortgagee and entitled to foreclose the mortgage in the same manner that the mortgagee could foreclose
it by the terms of this Act.
Sec. 14. Sale of property at public auction; Officer’s return; Fees; Disposition of proceeds. – The mortgagee,
his executor, administrator, or assign, may, after thirty days from the time of condition broken, cause the
mortgaged property, or any part thereof, to be sold at public auction by a public officer at a public place in
the municipality where the mortgagor resides, or where the property is situated, provided at least ten days’
notice of the time, place, and purpose of such sale has been posted at two or more public places in such
municipality, and the mortgagee, his executor, administrator, or assign, shall notify the mortgagor or person
holding under him and the persons holding subsequent mortgages of the time and place of sale, either by
notice in writing directed to him or left at his abode, if within the municipality, or sent by mail if he does
not reside in such municipality, at least ten days previous to the sale.
The officer making the sale shall, within thirty days thereafter, make in writing a return of his doings and
file the same in the office of the register of deeds where the mortgage is recorded, and the register of deeds
shall record the same. The fees of the officer for selling the property shall be the same as in the case of sale
on execution as provided in Act Numbered One hundred and ninety, 4 and the amendments thereto, and the
fees of the register of deeds for registering the officer’s return shall be taxed as a part of the costs of sale,
which the officer shall pay to the register of deeds. The return shall particularly describe the articles sold,
and state the amount received for each article, and shall operate as a discharge of the lien thereon created
by the mortgage. The proceeds of such sale shall be applied to the payment, first, of the costs and expenses
of keeping and sale, and then to the payment of the demand or obligation secured by such mortgage, and
the residue shall be paid to persons holding subsequent mortgages in their order, and the balance, after
paying the mortgages, shall be paid to the mortgagor or person holding under him on demand.
If the sale includes any “large cattle,” a certificate of transfer as required by section sixteen of Act
Numbered Eleven hundred and forty-seven 5 shall be issued by the treasurer of the municipality where the
sale was held to the purchaser thereof.
Sec. 15. 6, 6a
Sec. 16. This Act shall take effect on August first, nineteen hundred and six.
Summary of Act 1508
CHATTEL MORTGAGE
>Contract by virtue of which personal property is recorded in the Chattel Mortgage
Register as security for the performance of an obligation
CHARACTERISTICS
1. Accessory contract
2. Formal contract

WHAT MAKES IT DIFFERENT FROM A PLEDGE?

1. Delivery of the personal property to the mortgagee is not necessary
2. The registration in the Register is required by law
3. Procedure for the sale of the thing is different
4. If the property is foreclosed and there is excess, the amount goes to the debtor
5. If there is deficiency, the creditor may recover the deficiency
WHEN DO YOU DO A Chattel Mortgage OR PLEDGE?
> When property needs to be retained by the debtor, then opt for a chattel mortgage

Art. 2141. The provisions of this Code on pledge, insofar as they are not in conflict with the Chattel
Mortgage Law shall be applicable to chattel mortgages. (n)
LAWS GOVERNING CHATTEL MORTGAGE
1. Chattel mortgage law, Act 1508
2. Civil Code provisions
3. Revised Administrative Code
4. Revised Penal Code
OFFENSES INVOLVING CHATTEL MORTGAGE
1. Knowingly removing personal property mortgaged to any province or city other than the one
in which it was located at the time of the execution of the mortgage without the written consent
2. Selling or pledging personal property already mortgaged or any part thereof, under the terms of
the Chattel Mortgage Law without the consent of the mortgage written on the back of the
mortgage and duly recorded in the CM Register
REGISTRATION
> Registration shall be done in the Register of Deeds where the mortgagor resides
> And when the property is situated somewhere else, it needs to be registered also in the Register of
Deeds of the area where the property is situated
> Chattel mortgage would not be valid and binding as against third persons absent any registration
> If what is mortgaged is a car, registration with the LTO is
also needed. Absent this, again, it would not be binding and invalid as against third persons
FORM OF CONTRACT AS STATED IN THE LAW.
> Theoretically, the mortgagor may sign the contract alone
but practically, the mortgagee must sign also given that they both need to sign the affidavit of good
faith
AFFIDAVIT OF GOOD FAITH
> Part of the chattel mortgage contract wherein it is stated that the chattel mortgage has been
constituted to secure a principal obligation and not meant for fraud or any ill purpose
> It is possible to defraud using mortgage. You can take away property through mortgage
from an unsecured creditor.

FORMAL REQUIREMENT OF DESCRIPTION OF PROPERTY

> Attach a description or schedule of the properties mortgaged
> There is also the requirement of payment of registration fees and documentary stamp taxes
FORECLOSURE (SIMILAR BUT NOT IDENTICAL WITH REM) SECTION 14, CHATTEL
MORTGAGE LAW
1. There is a 30-day cooling off period before the public auction, from the time the condition is
broken
2. Notice—at least 10 days notice of the time, day, place, and purpose of such sale has been posted at 2
or more public places in such municipality. Personal notice or mail shall
also be given to the mortgagor or person holding under him and the persons holding subsequent
mortgages of the time and place of sale.
3. Sheriff should possess the property as he needs to deliver the same to the winning bidder. If the
mortgagor refuses to do so, the mortgagee can seek the help of the court. There could also
be a stipulation in the contract as well. But if the debtor is not willing and able, the loss is with the
creditor.
4. There is a 30-day equity of redemption period (payment of obligation)
5. After foreclosure, there could be recovery of deficiency,
but there is Recto Law (1484) pertaining to sale of
personal property in installments and there is a Chattel Mortgage to secure payment of price.
AN ACTION FOR SPECIFIC PERFORMANCE IS TANTAMOUNT TO THE ABANDONMENT OF
RIGHTS OF MORTGAGEE
APPLICATION OF PROCEEDS OF FORECLOSURE
1. Costs
2. Obligation itself. Pay first the interest and then the principal. If there is penalty, then pay it first.
3. Junior encumbrances
4. Owner
INSTALLMENT SALES LAW
What is the Installment Sales Law?
Commonly known as the Recto Law. It is embodied in Art. 1484 of the NCC which provides for the
remedies of a seller in the contracts of sale of personal property by installments.
Note: Art. 1484 of the NCC incorporates the provisions of Act No. 4122 passed by the Philippine
Legislature on Dec. 9, 1939, known as the "Installment Sales Law" or the "Recto Law," which then amended
Art. 1454 of the Civil Code of 1889.

To what does the Recto Law apply?

This law covers contracts of sale of personal property by installments (Act No. 4122). It is also applied to
contracts purporting to be leases of personal property with option to buy, when the lessor has deprived the
lessee of the possession or enjoyment of the thing. (PCI Leasing and Finance Inc. v. Giraffe-X Creative
Imaging, Inc., G.R. No. 142618, July 12, 2007)

What are the alternative remedies in case of sale of personal property in installments?
1. Specific Performance: Exact fulfillment should the buyer fail to pay
General Rule: If availed of, the unpaid seller cannot anymore choose other remedies;
Exception: if after choosing, it has become impossible, rescission may be pursued
2. Rescission: Cancel the sale if buyer fails to pay 2 or more installments Deemed chosen when:
a. Notice of rescission is sent
b. Takes possession of subject matter of sale
c. Files action for rescission
3. Foreclosure: Foreclose on chattel mortgage if buyer fails to pay 2 or more installments
General Rule: Actual foreclosure is necessary to bar recovery of balance - Extent of barring effect: purchase
price
Exception: Mortgagor refuses to deliver property to effect foreclosure; expenses incurred in attorneys fees,
etc.
ACT NO. 3135 - AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL POWERS
INSERTED IN OR ANNEXED TO REAL-ESTATE MORTGAGES

Section 1. When a sale is made under a special power inserted in or attached to any real-estate mortgage
hereafter made as security for the payment of money or the fulfillment of any other obligation, the
provisions of the following election shall govern as to the manner in which the sale and redemption shall
be effected, whether or not provision for the same is made in the power.
Sec. 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore
referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of said
debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under
which the property is sold, may redeem the same at any time within the term of one year from and after
the date of the sale; and such redemption shall be governed by the provisions of sections four hundred
and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so far as
these are not inconsistent with the provisions of this Act.

Sec. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First
Instance of the province or place where the property or any part thereof is situated, to give him possession
thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property
for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without
violating the mortgage or without complying with the requirements of this Act. Such petition shall be
made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the
property is registered, or in special proceedings in the case of property registered under the Mortgage Law
or under section one hundred and ninety-four of the Administrative Code, or of any other real property
encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any
existing law, and in each case the clerk of the court shall, upon the filing of such petition, collect the fees
specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and
ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon
approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in
which the property is situated, who shall execute said order immediately.

VOLUNTARY INSOLVENCY,

Insolvency Law- ACT NO. 1956

KINDS OF INSOLVENCY

1. 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
2. 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

STEPS IN VOLUNTARY INSOLVENCY

1. Filing of the petition by the debtor praying for the declaration of insolvency
2. Issuance of order of adjudication declaring the petitioner insolvent
3. Publication and service of the order
4. Meeting of the creditors to elect the assignee in insolvency

5. Conveyance of the debtor’s property by the clerk of court to the assignee

6. Liquidation of the debtor’s assets and payment of his debts
7. Composition, if agreed upon
8. Discharge of the debtor on his application, except a corporation
9. Objection, if any, to the discharge
10. Appeal to the SC in certain cases

REQUISITES OF PETITION FOR VOLUNTARY INSOLVENCY THE PETITION WHICH MUST BE

VERIFIED, IS TO BE FILED—

1. By an insolvent debtor

2. Owing debts exceeding in amount of the sum of P1000

3. In the RTC of the province or city in which he has resided for 6 months next preceding the filing of
such petition

4. Setting forth in his petition the following

a. His place of residence
b. The period of residence therein immediately prior to filing said petition
c. His inability to pay all his debts in full
d. His willingness to surrender all his property, estate, and effects not exempt from execution
for
the benefit of creditors
e. An application to be adjudged an insolvent
EFFECT OF FILING OF PETITION

 Once the petition is filed, it ipso facto takes away and deprives the debtor petitioner of the
right to do or commit any act of preference as to creditors, pending the final adjudication

DOCUMENTS TO ACCOMPANY THE PETITION

1. A verified schedule must contain—

a. A full and true statement of all debts and liabilities of the insolvent debtor
b. An outline of the facts giving rise or which might
give rise to a cause of action against such insolvent debtor

2. A verified inventory which must contain—

a. An accurate description of all the personal and real property of the insolvent exempt or not from
execution including a statement as of its value, location and encumbrances thereon

b. An outline of the facts giving rise or which might

give rise to a right of action in favor of the insolvent debtor

FILING OF SCHEDULE AND INVENTORY, JURISDICTIONAL

 On filing a petition for a discharge from his debts, an

insolvent is required to present a verified schedule of liabilities and a verified inventory of his
properties
 The presentation of such documents stating the amount of
each creditor’s claim is a jurisdictional requirement,
without the proper performance of which his subsequent discharge will be of no avail

EFFECT OF ERRORS IN DESCRIPTION OR OMISSION OF PROPERTY IN INVENTORY

 That the property is erroneously or ambiguously described

in the insolvent’s inventory will not affect the title of purchasers in the insolvency proceedings. All
the property of the insolvent passes to his assignee and is administered
in the insolvency proceedings regardless of errors in the insolvency.
 If the insolvent omits property from his inventory, through
either mistake or fraud, it is the duty of the assignee to
have the inventory amended so as to include it and take possession and administer it
 Even property exempt from execution must be included in order to preclude
possible fraudulent omissions under the pretext that such property is exempt. But where the
petitioner didn’t attach an inventory to its petition for insolvency, alleging under oath that it had no
property to inventory, the lack of inventory was held not fatal to the
petition because it was assumed, until proven otherwise, that the petitioner was stating the truth.

EFFECT OF COURT ORDER DECLARING DEBTOR INSOLVENT

1. All the assets of the debtor not exempt from execution are taken possession of by the sheriff until the
appointment of a receiver or assignee
2. The payment to the debtor of any debts due to him and the delivery to the debtor or to any
person for him of any property belonging to him, and the transfer of any property to him are
forbidden
3. All civil proceedings pending against the insolvent debtor shall be stayed
4. Mortgages or pledges, attachments or executions on property of the debtor duly recorded and
not dissolved are not, however, affected by the order

IF YOU ARE THE DEBTOR, WHY WOULD YOU FILE FOR INSOLVENCY?

 The debtor will get a discharge

 A corporation doesn’t get a discharge
 The partners in a partnership will get a discharge

Insolvency Law

ACT NO. 1956

SECTION 14. Application. — An insolvent debtor, owing debts exceeding in amount the sum of
one thousand pesos, may apply to be discharged from his debts and liabilities by petition to the Court of
First Instance of province or city in which he has resided for six months next preceding the filing of
such petition. In his petition he shall set forth his of
residence, the period of his residence therein immediately prior to filing said petition, his inability to
pay all his debts in full, his willingness to surrender all his property, estate, and effects not exempt from
execution for the benefit of his creditors, and an application to be adjudged an insolvent.
He shall annex to his petition a schedule and inventory in the form herein-
after provided. The filing of such petition shall be an act of insolvency.
SECTION 15. Statement of debts and liabilities. — Said schedule must contain a full and true
statement of all his debts and liabilities, together with a list of all those to
whom, to the best of his knowledge and belief, said debts or
liabilities are due, the place of residence of his creditors
and the sum due each the nature of the indebtedness or
liability and whether founded on written security,
obligation, contract or otherwise, the true cause and consideration thereof, the time and
place when and where
such indebtedness or liability accrued, a declaration of any existing pledge, lien, mortgage, judgment, or
other security for the payment of the debt or liability, and an outline of the
facts giving rise or which might give rise to a cause of action against such insolvent debtor.

SECTION 16. Description of real and personal property.

Said inventory must contain, besides the creditors, an
accurate description of all the real and personal property,
estate, and effects of the petitioner, including his homestead, if any, together with a statement of
the value of each item of said property, estate, and effects and its
location, and a statement of the encumbrances thereon. All property exempt by law from execution 2 shall
be set out in said inventory with a statement of its valuation, location,
and the encumbrances thereon, if any. The inventory shall
contain an outline of the facts giving rise, or which might
give rise, to a right of action in favor of the insolvent
debtor.

SECTION 17. Verification, form of . — The petition, schedule, and inventory must be verified
by the affidavit of the petitioner, annexed thereto, and shall be in form
substantially as follows: "I, _______________., do
solemnly swear that the schedule and inventory now delivered by me contain a full, correct, and
true discovery of all my debts and liabilities and of all goods, effects, estate,
and property of whatever kind or class to me in any way
belonging. The inventory also contains a full, true and correct statement of all debts owing or due to
me, or to any person or persons in trust for me and of all securities and contracts whereby any money
may hereafter become due or
payable to me or by or through which any benefit or advantage whatever may accrue to me or to
my use, or to any other person or persons in trust for me. The schedule
contains a clear outline of the facts giving rise, or which
might give rise, to a cause of action against me, and the
inventory contains an outline of the facts giving rise, or
which might give rise, to any cause of action in my favor. I
had no lands, money, stock, or estate, reversion, or expectancy, or property of any kind, except
that set forth in
said inventory. I have no instance created or acknowledged
a debt for a greater sum than I honestly and truly owe. I have not, directly or indirectly, concealed,
fraudulently sold,
or otherwise fraudulently disposed of, any part of my real or personal property, estate, effects, or
rights of action, and I have not in any way compounded with any of my creditors
in order to secure such creditors, or to receive or to accept any profit or advantage therefrom, or to
defraud or deceive in any manner any creditor to whom I am indebted. So help
me God."

SECTION 18. Order of court declaring petitioner insolvent; Publication notice. — Upon receiving and
filing said petition, schedule, and inventory, the court, or the judge thereof in
vacation, shall make an order declaring the petitioner insolvent, and directing the sheriff of the
province or city in which the petition is filed to take possession of, and safely
keep, until the appointment of a receiver or assignee, all
the deeds, vouchers, books of account, papers, notes,
bonds, bills, and securities of the debtor, and all his real
and personal property, estate, and effects, except such as
may be by law exempt from execution. 3 Said order shall further forbid the payment to the debtor
of any debts due to him and the delivery to the debtor, or to any person for him,
and the transfer of any property by him, and shall further
appoint a time and place for a meeting of the creditors to choose an assignee of the estate. Said
order shall designate a newspaper of general circulation published in the
province or city in which the petition is filed, if there be
one, and if there be none, in a newspaper which, in the opinion of the judge, will best give notice to
the creditors of
the said insolvent, and in the newspaper so designated said order shall be published 4 as often as may be
prescribed by the court or the judge The time appointed for the election of
an assignee shall not be less than two, nor more than eight, weeks from the date of the order of
adjudication. Upon the granting of said order all civil proceedings pending against
said insolvent shall be stayed. When a receiver is
appointed, or an assignee chosen, as provided in this Act,
the sheriff shall thereupon deliver to such receiver or
assignee chosen, as provided in this Act, the sheriff shall thereupon deliver to such receiver or
assignee, as the case may be, all the property, assets, and belongings of the insolvent which have
come into his possession, and he shall be allowed and paid as compensation for his services the
same expenses and fees as would by law be collectible if
the property had been levied upon and safely kept under attachment.

SECTION 19. Publication of order. — A copy of said order shall immediately be published 5 by the
clerk of said court, in the newspaper designated therein, for the number of
times and as prescribed by the court or the judge thereof,
and a copy of said order shall be delivered personally or
sent by the clerk forthwith by registered mail, postage prepaid, to all creditors named in the schedule.
There shall be deposited, in addition to twenty-four pesos, which shall be received by the clerk on
commencing such proceedings, a sum of money sufficient to defray the expense of the
publication ordered by the court, necessary postage, and
ten centavos for each copy, to be delivered personally or mailed to the creditors, which last-
named sum is hereby constituted the legal fee of the clerk for the personal delivery or mailing
required by this section.

REPUBLIC ACT No. 10142 AN ACT PROVIDING FOR THE REHABILITATION OR

LIQUIDATION OF FINANCIALLY DISTRESSED ENTERPRISES AND INDIVIDUALS

Be it enacted by the Senate and House of Representatives of the Philippines in Congress

assembled:

Purpose of the Law:

Section 1. Title. - This Act shall be known as the "Financial Rehabilitation and Insolvency Act
(FRIA) of 2010".

Section 2. Declaration of Policy. - It is the policy of the State to encourage debtors, both juridical
and natural persons, and their creditors to collectively and realistically resolve and adjust
competing claims and property rights. In furtherance thereof, the State shall ensure a timely, fair,
transparent, effective and efficient rehabilitation or liquidation of debtors. The rehabilitation or
liquidation shall be made with a view to ensure or maintain certainly and predictability in
commercial affairs, preserve and maximize the value of the assets of these debtors, recognize
creditor rights and respect priority of claims, and ensure equitable treatment of creditors who are
similarly situated. When rehabilitation is not feasible, it is in the interest of the State to facilities a
speedy and orderly liquidation of these debtor's assets and the settlement of their obligations.

THE SECURITIES REGULATION CODE

Section 3. Definition of Terms. - 3.1. "Securities" are shares, participation or interests in a

corporation or in a commercial enterprise or profit-making venture and evidenced by a certificate,
contract, instruments, whether written or electronic in character. It includes:

(a) Shares of stocks, bonds, debentures, notes evidences of indebtedness, asset-backed securities;
(b) Investment contracts, certificates of interest or participation in a profit sharing agreement,
certifies of deposit for a future subscription;

(c) Fractional undivided interests in oil, gas or other mineral rights;

(d) Derivatives like option and warrants;

(e) Certificates of assignments, certificates of participation, trust certificates, voting trust

certificates or similar instruments

(f) Proprietary or nonproprietary membership certificates in corporations; and

(g) Other instruments as may in the future be determined by the Commission.

CHAPTER III REGISTRATION OF SECURITIES

Section 8. Requirement of Registration of Securities.

8.1. Securities shall not be sold or offered for sale or distribution within the Philippines, without a
registration statement duly filed with and approved by the Commission. Prior to such sale,
information on the securities, in such form and with such substance as the Commission may
prescribe, shall be made available to each prospective purchaser.

8.2. The Commission may conditionally approve the registration statement under such terms as it
may deem necessary.
8.3. The Commission may specify the terms and conditions under which any
written communication, including any summary prospectus, shall be deemed
not to constitute an offer for sale under this Section.
8.4. A record of the registration of securities shall be kept in Register Securities in which shall be
recorded orders entered by the Commission with respect such securities. Such register and all
documents or information with the respect to the securities registered therein shall be open to
public inspection at reasonable hours on business days.
8.5. The Commission may audit the financial statements, assets and other information of firm
applying for registration of its securities whenever it deems the same necessary to ensure full
disclosure or to protect the interest of the investors and the public in general.

INSIDER
3.8. "Insider" means (a) the issuer; (b) a director or officer (or any person performing similar functions) of,
or a person controlling the issuer; 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 self-regulatory 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.
Section 27. Insider’s Duty to Disclose When Trading. – 27.1. It shall be unlawful for an insider to sell or
buy a security of the issuer, while in possession of material information with respect to the issuer or the
security that is not generally available to the public, unless: (a) The insider proves that the information was
not gained from such relationship; or (b) If the other party selling to or buying from the insider (or his agent)
is identified, the insider proves: (I) that he disclosed the information to the other party, or (ii) that he had
reason to believe that the other party otherwise is also in possession of the information. A purchase or sale
of a security of the issuer made by an insider defined in Subsection 3.8, or such insider’s spouse or relatives
by affinity or consanguinity within the second degree, legitimate or common-law, shall be presumed to
have been effected while in possession of material nonpublic information if transacted after such
information came into existence but prior to dissemination of such information to the public and the lapse
of a reasonable time for market to absorb such information: Provided, however, That this presumption shall
be rebutted upon a showing by the purchaser or seller that he was aware of the material nonpublic
information at the time of the purchase or sale.
27.2. For purposes of this Section, information is "material nonpublic" if: (a) It has not been generally
disclosed to the public and would likely affect the market price of the security after being disseminated to
the public and the lapse of a reasonable time for the market to absorb the information; or (b) would be
considered by a reasonable person important under the circumstances in determining his course of action
whether to buy, sell or hold a security.
27.3. It shall be unlawful for any insider to communicate material nonpublic information about the issuer
or the security to any person who, by virtue of the communication, becomes an insider as defined in
Subsection 3.8, where the insider communicating the information knows or has reason to believe that such
person will likely buy or sell a security of the issuer whole in possession of such information.
27.4. (a) It shall be unlawful where a tender offer has commenced or is about to commence for: (i) Any
person (other than the tender offeror) who is in possession of material nonpublic information relating to
such tender offer, to buy or sell the securities of the issuer that are sought or to be sought by such tender
offer if such person knows or has reason to believe that the information is nonpublic and has been acquired
directly or indirectly from the tender offeror, those acting on its behalf, the issuer of the securities sought
or to be sought by such tender offer, or any insider of such issuer; and (ii) Any tender offeror, those acting
on its behalf, the issuer of the securities sought or to be sought by such tender offer, and any insider of such
issuer to communicate material nonpublic information relating to the tender offer to any other person where
such communication is likely to result in a violation of Subsection
27.4 (a)(I). (b) For purposes of this subsection the term "securities of the issuer sought or to be sought by
such tender offer" shall include any securities convertible or exchangeable into such securities or any
options or rights in any of the foregoing securities.

Section 38. Independent Directors. – Any corporation with a class of equity securities listed for trading
on an Exchange or with assets in excess of Fifty million pesos (P50,000,000.00) and having two hundred
(200) or more holders, at least of two hundred (200) of which are holding at least one hundred (100) shares
of a class of its equity securities or which has sold a class of equity securities to the public pursuant to an
effective registration statement in compliance with Section 12 hereof shall have at least two (2) independent
directors or such independent directors shall constitute at least twenty percent (20%) of the members of
such board whichever is the lesser. For this purpose, an "independent director" shall mean a person other
than an officer or employee of the corporation, its parent or subsidiaries, or any other individual having a
relationship with the corporation, which would interfere with the exercise of independent judgement in
carrying out the responsibilities of a director.

Section 54. Administrative Sanctions. –

54.1. If, after due notice and hearing, the Commission finds that: (a) There is a violation of this Code, its
rule, or its orders; (b) Any registered broker or dealer, associated person thereof has failed reasonably to
supervise, with a view to preventing violations, another person subject to supervision who commits any
such violation; (c) Any registrant or other person has, in a registration statement or in other reports,
applications, accounts, records or documents required by law or rules to be filed with the Commission,
made any untrue statement of a material fact, or omitted to state any material fact required to be stated
their or necessary to make the statements therein not misleading; or, in the case of an underwriter, has
failed to conduct an inquiry with reasonable diligence to insure that a registration statement is accurate
and complete in all material respects; or (d) Any person has refused to permit any lawful examinations
into its affairs, it shall, in its discretion, and subject only to the limitations hereinafter prescribed, impose
any or all of the following sanctions as may be appropriate in light of the facts and circumstances: (i)
Suspension, or revocation of any registration for the offering of securities; (ii) A fine of no less than Ten
thousand pesos (P10,000.00) nor more than One million pesos (P1,000,000.00) plus not more than Two
thousand pesos (P2,000.00) for each day of continuing violation; (iii) In the case of a violation of Sections
19.2, 20, 24, 26 and 27, disqualification from being an officer, member of the Board of Directors, or person
performing similar functions, of an issuer required to file reports under Section 17 of this Code or any
other act, rule or regulation administered by the Commission; (iv) In the case of a violation of Section 34,
a fine of no more than three (3) times the profit gained or loss avoided as result of the purchase, sale or
communication proscribed by such Section, and (v) Other penalties within the power of the Commission
to impose.
54.2. The imposition of the foregoing administrative sanctions shall be without prejudice to the filing of
criminal charges against the individuals responsible for the violation.
54.3. The Commission shall have the power to issue writs of execution to enforce the provisions of the
Section and to enforce payment of the fees and other dues collectible under this Code. Section 55.
Sec 55. Settlement Offers. –
55.1. At any time, during an investigation or proceeding under this Code, parties being investigated and/or
charged may propose in writing an offer of settlement with the Commission.
55.2. Upon receipt of such offer of settlement, the Commission may consider the offer based on timing,
the nature of the investigation or proceeding, and the public interest.
55.3. The Commission may only agree to a settlement offer based on its findings that such settlement is
in the public interest. Any agreement to settle shall have no legal effect until publicly disclosed. Such
decision may be made without a determination of guilt on the part of the person making the offer.
55.4. The Commission shall adopt rules and procedures governing the filing, review, withdrawal, form of
rejection and acceptance of such offers.

INTELECTUAL PROPERTY LAW (R.A. 8923)

Purpose

SECTION 1. Title. - This Act shall be known as the “Intellectual Property Code of the
Philippines.”

SECTION 2. Declaration of State Policy. - The State recognizes that an effective intellectual and
industrial property system is vital to the development of domestic and creative activity, facilitates
transfer of technology, attracts foreign investments, and ensures market access for our products. It
shall protect and secure the exclusive rights of scientists, inventors, artists and other gifted citizens
to their intellectual property and creations, particularly when beneficial to the people, for such
periods as provided in this Act.

The use of intellectual property bears a social function. To this end, the State shall promote the
diffusion of knowledge and information for the promotion of national development and progress
and the common good.

It is also the policy of the State to streamline administrative procedures of registering patents,
trademarks and copyright, to liberalize the registration on the transfer of technology, and to
enhance the enforcement of intellectual property rights in the Philippines. (n)
SECTION 3. International Conventions and Reciprocity. - Any person who is a national or who is domiciled
or has a real and effective industrial establishment in a country which is a party to any convention, treaty
or agreement relating to intellectual property rights or the repression of unfair competition, to which the
Philippines is also a party, or extends reciprocal rights to nationals of the Philippines by law, shall be entitled
to benefits to the extent necessary to give effect to any provision of such convention, treaty or reciprocal
law, in addition to the rights to which any owner of an intellectual property right is otherwise entitled by
this Act. (n)
Coverage

SECTION 4. Definitions. - 4.1. The term “intellectual property rights” consists of:

a) Copyright and Related Rights;

b) Trademarks and Service Marks;

c) Geographic Indications;

d) Industrial Designs;

e) Patents;

f) Layout-Designs (Topographies) of Integrated Circuits; and

g) Protection of Undisclosed Information (n, TRIPS).

Penalties

SECTION 217. Criminal Penalties. - 217.1. Any person infringing any right secured by provisions
of Part IV of this Act or aiding or abetting such infringement shall be guilty of a crime punishable
by:

(a) Imprisonment of one (1) year to three (3) years plus a fine ranging from Fifty thousand pesos
(P50,000) to One hundred fifty thousand pesos (P150,000) for the first offense.

(b) Imprisonment of three (3) years and one (1) day to six (6) years plus a fine ranging from One
hundred fifty thousand pesos (P150,000) to Five hundred thousand pesos (P500,000) for the
second offense.

(c) Imprisonment of six (6) years and one (1) day to nine (9) years plus a fine ranging from Five
hundred thousand pesos (P500,000) to One million five hundred thousand pesos (P1,500,000) for
the third and subsequent offenses.

(d) In all cases, subsidiary imprisonment in cases of insolvency.

217.2. In determining the number of years of imprisonment and the amount of fine, the court shall
consider the value of the infringing materials that the defendant has produced or manufactured and
the damage that the copyright owner has suffered by reason of the infringement.

217.3. Any person who at the time when copyright subsists in a work has in his possession an
article which he knows, or ought to know, to be an infringing copy of the work for the purpose of:

(a) Selling, letting for hire, or by way of trade offering or exposing for sale, or hire, the article;

(b) Distributing the article for purpose of trade, or for any other purpose to an extent that will
prejudice the rights of the copyright owner in the work; or

(c) Trade exhibit of the article in public, shall be guilty of an offense and shall be liable on
conviction to imprisonment and fine as above mentioned. (Sec. 29, P.D. No. 49a)