MAKE LEGAL OPINION

Facts: The City of Manila intends to construct a new building over a lot in Delpan, Tondo, which will be used to house the informal settlers in Baseco Compound. In initiating such project, the City of Manila, thus, needs the following parcels of land: (1) a two-hectare land covered by TCT No. T-12345 in the name of spouses Juan and Juanita Bonanza, and (2) a three-hectare land covered by TCT No. T-54321 registered in the name of Reynaldo Dela Cruz. The zonal value of the lands located in Delpan, Tondo is P10,000.00 per square meter, although the zonal valuation was last updated in 2014.

Upon investigation of the City Engineering Department of the City of Manila, however, it turned out that the land covered by TCT No. T-12345 was mortgaged by Spouses Juan and Juanita Bonanza to Bank of the Philippine Islands under entry number 12031991, and to the Philippine National Bank under entry number 03121991. There is also an uncanceled encumbrance over TCT No. T-12345 with entry number 19911203 in favor of Jose Protacio executed in January 2000 when Spouses Juan and Juanita Bonanza obtained a loan from him on the same year, although the loan was already paid. It was further found out that Jose Protacio died in May 2015 and was survived by his heirs, namely, Andres Protacio, Emilio Protacio, and Gabriela Protacio.

As to the land covered by TCT No. T-54321, it appears on the title that the same is mortgaged to Security Bank under entry number 19910312. It was further found out that the land covered by TCT No. T-54321 was already sold by Reynaldo Dela Cruz to Megawide Corporation, although the title of Reynaldo Dela Cruz was not yet cancelled and transferred to Megawide Corporation.

Additionally, when the engineers of the City of Manila made an ocular inspection of the properties that they intend to use for the project, they discovered that two (2) families were occupying certain portions of the lands covered by TCT Nos. T-12345 and T-54321, these are the families of Lilia Bahing and Lilo Morano.

Confused as to whom they will make the letter-offer for the expropriation of the land, the engineers of the City of Manila sent everyone a letter-offer for the purchase of the land. All of the letter-offers were rejected by the concerned persons, thus, the engineers of the City of Manila wrote a letter to the Legal Department of the City to render an opinion as to the proper course of action. In response, the Legal Department recommended the filing of an expropriation complaint in order to take the properties covered by TCT Nos. T-12345 and T-54321. However, since the zonal valuation of the lands in Delpan, Tondo is outdated, and considering the requirement under the law that the basis of zonal valuation should be the most recent ones, meaning at least three (3) years at the time of the filing of expropriation, some of the legal staff in the Legal Department are unsure as to whether there is a need to include the Bureau of Internal Revenue as party to the looming expropriation case.

You are a legal staff of the Legal Department of the City of Manila and you are being asked to render an opinion as to who will be impleaded in the expropriation case in order to take possession of the subject lands, i.e., parcels of land covered by TCT Nos. T-12345 and T-54321.

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Render a not more than three (3) page opinion and/or memorandum to the City Engineering Department of Manila, based on the given facts.

The opinion, as in any other legal documents, must contain specific bases and citations.

samples

DATE: 31 MARCH 2022 TO: MELISSA GONZALES Chief Legal Counsel Head Office, Banco Espanol RE: Requirements of a Foreign Bank to enter Philippine Banking System We refer to your request for a legal opinion on how the above-captioned case will be performed in accordance with the Philippine laws in establishing a foreign bank, as part of Banco Espanol's global expansion. Per our discussion, the following are the pertinent facts: 1. On 3 January 2022, the Board of Directors of Banco Espanol unanimously approved its global expansion including the establishment of a bank in the Philippines. 2. Banco Espanol is a commercial bank duly organized and constituted under the laws of Spain. Initially, we inquired whether Banco Espanol is a leading bank in Spain, to which Ms. Gonzales responded that Banco Espanol is one of the Top Ten (10) banks in Spain, as well as one of the Top Fifty (50) banks in Europe. 3. Following the initial conversation, Ms. Gonzales specifically requested the requirements under Philippine law for how a foreign bank may conduct its banking business in the Philippines and, if permitted, what limitation it has. The pertinent law relative to the issue at hand is the Foreign Banks Liberalization Act or otherwise known as Republic Act No. 7721 as amended by Republic Act No. 10641' which shall govern the entry of foreign banks in the Philippines. Section 2 of the amended law allows foreign banks to operate in the Philippines through any one of the following modes of entry. Section 2 of R. A. No. 7721 as amended by R.A. No. 10641 provides: "SEC. 2. Modes of Entry. - The Monetary Board may authorize foreign banks to operate in the Philippine banking system through any one of the following modes of entry: (i) by acquiring, purchasing or owning up to one hundred percent (100%) of the voting stock of an existing bank; (ii) by investing in up to one hundred percent (100%) of the voting stock of a new banking 1 Republic Act No. 10641 An act allowing the full entry of Foreign Banks in the Philippines, amending for the purpose of Republic Act No. 7721. subsidiary incorporated under the laws of the Philippines; or (iii) by establishing branches with full banking authority. 2 (emphasis supplied) A foreign bank interested in operating in the Philippines may choose from the modes of entry mentioned above, but is limited to only one mode of entry. Prior to the chosen mode of entry, the submission of the letter of application with supporting documents to the Office of the Governor, a copy of which is furnished to the Office of the Supervisory Policy Development (OSPD) of the Bangko Sentral ng Pilipinas (BSP). Furthermore, stated in Section 3 are the following factors to be considered in evaluating an application of a foreign bank to operate in the Philippines, subject to approval by the Monetary Board. Section 3 of R. A. No. 7721 as amended by R.A. No. 10641 provides: "SEC. 3. Guidelines for Approval. - In approving entry applications of foreign banks, the Monetary Board shall: (i) ensure geographic representation and complementation: (ii) consider strategic trade and investment relationships between the Philippines and the country of incorporation of the foreign bank; (iii) study the demonstrated capacity, global reputation for financial innovations and stability in a competitive environment of the applicant; (iv) see to it that reciprocity rights are enjoyed by Philippine banks in the applicant's country; and (v) consider willingness to fully share their technology.3 Only established, reputable and financially sound foreign banks+ shall be allowed entry in accordance with Section 2 of this Act. The foreign bank applicant must be widely-owned and publicly-listed in its country of origins unless the foreign bank applicant is owned and controlled by the government of its country of origin. "(emphasis supplied) Therefore, the foreign bank must comply with the five (5) factors of selection and the qualification requirements of an established, reputable and financially sound, widely-owned and publicly-listed. In case of the ownership of domestic bank, at least sixty percent (60%) of the resources or assets of the entire banking system are majority- owned and controlled by Filipinos in order to satisfy the criteria prescribed therein Section 2 allows 100% full entry of foreign banks but subject to only one mode of entry. The foreign bank then shall file with the Office of the Governor, Bangko Sentral, their application for authority to operate in the Philippines. 3 Section 3 are the following factors from (i) to (v) shall be considered in selecting foreign banks which will be allowed to enter the Philippine Banking System through R.A. No. 7721, as amended by R.A. No. 10641. 4 The determination of whether foreign bank is an established, reputable and financially sound foreign banks shall be based on the information derived from submitted documents as required. " A "publicly listed" bank means that the foreign bank applicant is widely-owned and publicly listed in the country of origin. It applies to the foreign bank itself. However, if it is wholly owned by a holding company which is publicly listed, then the listing requirement shall be applied to said parent holding company. The "publicly-listed" requirement, however, is not met by a foreign bank applicant that is owned and controlled by the government of its country of origin.Following the submission of application documents to meet the qualication requirements, the following items should be discussed in signicant detail: (i) the applicant bank's and its home country's contribution to the Philippine economy in terms of foreign direct investments and trade; (ii) contribution to the local banking industry; (iii) business model or corporate strategy that is consistent with Philippine laws and regulations; (iv) nancial capability; and (v) ownership structure. Moreover, the capital requirements required should not be less than the minimum capital required for domestic banks of the same bank category. Section 4 of R. A. No. 7721 as amended by R.A. No. 10641 reads: \"SEC. 4. Capital Requirements. (1) For locally Incorporated Subsidiaries\" The minimum capital required for locally incorporated subsidiaries of foreign banks shall be equal to that prescribed by the Monetary Board for domestic banks of the same category. (ii) For Foreign Bank Branches Foreign banks that shall be authorized to establish branches pursuant to Section 2(h) of this Act shall permanently assign capital of an amount not less than the minimum capital required for domestic banks of the same category. The permanently assigned capital shall be inwardly remitted and converted into Philippine currency.\" In the case at bar, Banco Espaol a commercial bank applying for a commercial banking (KB) authority shall be equivalent to at least the amount prescribed by the Monetary Board for KBs. More so, the limitation prescribed in the law include the following; (i) a foreign bank may only avail itself of only one (1) mode of entry; (ii) foreign bank branches may establish ve (5) sub-branches only in any location of their choice; (iii) allowed to bid and take part in foreclosure sales of real property but it cannot be transferred to a foreign bank due to constitutional limitation on ownership over lands to Philippine nationals only. Relative to the issue of the entry of foreign banks in the Philippines, in the case of Julie Parcon-Song u. Lilia B. Parson,El the Supreme Court held that the amendment law allowed the full entry of foreign banks in the Philippines, though it maintained the State policy to keep the nancial system effectively controlled by Filipinos. Notably, it gave authorized foreign banks the same functions, privileges, and limitations as domestic banks of the same category. Likewise, any right, privilege, or incentive granted to Philippine banks is extended to foreign banks. 5 For locally incorporated subsidiaries, a foreign bank subsidiary shall comply with the minimum capital and prudential capital ratios applicable to domestic banks of the same category as prescribed under BSP Circular No. 854 Series of 2014. 7 A foreign bank branch shall comply with the minimum capital and prudential capital ratios applicable to domestic banks of the same category as prescribed under BSP Circular No. 854 Series of 2014. 5 Julie Parcon-Song u. Lilia B. Parcon, GR. No. 199582, July 07, 2020