manual of the legal services unit table of contents glossary manual.pdf · manual of the legal...

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MANUAL OF THE LEGAL SERVICES UNIT

TABLE OF CONTENTS

GLOSSARY INTRODUCTION

A. Objectives of the Manual

B. Scope of the Manual

C. Organizational Structure of the Unit

D. Functions of the Unit

CHAPTER I -- LEGAL REVIEW AND DOCUMENT DRAFTING

A. General Guidelines

B. Documentation Requirements

C. Internal Procedures

CHAPTER II – CONDUCT OF LEGAL RESEARCH AND RENDERING LEGAL OPINIONS

A. Written Opinion

B. Verbal Opinion

CHAPTER III – CASE HANDLING

A. General Guidelines

B. Collection Cases

C. Collection Case Flowchart

D. Extrajudicial Foreclosure of Real Estate Mortgage

E. EJF Case Flowchart

CHAPTER IV – OTHER FUNCTIONS OF THE LSU

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GLOSSARY

Collateral

Property or other assets that a borrower offers a lender to secure a loan. If the borrower stops making the promised loan payments, the lender can seize the collateral to recoup its losses.

Demand letter

Formal letter demanding payment or some other action from another party. A demand letter is sent usually to settle the matter without litigation or to put pressure on the other party.

Estafa

Estafa as defined by the Revised Penal Code is committed by a person who defrauds another causing him to suffer damage, by any of the means enumerated in Art. 315 of the Revised Penal Code.

Extrajudicial Foreclosure

Procedure by which real property may be foreclosed by the creditor/ mortgagee by filing the petition before the Clerk of Court to secure attendance of the Sheriff who conducts the public sale.

Lease agreement

Formal document that identifies the lessor, lessee, and the leased asset or property; states lease term and fee (rent), and detailed terms and conditions of the lease agreement.

Memoranda of Agreement/ Understanding

A Memorandum of Agreement (MOA) is a document whereby parties define a particular project goals or objective, their respective roles and participation in the project or objective, bind themselves to pursue these goals and the sanctions, if any for failure to comply with the terms of the MOA. A Memorandum of Understanding on the other hand is a document which indicates a mutual understanding between the parties as regards a particular project or endeavor, not necessarily creating a legal relationship among them.

Promissory note

a written promise to pay at a fixed or determinable future time a sum of money to a specified individual or to bearer

Quit claim

A document signed that formally releases or relinquishes a legal claim to a right or ownership.

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Real Estate Mortgage

A legal agreement that conveys the conditional right of ownership on an asset or property by its owner (the mortgagor) to a lender (the mortgagee) as security for a loan. The lender's security interest is recorded in the register of title documents to make it public information, and is voided when the loan is repaid in full.

Release Waiver

A waiver or release gives up a right, such as releasing one from his/her liability for harm or damage that may occur from performing under a contract, or participating in an activity. The release acts as an assurance to the person requesting the release that they will not be subjected to litigation resulting from the signing party's informed and consensual acts.

Subpoena/ Subpoena duces tecum

A process directed to a person requiring him to attend and to testify at the hearing or the trial of an action, or at any investigation conducted by competent authority, or for the taking of his deposition. It may also require him to bring with him any books, documents, or other things under his control, in which case it is called a subpoena duces tecum

Voluntary Surrender

A document signifying the client’s undertaking to voluntarily surrender the equipment subject of the loan to the company in the event of default

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INTRODUCTION

A. Objectives of the Manual

This Manual was prepared and designed to serve as a reference and guide for the other

LLC units on the applicable systems and procedures in regard to matters, accounts and

other concerns to be endorsed to the LSU.

The manual shall serve as reference tool for employees of the unit. It also serves to

inform and guide other LLC units on the organization, functions, procures being used by

the LSU on Written Legal and Verbal Opinions, case handling for Collection and Extra

Judicial Foreclosure of Real Estate Mortgage.

B. Scope of the Manual

This Manual contains the policies, detailed procedures and internal control measures on

how a particular process or activity is carried out by the LSU. This Manual shall be

supplemented further by internal guidelines and directives issued by the Management.

C. Organizational Structure

The LSU reports directly to the Office of the President and sits in the Management

Committee along with other Unit heads. The LSU is composed of a lawyer, a paralegal

and a legal secretary.

D. Functions of the Unit

The Legal Counsel

The Legal Counsel has been deputized by the OGCC to handle the prosecution of

collection cases, file complainants before the city prosecutor’s office and thereafter

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appear as the private prosecutor for the criminal cases, and such other processes which

may require legal representation.

The Legal Counsel leads in the Preparation of Case pleadings

The Legal Counsel represents LLC in court appearances

The Legal Counsel is a member of the Management Committee, the Bids and

Awards Committee and performs and all other tasks assigned by the President of

the Corporation

LSU Paralegal

The LSU paralegal assists the Legal Counsel in all stages of corporate transactions and

with the preparation of documents such as legal briefs, helping with research for cases,

gathering necessary documents for trials, submitting paperwork to courthouses as well

as other documents necessary to comply with national and local regulations in the

conduct of business activities. The LSU Paralegal also assists in gathering information to

aid LLC cases. Among the tasks of a paralegal is to prepare draft responses of the unit

and liaise with other LLC units on behalf of the counsel and the LSU.

LSU Legal Secretary

The LSU Legal Secretary’s tasks include overseeing all clerical tasks that are necessary

for keeping the unit running efficiently and able to meet the demands of other LLC

units. Legal secretaries prepare documents, including, court subpoenas, spreadsheets

and other office-related letters. LSU legal Secretary is tasked to organize and maintain

all legal files kept on-site and maintain electronic-filing databases. Other duties may

include scheduling counsel’s appointments, answering calls, taking notes during legal

meetings and maintaining the unit’s legal research references.

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ORGANIZATIONAL CHART

Office of the President

Management Committee

Unit Heads (Legal Services Unit)

Legal Secretary

(Legal Services Unit) Paralegal

(Legal Services Unit)

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Chapter I - Legal Review and Document Drafting

A. Prior to any loan release or availment, the loan documents (including the collateral

documents, Secretary’s Certificates, Notice of Award) shall be reviewed by the LSU as to

their legal sufficiency. The legal review shall ensure that all pertinent documents are in

order and duly executed/signed by the authorized signatories.

B. The loan documents must be tallied against the approved CFP and the resolution of the

Credit Committee/Executive Committee/Board of Directors, particularly in regard to:

1) Name and address of the borrower including authorized signatories

2) Amount of the Loan

3) Collaterals and other Security, if any

4) Approved terms and conditions

C. Upon request by the AMG, the LSU may also be tasked to draft non-standard documents

(i.e. Memoranda of Agreement/Understanding, Deeds of Undertaking, Release Waiver or

Quitclaim) necessary to effect the approval of a particular account/facility or release of

loan proceeds.

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Chapter II – Conduct of Legal Research and Rendering Legal Opinions

A. WRITTEN OPINION

Requests for opinion must be in writing, signed by the account officer/requesting party,

addressed to the Legal Counsel.

1) The request shall, as far as practicable:

Identify facts and circumstances giving rise to the issues

Include relevant documentation

State requestor’s position on the matter

Cite potential consequences of any proposed resolution or remedial action

which requestor may propose

2) Within three (3) days from receipt of the request, the LSU shall issue a Memo

addressed to the requesting party stating among others the procedure or

steps that the unit intends to pursue to come up with the opinion, a tentative

completion date and other clarificatory points if necessary:

3) Within a period of not later than fifteen (15) days, the LSU shall render the

legal opinion requested.

4) Any legal opinion issued by the LSU can be used as supporting legal

document to explain any succeeding action of the requesting party.

B. VERBAL OPINION

The LSU’s opinion may also be sought as far as practicable and on relatively simply

matters through email or the telephone. Legal Counsel may provide informal assistance

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to officers and employees and offer insights and observations based on prior Leasing

decisions and opinions and their individual experience and knowledge.

Typically, LLC counsel will provide quick turnaround, informal assistance in response to

telephone or e-mail inquiries. Their assistance may range from explaining a law, the

rationale behind a prior Leasing decision or opinion, or a legal position taken by the

department; referring the officer or employee to a line of case law that may help them

understand or address an issue; explaining a passage or discussion in Leasing’s Manual

of Operations; advising on available options or approaches (including submission of the

matter for a formal decision or opinion) to resolve a matter.

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Chapter III – Case Handling

The unit endorsing the account for possible legal action shall, through a formal memo,

endorse the account recommended for legal action to LSU, together attaching thereto all

the documents pertinent to the account i.e. loan agreement, lease schedule, REM, CHM,

demand letters. The unit shall likewise designate a point person with whom the LSU

shall directly coordinate with in all matters regarding the account.

The LSU shall within (15) days from endorsement shall recommend to the President the

most viable legal action for the company to pursue given the particular facts of the

account taking into consideration the whereabouts and financial standing of the

principal, the security for the account or the value of the leased equipment, the amount

of the obligation and other matters which may impact on the legal action to be taken.

The following processes at the minimum shall be observed and followed by the LSU and

serves as guide for the LSU in its course of action.

Collection Cases

A. Scope and Definition

Collection cases occur when due to non-payment of dues by client. The legal action is

necessary in order for the company to recover its investments.

B. Processing Collection Cases

The Accounts Management Group prepares the demand letters to clients as a first step.

If the account can be restructured and there is positive response from the client, the

account remains active and no further legal action is needed; the AMG then leads re-

negotiation of account with client.

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However, when there is no viable ways of payment, the AMG issues 2-3 more demand

letters before rendering the final demand letter and forwarding it to the LSU. The LSU

secures a board resolution authorizing the filing of the complaint.

If the account is secured, both the LSU and AMG moves for the voluntary surrender of

assets. If the account has insufficient security, LSU proceeds with filing of BP22 and/or

civil case in court against the client. LSU handles the case from here on which could

either be a compromise or a full blown trial.

C. Records Management and Filing

The LSU keeps record of complaints, answers, and orders issued by the court as well as

other relevant pleadings. Demand letters, promissory notes, a copy of the lease

agreement and security agreement are kept in active file until the collection case has

been resolved.

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Account officer (AO) determines delinquent accounts

AO writes demand letter to

client

Client updates payment

Client requests AO for

restructuring of loan

AO proposes restructuring program to

client

AO and client negotiate


Client pays

AO writes FINAL

demand letter

Client ignores first &

succeeding demand

letters

Client is secured

Client with insufficient

security

Voluntary surrender

LSU files estafa

case/ BP 22 vs

LSU files civil case

for collection vs Client

Settlement

Settlement

Full trial

Full trial

Client has no viable ways of

payment

LSU Secures Board

Resolution

LSU COLLECTION CASE FLOWCHART

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Extrajudicial Foreclosure of Real Estate Mortgage

A. Scope and definition

All accounts secured by real estate mortgage with overdue payments are subject to the

process of Extrajudicial Foreclosure.

B. Processing Extrajudicial Foreclosure of Real Estate Mortgage

Upon serving the Final Demand letter from the AMG, the LSU prepares a

Foreclosure Notice to the client and files for Extra Judicial Foreclosure of the REM

LSU prepares for the consolidation of titles and endorses the account to the

Accounts Services Group for execution.

C. Records Management and Filing

The LSU maintains a copy of the Transfer Certificate of Title and the Real Estate

Mortgage documents.

The foregoing procedure shall be followed for ALL matters which will be submitted to

the Courts, the Department of Justice, the Securities and Exchange Commission, any

administrative office or quasi-judicial body for Resolution shall be considered as cases

within the purview of this chapter, including but not limited to; civil cases for collection,

criminal cases for Estafa or BP 22, Petitions for Extra-Judicial Foreclosure.

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Account officer (AO) determines delinquent accounts

AO writes demand letter to

client

Client updates payment

Client requests AO

for restructuring

of loan

AO proposes restructuring program to

client

AO and client negotiate


Client pays

AO writes FINAL

demand letter

Client ignores first

and succeeding

demand letters

Account secured by

REM

Filing of petition for Extra Judicial

Foreclosure

Consolidation of titles

Endorsement of Account to

ASG

Client has no viable ways of

payment

LSU EXTRAJUDICIAL FORECLOSURE OF

REAL ESTATE MORTGAGE FLOWCHART

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Chapter IV - Other Functions of the LSU

Management Committee

LSU sits as a (non-voting member) of the Board or Management Committee. In this

capacity, the Unit helps in guiding both significant day-to-day management decisions

and long-range planning. The Legal Counsel may also assist in establishing policies and

practices that directly impact the terms and conditions of engagements, interactions

with client constituents, billing practices, and many other aspects of the relationship of

outside counsel to the client entity.

The LSU legal support may include drafting of management policies, equal employment

opportunity, disciplinary proceedings, intellectual property management, risk

management, and a host of other matters related to quasi-legal organizational functions.

Bid and Awards Committee

The LSU sits in the Bid and Awards Committee to provide assistance in terms of the

technical, legal and other aspects of the procurement at hand. Technical Assistance

involves ensuring the process reflects the requirements of the Corporation and that

these conform to the standards set forth by law.

Compliance Officer

The Legal Service Unit also functions as the Compliance Officer of the corporation. As

such the LSU is responsible for oversight of the institution’s compliance with applicable

rules and regulations and to identify and manage regulatory risk. The LSU helps to

ensure internal controls that adequately measure and manage the risks that it faces to

effectively support business areas in their duty to comply with relevant laws and

regulations and internal procedures.

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The LSU helps in devising and maintaining appropriate systems and controls for the

institution as a whole and advice management on compliance issues. In addition, the

LSU must exhibit an awareness and understanding of ethical and moral principles

consistent with the mission and values of the organization.

Credit Committee

The LSU sits as a member of the Credit Committee which reviews and assess credit

proposals in terms of viability of both client and project, manner of payment, financial

health of company and recommends specific actions so that creditor can qualify for

loans. The Credit Committee also reviews and assesses credit which fails to comply with

Leasing Policies and procedures for accounts within the limit of 5Million Pesos. The type

of loans amounting to more than 5 Million Pesos are brought up and endorsed to the

Executive Committee for further action.

Gender and Development officer

The LSU has the role of supporting the corporation’s program to implement gender

mainstreaming and development. This task is linked to the promotion of gender equity

within the different programs and units, i.e., the promotion of gender balance, work/life

issues, harassment and a gender sensitive work environment. The LSU in this capacity

provides input, guidance and recommendations on all gender perspectives within the

corporation.

Liaison and Coordination - Office of the Government Corporate Counsel

The Office of the Government Corporate Counsel (OGCC) is the principal and statutory

law office of government-owned-and-controlled corporations (GOCC’s). The Legal

Counsel has been deputized by the Government Corporate Counsel to represent LLC for

and in behalf of the OGCC. However, some cases and/or legal opinions may still be

referred to the OGCC team assigned to LLC as may be necessary. LSU coordinates with

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the OGCC in this respect and facilitate that necessary fees payable to the OGCC as

counsel for LLC.

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