Article 51Supplement v1, p. 51

COMMERCIAL LAWS SUPPLEMENT

direct all creditors to file their claims with the court at

least five (5) days before the initial hearing;

(j) direct the Bureau of Internal Revenue (BIR) to file and

serve on the debtor its comment on or opposition to the

petition or its claim/s against the debtor under such

procedures as the Supreme Court may hereafter provide;

(k) prohibit the debtor's suppliers of goods or services

from withholding the supply of goods and services in the

ordinary course of business for as long as the debtor

makes payments for the services or goods supplied after

the issuance of the Commencement Order;

(l) authorize the payment of administrative expenses as

they become due;

(m) set the case for initial hearing, which shall not be

more than forty (40) days from the date of filing of the

petition for the purpose of determining whether there is

substantial likelihood for the debtor to be rehabilitated;

(n)

make

available

copies

of

the

petition

and

rehabilitation plan for examination and copying by any

interested party;

(o) indicate the location or locations at which documents

regarding the debtor and the proceedings under this Act

may be reviewed and copied;

(p) state that any creditor or debtor, who is not the

petitioner, may submit the name or nominate any other

qualified person to the position of rehabilitation receiver

at least five (5) days before the initial hearing;

(q) include a Stay or Suspension Order which shall:

(1)

suspend

all

actions

or

proceedings,

in

court

or

otherwise, for the enforcement of claims against the

debtor;

(2)

suspend

all

actions

to

enforce

any

judgment,

attachment or other provisional remedies against the

debtor;

(3)

prohibit

the

debtor

from

selling,

encumbering,

transferring

or

disposing

in

any

manner any of its

properties except in the ordinary course of business; and

(4) prohibit the debtor from making any payment of its

liabilities outstanding as of the commencement date

except as may be provided herein.

SECTION 17. Effects of the Commencement Order. —

Unless otherwise provided for in this Act, the court's

issuance of a Commencement Order shall, in addition to

the effects of a Stay or Suspension Order described in

Section 16 hereof:

(a) vest the rehabilitation receiver with all the powers and

functions provided for in this Act, such as the right to

review and obtain all records to which the debtor's

management and directors have access, including bank

accounts of whatever nature of the debtor, subject to the

approval by the court of the performance bond filed by

the rehabilitation receiver;

(b) prohibit, or otherwise serve as the legal basis for

rendering null and void the results of any extrajudicial

activity or process to seize property, sell encumbered

property, or otherwise attempt to collect on or enforce a

claim against the debtor after the commencement date

unless otherwise allowed in this Act, subject to the

provisions of Section 50 hereof;

(c) serve as the legal basis for rendering null and void any

set-off after the commencement date of any debt owed

to the debtor by any of the debtor's creditors;

(d) serve as the legal basis for rendering null and void the

perfection of any lien against the debtor's property after

the commencement date; and

(e) consolidate the resolution of all legal proceedings by

and against the debtor to the court: Provided, however,

That the court may allow the continuation of cases in

other courts where the debtor had initiated the suit.

Attempts to seek legal or other recourse against the

debtor outside these proceedings shall be sufficient to

support a finding of indirect contempt of court.

SECTION 18. Exceptions to the Stay or Suspension Order.

— The Stay or Suspension Order shall not apply:

(a) to cases already pending appeal in the Supreme Court

as of commencement date: Provided, That any final and

executory judgment arising from such appeal shall be

referred to the court for appropriate action;

(b) subject to the discretion of the court, to cases pending

or filed at a specialized court or quasi-judicial agency

which, upon determination by the court, is capable of

resolving the claim more quickly, fairly and efficiently

than the court: Provided, That any final and executory

judgment of such court or agency shall be referred to the

court and shall be treated as a non-disputed claim;

(c) to the enforcement of claims against sureties and

other persons solidarily liable with the debtor, and third

party or accommodation mortgagors as well as issuers of

letters of credit, unless the property subject of the third

party or accommodation mortgage is necessary for the

rehabilitation of the debtor as determined by the court

upon recommendation by the rehabilitation receiver;

(d) to any form of action of customers or clients of a

securities market participant to recover or otherwise

claim moneys and securities entrusted to the latter in the

ordinary course of the latter's business as well as any

action

of

such

securities

market

participant

or the

appropriate

regulatory

agency

or

self-regulatory

organization to pay or settle such claims or liabilities;

(e) to the actions of a licensed broker or dealer to sell

pledged securities of a debtor pursuant to a securities

pledge

or

margin

agreement for the settlement of

securities transactions in accordance with the provisions

of the Securities Regulation Code and its implementing

rules and regulations ;

(f) the clearing and settlement of financial transactions

through the facilities of a clearing agency or similar

entities duly authorized, registered and/or recognized by

the

appropriate

regulatory

agency

like

the

Bangko

Sentral ng Pilipinas (BSP) and the SEC as well as any form

of actions of such agencies or entities to reimburse

themselves for any transactions settled for the debtor;

and

(g) any criminal action against the individual debtor or

owner, partner, director or officer of a debtor shall not be

affected by any proceeding commenced under this Act.

SECTION 19. Waiver of Taxes and Fees Due to the

National Government and to Local Government Units

(LGUs). — Upon issuance of the Commencement Order

by the court, and until the approval of the Rehabilitation

Plan or dismissal of the petition, whichever is earlier, the

imposition of all taxes and fees, including penalties,

interests

and

charges

thereof,

due

to

the

national

government or to LGUs shall be considered waived, in

furtherance of the objectives of rehabilitation.

SECTION 20. Application of Stay or Suspension Order to

Government Financial Institutions. — The provisions of

this Act concerning the effects of the Commencement

Order

and

the

Stay

or

Suspension

Order

on

the

suspension of rights to foreclose or otherwise pursue

legal

remedies

shall

apply

to

government

financial

institutions, notwithstanding provisions in their charters

or other laws to the contrary.

SECTION 21. Effectivity and Duration of Commencement

Order. — Unless lifted by the court, the Commencement

Order

shall

be

effective

for

the

duration

of

the

rehabilitation

proceedings for as long as there is a

substantial likelihood that the debtor will be successfully

rehabilitated. In determining whether there is substantial

likelihood for the debtor to be successfully rehabilitated,

the

court shall ensure that the following minimum

requirements are met:

© Compiled by RGL

51 of 203