Article 53Supplement v1, p. 53

COMMERCIAL LAWS SUPPLEMENT

SECTION 29. Qualifications of a Rehabilitation Receiver.

— The rehabilitation receiver shall have the following

minimum qualifications:

(a) A citizen of the Philippines or a resident of the

Philippines in the six (6) months immediately preceding

his nomination;

(b) Of good moral character and with acknowledged

integrity, impartiality and independence;

(c) Has the requisite knowledge of insolvency and other

relevant commercial laws, rules and procedures, as well as

the relevant training and/or experience that may be

necessary to enable him to properly discharge the duties

and obligations of a rehabilitation receiver; and

(d) Has no conflict of interest: Provided, That such conflict

of interest may be waived, expressly or impliedly, by a

party who may be prejudiced thereby.

Other

qualifications

and

disqualifications

of

the

rehabilitation receiver shall be set forth in procedural

rules, taking into consideration the nature of the business

of the debtor and the need to protect the interest of all

stakeholders concerned.

SECTION 30. Initial Appointment of the Rehabilitation

Receiver.

—

The

court

shall

initially

appoint

the

rehabilitation receiver, who may or may not be from

among the nominees of the petitioner. However, at the

initial hearing of the petition, the creditors and the debtor

who are not petitioners may nominate other persons to

the position. The court may retain the rehabilitation

receiver initially appointed or appoint another who may

or may not be from among those nominated.

In case the debtor is a securities market participant, the

court shall give priority to the nominee of the appropriate

securities or investor protection fund.

If a qualified natural person or entity is nominated by

more than fifty percent (50%) of the secured creditors and

the

general

unsecured

creditors,

and

satisfactory

evidence

is

submitted,

the

court

shall

appoint

the

creditors' nominee as rehabilitation receiver.

SECTION 31. Powers, Duties and Responsibilities of the

Rehabilitation Receiver. — The rehabilitation receiver

shall be deemed an officer of the court with the principal

duty of preserving and maximizing the value of the assets

of

the debtor during the rehabilitation proceedings,

determining the viability of the rehabilitation of the

debtor, preparing and recommending a Rehabilitation

Plan

to the court, and implementing the approved

Rehabilitation Plan. To this end, and without limiting the

generality of the foregoing, the rehabilitation receiver

shall

have

the

following

powers,

duties

and

responsibilities:

(a) To verify the accuracy of the factual allegations in the

petition and its annexes;

(b) To verify and correct, if necessary, the inventory of all of

the assets of the debtor, and their valuation;

(c) To verify and correct, if necessary, the schedule of

debts and liabilities of the debtor;

(d) To evaluate the validity, genuineness and true amount

of all the claims against the debtor;

(e) To take possession, custody and control, and to

preserve the value of all the property of the debtor;

(f) To sue and recover, with the approval of the court, all

amounts owed to, and all properties pertaining to the

debtor;

(g) To have access to all information necessary, proper or

relevant to the operations and business of the debtor and

for its rehabilitation;

(h) To sue and recover, with the approval of the court, all

property or money of the debtor paid, transferred or

disbursed in fraud of the debtor or its creditors, or which

constitute undue preference of creditor/s;

(i) To monitor the operations and the business of the

debtor

to

ensure

that no payments or transfers of

property are made other than in the ordinary course of

business;

(j) With the court's approval, to engage the services of or

to

employ

persons

or entities to assist him in the

discharge of his functions;

(k) To determine the manner by which the debtor may be

best rehabilitated, to review, revise and/or recommend

action on the Rehabilitation Plan and submit the same or

a new one to the court for approval;

(l) To implement the Rehabilitation Plan as approved by

the court, if so provided under the Rehabilitation Plan;

(m) To assume and exercise the powers of management

of the debtor, if directed by the court pursuant to Section

36 hereof;

(n) To exercise such other powers as may, from time to

time, be conferred upon him by the court; and

(o)

To

submit

a

status

report on the rehabilitation

proceedings every quarter or as may be required by the

court motu proprio, or upon motion of any creditor, or as

may be provided, in the Rehabilitation Plan.

Unless appointed by the court, pursuant to Section 36

hereof, the rehabilitation receiver shall not take over the

management

and

control

of

the

debtor

but

may

recommend

the

appointment

of

a

management

committee over the debtor in the cases provided by this

Act.

SECTION 32. Removal of the Rehabilitation Receiver. —

The rehabilitation receiver may be removed at any time

by the court, either motu proprio or upon motion by any

creditor/s holding more than fifty percent (50%) of the

total obligations of the debtor, on such grounds as the

rules of procedure may provide which shall include, but

are not limited to, the following:

(a) Incompetence, gross negligence, failure to perform or

failure to exercise the proper degree of care in the

performance of his duties and powers;

(b)

Lack

of

a

particular

or

specialized

competency

required by the specific case;

(c) Illegal acts or conduct in the performance of his duties

and powers;

(d)

Lack

of

qualification

or

presence

of

any

disqualification;

(e) Conflict of interest that arises after his appointment;

and

(f) Manifest lack of independence that is detrimental to

the general body of the stakeholders.

SECTION 33. Compensation and Terms of Service. — The

rehabilitation

receiver

and

his

direct

employees

or

independent

contractors

shall

be

entitled

to

compensation for reasonable fees and expenses from the

debtor according to the terms approved by the court

after notice and hearing. Prior to such hearing, the

rehabilitation receiver and his direct employees shall be

entitled to reasonable compensation based on quantum

meruit. Such costs shall be considered administrative

expenses.

SECTION

34.

Oath

and

Bond

of the Rehabilitation

Receiver. — Prior to entering upon his powers, duties and

responsibilities, the rehabilitation receiver shall take an

oath and file a bond, in such amount to be fixed by the

court, conditioned upon the faithful and proper discharge

of his powers, duties and responsibilities.

SECTION

35.

Vacancy.

—

In

case

the

position

of

rehabilitation

receiver

is

vacated

for

any

reason

whatsoever, the court shall direct the debtor and the

creditors to submit the name/s of their nominee/s to the

position. The court may appoint any of the qualified

nominees, or any other person qualified for the position.

SECTION 36. Displacement of Existing Management by

the Rehabilitation Receiver or Management Committee.

— Upon motion of any interested party, the court may

appoint and direct the rehabilitation receiver to assume

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