Article 39p. 39

SPECIAL RULES OF PROCEDURE SUPPLEMENT TO THE RULES OF COURT

Upon motion, the court may order that the originals of

the annexes to a submission be produced in court for

examination

or

comparison

by

a

party

to

the

proceedings.

All pleadings or motions shall be filed simultaneously in

three

(3)

printed

and

two

(2)

digitized

copies

in

compact

discs,

flash

drives,

or

other

compatible

Information

and

Communications

Technology

(ICT)

media, in PDF format.

The court may decide matters on the basis of the

pleadings

and

other

documentary

evidence,

and

conduct clarificatory hearings when necessary.

Any order issued by the court under these Rules is

immediately executory. Review of any order of the court

shall be in accordance with Rule 5 of these Rules.

Provided, however, that the reliefs ordered by the trial of

appellate courts shall take into account the need for

resolution of the proceedings in a just, equitable, and

speedy manner.

SECTION 4. Construction of Rules. — These Rules shall

be

liberally

construed

to

promote

a

timely,

fair,

transparent, effective, and efficient liquidation and

suspension of payments of debtors, in accordance with

the declared policy of the FRIA .

SECTION 5. Definition of Terms . — Terms used but not

defined herein shall have the same meanings ascribed

to them in the FRIA :

(a)

Administrative

expenses

shall

refer

to

those

reasonable and necessary expenses:

(1) incurred in connection with the filing of a petition

under these Rules, including filing and professional fees

in preparing the petition;

(2) arising from, or in connection with the proceedings

under these Rules;

(3) incurred in the ordinary course of business of the

debtor after the commencement date;

(4) incurred for the fees of the liquidator/commissioner

and/or of the professionals he may engage; and

(5) those otherwise authorized or mandated under the

FRIA or such other expenses authorized under these

Rules.

(b) Asset is anything of value, which may be either

tangible or intangible. Tangible assets can be current

assets or fixed assets. Current assets may include cash

on hand, money in banks or inventory, while fixed

assets

may

include

plant,

building,

property

and

equipment. Intangible assets may include intellectual

property (such as copyrights, patents, and trademarks)

and financial assets (such as accounts receivables,

subscriptions receivables, and bonds and stocks).

The value of these assets must appear in the latest

audited financial statements immediately preceding

the filing of the petition. In case the debtor is less than

three (3) years in operation, it is sufficient that the book

value is based on the audited financial statement/s for

the two (2) years or year immediately preceding the

filing of the petition, as the case may be.

(c) Commencement date shall refer to the date on

which the court issues a commencement order in a

rehabilitation case.

(d) Court/s shall refer to the Regional Trial Court/s

designated

by

the

Supreme

Court

as

special

commercial court/s.

(e) Insolvency shall refer to the financial incapacity of

the debtors to pay their liabilities as they fall due in the

ordinary course of business or whenever their liabilities

are greater than their assets.

(f) Liquidation shall refer to the proceedings under

Chapters V, VI (B) and (C), and VII of the FRIA .

(g) Liquidation Order shall refer to the order issued by

the court pursuant to Section 2, Rule 4 (A) of these

Rules.

(h) Liquidator shall refer to the natural person or

juridical entity appointed as such by the court pursuant

to these Rules and entrusted with such powers and

duties as set forth herein; Provided, that if the liquidator

is a juridical entity, it must designate a natural person

who possesses all the qualifications and none of the

disqualifications

as

its

representative,

it

being

understood

that

the

juridical

entity

and

the

representative are solidarily liable for all obligations and

responsibilities of the liquidator.

(i) Proceedings , unless the term is used in a different

context,

shall

refer

to

liquidation

proceedings

or

suspension of payments proceedings, as the case may

be, under these Rules.

(j) Suspension of Payments Order shall refer to the

order issued by the court pursuant to Section 2, Rule 3

(A) of these Rules.

(k) Working day shall have the same meaning as

business day.

SECTION 6. Debtor Spouses as Parties . — A married

individual debtor shall sue or be sued jointly with his or

her spouse, except as provided by law.

SECTION 7. Applicability of Rule 5 of the FR Rules. —

Rule 5 of the FR Rules on Cross-Border Insolvency

Proceedings is hereby made applicable to liquidation

proceedings and, for this purpose, is adopted as part of

these Rules.

SECTION 8. Liability of Individual Debtor, Owner of a

Sole

Proprietorship,

Partners

in

a

Partnership,

or

Directors and Officers . — The individual debtor, owner

of a sole proprietorship, the partners in a partnership, or

the directors and officers of a corporate debtor shall be

liable

for

double

the

value

of

the

property

sold,

embezzled or disposed of, or double the amount of the

transaction

involved,

whichever

is

higher,

to

be

recovered

for

the

benefit

of

the

debtor and the

creditors,

if

they,

having

notice

of

the

commencementof the proceedings, or having reason

to

believe

that

the

proceedings

are about to be

commenced,

or

in

contemplation

thereof,

willfully

commit the following acts:

(a) dispose or cause to be disposed any property of the

debtor other than in the ordinary course of business or

authorize

or

approve

any

transaction

in

fraud

of

creditors or in a manner grossly disadvantageous to the

debtor and/or creditors; or

(b) conceal, authorize or approve the concealment from

the

creditors,

or

embezzle

or

misappropriate,

any

property of the debtor.

The court shall determine the extent of the liability of

an owner, partner, director or officer under this section.

In

this

connection,

in

case

of

partnerships

and

corporations, the court shall consider the amount of the

shareholding or partnership or equity interest of such

partner, director or officer, the degree of control of such

partner, director or officer over the debtor, and the

extent of the involvement of such partner, director or

debtor in the actual management of the operations of

the debtor.

RULE 2 Liquidation of Insolvent Juridical

Debtors

A. Voluntary Liquidation

SECTION 1. Who May File Petition; Venue; Contents . —

An insolvent juridical debtor may file a verified petition

for liquidation in the Regional Trial Court which has

jurisdiction over its principal office as specified in its

articles of incorporation or partnership. Where the

principal office of the corporation or partnership as

registered

with

the

Securities

and

Exchange

© Compiled By RGL

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