Article 40p. 40

SPECIAL RULES OF PROCEDURE SUPPLEMENT TO THE RULES OF COURT

Commission (SEC) is in Metro Manila, the petition must

be filed in the Regional Trial Court of the city or

municipality where the head office is located. The

petition shall indicate the names of at least three (3)

nominees to the position of liquidator and shall include,

as minimum attachments, the following:

(a) a certificate attesting to the holding of a meeting of

the Board of Directors of a stock corporation or the

Board of Trustees of a non-stock corporation, as the

case may be, called for the purpose and the approval

during the meeting of a resolution to file the petition,

signed by the secretary of the meeting and at least a

majority of the members of the Board present during

the meeting;

(b) a certificate attesting to the holding of a meeting of

the stockholders, members or partners comprising the

debtor, as the case may be, called for the purpose and

the approval during the meeting of a resolution to file

the

petition

by

the

stockholders

holding

at least

two-thirds (2/3) of the outstanding capital stock of the

stock corporation, or two-thirds (2/3) of the members or

partners in case of a non-stock corporation, association

or partnership, as the case may be, signed by the

chairman and the secretary of the meeting;

(c) a schedule of debts and liabilities, which lists all the

creditors of the debtor, indicating the name and last

address of record of each creditor; the amount of each

claim as to principal, interest, or penalties due thirty (30)

days prior to the date of filing; the nature of the claim;

and any pledge, lien, mortgage, judgment or other

security given for the payment thereof;

(d)

an

inventory

of

assets,

which

must

list

with

reasonable particularity all the assets of the debtor,

whether in the possession of the debtor or third parties,

stating the nature of each asset; the location and

condition thereof; the book value and market value of

the asset, attaching the corresponding certified copy of

the certificate of title thereof in case of real property, or

the evidence of title or ownership in case of movable

property; the encumbrances, liens or claims thereon, if

any, and the identities and addresses of the lien holders

and claimants;

(e) a schedule of current income and expenditures

within three (3) months prior to the filing of the

petition;

(f) a list of all properties acquired by the debtor in the

immediately preceding two (2) years;

(g) a list of all properties sold, disposed of, or donated by

the debtor in the immediately preceding two (2) years;

(h) a schedule of the debtor's executory contracts and

unexpired leases;

(i) the audited financial statements of the debtor for the

immediately preceding three (3) years; and

(j)

the

income

tax

return

of

the

debtor

for

the

immediately preceding year.

All attachments to the petition shall be deemed part

and parcel of the verified petition.

SECTION 2. Filing of a Motion to Convert Rehabilitation

Proceedings into Liquidation Proceedings . — When

there is a pending court-supervised or pre-negotiated

rehabilitation proceeding, the debtor may file a motion

in the same court where the rehabilitation proceedings

are pending to convert the rehabilitation proceedings

into

liquidation

proceedings.

The

motion

shall be

verified and shall contain or set forth the same matters

mentioned in the preceding section and the grounds

relied upon as provided under the FRIA .

SECTION 3. Action on the Petition or Motion . — If the

court finds the petition or motion, as the case may be,

to be sufficient in form and substance, it shall issue the

Liquidation Order mentioned in Section 2, Rule 4 (A) of

these Rules. Otherwise, the court shall dismiss the

petition or deny the motion. The court may take any

action necessary for the foregoing purposes but it shall

have a maximum period of ten (10) working days from

the date of the filing of the petition or motion to issue

the Liquidation Order, dismiss the petition, or deny the

motion.

B. Involuntary Liquidation

SECTION 4. Who May File Petition; Venue; Contents . —

Three (3) or more creditors the aggregate of whose

claims

is

at

least

either

One

Million

Pesos

(P1,000,000.00) or at least twenty-five percent (25%) of

the subscribed capital stock or partners' contributions

of the insolvent juridical debtor, whichever is higher,

may file a petition for the liquidation of an insolvent

juridical debtor in the Regional Trial Court which has

jurisdiction over the principal office of the debtor as

specified in its articles of incorporation or partnership.

Where

the

principal

office

of

the

corporation

or

partnership as registered with the SEC is in Metro

Manila, the petition must be filed in the Regional Trial

Court of the city or municipality where the head office

is located. The petition must be verified by each of the

petitioners or, if the petitioners or any of them is a

corporation, partnership, or association, then by any of

their duly authorized officer/s or representative/s. The

petition shall indicate the names of at least three (3)

nominees to the position of liquidator, and must show

that:

(a) there is no genuine issue of fact or law on the claim/s

of the petitioner/s, and that the due and demandable

payments thereon have not been made for at least one

hundred eighty (180) days or that the debtor has failed

generally to meet its liabilities as they fall due; and

(b) there is no substantial likelihood that the debtor

may be rehabilitated.

The petition shall also include information to the best

knowledge of the petitioners on:

(a) the schedule of debts and liabilities, including a list

of its known creditors with their addresses, amounts of

claims and collaterals, or securities, if any;

(b) the debtor's assets, including receivables and claims

against third parties; and

(c) the audited financial statements of the debtor for

the immediately preceding three (3) years.

SECTION 5. Bond . — The petitioners shall post a bond in

an amount at least equal in value to the aggregate of

their claims, conditioned upon payment to the debtor

of all expenses and damages it may incur by reason of

the filing of the petition if the same is later denied or

dismissed by the court, or withdrawn by the petitioners

without the consent of the debtor.

SECTION 6. Filing of a Motion to Convert Rehabilitation

Proceedings into Liquidation Proceedings . — When

there is a pending court-supervised or pre-negotiated

rehabilitation proceedings, three (3) or more creditors

the aggregate of whose claims is at least either One

Million Pesos (P1,000,000.00) or at least twenty-five

percent (25%) of the subscribed capital, or partners'

contributions, of the debtor, whichever is higher, may

file a motion in the same court where the rehabilitation

proceedings are pending to convert the rehabilitation

proceedings into liquidation proceedings. The motion

shall be verified and shall contain or set forth the same

matters mentioned in Section 4 of this Rule.

SECTION 7. Action on the Petition or Motion . — If the

court finds the petition or motion sufficient in form and

substance, it shall issue an order:

(a) directing the publication of the petition or motion in

a newspaper of general circulation in the Philippines

once a week for two (2) consecutive weeks;

(b) directing the debtor, all known creditors, and any

other interested party, to file their comment on the

petition or motion within fifteen (15) days from notice of

the order; and

(c) directing that a copy of the petition or motion be

served on the debtor and on all known creditors, unless

© Compiled By RGL

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