Article 42p. 42

SPECIAL RULES OF PROCEDURE SUPPLEMENT TO THE RULES OF COURT

requirements. If the court finds merit in the objection, it

shall appoint a new commissioner.

SECTION 6. Creditors' Meeting . — The presence of

creditors, either in person or through a representative

duly authorized in writing, holding claims amounting to

at

least

three-fifths

(3/5)

of

the

liabilities

of

the

petitioner,

excluding

liabilities

unaffected

by

the

Suspension of Payments Order listed as exceptions

under Section 2 (a) of this Rule, shall be necessary to

hold

a

creditors'

meeting

under

this

Rule.

The

court-appointed commissioner shall preside over the

meeting and the clerk of court shall act as meeting

secretary, subject to the following rules:

(a) The clerk of court shall record the creditors present

and the amount of their respective claims;

(b)

The

commissioner

shall

examine

the

written

evidence of the claims. If the creditors present hold at

least three-fifths (3/5) of the liabilities of the debtor as

above-qualified, he shall declare a quorum;

(c) The creditors and the debtor shall discuss the

proposed agreement and any amendment thereto, and

put it to a vote. No creditor who incurred his credit

within ninety (90) days prior to the filing of the petition

shall be allowed to vote;

(d) To form a majority, it is necessary:

1) that two-thirds (2/3) of the creditors voting unite upon

the matter on the table; and

2) that the claims represented by said majority vote

amount to at least three-fifths (3/5) of the total liabilities

of the debtor as above-qualified; and

(e) After the announcement of the results, all the

protests against the majority vote shall be drawn up,

and the commissioner, the debtor and all creditors who

took

part

in

the

voting

shall

sign

the

affirmed

propositions.

The

commissioner

shall

prepare

a

report

of

the

proceedings that shall include the voting results, the

affirmed

propositions

mentioned

in

paragraph

(e)

above, if any, and submit the report to the court not

later

than

three

(3)

days

after

the

last

creditors'

meeting.

SECTION 7. Rejection of the Debtor's Proposal and

Dismissal of the Petition . — If no creditors' meeting

with the required quorum is held within ninety (90)

days from the date of the last publication mentioned in

Section 2 (d) of this Rule, or, there being such meeting

or meetings, the debtor's proposal is not approved

within the said period, the same shall be deemed

rejected. In such a case, the court, within five (5) days

from the lapse of the ninety (90)-day period, or from

receiving the report of the commissioner mentioned in

the preceding section that the debtor's proposal has

been rejected, shall issue an order dismissing the

petition.

SECTION 8. Objections to the Approval of the Debtor's

Proposal or Any Amendment Thereto . — If the proposal

of the debtor, or any amendment thereto, made during

the creditors' meeting, is approved by the majority of

creditors in accordance with Section 6 of this Rule, any

creditor who attended the meeting and who dissented

from and protested against the vote of the majority

may file an objection with the court within ten (10) days

from the date of the meeting on any of the following

grounds:

(a) defects in the call for the meeting, in the holding

thereof, and in the deliberations had thereat which

prejudice the rights of the creditors;

(b)

fraudulent

connivance

between

one

or

more

creditors and the individual debtor to vote in favor of

the proposed agreement, or any amendment thereto;

or

(c) fraudulent conveyance of claims for the purpose of

obtaining a majority.

The court shall hear and pass upon such objection in a

summary manner, within thirty (30) days from the filing

of the objection. If the decision of the majority of

creditors to approve the debtor's proposal, or any

amendment thereto, is annulled by the court, the

petition shall be dismissed.

SECTION 9. Effects of the Approval of the Debtor's

Proposal or Any Amendment Thereto . — If the decision

of the majority of the creditors to approve the proposed

agreement, or any amendment thereto, made during

the creditors' meeting is upheld by the court, or when

no opposition or objection to said decision has been

presented, the court shall issue an order confirming the

approval

of

the

proposed

agreement,

or

any

amendment thereto, and directing all parties bound

thereby to comply with its terms.

SECTION 10. Residual Power of the Court . — The court,

upon motion of any affected party, may issue any order

which may be necessary or proper to enforce the

agreement. If the debtor fails, wholly or in part, to

perform his obligations under the agreement, or to

comply with any order of the court, the court, upon

motion of any creditor, shall declare the agreement

terminated, and all the rights which the creditors had

against the debtor before the agreement shall revest in

them.

B. Voluntary Liquidation

SECTION 11. Who May File Petition; Venue; Contents . —

An individual debtor whose liabilities exceed his assets

and whose debts exceed Five Hundred Thousand Pesos

(P500,000.00) may file a verified petition for liquidation

in the court having jurisdiction over the province or city

where he has resided for six (6) months prior to the

filing of the petition.

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 schedule of debts and liabilities, including a list of

creditors with their addresses, amount of claims and

collaterals, if any;

(b) an inventory of all the debtor's assets, including

receivables and claims against third parties;

(c) a schedule of current income and expenditures

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

petition;

(d)

the

income

tax

return

of

the debtor for the

immediately preceding year;

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

immediately preceding two (2) years;

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

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

and

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

unexpired leases.

All attachments to the petition shall be deemed part

and parcel of the verified petition.

SECTION 3. * Action on the Petition . — If the court finds

the petition 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. The court may take any action

necessary for the foregoing purposes but it shall have a

maximum period often (10) working days from the date

of the filing of the petition to issue the Liquidation

Order or dismiss the petition.

* Note from the Publisher: Copied verbatim from the

official copy.

C. Involuntary Liquidation

SECTION 13. Who May File Petition; Venue; Contents . —

Any

creditor

or

creditors

with

a claim of, or the

© Compiled By RGL

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