Article 43p. 43

SPECIAL RULES OF PROCEDURE SUPPLEMENT TO THE RULES OF COURT

aggregate of whose claims is, at least Five Hundred

Thousand

Pesos

(P500,000.00)

may

file

a verified

petition for liquidation of an individual debtor with the

court of the province or city where the debtor resides.

The petition shall state the particulars of at least one of

the following acts of insolvency of the debtor:

(a) that the debtor is about to depart or has departed

from

the

Philippines,

with

intent

to

defraud

his

creditors;

(b) that being absent from the Philippines, with intent

to defraud his creditors, he remains absent;

(c) that the debtor conceals himself to avoid the service

of legal process for the purpose of hindering or delaying

the liquidation or of defrauding his creditors;

(d) that the debtor conceals, or is removing, any of his

property to avoid its being attached or taken on legal

process;

(e) that the debtor has allowed his property to remain

under attachment or legal process for three (3) days for

the purpose of hindering or delaying the liquidation or

of defrauding his creditors;

(f) that the debtor has confessed or offered to allow

judgment in favor of any creditor for the purpose of

hindering or delaying the liquidation or of defrauding

any creditor;

(g) that the debtor has wilfully allowed judgment to be

taken

against

him

by

default

for the purpose of

hindering or delaying the liquidation or of defrauding

his creditors;

(h)

that

the

debtor

has

suffered

or procured his

property to be taken on legal process with intent to give

a preference to one or more of his creditors and thereby

hinder or delay the liquidation or defraud any one of his

creditors;

(i) that the debtor has made any assignment, gift, sale,

conveyance or transfer of his estate, property, rights or

credits with intent to hinder or delay the liquidation or

defraud his creditors;

(j) that the debtor has, in contemplation of insolvency,

made any payment, gift, grant, sale, conveyance or

transfer of his estate, property, rights or credits;

(k) that being a merchant or tradesman, the debtor has

generally defaulted in the payment of his current

obligations for a period of thirty (30) days;

(l) that for a period of thirty (30) days, the debtor has

failed, after demand, to pay any moneys deposited with

him or received by him in a fiduciary capacity; or

(m) that an execution having been issued against him

on final judgment for money, the debtor shall have

been found to be without sufficient property subject to

execution to satisfy the judgment.

SECTION

14.

Bond

for

Filing

of

Petition .

—

The

petitioner/s shall post a bond in an amount at least

equal in value to the aggregate of his/their claims,

conditioned

upon

payment

to

the

debtor

of

all

expenses and damages the debtor may incur by reason

of the filing of the petition if the petition is later

dismissed or withdrawn by the petitioner/s without the

consent of the debtor, or if it is finally determined that

the debtor is not insolvent.

SECTION 15. Order for Debtor to Show Cause . — If the

petition is sufficient in form and substance, the court,

within five working (5) days from the filing of the

petition, shall issue summons to the debtor requiring

him, by way of comment on or opposition to the

petition within an inextendible period of fifteen (15)

days from service of the summons, to show cause why

he should not be declared insolvent.

SECTION 16. Order for Debtor to Refrain from Paying

Debts or Transferring Property . — Upon motion of any

creditor and after hearing, the court may, upon good

cause shown, issue an order prohibiting the debtor

from paying any of his debts, or from transferring any

property belonging to him, until the court issues a

Liquidation Order or dismisses the petition, whichever

is earlier. However, nothing contained herein shall affect

or impair the rights of a secured creditor to enforce his

lien in accordance with its terms.

SECTION 17. Hearing on the Petition . — After the issues

are joined, the court shall set the petition for hearing in

order to determine whether the evidence is sufficient

to warrant the issuance of a Liquidation Order.

SECTION 18. Issuance of the Liquidation Order . — If the

debtor on whom summons is properly served fails to

file a comment on or opposition to the petition within

the period given by the court, or if the evidence given

during the hearing mentioned in the preceding section

warrant it, the court shall issue the Liquidation Order

mentioned in Section 2, Rule 4 (A) of these Rules.

SECTION 19. Absent Debtor . — When the debtor resides

out

of

the

Philippines,

or

when

his

residence

is

unknown, or he has departed from the Philippines with

intent to defraud his creditors, or cannot, after due

diligence, be found therein, or conceals himself to avoid

service of summons, or any other related preliminary

process or orders, then the court, upon motion of the

petitioning creditors duly supported by an affidavit or

affidavit/s

narrating

and substantiating any of the

foregoing allegations and a bond approved by the court

in double the amount of the aggregate sum of their

claims against the debtor, shall issue an order directing:

(a) the sheriff of the province or city in which the matter

is pending to take into custody, within thirty (30) days

from the date of the order, a sufficient amount of

property of the debtor, not exempt from execution and

not subject of a secured creditor's lien, to satisfy the

claims of the petitioning creditors and the costs of the

proceedings;

(b) the publication of the summons and the said order

in a newspaper of general circulation in the Philippines

once a week for two (2) consecutive weeks;

(c) the mailing of the petition, the summons and the

order to the debtor's last known address;

(d) the sending of an electronic mail to the debtor's last

known electronic mail address, if any, attaching thereto

copies of the petition, the summons and the order; and

(e) the posting of copies of the petition and the

summons on at least three (3) conspicuous places on

any real property owned by the debtor.

If the debtor fails to file a comment, opposition or other

responsive pleading to the petition or order within

fifteen

(15)

days

after

the

last

publication

of the

summons and order, or within any other period given

by the court, then the court shall issue a Liquidation

Order mentioned in Section 2, Rule 4 (A) of these Rules.

SECTION 20. Duty of Sheriff . — Upon receiving the order

for him to take into custody property of the debtor, the

sheriff shall take custody of such property of the debtor

not exempt from execution and not subject of any

secured creditor's lien sufficient to cover the amount

provided for. He shall make a return to the court within

two (2) days every time he takes property of the debtor

pursuant to the order, and as soon as he has taken

sufficient amount of the debtor's property to cover the

amount provided for in the order, he shall make a

return to the court of an inventory of all the property

taken within three (3) days from the time of the last

taking. Upon motion and for good cause shown, the

time for making an inventory, or any return may be

extended. The sheriff shall also prepare a schedule of

the names and residences of the creditors, and the

amount due each, from the books of the debtor, or

from such other papers or data of the individual debtor

available as may come to his possession, and shall file

such schedule or list of creditors and inventory with the

clerk of court.

© Compiled By RGL

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