Article 46p. 46

SPECIAL RULES OF PROCEDURE SUPPLEMENT TO THE RULES OF COURT

debtor, with the end in view of liquidating them and

discharging to the extent possible all the claims against

the debtor. The powers, duties and responsibilities of

the liquidator shall include, but not be limited to, the

following:

(a) to sue and recover all the assets, debts and claims,

belonging or due to the debtor;

(b) to take possession of all the property of the debtor,

except property exempt by law from execution;

(c) to sell, with the approval of the court, any property of

the debtor under his possession or control;

(d) to redeem all mortgages and pledges, and satisfy

any judgment which may constitute an encumbrance

on any property sold by him;

(e) to settle all accounts between the debtor and his

creditors, subject to the approval of the court;

(f) to recover any property, or its value, fraudulently

conveyed by the debtor;

(g) to recommend to the court the creation of a

creditors'

committee

which

will

assist him in the

discharge of his functions and which shall be vested

with powers as the court deems just, reasonable and

necessary; and

(h) upon approval of the court, to engage the services of

persons with specialized skills or training as may be

necessary and reasonable to assist him in the discharge

of his duties. Such persons or professionals shall be

deemed employees or independent contractors of the

liquidator and shall possess the same qualifications as

the liquidator.

In addition to the rights and duties of a rehabilitation

receiver under Section 31, Chapter II (C) of the FRIA ,

insofar

as

they

are

applicable

to

liquidation

proceedings, the liquidator, shall have the right and

duty to take all reasonable steps to manage and

dispose of the debtor's assets with a view towards

maximizing the proceeds therefrom, to pay creditors

and stockholders, and to terminate the debtor's legal

existence.

SECTION

13.

Removal

of

the

Liquidator.

—

The

liquidator may be removed at any time by the court

either motu proprio or upon motion by the debtor or

any

creditor

or

creditors

on any of the following

grounds:

(a) he did not actually receive the highest number of

votes during the election for liquidator;

(b) incompetence, gross negligence, failure to perform

or

exercise

the

proper

degree

of

care

in

the

performance of his duties and powers;

(c)

lack

of a particular or specialized competency

required by the specific case;

(d) illegal acts or conduct in the performance of his

duties and powers;

(e) lack of any of the qualifications stated under Section

8 of this Rule or presence of any disqualification;

(f)

conflict of interest, unless, waived, expressly or

impliedly, by a party who may be prejudiced thereby;

(g) partiality or lack of independence; or

(h) any other ground analogous to the foregoing.

SECTION 14. Compensation of the Liquidator . — The

liquidator and the persons engaged or employed by

him to assist in the discharge of his powers and duties

shall be entitled to such reasonable compensation as

may be determined by the court, after consultation

with the creditors.

SECTION 15. Reporting Requirements. — The liquidator

shall make and keep a record of all property received

and all disbursements made by him or under his

authority as liquidator. He shall render a quarterly

report thereof to the court, which report shall be made

available to all interested parties. The liquidator shall

also submit such reports as may be required by the

court from time to time as well as a final report at the

end of the liquidation proceedings.

SECTION 16. Discharge of Liquidator . — Upon the filing

of his final report, and in preparation for the final

settlement of all the claims against the debtor, the

liquidator

will

notify

all

the

creditors,

either

by

publication in a newspaper of general circulation or

such other mode as the court may direct or allow, that

he will apply with the court for the settlement of his

account and his discharge from liability as liquidator.

The liquidator will file a final accounting with the court,

with proof of notice to all creditors. The accounting will

be set for hearing. If the court finds the same in order,

the court will discharge the liquidator.

SECTION 17. Registry of Claims . — Within twenty (20)

days from his assumption into office, the liquidator

shall submit to the court a preliminary registry of claims

of secured and unsecured creditors indicating, among

others, the amount and nature of each claim, the

documentary or other basis for each claim, and a

description of the nature and location of every security

or lien, if any. Secured creditors who have waived their

rights under their security or lien, or have fixed the

value of the property subject of their security or lien by

agreement with the liquidator and are admitted as

creditors

for

the

balance,

shall

be

considered

as

unsecured creditors. The liquidator shall make the

registry available for public inspection, give notice to all

the creditors and other interested parties that the

registry is available for inspection and copying, and

publish

said

notice

in

a

newspaper

of

general

circulation in the province or city where the debtor's

principal office is located.

D. Determination of Claims

SECTION 18. Right of Set-Off . — If the debtor and

creditor are mutually debtor and creditor of each other,

one debt shall be set off against the other and only the

balance, if any, shall be allowed in the liquidation

proceedings.

SECTION 19. Opposition or Challenge to Claims . —

Within thirty (30) days from the expiration of the period

for the filing of claims, a creditor, debtor, or other

interested party may submit to the court an opposition

or challenge to any claim or claims, serving a certified

copy on the liquidator and the creditor holding the

challenged claim. Upon the expiration of the period, the

liquidator shall submit to the court the registry of

claims containing the undisputed claims that have not

been subject to challenge. Such claims shall become

final

upon the filing of the register and may be

subsequently

set

aside only on grounds of fraud,

accident, mistake or excusable neglect.

SECTION 20. Submission of Disputed Claims to the

Court . — The liquidator shall resolve disputed claims

and submit his findings thereon to the court for final

approval. The liquidator may disallow claims, subject to

final approval of the court.

E. Avoidance Proceedings

SECTION

21.

Rescission

or

Nullity

of

Certain

Transactions . — Any transaction occurring prior to the

issuance of the Liquidation Order or, in the case of

conversion of rehabilitation proceedings to liquidation

proceedings,

prior

to

the

commencement

date,

entered into by the debtor or involving its assets, may

be rescinded or declared null and void on the ground

that the same was executed with intent to defraud a

creditor or creditors or constitutes an undue preference

of creditors. The presumptions set forth in Section 58,

Chapter II of the FRIA shall apply.

SECTION 22. Actions for Rescission or Nullity . —

(a) The liquidator or, with his conformity, a creditor, may

initiate and prosecute any action to rescind, or declare

© Compiled By RGL

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