Article 47p. 47

SPECIAL RULES OF PROCEDURE SUPPLEMENT TO THE RULES OF COURT

null

and

void,

any

transaction

described

in

the

immediately preceding paragraph. If the liquidator

does not consent to the filing or prosecution of such

action, any creditor may seek leave of the court to

commence and prosecute said action.

The court shall have five working (5) days to act on the

motion for leave to commence or prosecute an action.

(b) If leave of court is granted under subsection (a)

hereof, the liquidator shall assign and transfer to the

creditor all rights, title and interest in the chose in

action or subject matter of the proceeding, including

any document in support thereof.

(c)

Any

benefit

derived

from

a proceeding taken

pursuant

to

subsection

(a)

hereof

shall

belong

exclusively to the creditor instituting the proceeding to

the extent of his claim and the costs, and the surplus, if

any, shall belong to the estate.

(d) Where, before an order is made under subsection (a)

hereof, the liquidator signifies to the court his readiness

to institute the proceeding for the benefit of the

creditors, the order shall fix the time within which he

shall do so and, in that case the benefit derived from

the proceedings, if instituted within the time limits so

fixed, shall belong to the estate.

In any case, the liquidator shall make provisions for any

action for rescission or nullity in the Liquidation Plan.

F. The Liquidation Plan

SECTION 23. The Liquidation Plan . — Within three (3)

months from his assumption into office, the liquidator

shall submit a Liquidation Plan to the court. The

Liquidation Plan shall, as a minimum, enumerate all the

assets of the debtor not exempt from execution, a list of

all creditors and their claims which have been duly

proved as shown in the final registry of claims, and a

proposed mode and schedule of liquidation of the

assets and payment of the claims. The Liquidation Plan

shall

make

provisions for, among others, disputed

claims and any action for rescission or nullity of certain

transactions.

SECTION 24. Exempt Property to be Set Apart . — Upon

motion, and after notice and hearing, the court shall set

apart property of the individual debtor exempt from

execution. The motion shall be heard and granted only

after it is shown that the clerk of court has posted or

caused notice of the motion and hearing in at least

three (3) public places in the province or city where the

court exercises jurisdiction at least ten (10) days prior to

the time of such hearing, which notice shall set forth

the name of the debtor, and the time and place

appointed for the hearing of such motion, and shall

briefly indicate the homestead sought to be exempted

or the property sought to be set aside.

SECTION 25. Concurrence and Preference of Credits . —

The Liquidation Plan and its implementation shall

ensure that the concurrence and preference of credits

as enumerated in the Civil Code of the Philippines, and

other

relevant

laws,

shall

be

observed,

unless

a

preferred creditor voluntarily waives his preferred right.

For purposes of this Rule, credits for services rendered

by employees or laborers to the debtor shall enjoy first

preference under Article 2244 of the Civil Code, unless

the claims constitute legal liens under Articles 2241 and

2242 thereof.

SECTION 26. Sale of Assets in Liquidation . — With the

approval of the court, the liquidator may sell, transfer or

otherwise dispose of the unencumbered assets of the

debtor and convert the same into money. The sale,

transfer or disposition shall be made at public auction.

However, a private sale, transfer or disposition may be

allowed with the approval of the court if (a) the goods

to be sold are of a perishable nature, or are liable to

quickly deteriorate in value, or are disproportionately

expensive to keep or maintain; or (b) the private sale,

transfer or disposition is for the best interest of the

debtor and his creditors. With the approval of the court,

unencumbered property of the debtor may also be

conveyed to a creditor in satisfaction of his claim or part

thereof. In all cases, the liquidator and the court shall

ensure that the manner of sale, transfer or disposition is

in the best interest of the debtor and his creditors.

SECTION 27. Manner of Implementing the Liquidation

Plan . — The liquidator shall implement the Liquidation

Plan as approved by the court in an order duly issued

therefor. Payments shall be made to creditors only in

accordance with the provisions of the Plan.

SECTION 28. Final Report of the Liquidator . — When all

the property of the debtor not exempt from execution

have been realized and their proceeds distributed to

the creditors in accordance with the Liquidation Plan,

the liquidator shall submit his final report to the court,

together with the final accounting of his administration

and a recommendation for the termination of the

proceedings, furnishing all the creditors and other

interested parties with copies thereof.

SECTION 29. Termination of Proceedings . — If, after

notice and hearing, the court is satisfied with the final

report, it shall issue an order approving the same and

directing the removal of the name of the juridical

debtor from the register of legal entities of the SEC and

other

government

agencies,

or

discharging

the

individual debtor from his liabilities included in the

Liquidation Plan, as the case may be.

In the same order discharging the individual debtor

from

his

liabilities,

the

court

shall state that the

proceedings are terminated. However, in the case of a

juridical debtor registered with the SEC, the court shall

issue an order terminating the proceedings only upon

receipt of evidence showing that the debtor has been

removed from the registry of legal entities at the SEC.

SECTION

30.

Liquidation

of

a

Securities

Market

Participant .

—

The

foregoing

provisions

shall

be

without prejudice to the power of a regulatory agency

or self-regulatory organization to liquidate trade-related

claims of clients or customers of a securities market

participant which, for purposes of investor protection,

are hereby deemed to have absolute priority over other

claims

of

whatever

nature

or

kind

insofar

as

trade-related assets are concerned.

For

purposes

of

this

section,

trade-related

assets

include cash, securities, trading right, and other assets

owned and used by the securities market participant in

the ordinary course of its business.

RULE 5 Procedural Remedies

SECTION 1. Motion for Reconsideration in Suspension of

Payments Proceedings . — A party may file a motion for

reconsideration of a Suspension of Payments Order, or

any

order

issued

by

the

court

prior

to its order

confirming or disapproving the proposed agreement

mentioned in Section 9, Rule 3 (A) of these Rules. No

relief can be extended to the party aggrieved by the

court's order on the motion through a special civil

action for certiorari under Rule 65 of the Rules of Court.

SECTION 2. Review of Decision or Order in Suspension

of Payments Proceedings . — The court's dismissal of

the petition for suspension of payments on the ground

of insufficiency in form and substance resulting in the

non-issuance of a Suspension of Payments Order, and

its order confirming or disapproving the proposed

agreement mentioned in Section 9, Rule 3 (A) of these

Rules can only be reviewed through a petition for

certiorari to the Court of Appeals under Rule 65 of the

Rules of Court within fifteen (15) days from notice of the

decision or order.

SECTION 3. Motion for Reconsideration in Liquidation

Proceedings .

—

A

party

may

file

a

motion

for

reconsideration of any order issued by the court prior to

the issuance of the Liquidation Order. No relief can be

extended to the party aggrieved by the court's order on

© Compiled By RGL

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