interim rules of procedure on corporate rehab

7/31/2019 Interim Rules of Procedure on Corporate Rehab

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Rule 1COVERAGESECTION 1. Scope These Rules shall apply to petitions for rehabilitationfiled by corporations, partnerships, and associations pursuant to PresidentialDecree No. 902-A, as amended.

SEC. 2. Applicability to Rehabilitation Cases Transferred from the Securitiesand Exchange Commission. Cases for rehabilitation transferred from the

Securities and Exchange Commission to the Regional Trial Courts pursuantto Republic Act No. 8799, otherwise known as The Securities RegulationCode, shall likewise be governed by these Rules.

Rule 2DEFINITION OF TERMS AND CONSTRUCTION

SECTION 1. Definition of Terms. For purposes of these Rules:

Administrative Expenses shall refer to those expenses incurred in theordinary course of business of the debtor after the issuance of the stayorder, excluding interest payable to creditors.

Affidavit of General Financial Condition shall refer to a verified statementon the general financial condition of the debtor required in section 2, Rule 4of these Rules.

Board of Directors shall include the executive committee or themanagement of a partnership or association.

Claim shall include all claims or demands of whatever nature or characteragainst a debtor or its property, whether for money or otherwise.

Creditor shall mean any holder of a Claim.

Court shall refer to the proper Regional Trial Court designated to hear anddecide the cases contemplated under these Rules.

Debtor shall mean any corporation, partnership, or association, whether

supervised or regulated by the Securities and Exchange Commission orother government agencies, on whose behalf a petition for rehabilitation hasbeen filed under these Rules.

Stockholder shall include a member of a non-stock corporation orassociation, or a partner in a partnership.


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SEC. 2. Construction. These Rules shall be liberally construed to carry outthe objectives of sections 5(d), 6(c) and 6(d) of Presidential Decree No. 902-

A, as amended, and to assist the parties in obtaining a just, expeditious, and

inexpensive determination of cases. Where applicable, the Rules of Courtshall apply suppletorily to proceedings under these Rules.

Rule 3GENERAL PROVISIONSSECTION 1. Nature of Proceedings. Any proceeding initiated under theseRules shall be considered in rem. Jurisdiction over all those affected by theproceedings shall be considered as acquired upon publication of the notice

of the commencement of the proceedings in any newspaper of generalcirculation in the Philippines in the manner prescribed by these Rules.

The proceedings shall also be summary and non-adversarial in nature. Thefollowing pleadings are prohibited:

a. Motion to dismiss;

b. Motion for a bill of particulars;

c. Motion for new trial or for reconsideration;

d. Petition for relief;

e. Motion for extension;

f. Memorandum;g. Motion for postponement;

h. Reply or Rejoinder;

i. Third party complaint; and

j. Intervention.

Any pleading, motion, opposition, defense, or claim filed by any interestedparty shall be supported by verified statements that the affiant has read thesame and that the factual allegations therein are true and correct of hispersonal knowledge or based on authentic records and shall contain asannexes such documents as may be deemed by the party submitting thesame as supportive of the allegations in the affidavits. The court maydecide matters on the basis of affidavits and other documentary evidence.Where necessary, the court shall conduct clarificatory hearings beforeresolving any matter submitted to it for resolution.


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SEC. 2. Venue. Petitions for rehabilitation pursuant to these Rulesshall be filed in the Regional Trial Court having jurisdiction over the territorywhere the debtors principal office is located.

SEC. 3. Service of Pleadings and Documents. When so authorized by thecourt, any pleading and/or document required by these Rules may be filedwith the court and/or served upon the other parties by facsimile transmission(fax) or electronic mail (e-mail). In such cases, the date of transmission shallbe deemed to be the date of service. In case of a voluminous pleading ordocument, the court may, motu proprio or upon motion, waive therequirement of service, provided, a copy thereof together with all itsattachments is duly filed with the court and is made available forexamination and reproduction by any party, and provided, further, that anotice of such filing and availability is duly served on the parties.

SEC. 4. Trade Secrets and Other Confidential Information. On motion oron its own initiative, the court may issue an order to protect trade secrets orother confidential research, development, or commercial informationbelonging to the debtor.

SEC. 5. Executory Nature of Orders. Any order issued by the court underthese Rules is immediately executory. A petition for review or an appeal

therefrom shall not stay the execution of the order unless restrained orenjoined by the appellate court. The review of any order or decision of thecourt or an appeal therefrom shall be in accordance with the Rules of Court;Provided, however, that the reliefs ordered by the trial or appellate courtsshall take into account the need for resolution of proceedings in a just,equitable, and speedy manner.

Rule 4REHABILITATION

SECTION 1. Who May Petition. Any debtor who foresees the impossibilityof meeting its debts when they respectively fall due, or any creditor orcreditors holding at least twenty-five percent (25%) of the debtors totalliabilities, may petition the proper Regional Trial Court to have the debtorplaced under rehabilitation.

SEC. 2. Contents of the Petition. The petition filed by the debtor must beverified and must set forth with sufficient particularity all the followingmaterial facts: (a) the name and business of the debtor; (b) the nature of thebusiness of the debtor; (c) the history of the debtor; (d) the cause of itsinability to pay its debts; (e) all the pending actions or proceedings known tothe debtor and the courts or tribunals where they are pending; (f) threats ordemands to enforce claims or liens against the debtor; and (g) the mannerby which the debtor may be rehabilitated and how such rehabilitation maybenefit the general body of creditors, employees, and stockholders.


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The petition shall be accompanied by the following documents:

a. An audited financial statement of the debtor at the end of its last fiscalyear;

b. Interim financial statements as of the end of the month prior to the filingof the petition;

c. Schedule of Debts and Liabilities which lists all the creditors of thedebtor indicating the name and address of each creditor, the amount of eachclaim as to principal, interest, or penalties due as of the date of filing, thenature of the claim, and any pledge, lien, mortgage judgment, or othersecurity given for the payment thereof;

d. An Inventory of Assets which must list with reasonable specificity all theassets of the debtor, stating the nature of each asset, the location andcondition thereof, the book value or market value of the asset, and attachingthe corresponding certificate of title therefor in case of real property, or theevidence of title or ownership in case of movable property, theencumbrances, liens or claims thereon, if any, and the identities andaddresses of the lienholders and claimants. The Inventory shall include aSchedule of Accounts Receivable which must indicate the amount of each,the persons from whom due, the date of maturity, and the degree ofcollectibility categorizing them as highly collectible to remotely collectible;

e. A rehabilitation plan which conforms to the minimal requirements set outin section 5, Rule 4 of these Rules;

f. A Schedule of Payments and disposition of assets which the debtormay have effected within three (3) months immediately preceding the filingof the petition;

g. A Schedule of the Cash Flow of the debtor for three (3) monthsimmediately preceding the filing of the petition, and a detailed schedule of

the projected cash flow for the succeeding three (3) months;

h. A Statement of Possible Claims by or against the debtor which mustcontain a brief statement of the facts which might give rise to the claim andan estimate of the probable amount thereof;

i. An Affidavit of General Financial Condition which shall contain answersto the questions or matters prescribed in Annex A hereof;

j. At least three (3) nominees for the position of Rehabilitation Receiver aswell as their qualifications and addresses, including but not limited to theirtelephone numbers, fax number and e-mail address; and

k. A Certificate attesting, under oath, that (a) the filing of the petition hasbeen duly authorized; and (b) the directors and stockholders haveirrevocably approved and/or consented to, in accordance with existing laws,all actions or matters necessary and desirable to rehabilitate the debtor


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including, but not limited to, amendments to the articles of incorporation andby-laws or articles of partnership; increase or decrease in the authorizedcapital stock; issuance of bonded indebtedness; alienation, transfer, orencumbrance of assets of the debtor; and modification of shareholdersrights.

Five (5) copies of its petition shall be filed with the court.SEC. 3. Verification by Debtor. The petition filed by the debtor must beverified by an affidavit of a responsible officer of the debtor and shall be in aform substantially as follows:

I, _____________________, (position) of (name of petitioner), dosolemnly swear that the petitioner has been duly authorized to file thepetition and that the stockholders and board of directors (or governing body)

have approved and/or consented to, in accordance with law, all actions ormatters necessary or desirable to rehabilitate the debtor. There is no petitionfor insolvency filed with any other body, court, or tribunal affecting thepetitioner. The Inventory of Assets and the Schedule of Debts and Liabilitiescontains a full, correct, and true description of all debts and liabilities and ofall goods, effects, estate, and property of whatever kind or class belongingto petitioner. The Inventory also contains a full, correct, and true statementof all debts owing or due to petitioner, or to any person or persons in trust forpetitioner and of all securities and contracts whereby any money mayhereafter become due or payable to petitioner or by or through which any

benefit or advantage may accrue to petitioner. The petition contains aconcise statement of the facts giving rise, or which might give rise, to anycause of action in favor of petitioner. Petitioner has no land, money, stock,expectancy, or property of any kind, except those set forth in the Inventoryof Assets. Petitioner has, in no instance, created or acknowledged a debtfor a greater sum than the true and correct amount. Petitioner, its officers,directors, and stockholders have not, directly or indirectly, concealed,fraudulently sold, or otherwise fraudulently disposed of, any part ofpetitioners real or personal property, estate, effects, or rights of action, andpetitioner, its officers, directors, and stockholders have not in any way

compounded with any of its creditors in order to give preference to suchcreditors, or to receive or to accept any profit or advantage therefrom, or todefraud or deceive in any manner any creditor to whom petitioner isindebted. Petitioner, its officers, directors, and stockholders have beenacting in good faith and with due diligence.

SEC. 4. Creditor-initiated Petitions. Where the petition is filed by a creditoror creditors, it is sufficient that the petition is accompanied by a rehabilitationplan and a list of nominees to the position of Rehabilitation Receiver andverified by a sworn statement that the affiant has read the petition and thatits contents are true and correct of his personal knowledge or based onauthentic records obtained from the debtor.

SEC. 5. Rehabilitation Plan. The rehabilitation plan shall include (a) thedesired business targets or goals and the duration and coverage of therehabilitation; (b) the terms and conditions of such rehabilitation which shall


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include the manner of its implementation, giving due regard to the interestsof secured creditors; (c) the material financial commitments to support therehabilitation plan; (d) the means for the execution of the rehabilitation plan,which may include conversion of the debts or any portion thereof to equity,restructuring of the debts, dacion en pago, or sale of assets or of the

controlling interest; (e) a liquidation analysis that estimates the proportion ofthe claims that the creditors and shareholders would receive if the debtorsproperties were liquidated; and (f) such other relevant information to enablea reasonable investor to make an informed decision on the feasibility of therehabilitation plan.

SEC. 6. Stay Order. If the court finds the petition to be sufficient in formand substance, it shall, not later than five (5) days from the filing of thepetition, issue an Order (a) appointing a Rehabilitation Receiver and fixing

his bond; (b) staying enforcement of all claims, whether for money orotherwise and whether such enforcement is by court action or otherwise,against the debtor, its guarantors and sureties not solidarily liable withthe debtor; (c) prohibiting the debtor from selling, encumbering,transferring, or disposing in any manner any of its properties except in theordinary course of business; (d) prohibiting the debtor from making anypayment of its liabilities outstanding as at the date of filing of the petition; (e)prohibiting the debtors suppliers of goods or services from withholdingsupply of goods and services in the ordinary course of business for as longas the debtor makes payments for the services and goods supplied after the

issuance of the stay order; (f) directing the payment in full of alladministrative expenses incurred after the issuance of the stay order; (g)fixing the initial hearing on the petition not earlier than forty five (45) days butnot later than sixty (60) days from the filing thereof; (h) directing thepetitioner to publish the Order in a newspaper of general circulation in thePhilippines once a week for two (2) consecutive weeks; (i) directing allcreditors and all interested parties (including the Securities and ExchangeCommission) to file and serve on the debtor a verified comment on oropposition to the petition, with supporting affidavits and documents, not laterthan ten (10) days before the date of the initial hearing and putting them on

notice that their failure to do so will bar them from participating in theproceedings; and (j) directing the creditors and interested parties to securefrom the court copies of the petition and its annexes within such time as toenable themselves to file their comment on or opposition to the petition andto prepare for the initial hearing of the petition.

SEC. 7. Service of Stay Order on Rehabilitation Receiver. The petitionershall immediately serve a copy of the stay order on the RehabilitationReceiver appointed by the court, who shall manifest his acceptance or non-acceptance of his appointment not later than ten (10) days from receipt ofthe order.

SEC. 8. Voidability of Illegal Transfers and Preferences. Upon motion ormotu proprio, the court may declare void any transfer of property or any


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other conveyance, sale, payment, or agreement made in violation of its stayorder or in violation of these Rules.

SEC. 9. Initial Hearing. On or before the initial hearing, the petitioner shall

file the publishers affidavit showing that the publication requirementsspecified above had been complied with. If the court is satisfied that said

jurisdictional requirement had been complied with, it shall summarily hearthe parties on any matter relating to the petition as well as any commentand/or opposition filed in connection therewith. The court may holdadditional clarificatory hearings where there is need to further clarify mattersbut in no event shall such additional hearings be held beyond one hundredeighty (180) days from the date of the initial hearing.

If, after the initial hearing, the court is satisfied that there is merit in the

petition, it shall give due course to the petition and immediately refer thepetition and its annexes to the Rehabilitation Receiver who shall evaluatethe rehabilitation plan and submit his recommendations to the court not laterthan one hundred twenty (120) days from the date of the initial hearing.

SEC. 10. Opposition to or Comment on the Petition. Every creditor of thedebtor or any interested party shall file his verified opposition to or commenton the petition not later than ten (10) days before the date of the initialhearing. After such time, no creditor or interested party shall be allowed tofile any comment or opposition thereto without leave of court.

If the Schedule of Debts and Liabilities omits a claim or liability, the creditorconcerned shall attach a verified statement of the obligations allegedly due itto its comment or opposition.

The court shall likewise require the Securities and Exchange Commission tocomment on the petition. The Commission shall coordinate with thegovernment agency concerned in appropriate cases for purposes of filing itscomment.

SEC. 11. Period of the Stay Order. The stay order shall be effectivefrom the date of its issuance until the dismissal of the petition or thetermination of the rehabilitation proceedings.

The petition shall be dismissed if no rehabilitation plan is approved by thecourt upon the lapse of one hundred eighty (180) days from the date of theinitial hearing. The court may grant an extension beyond this period only if itappears by convincing and compelling evidence that the debtor maysuccessfully be rehabilitated. In no instance, however, shall the period forapproving or disapproving a rehabilitation plan exceed eighteen (18) monthsfrom the date of filing of the petition.

SEC. 12. Relief from, Modification, or Termination of Stay Order. Thecourt may, on motion or motu proprio, terminate, modify, or set conditionsfor the continuance of the stay order, or relieve a claim from the coverage


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thereof upon showing that (a) any of the allegations in the petition, or any ofthe contents of any attachment, or the verification thereof has ceased to betrue; (b) a creditor does not have adequate protection over property securingits claim; or (c) the debtors secured obligation is more than the fair marketvalue of the property subject of the stay and such property is not necessary

for the rehabilitation of the debtor.

For purposes of this section, the creditor shall lack adequate protection if itcan be shown that:

a. the debtor fails or refuses to honor a pre-existing agreement with thecreditor to keep the property insured;

b. the debtor fails or refuses to take commercially reasonable steps tomaintain the property; or

c. the property has depreciated to an extent that the creditor isundersecured.

Upon showing of a lack of adequate protection, the court shall order therehabilitation receiver to (a) make arrangements to provide for the insuranceor maintenance of the property, or (b) to make payments or otherwiseprovide additional or replacement security such that the obligation is fullysecured. If such arrangements are not feasible, the court shall modify thestay order to allow the secured creditor lacking adequate protection to

enforce its claim against the debtor; Provided, however, that the court maydeny the creditor the remedies in this paragraph if such remedies wouldprevent the continuation of the debtor as a going concern or otherwiseprevent the approval and implementation of a rehabilitation plan.

SEC. 13. Qualifications of the Rehabilitation Receiver. In the appointmentof the Rehabilitation Receiver, the following qualifications shall be taken intoconsideration by the court:

a. Expertise and acumen to manage and operate a business similar in sizeand complexity to that of the debtor;

b. Knowledge in management, finance, and rehabilitation of distressedcompanies;

c. General familiarity with the rights of creditors in suspension of paymentsor rehabilitation and general understanding of the duties and obligations of aRehabilitation Receiver;

d. Good moral character, independence, and integrity;

e. Lack of a conflict of interest as defined in these Rules; and

f. Willingness and ability to file a bond in such amount as may bedetermined by the court.


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Without limiting the generality of the following, a Rehabilitation Receiver maybe deemed to have a conflict of interest if:

a. He is a creditor or stockholder of the debtor;

b. He is engaged in a line of business which competes with the debtor;

c. He is, or was within two (2) years from the filing of the petition, adirector, officer, or employee of the debtor or any of its present creditors, orthe auditor or accountant of the debtor;

d. He is, or was within two (2) years from the filing of the petition, anunderwriter of the outstanding securities of the debtor;

e. He is related by consanguinity or affinity within the fourth civil degree to

any creditor, stockholder, director, officer, employee, or underwriter of thedebtor; or

f. He has any other direct or indirect material interest in the debtor or anycreditor.

SEC. 14. Powers and Functions of the Rehabilitation Receiver.TheRehabilitation Receiver shall not take over the management and control ofthe debtor but shall closely oversee and monitor the operations of the debtor

during the pendency of the proceedings, and for this purpose shall have thepowers, duties and functions of a receiver under Presidential Decree No.902-A, as amended, and the Rules of Court.

The Rehabilitation Receiver shall be considered as an officer of the court.He shall be primarily tasked to study the best way to rehabilitate the debtorand to ensure that the value of the debtors property is reasonablymaintained pending the determination of whether or not the debtor shouldbe rehabilitated, as well as implement the rehabilitation plan after itsapproval. Accordingly, he shall have the following powers and functions:

a) To verify the accuracy of the petition, including its annexes such as theSchedule of Debts and Liabilities and the Inventory of Assets submitted insupport of the petition;

b) To accept and incorporate, when justified, amendments to the Scheduleof Debts and Liabilities;

c) To recommend to the court the disallowance of claims and rejection ofamendments to the Schedule of Debts and Liabilities that lack sufficientproof and justification;

d) To submit to the court and make available for review by the creditors, arevised Schedule of Debts and Liabilities;


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e) To investigate the acts, conduct, properties, liabilities, and financialcondition of the debtor, the operation of its business and the desirability ofthe continuance thereof; and, any other matter relevant to the proceeding orto the formulation of a rehabilitation plan;

f) To examine under oath the directors and officers of the debtor and anyother witnesses that he may deem appropriate;

g) To make available to the creditors documents and notices necessary forthem to follow and participate in the proceedings;

h) To report to the court any fact ascertained by him pertaining to thecauses of the debtors problems, fraud, preferences, dispositions,encumbrances, misconduct, mismanagement, and irregularities committedby the stockholders, directors, management, or any other person against the

debtor;

i) To employ such person or persons such as lawyers, accountants,appraisers, and staff as are necessary in performing his functions and dutiesas Rehabilitation Receiver;

j) To monitor the operations of the debtor and to immediately report to thecourt any material adverse change in the debtors business;

k) To evaluate the existing assets and liabilities, earnings and operations

of the debtor;

l) To determine and recommend to the court the best way to salvage andprotect the interests of the creditors, stockholders, and the general public;

m) To study the rehabilitation plan proposed by the debtor or anyrehabilitation plan submitted during the proceedings, together with anycomments made thereon;

n) To prohibit and report to the court any encumbrance, transfer, or

disposition of the debtors property outside of the ordinary course ofbusiness or what is allowed by the court;

o) To prohibit and report to the court any payments outside of the ordinarycourse of business;

p) To have unlimited access to the debtors employees, premises, books,records, and financial documents during business hours;

q) To inspect, copy, photocopy, or photograph any document, paper,book, account, or letter, whether in the possession of the debtor or otherpersons;

r) To gain entry into any property for the purpose of inspecting,measuring, surveying, or photographing it or any designated relevant objector operation thereon;


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s) To take possession, control, and custody of the debtors assets;

t) To notify counterparties and the court as to contracts that the debtorhas decided to continue to perform or breach;

u) To be notified of, and to attend all meetings of the board of directorsand stockholders of the debtor;

v) To recommend any modification of an approved rehabilitation plan ashe may deem appropriate;

w) To bring to the attention of the court any material change affecting thedebtors ability to meet the obligations under the rehabilitation plan;

x) To recommend the appointment of a management committee in the

cases provided for under Presidential Decree No. 902-A, as amended;

y) To recommend the termination of the proceedings and the dissolution ofthe debtor if he determines that the continuance in business of such entity isno longer feasible or profitable or no longer works to the best interest of thestockholders, parties-litigants, creditors, or the general public;

z) To apply to the court for any order or directive that he may deemnecessary or desirable to aid him in the exercise of his powers andperformance of his duties and functions; and

aa) To exercise such other powers as may from time to time be conferredupon him by the court.

SEC. 15. Oath and Bond. Before entering upon his powers, duties, andfunctions, the Rehabilitation Receiver must be sworn to perform themfaithfully, and must post a bond executed in favor of the debtor in such sumas the court may direct, to guarantee that he will faithfully discharge hisduties and obey the orders of the court. If necessary, he shall also declare

under oath that he will perform the duties of a trustee of the assets of thedebtor, will act honestly and in good faith, and deal with the assets of thedebtor in a commercially reasonable manner.

SEC. 16. Fees and Expenses. The Rehabilitation Receiver and thepersons hired by him shall be entitled to reasonable professional fees andreimbursement of expenses which shall be considered as administrativeexpenses.

SEC. 17. Immunity from Suit. The Rehabilitation Receiver shall not besubject to any action, claim, or demand in connection with any act done oromitted by him in good faith in the exercise of his functions and powersherein conferred.


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SEC. 18. Reports. The Rehabilitation Receiver shall report every threemonths to the court or as often as the court may require on the generalcondition of the debtor.

SEC. 19. Dismissal of Rehabilitation Receiver. A Rehabilitation Receivermay be dismissed by the court, upon motion or motu proprio, on account ofconflict of interest, or on any of the grounds for removing a trustee under thegeneral principles of trusts.

SEC. 20. Comments on or Opposition to the Rehabilitation Plan. Anycreditor or interested party of record may file comments on or opposition tothe proposed rehabilitation plan, with a copy given to the Rehabilitation

Receiver, not later than one hundred twenty (120) days from the date of theinitial hearing. The court shall conduct summary and non-adversarialproceedings to receive evidence, if necessary, in hearing the comments andopposition to the plan.

SEC. 21. Creditors Meetings. At any time before he submits hisevaluation on the rehabilitation plan to the court as prescribed in section 9,Rule 4 of this Rule, the Rehabilitation Receiver may, either alone or with thedebtor, meet with the creditors or any interested party to discuss the plan

with a view to clarifying or resolving any matter connected therewith.

SEC. 22. Modification of the Proposed Rehabilitation Plan. The debtormay modify its rehabilitation plan in the light of the comments of theRehabilitation Receiver and creditors or any interested party and submit arevised or substitute rehabilitation plan for the final approval of the court.Such rehabilitation plan must be submitted to the court not later than one (1)year from the date of the initial hearing.

SEC. 23. Approval of the Rehabilitation Plan. The court may approve arehabilitation plan even over the opposition of creditors holding a majority ofthe total liabilities of the debtor if, in its judgment, the rehabilitation of thedebtor is feasible and the opposition of the creditors is manifestlyunreasonable.

In determining whether or not the opposition of the creditors is manifestlyunreasonable, the court shall consider the following:

a. That the plan would likely provide the objecting class of creditors withcompensation greater than that which they would have received if the assetsof the debtor were sold by a liquidator within a three-month period;

b. That the shareholders or owners of the debtor lose at least theircontrolling interest as a result of the plan; and


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c. The Rehabilitation Receiver has recommended approval of the plan.

In approving the rehabilitation plan, the court shall issue the necessaryorders or processes for its immediate and successful implementation. Itmay impose such terms, conditions, or restrictions as the effective

implementation and monitoring thereof may reasonably require, or for theprotection and preservation of the interests of the creditors should the planfail.

SEC. 24. Effects of the Rehabilitation Plan. The approval of therehabilitation plan by the court shall result in the following:

a. The plan and its provisions shall be binding upon the debtor and allpersons who may be affected by it, including the creditors, whether or not

such persons have participated in the proceedings or opposed the plan orwhether or not their claims have been scheduled;

b. The debtor shall comply with the provisions of the plan and shall take allactions necessary to carry out the plan;

c. Payments shall be made to the creditors in accordance with theprovisions of the plan;

d. Contracts and other arrangements between the debtor and its creditors

shall be interpreted as continuing to apply to the extent that they do notconflict with the provisions of the plan; and

e. Any compromises on amounts or rescheduling of timing of payments bythe debtor shall be binding on creditors regardless of whether or not the planis successfully implemented.

SEC. 25. Revocation of the Rehabilitation Plan on Grounds of Fraud. Onmotion or motu proprio, within ninety (90) days from the approval of the

rehabilitation plan, and after notice and hearing, the court may revoke theapproval thereof on the ground that the same was secured through fraud.

SEC. 26. Alteration or Modification of the Rehabilitation Plan. Anapproved rehabilitation plan may, on motion, be altered or modified if, in the

judgment of the court, such alteration or modification is necessary toachieve the desired targets or goals set forth therein.

SEC. 27. Termination of Proceedings. In case of the failure of the debtorto submit the rehabilitation plan, or the disapproval thereof by the court, orthe failure of the rehabilitation of the debtor because of failure to achieve thedesired targets or goals as set forth therein, or the failure of the said debtorto perform its obligations under the said plan, or a determination that therehabilitation plan may no longer be implemented in accordance with itsterms, conditions, restrictions, or assumptions, the court shall upon motion,motu proprio, or upon the recommendation of the Rehabilitation Receiver,


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terminate the proceedings. The proceedings shall also terminate upon thesuccessful implementation of the rehabilitation plan.

SEC. 28. Discharge of the Rehabilitation Receiver. Upon termination of

the rehabilitation proceedings, the Rehabilitation Receiver shall submit hisfinal report and accounting within such period of time as the court will allowhim. Upon approval of his report and accounting, the court shall order hisdischarge.

Rule 5FINAL PROVISIONSSECTION 1. Severability. If any provision or section of these Rules is held

invalid, the other provisions or sections shall not be affected thereby.

SEC. 2. Effectivity. These Rules shall take effect on December 15, 2000following its publication in two (2) newspapers of general circulation in thePhilippines.

AFFIDAVIT OF GENERAL FINANCIAL CONDITION

1) Are you an officer of the debtor referred to in these proceedings?

2) What is your full name and what position do you hold in the debtor?

3) What is the full name of the debtor and what is the address of its headoffice?

4) When was it formed or incorporated?

5) When did the debtor commence business?

6) What is the nature of its business? What is the market share of thedebtor in the industry in which it is engaged?

7) Who are the partners, members, or stockholders? How manyemployees?

8) What is the capital of the debtor?

9) What is the capital contribution and what is the amount of the capital,paid and unpaid, of each of the partners or shareholders?

10) Do any of these people hold the shares in trust for others?

11) Who are the directors and officers of the debtor?


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12) Has the debtor any subsidiary corporation? If so, give particulars.

13) Has the debtor properly maintained its books and are they updated?

14) Were the books audited annually?

15) If so, what is the name of the auditor and when was the last auditedstatement drawn up?

16) Have all proper returns been made to the various government agenciesrequiring the same?

17) When did the debtor first become aware of its problems?

18) Has the debtor within the twelve months preceding the filing of thepetition:

a) made any payments, returned any goods or delivered any property toany of its creditors, except in the normal course of business?

b) executed any mortgage, pledge, or security over any of its properties infavor of any creditor?

c) transferred or disposed of any of its properties in payment of any debt?

d) sold, disposed of, or removed any of its property except in the ordinarycourse of business?

e) sold any merchandise at less than fair market value or purchasedmerchandise or services at more than fair market value?

f) made or been a party to any settlement of property in favor of anyperson?

If so, give particulars.

19) Has the debtor recorded all sales or dispositions of assets?

20) What were the sales for the last three years and what percentage of thesales represented the profit or mark-up?

21) What were the profits or losses for the debtor for the last three years?

22) What are the causes of the problems of the debtor? Please provideparticulars.

23) When did you first notice these problems and what actions did thedebtor take to rectify them?

24) How much do you estimate is needed to rehabilitate the debtor?


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25) Has any person expressed interest in investing new money into thedebtor?

26) Are there any pending and threatened legal actions against thedebtor? If so, please provide particulars.

27) Has the debtor discussed any restructuring or repayment plan with anyof the creditors? Please provide status and details.

28) Has any creditor expressed interest in restructuring the debts of thedebtor? If so, please give particulars.29) Have employees wages and salaries been kept current? If not, howmuch are in arrears and what time period do the arrears represent?

30) Have obligations to the government and its agencies been kept current?

If not, how much are in arrears and what time period do the arrearsrepresent?

Appendix A

A.M. NO. 00-11-03-SC

RESOLUTION DESIGNATING CERTAIN BRANCHES OF REGIONALTRIAL COURTS TO TRY AND DECIDE CASES FORMERLYCOGNIZABLE BY THE SECURITIES AND EXCHANGE COMMISSION

To implement the provisions of Sec. 5.2 of Republic Act No. 8799 (TheSecurities Regulation Code), and in the interest of a speedy and efficientadministration of justice and subject to the guidelines hereinafter set forth,the following branches of the Regional Trial Courts (RTC) are herebydesignated to try and decide Securities and Exchange Commission (SEC)

cases enumerated in Sec. 5 of P.D. No. 902-A (Reorganization of theSecurities and Exchange Commission), arising within their respectiveterritorial jurisdictions with respect to the National Capital Judicial Regionand within the respective provinces in the First to the Twelfth JudicialRegions:

NATIONAL CAPITALJUDICIAL REGION

Manila(1) Br. 46, Judge Artemio S. Tipon

Quezon City(2) Br. 90, Judge Reynaldo B. Daway(3) Br. 93, Judge Apolinario D. Bruselas, Jr.


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Makati City(4) Br. 138, Judge Sixto C. Marella(5) Br. 139, Judge Florentino A. Tuazon, Jr.

Pasig City

(6) Br. 158, Judge Jose R. Hernandez

Kalookan City(7) Br. 123, Judge Edmundo T. Acua

Las Pias City(8) Br. 253, Judge Jose F. Caoibes, Jr.

Mandaluyong City(9) Br. 214, Judge Edwin D. Sorongon

Marikina City(10) Br. 273, Judge Olga P. Enriquez

Muntinlupa City(11) Br. 256, Judge Alberto L. Lerma

Paraaque City(12) Br. 258, Judge Raul E. De Leon

Pasay City(13) Br. 231, Judge Cesar Z. Ylagan

Valenzuela City(14) Br. 75, Judge Jaime F. Bautista

FIRST JUDICIAL REGION

Abra (Banguet)(15) Br. 1, Judge Charito B. Gonzales

Benguet (Baguio City)(16) Br. 59, Judge Abraham B. Borreta

Ilocos Norte (Laoag City)(17) Br. 15, Judge Benjamin D. Turgano

La Union (San Fernando City)(18) Br. 29, Judge Robert T. Cawed

Pangasinan (Urdaneta City)(19) Br. 48, Judge Alicia G. Decano


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SECOND JUDICIAL REGION

Isabela (Ilagan)(20) Br. 16, Judge Isaac R. De Alban

Nueva Vizcaya (Bayombong)(21) Br. 29, Judge Gil L. Valdez

Quirino (Cabarroguis)(22) Br. 31, Judge Moises M. Pardo

THIRD JUDICIAL REGION

Bataan (Balanga)(23) Br. 2, Judge Manuel M. Tan

Bulacan (Malolos)(24) Br. 7, Judge Danilo A. Manalastas

Nueva Ecija (Cabanatuan City)(25) Br. 28, Judge Tomas B. Talavera

Pampanga (San Fernando)(26) Br. 42, Judge Pedro M. Sunga, Jr.

Zambales (Olongapo City)(27) Br. 72, Judge Eliodoro G. Ubiadas

Tarlac (Tarlac City)(28) Br. 63, Judge Arsenio P. Adriano

FOURTH JUDICIAL REGION

Laguna (Calamba)(29) Br. 92, Judge Antonio S. Pozas

Rizal (Binangonan)(30) Br. 70, Judge Augusto T. Gutierrez

Cavite (Imus)(31) Br. 21, Judge Norbeto J. Quisumbing, Jr.

Batangas (Batangas City)(32) Br. 2, Judge Mario V. Lopez

Quezon (Lucena City)(33) Br. 57, Judge Rafael R. Lagos


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Mindoro Oriental (Calapan City)(34) Br. 39, Judge Manuel D. Luna, Jr.

FIFTH JUDICIAL REGION

Camarines Sur (Naga City)(35) Br. 23, Judge Pablo M. Paqueco, Jr.

Albay (Legaspi City)(36) Br. 4, Judge Gregorio A. Consulta

Sorsogon (Sorsogon)(37) Br. 52, Judge Honesto A. Villamor

SIXTH JUDICIAL REGION

Negros Occidental (Bacolod City)(38) Br. 53, Judge Pepito B. Gellada

Iloilo City(39) Br. 39, Judge Jose G. Abdallah

Aklan (Kalibo)

(40) Br. 8, Judge Eustaquio G. Terencio

Capiz (Roxas City)(41) Br. 19, Judge Sergio L. Pestao

Antique (San Jose)(42) Br. 10, Judge Sylvia G. Jurao

SEVENTH JUDICIAL REGION

Cebu (Cebu City)(43) Br. 11, Judge Isaias P. Dicdican

Negros Oriental (Dumaguete City)(44) Br. 40, Judge Godofredo S. Sison

Bohol (Tagbilaran City)(45) Br. 48, Judge Fernando G. Fuentes, III

EIGHT JUDICIAL REGION

Leyte (Tacloban City)(46) Br. 8, Judge Salvador Y. Apurillo

Southern Leyte (Maasin)(47) Br. 24, Judge Bethany G. Kapili


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Northern Samar (Catarman)(48) Br. 19, Judge Cesar R. Cinco

NINTH JUDICIAL REGION

Zamboanga del Norte (Dipolog City)(49) Br. 6, Judge Primitivo S. Abarquez, Jr.

Zamboanga del Sur (Zamboanga City)(50) Br. 12, Judge Hakim S. Abdulwahid

Agusan del Norte (Butuan City)(51) Br. 33, Judge Victor A. Tomaneng

TENTH JUDICIAL REGION

Misamis Oriental (Cagayan de Oro City)(52) Br. 40, Judge Epifanio T. Nacaya, Jr.

Misamis Occidental (Oroquieta City)(53) Br. 14, Judge Henry B. Damasing

Surigao del Norte (Surigao City)

(54) Br. 30, Judge Floripinas C. Buyser

ELEVENTH JUDICIAL REGION

Davao del Norte (Panabo)(55) Br. 34, Judge Gregorio A. Palabrica

Davao del Sur (Davao City)

(56) Br. 10, Judge Augusto V. Breva

South Cotabato (General Santos City)(57) Br. 23, Judge Jose S. Majaducon

Surigao del Sur (Tandag)(58) Br. 27, Judge Ermelindo G. Andal

TWELFTH JUDICIAL REGION

Lanao de Norte (Iligan City)(59) Br. 5, Judge Maximino M. Libre

Lanao del Sur (Marawi City)(60) Br. 8, Judge Santos B. Adiong


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The following guidelines shall be observed:

1. In multiple sala courts where one (1) or more branches of the RTC areherein designated as special courts, there will be no unloading of casesalready pending in the branches designated. They shall continue to try and

decide the said cases in addition to the SEC cases. In the meantime, in viewof the temporary imbalance of caseload as a result of the transfer of SECcases, the Executive Judge concerned shall exclude them in the raffle ofnewly filed cases in their station until their workload equals to that of theother branches, in which event they shall be included in the raffle of othercivil and criminal cases.

2. The trial and disposition of SEC cases shall be in accordance with theprocedure to be promulgated by the Supreme Court.

3. In case of temporary incapacity, absence, disability or inhibition of thejudge of the designated special court in multiple sala courts where one (1) ormore branches of the RTC have been designated, the pairing system formultiple sala stations subject of Circular No. 7 dated 23 September 1974, asamended, shall apply.

4. The branches herein designated shall continue to perform the functions ofspecial courts even after they shall have become vacant due to retirement,death, incapacity, dismissal, resignation, transfer, detail or promotion of theincumbent judges herein named. Their successors, whether permanent or

temporary, shall act as Presiding Judges of these special courts unless theCourt directs otherwise.

5. In provinces (for the First to the Twelfth Judicial Regions) where there areno designated special courts, the Executive Judge of the station where newSEC cases will be filed shall consult the Supreme Court thru the Office ofthe Office Administrator.

6. This Resolution shall take effect on the fifteenth day of December, 2000

and shall be published in a newspaper of general circulation not later thanthe 28th day of November 2000.

Promulgated this 21st day of November 2000.Davide, C.J., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban,Quisumbing, Pardo, Buena, Gonzaga-Reyes, Ynares-Santiago, and DeLeon, JJ.