Rule of Procedure for Small Claims (2008), as amended SECTION 1. Title.

This Rule shall be known as The Rule of Procedure for Small Claims Cases. SEC. 2. Scope. This Rule shall govern the procedure in actions before the Metropolitan Trial Courts, Municipal Trial Courts in Cities, Municipal Trial Courts and Municipal Circuit Trial Courts for payment of money where the value of the claim does not exceed One Hundred Thousand Pesos (P100,000.00) exclusive of interest and costs. SEC. 3. Definition of Terms. For purposes of this Rule: (a) Plaintiff refers to the party who initiated a small claims action. The term includes a defendant who has filed a counterclaim against plaintiff; (b) Defendant is the party against whom the plaintiff has filed a small claims action. The term includes a plaintiff against whom a defendant has filed a claim, or a person who replies to the claim; (c) Person is an individual, corporation, partnership, limited liability partnership, association, or other juridical entity endowed with personality by law; (d) Individual is a natural person; (e) Motion means a partys request, written or oral, to the court for an order or other action. It shall include an informal written request to the court, such as a letter; (f) Good cause means circumstances sufficient to justify the requested order or other action, as determined by the judge; and (g) Affidavit means a written statement or declaration of facts that are sworn or affirmed to be true. SEC. 4. Applicability. The Metropolitan Trial Courts, Municipal Trial Courts in Cities, Municipal Trial Courts, and Municipal Circuit Trial Courts shall apply this Rule in all actions which are: (a) purely civil in nature where the claim or relief prayed for by the plaintiff is solely for payment or reimbursement of sum of money, and (b) the civil aspect of criminal actions, either filed before the institution of the criminal action, or reserved upon the filing of the criminal action in court, pursuant to Rule 111 of the Revised Rules Of Criminal Procedure. These claims or demands may be: (a) For money owed under any of the following: 1. Contract of Lease; 2. Contract of Loan; 3. Contract of Services; 4. Contract of Sale; or 5. Contract of Mortgage; (b) For damages arising from any of the following: 1. Fault or negligence; 2. Quasi-contract; or 3. Contract; (c) The enforcement of a barangay amicable settlement or an arbitration award involving a money claim covered by this Rule pursuant to Sec. 417 of Republic Act 7160, otherwise known as the Local Government Code of 1991. SEC. 5. Commencement of Small Claims Action. A small claims action is commenced by filing with the court an accomplished and verified Statement of Claim (Form 1-SCC) in duplicate, accompanied by a Certification of Non-forum Shopping (Form 1A, SCC), and two (2) duly certified photocopies of the actionable document/s subject of the claim, as well as the affidavits of witnesses and other evidence to support the claim. No evidence shall be allowed during the hearing which was not attached to or submitted together with the Claim, unless good cause is shown for the admission of additional evidence.

No formal pleading, other than the Statement of Claim described in this Rule, is necessary to initiate a small claims action. SEC. 6. Joinder of Claims. Plaintiff may join in a single statement of claim one or more separate small claims against a defendant provided that the total amount claimed, exclusive of interest and costs, does not exceed P100,000.00. SEC. 7. Affidavits. The affidavits submitted under this Rule shall state only facts of direct personal knowledge of the affiants which are admissible in evidence. A violation of this requirement shall subject the party, and the counsel who assisted the party in the preparation of the affidavits, if any, to appropriate disciplinary action. The inadmissible affidavit(s) or portion(s) thereof shall be expunged from the record. SEC. 8. Payment of Filing Fees. The plaintiff shall pay the docket and other legal fees prescribed under Rule 141 of the Revised Rules of Court, unless allowed to litigate as an indigent. A claim filed with a motion to sue as indigent (Form 6-SCC) shall be referred to the Executive Judge for immediate action in case of multi-sala courts, or to the Presiding Judge of the court hearing the small claims case. If the motion is granted by the Executive Judge, the case shall be raffled off or assigned to the court designated to hear small claims cases. If the motion is denied, the plaintiff shall be given five (5) days within which to pay the docket fees, otherwise, the case shall be dismissed without prejudice. In no case shall a party, even if declared an indigent, be exempt from the payment of the P1,000.00 fee for service of summons and processes in civil cases. SEC. 9. Dismissal of the Claim. After the court determines that the case falls under this Rule, it may, from an examination of the allegations of the Statement of Claim and such evidence attached thereto, by itself, dismiss the case outright on any of the grounds apparent from the Claim for the dismissal of a civil action. SEC. 10. Summons and Notice of Hearing. If no ground for dismissal is found, the court shall forthwith issue Summons (Form 2-SCC) on the day of receipt of the Statement of Claim, directing the defendant to submit a verified Response. The court shall also issue a Notice (Form 4-SCC) to both parties, directing them to appear before it on a specific date and time for hearing, with a warning that no unjustified postponement shall be allowed, as provided in Section 19 of this Rule. The summons and notice to be served on the defendant shall be accompanied by a copy of the Statement of Claim and documents submitted by plaintiff, and a copy of the Response (Form 3-SCC) to be accomplished by the defendant. The Notice shall contain an express prohibition against the filing of a motion to dismiss or any other motion under Section 14 of this Rule. SEC. 11. Response. The defendant shall file with the court and serve on the plaintiff a duly accomplished and verified Response within a non-extendible period of ten (10) days from receipt of summons. The Response shall be accompanied by certified photocopies of documents, as well as affidavits of witnesses and other evidence in support thereof. No evidence shall be allowed during the hearing which was not attached to or submitted together with the Response, unless good cause is shown for the admission of additional evidence.

SEC. 12. Effect of Failure to File Response. Should the defendant fail to file his Response within the required period, the court by itself shall render judgment as may be warranted by the facts alleged in the Statement of Claim limited to what is prayed for. The court however, may, in its discretion, reduce the amount of damages for being excessive or unconscionable. SEC. 13. Counterclaims Within the Coverage of this Rule. If at the time the action is commenced, the defendant possesses a claim against the plaintiff that (a) is within the coverage of this Rule, exclusive of interest and costs; (b) arises out of the same transaction or event that is the subject matter of the plaintiffs claim; (c) does not require for its adjudication the joinder of third parties; and (d) is not the subject of another pending action, the claim shall be filed as a counterclaim in the Response; otherwise, the defendant shall be barred from suit on the counterclaim. The defendant may also elect to file a counterclaim against the plaintiff that does not arise out of the same transaction or occurrence, provided that the amount and nature thereof are within the coverage of this Rule and the prescribed docket and other legal fees are paid. SEC. 14. Prohibited Pleadings and Motions. The following pleadings, motions, or petitions shall not be allowed in the cases covered by this Rule: (a) Motion to dismiss the complaint except on the ground of lack of jurisdiction; (b) Motion for a bill of particulars; (c) Motion for new trial, or for reconsideration of a judgment, or for reopening of trial; (d) Petition for relief from judgment; (e) Motion for extension of time to file pleadings, affidavits, or any other paper; (f) Memoranda; (g) Petition for certiorari, mandamus, or prohibition against any interlocutory order issued by the court; (h) Motion to declare the defendant in default; (i) Dilatory motions for postponement; (j) Reply; (k) Third-party complaints; and (l) Interventions. SEC. 15. Availability of Forms; Assistance by Court Personnel. The Clerk of Court or other court personnel shall provide such assistance as may be requested by a plaintiff or a defendant regarding the availability of forms and other information about the coverage, requirements as well as procedure for small claims cases. SEC. 16. Appearance. The parties shall appear at the designated date of hearing personally or through a representative authorized under a Special Power of Attorney (Form 5-SCC) to enter into an amicable settlement, to submit to Judicial Dispute Resolution (JDR) and to enter into stipulations or admissions of facts and of documentary exhibits. SEC. 17. Appearance of Attorneys Not Allowed. No attorney shall appear in behalf of or represent a party at the hearing, unless the attorney is the plaintiff or defendant. If the court determines that a party cannot properly present his/her claim or defense and needs assistance, the court may, in its discretion, allow another individual who is not an attorney to assist that party upon the latters consent. SEC. 18. Non-appearance of Parties. Failure of the plaintiff to appear shall be cause for the dismissal of the claim without

prejudice. The defendant who appears shall be entitled to judgment on a permissive counterclaim. Failure of the defendant to appear shall have the same effect as failure to file a Response under Section 12 of this Rule. This shall not apply where one of two or more defendants who are sued under a common cause of action and have pleaded a common defense appears at the hearing. Failure of both parties to appear shall cause the dismissal with prejudice of both the claim and counterclaim. SEC. 19. Postponement When Allowed. A request for postponement of a hearing may be granted only upon proof of the physical inability of the party to appear before the court on the scheduled date and time. A party may avail of only one (1) postponement. SEC. 20. Duty of the Court. At the beginning of the court session, the judge shall read aloud a short statement explaining the nature, purpose and the rule of procedure of small claims cases. SEC. 21. Judicial Dispute Resolution. At the hearing, the judge shall conduct Judicial Dispute Resolution (JDR) through mediation, conciliation, early neutral evaluation, or any other mode of JDR. Any settlement (Form 7-SCC) or resolution (Form 8SCC) of the dispute shall be reduced into writing, signed by the parties and submitted to the court for approval (Form 12-SCC). SEC. 22. Failure of JDR. If JDR fails and the parties agree in writing (Form 10-SCC) that the hearing of the case shall be presided over by the judge who conducted the JDR, the hearing shall so proceed in an informal and expeditious manner and terminated within one (1) day. Absent such agreement, (a) in case of a multi-sala court, the case shall, on the same day, be transmitted (Form 11-SCC) to the Office of the Clerk of Court for immediate referral by the Executive Judge to the pairing judge for hearing and decision within five (5) working days from referral; and (b) in case of a single sala court, the pairing judge shall hear and decide the case in the court of origin within five (5) working days from referral by the JDR judge. SEC. 23. Decision.After the hearing, the court shall render its decision on the same day, based on the facts established by the evidence (Form 13-SCC). The decision shall immediately be entered by the Clerk of Court in the court docket for civil cases and a copy thereof forthwith served on the parties. The decision shall be final and unappealable. SEC. 24. Execution. If the decision is rendered in favor of the plaintiff, execution shall issue upon motion (Form 9-SCC). SEC. 25. Applicability of the Rules of Civil Procedure. The Rules of Civil Procedure shall apply suppletorily insofar as they are not inconsistent with this Rule. SEC. 26. Effectivity.This Rule shall take effect on October 1, 2008 for the pilot courts designated to apply the procedure for small claims cases following its publication in two newspapers of general circulation. RA 8369 (1997), Sec. 5

Section 5. Jurisdiction offamily Courts. - The Family Courts shall have exclusive original jurisdiction to hear and decide the following cases: a) Criminal cases where one or more of the accused is below eighteen (18) years of age but not less than nine (9) years of age but not less than nine (9) years of age or where one or more of the victims is a minor at the time of the commission of the offense: Provided, That if the minor is found guilty, the court shall promulgate sentence and ascertain any civil liability which the accused may have incurred. The sentence, however, shall be suspended without need of application pursuant to Ptesidential Decree No. 603, otherwise known as the "Child and Youth Welfare Code"; b) Petitions for guardianship, custody of children, habeas corpus in relation to the latter; c) Petitions for adoption of children and the revocation thereof; d) Complaints for annulment of marriage, declaration of nullity of marriage and those relating to marital status and property relations of husband and wife or those living together under different status and agreements, and petitions for dissolution of conjugal partnership of gains; e) Petitions for support and/or acknowledgment; f) Summary judicial proceedings brought under the provisions of Executive Order No. 209, otherwise known as the "Family Code of the Philippines"; g) Petitions for declaration of status of children as abandoned, dependent o neglected children, petitions for voluntary or involuntary commitment of children; the suspension, termination, or restoration of parental authority and other cases cognizable under Presidential Decree No. 603, Executive Order No. 56, (Series of 1986), and other related laws; h) Petitions for the constitution of the family home; i) Cases against minors cognizable under the Dangerous Drugs Act, as amended; j) Violations of Republic Act No. 7610, otherwise known as the "Special Protection of Children Against Child Abuse, Exploitation and Discrimination Act," as amended by Republic Act No. 7658; and k) Cases of domestic violence against: 1) Women - which are acts of gender based violence that results, or are likely to result in physical, sexual or psychological harm or suffering to women; and other forms of physical abuse such as battering or threats and coercion which violate a woman's personhood, integrity and freedom movement; and 2) Children - which include the commission of all forms of abuse, neglect, cruelty, exploitation, violence, and discrimination and all other conditions prejudicial to their development. If an act constitutes a criminal offense, the accused or batterer shall be subject to criminal proceedings and the corresponding penalties. If any question involving any of the above matters should arise as an incident in any case pending in the regular courts, said incident shall be determined in that court.

A.M. 02-11-10-SC 4 March 2003 RE: PROPOSED RULE ON DECLARATION OF ABSOLUTE NULLITY OF VOID MARRIAGES AND ANNULMENT OF VOIDABLE MARRIAGES RESOLUTION Acting on the letter of the Chairman of the Committee on Revision of the Rules of Court submitting for this Court's consideration and approval the Proposed Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages, the Court Resolved to APPROVE the same. The Rule shall take effect on March 15, 2003 following its publication in a newspaper of general circulation not later than March 7, 2003 March 4, 2003 Davide, C.J. Bellosillo, Puno, Vitug Mendoza, Panganiban, Quisumbing, Sandoval-Gutierrez, Carpio, Austria-Martinez, Carpio Morales, Callejo, Sr. and Azcuna Ynares-Santiago, on leave Corona, on official leave RULE ON DECLARATION OF ABSOLUTE NULLITY OF VOID MARIAGES AND ANNULMENT OF VOIDABLE MARRIAGES Section 1. Scope - This Rule shall govern petitions for declaration of absolute nullity of void marriages and annulment of voidable marriages under the Family Code of te Philippines. The Rules of Court shall apply suppletorily. Section 2. Petition for declaration of absolute nullity of void marriages. (a) Who may file. - A petition for declaration of absolute nullity of void marriage may be filed solely by the husband or the wife. (n) (b) Where to file. - The petition shal be filed in the Family Court. (c) Imprecriptibility ofaction or defense. - An Action or defense for the declaration of absolute nullity of void marriage shall not prescribe. (d) What to allege. - A petition under Article 36 of Family Code shall specially allege te complete facts showing the either or both parties were psychologically incapacitated from complying with the essential marital obligations of marriages at the time of the celebration of marriage even if such incapacity becomes manifest only after its celebration. The complete facts should allege the physical manifestations, if any, as are indicative of psychological incapacity at the time of the celebration of the marriage but expert opinion need not be alleged. Section 3. Petition for annulment of voidable marriages. (a) Who may file. - The following persons may file a petition for annulment of voidable marriage based on any of the grounds under article 45 of the Family Code and within the period herein indicated: (1) The contracting party whose parent, or guardian, or person exercising substitute parental authority did not give his or her consent, within five years after attaining the age of twenty-one unless, after attaining the age of twenty-one, such party freely cohabitated with the other as husband or wife; or the parent, guardian or person having legal charge of the contracting party , at any time before such party has reached the age of twenty-one;

(2) The sane spouse who had no knowledge of the other's insanity; or by any relative, guardian, or person having legal charge of the insane, at any time before the death of either party; or by the insane spouse during the a lucid interval or after regaining sanity, provided that the petitioner , after coming to reason, has not freely cohabited with the other as husband or wife; (3) The injured party whose consent was obtained by fraud, within five years after the discovery of the fraud, provided that said party, with full knowledge of the facts constituting the fraud, has not freely cohabited with the other as husband or wife; (4) The injured party whose consent was obtained by force, intimidation, or undue influence, within five years from the time the force intimidation, or undue influence disappeared or ceased, provided that the force, intimidation, or undue influence having disappeared or ceased, said party has not thereafter freely cohabited with the other as husband or wife; (5) The injured party where the other spouse is physically incapable of consummating the marriage with the other and such incapability continues and appears to be incurable, within five years after the celebration of marriage; and (6) Te injured party where the other party was afflicted with a sexually-transmissible disease found to be serious and appears to be incurable, within five years after the celebration of marriage. (b) Where to file. - The petition shall be filed in the Family Court. Section 4. Venue. - The Petition shall be filed in the Family Court of the province or city where the petitioner or the respondent has been residing for at least six months prior to the date of filing. Or in the case of non-resident respondent, where he may be found in the Philippines, at the election of the petitioner. Section 5. Contents and form of petition. - (1) The petition shall allege the complete facts constituting the cause of action. (2) It shall state the names and ages of the common children of the parties and specify the regime governing their property relations, as well as the properties involved. If there is no adequate provision in a written agreement between the parties, the petitioner may apply for a provisional order for spousal support, the custody and support of common children, visitation rights, administration of community or conjugal property, and other matters similarly requiringurgent action. (3) It must be verified and accompanied celebration of marriage. (b) Where to file.-The petition shall be filed in the Family Court. Section 4. Venue. - The petition shall be filed in the Family Court of the province or city where the petitioner or the respondent has been residing for at least six months prior to the date of filing, or in the case of a non-resident respondent, where he may be found in the Philippines at the election of the petitioner.

Section 5. Contents and form of petition. - (1) The petition shall allege the complete facts constituting the cause of action. (2) it shall state the names and ages of the common children of the parties and specify the regime governing their property relations, as well as the properties involved. If there is no adequate provision in a written agreement between the parties, the petitioner may apply for a provisional order for spousal support, custody and support of common children, visitation rights, administration of community or conjugal property, and other matters similarly requiring urgent action. (3) it must be verified and accompanied by a certification against forum shopping. The verification and certification must be signed personally by me petitioner. No petition may be filed solely by counsel or through an attorney-in-fact. If the petitioner is in a foreign country, the verification and certification against forum shopping shall be authenticated by the duly authorized officer of the Philippine embassy or legation, consul general, consul or vice-consul or consular agent in said country. (4) it shall be filed in six copies. The petitioner shall serve a copy of the petition on the Office of the Solicitor General and the Office of the City or Provincial Prosecutor, within five days from the date of its filing and submit to the court proof of such service within the same period. Failure to comply with any of the preceding requirements may be a ground for immediate dismissal of the petition. Section 6. Summons. - The service of summons shall be governed by Rule 14 of the Rules of Court and by the following rules: (1) Where the respondent cannot be located at his given address or his whereabouts are unknown and cannot be ascertained by diligent inquiry, service of summons may, by leave of court, be effected upon him by publication once a week for two consecutive weeks in a newspaper of general circulation in the Philippines and in such places as the court may order In addition, a copy of the summons shall be served on the respondent at his last known address by registered mail or any other means the court may deem sufficient. (2) The summons to be published shall be contained in an order of the court with the following data: (a) title of the case; (b) docket number; (c) nature of the petition; (d) principal grounds of the petition and the reliefs prayed for; and (e) a directive for the respondent to answer within thirty days from the last issue of publication. Section 7. Motion to dismiss. - No motion to dismiss the petition shall be allowed except on the ground of lack of jurisdiction over the subject matter or over the parties; provided, however, that any other ground that might warrant a dismissal of the case may be raised as an affirmative defense in an answer. Section 8. Answer. - (1) The respondent shall file his answer within fifteen days from service of summons, or within thirty days from the last issue of publication in case of service of summons by publication. The answer must be verified by the respondent himself and not by counsel or attorney-in-fact. (2) If the respondent fails to file an answer, the court shall not declare him or her in default. (3) Where no answer is filed or if the answer does not tender an issue, the court shall order the public

prosecutor to investigate whether collusion exists between the parties. Section 9. Investigation report of public prosecutor. - (1) Within one month after receipt of the court order mentioned in paragraph (3) of Section 8 above, the public prosecutor shall submit a report to the court stating whether the parties are in collusion and serve copies thereof on the parties and their respective counsels, if any. (2) If the public prosecutor finds that collusion exists, he shall state the on the finding of collusion within ten days from receipt of a copy of a report The court shall set the report for hearing and If convinced that the parties are in collusion, it shall dismiss the petition. (3) If the public prosecutor reports that no collusion exists, the court shall set the case for pre-trial. It shall be the duty of the public prosecutor to appear for the State at the pre-trial. Section 10. Social worker. - The court may require a social worker to conduct a case study and submit the corresponding report at least three days before the pre-trial. The court may also require a case study at any stage of the case whenever necessary. Section 11. Pre-trial. (1) Pre-trial mandatory. - A pre-trial is mandatory. On motion or motu proprio, the court shall set the pre-trial after the last pleading has been served and filed, or upon receipt of the report of the public prosecutor that no collusion exists between the parties. (2) Notice of pre-trial. - (a) The notice of pre-trial shall contain: (1) the date of pre-trial conference; and (2) an order directing the parties to file and serve their respective pretrial briefs in such manner as shall ensure the receipt thereof by the adverse party at least three days before the date of pre-trial. (b) The notice shall be served separately on the parties and their respective counsels as well as on the public prosecutor. It shall be their duty to appear personally at the pre-trial. (c) Notice of pre-trial shall be sent to the respondent even if he fails to file an answer. In case of summons by publication and the respondent failed to file his answer, notice of pre-trial shall be sent to respondent at his last known address. Section 12. Contents of pre-trial brief. - The pre-trial brief shall contain the following: (a) A statement of the willingness of the parties to enter into agreements as may be allowed by law, indicating the desired terms thereof; (b) A concise statement of their respective claims together with the applicable laws and authorities; (c) Admitted facts and proposed stipulations of facts, as well as the disputed factual and legal issues; (d) All the evidence to be presented, including expert opinion, if any, briefly stating or describing the nature and purpose thereof; (e) The number and names of the witnesses and their respective affidavits; and (f) Such other matters as the court may require.

Failure to file the pre-trial brief or to comply with its required contents shall have the same effect as failure to appear at the pre-trial under the succeeding paragraphs. Section 13. Effect of failure to appear at the pre-trial. - {a) If the petitioner fails to appear personally, the case shall be dismissed unless his counsel or a duly authorized representative appears in court and proves a valid excuse for the non-appearance of the petitioner. (b) If the respondent has filed his answer but fails to appear, the court shall proceed with the pre-trial and require the public prosecutor to investigate the nonappearance of the respondent and submit within fifteen days thereafter a report to the court stating whether his non-appearance is due to any collusion between the parties. If there Is no collusion, the court shall require the public prosecutor to intervene for the State during the trial on the merits to prevent suppression or fabrication of evidence. Section 14. Pre-trial conference. -At the pre-trial conference, the court: (a) May refer the issues to a mediator who shall assist the parties in reaching an agreement on matters not prohibited by law. The mediator shall render a report within one month from referral which, for good reasons, the court may extend for a period not exceeding one month. (b) In case mediation is not availed of or where it fails, the court shall proceed with the pre-trial conference, on which occasion it shall consider the advisability of receiving expert testimony and such other makers as may aid in the prompt disposition of the petition. Section 15. Pre-trial order. - {a) The proceedings in the pre-trial shall be recorded. Upon termination of the pre-trial, the court shall Issue a pre-trial order which shall recite in detail the matters taken up In the conference, the action taken thereon, the amendments allowed on the pleadings, and except as to the ground of declaration of nullity or annulment, the agreements or admissions made by the parties on any of the matters considered, including any provisional order that may be necessary or agreed upon by the parties. (b) Should the action proceed to trial, the order shall contain a recital of the following; (1) Facts undisputed, admitted, and those which need not be proved subject to Section 16 of this Rule; (2) Factual and legal issues to be litigated; (3) Evidence, including objects and documents, that have been marked and will be presented; (4) Names of witnesses who will be presented and their testimonies in the form of affidavits; and (5) Schedule of the presentation of evidence. (c) The pre-trial order shall also contain a directive to the public prosecutor to appear for the State and take steps to prevent collusion between the parties at any stage of the proceedings and fabrication or suppression of evidence during the trial on the merits. (d) The parlies shall not be allowed to raise issues or present witnesses and evidence other than those stated in the pre-trial order. The order shall control the trial of the case, unless modified by the court to prevent manifest injustice. (e) The parties shall have five days from receipt of the pre-trial order to propose corrections or modifications.

Section 16. Prohibited compromise. - The court-shall not allow compromise on prohibited matters, such as the following: (a) The civil status of persons; (b) The validity of a marriage or of a legal separation; (c) Any ground for legal separation; (d) Future support; (e) The jurisdiction of courts; and (f) Future legitime. Section 17. Trial. - (1) The presiding judge shall personally conduct the trial of the case. No delegation of the reception of evidence to a commissioner shall be allowed except as to matters involving property relations of the spouses. (2) The grounds for declaration of absolute nullity or annulment of marriage must be proved. No judgment on the pleadings, summary judgment, or confession of judgment shall be allowed. (3) The court may order the exclusion from the courtroom of all persons, including members of the press, who do not have a direct interest in the case. Such an order may be made if the court determines on the record that requiring a party to testify in open court would not enhance the ascertainment of truth; would cause to the party psychological harm or inability to effectively communicate due to embarrassment, fear, or timidity; would violate the right of a party to privacy; or would be offensive to decency or public morals. (4) No copy shall be taken nor any examination or perusal of the records of the case or parts thereof be made by any person other than a party or counsel of a party, except by order of the court. Section 18. Memoranda. - The court may require the parties and the public prosecutor, in consultation with the Office of the Solicitor General, to file their respective memoranda support of their claims within fifteen days from the date the trial is terminated. It may require the Office of the Solicitor General to file its own memorandum if the case is of significant interest to the State. No other pleadings or papers may be submitted without leave of court. After the lapse of the period herein provided, the case will be considered submitted for decision, with or without the memoranda. Section 19. Decision. - (1) If the court renders a decision granting the petition, it shall declare therein that the decree of absolute nullity or decree of annulment shall be issued by the court only after compliance with Article 50 and 51 of the Family Code as implemented under the Rule on Liquidation, Partition and Distribution of Properties. (2) The parties, including the Solicitor General and the public prosecutor, shall be served with copies of the decision personally or by registered mail. If the respondent summoned by publication failed to appear in the action, the dispositive part of the decision shall be published once in a newspaper of general circulation. (3) The decision becomes final upon the expiration of fifteen days from notice to the parties. Entry of judgment shall be made if no motion for reconsideration or new trial, or appeal Is filed by any of the parties the public prosecutor, or the Solicitor General. (4) Upon the finality of the decision, the court shall forthwith issue the corresponding decree if the parties have no properties. If the parties have properties, the court shall observe the procedure prescribed in Section 21 of this Rule.

The entry of judgment shall be registered in the Civil Registry where the marriage was recorded and In the Civil Registry where the Family Court'granting the petition for declaration of absolute nullity or annulment of marriage is located. Section 20. Appeal. (1) Pre-condition. - No appeal from the decision shall be allowed unless the appellant has filed a motion for reconsideration or new trial within fifteen days from notice of judgment. (2) Notice of appeal. - An aggrieved party or the Solicitor General may appeal from the decision by filing a Notice of Appeal within fifteen days from notice of denial of the motion for reconsideration or new trial. The appellant shall serve a copy of the notice of appeal on the adverse parties. Section 21. Liquidation, partition and distribution, custody, support of common children and delivery of their presumptive iegltimes. - Upon entry of the judgment granting the petition, or, in case of appeal, upon receipt of the entry of judgment of the appellate court granting the petition, the Family Court, on motion of either party, shall proceed with the liquidation, partition and distribution of the properties of the spouses, including custody, support of common children and delivery of their presumptive legitimes pursuant to Articles 50 and 51 of the Family Code unless such matters had been adjudicated in previous judicial proceedings. Section 22. Issuance of Decree of Declaration of Absolute Nullity or Annulment of Marriage." (a) The court shall issue the Decree after; (1) Registration of the entry of judgment granting the petition for declaration of nullity or annulment of marriage in the Civil Registry where the marriage was celebrated and in the Civil Registry of the place where the Family Court is located; (2) Registration of the approved partition and distribution of the properties of the spouses, in the proper Register of Deeds where the real properties are located; and (3) The delivery of the children's presumptive legitimes in cash, property, or sound securities. (b) The court shall quote in the Decree the dispositive portion of the judgment entered and attach to the Decree the approved deed of partition. Except in the case of children under Articles 36 and 53 of the Family Code, the court shall order the Local Civil Registrar to issue an amended birth certificate indicating the new civil status of the children affected. Section 23. Registration and publication of the decree; decree as best evidence. - (a) The prevailing party shall cause the registration of the Decree in the Civil Registry where the marriage was registered, the Civil Registry of the place where the Family Court is situated, and in the National Census and Statistics Office. He shall report td the court compliance with this requirement within thirty days from receipt of the copy of the Decree. (b) In case service of summons was made by publication, the parties shall cause the publication of the Decree once in a newspaper of general circulation. (c) The registered Decree shall be the best evidence to prove the declaration of absolute nullity or annulment of marriage and shall serve as notice to third persons

concerning the properties of petitioner and respondent as well as the properties or presumptive legitimes delivered to their common children. Section 24. Effect of death of a party; duty of the Family Court or Appellate Court. - (a) In case a party dies at any stage of the proceedings before the entry of judgment, the court shall order the case closed and terminated, without prejudice to the settlement of the estate in proper proceedings in the regular courts. (b) If the party dies after the entry of judgment of nullity or annulment, the judgment shall be binding upon the parties and their successors in interest in the settlement of the estate in the regular courts. Section 25. Effectlvity. - This Rule shall take effect on March 15, 2003 following its publication in a newspaper of general circulation not later than March 7, 2003.

A.M. 02-11-11-SC 4 March 2003 RE: PROPOSED RULE ON LEGAL SEPARATION RESOLUTION Acting on the letter of the Chairman of the Committee on Revision of the Rules of Court submitting for this Court's consideration and approval the Proposed Rule on Legal Separation, the Court Resolved to APPROVED the same. The Rule shall take effect on March 15, 2003 following its publication in a newspaper of general circulation not later than March 7, 2003 March 4, 2003 Davide Jr. C.J., Bellosillo, Puno, Vitug, Mendoza, Panganiban, Quisumbing, Sandoval Gutierrez, Carpio, Austria-Martinez, Carpio-Morales, Callejo, Sr. and Azcuna, JJ. Ynares-Santiago, on leave, Corona, officially on leave. RULE ON LEGAL SEPARATION Section 1. Scope. - This Rule shall govern petitions for legal separation under the Family Code of the Philippines. The Rules of Court shall apply suppletorily. Section 2. Petition. - (a) Who may and when to file. - (1) A petition for legal separation may be filed only by the husband or the wife, as the case may be within five years from the time of the occurrence of any of the following causes: (a) Repeated physical violence or grossly abusive conduct directed against the petitioner, a common child, or a child of the petitioner; (b) Physical violence or moral pressure to compel the petitioner to change religious or political affiliation; (c) Attempt of respondent to corrupt or induce the petitioner, a common child, or a child of the petitioner, to engage in prostitution, or connivance in such corruption or inducement; (d) Final judgment sentencing the respondent to imprisonment of more than six years, even if pardoned; (e) Drug addiction or habitual alcoholism of the respondent; (f) Lesbianism or homosexuality of the respondent; (g) Contracting by the respondent of a subsequent bigamous marriage, whether in or outside the Philippines; (h) Sexual infidelity or perversion of the respondent; (i) Attempt on the life of petitioner by the respondent; or (j) Abandonment of petitioner by respondent without justifiable cause for more than one year. (b) Contents and form. - The petition for legal separation shall: (1) Allege the complete facts constituting the cause of action.

(2) State the names and ages of the common children of the parties, specify the regime governing their property relations, the properties involved, and creditors, if any. If there is no adequate provision in a written agreement between the parties, the petitioner may apply for a provisional order for spousal support, custody and support of common children, visitation rights, administration of community or conjugal property, and other similar matters requiring urgent action, (3) Be verified and accompanied by a certification against forum shopping. The verification and certification must be personally signed by the petitioner. No petition may be filed solely by counsel or through an attorney-in-fact. If the petitioner is in a foreign country, the verification and certification against forum shopping shall be authenticated by the duly authorized officer of the Philippine embassy or legation, consul general, consul or vice-consul or consular agent in said country (4) Be filed in six copies. The petitioner shall, within five days from such filing, furnish a copy of the petition to the City or Provincial Prosecutor and the creditors, if any, and submit to the court proof of such service within the same period. Failure to comply with the preceding requirements may be a ground for immediate dismissal of the petition. (c) Venue. - The petition shall be filed in the Family Court of the province or city where the petitioner or the respondent has been residing for at least six months prior to the date of filing "or in The case of a non-resident respondent, where he may be found in the Philippines, at the election of the petitioner. Section 3. Summons. - The service of summons shall be governed by Rule 14 of the Rules of Court and by the following rules: (a) Where the respondent cannot be located at his given address or his whereabouts are unknown and cannot be ascertained by diligent inquiry, service of summons may, by leave of court, be effected upon him by publication once a week for two consecutive weeks in a newspaper of general circulation in the Philippines and in such place as the court may order. In addition, a copy of the summons shall be served on respondent at his last known address by registered mail or by any other means the court may deem sufficient. (b) The summons to be published shall be contained in an order of the court with the following data; (1) title of the case; (2) docket number; (3) nature of the petition; (4) principal grounds of the petition and the reliefs prayed for, and (5) a directive for respondent to answer within thirty days from the last issue of publication. Section 4. Motion to Dismiss. - No motion to dismiss the petition shall be allowed except on the ground of lack of jurisdiction over the subject matter or over the parties; provided, however, that any other ground that might warrant a dismissal of the case may be raised as an affirmative defense in an answer. Section 5. Answer. - (a) The respondent shall file his answer within fifteen days from receipt of summons, or within thirty days from the last issue of publication in case of service of summons by publication. The answer must be verified by respondent himself and not by counsel or attorney-in-fact. (b) If the respondent fails to file an answer, the court shall not declare him in default.

(c) Where no answer is filed/or if the answer does not tender an issue the court shall order the public prosecutor to investigate whether collusion exists between the parties. Section 6. Investigation Report of Public Prosecutor. - (a) Within one one month after receipt of the court order mentioned in paragraph (c) of the preceeding section, the public prosecutor shall submit a report to the court on whether the parties are in collusion and serve copies on the parties and their respective counsels, if any. (b) If the public prosecutor finds that collusion exists, he shall state the basis thereof in his report. The parties shall file their respective comments on the finding of collusion within ten days from receipt of copy of the report. The court shall set the report for hearing and if convinced that parties are in collusion,-it shall dismiss the petition. (c) If the public prosecutor reports that no collusion exists, the court shall set the case for pre-trial. It shall be the duty of the public prosecutor to appear for the State at the pre-trial. Section 7. Social Worker. - The court may require a social worker to conduct a case study and to submit the corresponding report at least three days before the pre-trial. The court may also require a case study at any stage of the case whenever necessary, Section 8. Pre-trial. (a) Pre-trial mandatory.-A pre-trial is mandatory. On motion or motu proprio, the court shall set the pre-trial after the last pleading has been served and filed, or upon receipt of the report of the public prosecutor that no collusion exists between the parties on a date not earlier than six months from date of the filing of the petition. (b) Notice of Pre-trial.-(1) The notice of pre-trial shall contain: (a) the date of pre-trial conference; and (b) an order directing the parties to file and serve their respective pre-trial briefs in such manner as shall ensure the receipt thereof by the adverse party at least three days before the date of pre-trial. (2) The notice shall be served separately on the parties and their respective counsels as well as on the public prosecutor. It shall be their duty to appear personally at the pre-trial. (3) Notice of pre-trial shall be sent to the respondent even if he fails to file an answer. In case of summons by publication and the respondent failed to file his answer, notice of pre-trial shall be sent to respondent at his last known address. Section 9. Contents of pre-trial brief. - The pre-trial brief shall contain the following: (1) A statement of the willingness of the parties to enter into agreements as may be allowed by law, indicating the desired terms thereof; (2) A concise statement of their respective claims together with the applicable laws and authorities; (3) Admitted facts and proposed stipulations of facts, as well as the disputed factual and legal issues;

(4) All the evidence to be presented, including expert opinion, if any, briefly stating or describing the nature and purpose thereof; (5) The number and names of the witnesses and their respective affidavits; and (6) Such other matters as the court may require. Failure to file the pre-trial brief or to comply with its required contents shall have the same effect as failure to appear at the pre-trial under the succeeding section. Section 10. Effect of failure to appear at the pre-trial. - (1) If the petitioner fails to appear personally, the case shall be dismissed unless his counsel or a duly authorized representative appears in court and proves a valid excuse for the non-appearance of the petitioner. (2) If the respondent filed his answer but fails to appear, the court shall proceed with the pre-trial and require the public prosecutor to investigate the non-appearance of the respondent and submit within fifteen days a report to the court stating whether his non-appearance is due to any collusion between the parties/ If there is no collusion the court shall require the public prosecutor to intervene for the State during the trial on the.merits to prevent suppression or fabrication of evidence. Section 11. Pre-trial conference. - At the pre-trial conference, the court may refer the issues to a mediator who shall assist the parties in reaching an agreement on matters not prohibited by law. The mediator shall render a report within one month from referral which, for good reasons, the court may extend for a period not exceeding one month. In case mediation is not availed of or where it fails, the court shall proceed with the pre-trial conference, on which occasion it shall consider the advisability of receiving expert testimony and such other matters as may aid in the prompt disposition of the petition. Section 12. Pre-trial order. - (a) The proceedings in the pre-trial shall be recorded. Upon termination of the pre-trial, the court shall issue a pre-trial order which shall recite in detail the matters taken up in the conference, the action taken thereon, the amendments allowed on the pleadings, and, except as to the ground of legal separation, the agreements or admissions made by the parties on any of the matters considered, including any provisional order that may be necessary or agreed upon by the parties. (b) Should the action proceed to trial, the order shall contain a recital of the following: (1) Facts undisputed, admitted, and those which need not be proved subject to Section 13 of this Rule; (2) Factual and legal issues to be litigated; (3) Evidence, including objects and documents, that have been marked and will be presented; (4) Names of witnesses who will be presented and their testimonies in the form of affidavits; and (5) Schedule of the presentation of evidence.

The pre-trial order shall also contain public prosecutor to appear for the State prevent collusion between the parties at proceedings and fabrication or suppression the trial on the merits.

a directive to the and take steps to any stage of the of evidence during

(2) There is connivance in the commission of the offense-or act constituting the ground for legal separation; (3) Both parties have given ground for legal separation; (4) There is collusion between the parties to obtain the decree of legal separation; or (5) The action is barred by prescription. (b) If the court renders a decision granting the petition, it shall declare therein that the Decree of Legal Separation shall be issued by the court only after full compliance with liquidation under the Family Code. However, in the absence of any property of.the parties, the court shall forthwith issue a Decree of Legal Separation which shall be registered in the Civil Registry where the marriage was recorded and in the Civil Registry where the Family Court granting the legal separation is located. (c) The decision shall likewise declare that: (1) The spouses are entitled to live separately from each other but the marriage bond is not severed; (2) The obligation of mutual support between the spouses ceases; and (3) The offending spouse is disqualified from inheriting from the innocent spouse by intestate succession, and provisions in favor of the offending spouse made in the will of the innocent spouse are revoked by operation of law. (d) The parties, including the Solicitor General and the public prosecutor, shall be served with copies of the decision personally or by registered mail. If the respondent summoned by publication failed to appear in the action, the dispositive part of the decision shall also be published once in a newspaper of general circulation. Section 17. Appeal. (a) Pre-condition. - No appeal from the decision shall be allowed unless the appellant has filed a motion for reconsideration or new trial within fifteen days from notice of judgment. (b) Notice of Appeal - An aggrieved party or the Solicitor General may appeal from the decision by filing a Notice of Appeal within fifteen days from notice of denial of the motion for reconsideration or new trial. The appellant shall serve a copy of the notice of appeal upon the adverse parties. Section 18. Liquidation, partition and distribution, custody, and support of minor children. - Upon entry of the judgment granting the petition, or, in case of appeal, upon receipt of the entry of judgment of the appellate court granting the petition, the Family Court, on motion of either party, shall proceed with the liquidation, partition and distribution of the properties of the spouses, including custody and support of common children, under the Family Code unless such matters had been adjudicated in previous judicial proceedings. Section 19. Issuance of Decree of Legal Separation. - (a) The court shall issue the Decree of Legal Separation after: (1) registration of the entry of judgment granting the petition tor legal separation in the Civil Registry where the marriage was

(c) The parties shall not be allowed to raise issues or present witnesses and evidence other than those stated in the pre-trial order. The order shall control the trial of the case unless modified by the court to prevent manifest injustice. (d) The parties shall have five days from receipt of the pre-trial order to propose corrections or modifications. Section 13. Prohibited compromise. - The court shall not allow compromise on prohibited matters, such as the following: (1) The civil status of persons; (2) The validity of a marriage or of a legal separation; (3) Any ground lor legal separation; (4) Future support; (5) The jurisdiction of courts; and (6) Future legitime. Section 14. Trial. - (a) The presiding judge shall personally conduct the trial of the case. No delegation of the reception of evidence to a commissioner shall be allowed except as to matters involving property relations of the spouses. (b) The grounds for legal separation must be proved. No judgment on the pleadings, summary judgment, or confession of judgment shall be allowed. (c) The court may order the exclusion from the courtroom of all persons, including members of the press, who do not have a direct interest in the case. Such an order may be made if the court determines on the record othat requiring a party to testify in open court would not enhance the ascertainment of truth; would cause to the party psychological harm or inability to effectively communicate due to embarrassment, fear, or timidity; would violate the party's right to privacy; or would be offensive to decency (d) No copy shall be taken nor any examination or perusal of the records of the case or parts thereof be made by any person other than a party or counsel of a party, except by order of the court. Section 15. Memoranda. - The court may require the parties and the public prosecutor to file their respective memoranda in support of their claims within fifteen days from the date the trial is terminated. No other pleadings or papers may be submitted without leave of court. After the lapse of the period herein provided, the case will be considered submitted for decision, with or without the memoranda. Section 16. Decision. - (a) The court shall deny the petition on any of the following grounds: (1) The aggrieved party has condoned the offense or act complained of or has consented to the commission of the offense or act complained of;

celebrated and in the Civil Registry where the Family Court is located; and (2) registration of the approved partition and distribution of the properties of the spouses, in the proper Register of Deeds where the real properties are located. (b) The court shall quote in the Decree the dispositive portion of the judgment entered and attach to the Decree the approved deed of partition. Section 20. Registration and publication of the Decree of Legal Separation; decree as best evidence. (a) Registration of decree.-The prevailing party shall cause the registration of the Decree in the Civil Registry where the marriage was registered, in the Civil Registry of the place where the Family Court is situated, and in the National Census and Statistics Office. He shall report to the court compliance with this requirement within thirty days iron receipt of the copy of the Decree. (b) Publication of decree.-- In case service of summons was made by publication, the parties shall cause the publication of the Decree once in a newspaper of general circulation. (c) Best evidence.-The registered Decree shall be the best evidence to prove the legal separation of the parties and shall serve as notice to third persons concerning the properties of petitioner and respondent. Section 21. Effect of death of a party; duty of the Family Court or Appellate Court. - (a) In case a party dies at any stage of me proceedings before the entry of judgment, the court shall order the case closed and terminated without prejudice to the settlement of estate proper proceedings in the regular courts. (b) If the party dies after the entry of judgment, the same shall be binding upon the parties and their successors in interest in the settlement of the estate in the regular courts. Section 22. Petition for revocation of donations. - (a) Within five (5) years from the date the decision granting the petition for legal separation has become final, the innocent spouse may file a petition under oath the same proceeding for legal separation to revoke the donations in favor of the offending spouse. (b)The revocation of the donations shall be recorded in the Register of Deeds of Deeds in the places where the properties are located. (c)Alienations, liens, and encumbrances registered in good faith. before the recording of the petition for revocation in the registries of property shall be respected. (d)After the issuance of the Decree of Legal Separation, the innocent spouse may revoke the designation of the offending spouse as a beneficiary in any insurance policy even if such designation be stipulated as irrevocable. The revocation or change shall take effect upon written notification thereof to the insurer. Section 23. Decree of Reconciliation. - (a) If the spouses had reconciled, a joint manifestation under oath, duly signed by the spouses, may be filed in the same proceeding for legal separation.

(b) If the reconciliation occurred while the proceeding for legal separation is pending, the court shall immediately issue an order terminating the proceeding. (c) If the reconciliation occurred after the rendition of the judgment granting the petition for legal separation but before the issuance of the Decree, the spouses shall express in their manifestation whether or not they agree to revive the former regime of their property relations or choose a new regime. The court shall immediately issue a Decree of Reconciliation declaring that the legal separation proceeding is set aside and specifying the regime of property relations under which the spouses shall be covered. (d) If the spouses reconciled after the issuance of the Decree, the court, upon proper motion, shall issue a decree of reconciliation declaring therein that the Decree is set aside but the separation of property and any forfeiture of the share of the guilty spouse already effected subsists, unless the spouses have agreed to revive their former regime of property relations or adopt a new regime. (e) In case of paragraphs (b), (c), and (d). if the reconciled spouses choose to adopt a regime of property relations different from that which they had prior to the filing of the petition for legal separation, the spouses shall comply with Section 24 hereof. (f) The decree of reconciliation shall be recorded in the Civil Registries where the marriage and the Decree had been registered. Section 24. Revival of property regime or adoption of another. (a) In case of reconciliation under Section 23, paragraph (c) above, the parties shall file a verified motion for revival of regime of property relations or the adoption of another regime of property relations in the same proceeding for legal separation attaching to said motion their agreement for the approval of the court. (b) The agreement which shall be verified shall specify the following: (1) The properties to be contributed to the restored or new regime; (2) Those to be retained as separate properties of each spouse; and (3) The names of all their known creditors, their addresses, and the amounts owing to each. (c) The creditors shall be furnished with copies of the motion and the agreement. (d) The court shall require the spouses to cause the publication of their verified motion for two consecutive weeks in a newspaper of general circulation. (e) After due hearing, and the court decides to grant the motion, it shall issue an order directing the parties to record the order in the proper registries of property within thirty days from receipt of a copy of the order and submit proof of compliance within the same period.

Section 25. Effectivity. - This Rule shall take effect on March 15,2003 following its publication in a newspaper of general circulation not later than March 7, 2003.

A.M. No. 02-11-12-SC 4 March 2003 RE: PROPOSED RULE ON PROVISIONAL ORDERS RESOLUTION Acting on the letter of the Chairman of the Committee on Revision of the Rules of Court submitting for this Court's consideration and approval the Proposed Rule on Provisional Orders, the Court Resolved to APPROVED the same. The Rule shall take effect on March 15, 2003 following its publication in a newspaper of general circulation not later than March 7, 2003 March 4, 2003 Davide Jr. C.J., Bellosillo, Puno, Vitug, Mendoza, Panganiban, Quisumbing, Sandoval Gutierrez, Carpio, Austria-Martinez, CarpioMorales, Callejo, Sr. and Azcuna, JJ. Ynares-Santiago, on leave, Corona, officially on leave. RULE ON PROVISIONAL ORDERS Section 1. When Issued, - Upon receipt of a verified petition for declaration of absolute nullity of void marriage or for annulment of voidable marriage, or for legal separation, and at any time during the proceeding, the court, motu proprio or upon application under oath of any of the parties, guardian or designated custodian, may issue provisional orders and protection orders with or without a hearing. These orders may be enforced immediately, with or without a bond, and for such period and under such terms" and conditions as the court may deem necessary. Section 2. Spousal Support. - In determining support for the spouses, the court may be guided by the following rules: (a) In the absence of adequate provisions in a written agreement between the spouses, the spouses may be supported from the properties of the absolute community or the conjugal partnership. (b) The court may award support to either spouse in such amount and for such period of time as the court may deem just and reasonable based on their standard of living during the marriage. (c) The court may likewise consider the following factors: (1) whether the spouse seeking support is the custodian of a child whose circumstances make it appropriate for that spouse not to seek outside employment; (2) the time necessary to acquire sufficient education and training to enable the spouse seeking support to find appropriate employment, and that spouse's future earning capacity; (3) the-duration of the marriage; (4) the comparative financial resources of the spouses, including their comparative earning abilities in the labor market; (5) the needs and obligations of each spouse; (6) the contribution of each spouse to the marriage, including services rendered in home-making, child care, education, and career building of the other spouse; (7) the age and health of the spouses; (8) the physical and emotional conditions of the spouses; (9) the ability of the supporting spouse to give support, taking into account that spouse's earning capacity, earned and unearned income, assets, and standard of living; and (10) any other factor the court may deem just and equitable. (d) The Family Court may direct the deduction of the provisional support from the salary of the spouse.

Section 3. Child Support. - The common children of the spouses shall be supported from the properties of the absolute community or the conjugal partnership. Subject to the sound discretion of the court, either parent or both may be ordered to give an amount necessary for the support, maintenance, and education of the child. It shall be in proportion to the resources or means of the giver and to the necessities of the recipient. In determining the amount of provisional support, the court may likewise consider the following factors: (1) the financial resources of the custodial and non-custodial parent and those of the child; (2) the physical and emotional health of the child and his or her special needs and aptitudes; (3) the standard of living the child has been accustomed to; (4) the non-monetary contributions that the parents will make toward the care and well-being of the child. The Family Court may direct the deduction of the provisional support from the salary of the parent. Section 4. Child Custody. - In determining the right party or person to whom the custody of the child of the parties may be awarded pending the petition, the court shall consider the best interests of the child and shall give paramount consideration to the material and moral welfare of the child. The court may likewise consider the following factors: (a) the agreement of the parties; (b) the desire and ability of each parent to foster an open and loving relationship between the child and the other parent; (c) the child's health, safety, and welfare; (d) any history of child or spousal abase by the person seeking custody or who has had any filial relationship with the child, including anyone courting the parent; (e) the nature and frequency of contact with both parents; (f) habitual use of alcohol or regulated substances; (g) marital misconduct; (h) the most suitable physical, emotional, spiritual, psychological and educational environment; and (i) the preference of the child, if over seven years of age and of sufficient discernment, unless the parent chosen is unfit. The court may award provisional custody in the following order of preference: (1) to both parents jointly; (2) to either parent taking into account all relevant considerations under the foregoing paragraph, especially the choice of the child over seven years of age, unless the parent chosen is unfit; (3} to the surviving grandparent, or if there are several of them, to the grandparent chosen by the child over seven years of age and of sufficient discernment, unless the grandparent is unfit or disqualified; (4) to the eldest brother or sister over twenty-one years of age, unless he or she is unfit or disqualified; (5) to the child's actual custodian over twenty-one years of age, unless unfit or disqualified; or (6) to any other person deemed by the court suitable to provide proper care and guidance for the child. The custodian temporarily designated by the" court shall give the court and the parents five days notice of any plan to change the residence of the child or take him out of his residence for more than three days provided it does not prejudice the visitation rights of the parents. Section 5. Visitation Rights. - Appropriate visitation rights shall be provided to the parent who is not awarded provisional custody unless found unfit or disqualified by the court. . Section 6. Hold Departure Order. - Pending resolution of the petition, no child of the parties shall be brought out of the country without prior order from the court. The court, motu proprio or upon application under oath, may issue ex-parte a hold departure order, addressed to the Bureau of Immigration and Deportation, directing it not to allow the departure of the child from the Philippines without the permission of the court.

The Family Court issuing the hold departure order shall furnish the Department of Foreign Affairs and the Bureau of Immigration and Deportation of the Department of Justice a copy of the hold departure order issued within twenty-four hours from the time of its issuance and through the fastest available means of transmittal. The hold-departure order shall contain the following information: (a) the complete name (including the middle name), the date and place of birth, and the place of last residence of the person against whom a hold-departure order has been issued or whose departure from the country has been enjoined; (b) the complete title and docket number of the case in which the hold departure was issued; (c) the specific nature of the case; and (d) the date of the hold-departure order. If available, a recent photograph of the person against whom a hold-departure order has been issued or whose departure from the country has been enjoined should also be included. The court may recall the order. motu proprio or upon verified motion of any of the parties after summary hearing, subject to such terms and conditions as may be necessary for the best interests of the child. Section 7. Order of Protection. - The court may issue an Order of Protection requiring any person: (a) to stay away from the home, school, business, or place of employment of the child, other parent or any other party, and to stay away from any other specific place designated by the court; (b) to refrain from harassing, intimidating, or threatening such child or the other parent or any person to whom custody of the child is awarded; (c) to refrain from acts of commission or omission that create an unreasonable risk to the health, safety, or welfare of the child; (d) to permit a parent, or a person entitled to visitation by a court order or a separation agreement, to visit the child at stated periods; (e) to permit a designated party to enter the residence during a specified period of time in order to take persona! belongings not contested in a proceeding pending with the Family Court; (f) to comply with such other orders as are necessary for the protection of the child. Section 8. Administration of Common Property. - If a spouse without just cause abandons the other or-fails to comply with his or her obligations to the family, the court may, upon application of the aggrieved party under oath, issue a provisional order appointing the applicant or a third person as receiver or sole administrator of the common property subject to such precautionary conditions it may impose. The receiver or administrator may not dispose of or encumber any common property or specific separate property of either spouse without prior authority of the court. The provisional order issued by the court shall be registered in the proper Register of Deeds and annotated in all titles of properties subject of the receivership or administration. Section 9. Effectivity. - This Rule shall take effect on March 15, 2003 following its publication in a newspaper of general circulation not later than March 7, 2003.

RA No. 8799 (2000), Sec. 5.2 5.2. The Commissions jurisdiction over all cases enumerated under section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court: Provided, That the Supreme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over the cases. The Commission shall retain jurisdiction over pending cases involving intra-corporate disputes submitted for final resolution which should be resolved within one (1) year from the enactment of this Code. The Commission shall retain jurisdiction over pending suspension of payment/rehabilitation cases filed as of 30 June 2000 until finally disposed.

P.D. 902-A (1976), Sec. 5 11 March 1976 REORGANIZATION OF THE SECURITIES AND EXCHANGE COMMISSION WITH ADDITIONAL POWER AND PLACING THE SAID AGENCY UNDER THE ADMINISTRATIVE SUPERVISION OF THE OFFICE OF THE PRESIDENT Section 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving. a) Devices or schemes employed by or any acts, of the board of directors, business associates, its officers or partnership, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholder, partners, members of associations or organizations registered with the Commission. b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity; c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations.

A.M. 01-2-04-SC 13 March 2001 Re: PROPOSED INTERIM RULES OF PROCEDURE GOVERNING INTRA-CORPORATE CONTROVERSIES UNDER R. A. NO. 8799 RESOLUTION INTERIM RULES OF PROCEDURE FOR INTRA-CORPORATE CONTROVERSIES RULE 1 GENERAL PROVISIONS SECTION 1. (a) Cases covered. These Rules shall govern the procedure to be observed in civil cases involving the following: 1. Devices or schemes employed by, or any act of, the board of directors, business associates, officers or partners, amounting to fraud or misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, or members of any corporation, partnership, or association; 2. Controversies arising out of intra-corporate, partnership, or association relations, between and among stockholders, members, or associates; and between, any or all of them and the corporation, partnership, or association of which they are stockholders, members, or associates, respectively; 3. Controversies in the election or appointment of directors, trustees, officers, or managers of corporations, partnerships, or associations; 4. Derivative suits; and 5. Inspection of corporate books. (b) prohibition against nuisance and harassment suits. Nuisance and harassment suits are prohibited. In determining whether a suit is a nuisance or harassment suit, the court shall consider, among others, the following: 1. The extent of the shareholding or interest of the initiating stockholder or member; 2. Subject matter of the suit; 3. Legal and factual basis of the complaint; 4. Availability of appraisal rights for the act or acts complained of; and 5. Prejudice or damage to the corporation, partnership, or association in relation to the relief sought. In case of nuisance or harassment suits, the court may, moto proprio or upon motion, forthwith dismiss the case. SEC. 2. Suppletory application of the Rules of Court. The Rules of Court, in so far as they may be applicable and are not inconsistent with these Rules, are hereby adopted to form an integral part of these Rules. SEC. 3. Construction. These Rules shall be liberally construed in order to promote their objective of securing a just, summary, speedy and inexpensive determination of every action or proceeding. SEC. 4. Executory nature of decisions and orders. All decisions and orders issued under these Rules shall immediately be executory. No appeal or petition taken therefrom shall stay the enforcement or implementation of the decision or order, unless restrained by an appellate court. Interlocutory orders shall not be subject to appeal.

SEC. 5. Venue. All actions covered by these Rules shall be commenced and tried in the Regional Trial Court which has jurisdiction over the principal office of the corporation, partnership, or association concerned. Where the principal office of the corporation, partnership or association is registered in the Securities and Exchange Commission as Metro Manila, the action must be filed in the city or municipality where the head office is located. SEC. 6. Service of pleadings. When so authorized by the court, any pleading and/or document required by these Rules may be filed with the court and/or served upon the other parties by facsimile transmission (tax) or electronic mail (e-mail. In such cases, the date of transmission shall be deemed to be prima facie the date of service. SEC. 7. Signing of pleadings, motions and other papers. Every pleading, motion, and other paper of a party represented by an attorney shall be signed by at least one attorney of record in the attorneys individual name, whose address shall be stated. A party who is not represented by an attorney shall sign the pleading, motion, or other paper and state his address. The signature of an attorney or party constitutes a certification by the signer that he has read the pleading, motion, or other paper; that to the best of his knowledge, information, and belief formed after reasonable inquiry, it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing jurisprudence; and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. If a pleading, motion, or other paper is not signed, it shall be stricken off the record unless it is promptly signed by the pleader or movant, after he is notified of the omission. SEC. 8. Prohibited pleadings. The following pleadings are prohibited: 1. Motion to dismiss; 2. Motion for a bill of particulars; 3. Motion for new trial, or for reconsideration of judgment or order, or for re-opening of trial; 4. Motion for extension of time to file pleadings, affidavits or any other paper, except those filed due to clearly compelling reasons. Such motion must be verified and under oath; and 5. Motion for postponement and other motions of similar intent, except those filed due to clearly compelling reasons. Such motion must be verified and under oath. SEC. 9. Assignment of cases. All cases filed under these Rules shall be tried by judges designated by the Supreme Court to hear and decide cases transferred from the Securities and Exchange Commission to the Regional Trial Courts and filed directly with said courts pursuant to Republic Act No. 8799, otherwise known as the Securities and Regulation Cod RULE 2 COMMENCEMENT OF ACTION AND PLEADINGS SECTION 1. Commencement of action. An action under these Rules is commenced by the filing of a verified complaint with the proper Regional Trial Court. SEC. 2. Pleadings allowed. The only pleadings allowed to be filed under these Rules are the complaint, answer, compulsory

counterclaims or cross-claims pleaded in the answer, and the answer to the counterclaims or cross-claims. SEC. 3. Verification. The complaint and the answer shall be verified by an affidavit stating that the affiant has read the pleading and the allegations therein are true and correct based on his own personal knowledge or on authentic records. SEC. 4. Complaint. The complaint shall state or contain: 1. the names, addresses, and other relevant personal or juridical circumstances of the parties; 2. all facts material and relevant to the plaintiffs cause or causes of action, which shall be supported by affidavits of the plaintiff or his witnesses and copies of documentary and other evidence supportive of such cause or causes of action; 3. the law, rule, or regulation relied upon, violated, or sought to be enforced; 4. a certification that (a) the plaintiff has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency, and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court; and 5. the relief sought. SEC. 5. Summons. The summons and the complaint shall be served together not later than five (5) days from the date of filing of the complaint. a. Service upon domestic private juridical entities. If the defendant is a domestic corporation, service shall be deemed adequate if made upon any of the statutory or corporate officers as fixed by the by-laws or their respective secretaries. If the defendant is a partnership, service shall be deemed adequate if made upon any of the managing or general partners or upon their respective secretaries. If the defendant is an association, service shall be deemed adequate if made upon any of its officers or their respective secretaries. b. Service upon foreign private juridical entity. When the defendant is a foreign private juridical entity which is transacting or has transacted business in the Philippines, service may be made on its resident agent designated in accordance with law for that purpose, or, if there be no such agent, on the government official designated by law to that effect, or on any of its officers or agents within the Philippines. SEC. 6. Answer. The defendant shall file his answer to the complaint, serving a copy thereof on the plaintiff, within fifteen (15) days from service of summons. In the answer, the defendant shall: 1. Specify each material allegation of fact the truth of which he admits; 2. Specify each material allegation of fact the truth of which he does not admit. Where the

defendant desires to deny only a part of an averment, he shall specify so much of it as true and material and shall deny only the remainder; 3. Specify each material allegation of fact as to which truth he has no knowledge or information sufficient to form a belief, and this shall have the effect of a denial; 4. State the defenses, including grounds for a motion to dismiss under the Rules of Court; 5. State the law, rule, or regulation relied upon; 6. Address each of the causes of action stated in the complaint; 7. State the facts upon which he relies for his defense, including affidavits of witnesses and copies of documentary and other evidence supportive of such cause or causes of action; 8. State any compulsory counterclaim/s and cross-claim/s; and 9. State the relief sought. The answer to counterclaims or cross-claims shall be filed within ten (10) days from service of the answer in which they are pleaded. SEC. 7. Effect of failure to answer. If the defendant fails to answer within the period above provided, he shall be considered in default. Upon motion or motu proprio, the court shall render judgment either dismissing the complaint or granting the relief prayed for as the records may warrant. In no case shall the court award a relief beyond or different from that prayed for. SEC. 8. Affidavits, documentary and other evidence. Affidavits shall be based on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify on the matters stated therein. The affidavits shall be in question and answer form, and shall comply with the rules on admissibility of evidence. Affidavits of witnesses as well as documentary and other evidence shall be attached to the appropriate pleading; Provided, however, that affidavits, documentary and other evidence not so submitted may be attached to the pre-trial brief required under these Rules. Affidavits and other evidence not so submitted shall not be admitted in evidence, except in the following cases: 1. Testimony of unwilling, hostile, or adverse party witnesses. A witness is presumed prima facie hostile if he fails or refuses to execute an affidavit after a written request therefor; 2. If the failure to submit the evidence is for meritorious and compelling reasons; and 3. Newly discovered evidence. In case of (2) and (3) above, the affidavit and evidence must be submitted not later than five (5) days prior to its introduction in evidence. RULE 3 MODES OF DISCOVERY SECTION 1. In general. A party can only avail of any of the modes of discovery not later than fifteen (15) days from the joinder of issues. SEC. 2. Objections. Any mode of discovery such as interrogatories, request for admission, production or inspection of documents or things, may be objected to within ten (10) days from receipt of the discovery device and only on the ground that the matter requested is patently incompetent, immaterial, irrelevant or privileged in nature.

The court shall rule on the objections not later than fifteen (15) days from the filing thereof. SEC. 3. Compliance. Compliance with any mode of discovery shall be made within ten (10) days from receipt of the discovery device, or if there are objections, from receipt of the ruling of the court. SEC. 4. Sanctions. The sanctions prescribed in the Rules of Court for failure to avail of, or refusal to comply with, the modes of discovery shall apply. In addition, the court may, upon motion, declare a party non-suited or as in default, as the case may be, if the refusal to comply with a mode of discovery is patently unjustified. RULE 4 PRE-TRIAL SECTION 1. Pre-trial conference; mandatory nature. Within five (5) days after the period for availment of, and compliance with, the modes of discovery prescribed in Rule 3 hereof, whichever comes later, the court shall issue and serve an order immediately setting the case for pre-trial conference and directing the parties to submit their respective pre-trial briefs. The parties shall file with the court and furnish each other copies of their respective pre-trial brief in such manner as to ensure its receipt by the court and the other party at least five (5) days before the date set for the pre-trial. The parties shall set forth in their pre-trial briefs, among other matters, the following: 1. Brief statement of the nature of the case, which shall summarize the theory or theories of the party in clear and concise language; 2. Allegations expressly admitted by either or both parties; 3. Allegations deemed admitted by either or both parties; 4. Documents not specifically denied under oath by either or both parties; 5. Amendments to the pleadings; 6. Statement of the issues, which shall separately summarize the factual and legal issues involved in the case; 7. Names of witnesses to be presented and the summary of their testimony as contained in their affidavits supporting their positions on each of the issues; 8. All other pieces of evidence, whether documentary or otherwise and their respective purposes; 9. Specific proposals for an amicable settlement; 10. Possibility of referral to mediation or other alternative modes of dispute resolution; 11. Proposed schedule of hearings; and 12. Such other matters as may aid in the just and speedy disposition of the case. SEC. 2. Nature and purpose of pre-trial conference. During the pre-trial conference, the court shall, with its active participation, ensure that the parties consider in detail all of the following: 1. The possibility of an amicable settlement; 2. Referral of the dispute to mediation or other forms of dispute resolution; 3. Facts that need not be proven, either because they are matters of judicial notice or expressly or deemed admitted; 4. Amendments to the pleadings;

5.

The possibility of obtaining stipulations and admissions of facts and documents; 6. Objections to the admissibility of testimonial, documentary and other evidence; 7. Objections to the form or substance of any affidavit, or part thereof; 8. Simplification of the issues; 9. The possibility of submitting the case for decision on the basis of position papers, affidavits, documentary and real evidence; 10. A complete schedule of hearing dates; and 11. Such other matters as may aid in the speedy and summary disposition of the case. SEC. 3. Termination. The preliminary conference shall be terminated not later than ten (10) days after its commencement, whether or not the parties have agreed to settle amicably. SEC. 4. Judgment before pre-trial. If, after submission of the pre-trial briefs, the court determines that, upon consideration of the pleadings, the affidavits and other evidence submitted by the parties, a judgment may be rendered, the court may order the parties to file simultaneously their respective memoranda within a non-extendible period of twenty (20) days from receipt of the order. Thereafter, the court shall render judgment, either full or otherwise, not later than ninety (90) days from the expiration of the period to file the memoranda. SEC. 5. Pre-trial order; judgment after pre-trial. The proceedings in the pre-trial shall be recorded. Within ten (10) days after the termination of the pre-trial, the court shall issue an order which shall recite in detail the matters taken up in the conference, the actions taken thereon, the amendments allowed in the pleadings, and the agreements or admissions made by the parties as to any of the matters considered. The court shall rule on all objections to or comments on the admissibility of any documentary or other evidence, including any affidavit or any part thereof. Should the action proceed to trial, the order shall explicitly define and limit the issues to be tried and shall strictly follow the form set forth in Annex "A" of these Rules. The contents of the order shall control the subsequent course of the action, unless modified before trial to prevent manifest injustice. After the pre-trial, the court may render judgment, either full or partial, as the evidence presented during the pre-trial may warrant. RULE 5 TRIAL SECTION 1. Witnesses. If the court deems necessary to hold hearings to determine specific factual matters before rendering judgment, it shall, in the pre-trial order, set the case for trial on the dates agreed upon by the parties. Only persons whose affidavits were submitted may be presented as witnesses, except in cases specified in section 8, Rule 2 of these Rules. The affidavits of the witnesses shall serve as their direct testimonies, subject to cross-examination in accordance with existing rules on evidence. SEC. 2. Trial schedule. Unless judgment is rendered pursuant to Rule 4 of these Rules, the initial hearing shall be held not later than thirty (30) days from the date of the pre-trial order. The hearings shall be completed not later than sixty (60) days from the date of the initial hearing, thirty (30) days of which shall be allotted to the plaintiffs and thirty (30) days to the defendants in the manner prescribed in the rep-trial order. The failure of a party to present a witness on a scheduled hearing date shall be

deemed a waiver of such hearing date. However, a party may present such witness or witnesses within his remaining allotted hearing dates. SEC. 3. Written offer of evidence. Evidence not otherwise admitted by the parties or ruled upon by the court during the pre-trial conference shall be offered in writing not later than five (5) days from the completion of the presentation of evidence of the party concerned. The opposing party shall have five (5) days from receipt of the offer to file his comments or objections. The court shall make its ruling on the offer within five (5) days from the expiration of the period to file comments or objections. SEC. 4. Memoranda. Immediately after ruling on the last offer of evidence, the court shall order the parties to simultaneously file, within thirty (30) days from receipt of the order, their respective memoranda. The memoranda shall contain the following: 1. A "Statement of the Case," which is a clear and concise statement of the nature of the action and a summary of the proceedings; 2. A "Statement of the Facts," which is a clear and concise statement in narrative form of the established facts, with reference to the testimonial, documentary or other evidence in support thereof; 3. A "Statement of the issues," which is a clear and concise statement of the issues presented to the court for resolution; 4. The "Arguments," which is a clear and concise presentation of the argument in support of each issue; and 5. The "Relief," which is a specification of the order or judgment which the party seeks to obtain. No reply memorandum shall be allowed. SEC. 5. Decision after trial. The court shall render a decision not later than (90) days from the lapse of the period to file the memoranda, with or without said pleading having been filed. RULE 6 ELECTION CONTESTS SECTION 1. Cases covered. The provisions of this rule shall apply to election contests in stock and non-stock corporations. SEC. 2. Definition. An election contest refers to any controversy or dispute involving title or claim to any elective office in a stock or non-stock corporation, the validation of proxies, the manner and validity of elections, and the qualifications of candidates, including the proclamation of winners, to the office of director, trustee or other officer directly elected by the stockholders in a close corporation or by members of a non-stock corporation where the articles of incorporation or by-laws so provide. SEC. 3. Complaint. In addition to the requirements in section 4, Rule 2 of these Rules, the complaint in an election contest must state the following: 1. The case was filed within fifteen (15) days from the date of the election if the by-laws of the corporation do not provide for a procedure for resolution of the controversy, or within fifteen (15) days from the resolution of the controversy by the corporation as provided in its by-laws; and

2.

The plaintiff has exhausted all intra-corporate remedies in election cases as provided for in the by-laws of the corporation.

3. SEC. 4. Duty of the court upon the filing of the complaint. Within two (2) days from the filing of the complaint, the court, upon a consideration of the allegations thereof, may dismiss the complaint outright if it is not sufficient in form and substance, or, if it is sufficient, order the issuance of summons which shall be served, together with a copy of the complaint, on the defendant within two (2) days from its issuance. SEC. 5. Answer. The defendant shall file his answer to the complaint, serving a copy thereof on the plaintiff, within ten (10) days from service of summons and the complaint. The answer shall contain the matters required in section 6, Rule 2 of these Rules. SEC. 6. Affidavits, documentary and other evidence. The parties shall attach to the complaint and answer the affidavits of witnesses, documentary and other evidence in support thereof, if any. Acting on the Memorandum of the Committee on SEC Cases submitting for this Courts consideration and approval the Proposed Interim Rules of Procedure for Intra-Corporate Controversies, the Court Resolved to APPROVE the same. The Interim Rules shall take effect on April 1, 2001 following its publication in two (2) newspapers of general circulation. March 13, 2001, Manila. (Sgd.) HILARIO G. DAVIDE, JR., Chief Justice (Sgd.) JOSUE N. BELLOSILLO, Associate Justice (Sgd.) JOSE A. R. MELO, Associate Justice (Sgd.) REYNATO S. PUNO, Associate Justice (Sgd.) JOSE C. VITUG, Associate Justice (Sgd.) SANTIAGO M. KAPUNAN, Associate Justice (Sgd.) VICENTE V. MENDOZA, Associate Justice (Sgd.) ARTEMIO V. PANGANIBAN, Associate Justice (Sgd.) LEONARDO A. QUISUMBING, Associate Justice (Sgd.) (Sgd.) BERNARDO P. PARDO ARTURO B. BUENA Associate Justice Associate Justice (Sgd.) (Sgd.) MINERVA P. GONZAGA-REYES CONSUELO YNARES-SANTIAGO Associate Justice Associate Justice (Sgd). (Sgd.) SABINO R. DE LEON, JR. ANGELINA SANDOVAL-GUTIERREZ Associate Justice Associate Justice

A.M. 00-8-10-SC 2 December 2008 RULES OF PROCEDURE ON CORPORATE REHABILITATION RESOLUTION Acting on the recommendation of the Subcommittee on Special Rules for Special Commercial Courts, submitting for the consideration and approval of the Court the Resolved to APPROVED the same. The Rule shall take effect on January 16, 2009 following its publication in two (2) newspapers of general circulation. December 2, 2008 RULES OF PROCEDURE ON CORPORATE REHABILITATION (2008) RULE 1 COVERAGE Section 1. Scope - These Rules shall apply to petitions for rehabilitation of corporations, partnerships and associations pursuant to Presidential Decree No. 902-A, as amended. Section 2. Applicability to Rehabilitation Cases Transferred from the Securities and Exchange Commission. - Cases for rehabilitation transferred from Securities Exchange Commission to the Regional Trial Court pursuant to Republic Act No. 8799, otherwise known as The Securities Regulation Code, shall likewise be governed by these Rules. RULE 2 DEFINITION OF TERMS AND CONSTRUCTION Section 1. Definition of Terms. - For purpose of these Rules: "Administrative Expenses" shall refer to (a) reasonable and necessary expenses that are incurred in connection with the filing of the petition; (b) expenses incurred in the ordinary course of business after the issuance of the stay order, excluding interest payable to the creditors for loans and credit accommodations existing at the time of the issuance of the stay order, and (c) other expenses that are authorized under this Rules. "Affidavit of General Financial Condition" shall refer to a verified statement on the general financial condition of the debtor requiredin Section 2, Rule 4 of these Rules. "Affiliate" is a corporation that directly or indirectly, through one or more intermediaries, is controlled by, or is under the common control of another corporation, which thereby becomes its parent corporation. "Asset" is anything of value that can be in the form of money, such as cash at the bank or amounts owed; fixed assets such as property or equipment; or intangibles including intellectual property, the book value of which is shown in the last three audited financial statement immediately preceding the filing of the petition, In case the debtor is less than three years in operation, it is sufficient that the book value is based on the audited financial statement\s for the years or year immediately preceding the filing of petition, as the case may be. "Board of Directors" shall include the executive committee or the management of partnership or association "Claim" shall include all claims or demands of whatever nature or charter against a debtor or its property, whether for money or otherwise

"Control" is the power of a parent corporation to direct or govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. Control is presumed to exit when the parent owns, directly or indirectly though subsidiaries, more than one - half () of the voting power of the voting power of an enterprise unless, unless, in exception circumstances, it can clearly be demonstrated that such own ship does not constitute control. Control also exits even when the parents owns one-half (1/2) or less of the voting power of an enterprise when there is power. (A) Over more than one-half () of agreement with investors; (B) To direct or govern the financial and operating policies of the enterprise under a statute or agreement; (C) To appoint or remove the majority of the member of the board of directors or equivalent governing body; or (D) To cast the majority votes at meeting of the board of directors or equivalent governing body. "Creditor" shall mean any holder or a Chain "Court" shall refer to the proper Regional Trial Court designated to hear and decide the cases contemplated contemplated under these Rules. "Days" shall refer to calendar days unless otherwise provided in these Rules. "Debtor" shall mean any corporation, partnership or association or a group of companies, whether supervised or regulated by the Securities and Exchange Commission or other government agencies, on whose behalf a petition for rehabilitation has been filed under these rules. "Foreign count" means a judicial or other authority competent to control or supervise a foreign proceeding. "Foreign proceeding" means a collective judicial or administrative proceeding in a foreign State, interim proceeding, pursuant to a law re solvency in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign count, for the purpose of rehabilitation or re-organization "Foreign Representative" means person or entity, including one appointed on an interim basis, authorized in a foreign proceeding to administer the reorganization or rehabilitation of the debtor or act as a representative of the foreign proceeding. "Group of companies" refers to, and can cover only, corporation that are financially refers to, and can cover only, corporations that are financially rated to one another as parent corporation, subsidiaries and affiliates. When the petition covers a group of companies, all reference under these Rules to "debtor" shall include and apply include and apply to the group of companies. "Liabilities" shall refer to monetary claims against the debtor, including stockholders advances that have been recoded in the debtor's audited financial statements as advances for subscription. "Parent" is a corporation directly or indirectly though one or more intermediaries. "Rehabilitation" shall mean the restoration of the debtor to a position of successful operation and solvency, if it is shown that its continuance of operation is economically feasible and its creditors can recover by way of the present value of payments projected in the plan more if the corporation continues as a going concern than if it immediately liquidated.

"Secured claim" shall refer to any clan whose payment or fulfillment is secured by contract or by law, including any clam or credit enumerated under Articles 2241 and 2242 of the civil Code and Article 110, as amended, of the Labor code of the Philippines. "Subsidiary" mean a corporation more than fifty percent (50%) of the voting stock of which is owned or controlled directly or indirectly though one or more intermediaries by another corporation "Unsecured clan" shall mean any clan other than a seared claim. Section 2. Construction - These Rules shall be liberally construed to carry out the objectives of Section 5(d), 6(d) and 6(d) of Presidential Decree No. 902-A, as amended, and to assist the parties in obtaining a jut, expeditious and inexpensive determination of case. Where applicable, the Rules of Court shall apply supplementary to proceedings under these Rules. RULES 3 GENERAL PROVISONS Section 1. Nature of Proceeding - Any proceeding initiated under these Rules shall be considered in rem. Jurisdiction over all persons affected by the proceeding shall be considered as acquired upon publication of the notice of the commencement of the proceedings in any newspaper or general circulation in the Philippines in the manner prescribed by these rules. The proceedings shall also be summary and non-adversarial in nature. The following pleading are prohibited: (a) Motion to dismiss; (b) Motion for a bill of particulars: (c) Petition for relief; (d) Motion for extension; (e) Motion for postponement (f) Third-party complaint; (g) Intervention; (h) Motion to hear affirmative defenses; and (I) Any pleading or motion which is similar to or of like effect as any of the foregoing. Any pleading, motion, opposition, defense or claim filed by any interested party shall be supported by verified statements that the affiant has read same and that the factual allegations therein are true and correct of his personal knowledge or based on authentic records, and correct of his personal knowledge or based on authentic records, and shall contain as annexes such documents as may be deemed by the party court may be decide matters on the basis of affidavits and other documentary evidence. Where necessary, the court shall conduct clarificatory hearings before resolving any matter submitted to it for resolution. Section 2. Venue. - Petitions for rehabilitation pursuant to these Rules shall be filed in the regional trial court which has jurisdiction over the principal office of the debtor as specified in its articles of incorporation or partnership. Where the principal office of the corporation, partnership or association is registered in the Securities and Exchange Commission as Metro Manila, the action must be filed in the regional trial court of the city or municipality where the head office is located. A joint petition by a group of companies shall be filed in the Regional Trial Court which has jurisdiction over the principal office of the parent company, as specified in its Articles of Incorporation. Section 3. Service of Pleadings and Documents. - When so authorized by the court, any pleading and/or document required by these Rules may be filed with 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 shall be deemed to be the dtae of service. Where the pleading or document is voluminous, the court may, upon motion, waive the requirement of service; provided that a copy thereof together with all its attachments is duly filed with the court and is made available for examination and reproduction by any party, and provided, further, that a notice of such filing and availability is duly served on the parties. Section 4. Trade Secrets and Other Confidential Information. Upon motion, the court may issue an order to protect trade secrets or other confidential research, development or commercial information belonging to the debtor. Section 5. Executory Nature of Orders. - Any order issued by the court under these Rules is immediately executory. A petition to review the order shall not stay the execution of the order unless restrained or enjoined by the appellate court. Unless otherwise provided in these Rules, the review of any order or decision of the court or an appeal therefrom shall be in accordance with the Rules of Court; provided, however, that the reliefs ordered by the trial or appellate courts shall take into account the need for resolution of proceedings in a just, equitable and speedy manner. Section 6. Nullification of Illegal Transfers and Preferences. - Upon motion the court may nullify any transfer of property or any other conveyance, sale, payment or agreement made in violation of its stay order or in violation of these Rules. Section 7. Stay Order. - If the court finds the petition to be sufficient in form and substance, it shall; not later than five (5) working days from the filing of the petition, issue an order: (a) appointing a rehabilitation receive and fixing his bond; (b) staying enforcement of all claims, whether for money or otherwise and whether such enforcement is by court action or otherwise, against the debtor, its guarantors and persons not solidarily liable with the debtor; provided, that the stay order shall not cover claims against letters of credit and similar security arrangements issued by a third party to secure the payment of the debtor's obligations; provided, further, that the stay order shall not cover foreclosure by a creditor of property not belonging to a debtor under corporate rehabilitation; provided, however, that where the owner of such property sought to be foreclosed is also a guarantor or one who is not solidarily liable, said owner shall be entitled to the benefit of excussion as such guarantor; (c) prohibiting the debtor from selling, encumbering, transferring, or disposing in any manner any of its properties except in the ordinary course of business; (d) prohibiting the debtor from making any payment of its liabilities except as provided in items (e), (f) and (g) of this Section or when ordered by the court pursuant to Section 10 of Rule 3; (e) prohibiting the debtor's suppliers of goods or services from withholding supply of goods and services in the ordinary course of business for as long as the debtor makes payments for the services and goods supplied after the issuance of the stay order; (f) directing the payment in full of all administrative expenses incurred after the issuance of the stay order; (g) directing the payment of new loans or other forms of credit accommodations obtained for the rehabilitation of the debtor with prior court approval; (h) fixing the dates of the initial hearing on the petition not earlier than forty-five (45) days but not later than sixty (60) days from the filing thereof; (I) directing the petitioner to publish the Order in a newspaper of general circulation in the Philippines once a week for two (2) consecutive weeks; (j) directing the petitioner to furnish a copy of the petition and its annexes, as well as the stay order, to the creditors named in the petition and the appropriate regulatory agencies such as, but not limited to, the Securities and

Exchange Commission, the Bangko Sentral ng Pilipinas, the Insurance Commission, the National Telecommunications Commission, the Housing and Land Use Regulatory Board and the Energy Regulatory Commission; (k) directing the petitioner that foreign creditors with no known addresses in the Philippines be individually given a copy of the stay order at their foreign addresses; (l) directing all creditors and all interested parties (including the regulatory agencies concerned) to file and serve on the debtor a verified comment on or opposition to the petition, with supporting affidavits and documents, not later than fifteen (15) days before the date of the first initial hearing and putting them on notice that their failure to do so will bar them from participating in the proceedings; and (m) directing the creditors and interested parties to secure from the court copies of the petition and its annexes within such time as to enable themselves to file their comment on or opposition to the petition and to prepare for the initial hearing of the petition. The issuance of a stay order does not affect the right to commence actions or proceedings insofar as it is necessary to preserve a claim against the debtor. Section 8. Service of Stay Order on Rehabilitation Receiver. - The petitioner shall immediately serve a copy of the stay order on the rehabilitation receiver appointed by the court, who shall manifest his acceptance or non-acceptance of his appointment not later than ten (10) days from receipt of the order. Section 9. Period of Stay Order. - The stay order shall be effective from the date of its issuance until the approval of the rehabilitation plan or the dismissal of the petition. Section 10. Relief from, Modification, or Termination of Stay Order. (a) The court may, upon motion, terminate, modify, or set conditions for the continuance of the stay order, or relieve a claim from the coverage thereof upon showing that (1) any of the allegations in the petition, or any of the contents of any attachment, or the verification thereof has ceased to be true; (2) a creditor does not have adequate protection over property securing its claims; (3) the debtor's secured obligation is more than the fair market value of the property subject of the stay and such property is not necessary for the rehabilitation of the debtor; or (4) the property covered by the stay order is not essential or necessary to the rehabilitation and the creditor's failure to enforce its claim will cause more damage to the creditor than to the debtor. (b) For purposes of this Section, the creditor lacks adequate protection if it can be shown that: (1) The debtor fails or refuses to honor a preexisting agreement with the to keep the property insured; (2) The debtor fails or refuses to take commercially reasonable steps to maintain the property; or (3) The property has depreciated to an extent that the creditor is undersecured (c) Upon showing the creditor's lack of adequate protection, the court shall order the rehabilitation receiver to (1) make arrangements to provide for the insurance or maintenance of the property, or (2) to make payments or otherwise provide additional or replacement security such as that the obligation is fully secured. If such arrangements are not feasible, the court shall modify the stay order to allow the secured creditor lacking adequate protection to enforce its claim against the debtor; provided, however, that the court may deny the creditor the remedies in this paragraph if such

remedies would prevent the continuation of the debtor as a going concern or otherwise prevent the approval and implementation of a rehabilitation plan. Section 11. Qualifications of Rehabilitation Receiver. (a) In the appointment of the rehabilitation receiver, the following qualifications shall be taken into consideration by the court: (1) Expertise and acumen to manage and operate a business similar in size and complexity to that of the debtor; (2) Knowledge in management, finance and rehabilitation of distressed companies; (3) General familiarity with the rights of creditors in suspension of payments or rehabilitation and general understanding of the duties and obligations of a rehabilitation receiver; (4) Good moral character, independence and integrity; (5) Lack of conflict of interest as defined in this Section; and (6) Willingness and ability to file a bond in such amount as may be determined by the court. (b) Without limiting the generality of the following, a rehabilitation receiver may be deemed to have a conflict of interest if: (1) He is creditor or stockholder of the debtor; (2) He is engaged in a line of business which competes with the debtor; (3) He is, or was within two (2) years from the filing of the petition, a director, officer, or employee or the auditor or accountant of the debtor; (4) He is or was within two (2) years from the filing of the petition, an underwriter of the outstanding securities of the debtor; (5) He is related by consanguinity or affinity within the fourth civil degree to any creditor, stockholder, director, officer, employee, or underwriter of the debtor; or (6) He has any other direct or indirect material interest in the debtor or any creditor. Section 12. Powers and Functions of Rehabilitation Receiver. - The rehabilitation receiver shall not take over the management and control of the debtor but shall closely oversee and monitor the operations of the debtor during the pendency of the proceedings. For this purpose, the rehabilitation receiver shall have the powers, 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 debtor and to ensure that the value of the debtor's property is reasonably maintained pending the determination of whether or not the debtor should be rehabilitated, as well as implement the rehabilitation plan after its approval. Accordingly, he shall have the following powers and functions: (a) To verify the accuracy of the petition, including its annexes such as the Schedule of Debts and Liabilities and the Inventory of Assets submitted in support to the petition; (b) To accept and incorporate, when justified, amendments to the Schedule of Debts and Liabilities; (c) To recommend to the court the disallowance of claims and rejection of amendments t the Schedule of

Debts and Liabilities that lack sufficient proof and justification; (d) To submit to the court and make available for review by the creditors, a revised Schedule of Debts and Liabilities; (e) To investigate the acts, conduct, properties, liabilities and financial condition of the debtor, the operation of its business and the desirability of the continuance thereof; and, any other matter relevant to the proceeding or to the formulation of a rehabilitation plan; (f) To examine under oath the directors and officers of the debtor and any other witnesses that he may deem appropriate; (g) To make available to the creditors documents and notices necessary for them to follow and participate in the proceedings; (h) To report to the court any fact ascertained by him pertaining to the causes of the debtor's problems, fraud, preferences, dispositions, encumbrances, misconduct, mismanagement and irregularities committed by 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 are necessary in performing his functions and duties as rehabilitation receiver; (j) To monitor the operations of the debtor and to immediately report to the court any material adverse change in the debtor's 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 and protect the interests of the creditors, stockholders and the general public; (m) To study the rehabilitation plan proposed by the debtor or any rehabilitation plan submitted during the proceedings, together with any comments made thereon; (n) To prohibit and report to the court any encumbrance, transfer or disposition of the debtor's property outside of the ordinary course of business or what is allowed by the court; (o) To prohibit and report to the court any payments outside of the ordinary course of business; (p) To have unlimited access to the debtor's 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 other persons; (r) To gain entry into any property for the purpose of inspecting, measuring, surveying or photographing it or any designated relevant object or operation thereon; (s) To take possession, control and custody of the debtor's assets; (t) To notify counterparties and the court as to contracts that the debtor has decided to continue to perform the breach; (u) To be notified of and to attend all meetings of the board of directors and stockholder of the debtor; (v) To recommend any modification of an approved rehabilitation plan as he may deem appropriate; (w) To bring to the attention of the court any material change affecting the debtor's 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 of the debtor if he determines that the continuance in business of such entity is no longer feasible or profitable or no longer works to the best interest of the stockholders, parties-litigants, creditors or the general public; (z) To apply to the court for any order or directive that he may deem necessary or desirable to aid him in the exercise of his powers and performance of his duties and functions; and (aa) To exercise such other powers as may from time to time be conferred upon him by the court. Section 13. Oath and Bond. - Before entering upon his powers, duties and functions, the rehabilitation receiver must be sworn in to perform them faithfully, and must post a bond executed in favor of the debtor in such sum as the court may direct, to guarantee that he will faithfully discharge his duties 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 the debtor, will act honestly and in good faith, and deal with the assets of the debtor on a commercially reasonable manner. Section 14. Fees and Expenses. - The rehabilitation receiver and the persons hired by him shall be entitled to reasonable professional fees and reimbursement of expenses which shall be considered as administrative expenses. Section 15. Immunity from Suit. - The rehabilitation receiver shall not be subject to any action, claim or demand in connection with any act done or omitted by him in good faith in the exercise of his functions and powers herein conferred. Section 16. Reports. - The rehabilitation receiver shall file a written report every three (3) months to the court or as often as the court may require on the general condition of the debtor. The report shall include, at the minimum, interim financial statements of the debtor. Section 17. Dismissal of Rehabilitation Receiver. - A rehabilitation receiver may, upon motion, be dismissed by the court on the following grounds: (a) if he fails, without just cause, to perform any of his powers and functions under these Rules; or (b) on any of the grounds for removing a trustee under the general principles of trusts. Section 18. Rehabilitation Plan. - The rehabilitation plan shall include (a) the desired business targets or goals and the duration and coverage of the rehabilitation; (b) the terms and conditions of such rehabilitation which shall include the manner of its implementation, giving due regard to the interests of secured creditors such as, but not limited, to the non-impairment of their security liens or interests; (c) the material financial commitments to support the rehabilitation plan; (d) the means for the execution of the rehabilitation plan, which may include debt to equity conversion, restructuring of the debts, dacion en pago or sale exchange or any disposition of assets or of the interest of shareholders, partners or members; (e) a liquidation analysis setting out for each creditor that the present value of payments it would receive under the plan is more than that which it would receive if the assets of the debtor were sold by a liquidator within a six-month period from the estimated date of filing of the petition; and (f) such other relevant information to enable a reasonable investor to make an informed decision on the feasibility of the rehabilitation plan.

Section 19. Repayment Period. - If the rehabilitation plan extends the period for the debtor to pay its contractual obligations, the new period should not extend beyond fifteen (15) years from the expiration of the stipulated term existing at the time of filing of the petition. Section 20. Effects of Rehabilitation Plan. - The approval of the rehabilitation plan by the court shall result in the following: (a) The plan and its provisions shall be binding upon the debtor and all persons who may be affected thereby, including the creditors, whether or not such persons have participated in the proceedings or opposed the plan or whether or not their claims have been scheduled; (b) The debtor shall comply with the provisions of the plan and shall take all actions necessary to carry out the plan; (c) Payments shall be made to the creditors in accordance with the provisions 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 not conflict with the provisions of the plan; and (e) Any compromises on amounts or rescheduling of timing of payments by the debtor shall be binding on creditors regardless of whether or not the plan is successfully implemented. Section 21. Revocation of Rehabilitation Plan on Grounds of Fraud. - Upon motion, within ninety (90) days from the approval of the rehabilitation plan, and after notice and hearing, the court may revoke the approval thereof on the ground that the same was secured through fraud. Section 22. Alteration or Modification of Rehabilitation Plan. - An approved rehabilitation plan may, upon motion, be altered or modified if, in the judgement of the court, such alteration or modification is necessary to achieve the desired targets or goals set forth therein. Section 23. Termination of Proceedings. - The court shall, upon motion or upon recommendation of the rehabilitation receiver, terminate the proceeding in any of the following cases: (a) Dismissal of the petition; (b) Failure of the debtor to submit the rehabilitation plan; (c) Disapproval of the rehabilitation plan by the court; (d) Failure to achieve the desired targets or goals as set forth in the rehabilitation plan; (e) Failure of the debtor to perform its obligations under the plan; (f) Determination that the rehabilitation plan may no longer be implemented in accordance with its terms, conditions, restrictions or assumptions; or (g) Successful implementation of the rehabilitation plan. Section 24. Discharge of Rehabilitation Receiver. - Upon termination of the rehabilitation proceedings, the rehabilitation receiver shall submit his final report and accounting with such period of time as the court will allow him. Upon approval of his report and accounting, the court shall order his discharge. RULE 4 DEBTOR-INITIATED REHABILITATION Section 1. Who May Petition. - Any debtor who foresees the impossibility of meeting its debts when they respectively fall due, may petition the proper regional trial court for rehabilitation.

A group of companies may jointly file a petition for rehabilitation under these Rules when one or more of its constituent corporations foresee the impossibility of meeting debts when they respectively fall due, and the financial distress would likely adversely affect the financial condition and/or operations of the other member companies of the group is essential under the terms and conditions of the proposed rehabilitation plan. Section 2. Contents of Petition. (a) The petition filed by the debtor must be verified and must set forth with sufficient particularity all the following material facts: (1) the name and business of the debtor; (2) the nature of the business of the debtor; (3) the history of the debtor; (4) the cause of its inability to pay its debts; (5) all the pending actions or proceedings known to the debtor and the courts or tribunals where they are pending; (6) threats or demands to enforce claims or liens against the debtor; and (7) the manner by which the debtor may be rehabilitated and how such rehabilitation may benefit the general body of creditors, employees and stockholders. (b) The petition shall be accompanied by the following documents: (1) An audited financial statement of the debtor at the end of its last fiscal year; (2) Interim financial statements as of the end of the month prior to the filing of the petition; (3) A Schedule of Debts and Liabilities which lists all the creditors of the debtor, indicating the name and last address of record of each creditor; the amount of each claim as to principal, interest, or penalties due as of the date of filing; the nature of the claim; and any pledge, lien, mortgage judgement or other security given for the payment thereof; (4) An Inventory of Assets which must list with reasonable specificity all the assets of the debtor, stating the nature of each asset, the location and condition thereof, the book value or market value of the asset, and attaching the corresponding certificate of title thereof in case of real property, or the evidence of title or ownership in case of movable property, the encumbrances, liens or claims thereon, if any, and the identities and addresses of the lienholders and claimants. The Inventory shall include a Schedule of Accounts Receivable which must indicate the amount of each, the persons from who due, the date of maturity and the degree of collectibility categorizing them as highly collectible to remotely collectible; (5) A rehabilitation plan which conforms with the minimal requirements set out in Section 18 of Rule 3; (6) A Schedule of Payments and Disposition of Assets which the debtor may have effected within three (3) months immediately preceding the filing of the petition; (7) A Schedule of Cash Flow of the debtor for three (3) months immediately preceding the filing of the petition, and a detailed schedule of the projected cash flow for the succeeding three (3) months; (8) A Statement of Possible Claims by or against the debtor which must contain a brief

statement of the facts which might give rise to the claim and an estimate of the probable amount thereof; (9) An Affidavit of General Financial Condition which shall contain answers to the questions or matters prescribed in Annex "A" hereof; (10) At least three (3) nominees for the position of rehabilitation receiver as well as their qualifications and addresses, including but not limited to their telephone numbers, fax numbers and e-mail address; and (11) A certificate attesting under oath that (i) the filing of the petition has been duly authorized; and (ii) the directors and stockholders of the debtor have irrevocably approved and/or consented to, in accordance with existing laws, all actions or matters necessary and desirable to rehabilitate the debtor including, but not limited to, amendments to the articles of incorporation and by-laws or articles of partnership; increase or decrease in the authorized capital stock; issuance of bonded indebtedness; alienation, transfer, or encumbrance of assets of the debtor; and modification of shareholders' rights. (c) Five (5) copies of the petition shall be filed with the court. Section 3. Verification by Debtor. - The petition filed by the debtor must be verified by an affidavit of a responsible officer of the debtor and shall be in a form substantially as follows: "I, ___________________, (position) of (name of petitioner), do solemnly swear that the petitioner has been duly authorized to file the petition and that the stockholders and board of directors (or governing body) have approved and/or consented to, accordance with law, all actions or matters necessary or desirable to rehabilitate the debtor. The petition is being filed to protect the interests of the debtor, the stockholders, the inventors and the creditors of the debtor, which warrant the appointment of a rehabilitation receiver. There is no petition for insolvency filed with any other body, court of tribunal affecting the petitioner. The Inventory of Assets and the Schedule of Debts and Liabilities contains a full, correct and true description of all debts and liabilities and of all goods, effects, estate and property of whatever kind of class belonging to petitioner. The Inventory also contains a full, correct and true statement of all debts owing or due to petitioner, or to any person or persons in trust for petitioner and of all securities and contracts whereby any money may hereafter become due or payable to petitioner or by or through which any benefit or advantage may accrue to petitioner. The petition contains a concise statement of the facts giving rise, or which might give rise, to any cause of action in favor of petitioner. Petitioner has no land, money, stock, expectancy, or property of any kind, except those set forth in the Inventory of Assets. Petitioner has, in no instance, created or acknowledged a debt for 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 of petitioner's real or personal property, estate, effects or rights of action, and petitioner, its officers, directors and stockholders have not in any way compounded with any of its creditors in order to give preference to such creditors, or to receive or to accept any profit or advantage therefrom, or to defraud or deceive in any manner any creditor to whom petitioner is indebted. Petitioner, its officers, directors, and stockholders have been acting in good faith and with due diligence.

Section 4. Opposition to or Comment on Petition. - Every creditor of the debtor or any interested party shall file his verified opposition to or comment on the petition not later than fifteen (15) days before the date of the initial hearing fixed in the stay order. After such time, no creditor or interested party shall be allowed to file any comment thereon or opposition thereto without leave of court. If the Schedule of Debts and Liabilities omits a claim or liability, the creditor concerned shall attach to its comment or opposition a verified statement of the obligations allegedly due it. Section 5. Initial Hearing. (a) On or before the initial hearing set in the order mentioned in Section 7 of Rule 3, the petitioner shall file a publisher's affidavit showing that the publication requirements and a petitioner's affidavit showing that the notification requirement for foreign creditors had been complied with, as required in the stay order. (b) Before proceeding with the initial hearing, the court shall determine whether the jurisdictional requirements set forth above had been complied with. After finding that such requirements are met, the court shall ensure that the parties consider in detail all of the following: (1) Amendments to the rehabilitation plan proposed by the debtor; (2) Simplification of the issues; (3) The possibility of obtaining stipulations and admission of facts and documents, including resort to request for admission under Rule 26 of the Rule of Court; (4) The possibility of amicably agreeing on any issue brought up in the comments on, or opposition to, the petition; (5) Referral of any accounting, financial and other technical issues to an expert; (6) The possibility of submitting the petition for decision on the basis of the comments, opposition, affidavit and other documents on record; (7) The possibility of a new rehabilitation plan voluntarily agreed upon by the debtor and its creditors; and (8) Such other matters as may aid in the speedy and summary disposition of the case. Section 6. Additional Hearings. - The court may hold additional hearings as part of the initial hearing contemplated in these Rules but the initial hearing must be concluded not later than ninety (90) days from the initial date of the initial hearing fixed in the stay order. Section 7. Order After Initial Hearing. (a) Within twenty (20) days after the last hearing, the court shall issue an order which shall: (1) Give due course to the petition and immediately refer the petition and its annexes to the rehabilitation receiver who shall evaluate the rehabilitation plan and submit his recommendations to the court not later than ninety (90) days from the date of the last initial hearing, if the court is satisfied that there is merit to the petition, otherwise the court shall immediately dismiss the petition; and (2) Recite in detail the matters taken up in the initial hearing and the action taken thereon,

including a substitute rehabilitation plan contemplated in Sections 5 (b)(7) and (8) of this Rule; (b) If the debtor and creditors agree on a new rehabilitation plan pursuant to Section 5 (b)(7) of this Rule, the order shall so state the fact and require the rehabilitation receiver to supply the details of the plan and submit it for the approval of the court not later than sixty (6) days from the date of the last initial hearing. The court shall approve the new rehabilitation plan not later than ninety (90) days from the date of the last initial hearing upon concurrence of the following: (1) Approval or endorsement of creditors holding at least two-thirds (2/3) of the total liabilities of the debtor including secured creditors holding more than fifty percent (50%) of the total secured claims of the debtor and unsecured creditors holding more than fifty percent (50%) of the total unsecured claims of the debtor; (2) The rehabilitation plan complies with the requirements specified in Section 18 of Rule 3; (3) The rehabilitation plan would provide the objecting class of creditors with payments whose present value projected in the plan would be greater than that which they would have received if the assets of the debtor were sold by a liquidator within a six (6) month period from the date of filing of the petition; and (4) The rehabilitation receiver has recommended approval of the plan. The approval by the court of the new rehabilitation plan shall have the same effect as approval of a rehabilitation plan under Section 20 of Rule 3. Section 8. Creditors' Meetings. - If no new rehabilitation plan is agreed upon by the debtor and the creditors, the rehabilitation receiver, at any time before he submits his evaluation on the debtor-proposed rehabilitation plan to the court as prescribed in Section 7(a)(1) of this Rule, shall, either alone or with the debtor, meet with the creditors or any interested party t discuss the plan with a view to clarifying or resolving any matter connected therewith. Section 9. Comments on or Opposition to Rehabilitation Plan. Any creditor or interested party of record may file comments on or opposition to the proposed rehabilitation plan, with a copy given to the rehabilitation receiver, not later than sixty (60) days from the date of the last initial hearing. The court shall conduct summary and non-adversarial proceedings to receive evidence, if necessary, in hearing the comments on and opposition to the plan. Section 10. modification of Proposed Rehabilitation Plan. - The debtor may modify its rehabilitation plan in the light of the comments of the rehabilitation receiver and creditors or any interested party and submit a revised or substitute rehabilitation plan for the final approval of the court. Such rehabilitation plan must be submitted to the court not later than ten (10) moths from the date of filing of the petition. Section 11. Approval of Rehabilitation Plan. - The court may approve a rehabilitation plan even over the opposition of creditors of the debtor if, in its judgement, the rehabilitation of the debtor is feasible and the opposition of the creditors is manifestly unreasonable if the following are present:

(a) The rehabilitation plan complies with the requirements specified in Section 18 of Rule 3; (b) The rehabilitation plan would provide the objecting class of creditors with payments whose present value projected in the plan would be greater than that which they would have received if the assets of the debtor were sold by a liquidator within a six (6)-month period from the date of filing of the petition; and (c) The rehabilitation receiver has recommended approval of the plan. In approving the rehabilitation plan, the court shall ensure that the rights of the secured creditors are not impaired. The court shall also issue the necessary orders or processes for its immediate and successful implementation. it may impose such terms, conditions, or restrictions as the effective implementation and monitoring thereof may reasonably require, or for the protection and preservation of the interests of the creditors should the plan fall. Section 12. Period to Decide Petition. - The court shall decide the petition within one (1) year from the date of filing of the petition, unless the court, for good cause shown, is able to secure an extension of the period from the Supreme Court. RULE 5 CREDITOR-INITIATED REHABILITATION Section 1. Who May Petition. - Any creditor or creditors holding at least twenty percent (20%) of the debtor's total liabilities may file a petition with the proper regional trial court for rehabilitation of a debtor that cannot meet its debts as they respectively fall due. Section 2. Requirements for Creditor-Initiated Petitions. - Where the petition is filed by a creditor or creditors under this Rule, it is sufficient that the petition is accompanied by a rehabilitation plan and a list of at least three (3) nominees to the position of rehabilitation receiver and verified by a sworn statement that the affiant has read the petition and that its contents are true and correct of his personal knowledge or based on authentic records and that the petition is being filed to protect the interests of the debtor, the stockholders, the investors and the creditors of the debtor. Section 3. Applicability of Provisions Relating to Debtor-Initiated Rehabilitation. - The provisions of Sections 5 to 12 of Rule 4 shall apply to rehabilitation under this Rule. RULE 6 PRE-NEGOTIATED REHABILITATION Section 1. Pre-negotiated Rehabilitation Plan. - A debtor that foresees the impossibility of meeting its debts as they fall due may, by itself or jointly with any of its creditors, file a verified petition for the approval of a pre-negotiated rehabilitation plan. The petition shall comply with Section 2 of Rule 4 and be supported by an affidavit showing the written approval or endorsement of creditors holding at least two-thirds (2/3) of the total liabilities of the debtor, including secured creditors holding more than fifty percent (50%) of the total secured claims of the debtor and unsecured creditors holding more than fifty percent (50%) of the total unsecured claims of the debtor. Section 2. Issuance of Order. - If the court finds the petition sufficient in form and substance, it shall, not later than five (5) working days from the filing of the petition, issue an order which shall:

(a) Identify the debtor, its principal business or activity/ies and its principal place of business; (b) Direct the publication of the order in a newspaper of general circulation once a week for at least two (2) consecutive weeks, with the first publication to be made within seven (7) days from the time of its issuance; (c) Direct the service by personal delivery of a copy of the petition on each creditor who is not a petitioner holding at least five percent (5%) of the total liabilities of the debtor, as determined in the schedule attached to the petition, within three (3) days; (d) Direct the petitioner to furnish a copy of the petition and its annexes, as well as the stay order, to the relevant regulatory agency; (e) State that copies of the petition and the rehabilitation plan are available for examination and copying by any interested party; (f) Direct creditors and other parties interested (including the Securities and Exchange Commission and the relevant regulatory agencies such as, but not limited to, the Bangko Sentral ng Pilipinas, the Insurance Commission, the National Telecommunications Commission, the Housing and Land Use Regulatory Board and the Energy Regulatory Commission) in opposing the petition or rehabilitation plan to file their verified objections thereto or comments thereon within a period of not later than twenty (20) days from the second publication of the order, with a warning that failure to do so will bar them from participating in the proceedings; (g) Appoint the rehabilitation receiver named in the plan, unless the court finds that he is not qualified under these Rules in which case it may appoint a qualified rehabilitation receiver of its choice; (h) Stay enforcement of all claims, whether for money or otherwise and whether such enforcement is by court action or otherwise, against the debtor, its guarantors and persons not solidarily liable with the debtor; provided, that the stay order shall not cover claims against letters of credit and similar security arrangements issued by a third party to secure the payment of the debtor's obligations; provided further, that the stay order shall not cover foreclosure by a creditor of property not belonging to a debtor under corporate rehabilitation; provided, however, that where the owner of such property sought to be foreclosed is also a guarantor or one who is not solidarily liable, said owner shall be entitled to be benefit of excussion as such guarantor; (i) Prohibit the debtor from selling, encumbering, transferring, or disposing in any manner any of its properties except in the ordinary course of business; (j) Prohibit the debtor from making any payment of its liabilities outstanding as of the date of filing of the petition; (k) Prohibit the debtor's suppliers of goods or services from withholding supply of goods and services in the ordinary course of business for as long as the debtor makes payments for the services and goods supplied after the issuance of the stay order; (l) Direct the payment in full of all administrative expenses incurred after the issuance of the stay order; and (m) Direct the payment of new loans or other forms of credit accommodations obtained for the rehabilitation of the debtor with prior court approval.

Section 3. Approval of Plan. - Within ten (10) days from the date of the second publication of the order referred to in Section 2 of this Rule, the court shall approve the rehabilitation plan unless a creditor or other interested party submits a verified objection to it in accordance with the next succeeding section. Section 4. Objection to Petition or Rehabilitation Plan. - Any creditor or other interested party may submit to the court a verified objection to the petition or the rehabilitation plan. The objection shall be limited to the following: (a) The petition or the rehabilitation plan or their attachments contain material omissions or are materially false or misleading; (b) The terms of rehabilitation are unattainable; or (c) The approval or endorsement of creditors required under Section 1 of this Rule has not been obtained Copies of any objection to the petition or the rehabilitation plan shall be served on the petitioning debtor and/or creditors. Section 5. Hearing on Objections. - The court shall set the case for hearing not earlier than ten (10) days and no longer than twenty (20) days from the date of the second publication of the order mentioned in Section 2 of this Rule on the objections is in accordance with the immediately preceding section, it shall direct the petitioner to cure the defect within a period fifteen (15) days from receipt of the order. Section 6. Period for Approval of Rehabilitation Plan. - The court shall decide the petition not later than one hundred twenty (120) days from the date of the filing of the petition. If the court fails to do so within said period, the rehabilitation plan shall be deemed approved. Section 7. Effects of Approval of Rehabilitation Plan. - Approval of the rehabilitation plan under this Rule shall have the same legal effect as approval of a rehabilitation plan under Section 20 of Rule 3. Section 8. Revocation of Approved Rehabilitation Plan. - Not later than thirty (30) days from the approval of a rehabilitation plan under this Rule, the plan may, upon motion and after notice and hearing, be revoked on the ground that the approval was secured by fraud or that the petitioner has failed to cure the defect ordered by the court pursuant to Section 5 of this Rule. Section 9. Effect of Rule on Pending Petitions. - Any pending petition for rehabilitation that has not undergone the initial hearing prescribed under the Interim Rules of Procedure for Corporate Rehabilitation at the time of the effectivity of these Rules may be converted into a rehabilitation proceeding under this Rule. RULE 7 RECOGNITION OF FOREIGN PROCEEDINGS Section 1. Scope of Application. - This Rule applies where (a) assistance is sought in a Philippine court by a foreign court or a foreign representative in connection with a foreign proceeding; (b) assistance is sought in a foreign State in connection with a domestic proceeding governed by these Rules; or (c) a foreign proceeding and a domestic proceeding are concurrently taking place. The sole fact that a petition is filed pursuant to this Rule does not subject the foreign representative or the foreign assets and affairs of the debtor to the jurisdiction of the local courts for any purpose other than the petition.

Section 2. Non-Recognition of Foreign Proceeding. - Nothing in this Rule prevents the court from refusing to take an action governed by this Rule if (a) the action would be manifestly contrary to the public policy of the Philippines; and (b) if the court finds that the country of which the petitioner is a national does not grant recognition to a Philippine rehabilitation proceeding in a manner substantially in accordance with this Rule. Section 3. Petition for Recognition of Foreign Proceeding. - A foreign representative may apply with the Regional Trial Court where the debtor resides for recognition of the foreign proceeding in which the foreign representative has been appointed. A petition for recognition shall be accompanied by: (a) A certified copy of the decision commencing the foreign proceeding and appointing the foreign representative; or (b) A certificate from the foreign court affirming the existence of the foreign proceeding and of the appointment of the foreign representative; or (c) In the absence of evidence referred to in subparagraph (a) and (b), any other evidence acceptable to the court of the existence of the foreign proceeding and of the appointment of the foreign representative. Section 4. Recognition of Foreign Proceeding. - A foreign proceeding shall be recognized if: (a) The proceeding is a foreign proceeding as defined herein; (b) The person or body applying for recognition is a foreign representative as defined herein; and (c) The petition meets the requirements of Section 3 of this Rule; Section 5. Period to Recognize Foreign Proceeding. - A petition for recognition of a foreign proceeding shall be decided within thirty (30) days from the filing thereof. Section 6. Notification to Court. - From the time of filing the petition for recognition f the foreign proceeding, the foreign representative shall inform the court promptly of: (a) Any substantial change in the status of the foreign proceeding or the status of the foreign representative's appointment; and (b) Any other foreign proceeding regarding the same debtor that becomes known to the foreign representative. Section 7. Provisional Relief that May be Granted upon Application for Recognition of Foreign Proceeding. - From the time of filing a petition for recognition until the same is decided upon, the court may, upon motion of the foreign representative where relief is urgently needed to protect the assets of the debtor or the interests of the creditors, grant relief of a provisional nature, including: (a) Staying execution against the debtor's assets; (b) Entrusting the administration or realization of all or part of the debtor's assets located in the Philippines to the foreign representative or another person designated by the court in order to protect and preserve the value of assets that, by their nature or because of other circumstances, are perishable, susceptible to devaluation or otherwise in jeopardy; (c) Any relief mentioned in Section 9(a)(1), (2) and (7) of this Rule.

Section 8. Effects of Recognition of Foreign Proceeding. - Upon recognition of a foreign proceeding: (a) Commencement or continuation of individual actions or individual proceedings concerning the debtor's assets, rights, obligations or liabilities is stayed; provided, that such stay does not affect the right to commence individual actions or proceedings to the extent necessary to preserve a claim against the debtor. (b) Execution against the debtor's assets is stayed; and (c) The right to transfer, encumber or otherwise dispose of any assets of the debtor is suspended. Section 9. Relief That May be Granted After Recognition of Foreign Proceeding. (a) Upon recognition of a foreign proceeding, where necessary to protect the assets of the debtor or the interests of the creditors, the court may, upon motion of the foreign representative, grant any appropriate relief including: (1) Staying the commencement or continuation of individual actions or individual proceedings concerning the debtor's assets, rights, obligations or liabilities to the extent they have not been stayed under Section 8(a) of this Rule; (2) Staying execution against the debtor's assets to the extent it has not been stayed under Section 8(b) of this Rule; (3) Suspending the right to transfer, encumber or otherwise dispose of any assets of the debtor to the extent this right has not been suspended under Section 8(c) of this Rule; (4) Providing for the examination of witnesses, the taking of evidence or the delivery of information concerning the debtor's assets, affairs, rights, obligations or liabilities; (5) Entrusting the administration or realization of all or part of the debtor's assets located in the Philippines to the foreign representative or another person designated by the court; (6) Extending the relief granted under Section 7 of this Rule; (7) Granting any additional relief that may be available to the rehabilitation receiver under these laws. (b) Upon recognition of a foreign proceeding, the court may, at the request of the foreign representative, entrust the distribution of all or part of the debtor's assets located in the Philippines to the foreign representative or another person designated by the court; provided that the court is satisfied that the interests of local creditors are adequately protected. Section 10. Protection of Creditors and Other Interested Persons. (a) In granting or denying relief under this Rule or in modifying or terminating the relief under paragraph (c) of this Section, the court must be satisfied that the interests of the creditors and other interested persons, including the debtor, are adequately protected. (b) The court may subject the relief granted under Section 7 or Section 9. Of this Rule to conditions it considers appropriate. (c) The court may, upon motion of the foreign representative or a person affected by the relief granted under Section 7 or Section 9 of this Rule, or on its own motion, modify or terminate such relief.

Section 11. Actions to Avoid Acts Detrimental to Creditors. - Upon recognition of a foreign proceeding, the foreign representative acquires the standing to initiate actions to avoid or otherwise render ineffective acts detrimental to creditors that are available under these Rules. Section 12. Intervention by Foreign Representative in Philippine Proceedings. - Upon recognition of a foreign proceeding, the foreign representative may intervene in any action or proceeding in the Philippines in which the debtor is a party. Section 13. Cooperation and Direct Communication with Foreign Courts and Foreign Representatives. - In matters covered by this Rule, the court shall cooperate to the maximum extent possible with foreign courts or foreign representatives. The court is entitled to communicate directly with, or request information or assistance directly from, foreign courts or foreign representatives. Section 14. Forms of Cooperation. - Cooperation may be implemented by any appropriate means, including but not limited to the following: (a) Appointment of a person or body to act at the discretion of the court; (b) Communication of information by any means considered appropriate by the court; (c) Coordination of the administration and supervision of the debtor's assets and affairs; (d) Approval or implementation by courts of agreements concerning the coordination of proceedings; (e) Coordination of concurrent proceedings regarding the same debtor; (f) Suspension of proceedings against the debtor; (g) Limiting the relief of assets that should be administered in a foreign proceeding pending in a jurisdiction other than the place where the debtor has its principal place of business (foreign non-main proceeding) or information required in that proceeding; and (h) Implementation of rehabilitation or re-organization plan for the debtor. Nothing in this Rule limits the power of the court to provide additional assistance to the foreign representative under other applicable laws. Section 15. Commencement of Local Proceeding after Recognition of Foreign Proceeding. - After the recognition of a foreign proceeding, a local proceeding under these Rules may be commenced only if the debtor is doing business in the Philippines, the effects of the proceedings shall be restricted to the assets of the debtor located in the country and, to the extent necessary to implement cooperation and coordination under Sections 13 and 14 of this Rule, to the other assets of the debtor that, under local laws, must be administered in that proceeding. Section 16. Local and Foreign Proceedings. - Where a foreign proceeding and a local proceeding are taking place concurrently regarding the same debtor, the court shall seek cooperation and coordination under Section 13 and 14 of this Rule. Any relief granted to the foreign proceeding must be made consistent with the relief granted in the local proceeding. RULE 8 PROCEDURAL REMEDIES

Section 1. Motion for Reconsideration. - A party may file a motion for reconsideration of any order issued by the court prior to the approval of the rehabilitation plan. 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. Such order can only be elevated to the Court of Appeals as an assigned error in the petition for review of the decision or order approving or disapproving the rehabilitation plan. An order issued after the approval of the rehabilitation plan can de reviewed only through a special civil action for certiorari under Rule 65 of the Rules of Court. Section 2. Review of Decision or Order on Rehabilitation Plan. - an order approving or disapproving a rehabilitation plan can only be reviewed through a petition for review to the Court of Appeals under Rule 43 of the Rules of Court within fifteen (15) days from notice of the decision or order. RULE 9 FINAL PROVISIONS Section 1. Severability. - If any provision or section of these Rules is held invalid, the other provisions or sections shall not be affected thereby. Section 2. Transitory Provision. - Unless the court orders otherwise to prevent manifest injustice, any pending petition for rehabilitation that has not undergone the initial hearing prescribed under the Interim Rules of Procedure for Corporate Rehabilitation at the time of the effectivity of these Rules shall be governed by these rules. Section 3. Effectivity. - These Rules shall take affect on 16 January 2009 following its publication in two (2) newspapers of general circulation in the Philippines.

A.M. 02-1-06-SC 22 January 2002 RULE ON SEARCH AND SEIZURE IN CIVIL ACTIONS FOR INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS The Rule shall take effect on February 15, 2002 following its, publication in two (2) newspapers of general circulation on or before January 30, 2002. RULE ON SEARCH AND SEIZURE IN CIVIL ACTIONS FOR INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS Section 1. Coverage. - This Rule shall govern the provisional seizure and impounding of documents and articles in pending and intended civil actions for the purpose of preventing infringement and preserving relevant evidence in regard to alleged infringement under Republic Act No. 8293, otherwise known as the Intellectual property Code of the Philippines, Article 50 of the Agreement on Trade Related Aspects of intellectual Property Rights, otherwise known as TRIPS and other related laws and international conventions. Section 2. The writ of search and seizure. - Where any delay is likely to cause irreparable harm to the intellectual property right holder or where there is demonstrable risk of evidence being destroyed, the intellectual property right holder or his duly authorized representative in a pending civil action for infringement or who intends to commence such an action may apply ex parte for the issuance of a writ of search and seizure directing the alleged infringing defendant or expected adverse party to admit into his premises the persons named in the order and to allow the search, inspection, copying, photographing, audio and audiovisual recording or seizure of any document and article specified in the order. Section 3. Where application filed. - The application shall be filed with any of the Regional Trial Courts of the judicial region designated to try violations of intellectual property rights stationed at the place where the alleged violation occurred or is to occur, or me place to be searched, at the election of the applicant. Provided, however, that where the complaint for infringement has a1ready been filed, the application shall be made in the court where the case is rending. Section 4. Verified application and affidavits. - The applicant shall file a verified application alleging the ground upon which it is based and the specific description and location of the documents and articles to be searched, inspected, copied or seized and their value. It shall also state the names of the applicant, his representative, witnesses and counsel who will attend the search in the event that the application is granted. The application shall be supported by affidavits of witnesses who personally know the facts and by authenticated or certified documents. The application shall contain a certification against forum shopping as prescribed by Section 5, Rule 7 of the 1997 Rules of Civil Procedure. The applicant shall undertake in his application that he will not use any of the documents, articles or information obtained by reason of the search and seizure for any purpose other than in the action in which the writ is issued. Section 5. Examination of applicant; record; confidentiality of proceedings. - The application shall be acted upon within twentyfour (24) hours from its filing; The judge must, before issuing the writ, examine in the form of searching questions and answers, in writing and under oath or affirmation, the applicant and the witnesses he may produce on facts personally known to them. The examination of the applicant and his witnesses shall be

recorded. Their sworn statements and their affidavits shall form part of the record of the case. The hearing on the application for the writ shall be held in the chambers of the judge. Court personnel shall maintain the confidentiality of the application proceeding.lawphi1.net The court may require the applicant to give other information necessary for the identification of the articles and documents to be searched, inspected, copied or seized and the premises to be searched. Where feasible, it may direct the applicant to submit copies and photographs of the documents or articles to be seized and impounded. Section 6. Grounds for the issuance of the order. - Before the Order can be issued, the evidence proffered by the applicant and personally evaluated by the judge must show that: (a) the applicant is the right holder or his duly authorized representative; (b) there is probable cause to believe that the applicant's right is being infringed or that such infringement is imminent and there is a prima facie case for final relief against the alleged infringing defendant or expected adverse party; (c) damage, potential or actual, likely to be caused to the applicant is irreparable; (d) there is demonstrable risk of evidence that the alleged infringing defendant or expected adverse party may destroy, hide or remove the documents or articles before any application inter partes can be made; and (e) the documents and articles to be seized constitute evidence of the alleged infringing defendant's or expected adverse party's infringing activity or that they infringe upon the intellectual property right of the applicant or that they are used or intended to be used as means of infringing the applicant's intellectual property right. Section 7. When writ may issue. - If the judge is satisfied with the proof of facts upon which the application is based, he shall issue the writ requiring the search, inspection or copying of the subject documents or articles or commanding the sheriff to take them into his custody subject to the control of the court. The enforcement of the writ shall be supervised by an independent Commissioner to be appointed by the court. Section 8. Contents of the writ. - The writ shall contain the following: (a) an order to the alleged infringing defendant, expected adverse party or to the person who appears to be in charge or in control of the premises or residing or working therein to permit the persons named in the writ to enter into the premises for the purpose of searching, inspecting, copying, or removing from the premises and transferring to the custody of the sheriff and subject to the control of the court the subject documents and articles; (b) an order to the alleged infringing defendant, expected adverse party or to the person in charge or in control of the premises to disclose to the sheriff serving the writ the location of the documents and articles subject of the writ; (c) the period when the writ shall be enforced which in no case shall be more than ten (10) days from the date of issuance by the court; (d) the names of the applicant or his agent or representative and the Commissioner who shall supervise the enforcement of the writ; and (e) other terms and conditions that will insure the proper execution of the writ with due regard to the

rights of the alleged infringing defendant or expected adverse party. It shall also contain a warning that violation of any of the terms and conditions of the writ shall constitute contempt of court. Section 9. Bond and its conditions. - The applicant shall be required to post a cash bond, surety bond or other equivalent security executed in favor of the defendant or expected adverse party in a reasonable amount to be fixed by me court in its order granting me issuance of a writ of search and seizure. The bond shall be conditioned on the undertaking of the applicant that he will pay all the costs which may be adjudged to defendant or expected adverse party and all damages which me latter may sustain by reason of me issuance of the writ. Section 10. When writ shall be served. - The writ shall be served only on weekdays and from 8 o'clock in the morning to 5 o'clock in the afternoon. However, the court may direct that the writ be served on any day and any time for compelling reasons stated in the application and duly proved. Section 11. To whom writ shall be served. - The writ shall be served on the alleged infringing defendant or expected adverse party in the place to be searched. If the alleged infringing defendant or expected adverse party cannot be found in the premises, the writ shall be served on his agent or representative. In the absence of an agent or representative, it shall be served on the person in charge or in control of the premises, or residing or working therein who is of sufficient age and discretion. If such person is absent, the sheriff or proper officer shall post the papers on the premises and proceed with the enforcement of the writ. Section 12. Commissioner, duties, qualifications and fees. - The enforcement of the writ shall be supervised by the independent Commissioner appointed by the court. In the performance of his duty, the Commissioner shall: (a) give impartial advise to the alleged infringing defendant, expected adverse party or to the person in charge of the premises to be searched as to the meaning and coverage of the writ; (b) attempt to achieve agreement on a suitable search procedure; (c) assess what documents or articles come within the terms of the writ; (d) ensure the accuracy of the list of documents and articles searched, inspected, copied or seized by the sheriff; (e) prepare his own report on the search and seizure and verify and sign the return prepared by the sheriff; and (f) generally, assist in the proper execution of the writ. The Commissioner shall be a member of the Philippine Bar and of proven competence, integrity and probity. He shall receive such reasonable compensation as may be determined by the court which can be charged as cost of suit. Section 13. Search to be conducted in the presence of defendant, his representative, person in charge of the premises or witnesses. The premises may not be searched except in the presence of the alleged infringing defendant, expected adverse party or his representative or the person in charge or in control of the premises or residing or working m therein who shall be given the opportunity to read the writ before its enforcement and seek its interpretation from the Commissioner. In the absence of the latter, two persons of sufficient age and discretion residing in the same locality shall be allowed to witness the search or in the

absence of the latter, two persons of sufficient age and discretion residing in the nearest locality. Section 14. Manner of search and seizure; duties of the sheriff. Upon service of the writ in accordance with section 11 hereof, sheriff, under the supervision of the Commissioner, shall search for the documents and articles specified in the writ, and take them in his custody subject to the control of the court. If the subject articles are not capable of manual delivery, the sheriff shall attach to them a tag or label stating the fact of seizure and warning all persons from tampering with them. The sheriff shall, in the presence of the applicant or his representative, and under the supervision of the Commissioner, prepare a detailed list of the seized documents and articles. He shall give an accurate copy of the same to the alleged infringing defendant, expected adverse party, his agent or representative, to the person in charge or in control of the premises or residing or working therein in whose presence the search and seizure were made. In the absence of the person in charge or in control of the premises or residing or working therein, the sheriff must, in the presence of at least two witnesses of sufficient age and discretion residing in the same locality, leave a copy of the receipt in the place in which he found the seized property. Where no witnesses are available in the same locality, the copy of the receipt shall be left by the sheriff in the presence of two witnesses residing in the nearest locality. The applicant or his representative and the Commissioner shall also be given a copy of the receipt. After the sheriff has taken possession of the documents and articles, he shall deliver them to a bonded warehouse or government warehouse for safekeeping. The applicant or his representative shall be allowed access to said materials for the purpose of examining them. The applicant shall be responsible for the necessary expenses incurred ill the seizure and safekeeping of the documents and articles in a bonded warehouse or government warehouse. Section 15. Use of reasonable force to effect writ. - The sheriff, if refused admittance to the premises after giving notice of his purpose and authority or in absence of the alleged infringing defendant or expected adverse party, his agent or representative, or person in charge or in control of the premises or residing or working therein who is of sufficient age and discretion, may use reasonable force to gain entry to the premises or any part of the building or anything therein, to enforce the writ or to liberate himself or any person lawfully aiding him when unlawfully detained therein. Section 16. Seizure of computer disks other storage devices. - The seizure of a computer disk or any storage device may be executed in any of the following manner: (a) by the physical taking thereof; (b) by Copying its contents in a suitable device or disk provided by the applicant; or (c) by printing out the Contents of the disk or device with a the use of a printer. When the computer disks or storage devices cannot be readily removed from the computer to which they are fitted, the sheriff may take the subject computer from the custody of the alleged infringing defendant, expected adverse party or person in charge or in control of the premises or residing or working therein. Section 17. Sheriff's return. - The sheriff who executed the writ shall, within three (3) days from its enforcement, make a verified return to the court which issued the writ. The return shall contain a full statement of the proceedings under the writ and a complete inventory of the documents and articles searched, inspected or copied or seized and impounded, with copies served

on the applicant, the defendant or expected adverse party and the Commissioner. If not all of the documents and articles enumerated in the order and writ were seized, the sheriff shall so report to the court and state is the reasons therefor. All objections of the defendant, expected adverse party or person in charge of the premises on the manner and regularity of the service of the writ shall be included by the sheriff in his return. Section 18. Discharge of writ by the defendant or expected adverse party. - Without waiting for return to be filed by the sheriff, the defendant, expected adverse party or the party whose property has been searched, inspected, copied or seized may file a motion with the court which issued the writ for its discharge with prayer for the return of the documents and articles seized. The writ may be discharged on any of the following grounds: (a) that the writ was improperly or irregularly issued, or excessively enforced; (b) that the bond is insufficient; (c) that tile safeguards provided in the writ have been violated by the applicant or the sheriff; or (d) that the documents and articles seized are not infringing copies or means for making the materials alleged to infringe the intellectual property right of the applicant. The writ may be discharged in a summary hearing by the court after notice to the applicant, the sheriff and the Commissioner. If the court finds that the bond is insufficient, it shall order a. new bond to be filed by the applicant within a reasonable time. The discharge of the writ based on the insufficiency of the bond may only be made if the applicant fails to post the new bond within the period fixed by the court. Section 19. Proceedings on return. - Five (5) days after issuance of the writ, the issuing judge shall ascertain if the writ has not been served or the return has been made by the sheriff. If the writ was not served or no return was made, it shall summon the sheriff and the applicant to whom the writ was issued and require them to explain why the writ was not served or why no return has been filed as the case may be. If the return has been made, the judge shall, after notice to the applicant, the alleged infringing defendant or expected adverse party, the sheriff and the Commissioner, ascertain whether the provisions of this Rule and applicable laws have been complied with. Section 20. Failure to file complaint. - The writ shall also. Upon motion of the expected adverse party, be set aside and the seized documents and articles returned to the expected adverse party if no case is filed with the appropriate court or authority within thirty-one (31) calendar days from the date of issuance of the writ. Section 21. Claim for damages. - Where the writ is discharged on any of die grounds provided in this Rule, or where it is found after trial that there has been no infringement or threat of infringement of an intellectual property right, the court. Upon motion of the alleged infringing defendant or expected adverse party and after due hearing, shall order the applicant to compensate the defendant or expected adverse party upon the cash bond, surety bond or other equivalent security for any injury or damage the latter suffered by the issuance and enforcement of the writ. Should the damages exceed the amount of the bond, the applicant shall be liable for the payment of the excess. When a complaint is already filed in court, the motion shall be filed with the same court during the trial or before appeal is perfected or before judgment becomes executory, with due notice to the applicant, setting forth the facts showing the

defendant's right to damage's and the amount thereof. The award of damages shall be included in the judgment in the main case. Where no complaint is filed against the expected adverse party, the motion shall be filed with the court which issued the writ. In such a case, the court shall set the motion for summary hearing and immediately determine the expected adverse party's right to damages. A judgment in favor of the applicant in its principal claim, should not necessarily bar the alleged infringing defendant from recovering damages where he suffered losses by reason of the wrongful issuance or enforcement of the writ. The damages provided for in this section shall be independent from the damages claimed by the defendant in his counterclaim. Section 22. Judgment. - If it appears after trial that the seized documents and articles are found to infringe the intellectual property right of the applicant or that they constitute the means for the production of infringing goods, the court shall order their destruction or donation to charitable, educational or religious institutions with the prohibition against bringing the same into the channels of commerce. In the latter case, infringing trademarks or trade names found on labels, tags and other portions of the infringing materials shall be removed or defaced before the donation. In no case shall the infringing materials be returned to the defendant. If the court finds no infringement, the seized materials shall be immediately returned to the defendant. Section 23. Direct filing, provisional docketing and deposit of prescribed filing fee. - The Regional Trial Courts specially designated to try violations of intellectual property rights shall keep a distinct and separate logbook for writs of search and seizure. The application for a writ of search and seizure filed directly with the said courts shall be given a provisional docket number. The prescribed filing fee shall be deposited with the branch clerk of court and properly receipted for and transmitted to the Clerk of Court within twenty-four (24) hours from issuance of the order granting or denying the application for said writ. If a formal complaint is filed thereafter, the Clerk of Court may make a. reassessment of the filing fee. Section 24. Separate logbook. - In every court, there shall be a logbook under the custody of the Clerk of Court wherein shall be docketed and entered within twenty-four (24) hours after the issuance or denial of the writ of search and seizure, the filing of such application and other particulars thereof. All the subsequent proceedings concerning the writ of search and seizure shall be faithfully recorded in the separate logbook. Section 25. Effect of violation. - A violation of any of the terms and conditions of the order and the writ of search and seizure or any provision of this Rule shall constitute contempt of court. Section 26. Writ not a bar to other measures. - The availment of the writ of search and seizure under this Rule shall not prevent the applicant from resorting to other provisional measures or remedies provided in existing laws and procedural rules. Section 27. Effectivity. - This Rule shall take effect on February 15, 2002 after its publication in two (2) newspapers of general circulation not later than January 30, 2002.

A.M. No. 03-03-SC 17 June 2003 RE: CONSOLIDATION OF INTELLECTUAL PROPERTY COURTS WITH COMMERCIAL COURTS RESOLUTION WHEREAS, to implement the provisions of Section 5.2 of Republic Act No. 8799 (The Securities Regulation Code), and in the interest of a speedy and efficient administration of justice, the Supreme Court en bane, in the (a) Resolution dated 21 November 2000 (Annex 1), 4 July 2001 (Annex 1-a), 12 November 2002 (Annex 1-b), and 9 July 2002 (Annex 1-c), all issued in A.M. No. 00-11-03-SC; (b) Resolution dated 27 August 2001 in A.M. No. 01-5-298 RTC (Annex 2); and (c) Resolution dated 8 July 2002 in A.M. No. 01-12-656-RTC (Annex 3), resolved to designate certain branches of the Regional Trial Courts to try and decide cases formerly cognizable by the Securities and Exchange Commission; WHEREAS, pursuant to the same Resolution, sixty-five (65) Regional Trial Courts, distributed in all regions (NCJR and Regions 1-12), were designated as SEC courts ("SEC Courts"), which courts have presently a total of 812 pending SEC cases (see Annex 6, Table); WHEREAS, in A.O No. 113-95, dated 2 October 1995, as amended by A.O. No. 104-96, dated 21 October 1996, the Regional Trial Courts in the National Capital Region and Regions 3, 4, 6, 7, 9, 10 and 11, with-twenty seven (27) judges, were specially designated to try and decide cases for violations of Intellectual Property Rights (Annex 4), and to ensure the speedy disposition of cases involving violations of intellectual property rights under the Intellectual Property Code (Rep. Act No. 8293), the Supreme Court en bane, in A.M. No. 02-1-11- SC, dated February 19, 2002, designated the Regional Trial Courts in Regions 1, 2, 5, 8 and 12, with a total of seven (7) judges, and Branch 24 of the Regional Trial Court of Manila with one (1) judge, as Special Intellectual Property Courts ("Special IP Courts") (Annex 5) WHEREAS, pursuant to A.M. No. 02-1-11 SC and A.O. No. 113-95, these Special IP Courts have a total caseload of 503 cases. Of this number 434 IP cases are pending in the NCJR (Annex 6, Table); WHEREAS, since the establishment of Special IP Courts (except for the Special IP Courts in Manila), 15 designated courts, in Regions 1, 2, 3, 4, 5, 6, 7, 8, 9 and 12 have zero (0) IP cases, and do not warrant their continued designations as Intellectual Property Courts (Annex 7, Table); WHEREAS, intellectual property cases are commercial in nature; WHEREAS, to streamline the court structure and to promote expediency and efficiency in handling such special cases, the jurisdiction to hear and decide IPC and SEC cases are best consolidated in one court; NOW, THEREFORE, the Court Resolves: 1. The Regional Courts previously designated as SEC Courts through the: (a) Resolutions of this Court dated 21 November 2000, 4 July 2001, 12 November 2002, and 9 July 2002, all issued in A.M. No. 00-11-03-SC, (b) Resolution dated 27 August 2001 in A.M. No. 01-5-298RTC; and (c) Resolution dated 8 July 2002 in A.M. No. 01-12-656-RTC are hereby DESIGNATED and shall be CALLED as Special Commercial Courts to try and decide 2.

3.

4.

5.

6.

cases involving violations of Intellectual Property Rights which fall within their jurisdiction and those cases formerly cognizable by the Securities and Exchange Commission; The designation of Intellectual Property Courts under Administrative Order No. 113-95 dated 2 October 1995, as amended by Administrative Order No. 104-96 dated 21 October 1996 and Resolution dated 19 February 2002 in A.M. No. 02-1-11-SC, is hereby revoked. However, the Regional Trial Court, Branch 24, Manila is hereby designated as an additional Special Commercial Court in the City of Manila; Upon the effectivity of this Resolution, all IP cases shall be transferred to the designated Special Commercial Courts except those which have undergone the pretrial stage in civil cases or those where any of the accused has been arraigned in criminal cases which shall be retained by the court previously assigned to try them; The Special Commercial Courts shall have jurisdiction over cases arising within their respective territorial jurisdiction with respect to the National Capital Judicial Region and within the respective provinces with respect to the First to Twelfth Judicial Regions. Thus, cases shall be filed in the Office of the Clerk of Court in the official station of the designated Special Commercial Court; In the event of inhibition of the judge of a designated Special Commercial Court, the following guidelines shall be observed: (a) where there is only one (1) Special Commercial Court, the case shall be raffled among the other judges in the station; (b) where there are two (2) Special Commercial Courts in the station, the Executive Judge shall immediately assign the case to the other Special Commercial Court; and (c) in case of inhibition of both judges of the Special Commercial Courts, the Executive Judge shall raffle the case among the judges in the station; and In order to ensure a just and equitable distribution of cases, the designated Special Commercial Courts shall continue to participate in the raffles of other cases. Provided, however, that the Executive Judge concerned shall adopt a procedure whereby every IP and SEC case assigned to a Special Commercial Court should be considered a case raffled to it and duly credited to such court.

This Resolution shall take effect on 1 July 2003 and shall be published in two (2) newspapers of general circulation. 17 June 2003

(Sgd.) Davide, Jr. C.J., Bellosillo, Puno, Vitug, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutirrez, Carpio, Corona, Callejo Sr., Carpio-Morales, Azcuna and Tinga, JJ. Austria-Martinez, J. on leave

RA 7160 (1991) CHAPTER VII Katarungang Pambarangay Section 399. Lupong Tagapamayapa. (a) There is hereby created in each barangay a lupong tagapamayapa, hereinafter referred to as the lupon, composed of the punong barangay, as chairman and ten (10) to twenty (20) members. The lupon shall be constituted every three (3) years in the manner provided herein. (b) Any person actually residing or working, in the barangay, not otherwise expressly disqualified by law, and possessing integrity, impartiality, independence of mind, sense of fairness, and reputation for probity, may be appointed a member of the lupon. (c) A notice to constitute the lupon, which shall include the names of proposed members who have expressed their willingness to serve, shall be prepared by the punong barangay within the first fifteen (15) days from the start of his term of office. Such notice shall be posted in three (3) conspicuous places in the barangay continuously for a period of not less than three (3) weeks; (d) The punong barangay, taking into consideration any opposition to the proposed appointment or any recommendations for appointment as may have been made within the period of posting, shall within ten (10) days thereafter, appoint as members those whom he determines to be suitable therefor. Appointments shall be in writing, signed by the punong barangay, and attested to by the barangay secretary. (e) The list of appointed members shall be posted in three (3) conspicuous places in the barangay for the entire duration of their term of office; and (f) In barangays where majority of the inhabitants are members of indigenous cultural communities, local systems of settling disputes through their councils of datus or elders shall be recognized without prejudice to the applicable provisions of this Code. Section 400. Oath and Term of Office. - Upon appointment, each lupon member shall take an oath of office before the punong barangay. He shall hold office until a new lupon is constituted on the third year following his appointment unless sooner terminated by resignation, transfer of residence or place of work, or withdrawal of appointment by the punong barangay with the concurrence of the majority of all the members of the lupon. Section 401. Vacancies. - Should a vacancy occur in the lupon for any cause, the punong barangay shall immediately appoint a qualified person who shall hold office only for the unexpired portion of the term. Section 402. Functions of the Lupon. - The lupon shall: (a) Exercise administrative supervision over the conciliation panels provided herein; (b) Meet regularly once a month to provide a forum for exchange of ideas among its members and the public on matters relevant to the amicable settlement of disputes, and to enable various conciliation panel members to share with one another their observations and experiences in effecting speedy resolution of disputes; and (c) Exercise such other powers and perform such other duties and functions as may be prescribed by law or ordinance.

Section 403. Secretary of the Lupon. - The barangay secretary shall concurrently serve as the secretary of the lupon. He shall record the results of mediation proceedings before the punong barangay and shall submit a report thereon to the proper city or municipal courts. He shall also receive and keep the records of proceedings submitted to him by the various conciliation panels. Section 404. Pangkat ng Tagapagkasundo. (a) There shall be constituted for each dispute brought before the lupon a conciliation panel to be known as the pangkat ng tagapagkasundo, hereinafter referred to as the pangkat, consisting of three (3) members who shall be chosen by the parties to the dispute from the list of members of the lupon. Should the parties fail to agree on the pangkat membership, the same shall be determined by lots drawn by the lupon chairman. (b) The three (3) members constituting the pangkat shall elect from among themselves the chairman and the secretary. The secretary shall prepare the minutes of the pangkat proceedings and submit a copy duly attested to by the chairman to the lupon secretary and to the proper city or municipal court. He shall issue and cause to be served notices to the parties concerned. The lupon secretary shall issue certified true copies of any public record in his custody that is not by law otherwise declared confidential. Section 405. Vacancies in the Pangkat. - Any vacancy in the pangkat shall be chosen by the parties to the dispute from among the other lupon members. Should the parties fail to agree on a common choice, the vacancy shall be filled by lot to be drawn by the lupon chairman. Section 406. Character of Office and Service of Lupon Members. (a) The lupon members, while in the performance of their official duties or on the occasion thereof, shall be deemed as persons in authority, as defined in the Revised Penal Code. (b) The lupon or pangkat members shall serve without compensation, except as provided for in Section 393 and without prejudice to incentives as provided for in this Section and in Book IV of this Code. The Department of the Interior and Local Government shall provide for a system of granting economic or other incentives to the lupon or pangkat members who adequately demonstrate the ability to judiciously and expeditiously resolve cases referred to them. While in the performance of their duties, the lupon or pangkat members, whether in public or private employment, shall be deemed to be on official time, and shall not suffer from any diminution in compensation or allowance from said employment by reason thereof. Section 407. Legal Advice on Matters Involving Questions of Law. The provincial, city legal officer or prosecutor or the municipal legal officer shall render legal advice on matters involving questions of law to the punong barangay or any lupon or pangkat member whenever necessary in the exercise of his functions in the administration of the katarungang pambarangay. Section 408. Subject Matter for Amicable Settlement; Exception Thereto. - The lupon of each barangay shall have authority to bring together the parties actually residing in the same city or municipality for amicable settlement of all disputes except: (a) Where one party is the government, or any subdivision or instrumentality thereof;

(b) Where one party is a public officer or employee, and the dispute relates to the performance of his official functions; (c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding Five thousand pesos (P5,000.00); (d) Offenses where there is no private offended party; (e) Where the dispute involves real properties located in different cities or municipalities unless the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon; (f) Disputes involving parties who actually reside in barangays of different cities or municipalities, except where such barangay units adjoin each other and the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon; (g) Such other classes of disputes which the President may determine in the interest of Justice or upon the recommendation of the Secretary of Justice. The court in which non-criminal cases not falling within the authority of the lupon under this Code are filed may, at any time before trial motu propio refer the case to the lupon concerned for amicable settlement. Section 409. Venue. (a) Disputes between persons actually residing in the same barangay shall be brought for amicable settlement before the lupon of said barangay. (b) Those involving actual residents of different barangays within the same city or municipality shall be brought in the barangay where the respondent or any of the respondents actually resides, at the election of the complaint. (c) All disputes involving real property or any interest therein shall be brought in the barangay where the real property or the larger portion thereof is situated. (d) Those arising at the workplace where the contending parties are employed or at the institution where such parties are enrolled for study, shall be brought in the barangay where such workplace or institution is located. Objections to venue shall be raised in the mediation proceedings before the punong barangay; otherwise, the same shall be deemed waived. Any legal question which may confront the punong barangay in resolving objections to venue herein referred to may be submitted to the Secretary of Justice, or his duly designated representative, whose ruling thereon shall be binding. Section 410. Procedure for Amicable Settlement. (a) Who may initiate proceeding - Upon payment of the appropriate filing fee, any individual who has a cause of action against another individual involving any matter within the authority of the lupon may complain, orally or in writing, to the lupon chairman of the barangay. (b) Mediation by lupon chairman - Upon receipt of the complaint, the lupon chairman shall within the next working day summon the respondent(s), with notice to the complainant(s) for them and their witnesses to appear before him for a mediation of their conflicting interests. If he fails in his mediation effort within fifteen (15) days from the first meeting of the parties before him, he shall forthwith set a date for the constitution of the pangkat in accordance with the provisions of this Chapter. (c) Suspension of prescriptive period of offenses - While the dispute is under mediation, conciliation, or

arbitration, the prescriptive periods for offenses and cause of action under existing laws shall be interrupted upon filing the complaint with the punong barangay. The prescriptive periods shall resume upon receipt by the complainant of the complainant or the certificate of repudiation or of the certification to file action issued by the lupon or pangkat secretary: Provided, however, That such interruption shall not exceed sixty (60) days from the filing of the complaint with the punong barangay. (d) Issuance of summons; hearing; grounds for disqualification - The pangkat shall convene not later than three (3) days from its constitution, on the day and hour set by the lupon chairman, to hear both parties and their witnesses, simplify issues, and explore all possibilities for amicable settlement. For this purpose, the pangkat may issue summons for the personal appearance of parties and witnesses before it. In the event that a party moves to disqualify any member of the pangkat by reason of relationship, bias, interest, or any other similar grounds discovered after the constitution of the pangkat, the matter shall be resolved by the affirmative vote of the majority of the pangkat whose decision shall be final. Should disqualification be decided upon, the resulting vacancy shall be filled as herein provided for. (e) Period to arrive at a settlement - The pangkat shall arrive at a settlement or resolution of the dispute within fifteen (15) days from the day it convenes in accordance with this section. This period shall, at the discretion of the pangkat, be extendible for another period which shall not exceed fifteen (15) days, except in clearly meritorious cases. Section 411. Form of settlement. - All amicable settlements shall be in writing, in a language or dialect known to the parties, signed by them, and attested to by the lupon chairman or the pangkat chairman, as the case may be. When the parties to the dispute do not use the same language or dialect, the settlement shall be written in the language known to them. Section 412. Conciliation. (a) Pre-condition to Filing of Complaint in Court. - No complaint, petition, action, or proceeding involving any matter within the authority of the lupon shall be filed or instituted directly in court or any other government office for adjudication, unless there has been a confrontation between the parties before the lupon chairman or the pangkat, and that no conciliation or settlement has been reached as certified by the lupon secretary or pangkat secretary as attested to by the lupon or pangkat chairman or unless the settlement has been repudiated by the parties thereto. (b) Where Parties May Go Directly to Court. - The parties may go directly to court in the following instances: (1) Where the accused is under detention; (2) Where a person has otherwise been deprived of personal liberty calling for habeas corpus proceedings; (3) Where actions are coupled with provisional remedies such as preliminary injunction, attachment, delivery of personal property and support pendente lite; and (4) Where the action may otherwise be barred by the statute of limitations. (c) Conciliation among members of indigenous cultural communities. - The customs and traditions of

indigenous cultural communities shall be applied in settling disputes between members of the cultural communities. Section 413. Arbitration. (a) The parties may, at any stage of the proceedings, agree in writing that they shall abide by the arbitration award of the lupon chairman or the pangkat. Such agreement to arbitrate may be repudiated within five (5) days from the date thereof for the same grounds and in accordance with the procedure hereinafter prescribed. The arbitration award shall be made after the lapse of the period for repudiation and within ten (10) days thereafter. (b) The arbitration award shall be in writing in a language or dialect known to the parties. When the parties to the dispute do not use the same language or dialect, the award shall be written in the language or dialect known to them. Section 414. Proceedings Open to the Public; Exception. - All proceedings for settlement shall be public and informal: Provided, however, That the lupon chairman or the pangkat chairman, as the case may be, may motu proprio or upon request of a party, exclude the public from the proceedings in the interest of privacy, decency, or public morals. Section 415. Appearance of Parties in Person. - In all katarungang pambarangay proceedings, the parties must appear in person without the assistance of counsel or representative, except for minors and incompetents who may be assisted by their next-ofkin who are not lawyers. Section 416. Effect of Amicable Settlement and Arbitration Award. - The amicable settlement and arbitration award shall have the force and effect of a final judgment of a court upon the expiration of ten (10) days from the date thereof, unless repudiation of the settlement has been made or a petition to nullify the award has been filed before the proper city or municipal court. However, this provision shall not apply to court cases settled by the lupon under the last paragraph of Section 408 of this Code, in which case the compromise or the pangkat chairman shall be submitted to the court and upon approval thereof, have the force and effect of a judgment of said court. Section 417. Execution. - The amicable settlement or arbitration award may be enforced by execution by the lupon within six (6) months from the date of the settlement. After the lapse of such time, the settlement may be enforced by action in the appropriate city or municipal court. Section 418. Repudiation. - Any party to the dispute may, within ten (10) days from the date of the settlement, repudiate the same by filing with the lupon chairman a statement to that effect sworn to before him, where the consent is vitiated by fraud, violence, or intimidation. Such repudiation shall be sufficient basis for the issuance of the certification for filing a complaint as hereinabove provided. Section 419. Transmittal of Settlement and Arbitration. - Award to the Court. - The secretary of the lupon shall transmit the settlement or the arbitration award to the appropriate city or municipal court within five (5) days from the date of the award or from the lapse of the ten-day period repudiating the settlement and shall furnish copies thereof to each of the parties to the settlement and the lupon chairman.

Section 420. Power to Administer Oaths. - The punong barangay, as chairman of the lupong tagapamayapa, and the members of the pangkat are hereby authorized to administer oaths in connection with any matter relating to all proceedings in the implementation of the katarungang pambarangay. Section 421. Administration; Rules and Regulations. - The city or municipal mayor, as the case may be, shall see to the efficient and effective implementation and administration of the katarungang pambarangay. The Secretary of Justice shall promulgate the rules and regulations necessary to implement this Chapter. Section 422. Appropriations. - Such amount as may be necessary for the effective implementation of the katarungang pambarangay shall be provided for in the annual budget of the city or municipality concerned.

Adm. Circ. No. 14-93 15 July 1993 TO: ALL REGIONAL TRIAL COURTS, METROPOLITAN TRIAL COURTS, MUNICIPAL TRIAL COURTS AND MUNICIPAL CIRCUIT TRIAL COURTS SUBJECT: GUIDELINES ON THE KATARUNGANG PAMBARANGAY CONCILIATION PROCEDURE TO PREVENT CIRCUMVENTION OF THE REVISED KATARUNGANG PAMBARANGAY LAW (SECTIONS 399-422, CHAPTER VII, TITLE I, BOOK III, R.A. 7160. OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE OF 1991). The Revised Katarungang Pambarangay Law under R.A. 7160, otherwise known as the local Government Code of 1991, effective on January 1, 1992, and which repealed P.D. 1508, introduced substantial changes not only in the authority granted to the Lupong Tagapamayapa but also in the procedure to be observed in the settlement of disputes within the authority of the Lupon. In order that the laudable purpose of the law may not be subverted and its effectiveness undermined by indiscriminate, improper and/or premature issuance of certifications to file actions in court by the Lupon or Pangkat Secretaries, attested by the Lupon/Pangkat Chairmen, respectively, the following guidelines are hereby issued for the information of trial court judges in cases brought before them coming from the Barangays: I. All disputes are subject to Barangay conciliation pursuant to the Revised Katarungang Pambarangay Law (formerly P.D. 1508, repealed and now replaced by Secs. 399-422, Chapter VII, Title I, Book III, and Sec. 515, Title I, Book IV, R.A. 7160, otherwise known as the Local Government Code of 1991), and prior recourse thereto is a pre-condition before filing a complaint in court or any government offices, except in the following disputes: 1. Where one party is the government, or any subdivision or instrumentality thereof; 2. Where one party is a public officer or employee, and the dispute relates to the performance of his official functions; 3. Where the dispute involves real properties located in different cities and municipalities, unless the parties thereto agree to submit their difference to amicable settlement by an appropriate Lupon; 4. Any complaint by or against corporations, partnership or juridical entities, since only individuals shall be parties to Barangay conciliation proceedings either as complainants or respondents (Sec. 1, Rule VI, Katarungang Pambarangay Rules); 5. Disputes involving parties who actually reside in barangays of different cities or municipalities, except where such barangay units adjoin each other and the parties thereto agree to submit their differences to amicable settlement by an appropriate Lupon; 6. Offenses for which the law prescribes a maximum penalty of imprisonment exceeding one (1) year or a fine over five thousand pesos (P5,000.00); 7. Offenses where there is no private offended party; 8. Disputes where urgent legal action is necessary to prevent injustice from being committed or further continued, specifically the following:

a. Criminal cases where accused is under police custody or detention (see Sec. 412 (b) (1), Revised Katarungang Pambarangay Law); b. Petitions for habeas corpus by a person illegally deprived of his rightful custody over another or a person illegally deprived or on acting in his behalf; c. Actions coupled with provisional remedies such as preliminary injunction, attachment, delivery of personal property and support during the pendency of the action; and d. Actions which may be barred by the Statute of Limitations. 9. Any class of disputes which the President may determine in the interest of justice or upon the recommendation of the Secretary of Justice; 10. Where the dispute arises from the Comprehensive Agrarian Reform Law (CARL) (Sec. 46 & 47, R.A. 6657); 11. Labor disputes or controversies arising from employer-employee relations (Montoya vs. Escayo, et al., 171 SCRA 442; Art. 226, Labor Code, as amended, which grants original and exclusive jurisdiction over conciliation and mediation of disputes, grievances or problems to certain offices of the Department of Labor and Employment); 12. Actions to annul judgment upon a compromise which may be filed directly in court (See Sanchez vs. Tupaz, 158 SCRA 459). II. Under the provisions of R.A. 7160 on Katarungang Pambarangay conciliation, as implemented by the Katarungang Pambarangay Rules and Regulations promulgated by the Secretary of Justice, the certification for filing a complaint in court or any government office shall be issued by Barangay authorities only upon compliance with the following requirements: 1. Issued by the Lupon Secretary and attested by the Lupon Chairman (Punong Barangay), certifying that a confrontation of the parties has taken place and that a conciliation settlement has been reached, but the same has been subsequently repudiated (Sec. 412, Revised Katarungang Pambarangay Law; Sec. 2[h], Rule III, Katarungang Pambarangay Rules); 2. Issued by the Pangkat Secretary and attested by the Pangkat Chairman, certifying that: a. a confrontation of the parties took place but no conciliation/settlement has been reached (Sec. 4[f], Rule III, Katarungang Pambarangay Rules; or b. that no personal confrontation took place before the Pangkat through

no fault of the complainant (Sec. 4[f], Rule III, Katarungang Pambarangay Rules). 3. Issued by the Punong Barangay, as requested by the proper party on the ground of failure of settlement where the dispute involves members of the same indigenous cultural community, which shall be settled in accordance with the customs and traditions of that particular cultural community, or where one or more of the parties to the aforesaid dispute belong to the minority and the parties mutually agreed to submit their dispute to the indigenous system of amicable settlement, and there has been no settlement as certified by the datu or tribal leader or elder to the Punong Barangay of place of settlement (Secs. 1,4 & 5, Rule IX, Katarungang Pambarangay Rules); and 4. If mediation or conciliation efforts before the Punong Barangay proved unsuccessful, there having been no agreement to arbitrate (Sec. 410 [b], Revised Katarungang Pambarangay Law; Sec. 1, c. (1), Rule III, Katarungang Pambarangay Rules), or where the respondent fails to appear at the mediation proceeding before the Punong Barangay (3rd par. Sec. 8, a, Rule VI, Katarungang Pambarangay Rules), the Punong Barangay shall not cause the issuance at this stage of a certification to file action, because it is now mandatory for him to constitute the Pangkat before whom mediation, conciliation, or arbitration proceedings shall be held. III. All complaints and/or informations filed or raffled to your sala/branch of the Regional Trial Court shall be carefully read and scrutinized to determine if there has been compliance with prior Barangay conciliation procedure under the Revised Katarungang Pambarangay Law and its Implementing Rules and Regulations, as a pre-condition to judicial action, particularly whether the certification to file action attached to the records of the case comply with the requirements hereinabove enumerated in par. II; IV. A case filed in court without compliance with prior Barangay conciliation which is a pre-condition for formal adjudication (Sec. 412 [a] of the Revised Katarungang Pambarangay Law) may be dismissed upon motion of defendant/s, not for lack of jurisdiction of the court but for failure to state a cause of action or prematurity (Royales vs. IAC, 127 SCRA 470; Gonzales vs. CA, 151 SCRA 289), or the court may suspend proceedings upon petition of any party under Sec. 1, Rule 21 of the Rules of Court; and refer the case motu proprio to the appropriate Barangay authority, applying by analogy Sec. 408 [g], 2nd par., of the Revised Katarungang Pambarangay Law which reads as follows: The court in which non-criminal cases not falling within the authority of the Lupon under this Code are filed may at any time before trial, motu proprio refer case to the Lupon concerned for amicable settlement. Strict observance of these guidelines is enjoined. This Administrative Circular shall be effective immediately. Manila, Philippines. July 15, 1993. (Sgd.) ANDRES R. NARVASA Chief Justice

RA 7042 (1991), Sec. 3(d) 13 June 1991 AN ACT TO PROMOTE FOREIGN INVESTMENTS, PRESCRIBE THE PROCEDURES FOR REGISTERING ENTERPRISES DOING BUSINESS IN THE PHILIPPINES, AND FOR OTHER PURPOSES d) The praise "doing business" shall include soliciting orders, service contracts, opening offices, whether called "liaison" offices or branches; appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country for a period or periods totalling one hundred eighty (180) days or more; participating in the management, supervision or control of any domestic business, firm, entity or corporation in the Philippines; and any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization: Provided, however, That the phrase "doing business: shall not be deemed to include mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business, and/or the exercise of rights as such investor; nor having a nominee director or officer to represent its interests in such corporation; nor appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account;