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UNLESS OTHERWISE INDICATED, REFERENCES TO

SECTIONS AND PORTIONS OF PROVISIONS IN THIS
REVIEWER PERTAIN THE RULES OF COURT.



PART ONE.

I. INTRODUCTION

A. Rule 72. Meaning and scope of special proceedings

RULE 72. SUBJECT MATTER AND APPLICABILITY OF GENERAL
RULES

SECTION 1. Subject matter of special proceedings.Rules of
special proceedings are provided for in the following cases:
(a) Settlement of estate of deceased persons;
(b) Escheat;
(c) Guardianship and custody of children;
(d) Trustees;
(e) Adoption;
(f) Rescission and revocation of adoption;
(g) Hospitalization of insane persons;
(h) Habeas corpus;
(i) Change of name;
(j) Voluntary dissolution of corporations;
(k) Judicial approval of voluntary recognition of minor
natural children;
(l) Constitution of family home;
(m) Declaration of absence and death
(n) Cancellation or correction of entries in the civil
registry.

SEC. 2. Applicability of rules of civil actions.In the absence of
special provisions, the rules provided for in ordinary actions shall
be, as far as practicable, applicable in special proceedings.

CASE NOTES

Vda. de Manalo v. Court of Appeals (2001)
It is a fundamental rule that in the determination of the
nature of an action or proceeding, the averments and the
character of the relief sought in the complaint or petition
shall be controlling. A careful scrutiny of the childrens
petition reveals that it is an ordinary civil action. The
jurisdictional requirements were: (1) the fact of the death of
the decedent; and (2) the place of his residence within the
Philippines. Both were present in the complaint.
Pilars co-called Opposition in actually an Answer
containing admissions and denials, special and affirmative
defenses and compulsory counterclaims for actual, moral
and exemplary damages. The argument based on Article
222 of the Civil Code is a mere afterthought, and only
applies to ordinary civil actions.

Natcher v. Court of Appeals (2001)
There lies a marked distinction between an action and a
special proceeding. An ACTION is a formal demand of ones
rights in a court of justice in the manner prescribed by the
law or by the court. It is the method of applying legal
remedies accourding to established rules. A SPECIAL
PROCEEDING is an application or proceeding to establish
the STATUS or RIGHT of a party, or a particular fact.
Usually, in a SPECIAL PROCEEDING, no formal
pleadings are required unless the statute so provides. In
SPECIAL PROCEEDINGS, the remedy is generally
granted upon an application or a motion.
Section 2, Rule 90 provides that advancements
made from the legitime shall be determined by the court
having jurisdiction over the estate proceedings. Thus, the
RTC, acting in its general jurisdiction, is devoid of authority
to render an adjudication to resolve the issue of
advancement of the real property in favor of Natcher.

Republic v. Court of Appeals (2005)
The petition for declaration of presumptive death IS a
special proceeding. The petition merely seeks for a
declaration by the RTC of the presumptive death of
Clemente Jomoc. It does not seek enforcement or protection
of a right or prevention or redress of a wrong.
The denial of the Solicitor Generals motion for
reconsideration was correct, and what the Solicitor General
should have done was to file, in addition to a Notice of
Appeal, a record on appeal in accordance with Section 19 of
the IRR to B.P. Blg. 129.


Distinguished from civil actions
RULE 2. CAUSE OF ACTION

SECTION 1. Ordinary civil actions, basis of.Every ordinary civil
action must be based on a cause of action. (n)

SEC. 2. Cause of action, defined.A cause of action is the act or
omission by which a party violates a right of another. (n)


B. Importance of procedural rules

CASE NOTES

Republic v. Kenrick Development Corporation (2006)
A signed pleading is one that is signed by either the party
himself or by his counsel. Section 3, Rule 7 is clear: it
requires that a pleading be signed by the party or counsel
representing him.
Counsels authority and duty to sign pleadings are
personal to him. He cannot delegate this duty. The Court
Remedial Law
SPECIAL PROCEEDINGS
Statutes and Case Notes
REVIEWER

Prepared by A.I.P. Dela Cruz based on the outline of
Prof. C.A. Dela Cerna
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refused to liberally interpret the Rules because they are not
mere technicalities. To summarily brush them aside may
lead to arbitrariness or injustice.


C. Applicability of rules of civil action See Section 2, Rule 72
above.

RULE 35. SUMMARY JUDGMENTS

SECTION 1. Summary judgment for claimant.A party seeking to
recover upon a claim, counterclaim, or cross-claim or to obtain a
declaratory relief may, at any time after the pleading in answer
thereto has been served, move with supporting affidavits,
depositions or admissions for a summary judgment in his favor
upon all or any part thereof. (1a, R34)

SEC. 2. Summary judgment for defending party.A party against
whom a claim, counterclaim or cross-claim is asserted or a
declaratory relief is sought may, at any time, move with
supporting affidavits, depositions or admissions for a summary
judgment in his favor as to all or any part thereof. (2a, R34)

SEC. 3. Motion and proceedings thereon .The motion shall be
served at least ten (10) days before the time specified for the
hearing. The adverse party may serve opposing affidavits,
depositions, or admissions at least three (3) days before the
hearing. After the hearing, the judgment sought shall be rendered
forthwith if the pleadings, supporting affidavits, depositions, and
admissions on file, show that, except as to the amount of
damages, there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of law.
(3a, R34)

SEC. 4. Case not fully adjudicated on motion.If on motion
under this Rule, judgment is not rendered upon the whole case or
for all the reliefs sought and a trial is necessary, the court at the
hearing of the motion, by examining the pleadings and the
evidence before it and by interrogating counsel shall ascertain
what material facts exist without substantial controversy and
what are actually and in good faith controverted. It shall
thereupon make an order specifying the facts that appear
without substantial controversy, including the extent to which the
amount of damages or other relief is not in controversy, and
directing such further proceedings in the action as are just. The
facts so specified shall be deemed established, and the trial shall
be conducted on the controverted facts accordingly. (4a, R34)

SEC. 5. Form of affidavits and supporting papers.Supporting
and opposing affidavits shall be made 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 to
the matters stated therein. Certified true copies of all papers or
parts thereof referred to in the affidavit shall be attached thereto
or served therewith. (5a, R34)

SEC. 6. Affidavits in bad faith.Should it appear to its satisfaction
at any time that any of the affidavits presented pursuant to this
Rule are presented in bad faith, or solely for the purpose of delay,
the court shall forthwith order the offending party or counsel to
pay to the other party the amount of the reasonable expenses
which the filing of the affidavits caused him to incur, including
attorneys fees. It may, after hearing, further adjudge the
offending party or counsel guilty of contempt. (6a, R34)
CASE NOTES

Matute v. Court of Appeals (1969)
Instead of resolving the motion, the probate judge issued the
controverted order removing the respondent as co-
administrator without giving him the opportunity to adduce
his own evidence despite his explicit reservation that he be
afforded the chance to introduce evidence in his behalf in the
event of denial of his motion to dismiss and/or demurrer to
evidence. The Court held that the above actuation of the
probate judge constituted grave abuse of discretion which
dooms his improvident order as a nullity. In fact, even
without the respondent's reservation, it was the bounden
duty of the probate judge to schedule the presentation and
reception of the respondent's evidence before disposing of
the case on the merits because only the movants at that time
had presented their evidence. This duty is projected into
bolder relief if it is considered that the aforesaid motion is in
form as well as in substance a demurrer to evidence allowed
by Rule 35, by virtue of which the defendant does not lose
his right to offer evidence in the event that his motion is
denied. Said Rule states:
After the plaintiff has completed the presentation of his
evidence, the defendant without waiving his right to offer evidence
in the event the motion is not granted, may move for a dismissal on
the ground that upon the facts and law the plaintiff has shown no
right to relief. (Italics supplied).
The application of the abovecited Rule in special
proceedings, like the case at bar, is authorized by section 2
of Rule 72 which direct that in the "absence of special
provisions, the rules provided for in ordinary civil actions
shall be, as far as practicable, applicable in special
proceedings."



PART TWO. SETTLEMENT OF ESTATE OF
DECEASED PERSONS


I. VENUE

RULE 73. VENUE AND PROCESS

SECTION 1. Where estate of deceased persons settled.If the
decedent is an inhabitant of the Philippines at the time of his
death, whether a citizen or an alien, his will shall be proved, or
letters of administration granted, and his estate settled, in the
Regional Trial Court in the province in which he resides at the
time of his death, and if he is an inhabitant of a foreign country,
the Regional Trial Court of any province in which he had estate.
The court first taking cognizance of the settlement of the estate
of a decedent, shall exercise jurisdiction to the exclusion of all
other courts. The jurisdiction assumed by a court, so far as it
depends on the place of residence of the decedent, or of the
location of his estate, shall not be contested in a suit or
proceeding, except in an appeal from that court, in the original
case, or when the want of jurisdiction appears on the record.

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SEC. 2. Where estate settled upon dissolution of marriage.
When the marriage is dissolved by the death of the husband or
wife, the community property shall be inventoried, administered,
and liquidated, and the debts thereof paid, in the testate or
intestate proceedings of the deceased spouse. If both spouses
have died, the conjugal partnership shall be liquidated in the
testate or intestate proceedings of either.

SEC. 3. Process.In the exercise of probate jurisdiction, Regional
Trial Court may issue warrants and process necessary to compel
the attendance of witnesses or to carry into effect their orders
and judgments, and all other powers granted them by law. If a
person does not perform an order or judgment rendered by a
court in the exercise of its probate jurisdiction, it may issue a
warrant for the apprehension and imprisonment of such person
until he performs such order or judgment, or is released.

SEC. 4. Presumption of death.For purposes of settlement of his
estate, a person shall be presumed dead if absent and unheard
from for the periods fixed in the Civil Code. But if such person
proves to be alive, he shall be entitled to the balance of his estate
after payment of all his debts. The balance may be recovered by
motion in the same proceeding.

CASE NOTES

Eusebio v. Eusebio (1956)
It was undisputed that up to at least 29 October 1952
Andres was, and has always been, domiciled in San
Fernando, Pampanga where he had his home, as well as
some other properties. To seek medical attention, (he had a
heart condition), he and his son whot treated him, Dr. Jesus
Eusebio, resided in Quezon City.
Thus, since the domicile of origin of the decedent
was San Fernando, Pampanga, where he resided for 70
years, the presumption is that he retained that domicile and
hence, residence, in the absence of satisfactory proof to the
contrary, for well-settled is the rule that a domicile once
acquired is retained until a new one is gained. Admittedly,
the decedent was juridically capable of choosing a domicile
and had been in Quezon City several days before his demise.
Did he intend to stay in Quezon City permanently?
The Court ruled that there was no such intent.
Neither did the decedent appear to have manifested his wish
to live indefinitely in said city. The Court found untenable
the RTCs finding that Andress purchase of a house in
Quezon City was indicative of animus manendi. The house
was bought because he had been advised to do so because of
his illness. It is well-settled that domicile is not commonly
changed by presence in a place merely for ones own health,
even if coupled with knowledge that one will never again
be, on account of illness, able to return home.

Fule v. Court of Appeals (1976)
1

The Judiciary Act of 1948 confers upon CFIs jurisdiction
over all probate cases independently of the place of the
residence of the deceased. But the Rules of Court fixes the
venue or the place where each case shall be brought. Place of
residence does not constitute an element of jurisdiction
ratione materiae.

1
Prevailing doctrine.
Resides means or connotes ex vi termini actual
residence as distinguished from legal residence or
domicile. In the application of the rules on venue, the
Revised Rules of Court is of such nature and residence,
rather than domicile, is the significant factor. Even if the
word used is domicile, the meaning is residence rather than
domicile. No particular length of time is required, bodily
presence suffices.
Amados last place of residence is Quezon City, and
both Preciosa and Virginia presented evidence to that effect.

Malig v. Bush (1969)
Section 1, Rule 75 of the old Rules of Court is really a rule
on venue, not of jurisdiction, as the caption of the Rule
indicates, and in order to preclude different courts from
exercising jurisdiction, the Rule specifis that the court first
taking cognizance of the settlement of the estate of a
decedent shall exercise jurisdiction to the exclusion of all
other courts.

Rodriguez v. de Borja (1966)
The jurisdiction of the Bulacan CFI became vested upon the
delivery thereto of the will of the will of the late Fr.
Rodriguez on 4 March 1963, even without a petition for its
allowance was filed until 12 March (Section 3, Rule 77 of the
old Rules).
But the Rodriguezes object because the Rules speak
of a will being delivered to the court having jurisdiction and
in this case the Bulacan CFI did not have it because the
decedent was domiciled in Rizal. The Court could not
discount Fr. Rodriguezs 33-year residence in Hagonoy,
Bulacan as parish priest, but even so, animus revertedni points
to Paraaque, but still that does not imply that the Bulacan
CFI had no jurisdiction. As ruled in previous decisions, the
power to settle the decedents estate is conferred by law
upon all courts of first instance, and the domicile of the
testator only affects the venue but not jurisdiction of the
court.

Cuenco v. Court of Appeals (1973)
The Judiciary Act concededly confers original jurisdiction
upon all CFIs over all matters of probate, both of testate
and intestate estates. Rule 73 of the Rules of Court lays
down the rule on venue as the very caption of the Rule
indicates, and in order to prevent conflict among different
courts which may otherwise properly assume jurisdiction
from doing so.
It should be noted that the Rule on venue does not
state that the court with whom the testate or the intestate
petition is first filed acquires exclusive jurisdiction. A court,
upon learning that a petition for the probate of the
decedents last will and testatment may decline to take
cognizance of the petition and defer to the second court.

De Borja v. Tan (1955)
The powers and functions of a special administrator are
quite limited. Under Section 1 of Rule 81, a special
administrator is only appointed where there is a delay in the
grant of letters of administration occasioned by an appeal
from allowance or disallowance of a will or from any other
cause.
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Since Joses appointment as co-administrator was
because Francisco was physically incapable, Jose is
practically a regular administrator, hence the order
appointing Jose as such was appealable.

Macias v. Uy Kim (1972)
Even in other cases it is also a general principle that the
branch of the CFI that first acquired jurisdiction over the
case retains such jurisdiction to the exclusion of all other
branches of the same CFI.


B. Dissolution of marriage

CASE NOTES

Bernardo v. Court of Appeals (1963)
The question of ownership of certain properties involved
whether or not the belong to the conjugal partnership of
gains or to the husband exclusively is a matter properly
within the jurisdiction of the probate court which
necessarily has to liquidate the partnership in order to
determine Capilis estate which is to be distributed among
his heirs who are all parties in the proceedings, including
the widow now represented on account of her death by her
heirs who have been substituted upon petition of the
executor himself. In this case, no third persons were present
whose rights must be considered.

Falcatan v. Sanchez (1957)
While a court in a summary proceeding for the settlement of
the estate of a deceased person may pass upon the question
of title to the property, this is only true where the title is
disputed by a third person not the surviving spouse or heir
of the deceased, as successors of the latter.
It would be fair to hold that the property in
question in this case belongs to the conjugal partnership.

Ermac v. Medelo (1975)
The Court held that it was proper for the lower court to
approve the project of partition notwithstanding claims by
Ermac in a separate civil action. The policy of the law is to
terminate proceedings for the settlement of the estate of
deceased persons with the least loss of time. Definitely,
probate court is not the best forum for the resolution of
adverse claims of ownership of any property ostensibly
belonging to the estate.

Calma v. Taedo (1938)
The Court held the sheriffs sale to be void. It appears that
Taedo brought the collection suit against Eulalio as
administrator of the conjugal partnership while Fausta was
still alive. But the administration has since passed to Maria.
Thus, no complaint for its collection may be brought against
Eulalio, and the claim had to be filed in the testamentary
proceedings for the estate of Fausta Macasaquit.
The sheriffs sale in the action against Eulalio is
thus null and void.

Ocampo v. Potenciano (1951)
Potenciano did not have authority to enter into an option to
repurchase agreement after Rufinas death. The Court of
Appeals erred in supposing that Potenciano had such
authority as de facto administrator of Rufinas estate.
OLD RULE: Upon dissolution of marriage, the husband
must liquidate.
PRESENT RULE: Liquidation must be done in testate or
intestate proceedings. Husband cannot now liquidate on his
own.


C. Jurisdiction of probate court

RULE 90. DISTRIBUTION AND PARTITION OF THE ESTATE

SECTION 1. When order for distribution of residue made.
When the debts, funeral charges, and expenses of
administration, the allowance to the widow, and inheritance tax,
if any, chargeable to the estate in accordance with law, have been
paid, the court, on the application of the executor or
administrator, or of a person interested in the estate, and after
hearing upon notice, shall assign the residue of the estate to the
persons entitled to the same, naming them and the proportions,
or parts, to which each is entitled, and such persons may demand
and recover their respective shares from the executor or
administrator, or any other person having the same in his
possession. If there is a controversy before the court as to who
are the lawful heirs of the deceased person or as to the
distributive shares to which each person is entitled under the law,
the controversy shall be heard and decided as in ordinary cases.
No distribution shall be allowed until the payment of
the obligations above mentioned has been made or provided for,
unless the distributees, or any of them, give a bond, in a sum to
be fixed by the court, conditioned for the payment of said
obligations within such time as the court directs.

CASE NOTES

Reyes v. Ysip (1955)
In the hearing for probate of a will, the court is not obliged
to accept or receive evidence of filiation. To allow Reyes,
oppositor to the probate proceedings, to prove her filiation
would be injecting matters different from the issues involved
in the probate of a will.

Torres v. Javier (1916)
In this case, the Court held that a third person can be
appointed administrator. The Code of Civil Procedure
provides that the following persons can be appointed
administrator:
(1) Surviving husband or wife;
(2) Other relatives;
(3) If the first two are unsuitable, some other
person
(4) Any person the court may appoint
Since two women were contesting as to who was
the legal wife, a third person, disinterested, should be
appointed.

Intestate Estate of Borromeo, Patrocino Borromeo-
Herrera, administrator v. Borromeo (1987)
The petitioners argue that the present status of Special
Proceeding No. 916-R requires only the appraisal of the
attorney's fees of the lawyers-claimants who were
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individually hired by their respective heirs-clients, so their
attorney's fees should be legally charged against their
respective clients and not against the estate.
The Court agreed with the petitioners' contention
that attorney's fees are not the obligation of the estate but of
the individual heirs who individually hired their respective
lawyers. The portion, therefore, of the Order of August 15,
1969, segregating the exhorbitantly excessive amount of
40% of the market value of the estate from which attorney's
fees shall be taken and paid should be deleted.

Morales et al. v. Court of First Instance (1986)
It is a well-settled rule that a probate court or one in charge
of proceedings whether testate or intestate cannot
adjudicate or determine title to properties claimed to be a
part of the estate and which are equally claimed to belong to
outside parties. All that the said court could do as regards
said properties is to determine whether they should or
should not be included in the inventory or list of properties
to be administered by the administrator. If there is no
dispute, well and good; but if there is, then the parties, the
administrator, and the opposing parties have to resort to an
ordinary action for a final determination of the conflicting
claims of title because the probate court cannot do so.
The controversy was not whether or not the
redemption ordered by the respondent court was done, but
whether or not such redemption, as done, was valid,
According to settled jurisprudence, such controversy is
outside the jurisdiction of the probate court. Parenthetically,
it must be mentioned that the respondent court itself had, at
that time, already determined that the petitioners are
intervenors in the settlement proceedings of Simona's estate
not as heirs but as "co-owners" with the intestate estates,
and the respondent court in fact would later state in the
January 13, 1977 order that the petitioners have "not been
called to participate in the proceedings." The petitioners,
are, therefore, outside parties claiming title to property
included in the inventory of properties under administration.

Heirs of Reyes v. Reyes (2000)
The pronouncements in this case should not by any means
diminish or deprive the oppositor of whatever rights or
properties he believes or considers to be rightfully his.
Although the circumstances and factors he has given to the
Court herein may have legal consequences that could have
defeated opposing-claims and rendered oppositors claim on
the properties unassailable, this Courts competence to
adjudicate thus in this proceedings is clearly non-existent.
In Baybayan vs. Aquino, it was held that the question of
ownership of a property alleged to be part of the estate must
be submitted to the Regional Trial Court in the exercise of
its general jurisdiction.
This ruling then, cannot be a final adjudication on
the present and existing legal ownership of the properties.
Whatever is declared herein ought not to preclude oppositor
from prosecuting an ordinary action for the purpose of
having his claims or rights established over the properties.
If he still cares hereafter to prosecute such claim of
ownership adversely to the estate and the apparent co-
owner, his mother Felisa. As stated in Valera, et al. vs. Judge
Inserto, et al., the Court, acting as a probate court, exercises
but limited jurisdiction; accordingly, its determination that
property should be included in the inventory or not is within
its probate jurisdiction, but such determination is only
provisional in character, not conclusive, and is subject to
the final decision in a separate action that may be instituted
by the parties.

Cunanan v. Amparo (1948)
The Court does not agree with the respondents that the
lower court lacked jurisdiction to order the delivery of the
possession of the lots to the estate. This power is a mere
consequence of the power to approve Soriano's claim; a
power which the court undoubtedly had and which Soriano
himself invoked with full knowledge of the facts. As a
general rule, with the consent of the parties matters
affecting property under judicial administration may be
taken cognizance of by the court in the course of the
intestate proceeding provided the interests of third persons
are not prejudiced. Determination of title to property is within
the jurisdiction of Courts of First Instance. The respondent
Soriano's objection relates exclusively to the procedure,
which is distinct from jurisdiction. It affects only personal
rights to a mode of practice which may be waived.
Certainly, there is waiver where, as here, and as has
been pointed out, the party who raises the objection was
the one who set the court in motion, and who, by failing
to disclose the existence of a sale under pacto de retro,
suppressed jurisdictional facts that might be in the way
of his claim's success.

Valera v. Inserto (1987)
Settled is the rule that a Court of First Instance (now
Regional Trial Court), acting as a Probate Court, exercises
but limited jurisdiction, and thus has no power to take
cognizance of and determine the issue of title to property
claimed by a third person adversely to the decedent, unless
the claimant and all the other parties having legal interest in
the property consent, expressly or impliedly, to the
submission of the question to the Probate Court for
adjudgment, or the interests of third persons are not thereby
prejudiced, the reason for the exception being that the
question of whether or not a particular matter should be
resolved by the Court in the exercise of its general
jurisdiction or of its limited jurisdiction as a special court
(e.g., probate, land registration, etc), is in reality not a
jurisdictional but in essence of procedural one, involving a
mode of practice which may be waived.
The facts obtaining in this case, however, do not
call for the application of the exception to the rule. As
already earlier stressed, it was at all times clear to the Court
as well as to the parties that if cognizance was being taken
of the question of title over the fishpond, it was not for the
purpose of settling the issue definitely and permanently, and
writing " finis" thereto, the question being explicitly left for
determination "in an ordinary civil action," but merely to
determine whether it should or should not be included in the
inventory. This function of resolving whether or not
property should be included in the estate inventory is, to be
sure, one clearly within the Probate Court's competence,
although the Court's determination is only provisional in
character, not conclusive, and is subject to the final decision
in a separate action that may be instituted by the parties.

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Dinglasan v. Ang Chia (1951)
The act of the lower court in taking cognizance of civil case
No. V-331 is not tantamount to assuming jurisdiction over
said case nor does it violate the ruling of the Court which
says that "when questions arise as to the ownership of
property, alleged to be part of the estate of a deceased
person, but claimed by some other person to be his property,
not by virtue of any right of inheritance from the deceased,
but by title adverse to that of the deceased and his estate,
such questions cannot be determined in the course of
administration proceedings. The Court of First Instance,
acting as probate court, has no jurisdiction to adjudicate
such contentions, which must be submitted to the court in
the exercise of its general jurisdiction as a Court of First
Instance to try and determine ordinary actions. . . ."
If the appellants filed a claim in intervention in the
intestate proceedings it was only pursuant to their desire to
protect their interests it appearing that the property in
litigation is involved in said proceedings and in fact is the
only property of the estate left subject of administration and
distribution; and the court is justified in taking cognizance
of said civil case because of the unavoidable fact that
whatever is determined in said civil case will necessarily
reflect and have a far reaching consequence in the
determination and distribution of the estate. In so taking
cognizance of civil case No. V-331 the court does not assume
general jurisdiction over the case but merely makes of
record its existence because of the close interrelation of the
two cases and cannot therefore be branded as having acted
in excess of its jurisdiction.

Ortaez-Enderes v. Court of Appeals (1999)
It is admitted that the special proceedings are still pending
with the court and the estate had not been partitioned and
distributed. Notwithstanding the proceedings being
conducted by the intestate court, the petitioners rights or
interests over the estate or over the assailed shareholdings
in the name of private respondents are still future and
unsettled rights which cannot be protected by the writ of
injunction. The rule is well settled that the jurisdiction of
the RTC as a probate or intestate court relates only to
matters having to do with the settlement of the estate and
the probate of wills of deceased persons but does not extend
to the determination of questions of ownership that arise
during the proceedings. The intestate court may pass upon
the title to a certain property for the purpose of determining
whether the same should or should not be included in the
inventory but such determination is not conclusive and is
subject to final decision in a separate action regarding
ownership which may be constituted by the parties. The
court in charge of the intestate proceedings cannot
adjudicate or determine title to properties claimed to be a
part of the estate and which are equally claimed to belong to
outside parties. Therefore the possibility of irreparable
damage without proof of violation of an actually existing
right of petitioners over the assailed shareholdings presently
in the possession of the private respondents is no ground for
an injunction being a mere damnum absque injuria.
Moreover, the grant or denial of an injunction rests
in the sound discretion of the lower court. SEC even found
that the private respondents actually own 94% of the
outstanding capital stock of Philinterlife!

D. Presumption of death See Sections 3 and 4, Rule 73
above.

CIVIL CODE

Article 391. The following shall be presumed dead for all
purposes, including the division of the estate among the heirs:
(1) A person on board a vessel lost during a sea voyage,
or an aeroplane which is missing, who has not been heard of for
four years since the loss of the vessel or aeroplane;
(2) A person in the armed forces who has taken part in
war, and has been missing for four years;
(3) A person who has been in danger of death under
other circumstances and his existence has not been known for
four years. (n)

Article 392. If the absentee appears, or without appearing his
existence is proved, he shall recover his property in the condition
in which it may be found, and the price of any property that may
have been alienated or the property acquired therewith; but he
cannot claim either fruits or rents. (194)


III. SUMMARY SETTLEMENT OF ESTATES

RULE 74. SUMMARY SETTLEMENT OF ESTATES

SECTION 1. Extrajudicial settlement by agreement between
heirs.If the decedent left no will and no debts and the heirs are
all of age, or the minors are represented by their judicial or legal
representatives duly authorized for the purpose, the parties may,
without securing letters of administration, divide the estate
among themselves as they see fit by means of a public
instrument filed in the office of the register of deeds, and should
they disagree, they may do so in an ordinary action of partition. If
there is only one heir, he may adjudicate to himself the entire
estate by means of an affidavit filed in the office of the register of
deeds. The parties to an extrajudicial settlement, whether by
public instrument or by stipulation in a pending action for
partition, or the sole heir who adjudicates the entire estate to
himself by means of an affidavit shall file, simultaneously with
and as a condition precedent to the filing of the public
instrument, or stipulation in the action for partition, or of the
affidavit in the office of the register of deeds, a bond with the
said register of deeds, in an amount equivalent to the value of the
personal property involved as certified to under oath by the
parties concerned and conditioned upon the payment of any just
claim that may be filed under section 4 of this rule. It shall be
presumed that the decedent left no debts if no creditor files a
petition for letters of administration within two (2) years after the
death of the decedent.
The fact of the extrajudicial settlement or
administration shall be published in a newspaper of general
circulation in the manner provided in the next succeeding
section; but no extrajudicial settlement shall be binding upon any
person who has not participated therein or had no notice thereof.

SEC. 2. Summary settlement of estates of small value.
Whenever the gross value of the estate of a deceased person,
whether he died testate or intestate, does not exceed ten
thousand pesos, and that fact if made to appear to the Regional
Trial Court having jurisdiction of the estate by the petition of an
interested person and upon hearing, which shall be held not less
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than one (1) month nor more than three (3) months from the
date of the last publication of a notice which shall be published
once a week for three (3) consecutive weeks in a newspaper of
general circulation in the province, and after such other notice to
interested persons as the court may direct, the court may
proceed summarily, without the appointment of an executor or
administrator, and without delay, to grant, if proper, allowance of
the will, if any there be, to determine who are the persons legally
entitled to participate in the estate and to apportion and divide it
among them after the payment of such debts of the estate as the
court shall then find to be due; and such persons, in their own
right, if they are lawful age and legal capacity, or by their
guardians or trustees legally appointed and qualified, if otherwise,
shall thereupon be entitled to receive and enter into the
possession of the portions of the estate so awarded to them
respectively. The court shall make such order as may be just
respecting the costs of the proceedings, and all orders and
judgments made or rendered in the course thereof shall be
recorded in the office of the clerk, and the order of partition or
award, if it involves real estate, shall be recorded in the proper
registers office.

SEC. 3. Bond to be filed by distributees.The court, before
allowing a partition in accordance with the provisions of the
preceding section, may require the distributees, if property other
than real is to be distributed, to file a bond in an amount to be
fixed by court, conditioned for the payment of any just claim
which may be filed under the next succeeding section.

SEC. 4. Liability of distributees and estate.If it shall appear at
any time within two (2) years after the settlement and
distribution of an estate in accordance with the provisions of
either of the first two sections of this rule, that an heir or other
person has been unduly deprived of his lawful participation in the
estate, such heir or such other person may compel the
settlement of the estate in the courts in the manner hereinafter
provided for the purpose of satisfying such lawful participation.
And if within the same time of two (2) years, it shall appear that
there are debts outstanding against the estate which have not
been paid, or that an heir or other person has been unduly
deprived of his lawful participation payable in money, the court
having jurisdiction of the estate may, by order for that purpose,
after hearing, settle the amount of such debts or lawful
participation and order how much and in what manner each
distributee shall contribute in the payment thereof, and may
issue execution, if circumstances require, against the bond
provided in the preceding section or against the real estate
belonging to the deceased, or both. Such bond and such real
estate shall remain charged with a liability to creditors, heirs, or
other persons for the full period of two (2) years after such
distribution, notwithstanding any transfers of real estate that may
have been made.

SEC. 5. Period for claim of minor or incapacitated person.If on
the date of the expiration of the period of two (2) years
prescribed in the preceding section the person authorized to file
a claim is a minor or mentally incapacitated, or is in prison or
outside the Philippines, he may present his claim within one (1)
year after such disability is removed.

CIVIL CODE

Article 320. The father, or in his absence the mother, is the legal
administrator of the property pertaining to the child under
parental authority. If the property is worth more than two
thousand pesos, the father or mother shall give a bond subject to
the approval of the Court of First Instance. (159a)

FAMILY CODE

Art. 234. Emancipation takes place by the attainment of majority.
Unless otherwise provided, majority commences at the age of
twenty-one years.

Emancipation also takes place:

(1) By the marriage of the minor; or

(2) By the recording in the Civil Register of an agreement in a
public instrument executed by the parent exercising parental
authority and the minor at least eighteen years of age. Such
emancipation shall be irrevocable. (397a, 398a, 400a, 401a)

Art. 236. Emancipation for any cause shall terminate parental
authority over the person and property of the child who shall
then be qualified and responsible for all acts of civil life. (412a)


A. Extra-judicial settlement by agreement between heirs See
Sections 1, 4 and 5, Rule 74 above.

CASE NOTES

Monserrat v. Ibaez (1950)
2

Where there are no debts, the heirs are not bound to submit
the property to a judicial administration which is always
long and costly or to apply for an appointment of an admin
by the court. These proceedings are superfluous and
unnecessary.

Vda. de Rodriguez v. Tan (1952)
Section 1, Rule 74 of the Rules of Court does not preclude
heirs from instituting administration proceedings evend if
the estate has no debts or obligations, if they do not desire
to resort for good reasons to an ordinary action of partition.
While Section 1 allows heirs to divide the estate among
themselves as they may deem fit, it does not compel them to
take another course of action.

Pereira v. Court of Appeals (1989)
The general rule is that when a person dies leaving
property, the same should be judicially administered and the
competent court should appoint a qualified administrator
under the Rules of Court. An exception is Section 1, Rule 74
of the Rules of Court. Under this Rule, when all heirs are of
age and there exist no debts from the estate, they may agree
in writing to partition the estate. There is no good reason to
burden the estate with the costs of judicial administration.

Guico v. Bautista (1960)
Guicos action for partition and liquidation was deemed
premature. While there are Rules allowing for summary
settlement of estates, this only applies when the decedent

2
Based from the digest of Roxan Roxas, C2013
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left no debts or obligations and all heirs are of legal age. The
debts must be paid first.
However, the question of whether the donated
properties are subject to collation may nonetheless be passed
upon in the special proceedings.

Rebong v. Ibaez (1947)
Since the registered or annotated contingent interest of the
creditors or other heirs of Rebongs predecessors in interest
was established Section 4, Rule 74 has not yet terminated,
(two-year lien), Judge Ibaez had no jurisdiction to order
cancellation of lien.

McMicking v. Sy Conbieng (1912)
Under the broad interpretation and application of the
provisions of the Code of Civil Procedure, the division of
Lao Sempcos properties is in conformity with said Rules
and may be termed extrajudicial partition. The fact of prior
appointment of an administrator and the filing of an
inventory before such partition is of no consequence so far
the right of the owners to partition is concerned. When the
condition that there are no debts or all the debts have been
paid by the heirs has been complied with , partition may take
place no matter what stage the administration has reached.

Gerona v. de Guzman (1964)
The Court held that the extrajudicial partition held by the
de Guzmans was valid because while as a general rule an
action for partition among co-heirs does not prescribe, this
is true only as long as the defendants do not hold the
property in question under an adverse title.
When the de Guzmans executed the deed of
extrajudicial partition stating therein that they are the sole
heirs of the deceased, and secured new TCTs in their name,
they hereby excluded the Geronas from the deceaseds
estate, thus an adverse title. This is why the Geronas should
have brought an annulment action on the ground of fraud
instead of claiming deprivation.

Pedrosa v. Court of Appeals (2001)
The Court held that the 1983 partition was invalid. The
two-year prescriptive period in Section 4, Rule 74 does not
apply if a person interested in the estate did not participate
in the partition. Pedrosa did not participate. She therefore
had four years to question the deed of partition, following
the ruling in Gerona v. de Guzman.
Section 1, Rule 74 governs the publication
requirement.

Pada-Kilario v. Court of Appeals (2000)
The Court held that the 1951 partition of Jacinto Padas
estate was valid and conclusive against the Kilarios. The
extrajudicial partition of the estate of Jacinto is valid
although executed in a private document. No law requires
partition among heirs to be in writing and registered in
order to be valid. The requirement in Section 1, Rule 74 that
a partition be put in writing has the purpose of constructive
notice, not affecting the intrinsic validity of the partition
where no creditors are involved.
The extrajudicial partition has produced a legal
status. As such, their division is conclusive unless and until
it is shown that there were debts existing against the estate
that were still unpaid.

Tan v. Benolirao (2009)
An annotation under Section 4, Rule 74 is an encumbrance
on the property. The provision of the said Rule prescribes
the procedure to be followed if within two years after an
extrajudicial partition of estate. An annotation is placed on
the new TCTs pursuant to distribution and partition of a
deceaseds real properties to warn third persons on possible
interests of excluded heirs or unpaid creditors.


B. Summary settlement See Sections 2 to 5, Rule 74 above.

CASE NOTES

Sampilo v. Court of Appeals (1958)
The Court held that Felisa Sinopera is not barred by the
statute of limitations from making a claim against the estate
of Tolete. Citing the provisions of Section 4, Rule 74 barring
distributes or the heirs from objecting to an extrajudicial
partition after the expiration of two years from such
extrajudicial partition is applicable only to (1) persons who
have participated or taken part or had notice of the
extrajudicial partition, and (2) when the provisions of
Section 1, Rule 74 have been strictly complied with in that
all persons or heirs of the deceased have taken part in the
extrajudicial settlement or are represented by themselves or
through guardians. These conditions do not obtain in this
case.
Also, there is nothing in Section 4, Rule 74 which
shows a statute of limitations barring action by third
persons. It is a bar against the parties who have taken part
in the extrajudicial proceedings, but not against third
persons not parties thereto. Even so, Section 4, Rule 74 is
still unavailing to Sampilo and Salacup because the action
taken by the estate of Tolete is one based on fraud.


IV. PRODUCTION AND ALLOWANCE OF WILLS

RULE 75. PRODUCTION OF WILL. ALLOWANCE OF WILL
NECESSARY

SECTION 1. Allowance necessary. Conclusive as to execution.
No will shall pass either real or personal estate unless it is proved
and allowed in the proper court. Subject to the right of appeal,
such allowance of the will shall be conclusive as to its due
execution.

SEC. 2. Custodian of will to deliver.The person who has
custody of a will shall, within twenty (20) days after he knows of
the death of the testator, deliver the will to the court having
jurisdiction, or to the executor named In the will.

SEC. 3. Executor to present will and accept or refuse trust.A
person named as executor in a will shall, within twenty (20) days
after he knows of the death of the testator, or within twenty (20)
days after he knows that be is named executor if he obtained
such knowledge after the death of the testator, present such will
to the court having jurisdiction, unless the will has reached the
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court in any other manner, and shall, within such period, signify
to the court in writing his acceptance of the trust or his refusal to
accept it.

SEC. 4. Custodian and executor subject to fine for neglect.A
person who neglects any of the duties required in the two last
preceding sections without excuse satisfactory to the court shall
be fined not exceeding two thousand pesos.

SEC. 5. Person retaining will may be committed.A person
having custody of a will after the death of the testator who
neglects without reasonable cause to deliver the same, when
ordered so to do, to the court having jurisdiction, may be
committed to prison and there kept until he delivers the will.


A. Meaning of probate

1. Due execution and extrinsic validity

CIVIL CODE

Article 783. A will is an act whereby a person is permitted, with
the formalities prescribed by law, to control to a certain degree
the disposition of this estate, to take effect after his death. (667a)

Article 838. No will shall pass either real or personal property
unless it is proved and allowed in accordance with the Rules of
Court.
The testator himself may, during his lifetime, petition
the court having jurisdiction for the allowance of his will. In such
case, the pertinent provisions of the Rules of Court for the
allowance of wills after the testator's a death shall govern.
The Supreme Court shall formulate such additional
Rules of Court as may be necessary for the allowance of wills on
petition of the testator.
Subject to the right of appeal, the allowance of the will,
either during the lifetime of the testator or after his death, shall
be conclusive as to its due execution. (n)

CASE NOTES

Spouses Pastor v. Court of Appeals (1983)
In the absence of a resolution on the intrinsic validity of the
will, there was no basis for the probate court to hold that
Quemada is entitled to the payment of the questioned
legacy.

In re Estate of Johnson (1918)
The Court held that the probate order was issued with
sufficient court jurisdiction. The proceeding as to the
probate of a will is essentially one in rem, and the very
nature of things the state is allowed wide latitutde in
determining the character of the constructive notice given
to the world in a prceeding where it has absolute possession
the res.

Manahan v. Manahan (1933)
Once a will has been authenticated and admitted to probate,
questions relative to the validity thereof can no longer be
raised on appeal. The probate decree is conclusive with
respect to due execution and cannot be impugned except for
fraud, in any separate or independent action or proceedings.
in rem.

Balanay v. Martinez (1975)
The Court held that the probate court was correct in
passing upon the intrinsic validity of the will. In view of the
certain unusual provisions of the will, which are of dubious
legality, the trial court was correct in passing upon the wills
intrinsic validity even before its formal validity has been
established. The probate of a will is a useless ceremony if on its
face it already appears to be void.

Maninang v. Court of Appeals (1982)
The lower court acted in excess of its jurisdiction in
dismissing the testate case. Generally, the probate of a will
is NECESSARY.
Opposition to the intrinsic validity of the will or the
legality of its provisions cannot be entertained in the
probate proceedings. Because of the dismissal of the testate
case, the determination of other controversial issues has not
been considered.


2. Nature of proceedinsg

CASE NOTES

Fernandez v. Dimagiba (1967)
The order allowing the will is not interlocutory. A probate
decree finally and definitely settles all questions covering
the capacity of the testator and the proper execution and
witnessing of his last will and testament, irrespective of
whethere its provisions are valid or not.

Alsua-Betts v. Court of Appeals (1979)
Probate proceedings involve public interest, and the
application of the rule on estoppel therein, when it will
bloack the ascertainment of the truth as to circumstances
surrounding the execution of a testament would seem
inimical to public policy.


B. Responsible person See Sections 2 and 5, Rule 75, above.


C. Discovery of will during intestate proceedings

CASE NOTES

Cuenco v. Court of Appeals (1973)
A court, upon learning that a petition for the probate of the
decedents last will and testament has been presented in
another court may decline to take cognizance of the petition
and hold the petition before it in abeyance, and instead defer
to the second court for the probate of the decedents will.

Casiano v. Maloto (1977)
An intestate court does not have jurisdiction to entertain the
petition of the probate of a will that was discovered during
the proceedings. The petition for the probate of said will
should have been filed in a separate action and not with the
intestate court.
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V. ALLOWANCE OR DISALLOWANCE OF WILLS

RULE 76. ALLOWANCE OR DISALLOWANCE OF WILL

SECTION 1. Who may petition for the allowance of will.Any
executor, devisee, or legatee named in a will, or any other person
interested in the estate, may, at any time after the death of the
testator, petition the court having jurisdiction to have the will
allowed, whether the same be in his possession or not, or is lost
or destroyed.
The testator himself may, during his lifetime, petition
the court for the allowance of his will.

SEC. 2. Contents of petition.A petition for the allowance of a
will must show, so far as known to the petitioner:
(a) The jurisdictional facts;
(b) The names, ages, and residences of the heirs,
legatees, and devisees of the testator or decedent;
(c) The probable value and character of the property of
the estate;
(d) The name of the person for whom letters are
prayed;
(e) If the will has not been delivered to the court, the
name of the person having custody of it.
But no defect in the petition shall render void the
allowance of the will, or the issuance of letters testamentary or of
administration with the will annexed.

SEC. 3. Court to appoint time for proving will. Notice thereof to
be published.When a will is delivered to, or a petition for the
allowance of a will is filed in, the court having jurisdiction, such
court shall fix a time and place for proving the will when all
concerned may appear to contest the allowance thereof, and
shall cause notice of such time and place to be published three
(3) weeks successively, previous to the time appointed, in a
newspaper of general circulation in the province.
But no newspaper publication shall be made where the
petition for probate has been filed by the testator himself.

SEC. 4. Heirs, devisees, legatees, and executors to be notified
by mail or personally.The court shall also cause copies of the
notice of the time and place fixed for proving the will to be
addressed to the designated or other known heirs, legatees, and
devisees of the testator resident in the Philippines at their places
of residence, and deposited in the post office with the postage
thereon prepaid at least twenty (20) days before the hearing, if
such places of residence be known. A copy of the notice must in
like manner be mailed to the person named as executor, if he be
not the petitioner, also, to any person named as co-executor not
petitioning, if their places of residence be known. Personal
service of copies of the notice at least ten (10) days before the
day of hearing shall be equivalent to mailing.
If the testator asks for the allowance of his own will,
notice shall be sent only to his compulsory heirs.

SEC. 5. Proof at hearing. What sufficient in absence of contest.
At the hearing compliance with the provisions of the last two
preceding sections must be shown before the introduction of
testimony in support of the will. All such testimony shall be taken
under oath and reduced to writing. If no person appears to
contest the allowance of the will, the court may grant allowance
thereof on the testimony of one of the subscribing witnesses
only, if such witness testify that the will was executed as is
required by law.
In the case of a holographic will, it shall be necessary
that at least one witness who knows the handwriting and
signature of the testator explicitly declare that the will and the
signature are in the handwriting of the testator. In the absence of
any such competent witness, and if the court deem it necessary,
expert testimony may be resorted to.

SEC. 6. Proof of lost or destroyed will. Certificate thereupon.
No will shall be proved as a lost or destroyed will unless the
execution and validity of the same be established and the will is
proved to have been in existence at the time of the death of the
testator, or is shown to have been fraudulently or accidentally
destroyed in the lifetime of the testator without his knowledge,
nor unless its provisions are clearly and distinctly proved by at
least two (2) credible witnesses. When a lost will is proved, the
provisions thereof must be distinctly stated and certified by the
judge, under the seal of the court, and the certificate must be
filed and recorded as other wills are filed and recorded.

SEC. 7. Proof when witnesses do not reside in province.If it
appears at the time fixed for the hearing that none of the
subscribing witnesses resides in the province, but that the
deposition of one or more of them can be taken elsewhere, the
court may, on motion, direct It to be taken, and may authorize a
photographic copy of the will to be made and to be presented to
the witness on his examination, who may be asked the same
questions with respect to it and to the handwriting of the testator
and others, as would be pertinent and competent if the original
will were present.

SEC. 8. Proof when witnesses dead or insane or do not reside in
the Philippines.If it appears at the time fixed for the hearing
that the subscribing witnesses are dead or insane, or that none of
them resides in the Philippines, the court may admit the
testimony of other witnesses to prove the sanity of the testator,
and the due execution of the will; and as evidence of the
execution of the will, it may admit proof of the handwriting of the
testator and of the subscribing witnesses, or of any of them.

SEC. 9. Grounds for disallowing will.The will shall be disallowed
in any of the following cases:
(a) If not executed and attested as required by law;
(b) If the testator was insane, or otherwise mentally
incapable to make a will, at the time of its execution;
(c) If it was executed under duress, or the influence of
fear, or threats;
(d) If it was procured by undue and improper pressure
and influence, on the part of the beneficiary, or of some other
person for his benefit;
(e) If the signature of the testator was procured by fraud
or trick, and he did not intend that the instrument should be his
will at the time of fixing his signature thereto.

SEC. 10. Contestant to file grounds of contest.Anyone
appearing to contest the will must state in writing his grounds for
opposing its allowance, and serve a copy thereof on the
petitioner and other parties interested in the estate.

SEC. 11. Subscribing witnesses produced or accounted for where
will contested.If the will is contested, all the subscribing
witnesses, and the notary in the case of wills executed under the
Civil Code of the Philippines, if present in the Philippines, and not
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insane, must be produced and examined, and the death,
absence, or insanity of any of them must be satisfactorily shown
to the court. If all or some of such witnesses are present in the
Philippines but outside the province where the will has been
filed, their deposition must be taken. If any or all of them testify
against the due execution of the will, or do not remember having
attested to it, or are otherwise of doubtful credibility, the will
may, nevertheless, be allowed if the court is satisfied from the
testimony of other witnesses and from all the evidence
presented that the will was executed and attested in the manner
required by law.
If a holographic will is contested, the same shall be
allowed if at least three (3) witnesses who know the handwriting
of the testator explicitly declare that the will and the signature are
in the handwriting of the testator; in the absence of any
competent witness, and if the court deem it necessary, expert
testimony may be resorted to.

SEC. 12. Proof where testator petitions for allowance of
holographic will.Where the testator himself petitions for the
probate of his holographic will and no contest is filed, the fact
that he affirms that the holographic will and the signature are in
his own handwriting, shall be sufficient evidence of the
genuineness and due execution thereof. If the holographic will is
contested, the burden of disproving the genuineness and due
execution thereof shall be on the contestant The testator may, in
his turn, present such additional proof as may be necessary to
rebut the evidence for the contestant.

SEC. 13. Certificate of allowance attached to proved will. To be
recorded in the Office of Register of Deeds.If the court is
satisfied, upon proof taken and filed, that the will was duly
executed, and that the testator at the time of its execution was of
sound and disposing mind, and not acting under duress, menace,
and undue influence, or fraud, a certificate of its allowance,
signed by the judge, and attested by the seal of the court shall be
attached to the will and the will and certificate filed and recorded
by the clerk. Attested copies of the will devising real estate and of
certificate of allowance thereof, shall be recorded in the register
of deeds of the province in which the lands lie.

A. Who and when to file

CASE NOTES

Guevara v. Guevara (1956)
The petition for probate was not barred by the statute of
limitations. The presentation of a decedents will to the
competent court has always been deemed in law as more of a
duty than a right, and neglect carries penalty.
The doctrine of prescription is destructive of the
right of testamentary disposition and violative of the
owners right to control his property within the legal limits.
It is not without purpose that Rule 77 of the Rules of Court
prescribes that any person interested in the estate may, at
anytime after the death of the testator, petition the court
having jurisdiction to have the will allowed. This means that
the statute of limitations has no application to the probate of
wills.

Duran v. Duran (1967)
The deed of assignment rendered Cipriano Duran a person
not interested in the estate of Pio Duran. In In re Santos,
since the approval of the court is deemed not final until the
estate is closed, the assigning heir remains an interested
person in the proceeding even after said approval, which can
be vacated, is given.
In the present case, however, the assignment took
place when no settlement proceedings were pending. The
properties subject matter of the assignment were not under
the jurisdiction of the court.
The assigning heir of cannot initiate a settlement
proceeding for until the deed of assignment is annulled or
rescinded, it is deemed valid and effective against him so
that he is left without that interest in the estate required to
petition for settlement proceedings.


B. Contents of petition See Section 2, Rule 76 above.

CASE NOTES

Salazar v. Court of First Instance (1937)
Under the provisions of the former Code of Civil Procedure,
a CFI acquires jurisdiction to probate a will when it is
shown by evidence before it:
(1) That a person has died leaving a will;
(2) In case of a resident of the Philippines, that he died
in the province where the court exercises
territorial jurisdiction;
(3) In case of a nonresident, that he has left an estate
in the province where the court is situated; and
(4) That the testament or last will of the deceased has
been delivered to the court and is in the
possession thereof.
NOTE: Section 2(a), Rule 74 of the current Rules
provides that a petition for probate of a will must show
the jurisdictional facts.
The law is silent as to the specific manner of
bringing the jurisdictional allegations before the court, but
practice and jurisprudence have established that they should
be made in the form of an applicationand filed with the
original of the will attached thereto. According to the facts
alleged and admitted by the parties, it is evident that the
court has acquired jurisdiction to probate the second will, in
view of the presence of all the jurisdictional facts above
stated.


C. Nature of proceedings See Sections 3 and 4, Rule 76
above.

CASE NOTES

In re Estate of Johnson (1918), supra
As was said in the case of In re Davis, the proceeding as to
the probate of a will is essentially one in rem, and the very
nature of things the state is allowed a wide latitude in
determining the character of the constructive notice to be
given to the world in a proceeding where it has absolute
possession of the res. It would be an exceptional case where
the court would declare a statute void, as depriving a party
of his property without due process of law, the proceeding
being strictly in rem, and the res within the state, upon the
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ground that the constructive notice prescribed by the statute
was unreasonably short.

In re Estate of Suntay (1954)
A probate is a proceeding in rem and for the validity of such
proceedings personal notice or notice by publication must be
made to all interested parties. The interested parties in the
case were known to reside in the Philippines. Evidence
shows that no such notice was received by the interested
parties residing in the Philippines.
The Chinese courts order does not even purport to
allow the will to probate and cannot be said to have been
done according to the basic principles followed in the
probate of wills.

Abut v. Abut (1972)
The jurisdiction of the court became vested upon the filing
of the original petition and upon compliance with Sections 3
and 4, Rule 76.
A proceeding for probate is one in rem, such that
with the correspoingding publication of the petition, the
courts jurisdiction extends to all persons interested in sai
will or in the settlement of the estate of the decedent. The
fact that the amended petition named Gavina Abut and
additional heirs were not included in the original petition
did not require notice of the amended petition to be
published anew.
Service of notice on individual heirs or legatees
or devisees is a matter of procedural convenience, not a
jurisdictional requisite, so much so that even if the names
of some legatees or heirs had been omitted from the petition
for allowance of the will and therefore were not advised of
the decree allowing the will does not ipso facto become void
for want of jurisdiction.

R-Infante de Aranz v. Galing (1988)
It is clear from Section 4, Rule 76 that noticeof the time and
place of the hearing for the allowance of a will shall be
forwarded to the designated or other known heirs, legatees
and devisees residing in the Philippines at their places of
residence if known. It is not contested that the residences of
herein petitioners legatees and devisees were known to the
Pasig RTC; the petition itself contained those facts, and yet
despite such knowledge, Judge Galing did not cause copies
of the notice to be sent to petitioners. The requirement of
the law for the allowance of the will was not satisfied by
mere publication of notice of hearing in a newspaper of
general circulation.
Proceeding in rem: Personal notice or by
publication or both is necessary.

Basa v. Mercado (1935)
The Court ruled that it was not necessary for publication to
be done in three full weeks. Citing a decision of the Vermont
State Supreme Court, from whose jurisdiction Section 630 of
the Philippine Code of Civil Procedure originated, the
Supreme Court held that said rule does not contemplate that
the notice referred to therein should be published for three
full weeks before the date set for hearing on the will; i.e., the
first publication of notice need not be done 21 days before
the scheduled hearing date. There is also no need for
publication be done in the newspaper with the largest
circulation.


D. Proof See Sections 5 to 8, 11 and 12, Rule 76 above.


E. Kinds of will

CIVIL CODE

Article 811. In the probate of a holographic will, it shall be
necessary that at least one witness who knows the handwriting
and signature of the testator explicitly declare that the will and
the signature are in the handwriting of the testator. If the will is
contested, at least three of such witnesses shall be required.
In the absence of any competent witness referred to in
the preceding paragraph, and if the court deems it necessary,
expert testimony may be resorted to. (619a)

CASE NOTES

Cayetano v. Leonidas (1984)
The Court held that there was no denial of due process in
this case. As regards the alleged absence of notice of hearing
for the petition for relief, the records will bear that what was
repeatedly scheduled for hearing on separate dates was
Hermogenes petition for relief and not his motion to vacate
order. There is no reason why he was led to believe
otherwise. The Court even admonished Hermogenes for his
failure to adduce evidence when his petition for relief was
repeatedly set for hearing. There was no denial of due
process.

Fernandez v. Tantoco (1926)
The denial of probate in this case was held to be improper.
In case of opposition to the probate of a will the proponent is
legally bound to introduce all of the subscribing witnesses, if
available. They are therefore forced witnesses so far as the
proponent is concerned, and he is not bound by their
testimony to the same extent that a lititgant is bound by the
testimony of a witness introduced in ordinary course. It
follows that the proponent of a will may avail himself of
other proof to establish the instrument, even contrary to the
testimony of some of the subscribing witnesses, or all of
them.

Vda. de Ramos v. Court of Appeals (1978)
It positively appears that the will and codicil were executed
in accordance with the formalities required by law. The
documents were prepared by a lawyer, Atty. Manuel Alvero.
The execution of the same was evidently supervised by his
associate, Atty. Ricardo Barcena who also acknowledged the
deeds. The solemnitites surrounding the execution of a will
is attended by some intricacies not usually within the
comprehension of an ordinary layman, so as to close the
door against bad faith and fraud, to avoid substitution of the
will, and to guarantee their truth and authenticity.
There is no showing that the above named lawyers
had been remiss in their sworn duty. Consequently, the
Court of Appeals failed to consider the presumption of
regularity in the execution of the documents.
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Azaola v. Singson (1960)
In the case of a holographic will, it is not mandatory that
witnesses first be presented before expert testimony may be
resorted to, unlike notarial wills wherein attesting witnesses
must be presented or accounted for. This is because
holographic wills are not required to be witnessed and the
existence of a qualified witness may be beyond the control
or knowledge of the proponent of the will.


F. Lost wills

CASE NOTES

Gan v. Yap (1958)
Unlike holographic wills, ordinary wills may be proved by
testimonial evidence when lost or destroyed. The difference
lies in the nature of the wills. In the first, the only guarantee
of authencity is the handwriting itself. In the second, it is
the testimony of the subscribing witness (and of the notary).
The loss of the holographic will entails the loss of the only
medium of proof. If the ordinary will is lost, the subscribing
witnesses are available to authenticate.
In holographic wills, if oral testimony were
admissible only one man could engineer the whole fraud so
easily.

Rodelas v. Aranza (1982)
A photostatic or Xerox copy of the holographic will may be
allowed as proof of the holographic will because comparison
can be made with the standard writings of the testator.


G. Grounds for disallowance See Sections 9, 10 and 13, Rule
76 above.

CIVIL CODE

Article 839. The will shall be disallowed in any of the following
cases:
(1) If the formalities required by law have not been
complied with;
(2) If the testator was insane, or otherwise mentally
incapable of making a will, at the time of its execution;
(3) If it was executed through force or under duress, or
the influence of fear, or threats;
(4) If it was procured by undue and improper pressure
and influence, on the part of the beneficiary or of some other
person;
(5) If the signature of the testator was procured by
fraud;
(6) If the testator acted by mistake or did not intend
that the instrument he signed should be his will at the time of
affixing his signature thereto. (n)








VI. ALLOWANCE OF WILL OUTSIDE THE
PHILIPPINES

RULE 77. ALLOWANCE OF WILL PROVED OUTSIDE OF
PHILIPPINES AND ADMINISTRATION OF ESTATE
THEREUNDER

SECTION 1. Will proved outside Philippines may be allowed
here.Wills proved and allowed in a foreign country, according to
the laws of such country, may be allowed, filed, and recorded by
the proper Regional Trial Court in the Philippines.

SEC 2. Notice of hearing for allowance.When a copy of such
will and of the order or decree of the allowance thereof, both
duly authenticated, are filed with a petition for allowance in the
Philippines, by the executor or other person interested in the
court having jurisdiction, such court shall fix a time and place for
the hearing, and cause notice thereof to be given as in case of an
original will presented for allowance.

SEC. 3. When will allowed, and effect thereof.If it appears at
the hearing that the will should be allowed in the Philippines, the
court shall so allow it, and a certificate of its allowance, signed by
the judge, and attested by the seal of the court, to which shall be
attached a copy of the will, shall be filed and recorded by the
clerk, and the will shall have the same effect as if originally
proved and allowed in such court.

SEC. 4. Estate, how administered.When a will is thus allowed,
the court shall grant letters testamentary, or letters of
administration with the will annexed, and such letters
testamentary or of administration, shall extend to all the estate
of the testator in the Philippines. Such estate, after the payment
of just debts and expenses of administration, shall be disposed of
according to such will, so far as such will may operate upon it; and
the residue, if any, shall be disposed of as is provided by law in
cases of estates in the Philippines belonging to persons who are
inhabitants of another state or country.

CASE NOTES

Vda. de Perez v. Tolete (1994)
The evidence necessary for the reprobate of wills previously
probated outside the Philippines are (1) the due execution of
the will according to foreign laws; (2) the testator has his
domicile in the foreign country and not the Philippines; (3)
the will has been probated in such country; (4) the fact that
the foreign tribunal is a foreign court; and (5) the laws of a
foreign country on procedure and allowance of wills. Except
for (1) and (5), Salud submitted all the required evidence.

In re Estate of Suntay (1954), supra

Ancheta v. Guersey-Dalaygon (2006)
Ancheta, as ancillary administrator, was under duty to prove
Maryland law on succession. He admitted that he merely
relied on processual presumption. Thus the RTC
disregarded the terms of Audreys will.



uLLA C8uZ Al

VII. LETTERS TESTAMENTARY AND OF
ADMINISTRATION

RULE 78. LETTERS TESTAMENTARY AND OF
ADMINISTRATION, WHEN AND TO WHOM ISSUED

SECTION 1. Who are incompetent to serve as a executors or
administrators.No person is competent to serve as executor or
administrator who:
(a) Is a minor;
(b) Is not a resident of the Philippines; and
(c) Is in the opinion of the court unfit to execute the
duties of the trust by reason of drunkenness, improvidence, or
want of understanding or integrity, or by reason of conviction of
an offense involving moral turpitude.

SEC. 2. Executor of executor not to administer estate.The
executor of an executor shall not, as such, administer the estate
of the first testator.

SEC. 3. Married women may serve.A married woman may
serve as executrix or administratrix, and the marriage of a single
woman shall not affect her authority so to serve under a previous
appointment

SEC 4 Letters testamentary issued when will allowed.When a
will has been proved and allowed, the court shall issue letters
testamentary thereon to the person named as executor therein,
if he is competent, accepts the trust, and gives bond as required
by these rules

SEC. 5. Where some coexecutors disqualified others may act.
When all of the executors named in a will can not act because of
incompetency, refusal to accept the trust, or failure to give bond,
on the part of one or more of them, letters testamentary may
issue to such of them as are competent, accept and give bond,
and they may perform the duties and discharge the trust required
by the will.

SEC. 6. When and to whom letters of administration granted.If
no executor is named in the will, or the executor or executors are
incompetent, refuse the trust, or fail to give bond, or a person
dies intestate, administration shall be granted:
(a) To the surviving husband or wife, as the case may be,
or next of kin, or both, in the discretion of the court, or to such
person as such surviving husband or wife, or next of kin, requests
to have appointed, if competent and willing to serve;
(b) If such surviving husband or wife, as the case may
be, or next of kin, or the person selected by them, be
incompetent or unwilling, or if the husband or widow, or next of
kin, neglects for thirty (30) days after the death of the person to
apply for administration or to request that administration be
granted to some other person, it may be granted to one or more
of the principal creditors, if competent and willing to serve;
(c) If there is no such creditor competent and willing to
serve, it may be granted to such other person as the court may
select.






A. Qualification See Sections 1 and 2, Rule 78 above.

CASE NOTES

Lim v. Diaz-Millares (1966)
3

In this jurisdiction, one is considered to be unsuitable for
appointment as administrator when he has adverse interest
of some kind or hostility to those immediately interested in
the estate. As shown by the Civil Case above, Cirilo Lim as a
relative of the deceased has some interest adverse to that of
Basilisa. Having some liabilities to Basilisa and to the estate
as a whole, Cirilo can not compatibly perform the duties of
an administrator.
The determination of a person's suitability for the
office of judicial administrator rests, to a great extent, in the
sound judgment of the court exercising the power of
appointment and said judgment is not to be interfered with
on appeal unless the said court is clearly in error.

Medina v. Court of Appeals
4

The Court does not look with favor on such practice of
clerks of court or other court employees being appointed as
administrators of estates of decedents pending settlement
before the probate court. The objectivity and impartiality of
such clerks of court or other employees so appointed as
administrators in discharging their regular functions may be
easily compromised by extraneous considerations.
Furthermore, because of the administrator's fees and
compensation payable to them, it is not inconceivable that
self-interest intrudes and consciously or unconsciously,
obstacles are placed against the prompt settlement and
termination of the proceedings.

Maloles II v. Phillips (2000)
In this case, an oppositor to the issuance of letters
testamentary in favor of respondent posits that the probate
proceedings in a branch of the Makati RTC did not
terminate upon the issuance of a probate decree, thus
barring another branch of the same court to act upon
respondents petition for the issuance of letters
testamentary. The Court held otherwise, ruling that after
the issuance of a probate decree, there was nothing else for a
probate court to do except to issue a certificate of allowance
of the will in accordance with Section 12, Rule 73 of the
Rules of Court.

Republic v. Marcos (2009)
5

The choice of his executor is a precious prerogative of a
testator, a necessary concomitant of his right to dispose of
his property in the manner he wishes. It is natural that the
testator should desire to appoint one of his confidence, one
who can be trusted to carry out his wishes in the disposal of
the estate. The curtailment of this right may be considered
as a curtailment of the right to dispose.
As the rights granted by will take effect from the
time of death (Article 777, Civil Code of the Philippines), the
management of his estate by the administrator of his choice
should be made as soon as practicable, when no reasonable
objection to his assumption of the trust can be interposed

3
Based on the digest of Venus Ambrona, C2013
4
Based on the digest of Nickie Bolos, C2013
5
Based on the digest of Gianna de Jesus, C2013
uLLA C8uZ Al

any longer. It has been held that when a will has been
admitted to probate, it is the duty of the court to issue
letters testamentary to the person named as executor upon
his application
The Rules of Court gives the lower court the duty
and discretion to determine whether in its opinion an
individual is unfit to serve as an executor. The sufficiency of
any ground for removal should thus be determined by the
said court, whose sensibilities are, in the first place, affected
by any act or omission on the part of the administrator not
conformable to or in disregard of the rules of orders of the
court. An appellate court is disinclined to interfere with the
action taken by the probate court in the matter of removal of
an executor or administrator unless positive error or gross
abuse of discretion is shown.


B. Procedure See Sections 2, 4 and 5, Rule 78 above.

CASE NOTES

In re Testate Estate of Margarita David (1956)
The old rules provide:
"The personal estate of the deceased shall be first
chargeable with the payment of debts and expenses; and if the
personal estate is not sufficient for that purpose, or its sale would
redound to the detriment of the participants in the estate, the whole
of the real estate, or so much thereof as is necessary, may be sold,
mortgaged, or otherwise encumbered for that purpose by the
executor or administrator, after obtaining the authority of the
court therefor."
And according to section 6 of Rule 89, the Court
has authority to fix the contributive shares of the devisees,
legatees or heirs for the payment of a claim if they have
entered into possession of portions of the estate before the
debts and expenses thereof have been settled and paid.
Appellant argues, however, that section 3 of Rule 89, Rules
of Court, is not applicable to the instant case on the ground
that it refers to the personal and real properties of the
deceased which are in the hands of the administrator, and
not to the properties of the estate which are already in the
hands of the heiresses. This contention is likewise untenable.
The residuary funds in the hands of the appellant are funds
of the estate and the Court has jurisdiction over them and,
therefore, it could compel the appellant to deliver to the
administrator of this estate the necessary portion of such
fund for the payment of the Sideco claim.

Baluyut v. Pao (1976)
While the probate court correctly assumed that Mrs.
Baluyut as surviving spouse enjoys preference in the
granting of letters of administration, it does not follow that
she should be named administratrix without conducting a
full-dress hearing on her competency to discharge that trust.
The directive of the testator in his will designating that a
certain person should act as executor is not binding on the
probate court and does not automatically entitle him to the
issuance of letters testamentary. A hearing has to be held in
order to ascertain his fitness to act as executor.
A hearing is necessary in order to determine the
suitability of the person to be appointed administrator by
giving him the opportunity to prove his qualifications and
affording oppositors a chance to contest the petition. In this
case the probate court briefly and perfunctorily interrogated
Mrs. Baluyut in order to satisfy itself on her mental
capacity. The court did not give Alfredo G. Baluyut a chance
to contest her qualifications. He had squarely raised the
issue as to her competency. The probate court assumed that
Alfredo G. Baluyut had no interest in the decedent's estate.
As it now turned out, he is one of the legatees named in the
decedent's alleged will.


C. Order of preference See Section 6, Rule 78 above.

CASE NOTES

Capistrano v. Nadurata (1922)
The selection of an administrator of the estate of a deceased
lies within the discretion of the court (sec. 642, subsec. 1,
Code of Civil Procedure). And the record does not contain
anything tending to show an abuse of discretion on the part
of the lower court. On the contrary, the act of the lower
court in overruling the objection of the opponents and
confirming the appointment as administrator of the person
proposed by the applicants is not only indicative of sound
discretion, but is right and just; for the evidence shows that
Leon Nadurata is not surviving spouse of Petra de los
Santos, who died widow and not twice widow, and that the
opponents Pedro de los Santos and Juan de los Santos are
not, as they pretend to be, brother of the aforesaid deceased.

Arevalo v. Bustamante (1940)
It falls within the discretion of the court, to appoint to the
office of judicial administrator a person considered to be
most qualified to defend and ensure, freely and in a
disengaged manner, the interests pertaining to a testate or
intestate proceeding. As a consequence, the first assignment
of error to the lower court is without basis, it not being
contrary to article 653 of the Code of Civil Procedure which
provides for the removal of an administrator for failure to
render accounts or failure to administer the estate entrusted
to his care, or for failure to comply with the orders given to
him, which is not here the case. On the other hand, be it
removal or be it dismissal, or whatever the court purports it
to be, the stoppage of Aristn Bustamante from carrying out
the duties of administrator can only be ascribed to the
ignorance of the lower court of the valid grounds for the
incapacity to discharge those duties. Because the inferior
court allowed the petition for the application for
administratorship to be presented ex parte, it effectively
denied the heirs of the deceased Brnabe Bustamante an
opportunity to be heard in relation to their objections as to
Aristns capacity as Administrator.

Gabriel v. Court of Appeals (1992)
In the case at bar, there is no compelling reason sufficient to
disqualify Felicitas Jose-Gabriel from appointment as
administratrix of the decedent's estate. Moreover, just as the
order of preference is not absolute and may be disregarded
for valid cause 18 despite the mandatory tenor in the
opening sentence of Rule 78 for its observance, so may the
30-day period be likewise waived under the permissive tone
in paragraph (b) of said rule which merely provides that said
uLLA C8uZ Al

letters, as an alternative, "may be granted to one or more of
the principal creditors."

Silverio v. Court of Appeals (1999)
The order of preference in the appointment of an
administrator depends on the attendant facts and
circumstances. In this case, the appointment of Edgardo S.
Silverio as administrator is proper.
In Sioca v. Jose Garcia, the court disregarded the
order of preference ratiocinating, thus:
. . . The determination of a person's suitability for
the office of administrator rests, to a great extent, in the
sound judgment of the court exercising the power of
appointment and such judgment will not be interfered with
on appeal unless it appears affirmatively that the court
below was in error.
A probate court cannot arbitrarily disregard the
preferential rights of the surviving spouse to the
administration of the estate of a deceased person; but if the
person enjoying such preferential rights is unsuitable the
court may appoint another person.
In Esler v. Tad-y, the Court answered in the
affirmative the query whether the probate court, in the
exercise of its discretion, may disregard the order of
preference to the administration, set forth in the Rules of
Court.




VIII. OPPOSING THE ISSUANCE OF LETTERS
TESTAMENTARY; PETITION AND CONTEST FOR
LETTERS OF ADMINISTRATION

RULE 79. OPPOSING ISSUANCE OF LETTERS
TESTAMENTARY. PETITION AND CONTEST FOR LETTERS OF
ADMINISTRATION

SECTION 1. Opposition to issuance of letters testamentary.
Simultaneous petition for administration.Any person
interested in a will may state in writing the grounds why letters
testamentary should not issue to the persons named therein as
executors, or any of them, and the court, after hearing upon
notice, shall pass upon the sufficiency of such grounds. A petition
may, at the same time, be filed for letters of administration with
the will annexed.

SEC. 2. Contents of petition for letters of administration.A
petition for letters of administration must be filed by an
interested person and must show, so far as known to the
petitioner.
(a) The jurisdictional facts;
(b) The names, ages, and residences of the heirs, and
the names and residences of the creditors, of the decedent;
(c) The probable value and character of the property of
the estate;
(d) The name of the person for whom letters of
administration are prayed.
But no defect in the petition shall render void the
issuance of letters of administration.

SEC. 3. Court to set time for hearing. Notice thereof.When a
petition for letters of administration is filed in the court having
jurisdiction, such court shall fix a time and place for hearing the
petition, and shall cause notice thereof to be given to the known
heirs and creditors of the decedent, and to any other persons
believed to have an interest in the estate, in the Manner provided
in sections 3 and 4 of Rule 76.

SEC. 4. Opposition to petition for administration.Any
Interested person may, by filing a written opposition, contest the
petition on the ground of the incompetency of the person for
whose letters are prayed therein, or on the ground of the
contestants own right to the administration, and may pray that
letter issue to himself, or to any competent person or persons
named In the opposition.

SEC. 5. Hearing and order for letters to issue.At the hearing of
the petition, it must first be shown that notice has been given as
hereinabove required, and thereafter the court shall hear the
proofs of the parties in support of their respective allegations,
and if satisfied that the decedent left no will, or that there is no
competent and willing executor, it shall order the issuance of
letters of administration to the party best entitled thereto.

SEC. 6. When letters of administration granted to any
applicant.Letters of administration may be granted to any
qualified applicant, though it appears that there are other
competent persons having better right to the administration, if
such persons fail to appear when notified and claim the issuance
of letters to themselves.

A. Contents of petition See Section 2, Rule 79 above.


B. Interested party See Sections 1 and 2.

CASE NOTES

Espinosa v. Barrios (1940)
6

In relation to the testate estate of Florencio Jagunap, a
stranger who has no material or direct interest in the estate
of the estate has no right to intervene nor to appeal from
any order given by the court, although apparently it would
prejudice him.

Trillana v. Crisostomo (1951)
Appellants argue that they are interested parties and
therefore may appeal in the present case, because in the
event the will of October 19 is disallowed and in its stead
that of August 16 is allowed, and the legacies made in the
latter are declared invalid or the legatees incapable to
inherit, the legacies will go to appellants. This argument has
no merit. In civil actions and special proceedings, unless
otherwise provided by law, the interest required in order
that a person may be a party on appeal must be material and
direct, so that he will be materially and directly benefited or
injured by the court's order, decree or judgment; and not
indirect or contingent. The interest claimed by the
appellants is purely contingent or dependent upon several
uncertain and future events, to wit: (1) The disallowance of
the will of October 19, 1948, (2) The allowance of the will of
August 16, 1948, and (3) The invalidation of certain legacies
left in the said will of August 16, 1948.

6
Based on the digest of Gianna de Jesus, C2013
uLLA C8uZ Al

Duran v. Duran (1967), supra

In re Intestate Estate of Irene Santos (1962)
7

It cannot be successfully denied that Adela Santos Gutierrez
is an indispensable party to the proceedings in question. Her
interest in the estate is not inchoate, it was established at the
time of death of Irene Santos. While it is true that she
executed a deed of assignment, it is also a fact that she asked
the same to be annulled, which action is now pending before
the Rizal CFI.
Although Adela had filed a manifestation dropping
herself from the proceedings and presenting therewith the
supposed Deed of Assignment, the record, nevertheless fails
to show that action thereon had been taken by the probate
Court. Every act intended to put an end to indivision among
co-heirs and legatees or devisees is deemed to be a partition,
although it should purport to be a sale, an exchange, a
compromise, or any other transaction (Art. 1082, Civil
Code).
No serious argument can be offered to deny the co-
heirship of appellee in the estate under probate. It appearing
that the transaction is in the nature of extrajudicial
partition, court approval is imperative, and the heirs cannot
just divest the court of its jurisdiction over the estate and
over their persons, by the mere act of assignment and
desistance. But even if the partition had been judicially
approved on the basis of the alleged deed of assignment, an
aggrieved heir does not lose her standing in the probate
court.

Tayag v. Tayag-Gallor (2008)
8

Respondent in this case had not been given the opportunity
to present evidence to show whether she had been
voluntarily recognized and acknowledged by her deceased
father because of petitioners opposition to her petition and
motion for hearing on affirmative defenses. There is, as yet,
no way to determine if her petition is actually one to compel
recognition which had already been foreclosed by the death
of her father, or whether indeed she has a material and direct
interest to maintain the suit by reason of the decedents
voluntary acknowledgment or recognition of her
illegitimate filiation.
The Court found that the allegation that
respondent is an illegitimate child of the decedent suffices
even without further stating that she has been so recognized
or acknowledged. A motion to dismiss on the ground of
failure to state a cause of action in the complaint
hypothetically admits the truth of the facts alleged therein.
Assuming the fact alleged to be true, i.e., that respondent is
the decedents illegitimate child, her interest in the estate as
such would definitely be material and direct. The appellate
court was, therefore, correct in allowing the proceedings to
continue, ruling that, "respondent still has the duty to prove
the allegation (that she is an illegitimate child of the
decedent), just as the petitioner has the right to disprove it,
in the course of the settlement proceedings."





7
Based on the digest of Giselle Mauhay, C2013
8
Based on the digest of Charles Icasiano, C2013
C. Procedure See Sections 3 to 6, Rule 79 above.

CASE NOTES

Avelino v. Court of Appeals (2000)
When a person dies intestate, or, if testate, failed to name an
executor in his will or the executor so named is
incompetent, or refuses the trust, or fails to furnish the bond
required by the Rules of Court, then the decedent's estate
shall be judicially administered and the competent court
shall appoint a qualified administrator in the order
established in Section 6 of Rule 78. The exceptions to this
rule are found in Sections 1 and 2 of Rule 74, on the
extrajudicial settlement by agreement between heirs and the
summary settlement of estates of small value.
The Court of Appeals found that in this case "the
decedent left no debts and the heirs and legatees are all of
age. With this finding, the Supreme Court ruled that
Section 1, Rule 74 of the Rules of Court should apply.
Where the more expeditious remedy of partition is
available to the heirs, then the heirs or the majority of them
may not be compelled to submit to administration
proceedings. The trial court appropriately converted
petitioner's action for letters of administration into a suit for
judicial partition, upon motion of the private respondents.




IX. SPECIAL ADMINISTRATOR

RULE 80. SPECIAL ADMINISTRATOR

SECTION 1. Appointment of special administrator.When there
is delay in granting letters testamentary or of administration by
any cause including an appeal from the allowance or
disallowance of a will, the court may appoint a special
administrator to take possession and charge of the estate of the
deceased until the questions causing the delay are decided and
executors or administrators appointed.

SEC. 2. Powers and duties of special administrator.Such special
administrator shall take possession and charge of the goods,
chattels, rights, credits, and estate of the deceased and preserve
the same for the executor or administrator afterwards appointed,
and for that purpose may commence and maintain suits as
administrator. He may sell only such perishable and other
property as the court orders sold. A special administrator shall
not be liable to pay any debts of the deceased unless so ordered
by the court.

SEC. 3. When powers of special administrator cease. Transfer of
effects. Pending suits.When letters testamentary or of
administration are granted on the estate of the deceased, the
powers of the special administrator shall cease, and he shall
forthwith deliver to the executor or administrator the goods,
chattels, money, and estate of the deceased in his hands. The
executor or administrator may prosecute to final judgment suits
commenced by such special administrator.


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A. Necessity for, and qualifications of, a special administrator
See Section1, Rule 80 above.

RULE 86. CLAIMS AGAINST ESTATE

SEC. 8. Claim of executor or administrator against an estate.If
the executor or administrator has a claim against the estate he
represents, he shall give notice thereof, in writing, to the court,
and the court shall appoint a special administrator, who shall, in
the adjustment of such claim, have the same power and be
subject to the same liability as the general administrator or
executor in the settlement of other claims. The court may order
the executor or administrator to pay to the special administrator
necessary funds to defend such claim.

CASE NOTES

Vda. de Roxas v. Pecson (1948)
It is well settled that the statutory provisions as to the prior
or preferred right of certain persons to the appointment of
administrator under section 1, Rule 81, as well as the
statutory provisions as to causes for removal of an executor
or administrator under section 653 of Act No. 190, now
section 2, Rule 83, do not apply to the selection or removal
of special administrator. As the law does not say who shall
be appointed as special administrator and the qualifications
the appointee must have, the judge or court has discretion in
the selection of the person to be appointed, discretion which
must be sound, that is, not whimsical or contrary to reason,
justice or equity.
There is nothing wrong in that the respondent
judge, in exercising his discretion and appointing the
petitioner as special administratrix, had taken into
consideration the beneficial interest of the petitioner in the
estate of the decedent and her being designated in the will as
executrix thereof. But the respondent's subsequent act of
appointing her as special administratrix only of the conjugal
or community property, and Maria Roxas as special
administratrix of the capital or exclusive property of the
decedent, does not seem to be in conformity with logic or
reason. The petitioner has or claims to have the same
beneficial interest after the decision of the court
disapproving the will, which is now pending on appeal, as
she had prior to it, because the decision is not yet final and
may be reversed by the appellate court.

Matias v. Gonzales (1957)
The rule, laid down in Roxas v. Pecson (supra), to the effect
that "only one special administrator may be appointed to
administrator temporarily" the estate of the deceased, must
be considered in the light of the facts obtaining in said case.
The lower court appointed therein one special administrator
for some properties forming part of said estate, and a special
administratrix for other properties thereof. Thus, there were
two (2) separate and independent special administrators. In
the case at bar there is only one (1) special administration,
the powers of which shall be exercised jointly by two special
co-administrators. In short, the Roxas case is not squarely in
point. Moreover, there are authorities in support of the
power of courts to appoint several special co-administrators.


B. Powers and duties See Sections 2 and 3, Rule 80 above.

RULE 81. BONDS OF EXECUTORS AND ADMINISTRATORS

SEC. 4. Bond of special administrator.A special administrator
before entering upon the duties of his trust shall give a bond, in
such sum as the court directs, conditioned that he will make and
return a true inventory of the goods, chattels, rights, credits, and
estate of the deceased which come to his possession or
knowledge, and that he will truly account for such as are received
by him when required by the court, and will deliver the same to
the person appointed executor or administrator, or to such other
person as may be authorized to receive them.

CASE NOTES

De Gala v. Gonzales (1929)
The Court of First Instance ordered Sinforoso Ona to
deliver to Serapia de Gala all the property left by the
deceased. Instead of delivering the property as ordered,
Sinforoso filed a motion asking that the appointment of
Serapia de Gala as special administratrix be cancelled and
that he, Sinforoso, be appointed in her stead. The motion
was opposed both by Apolinario Gonzales and by Serapia de
Gala, but on March 3, 1928, it was nevertheless granted,
Serapia was removed, and Sinforoso was appointed special
administrator in her place, principally on the ground that he
had possession of the property in question and that his
appointment would simplify the proceedings.
In the meantime and after various continuances and delays,
the court below in an order dated January 20, 1928, declared
the will valid and admitted it to probate. All of the parties
appealed, Serapia de Gala from the order removing her from
the office of special administratrix, and Apolinario Gonzales
and Sinforoso Ona from the order probating the will.
Serapia's appeal requires but little discussion. The
burden of the argument of her counsel is that a special
administrator cannot be removed except for one or more of
the causes stated in section 653 of the Code of Civil
Procedure. But that section can only apply to executors and
regular administrators, and the office of a special
administrator is quite different from that of regular
administrator. The appointment of a special administrator
lies entirely in the sound discretion of the court; the function
of such an administrator is only to collect and preserve the
property of the deceased and to return an inventory thereof;
he cannot be sued by a creditor and cannot pay any debts of
the deceased. The fact that no appeal can be taken from the
appointment of a special administrator indicates that both
his appointment and his removal are purely discretionary,
and we cannot find that the court below abused its
discretion in the present case. In removing Serapia de Gala
and appointing the present possessor of the property,
pending the final determination of the validity of the will,
the court probably prevented useless litigation.

Liwanag v. Court of Appeals (1965)
The Rules of Court do not expressly prohibit making the
special administratrix a defendant in a suit against the
estate. Otherwise, creditors would find the adverse effects of
the statute of limitations running against them in cases
where the appointment of a regular administrator is delayed.
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So that if the Court were now to deny the present action on
this technical ground alone, and the appointment of a
regular administrator will be delayed, the very purpose for
which the mortgage was constituted will be defeated.

Anderson v. Perkins (1961)
It is true that the function of a special administrator is only
to collect and preserve the property of the deceased until a
regular administrator is appointed. But it is not alone the
specific property of the estate which is to be preserved, but
its value as well, as shown by the legal provision for the sale
by a special administrator of perishable property. It is in line
with this general power of the special administrator to
preserve not only the property of the estate but also its
value, that section 2, Rule 81, also empowers such
administrator to sell "other property as the court ordered
sold."

Silverio v. Court of Appeals (1999), supra

Heirs of Castillo v. Lacuata-Gabriel (2005)
The Court has repeatedly held that the appointment of a
special administrator lies in the sound discretion of the
probate court. A special administrator is a representative of
a decedent appointed by the probate court to care for and
preserve his estate until an executor or general
administrator is appointed. When appointed, a special
administrator is regarded not as a representative of the
agent of the parties suggesting the appointment, but as the
administrator in charge of the estate, and, in fact, as an
officer of the court. As such officer, he is subject to the
supervision and control of the probate court and is expected
to work for the best interests of the entire estate, especially
its smooth administration and earliest settlement. The
principal object of appointment of temporary administrator
is to preserve the estate until it can pass into hands of
person fully authorized to administer it for the benefit of
creditors and heirs. In many instances, the appointment of
administrators for the estates of decedents frequently
become involved in protracted litigations, thereby exposing
such estates to great waste and losses unless an authorized
agent to collect the debts and preserve the assets in the
interim is appointed. The occasion for such an appointment,
likewise, arises where, for some cause, such as a pendency of
a suit concerning the proof of the will, regular
administration is delayed.




X. BONDS OF EXECUTORS AND
ADMINISTRATORS

RULE 81. BONDS OF EXECUTORS AND ADMINISTRATORS

SECTION 1. Bond to be given before issuance of letters.
Amount. Conditions.Before an executor or administrator enters
upon the execution of his trust, and letters testamentary or of
administration issue, he shall give a bond, in such sum as the
court directs, conditioned as follows:
(a) To make and return to the court, within three (3)
months, a true and complete inventory of all goods, chattels,
rights, credits, and estate of the deceased which shall come to his
possession or knowledge or to the possession of any other
person for him;
(b) To administer according to these rules, and, if an
executor, according to the will of the testator, all goods, chattels,
rights, credits, and estate which shall at any time come to his
possession or to the possession of any other person for him, and
from the proceeds to pay and discharge all debts, legacies, and
charges on the same, or such dividends thereon as shall be
decreed by the court;
(c) To render a true and just account of his
administration to the court within one (1) year, and at any other
time when required by the court;
(d) To perform all orders of the court by him to be
performed.

SEC. 2. Bond of executor where directed in will. When further
bond required.If the testator in his will directs that the executor
serve without bond, or with only his Individual bond, he may be
allowed by the court to give bond in such sum and with such
surety as the court approves conditioned only to pay the debts of
the testator; but the court may require of the executor a further
bond in case of a change in his circumstances, or for other
sufficient cause, with the conditions named in the last preceding
section.

SEC. 3. Bonds of joint executors and administrators.When two
or more persons are appointed executors or administrators the
court may take a separate bond from each, or a joint bond from
all.

SEC. 4. Bond of special administrator.A special administrator
before entering upon the duties of his trust shall give a bond, in
such sum as the court directs, conditioned that he will make and
return a true inventory of the goods, chattels, rights, credits, and
estate of the deceased which come to his possession or
knowledge, and that he will truly account for such as are received
by him when required by the court, and will deliver the same to
the person appointed executor or administrator, or to such other
person as may be authorized to receive them.


A. Kinds See Sections 1 to 4, Rule 81 above.

B. Conditions See Sections 1, 2 and 4.

CASE NOTES

Cosme de Mendoza v. Pacheco (1937)
The Court ruled that a probate court acting as such has
jurisdiction to order the execution of a bond. A probate
court, exercising probate jurisdiction, is empowered with an
all-embracing power over the administrators bond and over
administration proceedings, and thus cannot be devoid of
legal authority to execute and make that bond answerable
for the very purpose for which it was filed. It is true that the
law does not expressly state that such court has the power
to execute the bond of an administrator, but by necessary
and logical implication, the power is there as eloquently as if
it were phrased in unequivocal terms.
The remedy of the surety is the exercise of the
right to be admitted as a party to the accounting with which
a surety may not be charged with liability upon the bond
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during the process of accounting within the confines of the
probate proceedings and not in an action apart and distinct
from such proceedings.
The execution of an administrators bond clearly
stands upon a different footing, and is necessarily a part and
incident of the administration proceedings as the filing of
such bond or the fixing of its amount.

Ocampo v. Ocampo (2010)
The RTC does not need to resolve first the pending motion
for exemption from administrators bond by Renato and
Erlinda before revoking their appointment as special joint
administrators on their failure to post bond. The RTC
revoked Renato and Erlindas appointment for failure to
post bond and submit inventory, which is tantamount to
failure to comply with the courts lawful orders.
Under Section1, Rule 81, the bond secures the
performance of the duties and obligations of an
administrator. The purpose of the bond is for the benefit of
the creditors and the heirs, as it compels the administrator,
regular or special, to perform the trust reposed in and
incumbent upon him. Posting a bond is in itself a
qualification for administrators.




XI. REVOCATION OF ADMINISTRATION, DEATH,
RESIGNATION, REMOVAL OF EXECUTORS/
ADMINISTRATORS

RULE 82. REVOCATION OF ADMINISTRATION, DEATH,
RESIGNATION, AND REMOVAL OF EXECUTORS AND
ADMINISTRATORS

SECTION 1. Administration revoked if will discovered.
Proceedings thereupon.If after letters of administration have
been granted on the estate of a decedent as if he had died
intestate, his will is proved and allowed by the court, the letters of
administration shall be revoked and all powers thereunder cease
and the administrator shall forthwith surrender the letters to the
court, and render his account within such time as the court
directs. Proceedings for the issuance of letters testamentary or of
administration under the will shall be as hereinbefore provided.

SEC. 2. Court may remove or accept resignation of executor or
administrator. Proceedings upon death, resignation, or
removal.If an executor or administrator neglects to render his
account and settle the estate according to law, or to perform an
order or judgment of the court, or a duty expressly provided by
these rule., or absconds, or becomes insane, or otherwise
incapable or unsuitable to discharge the trust, the court may
remove him, or, in its discretion, may permit him to resign. When
an executor or administrator dies, resigns, or is removed, the
remaining executor. or administrator may administer the trust
alone, unless the court grants letters to someone to act with him.
If there is no remaining executor or administrator, administration
may be granted to any suitable person.

SEC. 3. Acts before revocation, resignation, or removal to be
valid.The lawful acts of an executor or administrator before the
revocation of his letters testamentary or of administration, or
before his resignation or removal, shall have the like validity if
there has been no such revocation resignation, or removal.

SEC. 4. Powers of new executor or administrator. Renewal of
license to sell real estate.The person to whom letters
testamentary or of administration are granted after the
revocation of former letters, or the death, resignation, or removal
of a former executor or administrator, shall have the like powers
to collect and settle the estate not administered that the former
executor or administrator had, and may prosecute of defend
actions commenced by or against the former executor or
administrator, and have execution on judgments recovered in the
name of such former executor or administrator. An authority
granted by the court to the former executor administrator for the
sale or mortgage of real estate may be renewed in favor of such
person without further notice or hearing.


A. Reasons See Sections 1 and 2, Rule 81 above.


B. Effects See Sections 3 and 4.

CASE NOTES

Quasha v. LCN Construction Corporation (2008)
The court has jurisdiction to appoint an administrator of an
estate by granting letters of administration to a person not
otherwise disqualified following Section 6, Rule 78 of the
Rules of Court. In connection, Section 2, Rule 82 provides
the modes for replacing an administrator in case of his
death. The records of the case do not show that neither
Quasha Law nor any of its lawyers substituted Atty. Quasha
as co-administrator of the estate. While it had helped in the
settlement of the estate of Triviere, Quasha Law had not
even been issued letters of administration. Therefore, the
prohibition against an attorney from collecting his fees
against the estate under Section 7, Rule 85 does not apply to
Quasha Law.




XII. INVENTORY AND APPRAISAL; PROVISIONS
FOR SUPPORT OF FAMILY

RULE 83. INVENTORY AND APPRAISAL. PROVISION FOR
SUPPORT OF FAMILY

SECTION 1. Inventory and appraisal to be returned within three
months.Within three (3) months after his appointment every
executor or administrator shall return to the court a true
inventory and appraisal of all the real and personal estate of the
deceased which has come into his possession or knowledge. In
the appraisement of such estate, the court may order one or
more of the inheritance tax appraisers to give his or their
assistance.

SEC. 2. Certain articles not to be inventoried.The wearing
apparel of the surviving husband or wife and minor children, the
marriage bed and bedding, and such provisions and other articles
as will necessarily be consumed in the subsistence of the family
of the deceased, under the direction of the court, shall not be
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considered as assets, nor administered as such, and shall not be
included in the inventory.

SEC. 3. Allowance to widow and family.The widow and minor
or incapacitated children of a deceased person, during the
settlement of the estate, shall receive therefrom, under the
direction of the court, such allowance as are provided by law.

A. Period See Section 1, Rule 83 above.

CASE NOTES

Sebial v. Sebial (1975)
Failure to file an inventory within 3 months after an
administrators appointment does not deprive the court of
jurisdiction to approve it. The 3-month period prescribed in
Section 1, Rule 83 is not mandatory. After the filing of a
petition for the issuance of letters of administration and the
publication of notice of hearing, the proper CFI acquires
jurisdiction until the proceeding is closed. The fact that an
inventory was filed after the 3-month period would not
deprive the probate court of jurisdiction to approve it.
However, an administrators unexplained delay in filing the
inventory may be considered a ground for his removal under
Section 2, Rule 82.


B. Contents- See Sections 2 and 3.

FAMILY CODE

Art. 102. Upon dissolution of the absolute community regime,
the following procedure shall apply:
(1) An inventory shall be prepared, listing separately all
the properties of the absolute community and the exclusive
properties of each spouse.
(2) The debts and obligations of the absolute
community shall be paid out of its assets. In case of insufficiency
of said assets, the spouses shall be solidarily liable for the unpaid
balance with their separate properties in accordance with the
provisions of the second paragraph of Article 94.
(3) Whatever remains of the exclusive properties of the
spouses shall thereafter be delivered to each of them.
(4) The net remainder of the properties of the absolute
community shall constitute its net assets, which shall be divided
equally between husband and wife, unless a different proportion
or division was agreed upon in the marriage settlements, or
unless there has been a voluntary waiver of such share provided
in this Code. For purpose of computing the net profits subject to
forfeiture in accordance with Articles 43, No. (2) and 63, No. (2),
the said profits shall be the increase in value between the market
value of the community property at the time of the celebration
of the marriage and the market value at the time of its
dissolution.
(5) The presumptive legitimes of the common children
shall be delivered upon partition, in accordance with Article 51.
(6) Unless otherwise agreed upon by the parties, in the
partition of the properties, the conjugal dwelling and the lot on
which it is situated shall be adjudicated to the spouse with whom
the majority of the common children choose to remain. Children
below the age of seven years are deemed to have chosen the
mother, unless the court has decided otherwise. In case there in
no such majority, the court shall decide, taking into consideration
the best interests of said children. (n)
Art. 103. Upon the termination of the marriage by death, the
community property shall be liquidated in the same proceeding
for the settlement of the estate of the deceased.
If no judicial settlement proceeding is instituted, the
surviving spouse shall liquidate the community property either
judicially or extra-judicially within six months from the death of
the deceased spouse. If upon the lapse of the six months period,
no liquidation is made, any disposition or encumbrance involving
the community property of the terminated marriage shall be
void.
Should the surviving spouse contract a subsequent
marriage without compliance with the foregoing requirements, a
mandatory regime of complete separation of property shall
govern the property relations of the subsequent marriage. (n)

Art. 129. Upon the dissolution of the conjugal partnership
regime, the following procedure shall apply:
(1) An inventory shall be prepared, listing separately all
the properties of the conjugal partnership and the exclusive
properties of each spouse.
(2) Amounts advanced by the conjugal partnership in
payment of personal debts and obligations of either spouse shall
be credited to the conjugal partnership as an asset thereof.
(3) Each spouse shall be reimbursed for the use of his or
her exclusive funds in the acquisition of property or for the value
of his or her exclusive property, the ownership of which has been
vested by law in the conjugal partnership.
(4) The debts and obligations of the conjugal
partnership shall be paid out of the conjugal assets. In case of
insufficiency of said assets, the spouses shall be solidarily liable
for the unpaid balance with their separate properties, in
accordance with the provisions of paragraph (2) of Article 121.
(5) Whatever remains of the exclusive properties of the
spouses shall thereafter be delivered to each of them.
(6) Unless the owner had been indemnified from
whatever source, the loss or deterioration of movables used for
the benefit of the family, belonging to either spouse, even due to
fortuitous event, shall be paid to said spouse from the conjugal
funds, if any.
(7) The net remainder of the conjugal partnership
properties shall constitute the profits, which shall be divided
equally between husband and wife, unless a different proportion
or division was agreed upon in the marriage settlements or unless
there has been a voluntary waiver or forfeiture of such share as
provided in this Code.
(8) The presumptive legitimes of the common children
shall be delivered upon the partition in accordance with Article 51.
(9) In the partition of the properties, the conjugal
dwelling and the lot on which it is situated shall, unless otherwise
agreed upon by the parties, be adjudicated to the spouse with
whom the majority of the common children choose to remain.
Children below the age of seven years are deemed to have
chosen the mother, unless the court has decided otherwise. In
case there is no such majority, the court shall decide, taking into
consideration the best interests of said children. (181a, 182a, 183a,
184a, 185a)

Art. 130. Upon the termination of the marriage by death, the
conjugal partnership property shall be liquidated in the same
proceeding for the settlement of the estate of the deceased.
If no judicial settlement proceeding is instituted, the
surviving spouse shall liquidate the conjugal partnership property
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either judicially or extra-judicially within six months from the
death of the deceased spouse. If upon the lapse of the six-month
period no liquidation is made, any disposition or encumbrance
involving the conjugal partnership property of the terminated
marriage shall be void.
Should the surviving spouse contract a subsequent
marriage without compliance with the foregoing requirements, a
mandatory regime of complete separation of property shall
govern the property relations of the subsequent marriage. (n)

Art. 131. Whenever the liquidation of the conjugal partnership
properties of two or more marriages contracted by the same
person before the effectivity of this Code is carried out
simultaneously, the respective capital, fruits and income of each
partnership shall be determined upon such proof as may be
considered according to the rules of evidence. In case of doubt as
to which partnership the existing properties belong, the same
shall be divided between the different partnerships in proportion
to the capital and duration of each. (189a)

Art. 132. The Rules of Court on the administration of estates of
deceased persons shall be observed in the appraisal and sale of
property of the conjugal partnership, and other matters which are
not expressly determined in this Chapter. (187a)

Art. 133. From the common mass of property support shall be
given to the surviving spouse and to the children during the
liquidation of the inventoried property and until what belongs to
them is delivered; but from this shall be deducted that amount
received for support which exceeds the fruits or rents pertaining
to them. (188a)

CASE NOTES

Heirs of Sy Bang v. Sy (2009)
A guardianship court cannot direct payment of the of the
widows allowance where settlement of estate proceedings
are pending in another court. The guardianship court had
limited jurisdiction. It cannot enforece payment of the
widows allowance ordered by the Supreme Court. It must
be recalled that the case in which the Court ordered the
payment of the widows allowance emanated from the estate
settlement proceedings still pending before the Lucena City
RTC.
Section 3, Rule 83 applies. The court referred to
this provision it the court hearing the settlement of the
estate.




XIII. GENERAL POWERS AND DUTIES OF
EXECUTORS AND ADMINISTRATORS

RULE 84. GENERAL POWERS AND DUTIES OF EXECUTORS
AND ADMINISTRATORS

SECTION 1. Executor or administrator to have access to
partnership books and property. How right enforced.The
executor or administrator of the estate of a deceased partner
shall at all times have access to, and may examine and take
copies of, books and papers relating to the partnership business,
and may examine and make invoices of the property belonging
to such partnership; and the surviving partner or partners, on
request, shall exhibit to him all such books, papers, and property
in their hands or control. On the written application of such
executor or administrator, the Court having jurisdiction of the
estate may order any such surviving partner or partners to freely
permit the exercise of the rights, and to exhibit the books, papers,
and property, as in this section provided, and may punish any
partner failing to do so for contempt.

SEC. 2. Executor or administrator to keep buildings in repair.
An executor or administrator shall maintain in tenantable repair
the houses and other structures and fences belonging to the
estate, and deliver the same in such repair to the heirs or devisees
when directed so to do by the court.

SEC. 3. Executor or administrator to retain whole estate to pay
debts, and to administer estate not willed.An executor or
administrator shall have the right to the possession and
management of the real as well as the personal estate of the
deceased so long as it is necessary for the payment of the debts
and the expenses of administration.

CASE NOTES

Jocson de Hilado v. Nava (1939)
The contract in question in this case, being a mere act of
administration, could validly be entered into by the
administratrix within her powers of administration, even
without the courts previous authority. And the court had no
power to annul or invalidate the contract in the intestate
proceedings wherein it had no jurisdiction over the person
of the lessee. A separate ordinary action is necessary to that
effect.

Estate of Ruiz v. Court of Appeals (1996)
The right of an executor/administrator to the possession
and management of the real and personal properties of the
decedent is not absolute and can only be exercised so long
as it is necessary for the payment of the debts and expenses
of administration (Section 3, Rule 84).
When Edmond movef for further release of funds
deposited with the Clerk of Court, he had been previously
granted amounts for the repair and maintenance expenses
on the properties of the estate, and payment of the real
estate taxes thereon. It was correct for the probate court to
require him to submit an accounting of the necessary
expenses for administration before releasing any further
money in his favor.

Silverio v. Court of Appeals (2009)
Until the estate is partitioned, each heir only has an inchoate
right to the properties of the estate, such that no heir may
lay claim to a particular property belonging to the estate.
The subject property is part of an estate and subject to
intestate proceedings before the courts. Section 2, Rule 84
states that the administrator may only deliver the properties
of the estate to the heirs upon order of the court.





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XIV. ACCOUNTABILITY AND COMPENSATION OF
EXECUTORS AND ADMINISTRATORS

RULE 85. ACCOUNTABILITY AND COMPENSATION OF
EXECUTORS AND ADMINISTRATORS

SECTION 1. Executor or administrator chargeable with all estate
and income.Except as otherwise expressly provided in the
following sections, every executor or administrator is chargeable
in his account with the whole of the estate of the deceased which
has come into his possession, at the value of the appraisement
contained in the inventory; with all the interest, profit, and
income of such estate; and with the proceeds of so much of the
estate as is sold by him, at the price at which it was sold.

SEC. 2. Not to profit by increase or lose by decrease in value.
No executor or administrator shall profit by the increase, or suffer
loss by the decrease or destruction, without his fault, of any part
of the estate. He must account for the excess when he sells any
part of the estate for more than the appraisement, and if any is
sold for less than the appraisement, he is not responsible for the
loss, if the sale has been justly made. If he settles any claim
against the estate for less than its nominal value, he is entitled to
charge in his account only the amount he actually paid on the
settlement.

SEC. 3. When not accountable for debts due estate.No
executor or administrator shall be accountable for debts due the
deceased which remain uncollected without his fault.

SEC. 4. Accountable for income from realty used by him.If the
executor or administrator uses or occupies any part of the real
estate himself, he shall account for it as may be agreed upon
between him and the parties interested, or adjusted by the court
with their assent; and if the parties do not agree upon the sum to
be allowed, the same may be ascertained by the court, whose
determination in this respect shall be final.

SEC. 5. Accountable if he neglects or delays to raise or pay
money.When an executor or administrator neglects or
unreasonably delays to raise money, by collecting the debts or
selling the real or personal estate of the deceased, or neglects to
pay over the money he has in his hands, and the value of the
estate is thereby lessened or unnecessary cost or interest
accrues, or the persons interested suffer loss, the same shall be
deemed waste and the damage sustained may be charged and
allowed against him in his account, and he shall be liable therefor
on his bond.

SEC. 6. When allowed money paid as costs.The amount paid
by an executor or administrator for costs awarded against him
shall be allowed in his administration account, unless it appears
that the action or proceeding in which the costs are taxed was
prosecuted or resisted without just cause, and not in good faith.

SEC. 7. What expenses and fees allowed executor or
administrator. Not to charge for services as attorney.
Compensation provided by will controls unless renounced.An
executor or administrator shall be allowed the necessary
expenses in the case, management, and settlement of the estate,
and for his services, four pesos per day for the time actually and
necessarily employed, or a commission upon the value of so
much of the estate as comes into his possession and is finally
disposed of by him in the payment of debts, expenses, legacies,
or distributive shares, or by delivery to heirs or devisees, of two
per centum of the first five thousand pesos of such value, one per
centum of so much of such value as exceeds five thousand pesos
and does not exceed thirty thousand pesos, one-half per centum
of so much of such value as exceeds thirty thousand pesos and
does not exceed one hundred thousand pesos, and one-quarter
per centum of so much of such value as exceeds one hundred
thousand pesos. But in any special case, where the estate is large,
and the settlement has been attended with great difficulty, and
has required a high degree of capacity on the part of the executor
or administrator, a greater sum may be allowed. If objection to
the fees allowed be taken, the allowance may be re-examined on
appeal.
If there are two or more executors or administrators,
the compensation shall be apportioned among them by the
court according to the services actually rendered by them
respectively.
When the executor or administrator is an attorney, he
shall not charge against the estate any professional fees for legal
services rendered by him.
When the deceased by will makes some other provision
for the compensation of his executor, that provision shall be a full
satisfaction for his services unless by a written instrument filed in
the court he renounces all claim to the compensation provided
by the will.

SEC. 8. When executor or administrator to render account.
Every executor or administrator shall render an account of his
administration within one (1) year from the time of receiving
letters testamentary or of administration, unless the court
otherwise directs because of extensions of time for presenting
claims against, or paying the debts of, the estate, or for disposing
of the estate; and he shall render such further accounts as the
court may require until the estate is wholly settled.

SEC. 9. Examinations on oath with respect to account .The
court may examine the executor or administrator upon oath with
respect to every matter relating to any account rendered by him,
and shall so examine him as to the correctness of his account
before the same is allowed, except when no objection is made to
the allowance of the account and its correctness is satisfactorily
established by competent proof. The heirs, legatees, distributees,
and creditors of the estate shall have the same privilege as the
executor or administrator of being examined on oath on any
matter relating to an administration account.

SEC. 10. Account to be settled on notice.Before the account of
an executor or administrator is allowed, notice shall be given to
persons interested of the time and place of examining and
allowing the same; and such notice may be given personally to
such persons interested or by advertisement in a newspaper or
newspapers, or both, as the court directs.

SEC. 11. Surety on bond may be party to accounting.Upon the.
settlement of the account of an executor or administrator, a
person liable as surety in respect to such account may, upon
application, be admitted as party to such accounting.

A. Improper charges

CASE NOTES

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Sison v. Teodoro (1957)
The ability to furnish a bond is in the nature of a
qualification for the office of administrator. The execution
and approval of a bond constitute a condition precedent to
the acceptance of the responsibilities of the trust.

Borja v. Borja (1957)
A counterclaim for moral damages demanded by an
administrator against the heirs for alleged utterances,
pleadings and actuations made in the course of the
proceedings is an extraneous matter to a testate or intestate
proceeding.

Uy Tioco v. Imperial (1928)
Attorneys fees for services rendered to the
administrator/executor for the execution of his trust is not
chargeable against the estate.

Rodriguez v. Ynza (1955)
Appeal from the orders of the Court of First Instance of Iloilo,
authorizing payment to Atty. Benjamin H. Tirol for
professional services. Appellant Jos Ynza objects to said
payment on the ground that Hugo P. Rodriguez, trustee of
the estate of the late Julia Ynza, being a member of the bar,
he had no need for the assistance of Atty. Tirol, and that at
any rate, the latter had rendered services, not to the estate of
Julia Ynza, but to Hugo Rodriguez in his individual
capacity. Held: The objection does not persuade. Rodriguez
was appointed trustee by reason of his qualifications as an
administrator and not as a lawyer. It appears that Rodriguez
was involved in eight cases, not in his private capacity, but
as trustee or administrator of the estate of Julia Ynza. It is
apparent therefore that as counsel for Rodriguez in said
cases, Atty. Tirol had rendered services for the benefit of the
estate of Julia Ynza, which obtained a favorable decision in
every one of said cases.


B. Accounting

CASE NOTES

Tumang v. Laguio (1980)
The lower court should have required Tumang to render an
accounting of the cash and stock dividends received after the
approval of her final accounts. In this case, further accounts
by the executrix appear to be in order in view of the fact that
the dividends sought for are not included in the final
accounts rendered by her. It appears that the interests of all
the parties will be better served and the conflict between
petitioners and respondent will be resolved if the accounting
is made. It has also been held that an
executor/administrator who receives assets of the estate
after he has filed an accounting should file a supplementary
account thereof, and may be compelled to do so, but that is
only with respect to matters occurring after the settlement
of final accounts that representatives will be compelled to
file supplementary accounts.

Punongbayan v. Punongbayan (2004)
The denial of Danilos petition to have Sotero render
accounting did not settle with finality the question of
Soteros liability therefore. The order is a mere interlocutory
order. Applying Section 8, Rule 85, the intestate court
denied the motion on the ground that it was premature
considering that Sotero has been co-administrator for only 1
day when it was filed. It denial in no way settled or forestall
future accountings by him which he is obliged to render 1
year from receipt of letters of administration.

Quasha v. LCN Construction Corporation (2008), supra




XV. CLAIMS AGAINST ESTATE

RULE 86. CLAIMS AGAINST ESTATE

SECTION 1. Notice to creditors to be issued by court.
Immediately after granting letters testamentary or of
administration, the court shall issue a notice requiring all persona
having money claims against the decedent to file them in the
office of the clerk of said court.

SEC. 2. Time within which claims shall be filed.In the notice
provided in the preceding section, the court shall state the time
for the filing of claims against the estate, which shall not be more
than twelve (12) nor less than six (6) months after the date of the
first publication of the notice. However, at any time before an
order of distribution is entered, on application of a creditor who
has failed to file his claim within the time previously limited, the
court may, for cause shown and on such terms as are equitable,
allow such claim to be filed within a time not exceeding one (1)
month.

SEC. 3. Publication of notice to creditors.Every executor or
administrator shall, immediately alter the notice to creditors is
issued, cause the same to be published three (3) weeks
successively in a newspaper of general circulation in the province,
and to be posted for the same period in four public places in the
province, and in two public places in the municipality where the
decedent last resided

SEC. 4. Filing copy of printed notice.Within ten (10) days after
the notice has been published and posted n accordance with the
preceding section, the executor or administrator shall file or
cause to be filed in the court a printed copy of the notice
accompanied with an affidavit setting forth the dates of the first
and last publication thereof and the name of the newspaper in
which the same is printed.

SEC. 5. Claims which must be filed under the notice. If not filed,
barred; exceptions.All claims for money against the decedent,
arising from contract, express or implied, whether the same be
due, not due, or contingent, all claims for funeral expenses and
expenses for the last sickness of the decedent, and judgment for
money against the decedent, must be filed within the time
limited in the notice; otherwise they are barred forever, except
that they may be set forth as counterclaims in any action that the
executor or administrator may bring against the claimants. Where
an executor or administrator commences an action, or
prosecutes an action already commenced by the deceased in his
lifetime, the debtor may set forth by answer the claims he has
against the decedent, instead of presenting them independently
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to the court as herein provided, and mutual claims may be set off
against each other in such action; and if final judgment is
rendered in favor of the defendant, the amount so determined
shall be considered the true balance against the estate, as though
the claim had been presented directly before the court in the
administration proceedings. Claims not yet due, or contingent,
may be approved at their present value.

SEC. 6. Solidary obligation of decedent.Where the obligation
of the decedent is solidary with another debtor, the claim shall be
filed against the decedent as if he were the only debtor, without
prejudice to the right of the estate to recover contribution from
the other debtor. In a joint obligation of the decedent, the claim
shall be confined to the portion belonging to him.

SEC. 7. Mortgage debt due from estate.A creditor holding a
claim against the deceased secured by mortgage or other
collateral security, may abandon the security and prosecute his
claim in the manner provided in this rule, and share in the general
distribution of the assets of the estate; or he may foreclose his
mortgage or realize upon his security, by action in court, making
the executor or administrator a party defendant, and if there is a
judgment for a deficiency, after the sale of the mortgaged
premises, or the property pledged, in the foreclosure or other
proceedings to realize upon the security, he may claim his
deficiency judgment in the manner provided in the preceding
section; or he may rely upon his mortgage or other security alone,
and foreclose the same at any time within the period of the
statute of limitations, and in that event he shall not be admitted
as a creditor, and shall receive no share in the distribution of the
other assets of the estate; but nothing herein contained shall
prohibit the executor or administrator from redeeming the
property mortgaged or pledged, by paying the debt for which it is
held as security, under the direction of the court, if the court shall
adjudge it to be for the best interest of the estate that such
redemption shall be made.

SEC. 8. Claim of executor or administrator against an estate.If
the executor or administrator has a claim against the estate he
represents, he shall give notice thereof, in writing, to the court,
and the court shall appoint a special administrator, who shall, in
the adjustment of such claim, have the same power and be
subject to the same liability as the general administrator or
executor in the settlement of other claims. The court may order
the executor or administrator to pay to the special administrator
necessary funds to defend such claim.

SEC. 9. How to file a claim. Contents thereof Notice to executor
or administrator.A claim may be filed by delivering the same
with the necessary vouchers to the clerk of court and by serving a
copy thereof on the executor or administrator. If the claim be
founded on a bond, bill, note, or any other instrument, the
original need not be filed, but a copy thereof with all
indorsements shall be attached to the claim and filed therewith.
On demand, however, of the executor or administrator, or by
order of the court or judge, the original shall be exhibited, unless
it be lost or destroyed, in which case the claimant must
accompany his claim with affidavit or affidavits containing a copy
or particular description of the instrument and stating its loss or
destruction. When the claim is due, it must be supported by
affidavit stating the amount justly due, that no payments have
been made thereon which are not credited, and that there are no
offsets to the same, to the knowledge of the affiant. If the claim
is not due, or is contingent, when filed, it must also be supported
by affidavit stating the particulars thereof. When the affidavit is
made by a person other than the claimant, he must set forth
therein the reason why it is not made by the claimant. The claim
once filed shall be attached to the record of the case in which the
letters testamentary or of administration were issued, although
the court, in its discretion, and as a matter of convenience, may
order all the claims to be collected in a separate folder.

SEC. 10. Answer of executor or administrator. Offsets.Within
fifteen (15) days after service of a copy of the claim on the
executor or administrator, he shall file his answer admitting or
denying the claim specifically, and setting forth the substance of
the matters which are relied upon to support the admission or
denial. If he has no knowledge sufficient to enable him to admit
or deny specifically, he shall state such want of knowledge. The
executor or administrator in his answer shall allege in offset any
claim which the decedent before death had against the claimant,
and his failure to do so shall bar the claim forever. A copy of the
answer shall be served by the executor or administrator on the
claimant. The court in its discretion may extend the time for filing
such answer.

SEC. 11. Disposition of admitted claim.Any claim admitted
entirely by the executor or administrator shall immediately be
submitted by the clerk to the court who may approve the same
without hearing; but the court, in its discretion, before approving
the claim, may order that known heirs, legatees, or devisees be
notified and heard. If upon hearing, an heir, legatee, or devisee
opposes the claim, the court may, in its discretion, allow him
fifteen (15) days to file an answer to the claim in the manner
prescribed in the preceding section.

SEC. 12. Trial of contested claim.Upon the filing of an answer to
a claim, or upon the expiration of the time for such filing, the
clerk of court shall set the claim for trial with notice to both
parties. The court may refer the claim to a commissioner.

SEC. 13. Judgment appealable.The judgment of the court
approving or disapproving a claim, shall be filed with the record
of the administration proceedings with notice to both parties, and
is appealable as in ordinary cases. A judgment against the
executor or administrator shall be that he pay, in due course of
administration, the amount ascertained to be due, and it shall not
create any lien upon the property of the estate, or give to the
judgment creditor any priority of payment.

SEC. 14. Costs.When the executor or administrator, in his
answer, admits and offers to pay part of a claim, and the claimant
refuses to accept the amount offered in satisfaction of his claim,
if he fails to obtain a more favorable judgment, he cannot recover
costs, but must pay to the executor or administrator costs from
the time of the offer. Where an action commenced against the
deceased for money has been discontinued and the claim
embraced therein presented as in this rule provided, the
prevailing party shall be allowed the costs of his action up to the
time of its discontinuance.

A. Notice and period See Sections 1 to 4, Rule 86 above.
Notice is jurisdictional.

CASE NOTES


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Santos v. Manarang (1914)
Section 689 of the Code of Civil Procedure provides that the
court shall allow such time as the circumstances of the case
require for the creditors to present their claims to the
committee for examination and allowance, but not, in the
first instance, more than 12 months or less than 6 months.
The court may extend the time as circumstances require, but
not so that the whole time should exceed 18 months.
Because of its comparative shortness as compared
with the ordinary statute of limitations, the statute of non-
claims does not have the finality of the ordinary statute of
limitations. The saving clause to Section 690 provides:
(1) The creditor who failed to present claim made the
claim within 6 months after the time previously
limited;
(2) If the committee fails to comply with the notice
requirement; and
(3) The application is made before the final settlement
of estates.
In which case, the court may renew the commission
and allow further time not exceeding 1 month.
The saving clause would only be operative if the
committee did not comply with the notice requirement. But
that is not the situation in this case. Thus, the bar of the
statute of non-claims is conclusive under these
circumstances like the bar of the ordinary statute of
limitations.

Tan Sen Guan v. Go Siu San (1924)
Section 693 requires the committee to report on the manner
in which notice was given to claimants. Facts relating to this
were provided, thus, with compliance with the notice
requirement, so Tan Sen Guan cannot escape the effect of
Section 695. His claim was barred.

Heirs of Ramon Pizarro v. Consolacion (1988)
The Court held that the lower court erred in dismissing the
claims out of time. The period must be 6 to 12 months from
the date of the publication of the notice thereof. This period
is mandatory.
However in this case the trial court set the period
for filing within 6 months from the date of the first
publication. This period was held to be too short.

Barredo v. Court of Appeals (1962)
The 1-month period under Section 2, Rule 87 does not
commence from the expiration of the original period for
filing claims. Citing Paulin v. Aquino, the Court held that the
1-month period begins from the order authorizing the filing
of claims. It does not mean that the extension of 1 month
stars from the expiration of the original period fixed by the
court.

Villanueva v. Philippine National Bank (1963)
In this case, the claim of the Philippine National Bank was
held to be a belated claim, hence not allowed. The period
fixed in the notice lapsed on 16 November 1951 and the
claim was filed on 20 July 1953 about a year and 8 months
late.
PNB claims not to have been informed. The Court
ruled that the petition for letters of administration and the
notice to creditors were duly published in the Manila Daily
Bulletin and in the Morning Times, respectively, which was
full compliance of the requirements of the Rules of Court.


B. Nature of claims See Sections 5 to 8.

CASE NOTES

Aguas v. Llemos (1962)
It is apparent that actions for damages caused by tortuous
conduct of a defendant survive the death of the latter. Under
Section 5, Rule 87 of the old Rules of Court, the actions that
are abated by death are (1) claims for funeral expenses and
those for the last sickness of the decedent; (2) judgments for
money; and (3) all claims for money against the decedent
arising from contact expressly or impliedly. None of these
includes the claim of the plaintiffs, for it is not enough that
the claim against the decedent be for money, but it must
arise from contract express or implied.
On the other hand, Section 1, Rule 88 enumerates
actions that survive a decedents executor/administrator: (1)
actions to recover real and personal property from the
estate; (2) actions to enforce a lien thereon; and (3) actions to
recover damages for injury to persons or property. This case
is one for damages under (3), it having been held that injury
to property is not limited to injuries to specific property,
but extends to other wrongs by which the personal estate is
injured or diminished.

Vera v. Fernandez (1979)
A perusal of Section 5, Rule 86 reveals no mention of claims
for monetary obligations created by law such as taxes which
are entirely of a different character from the claims
expressly enumerated therein. Therefore, the statute of non-
claims does not and cannot bar the Bureau of Internal
Revenue from claiming for unpaid tazes.

Gotamco v. Chang Seng (1924)
When the claim in this case was allowed, Tan Kim Hong
was only 12 years old, and that all other parties were
minors. He had no guardian.
There is no showing that the claim was ever
presented to the commissioners regarding the claim. Hence,
the commissioners had no authority to allow or reject the
claim.

Paredes v. Moya (1974)
A judgment for money against the decedent must be filed at
the time limited in the notice to creditors before the court
where the administration proceedings over the estate of
Kuntze is pending.

De Bautista v. De Guzman (1983)
Section 5, Rule 86 is mandatory. This is to protect the estate
of the deceased. Thus, when their claim was dismissed for
the first time, the Bautistas should have filed a claim in the
settlement proceedings over Rosendos estate. They slept on
their rights.




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Philippine National Bank v. Court of Appeals (2001)
Under Section 7, Rule 86 there are 3 alternative remedies
which a mortgagee of a deceased can avail satisfaction for
his claim against the estate:
(1) Waive the mortgage and claim the entire debt from
the estate of the mortgagor as an ordinary claim;
(2) Foreclose the mortgage judicially and prove any
deficiency as an ordinary claim;
(3) Rely on the mortgage exclusively, foreclosing the
same at any time before it is barred by prescription
without a right to file a claim for any deficiency.
By choosing to foreclose extrajudicially, PNB in effect
chose (3). It can therefore have no more claim for deficiency.


C. Procedure See Sections 9 to 14.

CASE NOTES

Ignacio v. Pampanga Bus Co. (1967)
It is correct to say that upon the demise of a decedent-
defendant in a civil action, said action does not survive and
such claim should be presented to the probate court for
allowance if death occurs before final judgment in the CFI.
But revival of civil action against the administrator is
tantamount to presentment, dispensing of presentation
requirements before the probate court.

Bachrach v. Icaragal (1939)
The remedies under Section 7, Rule 86 are alternative.

Soriano v. Parsons (1970)
The election by a creditor of any of the three options under
Section 7, Rule 86 is not jurisdictional. As long as no
positive forward step is taken, he his not precluded from
dropping the option already chosen and resorting to other
options available.

Manalansan v. Castaeda (1978)
The saving clause of Section 7, Rule 86 does not confer
jurisdiction upon the probate court, of limited jurisdiction,
to enforce a lien.

De los Reyes v. Court of First Instance (1930)
Under section 424 of the Code of Civil Procedure, an
attachment may be obtained at or after the commencement
of the plaintiff's "action." The word "action," as used in that
provision, includes a proceeding for the foreclosure of a
mortgage. This is of course directed primarily to the
property covered by the mortgage, but under section 260 of
the Code of Civil Procedure, the mortgage creditor is
entitled to judgment for any excess remaining due upon the
mortgage debt after the mortgaged property shall have been
sold; and this judgment for the balance due is entered upon
motion in the foreclosure proceeding itself. This fact, taken
in connection with the statement of the affidavit to the effect
that the mortgaged property was insufficient in value to
cover the indebtedness due to the plaintiff, made a case
where it was proper to grant an attachment upon the facts
stated.


XVI. ACTIONS BY AND AGAINST EXECUTORS
AND ADMINISTRATORS

RULE 87. ACTIONS BY AND AGAINST EXECUTORS AND
ADMINISTRATORS

SECTION 1. Actions which may and which may not be brought
against executor or administrator.No action upon a claim for
the recovery of money or debt or interest thereon shall be
commenced against the executor or administrator; but actions to
recover real or personal property, or an interest therein, from the
estate, or to enforce a lien thereon, and actions to recover
damages for an injury to person or property, real or personal,
may be commenced against him.

SEC. 2. Executor or administrator may bring or defend actions
which survive.For the recovery or protection of the property or
rights of the deceased, an executor or administrator may bring or
defend, in the right of the deceased, actions for causes which
survive.

SEC. 3. Heir may not sue until share assigned.When an
executor or administrator is appointed and assumes the trust, no
action to recover the title or possession of lands or for damages
done to such lands shall be maintained against him by an heir or
devisee until there is an order of the court assigning such lands to
such heir or devisee or until the time allowed for paying debts has
expired.

SEC. 4. Executor or administrator may compound with debtor.
With the approval of the court, an executor or administrator may
compound with the debtor of the deceased for a debt due, and
may give a discharge of such debt on receiving a just dividend of
the estate of the debtor.

SEC. 5. Mortgage due estate may be foreclosed.A mortgage
belonging to the estate of a deceased person, as mortgagee or
assignee of the right of a mortgagee, may be foreclosed by the
executor or administrator.

SEC. 6. Proceedings when property concealed, embezzled, or
fraudulently conveyed.If an executor or administrator, heir,
legatee, creditor, or other individual interested in the estate of the
deceased, complains to the court having jurisdiction of the estate
that a person is suspected of having concealed, embezzled, or
conveyed away any of the money, goods, or chattels of the
deceased, or that such person has in his possession or has
knowledge of any deed, conveyance, bond, contracts, or other
writing which contains evidence of or tends to disclose the right,
title, interest, or claim of the deceased to real or personal estate,
or the last will and testament of the deceased, the court may cite
such suspected person to appear before it and may examine him
on oath on the matter of such complaint; and if the person so
cited refuses to appear, or to answer on such examination such
interrogatories as are put to him, the court may punish him for
contempt, and may commit him to prison until he submits to the
order of the court. The interrogatories put to any such person,
and his answers thereto, shall be in writing and shall be filed in
the clerks office.

SEC. 7. Person entrusted with estate compelled to render
account.The court, on complaint of an executor or
administrator, may cite a person entrusted by an executor or
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administrator with any part of the estate of the deceased to
appear before it, and may require such person to render a full
account, on oath, of the money, goods, chattels, bonds, accounts,
or other papers belonging to such estate as came to his
possession in trust for such executor or administrator, and of his
proceedings thereon; and if the person so cited refuses to appear
to render such account, the court may punish him for contempt
as having disobeyed a lawful order of the court.

SEC. 8. Embezzlement before letters issued.If a person, before
the granting of letters testamentary or of administration on the
estate of the deceased, embezzles or alienates any of the
money, goods, chattels, or effect of such deceased, such person
shall be liable to an action in favor of the executor or
administrator of the estate for double the value of the property
sold, embezzled, or alienated, to be recovered for the benefit of
such estate.

SEC. 9. Property fraudulent conveyed by deceased may be
recovered. When executor or administrator must bring action.
When there is a deficiency of assets in the hands of an executor
or administrator for the payment of debts and expenses of
administration, and the deceased in his lifetime had conveyed
real or personal property, or a right or interest therein, or debt or
credit, with intent to defraud his creditors or to avoid any right
debt, or duty; or had so conveyed such property, right, interest,
debt, or creditors, and the subject of the attempted conveyance
would be liable to attachment by any of them in his lifetime, the
executor or administrator may commence and prosecute to final
judgment an action for the recovery of such property, right,
interest, debts, or credit for the benefit of the creditors; but he
shall not be bound to commence the action unless the creditors
making the application pay such part of the costs and expenses,
or give security therefor to the executor or administrator, as the
court deems equitable.

SEC. 10. When creditor may bring action. Lien for cost.When
there is such a deficiency of assets, and the deceased in his
lifetime had made or attempted such a conveyance, as is stated
in the last preceding section, and the executor and administrator
has not commenced the action therein provided for, any creditor
of the estate may, with the permission of the court, commence
and prosecute to final judgment, in the name of the executor or
administrator, a like action for the recovery of the subject of the
conveyance or attempted conveyance for the benefit of the
creditors. But the action shall not be commenced until the
creditor has filed in a court a bond executed to the executor or
administrator, in an amount approved by the judge, conditioned
to indemnify the executor or administrator against the costs and
expenses incurred by reason of such action. Such creditor shall
have a lien upon any judgment recovered by him in the action for
such costs and other expenses incurred therein as the court
deems equitable. Where the conveyance or attempted
conveyance has been made by the deceased in his lifetime in
favor of the executor or administrator, the action which a creditor
may bring shall be in the name of all the creditors, and
permission of the court and filing of bond as above prescribed,
are not necessary.

CASE NOTES
Romualdez v. Tiglao (1981)
The original judgment which was rendered in May 1960 has
become stale because of its non-execution after the lapse of 5
years under Section 6, Rule 39. Accordingly, it cannot be
presented against the estate of Felisa Tiglao unless it is first
revived by action. The purpose of the second suit is not to
make the estate of Felisa Tiglao pay the sums of money
adjudge in the first judgment byt merely to keep alive said
judgment.

Pascual v. Pascual (1942)
The old Section 1, Rule 86, on action fro the recovery or
protection of the property or rights of the deceased for
causes which may survive may be prosecuted or defended by
his administrator/executor. Upon the commencement of
settlement proceedings the heirs have no standing in court
except if the executor/administrator is unwilling or refuses
to act.

Velasquez v. George (1983)
Villanuevas contention that the exception to Section 3, Rule
87 is unavailing to Velasquez et al. is untenable because
Andres Muoz, the administrator, is the same person
charged by Velasquez et al. to have voted in the board of
directors without securing the proper authority from the
probate court to which he is accountable as administrator.

Valera v. Inserto (1987), supra

Rioferio v. Court of Appeals (2004)
Article 777 of the Civil Code governs. The rights of heirs
are transmitted at the death of the decedent. If there is no
administrator, the heirs cannot be expected to wait for the
appointment of an administrator, then wait further to see if
the administrator would care enough to file a suit to protect
the rights and interests of the decedent.




XVII. PAYMENTS OF THE DEBTS OF THE ESTATE

RULE 88. PAYMENT OF THE DEBTS OF THE STATE

SECTION 1. Debts paid in full if estate sufficient.If, after
hearing all the money claims against the estate, and after
ascertaining the amount of such claims, it appears that there are
sufficient assets to pay the debts, the executor or administrator
shall pay the same within the time limited for that purpose.

SEC. 2. Part of estate from which debt paid when provision
made by will.If the testator makes provision by his will, or
designates the estate to be appropriated for the payment of his
debts, the expenses of administration, or the family expenses,
they shall paid according to the provisions of the will; but if the
provision made by the will or the state appropriated, is not
sufficient for that purpose, such part of the state of the testator,
real or personal, as is not disposed of by will, if any, shall be
appropriated for that purpose.

SEC. 3. Personalty first chargeable for debts, then realty.The
personal estate of the deceased not disposed of by will shall be
first chargeable with the payment of debts and expenses; and if
said personal estate is not sufficient for that purpose, or its sale
would redound to the detriment of the participants of the estate,
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the whole of the real estate not disposed of by will, or so much
thereof as is necessary, may be sold, mortgaged, or otherwise
encumbered for that purpose by the executor or administrator,
after obtaining the authority of the court thereof. Any deficiency
shall be met by contributions in accordance with the provisions
of section 6 of this rule.

SEC. 4. Estate to be retained to meet contingent claims.If the
court is satisfied that a contingent claim duly filed is valid, it may
order the executor or administrator to retain in his hands
sufficient estate to pay such contingent claim when the same
becomes absolute, or, if the estate is insolvent, sufficient to pay a
portion equal to the dividend of the other creditors.

SEC. 5. How contingent claim becoming absolute in two years
allowed and paid. Action against distributes later.If such
contingent claim becomes absolute and is presented to the
court, or to the executor or administrator, within two (2) years
from the time limited for other creditors to present their claims, it
may be allowed by the court if not disputed by the executor or
administrator, and, if disputed, it may be proved and allowed or
disallowed by the court as facts may warrant. If the contingent
claim is allowed, the creditor shall receive payment to the same
extent as the other creditors if the estate retained by the
executor or administrator is sufficient. But if the claim is not so
presented, after having become absolute, within said two (2)
years, and allowed, the assets retained in the hands of the
executor or administrator, not exhausted in the payment of
claims, shall be distributed by the order of the court to the
persons entitled to the same; but the assets so distributed may
still be applied to the payment of the claim when established,
and the creditor may maintain an action against the distributees
to recover the debt, and such distributees and their estates shall
be liable for the debt in proportion to the estate they have
respectively received form the property of the deceased.

SEC. 6. Court to fix contributive shares where devisees,
legatees, or heirs have been in possession. Where devisees,
legatees, or heirs have entered into possession of portions of the
estate before the debts and expenses have been settled and
paid, and have become liable to contribute for the payment of
such debts and expenses, the court having jurisdiction of the
estate may, by order for that purpose, after hearing, settle the
amount of their several liabilities, and order how much and in
what manner each person shall contribute, and may issue
execution as circumstances require.

SEC. 7. Order of payment if estate insolvent. If the assets
which can be appropriated for the payment of debts are not
sufficient for that purpose, the executor or administrator shall
pay the debts against the estate, observing the provisions of
Articles 1059 and 2239 to 2251 of the Civil Code.

SEC. 8. Dividends to be paid in proportion to claims. If there
are no assets sufficient to pay the credits of any one class of
creditors after paying the credits entitled to preference over it,
each creditor within such class shall be paid a dividend in
proportion to his claim. No creditor of any one class shall
receive any payment until those of the preceding class are paid.

SEC. 9. Estate of insolvent nonresident, how disposed of. In
case administration is taken in the Philippines of the estate of a
person who was at the time of his death an inhabitant of another
country, and who died insolvent, his estate found in the
Philippines shall, as far as practicable, be so disposed of that his
creditors here and elsewhere may receive each an equal share,
in proportion to their respective credits.

SEC. 10. When and how claim proved outside the Philippines
against insolvent resident's estate paid. If it appears to the
court having jurisdiction that claims have been duly proven in
another country against the estate of an insolvent who was at the
time of his death an inhabitant of the Philippines, and that the
executor or administrator in the Philippines had knowledge of the
presentation of such claims in such country and an opportunity
to contest their allowance, the court shall receive a certified list of
such claims, when perfected in such country, and add the same
to the list of claims proved against the deceased person in the
Philippines so that a just distribution of the whole estate may be
made equally among all its creditors according to their respective
claims; but the benefit of this and the preceding sections shall
not be extended to the creditors in another country if the
property of such deceased person there found is not equally
apportioned to the creditors residing in the Philippines and the
other creditors, according to their respective claims.

SEC. 11. Order for payment of debts. Before the expiration of
the time limited for the payment of the debts, the court shall
order the payment thereof, and the distribution of the assets
received by the executor or administrator for that purpose
among the creditors, as the circumstances of the estate require
and in accordance with the provisions of this rule.

SEC. 12. Orders relating to payment of debts where appeal is
taken. If an appeal has been taken from a decision of the court
concerning a claim, the court may suspend the order for the
payment of the debts or may order the distribution among the
creditors whose claims are definitely allowed, leaving in the
hands of the executor or administrator sufficient assets to pay
the claim disputed and appealed. When a disputed claim is
finally settled the court having jurisdiction of the estate shall
order the same to be paid out of the assets retained to the same
extent and in the same proportion with the claims of other
creditors.

SEC. 13. When subsequent distribution of assets ordered. If
the whole of the debts are not paid on the first distribution, and if
the whole assets are not distributed, or other assets afterwards
come to the hands of the executor or administrator, the court
may from time to time make further orders for the distribution of
assets.

SEC. 14. Creditors to be paid in accordance with terms of order.
When an order is made for the distribution of assets among
the creditors, the executor or administrator shall, as soon as the
time of payment arrives, pay the creditors the amounts of their
claims, or the dividend thereon, in accordance with the terms of
such order.

SEC. 15. Time for paying debts and legacies fixed, or extended
after notice, within what periods. On granting letters
testamentary or administration the court shall allow to the
executor or administrator a time for disposing of the estate and
paying the debts and legacies of the deceased, which shall not, in
the first instance, exceed one (1) year; but the court may, on
application of the executor or administrator and after hearing on
such notice of the time and place therefor given to all persons
interested as it shall direct, extend the time as the circumstances
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of the estate require not exceeding six (6) months for a single
extension nor so that the whole period allowed to the original
executor or administrator shall exceed two (2) years.

SEC. 16. Successor of dead executor or administrator may have
time extended on notice within certain period. When an
executor or administrator dies, and a new administrator of the
same estate is appointed, the court may extend the time allowed
for the payment of the debts or legacies beyond the time
allowed to the original executor or administrator, not exceeding
six (6) months at a time and not exceeding six (6) months Beyond
the time which the court might have allowed to such original
executor or administrator; and notice shall be given of the time
and place for hearing such application, as required in the last
preceding section.




XVIII. SALES, MORTGAGES, ENCUMBRANCES

RULE 89. SALES, MORTGAGES, AND OTHER ENCUMBRANCES
OF PROPERTY OF DECEDENT

SECTION 1. Order of sale of personalty.Upon the application of
the executor or administrator, and on written notice to the heirs
and other persons interested, the court may order the whole or a
part of the personal estate to be sold, if it appears necessary for
the purpose of paying debts, expenses of administration, or
legacies, or for the preservation of the property.

SEC. 2. When court may authorize sale, mortgage, or other
encumbrance of realty to pay debts and legacies through
personalty not exhausted.When the personal estate of the
deceased is not sufficient to pay the debts, expenses of
administration, and legacies, or where the sale of such personal
estate may injure the business or other interests of those
interested in the estate, and where a testator has not otherwise
made sufficient provision for the payment of such debts,
expenses and legacies, the court, on the application of the
executor or administrator and on written notice to the heirs,
devisees, and legatees residing in the Philippines, may authorize
the executor or administrator to sell, mortgage, or otherwise
encumber so much as may be necessary of the real estate, in lieu
of personal estate, for the purpose of paying such debts,
expenses, and legacies, if it clearly appears that such sale,
mortgage, or encumbrance would be beneficial to the persons
interested; and if a part cannot be sold, mortgaged, or otherwise
encumbered without injury to those interested in the remainder,
the authority may be for the sale, mortgage, or other
encumbrance of the whole of such real estate, or so much
thereof as is necessary or beneficial under the circumstances.

SEC. 3. Persons interested may prevent such sale, etc., by giving
bond.No such authority to sell, mortgage, or otherwise
encumber real or personal estate shall be granted if any person
interested in the estate gives a bond, in a sum to be fixed by the
court, conditioned to pay the debts, expenses of administration,
and legacies within such time as the court directs; and such bond
shall be for the security of the creditors, as well as of the executor
or administrator, and may be prosecuted for the benefit of either.

SEC. 4. When court may authorize sale of estate as beneficial to
interested persons. Disposal of proceeds.When it appears that
the sale of the whole or a part of the real or personal estate, will
be beneficial to the heirs, devisees, legatees, and other interested
persons, the court may, upon application of the executor or
administrator and on written notice to the heirs, devisees, and
legatees who are interested in the estate to be sold, authorize the
executor or administrator to sell the whole or a part of said
estate, although not necessary to pay debts, legacies, or
expenses of administration; but such authority shall not be
granted if inconsistent with the provisions of a will. In case of
such sale, the proceeds shall be assigned to the persons entitled
to the estate in the proper proportions.

SEC. 5. When court may authorize sale, mortgage, or other
encumbrance of estate to pay debts and legacies in other
countries. When the sale of personal estate, or the sale,
mortgage, or other encumbrance of real estate is not necessary
to pay the debts, expenses of administration, or legacies in the
Philippines, but it appears from records of proceedings of a
probate court in another country that the estate of the deceased
in such other country is not sufficient to pay the debts, expenses
and administration, and legacies there, the court here may
authorize the executor or administrator to sell the personal estate
or to sell, mortgage, or otherwise encumber the real estate for
the payment of debts or legacies in the other country, in the
same manner as for the payment of debts or legacies in the
Philippines.

SEC. 6. When court may authorize sale, mortgage, or other
encumbrance of realty acquired on execution or foreclosure.
The court may authorize an executor or administrator to sell,
mortgage, or otherwise encumber real estate acquired by him on
execution or foreclosure sale, under the same circumstances and
under the same regulations as prescribed in this rule for the sale,
mortgage, or other encumbrance of other real estate.

SEC. 7. Regulations for granting authority to sell, mortgage, or
otherwise encumber estates.The court having jurisdiction of the
estate of the deceased may authorize the executor or
administrator to sell personal estate, or to sell, mortgage, or
otherwise encumber real estate, in cases provided by these rules
and when it appears necessary or beneficial, under the following
regulations:
(a) The executor or administrator shall file a written
petition setting forth the debts due from the deceased, the
expenses of administration, the legacies, the value of the
personal estate, the situation of the estate to be sold,
mortgaged, or otherwise encumbered, and such other facts as
show that the sale, mortgage, or other encumbrance is necessary
or beneficial;
(b) The court shall thereupon fix a time and place
for hearing such petition, and cause notice stating the nature of
the petition, the reason for the same, and the time and place
of hearing, to be given personally or by mail to the persons
interested, and may cause such further notice to be given, by
publication or otherwise, as it shall deem proper;
(c) If the court requires it, the executor or
administrator shall give an additional bond, in such sum as the
court directs, conditioned that such executor or administrator will
account for the proceeds of the sale, mortgage, or other
encumbrance;
(d) If the requirements in the preceding subdivisions
of this section have been complied with, the court, by order
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stating such compliance, may authorize the executor or
administrator to sell, mortgage, or otherwise encumber, in proper
cases, such part of the estate as is deemed necessary, and in case
of sale the court may authorize it to be public or private, as would
be most beneficial to all parties concerned. The executor or
administrator shall be furnished with a certified copy of such
order;
(e) If the estate is to be sold at auction, the mode of
giving notice of the time and place of the sale shall be governed
by the provisions concerning notice of execution sale;
(f) There shall be recorded in the registry of deeds of
the province in which the real estate thus sold,
mortgaged, or otherwise encumbered is situated, a certified
copy of the order of the court, together with the deed of the
executor or administrator for such real estate, which shall be as
valid as if the deed had been executed by the deceased in his
lifetime.

SEC. 8. When court may authorize conveyance of realty which
deceased contracted to convey. Notice. Effect of deed.Where
the deceased was in his lifetime under contract, binding in law, to
deed real property, or an interest therein, the court having
jurisdiction of the estate may, on application for that purpose,
authorize the executor or administrator to convey such property
according to such contract, or with such modifications as are
agreed upon by the parties and approved by the court; and if the
contract is to convey real property to the executor or
administrator, the clerk of the court shall execute the deed. The
deed executed by such executor, administrator, or clerk of court
shall be as effectual to convey the property as if executed by the
deceased in his lifetime; but no such conveyance shall be
authorized until notice of the application for that purpose has
been given personally or by mail to all persons interested, and
such further notice has been given, by publication or otherwise,
as the court deems proper; nor if the assets in the hands of the
executor or administrator will thereby be reduced so as to
prevent a creditor from receiving his full debt or diminish his
dividend.

SEC. 9. When court may authorize conveyance of lands which
deceased held in trust.Where the deceased in his lifetime held
real property in trust for another person, the court may, after
notice given as required in the last preceding section, authorize
the executor or administrator to deed such property to the
person, or his executor or administrator, for whose use and
benefit it was so held; and the court may order the execution of
such trust, whether created by deed or by law.

CASE NOTES

De la Cruz v. De la Cruz (1934)
The petition of the administrator in this case does not set
forth the value of the personal estate nor does it allege that
there is neither personal estate nor that if there be such its
sale would redound to the detriment of the interest of the
participants therein as mandated by Section 714 of the Code
of Civil Procedure. Notice by publication or personal notice
to the persons interested is still required by regulation no. 3
of Section 722.

Godoy v. Orellano (1921)
The sale in this case was not held to be valid. In the sale of
the property of an intestate estate for the benefit of heirs, it
is necessary to comply with Sections 717 to 718 and 722 of
the Code of Civil Procedure. Otherwise, the sale is void and
transfers no title to the vendee.

Manotok Realty v. Court of Appeals (1987)
Although the Rules of Court do not specifically state that
the sale of an immovable belonging to an estate in a special
proceeding should be made with court approval, this
authority is necessarily included in its capacity as a probate
court.

Rafols v. Barba (1982)
The lack of any indication on the documents that they were
served with copies of the same does not mean that they had
no notice thereof. Regularity in the performance of duties
must always be presumed.
The record reveals sufficient indicia that the Rafols
heirs were fully aware of the sale of the subject land in favor
of Barba. The Rafols heirs could not have been ignorant of
the fact that the estate of their late father was under
administration proceedings. When Montayre died, the new
administrator, Ricardo Rafols, one of the Rafols heirs, filed a
report expressly stating that the parcel of land in question
was sold to Barba for P18,000.

WT Construction v. Caete (2008)
9

The deed of sale in question is the sale of the property of the
estate to pay for taxes, a matter definitely within the power
of the probate/estate court to order. The power to enforce
obligations under the deed of sale of a property ordered sold
to pay debts of the estate is but a necessary incident of the
power of a probate/estate court to order and effect such sale
in the first place. Otherwise, they would not be able to
secure the proceeds to pay for the taxes and this would
defeat the purpose of the proceedings to settle the estate.

Pahamotang v. Philippine National Bank (2005)
A direct action to annul the assailed orders of an intestate
court is not necessary to nullify them. The trial court made
a factual finding that there was actually no compliance by
Agustin of the notice requirement under Rule 89, and as a
consequence, the rule is settled that when an order
authorizing the sale or encumbrance of real property was
issued by the testate court without previous notice to the
heirs, devisees and legatees as required by the Rules, it is
not only the contract itself which is null and void but also
the order of the court authorizing the same.




XIX. DISTRIBUTION AND PARTITION OF THE
ESTATE

RULE 90. DISTRIBUTION AND PARTITION OF THE ESTATE

SECTION 1. When order for distribution of residue made.
When the debts, funeral charges, and expenses of
administration, the allowance to the widow, and inheritance tax,
if any, chargeable to the estate in accordance with law, have been

9
Based on the digest of Jian Boller, C2013.
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paid, the court, on the application of the executor or
administrator, or of a person interested in the estate, and after
hearing upon notice, shall assign the residue of the estate to the
persons entitled to the same, naming them and the proportions,
or parts, to which each is entitled, and such persons may demand
and recover their respective shares from the executor or
administrator, or any other person having the same in his
possession. If there is a controversy before the court as to who
are the lawful heirs of the deceased person or as to the
distributive shares to which each person is entitled under the law,
the controversy shall be heard and decided as in ordinary cases.
No distribution shall be allowed until the payment of
the obligations above mentioned has been made or provided for,
unless the distributees, or any of them, give a bond, in a sum to
be fixed by the court, conditioned for the payment of said
obligations within such time as the court directs.

SEC. 2. Questions as to advancement to be determined.
Questions as to advancement made, or alleged to have been
made, by the deceased to any heir may be heard and determined
by the court having jurisdiction of the estate proceedings; and the
final order of the court thereon shall be binding on the person
raising the questions and on the heir.

SEC. 3. By whom expenses of partition paid.If at the time of
the distribution the executor or administrator has retained
sufficient effects in his hands which may lawfully be applied for
the expenses of partition of the properties distributed, such
expenses of partition may be paid by such executor or
administrator when it appears equitable to the court and not
inconsistent with the intention of the testator; otherwise, they
shall be paid by the parties in proportion to their respective
shares or interest in the premises, and the apportionment shall
be settled and allowed by the court, and, if any person interested
in the partition does not pay his proportion or share, the court
may issue an execution in the name of the executor or
administrator against the party not paying for the sum assessed.

SEC. 4. Recording the order of partition of estate.Certified
copies of final orders and judgments of the court relating to the
real estate or the partition thereof shall be recorded in the
registry of deeds of the province where the property is situated.

CASE NOTES

Dael v. Intermediate Appellate Court (1989)
The order for partial distribution of funds as advance
inheritance is valid. Said order is within the contemplation
of Section 2, Rule 109: notwithstanding a pending
controversy or appeal in proceedings to settle the estate of a
decedent, the court may permit that such part of the estate
as may not be affected by the controversy or appeal be
distributed among the heirs or legatees with compliance
with Rule 90, under which Section 1 requires the giving of a
bond.
The order is valid because it does not appear that
the estate has unpaid obligations under Rule 90 calling for
the posting of a bond.

Camia de Reyes v. Reyes de Ilano (1936)
There is nothing in the law that imposes upon the
executor/administrator the obligation to present a project of
partition for the distribution of the estate of a deceased
person. Section 753 of the Code of Civil Procedure
authorizes the court to assign the residue of the estate to
persons entitled to the same while Section 754 requires that
the order be issued on application of
executor/administrator/person interested.

Garcia v. Orozco (1978)
In this case, the formalities required by law were not
followed by Albina. Here the conjugal partnership of gains
of Epifanio and Albina consisted of numerous lots and
properties from Guinobatan, Albay and until a liquidation
and partition was made upon the death of Epifanio, no
particular lot or property can be said to appertain to Albina
or to the heirs of Epifanio. At the time of the sale, the rights
of the widow and the heirs were not yet fully vested in the
particular lot or property in specific metes and bounds.

Sanchez v. Court of Appeals (1997)
Article 2028 of the Civil Code defines a compromise
agreement as a "contract whereby the parties, by making
reciprocal concessions, avoid a litigation or put an end to
one already commenced." Being a consensual contract, it is
perfected upon meeting of the minds of the parties. Judicial
approval is not required for its perfection.
However, while denominated as a compromise
agreement, the document here in question is in effect a deed
of partition pursuant to Article 1082 of the Civil Code:
"Every act which is intended to put an end to indivision
among co-heirs and legatees or devisees is deemed to be a
partition although it should purport to be a sale, an
exchange, a compromise, or any other transaction." (Italics
mine). Be that as it may, it is significant that all the parties
herein had already consummated and availed themselves of
the benefits of their compromise. A compromise entered into
and carried out in good faith will not be discarded evene if
there was a mistake of law or fact because courts have not
power to relieve parties from obligations voluntarily
assumed simply because their contracts turned out to be
disastrous deals or unwise investments. Volenti non fit
injuria.
The petitioners argue that the administration
proceedings are not yet closed and terminated because there
no order of distribution of the estate pursuant to Rule 90 of
the Rules of Court. The Supreme Court disagreed, holding
that under Sec. 1, Rule 90, an order for the distribution of
the estate may be made when the "debts, funeral charges,
and expenses of administration, the allowance to the widow
and the inheritance tax, if any," had been paid. The record of
the case reveals that all the requirements in Rule 90 had
concurred in this case. The foregoing shows clearly that the
probate court had essentially finished said intestate
proceedings which, consequently, should be deemed closed
and terminated.

De Leon v. Court of Appeals (2002)
The order of inclusion is only an interlocutory order. The
Court of Appeals erred in considering the Order for
collation as final or binding upon heirs or third persons who
dispute the inclusion of certain properties in the intestate
estate of Nicolas.
Ramon Nicolas reliance on Section 2, Rule 90 of
the Rules of Court in support of his claim that the assailed
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order is final is not feasible. In the first place, it is not an
order of collation. It is just an order of inclusion in the
inventory.




PART THREE. ESCHEAT

RULE 91. ESCHEATS

SECTION 1. When and by whom petition filed.When a person
dies intestate, seized of real or personal property in the
Philippines, leaving no heir or person by law entitled to the same,
the Solicitor General or his representative in behalf of the
Republic of the Philippines, may file a petition in the Regional
Trial Court of the province where the deceased last resided or In
which he had estate, if he resided out of the Philippines, setting
forth the facts, and praying that the estate of the deceased be
declared escheated.

SEC. 2. Order for hearing.If the petition is sufficient in form and
substance, the court, by an order reciting the purpose of the
petition, shall fix a date and place for the hearing thereof, which
date shall be not more than six (6) months after the entry of the
order, and shall direct that a copy of the order be published
before the hearing at least once a week for six (6) successive
weeks in some newspaper of general circulation published in the
province, as the court shall deem best.

SEC. 3. Hearing and judgment.Upon satisfactory proof in open
court on the date fixed in the order that such order has been
published as directed and that the person died intestate, seized
of real or personal property in the Philippines, leaving no heir or
person entitled to the same, and no sufficient cause being shown
to the contrary, the court shall adjudge that the estate of the
deceased in the Philippines, after the payment of just debts and
charges, shall escheat; and shall, pursuant to law, assign the
personal estate to the municipality or city where he last resided
in the Philippines, and the real estate to the municipalities or
cities, respectively, in which the same is situated. If the deceased
never resided in the Philippines, the whole estate may be
assigned to the respective municipalities or cities where the same
is located. Such estate shall be for the benefit of public schools,
and public charitable institutions and centers in said
municipalities or cities.
The court, at the instance of an interested party, or on
its own motion, may order the establishment of a permanent
trust, so that only the income from the property shall be used.

SEC. 4. When and by whom claim to estate filed.If a devisee,
legatee, heir, widow, widower, or other person entitled to such
estate appears and files a claim thereto with the court within five
(5) years from the date of such judgment such person shall have
possession of and title to the same, or if sold, the municipality or
city shall be accountable to, him for the proceeds, after deducting
reasonable charges for the care of the estate; but a claim not
made within said time shall be forever barred.

SEC. 5. Other actions for escheat.Until otherwise provided by
law, actions for reversion or escheat of properties alienated in
violation of the Constitution or of any statute shall be governed
by this rule, except that the action shall be instituted in the
province where the land lies in whole or in part.

CASE NOTES

Municipal Council of San Pedro, Laguna v. Colegio de San
Jose (1937)
The essential facts should be alleged in the petition for
escheat because they are jurisdictional. Without them, the
court could not take cognizance of the petition.

In re Estate of Bernardo Rafanan Lao Sayco (1912)
From the record of these proceedings it does not appear tha
there was made, at the motion of the Municipality of
Mambajao, the hearing required by law under Section 750 of
the Code of Civil Procedure, for the record is not
accompanied by any certified copy of the inventory of the
real and personal property that belonged to the said
decedent, with a statement of the places where the realty is
located.
Neither is it shown to have ascertained whether
Rafanan left a will or if he left possible heirs. Also, notice
was only for three weeks, instead of six as mandated by the
law.





PART FOUR. GUARDIANSHIP

I. Of incompetents who are not minors

RULE 92. VENUE

Section 1. Where to institute proceedings. Guardianship of a
person or estate of a minor or incompetent may be instituted in
the (a) Court of First Instance of the province, (b) or in the justice
of the peace court of the municipality, (c) or in the municipal
court of the chartered city where the minor or incompetent
persons resides, and if he resides in a foreign country, in the
Court of First Instance of (d) the province wherein his property or
the party thereof is situated; provided, however, that where the
value of the property of such minor or incompetent exceeds that
jurisdiction of the justice of the peace or municipal court, the
proceedings shall be instituted in the Court of First Instance.
In the City of Manila the proceedings shall be instituted in the
Juvenile and Domestic Relations Court.

Section 2. Meaning of word "incompetent." Under this rule,
the word "incompetent" includes persons suffering the penalty
of (a) civil interdiction or who are (b) hospitalized lepers, (c)
prodigals, (d) deaf and dumb who are unable to read and write,
those who are of (e) unsound mind, even though they have lucid
intervals, and persons not being of unsound mind, but by reason
of age, disease, weak mind, and other similar causes, (f) cannot,
without outside aid, take care of themselves and manage their
property, becoming thereby an easy prey for deceit and
exploitation.

Section 3. Transfer of venue. The court taking cognizance of a
guardianship proceeding, may transfer the same to the court of
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another province or municipality wherein the ward has acquired
real property, if he has transferred thereto his bona-fide
residence, and the latter court shall have full jurisdiction to
continue the proceedings, without requiring payment of
additional court fees.

CASE NOTES

Parco v. Court of Appeals (1982)
In this case, the Supreme Court deemed it premature to rule
that Soledad Rodriguez has the right or title over the three
parcels of land in question. What is certain here is the fact
that the sale of the properties in question were duly
approved by Judge Kayanan in accordance with the
provisions on selling and encumbering of the property of the
ward under Rule 97 of the Rules of Court. The original
petition asked to cite Parco and Bautista in contempt; the
amended petition asked for reconveyance.
There being a cloud of doubt as to who has a better
right or title to the disputed properties, the determination
therefore of title or ownership of the three parcels of land in
dispute is a matter that lies beyond the jurisdiction of the
guardianship court which must be threshed out in a separate
ordinary action and not in a guardianship proceeding as held
in Cui v. Piccio.

Paciente v. Dacuycuy (1982)
The jurisdiction of guardianship courts, ordinarily, is to cite
persons suspected of having embezzled, concealed or
conveyed property belonging to the ward for the purpose of
obtaining information which may be used in action later to
be instituted by the guardian to protect the ward; only in
extreme cases may the court direct delivery to the ward.
However, the acts of the guardianship court
intended to effect the delivery or return of the property
conveyed are valid because the right or title of the two
minors to the property is clear and undisputable. They
inherited a part of the land in question from their father.
The sale of this land, where they are co-owners, by their
mother without the authority of the guardianship court is
illegal.

Garcia vda. de Chua v. Court of Appeals (1998)
Venue was improperly laid. Rule 92, Sec. 1 is clear on this
point.
The jurisdictional facts required in a petition for
issuance of letters of administration are: (1) the death of the
testator; (2) residence at the time of death; and (3) if
decedent was a non-resident, the fact of being the resident of
a foreign country.
Garcia was not able to prove her status as the
widow of Chua. She failed to produce marriage contract.
Garcias reliance in Gomez v. Imperial is misplaced.
In the Gomez case, the action before the lower court was
merely for guardianship. Therefore said court did not have
the jurisdiction to distribute the estate of the deceased. In
this case, the petition filed before the court was both for
guardianship and settlement of estate.




II. APPOINTMENT OF GUARDIANS

RULE 93. APPOINTMENT OF GUARDIANS

Section 1. Who may petition for appointment of guardian for
resident. Any relative, friend, or other person on behalf of a
resident minor or incompetent who has no parent or lawful
guardian, or the minor himself if fourteen years of age or over,
may petition the court having jurisdiction for the appointment of
a general guardian for the person or estate, or both, of such
minor or incompetent. An officer of the Federal Administration
of the United States in the Philippines may also file a petition in
favor of a ward thereof, and the Director of Health, in favor of an
insane person who should be hospitalized, or in favor of an
isolated leper.

Section 2. Contents of petition. A petition for the appointment
of a general guardian must show, so far as known to the
petitioner:
(a) The jurisdictional facts;
(b) The minority or incompetency rendering the
appointment necessary or convenient;
(c) The names, ages, and residence of the relatives of
the minor or incompetent, and of the person having him in their
care;
(d) The probable value and character of his estate;
(e) The name of the person for whom letters of
guardianship are prayed.
The petition shall be verified; but no defect in the
petition or verification shall render void the issuance of letters of
guardianship.

Section 3. Court to set time for hearing. Notice thereof. When
a petition for the appointment of a general guardian is filed, the
court shall fix a time and place for hearing the same, and shall
cause reasonable notice thereof to be given to the persons
mentioned in the petition residing in the province, including the
minor if above 14 years of age or the incompetent himself, and
may direct other general or special notice thereof to be given.

Section 4. Opposition to petition. Any interested person may,
by filing a written opposition, contest the petition on the ground
of majority of the alleged minor, competency of the alleged
incompetent, or the unsuitability of the person for whom letters
are prayed, and may pray that the petition be dismissed, or that
letters of guardianship issue to himself, or to any suitable person
named in the opposition.

Section 5. Hearing and order for letters to issue. At the hearing
of the petition the alleged incompetent must be present if able
to attend, and it must be shown that the required notice has
been given. Thereupon the courts shall hear the evidence of the
parties in support of their respective allegations, and, if the
person in question is a minor, or incompetent it shall be appoint a
suitable guardian of his person or estate, or both, with the powers
and duties hereinafter specified.

Section 6. When and how guardian for non-resident appointed.
Notice. When a person liable to be put under guardianship
resides without the Philippines but the estate therein, any relative
or friend of such person, or anyone interested in his estate, in
expectancy or otherwise, may petition a court having jurisdiction
for the appointment of a guardian for the estate, and if, after
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notice given to such person and in such manner as the court
deems proper, by publication or otherwise, and hearing, the court
is satisfied that such non-resident is a minor or incompetent
rendering a guardian necessary or convenient, it may appoint a
guardian for such estate.

Section 7. Parents as guardians. When the property of the
child under parental authority is worth two thousand pesos or
less, the father or the mother, without the necessity of court
appointment, shall be his legal guardian. When the property of
the child is worth more than two thousand pesos, the father or
the mother shall be considered guardian of the child's property,
with the duties and obligations of guardians under this rules, and
shall file the petition required by section 2 hereof. For good
reasons the court may, however, appoint another suitable
person.

Section 8. Service of judgment. Final orders or judgments
under this rule shall be served upon the civil registrar of the
municipality or city where the minor or incompetent person
resides or where his property or part thereof is situated.


FAMILY CODE

Art. 222. The courts may appoint a guardian of the child's
property or a guardian ad litem when the best interests of the
child so requires. (317)

Art. 223. The parents or, in their absence or incapacity, the
individual, entity or institution exercising parental authority, may
petition the proper court of the place where the child resides, for
an order providing for disciplinary measures over the child. The
child shall be entitled to the assistance of counsel, either of his
choice or appointed by the court, and a summary hearing shall be
conducted wherein the petitioner and the child shall be heard.
However, if in the same proceeding the court finds the
petitioner at fault, irrespective of the merits of the petition, or
when the circumstances so warrant, the court may also order the
deprivation or suspension of parental authority or adopt such
other measures as it may deem just and proper. (318a)

Art. 224. The measures referred to in the preceding article may
include the commitment of the child for not more than thirty
days in entities or institutions engaged in child care or in
children's homes duly accredited by the proper government
agency.
The parent exercising parental authority shall not
interfere with the care of the child whenever committed but shall
provide for his support. Upon proper petition or at its own
instance, the court may terminate the commitment of the child
whenever just and proper. (391a)

Art. 225. The father and the mother shall jointly exercise legal
guardianship over the property of the unemancipated common
child without the necessity of a court appointment. In case of
disagreement, the father's decision shall prevail, unless there is a
judicial order to the contrary.
Where the market value of the property or the annual
income of the child exceeds P50,000, the parent concerned
shall be required to furnish a bond in such amount as the court
may determine, but not less than ten per centum (10%) of the
value of the property or annual income, to guarantee the
performance of the obligations prescribed for general guardians.
A verified petition for approval of the bond shall be filed
in the proper court of the place where the child resides, or, if the
child resides in a foreign country, in the proper court of the place
where the property or any part thereof is situated.
The petition shall be docketed as a summary special
proceeding in which all incidents and issues regarding the
performance of the obligations referred to in the second
paragraph of this Article shall be heard and resolved.
The ordinary rules on guardianship shall be merely
suppletory except when the child is under substitute parental
authority, or the guardian is a stranger, or a parent has remarried,
in which case the ordinary rules on guardianship shall apply.
(320a)

Art. 226. The property of the unemancipated child earned or
acquired with his work or industry or by onerous or gratuitous title
shall belong to the child in ownership and shall be devoted
exclusively to the latter's support and education, unless the title
or transfer provides otherwise.
The right of the parents over the fruits and income of
the child's property shall be limited primarily to the child's
support and secondarily to the collective daily needs of the
family. (321a, 323a)

Art. 227. If the parents entrust the management or
administration of any of their properties to an unemancipated
child, the net proceeds of such property shall belong to the
owner. The child shall be given a reasonable monthly allowance
in an amount not less than that which the owner would have paid
if the administrator were a stranger, unless the owner, grants the
entire proceeds to the child. In any case, the proceeds thus give
in whole or in part shall not be charged to the child's legitime.
(322a)

CASE NOTES

Yangco v. Court of First Instance (1915)
In proceedings of this case notice as required by the statute
is jurisdictional and the lack of it deprives the court of the
power to make a valid decree in the premises. Section 559 of
the Code of Civil Procedure requires personal notice to the
alleged spendthrift when he is a resident of the Philippines.
The statute does not authorize substituted service
where the person for whose property the guardian is sought
to be appointed is a resident of a foreign country. Personal
notice being essential under the statute, the notice to Julia
Stanton de Regidor and Cristobal Regidor was immaterial.
To declare a person of full age to be incompetent to
manage his affairs and thereby deprive him of the possession
and of the right to manage and hold his property is a serious
thing. Thus, procedure must be strictly followed, and any
material departure therefrom, especially with respect to
notice, necessarily results in loss of jurisdiction.
Teodoro Yangco filed as a friend because he
thought that the petition for guardianship would prosper
under section 572 of the Code of Civil Procedure for
incompetents resident without the Philippines. Yet in this
case Luis Yangco did not reside without the Philippines.
He resided here and was temporarily absent for travel and
not for residence.

Guerrero v. Teran (1909)
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There is nothing in the law which requires the courts to
appoint residents only as administrators or guardians.
However, notwithstanding the fact that there are no
statutory requirements upon this question, the courts,
charged with the responsibilities of protecting the estates of
deceased persons, wards of the estate, etc., will find much
difficulty in complying with this duty by appointing
administrators and guardians who are not personally subject
to their jurisdiction. Therefore, the courts should not
consent to the appointment of administrators and guardians
who are not personally subject to the jurisdiction of
Philippine courts.
Nery v. Lorenzo (1972)
"Service of the notice upon the minor if above 14 years of
age or upon the incompetent, is jurisdictional. Without such
notice, the court acquires no jurisdiction to appoint a
guardian." The case cited by him in support of such view is
Yangco v. Court of First Instance, a 1915 decision. As was
therein made clear: "There is no need for interpretation or
construction of the word in the case before us. Its meaning is
so clear that interpretation and construction are
unnecessary. Where language is plain, subtle refinements
which tinge words so as to give them the color of a
particular judicial theory are not only unnecessary but
decidedly harmful.

Zafra-Sarte v. Court of Appeals (1970)
Mercader v. Wislizenus: The order declaring the
incompetency and appointing a guardian was good, until
reversed and set aside, and authorized the guardian, in
spite of the appeal, to do whatever was necessary under
the direction of the Court, to protect the property of the
incompetent.



III. BONDS OF GUARDIANS
RULE 94. BONDS OF GUARDIANS

Section 1. Bond to be given before issuance of letters. Amount.
Condition. Before a guardian appointed enters upon the
execution of his trust, or letters of guardianship issue, he shall
give a bond, in such sum as the court directs, conditioned as
follows:
(a) To make and return to the court, within three (3)
months, a true and complete inventory of all the estate, real and
personal, of his ward which shall come to his possession or
knowledge of any other person for him;
(b) To faithfully execute the duties of his trust, to
manage and dispose of the estate according to these rules for the
best interests of the ward, and to provide for the proper care,
custody, and education of the ward;
(c) To render a true and just account of all the estate of
the ward in his hands, and of all proceeds or interest derived
therefrom, and of the management and disposition of the same,
at the time designated by these rules and such other times as the
courts directs, and at the expiration of his trust to settle his
accounts with the court and deliver and pay over all the estate,
effects, and moneys remaining in his hands, or due from him on
such settlement, to the person lawfully entitled thereto;
(d) To perform all orders of the court by him to be
performed.

Section 2. When new bond may be required and old sureties
discharged. Whenever it is deemed necessary, the court may
require a new bond to be given by the guardian, and may
discharge the sureties on the old bond from further liability, after
due notice to interested persons, when no injury can result
therefrom to those interested in the estate.

Section 3. Bonds to be filed. Actions thereon. Every bond
given by a guardian shall be filed in the office of the clerk of the
court, and, in case of the breach of a condition thereof, may be
prosecuted in the same proceeding or in a separate action for the
use and benefit of the ward or of any other person legally
interested in the estate.



IV. SELLING AND ENCUMBERING PROPERTY OF
WARD
RULE 95. SELLING AND ENCUMBERING PROPERTY OF WARD

Section 1. Petition of guardian for leave to sell or encumber
estate. When the income of the estate under guardianship is
insufficient to maintain the ward and his family, or to maintain
and educate the ward when a minor, or when it appears that it is
for the benefit of the ward that his real estate or some part
thereof be sold, or mortgaged or otherwise encumbered, and the
proceeds thereof put out at interest, or invested in some
productive security, or in the improvement or security or other
real estate of the ward, the guardian may present a verified
petition to the court by which he was appointed setting forth
such facts, and praying that an order issue authorizing the sale or
encumbrance.

Section 2. Order to show cause thereupon. If it seems probable
that such sale or encumbrance is necessary, or would be
beneficial to the ward, the court shall make an order directing the
next of kin of the ward, and all persons interested in the estate, to
appear at a reasonable time and place therein specified to show
cause why the prayer of the petition should not be granted.

Section 3. Hearing on return of order. Costs. At the time and
place designated in the order to show cause, the court shall hear
the proofs and allegations of the petitioner and next of kin, and
other persons interested, together with their witnesses, and grant
and refuse the prayer of the petition as the best interest of the
ward require. The court shall make such order as to cost of the
hearing as may be just.

Section 4. Contents of order for sale or encumbrance, and how
long effective. Bond. If, after full examination, it appears that it
is necessary, or would be beneficial to the ward, to sell or
encumber the estate, or some portion of it, the court shall order
such sale or encumbrance and that the proceeds thereof be
expended for the maintenance of the ward and his family, or the
education of the ward, if a minor, or for the putting of the same
interest, or the investment of the same as the circumstances may
require. The order shall specify the causes why the sale or
encumbrance is necessary or beneficial, and may direct that
estate ordered sold be disposed of at either public or private sale,
subject to such conditions as to the time and manner of
payment, and security where a part of the payment is deferred as
in the discretion of the court are deemed most beneficial to the
ward. The original bond of the guardian shall stand as security for
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the proper appropriation of the proceeds of the sale, but the
judge may, if deemed expedient, require an additional bond as a
condition for the granting of the order of sale. No order of sale
granted in pursuance of this section shall continue in force more
than one (1) year after granting the same, without a sale being
had.

Section 5. Court may order investment of proceeds and direct
management of estate. The court may authorize and require
the guardian to invest the proceeds of sales or encumbrances,
and any other of his ward's money in his hands, in real estate or
otherwise, as shall be for the best interest of all concerned, and
may make such other orders for the management, investment,
and disposition of the estate and effects, as circumstances may
require.

CASE NOTES

Pardo de Tavera v. El Hogar Filipino (1956)
(1) Carmen contends that the probate court had no
jurisdiction because it failed to comply with the
requirements of section 569 of Act No. 190. She alleges that
the petition was not verified and that it did not set forth the
condition of the estate of the ward and the circumstances
upon which the petition was founded tending to show the
necessity of the sale. The court did not even direct the next
of kin of the ward and all persons interested in the estate to
appear before the judge, etc. Thus, Carmen contends the
order granting authority to her mother was issued without
jurisdiction. The Supreme Court ruled that lack of
verification is not a jurisdictional defect. Also, in the
guardians petition, it was alleged that the transfer of the
wards share in the property to the corporation then to be
organized would be to or for her benefit and she expected
that the construction of a new building would enhance the
value of her wards share in the property and increase her
income. That part of the section, requiring the probate court
to enter an order directing the next of kin to the ward and
all persons interested in the estate to appear before the court
at a time and place therein specified, was substantially
complied with, because the next kin to the ward was her
own guardian and mother and all persons interested in the
estate of the ward were her uncles and aunt who agreed to
make the transfer of their respective shares in the property
to the corporation, Tavera-Luna, Inc. Moreover, "next of
kin" are those whose relationship is such that they are
entitled to share in the estate as distributees. There were no
creditors to the ward's estate.
(2) Sec. 579 of Act No. 190 provides: No action for the
recovery of any estate sold by a guardian can be maintained
by the ward, or by any person claiming under him, unless it
is commenced within three years next after the termination
of the guardianship, or, when a legal disability to sue exists
by reason of minority or otherwise, at the time when the
cause of action accrues, within three years next after the
removal of such disability.





V. GENERAL POWERS AND DUTIES OF
GUARDIANS

RULE 96. GENERAL POWERS AND DUTIES OF GUARDIANS

Section 1. To what guardianship shall extend. A guardian
appointed shall have the care and custody of the person of his
ward, and the management of his estate, or the manangement of
the estate only, as the case may be. The guardian of the estate of
a non-resident shall have the management of all the estate of
the ward within the Philippines, and no court other than that in
which such guardian was appointed shall have jurisdiction over
the guardianship.

Section 2. Guardian to pay debts of ward. Every guardian must
pay the ward's just debts out of his personal estate and the
income of his real estate, if sufficient; if not, then out of his real
estate upon obtaining an order for the sale or encumbrance
thereof.

Section 3. Guardian to settle accounts, collect debts, and appear
in actions for ward. A guardian must settle all accounts of his
ward, and demand, sue for, and receive all debts due him, or
may, with the approval of the court, compound for the same and
give discharges to the debtor, on receiving a fair and just dividend
of the estate and effects; and he shall appear for and represent
his ward in all actions and special proceedings, unless another
person be appointed for that purpose.

Section 4. Estate to be managed frugally, and proceeds applied
to maintenance of ward. A guardian must manage the estate of
his ward frugally and without the waste, and apply the income
and profits thereof, so far as may be necessary, to the
comfortable and suitable maintenance of the ward and his
family, if there be any; and if such income and profits be
insufficient for that purpose, the guardian may sell or encumber
the real estate, upon being authorized by order so to do, and
apply to such of the proceeds as may be necessary to such
maintenance.

Section 5. Guardian may be authorized to join in partition
proceedings after hearing. The court may authorize the
guardian to join in an assent to a partition of real or personal
estate held by the ward jointly or in common with others, but
such authority shall only be granted after hearing, upon such
notice to relatives of the ward as the court may direct, and a
careful investigation as to the necessity and propriety of the
proposed action.

Section 6. Proceedings when the person suspected of
embezzling or concealing property of ward. Upon complaint
of the guardian or ward, or of any person having actual or
prospective interest in the estate of the ward as creditor, heir, or
otherwise, that anyone is suspected of having embezzled,
concealed, or conveyed away any money, goods, or interest, or a
written instrument, belonging to the ward or his estate, the court
may cite the suspected person to appear for examination
touching such money, goods, interest, or instrument, and make
such orders as will secure the estate against such embezzlement,
concealment or conveyance.

Section 7. Inventories and accounts of guardians, and
appraisement of estates. A guardian must render to the court
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an inventory of the estate of his ward within three (3) months
after his appointment, and annually after such appointment an
inventory and account, the rendition of any of which may be
compelled upon the application of an interested person. Such
inventories and accounts shall be sworn to by the guardian. All
the estate of the ward described in the first inventory shall be
appraised. In the appraisement the court may request the
assistance of one or more of the inheritance tax appraisers. And
whenever any property of the ward not included in an inventory
already rendered is discovered, or suceeded to, or acquired by
the ward, like proceedings shall be had for securing an inventory
and appraisement thereof within three (3) months after such
discovery, succession, or acquisition.

Section 8. When guardian's accounts presented for settlement.
Expenses and compensation allowed. Upon the expiration of a
year from the time of his appointment, and as often thereafter as
may be required, a guardian must present his account to the
court for settlement and allowance. In the settlement of the
account, the guardian, other than a parent, shall be allowed the
amount of his reasonable expenses incurred in the execution of
his trust and also such compensation for his services as the court
deems just, not exceeding fifteen per centum of the net income
of the ward.


CIVIL CODE

Article 736. Guardians and trustees cannot donate the property
entrusted to them.




VI. TERMINATION OF GUARDIANSHIP

RULE 97. TERMINATION OF GUARDIANSHIP

Section 1. Petition that competency of ward be adjudged, and
proceedings thereupon. A person who has been declared
incompetent for any reason, or his guardian, relative, or friend,
may petition the court to have his present competency judicially
determined. The petition shall be verified by oath, and shall state
that such person is then competent. Upon receiving the petition,
the court shall fix a time for hearing the questions raised thereby,
and cause reasonable notice thereof to be given to the guardian
of the person so declared incompetent, and to the ward. On the
trial, the guardian or relatives of the ward, and, in the discretion of
the court, any other person, may contest the right to the relief
demanded, and witnesses may be called and examined by the
parties or by the court on its own motion. If it be found that the
person is no longer incompetent, his competency shall be
adjudged and the guardianship shall cease.

Section 2. When the guardian removed or allowed to resign.
New appointment. When a (a) guardian becomes insane or
otherwise (b) incapable of discharging his trust or (c) unsuitable
therefor, or has (d) wasted or mismanaged the estate, or (e) failed
for thirty (30) days after it is due to render an account or make a
return, the court may, upon reasonable notice to the guardian,
remove him, and compel him to surrender the estate of the ward
to the person found to be lawfully entitled thereto. A guardian
may resign when it appears proper to allow the same; and upon
his resignation or removal the court may appoint another in his
place.

Section 3. Other termination of guardianship. The marriage or
voluntary emancipation of a minor ward terminates the
guardianship of the person of the ward, and shall enable the
minor to administer his property as though he were of age, but he
cannot borrow the money or alienate or encumber real property
without the consent of his father or mother, or guardian. He can
sue and be sued in court only with the assistance of his father,
mother or guardian. The guardian of any person may be
discharged by the court when it appears, upon the application of
the ward or otherwise, that the guardianship is no longer
necessary.

Section 4. Record to be kept by the justice of the peace or
municipal judge. When a justice of the peace or municipal
court takes cognizance of the proceedings in pursuance of the
provisions of these rules, the record of the proceedings shall be
kept as in the Court of First Instance.

Section 5. Service of judgment. Final orders of judgments
under this rule shall be served upon the civil registrar of the
municipality or city where the minor or incompetent person
resides or where his property or part thereof is situated.


FAMILY CODE

Art. 234. Emancipation takes place by the attainment of majority.
Unless otherwise provided, majority commences at the age of
twenty-one years.
Emancipation also takes place:
(1) By the marriage of the minor; or
(2) By the recording in the Civil Register of an
agreement in a public instrument executed by the parent
exercising parental authority and the minor at least eighteen
years of age. Such emancipation shall be irrevocable. (397a,
398a, 400a, 401a)

Art. 235. The provisions governing emancipation by recorded
agreement shall also apply to an orphan minor and the person
exercising parental authority but the agreement must be
approved by the court before it is recorded. (n)

Art. 236. Emancipation for any cause shall terminate parental
authority over the person and property of the child who shall
then be qualified and responsible for all acts of civil life. (412a)


Republic Act No. 6809 December 13, 1989
AN ACT LOWERING THE AGE OF MAJORITY FROM TWENTY-
ONE TO EIGHTEEN YEARS, AMENDING FOR THE PURPOSE
EXECUTIVE ORDER NUMBERED TWO HUNDRED NINE, AND
FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled::

Section 1. Article 234 of Executive Order No. 209, the Family
Code of the Philippines, is hereby amended to read as follows:

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"Art. 234. Emancipation takes place by the attainment of
majority. Unless otherwise provided, majority commences at the
age of eighteen years."

Section 2. Articles 235 and 237 of the same Code are hereby
repealed.

Section 3. Article 236 of the same Code is also hereby amended
to read as follows:

"Art. 236. Emancipation shall terminate parental authority over
the person and property of the child who shall then be qualified
and responsible for all acts of civil life, save the exceptions
established by existing laws in special cases.
"Contracting marriage shall require parental consent
until the age of twenty-one.
"Nothing in this Code shall be construed to derogate
from the duty or responsibility of parents and guardians for
children and wards below twenty-one years of age mentioned in
the second and third paragraphs of Article 2180 of the Civil
Code."

Section 4. Upon the effectivity of this Act, existing wills,
bequests, donations, grants, insurance policies and similar
instruments containing references and provisions favorable to
minors will not retroact to their prejudice.

Section 5. This Act shall take effect upon completion of its
publication in at least two (2) newspapers of general circulation.
Approved: December 13, 1989.

CASE NOTES

Crisostomo v. Endencia (1938)
In order that a court taking cognizance of the guardianship
of an incompetent may issue a valid order restoring him to
capacity it is necessary, under the rules, (1) that a verified
petition be presented by the incompetent, his guardian or
any relative of such person within the third degree, or any
friend of his; (2) that said petition should allege that the
incompetent has recovered his mental faculties or his legal
capacity, as the case may be; and that (3) upon receiving the
petition the court should set the same for hearing and notify
the guardian and the incompetent thereof. The rule does not
require notice of the hearing to any other person except the
guardian and the incompetent. The right given to Ramon to
appear in the hearing and present his objections to the
petition is not absolute in the sense that would entitle him to
personal notice thereof.

Vda. de Bengson v. Philippine National Bank (1961)
The grounds for which a guardian may be removed are
found in Section 2, Rule 98 of the Rules.
When a guardian becomes insane or otherwise
incapable of discharging his trust or unsuitable
therefor, or has wasted or mismanaged the estate, or
failed for thirty days after it is due to render an account
or make a return, the court may, upon reasonable notice to
the guardian, remove him, and compel him to surrender the
estate of the ward to the person found to be lawfully entitled
thereto.... (emphasis supplied).
Since the Rules enumerate the grounds for removal
of a guardian, a guardian cannot be legally removed from
office except for the causes therein mentioned. To the extent
that a court uses its discretion in appraising whether a
person is insuitable or incapable of discharging his trust, that
much it can be said that removal is discretionary. But the
discretion must be exercised within the law.
In this case, there was no legal ground upon which
the removal of the Philippine National Bank as guardian was
founded. Philippine National Bank was not show to have
become incapable of discharging its trust or was unsuitable
therefor, or that it had committed anything which the Rules
includes as grounds for removal.
That PNB has received commissions for its services
is no ground to remove it, especially since the Bank's
commission averages no more than P100.00 a year and is
offset by interest on the ward's deposit and the sum that the
son would probably have to disburse in bond premiums.
Neither is it sufficient to base removal on the
opinion that it would be more beneficial to the ward and
more convenient for the administration of the estate. A
guardian should not be removed except for the most cogent
reasons.
PNB may be asked to keep part of the moneys in its
La Union branch for purposes of convenience, however this
may be done without altering the guardianship.

In re guardianship of Inchausti (1920)
The notification of the ward required in section 562 of
the Code of Civil Procedure is not intended as a
personal service of process in the sense necessary to give
the court jurisdiction over the ward. It is, therefore, of no
moment that the person to be notified was living in a foreign
country and thus beyond the territorial jurisdiction of the
Manila court. Nor is the manner in which the court
procured service of the notice of any importance. It is
sufficient that the notice was given. The notification to
the ward is required merely as an assurance that the
individual chiefly concerned shall have cognizance of what is
being done. It at least gives him an opportunity to advise
the court in case action taken by the mover of the petition
was officious or unauthorized.
Propriety of order declaring ward of sound mind
>> violent access of dementia which manifested itself prior
to the original appointment of the guardian passed off after
Inchausti was taken away from Manila in 1915 and the same
extreme manifestations of derangement have not
reappeared. Furthermore, the evidence shows that at the
time the petition for his rehabilitation was heard, the ward
was in normal mental state and had been in this
condition for a period sufficiently long to justify the
belief that he is permanently restored.
The opposition to the termination of the
guardianship seems to be based chiefly on the fear,
entertained by his mother, that Inchausti, if placed in
control of the large property to which he is heir, will prove
to be a spendthrift. Even though this fear should be well-
founded, it affords no reason for maintaining a guardianship
which had its origin in his mental incapacity. Of course if he
is, or should hereafter prove to be, a spendthrift, proper
proceedings can be instituted to protect him from wasteful
proclivities.


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VII. GUARDIANSHIP OF MINORS

[A.M. No. 03-02-05-SC 2003-05-01]
RE: PROPOSED RULE ON GUARDIANSHIP OF MINORS

R E S O L U T I O N

Acting on the letter of the Chairman of the Committee on
Revision of the Rules of Court submitting for this Courts
consideration and approval the Proposed Rule on Guardianship
of Minors, the Court Resolved to APPROVE the same.

The Rule shall take effect on May 1, 2003 following its
publication in a newspaper of general circulation not later than
April 15, 2003.

April 1, 2003.

<>I>Davide, Jr. C.J., Bellosillo, Puno, Vitug, Mendoza, Panganiban,
Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio,
Austria-Martinez, Corona, Carpio-Moralez,Callejo Sr., Azcuna, JJ.,
concur

RULE ON GUARDIANSHIP OF MINORS

Section 1. Applicability of the Rule. This Rule shall apply to
petitions for guardianship over the person or property, or both, of
a minor.
The father and the mother shall jointly exercise legal
guardianship over the person and property of their
unemancipated common child without the necessity of a court
appointment. In such case, this Rule shall be suppletory to the
provisions of the Family Code on guardianship.

Sec. 2. Who may petition for appointment of guardian.
On grounds authorized by law, any relative or other person on
behalf of a minor, or the minor himself if fourteen years of age or
over, may petition the Family Court for the appointment of a
general guardian over the person or property, or both, of such
minor. The petition may also be filed by the Secretary of Social
Welfare and Development and by the Secretary of Health in the
case of an insane minor who needs to be hospitalized.

Sec. 3. Where to file petition. A petition for
guardianship over the person or property, or both, of a minor
may be filed in the Family Court of the province or city where the
minor actually resides. If he resides in a foreign country, the
petition shall be flied with the Family Court of the province or city
where his property or any part thereof is situated.

Sec. 4. Grounds of petition.-The grounds for the
appointment of a guardian over the person or property, or both,
of a minor are the following:
(a) death, continued absence, or incapacity of his
parents;
(b) suspension, deprivation or termination of parental
authority;
(c) remarriage of his surviving parent, if the latter Is
found unsuitable to exercise parental authority; or
(d) when the best interests of the minor so require.

Sec. 5. Qualifications of guardians. In appointing a guardian,
the court shall consider the guardians:
(a) moral character;
(b) physical, mental and psychological condition;
(c) financial status;
(d) relationship of trust with the minor;
(e) availability to exercise the powers and duties of a
guardian for the full period of the guardianship;
(f) lack of conflict of interest with the minor; and
(g) ability to manage the property of the minor.

Sec. 6. Who may be appointed guardian of the person or
property, or both, of a minor. In default of parents or a court-
appointed guardian, the court may appoint a guardian of the
person or property, or both, of a minor, observing as far as
practicable, the following order of preference:
(a) the surviving grandparent and In case several
grandparents survive, the court shall select any of them taking
Into account all relevant considerations;
(b) the oldest brother or sister of the minor over
twenty-one years of age, unless unfit or disqualified;
(c) the actual custodian of the minor over twenty-one
years of age, unless unfit or disqualified; and
(d) any other person, who in the sound discretion of the
court, would serve the best interests of the minor.

Sec. 7. Contents of petition. A petition for the appointment of a
general guardian must allege the following:
(a) The jurisdictional facts;
(b) The name, age and residence of the prospective
ward;
(c) The ground rendering the appointment necessary or
convenient;
(d) The death of the parents of the minor or the
termination, deprivation or suspension of their parental authority;
(e) The remarriage of the minors surviving parent;
(f) The names, ages, and residences of relatives within
the 4th civil degree of the minor, and of persons having him in
their care and custody;
(g) The probable value, character and location of the
property of the minor; and
(h) The name, age and residence of the person for
whom letters of guardianship are prayed.
The petition shall be verified and accompanied by a
certification against forum shopping. However, no defect in the
petition or verification shall render void the issuance of letters of
guardianship.

Sec. 8. Time and notice of hearing. When a petition for the
appointment of a general guardian is filed, the court shall fix a
time and place for its hearing, and shall cause reasonable notice
to be given to the persons mentioned in the petition, including
the minor if he is fourteen years of age or over, and may direct
other general or special notice to be given.

Sec. 9. Case study report. The court shall order a social worker
to conduct a case study of the minor and all the prospective
guardians and submit his report and recommendation to the
court for its guidance before the scheduled hearing. The social
worker may intervene on behalf of the minor if he finds that the
petition for guardianship should be denied.

Sec. 10. Opposition to petition. Any interested person may
contest the petition by filing a written opposition based on such
grounds as the majority of the minor or the unsuitability of the
person for whom letters are prayed, and pray that the petition be
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denied, or that letters of guardianship issue to himself, or to any
suitable person named in the opposition.
Sec. 11. Hearing and order for letters to issue. At the hearing of
the petition, it must be shown that the requirement of notice has
been complied with. The prospective ward shall be presented to
the court. The court shall hear the evidence of the parties in
support of their respective allegations. If warranted, the court
shall appoint a suitable guardian of the person or property, or
both, of the minor.
At the discretion of the court, the hearing on
guardianship may be closed to the public and the records of the
case shall not be released without its approval.

Sec. 12. When and how a guardian of the property for non-
resident minor is appointed; notice. When the minor resides
outside the Philippines but has property in the Philippines, any
relative or friend of such minor, or any one interested in his
property, in expectancy or otherwise, may petition the Family
Court for the appointment of a guardian over the property.
Notice of hearing of the petition shall be given to the
minor by publication or any other means as the court may deem
proper. The court may dispense with the presence of the non-
resident minor.
If after hearing the court is satisfied that such non-
resident is a minor and a guardian is necessary or convenient, it
may appoint a guardian over his property.

Sec. 13. Service of final and executory judgment or order. The
final and executory judgment or order shall be served upon the
Local Civil Registrar of the municipality or city where the minor
resides and the Register of Deeds of the place where his property
or part thereof is situated shall annotate the same in the
corresponding title, and report to the court his compliance within
fifteen days from receipt of the order.

Sec. 14. Bond of guardian; amount; conditions.-Before he enters
upon the execution of his trust, or letters of guardianship issue, an
appointed guardian may be required to post a bond in such sum
as the court shall determine and conditioned as follows:
(a) To make and return to the court, within three
months after the issuance of his letters of guardianship, a true
and complete Inventory of all the property, real and personal, of
his ward which shall come to his possession or knowledge or to
the possession or knowledge of any other person in his behalf;
(b) To faithfully execute the duties of his trust, to
manage and dispose of the property according to this rule for the
best interests of the ward, and to provide for his proper care,
custody and education;
(c) To render a true and Just account of all the property
of the ward in his hands, and of all proceeds or interest derived
therefrom, and of the management and disposition of the same,
at the time designated by this rule and such other times as the
court directs; and at the expiration of his trust, to settle his
accounts with the court and deliver and pay over all the property,
effects, and monies remaining in his hands, or due from him on
such settlement, to the person lawfully entitled thereto; and
(d) To perform all orders of the court and such other
duties as may be required by law.

Sec. 15. Where to file the bond; action thereon. The bond
posted by a guardian shall be filed in the Family Court and, In
case of breach of any of its conditions, the guardian may be
prosecuted in the same proceeding for the benefit of the ward or
of any other person legally interested in the property.
Whenever necessary, the court may require the
guardian to post a new bond and may discharge from further
liability the sureties on the old bond after due notice to
interested persons, if no injury may result therefrom to those
interested in the property.

Sec. 16. Bond of parents as guardians of property of minor. lf
the market value of the property or the annual Income of the
child exceeds P50,000.00, the parent concerned shall furnish a
bond In such amount as the court may determine, but in no case
less than ten per centurn of the value of such property or annual
income, to guarantee the performance of the obligations
prescribed for general guardians.
A verified petition for approval of the bond shall be flied
in the Family Court of the place where the child resides or, if the
child resides in a foreign country, in the Family Court of the place
where the property or any part thereof is situated.
The petition shall be docketed as a summary special
proceeding In which all incidents and issues regarding the
performance of the obligations of a general guardian shall be
heard and resolved.

Sec. 17. General duties of guardian. A guardian shall have the
care and custody of the person of his ward and the management
of his property, or only the management of his property. The
guardian of the property of a nonresident minor shall have the
management of all his property within the Philippines.

A guardian shall perform the following duties:
(a) To pay the just debts of the ward out of the personal
property and the income of the real property of the ward, If the
same is sufficient; otherwise, out of the real property of the ward
upon obtaining an order for its sale or encumbrance;
(b) To settle all accounts of his ward, and demand, sue
for, receive all debts due him, or may, with the approval of the
court, compound for the same and give discharges to the debtor
on receiving a fair and just dividend of the property and effects;
and to appear for and represent the ward in all actions and
special proceedings, unless another person is appointed for that
purpose;
(c) To manage the property of the ward frugally and
without waste, and apply the income and profits thereon, insofar
as may be necessary, to the comfortable and suitable
maintenance of the ward; and if such income and profits be
insufficient for that purpose, to sell or encumber the real or
personal property, upon being authorized by the court to do so;
(d) To consent to a partition of real or personal property
owned by the ward jointly or in common with others upon
authority granted by the court after hearing, notice to relatives of
the ward, and a careful investigation as to the necessity and
propriety of the proposed action;
(e) To submit to the court a verified inventory of the
property of his ward within three months after his appointment,
and annually thereafter, the rendition of which may be required
upon the application of an interested person;
(f) To report to the court any property of the ward not
included in the inventory which is discovered, or succeeded to, or
acquired by the ward within three months after such discovery,
succession, or acquisition; and
(g) To render to the court for its approval an accounting
of the property one year from his appointment, and every year
thereafter or as often as may be required.

Sec. 18. Power and duty of the court The court may:
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(a) Request the assistance of one or more
commissioners in the appraisal of the property of the ward
reported in the initial and subsequent inventories;
(b) Authorize reimbursement to the guardian, other
than a parent, of reasonable expenses incurred in the execution
of his trust, and allow payment of compensation for his services
as the court may deem just, not exceeding ten per centum of the
net income of the ward, if any; otherwise, in such amount the
court determines to be a reasonable compensation for his
services; and
(c) Upon complaint of the guardian or ward, or of any
person having actual or prospective interest in the property at the
ward, require any person suspected of having embezzled,
concealed, or disposed of any money, goods or interest, or a
written instrument belonging to the ward or his property to
appear for examination concerning any thereof and issue such
orders as would secure the property against such embezzlement,
concealment or conveyance.

Sec. 19. Petition to sell or encumber property.-When the
income of a property under guardianship is insufficient to
maintain and educate the ward, or when it is for his benefit that
his personal or real property or any part thereof be sold,
mortgaged or otherwise encumbered, and the proceeds invested
in safe and productive security, or in the improvement or security
of other real property, the guardian may file a verified petition
setting forth such facts, and praying that an order issue
authorizing the sale or encumbrance of the property.

Sec. 20. Order to show cause. If the sale or encumbrance is
necessary or would be beneficial to the ward, the court shall
order his next of kin and all person/s interested in the property to
appear at a reasonable time and place therein specified and show
cause why the petition should not be granted.

Sec. 21. Hearing on return of order; costs. At the time and
place designated in the order to show cause, the court shall hear
the allegations and evidence of the petitioner and next of kin,
and other persons interested, together with their witnesses, and
grant or deny the petition as the best interests of the ward may
require.

Sec. 22. Contents of order for sale or encumbrance and its
duration; bond. If, after full examination, it is necessary, or
would be beneficial to the ward, to sell or encumber the
property, or some portion of it, the court shall order such sale or
encumbrance the proceeds of which shall be expended for the
maintenance or the education of the ward, or invested as the
circumstances may require. The order shall specify the grounds
for the sale or encumbrance and may direct that the property
ordered sold be disposed of at public sale, subject to such
conditions as to the time and manner of payment, and security
where a part of the payment is deferred. The original bond of the
guardian shall stand as security for the proper appropriation of
the proceeds of the sale or encumbrance, but the court may, if
deemed expedient, require an additional bond as a condition for
the sale or encumbrance. The authority to sell or encumber shall
not extend beyond one year, unless renewed by the court.

Sec. 23. Court may order investment of proceeds and direct
management of property. The court may authorize and require
the guardian to invest the proceeds of sales or encumbrances,
and any other money of his ward in his hands, in real or personal
property, for the best interests of the ward, and may make such
other orders for the management, investment, and disposition of
the property and effects, as circumstances may warrant.

Sec. 24. Grounds for removal or resignation of guardian. When
a guardian becomes insane or otherwise incapable of discharging
his trust or is found thereafter to be unsuitable, or has wasted or
mismanaged the property of the ward, or has failed to render an
account or make a return for thirty days after it is due, the court
may, upon reasonable notice to the guardian, remove him as
such and require him to surrender the property of the ward to the
person found to be lawfully entitled thereto.
The court may allow the guardian to resign for
justifiable causes.
Upon the removal or resignation of the guardian, the
court shall appoint a new one.
No motion for removal or resignation shall be granted
unless the guardian has submitted the proper accounting of the
property of the ward and the court has approved the same.

Sec. 25. Ground for termination of guardianship. The court
motu proprio or upon verified motion of any person allowed to
file a petition for guardianship may terminate the guardianship on
the ground that the ward has come of age or has died. The
guardian shall notify the court of such fact within ten days of its
occurrence.

Sec. 26. Service of final and executory judgment or order. The
final and executory judgment or order shall be served upon the
Local Civil Registrar of the municipality or city where the minor
resides and the Register of Deeds of the province or city where
his property or any part thereof is situated. Both the Local Civil
Registrar and the Register of Deeds shall enter the final and
executory judgment or order in the appropriate books in their
offices.

Sec. 27. Effect of the rule. This Rule amends Rules 92 to 97
inclusive of the Rules of Court on guardianship of minors.
Guardianship of incompetents who are not minors shall continue
to be under the jurisdiction of the regular courts and governed by
the Rules of Court.

Sec. 28. Effectivity. - This Rule shall take effect on May 1, 2003
following its publication in a newspaper of general circulation not
later than April 15, 2003.




PART FIVE. TRUSTEESHIP

RULE 98. TRUSTEES

SECTION 1. Where trustee appointed.A trustee necessary to
carry into effect the provisions of a will or written instrument
shall be appointed by the Regional Trial Court in which the will
was allowed, if it be a will allowed in the Philippines, otherwise by
the Regional Trial Court of the province in which the property, or
some portion thereof, affected by the trust is situated.

SEC. 2. Appointment and powers of trustee under will. Executor
of former trustee need not administer trust.If a testator has
omitted in his will to appoint a trustee in the Philippines, and if
such appointment is necessary to carry into effect the provisions
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of the will, the proper Regional Trial Court may, after notice to all
persons interested, appoint a trustee who shall have the same
rights, powers, and duties, and in whom the estate shall vest, as if
he had been appointed by the testator. No person succeeding to
a trust as executor or administrator of a former trustee shall be
required to accept such trust.

SEC. 3. Appointment and powers of new trustee under written
instrument.When a trustee under a written instrument declines,
resigns, dies, or is removed before the objects of the trust are
accomplished, and no adequate provision is made in such
instrument for supplying the vacancy, the proper Regional Trial
Court may, after due notice to all persons interested, appoint a
new trustee to act alone or jointly with the others, as the case
may be. Such new trustee shall have and exercise the same
powers, rights, and duties as if he had been originally appointed,
and the trust estate shall vest in him in like manner as it had
vested or would have vested, in the trustee in whose place he is
substituted; and the court may order such conveyance to be
made by the former trustee or his representatives, or by the
other remaining trustees, as may be necessary or proper to vest
the trust estate in the new trustee, either alone or jointly with the
others.

SEC. 4. Proceedings where trustee- appointed abroad. When
land in the Philippines is held in trust for persons resident here by
a trustee who derives his authority from without the Philippines,
such trustee shall, on petition filed in the Regional Trial Court of
the province where the land is situated, and after due notice to all
persons interested, be ordered to apply to the court for
appointment as trustee; and upon his neglect or refusal to
comply with such order, the court shall declare such trust vacant,
and shall appoint a new trustee in whom the trust estate shall
vest in like manner as if he had been originally appointed by such
court.

SEC. 5. Trustee must file bond.Before entering on the duties of
his trust, a trustee shall file with the clerk of the court having
jurisdiction of the trust a bond in the amount fixed by the judge
of said court, payable to the Government of the Philippines and
sufficient and available for the protection of any party in interest,
and a trustee who neglects to file such bond shall be considered
to have declined or resigned the trust; but the court may, until
further order exempt a trustee under a will from giving a bond
when the testator has directed or requested such exemption, and
may so exempt any trustee when all persons beneficially
interested in the trust, being of full age, request the exemption.
Such exemption may be cancelled by the court at any time, and
the trustee required to forthwith file a bond.

SEC. 6. Conditions included in bond.The following conditions
shall be deemed to be a part of the bond whether written therein
or not:
(a) That the trustee will make and return to the court,
at such time as it may order, a true inventory of all the real and
personal estate belonging to him as trustee, which at the time of
the making of such inventory shall have come to his possession
or knowledge;
(b) That he will manage and dispose of all such estate,
and faithfully discharge his trust in relation thereto, according to
law and the will of the testator or the provisions of the
instrument or order under which he is appointed;
(c) That he will render upon oath at least once a year
until his trust is fulfilled, unless he is excused therefrom in any
year by the court, a true account of the property in his hands and
of the management and disposition thereof, and will render such
other accounts as the court may order;
(d) That at the expiration of his trust he will settle his
accounts in court and pay over and deliver all the estate
remaining in his hands, or due from him on such settlement, to
the person or persons entitled thereto.
But when the trustee is appointed as a successor to a
prior trustee, the court may dispense with the making and return
of an inventory, if one has already been filed, and in such case
the condition of the bond shall be deemed to be altered
accordingly.

SEC. 7. Appraisal. Compensation of trustee.When an inventory
is required to be returned by a trustee, the estate and effects
belonging to the trust shall be appraised and the court may order
one or more inheritance tax appraisers to assist in the
appraisement. The compensation of the trustee shall be fixed by
the court, if it be not determined in the instrument creating the
trust.

SEC. 8. Removal or resignation of trustee.The proper Regional
Trial Court may, upon petition of the parties beneficially
interested and after due notice to the trustee and hearing,
remove a trustee if such removal appears essential in the
interests of the petitioners. The court may also, after due notice
to all persons interested, remove a trustee who is insane or
otherwise incapable of discharging his trust or evidently
unsuitable therefor. A trustee, whether appointed by the court or
under a written instrument, may resign his trust if it appears to
the court proper to allow such resignation.

SEC. 9. Proceedings for sale or encumbrance of trust estate.
When the sale or encumbrance of any real or personal estate
held in trust is necessary or expedient, the court having
jurisdiction of the trust may, on petition and after due notice and
hearing, order such sale or encumbrance to be made, and the
reinvestment and application of the proceeds thereof in such
manner as will best effect the objects of the trust. The petition,
notice, hearing, order of sale or encumbrance, and record of
proceedings, shall conform as nearly as may be to the provisions
concerning the sale or encumbrance by guardians of the property
of minors or other wards.


CIVIL CODE

CHAPTER 2
Express Trusts

Article 1443. No express trusts concerning an immovable or any
interest therein may be proved by parol evidence.

Article 1444. No particular words are required for the creation of
an express trust, it being sufficient that a trust is clearly intended.

Article 1445. No trust shall fail because the trustee appointed
declines the designation, unless the contrary should appear in the
instrument constituting the trust.

Article 1446. Acceptance by the beneficiary is necessary.
Nevertheless, if the trust imposes no onerous condition upon the
beneficiary, his acceptance shall be presumed, if there is no proof
to the contrary.
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CASE NOTES

De Leon v. Molo-Peckson (1962)
10

That the document represents a recognition of pre-existing
trust or a declaration of an express trust impressed on the
ten parcels of land in question is evident. A declaration of
trust has been defined as an act by which a person
acknowledges that the property, title to which he holds, is
held by him for the use of another. Appellants obligingly
complied with this duty by executing the document under
consideration.
Here the document in question clearly and
unequivocally declares the existence of the trust even if the
same was executed subsequent to the death of the trustor,
Juana Juan, for it has been held that the right creating or
declaring a trust need not be contemporaneous or inter-
parties. It was even held that an express trust maybe
declared by writing made after the legal estate has been
vested in the trustee.
The fact that the beneficiaries were not notified of
the existence of the trust or that the latter have not been
given an opportunity to accept it is of no importance, for it
is not essential to the existence of a valid trust and to the
right of the beneficiaries to enforce the same that they had
knowledge thereof the time of its creation. Neither is it
necessary that the beneficiary should consent to the creation
of the trust. In fact it has been held that in case of a
voluntary trust the assent of the beneficiary is not necessary
to render it valid because as a general rule acceptance by the
beneficiary is presumed.
It is true that the alleged declaration of trust was
revoked, and having been revoked it cannot be accepted, but
the attempted revocation did not have any legal effect. The
rule is that in the absence of any reservation of the power to
revoke a voluntary trust is irrevocable without the consent
of the beneficiary. It cannot be revoked by the creator alone,
nor by the trustee. Here, there is no such reservation.

Heirs of Yap v. Court of Appeals (1999)
11

In order to establish an implied trust in real property by
parol evidence, the proof should be as fully convincing as if
the acts giving rise to the trust obligation are proven by an
authentic document. An implied trust cannot be established
upon vague and inconclusive proof. Petitioners failed to
adduce convincing evidence.
Lorenzos widow herself admitted that the business
establishment of her husband Lorenzo was razed by fire in
1964 that would somehow place to doubt the claim that he
indeed had the means to purchase the subject land about two
years later from the Nery spouses. On the other hand,
Ramon Yap was by then an accountant with apparent means
to buy the property himself.
ALSO, assuming there was a trust agreement, it
would have been in contravention of the Constitution.
Section 5, Article XIII, of the 1935 Constitution has
provided that Save in cases of hereditary succession, no
private agricultural land shall be transferred or assigned
except to individuals, corporations, or associations, qualified
to acquire or hold lands of the public domain in the
Philippines.

10
Based on the digest of Jian Boller, C2013
11
Based on the digest of Gianna de Jesus, C2013.
The mandate has also been adopted in Section 14,
Article XIV, of the 1973 Constitution and now reiterated
under Section 7, Article XII, of the 1987 Constitution. A
trust or a provision in the terms of a trust would be invalid
if the enforcement of the trust or provision is against the law
even though its performance does not involve the
commission of a criminal or tortuous act. It likewise must
follow that what the parties are not allowed to do expressly
is one that they also may not do impliedly as, for instance, in
the guise of a resulting trust.



PART SIX. ADOPTION AND CUSTODY OF MINORS

I. ADOPTION AND CUSTODY OF MINORS

A. Adoption

RULE ON ADOPTION (A.M. No. 02-6-02)

A. DOMESTIC ADOPTION

Section 1. Applicability of the Rule. This Rule covers the
domestic adoption of Filipino children.

Sec. 2. Objectives. (a) The best interests of the child shall be the
paramount consideration in all matters relating to his care,
custody and adoption, in accordance with Philippine laws, the
United Nations (UN) Convention on the Rights of the Child, UN
Declaration on Social and Legal Principles Relating to the
Protection and Welfare of Children with Special Reference to
Foster Placement and Adoption, Nationally and Internationally,
and the Hague Convention on the Protection of Children and
Cooperation in Respect of Inter-country Adoption.
(b) The State shall provide alternative protection and
assistance through foster care or adoption for every child who is a
foundling, neglected, orphaned, or abandoned. To this end, the
State shall:
(i) ensure that every child remains under the care and
custody of his parents and is provided with love, care,
understanding and security for the full and harmonious
development of his personality. Only when such efforts prove
insufficient and no appropriate placement or adoption within the
childs extended family is available shall adoption by an unrelated
person be considered.
(ii) safeguard the biological parents from making hasty
decisions in relinquishing their parental authority over their child;
(iii) prevent the child from unnecessary separation from
his biological parents;
(iv) conduct public information and educational
campaigns to promote a positive environment for adoption;
(v) ensure that government and private sector agencies
have the capacity to handle adoption inquiries, process domestic
adoption applications and offer adoption-related services
including, but not limited to, parent preparation and post-
adoption education and counseling;
(vi) encourage domestic adoption so as to preserve the
childs identity and culture in his native land, and only when this
is not available shall inter-country adoption be considered as a
last resort; and
(vii) protect adoptive parents from attempts to disturb
their parental authority and custody over their adopted child.
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Any voluntary or involuntary termination of parental
authority shall be administratively or judicially declared so as to
establish the status of the child as legally available for adoption
and his custody transferred to the Department of Social Welfare
and Development or to any duly licensed and accredited child-
placing or child-caring agency, which entity shall be authorized to
take steps for the permanent placement of the child.

Sec. 3. Definition of Terms. For purposes of this Rule:
(a) Child is a person below eighteen (18) years of age
at the time of the filing of the petition for adoption.
(b) A child legally available for adoption refers to a
child who has been voluntarily or involuntarily committed to the
Department or to a duly licensed and accredited child-placing or
child-caring agency, freed of the parental authority of his
biological parents, or in case of rescission of adoption, his
guardian or adopter(s).
(c) Voluntarily committed child is one whose parents
knowingly and willingly relinquish parental authority over him in
favor of the Department.
(d) Involuntarily committed child is one whose
parents, known or unknown, have been permanently and
judicially deprived of parental authority over him due to
abandonment; substantial, continuous or repeated neglect and
abuse; or incompetence to discharge parental responsibilities.
(e) Foundling refers to a deserted or abandoned infant
or child whose parents, guardian or relatives are unknown; or a
child committed to an orphanage or charitable or similar
institution with unknown facts of birth and parentage and
registered in the Civil Register as a foundling.
(f) Abandoned child refers to one who has no proper
parental care or guardianship or whose parents have deserted
him for a period of at least six (6) continuous months and has
been judicially declared as such.
(g) Dependent child refers to one who is without a
parent, guardian or custodian or one whose parents, guardian or
other custodian for good cause desires to be relieved of his care
and custody and is dependent upon the public for support.
(h) Neglected child is one whose basic needs have
been deliberately not attended to or inadequately attended to,
physically or emotionally, by his parents or guardian.
(i) Physical neglect occurs when the child is
malnourished, ill-clad and without proper shelter.
(j) Emotional neglect exists when a child is raped,
seduced, maltreated, exploited, overworked or made to work
under conditions not conducive to good health or made to beg in
the streets or public places, or placed in moral danger, or exposed
to drugs, alcohol, gambling, prostitution and other vices.
(k) Child-placement agency refers to an agency duly
licensed and accredited by the Department to provide
comprehensive child welfare services including, but not limited
to, receiving applications for adoption, evaluating the prospective
adoptive parents and preparing the adoption home study report.
(l) Child-caring agency refers to an agency duly
licensed and accredited by the Department that provides 24-
hour residential care services for abandoned, orphaned,
neglected or voluntarily committed children.
(m) Department refers to the Department of Social
Welfare and Development.
(n) Deed of Voluntary Commitment refers to the
written and notarized instrument relinquishing parental authority
and committing the child to the care and custody of the
Department executed by the childs biological parents or in their
absence, mental incapacity or death, by the childs legal guardian,
to be witnessed by an authorized representative of the
Department after counseling and other services have been made
available to encourage the biological parents to keep the child.
(o) Child Study Report refers to a study made by the
court social worker of the childs legal status, placement history,
psychological, social, spiritual, medical, ethno-cultural
background and that of his biological family needed in
determining the most appropriate placement for him.
(p) Home Study Report refers to a study made by the
court social worker of the motivation and capacity of the
prospective adoptive parents to provide a home that meets the
needs of a child.
(q) Supervised trial custody refers to the period of
time during which a social worker oversees the adjustment and
emotional readiness of both adopters and adoptee in stabilizing
their filial relationship.
(r) Licensed Social Worker refers to one who
possesses a degree in bachelor of science in social work as a
minimum educational requirement and who has passed the
government licensure examination for social workers as required
by Republic Act No. 4373.
(s) Simulation of birth is the tampering of the civil
registry to make it appear in the birth records that a certain child
was born to a person who is not his biological mother, thus
causing such child to lose his true identity and status.
(t) Biological Parents refer to the childs mother and
father by nature.
(u) Pre-Adoption Services refer to psycho-social
services provided by professionally-trained social workers of the
Department, the social services units of local governments,
private and government health facilities, Family Courts, licensed
and accredited child-caring and child-placement agencies and
other individuals or entities involved in adoption as authorized by
the Department.
(v) Residence means a persons actual stay in the
Philippines for three (3) continuous years immediately prior to
the filing of a petition for adoption and which is maintained until
the adoption decree is entered. Temporary absences for
professional, business, health, or emergency reasons not
exceeding sixty (60) days in one (1) year does not break the
continuity requirement.
(w) Alien refers to any person, not a Filipino citizen,
who enters and remains in the Philippines and is in possession of
a valid passport or travel documents and visa.

SEC. 4. Who may adopt. The following may adopt:
(1) Any Filipino citizen of legal age, in possession of full
civil capacity and legal rights, of good moral character, has not
been convicted of any crime involving moral turpitude; who is
emotionally and psychologically capable of caring for children, at
least sixteen (16) years older than the adoptee, and who is in a
position to support and care for his children in keeping with the
means of the family. The requirement of a 16-year difference
between the age of the adopter and adoptee may be waived
when the adopter is the biological parent of the adoptee or is the
spouse of the adoptees parent;
(2) Any alien possessing the same qualifications as
above-stated for Filipino nationals: Provided, That his country has
diplomatic relations with the Republic of the Philippines, that he
has been living in the Philippines for at least three (3) continuous
years prior to the filing of the petition for adoption and maintains
such residence until the adoption decree is entered, that he has
been certified by his diplomatic or consular office or any
appropriate government agency to have the legal capacity to
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adopt in his country, and that his government allows the adoptee
to enter his country as his adopted child. Provided, further, That
the requirements on residency and certification of the aliens
qualification to adopt in his country may be waived for the
following:
(i) a former Filipino citizen who seeks to adopt a relative
within the fourth (4th) degree of consanguinity or affinity; or
(ii) one who seeks to adopt the legitimate child of his
Filipino spouse; or
(iii) one who is married to a Filipino citizen and seeks to
adopt jointly with his spouse a relative within the fourth (4th)
degree of consanguinity or affinity of the Filipino spouse.
(3) The guardian with respect to the ward after the
termination of the guardianship and clearance of his financial
accountabilities.
Husband and wife shall jointly adopt, except in the
following cases:
(i) if one spouse seeks to adopt the legitimate child of
one spouse by the other spouse; or
(ii) if one spouse seeks to adopt his own illegitimate
child: Provided, however, That the other spouse has signified his
consent thereto; or
(iii) if the spouses are legally separated from each other.
In case husband and wife jointly adopt or one spouse
adopts the illegitimate child of the other, joint parental authority
shall be exercised by the spouses.

SEC. 5. Who may be adopted. The following may be adopted:
(1) Any person below eighteen (18) years of age who has
been voluntarily committed to the Department under Articles
154, 155 and 156 of P.D. No. 603 or judicially declared available
for adoption;
(2) The legitimate child of one spouse, by the other
spouse;
(3) An illegitimate child, by a qualified adopter to raise
the status of the former to that of legitimacy;
(4) A person of legal age regardless of civil status, if,
prior to the adoption, said person has been consistently
considered and treated by the adopters as their own child since
minority;
(5) A child whose adoption has been previously
rescinded; or
(6) A child whose biological or adoptive parents have
died: Provided, That no proceedings shall be initiated within six
(6) months from the time of death of said parents.
(7) A child not otherwise disqualified by law or these
rules.

Sec. 6. Venue. The petition for adoption shall be filed with the
Family Court of the province or city where the prospective
adoptive parents reside.

Sec. 7. Contents of the Petition. The petition shall be verified
and specifically state at the heading of the initiatory pleading
whether the petition contains an application for change of name,
rectification of simulated birth, voluntary or involuntary
commitment of children, or declaration of child as abandoned,
dependent or neglected.
(1) If the adopter is a Filipino citizen, the petition shall
allege the following:
(a) The jurisdictional facts;
(b) That the petitioner is of legal age, in possession of
full civil capacity and legal rights; is of good moral character; has
not been convicted of any crime involving moral turpitude; is
emotionally and psychologically capable of caring for children; is
at least sixteen (16) years older than the adoptee, unless the
adopter is the biological parent of the adoptee or is the spouse of
the adoptees parent; and is in a position to support and care for
his children in keeping with the means of the family and has
undergone pre-adoption services as required by Section 4 of
Republic Act No. 8552.
(2) If the adopter is an alien, the petition shall allege the
following:
(a) The jurisdictional facts;
(b) Sub-paragraph 1(b) above;
(c) That his country has diplomatic relations with the
Republic of the Philippines;
(d) That he has been certified by his diplomatic or
consular office or any appropriate government agency to have
the legal capacity to adopt in his country and his government
allows the adoptee to enter his country as his adopted child and
reside there permanently as an adopted child; and
(e) That he has been living in the Philippines for at least
three (3) continuous years prior to the filing of the petition and he
maintains such residence until the adoption decree is entered.
The requirements of certification of the aliens
qualification to adopt in his country and of residency may be
waived if the alien:
(i) is a former Filipino citizen who seeks to adopt a
relative within the fourth degree of consanguinity or affinity; or
(ii) seeks to adopt the legitimate child of his Filipino
spouse; or
(iii) is married to a Filipino citizen and seeks to adopt
jointly with his spouse a relative within the fourth degree of
consanguinity or affinity of the Filipino spouse.
(3) If the adopter is the legal guardian of the adoptee,
the petition shall allege that guardianship had been terminated
and the guardian had cleared his financial accountabilities.
(4) If the adopter is married, the spouse shall be a co-
petitioner for joint adoption except if:
(a) one spouse seeks to adopt the legitimate child of the
other, or
(b) if one spouse seeks to adopt his own illegitimate
child and the other spouse signified written consent thereto, or
(c) if the spouses are legally separated from each other.
(5) If the adoptee is a foundling, the petition shall allege
the entries which should appear in his birth certificate, such as
name of child, date of birth, place of birth, if known; sex, name
and citizenship of adoptive mother and father, and the date and
place of their marriage.
(6) If the petition prays for a change of name, it shall
also state the cause or reason for the change of name.
In all petitions, it shall be alleged:
(a) The first name, surname or names, age and
residence of the adoptee as shown by his record of birth,
baptismal or foundling certificate and school records.
(b) That the adoptee is not disqualified by law to be
adopted.
(c) The probable value and character of the estate of the
adoptee.
(d) The first name, surname or names by which the
adoptee is to be known and registered in the Civil Registry.
A certification of non-forum shopping shall be included
pursuant to Section 5, Rule 7 of the 1997 Rules of Civil Procedure.

Sec. 8. Rectification of Simulated Birth. In case the petition
also seeks rectification of a simulated of birth, it shall allege that:

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(a) Petitioner is applying for rectification of a simulated
birth;
(b) The simulation of birth was made prior to the date of
effectivity of Republic Act No. 8552 and the application for
rectification of the birth registration and the petition for adoption
were filed within five years from said date;
(c) The petitioner made the simulation of birth for the
best interests of the adoptee; and
(d) The adoptee has been consistently considered and
treated by petitioner as his own child.

Sec. 9. Adoption of a foundling, an abandoned, dependent or
neglected child. In case the adoptee is a foundling, an
abandoned, dependent or neglected child, the petition shall
allege:
(a) The facts showing that the child is a foundling,
abandoned, dependent or neglected;
(b) The names of the parents, if known, and their
residence. If the child has no known or living parents, then the
name and residence of the guardian, if any;
(c) The name of the duly licensed child-placement
agency or individual under whose care the child is in custody; and
(d) That the Department, child-placement or child-
caring agency is authorized to give its consent.

Sec. 10. Change of name. In case the petition also prays for
change of name, the title or caption must contain:
(a) The registered name of the child;
(b) Aliases or other names by which the child has been
known; and
(c) The full name by which the child is to be known.

Sec. 11. Annexes to the Petition. The following documents shall
be attached to the petition:
A. Birth, baptismal or foundling certificate, as the case
may be, and school records showing the name, age and
residence of the adoptee;
B. Affidavit of consent of the following:
1. The adoptee, if ten (10) years of age or over;
2. The biological parents of the child, if known, or the
legal guardian, or the child-placement agency, child-caring
agency, or the proper government instrumentality which has
legal custody of the child;
3. The legitimate and adopted children of the adopter
and of the adoptee, if any, who are ten (10) years of age or over;
4. The illegitimate children of the adopter living with
him who are ten (10) years of age or over; and
5. The spouse, if any, of the adopter or adoptee.
C. Child study report on the adoptee and his biological
parents;
D. If the petitioner is an alien, certification by his
diplomatic or consular office or any appropriate government
agency that he has the legal capacity to adopt in his country and
that his government allows the adoptee to enter his country as
his own adopted child unless exempted under Section 4(2);
E. Home study report on the adopters. If the adopter is
an alien or residing abroad but qualified to adopt, the home study
report by a foreign adoption agency duly accredited by the Inter-
Country Adoption Board; and
F. Decree of annulment, nullity or legal separation of
the adopter as well as that of the biological parents of the
adoptee, if any.
Sec. 12. Order of Hearing. If the petition and attachments are
sufficient in form and substance, the court shall issue an order
which shall contain the following:
(1) the registered name of the adoptee in the birth
certificate and the names by which the adoptee has been known
which shall be stated in the caption;
(2) the purpose of the petition;
(3) the complete name which the adoptee will use if the
petition is granted;
(4) the date and place of hearing which shall be set
within six (6) months from the date of the issuance of the order
and shall direct that a copy thereof be published before the date
of hearing at least once a week for three successive weeks in a
newspaper of general circulation in the province or city where the
court is situated; Provided, that in case of application for change
of name, the date set for hearing shall not be within four (4)
months after the last publication of the notice nor within thirty
(30) days prior to an election.
The newspaper shall be selected by raffle under the
supervision of the Executive Judge.
(5) a directive to the social worker of the court, the
social service office of the local government unit or any child-
placing or child-caring agency, or the Department to prepare and
submit child and home study reports before the hearing if such
reports had not been attached to the petition due to
unavailability at the time of the filing of the latter; and
(6) a directive to the social worker of the court to
conduct counseling sessions with the biological parents on the
matter of adoption of the adoptee and submit her report before
the date of hearing.
At the discretion of the court, copies of the order of
hearing shall also be furnished the Office of the Solicitor General
through the provincial or city prosecutor, the Department and
the biological parents of the adoptee, if known.
If a change in the name of the adoptee is prayed for in
the petition, notice to the Solicitor General shall be mandatory.

Sec. 13. Child and Home Study Reports. In preparing the child
study report on the adoptee, the concerned social worker shall
verify with the Civil Registry the real identity and registered name
of the adoptee. If the birth of the adoptee was not registered with
the Civil Registry, it shall be the responsibility of the social worker
to register the adoptee and secure a certificate of foundling or
late registration, as the case may be.
The social worker shall establish that the child is legally
available for adoption and the documents in support thereof are
valid and authentic, that the adopter has sincere intentions and
that the adoption shall inure to the best interests of the child.
In case the adopter is an alien, the home study report
must show the legal capacity to adopt and that his government
allows the adoptee to enter his country as his adopted child in
the absence of the certification required under Section 7(b) of
Republic Act No. 8552.
If after the conduct of the case studies, the social
worker finds that there are grounds to deny the petition, he shall
make the proper recommendation to the court, furnishing a copy
thereof to the petitioner.

Sec. 14. Hearing. Upon satisfactory proof that the order of
hearing has been published and jurisdictional requirements have
been complied with, the court shall proceed to hear the petition.
The petitioner and the adoptee must personally appear and the
former must testify before the presiding judge of the court on the
date set for hearing.
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The court shall verify from the social worker and
determine whether the biological parent has been properly
counseled against making hasty decisions caused by strain or
anxiety to give up the child; ensure that all measures to
strengthen the family have been exhausted; and ascertain if any
prolonged stay of the child in his own home will be inimical to his
welfare and interest.

Sec. 15. Supervised Trial Custody. Before issuance of the
decree of adoption, the court shall give the adopter trial custody
of the adoptee for a period of at least six (6) months within which
the parties are expected to adjust psychologically and
emotionally to each other and establish a bonding relationship.
The trial custody shall be monitored by the social worker of the
court, the Department, or the social service of the local
government unit, or the child-placement or child-caring agency
which submitted and prepared the case studies. During said
period, temporary parental authority shall be vested in the
adopter.
The court may, motu proprio or upon motion of any
party, reduce the period or exempt the parties if it finds that the
same shall be for the best interests of the adoptee, stating the
reasons therefor.
An alien adopter however must complete the 6-month
trial custody except the following:
a) a former Filipino citizen who seeks to adopt a relative
within the fourth (4th) degree of consanguinity or affinity; or
b) one who seeks to adopt the legitimate child of his
Filipino spouse; or
c) one who is married to a Filipino citizen and seeks to
adopt jointly with his or her spouse the latters relative within the
fourth (4th) degree of consanguinity or affinity.
If the child is below seven (7) years of age and is placed
with the prospective adopter through a pre-adoption placement
authority issued by the Department, the court shall order that the
prospective adopter shall enjoy all the benefits to which the
biological parent is entitled from the date the adoptee is placed
with him.
The social worker shall submit to the court a report on
the result of the trial custody within two weeks after its
termination.

Sec. 16. Decree of Adoption. If the supervised trial custody is
satisfactory to the parties and the court is convinced from the
trial custody report and the evidence adduced that the adoption
shall redound to the best interests of the adoptee, a decree of
adoption shall be issued which shall take effect as of the date the
original petition was filed even if the petitioners die before its
issuance.
The decree shall:
A. State the name by which the child is to be known
and registered;
B. Order:
1) the Clerk of Court to issue to the adopter a certificate
of finality upon expiration of the 15-day reglementary period
within which to appeal;
2) the adopter to submit a certified true copy of the
decree of adoption and the certificate of finality to the Civil
Registrar where the child was originally registered within thirty
(30) days from receipt of the certificate of finality. In case of
change of name, the decree shall be submitted to the Civil
Registrar where the court issuing the same is situated.
3) the Civil Registrar of the place where the adoptee
was registered:
a. to annotate on the adoptees original certificate of
birth the decree of adoption within thirty (30) days from receipt
of the certificate of finality;
b. to issue a certificate of birth which shall not bear any
notation that it is a new or amended certificate and which shall
show, among others, the following: registry number, date of
registration, name of child, sex, date of birth, place of birth, name
and citizenship of adoptive mother and father, and the date and
place of their marriage, when applicable;
c. to seal the original certificate of birth in the civil
registry records which can be opened only upon order of the
court which issued the decree of adoption; and
d. to submit to the court issuing the decree of adoption
proof of compliance with all the foregoing within thirty days from
receipt of the decree.
If the adoptee is a foundling, the court shall order the
Civil Registrar where the foundling was registered, to annotate
the decree of adoption on the foundling certificate and a new
birth certificate shall be ordered prepared by the Civil Registrar in
accordance with the decree.

Sec. 17. Book of Adoptions. The Clerk of Court shall keep a
book of adoptions showing the date of issuance of the decree in
each case, compliance by the Civil Registrar with Section 16(B)(3)
and all incidents arising after the issuance of the decree.

Sec. 18. Confidential Nature of Proceedings and Records. All
hearings in adoption cases, after compliance with the
jurisdictional requirements shall be confidential and shall not be
open to the public. All records, books and papers relating to the
adoption cases in the files of the court, the Department, or any
other agency or institution participating in the adoption
proceedings shall be kept strictly confidential.
If the court finds that the disclosure of the information
to a third person is necessary for security reasons or for purposes
connected with or arising out of the adoption and will be for the
best interests of the adoptee, the court may, upon proper
motion, order the necessary information to be released,
restricting the purposes for which it may be used.

Sec. 19. Rescission of Adoption of the Adoptee. The petition
shall be verified and filed by the adoptee who is over eighteen
(18) years of age, or with the assistance of the Department, if he
is a minor, or if he is over eighteen (18) years of age but is
incapacitated, by his guardian or counsel.
The adoption may be rescinded based on any of the
following grounds committed by the adopter:
1) repeated physical and verbal maltreatment by the
adopter despite having undergone counseling;
2) attempt on the life of the adoptee;
3) sexual assault or violence; or
4) abandonment or failure to comply with parental
obligations.
Adoption, being in the best interests of the child, shall
not be subject to rescission by the adopter. However, the adopter
may disinherit the adoptee for causes provided in Article 919 of
the Civil Code.

Sec. 20. Venue. The petition shall be filed with the Family
Court of the city or province where the adoptee resides.

Sec. 21. Time within which to file petition. The adoptee, if
incapacitated, must file the petition for rescission or revocation of
adoption within five (5) years after he reaches the age of majority,
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or if he was incompetent at the time of the adoption, within five
(5) years after recovery from such incompetency.

Sec. 22. Order to Answer. The court shall issue an order
requiring the adverse party to answer the petition within fifteen
(15) days from receipt of a copy thereof. The order and copy of
the petition shall be served on the adverse party in such manner
as the court may direct.

Sec. 23. Judgment. If the court finds that the allegations of the
petition are true, it shall render judgment ordering the rescission
of adoption, with or without costs, as justice requires.
The court shall order that the parental authority of the
biological parent of the adoptee, if known, or the legal custody of
the Department shall be restored if the adoptee is still a minor or
incapacitated and declare that the reciprocal rights and
obligations of the adopter and the adoptee to each other shall be
extinguished.
The court shall further declare that successional rights
shall revert to its status prior to adoption, as of the date of
judgment of judicial rescission. Vested rights acquired prior to
judicial rescission shall be respected.
It shall also order the adoptee to use the name stated in
his original birth or foundling certificate.
The court shall further order the Civil Registrar where
the adoption decree was registered to cancel the new birth
certificate of the adoptee and reinstate his original birth or
foundling certificate.

Sec. 24. Service of Judgment. A certified true copy of the
judgment together with a certificate of finality issued by the
Branch Clerk of the Court which rendered the decision in
accordance with the preceding Section shall be served by the
petitioner upon the Civil Registrar concerned within thirty (30)
days from receipt of the certificate of finality. The Civil Registrar
shall forthwith enter the rescission decree in the register and
submit proof of compliance to the court issuing the decree and
the Clerk of Court within thirty (30) days from receipt of the
decree.
The Clerk of Court shall enter the compliance in
accordance with Section 17 hereof.

SEC. 25. Repeal. - This supersedes Rule 99 on Adoption and Rule
100 of the Rules of Court.

B. Inter-Country Adoption

Sec. 26. Applicability. The following sections apply to inter-
country adoption of Filipino children by foreign nationals and
Filipino citizens permanently residing abroad.

SEC. 27. Objectives. The State shall:

a) consider inter-country adoption as an alternative
means of child care, if the child cannot be placed in a foster or an
adoptive family or cannot, in any suitable manner, be cared for in
the Philippines;
b) ensure that the child subject of inter-country
adoption enjoys the same protection accorded to children in
domestic adoption; and
c) take all measures to ensure that the placement
arising therefrom does not result in improper financial gain for
those involved.
Sec. 28. Where to File Petition. A verified petition to adopt a
Filipino child may be filed by a foreign national or Filipino citizen
permanently residing abroad with the Family Court having
jurisdiction over the place where the child resides or may be
found.
It may be filed directly with the Inter-Country Adoption
Board.

Sec. 29. Who may be adopted. Only a child legally available for
domestic adoption may be the subject of inter-country adoption.

Sec. 30. Contents of Petition. The petitioner must allege:
a) his age and the age of the child to be adopted,
showing that he is at least twenty-seven (27) years of age and at
least sixteen (16) years older than the child to be adopted at the
time of application, unless the petitioner is the parent by nature
of the child to be adopted or the spouse of such parent, in which
case the age difference does not apply;
b) if married, the name of the spouse who must be
joined as co-petitioner except when the adoptee is a legitimate
child of his spouse;
c) that he has the capacity to act and assume all rights
and responsibilities of parental authority under his national laws,
and has undergone the appropriate counseling from an
accredited counselor in his country;
d) that he has not been convicted of a crime involving
moral turpitude;
e) that he is eligible to adopt under his national law;
f) that he can provide the proper care and support and
instill the necessary moral values and example to all his children,
including the child to be adopted;
g) that he agrees to uphold the basic rights of the child,
as embodied under Philippine laws and the U. N. Convention on
the Rights of the Child, and to abide by the rules and regulations
issued to implement the provisions of Republic Act No. 8043;
h) that he comes from a country with which the
Philippines has diplomatic relations and whose government
maintains a similarly authorized and accredited agency and that
adoption of a Filipino child is allowed under his national laws; and
i) that he possesses all the qualifications and none of
the disqualifications provided in this Rule, in Republic Act No.
8043 and in all other applicable Philippine laws.

Sec. 31. Annexes. - The petition for adoption shall contain the
following annexes written and officially translated in English:
a) Birth certificate of petitioner;
b) Marriage contract, if married, and, if applicable, the
divorce decree, or judgment dissolving the marriage;
c) Sworn statement of consent of petitioners biological
or adopted children above ten (10) years of age;
d) Physical, medical and psychological evaluation of the
petitioner certified by a duly licensed physician and psychologist;
e) Income tax returns or any authentic document
showing the current financial capability of the petitioner;
f) Police clearance of petitioner issued within six (6)
months before the filing of the petitioner;
g) Character reference from the local church/minister,
the petitioners employer and a member of the immediate
community who have known the petitioner for at least five (5)
years;
h) Full body postcard-size pictures of the petitioner and
his immediate family taken at least six (6) months before the
filing of the petition.

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Sec. 32. Duty of Court. The court, after finding that the petition
is sufficient in form and substance and a proper case for inter-
country adoption, shall immediately transmit the petition to the
Inter-Country Adoption Board for appropriate action.

SEC. 33. Effectivity. - This Rule shall take effect on August 22,
2002 following its publication in a newspaper of general
circulation.



Republic Act No. 8552 February 25, 1998
AN ACT ESTABLISHING THE RULES AND POLICIES ON THE
DOMESTIC ADOPTION OF FILIPINO CHILDREN AND FOR
OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled::

ARTICLE I. GENERAL PROVISIONS

Section 1. Short Title. This Act shall be known as the "Domestic
Adoption Act of 1998."

Section 2. Declaration of Policies. (a) It is hereby declared the
policy of the State to ensure that every child remains under the
care and custody of his/her parent(s) and be provided with love,
care, understanding and security towards the full and harmonious
development of his/her personality. Only when such efforts
prove insufficient and no appropriate placement or adoption
within the child's extended family is available shall adoption by
an unrelated person be considered.
(b) In all matters relating to the care, custody and
adoption of a child, his/her interest shall be the paramount
consideration in accordance with the tenets set forth in the
United Nations (UN) Convention on the Rights of the Child; UN
Declaration on Social and Legal Principles Relating to the
Protection and Welfare of Children with Special Reference to
Foster Placement and Adoption, Nationally and Internationally;
and the Hague Convention on the Protection of Children and
Cooperation in Respect of Intercountry Adoption. Toward this
end, the State shall provide alternative protection and assistance
through foster care or adoption for every child who is neglected,
orphaned, or abandoned.
(c) It shall also be a State policy to:
(i) Safeguard the biological parent(s) from making
hurried decisions to relinquish his/her parental authority over
his/her child;
(ii) Prevent the child from unnecessary separation from
his/her biological parent(s);
(iii) Protect adoptive parent(s) from attempts to disturb
his/her parental authority and custody over his/her adopted
child.
Any voluntary or involuntary termination of parental
authority shall be administratively or judicially declared so as to
establish the status of the child as "legally available for adoption"
and his/her custody transferred to the Department of Social
Welfare and Development or to any duly licensed and accredited
child-placing or child-caring agency, which entity shall be
authorized to take steps for the permanent placement of the
child;
(iv) Conduct public information and educational
campaigns to promote a positive environment for adoption;
(v) Ensure that sufficient capacity exists within
government and private sector agencies to handle adoption
inquiries, process domestic adoption applications, and offer
adoption-related services including, but not limited to, parent
preparation and post-adoption education and counseling; and
(vi) Encourage domestic adoption so as to preserve the
child's identity and culture in his/her native land, and only when
this is not available shall intercountry adoption be considered as a
last resort.

Section 3. Definition of Terms. For purposes of this Act, the
following terms shall be defined as:
(a) "Child" is a person below eighteen (18) years of age.
(b) "A child legally available for adoption" refers to a
child who has been voluntarily or involuntarily committed to the
Department or to a duly licensed and accredited child-placing or
child-caring agency, freed of the parental authority of his/her
biological parent(s) or guardian or adopter(s) in case of rescission
of adoption.
(c) "Voluntarily committed child" is one whose parent(s)
knowingly and willingly relinquishes parental authority to the
Department.
(d) "Involuntarily committed child" is one whose
parent(s), known or unknown, has been permanently and
judicially deprived of parental authority due to abandonment;
substantial, continuous, or repeated neglect; abuse; or
incompetence to discharge parental responsibilities.
(e) "Abandoned child" refers to one who has no proper
parental care or guardianship or whose parent(s) has deserted
him/her for a period of at least six (6) continuous months and has
been judicially declared as such.
(f) "Supervised trial custody" is a period of time within
which a social worker oversees the adjustment and emotional
readiness of both adopter(s) and adoptee in stabilizing their filial
relationship.
(g) "Department" refers to the Department of Social
Welfare and Development.
(h) "Child-placing agency" is a duly licensed and
accredited agency by the Department to provide comprehensive
child welfare services including, but not limited to, receiving
applications for adoption, evaluating the prospective adoptive
parents, and preparing the adoption home study.
(i) "Child-caring agency" is a duly licensed and
accredited agency by the Department that provides twenty four
(24)-hour residential care services for abandoned, orphaned,
neglected, or voluntarily committed children.
(j) "Simulation of birth" is the tampering of the civil
registry making it appear in the birth records that a certain child
was born to a person who is not his/her biological mother,
causing such child to lose his/her true identity and status.

ARTICLE II. PRE-ADOPTION SERVICES

Section 4. Counseling Service. The Department shall provide
the services of licensed social workers to the following:
(a) Biological Parent(s) Counseling shall be provided to
the parent(s) before and after the birth of his/her child. No
binding commitment to an adoption plan shall be permitted
before the birth of his/her child. A period of six (6) months shall
be allowed for the biological parent(s) to reconsider any decision
to relinquish his/her child for adoption before the decision
becomes irrevocable. Counseling and rehabilitation services shall
also be offered to the biological parent(s) after he/she has
relinquished his/her child for adoption.
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Steps shall be taken by the Department to ensure that no hurried
decisions are made and all alternatives for the child's future and
the implications of each alternative have been provided.
(b) Prospective Adoptive Parent(s) Counseling
sessions, adoption fora and seminars, among others, shall be
provided to prospective adoptive parent(s) to resolve possible
adoption issues and to prepare him/her for effective parenting.
(c) Prospective Adoptee Counseling sessions shall be
provided to ensure that he/she understands the nature and
effects of adoption and is able to express his/her views on
adoption in accordance with his/her age and level of maturity.

Section 5. Location of Unknown Parent(s). It shall be the duty
of the Department or the child-placing or child-caring agency
which has custody of the child to exert all efforts to locate
his/her unknown biological parent(s). If such efforts fail, the child
shall be registered as a foundling and subsequently be the
subject of legal proceedings where he/she shall be declared
abandoned.

Section 6. Support Services. The Department shall develop a
pre-adoption program which shall include, among others, the
above mentioned services.

ARTICLE III. ELIGIBILITY

Section 7. Who May Adopt. The following may adopt:
(a) Any Filipino citizen of legal age, in possession of full
civil capacity and legal rights, of good moral character, has not
been convicted of any crime involving moral turpitude,
emotionally and psychologically capable of caring for children, at
least sixteen (16) years older than the adoptee, and who is in a
position to support and care for his/her children in keeping with
the means of the family. The requirement of sixteen (16) year
difference between the age of the adopter and adoptee may be
waived when the adopter is the biological parent of the adoptee,
or is the spouse of the adoptee's parent;
(b) Any alien possessing the same qualifications as
above stated for Filipino nationals: Provided, That his/her
country has diplomatic relations with the Republic of the
Philippines, that he/she has been living in the Philippines for at
least three (3) continuous years prior to the filing of the
application for adoption and maintains such residence until the
adoption decree is entered, that he/she has been certified by
his/her diplomatic or consular office or any appropriate
government agency that he/she has the legal capacity to adopt
in his/her country, and that his/her government allows the
adoptee to enter his/her country as his/her adopted
son/daughter: Provided, Further, That the requirements on
residency and certification of the alien's qualification to adopt in
his/her country may be waived for the following:
(i) a former Filipino citizen who seeks to adopt a relative
within the fourth (4th) degree of consanguinity or affinity; or
(ii) one who seeks to adopt the legitimate son/daughter
of his/her Filipino spouse; or
(iii) one who is married to a Filipino citizen and seeks to
adopt jointly with his/her spouse a relative within the fourth (4th)
degree of consanguinity or affinity of the Filipino spouse; or
(c) The guardian with respect to the ward after the termination of
the guardianship and clearance of his/her financial
accountabilities.
Husband and wife shall jointly adopt, except in the
following cases:
(i) if one spouse seeks to adopt the legitimate
son/daughter of the other; or
(ii) if one spouse seeks to adopt his/her own illegitimate
son/daughter: Provided, However, that the other spouse has
signified his/her consent thereto; or
(iii) if the spouses are legally separated from each other.
In case husband and wife jointly adopt, or one spouse adopts the
illegitimate son/daughter of the other, joint parental authority
shall be exercised by the spouses.

Section 8. Who May Be Adopted. The following may be
adopted:
(a) Any person below eighteen (18) years of age who has
been administratively or judicially declared available for adoption;
(b) The legitimate son/daughter of one spouse by the
other spouse;
(c) An illegitimate son/daughter by a qualified adopter
to improve his/her status to that of legitimacy;
(d) A person of legal age if, prior to the adoption, said
person has been consistently considered and treated by the
adopter(s) as his/her own child since minority;
(e) A child whose adoption has been previously
rescinded; or
(f) A child whose biological or adoptive parent(s) has
died: Provided, That no proceedings shall be initiated within six
(6) months from the time of death of said parent(s).

Section 9. Whose Consent is Necessary to the Adoption. After
being properly counseled and informed of his/her right to give or
withhold his/her approval of the adoption, the written consent of
the following to the adoption is hereby required:
(a) The adoptee, if ten (10) years of age or over;
(b) The biological parent(s) of the child, if known, or the
legal guardian, or the proper government instrumentality which
has legal custody of the child;
(c) The legitimate and adopted sons/daughters, ten (10)
years of age or over, of the adopter(s) and adoptee, if any;
(d) The illegitimate sons/daughters, ten (10) years of
age or over, of the adopter if living with said adopter and the
latter's spouse, if any; and
(e) The spouse, if any, of the person adopting or to be
adopted.

ARTICLE IV. PROCEDURE

Section 10. Hurried Decisions. In all proceedings for adoption,
the court shall require proof that the biological parent(s) has been
properly counseled to prevent him/her from making hurried
decisions caused by strain or anxiety to give up the child, and to
sustain that all measures to strengthen the family have been
exhausted and that any prolonged stay of the child in his/her
own home will be inimical to his/her welfare and interest.

Section 11. Case Study. No petition for adoption shall be set for
hearing unless a licensed social worker of the Department, the
social service office of the local government unit, or any child-
placing or child-caring agency has made a case study of the
adoptee, his/her biological parent(s), as well as the adopter(s),
and has submitted the report and recommendations on the
matter to the court hearing such petition.
At the time of preparation of the adoptee's case study,
the concerned social worker shall confirm with the Civil Registry
the real identity and registered name of the adoptee. If the birth
of the adoptee was not registered with the Civil Registry, it shall
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be the responsibility of the concerned social worker to ensure
that the adoptee is registered.
The case study on the adoptee shall establish that
he/she is legally available for adoption and that the documents
to support this fact are valid and authentic. Further, the case
study of the adopter(s) shall ascertain his/her genuine intentions
and that the adoption is in the best interest of the child.
The Department shall intervene on behalf of the
adoptee if it finds, after the conduct of the case studies, that the
petition should be denied. The case studies and other relevant
documents and records pertaining to the adoptee and the
adoption shall be preserved by the Department.

Section 12. Supervised Trial Custody. No petition for adoption
shall be finally granted until the adopter(s) has been given by the
court a supervised trial custody period for at least six (6) months
within which the parties are expected to adjust psychologically
and emotionally to each other and establish a bonding
relationship. During said period, temporary parental authority
shall be vested in the adopter(s).
The court may motu proprio or upon motion of any
party reduce the trial period if it finds the same to be in the best
interest of the adoptee, stating the reasons for the reduction of
the period. However, for alien adopter(s), he/she must complete
the six (6)-month trial custody except for those enumerated in
Sec. 7 (b) (i) (ii) (iii).
If the child is below seven (7) years of age and is placed
with the prospective adopter(s) through a pre-adoption
placement authority issued by the Department, the prospective
adopter(s) shall enjoy all the benefits to which biological parent(s)
is entitled from the date the adoptee is placed with the
prospective adopter(s).

Section 13. Decree of Adoption. If, after the publication of the
order of hearing has been complied with, and no opposition has
been interposed to the petition, and after consideration of the
case studies, the qualifications of the adopter(s), trial custody
report and the evidence submitted, the court is convinced that
the petitioners are qualified to adopt, and that the adoption
would redound to the best interest of the adoptee, a decree of
adoption shall be entered which shall be effective as of the date
the original petition was filed. This provision shall also apply in
case the petitioner(s) dies before the issuance of the decree of
adoption to protect the interest of the adoptee. The decree shall
state the name by which the child is to be known.

Section 14. Civil Registry Record. An amended certificate of
birth shall be issued by the Civil Registry, as required by the Rules
of Court, attesting to the fact that the adoptee is the child of the
adopter(s) by being registered with his/her surname. The original
certificate of birth shall be stamped "cancelled" with the
annotation of the issuance of an amended birth certificate in its
place and shall be sealed in the civil registry records. The new
birth certificate to be issued to the adoptee shall not bear any
notation that it is an amended issue.

Section 15. Confidential Nature of Proceedings and Records.
All hearings in adoption cases shall be confidential and shall not
be open to the public. All records, books, and papers relating to
the adoption cases in the files of the court, the Department, or
any other agency or institution participating in the adoption
proceedings shall be kept strictly confidential.
If the court finds that the disclosure of the information
to a third person is necessary for purposes connected with or
arising out of the adoption and will be for the best interest of the
adoptee, the court may merit the necessary information to be
released, restricting the purposes for which it may be used.

ARTICLE V. EFFECTS OF ADOPTION

Section 16. Parental Authority. Except in cases where the
biological parent is the spouse of the adopter, all legal ties
between the biological parent(s) and the adoptee shall be
severed and the same shall then be vested on the adopter(s).

Section 17. Legitimacy. The adoptee shall be considered the
legitimate son/daughter of the adopter(s) for all intents and
purposes and as such is entitled to all the rights and obligations
provided by law to legitimate sons/daughters born to them
without discrimination of any kind. To this end, the adoptee is
entitled to love, guidance, and support in keeping with the means
of the family.

Section 18. Succession. In legal and intestate succession, the
adopter(s) and the adoptee shall have reciprocal rights of
succession without distinction from legitimate filiation. However,
if the adoptee and his/her biological parent(s) had left a will, the
law on testamentary succession shall govern.

ARTICLE VI . RESCISSION OF ADOPTION

Section 19. Grounds for Rescission of Adoption. Upon petition
of the adoptee, with the assistance of the Department if a minor
or if over eighteen (18) years of age but is incapacitated, as
guardian/counsel, the adoption may be rescinded on any of the
following grounds committed by the adopter(s): (a) repeated
physical and verbal maltreatment by the adopter(s) despite
having undergone counseling; (b) attempt on the life of the
adoptee; (c) sexual assault or violence; or (d) abandonment and
failure to comply with parental obligations.
Adoption, being in the best interest of the child, shall
not be subject to rescission by the adopter(s). However, the
adopter(s) may disinherit the adoptee for causes provided in
Article 919 of the Civil Code.

Section 20. Effects of Rescission. If the petition is granted, the
parental authority of the adoptee's biological parent(s), if known,
or the legal custody of the Department shall be restored if the
adoptee is still a minor or incapacitated. The reciprocal rights and
obligations of the adopter(s) and the adoptee to each other shall
be extinguished.
The court shall order the Civil Registrar to cancel the
amended certificate of birth of the adoptee and restore his/her
original birth certificate.
Succession rights shall revert to its status prior to
adoption, but only as of the date of judgment of judicial
rescission. Vested rights acquired prior to judicial rescission shall
be respected.
All the foregoing effects of rescission of adoption shall
be without prejudice to the penalties imposable under the Penal
Code if the criminal acts are properly proven.

ARTICLE VII . VIOLATIONS AND PENALTIES

Section 21. Violations and Penalties. (a) The penalty of
imprisonment ranging from six (6) years and one (1) day to twelve
(12) years and/or a fine not less than Fifty thousand pesos
(P50,000.00), but not more than Two hundred thousand pesos
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(P200,000.00) at the discretion of the court shall be imposed
on any person who shall commit any of the following acts:
(i) obtaining consent for an adoption through coercion,
undue influence, fraud, improper material inducement, or other
similar acts;
(ii) non-compliance with the procedures and safeguards
provided by the law for adoption; or
(iii) subjecting or exposing the child to be adopted to
danger, abuse, or exploitation.
(b) Any person who shall cause the fictitious registration
of the birth of a child under the name(s) of a person(s) who is not
his/her biological parent(s) shall be guilty of simulation of birth,
and shall be punished by prision mayor in its medium period and
a fine not exceeding Fifty thousand pesos (P50,000.00).
Any physician or nurse or hospital personnel who, in
violation of his/her oath of office, shall cooperate in the
execution of the abovementioned crime shall suffer the penalties
herein prescribed and also the penalty of permanent
disqualification.
Any person who shall violate established regulations
relating to the confidentiality and integrity of records,
documents, and communications of adoption applications, cases,
and processes shall suffer the penalty of imprisonment ranging
from one (1) year and one (1) day to two (2) years, and/or a fine of
not less than Five thousand pesos (P5,000.00) but not more
than Ten thousand pesos (P10,000.00), at the discretion of the
court.
A penalty lower by two (2) degrees than that prescribed
for the consummated offense under this Article shall be imposed
upon the principals of the attempt to commit any of the acts
herein enumerated. Acts punishable under this Article, when
committed by a syndicate or where it involves two (2) or more
children shall be considered as an offense constituting child
trafficking and shall merit the penalty of reclusion perpetua.
Acts punishable under this Article are deemed
committed by a syndicate if carried out by a group of three (3) or
more persons conspiring and/or confederating with one another
in carrying out any of the unlawful acts defined under this Article.
Penalties as are herein provided, shall be in addition to any other
penalties which may be imposed for the same acts punishable
under other laws, ordinances, executive orders, and
proclamations.
When the offender is an alien, he/she shall be deported
immediately after service of sentence and perpetually excluded
from entry to the country.
Any government official, employee or functionary who
shall be found guilty of violating any of the provisions of this Act,
or who shall conspire with private individuals shall, in addition to
the above-prescribed penalties, be penalized in accordance with
existing civil service laws, rules and regulations: Provided, That
upon the filing of a case, either administrative or criminal, said
government official, employee, or functionary concerned shall
automatically suffer suspension until the resolution of the case.

Section 22. Rectification of Simulated Births. A person who
has, prior to the effectivity of this Act, simulated the birth of a
child shall not be punished for such act: Provided, That the
simulation of birth was made for the best interest of the child and
that he/she has been consistently considered and treated by that
person as his/her own son/daughter: Provided, further, That the
application for correction of the birth registration and petition for
adoption shall be filed within five (5) years from the effectivity of
this Act and completed thereafter: Provided, finally, That such
person complies with the procedure as specified in Article IV of
this Act and other requirements as determined by the
Department.

VIII. FINAL PROVISIONS

Section 23. Adoption Resource and Referral Office. There shall
be established an Adoption Resources and Referral Office under
the Department with the following functions: (a) monitor the
existence, number, and flow of children legally available for
adoption and prospective adopter(s) so as to facilitate their
matching; (b) maintain a nationwide information and educational
campaign on domestic adoption; (c) keep records of adoption
proceedings; (d) generate resources to help child-caring and
child-placing agencies and foster homes maintain viability; and
(e) do policy research in collaboration with the Intercountry
Adoption Board and other concerned agencies. The office shall
be manned by adoption experts from the public and private
sectors.

Section 24. Implementing Rules and Regulations. Within six
(6) months from the promulgation of this Act, the Department,
with the Council for the Welfare of Children, the Office of Civil
Registry General, the Department of Justice, Office of the
Solicitor General, and two (2) private individuals representing
child-placing and child-caring agencies shall formulate the
necessary guidelines to make the provisions of this Act operative.

Section 25. Appropriations. Such sum as may be necessary for
the implementation of the provisions of this Act shall be included
in the General Appropriations Act of the year following its
enactment into law and thereafter.

Section 26. Repealing Clause. Any law, presidential decree or
issuance, executive order, letter of instruction, administrative
order, rule, or regulation contrary to, or inconsistent with the
provisions of this Act is hereby repealed, modified, or amended
accordingly.

Section 27. Separability Clause. If any provision of this Act is
held invalid or unconstitutional, the other provisions not affected
thereby shall remain valid and subsisting.

Section 28. Effectivity Clause. This Act shall take effect fifteen
(15) days following its complete publication in any newspaper of
general circulation or in the Official Gazette.

Approved: February 25, 1998



REPUBLIC ACT NO. 8043
AN ACT ESTABLISHING THE RULES TO GOVERN INTER-
COUNTRY ADOPTION OF FILIPINO CHILDREN, AND FOR
OTHER PURPOSES.

ARTICLE I
GENERAL PROVISIONS

Section 1. Short Title. This Act shall be known as the "Inter-
Country Adoption Act of 1995."

Sec. 2. Declaration of Policy. It is hereby declared the policy of
the State to provide every neglected and abandoned child with a
family that will provide such child with love and care as well as
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opportunities for growth and development. Towards this end,
efforts shall be exerted to place the child with an adoptive family
in the Philippines. However, recognizing that inter-country
adoption may be considered as allowing aliens not presently
allowed by law to adopt Filipino children if such children cannot
be adopted by qualified Filipino citizens or aliens, the State shall
take measures to ensure that inter-country adoptions are allowed
when the same shall prove beneficial to the child's best interests,
and shall serve and protect his/her fundamental rights.

Sec. 3. Definition of Terms. As used in this Act. the term:
(a) Inter-country adoption refers to the socio-legal
process of adopting a Filipino child by a foreigner or a Filipino
citizen permanently residing abroad where the petition is filed,
the supervised trial custody is undertaken, and the decree of
adoption is issued outside the Philippines.
(b) Child means a person below fifteen (15) years of age
unless sooner emancipated by law.
(c) Department refers to the Department of Social
Welfare and Development of the Republic of the Philippines.
(d) Secretary refers to the Secretary of the Department
of Social Welfare and Development.
(e) Authorized and accredited agency refers to the State
welfare agency or a licensed adoption agency in the country of
the adopting parents which provide comprehensive social
services and which is duly recognized by the Department.
(f) Legally-free child means a child who has been
voluntarily or involuntarily committed to the Department, in
accordance with the Child and Youth Welfare Code.
(g) Matching refers to the judicious pairing of the
adoptive child and the applicant to promote a mutually satisfying
parent-child relationship.
(h) Board refers to the Inter-country Adoption Board.

ARTICLE II
THE INTER-COUNTRY ADOPTION BOARD

Sec. 4. The Inter-Country Adoption Board. There is hereby
created the Inter-Country Adoption Board, hereinafter referred
to as the Board to act as the central authority in matters relating
to inter-country adoption. It shall act as the policy-making body
for purposes of carrying out the provisions of this Act, in
consultation and coordination with the Department, the different
child-care and placement agencies, adoptive agencies, as well as
non-governmental organizations engaged in child-care and
placement activities. As such, it shall:
(a) Protect the Filipino child from abuse, exploitation,
trafficking and/or sale or any other practice in connection with
adoption which is harmful, detrimental, or prejudicial to the child;
(b) Collect, maintain, and preserve confidential
information about the child and the adoptive parents;
(c) Monitor, follow up, and facilitate completion of
adoption of the child through authorized and accredited agency;
(d) Prevent improper financial or other gain in
connection with an adoption and deter improper practices
contrary to this Act;
(e) Promote the development of adoption services
including post-legal adoption;
(f) License and accredit child-caring/placement
agencies and collaborate with them in the placement of Filipino
children;
(g) Accredit and authorize foreign adoption agency in
the placement of Filipino children in their own country; and
(h) Cancel the license to operate and blacklist the child-
caring and placement agency or adoptive agency involved from
the accreditation list of the Board upon a finding of violation of
any provision under this Act.

Sec. 5. Composition of the Board. The Board shall be
composed of the Secretary of the Department as ex officio
Chairman, and six (6) other members to be appointed by the
President for a nonrenewable term of six (6) years: Provided, That
there shall be appointed one (1) psychiatrist or psychologist, two
(2) lawyers who shall have at least the qualifications of a regional
trial court judge, one (1) registered social worker and two (2)
representatives from non-governmental organizations engaged
in child-caring and placement activities. The members of the
Board shall receive a per diem allowance of One thousand five
hundred pesos (P1,500) for each meeting attended by them:
Provided, further, That no compensation shall be paid for more
than four (4) meetings a month.

Sec. 6. Powers and Functions of the Board. The Board shall
have the following powers and functions:
(a) to prescribe rules and regulations as it may deem
reasonably necessary to carry out the provisions of this Act, after
consultation and upon favorable recommendation of the
different agencies concerned with the child-caring, placement,
and adoption;
(b) to set the guidelines for the convening of an Inter-
country Adoption Placement Committee which shall be under
the direct supervision of the Board;
(c) to set the guidelines for the manner by which
selection/matching of prospective adoptive parents and
adoptive child can be made;
(d) to determine a reasonable schedule of fees and
charges to be exacted in connection with the application for
adoption;
(e) to determine the form and contents of the
application for inter-country adoption;
(g) to institute systems and procedures to prevent
improper financial gain in connection with adoption and deter
improper practices which are contrary to this Act;
(h) to promote the development of adoption services,
including post-legal adoption services,
(i) to accredit and authorize foreign private adoption
agencies which have demonstrated professionalism, competence
and have consistently pursued non-profit objectives to engage in
the placement of Filipino children in their own country: Provided,
That such foreign private agencies are duly authorized and
accredited by their own government to conduct inter-country
adoption: Provided, however, That the total number of
authorized and accredited foreign private adoption agencies shall
not exceed one hundred (100) a year;
(j) to take appropriate measures to ensure
confidentiality of the records of the child, the natural parents and
the adoptive parents at all times;
(k) to prepare, review or modify, and thereafter,
recommend to the Department of Foreign Affairs, Memoranda
of Agreement respecting inter-country adoption consistent with
the implementation of this Act and its stated goals, entered into,
between and among foreign governments, international
organizations and recognized international non-governmental
organizations;
(l) to assist other concerned agencies and the courts in
the implementation of this Act, particularly as regards
coordination with foreign persons, agencies and other entities
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involved in the process of adoption and the physical transfer of
the child; and
(m) to perform such other functions on matters relating
to inter-country adoption as may be determined by the
President.

ARTICLE III
PROCEDURE

Sec. 7. Inter-Country Adoption as the Last Resort. The Board
shall ensure that all possibilities for adoption of the child under
the Family Code have been exhausted and that inter-country
adoption is in the best interest of the child. Towards this end, the
Board shall set up the guidelines to ensure that steps will be
taken to place the child in the Philippines before the child is
placed for inter-country adoption: Provided, however, That the
maximum number that may be allowed for foreign adoption
shall not exceed six hundred (600) a year for the first five (5)
years.

Sec. 8. Who May be Adopted. Only a legally free child may be
the subject of inter-country adoption. In order that such child
may be considered for placement, the following documents
must be submitted to the Board:
(a)Child study;
(b)Birth certificate/foundling certificate;
(c)Deed of voluntary commitment/decree of
abandonment/death certificate of parents;
(d)Medical evaluation /history;
(e)Psychological evaluation, as necessary; and
(f)Recent photo of the child.

Sec. 9. Who May Adopt. An alien or a Filipino citizen
permanently residing abroad may file an application for inter-
country adoption of a Filipino child if he/she:
(a) is at least twenty-seven (27) years of age and at least
sixteen (16) years older than the child to be adopted, at the time
of application unless the adopter is the parent by nature of the
child to be adopted or the spouse of such parent:
(b) if married, his/her spouse must jointly file for the
adoption;
(c) has the capacity to act and assume all rights and
responsibilities of parental authority under his national laws, and
has undergone the appropriate counseling from an accredited
counselor in his/her country;
(d) has not been convicted of a crime involving moral
turpitude;
(e) is eligible to adopt under his/her national law;
(f) is in a position to provide the proper care and
support and to give the necessary moral values and example to
all his children, including the child to be adopted;
(g) agrees to uphold the basic rights of the child as
embodied under Philippine laws, the U.N. Convention on the
Rights of the Child, and to abide by the rules and regulations
issued to implement the provisions of this Act;
(h) comes from a country with whom the Philippines
has diplomatic relations and whose government maintains a
similarly authorized and accredited agency and that adoption is
allowed under his/her national laws; and
(i) possesses all the qualifications and none of the
disqualifications provided herein and in other applicable
Philippine laws.

Sec. 10. Where to File Application. An application to adopt a
Filipino child shall be filed either with the Philippine Regional Trial
Court having jurisdiction over the child, or with the Board,
through an intermediate agency, whether governmental or an
authorized and accredited agency, in the country of the
prospective adoptive parents, which application shall be in
accordance with the requirements as set forth in the
implementing rules and regulations to be promulgated by the
Board.
The application shall be supported by the following
documents written and officially translated in English.
(a) Birth certificate of applicant(s);
(b) Marriage contract, if married, and divorce decree, if
applicable;
(c) Written consent of their biological or adoptive
children above ten (10) years of age, in the form of sworn
statement;
(d) Physical, medical and psychological evaluation by a
duly licensed physician and psychologist;
(e) Income tax returns or any document showing the
financial capability of the applicant(s);
(f) Police clearance of applicant(s);
(g) Character reference from the local church/minister,
the applicant's employer and a member of the immediate
community who have known the applicant(s) for at least five (5)
years; and
(h) Recent postcard-size pictures of the applicant(s) and
his immediate family;
The Rules of Court shall apply in case of adoption by
judicial proceedings.

Sec. 11. Family Selection/Matching. No child shall be matched
to a foreign adoptive family unless it is satisfactorily shown that
the child cannot be adopted locally. The clearance, as issued by
the Board, with the copy of the minutes of the meetings, shall
form part of the records of the child to be adopted. When the
Board is ready to transmit the Placement Authority to the
authorized and accredited inter-country adoption agency and all
the travel documents of the child are ready, the adoptive parents,
or any one of them, shall personally fetch the child in the
Philippines.

Sec. 12. Pre-adoptive Placement Costs. The applicant(s) shall
bear the following costs incidental to the placement of the child;
(a) The cost of bringing the child from the Philippines to
the residence of the applicant(s) abroad, including all travel
expenses within the Philippines and abroad; and
(b) The cost of passport, visa, medical examination and
psychological evaluation required, and other related expenses.

Sec. 13. Fees, Charges and Assessments. Fees, charges, and
assessments collected by the Board in the exercise of its
functions shall be used solely to process applications for inter-
country adoption and to support the activities of the Board.

Sec. 14. Supervision of Trial Custody. The governmental
agency or the authorized and accredited agency in the country of
the adoptive parents which filed the application for inter-country
adoption shall be responsible for the trial custody and the care of
the child. It shall also provide family counseling and other related
services. The trial custody shall be for a period of six (6) months
from the time of placement. Only after the lapse of the period of
trial custody shall a decree of adoption be issued in the said
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country a copy of which shall be sent to the Board to form part of
the records of the child.
During the trial custody, the adopting parent(s) shall
submit to the governmental agency or the authorized and
accredited agency, which shall in turn transmit a copy to the
Board, a progress report of the child's adjustment. The progress
report shall be taken into consideration in deciding whether or
not to issue the decree of adoption.
The Department of Foreign Affairs shall set up a system
by which Filipino children sent abroad for trial custody are
monitored and checked as reported by the authorized and
accredited inter-country adoption agency as well as the
repatriation to the Philippines of a Filipino child whose adoption
has not been approved.

Sec. 15. Executive Agreements. The Department of Foreign
Affairs, upon representation of the Board, shall cause the
preparation of Executive Agreements with countries of the
foreign adoption agencies to ensure the legitimate concurrence
of said countries in upholding the safeguards provided by this
Act.

ARTICLE IV
PENALTIES

Sec. 16. Penalties. (a) Any person who shall knowingly
participate in the conduct or carrying out of an illegal adoption, in
violation of the provisions of this Act, shall be punished with a
penalty of imprisonment ranging from six (6) years and one (1)
day to twelve (12) years and/or a fine of not less than Fifty
thousand pesos (P50,000), but not more than Two hundred
thousand pesos (P200.000), at the discretion of the court. For
purposes of this Act, an adoption is illegal if it is effected in any
manner contrary to the provisions of this Act or established State
policies, its implementing rules and regulations, executive
agreements, and other laws pertaining to adoption. Illegality may
be presumed from the following acts:
(1)consent for an adoption was acquired through, or
attended by coercion, fraud, improper material inducement;
(2)there is no authority from the Board to effect
adoption;
(3)the procedures and safeguards placed under the law
for adoption were not complied with; and
(4)the child to be adopted is subjected to, or exposed to
danger, abuse and exploitation.
(b)Any person who shall violate established regulations
relating to the confidentiality and integrity of records, documents
and communications of adoption applications, cases and
processes shall suffer the penalty of imprisonment ranging from
one (1) year and one (1) day to two (2) years, and/or a fine of not
less than Five thousand pesos (P5,000), but not more than Ten
thousand pesos (P10,000), at the discretion of the court.
A penalty lower by two (2) degrees than that prescribed
for the consummated felony under this Article shall be imposed
upon the principals of the attempt to commit any of the acts
herein enumerated.
Acts punishable under this Article, when committed by
a syndicate or where it involves two or more children shall be
considered as an offense constituting child trafficking and shall
merit the penalty of reclusion perpetua.
Acts punishable under this Article are deemed
committed by a syndicate if carried out by a group of three (3) or
more persons conspiring and/or confederating with one another
in carrying out any of the unlawful acts defined under this
Article.Penalties as are herein provided shall be in addition to any
other penalties which may be imposed for the same acts
punishable under other laws, ordinances, executive orders, and
proclamations.

Sec. 17. Public Officers as Offenders. Any government official,
employee or functionary who shall be found guilty of violating
any of the provisions of this Act, or who shall conspire with
private individuals shall, in addition to the above-prescribed
penalties, be penalized in accordance with existing civil service
laws, rules and regulations: Provided, That upon the filing of a
case, either administrative or criminal, said government official,
employee or functionary concerned shall automatically suffer
suspension until the resolution of the case.

ARTICLE V
FINAL PROVISIONS

Sec. 18. Implementing Rules and Regulations. The Inter-
country Adoption Board, in coordination with the Council for the
Welfare of Children, the Department of Foreign Affairs, and the
Department of Justice, after due consultation with agencies
involved in child-care and placement, shall promulgate the
necessary rules and regulations to implement the provisions of
this Act within six (6) months after its effectivity.

Sec. 19. Appropriations. The amount of Five million pesos
(P5,000,000) is hereby appropriated from the proceeds of the
Lotto for the initial operations of the Board and subsequently the
appropriations of the same shall be included in the General
Appropriations Act for the year following its enactment.

Sec. 20. Separability Clause. If any provision, or part hereof is
held invalid or unconstitutional, the remainder of the law or the
provision not otherwise affected, shall remain valid and
subsisting.

Sec. 21. Repealing Clause. Any law, decree, executive order,
administrative order or rules and regulations contrary to, or
inconsistent with the provisions of this Act are hereby repealed,
modified or amended accordingly.

Sec. 22. Effectivity Clause. This Act shall take effect fifteen (15)
days after its publication in two (2) newspapers of general
circulation.

Approved: June 7, 1995


B. Custody

A.M. No. 03-04-04-SC April 22, 2003
RE: PROPOSED RULE ON CUSTODY OF MINORS AND WRIT
OF HABEAS CORPUS IN RELATION TO CUSTODY OF MINORS

RESOLUTION
Acting on the letter of the Chairman of the Committee on
Revision of the Rules of Court submitting for this Courts
consideration and approval the Proposed Rule on custody of
Minors and Writ of Habeas Corpus in Relation to Custody of
Minors, the Court Resolved to APPROVE the same.
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The Rule shall take effect on May 15, 2003 following its
publication in a newspaper of general circulation not later than
April 30, 2003.
April 22, 2003
Davide, Jr., C.J., Bellosillo, Puno, Vitug, Panganiban, Ynares-
Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona,
Carpio-Morales, Callejo, Sr., and Azcuna, JJ., concur.
Quisumbing, J., on official leave.

RULE ON CUSTODY OF MINORS AND WRIT OF HABEAS
CORPUS IN RELATION TO CUSTODY OF MINORS

SECTION 1. Applicability. - This rule shall apply to petitions for
custody of minors and writs of habeas corpus in relation thereto.
The Rules of Court shall apply suppletorily.

Section 2. Petition for custody of minors; who may file.- A
verified petition for the rightful custody of a minor may be filed
by any person claiming such right. The party against whom it may
be filed shall be designated as the respondent.

Section 3. Where to file petition. - The petition for custody of
minors shall be filed with the Family Court of the province or city
where the petitioner resides or where the minor may be found.

Section 4. Contents of petition. - The verified petition shall
allege the following:
(a) The personal circumstances of the petitioner and of
the respondent;
(b) The name, age and present whereabouts of the
minor and his or her relationship to the petitioner and the
respondent;
(c) The material operative facts constituting deprivation
of custody; and
(d) Such other matters which are relevant to the
custody of the minor.
The verified petition shall be accompanied by a
certificate against forum shopping, which the petitioner must sign
personally.

Section 5. Summons; personal service on respondent. - If the
court is satisfied that the petition is sufficient in form and
substance, it shall direct the clerk of court to issue summons,
which shall be served together with a copy of the petition
personally on the respondent.

Section 6. Motion to Dismiss. - A motion to dismiss the petition
is not allowed except on the ground of lack of jurisdiction over
the subject matter or over the parties. Any other ground that
might warrant the dismissal of the petition may be raised as an
affirmative defense in the answer.

Section 7. Verified Answer. - The respondent shall file an answer
to the petition, personally verified by him, within five days after
service of summons and a copy of the petition.

Section 8. Case study; duty of social worker. - Upon the filing of
the verified answer or the expiration of the period to file it, the
court may order a social worker to make a case study of the
minor and the parties and to submit a report and
recommendation to the court at least three days before the
scheduled pre-trial.

Section 9. Notice of mandatory pre-trial. - Within fifteen days
after the filing of the answer or the expiration of the period to file
answer, the court shall issue an order: (1) fixing a date for the pre-
trial conference; (2) directing the parties to file and serve their
respective pre-trial briefs in such manner as shall ensure receipt
thereof by the adverse party at least three days before the date
of pre-trial; and (3) requiring the respondent to present the minor
before the court.
The notice of its order shall be served separately on
both the parties and their respective counsels. The pre-trial is
mandatory.

Section 10. 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 that may be allowed by law, indicating its terms;
(b) A concise statement of their respective claims
together with the applicable laws and authorities;
(c) Admitted facts and proposed stipulations of facts;
(d) The disputed factual and legal issues;
(e) All the evidence to be presented, briefly stating or
describing its nature and purpose;
(f) The number and names of the witnesses and their
respective affidavits which shall serve as the affiant's testimony
on direct examination; and
(g) Such other matters as the court may require to be
included in the pre-trial brief.
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.

Section 11. Effect of failure to appear at the pre-trial.-(a) If the
petitioner fails to appear personally at the pre-trial, 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 at the pre-trial, the petitioner shall be allowed to present
his evidence ex parte. The court shall then render judgment on
the basis of the pleadings and the evidence thus presented.

Section 12. What may be done at pre-trial. - At the pre-trial, the
parties may agree on the custody of the minor. If the parties fail
to agree, the court may refer the matter to a mediator who shall
have five days to effect an agreement between the parties. If the
issue is not settled through mediation, the court shall proceed
with the pre-trial conference, on which occasion it shall consider
such other matters as may aid in the prompt disposition of the
petition.

Section 13. Provisional order awarding custody. - After an
answer has been filed or after expiration of the period to file it,
the court may issue a provisional order awarding custody of the
minor. As far as practicable, the following order of preference
shall be observed in the award of custody:
(a) Both parents jointly;
(b) Either parent, taking into account all relevant
considerations, especially the choice of the minor over seven
years of age and of sufficient discernment, unless the parent
chosen is unfit;
(c) The grandparent, or if there are several grandparents,
the grandparent chosen by the minor over seven years of age
and of sufficient discernment, unless the grandparent chosen is
unfit or disqualified;
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(d) The eldest brother or sister over twenty-one years of
age, unless he or she is unfit or disqualified;
(e) The actual custodian of the minor over twenty-one
years of age, unless the former is unfit or disqualified; or
(f) Any other person or institution the court may deem
suitable to provide proper care and guidance for the minor.

Section 14. Factors to consider in determining custody. - In
awarding custody, the court shall consider the best interests of
the minor and shall give paramount consideration to his material
and moral welfare. The best interests of the minor refer to the
totality of the circumstances and conditions as are most
congenial to the survival, protection, and feelings of security of
the minor encouraging to his physical, psychological and
emotional development. It also means the least detrimental
available alternative for safeguarding the growth and
development of the minor.
The court shall also consider the following:
(a) Any extrajudicial agreement which the parties may
have bound themselves to comply with respecting the rights of
the minor to maintain direct contact with the non custodial
parent on a regular basis, except when there is an existing threat
or danger of physical, mental, sexual or emotional violence which
endangers the safety and best interests of the minor;
(b) The desire and ability of one parent to foster an
open and loving relationship between the minor and the other
parent;
(c) The health, safety and welfare of the minor;
(d) Any history of child or spousal abuse by the person
seeking custody or who has had any filial relationship with the
minor, including anyone courting the parent;
(e) The nature and frequency of contact with both
parents;
(f) Habitual use of alcohol, dangerous drugs or regulated
substances;
(g) Marital misconduct;
(h) The most suitable physical, emotional, spiritual,
psychological and educational environment for the holistic
development and growth of the minor; and
(i) The preference of the minor over seven years of age
and of sufficient discernment, unless the parent chosen is unfit.

Section 15. Temporary visitation rights. - The court shall provide
in its order awarding provisional custody appropriate visitation
rights to the non-custodial parent or parents, unless the court
finds said parent or parents unfit or disqualified.
The temporary custodian shall give the court and non
custodial parent or parents at least five days' notice of any plan
to change the residence of the minor or take him out of his
residence for more than three days provided it does not prejudice
the visitation rights of the non-custodial parent or parents.

Section 16. Hold Departure Order. - The minor child subject of
the petition shall not be brought out of the country without prior
order from the court while the petition is pending.
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 minor 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 within twenty-four hours from
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, the nationality 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 order was issued;
(c) The specific nature of the case;
(d) The date of the hold departure order; and
(e) A recent photograph, if available, of the party against
whom a hold departure order has been issued or whose
departure from the country has been enjoined.
The court may recall the hold departure 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 minor.

Section 17. Protection Order. - The court may issue a Protection
Order requiring any person:
(a) To stay away from the home, school, business, or
place of employment of the minor, other parent or any other
party, or from any other specific place designated by the court;
(b) To cease and desist from harassing, intimidating, or
threatening such minor or the other parent or any person to
whom custody of the minor is awarded;
(c) To refrain from acts of commission or omission that
create an unreasonable risk to the health, safety, or welfare of the
minor;
(d) To permit a parent, or a party entitled to visitation by
a court order or a separation agreement, to visit the minor at
stated periods;
(e) To permit a designated party to enter the residence
during a specified period of time in order to take personal
belongings not contested in a proceeding pending with the
Family Court; and
(f) To comply with such other orders as are necessary
for the protection of the minor.

Section 18. Judgment. - After trial, the court shall render
judgment awarding the custody of the minor to the proper party
considering the best interests of the minor.
If it appears that both parties are unfit to have the care
and custody of the minor, the court may designate either the
paternal or maternal grandparent of the minor, or his oldest
brother or sister, or any reputable person to take charge of such
minor, or commit him to any suitable home for children.
In its judgment, the court may order either or both
parents to give an amount necessary for the support,
maintenance and education of the minor, irrespective of who
may be its custodian. In determining the amount of support, the
court may consider the following factors: (1) the financial
resources of the custodial and non-custodial parent and those of
the minor; (2) the physical and emotional health, special needs,
and aptitude of the minor; (3) the standard of living the minor has
been accustomed to; and (4) the non-monetary contributions
that the parents would make toward the care and well-being of
the minor.
The court may also issue any order that is just and
reasonable permitting the parent who is deprived of the care and
custody of the minor to visit or have temporary custody.
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Section 19. Appeal. - 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.
An aggrieved party may appeal from the decision by
filing a Notice of Appeal within fifteen days from notice of the
denial of the motion for reconsideration or new trial and serving a
copy thereof on the adverse parties.

Section 20. Petition for writ of habeas corpus. - A verified
petition for a writ of habeas corpus involving custody of minors
shall be filed with the Family Court. The writ shall be enforceable
within its judicial region to which the Family Court belongs.
However, the petition may be filed with the regular
court in the absence of the presiding judge of the Family Court,
provided, however, that the regular court shall refer the case to
the Family Court as soon as its presiding judge returns to duty.
The petition may also be filed with the appropriate regular courts
in places where there are no Family Courts.
The writ issued by the Family Court or the regular court
shall be enforceable in the judicial region where they belong.
The petition may likewise be filed with the Supreme Court, Court
of Appeals, or with any of its members and, if so granted, the writ
shall be enforceable anywhere in the Philippines. The writ may be
made returnable to a Family Court or to any regular court within
the region where the petitioner resides or where the minor may
be found for hearing and decision on the merits.
Upon return of the writ, the court shall decide the issue
on custody of minors. The appellate court, or the member
thereof, issuing the writ shall be furnished a copy of the decision.

Section 21. Confidentiality of proceedings. - The hearings on
custody of minors may, at the discretion of the court, be closed
to the public and the records of the case shall not be released to
non-parties without its approval.

Section 22. Effectivity. - This Rule shall take effect on May 15,
2003 following its publication in a newspaper of general
circulation not later than April 30, 2003.

CASE NOTES

Perez v. Court of Appeals (1996)
The applicable law, when the parents of the child are
separated in fact, is Article 213 of the Family Code. It
provides: In case of separation of the parents, parental
authority shall be exercised by the parent designated by the
Court. The Court shall take into account all relevant
considerations, especially the choice of the child over seven
years of age, unless the parent chosen in unfit. No child
under seven years of age shall be separated from the mother,
unless the court finds compelling reasons to order
otherwise. Since the Code does not qualify the word
separation to mean legal separation decreed by a court,
couples who are separated in fact, such as the Perezes, are
covered within its terms.
Rule 99, Sec. 6 of the Rules of Court also contains a
similar provision.
The provisions of law clearly mandate that a child
under seven years of age shall not be separated from his
mother unless the court finds compelling reasons to order
otherwise. Rationale: The general rule is recommended in
order to avoid many a tragedy where a mother has seen her
baby torn away from her. No man can sound the deep
sorrows of a mother who is deprived of her child of tender
age.. Unless the court sees compelling reasons to order
otherwise, custody of the child below seven years of age
must be awarded to the mother.

Republic v. Hernandez (1996)
he legal effects of adoption, under Article 189 of the Family
Code, are that (1) the adopted shall be deemed a legitimate
child of the adopters and both shall acquire the reciprocal
rights and obligations arising from the relationship of
parent and child, including the right of the adopted to use
the surname of the adopters; (2) the parental authority of the
parents by nature over the adopted shall terminate and be
vested in the adopters, except if the adopter is the spouse of
the parent by nature of the adopted, parental authority over
the adopted shall be exercised jointly by both spouses; and
(3) the adopted shall remain an intestate heir of his parents
and other blood relatives.
Clearly, the law allows the adoptee, as a matter of
right and obligation, to bear the surname of the adopter,
upon issuance of the decree of adoption. It is the change of
the adoptees surname to follow that of the adopter which is
the natural and necessary consequence of a grant of
adoption and must specifically be contained in the order of
the court, in fact, even if not prayed for by petitioner.
However, the given or proper name of the adoptee
must remain as it was originally registered in the Civil
Register. The creation of an adoptive relationship does not
confer upon the adopter the license to change the adoptees
first name. The automatic change of a first name, premised
solely upon the adoption as granted, is beyond the purview
of an adoption proceeding, which an adoption court cannot
properly grant.
Rule 103 of the Rules of Court governs petitions
for change of name, which is a proceeding in rem, so strict
compliance with all the requirements therefor is
indispensable to vest the court with jurisdiction for its
adjudication. It cannot be granted in conjunction with any
other proceeding.

Sy v. Court of Appeals (2007)
(1) The applicable provision of the law is Article 213 of the
Family Code. The preference favouring the mother over the
father is reiterated in Rule 99, Sec. 6 of the Rules of Court.
(2) The Supreme Court held that the Rules of Court permits
the ventilation of the question regarding the care and
custody of the children as an incident to any proceeding,
even a habeas corpus proceeding. Wilson Sy argues that
since Mercedes Uy-Sys petition did not include a prayer for
support of the children in accordance with Article 203 of the
Family Code, the trial court erroneously awarded support in
favor of Mercedes. However, applying Rule 10, Sec. 5 of the
Rules of Court, since the issue of support was tried with the
implied consent of the parties, it should be treated in all
respects as if it had been raised in the pleadings. And since
there is implied consent, even if no motion had been filed
and no amendment had been ordered, the Court holds that
the trial court validly rendered a judgment on the issue of
support.


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PART SEVEN. HOSPITALIZATION OF INSANE
PERSONS
RULE 101. PROCEEDINGS FOR HOSPITALIZATION OF INSANE
PERSONS

Section 1. Venue, Petition for commitment. A petition for the
commitment of a person to a hospital or other place for the
insane may be filed with the Court of First Instance of the
province where the person alleged to be insane is found. The
petition shall be filed by the Director of Health in all cases where,
in his opinion, such commitment is for the public welfare, or for
the welfare of said person who, in his judgment, is insane and
such person or the one having charge of him is opposed to his
being taken to a hospital or other place for the insane.

Section 2. Order for hearing. If the petition filed is sufficient in
form and substance, the court, by an order reciting the purpose
of the petition, shall fix a date for the hearing thereof, and copy
of such order shall be served on the person alleged to be insane,
and to the one having charge him, or on such of his relatives
residing in the province or city as the judge may deem proper.
The court shall furthermore order the sheriff to produce the
alleged insane person, if possible, on the date of the hearing.

Section 3. Hearing and judgment. Upon satisfactory proof, in
open court on the date fixed in the order, that the commitment
applied for is for the public welfare or for the welfare of the
insane person, and that his relatives are unable for any reason to
take proper custody and care of him, the court shall order his
commitment to such hospital or other place for the insane as
may be recommended by the Director of Health. The court shall
make proper provisions for the custody of property or money
belonging to the insane until a guardian be properly appointed.

Section 4. Discharge of insane. When, in the opinion of the
Director of Health, the person ordered to be committed to a
hospital or other place for the insane is temporarily or
permanently cured, or may be released without danger he may
file the proper petition with the Court of First Instance which
ordered the commitment.

Section 5. Assistance of fiscal in the proceeding. It shall be the
duty of the provincial fiscal or in the City of Manila the fiscal of
the city, to prepare the petition for the Director of Health and
represent him in court in all proceedings arising under the
provisions of this rule.

CASE NOTES

Chin Ah Foo v. Concepcion (1930)
Section 1048 of the Administrative Code provides that
When in the opinion of the Director of Health any patient
in any Government hospital or other place for the insane is
temporarily or permanently cured, or may be released
without danger, he may discharge such patient, and shall
notify the Judge of the Court of First Instance who ordered
the commitment, in case the patient is confined by order of
the court. However, under article 8 of the Penal Code, from
which the judge of the court below based his order, provides
that the permission of the court who orders the confinement
of one accused of a grave felony in an insane asylum is a
prerequisite for obtaining release from the institution.
Which provision of the law should prevail? BOTH
SHOULD BE READ TOGETHER BECAUSE IMPLIED
REPEALS ARE GENERALLY FROWNED UPON.
Thus, the net legal effect is that while the Director
of Health could not have been vested by the Legislature
with blanket authority to release without a court order any
person confined by order of the court pursuant to article 8 of
the Penal Code, the courts are also without power to
discharge a person committed to an asylum for the insane
without ascertaining or seeking for the views of the Director
of Health as to propriety of such a release. The powers of the
court and of the Director of Health are complementary with
each other.





PART EIGHT. HABEAS CORPUS

RULE 102. HABEAS CORPUS

Sec. 1. To what habeas corpus extends. - Except as otherwise
expressly provided by law, the writ of habeas corpus shall extend
to all cases of illegal confinement or detention by which any
person is deprived of his liberty, or by which the rightful custody
of any person is withheld from the person entitled thereto.

A writ of habeas corpus
12
directs a person who detains
another to produce the body of the prisoner at a certain time
and place, with the day and the cause of his caption and
detention, to do, submit to, and receive whatsoever the court
or judge awarding the writ shall consider in that behalf.
This is the remedy for all cases of (1) illegal detention or (2)
where the rightful custody of a person is withheld from one
entitled to such custody. To be entitled to the writ, the
standard required is actual and effective restraint and not
merely moral or nominal.

Restraint. However, actual physical restraint is not always
required; any restraint which will prejudice freedom of
action is sufficient (Moncupa v. Enrile). The fact that no
physical force was exerted to keep a person does not make
less real the deprivation of his personal freedom which
includes the freedom of movement, freedom to transfer from
one place to another, freedom to choose ones residence.
Freedom may be lost due to internal moral compulsion, to
founded or groundless fear, to erroneous belief in the
existence of an imaginary power of an impostor to cause
harm if not blindly obeyed, to any other psychological
element, that may curtail the mental faculty of choice or the
unhampered exercise of the will. If the actual effect of such
psychological spell is to place a person at the mercy of
another, the victim is entitled to the protection of the courts
of justice as much as the individual who is illegally deprived
of liberty by duress of physical coercion.
It may also be availed of where, as a consequence of
a judicial proceeding, (a) there has been a deprivation of a
constitutional right resulting in the restraint of a person; (b)
the court had no jurisdiction to impose the sentence; or (c)
an excessive penalty has been imposed, such sentence being
void as to the excess. Where a deprivation of a

12
Latin. Literally, You produce the body.
uLLA C8uZ Al

constitutional right is established, the court that rendered
the judgment is deemed ousted of jurisdiction and habeas
corpus is the remedy to assail the legality of detention.

Nature. A petition for habeas corpus is like a proceeding in
rem as it is an inquisition of the government, at the
suggestion and instance of the individual, most probably,
but still in the name and capacity of the sovereign. It is
constituted for the purpose of fixing the status of a person.
No judgment can be entered against anybody since there is
no real plaintiff and defendant.
Habeas corpus is not in the nature of a writ of error,
nor is it intended as substitute for the trial courts function.
It cannot take the place of appeal, certiorari or writ of error.
Thus, it cannot be used to investigate and consider
questions of error that may be raised relating to procedure
or on the merits.
The inquiry in a habeas corpus proceeding is
addressed to the question of whether the proceedings and
the assailed order are, for any reason, null and void. It is
a summary remedy.
In order for habeas corpus to lie, it is necessary that
the judgment of the court which resulted in the allegedly
illegal deprivation of liberty is no longer appealable, in
which case the writ is in the nature of a collateral attack
against a final but void judgment. If still appealable, the
remedy is appeal because habeas corpus is not a substitute for
appeal.
It is not issued as a matter of right but in the sound
discretion of the court or judge.

What are not grounds for issuance of the writ? The
alleged circumstances that the information is invalid because
the preliminary investigation is invalid and that the offense
has already prescribed are not grounds for the issuance of
writ of habeas corpus. If petitioner claims that no preliminary
investigation had been validly conducted, his remedy is to
ask the court which issued the warrant of commitment for
an investigation or reinvestigation of the case. Habeas corpus
will not lie where the person alleged to be restrained of his
liberty is in the custody of an officer under process issued by
a court which has jurisdiction to do so. The writ will not
issue if the restraint is voluntary.

Sec. 2. Who may grant the writ. - The writ of habeas corpus may
be granted by the Supreme Court, or any member thereof, on
any day and at any time, or by the Court of Appeals or any
member thereof in the instances authorized by law, and if so
granted it shall be enforceable anywhere in the Philippines, and
may be made returnable before the court or any member
thereof, or before the Court of First Instance, or any judge
thereof for the hearing and decision on the merits. It may also be
granted by a Court of First Instance, or a judge thereof, on any
day and at any time, and returnable before himself, enforceable
only within his judicial district.

This is another exception to the rule that processes of the
then CFIs are enforceable throughout the Philippines. Since
the writ was enforceable only in the judicial district where
the RTC sits, the venue of petitions in RTCs for the writ
was fixed thereby and such petitions should be filed in the
RTC of the district where it is sought to be enforced. This
was expanded to judicial region under Sec. 21, B.P. Blg. 129.
The writ, if issued by the Supreme Court, may be
made returnable before the RTC. The latter court does not
thereby become merely a recommendatory body, whose
findings and conclusions are devoid of effect unless the
Supreme Court acts on its recommendation, but such lower
court acquires the authority and the duty to inquire into the
facts and the law pertinent to the legality or illegality of the
petitioners detention and to order his discharge from
confinement should it find that he is unlawfully imprisoned
or restrained.

Sec. 3. Requisites of application therefor. - Application for the
writ shall be by petition signed and verified either by the party
for whose relief it is intended, or by some person on his behalf,
and shall set forth:
(a) That the person in whose behalf the application is
made is imprisoned or restrained of his liberty;
(b) The officer or name of the person by whom he is so
imprisoned or restrained; or, if both are unknown or uncertain,
such officer or person may be described by an assumed
appellation, and the person who is served with the writ shall be
deemed the person intended;
(c) The place where he is so imprisoned or restrained, if
known;
(d) A copy of the commitment or cause of detention of
such person, if it can be procured without impairing the efficiency
of the remedy; or, if the imprisonment or restraint is without any
legal authority, such fact shall appear.

Petition must be verified but if not, it is not fatally defective
in form. In Villavicencio v. Lukban, the Supreme Court has
held that it is the duty of a court to issue the writ if there is
evidence that a person is being unjustly restrained of his
liberty within its jurisdiction even if there is no
application therefor. However, it is necessary that the
person on whose behalf the petition is filed is under actual
and effective restraint or deprivation of liberty.

Sec. 4. When writ not allowed or discharge authorized. - If it
appears that the person alleged to be restrained of his liberty is in
the custody of an officer under process issued by a court or
judge or by virtue of a judgment or order of a court of record, and
that the court or judge had jurisdiction to issue the process,
render the judgment, or make the order, the writ shall not be
allowed; or if the jurisdiction appears after the writ is allowed, the
person shall not be discharged by reason of any informality or
defect in the process, judgment, or order. Nor shall anything in
this rule be held to authorize the discharge of a person charged
with or convicted of an offense in the Philippines, or of a person
suffering imprisonment under lawful judgment.

The process referred to in this Section is not limited to that
issued by the regular courts; it can also refer to process
issued by a governmental agency authorized to order his
confinement, as in the case of the Deportation Board.

Sec. 5. When the writ must be granted and issued. - A court or
judge authorized to grant the writ must, when a petition therefor
is presented and it appears that the writ ought to issue, grant the
same forthwith, and immediately thereupon the clerk of the
court shall issue the writ under the seal of the court; or in case of
uLLA C8uZ Al

emergency, the judge may issue the writ under his own hand, and
may depute any officer or person to serve it.

Sec. 6. To whom writ directed, and what to require. - In case of
imprisonment or restraint by an officer, the writ shall be directed
to him, and shall command him to have the body of the person
restrained of his liberty before the court or judge designated in
the writ at the time and place therein specified. In case of
imprisonment or restraint by a person not an officer, the writ
shall be directed to an officer, and shall command him to take
and have the body of the person restrained of his liberty before
the court or judge designated in the writ at the time and place
therein specified, and to summon the person by whom he is
restrained then and there to appear before said court or judge
to show the cause of the imprisonment or restraint.

Where the person is detained under governmental authority
and the illegality of his detention is not patent from the
petition for the writ, the court may issue a citation to the
government officer having the person in his custody to show
cause why the writ of habeas corpus should not issue. This is
known as a preliminary citation, as distinguished from the
peremptory writ which is issued when the cause of the
detention appears to be patently illegal, and the non-
compliance therewith is punishable.

Sec. 7. How prisoner designated and writ served. - The person to
be produced should be designated in the writ by his name, if
known, but if his name is not known he may be otherwise
described or identified. The writ may be served in any province
by the sheriff or other proper officer, or by a person deputed by
the court or judge. Service of the writ shall be made by leaving
the original with the person to whom it is directed and
preserving a copy on which to make return of service. If that
person cannot be found, or has not the prisoner in his custody,
then the service shall be made on any other person having or
exercising such custody.

Sec. 8. How writ executed and returned. - The officer to whom
the writ is directed shall convey the person so imprisoned or
restrained, and named in the writ, before the judge allowing the
writ, or, in case of his absence or disability, before some other
judge of the same court, on the day specified in the writ, unless,
from sickness or infirmity of the person directed to be
produced, such person cannot, without danger, be brought
before the court or judge; and the officer shall make due return
of the writ, together with the day and the cause of the caption
and restraint of such person according to the command thereof.

Sec. 9. Defect of form. - No writ of habeas corpus can be
disobeyed for defect of form, if it sufficiently appears therefrom
in whose custody or under whose restraint the party imprisoned
or restrained is held and the court or judge before whom he is to
be brought.

Sec. 10. Contents of return. - When the person to be produced is
imprisoned or restrained by an officer, the person who makes
the return shall state therein, and in other cases the person in
whose custody the prisoner is found shall state, in writing to the
court or judge before whom the writ is returnable, plainly and
unequivocably:
(a) Whether he has or has not the party in his custody
or power, or under restraint;
(b) If he has the party in his custody or power, or under
restraint, the authority and the true and whole cause thereof, set
forth at large, with a copy of the writ, order, execution, or other
process, if any, upon which the party is held;
(c) If the party is in his custody or power or is restrained
by him, and is not produced, particularly the nature and gravity
of the sickness or infirmity of such party by reason of which he
cannot, without danger, be brought before the court or judge;
(d) If he has had the party in his custody or power, or
under restraint, and has transferred such custody or restraint to
another, particularly to whom, at what time, for what cause, and
by what authority such transfer was made.

Sec. 11. Return to be signed and sworn to. - The return or
statement shall be signed by the person who makes it; and shall
also be sworn to by him if the prisoner is not produced, and in all
other cases unless the return is made and signed by a sworn
public officer in his official capacity.

Sec. 12. Hearing on return; Adjournments. - When the writ is
returned before one judge, at a time when the court is in session,
he may forthwith adjourn the case into the court, there to be
heard and determined. The court or judge before whom the writ
is returned or adjourned must immediately proceed to hear and
examine the return, and such other matters as are properly
submitted for consideration, unless for good cause shown the
hearing is adjourned, in which event the court or judge shall
make such order for the safekeeping of the person imprisoned
or restrained as the nature of the case requires. If the person
imprisoned or restrained is not produced because of his alleged
sickness or infirmity, the court or judge must be satisfied that it is
so grave that such person cannot be produced without danger,
before proceeding to hear and dispose of the matter. On the
hearing the court or judge shall disregard matters of form and
technicalities in respect to any warrant or order of commitment
of a court or officer authorized to commit by law.

Sec. 13. When the return evidence, and when only a plea. - If it
appears that the prisoner is in custody under a warrant of
commitment in pursuance of law, the return shall be considered
prima facie evidence of the cause of restraint; but if he is
restrained of his liberty by any alleged private authority, the
return shall be considered only as a plea of the facts therein set
forth, and the party claiming the custody must prove such facts.

Section 13 lays down the rule on the burden of proof after
the writ has been returned. If the detention is by reason of
public authority, the return is considered prima facie
evidence of the validity of the restraint and the petitioner
has the burden of proving that the restraint is illegal. On the
other hand, if the detention is by reason of private authority,
the return is considered only a plea of the facts asserted
therein and the person responsible for the detention has the
burden of proof to establish that the detention is legal and
justified.

Sec. 14. When person lawfully imprisoned recommitted, and
when let to bail. - If it appears that the prisoner was lawfully
committed, and is plainly and specifically charged in the warrant
of commitment with an offense punishable by death, he shall
not be released, discharged, or bailed. If he is lawfully
imprisoned or restrained on a charge of having committed an
offense not so punishable, he may be recommitted to
imprisonment or admitted to bail in the discretion of the court
uLLA C8uZ Al

or judge. If he be admitted to bail, he shall forthwith file a bond
in such sum as the court or judge deems reasonable, considering
the circumstances of the prisoner and the nature of the offense
charged, conditioned for his appearance before the court where
the offense is properly cognizable to abide its order or judgment;
and the court or judge shall certify the proceedings, together with
the bond, forthwith to the proper court. If such bond is not so
filed, the prisoner shall be recommitted to confinement.

Where the prisoner has been detained and held without bail
although the offense is bailable, he may in a habeas corpus
proceeding be allowed to post bail to ensure his appearance
before the court where he was charged with said offense. If
the offense is not bailable, as where it involves a capital
offense and the evidence of guilt is strong, he cannot obtain
his provisional liberty on bail by habeas corpus proceedings in
another court.

Sec. 15. When prisoner discharged if no appeal. - When the
court or judge has examined into the cause of caption and
restraint of the prisoner, and is satisfied that he is unlawfully
imprisoned or restrained, he shall forthwith order his discharge
from confinement, but such discharge shall not be effective
until a copy of the order has been served on the officer or
person detaining the prisoner. If the officer or person detaining
the prisoner does not desire to appeal, the prisoner shall be
forthwith released.

Where the person is detained under governmental authority
and the illegality of his detention is not patent from the
petition for the writ, the court may issue a citation to the
government officer having the person in his custody to show
cause why the writ of habeas corpus should not issue. This is
known as a preliminary citation, as distinguished from the
peremptory writ which is issued when the cause of the
detention appears to be patently illegal, and the non-
compliance therewith is punishable.

Sec. 16. Penalty for refusing to issue writ, or for disobeying the
same. - A clerk of a court who refuses to issue the writ after
allowance thereof and demand therefor, or a person to whom a
writ is directed, who neglects or refuses to obey or make return
of the same according to the command thereof, or makes false
return thereof, or who, upon demand made by or on behalf of
the prisoner, refuses to deliver to the person demanding, within
six (6) hours after the demand therefor, a true copy of the
warrant or order of commitment, shall forfeit to the party
aggrieved the sum of one thousand pesos, to be recovered in a
proper action, and may also be punished by the court or judge as
for contempt.

Sec. 17. Person discharged not to be again imprisoned. - A
person who is set at liberty upon a writ of habeas corpus shall
not be again imprisoned for the same offense unless by the
lawful order or process of a court having jurisdiction of the
cause or offense; and a person who knowingly, contrary to the
provisions of this rule, recommits or imprisons, or causes to be
committed or imprisoned, for the same offense, or pretended
offense, any person so set at liberty, or knowingly aids or assists
therein, shall forfeit to the party aggrieved the sum of one
thousand pesos, to be recovered in a proper action,
notwithstanding any colorable pretense or variation in the
warrant of commitment, and may also be punished by the court
or judge granting writ as for contempt.

Sec. 18. When prisoner may be removed from one custody to
another. - A person committed to prison, or in custody of an
officer, for any criminal matter, shall not be removed therefrom
into the custody of another officer unless by legal process, or
the prisoner be delivered to an inferior officer to carry to jail, or,
by order of the proper court or judge, be removed from one
place to another within the Philippines for trial, or in case of fire,
epidemic, insurrection, or other necessity or public calamity; and
a person who, after such commitment, makes, signs, or
countersigns any order for such removal contrary to this
section, shall forfeit to the party aggrieved the sum of one
thousand pesos, to be recovered in a proper action.

Sec. 19. Record of writ, fees and costs. - The proceedings upon a
writ of habeas corpus shall be recorded by the clerk of the court,
and upon the final disposition of such proceedings the court or
judge shall make such order as to costs as the case requires. The
fees of officers and witnesses shall be included in the costs
taxed, but no officer or person shall have the right to demand
payment in advance of any fees to which he is entitled by virtue
of the proceedings. When a person confined under color of
proceedings in a criminal case is discharged, the costs shall be
taxed against the Republic of the Philippines, and paid out of its
Treasury; when a person in custody by virtue or under color of
proceedings in a civil case is discharged, the costs shall be taxed
against him, or against the person who signed the application
for the writ, or both, as the court shall direct.

The release contemplated under a writ of habeas corpus is one
which is free from any involuntary restraint. When the
person so released continues to be denied one or more of his
constitutional freedoms, where there is present a denial of
due process, or where the restraints are not merely
involuntary but appear to be unnecessary, the person
concerned or those acting on his behalf may still avail of the
privilege of the writ, as in the case of Moncupa v. Enrile.

A writ of habeas corpus reaches the body but not the record,
while a writ of certiorari reaches the record, but not the
body. They are two different things. Thus, certiorari may lie
with the writ of habeas corpus for the purpose of review, in
recognition of the supervisory powers of superior courts, but
the reverse is not true, or where the petitioner has resorted
to the remedy of appeal or certiorari because habeas corpus, as
stated earlier, cannot be made to perform the functions of a
writ of error or appeal for the purpose of reviewing mere
errors or irregularities in the proceedings of a court having
jurisdiction over the person and the subject matter.

The writ of habeas corpus is not intended as a substitute for
the functions of a trial court and absent exceptional
circumstances, the orderly course of trial should be pursued
and the usual remedies be exhausted before the writ may be
invoked. Habeas corpus is normally not available in advance
of trial to determine jurisdictional errors that may arise.

While the extraordinary writ of habeas corpus is the
appropriate remedy to inquire into questions of
constitutional rights, it does not find the conditions of the
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detainees confinement to be a proper subject of inquiry
therein.

Habeas corpus only extends to the fact and duration of
confinement. It exists as a speedy and effectual remedy to
relieve persons from unlawful restraint, but is not a means
for the redress of grievances or to seek injunctive relief or
damages in the proceedings therein. However, this does not
foreclose the right of the victims to seek redress of
grievances in the proper actions or proceedings in court, or
for the detainees to obtain injunctive relief or damages
through the proper remedies provided by law.

CASE NOTES

Moncupa v. Enrile (1986)
The Supreme Court observed that certain restrictions were
attached to Moncupas temporary release: (1) Moncupa
needs to secure the approval of the respondents for travel
outside of Metro Manila; (2) He also needs to secure prior
approval of respondents before changing his place of
residence; (3) His freedom of speech is limited in that he
must not participate in any interview conducted by any local
of foreign mass media representatives nor give any press
release or information that is inimical to the interest of
national security; and (4) He is required to regularly report
to respondents or their representatives.
Moncupa thus argues that his temporary release
did not render the case moot and academic but that it
merely shifted the inquiry from the legality of his actual
detention to the legality of the conditions imposed by the
respondents.
The Court ruled that the attachment of restrictions
to the temporary release of Moncupa constituted restraints
upon his liberty. Such restrictions limit the freedom of
movement of the petitioner. It is not physical restraint
alone which is inquired into by the writ of habeas
corpus. Therefore, the present petition by Moncupa has not
yet become moot and academic.
Citing Toyoto v. Fidel Ramos (1985), the Court held
that a petition for habeas corpus becomes moot and academic
when the restraint on the liberty of the petitioners is lifted
either temporarily or permanently. Thus, where a person
continues to be unlawfully denied one or more of his
constitutional freedoms, where there is present a denial of
due process, where the restraints are not merely involuntary
but appear to be unnecessary, and where a deprivation of
freedom originally valid has, in the light of subsequent
developments, become arbitrary, the person concerned or
those applying on his behalf may still avail themselves of the
privilege of the writ.

Villavicencio v. Lukban (1919)
(1) The petitioners were relatives and friends of the
deportees, the way the expulsion was conducted was such
that it was impossible for the women to sign a petition for
habeas corpus. It was consequently proper for the writ to be
submitted by other persons on their behalf. In fact, even in
the absence of a petition for habeas corpus, the law makes it
the courts duty to grant a writ of habeas corpus upon
evidence that within such courts jurisdiction, a person is
being unjustly imprisoned or deprived of his liberty (Sec. 93,
Code of Criminal Procedure).
(2) While the general rule is that the writ of habeas corpus
must issue from the nearest judge of first instance, this is
not a hard and fast rule. Sec. 79 of the Code of Criminal
Procedure and Sec. 526 of the Code of Civil Procedure
empower the Supreme Court or any judge thereof with the
authority to grant the writ, which shall be enforceable
throughout the Philippines. Whether the writ should be
made returnable to the Supreme Court or to some inferior
court falls within the discretion of the Supreme Court and
depends upon certain circumstances. In this case it was not
shown that the Davao CFI was in session, or that the
women had any means to bring a petition for habeas corpus
before said court.
(3) The gravamen of a petition for habeas corpus is the
restraint of liberty. Any restraint which will preclude
freedom of action is sufficient. The forcible taking of these
women from Manila and their subsequent deportation to a
far-off region deprived these women of their freedom of
locomotion just as effectively as if they had been imprisoned.
Placed in Davao without either money or personal
belongings, they were prevented from exercising the liberty
of going when and where they pleased.

In re Engr. Ashraf Kunting (2006)
Under Sec. 1, Rule 102 of the Rules of Court, the remedy of
habeas corpus has one objective: to inquire into the cause of
detention of a person, and if found to be illegal, the court
orders the release of the detainee. If however, detention is
found to be lawful, then the habeas corpus proceedings
terminate.
Sec. 4, Rule 102 provides that if a person alleging
to have been restrained of his liberty is in custody of an
officer under process issued by a court or judge, the writ
shall not be allowed.
In this case, Kuntings detention was under process
issued by the Basilan RTC. He was charged with four counts
of kidnapping for ransom with serious illegal detention, so
following Sec. 4, the writ cannot issue and Kunting cannot
be discharged since he had been charged with a criminal
offense.

Burgos v. Macapagal-Arroyo (2010)
There are significant lapses in the handling of the
investigation. PNP-CIDG failed to identify the cartographic
sketches of the five abductors of Jonas based on their
interview of the eyewitnesses to the abduction. No
significant follow-through was made by PNP-CIDG in
ascertaining the identities of the cartographic sketches of
two of the abductors despite evidentiary leads by State
Prosecutor Velasco of the DOJ.
The Court also directed the Commission on Human
Rights to conduct appropriate investigative proceedings,
including field investigations acting as the Courts
commissioned agency for the purposes of the Rule on the
Writ of Amparo with the tasks of (a) ascertaining the
identities of the persons appearing in the cartographic
sketches and their whereabouts; (b) determining the
identities and locations of the persons identified by State
Prosecutor Velasco allegedly involved in the abduction of
Jonas; (c) inquiring into the veracity of the claims of Lipio
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and Manuel that Jonas was abducted by elements of the
CPP-NPA; (d) determining the identities of these elements
of the CPP-NPA; and (e) undertaking all measures that may
be necessary to live up to the extraordinary measures
required in addressing an enforced disappearance under the
Rule on the Writ of Amparo.





PART NINE. CHANGE OF NAME AND
CANCELLATION OR CORRECTION OF ENTRIES IN
THE CIVIL REGISTRY

RULE 103. CHANGE OF NAME

Section 1. Venue. A person desiring to change his name shall
present the petition to the Court of First Instance of the province
in which he resides, or, in the City of Manila, to the Juvenile and
Domestic Relations Court.

Section 2. Contents of petition. A petition for change of name
shall be signed and verified by the person desiring his name
changed, or some other person on his behalf, and shall set forth:
(a) That the petitioner has been a bona fide resident of
the province where the petition is filed for at least three (3) years
prior to the date of such filing;
(b) The cause for which the change of the petitioner's
name is sought;
(c) The name asked for.

Section 3. Order for hearing. If the petition filed is sufficient in
form and substance, the court, by an order reciting the purpose
of the petition, shall fix a date and place for the hearing thereof,
and shall direct that a copy of the order be published before the
hearing at least once a week for three (3) successive weeks in
some newspaper of general circulation published in the province,
as the court shall deem best. The date set for the hearing shall
not be within thirty (30) days prior to an election nor within four
(4) month after the last publication of the notice.

Section 4. Hearing. Any interested person may appear at the
hearing and oppose the petition. The Solicitor General or the
proper provincial or city fiscal shall appear on behalf of the
Government of the Republic.

Section 5. Judgment. Upon satisfactory proof in open court on
the date fixed in the order that such order has been published as
directed and that the allegations of the petition are true, the court
shall, if proper and reasonable cause appears for changing the
name of the petitioner, adjudge that such name be changed in
accordance with the prayer of the petition.

Section 6. Service of judgment. Judgments or orders rendered
in connection with this rule shall be furnished the civil registrar of
the municipality or city where the court issuing the same is
situated, who shall forthwith enter the same in the civil register.


RULE 108. CANCELLATION OR CORRECTION OF ENTRIES IN
THE CIVIL REGISTRY
Section 1. Who may file petition. Any person interested in any
act, event, order or decree concerning the civil status of persons
which has been recorded in the civil register, may file a verified
petition for the cancellation or correction of any entry relating
thereto, with the Court of First Instance of the province where
the corresponding civil registry is located.

Section 2. Entries subject to cancellation or correction. Upon
good and valid grounds, the following entries in the civil register
may be cancelled or corrected: (a) births: (b) marriage; (c) deaths;
(d) legal separations; (e) judgments of annulments of marriage; (f)
judgments declaring marriages void from the beginning; (g)
legitimations; (h) adoptions; (i) acknowledgments of natural
children; (j) naturalization; (k) election, loss or recovery of
citizenship; (l) civil interdiction; (m) judicial determination of
filiation; (n) voluntary emancipation of a minor; and (o) changes
of name.

Section 3. Parties. When cancellation or correction of an entry
in the civil register is sought, the civil registrar and all persons who
have or claim any interest which would be affected thereby shall
be made parties to the proceeding.

Section 4. Notice and publication. Upon the filing of the
petition, the court shall, by an order, fix the time and place for the
hearing of the same, and cause reasonable notice thereof to be
given to the persons named in the petition. The court shall also
cause the order to be published once a week for three (3)
consecutive weeks in a newspaper of general circulation in the
province.

Section 5. Opposition. The civil registrar and any person having
or claiming any interest under the entry whose cancellation or
correction is sought may, within fifteen (15) days from notice of
the petition, or from the last date of publication of such notice,
file his opposition thereto.

Section 6. Expediting proceedings. The court in which the
proceeding is brought may make orders expediting the
proceedings, and may also grant preliminary injunction for the
preservation of the rights of the parties pending such
proceedings.

Section 7. Order. After hearing, the court may either dismiss
the petition or issue an order granting the cancellation or
correction prayed for. In either case, a certified copy of the
judgment shall be served upon the civil registrar concerned who
shall annotated the same in his record.


CIVIL CODE

Art. 376. No person can change his name or surname without
judicial authority.

REPUBLIC ACT NO. 9048 March 22, 2001
AN ACT AUTHORIZING THE CITY OR MUNICIPAL CIVIL
REGISTRAR OR THE CONSUL GENERAL TO CORRECT A
CLERICAL OR TYPOGRAPHICAL ERROR IN AN ENTRY
AND/OR CHANGE OF FIRST NAME OR NICKNAME IN THE
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CIVIL REGISTER WITHOUT NEED OF A JUDICIAL ORDER,
AMENDING FOR THIS PURPOSE ARTICLES 376 AND 412 OF
THE CIVIL CODE OF THE PHILIPPINES
Be it enacted by the Senate and the House of Representatives of the
Philippines in Congress assembled:
Section 1. Authority to Correct Clerical or Typographical Error and
Change of First Name or Nickname No entry in a civil register
shall be changed or corrected without a judicial order, except for
clerical or typographical errors and change of first name or
nickname which can be corrected or changed by the concerned
city or municipal civil registrar or consul general in accordance
with the provisions of this Act and its implementing rules and
regulations.
Section 2. Definition of Terms As used in this Act, the following
terms shall mean:
(1) "City or Municipal civil registrar" refers to the head of
the local civil registry office of the city or municipality,
as the case may be, who is appointed as such by the
city or municipal mayor in accordance with the
provisions of existing laws.
(2) "Petitioner" refers to a natural person filing the
petition and who has direct and personal interest in the
correction of a clerical or typographical error in an entry
or change of first name or nickname in the civil register.
(3) "Clerical or typographical error" refers to a mistake
committed in the performance of clerical work in
writing, copying, transcribing or typing an entry in the
civil register that is harmless and innocuous, such as
misspelled name or misspelled place of birth or the like,
which is visible to the eyes or obvious to the
understanding, and can be corrected or changed only
by reference to other existing record or
records:Provided, however, That no correction must
involve the change of nationality, age, status or sex of
the petitioner.
(4) "Civil Register" refers to the various registry books
and related certificates and documents kept in the
archives of the local civil registry offices, Philippine
Consulates and of the Office of the Civil Registrar
General.
(5) "Civil registrar general" refers to the Administrator of
the National Statistics Office which is the agency
mandated to carry out and administer the provision of
laws on civil registration.
(6) "First name" refers to a name or nickname given to a
person which may consist of one or more names in
addition to the middle and last names.
Section 3. Who May File the Petition and Where. Any person
having direct and personal interest in the correction of a clerical
or typographical error in an entry and/or change of first name or
nickname in the civil register may file, in person, a verified
petition with the local civil registry office of the city or
municipality where the record being sought to be corrected or
changed is kept.
In case the petitioner has already migrated to another place in
the country and it would not be practical for such party, in terms
of transportation expenses, time and effort to appear in person
before the local civil registrar keeping the documents to be
corrected or changed, the petition may be filed, in person, with
the local civil registrar of the place where the interested party is
presently residing or domiciled. The two (2) local civil registrars
concerned will then communicate to facilitate the processing of
the petition.
Citizens of the Philippines who are presently residing or
domiciled in foreign countries may file their petition, in person,
with the nearest Philippine Consulates.
The petitions filed with the city or municipal civil registrar or the
consul general shall be processed in accordance with this Act and
its implementing rules and regulations.
All petitions for the clerical or typographical errors and/or change
of first names or nicknames may be availed of only once.
Section 4. Grounds for Change of First Name or Nickname. The
petition for change of first name or nickname may be allowed in
any of the following cases:
(1) The petitioner finds the first name or nickname to be
ridiculous, tainted with dishonor or extremely difficult
to write or pronounce.
(2) The new first name or nickname has been habitually
and continuously used by the petitioner and he has
been publicly known by that by that first name or
nickname in the community: or
(3) The change will avoid confusion.
Section 5. Form and Contents of the Petition. The petition shall
be in the form of an affidavit, subscribed and sworn to before any
person authorized by the law to administer oaths. The affidavit
shall set forth facts necessary to establish the merits of the
petition and shall show affirmatively that the petitioner is
competent to testify to the matters stated. The petitioner shall
state the particular erroneous entry or entries, which are sought
to be corrected and/or the change sought to be made.
The petition shall be supported with the following documents:
(1) A certified true machine copy of the certificate or of
the page of the registry book containing the entry or
entries sought to be corrected or changed.
(2) At least two (2) public or private documents showing
the correct entry or entries upon which the correction
or change shall be based; and
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(3) Other documents which the petitioner or the city or
municipal civil registrar or the consul general may
consider relevant and necessary for the approval of the
petition.
In case of change of first name or nickname, the petition shall
likewise be supported with the documents mentioned in the
immediately preceding paragraph. In addition, the petition shall
be published at least once a week for two (2) consecutive weeks
in a newspaper of general circulation. Furthermore, the petitioner
shall submit a certification from the appropriate law enforcement
agencies that he has no pending case or no criminal record.
The petition and its supporting papers shall be filed in three (3)
copies to be distributed as follows: first copy to the concerned
city or municipal civil registrar, or the consul general; second copy
to the Office of the Civil Registrar General; and third copy to the
petitioner.
Section 6. Duties of the City or Municipal Civil Registrar or the
Consul General. The city or municipal civil registrar or the consul
general to whom the petition is presented shall examine the
petition and its supporting documents. He shall post the petition
in a conspicuous place provided for that purpose for ten (10)
consecutive days after he finds the petition and its supporting
documents sufficient in form and substance.
The city or municipal civil registrar or the consul general shall act
on the petition and shall render a decision not later than five (5)
working days after the completion of the posting and/or
publication requirement. He shall transmit a copy of his decision
together with the records of the proceedings to the Office of the
Civil Registrar General within five (5) working days from the date
of the decision.
Section 7. Duties and Powers of the Civil Registrar General. The
civil registrar general shall, within ten (10) working days from
receipt of the decision granting a petition, exercise the power to
impugn such decision by way of an objection based on the
following grounds:
(1) The error is not clerical or typographical;
(2) The correction of an entry or entries in the civil
register is substantial or controversial as it affects the
civil status of a person; or
(3) The basis used in changing the first name or
nickname of a person does not fall under Section 4.
The civil registrar general shall immediately notify the city or
municipal civil registrar or the consul general of the action taken
on the decision. Upon receipt of the notice thereof, the city or
municipal civil registrar or the consul general shall notify the
petitioner of such action.
The petitioner may seek reconsideration with the civil registrar
general or file the appropriate petition with the proper court.
If the civil registrar general fails to exercise his power to impugn
the decision of the city or municipal civil registrar or of the consul
general within the period prescribed herein, such decision shall
become final and executory.
Where the petition is denied by the city or municipal civil registrar
or the consul general, the petitioner may either appeal the
decision to the civil registrar general or file the appropriate
petition with the proper court.
Section 8. Payment of Fees. The city or municipal civil registrar
or the consul general shall be authorized to collect reasonable
fees as a condition for accepting the petition. An indigent
petitioner shall be exempt from the payment of the said fee.
Section 9. Penalty Clause. - A person who violates any of the
provisions of this Act shall, upon conviction, be penalized by
imprisonment of not less than six (6) years but not more than
twelve (12) years, or a fine of not less than Ten thousand pesos
(P10,000.00) but not more than One Hundred Thousand pesos
(P100,000.00), or both, at the discretion of the court.
In addition, if the offender is a government official or employee
he shall suffer the penalties provided under civil service laws,
rules and regulations.
Section 10. Implementing Rules and Regulations. - The civil
registrar general shall, in consultation with the Department of
Justice, the Department of Foreign Affairs, the Office of the
Supreme Court Administrator, the University of the Philippines
Law Center and the Philippine Association of Civil Registrars,
issue the necessary rules and regulations for the effective
implementation of this Act not later than three (3) months from
the effectivity of this law.
Section 11. Retroactivity Clause. - This Act shall have retroactive
effect insofar as it does not prejudice or impair vested or acquired
rights in accordance with the Civil Code and other laws.
Section 12. Separability Clause. - If any portion or provision of this
Act is declared void or unconstitutional, the remaining portions or
provisions thereof shall not be affected by such declaration.
Section 13. Repealing Clause - All laws, decrees, orders, rules and
regulations, other issuances, or parts thereof inconsistent with
the provisions of this Act are hereby repealed or modified
accordingly.
Section 14. Effectivity Clause. - This Act shall take effect fifteen
(15) days after its complete publication in at least two (2) national
newspapers of general circulation.
Approved: March 22, 2001
(Sgd.)
GLORIA MACAPAGAL-ARROYO
President of the Philippines

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IRR, R.A. No. 9048
ADMINISTRATIVE ORDER NO. 1, SERIES OF 2001
Subject: RULES AND REGULATIONS GOVERNING THE
IMPLEMENTATION OF REPUBLIC ACT NO. 9048
Pursuant to Section 10 of R.A. No. 9048, which took effect on 22
April 2001, the following rules and regulations are hereby
promulgated for the information, guidance and compliance of all
concerned parties.
PRELIMINARY STATEMENT
Article 376 of the Civil Code provides that "No person can change
his name or surname without judicial authority.". Article 412 of
the same Code provides that "No entry in a civil register shall be
changed or corrected, without a judicial order.".
Republic Act No. 9048 amended Articles 376 and 412. Section 1
of this amendatory law provides: "No entry in a civil register shall
be changed or corrected without a judicial order, except for
clerical or typographical errors and change of first name or
nickname which can be corrected or changed by the concerned
city or municipal civil registrar or consul general in accordance
with the provisions of this Act and its implementing rules and
regulations.".
As provided under Section 10 of Republic Act No. 9048, the Civil
Registrar General promulgated these rules and regulations, in
consultation with the representatives from the Department of
Justice, Department of Foreign Affairs, Office of the Supreme
Court Administrator, University of the Philippines Law Center and
Philippine Association of Civil Registrars.
IMPLEMENTING RULES AND REGULATIONS
Rule 1. Authority to correct clerical or typographical error and to
change first name or nickname. - The city/municipal civil
registrar, Consul General, including the Clerk of the Shari'a Court
in his capacity as District or Circuit Registrar of Muslim Marriages,
Divorces, Revocations of Divorces and Conversions, are hereby
authorized to correct clerical or typographical error and to change
first name or nickname in the civil register.
Rule 2. Definition of terms. - As used in this Order, the following
terms shall mean:
2.1. City or Municipal Civil Registrar (C/MCR) - Refers to
the head of the local civil registry office (LCRO) of the
city or municipality, as the case may be, who is
appointed by the city or municipal mayor in accordance
with the provisions of existing laws.
2.2. Consul General (CG) - Refers to an official of the
Department of Foreign Affairs who has been issued the
consular commissions by the President and/or the
Secretary of Foreign Affairs. In a foreign service
establishment of the Philippines where there is no
Consul General, the civil registration function and duties
herein provided for the Consul General shall be
exercised and performed by the Consul or Vice Consul
who should be similarly issued consular commissions
by the President and/or the Secretary of Foreign
Affairs.
2.3. District/Circuit Registrar (D/CR) - Refers to the
Clerk of the Shari'a District or Circuit Court acting in the
performance of its civil registration function with regard
to Muslim Marriages, Divorces, Revocations of Divorces
and Conversions under Title VI, Book Two of
Presidential Decree No. 1083 which is otherwise known
as the Code of Muslim Personal Laws.
2.4. Civil Registrar General (CRG) - Refers to the
Administrator of the National Statistics Office (NSO)
which is the agency mandated to carry out and
administer the provisions of laws on civil registration.
2.5. Local Civil Registry Office (LCRO) - Refers to an
office or department in the city or municipal
government that is mandated to perform civil
registration function.
2.6. Petitioner - Refers to a natural person filing the
petition and who has direct and personal interest in the
correction of a clerical or typographical error in an entry
or change of first name or nickname in the civil register.
2.7. Indigent petitioner - Refers to a destitute, needy
and poor individual who is certified as such by the social
welfare and development office of the city/municipal
government.
2.8. Clerical or typographical error - Refers to a mistake
committed in the performance of clerical work in
writing, copying, transcribing or typing an entry in the
civil register that is harmless and innocuous, such as
misspelled name or misspelled place of birth or the like,
which is visible to the eyes or obvious to the
understanding, and can be corrected or changed only
by reference to other existing record or records:
Provided, however, That no correction must involve the
change of nationality, age, status or sex of the
petitioner.
2.9. First name - Refers to the name or nickname given
to a person which may consist of one or more names in
addition to the middle and last names.
2.10. Civil Register - Refers to the various registry books
and related certificates and documents kept in the
archives of the LCROs, Philippine Consulates, Office of
the Civil Registrar General, and Shari'a District/Circuit
Courts.
2.11. Newspaper of general circulation - Refers to a
newspaper that is published for the dissemination of
local news and general information; that has a bona fide
subscription list of paying subscribers; and that is
published at regular intervals.
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2.12. Record-keeping civil registrar (RKCR) - Refers to
the C/MCR in whose archive is kept the record, which
contains the error to be corrected or the first name to
be changed. This term shall be used only in cases
involving migrant petitioner.
2.13. Petition-receiving civil registrar (PRCR) - Refers to
the C/MCR of the city or municipality where the
petitioner resides or is domiciled and who receives the
petition on behalf of the RKCR in the case of a migrant
petitioner.
2.14. Migrant petitioner (MP) - Refers to a petitioner
whose present residence or domicile is different from
the place where the civil registry record to be corrected
was registered.
2.15. Spouse - Refers to one's legal wife or legal
husband.
2.16. Guardian - Refers to a person lawfully invested
with the power, and charged with the duty, of taking
care of the person and managing the property and
rights of another person, who, for defect of age,
understanding, or self-control, is considered incapable
of administering his own affairs. This term may refer
also to those who, under Article 216 of the Family Code,
are authorized to exercise substitute parental authority
over the child in default of parents or a judicially
appointed guardian. These persons are the following:
2.16.1. The surviving grandparent, as provided
in Article 214 of the Family Code;
2.16.2. The oldest brother or sister, over
twenty-one years of age, unless unfit or
disqualified; and
2.16.3. The child's actual custodian, over
twenty-one years of age, unless unfit or
disqualified.
Rule 3. Who may file the petition. - Any person of legal age,
having direct and personal interest in the correction of a clerical
or typographical error in an entry and/or change of first name or
nickname in the civil register, may file the petition. A person is
considered to have direct and personal interest when he is the
owner of the record, or the owner's spouse, children, parents,
brothers, sisters, grandparents, guardian, or any other person duly
authorized by law or by the owner of the document sought to be
corrected: Provided, however, That when a person is a minor or
physically or mentally incapacitated, the petition may be filed on
his behalf by his spouse, or any of his children, parents, brothers,
sisters, grandparents, guardians, or persons duly authorized by
law.
Rule 4. Where to file the petition. - The verified petition may be
filed, in person, with the LCRO of the city or municipality or with
the Office of the Clerk of the Shari'a Court, as the case may be,
where the record containing the clerical or typographical error to
be corrected, or first name to be changed, is registered.
When the petitioner had already migrated to another place
within the Philippines and it would not be practical for such party,
in terms of transportation expenses, time and effort to appear in
person before the RKCR, the petition may be filed, in person,
with the PRCR of the place where the migrant petitioner is
residing or domiciled.
Any person whose civil registry record was registered in the
Philippines, or in any Philippine Consulate, but who is presently
residing or domiciled in a foreign country, may file the petition, in
person, with the nearest Philippine Consulate, or in accordance
with Rule 3.
Rule 5. Processing of the petition. - The C/MCR shall:
5.1. Examine the petition as to completeness of
requirements and supporting documents as required
under Rule 8.
5.2. Determine whether or not the civil registry
document, which is the subject of the petition, forms
part of the civil register of his office. If it is part of the
civil register of his office, he shall assume jurisdiction,
otherwise, Rule 6 shall apply.
5.3. Receive the petition upon payment of the
prescribed fees by the petitioner.
5.4. Ensure that posting or publication requirement is
complied with in accordance with Rule 9.
5.5. Investigate and consider any third party
intervention to the petition.
5.6. Enter all petitions in the appropriate record book, as
may be prescribed by the CRG, indicating therein,
among others, the following information:
5.6.1. Petition number
5.6.2. Name of petitioner
5.6.3. Type of petition
5.6.4. Date of petition
5.6.5. Date of receipt
5.6.6. Entry sought to be corrected/changed
5.6.7. Correction/Change made
5.6.8. Action taken or decision
5.7 Act on the petition within five (5) working days after
the completion of the posting and/or publication
requirement. In case the C/MCR, CG or D/CR approves
the petition, he shall render his decision in a prescribed
form in triplicate copies, indicating therein the entry
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sought to be corrected or the first name sought to be
changed in the civil register, and the corresponding
correction or change made.
5.8 Deny the petition for correction of clerical or
typographical error based on any of the following
grounds:
5.8.1. The supporting documents are not
authentic and genuine.
5.8.2. The C/MCR has personal knowledge
that a similar petition is filed or pending in
court or in any other LCRO.
5.8.3. The petition involves the same entry in
the same document, which was previously
corrected or changed under this Order.
5.8.4. The petition involves the change of the
status, sex, age or nationality of the petitioner
or of any person named in the document.
5.8.5. Such other grounds as the C/MCR may
deem not proper for correction.
5.9. In the case of petition for change of first name or
nickname, the C/MCR shall deny the petition based on
any of the following grounds, in addition to Rule 5.8.1 to
Rule 5.8.3:
5.9.1. The first name or nickname sought to be
changed is neither ridiculous, nor tainted with
dishonor nor extremely difficult to write or
pronounce.
5.9.2. The new first name or nickname sought
to be adopted has not been habitually and
continuously used by the petitioner, and he
has not been publicly known by that first
name or nickname in the community.
5.9.3. There is no confusion to be avoided or
created with the use of the registered first
name or nickname of the petitioner.
5.10. Record the decision in the appropriate record
book as mentioned in Rule 5.6, and shall transmit said
decision together with the records of proceedings to
the OCRG within five (5) working days after the date of
decision.
Insofar as applicable, Rule 5 shall be observed also by the CG and
D/CR.
Rule 6. Procedures for migrant petitioner. - When the petition is
for or from a person who is a resident or domiciled in a place
different from the place where the document sought to be
corrected was registered, the following procedures shall be
observed:
6.1. The PRCR shall perform the following:
6.1.1. Examine the petition as to completeness
of requirements and supporting documents as
required under Rule 8.
6.1.2. Receive the petition upon payment by
the petitioner of prescribed fees as required
under Rule 18.
6.1.3. Ensure that posting or publication of the
petition as required under Rule 9 is complied
with.
6.1.4. Endorse the petition and its supporting
documents, including the filing fee in postal
money order or in any other mode of
payment to the RKCR.
6.2. The RKCR shall perform the following:
6.1.1. Examine the petition as to completeness
of requirements and supporting documents as
required under Rule 8 and as transmitted by
the PRCR.
6.1.2. Observe the procedures under Rule 5.5
to Rule 5.9.
Insofar as applicable, Rule 6 shall be observed
also by the CG and D/CR.
Rule 7. Availment of the privilege. - The correction of clerical or
typographical error shall be availed of only once with respect to a
particular entry or entries in the same civil registry record.
However, with regard to the change of first name or nickname in
the birth certificate, the privilege shall be availed of only once
subject to Rule 12 hereunder.
Rule 8. Form and content of the petition. - The petition shall be
in the prescribed form of an affidavit, subscribed and sworn to
before any person authorized by law to administer oath. The
affidavit shall set forth facts necessary to establish the merits of
the petition and shall show affirmatively that the petitioner is
competent to testify to the matters stated. The petitioner shall
state the particular erroneous entry or entries sought to be
corrected or the first name sought to be changed, and the
correction or change to be made.
8.1. The petition for the correction of clerical or
typographical error shall be supported with the
following documents:
8.1.1. A certified true machine copy of the
certificate or of the page of the registry book
containing the entry or entries sought to be
corrected or changed;
8.1.2. At least two (2) public or private
documents showing the correct entry or
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entries upon which the correction or change
shall be based;
8.1.3. Notice or certification of posting
8.1.4. Other documents which the petitioner
or the C/MCR, or the CG, or D/CR may
consider relevant and necessary for the
approval of the petition.
8.2. In case of change of first name or nickname, the
petition shall be supported with the following
documents and shall comply with the following
requirements:
8.2.1. Documents required under Rule 8.1.
8.2.2. A clearance or a certification that the
owner of the document has no pending
administrative, civil or criminal case, or no
criminal record, which shall be obtained from
the following:
8.2.2.1. Employer, if employed
8.2.2.2. National Bureau of
Investigation
8.2.2.3. Philippine National Police
8.2.3. Affidavit of publication from the
publisher and a copy of the newspaper
clipping.
8.3. The C/MCR, CG or D/CR shall not accept a petition
unless all requirements and supporting documents are
complied with by the petitioner.
8.4. The petition and its supporting documents shall be
filed in three (3) copies, and upon acceptance, shall be
distributed as follows:
8.4.1. First copy to the concerned C/MCR, CG
or D/CR,
8.4.2. Second copy to the OCRG, and
8.4.3. Third copy to the petitioner.
Rule 9. Posting and publication of the petition. - The petition
shall be posted by the concerned C/MCR, CG or D/CR in a
conspicuous place provided for that purpose for ten (10)
consecutive days after he finds the petition and its supporting
documents sufficient in form and substance.
For a change of first name, the petition shall, in addition to the
above-stated posting requirements, be published at least once a
week for two (2) consecutive weeks in a newspaper of general
circulation. As proof of publication, the petitioner shall attach to
the petition a clipping of the publication and an affidavit of
publication from the publisher of the newspaper where
publication was made.
In the case of migrant petitioner, the petition shall be posted first
at the office of the PRCR for ten (10) consecutive days before
sending it to the RKCR. Upon receipt, the RKCR shall post again
the petition in his office for another ten (10) consecutive days.
When the petition is for a change of first name, the migrant
petitioner shall publish the petition in a newspaper of general and
national circulation.
In the case where a person's civil registry record or records were
registered in the Philippines or in any of the Philippine
Consulates, but the persons presently resides or is domiciled in a
foreign country, posting and/or publication, as the case may be,
shall be done in the place where the petition is filed and in the
place where the record sought to be corrected is kept.
Rule 10. Duties of the C/MCR. - The C/MCR shall have the
following duties:
10.1. Examine the petition and its supporting
documents.
10.2. If necessary, conduct investigation by interviewing
and asking probing questions to the petitioner.
10.3. Post the petition in a conspicuous place provided
for that purpose for ten (10) consecutive days after he
finds the petition and its supporting documents
sufficient in form and substance.
10.4. Act on the petition and render a decision not later
than five (5) working days after the completion of the
posting and/or publication requirement.
10.5. Transmit a copy of the decision together with the
records of the proceedings to the OCRG within five (5)
working days after the date of the decision.
10.6. Perform such other duties and functions as may
be necessary to carry out the provisions of R.A. 9048.
Insofar as applicable, the CG and the D/CR shall perform the
duties of the C/MCR as provided for under this Rule.
Rule 11. Duties and powers of the CRG. - The CRG shall have the
following duties and powers:
11.1. Impugn the decision of the C/MCR or CG or D/CR
within ten (10) working days after receipt of the
decision granting the petition based on any of the
following grounds:
11.1.1. The error is not clerical or typographical.
11.1.2. The correction of an entry in the civil
register is substantial or controversial as it
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involves the change of the age, sex,
nationality or civil status of a person.
11.1.3. The petition for correction of clerical or
typographical error was not posted, or the
petition for change of first name was not
published as required under Rule 9.
11.1.4. The basis used in changing the first
name or nickname of the person does not fall
under any of the following circumstances:
11.1.4.1. The name or nickname is
ridiculous, tainted with dishonor or
extremely difficult to write or
pronounce.
11.1.4.2. The new first name or
nickname has been habitually and
continuously used by the petitioner
and he has been publicly known by
that first name or nickname in the
community.
11.1.4.3. The change of first name or
nickname will avoid confusion.
11.1.5. The C/MCR does not have authority to
take cognizance of the case.
11.2. Notify the C/MCR or the CG or the D/CR of the
action taken on the decision not later than ten (10)
working days from the date of impugning or approving
the decision.
11.3. Act on all appeals or reconsideration duly filed by
the petitioner.
11.4. Devise or cause to be devised the forms necessary
or required for the effective implementation of this
Order.
11.5. Perform such other duties and functions as may be
necessary to carry out the provisions of R.A. 9048.
Rule 12. Effect of approving the petition for change of name. -
When the petition for a change of first name is approved by the
C/MCR or CG or D/CR and such decision has not been impugned
by the CRG, the change shall be reflected in the birth certificate
by way of marginal annotation. In case there are other civil
registry records of the same person which are affected by such
change, the decision of approving the change of first name in the
birth certificate, upon becoming final and executory, shall be
sufficient to be used as basis in changing the first name of the
same person in his other affected records without need for filing
a similar petition. In such a case, the successful petitioner shall file
a request in writing with the concerned C/MCR, CG or D/CR to
make such marginal annotation, attaching thereto a copy of the
decision.
Rule 13. Effect of denying the petition. - Where the petition is
not granted by the C/MCR, CG or D/CR, as the case may be, the
petitioner may either appeal the decision to the CRG within ten
(10) working days from receipt of the decision, or file the
appropriate petition with the proper court. In case the petitioner
opts to appeal the decision to the CRG, the latter shall render
decision within thirty (30) calendar days after receipt of the
appeal. The CRG shall furnish the C/MCR, CG or D/CR a copy of
the decision not later than ten (10) working days after the date of
the decision.
Rule 14. Appeal. - When the petition is denied by the C/MCR,
the petitioner may appeal the decision to the CRG, in which case,
the following guidelines shall be observed:
14.1. The adversely affected petitioner shall file the
notice of appeal to the concerned C/MCR within ten
(10) working days after the receipt of the latter's
decision.
14.2. The C/MCR shall, within five (5) working days after
the receipt of the notice of appeal from the petitioner,
submit the petition and all supporting documents to
the CRG.
14.3. The CRG shall render decision on the appeal within
thirty (30) calendar days after receipt thereof. The
decision of the CRG shall be transmitted to the
concerned C/MCR within ten (10) working days after
the date of the decision. Within ten (10) working days
after receipt of the decision, the C/MCR shall notify the
petitioner and shall carry out the decision.
14.4. When the petitioner fails to seasonably file the
appeal, the decision of the C/MCR disapproving the
petition shall become final and executory, and the only
option left for the petitioner shall be to file the
appropriate petition with the proper court.
14.5. The petitioner may file the appeal to the CRG on
any of the following grounds:
14.5.1. A new evidence is discovered, which
when presented, shall materially affect, alter,
modify or reverse the decision of the C/MCR.
14.5.2. The denial of the C/MCR is erroneous
or not supported with evidence.
14.5.3. The denial of the C/MCR is done with
grave abuse of authority or discretion.
Insofar as applicable, Rule 14 shall be observed in the case of a
petition denied by the CG or D/CR.
Rule 15. Failure of the CRG to impugn. - If the CRG fails to
impugn the decision of the C/MCR, CG or D/CR within ten (10)
working days after receipt of the decision granting the petition,
such decision shall become final and executory.
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Rule 16. Effect of impugning the decision. - Where the decision
of the C/MCR, CG or D/CR is impugned by the CRG, the
petitioner may appeal the decision by way of reconsideration
with the latter within fifteen (15) working days from receipt of the
decision and shall be based only on the ground of new evidence
discovered, or file the appropriate petition with the proper court.
The decision which shall be rendered by the CRG within thirty
(30) calendar days after receipt of the appeal shall be final and
executory.
Rule 17. Recording, filing and retrieval of decision. - The CRG
shall prescribe the proper recording, filing and retrieval system of
the decisions.
Rule 18. Authority to collect filing and other fees. - The C/MCR
or the D/CR is hereby authorized to collect from every petitioner
a filing fee in the amount of one thousand pesos (P1,000.00) for
the correction of clerical or typographical error, and three
thousand pesos (P3,000.00) for change of first name or
nickname. An indigent petitioner as defined under Rule 2.7, shall
be exempt from the payment of said fee.
In the case of a petition filed with the CG, a filing fee of fifty U.S.
dollars ($50.00) or its equivalent value in local currency for the
correction of clerical or typographical error, and one hundred fifty
U.S. dollars ($150.00) or its equivalent value in local currency for
the change of first name, shall be collected.
In the case of a migrant petitioner for correction of clerical or
typographical error, there shall be a service fee of five hundred
pesos (P500.00) to be collected by the PRCR. In case the
petition is for change of name, the service fee is one thousand
pesos (P1,000.00). The service fee shall accrue to the city or
municipal government of the PRCR. The PRCR shall also collect
the filing fee from the migrant petitioner, which shall be in the
form of postal money order or other form of payment which
shall be payable to and transmitted to the RKCR, together with
the petition and supporting documents.
When the petitioner files petition for correction of clerical or
typographical error, simultaneously with a petition for change of
first name, and the same document is involved, the petitioner
shall pay only the amount corresponding to the fee for the
petition for change of first name.
The local legislative body shall ratify the fees herein prescribed
upon effectivity of this Order. Prior to ratification by the local
legislative body, all fees collected in connection with this Order
shall go to the LCRO trust fund: Provided, however, That the fees
prescribed herein shall be uniform in all cities and municipalities
in the country, and in all Philippine Consulates.
Rule 19. Penalty clause. - A person who violates any of the
provisions of R.A. No. 9048 and of this Order shall, upon
conviction, be penalized by imprisonment of not less than six (6)
years but not more than twelve (12) years, or a fine of not less
than ten thousand pesos (P10,000.00) but not more than one
hundred thousand pesos (P100,000.00), or both, at the
discretion of the court. In addition, if the offender is a
government official or employee, he shall suffer the penalties
provided under existing civil service laws, rules and regulations.
Rule 20. Periodic review. - The Civil Registrar General may call
for periodic review of the IRR as may be necessary.
Rule 21. Retroactivity clause. - This Order shall have retroactive
effect insofar as it does not prejudice or impair vested or acquired
rights in accordance with the Civil Code and other laws.
Rule 22. Separability clause. - If any portion or provision of this
Order is declared void or unconstitutional, the remaining portions
or provisions thereof shall not be affected by such declaration.
Rule 23. Repealing clause. - All circulars, memoranda, rules and
regulations or parts thereof inconsistent with the provisions of
this Order are hereby repealed or modified accordingly.
Rule 24. Effectivity clause. - This Order shall take effect fifteen
(15) days after its publication in a newspaper of general
circulation.
APPROVED this 24th day of July 2001:
For the Office of the Civil Registrar General:
(Sgd.) CARMELITA N. ERICTA

CASE NOTES

Haw Liong v. Republic (1966)
The State is interested in the names borne by individuals for
purposes of identification and that a change of name is a
privilege and not a matter of right. Therefore, a person must
show proper or reasonable cause or any compelling reason
which may justify the change of his name. Otherwise, the
request should be denied. Such grounds which may be
considered as proper or reasonable causes are that (1) the
name is ridiculous, dishonourable or is extremely difficult to
write or pronounce; (2) the request for change of name is in
consequence of a change of status, as when a natural child is
acknowledged or legitimated; and (3) when change is
necessary to avoid confusion.
Haw Liong has not shown any proper or
compelling reason to justify such change. He only started
using that name during the Japanese occupation.

Llaneta v. Agrava (1994)
Teresita has established that she has been using the Ferrer
surname for a long as she can remember. All her school
records, were under the name Teresita Ferrer. There will be
a lot of confusion if she is made to use Llaneta as her
surname.
Moreover, his brothers who are legitimate
members of the Ferrer family have come forward in support
of Teresitas petition for change of surname.

Secan Kok v. Republic (1973)
To confer jurisdiction on the court, since petitions for
change of name are proceedings in rem, strict compliance
with the requirements is essential, namely, that such verified
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petition should be published for three (3) successive weeks in
some newspapers of general circulation in the province; and
that both the title or caption of the petition and its body
shall recite (1) the name or names or aliases of the applicant;
(2) the cause for which the change of name is sought; and (3)
the name or names or aliases of the applicant; (2) the cause
for which the change of name is sought; and (3) the new
name asked for. The reason for these requirements is that a
change of name is a matter of public interest. The petitioner
might be in, the rogues' gallery or hiding to avoid service of
sentence or compliance with a judgment in a criminal case,
or could have escaped from prison; or if an alien, he might
have given cause for deportation or might be one against
whom an order of deportation was issued or that the new
name the petitioner desires to adopt may be similar to that
of a respectable person and the latter might have evidence
that petitioner is of unsavory reputation that might impair
his own good name. Being a privilege and not a right, a
change of name lies within the discretion of the court give or
withhold. Failure to comply with these jurisdictional
requirements, renders the proceedings a nullity.
To allow the change of name of the wife and other
minor children of Secan Kok, upon a mere motion as an
incident in the proceedings for his change of name, will not
only deprive the government of the required filing fees
therefor but will also dispense with the aforesaid essential
requirements respecting the recitals in the title of the
petition and the publication to apprise persons, who may be
in possession of adverse information or evidence against the
grant of the petition, so that they will come forward with
such information or evidence in order to protect public
interest as well as the interest of private individuals who
may be prejudiced by the change of name of the Secan Kok.

Villegas v. Fernando (1969)
The heirs of Manahan and Sampedro argue that their
attaching a copy of the Court of Appeals' pre-war decision
was substantially a step to reconstitute the records of the
case. This argument deserves scant consideration, since
there was no sufficient compliance with Act 3110,
particularly section 2 thereof, providing for giving of notice
of the destruction of the records to those persons who might
be interested, such notice to be published for four
consecutive weeks "in the Official Gazette and in one of the
newspapers most widely read in the province"; nor with
Section 3 of the same Act further prescribing that upon
receipt of the application for reconstitution the Clerk of
Court "shall send notice to all parties interested, or their
counsel, of the day, hour and place when the Court may
proceed to the reconstitution". Strict compliance of notice
requirements under statutes governing reconstitution is the
rule (Manila Railroad Co. vs. Moya,1965).
The records before the Court show that notice of
the petition for approval of the amended plan for issuance of
the corresponding decree was given only to the Director of
Lands and to the Director of Forestry. This was plainly
insufficient, since the law requires notice to "all other
persons as might be interested". There is no showing that
notice of the motion was given to the petitioners-appellees,
who are possessors of lands affected by the decree, or even
to the persons whose lots were ordered excluded by the
decision of the Court of Appeals. That petitioners-appellees
are merely applicants for homesteads or free patents, as
contended by appellants, does not excuse the lack of notice
to them, considering the broad terms of sections 2 and 3 of
the Reconstitution Act (No. 3110) requiring notice
"to all persons as might be interested" through publication
in the Official Gazette and in a newspaper widely read in the
province.
The jurisprudence of the Court is to the effect that
upon failure to reconstitute destroyed judicial records within
the period prescribed by law (which expired on 17 June
1963, pursuant to Republic Act No. 3081) the parties are
deemed to have waived the effects of the decision rendered
in their favor and their only alternative is to file an action
anew for the registration in their names of the long in
question".
10
Appellants not having applied in due time for
proper reconstitution of their registration proceedings, the
court below had no recourse but to set, aside the order for
the issuance of the decree.

Republic v. Cagandahan (2008)
The Court was of the view that where the person is
biologically or naturally intersex the determining factor in
his gender classification would be what the individual, like
respondent, having reached the age of majority, with good
reason thinks of his/her sex. Cagandahan here thinks of
himself as a male and considering that his body produces
high levels of male hormones (androgen) there is
preponderant biological support for considering him as
being male. Sexual development in cases of intersex persons
makes the gender classification at birth inconclusive. It is at
maturity that the gender of such persons, like respondent, is
fixed.
Cagandahan has simply let nature take its course
and has not taken unnatural steps to arrest or interfere with
what he was born with. And accordingly, he has already
ordered his life to that of a male. He could have undergone
treatment and taken steps, like taking lifelong medication, to
force his body into the categorical mold of a female but he
did not. He chose not to do so. Nature has instead taken its
due course in respondent's development to reveal more fully
his male characteristics.
In the absence of a law on the matter, the Court
will not dictate on respondent concerning a matter so
innately private as one's sexuality and lifestyle preferences,
much less on whether or not to undergo medical treatment
to reverse the male tendency due to CAH. The Court will
not consider respondent as having erred in not choosing to
undergo treatment in order to become or remain as a female.
Neither will the Court force respondent to undergo
treatment and to take medication in order to fit the mold of
a female, as society commonly currently knows this gender
of the human species. Respondent is the one who has to live
with his intersex anatomy. To him belongs the human right
to the pursuit of happiness and of health. Thus, to him
should belong the primordial choice of what courses of
action to take along the path of his sexual development and
maturation. In the absence of evidence that respondent is an
"incompetent"

and in the absence of evidence to show that
classifying respondent as a male will harm other members of
society who are equally entitled to protection under the law,
the Court affirms as valid and justified the respondent's
position and his personal judgment of being a male.
As for respondent's change of name under Rule
103, the Court has held that a change of name is not a
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matter of right but of judicial discretion, to be exercised in
the light of the reasons adduced and the consequences that
will follow. The trial court's grant of respondent's change of
name from Jennifer to Jeff implies a change of a feminine
name to a masculine name. Considering the consequence
that respondent's change of name merely recognizes his
preferred gender, we find merit in respondent's change of
name. Such a change will conform with the change of the
entry in his birth certificate from female to male.

Braza v. Civil Register (2009)
In a special proceeding for correction of entry under Rule
108 (Cancellation or Correction of Entries in the Original
Registry), the trial court has no jurisdiction to nullify
marriages and rule on legitimacy and filiation.
Rule 108 of the Rules of Court vis a vis Article 412
of the Civil Code charts the procedure by which an entry in
the civil registry may be cancelled or corrected. The
proceeding contemplated therein may generally be used
only to correct clerical, spelling, typographical and other
innocuous errors in the civil registry. A clerical error is one
which is visible to the eyes or obvious to the understanding;
an error made by a clerk or a transcriber; a mistake in
copying or writing, or a harmless change such as a
correction of name that is clearly misspelled or of a
misstatement of the occupation of the parent. Substantial or
contentious alterations may be allowed only in adversarial
proceedings, in which all interested parties are impleaded
and due process is properly observed.
The allegations of the petition filed before the trial
court clearly show that petitioners seek to nullify the
marriage between Pablo and Lucille on the ground that it is
bigamous and impugn Patricks filiation in connection with
which they ask the court to order Patrick to be subjected to
a DNA test.
Christina insists, however, that the main cause of
action is for the correction of Patricks birth records and
that the rest of the prayers are merely incidental thereto.
This is untenable. Her cause of action is actually to
seek the declaration of Pablo and Lucilles marriage as void
for being bigamous and impugn Patricks legitimacy, which
causes of action are governed not by Rule 108 but by A.M.
No. 02-11-10-SC which took effect on March 15, 2003, and
Art. 171 of the Family Code, respectively, hence, the petition
should be filed in a Family Court as expressly provided in
said Code.

Corpuz v. Sto. Tomas (2010)
As the RTC correctly stated, the provision was included in
the law "to avoid the absurd situation where the Filipino
spouse remains married to the alien spouse who, after
obtaining a divorce, is no longer married to the Filipino
spouse." The legislative intent is for the benefit of the
Filipino spouse, by clarifying his or her marital status,
settling the doubts created by the divorce decree.
Essentially, the second paragraph of Article 26 of the Family
Code provided the Filipino spouse a substantive right to
have his or her marriage to the alien spouse considered as
dissolved, capacitating him or her to remarry.
24
Without the
second paragraph of Article 26 of the Family Code, the
judicial recognition of the foreign decree of divorce, whether
in a proceeding instituted precisely for that purpose or as a
related issue in another proceeding, would be of no
significance to the Filipino spouse since our laws do not
recognize divorce as a mode of severing the marital bond;

Article 17 of the Civil Code provides that the policy against
absolute divorces cannot be subverted by judgments
promulgated in a foreign country. The inclusion of the
second paragraph in Article 26 of the Family Code provides
the direct exception to this rule and serves as basis for
recognizing the dissolution of the marriage between the
Filipino spouse and his or her alien spouse.
However, the Court qualified its above conclusion
i.e., that the second paragraph of Article 26 of the Family
Code bestows no rights in favor of aliens with the
complementary statement that this conclusion is not
sufficient basis to dismiss Gerberts petition before the RTC.
In other words, the unavailability of the second paragraph of
Article 26 of the Family Code to aliens does not necessarily
strip Gerbert of legal interest to petition the RTC for the
recognition of his foreign divorce decree. The foreign
divorce decree itself, after its authenticity and conformity
with the aliens national law have been duly proven
according to our rules of evidence, serves as a presumptive
evidence of right in favor of Gerbert, pursuant to Section 48,
Rule 39 of the Rules of Court which provides for the effect of
foreign judgments.
But while the law requires the entry of the divorce
decree in the civil registry, the law and the submission of the
decree by themselves do not ipso facto authorize the decrees
registration. The law should be read in relation with the
requirement of a judicial recognition of the foreign
judgment before it can be given res judicata effect. In the
context of the present case, no judicial order as yet exists
recognizing the foreign divorce decree. Thus, the Pasig City
Civil Registry Office acted totally out of turn and without
authority of law when it annotated the Canadian divorce
decree on Gerbert and Daisylyns marriage certificate, on
the strength alone of the foreign decree presented by
Gerbert.
Evidently, the Pasig City Civil Registry Office was
aware of the requirement of a court recognition, as it cited
NSO Circular No. 4, series of 1982, and Department of
Justice Opinion No. 181, series of 1982 both of which
required a final order from a competent Philippine court
before a foreign judgment, dissolving a marriage, can be
registered in the civil registry, but it, nonetheless, allowed
the registration of the decree. For being contrary to law, the
registration of the foreign divorce decree without the
requisite judicial recognition is patently void and cannot
produce any legal effect.
The Court hastens to point out, however, that this
ruling should not be construed as requiring two separate
proceedings for the registration of a foreign divorce decree
in the civil registry one for recognition of the foreign
decree and another specifically for cancellation of the entry
under Rule 108 of the Rules of Court. The recognition of the
foreign divorce decree may be made in a Rule 108
proceeding itself, as the object of special proceedings (such
as that in Rule 108 of the Rules of Court) is precisely to
establish the status or right of a party or a particular fact.
Moreover, Rule 108 of the Rules of Court can serve as the
appropriate adversarial proceeding
41
by which the
applicability of the foreign judgment can be measured and
tested in terms of jurisdictional infirmities, want of notice to
the party, collusion, fraud, or clear mistake of law or fact.
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PART TEN. VOLUNTARY DISSOLUTION OF
CORPORATIONS

CORPORATION CODE

TITLE XIV. DISSOLUTION

Sec. 117. Methods of dissolution. - A corporation formed or
organized under the provisions of this Code may be dissolved
voluntarily or involuntarily. (n)

Sec. 118. Voluntary dissolution where no creditors are affected.
- If dissolution of a corporation does not prejudice the rights of
any creditor having a claim against it, the dissolution may be
effected by majority vote of the board of directors or trustees,
and by a resolution duly adopted by the affirmative vote of the
stockholders owning at least two-thirds (2/3) of the outstanding
capital stock or of at least two-thirds (2/3) of the members of a
meeting to be held upon call of the directors or trustees after
publication of the notice of time, place and object of the meeting
for three (3) consecutive weeks in a newspaper published in the
place where the principal office of said corporation is located; and
if no newspaper is published in such place, then in a newspaper
of general circulation in the Philippines, after sending such notice
to each stockholder or member either by registered mail or by
personal delivery at least thirty (30) days prior to said meeting. A
copy of the resolution authorizing the dissolution shall be
certified by a majority of the board of directors or trustees and
countersigned by the secretary of the corporation. The Securities
and Exchange Commission shall thereupon issue the certificate
of dissolution. (62a)

Sec. 119. Voluntary dissolution where creditors are affected. -
Where the dissolution of a corporation may prejudice the rights
of any creditor, the petition for dissolution shall be filed with the
Securities and Exchange Commission. The petition shall be
signed by a majority of its board of directors or trustees or other
officers having the management of its affairs, verified by its
president or secretary or one of its directors or trustees, and shall
set forth all claims and demands against it, and that its
dissolution was resolved upon by the affirmative vote of the
stockholders representing at least two-thirds (2/3) of the
outstanding capital stock or by at least two-thirds (2/3) of the
members at a meeting of its stockholders or members called for
that purpose.
If the petition is sufficient in form and substance, the
Commission shall, by an order reciting the purpose of the
petition, fix a date on or before which objections thereto may be
filed by any person, which date shall not be less than thirty (30)
days nor more than sixty (60) days after the entry of the order.
Before such date, a copy of the order shall be published at least
once a week for three (3) consecutive weeks in a newspaper of
general circulation published in the municipality or city where the
principal office of the corporation is situated, or if there be no
such newspaper, then in a newspaper of general circulation in the
Philippines, and a similar copy shall be posted for three (3)
consecutive weeks in three (3) public places in such municipality
or city.
Upon five (5) day's notice, given after the date on which
the right to file objections as fixed in the order has expired, the
Commission shall proceed to hear the petition and try any issue
made by the objections filed; and if no such objection is
sufficient, and the material allegations of the petition are true, it
shall render judgment dissolving the corporation and directing
such disposition of its assets as justice requires, and may appoint
a receiver to collect such assets and pay the debts of the
corporation. (Rule 104, RCa)

Sec. 120. Dissolution by shortening corporate term. - A
voluntary dissolution may be effected by amending the articles
of incorporation to shorten the corporate term pursuant to the
provisions of this Code. A copy of the amended articles of
incorporation shall be submitted to the Securities and Exchange
Commission in accordance with this Code. Upon approval of the
amended articles of incorporation of the expiration of the
shortened term, as the case may be, the corporation shall be
deemed dissolved without any further proceedings, subject to
the provisions of this Code on liquidation. (n)

Sec. 121. Involuntary dissolution. - A corporation may be
dissolved by the Securities and Exchange Commission upon filing
of a verified complaint and after proper notice and hearing on the
grounds provided by existing laws, rules and regulations. (n)

Sec. 122. Corporate liquidation. - Every corporation whose
charter expires by its own limitation or is annulled by forfeiture or
otherwise, or whose corporate existence for other purposes is
terminated in any other manner, shall nevertheless be continued
as a body corporate for three (3) years after the time when it
would have been so dissolved, for the purpose of prosecuting
and defending suits by or against it and enabling it to settle and
close its affairs, to dispose of and convey its property and to
distribute its assets, but not for the purpose of continuing the
business for which it was established.
At any time during said three (3) years, the corporation
is authorized and empowered to convey all of its property to
trustees for the benefit of stockholders, members, creditors, and
other persons in interest. From and after any such conveyance by
the corporation of its property in trust for the benefit of its
stockholders, members, creditors and others in interest, all
interest which the corporation had in the property terminates,
the legal interest vests in the trustees, and the beneficial interest
in the stockholders, members, creditors or other persons in
interest.
Upon the winding up of the corporate affairs, any asset
distributable to any creditor or stockholder or member who is
unknown or cannot be found shall be escheated to the city or
municipality where such assets are located.
Except by decrease of capital stock and as otherwise
allowed by this Code, no corporation shall distribute any of its
assets or property except upon lawful dissolution and after
payment of all its debts and liabilities. (77a, 89a, 16a)

REPUBLIC ACT No. 10142

AN ACT PROVIDING FOR THE REHABILITATION OR
LIQUIDATION OF FINANCIALLY DISTRESSED ENTERPRISES
AND INDIVIDUALS

Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:

CHAPTER I
GENERAL PROVISIONS
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Section 1. Title. - This Act shall be known as the "Financial
Rehabilitation and Insolvency Act (FRIA) of 2010".

Section 2. Declaration of Policy. - It is the policy of the State to
encourage debtors, both juridical and natural persons, and their
creditors to collectively and realistically resolve and adjust
competing claims and property rights. In furtherance thereof, the
State shall ensure a timely, fair, transparent, effective and
efficient rehabilitation or liquidation of debtors. The rehabilitation
or liquidation shall be made with a view to ensure or maintain
certainly and predictability in commercial affairs, preserve and
maximize the value of the assets of these debtors, recognize
creditor rights and respect priority of claims, and ensure equitable
treatment of creditors who are similarly situated. When
rehabilitation is not feasible, it is in the interest of the State to
facilities a speedy and orderly liquidation of these debtor's assets
and the settlement of their obligations.

Section 3. Nature of Proceedings. - The proceedings under this
Act shall be in rem. Jurisdiction over all persons affected by the
proceedings shall be considered as acquired upon publication of
the notice of the commencement of the proceedings in any
newspaper of general circulation in the Philippines in the manner
prescribed by the rules of procedure to be promulgated by the
Supreme Court.

The proceedings shall be conducted in a summary and non-
adversarial manner consistent with the declared policies of this
Act and in accordance with the rules of procedure that the
Supreme Court may promulgate.

Section 4. Definition of Terms. - As used in this Act, the term:

(a) Administrative expenses shall refer to those reasonable and
necessary expenses:

(1) incurred or arising from the filing of a petition under the
provisions of this Act;

(2) arising from, or in connection with, the conduct of the
proceedings under this Act, including those incurred for the
rehabilitation or liquidation of the debtor;

(3) incurred in the ordinary course of business of the debtor after
the commencement date;

(4) for the payment of new obligations obtained after the
commencement date to finance the rehabilitation of the debtor;

(5) incurred for the fees of the rehabilitation receiver or liquidator
and of the professionals engaged by them; and

(6) that are otherwise authorized or mandated under this Act or
such other expenses as may be allowed by the Supreme Court in
its rules.

(b) Affiliate shall refer to a corporation that directly or indirectly,
through one or more intermediaries, is controlled by, or is under
the common control of another corporation.

(c) Claim shall refer to all claims or demands of whatever nature
or character against the debtor or its property, whether for
money or otherwise, liquidated or unliquidated, fixed or
contingent, matured or unmatured, disputed or undisputed,
including, but not limited to; (1) all claims of the government,
whether national or local, including taxes, tariffs and customs
duties; and (2) claims against directors and officers of the debtor
arising from acts done in the discharge of their functions falling
within the scope of their authority: Provided, That, this inclusion
does not prohibit the creditors or third parties from filing cases
against the directors and officers acting in their personal
capacities.

(d) Commencement date shall refer to the date on which the
court issues the Commencement Order, which shall be
retroactive to the date of filing of the petition for voluntary or
involuntary proceedings.

(e) Commencement Order shall refer to the order issued by the
court under Section 16 of this Act.

(f) Control shall refer to 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 exist when the parent owns, directly or indirectly
through subsidiaries or affiliates, more than one-half (1/2) of the
voting power of an enterprise unless, in exceptional
circumstances, it can clearly be demonstrated that such
ownership does not constitute control. Control also exists even
when the parent owns one-half (1/2) or less of the voting power
of an enterprise when there is power:

(1) over more than one-half (1/2) of the voting rights by virtue of
an agreement with investors;

(2) to direct or govern the financial and operating policies of the
enterprise under a statute or an agreement;

(3) to appoint or remove the majority of the members of the
board of directors or equivalent governing body; or

(4) to cast the majority votes at meetings of the board of
directors or equivalent governing body.

(g) Court shall refer to the court designated by the Supreme
Court to hear and determine, at the first instance, the cases
brought under this Act.

(h) Creditor shall refer to a natural or juridical person which has a
claim against the debtor that arose on or before the
commencement date.

(i) Date of liquidation shall refer to the date on which the court
issues the Liquidation Order.

(j) Days shall refer to calendar days unless otherwise specifically
stated in this Act.

(k) Debtor shall refer to, unless specifically excluded by a
provision of this Act, a sole proprietorship duly registered with
the Department of Trade and Industry (DTI), a partnership duly
registered with the Securities and Exchange Commission (SEC), a
corporation duly organized and existing under Philippine laws, or
an individual debtor who has become insolvent as defined
herein.

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(l) Encumbered property shall refer to real or personal property of
the debtor upon which a lien attaches.

(m) General unsecured creditor shall refer to a creditor whose
claim or a portion thereof its neither secured, preferred nor
subordinated under this Act.

(n) Group of debtors shall refer to and can cover only: (1)
corporations that are financially related to one another as parent
corporations, subsidiaries or affiliates; (2) partnerships that are
owned more than fifty percent (50%) by the same person; and
(3) single proprietorships that are owned by the same person.
When the petition covers a group of debtors, all reference under
these rules to debtor shall include and apply to the group of
debtors.

(o) Individual debtor shall refer to a natural person who is a
resident and citizen of the Philippines that has become insolvent
as defined herein.

(p) Insolvent shall refer to the financial condition of a debtor that
is generally unable to pay its or his liabilities as they fall due in the
ordinary course of business or has liabilities that are greater than
its or his assets.

(q) Insolvent debtor's estate shall refer to the estate of the
insolvent debtor, which includes all the property and assets of
the debtor as of commencement date, plus the property and
assets acquired by the rehabilitation receiver or liquidator after
that date, as well as all other property and assets in which the
debtor has an ownership interest, whether or not these property
and assets are in the debtor's possession as of commencement
date: Provided, That trust assets and bailment, and other
property and assets of a third party that are in the possession of
the debtor as of commencement date, are excluded therefrom.

(r) Involuntary proceedings shall refer to proceedings initiated by
creditors.

(s) Liabilities shall refer to monetary claims against the debtor,
including stockholder's advances that have been recorded in the
debtor's audited financial statements as advances for future
subscriptions.

(t) Lien shall refer to a statutory or contractual claim or judicial
charge on real or personal property that legality entities a creditor
to resort to said property for payment of the claim or debt
secured by such lien.

(u) Liquidation shall refer to the proceedings under Chapter V of
this Act.

(v) Liquidation Order shall refer to the Order issued by the court
under Section 112 of this Act.

(w) Liquidator shall refer to the natural person or juridical entity
appointed as such by the court and entrusted with such powers
and duties as set forth in this Act: Provided, That, if the liquidator
is a juridical entity, it must designated a natural person who
possesses all the qualifications and none of the disqualifications
as its representative, it being understood that the juridical entity
and the representative are solidarity liable for all obligations and
responsibilities of the liquidator.

(x) Officer shall refer to a natural person holding a management
position described in or contemplated by a juridical entity's
articles of incorporation, bylaws or equivalent documents, except
for the corporate secretary, the assistant corporate secretary and
the external auditor.

(y) Ordinary course of business shall refer to transactions in the
pursuit of the individual debtor's or debtor's business operations
prior to rehabilitation or insolvency proceedings and on ordinary
business terms.

(z) Ownership interest shall refer to the ownership interest of
third parties in property held by the debtor, including those
covered by trust receipts or assignments of receivables.

(aa) Parent shall refer to a corporation which has control over
another corporation either directly or indirectly through one or
more intermediaries.

(bb) Party to the proceedings shall refer to the debtor, a creditor,
the unsecured creditors' committee, a stakeholder, a party with
an ownership interest in property held by the debtor, a secured
creditor, the rehabilitation receiver, liquidator or any other
juridical or natural person who stands to be benefited or injured
by the outcome of the proceedings and whose notice of
appearance is accepted by the court.

(cc) Possessory lien shall refer to a lien on property, the
possession of which has been transferred to a creditor or a
representative or agent thereof.

(dd) Proceedings shall refer to judicial proceedings commenced
by the court's acceptance of a petition filed under this Act.

(ee) Property of others shall refer to property held by the debtor
in which other persons have an ownership interest.

(ff) Publication notice shall refer to notice through publication in a
newspaper of general circulation in the Philippines on a business
day for two (2) consecutive weeks.

(gg) Rehabilitation shall refer to the restoration of the debtor to a
condition 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 debtor continues as a going
concern than if it is immediately liquidated.

(hh) Rehabilitation receiver shall refer to the person or persons,
natural or juridical, appointed as such by the court pursuant to
this Act and which shall be entrusted with such powers and duties
as set forth herein.

(ii) Rehabilitation Plan shall refer to a plan by which the financial
well-being and viability of an insolvent debtor can be restored
using various means including, but not limited to, debt
forgiveness, debt rescheduling, reorganization or quasi-
reorganization, dacion en pago, debt-equity conversion and sale
of the business (or parts of it) as a going concern, or setting-up of
new business entity as prescribed in Section 62 hereof, or other
similar arrangements as may be approved by the court or
creditors.


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(jj) Secured claim shall refer to a claim that is secured by a lien.

(kk) Secured creditor shall refer to a creditor with a secured claim.

(ll) Secured party shall refer to a secured creditor or the agent or
representative of such secured creditor.

(mm) Securities market participant shall refer to a broker dealer,
underwriter, transfer agent or other juridical persons transacting
securities in the capital market.

(nn) Stakeholder shall refer, in addition to a holder of shares of a
corporation, to a member of a nonstock corporation or
association or a partner in a partnership.

(oo) Subsidiary shall refer to a corporation more than fifty
percent (50%) of the voting stock of which is owned or
controlled directly or indirectly through one or more
intermediaries by another corporation, which thereby becomes
its parent corporation.

(pp) Unsecured claim shall refer to a claim that is not secured by
a lien.

(qq) Unsecured creditor shall refer to a creditor with an unsecured
claim.

(rr) Voluntary proceedings shall refer to proceedings initiated by
the debtor.

(ss) Voting creditor shall refer to a creditor that is a member of a
class of creditors, the consent of which is necessary for the
approval of a Rehabilitation Plan under this Act.

Section 5. Exclusions. - The term debtor does not include banks,
insurance companies, pre-need companies, and national and
local government agencies or units.

For purposes of this section:

(a) Bank shall refer to any duly licensed bank or quasi-bank that is
potentially or actually subject to conservatorship, receivership or
liquidation proceedings under the New Central Bank Act
(Republic Act No. 7653) or successor legislation;

(b) Insurance company shall refer to those companies that are
potentially or actually subject to insolvency proceedings under
the Insurance Code (Presidential Decree No. 1460) or successor
legislation; and

(c) Pre-need company shall refer to any corporation
authorized/licensed to sell or offer to sell pre-need plans.

Provided, That government financial institutions other than banks
and government-owned or controlled corporations shall be
covered by this Act, unless their specific charter provides
otherwise.

Section 6. Designation of Courts and Promulgation of Procedural
Rules. - The Supreme Court shall designate the court or courts
that will hear and resolve cases brought under this Act and shall
promulgate the rules of pleading, practice and procedure to
govern the proceedings brought under this Act.

Section 7. Substantive and Procedural Consolidation. - Each
juridical entity shall be considered as a separate entity under the
proceedings in this Act. Under these proceedings, the assets and
liabilities of a debtor may not be commingled or aggregated with
those of another, unless the latter is a related enterprise that is
owned or controlled directly or indirectly by the same interests:
Provided, however, That the commingling or aggregation of
assets and liabilities of the debtor with those of a related
enterprise may only be allowed where:

(a) there was commingling in fact of assets and liabilities of the
debtor and the related enterprise prior to the commencement of
the proceedings;

(b) the debtor and the related enterprise have common creditors
and it will be more convenient to treat them together rather than
separately;

(c) the related enterprise voluntarily accedes to join the debtor as
party petitioner and to commingle its assets and liabilities with
the debtor's; and

(d) The consolidation of assets and liabilities of the debtor and
the related enterprise is beneficial to all concerned and promotes
the objectives of rehabilitation.

Provided, finally, That nothing in this section shall prevent the
court from joining other entities affiliated with the debtor as
parties pursuant to the rules of procedure as may be
promulgated by the Supreme Court.

Section 8. Decisions of Creditors. - Decisions of creditors shall be
made according to the relevant provisions of the Corporation
Code in the case of stock or nonstock corporations or the Civil
Code in the case of partnerships that are not inconsistent with
this Act.

Section 9. Creditors Representatives. - Creditors may designate
representatives to vote or otherwise act on their behalf by filing
notice of such representation with the court and serving a copy
on the rehabilitation receiver or liquidator.

Section 10. Liability of Individual Debtor, Owner of a Sole
Proprietorship, Partners in a Partnership, or Directors and
Officers. - Individual debtor, owner of a sole proprietorship,
partners in a partnership, or directors and officers of a debtor
shall be liable for double the value of the property sold,
embezzled or disposed of or double the amount of the
transaction involved, whichever is higher to be recovered for
benefit of the debtor and the creditors, if they, having notice of
the commencement of the proceedings, or having reason to
believe that proceedings are about to be commenced, or in
contemplation of the proceedings, willfully commit the following
acts:

(a) Dispose or cause to be disposed of any property of the debtor
other than in the ordinary course of business or authorize or
approve any transaction in fraud of creditors or in a manner
grossly disadvantageous to the debtor and/or creditors; or

(b) Conceal or authorize or approve the concealment, from the
creditors, or embezzles or misappropriates, any property of the
debtor.

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The court shall determine the extent of the liability of an owner,
partner, director or officer under this section. In this connection,
in case of partnerships and corporations, the court shall consider
the amount of the shareholding or partnership or equity interest
of such partner, director or officer, the degree of control of such
partner, director or officer over the debtor, and the extent of the
involvement of such partner, director or debtor in the actual
management of the operations of the debtor.

Section 11. Authorization to Exchange Debt for Equity. -
Notwithstanding applicable banking legislation to the contrary,
any bank, whether universal or not, may acquire and hold an
equity interest or investment in a debtor or its subsidiaries when
conveyed to such bank in satisfaction of debts pursuant to a
Rehabilitation or Liquidation Plan approved by the court:
Provided, That such ownership shall be subject to the ownership
limits applicable to universal banks for equity investments and:
Provided, further, That any equity investment or interest acquired
or held pursuant to this section shall be disposed by the bank
within a period of five (5) years or as may be prescribed by the
Monetary Board.

CHAPTER II
COURT-SUPERVISED REHABILITATION

(A) Initiation Proceedings.

(1) Voluntary Proceedings.

Section 12. Petition to Initiate Voluntary Proceedings by Debtor. -
When approved by the owner in case of a sole proprietorship, or
by a majority of the partners in case of a partnership, or in case of
a corporation, by a majority vote of the board of directors or
trustees and authorized by the vote of the stockholders
representing at least two-thirds (2/3) of the outstanding capital
stock, or in case of nonstock corporation, by the vote of at least
two-thirds (2/3) of the members, in a stockholder's or member's
meeting duly called for the purpose, an insolvent debtor may
initiate voluntary proceedings under this Act by filing a petition
for rehabilitation with the court and on the grounds hereinafter
specifically provided. The petition shall be verified to establish
the insolvency of the debtor and the viability of its rehabilitation,
and include, whether as an attachment or as part of the body of
the petition, as a minimum the following:

(a) Identification of the debtor, its principal activities and its
addresses;

(b) Statement of the fact of and the cause of the debtor's
insolvency or inability to pay its obligations as they become due;

(c) The specific relief sought pursuant to this Act;

(d) The grounds upon which the petition is based;

(e) Other information that may be required under this Act
depending on the form of relief requested;

(f) Schedule of the debtor's debts and liabilities including a list of
creditors with their addresses, amounts of claims and collaterals,
or securities, if any;

(g) An inventory of all its assets including receivables and claims
against third parties;

(h) A Rehabilitation Plan;

(i) The names of at least three (3) nominees to the position of
rehabilitation receiver; and

(j) Other documents required to be filed with the petition
pursuant to this Act and the rules of procedure as may be
promulgated by the Supreme Court.

A group of debtors may jointly file a petition for rehabilitation
under this Act when one or more of its members 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 members of
the group and/or the participation of the other members of the
group is essential under the terms and conditions of the
proposed Rehabilitation Plan.

(2) Involuntary Proceedings.

Section 13. Circumstances Necessary to Initiate Involuntary
Proceedings. - Any creditor or group of creditors with a claim of,
or the aggregate of whose claims is, at least One Million Pesos
(Php1,000,000.00) or at least twenty-five percent (25%) of the
subscribed capital stock or partners' contributions, whichever is
higher, may initiate involuntary proceedings against the debtor
by filing a petition for rehabilitation with the court if:

(a) there is no genuine issue of fact on law on the claim/s of the
petitioner/s, and that the due and demandable payments
thereon have not been made for at least sixty (60) days or that
the debtor has failed generally to meet its liabilities as they fall
due; or

(b) a creditor, other than the petitioner/s, has initiated foreclosure
proceedings against the debtor that will prevent the debtor from
paying its debts as they become due or will render it insolvent.

Section 14. Petition to Initiate Involuntary Proceedings. - The
creditor/s' petition for rehabilitation shall be verified to establish
the substantial likelihood that the debtor may be rehabilitated,
and include:

(a) identification of the debtor its principal activities and its
address;

(b) the circumstances sufficient to support a petition to initiate
involuntary rehabilitation proceedings under Section 13 of this
Act;

(c) the specific relief sought under this Act;

(d) a Rehabilitation Plan;

(e) the names of at least three (3) nominees to the position of
rehabilitation receiver;

(f) other information that may be required under this Act
depending on the form of relief requested; and

(g) other documents required to be filed with the petition
pursuant to this Act and the rules of procedure as may be
promulgated by the Supreme Court.
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(B) Action on the Petition and Commencement of Proceedings.

Section 15. Action on the Petition. - If the court finds the petition
for rehabilitation to be sufficient in form and substance, it shall,
within five (5) working days from the filing of the petition, issue a
Commencement Order. If, within the same period, the court
finds the petition deficient in form or substance, the court may,
in its discretion, give the petitioner/s a reasonable period of time
within which to amend or supplement the petition, or to submit
such documents as may be necessary or proper to put the
petition in proper order. In such case, the five (5) working days
provided above for the issuance of the Commencement Order
shall be reckoned from the date of the filing of the amended or
supplemental petition or the submission of such documents.


Section 16. Commencement of Proceedings and Issuance of a
Commencement Order. - The rehabilitation proceedings shall
commence upon the issuance of the Commencement Order,
which shall:

(a) identify the debtor, its principal business or activity/ies and its
principal place of business;

(b) summarize the ground/s for initiating the proceedings;

(c) state the relief sought under this Act and any requirement or
procedure particular to the relief sought;

(d) state the legal effects of the Commencement Order, including
those mentioned in Section 17 hereof;

(e) declare that the debtor is under rehabilitation;

(f) direct the publication of the Commencement Order in a
newspaper of general circulation in the Philippines 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;

(g) If the petitioner is the debtor direct the service by personal
delivery of a copy of the petition on each creditor holding at least
ten percent (10%) of the total liabilities of the debtor as
determined from the schedule attached to the petition within
five (5) days; if the petitioner/s is/are creditor/s, direct the
service by personal delivery of a copy of the petition on the
debtor within five (5) days;

(h) appoint a rehabilitation receiver who may or not be from
among the nominees of the petitioner/s and who shall exercise
such powers and duties defined in this Act as well as the
procedural rules that the Supreme Court will promulgate;

(i) summarize the requirements and deadlines for creditors to
establish their claims against the debtor and direct all creditors to
their claims with the court at least five (5) days before the initial
hearing;

(j) direct Bureau of internal Revenue (BIR) to file and serve on the
debtor its comment on or opposition to the petition or its
claim/s against the debtor under such procedures as the
Supreme Court provide;

(k) prohibit the debtor's suppliers of goods or services from
withholding the supply of goods and services in the ordinary
course of business for as long as the debtor makes payments for
the services or goods supplied after the issuance of the
Commencement Order;

(l) authorize the payment of administrative expenses as they
become due;

(m) set the case for initial hearing, which shall not be more than
forty (40) days from the date of filing of the petition for the
purpose of determining whether there is substantial likelihood for
the debtor to be rehabilitated;

(n) make available copies of the petition and rehabilitation plan
for examination and copying by any interested party;

(o) indicate the location or locations at which documents
regarding the debtor and the proceedings under Act may be
reviewed and copied;

(p) state that any creditor or debtor who is not the petitioner,
may submit the name or nominate any other qualified person to
the position of rehabilitation receiver at least five (5) days before
the initial hearing;

(q) include s Stay or Suspension Order which shall:

(1) suspend all actions or proceedings, in court or otherwise, for
the enforcement of claims against the debtor;

(2) suspend all actions to enforce any judgment, attachment or
other provisional remedies against the debtor;

(3) prohibit the debtor from selling, encumbering, transferring or
disposing in any manner any of its properties except in the
ordinary course of business; and

(4) prohibit the debtor from making any payment of its liabilities
outstanding as of the commencement date except as may be
provided herein.

Section 17. Effects of the Commencement Order. - Unless
otherwise provided for in this Act, the court's issuance of a
Commencement Order shall, in addition to the effects of a Stay
or Suspension Order described in Section 16 hereof:

(a) vest the rehabilitation with all the powers and functions
provided for this Act, such as the right to review and obtain
records to which the debtor's management and directors have
access, including bank accounts or whatever nature of the debtor
subject to the approval by the court of the performance bond
filed by the rehabilitation receiver;

(b) prohibit or otherwise serve as the legal basis rendering null
and void the results of any extrajudicial activity or process to
seize property, sell encumbered property, or otherwise attempt
to collection or enforce a claim against the debtor after
commencement date unless otherwise allowed in this Act,
subject to the provisions of Section 50 hereof;

(c) serve as the legal basis for rendering null and void any setoff
after the commencement date of any debt owed to the debtor
by any of the debtor's creditors;
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(d) serve as the legal basis for rendering null and void the
perfection of any lien against the debtor's property after the
commencement date; and

(e) consolidate the resolution of all legal proceedings by and
against the debtor to the court Provided. However, That the court
may allow the continuation of cases on other courts where the
debtor had initiated the suit.

Attempts to seek legal of other resource against the debtor
outside these proceedings shall be sufficient to support a finding
of indirect contempt of court.

Section 18. Exceptions to the Stay or Suspension Order. - The
Stay or Suspension Order shall not apply:

(a) to cases already pending appeal in the Supreme Court as of
commencement date Provided, That any final and executory
judgment arising from such appeal shall be referred to the court
for appropriate action;

(b) subject to the discretion of the court, to cases pending or filed
at a specialized court or quasi-judicial agency which, upon
determination by the court is capable of resolving the claim more
quickly, fairly and efficiently than the court: Provided, That any
final and executory judgment of such court or agency shall be
referred to the court and shall be treated as a non-disputed
claim;

(c) to the enforcement of claims against sureties and other
persons solidarily liable with the debtor, and third party or
accommodation mortgagors as well as issuers of letters of credit,
unless the property subject of the third party or accommodation
mortgage is necessary for the rehabilitation of the debtor as
determined by the court upon recommendation by the
rehabilitation receiver;

(d) to any form of action of customers or clients of a securities
market participant to recover or otherwise claim moneys and
securities entrusted to the latter in the ordinary course of the
latter's business as well as any action of such securities market
participant or the appropriate regulatory agency or self-
regulatory organization to pay or settle such claims or liabilities;

(e) to the actions of a licensed broker or dealer to sell pledged
securities of a debtor pursuant to a securities pledge or margin
agreement for the settlement of securities transactions in
accordance with the provisions of the Securities Regulation Code
and its implementing rules and regulations;

(f) the clearing and settlement of financial transactions through
the facilities of a clearing agency or similar entities duly
authorized, registered and/or recognized by the appropriate
regulatory agency like the Bangko Sentral ng Pilipinas (BSP) and
the SEC as well as any form of actions of such agencies or entities
to reimburse themselves for any transactions settled for the
debtor; and

(g) any criminal action against individual debtor or owner, partner,
director or officer of a debtor shall not be affected by any
proceeding commend under this Act.

Section 19. Waiver of taxes and Fees Due to the National
Government and to Local Government Units (LGUs). - Upon
issuance of the Commencement Order by the court, and until
the approval of the Rehabilitation Plan or dismissal of the
petition, whichever is earlier, the imposition of all taxes and fees
including penalties, interests and charges thereof due to the
national government or to LGUs shall be considered waived, in
furtherance of the objectives of rehabilitation.

Section 20. Application of Stay or Suspension Order to
Government Financial Institutions. - The provisions of this Act
concerning the effects of the Commencement Order and the
Stay or Suspension Order on the suspension of rights to
foreclose or otherwise pursue legal remedies shall apply to
government financial institutions, notwithstanding provisions in
their charters or other laws to the contrary.

Section 21. Effectivity and Duration of Commencement Order. -
Unless lifted by the court, the Commencement Order shall be for
the effective for the duration of the rehabilitation proceedings for
as long as there is a substantial likelihood that the debtor will be
successfully rehabilitated. In determining whether there is
substantial likelihood for the debtor to be successfully
rehabilitated, the court shall ensure that the following minimum
requirements are met:

(a) The proposed Rehabilitation Plan submitted complies with the
minimum contents prescribed by this Act;

(b) There is sufficient monitoring by the rehabilitation receiver of
the debtor's business for the protection of creditors;

(c) The debtor has met with its creditors to the extent reasonably
possible in attempts to reach consensus on the proposed
Rehabilitation Plan;

(d) The rehabilitation receiver submits a report, based on
preliminary evaluation, stating that the underlying assumptions
and the goals stated in the petitioner's Rehabilitation Plan are
realistic reasonable and reasonable or if not, there is, in any case,
a substantial likelihood for the debtor to be successfully
rehabilitated because, among others:

(1) there are sufficient assets with/which to rehabilitate the
debtor;

(2) there is sufficient cash flow to maintain the operations of the
debtor;

(3) the debtor's, partners, stockholders, directors and officers
have been acting in good faith and which due diligence;

(4) the petition is not s sham filing intended only to delay the
enforcement of the rights of the creditor's or of any group of
creditors; and

(5) the debtor would likely be able to pursue a viable
Rehabilitation Plan;

(e) The petition, the Rehabilitation Plan and the attachments
thereto do not contain any materially false or misleading
statement;

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(f) If the petitioner is the debtor, that the debtor has met with its
creditor/s representing at least three-fourths (3/4) of its total
obligations to the extent reasonably possible and made a good
faith effort to reach a consensus on the proposed Rehabilitation
Plan if the petitioner/s is/are a creditor or group of creditors,
that/ the petitioner/s has/have met with the debtor and made a
good faith effort to reach a consensus on the proposed
Rehabilitation Plan; and

(g) The debtor has not committed acts misrepresentation or in
fraud of its creditor/s or a group of creditors.

Section 22. Action at the Initial Hearing. - At the initial hearing,
the court shall:

(a) determine the creditors who have made timely and proper
filing of their notice of claims;

(b) hear and determine any objection to the qualifications of the
appointment of the rehabilitation receiver and, if necessary
appoint a new one in accordance with this Act;

(c) direct the creditors to comment on the petition and the
Rehabilitation Plan, and to submit the same to the court and to
the rehabilitation receiver within a period of not more than
twenty (20) days; and

(d) direct the rehabilitation receiver to evaluate the financial
condition of the debtor and to prepare and submit to the court
within forty (40) days from initial hearing the report provided in
Section 24 hereof.

Section 23. Effect of Failure to File Notice of Claim. - A creditor
whose claim is not listed in the schedule of debts and liabilities
and who fails to file a notice of claim in accordance with the
Commencement Order but subsequently files a belated claim
shall not be entitled to participate in the rehabilitation
proceedings but shall be entitled to receive distributions arising
therefrom.

Section 24. Report of the Rehabilitation Receiver. - Within forty
(40) days from the initial hearing and with or without the
comments of the creditors or any of them, the rehabilitation
receiver shall submit a report to the court stating his preliminary
findings and recommendations on whether:

(a) the debtor is insolvent and if so, the causes thereof and any
unlawful or irregular act or acts committed by the owner/s of a
sole proprietorship partners of a partnership or directors or
officers of a corporation in contemplation of the insolvency of
the debtor or which may have contributed to the insolvency of
the debtor;

(b) the underlying assumptions, the financial goals and the
procedures to accomplish such goals as stated in the petitioner's
Rehabilitation Plan are realistic, feasible and reasonable;

(c) there is a substantial likelihood for the debtor to be
successfully rehabilitated;

(d) the petition should be dismissed; and

(e) the debtor should be dissolved and/or liquidated.

Section 25. Giving Due Course to or Dismissal of Petition, or
Conversion of Proceedings. - Within ten (10) days from receipt of
the report of the rehabilitation receiver mentioned in Section 24
hereof the court may:

(a) give due course to the petition upon a finding that:

(1) the debtor is insolvent; and

(2) there is a substantial likelihood for the debtor to be
successfully rehabilitated;

(b) dismiss the petition upon a finding that:

(1)debtor is not insolvent;

(2) the petition i8 a sham filing intended only to delay the
enforcement of the rights of the creditor/s or of any group of
creditors;

(3)the petition, the Rehabilitation Plan and the attachments
thereto contain any materially false or misleading statements; or

(4)the debtor has committed acts of misrepresentation or in
fraud of its creditor/s or a group of creditors;

(c)convert the proceedings into one for the liquidation of the
debtor upon a finding that:

(1)the debtor is insolvent; and

(2)there is no substantial likelihood for the debtor to be
successfully rehabilitated as determined in accordance with the
rules to be promulgated by the Supreme Court.

Section 26.Petition Given Due Course. - If the petition is given
due course, the court shall direct the rehabilitation receiver to
review, revise and/or recommend action on the Rehabilitation
Plan and submit the same or a new one to the court within a
period of not more than ninety (90) days.

The court may refer any dispute relating to the Rehabilitation
Plan or the rehabilitation proceedings pending before it to
arbitration or other modes of dispute resolution, as provided for
under Republic Act No. 9285, Or the Alternative Dispute
Resolution Act of 2004, should it determine that such mode will
resolve the dispute more quickly, fairly and efficiently than the
court.

Section 27.Dismissal of Petition. - If the petition is dismissed
pursuant to paragraph (b) of Section 25 hereof, then the court
may, in its discretion, order the petitioner to pay damages to any
creditor or to the debtor, as the case may be, who may have
been injured by the filing of the petition, to the extent of any
such injury.

(C) The Rehabilitation Receiver, Management Committee and
Creditors' Committee.

Section 28.Who May Serve as a Rehabilitation Receiver. - Any
qualified natural or juridical person may serve as a rehabilitation
receiver: Provided, That if the rehabilitation receiver is a juridical
entity, it must designate a natural person/s who possess/es all
the qualifications and none of the disqualifications as its
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representative, it being understood that the juridical entity and
the representative/s are solidarily liable for all obligations and
responsibilities of the rehabilitation receiver.

Section 29.Qualifications of a Rehabilitation Receiver. - The
rehabilitation receiver shall have the following minimum
qualifications:

(a)A citizen of the Philippines or a resident of the Philippines in
the six (6) months immediately preceding his nomination;

(b)Of good moral character and with acknowledged integrity,
impartiality and independence;

(c)Has the requisite knowledge of insolvency and other relevant
commercial laws, rules and procedures, as well as the relevant
training and/or experience that may be necessary to enable him
to properly discharge the duties and obligations of a
rehabilitation receiver; and

(d)Has no conflict of interest: Provided, That such conflict of
interest may be waived, expressly or impliedly, by a party who
may be prejudiced thereby.

Other qualifications and disqualifications of the rehabilitation
receiver shall be set forth in procedural rules, taking into
consideration the nature of the business of the debtor and the
need to protect the interest of all stakeholders concerned.

Section 30.Initial Appointment of the Rehabilitation Receiver. -
The court shall initially appoint the rehabilitation receiver, who
mayor may not be from among the nominees of the petitioner,
However, at the initial hearing of the petition, the creditors and
the debtor who are not petitioners may nominate other persons
to the position. The court may retain the rehabilitation receiver
initially appointed or appoint another who mayor may not be
from among those nominated.

In case the debtor is a securities market participant, the court
shall give priority to the nominee of the appropriate securities or
investor protection fund.

If a qualified natural person or entity is nominated by more than
fifty percent (50%) of the secured creditors and the general
unsecured creditors, and satisfactory evidence is submitted, the
court shall appoint the creditors' nominee as rehabilitation
receiver.

Section 31.Powers, Duties and Responsibilities of the
Rehabilitation Receiver. - The rehabilitation receiver shall be
deemed an officer of the court with the principal duty of
preserving and maximizing the value of the assets of the debtor
during the rehabilitation proceedings, determining the viability of
the rehabilitation of the debtor, preparing and recommending a
Rehabilitation Plan to the court, and implementing the approved
Rehabilitation Plan, To this end, and without limiting the
generality of the foregoing, the rehabilitation receiver shall have
the following powers, duties and responsibilities:

(a)To verify the accuracy of the factual allegations in the petition
and its annexes;

(b)To verify and correct, if necessary, the inventory of all of the
assets of the debtor, and their valuation;

(c)To verify and correct, if necessary, the schedule of debts and
liabilities of the debtor;

(d)To evaluate the validity, genuineness and true amount of all
the claims against the debtor;

(e)To take possession, custody and control, and to preserve the
value of all the property of the debtor;

(f)To sue and recover, with the approval of the court, all amounts
owed to, and all properties pertaining to the debtor;

(g)To have access to all information necessary, proper or relevant
to the operations and business of the debtor and for its
rehabilitation;

(h) To sue and recover, with the. approval of the court, all
property or money of the debtor paid, transferred or disbursed in
fraud of the debtor or its creditors, or which constitute undue
preference of creditor/s;

(i) To monitor the operations and the business of the debtor to
ensure that no payments or transfers of property are made other
than in the ordinary course of business;

(j) With the court's approval, to engage the services of or to
employ persons or entities to assist him in the discharge of his
functions;

(k) To determine the manner by which the debtor may be best
rehabilitated, to review) revise and/or recommend action on the
Rehabilitation Plan and submit the same or a new one to the
court for approval;

(1) To implement the Rehabilitation Plan as approved by the
court, if 80 provided under the Rehabilitation Plan;

(m) To assume and exercise the powers of management of the
debtor, if directed by the court pursuant to Section 36 hereof;

(n) To exercise such other powers as may, from time to time, be
conferred upon him by the court; and

To submit a status report on the rehabilitation proceedings every
quarter or as may be required by the court motu proprio. or upon
motion of any creditor. or as may be provided, in the
Rehabilitation Plan.

Unless appointed by the court, pursuant to Section 36 hereof,
the rehabilitation receiver shall not take over the management
and control of the debtor but may recommend the appointment
of a management committee over the debtor in the cases
provided by this Act.

Section 32.Removal of the Rehabilitation Receiver. The
rehabilitation receiver may be removed at any time by the court
either motu proprio or upon motion by any creditor/s holding
more than fifty percent (50%) of the total obligations of the
debtor, on such grounds as the rules of procedure may provide
which shall include, but are not limited to, the following:

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(a) Incompetence, gross negligence, failure to perform or failure
to exercise the proper degree of care in the performance of his
duties and powers;

(b) Lack of a particular or specialized competency required by the
specific case;

(c) Illegal acts or conduct in the performance of his duties and
powers;

(d) Lack of qualification or presence of any disqualification;

(e) Conflict of interest that arises after his appointment; and

(f) Manifest lack of independence that is detrimental to the
general body of the stakeholders.

Section 33.Compensation and Terms of Service. The
rehabilitation receiver and his direct employees or independent
contractors shall be entitled to compensation for reasonable fees
and expenses from the debtor according to the terms approved
by the court after notice and hearing. Prior to such hearing, the
rehabilitation receiver and his direct employees shall be entitled
to reasonable compensation based on quantum meruit. Such
costs shall be considered administrative expenses.

Section 34.Oath and Bond of the Rehabilitation Receiver. Prior to
entering upon his powers, duties and responsibilities, the
rehabilitation receiver shall take an oath and file a bond, in such
amount to be fixed by the court, conditioned upon the faithful
and proper discharge of his powers, duties and responsibilities.

Section 35.Vacancy. - Incase the position of rehabilitation
receiver is vacated for any reason whatsoever. the court shall
direct the debtor and the creditors to submit the name/s of their
nominee/s to the position. The court may appoint any of the
qualified nominees. or any other person qualified for the position.

Section 36.Displacement of Existing Management by the
Rehabilitation Receiver or Management Committee. Upon
motion of any interested party, the court may appoint and direct
the rehabilitation receiver to assume the powers of management
of the debtor, or appoint a management committee that will
undertake the management of the debtor. upon clear and
convincing evidence of any of the following circumstances:

(a) Actual or imminent danger of dissipation, loss, wastage or
destruction of the debtors assets or other properties;

(b) Paralyzation of the business operations of the debtor; or

(c) Gross mismanagement of the debtor. or fraud or other
wrongful conduct on the part of, or gross or willful violation of
this Act by. existing management of the debtor Or the owner,
partner, director, officer or representative/s in management of
the debtor.

In case the court appoints the rehabilitation receiver to assume
the powers of management of the debtor. the court may:

(1) require the rehabilitation receiver to post an additional bond;

(2) authorize him to engage the services or to employ persona or
entities to assist him in the discharge of his managerial functions;
and

(3) authorize a commensurate increase in his compensation.

Section 37.Role of the Management Committee. When
appointed pursuant to the foregoing section, the management
committee shall take the place of the management and the
governing body of the debtor and assume their rights and
responsibilities.

The specific powers and duties of the management committee,
whose members shall be considered as officers of the court, shall
be prescribed by the procedural rules.

Section 38.Qualifications of Members of the Management
Committee. - The qualifications and disqualifications of the
members of the management committee shall be set forth in the
procedural rules, taking into consideration the nature of the
business of the debtor and the need to protect the interest of all
stakeholders concerned.

Section 39.Employment of Professionals. - Upon approval of the
court, and after notice and hearing, the rehabilitation receiver or
the management committee may employ specialized
professionals and other experts to assist each in the performance
of their duties. Such professionals and other experts shall be
considered either employees or independent contractors of the
rehabilitation receiver or the management committee, as the
case may be. The qualifications and disqualifications of the
professionals and experts may be set forth in procedural rules,
taking into consideration the nature of the business of the debtor
and the need to protect the interest of all stakeholders
concerned.

Section 40.Conflict of Interest. - No person may be appointed as
a rehabilitation receiver, member of a_ management committee,
or be employed by the rehabilitation receiver or the
management committee if he has a conflict of interest.

An individual shall be deemed to have a conflict of interest if he is
so situated as to be materially influenced in the exercise of his
judgment for or against any party to the proceedings. Without
limiting the generality of the foregoing, an individual shall be
deemed to have a conflict of interest if:

(a) he is a creditor, owner, partner or stockholder of the debtor;

(b) he is engaged in a line of business which competes with that
of the debtor;

(c) he is, or was, within five (5) years from the filing of the petition,
a director, officer, owner, partner or employee of the debtor or
any of the creditors, or the auditor or accountant of the debtor;

(d) he is, or was, within two (2) years from the filing of the
petition, an underwriter of the outstanding securities of the
debtor;

(e) he is related by consanguinity or affinity within the fourth civil
degree to any individual creditor, owners of a sale proprietorship-
debtor, partners of a partnership- debtor or to any stockholder,
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director, officer, employee or underwriter of a corporation-
debtor; or

(f) he has any other direct or indirect material interest in the
debtor or any of the creditors.

Any rehabilitation receiver, member of the management
committee or persons employed or contracted by them
possessing any conflict of interest shall make the appropriate
disclosure either to the court or to the creditors in case of out-of-
court rehabilitation proceedings. Any party to the proceeding
adversely affected by the appointment of any person with a
conflict of interest to any of the positions enumerated above
may however waive his right to object to such appointment and,
if the waiver is unreasonably withheld, the court may disregard
the conflict of interest, taking into account the general interest of
the stakeholders.

Section 41.Immunity. - The rehabilitation receiver and all persons
employed by him, and the members of the management
committee and all persons employed by it, shall not be subject to
any action. claim or demand in connection with any act done or
omitted to be done by them in good faith in connection with the
exercise of their powers and functions under this Act or other
actions duly approved by the court.1awp++il

Section 42.Creditors' Committee. - After the creditors' meeting
called pursuant to Section 63 hereof, the creditors belonging to a
class may formally organize a committee among

themselves. In addition, the creditors may, as a body, agree to
form a creditors' committee composed of a representative from
each class of creditors, such as the following:

(a) Secured creditors;

(b) Unsecured creditors;

(c) Trade creditors and suppliers; and

(d) Employees of the debtor.

In the . election of the creditors' representatives, the
rehabilitation receiver or his representative shall attend such
meeting and extend the appropriate assistance as may be
defined in the procedural rules.

Section 43.Role of Creditors' Committee. - The creditors'
committee when constituted pursuant to Section 42 of this Act
shall assist the rehabilitation receiver in communicating with the
creditors and shall be the primary liaison between the
rehabilitation receiver and the creditors. The creditors' committee
cannot exercise or waive any right or give any consent on behalf
of any creditor unless specifically authorized in writing by such
creditor. The creditors' committee may be authorized by the
court or by the rehabilitation receiver to perform such other tasks
and functions as may be defined by the procedural rules in order
to facilitate the rehabilitation process.

(D) Determination of Claims.

Section 44.Registry of Claims. - Within twenty (20) days from his
assumption into office, the rehabilitation receiver shall establish a
preliminary registry of claims. The rehabilitation receiver shall
make the registry available for public inspection and provide

publication notice to the debtor, creditors and stakeholders on
where and when they may inspect it. All claims included in the
registry of claims must be duly supported by sufficient evidence.

Section 45.Opposition or Challenge of Claims. Within thirty
(30) days from the expiration of the period stated in the
immediately preceding section, the debtor, creditors,
stakeholders and other interested parties may submit a challenge
to claim/s to the court, serving a certified copy on the
rehabilitation receiver and the creditor holding the challenged
claim/so Upon the expiration of the thirty (30)-day period, the
rehabilitation receiver shall submit to the court the registry of
claims which shall include undisputed claims that have not been
subject to challenge.

Section 46.Appeal. - Any decision of the rehabilitation receiver
regarding a claim may be appealed to the court.

(E) Governance.

Section 47.Management. - Unless otherwise provided herein, the
management of the juridical debtor shall remain with the existing
management subject to the applicable law/s and agreement/s, if
any, on the election or appointment of directors, managers Or
managing partner. However, all disbursements, payments or sale,
disposal, assignment, transfer or encumbrance of property , or
any other act affecting title or interest in property, shall be
subject to the approval of the rehabilitation receiver and/or the
court, as provided in the following subchapter.

(F) Use, Preservation and Disposal of Assets and Treatment of
Assets and Claims after Commencement Date.

Section 48.Use or Disposition of Assets. - Except as otherwise
provided herein, no funds or property of the debtor shall he used
or disposed of except in the ordinary course of business of the
debtor, or unless necessary to finance the administrative
expenses of the rehabilitation proceedings.

Section 49.Sale of Assets. - The court, upon application of the
rehabilitation receiver, may authorize the sale of unencumbered
property of the debtor outside the ordinary course of business
upon a showing that the property, by its nature or because of
other circumstance, is perishable, costly to maintain, susceptible
to devaluation or otherwise injeopardy.

Section 50.Sale or Disposal of Encumbered Property of the
Debtor and Assets of Third Parties Held by Debtor. The court
may authorize the sale, transfer, conveyance or disposal of
encumbered property of the debtor, or property of others held
by the debtor where there is a security interest pertaining to third
parties under a financial, credit or other similar transactions if,
upon application of the rehabilitation receiver and with the
consent of the affected owners of the property, or secured
creditor/s in the case of encumbered property of the debtor and,
after notice and hearing, the court determines that:

(a) such sale, transfer, conveyance or disposal is necessary for the
continued operation of the debtor's business; and

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(b) the debtor has made arrangements to provide a substitute
lien or ownership right that provides an equal level of security for
the counter-party's claim or right.

Provided, That properties held by the debtor where the debtor
has authority to sell such as trust receipt or consignment
arrangements may be sold or disposed of by the .debtor, if such
sale or disposal is necessary for the operation of the debtor's
business, and the debtor has made arrangements to provide a
substitute lien or ownership right that provides an equal level of
security for the counter-party's claim or right.

Sale or disposal of property under this section shall not give rise
to any criminal liability under applicable laws.

Section 51.Assets of Debtor Held by Third Parties. In the case of
possessory pledges, mechanic's liens or similar claims, third
parties who have in their possession or control property of the
debtor shall not transfer, conveyor otherwise dispose of the
same to persons other than the debtor, unless upon prior
approval of the rehabilitation receiver. The rehabilitation receiver
may also:

(a) demand the surrender or the transfer of the possession or
control of such property to the rehabilitation receiver or any
other person, subject to payment of the claims secured by any
possessory Iien/s thereon;

(b) allow said third parties to retain possession or control, if such
an arrangement would more likely preserve or increase the value
of the property in question or the total value of the assets of the
debtor; or

(c) undertake any otI1er disposition of the said property as may
be beneficial for the rehabilitation of the debtor, after notice and
hearing, and approval of the court.

Section 52.Rescission or Nullity of Sale, Payment, Transfer or
Conveyance of Assets. - The court may rescind or declare as null
and void any sale, payment, transfer or conveyance of the
debtor's unencumbered property or any encumbering thereof by
the debtor or its agents or representatives after the
commencement date which are not in the ordinary course of the
business of the debtor: Provided, however, That the
unencumbered property may be sold, encumbered or otherwise
disposed of upon order of the court after notice and hearing:

(a) if such are in the interest of administering the debtor and
facilitating the preparation and implementation of a
Rehabilitation Plan;

(b) in order to provide a substitute lien, mortgage or pledge of
property under this Act;

(c) for payments made to meet administrative expenses as they
arise;

(d) for payments to victims of quasi delicts upon a showing that
the claim is valid and the debtor has insurance to reimburse the
debtor for the payments made;

(e) for payments made to repurchase property of the debtor that
is auctioned off in a judicial or extrajudicial sale under. This Act; or

(f) for payments made to reclaim property of the debtor held
pursuant to a possessory lien.

Section 53.Assets Subject to Rapid Obsolescence, Depreciation
and Diminution of Value. - Upon the application of a secured
creditor holding a lien against or holder of an ownership interest
in property held by the debtor that is subject to potentially rapid
obsolescence, depreciation or diminution in value, the court shall,
after notice and hearing, order the debtor or rehabilitation
receiver to take reasonable steps necessary to prevent the
depreciation. If depreciation cannot be avoided and such
depreciation is jeopardizing the security or property interest of
the secured creditor or owner, the court shall:

(a) allow the encumbered property to be foreclosed upon by the
secured creditor according to the relevant agreement between
the debtor and the secured creditor, applicable rules of procedure
and relevant legislation: Provided. That the proceeds of the sale
will be distributed in accordance with the order prescribed under
the rules of concurrence and preference of credits; or

(b) upon motion of, or with the consent of the affected secured
creditor or interest owner. order the conveyance of a lien against
or ownership interest in substitute property of the debtor to the
secured creditor: Provided. That other creditors holding liens on
such property, if any, do not object thereto, or, if such property is
not available;

(c) order the conveyance to the secured creditor or holder . of an
ownership interest of a lien on the residual funds from the sale of
encumbered property during the proceedings; or

(d) allow the sale or disposition of the property: Provided. That
the sale or disposition will maximize the value of the property for
the benefit of the secured creditor and the debtor, and the
proceeds of the sale will be distributed in accordance with the
order prescribed under the rules of concurrence and preference
of credits.

Section 54.Post-commencement Interest. - The rate and term of
interest, if any, on secured and unsecured claims shall be
determined and provided for in the approved Rehabilitation Plan.

Section 55.Post-commencement Loans and Obligations. - With
the approval of the court upon the recommendation of the
rehabilitation receiver, the debtor, in order to enhance its

rehabilitation. may:

(a) enter into credit arrangements; or

(b) enter into credit arrangements, secured by mortgages of its
unencumbered property or secondary mortgages of encumbered
property with the approval of senior secured parties with regard
to the encumbered property; or

(c) incur other obligations as may be essential for its
rehabilitation.

The payment of the foregoing obligations shall be considered
administrative expenses under this Act.

Section 56.Treatment of Employees, Claims. Compensation of
employees required to carry on the business shall be considered
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an administrative expense. Claims of separation pay for months
worked prior to the commencement date shall be considered a
pre- ommencement claim. Claims for salary and separation pay
for work performed after the commencement date shall be an
administrative expense.

Section 57.Treatment of Contracts. - Unless cancelled by virtue
of a final judgment of a court of competent jurisdiction issued
prior to the issuance of the Commencement Order, or at anytime
thereafter by the court before which the rehabilitation
proceedings are pending, all valid and subbsisting contracts of
the debtor with creditors and other third parties as at the
commencement date shall continue in force: Provided, That
within ninety (90) days following the commencement of
proceedings, the debtor, with the consent of the rehabilitation
receiver, shall notify each contractual counter-party of whether it
is confirming the particular contract. Contractual obligations of
the debtor arising or performed during this period, and
afterwards for confirmed contracts, shall be considered
administrative expenses. Contracts not confirmed within the
required deadline shall be considered terminated. Claims for
actual damages, if any, arising as a result of the election to
terminate a contract shall be considered a pre-commencement
claim against the debtor. Nothing contained herein shall prevent
the cancellation or termination of any contract of the debtor for
any ground provided by law.

(G) Avoidance Proceedings.

Section 58.Rescission or Nullity of Certain Pre-commencement
Transactions. Any transaction occurring prior to commencement
date entered into by the debtor or involving its funds or assets
may be rescinded or declared null and void on the ground that
the same was executed with intent to defraud a creditor or
creditors or which constitute undue preference of creditors.
Without limiting the generality of the foregoing, a disputable
presumption of such design shall arise if the transaction:

(a) provides unreasonably inadequate consideration to the debtor
and is executed within ninety (90) days prior to the
commencement date;

(b) involves an accelerated payment of a claim to a creditor
within ninety (90) days prior to the commencement date;

(c) provides security or additional security executed within ninety
(90) days prior to the commencement date;

(d) involves creditors, where a creditor obtained, or received the
benefit of, more than its pro rata share in the assets of the
debtor, executed at a time when the debtor was insolvent; or

(e) is intended to defeat, delay or hinder the ability of the
creditors to collect claims where the effect of the transaction is to
put assets of the debtor beyond the reach of creditors or to
otherwise prejudice the interests of creditors.

Provided, however, That nothing in this section shall prevent the
court from rescinding or declaring as null and void a transaction
on other grounds provided by relevant legislation and
jurisprudence: Provided, further, That the provisions of the Civil
Code on rescission shall in any case apply to these transactions.

Section 59.Actions for Rescission or Nullity. - (a) The
rehabilitation receiver or, with his conformity, any creditor may
initiate and prosecute any action to rescind, or declare null and
void any transaction described in Section 58 hereof. If the
rehabilitation receiver does not consent to the filing or
prosecution of such action,

(b) If leave of court is granted under subsection (a), the
rehabilitation receiver shall assign and transfer to the creditor all
rights, title and interest in the chose in action or subject matter of
the proceeding, including any document in support thereof.

(c) Any benefit derived from a proceeding taken pursuant to
subsection (a), to the extent of his claim and the costs, belongs
exclusively to the creditor instituting the proceeding, and the
surplus, if any, belongs to the estate.

(d) Where, before an order is made under subsection (a), the
rehabilitation receiver (or liquidator) signifies to the court his
readiness to institute the proceeding for the benefit of the
creditors, the order shall fix the time within which he shall do so
and, m that case, the benefit derived from the proceeding, if
instituted within the time limits so fixed, belongs to the estate.

(H) Treatment of Secured Creditors.

Section 60.No Diminution of Secured Creditor Rights. The
issuance of the Commencement Order and the Suspension or
Stay Order, and any other provision of this Act, shall not be

deemed in any way to diminish or impair the security or lien of a
secured creditor, or the value of his lien or security, except that
his right to enforce said security or lien may be suspended during
the term of the Stay Order.

The court, upon motion or recommendation of the rehabilitation
receiver, may allow a secured creditor to enforce his security or
lien, or foreclose upon property of the debtor

securing his/its claim, if the said property is not necessary for the
rehabilitation of the debtor. The secured creditor and/or the
other lien holders shall be admitted to the rehabilitation
proceedings only for the balance of his claim, if any.

Section 61.Lack of Adequate Protection. - The court, on motion
or motu proprio, may terminate, modify or set conditions for the
continuance of suspension of payment, or relieve a claim from
the coverage thereof, upon showing that: (a) a creditor does not
have adequate protection over property securing its claim; or

(b) the value of a claim secured by a lien on property which is not
necessary for rehabilitation of the debtor exceeds the fair market
value of the said property.

For purposes of this section, a creditor shall be deemed to lack
adequate protection if it can be shown that:

(a) the debtor fails or refuses to honor a pre-existing agreement
with the creditor to keep the property insured;

(b) the debtor fails or refuses to take commercially reasonable
steps to maintain the property; or

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(c) the property has depreciated to an extent that the creditor is
under secured.

Upon showing of a lack of protection, the court shall order the
debtor or the rehabilitation receiver to make arrangements to
provide for the insurance or maintenance of the property; or to
make payments or otherwise provide additional or replacement
security such that the obligation is fully secured. If such
arrangements are not feasible, the court may modify the Stay
Order to allow the secured creditor lacking adequate protection
to enforce its security claim against the debtor: Provided,
however, That the court may deny the creditor the remedies in
this paragraph if the property subject of the enforcement is
required for the rehabilitation of the debtor.

(i) Administration of Proceedings.

Section 62.Contents of a Rehabilitation Plan. The Rehabilitation
Plan shall, as a minimum:

(a) specify the underlying assumptions, the financial goals and
the procedures proposed to accomplish such goals;

(b) compare the amounts expected to be received by the
creditors under the Rehabilitation Plan with those that they will
receive if liquidation ensues within the next one hundred twenty
(120) days;

(c) contain information sufficient to give the various classes of
creditors a reasonable basis for determining whether supporting
the Plan is in their financial interest when compared to the
immediate liquidation of the debtor, including any reduction of
principal interest and penalties payable to the creditors;

(d) establish classes of voting creditors;

(e) establish subclasses of voting creditors if prior approval has
been granted by the court;

(f) indicate how the insolvent debtor will be rehabilitated
including, but not limited to, debt forgiveness, debt rescheduling,
reorganization or quasi-reorganization. dacion en pago, debt-
equity conversion and sale of the business (or parts of it) as a
going concern, or setting-up of a new business entity or other
similar arrangements as may be necessary to restore the financial
well-being and visibility of the insolvent debtor;

(g) specify the treatment of each class or subclass described in
subsections (d) and (e);

(h) provide for equal treatment of all claims within the same class
or subclass, unless a particular creditor voluntarily agrees to less
favorable treatment;

(i) ensure that the payments made under the plan follow the
priority established under the provisions of the Civil Code on
concurrence and preference of credits and other applicable laws;

(j) maintain the security interest of secured creditors and preserve
the liquidation value of the security unless such has been waived
or modified voluntarily;

(k) disclose all payments to creditors for pre-commencement
debts made during the proceedings and the justifications thereof;

(1) describe the disputed claims and the provisioning of funds to
account for appropriate payments should the claim be ruled valid
or its amount adjusted;

(m) identify the debtor's role in the implementation of the Plan;

(n) state any rehabilitation covenants of the debtor, the breach of
which shall be considered a material breach of the Plan;

(o) identify those responsible for the future management of the
debtor and the supervision and implementation of the Plan, their
affiliation with the debtor and their remuneration;

(p) address the treatment of claims arising after the confirmation
of the Rehabilitation Plan;

(q) require the debtor and its counter-parties to adhere to the
terms of all contracts that the debtor has chosen to confirm;

(r) arrange for the payment of all outstanding administrative
expenses as a condition to the Plan's approval unless such
condition has been waived in writing by the creditors concerned;

(s) arrange for the payment" of all outstanding taxes and
assessments, or an adjusted amount pursuant to a compromise
settlement with the BlR Or other applicable tax authorities;

(t) include a certified copy of a certificate of tax clearance or
evidence of a compromise settlement with the BIR;

(u) include a valid and binding r(,solution of a meeting of the
debtor's stockholders to increase the shares by the required
amount in cases where the Plan contemplates an additional
issuance of shares by the debtor;

(v) state the compensation and status, if any, of the rehabilitation
receiver after the approval of the Plan; and

(w) contain provisions for conciliation and/or mediation as a
prerequisite to court assistance or intervention in the event of
any disagreement in the interpretation or implementation of the
Rehabilitation Plan.

Section 63.Consultation with Debtor and Creditors. if the court
gives due course to the petition, the rehabilitation receiver shall
confer with the debtor and all the classes of creditors, and may
consider their views and proposals ill the review, revision or
preparation of a new Rehabilitation Plan.

Section 64.Creditor Approval of Rehabilitation Plan. The
rehabilitation receiver shall notify the creditors and stakeholders
that the Plan is ready for their examination. Within twenty (2Q)
days from the said notification, the rehabilitation receiver shall
convene the creditors, either as a whole or per class, for purposes
of voting on the approval of the Plan. The Plan shall be deemed
rejected unless approved by all classes of creditors w hose rights
are adversely modified or affected by the Plan. For purposes of
this section, the Plan is deemed to have been approved by a class
of creditors if members of the said class holding more than fifty
percent (50%) of the total claims of the said class vote in favor of
the Plan. The votes of the creditors shall be based solely on the
amount of their respective claims based on the registry of claims
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submitted by the rehabilitation receiver pursuant to Section 44
hereof.

Notwithstanding the rejection of the Rehabilitation Plan, the
court may confirm the Rehabilitation Plan if all of the following
circumstances are present:

(a)The Rehabilitation Plan complies with the requirements
specified in this Act.

(b) The rehabilitation receiver recommends the confirmation of
the Rehabilitation Plan;

(c) The shareholders, owners or partners of the juridical debtor
lose at least their controlling interest as a result of the
Rehabilitation Plan; and

(d) The Rehabilitation Plan would likely provide the objecting
class of creditors with compensation which has a net present
value greater than that which they would have received if the
debtor were under liquidation.

Section 65.Submission of Rehabilitation Plan to the Court. - 1fthe
Rehabilitation Plan is approved, the rehabilitation receiver shall
submit the same to the court for confirmation. Within five (5)
days from receipt of the Rehabilitation Plan, the court shall notify
the creditors that the Rehabilitation Plan has been submitted for
confirmation, that any creditor may obtain copies of the
Rehabilitation Plan and that any creditor may file an objection
thereto.

Section 66.Filing of Objections to Rehabilitation Plan. A creditor
may file an objection to the Rehabilitation Plan within twenty
(20) days from receipt of notice from the court that the
Rehabilitation Plan has been submitted for confirmation.
Objections to a Rehabilitation Plan shall be limited to the
following:

(a) The creditors' support was induced by fraud;

(b)The documents or data relied upon in the Rehabilitation Plan
are materially false or misleading; or

(c)The Rehabilitation Plan is in fact not supported by the voting
creditors.

Section 67.Hearing on the Objections. - If objections have been
submitted during the relevant period, the court shall issue an
order setting the time and date for the hearing or hearings on the
objections.

If the court finds merit in the objection, it shall order the
rehabilitation receiver or other party to cure the defect, whenever
feasible. If the court determines that the debtor acted in bad
faith, or that it is not feasible to cure the defect, the court shall
convert the proceedings into one for the liquidation of the debtor
under Chapter V of this Act.

Section 68.Confirmation of the Rehabilitation Plan. If no
objections are filed within the relevant period or, if objections are
filed, the court finds them lacking in merit, or determines that the
basis for the objection has been cured, or determines that the
debtor has complied with an order to cure the objection, the
court shall issue an order confirming the Rehabilitation Plan.

The court may confirm the Rehabilitation Plan notwithstanding
unresolved disputes over claims if the Rehabilitation Plan has
made adequate provisions for paying such claims.

For the avoidance of doubt, the provisions of other laws to the
contrary notwithstanding, the court shall have the power to
approve or implement the Rehabilitation Plan despite the lack of
approval, or objection from the owners, partners or stockholders
of the insolvent debtor: Provided, That the terms thereof are
necessary to restore the financial well-being and viability of the
insolvent debtor.

Section 69.Effect of Confirmation of the Rehabilitation Plan, -
The confirmation of the Rehabilitation Plan by the court shall
result in the following:

(a) The Rehabilitation Plan and its provisions shall be binding
upon the debtor and all persons who may be affected by . it,
including the creditors, whether or not such persons have
participated in the proceedings or opposed the Rehabilitation
Plan or whether or not their claims have been scheduled;

(b) The debtor shall comply with the provisions of the
Rehabilitation 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 Rehabilitation 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 Rehabilitation
Plan;

(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 implement; and

(f) Claims arising after approval of the Plan that are otherwise not
treated by the Plan are not subject to any Suspension Order.

The Order confirming the Plan shall comply with Rules 36 of the
Rules of Court: Provided, however, That the court may maintain
jurisdiction over the case in order to resolve claims against the
debtor that remain contested and allegations that the debtor has
breached the Plan.

Section 70. Liability of General Partners of a Partnership for
Unpaid Balances Under an Approved Plan. - The approval of the
Plan shall not affect the rights of creditors to pursue actions
against the general partners of a partnership to the extent they
are liable under relevant legislation for the debts thereof.

Section 71. Treatment of Amounts of Indebtedness or
Obligations Forgiven or Reduced. - Amounts of any indebtedness
or obligations reduced or forgiven in connection with a Plan's
approval shall not be subject to any tax in furtherance of the
purposes of this Act.

Section 72. Period for Confirmation of the Rehabilitation Plan. -
The court shall have a maximum period of one (1) year from the
date of the filing of the petition to confirm a Rehabilitation Plan.

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If no Rehabilitation Plan is confirmed within the said period, the
proceedings may upon motion or motu propio, be converted into
one for the liquidation of the debtor .

Section 73. Accounting Discharge of Rehabilitation Receiver. -
Upon the confirmation of the Rehabilitation Plan, the
rehabilitation receiver shall provide a final report and accounting
to the court. Unless the Rehabilitation Plan specifically requires
and describes the role of the rehabilitation receiver after the
approval of the Rehabilitation Plan, the court shall discharge the
rehabilitation receiver of his duties.

(j) Termination of Proceedings

Section 74. Termination of Proceedings. - The rehabilitation
proceedings under Chapter II shall, upon motion by any
stakeholder or the rehabilitation receiver be terminated by order
of the court either declaring a successful implementation of the
Rehabilitation Plan or a failure of rehabilitation.

There is failure of rehabilitation in the following cases:

(a) Dismissal of the petition by the court;

(b) The debtor fails to submit a Rehabilitation Plan;

(c) Under the Rehabilitation Plan submitted by the debtor, there
is no substantial likelihood that the debtor can be rehabilitated
within a reasonable period;

(d) The Rehabilitation Plan or its amendment is approved by the
court but in the implementation thereof, the debtor fails to
perform its obligations thereunder or there is a failure to realize
the objectives, targets or goals set forth therein, including the
timelines and conditions for the settlement of the obligations
due to the creditors and other claimants;

(e) The commission of fraud in securing the approval of the
Rehabilitation Plan or its amendment; and

(f) Other analogous circumstances as may be defined by the rules
of procedure.

Upon a breach of, or upon a failure of the Rehabilitation Plan the
court, upon motion by an affected party may:

(1) Issue an order directing that the breach be cured within a
specified period of time, falling which the proceedings may be
converted to a liquidation;

(2) Issue an order converting the proceedings to a liquidation;

(3) Allow the debtor or rehabilitation receiver to submit
amendments to the Rehabilitation Plan, the approval of which
shall be governed by the same requirements for the approval of a
Rehabilitation Plan under this subchapter;

(4) Issue any other order to remedy the breach consistent with
the present regulation, other applicable law and the best interests
of the creditors; or

(5) Enforce the applicable provisions of the Rehabilitation Plan
through a writ of execution.

Section 75. Effects of Termination. - Termination of the
proceedings shall result in the following:

(a) The discharge of the rehabilitation receiver subject to his
submission of a final accounting; and

(b) The lifting of the Stay Order and any other court order holding
in abeyance any action for the enforcement of a claim against
the debtor.

Provided, however, That if the termination of proceedings is due
to failure of rehabilitation or dismissal of the petition for reasons
other than technical grounds, the proceedings shall be
immediately converted to liquidation as provided in Section 92
of this Act.

CHAPTER III
PRE-NEGOTIATED REHABILITATION

Section 76. Petition by Debtor. - An insolvent debtor, by itself or
jointly with any of its creditors, may file a verified petition with
the court for the approval of a pre-negotiated Rehabilitation Plan
which has been endorsed or approved by 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. The petition shall include as a minimum:

(a) a schedule of the debtor's debts and liabilities;

(b) an inventory of the debtor's assets;

(c) the pre-negotiated Rehabilitation Plan, including the names of
at least three (3) qualified nominees for rehabilitation receiver;
and

(d) a summary of disputed claims against the debtor and a report
on the provisioning of funds to account for appropriate payments
should any such claims be ruled valid or their amounts adjusted.

Section 77. Issuance of Order. - Within five (5) working days, and
after determination that the petition is sufficient in form and
substance, the court shall issue an Order which shall;

(a) identify the debtor, its principal business of activity/ies and its
principal place of business;

(b) declare that the debtor is under rehabilitation;

(c) summarize the ground./s for the filling of the petition;

(d) direct the publication of the Order in a newspaper of general
circulation in the Philippines 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;

(e) direct the service by personal delivery of a copy of the petition
on each creditor who is not a petitioner holding at least ten
percent (10%) of the total liabilities of the debtor, as determined
in the schedule attached to the petition, within three (3) days;

(f) state that copies of the petition and the Rehabilitation Plan are
available for examination and copying by any interested party;
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(g) state that creditors and other interested parties opposing the
petition or Rehabilitation Plan may file their objections or
comments thereto within a period of not later than twenty (20)
days from the second publication of the Order;

(h) appoint a rehabilitation receiver, if provided for in the Plan;
and

(i) include a Suspension or Stay Order as described in this Act.

Section 78. Approval of the Plan. - Within ten (10) days from the
date of the second publication of the Order, the court shall
approve the Rehabilitation Plan unless a creditor or other
interested party submits an objection to it in accordance with the
next succeeding section.

Section 79. Objection to the 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 not
later than eight (8) days from the date of the second publication
of the Order mentioned in Section 77 hereof. The objections shall
be limited to the following:

(a) The allegations in the petition or the Rehabilitation Plan or the
attachments thereto are materially false or misleading;

(b) The majority of any class of creditors do not in fact support
the Rehabilitation Plan;

(c) The Rehabilitation Plan fails to accurately account for a claim
against the debtor and the claim in not categorically declared as a
contested claim; or

(d) The support of the creditors, or any of them was induced by
fraud.

Copies of any objection to the petition of the Rehabilitation Plan
shall be served on the debtor, the rehabilitation receiver (if
applicable), the secured creditor with the largest claim and who
supports the Rehabilitation Plan, and the unsecured creditor with
the largest claim and who supports the Rehabilitation Plan.

Section 80. Hearing on the Objections. - After receipt of an
objection, the court shall set the same for hearing. The date of
the hearing shall be no earlier than twenty (20) days and no later
than thirty (30) days from the date of the second publication of
the Order mentioned in Section 77 hereof. If the court finds merit
in the objection, it shall direct the debtor, when feasible to cure
the detect within a reasonable period. If the court determines
that the debtor or creditors supporting the Rehabilitation Plan
acted in bad faith, or that the objection is non-curable, the court
may order the conversion of the proceedings into liquidation. A
finding by the court that the objection has no substantial merit,
or that the same has been cured shall be deemed an approval of
the Rehabilitation Plan.

Section 81. Period for Approval of Rehabilitation Plan. - The court
shall have a maximum period of one hundred twenty (120) days
from the date of the filing of the petition to approve the
Rehabilitation Plan. If the court fails to act within the said period,
the Rehabilitation Plan shall be deemed approved.

Section 82. Effect of Approval. - Approval of a Plan under this
chapter shall have the same legal effect as confirmation of a Plan
under Chapter II of this Act.

CHAPTER IV
OUT-OF-COURT OR INFORMAL RESTRUCTURING
AGREEMENTS OR REHABILITATION PLANS

Section 83. Out-of-Court or Informal Restructuring Agreements
and Rehabilitation Plans. - An out-of-curt or informal
restructuring agreement or Rehabilitation Plan that meets the
minimum requirements prescribed in this chapter is hereby
recognized as consistent with the objectives of this Act.

Section 84. Minimum Requirements of Out-of-Court or Informal
Restructuring Agreements and Rehabilitation Plans. - For an out-
of-court or informal restructuring/workout agreement or
Rehabilitation Plan to qualify under this chapter, it must meet the
following minimum requirements:

(a) The debtor must agree to the out-of-court or informal
restructuring/workout agreement or Rehabilitation Plan;

(b) It must be approved by creditors representing at least sixty-
seven (67%) of the secured obligations of the debtor;

(c) It must be approved by creditors representing at least
seventy-five percent (75%) of the unsecured obligations of the
debtor; and

(d) It must be approved by creditors holding at least eighty-five
percent (85%) of the total liabilities, secured and unsecured, of
the debtor.

Section 85. Standstill Period. - A standstill period that may be
agreed upon by the parties pending negotiation and finalization
of the out-of-court or informal restructuring/workout agreement
or Rehabilitation Plan contemplated herein shall be effective and
enforceable not only against the contracting parties but also
against the other creditors: Provided, That (a) such agreement is
approved by creditors representing more than fifty percent
(50%) of the total liabilities of the debtor; (b) notice thereof is
publishing in a newspaper of general circulation in the Philippines
once a week for two (2) consecutive weeks; and (c) the standstill
period does not exceed one hundred twenty (120) days from the
date of effectivity. The notice must invite creditors to participate
in the negotiation for out-of-court rehabilitation or restructuring
agreement and notify them that said agreement will be binding
on all creditors if the required majority votes prescribed in
Section 84 of this Act are met.

Section 86. Cram Down Effect. - A restructuring/workout
agreement or Rehabilitation Plan that is approved pursuant to an
informal workout framework referred to in this chapter shall have
the same legal effect as confirmation of a Plan under Section 69
hereof. The notice of the Rehabilitation Plan or restructuring
agreement or Plan shall be published once a week for at least
three (3) consecutive weeks in a newspaper of general circulation
in the Philippines. The Rehabilitation Plan or restructuring
agreement shall take effect upon the lapse of fifteen (15) days
from the date of the last publication of the notice thereof.

Section 87. Amendment or Modification. - Any amendment of
an out-of-court restructuring/workout agreement or
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Rehabilitation Plan must be made in accordance with the terms
of the agreement and with due notice on all creditors.

Section 88. Effect of Court Action or Other Proceedings. - Any
court action or other proceedings arising from, or relating to, the
out-of-court or informal restructuring/workout agreement or
Rehabilitation Plan shall not stay its implementation, unless the
relevant party is able to secure a temporary restraining order or
injunctive relief from the Court of Appeals.

Section 89. Court Assistance. - The insolvent debtor and/or
creditor may seek court assistance for the execution or
implementation of a Rehabilitation Plan under this Chapter,
under such rules of procedure as may be promulgated by the
Supreme Court.

CHAPTER V
LIQUIDATION OF INSOLVENT JURIDICAL DEBTORS

Section 90. Voluntary Liquidation. - An insolvent debtor may
apply for liquidation by filing a petition for liquidation with the
court. The petition shall be verified, shall establish the insolvency
of the debtor and shall contain, whether as an attachment or as
part of the body of the petition;

(a) a schedule of the debtor's debts and liabilities including a list
of creditors with their addresses, amounts of claims and
collaterals, or securities, if any;

(b) an inventory of all its assets including receivables and claims
against third parties; and

(c) the names of at least three (3) nominees to the position of
liquidator.

At any time during the pendency of court-supervised or pre-
negotiated rehabilitation proceedings, the debtor may also
initiate liquidation proceedings by filing a motion in the same
court where the rehabilitation proceedings are pending to
convert the rehabilitation proceedings into liquidation
proceedings. The motion shall be verified, shall contain or set
forth the same matters required in the preceding paragraph, and
state that the debtor is seeking immediate dissolution and
termination of its corporate existence.

If the petition or the motion, as the case may be, is sufficient in
form and substance, the court shall issue a Liquidation Order
mentioned in Section 112 hereof.

Section 91. Involuntary Liquidation. - Three (3) or more creditors
the aggregate of whose claims is at least either One million pesos
(Php1,000,000,00) or at least twenty-five percent (25%0 of
the subscribed capital stock or partner's contributions of the
debtor, whichever is higher, may apply for and seek the
liquidation of an insolvent debtor by filing a petition for
liquidation of the debtor with the court. The petition shall show
that:

(a) there is no genuine issue of fact or law on the claims/s of the
petitioner/s, and that the due and demandable payments
thereon have not been made for at least one hundred eighty
(180) days or that the debtor has failed generally to meet its
liabilities as they fall due; and

(b) there is no substantial likelihood that the debtor may be
rehabilitated.

At any time during the pendency of or after a rehabilitation
court-supervised or pre-negotiated rehabilitation proceedings,
three (3) or more creditors whose claims is at least either One
million pesos (Php1,000,000.00) or at least twenty-five
percent (25%) of the subscribed capital or partner's contributions
of the debtor, whichever is higher, may also initiate liquidation
proceedings by filing a motion in the same court where the
rehabilitation proceedings are pending to convert the
rehabilitation proceedings into liquidation proceedings. The
motion shall be verified, shall contain or set forth the same
matters required in the preceding paragraph, and state that the
movants are seeking the immediate liquidation of the debtor.

If the petition or motion is sufficient in form and substance, the
court shall issue an Order:

(1) directing the publication of the petition or motion in a
newspaper of general circulation once a week for two (2)
consecutive weeks; and

(2) directing the debtor and all creditors who are not the
petitioners to file their comment on the petition or motion within
fifteen (15) days from the date of last publication.

If, after considering the comments filed, the court determines
that the petition or motion is meritorious, it shall issue the
Liquidation Order mentioned in Section 112 hereof.

Section 92. Conversion by the Court into Liquidation
Proceedings. - During the pendency of court-supervised or pre-
negotiated rehabilitation proceedings, the court may order the
conversion of rehabilitation proceedings to liquidation
proceedings pursuant to (a) Section 25(c) of this Act; or (b)
Section 72 of this Act; or (c) Section 75 of this Act; or (d) Section
90 of this Act; or at any other time upon the recommendation of
the rehabilitation receiver that the rehabilitation of the debtor is
not feasible. Thereupon, the court shall issue the Liquidation
Order mentioned in Section 112 hereof.

Section 93. Powers of the Securities and Exchange Commission
(SEC). - The provisions of this chapter shall not affect the
regulatory powers of the SEC under Section 6 of Presidential
Decree No. 902-A, as amended, with respect to any dissolution
and liquidation proceeding initiated and heard before it.

CHAPTER VI
INSOLVENCY OF INDIVIDUAL DEBTORS

(A) Suspension of Payments.

Section 94. Petition. - An individual debtor who, possessing
sufficient property to cover all his debts but foreseeing the
impossibility of meeting them when they respectively fall due,
may file a verified petition that he be declared in the state of
suspension of payments by the court of the province or city in
which he has resides for six (6) months prior to the filing of his
petition. He shall attach to his petition, as a minimum: (a) a
schedule of debts and liabilities; (b) an inventory of assess; and (c)
a proposed agreement with his creditors.

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Section 95. Action on the Petition. - If the court finds the petition
sufficient in form and substance, it shall, within five (5) working
days from the filing of the petition, issue an Order:

(a) calling a meeting of all the creditors named in the schedule of
debts and liabilities at such time not less than fifteen (15) days
nor more than forty (40) days from the date of such Order and
designating the date, time and place of the meeting;

(b) directing such creditors to prepare and present written
evidence of their claims before the scheduled creditors' meeting;

(c) directing the publication of the said order in a newspaper of
general circulation published in the province or city in which the
petition is filed once a week for two (2) consecutive weeks, with
the first publication to be made within seven (7) days from the
time of the issuance of the Order;

(d) directing the clerk of court to cause the sending of a copy of
the Order by registered mail, postage prepaid, to all creditors
named in the schedule of debts and liabilities;

(e) forbidding the individual debtor from selling, transferring,
encumbering or disposing in any manner of his property, except
those used in the ordinary operations of commerce or of industry
in which the petitioning individual debtor is engaged so long as
the proceedings relative to the suspension of payments are
pending;

(f) prohibiting the individual debtor from making any payment
outside of the necessary or legitimate expenses of his business or
industry, so long as the proceedings relative to the suspension of
payments are pending; and

(g) appointing a commissioner to preside over the creditors'
meeting.

Section 96. Actions Suspended. - Upon motion filed by the
individual debtor, the court may issue an order suspending any
pending execution against the individual debtor. Provide, That
properties held as security by secured creditors shall not be the
subject of such suspension order. The suspension order shall
lapse when three (3) months shall have passed without the
proposed agreement being accepted by the creditors or as soon
as such agreement is denied.

No creditor shall sue or institute proceedings to collect his claim
from the debtor from the time of the filing of the petition for
suspension of payments and for as long as proceedings remain
pending except:

(a) those creditors having claims for personal labor, maintenance,
expense of last illness and funeral of the wife or children of the
debtor incurred in the sixty (60) days immediately prior to the
filing of the petition; and

(b) secured creditors.

Section 97. Creditors' Meeting. - The presence of creditors
holding claims amounting to at least three-fifths (3/5) of the
liabilities shall be necessary for holding a meeting. The
commissioner appointed by the court shall preside over the
meeting and the clerk of court shall act as the secretary thereof,
subject to the following rules:

(a) The clerk shall record the creditors present and amount of
their respective claims;

(b) The commissioner shall examine the written evidence of the
claims. If the creditors present hold at least three-fifths (3/5) of
the liabilities of the individual debtor, the commissioner shall
declare the meeting open for business;

(c) The creditors and individual debtor shall discuss the
propositions in the proposed agreement and put them to a vote;

(d) To form a majority, it is necessary:

(1) that two-thirds (2/3) of the creditors voting unite upon the
same proposition; and

(2) that the claims represented by said majority vote amount to
at least three-fifths (3/5) of the total liabilities of the debtor
mentioned in the petition; and

(e) After the result of the voting has been announced, all protests
made against the majority vote shall be drawn up, and the
commissioner and the individual debtor together with all
creditors taking part in the voting shall sign the affirmed
propositions.

No creditor who incurred his credit within ninety (90) days prior
to the filing of the petition shall be entitled to vote.

Section 98. Persons Who May Refrain From Voting. - Creditors
who are unaffected by the Suspension Order may refrain from
attending the meeting and from voting therein. Such persons
shall not be bound by any agreement determined upon at such
meeting, but if they should join in the voting they shall be bound
in the same manner as are the other creditors.

Section 99. Rejection of the Proposed Agreement. - The
proposed agreement shall be deemed rejected if the number of
creditors required for holding a meeting do not attend thereat, or
if the two (2) majorities mentioned in Section 97 hereof are not in
favor thereof. In such instances, the proceeding shall be
terminated without recourse and the parties concerned shall be
at liberty to enforce the rights which may correspond to them.

Section 100. Objections. - If the proposal of the individual
debtor, or any amendment thereof made during the creditors'
meeting, is approved by the majority of creditors in accordance
with Section 97 hereof, any creditor who attended the meeting
and who dissented from and protested against the vote of the
majority may file an objection with the court within ten (10) days
from the date of the last creditors' meeting. The causes for which
objection may be made to the decision made by the majority
during the meeting shall be: (a) defects in the call for the meeting,
in the holding thereof and in the deliberations had thereat which
prejudice the rights of the creditors; (b) fraudulent connivance
between one or more creditors and the individual debtor to vote
in favor of the proposed agreement; or (c) fraudulent conveyance
of claims for the purpose of obtaining a majority. The court shall
hear and pass upon such objection as soon as possible and in a
summary manner.

In case the decision of the majority of creditors to approve the
individual debtor's proposal or any amendment thereof made
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during the creditors' meeting is annulled by the court, the court
shall declare the proceedings terminated and the creditors shall
be at liberty to exercise the rights which may correspond to
them.

Section 101. Effects of Approval of Proposed Agreement. - If the
decision of the majority of the creditors to approve the proposed
agreement or any amendment thereof made during the
creditors' meeting is uphold by the court, or when no opposition
or objection to said decision has been presented, the court shall
order that the agreement be carried out and all parties bound
thereby to comply with its terms.

The court may also issue all orders which may be necessary or
proper to enforce the agreement on motion of any affected
party. The Order confirming the approval of the proposed
agreement or any amendment thereof made during the
creditors' meeting shall be binding upon all creditors whose
claims are included in the schedule of debts and liabilities
submitted by the individual debtor and who were properly
summoned, but not upon: (a) those creditors having claims for
personal labor, maintenance, expenses of last illness and funeral
of the wife or children of the debtor incurred in the sixty (60)
days immediately prior to the filing of the petition; and (b)
secured creditors who failed to attend the meeting or refrained
from voting therein.

Section 102. Failure of Individual Debtor to Perform Agreement.
- If the individual debtor fails, wholly or in part, to perform the
agreement decided upon at the meeting of the creditors, all the
rights which the creditors had against the individual debtor before
the agreement shall revest in them. In such case the individual
debtor may be made subject to the insolvency proceedings in
the manner established by this Act.

(B) Voluntary Liquidation.

Section 103. Application. - An individual debtor whose properties
are not sufficient to cover his liabilities, and owing debts
exceeding Five hundred thousand pesos (Php500,000.00),
may apply to be discharged from his debts and liabilities by filing
a verified petition with the court of the province or city in which
he has resided for six (6) months prior to the filing of such
petition. He shall attach to his petition a schedule of debts and
liabilities and an inventory of assets. The filing of such petition
shall be an act of insolvency.

Section 104. Liquidation Order. - If the court finds the petition
sufficient in form and substance it shall, within five (5) working
days issue the Liquidation Order mentioned in Section 112 hereof.

(C) In voluntary Liquidation.

Section 105. Petition; Acts of Insolvency. - Any creditor or group
of creditors with a claim of, or with claims aggregating at least
Five hundred thousand pesos (Php500, 000.00) may file a
verified petition for liquidation with the court of the province or
city in which the individual debtor resides.

The following shall be considered acts of insolvency, and the
petition for liquidation shall set forth or allege at least one of such
acts:

(a) That such person is about to depart or has departed from the
Republic of the Philippines, with intent to defraud his creditors;

(b) That being absent from the Republic of the Philippines, with
intent to defraud his creditors, he remains absent;

(c) That he conceals himself to avoid the service of legal process
for the purpose of hindering or delaying the liquidation or of
defrauding his creditors;

(d) That he conceals, or is removing, any of his property to avoid
its being attached or taken on legal process;

(e) That he has suffered his property to remain under attachment
or legal process for three (3) days for the purpose of hindering or
delaying the liquidation or of defrauding his creditors;

(f) That he has confessed or offered to allow judgment in favor of
any creditor or claimant for the purpose of hindering or delaying
the liquidation or of defrauding any creditors or claimant;

(g) That he has willfully suffered judgment to be taken against
him by default for the purpose of hindering or delaying the
liquidation or of defrauding his creditors;

(h) That he has suffered or procured his property to be taken on
legal process with intent to give a preference to one or more of
his creditors and thereby hinder or delay the liquidation or
defraud any one of his creditors;

(i) That he has made any assignment, gift, sale, conveyance or
transfer of his estate, property, rights or credits with intent to
hinder or delay the liquidation or defraud his creditors;

(j) That he has, in contemplation of insolvency, made any
payment, gift, grant, sale, conveyance or transfer of his estate,
property, rights or credits;

(k) That being a merchant or tradesman, he has generally
defaulted in the payment of his current obligations for a period of
thirty (30) days;

(l) That for a period of thirty (30) days, he has failed, after
demand, to pay any moneys deposited with him or received by
him in a fiduciary; and

(m) That an execution having been issued against him on final
judgment for money, he shall have been found to be without
sufficient property subject to execution to satisfy the judgment.

The petitioning creditor/s shall post a bond in such as the court
shall direct, conditioned that if the petition for liquidation is
dismissed by the court, or withdrawn by the petitioner, or if the
debtor shall not be declared an insolvent the petitioners will pay
to the debtor all costs, expenses, damages occasioned by the
proceedings and attorney's fees.

Section 106. Order to Individual Debtor to Show Cause. - Upon
the filing of such creditors' petition, the court shall issue an Order
requiring the individual debtor to show cause, at a time and place
to be fixed by the said court, why he should not be adjudged an
insolvent. Upon good cause shown, the court may issue an Order
forbidding the individual debtor from making payments of any of
his debts, and transferring any property belonging to him.
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However, nothing contained herein shall affect or impair the
rights of a secured creditor to enforce his lien in accordance with
its terms.

Section 107. Default. - If the individual debtor shall default or if,
after trial, the issues are found in favor of the petitioning creditors
the court shall issue the Liquidation Order mentioned in Section
112 hereof.

Section 108. Absent Individual Debtor. - In all cases where the
individual debtor resides out of the Republic of the Philippines; or
has departed therefrom; or cannot, after due diligence, be found
therein; or conceals himself to avoid service of the Order to show
cause, or any other preliminary process or orders in the matter,
then the petitioning creditors, upon submitting the affidavits
requisite to procedure an Order of publication, and presenting a
bond in double the amount of the aggregate sum of their claims
against the individual debtor, shall be entitled to an Order of the
court directing the sheriff of the province or city in which the
matter is pending to take into his custody a sufficient amount of
property of the individual debtor to satisfy the demands of the
petitioning creditors and the costs of the proceedings. Upon
receiving such Order of the court to take into custody of the
property of the individual debtor, it shall be the duty of the sheriff
to take possession of the property and effects of the individual
debtor, not exempt from execution, to an extent sufficient to
cover the amount provided for and to prepare within three (3)
days from the time of taking such possession, a complete
inventory of all the property so taken, and to return it to the court
as soon as completed. The time for taking the inventory and
making return thereof may be extended for good cause shown to
the court. The sheriff shall also prepare a schedule of the names
and residences of the creditors, and the amount due each, from
the books of the debtor, or from such other papers or data of the
individual debtor available as may come to his possession, and
shall file such schedule or list of creditors and inventory with the
clerk of court.

Section 109. All Property Taken to be Held for All Creditors;
Appeal Bonds; Exemptions to Sureties. - In all cases where
property is taken into custody by the sheriff, if it does not
embrace all the property and effects of the debtor not exempt
from execution, any other creditor or creditors of the individual
debtor, upon giving bond to be approved by the court in double
the amount of their claims, singly or jointly, shall be entitled to
similar orders and to like action, by the sheriff; until all claims be
provided for, if there be sufficient property or effects. All
property taken into custody by the sheriff by virtue of the giving
of any such bonds shall be held by him for the benefit of all
creditors of the individual debtor whose claims shall be duly
proved as provided in this Act. The bonds provided for in this
section and the preceding section to procure the order for
custody of the property and effects of the individual debtor shall
be conditioned that if, upon final hearing of the petition in
insolvency, the court shall find in favor of the petitioners, such
bonds and all of them shall be void; if the decision be in favor of
the individual debtor, the proceedings shall be dismissed, and the
individual debtor, his heirs, administrators, executors or assigns
shall be entitled to recover such sum of money as shall be
sufficient to cover the damages sustained by him, not to exceed
the amount of the respective bonds. Such damages shall be fixed
and allowed by the court. If either the petitioners or the debtor
shall appeal from the decision of the court, upon final hearing of
the petition, the appellant shall be required to give bond to the
successful party in a sum double the amount of the value of the
property in controversy, and for the costs of the proceedings.

Any person interested in the estate may take exception to the
sufficiency of the sureties on such bond or bonds. When
excepted to the petitioner's sureties, upon notice to the person
excepting of not less than two (2) nor more than five (5) days,
must justify as to their sufficiency; and upon failure to justify, or
of others in their place fail to justify at the time and place
appointed the judge shall issue an Order vacating the order to
take the property of the individual debtor into the custody of the
sheriff, or denying the appeal, as the case may be.

Section 110. Sale Under Execution. - If, in any case, proper
affidavits and bonds are presented to the court or a judge
thereof, asking for and obtaining an Order of publication and an
Order for the custody of the property of the individual debtor
and thereafter the petitioners shall make it appear satisfactorily
to the court or a judge thereof that the interest of the parties to
the proceedings will be subserved by a sale thereof, the court
may order such property to be sold in the same manner as
property is sold under execution, the proceeds to de deposited in
the court to abide by the result of the proceedings.

CHAPTER VII
PROVISIONS COMMON TO LIQUIDATION IN INSOLVENCY OF
INDIVIDUAL AND JURIDICAL DEBTORS

Section 111. Use of Term Debtor. - For purposes of this chapter,
the term debtor shall include both individual debtor as defined in
Section 4(o) and debtor as defined in Section 4(k) of this Act.

(A) The Liquidation Order.

Section 112. Liquidation Order. - The Liquidation Order shall:

(a) declare the debtor insolvent;

(b) order the liquidation of the debtor and, in the case of a
juridical debtor, declare it as dissolved;

(c) order the sheriff to take possession and control of all the
property of the debtor, except those that may be exempt from
execution;

(d) order the publication of the petition or motion in a newspaper
of general circulation once a week for two (2) consecutive weeks;

(e) direct payments of any claims and conveyance of any
property due the debtor to the liquidator;

(f) prohibit payments by the debtor and the transfer of any
property by the debtor;

(g) direct all creditors to file their claims with the liquidator within
the period set by the rules of procedure;

(h) authorize the payment of administrative expenses as they
become due;

(i) state that the debtor and creditors who are not petitioner/s
may submit the names of other nominees to the position of
liquidator; and

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(j) set the case for hearing for the election and appointment of
the liquidator, which date shall not be less than thirty (30) days
nor more than forty-five (45) days from the date of the last
publication.

Section 113. Effects of the Liquidation Order. - Upon the issuance
of the Liquidation Order:

(a) the juridical debtor shall be deemed dissolved and its
corporate or juridical existence terminated;

(b) legal title to and control of all the assets of the debtor, except
those that may be exempt from execution, shall be deemed
vested in the liquidator or, pending his election or appointment,
with the court;

(c) all contracts of the debtor shall be deemed terminated and/or
breached, unless the liquidator, within ninety (90) days from the
date of his assumption of office, declares otherwise and the
contracting party agrees;

(d) no separate action for the collection of an unsecured claim
shall be allowed. Such actions already pending will be transferred
to the Liquidator for him to accept and settle or contest. If the
liquidator contests or disputes the claim, the court shall allow,
hear and resolve such contest except when the case is already on
appeal. In such a case, the suit may proceed to judgment, and
any final and executor judgment therein for a claim against the
debtor shall be filed and allowed in court; and

(e) no foreclosure proceeding shall be allowed for a period of one
hundred eighty (180) days.

Section 114. Rights of Secured Creditors. - The Liquidation Order
shall not affect the right of a secured creditor to enforce his lien
in accordance with the applicable contract or law. A secured
creditor may:

(a) waive his right under the security or lien, prove his claim in the
liquidation proceedings and share in the distribution of the assets
of the debtor; or

(b) maintain his rights under the security or lien:

If the secured creditor maintains his rights under the security or
lien:

(1) the value of the property may be fixed in a manner agreed
upon by the creditor and the liquidator. When the value of the
property is less than the claim it secures, the liquidator may
convey the property to the secured creditor and the latter will be
admitted in the liquidation proceedings as a creditor for the
balance. If its value exceeds the claim secured, the liquidator may
convey the property to the creditor and waive the debtor's right
of redemption upon receiving the excess from the creditor;

(2) the liquidator may sell the property and satisfy the secured
creditor's entire claim from the proceeds of the sale; or

(3) the secure creditor may enforce the lien or foreclose on the
property pursuant to applicable laws.

(B) The Liquidator.

Section 115. Election of Liquidator. - Only creditors who have
filed their claims within the period set by the court, and whose
claims are not barred by the statute of limitations, will be allowed
to vote in the election of the liquidator. A secured creditor will not
be allowed to vote, unless: (a) he waives his security or lien; or (b)
has the value of the property subject of his security or lien fixed
by agreement with the liquidator, and is admitted for the balance
of his claim.

The creditors entitled to vote will elect the liquidator in open
court. The nominee receiving the highest number of votes cast in
terms of amount of claims, ad who is qualified pursuant to
Section 118 hereof, shall be appointed as the liquidator.

Section 116. Court-Appointed Liquidator. - The court may appoint
the liquidator if:

(a) on the date set for the election of the liquidator, the creditors
do not attend;

(b) the creditors who attend, fail or refuse to elect a liquidator;

(c) after being elected, the liquidator fails to qualify; or

(d) a vacancy occurs for any reason whatsoever, In any of the
cases provided herein, the court may instead set another hearing
of the election of the liquidator.

Provided further, That nothing in this section shall be construed
to prevent a rehabilitation receiver, who was administering the
debtor prior to the commencement of the liquidation, from
being appointed as a liquidator.

Section 117. Oath and Bond of the Liquidator. -Prior to entering
upon his powers, duties and responsibilities, the liquidator shall
take an oath and file a bond, In such amount to be fixed by the
court, conditioned upon the proper and faithful discharge of his
powers, duties and responsibilities.

Section 118. Qualifications of the Liquidator. - The liquidator shall
have the qualifications enumerated in Section 29 hereof. He may
be removed at any time by the court for cause, either motu
propio or upon motion of any creditor entitled to vote for the
election of the liquidator.

Section 119. Powers, Duties and Responsibilities of the Liquidator.
- The liquidator shall be deemed an officer of the court with the
principal duly of preserving and maximizing the value and
recovering the assets of the debtor, with the end of liquidating
them and discharging to the extent possible all the claims against
the debtor. The powers, duties and responsibilities of the
liquidator shall include, but not limited to:

(a) to sue and recover all the assets, debts and claims, belonging
or due to the debtor;

(b) to take possession of all the property of the debtor except
property exempt by law from execution;

(c) to sell, with the approval of the court, any property of the
debtor which has come into his possession or control;

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(d) to redeem all mortgages and pledges, and so satisfy any
judgement which may be an encumbrance on any property sold
by him;

(e) to settle all accounts between the debtor and his creditors,
subject to the approval of the court;

(f) to recover any property or its value, fraudulently conveyed by
the debtor;

(g) to recommend to the court the creation of a creditors'
committee which will assist him in the discharge of the functions
and which shall have powers as the court deems just, reasonable
and necessary; and

(h) upon approval of the court, to engage such professional as
may be necessary and reasonable to assist him in the discharge
of his duties.

In addition to the rights and duties of a rehabilitation receiver, the
liquidator, shall have the right and duty to take all reasonable
steps to manage and dispose of the debtor's assets with a view
towards maximizing the proceedings therefrom, to pay creditors
and stockholders, and to terminate the debtor's legal existence.
Other duties of the liquidator in accordance with this section may
be established by procedural rules.

A liquidator shall be subject to removal pursuant to procedures
for removing a rehabilitation receiver.

Section 120. Compensation of the Liquidator. - The liquidator
and the persons and entities engaged or employed by him to
assist in the discharge of his powers and duties shall be entitled
to such reasonable compensation as may determined by the
liquidation court, which shall not exceed the maximum amount
as may be prescribed by the Supreme Court.

Section 121. Reporting Requiremen5ts. - The liquidator shall make
and keep a record of all moneys received and all disbursements
mad by him or under his authority as liquidator. He shall render a
quarterly report thereof to the court , which report shall be made
available to all interested parties. The liquidator shall also submit
such reports as may be required by the court from time to time
as well as a final report at the end of the liquidation proceedings.

Section 122. Discharge of Liquidator. - In preparation for the final
settlement of all the claims against the debtor , the liquidator will
notify all the creditors, either by publication in a newspaper of
general circulation or such other mode as the court may direct or
allow, that will apply with the court for the settlement of his
account and his discharge from liability as liquidator. The
liquidator will file a final accounting with the court, with proof of
notice to all creditors. The accounting will be set for hearing. If
the court finds the same in order, the court will discharge the
liquidator.

(C) Determination of Claims

Section 123. Registry of Claims. - Within twenty (20) days from
his assumption into office the liquidator shall prepare a
preliminary registry of claims of secured and unsecured creditors.
Secured creditors who have waived their security or lien, or have
fixed the value of the property subject of their security or lien by
agreement with the liquidator and is admitted as a creditor for
the balance , shall be considered as unsecured creditors. The
liquidator shall make the registry available for public inspection
and provide publication notice to creditors, individual debtors
owner/s of the sole proprietorship-debtor, the partners of the
partnership-debtor and shareholders or members of the
corporation-debtor, on where and when they may inspect it. All
claims must be duly proven before being paid.

Section 124. Right of Set-off. - If the debtor and creditor are
mutually debtor and creditor of each other one debt shall be set
off against the other, and only the balance, if any shall be allowed
in the liquidation proceedings.

Section 125. - Opposition or Challenge to Claims. - Within thirty
(30 ) days from the expiration of the period for filing of
applications for recognition of claims, creditors, individual
debtors, owner/s of the sole proprietorship-debtor, partners of
the partnership-debtor and shareholders or members of the
corporation -debtor and other interested parties may submit a
challenge to claim or claims to the court, serving a certified copy
on the liquidator and the creditor holding the challenged claim.
Upon the expiration of the (30) day period, the rehabilitation
receiver shall submit to the court the registry of claims containing
the undisputed claims that have not been subject to challenge.
Such claims shall become final upon the filling of the register and
may be subsequently set aside only on grounds or fraud,
accident, mistake or inexcusable neglect.

Section 126. Submission of Disputed to the Court. - The
liquidator shall resolve disputed claims and submit his findings
thereon to the court for final approval. The liquidator may
disallow claims.

(D) Avoidance Proceedings.

Section 127. Rescission or Nullity of Certain Transactions. - Any
transaction occurring prior to the issuance of the Liquidation
Order or, in case of the conversion of the rehabilitation
proceedings prior to the commencement date, entered into by
the debtor or involving its assets, may be rescinded or declared
null and void on the ground that the same was executed with
intent to defraud a creditor or creditors or which constitute undue
preference of creditors. The presumptions set forth in Section 58
hereof shall apply.

Section 128. Actions for Rescission or Nullity. - (a) The liquidator
or, with his conformity, a creditor may initiate and prosecute any
action to rescind, or declare null and void any transaction
described in the immediately preceding paragraph. If the
liquidator does not consent to the filling or prosecution of such
action, any creditor may seek leave of the court to commence
said action.

(b) if leave of court is granted under subsection (a) hereof, the
liquidator shall assign and transfer to the creditor all rights, title
and interest in the chose in action or subject matter of the
proceeding, including any document in support thereof.

(c) Any benefit derived from a proceeding taken pursuant to
subsection (a) hereof, to the extent of his claim and the costs,
belongs exclusively to the creditor instituting the proceeding, and
the surplus, if any, belongs to the estate.

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(d) Where, before an orders is made under subsection (a) hereof,
the liquidator signifies to the court his readiness to the institute
the proceeding for the benefit of the creditors, the order shall fix
the time within which he shall do so and, in that case the benefit
derived from the proceedings, if instituted within the time limits
so fixed, belongs to the estate.

(E) The Liquidation Plan.

Section 129. The Liquidation Plan. - Within three (3) months from
his assumption into office, the Liquidator shall submit a
Liquidation Plan to the court. The Liquidation Plan shall, as a
minimum enumerate all the assets of the debtor and a schedule
of liquidation of the assets and payment of the claims.

Section 130. Exempt Property to be Set Apart. - It shall be the
duty of the court, upon petition and after hearing, to exempt and
set apart, for the use and benefit of the said insolvent, such real
and personal property as is by law exempt from execution, and
also a homestead; but no such petition shall be heard as aforesaid
until it is first proved that notice of the hearing of the application
therefor has been duly given by the clerk, by causing such notice
to be posted it at least three (3) public places in the province or
city at least ten (10) days prior to the time of such hearing, which
notice shall set forth the name of the said insolvent debtor, and
the time and place appointed for the hearing of such application,
and shall briefly indicate the homestead sought to be exempted
or the property sought to be set aside; and the decree must show
that such proof was made to the satisfaction of the court, and
shall be conclusive evidence of that fact.

Section 131. Sale of Assets in Liquidation. - The liquidator may sell
the unencumbered assets of the debtor and convert the same
into money. The sale shall be made at public auction. However, a
private sale may be allowed with the approval of the court if; (a)
the goods to be sold are of a perishable nature, or are liable to
quickly deteriorate in value, or are disproportionately expensive
to keep or maintain; or (b) the private sale is for the best interest
of the debtor and his creditors.

With the approval of the court, unencumbered property of the
debtor may also be conveyed to a creditor in satisfaction of his
claim or part thereof.

Section 132. manner of Implementing the Liquidation Plan. - The
Liquidator shall implement the Liquidation Plan as approved by
the court. Payments shall be made to the creditors only in
accordance with the provisions of the Plan.

Section 133. Concurrence and Preference of Credits. - The
Liquidation Plan and its Implementation shall ensure that the
concurrence and preference of credits as enumerated in the Civil
Code of the Philippines and other relevant laws shall be
observed, unless a preferred creditor voluntarily waives his
preferred right. For purposes of this chapter, credits for services
rendered by employees or laborers to the debtor shall enjoy first
preference under Article 2244 of the Civil Code, unless the claims
constitute legal liens under Article 2241 and 2242 thereof.

Section 134. Order Removing the Debtor from the List of
Registered Entitles at the Securities and Exchange Commission. -
Upon determining that the liquidation has been completed
according to this Act and applicable law, the court shall issue an
Order approving the report and ordering the SEC to remove the
debtor from the registry of legal entities.

Section 135. Termination of Proceedings. - Upon receipt of
evidence showing that the debtor has been removed from the
registry of legal entities at the SEC. The court shall issue an Order
terminating the proceedings.

(F) Liquidation of a Securities Market Participant.

Section 136. Liquidation of a Securities Market Participant. - The
foregoing provisions of this chapter shall be without prejudice to
the power of a regulatory agency or self- regulatory organization
to liquidate trade-related claims of clients or customers of a
securities market participant which, for purposes of investor
protection, are hereby deemed to have absolute priority over
other claims of whatever nature or kind insofar as trade-related
assets are concerned.

For purposes of this section, trade -related assets include cash,
securities, trading right and other owned and used by the
securities market participant in the ordinary course of this
business.

CHAPTER VIII
PROCEEDINGS ANCILLARY TO OTHER INSOLVENCY OR
REHABILITAION PROCEEDINGS

(A) Banks and Other Financial Institutions Under Rehabilitation
Receivership Pursuant to a State-funded or State-mandated
Insurance System.

Section 137. Provision of Assistance. - The court shall issue
orders, adjudicate claims and provide other relief necessary to
assist in the liquidation of a financial under rehabilitation
receivership established by a state-funded or state-mandated
insurance system.

Section 138. Application of Relevant Legislation. - The liquidation
of bank, financial institutions, insurance companies and pre-need
companies shall be determined by relevant legislation. The
provisions in this Act shall apply in a suppletory manner.

(B) Cross-Border Insolvency Proceedings.

Section 139. Adoption of Uncitral Model Law on Cross-Border
Insolvency. - Subject to the provision of Section 136 hereof and
the rules of procedure that may be adopted by the Supreme
Court, the Model Law on Cross-Border Insolvency of the United
Nations Center for International Trade and Development is
hereby adopted as part of this Act.

Section 140. Initiation of Proceedings. - The court shall set a
hearing in connection with an insolvency or rehabilitation
proceeding taking place in a foreign jurisdiction, upon the
submission of a petition by the representative of the foreign
entity that is the subject of the foreign proceeding.

Section 141. Provision of Relief. - The court may issue orders:

(a) suspending any action to enforce claims against the entity or
otherwise seize or foreclose on property of the foreign entity
located in the Philippines;

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(b) requiring the surrender property of the foreign entity to the
foreign representative; or

(c) providing other necessary relief.

Section 142. Factors in Granting Relief. - In determining whether
to grant relief under this subchapter, the court shall consider;

(a) the protection of creditors in the Philippines and the
inconvenience in pursuing their claim in a foreign proceeding;

(b) the just treatment of all creditors through resort to a unified
insolvency or rehabilitation proceedings;

(c) whether other jurisdictions have given recognition to the
foreign proceeding;

(d) the extent that the foreign proceeding recognizes the rights of
creditors and other interested parties in a manner substantially in
accordance with the manner prescribed in this Act; and

(e) the extent that the foreign proceeding has recognized and
shown deference to proceedings under this Act and previous
legislation.

CHAPTER IX
FUNDS FOR REHABILITATION OF GOVERNMENT-OWNED
AND CONTROLLED CORPORATIONS

Section 143. Funds for Rehabilitation of Government -owned and
Controlled Corporations. - Public funds for the rehabilitation of
government-owned and controlled corporations shall be
released only pursuant to an appropriation by Congress and shall
be supported by funds actually available as certified by the
National Treasurer.

The Department of Finance, in collaboration with the
Department of Budget and Management, shall promulgate the
rules for the use and release of said funds.

CHAPTER X
MISCELLANEOUS PROVISIOS

Section 144. Applicability of Provisions. - The provisions in
Chapter II, insofar as they are applicable, shall likewise apply to
proceedings in Chapters II and IV.

Section 145. Penalties. - An owner, partner, director, officer or
other employee of the debtor who commits any one of the
following acts shall, upon conviction thereof, be punished by a
fine of not more than One million pesos (Php 1, 000,000.00)
and imprisonment for not less than three(3) months nor more
than five (5) years for each offense;

(a) if he shall, having notice of the commencement of the
proceedings, or having reason to believe that proceedings are
about to be commented, or in contemplation of the proceedings
hide or conceal, or destroy or cause to be destroyed or hidden
any property belonging to the debtor or if he shall hide, destroy,
after mutilate or falsify, or cause to be hidden, destroyed, altered,
mutilated or falsified, any book, deed, document or writing
relating thereto; if he shall, with intent to defraud the creditors of
the debtor, make any payment sale, assignment, transfer or
conveyance of any property belongings to the debtor

(b) if he shall, having knowledge belief of any person having
proved a false or fictitious claim against the debtor, fail to
disclose the same to the rehabilitation receiver of liquidator
within one (1) month after coming to said knowledge or belief; or
if he shall attempt to account for any of the debtors property by
fictitious losses or expense; or

(c) if he shall knowingly violate a prohibition or knowingly fail to
undertake an obligation established by this Act.

Section 146. Application to Pending Insolvency, Suspension of
Payments and Rehabilitation Cases. - This Act shall govern all
petitions filed after it has taken effect. All further proceedings in
insolvency, suspension of payments and rehabilitation cases then
pending, except to the extent that in opinion of the court their
application would not be feasible or would work injustice, in
which event the procedures set forth in prior laws and regulations
shall apply.

Section 147. Application to Pending Contracts. - This Act shall
apply to all contracts of the debtor regardless of the date of
perfection.

Section 148. Repeating Clause. - The Insolvency Law (Act No.
1956). As amended is hereby repealed. All other laws, orders,
rules and regulations or parts thereof inconsistent with any
provision of this Act are hereby repealed or modified accordingly.

Section 149. Separability Clause. - If any provision of this Act shall
be held invalid, the remainder of this Act not otherwise affected
shall remain in full force effect

Section 150. Effectivity Clause. - This Act shall take effect fifteen
(15) days after its complete publication in the Official Gazette or
in at least two (2) national newspaper of general circulation.

A.M. No. 00-8-10-SC December 2, 2008
RULES OF PROCEDURE ON CORPORATE
REHABILITATION
R E S O L U T I O N
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
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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.
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"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.
RULE 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
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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:
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(1) The debtor fails or refuses to honor a
pre-existing 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;
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(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.
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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
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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.
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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
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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
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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
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(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;
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(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. -
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(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.
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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.
ANNEX "A" AFFIDAVIT OF GENERAL
FINANCIAL CONDITION
(1) Are you an officer of the debtor referred to in
these proceedings?
(2) What is your full name and what position do
you hold in the debtor?
(3) What is the full name of the debtor and what is
the address of its head office?
(4) When was it formed or incorporated?
(5) When did the debtor commence business?
(6) What is the nature of its business? What is the
market share of the debtor in the industry in which
it is engaged?
(7) Who are the parties, members, or stockholders?
How many employees?
(8) What is the capital of the debtor?
(9) What is the capital contribution and what is the
amount of the capital, paid and unpaid, of each of
the partners or shareholders?
(10) Do any of these people hold the shares in trust
for others?
(11) Who are the directors and officers of the
debtors?
(12) Has the debtor any subsidiary corporation? If
so, give particulars?
(13) Has the debtor properly maintained its books
and are they updated?
(14) Were the books audited annually?
(15) If so, what is the name of the auditor and when
was the last audited statement drawn up?
(16) Have all proper returns been made to the
various government agencies requiring same?
(17) When did the debtor first become aware of its
problems?
(18) Has the debtor within the twelve months
preceding the filing of the petition:
(a) made any payments, returned any
goods or delivered any property to any of
its creditors, except in the normal course
of business?
(b) executed any mortgage, pledge, or
security over any of its properties in favor
of any creditor?
(c) transferred or disposed of any of its
properties in payment of any debt?
(d) sold, disposed of, or removed any of its
property except in the ordinary course of
business?
(e) sold any merchandise at less than fair
market value or purchased merchandise or
services at more than fair market value?
(f) made or been a party to any settlement
of property in favor of any person?
If, so, give particulars.
(19) Has the debtor recorded all sales or
dispositions of assets?
(20) What were the sales for the last three years
and what percentage of the sales represented the
profit or markup?
(21) What were the profits or losses for the debtor
for the last three years?
(22) What are the causes of the problems of the
debtor? Please provide particulars?
(23) When did you first notice these problems and
what actions did the debtor take to rectify them?
(24) How much do you estimate is needed to
rehabilitate the debtor?
(25) Has any person expressed interest in investing
new money into the debtor?
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(26) Are there any pending and threatened legal
actions against the debtor? If so, please provide
particulars.
(27) Has the debtor discussed any restructuring or
repayment plan with any of the creditors? Please
provide status and details.
(28) Has any creditor expressed interest in
restructuring the debts of the debtor? If so, please
give particulars.
(29) Have employees' wages and salaries been kept
current? If not, how much are in arrears and what
time period do the arrears represent?
(30) Have obligation to the government and its
agencies been kept current? If not, how much are in
arrears and what time period do the arrears
represent?
A.M. No. 04-9-07-SC
Re: Mode of Appeal in Cases Formerly Cognizable
by the Securities and Exchange Commission
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
Banc promulgated (1) A.M. No. 00-8-10-SC, on Transfer of
Cases from the Securities and Exchange Commission to the
Regional Trial Courts which took effect on October 1,
2001; and (2) SC Adm. Memo. No. 01-2-04, or the
Interim Rules of Procedure Governing Intra-Corporate
Controversies under Republic Act No. 8799 which took
effect on April 1, 2001;
WHEREAS, the Supreme Court En Banc designated
certain regional trial courts as commercial courts to decide
cases falling under both Interim Rules;
WHEREAS, under both Interim Rules, all decisions
and orders issued shall immediately be executory and no
appeal or petition taken therefrom shall stay the
enforcement or implementation of the decision or order,
unless restrained by an appellate court;
WHEREAS, lawyers and litigants are in a quandary
on how to prevent under appropriate circumstances the
execution of decisions and orders in cases involving
corporate rehabilitation and intra-corporate controversies;
WHEREAS, in A.M. No. 00-8-10-SC, dated 4
September 2001, the Supreme Court En Banc clarified the
period of appeal for cases involving corporate rehabilitation
and intra-corporate controversies;
WHEREAS, there is a need to clarify the proper mode
of appeal in these cases in order to prevent cluttering the
dockets of the courts with appeals and/or petitions for
certiorari;
WHEREFORE, the Court Resolves:
1. All decisions and final orders in cases falling
under the Interim Rules of Corporate
Rehabilitation and the Interim Rules
of Procedure Governing Intra-Corporate
Controversies under Republic Act No. 8799 shall
be appealable to the Court of Appeals through
a petition for review under Rule 43 of the Rules
of Court.
2. The petition for review shall be taken within
fifteen (15) days from notice of the decision or
final order of the Regional Trial Court. Upon
proper motion and the payment of the full
amount of the legalfee prescribed in Rule 141
as amended before the expiration of
the reglementary period, the Court of Appeals
may grant an additional period of fifteen (15)
days within which to file the petition
forreview. No further extension shall be
granted except for the most compelling
reasons and in no case to exceed fifteen (15)
days.
3. This Resolution shall apply to all pending
appeals filed within the reglementary period
from decisions and final orders in cases
falling under the Interim Rules of Corporate
Rehabilitation and the Interim Rules of
Procedure Governing Intra-Corporate
Controversies under Republic Act No. 8799,
regardless of the mode of appeal or
petition resorted to by the appellant or
petitioner.
4. These pending appeals or petitions shall be
treated in the following manner:
a. In case a notice of appeal and/or
record on appeal was filed with the
Regional Trial Court within the
period provided in A.M. No. 00-8-10-
SC, and the original record or
the approved record on appeal has
not been transmitted to the Court
of Appeals, the appealing party shall
have fifteen (15) days from the
effectivity of this Resolution to file a
petition for review under Rule 43
with the Court of Appeals,
without prejudice to filing a motion
for extension in accordance with 1
hereof.
The notice of appeal and/or
record on appeal shall remain in the
original record but the Regional
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Trial Court and/or its clerk shall not
transmit the original record or
the approved record on appeal to the
Court of Appeals anymore.
An appealing party who
fails to file a petition for review
with the Court of Appeals within
the prescribed period shall not be
deemed to have abandoned his appeal,
in which case the appeal shall run its
due course.
b. In case a notice of appeal and/or
record on appeal was filed with the
Regional Trial Court within the
period provided in A.M. No. 00-8-10-
SC, and the original record or
the approved record on appeal has
been transmitted to the Court of
Appeals, the case shall continue as an
appeal.
c. In case a petition appealing or
assailing the decision and/or final
order is filed directly with the Court
of Appeals within the reglementary
period, such petition shall be
considered a petition for review
under Rule 43.
d. In case a notice of appeal and/or
record on appeal is filed with the
Regional Trial Court and a petition
appealing or assailing the decision
and/or final order is likewise filed
with the Court of Appeals, the cases
shall be consolidated and treated as a
petition for review under Rule 43.
e. No docket fees shall be required for
the filing of a petition for review
filed in substitution of a pending
appeal and/or petition as the
appellate fees have already been
collected by the Regional Trial
Court and/or Court of Appeals.
However, should a prayer for
temporary restraining order and/or
writ of preliminary injunction, not
included in the original petition, be
included in the substitute petition for
review, the Court of Appeals may
assess additional docket fees for such
prayer.
This Resolution shall take effect on the 15
th
day of
October 2004 and shall be published on a newspaper of
general circulation not later than 30 September 2004.
Promulgated this 14
th
day of September 2004.
Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Ynares-
Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez,
Corona, Callejo, Sr., Azcuna, and Tinga, JJ., concur.
Carpio-Morales, J., on official leave.
Chico-Nazario, J., on leave.





PART ELEVEN. RECOGNITION OF MINOR
NATURAL CHILDREN

Republic Act No. 9255 February 24 2004
AN ACT ALLOWING ILLEGITIMATE CHILDREN TO USE THE
SURNAME OF THEIR FATHER, AMENDING FOR THE PURPOSE
ARTICLE 176 OF EXECUTIVE ORDER NO. 209, OTHERWISE
KNOWN AS THE "FAMILY CODE OF THE PHILIPPINES"

Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:

SECTION 1. Article 176 of Executive Order No. 209, otherwise
known as the Family Code of the Philippines, is hereby amended
to read as follows:
"Article 176. Illegitimate children shall use the surname
and shall be under the parental authority of their mother, and
shall be entitled to support in conformity with this Code.
However, illegitimate children may use the surname of their
father if their filiation has been expressly recognized by the
father through the record of birth appearing in the civil register, or
when an admission in a public document or private handwritten
instrument is made by the father. Provided, the father has the
right to institute an action before the regular courts to prove non-
filiation during his lifetime. The legitime of each illegitimate child
shall consist of one-half of the legitime of a legitimate child."

SECTION 2. Repealing Clause. All laws, presidential decrees,
executive orders, proclamations, rules and regulations, which are
inconsistent with the provisions of this Act are hereby repealed or
modified accordingly.

SECTION 3. Effectivity Clause. This Act shall take effect fifteen
(15) days from its publication in the Official Gazette or in two (2)
newspapers of general circulation.

CASE NOTES

Uyguangco v. Court of Appeals (1989)
Since Graciano Uyguangco seeks to prove his filiation under
the second paragraph of Article 172 of the Family Code, his
action is now barred because of his alleged father's death in
1975. The second paragraph of this Article 175 reads as
follows: The action must be brought within the same period
specified in Article 173, except when the action is based on
the second paragraph of Article 172, in which case the action
may be brought during the lifetime of the alleged parent. (Italics
supplied.)
It is clear that the private respondent can no longer
be allowed at this time to introduce evidence of his open and
continuous possession of the status of an illegitimate child
or prove his alleged filiation through any of the means
allowed by the Rules of Court or special laws. The simple
reason is that Apolinario Uyguangco is already dead and can
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no longer be heard on the claim of his alleged son's
illegitimate filiation.




PART TWELVE. CONSTITUTION OF FAMILY
HOME

CIVIL CODE

Article 223. The family home is the dwelling house where a
person and his family reside, and the land on which it is situated.
If constituted as herein provided, the family home shall be
exempt from execution, forced sale or attachment, except as
provided in articles 232 and 243.

Article 224. The family home may be established judicially or
extrajudicially.


FAMILY CODE

Art. 152. The family home, constituted jointly by the husband and
the wife or by an unmarried head of a family, is the dwelling
house where they and their family reside, and the land on which
it is situated. (223a)

Art. 153. The family home is deemed constituted on a house and
lot from the time it is occupied as a family residence. From the
time of its constitution and so long as any of its beneficiaries
actually resides therein, the family home continues to be such
and is exempt from execution, forced sale or attachment except
as hereinafter provided and to the extent of the value allowed by
law. (223a)

Art. 154. The beneficiaries of a family home are:
(1) The husband and wife, or an unmarried person who
is the head of a family; and
(2) Their parents, ascendants, descendants, brothers
and sisters, whether the relationship be legitimate or illegitimate,
who are living in the family home and who depend upon the
head of the family for legal support. (226a)

Art. 155. The family home shall be exempt from execution,
forced sale or attachment except:
(1) For nonpayment of taxes;
(2) For debts incurred prior to the constitution of the
family home;
(3) For debts secured by mortgages on the premises
before or after such constitution; and
(4) For debts due to laborers, mechanics, architects,
builders, materialmen and others who have rendered service or
furnished material for the construction of the building. (243a)

Art. 156. The family home must be part of the properties of the
absolute community or the conjugal partnership, or of the
exclusive properties of either spouse with the latter's consent. It
may also be constituted by an unmarried head of a family on his
or her own property.
Nevertheless, property that is the subject of a
conditional sale on installments where ownership is reserved by
the vendor only to guarantee payment of the purchase price may
be constituted as a family home. (227a, 228a)

Art. 157. The actual value of the family home shall not exceed, at
the time of its constitution, the amount of the three hundred
thousand pesos in urban areas, and two hundred thousand pesos
in rural areas, or such amounts as may hereafter be fixed by law.
In any event, if the value of the currency changes after
the adoption of this Code, the value most favorable for the
constitution of a family home shall be the basis of evaluation.
For purposes of this Article, urban areas are deemed to
include chartered cities and municipalities whose annual income
at least equals that legally required for chartered cities. All others
are deemed to be rural areas. (231a)

Art. 158. The family home may be sold, alienated, donated,
assigned or encumbered by the owner or owners thereof with
the written consent of the person constituting the same, the
latter's spouse, and a majority of the beneficiaries of legal age. In
case of conflict, the court shall decide. (235a)

Art. 159. The family home shall continue despite the death of one
or both spouses or of the unmarried head of the family for a
period of ten years or for as long as there is a minor beneficiary,
and the heirs cannot partition the same unless the court finds
compelling reasons therefor. This rule shall apply regardless of
whoever owns the property or constituted the family home.
(238a)

Art. 160. When a creditor whose claims is not among those
mentioned in Article 155 obtains a judgment in his favor, and he
has reasonable grounds to believe that the family home is
actually worth more than the maximum amount fixed in Article
157, he may apply to the court which rendered the judgment for
an order directing the sale of the property under execution. The
court shall so order if it finds that the actual value of the family
home exceeds the maximum amount allowed by law as of the
time of its constitution. If the increased actual value exceeds the
maximum allowed in Article 157 and results from subsequent
voluntary improvements introduced by the person or persons
constituting the family home, by the owner or owners of the
property, or by any of the beneficiaries, the same rule and
procedure shall apply.
At the execution sale, no bid below the value allowed
for a family home shall be considered. The proceeds shall be
applied first to the amount mentioned in Article 157, and then to
the liabilities under the judgment and the costs. The excess, if
any, shall be delivered to the judgment debtor. (247a, 248a)

Art. 161. For purposes of availing of the benefits of a family home
as provided for in this Chapter, a person may constitute, or be the
beneficiary of, only one family home. (n)

Art. 162. The provisions in this Chapter shall also govern existing
family residences insofar as said provisions are applicable. (n)








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PART THIRTEEN. ABSENTEES

RULE 107. PROCEEDINGS FOR HOSPITALIZATION OF INSANE
PERSONS

Section 1. Appointment of representative. When a person
disappears from his domicile, his whereabouts being unknown,
and without having left an agent to administer his property, or
the power conferred upon the agent has expired, any interested
party, relative or friend may petition the Court of First Instance of
the place where the absentee resided before his dis-appearance,
for the appointment of a person to represent him provisionally in
all that may be necessary. In the City of Manila, the petition shall
be filed in the Juvenile and Domestic Relations Court.

Section 2. Declaration of absence; who may petition. After the
lapse of two (2) years from his disapperance and without any
news about the absentee or since the receipt of the last news, or
of five (5) years in case the absentee has left a person in charge of
the administration of his property, the declaration of his absence
and appointment of a trustee or administrative may be applied
for by any of the following:
(a) The spouse present;
(b) The heirs instituted in a will, who may present an
authentic copy of the same.
(c) The relatives who would succeed by the law of
intestacy; and
(d) Those who have over the property of the absentee
some right subordinated to the condition of his death.

Section 3. Contents of petition. The petition for the
appointment of a representative, or for the declaration of
absence and the appointment of a trustee or an administrator,
must show the following:
(a) The jurisdictional facts;
(b) The names, ages, and residences of the heirs
instituted in the will, copy of which shall be presented, and of the
relatives who would succeed by the law of intestacy;
(c) The names and residences of creditors and others
who may have any adverse interest over the property of the
absentee;
(d) The probable value, location and character of the
property belonging to the absentee.

Section 4. Time of hearing; notice and publication thereof.
When a petition for the appointment of a representative, or for
the declaration of absence and the appointment of a trustee or
administrator, is filed, the court shall fix a date and place for the
hearing thereof where all concerned may appear to contest the
petition.
Copies of the notice of the time and place fixed for the
hearing shall be served upon the known heirs, legatees, devisees,
creditors and other interested persons, at least ten (10) days
before the day of the hearing, and shall be published once a week
for three (3) consecutive weeks prior to the time designated for
the hearing, in a newspaper of general circulation in the province
or city where the absentee resides, as the court shall deem best.

Section 5. Opposition. Anyone appearing to contest the
petition shall state in writing his grounds therefor, and serve a
copy thereof on the petitioner and other interested parties on or
before the date designated for the hearing.
Section 6. Proof at hearing; order. At the hearing, compliance
with the provisions of section 4 of this rule must first be shown.
Upon satisfactory proof of the allegations in the petition, the
court shall issue an order granting the same and appointing the
representative, trustee or administrator for the absentee. The
judge shall take the necessary measures to safeguard the rights
and interests of the absentee and shall specify the powers,
obligations and remuneration of his representative, trustee or
administrator, regulating them by the rules concerning guardians.
In case of declaration of absence, the same shall not take effect
until six (6) months after its publication in a newspaper of general
circulation designated by the court and in the Official Gazette.

Section 7. Who may be appointed. In the appointment of a
representative, the spouse present shall be preferred when there
is no legal separation. If the absentee left no spouse, or if the
spouse present is a minor or otherwise incompetent, any
competent person may be appointed by the court.
In case of declaration of absence, the trustee or administrator of
the absentee's property shall be appointed in accordance with
the preceding paragraph.

Section 8. Termination of administration. The trusteeship or
administration of the property of the absentee shall cease upon
order of the court in any of the following cases:
(a) When the absentee appears personally or by means
of an agent;
(b) When the death of the absentee is proved and his
testate or intestate heirs appear;
(c) When a third person appears, showing by a proper
document that he has acquired the absentee's property by
purchase or other title.
In these cases the trustee or administrator shall cease in
the performance of his office, and the property shall be placed at
the disposal of whose may have a right thereto.


CIVIL CODE
TITLE XIV. ABSENCE
CHAPTER 1. Provisional Measures in Case of Absence

Article 381. When a person disappears from his domicile, his
whereabouts being unknown, and without leaving an agent to
administer his property, the judge, at the instance of an
interested party, a relative, or a friend, may appoint a person to
represent him in all that may be necessary.
This same rule shall be observed when under similar
circumstances the power conferred by the absentee has expired.
(181a)

Article 382. The appointment referred to in the preceding article
having been made, the judge shall take the necessary measures
to safeguard the rights and interests of the absentee and shall
specify the powers, obligations and remuneration of his
representative, regulating them, according to the circumstances,
by the rules concerning guardians. (182)

Article 383. In the appointment of a representative, the spouse
present shall be preferred when there is no legal separation.
If the absentee left no spouse, or if the spouse present is a minor,
any competent person may be appointed by the court. (183a)

CHAPTER 2. Declaration of Absence
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Article 384. Two years having elapsed without any news about
the absentee or since the receipt of the last news, and five years
in case the absentee has left a person in charge of the
administration of his property, his absence may be declared.
(184)

Article 385. The following may ask for the declaration of absence:
(1) The spouse present;
(2) The heirs instituted in a will, who may present an
authentic copy of the same;
(3) The relatives who may succeed by the law of
intestacy;
(4) Those who may have over the property of the
absentee some right subordinated to the condition of his death.
(185)

Article 386. The judicial declaration of absence shall not take
effect until six months after its publication in a newspaper of
general circulation. (186a)


FAMILY CODE

Art. 41. A marriage contracted by any person during subsistence
of a previous marriage shall be null and void, unless before the
celebration of the subsequent marriage, the prior spouse had
been absent for four consecutive years and the spouse present
has a well-founded belief that the absent spouse was already
dead. In case of disappearance where there is danger of death
under the circumstances set forth in the provisions of Article 391
of the Civil Code, an absence of only two years shall be sufficient.
For the purpose of contracting the subsequent marriage under
the preceding paragraph the spouse present must institute a
summary proceeding as provided in this Code for the declaration
of presumptive death of the absentee, without prejudice to the
effect of reappearance of the absent spouse. (83a)

Art. 42. The subsequent marriage referred to in the preceding
Article shall be automatically terminated by the recording of the
affidavit of reappearance of the absent spouse, unless there is a
judgment annulling the previous marriage or declaring it void ab
initio.
A sworn statement of the fact and circumstances of
reappearance shall be recorded in the civil registry of the
residence of the parties to the subsequent marriage at the
instance of any interested person, with due notice to the spouses
of the subsequent marriage and without prejudice to the fact of
reappearance being judicially determined in case such fact is
disputed. (n)

Art. 43. The termination of the subsequent marriage referred to
in the preceding Article shall produce the following effects:
(1) The children of the subsequent marriage conceived
prior to its termination shall be considered legitimate;
(2) The absolute community of property or the conjugal
partnership, as the case may be, shall be dissolved and liquidated,
but if either spouse contracted said marriage in bad faith, his or
her share of the net profits of the community property or
conjugal partnership property shall be forfeited in favor of the
common children or, if there are none, the children of the guilty
spouse by a previous marriage or in default of children, the
innocent spouse;
(3) Donations by reason of marriage shall remain valid,
except that if the donee contracted the marriage in bad faith,
such donations made to said donee are revoked by operation of
law;
(4) The innocent spouse may revoke the designation of
the other spouse who acted in bad faith as beneficiary in any
insurance policy, even if such designation be stipulated as
irrevocable; and
(5) The spouse who contracted the subsequent
marriage in bad faith shall be disqualified to inherit from the
innocent spouse by testate and intestate succession. (n)

CASE NOTES

Jones v. Hortiguela (1937)
For the purposes of the civil marriage law, it is not
necessary to have the former spouse judicially declared an
absentee. The declaration of absence under Civil Code is
only to enable the taking of the necessary precautions for
the administration of the estate of the absentee.
For the celebration of civil marriage, the law only
requires that the former spouse has been absent for seven
consecutive years at the time of the second marriage (section
III, paragraph 2, General orders, No. 68). Hence the absence
of Marciana Escao's former husband should be counted
from January 10, 1918, the date on which the last news
concerning Arthur W. Jones was received, and from said
date to May 6, 1927. Therefore, more than nine years
elapsed when Marciana remarried, hence her marriage with
Hortiguela is valid.
That the marriage contracted does not appear
recorded in the marriage register of the municipality of
Malitbog does not affect the fact that the marriage was
valid:
Madridejo vs. De Leon: "The mere fact that the
parish priest who married the plaintiff's natural father and
mother, while the latter was in articulo mortis failed to send
a copy of the marriage certificate to the municipal secretary,
does not invalidate said marriage the forwarding of a copy
of the marriage certificate not one of the requisites [of a
valid marriage]."
U. S. vs. De Vera: "Certificate issued by municipal
secretaries, marriages recorded in their respective registers,
are not the only ones that can attest and prove such facts [of
marriage] Other proofs established by law may be
presented or admitted at trial.."
Furthermore, Marciana Escao believed Arthur W.
Jones to be dead when she contracted her second marriage.
Her daughter Angelita Jones herself was of the same belief,
since she lived with her mother after the latter had married
Hortiguela, treated Hortiguela as her true stepfather, and
lived and traveled with him together with her mother.
Still furthermore, according to section 334, No. 24,
of the Code of Civil Procedure, a person not heard from in
seven years is presumed to be dead.
Therefore, there is no reason to annul the order of
May 9, 1932, declaring that the heirs of the deceased were
her widower and her daughter Angelita Jones. Neither is
there any reason to annul the order of June 26, 1933,
approving the partition of the properties of the intestate
estate.



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Tol-Noquera v. Villamor (1992)
The lower court was rather hasty in dismissing the petition.
The petition was not a collateral attack on a Torrens title.
The petitioner did say there was a need to appoint an
administrator to prevent the property from being usurped,
but this did not amount to a collateral attack on the title.
The alleged fraudulent issuance of title was mentioned as a
justification for her appointment as administrator. But there
was nothing in the petition to indicate that the petitioner
would attack the title issued to Diosdado in the same
proceeding. In fact, the petitioner declared that whatever
remedy she might choose would be pursued in another
venue, in a proceeding entirely distinct and separate from
her petition for appointment as administratrix.
The private respondent's arguments that the
petitioner cannot inherit ab intestato from the legitimate
parents of the absentee is immaterial to this case. Her
disqualification as an heir to her supposed grandparents
does not inhibit her from petitioning for a declaration of
absence or to be appointed as an administratrix of the
absentee's estate.
It is not necessary that a declaration of absence be
made in a proceeding separate from and prior to a petition
for administration. This was the ruling in Reyes v.
Alejandro, reiterating Pejer v. Martinez. In the latter case,
the court declared that the petition to declare the husband
an absentee and the petition to place the management of the
conjugal properties in the hands of the wife could be
combined and adjudicated in the same proceeding.
The purpose of the law is the protection of the
interests and property of the absentee, not of the
administrator. Thus, the question of whether the
administrator may inherit the property to be administered is
not controlling. What is material is whether she is one of
those allowed by law to seek the declaration of absence of
Remigio Tol and whether she is competent to be appointed
as administratrix of his estate.
As to the issue of whether or not the property titled to
Diosdado Tol is really owned by him should be resolved in
another proceeding. The right of Daya Maria Tol to be
appointed administratrix cannot be denied outright by
reason alone of such issue.
Even if it be assumed that the title obtained by Diosdado
Tol is already indefeasible because of the lapse of the one-
year period for attacking it on the ground of fraud, there are
still other remedies available to one who is unjustly deprived
of his property. One of these is a claim for reconveyance,
another a complaint for damages. The petitioner can avail
herself of such remedies if she is appointed administratrix of
the estate of the absentee.
REMANDED to the court of origin for determination of the
legal personality of Daya Maria Tol to petition the
declaration of Remigio Tol's absence and of her competence
to be appointed as administratrix of his estate.




PART FOURTEEN. OTHER WRITS
13




13
See attachments
PART FIFTEEN. ALTERNATIVE DISPUTE
RESOLUTION

A.M. No. 07-11-08-SC September 1, 2009
SPECIAL RULES OF COURT ON ALTERNATIVE DISPUTE
RESOLUTION
Acting on the recommendation of the Chairperson of the Sub-
Committee on the Rules on Alternative Dispute Resolution
submitting for this Courts consideration and approval the
proposed Special Rules of Court on Alternative Dispute
Resolution, the Court Resolved to APPROVE the same.
This Rule shall take effect on October 30, 2009 following its
publication in three (3) newspapers of general circulation.
September 1, 2009.
SPECIAL RULES OF COURT ON ALTERNATIVE DISPUTE
RESOLUTION
PART I. GENERAL PROVISIONS AND POLICIES
RULE 1: GENERAL PROVISIONS
Rule 1.1. Subject matter and governing rules.-The Special Rules
of Court on Alternative Dispute Resolution (the "Special ADR
Rules") shall apply to and govern the following cases:
a. Relief on the issue of Existence, Validity, or
Enforceability of the Arbitration Agreement;
b. Referral to Alternative Dispute Resolution ("ADR");
c. Interim Measures of Protection;
d. Appointment of Arbitrator;
e. Challenge to Appointment of Arbitrator;
f. Termination of Mandate of Arbitrator;
g. Assistance in Taking Evidence;
h. Confirmation, Correction or Vacation of Award in
Domestic Arbitration;
i. Recognition and Enforcement or Setting Aside of an
Award in International Commercial Arbitration;
j. Recognition and Enforcement of a Foreign Arbitral
Award;
k. Confidentiality/Protective Orders; and
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l. Deposit and Enforcement of Mediated Settlement
Agreements.
Rule 1.2. Nature of the proceedings.-All proceedings under the
Special ADR Rules are special proceedings.
Rule 1.3. Summary proceedings in certain cases.-The
proceedings in the following instances are summary in nature
and shall be governed by this provision:
a. Judicial Relief Involving the Issue of Existence, Validity
or Enforceability of the Arbitration Agreement;
b. Referral to ADR;
c. Interim Measures of Protection;
d. Appointment of Arbitrator;
e. Challenge to Appointment of Arbitrator;
f. Termination of Mandate of Arbitrator;
g. Assistance in Taking Evidence;
h. Confidentiality/Protective Orders; and
i. Deposit and Enforcement of Mediated Settlement
Agreements.
(A) Service and filing of petition in summary proceedings.-The
petitioner shall serve, either by personal service or courier, a copy
of the petition upon the respondent before the filing thereof.
Proof of service shall be attached to the petition filed in court.
For personal service, proof of service of the petition consists of
the affidavit of the person who effected service, stating the time,
place and manner of the service on the respondent. For service
by courier, proof of service consists of the signed courier proof of
delivery. If service is refused or has failed, the affidavit or delivery
receipt must state the circumstances of the attempted service
and refusal or failure thereof.
(B) Notice.-Except for cases involving Referral to ADR and
Confidentiality/Protective Orders made through motions, the
court shall, if it finds the petition sufficient in form and substance,
send notice to the parties directing them to appear at a particular
time and date for the hearing thereof which shall be set no later
than five (5) days from the lapse of the period for filing the
opposition or comment. The notice to the respondent shall
contain a statement allowing him to file a comment or
opposition to the petition within fifteen (15) days from receipt of
the notice.
The motion filed pursuant to the rules on Referral to ADR or
Confidentiality/Protective Orders shall be set for hearing by the
movant and contain a notice of hearing that complies with the
requirements under Rule 15 of the Rules of Court on motions.
(C) Summary hearing. - In all cases, as far as practicable, the
summary hearing shall be conducted in one (1) day and only for
purposes of clarifying facts.
Except in cases involving Referral to ADR or
Confidentiality/Protective Orders made through motions, it shall
be the court that sets the petition for hearing within five (5) days
from the lapse of the period for filing the opposition or
comment.
(D) Resolution. - The court shall resolve the matter within a
period of thirty (30) days from the day of the hearing.
Rule 1.4. Verification and submissions. -Any pleading, motion,
opposition, comment, defense or claim filed under the Special
ADR Rules by the proper party shall be supported by verified
statements that the affiant has read the same and that the
factual allegations therein are true and correct of his own
personal knowledge or based on authentic records and shall
contain as annexes the supporting documents.

The annexes to the pleading, motion, opposition, comment,
defense or claim filed by the proper party may include a legal
brief, duly verified by the lawyer submitting it, stating the
pertinent facts, the applicable law and jurisprudence to justify the
necessity for the court to rule upon the issue raised.
Rule 1.5. Certification Against Forum Shopping. - A Certification
Against Forum Shopping is one made under oath made by the
petitioner or movant: (a) that he 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 pending 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 wherein his aforementioned petition or
motion has been filed.
A Certification Against Forum Shopping shall be appended to all
initiatory pleadings except a Motion to Refer the Dispute to
Alternative Dispute Resolution.
Rule 1.6. Prohibited submissions. - The following pleadings,
motions, or petitions shall not be allowed in the cases governed
by the Special ADR Rules and shall not be accepted for filing by
the Clerk of Court:
a. Motion to dismiss;
b. Motion for bill of particulars;
c. Motion for new trial or for reopening of trial;
d. Petition for relief from judgment;
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e. Motion for extension, except in cases where an ex-
parte temporary order of protection has been issued;
f. Rejoinder to reply;
g. Motion to declare a party in default; and
h. Any other pleading specifically disallowed under any
provision of the Special ADR Rules.
The court shall motu proprio order a pleading/motion that it has
determined to be dilatory in nature be expunged from the
records.
Rule 1.7. Computation of time. - In computing any period of time
prescribed or allowed by the Special ADR Rules, or by order of
the court, or by any applicable statute, the day of the act or event
from which the designated period of time begins to run is to be
excluded and the date of performance included. If the last day of
the period, as thus computed, falls on a Saturday, a Sunday, or a
legal holiday in the place where the court sits, the time shall not
run until the next working day.
Should an act be done which effectively interrupts the running of
the period, the allowable period after such interruption shall start
to run on the day after notice of the cessation of the cause
thereof.
The day of the act that caused the interruption shall be excluded
from the computation of the period.
Rule 1.8. Service and filing of pleadings, motions and other
papers in non-summary proceedings. - The initiatory pleadings
shall be filed directly with the court. The court will then cause the
initiatory pleading to be served upon the respondent by personal
service or courier. Where an action is already pending, pleadings,
motions and other papers shall be filed and/or served by the
concerned party by personal service or courier. Where courier
services are not available, resort to registered mail is allowed.
(A) Proof of filing. - The filing of a pleading shall be proved by its
existence in the record of the case. If it is not in the record, but is
claimed to have been filed personally, the filing shall be proved
by the written or stamped acknowledgment of its filing by the
clerk of court on a copy of the same; if filed by courier, by the
proof of delivery from the courier company.
(B) Proof of service. - Proof of personal service shall consist of a
written admission by the party served, or the official return of the
server, or the affidavit of the party serving, containing a full
statement of the date, place and manner of service. If the service
is by courier, proof thereof shall consist of an affidavit of the
proper person, stating facts showing that the document was
deposited with the courier company in a sealed envelope, plainly
addressed to the party at his office, if known, otherwise at his
residence, with postage fully pre-paid, and with instructions to
the courier to immediately provide proof of delivery.
(C) Filing and service by electronic means and proof thereof. -
Filing and service of pleadings by electronic transmission may be
allowed by agreement of the parties approved by the court. If the
filing or service of a pleading or motion was done by electronic
transmission, proof of filing and service shall be made in
accordance with the Rules on Electronic Evidence.
Rule 1.9. No summons. - In cases covered by the Special ADR
Rules, a court acquires authority to act on the petition or motion
upon proof of jurisdictional facts, i.e., that the respondent was
furnished a copy of the petition and the notice of hearing.
(A) Proof of service. - A proof of service of the petition and
notice of hearing upon respondent shall be made in writing by
the server and shall set forth the manner, place and date of
service.
(B) Burden of proof. - The burden of showing that a copy of the
petition and the notice of hearing were served on the respondent
rests on the petitioner.
The technical rules on service of summons do not apply to the
proceedings under the Special ADR Rules. In instances where the
respondent, whether a natural or a juridical person, was not
personally served with a copy of the petition and notice of
hearing in the proceedings contemplated in the first paragraph of
Rule 1.3 (B), or the motion in proceedings contemplated in the
second paragraph of Rule 1.3 (B), the method of service resorted
to must be such as to reasonably ensure receipt thereof by the
respondent to satisfy the requirement of due process.
Rule 1.10. Contents of petition/motion. - The initiatory pleading
in the form of a verified petition or motion, in the appropriate
case where court proceedings have already commenced, shall
include the names of the parties, their addresses, the necessary
allegations supporting the petition and the relief(s) sought.
Rule 1.11. Definition. - The following terms shall have the
following meanings:
a. "ADR Laws" refers to the whole body of ADR laws in
the Philippines.
b. "Appointing Authority" shall mean the person or
institution named in the arbitration agreement as the appointing
authority; or the regular arbitration institution under whose rule
the arbitration is agreed to be conducted. Where the parties have
agreed to submit their dispute to institutional arbitration rules,
and unless they have agreed to a different procedure, they shall
be deemed to have agreed to procedure under such arbitration
rules for the selection and appointment of arbitrators. In ad hoc
arbitration, the default appointment of arbitrators shall be made
by the National President of the Integrated Bar of the Philippines
or his duly authorized representative.
c. "Authenticate" means to sign, execute or use a
symbol, or encrypt a record in whole or in part, intended to
identify the authenticating party and to adopt, accept or establish
the authenticity of a record or term.
d. "Foreign Arbitral Award" is one made in a country
other than the Philippines.
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e. "Legal Brief" is a written legal argument submitted to
a court, outlining the facts derived from the factual statements in
the witnesss statements of fact and citing the legal authorities
relied upon by a party in a case submitted in connection with
petitions, counter-petitions (i.e., petitions to vacate or to set aside
and/or to correct/modify in opposition to petitions to confirm or
to recognize and enforce, or petitions to confirm or to recognize
and enforce in opposition to petitions to vacate or set aside
and/or correct/modify), motions, evidentiary issues and other
matters that arise during the course of a case. The legal brief shall
state the applicable law and the relevant jurisprudence and the
legal arguments in support of a partys position in the case.
f. "Verification" shall mean a certification under oath by
a party or a person who has authority to act for a party that he
has read the pleading/motion, and that he certifies to the truth of
the facts stated therein on the basis of his own personal
knowledge or authentic documents in his possession. When
made by a lawyer, verification shall mean a statement under oath
by a lawyer signing a pleading/motion for delivery to the Court or
to the parties that he personally prepared the pleading/motion,
that there is sufficient factual basis for the statements of fact
stated therein, that there is sufficient basis in the facts and the
law to support the prayer for relief therein, and that the
pleading/motion is filed in good faith and is not interposed for
delay.

Rule 1.12. Applicability of Part II on Specific Court Relief. - Part II
of the Special ADR Rules on Specific Court Relief, insofar as it
refers to arbitration, shall also be applicable to other forms of
ADR.
Rule 1.13. Spirit and intent of the Special ADR Rules. In
situations where no specific rule is provided under the Special
ADR Rules, the court shall resolve such matter summarily and be
guided by the spirit and intent of the Special ADR Rules and the
ADR Laws.
RULE 2: STATEMENT OF POLICIES
Rule 2.1. General policies. - It is the policy of the State to actively
promote the use of various modes of ADR and to respect party
autonomy or the freedom of the parties to make their own
arrangements in the resolution of disputes with the greatest
cooperation of and the least intervention from the courts. To this
end, the objectives of the Special ADR Rules are to encourage
and promote the use of ADR, particularly arbitration and
mediation, as an important means to achieve speedy and
efficient resolution of disputes, impartial justice, curb a litigious
culture and to de-clog court dockets.
The court shall exercise the power of judicial review as provided
by these Special ADR Rules. Courts shall intervene only in the
cases allowed by law or these Special ADR Rules.
Rule 2.2. Policy on arbitration.- (A) Where the parties have
agreed to submit their dispute to arbitration, courts shall refer the
parties to arbitration pursuant to Republic Act No. 9285 bearing
in mind that such arbitration agreement is the law between the
parties and that they are expected to abide by it in good faith.
Further, the courts shall not refuse to refer parties to arbitration
for reasons including, but not limited to, the following:
a. The referral tends to oust a court of its jurisdiction;
b. The court is in a better position to resolve the dispute
subject of arbitration;
c. The referral would result in multiplicity of suits;
d. The arbitration proceeding has not commenced;
e. The place of arbitration is in a foreign country;
f. One or more of the issues are legal and one or more
of the arbitrators are not lawyers;
g. One or more of the arbitrators are not Philippine
nationals; or
h. One or more of the arbitrators are alleged not to
possess the required qualification under the arbitration
agreement or law.
(B) Where court intervention is allowed under ADR Laws or the
Special ADR Rules, courts shall not refuse to grant relief, as
provided herein, for any of the following reasons:
a. Prior to the constitution of the arbitral tribunal, the
court finds that the principal action is the subject of an arbitration
agreement; or
b. The principal action is already pending before an
arbitral tribunal.
The Special ADR Rules recognize the principle of competence-
competence, which means that the arbitral tribunal may initially
rule on its own jurisdiction, including any objections with respect
to the existence or validity of the arbitration agreement or any
condition precedent to the filing of a request for arbitration.
The Special ADR Rules recognize the principle of separability of
the arbitration clause, which means that said clause shall be
treated as an agreement independent of the other terms of the
contract of which it forms part. A decision that the contract is null
and void shall not entail ipso jure the invalidity of the arbitration
clause.
Rule 2.3. Rules governing arbitral proceedings. - The parties are
free to agree on the procedure to be followed in the conduct of
arbitral proceedings. Failing such agreement, the arbitral tribunal
may conduct arbitration in the manner it considers appropriate.
Rule 2.4. Policy implementing competence-competence
principle. - The arbitral tribunal shall be accorded the first
opportunity or competence to rule on the issue of whether or not
it has the competence or jurisdiction to decide a dispute
submitted to it for decision, including any objection with respect
to the existence or validity of the arbitration agreement. When a
court is asked to rule upon issue/s affecting the competence or
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jurisdiction of an arbitral tribunal in a dispute brought before it,
either before or after the arbitral tribunal is constituted, the court
must exercise judicial restraint and defer to the competence or
jurisdiction of the arbitral tribunal by allowing the arbitral tribunal
the first opportunity to rule upon such issues.
Where the court is asked to make a determination of whether the
arbitration agreement is null and void, inoperative or incapable of
being performed, under this policy of judicial restraint, the court
must make no more than a prima facie determination of that
issue.
Unless the court, pursuant to such prima facie determination,
concludes that the arbitration agreement is null and void,
inoperative or incapable of being performed, the court must
suspend the action before it and refer the parties to arbitration
pursuant to the arbitration agreement.
Rule 2.5. Policy on mediation. - The Special ADR Rules do not
apply to Court-Annexed Mediation, which shall be governed by
issuances of the Supreme Court.
Where the parties have agreed to submit their dispute to
mediation, a court before which that dispute was brought shall
suspend the proceedings and direct the parties to submit their
dispute to private mediation. If the parties subsequently agree,
however, they may opt to have their dispute settled through
Court-Annexed Mediation.
Rule 2.6. Policy on Arbitration-Mediation or Mediation-
Arbitration. - No arbitrator shall act as a mediator in any
proceeding in which he is acting as arbitrator; and all negotiations
towards settlement of the dispute must take place without the
presence of that arbitrator. Conversely, no mediator shall act as
arbitrator in any proceeding in which he acted as mediator.
Rule 2.7. Conversion of a settlement agreement to an arbitral
award. - Where the parties to mediation have agreed in the
written settlement agreement that the mediator shall become
the sole arbitrator for the dispute or that the settlement
agreement shall become an arbitral award, the sole arbitrator
shall issue the settlement agreement as an arbitral award, which
shall be subject to enforcement under the law.
PART II. SPECIFIC COURT RELIEF
RULE 3: JUDICIAL RELIEF INVOLVING THE ISSUE OF
EXISTENCE, VALIDITY AND ENFORCEABILITY OF THE
ARBITRATION AGREEMENT
Rule 3.1. When judicial relief is available. - The judicial relief
provided in Rule 3, whether resorted to before or after
commencement of arbitration, shall apply only when the place
of arbitration is in the Philippines.
A. Judicial Relief before Commencement of Arbitration
Rule 3.2. Who may file petition. - Any party to an arbitration
agreement may petition the appropriate court to determine any
question concerning the existence, validity and enforceability of
such arbitration agreement serving a copy thereof on the
respondent in accordance with Rule 1.4 (A).

Rule 3.3. When the petition may be filed. - The petition for
judicial determination of the existence, validity and/or
enforceability of an arbitration agreement may be filed at any
time prior to the commencement of arbitration.
Despite the pendency of the petition provided herein, arbitral
proceedings may nevertheless be commenced and continue to
the rendition of an award, while the issue is pending before the
court.
Rule 3.4. Venue. - A petition questioning the existence, validity
and enforceability of an arbitration agreement may be filed
before the Regional Trial Court of the place where any of the
petitioners or respondents has his principal place of business or
residence.
Rule 3.5. Grounds. - A petition may be granted only if it is shown
that the arbitration agreement is, under the applicable law,
invalid, void, unenforceable or inexistent.
Rule 3.6. Contents of petition. - The verified petition shall state
the following:
a. The facts showing that the persons named as
petitioner or respondent have legal capacity to sue or be sued;
b. The nature and substance of the dispute between the
parties;
c. The grounds and the circumstances relied upon by
the petitioner to establish his position; and
d. The relief/s sought.
Apart from other submissions, the petitioner must attach to the
petition an authentic copy of the arbitration agreement.
Rule 3.7. Comment/Opposition.-The comment/opposition of
the respondent must be filed within fifteen (15) days from service
of the petition.
Rule 3.8. Court action. - In resolving the petition, the court must
exercise judicial restraint in accordance with the policy set forth in
Rule 2.4, deferring to the competence or jurisdiction of the
arbitral tribunal to rule on its competence or jurisdiction.
Rule 3.9. No forum shopping. - A petition for judicial relief under
this Rule may not be commenced when the existence, validity or
enforceability of an arbitration agreement has been raised as one
of the issues in a prior action before the same or another court.
Rule 3.10. Application for interim relief. - If the petitioner also
applies for an interim measure of protection, he must also
comply with the requirements of the Special ADR Rules for the
application for an interim measure of protection.
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Rule 3.11. Relief against court action. - Where there is a prima
facie determination upholding the arbitration agreement.-A
prima facie determination by the court upholding the existence,
validity or enforceability of an arbitration agreement shall not be
subject to a motion for reconsideration, appeal or certiorari.
Such prima facie determination will not, however, prejudice the
right of any party to raise the issue of the existence, validity and
enforceability of the arbitration agreement before the arbitral
tribunal or the court in an action to vacate or set aside the arbitral
award. In the latter case, the courts review of the arbitral
tribunals ruling upholding the existence, validity or enforceability
of the arbitration agreement shall no longer be limited to a mere
prima facie determination of such issue or issues as prescribed in
this Rule, but shall be a full review of such issue or issues with due
regard, however, to the standard for review for arbitral awards
prescribed in these Special ADR Rules.
B. Judicial Relief after Arbitration Commences
Rule 3.12. Who may file petition. - Any party to arbitration may
petition the appropriate court for judicial relief from the ruling of
the arbitral tribunal on a preliminary question upholding or
declining its jurisdiction. Should the ruling of the arbitral tribunal
declining its jurisdiction be reversed by the court, the parties shall
be free to replace the arbitrators or any one of them in
accordance with the rules that were applicable for the
appointment of arbitrator sought to be replaced.
Rule 3.13. When petition may be filed. - The petition may be
filed within thirty (30) days after having received notice of that
ruling by the arbitral tribunal.
Rule 3.14. Venue. - The petition may be filed before the Regional
Trial Court of the place where arbitration is taking place, or where
any of the petitioners or respondents has his principal place of
business or residence.
Rule 3.15. Grounds. - The petition may be granted when the
court finds that the arbitration agreement is invalid, inexistent or
unenforceable as a result of which the arbitral tribunal has no
jurisdiction to resolve the dispute.
Rule 3.16. Contents of petition. - The petition shall state the
following:
a. The facts showing that the person named as
petitioner or respondent has legal capacity to sue or be sued;
b. The nature and substance of the dispute between the
parties;
c. The grounds and the circumstances relied upon by
the petitioner; and
d. The relief/s sought.
In addition to the submissions, the petitioner shall attach to the
petition a copy of the request for arbitration and the ruling of the
arbitral tribunal.
The arbitrators shall be impleaded as nominal parties to the case
and shall be notified of the progress of the case.
Rule 3.17. Comment/Opposition. - The comment/opposition
must be filed within fifteen (15) days from service of the petition.
Rule 3.18. Court action. - (A) Period for resolving the petition.-
The court shall render judgment on the basis of the pleadings
filed and the evidence, if any, submitted by the parties, within
thirty (30) days from the time the petition is submitted for
resolution.
(B) No injunction of arbitration proceedings. - The court shall not
enjoin the arbitration proceedings during the pendency of the
petition.
Judicial recourse to the court shall not prevent the arbitral tribunal
from continuing the proceedings and rendering its award.
(C) When dismissal of petition is appropriate. - The court shall
dismiss the petition if it fails to comply with Rule 3.16 above; or if
upon consideration of the grounds alleged and the legal briefs
submitted by the parties, the petition does not appear to be
prima facie meritorious.
Rule 3.19. Relief against court action. - The aggrieved party may
file a motion for reconsideration of the order of the court. The
decision of the court shall, however, not be subject to appeal. The
ruling of the court affirming the arbitral tribunals jurisdiction shall
not be subject to a petition for certiorari. The ruling of the court
that the arbitral tribunal has no jurisdiction may be the subject of
a petition for certiorari.
Rule 3.20. Where no petition is allowed. - Where the arbitral
tribunal defers its ruling on preliminary question regarding its
jurisdiction until its final award, the aggrieved party cannot seek
judicial relief to question the deferral and must await the final
arbitral award before seeking appropriate judicial recourse.
A ruling by the arbitral tribunal deferring resolution on the issue
of its jurisdiction until final award, shall not be subject to a motion
for reconsideration, appeal or a petition for certiorari.
Rule 3.21. Rendition of arbitral award before court decision on
petition from arbitral tribunals preliminary ruling on
jurisdiction. - If the arbitral tribunal renders a final arbitral award
and the Court has not rendered a decision on the petition from
the arbitral tribunals preliminary ruling affirming its jurisdiction,
that petition shall become ipso facto moot and academic and
shall be dismissed by the Regional Trial Court. The dismissal shall
be without prejudice to the right of the aggrieved party to raise
the same issue in a timely petition to vacate or set aside the
award.
Rule 3.22. Arbitral tribunal a nominal party. - The arbitral
tribunal is only a nominal party. The court shall not require the
arbitral tribunal to submit any pleadings or written submissions
but may consider the same should the latter participate in the
proceedings, but only as nominal parties thereto.
RULE 4: REFERRAL TO ADR
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Rule 4.1. Who makes the request. - A party to a pending action
filed in violation of the arbitration agreement, whether contained
in an arbitration clause or in a submission agreement, may
request the court to refer the parties to arbitration in accordance
with such agreement.
Rule 4.2. When to make request. - (A) Where the arbitration
agreement exists before the action is filed. - The request for
referral shall be made not later than the pre-trial conference.
After the pre-trial conference, the court will only act upon the
request for referral if it is made with the agreement of all parties
to the case.
(B) Submission agreement. - If there is no existing arbitration
agreement at the time the case is filed but the parties
subsequently enter into an arbitration agreement, they may
request the court to refer their dispute to arbitration at any time
during the proceedings.
Rule 4.3. Contents of request. - The request for referral shall be
in the form of a motion, which shall state that the dispute is
covered by an arbitration agreement.
Apart from other submissions, the movant shall attach to his
motion an authentic copy of the arbitration agreement.
The request shall contain a notice of hearing addressed to all
parties specifying the date and time when it would be heard. The
party making the request shall serve it upon the respondent to
give him the opportunity to file a comment or opposition as
provided in the immediately succeeding Rule before the hearing.
Rule 4.4. Comment/Opposition. - The comment/opposition
must be filed within fifteen (15) days from service of the petition.
The comment/opposition should show that: (a) there is no
agreement to refer the dispute to arbitration; and/or (b) the
agreement is null and void; and/or (c) the subject-matter of the
dispute is not capable of settlement or resolution by arbitration
in accordance with Section 6 of the ADR Act.
Rule 4.5. Court action. - After hearing, the court shall stay the
action and, considering the statement of policy embodied in Rule
2.4, above, refer the parties to arbitration if it finds prima facie,
based on the pleadings and supporting documents submitted by
the parties, that there is an arbitration agreement and that the
subject-matter of the dispute is capable of settlement or
resolution by arbitration in accordance with Section 6 of the ADR
Act. Otherwise, the court shall continue with the judicial
proceedings.
Rule 4.6. No reconsideration, appeal or certiorari. - An order
referring the dispute to arbitration shall be immediately
executory and shall not be subject to a motion for
reconsideration, appeal or petition for certiorari.
An order denying the request to refer the dispute to arbitration
shall not be subject to an appeal, but may be the subject of a
motion for reconsideration and/or a petition for certiorari.
Rule 4.7. Multiple actions and parties. - The court shall not
decline to refer some or all of the parties to arbitration for any of
the following reasons:
a. Not all of the disputes subject of the civil action may
be referred to arbitration;
b. Not all of the parties to the civil action are bound by
the arbitration agreement and referral to arbitration would result
in multiplicity of suits;
c. The issues raised in the civil action could be speedily
and efficiently resolved in its entirety by the court rather than in
arbitration;
d. Referral to arbitration does not appear to be the most
prudent action; or
e. The stay of the action would prejudice the rights of
the parties to the civil action who are not bound by the
arbitration agreement.
The court may, however, issue an order directing the inclusion in
arbitration of those parties who are not bound by the arbitration
agreement but who agree to such inclusion provided those
originally bound by it do not object to their inclusion.
Rule 4.8. Arbitration to proceed.- Despite the pendency of the
action referred to in Rule 4.1, above, arbitral proceedings may
nevertheless be commenced or continued, and an award may be
made, while the action is pending before the court.
RULE 5: INTERIM MEASURES OF PROTECTION
Rule 5.1. Who may ask for interim measures of protection. - A
party to an arbitration agreement may petition the court for
interim measures of protection.
Rule 5.2. When to petition. - A petition for an interim measure of
protection may be made (a) before arbitration is commenced, (b)
after arbitration is commenced, but before the constitution of the
arbitral tribunal, or (c) after the constitution of the arbitral tribunal
and at any time during arbitral proceedings but, at this stage, only
to the extent that the arbitral tribunal has no power to act or is
unable to act effectively.
Rule 5.3. Venue. - A petition for an interim measure of protection
may be filed with the Regional Trial Court, which has jurisdiction
over any of the following places:
a. Where the principal place of business of any of the
parties to arbitration is located;
b. Where any of the parties who are individuals resides;
c. Where any of the acts sought to be enjoined are
being performed, threatened to be performed or not being
performed; or
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d. Where the real property subject of arbitration, or a
portion thereof is situated.
Rule 5.4. Grounds. - The following grounds, while not limiting the
reasons for the court to grant an interim measure of protection,
indicate the nature of the reasons that the court shall consider in
granting the relief:
a. The need to prevent irreparable loss or injury;
b. The need to provide security for the performance of
any obligation;
c. The need to produce or preserve evidence; or
d. The need to compel any other appropriate act or
omission.
Rule 5.5. Contents of the petition. - The verified petition must
state the following:
a. The fact that there is an arbitration agreement;
b. The fact that the arbitral tribunal has not been
constituted, or if constituted, is unable to act or would be unable
to act effectively;
c. A detailed description of the appropriate relief
sought;
d. The grounds relied on for the allowance of the
petition
Apart from other submissions, the petitioner must attach to his
petition an authentic copy of the arbitration agreement.
Rule 5.6. Type of interim measure of protection that a court
may grant.- The following, among others, are the interim
measures of protection that a court may grant:
a. Preliminary injunction directed against a party to
arbitration;
b. Preliminary attachment against property or
garnishment of funds in the custody of a bank or a third person;
c. Appointment of a receiver;
d. Detention, preservation, delivery or inspection of
property; or,
e. Assistance in the enforcement of an interim measure
of protection granted by the arbitral tribunal, which the latter
cannot enforce effectively.
Rule 5.7. Dispensing with prior notice in certain cases. - Prior
notice to the other party may be dispensed with when the
petitioner alleges in the petition that there is an urgent need to
either (a) preserve property, (b) prevent the respondent from
disposing of, or concealing, the property, or (c) prevent the relief
prayed for from becoming illusory because of prior notice, and
the court finds that the reason/s given by the petitioner are
meritorious.
Rule 5.8. Comment/Opposition. - The comment/opposition
must be filed within fifteen (15) days from service of the petition.
The opposition or comment should state the reasons why the
interim measure of protection should not be granted.
Rule 5.9. Court action. - After hearing the petition, the court shall
balance the relative interests of the parties and inconveniences
that may be caused, and on that basis resolve the matter within
thirty (30) days from (a) submission of the opposition, or (b) upon
lapse of the period to file the same, or (c) from termination of the
hearing that the court may set only if there is a need for
clarification or further argument.
If the other parties fail to file their opposition on or before the
day of the hearing, the court shall motu proprio render judgment
only on the basis of the allegations in the petition that are
substantiated by supporting documents and limited to what is
prayed for therein.
In cases where, based solely on the petition, the court finds that
there is an urgent need to either (a) preserve property, (b) prevent
the respondent from disposing of, or concealing, the property, or
(c) prevent the relief prayed for from becoming illusory because
of prior notice, it shall issue an immediately executory temporary
order of protection and require the petitioner, within five (5) days
from receipt of that order, to post a bond to answer for any
damage that respondent may suffer as a result of its order. The
ex-parte temporary order of protection shall be valid only for a
period of twenty (20) days from the service on the party required
to comply with the order. Within that period, the court shall:
a. Furnish the respondent a copy of the petition and a
notice requiring him to comment thereon on or before the day
the petition will be heard; and
b. Notify the parties that the petition shall be heard on a
day specified in the notice, which must not be beyond the
twenty (20) day period of the effectivity of the ex-parte order.
The respondent has the option of having the temporary order of
protection lifted by posting an appropriate counter-bond as
determined by the court.
If the respondent requests the court for an extension of the
period to file his opposition or comment or to reset the hearing
to a later date, and such request is granted, the court shall extend
the period of validity of the ex-parte temporary order of
protection for no more than twenty days from expiration of the
original period.
After notice and hearing, the court may either grant or deny the
petition for an interim measure of protection. The order granting
or denying any application for interim measure of protection in
aid of arbitration must indicate that it is issued without prejudice
to subsequent grant, modification, amendment, revision or
revocation by an arbitral tribunal.
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Rule 5.10. Relief against court action. - If respondent was given
an opportunity to be heard on a petition for an interim measure
of protection, any order by the court shall be immediately
executory, but may be the subject of a motion for
reconsideration and/or appeal or, if warranted, a petition for
certiorari.
Rule 5.11. Duty of the court to refer back. - The court shall not
deny an application for assistance in implementing or enforcing
an interim measure of protection ordered by an arbitral tribunal
on any or all of the following grounds:
a. The arbitral tribunal granted the interim relief ex
parte; or
b. The party opposing the application found new
material evidence, which the arbitral tribunal had not considered
in granting in the application, and which, if considered, may
produce a different result; or
c. The measure of protection ordered by the arbitral
tribunal amends, revokes, modifies or is inconsistent with an
earlier measure of protection issued by the court.
If it finds that there is sufficient merit in the opposition to the
application based on letter (b) above, the court shall refer the
matter back to the arbitral tribunal for appropriate determination.
Rule 5.12. Security. - The order granting an interim measure of
protection may be conditioned upon the provision of security,
performance of an act, or omission thereof, specified in the order.
The Court may not change or increase or decrease the security
ordered by the arbitral tribunal.
Rule 5.13. Modification, amendment, revision or revocation of
courts previously issued interim measure of protection. - Any
court order granting or denying interim measure/s of protection
is issued without prejudice to subsequent grant, modification,
amendment, revision or revocation by the arbitral tribunal as may
be warranted.
An interim measure of protection issued by the arbitral tribunal
shall, upon its issuance be deemed to have ipso jure modified,
amended, revised or revoked an interim measure of protection
previously issued by the court to the extent that it is inconsistent
with the subsequent interim measure of protection issued by the
arbitral tribunal.
Rule 5.14. Conflict or inconsistency between interim measure of
protection issued by the court and by the arbitral tribunal. - Any
question involving a conflict or inconsistency between an interim
measure of protection issued by the court and by the arbitral
tribunal shall be immediately referred by the court to the arbitral
tribunal which shall have the authority to decide such question.
Rule 5.15. Court to defer action on petition for an interim
measure of protection when informed of constitution of the
arbitral tribunal. - The court shall defer action on any pending
petition for an interim measure of protection filed by a party to
an arbitration agreement arising from or in connection with a
dispute thereunder upon being informed that an arbitral tribunal
has been constituted pursuant to such agreement. The court may
act upon such petition only if it is established by the petitioner
that the arbitral tribunal has no power to act on any such interim
measure of protection or is unable to act thereon effectively.
Rule 5.16. Court assistance should arbitral tribunal be unable to
effectively enforce interim measure of protection. - The court
shall assist in the enforcement of an interim measure of
protection issued by the arbitral tribunal which it is unable to
effectively enforce.
RULE 6: APPOINTMENT OF ARBITRATORS
Rule 6.1. When the court may act as Appointing Authority. - The
court shall act as Appointing Authority only in the following
instances:
a. Where any of the parties in an institutional arbitration
failed or refused to appoint an arbitrator or when the parties have
failed to reach an agreement on the sole arbitrator (in an
arbitration before a sole arbitrator) or when the two designated
arbitrators have failed to reach an agreement on the third or
presiding arbitrator (in an arbitration before a panel of three
arbitrators), and the institution under whose rules arbitration is to
be conducted fails or is unable to perform its duty as appointing
authority within a reasonable time from receipt of the request for
appointment;
b. In all instances where arbitration is ad hoc and the
parties failed to provide a method for appointing or replacing an
arbitrator, or substitute arbitrator, or the method agreed upon is
ineffective, and the National President of the Integrated Bar of
the Philippines (IBP) or his duly authorized representative fails or
refuses to act within such period as may be allowed under the
pertinent rules of the IBP or within such period as may be agreed
upon by the parties, or in the absence thereof, within thirty (30)
days from receipt of such request for appointment;
c. Where the parties agreed that their dispute shall be
resolved by three arbitrators but no method of appointing those
arbitrators has been agreed upon, each party shall appoint one
arbitrator and the two arbitrators thus appointed shall appoint a
third arbitrator. If a party fails to appoint his arbitrator within
thirty (30) days of receipt of a request to do so from the other
party, or if the two arbitrators fail to agree on the third arbitrator
within a reasonable time from their appointment, the
appointment shall be made by the Appointing Authority. If the
latter fails or refuses to act or appoint an arbitrator within a
reasonable time from receipt of the request to do so, any party or
the appointed arbitrator/s may request the court to appoint an
arbitrator or the third arbitrator as the case may be.
Rule 6.2. Who may request for appointment. - Any party to an
arbitration may request the court to act as an Appointing
Authority in the instances specified in Rule 6.1 above.
Rule 6.3. Venue. - The petition for appointment of arbitrator may
be filed, at the option of the petitioner, in the Regional Trial Court
(a) where the principal place of business of any of the parties is
located, (b) if any of the parties are individuals, where those
individuals reside, or (c) in the National Capital Region.
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Rule 6.4. Contents of the petition. -The petition shall state the
following:
a. The general nature of the dispute;
b. If the parties agreed on an appointment procedure, a
description of that procedure with reference to the agreement
where such may be found;
c. The number of arbitrators agreed upon or the
absence of any agreement as to the number of arbitrators;
d. The special qualifications that the arbitrator/s must
possess, if any, that were agreed upon by the parties;
e. The fact that the Appointing Authority, without
justifiable cause, has failed or refused to act as such within the
time prescribed or in the absence thereof, within a reasonable
time, from the date a request is made; and
f. The petitioner is not the cause of the delay in, or
failure of, the appointment of the arbitrator.
Apart from other submissions, the petitioner must attach to the
petition (a) an authentic copy of the arbitration agreement, and
(b) proof that the Appointing Authority has been notified of the
filing of the petition for appointment with the court.
Rule 6.5. Comment/Opposition. - The comment/opposition
must be filed within fifteen (15) days from service of the petition.
Rule 6.6. Submission of list of arbitrators. - The court may, at its
option, also require each party to submit a list of not less than
three (3) proposed arbitrators together with their curriculum vitae.
Rule 6.7. Court action. - After hearing, if the court finds merit in
the petition, it shall appoint an arbitrator; otherwise, it shall
dismiss the petition.
In making the appointment, the court shall have regard to such
considerations as are likely to secure the appointment of an
independent and impartial arbitrator.
At any time after the petition is filed and before the court makes
an appointment, it shall also dismiss the petition upon being
informed that the Appointing Authority has already made the
appointment.
Rule 6.8. Forum shopping prohibited. - When there is a pending
petition in another court to declare the arbitration agreement
inexistent, invalid, unenforceable, on account of which the
respondent failed or refused to participate in the selection and
appointment of a sole arbitrator or to appoint a party-nominated
arbitrator, the petition filed under this rule shall be dismissed.
Rule 6.9. Relief against court action. - If the court appoints an
arbitrator, the order appointing an arbitrator shall be immediately
executory and shall not be the subject of a motion for
reconsideration, appeal or certiorari. An order of the court
denying the petition for appointment of an arbitrator may,
however, be the subject of a motion for reconsideration, appeal
or certiorari.
RULE 7: CHALLENGE TO APPOINTMENT OF ARBITRATOR
Rule 7.1. Who may challenge. - Any of the parties to an
arbitration may challenge an arbitrator.
Rule 7.2. When challenge may be raised in court. - When an
arbitrator is challenged before the arbitral tribunal under the
procedure agreed upon by the parties or under the procedure
provided for in Article 13 (2) of the Model Law and the challenge
is not successful, the aggrieved party may request the Appointing
Authority to rule on the challenge, and it is only when such
Appointing Authority fails or refuses to act on the challenge
within such period as may be allowed under the applicable rule or
in the absence thereof, within thirty (30) days from receipt of the
request, that the aggrieved party may renew the challenge in
court.
Rule 7.3. Venue. - The challenge shall be filed with the Regional
Trial Court (a) where the principal place of business of any of the
parties is located, (b) if any of the parties are individuals, where
those individuals reside, or (c) in the National Capital Region.
Rule 7.4. Grounds. - An arbitrator may be challenged on any of
the grounds for challenge provided for in Republic Act No. 9285
and its implementing rules, Republic Act No. 876 or the Model
Law. The nationality or professional qualification of an arbitrator
is not a ground to challenge an arbitrator unless the parties have
specified in their arbitration agreement a nationality and/or
professional qualification for appointment as arbitrator.
Rule 7.5. Contents of the petition. - The petition shall state the
following:
a. The name/s of the arbitrator/s challenged and his/their
address;
b. The grounds for the challenge;
c. The facts showing that the ground for the challenge has been
expressly or impliedly rejected by the challenged arbitrator/s;
and
d. The facts showing that the Appointing Authority failed or
refused to act on the challenge.
The court shall dismiss the petition motu proprio unless it is
clearly alleged therein that the Appointing Authority charged with
deciding the challenge, after the resolution of the arbitral tribunal
rejecting the challenge is raised or contested before such
Appointing Authority, failed or refused to act on the challenge
within thirty (30) days from receipt of the request or within such
longer period as may apply or as may have been agreed upon by
the parties.
Rule 7.6. Comment/Opposition. - The challenged arbitrator or
other parties may file a comment or opposition within fifteen (15)
days from service of the petition.
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Rule 7.7. Court action. - After hearing, the court shall remove the
challenged arbitrator if it finds merit in the petition; otherwise, it
shall dismiss the petition.
The court shall allow the challenged arbitrator who subsequently
agrees to accept the challenge to withdraw as arbitrator.
The court shall accept the challenge and remove the arbitrator in
the following cases:
a. The party or parties who named and appointed the
challenged arbitrator agree to the challenge and withdraw the
appointment.
b. The other arbitrators in the arbitral tribunal agree to
the removal of the challenged arbitrator; and
c. The challenged arbitrator fails or refuses to submit his
comment on the petition or the brief of legal arguments as
directed by the court, or in such comment or legal brief, he fails
to object to his removal following the challenge.
The court shall decide the challenge on the basis of evidence
submitted by the parties.
The court will decide the challenge on the basis of the evidence
submitted by the parties in the following instances:
a. The other arbitrators in the arbitral tribunal agree to
the removal of the challenged arbitrator; and
b. If the challenged arbitrator fails or refuses to submit
his comment on the petition or the brief of legal arguments as
directed by the court, or in such comment or brief of legal
arguments, he fails to object to his removal following the
challenge.
Rule 7.8. No motion for reconsideration, appeal or certiorari. -
Any order of the court resolving the petition shall be immediately
executory and shall not be the subject of a motion for
reconsideration, appeal, or certiorari.
Rule 7.9. Reimbursement of expenses and reasonable
compensation to challenged arbitrator. - Unless the bad faith of
the challenged arbitrator is established with reasonable certainty
by concealing or failing to disclose a ground for his
disqualification, the challenged arbitrator shall be entitled to
reimbursement of all reasonable expenses he may have incurred
in attending to the arbitration and to a reasonable compensation
for his work on the arbitration. Such expenses include, but shall
not be limited to, transportation and hotel expenses, if any. A
reasonable compensation shall be paid to the challenged
arbitrator on the basis of the length of time he has devoted to the
arbitration and taking into consideration his stature and
reputation as an arbitrator. The request for reimbursement of
expenses and for payment of a reasonable compensation shall
be filed in the same case and in the court where the petition to
replace the challenged arbitrator was filed. The court, in
determining the amount of the award to the challenged
arbitrator, shall receive evidence of expenses to be reimbursed,
which may consist of air tickets, hotel bills and expenses, and
inland transportation. The court shall direct the challenging party
to pay the amount of the award to the court for the account of
the challenged arbitrator, in default of which the court may issue
a writ of execution to enforce the award.
RULE 8: TERMINATION OF THE MANDATE OF ARBITRATOR
Rule 8.1. Who may request termination and on what grounds.-
Any of the parties to an arbitration may request for the
termination of the mandate of an arbitrator where an arbitrator
becomes de jure or de facto unable to perform his function or for
other reasons fails to act without undue delay and that arbitrator,
upon request of any party, fails or refuses to withdraw from his
office.
Rule 8.2. When to request. - If an arbitrator refuses to withdraw
from his office, and subsequently, the Appointing Authority fails
or refuses to decide on the termination of the mandate of that
arbitrator within such period as may be allowed under the
applicable rule or, in the absence thereof, within thirty (30) days
from the time the request is brought before him, any party may
file with the court a petition to terminate the mandate of that
arbitrator.
Rule 8.3. Venue. - A petition to terminate the mandate of an
arbitrator may, at that petitioners option, be filed with the
Regional Trial Court (a) where the principal place of business of
any of the parties is located, (b) where any of the parties who are
individuals resides, or (c) in the National Capital Region.
Rule 8.4. Contents of the petition. - The petition shall state the
following:
a. The name of the arbitrator whose mandate is sought
to be terminated;
b. The ground/s for termination;
c. The fact that one or all of the parties had requested
the arbitrator to withdraw but he failed or refused to do so;
d. The fact that one or all of the parties requested the
Appointing Authority to act on the request for the termination of
the mandate of the arbitrator and failure or inability of the
Appointing Authority to act within thirty (30) days from the
request of a party or parties or within such period as may have
been agreed upon by the parties or allowed under the applicable
rule.
The petitioner shall further allege that one or all of the parties had
requested the arbitrator to withdraw but he failed or refused to
do so.
Rule 8.5. Comment/Opposition. - The comment/opposition
must be filed within fifteen (15) days from service of the petition.
Rule 8.6. Court action. - After hearing, if the court finds merit in
the petition, it shall terminate the mandate of the arbitrator who
refuses to withdraw from his office; otherwise, it shall dismiss the
petition.
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Rule 8.7. No motion for reconsideration or appeal. - Any order
of the court resolving the petition shall be immediately executory
and shall not be subject of a motion for reconsideration, appeal
or petition for certiorari.
Rule 8.8. Appointment of substitute arbitrator. - Where the
mandate of an arbitrator is terminated, or he withdraws from
office for any other reason, or because of his mandate is revoked
by agreement of the parties or is terminated for any other
reason, a substitute arbitrator shall be appointed according to the
rules that were applicable to the appointment of the arbitrator
being replaced.
RULE 9: ASSISTANCE IN TAKING EVIDENCE
Rule 9.1. Who may request assistance. - Any party to an
arbitration, whether domestic or foreign, may request the court
to provide assistance in taking evidence.
Rule 9.2. When assistance may be sought. - Assistance may be
sought at any time during the course of the arbitral proceedings
when the need arises.
Rule 9.3. Venue. - A petition for assistance in taking evidence
may, at the option of the petitioner, be filed with Regional Trial
Court where (a) arbitration proceedings are taking place, (b) the
witnesses reside or may be found, or (c) where the evidence may
be found.
Rule 9.4. Ground. - The court may grant or execute the request
for assistance in taking evidence within its competence and
according to the rules of evidence.
Rule 9.5. Type of assistance. - A party requiring assistance in the
taking of evidence may petition the court to direct any person,
including a representative of a corporation, association,
partnership or other entity (other than a party to the ADR
proceedings or its officers) found in the Philippines, for any of the
following:
a. To comply with a subpoena ad testificandum and/or
subpoena duces tecum;
b. To appear as a witness before an officer for the taking
of his deposition upon oral examination or by written
interrogatories;
c. To allow the physical examination of the condition of
persons, or the inspection of things or premises and, when
appropriate, to allow the recording and/or documentation of
condition of persons, things or premises (i.e., photographs, video
and other means of recording/documentation);
d. To allow the examination and copying of documents;
and
e. To perform any similar acts.
Rule 9.6. Contents of the petition. - The petition must state the
following:
a. The fact that there is an ongoing arbitration
proceeding even if such proceeding could not continue due to
some legal impediments;
b. The arbitral tribunal ordered the taking of evidence or
the party desires to present evidence to the arbitral tribunal;
c. Materiality or relevance of the evidence to be taken;
and
d. The names and addresses of the intended
witness/es, place where the evidence may be found, the place
where the premises to be inspected are located or the place
where the acts required are to be done.
Rule 9.7. Comment/Opposition. - The comment/opposition
must be filed within fifteen (15) days from service of the petition.
Rule 9.8. Court action. - If the evidence sought is not privileged,
and is material and relevant, the court shall grant the assistance
in taking evidence requested and shall order petitioner to pay
costs attendant to such assistance.
Rule 9.9. Relief against court action. - The order granting
assistance in taking evidence shall be immediately executory and
not subject to reconsideration or appeal. If the court declines to
grant assistance in taking evidence, the petitioner may file a
motion for reconsideration or appeal.
Rule 9.10. Perpetuation of testimony before the arbitral tribunal
is constituted. - At anytime before arbitration is commenced or
before the arbitral tribunal is constituted, any person who desires
to perpetuate his testimony or that of another person may do so
in accordance with Rule 24 of the Rules of Court.
Rule 9.11. Consequence of disobedience. - The court may
impose the appropriate sanction on any person who disobeys its
order to testify when required or perform any act required of
him.
RULE 10: CONFIDENTIALITY/PROTECTIVE ORDERS
Rule 10.1. Who may request confidentiality. - A party, counsel or
witness who disclosed or who was compelled to disclose
information relative to the subject of ADR under circumstances
that would create a reasonable expectation, on behalf of the
source, that the information shall be kept confidential has the
right to prevent such information from being further disclosed
without the express written consent of the source or the party
who made the disclosure.
Rule 10.2. When request made. - A party may request a
protective order at anytime there is a need to enforce the
confidentiality of the information obtained, or to be obtained, in
ADR proceedings.
Rule 10.3. Venue. - A petition for a protective order may be filed
with the Regional Trial Court where that order would be
implemented.
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If there is a pending court proceeding in which the information
obtained in an ADR proceeding is required to be divulged or is
being divulged, the party seeking to enforce the confidentiality of
the information may file a motion with the court where the
proceedings are pending to enjoin the confidential information
from being divulged or to suppress confidential information.
Rule 10.4. Grounds. - A protective order may be granted only if it
is shown that the applicant would be materially prejudiced by an
unauthorized disclosure of the information obtained, or to be
obtained, during an ADR proceeding.
Rule 10.5. Contents of the motion or petition. - The petition or
motion must state the following:
a. That the information sought to be protected was obtained, or
would be obtained, during an ADR proceeding;
b. The applicant would be materially prejudiced by the disclosure
of that information;
c. The person or persons who are being asked to divulge the
confidential information participated in an ADR proceedings; and
d. The time, date and place when the ADR proceedings took
place.
Apart from the other submissions, the movant must set the
motion for hearing and contain a notice of hearing in accordance
with Rule 15 of the Rules of Court.
Rule 10.6. Notice. - Notice of a request for a protective order
made through a motion shall be made to the opposing parties in
accordance with Rule 15 of the Rules of Court.
Rule 10.7. Comment/Opposition. - The comment/opposition
must be filed within fifteen (15) days from service of the petition.
The opposition or comment may be accompanied by written
proof that (a) the information is not confidential, (b) the
information was not obtained during an ADR proceeding, (c)
there was a waiver of confidentiality, or (d) the
petitioner/movant is precluded from asserting confidentiality.
Rule 10.8. Court action. - If the court finds the petition or motion
meritorious, it shall issue an order enjoining a person or persons
from divulging confidential information.
In resolving the petition or motion, the courts shall be guided by
the following principles applicable to all ADR proceedings:
Confidential information shall not be subject to discovery and
shall be inadmissible in any adversarial proceeding, whether
judicial or quasi judicial. However, evidence or information that is
otherwise admissible or subject to discovery does not become
inadmissible or protected from discovery solely by reason of its
use therein.
For mediation proceedings, the court shall be further guided by
the following principles:
a. Information obtained through mediation shall be
privileged and confidential.
b. A party, a mediator, or a nonparty participant may
refuse to disclose and may prevent any other person from
disclosing a mediation communication.
c. In such an adversarial proceeding, the following
persons involved or previously involved in a mediation may not
be compelled to disclose confidential information obtained
during the mediation: (1) the parties to the dispute; (2) the
mediator or mediators; (3) the counsel for the parties: (4) the
nonparty participants; (5) any persons hired or engaged in
connection with the mediation as secretary, stenographer; clerk
or assistant; and (6) any other person who obtains or possesses
confidential information by reason of his/ her profession.
d. The protection of the ADR Laws shall continue to
apply even if a mediator is found to have failed to act impartially.
e. A mediator may not be called to testify to provide
information gathered in mediation. A mediator who is wrongfully
subpoenaed shall be reimbursed the full cost of his attorney fees
and related expenses.
Rule 10.9. Relief against court action. - The order enjoining a
person or persons from divulging confidential information shall
be immediately executory and may not be enjoined while the
order is being questioned with the appellate courts.
If the court declines to enjoin a person or persons from divulging
confidential information, the petitioner may file a motion for
reconsideration or appeal.
Rule 10.10. Consequence of disobedience. - Any person who
disobeys the order of the court to cease from divulging
confidential information shall be imposed the proper sanction by
the court.
RULE 11: CONFIRMATION, CORRECTION OR VACATION OF
AWARD IN DOMESTIC ARBITRATION
Rule 11.1. Who may request confirmation, correction or vacation.
- Any party to a domestic arbitration may petition the court to
confirm, correct or vacate a domestic arbitral award.
Rule 11.2. When to request confirmation,
correction/modification or vacation. -
(A) Confirmation. - At any time after the lapse of thirty (30) days
from receipt by the petitioner of the arbitral award, he may
petition the court to confirm that award.
(B) Correction/Modification. - Not later than thirty (30) days
from receipt of the arbitral award, a party may petition the court
to correct/modify that award.
(C) Vacation. - Not later than thirty (30) days from receipt of the
arbitral award, a party may petition the court to vacate that
award.
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(D) A petition to vacate the arbitral award may be filed, in
opposition to a petition to confirm the arbitral award, not later
than thirty (30) days from receipt of the award by the petitioner.
A petition to vacate the arbitral award filed beyond the
reglementary period shall be dismissed.
(E) A petition to confirm the arbitral award may be filed, in
opposition to a petition to vacate the arbitral award, at any time
after the petition to vacate such arbitral award is filed. The
dismissal of the petition to vacate the arbitral award for having
been filed beyond the reglementary period shall not result in the
dismissal of the petition for the confirmation of such arbitral
award.
(F) The filing of a petition to confirm an arbitral award shall not
authorize the filing of a belated petition to vacate or set aside
such award in opposition thereto.
(G) A petition to correct an arbitral award may be included as
part of a petition to confirm the arbitral award or as a petition to
confirm that award.
Rule 11.3. Venue. - The petition for confirmation,
correction/modification or vacation of a domestic arbitral award
may be filed with Regional Trial Court having jurisdiction over the
place in which one of the parties is doing business, where any of
the parties reside or where arbitration proceedings were
conducted.
Rule 11.4. Grounds. - (A) To vacate an arbitral award. - The arbitral
award may be vacated on the following grounds:
a. The arbitral award was procured through corruption,
fraud or other undue means;
b. There was evident partiality or corruption in the
arbitral tribunal or any of its members;
c. The arbitral tribunal was guilty of misconduct or any
form of misbehavior that has materially prejudiced the rights of
any party such as refusing to postpone a hearing upon sufficient
cause shown or to hear evidence pertinent and material to the
controversy;
d. One or more of the arbitrators was disqualified to act
as such under the law and willfully refrained from disclosing such
disqualification; or
e. The arbitral tribunal exceeded its powers, or so
imperfectly executed them, such that a complete, final and
definite award upon the subject matter submitted to them was
not made.
The award may also be vacated on any or all of the following
grounds:
a. The arbitration agreement did not exist, or is invalid
for any ground for the revocation of a contract or is otherwise
unenforceable; or
b. A party to arbitration is a minor or a person judicially
declared to be incompetent.
The petition to vacate an arbitral award on the ground that the
party to arbitration is a minor or a person judicially declared to be
incompetent shall be filed only on behalf of the minor or
incompetent and shall allege that (a) the other party to arbitration
had knowingly entered into a submission or agreement with such
minor or incompetent, or (b) the submission to arbitration was
made by a guardian or guardian ad litem who was not authorized
to do so by a competent court.
In deciding the petition to vacate the arbitral award, the court
shall disregard any other ground than those enumerated above.
(B) To correct/modify an arbitral award. - The Court may
correct/modify or order the arbitral tribunal to correct/modify
the arbitral award in the following cases:
a. Where there was an evident miscalculation of figures
or an evident mistake in the description of any person, thing or
property referred to in the award;
b. Where the arbitrators have awarded upon a matter
not submitted to them, not affecting the merits of the decision
upon the matter submitted;
c. Where the arbitrators have omitted to resolve an
issue submitted to them for resolution; or
d. Where the award is imperfect in a matter of form not
affecting the merits of the controversy, and if it had been a
commissioners report, the defect could have been amended or
disregarded by the Court.
Rule 11.5. Form of petition. - An application to vacate an arbitral
award shall be in the form of a petition to vacate or as a petition
to vacate in opposition to a petition to confirm the same award.
An application to correct/modify an arbitral award may be
included in a petition to confirm an arbitral award or in a petition
to vacate in opposition to confirm the same award.
When a petition to confirm an arbitral award is pending before a
court, the party seeking to vacate or correct/modify said award
may only apply for those reliefs through a petition to vacate or
correct/modify the award in opposition to the petition to
confirm the award provided that such petition to vacate or
correct/modify is filed within thirty (30) days from his receipt of
the award. A petition to vacate or correct/modify an arbitral
award filed in another court or in a separate case before the same
court shall be dismissed, upon appropriate motion, as a violation
of the rule against forum-shopping.
When a petition to vacate or correct/modify an arbitral award is
pending before a court, the party seeking to confirm said award
may only apply for that relief through a petition to confirm the
same award in opposition to the petition to vacate or
correct/modify the award. A petition to confirm or
correct/modify an arbitral award filed as separate proceeding in
another court or in a different case before the same court shall be
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dismissed, upon appropriate motion, as a violation of the rule
against forum shopping.
As an alternative to the dismissal of a second petition for
confirmation, vacation or correction/modification of an arbitral
award filed in violation of the non-forum shopping rule, the court
or courts concerned may allow the consolidation of the two
proceedings in one court and in one case.
Where the petition to confirm the award and petition to vacate
or correct/modify were simultaneously filed by the parties in the
same court or in different courts in the Philippines, upon motion
of either party, the court may order the consolidation of the two
cases before either court.
In all instances, the petition must be verified by a person who has
knowledge of the jurisdictional facts.
Rule 11.6. Contents of petition. - The petition must state the
following:
a. The addresses of the parties and any change thereof;
b. The jurisdictional issues raised by a party during
arbitration proceedings;
c. The grounds relied upon by the parties in seeking the
vacation of the arbitral award whether the petition is a petition
for the vacation or setting aside of the arbitral award or a petition
in opposition to a petition to confirm the award; and
d. A statement of the date of receipt of the arbitral
award and the circumstances under which it was received by the
petitioner.
Apart from other submissions, the petitioner must attach to the
petition the following:
a. An authentic copy of the arbitration agreement;
b. An authentic copy of the arbitral award;
c. A certification against forum shopping executed by
the applicant in accordance with Section 5 of Rule 7 of the Rules
of Court; and
d. An authentic copy or authentic copies of the
appointment of an arbitral tribunal.
Rule 11.7. Notice. - Upon finding that the petition filed under this
Rule is sufficient both in form and in substance, the Court shall
cause notice and a copy of the petition to be delivered to the
respondent allowing him to file a comment or opposition thereto
within fifteen (15) days from receipt of the petition. In lieu of an
opposition, the respondent may file a petition in opposition to
the petition.
The petitioner may within fifteen (15) days from receipt of the
petition in opposition thereto file a reply.
Rule 11.8. Hearing. - If the Court finds from the petition or
petition in opposition thereto that there are issues of fact, it shall
require the parties, within a period of not more than fifteen (15)
days from receipt of the order, to simultaneously submit the
affidavits of all of their witnesses and reply affidavits within ten
(10) days from receipt of the affidavits to be replied to. There
shall be attached to the affidavits or reply affidavits documents
relied upon in support of the statements of fact in such affidavits
or reply affidavits.
If the petition or the petition in opposition thereto is one for
vacation of an arbitral award, the interested party in arbitration
may oppose the petition or the petition in opposition thereto for
the reason that the grounds cited in the petition or the petition in
opposition thereto, assuming them to be true, do not affect the
merits of the case and may be cured or remedied. Moreover, the
interested party may request the court to suspend the
proceedings for vacation for a period of time and to direct the
arbitral tribunal to reopen and conduct a new hearing and take
such other action as will eliminate the grounds for vacation of the
award. The opposition shall be supported by a brief of legal
arguments to show the existence of a sufficient legal basis for the
opposition.
If the ground of the petition to vacate an arbitral award is that the
arbitration agreement did not exist, is invalid or otherwise
unenforceable, and an earlier petition for judicial relief under Rule
3 had been filed, a copy of such petition and of the decision or
final order of the court shall be attached thereto. But if the
ground was raised before the arbitral tribunal in a motion to
dismiss filed not later than the submission of its answer, and the
arbitral tribunal ruled in favor of its own jurisdiction as a
preliminary question which was appealed by a party to the
Regional Trial Court, a copy of the order, ruling or preliminary
award or decision of the arbitral tribunal, the appeal therefrom to
the Court and the order or decision of the Court shall all be
attached to the petition.
If the ground of the petition is that the petitioner is an infant or a
person judicially declared to be incompetent, there shall be
attached to the petition certified copies of documents showing
such fact. In addition, the petitioner shall show that even if the
submission or arbitration agreement was entered into by a
guardian or guardian ad litem, the latter was not authorized by a
competent court to sign such the submission or arbitration
agreement.
If on the basis of the petition, the opposition, the affidavits and
reply affidavits of the parties, the court finds that there is a need
to conduct an oral hearing, the court shall set the case for
hearing. This case shall have preference over other cases before
the court, except criminal cases. During the hearing, the affidavits
of witnesses shall take the place of their direct testimonies and
they shall immediately be subject to cross-examination thereon.
The Court shall have full control over the proceedings in order to
ensure that the case is heard without undue delay.
Rule 11.9. Court action. - Unless a ground to vacate an arbitral
award under Rule 11.5 above is fully established, the court shall
confirm the award.
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An arbitral award shall enjoy the presumption that it was made
and released in due course of arbitration and is subject to
confirmation by the court
In resolving the petition or petition in opposition thereto in
accordance with these Special ADR Rules, the court shall either
confirm or vacate the arbitral award. The court shall not disturb
the arbitral tribunals determination of facts and/or interpretation
of law.
In a petition to vacate an award or in petition to vacate an award
in opposition to a petition to confirm the award, the petitioner
may simultaneously apply with the Court to refer the case back
to the same arbitral tribunal for the purpose of making a new or
revised award or to direct a new hearing, or in the appropriate
case, order the new hearing before a new arbitral tribunal, the
members of which shall be chosen in the manner provided in the
arbitration agreement or submission, or the law. In the latter case,
any provision limiting the time in which the arbitral tribunal may
make a decision shall be deemed applicable to the new arbitral
tribunal.
In referring the case back to the arbitral tribunal or to a new
arbitral tribunal pursuant to Rule 24 of Republic Act No. 876, the
court may not direct it to revise its award in a particular way, or to
revise its findings of fact or conclusions of law or otherwise
encroach upon the independence of an arbitral tribunal in the
making of a final award.
RULE 12: RECOGNITION AND ENFORCEMENT OR SETTING
ASIDE OF AN INTERNATIONAL COMMERCIAL ARBITRATION
AWARD
Rule 12.1. Who may request recognition and enforcement or
setting aside. - Any party to an international commercial
arbitration in the Philippines may petition the proper court to
recognize and enforce or set aside an arbitral award.
Rule 12.2. When to file petition. - (A) Petition to recognize and
enforce. - The petition for enforcement and recognition of an
arbitral award may be filed anytime from receipt of the award. If,
however, a timely petition to set aside an arbitral award is filed,
the opposing party must file therein and in opposition thereto
the petition for recognition and enforcement of the same award
within the period for filing an opposition.
(B) Petition to set aside. - The petition to set aside an arbitral
award may only be filed within three (3) months from the time
the petitioner receives a copy thereof. If a timely request is made
with the arbitral tribunal for correction, interpretation or
additional award, the three (3) month period shall be counted
from the time the petitioner receives the resolution by the
arbitral tribunal of that request.
A petition to set aside can no longer be filed after the lapse of the
three (3) month period. The dismissal of a petition to set aside an
arbitral award for being time-barred shall not automatically result
in the approval of the petition filed therein and in opposition
thereto for recognition and enforcement of the same award.
Failure to file a petition to set aside shall preclude a party from
raising grounds to resist enforcement of the award.
Rule 12.3. Venue. - A petition to recognize and enforce or set
aside an arbitral award may, at the option of the petitioner, be
filed with the Regional Trial Court: (a) where arbitration
proceedings were conducted; (b) where any of the assets to be
attached or levied upon is located; (c) where the act to be
enjoined will be or is being performed; (d) where any of the
parties to arbitration resides or has its place of business; or (e) in
the National Capital Judicial Region.
Rule 12.4. Grounds to set aside or resist enforcement. - The
court may set aside or refuse the enforcement of the arbitral
award only if:
a. The party making the application furnishes proof that:
(i). A party to the arbitration agreement was under some
incapacity, or the said agreement is not valid under the law to
which the parties have subjected it or, failing any indication
thereof, under Philippine law; or
(ii). The party making the application to set aside or resist
enforcement was not given proper notice of the appointment of
an arbitrator or of the arbitral proceedings or was otherwise
unable to present his case; or
(iii). The award deals with a dispute not contemplated by or not
falling within the terms of the submission to arbitration, or
contains decisions on matters beyond the scope of the
submission to arbitration; provided that, if the decisions on
matters submitted to arbitration can be separated from those not
so submitted, only that part of the award which contains
decisions on matters not submitted to arbitration may be set
aside or only that part of the award which contains decisions on
matters submitted to arbitration may be enforced; or
(iv). The composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the agreement of the
parties, unless such agreement was in conflict with a provision of
Philippine law from which the parties cannot derogate, or, failing
such agreement, was not in accordance with Philippine law;
b. The court finds that:
(i). The subject-matter of the dispute is not capable of
settlement by arbitration under the law of the Philippines; or
(ii). The recognition or enforcement of the award would be
contrary to public policy.
In deciding the petition, the Court shall disregard any other
ground to set aside or enforce the arbitral award other than those
enumerated above.
The petition to set-aside or a pleading resisting the enforcement
of an arbitral award on the ground that a party was a minor or an
incompetent shall be filed only on behalf of the minor or
incompetent and shall allege that (a) the other party to arbitration
had knowingly entered into a submission or agreement with such
minor or incompetent, or (b) the submission to arbitration was
made by a guardian or guardian ad litem who was not authorized
to do so by a competent court.
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Rule 12.5. Exclusive recourse against arbitral award. - Recourse
to a court against an arbitral award shall be made only through a
petition to set aside the arbitral award and on grounds prescribed
by the law that governs international commercial arbitration. Any
other recourse from the arbitral award, such as by appeal or
petition for review or petition for certiorari or otherwise, shall be
dismissed by the court.
Rule 12.6. Form. - The application to recognize and enforce or set
aside an arbitral award, whether made through a petition to
recognize and enforce or to set aside or as a petition to set aside
the award in opposition thereto, or through a petition to set aside
or petition to recognize and enforce in opposition thereto, shall
be verified by a person who has personal knowledge of the facts
stated therein.
When a petition to recognize and enforce an arbitral award is
pending, the application to set it aside, if not yet time-barred,
shall be made through a petition to set aside the same award in
the same proceedings.
When a timely petition to set aside an arbitral award is filed, the
opposing party may file a petition for recognition and
enforcement of the same award in opposition thereto.
Rule 12.7. Contents of petition. - (A) Petition to recognize and
enforce. - The petition to recognize and enforce or petition to set
aside in opposition thereto, or petition to set aside or petition to
recognize and enforce in opposition thereto, shall state the
following:
a. The addresses of record, or any change thereof, of
the parties to arbitration;
b. A statement that the arbitration agreement or
submission exists;
c. The names of the arbitrators and proof of their
appointment;
d. A statement that an arbitral award was issued and
when the petitioner received it; and
e. The relief sought.
Apart from other submissions, the petitioner shall attach to the
petition the following:
a. An authentic copy of the arbitration agreement;
b. An authentic copy of the arbitral award;
c. A verification and certification against forum
shopping executed by the applicant in accordance with Sections
4 and 5 of Rule 7 of the Rules of Court; and
d. An authentic copy or authentic copies of the
appointment of an arbitral tribunal.
(B) Petition to set aside. - The petition to set aside or petition to
set aside in opposition to a petition to recognize and enforce an
arbitral award in international commercial arbitration shall have
the same contents as a petition to recognize and enforce or
petition to recognize and enforce in opposition to a petition to
set aside an arbitral award. In addition, the said petitions should
state the grounds relied upon to set it aside.
Further, if the ground of the petition to set aside is that the
petitioner is a minor or found incompetent by a court, there shall
be attached to the petition certified copies of documents
showing such fact. In addition, the petitioner shall show that even
if the submission or arbitration agreement was entered into by a
guardian or guardian ad litem, the latter was not authorized by a
competent court to sign such the submission or arbitration
agreement.
In either case, if another court was previously requested to
resolve and/or has resolved, on appeal, the arbitral tribunals
preliminary determination in favor of its own jurisdiction, the
petitioner shall apprise the court before which the petition to
recognize and enforce or set aside is pending of the status of the
appeal or its resolution.
Rule 12.8. Notice. - Upon finding that the petition filed under this
Rule is sufficient both in form and in substance, the court shall
cause notice and a copy of the petition to be delivered to the
respondent directing him to file an opposition thereto within
fifteen (15) days from receipt of the petition. In lieu of an
opposition, the respondent may file a petition to set aside in
opposition to a petition to recognize and enforce, or a petition to
recognize and enforce in opposition to a petition to set aside.
The petitioner may within fifteen (15) days from receipt of the
petition to set aside in opposition to a petition to recognize and
enforce, or from receipt of the petition to recognize and enforce
in opposition to a petition to set aside, file a reply.
Rule 12.9. Submission of documents. - If the court finds that the
issue between the parties is mainly one of law, the parties may
be required to submit briefs of legal arguments, not more than
fifteen (15) days from receipt of the order, sufficiently discussing
the legal issues and the legal basis for the relief prayed for by
each of them.
If the court finds from the petition or petition in opposition
thereto that there are issues of fact relating to the ground(s)
relied upon for the court to set aside, it shall require the parties
within a period of not more than fifteen (15) days from receipt of
the order simultaneously to submit the affidavits of all of their
witnesses and reply affidavits within ten (10) days from receipt of
the affidavits to be replied to. There shall be attached to the
affidavits or reply affidavits, all documents relied upon in support
of the statements of fact in such affidavits or reply affidavits.
Rule 12.10. Hearing. - If on the basis of the petition, the
opposition, the affidavits and reply affidavits of the parties, the
court finds that there is a need to conduct an oral hearing, the
court shall set the case for hearing. This case shall have
preference over other cases before the court, except criminal
cases. During the hearing, the affidavits of witnesses shall take
the place of their direct testimonies and they shall immediately
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be subject to cross-examination thereon. The court shall have full
control over the proceedings in order to ensure that the case is
heard without undue delay.
Rule 12.11. Suspension of proceedings to set aside. - The court
when asked to set aside an arbitral award may, where appropriate
and upon request by a party, suspend the proceedings for a
period of time determined by it to give the arbitral tribunal an
opportunity to resume the arbitral proceedings or to take such
other action as in the arbitral tribunals opinion will eliminate the
grounds for setting aside. The court, in referring the case back to
the arbitral tribunal may not direct it to revise its award in a
particular way, or to revise its findings of fact or conclusions of
law or otherwise encroach upon the independence of an arbitral
tribunal in the making of a final award.
The court when asked to set aside an arbitral award may also,
when the preliminary ruling of an arbitral tribunal affirming its
jurisdiction to act on the matter before it had been appealed by
the party aggrieved by such preliminary ruling to the court,
suspend the proceedings to set aside to await the ruling of the
court on such pending appeal or, in the alternative, consolidate
the proceedings to set aside with the earlier appeal.
Rule 12.12. Presumption in favor of confirmation. - It is
presumed that an arbitral award was made and released in due
course and is subject to enforcement by the court, unless the
adverse party is able to establish a ground for setting aside or not
enforcing an arbitral award.
Rule 12.13. Judgment of the court. - Unless a ground to set aside
an arbitral award under Rule 12.4 above is fully established, the
court shall dismiss the petition. If, in the same proceedings, there
is a petition to recognize and enforce the arbitral award filed in
opposition to the petition to set aside, the court shall recognize
and enforce the award.
In resolving the petition or petition in opposition thereto in
accordance with the Special ADR Rules, the court shall either set
aside or enforce the arbitral award. The court shall not disturb the
arbitral tribunals determination of facts and/or interpretation of
law.
Rule 12.14. Costs. - Unless otherwise agreed upon by the parties
in writing, at the time the case is submitted to the court for
decision, the party praying for recognition and enforcement or
setting aside of an arbitral award shall submit a statement under
oath confirming the costs he has incurred only in the proceedings
for such recognition and enforcement or setting aside. The costs
shall include the attorneys fees the party has paid or is
committed to pay to his counsel of record.
The prevailing party shall be entitled to an award of costs, which
shall include reasonable attorneys fees of the prevailing party
against the unsuccessful party. The court shall determine the
reasonableness of the claim for attorneys fees.
RULE 13: RECOGNITION AND ENFORCEMENT OF A FOREIGN
ARBITRAL AWARD
Rule 13.1. Who may request recognition and enforcement. - Any
party to a foreign arbitration may petition the court to recognize
and enforce a foreign arbitral award.
Rule 13.2. When to petition. - At any time after receipt of a
foreign arbitral award, any party to arbitration may petition the
proper Regional Trial Court to recognize and enforce such award.
Rule 13.3. Venue. - The petition to recognize and enforce a
foreign arbitral award shall be filed, at the option of the
petitioner, with the Regional Trial Court (a) where the assets to be
attached or levied upon is located, (b) where the act to be
enjoined is being performed, (c) in the principal place of business
in the Philippines of any of the parties, (d) if any of the parties is
an individual, where any of those individuals resides, or (e) in the
National Capital Judicial Region.
Rule 13.4. Governing law and grounds to refuse recognition and
enforcement. - The recognition and enforcement of a foreign
arbitral award shall be governed by the 1958 New York
Convention on the Recognition and Enforcement of Foreign
Arbitral Awards (the "New York Convention") and this Rule. The
court may, upon grounds of comity and reciprocity, recognize
and enforce a foreign arbitral award made in a country that is not
a signatory to the New York Convention as if it were a
Convention Award.
A Philippine court shall not set aside a foreign arbitral award but
may refuse it recognition and enforcement on any or all of the
following grounds:
a. The party making the application to refuse
recognition and enforcement of the award furnishes proof that:
(i). A party to the arbitration agreement was under some
incapacity; or the said agreement is not valid under the law to
which the parties have subjected it or, failing any indication
thereof, under the law of the country where the award was made;
or
(ii). The party making the application was not given proper notice
of the appointment of an arbitrator or of the arbitral proceedings
or was otherwise unable to present his case; or
(iii). The award deals with a dispute not contemplated by or not
falling within the terms of the submission to arbitration, or
contains decisions on matters beyond the scope of the
submission to arbitration; provided that, if the decisions on
matters submitted to arbitration can be separated from those not
so submitted, only that part of the award which contains
decisions on matters not submitted to arbitration may be set
aside; or
(iv). The composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the agreement of the
parties or, failing such agreement, was not in accordance with the
law of the country where arbitration took place; or
(v). The award has not yet become binding on the parties or has
been set aside or suspended by a court of the country in which
that award was made; or
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b. The court finds that:
(i). The subject-matter of the dispute is not capable of
settlement or resolution by arbitration under Philippine law; or
(ii). The recognition or enforcement of the award would be
contrary to public policy.
The court shall disregard any ground for opposing the recognition
and enforcement of a foreign arbitral award other than those
enumerated above.
Rule 13.5. Contents of petition. - The petition shall state the
following:
a. The addresses of the parties to arbitration;
b. In the absence of any indication in the award, the
country where the arbitral award was made and whether such
country is a signatory to the New York Convention; and
c. The relief sought.
Apart from other submissions, the petition shall have attached to
it the following:
a. An authentic copy of the arbitration agreement; and
b. An authentic copy of the arbitral award.
If the foreign arbitral award or agreement to arbitrate or
submission is not made in English, the petitioner shall also attach
to the petition a translation of these documents into English. The
translation shall be certified by an official or sworn translator or
by a diplomatic or consular agent.
Rule 13.6. Notice and opposition. - Upon finding that the
petition filed under this Rule is sufficient both in form and in
substance, the court shall cause notice and a copy of the petition
to be delivered to the respondent allowing him to file an
opposition thereto within thirty (30) days from receipt of the
notice and petition.
Rule 13.7. Opposition. - The opposition shall be verified by a
person who has personal knowledge of the facts stated therein.
Rule 13.8. Submissions. - If the court finds that the issue
between the parties is mainly one of law, the parties may be
required to submit briefs of legal arguments, not more than thirty
(30) days from receipt of the order, sufficiently discussing the
legal issues and the legal bases for the relief prayed for by each
other.
If, from a review of the petition or opposition, there are issues of
fact relating to the ground/s relied upon for the court to refuse
enforcement, the court shall, motu proprio or upon request of
any party, require the parties to simultaneously submit the
affidavits of all of their witnesses within a period of not less than
fifteen (15) days nor more than thirty (30) days from receipt of
the order. The court may, upon the request of any party, allow
the submission of reply affidavits within a period of not less than
fifteen (15) days nor more than thirty (30) days from receipt of
the order granting said request. There shall be attached to the
affidavits or reply affidavits all documents relied upon in support
of the statements of fact in such affidavits or reply affidavits.
Rule 13.9. Hearing. - The court shall set the case for hearing if on
the basis of the foregoing submissions there is a need to do so.
The court shall give due priority to hearings on petitions under
this Rule. During the hearing, the affidavits of witnesses shall take
the place of their direct testimonies and they shall immediately
be subject to cross-examination. The court shall have full control
over the proceedings in order to ensure that the case is heard
without undue delay.
Rule 13.10. Adjournment/deferment of decision on
enforcement of award. - The court before which a petition to
recognize and enforce a foreign arbitral award is pending, may
adjourn or defer rendering a decision thereon if, in the meantime,
an application for the setting aside or suspension of the award
has been made with a competent authority in the country where
the award was made. Upon application of the petitioner, the
court may also require the other party to give suitable security.
Rule 13.11. Court action. - It is presumed that a foreign arbitral
award was made and released in due course of arbitration and is
subject to enforcement by the court.
The court shall recognize and enforce a foreign arbitral award
unless a ground to refuse recognition or enforcement of the
foreign arbitral award under this rule is fully established.
The decision of the court recognizing and enforcing a foreign
arbitral award is immediately executory.
In resolving the petition for recognition and enforcement of a
foreign arbitral award in accordance with these Special ADR
Rules, the court shall either [a] recognize and/or enforce or [b]
refuse to recognize and enforce the arbitral award. The court shall
not disturb the arbitral tribunals determination of facts and/or
interpretation of law.
Rule 13.12. Recognition and enforcement of non-convention
award. - The court shall, only upon grounds provided by these
Special ADR Rules, recognize and enforce a foreign arbitral award
made in a country not a signatory to the New York Convention
when such country extends comity and reciprocity to awards
made in the Philippines. If that country does not extend comity
and reciprocity to awards made in the Philippines, the court may
nevertheless treat such award as a foreign judgment enforceable
as such under Rule 39, Section 48, of the Rules of Court.
PART III. SPECIFIC TO MEDIATION
RULE 14: GENERAL PROVISIONS
Rule 14.1. Application of the rules on arbitration. - Whenever
applicable and appropriate, the pertinent rules on arbitration shall
be applied in proceedings before the court relative to a dispute
subject to mediation.
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RULE 15: DEPOSIT AND ENFORCEMENT OF MEDIATED
SETTLEMENT AGREEMENTS
Rule 15.1. Who makes a deposit. - Any party to a mediation that
is not court-annexed may deposit with the court the written
settlement agreement, which resulted from that mediation.
Rule 15.2. When deposit is made. - At any time after an
agreement is reached, the written settlement agreement may be
deposited.
Rule 15.3. Venue. - The written settlement agreement may be
jointly deposited by the parties or deposited by one party with
prior notice to the other party/ies with the Clerk of Court of the
Regional Trial Court (a) where the principal place of business in
the Philippines of any of the parties is located; (b) if any of the
parties is an individual, where any of those individuals resides; or
(c) in the National Capital Judicial Region.
Rule 15.4. Registry Book. - The Clerk of Court of each Regional
Trial Court shall keep a Registry Book that shall chronologically
list or enroll all the mediated settlement agreements/settlement
awards that are deposited with the court as well as the names
and address of the parties thereto and the date of enrollment
and shall issue a Certificate of Deposit to the party that made the
deposit.
Rule 15.5. Enforcement of mediated settlement agreement. -
Any of the parties to a mediated settlement agreement, which
was deposited with the Clerk of Court of the Regional Trial Court,
may, upon breach thereof, file a verified petition with the same
court to enforce said agreement.
Rule 15.6. Contents of petition. - The verified petition shall:
a. Name and designate, as petitioner or respondent, all
parties to the mediated settlement agreement and those who
may be affected by it;
b. State the following:
(i). The addresses of the petitioner and respondents; and
(ii). The ultimate facts that would show that the adverse party has
defaulted to perform its obligation under said agreement; and
c. Have attached to it the following:
(i). An authentic copy of the mediated settlement agreement;
and
(ii). Certificate of Deposit showing that the mediated settlement
agreement was deposited with the Clerk of Court.
Rule 15.7. Opposition. - The adverse party may file an
opposition, within fifteen (15) days from receipt of notice or
service of the petition, by submitting written proof of compliance
with the mediated settlement agreement or such other
affirmative or negative defenses it may have.
Rule 15.8. Court action. - After a summary hearing, if the court
finds that the agreement is a valid mediated settlement
agreement, that there is no merit in any of the affirmative or
negative defenses raised, and the respondent has breached that
agreement, in whole or in part, the court shall order the
enforcement thereof; otherwise, it shall dismiss the petition.
PART IV. SPECIFIC TO CONSTRUCTION ARBITRATION
RULE 16: GENERAL PROVISIONS
Rule 16.1. Application of the rules on arbitration. - Whenever
applicable and appropriate, the rules on arbitration shall be
applied in proceedings before the court relative to a dispute
subject to construction arbitration.
RULE 17: REFERRAL TO CIAC
Rule 17.1. Dismissal of action. - A Regional Trial Court before
which a construction dispute is filed shall, upon becoming aware
that the parties have entered into an arbitration agreement, motu
proprio or upon motion made not later than the pre-trial, dismiss
the case and refer the parties to arbitration to be conducted by
the Construction Industry Arbitration Commission (CIAC), unless
all parties to arbitration, assisted by their respective counsel,
submit to the court a written agreement making the court, rather
than the CIAC, the body that would exclusively resolve the
dispute.
Rule 17.2. Form and contents of motion. - The request for
dismissal of the civil action and referral to arbitration shall be
through a verified motion that shall (a) contain a statement
showing that the dispute is a construction dispute; and (b) be
accompanied by proof of the existence of the arbitration
agreement.
If the arbitration agreement or other document evidencing the
existence of that agreement is already part of the record, those
documents need not be submitted to the court provided that the
movant has cited in the motion particular references to the
records where those documents may be found.
The motion shall also contain a notice of hearing addressed to all
parties and shall specify the date and time when the motion will
be heard, which must not be later than fifteen (15) days after the
filing of the motion. The movant shall ensure receipt by all parties
of the motion at least three days before the date of the hearing.
Rule 17.3. Opposition. - Upon receipt of the motion to refer the
dispute to arbitration by CIAC, the other party may file an
opposition to the motion on or before the day such motion is to
be heard. The opposition shall clearly set forth the reasons why
the court should not dismiss the case.
Rule 17.4. Hearing. - The court shall hear the motion only once
and for the purpose of clarifying relevant factual and legal issues.
Rule 17.5. Court action. - If the other parties fail to file their
opposition on or before the day of the hearing, the court shall
motu proprio resolve the motion only on the basis of the facts
alleged in the motion.
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After hearing, the court shall dismiss the civil action and refer the
parties to arbitration if it finds, based on the pleadings and
supporting documents submitted by the parties, that there is a
valid and enforceable arbitration agreement involving a
construction dispute. Otherwise, the court shall proceed to hear
the case.
All doubts shall be resolved in favor of the existence of a
construction dispute and the arbitration agreement.
Rule 17.6. Referral immediately executory. - An order dismissing
the case and referring the dispute to arbitration by CIAC shall be
immediately executory.
Rule 17.7. Multiple actions and parties. - The court shall not
decline to dismiss the civil action and make a referral to
arbitration by CIAC for any of the following reasons:
a. Not all of the disputes subject of the civil action may
be referred to arbitration;
b. Not all of the parties to the civil action are bound by
the arbitration agreement and referral to arbitration would result
in multiplicity of suits;
c. The issues raised in the civil action could be speedily
and efficiently resolved in its entirety by the Court rather than in
arbitration;
d. Referral to arbitration does not appear to be the most
prudent action; or
e. Dismissal of the civil action would prejudice the rights
of the parties to the civil action who are not bound by the
arbitration agreement.
The court may, however, issue an order directing the inclusion in
arbitration of those parties who are bound by the arbitration
agreement directly or by reference thereto pursuant to Section
34 of Republic Act No. 9285.
Furthermore, the court shall issue an order directing the case to
proceed with respect to the parties not bound by the arbitration
agreement.
Rule 17.8. Referral - If the parties manifest that they have agreed
to submit all or part of their dispute pending with the court to
arbitration by CIAC, the court shall refer them to CIAC for
arbitration.
PART V. SPECIFIC TO OTHER FORMS OF ADR
RULE 18: GENERAL PROVISIONS
Rule 18.1. Applicability of rules to other forms of ADR. - This rule
governs the procedure for matters brought before the court
involving the following forms of ADR:
a. Early neutral evaluation;
b. Neutral evaluation;
c. Mini-trial;
d. Mediation-arbitration;
e. A combination thereof; or
f. Any other ADR form.
Rule 18.2. Applicability of the rules on mediation. - If the other
ADR form/process is more akin to mediation (i.e., the neutral
third party merely assists the parties in reaching a voluntary
agreement), the herein rules on mediation shall apply.
Rule 18.3. Applicability of rules on arbitration.-If the other ADR
form/process is more akin to arbitration (i.e., the neutral third
party has the power to make a binding resolution of the dispute),
the herein rules on arbitration shall apply.
Rule 18.4. Referral. - If a dispute is already before a court, either
party may before and during pre-trial, file a motion for the court
to refer the parties to other ADR forms/processes. At any time
during court proceedings, even after pre-trial, the parties may
jointly move for suspension of the action pursuant to Article
2030 of the Civil Code of the Philippines where the possibility of
compromise is shown.
Rule 18.5. Submission of settlement agreement. - Either party
may submit to the court, before which the case is pending, any
settlement agreement following a neutral or an early neutral
evaluation, mini-trial or mediation-arbitration.
PART VI. FOR RECONSIDERATION, APPEAL AND CERTIORARI
RULE 19: MOTION FOR RECONSIDERATION, APPEAL AND
CERTIORARI
A. MOTION FOR RECONSIDERATION
Rule 19.1. Motion for reconsideration, when allowed. - A party
may ask the Regional Trial to reconsider its ruling on the
following:
a. That the arbitration agreement is inexistent, invalid or
unenforceable pursuant to Rule 3.10 (B);
b. Upholding or reversing the arbitral tribunals
jurisdiction pursuant to Rule 3.19;
c. Denying a request to refer the parties to arbitration;
d. Granting or denying a party an interim measure of
protection;
e. Denying a petition for the appointment of an
arbitrator;
f. Refusing to grant assistance in taking evidence;
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g. Enjoining or refusing to enjoin a person from
divulging confidential information;
h. Confirming, vacating or correcting a domestic arbitral
award;
i. Suspending the proceedings to set aside an
international commercial arbitral award and referring the case
back to the arbitral tribunal;
j. Setting aside an international commercial arbitral
award;
k. Dismissing the petition to set aside an international
commercial arbitral award, even if the court does not recognize
and/or enforce the same;
l. Recognizing and/or enforcing, or dismissing a petition
to recognize and/or enforce an international commercial arbitral
award;
m. Declining a request for assistance in taking evidence;
n. Adjourning or deferring a ruling on a petition to set
aside, recognize and/or enforce an international commercial
arbitral award;
o. Recognizing and/or enforcing a foreign arbitral
award, or refusing recognition and/or enforcement of the same;
and
p. Granting or dismissing a petition to enforce a
deposited mediated settlement agreement.
No motion for reconsideration shall be allowed from the
following rulings of the Regional Trial Court:
a. A prima facie determination upholding the existence,
validity or enforceability of an arbitration agreement pursuant to
Rule 3.1 (A);
b. An order referring the dispute to arbitration;
c. An order appointing an arbitrator;
d. Any ruling on the challenge to the appointment of an
arbitrator;
e. Any order resolving the issue of the termination of
the mandate of an arbitrator; and
f. An order granting assistance in taking evidence.
Rule 19.2. When to move for reconsideration. - A motion for
reconsideration may be filed with the Regional Trial Court within
a non-extendible period of fifteen (15) days from receipt of the
questioned ruling or order.
Rule 19.3. Contents and notice. - The motion shall be made in
writing stating the ground or grounds therefor and shall be filed
with the court and served upon the other party or parties.
Rule 19.4. Opposition or comment. - Upon receipt of the motion
for reconsideration, the other party or parties shall have a non-
extendible period of fifteen (15) days to file his opposition or
comment.
Rule 19.5. Resolution of motion. - A motion for reconsideration
shall be resolved within thirty (30) days from receipt of the
opposition or comment or upon the expiration of the period to
file such opposition or comment.
Rule 19.6. No second motion for reconsideration. - No party
shall be allowed a second motion for reconsideration.
B. GENERAL PROVISIONS ON APPEAL AND CERTIORARI
Rule 19.7. No appeal or certiorari on the merits of an arbitral
award. - An agreement to refer a dispute to arbitration shall
mean that the arbitral award shall be final and binding.
Consequently, a party to an arbitration is precluded from filing an
appeal or a petition for certiorari questioning the merits of an
arbitral award.
Rule 19.8. Subject matter and governing rules. - The remedy of
an appeal through a petition for review or the remedy of a special
civil action of certiorari from a decision of the Regional Trial Court
made under the Special ADR Rules shall be allowed in the
instances, and instituted only in the manner, provided under this
Rule.
Rule 19.9. Prohibited alternative remedies. - Where the
remedies of appeal and certiorari are specifically made available
to a party under the Special ADR Rules, recourse to one remedy
shall preclude recourse to the other.
Rule 19.10. Rule on judicial review on arbitration in the
Philippines. - As a general rule, the court can only vacate or set
aside the decision of an arbitral tribunal upon a clear showing that
the award suffers from any of the infirmities or grounds for
vacating an arbitral award under Section 24 of Republic Act No.
876 or under Rule 34 of the Model Law in a domestic arbitration,
or for setting aside an award in an international arbitration under
Article 34 of the Model Law, or for such other grounds provided
under these Special Rules.
If the Regional Trial Court is asked to set aside an arbitral award in
a domestic or international arbitration on any ground other than
those provided in the Special ADR Rules, the court shall entertain
such ground for the setting aside or non-recognition of the
arbitral award only if the same amounts to a violation of public
policy.
The court shall not set aside or vacate the award of the arbitral
tribunal merely on the ground that the arbitral tribunal
committed errors of fact, or of law, or of fact and law, as the court
cannot substitute its judgment for that of the arbitral tribunal.
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Rule 19.11. Rule on judicial review of foreign arbitral award. - The
court can deny recognition and enforcement of a foreign arbitral
award only upon the grounds provided in Article V of the New
York Convention, but shall have no power to vacate or set aside a
foreign arbitral award.
C. APPEALS TO THE COURT OF APPEALS
Rule 19.12. Appeal to the Court of Appeals. - An appeal to the
Court of Appeals through a petition for review under this Special
Rule shall only be allowed from the following final orders of the
Regional Trial Court:
a. Granting or denying an interim measure of
protection;
b. Denying a petition for appointment of an arbitrator;
c. Denying a petition for assistance in taking evidence;
d. Enjoining or refusing to enjoin a person from
divulging confidential information;
e. Confirming, vacating or correcting/modifying a
domestic arbitral award;
f. Setting aside an international commercial arbitration
award;
g. Dismissing the petition to set aside an international
commercial arbitration award even if the court does not decide
to recognize or enforce such award;
h. Recognizing and/or enforcing an international
commercial arbitration award;
i. Dismissing a petition to enforce an international
commercial arbitration award;
j. Recognizing and/or enforcing a foreign arbitral award;
k. Refusing recognition and/or enforcement of a
foreign arbitral award;
l. Granting or dismissing a petition to enforce a
deposited mediated settlement agreement; and
m. Reversing the ruling of the arbitral tribunal upholding
its jurisdiction.
Rule 19.13. Where to appeal. - An appeal under this Rule shall be
taken to the Court of Appeals within the period and in the
manner herein provided.
Rule 19.14. When to appeal. - The petition for review shall be
filed within fifteen (15) days from notice of the decision of the
Regional Trial Court or the denial of the petitioners motion for
reconsideration.
Rule 19.15. How appeal taken. - Appeal shall be taken by filing a
verified petition for review in seven (7) legible copies with the
Court of Appeals, with proof of service of a copy thereof on the
adverse party and on the Regional Trial Court. The original copy
of the petition intended for the Court of Appeals shall be marked
original by the petitioner.
Upon the filing of the petition and unless otherwise prescribed by
the Court of Appeals, the petitioner shall pay to the clerk of court
of the Court of Appeals docketing fees and other lawful fees of
P3,500.00 and deposit the sum of P500.00 for costs.
Exemption from payment of docket and other lawful fees and
the deposit for costs may be granted by the Court of Appeals
upon a verified motion setting forth valid grounds therefor. If the
Court of Appeals denies the motion, the petitioner shall pay the
docketing and other lawful fees and deposit for costs within
fifteen days from the notice of the denial.
Rule 19.16. Contents of the Petition. - The petition for review
shall (a) state the full names of the parties to the case, without
impleading the court or agencies either as petitioners or
respondent, (b) contain a concise statement of the facts and
issues involved and the grounds relied upon for the review, (c) be
accompanied by a clearly legible duplicate original or a certified
true copy of the decision or resolution of the Regional Trial Court
appealed from, together with certified true copies of such
material portions of the record referred to therein and other
supporting papers, and (d) contain a sworn certification against
forum shopping as provided in the Rules of Court. The petition
shall state the specific material dates showing that it was filed
within the period fixed herein.
Rule 19.17. Effect of failure to comply with requirements. - The
court shall dismiss the petition if it fails to comply with the
foregoing requirements regarding the payment of the docket and
other lawful fees, the deposit for costs, proof of service of the
petition, the contents and the documents, which should
accompany the petition.
Rule 19.18. Action on the petition. - The Court of Appeals may
require the respondent to file a comment on the petition, not a
motion to dismiss, within ten (10) days from notice, or dismiss
the petition if it finds, upon consideration of the grounds alleged
and the legal briefs submitted by the parties, that the petition
does not appear to be prima facie meritorious.
Rule 19.19. Contents of Comment. - The comment shall be filed
within ten (10) days from notice in seven (7) legible copies and
accompanied by clearly legible certified true copies of such
material portions of the record referred to therein together with
other supporting papers. The comment shall (a) point out
insufficiencies or inaccuracies in petitioners statement of facts
and issues, and (b) state the reasons why the petition should be
denied or dismissed. A copy thereof shall be served on the
petitioner, and proof of such service shall be filed with the Court
of Appeals.
Rule 19.20. Due course. - If upon the filing of a comment or such
other pleading or documents as may be required or allowed by
the Court of Appeals or upon the expiration of the period for the
filing thereof, and on the basis of the petition or the records, the
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Court of Appeals finds prima facie that the Regional Trial Court
has committed an error that would warrant reversal or
modification of the judgment, final order, or resolution sought to
be reviewed, it may give due course to the petition; otherwise, it
shall dismiss the same.
Rule 19.21. Transmittal of records. - Within fifteen (15) days from
notice that the petition has been given due course, the Court of
Appeals may require the court or agency concerned to transmit
the original or a legible certified true copy of the entire record of
the proceeding under review. The record to be transmitted may
be abridged by agreement of all parties to the proceeding. The
Court of Appeals may require or permit subsequent correction of
or addition to the record.
Rule 19.22. Effect of appeal. - The appeal shall not stay the
award, judgment, final order or resolution sought to be reviewed
unless the Court of Appeals directs otherwise upon such terms as
it may deem just.
Rule 19.23. Submission for decision. - If the petition is given due
course, the Court of Appeals may set the case for oral argument
or require the parties to submit memoranda within a period of
fifteen (15) days from notice. The case shall be deemed
submitted for decision upon the filing of the last pleading or
memorandum required by the Court of Appeals.
The Court of Appeals shall render judgment within sixty (60) days
from the time the case is submitted for decision.
Rule 19.24. Subject of appeal restricted in certain instance. - If
the decision of the Regional Trial Court refusing to recognize
and/or enforce, vacating and/or setting aside an arbitral award is
premised on a finding of fact, the Court of Appeals may inquire
only into such fact to determine the existence or non-existence
of the specific ground under the arbitration laws of the
Philippines relied upon by the Regional Trial Court to refuse to
recognize and/or enforce, vacate and/or set aside an award. Any
such inquiry into a question of fact shall not be resorted to for the
purpose of substituting the courts judgment for that of the
arbitral tribunal as regards the latters ruling on the merits of the
controversy.
Rule 19.25. Party appealing decision of court confirming arbitral
award required to post bond. - The Court of Appeals shall within
fifteen (15) days from receipt of the petition require the party
appealing from the decision or a final order of the Regional Trial
Court, either confirming or enforcing an arbitral award, or denying
a petition to set aside or vacate the arbitral award to post a bond
executed in favor of the prevailing party equal to the amount of
the award.
Failure of the petitioner to post such bond shall be a ground for
the Court of Appeals to dismiss the petition.
D. SPECIAL CIVIL ACTION FOR CERTIORARI
Rule 19.26. Certiorari to the Court of Appeals. - When the
Regional Trial Court, in making a ruling under the Special ADR
Rules, has acted without or in excess of its jurisdiction, or with
grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal or any plain, speedy, and
adequate remedy in the ordinary course of law, a party may file a
special civil action for certiorari to annul or set aside a ruling of
the Regional Trial Court.
A special civil action for certiorari may be filed against the
following orders of the court.
a. Holding that the arbitration agreement is inexistent,
invalid or unenforceable;
b. Reversing the arbitral tribunals preliminary
determination upholding its jurisdiction;
c. Denying the request to refer the dispute to
arbitration;
d. Granting or refusing an interim relief;
e. Denying a petition for the appointment of an
arbitrator;
f. Confirming, vacating or correcting a domestic arbitral
award;
g. Suspending the proceedings to set aside an
international commercial arbitral award and referring the case
back to the arbitral tribunal;
h. Allowing a party to enforce an international
commercial arbitral award pending appeal;
i. Adjourning or deferring a ruling on whether to set
aside, recognize and or enforce an international commercial
arbitral award;
j. Allowing a party to enforce a foreign arbitral award
pending appeal; and
k. Denying a petition for assistance in taking evidence.
Rule 19.27. Form. - The petition shall be accompanied by a
certified true copy of the questioned judgment, order or
resolution of the Regional Trial Court, copies of all pleadings and
documents relevant and pertinent thereto, and a sworn
certification of non-forum shopping as provided in the Rules of
Court.
Upon the filing of the petition and unless otherwise prescribed by
the Court of Appeals, the petitioner shall pay to the clerk of court
of the Court of Appeals docketing fees and other lawful fees of
P3,500.00 and deposit the sum of P500.00 for costs.
Exemption from payment of docket and other lawful fees and
the deposit for costs may be granted by the Court of Appeals
upon a verified motion setting forth valid grounds therefor. If the
Court of Appeals denies the motion, the petitioner shall pay the
docketing and other lawful fees and deposit for costs within
fifteen days from the notice of the denial.
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Rule 19.28. When to file petition. - The petition must be filed
with the Court of Appeals within fifteen (15) days from notice of
the judgment, order or resolution sought to be annulled or set
aside. No extension of time to file the petition shall be allowed.
Rule 19.29. Arbitral tribunal a nominal party in the petition. -
The arbitral tribunal shall only be a nominal party in the petition
for certiorari. As nominal party, the arbitral tribunal shall not be
required to submit any pleadings or written submissions to the
court. The arbitral tribunal or an arbitrator may, however, submit
such pleadings or written submissions if the same serves the
interest of justice.
In petitions relating to the recognition and enforcement of a
foreign arbitral award, the arbitral tribunal shall not be included
even as a nominal party. However, the tribunal may be notified
of the proceedings and furnished with court processes.
Rule 19.30. Court to dismiss petition. - The court shall dismiss
the petition if it fails to comply with Rules 19.27 and 19.28 above,
or upon consideration of the ground alleged and the legal briefs
submitted by the parties, the petition does not appear to be
prima facie meritorious.
Rule 19.31. Order to comment. - If the petition is sufficient in
form and substance to justify such process, the Court of Appeals
shall immediately issue an order requiring the respondent or
respondents to comment on the petition within a non-
extendible period of fifteen (15) days from receipt of a copy
thereof. Such order shall be served on the respondents in such
manner as the court may direct, together with a copy of the
petition and any annexes thereto.
Rule 19.32. Arbitration may continue despite petition for
certiorari. - A petition for certiorari to the court from the action of
the appointing authority or the arbitral tribunal allowed under this
Rule shall not prevent the arbitral tribunal from continuing the
proceedings and rendering its award. Should the arbitral tribunal
continue with the proceedings, the arbitral proceedings and any
award rendered therein will be subject to the final outcome of
the pending petition for certiorari.
Rule 19.33. Prohibition against injunctions. - The Court of
Appeals shall not, during the pendency of the proceedings before
it, prohibit or enjoin the commencement of arbitration, the
constitution of the arbitral tribunal, or the continuation of
arbitration.
Rule 19.34. Proceedings after comment is filed. - After the
comment is filed, or the time for the filing thereof has expired,
the court shall render judgment granting the relief prayed for or
to which the petitioner is entitled, or denying the same, within a
non-extendible period of fifteen (15) days.
Rule 19.35. Service and enforcement of order or judgment. - A
certified copy of the judgment rendered in accordance with the
last preceding section shall be served upon the Regional Trial
Court concerned in such manner as the Court of Appeals may
direct, and disobedience thereto shall be punished as contempt.
E. APPEAL BY CERTIORARI TO THE SUPREME COURT
Rule 19.36. Review discretionary. - A review by the Supreme
Court is not a matter of right, but of sound judicial discretion,
which will be granted only for serious and compelling reasons
resulting in grave prejudice to the aggrieved party. The following,
while neither controlling nor fully measuring the court's
discretion, indicate the serious and compelling, and necessarily,
restrictive nature of the grounds that will warrant the exercise of
the Supreme Courts discretionary powers, when the Court of
Appeals:
a. Failed to apply the applicable standard or test for
judicial review prescribed in these Special ADR Rules in arriving at
its decision resulting in substantial prejudice to the aggrieved
party;
b. Erred in upholding a final order or decision despite
the lack of jurisdiction of the court that rendered such final order
or decision;
c. Failed to apply any provision, principle, policy or rule
contained in these Special ADR Rules resulting in substantial
prejudice to the aggrieved party; and
d. Committed an error so egregious and harmful to a
party as to amount to an undeniable excess of jurisdiction.
The mere fact that the petitioner disagrees with the Court of
Appeals determination of questions of fact, of law or both
questions of fact and law, shall not warrant the exercise of the
Supreme Courts discretionary power. The error imputed to the
Court of Appeals must be grounded upon any of the above
prescribed grounds for review or be closely analogous thereto.
A mere general allegation that the Court of Appeals has
committed serious and substantial error or that it has acted with
grave abuse of discretion resulting in substantial prejudice to the
petitioner without indicating with specificity the nature of such
error or abuse of discretion and the serious prejudice suffered by
the petitioner on account thereof, shall constitute sufficient
ground for the Supreme Court to dismiss outright the petition.
Rule 19.37. Filing of petition with Supreme Court. - A party
desiring to appeal by certiorari from a judgment or final order or
resolution of the Court of Appeals issued pursuant to these
Special ADR Rules may file with the Supreme Court a verified
petition for review on certiorari. The petition shall raise only
questions of law, which must be distinctly set forth.
Rule 19.38. Time for filing; extension. - The petition shall be filed
within fifteen (15) days from notice of the judgment or final order
or resolution appealed from, or of the denial of the petitioner's
motion for new trial or reconsideration filed in due time after
notice of the judgment.
On motion duly filed and served, with full payment of the docket
and other lawful fees and the deposit for costs before the
expiration of the reglementary period, the Supreme Court may
for justifiable reasons grant an extension of thirty (30) days only
within which to file the petition.
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Rule 19.39. Docket and other lawful fees; proof of service of
petition. - Unless he has theretofore done so or unless the
Supreme Court orders otherwise, the petitioner shall pay docket
and other lawful fees to the clerk of court of the Supreme Court
of P3,500.00 and deposit the amount of P500.00 for costs at
the time of the filing of the petition. Proof of service of a copy
thereof on the lower court concerned and on the adverse party
shall be submitted together with the petition.
Rule 19.40. Contents of petition. - The petition shall be filed in
eighteen (18) copies, with the original copy intended for the court
being indicated as such by the petitioner, and shall (a) state the
full name of the appealing party as the petitioner and the adverse
party as respondent, without impleading the lower courts or
judges thereof either as petitioners or respondents; (b) indicate
the material dates showing when notice of the judgment or final
order or resolution subject thereof was received, when a motion
for new trial or reconsideration, if any, was filed and when notice
of the denial thereof was received; (c) set forth concisely a
statement of the matters involved, and the reasons or arguments
relied on for the allowance of the petition; (d) be accompanied by
a clearly legible duplicate original, or a certified true copy of the
judgment or final order or resolution certified by the clerk of
court of the court a quo and the requisite number of plain copies
thereof, and such material portions of the record as would
support the petition; and (e) contain a sworn certification against
forum shopping.
Rule 19.41. Dismissal or denial of petition. - The failure of the
petitioner to comply with any of the foregoing requirements
regarding the payment of the docket and other lawful fees,
deposit for costs, proof of service of the petition, and the
contents of and the documents which should accompany the
petition shall be sufficient ground for the dismissal thereof.
The Supreme Court may on its own initiative deny the petition
on the ground that the appeal is without merit, or is prosecuted
manifestly for delay, or that the questions raised therein are too
insubstantial to require consideration.
Rule 19.42. Due course; elevation of records. - If the petition is
given due course, the Supreme Court may require the elevation
of the complete record of the case or specified parts thereof
within fifteen (15) days from notice.
PART VII. FINAL PROVISIONS
RULE 20: FILING AND DEPOSIT FEES
Rule 20.1. Filing fee in petitions or counter-petitions to confirm
or enforce, vacate or set aside arbitral award or for the
enforcement of a mediated settlement agreement. - The filing
fee for filing a petition to confirm or enforce, vacate or set aside
an arbitral award in a domestic arbitration or in an international
commercial arbitration, or enforce a mediated settlement
agreement shall be as follows:
PhP 10,000.00 - if the award does not exceed PhP
1,000,000.00
PhP 20,000.00 - if the award does not exceed PhP
20,000,000.00
PhP 30,000.00 - if the award does not exceed PhP
50,000,000.00
PhP 40,000.00 - if the award does not exceed PhP
100,000,000.00
PhP 50,000.00 - if the award exceeds PhP 100,000,000.00
The minimal filing fee payable in "all other actions not involving
property" shall be paid by the petitioner seeking to enforce
foreign arbitral awards under the New York Convention in the
Philippines.
Rule 20.2. Filing fee for action to enforce as a counter-petition.
- A petition to enforce an arbitral award in a domestic arbitration
or in an international commercial arbitration submitted as a
petition to enforce and/or recognize an award in opposition to a
timely petition to vacate or set aside the arbitral award shall
require the payment of the filing fees prescribed in Rule 20.1
above.
Rule 20.3. Deposit fee for mediated settlement agreements. -
Any party to a mediated settlement agreement who deposits it
with the clerk of court shall pay a deposit fee of P500.00.
Rule 20.4. Filing fee for other proceedings. - The filing fee for
the filing of any other proceedings, including applications for
interim relief, as authorized under these Special Rules not
covered under any of the foregoing provisions, shall be
P10,000.00.
RULE 21: COSTS
Rule 21.1. Costs. - The costs of the ADR proceedings shall be
borne by the parties equally unless otherwise agreed upon or
directed by the arbitrator or arbitral tribunal.
Rule 21.2. On the dismissal of a petition against a ruling of the
arbitral tribunal on a preliminary question upholding its
jurisdiction. - If the Regional Trial Court dismisses the petition
against the ruling of the arbitral tribunal on a preliminary question
upholding its jurisdiction, it shall also order the petitioner to pay
the respondent all reasonable costs and expenses incurred in
opposing the petition. "Costs" shall include reasonable attorneys
fees. The court shall award costs upon application of the
respondent after the petition is denied and the court finds, based
on proof submitted by respondent, that the amount of costs
incurred is reasonable.
Rule 21.3. On recognition and enforcement of a foreign arbitral
award. - At the time the case is submitted to the court for
decision, the party praying for recognition and enforcement of a
foreign arbitral award shall submit a statement under oath
confirming the costs he has incurred only in the proceedings in
the Philippines for such recognition and enforcement or setting-
aside. The costs shall include attorneys fees the party has paid or
is committed to pay to his counsel of record.
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The prevailing party shall be entitled to an award of costs which
shall include the reasonable attorneys fees of the prevailing party
against the unsuccessful party. The court shall determine the
reasonableness of the claim for attorneys fees.
Rule 21.4. Costs. - At the time the case is submitted to the court
for decision, the party praying for confirmation or vacation of an
arbitral award shall submit a statement under oath confirming
the costs he has incurred only in the proceedings for
confirmation or vacation of an arbitral award. The costs shall
include the attorneys fees the party has paid or is committed to
pay to his counsel of record.
The prevailing party shall be entitled to an award of costs with
respect to the proceedings before the court, which shall include
the reasonable attorneys fees of the prevailing party against the
unsuccessful party. The court shall determine the reasonableness
of the claim for attorneys fees.
Rule 21.5. Bill of Costs. - Unless otherwise agreed upon by the
parties in writing, at the time the case is submitted to the court
for decision, the party praying for recognition and enforcement
or for setting aside an arbitral award shall submit a statement
under oath confirming the costs he has incurred only in the
proceedings for such recognition and enforcement or setting-
aside. The costs shall include attorneys fees the party has paid or
is committed to pay to his counsel of record.
The prevailing party shall be entitled to an award of costs, which
shall include reasonable attorneys fees of the prevailing party
against the unsuccessful party. The court shall determine the
reasonableness of the claim for attorneys fees.
Rule 21.6. Governments exemption from payment of fees. -
The Republic of the Philippines, its agencies and instrumentalities
are exempt from paying legal fees provided in these Special ADR
Rules. Local governments and government controlled
corporation with or with or without independent charters are not
exempt from paying such fees.
RULE 22: APPLICABILITY OF THE RULES OF COURT
Rule 22.1. Applicability of Rules of Court. - The provisions of the
Rules of Court that are applicable to the proceedings enumerated
in Rule 1.1 of these Special ADR Rules have either been included
and incorporated in these Special ADR Rules or specifically
referred to herein.
In connection with the above proceedings, the Rules of Evidence
shall be liberally construed to achieve the objectives of the
Special ADR Rules.
RULE 23: SEPARABILITY
Rule 23.1. Separability Clause. - If, for any reason, any part of the
Special ADR Rules shall be held unconstitutional or invalid, other
Rules or provisions hereof which are not affected thereby, shall
continue to be in full force and effect.
RULE 24: TRANSITORY PROVISIONS
Rule 24.1. Transitory Provision. - Considering its procedural
character, the Special ADR Rules shall be applicable to all
pending arbitration, mediation or other ADR forms covered by
the ADR Act, unless the parties agree otherwise. The Special ADR
Rules, however, may not prejudice or impair vested rights in
accordance with law.
RULE 25: ONLINE DISPUTE RESOLUTION
Rule 25.1. Applicability of the Special ADR Rules to Online
Dispute Resolution. - Whenever applicable and appropriate, the
Special ADR Rules shall govern the procedure for matters
brought before the court involving Online Dispute Resolution.
Rule 25.2. Scope of Online Dispute Resolution. - Online Dispute
Resolution shall refer to all electronic forms of ADR including the
use of the internet and other web or computed based
technologies for facilitating ADR.
RULE 26: EFFECTIVITY
Rule 26.1. Effectivity. - The Special ADR Rules shall take effect
fifteen (15) days after its complete publication in two (2)
newspapers of general circulation.
RULE A: GUIDELINES FOR THE RESOLUTION OF ISSUES
RELATED TO ARBITRATION OF LOANS SECURED BY
COLLATERAL
Rule A.1. Applicability of an arbitration agreement in a contract
of loan applies to the accessory contract securing the loan. - An
arbitration agreement in a contract of loan extends to and covers
the accessory contract securing the loan such as a pledge or a
mortgage executed by the borrower in favor of the lender under
that contract of loan.
Rule A.2. Foreclosure of pledge or extra-judicial foreclosure of
mortgage not precluded by arbitration. - The commencement
of the arbitral proceeding under the contract of loan containing
an arbitration agreement shall not preclude the lender from
availing himself of the right to obtain satisfaction of the loan
under the accessory contract by foreclosure of the thing pledged
or by extra-judicial foreclosure of the collateral under the real
estate mortgage in accordance with Act No. 3135.
The lender may likewise institute foreclosure proceedings against
the collateral securing the loan prior to the commencement of
the arbitral proceeding.
By agreeing to refer any dispute under the contract of loan to
arbitration, the lender who is secured by an accessory contract of
real estate mortgage shall be deemed to have waived his right to
obtain satisfaction of the loan by judicial foreclosure.
Rule A.3. Remedy of the borrower against an action taken by
the lender against the collateral before the constitution of the
arbitral tribunal. - The borrower providing security for the
payment of his loan who is aggrieved by the action taken by the
lender against the collateral securing the loan may, if such action
against the collateral is taken before the arbitral tribunal is
constituted, apply with the appropriate court for interim relief
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against any such action of the lender. Such interim relief may be
obtained only in a special proceeding for that purpose, against
the action taken by the lender against the collateral, pending the
constitution of the arbitral tribunal. Any determination made by
the court in that special proceeding pertaining to the merits of
the controversy, including the right of the lender to proceed
against the collateral, shall be only provisional in nature.
After the arbitral tribunal is constituted, the court shall stay its
proceedings and defer to the jurisdiction of the arbitral tribunal
over the entire controversy including any question regarding the
right of the lender to proceed against the collateral.

Rule A.4. Remedy of borrower against action taken by the
lender against the collateral after the arbitral tribunal has been
constituted. - After the arbitral tribunal is constituted, the
borrower providing security for the payment of his loan who is
aggrieved by the action taken by the lender against the collateral
securing the loan may apply to the arbitral tribunal for relief,
including a claim for damages, against such action of the lender.
An application to the court may also be made by the borrower
against any action taken by the lender against the collateral
securing the loan but only if the arbitral tribunal cannot act
effectively to prevent an irreparable injury to the rights of such
borrower during the pendency of the arbitral proceeding.
An arbitration agreement in a contract of loan precludes the
borrower therein providing security for the loan from filing
and/or proceeding with any action in court to prevent the lender
from foreclosing the pledge or extra-judicially foreclosing the
mortgage. If any such action is filed in court, the lender shall have
the right provided in the Special ADR Rules to have such action
stayed on account of the arbitration agreement.
Rule A.5. Relief that may be granted by the arbitral tribunal. -
The arbitral tribunal, in aid of the arbitral proceeding before it,
may upon submission of adequate security, suspend or enjoin
the lender from proceeding against the collateral securing the
loan pending final determination by the arbitral tribunal of the
dispute brought to it for decision under such contract of loan.
The arbitral tribunal shall have the authority to resolve the issue
of the validity of the foreclosure of the thing pledged or of the
extrajudicial foreclosure of the collateral under the real estate
mortgage if the same has not yet been foreclosed or confirm the
validity of such foreclosure if made before the rendition of the
arbitral award and had not been enjoined.
Rule A.6. Arbitration involving a third-party provider of security.
- An arbitration agreement contained in a contract of loan
between the lender and the borrower extends to and covers an
accessory contract securing the loan, such as a pledge, mortgage,
guaranty or suretyship, executed by a person other than the
borrower only if such third-party securing the loan has agreed in
the accessory contract, either directly or by reference, to be
bound by such arbitration agreement.
Unless otherwise expressly agreed upon by the third-party
securing the loan, his agreement to be bound by the arbitration
agreement in the contract of loan shall pertain to disputes arising
from or in connection with the relationship between the lender
and the borrower as well as the relationship between the lender
and such third-party including the right of the lender to proceed
against the collateral securing the loan, but shall exclude disputes
pertaining to the relationship exclusively between the borrower
and the provider of security such as that involving a claim by the
provider of security for indemnification against the borrower.
In this multi-party arbitration among the lender, the borrower
and the third party securing the loan, the parties may agree to
submit to arbitration before a sole arbitrator or a panel of three
arbitrators to be appointed either by an Appointing Authority
designated by the parties in the arbitration agreement or by a
default Appointing Authority under the law.
In default of an agreement on the manner of appointing
arbitrators or of constituting the arbitral tribunal in such multi-
party arbitration, the dispute shall be resolved by a panel of three
arbitrators to be designated by the Appointing Authority under
the law. But even in default of an agreement on the manner of
appointing an arbitrator or constituting an arbitral tribunal in a
multi-party arbitration, if the borrower and the third party
securing the loan agree to designate a common arbitrator,
arbitration shall be decided by a panel of three arbitrators: one to
be designated by the lender; the other to be designated jointly by
the borrower and the provider of security who have agreed to
designate the same arbitrator; and a third arbitrator who shall
serve as the chairperson of the arbitral panel to be designated by
the two party-designated arbitrators.

PART SIXTEEN. APPEALS

RULE 109. APPEALS IN SPECIAL PROCEEDINGS

SECTION 1. Orders or judgments from which appeals may be
taken.An interested person may appeal in special proceedings
from an order or judgment rendered by a Regional Trial Court [or
a Juvenile, and Domestic Relations Court], where such order or
judgment:
(a) Allows or disallows a will;
(b) Determines who are the lawful heirs of
a deceased person, or the distributive share of the estate to
which such person is entitled;
(c) Allows or disallows, in whole or in part, any claim
against the estate of a deceased person, or any claim presented
on behalf of the estate in offset to a claim against it;
(d) Settles the account of an executor, administrator,
trustee or guardian;
(e) Constitutes, in proceedings relating to the
settlement of the estate of a deceased person, or the
administration of a trustee or guardian, a final determination in
the lower court of the rights of the party appealing, except that
no appeal shall be allowed from the appointment of a special
administrator; and
(f) Is the final order or judgment rendered in the case,
and affects the substantial rights of the person appealing, unless
it be an order granting or denying a motion for a new trial or for
reconsideration.

SEC. 2. Advance distribution in special proceedings.
Notwithstanding a pending controversy or appeal in proceedings
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to settle the estate of a decedent, the court may, in its discretion
and upon such terms as it may deem proper and just, permit that
such part of the estate as may not be affected by the controversy
or appeal be distributed among the heirs or legatees, upon
compliance with the conditions set forth in Rule 90 of these
rules.

CASE NOTES

Testate Estate of vda. de Biascan v. Biascan (2000)
Section 1, Rule 109 of the Rules of Court enumerates the
orders and judgments in special proceedings which may be
the subject of an appeal. Thus:
Section 1. Orders or judgments from which appeals
may be taken. An interested person may appeal in a special
proceeding from an order or judgment rendered by a
Regional Trial Court or a Juvenile and domestic Relations
Court, where such order or judgment:
(a) Allows or disallows a will;
(b) Determines who are the lawful heirs of a
deceased person, or the distributive shares of the estate to
which such person is entitled;
(c) Allows, or disallows, in whole or in part,
any claim against the estate of a deceased person, or any
claim presented on behalf of the estate in offset to a claim
against it;
(d) Settles the account of an executor,
administrator, trustee or guardian;
(e) Constitutes, in proceedings relating to the
settlement of the estate of a deceased person, or the
administration of a trustee or guardian, a final determination
in the lower court of the rights of the party appealing,
except that no appeal shall be allowed from the appointment
of a special administrator; and
(f) Is the final order or judgment rendered in
the case, and affects the substantial rights of the person
appealing, unless it be an order granting or denying a
motion for new trial or for reconsideration.
The ruling of the trial court that Maria, private
respondent Rosalina Biascan and German Biascan were
entitled to participate in the settlement proceedings falls
squarely under paragraph (b), Section 1, Rule 109 of the
Rules of Court as a proper subject of appeal. By so ruling,
the trial court has effectively determined that the three
persons are the lawful heirs of the deceased. As such, the
same may be the proper subject of an appeal.
Similarly, the ruling of the trial court denying
petitioners motion to set aside the order appointing private
respondent as the regular administratrix of the estate of
Florencio Bisacan is likewise a proper subject of an
appeal. We have previously held that an order of the trial
court appointing a regular administrator of a deceased
persons estate is a final determination of the rights of the
parties thereunder, and is thus, appealable. This is in
contrast with an order appointing a special administrator
who is appointed only for a limited time and for a specific
purpose. Because of the temporary character and special
character of this appointment, the Rules deem it not
advisable for any party to appeal from said temporary
appointment. Considering however that private respondent
has aleready been appointed as regular administratrix of the
estate of Florencio Biascan, her appointment as such may be
questioned before the appellate court by way of appeal.
It is thus clear that the Order dated April 2, 1981
may be the proper subject of an appeal in a special
proceeding. In special proceedings, such as the instant
proceeding for settlement of estate, the period of appeal
from any decision or final order rendered therein is thirty
(30) days, a notice of appeal and a record on appeal being
required. The appeal period may only be interrupted by the
filing of a motion for new trial or reconsideration. Once the
appeal period expires without an appeal or a motion for
reconsideration or new trial being perfected, the decision or
order becomes final.
It is well-settled that judgment or orders
become final and executory by operation of law and not
by judicial declaration. Thus, finality of a judgment
becomes a fact upon the lapse of the reglementary
period of appeal if no appeal is perfected or motion for
reconsideration or new trial is filed. The trial court
need not even pronounce the finality of the order as the
same becomes final by operation of law. In fact, the
trial court could not even validly entertain a motion for
reconsideration filed after the lapse of the period for
taking an appeal. As such, it is of no moment that the
opposing party failed to object to the timeliness of the
motion for reconsideration or that the court denied the
same on grounds other than timeliness considering that
at the time the motion was filed, the Order dated April
2, 1981 had already become final and executory. Being
final and executory, the trial court can no longer alter,
modify, or reverse the questioned order. The
subsequent filing of the motion for reconsideration
cannot disturb the finality of the judgment or order.

Republic v. Nishina (2010)
Rule 109 of the Rules of Court contemplates
multiple appeals during the pendency of special
proceedings. A record on appeal in addition to the notice
of appeal is thus required to be filed as the original records
of the case should remain with the trial courtto enable the
rest of the case to proceed in the event that a separate and
distinct issue is resolved by said court and held to be final.
In the present case, the filing of a record on appeal
was not necessary since no other matter remained to be
heard and determined by the trial court after it issued the
appealed order granting respondents petition for
cancellation of birth record and change of surname in the
civil registry.