A.M.
NO. 01-2-04-SC[March
13,
2001]
RE :
PROPOSED
INTERIM RULES OF PROCEDURE GOVERNING
INTRA-CORPORATE
CONTROVERSIES UNDER R.A.
NO. 8799
EN
BANCR E
S O L
U T I O N
Acting on the Memorandum
of the Committee on SEC Cases submitting for this Court's consideration
and approval the Proposed Interim Rules of Procedure for
Intra-Corporate
Controversies, the Court Resolved to approve the same.
The Interim Rules
shall take effect on April 1, 2001 following its publication in two (2)
newspapers in general circulation.cralaw:red
March 13, 2001, Manila.
Davide,
Jr.,
C.J., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza,
Panganiban,
Quisumbing, Pardo, Buena, Gonzaga-Reyes, Ynares-Santiago, De Leon, Jr.
and Sandoval-Gutierrez, JJ., concur.
INTERIM
RULES OF PROCEDURE FOR INTRA-CORPORATE CONTROVERSIESRule
IGENERAL
PROVISIONS
Section 1. (a) Cases
covered. - These Rules shall govern the procedure to be observed in
civil cases involving the following:chanroblesvirtuallawlibrary
(1) Devices
or schemes
employed by, or any act of, the board of directors, business
associates,
officers or partners, amounting to fraud or misrepresentation which may
be detrimental to the interest of the public and/or of the
stockholders,
partners, or members of any corporation, partnership, or association;
(2)
Controversies
arising out of intra-corporate, partnership, or association relations,
between and among stockholders, members, or associates; and between,
any
or all of them and the corporation, partnership, or association of
which
they are stockholders, members, or associates, respectively;
(3)
Controversies
in the election or appointment of directors, trustees, officers, or
managers
of corporations, partnerships, or associations;
(4)
Derivative suits; and cralaw:red
(5)
Inspection of
corporate books.cralaw:red
(b) Prohibition against
nuisance and harassment suits. - Nuisance and harassment suits are
prohibited. In determining whether a suit is a nuisance or harassment
suit,
the court shall consider, among others, the following:chanroblesvirtuallawlibrary
(1) The
extent of
the shareholding or interest of the initiating stockholder or member;
(2)
Subject matter
of the suit;
(3) Legal
and factual
basis of the complaint;
(4)
Availability
of appraisal rights for the act or acts complained of; and cralaw:red
(5)
Prejudice or
damage to the corporation, partnership, or association in relation to
the
relief sought.cralaw:red
In case of nuisance
or harassment suits, the court may, motu proprio or upon
motion,
forthwith dismiss the case.
Sec. 2. Suppletory
application of the Rules
of Court
. - The Rules
of Court, in so far as they may be applicable and are not
inconsistent
with these Rules, are hereby adopted to form an integral part of these
Rules.cralaw:red
Sec. 3. Construction.
- These Rules shall be liberally construed in order to promote their
objective
of securing a just, summary, speedy and inexpensive determination of
every
action or proceeding.cralaw:red
Sec. 4. Executory
nature of decisions and orders. - All decisions and orders issued
under
these Rules shall immediately be executory. No appeal or petition taken
therefrom shall stay the enforcement or implementation of the decision
or order, unless restrained by an appellate court. Interlocutory orders
shall not be subject to appeal.cralaw:red
Sec. 5. Venue.
- All actions covered by these Rules shall be commenced and tried in
the
Regional Trial Court which has jurisdiction over the principal office
of
the corporation, partnership, or association concerned. Where the
principal
office of the corporation, partnership or association is registered in
the Securities and Exchange Commission as Metro Manila, the action must
be filed in the city or municipality where the head office is located.cralaw:red
Sec. 6. Service
of pleadings. - When so authorized by the court, any pleading
and/or
document required by these Rules may be filed with the court and/or
served
upon the other parties by facsimile transmission (fax) or electronic
mail
(e-mail). In such cases, the date of transmission shall be deemed to be
prima facie the date of service.cralaw:red
Sec. 7. Signing
of pleadings, motions and other papers. - Every pleading, motion,
and
other paper of a party represented by an attorney shall be signed by at
least one attorney of record in the attorney's individual name, whose
address
shall be stated. A party who is not represented by an attorney shall
sign
the pleading, motion, or other paper and state his address.cralaw:red
The signature of
an attorney or party constitutes a certification by the signer that he
ha read the pleading, motion, or other paper; that to the best of his
knowledge,
information, and belief formed after reasonable inquiry, it is well
grounded
in fact and is warranted by existing law or a good faith argument for
the
extension, modification, or reversal of existing jurisprudence; and
that
it is not interposed for any improper purpose, such as to harass or to
cause unnecessary delay or needless increase in the cost of litigation.cralaw:red
If a pleading, motion,
or other paper is not signed, it shall be stricken off the record
unless
it is promptly signed by the pleader or movant, after he is notified of
the omission.cralaw:red
Sec. 8. Prohibited
pleadings. - The following pleadings are prohibited:chanroblesvirtuallawlibrary
(1) Motion
to dismiss;
(2)
Motion for a
bill of particulars;
(3)
Motion for new
trial, or for reconsideration of judgment or order, or for re-opening
of
trial;
(4)
Motion for extension
of time to file pleadings, affidavits or any other paper, except those
filed due to clearly compelling reasons. Such motion must be verified
and
under oath; and cralaw:red
(5)
Motion for postponement
and other motions of similar intent, except those filed due to clearly
compelling reasons. Such motion must be verified and under oath.cralaw:red
Sec. 9. Assignment
of cases. - All cases filed under these Rules shall be tried by
judges
designated by the Supreme Court to hear and decide cases transferred
from
the Securities and Exchange Commission to the Regional Trial Courts and
filed directly with said courts pursuant to Republic
Act No. 8799, otherwise known as the Securities Regulation Code.
Rule
2COMMENCEMENT
OF ACTION AND PLEADINGS
Section 1. Commencement
of action. - An action under these Rules is commenced by the filing
of a verified complaint with the proper Regional Trial Court.
Sec. 2. Pleadings
allowed. - The only pleadings allowed to be filed under these Rules
are the complaint, answer, compulsory counterclaims or cross-claims
pleaded
in the answer, and the answer to the counterclaims or cross-claims.cralaw:red
Sec. 3. Verification.
- The complaint and the answer shall be verified by an affidavit
stating
that the affiant has read the pleading and the allegations therein are
true and correct based on his own personal knowledge or on authentic
records.cralaw:red
Sec. 4. Complaint.
- The complaint shall state or contain:chanroblesvirtuallawlibrary
(1) the
names, addresses,
and other relevant personal or judicial circumstances of the parties;
(2) all
facts material
and relevant to the plaintiff's cause or causes of action, which shall
be supported by affidavits of the plaintiff or his witnesses and copies
of documentary and other evidence supportive of such cause or causes of
action;
(3) the
law, rule,
or regulation relied upon, violated, or sought to be enforced;
(4) a
certification
that (a) the plaintiff has not therefore commenced any action or filed
any claim involving the same issues in any court, tribunal or
quasi-judicial
agency, and, to the best of his knowledge, no such other action or
claim
is pending therein; (b) if there is such other action or claim, a
complete
statement of the present status thereof; and (c) if he should
thereafter
learn that the same or similar action or claim has been filed or is
pending,
he shall report that fact within five (5) days therefrom to the court; and cralaw:red
(5) the
relief sought.cralaw:red
Sec. 5. Summons.
- The summons and the complaint shall be served together not later than
five (5) days from the date of filing of the complaint.
(a) Service
upon
domestic private juridical entities. - If the defendant is a
domestic
corporation, service shall be deemed adequate is made upon any of the
statutory
or corporate officers as fixed by the by-laws or their respective
secretaries.
If the defendant is a partnership, service shall be deemed adequate if
made upon any of the managing or general partners or upon their
respective
secretaries. If the defendant is an association service shall be deemed
adequate if made upon any of its officers or their respective
secretaries.
(b) Service
upon
foreign private juridical entity. - When the defendant is a foreign
private juridical entity which is transacting or has transacted
business
in the Philippines, service may be made on its resident agent
designated
in accordance with law for that purpose, or, if there be no such agent,
on the government official designated by law to that effect, or on any
of its officers or agents within the Philippines.cralaw:red
Sec. 6. Answer.
- The defendant shall file his answer to the complaint, serving a copy
thereof on the plaintiff, within fifteen (15) days from service of
summons.
In the answer,
the
defendant shall:chanroblesvirtuallawlibrary
(1) Specify
each
material allegation of fact the truth of which he admits;
(2)
Specify each
material allegation of fact the truth of which he does not admit. Where
the defendant desires to deny only a part of an averment, he shall
specify
so much of it as true and material and shall deny only the remainder;
(3)
Specify each
material allegation of facts as to which truth he has no knowledge or
information
sufficient to form a belief, and this shall have the effect of a denial;
(4) State
the defenses,
including grounds for a motion to dismiss under the Rules
of Court;
(5) State
the law,
rule, or regulation relied upon;
(6)
Address each
of the causes of action stated in the complaint;
(7) State
the facts
upon which he relied for his defense, including affidavits of witnesses
and copies of documentary and other evidence supportive of such cause
or
causes of action;
(8) State
any compulsory
counterclaim/s and cross-claim/s; and cralaw:red
(9) State
the relief
sought.cralaw:red
The answer to counterclaims
or cross-claims shall be filed within ten (10) days from service of the
answer in which they are pleaded.
Sec. 7. Effect
of failure to answer. - If the defendant fails to answer within the
period above provided, he shall be considered in default. Upon motion
or
motu proprio, the court shall render judgment either
dismissing
the complaint or granting the relief prayed for as the records may
warrant.
In no case shall the court award a relief beyond or different from that
prayed for.cralaw:red
Sec. 8. Affidavits,
documentary and other evidence. - Affidavits shall be based on
personal
knowledge, shall set forth such facts as would be admissible in
evidence,
and shall show affirmatively that the affiant is competent to testify
on
the matters stated therein. The affidavits shall be in question and
answer
form, and shall comply with the rules on admissibility of evidence.cralaw:red
Affidavits of witnesses
as well as documentary and other evidence shall be attached to the
appropriate
pleading: Provided, however, that affidavits, documentary and
other
evidence not so submitted may be attached to the pre-trial brief
required
under these Rules. Affidavits and other evidence not so submitted shall
not be admitted in evidence, except in the following cases:chanroblesvirtuallawlibrary
(1)
Testimony of
unwilling, hostile, or adverse party witnesses. A witness is presumed
prima
facie hostile if he fails or refuses to execute an affidavit after a
written
request therefor;
(2) If
the failure
to submit the evidence is for meritorious and compelling reasons; and cralaw:red
(3) Newly
discovered
evidence.cralaw:red
In case of (2) and (3)
above, the affidavit and evidence must be submitted not later than five
(5) days prior to its introduction in evidence.
Rule
3MODES
OF
DISCOVERY
Section 1.
In
general. - A party can only avail of any of the modes of discovery
not later than fifteen (15) days from the joinder of issues.
Sec. 2. Objections.
- Any mode of discovery such as interrogatories, request for admission,
production or inspection of documents or things, may be objected to
within
ten (10) days from receipt of the discovery device and only on the
ground
that the matter requested is patently incompetent, immaterial,
irrelevant
or privileged in nature. The court shall rule on the objections not
later
than fifteen (15) days from the filing thereof.cralaw:red
Sec. 3. Compliance.
- Compliance with any mode of discovery shall be made within ten (10)
days
from receipt of the discovery device, or if there are objections, from
receipt of the ruling of the court.cralaw:red
Sec. 4. Sanctions.
- The sanctions prescribed in the Rules
of Court for failure to avail of, or refusal to comply with, the
modes
of discovery shall apply. In addition, the court may, upon motion,
declare
a party non-suited or as in default, as the case may be, if the refusal
to comply with a mode of discovery is patently unjustified.
Rule
4PRE-TRIAL
Section 1. Pre-trial
conference; mandatory nature. - Within five (5) days after the
period
for availment of, and compliance with, the modes of discovery
prescribed
in Rule 3 hereof, whichever comes later, the court shall issue and
serve
an order immediately setting the case for pre-trial conference and
directing
the parties to submit their respective pre-trial briefs. The parties
shall
file with the court and furnish each other copies of their respective
pre-trial
brief in such manner as to ensure its receipt by the court and the
other
party at least five (5) days before the date set for the pre-trial.
The parties shall
set forth in their pre-trial briefs, among other matters, the following:chanroblesvirtuallawlibrary
(1) Brief
statement
of the nature of the case, which shall summarize the theory or theories
of the party in clear and concise language;
(2)
Allegations expressly
admitted by either or both parties;
(3)
Allegations deemed
admittedly by either or both parties;
(4)
Documents not
specifically denied under oath by either or both parties;
(5)
Amendments to
the pleadings;
(6)
Statement of
the issues, which shall separately summarize the factual and legal
issues
involved in the case;
(7) Names
of witnesses
to be presented and the summary of their testimony as contained in
their
affidavits supporting their positions on each of the issues;
(8) All
other pieces
of evidence, whether documentary of otherwise and their respective
purposes;
(9)
Specific proposals
for an amicable settlement;
(10)
Possibility
of referral to mediation or other alternative modes of dispute
resolution;
(11)
Proposed schedule
of hearings; and cralaw:red
(12) Such
other matters
as may aid in the just and speedy disposition of the case.cralaw:red
Sec. 2. Nature and
purpose of pre-trial conference. - During the pre-trial conference,
the court shall, with its active participation, ensure that the parties
consider in detail all of the following:chanroblesvirtuallawlibrary
(1) The
possibility
of an amicable settlement;
(2)
Referral of the
dispute to mediation or other forms of dispute resolution;
(3) Facts
that need
not be proven, either because they are matters of judicial notice or
expressly
or deemed admitted;
(4)
Amendments to
the pleadings;
(5) The
possibility
of obtaining stipulations and admission of facts and documents;
(6)
Objections to
the admissibility of testimonial, documentary and other evidence;
(7)
Objections to
the form or substance of any affidavit, or part thereof;
(8)
Simplification
of the issues;
(9) The
possibility
of submitting the case for decision on the basis of position papers,
affidavits,
documentary and real evidence;
(10) A
complete schedule
of hearing dates; and cralaw:red
(11) Such
other matters
as may aid in the speedy and summary disposition of the case.cralaw:red
Sec. 3. Termination.
- The preliminary conference shall be terminated not later than ten
(10)
days after its commencement, whether or not the parties have agreed to
settle amicably.
Sec. 4. Judgment
before pre-trial. - If, after submission of the pre-trial briefs,
the
court determines that, upon consideration of the pleadings, the
affidavits
and other evidence submitted by the parties, a judgment may be
rendered,
the court may order the parties to file simultaneously their respective
memoranda within a non-extendible period of twenty (20) days from
receipt
of the order. Thereafter, the court shall render judgment, either full
or otherwise, not later than ninety (90) days from the expiration of
the
period to file the memoranda.cralaw:red
Sec. 5. Pre-trial
order; judgment after pre-trial. - The proceedings in the pre-trial
shall be recorded. Within ten (10) days after the termination of the
pre-trial,
the court shall issue an order which shall recite in detail the matters
taken up in the conference, the actions taken thereon, the amendments
allowed
in the pleadings, and the agreements or admissions made by the parties
as to any of the matters considered. The court shall rule on all
objections
to or comments on the admissibility of any documentary or other
evidence,
including any affidavit or any part thereof. Should the action proceed
to trial, the order shall explicit define and limit the issues to be
tried
and shall strictly follow the form set forth in Annex
"A"
of these Rules.cralaw:red
The contents of the
order shall control the subsequent course of the action, unless
modified
before trial to prevent manifest injustice.cralaw:red
After the pre-trial,
the court may render judgment, either full or partial, as the evidence
presented during the pre-trial may warrant.
Rule
5TRIAL
Section 1. Witnesses.
- If the court deems necessary to hold hearings to determine specific
factual
matters before rendering judgment, it shall, in the pre-trial order set
the case for trial on the dates agreed upon by the parties.
Only persons whose
affidavits were submitted may be presented as witnesses, except in
cases
specified in Section 8, Rule 2 of these Rules. The affidavits of the
witnesses
shall serve as their direct testimonies, subject to cross-examination
in
accordance with existing rules on evidence.cralaw:red
Sec. 2. Trial
schedule. - Unless judgment is rendered pursuant to Rule 4 of these
Rules, the initial hearing shall be held not later than thirty (30)
days
from the date of the pre-trial order. The hearings shall be completed
not
later than sixty (60) days from the date of the initial hearing, thirty
(30) days of which shall be allotted to the plaintiffs and thirty (30)
days to the defendants in the manner prescribed in the pre-trial order.
The failure of a party to present a witness on a scheduled hearing date
shall be deemed a waiver of such hearing date. However, a party may
present
such witness or witnesses within his remaining allotted hearing dates.cralaw:red
Sec. 3. Written
offer of evidence. - Evidence not otherwise admitted by the parties
or ruled upon by the court during the pre-trial conference shall be
offered
in writing not later than five (5) days from the completion of the
presentation
of evidence of the party concerned. The opposing party shall have five
(5) days from receipt of the offer to file his comments or objections.
The court shall make its ruling on the offer within five (5) days from
the expiration of the period to file comments or objections.cralaw:red
Sec. 4. Memoranda.
- Immediately after ruling on the last offer of evidence, the court
shall order the parties to simultaneously file, within thirty (30) days
from receipt of the order, their respective memoranda. The memoranda
shall
contain the following:chanroblesvirtuallawlibrary
(1) A "Statement
of the Case," which is a clear and concise statement of the nature
of the action and a summary of the proceedings;
(2) A "Statement
of the Facts," which is a clear and concise statement in narrative
form of the established facts, with reference to the testimonial,
documentary
or other evidence in support thereof;
(3) A "Statement
of the Issues," which is a clear and concise statement of the
issues
presented to the court for resolution;
(4) The "Arguments,"
which is a clear and concise presentation of the argument in support of
each issue; and cralaw:red
(5) The "Relief,"
which is a specification of the order or judgment which the party seeks
to obtain.cralaw:red
No reply memorandum
shall be allowed.
Sec. 5. Decision
after trial. - The court shall render a decision not later than
(90)
days from the lapse of the period to file the memoranda, with or
without
said pleading having been filed.
Rule
6ELECTION
CONTESTS
Section 1. Cases
covered. - The provisions of this rule shall apply to election
contests
in stock and non-stock corporations.
Sec. 2. Definition.
- An election contests refers to any controversy or dispute involving
title
or claim to any elective office in a stock or non-stock corporation,
the
validation of proxies, the manner and validity of elections, and the
qualifications
of candidates, including the proclamation of winners, to the office of
director, trustee or other officer directly elected by the stockholders
in a close corporation or by members of a non-stock corporation where
the
article of incorporation or by-laws so provide.cralaw:red
Sec. 3. Complaint.
- In addition to the requirements in Section 4, Rule 2 of these Rules,
the complaint in an election contests must state the following:chanroblesvirtuallawlibrary
(1) The case
was
filed fifteen (15) days from the date of the election if the by-laws of
the corporation do not provide for a procedure for resolution of the
controversy,
or within fifteen (15) days from the resolution of the controversy by
the
corporation as provided in its by-laws; and
(2) The
plaintiff
has exhausted all intra-corporate remedies in election cases as
provided
for in the by-laws of the corporation.cralaw:red
Sec. 4. Duty of the
court upon the filing of the complaint. - Within two (2) days from
the filing of the complaint, the court, upon a consideration of the
allegations
thereof, may dismiss the complaint outright if it is not sufficient in
form and substance, or, if it is sufficient, order the issuance of
summons
which shall be served, together with a copy of the complaint, on the
defendant
within two (2) days from its issuance.
Sec. 5. Answer.
- The defendant shall file his answer to the complaint, serving a copy
thereof on the plaintiff, within ten (10) days from service of summons
and the complaint. The answer shall contain the matters required in
Section
6, Rule 2 of these Rules.cralaw:red
Sec. 6. Affidavits,
documentary and other evidence. - The parties shall attach to the
complaint
and answer the affidavits of witnesses, documentary and other evidence
in support thereof, if any.cralaw:red
Sec. 7. Effect
of failure to answer. - If the defendants fails to file an answer
within
the period above, the court shall, within ten (10) days from the lapse
of said period, motu proprio or on motion, render judgments as
may
be warranted by the allegations of the complaint, as well as the
affidavits,
documentary and other evidence on record. In no case shall the court
award
a relief beyond or different from that prayed for.cralaw:red
Sec. 8. Trial.
- If the court deems it necessary to hold a hearing to clarify
specific
factual matters before rendering judgment, it shall, within ten (10)
days
from the filling of the last pleading, issue an order setting the case
for hearing for the purpose. The order shall, in clear and concise
terms,
specify the factual matters the court desires to be clarified and the
witnesses,
whose affidavits have been submitted, who will give the necessary
clarification.cralaw:red
The hearing shall
be set on a date not later than ten (10) days from the date of the
order,
and shall be completed not later than fifteen (15) days from the date
of
the first hearing. The affidavit of a witness who fails to appear for
clarificatory
questions of the court shall be ordered stricken off the record.cralaw:red
Sec. 9. Decision.
- The Court shall render a decision with fifteen (15) days from receipt
of the last pleading, or from the date of the last hearing as the case
may be. The decision shall be based on the pleadings, affidavits,
documentary
and other evidence attached thereto and the answers of the witnesses to
the clarificatory questions of the court given during the hearings.
Rule
7INSPECTION
OF CORPORATE BOOKS AND RECORDS
Section 1. Cases
covered. - The provisions of this Rule shall apply to disputes
exclusively
involving the rights of stockholders or members to inspect the books
and
records and/or to be furnished with the financial statements of a
corporation,
under Sections 74 and 75 of Batas
Pambansa Blg. 68, otherwise known as the Corporation Code of the
Philippines.
Sec. 2. Complaint.
- In addition to the requirements in section 4, Rule 2 of these Rules,
the complaint must state the following:chanroblesvirtuallawlibrary
(1) The case
is
for the enforcement of plaintiff's right of inspection of corporate
orders
or records and/or to be furnished with financial statements under
Sections
74 and 75 of the Corporation
Code of the Philippines;
(2) A
demand for
inspection and copying of books and records and/or to be furnished with
financial statements made by the plaintiff upon defendant;
(3) The
refusal of
defendant to grant the demands of the plaintiff and the reasons given
for
such refusals, if any; and cralaw:red
(4) The
reasons why
the refusal of defendant to grant the demands of the plaintiff is
unjustified
and illegal, stating the law and jurisprudence in support thereof.cralaw:red
Sec. 3. Duty of the
court upon the filing of the complaint. - Within two (2) days from
the filing of the complaint, the court, upon a consideration of the
allegations
thereof, may dismiss the complaint outright if it is not sufficient in
form and substance, or, if it is sufficient, order the issuance of
summons
which shall be served, together with a copy of the complaint, on the
defendant
within two (2) days from its issuance.
Sec. 4. Answer.
- The defendant shall file his answer to the complaint, serving a copy
thereof on the plaintiff, within ten (10) days from the service of
summons
and the complaint. In addition to the requirements in Section 6, Rule 2
of these Rules, the answer must state the following:chanroblesvirtuallawlibrary
(1) The
grounds
for the refusal of defendant to grant the demands of the plaintiff,
stating
the law and jurisprudence in support thereof;
(2) The
conditions
or limitations on the exercise of the right to inspect which should be
imposed by the court; and cralaw:red
(3) The
cost of inspection,
including manpower and photocopying expenses, if the right to inspect
is
granted.cralaw:red
Sec. 5. Affidavits,
documentary and other evidence. - The parties shall attach to the
complaint
and answer the affidavits of witnesses, documentary and other evidence
in support thereof, if any.
Sec. 6. Effect
of failure to answer. - If the defendants fails to file an answer
within
the period above provided, the court, within ten (10) days from the
lapse
of the said period, motu proprio or upon motion, shall render judgment
as warranted by the allegations of the complaint, as well as the
affidavits,
documentary and other evidence on record. In no case shall the court
award
a relief beyond or different from that prayed for.cralaw:red
Sec. 7. Decision.
- The court shall render a decision based on the pleadings, affidavits
and documentary and other evidence attached thereto within fifteen (15)
days from receipt of the last pleading. A decision ordering defendants
to allow the inspection of books and records and/or to furnish copies
thereof
shall also order the plaintiff to deposit the estimated cost of the
manpower
necessary to produce the books and records and the cost of copying, and
state, in clear and categorical terms, the limitations and conditions
to
the exercise of the right allowed or enforced.
Rule
8DERIVATIVE
SUITS
Section 1. Derivative
action. — A stockholder or member may bring an action in the name
of
a corporation or association, as the case may be, provided, that:chanroblesvirtuallawlibrary
(1) He was a
stockholder
or member at the time the acts or transactions subject of the action
occurred
and the time the action was filed;
(2) He
exerted all
reasonable efforts, and alleges the same with particularity in the
complaint,
to exhaust all remedies available under the articles of incorporation,
by-laws, laws or rules governing the corporation or partnership to
obtain
the relief he desires;
(3) No
appraisal
rights are available for the acts or acts complained of; and cralaw:red
(4) The
suits is
not a nuisance or harassment suit.cralaw:red
In case of nuisance
of harassment suit, the court shall forthwith dismiss the case.
Sec. 2. Discontinuance.
- A derivative action shall not be discontinued, compromised or settled
without approval of the court. During the pendency of the action, any
sale
of shares of the complaining stockholders shall be approved by the
court.
If the court determines that the interest of the stockholders or
members
will be substantially affected by the discontinuance, compromise or
settlement,
the court may direct that notice, by publication or otherwise, be given
to the stockholders or members whose interest it determines will be so
affected.
Rule
9MANAGEMENT
COMMITTEE
Section 1. Creation
of a management committee. - As an incident to any of the cases
filed
under these Rules or the Interim
Rules Corporate Rehabilitation, a party may apply for the
appointment
of a management committee for the corporation, partnership or
association,
when there is imminent danger of:chanroblesvirtuallawlibrary
(1)
Dissipation,
loss, wastage or destruction of assets or other properties; and
(2)
Paralyzation
of its business operations which may be prejudicial to the interest of
the minority stockholders, parties-litigants or the general public.cralaw:red
Sec. 2. Receiver.
-- In the event the court finds the application to be sufficient in
form
and substance, the court shall issue an order; (a) appointing a
receiver
of known probity, integrity and competence and without any conflict of
interest as hereunder defined to immediately take over the corporation,
partnership or association, specifying such powers as it may deem
appropriate
under the circumstances, including any of the powers specified in
Section
5 of this Rule; (b) fixing the bond of the receiver; (c) directing the
receiver to make a report as to the affairs of the entity under
receivership
and on other relevant matters within sixty (60) days from the time he
assumes
office; (d) prohibiting the incumbent management of the company,
partnership
or association from selling, encumbering, transferring or disposing in
any manner any of its properties except in the ordinary course of
business;
and (e) directing the payment in full of all administrative expenses
incurred
after the issuance of the order.
Sec. 3. Receiver
and management committee as officers of the court. - The receiver
and
the members of the management committee in the exercise of their powers
and performance of their duties are considered officers of the court
and
shall be under its control and supervision.cralaw:red
Sec. 4. Composition
of the management committee. - After due notice and hearing, the
court
may appoint a management committee composed of three (3) members chosen
by the court. In the appointment of the members of the management
committee,
the following qualifications shall be taken into consideration by the
court.cralaw:red
(1)
Expertise and
acumen to manage and operate a business similar in size and completely
as that the corporation, association or partnership sought to be put
under
management committee;
(2)
Knowledge in
management and finance;
(3) Good
moral character,
independence and integrity;
(4) A
lack of a conflict
of interest as defined in these Rules; and cralaw:red
(5)
Willingness and
ability to file a bond in such amount as may be determined by the court.cralaw:red
Without limiting the
generality of the following, a member of a management committee may be
deemed to have a conflict of interest if:chanroblesvirtuallawlibrary
(1) He is
engaged
in a line of business which completes with the corporation, association
or partnership sought to be placed under management;
(2) He is
a director,
officer or stockholder charged with mismanagement, dissipation or
wastage
of the properties of the entity under management; or
(3) He is
related
by consanguinity or affinity within the fourth civil degree to any
director,
officer or stockholder charged with mismanagement, dissipation or
wastage
of the properties of the entity under management.cralaw:red
Sec. 5. Powers and
functions of the management committee. - Upon assumption to office
of the management committee, the receiver shall immediately render a
report
and turn over the management and control of the entity under his
receivership
to the management committee.
The management committee
shall have the power to take custody of and control all assets and
properties
owned or possessed by the entity under management. It shall take the
place
of the management and board of directors of the entity under
management,
assume their rights and responsibilities, and preserve the entity's
assets
and properties in its possession.
Without
limiting
the generality of the foregoing, the management committee shall
exercise
the following powers and functions:chanroblesvirtuallawlibrary
(1) To
investigate
the acts, conduct, properties, liabilities, and financial condition of
the corporation, association or partnership under management;
(2) To
examine under
oath the directors and offices of the entity and any other witnesses
that
it may deem appropriate;
(3) To
report to
the court any fact ascertained by it pertaining to the causes of the
problems,
fraud, misconduct, mismanagement and irregularities committed by the
stockholders,
directors, management or any other person;
(4) To
employ such
person or persons such as lawyers, accountants, auditors, appraisers
and
staff as are necessary in performing its functions and duties as
management
committee;
(5) To
report to
the court any material adverse change in the business of the
corporation,
association or partnership under management;
(6) To
evaluate the
existing assets and liabilities, earnings and operations of the
corporation,
association or partnership under management;
(7) To
determine
and recommended to the court the best way to salvage and protect the
interest
of the creditors, stockholders and the general public, including the
rehabilitation
of the corporation, association or partnership under management;
(8) 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;
(9) To
prohibit and
report to the court any payments made outside of the ordinary course of
business;
(10) To
have unlimited
access to the employees, premises, books, records and financial
documents
during business hours;
(11) To
inspect,
copy, photocopy or photograph any document, paper, book, account or
letter,
whether in the possession of the corporation, association or
partnership
or other persons;
(12) To
gain entry
into any property for the purposes of inspecting, measuring, surveying,
or photographing it or any designated relevant object or operation
thereon;
(13) To
bring to
the attention of the court any material change affecting the entity's
ability
to meet its obligations;
(14) To
revoke resolutions
passed by the Executive Committee or Board of Directors/Trustees or any
governing body of the entity under management and pass resolution in
substitution
of the same to enable it to more effectively exercise its powers and
functions;
(15) To
modify, nullify
or revoke transactions coming to its knowledge which it deems
detrimental
or prejudicial to the interest of the entity under management;
(16) To
recommend
the termination of the proceedings and the dissolution of the entity if
determines that the continuance in business of such entry is no longer
feasible or profitable or no longer works to the best interest of the
stockholders,
parties-litigants, creditors or the general public;
(17) To
apply to
the court for any order or directive that it may deem necessary or
desirable
to aid it in the exercise of its powers and performance of its duties
and
functions; and cralaw:red
(18) To
exercise
such other powers as may, from time to time, be conferred upon it by
the
court.cralaw:red
Sec. 6. Action by
management committee. - A majority of its members shall be
necessary
for the management committee to act or make a decision. The chairman of
the management committee shall be chosen by the members from among
themselves.
The committee may delegate its management functions as may be necessary
to operate the business of the entity under management and preserve its
assets.
Sec. 7. Transactions
deemed to be in bad faith. - All transactions made by the previous
management and directors shall be deemed fraudulent and are rescissible
if made within thirty (30) days prior to the appointment of the
receiver
or management committee or during their incumbency as receiver or
management
committee.cralaw:red
Sec. 8. Fees and
expenses. - The receiver or the management committee and the
persons
hired by it shall be entitled to reasonable professionals fees
reimbursement
of expenses which shall be considered as administrative expenses.cralaw:red
Sec. 9. Immunity
from suit. - The receiver and members of the management committee
and
the persons employed by them shall not be subject to any action, claim
or demand in connection with any act done or omitted by them in good
faith
in the exercise of their functions and powers. All official acts and
transactions
of the receiver or management committee duly approved or ratified by
the
court shall render them immune from any suit in connection with such
act
or transaction.cralaw:red
Sec. 10. Reports.
- Within a period of sixty (60) days from the appointment of its
members,
the management committee shall make a report to the court on the state
of the corporation, partnership or association under management.
Thereafter,
the management committee shall report every three (3) months to the
court
or as often as the court may require on the general condition of the
entity
under management.cralaw:red
Sec. 11. Removal
and replacement of a member of the management committee. - A member
of the management is deemed removed upon appointment by the court of
his
replacement chosen in accordance with Section 4 of this Rule.cralaw:red
Sec. 12. Discharge
of the management committee. - The management committee shall be
discharged
and dissolved under the following circumstances:chanroblesvirtuallawlibrary
(1) Whenever
the
court, on motion of motu proprio, has determined that the
necessity
for the management committee no longer exist;
(2) By
agreement
of the parties; and cralaw:red
(3) Upon
termination
of the proceedings.cralaw:red
Upon its discharge and
dissolution, the management committee shall submit its final report and
render accounting of its management within such reasonable time as the
court may allow.
Rule
10PROVISIONAL
REMEDIES
Section 1. Provisional
remedies. - A party may apply for any of the provisional remedies
provided
in the Rules of
Court
as may be available for the purposes. However, no temporary restraining
order or status quo order shall be issued save in exceptional
cases
and only after hearing the parties and the posting of bond.
Rule
11SANCTIONS
Section 1. Sanctions
of the parties or counsel. - In any of the following cases, the
court
may, upon motion motu proprio, impose appropriate sanctions:chanroblesvirtuallawlibrary
(1) In case
the
court determines in the course of the proceeding that the action is a
nuisance
or harassment suit;
(2) In
case a pleading,
motion or other paper is filed in violation of Section 7, Rule 1 of
these
Rules;
(3) In
case a party
omits or violates the certification required under Section 4, Rule 2 of
these Rules;
(4) In
case or unwarranted
denials in the answer to the complaint;
(5) In
case of willful
concealment or non-disclosure of material facts or evidence;
The sanctions may include
an order to pay the other party of parties the amount of the reasonable
expenses incurred because of the act complained of, including
reasonable
attorney's fees.
Sec. 2. Disciplinary
sanctions on the judge. - The presiding judge may, upon a verified
complaint filed with the Office of the Court Administrator, be subject
to disciplinary action under any of the following cases;
Rule
12FINAL
PROVISIONS
Section. 1. Severability.
- If any provision or section of these Rules is held invalid, the
remaining
provisions or sections shall not be affected thereby.
Sec. 2. Effectivity.
- These Rules shall take effect on 1 April 2001 following its
publication
in two (2) newspapers of general circulation in the Philippines.
ANNEX
"A"
Republic
of
the Philippines______
Judicial
RegionRegional
Trial
CourtBranch
_____
NAME(s) OF
PLAINTIFF/S,
Plaintiff/s,
-versus-
NAME(s) OF
DEFENDANT/S,
Defendants.
x----------------------------------------x
PRE-TRIAL
ORDER
I. Summary of
the
Case
II.
Preliminary Matters
A.
Amendments allowed
in the pleadings
B.
Rulings on all
objections to or comments on admissibility of any documentary or other
evidence.cralaw:red
C. Other
matters
taken up in conference not covered by the subsequent items and actions
taken thereon.cralaw:red
III. Statement
of the
Facts
IV. Issues
to be
Resolved
V. Applicable
Laws
VI.
Evidence for
the Parties
All evidence to be
adduced and presented by both parties shall be limited to those
identified
below. All documentary evidence have already been pre-marked and copies
thereof, after comparison with the original, have been given the other
party or such party has been given an opportunity to examine the same
cases
when generating copies proves impractical. The testimonies of the
witnesses
have all been reduced to affidavit form in accordance with these Rules
and copies thereof given to the other party.
No other
evidence
shall be allowed other than those indicated below except in accordance
with Section 8, Rule 2 of the Interim Rules of Procedure for
Intra-Corporate
Controversies.
A. Evidence
of the
Plaintiff
1.
Documentary Evidence
a)
Document No.
1 (Exh.__ )
(1)
Name/Type
(2)
Pre-Marking Number
(3)
Summary
(4)
Purpose
b)
Document No.
2. (Exh. __ )
2.
Testimonial Evidence
b) Name of
Second
Witness
3. Other
Evidence
B. Evidence of
the Defendant
1.
Documentary Evidence
a)
Document No.
1 (Exh. __ )
(1)
Name/Type
(2)
Pre-Marking Number
(3)
Summary
(4)
Purpose
b)
Document No.
2. (Exh. __ )
b) Name of
Second
Witness
VII. Hearing
Dates
These hearing dates,
which should be scheduled not later than thirty (30) days from the
completion
at the pre-trial, shall be strictly followed and all postponements by
either
party shall be deducted from such party's allotted time to present
evidence.
A.
Schedule of Plaintiff's
Presentation of Evidence
B.
Schedule of Defendant's
Presentation of Evidence
|