Financial Rehabilitation and Insolvency Act (FRIA) of 2010

Section 1

This Rule applies where: assistance is sought in a Philippine court by a foreign court or a foreign representative in connection with a foreign proceeding; assistance is sought in a foreign State in connection with a proceeding governed by the FRIA and these Rules; or a foreign proceeding and a proceeding governed by the FRIA and these Rules are concurrently taking place; or Creditors in a foreign State have an interest in requesting the commencement of, or participating in, a proceeding under Rules 2, 3, and 4 of these Rules. 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 for recognition and resulting related proceedings.

Section 2

A rehabilitation receiver is authorized to act in a foreign State on behalf of a proceeding under these Rules, as permitted by the applicable foreign law.

Section 3

Access of Foreign Creditors to a Proceeding under These Rules. — Subject to Sections 1 and 4 of this Rule, to paragraph 2 of this Section, and to the rule of reciprocity, foreign creditors have the same rights regarding proceedings commenced under Rules 2, 3 and 4 of these Rules as creditors in the Philippines. Paragraph 1 above does not affect the ranking of claims in a proceeding under the relevant laws.

Section 4

The court shall refuse to take any action in any proceeding contemplated under Section 1 of this Rule if: the action would be manifestly contrary to the public policy of the Philippines; and the court finds that the country where the foreign rehabilitation proceeding is taking place does not extend recognition to a Philippine rehabilitation proceeding, or that the country of which the petitioner-foreign creditor is a national does not grant the same rights to a Philippine creditor in a manner substantially in accordance with these Rules.

Section 5

Petition for Recognition of Foreign Proceeding. — A foreign representative may apply with the Regional Trial Court which has jurisdiction over the place where the debtor resides or holds principal office for recognition of the foreign proceeding in which the foreign representative has been appointed. Whenever a petition for recognition of a foreign proceeding is filed after a proceeding under these Rules has been commenced, the petition for recognition of the foreign proceeding shall be filed with the same court. A petition for recognition shall be accompanied by:a certified copy of the order commencing the foreign proceeding and appointing the foreign representative; ora certificate from the foreign court affirming the existence of the foreign proceeding and of the appointment of the foreign representative; or in the absence of evidence referred to in subparagraphs (1) and (2), any other evidence acceptable to the court of the existence of the foreign proceeding and of the appointment and identity of the foreign representative; and any additional evidence that the court may deem necessary, and allege how the petition is affected by the factors in granting relief specified under Section 13 of this Rule. A petition for recognition shall be accompanied by: a certified copy of the order commencing the foreign proceeding and appointing the foreign representative; or a certificate from the foreign court affirming the existence of the foreign proceeding and of the appointment of the foreign representative; or in the absence of evidence referred to in subparagraphs (1) and (2), any other evidence acceptable to the court of the existence of the foreign proceeding and of the appointment and identity of the foreign representative; and any additional evidence that the court may deem necessary, and allege how the petition is affected by the factors in granting relief specified under Section 13 of this Rule. An application for recognition shall also be accompanied by a statement identifying all foreign proceedings in respect of the debtor that are known to the foreign representative. The court may require a translation of documents supplied in support of the application for recognition into an official language of this State.

Section 6

Within three (3) days from the filing of the petition for recognition of a foreign proceeding, the court shall acknowledge the fact of filing and issue a Notice of filing of the petition, which shall be published once in a newspaper of general circulation within five (5) days from its issuance. The Notice shall likewise state that any opposition to the petition should be filed within five (5) days from publication.

Section 7

If the order or certificate referred to in paragraph (C), subparagraphs (1) or (2), of Section 5 of this Rule is attached to the petition for recognition, the court may disputably presume that: a foreign proceeding is a proceeding as defined under Section 5 (g), Rule 1 of these Rules; the foreign representative is a person or body as defined under Section 5 (j), Rule 1 of these Rules and has established its identity; the documents submitted in support of the petition for recognition are authentic, whether or not they have been legalized; and the debtor's registered office, or habitual residence in the case of an individual, is the centre of the debtor's main interests.

Section 8

Subject to Section 4 of this Rule, a foreign proceeding shall be recognized if: the proceeding is a foreign proceeding as defined under these Rules; the person or body applying for recognition is a foreign representative as defined under these Rules; and the petition meets the requirements of Section 6 of this Rule. The foreign proceeding may be recognized either as a foreign main proceeding or a foreign non-main proceeding, as defined and understood under Section 5 (h) and (i), Rule 1 of these Rules. The court may modify or terminate the Order granting recognition, if it is shown that the grounds for granting it were fully or partially lacking or have ceased to exist.

Section 9

A petition for recognition of a foreign proceeding shall be decided within thirty (30) days from its filing.

Section 10

From the time of filing the petition for recognition of the foreign proceeding, the foreign representative shall inform the court promptly of: any substantial change in the status of the foreign proceeding or the status of the foreign representative's appointment; and any other foreign proceeding regarding the same debtor that becomes known to the foreign representative, and how the changes or developments affect or have affected the petition.

Section 11

Provisional Relief That May be Granted Upon Application for Recognition of a Foreign Proceeding. — From the time of the complete publication of the notice of the fact of filing under Section 6 of this Rule 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 and there is prima facie showing that the petition is meritorious, grant relief of a provisional nature, including: staying execution against the debtor's assets; 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; any relief mentioned in Section 13 (A) (3), (4) and (6) of this Rule. Unless extended, the provisional relief granted under this section terminates when the application for recognition is decided upon. The court may refuse to grant the provisional relief under this section if such relief would interfere with the administration of a foreign main proceeding.

Section 12

Effects of Recognition of Foreign Proceeding. — Upon recognition of a foreign main proceeding: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 actions or proceedings to preserve ad cautelam a claim against the debtor. For this purpose, the plaintiff may file the appropriate court action or proceeding against the debtor by paying the amount of One Hundred Thousand Pesos (P100,00.00) or one-tenth (1/10) of the prescribed filing fee, whichever is lower. The payment of the balance of the filing fee shall be a jurisdictional requirement for the continuation of the proceedings in the ad cautelam claim;execution against the debtor's assets is stayed in accordance with Section 9, Rule 2 of these Rules; and the right to transfer, encumber or otherwise dispose of any assets of the debtor is suspended in accordance with Section 9, Rule 2 of these Rules. Upon recognition of a foreign main proceeding: 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 actions or proceedings to preserve ad cautelam a claim against the debtor. For this purpose, the plaintiff may file the appropriate court action or proceeding against the debtor by paying the amount of One Hundred Thousand Pesos (P100,00.00) or one-tenth (1/10) of the prescribed filing fee, whichever is lower. The payment of the balance of the filing fee shall be a jurisdictional requirement for the continuation of the proceedings in the ad cautelam claim; execution against the debtor's assets is stayed in accordance with Section 9, Rule 2 of these Rules; and the right to transfer, encumber or otherwise dispose of any assets of the debtor is suspended in accordance with Section 9, Rule 2 of these Rules. Upon recognition of a foreign proceeding, the foreign representative is entitled to participate, through counsel, in any proceeding involving the debtor filed under these Rules. The recognition of the foreign proceeding does not affect the right of Philippine creditors to commence or continue a rehabilitation or liquidation proceeding under these Rules or the right to file or continue claims in these proceedings. The order granting recognition of the foreign proceeding shall be published in two separate newspapers of general circulation not later than five (5) days from its issuance.

Section 13

Relief That May be Granted After Recognition of Foreign Proceeding. — 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: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 12 (A) (1) of this Rule;staying execution against the debtor's assets to the extent it has not been stayed under Section 12 (A) (2) of this Rule;suspending the right to transfer, encumber or otherwise dispose of any assets of the debtor to the extent that this right has not been suspended under Section 12 (A) (3) of this Rule;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;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;granting any additional relief that may be available to the rehabilitation receiver under the law or these Rules. 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: 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 12 (A) (1) of this Rule; staying execution against the debtor's assets to the extent it has not been stayed under Section 12 (A) (2) of this Rule; suspending the right to transfer, encumber or otherwise dispose of any assets of the debtor to the extent that this right has not been suspended under Section 12 (A) (3) of this Rule; 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; 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; granting any additional relief that may be available to the rehabilitation receiver under the law or these Rules. 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 14

In determining whether to grant relief under this Rule, the court shall consider: the protection of creditors in the Philippines and the inconvenience in pursuing their claim in a foreign proceeding; the just treatment of all creditors through resort to a unified insolvency or rehabilitation proceedings; whether other jurisdictions have given recognition to the foreign proceeding; 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 Rule; and the extent that the foreign proceeding has recognized and shown deference to proceedings under the Act and previous legislation.

Section 15

Protection of Creditors and Other Interested Persons. — The court may impose conditions in the grant of relief under Sections 11 and 13 of this Rule, as it may deem appropriate. The court may, motu proprio or upon motion of the foreign representative, or of a person affected by the relief granted under Sections 11 and 13 of this Rule, modify or terminate such relief.

Section 16

Upon recognition of a foreign proceeding, the foreign representative, through counsel, acquires the standing to initiate actions to avoid or otherwise render ineffective acts detrimental to creditors that are available under these Rules.

Section 17

Upon recognition of a foreign proceeding, the foreign representative may intervene, through counsel, in any action or proceeding in the Philippines in which the debtor is a party.

Section 18

In matters covered by this Rule, the court shall cooperate to the maximum extent possible in all court-to-court communications for purposes of information or assistance.

Section 19

Cooperation and Direct Communication Between the Rehabilitation Receiver or Liquidator and Foreign Courts or Foreign Representatives. — In matters referred to in Section 1 of this Rule, a rehabilitation receiver or liquidator shall, in the exercise of its functions and subject to the supervision of the court, cooperate to the maximum extent possible with foreign courts or foreign representatives. The rehabilitation receiver or liquidator is entitled, in the exercise of its functions and subject to the supervision of the court, to communicate directly with foreign courts or foreign representatives.

Section 20

Cooperation may be implemented by any appropriate means, including but not limited to the following: appointment of a person or body to act at the discretion of the court; communication of information by any means considered appropriate by the court; coordination of the administration and supervision of the debtor's assets and affairs; approval or implementation by courts of agreements concerning the coordination of proceedings; coordination of concurrent proceedings regarding the same debtor; suspension of proceedings against the debtor; limiting the relief to 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 implementation of rehabilitation or reorganization 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 21

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 19 and 20 of this Rule, to the other assets of the debtor that, under local laws, must be administered in that proceeding.

Section 22

Where a foreign proceeding and a local proceeding are taking place concurrently regarding the same debtor, the court shall seek cooperation and coordination under Sections 19 and 20 of this Rule. Any relief granted to the foreign proceeding must be made consistent with the relief granted in the local proceeding.