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ELECTRONIC COMMERCE ACT OF 2000 document, but does not include a person

acting as an intermediary (agent) with respect


REPUBLIC ACT 8792
to that electronic data message or electronic
An Act Providing For The Recognition And Use document
of Electronic Commercial And Non-Commercial -kung para kanino ang message
Transactions, Penalties For Unlawful Use Thereof, And
Other Purposes b.) 'Computer" refers to any device or apparatus
singly or interconnected which, by electronic,
- Dealing with contracts/ electronic contract electro— mechanical, optical and/or magnetic
PRINCIPLES impulse, or other means with the same
function, can receive, record, transmit, store,
FUNCTIONAL EQUIVALENT APPROACH process, correlate, analyze, project, retrieve
The approach is based on an analysis of the and/or produce information, data, text,
purposes and functions of the traditional paper- based graphics, figures, voice, video, symbols or
requirement with a view to determining how those other modes of expression or perform any
purposes or functions could be fulfilled through one or more of these functions.
electronic commerce techniques.
c.) "Electronic data message" refers to
An electronic contract is given the same legal information generated, sent, received or
recognition and effect as a contract written on a piece stored by, electronic, optical or similar means.
of paper because they perform the same basic
function d.) "Information and Communication System'
refers to a system for generating, sending,
- The electronic form of the contract is considered
receiving, storing or otherwise processing
equivalent as a paper based contract and they are
electronic data messages or electronic
treated the same.
documents and includes the computer system
TECHNOLOGICALLY NEUTRAL or other similar device by or in which data is
recorded or stored and any procedures
The law does not espouse or favor any
related to the recording or storage of
particular technology and seeks to uphold the legal
electronic data message or electronic
validity of all kinds of communications techniques. No
document.
communication technique should be excluded
because future technical development should be
e.) "Electronic signature" refers to any distinctive
openly accommodated.
mark characteristic and/or sound in electronic
- As long as it is technologically made, there is no form, representing the identity of a person
specific platforms application mention in e- and attached to or logically associated with
commerce act therefore it considers valid and the electronic data message or electronic
legal in all kinds of technology or communication document or any methodology or procedures
through various kinds of technology. employed or adopted by a person and
executed or adopted by such person with the
SECTION 4(4). Sphere of Application. — intention of authentication or approving an
This Act shall apply to any kind of electronic electronic data message or electronic
data message and electronic document used in the document.
context of commercial and non-commercial activities,
to include domestic and international dealings, f.) "Electronic document" refers to information
transactions, arrangements, agreements, contracts or their presentation of information, data,
and exchanges and storage of information. figures, symbols or other modes of written
expression, described or however
SECTION 5(5). Definition of Terms. represented, by which a right is established or
a.) "Addressee" refers to a person who is an obligation extinguished, or by which a fact
intended by, the originator to receive the may be proved and affirmed, which is
electronic data message or electronic received, recorded, transmitted stored,
processed, retrieved or produced  Information shall not be denied legal effect,
electronically. validity or enforceability solely on the grounds
that it is in the data message purporting to give
g.) "Electronic key" refers to a secret code which rise to such legal effect, or that it is merely
secures and defends sensitive information referred to in that electronic data message.
that crosses over public channels into a form
decipherable only with a matching electronic  Where the law requires a document to be in
key. writing, that requirement is met by an electronic
- Like password document if the said electronic document
maintains its integrity and reliability and can be
h.) "Intermediary' refers to a person who in authenticated so as to be usable for subsequent
behalf of another person and with respect to reference.
a particular electronic data message or  Where it is required that information be
electronic document sends, receives and/or presented, that the information is capable of
stores or provides other services in respect of being displayed to the person to whom it is
that electronic data message or electronic presented.
document.  For evidentiary purposes, an electronic document
shall be the functional equivalent of a written
i.) 'Originator" refers to a person by whom, on document under existing laws.
whose behalf, the electronic document
Legal Recognition of Electronic Writing of Document
purports to have been created, generated
and Data Messages
and/or sent. The term does not include a
person acting as an intermediary with respect  An electronic signature on the electronic
to that electronic document. document shall be equivalent to the signature of a
person on a written document if that signature is
j.) "Service provider" refers to a provider of – proved by showing that a prescribed procedure,
not alterable by the parties interested in the
I. Online services or network access, or the electronic document, existed.
operator of facilities therefor, including
entities offering the transmission, Communication of Electronic Data, Messages or
routing, or providing of connections for Electronic Document,
online communications, digital or  Except as otherwise agreed by the parties, an
otherwise, between or among points offer, or an acceptance of an offer and such other
specified by a user, of electronic elements required under existing laws for the
documents of the user's choosing; or formation of contracts may be expressed in
II. The necessary technical means by which demonstrated and proved by means of electronic
electronic documents of an originator data messages or electronic documents and no
may be stored and made accessible to a contract shall be denied validity or enforceability
designated or undesignated third party. on the sole ground that it is In the form of an
Such service providers shall have no authority to electronic data message or electronic document,
modify or alter the content of the electronic or that any or all of the elements required under
document received or to make any entry therein on existing laws for the formation of contracts is
behalf of the originator, addressee or any third party expressed, demonstrated and proved by means of
unless specifically authorized to do so, and who shall electronic data messages or electronic
retain the electronic document in accordance with the documents.
specific request or as necessary for the purpose of - If the offer and acceptance can be proved
performing the services it was engaged to perform. electronically, no problem. Or the existence of
consent, object or consideration can be
proved to electronic data messages, still no
prob, because that can be used as evidence to
Chapter II: Legal Recognition of Electronic
show that there was a perfected contract.
Writing or Document and Data Message
 Electronic transactions made through networking using one or more electronic data messages or
among banks, or linkages thereof with other electronic documents.
entities or networks, and vice versa, shall be 2.) Paragraph (1) applies whether the
deemed consummated the actual upon dispensing requirement therein is in the form of an obligation or
of cash or the debit of one account and the whether the law simply provides consequences for
corresponding credit to another, whether such failing either to carry out the action in writing or to
transaction is initiated by the depositor or by an use a paper document.
authorized collecting party: Provided, that the 3.) If a right is to be granted to, or an obligation is
obligation of one bank, entity, or person similarly to be acquired by, one person and no other person,
situated to another arising therefrom shall be and if the law requires that, in order to effect this, the
considered absolute and shall not be subjected to right or obligation must be conveyed to that person by
the process of preference of credits the transfer, or use of a paper document, that
requirement is met if the right or obligation is
Electronic Commerce in Carriage of Goods
conveyed by using one or more electronic data
 Applies to any action in connection with, or in messages or electronic documents: Provided, That a
pursuance of, a contract of carriage of goods. reliable method is used to render such electronic data
 Where the law requires that any action referred to messages or electronic document unique.
contract of carriage of goods be carried out in 4.) For the purposes of paragraph (3), the
writing or by using a paper document, that standard reliability required shall be assessed in the
requirement is met if the action is carried out by light of the purpose for which the right or obligation
using one or more data messages or electronic was conveyed and in the light of all the circumstances,
documents. including any relevant agreement.
5.) Where one or more electronic data messages
SECTION 25(24). Actions Related to Contracts of or electronic documents are used to effect any action
Carriage of Goods. in subparagraphs (f) and (g) of Section 25, no paper
a.) i.) furnishing the marks, number, quantity or document used to effect any such action is valid unless
weight of goods. the use of electronic data message or electronic
ii.) stating or declaring the nature or value of goods. document has been terminated and replaced by the
iii.) issuing a receipt for goods. use of paper documents. A paper document issued in
iv.) confirming that goods have been loaded. these circumstances shall contain a statement of such
b.) i.) notifying a person of terms and conditions of termination. The replacement of electronic data
the contract, messages or electronic documents by paper
ii.) giving instructions to a carrier. documents shall not affect the rights or obligations of
c.) i.) claiming delivery of goods. the parties involved.
ii.) authorizing release of goods. 6.) If a rule of law is compulsorily applicable to a
iii.) giving notice of loss of, or damage to contract of carriage of goods which is in, or is
goods. evidenced by, a paper document, that rule shall not be
d.) Giving any other notice or statement in inapplicable to such a contract of carriage of goods
connection with the performance of the contract. which is evidenced by one or more electronic data
e.) undertaking to deliver goods to a named person messages or electronic documents by reason of the
or a person authorized to claim delivery: fact that the contract is evidenced by such electronic
f.) granting, acquiring, renouncing, surrendering, data message or electronic documents instead of by a
transferring or negotiating rights in goods. paper document.
g.) acquiring or transferring rights and obligations Electronic Transactions in Government
under the contract
Within two (2) years from the date of the
SECTION 26(25). Transport Documents. effectivity of this Act, all departments, bureaus, offices
1.) Subject to paragraph (3), where the law and agencies of the government, as well as
requires that any action referred to in Section 25 be government-owned and -controlled corporations, that
carried out in writing or by using a paper document, pursuant to law require or accept the filling of
that requirement is met if the action is carried out by documents, require that documents be created, or
retained and / or submitted, issue permits, licenses or
certificates of registration or approval, or provide for
the method and manner of payment or settlement of Who’s in charged?
fees and other obligations to the government, shall -
PHILIPPINE COMPETITION COMMISSION
A.) accept the creation, filing or retention of
-The government agency mandated to implement the
documents in the form of electronic data messages
PCA and the national competition policy. Established
or electronic documents.
in February 2016, the PCC is the main authority on
B.) issue permits, licenses, or approval in the form of
competition-related matters in the country.
electronic data messages or electronic documents;
C.) require and/or accept payments, and issue receipts Functions:
acknowledging such payments, through systems  Conduct inquiry, investigate, and hear and decide
using electronic data messages or electronic on cases involving violations of the PCA, its
documents; or implementing rules, and other competition laws.
D.) transact the government business and/or perform  Monitor and analyze the practice of competition
governmental functions using electronic data in markets, and issue advisory opinion, rules, and
messages or electronic documents, and for the guidelines on competition matters for the
purpose, are authorized to adopt and promulgate, effective enforcement of the PCA; and
after appropriate public hearing and with u  Conduct, publish, and disseminate studies,
publication in newspapers of general circulation, reports, and other publications on competition
the appropriate rules, regulations, or guidelines, to, matters to inform and guide the industry and
among others. consumers.
PHILIPPINE COMPETITION ACT (PCA) ANTI-COMPETITIVE AGREEMENTS
REPUBLIC ACT 10667 (2015)  those that substantially prevent, restrict, or lessen
competition.
- this law enables businesses compete in the same  The agreement may be any type or form of contract,
market under fair terms.
arrangement, or understanding between or among
- encourage competition.
businesses to fix prices or manipulate bids.
DEFINITION OF TERMS  It does not matter if the said agreement is formal or
 Agreements - "any type of or form of contract, informal, explicit (i.e., written or announced) or tacit,
arrangement, understanding, collective or in written or oral i.e., verbal) form. It is illegal for
recommendation, or concerted action. whether business rivals to act together in ways that can limit
formal or informal, explicit or tacit (implied), competition or hinder other businesses from
written or oral." entering the market.
 Control — "ability to substantially influence or
EXAMPLES OF ANTI-COMPETITIVE AGREEMENTS
direct the actions or decisions of an entity,
 PRICE FIXING – businesses agree to directly or
whether by contract, agency or otherwise.
indirectly fixed purchase or selling price.
BUSINESS PRACTICES PROHIBITED -Magsabot sila hm ang selling price of their goods
instead of letting the supply and demand
The PCA prohibits entering into anti- competitive determine the prices of the goods/services.
agreements (e.g., price fixing, bid rigging), abusing a  BID RIGGING (Bid suppression- occurs when one (or
dominant market position, and entering into anti- more) bidder(s) sits out of the bidding so that another
competitive mergers and acquisitions (M&As). party is guaranteed to win a bidding process. , Cover
Bidding- where 1 of 2 bus. put an overpriced so that
COVERAGE
the other one may look like a good deal for the buyer
 Covers any person or entity engaged in trade, even though not, Bid Rotation- conspiring firms
industry, and commerce in the Philippines. It also continue to bid, but they agree to take turns being the
applies to international trade that may impact winner)- connected to price fixing. Businesses
trade, industry, and commerce in the Philippines. agreed fixed price on auction or manipulate bids,
 Does not apply to collective bargaining wherein they could force buyers to select the
agreements or arrangements between workers higher price in selecting bid instead of the best
and employers, and other such activities affecting price.
conditions of employment.  OUTPUT LIMITATION- business entities agreed to
limit production.
 MARKET SHARING- wherein businesses divide the MERGER- refers to the joining of two or more entities
market and claim dominance according to into an existing entity or to form a new entity.
territory, customer demographic, sales volume or
ACQUISITION- refers to the purchase of securities or
type, creating local monopoly is deprived
assets for the purpose of obtaining control of another
consumers of choice.
entity.

 Can benefit consumers because they may lead to


CARTELS businesses that operate more efficiently, enable the
transfer of technologies, broaden access to capital
 An organization formed by competitors in a specific
and increase productivity.
industry, which enables them to set prices or
 However, there are M&As that harm competition and
control levels of production.
can be disadvantageous to consumers.
 Agreements to form cartels or to collude are
 Prohibited if they substantially lessen competition in
considered anti- competitive agreements.
the Philippines.
ABUSE OF DOMINANT POSITION
Example: M&As that create companies with dominant
A business may become dominant in a certain market power could potentially lessen, restrict, or
industry by gaining a significant share in the market or prevent market competition.
becoming an industry leader by virtue of years in
EXEMPTIONS FROM PROHIBITED MERGERS AND
operation.
ACQUISITIONS
It is not illegal to be dominant provided businesses
do not abuse their dominance. a.) The concentration has brought about or is likely to
Considered prohibited: if that dominant business bring about gains in efficiencies that are greater
abuses its dominance. than the effects of any limitation on competition
-Considered prohibited because markets dominated that result or likely to result from the merger or
by a single or handful large companies are particularly acquisition agreement; or
vulnerable to anti-competitive practices. b.) A party to the merger or acquisition agreement is
A conduct of an entity, whether a company or an faced with actual or imminent financial failure,
individual, with dominant position that substantially and the agreement represents the least anti-
prevents, restricts, lessens or competition in the competitive arrangement among the known
market. alternative uses for the failing entity’s assets.

ABUSE OF DOMINANT POSITION GOVERNMENT PROCUREMENT LAW


REPUBLIC ACT 9184
 PREDATORY PRICING- a dominant firm deliberately
incurs losses in a short term by selling goods or DECLARATION OF POLICY
services below the cost of its production which -To promote the ideals of good governance its
can eventually force its competitors out of branches, departments, agencies, subdivisions, and
business. instrumentalities, including government- owned
 PRICE DISCRIMINATION- wherein a dominant firm and/or -controlled corporations and local
sets prices or conditions for equivalent government units.
transactions. (seller charges each customer the
maximum price they will pay.) GOVERNING PRINCIPLES ON GOVERNMENT
 EXPLOITATIVE BEHAVIOR TOWARDS CONSUMERS, PROCUREMENT
CUSTOMER OR COMPETITORS- if a dominant firm 1. Transparency in the procurement process and in
charges excessive or unfair prices or employs the implementation of procurement contracts.
other unfair trading conditions. 2. Competitiveness by extending equal opportunity
 LIMITING PRODUCTION, MARKETS OR TECHNICAL to enable private contracting parties who are
DEVELOPMENT- dominant firms restricts output or eligible and qualified to participate in public
refuses to supply, restrict access to use of bidding.
development of the new technology to the 3. Streamlined procurement process that will
detriment of the consumers. uniformly apply to all government procurement.
MERGERS AND ACQUISITIONS The procurement process shall simple and made
adaptable to advances in modern technology in PREPARATION OF BIDDING DOCUMENTS
order to ensure an effective and efficient method.
The Bidding Documents shall include the following:
4. System of accountability (in the account of gov.
(a) Approved Budget for the Contract:
officials) where both the public officials directly or
(b) Instructions to Bidders, including criteria for
indirectly involved in the procurement process as eligibility. bid evaluation and post-qualification. as well
well as in the Implementation of procurement as the date time and place of the pre- bid Conference
contracts and the private parties that deal with (where applicable). submission of bids and opening of
government are, when warranted by bids;
circumstances, investigated, and held liable for (c) Terms of Reference:
their actions relative thereto. (d) Eligibility Requirements:
5. Public monitoring of the procurement process and (e) Plans and Technical Specifications.
the implementation of awarded contracts with the (f) Form of Bid, price Form, and List of Goods or Bill of
end in view of guaranteeing that these contracts Quantities.
are awarded pursuant to the provisions of this Act (g) Delivery time or Completion Schedule:
(h) Form and Amount of Bid Security: (bond)
and its implementing rules and regulations, and
(i) Form and Amount Performance Security and
that all these contracts are performed strictly
Warranty; and,
according to specifications.(open sa public)
(j) form of contract and general and special conditions
SCOPE AND APPLICATION of contract
This act shall apply to the Procurement of  Specifications for the Procurement of Goods shall
Infrastructure Projects, Goods and Consulting be based on relevant characteristics and/or
Services, regardless of source of funds, whether local performance requirements.
of foreign, by all branches and instrumentalities of  Reference to brand names shall not be allowed.
government, its departments, offices and agencies, INVITATION TO BID
including government- owned and/or-controlled
corporations and local government units.  In line with the principle of transparency and
competitiveness, all Invitations to Bid contracts
DEFINITION OF TERMS under competitive bidding shall be advertised by
Approved Budget for the Contract (ABC) -refers to the the Procuring Entity in such manner and for such
budget for the contract duly approved by the Head of length of time as may be necessary under the
the Procuring Entity circumstances, in order to ensure the widest
possible dissemination thereof, such as, but not
BAC- refers to the Bids and Awards Committee limited to, posting in the Procuring Entity's
premises, in newspapers of general circulation,
Bid- refers to signed offer or proposal submitted by a
the G-EPS and the website of the procuring entity,
supplier, manufacturer, distributor, contractor or
if available
consultant in response to the Bidding Documents.
RECEIPT AND OPENING OF BIDS
Competitive Bidding- Refers to a method of
procurement which is open to participation by any  A bid shall have two (2) components, namely the
interested party, and which consist of the following technical and financial components which should
processes: advertisement, pre-bid conference, be in separate sealed envelopes, and which shall
eligibility screening of bids, evaluations of bids, post - be submitted simultaneously.
qualification, and award of contract.  The bids shall be received by the BAC on such
date, time and place specified in the invitation to
G–EPS - refers to the Government Electronic
bid. The deadline for the receipt of bids shall be
Procurement System
fixed by the BAC.
- Help the process - simplified the process of  Bids submitted after the deadline shall not be
procurement and involves technology. accepted.
 A bidder may modify his bid, provided that this is
Procurement – refers to the acquisition of goods,
done before the deadline for the receipt of bids.
Consulting Services, and the contracting for
- Pwede nila ichange ang kanilang bids, just
Infrastructure Projects by the Procuring Entity.
substitute with a new one na naka seal parin.
Procurement shall also include the lease of goods and
real estate.
- Must be made before the deadline of the Post-qualification- is the stage where the bidder with
receipt or acceptance of the bids. the Lowest Calculated Bid, in the case of Goods and
 A bidder may, through a letter, withdraw his bid or Infrastructure Projects, or the Highest Rated Bid, in
express his intention not to participate in the the case of Consulting Services, undergoes verification
bidding before the deadline for the receipt of and validation whether he has passed all the
bids. In such case, he shall no longer be allowed to requirements and conditions as specified in the
submit another Bid or the same contract either Bidding Documents.
directly or indirectly.
There shall be a failure of bidding if:
 The BAC shall publicly open all bids at the time,
a.) No bids are received.
date. and place specified in the bidding
b.) No bid qualifies as the Lowest Calculated
documents. The minutes of the bid opening shall
Responsive Bid; or,
be made available to the public upon written
c.) Whenever the bidder with the highest
request and payment of a specified fee.
rated/lowest calculated responsive bid refuses,
BID EVALUATION without justifiable cause to accept the award of
Prior to Bid evaluation, the BAC shall examine contract, as the case may be.
first the technical components of the bids using
"pass/fail” criteria to determine whether all required AWARD, IMPLEMENTATION AND TERMINATION OF
documents are present. Only bids that are determined THE CONTRACT
to contain all the bid requirements of the technical Within a period not exceeding fifteen (15)
component shall be considered for opening and calendar days from the determination and
evaluation of their financial component. declaration by the BAC of the Lowest Calculated
Responsive Bid or Highest Rated Responsive Bid, and
- Unahin yung technical requirements bago and
the recommendation of the award, the Head of the
financial components.
Procuring Entity or his duly authorized representative
The ABC shall be the upper limit or ceiling for the shall approve or disapprove the said recommendation.
Bid prices. Bid prices that exceed this ceiling shall be Within ten (10) calendar days from receipt of the
disqualified outright from further participating in the Notice of Award, the Winning bidder shall formally
bidding. There shall be no lower limit to the amount of enter into contract with the Procuring Entity. When
the award. further approval of higher authority is required, the
approving authority for the contracts shall be given a
For the procurement of Goods and Infrastructure maximum of twenty (20) calendar days to approve or
Projects, the BAC shall evaluate the financial disapprove it.
component of the bids. The bids that passed the The procurement process from the opening of bids
preliminary examination shall be ranked from lowest up to the award of contract shall not exceed three (3)
to highest in terms of their corresponding calculated months, or a shorter period to be determined by the
price shall be referred to as the "Lowest Calculated procuring entity concerned.
Bid”.

For the Procurement of Consulting Services, the DISCLOSURE OF RELATIONS


Bids of the short listed bidders shall be evaluated and In addition to the proposed contents of the
ranked using numerical ratings in accordance with the Invitation to Bid as mentioned under Section 21 of this
evaluation criteria stated in the Bidding Documents, Act, all bidding documents shall be accompanied by a
which shall include factors such as, but not limited to, sworn affidavit (notarized) of the bidder that he or
experience, performance, quality or personnel, price she or any officer of their corporation is not related to
and methodology. The Bids shall be ranked from the Head of the Procuring Entity by consanguinity or
highest to lowest in terms of their corresponding affinity up to the third civil degree. Failure to comply
calculated ratings. The Bid with the high calculated with the aforementioned provision shall be ground for
rating shall be the "Highest rated Bid” the automatic disqualification of the bid.

- Not to a value ALTERNATIVE METHODS OF PROCUREMENT)excpt for


POST-QUALIFICATION gen rule that for public ang procurement
a. Limited Source Bidding, otherwise known as
Selective Bidding - a method of Procurement that
involves direct invitation to bid by the Procuring the debtor arising from acts done in the discharge of
Entity from a set of pre-selected suppliers or their functions falling within the scope of their
consultants with known experience and proven authority: Provided, That, this inclusion does not
capability relative to the requirements of a prohibit the creditors or third parties from filing cases
particular contract: against the directors and officers acting in their
b. Direct Contracting. otherwise known as Single personal capacities.
Source Procurement - a method of Procurement
Liquidated- amount is fixed.
that does not require elaborate Bidding
Matured- due and demandable na
Documents because the supplier is simply asked
Disputed- congested by the debtor.
to submit a price quotation or a pro-forma invoice
- It includes obligations in favor of the government
together with the conditions of sale, which offer
(taxes).
may be accepted immediately or after some
INSOLVENT - the financial condition of a debtor that is
negotiations;
generally unable to pay its or his liabilities as they fall
c. Repeat Order. - a method of Procurement that
due in the ordinary course of business or has liabilities
involves a direct Procurement of Goods from the
that are greater than its or his assets.
previous winning bidder, whenever there is a need
to replenish Goods procured under a contract INSOLVENT DEBTOR'S ESTATE - estate of the insolvent
previously awarded through Competitive Bidding: debtor, which includes all the property and assets of
d. Shopping - a method of Procurement whereby the the debtor as of commencement date, plus the
Procuring Entity simply requests for the property and assets acquired by the rehabilitation
submission of price quotations for readily receiver or liquidator after that date, as well as all
available off-the-shelf Goods or ordinary/regular other property and assets in which the debtor has an
equipment to be procured directly from suppliers ownership interest.
of known qualification; or
e. Negotiated Procurement - a method of REHABILITATION - the restoration of the debtor to a
Procurement that may be resorted under the condition of successful operation and solvency, if it is
extraordinary circumstances provided for in shown that its continuance of operation is
Section 53 of this Act and other instances that economically feasible and its creditors can recover by
shall be specified in the IRR. whereby 'he way of the present value of payments projected in the
Procuring Entity directly negotiates a contract with plan, more if the debtor continues as a going concern
a technically legally and financially capable than if it is immediately liquidated.
supplier, contractor or consultant. REHABILITATION PLAN - a plan by which the financial
FINANCIAL REHABILITATION AND INSOLVENCY ACT well-being and viability of an insolvent debtor can be
OF 2010 (FRIA) RA 10142 – JULY 18,2010 restored using various means including, but not
limited to debt forgiveness, debt rescheduling,
DECCLARATION OF POLICY reorganization quasi- or reorganization, dacion en
pago, debt-equity conversion and sale of business as a
 To encourage debtors, both juridical and Natural
going concern, or setting-up of new business entity, or
persons, and their creditors to collectively and
other similar arrangements as may be approved by
realistically resolve and adjust competing claims
the court or creditors.
and property rights.
 To ensure timely, fair, transparent, effective and CRAM DOWN RULE - The Rehabilitation Plan
efficient rehabilitation or liquidation of debtors confirmed by the Court shall be binding upon the
debtor and all persons who may be affected by it,
DEFINITION OF TERMS:
including creditors, where or not such persons have
CLAIM - shall refer to all claims or demands of participated in the proceedings.
whatever nature or character against the debtor or its
- Once the rehabilitation plan confirmed by the court it
property, whether for money or otherwise, liquidated
affects the debtor and all persons that are affected by
or unliquidated, fixed or contingent, matured or
it including the creditor.
unmatured, disputed or undisputed, including, but not
limited to; (1) all claims of the government, whether LIQUIDATION PROCESS - proceedings where claims
national or local, including taxes, tariffs and customs are filed, and the assets of the insolvent debtor are
duties; and (2) claims against directors and officers of
disposed, and proceeds are divided among the
creditors.

LIQUIDATOR-a natural person or juridical entity


appointed as such by the court and entrusted with
such powers and duties set forth in R.A. 10142 (in COMMENCEMENT ORDER SHALL:
relation to liquidation)
a.) identify the debtor, its principal business or
VOLUNTARY PROCEEDINGS - proceedings initiated by activity/ies and its principal place of business.
the debtor. b.) summarize the ground's for initiating the
proceedings.
INVOLUNTARY PROCEEDINGS - proceedings initiated
c.) state the relief sought under this Act and any
by the creditor.
requirement or procedure particular to the
EXCLUDED DEBTORS relief sought.
(NOT COVERED BY FRIA; SPECIAL LAWS WILL BE d.) state the legal effects of the Commencement
APPLIED) Order, including those mentioned in Section
1. Banks 17 thereof.
2. Pre-need companies e.) declare that the debtor is under rehabilitation.
3. Insurance companies f.) direct the publication of the Commencement
4. National and local government agencies or units
Order in a newspaper of general circulation in
the Philippines once a week for at least two
PROCEEDINGS COVERED BY FRIA AND PERSONS WHO
WILL FILE AND/OR APPROVE (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 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.) 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.
i.) 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.
j.) 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.
k.) authorize the payment of administrative
expenses as they become due.
l.) 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 entrusted to the latter in the ordinary course
determining whether there is substantial of the latter's business.
likelihood for the debtor to be rehabilitated.  Actions of a licensed broker or dealer to sell
m.) make available copies of the petition and pledged securities of a debtor.
rehabilitation plan for examination and  Clearing and settlement of financial
copying by any interested party; transactions through the facilities of a clearing
n.) indicate the location or locations at which agency or similar entities duly authorized by
documents regarding the debtor and the the appropriate regulatory agency (ex: BSP)
proceedings under Act may be reviewed and  Any criminal action against individual owner,
copied. partner, director, or officer of a debtor
o.) state that any creditor or debtor who is not
the petitioner, may submit the name or
nominate any other qualified person to the WHO MAY SERVE AS A REHABILITATION RECEIVER
position of rehabilitation receiver at least five
(5) days before the initial hearing.  Any qualified natural or juridical person may
p.) include STAY OR SUSPENSION ORDER which serve as a rehabilitation receiver: Provided,
shall: that if the rehabilitation receiver is a juridical
1.) suspend all actions or proceedings, in entity, it must designate a natural person's
court or otherwise, for the enforcement who possess/es all the qualifications and none
of claims against the debtor. of the disqualification's as its representative, it
2.) suspend all actions to enforce any being understood that the juridical entity and
judgment, attachment or other the representative/s are solidarily liable for all
provisional remedies against the debtor. obligations and responsibilities of the
3.) prohibit the debtor from selling, rehabilitation receiver.
encumbering, transferring or disposing in QUALIFICATIONS OF A REHABILITATION RECEIVER:
any manner any of its properties except in
the ordinary course of business; and a. A citizen of the Philippines or a resident of the
4.) prohibit the debtor from making any Philippines in the (6) months immediately
payment of its liabilities outstanding as of preceding his nomination.
the commencement date except as may b. Of good moral character and with
be provided herein. acknowledged integrity, impartiality and
independence.
SUMMARY: STAY OR SUSPENSION ORDER c. Has the requisite knowledge of insolvency and
 Suspends all actions or proceedings in court. other relevant commercial laws, rules and
 Suspends all actions to enforce any judgment. procedures, as well as the relevant training
 Prohibits the debtor from selling, and/or experience that may be necessary to
encumbering, transferring or disposing in any enable him to properly discharge the duties
manner any of its properties. and obligations of a rehabilitation receiver;
 Prohibits the debtor from making any and
payment of its liabilities outstanding. d. Has no conflict of interest: Provided, that such
SHALL NOT APPLY IF: conflict of interest may be waived, expressly
or impliedly, by a party who may be
 Cases already pending appeal in the Supreme
prejudiced thereby
Court
 Cases pending or filed at a specialized court or POWERS, DUTIES AND RESPONSIBILITIES OF THE
quasi- judicial agency. REHABILITATION RECEIVER
 Enforcement of claims against sureties and
other persons solidarily liable with the debtor,  Verify the accuracy of the factual allegations in
and third party or accommodation mortgagors the Petition for Rehabilitation
as well as issuers of letters of credit  Verify and correct, if necessary, the inventory
 Any form of action of customers or clients of a of all the assets of the debtor, and their
securities market participant to recover or valuation
otherwise claim moneys and securities  Verify and correct, if necessary, the schedule
of debts and liabilities of the debtor
 Evaluate the validity, genuineness and true c.) Illegal acts or conduct in the performance of
amount of all the claims against the debtor. his duties and powers,
 Take possession, custody and control, and to d.) Lack Of qualification or presence Of any
preserve the value of all the property of the disqualification;
debtor. e.) Conflict of interest that arises after his
 Sue and recover, with the approval of the appointment: and
court, all amounts owed to, and all properties f.) Manifest lack of independence that is
pertaining to the debtor. detrimental to the general body of the
 Have access to all information necessary, stakeholders.
proper or relevant to the operations and
REHABILITATION RECEIVER
business of the debtor and for its
rehabilitation.  The rehabilitation receiver and his direct
 Sue and recover, with the approval of the employees or independent contractors shall
court, all property or money of the debtor be entitled to compensation for reasonable
paid, transferred and disbursed in fraud of the fees and expenses from the debtor according
debtor or its creditors, or which constitute to the terms approved by the court after
undue preference of creditors. notice and hearing.
 Monitor the operations and the business of  The rehabilitation receiver shall take an oath
the debtor to ensure that no payments or and file a bond, in such amount to be fixed by
transfers of property are made other than in the court, conditioned upon the faithful and
the ordinary course of business. proper discharge of his powers, duties and
 With the court's approval, to engage the responsibilities.
services of or to employ persons or entities to - The bond will answer the damages in case
assist him in the discharge of his functions. there is fault in the part or the receiver.
 Determine the manner by which the debtor - Isa lang sya either a natural person or
may be best rehabilitated, to review, revise, representative by a juridical entity
and/or recommend action on the
MANAGEMENT COMMITTEE
Rehabilitation Plan and submit the same or a
new one to the court for approval.  Takes the place of the management and the
 Implement the Rehabilitation Plan as governing body of the debtor and assume
approved by the court their rights and responsibilities.
 Assume and exercise the powers of  The specific powers and duties of the
management of the debtor, if directed by the management committee, whose members
court shall be considered as officers of the court,
 Submit a status report on the rehabilitation shall be prescribed by the procedural rules.
proceedings every quarter or as may be - Not just one person
required.
PROHIBITED ACTS (SUSPENSION OF PAYMENTS)
REMOVAL OF THE REHABILITATION RECEIVER
Individual Debtor is prohibited from:
The rehabilitation receiver may be removed at
 Selling, transferring, encumbering (ex.
any time by the court either motu proprio (upon the
mortgage) or disposing in any manner of his
court itself) or upon motion by any creditor's holding
property, except those used in the ordinary
more than fifty percent (50%) of the total obligations
operations.
of the debtor, on such grounds as the rules of
 Making any payment outside of the necessary
procedure may provide which shall include. but are
or legitimate expenses of his business or
not limited to, the following:
industry, pending proceedings relative to
a.) Incompetence, gross negligence, failure to suspension of payments
perform or failure to exercise the proper
CONVERSION OF REHABILITATION TO LIQUIDATION
degree of care in the performance of his
PROCEEDINGS
duties and powers.
1. the debtor is insolvent; and
b.) Lack of a particular or specialized competency
required by the specific case.
2. there is no substantial likelihood for the debtor to appeal. In such a case, the suit may proceed
be successfully rehabilitated as determined in to judgment. and any final and executor
accordance with the rules to be promulgated by judgment therein for a claim against the
the Supreme Court. debtor shall be filed and allowed in court; and
LIQUIDATION ORDER: 5. no foreclosure proceeding shall be allowed for
a.) declare the debtor insolvent. a period of one hundred eighty (180) days.
b.) order the liquidation of the debtor and, in the General rule if there is a mortgage
case of a juridical debtor, declare it as dissolved.
SUSPENSION OF LIQUIDATION
c.) order the sheriff to take possession and control of
PAYMENTS
all the property of the debtor, except those that
Debtor is not insolvent Debtor is insolvent
may be exempt from execution.
Payment of obligation is Obligations are
d.) order the publication of the petition or motion in stayed discharged
a newspaper of general circulation once a week Applies only to Can cover judicial
for two (2) consecutive weeks; individual debtor persons and individual
e.) direct payments of any claims and conveyance of debtors
any property due the debtor to the liquidator. May be filed by the May be initiated by the
f.) prohibit payments by the debtor and the transfer debtor debtor or creditors
of any property by the debtor: No minimum liabilities Required that the debt
g.) direct all creditors to file their claims with the prescribed of the individual debtor
liquidator within the period set by the rules of is not less than 500,000
procedure; Rules on concurrence Rules on concurrence
h.) authorize the payment of administrative and preference of and preference of
expenses as they become due. credits under the new credits under the new
i.) state that the debtor and creditors who are not civil code do not apply civil code apply
petitioner/s may submit the names of other
SUSPENSION OF REHABILITATION
nominees to the position of liquidator; and
PAYMENTS
j.) set the case for hearing for the election and
Applies only to Applies to business
appointment of the liquidator, which date shall individual debtor organizations
not be less than thirty (30) days nor more than Debtor has sufficient Debtor is insolvent
forty-five (45) days from the date of the last assets to cover its
publication. liabilities
Secured debtors are notSecured debtors are
EFFECTS OF "THE LIQUIDATION ORDER.'
affected affected by the stay
1. the juridical debtor shall be deemed order
dissolved, and its corporate or juridical Filed by the debtor May be initiated by the
existence terminated. debtor or by creditors
2. legal title to and control of all the assets of the No minimum Claim of, or aggregate of
debtor, except those that may be exempt requirement for the claims against the
amount of claims debtor is at least
from execution, shall be deemed vested in the
1,000,000 or at least
liquidator or, pending his election or
25% of the SCS or
appointment, with the court;
partners’ contributions
3. all contracts of the debtor shall be deemed whichever is higher
terminated and/or breached. unless the
liquidator within ninety (90) days from the
date of his assumption of office declares and
the contracting party agrees:
4. 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 such
contest except when the case is already on
2.) the liquidator may sell the property and satisfy the
secured creditor's entire claim from the proceeds
of the sale;
3.) the secured creditor may enforce the lien or
foreclose on the property pursuant to applicable
laws.

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
INVOLUNTARY INVOLUNTARY debtor, with the end of liquidating them and
LIQUIDATION OF LIQUIDATION OF discharging to the extent possible all the claims
INDIVIDUAL DEBTOR BUSINESS against the debtor. The powers, duties and
ORGANIZATIONS responsibilities of the liquidator shall include, but not
At least 3 creditors are There can be one or limited to:
required more creditors
Debts must be at least Debt or aggregate of A.) to sue and recover all the assets, debts and
500,000 debts must be at least claims, belonging or due to the debtor,
1,000,000 or equivalent B.) to take possession of all the property of the
to 25% of the SCS or debtor except property exempt by law from
partners’ contribution, execution.
whichever is higher C.) to sell, with the approval of the court, any
Individual can continue Business organization property of the debtor which has come into his
his business will be dissolved possession or control;
There must be an act of Act of insolvency not
D.) to redeem all mortgages and pledges, and so
insolvency required
satisfy any judgement which may be an
encumbrance on any property sold by him.
RIGHTS OF SECURED CREDITORS E.) to settle all accounts between the debtor and his
creditors, subject to the approval of the court.
The Liquidation Order shall not affect the right
F.) to recover any property or its value, fraudulently
of a secured creditor to enforce his lien in accordance
conveyed by the debtor.
with the applicable contract or law. A secured creditor
G.) to recommend to the court the creation of a
may:
creditors' committee which will assist him in the
a.) waive his right under the security or lien,
discharge of the functions and which shall have
prove his claim in the liquidation proceedings
powers as the court deems just, reasonable and
and share in the distribution of the assets of
necessary; and
the debtor; or
H.) upon approval of the court. to engage such
b.) maintain his rights under the security or lien
professional as may be necessary and reasonable
If the secured creditor maintains his rights under the
to assist him in the discharge of his duties.
security or lien:
In addition to the rights and duties of a
1.) the value of the property may be fixed in a manner
rehabilitation receiver, the liquidator, shall have the
agreed upon by the creditor and the liquidator.
right and duty to take all reasonable steps to manage
When the value of the property is less than the
and dispose of the debtor's assets with a view towards
claim it secures, the liquidator may convey the
maximizing the proceedings therefrom, to pay
property to the secured creditor and the latter will
creditors and stockholders and to terminate the
be admitted in the liquidation proceedings as a
debtor’s legal existence. Other duties of the liquidator
creditor for the balance. If its value exceeds the
in accordance with this section may be established by
claim secured, the liquidator may convey the
the procedural rules.
property to the creditor and waive the debtor's
right of redemption upon receiving the excess from REGISTRY OF CLAIMS
the creditor.
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
debtor’s owners 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.

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.

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