RFBT-FILES-Atty.-Celiz.pdf

R.A. NO. 7394 CONSUMER ACT OF THE PHILIPPINES (03 April 1992) Consumer - refers to any individual or household that uses goods and services. Article 2. Declaration of Basic Policy - State to protect the interests of the consumer, promote...

R.A. NO. 7394 CONSUMER ACT OF THE PHILIPPINES (03 April 1992) Consumer - refers to any individual or household that uses goods and services. Article 2. Declaration of Basic Policy - State to protect the interests of the consumer, promote his general welfare and to establish standards of conduct for business and industry xxx. Article 6. Implementing Agencies a) the Department of Health - food, drugs, cosmetics, devices and substances; b) the Department of Agriculture - products related to agriculture; and c) the Department of Trade and Industry - other consumer products not specified above. Eight (8) Basic Rights of Consumers: 1. First right – to basic needs; ensures availability of basic goods and services to consumers at affordable prices and of good quality; adequate food, clothing, shelter, health care, education, public utilities, water and sanitation to lead a decent life; 2. Second right – to safety; to be protected against marketing of goods which are injurious to health and life; consumer products undertake extensive safety and performance testing before selling their products in the market; products are required to be properly labelled (contents, use, precautions or warning signs); 3. Third right – to information; protection against dishonest or misleading advertising or labelling; consumer can properly choose a product to buy or services to availed of if he/she has adequate information about it;  information like: product specification, place of origin, safety warnings, price, warranty, ingredients, etc.; 4. Fourth right – to choose; price over quality; or quality over price; right to choose products and services at competitive prices, with assurance of satisfactory quality; wide array of goods and services offered in the market; 5. Fifth right – to representation; right to be heard; to express interest in the making and execution of government policies on the supply of goods and services to consumers; consumers are represented by their legislators and chamber of commerce; 6. Sixth right – to redress; to be compensated (damages) for injury suffered because of misrepresentation, inferior goods or unsatisfactory services; includes replacement of defective goods or refund of money (as payment); right to seek legal remedies in the appropriate courts of law; 7. Seventh right – to consumer education; acquiring the knowledge and skills necessary to be an informed consumer; Information campaign on consumer-related issues; seminars, conferences, trainings, and public hearings for consumer‚Äôs welfare; 8. Eight right – to a healthy environment;  government to exert efforts on the manufacture and use of products in relation to the alarming increase of environmental degradation (forest, dying wildlife); eco-friendly products; government to prosecute violation of environmental laws. CONSUMER PRODUCT QUALITY AND SAFETY Article 7. Promulgation and Adoption of Consumer Product Standards. - The concerned department shall establish consumer product quality and safety standards (like performance, precautions in storage, transporting and packaging). Article 10. Injurious, Dangerous and Unsafe Products. - consumer product is found to be injurious, unsafe or dangerous - by the concerned department (own initiative) or by petition of a consumer; - notice and hearing; - issue an order for its recall, prohibition or seizure from public sale or distribution; Article 11. Amendment and Revocation of Declaration of the Injurious, Unsafe or Dangerous Character of a Consumer Product How commenced? - By Petition by any interested person, or by the DTI (motu propio); Effect if DTI finds the product injurious, unsafe or dangerous: 1. DTI to notify the manufacturer, distributor or seller thereof of such finding; 2. Manufacturer, distributor or seller to: a. Give notice to the public of the defect or failure to comply with the product safety standards; and b. Give notice to each distributor or retailer of such product. Other concomitant remedies to the injured person/consumer: 1. To bring such product into conformity with the requirements of the applicable consumer product standards or to repair the defect in order to conform with the same; 2. To replace the product with a like or equivalent product which complies with the applicable consumer product standards which does not contain the defect; Other concomitant remedies to the injured person/consumer: 3. To refund the purchase price of the product less a reasonable allowance for use; and 4. To pay the consumer reasonable damages as may be determined by the department. Article 15. Imported Products. a. Any consumer product offered for importation into the customs of the Philippine territory shall be refused admission if such product: 1. fails to comply with an applicable consumer product quality and safety standard or rule; 2. is or has been determined to be injurious, unsafe and dangerous; 3. is substandard; or 4. has material defect. Food, Drugs, Cosmetics and Devices Article 21- Implementing Agency - Department of Health. Bureau of Food and Drugs - which is under the Department of Health Article 24 - Regulation of Unprocessed Food. Local Government Units - The provincial, municipal and city governments shall regulate the preparation and sale of meat, fresh fruits, poultry, milk, fish, vegetables and other foodstuff for public consumption, pursuant to the Local Government Code. “Food” – any substance, whether processed, semi-processed or raw, intended for human consumption xxx; “Drugs” – mean: articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals; articles (other than food) intended to affect the structure or any function of the body of man or animals; and include herbal and/or traditional drug. “Cosmetics” articles intended to be rubbed, poured, sprinkled or sprayed on, or otherwise applied to the human body or any part thereof for cleansing, beautifying, promoting attractiveness, or altering the appearance; "Device" means an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part or accessory which is: intended for use in the diagnosis of disease or other condition or in the cure, mitigation, treatment or prevention of disease, in man or other animals; or intended to affect the structure or any function of the body of man or other animals xxx; Article 23. Adulterated Food. 1. If it bears or contains any poisonous or deleterious substance; 2. If it consists of any filthy, putrid or decomposed substance, or unfit for food;  3. If it was prepared, packed or held under unsanitary conditions xxx; 4. If animal product, involves a diseased animal or of an animal which has died other than by slaughter; 5. If its container is composed of any poisonous or deleterious substance xxx; 6. If it has passed its expiry date. Article 29. Adulterated Drugs and Devices. 1. If it contains any filthy, putrid, or decomposed substance xxx; 2. If it has been manufactured, prepared or held under unsanitary conditions xxx; 3. If its container is composed of any poisonous or deleterious substance xxx; 4. If it bears or contains any color other than a permissible one xxx; 5. It falls below the standards set forth; 6. If the methods used do not conform to or are not operated or administered in conformity with current good manufacturing practice xxx Article 35. Adulterated cosmetics. 1. If it bears or contains any poisonous or deleterious substance xxx; 2. If it consists in whole or in part of any filthy, putrid, or decomposed substance; 3. If it has been prepared, packed or held under unsanitary conditions xxx; 4. If its container is composed of any poisonous or deleterious substance xxx; 5. If it is not a hair dye, it bears or contains color additive other than which is permissible; 6. If any of its substances has been (1) mixed or packed therewith so as to reduce its quality or strength or (2) substituted wholly or in parts therefore.  Deceptive, Unfair and Unconscionable Sales Acts or Practices Article 50 - Prohibition Against Deceptive Sales Acts or Practices Whether it occurs before, during or after the transaction; An act or practice shall be deemed DECEPTIVE whenever the producer, manufacturer, supplier or seller, through concealment, false representation or fraudulent manipulation, induces a consumer to enter into a sales or lease transaction of any consumer product or service. a. a consumer product or service has the sponsorship, approval, performance, characteristics, ingredients, accessories, uses, or benefits it does not have; b. a consumer product or service is of a particular standard, quality, grade, style, or model when in fact it is not; c. a consumer product is new, original or unused, when in fact, it is in a deteriorated, altered, reconditioned, reclaimed or second-hand state; d. a consumer product or service is available to the consumer for a reason that is different from the fact; e. a consumer product or service has been supplied in accordance with the previous representation when in fact it is not; f. a consumer product or service can be supplied in a quantity greater than the supplier intends; g. a service or repair of a consumer product is needed when in fact it is not; h. a specific price advantage of a consumer product exists when in fact it does not; i. the sales act or practice involves or does not involve a warranty, a disclaimer of warranties, particular warranty terms or other rights, remedies or obligations if the indication is false; and j. the seller or supplier has a sponsorship, approval, or affiliation he does not have. Article 52. Unfair or Unconscionable Sales Act or Practice An act or practice shall be deemed UNFAIR OR UNCONSCIONABLE  whenever the producer, manufacturer, distributor, supplier or seller, by taking advantage of the consumer's physical or mental infirmity, ignorance, illiteracy, lack of time or the general conditions of the environment or surroundings; induces the consumer to enter into a sales or lease transaction grossly inimical to the interests of the consumer or grossly one-sided in favor of the producer, manufacturer, distributor, supplier or seller. Article 53 - Chain Distribution Plans or Pyramid Sales Schemes. Chain distribution plans or pyramid sales schemes shall not be employed in the sale of consumer products. “Chain distribution plans” or “pyramid sales schemes” when a person, upon condition that he makes an investment, is granted by the manufacturer or his representative a right to recruit for profit one or more additional persons who will also be granted such right to recruit upon condition of making similar investments; the profits of the person employing such a plan are derived primarily from the recruitment of other persons into the plan rather than from the sale of consumer products, services and credit; “Home solicitation sale” consumer sales or leases which are personally solicited by any person or organization by telephone, person-to-person contact or by written or printed communication other than general advertising or consummated at the buyer's residence or a place of business, at the seller's transient quarters, or away from a seller's regular place of business. Article 54 - Home Solicitation Sales. To be valid: permit from the DTI Article 59 - Referral Sales. Referral selling plans shall not be used in the sale of consumer products unless the seller executes in favor of the buyer a written undertaking that will grant a  specified compensation or other benefit to said buyer in return for each and every transaction consummated by said seller with the persons referred by said buyer or for subsequent sales that said buyers has helped the seller enter into. REGULATION OF PRACTICES RELATIVE TO WEIGHTS AND MEASURES GENERAL PROVISION Article 61- Implementing Agency. The provincial, city, or municipal treasurers - implementing rules and regulations; The DTI - on the use of the Metric System; Article 62 - Sealing and Testing of Instruments of Weights and Measure. All instruments for determining weights and measures in all consumer and consumer-related transactions shall be tested, calibrated and sealed every six (6) months by the official sealer who shall be the provincial or city or municipal treasurer or his authorized representative xxx; Consumer Product and Service Warranties (DTI) Article 67- Applicable Law on Warranties. The provisions of the Civil Code on conditions and warranties shall govern all contracts of sale with conditions and warranties. The provisions of the Civil Code on conditions and warranties shall govern all contracts of sale with conditions and warranties Article 68- Additional Provisions on Warranties. ‚ a. Terms of express warranty. 1. Set forth the terms of warranty in clear and readily understandable language; 2. Identify the party to whom the warranty is extended;  3. State the products or parts covered; 4. State what the warrantor will do in the event of a defect, malfunction or failure to conform to the written warranty and at whose expense; 5. State what the consumer must do to avail of the rights which accrue to the warranty; and 6. Stipulate the period within which, after notice of defect, malfunction or failure to conform to the warranty, the warrantor will perform any obligation under the warranty. b. Express warranty All written warranties or guarantees issued by a manufacturer, producer, or importer shall be operative from the moment of sale. Sales report should be made within 30 days to the manufacturer, producer or importer. Failure to do so, relieves the manufacturer, producer or importer of the liability under the warranty, and the distributor is personally liable c. Designation of warranties. 1. "Full warranty" if the written warranty meets the minimum requirements set forth in paragraph (d) – remedy of relief offered to consumer within a reasonable time and without charge of the defect; and give consumer an option to either ask for a refund or replacement without charge of product or part; or 2. “Limited warranty" if the written warranty does not meet such minimum requirements. d. Minimum standards for warranties. 1. To Remedy such consumer product within a reasonable time and without charge in case of a defect, malfunction or failure to conform to such written warranty; 2. To Permit the consumer to elect whether to ask for a refund or replacement without charge of such product or part, as the case may be,  where after reasonable number of attempts to remedy the defect or malfunction, the product continues to have the defect or to malfunction; e. Duration of warranty. - Seller and consumer may stipulate the period within which the express warranty shall be enforceable. Any other implied warranty shall endure not less than sixty (60) days nor more than one (1) year following the sale of new consumer products. f. Breach of warranties. 1. In case of breach of express warranty (by the seller), the consumer may elect: i. to have the goods repaired; ii. or its purchase price refunded by the warrantor xxx. 2. In case of breach of implied warranty (by the seller), the consumer may: i. retain in the goods and recover damages, ii. or reject the goods, cancel and contract and recover from the seller so much of the purchase price as has been paid, including damages. Options Given to Consumer in case of Breach of an EXPRESS warranty: First - REPAIR. Consumer can have the goods repaired. Warranty work must be within 30 days. Such period may be extended by conditions beyond the control of the warrantor of his representative. Second - REPLACE: The product or its part may be replaced; Third - REFUND: Consumer may ask for a refund from the warrantor. The amount directly attributable to the use of consumer prior to the discovery of the non-conformity shall be deducted. “Label, labeling” the display of written, printed or graphic matter on any consumer product its immediate container, tag, literature or other suitable material affixed thereto for the purpose of giving information as to identify, components, ingredients, attributes, directions for use, specifications and such other information as may be required by law or regulations. Article 77- Minimum Labeling Requirements for Consumer Products. All consumer products domestically sold whether manufactured locally or imported shall indicate the following in their respective labels of packaging: a. its correct and registered trade name or brand name; b. its duly registered trademark; c. its duly registered business name; d. the address of the manufacturer, importer, repacker of the consumer product in the Philippines; e. its general make or active ingredients; f. the net quality of contents, in terms of weight, measure or numerical count xxx; g. country of manufacture, if imported; and h. if a consumer product is manufactured, refilled or repacked under license from a principal, the label shall so state the fact. Article 78- Philippine Product Standard Mark. The label may contain the Philippine Product Standard Mark if it is certified to have passed the consumer product standard prescribed by the concerned department. Article 81- Price Tag Requirement. It shall be unlawful to offer any consumer product for retail sale to the public without an appropriate price tag, label or marking publicly displayed; Purpose: to indicate the price of each article and said products shall not be sold at a price higher than that stated xxx; If consumer products for sale are too small or the nature of which makes it impractical to place a price tag thereon price list placed at the nearest point where the products are displayed indicating the retail price of the same may suffice. Article 82- Manner of Placing Price Tags. Price tags, labels or markings must be written clearly, indicating the price of the consumer product per unit in pesos and centavos. No Shortchanging Act of 2016 (RA 10909) “An Act Prohibiting Business Establishments from Giving Insufficient or No Change to Consumers and Providing Penalties Therefor” Change – the excess in the payment given by a consumer for goods and services purchased or received from a business establishment; Gross sale – the total invoice value of sales, before deducting for customer discount, allowances and returns; Price-tag – any device written, printed, affixed or attached to a good, or displayed in a consumer retail or service establishment for the purpose of indicating the retail price per unit or services; Insufficient change – a change that is less than what is due the consumers; Shortchange – the act of giving insufficient or no change to a consumer who purchased a product or service. REGULATED ACTS Section 4. Regulated Acts. It shall be the duty of the business establishment to give the exact change to the consumer without waiting for the consumer to ask for the same. a. In General. It shall be unlawful for any business establishment to shortchange a consumer,even if such change is only of a small amount. But business establishments are not restricted to give an amount greater than the sufficient change. b. Other Prohibitions. It shall also be unlawful for any business establishment which sells goods or provides services: i. to give the change in any form other than the present currency; or ii. to ask the consumers for permission to be exempted from the provisions of this Act for any reason, including the nonavailability of small bills or coins. Article 94- Labeling Requirements of Cigarettes. All cigarettes for sale or distribution within the country shall be contained in a package which shall bear the following statement or its equivalent in Filipino: "Warning" Cigarette Smoking is Dangerous to Your Health". Such statement shall be located in conspicuous place on every cigarette package and shall appear in conspicuous and legible type in contrast by typography, layout or color with other printed matter on the package. Any advertisement of cigarette shall contain the name warning as indicated in the label.  Advertising and Sales Promotion False, Deceptive and Misleading Advertisement Article 110- False, Deceptive or Misleading Advertisement. It shall be unlawful for any person to disseminate or to cause the dissemination of any false, deceptive or misleading advertisement by Philippine mail or in commerce by print, radio, television, outdoor advertisement or other medium for the purpose of inducing or which is likely to induce directly or indirectly the purchase of consumer products or services. An advertisement shall be false, deceptive or misleading if it is not in conformity with the provisions of this Act or if it is misleading in a material respect. Things to consider in determining whether any advertisement is false, deceptive ormisleading: - the representations made or any combination thereof; - the extent to which the advertisement fails to reveal material facts. Promotion of Sales of Consumer Products and Services Article 116- Permit to Conduct Promotion. No person shall conduct any sales campaigns, including beauty contest, national in character, sponsored and promoted by manufacturing enterprises without first securing a permit from the concerned department at least thirty (30) calendar days prior to the commencement thereof. Unless an objection or denial is received within fifteen (15) days from filing of the application, the same shall be deemed approved and the promotion campaign or activity may be conducted; Provided, that any sales promotion campaign using medical prescriptions or any part thereof or attachment thereto for raffles or a promise of reward shall not be allowed, nor a permit be issued thereof. Consumer Complaints Article 159- Consumer Complaints. The concerned department may commence an investigation upon petition or upon letter-complaint from any consumer; Upon a finding by the department of prima facie violation of any provisions of this Act or any rule or regulation promulgated under its authority, it may motu proprio or upon verified complaint commerce formal administrative action against any person who appears responsible therefor. Xxx Article 163- Investigation Procedure. a. The consumer arbitration officer shall conduct hearings on any complaint received by him or referred by the Council. b. Parties to the case shall be entitled to notice of the hearing, and shall be informed of the date, time and place of the same. A copy of the complaint shall be attached to the notice. c. The department shall afford all interested parties the opportunity to submit a statement of facts, arguments, offers of settlements or proposals of adjustments. d. The Consumer arbitration officer shall first and foremost ensure that the contending parties come to a settlement of the case. e. In the event that a settlement has not been effected, the Mediation officer may now proceed to formally investigate, hear and decide the case. f. The Consumer arbitration officer may summon witnesses, administer oaths and affirmations, issue subpoena and subpoena duces tecum, rule upon offers of proof and receive relevant evidence, take or cause deposition to be taken whenever the ends of justice would be served thereby, regulate the course of the hearing, rule on any procedural request or similar matter and decide the complaint. In hearing the complaint, the mediation officer shall use every and all reasonable means to ascertain the facts in each complaint speedily and objectively without regard to strict rules of evidence prevailing in suits before courts. The complaints shall be decided within fifteen (15) days from the time the investigation was terminated. Article 164- Sanctions. After investigation, any of the following administrative penalties may be imposed even if not prayed for in the complaint: a. the issuance of a cease and desist order; b. the acceptance of a voluntary assurance of compliance or discontinuance on: 1. an assurance to comply with the provisions of this Act; 2. an assurance to refrain from engaging in unlawful acts and practices or unfair or unethical trade practices; 3. an assurance to comply with the terms and conditions specified in the consumer transaction subject of the complaint; 4. an assurance to recall, replace, repair, or refund the money value of defective products distributed in commerce; 5. an assurance to reimburse the complaint xxx including expenses in making or pursuing the complaint, if any, and to file a bond to guarantee compliance therewith. c. the restitution or rescission of the contract without damages; d. the condemnation and seizure of the consumer product found to be hazardous to health and safety unless the respondent files a bond to answer for any damage or injury that may arise from the continued use of the product; e. the imposition of administrative fines in such amount as deemed reasonable by the Secretary, which shall in no case be less that Five hundred pesos (P500.00) nor more than Three hundred thousand pesos (P300,000.00) depending on the gravity of the offense, and an additional fine of not more than One thousand pesos (P1,000.00) or each day of continuing violation. Article 165- Appeal from Orders. – Any order, not interlocutory of the Consumer Arbitration Officer, becomes final and executory unless appealed to the Department Secretary concerned within fifteen (15) days from receipt of such order. An appeal may be entertained only on any of the following grounds: a. grave abuse of discretion; b. the order is in excess of the jurisdiction or authority of the consumer arbitration officer; c. the order is not supported by the evidence or there is serious error in the findings of facts. Article 166- Decision on Appeal. – The Secretary shall decide the appeal within thirty (30) days from receipt thereof. The decision becomes final after fifteen (15) days from receipt thereof unless a petition for certiorari is filed with the proper court. Article 169- Prescription. – All actions or claims accruing under the provisions of this Act and the rules and regulations issued pursuant thereto shall prescribe within two (2) years from the time the consumer transaction was consummated or the deceptive or unfair and unconscionable act xxx. R. A. No. 10642 –"Philippine Lemon Law" An Act Strengthening Consumer Protection in the Purchase of Brand-New Motor Vehicles Implementing agency: DTI; Section 4. Coverage. – This Act shall cover: 1. Brand new motor vehicles; 2. Purchased in the Philippines; 3. Nonconformity with the vehicle’s manufacturer or distributor’s standards or specifications: a. within twelve (12) months from the date of original delivery to the consumer; or b. Up to twenty thousand (20,000) kilometers of operation after such delivery, whichever comes first. The following causes of nonconformity shall be excluded: a. Non-compliance by the consumer of the obligations under the warranty; b. Modifications not authorized by the manufacturer, distributor, authorized dealer or retailer; c. Abuse or neglect of the brand-new motor vehicle; and d. Damage to the vehicle due to accident or force majeure. Section 5. Repair Attempts. — At any time within the Lemon Law rights period, and after at least four (4) separate repair attempts by the same manufacturer, distributor, authorized dealer or retailer for the same complaint, and the nonconformity issue remains unresolved, theconsumer may invoke his or her rights under this Act. The repair may include replacement of parts components, or assemblies. Section 6. Notice of Availment of Lemon Law Rights. Before availing of any remedy under this Act and subject to compliance with the provisions of Section 5 hereof, the consumer shall, in writing, notify the manufacturer, distributor, authorized dealer or retailer of the unresolved complaint, and the consumer’s intention to invoke his or her rights under this Act within the Lemon Law rights period. The warranty booklet issued by the manufacturer, distributor, authorized dealer or retailer shall clearly state the manner and form of such notice to constitute a valid and legal notice to the manufacturer, distributor, authorized dealer or retailer. It shall also clearly state the responsibility of the consumer under this section. Section 7. Availment of Lemon Law Rights. Subsequent to filing the notice of availment referred to in the preceding section, the consumer shall bring the vehicle to the manufacturer, distributor, authorized dealer or retailer from where the vehicle was purchased for a final attempt to address the complaint of the consumer to his or her satisfaction. It shall be the duty of the manufacturer, distributor, authorized dealer or retailer, upon receipt of the motor vehicle and the notice of nonconformity required under Section 6 hereof, to attend to the complaints of the consumer including, as  may be necessary, making the repairs and undertaking such actions to make the vehicle conform to the standards or specifications of the manufacturer, distributor, authorized dealer or retailer for such vehicle. In case the nonconformity issue remains unresolved despite themanufacturer, distributor, authorized dealer or retailer‚Äôs efforts to repair the vehicle, the consumer may file a complaint before the DTI; However, that if the vehicle is not returned for repair, based on the same complaint, within thirty (30) calendar days from the date of notice of release of the motor vehicle to the consumer following this repair attempt within the Lemon Law rights period, the repair is deemed successful; To compensate for the non-usage of the vehicle while under repair and during the period of availment of the Lemon Law rights, the consumer shall be provided a reasonable daily transportation allowance; an amount which covers the transportation of the consumer from his or her residence to his or her regular workplace or destination and vice versa, equivalent to air-conditioned taxi fare, as evidenced by official receipt, or in such amount to be agreed upon by the parties, or a service vehicle at the option of the manufacturer, distributor, authorized dealer or retailer. Any disagreement on this matter shall be resolved by the DTI. Section 8. Remedies for Dispute Resolution. The DTI shall exercise exclusive and original jurisdiction over disputes; a. Mediation - All disputes that have been submitted for mediation shall be settled not later than ten (10) working days from the date of filing of the complaint with the DTI. b. Arbitration - In the event there is a failure to settle the complaint during the mediation proceedings, both parties may voluntarily decide to undertake arbitration proceedings. c. Adjudication - In no case shall adjudication proceedings exceed twenty (20) working days;  An appeal may be taken from a final judgment or order of the Adjudication Officer which completely disposes of the case within fifteen (15) days from receipt thereof. The appeal shall be taken by filing a Memorandum of Appeal with the Secretary of the DTI, with Notice of Appeal to the Adjudication Officer, and with a copy duly furnished the adverse party or parties on any of the following grounds: i. Grave abuse of discretion; ii. The decision/order is in excess of jurisdiction or authority of the Adjudication Officer; and iii. The decision/order is not supported by the evidence or there is serious error in the findings of facts. The Secretary of the DTI shall decide on the appeal within thirty (30) days from receipt thereof. A party seeking further appeal from the decision of the Secretary of the DTI may file a case for certiorari to the Court of Appeals under Section 4, Rule 65 of the Revised Rules of Court. Section 10. Disclosure on Resale. Should the returned motor vehicle be made available for resale, the manufacturer, distributor, authorized dealer or retailer shall, prior to sale or transfer, disclose in writing to the next purchaser of the same vehicle the following information: a. The motor vehicle was returned to the manufacturer, distributor, authorized dealer or retailer; b. The nature of the nonconformity which caused the return; and c. The condition of the motor vehicle at the time of the transfer to the manufacturer, distributor, authorized dealer or retailer.  REPUBLIC ACT NO. 10142 AN ACT PROVIDING FOR THE REHABILITATION OR LIQUIDATION OF FINANCIALLY DISTRESSED ENTERPRISES AND INDIVIDUALS SECTION 1. TITLE. — "FINANCIAL REHABILITATION AND INSOLVENCY ACT (FRIA) OF 2010" SECTION 3. NATURE OF PROCEEDINGS The proceedings (rehabilitation and liquidation) shall be in rem; An action or proceeding in rem — one instituted against a thing/property, and not against a particular person; its object is the disposition of the property, without reference to the title of individual claimants; Jurisdiction over all persons is acquired upon publication of the notice of the commencement of the proceedings in any newspaper of general circulation in the Philippines xxx; DEFINITION OF SOME TERMS Debtor — has become insolvent: sole proprietorship duly registered with the DTI; partnership duly registered with the SEC; corporation duly organized and existing under Philippine laws, or Individual. Group of Debtors: 1.) corporations that are financially related to one another as parent corporations, subsidiaries or affiliates; 2.) partnerships that are owned more than fifty percent (50%) by the same person; and 3.) single proprietorships that are owned by the same person. Individual Debtor a natural person who is a resident and citizen of the Philippines that has become insolvent as defined herein. Term debtor does not include banks, insurance companies, pre- need companies, and national and local government agencies or units. (Sec. 5 – Exclusions) Encumbered Property real or personal property of the debtor upon which a lien attaches. Rehabilitation the restoration of the debtor to a condition of successful operation and solvency, if it is shown that its continuance of operation is economically feasible and its creditors can recover xxx. Rehabilitation Receiver the person or persons, natural or juridical, appointed as such by the court and which shall be entrusted with such powers and duties as set forth herein. Rehabilitation Plan a plan by which the financial well-being and viability of an insolvent debtor can be restored by using various means xxx or similar arrangements as may be approved by the court or creditors. Subsidiary a corporation more than fifty percent (50%) of its voting stock is owned or controlled, directly or indirectly, through one or more intermediaries by another corporation, which becomes its parent corporation. LIABILITY OF INDIVIDUAL DEBTOR, OWNER OF A SOLE PROPRIETORSHIP, PARTNERS IN A PARTNERSHIP, OR DIRECTORS AND OFFICERS OF CORPORATIONS (Sec. 10) Liability – Double the value of the property sold, embezzled or disposed of or double the amount of the transaction involved, whichever is higher Having notice of the commencement of the proceedings, or having reason to believe that proceedings are about to be commenced, or in contemplation of the proceedings, willfully commit the following acts:  a. Dispose or cause to be disposed of any property of the debtor other than in the ordinary course of business or authorize or approve any transaction in fraud of creditors or in a manner grossly disadvantageous to the debtor and/or creditors; or b. Conceal or authorize or approve the concealment, from creditors, or embezzles or misappropriates, any property of the debtor. Embezzlement fraudulent taking of personal property by someone to whom it was entrusted; Most often associated with the misappropriation of money; COURT-SUPERVISED REHABILITATION 1. VOLUNTARY; 2. INVOLUNTARY Voluntary Proceedings – Initiated by Debtor (Sec. 12); Approved by the debtor – owner (a sole proprietorship); majority of the partners (partnership); or majority vote of the board of directors or trustees and authorized by ⅔ votes of the stockholders representing outstanding capital stock, or in case of non-stock, by the vote of at least 2/3 of the members (corporation). HOW? By filing a petition for rehabilitation with the court. Involuntary Proceedings — Initiated by creditor or group of creditors (Sec. 13) With a claim of, or aggregate claims of at least Php1 million, or at least 25% of the subscribed capital stock or partners' contributions, whichever is higher. HOW? By filing involuntary proceedings against the debtor; REQUIREMENTS: a. there is no genuine issue of fact or law on the claim/s of the petitioner/s, and that the due and demandable payments thereon have not been made for at least sixty (60) days or that the debtor has failed generally to meet its liabilities as they fall due; or  b. a creditor, other than the petitioner/s, has initiated foreclosure proceedings against the debtor that will prevent the debtor from paying its debts as they become due or will render it insolvent. ACTION ON THE PETITION (Sec. 15) If the petition for rehabilitation is sufficient in form and substance, the Court shall, within five (5) working days from the filing of the petition, issue a Commencement Order. If, within the same period, the court finds the petition deficient in form or substance, the court may, in its discretion: - give the petitioner/s a reasonable period of time within which to amend or supplement the petition; or - to submit such documents as may be necessary or proper to put the petition in proper order. Here, the 5 working days for the issuance of the Commencement Order shall be reckoned from the date of the filing of the amended or supplemental petition or the submission of such documents. IMPORTANT MATTERS INCLUDED IN THE COMMENCEMENT ORDER (Sec. 16) The rehabilitation proceedings shall commence upon the issuance of the Commencement Order; Commencement Order, among others, shall: - Declare that the debtor is under rehabilitation; - Direct the publication of the Commencement Order in a newspaper of general circulation in the Philippines; - Appoint a rehabilitation receiver who may or not be from among the nominees of the petitioner/s; - Direct BIR to file its comment on or opposition to the petition; - Set the case for initial hearing (not be more than 40 days from the date of filing of the petition); - Include Stay or Suspension Order. EFFECTS OF THE STAY OR SUSPENSION ORDER: 1) suspend all actions or proceedings, in court or otherwise, for the enforcement of claims against the debtor; 2) suspend all actions to enforce any judgment, attachment or other provisional remedies against the debtor; 3) prohibit the debtor from selling, encumbering, transferring or disposing in any manner any of its properties except in the ordinary course of business; 4) prohibit the debtor from making any payment of its liabilities outstanding as of the commencement date. EXCEPTIONS TO THE STAY OR SUSPENSION ORDER (Sec. 18) The Stay or Suspension Order shall not apply to: a) cases already pending appeal in the Supreme Court as of commencement date; b) cases pending or filed at a specialized court or quasi-judicial agency; c) enforcement of claims against sureties and other persons solidarily liable with the debtor, and third party or accommodation mortgagors xxx. EFFECTS OF THE COMMENCEMENT ORDER (Sec. 17) a) vest the rehabilitation with all the powers and functions provided for this Act; - the right to review and obtain records xxx, including bank accounts of the debtor subject to the approval by the court and posting of the performance bond filed by the rehabilitation receiver; b) prohibit or render as null and void the results of any extrajudicial activity or process to seize property, sell encumbered property, or otherwise attempt to collect or enforce a claim against the debtor after commencement date. SECTION 21. EFFECTIVITY AND DURATION OF COMMENCEMENT ORDER (Sec. 21) Commencement Order shall be effective for the duration of the rehabilitation proceedings Provided — there is a substantial likelihood that the debtor will be successfully rehabilitated. SECTION 22. ACTION AT THE INITIAL HEARING (Sec. 22) The court shall: a) determine the creditors who have made timely and proper filing of their notice of claims; b) hear and determine any objection to the qualifications of the appointment of the rehabilitation receiver and, if necessary appoint a new one xxx; c) direct the creditors to comment on the petition and the Rehabilitation Plan, and to submit the same to the court and to the rehabilitation receiver within a period of not more than 20 days; and d) direct the rehabilitation receiver to evaluate the financial condition of the debtor and to prepare and submit his/her report to the court within 40 days from initial hearing. SECTION 23. EFFECT OF FAILURE TO FILE NOTICE OF CLAIM (Sec 23) A creditor whose claim is not listed in the schedule of debts and liabilities and who fails to file a notice of claim xxx but subsequently files a belated claim shall not be entitled to participate in the rehabilitation proceedings but shall be entitled to receive distributions arising therefrom. GIVING DUE COURSE TO OR DISMISSAL OF PETITION, OR CONVERSION OF PROCEEDINGS (Sec. 25) Within 10 days from receipt of the report of the rehabilitation receiver, the Court may: a) give due course to the petition upon a finding that: 1) debtor is insolvent; and 2) there is a substantial likelihood for the debtor to be successfully rehabilitated Here, rehabilitation receiver to shall review, revise and/or recommend action on the Rehabilitation Plan and submit the same or a new one to the court within 90 days. (Sec. 26) b) dismiss the petition upon a finding that:  1) debtor is not insolvent; 2) petition is a sham filing intended only to delay the enforcement of the rights of creditor/s or of any group of creditors; 3) the petition, the Rehabilitation Plan and the attachments contain any materially false or misleading statements; or 4) debtor has committed acts of misrepresentation or in fraud of its creditor/s or a group of creditors. Here, court may order petitioner to pay damages to any creditor or to the debtor who may have been injured by the filing of the petition. (Sec. 27) c) convert the proceedings into one for the liquidation of the debtor upon a finding that: 1) debtor is insolvent; and 2) there is no substantial likelihood for the debtor to be successfully rehabilitated xxx REHABILITATION RECEIVER QUALIFICATIONS (Sec. 29) a) A citizen of the Philippines, or a resident of the Philippines in the 6 months immediately preceding his nomination; b) Of good moral character and with acknowledged integrity, impartiality and independence; c) Has the requisite knowledge of insolvency and other relevant commercial laws, rules and procedures xxx; d) Has no conflict of interest. REMOVAL (Sec. 32) May be removed at any time by the court either motu proprio or upon motion by any creditor/s holding more than 50% of the total obligations of the debtor; Grounds for Removal: a) Incompetence, gross negligence xx; b) Lack of a particular or specialized competency; c) Illegal acts or conduct in the performance of his duties and powers; d) Lack of qualification or presence of any disqualification; e) Conflict of interest that arises after his appointment; f) Manifest lack of independence. COMPENSATION AND TERMS OF SERVICE (Sec. 33) Entitled to compensation for reasonable fees and expenses from the debtor according to the terms approved by the court after notice and hearing. Prior to such hearing — Quantum meruit – a reasonable sum of money to be paid for services rendered or work done when the amount due is not stipulated in a legally enforceable contract. CONFLICT OF INTEREST (Sec. 40) Conflict of interest. An individual shall be deemed to have a conflict of interest if he is so situated as to be materially influenced in the exercise of his judgment for oragainst any party to the proceedings. Xxx IMMUNITY (Sec. 41) Rehabilitation receiver (and all persons employed by him) shall not be subject to any action claim or demand in connection with any act done or omitted to be done by them in good faith in connection with the exercise of their powers and functions. USE, PRESERVATION AND DISPOSAL OF ASSETS AND TREATMENT OF ASSETS AND CLAIMS AFTER COMMENCEMENT DATE Section 48. Use or Disposition of Assets. - Except as otherwise provided herein, no funds or property of the debtor shall be used or disposed of except in the ordinary course of business of the debtor, or unless necessary to finance the administrative expenses of the rehabilitation proceedings. Section 49. Sale of Assets. - The court, upon application of the rehabilitation receiver, may authorize the sale of unencumbered property of the debtor outside the ordinary course of business upon a showing that the property, by its nature or because of other circumstance, is perishable, costly to maintain, susceptible to devaluation or otherwise in jeopardy. Section 50. Sale or Disposal of Encumbered Property of the Debtor and Assets of Third Parties Held by Debtor. — The court may authorize the sale, transfer, conveyance or disposal of encumbered property of the debtor, or property of others held by the debtor where there is a security interest pertaining to third parties under a financial, credit or other similar transactions if, upon application of the rehabilitation receiver and with the consent of the affected owners of the property, or secured creditor/s in the case of encumbered property of the debtor and, after notice and hearing, the court determines that: a. such sale, transfer, conveyance or disposal is necessary for the continued operation of the debtor's business; and b. the debtor has made arrangements to provide a substitute lien or ownership right that provides an equal level of security for the counter-party's claim or right. Section 51. Assets of Debtor Held by Third Parties. - In the case of possessory pledges, mechanic's liens or similar claims, third parties who have in their possession or control property of the debtor shall not transfer, convey or otherwise dispose of the same to persons other than the debtor, unless upon prior approval of the rehabilitation receiver. Section 52. Rescission or Nullity of Sale, Payment, Transfer or Conveyance of Assets. - The court may rescind or declare as null and void any sale, payment, transfer or conveyance of the debtor's unencumbered property or any encumbering thereof by the debtor or its agents or representatives after the commencement date which are not in the ordinary course of the business of the debtor: Provided, however, that the unencumbered property may be sold, encumbered or otherwise disposed of upon order of the court after notice and hearing xxx. Section 53. Assets Subject to Rapid Obsolescence, Depreciation and Diminution of Value. —- Upon the application of a secured creditor holding a lien against or holder of an ownership interest in property held by the debtor that is subject to potentially rapid obsolescence, depreciation or diminution in value, the court shall, after notice and hearing, order the debtor or rehabilitation receiver to take reasonable steps necessary to prevent the depreciation. If depreciation cannot be avoided and such depreciation is jeopardizing the security or property interest of the secured creditor or owner, the court shall: a) allow the encumbered property to be foreclosed by the secured creditor xxx; b) xxx order the conveyance of a lien against or ownership interest in substitute property of the debtor to the secured creditor xxx; c) order the conveyance to the secured creditor or holder of an ownership interest of a lien on the residual funds from the sale of encumbered property xxx; d) allow the sale or disposition of the property xxx. Obsolescence - uselessness; oldness; outmodedness. TREATMENT OF SECURED CREDITORS Section 60. No Diminution of Secured Creditor Rights. The issuance of the Commencement Order and the Suspension or Stay Order shall not diminish or impair the security or lien of a secured creditor, or the value of his lien or security, except that his right to enforce said security or lien may be suspended during the term of the Stay Order. The court xxx may allow a secured creditor to enforce his security or lien, or foreclose upon property of the debtor securing his/its claim, if the said property is not necessary for the rehabilitation of the debtor. REHABILITATION PLAN (PLAN) 1. Rehabilitation receiver shall notify the creditors a Plan has been submitted to court – ready for examination; 2. Within 20 days from the notice, creditors shall convene to vote to approve the Plan (Sec. 64); 3. If Plan is approved, rehabilitation receiver shall submit the approved plan to court for confirmation (Sec. 65); 4. Court shall notify the creditors, who may file an objection thereto (within 20 days from receipt of notice) (Sec. 66); Grounds for objections: The creditors' support was induced by fraud; The documents or data relied upon in the Rehabilitation Plan are materially false or misleading; or The Rehabilitation Plan is in fact not supported by the voting creditors. 5. If there is an objection, court shall issue an order setting time and date for the hearing (Sec. 67); 6. If the court finds merit in the objection, it shall order the rehabilitation receiver or other party to cure the defect; If debtor acted in bad faith, or that it is not feasible to cure the defect, court shall convert the rehabilitation proceedings into liquidation of the debtor. Court shall issue an order confirming the Rehabilitation Plan (Sec. 68): 1) If no objections are filed; or 2) If objections are filed but the court finds them lacking in merit; or 3) The basis for the objection has been cured; or 4) Debtor has complied with an order to cure the objection. Court has maximum period of one (1) year to confirm a Rehabilitation Plan, counted from the date of the filing of the petition; If not confirmed within the said period, the proceedings may (upon motion or motu propio) be converted into one for the liquidation of the debtor. (Sec. 72) Termination of Rehabilitation Proceedings (Sec. 74) Upon motion by any stakeholder or the rehabilitation receiver, be terminated by order of the court either declaring a successful implementation of the Rehabilitation Plan or a failure of rehabilitation. There is failure of rehabilitation in the following cases: a) Dismissal of the petition by the court; b) Debtor fails to submit a Rehabilitation Plan; c) Under the Rehabilitation Plan xxx, there is no substantial likelihood that the debtor can be rehabilitated within a reasonable period; d) Debtor fails to perform its obligations under the Rehabilitation Plan or its amendment; e) There is fraud in securing the approval of the Rehabilitation Plan or its amendment; and f) Other analogous circumstances as may be defined by the rules of procedure. Effects of Termination (Sec. 75) a) The discharge of the rehabilitation receiver subject to his submission of a final accounting; b) The lifting of the Stay Order and any other court order holding in abeyance any action for the enforcement of a claim against the debtor. If the termination of proceedings is due to failure of rehabilitation or dismissal of the petition for reasons other than technical grounds, the proceedings shall be immediately converted to liquidation. PRE-NEGOTIATED REHABILITATION Section 76. Petition by Debtor. An insolvent debtor, by itself or jointly with any of its creditors, may file a verified petition with the court for the approval of a pre-negotiated Rehabilitation Plan which has been endorsed or approved by creditors holding at least two-thirds (2/3) of the total liabilities of the debtor, including secured creditors holding more than fifty percent (50%) of the total secured claims of the debtor and unsecured creditors holding more than fifty percent (50%) of the total unsecured claims of the debtor. Xxx Section 77. Issuance of Order. - Within five (5) working days, and after determination that the petition is sufficient in form and substance, the court shall issue an Order. Xxx Similar contents with that of the Commencement Order). Section 78. Approval of the Plan. - Within ten (10) days from the date of the second publication of the Order, the court shall approve the Rehabilitation Plan unless a creditor or other interested party submits an objection to it xxx. Section 79. Objection to the Petition or Rehabilitation Plan. - Any creditor or other interested party may submit to the court a verified objection to the petition or the Rehabilitation Plan not later than eight (8) days from the date of the second publication of the Order xxx. Section 80. Hearing on the Objections. - After receipt of an objection, the court shall set the same for hearing – no earlier than twenty (20) days and no later than thirty (30) days from the date of the second publication of the Order xxx. Section 81. Period for Approval of Rehabilitation Plan - The court shall have a maximum period of one hundred twenty (120) days from the date of the filing of the petition to approve the Rehabilitation Plan. If the court fails to act within the said period, the Rehabilitation Plan shall be deemed approved. Section 82. Effect of Approval. - Approval of a Plan under this chapter shall have the same legal effect as confirmation of a Plan under Chapter II of this Act.  OUT-OF-COURT OR INFORMAL RESTRUCTURING AGREEMENTS OR REHABILITATION PLANS Section 83. Out-of-Court or Informal Restructuring Agreements and Rehabilitation Plans. - An out-of-court or informal restructuring agreement or Rehabilitation Plan that meets the minimum requirements prescribed in this chapter is hereby recognized as consistent with the objectives of this Act. Section 85. Standstill Period. - A standstill period that may be agreed upon by the parties pending negotiation and finalization of the out-of-court or informal restructuring/workout agreement or Rehabilitation Plan contemplated herein shall be effective and enforceable not only against the contracting parties but also against the other creditors: xxx Section 86. Cram Down Effect A restructuring/workout agreement or Rehabilitation Plan that is approved pursuant to an informal workout framework xxx shall have the same legal effect as confirmation of a Plan. The notice of the Rehabilitation Plan or restructuring agreement or Plan shall be published once a week for at least three (3) consecutive weeks in a newspaper of general circulation in the Philippines. The Rehabilitation Plan or restructuring agreement shall take effect upon the lapse of fifteen (15) days from the date of the last publication of the notice thereof Also known as the “cram-down clause” A rehabilitation plan may be approved even over the opposition of the creditors holding a majority of the corporation’s total liabilities if there is a showing that rehabilitation is feasible and the opposition of the creditors is manifestly unreasonable; This obliges creditors to accept the terms and conditions of the rehabilitation plan, preferring long-term viability over immediate but incomplete recovery. Section 88. Effect of Court Action or Other Proceedings Any court action or other proceedings arising from, or relating to, the out-of-court or informal restructuring/workout agreement or Rehabilitation Plan shall not stay its implementation, unless the relevant party is able to secure a temporary restraining order or injunctive relief from the Court of Appeals. LIQUIDATION OF INSOLVENT JURIDICAL DEBTORS Section 90. Voluntary Liquidation. An insolvent debtor may apply for liquidation by filing a petition for liquidation with the court. The petition shall be verified, shall establish the insolvency of the debtor and shall contain: a) a schedule of the debtor's debts and liabilities including a list of creditors with their addresses, amounts of claims and collaterals, or securities, if any; b) an inventory of all its assets including receivables and claims against third parties; and c) the names of at least three (3) nominees to the position of liquidator. Section 91. Involuntary Liquidation. Three (3) or more creditors the aggregate of whose claims is at least either 1 million pesos or at least twenty-five percent (25%) of the subscribed capital stock or partner's contributions of the debtor, whichever is higher, may apply for and seek the liquidation of an insolvent debtor by filing a petition for liquidation of the debtor with the court. At any time during the pendency of court-supervised or pre-negotiated rehabilitation proceedings, the debtor may also initiate liquidation proceedings by filing a motion in the same court where the rehabilitation proceedings are pending to convert the rehabilitation proceedings into liquidation proceedings. Section 92. Conversion by the Court into Liquidation Proceedings. During the pendency of court-supervised or pre-negotiated rehabilitation proceedings, the court may order the conversion of rehabilitation proceedings to liquidation proceedings xxx Section 93. Powers of the Securities and Exchange Commission (SEC) The regulatory powers of the SEC under Sec. 6 of PD No. 902-A, as amended, with respect to any dissolution and liquidation proceeding initiated and heard before it. INSOLVENCY OF INDIVIDUAL DEBTORS A) SUSPENSION OF PAYMENTS An individual debtor who, possessing sufficient property to cover all his debts but foreseeing the impossibility of meeting them when they respectively fall due, may file a verified petition that he be declared in the state of suspension of payments by the court of the province or city in which he has resides for six (6) months prior to the filing of his petition. Contents of Petition: (a) a schedule of debts and liabilities; (b) an inventory of assess; and (c) a proposed agreement with his creditors. (Sec. 94) If the court finds the petition sufficient in form and substance, it shall, within five (5) working days from the filing of the petition, issue an Order (Sec. 95) B) VOLUNTARY LIQUIDATION An individual debtor whose properties are not sufficient to cover his liabilities, and owing debts exceeding Php500,000, may apply to be discharged from his debts and liabilities by filing a verified petition with the court of the province or city in which he has resided for six (6) months prior to the filing of such a petition. Contents of Petition: schedule of debts and liabilities, and an inventory of assets. (Sec. 103)  If the court finds the petition sufficient in form and substance it shall, within five (5) working days issue the Liquidation Order. (Sec. 104) C) INVOLUNTARY LIQUIDATION Petition; Acts of Insolvency. Any creditor or group of creditors with a claim of, or with claims aggregating at least Php500, 000 may file a verified petition for liquidation with the court of the province or city in which the individual debtor resides. (Sec. 105) The following shall be considered acts of insolvency, and the petition for liquidation shall set forth or allege at least one of such acts a) That such person is about to depart or has departed from the Republic of the Philippines, with intent to defraud his creditors; b) That being absent from the Republic of the Philippines, with intent to defraud his creditors, he remains absent; c) That he conceals himself to avoid the service of legal process for the purpose of hindering or delaying the liquidation or of defrauding his creditors; d) That he conceals, or is removing, any of his property to avoid its being attached or taken on legal process; e) That he has suffered his property to remain under attachment or legal process for three (3) days for the purpose of hindering or delaying the liquidation or of defrauding his creditors; f) That he has confessed or offered to allow judgment in favor of any creditor or claimant for the purpose of hindering or delaying the liquidation or of defrauding any creditors or claimant; g) That he has willfully suffered judgment to be taken against him by default for the purpose of hindering or delaying the liquidation or of defrauding his creditors; h) That he has suffered or procured his property to be taken on legal process with intent to give a preference to one or more of his creditors and thereby hinder or delay the liquidation or defraud any one of his creditors;  i) That he has made any assignment, gift, sale, conveyance or transfer of his estate, property, rights or credits with intent to hinder or delay the liquidation or defraud his creditors; j) That he has, in contemplation of insolvency, made any payment, gift, grant, sale, conveyance or transfer of his estate, property, rights or credits; k) That being a merchant or tradesman, he has generally defaulted in the payment of his current obligations for a period of thirty (30) days; l) That for a period of thirty (30) days, he has failed, after demand, to pay any moneys deposited with him or received by him in a fiduciary; and m) That an execution having been issued against him on final judgment for money, he shall have been found to be without sufficient property subject to execution to satisfy the judgment. Section 106. Order to Individual Debtor to Show Cause. Upon the filing of such creditors‚Äô petition, the court shall issue an Order requiring the individual debtor to show cause xxx why he should not be adjudged an insolvent. Court may issue an Order forbidding the individual debtor from making payments of any of his debts, and transferring any property belonging to him. But the rights of a secured creditor to enforce his lien in accordance with its terms shall affected or impaired Section 107. Default. If the individual debtor shall default or if, after trial, the issues are found in favor of the petitioning creditors the court shall issue the Liquidation Order. Section 108. Absent Individual Debtor. Instances where a creditor shall be entitled to an Order directing the sheriff of the province or city in which the matter is pending to take into his custody a sufficient amount of property of the individual debtor to satisfy the demands of the petitioning creditors and the costs of the proceedings: 1. Where the individual debtor resides out of the Republic of the Philippines; or 2. Has departed therefrom; or 3. Cannot, after due diligence, be found therein; or 4. Conceals himself to avoid service of the Order to show cause xxx; Requirements: a) Submission of affidavits; b) Posting a bond in double the amount of the aggregate sum of their claims against the individual debtor.  R.A. 10667 THE PHILIPPINE COMPETITION ACT “An Act Providing for a National Competition Policy Prohibiting Anti-competitive Agreements, Abuse of Dominant Position and Anti-competitive Mergers and Acquisitions, Establishing the Philippine Competition Commission and Appropriating Funds therefor” Sec. 1. Short Title. - The “Philippine Competition Act” (PCA). PCA was enacted in 2015 and its Implementing Rules and Regulations (IRR) became effective on June 18, 2016. BASIC PURPOSES OF THE PCA a. To enhance economic efficiency and promote free and fair competition in trade, industry and all commercial economic activities xxx; b. To prevent economic concentration which will control the production, distribution, trade, or industry that will unduly stifle competition, lessen, manipulate or constrict the discipline of free markets; and c. To penalize all forms of anti-competitive agreements, abuse of dominant position and anti-competitive mergers and acquisitions xxx. Sec. Philippine Competition Commission The Philippine Competition Commission (PCC) was formed in February 2016 – to implement the national competition policy; An independent quasi-judicial body; an attached agency to the Office of the President; Composed of – (a) Chairman; and (b) Four (4) Commissioners, with a TERM of seven (7) years without re-appointment; Sec. 12. Powers and Functions. - The Sole authority to initiate and conduct preliminary investigation – - “No civil case shall be filed or instituted by a private party in court, unless the PCC has completed a preliminary inquiry.” (Sec. 45, PCA); POWERS AND FUNCTIONS: a) Conduct inquiry, investigate, hear and decide cases; b) Review mergers and acquisitions; c) Monitor compliance; d) Stop, redress, apply remedies based on finding; e) Conduct administrative proceedings, impose sanctions, fines or penalties for any noncompliance with or breach of this Act and punish for contempt; f) Issue subpoenas; g) Undertake inspection of business premises, under order of court; h) Deputize enforcement agencies; i) Issue advisory opinions on competition matters; j) Monitor and analyze competition practices in markets; conduct, publish and disseminate studies, etc.  PROHIBITED ACTS A. ANTI-COMPETITIVE AGREEMENTS (Sec. 14) a. Agreements, between or among competitors, which are per se prohibited: 1. Restricting competition as to price, or components thereof, or other terms of trade; 2. Fixing price at an auction or in any form of bidding - Cover bidding; - Bid suppression; - Bid rotation; - Market allocation; - Other analogous bid manipulation; b. Agreements, between or among competitors which are prohibited because their object or effect is to substantially prevent, restrict or lessen competition: 1. Setting, Kmiting, or controlling production, markets, technical development, or investment; 2. Dividing or sharing the market, whether by volume of sales or purchases, territory, type of goods or services, buyers or sellers, or any other means; c. Other agreements which have the object or effect of substantially preventing, restricting or lessening competition shall also be prohibited xxx. Agreements which contribute to improving the production or distribution of goods and services or to promoting technical or economic progress xxx are allowed. An entity that controls, is controlled by, or is under common control with another entity or entities, have common economic interests, and are not otherwise able to decide or act independently of each other, shall not be considered competitors  - Cover Bidding – submitting bids that are too high to be accepted, or with terms that are unacceptable to the party calling for bids – to protect an agreed upon low bidder. B. ABUSE OF DOMINANT POSITION Xxx By engaging in conduct that would substantially prevent, restrict or lessen (PRL) competition: a. Selling goods or services below cost with the object of driving competition out of the relevant market - PCC shall evaluate if the entity or entities have no such object and the price established was in good faith to meet or compete with the lower price of a competitor in the same market selling the same or comparable product or service of like quality; b. Imposing barriers to entry or committing acts that prevent competitors from growing within the market in an anti-competitive manner except those that develop in the market as a result of or arising from a superior product or process, business acumen, or legal rights or laws; Market Dominant Position (Sec. 27) Rebuttable presumption of market dominant position if the market share of an entity in the relevant market is at least fifty percent (50%), unless a new market share threshold is determined by the Commission for that particular sector Factors considered in determining if an entity has market dominant position: a. Share of the entity in the relevant market and whether it is able to fix prices unilaterally or to restrict supply in the relevant market; b. Existence of barriers to entry xxx; c. Existence and power of its competitors; d. Possibility of access by its competitors or other entities to its sources of inputs;  e. Power of its customers to switch to other goods or services; f. Its recent conducts; and g. Other criteria established by the regulations of this Act. c. Making a transaction subject to acceptance by the other parties of other obligations which xxx have no connection with the transaction; d. Setting prices or other terms or conditions that discriminate unreasonably between customers or sellers of the same goods or services; e. Imposing restrictions on the lease or contract for sale or trade of goods or services; f. Making supply of particular goods or services dependent upon the purchase of other goods or services from the supplier which have no direct connection with the main goods or services to be supplied; g. Directly or indirectly imposing unfairly low purchase prices for the goods or services of marginalized agricultural producers, fisherfolk, micro-small-, medium-scale enterprises xxx; h. Directly or indirectly imposing unfair purchase or selling price on their competitors, customers, suppliers or consumers xxx; i. Limiting production, markets or technical development to the prejudice of consumers xxx. ON PRICING — Following permissible price differentials: 1. Socialized pricing for the less fortunate sector of the economy; 2. Price differential which reasonably or approximately reflect differences in the cost of manufacture, sale, or delivery resulting from differing methods, technical conditions, or quantities in which the goods or services are sold or delivered to the buyers or sellers; 3. Price differential or terms of sale offered in response to the competitive  price of payments, services or changes in the facilities furnished by a competitor; and 4. Price changes in response to changing market conditions, marketability of goods or services, or volume; C. MERGERS AND ACQUISITIONS (Sec. 17) Compulsory Notification - Parties to the merger or acquisition agreement wherein the value of the transaction exceeds one billion pesos (P1,000,000,000.00) are prohibited from consummating their agreement until thirty (30) days after providing notification to the Philippine Competition Commission. Starting March 01, 2024 - PCC must be notified before they can proceed. - Mergers and acquisitions (M&As) that exceed of PhP 7.8 billion; - Size of transaction (SOT) that exceed PhP 3.2 billion. Effect of Notification (Sec. 18) After notification, the Commission shall determine if the agreement is prohibited and does not qualify for exemption (under Sec. 21) The PCC may: a. Prohibit the implementation of the agreement; b. Prohibit the implementation of the agreement unless and until it is modified by changes specified by the Commission. c. Prohibit the implementation of the agreement unless and until the pertinent party or parties enter into legally enforceable agreements specified by the Commission. Prohibited Mergers and Acquisitions (Sec. 20) If the merger or acquisition agreements substantially prevent, restrict or lessen competition Exemptions from Prohibited Mergers and Acquisitions (Sec. 21) a. The merger and acquisition (concentration) is likely to bring about gains in efficiencies greater than the effects of competition; b. A party to the merger or acquisition agreement is faced with actual or imminent financial failure, and the agreement represents the least anti-competitive arrangement among the known alternative uses for the failing entity’s assets; Burden of Proof (Sec. 22) Lies with the parties seeking the exemption. - Must show that if the agreement were not implemented, significant efficiency gains would not be realized. Statute of Limitations (Sec. 46) Within five (5) years from: Plea of Nolo Contendere (Sec. 36) An entity charged in a criminal proceeding pursuant to Section 14(a) and 14(b) of this Act may enter a plea of Nolo Contendere; Here, it does not accept nor deny responsibility for the charges but agrees to accept punishment as if he had pleaded guilty; The plea cannot be used against the defendant entity to prove liability in a civil suit arising from the criminal action nor in another cause of action; For criminal actions, the time the violation is discovered by the offended party, the authorities, or their agents; and For administrative and civil actions, the time the cause of action accrues. Prohibition on the Issuance of Temporary Restraining Orders, Preliminary Injunctions and Preliminary Mandatory Injunctions (Sec. 47) Except for the Court of Appeals and the Supreme Court, no other court shall issue any temporary restraining order, preliminary injunction or preliminary mandatory injunction against the Commission in the exercise of its duties or functions.