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A.M. No. 01-2-04-SC RE: Proposed Interim Rules Of Pro edure !o"ernin# Intr$-Corpor$te Contro"ersies %nder R.A. No.

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(Effective April 1, 2001)

Rule 1

General Provisions

Rule 2

Commencement Of Action And Pleadings

Rule

!odes Of "iscover#

Rule $

Pre%&rial

Rule '

&rial

Rule (

Election Contests

Rule )

*nspection Of Corporate +oo,s And Records

Rule -

"erivative .uits

Rule /

!anagement Committee

Rule 10

Provisional Remedies

Rule 11

.anctions

Rule 12

0inal Provisions Anne1 2A3

IN)ERIM R%*ES O+ PROCE,%RE +OR IN)RA-CORPORA)E CON)RO-ERSIES R%*E I !ENERA* PRO-ISIONS SECTION 1. (a) Cases covered. % &4ese Rules s4all govern t4e procedure to 5e o5served in civil cases involving t4e follo6ing7 (1) "evices or sc4emes emplo#ed 5#, or an# act of, t4e 5oard of directors, 5usiness associates, officers or partners, amounting to fraud or misrepresentation 64ic4 ma# 5e detrimental to t4e interest of t4e pu5lic and8or of t4e stoc,4olders, partners, or mem5ers of an# corporation, partners4ip, or association9 (2) Controversies arising out of intra%corporate, partners4ip, or association relations, 5et6een and among stoc,4olders, mem5ers, or associates9 and 5et6een, an# or all of t4em and t4e corporation, partners4ip, or association of 64ic4 t4e# are stoc,4olders, mem5ers, or associates, respectivel#9 ( ) Controversies in t4e election or appointment of directors, trustees, officers, or managers of corporations, partners4ips, or associations9 ($) "erivative suits9 and (') *nspection of corporate 5oo,s: (b) Prohibition against nuisance and harassment suits. % ;uisance and 4arassment suits are pro4i5ited: *n determining 64et4er a suit is a nuisance or 4arassment suit, t4e court s4all consider, among ot4ers, t4e follo6ing7 (1) &4e e1tent of t4e s4are4olding or interest of t4e initiating stoc,4older or mem5er9 (2) .u5<ect matter of t4e suit9 ( ) =egal and factual 5asis of t4e complaint9 ($) Availa5ilit# of appraisal rig4ts for t4e act or acts complained of9 and (') Pre<udice or damage to t4e corporation, partners4ip, or association in relation to t4e relief soug4t: *n case of nuisance or 4arassment suits, t4e court ma#, motu proprio or upon motion, fort46it4 dismiss t4e case: SEC. 2. Supp etor! app ication o" the #u es o" Court. % &4e Rules of Court, in so far as t4e# ma# 5e applica5le and are not inconsistent 6it4 t4ese Rules, are 4ere5# adopted to form an integral part of t4ese Rules: SEC. $. Construction. % &4ese Rules s4all 5e li5erall# construed in order to promote t4eir o5<ective of securing a <ust, summar#, speed# and ine1pensive determination of ever# action or proceeding: SEC. %. E&ecutor! nature o" decisions and orders. % All decisions and orders issued under t4ese Rules s4all immediatel# 5e e1ecutor#: ;o appeal or petition ta,en t4erefrom s4all sta# t4e enforcement or implementation of t4e decision or

order, unless restrained 5# an appellate court: *nterlocutor# orders s4all not 5e su5<ect to appeal: SEC. '. (enue. % All actions covered 5# t4ese Rules s4all 5e commenced and tried in t4e Regional &rial Court 64ic4 4as <urisdiction over t4e principal office of t4e corporation, partners4ip, or association concerned: >4ere t4e principal office of t4e corporation, partners4ip or association is registered in t4e .ecurities and E1c4ange Commission as !etro !anila, t4e action must 5e filed in t4e cit# or municipalit# 64ere t4e 4ead office is located: SEC. ). Service o" p eadings. % >4en so aut4ori?ed 5# t4e court, an# pleading and8or document re@uired 5# t4ese Rules ma# 5e filed 6it4 t4e court and8or served upon t4e ot4er parties 5# facsimile transmission (fa1) or electronic mail (e%mail): *n suc4 cases, t4e date of transmission s4all 5e deemed to 5e prima "acie t4e date of service: SEC. *. Signing o" p eadings+ motions and other papers. % Ever# pleading, motion, and ot4er paper of a part# represented 5# an attorne# s4all 5e signed 5# at least one attorne# of record in t4e attorne#As individual name, 64ose address s4all 5e stated: A part# 64o is not represented 5# an attorne# s4all sign t4e pleading, motion, or ot4er paper and state 4is address: &4e signature of an attorne# or part# constitutes a certification 5# t4e signer t4at 4e 4as read t4e pleading, motion, or ot4er paper9 t4at to t4e 5est of 4is ,no6ledge, information, and 5elief formed after reasona5le in@uir#, it is 6ell grounded in fact and is 6arranted 5# e1isting la6 or a good fait4 argument for t4e e1tension, modification, or reversal of e1isting <urisprudence9 and t4at it is not interposed for an# improper purpose, suc4 as to 4arass or to cause unnecessar# dela# or needless increase in t4e cost of litigation: *f a pleading, motion, or ot4er paper is not signed, it s4all 5e stric,en off t4e record unless it is promptl# signed 5# t4e pleader or movant, after 4e is notified of t4e omission: SEC. ,. Prohibited p eadings. % &4e follo6ing pleadings are pro4i5ited7 (1) !otion to dismiss9 (2) !otion for a 5ill of particulars9 ( ) !otion for ne6 trial, or for reconsideration of <udgment or order, or for re% opening of trial9 ($) !otion for e1tension of time to file pleadings, affidavits or an# ot4er paper, e1cept t4ose filed due to clearl# compelling reasons: .uc4 motion must 5e verified and under oat49 and (') !otion for postponement and ot4er motions of similar intent, e1cept t4ose filed due to clearl# compelling reasons: .uc4 motion must 5e verified and under oat4: SEC. -. .ssignment o" cases. % All cases filed under t4ese Rules s4all 5e tried 5# <udges designated 5# t4e .upreme Court to 4ear and decide cases transferred from t4e .ecurities and E1c4ange Commission to t4e Regional &rial

Courts and filed directl# 6it4 said courts pursuant to Repu5lic Act ;o: -)//, ot4er6ise ,no6n as t4e .ecurities and Regulation Code: R%*E 2 COMMENCEMEN) O+ AC)ION AN, P*EA,IN!S SECTION 1. Commencement o" action. % An action under t4ese Rules is commenced 5# t4e filing of a verified complaint 6it4 t4e proper Regional &rial Court: SEC. 2. P eadings a o/ed. % &4e onl# pleadings allo6ed to 5e filed under t4ese Rules are t4e complaint, ans6er, compulsor# counterclaims or cross% claims pleaded in t4e ans6er, and t4e ans6er to t4e counterclaims or cross% claims: SEC. $. (eri"ication. % &4e complaint and t4e ans6er s4all 5e verified 5# an affidavit stating t4at t4e affiant 4as read t4e pleading and t4e allegations t4erein are true and correct 5ased on 4is o6n personal ,no6ledge or on aut4entic records: SEC. %. Comp aint. % &4e complaint s4all state or contain7 (1) t4e names, addresses, and ot4er relevant personal or <uridical circumstances of t4e parties9 (2) all facts material and relevant to t4e plaintiffAs cause or causes of action, 64ic4 s4all 5e supported 5# affidavits of t4e plaintiff or 4is 6itnesses and copies of documentar# and ot4er evidence supportive of suc4 cause or causes of action9 ( ) t4e la6, rule, or regulation relied upon, violated, or soug4t to 5e enforced9 ($) a certification t4at (a) t4e plaintiff 4as not t4eretofore commenced an# action or filed an# claim involving t4e same issues in an# court, tri5unal or @uasi%<udicial agenc#, and, to t4e 5est of 4is ,no6ledge, no suc4 ot4er action or claim is pending t4erein9 (5) if t4ere is suc4 ot4er action or claim, a complete statement of t4e present status t4ereof9 and (c) if 4e s4ould t4ereafter learn t4at t4e same or similar action or claim 4as 5een filed or is pending, 4e s4all report t4at fact 6it4in five (') da#s t4erefrom to t4e court9 and (') t4e relief soug4t: SEC. '. Summons. % &4e summons and t4e complaint s4all 5e served toget4er not later t4an five (') da#s from t4e date of filing of t4e complaint: (a) Service upon domestic private 0uridica entities. % *f t4e defendant is a domestic corporation, service s4all 5e deemed ade@uate if made upon an# of t4e statutor# or corporate officers as fi1ed 5# t4e 5#%la6s or t4eir respective secretaries: *f t4e defendant is a partners4ip, service s4all 5e deemed ade@uate if made upon an# of t4e managing or general partners or upon t4eir respective secretaries: *f t4e defendant is an association, service s4all 5e deemed

ade@uate if made upon an# of its officers or t4eir respective secretaries: (5) Service upon "oreign private 0uridica entit!. % >4en t4e defendant is a foreign private <uridical entit# 64ic4 is transacting or 4as transacted 5usiness in t4e P4ilippines, service ma# 5e made on its resident agent designated in accordance 6it4 la6 for t4at purpose, or, if t4ere 5e no suc4 agent, on t4e government official designated 5# la6 to t4at effect, or on an# of its officers or agents 6it4in t4e P4ilippines: SEC. ). .ns/er. % &4e defendant s4all file 4is ans6er to t4e complaint, serving a cop# t4ereof on t4e plaintiff, 6it4in fifteen (1') da#s from service of summons: *n t4e ans6er, t4e defendant s4all7 (1) .pecif# eac4 material allegation of fact t4e trut4 of 64ic4 4e admits9 (2) .pecif# eac4 material allegation of fact t4e trut4 of 64ic4 4e does not admit: >4ere t4e defendant desires to den# onl# a part of an averment, 4e s4all specif# so muc4 of it as true and material and s4all den# onl# t4e remainder9 ( ) .pecif# eac4 material allegation of fact as to 64ic4 trut4 4e 4as no ,no6ledge or information sufficient to form a 5elief, and t4is s4all 4ave t4e effect of a denial9 ($) .tate t4e defenses, including grounds for a motion to dismiss under t4e Rules of Court9 (') .tate t4e la6, rule, or regulation relied upon9 (() Address eac4 of t4e causes of action stated in t4e complaint9 ()) .tate t4e facts upon 64ic4 4e relies for 4is defense, including affidavits of 6itnesses and copies of documentar# and ot4er evidence supportive of suc4 cause or causes of action9 (-) .tate an# compulsor# counterclaim8s and cross%claim8s9 and (/) .tate t4e relief soug4t: &4e ans6er to counterclaims or cross%claims s4all 5e filed 6it4in ten (10) da#s from service of t4e ans6er in 64ic4 t4e# are pleaded: SEC. *. E""ect o" "ai ure to ans/er. % *f t4e defendant fails to ans6er 6it4in t4e period a5ove provided, 4e s4all 5e considered in default: Bpon motion or motu proprio, t4e court s4all render <udgment eit4er dismissing t4e complaint or granting t4e relief pra#ed for as t4e records ma# 6arrant: *n no case s4all t4e court a6ard a relief 5e#ond or different from t4at pra#ed for: SEC. ,. .""idavits+ documentar! and other evidence. % Affidavits s4all 5e 5ased on personal ,no6ledge, s4all set fort4 suc4 facts as 6ould 5e admissi5le in evidence, and s4all s4o6 affirmativel# t4at t4e affiant is competent to testif# on t4e matters stated t4erein: &4e affidavits s4all 5e in @uestion and ans6er form, and s4all compl# 6it4 t4e rules on admissi5ilit# of evidence: Affidavits of 6itnesses as 6ell as documentar# and ot4er evidence s4all 5e attac4ed to t4e appropriate pleading9 Provided, 4o6ever, t4at affidavits, documentar# and ot4er evidence not so su5mitted ma# 5e attac4ed to t4e pre%

trial 5rief re@uired under t4ese Rules: Affidavits and ot4er evidence not so su5mitted s4all not 5e admitted in evidence, e1cept in t4e follo6ing cases7 (1) &estimon# of un6illing, 4ostile, or adverse part# 6itnesses: A 6itness is presumed prima "acie 4ostile if 4e fails or refuses to e1ecute an affidavit after a 6ritten re@uest t4erefor9 (2) *f t4e failure to su5mit t4e evidence is for meritorious and compelling reasons9 and ( ) ;e6l# discovered evidence: *n case of (2) and ( ) a5ove, t4e affidavit and evidence must 5e su5mitted not later t4an five (') da#s prior to its introduction in evidence: R%*E . MO,ES O+ ,ISCO-ER/ SECTION 1. In genera . % A part# can onl# avail of an# of t4e modes of discover# not later t4an fifteen (1') da#s from t4e <oinder of issues: SEC. 2. Ob0ections. % An# mode of discover# suc4 as interrogatories, re@uest for admission, production or inspection of documents or t4ings, ma# 5e o5<ected to 6it4in ten (10) da#s from receipt of t4e discover# device and onl# on t4e ground t4at t4e matter re@uested is patentl# incompetent, immaterial, irrelevant or privileged in nature: &4e court s4all rule on t4e o5<ections not later t4an fifteen (1') da#s from t4e filing t4ereof: SEC. $. Comp iance. % Compliance 6it4 an# mode of discover# s4all 5e made 6it4in ten (10) da#s from receipt of t4e discover# device, or if t4ere are o5<ections, from receipt of t4e ruling of t4e court: SEC. %. Sanctions. % &4e sanctions prescri5ed in t4e Rules of Court for failure to avail of, or refusal to compl# 6it4, t4e modes of discover# s4all appl#: *n addition, t4e court ma#, upon motion, declare a part# non%suited or as in default, as t4e case ma# 5e, if t4e refusal to compl# 6it4 a mode of discover# is patentl# un<ustified: R%*E 4 PRE-)RIA* SECTION 1. Pre1tria con"erence2 mandator! nature. % >it4in five (') da#s after t4e period for availment of, and compliance 6it4, t4e modes of discover# prescri5ed in Rule 4ereof, 64ic4ever comes later, t4e court s4all issue and serve an order immediatel# setting t4e case for pre%trial conference and directing t4e parties to su5mit t4eir respective pre%trial 5riefs: &4e parties s4all file 6it4 t4e court and furnis4 eac4 ot4er copies of t4eir respective pre%trial 5rief in suc4 manner as to ensure its receipt 5# t4e court and t4e ot4er part# at least five (')

da#s 5efore t4e date set for t4e pre%trial: &4e parties s4all set fort4 in t4eir pre%trial 5riefs, among ot4er matters, t4e follo6ing7 (1) +rief statement of t4e nature of t4e case, 64ic4 s4all summari?e t4e t4eor# or t4eories of t4e part# in clear and concise language9 (2) Allegations e1pressl# admitted 5# eit4er or 5ot4 parties9 ( ) Allegations deemed admitted 5# eit4er or 5ot4 parties9 ($) "ocuments not specificall# denied under oat4 5# eit4er or 5ot4 parties9 (') Amendments to t4e pleadings9 (() .tatement of t4e issues, 64ic4 s4all separatel# summari?e t4e factual and legal issues involved in t4e case9 ()) ;ames of 6itnesses to 5e presented and t4e summar# of t4eir testimon# as contained in t4eir affidavits supporting t4eir positions on eac4 of t4e issues9 (-) All ot4er pieces of evidence, 64et4er documentar# or ot4er6ise and t4eir respective purposes9 (/) .pecific proposals for an amica5le settlement9 (10) Possi5ilit# of referral to mediation or ot4er alternative modes of dispute resolution9 (11) Proposed sc4edule of 4earings9 and (12) .uc4 ot4er matters as ma# aid in t4e <ust and speed# disposition of t4e case: SEC. 2. Nature and purpose o" pre1tria con"erence. % "uring t4e pre%trial conference, t4e court s4all, 6it4 its active participation, ensure t4at t4e parties consider in detail all of t4e follo6ing7 (1) &4e possi5ilit# of an amica5le settlement9 (2) Referral of t4e dispute to mediation or ot4er forms of dispute resolution9 ( ) 0acts t4at need not 5e proven, eit4er 5ecause t4e# are matters of <udicial notice or e1pressl# or deemed admitted9 ($) Amendments to t4e pleadings9 (') &4e possi5ilit# of o5taining stipulations and admissions of facts and documents9 (() O5<ections to t4e admissi5ilit# of testimonial, documentar# and ot4er evidence9 ()) O5<ections to t4e form or su5stance of an# affidavit, or part t4ereof9 (-) .implification of t4e issues9 (/) &4e possi5ilit# of su5mitting t4e case for decision on t4e 5asis of position papers, affidavits, documentar# and real evidence9 (10) A complete sc4edule of 4earing dates9 and (11) .uc4 ot4er matters as ma# aid in t4e speed# and summar# disposition of t4e case: SEC. $. Termination. % &4e preliminar# conference s4all 5e terminated not later t4an ten (10) da#s after its commencement, 64et4er or not t4e parties 4ave

agreed to settle amica5l#: SEC. %. 3udgment be"ore pre1tria . % *f, after su5mission of t4e pre%trial 5riefs, t4e court determines t4at, upon consideration of t4e pleadings, t4e affidavits and ot4er evidence su5mitted 5# t4e parties, a <udgment ma# 5e rendered, t4e court ma# order t4e parties to file simultaneousl# t4eir respective memoranda 6it4in a non%e1tendi5le period of t6ent# (20) da#s from receipt of t4e order: &4ereafter, t4e court s4all render <udgment, eit4er full or ot4er6ise, not later t4an ninet# (/0) da#s from t4e e1piration of t4e period to file t4e memoranda: SEC. '. Pre1tria order2 0udgment a"ter pre1tria . % &4e proceedings in t4e pre% trial s4all 5e recorded: >it4in ten (10) da#s after t4e termination of t4e pre%trial, t4e court s4all issue an order 64ic4 s4all recite in detail t4e matters ta,en up in t4e conference, t4e actions ta,en t4ereon, t4e amendments allo6ed in t4e pleadings, and t4e agreements or admissions made 5# t4e parties as to an# of t4e matters considered: &4e court s4all rule on all o5<ections to or comments on t4e admissi5ilit# of an# documentar# or ot4er evidence, including an# affidavit or an# part t4ereof: .4ould t4e action proceed to trial, t4e order s4all e1plicitl# define and limit t4e issues to 5e tried and s4all strictl# follo6 t4e form set fort4 in Anne1 2A3 of t4ese Rules: &4e contents of t4e order s4all control t4e su5se@uent course of t4e action, unless modified 5efore trial to prevent manifest in<ustice: After t4e pre%trial, t4e court ma# render <udgment, eit4er full or partial, as t4e evidence presented during t4e pre%trial ma# 6arrant: R%*E 0 )RIA* SECTION 1. 4itnesses. % *f t4e court deems necessar# to 4old 4earings to determine specific factual matters 5efore rendering <udgment, it s4all, in t4e pre% trial order, set t4e case for trial on t4e dates agreed upon 5# t4e parties: Onl# persons 64ose affidavits 6ere su5mitted ma# 5e presented as 6itnesses, e1cept in cases specified in section -, Rule 2 of t4ese Rules: &4e affidavits of t4e 6itnesses s4all serve as t4eir direct testimonies, su5<ect to cross% e1amination in accordance 6it4 e1isting rules on evidence: SEC. 2. Tria schedu e. % Bnless <udgment is rendered pursuant to Rule $ of t4ese Rules, t4e initial 4earing s4all 5e 4eld not later t4an t4irt# ( 0) da#s from t4e date of t4e pre%trial order: &4e 4earings s4all 5e completed not later t4an si1t# ((0) da#s from t4e date of t4e initial 4earing, t4irt# ( 0) da#s of 64ic4 s4all 5e allotted to t4e plaintiffs and t4irt# ( 0) da#s to t4e defendants in t4e manner prescri5ed in t4e pre%trial order: &4e failure of a part# to present a 6itness on a sc4eduled 4earing date s4all 5e deemed a 6aiver of suc4 4earing date: Co6ever, a part# ma# present suc4 6itness or 6itnesses 6it4in 4is remaining allotted 4earing dates: SEC. $. 4ritten o""er o" evidence. % Evidence not ot4er6ise admitted 5# t4e

parties or ruled upon 5# t4e court during t4e pre%trial conference s4all 5e offered in 6riting not later t4an five (') da#s from t4e completion of t4e presentation of evidence of t4e part# concerned: &4e opposing part# s4all 4ave five (') da#s from receipt of t4e offer to file 4is comments or o5<ections: &4e court s4all ma,e its ruling on t4e offer 6it4in five (') da#s from t4e e1piration of t4e period to file comments or o5<ections: SEC. %. 5emoranda. % *mmediatel# after ruling on t4e last offer of evidence, t4e court s4all order t4e parties to simultaneousl# file, 6it4in t4irt# ( 0) da#s from receipt of t4e order, t4eir respective memoranda: &4e memoranda s4all contain t4e follo6ing7 (1) A 2.tatement of t4e Case,3 64ic4 is a clear and concise statement of t4e nature of t4e action and a summar# of t4e proceedings9 (2) A 2.tatement of t4e 0acts,3 64ic4 is a clear and concise statement in narrative form of t4e esta5lis4ed facts, 6it4 reference to t4e testimonial, documentar# or ot4er evidence in support t4ereof9 ( ) A 2.tatement of t4e *ssues,3 64ic4 is a clear and concise statement of t4e issues presented to t4e court for resolution9 ($) &4e 2Arguments,3 64ic4 is a clear and concise presentation of t4e argument in support of eac4 issue9 and (') &4e 2Relief,3 64ic4 is a specification of t4e order or <udgment 64ic4 t4e part# see,s to o5tain: ;o repl# memorandum s4all 5e allo6ed: SEC. '. 6ecision a"ter tria . % &4e court s4all render a decision not later t4an (/0) da#s from t4e lapse of t4e period to file t4e memoranda, 6it4 or 6it4out said pleading 4aving 5een filed: R%*E 1 E*EC)ION CON)ES)S SECTION 1. Cases covered. % &4e provisions of t4is rule s4all appl# to election contests in stoc, and non%stoc, corporations: SEC. 2. 6e"inition. % An election contest refers to an# controvers# or dispute involving title or claim to an# elective office in a stoc, or non%stoc, corporation, t4e validation of pro1ies, t4e manner and validit# of elections, and t4e @ualifications of candidates, including t4e proclamation of 6inners, to t4e office of director, trustee or ot4er officer directl# elected 5# t4e stoc,4olders in a close corporation or 5# mem5ers of a non%stoc, corporation 64ere t4e articles of incorporation or 5#%la6s so provide: SEC. $. Comp aint. % *n addition to t4e re@uirements in section $, Rule 2 of t4ese Rules, t4e complaint in an election contest must state t4e follo6ing7 (1) &4e case 6as filed 6it4in fifteen (1') da#s from t4e date of t4e election if t4e 5#%la6s of t4e corporation do not provide for a procedure for resolution of t4e controvers#, or 6it4in fifteen (1') da#s from t4e resolution of t4e controvers# 5# t4e corporation as provided in its 5#%la6s9 and

(2) &4e plaintiff 4as e14austed all intra%corporate remedies in election cases as provided for in t4e 5#%la6s of t4e corporation: SEC. %. 6ut! o" the court upon the "i ing o" the comp aint. % >it4in t6o (2) da#s from t4e filing of t4e complaint, t4e court, upon a consideration of t4e allegations t4ereof, ma# dismiss t4e complaint outrig4t if it is not sufficient in form and su5stance, or, if it is sufficient, order t4e issuance of summons 64ic4 s4all 5e served, toget4er 6it4 a cop# of t4e complaint, on t4e defendant 6it4in t6o (2) da#s from its issuance: SEC. '. .ns/er. % &4e defendant s4all file 4is ans6er to t4e complaint, serving a cop# t4ereof on t4e plaintiff, 6it4in ten (10) da#s from service of summons and t4e complaint: &4e ans6er s4all contain t4e matters re@uired in section (, Rule 2 of t4ese Rules: SEC. ). .""idavits+ documentar! and other evidence. % &4e parties s4all attac4 to t4e complaint and ans6er t4e affidavits of 6itnesses, documentar# and ot4er evidence in support t4ereof, if an#: SEC. *. E""ect o" "ai ure to ans/er. % *f t4e defendant fails to file an ans6er 6it4in t4e period a5ove provided, t4e court s4all, 6it4in ten (10) da#s from t4e lapse of said period, motu proprio or on motion, render <udgment as ma# 5e 6arranted 5# t4e allegations of t4e complaint, as 6ell as t4e affidavits, documentar# and ot4er evidence on record: *n no case s4all t4e court a6ard a relief 5e#ond or different from t4at pra#ed for: SEC. ,. Tria . % *f t4e court deems it necessar# to 4old a 4earing to clarif# specific factual matters 5efore rendering <udgment, it s4all, 6it4in ten (10) da#s from t4e filing of t4e last pleading, issue an order setting t4e case for 4earing for t4e purpose: &4e order s4all, in clear and concise terms, specif# t4e factual matters t4e court desires to 5e clarified and t4e 6itnesses, 64ose affidavits 4ave 5een su5mitted, 64o 6ill give t4e necessar# clarification: &4e 4earing s4all 5e set on a date not later t4an ten (10) da#s from t4e date of t4e order, and s4all 5e completed not later t4an fifteen (1') da#s from t4e date of t4e first 4earing: &4e affidavit of a 6itness 64o fails to appear for clarificator# @uestions of t4e court s4all 5e ordered stric,en off t4e record: SEC. -. 6ecision. % &4e Court s4all render a decision 6it4in fifteen (1') da#s from receipt of t4e last pleading, or from t4e date of t4e last 4earing as t4e case ma# 5e: &4e decision s4all 5e 5ased on t4e pleadings, affidavits, documentar# and ot4er evidence attac4ed t4ereto and t4e ans6ers of t4e 6itnesses to t4e clarificator# @uestions of t4e court given during t4e 4earings: R%*E ' INSPEC)ION O+ CORPORA)E 2OO3S AN, RECOR,S SECTION 1. Cases covered. % &4e provisions of t4is Rule s4all appl# to

disputes e1clusivel# involving t4e rig4ts of stoc,4olders or mem5ers to inspect t4e 5oo,s and records and8or to 5e furnis4ed 6it4 t4e financial statements of a corporation, under sections )$ and )' of +atas Pam5ansa +lg: (-, ot4er6ise ,no6n as t4e Corporation Code of t4e P4ilippines: SEC. 2. Comp aint. D *n addition to t4e re@uirements in section $, Rule 2 of t4ese Rules, t4e complaint must state t4e follo6ing7 (1) &4e case is for t4e enforcement of plaintiffAs rig4t of inspection of corporate orders or records and8or to 5e furnis4ed 6it4 financial statements under sections )$ and )' of t4e Corporation Code of t4e P4ilippines9 (2) A demand for inspection and cop#ing of 5oo,s and records and8or to 5e furnis4ed 6it4 financial statements made 5# t4e plaintiff upon defendant9 ( ) &4e refusal of defendant to grant t4e demands of t4e plaintiff and t4e reasons given for suc4 refusal, if an#9 and ($) &4e reasons 64# t4e refusal of defendant to grant t4e demands of t4e plaintiff is un<ustified and illegal, stating t4e la6 and <urisprudence in support t4ereof: SEC. $. 6ut! o" the court upon the "i ing o" the comp aint. % >it4in t6o (2) da#s from t4e filing of t4e complaint, t4e court, upon a consideration of t4e allegations t4ereof, ma# dismiss t4e complaint outrig4t if it is not sufficient in form and su5stance, or, if it is sufficient, order t4e issuance of summons 64ic4 s4all 5e served, toget4er 6it4 a cop# of t4e complaint, on t4e defendant 6it4in t6o (2) da#s from its issuance: SEC. %. .ns/er. D &4e defendant s4all file 4is ans6er to t4e complaint, serving a cop# t4ereof on t4e plaintiff, 6it4in ten (10) da#s from service of summons and t4e complaint: *n addition to t4e re@uirements in section (, Rule 2 of t4ese Rules, t4e ans6er must state t4e follo6ing7 (1) &4e grounds for t4e refusal of defendant to grant t4e demands of t4e plaintiff, stating t4e la6 and <urisprudence in support t4ereof9 (2) &4e conditions or limitations on t4e e1ercise of t4e rig4t to inspect 64ic4 s4ould 5e imposed 5# t4e court9 and ( ) &4e cost of inspection, including manpo6er and p4otocop#ing e1penses, if t4e rig4t to inspect is granted: SEC. '. .""idavits+ documentar! and other evidence. D &4e parties s4all attac4 to t4e complaint and ans6er t4e affidavits of 6itnesses, documentar# and ot4er evidence in support t4ereof, if an#: SEC. ). E""ect o" "ai ure to ans/er. D *f t4e defendant fails to file an ans6er 6it4in t4e period a5ove provided, t4e court, 6it4in ten (10) da#s from t4e lapse of t4e said period, motu proprio or upon motion, s4all render <udgment as 6arranted 5# t4e allegations of t4e complaint, as 6ell as t4e affidavits, documentar# and ot4er evidence on record: *n no case s4all t4e court a6ard a relief 5e#ond or different from t4at pra#ed for: SEC. *. 6ecision. D &4e court s4all render a decision 5ased on t4e pleadings,

affidavits and documentar# and ot4er evidence attac4ed t4ereto 6it4in fifteen (1') da#s from receipt of t4e last pleading: A decision ordering defendants to allo6 t4e inspection of 5oo,s and records and8or to furnis4 copies t4ereof s4all also order t4e plaintiff to deposit t4e estimated cost of t4e manpo6er necessar# to produce t4e 5oo,s and records and t4e cost of cop#ing, and state, in clear and categorical terms, t4e limitations and conditions to t4e e1ercise of t4e rig4t allo6ed or enforced: R%*E & ,ERI-A)I-E S%I)S SECTION 1. 6erivative action. % A stoc,4older or mem5er ma# 5ring an action in t4e name of a corporation or association, as t4e case ma# 5e, provided, t4at7 (1) Ce 6as a stoc,4older or mem5er at t4e time t4e acts or transactions su5<ect of t4e action occurred and at t4e time t4e action 6as filed9 (2) Ce e1erted all reasona5le efforts, and alleges t4e same 6it4 particularit# in t4e complaint, to e14aust all remedies availa5le under t4e articles of incorporation, 5#%la6s, la6s or rules governing t4e corporation or partners4ip to o5tain t4e relief 4e desires9 ( ) ;o appraisal rig4ts are availa5le for t4e act or acts complained of9 and ($) &4e suit is not a nuisance or 4arassment suit: *n case of nuisance or 4arassment suit, t4e court s4all fort46it4 dismiss t4e case: SEC. 2. 6iscontinuance. % A derivative action s4all not 5e discontinued, compromised or settled 6it4out approval of t4e court: "uring t4e pendenc# of t4e action, an# sale of s4ares of t4e complaining stoc,4older s4all 5e approved 5# t4e court: *f t4e court determines t4at t4e interest of t4e stoc,4olders or mem5ers 6ill 5e su5stantiall# affected 5# t4e discontinuance, compromise or settlement, t4e court ma# direct t4at notice, 5# pu5lication or ot4er6ise, 5e given to t4e stoc,4olders or mem5ers 64ose interests it determines 6ill 5e so affected: R%*E ( MANA!EMEN) COMMI))EE SECTION 1. Creation o" a management committee. % As an incident to an# of t4e cases filed under t4ese Rules or t4e *nterim Rules on Corporate Re4a5ilitation, a part# ma# appl# for t4e appointment of a management committee for t4e corporation, partners4ip or association, 64en t4ere is imminent danger of7 (1) "issipation, loss, 6astage or destruction of assets or ot4er properties9 and (2) Paral#?ation of its 5usiness operations 64ic4 ma# 5e pre<udicial to t4e interest of t4e minorit# stoc,4olders, parties%litigants or t4e general pu5lic:

SEC. 2. #eceiver. % *n t4e event t4e court finds t4e application to 5e sufficient in form and su5stance, t4e court s4all issue an order7 (a) appointing a receiver of ,no6n pro5it#, integrit# and competence and 6it4out an# conflict of interest as 4ereunder defined to immediatel# ta,e over t4e corporation, partners4ip or association, specif#ing suc4 po6ers as it ma# deem appropriate under t4e circumstances, including an# of t4e po6ers specified in section ' of t4is Rule9 (5) fi1ing t4e 5ond of t4e receiver9 (c) directing t4e receiver to ma,e a report as to t4e affairs of t4e entit# under receivers4ip and on ot4er relevant matters 6it4in si1t# ((0) da#s from t4e time 4e assumes office9 (d) pro4i5iting t4e incum5ent management of t4e compan#, partners4ip or association from selling, encum5ering, transferring or disposing in an# manner an# of its properties e1cept in t4e ordinar# course of 5usiness9 and (e) directing t4e pa#ment in full of all administrative e1penses incurred after t4e issuance of t4e order: SEC. $. #eceiver and management committee as o""icers o" the court. % &4e receiver and t4e mem5ers of t4e management committee in t4e e1ercise of t4eir po6ers and performance of t4eir duties are considered officers of t4e court and s4all 5e under its control and supervision: SEC. %. Composition o" the management committee. % After due notice and 4earing, t4e court ma# appoint a management committee composed of t4ree ( ) mem5ers c4osen 5# t4e court: *n t4e appointment of t4e mem5ers of t4e management committee, t4e follo6ing @ualifications s4all 5e ta,en into consideration 5# t4e court7 (1) E1pertise and acumen to manage and operate a 5usiness similar in si?e and comple1it# as t4at of t4e corporation, association or partners4ip soug4t to 5e put under management committee9 (2) Eno6ledge in management and finance9 ( ) Good moral c4aracter, independence and integrit#9 ($) A lac, of a conflict of interest as defined in t4ese Rules9 and (') >illingness and a5ilit# to file a 5ond in suc4 amount as ma# 5e determined 5# t4e court: >it4out limiting t4e generalit# of t4e follo6ing, a mem5er of a management committee ma# 5e deemed to 4ave a conflict of interest if7 (1) Ce is engaged in a line of 5usiness 64ic4 competes 6it4 t4e corporation, association or partners4ip soug4t to 5e placed under management9 (2) Ce is a director, officer or stoc,4older c4arged 6it4 mismanagement, dissipation or 6astage of t4e properties of t4e entit# under management9 or ( ) Ce is related 5# consanguinit# or affinit# 6it4in t4e fourt4 civil degree to an# director, officer or stoc,4older c4arged 6it4 mismanagement, dissipation or 6astage of t4e properties of t4e entit# under management: SEC. '. Po/ers and "unctions o" the management committee. % Bpon assumption to office of t4e management committee, t4e receiver s4all immediatel# render a report and turn over t4e management and control of t4e entit# under 4is receivers4ip to t4e management committee:

&4e management committee s4all 4ave t4e po6er to ta,e custod# of and control all assets and properties o6ned or possessed 5# t4e entit# under management: *t s4all ta,e t4e place of t4e management and 5oard of directors of t4e entit# under management, assume t4eir rig4ts and responsi5ilities, and preserve t4e entit#As assets and properties in its possession: >it4out limiting t4e generalit# of t4e foregoing, t4e management committee s4all e1ercise t4e follo6ing po6ers and functions7 (1) &o investigate t4e acts, conduct, properties, lia5ilities, and financial condition of t4e corporation, association or partners4ip under management9 (2) &o e1amine under oat4 t4e directors and officers of t4e entit# and an# ot4er 6itnesses t4at it ma# deem appropriate9 ( ) &o report to t4e court an# fact ascertained 5# it pertaining to t4e causes of t4e pro5lems, fraud, misconduct, mismanagement and irregularities committed 5# t4e stoc,4olders, directors, management or an# ot4er person9 ($) &o emplo# suc4 person or persons suc4 as la6#ers, accountants, auditors, appraisers and staff as are necessar# in performing its functions and duties as management committee9 (') &o report to t4e court an# material adverse c4ange in t4e 5usiness of t4e corporation, association or partners4ip under management9 (() &o evaluate t4e e1isting assets and lia5ilities, earnings and operations of t4e corporation, association or partners4ip under management9 ()) &o determine and recommend to t4e court t4e 5est 6a# to salvage and protect t4e interest of t4e creditors, stoc,4olders and t4e general pu5lic, including t4e re4a5ilitation of t4e corporation, association or partners4ip under management9 (-) &o pro4i5it and report to t4e court an# encum5rance, transfer, or disposition of t4e de5torAs propert# outside of t4e ordinar# course of 5usiness or 64at is allo6ed 5# t4e court9 (/) &o pro4i5it and report to t4e court an# pa#ments made outside of t4e ordinar# course of 5usiness9 (10) &o 4ave unlimited access to t4e emplo#ees, premises, 5oo,s, records and financial documents during 5usiness 4ours9 (11) &o inspect, cop#, p4otocop# or p4otograp4 an# document, paper, 5oo,, account or letter, 64et4er in t4e possession of t4e corporation, association or partners4ip or ot4er persons9 (12) &o gain entr# into an# propert# for t4e purposes of inspecting, measuring, surve#ing, or p4otograp4ing it or an# designated relevant o5<ect or operation t4ereon9 (1 ) &o 5ring to t4e attention of t4e court an# material c4ange affecting t4e entit#As a5ilit# to meet its o5ligations9 (1$) &o revo,e resolutions passed 5# t4e E1ecutive Committee or +oard of "irectors8&rustees or an# governing 5od# of t4e entit# under management and pass resolution in su5stitution of t4e same to ena5le it to more effectivel# e1ercise its po6ers and functions9

(1') &o modif#, nullif# or revo,e transactions coming to its ,no6ledge 64ic4 it deems detrimental or pre<udicial to t4e interest of t4e entit# under management9 (1() &o recommend t4e termination of t4e proceedings and t4e dissolution of t4e entit# if it determines t4at t4e continuance in 5usiness of suc4 entit# is no longer feasi5le or profita5le or no longer 6or,s to t4e 5est interest of t4e stoc,4olders, parties%litigants, creditors or t4e general pu5lic9 (1)) &o appl# to t4e court for an# order or directive t4at it ma# deem necessar# or desira5le to aid it in t4e e1ercise of its po6ers and performance of its duties and functions9 and (1-) &o e1ercise suc4 ot4er po6ers as ma#, from time to time, 5e conferred upon it 5# t4e court: SEC. ). .ction b! management committee. % A ma<orit# of its mem5ers s4all 5e necessar# for t4e management committee to act or ma,e a decision: &4e c4airman of t4e management committee s4all 5e c4osen 5# t4e mem5ers from among t4emselves: &4e committee ma# delegate its management functions as ma# 5e necessar# to operate t4e 5usiness of t4e entit# under management and preserve its assets: SEC. *. Transactions deemed to be in bad "aith. % All transactions made 5# t4e previous management and directors s4all 5e deemed fraudulent and are rescissi5le if made 6it4in t4irt# ( 0) da#s prior to t4e appointment of t4e receiver or management committee or during t4eir incum5enc# as receiver or management committee: SEC. ,. 7ees and e&penses. % &4e receiver or t4e management committee and t4e persons 4ired 5# it s4all 5e entitled to reasona5le professional fees and reim5ursement of e1penses 64ic4 s4all 5e considered as administrative e1penses: SEC. -. Immunit! "rom suit. % &4e receiver and mem5ers of t4e management committee and t4e persons emplo#ed 5# t4em s4all not 5e su5<ect to an# action, claim or demand in connection 6it4 an# act done or omitted 5# t4em in good fait4 in t4e e1ercise of t4eir functions and po6ers: All official acts and transactions of t4e receiver or management committee dul# approved or ratified 5# t4e court s4all render t4em immune from an# suit in connection 6it4 suc4 act or transaction: SEC. 18. #eports. % >it4in a period of si1t# ((0) da#s from t4e appointment of its mem5ers, t4e management committee s4all ma,e a report to t4e court on t4e state of t4e corporation, partners4ip or association under management: &4ereafter, t4e management committee s4all report ever# t4ree ( ) mont4s to t4e court or as often as t4e court ma# re@uire on t4e general condition of t4e entit# under management: SEC. 11. #emova and rep acement o" a member o" the management committee. % A mem5er of t4e management committee is deemed removed upon appointment 5# t4e court of 4is replacement c4osen in accordance 6it4 section $

of t4is Rule: SEC. 12. 6ischarge o" the management committee. % &4e management committee s4all 5e disc4arged and dissolved under t4e follo6ing circumstances7 (1) >4enever t4e court, on motion or motu proprio+ 4as determined t4at t4e necessit# for t4e management committee no longer e1ists9 (2) +# agreement of t4e parties9 and ( ) Bpon termination of t4e proceedings: Bpon its disc4arge and dissolution, t4e management committee s4all su5mit its final report and render an accounting of its management 6it4in suc4 reasona5le time as t4e court ma# allo6: R%*E 10 PRO-ISIONA* REME,IES SECTION 1. Provisiona remedies. % A part# ma# appl# for an# of t4e provisional remedies provided in t4e Rules of Court as ma# 5e availa5le for t4e purposes: Co6ever, no temporar# restraining order or status 9uo order s4all 5e issued save in e1ceptional cases and onl# after 4earing t4e parties and t4e posting of a 5ond: R%*E 11 SANC)IONS SECTION 1. Sanctions on the parties or counse . % *n an# of t4e follo6ing cases, t4e court ma#, upon motion or motu proprio, impose appropriate sanctions7 (1) *n case t4e court determines in t4e course of t4e proceeding t4at t4e action is a nuisance or 4arassment suit9 (2) *n case a pleading, motion or ot4er paper is filed in violation of section ), Rule 1 of t4ese Rules9 ( ) *n case a part# omits or violates t4e certification re@uired under section $, Rule 2 of t4ese Rules9 ($) *n case of un6arranted denials in t4e ans6er to t4e complaint9 (') *n case of 6illful concealment or non%disclosure of material facts or evidence9 &4e sanctions ma# include an order to pa# t4e ot4er part# or parties t4e amount of t4e reasona5le e1penses incurred 5ecause of t4e act complained of, including reasona5le attorne#As fees: SEC. 2. 6iscip inar! sanctions on the 0udge. % &4e presiding <udge ma#, upon a verified complaint filed 6it4 t4e Office of t4e Court Administrator, 5e su5<ect to disciplinar# action under an# of t4e follo6ing cases7

(1) 0ailure to o5serve t4e special summar# procedures prescri5ed in t4ese Rules9 or (2) 0ailure to issue a pre%trial order in t4e form prescri5ed in t4ese Rules: R%*E 12 +INA* PRO-ISIONS SECTION 1. Severabi it!. % *f an# provision or section of t4ese Rules is 4eld invalid, t4e remaining provisions or sections s4all not 5e affected t4ere5#: SEC. 2. E""ectivit!. % &4ese Rules s4all ta,e effect on 1 April 2001 follo6ing its pu5lication in t6o (2) ne6spapers of general circulation in t4e P4ilippines: Anne4 5A6 Repu5lic of t4e P4ilippines FFFFFFF Gudicial Region Regional &rial Court +ranc4 FFF ;A!E(s) O0 P=A*;&*008., Plaintiff8s, % versus % Case ;o: FFFFFFFFFF ;A!E(s) O0 "E0E;"A;&8., "efendant8s: 1HHHHHHHHHHH1 PRE%&R*A= OR"ER *: .ummar# of t4e Case **: Preliminar# !atters A: Amendments allo6ed in t4e pleadings +: Rulings on all o5<ections to or comments on admissi5ilit# of an# documentar# or ot4er evidence C: Ot4er matters ta,en up in conference not covered 5# t4e su5se@uent items and actions ta,en t4ereon: ***: .tatement of t4e 0acts A: Admitted +: "isputed 1: Iersion of t4e Plaintiff 2: Iersion of t4e "efendant

*I: *ssues to 5e Resolved A: 0actual +: =egal I: Applica5le =a6s I*: Evidence for t4e Parties All evidence to 5e adduced and presented 5# 5ot4 parties s4all 5e limited to t4ose identified 5elo6: All documentar# evidence 4ave alread# 5een pre%mar,ed and copies t4ereof, after comparison 6it4 t4e original, 4ave 5een given t4e ot4er part# or suc4 part# 4as 5een given an opportunit# to e1amine t4e same in cases 64en generating copies proves impractical: &4e testimonies of t4e 6itnesses 4ave all 5een reduced to affidavit form in accordance 6it4 t4ese Rules and copies t4ereof given to t4e ot4er part#: ;o ot4er evidence s4all 5e allo6ed ot4er t4an t4ose indicated 5elo6 e1cept in accordance 6it4 section -, Rule 2 of t4e *nterim Rules of Procedure for *ntra% Corporate Controversies: A: Evidence of t4e Plaintiff 1: "ocumentar# Evidence a) "ocument ;o: 1 (E14: FFF ) (1) ;ame8&#pe (2) Pre%!ar,ing ;um5er ( ) .ummar# ($) Purpose 5) "ocument ;o: 2 (E14: FFF ) (1) ;ame8&#pe (2) Pre%!ar,ing ;um5er ( ) .ummar# ($) Purpose (Additional documentar# evidence s4all 5e similarl# 2: &estimonial Evidence a) ;ame of 0irst >itness (1) Purpose of t4e testimon# (2) Estimated lengt4 of testimon# 5) ;ame of .econd >itness (1) Purpose of t4e testimon# (2) Estimated lengt4 of testimon# (Additional 6itnesses s4all 5e similarl# presented) : Ot4er Evidence +: Evidence of t4e "efendant 1: "ocumentar# Evidence a) "ocument ;o: 1 (E14: FFF ) (1) ;ame8&#pe

presented)

(2) Pre%!ar,ing ;um5er ( ) .ummar# ($) Purpose 5) "ocument ;o: 2 (E14: FFF ) (1) ;ame8&#pe (2) Pre%!ar,ing ;um5er ( ) .ummar# ($) Purpose (Additional documentar# evidence s4all 5e similarl# 2: &estimonial Evidence a) ;ame of 0irst >itness (1) Purpose of t4e testimon# (2) Estimated lengt4 of testimon# 5) ;ame of .econd >itness (1) Purpose of t4e testimon# (2) Estimated lengt4 of testimon# (Additional 6itnesses s4all 5e similarl# presented) : Ot4er Evidence I**:Cearing "ates

presented)

(&4ese 4earing dates, 64ic4 s4ould 5e sc4eduled not later t4an t4irt# ( 0) da#s from t4e completion at t4e pre%trial, s4all 5e strictl# follo6ed and all postponements 5# eit4er part# s4all 5e deducted from suc4 part#As allotted time to present evidence:) A: .c4edule of PlaintiffAs Presentation of Evidence +: .c4edule of "efendantAs Presentation of Evidence