SEC - Revised Rulesof Procedure of The SEC

2006
SEC MEMORANDUM CIRCULAR NO. 14-06
SUBJECT : Rules Governing the Over the Counter (OTC) Market
WHEREAS, the Securities Regulation Code (SRC) empowers the Securities

and Exchange Commission (Commission) to promulgate rules and regulations and
orders that shall govern Exchanges and other securities trading markets;
WHEREAS, Chapter IX of the SRC contains the sections that pertain to the
regulation of Exchanges and other securities trading markets. Specifically,
Section 32.1 prohibits brokers, dealers, salesmen and associated persons

of broker or dealer from using unregistered Exchange;
Section 32.2 (a) also prohibits brokers, dealers, salesmen and associated
persons of broker or dealer from making, creating or operating, or
enabling another to make, create or operate, any trading market,
otherwise than on a registered Exchange, for the buying and selling of
any security, except in accordance with rules and regulations that the
Commission prescribes; 2007sec
Section 32.2 (b) further authorizes the Commission to promulgate rules

and regulations governing transactions by brokers, dealers, salesmen or
associated persons of broker or dealer, over any facilities of such
trading market and to require such market to be administered by a
self-regulatory organization (SRO) determined by the Commission as
capable of ensuring the protection of investors comparable to that
provided in the case of a registered Exchange, and that such SRO must
provide a centralized marketplace for trading and must satisfy
requirements comparable to those prescribed for registration of
Exchanges in Section 33 of the SRC;
Copyright 2015 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Law Encyclopedia First Release 2015 1
Section 33 requires the registration of an Exchange;
Section 36.2 empowers the Commission to require and enforce

uniformity of trading regulations between or among Exchanges or other
trading markets, where two (2) or more Exchanges or other trading
markets exist;
Section 36.3 recognizes the authority of the Commission to determine

the number, size and location of stock Exchanges, other trading markets
and commodity Exchanges and other similar organizations in the light
of national or regional requirements for such activities with the view to
promote, enhance, protect, conserve or rationalize investment, and;
Section 37 authorizes the Commission, having due regard for national

economic development, to encourage competitiveness in the market to
promulgate rules for the registration and licensing of innovative and
other trading markets or Exchanges covering, but not limited to, the
issuance and trading of innovative securities, securities of small,
medium, growth and venture enterprises, and technology-based
ventures;
WHEREAS, the rules governing the registration of Exchanges have already

been promulgated and are embodied in the Implementing Rules and Regulations
(IRR) of the SRC;
WHEREAS, the rules governing the issuance and trading of innovative and
non-traditional securities and registration and licensing of innovative and
non-traditional markets have been promulgated and are reflected in the Rules and
Regulations on Alternative Trading Systems (ATS);
WHEREAS, the existing Rules Governing Secondary Market Trade of

Government Securities must be strengthened;
WHEREAS, there is a need to promulgate rules governing existing trading

market that shall recognize the activities of brokers, dealers, salesmen and associated
persons of broker or dealer in trading securities that are otherwise not qualified for
listing or trading in an Exchange or ATS, and support the bilateral negotiation
between the buyer and seller before concluding a transaction which is generally
referred to as the OTC market; TESICD
WHEREAS, it is essential to ensure that the OTC market shall operate in a
manner that is consistent with investor protection, market integrity and transparency
in order to promote the development of the capital market;
NOW THEREFORE, the Commission hereby issues and promulgates the

following rules governing OTC market and the transactions and persons involved
therein.
SECTION 1. Title, Applicability and Interpretation
A. These rules shall be known as the "Rules Governing The

Over-The-Counter (OTC) Market" or "OTC rules" for brevity. These rules shall
govern the operation and use of an OTC market by registered persons such as brokers,
dealers, salesmen or associated persons of broker or dealer, who trade or deal in
securities in the secondary market.
B. The requirements under these rules shall be in addition to those provided

under the following: (1) SRC and other related laws and their IRRs insofar as their
provisions are applicable; (2) internal policies, procedures, conventions of brokers or
dealers, and; (3) rules, procedures and conventions of the SRO that shall regulate and
supervise the brokers, dealers, salesmen or associated persons of broker or dealer who
participate in the OTC market, to the extent that such policies, rules, procedures and
conventions do not contravene the SRC, its IRR and these rules.
C. The OTC rules shall not alter or abrogate the obligations of a broker,
dealer, salesman or associated person of broker or dealer to comply with other
applicable laws, rules, or regulations that may govern the operations of such
registered persons.
D. These rules shall be construed in a manner which shall establish a socially

conscious free market that regulates itself, ensure transparency and full and timely
disclosure of material information, protect investors, preserve market integrity, avoid
systemic risk, prevent fraudulent or manipulative devices and practices, enhance the
democratization of wealth and promote the development of the capital market.
SECTION 2. Definition of Terms For purposes of these rules, the

following definition of terms shall apply unless the context otherwise requires:
(A) Algorithm refers to a set of rules that govern the process of prioritizing
and matching of quotations against contra orders.
(B) Associated person of broker or dealer (AP) refers to any person employed
full time by a broker or dealer whose responsibilities include internal control
supervision of other employees, agents, salesmen, officers, directors, clerks and
stockholders of such broker or dealer for compliance with the SRC and its IRR. An
AP shall not perform other duties without Commission approval and subject to the
condition that the broker or dealer will maintain the appropriate Chinese Wall
between the functions of an AP and that of his other duties.
(C) Broker refers to a person engaged in the business of buying and selling
securities for the account of others.
(D) Dealer refers to a person who buys and sells securities for his own
account in the ordinary course of business.
(E) Government Securities Eligible Dealer or GSED refers to a dealer

registered by the Commission as such.
(F) OTC Market refers to the market created by the buying and selling of a
security on a bilateral basis between parties that takes place outside of an Exchange or
Alternative Trading System (ATS).
(G) OTC Quotation System or Quotation System refers to the system defined
in Section 9 of these rules.
(H) OTC Transaction or OTC Trade refers to a purchase or sale of security

that takes place in an OTC market.
(I) Participant in an OTC Market refers to a broker, dealer, salesman or

associated person of broker or dealer who is authorized to participate in the OTC
market. The term "counterparty" as used in these rules refers to a person who is the
other party to an OTC transaction.
(J) Qualified Investor refers to any of the qualified buyers defined under
Section 10.1 (L) of the SRC and any of the institutional accounts defined under SRC
Rule 52.1-6 of the IRR of the SRC or such other person declared by the Commission
by way of rule or order as a qualified investor taking into consideration such person's
net worth or financial background would allow him to bear the risk that may arise
from participating in an OTC market.
(K) Salesman refers to a natural person hired to buy and sell securities on a
salary or commission basis properly endorsed to the Commission by the employing
broker or dealer. It includes any employee of an issuer company whose compensation
is determined directly or indirectly on sales of the issuer's securities.
(L) Self-Regulatory Organization or SRO refers to an organized Exchange,

registered clearing agency or any organization or association registered as an SRO
under Section 39 of the SRC to enforce compliance with relevant provisions of the
SRC and IRR issued thereunder, and mandated to make and enforce its own rules,
which have been approved by the Commission, by their members and/or participants.
It is an organization that enforces fair, ethical and efficient practices in the securities
and commodity futures industries, including securities and commodities Exchanges.
(M) Secondary market refers to the market where outstanding securities are
bought and sold. In contrast, primary market refers to a market where new securities
are sold.
SECTION 3. Making, Creating or Operating an OTC Market
A. A broker, dealer, salesman, or associated person of broker or dealer,

singly or in concert with any other person, is prohibited from making, creating or
operating or enabling another to make, create or operate an OTC market, except in
accordance with these rules.
B. A person shall be viewed to be making, creating or operating an OTC

market:
1. If in the ordinary course of his business, he buys, sells or publishes or

submits for publication a quotation to a quotation system, or holds
himself before the public that he is ready or his act is perceived that he
is ready to buy or sell or to publish or submit for publication a quotation
to a quotation system, for any security, other than in an Exchange or
ATS. In this case, he shall be construed to be acting as dealer in an
OTC market and shall be registered accordingly.
2. If he searches for a counterparty to a buy or sell order that is left with

him by another person for his disposal or holds himself before the
public that he is ready or he is perceived that he is ready to search for a
counterparty to a buy or sell order that is left with him for his disposal,
either by direct search or participation in a quotation system, for any
security, other than in an Exchange or ATS. In this case, he shall be
construed to be acting as broker in an OTC market and shall be
registered accordingly. HEDSIc
3. If he represents himself as an agent or salesman of or affiliated with a

dealer or broker as construed in this section and buys, sells or publishes
or submits for publication a quotation, for and on behalf of the principal
or customer account of such dealer or broker, for any security, other
than in an Exchange or ATS. In this case, he shall be construed to be
acting as a salesman of broker or dealer in an OTC market and shall be
registered accordingly.
C. A person shall be viewed to be enabling another person to make, create

or operate an OTC market if he sells or buys a security or publishes or submits for
publication a quotation in other person's quotation system.
D. A group of two or more brokers, dealers and/or salesmen of broker or

dealer shall be viewed to be acting in concert in making, creating or operating an
OTC market if in buying and selling a security between and/or among each other, in a
market other than an Exchange or ATS, the group utilizes a common quotation
system and the access to such common quotation system by other persons is restricted
by some standards, conventions or requirements prescribed by the group or the
operator of the quotation system.
E. Nothing herein shall preclude the Commission from declaring any person
to be making, creating or operating an OTC market, or enabling another person to
make, create or operate an OTC market or acting in concert with other person in
making, creating or operating an OTC market, and impose sanction where the
circumstances warrant.
SECTION 4. Registration of Broker, Dealer, Salesman and Associated

Person of Broker or Dealer In an OTC Market
A. General Provisions:
1. No person shall act as a broker, dealer, salesman or an associated person

of broker or dealer unless he is registered as such pursuant to the
requirements of Section 28 of the SRC.
2. No person shall make, create or operate an OTC market unless he is a

registered broker, dealer or salesman of broker or dealer in an OTC
market.
3. No broker, dealer or salesman shall enable another person to make,
create or operate an OTC market unless the latter is authorized to act as
broker, dealer or salesman in an OTC market.
B. Registration of Broker or Dealer in an OTC Market:
1. In applying for registration as a broker or dealer, the applicant shall

specifically signify in the application his intention to conduct the
activities of a broker or dealer in an OTC market, either singly or in
concert with others, prior to engaging in said activities.
2. A broker or dealer with current registration shall amend his registration

to specifically reflect his intention to conduct the activities of a broker
or dealer in an OTC market, either singly or in concert with others, prior
to engaging in said activities.
C. Registration of Salesman or Associated Person of Broker or Dealer in an

OTC Market:
1. A broker or dealer shall cause the registration of a person or the

amendment of the registration of a salesman or associated person with
current registration before allowing such person to act as a salesman or
associated person of broker or dealer in an OTC market.
2. A salesman or associated person of broker or dealer shall not act as such

unless he has determined that the broker or dealer to which he is
affiliated is registered to act as broker or dealer in an OTC market and
that he is authorized to act as salesman or associated person in an OTC
market.
3. A broker or dealer shall ensure that his salesman or associated person

has acquired the competence and skills to perform the activities of a
salesman or associated person in an OTC market before causing his
registration or the amendment of his existing registration as salesman or
associated person in an OTC market.
SECTION 5. Registration of a Group of Persons To Operate an OTC

Market No group of two or more brokers, dealers and/or salesmen of broker or
dealer shall act in concert in making, creating or operating an OTC market unless
such group forms and causes the registration of an association of brokers and/or
dealers pursuant to Section 39 of the SRC and which association shall act as a
self-regulatory organization (SRO) to regulate and supervise the activities of the
members of the group or unless the brokers, dealers and/or salesmen who are part of
such group are currently members of an SRO in accordance with Section 6 of these
rules.
SECTION 6. Membership in an SRO
A. No broker or dealer shall participate in an OTC market unless he is a

member of an SRO that has been registered with the Commission for the purpose of
regulating and supervising the activities of the broker or dealer in an OTC market.
B. In case a broker or dealer is already a member of an existing SRO whose

current status is for the purpose of regulating and supervising a market other than the
OTC market, such broker or dealer may be allowed to participate in the OTC market;
Provided, that the broker or dealer shows proof and the existing SRO is able to
demonstrate that said SRO is capable of performing its regulatory and supervisory
obligations relative to the activities of the broker or dealer in the OTC market;
Provided further, that the SRO has committed to regulate and supervise the broker or
dealer with respect to such activities; Provided finally, that the SRO files an
amendment to its current SRO registration to reflect its intention to act as SRO in
such OTC market.
C. The Commission may prescribe the governance and ownership structure

of an SRO or require amendment thereto to ensure the effective regulation and
supervision of the OTC market.
SECTION 7. Eligible Investors in an OTC Market
A. An investor in the OTC market shall be treated either as a qualified

investor or as a non-qualified investor.
B. An investor falling under the definition of Section 2 (J) of these rules may
be recognized as a qualified investor and allowed to deal directly in an OTC market
subject to any of the following conditions:
1. An investor who opts to participate as a qualified investor can directly

buy or sell security in an OTC market; Provided, that this type of
participation is explicitly recognized and accepted by a broker or dealer
that singly makes, creates or operates an OTC market by embodying the
same in the client agreement required under SRC Rule 30.2 (3);
Provided further, that if an investor participates in an OTC market
operated by a group, this type of participation is explicitly recognized
and accepted by the group based on the participation agreement entered
into by all participants and/or on the internal rules prescribed by the
OTC market and approved by the Commission. cDTCIA
2. An investor who opts not to participate as a qualified investor shall be

treated as non-qualified investor and shall participate in the manner
allowed for non-qualified investor.
C. A non-qualified investor shall not participate in an OTC market unless

such participation is in any of the following manners:
1. Through the service of another person such as broker, investment house

or bank, each in its capacity as an authorized broker in an OTC market;
or
2. Through participation in a registered or investment collective

investment scheme such as a company, non-directional trust fund or
pension fund.
D. Nothing in these rules shall be construed to mean that a qualified investor

has waived his right to protection of the SRC and its IRR.
SECTION 8. Eligible Securities in an OTC Market
A. A broker, dealer or salesman of broker or dealer shall buy or sell or quote

a buy or sell price in the OTC market only in the following categories of securities:
1. A security that is registered pursuant to Section 8 of the SRC;
2. A security that is exempt from registration pursuant to Section 9 of the

SRC;
3. A security that is exempt from registration pursuant to Section 10 of the

SRC;
4. A security of an entity that is deemed as a "public company" pursuant to

Section 38 of the SRC and its IRR;
B. Notwithstanding paragraph A of this section, a security that is already

being traded in an Exchange or an ATS shall not be quoted or traded in an OTC
market unless the Commission specifically allows the quoting or trading of such
security in an OTC market.
C. Recognizing the role of government securities in the government's effort

in laying down monetary and fiscal policies, the Commission hereby allows the
trading of government securities in an OTC market.
SECTION 9. Quotation and Quotation System
A. Except as otherwise specified in these rules, "quotation" shall mean any

bid or offer at a specified price with respect to a security, or any indication of interest
by a broker or dealer in receiving bid or offer from others for a security, or any
indication by a broker or dealer that he wishes to advertise his general interest in
buying or selling a particular security.
A debt issue shall be quoted in a quotation system in peso amount or in any

other applicable currency and/or in yield to maturity.
B. "Quotation system" shall mean any inter-dealer quotation system or any

publication, set of procedures or electronic communications network or other device,
or a combination thereof, which is used by brokers or dealers, singly or in concert
with others, to make known to others their interest in transactions in any security,
including offers to buy or sell at a stated price or otherwise, or invitations of offers to
buy or sell, either for the account of customers or for the principal account.
SECTION 10. Submission of Information Relative to the Quotation System

A. No broker or dealer shall activate a quotation system unless the following

shall have been submitted to the Commission for notation:
1. A description of such quotation system or amendment thereof;
2. A description showing how an actual transaction would transpire;
3. The internal rules and procedures specifying among others:
a. How a person may participate in the quotation system;
b. How a person accepted to participate in the system may submit a

quotation for publication;
c. How a person accepted to participate in the system may view the
quotation of other participants and act as a counterparty to a
published quotation;
d. Other rights and responsibilities of a participant that shall allow

the viewing, submission, execution and settlement of a published
quotation.
4. The procedures for making available to participants information about

the security and the issuer of the security being quoted.
5. An affidavit of undertaking that the quotation system shall connect with

other quotation systems, the central trade reporting system, the system
of an existing exchange or an SRO, upon order of the Commission,
within the manner and period prescribed by the Commission.
B. A quotation system that provides an algorithm that automatically executes

published buy or sell quotation with a contra order shall not be used in an OTC
market unless the owner, operator or common users of such quotation system are able
to demonstrate that the quotation system preserves the characteristic of conducting
bilateral negotiation before execution that is inherent in an OTC trade.
A quotation system is deemed to have achieved this required characteristic if

the system also provides an algorithm that determines the acceptability of the parties
to each other in terms of establishing the ability of each party to either pay the cash or
to deliver the security in a particular trade, before automatically executing the orders
or establishing the creditworthiness of parties based on each party's internal credit
setting policies, or other procedures that the Commission determines to have achieved
the same characteristic.
C. The broker or dealer that will operate the quotation system shall maintain
in his office the following documents which shall be made available to the
representatives of the Commission for inspection and examination:
1. A list of and a written description of each software system or program

and a diagram or matrix showing its applications and functions, if any.
cCTaSH
2. A written description of the hardware component and the

communication facility of the system which shall include configuration,
capacity, and the ability to interconnect with other OTC markets,
Exchanges, ATS, other trading markets and a central trade reporting
system, if and when required by the Commission.
3. A business continuity and recovery plan.
4. Copy of pro-forma agreement between and/or among participants in the

quotation system.
5. Copy of agreement between the operator of a quotation system and any

third-party service provider.
6. The ground(s) and procedures that may disqualify an accepted

participant from participating in the quotation system.
7. The ground(s) and procedures for terminating the quotation on a

security.
8. Risk Management Manual relative to the operation of a quotation

system;
9. Other requirements that the Commission may prescribe.
D. The Commission may add, remove or modify the list of information that
shall be viewed by the participants in a quotation system.
E. For audit and/or surveillance purposes, the dealers, brokers or group of

dealers and/or brokers shall grant the Commission access to their quotation systems.
If a third party is engaged to provide the quotation system service, the service
agreement between the parties, mentioned in subsection C(5) of this section, shall
expressly provide that the Commission shall have access to the quotation system.
SECTION 11. Operation of a Quotation System by a Dealer
A. A dealer who operates a quotation system shall be deemed to act as

market maker for security that shall be quoted in said system.
A dealer acting as a market maker shall publish two(2)-way quotes for a

security in a continuous manner.
B. A dealer shall immediately publish in his quotation system the price,

volume, date and time of the transaction done or executed in his quotation system. A
dealer shall also immediately publish the trade details of transactions executed in
another quotation system on a security for which he makes market upon being made
available by a central trade reporting system.
C. In case where a third party is engaged by a dealer to provide the quotation

system, the dealer shall be accountable for the acts, errors or omissions of the third
party service provider.
SECTION 12. Operation of a Quotation System by a Broker
A. A broker who operates a quotation system shall only facilitate the

publication and/or execution of published quotation but such broker shall not act as a
counterparty to a quotation published in the quotation system he is operating.
B. A broker shall immediately publish in his quotation system the price,

volume, date and time of the transaction done or executed in another quotation system
on a security that is also being quoted in his quotation system. A broker shall also
immediately publish the trade details of transactions executed in another quotation
system on a security for which he creates a market upon being made available by a
central trade reporting system.
C. In case where a third party is engaged by a broker to provide the

quotation system, the broker shall be accountable for the acts, errors or omissions of
the third party service provider.
SECTION 13. Operation of a Quotation System by a Group of Brokers

and/or Dealers
A. A group of brokers and/or dealers that operates a quotation system or uses

a common quotation system which is provided by a third party shall likewise submit
to the Commission the requirements under Section 10 of these rules.
B. The group shall immediately post in its quotation system the price,
volume, date and time of the transaction done or executed in its quotation system. The
group shall also immediately publish the trade details of transactions executed in
another quotation system on a security for which any member of the group makes,
creates or operates a market upon being made available by a central trade reporting
system.
C. In case where a third party is engaged by a group of brokers and/or

dealers to provide the quotation system, the brokers and/or dealers concerned shall be
accountable for the acts, errors or omissions of the third party service provider.
SECTION 14. Integration of the Quotation Systems
A. Pursuant to its mandate under Section 39 of the SRC, the Commission,

when it finds necessary and appropriate in the public interest or for the protection of
the investors, may order the electronic integration of the various quotation systems,
the central trade reporting system, the systems of an Exchange, SRO and/or other
market participants, in a manner and within reasonable period that it shall prescribe.
Such integration should be able, among others, to ensure transparency, facilitate
exchange of information and route orders in a security among competing quotation
systems to achieve, among others, best execution.
B. The Commission may also require a broker or dealer or group of brokers

and/or dealers to provide the Commission access and linkage to his or its quotation
system.
SECTION 15. Required Information Before Initiation or Resumption of

Quotations
A. No broker or dealer shall publish or submit a quotation on a security for

publication in a quotation system unless such broker or dealer has in his records the
following documents:
1. Copy of the prospectus relative to the subject security.
2. Copy of the most recent quarterly and current reports that have been
filed under the provisions of the SRC by the issuer; Provided, that prior
to the initial publication or submission of a quotation, a broker or dealer
shall have in his records copy of the quarterly and current reports for the
last twelve (12) months. DACcIH
3. Copy of the issuer's most recent annual report that has been filed under
the provisions of the SRC by the issuer.
B. Moreover, no broker or dealer shall publish or submit a quotation on a

security for publication in a quotation system unless such broker or dealer has in his
records the following specific information which shall be reasonably current in
relation to the day the quotation is submitted and which the broker or dealer shall
make reasonably available to any person expressing an interest in a proposed
transaction in the security with such broker or dealer:
1. Exact name of the issuer and its predecessor (if any).
2. Address of the issuer's principal office.
3. Latest articles of incorporation and by-laws of issuer.
4. Exact title and class of the security.
5. Par or stated value of the security.
6. Number of shares or total amount of the securities issued and

outstanding based on the latest report filed with the Commission.
7. Coupon rate, date of issue and maturity date.
8. Material features of the security such as convertibility, callability,

redemption, lock-up period and the likes.
9. Name and address of the transfer agent and/or registrar.
10. Nature of the issuer's business.
11. Nature of products of or services offered by the issuer.
12. Nature and extent of the issuer's facilities.
13. Names of the chief executive officer and members of the board of
directors and other key officers of the issuer.
14. Issuer's most recent balance sheet and profit and loss and retained
earnings statements.
15. Similar financial information for such part of the two (2) preceding
fiscal years as the issuer or its predecessor has been in existence.
16. Whether the broker or dealer or any associated person is affiliated,

directly or indirectly with the issuer.
17. Whether the quotation is being published or submitted on behalf of any

other broker or dealer, and, if so, the name of such broker or dealer.
18. Whether the quotation is being submitted or published directly or

indirectly on behalf of the issuer, or any director, officer or any person,
directly or indirectly the beneficial owner of more than ten percent
(10%) of the outstanding units or shares of any equity security of the
issuer, and, if so, the name of such person, and the basis for any
exemption under the SRC for any sale of such securities on behalf of
such person.
If the listed information in subsection B is made available to others, such

delivery, unless otherwise represented, shall not constitute a representation by such
broker or dealer that such information is accurate, but shall constitute a representation
by such broker or dealer that the information is reasonably current in relation to the
day the quotation is submitted, that the broker or dealer has a reasonable basis under
the circumstances for believing the information is accurate in all material respects,
and that the information was obtained from sources which the broker or dealer has a
reasonable basis for believing are reliable.
C. The requirements of subsections A and B shall be complied to the extent

that these are applicable.
D. In addition, a broker or dealer submitting or publishing quotation shall

have in his records the following documents:
1. A record of the circumstances involved in the submission or publication

of such quotation which shall include (a) the identity of the person or
persons for whom the quotation is being submitted or published, and (b)
any information regarding the transactions provided to the broker or
dealer by such person or persons;
2. A copy of any trading suspension order issued by the Commission

pursuant Section 36 of the SRC with respect to any security of the
issuer during the twelve (12) months preceding the date of the
publication or submission of the quotation, or a copy of any other
document issued by the Commission evidencing such trading
suspension; and
3. A copy or a written record of any other material information (whether

favorable or adverse information) regarding the issuer which comes to
the broker's or dealer's knowledge or possession before the publication
or submission of the quotation.
E. A broker or dealer shall preserve the documents and information required

under subsections A, B and D of this section for a period of not less than five (5)
years, the first two (2) years in an easily accessible place.
F. A broker or dealer shall establish procedures to ensure that he will be able

to secure the annual, quarterly, and current reports in a timely manner.
SECTION 16. Trade Reporting Obligations
A. A broker or dealer or group of brokers and/or dealers that owns or

operates a quotation system, shall post or publish in its quotation system all
transactions executed in said system within one (1) minute from execution.
The broker or dealer or group of brokers and/or dealers shall also report said
transactions to a central trade reporting system in a manner and within the period
prescribed by the Commission or by the operator of said central trade reporting
system, whichever is stricter or earlier, but in no case shall it be more than fifteen (15)
minutes from execution of transaction.
The trade details of the transaction that shall be posted or published in the
quotation system and reported to the central trade reporting system shall include the
price, volume, date and time of execution of the transaction.
B. The central trade reporting system shall make available such trade details
to other quotation systems quoting or authorized to quote the same security for
immediate publication in such other quotation systems. CDHaET
SECTION 17. Approval of a Central Trade Reporting System
A. No person shall operate or provide a central trade reporting system unless

such system has been approved by the Commission.
B. In applying for the approval of the system, the operator or provider shall
submit the following requirements:
1. A flowchart showing how actual activities would transpire;
2. A list of and a written description of each software system or program

and a diagram or matrix showing its applications and functions, if any;
3. A written description of the hardware component and the

communication facility of the system which shall include configuration,
capacity, and the ability to interconnect with various OTC participants
such as broker or dealer in OTC markets, Exchanges, ATS or other
trading markets, and with another central trade reporting system, if and
when required by the Commission;
4. Business plan;
5. A business continuity and recovery plan;
6. Implementation Plan;
7. Rules and Operating Procedures;
8. Proof of payment of filing fee in the amount of Fifty Thousand Pesos

(P50,000.00); and
9. Other requirements that the Commission may prescribe in the interest of

the public or protection of investors.
C. The Commission may prescribe the governance and ownership structure

of the central trade reporting system.
SECTION 18. Capital Adequacy Requirements and Reports
A. A broker or dealer in an OTC market shall maintain adequate financial

resources in accordance with the minimum capital adequacy requirements and other
capital-related obligations that are required of such broker or dealer by the
Commission under the SRC and its IRR.
B. If the entity acting as broker or dealer is a bank regulated by the BSP,

then such entity shall maintain the minimum capital adequacy requirement and other
capital-related obligations that are required of said entity by the BSP; Provided, that
the bank shall file with the Commission and the SRO the pertinent documents on
capital that have been filed with BSP not later than three (3) business days after being
filed with BSP.
C. Nothing in these rules shall be construed to mean that the Commission or

the designated SRO is precluded from examining the books and records of the bank
relative to its securities business and from imposing sanction in case of breach.
D. In case of breach by a bank, the Commission shall impose the

corresponding sanctions being enforced on broker or dealer as if the violation is a
breach of SRC Rules on Risk Based Capital Adequacy (RBCA).
E. If the entity is a qualified investor, it shall maintain the minimum capital
adequacy requirement and other capital-related obligations that are required of said
entity by the relevant regulatory agency.
F. In case of breach by a qualified investor, the Commission may declare the

entity as being unfit to continue participating as a qualified investor in the OTC
market.
SECTION 19. Commissions, Charges and Fees
A. A broker or dealer shall not effect transaction in an OTC market unless he

has disclosed and explained to his customer the various fees, if any, involved in
effecting such transaction and the customer has agreed to said fees. New clients
should signify their assent to the various fees being charged by the broker or dealer in
writing.
B. The fees to a transaction should be presented in the confirmation advice

in an unbundled manner.
C. The rules on commissions and charges to the extent these are imposed for
services performed by broker or dealer under SRC Rule 30.2 (5) shall also apply.
SECTION 20. Clearing and Settlement
A. No broker or dealer shall effect transaction in an OTC market unless he

has disclosed and has secured agreement from the counterparty as to how a
transaction shall clear and settle. The broker or dealer shall ensure that the clearing
and settlement arrangement shall be prompt and accurate and shall define among
others: (1) Due date as to settlement; (2) Due date as to delivery of the security, and;
(3) Due date as to payment of cash.
B. The clearing and settlement arrangement in the exchange of assets subject

of the trade shall be on a delivery versus payment (DVP) scheme.
C. No broker or dealer shall allow the clearing and settlement of an OTC

transaction via an intermediary unless such intermediary is a registered clearing
agency or has been authorized by the Commission to act as intermediary.
D. The Commission may require market participants to use uniform

settlement systems in the public interest and for the protection of the investors.
SECTION 21. Other Applicable Rules in the SRC-IRR The provisions
of the SRC and its IRR applicable to a broker, dealer, salesman and associated person
of broker or dealer shall still apply unless explicitly ruled otherwise by the
Commission. Accordingly, a broker, dealer, salesman or associated person of broker
or dealer shall comply with the following rules among others: IATSHE
SRC Rule Number Title

SRC Rule 24.1(b)-1 Prohibition of Manipulative Practices
SRC Rule 24.1(d) Prohibition of Manipulation of Security
Prices; Devices and Practices
SRC Rule 24.2-2 Short Sales
SRC Rule 24.2-3 Prohibition on Guarantees Against Loss
SRC Rule 25.1 Regulation of Options Trading
SRC Rule 26.3 Prohibition of Fraudulent Transactions
SRC Rule 28.1 Registration of Brokers and Dealers
SRC Rule 28.2 Compliance with Qualification Requirements
of
Self Regulatory Organization
SRC Rule 29 Protection of Customer Accounts Where
Registration of a Broker
Dealer is Suspended or Revoked
SRC Rule 30.1 Monitoring of Affiliated Transactions by
Broker Dealers
SRC Rule 30.2 Transactions Responsibilities of Brokers and
Dealers
SRC Rule 31 Commission Role in the Development of
Securities
Market Professionals
SRC Rule 31.2 Trading Limited to Listed Securities and
Exchanges
Registered under the Code
SRC Rule 32.2(a) Best Execution Rule
SRC Rule 34.1 Segregation of Broker Dealer Functions,
Practices
SRC Rule 39.1 Registration, Responsibilities and Oversight of
Self- Regulatory Organization
SRC Rule 40.3 Commission Review Procedures
SRC Rule 40.4 Commission Directions Regarding
Rulemaking
SRC Rule 40.5 Commission Powers Over Exchanges,
Clearing Agencies
and Sell Regulatory Organizations
SRC Rule 48.1 Margin
SRC Rule 49.1*
(*Amended by SEC MC 16 [2004] Restrictions on Borrowing by Member,
Brokers, and Dealers
RBCA for Brokers Dealers)
SRC Rule 49.2 Customer Protection Reserves and Custody of
Securities
SRC Rule 52.1 Accounts and Records, Reports, Examinations
of Exchanges, Members
and Others
SECTION 22. Unlawful Acts In the purchase or sale of a security, a

broker, dealer, salesman or associated person of broker or dealer shall not:
1. Make representation that his registration or the failure of the Commission

to deny or revoke such registration indicates that the Commission has passed upon or
approved his financial standing, business and conduct or the merits of any security or
transaction or transactions therein.
2. Effect transaction in a security for which he is controlled by, controlling,

or under common control with, the issuer of said security unless such information is
disclosed to the customer before the completion of the transaction.
3. Provide advice in or recommend the purchase or sale of security that is

the subject of a primary or secondary distribution of which he is participating or is
otherwise financially interested, or facilitates transaction during the distribution,
unless such participation or interest is disclosed to the customer before the completion
of the transaction.
4. Effect transaction for a discretionary account, which is excessive in size

or frequency in view of the financial resources and character of such account.
5. Effect transaction for a discretionary account unless immediately after

effecting such transaction he records such transaction which shall include, among
others, the name of such customer, name, amount and price of the security, and the
date and time when such transaction took place.
6. Make representation to a customer that the price of the security being

quoted is "at the market" or at a price related to the market price, unless he knows or
has reasonable grounds to believe that a market for such security exists other than that
made, created, or controlled by him, or by any person for whom he is acting or with
whom he is associated in the distribution, or by any person controlled by, controlling
or under common control with him.
SECTION 23. Other Prohibited Acts
A. A dealer shall not:
1. Deal with non-qualified investor except through the broker of said

non-qualified investor.
2. Deal with another dealer, broker or qualified investor unless he has

exerted reasonable effort to determine that such other dealer or broker is
authorized to participate in an OTC market or the investor is indeed
qualified to trade in the OTC market in accordance with these rules.
A dealer shall include in his Written Supervisory Procedures (WSP) the steps
and/or activities that will be undertaken by the dealer relative to the determination
process required in this paragraph.
B. A broker shall not:
1. Accept a non-qualified investor as his customer unless he has

determined and confirmed to the investor that the OTC market and the
securities traded therein in general are suitable to the investor.
2. Publish or accept for publication a quotation from a non-qualified

investor who is his customer unless he has determined and confirmed to
the customer that the security for which the investor expresses an
interest to buy or sell is suitable to the customer.
A broker shall include in his WSP the steps and/or activities that will be
undertaken by the broker relative to the determination and confirmation process
required in this paragraph.
SECTION 24. Penalties
A. Any person who violates any provision of these rules shall be penalized
as follows:
FIRST VIOLATION:
For broker or dealer A minimum of Php100,000.00
For a salesman or associated person A minimum of Php50,000.00
Other person A minimum of Php10,000.00
SECOND VIOLATION:
THIRD AND SUBSEQUENT VIOLATIONS:

B. In addition to the fines above, the Commission may limit the activities of
any person, suspend or revoke his registration.
SECTION 25. Transitory Provisions
A. For Dealer With Existing Registration as GSED:
1. A dealer in government securities with existing registration as GSED

may continue trading in government securities in an OTC market;
Provided, that said dealer shall file an amendment to his registration in
accordance with the requirements of these rules and the procedures
prescribed by the Commission, within forty five (45) days from the
effectivity of these rules. ATcaID
2. A dealer who fails to file an amendment to his registration as GSED

within the prescribed period and continues to trade government
securities shall be considered in violation of Section 32 of the SRC and
shall be penalized accordingly.
3. An application for amendment that does not conform to the procedures

and requirements of the Commission shall be considered as not having
been filed at all.
B. For Dealer Transacting With Non-Qualified Investors:
1. Notwithstanding Section 7 (C) of these rules, a person with existing

registration as dealer or GSED may continue to deal with non-qualified
investor in an OTC market for a period of one (1) year from the
effectivity of these rules; Provided, that said dealer shall file an
amendment to his registration in accordance with the requirements of
these rules and the procedures prescribed by the Commission, within
forty five (45) days from the effectivity of these rules.
2. A dealer who fails to file an amendment to his registration within the

prescribed period and continues to trade in government and proprietary
securities like club shares with non-qualified investor shall be
considered in violation of Section 32 of the SRC and shall be penalized
accordingly.
3. After one (1) year from the effectivity of these rules, a dealer shall not
deal with non-qualified investor in an OTC market except through the
broker of said non-qualified investor unless the Commission rules
otherwise, which ruling shall be contingent, among others, on the
operation of the central trade reporting system and the establishment of
adequate safeguards to protect investors and the public interest.
C. For Broker With Existing Registration To Act as Broker in Government

Securities:
1. A broker with existing registration that allows him to act as broker in

government securities may continue acting as a broker in said securities
in an OTC market; Provided, that said broker shall file an amendment
to his registration in accordance with the requirements of these rules and
the procedures prescribed by the Commission, within forty five (45)
days from the effectivity of these rules.
2. A broker who fails to file an amendment within the prescribed period

and continues to trade government securities shall be considered in
violation of Section 32 of the SRC and shall be penalized accordingly.

been filed at all.
D. For Broker or Dealer With Existing Registration To Act as Broker or

Dealer in Proprietary Securities:
1. A broker or dealer with existing registration that specifies that he shall

act as broker or dealer in proprietary securities like club shares may
continue acting as a broker or dealer in proprietary securities in an OTC
market; Provided, that said broker or dealer shall file an amendment to
his registration in accordance with the requirements of these rules and
the procedures prescribed by the Commission, within forty five (45)
days from the effectivity of these rules.
2. A broker or dealer who fails to file an amendment within the prescribed

period and continues to trade in proprietary securities shall be
accordingly.

been filed at all.
E. Registration of Salesmen and Associated Persons of Broker or Dealer:
1. A salesman or associated person of broker or dealer with existing

registration may continue acting as such in an OTC market; Provided,
that the broker or dealer to which he is affiliated shall file an
amendment to his registration that he shall act as such in an OTC
market in accordance with the requirements of these rules and the
procedures prescribed by the Commission, within forty five (45) days
from the effectivity of these rules.
2. For this purpose, the broker or dealer concerned shall ensure that the
terms and conditions for registration of salesman and associated person
such as education, training and examination and other requirements
under SRC Rule 28.1 (4) are complied with.
3. After one (1) year from the effectivity of these rules, a broker or dealer
who fails to cause the registration of a person but allows such person to
act as his salesman or associated person in an OTC market shall be
accordingly. Similarly, after the lapse of aforesaid one (1) year period,
an unregistered person who acts as salesman or associated person of
broker or dealer in an OTC market shall be considered in violation of
Section 32 of the SRC and shall be penalized accordingly.
F. Registration of SRO To Govern the OTC Market:
1. Within one (1) year from the effectivity of these rules, brokers and
dealers in the OTC market shall be members of an SRO. The brokers,
dealers, salesmen or associated persons of broker and/or dealer may
form and cause the registration of an SRO which shall regulate and
supervise the activities of such members of the SRO.
2. The brokers, dealers, salesmen or associated persons of brokers or

dealers seeking registration to participate in an OTC market shall also
attach to their application for registration an Undertaking that they
commit to join or form an SRO which shall regulate and supervise the
activities of the members of SRO participating in an OTC market.
G. Submission of Quotation Systems:
The brokers or dealers concerned shall submit to the Commission for notation
a description of their quotation systems and other requirements mentioned in Section
10 of these rules, within forty five (45) days from the effectivity of these rules. ATHCac
H. Central Trade Reporting System:
1. Trading participants of an Exchange who are currently reporting done

trades on a security on such Exchange shall continue reporting such
done trades to the Exchange in accordance with rules of the Exchange.
2. If after six (6) months from the effectivity of these OTC Rules, a central
trade reporting system is not yet in place, the Commission may
designate an existing Exchange to act as the central trade reporting
system for a security that is traded in an OTC market. The broker or
dealer or group of brokers and/or dealers operating the quotation system
shall be responsible for the cost attendant to said reporting activity. The
Exchange shall be allowed to charge a reasonable amount for services
provided hereunder based on a cost recovery approach. In case the
Exchange generates revenue from the reported data, it shall return part
of the profit to reporting broker or dealer or group of brokers and/or
dealers based on fair and equitable allocation plan which shall be
approved by the Commission.
3. On the first six (6) months of the operation of the central trade reporting
system, a broker or dealer shall report the trade details of done
transactions to such system not later than fifteen (15) minutes from
execution of transaction. Thereafter, the reporting period shall be as that
prescribed by the Commission or the operator of the system but in no
case be more than fifteen (15) minutes from execution of transaction.
I. Submission of Implementation Plan
Brokers and dealers who intend to participate in the OTC market shall submit
to the Commission their respective implementation plans specifying the definite steps
to be done and schedule to comply with the requirements herein such as but not
limited to: the training and accreditation program for the salesmen and associated
persons of brokers or dealers in the OTC market, compliance with the manner by
which the Best Execution Rule is to be achieved, the manner of reporting trade details
of done transactions, and the concrete steps to be taken towards joining or forming an
SRO which shall regulate and supervise the activities of the SRO members
participating in the OTC market.
The implementation plan shall be submitted within thirty (30) days from the
date a broker or dealer concerned filed his application for registration or amendment
of his current registration wherein he indicated his intention to participate in the OTC
market.
J. Compliance With Other Provisions of IRR
All the applicable provisions in the IRR of the SRC shall be complied with
during the transition period.
SECTION 26. Dispute Resolution. The participants in the OTC market

and other persons involved therein shall incorporate in their client agreement,
participation agreement or any other suitable agreement provisions for prompt
resolution of any dispute that may arise from the implementation of said agreement.
SECTION 27. Separability Clause. Should any provision herein be

subsequently declared unconstitutional or invalid, such declaration shall not affect the
validity or legality of other provisions.
SECTION 28. Repealing Clause. All rules and regulations or any part
or provisions thereof, inconsistent with these rules or any part or provision thereof are
hereby repealed or modified accordingly.
SECTION 29. Effectivity. These rules shall take effect fifteen (15) days
after the date of last publication in two (2) newspapers of general circulation in the
Philippines.
Mandaluyong City, Metro Manila, October 27, 2006.
For the Commission:
(SGD.) FE B. BARIN
Chairperson
(1)
May 30, 2000
2000 REVISED RULES OF PROCEDURE OF THE SECURITIES AND EXCHANGE

COMMISSION
Pursuant to Presidential Decree No. 902-A, as amended, and other related laws
in the interest of just, speedy and inexpensive determination of disputes and claims,
the Commission hereby promulgates the following revised rules of procedure to
govern actions and proceedings before it, in the exercise of its adjudicative functions.
PART I Securities Investigation and Clearing Department and appealed cases

to the En Banc.
TITLE I
RULE I
General Provisions
SECTION 1-1. Title. These Rules shall be known as the "Revised Rules
of Procedure 2000 of the Securities and Exchange Commission"
SECTION 1-2. Definitions. For purposes of these Rules the following

terms shall mean:
a) Commission the Securities and Exchange Commission.
b) Commissioner the Chairman or any of the Associate Commissioners.

DcICEa
c) Hearing Officer any Commissioner, officer, body or panel duly

designated or created by the Commission to hear and decide a particular
case.
d) Order any directive, other than a judgment, of a Hearing Officer.
e) Corporation also refers to a partnership of an association registered

with the Commission. law2005cd
SECTION 1-3. Construction. These rules shall be liberally construed in

order to promote public interest and to assist the parties in obtaining just, speedy and
expensive determination of every action or claim brought before the Commission.
SECTION 1-4. Nature of Proceedings. Subject to the requirements of

due process, proceedings before the Commission shall be summary in nature not
necessarily adhering to or following the technical rules of evidence obtaining in the
regular courts. Provided, however, that the Rules of Court may apply in a suppletory
manner whenever practicable.
SECTION 1-5. Venue of Hearings. All actions or claims brought under

these Rules shall be commenced and heard in the main office of the Commission.
However, an action involving a corporation whose principal office is within a region
where the Commission has an extension office may be filed with the heard in such
extension office.
SECTION 1-6. Assignment of Cases. All cases filed with the

Commission shall be assigned to the Hearing Officers(s) by means of a raffle, unless
for special reasons the Commission determines otherwise. The SICD Director or his
assistant shall conduct the raffle on a regularly scheduled basis in open court with at
least two hearing officers present. The minutes of the raffle proceedings shall be
recorded and signed by the Director and the hearing officers in attendance. (new) IAcDET
RULE II
Parties
SECTION 2-1. Who May Be Parties. Only natural or juridical persons or

entities authorized by law may be parties.
SECTION 2-2. Parties in Interest. All actions or claims filed with the
Commission must be prosecuted and defended in the name of the real party in
interest. All persons having an interest in the subject of the actions or claims and in
obtaining the relief demanded shall be joined as complainants or petitioners. All
persons who claim an interest in the controversy, or the subject thereof adverse to the
complaint or petitioner or who are necessary to a complete determination or
settlement of the questions involved therein, shall be joined as respondents.
SECTION 2-3. Representative Parties. A trustee of an express trust, a

guardian, executor or administrator, or a party authorized by statute, may sue or be
sued without joining the party for whose benefit the action is presented or defended;
but the Hearing Officer may, at any stage of the proceedings, order such beneficiary
to be made a party. An agent acting in his own name and for the benefit of an
undisclosed principal may sue or be sued without joining the principal, except when
the contract involves things belonging to the principal.
SECTION 2-4. Class Suit. When the subject matter of the action or
claim is one of common or general interest to any persons, and the parties are so
numerous that it is impracticable to join all before the Commission, one or more may
sue or defend for the benefit of all. In such case, the Hearing Office shall make sure
that the parties actually before it are sufficiently numerous and representative so that
all interest concerned are fully protected. HEDCAS
SECTION 2-5. Derivative Action. No action or claim shall be brought

by a stockholder in the name of a corporation unless the complainant (a) was a
stockholder at the time the questioned transaction occurred as well as at the time the
action was filed and remains a stockholder during the pendency of the action, and (b)
the complainant alleges with particularity the efforts, if any, made by the complainant
to obtain the action he desires, or the reason for not making the effort.
An action authorized by this section shall not be discontinued, compromised or

settled without approval of the Hearing Officer. If the Hearing Officer determines that
the interest of the stockholders or of any class thereof will be substantially affected by
the discontinuance, compromise or settlement, the Hearing Officer may direct that
notice, by publication or otherwise, be given to the stockholders or any class thereof
whose interests he determines will be so affected.
SECTION 2-6. Compulsory Joinder of Indispensable Parties. Parties in

interest without whom no final determination can be had of an action shall be joined
either as complaint, petitioner or respondent.
SECTION 2-7. Transfer of Interest. In case of any transfer of interest,

the action may be continued by or against the original party, unless the Hearing
Officer upon motion directs the person to whom the interest is transferred to be
submitted in the action or joined with the original party.
SECTION 2-8. Intervention. A person may, at any stage of the

proceedings, be permitted by the Hearing Officer, in his discretion, to intervene in an
action, if he has legal interest in the matter in litigation or in the success of either of
the parties or an interest against both, or when he is so situated as to be adversely
affected by a distribution or other disposition of property in the custody of the
Commission.
SECTION 2-9. Motion for Intervention. A person desiring to intervene

shall file a motion for leave of the Commission with notice upon all parties to the
action. cECaHA
SECTION 2-10. Discretion of the Hearing Officer. All allowing or

disallowing a motion for intervention, the Hearing Officer shall consider whether or
not the intervention will unduly delay or prejudice the adjudication of the rights of the
original parties and whether or not the intervenor's right may be fully protected in a
separate proceeding.
SECTION 2-11. Complaint/Petition or Answer in Intervention. The

intervention shall be made by complaint/petition filed and served in regular form and
may be answered as if it was an original complaint/petition but where intervenor
unites with the respondent in resisting the claims of the complaint or petitioner, the
intervention may be made in the form of an answer to the complaint or petition.
SECTION 2-12. When to File. The complaint/petition or answer in

intervention shall be filed within ten (10) days from notice of the order permitting the
intervention.
RULE III
Commencement of Action:
Pleadings
SECTION 3-1. Commencement of Action. An action under these rules is

commenced by the filing of an original complaint or petition with the Commission.
(new)
SECTION 3-2. Pleadings Allowed. The only pleadings allowed to be

filed are the complaint/petition, compulsory counterclaim pleaded in the answer, the
answer thereto, the reply and the rejoinder. Provided, however, that such restrictions
are not applicable to actions filed under the Rules of Procedure on Corporate
Recovery. (amended) IEAacT
SECTION 3-3. Verification. Only the complaint or petition and the

answer shall be verified by an affidavit that the affiant has read the pleading and the
allegations therein are true and correct of his own knowledge and belief. A pleading
which contains a verification based on "information and belief", or upon "knowledge,
information and belief," or which lacks a proper verification, shall be treated as an
unsigned pleading and shall not be considered as filed. (amended)
SECTION 3-4. Certification. The complainant/petitioner or principal

party shall certify under oath in the complaint or other initiatory pleading asserting a
claim for relief, or in a sworn certification annexed thereto and simultaneously filed
therewith: (a) that he has not thereto commenced any action or filed any claim
involving the same issues in any court, tribunal or agency and, to the best of his
knowledge, not such other action or claim is pending therein; (b) if there is such other
pending action or claim, a complete statement of the present status thereof; and (c) if
he should thereafter learn that the same or similar action or claim has been filed or is
pending, he shall report the fact within five (5) days therefrom to the Commission
wherein his aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but shall cause the dismissal
of the petition without prejudice. The submission of a false certification or
not-compliance with any of the undertakings therein shall constitute indirect contempt
of court, without prejudice to the corresponding administrative and criminal actions.
If the acts of the party or his counsel clearly constitute willful and deliberate forum
shopping, the same shall be ground for summary dismissal with prejudice and
constitute direct contempt, as well as a cause for administrative sanctions.
SECTION 3-5. Prohibited Pleadings. The following pleadings; motions,
or petitions shall not be allowed in the cases covered by these Rules:
a. Motion to dismiss the complaint;
b. Motion for a bill of particulars; EaICAD
c. Motion for new trial, or for consideration of judgment or order, or for

reopening of trial;
d. Petition for relief from judgment;
e. Motion for extension of time to file pleadings, affidavits or any other

paper;
f. Memoranda;
g. Motion to declare the defendant in default;
h. Motion for Postponement and other motions of similar intent; and
i. Motion for leave to amend pleadings. (amended)
SECTION 3-6. Duty of Hearing Officer. The Hearing Officer shall, from
an examination of the allegations in the complaint/petition and such evidence as may
be attached thereto, dismiss the complaint/petition if it is not sufficient in form and
substance. Otherwise, he shall forthwith issue the corresponding summons within five
(5) days from the filing of the complaint/petition.
SECTION 3-7. Form of Pleadings. All pleadings filed shall be printed,

mimeographed or typewritten on legal size bond papers and shall be in English or
Filipino.
Each pleading shall contain a caption setting forth the name of the
Commission, the title of the case, the case number, and designation of the pleading.
CAaSED
The original and two (2) signed copies of every pleading shall be filed with the
Commission, except a complaint, petition, or petition in intervention where there are
more than one respondent in which case, there shall be filed as many additional
signed copies of the said pleading as there are additional respondents.
No pleading shall be accepted by the Commission unless it conforms to the
formal requirements provided by these rules.
SECTION 3-8. Complaint/Petition. The complaint/petition shall contain

the names and residences of the parties, a concise statement of the ultimate facts
constituting the complainant's or petitioner's cause or causes of action, a brief
statement of the rights/sought to be enforced, the law, rule or regulation under which
the complaint/petition is based, a summary of the complainant's or petitioner's claims,
a statement of the issues to be determined, the affidavits of witnesses, copies of
documentary and other evidence, and the relief/s sought.
SECTION 3-9. Capacity. The facts showing the capacity of a party to

sue or be sued or the authority of a party to sue or be sued in a representative capacity
or the legal existence of an organized association of persons that is made a party, must
be averred. A party desiring to raise an issue as to the legal existence of any party or
the capacity of any party to sue or be sued in a representative capacity, shall do so by
specific denial, which shall include such supporting particulars as are peculiarly
within the pleader's knowledge.
SECTION 3-10. Answer. Within twenty (20) days from service of

summons, the defendant shall file his answer to the complaint and serve a copy
thereof on the plaintiff. The answer shall contain the affidavits of witnesses, and
copies of documentary and other evidence, if any. Affirmative and negative defenses
not pleaded in the answer shall be deemed waived, except for lack of jurisdiction and
failure to state a cause of action. Cross-claims and compulsory counterclaims not
asserted therein shall be considered barred. The answered to counterclaims shall be
filed within fifteen (15) days from service of the answer in which they are pleaded.
DacTEH
SECTION 3-11. Effect of Failure to Answer. Should the defendant fail to

answer the complaint within the period above provided, he shall be considered in
default. The Hearing Officer shall, muto proprio, proceed to render judgment granting
the plaintiff such relief as his pleading may warrant, unless the Hearing Officer in his
discretion requires the plaintiff to submit evidence which shall be received ex parte.
SECTION 3-12. Reply and Rejoinder. Within fifteen (15) days from the
service of the answer, the plaintiff may rebut any matter raised in the answer by way
of a reply. A rejoinder on the matters alleged in the reply may be submitted by the
respondent within fifteen (15) days from receipt of the reply. The reply and rejoinder
shall likewise contain the affidavits of witnesses, documentary and other evidence is
supported thereof, if any.
SECTION 3-13. Inadmissibility of Affidavit, Document and Other Evidence.
The affidavits of the parties' respective witnesses, documents, and other supporting
evidence shall be attached to the appropriate pleading. A witness without the requisite
affidavit shall not be allowed to testify except an adverse party or hostile witness.
Documents and other evidence or copies thereof which are not attached to the
pleadings shall be inadmissible. However, the Hearing Officer may allow for
compelling reasons, the submission of affidavits and other documents as the parties
may prove necessary during the pre-trial which must be submitted not later than five
(5) days prior to the commencement of the trial.
Supporting affidavits shall be made on personal knowledge, shall set forth

such facts as would be admissible in evidence, and shall show affirmatively that the
affiant is competent to testify on the matters stated therein. AcICHD
SECTION 3-14. Action or Defense Based on Document. Whenever an

action or defense is based upon a written instrument or document, the substance of
such instrument or document shall be set forth in the pleading, and the original of a
copy thereof shall be attached to the pleading as an exhibit, which shall be deemed to
be part of the pleading or said copy may with like effect be set forth in the pleading.
SECTION 3-15. How to Contest Genuineness of Such Documents. When

an action or defense is founded upon a written instrument, copied in or attached to the
corresponding pleading as provided in the preceding section, the genuineness and due
execution of the instrument shall be deemed admitted unless the adverse party, under
oath, specifically denies them and set forth what he claims to be the facts; but this
provision does not apply when the adverse party does not appear to be a party to the
instrument or when compliance with an order for an inspection of the original
instrument is refused. TEaADS
SECTION 3-16. Special Denial. The respondent must specify each

material allegation of fact the truth of which he does not admit and, whenever
practicable, shall set forth the substance of the matters which he will rely upon to
support his qualification of an averment. Where the respondent desires to deny only a
part or a qualification of an averment, he shall specify so much of it as is true and
material and shall deny only the remainder. Where the respondent is without
knowledge or information sufficient to form a belief as to the truth of a material
averment made in the complaint or petition, he shall so state, and this shall have the
effect of a denial, otherwise the averment shall be deemed admitted.
SECTION 3-17. When Amendments Allowed as a Matter of Right. A

party may amend his pleading once a matter of right at any time before a responsive
pleading is served or, in case of a reply, at any time within ten (10) days after it is
served.
SECTION 3-18. Docket Fee and Other Fees. The docket fee for filing a
complaint or petition, complaint or petition in intervention, unless otherwise provided
by the Commission, shall be one-tenth (1/10) of one percent (1%) of the amount
claimed or prayed for plus twenty percent (20%) of such amount, exclusive of
interest, but which shall not be less than one thousand pesos (P1,000.00); Provided,
however, that if there is no claim for money, the docket fee shall be one thousand
pesos (P1,000.00). Provided, further, that in cases for suspension of payments,
rehabilitation, and involuntary dissolution the docket fee shall be five thousand pesos
(P5,000.00). Provided, finally, that a complaint or petition shall be deemed filed only
after the payment of the required docket fees and all other fees which by law are
payable. SaHIEA
There shall also be collected as process service fee the amount of one hundred
pesos (P100.00) for every respondent named in the complaint or petition. (amended)
RULE IV
Summons
SECTION 4-1. Summons. Upon the filing of the complaint or petition,

the corresponding summons to the respondent shall forthwith be issued within Five
(5) days from date of filing of the complaint. Provided, however, that a summons
shall not be issued in cases under the Rules of Procedure for Corporate Recovery
where the Petitioner is the debtor. (amended)
SECTION 4-2. Contents. The summons shall be directed to the

respondent under the seal of the Commission, and shall contain:
a. The names of the parties to the action; DEHaAS
b. A direction that the respondent answer within the time fixed by these
Rules; and
c. A notice that unless the respondent so answers, plaintiff will take

judgment by default and may be granted the relief applied for as
provided for in Rule III, Sec. 10 of these Rules.
SECTION 4-3. Alias Summons. If summons is returned unserved on any
or all the respondents, or if it has been lost, the Hearing Officer on demand of the
petitioner or complainant may issue alias summons as the case may require, in the
same form as the original. (amended)
SECTION 4-4. By Whom Summons may be Served. The summons may

be served by the process server of the Commission, or for special reasons by any
person specially authorized by the Hearing Officer.
SECTION 4-5. Return of Summons. When the service has been

completed, the process server shall return the summons to the Commission attached
to the proof of service. aTEADI
SECTION 4-6. Personal Service of Summons. The summons shall be

served by handing a copy thereof to the respondent in person or if he refuses to
receive it, by tendering it to him. If the respondent is a corporation, partnership or
association organized and registered under the laws of the Philippines, service must
be made on the President, Manager, Corporate Secretary, or any authorized directors
or officers.
SECTION 4-7. Substituted Service. If, for justifiable causes, the

respondent cannot be served personally with the summons as provided in the
preceding section, service may be effected, (a) by leaving copies of the summons as
the respondent's dwelling house or residence with some person of suitable age and
discretion then residing therein, or (b) by leaving the copies at respondent's principal
office or regular place of business with some competent person in charge thereof.
SECTION 4-8. Service Upon Private Foreign Entities. If the respondent

is a foreign corporation, partnership or association doing business in the Philippines,
service may be made on its resident agent designated in accordance with law for that
purpose, or, if there be no such agent, on the government officials designated by law
to that effect or on any of its officers or agents within the Philippines. The
government official designated by law for the service of summons shall in turn
transmit a copy of the summons to the home office of said respondent foreign entity
by registered mail. The time to answer shall be thirty (30) days from receipt thereof
by the home office, expenses incurred by the said government official for such service
shall be paid in advance by the parties at whose instance the service was made.
(amended)
SECTION 4-9. Service by Publication. When the address of a

respondent is unknown or even if known, his whereabouts cannot be ascertained by
diligent inquiry, service of summons may, by leave of the Commission, be effected
upon him by publication of the complaint or petition once in a newspaper of general
circulation and in such places and for such time as the Commission may order. The
publication expenses shall be defrayed by the petitioner or complainant. Likewise,
when the respondent does not reside or is not found in the Philippines, service may,
by leave of the Commission, be effected out of the Philippines by personal service in
the manner provided under Section 6 hereof, and which may be effected through the
Office of the Department of Foreign Affairs; or by publication of the complaint or
petition once in a newspaper of general circulation and in such places as the
Commission may order. A copy of the complaint or petition as well as the order
granting such leave shall be sent by registered mail to the last known address of the
respondent.
Any order granting such leave shall specify a reasonable time which shall not
be less than thirty (30) days from the date of last publication, in case of a resident
respondent whose address is unknown or whose whereabouts cannot be ascertained
and not less than sixty (60) days from the date of last publication, in case of
non-resident respondent, within which the respondent must answer.
Any application to the Commission for leave to effect service of summons by

publication shall be made by motion in writing, supported by affidavit of the
petitioner or complainant or some person on his behalf, setting forth the grounds for
the application. (amended)
SECTION 4-10. Service by Publication in Action for Suspension or

Revocation of Franchise of a Corporation Instituted by the Prosecution and
Enforcement Department. In actions for suspension or revocation of franchise of a
corporation instituted by the Prosecution and Enforcement Department at the request
and upon the relation of another person when the address of respondent is unknown
or even if known, his whereabouts cannot be ascertained by diligent inquiry, service
of summons, may, by leave of the Commission, be effected upon the respondent by
publication of the complaint or petition and the order granting such leave once in a
newspaper of general circulation. The publication expenses shall be defrayed by the
person at whose request and upon whose relation the same is brought.
SECTION 4-11. Proof of Service. The proof of service of a summons

should be made in writing by the server setting forth the manner, the place and the
date of service; it shall specify any papers which have been served with the process
and the name of the person who received the same; and shall be sworn to when made
by a person other than the server of the Commission.
When the service has been made by publication on a resident respondent

whose address is unknown or whose whereabouts cannot be ascertained, service may
be proved by the affidavit of the printer, editor or business or advertising manager and
to which affidavit a copy of such publication shall be attached. acHTIC
When the service has been made by publication on a non-resident respondent,

service may be proved, aside from the affidavit of the printer, editor or business or
advertising manager, by the affidavit of the server that a copy of the complaint or
petition and the order of the Commission was sent by registered mail to the last
known address of the respondent.
The respondent's voluntary appearance before the Commission shall be

equivalent to service for purposes of acquiring jurisdiction over his person, unless he
makes an explicit reservation thereto.
RULE V
Proceedings Before The Designated Hearing Officer
SECTION 5-1. Preliminary Conference. In any action, the Hearing

Officer shall set the case for preliminary conference within ten (10) days after the last
pleading is filed, and the parties and their attorneys shall be directed to submit a
pre-trial brief and to appear before the hearing Officer on the date set on the notice, to
consider, based on the affidavits, documents and other evidence submitted by the
parties:
a. The possibility of an amicable settlement;
b. The simplification of the issues;
c. Schedule hearing which must be undertaken continuously as scheduled

until completed and terminated; and
d. Such other matters as may aid in the just and speedy disposition of the
case.
The Hearing officer shall terminate the preliminary conference ten (10) days
after its commencement, whether or not the parties have agreed to settle their
differences. (amended)
SECTION 5-2. Amicable Settlement. During the preliminary conference,
the Hearing Officer shall take the initiative in seeing to it that the parties exhaust all
available means to arrive at a fair and reasonable settlement of the case. The parties,
on the other hand, shall be prepared to present during the preliminary conference
specific proposals or counter-proposals to effect such settlement.
Amicable settlement shall always be encouraged, even at any stage of the

proceedings, provided it shall not be prejudicial to the public interest or to third
parties or contrary to law, rules or regulations of the Commission nor against good
morals or public policy. The amicable settlement shall, as far as practicable, be
reduced into writing, duly signed by the parties and/or their counsels, which shall be
the basis of the corresponding order or decision of the Hearing Officer.
SECTION 5-3. Failure to Appear at Preliminary Conference. The

failure of the plaintiff to appear in the preliminary conference shall lead to a dismissal
of his petition. The defendant who appears in the absence of the plaintiff shall be
entitled to judgment on his counterclaim based on the facts alleged and limited to
what is prayed for in the answer. Provided, however, that the Hearing Officer may, in
his discretion, reduce the amount of damages and attorney's fees claimed for being
excessive or otherwise unconscionable.
If a sole defendant shall fail to appear, the plaintiff shall be entitled to

judgment in accordance with the preceding paragraph. This rule shall not apply where
one or more defendants sued under a common cause of action who had pleaded a
common defense shall appear at the preliminary conference.
SECTION 5-4. Hearings. Should the Hearing Officer find upon

consideration of the pleadings, the affidavits and other evidences and position
statements submitted by the parties that a judgment may be rendered thereon without
the need of a formal hearing, he may proceed to render judgment.
In cases where the Hearing Officer deems it necessary to hold a hearing to

clarify specific factual matters before rendering judgment, he shall set the case for
hearing for the purpose. At such hearing, only witnesses whose affidavits were
submitted may be asked clarificatory questions by the Hearing Officer and may be
cross-examined by the adverse party. cIaHDA
The burden of proof in such hearings shall rest upon the person seeking to
establish the facts necessary to support the particular claim or relevant defense. Facts
may be established so long as they are based on substantial evidence. (new)
SECTION 5-5. Preliminary Conference Order. After the preliminary
conference, the Hearing Officer shall issue an Order reciting the action taken at the
conference; the stipulations made by the parties as to any of the matters considered; a
recital of such other evidence as the parties may have agreed upon; the witnesses, if
any, to be presented by all the parties; and the scheduled dates of hearing for
presentation of all such witnesses. Provided, however, that the hearings if any shall be
commenced not later than fifteen (15) days from the date of the termination of the
preliminary conference. The hearing, if any shall be set for successive and continuous'
daily trial and completed within 60 days from the date of the first hearing, 30 days to
be allotted to complainant and 30 days for the respondents. Provided, further, that the
failure of a party to present a witness or witnesses on a scheduled hearing date shall
be deemed a waiver of such hearing date. Provided, finally, that a party may present
such witness or witnesses within the remaining hearing dates. (amended)
SECTION 5-6. Submission of Draft Decisions. Within fifteen (15) days

after the submission of case for resolution, the parties shall submit a draft of the
decision or resolution they seek; stating clearly and distinctly the facts and the law
upon which it is based. The Hearing Officer may adopt, in whole or in part, either of
the parties' draft decision or resolution, or reject both. At the discretion of the Hearing
Officer, this requirement may likewise apply to orders other than the final judgment.
(amended)
RULE VI
Decision
SECTION 6-1. Decision. The Hearing Officer shall render a decision

within thirty days (30) from submission of the case for decision. The draft decision
shall contain clearly and distinctly a statement of the facts proved or admitted by the
parties and the law upon which the judgment is based. (amended)
SECTION 6-2. Finality of Decision. The decision of the Hearing

Officer, in the absence of appeal therefrom, shall become final and executory fifteen
(15) days from the date of receipt thereof.
RULE VII
Contempt
SECTION 7-1. Direct Contempt. A person guilty of misbehavior in the
presence of or so near the Hearing Officer as to obstruct or interrupt the proceedings
before him, including disrespect towards the Hearing Officer, offensive personalities
towards others, or refusal to be sworn to or answer as a witness, or to subscribe an
affidavit or deposition when lawfully required to do so, may be summarily adjudged
in contempt by the Hearing Officer and punished by fine not exceeding one thousand
pesos (P1,000.00) or imprisonment not exceeding ten (10) days, or both such fine and
imprisonment. The Hearing Officer may require the Sheriff or other police agencies
of the locality where the hearing or investigation is conducted, to assist in the
enforcement of this action. EcTIDA
SECTION 7-2. Indirect Contempt. Any person who shall fail or refuse
to comply with the promulgated decision, order or writ of the Hearing Officer without
justifiable cause after being required to do so, shall be punished for contempt
pursuant to the applicable provisions of the New Rules of Court. acAIES
RULE VIII
Subpoena and Subpoena Duces Tecum
SECTION 8-1. When Issued. If the attendance of a witness or the

production of clearly specified documents is necessary, any party may request the
issuance of a subpoena or subpoena duces tecum before or during the scheduled
preliminary conference. Provided, however, that a subpoena may only be issued if the
witness or document sought to be subpoenaed has been previously referred to or
stated in the petition/complaint, the answer or any subsequent pleadings including the
pre-trial. Provided further, that upon request of any party, the Hearing Officer, may in
his discretion issue a subpoena during the hearing for justifiable reasons.
RULE IX
Production or Inspection of Documents or Things
SECTION 9-1. Motion for Production or Inspection Order. Upon

motion of any party showing good cause therefor, the Hearing Officer may (a) order
any party to produce and permit the inspection and copying or photographing, by or
on behalf of the moving party, of any designated documents, papers, books, accounts,
letters, photographs, objects or tangible things, not privileged, which constitute or
contain evidence material to any matter involved in the action and which are in his
possession, custody or control; or (b) order any party to permit entry upon designated
land or other property in his possession or control for the purpose of inspecting,
measuring, surveying, or photographing the property or any designated relevant
object or operation thereon. The order shall specify the time, place and manner of
making the inspection and taking copies and photographs, and may prescribe such
terms and conditions as are just. Provided, however, that request for the production or
inspection of documents or things shall be made before or during the preliminary
conference and only for documents and things previously referred to in the
complaint/petition, answer, reply, or rejoinder.
TITLE II
RULE X
Provisional Remedies
SECTION 10-1. Proceedings on Provisional Remedies. Provisional

remedies applied for by any of the parties shall be heard and resolved by the hearing
officer within twenty (20) days from application. If the hearings thereon are not
completed within that period for any reason whatsoever, the Hearing Officer shall
resolve the matter on the basis of whatever evidence is available from the records of
the case. (new)
RULE XI
Preliminary Injunction
SECTION 11-1. Issuance of Preliminary Injunction. A preliminary

injunction may be granted by the Hearing Officer, upon bond filed with the
Commission to be fixed by the Hearing Officer, at any time after the commencement
of the action and before judgment when it is established after notice and hearing:
a. That the applicant is entitled to the relief demanded, and the whole or
part of such relief consists in restraining the commission or continuance
of the act or acts complained of, or in requiring the performance of an
act or acts, either, for a limited period or perpetually;
b. That the commission, continuance or non-performance of the act or acts

complained of during the litigation would probably work injustice to the
applicant; or
c. That a party, court, agency or person is doing, threatens, or is about to

do, or is procuring or suffering to be done, some act probably in
violation of the rights of the applicant respecting the subject of the
action, and tending to render the judgment ineffectual.
SECTION 11-2. Objection to, or Dissolution of, Injunction. The

application for injunction may be denied upon a showing of its insufficiency. It may
also be denied, or, if granted, may be dissolved on other grounds upon affidavit of the
party or person enjoined, which may be opposed by the applicant also by affidavits. It
may further be denied, or, if granted, may be dissolved, if it appears after hearing that
although the applicant is entitled to the injunction, the issuance or continuance
thereof, as the case may be, would cause irreparable damage to the party or person
enjoined while the applicant can be fully compensated for such damages as he may
suffer, and the former files a bond in an amount fixed by the Hearing Officer
conditioned that he will pay all damages which the applicant may suffer by the denial
or the dissolution of the injunction. If it appears that the extent of the preliminary
injunction granted is too great, it must be modified. TcHCDE
SECTION 11-3. Final Injunction. If after the trial of the action it appears
that the applicant is entitled to have the act or acts complained of permanently
enjoined, the Hearing Officer shall grant a final injunction perpetually restraining the
party or person enjoined from the commission or continuance of the act or acts or
confirming the preliminary mandatory injunction.
SECTION 11-4. Temporary Restraining Order Ex-parte. Any complaint

or initiatory pleading which contains a prayer for the issuance of a temporary
restraining order (TRO) shall be referred to the Chairman or in his absence, the most
senior Associate Commissioner, for appropriate action. If the Chairman or Associate
Commissioner determines, in his discretion, that the matter is of extreme urgency
such that unless a TRO is issued grave injustice and irreparable injury will arise, he
may forthwith issue a TRO effective only for seventy-two (72) hours from issuance.
The parties shall immediately be summoned and the case set for raffle to a Hearing
Officer in their presence. (amended)
SECTION 11-5. Summary Hearing. Before the expiry of the seventy-two

(72) hours, the Hearing Officer/Panel to whom the case was raffled shall conduct a
summary hearing wherein all parties shall be given an opportunity to argue orally or
in writing to determine whether the TRO shall be extended for the remaining
seventeen (17) days. In case where no seventy-two (72) hour-TRO has been issued,
action upon the application for TRO shall be taken by the Hearing Officer/Panel only
after a summary hearing within twenty-four (27) hours after the case is transmitted to
him after the raffle.
SECTION 11-6. When Hearing Deemed Conducted. The summary
hearing shall be deemed to have been conducted when the adverse party or his
counsel has been given the opportunity to oppose the application for TRO whether
orally or in writing. Provided, however, that the failure on the part of the adverse
party or counsel to oppose the application shall be deemed a waiver of his right to be
heard thereon. In which case, the application for TRO shall be deemed submitted for
resolution.
SECTION 11-7. Application for Preliminary Injunction. During the

period of the effectivity of the TRO, the application for writ of preliminary injunction,
if any, shall be heard and resolved by the Hearing Officer/Panel assigned to the case.
If the hearings thereon are not completed within the period of the effectivity of the
TRO for any reason whatsoever, the Hearing Officer/Panel shall resolve the
application for preliminary injunction on the basis of whatever evidence is available
from the records of the case.
SECTION 11-8. Applications for TRO after Commencement of the Action.

At any time after the commencement of the action but before judgment, the SICD
Director or his assistant in his absence, shall act on any application for TRO ex parte
by any of the parties: Thereafter, the proceedings provided in summary hearing in the
preceding sections shall apply. (amended)
SECTION 11-9. Prohibitions. Any motion that would delay the

resolution of the application for TRO is prohibited. A petition for Certiorari with
respect to the issuance of the seventy-two (72) hour TRO is likewise prohibited.
RULE XII
Preliminary Attachment
SECTION 12-1. Preliminary Attachment. At the commencement or at any

time before entry of judgment, the complainant or petitioner or any proper party may
have the property of the adverse party attached as security for the satisfaction of
judgment that may be recovered in those cases analogous to those expressly provided
under Rule 57 (Preliminary Attachment) of the Rules of Court.
SECTION 12-2. Issuance and Contents of Order. An order of attachment

may be issued upon motion with notice and hearing by the Hearing Officer where the
action or claim is pending, and must require the sheriff of the Commission to attach
so much of the property in the Philippines of the party against whom it is issued, not
exempt from execution, as may be sufficient to satisfy the applicant's demand, unless
such party makes deposit or gives a bond in an amount equal to that fixed in the
order, which may be the amount sufficient to satisfy the applicant's demand or the
value of the property to be attached as stated by the applicant, exclusive of costs.
Provided, however, the SICD Director or in his absence his assistant, may issue an
order of attachment ex-parte. (amended)
SECTION 12-3. Except as provided for in the preceding sections, all

provisions of Rule 57 of the Rules of Court shall apply as far as practicable. SDIaCT
RULE XIII
Receivers
SECTION 13-1. Appointment of Receiver. Upon verified petition, one or

more receivers of the property, real or personal which is the subject of the action or
claim, may be appointed by the Hearing Officer after notice and hearing in the
following cases:
a. When a corporation has been dissolved, or is insolvent, or is in

imminent danger of insolvency, or has forfeited its corporate rights;
b. When it appears from the complaint or answer, and such other proof as
the Hearing Officer may require, that the party applying for the
appointment of receiver has an interest in the property or fund which is
the subject of the action or claim, and that such property or fund is in
danger of being lost, removed, or materially injured unless a receiver be
appointed to guard and preserve it; and
c. Whenever in other cases it appears that the appointment of the receiver

is the most convenient and feasible means of preserving, administering,
or disposing of the property in litigation.
SECTION 13-2. Bond on Appointment of Receiver. Before issuing the

order appointing a receiver the Hearing Officer shall require the applicant to file a
bond executed to the party against whom the application is presented, in an amount to
be fixed by the Hearing Officer, to the effect that the applicant will pay such party all
damages he may sustain by reason of the appointment of such receiver in case the
applicant shall have procured such appointment without sufficient cause, and the
Hearing Officer may, in his discretion, at any time after the appointment, require an
additional bond as further security for such damages.
SECTION 13-3. Denial of Application or Discharge of Receiver. The

application may be denied, or the receiver discharged, when the adverse party files a
bond executed to the applicant, in an amount to be fixed by the Hearing Officer, to
the effect that such party will pay the applicant all damages he may suffer by reason
of the acts, omissions, or other matters specified in the application as ground for such
appointment. The receiver may also be discharged if it is shown that his appointment
was obtained without sufficient cause.
SECTION 13-4. Oath and Bond of Receiver. Before entering upon his
duties, the receiver shall be sworn to perform them faithfully, and shall file a bond,
executed to such person and in such sum as the Hearing Officer may direct, to the
effect that he will faithfully discharge his duties in the action or proceeding and obey
the orders of the Commission. (new)
RULE XIV
Management Committee
SECTION 14-1. Appointment of Management Committee. The Hearing

Officer may, upon verified petition or motu proprio, create and appoint a
management committee to undertake the management of corporations, partnerships or
other associations when there is imminent danger of dissipation, loss, wastage or
destruction of assets or other properties or paralization of business operations of such
corporations or entities which may be prejudicial to the interest of minority
stockholders, parties-litigants or the general public.
TITLE III
RULE XV
Election Contest
SECTION 15-1. To What Cases Applicable. The provisions under this

rule shall apply to election contest in stock or non-stock corporations, respectively.
An election contest shall mean any controversy or dispute involving title or

claim to any elective office in a stock or non-stock corporation, the validation of
proxies, the manner of elections, and the qualifications of candidates, including the
proclamation of winners to the office of directors or trustees or other officers directly
elected by the stockholders in a close corporation or by members in a non-stock
corporation when the Articles of Incorporation or By-laws so provides.
It is filed by a stockholder or member of record as of the date of the election on

the grounds of fraud, irregularities and illegal acts committed before, during, after the
casting, counting of votes and declaration of results thereof. (amended) CAHTIS
SECTION 15-2. Duty of the Hearing Officer Upon the Filing of the
Complaint or Petition. Upon the filing of the complaint or petition, the Hearing
Officer from a consideration of the allegations thereof.
a. May dismiss the complaint or petition outright due to:
1. failure to file the case within fifteen (15) days from the date of the
election if the by-laws do not provide for a procedure for resolution, or
within fifteen (15) days from the resolution of the controversy by the
corporation as may be provided for in its by-laws;
2. failure to exhaust intra-corporate remedies in election protests as may

be provided for in the corporation's by-laws; or
b. May order the issuance of summons.
SECTION 15-3. Answer. Upon being served with summons, the

respondent must answer the complaint or petition within ten (10) days from service
thereof which will include all available grounds for a motion to dismiss. The answer
to a compulsory counterclaim must be filed within ten (10) days from service thereof.
SECTION 15-4. Effect of Failure to Answer. Upon failure to answer the

complaint or petition within the reglementary 10-day period herein provided, the
Hearing Officer motu proprio or on motion, shall render judgment as may be
warranted by the facts alleged in the complaint or petition, or compulsory
counterclaim.
SECTION 15-5. Preliminary Conference. Not later than ten (10) days
after the answer is filed, a preliminary conference shall be held, during which the
parties as well as their respective counsel shall be present.
The parties shall submit a pre-trial brief at least three (3) days before the
preliminary conference which shall include:
a. any proposal for an amicable settlement;
b. simplified issues of the case;
c. facts and documents sought to be admitted or stipulated on;
d. number and names of witnesses, and a brief statement of their

testimony; and
e. such other matters as may aid in the prompt disposition of the petition.
Any party who fails to attend the preliminary conference shall be dealt with in
accordance with Section 5.3 of these Rules.
After the preliminary conference, the Hearing Officer shall immediately issue a
preliminary conference order specifying the matters taken up during the conference.
(amended)
SECTION 15-6. Judgment; Hearing; When Ordered. Upon a

consideration of the pleadings, the affidavits and other evidences, and position
statements submitted by the parties, the Hearing Officer shall proceed in accordance
with Section 4 Rule 5 of these rules.
SECTION 15-7. Prohibited Pleadings and Motions. The following

pleadings, motions or petitions shall not be allowed:
a. Motion to Dismiss;
b. Motion for a Bill of Particulars;
c. Motion for New Trial or for Reconsideration;
d. Petition for Relief from Judgment;
e. Motion for Extension of Time to File Pleadings, Affidavits or any Other

Paper;
f. Memorandum;
g. Petition for Certiorari, Mandamus or Prohibition against any

Interlocutory Order of the Hearing Officer;
h. Motion to Declare Respondent in Default;
i. Motion for Postponement;
j. Reply or Rejoinder;
k. Third Party Complaint; and
l. Intervention.
SECTION 15-8. Affidavits. The affidavits required to be submitted under

this rule shall state only facts of direct personal knowledge of the affiants which are
admissible in evidence and shall show their competence to testify to the matters stated
therein. CHcTIA
A violation of this requirement may subject the party or the counsel who
submits the same to disciplinary action and shall be caused to expunge the
inadmissible affidavit or portions thereof from the record.
SECTION 15-9. Hearing and Judgment. In cases where a hearing is

ordered, the same must be finished on the same date set therefor, insofar as
practicable. The judgment in the case must be rendered within fifteen (15) working
days from termination of the hearing.
SECTION 15-10. Decision Immediately Executory. The Decision of the

Hearing Officer shall be immediately executory unless stayed by the Commission En
Banc.
RULE XVI
Petition for Review on Certiorari
SECTION 16-1. Petition for Review or Certiorari. When any Hearing

Officer/Panel of the Commission, has acted without or in excess of its jurisdiction, or
with grave abuse of discretion and there is no appeal, nor any plain, speedy, and
adequate remedy in the ordinary course of law; a person aggrieved thereby may file a
verified petition with the Commission En Banc alleging the facts with certainty and
praying that judgment be rendered annulling or modifying the proceedings, order or
ruling as the law requires, of such Hearing Officer or Panel of Hearing Officers.
The Petition shall be accompanied by a certified true copy of the judgment,
order, or ruling subject thereof, together with copies of all pleadings and documents
relevant thereto. Provided that no petition for review or certiorari shall be given due
course unless it includes a certification of non-filing of multiple petitions and
complaints provided for in Section 3-4 of the Revised Rules of Procedure 2000 of the
Securities and Exchange Commission. (New)
SECTION 16-2. Where petition filed. The petition shall be filed with the
Clerk of the Commission En Banc in seven (7) copies, within ten (10) days from
receipt of the order or ruling subject of the petition; furnishing a copy thereof to the
party interested in sustaining the order and the Hearing Officer/Panel who issued the
same. (New)
SECTION 16-3. Docket Fee. Unless otherwise provided by the

Commission, the docket fee shall be Two Thousand Pesos (P2,000) and Five
Thousand Pesos (P5,000) for cases of suspension of payments. (New)
SECTION 16-4. Parties Respondent. When the Petition filed relates to

the acts or omission of a Hearing Officer of the Commission the petition shall join, as
parties respondent, the person or persons interested in sustaining the order, and it shall
be the duty of such person or persons to defend the questioned order or ruling. (New)
SECTION 16-5. Order to Answer. If the Petition is sufficient in form and

substance to justify such process, the Commission En Banc shall issue an order
requiring the respondents to answer the petition within ten (10) days from receipt of a
copy thereof. Such order shall be served on the respondent in such manner as the
Commission En Banc may direct. (New)
SECTION 16-6. Expediting Proceedings. Preliminary Injunction. The

Commission En Banc in which the petition is filed may make orders expediting the
proceedings and may also grant a preliminary injunction for the preservation of the
rights of the parties pending such proceedings. (new) EaHcDS
SECTION 16-7. Summary Proceedings. The proceedings before the

Commission En Banc shall be summary in nature. Upon receipt of the verified
petition, the commission En Banc may either dismiss the petition if it is not sufficient
in form and substance or is filed manifestly for delay or if from its face there is no
showing that in issuing the questioned Order/Ruling, the Hearing Officer has acted
without or in excess of his jurisdiction, or has acted with grace abuse of discretion. It
may require the party or parties interested in sustaining the questioned Order/Ruling,
to Comment/Answer thereon within ten (10) days from notice upon the filing of
which the petition is deemed submitted for resolution, unless the Commission En
Banc sets the case for oral arguments. (new)
SECTION 16-8. Stay of the Action. No petition for review or certiorari

shall stay the progress of the action in the main case unless a restraining order is
issued by the Commission En Banc enjoining the further hearing of the main case
and, in which event, the Commission En Banc may also issue such order for the
preservation of the rights of the parties during the pendency of the proceedings. (new)
SECATH
RULE XVII
Appeal
SECTION 17-1. Decision, Order or Ruling Subject to Appeal. Only final

decisions, orders or ruling shall be subject to appeal to the Commission En Banc.
No interlocutory or incidental order shall stay the progress of an action, nor

shall it be the subject of appeal for one party or the other or ruling is rendered for one
party or the other, except as provided in Rule XV hereof. (New)
SECTION 17-2. How Appeal is Taken. Appeal may be taken by serving

upon the adverse party and filing with the Commission En Banc within fifteen (15)
days from notice of Decision, Order or Ruling, a notice of appeal and a memorandum
on appeal and paying the corresponding docket fee therefore. Provided, that no appeal
shall be given due course unless it includes a certification of non-filing of multiple
petitions and complaints provided for in Section 3.3. (new)
SECTION 17-3. Perfection of Appeal. The appeal is deemed perfected

upon the filing of the notice of appeal, memorandum on appeal and payment of the
required docket fee within the period provided for in this Rules. (new)
SECTION 17-4. Notice of Appeal. The notice of appeal shall specify the
parties to the appeal designate the Decision, Order, Ruling or part thereof, appealed
from; and shall indicate the material dates to show that the appeal was seasonably
filed. (new) aHTcDA
SECTION 17-5. Memorandum on Appeal; Form And Contents Thereof.

The full names of all the parties to the proceedings shall be stated in the caption of the
memorandum on appeal and shall include the decision, order, or ruling from which
the appeal is taken, and, in chronological order, copies of only such pleadings,
petition, motions and all interlocutory orders as are related to the appealed decision,
order, or ruling and necessary for the proper understanding of the issue/s involved,
together with such date as will show that the appeal was perfected on time. The
memorandum on appeal in seven (7) copies shall contain a concise statement of the
facts and issues involved, the errors assigned, the grounds relied upon for the appeal
and the arguments in support thereof. (new)
SECTION 17-6. Appeal Fee. Unless otherwise provided by the

Commission, a fee of Two Thousand (P2,000) Pesos shall be charged for every
appeal to the Commission en banc. Provided however, that cases involving Petition
for Suspension of Payments shall be Five Thousand (P5,000) Pesos. (new)
SECTION 17-7. Reply Memorandum. The appellee shall file seven (7)
copies of the reply memorandum with the Clerk of the Commission En banc,
furnishing copy thereof to the appellant, within ten (10) days from receipt of the
memorandum on appeal.
Failure to file said reply memorandum within the period herein specified shall
be construed a waiver to file the same. (new)
SECTION 17-8. Dismissal of Appeal for Non-Compliance. The appeal

may be dismissed by the Commission En banc for failure to comply with this Rules,
or if it is not perfected within the period provided herein, or if the decision, order or
ruling appealed from is not appealable under the rules. (new)
SECTION 17-9. When Appeal Deemed Submitted for Decision. Upon the
filing of the reply memorandum with the Commission En banc, or after the expiration
of the period to file the same and no such memorandum has been filed, the appeal
shall be deemed submitted for decision, unless the Commission En banc moto
proprio, or upon proper motion and for special reason, sets the case for oral
arguments. (new) ECDaTI
SECTION 17-10. Standard Review. Factual findings of the hearing officer

below shall remain undisturbed unless the Commission En banc finds that clear error
has been committed. (new)
SECTION 17-11. Disposition of Appeal. The Commission En banc, in the

exercise of its appellate jurisdiction, may affirm, reverse or modify, the decision,
order or ruling appealed from, or may direct further proceedings to be taken. No
Motion for Reconsideration of the Order or Decision of the Commission En banc
shall be entertained. (new)
RULE XVIII
Conduct of Parties and Hearing Officers
SECTION 18-1. Code of Ethics. Hearing Officers and Commissioner

shall comply with the Code of Ethics for Hearing Officer attached herein as "Annex
A". (new)
SECTION 18-2. Prohibition of Ex-parte Communication. No person who

is a party to or an agent of a party to any proceedings before the commission shall
make or knowingly cause to be made to a hearing officer in such proceeding an ex
parte communication relevant to the merits of the proceeding.
Any Hearing Officer who receives an ex parte communication shall transmit

such communication to the Records Officer, SICD Records Unit. Such materials shall
be made part of the public docket of such proceeding.
Ex parte communication shall include an oral or written communication on

any matter relevant to a proceeding before a hearing officer in which other parties to
the proceeding are not privy to and were not given reasonable prior notice thereof.
(new)
RULE XIX
Effectivity
SECTION 19-1. Repeal and Separability. All existing rules, regulations

or orders or any part thereof inconsistent with this Rules are hereby repealed,
amended or modified accordingly. If any part or provision of these Rules is declared
unconstitutional or illegal, the other parts or provisions shall remain valid.
SECTION 19-2. Effectivity. These Rules shall take effect fifteen (15) days
after publication in a newspaper of general circulation.
City of Mandaluyong
May 30, 2000.
(SGD.) LILIA R. BAUTISTA

Chairman
(SGD.) FE ELOISA C. GLORIA

Associate Commissioner
(SGD.) EDIJER A. MARTINEZ

(SGD.) ROSALINDA U. CASIGURAN

(SGD.) DANILO L. CONCEPCION

Published at Manila Standard dated June 27, 2000.
ANNEX "A"
CODE OF CONDUCT FOR HEARING OFFICERS
PREAMBLE
Honorable, competent and independent Hearing Officers in the Securities and

Exchange Commission exist to administer justice and thus promote the unity of the country,
the stability of government, and the well-being of the people.
CANON 1
A Hearing Officer shall uphold the integrity of his office and help promote the
independence of the Commission.
Rule 1-1. A Hearing Officer shall adhere to maintain and enforce high standards
of conduct, and shall personally observe those standards so that the integrity and
independence of his office will be preserved. ACDIcS
The provisions of this Code are to be construed and applied further to this objective.
CANON 2
A Hearing Officer shall avoid impropriety and the appearance of impropriety in all of
his activities.
Rule 2-1. A Hearing Officer shall respect and comply with the law and shall act at
all times in a manner that promotes public confidence in the integrity and impartiality of the
Commission.
Rule 2-2. He should not allow family, social, political, or other relationships to
influence his conduct or judgment, nor shall he convey or permit others to convey the
impression that any individual is in a special position to influence him.
CANON 3
A Hearing Officer shall perform the duties of his office impartially and diligently.
Rule 3-1. He should hear and decide all matters assigned to him except those in
which he or she is disqualified.
Rule 3-2. A Hearing Officer shall be faithful to the law regardless of partisan
interests, public clamor, or fear of criticism, and shall maintain professional competence in
the law.
Rule 3-3. He should require order and decorum in proceedings before him. He
should be patient, dignified, and courteous to litigants, witnesses, lawyers and other with
whom he deals with in an official capacity, and shall require similar conduct of lawyers and
all staff and personnel under his direction and control.
Rule 3-4. A Hearing Officer shall perform his duties without bias or prejudice. He
shall not, in the performance of these duties, by words or conduct, manifest bias or prejudice,
including but not limited to bias or prejudice based upon race, sex, religion, national origin,
disability, age sexual orientation, or socio-economic status.
Rule 3-5. The Hearing Officer shall accord to every person who has a legal
interest in a proceeding, or that person's lawyer, full right to be heard according to law. He
shall not initiate or consider ex parte communications, or consider other communications
made to him outside the presence of the parties concerning pending or impending
proceeding, except as follows:
a. To obtain the advice of a disinterested expert on the law applicable to a

proceeding before him, if he gives notice to the parties of the person consulted
and the substance of the advice, and affords the parties reasonable opportunity
to respond.
b. Consult with Commission personnel and other Hearing Officers whose
function is to aid him in carrying out his adjudicative responsibilities.
c. A Hearing Officer, may initiate ex parte communications, where

circumstances require, for scheduling, administrative purposes, or
emergencies that do not deal with substantive matters provided that no party
will again a procedural or tactical advantage as a result of the ex parte
communication, and the Hearing Officer makes provision promptly to notify
all the other parties of the substance of the ex parte communication and
allows an opportunity to respond.
d. Ex parte motions allowed under the Rules and form part of the records.
Rule 3-6. A Hearing Officer shall dispose of all matters fairly, promptly, and
efficiently.
Rule 3-7. A Hearing Officer shall not make any public comment about a pending
or impending proceeding, and shall not make any nonpublic comment that might
substantially interfere with a fair trial or hearing. The Hearing officer shall require similar
abstention on the part of the Commission's personnel subject to his direction and control This
Cannon does not prohibit Hearing Officer from making statements in the course of their
official duties or from explaining for public information the procedures of the Commission,
and does not apply to proceedings in which the Hearing Officer is a litigant in a personal
capacity.
Rule 3-8. A Hearing Officer shall not disclose or use, for any purpose unrelated to
his duties, nonpublic information acquired in his official capacity.
Rule 3-9. A Hearing Officer shall disqualify himself in any proceeding in which
disqualification is required by law. In all proceedings before him, he shall disclose on the
record information that the Hearing Officer believes the parties or their lawyers might
consider relevant to the question of disqualification, even if he believes there is no actual
basis for disqualification. TEacSA
Rule 3-10. A Hearing Officer should take no part in a proceeding where the
Hearing Officer's impartiality might reasonably be questioned. These include, among others,
proceedings where:
a. The Hearing Officer has personal bias or prejudice concerning a party, or

personal knowledge of disputed evidentiary facts concerning the proceeding;
b. The Hearing Officer served as executor, administrator, guardian, trustee or

lawyer in the case or matters in controversy, or a former associate of the judge
served as counsel during their association, or the Hearing Officer was a
material witness therein;
c. The Hearing Officer is related by consanguinity or affinity to a party litigant

within the sixth degree or to counsel within the fourth degree;
d. The Hearing Officer knows that his spouse or child has a financial interest as
heir, legatee, creditor, fiduciary, or otherwise, in the subject matter in
controversy or in a party to the proceeding, or any other interest that could be
substantially affected by the outcome of the proceeding.
City of Mandaluyong.
June 6, 2000
(SGD.) LILIA R. BAUTISTA

Chairman
(SGD.) FE ELOISA C. GLORIA

(SGD.) EDIJER A. MARTINEZ

(SGD.) ROSALINDA U. CASIGURAN

(SGD.) DANILO L. CONCEPCION

July 15, 1999
NEW RULES OF PROCEDURE OF THE SECURITIES AND EXCHANGE

COMMISSION
Pursuant to Presidential Decree No. 902-A, as amended, and other related laws
in the interest of just, speedy and inexpensive determination of disputes and claims,
the Commission hereby promulgates the following new rules of procedure to govern
actions and proceedings before it, in the exercise of its adjudicative functions. cdrep
RULE I
SECTION 1. Title. These Rules shall be known as the New Rules of

Procedure of the Securities and Exchange Commission.
SECTION 2. Definitions. For purposes of these Rules the following

terms shall mean:
a. Commission the Securities and Exchange Commission.
b. Commissioner the Chairman or any of the Associate

Commissioners.
c. Hearing Officer any Commissioner, officer, body or panel duly

designated or created by the Commission to hear and decide a
particular case.
d. Order any directive, other than a judgment, of a Hearing

Officer.
e. Corporation also refers to a partnership or an association

registered with the Commission.
SECTION 3. Construction. These rules shall be liberally construed in

order to promote public interest and to assist the parties in obtaining just, speedy and
inexpensive determination of every action or claim brought before the Commission.
SECTION 4. Nature of Proceedings. Subject to the requirements of

due process, proceedings before the Commission shall be summary in nature not
necessarily adhering to or following the technical rules of evidence obtaining in the
regular courts. Provided however, that the Rules of Court may apply in a suppletory
manner whenever practicable.
SECTION 5. Venue of Hearings. All actions or claims brought under

these Rules shall be commenced and heard in the main office of the Commission.
However, an action involving a corporation whose principal office is within a region
where the Commission has an extension office may be filed with and heard in such
extension office.
RULE II
Parties
SECTION 1. Who may be Parties. Only natural or juridical persons or

entities authorized by law may be parties. llcd
SECTION 2. Parties in Interest. All actions or claims filed with the

Commission must be prosecuted and defended in the name of the real party in
interest. All persons having an interest in the subject of the actions or claims and in
obtaining the relief demanded shall be joined as complainants or petitioners. All
persons who claim an interest in the controversy or the subject thereof adverse to the
complainant or petitioner or who are necessary to a complete determination or
settlement of the questions involved therein shall be joined as respondents.
SECTION 3. Representative Parties. A trustee of an express trust, a

guardian, executor or administrator, or a party authorized by statute, may sue or be
sued without joining the party for whose benefit the action is presented or defended;
but the Hearing officer may, at any stage of the proceedings, order such beneficiary to
be made a party. An agent acting in his own name and for the benefit of an
undisclosed principal may sue or be sued without joining the principal except when
the contract involves things belonging to the principal.
SECTION 4. Class Suit. When the subject matter of the action or

claim is one of common or general interest to many persons, and the parties are so
numerous that it is impracticable to join all before the Commission, one or more may
sue or defend for the benefit of all. But in such case, the Hearing Officer shall make
sure that the parties actually before it are sufficiently numerous and representative so
that all interests concerned are fully protected.
SECTION 5. Derivative Action. No action or claim shall be brought

by a stockholder in the name of a corporation unless the complainant (a) was a
stockholder at the time the questioned transaction occurred as well as at the time the
action was filed and remains a stockholder during the pendency of the action, and (b)
the complainant alleges with particularity the efforts, if any, made by the complainant
to obtain the action he desires, or the reason for not making the effort.
An action authorized by this section shall not be discontinued, compromised or

settled without approval of the Hearing Officer. If the Hearing Officer determines that
the interest of the stockholders or of any class thereof will be substantially affected by
the discontinuance, compromise or settlement, the Hearing Officer may direct that
notice, by publication or otherwise, be given to the stockholders or any class thereof
whose interests he determines will be so affected.
SECTION 6. Compulsory Joinder of Indispensable Parties. Parties in

interest without whom no final determination can be had of an action shall be joined
either as complainant, petitioner or respondent.
SECTION 7. Transfer of interest. In case of any transfer of interest,

the action may be continued by or against the original party, unless the Hearing
Officer upon motion directs the person to whom the interest is transferred to be
substituted in the action or joined with the original party.
SECTION 8. Intervention. A person may, at any stage of the

proceedings, be permitted by the Hearing Officer, in his discretion, to intervene in an
action, if he has legal interest in the matter in litigation or in the success of either of
the parties or an interest against both, or when he is so situated as to be adversely
affected by a distribution or other disposition of property in the custody of the
Commission.
SECTION 9. Motion for Intervention. A person desiring to intervene

shall file a motion for leave of the Commission with notice upon all parties to the
action.
SECTION 10. Discretion of the Hearing Officer. In allowing or

disallowing a motion for intervention, the Hearing Officer shall consider whether or
not the intervention will unduly delay or prejudice the adjudication of the rights of the
original parties and whether or not the intervenor's right may be fully protected, in a
separate proceeding.
SECTION 11. Complaint/Petition or Answer in Intervention. The

intervention shall be made by complaint/petition filed and served in regular form and
may be answered as if it was an original complaint/petition but where intervenor
unites with the respondent in resisting the claims of the complainant or petitioner, the
intervention may be made in the form of an answer to the complaint or petition.
SECTION 12. When to File. Unless a shorter period is fixed by the

Hearing Officer, the complaint/petition or answer in intervention shall be filed within
ten (10) days from notice of the order permitting the intervention.
RULE III
Commencement of Action: Pleadings
SECTION 1. Pleadings Allowed. The only pleadings allowed to be

filed are the complaint/petition, compulsory counterclaim pleaded in the answer, the
answer thereto, the reply and the rejoinder. LexLib
SECTION 2. Verification. All pleadings filed with the Commission

shall be verified by an affidavit that the affiant has read the pleading and the
allegations therein are true and correct of his own knowledge and belief. A pleading
which contains a verification based on "information and belief", or upon "knowledge,
information and belief," or which lacks a proper verification, shall be treated as an
unsigned pleading and shall not be considered as filed.
SECTION 3. Certification. The complainant/petitioner or principal

party shall certify under oath in the complaint or other initiatory pleading asserting a
claim for relief, or in a sworn certification annexed thereto and simultaneously filed
therewith: (a) that he has not thereto commenced any action or filed any claim
involving the same issues in any court, tribunal or agency and, to the best of his
knowledge, no such other action or claim is pending therein; (b) if there is such other
pending action or claim, a complete statement of the present status thereof; and (c) if
he should thereafter learn that the same or similar action or claim has been filed or is
pending, he shall report the fact within five (5) days therefrom to the Commission
wherein his aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but shall cause the dismissal
of the petition without prejudice. The submission of a false certification or
non-compliance with any of the undertakings therein shall constitute indirect
contempt of court, without prejudice to the corresponding administrative and criminal
actions. If the acts of the party or his counsel clearly constitute willful and deliberate
forum shopping, the same shall be ground for summary dismissal with prejudice and
shall constitute direct contempt, as well as a cause for administrative sanctions.
SECTION 4. Prohibited Pleadings. The following pleadings, motions,

or petitions shall not be allowed in the cases covered by these Rules:
a. Motion to dismiss the complaint;
b. Motion for a bill of particulars;
c. Motion for new trial or for reconsideration of judgment or order, or

for reopening of trial;
d. Petition for relief from judgment;
e. Motion for extension of time to file pleadings, affidavits or any

other paper;
f. Memoranda;
g. Motion to declare the defendant in default;
h. Motion for Postponement;
i. Supplemental pleadings; and
j. Motion for leave to amend pleadings.
SECTION 5. Duty of Hearing Officer. The Hearing Officer shall, from

an examination of the allegations in the complaint/petition and such evidence as may
be attached thereto, dismiss the complaint/petition if it is not sufficient in form and
substance. Otherwise, he shall forthwith issue the corresponding summons within five
(5) days from the filing of the complaint/petition.
SECTION 6. Form of Pleadings. All pleadings filed shall be printed,

mimeographed or typewritten on legal size bond papers and shall be in English or
Filipino.
Each pleading shall contain a caption setting forth the name of the
Commission, the title of the case, the case number, and designation of the pleading.
The original and two (2) signed copies of every pleading shall be filed with the
Commission, except a complaint, petition, or petition in intervention where there are
more than one respondent in which case, there shall be filed as many additional
signed copies of the said pleading as there are additional respondents.
No pleading shall be accepted by the Commission unless it conforms to the

formal requirements provided by these rules.
SECTION 7. Complaint/Petition. The complaint/petition shall contain

the names and residences of the parties, a concise statement of the ultimate facts
constituting the complainant's or petitioner's cause or causes of action, a brief
statement of the right/s sought to be enforced, the law, rule or regulation under which
the complaint/petition is based, a summary of the complainant's or petitioner's claims,
a statement of the issues to be determined, the affidavits of witnesses, copies of
documentary and other evidence, and the relief/s sought. prcd
SECTION 8. Capacity. The facts showing the capacity of a party to

sue or be sued or the authority of a party to sue or be sued in a representative capacity
or the legal existence of an organized association of persons that is made a party, must
be averred. A party desiring to raise an issue as to the legal existence of any party or
the capacity of any party to sue or be sued in a representative capacity, shall do so by
specific denial, which shall include such supporting particulars as are peculiarly
within the pleader's knowledge.
SECTION 9. Answer. Within twenty (20) days from service of

summons, the defendant shall file his answer to the complaint and serve a copy
thereof on the plaintiff. The answer shall contain the affidavits of witnesses, and
copies of documentary and other evidence, if any. Affirmative and negative defenses
not pleaded in the answer shall be deemed waived, except for lack of jurisdiction and
failure to state a cause of action.. Cross-claims and compulsory counterclaims not
asserted therein shall be considered barred. The answer to counterclaims shall be filed
within fifteen (15) days from service of the answer in which they are pleaded.
SECTION 10. Effect of Failure to Answer. Should the defendant fail to

answer the complaint within the period above provided, he shall be considered in
default. The Hearing Officer shall, motu proprio, proceed to render judgment granting
the plaintiff such relief, as his pleading may warrant, unless the Hearing Officer in his
discretion requires the plaintiff to submit evidence which shall be received ex parte.
SECTION 11. Reply and Rejoinder. Within fifteen (15) days from the
service of the answer, the plaintiff may rebut any matter raised in the answer by way
of a reply. A rejoinder on the matters alleged in the reply may be submitted by the
respondent within fifteen (15) days from receipt of the reply. The reply and rejoinder
shall likewise contain the affidavits of witnesses, documentary and other evidence in
support thereof, if any.
SECTION 12. Inadmissibility of Affidavit, Document and Other Evidence.

The affidavits of the parties' respective witnesses, documents, and other supporting
evidence shall be attached to the appropriate pleading. A witness without the requisite
affidavit shall not be allowed to testify except an adverse party or hostile witness.
Documents and other evidence or copies thereof which are not attached to the
pleadings shall be inadmissible. However, the Hearing Officer may allow for
compelling reasons, the submission of affidavits and other documents as the parties
may prove necessary during the pre-trial which must be submitted not later than five
(5) days prior to the commencement of the trial.
Supporting affidavits shall be made on personal knowledge, shall set forth

such facts as would be admissible in evidence; and shall show affirmatively that the
affiant is competent to testify on the matters stated therein.
SECTION 13. Action or Defense Based on Document. Whenever an

action or defense is based upon a written instrument or document, the substance of
such instrument or document shall be set forth in the pleading, and the original of a
copy thereof shall be attached to the pleading as an exhibit, which shall be deemed to
be a part of the pleading or said copy may with like effect be set forth in the pleading.
SECTION 14. How to Contest Genuineness of Such Documents. When

an action or defense is founded upon a written instrument, copied in or attached to the
corresponding pleading as provided in the preceding section, the genuineness and due
execution of the instrument shall be deemed admitted unless the adverse party, under
oath, specifically denies them and set forth what he claims to be the facts; but this
provision does not apply when the adverse party does not appear to be a party to the
instrument when compliance with an order for an inspection of the original
instrument is refused.
SECTION 15. Specific Denial. The respondent must specify each

material allegation of fact the truth of which he does not admit and, whenever
practicable, shall set forth the substance of the matters which he will rely upon to
support his qualification of an averment. Where the respondent desires to deny only a
part or a qualification of an averment, he shall specify so much of it as is true and
material and shall deny only the remainder. Where the respondent is without
knowledge or information sufficient to form a belief as to the truth of a material
averment made in the complaint or petition, he shall so state, and this shall have the
effect of a denial, otherwise the averment shall be deemed admitted.
SECTION 16. When Amendments Allowed as a Matter of Right. A

party may amend his pleading once as a matter of right at any time before a
responsive pleading is served or, in case of a reply, at any time within ten (10) days
after it is served. cdtai
SECTION 17. Docket Fee and Other Fees. The docket fee for filing a
complaint or petition, complaint or petition in intervention, unless otherwise provided
by the Commission, shall be one-tenth (1/10) of one percent (1%) of the amount
claimed or prayed for plus twenty percent (20%) of such amount, exclusive of
interest, but which shall not be less than one thousand pesos (P1,000.00); Provided,
however, that if there is no claim for money, the docket fee shall be one thousand
pesos (P1,000.00). Provided; further, that in cases for suspension of payments,
rehabilitation, and involuntary dissolution the docket fee shall not be less than five
thousand pesos (P5,000.00). Provided, finally, that a complaint or petition shall be
deemed filed only after the payment of the required docket fees and all other fees
which by law are payable.
There shall also be collected as process service fee the amount of one hundred
pesos (P100.00) for every respondent named in the complaint or petition.
RULE IV
Summons
SECTION 1. Summons. Upon the filing of the complaint or petition,

the corresponding summons to the respondent shall forthwith be issued within five (5)
days from date of filing of the complaint.
SECTION 2. Contents. The summons shall be directed to the

respondent under the seal of the Commission, and shall contain:
a. The names of the parties to the action;
b. A direction that the respondent answer within the time fixed by

these Rules; and
c. A notice that unless the respondent so answers, plaintiff will take

judgment by default and may be granted the relief applied for as
provided for in Rule III, Sec. 10 of these Rules.
SECTION 3. Alias Summons. If summons is returned without being

served on any or all the respondents, or if it has been lost, the Hearing Officer on
demand of the petitioner or complainant may issue alias summons as the case may
require, in the same form as the original.
SECTION 4. By Whom Summons may be Served. The summons may

be served by the process server of the Commission, or for special reasons by any
person specially authorized by the Hearing Officer.
SECTION 5. Return of Summons. When the service has been

completed, the process server shall return the summons to the Commission attached
to the proof of service.
SECTION 6. Personal Service of Summons. The summons shall be

served by handing a copy thereof to the respondent in person or if he refuses to
receive it, by tendering it to him. If the respondent is a corporation, partnership or
association organized and registered under the laws of the Philippines, service must
be made on the President, Manager, Corporate Secretary, Cashier, Agent or any of its
directors.
SECTION 7. Substituted Service. If, for justifiable causes, the

respondent cannot be served personally with the summons as provided in the
preceding section, service may be effected, (a) by leaving copies of the summons at
the respondent's dwelling house or residence with some person of suitable age and
discretion then residing therein, or (b) by leaving the copies at respondent's principal
office or regular place of business with some competent person in charge thereof.
SECTION 8. Service Upon Private Foreign Entities. If the respondent

is a foreign corporation, partnership or association doing business in the Philippines,
service may be made on its resident agent designated in accordance with law for that
purpose, or, if there be no such agent, on the government officials designated by law
to that effect or on any of its officers or agents within the; Philippines.
SECTION 9. Service by Publication. When the address of a

respondent is unknown, or even if known, his whereabouts cannot be ascertained by
diligent inquiry, service of summons may, by leave of the Commission, be effected
upon him by publication of the complaint or petition once in a newspaper of general
circulation and in such places as the Commission may order. The publication
expenses shall be defrayed by the petitioner or complainant. Likewise, when the
respondent does not reside or is not found in the Philippines, service may, by leave of
the Commission, be effected out of the Philippines by personal service in the manner
provided under Section 6 hereof, and which may be effected through the Office of the
Department of Foreign Affairs; or by publication of the complaint or petition once in
a newspaper of general circulation and in such places as the Commission may order.
A copy of the complaint or petition as well as the order granting such leave shall be
sent by registered mail to the last known address of the respondent. llcd
Any order granting such leave shall specify a reasonable time which shall not
be less than thirty (30) days from the date of last publication, in case of a resident
respondent whose address is unknown or whose whereabouts cannot be ascertained
and not less than sixty (60) days from the date of last publication, in case of
non-resident respondent, within which the respondent must answer.
Any application to the Commission for leave to effect service of summons by

publication shall be made by motion in writing, supported by affidavit of the
petitioner or complainant or some person on his behalf, setting forth the grounds for
the application.
SECTION 10. Service by Publication in Action for Suspension or

Revocation of Franchise of a Corporation Instituted by the Prosecution and
Enforcement Department. In actions for suspension or revocation of franchise of a
corporation instituted by the Prosecution and Enforcement Department at the request
and upon the relation of another person when the address of respondent is unknown
or even if known, his whereabouts cannot be ascertained by diligent inquiry, service
of summons, may, by leave of the Commission, be effected upon the respondent by
publication of the complaint or petition and the order granting such leave once in a
newspaper of general circulation. The publication expenses shall be defrayed by the
person at whose request and upon whose relation the same is bought.
SECTION 11. Proof of Service. The proof of service of a summons

should be made in writing by the server setting forth the manner, the place and the
date of service; it shall specify any papers which have been served with the process
and the name of the person who received the same; and shall be sworn to when made
by a person other than the server of the Commission.
When the service has been made by publication on a resident respondent

whose address is unknown or whose whereabouts cannot be ascertained, service may
be proved by the affidavit of the printer, editor or business or advertising manager and
to which affidavit a copy of such publication shall be attached.
When the service has been made by publication on a non-resident respondent,
service may be proved, aside from the affidavit of the printer, editor or business or
advertising manager, by the affidavit of the server that a copy of the complaint or
petition and the order of the Commission was sent by registered mail to the last
known address of the respondent.
The respondent's voluntary appearance before the Commission shall be

equivalent to service for purposes of acquiring jurisdiction over his person, unless he
makes an explicit reservation thereto.
RULE V
Proceedings Before the Designated Hearing Officer
SECTION 1. Preliminary Conference. In any action, the Hearing

Officer shall set the case for preliminary conference within ten (10) days after the last
pleading is filed, and the parties and their attorneys shall be directed to appear before
the Hearing Officer on the date set on the notice, to consider, based on the affidavits,
documents and other evidence submitted by the parties:
a. The possibility of an amicable settlement;
b. The simplification of the issues;
c. Schedule hearing which must be undertaken continuously as

scheduled until completed and terminated; and
d. Such other matters as may aid in the just and speedy disposition of
the case.
The Hearing Officer shall terminate the preliminary conference ten (10) days
after its commencement, whether or not the parties have agreed to settle their
differences.
SECTION 2. Amicable Settlement. During the preliminary conference,

the Hearing Officer shall take the initiative in seeing to it that the parties exhaust all
available means to arrive at a fair and reasonable settlement of the case. The parties,
on the other hand, shall be prepared to present during the preliminary conference
specific proposals or counter-proposals to effect such settlement.
Amicable settlement shall always be encouraged, even at any stage of the

proceedings, provided it shall not be prejudicial to the public interest or to third
parties or contrary to law, rules or regulations of the Commission nor against the good
morals or public policy. The amicable settlement shall, as far as practicable, be
reduced into writing, duly signed by the parties and/or their counsels, which shall be
the basis of the corresponding order or decision of the Hearing Officer. cdphil
SECTION 3. Failure to Appear at Preliminary Conference. The

failure of the plaintiff to appear in the preliminary conference shall lead to a dismissal
of his petition. The defendant who appears in the absence of the plaintiff shall be
entitled to judgment on his counterclaim based on the facts alleged and limited to
what is prayed for in the answer. Provided, however, that the Hearing Officer may, in
his discretion, reduce the amount of damages and attorney's fees claimed for being
excessive or otherwise unconscionable.
If a sole defendant shall fail to appear, the plaintiff shall be entitled to

judgment in accordance with the preceding paragraph. This rule shall not apply where
one or more defendants sued under a common cause of action who had pleaded a
common defense shall appear at the preliminary conference.
SECTION 4. Preliminary Conference Order. After the preliminary

conference, the Hearing Officer shall issue an Order reciting the action taken at the
conference; the stipulations made by the parties as to any of the matters considered; a
recital of such other evidence as the parties may have agreed upon; the witnesses, if
any, to be presented by all the parties; and the scheduled dates of hearing for
presentation of all such witnesses. Provided, however, that the hearings shall be
commenced not later than fifteen (15) days from the date of the termination of the
preliminary conference and completed within twenty (20) days from the date of the
first hearing. Provided, further, that the failure of a party to present a witness or
witnesses on a scheduled hearing date shall be deemed a waiver of such hearing date.
Provided, finally, that a party may present such witness or witnesses within the
remaining hearing dates.
SECTION 5. Submission of Position Papers and Draft Decisions.

Within fifteen (15) days after the submission of case for resolution, the parties shall
submit their position papers setting forth the law and the facts relied upon by them.
They shall also be required to submit a draft of the decision or resolution they seek,
stating clearly and distinctly the facts and the law upon which it is based. The Hearing
Officer may adopt, in whole or in part, either of the parties' draft decision or
resolution, or reject both.
RULE VI
Decision
SECTION 1. Decision. The Hearing Officer shall render a decision

within twenty (20) days from submission of the case for resolution.
SECTION 2. Finality of Decision. The decision of the Hearing

Officer, in the absence of appeal therefrom, shall become final and executory fifteen
(15) days from the date of receipt thereof.
RULE VII
Contempt
SECTION 1. Direct Contempt. A person guilty of misbehavior in the

presence of or so near the Hearing Officer as to obstruct or interrupt the proceedings
before him, including disrespect towards the Hearing Officer, offensive personalities
towards others, or refusal to be sworn to or answer as a witness, or to subscribe an
affidavit or deposition when lawfully required to do so, may be summarily adjudged
in contempt by the Hearing Officer and punished by fine not exceeding one thousand
pesos (P1,000.00) or imprisonment not exceeding ten (10) days, or both such fine and
imprisonment. The Hearing Officer may require the Sheriff or other police agencies
of the locality where the hearing or investigation is conducted, to assist in the
enforcement of this action.
SECTION 2. Indirect Contempt. Any person who shall fail or refuse

to comply with the promulgated decision, order or writ of the Hearing Officer without
justifiable cause after being required to do so, shall be punished for contempt
pursuant to the applicable provisions of the New Rules of Court.
RULE VIII
Subpoena and Subpoena Duces Tecum
SECTION 1. When Issued. If the attendance of a witness or the

production of clearly specified documents is necessary, any party may request the
issuance of a subpoena or subpoena duces tecum before or during the scheduled
preliminary conference. Provided, however, that a subpoena may only be issued if the
witness or document sought to be subpoenaed has been previously referred to or
stated in the petition/complaint, the answer or any subsequent pleadings. LexLib
RULE IX
Production or Inspection of Documents or Things
SECTION 1. Motion for Production or Inspection Order. Upon

motion of any party showing good cause therefor, the Hearing Officer may (a) order
any party to produce and permit the inspection and copying or photographing, by or
on behalf of the moving party, of any designated documents, papers, books, accounts,
letters, photographs, objects or tangible things, not privileged, which constitute or
contain evidence material to any matter involved in the action and which are in his
possession, custody or control; or (b) order any party to permit entry upon designated
land or other property in his possession, or control for the purpose of inspecting,
measuring, surveying, or photographing the property or any designated relevant
object or operation thereon. The order shall specify the time, place and manner of
making the inspection and taking copies and photographs, and may prescribe such
terms and conditions as are just. Provided, however, that request for the production or
inspection of documents or things shall be made before or during the preliminary
conference and only for documents and things previously referred to in the
complaint/petition, answer, reply, or rejoinder.
RULE X
Preliminary Injunction
SECTION 1. Issuance of Preliminary Injunction. A preliminary

injunction may be granted by the Hearing Officer, upon bond filed with the
Commission to be fixed by the Hearing Officer, at any time after the commencement
of the action and before judgment when it is established after notice and hearing:
a. That the applicant is entitled to the relief demanded, and the whole
or part of such relief consists in restraining the commission or
continuance of the act or acts complained of, or in requiring the
performance of an act or acts, either for a limited period or
perpetually;
b. That the commission, continuance or non-performance of the act

or acts complained of during the litigation would probably work
injustice to the applicant; or
c. That a party, court, agency or person is doing, threatens, or is
about to do, or is procuring or suffering to be done, some act
probably in violation of the rights of the applicant respecting the
subject of the action, and tending to render the judgment
ineffectual.
SECTION 2. Objection to, or Dissolution of, Injunction. The

application for injunction may be denied upon a showing of its insufficiency. It may
also be denied, or, if granted, may be dissolved on other grounds upon affidavit of the
party or person enjoined, which may be opposed by the applicant also by affidavits. It
may further be denied, or, if granted, may be dissolved, if it appears after hearing that
although the applicant is entitled to the injunction, the issuance or continuance
thereof, as the case may be, would cause irreparable damage to the party or person
enjoined while the applicant can be fully compensated for such damages as he may
suffer, and the former files a bond in an amount fixed by the Hearing Officer
conditioned that he will pay all damages which the applicant may suffer by the refusal
or the dissolution of the injunction. If it appears that the extent of the preliminary
injunction granted is too great, it must be modified.
SECTION 3. Final Injunction. If after the trial of the action it appears

that the applicant is entitled to have the act or acts complained of permanently
enjoined, the Hearing Officer shall grant a final injunction perpetually restraining the
party or person enjoined from the commission or continuance of the act or acts or
confirming the preliminary mandatory injunction.
SECTION 4. Temporary Restraining Order. Any complaint or

initiatory pleading which contains a prayer for the issuance of a Temporary
Restraining Order (TRO) shall be referred to the Chairman or in his absence, the most
senior Associate Commissioner, for appropriate action.
SECTION 5. TRO Issued Ex-Parte. If the Chairman, or in his absence

the most senior Associate Commissioner, determines, in his discretion, that the matter
is of extreme urgency such that unless a TRO is issued grave injustice and irreparable
injury will arise, he may forthwith issue a TRO effective only for seventy-two (72)
hours from issuance. The parties shall immediately be summoned for raffle of the
case to a Hearing Officer/Panel in their presence.
SECTION 6. Summary Hearing. Before the expiry of the seventy-two

(72) hours, the Hearing Officer/Panel to whom the case was raffled shall conduct a
summary hearing to determine whether the TRO shall be extended for the remaining
seventeen (17) days. In case where no seventy-two (72) hour-TRO has been issued,
action upon the application for TRO shall be taken by the Hearing Officer/Panel only
after all the parties are heard within twenty-four (24) hours after the case is
transmitted to him after the raffle.
SECTION 7. When Hearing Deemed Conducted. The summary

hearing shall be deemed to have been conducted when the adverse party or his
counsel has been given the opportunity to oppose the application for TRO whether
orally or in writing. Provided, however, that the failure on the part of the adverse
party or counsel to oppose the application shall be deemed a waiver of his right to be
heard thereon. In which case, the application for TRO shall be deemed submitted for
resolution.
SECTION 8. Application for Preliminary Injunction. During the

period of the effectivity of the TRO, the application for writ of preliminary injunction,
if any, shall be heard and resolved by the Hearing Officer/Panel assigned to the case.
If the hearings thereon are not completed within the period of the effectivity of the
TRO for any reasons whatsoever, the Hearing Officer/Panel shall resolve the
application for preliminary injunction on the basis of whatever evidence is available
from the records of the case. cdphil
SECTION 9. Applications for TRO after Commencement of the Action.

At any time after the commencement of the action but before judgment, any
application for TRO by any of the parties shall be referred to the office of the SICD
Director/Head for appropriate action. The procedure provided in the preceding
sections shall apply.
SECTION 10. Prohibitions. Any motion that would delay the

resolution of the application for TRO is prohibited. A petition for Certiorari with
respect to the issuance of seventy-two (72)-hour TRO is likewise, prohibited.
RULE XI
Preliminary Attachment
SECTION 1. Preliminary Attachment. At the commencement or at any

time before entry of judgment, the complainant or petitioner or any proper party may
have the property of the adverse party attached as security for the satisfaction of
judgment that may be recovered in those cases analogous to those expressly provided
under Rule 57 (Preliminary Attachment) of the Rules of Court.
SECTION 2. Issuance and Contents of Order. An order of attachment
may be issued upon motion with notice and hearing by the Hearing Officer where the
action or claim is pending, and must require the sheriff of the Commission to attach
so much of the property in the Philippines of the party against whom it is issued, not
exempt from execution, as may be sufficient to satisfy the applicant's demand unless
such party makes deposit or gives a bond in an amount equal to that fixed in the
order, which may be the amount sufficient to satisfy the applicants demand or the
value of the property to be attached as stated by the applicant, exclusive of costs.
SECTION 3. Condition of Bond. The party applying for the order

must thereafter give a bond executed to the adverse party in the amount fixed by the
Hearing Officer in his order granting the issuance of the writ, conditioned that the
applicant will pay all the costs which may be adjudged to the adverse party and all
damages which may be sustained by reason of the attachment if the Hearing Officer
shall finally adjudge that the applicant was not entitled thereto.
RULE XII
Receivers
SECTION 1. Appointment of Receiver. Upon verified petition, one or

more receivers of the property, real or personal which is the subject of the action or
claim, may be appointed by the Hearing Officer in the following cases:
a. When a corporation has been dissolved, or is insolvent, or is in

imminent danger of insolvency, or has forfeited its corporate
rights;
b. When it appears from the complaint or answer, and such other

proof as the Hearing Officer may require, that the party applying
for the appointment of receiver has an interest in the property or
fund which is the subject of the action or claim, and that such
property or fund is in danger of being lost, removed, or materially
injured unless a receiver be appointed to guard and preserve it; and
c. Whenever in other cases it appears that the appointment of the

receiver is the most convenient and feasible means of preserving,
administering, or disposing of the property in litigation.
SECTION 2. Bond on Appointment of Receiver. Before issuing the
order appointing a receiver, the Hearing Officer shall require the applicant to file a
bond executed to the party. Against whom the application is presented, in an amount
to be fixed by the Hearing Officer, to the effect that the applicant will pay such party
all damages he may sustain by reason of the appointment of such receiver in case the
applicant shall have procured such appointment without sufficient cause; and the
Hearing Officer may, in his discretion, at any time after the appointment, require an
additional bond as further security for such damages.
SECTION 3. Denial of Application or Discharge of Receiver. The

application may be denied, or the receiver discharged, when the adverse party files a
bond executed to the applicant, in an amount to be fixed by the Hearing Officer, to
the effect that such party will pay the applicant all damages he may suffer by reason
of the acts, omissions, or other matters specified in the application as ground for such
appointment. The receiver may also be discharged if it is shown that his appointment
was obtained without sufficient cause. cdlex
RULE XIII
Management Committee
SECTION 1. Appointment of Management Committee. The Hearing

Officer may, upon verified petition or motu proprio, create and appoint a
management committee to undertake the management of corporations, partnerships or
other associations when there is imminent danger of dissipation, loss, wastage or
destruction of assets or other properties or paralization of business operations of such
corporations or entities which may be prejudicial to the interest of minority
stockholders, parties-litigants or the general public.
RULE XIV
Election Cases
SECTION 1. To What Cases Applicable. The provisions under this

rule shall apply to disputes involving the election of directors or trustees in stock or
non-stock corporations, respectively.
SECTION 2. Pleadings Allowed. The only pleadings allowed to be

filed are the complaint or petition, the answer thereto, and the compulsory
counterclaim. Counterclaims or cross-claims must be asserted in the answer or be
considered barred. All pleadings must be verified.
SECTION 3. Duty of the Hearing Officer Upon the Filing of the
Complaint or Petition. Upon the filing of the complaint or petition, the Hearing
Officer from a consideration of the allegations thereof:
a. May dismiss the complaint or petition outright due to:
1. failure to file the case within fifteen (15) days from the date
of the election if the by-laws do not provide for a procedure
for resolution, or within fifteen (15) days from the
resolution of the controversy by the corporation as may be
provided for in its by-laws;
2. failure to exhaust intra-corporate remedies in election

protests as may be provided for in the corporation's
by-laws; or
b. May order the issuance of summons.
SECTION 4. Answer. Upon being served with summons, the

respondent must answer the complaint or petition within ten (10) days from service
thereof which will include all available grounds for a motion to dismiss. The answer
to a compulsory counterclaim must be filed within ten (10) days from service thereof.
SECTION 5. Effect of Failure to Answer. Upon failure to answer the

complaint or petition, and the compulsory counterclaim within the reglementary
10-day period herein provided, the Hearing Officer motu propio or on motion, shall
render judgment as may be warranted by the facts alleged in the complaint or petition,
or compulsory counterclaim.
SECTION 6. Preliminary Conference. Not later than ten (10) days

after the answer is filed, a preliminary conference shall be held, during which the
parties as well as their respective counsel shall be present. However, a party who is
unable to attend the conference shall deliver to his counsel a special
power-of-attorney empowering the latter to represent him, with the authority to enter
into a compromise.
The parties shall submit a pre-trial brief at least three (3) days before the
preliminary conference which shall include:
a. any proposal for an amicable settlement;
b. simplified issues of the case;
c. facts and documents sought to be admitted or stipulated on;
d. number and names of witnesses, and a brief statement of their

testimony; and
e. such other matters as may aid in the prompt disposition of the

petition.
A party who shall fail to attend the preliminary conference or to submit a

pre-trial brief may be non-suited or declared as in default and the Hearing Officer
may proceed to render judgment as may be warranted by the facts alleged in the
pleadings.
After the preliminary conference, the Hearing Officer shall immediately issue a
preliminary conference order specifying the matters taken up during the conference
including the stipulation of facts entered into and delineating the issue/s subject of
presentation of evidence. cdlex
SECTION 7. Judgment, Hearing, When Ordered. Should the Hearing

Officer find upon a consideration of the pleadings, the affidavits and other evidences,
and position statements submitted by the parties that a judgment may be rendered
thereon without need of a formal hearing, he may proceed to render judgment.
In cases where the Hearing Officer deems it necessary to hold a hearing to

clarify specific factual matters before rendering judgment, he shall set the case for
hearing for the purpose. At such hearing, only witnesses whose affidavits were
submitted may be asked clarificatory questions by the Hearing Officer and may be
cross-examined by the adverse party.
The order setting the case for hearing shall specify the witnesses who will be
called to testify, and the matters on which their examination will deal.
SECTION 8. Prohibited Pleadings and Motions. The following

pleadings, motions or petitions shall not be allowed:
a. Motion to Dismiss;
b. Motion for a Bill of Particulars;
c. Motion for New Trial or for Reconsideration;
d. Petition for Relief from Judgment;
e. Motion for Extension of Time to File Pleadings, Affidavits or any

Other Paper;
f. Memorandum;
g. Petition for Certiorari, Mandamus or Prohibition against any

Interlocutory Order of the Hearing Officer;
h. Motion to Declare Respondent in Default;
i. Motion for Postponement;
j. Reply or Rejoinder;
k. Third Party Complaint; and
l. Intervention.
SECTION 9. Affidavits. The affidavits required to be submitted under

this rule shall state only facts of direct personal knowledge of the affiants which are
admissible in evidence and shall show their competence to testify to the matters stated
therein.
A violation of this requirement may subject the party or the counsel who
submits the same to disciplinary action and shall be cause to expunge the inadmissible
affidavit or portions thereof from the record.
SECTION 10. Hearing and Judgment. In cases where a hearing is

ordered, the same must be finished on the same date set therefor, insofar as
practicable. The judgment in the case must be rendered within fifteen (15) working
days from termination of the hearing.
SECTION 11. Decision, Immediately Executory. The Decision of the

Hearing Officer shall be immediately executory unless stayed by the Commission En
Banc.
RULE XV
Appeal
SECTION 1. Appeal from the Resolution, Ruling or Order of the Hearing

Officer. Any decision, ruling or order of the Hearing Order may be appealed by the
aggrieved party to the Commission sitting En Banc within fifteen (15) days from
receipt by the appellant of notice of such resolution, ruling or order.
SECTION 2. Oral Testimony. If the Commission En Banc, exercising

its appellate jurisdiction, determines that the oral testimony of a witness is
indispensable to deciding the case, it may call the witness to give oral testimony. The
Commission, or any Commissioner, may likewise propound clarificatory questions to
the witness if it believes that there are matters which are necessary to be clarified
before the case can be decided. Provided, that in no case can a witness be called for
oral testimony if the party did not submit an affidavit of said witness to the Hearing
Officer.
SECTION 3. Rulings, Orders, Resolutions of the Commission En Banc.

In all cases, the rulings, orders and resolutions of the Commission En Banc shall
become final after the lapse of fifteen (15) days from receipt of a copy thereof by the
parties.
RULE XVI
Effectivity
SECTION 1. Effectivity. These Rules shall take effect fifteen (15) days
after publication in a newspaper of general circulation. Cdpr
(SGD.) PERFECTO R. YASAY, JR.

Chairman
(SGD.) FE ELOISA C. GLORIA (SGD.) ROSALINDA O. CASIGURAN

Associate Commissioners Associate Commissioners
(SGD.) EDIJER A. MARTINEZ (SGD.) DANILO L. CONCEPCION

Associate Commissioners Associate Commissioners
ANNEX A
Endnotes
1 (Popup - Popup)
PD 902-A
Rules of Court

SEC - Revised Rulesof Procedure of The SEC

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

SEC - Revised Rulesof Procedure of The SEC

Hochgeladen von

Copyright:

Verfügbare Formate

2006

SEC MEMORANDUM CIRCULAR NO. 14-06

SUBJECT : Rules Governing the Over the Counter (OTC) Market

WHEREAS, the Securities Regulation Code (SRC) empowers the Securities

Section 32.1 prohibits brokers, dealers, salesmen and associated persons

Section 32.2 (b) further authorizes the Commission to promulgate rules

Section 36.2 empowers the Commission to require and enforce

Section 36.3 recognizes the authority of the Commission to determine

Section 37 authorizes the Commission, having due regard for national

WHEREAS, the rules governing the registration of Exchanges have already

WHEREAS, the existing Rules Governing Secondary Market Trade of

WHEREAS, there is a need to promulgate rules governing existing trading

NOW THEREFORE, the Commission hereby issues and promulgates the

SECTION 1. Title, Applicability and Interpretation

A. These rules shall be known as the "Rules Governing The

B. The requirements under these rules shall be in addition to those provided

D. These rules shall be construed in a manner which shall establish a socially

SECTION 2. Definition of Terms For purposes of these rules, the

(E) Government Securities Eligible Dealer or GSED refers to a dealer

(H) OTC Transaction or OTC Trade refers to a purchase or sale of security

(I) Participant in an OTC Market refers to a broker, dealer, salesman or

(L) Self-Regulatory Organization or SRO refers to an organized Exchange,

SECTION 3. Making, Creating or Operating an OTC Market

A. A broker, dealer, salesman, or associated person of broker or dealer,

B. A person shall be viewed to be making, creating or operating an OTC

1. If in the ordinary course of his business, he buys, sells or publishes or

2. If he searches for a counterparty to a buy or sell order that is left with

3. If he represents himself as an agent or salesman of or affiliated with a

C. A person shall be viewed to be enabling another person to make, create

D. A group of two or more brokers, dealers and/or salesmen of broker or

SECTION 4. Registration of Broker, Dealer, Salesman and Associated

1. No person shall act as a broker, dealer, salesman or an associated person

2. No person shall make, create or operate an OTC market unless he is a

B. Registration of Broker or Dealer in an OTC Market:

1. In applying for registration as a broker or dealer, the applicant shall

2. A broker or dealer with current registration shall amend his registration

C. Registration of Salesman or Associated Person of Broker or Dealer in an

1. A broker or dealer shall cause the registration of a person or the

2. A salesman or associated person of broker or dealer shall not act as such

3. A broker or dealer shall ensure that his salesman or associated person

SECTION 5. Registration of a Group of Persons To Operate an OTC

SECTION 6. Membership in an SRO

A. No broker or dealer shall participate in an OTC market unless he is a

B. In case a broker or dealer is already a member of an existing SRO whose

C. The Commission may prescribe the governance and ownership structure

SECTION 7. Eligible Investors in an OTC Market

A. An investor in the OTC market shall be treated either as a qualified

1. An investor who opts to participate as a qualified investor can directly

2. An investor who opts not to participate as a qualified investor shall be

C. A non-qualified investor shall not participate in an OTC market unless

1. Through the service of another person such as broker, investment house

2. Through participation in a registered or investment collective

D. Nothing in these rules shall be construed to mean that a qualified investor

SECTION 8. Eligible Securities in an OTC Market

A. A broker, dealer or salesman of broker or dealer shall buy or sell or quote

1. A security that is registered pursuant to Section 8 of the SRC;

2. A security that is exempt from registration pursuant to Section 9 of the

3. A security that is exempt from registration pursuant to Section 10 of the

4. A security of an entity that is deemed as a "public company" pursuant to

B. Notwithstanding paragraph A of this section, a security that is already

C. Recognizing the role of government securities in the government's effort

SECTION 9. Quotation and Quotation System

A. Except as otherwise specified in these rules, "quotation" shall mean any