The interplay of viscous, gravity and capillary forces determines the flow behavior of two or more phases through porous materials. In this study, a rule-based dynamic network model is developed to simulate two-phase flow in three-dimensional porous media. A cubic network analog of porous medium is used with cubic bodies and square cross-section throats. The rules for phase movement and redistribution are devised to honor the imbibition and drainage physics at pore scale. These rules are based on the pressure field within the porous medium that is solved for by applying mass conservation at each node. The pressure field governs the movement and flow rates of the fluids within the porous medium. Film flow has been incorporated in a novel way. A pseudo-percolation model is proposed for low but non-zero capillary number (ratio of viscous to capillary forces). The model is used to study primary drainage with constant inlet flow rate and constant inlet pressure boundary conditions. Non-wetting phase front dynamics, apparent wetting residuals (S-wr), and relative permeability are computed as a function of capillary number (N-ca), viscosity ratio (M), and pore-throat size distribution. The simulation results are compared with experimental results from the literature. Depending upon the flow rate and viscosity ratio, the displacement front shows three distinct flow patterns-stable, viscous fingering and capillary fingering. Capillary desaturation curves (S-wr vs. N-ca) depend on the viscosity ratio. It is shown that at high flow rates (or high N-ca), relative permeability assumes a linear dependence upon saturation. Pseudo-static capillary pressure curve is also estimated (by using an invasion percolation model) and is compared with the dynamic capillary pressure obtained from the model.