CHAPTER I
TITLE AND GENERAL SUBJECT OF THE ACT
Section 1. This Act shall be known and may be cited
as The Insolvency Law, and in accordance with its provisions every
insolvent debtor may be permitted to suspend payments or be discharged
from his debts and liabilities.
CHAPTER II
SUSPENSION OF PAYMENTS
Sec. 2. Petition. — The debtor who, possessing
sufficient property to cover all his debts, be it an individual person,
be it a sociedad or corporation, foresees the impossibility of meeting
them when they respectively fall due, may petition that he be declared
in the state of suspension of payments by the court, or the judge
thereof in vacation, of the province or of the city in which he has
resided for six months next preceding the filing of his petition.
He shall necessarily annex to his petition a schedule and inventory in
the form provided in sections fifteen, sixteen, and seventeen of this
Act, in addition to the statement of his assets and liabilities and the
proposed agreement he requests of his creditors.
Sec. 3. Meeting of Creditors; Injunction. — Upon
receiving and filing the petition with the schedule and documents
mentioned in the next preceding section, the court, or the judge
thereof in vacation, shall make an order calling a meeting of creditors
to take place in not less than two weeks nor more than eight weeks from
the date of such order. Said order shall designate the day, hour, and
place of meeting of said creditors as well as a newspaper of general
circulation published in the province or city in which the petition is
filed, if there be one, and if there be none, in a newspaper which, in
the judgment of the judge, will best give notice to the creditors of
the said debtor, and in the newspaper so designated said order shall be
published as often as may be prescribed by the court or the judge
thereof.
Said order shall further contain an absolute injunction forbidding the
petitioning debtor from disposing in any manner of his property, except
in so far as concerns the ordinary operations of commerce or of
industry in which the petitioner is engaged, and, furthermore, from
making any payments outside of the necessary or legitimate expenses of
his business or industry, so long as the proceedings relative to the
suspension of payments are pending, and said proceedings for the
purposes of this Act shall be considered to have been instituted from
the date of the filing of the petition.
Sec. 4. Publication order; Deposit. — A copy of
said order shall immediately be published 1 by the clerk of said court,
in the newspaper designated therein, for the number of times and in the
form prescribed by the court or the judge thereof, and the clerk of
said court shall cause a copy of said order to be delivered personally
or to be sent forthwith by registered mail, postage prepaid, to all
creditors named in the schedule. There shall be deposited in addition
to the sum of twenty-four Philippine pesos, which shall be paid to the
clerk for the filing and registration of the petition, including all
proceedings until the expediente is completed, an amount sufficient to
defray all expense of publication ordered by the court, necessary
postage, and ten centavos for each copy, to be delivered personally or
mailed to the creditors, which last-named sum is hereby constituted the
legal fee of the clerk for the personal delivery or mailing required by
this section.
Sec. 5. Creditors cited to appear. — Only
creditors included in the schedule filed by the debtor shall be cited
to appear and take part in the meeting mentioned in section three, and
they shall be notified upon delivery or transmission to them of a copy
of the order calling the meeting to appear at same with the written
evidences of their respective claims, without which they shall not be
admitted.
Sec. 6. Pending Execution. — If any execution be
pending against the debtor it shall not be consolidated with this
proceeding, but the course thereof shall be suspended before sale of
property is made thereunder, provided the debtor makes a request
therefor to the court before which the proceeding for suspension of
payments is pending, unless the execution be against property
especially mortgaged which is hereby exempted from the least the
provisions of this section. The suspension ordered by virtue of this
section shall lapse when three months shall have passed without the
proposed agreement being accepted by the creditors or as soon as it is
denied. No creditor and the other than those mentioned in section nine
shall sue or institute proceedings to collect his claim from the debtor
from the moment that suspension of payments is applied for and while
the proceedings are pending.
Sec. 7. Creditors may be represented at the
meeting by one or more lawyers or by any person authorized by power of
attorney, which document shall be presented and be attached to the
record.
Persons appearing for more than one creditor shall have only one
personal vote, but the claims presented by them shall be taken into
consideration for the purpose of arriving at the majority of the amount
represented.
Sec. 8. Creditors necessary to hold a meeting;
Meeting; Minutes of the meeting. — The presence of the creditors
representing at least three-fifths the liabilities shall be necessary
for holding a meeting. The meeting shall be held on the day and at the
hour and place designated, the judge, or commissioner deputized by him
when he is absent from the province where the meeting is held, acting
as president and the clerk as secretary thereof, subject to the
following rules:
(a) The clerk shall prepare for insertion in the
minutes of the meeting a statement of the persons present and their
claims; the judge, or, in default thereof, the commissioner, shall
examine the written evidences of the claims and the powers of attorney,
if any. If the persons present who have complied with the foregoing
rules represent at least three-fifths of the liabilities, the judge or
commissioner shall declare the meeting open for business.
(b) The petition of the debtor, the schedule of debts
and of property, the statement of assets and liabilities, and the
proposed agreement filed there- with shall be read forthwith by the
clerk, and the discussion shall be opened.
(c) The debtor may modify his proposition or
propositions in view of the result of the debate, or insist upon the
ones already made, and the judge or commissioner, without further
discussion, shall clearly and succinctly place these several
propositions before the meeting for a vote thereupon.
(d) The vote shall be taken by a call of names and
shall be inserted in and the minutes; a majority vote shall rule.
(e) To form a majority it is necessary —
1. That two-thirds of the creditors voting unite upon
the same position.
2. That the claims represented by said majority vote
amount to at least three-fifths of the total liabilities of the debtor
mentioned in the petition.
(f) After the result of the voting has been
announced, all protests made against the majority vote shall be drawn
up, and there shall be inserted therein the proposition or propositions
voted upon, which, after having been read and approved, shall be signed
by the judge or commissioner together with all persons taking part in
the voting; if any such persons shall be unable to write, any person
present shall sign, at their request, and the clerk shall certify to
all of the above.
Sec. 9. Persons who may refrain from voting. —
Persons having claims for personal labor, maintenance, expenses of last
illness and funeral of the wife or children of the debtor, incurred in
the sixty days immediately preceding the filing of the petition, and
persons having legal or contractual mortgages, may refrain from
attending the meeting and from voting therein. Such persons shall not
be bound by any agreement determined upon at such meeting, but if they
should join in the voting they shall be bound in the same manner as are
the other creditors.
Sec. 10. Rejection of agreement. — The proposed
agreement shall be deemed rejected if the number of creditors required
for holding a meeting do not attend thereat, or if the two majorities
mentioned in rule (e) of section eight are not in favor thereof, even
if the negative vote itself does not receive such majorities.
Sec. 11. Termination of proceedings without
recourse; Court hearing. — If the decision of the meeting be negative
as regards the proposed agreement or if no decision is had in default
of such number or of such majorities, the proceeding shall be
terminated without recourse and the parties concerned shall be at
liberty to enforce the rights which may correspond to them. If the
decision is favorable to the debtor it may be objected to within ten
days following the date of the meeting by any creditor who attended the
meeting and who dissented from and protested against the vote of the
majority. The opposition or objection to the decision of the majority
favorable to the debtor shall be proceeded with as in any other
incidental motion, the debtor and the creditors who shall appear
declaring their purpose to sustain the decision of the meeting being
the defendants. The court shall hear and pass upon such objection
as soon as possible in a summary manner, and in its order, which shall
be final, it shall declare whether or not the decision of the meeting
is valid. In case that the decision of the meeting is held to be null,
the court shall declare the proceeding terminated and the parties
concerned at liberty to exercise the rights which may correspond to
them; and in case the decision of the meeting is declared valid, or
when no opposition or objection to said decision has been presented,
the court shall order that the agreement be carried out and the persons
concerned shall be bound by the decision of the meeting. The court may
also issue all orders which may be proper to enforce the agreement on
motion of any of the parties litigant. The order directing the
agreement to be made effective shall be binding upon all creditors
included in the schedule of the debtor who may have been properly
summoned, but not upon creditors mentioned in section nine who failed
to attend the meeting or refrained from voting therein, and their
rights shall not be affected by the agreement unless they may have
expressly or impliedly consented thereto.
Sec. 12. The causes for which objection may be
made to the decision of the meeting shall be —
(a) Defects in the call for the meeting, in the
holding thereof, and in and the deliberations had thereat which
prejudice the rights of the creditors;
(b) Fraudulent connivance between one or more
creditors and in debtor to vote in favor of the proposed agreement;
(c) Fraudulent conveyance of claims for the purpose
of obtaining a majority.
Sec. 13. Failure of debtor to perform agreement. —
If the debtor fails wholly or in part to perform the agreement decided
upon at the meeting of the creditors, all the rights which the
creditors had against the debtor before the agreement shall revest in
them. In such case the debtor may be made subject to the bankruptcy and
insolvency proceedings in the manner established by the following
chapters of this Act:
CHAPTER III
VOLUNTARY INSOLVENCY
Sec. 14. Application. — An insolvent debtor, owing
debts exceeding in amount the sum of one thousand pesos, may apply to
be discharged from his debts and liabilities by petition to the Court
of First Instance of province or city in which he has resided for six
months next preceding the filing of such petition. In his petition he
shall set forth his of residence, the period of his residence therein
immediately prior to filing said petition, his inability to pay all his
debts in full, his willingness to surrender all his property, estate,
and effects not exempt from execution for the benefit of his creditors,
and an application to be adjudged an insolvent. He shall annex to his
petition a schedule and inventory in the form herein-after provided.
The filing of such petition shall be an act of insolvency.
Sec. 15. Statement of debts and liabilities. —
Said schedule must contain a full and true statement of all his debts
and liabilities, together with a list of all those to whom, to the best
of his knowledge and belief, said debts or liabilities are due, the
place of residence of his creditors and the sum due each the nature of
the indebtedness or liability and whether founded on written security,
obligation, contract or otherwise, the true cause and consideration
thereof, the time and place when and where such indebtedness or
liability accrued, a declaration of any existing pledge, lien,
mortgage, judgment, or other security for the payment of the debt or
liability, and an outline of the facts giving rise or which might give
rise to a cause of action against such insolvent debtor.
Sec. 16. Description of real and personal
property. — Said inventory must contain, besides the creditors, an
accurate description of all the real and personal property, estate, and
effects of the petitioner, including his homestead, if any, together
with a statement of the value of each item of said property, estate,
and effects and its location, and a statement of the incumbrances
thereon. All property exempt by law from execution 2 shall be set out
in said inventory with a statement of its valuation, location, and the
incumbrances thereon, if any. The inventory shall contain an outline of
the facts giving rise, or which might give rise, to a right of action
in favor of the insolvent debtor.
Sec. 17. Verification, form of . — The petition,
schedule, and inventory must be verified by the affidavit of the
petitioner, annexed thereto, and shall be in form substantially as
follows: "I, _______________., do solemnly swear that the schedule and
inventory now delivered by me contain a full, correct, and true
discovery of all my debts and liabilities and of all goods, effects,
estate, and property of whatever kind or class to me in any way
belonging. The inventory also contains a full, true and correct
statement of all debts owing or due to me, or to any person or persons
in trust for me and of all securities and contracts whereby any money
may hereafter become due or payable to me or by or through which any
benefit or advantage whatever may accrue to me or to my use, or to any
other person or persons in trust for me. The schedule contains a clear
outline of the facts giving rise, or which might give rise, to a cause
of action against me, and the inventory contains an outline of the
facts giving rise, or which might give rise, to any cause of action in
my favor. I had no lands, money, stock, or estate, reversion, or
expectancy, or property of any kind, except that set forth in said
inventory. I have no instance created or acknowledged a debt for a
greater sum than I honestly and truly owe. I have not, directly or
indirectly, concealed, fraudulently sold, or otherwise fraudulently
disposed of, any part of my real or personal property, estate, effects,
or rights of action, and I have not in any way compounded with any of
my creditors in order to secure such creditors, or to receive or to
accept any profit or advantage therefrom, or to defraud or deceive in
any manner any creditor to whom I am indebted. So help me God."
Sec. 18. Order of court declaring petitioner
insolvent; Publication notice. — Upon receiving and filing said
petition, schedule, and inventory, the court, or the judge thereof in
vacation, shall make an order declaring the petitioner insolvent, and
directing the sheriff of the province or city in which the petition is
filed to take possession of, and safely keep, until the appointment of
a receiver or assignee, all the deeds, vouchers, books of account,
papers, notes, bonds, bills, and securities of the debtor, and all his
real and personal property, estate, and effects, except such as may be
by law exempt from execution. 3 Said order shall further forbid the
payment to the debtor of any debts due to him and the delivery to the
debtor, or to any person for him, and the transfer of any property by
him, and shall further appoint a time and place for a meeting of the
creditors to choose an assignee of the estate. Said order shall
designate a newspaper of general circulation published in the province
or city in which the petition is filed, if there be one, and if there
be none, in a newspaper which, in the opinion of the judge, will best
give notice to the creditors of the said insolvent, and in the
newspaper so designated said order shall be published 4 as often as may
be prescribed by the court or the judge The time appointed for the
election of an assignee shall not be less than two, nor more than
eight, weeks from the date of the order of adjudication. Upon the
granting of said order all civil proceedings pending against said
insolvent shall be stayed. When a receiver is appointed, or an assignee
chosen, as provided in this Act, the sheriff shall thereupon deliver to
such receiver or assignee chosen, as provided in this Act, the sheriff
shall thereupon deliver to such receiver or assignee, as the case may
be, all the property, assets, and belongings of the insolvent which
have come into his possession, and he shall be allowed and paid as
compensation for his services the same expenses and fees as would by
law be collectible if the property had been levied upon and safely kept
under attachment.
Sec. 19. Publication of order. — A copy of said
order shall immediately be published 5 by the clerk of said court, in
the newspaper designated therein, for the number of times and as
prescribed by the court or the judge thereof, and a copy of said order
shall be delivered personally or sent by the clerk forthwith by
registered mail, postage prepaid, to all creditors named in the
schedule. There shall be deposited, in addition to twenty-four pesos,
which shall be received by the clerk on commencing such proceedings, a
sum of money sufficient to defray the expense of the publication
ordered by the court, necessary postage, and ten centavos for each
copy, to be delivered personally or mailed to the creditors, which
last-named sum is hereby constituted the legal fee of the clerk for the
personal delivery or mailing required by this section.
CHAPTER IV
INVOLUNTARY INSOLVENCY
Sec. 20. Petition; Acts of insolvency. — An
adjudication of insolvency may be made on the petition of three or more
creditors, residents of the Philippine Islands whose credits or demands
accrued in the Philippine Islands, and the amount of which credits or
demands are in the aggregate not less than one thousand pesos:
Provided, That none of said creditors has become a creditor by
assignments, however made, within thirty days prior to the filing of
said petition. Such petition must be filed in the Court of First
Instance of the province or city in which the debtor resides or has his
principal place of business, and must be verified by at least three of
the petitioners. The following shall be considered acts of insolvency,
and the petition for insolvency shall set forth one or more of
insolvency such acts: (1) That such person is about to depart or has
departed from the Philippine Islands, with intent to defraud his
creditors; (2) that being absent from the Philippine Islands, with
intent to defraud his creditors, he remains absent; (3) that he
conceals himself to avoid the service of legal process for purpose of
hindering or delaying or defrauding his creditors; (4) that he
conceals, or is removing, any of his property to avoid its being
attached or taken on legal process; (5) that he has suffered his
property to remain under attachment or legal process for three days for
the purpose of hindering or delaying or defrauding his creditors; (6)
that he has confessed or offered to allow judgment in favor of any
creditor or claimant for the purpose of hindering or delaying or
defrauding any creditor or claimant; (7) that he has willfully suffered
judgment to be taken against him by default for the purpose of
hindering or delaying or defrauding his creditors; (8) that he has
suffered or procured his property to be taken on legal process with
intent to give a preference to one or more of his creditors and thereby
hinder, delay, or defraud any one of his creditors; (9) that he has
made any assignment, gift, sale, conveyance, or transfer of his estate,
property, rights, or credits with intent to delay, defraud, or hinder
his creditors; (10) that he has, in contemplation of insolvency, made
any payment, gift, grant, sale conveyance, or transfer of his estate,
property, rights, or credits; (11) that being a merchant or tradesman
he has generally defaulted in the payment of his current obligations
for a period of thirty days; (12) that for a period of thirty days he
has failed, after demand, to pay any moneys deposited with him or
received by him in a fiduciary capacity; and (13) that an execution
having been issued against him on final judgment for money, he shall
have been found to be without sufficient property subject to execution
to satisfy the judgment. The petitioners may, from time to time, by
leave of the court, amend and or amendments to relate back to and be
received as embraced in the original petition. The said petition shall
be accompanied by a bond, 6 approved by the court, with at least two
sureties, in such penal sum as the court shall direct, conditioned that
if the petition in insolvency be dismissed by the court, or withdrawn
by the petitioner, or if the debtor shall not be declared an insolvent,
the petitioners will pay to the debtor alleged in the petition to be
insolvent all costs, expenses, and damages occasioned by the
proceedings dent, the in insolvency, together with a reasonable counsel
fee to be fixed by the court. The court may, upon motion, direct the
filing of an additional bond, with different sureties, when deemed
necessary.
Sec. 21. Order to debtor to show cause. — Upon the
filing of such creditors' petition, the court or a judge shall issue an
order requiring such debtor to show cause, at a time and place to be
fixed by said court or judge, why he should not be adjudged an
insolvent debtor; and at the same time, or thereafter, upon good cause
shown therefor, said court or judge may make an order forbidding the
payment of any debts, and the delivery of any the court property
belonging to such debtor to him or to any other person for his benefit
or the transfer of any property by him.
Sec. 22. Copies served on debtor. — A copy of said
petition, with a copy of the order to show shall be served on the
debtor, in the same manner as is provided by law for the service of
summons in civil actions, 7 but such shall be made at least five days
before the time fixed for the hearing: Provided, That if, for any
reason, the service is not made, the order may be renewed, and the time
and place of hearing changed by supplemental order of the court.
Whenever the debtor on whom service is to be made resides out of the
Philippine Islands; or has departed from the Philippine Islands; or can
not, after due diligence, be found within the Philippine Islands; or
conceals himself to avoid the service of the order to show cause, or
any other process or orders in the matter; or is a foreign corporation
having no managing or business agent, cashier, or secretary within the
Philippine Islands upon whom service can be made, and such facts are
shown to the court or a judge thereof, shall make an order that the
service of such order, or other process, be made by publication, in the
same manner, and with the same effect, as service of summons by
publication in ordinary civil actions.
Sec. 23. Answer to petition. — At the time fixed
for the hearing of said order to show cause, or at another time to
which such hearing may be adjourned, the debtor must answer the
petition, or may demur for the same causes as are provided for demurrer
in other cases by the Code of Civil Procedure. 9 If he demur and the
demurrer be overruled, the debtor shall immediately answer the
petition. Such answer shall contain a specific denial of the material
allegations of the petition controverter by him, and shall be sworn to;
and the issues raised thereon shall be promptly tried and disposed of.
If, upon such trial, the issues are found in favor of the respondent,
the proceedings shall be dismissed, and the respondent shall be allowed
all costs, counsel fees, expenses, and damages sustained by reason of
the proceedings therein. Counsel fees, costs, expenses, and damages
shall be fixed and allowed by the court.
Sec. 24. Default; Payments to debtor. — If the
respondent shall make default, or if, after trial, the issues are found
in favor of the petitioners, the court shall make an order adjudging
that said respondent is and was, at the time of filing the petition, an
insolvent debtor and that the debtor was guilty of the acts and things
charged in the petition, or such of them as the court may find to be
true; and shall require said debtor, within such time as the court may
designate, not to exceed three days, to file in court the schedule and
inventory provided for in sections fifteen and sixteen of this Act,
duly verified as required of a petitioning debtor: 10 Provided, That in
the affidavit of the insolvent, touching his property and its
disposition, he shall not be required to swear that he has not made any
fraudulent preference or committed any other act in conflict with the
provisions of this Act; but he may do so if he desires. Said order
shall further direct the sheriff of the province or city where the
insolvency petition is filed, or the receiver, if one has been
theretofore appointed, to take possession of and safely keep, until the
appointment of an assignee, all the deeds, vouchers, books of account,
papers, notes, bills, bonds and securities of the debtor, and all his
real and personal property, estate and effects, except such as may be
by law exempt from execution. 11 Said order shall further forbid the
payment to the debtor of any debts due to him, and the delivery to the
debtor, or to any person for him, of any property belonging to him, and
the transfer of any property by him, and shall further appoint a time
and place for a meeting of the creditors to choose an assignee of the
estate. Said order shall designate a newspaper of general circulation
published in the province or city in which the petition is filed, if
there be one, and if there be none, in a newspaper which, in the
opinion of the judge, will best give notice to the creditors of the
said insolvent, and in the newspaper so designated said order shall be
published 12 as often as may be prescribed by the court or the judge
thereof. The time appointed for the election of an assignee shall not
be less than two nor more than eight weeks from the date of the order
of adjudication. Upon the granting of said order, all civil proceedings
pending against the said insolvent shall be stayed. When an assignee is
chosen as provided in this Act, the sheriff or receiver, if there be
one, shall thereupon deliver to such assignee all the property, estate,
and belongings of the insolvent, which have come into his possession,
and he shall be allowed and paid as compensation for his services the
same expenses and fees as would by law be collectible if the property
had been levied upon and safely kept under attachment.
Sec. 25. Publication and service of order. — A
copy of the order provided for in the last preceding section of this
Act shall immediately be published by the clerk of said court in the
newspaper designated therein for the number of times and as prescribed
by the court or the judge thereof, and upon the filing, at any time
before the date set for such meeting, of the schedule required by said
last preceding section, a copy of said order shall be delivered
personally or sent by the clerk forthwith by registered mail, postage
prepaid, to all creditors named in said schedule. If said schedule is
not filed prior to the day fixed for the election of an assignee,
publication of said order as herein required shall be of itself
sufficient notice to the creditors of the time and place appointed for
the election of an assignee. No order of adjudication upon creditor's
petition shall be entered unless there be first deposited, in addition
to the cost of commencing said proceedings, a sum of money sufficient
to defray the expense of the publication ordered by the court,
necessary postage, and ten centavos for each copy to be delivered
personally or mailed to the creditors, which last-named sum is hereby
constituted the legal fee of the clerk for the personal delivery or
mailing required by this section.
Sec. 26. Absentee debtors; Sheriff to take
possession. — In all cases where the debtor resides out of the
Philippine Islands; or has departed from the Philippine Islands; or can
not, after due diligence, be found within the Philippine Islands; or
conceals himself to avoid service of the order to show cause, or any
other preliminary process or orders in the matter; or is a foreign
corporation having no managing or business agent, cashier, or secretary
within the Philippine Islands upon whom service or orders and process
can be made, and it therefore becomes necessary to obtain service of
process and order to show cause, as provided in section twenty-two of
this Act, then the petitioning creditors, upon submitting the
affidavits requisite to procure an order of publication, and presenting
a bond in double the amount of the aggregate sum of their claims
against the debtor, shall be entitled to an order of the court
directing the sheriff of the province or city in which the matter is
pending to take into his custody a sufficient amount of property of the
debtor to satisfy the demands of the petitioning creditors and the
costs of the proceedings. Upon receiving such order of the court to
take into custody property of the debtor, it shall be the duty of the
sheriff to take possession of the property and effects of the debtor,
not exempt from execution, 13 to an extent sufficient to cover the
amount provided for, and to prepare, within three days from the time of
taking such possession, a complete inventory of all the property so
taken, and to return it to the court as soon as completed. The time for
taking the inventory and making return thereof may be extended for good
cause shown to the court or a judge thereof. The sheriff shall also
prepare a schedule of the names and residences of the creditors, and
the amount due each, from the books of the debtor, or from such other
papers or data of the debtor available as may come to his possession,
and shall file such schedule list of creditors and inventory with the
clerk of the court.
Sec. 27. All property taken to be held for all
creditors; Appeal bonds; Exceptions to sureties. — In all cases where
property is taken into custody by the sheriff, as provided in the
preceding section, if it does not embrace all the property and effects
of the debtor not exempt from execution, 14 any other creditor or
creditors of the debtor, upon giving bond to be approved by the court
in double the amount of their claims, singly or jointly, shall be
entitled to similar orders, and to like action, by the sheriff, until
all claims be provided for, if there be sufficient property or effects.
All property taken into custody by the sheriff by virtue of the giving
of any such bonds shall be held by him for the benefit of all creditors
of the debtor whose claims shall be duly proved, and as provided, in
this Act. The bonds provided for in this and the preceding section to
procure the order for custody of the property and effects of the
debtor, shall be conditioned that if, upon final hearing of the
petition in insolvency, the court shall find in favor of the
petitioners, such bonds and all of them shall be void; if the decision
be in favor of the debtor, the proceedings shall be dismissed, and the
debtor, his heirs, administrators, executors, or assigns, shall be
entitled to recover such sum of money as shall be sufficient to cover
the damages sustained by him, not to exceed the amount of the
respective bonds. Such damages shall be fixed and allowed by the court.
If either the petitioners or the debtor shall appeal from the decision
of the court, upon final hearing of the petition the appellant shall be
required to give bond to the successful party in a sum double the
amount of the value of the property in controversy, and for the costs
of the proceedings. Such bond shall be approved by the court.
Any person interested in the estate may except to the sufficiency of
the sureties on such bond or bonds. When excepted to, the petitioner's
sureties, upon notice to the person excepting of not less than two nor
more than five days, must justify as to their sufficiency; and upon
failure to justify, or if others in their place fail to justify at the
time and place appointed, the judge shall issue an order vacating the
order to take the property of the debtor into the custody of the
sheriff, or denying the appeal, as the case may be.
Sec. 28. Sale under execution. — If, in any case,
proper affidavits and bonds are presented to the court or a judge
thereof, asking for and obtaining an order of publication and an order
for the custody of the property of the debtor, as provided in sections
twenty-six and twenty-seven of this Act, and thereafter the petitioners
shall make it appear satisfactorily to the court or a judge thereof
that the interest of the parties to the proceedings will be subserved
by a sale thereof, the court may order such property to be sold in the
same manner as property is sold under execution, 15 the proceeds to be
deposited in the court to abide the result of the proceedings.
CHAPTER V
ASSIGNEES
Sec. 29. Election; Creditors holding security. —
No creditor shall be entitled to vote for the election of an assignee
unless he shall have filed his claim in the office of the clerk of the
court in which the proceedings are pending at least two days prior to
the time appointed for such election. All claims shall contain a
statement showing the amount and nature of the claim and security, if
any. The claim shall be verified by the claimant, or his duly
authorized agent or attorney. No claim barred by the statute of
limitations 16 shall be proved or allowed against the estate of an
insolvent debtor for any purpose. Any person interested in the estate
of the insolvent may file exceptions to the legality of good faith of
any claim, by setting forth specifically in writing his interest in the
estate, and the grounds of his objection to such claim. Such exceptions
shall be verified by the affidavit of the party objecting, or his duly
authorized agent or attorney, and the affidavit shall set out that such
exceptions are not made for the purpose of delay and are made in good
faith in the best interests of said estate. Exceptions to any claim
must be filed with the clerk of the court at least one day before the
time appointed for the election of an assignee, and such exceptions
shall be heard and disposed of by the court, on affidavit or other
evidence, in a summary manner, before the election of an assignee. No
creditor or claimant who holds any mortgage, pledge, or lien of any
kind whatever as security for the payment of his claim or attachment or
execution on property of the debtor duly recorded and not dissolved
under this Act shall be permitted to vote at the election of the
assignee any part of his secured claim unless he shall first have the
value of such security fixed as provided section fifty-nine of this
Act, or shall surrender to the sheriff or receiver of the estate of the
insolvent, if there be a receiver, all such property, or assign such
lien to such sheriff or receiver. The surrender or assignment of such
security or lien shall be for the benefit of all creditors of the
estate of the insolvent. The value of such security, if fixed by the
court, shall be so fixed at least one day before the day appointed for
the election of an assignee, in which event the claimant may prove his
demand as provided in this section for any unsecured balance, subject
to the filing of exceptions as in all other claims.
Sec. 30. Election of assignee in open court. — At
a meeting of the creditors in open court or, if the court is not in
session, in the presence of the judge or the clerk of the court, those
being entitled to vote, as provided by section twenty-nine, shall
proceed to the election of an assignee. The majority of the creditors
who have proven their claims, such majority being both in number and
amount, must concur for the election of an assignee. The clerk of the
court shall keep a minute of the deliberations of said creditors, and
of the election and appointment of the assignee, and enter the same
upon the records of the court, and, in the absence of the judge, shall
send a copy of such record to him at the place where he may be found.
The assignee shall file, within five days, unless the time be extended
by the court, with the clerk, a bond, in an amount to be fixed by the
court, to the Government of the Philippine Islands, with two or more
sufficient sureties, approved by the court, and conditioned upon the
faithful performance of the duties devolving upon him. The bond shall
not be void upon the first recovery, but may be sued upon from time to
time by any person aggrieved, in his own name, until the whole penalty
be exhausted. The sureties on such bond may be required to justify as
to their sufficiency upon the application of any party interested.
Sec. 31. Appointment of assignee by court. — If,
on the day appointed for the meeting, creditors do not attend, or fail
or refuse to elect an assignee, or if, after election, the assignee
shall fail to qualify within the proper time, or if a vacancy occurs by
death or otherwise, the court shall appoint an assignee and fix the
amount of his bond.
Sec. 32. Transfer of property to assignee. — As
soon as an assignee is elected or appointed and qualified, the clerk of
the court shall, by an instrument under his hand and seal of the court,
assign and convey to the assignee all the real and personal property,
estate, and effects of the debtor with all his deeds, books, and papers
relating thereto, and such assignment shall relate back to the
commencement of the proceedings in insolvency, and shall relate back to
the acts upon which the adjudication was founded, and by operation of
law shall vest the title to all such property, estate, and effects in
the assignee, although the same is then attached on mesne process, as
the property of the debtor. Such assignment shall operate to vest in
the assignee all of the estate of the insolvent debtor not exempt by
law from execution. 17 It shall also dissolve any attachment levied
within one month next preceding the commencement of the insolvency
proceedings and vacate and set aside any judgment entered in any action
commenced within thirty days immediately prior to the commencement of
insolvency proceedings and shall vacate and set aside any execution
issued thereon and shall vacate and set aside any judgment entered by
default or consent of the debtor within thirty days immediately prior
to the commencement of the insolvency proceedings.
Sec. 33. Recovery and action of assignee. — The
assignee shall have the right to recover all the state debts, and
effects of said insolvent. If, at the time of the commencement of
proceedings in insolvency, an action is pending in the name of the
debtor, for the recovery of a debtor other thing which might or ought
to pass to the assignee by the assignment, the assignee shall be
allowed and admitted to prosecute the action, in like manner and with
like effect as if it had been originally commenced by him. If there are
any rights of action in favor of the insolvent for damages, on any
account, for which an action is not pending, the assignee shall have
the right to prosecute the same with the same effect as the insolvent
might have done himself if no proceedings in insolvency had been
instituted. If any action or proceeding in which the insolvent is
defendant is pending at the time of the adjudication, the assignee may
defend the same in the same manner and with like effect as it might
have been defended by the insolvent. In a suit prosecuted or defended
by the assignee, a certified copy of the assignment made to him shall
be conclusive evidence of his authority to sue or defend.
Sec. 34. Registration of assignment to assignee. —
The assignee shall, within one month after the making of the assignment
to him, cause the same to be recorded in every province or city within
the Philippine Islands where any real estate owned by the debtor is
situated, and the record of such assignment, or a duly certified copy
thereof, shall be conclusive evidence thereof in all courts. If the
schedule and inventory required by this Act have not been filed by the
debtor the assignee shall, within one month after his election, prepare
and file such schedule and inventory from the best information he can
obtain, and shall thereupon personally deliver notice or send same by
registered mail, postage prepaid, to all creditors named in such
schedule, whose claims have not been filed, to forthwith prove their
demands.
Sec. 35. Resignation of assignee. — Any assignee
may at any time, by writing filed in court, resign his appointment,
having first settled his accounts and delivered up all the deeds,
vouchers, books of account, notes, bills, bonds, and securities of the
debtor and all his real and personal property, estate, and effects to
such successor as the court shall appoint: Provided, That if, in the
discretion of the court, the circumstances of the case require it, upon
good cause being shown, the court may, at any time before such
settlement of account and delivery of the estate shall have been
completed, revoke the appointment of such assignee and appoint another
in his stead. The liability of the outgoing assignee, or of the
sureties on his bond, shall not be in any manner discharged, released,
or affected by such appointment of another in his stead.
Sec. 36. The said assignee shall have power:
1. To sue and recover all the estate, assets, debts,
and claims, belonging to or due to such debtor; and no set-off or
counterclaim shall be allowed in any such for debts contracted by the
insolvent within thirty days immediately preceding the filing of the
petition of insolvency except in case of creditors specified in section
fifty of this Act.
2. To take in to his possession all the estate of
such debtor except property exempt by law from execution, 18 whether
attached or delivered to him, or afterwards discovered, and all books,
vouchers, evidence of indebtedness, and securities belonging to the
same.
3. In case of a nonresident or absconding or
concealed debtor, to demand and receive of every sheriff who shall have
attached any of the property of such debtor, or who shall have in his
possession any moneys arising from the sale of such property, all such
property and moneys, on paying him his lawful costs and charges for
attaching and keeping the same.
4. From time to time to sell at public auction after
advertisement in the manner provided by subsections (1), (2), and (3)
of section four hundred and fifty-four of the Code of Civil Procedure,
19 upon order of the court, any of the estate, real and personal, which
has come into his possession, and which is vested in him as such
assignee, and on such sales to execute the necessary conveyances and
bills of sale.
5. To redeem all valid mortgages and conditional
contracts, and all valid pledges of personal property, and to satisfy
any judgments which may be an incumbrance on any property sold by him;
or to sell such property, subject to such mortgage, contracts, pledges,
judgments, or liens.
6. To settle all matters and accounts between such
debtor and his creditors subject to the approval of the court.
7. Under the order of the court or judge appointing
him, to compound with any person indebted to such debtor, and thereupon
discharge all demands against such person.
8. To recover from any person receiving a conveyance,
gift transfer, payment, or assignment, made contrary to any provision
of this Act, the property thereby transferred or assigned; or in case a
redelivery of the property can not be had, to recover the value thereof
with damages for the detention.
Sec. 37. Embezzlement, etc. — If any person,
before the assignment is made, having notice of the commencement of the
proceedings in insolvency, or having reason to believe that insolvency
proceedings are about to be commenced, embezzles or disposes of any of
the moneys, goods, chattels, or effects of the insolvent, he is
chargeable therewith, and liable to an action by the assignee for
double the value of the property so embezzled or disposed of, to be
recovered for the benefit of the insolvent's estate.
Sec. 38. Penalties and forfeitures. — The same
penalties, forfeitures, and proceedings by citation, examination, and
commitment shall apply on behalf of an assignee against persons
suspected of having concealed, embezzled, conveyed away, or disposed of
any property of the debtor, or of having possession or knowledge of any
deeds, conveyances, bonds, contracts, or other writings which relate to
any interest of the debtor in any real or personal estate as provided
in the case of estates of deceased persons in sections seven hundred
and nine to seven hundred and thirteen, inclusive, of the Code of Civil
Procedure. 20
Sec. 39. Conversion of property into money. — The
assignee shall as speedily as possible convert the estate, real and
personal, into money. He shall keep a regular account of all moneys
received by him as assignee, to which every creditor or other person
interested therein may, at all reasonable times, have access. No
private sale of any property of the estate of an insolvent debtor shall
be valid unless made under the order of the court, upon a petition in
writing, which shall set forth the facts showing the sale to be
necessary. Upon filing the petition, notice of the hearing thereof of
at least ten days shall be given by publication and mailing, in the
same manner as is provided in section nineteen of this Act. If it
appears that a private sale is for the best interests of the estate,
the court shall order it to be made.
Sec. 40. Perishable property. — In all cases when
it appears to the satisfaction of the court that the estate of the
debtor, or any part thereof, is of a perishable nature, or is liable to
deteriorate in value, or is disproportionately expensive to keep, and
that the insolvent's estate will suffer if sufficient time elapses for
the giving of notice, the court may order the same to be sold in such
manner and at such time as may be deemed most expedient, under the
direction of the sheriff, receiver, or assignee, as the case may be,
who shall hold the funds received in place of the property sold until
further order of the court.
Sec. 41. Outstanding debts, etc. due estate. —
Outstanding debts, or other property due or belonging to the estate,
which can not be collected and received by the assignee without
unreasonable or inconvenient delay or expense, may be sold and assigned
in like manner as the remainder of the estate. If there are any rights
of action for damages in favor of the insolvent prior to the
commencement of the insolvency proceedings, the same may, with the
approval of the court, be compromised.
Sec. 42. Expenses and commissions; Division of
compensation. — Assignees shall be allowed all necessary expenses in
the care, management, and settlement of the estate, and shall be
entitled to charge and receive for their services commissions upon all
sums of money coming to their hands and accounted for by them, as
follows: For the first thousand pesos, at the rate of seven per centum;
for all above that sum and not exceeding ten thousand pesos, at the
rate of five per centum; and for all above that sum, at the rate of
four per centum: Provided, however, That if the person acting as
assignee was receiver of the property of the estate pending the
election of an assignee, any compensation allowed him as such receiver
shall be deducted from the compensation to which he otherwise would be
entitled as such assignee: And provided further, further That if there
should be two or more assignees the court shall order an equitable
division of the compensation herein provided, and if for any reason an
assignee's term is completed before the final settlement of the estate
and a successor is appointed the court shall not allow to any such
assignee prior to the settlement of the estate an amount exceeding four
per centum of the sums of money coming into his hands. Upon the final
settlement of the estate an equitable distribution of the compensation
of the assignees shall be made.
Sec. 43. Filing of accounts with vouchers,
statements, etc.; Decisions of court upon claims; Additional accounts.
— At the expiration of three months from the appointment of the
assignee in any case, or as much earlier as the court may direct, a
time and place shall be fixed by the court at which the assignee shall
file just and true accounts of all his receipts and payments with
proper vouchers, verified by his oath and a statement of the property
outstanding, specifying the causes of its outstanding, also what debts
or claims are yet undetermined, and stating what sum remains in his
possession, and shall accompany the same with an affidavit that notice
by registered mail has been given to all creditors named in the
schedule filed by the debtor or the assignee that said accounts will be
heard at a time specified in such notice, which time shall not be less
than two nor more than eight weeks from the filing of such accounts. At
the hearing the court shall audit the accounts of the assignee, and any
person interested may appear and file exceptions thereto and contest
the same. The court shall thereupon confirm said accounts if they shall
be found to be correct, or order the same corrected if errors shall be
found therein. The court shall also, in such hearing, determine the
property which must be deducted from the estate as another's, under the
provisions of section forty-eight of this Act, and the right of the
claimants to participate in the dividend, and may order a dividend paid
to those creditors whose claims have been proven and allowed. The
decision of the court theretofore rendered as to whether any claimant
was entitled to vote for an assignee shall not be conclusive upon the
right of the claimant to share in such dividend; but all claimants who
were so allowed to vote shall participate in such dividend unless
objections were filed to the same prior to such hearing. If any such
objections have been filed against any claim, or if any claimant was
refused the right to vote, the court shall determine said objections
and the rights of all such claimants in such hearing and refuse or
allow the same before the declaration of a dividend. Thereafter,
further accounts, statements, and dividends shall be made in like
manner as often as occasion requires: Provided, however, That it shall
be the duty of the assignee to file his final account within one year
from the date of the order of adjudication, unless the court, after
notice to creditors, shall grant further time, upon a satisfactory
showing that great loss and waste would result to the estate by reason
of the conversion of the property into money within said time, or that
it has been impossible to do so by reason of litigation.
Sec. 44. Motion to require accounts, filing of . —
The court may at any time, upon the motion of any two or more
creditors, require the assignee to file his account in the manner and
upon giving the notice specified in the preceding section, and if he
has funds subject to distribution he may be required to distribute them
without delay.
Sec. 45. Rights of creditors late in proving
claims. — Whenever any dividend has been duly declared, the
distribution of it shall not be stayed or affected by reason of debts
being subsequently proved, but any creditor proving such a debt shall
be entitled to a dividend equal to those already received by the other
creditors before any further dividend is made to the latter, if the
failure to prove such claim shall not have resulted from his own
neglect.
Sec. 46. Failure, neglect or refusal by assignee.
— Should the assignee refuse or neglect to render his accounts as
required by sections forty-three and forty-four of this Act, or refuse
or neglect to pay over a dividend when he shall have, in the opinion of
the court, sufficient funds for that purpose, or shall neglect or
mismanage the estate in any manner whatever or violate any of the
provisions of this Act, the court shall immediately discharge such
assignee from his trust, and shall appoint another in his place. The
assignee so discharged shall forthwith deliver over to the assignee
appointed by the court all the funds, property, books, vouchers, or
securities belonging to the insolvent, and he shall not be entitled for
his services to the compensation provided in section forty-two.
Sec. 47. Final account. — Preparatory to the
settlement of the estate, the assignee shall file his final account in
the court, accompanying the same with an affidavit that a notice by
registered mail has been given to all creditors who have proved their
claims, that he will apply for a settlement of his account and for a
discharge from all liability as assignee at a time specified in such
notice, which time shall not be less than two nor more than eight weeks
from such filing. At the hearing the court shall audit the account, and
any person interested may appear and file exceptions in writing and
contest the same. The court thereupon shall settle the account, and
order a dividend of any portion of the estate, if any, remaining
undistributed, and shall discharge the assignee, subject to compliance
with the order of the court, from all liability as assignee to any
creditor of the insolvent.
CHAPTER VI
CLASSIFICATION AND PREFERENCE OF CREDITORS
Sec. 48. Property not belonging to insolvent;
Dowry; Paraphernalia property. — Merchandise, effects, and any other
kind of property found among the property of the insolvent, the
ownership of which has not been conveyed to him by a legal and
irrevocable title, shall be considered to be the property of other
persons and shall be placed at the disposal of its lawful owners on
order of the court made at the hearing mentioned in section forty-three
or at any ordinary hearing, if the assignee or any creditor whose right
in the estate of the insolvent has been established shall petition in
writing for such hearing and the court in its discretion shall so
order, the creditors, however, retaining such rights in said property
as belong to the insolvent, and subrogating him whenever they shall
have complied with all obligations concerning said property.
The following shall be included in this section:
1. Dowry property 21 inestimado and such property
estimado which may remain in the possession of the husband where the
receipt thereof is a matter of record in a public instrument registered
under the provisions of sections twenty-one and twenty-seven of the
Code of Commerce in force.
2. Paraphernalia property which the wife may have
acquired by inheritance, legacy, or donation whether remaining in the
form in which it was received or subrogated or invested in other
property, provided that such investment or subrogation has been
registered in the registro mercantile in accordance with the provisions
of the sections of the Code of Commerce mentioned in the next preceding
paragraph.
3. Property and effects deposited with the bankrupt,
or administered, leased, rented, or held in usufruct by him.
4. Merchandise in the possession of the bankrupt, on
commission, for purchase, sale, forwarding, or delivery.
5. Bills of exchange or promissory notes without
endorsement or other expression transferring ownership remitted to the
insolvent for collection
6. Money remitted to the insolvent, otherwise than on
current account, and which is in his possession for delivery to a
definite person in the name and for the account of the remitter or for
the settlement of claims which are to be met at the unsolvent's
domicile.
7. Amounts due the insolvent for sales of merchandise
on commission, and bills of exchange and promissory notes derived
therefrom in his possession, even when the same are not made payable to
the owner of the merchandise sold, provided it is proven that for the
obligation to the insolvent is derived therefrom and that said bills of
exchange and promissory notes were in the possession of the insolvent
for account of the owner of the merchandise to be cashed and remitted,
in due time, to the said owner; all of which shall be a legal
presumption when the amount involved in any such sale shall not have
been credited on the books of both the owner of the merchandise and of
the insolvent.
8. Merchandise bought on credit by the insolvent so
long as the actual delivery thereof has not been made to him at his
store or at any other place stipulated for such delivery, and
merchandise the bills of lading or shipping receipts of which have been
sent him after the same has been loaded by order of the purchaser and
for his account and risk.
In all cases arising under this paragraph assignees may retain the
merchandise so purchased or claim it for the creditors by paying the
price thereof to the vendor.
9. Goods or chattels wrongfully taken, converted, or
withheld by the insolvent if still existing in his possession or the
amount of the value thereof.
Sec. 49. Creditors sharing pro rata. — All
creditors, except those whose claims are mentioned in the next
following section, whose debts are duly proved and allowed shall be
entitled to share in the property and estate pro rata, after the
property belonging to other persons referred to in the last in
preceding section has been deducted therefrom, without priority or
preference whatever: Provided, That any debt proved by any person
liable as bail, surety, guarantor, or otherwise, for the debtor, shall
not be paid to the person so proving the same until satisfactory
evidence shall be produced of the payment of such debt by such person
so liable, and the share to which such debt would be entitled may be
paid into court, or otherwise held, for the benefit of the party
entitled thereto, as the court may direct.
Sec. 50. The following are the preferred claims
which shall be paid in the order named:
(a) Necessary funeral expenses of the debtor, or of
his wife, or children who are under their parental authority and have
no property of their own, when approved by the court;
(b) Debts due for personal services rendered the
insolvent by employees, laborers, or domestic servants immediately
preceding the commencement of proceedings in insolvency;
(c) Compensation due the laborers or their dependents
under the provisions of Act Numbered Thirty-four hundred and
twenty-eight, known as the Workmen's Compensation Act, 22 as amended by
Act Numbered Thirty-eight hundred and twelve, and under the provisions
of Act Numbered Eighteen hundred and seventy-four, known as the
Employees' Liability Act 23 and of other laws providing for payment of
indemnity for damages in cases of labor accidents;
(d) Legal expenses, and expenses incurred in the
administration of the insolvent's estate for the common interest of the
creditors, when properly authorized and approved by the court;
(e) Debts, taxes, and assessments due the Insular
Government; 24
(f) Debts, taxes, and assessments due to any province
or provinces of the Philippine Islands;
(g) Debts, taxes, and assessments due to any
municipality or municipalities of the Philippine Islands;
All other creditors shall be paid pro rata 25
CHAPTER VII
PARTNERSHIPS & CORPORATIONS
Sec. 51. Partnerships. — A partnership, during the
continuation of the partnership business, or after its dissolution and
before the final settlement thereof, may be adjudged insolvent, either
on the petition of the partners or any one of them, or on the petition
of three or more creditors of the partnership, qualified as provided in
section twenty of this Act, in either of which cases the court shall
issue an order in the manner provided by this Act, upon which all the
property of the partnership, and also all the separate property of each
of the partners, if they are liable, shall be taken, excepting such
parts thereof as may be exempt by law; and all creditors of the
partnership, and the separate creditors of each partner, shall be
allowed to prove their respective claims; and the assignee shall be
chosen by the creditors of the partnership, and shall also keep
separate accounts of the property of the partnership, and of the
separate estate of each member thereof. The expenses of the proceedings
shall be paid from the partnership property and the individual property
of the partners in such proportions as the court shall determine. The
net proceeds of the partnership property shall be appropriated to the
payment of the partnership debts and the net proceeds of the individual
estate of each partner to the payment of his individual debts. Should
any surplus remain of the property of any partner after paying his
individual debts, such surplus shall be added to the partnership assets
and be applied to the payment of the partnership debts. Should any
surplus of the partnership property remain after paying the partnership
debts, such surplus shall be added to the assets of the individual
partners in the proportion of their respective interests in the
partnership. Certificate of discharge shall be granted or refused to
each partner as the same would or ought to be if the proceedings had
been by or against him alone under this Act; and in all other respects
the proceedings as to the partners shall be conducted in like manner as
if they had been commenced and prosecuted by or against one person
alone. If such partners reside in different provinces, the court in
which the petition is first filed shall retain exclusive jurisdiction
over the case. If the petition to be filed by less than all the
partners of a partnership those partners who do not join in the
petition shall be ordered to show cause why they, as individuals, and
said partnership, should not be adjudged to be insolvent, in the same
manner as other debtors are required to show cause upon a creditor's
petition, as in this Act provided; and no order of adjudication shall
be made in said proceedings until after the hearing of said order to
show cause.
Sec. 52. Corporations and sociedades anonimas;
Banking. — The provisions of this Act shall apply to corporations and
sociedades anonimas, and upon the petition of any officer of any
corporation or sociedad anonima, duly authorized by the vote of the
board of directors or trustees, at a meeting specially called for that
purpose, or by the assent in writing of a majority of the directors or
trustees as the case may be, or upon a creditor's petition made and
presented in the manner provided in respect to debtors, of the like
proceedings shall be had and taken as are provided in the case of
debtors: Provided, That in case the articles of association or by-laws
of any corporation the or sociedad anonima provide a method for such
proceedings, such method shall be followed. All the provisions of this
Act which apply to the debtor, or set forth his duties, examination,
and liabilities, or prescribe penalties, or relate to fraudulent
conveyances, payments, and assignments, apply to each and every officer
of any corporation or sociedad anonima in relation to the same matters
concerning the corporation. Whenever any corporation is declared
insolvent, its property and assets shall be distributed to the
creditors; due at but no discharge shall be granted to any corporation.
The provisions of this Act shall not apply to corporations engaged
principally in the banking business, 26 or to any other corporation as
to which there is any special provision of law for its liquidation in
case of insolvency.
CHAPTER VIII
PROOF OF DEBTS
Sec. 53. Class of debts. — All debts due and
payable from the debtor at the time of the adjudication of insolvency,
and all debts then existing but not payable until a future time, a
discount being made if no interest is payable by the terms of the
contract, may be proved against the estate of the debtor.
Sec. 54. Commercial paper. — If the debtor is
bound as indorser, surety, bail, or guarantor, upon any bill, bond,
note, or other specialty or contract, or for any debt any person, and
his liability shall not have become absolute until after the
adjudication of insolvency, the creditor may prove the same after such
liability shall have become fixed, and before the final dividend shall
have been declared.
Sec. 55. Contingent debts. — In all cases of
contingent debts and contingent liabilities, contracted by the debtor,
and not herein otherwise provided for, the creditor may make claim
therefor and have his claim allowed, with the right to share in the
dividends, if the contingency shall happen before the order of the
final dividend; or he may, at any time, apply to the court to have the
present value of the debt or liability ascertained and liquidated,
which shall be done in such manner as the court shall order, and it
shall be allowed for the amount so ascertained.
Sec. 56. Bail, surety, etc., for the debtor. — Any
person liable as bail, surety, or guarantor, or otherwise, for the
debtor, who shall have paid the debt, or any part thereof, in discharge
of the whole, shall be entitled to prove such debt, or to stand in the
place of the creditor, if he shall have proved the same, although such
payments shall have been made after the proceedings in insolvency were
commenced; and any person so liable for the debtor, and who has not
paid the whole of said debt, but is still liable for the same, or any
part thereof, may, if the creditor shall fail or omit to prove such
debt, prove the same in the name of the creditor.
Sec. 57. Rents and periodical payments. — Where
the debtor is liable to pay rent, or other debt falling due at fixed
and stated periods, the creditor may prove, for a proportionate part
thereof up to the time of the insolvency, as if the same became due
from day to day, and not at such fixed and stated periods.
Sec. 58. Mutual debts and credits. — In all cases
of mutual debts and mutual credits between the parties, the account
between them shall be stated, and one debt set off against the other,
and the balance only shall be allowed of a claim in its nature not
provable against the estate: Provided, That no set-off or counterclaim
shall be allowed in favor of any debtor to the insolvent of a claim
purchased by or transferred to such debtor within thirty days
immediately preceding the filing, or after the filing of the petition
by or against the insolvent.
Sec. 59. Mortgages, pledges, liens, etc.; Release
or sale by assignee. — When a creditor has a mortgage, or pledge of
real or personal property of the debtor, or a lien thereon, for
securing the payment of a debt owing to him from the debtor, or an
attachment or execution on property of the debt or duly recorded and
not dissolved under this Act, he shall be admitted as a creditor for
the balance of the debt only, after deducting the value of such
property, such value to be ascertained by agreement between him and the
receiver, if any, and if no receiver, then upon such sum as the court
or a judge thereof may decide to be fair and reasonable, before the
election of an assignee, or by a sale thereof, to be made in such
manner as the court or judge thereof shall direct; or the creditor may
release or convey his claim to the receiver, if any, or if no receiver
then to the sheriff, before the election of an assignee, or to the
assignee if an assignee has been elected, upon such property, and be
admitted to prove his whole debt. If the value of the property exceeds
the sum for which it is so held as security, the assignee may release
to the creditor the debtor's right of redemption thereon on receiving
such excess; or he may sell the property, subject to the claim of the
creditor thereon, and in either case the assignee and creditor,
respectively, shall execute all deeds and writings necessary or proper
to consummate the transaction. If the property is not sold or released,
and delivered up, or its value fixed, the creditor shall not be allowed
to prove any part of his debt, but the assignee shall deliver to the
creditor all such property upon which the creditor holds a mortgage,
pledge, or lien, or upon which he has an attachment or execution.
Sec. 60. Creditors proving claims cannot use; Stay
of action. — No creditor, proving his debt or claim, shall be allowed
to maintain any suit therefor against the debtor, but shall be deemed
to have waived all right of action and suit against him, and all
proceedings already commenced, or any unsatisfied judgment already
obtained thereon, shall be deemed to be discharged and surrendered
thereby; and after the debtor's discharge, upon proper application and
proof to the court having jurisdiction, all such proceedings shall be,
dismissed, and such unsatisfied judgments satisfied of record:
Provided, That no valid lien existing in good faith thereunder shall be
thereby affected. A creditor proving his debt or claim shall not be
held to have waived his right of action or suit against the debtor when
a discharge has have been refused or the proceedings have been
determined to the without a discharge. No creditor whose debt is
provable under this Act shall be allowed, after the commencement of
proceedings in insolvency, to prosecute to final judgment any action
therefor against the debtor until the question of the debtor's
discharge shall have been determined, and any such suit proceeding
shall, upon the application of the debtor or of any creditor, or the
assignee, be stayed to await the determination of the court on the
question of discharge: Provided, That if the amount due the creditor is
in dispute, the suit, by leave of the court in insolvency, may proceed
to judgment for purpose of ascertaining the amount due, which amount,
when adjudged, may be allowed in the insolvency proceedings, but
execution shall be stayed aforesaid.
Sec. 61. Preferences knowingly accepted contrary
to this Act. — Any person who shall have accepted any preference,
having reasonable cause to believe that the same was made or given by
the debtor contrary to any provision of this Act, shall not be allowed
to prove the debt or claim on account of which the preference was made
or given, nor shall he receive any dividend thereon, until he shall
have surrendered to the assignee all property, money, benefit, or
advantage received by him under such preference.
Sec. 62. Examinations under oath by court. — The
court may, upon the application of the assignee, or of any creditor, or
without any application, before or after adjudication in insolvency,
examine upon oath the debtor in relation to his property and his estate
and may examine any other person tending or making proof of claims, and
may subpoena witnesses to give evidence relating to such matters. All
examinations of witnesses shall be had and depositions shall be taken
in accordance with and in the same manner as is provided by the Code of
Civil Procedure. 27
CHAPTER IX
COMPOSITIONS
Sec. 63. When confirmation filed. — An insolvent
may offer terms of composition to his creditors after, but not before,
he has filed in court a schedule of his property and list of his
creditors as provided in this Act. An application for the confirmation
of a composition may be filed in the insolvency court after, but not
before, it has been accepted in writing by a majority in number of all
creditors whose claims have been allowed, which number must represent a
majority in amount of such claims and after the consideration to be
paid by the insolvent to his creditors and the money necessary to pay
all debts which have priority and the costs of proceedings have been
deposited in such place as shall be designated by and subject to the
order of the court. A time shall be fixed by the court for the hearing
upon an application for the confirmation of a composition, and for the
hearing of such objections as may be made to its confirmation. The
court shall confirm a composition if satisfied that (1) it is for the
best interest of the creditors; (2) that the insolvent has not been
guilty of any of the acts, or of a failure to perform any of the
duties, which would create a bar to his discharge; and (3) that the
offer and its acceptance are in good faith, and have not been made or
procured except as herein provided, or by any means, promises, or acts
herein forbidden. Upon the confirmation of a composition the
consideration shall be distributed as the judge shall direct, and the
case dismissed, and the title to the insolvent's property shall revest
in him. Whenever a composition is not confirmed, the estate in
insolvency shall be administered as herein provided. The court may,
upon application of a party in interest, filed at any time within six
months after the composition has been confirmed, set the same aside,
and reinstate the case if it shall be made to appear upon a trial that
fraud was practiced in the procuring of such composition, and that the
knowledge thereof has come to the petitioner since the confirmation of
such composition.
CHAPTER X
DISCHARGE
Sec. 64. Discharge. — At any time after the
expiration of three months from the adjudication of insolvency, but not
later than one year from such adjudication, unless the property of the
insolvent has not been converted unto money, the debtor may apply to
the court for a discharge from his debts, and the court shall thereupon
order notice to be given to all creditors who have proved their debts
to appear on a day appointed for that purpose and show cause why a
discharge should not be granted to the debtor; said notice shall be
given by registered mail and by publication 28 at least once a week,
for six weeks, in a newspaper published in the province or city, or, if
there be none, in a newspaper which, in the opinion of the judge, will
best give notice to the creditors of the said insolvent: Provided, That
if no debts have been proven, such notice shall not be required.
Sec. 65. Invalid discharge. — No discharge shall
be granted, or if granted shall be valid, (1) if the debtor shall have
sworn falsely in his affidavit annexed to his petition, schedule, or
inventory, or upon any examination in the course of the proceedings in
insolvency, in relation to any material fact concerning his estate or
his debts or to any other material fact; or (2) if he has concealed any
part of his estate or effects, or any books or writing relating
thereto; or (3) if he has been guilty of fraud or willful neglect in
the care or custody of his property or in the delivery to the assignee
of the property belonging to him at the time of the presentation of his
petition and inventory, excepting such property as he is permitted to
retain under the provisions of this Act; or (4) if, within one month
before the commencement of such proceedings, he has procured his real
estate, goods, moneys, or chattels to be attached or seized on
execution; or (5) if he has destroyed, mutilated, altered, or falsified
any of his books, documents, papers, writings, or securities, or has
made, or been privy to the making of, any false or fraudulent entry in
any book of account or other document with intent to defraud his
creditors; or (6) if he has given any fraudulent preference, contrary
to the provisions of this Act, or has made any fraudulent payment,
gift, transfer, conveyance, or assignment of any part of his property,
or has admitted a false or fictitious debt against his estate; or (7)
if, having knowledge that any person has proven such false or
fictitious debt, he has not disclosed the same to his assignee within
one month after such knowledge; or (8) if, being a merchant or
tradesman, he has not kept proper books of account in Arabic numerals
and in accordance with the provisions of the Code of Commerce; or (9)
if he, or any other person on his account, or in his behalf, has
influenced the action of any creditor, at any stage of the proceedings,
by any pecuniary consideration or obligation; or (10) if he has, in
contemplation of becoming insolvent, made any pledge, payment,
transfer, assignment, or conveyance of any part of his property,
directly or indirectly, absolutely or conditionally, for the purpose of
preferring any creditor or person having a claim against him, or who
is, or may be, under liability for him, or for the purpose of
preventing the property from coming into the hands of the assignee, or
of being distributed under this Act in satisfaction of his debts; or
(11) if he has been convicted of any misdemeanor under this Act, or has
been guilty of fraud contrary to the true intent of this Act; or (12)
in case of voluntary insolvency, has received the benefit of this or
any other Act of insolvency or bankruptcy within six years next
preceding his application for discharge; or (13) if insolvency
proceedings in which he could have applied for a discharge are pending
by or against him in the Court of First Instance of any other province
or city in the Philippine Islands. Before any discharge is granted, the
debtor shall take and subscribe an oath to the effect that he has not
done, suffered, or been privy to any act, matter, or thing specified in
this Act as grounds for withholding such discharge or as invalidating
such discharge, if granted.
Sec. 66. Any creditor opposing the discharge of a
debtor shall file his objections thereto, specifying the grounds of his
opposition, and after the debtor has filed and served his answer
thereto which pleadings shall be verified, the court shall try the
issue or issues raised, according to the practice provided by law in
civil actions.
Sec. 67. Discharge of debtor by court. — If it
shall appear to the court that the debtor has in all things conformed
to his duty under this Act, and that he is entitled under the
provisions thereof to receive a discharge, the court shall grant him a
discharge from all his debts, except as hereinafter provided, and shall
give him a certificate thereof, under the seal of the court, in
substance as follows: "In the Court of First Instance of the
_____________, Philippine Islands. Whereas, ______________, has been
duly adjudged an insolvent under the Insolvency Law of the Philippine
Islands, and appears to have conformed to all the requirements of law
in that behalf, it is therefore ordered by the court that said
_______________ be forever discharged from all debts and claims, which
by said Insolvency Law are made provable against his estate, and which
existed on the _______ day of _________, on which the petition of
adjudication was filed by (or against) him, excepting such debts, if
any, as are by said Insolvency Law excepted from the operation of a
discharge in insolvency. Given under my hand, and the seal of the
court, this ____ day of ______________, anno Domini ______________
Attest: ____________, clerk. (Seal) _____________, judge."
Sec. 68. Debts not released under this Act — No
tax or assessment due the Insular Government 29 or any provincial or
municipal government, whether proved or not as provided for in this
Act, shall be discharged. Nor shall any debt created by the fraud or
embezzlement of the debtor, or by his defalcation as a public officer
or while acting in a fiduciary capacity, be discharged under this Act,
but the debt may be proved, and the dividend thereon shall be a payment
on account of said debt. No discharge solvent granted under this Act
shall release, discharge, or affect any person liable for the same
debt, for or with the debtor, either as partner, joint contractor,
indorser, surety, or otherwise. 30
Sec. 69. Effect of discharge under this Act — A
discharge, duly granted under this Act, shall, with the exceptions
aforesaid, release the debtor from all claims, debts, liabilities, and
demands set forth in his schedule, or which were or might have been
proved against his estate in insolvency, and may be pleaded by a simple
averment that on the day of its date such discharge was granted to him,
setting forth the same in full, and the same shall be a complete bar to
all suits brought on any such debts, claims, liabilities, or demands,
and the certificate shall be prima facie evidence in favor of such fact
and of the regularity of such discharge: Provided, however, That any
creditor whose debt was proved or provable against the estate in
insolvency who shall see fit to contest the validity of such discharge
on the ground that it was fraudulently obtained and who has discovered
the facts constituting the fraud subsequent to the discharge, may, at
any time within one year after the date thereof, apply to the court
which granted it to set it aside and annul the same.
CHAPTER XI
FRAUDULENT PREFERENCES AND TRANSFERS
Sec. 70. If any debtor, being insolvent, or in
contemplation of insolvency, within thirty days before the filing of a
petition by or against him, with a view to giving a preference to any
creditor or person having a claim against him or who is under any
liability for him, procures any part of his property to be attached,
sequestered, or seized on execution, or makes any payment, pledge,
mortgage, assignment, transfer, sale, or conveyance of any part of his
property, either directly or indirectly, absolutely or conditionally,
to anyone, the person receiving such payment, pledge, mortgage,
assignment, transfer, sale, or conveyance, or to be benefited thereby,
or by such attachment or seizure, having reasonable cause to believe
that such debtor is insolvent, and that such attachment, sequestration,
seizure, payment, pledge, mortgage, conveyance, transfer, sale, or
assignment is made with a view to prevent his property from coming to
his assignee in insolvency, or to prevent the same from being
distributed ratably among his creditors, or to defeat the object of, or
in any way hinder, impede, or delay the operation of or to evade any of
the provisions of this Act, such attachment, sequestration, seizure,
payment, pledge, mortgage, transfer, sale, assignment, or conveyance is
void, and the assignee, or the receiver, may recover the property, or
the value thereof, as assets of such insolvent debtor. If such payment,
pledge, mortgage, conveyance, sale, assignment, or transfer is not made
in the usual and ordinary course of business of the debtor, or if such
seizure is made under a judgment which the debtor has confessed or
offered to allow, that fact shall be prima facie evidence of fraud. Any
payment, pledge, mortgage, conveyance, sale, assignment, or transfer of
property of whatever character made by the insolvent within one month
before the filing of a petition in insolvency by or against him, except
for a valuable pecuniary consideration made in good faith, shall be
void. All assignments, transfers, conveyances, mortgages, or
incumbrances of real estate shall be deemed, under this section, to
have been made at the time the instrument conveying or affecting such
realty was filed for record in the office of the register of deeds of
the province or city where the same is situated.
CHAPTER XII
PENAL PROVISIONS
Sec. 71. Acts of debtors punishable under this
Act. — From and after the taking effect of this Act, a debtor who
commits any one of the following acts shall, upon conviction thereof,
be punished by imprisonment for not less than three months nor more
than five years for each offense:
1. If he shall, after the commencement of proceedings
in insolvency, secrete or conceal any property belonging to his estate
or part with, conceal, destroy, alter, mutilate, or falsify or cause to
be concealed, destroyed, altered, mutilated, or falsified, any book,
deed, document, or writing relating thereto, or remove, or cause to be
removed, the same or any part thereof, with the intent to prevent it
from coming into the possession of the assignee in insolvency, or to
hinder, impede, or delay his assignee in recovering or receiving the
same, or if he shall make any payment, gift, sale, assignment,
transfer, or conveyance of any property belonging to his estate, with
like intent, or shall spend any part thereof in gaming; or if he shall,
with intent to defraud willfully and fraudulently conceal from his
assignee, or fraudulently or designedly omit from his schedule any
property or effects whatsoever; or if, in any case of any person
having, to his knowledge or belief, proved a false or fictitious debt
against his estate he shall fail to disclose the same to his assignee
within one month after coming to the knowledge or belief thereof; or if
he shall attempt to account for any of his property by fictitious
losses or expenses;
2. If he shall, within three months before
commencement of proceedings in insolvency under the false pretense of
carrying on business and dealing in the ordinary course of trade,
obtain on credit from any person any goods or chattels or shall pawn,
pledge, or dispose of, otherwise than by bona fide transactions in the
ordinary course of his trade, any of his goods and chattels which have
been obtained on credit and remain unpaid for, or shall have suffered
loss in any kind of gaming when such loss is one of the causes
determining the commencement of proceedings, in insolvency, or shall
have sold at a loss or for less than the current price any goods bought
on credit and still unpaid for, or shall have advanced payments to the
prejudice of his creditors. 31
3. If he shall, from and after the taking effect of
this Act, during the proceedings for the suspension of payments,
secrete or conceal, or destroy or cause to be destroyed or secreted any
property belonging to his estate; or if he shall secrete, destroy,
alter, mutilate, or falsify, or cause to be secreted, destroyed,
altered, mutilated, or falsified, any book, deed, document, or writing
relating thereto, or if he shall, with intent to defraud his creditors,
make any payment, sale, assignment, transfer, or conveyance of any
property belonging to his estate; or if he shall spend any part thereof
in gaming; or if he shall falsely swear to the schedule and inventory
exacted by paragraph two of section two as required by sections
fifteen, sixteen and seventeen of this Act, with intent to defraud his
creditors; or if he shall violate or break in any manner whatsoever the
injunction issued by the court under section three of this Act.
CHAPTER XIII
MISCELLANEOUS
Sec. 72. If any debtor shall die after the order
of adjudication, the proceedings shall be continued and concluded in
like manner and with like validity and effect as if he had lived.
Sec. 73. Pending insolvency proceedings by or
against any person, partnership, corporation, or sociedad anonima, no
statute of limitations shall run upon a claim of or against the estate
of the debtor.
Sec. 74. Any creditor, at any stage of the
proceedings, may be represented by his attorney or duly authorized
agent, and the attorney or agent, properly authorized, shall be
entitled to vote at any creditors' meeting as and for his principal.
Sec. 75. Exempt property to be set apart. — It
shall be the duty of the court having jurisdiction of the proceedings,
upon petition and after hearing, to exempt and set apart, for the use
and benefit of said insolvent, such real and personal property as is by
law exempt from execution, and also a homestead, as provided in section
four hundred and fifty-two of the Code of Civil Procedure; 32 but no
such petition shall be heard as aforesaid until it is first proved that
notice of the hearing of the application therefor has been duly given
by the clerk, by causing such notice to be posted in at least three
public places in the province or city at least ten days prior to the
time of such hearing, which notice shall set forth the name of said
insolvent debtor, and the time and place appointed for the hearing of
such application, and shall briefly indicate the homestead sought to be
exempted or the property sought to be set aside; and the decree must
show that such proof was made to the satisfaction of the court, and
shall be conclusive evidence of that fact.
Sec. 76. Proceedings, how commenced. — The filing
of a petition by or against a debtor upon which, or upon an amendment
of which, an order of adjudication in insolvency may be made, shall be
deemed to be the commencement of the proceedings in insolvency under
this Act.
Sec. 77. Words used in this Act in the singular
include the plural, and in the plural, the singular, and the word
"debtor" includes partnerships, corporations and sociedades anonimas.
Sec. 78. Appointment of receiver; Election and
qualification of assignee. — Upon the filing of either a voluntary or
involuntary petition in insolvency, a receiver may be appointed by the
court in which the proceeding is pending, or by a judge thereof, at any
time before the election of an assignee, when it appears by the
verified petition of a creditor that the assets of the insolvent, or a
considerable portion thereof, have been pledged, mortgaged,
transferred, assigned, conveyed, or seized, on legal process, in
contravention or violation of the provisions of section seventy of this
Act, and that it is necessary to commence an action to recover the
same. The appointment, oath, undertaking, and powers of such receiver
shall in all respects be regulated by the general laws of the
Philippine Islands applicable to receivers. When an assignee is chosen,
and has qualified, the receiver shall forthwith return to court an
account of the assets and property which have come into his possession,
and of his disbursements, and a report of all actions or proceedings
commenced by him for the recovery of any property belonging to the
estate, and the court shall thereupon summarily hear and settle the
receiver's account, and shall allow him a just compensation for his
services and his expenses, including a reasonable attorney's fee,
whereupon the receiver shall deliver all property, assets, or effects
remaining in his hands, to the assignee who shall be substituted for
the receiver in all pending actions or proceedings.
Sec. 79. Attachments. — When an attachment has
been made and is not dissolved before the commencement of proceedings
in insolvency, or is dissolved by an undertaking given by the
defendant, if the claim upon which the attachment suit was commenced is
proved against the estate of the debtor, the plaintiff may prove the
legal costs and disbursements of the suit, and of the keeping of the
property, and the amount thereof shall be a preferred debt.
Sec. 80. Costs. — In all contested matters in
insolvency the court may, in its discretion, award costs to either
party to be paid by the other, or to either or both parties to be paid
out of the estate, as justice and equity may require. In awarding
costs, the court may issue execution therefor. In all involuntary cases
under this Act, the court shall allow the petitioning creditors out of
the estate of the debtor, if any adjudication of insolvency be made, as
a preferred claim, all legal costs and disbursements incurred by them
in that behalf.
Sec. 81. Dismissal or discontinuance. — If no
creditor files written objections, the court may, upon the application
of the debtor, if it be voluntary petition, or of the petitioning
creditors, if a creditor's petition, dismiss the petition and the
discontinue the proceedings at any time before the appointment of an
assignee, upon giving not less than two nor more than eight weeks'
notice to the creditors, in the same manner that notice of the time and
place of election of an assignee is given: Provided, however, That by
written consent of all creditors filed in the court the proceedings may
be dismissed at any time. After the appointment of an assignee, no
dismissal shall be made without the consent of all parties interested
in or affected thereby.
Sec. 82. Law governing appeal. — An appeal may be
taken to the Supreme Court in the following cases: 33
1. From an order granting or refusing an adjudication
of insolvency and, in the latter case, from the order fixing the amount
of costs, expenses, damages, and attorney's fees allowed the debtor.
2. From an order made at the hearing of any account
of an assignee, allowing or rejecting a creditor's claim, in whole or
in part, when the amount in dispute exceeds three hundred pesos.
3. From an order allowing or denying a claim for
property not belonging to the insolvent, presented under section
forty-eight of this Act.
4. From an order settling an account of an assignee.
5. From an order against or in favor of setting apart
homestead or other property claimed as exempt from execution.
6. From an order granting or refusing a discharge to
the debtor.
Chapter forty-two of the Code of Civil Procedure, 34 so far as
applicable, shall govern appeals under this Act, except that when an
assignee has given an official undertaking and appeals from a judgment
or order of insolvency, his official undertaking stands in the place of
an undertaking on appeal, and the sureties thereon are liable on such
undertaking: Provided, however, That an interlocutory appeal shall not
stay proceedings unless written be entered into on the part of the
appellant, with at least two sureties, in such an amount as the court,
or a judge thereof, may direct, but not less than double the value of
the property involved, to the effect that if the order appealed from be
affirmed, or the appeal dismissed, appellant will pay all costs and
damages which the adverse party may sustain by reason of the appeal and
the stay of proceedings.
Sec. 83. All Acts and parts of Acts inconsistent
with the provisions of this Act are hereby repealed.
Sec. 84. This Act shall take effect on its passage.
Enacted, May 20, 1909.
Footnotes
* As amended by Act 3544, Act 3616 and Act
3692.
1. See PD 1079, promulgated January 28, 1977
regulating publications of judicial notices.
2. See Rule 39, section 12, of the Rules of
Court for list of properties exempt from execution.
3. Id.
4. See PD 1074, promulgated January 28, 1977
regulating publications of judicial notices.
5. Id.
6. See Act 3342, regulating criminal and civil
bonds.
7. See Rule 14, Rules of Court for service of
summons.
8. See Rule 14, sections 16 and 21, of the
Rules of Court of the Philippines for rule on publication of summons.
9. See Rule 16, Rules of Court for motion to
dismiss.
10. See section 17, supra, for the form of
verification.
11. See Rule 39, section 12, of the Rules of Court of
the Philippines for list of properties exempt from execution.
12. See PD 1079, promulgated January 28, 1977
regulating publication of judicial notices.
13. See Rule 39, section 12, Rules of Court for
properties exempt from execution.
14. Id.
15. See Rule 39 of the Rules of Court for the
procedure in the sale of properties under execution.
16. See Act 190 and RA 386 for prescription of
actions.
17. See Rule 39, section 12, Rules of Court for list
of properties exempt from execution.
18. Id.
19. See Rule 39, Rules of Court for execution of
judgment.
20. See Rule 87, Rules of Court.
21. The provisions on dowry in the Spanish Civil Code
were repealed by RA 386.
22. Superseded by the Labor Code, PD 442 promulgated
May 1, 1974.
23. Id.
24. Now National.
25. Words in bold in the text above are amendments
introduced by Act 3692, section 1, approved December 2, 1932.
Statutory History of section 50:
Original text —
SEC. 50. The following shall be
preferred claims which shall be paid in the order named:
(a) Legal
expenses, and expenses incurred in the administration of the
insolvent's estate for the common interest of the creditors when
properly authorized and approved by the court;
(b) Necessary
funeral expenses of the debtor, or of his wife, or children who are
under their parental authority and have no property of their own, when
approved by the court;
(c) Debts,
taxes and assessments due the Insular Government;
(d) Debts,
taxes, and assessments due to any province or provinces of the
Philippine Islands;
(e) Debts,
taxes, and assessments due to any municipality or municipalities of the
Philippine Islands;
(f) Debts for
personal services rendered the insolvent by clerks laborers, or
domestic servants during the sixty days immediately preceding the
commencement
26. See RA 3591, approved June 22, 1963 providing for
insurance on bank deposits.
27. Now Rules of Court.
28. See PD 1079, promulgated January 28, 1977
regulating publication of judicial notices.
29. Now National.
30. Word in bold in the text above are amendments
introduced by Act 3544, section 1, approved November 22, 1929:
Statutory History of section 68:
Original text —
SEC. 68. No debt created by the
fraud or embezzlement of the debtor, or by his defalcation as a public
officer or while acting in a fiduciary capacity, [shall] be discharged
under this Act, but the debt may be proved, and the dividend thereon
shall be a payment on account of said debt. No discharge granted under
this Act shall release, discharge, or affect any person liable for the
same debt, for or with the debtor, either as partner, joint contractor,
indorser, surety, or otherwise. (Note: Word in brackets was deleted in
Act 3544, supra.)
31. Word in bold in the text above are amendment
introduced by Act 3616, section 1, approved December 4, 1929.
Statutory History of section 71(2):
Original text —
2. If he shall, within three
months before commencement of proceedings [of] insolvency, under the
false pretense of carrying on business and dealing in the ordinary
course of trade, obtain on credit from any person any goods or chattels
[with intent to defraud,] or shall, [with intent to defraud his
creditors,] pawn, pledge, or dispose of, otherwise than by bona fide
transactions in the ordinary way of his trade, any of his goods and
chattels which have been obtained on credit and remain unpaid for, or
shall have suffered loss in any kind of gaming when such loss is one of
the causes determining the commencement of proceedings in insolvency,
or shall have sold at a loss or for less than the current price any
goods bought on credit and still unpaid for, or shall have advanced
payments to the prejudice of his creditors; (Ed. Note: Words in
brackets were deleted in Act 3616, supra.)
32. Now Rule 39, section 12, New Rules of Court.
33. See RA 296, section 17 as amended.
34. Now Rule 109, New Rules of Court.
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