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debtor’s assets are insufficient to pay his debts in full Episode 1: August 31, 2018
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GENERAL PROVISIONS Episode 2: September 7, 2018
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Art. 2236. The debtor is liable with all his property, present and future, for the fulfillment of his Episode 3: September 13, 2018
obligations, subject to the exemptions provided by law. (1911a) Facebook Video | YouTube Video
Art. 152. The family home, constituted jointly by the husband and the wife or by an
unmarried head of a family, is the dwelling house where they and their family
reside, and the land on which it is situated. (223a)
Art. 153. The family home is deemed constituted on a house and lot from the time it is
occupied as a family residence. From the time of its constitution and so long as any of
its
beneficiaries actually resides therein, the family home continues to be such and is
exempt from execution, forced sale or attachment except as hereinafter provided and to the
extent
of the value allowed by law. (223a)
(1) The husband and wife, or an unmarried person who is the head of a family;
(2) Their parents, ascendants, descendants, brothers and sisters, whether the
relationship be legitimate or illegitimate, who are living in the family home and who
depend upon the head of the family for legal support. (226a)
Art. 155. The family home shall be exempt from execution, forced sale or attachment
except:
(1) For nonpayment of taxes;
(2) For debts incurred prior to the constitution of the family home;
(3) For debts secured by mortgages on the premises before or after such constitution; and
(4) For debts due to laborers, mechanics, architects, builders, materialmen and others
who have rendered service or furnished material for the construction of the building.
(243a)
Art. 205. The right to receive support under this Title as well as any money or property
obtained as such support shall not be levied upon on attachment or execution. (302a)
(a) The judgment obligor's family home as provided by law, or the homestead in which he
resides, and land necessarily used in connection therewith;
(b) Ordinary tools and implements personally used by him in his trade, employment,
or livelihood;
(c) Three horses, or three cows, or three carabaos, or other beasts of burden such
as the judgment obligor may select necessarily used by him in his ordinary occupation;
(d) His necessary clothing and articles for ordinary personal use, excluding jewelry;
(e) Household furniture and utensils necessary for housekeeping, and used for
that purpose by the judgment obligor and his family, such as the judgment obligor
may
select, of a value not exceeding one hundred thousand pesos;
But no article or species of property mentioned in his section shall be exempt from
execution issued upon a judgment recovered for its price or upon a judgment of
foreclosure of a mortgage thereon.
Art. 2237. Insolvency shall be governed by special laws insofar as they are not
inconsistent with this Code. (n)
Art. 2238. So long as the conjugal partnership or absolute community subsists, its property shall not
be among the assets to be taken possession of by the assignee for the payment of the insolvent
debtor's obligations, except insofar as the latter have redounded to the benefit of the family. If it
is the husband who is insolvent, the administration of the conjugal partnership of absolute
community may, by order of the court, be transferred to the wife or to a third person other than the
assignee. (n)
Art. 2239. If there is property, other than that mentioned in the preceding article, owned by two or
more persons, one of whom is the insolvent debtor, his undivided share or interest therein shall be
among the assets to be taken possession of by the assignee for the payment of the insolvent
debtor's obligations. (n)
The shares of the other co-owners of course cannot be taken possession of by the assignee
Art. 2240. Property held by the insolvent debtor as a trustee of an express or implied trust, shall
be excluded from the insolvency proceedings. (n)
CLASSIFICATION OF CREDITS
Art. 2241. With reference to specific movable property of the debtor, the following claims or liens shall
be preferred:
(1) Duties, taxes and fees due thereon to the State or any subdivision thereof;
(2) Claims arising from misappropriation, breach of trust, or malfeasance by public officials
committed in the performance of their duties, on the movables, money or securities obtained by
them;
(3) Claims for the unpaid price of movables sold, on said movables, so long as they are in the
possession of the debtor, up to the value of the same; and if the movable has been resold by the debtor
and the price is still unpaid, the lien may be enforced on the price; this right is not lost by the
immobilization of the thing by destination, provided it has not lost its form, substance and identity;
neither is the right lost by the sale of the thing together with other property for a lump sum, when
the price thereof can be determined proportionally;
(4) Credits guaranteed with a pledge so long as the things pledged are in the hands of the
creditor, or those guaranteed by a chattel mortgage, upon the things pledged or mortgaged, up to the
value thereof;
(5) Credits for the making, repair, safekeeping or preservation of personal property, on the
movable thus made, repaired, kept or possessed;
(6) Claims for laborers' wages, on the goods manufactured or the work done;
(8) Credits between the landlord and the tenant, arising from the contract of tenancy on shares, on
the share of each in the fruits or harvest;
(9) Credits for transportation, upon the goods carried, for the price of the contract and incidental
expenses, until their delivery and for thirty days thereafter;
(10) Credits for lodging and supplies usually furnished to travelers by hotelkeepers, on the
movables belonging to the guest as long as such movables are in the hotel, but not for money loaned to
the guests;
(11) Credits for seeds and expenses for cultivation and harvest advanced to the debtor, upon the fruits
harvested;
(12) Credits for rent for one year, upon the personal property of the lessee existing on the
immovable leased and on the fruits of the same, but not on money or instruments of credit;
(13) Claims in favor of the depositor if the depositary has wrongfully sold the thing deposited,
upon the price of the sale.
In the foregoing cases, if the movables to which the lien or preference attaches have been
wrongfully taken, the creditor may demand them from any possessor, within thirty days from the
unlawful seizure. (1922a)
3. Claims for the unpaid price of movables sold, on said movables, so long as they are in the
possession of the debtor, up to the value of the same; and if the movable has been resold by the
debtor and the price is still unpaid, the lien may be enforced on the price; this right is not lost by the
immobilization of the thing by destination, provided it has not lost its form, substance and identity;
neither is the right lost by the sale of the thing together with other property for a lump sum, when the
price thereof can be determined proportionally
4. Credits guaranteed with a pledge so long as the things pledged are in the hands of the
creditor, or those guaranteed by a chattel mortgage, upon the things pledged or mortgaged, up to
the value thereof
a. Should be registered
b. Binding against third parties
5. Credits for the making, repair, safekeeping or preservation of personal property, on the movable thus
made, repaired, kept or possessed
6. Claims for laborers' wages, on the goods manufactured or the work done
7. For expenses of salvage, upon the goods salvaged
8. Credits between the landlord and the tenant, arising from the contract of tenancy on shares, on the
share of each in the fruits or harvest
9. Credits for transportation, upon the goods carried, for the price of the contract and incidental
expenses, until their delivery and for thirty days thereafter
10. Credits for lodging and supplies usually furnished to travelers by hotel keepers, on the
movables belonging to the guest as long as such movables are in the hotel, but not for money
loaned to the guests
11. Credits for seeds and expenses for cultivation and harvest advanced to the debtor, upon the fruits
harvested
12. Credits for rent for one year, upon the personal property of the lessee existing on the immovable
leased and on the fruits of the same, but not on money or instruments of credit
13. Claims in favor of the depositor if the depositary has wrongfully sold the thing deposited, upon
the price of the sale.
Art. 2242. With reference to specific immovable property and real rights of the debtor, the
following claims, mortgages and liens shall be preferred, and shall constitute an encumbrance on the
immovable or real right:
(2) For the unpaid price of real property sold, upon the immovable sold;
(3) Claims of laborers, masons, mechanics and other workmen, as well as of architects,
engineers and contractors, engaged in the construction, reconstruction or repair of buildings, canals
or other works, upon said buildings, canals or other works;
(5) Mortgage credits recorded in the Registry of Property, upon the real estate mortgaged;
(6) Expenses for the preservation or improvement of real property when the law authorizes
reimbursement, upon the immovable preserved or improved;
(7) Credits annotated in the Registry of Property, in virtue of a judicial order, by attachments or
executions, upon the property affected, and only as to later credits;
(8) Claims of co-heirs for warranty in the partition of an immovable among them, upon the real
property thus divided;
(9) Claims of donors or real property for pecuniary charges or other conditions imposed upon the
donee, upon the immovable donated;
(10) Credits of insurers, upon the property insured, for the insurance premium for two years. (1923a)
5. Mortgage credits recorded in the Registry of Property, upon the real estate mortgaged
6. Expenses for the preservation or improvement of real property when the law authorizes
reimbursement, upon the immovable preserved or improved
Art. 2243. The claims or credits enumerated in the two preceding articles shall be
considered as mortgages or pledges of real or personal property, or liens within the
purview of legal provisions governing insolvency. Taxes mentioned in No. 1, Article
2241, and No. 1, Article 2242, shall first be satisfied. (n)
Art. 2244. With reference to other property, real and personal, of the debtor, the
following claims or credits shall be preferred in the order named:
(1) Proper funeral expenses for the debtor, or children under his or her parental
authority who have no property of their own, when approved by the court;
(3) Expenses during the last illness of the debtor or of his or her spouse and
children under his or her parental authority, if they have no property of their own;
(4) Compensation due the laborers or their dependents under laws providing for
indemnity for damages in cases of labor accident, or illness resulting from the nature
of the employment;
(5) Credits and advancements made to the debtor for support of himself or
herself, and family, during the last year preceding the insolvency;
(6) Support during the insolvency proceedings, and for three months thereafter;
(9) Taxes and assessments due the national government, other than those
mentioned in Articles 2241, No. 1, and 2242, No. 1;
(10) Taxes and assessments due any province, other than those referred to in Articles
2241, No. 1, and 2242, No. 1;
(11) Taxes and assessments due any city or municipality, other than those
indicated in Articles 2241, No. 1, and 2242, No. 1;
(14) Credits which, without special privilege, appear in(a) a public instrument; or (b) in
a final judgment, if they have been the subject of litigation. These credits shall have
preference among themselves in the order of priority of the dates of the instruments
and of the judgments, respectively. (1924a)
These credits shall have preference among themselves in the order of priority of the dates of the
instruments and of the judgments, respectively.
Art. 2245. Credits of any other kind or class, or by any other right or title not comprised
in the four preceding articles, shall enjoy no preference. (1925)
Art. 2246. Those credits which enjoy preference with respect to specific movables, exclude all
others to the extent of the value of the personal property to which the preference refers.
Art. 2247. If there are two or more credits with respect to the same specific movable property, they shall
be satisfied pro rata, after the payment of duties, taxes and fees due the State or any subdivision
thereof. (1926a)
Art. 2248. Those credits which enjoy preference in relation to specific real property or real rights, exclude
all others to the extent of the value of the immovable or real right to which the preference refers.
Art. 2249. If there are two or more credits with respect to the same specific real property or real rights,
they shall be satisfied pro rata, after the payment of the taxes and assessments upon the
immovable property or real right. (1927a)
Art. 2250. The excess, if any, after the payment of the credits which enjoy preference with respect
to specific property, real or personal, shall be added to the free property which the debtor may have,
for the payment of the other credits. (1928a)
Art. 2251. Those credits which do not enjoy any preference with respect to specific
property, and those which enjoy preference, as to the amount not paid, shall be
satisfied according to the following rules:
(2) Common credits referred to in Article 2245 shall be paid pro rata regardless of dates.
(1929a)
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