Act No. 1956 CHAPTER VI (Section 48–50) — Full Text

Section 48

SEC. 48. Merchandise, effects, and any other kind of property longing to insolvent among the property of which insolvent, the ownership of which has not been conveyed to him by a legal and irrevocable title, shall be considered to be the properly 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 suction 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 lights 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 he included in this section: 1. Dowry property 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. Paraphernal properly which the wife may have acquired by inheritance, legacy, or donation whether remaining in the form in which it was received or subrogatod or invested in other property, provided that such investment or subrogation has been registered in the registro mercantil 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 indorsement or other expression transferring ownership remitted to the insolvent, for collection and all others acquired by him for the account of another person, drawn or indorsed to the remitter direct. 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 insolvent'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 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 Goods bought on 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 tor the creditors by paying the price thereof to the vendor. 9. Goods or chattels wrongfully taken, converted, or withheld take by the insolvent if si ill existing in his possession or the amount of the value thereof.

Section 49

SEC. 49. All creditors, except those whose claims are mentioned sharing in the next following section, whose debts are duly proved and allowed shall he entitled to share in the property and estate pro rata after the property belonging to other persons referred to in the last 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.

Section 50

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 of proceedings in insolvency, not to exceed two hundred pesos for each claimant. All other creditors shall be paid pro rata.