TITLE XII CONCURRENCE AND PREFERENCE OF CREDITS

CHAPTER 1 General Provisions

Article 2236.

Article 2237.

GR The debtor is liable with ALL HIS PROPERTY, PRESENT AND FUTURE, for the fulfillment of his obligations,

INSOLVENCY shall be governed by SPECIAL LAWS insofar as they are not inconsistent with this Code. (n)

subject to the EXEMPTIONS provided by LAW. (1911a)

Article 2238.
So long as the CONJUGAL PARTNERSHIP OR ABSOLUTE COMMUNITY SUBSISTS, GR 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, E 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 or absolute community may, be transferred to the 1. WIFE OR 2. THIRD PERSON OTHER THAN THE ASSIGNEE. (N) by order of the court,

Article 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.

Article 2240.

PROPERTY HELD BY THE INSOLVENT DEBTOR AS A TRUSTEE of an express or implied trust,

shall be EXCLUDED FROM THE INSOLVENCY PROCEEDINGS. (n)

CHAPTER 2

CLASSIFICATION OF CREDITS

Article 2241. With reference to specific movable property of the debtor, the following CLAIMS OR LIENS SHALL BE PREFERRED:

DUTIES, TAXES AND FEES due thereon to the STATE or any subdivision thereof;
1.

(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;

Article 2241. With reference to specific movable property of the debtor, the following CLAIMS OR LIENS SHALL BE PREFERRED:

(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;

Article 2241. With reference to specific movable property of the debtor, the following CLAIMS OR LIENS SHALL BE PREFERRED:

(4) CREDITS A. GUARANTEED WITH A PLEDGE so long as the things pledged are in the hands of the creditor, or

B. those guaranteed by a CHATTEL MORTGAGE, upon the things pledged or mortgaged, UP TO THE VALUE THEREOF;

Article 2241. With reference to specific movable property of the debtor, the following CLAIMS OR LIENS SHALL BE PREFERRED:

(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, 1. on the goods manufactured or 2. the work done;

Article 2241. With reference to specific movable property of the debtor, the following CLAIMS OR LIENS SHALL BE PREFERRED:

(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 30 days thereafter;

Article 2241. With reference to specific movable property of the debtor, the following CLAIMS OR LIENS SHALL BE PREFERRED:

(10) CREDITS FOR LODGING AND SUPPLIES

usually furnished to travellers by hotel keepers, on the movables belonging to the guest as long as such movables are in the hotel,

(11) CREDITS FOR SEEDS AND EXPENSES FOR CULTIVATION AND HARVEST ADVANCED TO THE DEBTOR, upon the fruits harvested;

but not for money loaned to the guests;

(12) CREDITS FOR RENT FOR 1 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 30 days from the unlawful seizure. (1922a)

Article 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:

TAXES due upon the land or building; 2. For the UNPAID PRICE of real property sold, upon the
1.

(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;

(4) CLAIMS OF FURNISHERS OF MATERIALS used 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 2 years. (1923a)

Article 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

TAXES mentioned in No. 1, article 2241, and No. 1, article 2242, shall first be satisfied. (n)

Article 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;

(2) Credits for services rendered the insolvent by employees, laborers, or household helpers for one year preceding the commencement of the proceedings in insolvency;

(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; (7) Fines and civil indemnification arising from a criminal offense; (8) 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;

(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;

(12) Damages for death or personal injuries caused by a quasi-delict; (13) Gifts due to public and private institutions of charity or beneficence; (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)

Article 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)

CHAPTER 3

ORDER OF PREFERENCE OF CREDITS

Article 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.

Article 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)

Article 2248.

Article 2249.

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.

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)

TRANSITIONAL PROVISIONS

Article 2252.
CHANGES made and NEW PROVISIONS and 3. RULES laid down by this Code which may prejudice or impair vested or acquired rights in accordance with the old legislation shall have NO RETROACTIVE EFFECT.
1. 2.

For the DETERMINATION OF THE APPLICABLE LAW IN CASES WHICH ARE NOT SPECIFIED ELSEWHERE IN THIS CODE,
the following articles shall be observed: (Pars. 1 and 2, Transitional Provisions).

Article 2253.
THE CIVIL CODE OF 1889 AND OTHER PREVIOUS LAWS shall govern rights originating, under said laws, from acts done or events which took place under their regime, even though this Code may regulate them in a different manner, or may not recognize them.

But if a right should be declared for the first time in this Code, it shall be effective at once,

even though the act or event which gives rise thereto may have been done or may have occurred under prior legislation, C

provided said new right does not prejudice or impair any vested or acquired right, of the same origin. (Rule 1)

Article 2254.
NO VESTED OR ACQUIRED RIGHT can arise from acts or omissions 1. which are against the law or 2. which infringe upon the rights of others. (n)

Article 2255.

THE FORMER LAWS SHALL REGULATE ACTS AND CONTRACTS WITH A CONDITION OR PERIOD, which were executed or entered into BEFORE the effectivity of this Code,

even though the condition or period may still be pending at the time this body of laws goes into effect. (n)

Article 2256.

But the
REVOCATION OR MODIFICATION of

ACTS AND CONTRACTS UNDER THE REGIME OF THE OLD LAWS, if they are VALID in accordance therewith,
shall CONTINUE TO BE FULLY OPERATIVE as provided in the same, with the limitations established in these rules.

these acts and contracts

AFTER THE BEGINNING OF THE EFFECTIVITY OF THIS CODE,

shall be subject to the provisions of this NEW BODY OF LAWS. (Rule 2a)

Article 2257.
Provisions of this Code which attach a 1. CIVIL SANCTION OR 2. PENALTY OR A DEPRIVATION OF RIGHTS to acts or omissions which were not penalized by the former laws,

are NOT APPLICABLE to those who, when said laws were in force, may have EXECUTED THE ACT OR INCURRED IN THE OMISSION FORBIDDEN OR CONDEMNED BY THIS CODE.

Article 2257.

IF A CONTINUOUS OR REPEATED ACT OR OMISSION

IF THE FAULT IS ALSO PUNISHED BY THE PREVIOUS LEGISLATION,

the LESS SEVERE SANCTION shall be applied.

was commenced before the beginning of the effectivity of this Code, and the same subsists or is maintained or repeated after this body of laws has become operative,
THE SANCTION OR PENALTY PRESCRIBED IN THIS CODE SHALL BE APPLIED, EVEN THOUGH THE PREVIOUS LAWS MAY NOT HAVE PROVIDED ANY SANCTION OR PENALTY THEREFOR. (Rule 3a)

Article 2258.

ACTIONS AND RIGHTS WHICH CAME INTO BEING BUT WERE NOT EXERCISED BEFORE THE EFFECTIVITY OF THIS CODE, SHALL REMAIN IN FULL FORCE in conformity with the old legislation;

but their EXERCISE, DURATION AND THE PROCEDURE TO ENFORCE THEM shall be regulated by 1. NCC 2. ROC

IF THE EXERCISE OF THE RIGHT OR OF THE ACTION WAS COMMENCED UNDER THE OLD LAWS, but is PENDING on the date this Code takes effect, (Rule 4)

and the procedure was DIFFERENT from that established in this new body of laws,
THE PARTIES CONCERNED MAY CHOOSE WHICH METHOD OR COURSE TO PURSUE.

Article 2259.

Article 2260.

THE CAPACITY OF A MARRIED WOMAN TO EXECUTE ACTS AND CONTRACTS IS GOVERNED BY THIS NCC EVEN IF HER MARRIAGE WAS CELEBRATED UNDER THE FORMER LAWS. (N)

THE VOLUNTARY RECOGNITION OF A NATURAL CHILD SHALL TAKE PLACE ACCORDING TO THIS NCC, EVEN IF THE CHILD WAS BORN BEFORE THE EFFECTIVITY OF THIS BODY OF LAWS. (N)

Article 2267.

The following provisions shall apply not only to future cases but also to those pending on the date this Code becomes effective:

(1) ARTICLE 29, Relative to CRIMINAL PROSECUTIONS

wherein the accused is ACQUITTED on the ground that his GUILT HAS NOT BEEN PROVED BEYOND REASONABLE DOUBT;

(2) ARTICLE 33, concerning cases of DEFAMATION, FRAUD, AND PHYSICAL INJURIES. (n)

Article 2268.

SUITS BETWEEN MEMBERS OF THE SAME FAMILY WHICH ARE PENDING at the time this Code goes into effect shall be SUSPENDED, under such terms as the court may determine,

1.

in order that COMPROMISE

may be earnestly sought, or,

2.

in case of LEGAL SEPARATION PROCEEDINGS,

for the purpose of effecting, if possible, a RECONCILIATION. (n)

Article 2269.

Article 2270.

The principles upon which the preceding transitional provisions are based shall, by analogy, BE APPLIED TO CASES NOT SPECIFICALLY REGULATED BY THEM. (Rule 13a)

REPEALING CLAUSE The following laws and regulations are hereby repealed: (1) Those parts and provisions of the Civil Code of 1889 which are in force on the date when this new Civil Code becomes effective: (2) The provisions of the Code of Commerce governing sales, partnership, agency, loan, deposit and guaranty; (3) The provisions of the Code of Civil Procedure on prescription as far as inconsistent with this Code; and (4) All laws, Acts, parts of Acts, rules of court, executive orders, and administrative regulations which are inconsistent with this Code. (n) Approved: June 18, 1949.