Article 65Supplement v1, p. 65

COMMERCIAL LAWS SUPPLEMENT

(c) Any benefit derived from a proceeding taken pursuant

to subsection (a) hereof, to the extent of his claim and the

costs, belongs exclusively to the creditor instituting the

proceeding, and the surplus, if any, belongs to the estate.

(d) Where, before an order is made under subsection (a)

hereof, the liquidator signifies to the court his readiness

to institute the proceeding for the benefit of the creditors,

the order shall fix the time within which he shall do so

and,

in

that

case,

the

benefit

derived

from

the

proceedings, if instituted within the time limits so fixed,

belongs to the estate.

(E) The Liquidation Plan.

SECTION 129. The Liquidation Plan. — Within three (3)

months from his assumption into office, the Liquidator

shall

submit

a

Liquidation

Plan

to

the

court.

The

Liquidation Plan shall, as a minimum, enumerate all the

assets of the debtor, all the claims against the debtor and

a schedule of liquidation of the assets and payment of the

claims.

SECTION 130. Exempt Property to be Set Apart. — It shall

be the duty of the court, upon petition and after hearing,

to exempt and set apart, for the use and benefit of the

said insolvent, such real and personal property as is by

law exempt from execution, and also a homestead; 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 (3) public places in

the province or city at least ten (10) days prior to the time

of such hearing, which notice shall set forth the name of

the

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.

SECTION

131.

Sale

of

Assets

in

Liquidation.

—

The

liquidator may sell the unencumbered assets of the

debtor and convert the same into money. The sale shall

be made at public auction. However, a private sale may

be allowed with the approval of the court if: (a) the goods

to be sold are of a perishable nature, or are liable to

quickly deteriorate in value, or are disproportionately

expensive to keep or maintain; or (b) the private sale is for

the best interest of the debtor and his creditors.

With the approval of the court, unencumbered property

of the debtor may also be conveyed to a creditor in

satisfaction of his claim or part thereof.

SECTION 132. Manner of Implementing the Liquidation

Plan. — The liquidator shall implement the Liquidation

Plan as approved by the court. Payments shall be made

to the creditors only in accordance with the provisions of

the Plan.

SECTION 133. Concurrence and Preference of Credits. —

The Liquidation Plan and its implementation shall ensure

that

the

concurrence

and

preference

of

credits

as

enumerated in the Civil Code of the Philippines and other

relevant

laws

shall

be

observed,

unless

a preferred

creditor

voluntarily

waives

his

preferred

right.

For

purposes of this chapter, credits for services rendered by

employees or laborers to the debtor shall enjoy first

preference under Article 2244 of the Civil Code , unless the

claims constitute legal liens under Articles 2241 and 2242

thereof.

SECTION 134. Order Removing the Debtor from the List of

Registered

Entities

at

the

Securities

and Exchange

Commission. — Upon determining that the liquidation

has been completed according to this Act and applicable

law, the court shall issue an Order approving the report

and ordering the SEC to remove the debtor from the

registry of legal entities.

SECTION 135. Termination of Proceedings. — Upon receipt

of evidence showing that the debtor has been removed

from the registry of legal entities at the SEC, the court

shall issue an Order terminating the proceedings.

(F) Liquidation of a Securities Market Participant.

SECTION

136.

Liquidation

of

a

Securities

Market

Participant. — The foregoing provisions of this chapter

shall be without prejudice to the power of a regulatory

agency

or

self-regulatory

organization

to

liquidate

trade-related claims of clients or customers of a securities

market

participant

which,

for

purposes

of

investor

protection, are hereby deemed to have absolute priority

over all other claims of whatever nature or kind insofar as

trade-related assets are concerned.

For purposes of this section, trade-related assets include

cash, securities, trading right and other assets owned and

used by the securities market participant in the ordinary

course of its business.

CHAPTER VIII Proceedings Ancillary to Other

Insolvency or Rehabilitation Proceedings

(A) Banks and Other Financial Institutions Under

Rehabilitation

Receivership

Pursuant

to

a

State-funded

or

State-mandated

Insurance

System.

SECTION 137. Provision of Assistance. — The court shall

issue orders, adjudicate claims and provide for other relief

necessary

to

assist

in the liquidation of a financial

institution under rehabilitation receivership established

by a state-funded or state-mandated insurance system.

SECTION 138. Application of Relevant Legislation. — The

liquidation

of

banks,

financial

institutions,

insurance

companies and pre-need companies shall be determined

by relevant legislation. The provisions in this Act shall

apply in a suppletory manner.

(B) Cross-Border Insolvency Proceedings.

SECTION

139.

Adoption

of

Uncitral

Model

Law

on

Cross-Border Insolvency. — Subject to the provision of

Section 136 hereof and the rules of procedure that may be

adopted by the Supreme Court, the Model Law on

Cross-Border Insolvency of the United Nations Center for

International Trade and Development is hereby adopted

as part of this Act.

SECTION 140. Initiation of Proceedings. — The court shall

set

a

hearing

in

connection

with

an insolvency or

rehabilitation

proceeding

taking

place

in

a

foreign

jurisdiction, upon the submission of a petition by the

representative of the foreign entity that is the subject of

the foreign proceeding.

SECTION 141. Provision of Relief. — The court may issue

orders:

(a) suspending any action to enforce claims against the

entity or otherwise seize or foreclose on property of the

foreign entity located in the Philippines;

(b) requiring the surrender of property of the foreign

entity to the foreign representative; or

(c) providing other necessary relief.

SECTION 142. Factors in Granting Relief. — In determining

whether to grant relief under this subchapter, the court

shall consider:

(a) the protection of creditors in the Philippines and the

inconvenience

in pursuing their claims in a foreign

proceeding;

(b) the just treatment of all creditors through resort to a

unified insolvency or rehabilitation proceeding;

(c) whether other jurisdictions have given recognition to

the foreign proceeding;

© Compiled by RGL

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