Angara Abello Concepcion Regala & Cruz

November 3, 1997 Angara Abello Concepcion Regala & Cruz ACCRA Building, 122 Gamboa St., Legaspi Village, Makati City Attention : Atty . Maria Teresa Sianghio-Baac M a d a m : This refers to your letter dated October 22, 1991 requesting opinion on whether or not Section 70 of the Act No. 1956, as amended, otherwise known as the Insolvency Law, quoted hereunder, also apply to petitions for a suspension of payments" filed before the SEC pursuant to PD 909-A * as amended. SECTION 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 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 its 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 deny the operation of or to evade any of the provisions of this Act , such attachment, sequestration; seizure, payments 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 encumbrances of real estate shall be deemed, under this section to have been made at the time one 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." (Emphasis provided) Take note that Chapter II of the Insolvency Law also deals with " suspension of payments ". It is well-settled that in construing statutes, legislative intent must be ascertained by considering the statute as a whole. Every part of the statute must be considered in fixing the meaning of any of its parts and in order to produce a harmonious whole. (Statutes by Alcantara Sec. 73, citing decided cases) Consequently, where a legal provision is susceptible of two interpretations, the court will adopt that which will render it operative and harmonious with other provisions of the Law. (Ibid. Sec. 74, citing 1 decided cases) Further, conscience and equity should always be considered in the construction of statutes. Statutory interpretation are not always to be hedged in by the literal meaning of the language of the statute; the spirit and intendment thereof must prevail over its letter, especially where adherence to the latter would result in absurdity and injustice. Thus, cases which do not come within the strict letter of the statute, if within the spirit, will fall within its scope. (Ibid., Sec. 31, citing decided cases) Accordingly, while the above provision speaks of an " insolvent " debtor, by analogy and necessity, the above provision prohibiting "fraudulent" payment or transfer/alienation of assets prior to the filing of the petition of "insolvency" should also be adopted in the case of " suspension of payments " considering that. the rationale behind the law on "suspension of payments" is also to preserve the debtors assets in the status quo. To disregard the above-cited provision in the case of suspension of payments would not only give the favored creditors preference over the other creditors, but would also necessarily deplete the assets of the distressed entity, thereby defeating the very purpose of the law on "suspension of payments". cdlex In the light of the foregoing, your query is answered in the affirmative. Please be advised accordingly. Very truly yours, (SGD.) PERFECTO R. YASAY, JR. Chairman * Copied verbatim from documents obtained directly from the Securities and Exchange Commission .