G.R. No. 75222 - Radiola-Toshiba Philippines, Inc. vs. Intermediate Appellate Court

Three creditors filed a petition on July 2, 1980, for the involuntary insolvency of respondents Carlos Gatmaytan and Teresita Gatmaytan. The case was docketed as Special Proceeding No. 1548 in the then Court of First Instance (now Regional Trial Court) of Pampanga and Angeles City.
On July 9, 1980, the court issued an order taking cognizance of the petition. The order notably prohibited the payment of debts and the transfer or delivery of any property belonging to the respondents by third parties, pending the posting of a bond by the petitioners.

Counsel for the petitioners informed the Angeles City sheriff about the court’s order and the need to preserve the attached and levied properties until the final resolution of the insolvency petition.
On March 26, 1981, further communication emphasized that the personal and real properties under attachment should remain preserved pending the final determination of the case.

The issuance of an insolvency order and case resolution, arguing that delays were injurious to their rights.
A directive for the respondent sheriff to annotate the insolvency order on the titles of the attached properties.

April 12, 1983 – Filing of the motion opposing the transfer of properties.
April 28, 1983 – Supplemental opposition requesting the issuance of a final certificate of sale for properties under TCT Nos. 18905 and 40430.

The insolvency court officially rendered judgment on April 22, 1983, declaring the insolvency of the Gatmaytans.
On February 3, 1984, acting on petitioner’s motion in a separate civil case (Civil Case No. 35946, CFI of Rizal, Pasig), the court ordered confirmation of the assignee’s election and directed the transition from receivership to assignee management.

In Civil Case No. 35946, which involved the collection of a sum related to proceeds from television sets and other appliances, a writ of preliminary attachment was issued on February 15, 1980.
The attachment on the properties (TCT Nos. 18905 and 40430) was effectuated on March 4, 1980, by the Court of First Instance of Rizal, thereby granting petitioner a lien.
Following the final and executory decision favoring the petitioner, a writ of execution led to an auction sale of the attached properties on May 4, 1981, and a certificate of sale was issued in petitioner’s favor.
Despite a subsequent consolidation of property ownership on September 21, 1982, the respondent sheriff refused to issue a final certificate of sale.

Petitioner contended that the lien arising from the attachment should override the insolvency proceedings, given that the attachment was executed on March 4, 1980, whereas the insolvency proceedings commenced on July 2, 1980 (a gap exceeding four months).
The central legal contention revolved around Section 32 of the Insolvency Law, which provides that attachments made within one month immediately preceding the insolvency proceedings are dissolved upon the election or qualification of an assignee.
In contrast, Section 79 of the same law allowed that if an attachment (not dissolved before insolvency) is upheld by proving the claim against the debtor's estate, the plaintiff may secure preference for his claim.
Petitioner argued that the sheriff’s sale in the context of the attachment was rendered invalid by the insolvency proceedings, as the properties were never effectively placed under the jurisdiction of the insolvency court.

On September 8, 1984, petitioner filed a petition for certiorari and mandamus with the Intermediate Appellate Court, challenging the insolvency court’s handling of the attached properties and the subsequent sale.
The petitioner specifically raised two issues:

Whether certiorari is a remedy designated only for errors of jurisdiction.
Whether the refusal to enforce the lien from the attachment (executed outside the statutory one-month period) constituted a grave abuse of discretion.

The Intermediate Appellate Court, in its decision dated March 31, 1986, denied the petitioner’s certiorari and mandamus petition. This decision, along with a motion for reconsideration (filed on April 19, 1986 and denied on July 1, 1986), eventually led to the present petition before the Supreme Court.

Whether certiorari is a remedy exclusively designated for the correction of errors of jurisdiction.
Whether the refusal of the court to enforce the lien arising from the attachment—executed on March 4, 1980, which fell outside the statutory one-month period preceding the commencement of the insolvency proceedings (initiated on July 2, 1980)—amounts to a grave abuse of discretion.
Whether the insolvency proceedings automatically dissolve the attachment and the subsequent execution sale when the attachment was made well in advance (more than four months) of the insolvency case’s commencement.