Title
Radiola-Toshiba Philippines, Inc. vs. Intermediate Appellate Court
Case
G.R. No. 75222
Decision Date
Jul 18, 1991
Creditors filed insolvency against Gatmaytans; petitioner's prior attachment and execution sale upheld, as it occurred outside the 30-day insolvency window, granting ownership rights.

Case Summary (G.R. No. 208170)

Key Dates

  • February 15, 1980: Writ of preliminary attachment issued in Civil Case No. 35946 (CFI of Rizal, Branch II, Pasig) in favor of petitioner.
  • March 4, 1980: Levy on attachment effected on the Gatmaytans’ properties (TCT Nos. 18905 and 40430).
  • July 2, 1980: Creditors filed involuntary insolvency petition against Carlos and Teresita Gatmaytan (Special Proceeding No. 1548, CFI Angeles).
  • December 10, 1980: Judgment in Civil Case No. 35946 in favor of petitioner.
  • March 18, 1981: Writ of execution issued after judgment became final and executory.
  • May 4, 1981: Sheriff’s auction sale of the attached properties to petitioner; certificate of sale issued.
  • April 22, 1983: Insolvency court declared the Gatmaytans insolvent.
  • February 3, 1984 and subsequent months: Assignee confirmed and insolvency administration exercises control; Pasig court (Civil Case No. 35946) ordered issuance of final deed of sale in favor of petitioner (May 18, 1984).
  • July 13, 1984: Insolvency court denied petitioner’s motion and directed petitioner to participate in creditors’ meeting; later denial by the IAC (March 31, 1986) and final disposition by the Supreme Court (decision cited in the prompt).

Procedural History

Creditors initiated insolvency proceedings in Angeles (July 2, 1980). Petitioner had earlier pursued a separate civil case in Pasig (Civil Case No. 35946) that resulted in an attachment (March 4, 1980), a favorable judgment (December 10, 1980), execution (March 18, 1981), and a sheriff’s sale (May 4, 1981). After the insolvency declaration and assignee appointment, the insolvency court resisted giving effect to petitioner’s sheriff’s sale and refused to issue the final certificate of sale, treating the subject properties as part of the insolvents’ estate. Petitioner sought relief by certiorari and mandamus from the IAC, which denied the petition; that denial was the subject of the Supreme Court review summarized here.

Issues Presented

  1. Whether certiorari is limited to correcting errors of jurisdiction only (i.e., whether certiorari was an appropriate remedy here).
  2. Whether the insolvency court’s refusal to enforce petitioner’s lien and to recognize its execution sale — when the attachment was levied more than one month prior to the commencement of the insolvency proceedings — amounted to grave abuse of discretion.

Applicable Law and Constitutional Basis

Primary statutory authority: Insolvency Law (Act No. 1956, as amended), with emphasis on Sections 32, 70, and 79 as quoted and applied in the decision. Section 32 addresses the effect of the assignee’s appointment, vesting in the assignee-title and dissolving attachments levied within one month next preceding the commencement of insolvency proceedings; Section 79 provides for the plaintiff’s right to prove costs and disbursements and to claim a preferred debt where an attachment is not dissolved before insolvency proceedings commence; Section 70 (discussed) concerns fraudulent transfers and preferences within the period relevant to insolvency. Because the decision date is after 1990, the 1987 Philippine Constitution is the applicable constitutional framework (noting, however, that the decision’s reasoning relied principally on statutory interpretation of the Insolvency Law).

Facts Material to Decision

  • The levy in favor of petitioner on the Gatmaytans’ real properties occurred on March 4, 1980.
  • The insolvency petition against the Gatmaytans was filed on July 2, 1980, more than four months after the attachment.
  • Petitioner obtained a judgment, executed it, purchased the properties at sheriff’s sale, and received a certificate of sale.
  • The insolvency court later declared the Gatmaytans insolvent and, despite the earlier levy and execution sale, refused to issue the final certificate of sale or to recognize petitioner’s consolidated ownership on the ground that the properties were part of the insolvency estate.
  • Petitioners‑creditors argued the insolvency court had jurisdiction over the properties and invoked Section 79; petitioner argued its lien predated the insolvency and therefore was not dissolved under the statutory cutoff.

Court’s Statutory Interpretation and Reasoning

The Court examined Section 32 of the Insolvency Law, highlighting its explicit temporal limitation: attachments dissolved by operation of Section 32 are those levied within one month immediately preceding the commencement of insolvency proceedings, and similarly judgments entered within thirty days immediately prior are vacated. Given the undisputed dates, the attachment in favor of petitioner was levied well outside the one‑month pre‑insolvency cutoff. The Court found petitioner’s contention meritorious because Section 32’s language plainly protects only attachments within that one‑month period; attachments earlier than that remain effective against the debtor unless other statutory or equitable grounds operate to invalidate them.

The Court addressed the respondents’ reliance on Section 79, explaining there is no conflict between Sections 32 and 79: Section 79 operates when an attachment is not dissolved before insolvency commences (or is dissolved by an undertaking), allowing the plaintiff to prove costs as a preferred debt if the claim

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