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RADIOLA-TOSHIBA PHILIPPINES INC. v. INTERMEDIATE APPELLATE COURT

FACTS:

On July 2, 1980, three creditors filed a petition for the involuntary insolvency of Carlos Gatmaytan and Teresita Gatmaytan. The court issued an order prohibiting the payment of debts and transfer of the debtors' property. The creditors informed the sheriff about the order and requested the preservation of the properties. In April 1983, the creditors moved for the issuance of an insolvency order and resolution of the case, asserting that some of the properties had been transferred to Radiola-Toshiba Philippines, Inc. Consequently, on April 22, 1983, the court declared the debtors insolvent. Following this, in February 1984, the court confirmed the assignment of an assignee and ordered the transfer of the properties to the assignee's custody. Finally, in May 1984, the court directed the sheriff to issue a final deed of sale over the properties in favor of the creditor.

ISSUES:

  1. Whether certiorari is a remedy designated for the correction of errors of jurisdiction only.

  2. Whether the refusal of the courts to enforce the lien of the petitioner arising from a levy of attachment not made within one month next preceding the commencement of the insolvency proceeding is grave abuse of discretion.

  3. Whether or not attachments and judgments entered within a specific period before the commencement of insolvency proceedings are dissolved or set aside.

  4. Whether or not the properties subject to attachment and execution sale can be considered as a fraudulent transfer or preference.

  5. Whether or not the properties in question were under the jurisdiction of the insolvency court.

RULING:

  1. The main issue in this case is whether or not the levy on attachment in favor of the petitioner is dissolved by the insolvency proceedings against the respondent spouses commenced four months after said attachment. The court found that Section 32 of the Insolvency Law (Act No. 1956, as amended) provides that an assignment in insolvency proceedings shall dissolve any attachment levied within one month next preceding the commencement of the insolvency proceedings. In this case, the attachment was issued four months before the insolvency proceedings. Therefore, the court ruled that the petitioner's lien on the subject properties overrode the insolvency proceeding and was not dissolved thereby.

  2. The attachments and judgments entered within a specific period before the commencement of insolvency proceedings are dissolved or set aside. The court ruled that attachments are dissolved if levied within one month before the commencement of insolvency proceedings, and judgments are vacated and set aside if entered within thirty days before the commencement of insolvency proceedings.

  3. The properties subject to attachment and execution sale cannot be considered as a fraudulent transfer or preference. The court held that Sections 32 and 70 of the Insolvency Law only contemplate acts and transactions occurring within 30 days prior to the commencement of insolvency proceedings.

  4. The properties in question were not under the jurisdiction of the insolvency court. Therefore, the denial of the insolvency court to give due course to the attachment and execution of the properties constitutes a grave abuse of discretion amounting to want of jurisdiction.

PRINCIPLES:

  • Certiorari is a remedy designated for the correction of errors of jurisdiction only.

  • Section 32 of the Insolvency Law provides that an assignment in insolvency proceedings shall dissolve any attachment levied within one month next preceding the commencement of the insolvency proceedings.

  • In construing a statute, courts should adopt a construction that will give effect to every part of the statute, if possible.

  • If a statute is susceptible to more than one interpretation, the court should adopt a reasonable and beneficial construction that renders the provision operative and effective and harmonious with each other.

  • Attachments are dissolved if levied within one month before the commencement of insolvency proceedings, and judgments are vacated and set aside if entered within thirty days before the commencement of insolvency proceedings.

  • Sections 32 and 70 of the Insolvency Law only apply to acts and transactions occurring within 30 days prior to the commencement of insolvency proceedings.

  • The properties subject to attachment and execution sale cannot be considered as a fraudulent transfer or preference if occurring outside of the 30-day period before the commencement of insolvency proceedings.

  • Properties not placed under the jurisdiction of the insolvency court are not available for the payment of claims in insolvency proceedings.