Supreme Court Decisions, Rizal Surety & Insurance Co. vs. de la Paz, et al. - Justice Paras.pdf · Rare Periodicals

Supreme Court Decisions, Rizal Surety & Insurance Co. vs. de la Paz, et al. - Justice Paras.pdf

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extracted text: SUPREME COURT DECICIONS Ri:uil Surety 4t lniiurancc Co., Plab1Uff-Appellee, vs. Marciano de fa Paz, et al., Defendanfa-Apµella11t.<; and Appellees. lllarciano de lrz P•1z 1.rnd D<Jminuo /,eon<•r, Defet;d1mts-Avpellm1ti;, G. R. No. L-6463, May 26, 1954, Paras, C.J. .:i. ID.; lD.; IO.; PUBLIC INSTRUMENT; DA1'E IN BODY IS DATE OF ACKNOWLEDGMENT BY REFERENCE. - Where an instrume1~t is dated in the body, and said date is referred to in the notarial acknowledgment, the. dat'e of the latter is deemed to be the date appearing in the body of the instrument. 1. ORLIGATIONS AND CONTP.ACTS; PREFERENCE OF CREDITS; INSOLVENCY. - Wh~rc thf' debtor is msolvcnt, article lL Hl24 of thf' old Civil Code is not applicable, since it iF. considered repealed insofar as it referred to cases of bankruptcy ID.; ID.; ID.; CREDIT EVIDENCED BY PUBLIC INSTRUMENT NEED NOT BE REDUCED TO JUDGMENT. - A credi~ evidenced by a pub\.ic instrument, though not reduced to a judgment, is entitled to priority, because article 1924 of the Civil Code distinguishes credits evidenced by a final judgment. and estates of deceased persons. 2. ID.; ID.; LAW ON ATTACHMENT AND LAW ON PREFERENCE OF CREDITS APPLIED TOGETHER. - The law on attachment and the law on preference 'lf credits under 7 · article 1924 o{ the Civil Code had heretofore berm applied· hand ID.; ID.; ID.: ID.: PREFERENCE UNDER PUBLIC INSTRUMENT NOT LOST BY REDUCTION THEREOF INTO JUDGMENT. - The preference under :i public instrument is not los\' by the mere fact that the credit ,is made the subject of a subsequent judicial action and judgment. in hand. 3. ID.; ID.; ID.; AMUSEMENT 'fAXES, SUPERIOR LIEN.The claim of t'he Colleetor of Jnternal Revenue for amusement taxes on the theater insured, constitutes a lien sure.riot to all 8 · C1ther charges or liens, not only on the theater itself but: also upon all property rights therein, including the insurance proceeds. ID.; ID.; ID.; FINAL JUDGMENT; ABSENCE OF STAY OF EXECUTION. - A judgment upon which execution has not been staytd under the provisirms of section 14 of Act 190, is enlit'led to the preference prc.vided for in article lfl24 of the Ci\'il r.ode. 4. ID.; ID.; ORDER OF PREFERENC~ UNDER Al~TICLE 1924 OF CIVIL CODE. - The order of preference under ar- fl. tide 1924, 1mragraph 3, of the Civil Code, is, first, in favor ID.; ID.; ID.; PHEFERENCE DUE TO NOTICE OF ATTACHMEN'l' OR GARNISHMENT. - A credit ma.de the subject of notice of attnchm.ent or garnishment is entit!('d t9 preferenee as of the dat'e of said notice, subjeet only to the priority of rredits provided for by article 1924 of the old Civil Code. of credits evidenced by a puhlic inst:rument and, secondly, in favor of credits evidenced by a final judgmen~, should they have been the subject of litigatil•U, the preference among the two kinds of credits being determined by priority of dat'es, sworn, shall hold th~ir offices during good behavior, excepting such concerning whom there is different provision made in this constitution: provided nevertheless, the governor, with consent: of the council, may remove them upon the address of both houses of the legislature; ··and [according to Amendment 58 1·atified and adopted No\'ember 5, 1918) provided also that the governor, with the consent: of the council, may afte1· due notice and hei-.rini; retire them because of advanced age or mental or physical disability. Such retirement shall be subject to any provisions made by law as to pensions or allowances 1iayable to such officers upon their vohmtary retirement." The exception mentioned relates to justices of the peace and has no bearing unon the present question. The tenul'e of office of judges as thus settled by the Constitution is imperative and final. It ·cannot be enlarged, limited, modified, altered or in any way affected by the General Court. In conformity iO this provision of the Constitution the commissions of judges of the courts named in the prnposed bill state in substa11ce that the appointee is to hold said trust during his good behavior therein unless sooner removed therefrom in the manner prnvide1l in the Constit'ulion. The provision as to the tenure of all judges of the United States, both of the SUJ!l"eme and of the inferior cou1·ts, in art. 3, sec. 1 of the Constitution of the Unil:ed States, is in the same words as those in e. 3, art. I of the Constitution of this Commonwealth, viz., that they "shall hold their offices during good behaviOl'." Respecting such inferior courts of t'he United States, it was said in Ex parte Bakelite Corp., 276 U.S. 438 at page 44!:1 S. Ct. 411, 412, 73 L. Ed. 789: "They * * * have judges who hold office during good behavior, with no power in Congress to prnvide otherwise." The inevitable effect of the part of sec. 4 of the proposed bill touchin~ compulsory retirement of cert'ain judges is to make something else than good behavior an element in judicial service. It is no e\'idence whatever of evil behavior or of want of good bchaviol' to pass the ag·e of tlu·ee scores and t€n. Age and good behavior are ·,Jnrd.::.ted subjects. Ther€ is no connection between the two. And yet, under the proposed bill the compulsion of Ju.df-time service &r.d half-time pay for judges of the designated courts arises when the age of seventy comes, regardless-of e\·ery other circumstance or cons>der;ttion. 'l'cnurc of office during good behavior imports not only the length of the term but also the extent: of service. The Constitution in this particular means that judges "shall hold their offices during good behavior," not that they shall hold half of their offices after a ce1·tain age and such other fractional part as some ot~1er person may determine. The Constitution itself, in the words already quoted, makes two provisions to i·elieve the judicial service of judges no ionger competent to render efficic-nt service. It contains a specifi(; clause in art. 58 of the Amendments affording the means of retiring a judge "because of advanced age or mental or physical disability." The proposed bill adds another and diverse method to the same end. It would deprive such judge against his will of the right to render full-time service for full-time pay That is beyond the pO\\'er of the legislative depai'lmt'llt of government. When the Constitution has made definite provision ~overing a particular subject, t'hat pre.vision i!": exclusive and final. It must be accepted unec:uivoca]. J~'· It can neither be abridged nor be inc1·eased by any or all of the d<.!Jlartl'H'nts :-if go,•e1nment. It is our opinion th:.1t the provisions of the bill concerning permissive retirement of t'he judges of the serveral courts are not in conflict with the Constitution, but that · all its provisions for compulsory retirement and for compulsory or voluntary retirement of the chief or presiding judges are in conflict wil'h part 2, c. 3, art. I, as amended by a1·t. 58 of the Amendment~ of the Con!>titution. 4114 THE LAWYERS JOURNAL August ;H, !!Hi-I A:nelito R. M1tf.uc for the plaintiff and appe1lce. Tolentino & Garcia for the defendant and appellant. Padilla, Ca,.los & Fcn1and(l for the defendant' a.nd appellf\nt D. Leonor. F. A. Rodrigo for the interplcader-appellee Pa11o Roman. Soliciun· G1mcml for the Colfoctor of Internal Revenue. Ta.njuatco & Del Rosario for the appellees Jose Santos and D. Nepomuceno. Alfonso G. Espinosa for S. D. Yfligo. DECISION PARAS, C.J.: On March 22, 1950, the plaintiff Rizal Surety and Insurance Company filed a complaint in l'he Court of First Instance of Manila, alleging that the sum of P20,000.00 was due and payable to the Federal Films, Inc., as proceeds of fire insurance coveri.ng a theater situci.ted in Marikina, Rizal, which was destroyed by fire on February 1, 1947; that as several creditors of t'he insured, namely, Marciano de la Paz, Domingo Leonor, Jose Santos and Dominador Nepomuceno, Pablo Roman, Serapion D. Yliigo, and the Collector of Internal Revenue, were claiming said proceeds from th" plaintiff, the latter had no means o! knowing definitely the order of preference among t'hc various claimants; ancl praying that said creditors, named defendants in the complaint. be ordered to ir.terplead and litigate their conflicting claims, and that the ·sum of P2C,OOO.OO be ordered paid to t'he court for delivery to the proper parties, afte1· deducting the costs of the suit. After t.he defendants had filed their respective miswers, the Court of First Instance of Manila rendered a decision the dispositive part of which reads as foll owe: "WHEREFORE, judgment is hereby rendered in favor of the defendants, and the plaintiff is ordered to pay s?.id de. fendant's out of the P20,000.00 minus the ·costs in Its favor, in the following order: first, the Collector (lf Internal Rs. venue to be paid the sum of PS,216.08; seconci, Jose Santos and Dominador· Nepomuceno to be paid the sum of Pl0,000.00; third, the defendant: Pablo Roman to be paid the sum of P9,000.00, with six per centum interest per annum from the date of the filing of complaint in Civil Case No. 73256 a.nd his costs in said case out of the remaining balance; fourth, tbe defendant Domingo E. Leonor to be paid the Furn of '20,000, with interest of six per centum per annum from the date of the filjng of l'he complaint in Civil Case Na. 1749, should there be any balance; and fifth, the defendant Marciano de la. Paz to be paid the sum o! P6,001.50 with interest of six per centum from February 5, 1947, the elate of the demand, plus P545.00 as costs and Sheriff's fees should there Oy any balance left." From this judgme~t. which applied section 315 of the National Internal Revenue Code and article 1924, paragraph 3, of the Clld Civil Code, the defendants Marciano de la Pa.z and Domingo Leonor appealed. Briefly the contention of appellant: Marciano de la Paz is that his claim for P6,001.50 :;hould enjoy first priority, because on February 5, 1947, he caused to be garnished the proceeds in question, said garnishment being prior to all other liens. The a.ppellant Domingo Leonor in ~urn contends that his claim for !"2,300.00 is superior, except with regards to the tax lien of the Collector of Internal Revenue, because it is evidenced by a public document d~ted July 19, 1946, in addition to the fact that he garnished the disputed insurance proceeds on February 17, 1947. Incidentally it Is insisted for both appellants that, where priority of attachment ie involved, art'icle 1924 of the Civil Code is not applicable. Appellant de la Paz further argues that article 1924 may be invoked only when there is a showing of the debtor's insolvency. In the first place, we may point out that, where i'he debtor waF insolvent, article 1924 was held not app~icable, since it w&S considered repealed insofar as it referred to cases of bankrupt'Cy ar.d estates of deceased persons. (Peterson vs. Newberry et al., 6 Phil. 260.> In the second place, we find that the law on attachment and the l&w on preference of credit's under article 1924 of the Civil Code had been applied by this Court hand in hand, as may be gleaned from the following pronouncements in the case of Kuenzl& & Streiff vs. Villanueva, 41 Phil. 611, 614-615: "In other wordS, the question for considel'ation is whether an att:achment levied on specific property gives to the at. taching creditor a lien or a. right to a preference in the nature of a lien, superior to the statutory right to a preference which is recognized in arCicle · 1924 of the Civil Code in favor of the owner of an after-acquired judgment. "In a long and unbroken Hne of decisions, running through our reports from the first volume down to the last, we have uniformly and steadfastly sustained and 1·ecognized the statutory preferences created by the provisions of title 17 of the Civil Code, save only in so far as they have been expressly or by necessary implication repealed or modified b:r Acts of the Commission or \'he Legislature. "Upon full consideration of the provisions of the new Code of Civil Proc°"dure by virtue of which levies of attachments are authorized, and of the circumstances under which that Code was enacted by a co~mission the majorit'y of whose members were Amcriean lawyers, we are satisfied that it Wl!.S the intention of the legislature to give an attaching creditor a lien or at least a right in the nature of a lien in the at\'ached prop~rty; but we see no reason whatever for holding that this lie11, or right in t'he nature of & lien, rises superior to any statutury prdc1ences with which the property is affected at the lim(' ci its attachment." We shall t~acrcfore proceed to determine the order of preference herein, in the li~ht of priority both t.y reason of attachment!:' and l:y reason of :i.rtide 1924 of thti Civil Code, subject however to the superior hen of the Collector of lnt'ernal Revenue in virtue of section 315 of the National Iutern::i.l Revenue Code which provides as fol'.nws: "Every internal revenue tax on property or in any business or occupation, and <:!very tax on resources and receipts, and uny increment to any of t'hem incident to delinquency, shall constituute a lien superior to all other charges or liens not only on the property itself upon which such tax may be imposed but als•i upon the prnpcn'y used in any business or occupation upon which tax is imposed and upon all property rights therein" We arc of 1he opinion that the trial court correctly ordered i.'hat the claim of the Collector of lntcrna.I Revenue be paid first. Said claim being for amusement faxes on the theater insured, const.itutes a lien superior to all other charges or liens not only on tile theater it'self but also upon all property rights therein, including the insurance proceeds. Under article 1924, paragraph 3, of the Civil Code, the order of preference is, first, in favor of credits evidenced by a public instrument, and, secondly, in' favor of credits evidenced by a final judgment, should they have been \'he subject of litig-ation, the preference among the two kinds of credits being determined by priority of dates. The trial court was also ~urrect in placing the claim of Josi' Santos and Dominador Nepomuceno second in the list: of creditors, hecause their credit is evidenced br a public document dated May 23, Hl4G. Appellants, with appellee Pablo Roman, v.rguc that ,;aid document cannot be classified as public, because its acknowledgment is nO\: dated. This contention is not tenable, since nn exumination of the instrument shows that the body is dated at J\lanila on J\foy 23, 1946, a.:id iu the acknowledgment the following appears: "Witness my hand and official seal in t'he date and 1.Jac ~d above mentioned.'' This i·ecital logically refers to the date and ,,lace Sfl~cificd in the preccdill~ body of 'the document. There is no pobt in the observation that l'he credit of Santos and Ne· August 31, 1954 THE LA WYERS JOURNAL 405 pomuceno, not being reduced to a judgment, should not be entitled to any prefert:nce binding against the Federal Films, Inc., which is not a party hereto, because article 1924 of the Civil Code al'! a matter of fact distinguishes credits evidenced by a public docu.. ment from those evidenced by a judgment. At any rate, in so far as the absence in this case of the common debtor is concerned, a.11 t'he defendants arc on equal footing. The next in preference, in ou1· opinion, is the credit of appel. lant Domingo Leonor because, although he caused a notice of garnishment to be served upon the plaintiff on February 17, 1947, or subsequent to the notice of garnislunent! of appellant Marciano de le. Paz on February 5, 1947, the former's credit is none the less evidenced by a public instrument dnted July 19, 1946, duly presented as exhibit. Preference cluimcd under e. nublic document ls not lost by the mere fact that the credit is mad~ the subject of a subsequent judicial action and jnclgment. Even appellee Pablo Roman admits this proposition. The next preferred credit is that of defendant-11ppellee Pablo Homan, evidenced by a judgment which became final on September 26, 1946. !\! is contended on the part of appellant Domingo Leonor that said judgment was not yet final then, because an appeal was taken therefrom to the Supreme Court which resolved it in favor of appellee Pablo Roman only on fl-lay 27, 1947. However, as correctly obset'Ved by counsel for the lat'l:er, the judgment 'of September 26, 1946, was not appealed, and the petition filed before the Supreme Court wa.s one for certiorari against order of the trial courC dismissing the appeal; and, indeed, two writs of execution had been issued during the pendency of the certiorari proceeding, one on December 24, 1946, and anothe1· on January 9, 1947. In l\.kl\Iicking vs. Lichauco, 27 Phil. 386, it was held that "a judgment upon which execution has not been stayed, under the provi. sions of section 144 of Act No. 190, is entitled to the preference provided for in article 1924 of the Civil Code." The remaining credit to be paid is that or appella.nt Marciano de la Paz, whose notice of garnishment was served on the plaintiff of February 5, 1947, the appealed decision being correc~ on this phase of the case. Serapion D. Yiiigo failed to present any evidence in support of his claim. 1t being understood that the various claime.nta sl1ould be paid in the order indicai.'ed in this decision, and that none of them is entitled tc receive any interest <as the plaintiff.appellee cannot be deemed as having defaulted in paying out the insurance pro.. ceeds in question), t'he appealed judgment, as thus modified, is · hereby affirmed. So ordered without costs. Pablo, Bengzon, Montemayor, Reye.~. Jugo, Baittista A n"elo, Lnbrador and Concepcion, J.J., co·ncur. II · Republic of the Philippines, Plaintiff-Appellant, vs. Jose Leon Gonzales, et al., Defendant-Appellants, G. R. No. L-4918, May 14, 1954, Bengzon, J. J. CONSTITUTIONAL LAW; EMINENT DOMAIN; JUST COMPENSATION, HOW DETERMINED. -- In determining just compensation or the fair market value of the property subject of expropriation proceedings, evidence is competent of bona fide sales of other nearby parcels at times sufficiently near to the proceedings to exclude general changes 0£ values due to new conditions in the vicinity. 2. ID.; ID.; ID.; RESALE TO INDIVIDUALS. - Whether, in expropriations for resale to individuals, a more liberal interpretation of "just compensation" ahould be adopted, quaere. 3. ID.; ID.; ENTRY OF PLAINTIFF UPON DEPOSITING VALUE; OWNER ENTITLED TO JNTEREST. - In condemnation proceedings the owner of the land is entitled to interest, on the amount awarded, from the time the plaintiff takes possession of the property. Angel M. Tesr.>ro, Ramirez & Ortigas, Alberto V. Cruz, Guillermo B. Ilagan, FUemon 1. Alma:::an and F&rtunato de Leon for defendants and appellants. Solicitor General Pompeyo Dia::: and Solicitor Antonio A. Torres for the plaintiff and appellant. DECISION BENGZON, J.: In January 1947, in the Court of First Instance of Rizal, the Hepublic !:tarted this proceedings uuder Com. Act No. 539 Ior the purpose of expropriating an extensive tract of land - over 87 hectares - for resale to the tenants thereof. Situated within the l\.laysilo Estate, Caloocan, and originally cove1·ed by 1'ransfer Certificate of Title No. 35486 the p1·operty is now represented by seven Transfer Certificates of Title, numbered and owned respectivley: 1373 by Jose Leon Gonzalez; 13'78 by Juan F. Gonzalez; 1369 by Maria C. Gonzalez-Hilario; 1372 by Concepcion A. Gonzalez-Virata; 1370 by Consuelo Gonzale7,-Precilla; 1371 by Francisco Felipe Gonzalez; and 1374 by Jose Leon Gonzalez, et al. Eight kilometers north of Plaza Santa Cruz, l.7 kilometers east of Rizal avenue, and 2 kilometers above Highway 54, the estate is bounded by the Araneta Institute property, the Victoneta Inc., the Balintawak Estate Subdivision, the Seventh Day Adventists' land, and the Piedad Est.ate. It lies within the sites of the University of the Philippines and the Capitol and within the field of expansion of the City of Manila. All the defendants at first opposed the compulsory sale; but subsequently they waived the objection, recognizing the social-justice aims of the Government, (there were about two-hundred tenants) and agreed to the designation of commissioner to determine the reasonable market value of the property to be taken. Wherefore, in June 1948, the court appointed the following commissioners: Atty. Erasmo R. Cruz, recommended by defendants, Assistant Fiscnl Sugueco, suggested by plaintiff, nnd Depul'y Ch:rk Benito Macrohon, selected by the judge. In the performance of their duties, the Commissioners received oral and documentary evidence, inspected the premises, and there- ' after submitted one majority report, plus one minority report by Commissioner SugUeco. The first divided the property into two parts: one portion previously occupied by the U. S. Army with roads, playground, water and sewerage system, and valued at 5 pesos per sq.m.; and another consisting of rolling lands and :rice fields priced at fifteen centavos per sq.m. The report thereby fixed !"1.75 per sq.m. as the average compensation for the entire estate. On the other hand Sugueco's minority opinion rated the whole parcel at ten centavos per square meter only. The two reports provoked objections from both side.1, whose oppositions were seasonably filed in writing. On !\.lay 6, 1949, obeying orders of the trial judge, Clerk of Court Severo Abellera repaired to the pl'Cmises, made inquiries, and reported afterwards that the realty was fairly worth Pl.90 per square meter. Then on March 29, 1950, the Hon. Gabino Abaya, Judge, rendered his decision appraising the estate at Pl.50 per square meter. It should be explained, in thi's connection, that all defendants agreed the entire property should be evaluated as a whole, for the purpose of facilitating the award. The parties petitioned for reconsideration. Denial thereof motivated this appeal both by the plaintiff and by the defendants, The plaintiff, in a series of assignments reaches the conclusion, and submits the proposition, that "there is no reliable standard for determining the reasonable worth of the defendants' land except the tax declaration Exh. B which puts its value at P28,850.00 x x x. Taking into account, however, that the assessed value is usually lower by 1/3 of 1/2 of the ·real market value, the defendants should be given an additional SO% of P28,850 or PS,655.00." Such position is clearly untenable. The declaration was made 406 THE LA WYERS JOURNAL August 31, 1954
Date: 1954
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