G.R. No. L-28488. October 21, 1977
THE ECONOMIC INSURANCE COMPANY, INC., PETITIONER, VS. JUDGE GUILLERMO E. TORRES OF THE COURT OF FIRST INSTANCE OF RIZAL; VISAYAN MARKETING CORPORATION; AND THE SHERIFF OF THE PR…
FERNANDEZ, J.:
This is a petition for certiorari to review the order
dated June 1, 1967[1]
of the Court of First Instance of Rizal, Branch VIII, presided by the
respondent Judge Guillermo E. Torres, in Civil Case No. 8732 entitled
“Visayan Marketing Corporation vs. I-Feng Enamelling Co. (Phil.)
Inc.” directing the petitioner, The Economic Insurance Company, Inc., to
deliver to the private respondent, the Visayan Marketing Corporation, the
amount of P52,987.43 as partial satisfaction of the unsatisfied judgment credit
with legal interest from the date of the filing of the action and P1,000.00 as
attorney’s fees and the costs and the order of August 11, 1967[2]
denying the petitioner’s motion for reconsideration and the order dated October
13, 1967[3]
denying petitioner’s second motion for reconsideration.
Sometime prior to August 20, 1965, the respondent Visayan
Marketing Corporation filed an action against I-Feng Enamelling Co. (Phil.)
Inc. in the Court of First Instance of Rizal which was assigned to Branch VIII
thereof and docketed as Civil Case No. 8732 of said court. The respondent judge, Hon. Guillermo E.
Torres, rendered judgment dated August 20, 1965 ordering the defendant I-Feng
Enamelling Co. (Phil.) Inc. to pay the plaintiff therein, Visayan Marketing
Corporation, the sum of P360,000.00. The
judgment was only partially satisfied.
The therein plaintiff, Visayan Marketing Corporation, filed a motion for
the examination of the petitioner, The Economic Insurance Company, Inc., for
the purpose of determining whether said petitioner had property or money
belonging to the defendant I-Feng Enamelling Co. (Phil.) Inc.
The President of the petitioner, Stephen J. Zohr, was examined
under oath. In said examination, Stephen
J. Zohr denied that any sum of money was due from the petitioner to I-Feng
Enamelling Co. (Phil.) Inc., the judgment debtor in Civil Case No. 8732.
The record discloses that the petitioner, The Economic Insurance
Company, Inc., (ECONOMIC for short), was the second mortgagee under a chattel
mortgage executed by I-Feng Enamelling Co. (Phil.) Inc. (I-FENG for short) over
certain personal properties belonging to the latter. The second chattel mortgage was security for
an obligation of P300,000.00.
The Philippine Bank of Communications (PBC for short) was the
first chattel mortgagee of I-Feng to secure an obligation of P202,512.57. When the PBC, as the first mortgagee, sought
to foreclose the first mortgage in its favor, the Economic paid off the bank in
the sum of P202,512.57. The Economic
thereby became the sole chattel-mortgagee.
Subsequently, after a series of negotiations, the Atlas Glass &
Enamelling Co., Inc. (ATLAS GLASS for short) purchased all of the petitioner’s
chattel mortgage rights over the properties mortgaged by I-Feng. The petitioner executed an assignment of
mortgage in favor of Atlas Glass for a total consideration of P523,000.00. In due course, Atlas Glass, as assignee of
the consolidated chattel mortgage rights of the petitioner and PBC, foreclosed
both chattel mortgages and eventually took possession of the mortgaged
properties of I-Feng.[4]
Upon the foregoing facts, the respondent Visayan Marketing
Corporation, plaintiff and judgment creditor in Civil Case No. 8732, contended that the petitioner Economic
realized an amount of P52,987.43 in excess of its mortgage credit against
I-Feng and is,
therefore, bound under the chattel mortgage law to turn over such excess
to the mortgagor, I-Feng.
After the examination under oath of the President of the
petitioner Economic, the respondent judge issued an order dated June 1, 1967,
the dispositive part of which reads:
“FOR ALL THE FOREGOING CONSIDERATIONS, as Economic has in its
custody and possession the sum of P52,987.43 which lawfully belongs to the
herein judgment-debtor, judgment is hereby rendered ordering Economic to
deliver to the Visayan Marketing Corporation the amount of P52,987.43 as
partial satisfaction of the said unsatisfied judgment-credit with legal
interest from the date of filing of this action, and P1,000.00 as attorney’s
fees and costs.
SO ORDERED.
Pasig, Rizal, June 1, 1967.
(Sgd.) GUILLERMO E.
TORRES
Judge”[5]
The first and second motions for reconsideration of the
petitioner Economic were both denied by the respondent judge.
The petitioner submits that the respondent judge committed a
grave abuse of discretion in rendering judgment against the petitioner to pay
the amount of P52,987.43 to the respondent, Visayan Marketing Corporation,
because no action was filed against the petitioner by said respondent Visayan
Marketing Corporation as required by Section 45, Rule 39, Revised Rules of
Court which reads:
“SEC. 45. Proceedings
when indebtedness denied or another person claims the property. – If it appears that a person or
corporation, alleged to have property of the judgment debtor or to be indebted
to him claims an interest in the property adverse to him or denies the debt,
the court or judge may authorize, by an order made to that effect, the judgment
creditor to institute an action against such person or corporation for the recovery
of such interest or debt, forbid a transfer or other disposition of such
interest or debt until an action can be commenced and prosecuted to judgment,
and may punish disobedience of such order as for contempt. Such order may be modified or vacated by the
judge granting the same, or by the court in which the action is brought, at any
time, upon such terms as may be just.”
The petitioner also contends that the respondent judge
arbitrarily fixed the amount of P52,987.43 and acted without legal basis in
imposing legal interest on said amount from the date of the filing of Civil
Case No. 8732 and ordering said petitioner to pay attorney’s fees of P1,000.00 and the costs; and that said
petitioner did not foreclose the chattel mortgages.
It is clear from Section 45, Rule 39 that if a person alleged to
have property of the judgment debtor or to be indebted to him claims an interest
in the property adverse to him or denies the debt, the court may only authorize
the judgment creditor to institute an action against such person for the
recovery of such interest or debt. Said
section does not authorize the court to make a finding that the third person
has in his possession property belonging to the judgment debtor or is indebted
to him and to order said third person to pay the amount to the judgment
creditor.
It has been held that the only power of the court in proceedings
supplemental to execution is to make an order authorizing the creditor to sue
in the proper court to recover an indebtedness due to the judgment debtor.[6]
The court has no jurisdiction to try summarily the question whether the third
party served with notice of execution and levy is indebted to defendant when
such indebtedness is denied.[7]
To make an order in relation to property which the garnishee claimed to own in
his own right, requiring its application in satisfaction of judgment of
another, would be to deprive the garnishee of property upon summary proceeding
and without due process of law.[8]
The contention that the profit made by the petitioner in
assigning its chattel mortgage rights to Atlas Glass belongs to the judgment debtor, I-Feng, has
no merit. The chattel mortgages were
foreclosed by Atlas Glass, not by the petitioner.
In view of the foregoing, it is obvious that the respondent judge
exceeded his jurisdiction and committed a grave abuse of discretion in ordering
the petitioner to pay the sum of P52,987.43 to the private respondent Visayan
Marketing Corporation in the proceeding had pursuant to Section 45, Rule 39,
Revised Rules of Court.
WHEREFORE, the order dated June 1, 1967 and the orders
dated August 11, 1967 and October 13, 1967 sought to be reviewed are hereby
set aside, with costs against the private respondent Visayan Marketing
Corporation.
SO ORDERED.
Teehankee, (Chairman), Makasiar, Muñoz Palma, Martin and Guerrero, JJ., concur.
[1]
Annex “B”, Rollo, pp. 19-23.
[2]
Annex “D”, Rollo, p. 30.
[3]
Annex “F”, Rollo, p. 34.
[4]
Petition, Rollo, pp. 1-3.
[5]
Annex “B”, Rollo, p. 23.
[6]
McDowell v. Bell 86 Cal. 615; 25 Pac. 128; High v. Bank of
Commerce, 103 Cal. 525; 37 Pac. 508.
[7]
Takahashi v. Kunishima, Cal.
App; (1939) 93 p. 2d 645.
[8]
Lewis v. Chamberlain, 108 Cal. 525, 527, 41 Pac. Rep. 413.