GR L 21835; (August, 1967) (Digest)
G.R. No. L-21835; August 19, 1967
THE CHIEF OF STAFF, ARMED FORCES OF THE PHILIPPINES, plaintiff-appellee, vs. COLLECTOR OF INTERNAL REVENUE, ET AL., defendants-appellees. MADRIGAL SHIPPING CO., INC., and CESARIO SIPACO, defendants-appellants.
FACTS
C.Y. George Khoong and K.H. Powel Khoong, through the Leyte Supply Corporation, acquired surplus war materials. They later purchased these materials from the corporation and hired Cesario Sipaco to possess, keep, and administer them in Tacloban. They chartered the steamship Lepus, owned by Madrigal Shipping Co., Inc., to transport the materials to Hongkong. The Visayan Workers’ Union loaded the materials onto the ship in Tacloban. While the ship was docked in Manila, the cargo was seized by the Government under Executive Order No. 339. The cargo was unloaded at Pier 11 and later stored in Nichols Air Base. The Armed Forces of the Philippines used some of the cargo and agreed to pay P24,292.00 to the owners. Due to multiple claims exceeding this amount, the Chief of Staff filed an interpleader complaint. The remaining goods were sold at public auction, and the proceeds, plus the P24,292.00, totaling P29,948.50, were deposited with the court. The lower court declared the claims of the Bureau of Internal Revenue (P10,100.00), Madrigal Shipping Co., Inc. (P37,250.00), Philippine Port Terminal, Inc. (P5,000.00), and Visayan Workers’ Union (P5,073.00) as preferred credits, ordering the BIR claim satisfied first and the others paid pro rata from the balance. Madrigal Shipping Co., Inc. and Cesario Sipaco appealed.
ISSUE
1. Which law governs the preference of credits among the claimants: the Spanish Civil Code of 1889 or the New Civil Code of the Philippines?
2. Under the proper law, who among the claimants enjoys preference?
RULING
1. The Spanish Civil Code of 1889 governs because all the claims matured and became demandable prior to the effectivity of the Civil Code of the Philippines.
2. Under Article 1922 of the Spanish Civil Code of 1889:
* The claim of the Collector of Internal Revenue for sales taxes (P10,100.00) is a preferred credit under Section 315 of the National Internal Revenue Code, which establishes a tax lien superior to other charges. The Khoongs assumed liability for the taxes, and the lien was not dissolved by the filing of a surety bond.
* The claim of the Visayan Workers’ Union for stevedoring wages (P5,073.00) is a preferred credit under paragraph 4 of Article 1922, as stevedoring is a necessary operation in the transportation of goods, making the wages an expenditure for carriage.
* The claim of the Philippine Ports Terminal for arrastre and storage fees (P5,000.00) is a preferred credit under paragraph 4 of Article 1922, as these services were necessary for the preservation of the goods.
* The claim of Cesario Sipaco for unpaid salaries and advances (P9,050.00), incurred for the safekeeping and preservation of the goods, is a preferred credit under paragraph 1 of Article 1922, as an expense for the preservation of personal property.
* The claim of Madrigal Shipping Co., Inc. (P37,250.00) was also declared a preferred credit by the lower court, and this was not overturned.
The judgment was modified to include Cesario Sipaco’s claim as a preferred credit. The claim of the Collector of Internal Revenue shall be satisfied first. Thereafter, the claims of Madrigal Shipping Co., Inc., Philippine Ports Terminal, Inc., Visayan Workers Union, and Cesario Sipaco shall be satisfied pro rata from the remaining fund according to Article 1926 of the Civil Code of 1889.