GR L 7915; (July, 1955) (Digest)
G.R. No. L-7915; July 30, 1955
In the Matter of the Voluntary Insolvency of the COMMERCIAL AIRLINES, INC.; ALFREDO M. VELAYO, assignee-appellant, vs. REPUBLIC OF THE PHILIPPINES, claimant-creditor-appellee.
FACTS
The Republic of the Philippines filed a proof of debt for unpaid charges amounting to P153,756.63 (minus a counterclaim of P561.65) for the use of Government airports and air navigation facilities by the Commercial Airlines, Inc. in its involuntary insolvency proceedings. The insolvency court approved the claim and declared it preferred. The assignee in insolvency appealed. The debts were incurred during periods when the airports were administered by different government agencies: (a) P68,715.00 under the Civil Aeronautics Administration; (b) P39,382.04 under the Administrator of the Civil Aeronautics Administration; and (c) P45,658.59 under the National Airports Corporation. The airports and facilities are owned by the National Government.
ISSUE
Whether the claim of the Republic of the Philippines for unpaid airport charges enjoys preference under Section 50(e) of the Insolvency Law as a debt due to the National Government.
RULING
Yes, the claim is a preferred debt under Section 50(e) of the Insolvency Law. The Supreme Court affirmed the lower court’s order. The airports and air navigation facilities are owned by the National Government, and compensation for their use constitutes civil fruits belonging to the Government. The fact that the charges were collected by or payable to different government agencies (Civil Aeronautics Administration, its Administrator, or the National Airports Corporation) is immaterial, as these entities are mere instrumentalities of the National Government. The National Airports Corporation, though a separate corporate entity, is an agency of the Republic for administering government-owned landing fields, managed by presidential appointees and subject to government control. The debt pertains to the Government in its sovereign function of establishing and maintaining public airfields, not from a commercial transaction for profit, distinguishing it from the claim in Government of the P. I. vs. China Banking Corporation. Therefore, the claim is preferred.