FIRST
DIVISION
BENITO
AFRICA,
Petitioner,
G.
R.
No. 10649
March
1, 1916
-versus-
KURT W.
GRONKE,
Assignee,
TOMASA
MASONSONG,
ET AL.,
WIFE AND
CHILDREN
OF THE
INSOLVENT
BENITO
AFRICA,
Appellants.
D
E C I S I
O N
MORELAND,
J:
On February 24, 1914, Benito
Africa filed in the Court of First Instance of Batangas a Petition for
Voluntary Bankruptcy. The judge assigned to hold the Court of First
Instance
in that province was absent from the province and the petition was
presented
to the justice of the peace of the capital of the province under the
provisions
of Section 68 of Act No. 136, as amended. The justice of the peace took
cognizance of the case and, on the 24th of February 1914, the same day
on which the petition was filed, made the order provided for in Section
18 of Act No. 1956, known as the Insolvency Law. On the 24th of August
1914, a motion was made by the wife of the insolvent on her own behalf
and as guardian ad litem of one of her minor children, and by
Patrocinio
Africa, a daughter of the insolvent, in her own behalf, for the
dismissal
of the insolvency proceedings on the ground that the justice of the
peace
was without jurisdiction to make the order referred to. This motion was
denied; and on the 9th of October, a motion was made for
reconsideration
which was denied. To the denial, the moving parties duly excepted and
gave
notice of appeal from the order denying the motion as well as the order
denying the motion for reconsideration.
We are of the opinion
that the motion should have been granted. It is clear to Us that the
justice
of the peace had no jurisdiction to make the order complained of.
The appellee relies
on that provision of Section 68 of Act No. 136 already referred to
which
reads as follows:
"Justices of the
peace
in the capitals of provinces organized under the Provincial Government
Act, and the governors of provinces not organized under said Act acting
as ex officio justices of the peace, in the absence of the judge of the
district from the province may exercise within the province like
interlocutory
jurisdiction as the Court of First Instance, which shall be held to
include
the hearing of all motions for the appointment of a receiver, for
temporary
injunctions, and for all other orders of the court which are not final
in their character and do not involve a decision of the case on its
merits,
the hearing of petitions for a writ of habeas corpus, and all questions
which may arise concerning the appointment of inspectors of election,
or
the inclusion in or exclusion from the register of voters of the names
of electors."
It is conceded that the
judge of the district was absent from the province when the justice of
the peace made the order complained of; so that We have before Us
squarely
the question of whether a justice of the peace has jurisdiction under
this
section to make an order declaring a person bankrupt. It is contended
that
a declaration of insolvency made by a judge or court in insolvency
proceedings
is an interlocutory order not final in its character and does not
involve
a decision of the case on its merits; and that consequently, it is one
of the acts which the section referred to gives a justice of the peace
jurisdiction to perform. We do not believe that the section authorizes
a justice of the peace to make an order declaring a person a bankrupt.
It should be noted, in considering the wording of the section, that the
orders which a justice of the peace is authorized to make are strictly
interlocutory in their character from which the law permits no appeal.
It should also be noted that they are urgent in their nature, a delay
in
procuring them resulting in loss of property or personal liberty. The
appointment
of a receiver or temporary injunction, petitions for writs of habeas
corpus,
and the appointment of inspectors of election or inclusion in or
exclusion
from the register of voters of the names of electors, are matters
which,
by their very nature, cannot wait for an indefinite time without great
damage to property, injury to personal rights or to the public
interest.
It is clear from the wording of the section that the intention of the
Legislature
was simply to expedite matters of urgency where great loss to person or
property or to the public would result from delay; and where the
decision
of the justice of the peace thereon would be temporary in character and
subject to immediate revision by the Court of First Instance on its
return
to the province. If this was in fact the intention of the Legislature,
then a justice of the peace has, under the section, no jurisdiction
over
an application for a declaration of insolvency, whether voluntary or
involuntary.
An order of insolvency is both final and on the merits. It is final
because
it adjudicates a status which cannot subsequently be changed and
divests
and transfers property from one person to another. Besides, the order
is
made appealable by the statute [Sec. 82]. If such an order is not final
in what part of the proceedings in bankruptcy shall we find a final
order?
If it is not an order on the merits in what part of the proceedings can
such an order be found? After that order, the greater part of the
remainder
of the proceedings is administrative.
Moreover, the
jurisdiction
of an inferior court will not be presumed; it must appear clearly from
statute or it will not be held to exist. While the presumption of
jurisdiction
in a given case exists as to superior courts the contrary presumption
prevails
with respect to inferior courts. A justice's court will not be presumed
to have jurisdiction but it will be held to have only such jurisdiction
as is expressly conferred upon it by statute or which is necessary to
make
effective the jurisdiction expressly conferred. Section 68 of Act No.
136
does not expressly confer on justices' courts jurisdiction in
bankruptcy
cases nor is such jurisdiction necessary to render effective that
expressly
conferred. While the phrase, "may exercise within the province like
interlocutory
jurisdiction as Court of First Instance" and that jurisdiction shall be
held to include "the orders of the court which are not final in their
character
and do not involve a decision of the case on its merits," are broad in
their scope, they will be held to cover only such cases as are
expressly
mentioned in the section, or those strictly of the same character.
Declaration
of insolvency are generally not urgent nor are they interlocutory. They
are the corner stones of the proceedings. All of the other steps are
taken
by the creditors and the assignee, unless special conditions arise; and
all matters are in the hands of the assignee for administration after
his
appointment. Except where some contests arise over property or claims
the
court has nothing to do until the time comes for the discharge in
bankruptcy.
Moreover, such an order is necessarily appealable for it would be a
denial
of justice if persons interested in the insolvent's assets were obliged
to go through the whole bankruptcy proceeding, including the conversion
of the insolvent's assets into money, the payment thereof to claimants,
and the final order of discharge, before an appeal could be taken.
The character of the
declaration of insolvency is such and it involves the exercise of
powers
so high and important as to exclude it from the jurisdiction of the
justices
of the peace. It declares the insolvency of the petitioner; it orders
the
sheriff to take possession of all the property, deeds, vouchers, books
of account, papers, notes, bonds, bills and securities of the debtor,
and
all his real and personal property, estates and effects, except such as
may be by law exempt from execution; it forbids the payment to the
debtor
of any debts due him and prohibits the delivery to the debtor or to any
one for him of any property belonging to him; it prohibits the transfer
by the debtor of any property; it fixes a time and place for a meeting
of the creditors to choose an assignee of the estate; it designates a
newspaper
of general circulation published in the province if there be one, and
if
there be none, in a newspaper which in the opinion of the judge will
best
give notice to the creditors, in which the order shall be published as
often as may be prescribed by the court or judge; it provides that all
civil proceedings then pending against the insolvent shall be stayed.
In
other words, it requires the exercise of powers which have rarely if
ever
been conferred by a Legislature on justices of the peace; and that
being
the case, We will not, by construction or interpretation or by
presumption,
declare that such power exists in the justices of the peace in the
Philippine
Islands.
Furthermore, if a
justice
of the peace has power to make a declaration of insolvency it can
decide
all questions which may be raised and what must be litigated prior to
such
declaration. Such questions may involve title to real estate and may
require
the exercise of the highest powers of superior courts. And it must not
be forgotten that if a justice of the peace may make such a declaration
in voluntary proceedings he may make it in involuntary proceedings,
where
it is generally necessary to decide rights of the highest quality and
import
before such a declaration can be made.
For these reasons,
we are of the opinion that the justice of the peace of the capital of
Batangas
had no power, authority, or jurisdiction to make the order complained
of
and it is therefore declared null and void and of no effect.
The order appealed
is of no force or effect. So ordered.
Arellano, C.J.,
Carson and Araullo, JJ., concur.
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