Menzi and Co. v. Bastida

Special Civil Actions
G.R. No. L-42278

Date: 03/25/1936
08 Menzi and Co v. Bastida
Plaintiff-Appellee: Menzi & Co. Inc.
Defendant: Francisco Bastida et al
Appellants: Bank of the Philippine Islands, The Philippine Guaranty Co.,
Inc. and Macondray & Co., Inc.
Ponente: Imperial J.
Facts:
The CFI Manila ordered Menzi & Co., Inc., to pay to Francisco
Bastida the sum of P21,633,20 with legal interest thereon from
June 17, 1927, which amounted to P29,774.49 on September
25, 1933. Prior to the issuance of a writ of execution of the final
judgment, Menzi received written notices from Levy Hermanos,
Inc., The Bank of Philippine Islands, Manuel Bustamante,
Filipinas Lumber Co., Inc., the Philippine Guaranty Co., Inc.,
Claro M. Recto, Jose M. Casal, Alberto Barretto and Manuel
Nieto alleging that they were Francisco Bastida's creditors in the
amounts specified by each of them and that, their respective
claims, being preferred claims, they asked to be paid with
preference. In order that the courts might finally determine the
alleged preferences and the order in which they should be paid
and to avoid subsequent responsibilities, Menzi & Co., Inc.,
brought an action of interpleader against all the said creditors
and deposited the sum of P29,774.49 with the clerk of the court.
Judgment was rendered in said case ordering that the credits be
paid in the order and preference as follows: the sum of
P23,041.69 to Levy Hermanos, Inc.; the sum of P1,300 to Claro
M. Recto; the sum of P4,000 to Jose M. Casal, or to his
assignee Macondray & Co.; the sum of P1,000 to Alberto
Barretto; the sum of P100 as attorney's fees and P76.04 as
judicial expenses to Harvey and O'Brien, and the balance to the
Bank of the Philippine Islands.
Francisco Bastida owed Levy Hermanos, Inc., the sum of
P18,531.42 representing the value of autotrucks and an
automobile bought by him on the installment plan, having
constituted mortgages on 6 Dodge Brothers autotrucks and a 7passenger Hudson Sedan, which mortgages were duly
registered. After Bastida had obtained judgment in his favor,
Levy Hermanos, Inc., was informed that the securities given to it
by Bastida had greatly depreciated in value due to the constant
use thereof, for which reason it required Bastida to transfer to it
part of the judgment obtained by him sufficient to cover the
balance in question plus interest thereon on the date of the
execution of the judgment. Bastida agreed he sold, ceded and
conveyed to said creditor an aliquot part of the judgment
obtained by him sufficient to cover the balance in question plus
interest thereon until the date of the execution of the judgment.
The Bank of the Philippine Islands, Filipinas Lumber Co., Inc.,
Macondray & Co., Inc., and the Philippine Guaranty Co., Inc.,
filed motions for a new trial which were denied; but only the
Bank of the Philippine Islands, Macondray & Co., Inc., and the
Philippine Guaranty Co., Inc. filed a joint bill of exceptions thus
making them the only appellants. BPI questions the
preference/priority given to all others over its claim. BPI also
contends in that the court should not have granted fees in the
sum of P100 to the attorneys for the herein plaintiff, Menzi & Co.,
Inc. Counsel for the Bank of the Philippine Islands cites no
authority in support of his theory.
Philippine Guaranty Co., Inc. also claims that the judgment of
the court erred: (1) In not declaring that the assignment made by
Bastida to Levy Hermanos, Inc., is fraudulent; (2) in not holding
that the mortgage constituted by Bastida in favor of the Bank of
the Philippine Islands is null and void; (3) in holding that the
claim of Barretto and Recto for attorney's fees have preference
over its credit; (4) in not holding that the claim of Macondray &
Naydia Carla A. Yoro (4-A)

November 24, 2011
Co. has preference over its credit; (5) in granting fees in the sum
of P100 to the attorneys of Menzi & Co., Inc., and (6) in not
holding that its credit is superior and preferential to all the rest.
Issue/Held:
Should an interpleaders attorney be given priority over other

claims? Yes
Rationale:
Section 120 of the Code of Civil Procedure which authorizes the

bringing of an action of interpleading contains no provision
relative to fees of the attorney for the plaintiff in such actions.
However, taking into consideration the purpose of an action of
interpleading, it seems just that the fees of an interpleader's
attorney be defrayed with the funds sought to be distributed,
unless there be some reason justifying payment thereof by some
of defendants in the case." According to many authorities,
complainant is entitled, as a part of his costs, to an attorney's fee
commensurate with the services of his counsel in the cause,
eventually to fall on the claimant who was in the wrong and
made the litigation necessary, and this is expressly provided by
the statute in some jurisdictions. . . . In any case, the allowance
for the attorney's fees should be limited to a reasonable fee for
necessary services." It appears that the amount of the fees
granted is not questioned nor is it claimed that it is exorbitant or
unreasonable. Truly, the sum fixed is very reasonable and
proportionate to the amount and quality of the professional
services rendered. As to the order of payment of these fees, the
law is likewise silent; but being in the nature of costs, according
to the American doctrine referred to above, they should be paid
in preference to all claims and at the same time as judicial costs.
In its brief the plaintiff-appellee likewise prays that it be granted
the costs of both instances, including the expenses incurred in
the printing of its brief. We agree to the recovery of costs but we
cannot authorize the refund of the expenses incurred in the
printing of its brief because it is expressly prohibited by section
494 of the Code of Civil Procedure.
It has already been settled that Casal's credit, now Macondray &
Co.'s, is inferior to that of Levy Hermanos, Inc., by virtue of the
provisions of section 37 of the Code of Civil Procedure that an
attorney's lien enjoys preference only from the date a statement
thereof is caused to be entered upon the records and notice
thereof served to the adverse party. Casal's lien was caused to
be entered upon records and Menzi & Co., Inc., notified thereof
long after Bastida had transferred his judgment credit to Levy
Hermanos and also after said Bastida had mortgaged it to the
Bank of the Philippine Islands.
The court held that the claims involved in these appeals enjoy
preference in the order as follows: (1) The fees of the attorneys
for the plaintiff Menzi & Co., Inc., and the costs of both instances
to which it is entitled under sections 492 and 494 of the Code of
Civil Procedure; (2) the claim or credit of Levy Hermanos, Inc.;
(3) the claim or credit of the Bank of the Philippine Islands; (4)
the claim or credit of the Philippine Guaranty Co., Inc.; (5) the
claim or credit of Macondray & Co.; and (6) the claim or credit of
Alberto Barretto. These claims will be payable in the order
established if the funds on deposit are sufficient.
With modification of the appealed judgment, it is ordered that of

the sum of P29,774.49 deposited by the plaintiff with the clerk of
the CFI Instance of Manila, the following be paid: First, the costs
of the both instances to said plaintiff and the sum of P100 to the
attorneys thereof; second, the sum of P23,041.69 to Levy
Hermanos, Inc., and third, the entire balance of the amount of
money on deposit to the Bank of the Philippine Islands, as
partial payment of its claim. That part of the appealed judgment
releasing the plaintiff from all further responsibility is affirmed.

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Special Civil Actions

G.R. No. L-42278

Naydia Carla A. Yoro (4-A)

Should an interpleaders attorney be given priority over other

Section 120 of the Code of Civil Procedure which authorizes the

With modification of the appealed judgment, it is ordered that of

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