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[G.R. No. L-3132. September 14, 1907. ]

MANUEL SOLER Y MARTINEZ AND FEDERICO SOLER Y MARTINEZ, by their guardian ad litem, Thomas D. Aitken, Plaintiffs-Appellants, v. EMILIA ALZOUA AND W.H. MITCHELL, acting sheriff of the city of Manila, Defendants-Appellees.

Thomas D. Aitken, for Appellants.

Hartigan, Rohde & Gutierrez, for Appellees.


INDEBTEDNESS; PRIORITY OF PAYMENT. — Indebtedness evidenced by a public document takes preference or priority according to its date over indebtedness evidenced by a sentence of the court. (Following the decisions in cases of Martionez v. Holliday, Wise & Co., 1 Phil. Rep., 194; Olivares v. Hoskyn & Co., 2 Phil. Rep., 689; Peterson v. Newberry, 6 Phil. Rep., 260; Gocuico v. Ocampo, 7 Phil. Rep., 15.)



On the 14th day of October, 1905, the plaintiffs commenced an action in the Court of First Instance of the city of Manila, praying for a preliminary injunction against the defendants and each of them to prohibit the defendants from selling the property or business known as "The Sport," situated at Nos. 58 to 60 on the Escolta in the city of Manila, or to interfere in any manner with the possession of the plaintiffs in said premises, and that the preliminary injunction, upon the hearing of said cause, be made perpetual, and for damages to the amount of P500 and costs.

On the 8th day of November, 1905, the attorneys for the respective parties entered into a stipulation of facts, from which the following, pertinent to the question involved here, were agreed upon:chanrob1es virtual 1aw library

(1) That the said plaintiffs are minors, aged 19 and 12 years, respectively, and sons of Manuel Soler y Cendra and Visitacion Martinez.

(2) That Manuel Soler y Cendra died in Barcelona Spain, on the 26th day of January, 1901; that he left as heirs a widow, the said Visitacion Martinez and who children, to wit, the plaintiffs.

(3) That the said Manuel Soler y Cendra left a will under the terms of which his children were to receive one-half of all his property. The will also contains the following provision (par. 4):jgc:chanrobles.com.ph

"For the remnant of all this property, shares, and rights, his institutes and appoints as his sole and universal heirs his sons, Manuel and Federico, reserving to his wife the rights which the Civil Code grants to the surviving spouse."cralaw virtua1aw library

(4) The will provided for executors, giving them full authority, jointly and severally, to take over and into their ]care the property, will full power to administer, manage, and govern, etc.; to make an inventory, to appraise, to liquidate, to divide and to adjudge the property of the estate, etc.

(5) That they said executors duly made an inventory of the said estate found that the value thereof was P23,683.88.

(6) That the property included in said inventory had been acquired during the matrimony of the said Don Manuel Soler y Cendra with Doña Visitacion Martinez and that it constituted the credit of the legal conjugal partnership, and therefore one-half of it — to wit, P11,841.94 — belonged to the wife, Doña Visitacion Martinez.

(7) That the share belonging to his sons Manuel and Federico, the plaintiffs herein of said estate was 34,028.;57 pesetas.

(8) That on the 17th of May, 1902, the said Doña Visitacion Martinez, being in possession of the property of her husband, formed a copartnership with Joaquin Riu, under the provisions of the articles of which copartnership the capital of the partnership was to consist of P23,683.88 supplied by Doña Visitacion Martinez and of P5,239.11 supplied by the said Joaquin Riu.

(9) The said articles of copartnership were duly executed before a notary public and registered in the mercantile that of the P23,683.88 supplied by the said Doña Visitacion Martinez P9,868.29 belonged her sons, Manuel and Federico, being the property left by their father under the said will.

(10) That during the existence of the said partnership, to wit, on the 25th day of April, 1903, the said Doña Visitacion Martinez jointly with the other partner, the said Joaquin Riu, borrowed from Emilia Alzoua the sum of P15,000, for which they gave their joint and several promissory note, said sum being used for the benefit of the said partnership business, and on the same day at the same time the said promissory note was executed for the said sum, the said partners executed a document purporting to give as guaranty if the said note the said business.

(11) On the 7th day of September, 1905, the judge of the Court of First Instance of the city of Manila rendered a judgment against the said partners on the said p[promissory note for the sum of P12,700, with interest from the 7th day of September, 1905, with costs, declaring that this amount as against the defendants should constitute a first lien upon the business of the said partnership.

(12) That prior to the date of the said judgment against the members of said partnership, to wit, on the 28th day of November, 1904, said partners executed and instrument before a notary public of Manila, Dr. Enrique Barrera y Caldes, dissolving the said partnership, dividing the assets of said partnership in the manner indicated in the said dissolution, the said Visitacion Martinez continuing the business of the said partnership and relieving the copartner, Joaquin Riu, of all responsibility in relation to said partnership.

(13) In one of the paragraphs of the said articles of the dissolution there appeared the above-mentioned liability in favor of the said Emilia Alzoua.

(14) From paragraph 7 of the said articles of copartnership it appears that P9,868.29 of the capital of said partnership was the sum left by Manuel Soler y Cendra, deceased, to the plaintiffs herein, which articles contain the following clause:jgc:chanrobles.com.ph

"But that this participation by no means can ever affect the partner, Mr. Riu, because all question which by virtue of such participation may arise will be on account and at the risk of the said Visitacion Martinez, with full and complete indemnity of the company formed by the present instrument."cralaw virtua1aw library

(15) From said stipulation of facts it appears "that during none of the times mentioned has Visitacion Martinez been the legal guardian of the said minors," the plaintiff herein.

After a consideration of the facts included in the stipulation of the parties, the lower court dismissed the complaint of the plaintiffs and dissolved the temporary injunction granted upon the filing of said petition, ordering that the costs be paid by the sheriff of Manila out of the proceeds of the sale of the goods attached. From this contention of the lower court the plaintiff appealed to this court and among other errors assigned:jgc:chanrobles.com.ph

"1. That the court erred in deciding that the minors’ claim was not preferred to that of Emilia Alzoua; and

"2. That the court erred in dismissing the complaint and dissolving the injunction."cralaw virtua1aw library

Under the above first assignment of error the appellant argues that, inasmuch as the partnership formed by the said Doña Visitacion Martinez and the said Joaquin Riu had accepted and used the sum of P9,868.29 of the property of these plaintiffs, and had evidenced the same by the public document, which document had been made of record more than a year prior to the date of the indebtedness of the said partnership to the said Emilia, the lower court should have applied paragraph have given the claim of indebtedness of the said Emilia Alzoua; and therefore the lower court should have restrained the payment of the claim of the said Emilia Alzoua until the payment of the claim on the part of these plaintiffs.

The public document evidencing the indebtedness of the said plaintiffs was executed May 17, 1902, while the indebtedness in favor of Emilia Alzoua was dated April 15, 1903, the judgment thereon bearing date of September 22, 1905. The indebtedness of the said partnership in favor of the said plaintiffs was duly registered long before the indebtedness of the said partnership was created in favor of the said Emilia Alzoua was rendered. This court has frequently decided that indebtedness evidenced by a public document and by a final sentence take preference according to their date. (Martinez v. Holiday, Wise & Co., 1 Phil. Rep., 194; Olivares v. Hoskyn & Co., 2 Phil. Rep., 689; Peterson v. Newberry, 6 Phil. Rep., 260; Gochuico v. Ocampo. 7 Phil. Rep., 15.)

Many other difficult questions have been suggested by the attorneys in the cause, but in the view of the above conclusions that the plaintiffs herein were entitled to be paid out of the funds of the said partnership prior to the payment of the indebtedness in favor of the said Emilia Alzoua, we deem it necessary to discuss them. Therefore the judgment of the lower court dismissing the complaint and dissolving the temporary injunction in said cause is hereby reversed and the cause is remanded to the lower court with direction to take such action in the premises, not inconsistent with the views hereinbefore expressed, as may be deemed just an equitable. Without any finding as to costs, it is so ordered.

Arellano, Torres, Carson, and Tracey, JJ., concur.

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