GR L 11747; (December, 1917)

EN BANC

G.R. No. L-11747       December 6, 1917

GO KIAM CO, plaintiff-appellee,

vs.
LIM TUICO, ET AL., defendants-appellants.

Beaumont and Tenney for appellants.
No appearance for the appellee.

JOHNSON, J.:

The only question presented by this appeal is, whether or not, in an action, by the different creditors, against the same debtor, the preference, which is conceded to the vendor of personal property over the other creditors is measured by the value of the goods sold at the time of the sale or by that amount received by the sheriff at the public sale of the same. In other words, for example, A and B are common creditors of C. C is insolvent. B obtain a judgment and secures an order for the sale of the personal property of C. A presents a claim based upon his preference under paragraph 1 of article 1922 of the Civil Code. The goods are sold at public auction. A identifies the goods so sold by the sheriff as the identical goods sold by A to C was P165. The amount received by the sheriff was P21. Query: To what amount is A entitled in the distribution of the proceeds of the sale by the sheriff? P165 or P21 only?

Paragraph 1 of article 1922 of the Civil Code provides that preference shall be given, in case of common creditors of the same debtor “for the amount of the sale of personal property which may be in the possession of the debtor to the extent of the value of such property.” What is the signification of the phrase “credit . . . to the extent of the value of such property?” Does said phrase mean the value of such property at the time of the sale by the creditor to the common debtor, or its value at the time it is sold by the sheriff? That personal property is constantly fluctuating in value is a fact well recognized. The fact that it was sold on the 1st day of the month for P165 is not absolute proof that its value on the 1st day of the month is more than P21. And moreover, the vendor, in cases like the present, in order to enforce his preference has no right to the return of the identical property, He is entitled to a preference to the extent of the value of such property. The merchandise was sold. The vendor thereby lost his title thereto. He is not entitled to a return of the merchandise simply because his debt has not been paid, in the absence of conditions to that effect. The law gives him the right of the preference only, “to the extent of the value of such merchandise” in the final distribution of the assets of the insolvent. We are of the opinion that the phrase giving to the vendor a preference “to the extent of the value of the property” relates to its value as ascertained by the sheriff’s sale of the same at public auction. If that is true, then the preference of the plaintiff in the present action is not to the extent of the value of the goods at the time he sold them, or P165, but to their value at the time of the sale by the sheriff at public auction, or P21.

Therefore, the judgment of the lower court giving the plaintiff a preference in the amount of P165 is hereby modified; and it is hereby ordered and decreed that the plaintiff be given a preference over the P21 in the hands of the sheriff, less necessary costs and expense in the sale of said merchandise. With said modification, the judgment of the lower court is hereby affirmed, without any finding as to costs. So ordered. lawphi1.net

Arellano, C.J., Carson, Street, and Malcolm, JJ., concur.
Araullo, J., took no part.

Batas Pinas