G.R. No. L‑3393 (November 23 1906)

FACTS
– Clemente Gochuico loaned Manuel Ocampo ₱4,800 free of interest, securing the loan with a mortgage over Ocampo’s “tienda de quincalleria” located at No. 83 Calle Rosario, Binondo, Manila.
– The loan agreement was executed before a notary public (Art. 1216 Civil Code) on 9 May 1905, making it a public document.
– On 1 August 1905 the Court of First Instance ordered the sheriff to seize the mortgaged premises in favor of Gochuico; the seizure was effected.
– Defendants Choa Tec Hee and Heinszen & Co., holders of separate judgments from the Justice of the Peace, sought to intervene and to have the sequestration annulled.
– The seized property was later ordered sold; Ocampo did not appear.
– The trial court entered judgment for Gochuico for ₱4,800 plus 6 % annual interest from 1 August 1905 and costs, declaring him a “special owner” of the proceeds.
– The intervenors appealed, contending that Gochuico’s claim should not enjoy priority over other creditors.

ISSUE
Whether the mortgage deed, being a public instrument, confers on the plaintiff a preferential right over the debtor’s assets against subsequent creditors under Article 1924, 3 of the Civil Code.

RULING
The Supreme Court affirmed the lower court’s judgment. It held that:

– The notarized mortgage deed constitutes a public document; thus the credit it evidences is subject to the preference rule of Art. 1924 (3), which ranks claims by the date of the public document or final judgment.
– Consequently, Gochuico’s claim, dated 9 May 1905, outranks later claims (e.g., those of Choa Tec Hee and Heinszen & Co.).
– The judgment for ₱4,800, interest at 6 % per annum from 1 August 1905, and costs was upheld.

The decision was rendered with concurrence of all justices; execution was ordered after ten days.