G.R. No. L‑2908
December 20, 1906

—

FACTS
– Antonio Torres and Simon Schneer formed a copartnership (the “Partnership”) on 29 Oct 1903 to operate the New Oriente Hotel, acquiring furniture and a lease.
– On 9 Dec 1903 the Partnership borrowed ₱20,000 from the International Bank and pledged certain partnership assets to José Robles Lahesa as security.
– On 25 Aug 1904 Torres filed a petition for winding‑up of the Partnership, naming Schneer, the International Bank and Lahesa as defendants.
– Intervenor Ramón B. Genato filed a separate complaint alleging that the Partnership purchased chairs from him in Dec 1903 for ₱572, which remained unpaid.
– The trial court dismissed Genato’s complaint, holding that it failed to show a “legal interest in the matter in litigation” under Sec. 121 of the Code of Civil Procedure.

ISSUE
Whether the intervenor’s complaint sufficiently alleged a legal interest in the winding‑up proceedings to entitle him to intervene and claim a preferential claim over the partnership’s assets (the chairs).

RULING
– The Court held that the trial court erred.
– Under Art. 1922 of the Civil Code, a creditor who sold movable goods to a debtor retains a preferential right over the proceeds from those goods while they remain in the debtor’s possession.
– The complaint alleged that the chairs were sold to the Partnership, were in its possession, and the purchase price remained unpaidfacts that, if true, confer a preferential claim.
– Whether the chairs were included in the property pledged to Lahesa is a question of fact; denial of that fact by the intervenor warrants his participation in the liquidation.
– Consequently, the dismissal was reversed. Judgment will be entered in favor of the intervenor, with no special costs awarded, and the case remanded for proper disposition.

—