G.R. No. L-5138
JOSE MCMICKING, sheriff of the city of Manila, plaintiff-appellee, vs. DOMINGO TREMOYA, HOLLIDAY, WISE & CO., BEHN, MEYER & Co., MOLL, KUNZLI & Co., LUTZ & Co., ELLIS CROMWELL, as Collector of Internal Revenue, YU GUIOC LO. NG BOC PUN, NG LIONG, and NG CHEE YAN, defendants-appellants.
October 9, 1909

FACTS: Domingo Tremoya (appellant) obtained a judgment against Lim Buanco. An execution was issued, and the sheriff of Manila (McMicking) levied upon goods found in Lim Buanco’s store. The goods were subsequently sold, yielding P7,012.89. Prior to and during the sale, several parties made claims for preference over the proceeds:

1. Holliday, Wise & Co., Behn, Meyer & Co., Moll, Kunzli & Co., and Lutz & Co.: Claimed they had sold specific merchandise to Lim Buanco which remained unpaid. They identified and separated these goods, which were then sold separately.
2. Collector of Internal Revenue: Claimed unpaid internal-revenue tax for the first trimester of 1908 (P178.84).
3. Yu Guioc Lo and Be Yoaju: Claimed unpaid rent for the store building for January to April 1908 (P721).
4. Ng Boc Pun, Ng Liong, and Ng Chee Yan: Employees of Lim Buanco, claimed unpaid salaries.

The sheriff, unable to determine the priority of these claims, filed a petition in the Court of First Instance (CFI) of Manila. The CFI found that the claims of the vendors (except Holliday, Wise & Co. for specific proof), the Collector of Internal Revenue, the landlords, and the employees were entitled to preference over Tremoya’s judgment credit. Tremoya appealed, arguing that his credit should have preference and that the other claims did not meet the requirements for preference, particularly that goods claimed by vendors must be identified, unpaid, and in the debtor’s possession.

ISSUE: Which of the several creditors’ claims (judgment creditor, vendors of unpaid goods, landlord, employees, or internal revenue) have a preferred right to the proceeds from the execution sale of the debtor’s property, and under what conditions, pursuant to the Civil Code?

RULING: The Supreme Court partially affirmed and partially reversed the CFI’s judgment.

1. Holliday, Wise & Co. (Vendors of Unpaid Goods): The Court reversed the CFI’s decision granting preference to Holliday, Wise & Co. While they proved they sold goods to the debtor and identified some goods, they failed to present proof that the particular goods selected and sold had not been paid for. Under Article 1922, paragraph 1 of the Civil Code, preference for the selling price of personal property requires proof that the specific goods in the debtor’s possession are indeed unpaid.
2. Behn, Meyer & Co., Moll, Kunzli & Co., and Lutz & Co. (Vendors of Unpaid Goods): The Court affirmed the CFI’s decision granting preference to these companies. The evidence showed that they sold the selected goods to the debtor and that these specific goods had not been paid for, thereby meeting the requirements of Article 1922, paragraph 1 of the Civil Code.
3. Yu Guioc Lo and Be Yoaju (Landlord): The Court affirmed the CFI’s decision granting preference for the unpaid rent. Claims for rent due for the building where the merchandise is found are expressly recognized as preferred claims by Article 1922, paragraph 7 of the Civil Code.
4. Ng Boc Pun, Ng Liong, and Ng Chee Yan (Employees): The Court affirmed the CFI’s decision granting preference for their unpaid salaries, to be paid proportionally from the balance of the funds. The preferred rights of employees for salaries are recognized by Article 1924, paragraph 2, subparagraph (d) of the Civil Code.
5. Collector of Internal Revenue: The Court affirmed the CFI’s decision granting preference for the unpaid internal-revenue tax. (While not explicitly detailed in the final part of the ruling, the general affirmation implies the upholding of this particular claim’s preference as it was not part of the reversal.)

Therefore, the judgment of the lower court was affirmed, except for the claim of Holliday, Wise & Co., which was reversed.