products and that were near the market for these products. "We command," Philip IV said in Zaragosa in 1646, "that the grants of lands shall not be made to those Spaniards who have obtained their lands from Indians in contravention of our royal decrees or orders." Later on, in 1797, a royal order spoke of the frauds which were being committed under the pretext of the privileges of the Indians on account of the misuse with which the latter exercised their rights of leasing their lands to other Indians, mestizos or Spaniards. For the honor and glory of the Spanish kings, we ought to make it appear that from the very first laws promulgated suitable penalties were provided for punishing the violators of their provisions in order that the rights of natives would be respected, and under no cirumstznce the land owned and occupied by the natives could be taken away from them. As a consequence of this policy, it was ordered in the Law VI, Title I, Book IV of the Compilation of the Indies that in the agreement of discovery "the use of the word conquest is to be dropped and in its place are to be used those of pacification and settlement in order that no "force nor damage could be done to the Indias." "We ordered," said Philip II, in his decree of 1594, "that farms and lands granted to the Spaniards were to be so given that they would not prejudice the Indians and that those given away in prejudice and to the damage of their rights are to be returned to those who are entitled of them." "We order lastly", Philip IV said, in 1643 and 1646 "that there should be specially left to the Indians all that which belonged to them, whether owned individually or in common and also the waters, irrigations, and lands in which they have constructed dikes... and under no excuse can they sell or transfer them. Under these laws the titles of possession of the Filipinos over their lands were confirmed, and not only were they so confirmed but they were also given the right to obtain lands under distribution "(repartimiento)". Divide among the Indians all that can be conveniently given, taking into consideration their immediate needs," Philip II said, "for tillage and farming purposes and also for breeding animals, adjudicating to them what they already possess and give them further what they still need." As such distributions of land (repartimientos) required elaborate administrative proceedings which resulted costly and consumed a great deal of time, it is therefore, not strange that whenever there was a need of starting improvements on a new space of ground the Filipinos as well as the Spaniards resorted to the easier method of mere occupation rather than that of distributive proceedings. In order to check this practice Philip II in his successive decrees in 1578, 1589, 1591 repeatedly maintained that the ownership of the Indies belonged to his patrimony and as a consequence the grants or disposition of the same was only possible through permission of the crown and he ordained that to the crown should be reverted all those lands possessed without just title. And by the royal decree of November 1, 1591, the authority of the governors and cabildos (chapters) to make distribution at their own discretion was revoked and it was there provided that grants of lands or farms for cultivation or for breeding animals were to be sold or disposed of by the royal officials in public sales. In

1735, although the expressed approval of the crown was previously required, nevertheless said order was revoked 19 years afterwards (1754), because it proved to be impracticable; and in its place it was newly ordered that in the gifts, sales and disposition of lands belonging to the royal patrimony, the authority to name assistants and sub-agents who were to carry out and perform the sale and conveyances of said lands, who, in turn, could appoint substitutes in those places and provinces far away from their residences was exclusively left in charge of the viceroys and presidents of the audiencas. By article 81 of the decree of 1786, it is provided that the (intendentes) sub-treasurers, are the sole judges concerning the sales, conveyances, and distributions of lands. And lastly, on March 28, 1789 the settlers were exempted from applying to the royal tribunal.

In spite of all these measures tending to decentralize the administrative organization in charge of the distribution of lands, in order to popularize the laws, and to lesson the expenses, and at the same time to facilitate and expedite the methods of acquisitions, the practice of mere occupation became more and more general.

Up to April 1883, we may say in synthesis, that the forms of acquiring public lands could be reduced into that of distribution and of sale, the first being gratuitous and the second onerous. As a supplementary means to correct the deficiencies of mere possession, the government grants based on prescriptive principles, which could be either gratuitous or onerous as the case may be, were introduced.

The idea of distribution of lands having been almost abandoned, because there was a need for the royal decree of August 6, 1899, in order to authorize the distribution of the uncultivated lands in the eastern half of the island of Negros, there was only left the sale and the grant methods.

The sales were governed primarily by the laws of the Indies and by the royal cedulas and decrees that were promulgated from time to time. At first, it required only the payment of a moderate price, but beginning from the royal decree of February 15, 1858, it was provided that if the price of the land exceeded 200 pesos the adjudication of same was always to be made at a public sale. This criterion was changed in the royal decree of January 19, 1883, which was ordered to be published in Manila in April 7 of the same year, and from this year instead of the vague and general provisions of the law of the Indies, we had a methodical legislation on sales with the necessary classification of salable lands.

(To be continued)

THE LAW OF LIENS IN THE PHILIPPINE ISLANDS AS COMPARED WITH THAT PREVAILING

IN THE UNITED STATES

By FELIPE YSMAEL, B. A., LL. B.

(Awarded the Lawyers Cooperative Publishing Co. prize of United States Supreme Court Digest, Extra Annotated, 7 volumes, for the best thesis presented for graduation from the College of Law, University of the Philippines.)

(Continued from October number.)

PARTNERSHIP

PARTNERSHIP LIENS

EXISTENCE OF a Partner's LIEN ON THE EFFECTS OF PARTNERSHIP.

Under the American law, the partnership effects are pledged to each separate partner, until he is released from all his partnership obligations; but this lien, however, is solely under the control of the partners and it would follow doubtless, that if the partnership be dissolved, and the effects assigned to one partner, this pledge or lien is gone or lost. (Bardwell vs. Perry, 19 Vermont 292.) This lien is an equitable one existing by the very law of partnership. The partnership property belongs to the partnership, and not to the individuals of whom the partnership is composed. It is the right of each individual member of the partnership to require that the partnership property shall be applied to the payment of the partnership debts. The share of each member is his share of the surplus remaining after the settlement of all the firm's debts and accounts. (Jones on Liens, Sec. 787.)

The phrase "partner's lien" is unknown to the Spanish law, but its substance obtains in Spanish jurisprudence. Thus article 139 of the Code of Commerce provides that:

"In general or limited copartnerships, no partner may remove or divert from the common funds a larger amount than that assigned to each for his personal expenses; should he do so, he may be compelled to repay it as if he had not completed the portion of the capital which he bound himself to contribute to the copartnership;" and according to article 170 of the same code an execution lies against the property of a partner to recover the portion of capital not contributed by such partner."

Article 235 of the Code of Commerce further provides:

"No member can demand the delivery to him of the capital due from the common funds until all the debts and obligations of the association have been extinguished, or until the amount thereof has been deposited, if the delivery can not at once take place.”

However, the strongest support for my contention is found in article 237 of the Code of Commerce, which is of the following tenor:

"The private property of the general partners which is not included in the assets of the copartnership when it is established cannot be seized for the payment of the obligations contracted by the copartnership until after the common assets have been attached."

In other words, as long as there is property belonging to the company, obligations in favor of third persons are covered by the primary and direct responsibility of the company. When the assets of the company are exhausted then it becomes necessary to appeal to the ulterior or subsidiary liability of the private property of the partners. This notwithstanding the remarks made by our Supreme Court in the case of Compañía Marítima vs. Muñoz, 9 Phil. Rep. 338, which run as follows: "An action can be maintained against the partnership and the partners, but the judgment should recognize the rights of the individual partners which are secured by said article 237."

So that from a recital of the foregoing articles it is clear that the system of a partner's lien on the effects of the partnership until he is released from all his partnership obligations obtains as well in the Philippine Islands: for both under the American law (Jones on Liens, Sec. 787) and under our jurisprudence (Art. 237 of the Code of Commerce) it is the right of each individual member of the partnership to require that the partnership property shall be applied to the payment of the partnership debts. INDIVIDUAL DEBT DUE FROM ONE PARTNER TO ANOTHER.

Under the American law, one partner has no lien on a copartner's interest in the partnership property for a debt due to him from the copartner. Thus in the case of Evans vs. Bryan, 95 N. C., 174, wherein the plaintiff's intestate, in contemplation of a business partnership between the intestate and the defendant, sold to the latter an undivided one-half interest in a business he had already established, taking his note for a part of the purchase money, the court said.

the plaintiff is no more entitled to have the note in question paid out of the defendant's share of the assets of the partnership than if it had been given for a horse or other consideration in no way connected with the partnership property the intestate had a specific lien on the property of the partnership, for its debts and liabilities due to other persons, for his share of its capital and funds; for all moneys advanced by him for its use, and for debts due it from the defendant, if there were such beyond his share, but he had no such lien for a debt due to him for property he sold to his copartner, in the absence of a special contract to that effect."

In the Philippine Islands, the same holding obtains, inasmuch as our Supreme Court in the case of Maximino Paterno vs. Gervasio Unson, R. G. No. 9450, has declared that "an action for money loaned in advance, by the plaintiff as partner to the concern which was managed by the defendant as an industrial partner, will not lie; and where no action can be maintained to enforce the lien, it is illusory to speak of the existence of a lien.

LIEN OF CREDITOR ON EFFECTS OF PARTNERSHIP.

The doctrine that firm assets must first be applied to the payment of firm debts, and individual property to individual debts, is only a principle of administration adopted by the courts where, from any cause, they are called upon to wind up the firm business and find that the members have made no valid disposition of or charges upon its assets. Thus: where, upon a dissolution of the firm, by death or limitation or bankruptcy or from any other cause, the courts are called upon to wind up the concern, they adopt and enforce the principle stated; but the principle ittself springs alone out of the obligation to do justice between the partners. (Schmidlapp vs. Currier, 55 Miss., 597.) It is indispensable, to the application of the above principle, that the partnership property should be within the control of the court and, in the course of administration, brought about by the bankruptcy of the firm or by an assignment, or by the creation of a trust in some mode. (Case v. Beauregard, 99 U. S., 119.)

This is because, in the United States, copartnership creditors have no specific lien, legal or equitable, upon the joint funds, no more than any individual creditor has a lien upon the private estate of his debtor. Even the partners themselves have no specific lien until the property has passed in custodia legis. While the partnership is going on the partners may convert joint into separate property, or separate into joint, and the property will, at the dissolution, be held to possess that character which is then impressed upon it. (Bisset on Partnership, 108, 111; Gow on Partnership, 296, Collyer on Partnership, 334, 511; Story on Partnership, 527; Kimball vs. Thompson, 13 Metc., 283.)

So that it has been shown that a creditor of a partnership, under the American Law, has no equitable lien upon its effects in the first instance to compel their application to the payment of partnership debts. The creditor does not acquire a lien upon the partnership property until he acquires it by legal process as by the levy of an attachment or of an execution.

Under the American law, equities of the creditors are derivative, that is, the rights and equities of the joint creditors are to be worked out only through the lien or equities of the partners. It operates when there is to be a settlement of a partnership concern, either by the partners themselves, or by a solvent partner, or a surviving one, or by an administrator, assignee, or receiver. (Allen vs. Genter Valley Co., 21 Conn., 138.)

All the preceding discussion is generally true as long as the transactions are carried on in good faith; that is, as long as the element of fraud is absent. But when the transactions have been brought about fraudulently, in contemplation of actual and open insolvency, and with a design to defeat the claims of creditors of the partnership, and with the knowledge and assent of the purchaser-it would be sustained by the general and conservative principle that the fraud of the parties will destroy