FRANCISCO C. MANABAT, IN HIS CAPACITY AS PROVINCIAL SHE­RIFF OF LAGUNA, BRANCH I, PLAINTIFF-APPELLEE, VS. LAGUNA FEDERATION OF FACOMAS, INC., ET AL., DEFENDANTS-APPELLEES, FLORE…

In a suit filed by Laguna Federation of Facomas,
Inc. against Nieves M. Vda. de Roxas,^[1] a
judgment for the plain­tiff was rendered. 
And pursuant to it, a writ of execu­tion was issued on February 8, 1960,
by virtue of which Francisco Manabat, the provincial
sheriff, sold at public auction on November 24, 1960 all rights, titles and
inte­rests of Nieves M. Vda. de Roxas
in ten (10) parcels of land for a total price of P37,000.

Discovering, however, that the parcels of land solo were subject
to registered liens such as writs of execu­tion and attachment annotated at the
back of the respec­tive title certificates, the sheriff instituted an action
for interpleader on February 21, 1961 in the same
Court of First Instance of Laguna,^[2]
for the different creditors or lienholders to
litigate among themselves and determine their rights to the P37,000 proceeds of
the sale.

As a result, the following pertinent claims were thereafter
asserted:

After stipulation of facts and submission of docu­mentary evidence
by the parties, the Court of First Ins­tance ruled, in its decision of December 6, 1961, that the
aforementioned defendants-claimants are entitled to the proceeds of the sale
in the order of preference in accordance with the dates of the registration of
their credits.

From said judgment only Florentino Cayco and Jose Fernandez Zorilla
appealed.^[4]
And finding that it involves a question purely of law, the Court of Appeals, by
reso­lution of November 12, 1964,
has certified their appeal to Us.

The only issue presented is whether the rule to fal­low in the
satisfaction of the credits involved is that of preference in the order of
dates of registration, as held by the court a quo, or
distribution pro rata, as ap­pellants maintain.

Appellants’ reasoning is that this is an instance of several
credits referring to the same specific real property; and that the rule in such
case is to satisfy all the aforesaid credits pro rata, following
Article 2249 of the Civil Code:

“ART. 2249.  If there
are two or more cre­dits with respect to the same specific real property or
real rights, they shall be satis­fied pro rata, after the payment
of the taxes and assessments upon the immovable property or real right.”

The above provision of the new Civil Code altered the set-up
under the old one^[5]
in that while previously the rule provided for was priority of payment in
regard to credits referring to the same specific real property, now the general
rule is pro rata.

Nonetheless, even under the new system, not all cre­dits referring
to the same specific real property come under the pro rata
rule.  Article 2249 itself, supra,
expressly provides that taxes and assessments upon the real property are to be
paid first.

Similarly, the rule of pro rata does not apply to
the credits mentioned in subpar. (7) of Article 2242
of the Civil Code:

“ART. 2242.  With
reference to specific immovable property and real rights of the deb­tor, the
following claims, mortgages and liens shall be preferred, and shall constitute
an encumbrance on the immovable or real right:

x        x          x          x          x

“(7) Credits annotated in the Registry of Property, in virtue
of a judicial order, by attachments or executions, upon the pro­perty affected,
and only as to later credits;”

It being expressly provided that said
credits are preferred “only as to later credits“, it follows that
the same limitation applies as to their preference among themselves; i.e., for
purposes of satisfying several credits annotated by attachments or executions,
the rule is still preference according to priority of the credits in the order
of time.  For, otherwise, the result
would be absurd:  the preference of an
attachment or execution lien over later credits, as above provided for, could
easily be defeated by simply obtaining writs of attachment or execution, and
annotating them, no matter how much later.

It not being disputed that appellants’ credit is
“later” than those of appellees Laguna
Federation of Facomas, Inc., Valeriana
Lim-aco de Almeda and
Cosmopoli­tan Insurance Co., Inc., the appellees‘
credits must be deemed preferred to that of appellants.  To satisfy them pro rata would
erase the difference between earlier and later credits provided for by subpar. (7) of Article 2242 aforementioned.

WHEREFORE, the judgment appealed from ruling prefe­rence
is hereby affirmed.  No costs.

SO ORDERED.

Concepcion, C.J., Reyes, Dizon, Regala, Makalintal, Zaldivar, Sanchez, and Castro, JJ., concur.

^[1]
Civil Case No. B-188, CFI of Laguna.

^[2]
Civil Case No. B-280, CFI of Laguna.

^[3]
Decided on June 29, 1962 in
favor of registrability.

^[4]
No. 4 in foregoing tabulation.

^[5]
Cf. Article 1927, Old Civil Code.