Case Doctrines on Credit Transactions (Civil Law Review - Atty. Legarda) DOCX

Title	Case Doctrines on Credit Transactions (Civil Law Review - Atty. Legarda)
Author	Tricia Cruz
Pages	29
File Size	200.3 KB
File Type	DOCX
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PREFERENCE OF CREDITS 1. NCC 2241-2251 NCC 110, Labor Code Carried Lumber v. ACCFA, April 22, 1975, 63 SCRA 411 Concurrence of credits; Credits with reference to specific immovable property; Article 2242 of Civil Code provides for concurrence of credits; Materialman's lien and mortgage lien; Case at bar. —The trial court erred in holding that the lumber company 's lien over the warehouse is superior to the ACCFA's mortgage lien. It was mistaken in assuming that the enumeration of ten claims, mortgages and liens in article 2242 creates an order of preference. It is not correct to say that the materialman's (mechanic's) lien or refectionary credit of the lumber company , being listed as No. 4 in article 2242, is superior to the ACCFA' s mortgage credit which is listed as No. 5. The enumeration in article 2242 is not an order of preference. That article lists the credits which may concur with respect to specific real properties and which would be satisfied pro rata according to article 2249. Pro-rata satisfaction of credits; "Pro-rata" explained. —The term pro-rata in article 2249 means in proportion or ratably, or a division according to share, interest or liability of each. Consuelo Metal v Planters, 555 SCRA 465 If rehabilitation is no longer feasible and the assets of the corporation are finally liquidated, secured creditors shall enjoy preference over unsecured creditors, subject only to the provisions of the Civil Code on concurrence and preference of credits. —In Rizal Commercial Banking Corporation v. Intermediate Appellate Court, 320 SCRA 279 (1999), we held that if rehabilitation is no longer feasible and the assets of the corporation are finally liquidated, secured creditors shall enjoy preference over unsecured creditors, subject only to the provisions of the Civil Code on concurrence and preference of credits. Creditors of secured obligations may pursue their security interest or lien, or they may choose to abandon the preference and prove their credits as ordinary claims. Those credits which enjoy preference in relation to, exclude all others to the extent of the value of the immovable or real right to which the preference refers. —Section 2248 of the Civil Code provides: Those credits which enjoy preference in relation to specific real property or real rights, exclude all others to the extent of the value of the immovable or real right to which the preference refers. 2. Insolvency Law, Act. No. 1956 as amended Gateway Electronics v Asiabank, 574 SCRA 698 Insolvency Law; The issuance of an order declaring the petitioner insolvent after the insolvency court finds the corresponding petition for insolvency to be meritorious shall stay all pending civil actions against the petitioner's property. —Gateway, having been declared insolvent, argues that jurisdiction over all claims against all of its properties and assets properly pertains to the insolvency court. Accordingly, Gateway adds, citing Sec. 60 of Act No. 1956, as amended, or the Insolvency Law, any pending action against its properties and assets must be dismissed, the claimant relegated to the insolvency proceedings for the claimant's relief. The contention, as formulated, is in a qualified sense meritorious. Under Sec. 18 of Act No. 1956, as couched, the issuance of an order declaring the petitioner insolvent after the insolvency court finds the corresponding petition for insolvency to be meritorious shall stay all pending civil actions against the petitioner's property. Same; Sec. 18 and Sec. 60 of Act No. 1956 Harmonized; Once an order of insolvency...