Classification of Credits
Classification of Credits
Art. 2241. With reference to specific movable property of the debtor, the
following claims or liens shall be preferred:
(1) Duties, taxes and fees due thereon to the State or any subdivision
thereof;
(2) Claims arising from misappropriation, breach of trust, or malfeasance by
public officials committed in the performance of their duties, on the
movables, money or securities obtained by them;
(3) Claims for the unpaid price of movables sold, on said movables, so long
as they are in the possession of the debtor, up to the value of the same; and
if the movable has been resold by the debtor and the price is still unpaid, the
lien may be enforced on the price; this right is not lost by the immobilization
of the thing by destination, provided it has not lost its form, substance and
identity; neither is the right lost by the sale of the thing together with other
property for a lump sum, when the price thereof can be determined
proportionally;
(4) Credits guaranteed with a pledge so long as the things pledged are in the
hands of the creditor, or those guaranteed by a chattel mortgage, upon the
things pledged or mortgaged, up to the value thereof;
(5) Credits for the making, repair, safekeeping or preservation of personal
property, on the movable thus made, repaired, kept or possessed;
(6) Claims for laborers' wages, on the goods manufactured or the work done;
(7) For expenses of salvage, upon the goods salvaged;
(8) Credits between the landlord and the tenant, arising from the contract of
tenancy on shares, on the share of each in the fruits or harvest;
(9) Credits for transportation, upon the goods carried, for the price of the
contract and incidental expenses, until their delivery and for thirty days
thereafter;
(10) Credits for lodging and supplies usually furnished to travellers by hotel
keepers, on the movables belonging to the guest as long as such movables
are in the hotel, but not for money loaned to the guests;
(11) Credits for seeds and expenses for cultivation and harvest advanced to
the debtor, upon the fruits harvested;
(12) Credits for rent for one year, upon the personal property of the lessee
existing on the immovable leased and on the fruits of the same, but not on
money or instruments of credit;
(13) Claims in favor of the depositor if the depositary has wrongfully sold the
thing deposited, upon the price of the sale.
In the foregoing cases, if the movables to which the lien or preference
attaches have been wrongfully taken, the creditor may demand them from
any possessor, within thirty days from the unlawful seizure.
The order in this article is NOT important. What is important is that:
a) Those credits which enjoy preference with respect to specific
movables exclude all others to the extent of the value of the
personal property to which the preference refers. (Art. 2246)
b) If there are two or more credits with respect to the same specific
movable property, they shall be satisfied pro rata, after the
payment of duties, taxes and fees due the State or any subdivision
thereof. (Art. 2247)
c) Duties, taxes ,and fees due the Government enjoy priority only
when they are with reference to a specific movable rproperty, under
Art. 2241 (1) or immovable property under Art. 2242 (1).
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:
(1) Taxes due upon the land or building;
(2) For the unpaid price of real property sold, upon the immovable sold;
(3) Claims of laborers, masons, mechanics and other workmen, as well as of
architects, engineers and contractors, engaged in the construction,
reconstruction or repair of buildings, canals or other works, upon said
buildings, canals or other works;
PROBLEM:
Debtors FINANCIAL STATEMENT
ASSETS:
House and Lot
Car
Jewelries
LIABILITIES:
P5M
1M
.5M
P3M
P6.5M
.5M
6M
9.5M
P3M
What are the preferred credits? How much free property does Debtor have?
With respect to the house and lot, the Real Estate Mortgage is Preferred. With respect to
the car, the Chattel Mortgage is Preferred.
To determine the value of the Debtors free property, pay-off the preferred claims first:
House and Lot
Less: REM
P5M
P3M
Excess
P2M
Car
P1M
Less: CM
.5M
Excess
P.5M
Free Property:
Jewelries
P.5M
2M
.5M
P3M
The other creditors for P6M will then line up for this portion according to the order of priority
established in Art. 2244.