G.R. No. L-12348; May 28, 1958
MARIANO CORDOVA, petitioner, vs. HON. GREGORIO NARVASA., ET AL., respondents.

FACTS

This is a petition for certiorari to set aside two orders of respondent Judge. The orders involved the payment of two judgment credits against a common debtor, G. K. Co Bun Kim, whose only property for payment was a seventeen-door apartment building in Ermita, Manila, and the funds held by its receiver. The receivership was instituted in Civil Case No. 16221 at the instance of Natalio Enriquez to preserve the property and secure payment of his credit.
Petitioner Mariano Cordova’s judgment credit originated from a loan of P20,986.42 taken by Co Bun Kim from Concha Apacible for the improvement and preservation of the building. This loan was secured by a mortgage on the building, duly recorded. Upon Co Bun Kim’s failure to pay, Apacible filed for foreclosure (Civil Case No. 14603). Judgment was rendered on April 23, 1952, ordering Co Bun Kim to pay Apacible. A writ of execution was secured on July 7, 1952, but execution was halted due to the receivership. The mortgage in favor of Apacible was a second mortgage on the building. Natalio Enriquez, who held a third mortgage, later bought the rights under the first (Tabacalera) and second (Apacible) mortgages. On March 26, 1956, Enriquez assigned all his rights under the three mortgages to petitioner Cordova.
Meanwhile, Co Bun Kim failed to pay land rentals. Jacinta Abella, who bought the land, filed an action (Civil Case No. 19409) to collect rentals. Judgment was rendered in favor of Abella, ordering Co Bun Kim to pay rentals from January 1953 to January 1955, affirmed by the Supreme Court on February 28, 1957.
On April 8, 1957, petitioner filed motions in the receivership case, praying that the receiver be authorized to pay his judgment credit (assigned from Apacible) in preference to Abella’s judgment for rentals, arguing his mortgage credit enjoyed legal preference. Respondent Judge denied both motions, implying Abella’s judgment could be executed first. Hence, this petition.

ISSUE

Whether the judgment credit of Concha Apacible, assigned to petitioner, is preferred over the judgment credit in favor of Jacinta Abella, and if so, whether it may be executed in preference to the latter.

RULING

Yes. The Supreme Court granted the petition, set aside the respondent Judge’s orders, and made the preliminary injunction permanent.
The Court held that under Article 2244 of the Civil Code, a credit appearing in a final judgment is preferred, with preference determined by the priority of the judgment dates. Under Article 2242, a recorded mortgage credit is preferred over other unsecured credits with respect to the mortgaged property. The judgment in favor of Apacible (assigned to petitioner) was rendered on April 23, 1952, and became final and executory on July 7, 1952. It was secured by a duly recorded real estate mortgage. In contrast, the judgment in favor of Abella for back rentals became final and executory only in March 1957 and was unsecured. Therefore, petitioner’s judgment credit is prior in time and secured, giving it preference over Abella’s unsecured credit. The respondent Judge acted with grave abuse of discretion in refusing to authorize payment of petitioner’s preferred credit from the receivership funds. Costs were imposed on respondent Jacinta Abella.