G.R. No. L-2698

FACTS:
Sheriff J.J. Peterson initiated an interpleader action concerning funds (P3,632.62) from the levy on the property of judgment debtor Fulgencio Tan Tongco. Three judgment creditors asserted claims: (1) Findlay & Co. (first to file suit), (2) Charles P. Newberry (first to deliver an execution to the sheriff), and (3) the American Bank, assignee of F. Theodore Rogers (first to obtain judgment). The trial court ordered the funds distributed to Newberry, prioritizing the creditor who first placed execution in the sheriff’s hands.

ISSUE:
What is the proper order of preference among competing judgment creditors in the distribution of proceeds from an execution sale?

RULING:
The Supreme Court reversed the trial court’s decision. The order of preference is governed by Article 1924 of the Civil Code, which classifies judgment creditors as third-class preferred creditors and ranks them according to the “age” or priority in date of their respective judgments. The American Bank’s judgment, being the oldest, is entitled to full preference. The Court held that no lien is created by the mere filing of a complaint, rendition of judgment, issuance of execution, or levy under Philippine law at the time. The right of a judgment creditor is limited to the preference established by Article 1924 in distribution proceedings. The funds, less sheriff’s fees, were ordered paid to Theodore Rogers as the Bank’s assignee.