G. R. No. 11787 - The Sheriff of the City of Manila vs. Angel Jose Realty Corporation, Inc.

Case Summary (G. R. No. 11787)

Parties and Setting

The sheriff instituted the interpleader to require Alconcel and Carlos and Angel Jose Realty Corporation, Inc. to litigate their respective claims over the amount of P783.85. The dispute initially involved the proceeds from execution in criminal case No. 13731 and later expanded due to a separate claim for back rentals asserted by the realty corporation. The principal civil law provisions invoked were provisions on preference of credits under the Civil Code, specifically Article 2241 and Article 2244.

Factual Background

Alconcel and Carlos claimed the entire P783.85 based on a judgment rendered in criminal case No. 13731. Their claim derived from a counter-bond or surety bond they had executed in favor of Jose Romualdez.

Angel Jose Realty Corporation, Inc., in turn, claimed the P783.85 as unpaid rentals of an apartment occupied by Romualdez, corresponding to the period from July to September 30, 1955. The properties sold in execution under criminal case No. 13731 were movable properties belonging to Romualdez located at room No. 405 of the Teodorica Apartments, which Romualdez rented from the realty corporation.

After the sheriff paid the claims of Alconcel and Carlos, the amount of P783.85 remained in the sheriff’s hands. The realty corporation sought permission to intervene in the criminal case, but the request was denied. It then filed a civil case in the municipal court of Manila against Romualdez for back rentals. Upon obtaining judgment, a writ of execution issued on March 10, 1956 ordered the sheriff to deliver the P783.85 to the realty corporation.

Trial Court Proceedings and Basis of Decision

The lower court held that the credit of Alconcel and Carlos had preference over the claim of Angel Jose Realty Corporation, Inc. It reasoned that Alconcel and Carlos’ credit arose from a writ of execution in criminal case No. 13731 issued on September 10, 1955, while the realty corporation’s claim was based on a writ dated March 10, 1956. The lower court relied on Article 2244, paragraph (7) of the Civil Code. In consequence, it ordered that the disputed sum be paid to Alconcel and Carlos.

Issues on Appeal and the Realty Corporation’s Position

Angel Jose Realty Corporation, Inc. appealed. It argued that its claim arose from unpaid rentals, and that the disputed sum represented the proceeds of the sale of movables found in the rented premises. On that premise, it contended that its claim fell under Article 2241, paragraph (12) of the Civil Code, which provides that 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, are preferred, but not on money or instruments of credit.

Appellate Court’s Resolution: Preference Determined by the Nature and Source of the Funds

The Court held that the realty corporation’s contention was well founded. It relied on McMicking vs. Padern, Moreno, Jimenez and Co., 36 Phil., 987, which it found “on all fours” with the case at bar. In McMicking, the Court had recognized that although one judgment antedated another, the later judgment for rents due for the use and occupation of the building prevailed because the nature of the claim and the statutory preference controlling that claim governed payment.

Applying the same reasoning, the Court observed that although Alconcel and Carlos’ claim appeared earlier because it arose from execution in criminal case No. 13731 dated September 10, 1955, while the realty corporation’s judgment-based claim came later with a writ dated March 10, 1956, the realty corporation still had preference. The Court explained that the preference turned on the character of the fund: the P783.85 was part of the proceeds from the sale of movables located in the apartment occupied by Romualdez, and the realty corporation’s claim was for rentals for the period from July to September, 1955.

The Court further clarified that Article 2241 and not Article 2244 controlled. Article 2241 was applicable because the funds in dispute came from specific movable property of the debtor subject to preferred claims or liens. In contrast, Article 2244 applies to other property of the debtor and, therefore, did not govern the case at bar.

Legal Basis and Reasoning

The Court’s doctrinal point was that statutory preference depends not merely on chronological priority of judgments or executions, but on the legal character of the credit and the source of the disputed fund. Because the proceeds were linked to the sale of movable properties connected to the leased prem

Case Syllabus (G. R. No. 11787)

The Sheriff of the City of Manila filed an action of inter-pleader involving a disputed sum of P783.85 held in his possession.
The inter-pleader was initiated against Soledad Alconcel and Wilhelmina Carlos on one side, and Angel Jose Realty Corporation, Inc. on the other.
The controversy arose because multiple claimants asserted entitlement to the same execution proceeds that the sheriff had in hand.
The case reached the Supreme Court on appeal from the adverse judgment of the lower court.

Parties and Procedural Posture

The plaintiff was the Sheriff of the City of Manila, who sought a judicial determination of the proper recipient of the P783.85.
The defendants and claimants were Soledad Alconcel and Wilhelmina Carlos, who asserted rights arising from a criminal judgment.
The defendant-appellant was Angel Jose Realty Corporation, Inc., which asserted rights arising from unpaid rental obligations.
The lower court ruled in favor of Alconcel and Carlos, ordering the payment of the disputed amount to them.
Angel Jose Realty Corporation, Inc. appealed the lower court’s judgment to the Supreme Court.

Key Factual Allegations

The sheriff held P783.85 in his possession by virtue of a writ of execution issued in criminal case No. 13731.
Alconcel and Carlos claimed the entire P783.85 based on a judgment in criminal case No. 13731 of the Court of First Instance of Manila.
The claim of Alconcel and Carlos was anchored on a counter-bond or surety bond they executed in favor of Jose Romualdez.
Angel Jose Realty Corporation, Inc. claimed the P783.85 as unpaid rentals for an apartment occupied by Jose Romualdez, covering the period from July to September 30, 1955.
The properties sold in execution under criminal case No. 13731 consisted of movable properties belonging to Romualdez located at room No. 405 of the Teodorica Apartments, which Romualdez rented from the realty corporation.
After paying the claims of Alconcel and Carlos, the amount of P783.85 remained with the sheriff.
Angel Jose Realty Corporation, Inc. sought to intervene in the inter-pleader proceedings, but its petition was denied.
The realty corporation then filed a civil action in the municipal court of Manila against Romualdez for back rentals.
The municipal court rendered judgment in favor of the realty corporation, and a writ of execution was issued on March 10, 1956, ordering delivery of P783.85 to the realty corporation.
The lower court treated the conflicting dates of the writs as controlling under the Civil Code preference rules, favoring Alconcel and Carlos.

Claims and Legal Theories

Alconcel and Carlos asserted preference because their claim arose from the execution of the judgment in criminal case No. 13731, where the writ of execution was issued on September 10, 1955.
Angel Jose Realty Corporation, Inc. argued that its claim arose from unpaid rentals, and that the disputed sum represented proceeds connected to rental-related obligations.
The appellant contended that the governing preference provision was paragraph (12) of Article 2241 of the Civil Code, which covered credits for rent for one year upon the personal property of the lessee existing in the leased immovable and on its fruits.
Angel Jose Realty Corporation, Inc. further argued that the lower court misapplied the preference rules because the disputed funds came from the proceeds of movable property sold from the rented premises.
Alconcel and Carlos defended the lower court’s application of Article 2244, emphasizing that their execution writ predated the writ supporting the realty corporation’s claim.

Statutory Framework

The lower court applied Article 2244, paragraph (7) of the Civil Code, concluding that the