CONCURRENCE AND PREFERENCE OF

CREDITS
(ARTICLES 2236-2251)
CONCURRENCE OF CREDITS
Implies the possession by two or more creditors of equal
rights or privileges over the same property or all the property of a debtor

PREFERENCE OF CREDIT
Right held by a creditor to be preferred in the payment of his claim above others out of the debtor’s assets

NATURE AND EFFECT OF PREFERENCE

1. A preference is an exception to the general rule. For this reason, the law as to preferences is
strictly construed.
2. Preference doesn’t create an interest in property. it creates simply a right of one creditor to be
paid first the proceeds of the sale of property as against another creditor.
3. The law doesn’t give the creditor who has a preference a right to take the property or sell it as against
another creditor. It is not a question who takes or sells, it is one of the application of the proceeds after the
sale—of payment of the debt
4. The right of preference is one which can be made only by
being asserted and maintained. If the right claimed is not asserted or maintained, it is lost.
5. Where a creditor released his levy, leaving the property in
possession of the debtor, thereby indicating that he didn’t
intend to press his claim further as to that specific property, after that act, his claim to preference, if
one had been asserted y him, could not exist because he had ceased to contest.

WHEN RULE OF PREFERENCE APPLICABLE

 Apply only where two or more creditors have separate and

distinct claims against the same debtor who has an insufficient property
 Is applicable when the debtor is insolvent—having more liabilities than his assets
 It is a matter of necessity and log that the question of preference should arise only when the
debtor’s assets are insufficient to pay his debts in full

SUMMARY AS TO ORDER OF PREFERENCE

1. Preferred lien on specific immovables

2. Preferred lien on specific movables
3. Special preferred credits
4. Distribute pro-rata to creditors without preference