OPINION & ORDER

Brian K. Tester, U.S. Bankruptcy Judge.

Before this Court is Co-Defendant, United States of America's (hereinafter, "IRS") Motion for Partial Summary Judgment [Dkt. No. 48], Debtor, Cesar I. Vargas Quiñónez's (hereinafter, "Debtor") Motion for Summary Judgment [Dkt. No. 55], Co-Defendant, Treasury Department of the Commonwealth of Puerto Rico's (hereinafter, "Hacienda") Motion Requesting Entry of Summary Judgment [Dkt. No. 57], Hacienda's Statement of Facts in Support of Motion for Summary Judgment [Dkt. No. 58], Debtor's Opposition to the United States' Motion for Partial Summary Judgment [Dkt. No. 65], Debtor's Opposition to the Puerto Rico Department of Treasury's Motion for Partial Summary Judgment [Dkt. No. 68], IRS' Opposition to Debtor's Motion for Summary Judgment and Reply on United States' Motion for Summary Judgment [Dkt. No. 69], and Debtor's Reply to the United States' Opposition to Debtor's Motion for Summary Judgment [Dkt. No. 80].

I. Procedural Background

Debtor filed a chapter 11 voluntary petition for bankruptcy relief on November 14, 2014. [Dkt. No. 1, related legal case 14-09404]. Debtor owns in fee simple absolute six (6) parcels of real property (hereinafter "Real Properties") in and around the municipality of San Sebastian. Debtor's Real Properties are: Parcel No. 18455; Parcel No. 25537; Parcel No. 25539; Parcel No. 26489; Parcel No. 25538; and Parcel No. 24093. Debtor's Real Properties are encumbered by several liens in favor of the IRS and Hacienda (the "Defendants" collectively). Nevertheless, pursuant to a recent appraisal report, these Real Properties have a combined market value of $360,500.00. Of these six (6) Real Properties, all but one, Land Parcel No. 26489, are encumbered with cross-collateralized mortgages amounting to $355,000.00 in favor of creditor Condado 3, LLC, including principal balance and interest. The Debtor also holds chattel property (hereinafter "Chattel Property") with a listed value of $33,765.00. Debtor seeks to strip down, strip off and void secured creditors' liens to the extent they are unsecured by equity in the underlying Real Properties.

Debtor owes Puerto Rico income taxes for tax years 2002, 2003, 2004 and 2005. Hacienda has filed tax liens upon all of Debtor's properties, the first of which was filed March 23, 2005. Debtor owes federal income taxes to the IRS corresponding to tax years 2002, 2003, 2005, 2006, 2007, 2008, 2009 and 2010, and federal insurance contributions act ("FICA") taxes for seven (7) quarterly periods between 2004 and 2006. The IRS has filed tax liens upon all of Debtor's properties, the first of which was filed May 14, 2007.

On December 5, 2014, IRS filed proof of claim 4-1 and filed Claim No. 4-2 on October 7, 2015, where the IRS claimed a total of $155,184.81 of which $109,017.55 was claimed as a secured debt. On February 20, 2015, the State Insurance Fund Corporation (hereinafter, "SIFC") filed a proof of claim, in which it claimed $2,108.46 as a general unsecured claim. [Claim No. 5]. On May 11, 2015, Hacienda filed a claim for a total amount of $242,287.68 of which $185,302.98 was claimed as a secured debt. [Claim No. 7-1]. The liens which encumber the Debtor's Real Properties were recorded pursuant to the Mortgage and Property Registry Act of 1979, P.R. Laws Ann. T. 30 §§ 2001 et seq. This statute was set aside and replaced by the Real Property Registry of Puerto Rico Act of 2015.

Debtor has yet to confirm a plan and the bankruptcy case is being held in abeyance until the present adversary procedure concludes. All three parties have stipulated to all the material facts underlying the controversy, leaving the case ripe for decision as to the legal issues presented.

II. Standard of Review

The role of summary judgment is to look behind the facade of the pleadings and assay the parties' proof in order to determine whether a trial is required. Under Fed.R.Civ.P., Rule 56(c), made applicable in bankruptcy by Fed.R.Bankr.P., Rule 7056, a summary judgment is available if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c); Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 4 (1st Cir. 2010). See also, Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). As to issues on which the movant, at trial, would be compelled to carry the burden of proof, it must identify those portions of the pleadings which it believes demonstrates that there is no genuine issue of material fact. In re Edgardo Ryan Rijos & Julia E. Cruz Nieves v. Banco Bilbao Vizcaya & Citibank, 263 B.R. 382, 388 (1st Cir. BAP 2001).

A fact is deemed "material" if it could potentially affect the outcome of the suit. Borges, 605 F.3d at 5. Moreover, there will only be a "genuine" or "trial worthy" issue as to such a "material fact ... if a reasonable fact-finder, examining the evidence and drawing all reasonable inferences helpful to the party resisting summary judgment, could resolve the dispute in that party's favor." Id. at 4. The court must view the evidence in the light most favorable to the nonmoving party. Alt. Sys. Concepts, Inc. v. Synopsys, Inc., 374 F.3d 23, 26 (1st Cir. 2004). Therefore, summary judgment is "inappropriate if inferences are necessary for the judgment and those inferences are not mandated by the record." Rijos, 263 B.R. at 388.

Although this perspective is favorable to the nonmoving party, she still must demonstrate, "through submissions of evidentiary quality, that a trial worthy issue persists." Iverson v. City Of Boston, 452 F.3d 94, 98 (1st Cir. 2006). Moreover, "[o]n issues where the non Movant bears the ultimate burden of proof, [she] must present definite, competent evidence to rebut the motion." Mesnick v. Gen. Elec. Co., 950 F.2d 816, 822 (1st Cir.1991). These showings may not rest upon "conclusory allegations, improbable inferences, and unsupported speculation." Medina-Muñoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir.1990). The evidence offered by the non-moving party "cannot be merely colorable, but must be sufficiently probative to show differing versions of fact which justify a trial." Id.; See also Horta v. Sullivan, 4 F.3d 2, 7-8 (1st Cir. 1993) (holding that the materials attached to the motion for summary judgment must be admissible and usable at trial). "The mere existence of a scintilla of evidence" in the nonmoving party's favor is insufficient to defeat summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); González-Pina v. Rodríguez, 407 F.3d 425, 431 (1st Cir. 2005).

III. Legal Analysis

A. Hacienda

Hacienda argues:

Motion Requesting Entry of Summary Judgment [Dkt. No. 57, pgs. 5 & 6].

On the other hand, Debtor's Motion for Summary Judgment [Dkt. No. 55] requests this court to strip off all of Hacienda's liens. First, Debtor argues that Land Parcel No's. 18455, 25537, 25539, 25538 and 24093 have zero equity available to Co-Defendants, as their entire value is cross-collaterized and the mortgagor's lien primes over all other liens encumbered in these five properties.

Second, regarding land parcel No. 26489, which is the only one not encumbered by mortgage liens, Debtor requests this court to strip Hacienda's March 23, 2005 lien, as the lien's attachment period has elapsed. Furthermore, Debtor requests the court to strip all liens upon said Real Property according to Section 506 of the United States Bankruptcy Code (hereinafter, "Code"). In his motions to this court, Debtor pinpoints Real Property No. 26489's $25,000 market value and acknowledges its availability to Co-Defendants. Debtor argues:

Motion for Summary Judgment [Dkt. No. 55, pg. 15].

Third, Debtor argues that Hacienda's claims are partially time bared, as they belong to tax years 2002, 2003, 2004 and 2005.

Complaint [Dkt. No. 1, pg. 15].

Section 506 of the Code states that:

Moreover,

As Debtor asserts, the process of voiding a lien is called "lien-stripping" and can be done in two different ways: strip down and/or strip off. A strip down "occurs when an under-secured creditor's lien is reduced to the remaining equity value in its collateral after superior liens are deducted; whereas, strip off occurs when a wholly under-secured creditor's lien is removed from the collateral in which there is no equity." In re Johnson, 386 B.R. 171, 173 (Bankr. W.D.Penn. 2008)

There being no equity available to Hacienda on Counts I, II, III, V and VI of the Complaint, this court GRANTS Debtor's request to strip off Hacienda's tax liens over Real Properties numbered 18455 (Count I), 25537 (Count II), 25539 (Count III), 25538 (Count V), and 24093 (Count VI).

Second, in order for Hacienda to able to collect from taxpayers, they must first asses a tax deficiency, for which Hacienda has four (4) years. See 13 L.P.R.A. § 33005. After the assessment, as per statutory law, Hacienda is granted a collection period "by means of demand for payment proceedings or court proceedings, insofar these are filed within seven (7) years following the date of tax assessment." See 13 L.P.R.A. § 33006.

Pursuant to the aforementioned Internal Revenue Code sections and the undisputed facts set forth by the parties herein, Hacienda acted according to law and instituted a demand for payment proceeding within the statutorily prescribed seven-year term by filing a tax lien on March 23, 2005, on all the Real Properties to secure collection over those debts in the amount of $54,537.76, as proscribed by 30 LPRA §§ 1841-1847. No other lien was filed by Hacienda until 2010, by which time the SIFC and the IRS had already filed their liens respectively.

As the Debtor argues, when it comes to the attachment of liens to property, Puerto Rico's recording statute is a "race-notice" statute. See United States v. V & E Engineering, 819 F.2d 331, 334 (1st Cir. 1987). Pursuant to Article 53 of the Mortgage and Property Registry Act, liens have a preferential ranking according to their dates of presentment. P.R. Laws Ann. T. 30 § 2256. This article incorporates the prior in tempore, potior in iure legal maxim (first in time, first in right). Therefore, the recording of subsequent liens only creates "junior" claims as to the prior or more "senior" claims, i.e. the filing of a subsequent lien by an already existing lien holder does not toll or extend the attachment of any prior lien.

By March 23, 2005, Real Properties numbered 18455, 25537, 25539, 25538 and 24093 (Counts I, II, III, V, and VI, respectively) had liens or inscriptions in the property registry, whereas Real Property numbered 26489 (Count IV) had none. Thus, the filing of a tax lien on March 23, 2005, granted Hacienda a "junior lien" as to Counts I, II, III, V, and VI and a priming lien upon Count IV. Subsequent liens were filed by the SIFC and the IRS before Hacienda filed another lien.

Tax liens are valid for a period of six (6) years as evidenced by 30 L.P.R.A. § 2468 which states in relevant part that "[p]roperty Registrars shall cancel notations of tax embargoes six years after the date of the respective entry, at the request of a party, by notarized affidavit." This court agrees with Debtor as to the nature of this six-year term. Debtor argues that "prescription requires a legal relationship between a debtor and a creditor as there are two separate patrimonies (or estates). Industrial Equip. Corp. v. Builders Inc., 108 D.P.R. 290, 297 (1979). ... Whereas caducity time limitations occur when optional rights are involved, where a statute states a term for a party to execute a specific act that does not require a credit transaction." Given the nature of the tax embargo, "only Hacienda, as the lien holder, has the power and the option to execute and foreclose on the lien." Dkt. No. 68 at p. 7. Consequently, the statute of limitations of tax embargoes must be classified as a "caducity" term, meaning that it "(1) extinguishes the obligation once the period has elapsed; (2) admits no interruption; (3) can be raised as a defense by the court ex-officio judicis; and (4) begins running irrespective of whether the potential plaintiff has discovered the facts needed to support the claim." Fed. Deposit Ins. Corp. v. Arrillaga-Torrens, 212 F.Supp.3d 312, 333 (D.P.R. 2016) (citing Ruiz v. Ambush, 25 F.Supp.3d 211, 214 (D.P.R. 2014)).

As a result, Hacienda's Count IV priming tax lien filed March 23, 2005, does not allow any tolling and as such prescribed on March 23, 2011. Because Hacienda did not file another lien until after the SIFC and the IRS filed theirs, as per the rules of "race-notice" statutes, Hacienda's priming lien lost its status, and the next in line becomes the priming lien holder — the IRS.1

In addition, given that Real Property numbered 26489 only has a market value of $25,000 and the IRS' lien is for an amount higher than $25,000, Hacienda is wholly unsecured and this court GRANTS Debtor's request to strip off Hacienda's tax liens over Real Property numbered 26489 (Count IV).

Third, as to Hacienda's collection period's statute of limitations, it is important to reiterate the genesis from which all terms begin to count — the assessment:

§ 33005 Limitations for assessment and collection, 13 L.P.R.A. § 33005

After the final assessment, Hacienda is allowed a period of seven (7) years to demand payment:

§ 33006 Exceptions to the prescriptive term, 13 L.P.R.A. § 33006

Nonetheless, no collection effort can be carried out after ten (10) years of the final assessment:

§ 33006 Exceptions to the prescriptive term, 13 L.P.R.A. § 33006

The exact date(s) of the assessment(s) were not included by Debtor or Hacienda in their filings. Without these dates, the court is unable to determine whether or not Hacienda's claims are partially time barred. That being a material fact in dispute, the court orders an evidentiary hearing as to this issue only.

B. IRS

The IRS's arguments in its Motion for Partial Summary Judgment [Dkt. No. 48] are two fold (1) this court lacks jurisdiction to adjudicate the issue at bar, (2) stripping down or stripping off the liens of the United States prior to confirmation is not permitted by the Code in chapter 11 cases.

In promoting the argument for this court's lack of jurisdiction to modify the United States' security interests prior to confirmation, the IRS assumes "that the Debtor seeks to strip the liens pursuant to 11 U.S.C. § 1123(b)(5)" and that as a result, Debtor cannot sue the IRS because "the United States has not waived its sovereign immunity with respect to § 1123 of the Bankruptcy Code". Dkt. No. 48, p. 2. As a general rule, "sovereign immunity is a jurisdictional bar to suit against the United States." In re Knapp, 294 B.R. 334, 336 (W.D. Wash. 2003) (citing Russell v. United States Dep't of the Army, 191 F.3d 1016, 1019 (9th Cir.1999)).

Furthermore, and regardless of this court's determination on jurisdiction, the IRS argues that this court should deny Debtor's request for relief based on the fact that a federal tax lien is a unitary lien that cannot be voided based on the value of individual pieces of collateral and on precedent prohibiting lien-stripping until authorized by the Code.

To these allegations, Debtor responded by filing its Opposition to the United States Motion for Partial Summary Judgment [Dkt. No. 65]. Debtor argues:

To Debtor's opposition, the IRS further replied in their Opposition to Debtor's Motion for Summary Judgment and Reply on United States' Motion for Summary Judgment [Dkt. No. 69]:

This court has jurisdiction over core proceedings, which include the "determinations of the validity, extent, or priority of liens." 28 U.S.C. § 157(b)(2)(K). "`Validity' means the existence or legitimacy of the lien itself, `priority' means the lien's relationship to other claims to or interests in the collateral, and `extent' means the scope of the property encompassed by or subject to the lien. ..." In re King, 290 B.R. 641, 647 (Bankr. C.D. Ill. 2003). This being a proceeding where the extent and priority of liens is being contested, this court finds itself in the position of having jurisdiction over the present adversary proceeding. The court does not find IRS' argument about the court's lack of jurisdiction based on their sovereign immunity compelling. The United States waived its sovereign immunity by filing proof of claim number 4. Section 106(b) of the Bankruptcy Code states:

The operative section allowing Debtor to request liens to be stripped from the estate's property is Section 506 of the Code, for which the IRS' sovereign immunity is abrogated. See 11 U.S.C. § 106. This court acknowledges that it is Debtor's option to "cram down" its creditors through the plan, as argued by the IRS. See 11 USC § 1123(b)(5). However, this court does not find any statutory authority or case law making this latter option mandatory. Thus, there is no impediment to request liens to be stripped through Section 506 via the present adversary proceeding.

Having established this court's jurisdiction over the present matter, the court now moves to explain the lien voiding powers provided by the Code:

In re Johnson, 386 B.R. 171, 173-74 (Bankr. W.D. Pa. 2008), aff'd sub nom. I.R.S. Dep't of Treasury of U.S. v. Johnson, 415 B.R. 159 (W.D. Pa. 2009)

Moreover, this general principle is not precluded by the decision in Dewsnup, as the IRS claims

Id.

The aforementioned case clearly rejects Dewsnup and allows for lien stripping in chapter 11 bankruptcy cases. The decision in Dewsnup was motivated by one principle: to avoid the potential windfall on a debtor as a result of a price increase on the property after the bankruptcy filing. However, under reorganization schemes, such as Chapter 11,

Id.

Nevertheless, even when the general rule allows for the stripping of under-secured liens in chapter 11 cases, as the IRS suggests in their Motion for Partial Summary Judgment, IRS tax liens can be unitary. Unitary or blanket liens cannot be voided based on the value of individual pieces of collateral. A unitary or blanket lien is defined as a lien indivisible in nature that cannot be broken down on a property-by-property basis that attaches to both real and personal property. They are regarded as "inviolable so long as there is equity value in any of the collateral subject to the lien." Id. 26 U.S.C. § 6321 provides for their existence:

However 26 U.S.C. § 6323 imposes requirements for a tax lien to obtain such status. Said section of the United States Internal Revenue Code (hereinafter, "IRC") establishes:

Subsection (f) of the aforesaid IRC section details:

No lien filed by the IRS meets the above stated criteria. They were either filed at the Property Registry or at the United States District Court for the District of Puerto Rico (hereinafter, "USDC"). In no instance does the IRS provide evidence of complying with section 6323(f)(1)(A)(ii) or subsection 6323(f)(1)(B).

As a result, the IRS' liens attach only to real property and never obtained the unitary or blanket lien status the IRS claims. Without said status, the court sees no merit in any further analysis of IRS' claim. The court orders the stripping down of the $31,961.45 tax lien filed May 14, 2007, to $25,000, and the stripping off of all other liens filed after the referenced date, because they are wholly under secured.

IV. Conclusion

It has been a long held pillar of the Code to provide a procedure through which debtors can come out of bankruptcy with a "clean slate" without the pressures of pre-existing debt. Many times, the proper mechanism to accomplish said goal is by lien stripping. That is the case with Debtor in the adversary at bar. Not removing all unsecured liens from Debtor's Real Properties would certainly go against the "clean slate" principle envisioned by the Code.

WHEREFORE, it is hereby ORDERED, ADJUDGED and DECREED that the relief requested by the Debtor in his Motion for Summary Judgment is GRANTED, in part.

It is FURTHER ORDERED that:

SO ORDERED