Case Digest (G.R. No. L-10817-18) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Enrique Lopez vs. Vicente Orosa, Jr. and Plaza Theatre, Inc. (103 Phil. 98, Feb. 28, 1958), petitioner Enrique Lopez, a Balayan, Batangas sawmill operator, agreed in May 1946 to supply lumber for the construction of the Plaza Theatre upon the personal assurance of respondent Vicente Orosa, Jr. that payment would be on demand and that he would be personally liable. From May 17 to December 4, 1946, Lopez delivered lumber valued at ₱62,255.85, of which only ₱20,848.50 was paid, leaving ₱41,771.35 unpaid. The theatre was erected on land originally owned by Orosa and sold to Plaza Theatre, Inc. on September 25, 1946, for ₱6,000. Unbeknownst to Lopez, the corporation had obtained a ₱30,000 loan from the Philippine National Bank, secured by a mortgage over the land and building in favor of Luzon Surety Company, registered under Act No. 3344 on November 16, 1946, but omitted in the Torrens registration of October 25, 1947. Failing payment, Lopez accepted an assignment on March 17, 19 Case Digest (G.R. No. L-10817-18) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Business Context
- Enrique Lopez – resident of Balayan, Batangas, operating as Lopez-Castelo Sawmill, supplier of lumber.
- Vicente Orosa, Jr. – resident of Batangas; promoter and treasurer of Plaza Theatre, Inc., a corporation formed October 14, 1946, to build and operate a movie theatre on land acquired September 25, 1946 for ₱6,000 (679.17 m²).
- Verbal Agreement and Deliveries
- May 1946–Dec. 4, 1946: Lopez agreed, at Orosa’s behest, to supply lumber on credit (payment on demand), with Orosa’s personal guaranty.
- Total lumber cost: ₱62,255.85; payments received: ₱20,848.50; unpaid balance: ₱41,771.35.
- Collateral and Mortgage Transactions
- Deed of Assignment (Mar. 17, 1947): Orosa assigned his 420 shares (₱100 par value each; total ₱42,000) in Plaza Theatre, Inc. as security for Lopez’s claim.
- Bank Loan and Mortgage (Nov. 16, 1946): Plaza Theatre, Inc. borrowed ₱30,000 from Philippine National Bank; Luzon Surety Co. acted as surety; the corporation mortgaged the land and building as counter-security under Act No. 3344.
- Torrens Registration (Oct. 25, 1947): Land registered under Act 496 (OCT No. O-391) without reference to the Luzon Surety mortgage; notice of lis pendens by Lopez was annotated afterwards.
- Trial Court Proceedings
- Complaint (Nov. 12, 1947): Lopez sued Orosa and Plaza Theatre, Inc. in CFI Batangas (Civil Case No. 4501/R-57) for ₱41,771.35 plus interest; sought materialman’s lien and public auction of the land, building, or assigned shares.
- Defenses by Orosa: asserted personal purchase, no joint liability with the corporation, shares pledged as collateral conferring a deficiency-exemption.
- Defenses by Plaza Theatre, Inc.: denied any lien agreement, contended materials were sold in good faith, argued loss of rights for unclaimed materials, and that corporation had no pre-incorporation obligations.
- Luzon Surety Co.: petitioned Land Registration Court (Land Registration Case No. 17) to annotate its mortgage within one year of Torrens title issuance; Lopez opposed, claiming his lien was preferred.
- Decisions Below
- Trial Court (Oct. 30, 1952):
- Held Orosa and Plaza Theatre, Inc. jointly liable for ₱41,771.35; recognized a materialman’s lien on the building only (not the land); declared that lien superior to Luzon Surety’s mortgage on the structure; granted annotation of the mortgage subject to Lopez’s lien.
- Ordered payment within 90 days or sale of assigned shares; denied joint obligation as solidary and extension of lien to land.
- Court of Appeals: affirmed the trial court in toto.
Issues:
- Whether a materialman’s lien under Article 1923 of the Spanish Civil Code extends to the land on which the building is erected, or is confined to the building alone.
- Whether the materialman’s lien on both building and land is superior to a previously registered mortgage executed in favor of the Luzon Surety Company.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)