Case Summary (G.R. No. L-10817-18)
Petitioner
Enrique Lopez
Respondents
• Vicente Orosa, Jr.
• Plaza Theatre, Inc.
• Luzon Surety Company, Inc.
Key Dates
• May 17 – December 4, 1946: Delivery of lumber by Lopez.
• September 25, 1946: Plaza Theatre, Inc. acquires land from Orosa for ₱6,000.
• November 16, 1946: Mortgage on land under Act No. 3344 in favor of Luzon Surety Co.
• October 25, 1947: Issuance of Original Certificate of Title No. 0-391 (Torrens).
• March 17, 1947: Deed of assignment by Orosa of 420 shares (₱42,000 value) to Lopez.
• November 12, 1947: Lopez files suit for ₱41,771.35 balance due.
• October 30, 1952: Decision of the Court of First Instance.
• February 28, 1958: Supreme Court decision.
Applicable Law
• 1935 Constitution of the Philippines
• Article 1923, Old Spanish Civil Code (refection credits)
• Act No. 3344 (registration of mortgages on non-Torrens land)
• Act No. 496 (Torrens registration)
Background Facts
Lopez agreed to furnish lumber on Orosa’s assurance of personal liability and payment on demand. He delivered materials totaling ₱62,255.85 but received only ₱20,848.50, leaving a balance of ₱41,771.35. Plaza Theatre, Inc. built the theatre on land acquired from Orosa. Orosa and the corporation later secured a ₱30,000 bank loan, mortgaging the land and building with Luzon Surety Co. as surety and mortgagee. The mortgage was registered pre-Torrens, but omitted when the property entered the Torrens System.
Procedural Posture
Lopez annotated a notice of lis pendens and sued Orosa and the corporation for the unpaid balance, praying for joint and several liability, sale of the theatre property, or sale of Orosa’s assigned shares. Defendants denied joint liability, contended the materials were on Orosa’s personal account, and asserted that stock shares were collateral limiting Lopez’s recovery. Luzon Surety Co. petitioned for annotation of its mortgage under Land Registration Case No. 17.
Trial Court and Court of Appeals Findings
Both courts held:
• Orosa and Plaza Theatre, Inc. were jointly liable for ₱41,771.35 plus interest and costs.
• Lopez acquired a materialman’s lien on the building alone, not on the land.
• The mortgagee’s interest in the land was superior to Lopez’s lien.
• The Torrens title was corrected to show Luzon Surety Co.’s encumbrance, subject to Lopez’s lien on the building.
Issues on Appeal
- Whether a materialman’s lien for construction materials extends to both the building and the land.
- Whether Lopez’s lien on the land is superior to the Luzon Surety Co. mortgage.
Supreme Court Ruling
Affirmed. Costs against appellant.
Rationale on Scope of Lien
Article 1923 grants preference to refection credits “with respect to the real estate upon which the refection was made,” but the term “real estate” must be construed in light
...continue readingCase Syllabus (G.R. No. L-10817-18)
Procedural History
- Two related actions consolidated on appeal: Civil Case No. 4501 (R-57) in the Court of First Instance of Batangas and Land Registration Case No. 17 GLRO (Rec. No. 296).
- November 12, 1947: Enrique Lopez files suit for unpaid lumber deliveries and enforcement of lien or sale of collateral.
- October 30, 1952: Trial court rules for Lopez—joint liability of Orosa and Plaza Theatre, Inc.—and grants Luzon Surety’s petition to annotate its mortgage.
- December 23, 1952: Trial court denies Lopez’s motion to modify ruling on solidarity of obligation and scope of lien.
- Court of Appeals affirms; Lopez appeals to the Supreme Court.
Factual Background
- Enrique Lopez, owner of Lopez-Castelo Sawmill in Balayan, Batangas, supplies lumber for the construction of Plaza Theatre from May 17 to December 4, 1946.
- Verbal agreement: Vicente Orosa, Jr. (promoter and treasurer of prospective corporation) assures personal liability; sale on demand, not cash delivery.
- Total cost of lumber: ₱62,255.85; payments made: ₱20,848.50; unpaid balance: ₱41,771.35.
Properties and Encumbrances
- Theatre erected on a 679.17 sq m. parcel formerly owned by Orosa, Jr.
- September 25, 1946: Plaza Theatre, Inc. buys land for ₱6,000.
- November 1946: Corporation secures PNB loan of ₱30,000 with Luzon Surety Co. as surety; mortgage on land and building registered under Act No. 3344.
- October 25, 1947: Original Certificate of Title No. O-391 issued under Torrens Act 496 without mortgage annotation.
- Lopez annotates lis pendens on land and building.
Plaintiff’s Claims and Prayers
- Demand for payment of ₱41,771.35 with legal interest from filing of complaint.
- In default: public sale of the theatre building and land (OCT No. O-391) with proceeds applied to debt.
- Alternatively: sale of 420 shares of Plaza Theatre, Inc. assigned by Orosa as collateral.
- Other reliefs warranted by circumstances.