Lex Rex Ph

Lopez vs. Orosa Digest

“Material Man’s Lien Does Not Extend to Land”

Petitioner FILED a petition against defendants on the grounds that as a creditor/material man of the building, he has the superior lien to both building and lot.

Facts

  • Lopez delivered lumber to Orosa worth P62,255 for the construction of Plaza Theatre. Orosa only paid P20,848, with a balance of P41,771.35.
  • Because of Lopez’s pressing, Orosa told Corporation Pres Rustia to mortgage theatre to pay Lopez
  • However, the theatre and the lot were already mortgaged at PNB to secure a P30,000 loan with Luzon Surety Company as surety
  • The building (theater) now is now used as mortgage for two separate creditors
  • Orosa then promised Lopez to assign P42,000 worth of stocks of his theatre to pay Lopez
  • But when it was still unsettled, Lopez filed with CFI Batangas praying
    • For Orosa to pay him with legal interest either by selling his shares or sell the land and theatre building
    • Lopez also filed for “lis pendens” for O-391

Lopez

As materials supplied of the building, he has the superior lien to both the house and lot.

RTC: Your right is superior to the building only

CA and SC: Affirmed RTC

Orosa

• Denied materials were delivered to him
• Moviehouse not changed by the lien
• 420 shares not collaterals but direct security

  • Luzon Surety Company upon knowledge of the Lis Pendens and registration to Torrens system, filed for petition for review on OCT-391
    • Aim: To annotate the rights of the surety company
  • Lopez opposed: “Mine is a preferred lien. Luzon Surety is guilty of negligence. Annotation must be in my favor.”

THE RTC RULED: Favored Lopez

  • Defendants jointly liable for unpaid cost of materials
  • But Lopez (p) lien is only confined to the building, not the land
  • His right is superior to the building, but to the land, it is the Surety’
  • Article 1923 of Old Civil Code: “Refection credits preferred” refers only to buildings

But Lopez: wants his lien to extend to the lot

ISSUE 1: Does a material man’s lien on the building extend to land? No

Though real property refers to building and land, lien is only limited to such immovable, in this case, the building only.

Is the material man’s lien superior to surety company on both land and building? No

Article 1923 “Preferred credits” – are for those used for refection (reparation/reestablishment) of the real estate that are not registered.

Ponente: Felix

SUPREME COURT RULING: CA decision affirmed

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