Case Brief: Lopez v. Orosa et al

G.R. Nos. L-10817-18  February 28, 1958

ENRIQUE LOPEZ, petitioner,

vs.

VICENTE OROSA, JR., and PLAZA THEATRE, INC., respondents.

Facts:

After agreeing to make an investment in Orosa’s theatre business and his assurance that he would be personally liable for any account that the said construction might incur, Lopez delivered the lumber which was used for the construction of the Plaza Theatre.  But of the total cost of the materials amounting to P62,255.85, Lopez was paid only P20848.50.

Plaza Theatre was erected on a piece of land formerly owned by Orosa, and was acquired by the corporation.  As Lopez was pressing Orosa for payment of remaining unpaid obligation, the latter promised to obtain a bank loan by mortgaging the properties of Plaza Theatre.  Unknown to Lopez, the corporation already got a loan from a bank with Luzon Surety Company as surety, and the corporation in turn executed a mortgage on the land and building in favor of said company as counter-security.

Persistent demand from Lopez caused Orosa to execute an alleged “deed of assignment” of his 480 shares of stock of Plaza Theatre, at P100 per share; and as the obligation still remain unsettled, Lopez filed a complaint against Orosa and Plaza Theatre Inc, praying that xxx in case defendants fail to pay, the building and land owned by corporation be sold at public auction, or the shares of the capital stock be sold, and the proceeds thereof be applied to said indebtedness.

As a defense, Orosa contended that the shares of stocks were personal properties and cannot be made to cover and satisfy the obligation.  it was thus prayed that he be declared exempted from payment of deficiency in case the proceeds from the sale of properties are not enough.

The surety company, upon discovery that the land was already registered, file a petition to annotate the rights and interests of the surety company over the said properties, which was opposed by Lopez who asserted that he has preferred lien over the properties.

The two cases were heard jointly, and lower court held that Orosa were liable for the unpaid balance of the cost of lumber used in the construction, and Lopez thus acquired materialman’s lien over it.  In making the pronouncement that tyhe lien was merely confined to the building and did not extend to the land where it was built, the trial jduge took into consideration that xxx codal provisions specifying that refection credits are preferred could refer to buildings which are also classified as real properties upon which the refaction was made.  Orosa were thus required to xxx with respect tohe building, said mortgage was subject to materialmen’s lien in favor of Lopez.

Lopez tried to secure a modification of decision in so far as it declared that lien did not extend to the land, but was denied by court.  Hence, the appeal.

Issue:

Whether a materialmen’s lien for the value of materials used in the construction of building attaches to said structure alone, and does not extend to the land on which building is adhered to.

Held:

Yes.  Such lien attaches to structure alone, and does not extend to the land where the building is.

In view of employment of the phrase, “real estate or immovable property”, and in as much as said provision does not contain any specification delimiting the lien to the building, said article must be construed as to embrace both the land and building or the structure adhering thereto.  SC cannot subscribe to this view, for while it is true that real estate connotes land and building constructed thereon, it is obvious that the inclusion of the building, separate and distinct from the land, in the enumeration of what may constitute real properties could mean only one thing – that the building is by itself an immovable property.  Moreover, in view of the absence of any specific provision of law to the contrary, a building is an immovable property, irrespective of whether or not said structure and the land on which it is adhered to belong to the same owner.

A close examination of the provision of the Civil Code reveals that the law gives preference to unregistered refectionary credits only with respect to the real estate upon the refection or work was made.  The conclusion is that it must be that the lien so created attaches merely to the immovable property for the construction or repair of which the obligation was incurred.  Therefore, the lien in favor of appellant for the unpaid value of the lumber used in construction of the building attaches only to said structure and to no other property of the obligors.

Wherefore, and on the strength of the foregoing considerations, the decision appealed from is hereby affirmed, with costs against appellant. It is so ordered.

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