Carried Lumber Company vs.

Agricultural Credit and Cooperative Financing Administration

(ACCFA)

Facts:

Sta. Barbara Farmer’s Cooperative Marketing Association, Inc. (Facoma) purchased on credit from
the lumber company materials used in the construction of its warehouse. Facoma made partial
payments but was unable to pay the whole amount due. Thus, a suit for recovery of the amount was
filed by the lumber comp against Facoma and obtained a writ of execution over the warehouse and
ricemill bldg.

However, ACCFA allege that said mortgage over the same warehouse plus the improvements on a
certain parcel of lot was already extrajudicially foreclosed for Facoma’s failure to pay the loan
contracted by it from ACCFA.

Trial court rendered a decision in favor of the lumber company ruling that it had a preferential lien
over the warehouse and ricemill of Facoma than ACCFA. ACCFA, contends, however, that the
company waived its lien when it filed an ordinary action to recover its claim instead of enforcing its
lien.

Issue:

Whether the materialman’s/mechanic’s lien (lumber company’s lien) is superior to that of the
mortgage lien (ACCFA’s lien)

Held:

The materialman’s lien is not superior to that of a mortgage lien.

It is not correct to say that the materialman’s (mechanic’s) lien or refectionary credit of the lumber
company, being listed as No. 4 in article 2242, is superior to the ACCFA’s mortgage credit which is
listed as No. 5. The enumeration in article 2242 is not an order of preference. That article lists the
credits which may concur with respect to specific real properties and which would be satisfied pro
rata according to article 2249. It is just and proper that the two creditors should have pro rata shares
in that warehouse.

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The lumber company has no lien over the ricemill building. The evidence for the lumber company
shows that it supplied materials only for the construction of the warehouse. Thus, it has no
materialman’s lien on the ricemill building.