The Director of Public Works v. Sing Juco

Summary

This Supreme Court case established important precedents regarding priority of liens on improved real property and requirements for suretyship authority. Property owners who had mortgaged land to Philippine National Bank subsequently contracted with the government for land improvement, creating competing claims when they defaulted on payments. The Court ruled that improvement liens made after a mortgage only attach to the mortgagor's equity of redemption, preserving the priority of prior registered mortgages. The decision protects mortgage creditors from being 'improved out of their property' by unauthorized third-party improvements. Additionally, the Court clarified that suretyship contracts require express authority in powers of attorney and cannot be inferred from general property management powers, emphasizing the exceptional nature of guaranty obligations under Philippine civil law.