Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-11607 January 17, 1917

PHILIPPINE SUGAR ESTATES DEVELOPMENT COMPANY (Ltd.), plaintiff-appellee,

vs.
ARMANDO CAMPS Y CAMPS, defendant-appellant.

Recaredo M.a Calvo for appellant.

Eusebio Orense for appellee.

PER CURIAM, J.:

After due consideration of the motion filed by the defendant and of the statements contained
in the plaintiff's briefs, this court rules upon said motion as follows:

The question raised by the defendant Armando Camps and submitted to the ruling of this
court, in connection with his motion for a reconsideration of the decision of the 14th of last
December, is merely one of law. It consists of whether the cinematograph building erected
by him on the mortgaged lot or land in place of the building that formerly stood there (a
lithographic plant), which was torn down to make way for the cinematograph, is or is not
included in the mortgages recorded in the notarial instruments Exhibits A and B. The third
paragraph of the first of said instruments recites that in guarantee of the fulfillment of the
contract and as security for the payment of P30,000, plus a further specified sum of P3,000,
the defendant mortgaged to the Philippine Sugar Estates Development Company (Ltd.) a
parcel of land, together with the building thereon erected, situated on Plaza Santa Ana,
Quiapo. In the third and fourth paragraphs of the second instrument it is set forth that the
interested parties agreed to increase the amount to the loan by P8,000. The amount of the
mortgage on the specified property was correspondingly increased as the said mortgage
was deemed to be sufficient security for the additional sum.

The following facts were not disputed, to wit, that at least on the date of the execution of the
first mortgage deed, October 2, 1912, a building used as a lithographic plant stood on the
land and that this building, afterwards called a camarin, was torn down to make way for
another one that was to be used for cinematographic purposes. This latter building was built
subsequent to the loan and the mortgage referred to in the two aforesaid instruments, but
prior to the expiration of the period fixed for the payment of the debt. The Cine
Manila building was erected not on a vacant lot, but on the site that was formerly occupied
by the building or camarin that had served as a lithographic plant and which was destroyed
to make way for the new edifice.

The judgment rendered on July 23, 1915, in the foreclosure proceedings ordered that if, on
or before the 4th day of October, 1915, the debtor Armando Camps should not pay all the
sums specified in said judgment, the sheriff should proceed to sell the mortgaged property
in satisfaction of the judgment; and as it appeared in the said instruments that a parcel of
land, together with the buildings erected thereon, was mortgaged as security for the
payment of the said amounts, the entire property was sold at public auction for P43,648.25
and knocked down to the plaintiff creditor, the only bidder.

The question of excluding the "Cine Manila" building was not raised by the defendant until
the judgment creditor asked to have the sale approved; and notwithstanding the reasons
put forward by the former, the judge by an order of November 18, 1915 (in which he held
that he could not amend nor modify the previous judgment rendered in conformity with the
mortgage deed, and that the sale was effected in accordance with law), denied the
exclusion requested and approved the sale made by the sheriff to the plaintiff.

Although the Cine Manila building was erected after the execution of the said mortgage
deeds, yet, as it is not shown to have been agreed between the creditor and the debtor that,
notwithstanding the fact that it was constructed on mortgaged land and in place of another
building or camarin which previously stood thereon, it would nevertheless be expressly
excluded from the mortgage placed on the land and the building, it is unquestionable that
the mortgage was in fact extended to and did include the said building later erected which,
of course, with the land or lot on which it was built, formed one indivisible whole.

The Cine Manila building, although not mentioned in the said deed, is an improvement
which is understood as having been mortgaged jointly with the lot because it belongs to the
same owner and debtor and because it was erected on the site of the former building, and
not on a vacant lot where there was previously no building at all.

The case at bar unmistakably falls within the provisions of the following articles of the Civil
Code and the Mortgage Law:

Art. 1877, Civil Code: A mortgage includes the natural accessions, improvements,
growing fruits, and rents not collected when the obligation is due, and the amount of
the indemnities granted or due the owner by the underwriters of the property
mortgaged or by virtue of the exercise of eminent domain by reason of public utility,
with the declarations, amplifications and limitations established by law, in case the
estate continues in the possession of the person who mortgaged it, as well as when
it passes into the hands of a third person.

Art. 110, Mortgage Law: A mortgage extends to natural increase, improvements,

growing crops, and rents not collected when the obligation falls due, and the value of
indemnities allowed or due the owner for insurance on the property mortgaged, or by
virtue of condemnation by right of eminent domain.

Art. 111, id.: In accordance with the provisions of the preceding article, the following
shall be considered mortgaged together with the estate, provided they belong to the
owner of the estate, although they are not mentioned in the contract.

xxx xxx xxx

 2. Improvements consisting of new plantings, works of irrigation and drainage,
repairs, works for safety or alterations, comfort, ornamentation or raising of buildings,
and any other similar works, which do not consists of additions to the land, except
natural accretions, or in the new construction of buildings, where previously none
existed.

Although the Cine Manila building was an entirely new construction and nothing remained of
the lithographic plant that formerly stood on the land, yet it is undeniable that the
cinematograph was built after the camarin or frame building used as a lithography was torn
down and that it was erected on the site formerly occupied by the latter. It is therefore to be
believed that the debtor Camps, acting in good faith and in order to avoid depreciation in the
value of the security, proposed to substitute the camarin specified in the mortgage of the
property by the Cine Manila building.

It is not reasonable to claim that because the Cine Manila building is worth P50,000 it ought
to be excluded from the sale; and that it should not be considered an improvement, and that
it ought not to be held subject to the mortgage. As a result of the nonperformance of the
contract the pecuniary liabilities of the debtor amounted to P43,748.25, and, at any rate, the
creditor is entitled, in accordance with the written stipulations made, to collect the amount
due him out of the value of the land and the buildings thereon erected. The Cine
Manila building is one erected on the said land; it is the property of the debtor and, by force
of law, was covered by the mortgage, as there is nothing in the law to exclude it therefrom.

For the foregoing reasons, reconsideration of the decision of the 14th of last December is
denied, with costs. So ordered.