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[G.R. No. 11607. January 17, 1917. ]


Recaredo Ma Calvo for Appellant.

Eusebio Orense for Appellee.


1. MORTGAGES; DESTRUCTION AND REEDIFICATION OF MORTGAGED BUILDINGS. — Where a parcel of land, together with the building thereon erected has been mortgaged, and where after execution of the mortgage, but before the expiration of the mortgage period, the debtor tears down the building and erects another and more costly one in its place, no stipulation whatever being contained in the mortgage deed that the new building should be expressly excluded from the mortgage encumbering the land and the construction thereon; it is unquestionable that the mortgage actually includes the new building, which forms one indivisible whole with the land or lot on which it was erected. (Civ. Code, art. 1877; and Mortgage Law, arts. 110 and 111.)



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:chanrob1es virtual 1aw library

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 buildings 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 of 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 12, 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 or 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 shown to have been agree 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, 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 the 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:jgc:chanrobles.com.ph

"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.

x       x       x

"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 consist of additions to the land, except natural accretions, or in the new construction of buildings, where previously none existed."cralaw virtua1aw library

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 the 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.

Torres, Moreland, Trent and Carson, JJ., concur.

Araullo, J., dissents.

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