G.R. No. 11607
December 14, 1916
PHILIPPINE SUGAR ESTATES DEVELOPMENT COMPANY (LTD.), plaintiff-appellee, vs. ARMANDO CAMPS Y CAMPS and J. S. LI TSUNG LING, defendants. ARMANDO CAMPS Y CAMPS, appellant.

FACTS:
On October 2, 1912, and June 11, 1913, defendant Armando Camps y Camps executed two mortgages in favor of plaintiff Philippine Sugar Estates Development Company (Ltd.) over a parcel of land, expressly including “the building erected thereon,” to secure loans. Upon default, plaintiff filed for foreclosure. The court rendered judgment in favor of plaintiff and ordered foreclosure. An execution sale was conducted by the sheriff, who sold the property “together with the buildings erected thereon.” Defendant objected, arguing that a cinematograph building (“Cine Manila”) constructed by altering an existing building on the mortgaged land should be excluded from the sale, as it was not part of the mortgage. The lower court confirmed the sheriff’s sale, prompting this appeal.

ISSUE:
Whether the cinematograph building (“Cine Manila”)which resulted from the alteration of an existing building on the mortgaged landis included in the foreclosure sale.

RULING:
Yes. The Supreme Court affirmed the lower court’s confirmation of the sale. Applying the doctrine in Bischoff vs. Pomar and Compañia General de Tabacos (12 Phil. Rep., 690), the Court held that under the Mortgage Law, a mortgage of land extends by law to all improvements thereon, unless expressly excluded. Here, the mortgages expressly included “the building erected thereon.” The cinematograph was not a new structure but a modification of an existing building on the land at the time of the mortgage. Thus, it was encompassed by the mortgage and properly included in the foreclosure sale. The Court found no merit in appellant’s arguments. The decision was affirmed, with costs against appellant.