G.R. No. 33113, December 13, 1930
PHILIPPINE TRUST COMPANY, plaintiff-appellee, vs. LUCIO ECHAUS, defendant-appellant.

FACTS

The plaintiff, Philippine Trust Company, acquired ownership of Lots Nos. 485, 588, and 904 of the Iloilo cadastral survey through a series of transactions. Originally, Siuliong & Co. owned the lots and mortgaged them to Maria Caballero y Aparici in 1916. In 1922, Siuliong & Co. sold the lots to Enrique Echaus, who assumed the mortgage debt, with a stipulation that failure to pay would render the sale null and void. Enrique Echaus did not register the sale and later constructed a cement building on Lot No. 485. In 1926, Enrique Echaus sold his rights to his sister, Leonor Echaus. In 1927, the plaintiff obtained a judgment against Enrique Echaus and levied upon his interests in the property. After Enrique Echaus defaulted on the mortgage, Siuliong & Co. paid the mortgage debt in 1927. In 1929, the plaintiff purchased Enrique Echaus’s interests at a public auction and later bought the lots and improvements directly from Siuliong & Co., obtaining transfer certificates of title. The defendant, Lucio Echaus, occupied the lots and buildings, claiming ownership of the cement building on Lot No. 485. The plaintiff filed an action for recovery of possession and damages.

ISSUE

1. Whether the plaintiff is the owner of the cement building on Lot No. 485, or whether the defendant has a valid claim to it.
2. Whether the defendant is liable to pay damages for his occupation of the property.

RULING

1. Yes, the plaintiff is the owner of the cement building. The Supreme Court held that the original mortgage executed by Siuliong & Co. in 1916 constituted a lien on the land and all improvements thereon, including subsequently erected structures like the cement building. Under the doctrine of accession, improvements attached to the land become part of the mortgaged property unless expressly excluded. Since Enrique Echaus defaulted on the mortgage, and Siuliong & Co. paid the debt, the plaintiff’s titlederived from Siuliong & Co. and the foreclosure of Enrique Echaus’s interestsencompassed both the lots and all improvements, including the cement building. The defendant’s claim of ownership over the building, even assuming he financed its construction, cannot prevail over the mortgage lien and the plaintiff’s consolidated title.

2. Yes, the defendant is liable for damages. The Court affirmed the lower court’s award of damages at P1,000 per month from January 19, 1929, until the defendant vacates the property. The defendant’s possession was deemed unlawful, as the plaintiff had established rightful ownership and served notice to vacate.

The Supreme Court affirmed the lower court’s judgment in favor of the plaintiff, emphasizing that the plaintiff’s title related back to the original mortgage and that no legal basis supported the defendant’s claim to the building. Costs were awarded against the defendant.