Case No.

9
CARIDAY INVESTMENT CORPORATION V. COURT OF APPEALS

FACTS:

Cariday Investment Corporation (CARIDAY for brevity) is the owner of a residential building in the
Forbes Park Subdivision, recognized that residents and lot owners in the subdivision automatically become
members of the Forbes Park Association and are bound by its rules and regulations stipulated in the “deed of
restrictions.” A provision in the “deed of restrictions” annotated at the back of the certificate of title of a lot
owner in the Forbes Park Subdivision required the owner to use his lot for residential purposes and stated that
not more than one single family residential building will be constructed thereon.

However, herein petitioner erected a building good for two families and allowed the occupancy by two
families, hereby in violation of "one single-family residential restriction”.  FPA advised Cariday that it would
not allow Cariday to lease its house to more than one tenant threatened to disconnect the water service (which it
supplies to the residents from its deep-well pumps) to Cariday's property.

Cariday filed in the Regional Trial Court of Makati, a complaint for injunction and damages (Civil Case
No. 17933).  It prayed for ordering the FPA to desist from cutting-off the water supply to its building, or to
reconnect the service if it has been cut-off, and, further, to desist from preventing its tenants' ingress into and
egress from its aforementioned building. 

The trial court issued a writ of preliminary injunction infavor or Cariday's. FPA The Court of Appeals,
after hearing the parties, annulled the writ of injunction.

ISSUE: Whether the interpretation of the petitioner that restriction is bound only to construct "one
residential building" on its lot and not preventing it from exercising its rights to let its residential building to two
or more tenants.

HELD: No. The petitioner's interpretation of the restriction unacceptable.  

The restriction clearly defines not only the type and number of structures (one residential building) that
may be built on each lot, but also the number of families (a single family) that may use it as a
residence.  Indeed, the restriction of "one x x x residential building" per lot would have been sufficient, without
incorporating the additional restriction of "a single family," (p. 35, Rollo) if the purpose, as petitioner contends,
were only to limit the type of building but not its use or occupancy.

We are persuaded that the purpose of the restriction is to avoid overcrowding both in the houses and in
the subdivision which would result in pressure upon the common facilities such as water, power and telephone
connections, accelerate the deterioration of the roads, and create problems of sanitation and security in the
subdivision.  As correctly perceived by the petitioner itself, the restrictions are "for aesthetic consideration
and for the preservation of the peace, beauty, tranquility and serenity of living at Forbes Park"

Logic dictates that as the building rules and regulations of the FPA expressly prohibit the construction of
buildings for multiple occupancy, such as hotels, motels, and condominiums, that prohibition may not be
circumvented by building a house with the external appearance of a single family dwelling but whose interior is
designed for multiple occupany.  It is an elementary rule of reason that what may not be done directly, may not
also be done indirectly.

Case No.10
NATIONAL POWER CORPORATION v. LUCMAN G. IBRAHIM
G.R. No.168732

Facts:

On November 23, 1994, respondent Lucman G. Ibrahim, in his personal capacity and in behalf of his co-heirs,
instituted an action against petitioner National Power Corporation (NAPOCOR) for recovery of possession of
land and damages before the Regional Trial Court (RTC) of Lanao Del Sur. In their complaint, Ibrahim and his
co-heirs claimed that they were owners of several parcels of land described in Survey Plan consisting of 70,000
square meters, divided into three (3) lots.

Sometime in 1978, NAPOCOR, through alleged stealth and without respondents' knowledge and prior consent,
took possession of the sub-terrain area of their lands and constructed therein underground tunnels. The existence
of the tunnels was only discovered sometime in July 1992 by respondents and then later confirmed on
November 13, 1992 by NAPOCOR itself through a memorandum issued by the latter's Acting Assistant Project
Manager. The tunnels were apparently being used by NAPOCOR in siphoning the water of Lake Lanao and in
the operation of NAPOCOR's projects.

On September 19, 1992, respondent Omar G. Maruhom requested the Marawi City Water District for a permit
to construct and/or install a motorized deep well in Lot 3 located in Saduc, Marawi City but his request was
turned down because the construction of the deep well would cause danger to lives and property. Respondents
demanded that NAPOCOR pay damages and vacate the sub-terrain portion of their lands but the latter refused
to vacate much less pay damages.

Respondents further averred that the construction of the underground tunnels has endangered their lives and
properties as Marawi City lies in an area of local volcanic and tectonic activity.

Petitioner contends that the underground tunnels in this case constitute an easement upon the property of
respondents which does not involve any loss of title or possession. Petitioner maintains that the sub-terrain
portion where the underground tunnels were constructed does not belong to respondents because, even
conceding the fact that respondents owned the property, their right to the subsoil of the same does not extend
beyond what is necessary to enable them to obtain all the utility and convenience that such property can
normally give.

Petitioner concludes that the underground tunnels 115 meters below respondents' property could not have
caused damage or prejudice to respondents and their claim to this effect was, therefore, purely conjectural and
speculative.

Issue:

Whether respondents are entitled to just compensation hinges upon who owns the sub-terrain area occupied by
petitioner.

Ruling:

Yes. respondents are entitled to just compensation.

ART. 437. The owner of a parcel of land is the owner of its surface and of everything under it, and he can
construct thereon any works or make any plantations and excavations which he may deem proper, without
detriment to servitudes and subject to special laws and ordinances. He cannot complain of the reasonable
requirements of aerial navigation.

Thus, the ownership of land extends to the surface as well as to the subsoil under it.

The owner of a piece of land has rights not only to its surface but also to everything underneath and the airspace
above it up to a reasonable height. Under the aforesaid ruling, the land cannot be classified as mineral
underneath and agricultural on the surface. The land are indivisible and that the land itself cannot be half
agricultural and half mineral. The classification must be categorical; the land must be either completely mineral
or completely agricultural. The tunnels interfered with respondents' enjoyment of their property and deprived
them of its full use and enjoyment.

The underground tunnels impose limitations on respondents' use of the property for an indefinite period and
deprive them of its ordinary use. Based upon the foregoing, respondents are clearly entitled to the payment of
just compensation.
Notwithstanding the fact that petitioner only occupies the sub-terrain portion, it is liable to pay not merely an
easement fee but rather the full compensation for land.

The surface owner will be planting on the land while the mining locator will be boring tunnels underneath. The
farmer cannot dig a well because he may interfere with the mining operations below and the miner cannot blast
a tunnel lest he destroy the crops above.

Case No. 11
PACIFIC FARMS, INC. VS. SIMPLICIO G. ESGUERRA, CARRIED LUMBER COMPANY
GRN L-21783 NOVEMBER 29, 1969

FACTS:
On several occasions, the Company sold and delivered lumber and construction materials to the Insular
Farms, Inc. which the latter used in the construction of the aforementioned six buildings at its compound in
Bolinao, Pangasian. Of the total procurement price of P15,000, the sum of P4,710.18 has not been paid by the
Insular Farms, Inc. The Company instituted a civil case with the CIR of Pangasinan to recover the said unpaid
balance from the Insular Farms, Inc. The trial court rendered judgment in favor of the Company's claim. The
corresponding writ of execution was issued because there was no appeal instituted by Insular, Inc.

The Pacific Farms, Inc. filed a third-party claim asserting ownership over the levied buildings which it
had acquired from the Insular Farms, Inc. by virtue of a deed of absolute sale executed about seven months
before the Company filed the civil action. Shielded by an indemnity bond put up by the Company and the
Cosmopolitan Insurance Company, Inc., the sheriff proceeded with the announced public auction and sold the
levied buildings to the Company.

ISSUE:
WON the Company is entitled to a materialman’s lien to be paid by Pacific Farms, Inc?

HELD: YES.
Therefore, applying article 447 by analogy, we perforce consider the buildings as the principal and the
lumber and construction materials that went into their construction as the accessory. Thus Pacific Farms, if it
does own the s
ix buildings, must bear the obligation to pay for the value of the said materials; the Company- which
apparently has no desire to remove the materials, and, even if it were minded to do so, cannot remove them
without necessarily damaging the buildings has the corresponding right to recover the value of the unpaid
lumber and construction materials.
Of course, the character of a buyer in good faith and for value, if really possessed by the Pacific Farms,
could possibly exonerate it from making compensation. But the Pacific Farm's stance that it is an innocent
purchaser for value and in good faith is open to grave doubt because of certain facts of substantial import
(evident from the records) that cannot escape notice.
In the deed of absolute sale, exhibit 1, the Insular Farms, Inc. (vendor) was represented in the contract
by its president, J. Antonio Araneta. The latter was a director of the appellee (Pacific Farms, Inc.) and was the
counsel who signed the complaint filed by the appellee in the court below. J. Antonio Araneta was, therefore,
not only the president of the Insular Farms, Inc. but also a director and counsel of Pacific Farms.
During the trial of civil case the Insular Farms, Inc. was represented by Attorney Amado Santiago, Jr. of
the law firm of J. Antonio Araneta. The latter was one of the counsels of the Pacific Farms, Inc. They cannot
claim ignorance of the pendency of civil case because the Insular Farms, Inc. was defended by the same
lawyer from the same law firm that commenced the present action.
Pacific Farms merely folded its arms in disinterest and waited, so to speak. Not until a decision was
rendered therein in favor of the Company, a writ of execution issued, and the six buildings levied upon by the
sheriff, did it file a third-party claim over the levied buildings.

Case No.12
PLEASANTVILLE DEV. CORP VS. CA
GR No. 79688, 1996-02-01

Facts:
Edith Robillo purchased from petitioner a parcel of land designated as Lot 9, Phase II and located at Taculing
Road, Pleasantville Subdivision, Bacolod City. In 1975, respondent Eldred Jardinico bought the rights to the lot
from Robillo. At that time, Lot 9 was vacant.
Upon completing all payments, Jardinico secured from the Register of Deeds of Bacolod City on December 19,
1978 Transfer Certificate of Title No. 106367 in his name. It was then that he discovered that improvements had
been introduced on Lot 9 by respondent Wilson Kee, who had... taken possession thereof.
It appears that on March 26, 1974, Kee bought on installment Lot 8 of the same subdivision from C.T. Torres
Enterprises, Inc. (CTTEI), the exclusive real estate agent of petitioner.
After discovering that Lot 9 was occupied by Kee, Jardinico confronted him.  The parties tried to reach an
amicable settlement, but failed.
On January 30, 1981, Jardinico's lawyer wrote Kee, demanding that the latter remove all improvements and
vacate Lot 9. When Kee refused to vacate Lot 9, Jardinico filed with the Municipal Trial Court in Cities, Branch
3, Bacolod City (MTCC), a complaint for ejectment with... damages against Kee.
Kee, in turn, filed a third-party complaint against petitioner and CTTEI.
The MTCC held that the erroneous delivery of Lot 9 to Kee was attributable to CTTEI.
On appeal, the Regional Trial Court, Branch 48, Bacolod City (RTC) ruled that petitioner and CTTEI were not
at fault or were not negligent, there being no preponderant evidence to show that they directly participated in
the delivery of Lot 9 to Kee.
The appellate court ruled that Kee was a builder in good faith, as he was unaware of the "mix-up" when he
began construction of the improvements on Lot 8.
Issues:
(1) Was Kee a builder in good faith?
Ruling:
Petitioner fails to persuade this Court to abandon the findings and conclusions of the Court of Appeals that Kee
was a builder in good faith.
The roots of the controversy can be traced directly to the errors committed by CTTEI, when it pointed the
wrong property to Wilson Kee and his wife. It is highly improbable that a purchaser of a lot would knowingly
and willingly build his residence on a lot owned by... another, deliberately exposing himself and his family to
the risk of being ejected from the land and losing all improvements thereon, not to mention the social
humiliation that would follow.
"Under the circumstances, Kee had acted in the manner of a prudent man in ascertaining the identity of his
property.
Upon Kee's receipt of the map, his wife went to the subdivision site accompanied by CTTEI's employee,
Octaviano, who authoritatively declared that the land she was pointing to was indeed Lot 8. Having full... faith
and confidence in the reputation of CTTEI, and because of the company's positive identification of the property,
Kee saw no reason to suspect that there had been a misdelivery.
Good faith consists in the belief of the builder that the land he is building on is his and his ignorance of any
defect or flaw in his title.[9] And as good faith is presumed, petitioner has the burden of proving bad faith on
the part of Kee.[10]
At the time he built improvements on Lot 8, Kee believed that said lot was what he bought from petitioner. He
was not aware that the lot delivered to him was not Lot 8. Thus, Kee's good faith. Petitioner failed to prove
otherwise.