1. Dumo v.

Republic
Facts: Plaintiffs are the heirs of Marcelino Espinas (Espinas), who died intestate, leaving a parcel of land. The
Subject Property was purchased by Espinas from Carlos Calica. Meanwhile, the heirs of Trinidad executed a
Deed of Partition with Absolute Sale over a parcel of land. The heirs of Espinas filed a Complaint for Recovery
of Ownership, Possession and Damages to protect their interests against the heirs of Trinidad.
In the Complaint for Recovery of Ownership, Possession and Damages, Dumo, one of the defendants therein,
filed a Motion to Dismiss based on res judicata. Dumo argued that Espinas had already applied for the
registration of the Subject Property and that such application had been dismissed. The heirs of Espinas
opposed Dumo's application for land registration on the ground that the properties sought to be registered by
Dumo are involved in the accion reivindicatoria case. Thus, the RTC consolidated the land registration case
with the Complaint for Recovery of Ownership, Possession and Damages.
Issue: Whether Dumo had registrable title over the land she seeks to register.
Ruling: No.CA committed no reversible error in finding that Dumo had no registerable title over the land she
seeks to register. She failed to prove her right under either Section 14(1) or Section 14(2) of PD No. 1529.
She failed to prove that the land she seeks to register was alienable and disposable land of the public
domain.
The first requirement is to prove that the land sought to be registered is alienable and disposable land of the
public domain. This is because under the Regalian Doctrine, as embodied in the 1987 Philippine Constitution,
lands which do not clearly appear to be within private ownership are presumed to belong to the State.13
Thus, in an application for land registration, the applicant has the burden of overcoming the presumption that
the State owns the land applied for, and proving that the land has already been classified as alienable and
disposable.14 To overcome the presumption that the land belongs to the State, the applicant must prove by
clear and incontrovertible evidence at the time of application that the land has been classified as alienable and
disposable land of the public domain.
Classification of lands of the public domain may be found under Article XII of the 1987 Philippine Constitution.
More specifically, Section 3 of Article XII classifies lands of the public domain into (1) agricultural, (2) forest or
timber, (3) mineral lands, and (4) national parks.15 Of these four classifications, only agricultural lands may be
alienated and disposed of by the State.
The 1987 Philippine Constitution also provides that "agricultural lands of the public domain may be further
classified by law according to the uses to which they may be devoted."16 Based on the foregoing, it is clear
that the classification of lands of the public domain is first and foremost provided by the Constitution itself.
Of the classifications of lands of the public domain, agricultural lands may further be classified by law,
according to the uses it may be devoted to.
2. Republic vs. Spouses Alejandre

Facts: Spouses Alejandre (applicants-spouses, for brevity) filed an application for the registration of Lot No.
6487 under P.D. No. 1529, described in plan Ap-CAR-000007, Cad-536, with an area of 256 square meters.
They alleged that they are the owners of the subject property by virtue of a deed of sale or conveyance; that
the subject property was sold to them by its former owner Angustia Lizardo Taleon by way of a Deed of
Absolute Sale executed on June 20, 1990; that the said land is presently occupied by the applicants-spouses.

Republic filed its Opposition to the application based on the ground that the subject property applied for is a
portion of the public domain belonging to the Republic of the Philippines which is not subject to private
appropriation

Issue: Whether or not the subject property is capable of private appropriation

Ruling: No. Accordingly, public lands not shown to have been classified, reclassified or released as alienable
agricultural land or alienated to a private person by the State remain part of the inalienable lands of public
domain.Therefore, the onus to overturn, by incontrovertible evidence, the presumption that the land
subject of an application for registration is alienable and disposable rests with the applicant.
Respondents, based on the evidence that they adduced, are apparently claiming ownership over the land
subject of their application for registration by virtue of tradition, as a consequence of the contract of sale, and
by succession in so far as their predecessors-in-interest are concerned. Both modes are derivative modes of
acquiring ownership. Yet, they failed to prove the nature or classification of the land . The fact that they
acquired the same by sale and their transferor by succession is not incontrovertible proof that it is of private
dominion or ownership. In the absence of such incontrovertible proof of private ownership, the well-
entrenched presumption arising from the Regalian doctrine that the subject land is of public domain or
dominion must be overcome. Respondents failed to do this.

The real property tax declarations (Exhibits "L" and "M"), the Deed of Absolute Sale dated June 20, 1990
(Exhibit "K" to "K5"), and the technical descriptions of the subject property (Exhibit "J") are insufficient
evidence to overcome the presumption that the land subject of the registration is inalienable land of public
domain or dominion.

3. Hi-lon vs COA

FACTS: Sometime in 1978, the government, through the then Ministry of Public Works and Highways (now
DPWH), converted to a road right-of-way (RROW) a 29,690 sq. m. portion of the 89,070 sq. m. parcel of land
(subject property) located in Mayapa, Calamba, Laguna, for the Manila South Expressway Extension Project.
The subject property was registered in the name of Commercial and Industrial Real Estate Corporation (CIREC).

Later on, Philippine Polymide Industrial Corporation (PPIC) acquired the subject property, which led to the
cancellation of TCT and the issuance of TCT under its name. PPIC then mortgaged the subject property with
the Development Bank of the Philippines (DBP), a government financing institution, which later acquired the
property in a foreclosure proceeding on September 6, 1985. .

Despite the use of the 29,690 sq. m. portion of the property as RROW, the government neither annotated its
claim or lien on the titles of CIREC, PPIC and DBP nor initiated expropriation proceedings, much less paid just
compensation to the registered owners.

April 16, 1995 TGPI executed a Deed of Absolute Sale in favor of HI-LON over the entire 89,070 sq. m. subject
property for a consideration of ₱44,535,000.00. HI-LON registered the Deed with the Register of Deeds of
Calamba, Laguna, which issued in its name TCT No. 383819.

In 1998 Rupert P. Quijano, Attorney-in-Fact of HI-LON, requested assistance from the Urban Road Project
Office (URPO) DPWH for payment of just compensation for the 29,690 sq. m. portion of the subject property
converted to a RROW. The DPWH created an Ad Hoc Committee which valued the RROW at ₱2,500/sq. m.

December 21, 2001, a Deed of Sale was executed between HILON and the Republic of the Philippines,
represented by Lope S. Adriano, URPO-PMO Director, by authority of the DPWH Secretary, covering the
29,690 sq. m. parcel of land converted to RROW for a total consideration of ₱67,492,500.00.

ISSUE: Whether or not HI-LON is entitled to just compensation for the 29, 690 sq.m. portion of the subject
property? No.

RULING: No. The 29,690 sq. m. portion of the subject property is not just an ordinary asset, but is being used
as a RROW for the Manila South Expressway Extension Project, a road devoted for a public use since it was
taken in 1978. Under the Philippine Highway Act of 1953, "right-of-way" is defined as the land secured and
reserved to the public for highway purposes, whereas "highway" includes rights-of-way, bridges, ferries,
drainage structures, signs, guard rails, and protective structures in connection with highways.

Article 420 of the New Civil Code considers as property of public dominion those intended for public use, such
as roads, canals, torrents, ports and bridges constructed by the state, banks, shores, roadsteads, and others of
similar character.
Being of similar character as roads for public use, a road right-of-way (RROW) can be considered as a property
of public dominion, which is outside the commerce of man, and cannot be leased, donated, sold, or be the
object of a contract,18 except insofar as they may be the object of repairs or improvements and other
incidental matters.

Doctrine: Right of Way

As a property of public dominion akin to a public thoroughfare, a RROW cannot be registered in the name of
private persons under the Land Registration Law and be the subject of a Torrens Title; and if erroneously
included in a Torrens Title, the land involved remains as such a property of public dominion

4. SALUBAY vs. PEOPLE

Facts: The Philippine Army flagged down the shuttle bus during a routine inspection. They found Marcelo G.
Saluday carrying high-powered firearm, ammunition, and explosive without any proof of authority to carry the
same. The petitioner was charged of illegal possession of high-powered firearm, ammunition, and explosive.
He argued that the evidence presented was inadmissible on the ground that the search conducted by Task
Force Davao was illegal.

Issue: Whether or not petitioner’s argument is tenable.

Ruling: No. The constitutional guarantee under Section 2, Article III of the Constitution is not a blanket
prohibition. Rather, it operates against "unreasonable" searches and seizures only.
In the case at bar, the court explained that a bus is a private property whose owners have every right
to exclude anyone from entering. At the same time, however, because these private premises are accessible
to the public, the State, much like the owner, can impose non-intrusive security measures and filter those
going in. The only difference in the imposition of security .measures by an owner and the State is, the former
emanates from the attributes of ownership under Article 429 of the Civil Code, while the latter stems from the
exercise of police power for the promotion of public safety. Necessarily, a person's expectation of privacy is
diminished whenever he or she enters private premises that are accessible to the public. The search of
persons in a public place is valid because the safety of others may be put at risk. Hence, the bus inspection
conducted by Task Force Davao at a military checkpoint constitutes a reasonable search.
5. Heirs of Mariano vs. City of Naga

FACTS: In 1954, the officers of City Heights Subdivision wrote to the mayor of the City of Naga, offering to
construct the Naga City Hall within the premises of the Subdivision. Their letter indicated that the City Hall
would be built on an area of not less than two hectares within the Subdivision, which would be designated as
the open space reserved for a public purpose. Upon the City’s request, the Subdivision amended its offer and
agreed to donate five hectares to the City. The area is a portion of the land registered in the names of Mariano
and Gimenez under TCT No. 671.

The amended offer was signed by Mariano and Gimenez to indicate their “conforme” together their respective
spouses. Thereafter, the Municipal Board adopted Resolution No. 89 accepting the Subdivision’s offer of
donation and its proposed contract.

According to the City, the Mayor Imperial and the registered landowners, Macario and Gimenez executed a
Deed of Donation. By virtue thereof, the City entered the property and began the construction of the
government center. However, the heirs of Mariano aver the plan to donate to the City did not materialize as
the contract to build the City Hall was not awarded to the subdivision but to another contractor. Thereafter,
Macario and Gimenez demanded for the return of the said property.

ISSUE: Whether or not the petitioners, as heirs of a registered owner of the subject property, have the
preferred or better right of possession.

RULING: Yes. The Court has consistently upheld the registered owner’s superior right to possess the property
in unlawful detainer cases. A fundamental principle in land registration is that the certificate of title serves as
evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name
appears therein. It is conclusive evidence as regards ownership of the land described therein. The title to the
subject property remains registered in the names of Macario. The alleged Deed of Donation does not appear
to have been registered and TCT No. 671 does not bear any inscription of said Deed.

It has likewise been constantly emphasized that when the property is registered under the Torrens system, the
registered owner’s title to the property is presumed legal and cannot be collaterally attacked, especially in a
mere action for unlawful detainer. It has been held that it does not even matter if the party’s title to the
property is questionable.

6. Leviste Management SystemInc., vs Legaspi Towers

Facts: Legaspi Towers is a condominium building located in Makati City. It consists of seven (7) floors, with
a unit on the roof deck and two levels above said unit called Concession 2 and Concession 3. Concession 3
was originally owned by Leon Antonio Mercado. On 9 March 1989, Lemans, through Mr. Conrad Leviste,
bought Concession 3 from Mercado. Sometime in 1989, Lemans decided to build another unit called
“Concession 4” on the roof deck of Concession 3. Legaspi Corporation ordered Lemans to stop but it refused.
Due to this, Legaspi Corporation forbade the entry of Lemans’ construction materials to be used in Concession
4 and asks the building permit to be cancelled from Irasga. Lemans invoked that as the owner of Concession 3,
it owns the airspace there with which will give it the right to build an improvement on top of the same.
Legaspi invokes the bylaws which requires the approval of the member unit owners of any improvements
worth 100, 000 or more, in which the same was not attained by Leviste.
Issue: whether or not Lemans own the air space above its condominium unit which will entitle them to
construct another floor as an exercise of its rights.
Held: No. As a general rule, Article 448 on builders in good faith does not apply where there is a contractual
relation between the parties. The Condominium Act provides that unit owners are considered members or
stockholders of the condo corp. The builder is therefore already in a co-ownership with other unit owners as
members or stockholders of the condominium corporation, whose legal relationship is governed by a
special law, the Condominium Act. Articles 448 and 546 of the Civil Code on builders in good faith are
therefore inapplicable in cases covered by the Condominium Act where the owner of the land and
the builder are already bound by specific legislation on the subject property (the Condominium Act), and by
contract (the Master Deed and the Bylaws of the condominium corporation). This Court has ruled that upon
acquisition of a condominium unit, the purchaser not only affixes his conformity to the sale; he also binds
himself to a contract with other unit owners.
Leviste was ordered to remove concession 4
Note baka tanungin
Moreover this Court has explained that the raison d’être for Article 448 of the Civil Code is to prevent the
impracticability of creating a state of forced co-ownership. In view of the impracticability of creating a state
of forced co-ownership, the law has provided a just solution by giving the owner of the land the option to
acquire the improvements after payment of the proper indemnity, or to oblige the builder or planter to pay
for the land and the sower the proper rent. He cannot refuse to exercise either option. It is the owner of the
land who is authorized to exercise the option, because his right is older, and because, by the principle of
accession, he is entitled to the ownership of the accessory thing.

7. LEVISTE MANAGEMENT SYSTEM, INC., vs. LEGASPI TOWERS 200, INC

G.R. No. 199353, FIRST DIVISION, APRIL 4, 2018, LEONARDO-DE CASTRO, J.
FACTS: Legaspi Towers is a condominium building located at Paseo de Roxas, Makati City. Lemans bought
Concession 3 and decided to build another unit ("Concession 4") on the roof deck of Concession 3. Despite
Legaspi Corporation's notice that the construction of Concession 4 was illegal, Lemans refused to stop its
construction. When Legaspi Corporation forbade the entry of Lemans' construction materials to be used in
Concession 4 in the condominium, Lemans filed a Complaint with the RTC, praying that a writ of mandatory
injunction be issued to allow the completion of the construction of Concession 4. RTC issued the writ prayed
for by Lemans. RTC, in its Order, then found the application of Article 448 of the Civil Code and the ruling in
the Depra vs. Dumlao to be proper. Afterwards, RTC rendered the Assailed Decision, ordering Legaspi Towers
to exercise its option to appropriate the additional structure constructed on top of the penthouse within sixty
[60] days from the time the Decision becomes final and executory. Should defendant Legaspi Towers 200, Inc.
choose not to appropriate after proper indemnity, the parties shall agree upon the terms of the lease and in
case of disagreement, the Court shall fix the terms thereof. When the case was elevated, CA affirmed the
decision of the RTC of Makati City. CA held that while Concession 4 is indeed a nuisance, Lemans has been
declared a builder in good faith, and noted that Legaspi Towers failed to contest this declaration. Since
Concession 4 was built in good faith, it cannot be demolished. Hence, LEMANS and Legaspi Towers filed
separate Petitions for Review on Certiorari with the Court.
ISSUE: Whether or not Article 448 of the Civil Code and the Court’s ruling in Depra v. Dumlao are applicable to
the parties' situation.
RULING: NO. Significantly, the parties are no longer questioning the past rulings regarding Legaspi Towers'
ownership of the air space above Concession 3 which is the air space above the condominium building itself.
The ruling of this Court in Depra v. Dumlao extensively cited by both parties pertains to the application of
Articles 448 and 546 of the Civil Code. Art. 448. The owner of the land on which anything has been built, sown
or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after
payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to
pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be
obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall
pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper
indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix
the terms thereof. Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor
in good faith may retain the thing until he has been reimbursed therefor. Useful expenses shall be refunded
only to the possessor in good faith with the same right of retention, the person who has defeated him in the
possession having the option of refunding the amount of the expenses or of paying the increase in value which
the thing may have acquired by reason thereof. Firstly, it is recognized in jurisprudence that, as a general rule,
Article 448 on builders in good faith does not apply where there is a contractual relation between the parties.
Morever, in several cases, the Court has explained that the raison d'etre for Article 448 of the Civil Code is to
prevent the impracticability of creating a state of forced co-ownership. In accord with the principle of
accession, the landowner cannot refuse to exercise either option and compel instead the owner of the
building to remove it from the land. In the case at bar, however, the land belongs to a condominium
corporation, wherein the builder, as a unit owner, is already in a co-ownership with other unit owners as
members or stockholders of the condominium corporation, whose legal relationship is governed by a special
law, the Condominium Act. Articles 448 and 546 of the Civil Code on builders in good faith are therefore
inapplicable in cases covered by the Condominium Act where the owner of the land and the builder are
already bound by specific legislation on the subject property (the Condominium Act), and by contract (the
Master Deed and the By-Laws of the condominium corporation). In accordance therefore with the Master
Deed, the By-Laws of Legaspi Towers, and the Condominium Act, Legaspi Towers is correct that it has the right
to demolish Concession 4 at the expense of Lemans. Indeed, the application of Article 448 to the present
situation is highly iniquitous, in that an owner, also found to be in good faith, will be forced to either
appropriate the illegal structure and impliedly be burdened with the cost of its demolition) or to allow the
continuance of such an illegal structure that violates the law and the Master Deed, and threatens the
structural integrity of the condominium building upon the payment of rent. The Court cannot countenance
such an unjust result from an erroneous application of the law and jurisprudence.

(CO-OWNERSHIP) In the case at bar, however, the land belongs to a condominium corporation, wherein the
builder, as a unit owner, is already in a co-ownership with other unit owners as members or stockholders of
the condominium corporation, whose legal relationship is governed by a special law, the Condominium Act.
Articles 448 and 546 of the Civil Code on builders in good faith are therefore inapplicable in cases covered by
the Condominium Act where the owner of the land and the builder are already bound by specific legislation on
the subject property (the Condominium Act), and by contract (the Master Deed and the By-Laws of the
condominium corporation).

8. Lim v. Moldex Land, Inc.

Facts: Condocor (Condominium Corporation) a non-stock, non-profit corporation, which is the registered
condominium corporation for the Golden Empire Tower held its annual general membership meeting. Moldex
became a member of Condocor on the basis of its ownership of the 220 unsold units in the Golden Empire
Tower. During the meeting, an existence of a quorum was declared even though only 29 of the 108 unit
buyers were present. The declaration was based on the presence of the majority of the voting rights, including
those pertaining to the 220 unsold units held by Moldex through its representatives. Lim (a registered unit
owner), through her attorney-in-fact, objected to the validity of the meeting. The objection was denied. Thus,
Lim and all the other unit owners present, except for one, walked out and left the meeting.

Despite the walkout, the individual respondents and the other unit owner proceeded with the meeting and
elected the new members of the Board of Directors for 2012-2013. All 4 individual respondents (JAMINOLA,
MACALINTAL, MILANES, and ROMAN) were voted as members of the board, together with other 3 members.

Consequently, Lim filed an election protest before the RTC. Lim claimed that herein respondents are not
entitled to be members of the Board of Directors because they are non-unit buyers. However, said court ruled
in favor for the respondents. Not in conformity, Lim filed the present petition.

Issue: Whether only unit buyers are entitled to become members of Condocor.

Ruling: No. Moldex can be deemed a member of Condocor.

Lim asserted that only unit buyers are entitled to become members of Condocor. Respondents, for their part,
countered that a registered owner of a unit in a condominium project or the holders of duly issued
condominium certificate of title (CCT), automatically becomes a member of the condominium corporation,
relying on Sections 2 and 10 of the Condominium Act, the Master Deed and Declaration of Restrictions, as well
as the By-Laws of Condocor. For said reason, respondents averred that as Moldex is the owner of 220 unsold
units and the parking slots and storage areas attached thereto, it automatically became a member of
Condocor upon the latter's creation.

On this point, respondents are correct. Section 2 of the Condominium Act states:

Sec. 2. A condominium is an interest in real property consisting of separate interest in a unit in a residential,
industrial or commercial building and an undivided interest in common, directly or indirectly, in the land on
which it is located and in other common areas of the building. A condominium may include, in addition, a
separate interest in other portions of such real property. Title to the common areas, including the land, or
the appurtenant interests in such areas, may be held by a corporation specially formed for the purpose
(hereinafter known as the "condominium corporation") in which the holders of separate interest shall
automatically be members or shareholders, to the exclusion of others, in proportion to the appurtenant
interest of their respective units in the common areas.

The Condominium Act does not provide a specific mode of acquiring ownership of a unit. It is erroneous to
argue that the ownership must result from a sale transaction between the owner-developer and the
purchaser. Such interpretation would mean that persons who inherited a unit, or have been donated one, and
properly transferred title in their names cannot become members of a condominium corporation.

9. JOSEPH HARRY WALTER POOLE-BLUNDEN vs. UNION BANK OF THE PHILIPPINES

FACTS: Petitioner saw respondent’s advertisement about the public auction of certain properties. One of
these properties was a condominium. The Unit was advertised to have an area of 95 sq.m. He registered for
the sale, placed his bid and won. They entered into a Contract to Sell where Joseph would pay 10% of the
purchase price as down payment and the balance will be paid monthly over a period of 15 years.
After occupying and fully paying for the unit, Joseph decided to construct 2 additional bedrooms in the Unit.
Upon examining, he noticed apparent problems in its dimensions. He took rough measurements which
indicated that its floor area was less than advertised (70 sq.m, not 95 sq.m.). Joseph wrote to UnionBank,
informing it of the discrepancy and asked for a rescission with a refund, in the event that it was conclusively
established that the area of the unit was less than 95 square meters. UnionBank informed Joseph that after
inquiring with the Housing and Land Use Regulatory Board (HLURB), the Homeowners' Association of T-Tower
Condominium, and its appraisers, it was 95 sq.m. inclusive of the terrace and the common areas surrounding
it. Not satisfied with UnionBank's response, he hired an independent geodetic engineer to survey the Unit
and his suspicion was confirmed. With the vitiation of his consent as to the object of the sale, Joseph asserts
that the Contract to Sell may be voided.
ISSUE: W/N Petitioner is entitled to voiding of the Contract to Sell.
RULING: YES. Section 6(a) of the Condominium Act specifies the reckoning of a condominium unit’s bounds.
It also specifies that areas of common use “are not part of the unit”: Section 6. Unless otherwise expressly
provided in the enabling or master deed or the declaration of restrictions, the incidents of a condominium
grant are as follows: (a) The boundary of the unit granted are the interior surfaces of the perimeter walls,
floors, ceilings, windows and doors thereof. The following are not part of the unit bearing walls, columns,
floors, roofs, foundations and other common structural elements of the building; lobbies, stairways, hallways,
and other areas of common use, elevator equipment and shafts, central heating, central refrigeration and
central air-conditioning equipment, reservoirs, tanks, pumps and other central services and facilities, pipes,
ducts, flues, chutes, conduits, wires and other utility installations, wherever located, except the outlets thereof
when located within the unit. x x x Thus, the unit sold to petitioner was deficient in relation to its advertised
area. This advertisement having been made by respondent, it is equally settled there was a falsity in the
declarations made by respondent prior to, and with the intention of enticing buyers to the sale.
Article 1542 as utilized by the CA has nothing to do with annulling fraudulently made sales. What it is
concerned with is the proportionate reduction of the purchase price in relation to the measurable units of the
thing sold. Petitioner does not seek a reduction of the purchase price. He seeks judicial relief to have the
entirety of his purchase annulled, his consent having been fraudulently obtained. By filing an action under
Article 1390 of the Civil Code, petitioner declared that his consent to the entire subject matter of the
contract was vitiated. What suffices as relief is the complete annulment of the sale, not the partial
reimbursement upon which Article 1542 is premised. Likewise, Article 1542 does not contemplate the seller’s
delivery to the buyer of things other than the agreed object of the sale. While it is true that petitioner did not
buy the unit on a per-square-meter basis, it remains that what he bought was a condominium unit. Thus,
when petitioner agreed to purchase the Unit at a lump-sum price, he never consented to including common
areas as part of his purchase. Article 1542’s concern with a ratable reduction of the price delivered by the
buyer assumes that the seller correctly delivered, albeit deficiently, the object of the sale.

Art. 1542. In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit
of measure or number, there shall be no increase or decrease of the price, although there be a greater
or less area or number than that stated in the contract.
Additional: The significance of space and dimensions to any buyer of real property is plain to see. This is
particularly significant to buyers of condo units in urban areas, and even more so in central business districts,
where the scarcity of space drives vertical construction and propels property values. A condo unit's area is a
physical attribute. The total area of it is a valid object of an as-is-where-is clause. However, while as-is-where-
is clauses exclusively apply to physical attributes of a thing sold, they apply only to physical features that are
readily observable. (“as-is-where-is”: you get everything that comes w/ a property, at its present condition,
good/bad, when you buy it.)

10. Spouses Ermino v Golden Village Homeowner Assoc Inc.

Facts: Spouses Ermino are residents of Alco Homes, a subdivision located beside Golden Village Subdivision
(Golden Village) in Barangay Carmen, Cagayan de Oro City. There was continuous heavy rain which caused a
large volume of water to fall from the hilltop subdivision to the subdivisions below. The volume of water
directly hit Spouses Ermino's house and damaged their fence, furniture, appliances and car. Spouses Ermino
filed a complaint for damages against E.B. Villarosa, the developer of Hilltop City Subdivision, and GVHAI. The
Hilltop City Subdivision is found at the upper portion of Alco Homes, making it a higher estate, while Golden
Village is located beside Alco Homes, which makes both Alco Homes and Golden Village lower estates  vis-a-
vis Hilltop City Subdivision. Spouses Ermino blamed E.B. Villarosa for negligently failing to observe DENR rules
and regulations and to provide retaining walls and other flood control devices. They likewise claimed that
GVHAI committed a wrongful act in constructing the concrete fence which diverted the flow of water to Alco
Homes, hence, making it equally liable to Spouses Ermino.

E.B. Villarosa argued that the location of the house of Spouses Ermino is located at the lower portion of
the Dagong Creek and is indeed flooded every time and aggravated by GVHAI's construction of the concrete
fence. It contended, however, that the damage was due to a fortuitous event. Meanwhile, GVHAI averred that
the construction of the concrete fence was in the exercise of its proprietary rights and that it was done in
order to prevent outsiders from entering. It likewise asserted that they "should not be made inutile and lame-
duck recipients of whatever waters and/or garbage" that come from Alco Homes. GVHAI attributed sole
liability on E.B. Villarosa for bulldozing and construction works. The RTC found E.B. Villarosa and GVHAI jointly
and severally liable. The CA reversed the RTC's Decision and found no liability on the part of GVHAI.

Issue: Whether the CA erred in ruling that GVHAI was not responsible for the damage to Spouses Ermino's
properties.

Ruling: No. The bulldozing and construction works done by E.B. Villarosa, not to mention the denudation of
the vegetation at the Hilltop City Subdivision, made Alco Homes and Golden Village’s obligation, as lower
estates, more burdensome than what the law contemplated. Lower estates are only obliged to receive water
naturally flowing from higher estates and such should be free from any human intervention under Article
637 of the Civil Code and Article 50 of the Water Code. These provisions refer to easements relating to waters.
In the instant case, what flowed from Hilltop City Subdivision was not water that naturally flowed from a
higher estate. The bulldozing and flattening of the hills led to the softening of the soil that could then be
easily carried by the current of water whenever it rained. Thus, Alco Homes and Golden Village are not
anymore obligated to receive such waters and earth coming from Hilltop City Subdivision.

The Court agrees with the CA's observation that the concrete fence cannot be considered as an
impediment to Golden Village's obligation to receive the water, because if only naturally flowing water,
without any human intervention, cascaded down from the Hilltop City Subdivision, the concrete fence
would not pose as an obstruction to its flow. In this regard, the closure of the steel grille gate was effected
even before the construction made by E.B. Villarosa. Only EB Villarosa is liable.

Other Doctrines about easement

An easement or servitude is "a real right constituted on another's property, corporeal and immovable,
by virtue of which the owner of the same has to abstain from doing or to allow somebody else to do
something on his property for the benefit of another thing or person. (Art 613)

ARTICLE 613. An easement or servitude is an encumbrance imposed upon an immovable for the benefit of
another immovable belonging to a different owner. The immovable in favor of which the easement is
established is called the dominant estate; that which is subject thereto, the servient estate.

In this regard, Hilltop City Subdivision, the immovable in favor of which the easement is established, is
the dominant estate; while Alco Homes and Golden Village, those that are subject of the easement, are the
servient estates. It must be noted, however, that there is a concomitant responsibility on the part of Hilltop
City Subdivision not to make the obligation of these lower estates/servient estates more onerous. This
obligation is enunciated under second paragraph of Article 637, as abovementioned, and Article 627 of the
Civil Code:

ARTICLE 627. The owner of the dominant estate may make, at his own expense, on the servient estate any
works necessary for the use and preservation of the servitude, but without altering it or rendering it more
burdensome. For this purpose, he shall notify the owner of the servient estate, and shall choose the most
convenient time and manner so as to cause the least inconvenience to the owner of the servient estate.

Based on the ocular inspection conducted by the RTC of the Hilltop City Subdivision, the area was
bulldozed and the hills were flattened. There were no retaining walls constructed to prevent the water from
flowing down and the soil was soft. This flattening of the area due to bulldozing changed the course of water,
which ultimately led to the passing of said water to the house of Spouses Ermino.
11. CITY OF BATANGAS v PHILIPPINE SHELL PETROLEUM CORP (PSPC)

FACTS: PSPC is a Philippine corporation engaged in the business of manufacturing, refining and distribution of
petroleum products. PSPC owns and operates a refinery situated in Tabangao, Batangas City (Tabangao
Refinery).

In furtherance of the mandate of PD 87, to promote the discovery and production of indigenous petroleum,
the Department of Energy (DOE) executed Service Contract No. 38 with Shell Philippines Exploration (SPEX)
under which SPEX was tasked to explore and develop possible petroleum sources in North Western Palawan.
SPEX's exploration led to the discovery of an abundant source of natural gas which thereafter gave rise to the
Malampaya Project. The Malampaya Project required the construction of a 504-kilometer offshore pipeline for
the transport of natural gas from Malampaya field to Batangas, for treatment in PSPC's Tabangao Refinery.

On May 28, 2001, the Sangguniang Panlungsod enacted the Assailed Ordinance which requires heavy
industries operating along the portions of Batangas Bay within the territorial jurisdiction of Batangas City to
construct desalination plants to facilitate the use of seawater as coolant for their industrial facilities.

Subsequently, PSPC filed against Batangas City and the Sangguniang Panlungsod a Petition for Declaration of
Nullity before the RTC praying that the Assailed Ordinance be declared null and void. Particularly, PSPC argued
that the Assailed Ordinance contravenes the Water Code of the Philippines, and encroaches upon the power
of the National Water Resources Board (NWRB) to regulate and control the Philippines' water resources.

ISSUE: W/N the control and regulation of the use of water may be made subject of a city ordinance under the
regime of the Water Code - a national statute governing the same subject matter

RULING: NO. The Water Code governs the ownership, appropriation, utilization, exploitation, development,
conservation and protection of water resources. Under Article 3 thereof, water resources are placed under the
control and regulation of the government through the NWRB. In turn, the privilege to appropriate and use
water is one which is exclusively granted and regulated by the State through water permits issued by the
NWRB. Once granted, these water permits continue to be valid save only for reasons spelled out under the
Water Code itself.

Conversely, the power to modify, suspend, cancel or revoke water permits already issued also rests with
NWRB.

Accordingly, the Assailed Ordinance mandates all heavy industries operating along Batangas Bay to use
seawater in the operation of their respective facilities, and install desalination plants for this purpose. Failure
to comply with this mandatory requirement would have the effect of precluding continuous operation, and
exposing noncompliant parties to penal and administrative sanctions.

There is no doubt, therefore, that the Assailed Ordinance effectively contravenes the provisions of the Water
Code as it arrogates unto Batangas City the power to control and regulate the use of ground water which, by
virtue of the provisions of the Water Code, pertains solely to the NWRB. By enacting the Assailed Ordinance,
Batangas City acted in excess of the powers granted to it as an LGU, rendering the Assailed Ordinance ultra
vires.

13. Initiatives for Dialogue and Empowerment Through Alternative Legal Services, Inc. (IDEALS) v. Power
Sector Assets and Liabilities Management Corporation (PSALM) [GR. 192088, Oct. 9, 2012]

Main Point: Water rights was not granted to K-Water. It was only sold the hydroelectric facility. NPC, which is
the holder of a water right, is not mandated to transfer its water right to the private entity (K-Water) upon
sale. The Water Code was not violated. NPC still retains full supervision and control over the extraction and
diversion of waters from the Angat River.

FACTS: The RA 9136 (Electric Power Industry Reform Act of 2001), mandated PSALM to manage the orderly
sale, disposition, and privatization of National Power Corporation (NPC). PSALM commenced the privatization
of the Angat Hydro-Electric Power Plant (AHEPP), PSALM’s Board of Directors approved the Bidding
Procedures for the privatization of the AHEPP. An invitation to bid was published. Korea Water Resources
Corporation (K-Water) won the public bidding conducted by PSALM. Petitioners contend that PSALM clearly
violated the constitutional provisions on the appropriation and utilization of water as a natural resource, as
implemented by the Water Code of the Philippines limiting water rights to Filipino citizens and corporations
which are at least 60% Filipino-owned, when it awarded the AHEPP to K-Water. Petitioners thus argue that
the protection of their right to water and of public interest requires that the bidding process initiated by
PSALM be declared null and void for violating such right, as defined by international law and by domestic law
establishing the State’s obligation to ensure water security for its people. On the alleged violation of
petitioners’ and the people’s right to water, PSALM contends that such is baseless and proceeds from the
mistaken assumption that the Angat Dam was sold and as a result thereof, the continuity and availability of
domestic water supply will be interrupted. PSALM stresses that only the hydroelectric facility is being sold
and not the Angat Dam which remains to be owned by PSALM, and that the NWRB still governs the water
allocation therein while the NPC-FFWSDO still retains exclusive control over the opening of spillway gates
during rainy season. The foregoing evinces the continued collective control by government agencies over the
Angat Dam, which in the meantime, is in dire need of repairs, the cost of which cannot be borne by the
Government.

ISSUE: WON there was a violation of the Water Code provisions on the grant of water rights

HELD: No. Foreign ownership of a hydropower facility is not prohibited under existing laws. Under the Water
Code concept of appropriation, a foreign company may not be said to be "appropriating" our natural
resources if it utilizes the waters collected in the dam and converts the same into electricity through
artificial devices. Since only the power plant is to be sold and privatized, the operation of the non-power
components such as the dam and reservoir, including the maintenance of the surrounding watershed,
should remain under the jurisdiction and control of NPC which continue to be a government corporation.
There is therefore no necessity for NPC to transfer its permit over the water rights to K-Water. NPC’s water
rights remain an integral aspect of its jurisdiction and control over the dam and reservoir.

There is nothing in the EPIRA which declares that it is mandatory for PSALM or NPC to transfer or assign
NPC’s water rights to buyers of its multi-purpose hydropower facilities as part of the privatization process.
While PSALM was mandated to transfer the ownership of all hydropower plants except those mentioned in
Sec. 47 (f), any transfer of possession, operation and control of the multi-purpose hydropower facilities, the
intent to preserve water resources under the full supervision and control of the State is evident when PSALM
was obligated to prescribe safeguards to enable the national government to direct water usage to domestic
and other requirements "imbued with public interest." There is no express requirement for the transfer of
water rights in all cases where the operation of hydropower facilities in a multi-purpose dam complex is
turned over to the private sector. NPC retains full supervision and control over the extraction and diversion
of waters from the Angat River.

Notes:
NWRB – National Water Resource Board

NPC-FFWSDO – National Power Corporation-Flood Forecasting and Warning System for Dam Operations

Appropriation of water(Water Code) - the acquisition of rights over the use of waters or the taking or
diverting of waters from a natural source in the manner and for any purpose allowed by law.

14. PILAR DEVELOPMENT CORP vs RAMON DUMADAG G.R. No. 194336  March 11, 2013
FACTS:
Petitioner instituted an accion for publiciana against respondents for allegedly building their shanties,
without its knowledge and consent, in its property at Phase V, Pilar Village Subdivision, Almanza, Las which
was designated as an open space intended for village recreational facilities and amenities for subdivision
residents. The respondents deny. TRIAL COURT: dismissed petitioner’s complaint inding that the land being
occupied by respondents are situated on the sloping area going down and leading towards the Mahabang Ilog
Creek, and within the three-meter legal easement; thus, considered as public property and part of public
dominion which could not be owned by petitioner. Petitioner filed an MR which was denied by trial court;
later in the CA as well.

ISSUE: WON petitioner still retains ownership over the portion of the subject property occupied by
respondents even if it is within the 3-meter strip reserved for public easement since the strip does not form
part of the public dominion?

HELD: NO. An easement or servitude is a real right on another's property, corporeal and immovable, whereby
the owner of the latter must refrain from doing or allowing somebody else to do or something to be done on
his or her property, for the benefit of another person or tenement; it is jus in re aliena, inseparable from the
estate to which it actively or passively belongs, indivisible, perpetual, and a continuing property right, unless
extinguished by causes provided by law. There are two kinds of easement according to source: by law or by
will of the owners – the former are called legal and the latter voluntary easement. A legal easement or
compulsory easement, or an easement by necessity constituted by law has for its object either public use or
the interest of private persons.

While Article 630 of the Code provides for the general rule that "the owner of the servient estate
retains the ownership of the portion on which the easement is established, and may use the same in such a
manner as not to affect the exercise of the easement," Article 635 thereof is specific in saying that "all matters
concerning easements established for public or communal use shall be governed by the special laws and
regulations relating thereto, and, in the absence thereof, by the provisions of this Title Title VII on Easements
or Servitudes.

In the case at bar, DENR A.O. No. 99-21 dated June 11, 1999 is applicable. Certainly, in the case of
residential subdivisions, the allocation of the 3-meter strip along the banks of a stream, like the Mahabang Ilog
Creek in this case, is required and shall be considered as forming part of the open space requirement pursuant
to P.D. 1216. In the same vein is the Water Code which says “The banks of rivers and streams and the shores
of the seas and lakes throughout their entire length and within a zone of three (3) meters in urban areas…are
subject to the easement of public use in the interest of recreation, navigation, floatage, fishing and salvage.”
Thus, the above prove that petitioner’s right of ownership and possession has been limited by law with
respect to the 3-meter strip/zone along the banks of Mahabang Ilog Creek. Despite this, the Court says that
respondents do not have a better right to possess the subject portion of the land because they are occupying
an area reserved for public easement purposes.
15. LEONARDO AZARCON, MANUEL AZARCON and ESTEBAN ABOBO, petitioners, vs. VICTOR EUSEBIO,
respondent.

FACTS:

 Eusebio filed for a lease application over a parcel of land, Azarcon occupied a portion thereof under a
homestead application.
 This caused a dispute between the two. While their dispute was pending, Eusebio filed a case against
alleging that he acquired the parcel of land by lease from the Director of Lands and that Azarcon had
been occupying a portion thereof.
 He prayed for Azarcon to vacate the premises. Azarcon on the other hand, alleged that he had been
occupying the land by virtue of a homestead application prior to the lease application of Eusebio, with
interruptions during the war and until the time of filing of the action. The trial court ruled in favor of
Eusebio and while pending appeal, a writ of execution was issued ordering Azarcon to leave the
premises without expressly ordering Azarcon to desist from gathering pending fruits.
 Azarcon moved for the setting aside of the order and posted bond as he was required by the court. The
court eventually set aside the order but reinstated it under the wrong premise that Azarcon failed to
post the required bond. Despite the reinstatement of the order, Azarcon continued to gather the
pending fruits on the land.

ISSUE: Whether or not the defendant is justified in harvesting his pending fruits upon the court order of
execution?

RULING:

YES. While the court order ordered the defendants to move out from the premises, it did not prohibit
them from gathering the crop then existing thereon. Under the law, a person who is in possession and who is
being ordered to leave a parcel of land while products thereon are pending harvest, has the right to a part of
the net harvest, as expressly provided by Article 545 of the Civil Code: If at the time the good faith ceases,
there should be any natural or industrial fruits, the possessor shall have a right to a part of the expenses of
cultivation, and to a part of the net harvest, both in proportion to the time of the possession.

As the order of execution did not expressly prohibit the defendants-appellants from gathering the
pending fruits, which fruits were the result of their possession and cultivation of the land, it cannot be said
that they committed an act which is clear violation of the court’s order. Besides, the defendants-appellants
had presented, after receipt of the order of execution, a motion to set aside the said order, and this motion to
stay execution was granted. They further presented a bond in accordance with the order of the court and had
it approved by the Court of First Instance. It was perhaps in expectation of this resolution of the court setting
aside the order of execution that defendants-appellants may have felt justified in entering the land and
harvesting the fruits existing thereon.

16. Cordova v Cabral

Facts: Mr. Gregorio Z. Ocampo, husband of Felipa Cordero and father of the other petitioners, died on May 17,
1958, and left several properties. Petitioners took possession of the properties left by him, among others
is a riceland. However, they found out that a portion of the same was possessed by Victoria P. Cabral,
Alejandro Berboso and Dalmacio Montaos. Petitioners filed a civil case alleging that Victoria P. Cabral
continued claiming to be the owner of the land while her co-defendants continued recognizing
her as the owner thereof instead of the plaintiffs despite demands to vacate the property. They
also claim that due to respondents' occupancy of the aforementioned portion of land, petitioners
failed to realize a yearly harvest of at least ten (10) cavans of palay at the rate of P10.00 per cavan,
from the harvest- time of 1958 up to the present.
 RTC dismissed the complaint. On appeal, even though the CA found that the disputed piece of land is
registered in the name of the petitioners but because of the supposed oral sale of the same to the
predecessors of the defendants mentioned by the petitioners on appeal, it affirmed the judgment of the trial
court dismissing the complaint for the recovery of the land

ISSUES: 1. Are the heirs of the registered owner entitled to the land?
2. May the respondents be held liable for reimbursement of fruits received?

RULING:
1. YES. The Court of Appeals found as a fact that the disputed portion of the land is admittedly part of the land
originally registered in the name of petitioners’ predecessor in interest. There should be no question that that
title had become imprescriptible and the original registrant as well as his successors had the right to vindicate
their ownership against anybody else.

2. YES. The respondents, by their own admission, are in possession of the disputed land. There is no evidence
that they were possessors in bad faith. However, their good faith ceased when they were served with
summons to answer the complaint. As possessors in bad faith from the service of the summons they "shall
reimburse the
fruits received and those which the legitimate possessor could have received and he shall only have the right
to recover expenses he has incurred for the preservation of the thing and for cultivation, gathering and
preservation of fruits. (Art. 549, in relation to Arts. 546 and 443)

17. Mendoza and Enriquez v De Guzman

FACTS: In 1916, a piece of land identified as lot No. 687 was the subject of a court action between the Solis
Spouses and Mendoza. Mendoza won the case and Mendoza was in fact put in possession of the property
pursuant to a court order. In 1924, cadastral proceedings were instituted over the same parcel of land by
Martin Mendoza and Natalio Enriquez, the owners and proprietors of the land. In the decision rendered in the
cadastral case, this lot was adjudicated in favor of Mendoza and Enriquez in equal parts pro indiviso subject to
the right of retention on the part of Manuel de Guzman (who was working on the land) until he shall have
been indemnified for the improvements existing on the land.
De Guzman obtained a writ possession and since then he has had dominion over the land. He has made
improvements on said land be planting coconut trees thereon. Being unable to come to an agreement as to
the amount which should be allowed for the improvements made on the land, Mendoza and Enriquez began
an action requesting the court to, among others, fix the value of the necessary and useful expenses incurred
by De Guzman in introducing the improvements.
The trial court held: that in accordance with the provisions of articles 435 and 454 in relation with article 361
of the Civil Code, the value of the "indemnization" to be paid to the defendant should be fixed according to
the necessary and useful expenses incurred by him in introducing "las plantaciones en cuestion.” After trial,
Judge of First Instance rendered judgment declaring that De Guzman has the right to collect from Mendoza
and Enriquez the sum of P2,046 as compensation for the necessary and useful expenditures.
ISSUE: Is De Guzman entitled to be reimbursed as regard expenses he incurred on improvements on the land?
HELD: Yes. Article 361 of the Civil Code in the original Spanish text uses the word "indemnizacion." However
one may speculate as to the true meaning of the term "indemnizacion" whether correctly translated as
"compensation" or "indemnity," the amount of the "indemnizacion" is the amount of the expenditures
mentioned in articles 453 and 454 of the Civil Code, which in the present case is the amount of the necessary
and useful expenditures incurred by the defendant. Necessary expenses have been variously described by the
Spanish commentators as those made for the preservation of the thing (4 Manresa's Comentarios al Codigo
Civil, p. 258); as those without which the thing would deteriorate or be lost (Scaevola's Comentarios al Codigo
Civil, p.408); as those that augment the income of the things upon which they are expanded (4
Manresa's Comentarios al Codigo Civil, p. 261; 8 Scaevola's Comentarios al Codigo Civil, p. 416). Among the
necessary expenditures are those incurred for cultivation, production, upkeep, etc. (4 Manresa's Comentarios
al Codigo Civil, p. 257). Here the plaintiffs have chosen to take the improvements introduced on the land and
are disposed to pay the amount of the necessary and useful expenses incurred by the defendant . Inasmuch
as the retentionist, who is not exactly a possessor in good faith within the meaning of the law, seeks to be
reimbursed for the necessary and useful expenditures, it is only just that he should account to the owners of
the estate for any rents, fruits, or crops he has gathered from it.

18. Robles and Martin v. Lizarraga Hermanos 42 Phil. 584

FACTS: Anastasia de la Rama died on the 17th of October, 1916, leaving six children, to wit, Magdalena, Jose,
Evarista, Zacarias, Felix, and Purificacion, surnamed Robles, and some properties, among which is house No. 4
on Iznart Street in the city of Iloilo. The children and heirs of Anastasia de la Rama entered into partnership
with Lizarraga Hermanos in liquidation and settlement of their accounts, by virtue of which the competent
court awarded to said partnership the properties left by the deceased, including the aforesaid house No. 4 on
Iznart Street. Evarista Robles, one of the heirs, since before the death of her mother Anastasia de la Rama, has
been with her husband occupying the aforesaid house No. 4 on Iznart Street, at the beginning, by permission
of her mother, later on by the consent of her coheirs, and lastly by agreement with the partnership, Lizarraga
Hermanos, to whom it had been awarded, having made some improvements on the house, the value of which
is fixed at four thousand five hundred pesos (P4,500), and paying to said partnership forty pesos (P40)
monthly as rent of the upper story. On March 18, 1918, Lizarraga Hermanos notified Evarista Robles (Exhibit J)
that beginning April next the rent of the upper story of the house would be raised to sixty pesos (P60) a
month, and that, if she did not agree to the new rate of rent, she might vacate the house. Evarista Robles
refused to pay such a new rate of rent and to vacate the house, and Lizarraga Hermanos brought suit against
her for ejectment. Evarista Robles sued Lizarraga Hermanos afterwards to recover the value of the
improvements.
ISSUES: 1.) Whether or not Evarista Robles is the owner of the aforesaid improvements and has the right to
demand payment of their value.
2.) Whether or not she has any right to retain the building until the said value is paid to her.
HELD: 1.) Yes. Robles is the owner of the improvements. The expenditures incurred in these improvements
were not necessary inasmuch as without them the house would have continued to stand just as before, but
were useful, inasmuch as with them the house better serves the purpose for which it was intended, being
used as a residence, and the improvements consisting of the addition of a dining room, kitchen, closet, and
bathroom in the lower and upper stories of the house, and a stable, suitable as a coach house and dwelling, it
is beyond doubt that such improvements are useful to the building. Since the improvements are useful and
Robles’ possession is in good faith, applying Article 453, it is beyond question that Evarista Robles is the owner
of such improvements, and entitled to reimbursement therefor.
2.) Yes. It is a fact that the value of the improvements in question has not as yet been paid by Lizarraga
Hermanos. Wherefore, if Evarista Robles and her husband are entitled to retain the building until the value of
such improvements is paid them, Lizarraga Hermanos have not yet any right to oust them from the building,
nor, therefore, to be indemnified for any damages caused by the refusal of the plaintiffs found on their
legitimate rights. Hence, due to the non-reimbursement of the aforesaid useful expenditures, the possessor in
good faith has the right of retention until she has been fully reimbursed with the same.

19. MWSS v. CA

FACTS:

The City of Dagupan (CITY) filed a complaint against the former National Waterworks and Sewerage Authority
(NAWASA), now the Metropolitan Waterworks and Sewerage System (MWSS), for recovery of the ownership
and possession of the Dagupan Waterworks System. NAWASA interposed as one of its special defenses R.A.
1383 which vested upon it the ownership, possession and control of all waterworks systems throughout the
Philippines and as one of its counterclaims the reimbursement of the expenses it had incurred for necessary
and useful improvements amounting to P255,000.00. Judgment was rendered by the trial court in favor of the
CITY on the basis of a stipulation of facts. The trial court found NAWASA to be a possessor in bad faith and
hence not entitled to the reimbursement claimed by it.

ISSUE:

Whether or not MWSS has the right to remove all the useful improvements introduced by NAWASA to the
Dagupan Waterworks System, notwithstanding the fact that NAWASA was found to be a possessor in bad
faith?

HELD:

No.

Article 449 of the Civil Code of the Philippines provides that "he who builds, plants or sows in bad faith on the
land of another, loses what is built, planted or sown without right to indemnity." As a builder in bad faith,
NAWASA lost whatever useful improvements it had made without right to indemnity. Moreover, under Article
546 of said code, only a possessor in good faith shall be refunded for useful expenses with the right of
retention until reimbursed; and under Article 547 thereof, only a possessor in good faith may remove useful
improvements if this can be done without damage to the principal thing and if the person who recovers the
possession does not exercise the option of reimbursing the useful expenses. The right given a possessor in
bad faith is to remove improvements applies only to improvements for pure luxury or mere pleasure, provided
the thing suffers no injury thereby and the lawful possessor does not prefer to retain them by paying the value
they have at the time he enters into possession (Article 549).

20.Bachrach vs Seifert and Elianoff

Facts:

The deceased E. M. Bachrach, who left no forced heir except his widow Mary McDonald Bachrach, in his last
will and testament made various legacies in cash and willed the remainder of his estate. The estate of E. M.
Bachrach, as owner of 108,000 shares of stock of the Atok-Big Wedge Mining Co., Inc., received from the latter
54,000 shares representing 50 per cent stock dividend on the said 108,000 shares. On June 10, 1948, Mary
McDonald Bachrach, as usufructuary or life tenant of the estate, petitioned the lower court to authorize the
Peoples Bank and Trust Company, as administrator of the estate of E. M. Bachrach, to transfer to her the said
54,000 shares of stock dividend by indorsing and delivering to her the corresponding certificate of stock,
claiming that said dividend, although paid out in the form of stock, is fruit or income and therefore belonged
to her as usufructuary or life tenant. Sophie Siefert and Elisa Elianoff, legal heirs of the deceased, opposed said
petition on the ground that the stock dividend in question was not income but formed part of the capital and
therefore belonged not to the usufructuary but to the remainderman. While appellants admit that a cash
dividend is an income, they contend that a stock dividend is not, but merely represents an addition to the
invested capital.

Issue:

Whether or not a dividend is an income and whether it should go to the usufructuary.

Held:

Yes it is an income and go to usufruactuary.

The usufructuary shall be entitled to receive all the natural, industrial, and civil fruits of the property in
usufruct. The 108,000 shares of stock are part of the property in usufruct. The 54,000 shares of stock dividend
are civil fruits of the original investment. They represent profits, and the delivery of the certificate of stock
covering said dividend is equivalent to the payment of said profits. Said shares may be sold independently of
the original shares, just as the offspring of a domestic animal may be sold independently of its mother. If the
dividend be in fact a profit, although declared in stock, it should be held to be income. A dividend, whether in
the form of cash or stock, is income and, consequently, should go to the usufructuary, taking into
consideration that a stock dividend as well as a cash dividend can be declared only out of profits of the
corporation, for if it were declared out of the capital it would be a serious violation of the law.

Under the Massachusetts rule, a stock dividend is considered part of the capital and belongs to the
remainderman; while under the Pennsylvania rule, all earnings of a corporation, when declared as dividends in
whatever form, made during the lifetime of the usufructuary, belong to the latter. The Pennsylvania rule is
more in accord with our statutory laws than the Massachusetts rule.

21. HEMEDES VS. CA ; G.R. No. 108472 October 8, 1999

Facts: Justa Kausapin executed a deed of donation covering a parcel of land in favor of Maxima Hemedes.

Subsequently, an OCT was issued in the name of Maxima, with the annotation that "Justa Kausapin shall have
the usufructuary rights over the parcel of land during her lifetime or widowhood.”

Thereafter, Maxima and her husband constituted a real estate mortgage over the subject property in favor of
R & B Insurance to serve as security for a loan they obtained.

Since Maxima failed to pay the loan, the land was sold at a public auction with R & B Insurance as the highest
bidder.

The lower court held that R & B Insurance is not a mortgagee in good faith because the fact that the certificate
of title indicates upon its face that the land is subject to an encumbrance, i.e. usufructuary rights in favor of
Justa Kausapin should have prompted R & B Insurance to investigate further the circumstances behind this
encumbrance.

R & B Insurance argues that the owner of a parcel of land may still sell the same even though such land is
subject to a usufruct.

Issue: W/N the annotation of usufructuary rights in favor of Justa Kausapin is a sufficient cause to require R &
B Insurance to investigate Maxima Hemedes' title.

Ruling: No. The annotation of usufructuary rights does not impose upon R & B Insurance the obligation to
investigate the validity of its mortgagor's title.

Usufruct gives a right to enjoy the property of another with the obligation of preserving its form and
substance.  The usufructuary is entitled to all the natural, industrial and civil fruits of the property and may
personally enjoy the thing in usufruct, lease it to another, or alienate his right of usufruct, even by a gratuitous
title, but all the contracts he may enter into as such usufructuary shall terminate upon the expiration of the
usufruct. Clearly, only the jus utendi and jus fruendi over the property is transferred to the usufructuary. The
owner of the property maintains the jus disponendi or the power to alienate, encumber, transform, and even
destroy the same.  This right is embodied in the Civil Code, which provides that the owner of property the
usufruct of which is held by another, may alienate it, although he cannot alter the property's form or
substance, or do anything which may be prejudicial to the usufructuary. 

Based on the foregoing, the annotation of usufructuary rights in favor of Justa Kausapin is not a sufficient
cause to require R & B Insurance to investigate Maxima’s title, for the reason that Maxima’s ownership over
the land remained unimpaired despite such encumbrance. R & B Insurance had a right to rely on the
certificate of title and was not in bad faith in accepting the property as a security for the loan it extended to
Maxima.
22. Fabie v Gutierrez David
Facts:
Josefa Fabie is the usufructuary of the income of certain houses at Santo Cristo, Binondo, and Ongpin,
Santa Cruz, Manila, under the ninth clause of the will of the deceased Rosario Fabie. The owner of Santo Cristo
property abovementioned is the respondent Juan Grey. Previously, litigation arose between Fabie and Grey
and the owner of the Ongpin property as intervenors, involving the administration of the houses mentioned in
clause 9 of the will. That suit was decided by the court, upon a stipulation in writing submitted by the parties
to and approved by the court.
Fabie commenced an action of unlawful detainer against the herein respondent Ngo Boo Soo, alleging
the he is occupying the premises at Santo Cristo on a month-to month rental; that she is the administratrix
and usufructuary of said premises; "that the defendant offered to pay P300 monthly rent, for the said
premises including the one door which said defendant, without plaintiff's consent and contrary to their
agreement, had subleased to another Chinese, but plaintiff refused, based on the fact that the herein plaintiff
very badly needs the said house to live in, as her house was burned by the Japanese; that defendant was duly
notified, to leave the said premises, but he refused"; and she prayed for judgment of eviction and for unpaid
rentals.
Juan Grey intervened in the unlawful detainer suit, alleging that he is the sole and absolute owner of
the premises in question; that the only right recognized in favor of Josefa Fabie as usufructuary of the income
of said premises is to receive the rents therefrom when due; and that she has no right nor authority to
administer the said premises nor to lease them nor to evict tenants, which right and authority are vested in
the intervenor as owner of the premises.
Issue:
Who has the right to manage or administer the property — to select the tenant and to fix the amount
of the rent?
Ruling:
Whoever has that right has the right to the control and possession of the property in question,
regardless of the title thereto. There is therefore no dispute as to the title to or the respective interests of the
parties in the property in question. The naked title to the property is to admittedly in the respondent Juan
Grey, but the right to all the rents thereof, with the obligation to pay the taxes and insurance premiums and
make the necessary repairs, is, also admittedly, vested in the usufructuary, the petitioner Josefa Fabie, during
her lifetime.
The pretension of the respondent Juan Grey that he is the administrator of the property with the right
to choose the tenants and to dictate the conditions of the lease is contrary to both the letter and the spirit of
the said clause of the will, the stipulation of the parties, and the judgment of the court. He cannot manage or
administer the property after all the acts of management and administration have been vested by the court,
with his consent, in the usufructuary. He admitted that before said judgment he had been collecting the rents
as agent of the usufructuary under an agreement with the latter.
As a corollary to her right to all the rent, to choose the tenant, and to fix the amount of the rent, she
necessarily has the right to choose herself as the tenant thereof, if she wishes to; and, as she fulfills her
obligation to pay the taxes and insure and conserve the property properly, the owner has no legitimate cause
to complain. As Judge Nable of the municipal court said in his decision, "the pretension that the plaintiff, being
a mere usufructuary of the rents, cannot occupy the property, is illogical if it be taken into account that that
could not have been the intention of the testatrix."
23. Vda. De Aranas vs Aranas

Facts: Fr. Teodoro Aranas, a priest of the Roman Catholic Church, died on January 19, 1953. He had executed
on his Last Will and Testament which was admitted to probate on August 31, 1956. In said Last Will and
Testament, Fr. Teodoro Aranas stipulated the following:

A. The return to Aniceto Aranas or his heirs of all properties acquired by Fr. Aranas from his brother Aniceto
Aranas and 10 parcels of land... B. The return to Carmelo Aranas or his heirs of all properties acquired by Fr.
Aranas from his brother Carmelo Aranas and 10 parcels of land... C. The special administration of the
remainder of the estate of the testator by Vicente Aranas, a faithful and serviceable nephew and designating
him also as recipient of 1/2 of the produce of said properties after deducting the expenses for the
administration and the other 1/2 of the produce to be given to the Catholic Church for the eternal repose of
the testator's soul. Fourth. It is my will that the lands I had bought from other persons should be converged
and placed under a "special administrator." The special administrator of these lands, for his office, should
receive one half of all the produce from which shall be deducted the expenses for the administration, and the
other half of the produce should be received by the Roman Catholic Church and should be spent for my soul,
Vicente B. Aranas (Tingting), because he is a faithful and serviceable nephew, should be the first special
administrator of said properties, without bond, until his death or until he should not want to hold the said
office anymore. Anyone of the sons of my brother Carmelo Aranas can hold the said office of special
administrator, and none other than they. Their father, my brother Carmelo Aranas shall be the one to decide
who among them shall hold the said office, but upon the death of my said brother Carmelo Aranas, his said
sons will have power to select the one among them ourselves. The special administration is perpetual. A
petition for the removal of Vicente Aranas as administrator was filed.

Issue: W/N Vicente Aranas has the right to enjoy the usufructuary of said lands.

Ruling: Yes. The group “C” property is subject to Remunerative legacy by way of usufruct of the net proceeds
of 1/2 of the estate after deducting expenses for administration in favor of Vicente Aranas, during his lifetime
and shall continue an administrator of the estate, and, who, upon his death or refusal to continue such
usufruct, may be succeeded by any of the brothers of the administrator as selected by their father, Carmelo
Aranas, if still alive or one selected by his sons if, he, Carmelo, is dead; Pursuant to the Will. 

It was the sincere intention and desire of the testator to reward his nephew Vicente Aranas for his faithful and
unselfish services by allowing him to enjoy one-half of the fruits of the testator's third group of properties until
Vicente's death and/or refusal to act as administrator in which case, the administration shall pass to anyone
chosen by Carmelo Aranas among his sons and upon Carmelo's death, his sons will have the power to select
one among themselves. Vicente Aranas therefore as a usufructuary has the right to enjoy the property of his
uncle with all the benefits which result from the normal enjoyment (or exploitation) of another's property,
with the obligation to return, at the designated time, either the same thing, or in special cases its equivalent.
This right of Vicente to enjoy the fruits of the properties is temporary and therefore not perpetual as there is a
limitation namely his death or his refusal. Likewise his designation as administrator of these properties is
limited by his refusal and/or death and therefore it does not run counter to Art. 870 of the Civil Code relied
upon by the petitioners. Be it noted that Vicente Aranas is not prohibited to dispose of the fruits and other
benefits arising from the usufruct. Neither are the naked owners (the other heirs) of the properties, the
usufruct of which has been given to Vicente Aranas prohibited from disposing of said naked ownership
without prejudice of course to Vicente's continuing usufruct. 

24. Locsin vs Honorable Judge Vicente Valenzuela & Sps. Joseph and Helen Bennett Schon

Facts: Petitioners were co-owners of a large tract of agricultural land known as "Hacienda Villa Regalado". A
portion of this land was subject to the lifetime usufructuary rights of respondent Schon. Former President
Marcos promulgated P.D. No. 27 decreeing the "Emancipation of Tenants." The tract of land owned in
common by the petitioners, including the portion subject to Helen Schon's usufructuary rights, fell within the
scope of "Operation Land Transfer”. Petitioners sought the opinion of the DAR as to who should be entitled to
receive the rental payments made by the respondent tenants to Helen Schon. The DAR District Officer
rendered an opinion that the rental payments were properly considered as amortization payments for the
land and as such should pertain to the land- owners and not to the usufructuary.

Petitioners filed against the respondent a Case for collection of rentals plus damages since the land subject to
Helen Schon's usufructuary rights was among the parcels of land which has been declared by the DAR as a
land reform area, the rental payments collected from the tenants should be delivered to petitioners.
Petitioners sought to recover from the Schons all such previous rentals or the money value, and to prevent the
respondents from collecting any further rental payments from the tenants of the land involved. The
respondents filed an answer and urged that jurisdiction was vested in the CAR instead, they further argued
that, upon the assumption arguendo that the Court of First Instance did have jurisdiction, Article 609 of the
Civil Code must in any case be applied by that court in resolving the case.

Issue: Whether or not the land subject to the Operation Land Transfer, extinguishes the usufructuary right of
the respondent

Ruling: No. For all legal intents and purposes, Helen Bennett-Schon belongs to the category of a landowner,
since she is the recipient of any and all fruit derived from the land of which the plaintiffs are the naked
owners. The usufruct lasts for as long as Helen Bennett-Schon lives. Should the thing in usufruct be
expropriated for public use, the owner shall be obliged either to replace it with another thing of the same
value and of similar conditions, or to pay the usufructuary the legal interest on the amount of the indemnity
for the whole period of the usufruct. If the owner chooses the later alternative, he shall give security for the
payment of the interest – Article 609.