Believing that he owned a certain parcel of land and completely unaware of any defect in

his title thereto, Mr. A started to build a house thereon. When Mr. P. the real owner of
the land learned of ‘Mr. A’s actions, Mr. P immediately demanded Mr. A to leave the
premises. However. Mr. A refused to leave, and instead, asserted that as a builder in
good faith. Mr. P is obliged to sell the land to him. 
(a) is the claim of Mr. A correct? Explain. (3%) 
SUGGESTED ANSWER: 
No, Mr. A is not correct. Mr. A who was completely unaware of any defect in his
title, is a builder in good faith. Mr. P who prompted Mr. A’s possession also acted
in good faith. Article 448 appiies in this case, which provides that only the owner of
the land on which anything has been built, sown or planted in good faith, has the
right to appropriate as his own the works, sowing or planting, after payment of the
indemnity for necessary expenses and useful expenses where applicable, 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. The law
grants said rights to the owner of the land. The builder in good faith, Mr. A in this
case, cannot compel Mr. P, the owner of the land, to choose which right to
exercise, for the option belongs to the owner alone. 
ALTERNATIVE ANSWER: 
No, Mr. A is incorrect. He is a builder in bad faith. When Mr. A started building his
house, he was completely unaware of any defect in his title and therefore, was, at
the outset, a builder in good faith but when Mr. P immediately demanded Mr. A to
leave the premises before he completed the house, which Mr. A refused to do and
he continued building since he persisted in the belief that his title had no fatal
defect, he became a builder in bad faith. Mr. P, the real owner, who immediately
asked him to leave the premises, acted in good faith. He has by law the option of
acquiring the house without paying for it (Art. 499, Civil Code). 
(b) Assuming that Mr. P all the while, know but did not object to Mr. Als construction of
the house on his property, may Mr. A compel Mr. P to purchase the said improvement
due to Mr. P’s bad faith? Explain. (3%) 
SUGGESTED ANSWER: 
Yes, Mr. A may compel Mr. P to purchase the improvements, Article 454 of the Civil
Code provides that when the landowner acted in bad faith and the builder, planter
or sower proceeded in good faith, the provisions of article 447 shall apply. Article
453 of the same Code provides that it is understood that there is bad faith on the
part of the landowner whenever the act was done with his knowledge and without
opposition on his part. Article 447 provides that the owner of the land who makes
thereon, personally or through another, plantings, constructions or works with the
materials of another, shall pay their value; and, if the landowner acted in bad faith,
the owner of the materials may remove them in any event, with a right to be
indemnified for damages. The landowner, having known and without opposing the
construction made by Mr. A is deemed to have acted in bad faith: Article 447,
therefore, applies and Mr. P shall pay the value of the improvement; i.e., the value
of the materials, plus damages. 
ALTERNATIVE ANSWER: 
Since Mr. A is a builder in bad faith for continuing to build despite being asked to leave
the premises, and Mr. P also acted in bad faith for not objecting to Mr. A’s construction
of his house on his property, they shall be treated to have both acted in good faith
(Article 453 of the Civil Code). The bad faith of Mr. A is neutralized by the bad faith of
Mr. P; thus, Article 448 of the Civil Code shall apply. The two options still belong to Mr. P,
not Mr. A. 
A.8.
Mr. E leased a piece of land from Mr. F to be used for his sawmill business for a period of
ten (10) years. Consequently, Mr. E placed heavy machineries there on to be used for his
aforementioned business, with the intention of removing them after the expiration of the
lease period. 
Are Mr. E’s heavy machineries considered real properties under the Civil Code? Explain.
(3%) 
SUGGESTED ANSWER: 
No, they are movables. Machinery which is movable in its nature only becomes
immobilized when placed in a plant by the owner thereof in a land or building
which is also owned by him, for an industry or works which may be carried on in a
tenement and which tend directly to meet the needs of said industry or works, but
not when so placed by a tenant, a usufructuary, or any person having only a
temporary right, unless such person acted as the agent of the owner, for instance,
if the lease contained a stipulation that any useful improvement which the lessee
introduces on the leased property shall pertain to the lessor at the termination of
the lease. Here, the heavy machineries were placed by Mr. E on a piece of land
leased from Mr. F with the intention of removing them after the expiration of the
lease period. Being movable in nature, said machineries were not deemed
immobilized (Davao Saw Mill Co. Inc. v. Castillo, G.R. No. L-40411, August 7,
1935). 
A.9.
Ms. U is a usufructuary of a piece of land owned by Mr. L. During the existence of the
usufruct, Ms. U introduced various useful improvements on the land. Upon termination
of the usufruct, Mr. L requested Ms. U to remove the said improvements, but Ms. U
refused, demanding instead that Mr. L reimburse her the value of the same. 
(a) What is a usufruct? (2%) 
SUGGESTED ANSWER: 
A usufruct gives a right to enjoy the property of another with the obligation of
preserving its form and substance, unless the title constituting it or the law
otherwise provides (Article 562, Civil Code). 
The Court has further declared that a usufruct, in essence, is nothing else but
simply allowing one to enjoy another’s property. It is also defined as the right to
enjoy the property of another temporarily, including both the jus utendi  and
the jus fruendi,  (plus, impliedly, the jus possidendi)  with the owner retaining
the jus disponendi  or the power to alienate the same (Moralidad v. Sps. Pernes,
G.R. No. 152809, August 3, 2006). 
(b) Is Ms. U’s demand proper? Explain. (3%) 
SUGGESTED ANSWER: 
No, the demand is not proper. The Civil Code provides that the usufructuary may
make on the property held in usufruct any useful improvements, or expenses for
mere pleasure, which he may deem proper, provided he does not alter its form or
substance; but he shall have no right to be indemnified therefor. He may, however,
remove such improvements should it be possible to do so without injury to the
property (Article 579, Civil Code). 
Ms. U, thus, has no right to be indemnified for any improvements which she might
have made on the land held in usufruct. She may only remove them should it be
possible to do so without injury to the property. 
A.10.
Village H and Village L are adjoining residential villages in a mountainous portion of
Antipolo City, Rizal, with Village L being lower in elevation than Village 11. In an effort to
beautify Village H. its developer, X, Inc., constructed a clubhouse which included an
Olympic-sized swimming pool and an artificial lagoon on a portion of land overlooking
Village L. 
During the monsoon season, the continuous heavy rains caused Village II’s swimming
pool and artificial lagoon to overflow, resulting into a massive spillover that damaged
various properties in Village L. Aggrieved, the homeowners of Village L filed a complaint
for damages against X, Inc. In defense, X, Inc. contended that pursuant to the Civil Code,
Village L, as the lower estate, was obliged to receive the waters descending from Village
H. the higher estate. Hence, it cannot be held liable for damages. 
Is X. Inc.’s position tenable? Explain. (3%) 
SUGGESTED ANSWERS: 
No, X Inc.’s position is not tenable. The Water Code provides that lower estates are
only obliged to receive waters which naturally and without intervention of man
descend from higher estates (Art. 50, Water Code of the Philippines). The Code also
provides that the owner of the higher estate cannot make works which will
increase the natural flow. Therefore, Village L, as the lower estate, was only obliged
to receive the waters which naturally and without intervention of man descend
from higher estates and not those which are due to the massive spillover from
constructions made by X, Inc. (Article 537 of the Civil Code). 
X, Inc, therefore, is liable for damages. 

B.11.
Mr. R is the registered owner of a parcel of land located in Cebu City covered by Transfer
Certificate of Title (TCT) No. 1234 issued in 1955. Since his acquisition of the lot. Mr. R
and his family had been in continuous, open, and peaceful possession thereof. Mr. R
died in 1980, resulting in the land being transferred in the names of his heirs, i.e., A, B.
and C, who became registered owners thereof as per TCT No. 5678. During the entire
time, said land had never been encumbered or disposed, and that its possession always
remained with them. 
Sometime in 1999. A, B, and C wanted to build a concrete fence around the parcel of
land, but they were opposed by Mrs. X, who started claiming ownership over the same
property on the strength of a Deed of Absolute Sale purportedly entered into by her
with Mr. R during the time that he was still alive, Aggrieved, A, B, and C intend to file a
complaint for quieting of title against Mrs. X. 
(a) What are the substantive requisites for the action to prosper? Do they obtain in this
case? Explain. (3%) 
SUGGESTED ANSWER: 
For an action to quiet title to prosper, the following requisites must obtain in the
case: 
(1) the plaintiff or complainant has a legal or an equitable title 
to or interest in the real property subject of the action; and 
(2) the instrument, record, claim, encumbrance or proceeding 
claimed to be casting cloud on his title must be shown to be in fact invalid or
inoperative despite its prima facie appearance of validity or legal efficacy. 
The requisites for an action to quiet the title obtain in this case, since A, B, and
Care the registered owners of the parcel of land, having inherited the same from
their father Mr. R, and the Deed of Absolute Sale, which cast a cloud on their title
may be shown to be invalid or inoperative (Heirs of Delfin v. Heirs of Bacud, G.R.
No. 187633, April 4, 2016). 
(b) Within what period should A, B, and C file the complaint for quieting of title? Explain,
(2%) 
SUGGESTED ANSWER: 
The action for quieting of title does not prescribe, because the plaintiffs are in
possession of the land [Heirs of Uheras v. CFI,  October 30, 1978). 
(c) Assuming that Band C are residing abroad, may A. without the knowledge of Band ,
file the complaint for quieting of title on behalf of all the heirs? Explain. (2%) 
SUGGESTED ANSWER: 
Yes, A may file the complaint, provided that he files the same for the co-ownership.
Anyone of the co-owners may bring such an action in ejectment (Article 87 of the
Civil Code), even without joining all the other co-owners as co-plaintiffs, because
the suit is deemed to be instituted for the benefit of all, assuming A wins the case.
Parenthetically, if A loses in the action to quiet title, it will if not affect B and C,
because the Court did not acquire jurisdiction over their persons. The Court further
held that if the action is for the benefit of the plaintiff alone, such that he claims
the possession for himself and not for the co-ownership, the action will not
prosper (Celino v. Heirs of Alejo, G.R. No. 1618117, July 30, 2004)

B.17.
In 2015, O, the original registered owner of a 300-square meter property covered by
Original Certificate of Title (OCT) No. 0-1234. appointed F as its caretaker. A year after,
while was abroad, F surreptitiously broke open O’s sure and stole the duplicate copy of
the said OCT. F then forged a Deed of Absolute Sale and made it appear that O sold the
property to him. Consequently. F was able to have OCT No. 0-1234 cancelled and in lieu
thereof a new title. Transfer Certificate of Title (TCT) No. T-4321. was issued in his naine 
A few months after, F offered the property for sale to X After conducting the required
due diligence to verify the title of F. and finding no occupant in the property during
ocular inspection, X signed the contract of sale, and thereupon, fully paid the purchase
price. A few days later, X was able to obtain TCT No. T 5678 under his name. 
When O discovered T’s fraudulent acts upon his return in 2017. O immediately filed a
complaint for reconveyance against F and X, principally pointing out that F merely
forged his signature in the Deed of Absolute Sale purportedly made in F’s favor and thus,
F could not have validly transferred the title thereof to X. Consequently, he sought the
return of the subject property to him. 
(a) Will the prayer of O for the return of the subject property prosper? Explain. (3%)
 SUGGESTED ANSWER: 
No, the prayer of O will not prosper, because X purchased the land from an
apparent owner in good faith and for value. Section 53 of P.D. 1529 provides that
in all cases of registration procured by fraud, the owner may pursue all his legal
and equitable remedies against the parties to such fraud without prejudice,
however, to the rights of any innocent holder for value of a certificate of title. The
Court in the case of Heirs of Abalon v. Andal (G.R. No. 183448, June 30, 2014),
defined an innocent purchaser for value as one who buys the property of another
without notice that some other person has a right to or interest therein and who
then pays a full and fair price for it at the time of the purchase or before receiving
a notice of the claim or interest of some other persons in the property. 
(b) Assuming that could no longer recover the subject property in view of X’s registration
thereof in his name, may a claim against the Assurance Fund pursuant to the provisions
of the Property Registration Decree be instituted? Explain. (3%) 
SUGGESTED ANSWER: 
Yes, a claim against the Assurance Fund may be instituted. Section 95 of P.D. 1529
provides that a person who, without negligence on his part, sustains loss or
damage, or is deprived of land or any estate or interest therein in consequence of
the bringing of the land under the operation of the Torrens system arising after
original registration of land, through fraud or in consequence of any error,
omission, mistake or misdescription in any certificate of title or in any entry or
memorandum in the registration book, and who by the provisions of this Decree is
barred or otherwise precluded under the provision of any law from bringing an
action for the recovery of such land or the estate or interest therein, may bring an
action in any court of competent jurisdiction for the recovery of damages to be
paid out of the Assurance Fund. 
ALTERNATIVE ANSWER: 
The property is already registered under the name of X, an innocent purchaser for
value. The registration of the innocent purchaser for value’s title is a condition sine
qua non  in order to properly claim against the Assurance Fund. This is because it is
only after the registration of the innocent purchaser for value’s title and not the
usurper’s title which constitutes a breach of trust) can it be said that the claimant
effectively sustains loss or damage, or is deprived of land or any estate or interest
therein Manuel v. RD for Legazpi City, G.R. No. 224678, July 3, 2018].