G.R. No.

152809 August 3, 2006

MERCEDES MORALIDAD, Petitioner,
vs.
SPS. DIOSDADO PERNES and ARLENE PERNES, Respondents.

DECISION

GARCIA, J.:

Under consideration is this petition for review on certiorari under Rule 45 of the Rules of Court to
nullify and set aside the following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 61610,
to wit:

1. Decision dated September 27, 2001, 1 affirming an earlier decision of the Regional Trial Court
(RTC) of Davao City which reversed that of the Municipal Trial Court in Cities (MTCC), Davao City,
Branch 1, in an action for unlawful detainer thereat commenced by the petitioner against the herein
respondents; and

2. Resolution dated February 28, 2002, 2 denying petitioner’s motion for reconsideration.

At the heart of this controversy is a parcel of land located in Davao City and registered in the name
of petitioner Mercedes Moralidad under Transfer Certificate of Title (TCT) No. T-123125 of the
Registry of Deeds of Davao City.

In her younger days, petitioner taught in Davao City, Quezon City and Manila. While teaching in
Manila, she had the good fortune of furthering her studies at the University of Pennsylvania, U.S.A.
While schooling, she was offered to teach at the Philadelphia Catholic Archdiocese, which she did
for seven (7) years. Thereafter, she worked at the Mental Health Department of said University for
the next seventeen (17) years.

During those years, she would come home to the Philippines to spend her two-month summer
vacation in her hometown in Davao City. Being single, she would usually stay in Mandug, Davao
City, in the house of her niece, respondent Arlene Pernes, a daughter of her younger sister, Rosario.

Back in the U.S.A. sometime in 1986, she received news from Arlene that Mandug at the outskirts of
Davao City was infested by NPA rebels and many women and children were victims of crossfire
between government troops and the insurgents. Shocked and saddened about this development,
she immediately sent money to Araceli, Arlene’s older sister, with instructions to look for a lot in
Davao City where Arlene and her family could transfer and settle down. This was why she bought
the parcel of land covered by TCT No. T-123125.

Petitioner acquired the lot property initially for the purpose of letting Arlene move from Mandug to
Davao City proper but later she wanted the property to be also available to any of her kins wishing to
live and settle in Davao City. Petitioner made known this intention in a document she executed on
July 21, 1986. 3 The document reads:

I, MERCEDES VIÑA MORALIDAD, of legal age, single, having been born on the 29th day of
January, 1923, now actually residing at 8021 Lindbergh Boulevard, Philadelphia, Pennsylvania,
U.S.A., wishes to convey my honest intention regarding my properties situated at Palm Village
Subdivision, Bajada, Davao City, 9501, … and hereby declare:
1. That it is my desire that Mr. and Mrs. Diosdado M. Pernes may build their house therein and stay
as long as they like;

2. That anybody of my kins who wishes to stay on the aforementioned real property should maintain
an atmosphere of cooperation, live in harmony and must avoid bickering with one another;

3. That anyone of my kins may enjoy the privilege to stay therein and may avail the use thereof.
Provided, however, that the same is not inimical to the purpose thereof;

4. That anyone of my kins who cannot conform with the wishes of the undersigned may exercise the
freedom to look for his own;

5. That any proceeds or income derived from the aforementioned properties shall be allotted to my
nearest kins who have less in life in greater percentage and lesser percentage to those who are
better of in standing.

xxx xxx xxx

Following her retirement in 1993, petitioner came back to the Philippines to stay with the
respondents’ on the house they build on the subject property. In the course of time, their relations
turned sour because members of the Pernes family were impervious to her suggestions and
attempts to change certain practices concerning matters of health and sanitation within their
compound. For instance, Arlene’s eldest son, Myco Pernes, then a fourth year veterinary medicine
student, would answer petitioner back with clenched fist and at one time hurled profanities when she
corrected him. Later, Arlene herself followed suit. Petitioner brought the matter to the local barangay
lupon where she lodged a complaint for slander, harassment, threat and defamation against the
Pernes Family. Deciding for petitioner, the lupon apparently ordered the Pernes family to vacate
petitioner’s property but not after they are reimbursed for the value of the house they built thereon.
Unfortunately, the parties could not agree on the amount, thus prolonging the impasse between
them.

Other ugly incidents interspersed with violent confrontations meanwhile transpired, with the
petitioner narrating that, at one occasion in July 1998, she sustained cuts and wounds when Arlene
pulled her hair, hit her on the face, neck and back, while her husband Diosdado held her, twisting
her arms in the process.

Relations having deteriorated from worse to worst, petitioner, on July 29, 1998, lodged a formal
complaint before the Regional Office of the Ombudsman for Mindanao, charging the respondent
spouses, who were both government employees, with conduct unbecoming of public servants. This
administrative case, however, did not prosper.

Then, on August 3, 1998, petitioner filed with the MTCC of Davao City an unlawful detainer suit
against the respondent spouses. Petitioner alleged that she is the registered owner of the land on
which the respondents built their house; that through her counsel, she sent the respondent spouses
a letter demanding them to vacate the premises and to pay rentals therefor, which the respondents
refused to heed.

In their defense, the respondents alleged having entered the property in question, building their
house thereon and maintaining the same as their residence with petitioner’s full knowledge and
express consent. To prove their point, they invited attention to her written declaration of July 21,
1986, supra, wherein she expressly signified her desire for the spouses to build their house on her
property and stay thereat for as long as they like.

The MTCC, resolving the ejectment suit in petitioner’s favor, declared that the respondent spouses,
although builders in good faith vis-à-vis the house they built on her property, cannot invoke their
bona fides as a valid excuse for not complying with the demand to vacate. To the MTCC,
respondents’ continued possession of the premises turned unlawful upon their receipt of the demand
to vacate, such possession being merely at petitioner’s tolerance, and sans any rental. Accordingly,
in its decision dated November 17, 1999, 4 the MTCC rendered judgment for the petitioner, as
plaintiff therein, to wit:

WHEREFORE, judgment is hereby rendered in favor of herein plaintiff and against the defendants,
as follows:

a) Directing the defendants, their agents and other persons acting on their behalf to vacate the
premises and to yield peaceful possession thereof to plaintiff;

b) Ordering defendants to pay P2,000.00 a month from the filing of this complaint until they vacate
premises;

c) Sentencing defendants to pay the sum of P120,000.00 5 as attorney’s fees and to pay the cost of
suit.

Defendants counterclaim are hereby dismissed except with respect to the claim for reimbursement
of necessary and useful expenses which should be litigated in an ordinary civil actions. (sic)

Dissatisfied, the respondent spouses appealed to the RTC of Davao City.

In the meantime, petitioner filed a Motion for Execution Pending Appeal. The motion was initially
granted by the RTC in its Order of February 29, 2000, but the Order was later withdrawn and
vacated by its subsequent Order dated May 9, 2000 6 on the ground that immediate execution of the
appealed decision was not the prudent course of action to take, considering that the house the
respondents constructed on the subject property might even be more valuable than the land site.

Eventually, in a decision 7 dated September 30, 2000, the RTC reversed that of the MTCC, holding
that respondents’ possession of the property in question was not, as ruled by the latter court, by
mere tolerance of the petitioner but rather by her express consent. It further ruled that Article 1678 of
the Civil Code on reimbursement of improvements introduced is inapplicable since said provision
contemplates of a lessor-lessee arrangement, which was not the factual milieu obtaining in the case.
Instead, the RTC ruled that what governed the parties’ relationship are Articles 448 and 546 of the
Civil Code, explaining thus:

Since the defendants-appellees [respondents] are admittedly possessors of the property by

permission from plaintiff [petitioner], and builders in good faith, they have the right to retain
possession of the property subject of this case until they have been reimbursed the cost of the
improvements they have introduced on the property.

Indeed, this is a substantive right given to the defendants by law, and this right is superior to the
procedural right to [sic] plaintiff to immediately ask for their removal by a writ of execution by virtue of
a decision which as we have shown is erroneous, and therefore invalid. (Words in brackets
supplied),
and accordingly dismissed petitioner’s appeal, as follows:

WHEREFORE, in view of the foregoing, the Decision appealed from is REVERSED and declared
invalid. Consequently, the motion for execution pending appeal is likewise denied.

Counter-claims of moral and exemplary damages claimed by defendants are likewise dismissed.
However, attorney’s fees in the amount of fifteen thousand pesos is hereby awarded in favor of
defendants-appellants, and against plaintiffs.

SO ORDERED. 8

Therefrom, petitioner went to the CA in CA-G.R. SP No. 61610.

On September 27, 2001, the CA, while conceding the applicability of Articles 448 and 546 of the Civil
Code to the case, ruled that it is still premature to apply the same considering that the issue of
whether respondents’ right to possess a portion of petitioner’s land had already expired or was
already terminated was not yet resolved. To the CA, the unlawful detainer suit presupposes the
cessation of respondents’ right to possess. The CA further ruled that what governs the rights of the
parties is the law on usufruct but petitioner failed to establish that respondents’ right to possess had
already ceased. On this premise, the CA concluded that the ejectment suit instituted by the petitioner
was premature. The appellate court thus affirmed the appealed RTC decision, disposing:

WHEREFORE, premises considered, the instant petition for review is hereby denied for lack of
merit. Accordingly, the petitioner’s complaint for Unlawful Detainer is DISMISSED.

SO ORDERED.

With the CA’s denial of her motion for reconsideration in its Resolution of February 28, 2002,
petitioner is now before this Court raising the following issues:

I. WHETHER OR NOT THE COURT OF APPEALS ERRED IN DISMISSING THE UNLAWFUL

DETAINER CASE FOR BEING PREMATURE WHICH DECISION IS NOT IN ACCORDANCE WITH
LAW AND JURISPRUDENCE.

II. WHETHER OR NOT THE COURT OF APPEALS ERRED IN APPLYING ARTICLES 448 AND
546 AND THE PROVISIONS OF THE CODE ON USUFRUCT INSTEAD OF ARTICLE 1678 OF
THE CIVIL CODE.

The Court rules for the petitioner.

The Court is inclined to agree with the CA that what was constituted between the parties herein is
one of usufruct over a piece of land, with the petitioner being the owner of the property upon whom
the naked title thereto remained and the respondents being two (2) among other unnamed
usufructuaries who were simply referred to as petitioner’s kin. The Court, however, cannot go along
with the CA’s holding that the action for unlawful detainer must be dismissed on ground of
prematurity.

Usufruct is defined under Article 562 of the Civil Code in the following wise:

ART. 562. 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.
Usufruct, in essence, is nothing else but simply allowing one to enjoy another’s property. 9 It is also
defined as the right to enjoy the property of another temporarily, including both the jus utendi and the
jus fruendi, 10 with the owner retaining the jus disponendi or the power to alienate the same. 11

It is undisputed that petitioner, in a document dated July 21, 1986, supra, made known her intention
to give respondents and her other kins the right to use and to enjoy the fruits of her property. There
can also be no quibbling about the respondents being given the right "to build their own house" on
the property and to stay thereat "as long as they like." Paragraph #5 of the same document
earmarks "proceeds or income derived from the aforementioned properties" for the petitioner’s
"nearest kins who have less in life in greater percentage and lesser percentage to those who are
better of (sic) in standing." The established facts undoubtedly gave respondents not only the right to
use the property but also granted them, among the petitioner’s other kins, the right to enjoy the fruits
thereof. We have no quarrel, therefore, with the CA’s ruling that usufruct was constituted between
petitioner and respondents. It is thus pointless to discuss why there was no lease contract between
the parties.

However, determinative of the outcome of the ejectment case is the resolution of the next issue, i.e.,
whether the existing usufruct may be deemed to have been extinguished or terminated. If the
question is resolved in the affirmative, then the respondents’ right to possession, proceeding as it did
from their right of usufruct, likewise ceased. In that case, petitioner’s action for ejectment in the
unlawful detainer case could proceed and should prosper.

The CA disposed of this issue in this wise:

xxx Section 1, Rule 70 of the 1997 Rules of Civil Procedure, as amended, provides xxx

xxx xxx xxx

From the foregoing provision, it becomes apparent that for an action for unlawful detainer to prosper,
the plaintiff [petitioner] needs to prove that defendants’ [respondents’] right to possess already
expired and terminated. Now, has respondents’ right to possess the subject portion of petitioner’s
property expired or terminated? Let us therefore examine respondents’ basis for occupying the
same.

It is undisputed that petitioner expressly authorized respondents o occupy portion of her property on
which their house may be built. Thus – "it is my desire that Mr. and Mrs. Diosdado M. Pernes may
build their house therein and stay as long as they like." From this statement, it seems that petitioner
had given the respondents the usufructuary rights over the portion that may be occupied by the
house that the latter would build, the duration of which being dependent on how long respondents
would like to occupy the property. While petitioner had already demanded from the respondents the
surrender of the premises, this Court is of the opinion that the usufructuary rights of respondents had
not been terminated by the said demand considering the clear statement of petitioner that she is
allowing respondents to occupy portion of her land as long as the latter want to. Considering that
respondents still want to occupy the premises, petitioner clearly cannot eject respondents. 12

We disagree with the CA’s conclusion of law on the matter. The term or period of the usufruct
originally specified provides only one of the bases for the right of a usufructuary to hold and retain
possession of the thing given in usufruct. There are other modes or instances whereby the usufruct
shall be considered terminated or extinguished. For sure, the Civil Code enumerates such other
modes of extinguishment:

ART. 603. Usufruct is extinguished:

(1) By the death of the usufructuary, unless a contrary intention clearly appears;

(2) By expiration of the period for which it was constituted, or by the fulfillment of any resolutory
condition provided in the title creating the usufruct;

(3) By merger of the usufruct and ownership in the same person;

(4) By renunciation of the usufructuary;

(5) By the total loss of the thing in usufruct;

(6) By the termination of the right of the person constituting the usufruct;

(7) By prescription. (Emphasis supplied.)

The document executed by the petitioner dated July 21, 1986 constitutes the title creating, and sets
forth the conditions of, the usufruct. Paragraph #3 thereof states "[T]hat anyone of my kins may
enjoy the privilege to stay therein and may avail the use thereof. Provided, however, that the same is
not inimical to the purpose thereof" (Emphasis supplied). What may be inimical to the purpose
constituting the usufruct may be gleaned from the preceding paragraph wherein petitioner made it
abundantly clear "that anybody of my kins who wishes to stay on the aforementioned property
should maintain an atmosphere of cooperation, live in harmony and must avoid bickering with one
another." That the maintenance of a peaceful and harmonious relations between and among kin
constitutes an indispensable condition for the continuance of the usufruct is clearly deduced from the
succeeding Paragraph #4 where petitioner stated "[T]hat anyone of my kins who cannot conform
with the wishes of the undersigned may exercise the freedom to look for his own." In fine, the
occurrence of any of the following: the loss of the atmosphere of cooperation, the bickering or the
cessation of harmonious relationship between/among kin constitutes a resolutory condition which, by
express wish of the petitioner, extinguishes the usufruct.

From the pleadings submitted by the parties, it is indubitable that there were indeed facts and
circumstances whereby the subject usufruct may be deemed terminated or extinguished by the
occurrence of the resolutory conditions provided for in the title creating the usufruct, namely, the
document adverted to which the petitioner executed on July 21, 1986.

As aptly pointed out by the petitioner in her Memorandum, respondents’ own evidence before the
MTCC indicated that the relations between the parties "have deteriorated to almost an irretrievable
level." 13 There is no doubt then that what impelled petitioner to file complaints before the local
barangay lupon, the Office of the Ombudsman for Mindanao, and this instant complaint for unlawful
detainer before the MTCC is that she could not live peacefully and harmoniously with the Pernes
family and vice versa.

Thus, the Court rules that the continuing animosity between the petitioner and the Pernes family and
the violence and humiliation she was made to endure, despite her advanced age and frail condition,
are enough factual bases to consider the usufruct as having been terminated.

To reiterate, the relationship between the petitioner and respondents respecting the property in
question is one of owner and usufructuary. Accordingly, respondents’ claim for reimbursement of the
improvements they introduced on the property during the effectivity of the usufruct should be
governed by applicable statutory provisions and principles on usufruct. In this regard, we cite with
approval what Justice Edgardo Paras wrote on the matter:
If the builder is a usufructuary, his rights will be governed by Arts. 579 and 580. In case like this, the
terms of the contract and the pertinent provisions of law should govern (3 Manresa 215-216; se also
Montinola vs. Bantug, 71 Phil. 449). 14 (Emphasis ours.)

By express provision of law, respondents, as usufructuary, do not have the right to reimbursement
for the improvements they may have introduced on the property. We quote Articles 579 and 580 of
the Civil Code:

Art. 579. The usufructuary may make on the property held in usufruct such useful improvements or
expenses for mere pleasure as 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 damage to the property. (Emphasis supplied.)

Art. 580. The usufructuary may set off the improvements he may have made on the property against
any damage to the same.

Given the foregoing perspective, respondents will have to be ordered to vacate the premises without
any right of reimbursement. If the rule on reimbursement or indemnity were otherwise, then the
usufructuary might, as an author pointed out, improve the owner out of his property. 15 The
respondents may, however, remove or destroy the improvements they may have introduced thereon
without damaging the petitioner’s property.

Out of the generosity of her heart, the petitioner has allowed the respondent spouses to use and
enjoy the fruits of her property for quite a long period of time. They opted, however, to repay a noble
gesture with unkindness. At the end of the day, therefore, they really cannot begrudge their aunt for
putting an end to their right of usufruct. The disposition herein arrived is not only legal and called for
by the law and facts of the case. It is also right.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the CA are
REVERSED and SET ASIDE. Accordingly, the decision of the MTCC is REINSTATED with
MODIFICATION that all of respondents’ counterclaims are dismissed, including their claims for
reimbursement of useful and necessary expenses.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 107132 October 8, 1999

MAXIMA HEMEDES, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, DOMINIUM REALTY AND CONSTRUCTION
CORPORATION, ENRIQUE D. HEMEDES and R & B INSURANCE CORPORATION, respondents.

G.R. No. 108472 October 8, 1999

R & B INSURANCE CORPORATION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, DOMINIUM REALTY AND CONSTRUCTION
CORPORATION, ENRIQUE D. HEMEDES and MAXIMA HEMEDES, respondents.

GONZAGA-REYES, J.:

Assailed in these petitions for review on certiorari is the decision   of the eleventh division of the
1

Court of Appeals in CA-G.R. CV No. 22010 promulgated on September 11, 1992 affirming in toto the
decision of Branch 24 of the Regional Trial Court of Laguna in Civil Case No. B-1766 dated February
22, 1989,   and the resolution dated December 29, 1992 denying petitioner R & B Insurance
2

Corporation's (R & B Insurance) motion for reconsideration. As the factual antecedents and issues
are the same, we shall decide the petitions jointly.

The instant controversy involves a question of ownership over an unregistered parcel of land,
identified as Lot No. 6, plan Psu-111331, with an area of 21,773 square meters, situated in Sala,
Cabuyao, Laguna. It was originally owned by the late Jose Hemedes, father of Maxima Hemedes
and Enrique D. Hemedes. On March 22, 1947 Jose Hemedes executed a document entitled
"Donation Inter Vivos With Resolutory Conditions"   whereby he conveyed ownership over the
3

subject land, together with all its improvements, in favor of his third wife, Justa Kauapin, subject to
the following resolutory conditions:

(a) Upon the death or remarriage of the DONEE, the title to the property donated
shall revert to any of the children, or their heirs, of the DONOR expressly designated
by the DONEE in a public document conveying the property to the latter; or

(b) In absence of such an express designation made by the DONEE before her death
or remarriage contained in a public instrument as above provided, the title to the
property shall automatically revert to the legal heirs of the DONOR in common.

Pursuant to the first condition above mentioned, Justa Kausapin executed on September 27, 1960 a
"Deed of Conveyance of Unregistered Real Property by Reversion"   conveying to Maxima Hemedes
4

the subject property under the following terms —

That the said parcel of land was donated unto me by the said Jose Hemedes, my
deceased husband, in a deed of "DONATION INTER VIVOS WITH RESOLUTORY
CONDITIONS" executed by the donor in my favor, and duly accepted by me on
March 22, 1947, before Notary Public Luis Bella in Cabuyao, Laguna;

That the donation is subject to the resolutory conditions appearing in the said deed of
"DONATION INTER VIVOS WITH RESOLUTORY CONDITIONS," as follows:

(a) Upon the death or remarriage of the DONEE, the title to the
property donated shall revert to any of the children, or their heirs, of
the DONOR expressly designated by the DONEE in a public
document conveying the property to the latter; or

(b) In absence of such an express designation made by the DONEE

before her death or remarriage contained in a public instrument as
above provided, the title to the property shall automatically revert to
the legal heirs of the DONOR in common.
 That, wherefore, in virtue of the deed of donation above mentioned and in the
exercise of my right and privilege under the terms of the first resolutory condition
therein contained and hereinabove reproduced, and for and in consideration of my
love and affection, I do hereby by these presents convey, transfer, and deed unto my
designee, MAXIMA HEMEDES, of legal age, married to RAUL RODRIGUEZ, Filipino
and resident of No. 15 Acacia Road, Quezon City, who is one of the children and
heirs of my donor, JOSE HEMEDES, the ownership of, and title to the property
hereinabove described, and all rights and interests therein by reversion under the
first resolutory condition in the above deed of donation; Except the possession and
enjoyment of the said property which shall remain vested in me during my lifetime, or
widowhood and which upon my death or remarriage shall also automatically revert
to, and be transferred to my designee, Maxima Hemedes.

Maxima Hemedes, through her counsel, filed an application for registration and confirmation of title
over the subject unregistered land. Subsequently, Original Certificate of Title (OCT) No. (0-941) 0-
198   was issued in the name of Maxima Hemedes married to Raul Rodriguez by the Registry of
5

Deeds of Laguna on June 8, 1962, with the annotation that "Justa Kausapin shall have the
usufructuary rights over the parcel of land herein described during her lifetime or widowhood."

It is claimed by R & B Insurance that on June 2, 1964, Maxima Hemedes and her husband Raul
Rodriguez constituted a real estate mortgage over the subject property in its favor to serve as
security for a loan which they obtained in the amount of P6,000.00. On February 22, 1968, R & B
Insurance extrajudicially foreclosed the mortgage since Maxima Hemedes failed to pay the loan
even after it became due on August 2, 1964. The land was sold at a public auction on May 3, 1968
with R & B Insurance as the highest bidder and a certificate of sale was issued by the sheriff in its
favor. Since Maxima Hemedes failed to redeem the property within the redemption period, R & B
Insurance executed an Affidavit of Consolidation dated March 29, 1974 and on May 21, 1975 the
Register of Deeds of Laguna cancelled OCT No. (0-941) 0-198 and issued Transfer Certificate of
Title (TCT) No. 41985 in the name of R & B Insurance. The annotation of usufruct in favor of Justa
Kausapin was maintained in the new title.  6

Despite the earlier conveyance of the subject land in favor of Maxima Hemedes, Justa Kausapin
executed a "Kasunduan" on May 27, 1971 whereby she transferred the same land to her stepson
Enrique D. Hemedes, pursuant to the resolutory condition in the deed of donation executed in her
favor by her late husband Jose Hemedes. Enrique D. Hemedes obtained two declarations of real
property — in 1972, and again, in 1974, when the assessed value of the property was raised. Also,
he has been paying the realty taxes on the property from the time Justa Kausapin conveyed the
property to him in 1971 until 1979. In the cadastral survey of Cabuyao, Laguna conducted from
September 8, 1974 to October 10, 1974, the property was assigned Cadastral No. 2990, Cad. 455-
D, Cabuyao Cadastre, in the name of Enrique Hemedes. Enrique Hemedes is also the named owner
of the property in the records of the Ministry of Agrarian Reform office at Calamba, Laguna.

On February 28, 1979, Enriques D. Hemedes sold the property to Dominium Realty and
Construction Corporation (Dominium). On April 10, 1981, Justa Kausapin executed an affidavit
affirming the conveyance of the subject property in favor of Enrique D. Hemedes as embodied in the
"Kasunduan" dated May 27, 1971, and at the same time denying the conveyance made to Maxima
Hemedes.

On May 14, 1981, Dominium leased the property to its sister corporation Asia Brewery, Inc. (Asia
Brewery) who, even before the signing of the contract of lease, constructed two warehouses made
of steel and asbestos costing about P10,000,000.00 each. Upon learning of Asia Brewery's
constructions upon the subject property, R & B Insurance sent it a letter on March 16, 1981
informing the former of its ownership of the property as evidenced by TCT No. 41985 issued in its
favor and of its right to appropriate the constructions since Asia Brewery is a builder in bad faith. On
March 27, 1981, a conference was held between R & B Insurance and Asia Brewery but they failed
to arrive at an amicable settlement.1âwphi1.nêt

On May 8, 1981, Maxima Hemedes also wrote a letter addressed to Asia Brewery wherein she
asserted that she is the rightful owner of the subject property by virtue of OCT No. (0-941) 0-198 and
that, as such, she has the right to appropriate Asia Brewery's constructions, to demand its
demolition, or to compel Asia Brewery to purchase the land. In another letter of the same date
addressed to R & B Insurance, Maxima Hemedes denied the execution of any real estate mortgage
in favor of the latter.

On August 27, 1981, Dominium and Enrique D. Hemedes filed a

complaint   with the Court of First Instance of Binan, Laguna for the annulment of TCT No. 41985
7

issued in favor of R & B Insurance and/or the reconveyance to Dominium of the subject property.
Specifically, the complaint alleged that Dominium was the absolute owner of the subject property by
virtue of the February 28, 1979 deed of sale executed by Enrique D. Hemedes, who in turn obtained
ownership of the land from Justa Kausapin, as evidenced by the "Kasunduan" dated May 27, 1971.
The plaintiffs asserted that Justa Kausapin never transferred the land to Maxima Hemedes and that
Enrique D. Hemedes had no knowledge of the registration proceedings initiated by Maxima
Hemedes.

After considering the merits of the case, the trial court rendered judgment on February 22, 1989 in
favor of plaintiffs Dominium and Enrique D. Hemedes, the dispositive portion of which states —

WHEREFORE, judgment is hereby rendered:

(a) Declaring Transfer Certificate of Title No. 41985 of the Register of

Deeds of Laguna null and void and ineffective;

(b) Declaring Dominium Realty and Construction Corporation the

absolute owner and possessor of the parcel of land described in
paragraph 3 of the complaint;

(c) Ordering the defendants and all persons acting for and/or under
them to respect such ownership and possession of Dominium Realty
and Construction Corporation and to forever desist from asserting
adverse claims thereon nor disturbing such ownership and
possession; and

(d) Directing the Register of Deeds of Laguna to cancel said Transfer

Certificate of Title No. 41985 in the name of R & B Insurance
Corporation, and in lieu thereof, issue a new transfer certificate of title
in the name of Dominium Realty and Construction Corporation. No
pronouncement as to costs and attorney's fees.  8

Both R & B Insurance and Maxima Hemedes appealed from the trial court's decision. On September
11, 1992 the Court of Appeals affirmed the assailed decision in toto and on December 29, 1992, it
denied R & B Insurance's motion for reconsideration. Thus, Maxima Hemedes and R & B Insurance
filed their respective petitions for review with this Court on November 3, 1992 and February 22,
1993, respectively.
In G.R. No. 107132  , petitioner Maxima Hemedes makes the following assignment of errors as
9

regards public respondent's ruling —

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN APPLYING ARTICLE

1332 OF THE NEW CIVIL CODE IN DECLARING AS SPURIOUS THE DEED OF
CONVEYANCE OF UNREGISTERED REAL PROPERTY BY REVERSION
EXECUTED BY JUSTA KAUSAPIN IN FAVOR OF PETITIONER MAXIMA
HEMEDES.

II

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING AS

VOID AND OF NO LEGAL EFFECT THE "KASUNDUAN" DATED 27 MAY 1971
EXECUTED BY JUSTA KAUSAPIN IN FAVOR OF RESPONDENT ENRIQUE
HEMEDES AND THE SALE OF THE SUBJECT PROPERTY BY RESPONDENT
ENRIQUE HEMEDES IN FAVOR OF RESPONDENT DOMINIUM REALTY AND
CONSTRUCTION CORPORATION.

III

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING

RESPONDENTS ENRIQUE AND DOMINIUM IN BAD FAITH.

IV

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT

ORIGINAL CERTIFICATE OF TITLE NO. (0-941) 0-198 ISSUED IN THE NAME OF
PETITIONER MAXIMA HEMEDES NULL AND VOID.

RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT NO LOAN

WAS OBTAINED BY PETITIONER MAXIMA HEMEDES FROM RESPONDENT R &
B INSURANCE CORPORATION.

VI

RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT NO REAL

ESTATE MORTGAGE OVER THE SUBJECT PROPERTY WAS EXECUTED BY
PETITIONER MAXIMA HEMEDES IN FAVOR OF RESPONDENT R & B
INSURANCE CORPORATION.

VII

RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT THE VALID

TITLE COVERING THE SUBJECT PROPERTY IS THE ORIGINAL CERTIFICATE
OF TITLE NO. (0-941) 0-198 IN THE NAME OF PETITIONER MAXIMA HEMEDES
AND NOT THE TRANSFER CERTIFICATE OF TITLE (TCT) NO. 41985 IN THE
NAME OF R & B INSURANCE CORPORATION.  10
Meanwhile, in G.R. No. 108472  , petitioner R & B Insurance assigns almost the same errors, except
11

with regards to the real estate mortgage allegedly executed by Maxima Hemedes in its favor.
Specifically, R & B Insurance alleges that:

RESPONDENT COURT ERRONEOUSLY ERRED IN APPLYING ARTICLE 1332

OF THE CIVIL CODE.

II

RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE ON (sic)

THE KASUNDUAN BY AND BETWEEN JUSTA KAUSAPIN AND ENRIQUE
NOTWITHSTANDING THE FACT THAT JUSTA KAUSAPIN BY WAY OF A DEED
OF CONVEYANCE OF UNREGISTERED REAL PROPERTY BY REVERSION
CEDED THE SUBJECT PROPERTY TO MAXIMA SOME ELEVEN (11) YEARS
EARLIER.

III

RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE ON (sic)

THE AFFIDAVIT OF REPUDIATION OF JUSTA KAUSAPIN NOTWITHSTANDING
THE FACT THAT SHE IS A BIAS (sic) WITNESS AND EXECUTED THE SAME
SOME TWENTY-ONE (21) YEARS AFTER THE EXECUTION OF THE DEED OF
CONVEYANCE IN FAVOR OF MAXIMA.

IV

RESPONDENT COURT SERIOUSLY ERRED IN NOT FINDING THAT THE

COMPLAINT OF ENRIQUE AND DOMINIUM HAS PRESCRIBED AND/OR THAT
ENRIQUE AND DOMINIUM WERE GUILTY OF LACHES.

RESPONDENT COURT SERIOUSLY ERRED IN FINDING

R & B AS A MORTGAGEE NOT IN GOOD FAITH.

VI

RESPONDENT COURT SERIOUSLY ERRED IN NOT GRANTING THE DAMAGES

PRAYED FOR BY R & B IN ITS COUNTERCLAIM AND CROSSCLAIM.  12

The primary issue to be resolved in these consolidated petitions is which of the two conveyances by
Justa Kausapin, the first in favor of Maxima Hemedes and the second in favor of Enrique D.
Hemedes, effectively transferred ownership over the subject land.

The Register of Deeds of Laguna issued OCT No. (0-941) 0-198 in favor of Maxima Hemedes on the
strength of the "Deed of Conveyance of Unregistered Real Property by Reversion" executed by
Justa Kausapin. Public respondent upheld the trial court's finding that such deed is sham and
spurious and has "no evidentiary value under the law upon which claimant Maxima Hemedes may
anchor a valid claim of ownership over the property." In ruling thus, it gave credence to the April 10,
1981 affidavit executed by Justa Kausapin repudiating such deed of conveyance in favor of Maxima
Hemedes and affirming the authenticity of the "Kasunduan" in favor of Enrique D. Hemedes. Also, it
considered as pivotal the fact that the deed of conveyance in favor of Maxima Hemedes was in
English and that it was not explained to Justa Kausapin, although she could not read nor understand
English; thus, Maxima Hemedes failed to discharge her burden, pursuant to Article 1332 of the Civil
Code, to show that the terms thereof were fully explained to Justa Kausapin. Public respondent
concluded by holding that the registration of the property on the strength of the spurious deed of
conveyance is null and void and does not confer any right of ownership upon Maxima Hemedes.  13

Maxima Hemedes argues that Justa Kausapin's affidavit should not be given any credence since
she is obviously a biased witness as it has been shown that she is dependent upon Enrique D.
Hemedes for her daily subsistence, and she was most probably influenced by Enrique D. Hemedes
to execute the "Kasunduan" in his favor. She also refutes the applicability of article 1332. It is her
contention that for such a provision to be applicable, there must be a party seeking to enforce a
contract; however, she is not enforcing the "Deed of Conveyance of Unregistered Real Property by
Reversion" as her basis in claiming ownership, but rather her claim is anchored upon OCT No. (0-
941) 0-198 issued in her name, which document can stand independently from the deed of
conveyance. Also, there exist various circumstances which show that Justa Kausapin did in fact
execute and understand the deed of conveyance in favor of Maxima Hemedes. First, the "Donation
Intervivos With Resolutory Conditions" executed by Jose Hemedes in favor of Justa Kausapin was
also in English, but she never alleged that she did not understand such document. Secondly, Justa
Kausapin failed to prove that it was not her thumbmark on the deed of conveyance in favor of
Maxima Hemedes and in fact, both Enrique D. Hemedes and Dominium objected to the request of
Maxima Hemedes' counsel to obtain a specimen thumbmark of Justa Kausapin.  14

Public respondent's finding that the "Deed of Conveyance of Unregistered Real Property By
Reversion" executed by Justa Kausapin in favor of Maxima Hemedes is spurious is not supported by
the factual findings in this case. It is grounded upon the mere denial of the same by Justa Kausapin.
A party to a contract cannot just evade compliance with his contractual obligations by the simple
expedient of denying the execution of such contract. If, after a perfect and binding contract has been
executed between the parties, it occurs to one of them to allege some defect therein as a reason for
annulling it, the alleged defect must be conclusively proven, since the validity and fulfillment of
contracts cannot be left to the will of one of the contracting parties. 
15

Although a comparison of Justa Kausapin's thumbmark with the thumbmark affixed upon the deed of
conveyance would have easily cleared any doubts as to whether or not the deed was forged, the
records do not show that such evidence was introduced by private respondents and the lower court
decisions do not make mention of any comparison having been made.   It is a legal presumption that
16

evidence willfully suppressed would be adverse if produced.   The failure of private respondents to
17

refute the due execution of the deed of conveyance by making a comparison with Justa Kausapin's
thumbmark necessarily leads one to conclude that she did in fact affix her thumbmark upon the deed
of donation in favor of her stepdaughter.

Moreover, public respondent's reliance upon Justa Kausapin's repudiation of the deed of
conveyance is misplaced for there are strong indications that she is a biased witness. The trial court
found that Justa Kausapin was dependent upon Enrique D. Hemedes for financial
assistance.   Justa Kausapin's own testimony attests to this fact —
18

Atty. Conchu:

Q: Aling Justa, can you tell the Honorable Court why you donated this
particular property to Enrique Hemedes?
 A: Because I was in serious condition and he was the one supporting
me financially.

Q: As of today, Aling Justa are you continuing to receive any

assistance from Enrique Hemedes?

A: Yes Sir.

(TSN pp. 19 and 23, November 17, 1981)  19

Even Enrique Hemedes admitted that Justa Kausapin was dependent upon him for financial
support. The transcripts state as follows:

Atty. Mora:

Now you said that Justa Kausapin has been receiving from you
advances for food, medicine & other personal or family needs?

E. Hemedes:

A: Yes.

Q: Was this already the practice at the time this "Kasunduan" was
executed?

A: No that was increased, no, no, after this document.

x x x           x x x          x x x

Q: And because of these accommodations that you have given to

Justa Kausapin; Justa Kausapin has in turn treated you very well
because she's very grateful for that, is it not?

A: I think that's human nature.

Q: Answer me categorically, Mr. Hemedes she's very grateful?

A: Yes she might be grateful but not very grateful.

(TSN, p. 34, June 15, 1984)  20

A witness is said to be biased when his relation to the cause or to the parties is such that he has an
incentive to exaggerate or give false color to his statements, or to suppress or to pervert the truth, or
to state what is false.   At the time the present case was filed in the trial court in 1981, Justa
21

Kausapin was already 80 years old, suffering from worsening physical infirmities and completely
dependent upon her stepson Enrique D. Hemedes for support. It is apparent that Enrique D.
Hemedes could easily have influenced his aging stepmother to donate the subject property to him.
Public respondent should not have given credence to a witness that was obviously biased and
partial to the cause of private respondents. Although it is a well-established rule that the matter of
credibility lies within the province of the trial court, such rule does not apply when the witness'
credibility has been put in serious doubt, such as when there appears on the record some fact or
circumstance of weight and influence, which has been overlooked or the significance of which has
been
misinterpreted. 22

Finally, public respondent was in error when it sustained the trial court's decision to nullify the "Deed
of Conveyance of Unregistered Real Property by Reversion" for failure of Maxima Hemedes to
comply with article 1332 of the Civil Code, which states:

When one of the parties is unable to read, or if the contract is in a language not
understood by him, and mistake or fraud is alleged, the person enforcing the contract
must show that the terms thereof have been fully explained to the former.

Art. 1332 was intended for the protection of a party to a contract who is at a disadvantage due to his
illiteracy, ignorance, mental weakness or other handicap.   This article contemplates a situation
23

wherein a contract has been entered into, but the consent of one of the parties is vitiated by mistake
or fraud committed by the other contracting party.   This is apparent from the ordering of the
24

provisions under Book IV, Title II, Chapter 2, section 1 of the Civil Code, from which article 1332 is
taken. Article 1330 states that —

A contract where consent is given through mistake, violence, intimidation, undue

influence, or fraud is voidable.

This is immediately followed by provisions explaining what constitutes mistake, violence,

intimidation, undue influence, or fraud sufficient to vitiate consent.   In order that mistake may
25

invalidate consent, it should refer to the substance of the thing which is the object of the contract, or
to those conditions which have principally moved one or both parties to enter into the
contract.   Fraud, on the other hand, is present when, through insidious words or machinations of
26

one of the contracting parties, the other is induced to enter into a contract which, without them, he
would not have agreed to.   Clearly, article 1332 assumes that the consent of the contracting party
27

imputing the mistake or fraud was given, although vitiated, and does not cover a situation where
there is a complete absence of consent. 1âwphi1.nêt

In this case, Justa Kausapin disclaims any knowledge of the "Deed of Conveyance of Unregistered
Real Property by Reversion" in favor of Maxima Hemedes. In fact, she asserts that it was only during
the hearing conducted on December 7, 1981 before the trial court that she first caught a glimpse of
the deed of conveyance and thus, she could not have possibly affixed her thumbmark thereto.   It is28

private respondents' own allegations which render article 1332 inapplicable for it is useless to
determine whether or not Justa Kausapin was induced to execute said deed of conveyance by
means of fraud employed by Maxima Hemedes, who allegedly took advantage of the fact that the
former could not understand English, when Justa Kausapin denies even having seen the document
before the present case was initiated in 1981.

It has been held by this Court that ". . . mere preponderance of evidence is not sufficient to
overthrow a certificate of a notary public to the effect that the grantor executed a certain document
and acknowledged the fact of its execution before him. To accomplish this result, the evidence must
be so clear, strong and convincing as to exclude all reasonable controversy as to the falsity of the
certificate, and when the evidence is conflicting, the certificate will be
upheld."   In the present case, we hold that private respondents have failed to produce clear, strong,
29

and convincing evidence to overcome the positive value of the "Deed Conveyance of Unregistered
Real Property by Reversion" — a notarized document. The mere denial of its execution by the donor
will not suffice for the purpose.
In upholding the deed of conveyance in favor of Maxima Hemedes, we must concomitantly rule that
Enrique D. Hemedes and his transferee, Dominium, did not acquire any rights over the subject
property. Justa Kausapin sought to transfer to her stepson exactly what she had earlier transferred
to Maxima Hemedes — the ownership of the subject property pursuant to the first condition
stipulated in the deed of donation executed by her husband. Thus, the donation in favor of Enrique
D. Hemedes is null and void for the purported object thereof did not exist at the time of the transfer,
having already been transferred to his sister.   Similarly, the sale of the subject property by Enrique
30

D. Hemedes to Dominium is also a nullity for the latter cannot acquire more rights than its
predecessor-in-interest and is definitely not an innocent purchaser for value since Enrique D.
Hemedes did not present any certificate of title upon which it relied.

The declarations of real property by Enrique D. Hemedes, his payment of realty taxes, and his being
designated as owner of the subject property in the cadastral survey of Cabuyao, Laguna and in the
records of the Ministry of Agrarian Reform office in Calamba, Laguna cannot defeat a certificate of
title, which is an absolute and indefeasible evidence of ownership of the property in favor of the
person whose name appears therein.   Particularly, with regard to tax declarations and tax receipts,
31

this Court has held on several occasions that the same do not by themselves conclusively prove title
to land. 
32

We come now to the question of whether or not R & B Insurance should be considered an innocent
purchaser of the land in question. At the outset, we note that both the trial court and appellate court
found that Maxima Hemedes did in fact execute a mortgage over the subject property in favor of R &
B Insurance. This finding shall not be disturbed because, as we stated earlier, it is a rule that the
factual findings of the trial court, especially when affirmed by the Court of Appeals, are entitled to
respect, and should not be disturbed on
appeal. 33

In holding that R & B Insurance is not a mortgagee in good faith, public respondent stated that the
fact that the certificate of title of the subject property indicates upon its face that the same is subject
to an encumbrance, i.e. usufructuary rights in favor of Justa Kausapin during her lifetime or
widowhood, should have prompted R & B Insurance to ". . . investigate further the circumstances
behind this encumbrance on the land in dispute," but which it failed to do. Also, public respondent
considered against R & B Insurance the fact that it made it appear in the mortgage contract that the
land was free from all liens, charges, taxes and encumbrances.  34

R & B Insurance alleges that, contrary to public respondent's ruling, the presence of an
encumbrance on the certificate of title is not reason for the purchaser or a prospective mortgagee to
look beyond the face of the certificate of title. The owner of a parcel of land may still sell the same
even though such land is subject to a usufruct; the buyer's title over the property will simply be
restricted by the rights of the usufructuary. Thus, R & B Insurance accepted the mortgage subject to
the usufructuary rights of Justa Kausapin. Furthermore, even assuming that R & B Insurance was
legally obliged to go beyond the title and search for any hidden defect or inchoate right which could
defeat its right thereto, it would not have discovered anything since the mortgage was entered into in
1964, while the "Kasunduan" conveying the land to Enrique D. Hemedes was only entered into in
1971 and the affidavit repudiating the deed of conveyance in favor of Maxima Hemedes was
executed by Justa Kausapin in 1981.  35

We sustain petitioner R & B Insurance's claim that it is entitled to the protection of a mortgagee in
good faith.

It is a well-established principle that every person dealing with registered land may safely rely on the
correctness of the certificate of title issued and the law will in no way oblige him to go behind the
certificate to determine the condition of the property.   An innocent purchaser for value   is one who
36 37

buys the property of another without notice that some other person has a right to or interest in such
property and pays a full and fair price for the same at the time of such purchase or before he has
notice of the claim of another person.  38

The annotation of usufructuary rights in favor of Justa Kausapin upon Maxima Hemedes' OCT dose
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
39

property   and may personally enjoy the thing in usufruct, lease it to another, or alienate his right of
40

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.  41

Clearly, only the jus utendi and jus fruendi over the property is transferred to the usufructuary.   The 42

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
43

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.  44

There is no doubt that the owner may validly mortgage the property in favor of a third person and the
law provides that, in such a case, the usufructuary shall not be obliged to pay the debt of the
mortgagor, and should the immovable be attached or sold judicially for the payment of the debt, the
owner shall be liable to the usufructuary for whatever the latter may lose by reason thereof.  45

Based on the foregoing, the annotation of usufructuary rights in favor of Justa Kausapin is not
sufficient cause to require R & B Insurance to investigate Maxima Hemedes' title, contrary to public
respondent's ruling, for the reason that Maxima Hemedes' ownership over the property 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
Hemedes.

Even assuming in gratia argumenti that R & B Insurance was obligated to look beyond the certificate
of title and investigate the title of its mortgagor, still, it would not have discovered any better rights in
favor of private respondents. Enrique D. Hemedes and Dominium base their claims to the property
upon the "Kasunduan" allegedly executed by Justa Kausapin in favor of Enrique Hemedes. As we
have already stated earlier, such contract is a nullity as its subject matter was inexistent. Also, the
land was mortgaged to R & B Insurance as early as 1964, while the "Kasunduan" was executed only
in 1971 and the affidavit of Justa Kausapin affirming the conveyance in favor of Enrique D. Hemedes
was executed in 1981. Thus, even if R & B Insurance investigated the title of Maxima Hemedes, it
would not have discovered any adverse claim to the land in derogation of its mortgagor's title. We
reiterate that at no point in time could private respondents establish any rights or maintain any claim
over the land.

It is a well-settled principle that where innocent third persons rely upon the correctness of a
certificate of title and acquire rights over the property, the court cannot just disregard such rights.
Otherwise, public confidence in the certificate of title, and ultimately, the Torrens system, would be
impaired for everyone dealing with registered property would still have to inquire at every instance
whether the title has been regularly or irregularly issued.   Being an innocent mortgagee for value, R
46

& B Insurance validly acquired ownership over the property, subject only to the usufructuary rights of
Justa Kausapin thereto, as this encumbrance was properly annotated upon its certificate of title.
The factual findings of the trial court, particularly when affirmed by the appellate court, carry great
weight and are entitled to respect on appeal, except under certain circumstances.   One such
47

circumstance that would compel the Court to review the factual findings of the lower courts is where
the lower courts manifestly overlooked certain relevant facts not disputed by the parties and which, if
properly considered, would justify a different conclusion.   Also, it is axiomatic that the drawing of the
48

proper legal conclusions from such factual findings are within the peculiar province of this Court.  49

As regards R & B Insurance's prayer that Dominium be ordered to demolish the warehouses or that
it be declared the owner thereof since the same were built in bad faith, we note that such
warehouses were constructed by Asia Brewery, not by Dominium. However, despite its being a
necessary party in the present case, the lower courts never acquired jurisdiction over Asia Brewery,
whether as a plaintiff or defendant, and their respective decisions did not pass upon the
constructions made upon the subject property. Courts acquire jurisdiction over a party plaintiff upon
the filing of the complaint, while jurisdiction over the person of a party defendant is acquired upon
the service of summons in the manner required by law or by his voluntary appearance. As a rule, if a
defendant has not been summoned, the court acquires no jurisdiction over his person, and any
personal judgment rendered against such defendant is null and void.   In the present case, since
50

Asia Brewery is a necessary party that was not joined in the action, any judgment rendered in this
case shall be without prejudice to its rights. 
51

As to its claim for moral damages, we hold that R & B Insurance is not entitled to the same for it has
not alleged nor proven the factual basis for the same. Neither is it entitled to exemplary damages,
which may only be awarded if the claimant is entitled to moral, temperate, liquidated or
compensatory damages.   R & B Insurance's claim for attorney's fees must also fail. The award of
52

attorney's fees is the exception rather than the rule and counsel's fees are not to be awarded every
time a party wins a suit. Its award pursuant to article 2208 of the Civil Code demands factual, legal
and equitable justification and cannot be left to speculation and conjecture.   Under the
53

circumstances prevailing in the instant case, there is no factual or legal basis for an award of
attorney's fees.

WHEREFORE, the assailed decision of public respondent and its resolution dated February 22,
1989 are REVERSED. We uphold petitioner R & B Insurance's assertion of ownership over the
property in dispute, as evidenced by TCT No. 41985, subject to the usufructuary rights of Justa
Kausapin, which encumbrance has been properly annotated upon the said certificate of title. No
pronouncement as to costs.

SO ORDERED.

Panganiban and Purisima, JJ., 

SECOND DIVISION

G.R. No. 183719               February 2, 2011

MARGARITA F. CASTRO, Petitioner,
vs.
NAPOLEON A. MONSOD, Respondent.

DECISION

NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing
the Decision1 dated May 25, 2007 and the Resolution 2 dated July 14, 2008 of the Court of Appeals
(CA) in CA-G.R. CV No. 83973.

The antecedents of the case are as follows:

Petitioner is the registered owner of a parcel of land located on Garnet Street, Manuela Homes,
Pamplona, Las Piñas City, and covered by Transfer Certificate of Title (TCT) No. T-36071, with an
area of one hundred thirty (130) square meters (sq.m.). Respondent, on the other hand, is the owner
of the property adjoining the lot of petitioner, located on Lyra Street, Moonwalk Village, Phase 2, Las
Piñas City. There is a concrete fence, more or less two (2) meters high, dividing Manuela Homes
from Moonwalk Village.3

On February 29, 2000, respondent caused the annotation of an adverse claim against sixty-five (65)
sq.m. of the property of petitioner covered by TCT No. T-36071. The adverse claim was filed without
any claim of ownership over the property. Respondent was merely asserting the existing legal
easement of lateral and subjacent support at the rear portion of his estate to prevent the property
from collapsing, since his property is located at an elevated plateau of fifteen (15) feet, more or less,
above the level of petitioner’s property.4 Respondent also filed a complaint for malicious mischief and
malicious destruction before the office of the barangay chairman. 5

In defiance, petitioner filed a complaint for damages with temporary restraining order/writ of
preliminary injunction before the Regional Trial Court (RTC) of Las Piñas City. Petitioner also prayed
that the Register of Deeds of Las Piñas City be ordered to cancel the annotation of the adverse
claim on TCT No. T-36071.6

Prior to the filing of the case before the RTC, there were deposits of soil and rocks about two (2)
meters away from the front door of the house of

petitioner. As such, petitioner was not able to park her vehicle at the dead-end portion of Garnet
Street. When petitioner noticed a leak that caused the front portion of her house to be slippery, she
hired construction workers to see where the leak was coming from. The workers had already started
digging when police officers sent by respondent came and stopped the workers from finishing their
job.7

Petitioner averred that when she bought the property from Manuela Homes in 1994, there was no
annotation or existence of any easement over the property. Respondent neither asked permission
nor talked to her with regard to the use of 65 sq.m. of her property as easement. Upon learning of
the adverse claim, she felt disturbed and experienced sleepless nights for fear that she would not be
able to sell her property. Petitioner admitted that TCT No. 36071 does not cover the open space at
the dead-end portion of Garnet Street.8

For his part, respondent claimed that he and his family had been residing in Moonwalk Village since
June 1984. Adjacent to his property is the land of petitioner in Manuela Homes. When he bought the
property in 1983, the land elevation of Moonwalk Village was almost on the same level as Manuela
Homes. However, sometime in 1985 and 1986, Pilar Development Corporation, the developer of
Manuela Homes, bulldozed, excavated, and transferred portions of the elevated land to the lower
portions of Manuela Homes. Thus, Manuela Homes became lower than Moonwalk Village. 9

Before the said excavation, respondent personally complained to Pilar

Development Corporation and was assured that, as provided by the National Building Code, an
embankment will be retained at the boundary of Manuela Homes and Moonwalk Village, which is
more or less fifteen (15) feet higher than Manuela Homes. 10

Manuela Homes retained the embankment consisting of soil and rocks. Respondent had the open
space riprapped with stones as reinforcement against any potential soil erosion, earthquake, and
possible digging by any person.

Respondent asserted that the affidavit of adverse claim was for the annotation of the lateral and
subjacent easement of his property over the property of petitioner, in view of the latter’s manifest
determination to remove the embankment left by the developer of Manuela Homes.

On October 11, 2004, the RTC rendered a decision, 11 the dispositive portion of which reads:

WHEREFORE, premises considered, this court hereby renders judgment: (1) ordering the
cancellation of [respondent’s] adverse claim at the back of Transfer Certificate of Title No. T-36071
at the expense of [respondent] Napoleon Monsod; (2) ordering the said [respondent] to pay the
herein [petitioner] the amount of Php50,000.00 as moral damages; and (3) dismissing [petitioner’s]
claim for actual damages, attorney’s fees, litigation costs and costs of suit and [respondent’s]
compulsory counterclaim for lack of merit.

SO ORDERED.12

The trial court ratiocinated that the adverse claim of respondent was non-registrable considering that
the basis of his claim was an easement and not an interest adverse to the registered owner, and
neither did he contest the title of petitioner. Furthermore, the adverse claim of respondent failed to
comply with the requisites provided under Section 70 of Presidential Decree No. 1529. 13

On appeal, the CA reversed the decision of the trial court in a Decision 14 dated May 25, 2007, the
fallo of which reads:

WHEREFORE, premises considered, the instant appeal is GRANTED. The Decision of the Regional
Trial Court, Branch 198, Las Piñas City dated October 11, 2004 is REVERSED and SET ASIDE.
The Court hereby orders the retention of the annotation at the back of Transfer Certificate of Title
No. T-36071, not as an adverse claim, but a recognition of the existence of a legal easement of
subjacent and lateral support constituted on the lengthwise or horizontal land support/embankment
area of sixty-five (65) square meters, more or less, of the property of [petitioner] Margarita Castro.
The writ of preliminary injunction issued by this Court on April 18, 2006 is hereby made permanent.
[Petitioner’s] claim for damages is likewise DISMISSED.

SO ORDERED.15

The CA ruled that while respondent’s adverse claim could not be sanctioned because it did not fall
under the requisites for registering an adverse claim, the same might be duly annotated in the title as
recognition of the existence of a legal easement of subjacent and lateral support. The purpose of the
annotation was to prevent petitioner from making injurious excavations on the subject embankment
as to deprive the residential house and lot of respondent of its natural support and cause it to
collapse. Respondent only asked that petitioner respect the legal easement already existing
thereon.16
On June 15, 2007, petitioner filed a motion for reconsideration. However, the CA denied the same in
a Resolution17 dated July 14, 2008.

Hence, this petition.

The issue in this case is whether the easement of lateral and subjacent support exists on the subject
adjacent properties and, if it does, whether the same may be annotated at the back of the title of the
servient estate.

Article 437 of the Civil Code provides that the owner of a parcel of land is the owner of its surface
and of everything under it, and he can construct thereon any works, or make any plantations and
excavations which he may deem proper. However, such right of the owner is not absolute and is
subject to the following limitations: (1) servitudes or easements, 18 (2) special laws,19 (3)
ordinances,20 (4) reasonable requirements of aerial navigation, 21 and (5) rights of third persons.22

Respondent filed before the RTC an affidavit of adverse claim, the pertinent portions of which read:

5. That our adverse claim consists of rights of legal or compulsory easement of lateral and
subjacent support (under the Civil Code) over a portion of the above-described property of
owner Margarita F. Castro, that is, covering the lengthwise or horizontal land
support/embankment area of sixty-five (65) square meters, more or less.

6. That said registered owner has attempted to destroy and/or remove portions of the
existing lateral/subjacent land and cement supports adjoining the said two properties. In fact,
a portion of the easement was already destroyed/removed, to the continuing prejudice of
herein adverse claimant, and that a formal complaint against said registered owner was filed
by the herein adverse claimant before the Office of the Barangay Chairman of Talon V, Las
Piñas City and the same proved futile.23

Respondent’s assertion that he has an adverse claim over the 65 sq.m. property of petitioner is
misplaced since he does not have a claim over the ownership of the land. The annotation of an
adverse claim over registered land under Section 70 of Presidential Decree 1529 24 requires a claim
on the title of the disputed land. Annotation is done to apprise third persons that there is a
controversy over the ownership of the land and to preserve and protect the right of the adverse
claimant during the pendency of the controversy. It is a notice to third persons that any transaction
regarding the disputed land is subject to the outcome of the dispute. 25

In reality, what respondent is claiming is a judicial recognition of the existence of the easement of
subjacent and lateral support over the 65 sq. m. portion of petitioner’s property covering the land
support/embankment area. His reason for the annotation is only to prevent petitioner from removing
the embankment or from digging on the property for fear of soil erosion that might weaken the
foundation of the rear portion of his property which is adjacent to the property of petitioner.

An easement or servitude is an encumbrance imposed upon an immovable for the benefit of another
immovable belonging to a different owner.26 There are two kinds of easements according to source.
An easement is established either by law or by will of the owners. 27 The courts cannot impose or
constitute any servitude where none existed. They can only declare its existence if in reality it exists
by law or by the will of the owners. There are therefore no judicial easements. 28

Article 684 of the Civil Code provides that no proprietor shall make such excavations upon his land
as to deprive any adjacent land or building of sufficient lateral or subjacent support. An owner, by
virtue of his surface right, may make excavations on his land, but his right is subject to the limitation
that he shall not deprive any adjacent land or building of sufficient lateral or subjacent support.
Between two adjacent landowners, each has an absolute property right to have his land laterally
supported by the soil of his neighbor, and if either, in excavating on his own premises, he so disturbs
the lateral support of his neighbor’s land as to cause it, or, in its natural state, by the pressure of its
own weight, to fall away or slide from its position, the one so excavating is liable. 29

In the instant case, an easement of subjacent and lateral support exists in favor of respondent.  It1avvphi1

was established that the properties of petitioner and respondent adjoin each other. The residential
house and lot of respondent is located on an elevated plateau of fifteen (15) feet above the level of
petitioner’s property. The embankment and the riprapped stones have been in existence even before
petitioner became the owner of the property. It was proven that petitioner has been making
excavations and diggings on the subject embankment and, unless restrained, the continued
excavation of the embankment could cause the foundation of the rear portion of the house of
respondent to collapse, resulting in the destruction of a huge part of the family dwelling. 30

We sustain the CA in declaring that a permanent injunction on the part of petitioner from making
injurious excavations is necessary in order to protect the interest of respondent. However, an
annotation of the existence of the subjacent and lateral support is no longer necessary. It exists
whether or not it is annotated or registered in the registry of property. A judicial recognition of the
same already binds the property and the owner of the same, including her successors-in-interest.
Otherwise, every adjoining landowner would come to court or have the easement of subjacent and
lateral support registered in order for it to be recognized and respected.

WHEREFORE, in view of the foregoing, the Decision dated May 25, 2007 and the Resolution dated
July 14, 2008 of the Court of Appeals in CA-G.R. CV No. 83973 are hereby AFFIRMED WITH
MODIFICATION that the annotation at the back of Transfer Certificate of Title No. T-36071,
recognizing the existence of the legal easement of subjacent and lateral support constituted on the
lengthwise or horizontal land support/embankment area of sixty-five (65) square meters, more or
less, of the property of petitioner Margarita F. Castro, is hereby ordered removed.

SO ORDERED.

G.R. No. 134692               August 1, 2000

ELISEO FAJARDO, JR., and MARISSA FAJARDO, petitioners,

vs.
FREEDOM TO BUILD, INC., respondent.

DECISION

VITUG, J.:

Freedom To Build, Incorporated, an owner-developer and seller of low-cost housing, sold to

petitioner-spouses, a house and lot designated Lot No. 33, Block 14, of the De la Costa Homes in
Barangka, Marikina, Metro Manila. The Contract to Sell executed between the parties, contained a
Restrictive Covenant providing certain prohibitions, to wit: 1

"Easements. For the good of the entire community, the homeowner must observe a two-meter
easement in front. No structure of any kind (store, garage, bodega, etc.) may be built on the front
easement.
 x x x           x x x          x x x

"Upward expansion. A second storey is not prohibited. But the second storey expansion must be
placed above the back portion of the house and should not extend forward beyond the apex of the
original building.

x x x           x x x          x x x

"Front expansion: 2nd Storey: No unit may be extended in the front beyond the line as designed
and implemented by the developer in the 60 sq. m. unit. In other words, the 2nd floor expansion, in
front, is 6 meters back from the front property line and 4 meters back from the front wall of the
house, just as provided in the 60 sq. m. units." 2

The above restrictions were also contained in Transfer Certificate of Title No. N-115384 covering the
lot issued in the name of petitioner-spouses.

The controversy arose when petitioners, despite repeated warnings from respondent, extended the
roof of their house to the property line and expanded the second floor of their house to a point
directly above the original front wall. Respondent filed before the Regional Trial Court, National
3 

Capital Judicial Region, Branch 261, Pasig City, an action to demolish the unauthorized structures.

After trial, judgment was rendered against petitioners; thus:

"WHEREFORE, premises considered, defendant spouses Eliseo B. Fajardo, Jr., and Marissa F.
Fajardo are hereby directed to immediately demolish and remove the extension of their expanded
housing unit that exceeds the limitations imposed by the Restrictive Covenant, otherwise the Branch
Sheriff of this Court shall execute this decision at the expense of the defendants.

"As to damages and attorney's fees, it appearing from the records of this case that no evidence to
sustain the same was adduced by either of the parties, the Court deems it proper not to award any.

"SO ORDERED." 4

On appeal to it, the Court of Appeals affirmed the decision of the trial court.

In their petition for review to this Court, the spouses contest the judgment of the courts below.
Adjacent owners reportedly have no objection to the construction, and have even expressed interest
in undertaking a similar expansion in their respective residences. Moreover, the couple's two
children, a son and a daughter, might soon get married and then share, with their families, living
quarters with petitioners. The latter also assail the personality of private respondent to question the
construction which have effectively relinquished its ownership, right or interest over the subdivision
upon the execution of the Deed of Absolute Sale in favor of the individual homeowners. Per the
contract between Freedom to Build Incorporated and the De la Costa Low Income Project
Homeowners' Association (hereinafter homeowners' association), petitioners aver, the enforcement
of the prohibitions contained in the "Restrictive Covenant" originally residing on respondent is now
lodged in the homeowners' association. Petitioners maintain that it is incumbent upon the
homeowners' association, not on respondent, to enforce compliance with the provisions of the
covenant.

A perusal of the provisions of the covenant would show that the restrictions therein imposed were
intended -
"For the protection and benefit of the De La Costa Low Income Housing Project, and of all the
persons who may now, or hereafter become owners of any part of the project, and as part of the
consideration for the conveyance of the housing unit, these restrictions are promulgated in order
that; the intents and purposes for which the project was designed shall be upheld; to wit: subsequent
duly approved sale and assignments of housing units shall be made only to low income families; a
certain level of privacy shall be observed; a community spirit shall be fostered; and an undisturbed
possession and occupancy at the homeowners shall be maintained." 5

Restrictive covenants are not, strictly speaking, synonymous with easements. While it may be
correct to state that restrictive covenants on the use of land or the location or character of buildings
or other structures thereon may broadly be said to create easements or rights, it can also be
contended that such covenants, being limitations on the manner in which one may use his own
property, do not result in true easements, but a case of servitudes (burden), sometimes
6  7 

characterized to be negative easements or reciprocal negative easements. Negative easement is

the most common easement created by covenant or agreement whose effect is to preclude the
owner of the land from doing an act, which, if no easement existed, he would be entitled to do. 8

Courts which generally view restrictive covenants with disfavor for being a restriction on the use of
one's property, have, nevertheless, sustained them where the covenants are reasonable, not
9  10 

contrary to public policy, or to law, and not in restraint of trade. Subject to these limitations, courts
11  12  13 

enforce restrictions to the same extent that will lend judicial sanction to any other valid contractual
relationship. In general, frontline restrictions on constructions have been held to be valid
14 

stipulations. 15

The provisions in a restrictive covenant prescribing the type of the building to be erected are crafted
not solely for the purpose of creating easements, generally of light and view, nor as a restriction as
to the type of construction, but may also be aimed as a check on the subsequent uses of the
16 

building conformably with what the developer originally might have intended the stipulations to be.
17 

In its Memorandum, respondent states in arguing for the validity of the restrictive covenant that the -

"x x x restrictions are not without specific purpose. In a low cost-socialized housing, it is of public
knowledge that owners-developers are constrained to build as many number of houses on a limited
land area precisely to accommodate marginalized lot buyers, providing as much as possible the
safety, aesthetic and decent living condition by controlling overcrowding. Such project has been
designed to accommodate at least 100 families per hectare." 18

There appears to be no cogent reasons for not upholding restrictive covenants aimed to promote
aesthetics, health, and privacy or to prevent overcrowding.

Viewed accordingly, the statement of petitioners that their immediate neighbors have not opposed
the construction is unavailing to their cause, the subject restrictive covenant not being intended for
the benefit of adjacent owners but to prescribe the uses of the building, i.e., to ensure, among other
things, that the structures built on De la Costa Homes Subdivision would prevent overcrowding and
promote privacy among subdivision dwellers. The argument then of petitioners that expansion is
necessary in order to accommodate the individual families of their two children must fail for like
reason. Nor can petitioners claim good faith; the restrictive covenants are explicitly written in the
Contract To Sell and annotated at the back of the Transfer Certificate of Title.

Petitioners raise the issue of the personality of respondent to enforce the provisions of the
covenant.  Broadly speaking, a suit for equitable enforcement of a restrictive covenant can only be
1âwphi1

made by one for whose benefit it is intended. It is not thus normally enforceable by one who has no
19 

right nor interest in the land for the benefit of which the restriction has been imposed. Thus, a
20 
developer of a subdivision can enforce restrictions, even as against remote grantees of lots, only if
he retains part of the land. There would have been merit in the argument of petitioners - that
21 

respondent, having relinquished ownership of the subdivision to the homeowners, is precluded from
claiming any right or interest on the same property - had not the homeowners' association, confirmed
by its board of directors, allowed respondent to enforce the provisions of the restrictive covenant.

Finally, petitioners argue that for lack of a specific provision, prescribing the penalty of demolition in
the "Restrictive Covenant" in the event of a breach thereof, the prayer of respondent to demolish the
structure should fail. This argument has no merit; Article 1168 of the New Civil Code states:

"When the obligation consists in not doing and the obligor does what has been forbidden him, it shall
be undone at his expense."

This Court is not unaware of its ruling in Ayala Corporation vs. Ray Burton Development
Corporation, which has merely adjudged the payment of damages in lieu of demolition. In the
22 

aforementioned case, however, the elaborate mathematical formula for the determination of
compensatory damages which takes into account the current construction cost index during the
immediately preceding 5 years based on the weighted average of wholesale price and wage indices
of the National Census and Statistics Office and the Bureau of Labor Statistics is explicitly provided
for in the Deed of Restrictions entered into by the parties. This unique and peculiar circumstance,
among other strong justifications therein mentioned, is not extant in the case at bar.

In sum, the Court holds that -

(1)....The provisions of the Restrictive Covenant are valid;

(2)....Petitioners must be held to be bound thereby; and

(3)....Since the extension constructed exceeds the floor area limits of the Restrictive
Covenant, petitioner-spouses can be required to demolish the structure to the extent that it
exceeds the prescribed floor area limits.

WHEREFORE, the assailed decision, dated 13 July 1998, of the Court of Appeals in CA-G.R. CV
No. 50085, sustaining that of the court a quo, is AFFIRMED. No costs.

SO Ordered

G.R. No. 185240               January 20, 2010

SPS. MANUEL AND VICTORIA SALIMBANGON, Petitioners,

vs.
SPS. SANTOS AND ERLINDA TAN, Respondents.

DECISION

ABAD, J.:

This case is about the admissibility of testimony that tends to modify a written agreement among the
parties and the extinction of the easement of right of way upon consolidation in one person of the
ownership of the dominant and the servient estates.
 The Facts and the Case

Guillermo Ceniza died intestate on July 11, 1951, leaving a parcel of land at Poblacion, Mandaue
City. Twenty years later on July 17, 1973 his children Benedicta, Guillermo, Jr., Victoria, Eduardo,
and Carlos executed an extrajudicial declaration of heirs and partition, adjudicating and dividing the
land among themselves as follows:

1. To Benedicta T. Cabahug, Lot A subject to a perpetual and grat[u]itous road right of

way 1.50 m. wide along its NW. boundary in favor of Lots B, E, and D, of the
subdivision;

2. To Eduardo Ceniza, Lot B subject to a perpetual and grat[u]itous road right of way
1.50 m. wide along its SW. boundary in favor of Lots A, D & E of the subdivision;

3. To Carlos Ceniza, Lot C;

4. To Guillermo Ceniza Jr., Lot D subject to a perpetual and grat[u]itous road right of
way 1.50 m. wide along its NE. boundary in favor of Lot B and E of the subdivision;
and

5. To Victoria Ceniza, Lot E, subject to a perpetual and grat[u]itous road right of way
1.50 m. wide along its SW. boundary in favor of Lot D of the subdivision.1

Lots A, B, and C were adjacent to a city street. But Lots D and E were not, they being interior lots.
To give these interior lots access to the street, the heirs established in their extrajudicial partition an
easement of right of way consisting of a 3-meter wide alley between Lots D and E that continued on
between Lots A and B and on to the street. The partition that embodied this easement of right of way
was annotated on the individual titles issued to the heirs.

Roughly, the lots including the easement of right of way would take the following configurations, 2 not
drawn here to accurate size and proportion but illustrative of their relative locations:
But, realizing that the partition resulted in an unequal division of the property, the heirs modified their
agreement by eliminating the easement of right of way along Lots A, D, and E, and in its place,
imposed a 3-meter wide alley, an easement of right of way, that ran exclusively along the southwest
boundary of Lot B from Lots D and E to the street. 3 Thus:

Victoria (now petitioner Victoria Salimbangon) later swapped lots with Benedicta with the result that
Victoria became the owner of Lot A, one of the three lots adjacent to the city street. Victoria and her
husband (the Salimbangons) constructed a residential house on this lot and built two garages on it.
One garage abutted the street while the other, located in the interior of Lot A, used the alley or
easement of right of way existing on Lot B to get to the street. Victoria had this alley cemented and
gated.

Subsequently, however, respondent spouses Santos and Erlinda Tan (the Tans) bought Lots B, C,
D, and E from all their owners. The Tans built improvements on Lot B that spilled into the easement
area. They also closed the gate that the Salimbangons built. Unable to use the old right of way, the
Salimbangons lodged a complaint with the City Engineer of Mandaue against the Tans. For their
part, the Tans filed an action with the Regional Trial Court (RTC) of Mandaue against the
Salimbangons in Civil Case MAN-3223 for the extinguishment of the easement on Lot B and
damages with application for preliminary injunction. 4 The Salimbangons filed their answer with
counterclaims.

After hearing or on February 9, 2001 the RTC rendered judgment, upholding the Salimbangons’
easement of right of way over the alley on Lot B, the lot that belonged to the Tans. The court pointed
out that the easement in this case was established by agreement of the parties for the benefit of Lots
A, D, and E. Consequently, only by mutual agreement of the parties could such easement be
extinguished. The RTC declined, however, to award damages to the Salimbangons.

Both parties appealed to the Court of Appeals (CA) in CA-G.R. CV 73468. On July 27, 2007 the
CA5 reversed the RTC decision, extinguished the easement of right of way established on the alley
in Lot B of the Tans, and denied the Salimbangons’ claim for damages. The court ruled that based
on the testimony of one of the previous owners, Eduardo Ceniza, the true intent of the parties was to
establish that easement of right of way for the benefit of the interior lots, namely, Lots D and E.
Consequently, when ownership of Lots B, D, and E was consolidated into the Tans, the easement
ceased to have any purpose and became extinct. The Salimbangons filed a motion for
reconsideration but the CA denied the same in its resolution of October 14, 2008. This prompted
them to file the present petition.

Questions Presented

Two questions are presented:

1. Whether or not the CA erred in admitting in evidence contrary to the parol evidence rule
Eduardo Ceniza’s testimony respecting the true intent of the heirs in establishing the
easement of right of way as against what they stated in their written agreement; and

2. Whether or not the CA erred in ruling that the easement of right of way established by the
partition agreement among the heirs for the benefit of Lot A has been extinguished.

The Court’s Ruling

One. The Salimbangons point out that the CA ought to have rejected Eduardo Ceniza’s testimony
that the heirs had intended to establish the easement of right of way solely for the benefit of the
interior Lots D and E which had no access to the city street. The partition agreement also made Lot
A, now owned by the Salimbangons, a beneficiary of that easement. Thus:

2. To Eduardo Ceniza [now the Tans], Lot B subject to a perpetual and grat[u]itous road right
of way 1.50 m. wide along its SW. boundary in favor of Lots A, D & E of the
subdivision;6 (Underscoring supplied)

The parol evidence rule, said the Salimbangons, precluded the parties from introducing testimony
that tended to alter or modify what the parties had agreed on above.

But the exclusionary provision of the parol evidence rule admits of exceptions. Section 9, Rule 130
of the Revised Rules on Evidence states:

Sec. 9. Evidence of written agreements. - When the terms of an agreement have been reduced to
writing, it is considered as containing all the terms agreed upon and there can be, between the
parties and their successors in interest, no evidence of such terms other than the contents of the
written agreement. However, a party may present evidence to modify, explain or add to the terms of
the written agreement if he puts in issue in his pleading:

(a) An intrinsic ambiguity, mistake or imperfection in the written agreement;

(b) The failure of the written agreement to express the true intent and agreement of the
parties thereto;

(c) The validity of the written agreement; or

(d) The existence of other terms agreed to by the parties or their successors in interest after
the execution of the written agreement.

The term "agreement" includes wills. (7a)

Here, the Tans had put in issue the true intent and agreement of the parties to the partition when
they alleged in their complaint that, contrary to what paragraph 2 quoted above seems to imply, the
easement was actually for the benefit of Lots D and E only. The complaint thus said:

So that in the same partition instrument, the said heirs voluntarily agreed to establish the so-called
"perpetual and gratuitous easement of road right of way" along LOT A, with 1.50 meters wide and
along LOT B, with the same 1.50 meters wide.

Understandably, this servitude voluntarily constituted on LOTS A and B was had for the benefit and
use by the owners of LOTS D (Guillermo Ceniza, Jr.) and E (defendant Victoria Ceniza
Salimbagon).7 (Underscoring supplied)

Consequently, with the above averment, the Tans were entitled to introduce evidence to establish
the true intent and agreement of the parties although this may depart from what the partition
agreement literally provided.

At any rate, as the CA said, the Salimbangons did not object at the hearing to admission of Eduardo
Ceniza’s testimony even when this seemed at variance, as far as they were concerned, with the
partition agreement among the heirs. Consequently, the Salimbangons may also be deemed to have
waived their right to now question such testimony on appeal.

Two. The Salimbangons point out that the partition agreement among the heirs established in their
favor, as owners of Lot A, an easement of right of way on Lot B from the interior of their lot to the city
street. Since theirs was an easement established by agreement of the parties, only by mutual
agreement could the same be extinguished.

But, firstly, as Eduardo Ceniza testified, the true agreement of the heirs was for the establishment of
an easement of right of way for the benefit solely of the lots that did not have direct access to the
street, namely Lots D and E. His testimony made sense. 1avvphi1

As originally constituted in that agreement, each of Lots A and B was to contribute a strip of 1.5
meters between them that when combined formed a 3-meter wide alley leading from Lots D and E to
the street. To the extent that Lots A and B retained the right to use the 1.5-meter portion that they
contributed to the establishment of the easement, the agreement gave their owners the right to use
the common alley as well. As Eduardo testified, however, the true intent of the heirs was to give Lots
D and E access to the street. Lots A and B did not need this alley since they were facing the street. 1avvphi1

Consequently, when the owner of Lots D and E also became the owner of Lot B, the easement of
right of way on Lot B became extinct by operation of law. 8 The existence of a dominant estate and a
servient estate is incompatible with the idea that both estates belong to the same person.

Secondly, there is no question that when the heirs realized that it was not fair to take strips of 1.5
meters from each of Lots A, D, and E for the easement of right of way when these lots were already
small, the heirs executed a "Cancellation of Annotation of Right of Way, etc." that cancelled the
easement of right of way they earlier established on Lots A, D, and E and in its place imposed a 3-
meter wide easement of right of way solely on Lot B.

Although the "cancellation" document did not say so, it was implicit that the changed location of the
easement cancelled not only the 1.5-meter strip of easement imposed on Lot A of the Salimbangons
but also their right to use the new 3-meter easement alley that lay entirely on Lot B. Strictly
speaking, if the Salimbangons insist that their right as dominant estate under the original partition
agreement remains, then that would be partly on a 1.5-meter strip of their own Lot A and partly on
the equivalent 1.5-meter strip on the side of Lot B, not on the new 3-meter alley established entirely
on Lot B.

The point is that, obviously, in establishing the new easement of right of way, the heirs intended to
abandon the old one. Since this 3-meter alley on Lot B directly connected Lots D and E to the street,
it is also obvious that only the latter lots were its intended beneficiary. And, with the ownership of
Lots B, D, and E now consolidated in a common owner, namely, the Tans, then the easement of
right of way on Lot B may be said to have been extinguished by operation of law. 9

ACCORDINGLY, this Court DENIES the petition and AFFIRMS in all respects the decision dated
July 27, 2007 and resolution dated October 14, 2008 of the Court of Appeals in CA-G.R. CV 73468.

SO ORDERED.

G.R. No. 97039 April 24, 1992

CONCORDIO ABELLANA, SR., PEDRO E. MENDEZ, VERANO BADANA, CONCORDIO

ABELLANA, JR., TEODOLFO ABELLANA, MUSSULINI BUCAO, REMEDIOS GARCIANO,
ALFREDO SY, JUANITO JABELLANA, CATALINO LABANDERO, PURISIMO JABELLANA,
ANDRES LASTIMOSA, LUCRESIA VDS. DE BENTE, PAULA VDA. DE BACUS, ARTURO
JABELLANA, FLORENTINO LARIOSA, LEODY DE LA PEÑA, PELAGIA JABELLANA, FE
GOCELA, SEVERINO QUINAMADA and NARCISA LASTIMOSA, petitioners,
vs.
HON. COURT OF APPEALS, ORLANDO P. NAYA, ROSENDO ESTOYE, JR. and the
MUNICIPAL GOVERNMENT OF TALISAY, CEBU, represented by the Mayor and Members of
the Sanguniang Bayan, respondents.

APOLINARIO ENGUIO, RICO VILLARIN, MARIA ROSARIO BALBUENA, JOSE TIROL,

ASUNCION DE LA PEÑA, ROGELIO B. GUYOT, LEONIZA FAUSTINO, MAMERTO ZAMORAS,
ANTONIO CAL, VICENTE ALMENDRAS, MICHAEL SERRANO, EDUARDO PADERNOS, MA.
LUZ SANCHEZ, R. CABARERO, OSCAR NAPOLI and ROBERTO BUENO, intervenors.

GRIÑO-AQUINO, J.:

The petitioners who live on a parcel of land abutting the northwestern side of the Nonoc Homes
Subdivision, sued to establish an easement of right of way over a subdivision road which, according
to the petitioners, used to be a mere footpath which they and their ancestors had been using since
time immemorial, and that, hence, they had acquired, through prescription, an easement of right of
way therein. The construction of a wall by the respondents around the subdivision deprived the
petitioners of the use of the subdivision road which gives the subdivision residents access to the
public highway. They asked that the high concrete walls enclosing the subdivision and cutting of
their access to the subdivision road be removed and that the road be opened to them.

The private respondents denied that there was a pre-existing footpath in the place before it was
developed into a subdivision. They alleged furthermore that the Nonoc Subdivision roads are not the
shortest way to a public road for there is a more direct route from the petitioners' land to the public
highway.
After trial, the trial court rendered judgment disposing as follows:

WHEREFORE, judgment is hereby rendered, and, accordingly, defendants Orlando

P. Naya and Rosendo Estoye, Jr. and the intervenors are hereby ordered to
demolish the subject fences or enclosures at the dead ends of Road Lots 1 and 3 of
the Nonoc Homes Subdivision at their expense and to leave them open for the use of
the plaintiffs and the general public, within fifteen (15) days from finality of this
judgment. The complaint as against defendant Municipal Government of Talisay,
Cebu is ordered dismissed. All counterclaims are ordered dismissed. No
pronouncement as to costs. (p.15, Rollo.)

However, on appeal by the defendants and intervenors (now private respondents), the appellate
court on October 17, 1990, reversed the appealed judgment. It found that:

As borne out by the records of the case, the abovementioned

requisites essential for the grant of an easement of right of way are
not obtaining in this case hence no alternative presents itself except
reversal of the judgment below. . . .

However, the foregoing is without prejudice to the filing of the

appropriate action by the proper authorities. Records bear that
attention of the Municipal Mayor of Talisay was already called by the
Provincial Fiscal to Opinion No. 172, Series of 1975, of the
Department of Justice wherein the Acting Secretary of Justice opined
that "road lots in a private subdivision are private property and should
be acquired by the government by donation, purchase or
expropriation if they are to be utilized for a public highway. . . ."

xxx xxx xxx

WHEREFORE, the judgment appealed from is hereby REVERSED

and set aside. The Municipal Government of Talisay, Cebu, at its
option, may institute the proper action for expropriation. (p. 22, Rollo)

In an order dated January 9, 1991, the appellate court denied petitioners' motion for reconsideration
of the aforesaid decision. Hence, this petition for review in which the petitioners allege that the Court
of Appeals erred:

1. in not holding that the easement claimed by them is a legal easement established
by law (Art. 619. Civil Code) and acquired by them by virtue of a title under Art. 620,
Civil Code and P.D. No. 957 through the National Housing Authority which has
exclusive jurisdiction to regulate subdivision and condominium projects;

2. in not holding that the footpaths and passageways which were converted into
subdivision road lots have acquired the status of public streets in view of Section 4 of
Municipal Ordinance No. 1, Series of 1969 of Talisay, Cebu which provides that
subdivision roads shall be used not only for the exclusive use of the homeowners but
also for the general public, and Section 5 of Ordinance No. 5, Series of 1974, which
provides that "those subdivision road lots whose use by the public are (sic) deemed
necessary by the proper authorities shall be made available for public use" (p.
7, Rollo); and
 3. in not determining whether or not the closure of the dead ends of road lots 1 and 3
of the Nonoc Homes Subdivision by the private respondents, Estoye and Naya, was
legal.

After deliberating on their petition for review of the decision dated October 17, 1990 of the Court of
Appeals in CA-G.R. CV No. 19948, and the private respondents' comments, we find that the petition
raises merely factual issues which are not reviewable by this Court under Rule 45 of the Rules of
Court, and that, in any event, no reversible error was committed by the Court of Appeals in
dismissing the complaint on the ground that the requisite conditions do not exist for the grant of an
easement of right of way in favor of the petitioners' land under Articles 649 and 650 of the Civil
Code. The appellate court did not err in holding that the road lots in a private subdivision are private
property, hence, the local government should first acquire them by donation, purchase, or
expropriation, if they are to be utilized as a public road.

Petitioners' assumption that an easement of right of way is continuous and apparent and may be
acquired by prescription under Article 620 of the Civil Code, is erroneous. The use of a footpath or
road may be apparent but it is not a continuous easement because its use is at intervals and
depends upon the acts of man. It can be exercised only if a man passes or puts his feet over
somebody else's land (4 Manresa 597; Haffman vs. Shoemaker, 71 SE 198, both cited on p. 454,
Vol. 2, 6th Ed., Paras, Civil Code of the Philippines). Hence, a right of way is not acquirable by
prescription (Cuaycong, et al, vs Benedicto, et al., 37 Phil. 781; Ronquillo, et al. vs. Roco, et al., 103
Phil. 84; Ayala de Roxas vs. Case, 8 Phil. 197).

Neither may petitioners invoke Section 29 of P.D. 957 which provides:

Sec. 29. Right of Way to Public Road. — The owner or developer of a subdivision

without access to any existing public road or street must secure a right of way to a
public road or street and such right of way must be developed and maintained
according to the requirement of the government authorities concerned.

The above provision applies to the owner or developer of a subdivision (which petitioners are not)
without access to a public highway.

The petitioners' allegation that the footpaths which were converted to subdivision roads have
acquired the status of public streets, is not well taken. In the first place, whether or not footpaths
previously existed in the area which is now known as the Nonoc Homes Subdivision, is a factual
issue which this Court may not determine for it is not a trier of facts.

The municipal ordinances which declared subdivision roads open to public use "when deemed
necessary by the proper authorities" (p. 7, Rollo) simply allow persons other than the residents of the
Nonoc Homes Subdivision, to use the roads therein when they are inside the subdivision but those
ordinances do not give outsiders a right to open the subdivision walls so they can enter the
subdivision from the back. As the private respondents pointed out in their Comment:

The closure of the dead ends of road lots 1 and 3 is a valid exercise of proprietary
rights. It is for the protection of residents in the subdivision from night prowlers and
thieves. And the public is not denied use of the subdivision roads, only that the users
must get inside the subdivision through the open ends of the road lots that link the
same to the public road. It is common to most, if not all subdivisions in Cebu, Metro
Manila and other places, that points of ingress to and egress from the subdivision are
the points where the subdivision roads intersect with public roads. It is of judicial
 notice that most, if not all, subdivisions are enclosed and fenced with only one or few
points that are used as ingress to and egress from the subdivisions. (54-55, Rollo)

WHEREFORE, finding no merit in the petition for review, the same is DENIED with costs against the
petitioners.

SO ORDERED.

Narvasa, C.J., Cruz and Medialdea, JJ., concur.

Bellosillo, J., is on leave.

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