Hemedes v.

CA
Digest

Lyndon Cena
10/8/1999





Hemedes v. CA
G.R. No. 107132, October 8, 1999
Gonzaga-Reyes, J.


FACTS:

A parcel of land wa s ori gi nal l y owned by the late J ose Hemedes, father of Maxima Hemedes
and E n r i q u e Hemedes. Jose Hemedes executed a document entitled Donation Inter Vivos wi t h
Resolutory Conditions whereby he conveyed ownership over the subject land, t oget her 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 b y the DONEE before her death
or remarriage contained in a public instrument as above provided, the title to the
property shall au t o ma t i c a l l y revert to the legal h e i r s o f the DONOR in
common.

Pursuant to the first condition above mentioned, Justa Kausapin executed a Deed of
Conveyance of Unregistered Real Property by Reversion conveying to Maxima Hemedes the subject
property. An OCT was issued in the name of Maxima Hemedes by the Registry of Deeds of Laguna,
with the annotation that Justa Kausapin shall have the usufructuary rights over the parcel of land
herein described during her lifetime or widowhood.

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 from & B Insurance. The latter extraj udi ci al l y
foreclosed the mortgage since Maxima Hemedes failed to pay the loan even after it became due. The
land was sold at a public auction with R & B Insurance as the highest bidder and a certificate of sale
was issued by the sheriff in its favor. The annotation of usufruct in favor of Justa Kausapin was
maintained in the new title.

Despite the earlier conveyance of the subject land in favor of Maxima Hemedes, Justa
Kausapin executed a Kasunduan whereby she transferred the same land to her stepson Enrique
Hemedes, pursuant to the resolutory condition in the deed of donation executed in her favor by
her late husband Jose Hemedes. Enrique Hemedes later sold t he property to Dominium Realty and
C o n s t r u c t i o n Corporation (Dominium). Justa Kausapin executed an affidavit affirming the
conveyance of the subject property in favor of Enrique Hemedes as embodied in the
Kasunduan, and at the same time denying the conveyance made to Maxima Hemedes.

Dominium l eased the property to its sister corporation Asia B r e w e r y , 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 Brewerys
constructions upon the subject property, R & B Insurance sent it a letter informing the former of its
ownership of the property and of its right to appropriate the constructions since Asia Brewery is a
builder in bad faith. A conference was held between R & B Insurance and Asia Brewery but they failed
to arrive at an amicable settlement.

Maxima Hemedes also wrote a letter addressed to Asia Brewery wherein she asserted that
she is the rightful owner of the subject property and that, as such, she has the right to
appropriate Asia Brewerys constructions, to demand its demolition, or to compel Asia Brewery to
purchase the land. In anot her letter of the same date addressed to R & B Insurance, Maxima Hemedes
denied the execution of any real est at e mortgage in favor of the latter.

ISSUE:

Whether or not R & B Insurance should be considered an innocent purchaser of the land in question

HELD:

Yes. The annotation of usufructuary rights in favour of Justa Kausapin upon Maxima Hemedes OCT dose
not impose upon R & B Insurance the obligation to investigate the validity of its mortgagors title. Usufruct
gives a right to enjoy t h e property of another with the obligation of preserving its form and subst ance. The
usufructuary is entitled to all the natural, industrial and civil fruits of the property and may personally
enjoy the thing in usufruct, lease it to another, or alienate his right of usufruct, even by a gratuitous title, but
all the contracts he may enter into as such usufructuary shall terminate upon the expiration of the usufruct.
Clearly, only the jus utendi and jus fruendi over the property is transferred to the usufructuary. The owner of the
property maintains the jus disponendi or the power to alienate, encumber, transform, and ev en d e s t r o y the
same. This right is embodied in the Civil Code, which provides that the owner of property the usufruct of
which is held by another, may alienate it, although he cannot alter the propertys form or substance, or do
anything which may be prejudicial to the usufructuary. 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. 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 respondents 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.