Case Digest: Privatization and Management Office vs. Legaspi Towers 300, Inc, G.R. No. 147957. July 22, 2009.

Easement

CASE TITLE: Privatization and Management Office vs. Legaspi Towers 300, Inc.
GR No/ Date: G.R. No. 147957. July 22, 2009.
PONENTE: Peralta, J.
CASE WITH THE SC: Petition for Review on Certiorari
PROCEDURAL ANTECEDENTS: RTC - Declaration of the existence of an easement. CA - Appeal
FACTS: Caruff Development Corporation owned several parcels of land along Roxas Boulevard, Manila. In December 1975, Caruff obtained a loan from the Philippine National Bank (PNB) secured by a mortgage on three parcels of land for constructing a 21-storey condominium. In 1979, Caruff began building a multi-storey condominium on the mortgaged land and a powerhouse and sump pumps on an adjacent lot. Upon completion, the condominium was constituted as Legaspi Towers 300, Inc. under the Condominium Act. Caruff failed to pay its loan, leading PNB to foreclose the mortgage and acquire Caruff's properties at a sheriff's auction on January 30, 1985. Proclamation No. 50 created the Asset Privatization Trust (APT), aimed to promote privatization. The National Government, through APT, became the assignee of PNB's rights and interests, including Caruff's foreclosed properties. Caruff filed a case against PNB seeking nullification of the foreclosure. A Compromise Agreement was met. The Compromise Agreement required Caruff to transfer the lot with the powerhouse and sump pumps to the National Government through APT. RTC: Approved the Compromise Agreement, transferring the property to PNB and the National Government through APT. In 1989, Legaspi Towers 300, Inc. filed a case for the declaration of an easement over the lot with the powerhouse and sump pumps. Claim: Caruff's construction of the powerhouse and sump pumps on its property constituted a voluntary easement in favor of the Legaspi Towers 300, Inc. RTC: Declared an easement over the land in favor of Legaspi Towers 300, Inc. and directed the annotation of the easement on the title. CA: Affirmed the RTC's decision on February 16, 2001. The Privatization and Management Office (PMO) substituted APT in the appeal after APT's term expired.
ISSUE: Whether the CA erred in affirming the existence of an easement over the property occupied by the generator set and sump pumps under Article 688 of the Civil Code.
ARGUMENTS/LEGAL BASES
PETITIONER	RESPONDENTS
The generator set and sump pumps are improvements or appurtenances for the condominium, not an easement. These improvements should have been removed when Caruff delivered the property free from liens and encumbrances under the Compromise Agreement. Caruff could not have intended to include a voluntary easement when alienating the property to APT/PMO. The respondent did not present evidence proving the requisites for establishing an easement, nor did Caruff show a clear intention to create one. The respondent is considered a "squatter" for using the property without consent and without paying rent or indemnity. The presence of these improvements on the property cannot be considered an easement as it impairs the ownership rights of the servient estate, effectively canceling its rights. The respondent should compensate the National Government for using the property since August 28, 1989, due to unjust enrichment and encroachment on ownership rights.	Caruff intended to establish a voluntary easement on the property for the benefit of the condominium, and this easement should remain despite the property's transfer to APT. The generating set and sump pumps were constructed by Caruff for the use and benefit of the condominium, and their removal would render them worthless and cut off essential utilities. Petitioner cannot claim Caruff intended to renounce the easement by the Compromise Agreement; only Caruff could present this defense. Petitioner had actual notice of the generating set and sump pumps during negotiations and property transfer. Petitioner cannot claim rent or indemnity payments as there was no written demand for such payments from the respondent. Petitioner’s mandate to privatize non-performing assets does not conflict with the easement issue; the property can still be privatized despite the voluntary easement.
PREVAILING PARTY: Petitioner
DECISION/DOCTRINE: The petition is meritorious. An easement or servitude is "a real right constituted on another's property, corporeal and immovable, by virtue of which the owner of the same has to abstain from doing or to allow somebody else to do something on his property for the benefit of another thing or person."  The statutory basis of this right is Article 613 of the Civil Code, which provides: Art. 613. An easement or servitude is an encumbrance imposed upon an immovable for the benefit of another immovable belonging to a different owner. The immovable in favor of which the easement is established is called the dominant estate; that which is subject thereto, the servient estate. There are two sources of easements: by law or by the will of the owners. Article 619 of the Civil Code states: Art. 619. Easements are established either by law or by the will of the owners. The former are called legal and the latter voluntary easements. In the present case, neither type of easement was constituted over the subject property. In its allegations, respondent claims that Caruff constituted a voluntary easement when it constructed the generating set and sump pumps over the disputed portion of the subject property for its benefit. However, it should be noted that when the appurtenances were constructed on the subject property, the lands where the condominium was being erected and the subject property where the generating set and sump pumps were constructed belonged to Caruff. Therefore, Article 613 of the Civil Code does not apply, since no true easement was constituted or existed, because both properties were owned by Caruff. Also, Article 624 of the Civil Code is controlling, as it contemplates a situation where there exists an apparent sign of easement between two estates established or maintained by the owner of both. The law provides: Art. 624. The existence of an apparent sign of easement between two estates, established or maintained by the owner of both, shall be considered, should either of them be alienated, as a title in order that the easement may continue actively and passively, unless, at the time the ownership of the two estates is divided, the contrary should be provided in the title of conveyance of either of them, or the sign aforesaid should be removed before the execution of the deed. This provision shall also apply in case of the division of a thing owned in common by two or more persons. From the foregoing, it can be inferred that when the owner of two properties alienates one of them and an apparent sign of easement exists between the two estates, entitlement to it continues, unless there is a contrary agreement, or the indication that the easement exists is removed before the execution of the deed. In relation thereto, the Compromise Agreement, as approved by the court, clearly states, among other things, that: x x x 2.0 That in consideration of the covenants hereunder stipulated, plaintiff [Caruff] Development Corporation (CDC), hereby terminates the instant case against defendants Philippine National Bank (PNB) and the National Government/APT, and hereby: 2.1 Assigns, transfers and conveys in favor of defendant National government thru APT, CDC's rights, title and interest in the Maytubig property, situated at the back of the Legaspi Towers 300 Condominium, consisting of seven (7) contiguous lots with an aggregate area of 1,504.90 square meters, covered by the following Transfer Certificate of Title, viz: TCT No. 23663 - Pasay City Registry; TCT No. 142497 - Metro Manila 1 Registry; TCT No. 142141 - Metro Manila 1 Registry; TCT No. 127649 - Metro Manila 1 Registry; x x x; all titles, free from any and all liens and encumbrances, to be delivered, and the necessary papers and documents to be turned over/executed to effect transfer in favor of the National Government/APT, upon approval of this Compromise Agreement; x x x x. Thus, when the subject property was assigned to the National Government thru the APT, no easement arose or was voluntarily created from the transfer of ownership, considering that the parties, more particularly, Caruff, pledged that it was assigning, transferring, and conveying the subject property in favor of the National Government thru the APT "free from any and all liens and encumbrances." Compromise agreements are contracts, whereby the parties undertake reciprocal obligations to resolve their differences, thus, avoiding litigation, or put an end to one already commenced.  As a contract, when the terms of the agreement are clear and explicit that they do not justify an attempt to read into it any alleged intention of the parties; the terms are to be understood literally, just as they appear on the face of the contract. Considering that Caruff never intended to transfer the subject property to PMO, burdened by the generating set and sump pumps, respondent should remove them from the subject property. As regards PMO's claim for rent, respondent has been enjoying the use of the subject property for free from the time the rights over the property were transferred and conveyed by Caruff to the National Government. We have held that “there is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good conscience.”  Article 22 of the Civil Code provides that "every person who, through an act or performance by another, or any other means, acquires or comes into possession of something at the expense of the latter, without just or legal ground, shall return the same to him."  The principle of unjust enrichment under Article 22 of the Civil Code requires two conditions: that a person is benefited without a valid basis or justification, and that such benefit is derived at another's expense or damage. In the present case, there is no dispute as to who owns the subject property and as to the fact that the National Government has been deprived of the use thereof for almost two decades. Thus, it is but just and proper that respondent should pay reasonable rent for the portion of the subject property occupied by the generating set and sump pumps, from the time respondent deprived the lawful owner of the use thereof up to the present. To rule otherwise would be unjust enrichment on the part of respondent at the expense of the Government. From the records, APT/PMO submitted, as part of its evidence, a letter dated June 18, 1992, wherein it fixed the monthly rental fee per square meter of the entire property at P56.25, or P1.81 per square meter per day. Hence, respondent should pay the National Government reasonable rent in the amount of P56.25 per square meter per month, to be reckoned from August 28, 1989 up to the time when the generating set and sump pumps are completely removed therefrom. WHEREFORE, premises considered, the Decision of the Regional Trial Court in Spec. Proc. No. 89-49563 dated January 12, 1995, and the Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 48984 dated February 16, 2001 and May 3, 2001, respectively, are REVERSED and SET ASIDE. Legaspi Towers 300, Inc. is DIRECTED to REMOVE the generating set and sump pumps 1 and 2 from the property covered by TCT No. 200760 and to PAY reasonable rent at the rate of P56.25 per square meter/per month from August 28, 1989 until the same are completely removed. SO ORDERED.