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.]
Doctrine & Laws involved
ANNOTATION OF USUFRUCTUARY RIGHTS IN THE
CERTIFICATE OF TITLE IS NOT SUFFICIENT CAUSE TO
REQUIRE MORTGAGEE TO INVESTIGATE VALIDITY OF
MORTGAGOR'S TITLE.
The owner of the property maintains the jus disponendi or the
power to alienate, encumber, transform, and even destroy the
same; even if he cannot alter the propertys for or substance, or do
anything which may be prejudicial to the usufructuary.
Recit Ready
Stepmother, Kausapin, transferred land in Laguna to Stepdaughter,
Maxima, through a Deed of Conveyance of Unregistered Property by
Reversion, pursuant to a resolutory condition in the deed of donation
by her late husband. The deed also mentioned that Kausapin shall have
the right to usufruct of the property during her lifetime or upon
remarriage. Maxima eventually mortgaged the said property to R&B
Insurances as security for a loan. Upon failure to pay the loan, R&B
Insurance extrajudicially foreclosed the mortgage. A public auction was
held, R&B highest bidder. Maima failed to redeem the property. The
usufruct of Kausapin remained in the new title. Kausapin then
transferred the same lot to stepson, Enrique Hemedes, who sold the land
to Dominium Realty an Consctruction, who immediately leased the
property to sister corporation Asia Brewery. Asia Brewery constructed
two warehouses. Now Maxim and R&B Insurance claim ownership of
the subject property. Maxima denied execution of any real estate
mortgage in favor of R&B. The relevant issue in this case is W/N R&B
was in good faith when it entered the mortgage despite the right to
usufruct of Kausapin. The court ruled that YES, it was in good faith
since Maxima maintains the jus disponendi or the power to alienate,
encumber, transform, and even destroy the same; even if he cannot alter
the propertys for or substance, or do anything which may be prejudicial
to the usufructuary
FACTS
1. Justa Kausapin executed Deed of Conveyand of Unregistered
Property by Reversion transferring land to Maxima Hemedes her
stepdaughter. Pursuant to resolutory condition in deed of donation
by her husband Jose, except Justa will have right to usufruct within
her lifetime or remarriage.
2. Maxima registered the new titles in her name, titles were annotated of
usufruct in favor of Justa.
3. Maxima and spouse mortgaged the property to R&B. Maxima failed
to pay and to redeem, hence the land was foreclosed then bought by
R&B.
4. 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.
5. Enrique Hemedes was named owner of the property in the records
of the Ministry of Agrarian Reform office at Calamba, Laguna.
Enrique D. Hemedes sold the property to Dominium Realty and
Construction Corporation (Dominium). 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
6. 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. She
also denied execution of any real estate mortgage in favor of the
R&B.
7. Maxima avers also that R&B is not a mortgagee in good faith. Lower
courts held that Title indicated 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.

ISSUES
1. Which of the two conveyances by Kausapin transferred ownership
over said land
2. W/N R&B Insurance should be considered an innocent
purchaser of the land in question.
HELD
1. MAXIMA. Deed of Conveyance of Unregistered Real Property
by Reversions evidenciary weight was not overturned. It has
more weight than the Kasunduan since Kausapins claim of
illiteracy of the English Language cannot be proven by mere
denial. A party to a contract cannot just evade compliance with
his contractual obligations by the simple expedient of denying the
execution of such contract. She was also 80y/o already when she
took the witness stand and completely dependent upon Enrique
for support, that he could easily have influenced her.

2. YES. 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. 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. 36 An
innocent purchaser for value 37 is one who 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.