G.R. No. 147957 - Privatization and Management Office vs. Legaspi Towers 300, Inc.

Caruff Development Corporation owned several parcels of land along Roxas Boulevard, Manila, evidenced by Transfer Certificates of Title (TCT) Nos. 120311, 120312, 120313, and 127649 (later TCT No. 200760).
In December 1975, Caruff obtained a loan from the Philippine National Bank (PNB) to finance the construction of a 21-storey condominium, with the loan secured by a real estate mortgage over three of the parcels (TCT Nos. 120311, 120312, and 120313).

In 1979, Caruff commenced construction of the multi-storey condominium on the mortgaged lots.
Alongside the condominium construction, Caruff erected a powerhouse (generating set) and two sump pumps on the adjacent lot covered by TCT No. 127649 (later TCT No. 200760).

After the condominium project was completed and constituted under the Condominium Act as Legaspi Towers 300, Inc., Caruff failed to pay its loan obligations.
PNB foreclosed on the mortgage, acquiring some of Caruff’s properties during the sheriff’s auction on January 30, 1985.
Proclamation No. 50 was subsequently issued to expedite the privatization of non-performing assets, leading to the creation of the Asset Privatization Trust (APT).
By virtue of Administrative Order No. 14 and a deed of transfer, the National Government (through APT) became the assignee of PNB’s rights and interests, including the properties acquired from the foreclosure.

Caruff initiated a case against PNB (Civil Case No. 85-29512) seeking nullification of the foreclosure; later, a Compromise Agreement was entered on August 31, 1988, involving Caruff, PNB, and the National Government through APT.
Under the Compromise Agreement, Caruff agreed to transfer the land covered by TCT No. 127649 (later TCT No. 200760), where the generating set and sump pumps were located, to the National Government via APT.
On September 9, 1988, the RTC approved the Compromise Agreement, thereby transferring the subject property free from liens and encumbrances.

On July 5, 1989, Legaspi Towers 300, Inc. (the respondent) filed a case for the declaration of an easement, asserting that the construction of the powerhouse and sump pumps by Caruff constituted a voluntary easement in its favor.
The RTC in its January 12, 1995 decision declared the existence of an easement over the portion of the property (TCT No. 127649/TCT No. 200760) occupied by the generating set and sump pumps.
The National Government, via APT (later substituted by the Privatization and Management Office [PMO]), countered the claim by asserting its status as the absolute owner through the Compromise Agreement, which delivered the property free from encumbrances.
The CA, in its decision dated February 16, 2001, affirmed the RTC’s ruling. PMO subsequently filed a petition for review, raising several arguments against the easement and the absence of compensation for the continued use of the property by the respondent.

The presence of the generating set and sump pumps did not constitute an easement but were mere improvements/accessories for the condominium complex.
The improvements should have been removed after the transfer of the property per the Compromise Agreement that conveyed the property free from liens and encumbrances.
The respondent, by encroaching on the property without consent and without paying rent, unjustly enriched itself.

Caruff’s act of constructing the power generation and water-supplying facilities was meant as a voluntary easement for the benefit of the condominium.
The easement remained in effect even after the transfer of the property since the improvement was permanent and integral to the condominium.
There was no obligation for rent since no written demand had been made for payment, and the easement did not preclude the privatization mandate of the PMO.

Whether the installation of the generating set and sump pumps on the subject property constitutes a voluntary easement.

The petitioner argued that such installations are mere improvements without the characteristics of an easement.
The respondent claimed these installations were intended as a permanent, voluntary easement benefiting the condominium.

Whether a valid easement was established over the subject property, considering that both the land where the condominium was being erected and the lot with the installations originally belonged to Caruff.

The contention centered on whether the ownership of both estates precluded the creation of an easement by the act of installing the improvements.
The application of Articles 613 and 624 of the Civil Code was examined in this context.

Whether the respondent, by using the property without compensation, is liable to pay rent to the petitioner (the owner).

The issue involved the determination of unjust enrichment, given that the respondent had continuously enjoyed the use of the property since August 28, 1989.
The appropriate rental rate and the duration for which compensation was due were also questioned.