SURFACE RIGHTS

Republic (NIA) vs Rural Bank of Kabacan GR 185124 January 25 2012

Facts: NIA needed some parcels of land for the purpose of constructing the
Malitubog-Marigadao Irrigation Project. On 08 September 1994, it filed with the
RTC of Kabacan, Cotabato a Complaint for the expropriation of a portion of three
(3) parcels of land. Respondents alleged, inter alia, that:
a) NIA had no authority to expropriate portions of their land, because it was
not a sovereign political entity;
b) it was not necessary to expropriate their properties, because there was an
abandoned government property adjacent to theirs, where the project
could pass through;
c) that Lot No. 3080 was no longer owned by the Rural Bank of Kabacan;
d) that NIAs valuation of their expropriated properties was inaccurate
because of the improvements on the land that should have placed its
value at 5 million; and
e) that NIA never negotiated with the landowners before taking their
properties for the project, causing permanent and irreparable damages to
their properties
The RTC rendered decision in favour of NIA and ordered them to pay for the land,
earthfill, gmelina trees, coconut trees. NIA appealed to the CA alleging that
determined the just compensation to be awarded to the owners of the lands
expropriated. NIA also impugned as error the RTCs inclusion for compensation of
the excavated soil from the expropriated properties. CA affirmed the RTC decision
but deleted the inclusion of the value of the soil excavated from the properties in
the just compensation. It ruled that the property owner was entitled to
compensation only for the value of the property at the time of the taking. In the
construction of irrigation projects, excavations are necessary to build the canals,
and the excavated soil cannot be valued separately from the land expropriated.
Thus, it concluded that NIA, as the new owner of the affected properties, had the
right to enjoy and make use of the property, including the excavated soil, pursuant
to the latters objectives.
Issues: WON just compensation of the land and improvements is right?
Held: Yes. In expropriation proceedings, just compensation is defined as the full
and fair equivalent of the property taken from its owner by the expropriator. The
measure is not the taker's gain, but the owner's loss. The word just is used to
intensify the meaning of the word compensation and to convey thereby the idea
that the equivalent to be rendered for the property to be taken shall be real,
substantial, full and ample.[32] The constitutional limitation of just compensation is
considered to be a sum equivalent to the market value of the property, broadly
defined as the price fixed by the seller in open market in the usual and ordinary
course of legal action and competition; or the fair value of the property; as between
one who receives and one who desires to sell it, fixed at the time of the actual
taking by the government. In the instant case, the committee members based their
recommendations on reliable data and, as aptly noted by the appellate court,

considered various factors that affected the value of the land and the
improvements.
We also uphold the CA ruling, which deleted the inclusion of the value of the
excavated soil in the payment for just compensation. There is no legal basis to
separate the value of the excavated soil from that of the expropriated properties,
contrary to what the trial court did. In the context of expropriation proceedings, the
soil has no value separate from that of the expropriated land. Just compensation
ordinarily refers to the value of the land to compensate for what the owner actually
loses. Such value could only be that which prevailed at the time of the taking.
RIGHT OF ACCESSION
Bachrach Motor Co. vs Talisay-Silay Mining Co. 56 Phil 117
FACTS: On December 22, 1923, the Talisay-Silay Milling Co., Inc., (sugar central)
was indebted to the Philippine National Bank. To secure the payment of its debt, it
succeeded in inducing its planters, among whom, was Mariano Lacson Ledesma,
to mortgage their land to the creditor bank. And in order to compensate those
planters for the risk they were running with their property under the mortgage, the
sugar central, by a resolution passed on that same date, i.e., December 22, 1923,
undertook to credit the owners of the plantation thus mortgaged every year with a
sum equal to two per centum of the debt secured according to yearly balance, the
payment of the bonus being made at once, or in part from time to time, as soon as
the central became free of its obligations to the aforesaid bank, and of those
contracted by virtue of the contract of supervision, and had funds which might be
so used, or as soon as it obtained from said bank authority to make such payment.
Bachrach Motor Co., Inc. filed a complaint against the Talisay-Silay Milling Co.,
Inc., for the delivery of the amount P13,850 or promissory notes or other
instruments or credit for that sum payable on June 30, 1930, as bonus in favor of
Mariano Lacson Ledesma.
The Philippine National Bank filed a third party claim alleging a preferential right to
receive any amount which Mariano Lacson Ledesma might be entitled to from the
Talisay-Silay Milling Co. as bonus, because that would be civil fruits of the land
mortgaged to said bank by said debtor for the benefit of the central referred to, and
by virtue of a deed of assignment, and praying that said central be ordered to
delivered directly to the intervening bank said sum on account of the latter's credit
against the aforesaid Mariano Lacson Ledesma.
ISSUE: Whether or not the bonus in question is civil fruits
HELD: No. The said bonus bears no immediate, but only a remote accidental
relation to the land mentioned, having been granted as compensation for the risk
of having subjected one's land to a lien in favor of the bank, for the benefit of the
entity granting said bonus. If this bonus be income or civil fruits of anything, it is
income arising from said risk, or, if one chooses, from Mariano Lacson

Ledesma's generosity in facing the danger for the protection of the central,
but certainly it is not civil fruits or income from the mortgaged property.
Hence, the amount of the bonus, according to the resolution of the central granting
it, is not based upon the value, importance or any other circumstance of the
mortgaged property, but upon the total value of the debt thereby secured,
according to the annual balance, which is something quite distinct from and
independent of the property referred to.
Equatorial Realty Development Inc vs Mayfair Theater 370 Scra 56
FACTS: Carmelo and Bauermann, Inc. use to own a parcel of land, together with
two 2-storey buildings constructed thereon. Carmelo entered into a Contract of
Lease with Mayfair Theater Inc. for a period of 20 years. The lease covered a
portion a portion of the second floor and mezzanine of a 2-storey building which
respondent used as a movie house known as Maxim Theater. Two years later,
Mayfair entered into a second Contract of Lease with of Carmelo for the lease of
another portion of the latters property namely, part of the second floor of the 2storey building and two store spaces on the ground floor and the mezzanine, on
which Mayfair put up another movie house known as Miramar Theater. The
contract was likewise for a period of 20 years. Both leases contained a provision
granting Mayfair a right of first refusal to purchase the subject properties.
However, the subject properties were sold by Carmelo to Equatorial Realty
Development, Inc. without offering it first to Mayfair. Mayfair filed a Complaint
before the RTC of Manila for the annulment of the Deed of Absolute Sale between
Carmelo and Equatorial. The RTC rendered its decision in favour of Carmelo and
Equatorial. The Court of Appeals completely reversed and set aside the judgment
of the lower court. The Supreme Court denied the petition for review and rescinded
the contract of sale between Carmelo and Equatorial and ordered Carmelo to allow
Mayfair to buy the lots. However, Carmelo could no longer be located. Thus,
following the order of execution of the trial court, Mayfair deposited with the clerk of
court a quo its payment to Carmelo. The lower court issued a Deed of
Reconveyance in favour of Carmelo and a Deed of Sale in favor of Mayfair. Later,
Equatorial filed with the trial court an action for the collection of the sum of money
against Mayfair, claiming payment of rentals or reasonable compensation for the
defendants use of subject premises after its lease contract had expired.
ISSUE: Whether or not Equatorial should be entitled to back rentals.
HELD: No. Rescission creates the obligation to return the things which were
the object of the contract, together with their fruits, and the price with its
interest. It is clear the Equatorial never took actual control and possession of the
property sold, in view of Mayfairs timely objection to the sale and continued actual
possession of the property. Furthermore, the fact that Mayfair paid rentals to
Equatorial during the litigation should not be interpreted to mean actual delivery or
ispo facto recognition of Equatorials title. They were made merely to avoid
imminent eviction and should not be construed as recognition of Equatorial as new
owner.

Daclison vs Baytion GR 219811 April 6 2016

Facts: Eduardo Baytion filed a compliant for Forcible entry and damages agains
Rex Daclison. In the complaint, Baytion alleged that he was a co-owner of a parcel
of land, with a one storey building divided into 7 unit or stalls one of which was
leased by Leonida Dela Cruz. Upon expiration of the lease contract of Leonida,
Daclison and other persons acting under her took possession of the portion leased
and occupied by Leonida without the prior knowledge and consent of Baytion.
Since then, Daclison had been occupying the contested portion and using it for his
business of selling marble and other finishing materials without paying anything to
Baytion. Baytion demanded Daclison to vacate the premises however Daclison
refused thus the filing of the complaint.
Daclison, in his answer, averred that sometime in 1978, Baytion leased the
subject portion to Antonio dela Cruz (Antonio) where the latter started a business;
that ten or fifteen years later, a stone walling, called a riprap, was erected at the
creek lying beside Baytions property, leaving a deep down-sloping area; that
Antonio negotiated with a certain engineer so he could be in possession of the said
down-slope; that Antonio had the down-slope filled up until it was leveled with the
leased portion; that Antonio paid for the right to possess the same; that in 2000,
Antonios business was taken over by Leonida which upon her death, her business
was taken over by Ernanie Dela Cruz. He also averred that he issued a check for
P100,000 as payment for the rental arrears which was returned by Baytion. He
then transferred to the levelled up portion as agreed with Baytion. The RTC then
decided that Baytion had a better right of possession over the property and
ordered Daclison to pay P20,000 monthly for the use of the premises commencing
from May 2008 until the subject premises is vacated. Daclison appealed to CA.
Issues: WON who had the better right to possess the levelled up property?
Held: Baytion not being the owner of the contested portion, does not have a better
right to possess the same and he does not have any cause of action to eject
Daclison. The contested portion cannot be considered as an accretion. Baytions
contention that he owns that portion by reason of accretion is misplaced. Article
457 of the New Civil Code provides: To the owners of lands adjoining the banks of
rivers belongs the accretion which they gradually receive from the effects of the
current of the waters. In other words, the following requisites must concur in order
for an accretion to be considered, namely:
(1) that the deposit be gradual and imperceptible;
(2) that it be made through the effects of the current of the water; and,
(3) that the land where accretion takes place is adjacent to the banks of
rivers.
Alluvion must the exclusive work of nature and not a result of human intervention.
It is also not an improvement or accession. It must be noted that Article 445 uses
the adverb "thereon" which is simply defined as "on the thing that has been
mentioned." In other words, the supposed improvement must be made,
constructed or introduqed within or on the property and not outside so as to
qualify as an improvement contemplated 'by law. Otherwise, it would just be yery

convenient for land owners to expand or widen their properties in the guise of
improvements.
Land bank of the Phils vs Perez or Officers of Asian Construction and
Development Corporation (ACDC) GR 166884 June 13, 2012
Facts: LBP filed a complaint for estafa against ACDC. LBP extended a credit
accommodation to ACDC. In various instances, ACDC used the Letters of
Credit/Trust Receipts Facility of the Agreement to buy construction materials. The
trust receipts matured, but ACDC failed to return to LBP the proceeds of the
construction projects or the construction materials subject of the trust receipts. LBP
sent ACDC a demand letter for the payment of its debts, including those under the
Trust Receipts Facility. When ACDC failed to comply with the demand letter, LBP
filed the affidavit-complaint. Section 13 of PD 115 states that in the case of goods
delivered under trust receipt for the purpose of manufacturing or processing before
its ultimate sale, the entruster shall retain its title over the goods whether in its
original or processed form until the entrustee has complied fully with his obligation
under the trust receipt.
The respondents filed a joint affidavit wherein they stated that they signed the trust
receipt documents on or about the same time LBP and ACDC executed the loan
documents; their signatures were required by LBP for the release of the loans. The
trust receipts in this case do not contain (1) a description of the goods placed in
trust, (2) their invoice values, and (3) their maturity dates, in violation of Section
5(a) of P.D. 115. Moreover, they alleged that ACDC acted as a subcontractor for
government projects such as the Metro Rail Transit, the Clark Centennial
Exposition and the Quezon Power Plant in Mauban, Quezon. Its clients for the
construction projects, which were the general contractors of these projects, have
not yet paid them; thus, ACDC had yet to receive the proceeds of the materials
that were the subject of the trust receipts and were allegedly used for these
constructions. As there were no proceeds received from these clients, no
misappropriation thereof could have taken place.
Issue: WON the transaction is a trust receipt?
WON the case of estafa (misappropriation) is right?
Held: (1) No. When both parties enter into an agreement knowing that the return of
the goods subject of the trust receipt is not possible even without any fault on the
part of the trustee, it is not a trust receipt transaction penalized under Section 13 of
P.D. 115; the only obligation actually agreed upon by the parties would be the

return of the proceeds of the sale transaction. This transaction becomes a mere
loan, where the borrower is obligated to pay the bank the amount spent for the
purchase of the goods. LBP knew that ACDC was in the construction business and
that the materials that it sought to buy under the letters of credit were to be used
for the projects.
The fact that LBP had knowingly authorized the delivery of construction materials
to a construction site of two government projects, as well as unspecified
construction sites, repudiates the idea that LBP intended to be the owner of those
construction materials. As a government financial institution, LBP should have
been aware that the materials were to be used for the construction of an
immovable property, as well as a property of the public domain. As an immovable
property, the ownership of whatever was constructed with those materials would
presumably belong to the owner of the land, under Article 445 of the Civil Code
which provides:
Article 445. Whatever is built, planted or sown on the land of another and the
improvements or repairs made thereon, belong to the owner of the land, subject to
the provisions of the following articles.
Even if we consider the vague possibility that the materials, consisting of cement,
bolts and reinforcing steel bars, would be used for the construction of a movable
property, the ownership of these properties would still pertain to the government
and not remain with the bank as they would be classified as property of the public
domain.
(2) No. The Trust Receipts Law punishes the dishonesty and abuse of confidence
in the handling of money or goods to the prejudice of another, regardless of
whether the latter is the owner or not. The law does not singularly seek to enforce
payment of the loan, as there can be no violation of [the] right against
imprisonment for non-payment of a debt. In this case, the misappropriation could
be committed should the entrustee fail to turn over the proceeds of the sale of the
goods covered by the trust receipt transaction or fail to return the goods
themselves. The respondents could not have failed to return the proceeds since
their allegations that the clients of ACDC had not paid for the projects it had
undertaken with them at the time the case was filed had never been questioned or
denied by LBP. What can only be attributed to the respondents would be the failure
to return the goods subject of the trust receipts.