G.R. No.

4223

August 19, 1908

NICOLAS LUNOD, ET AL., plaintiffs-appellees, vs. HIGINO MENESES, defendant-appellant. On the 14th of March, 1904, Nicolas Lunod, Juan de la Vega, Evaristo Rodriguez, Fernando Marcelo, Esteban Villena, Benito Litao, Ventura Hernandez, and Casimiro Pantanilla, residents of the town of Bulacan, province of the same name, filed a written complaint against Higino Meneses, alleging that they each owned and possessed farm lands, situated in the places known as Maytunas and Balot, near a small lake named Calalaran; that the defendant is the owner of a fish-pond and a strip of land situated in Paraanan, adjoining the said lake on one side, and the River Taliptip on the other; that from time immemorial, and consequently for more than twenty years before 1901, there existed and still exists in favor of the rice fields of the plaintiffs a statutory easement permitting the flow of water over the said land in Paraanan, which easement the said plaintiffs enjoyed until the year 1901 and consisted in that the water collected upon their lands and in the Calalaran Lake flow through Paraanan into the Taliptip River. From that year however, the defendant, without any right or reason, converted the land in Paraanan into a fishpond and by means of a dam and a bamboo net, prevented the free passage of the water through said place into the Taliptip River, that in consequence the lands of the plaintiff became flooded and damaged by the stagnant waters, there being no outlet except through the land in Paraanan; that their plantation were destroyed, causing the loss and damages to the extent of about P1,000, which loss and damage will continue if the obstructions to the flow of the water are allowed to remain, preventing its passage through said land and injuring the rice plantations of the plaintiffs. They therefore asked that judgment be entered against the defendant, declaring that the said tract of land in Paraanan is subject to a statutory easement permitting the flow of water from the property of the plaintiffs, and that, without prejudice to the issuing of a preliminary injunction, the defendant be ordered to remove and destroy the obstructions that impede the passage of the waters through Paraanan, and that in future, and forever, he abstain from closing in any manner the aforesaid tract of land; that, upon judgment being entered, the said injunction be declared to be final and that the defendant be sentenced to pay to the plaintiffs an indemnity of P1,000, and the costs in the proceedings; that they be granted any other and further equitable or proper remedy in accordance with the facts alleged and proven. In view of the demurrer interposed by the plaintiffs to the answer of the defendant, the latter, on the 29th of August, 1904, filed an amended answer, denying each and everyone of the allegations of the complaint, and alleged that no statutory easement existed nor could exist in favor of the lands described in the complaint, permitting the waters to flow over the fish pond that he, together with his brothers, owned in the sitio of Bambang, the area and boundaries of which were stated by him, and which he and his brothers had inherited from their deceased mother. Apolinara de Leon; that the same had been surveyed by a land surveyor in September, 1881, he also denied that he had occupied or converted any land in the barrio of Bambang into a fishpond; therefore, and to sentence the plaintiffs to pay the costs and corresponding damages. Upon the evidence adduced by both parties to the suit, the court, on the 13th of March, 1907, entered judgment declaring that the plaintiffs were entitled to a decision in their favor, and sentenced the defendant to remove the dam placed on the east of the Paraanan passage on the side of the Taliptip River opposite the old dam in the barrio of Bambang, as well as to remove and destroy the obstacles to the free passage of the waters through the strip of land in Paraanan; to abstain in future, and forever, from obstructing or closing in any manner the course of the waters through the said strip of land. The request that the defendant be sentenced to pay an indemnity was denied, and no ruling was made as to costs.The defendant excepted to the above judgment and furthermore asked for a new trial which was denied and also excepted to, and, upon approval of the bill of exceptions, the question was submitted to this court. Notwithstanding the defendant's denial in his amended answer, it appears to have been clearly proven in this case that the lands owned by the plaintiffs in the aforesaid barrio, as well as the small adjoining lake, named Calalaran, are located in places relatively higher than the sitio called Paraanan where the land and fish pond of the defendant are situated, and which border on the Taliptip River; that during the rainy season the rain water which falls on he land of the plaintiffs, and which flows toward the small Calalaran Lake at flood time, has no outlet to the Taliptip River other than through the low land of Paraanan: that the border line between Calalaran and Paraanan there has existed from time immemorial a dam, constructed by the community for the purpose of preventing the salt waters from the Taliptip River, at high tide, from flooding the land in Calalaran, passing through the lowlands of Paraanan; but when rainfall was abundant, one of the residents was designated in his turn by the lieutenant or justice of the barrio to open the sluice gate in order to let out the water that flooded the rice fields, through the land of Paraanan to the above-mentioned river, that since 1901, the defendant constructed another dam along the boundary of this fishpond in

Paraanan, thereby impeding the outlet of the waters that flood the fields of Calalaran, to the serious detriment of the growing crops. According to article 530 of the Civil Code, an easement is charge imposed upon one estate for the benefit of another estate belonging to a different owner, and the realty in favor of which the easement is established is called the dominant estate, and the one charged with it the servient estate. The lands of Paraanan being the lower are subject to the easement of receiving and giving passage to the waters proceeding from the higher lands and the lake of Calalaran; this easement was not constituted by agreement between the interested parties; it is of a statutory nature, and the law had imposed it for the common public utility in view of the difference in the altitude of the lands in the barrio Bambang. Article 552 of the Civil code provides: Lower estates must receive the waters which naturally and without the intervention of man descend from the higher estates, as well as the stone or earth which they carry with them. Neither may the owner of the lower estates construct works preventing this easement, nor the one of the higher estate works increasing the burden. Article 563 of the said code reads also: The establishment, extent, form, and conditions of the easements of waters to which this section refers shall be governed by the special law relating thereto in everything not provided for in this code. The special law cited in the Law of Waters of August 3, 1866, article 111 of which, treating of natural easements relating to waters, provides: Lands situated at a lower level are subject to receive the waters that flow naturally, without the work of man, from the higher lands together with the stone or earth which they carry with them. Hence, the owner of the lower lands can not erect works that will impede or prevent such an easement or charge, constituted and imposed by the law upon his estate for the benefit of the higher lands belonging to different owners; neither can the latter do anything to increase or extend the easement. According to the provisions of law above referred to, the defendant, Meneses, had no right to construct the works, nor the dam which blocks the passage, through his lands and the outlet to the Taliptip River, of the waters which flood the higher lands of the plaintiffs; and having done so, to the detriment of the easement charged on his estate, he has violated the law which protects and guarantees the respective rights and regulates the duties of the owners of the fields in Calalaran and Paraanan. It is true that article 388 of said code authorizes every owner to enclose his estate by means of walls, ditches fences or any other device, but his right is limited by the easement imposed upon his estate. The defendant Meneses might have constructed the works necessary to make and maintain a fish pond within his own land, but he was always under the strict and necessary obligation to respect the statutory easement of waters charged upon his property, and had no right to close the passage and outlet of the waters flowing from the lands of the plaintiffs and the lake of Calalaran into the Taliptip River. He could not lawfully injure the owners of the dominant estates by obstructing the outlet to the Taliptip River of the waters flooding the upper lands belonging to the plaintiffs. It is perhaps useful and advantageous to the plaintiffs and other owners of high lands in Calalaran, in addition to the old dike between the lake of said place and the low lands in Paraanan, to have another made by the defendant at the border of Paraanan adjoining the said river, for the purpose of preventing the salt waters of the Taliptip River flooding, at high tide, not only the lowlands in Paraanan but also the higher ones of Calalaran and its lake, since the plaintiffs can not prevent the defendant from protecting his lands against the influx of salt water; but the defendant could never be permitted to obstruct the flow of the waters through his lands to the Taliptip River during the heavy rains, when the high lands in Calalaran and the lake in said place are flooded, thereby impairing the right of the owners of the dominant estates. For the above reasons, and accepting the findings of the court below in the judgment appealed from in so far as they agree with the terms of this decision, we must and do hereby declare that the defendant, Higino Meneses, as the owner of the servient estate, is obliged to give passage to and allow the flow of the waters descending from the Calalaran Lake and from the land of the plaintiffs through his lands in Paraanan for their discharge into the Taliptip River; and he is hereby ordered to remove any obstacle that may obstruct the free passage of the waters whenever there may be either a small or large volume of running water through his lands in the sitio of Paraanan for their discharge into the Taliptip River; and in future to abstain from impeding, in any manner, the flow of the waters coming from the higher lands. The judgment appealed from is affirmed, in so far as it agrees with decision, and reversed in other respects, with the costs of this instance against the appellants. So ordered.

GERMAN MANAGEMENT & SERVICES, INC. V COURT OF APPEALS FACTS:Spouses Jose are residents of Pennsylvania, Philadelphia, USA are owners of the land situated in sitio Inarawan, San Isidro, Antipolo, Rizal (the land being disputed in the case at bar.) The spouses Jose executed a special power of attorney authorizing petitioner German Management Services to develop their property. They have already acquired the proper permits to do so but they discovered that the land was occupied by the respondent with 20 other farmers (members of the Concerned of Farmers Association.) These farmers have occupied the land for the last twelve to fifteen years prior to the issuance of the permits and they already have their crops all over the property. In short, they are in actual possession of the land.Petitioners tried to forcibly drive the farmers away and; demolish and bulldoze their crops and property. The respondents filed in CFI because they were deprived of their property without due process of law by trespassing, demolishing and bulldozing their crops and property situated in the land. CFI and RTC denied it but CA reversed the decision. Petitioners tried to appeal the decision in CA but were denied thus this appeal ISSUE:Whether or not private respondents are entitled to file a forcible entry case against petitioner? RULING:YES, they are entitled to file a forcible entry case! Since private respondents were in actual possession of the property at the time they were forcibly ejected by petitioner, private respondents have a right to commence an action for forcible entry regardless of the legality or illegality of possession. Private respondents, as actual possessors, can commence a forcible entry case against petitioner because ownership is not in issue. Forcible entry is merely a quieting process and never determines the actual title to an estate. Title is not involved, only actual possession. It is undisputed that private respondents were in possession of the property and not the petitioners nor the spouses Jose. Although the petitioners have a valid claim over ownership this does not in any way justify their act of forcible entry. It must be stated that regardless of the actual condition of the title to the property the party in peaceable quiet possession shall not be turned out by a strong hand, violence or terror. Thus, a party who can prove prior possession can recover such possession even against the owner himself.Whatever may be the character of his possession, if he has in his favor priority in time, he has the security that entitles him to remain on the property until he is lawfully ejected by a person having a better right by accion publiciana or accion reivindicatoria. The doctrine of self help, which the petitioners were using to justify their actions, are not applicable in the case because it can only be exercised at the time of actual or threatened dispossession which is absent in the case at bar (in fact they are the ones who are threatening to remove the respondents with the use of force.) Article 536 basically tells us that the owner or a person who has a better right over the land must resort to judicial means to recover the property from another person who possesses the land.When possession has already been lost, the owner must resort to judicial process for the recovery of property. As clearly stated in Article 536In no case may possession be acquired through force or intimidation as long as there is a possessor who objects thereto. He who believes that he has an action or right to deprive another of the holding of a thing must invoke the aid of the competent court, if holder should refuse to deliver the thing. NATIONAL POWER CORPORATION v. IBRAHIM Facts:Sometime in 1978, NAPOCOR, without respondents' knowledge and consent, constructed underground tunnels in the sub-terrain areas of the lands of the latter.These tunnels were discovered only in 1992. The tunnels were being used by the NAPOCOR in their operations Because of the said tunnels, the respondents were denied application of construction of deep well because it would pose a health hazard to the community. RTC decided in favor of the respondent and ordered NPC to pay the market value and damages. Petitioner asserts: the right to the subsoil does not extend beyond what is necessary to enable them to obtain all the utility and convenience that such property can normally give petitioners were still able to use the subject property even in the existence of the tunnels underground tunnels are easements because there is no loss of title or possession Issue:W/N respondents are owners of the sub-terrain, thereby entitling them to just compensation Held:YES, they are still the owners of the sub-terrain portion of their land the ownership of land extend from the surface to the subsoil According to

Art 437The owner of the parcel of land is the owner of its surface and everything under it, and he can construct thereon any works or make ay plantations and excavations which he may deem proper, without detriment to servitudes and subject to special laws and ordinances. He cannot complain of the reasonable requirements of aerial navigation. Contrary to the claim of petitioners, respondents were not able to enjoy the use of their property because: they were not allowed to construct deep well in their lands because the tunnel may cause hazard in the community the value of the land was reduced and owners were even denied loan application because of the tunnels The manner of the easement violates due process rights of the respondents as it did not go through proper expropriation proceedings JUST COMPENSATION General Rule: value of the property is based on the date of the filing of the complaint.The time of the taking must coincide with the filing of the complaint. Exception: value of the property is based on the date when it was taken and not the date of the commencement of the expropriation proceedings:This is only applied to avoid giving undue incremental advantage.Must be based on a legal taking .Absent the consent, the taking during 1978 is not considered legal and to follow the 2nd rule would be to agreeing with the scheme that was made by the petitioner.The basis of the computation must be based on the value of the property in 1992 when the tunnels were discovered. G.R. No. 158385 February 12, 2010

MODESTO PALALI, Petitioner, vs. JULIET AWISAN, represented by her Attorney-in-Fact GREGORIO AWISAN, Respondent. A person occupying a parcel of land, by himself and through his predecessors-in-interest, enjoys the presumption of ownership. Anyone who desires to remove him from the property must overcome such presumption by relying solely on the strength of his claims rather than on the weakness of the defense. This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the September 27, 2002 Decision2 and the April 25, 2003 Resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 52942. The challenged Decision disposed as follows: WHEREFORE, premises considered, the assailed decision of the trial court dated May 24, 1996 is herebyREVERSED AND SET ASIDE and a new one is entered: 1. Awarding the subject land in favor of the [respondent] with the exclusion of the area where the residential house of the [petitioner] is erected. 2. Ordering the [petitioner] to vacate the rootcrop land and surrender its possession in favor of the [respondent], and enjoining the [petitioner] to refrain from doing any act disturbing the *respondents+ peaceful possession and enjoyment of the same. 3. Cancelling Tax Declaration No. 31297 of the [petitioner] insofar as the rootcrop land of .0648 hectares is concerned, with the exclusion of his residential land. All other reliefs and remedies prayed for are DENIED, there being no sufficient evidence to warrant granting them SO ORDERED.4 Factual Antecedents Respondent Juliet Awisan claimed to be the owner5 of a parcel of land in Sitio Camambaey, Tapapan, Bauko, Mountain Province, allegedly consisting of 6.6698 hectares6 and covered by Tax Declaration No. 147 in her name.7 On March 7, 1994, she filed an action for quieting of title against petitioner Modesto Palali, alleging that the latter occupied and encroached on the northern portion of her property and surreptitiously declared it in his name for tax purposes.8 We shall refer to this land occupied by petitioner, which allegedly encroached on the northern portion of respondents 6.6698hectare land, as the "subject property". Respondent prayed to be declared the rightful owner of the northern portion, for the cancellation of petitioners tax declaration, and for the removal of petitioner and his improvements from the property.9

Respondents (Plaintiffs) Allegations According to respondent, the 6.6698 hectare land was originally owned by her father, Cresencio Cadwising. The latter testified that he and his wife were able to consolidate ownership over the land by declaring them from public land as well as by purchasing from adjoining landowners. He admitted including in his tax declaration a communal sacred lot (patpatayan) even if he did not acquire free patent title over the same. As for the properties he bought, these were generally purchased without any documentation, save for two.10 Cadwising also claimed having introduced improvements on the subject property as early as the 1960s.11 The 6.6698 hectare land was mortgaged to the Development Bank of the Philippines (DBP), which acquired it in the foreclosure sale. DBP then sold the land to one Tico Tibong, who eventually donated the same to respondent. Petitioners (Defendants) Allegations- In his defense, petitioner denied the encroachment and asserted ownership over the subject property. He maintained that he and his ancestors or predecessors-in-interest have openly and continuously possessed the subject land since time immemorial. He and his siblings were born on that land and, at that time, the area around the house was already planted with bananas, alnos, and coffee.12 When his mother died, he buried her in the lot beside the house in 1975; while his father was buried near the same plot in 1993.13 His own home had been standing on the property for the past 20 years. Petitioner insisted that during this entire time, no one disturbed his ownership and possession thereof.14 Sometime in 1974, petitioner declared the said land in his name for taxation purposes.15 The said Tax Declaration indicates that the property consists of 200 square meters of residential lot and 648 square meters of rootcrop land (or a total of 848 square meters). Proceedings before the Regional Trial Court It is worth mentioning that both the complaint16 and the pre-trial brief17 of respondent alleged encroachment only on the northern portion of her 6.6698-hectare land. During trial, however, respondents attorney-in-fact, Gregorio Awisan,18 and respondents predecessor-in-interest, Cresencio Cadwising,19 both alleged that there was an encroachment in the southern portion also. This was done without amending the allegations of the complaint. Confronted with this new allegation of encroachment on the southern portion, petitioner tried to introduce his tax declaration over the same (in the name of his deceased father), but was objected to by respondent on the ground of immateriality.20 After such objection, however, respondent surprisingly and inconsistently insisted that the ownership of the southern portion was included in the complaint and was an issue in the case. The ensuing confusion over the subject of the case is revealed in the following exchange between the parties lawyers:21 Atty. Awisan: Where is the land in question located? Palali: In Tapapan, Bauko, sir. Atty. Awisan: Where is that situated in relation to your house? Palali: It is near my house which is enclosed with fence. Atty. Awisan: How about the land in question situated in the southern portion, do you know that? Palali: That is the land our parents gave to us as inheritance. There are terraces there. Atty. Awisan: So, the land in question [is] located below your house and on the southern portion? Atty. Bayogan: As far as the southern portion is concerned, it is not included in the complaint. Atty. Awisan: It is included. Atty. Bayogan: The southern portion refer[s] to Lot 3 and it is not included in the complaint. In fact when I started asking question regarding this land, the counsel objected. Atty. Awisan: This land indicated as Lot 3 is the southern portion.

The trial court, apparently relying on the allegations of the complaint, ruled on the northern portion as the subject property of the case. Ruling of the Regional Trial Court After due trial, the Regional Trial Court of Bontoc, Mountain Province, Branch 35, dismissed22 the complaint. It based its decision on respondents failure to prove her allegation of physical possession of the land. Going by the results of its ocular inspection23 of the land in question, the trial court noted that Cadwising (respondents predecessor-in-interest) could not pinpoint and the court did not see any of the improvements that Cadwising had allegedly introduced to the land.24 Thus, the trial court held that respondents claim of ownership was supported solely by her tax declarations and tax payment receipts which, by themselves, are not conclusive proof of ownership.25 In contrast, the trial court duly verified during the ocular inspection the existence of the improvements introduced by petitioner and his predecessors on the subject property.26 Moreover, the trial court observed that the witnesses for the petitioner all lived continuously since their births within or near Sitio Camambaey in Tapapan and that they knew the land very well. They knew petitioner and his predecessors, as well as the improvements introduced by them to the land. Thus, the trial court found that the petitioner presented overwhelming proof of actual, open, continuous and physical possession of the property since time immemorial. Petitioners possession, coupled with his tax declarations, is strong evidence of ownership which convinced the court of his better right to the property. 27 For purposes of clarity, we cite the dispositive portion of the trial courts Decision thus: Wherefore, premises considered, judgment is hereby rendered in favor of the defendant Modesto Palali and against the plaintiff Juliet C. Awisan, represented by her Attorney-in-Fact, Gregorio B. Awisan, as follows: a) Ordering the dismissal of the complaint and costs against the plaintiff; b) Adjudging the defendant Modesto Palali as the owner and lawful possessor of the subject property; and c) The court cannot however grant the counterclaim of defendant for lack of evidence to prove the same. SO ORDERED.28 Ruling of the Court of Appeals Respondent appealed the trial courts decision to the CA, which reversed the same. The CA found that petitioner failed to prove actual possession of the entire 6.6698 hectare land, which the CA believed to be the subject of the case. According to the appellate court, petitioner was only able to prove actual occupation of the portion where his house was located and the area below where he had planted fruit-bearing plants.29 The CA also ruled that based on the ocular inspection report of the trial court, petitioners possession did not extend to the entire 6.6698 hectares. In its own words: Likewise, the report on the ocular inspection of the land in question divulges that the alleged possession of the land by [petitioner] Modesto Palali does not extend to the entire 6.6698 hectares of the subject land. Not even in the sketch plan of the land does it illustrate that the possession of the [petitioner] refers to the entire subject land. Instead, the possession of [petitioner] merely points to certain portions of the subject land as drawn and prepared by the tax mappers. From the foregoing testimony, no sufficient indicia could be inferred that the possession of the [petitioner] refers to the entire portion of the land.30 The appellate court also refused to give credence to petitioners tax declaration. The CA held that petitioners Tax Declaration No. 31793, which covers only an 848-square meter property, is incongruous with his purported claim of ownership over the entire 6.6698-hectare land. Proceeding from this premise, the CA gave greater weight to the documentary and testimonial evidence of respondent. The presumption of regularity was given to the public documents from which respondent traced her title to the subject property. Thus, the CA awarded the entire 6.6698-hectare property to respondent and ordered the cancellation of petitioners tax declaration (except for the 200-

square meter residential lot thereof which was not being claimed by respondent).31 Petitioner moved for a reconsideration of the unfavorable Decision, but his motion was denied for lack of merit. Hence, this petition. Preliminary Matter The CA Decision is based on a mistaken understanding of the subject property It is apparent that the CA Decision proceeded from an erroneous understanding of what the subject property actually is and what the trial court actually ruled upon. The CA was under the mistaken impression that the subject property was the entire 6.6698 hectares of land allegedly owned by respondent under her Tax Declaration No. 147. Because of this, the CA ruled against petitioner on the ground that he failed to prove possession of the entire 6.6698 hectares. The CA also disregarded petitioners Tax Declaration No. 31793 (despite being coupled with actual possession) because the said tax declaration covered only an 848-square meter property and did not cover the entire 6.6698 hectare property. This is clear from the following text lifted from the CA Decision: The trial courts finding that the defendant-appellee had acquired the subject land by virtue of acquisitive prescription cannot be countenanced. At the outset, the subject land being claimed by the plaintiff-appellant as described in the complaint is the 6.6698 hectares land [boundaries omitted]. The said description is with the exclusion of the portion of land where the residential house of the defendant-appellee is erected. However, the adverse and exclusive possession offered by the defendant-appellee, which includes his tax receipt, does not refer to the entire land consisting of 6.6698 hectares being claimed by the plaintiff-appellant. x x x The witnesses for the defendant-appellee testified that indeed Modesto Palalis predecessors-ininterest have once built a house in Camambaey, Tapapan, Bauko, Mt. Province, but whether or not the defendant-appellee or his predecessor-ininterest have actually, exclusively, notoriously, and adversely possessed the entire 6.6698 hectares of land could not be deduced from their testimonies. It could be gleaned from the testimony of Consigno Saligen, that what the defendant-appellee actually possessed and claim as their own is merely that portion where the house is erected and that portion of land below the house where Modesto Palali planted fruit-bearing plants. x x x Likewise, the report on ocular inspection of the land in question divulges that the alleged possession of the land by defendant-appellee Modesto Palali does not extend to the entire 6.6698 hectares of the subject land. Not even in the sketch plan of the land does it illustrate that the possession of the defendant-appellee refers to the entire subject land. Instead, the possession of the defendant-appellee merely points to certain portions of the subject land as drawn and prepared by the "tax mappers". From the foregoing testimony, no sufficient indicia could be inferred that the possession of the defendant-appellee refers to the entire portion of the land.32 This was perhaps not entirely the appellate courts fault, because a reading of the issues presented by respondent to the CA gives the wrong impression that the subject property is the entire 6.6698 hectares: x x x [T]he plaintiff-appellant elevated the matter on appeal assigning the following errors committed by the trial court: I The trial court erred in failing to consider the overwhelming superior documentary and oral evidence of the plaintiff Juliet C. Awisan showing her ownership on (sic) the land in question consisting of 6.6698 hectares described in her complaint II The trial court erred in adjudicating the land in question to the defendant Modesto Palali who is a squatter on the land whose tax declaration merely overlapped or duplicated that of the plaintiff and which covered only a small portion of 200 square meters of residential portion [sic] and 648 square meter of rootcrop land. x x x x33

The foregoing formulation of the issues presented by respondent before the CA erroneously described "the land in question" as "consisting of 6.6698 hectares" and erroneously stated that the trial court "adjudicated the land in question to [petitioner]". Said formulation is very misleading because the case before the trial court did not involve the ownership of the entire 6.6698 hectares, but merely the northern portion thereof the property actually occupied by petitioner and much smaller than 6.6698 hectares. Even if we go back to the respondents complaint, we would find there that respondent is claiming encroachment merely of the "northern portion" of her 6.6698hectare property, and not of the entire 6.6698 property.34 Neither did the trial court adjudicate to petitioner the entire 6.6698-hectare land; it simply upheld petitioners right to the property he is actually occupying. It only declared petitioner as the lawful owner and possessor of the "subject property", which is the property to the north of the 6.6698hectare land and occupied by petitioner. This is evident from the trial courts summary of the facts established by the respondent and her witnesses, to wit: During the hearing of the case, plaintiff and her witnesses established and disclosed: x x x that only a portion of the entire 6.6 hectares in its northern portion located below and above the residential house of the defendant Modesto Palali is now the land in question as properly shown in the sketch of the land covered by Tax Declaration No. 147 in the name of Juliet Awisan x x x.35 Proceeding from a wrong premise as to what is the subject property, the CA utterly failed to appreciate the evidence as they relate to the parties claims. Thus, while the general rule is that this Court is not a trier of facts, and that in a petition for review under Rule 45, only questions of law may be raised, the Court is behooved to admit the instant case as an exception.36 Issue The issue in this case is who between the parties has the better right to the subject property. Our Ruling Having gone over the parties evidence before the trial court, we find adequate support for the trial courts ruling in favor of petitioner. The CA erred in reversing the trial courts findings, particularly because, as discussed above, such reversal was premised on the CAs erroneous understanding of the subject property. As found by the trial court, petitioner was able to prove his and his predecessors actual, open, continuous and physical possession of the subject property dating at least to the pre-war era (aside from petitioners tax declaration over the subject property). Petitioners witnesses were long time residents of Sitio Camambaey. They lived on the land, knew their neighbors and were familiar with the terrain. They were witnesses to the introduction of improvements made by petitioner and his predecessors-ininterest. From their consistent, unwavering, and candid testimonies, we find that petitioners grandfather Mocnangan occupied the land during the pre-war era. He planted camote on the property because this was the staple food at that time. He then gave the subject property to his daughter Tammam, while he gave a separate one to his son Pacolan Mocnangan. In the 1960s, Tammam and her husband Palalag cultivated the land, built a cogon home, and started a family there. Palalag introduced terraces and, together with his sons, built earth fences around the property. Palalags family initially planted bananas, coffee, and oranges; they later added avocadoes, persimmons, and pineapples. When Tammam and Palalag died, their son, petitioner herein, buried them in the subject property and continued cultivating the land. He also constructed a new home. On the other hand, respondent relied merely on her tax declaration, but failed to prove actual possession insofar as the subject property is concerned. To be sure, respondent attempted to prove possession of the subject property. Her predecessor-in-interest, Cadwising, had allegedly introduced improvements like a piggery, poultry, terracing, plantings, and a barbed wire fence. However, not one of these alleged improvements was found during the ocular inspection conducted by the trial court. The absence of all his alleged improvements on the property is suspicious in light of his assertion that he has a caretaker living near the subject property for 20 years. Cadwising did not even bother to explain the absence of the improvements. The trial courts rejection of Cadwisings assertions regarding the introduction of improvements is therefore not baseless.1avvphi1 Thus, respondent having failed to prove possession, her claim rests solely on her tax declaration. But tax declarations, by themselves, are not conclusive evidence of ownership of real property. In the absence of actual, public, and

adverse possession, the declaration of the land for tax purposes does not prove ownership.37Respondents tax declaration, therefore, cannot serve as basis to oust petitioner who has been in possession (by himself and his predecessors) of the subject property since before the war . Neither can respondent rely on the public instruments dealing with the 6.6698-hectare property covered by her tax declaration. Such public documents merely show the successive transfers of the property covered by said documents. They do not conclusively prove that the transferor actually owns the property purportedly being transferred, especially as far as third parties are concerned. For it may very well be that the transferor does not actually own the property he has transferred, in which case he transfers no better right to his transferee. No one can give what he does not have nemo dat quod non habet.38 Thus, since respondents predecessor-in-interest Cadwising appeared not to have any right to the subject property, he transferred no better right to his transferees, including respondent. All told, we hold that as between the petitioner and the respondent, it is the petitioner who has the better claim or title to the subject property. While the respondent merely relied on her tax declaration, petitioner was able to prove actual possession of the subject property coupled with his tax declaration. We have ruled in several cases that possession, when coupled with a tax declaration, is a weighty evidence of ownership.39 It certainly is more weighty and preponderant than a tax declaration alone. The preponderance of evidence is therefore clearly in favor of petitioner, particularly considering that, as the actual possessor under claim of ownership, he enjoys the presumption of ownership.40 Moreover, settled is the principle that a party seeking to recover real property must rely on the strength of her case rather than on the weakness of the defense.41 The burden of proof rests on the party who asserts the affirmative of an issue. For he who relies upon the existence of a fact should be called upon to prove that fact. Having failed to discharge her burden to prove her affirmative allegations, we find that the trial court rightfully dismissed respondents complaint. A final note. Like the trial court, we make no ruling regarding the southern portion of the property (or Lot 3, as referred to by the parties), because this property was not included in respondents complaint. Although the Rules of Court provide that "when issues not raised by the pleadings are tried with the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings,"42 such rule does not apply here. Respondent objected43 when petitioner tried to prove his ownership of Lot 3 on the ground of immateriality, arguing that ownership of Lot 3 was not an issue. Respondent cannot now insist otherwise. WHEREFORE, the petition is GRANTED. The September 27, 2002 Decision as well as the April 25, 2003 Resolution of the Court of Appeals in CA-G.R. CV No. 52942 are REVERSED and SET ASIDE. The May 24, 1996 Decision of the Regional Trial Court of Bontoc, Mountain Province, Branch 35 is REINSTATED and AFFIRMED. Costs against respondent. REPUBLIC VS HOLY TRINITY This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to set aside the Decision[1] dated 21 April 2006 of the Court of Appeals in CA-G.R. SP No. 90981 which, in turn, set aside two Orders[2] dated 7 February 2005[3] and 16 May 2005[4] of the Regional Trial Court (RTC) of Malolos, Bulacan, in Civil Case No. 869-M-2000.

of P28,406,700.00, with the Land Bank of the Philippines, South Harbor Branch (LBP-South Harbor), an authorized government depository. TRB maintained that since it had already complied with the provisions of Section 4 of Republic Act No. 8974[5] in relation to Section 2 of Rule 67 of the Rules of Court, the issuance of the writ of possession becomes ministerial on the part of the RTC. The RTC issued, on 19 March 2002, an Order for the Issuance of a Writ of Possession, as well as the Writ of Possession itself. HTRDC thereafter moved for the reconsideration of the 19 March 2002 Order of the RTC. On 7 October 2002, the Sheriff filed with the RTC a Report on Writ of Possession stating, among other things, that since none of the landowners voluntarily vacated the properties subject of the expropriation proceedings, the assistance of the Philippine National Police (PNP) would be necessary in implementing the Writ of Possession. Accordingly, TRB, through the Office of the Solicitor General (OSG), filed with the RTC an Omnibus Motion praying for an Order directing the PNP to assist the Sheriff in the implementation of the Writ of Possession. On 15 November 2002, the RTC issued an Order directing the landowners to file their comment on TRBs Omnibus Motion.

On 3 March 2003, HTRDC filed with the RTC a Motion to Withdraw Deposit, praying that the respondent or its duly authorized representative be allowed to withdraw the amount of P22,968,000.00, out of TRBs advance deposit of P28,406,700.00 with LBP-South Harbor, including the interest which accrued thereon. Acting on said motion, the RTC issued an Order dated 21 April 2003, directing the manager of LBP-South Harbor to release in favor of HTRDC the amount of P22,968,000.00 since the latter already proved its absolute ownership over the subject properties and paid the taxes due thereon to the government. According to the RTC, (t)he issue however on the interest earned by the amount deposited in the bank, if there is any, should still be threshed out.[6]

On 7 May 2003, the RTC conducted a hearing on the accrued interest, after which, it directed the issuance of an order of expropriation, and granted TRB a period of 30 days to inquire from LBP-South Harbor whether the deposit made by DPWH with said bank relative to these expropriation proceedings is earning interest or not.[7]

The RTC issued an Order, on 6 August 2003, directing the appearance of LBP Assistant Vice-President Atty. Rosemarie M. Osoteo and

The undisputed factual and procedural antecedents of this case are as follows:

Department Manager Elizabeth Cruz to testify on whether the Department of Public Works and Highways (DPWHs) expropriation account with the bank was earning interest. On 9 October 2003, TRB instead submitted a

On 29 December 2000, petitioner Republic of the Philippines, represented by the Toll Regulatory Board (TRB), filed with the RTC a Consolidated Complaint for Expropriation against landowners whose properties would be affected by the construction, rehabilitation and expansion of the North Luzon Expressway. The suit was docketed as Civil Case No. 869-M-2000 and raffled to Branch 85, Malolos,

Manifestation to which was attached a letter dated 19 August 2003 by Atty. Osoteo stating that the DPWH Expropriation Account was an interest bearing current account.

On 11 March 2004, the RTC issued an Order resolving as follows the issue of ownership of the interest that had accrued on the amount deposited by DPWH in its expropriation current account with LBPSouth Harbor: WHEREFORE, the interest earnings from the deposit of P22,968,000.00 respecting one hundred (100%) percent of the zonal value of the affected

Bulacan. Respondent Holy Trinity Realty and Development Corporation (HTRDC) was one of the affected landowners. On 18 March 2002, TRB filed an Urgent Ex-Parte Motion for the issuance of a Writ of Possession, manifesting that it deposited a sufficient amount to cover the payment of 100% of the zonal value of the affected properties, in the total amount

properties in this expropriation proceedings under the principle of accession are considered as fruits and should properly pertain to the herein defendant/property owner [HTRDC]. Accordingly, the Land Bank as the depositary bank in this expropriation proceedings is (1) directed to make the necessary computation of the accrued interest of the amount of P22,968,000.00 from the time it was deposited up to the time it was released to Holy Trinity Realty and Development Corp. and thereafter (2) to release the same to the defendant Holy Trinity Development Corporation through its authorized representative.[8]

hundred (100%) percent of the value of the property based on the current relevant zonal valuation of the Bureau of Internal Revenue (BIR); and (2) the value of the improvements and/or structures as determined under Section 7 hereof.

and Section 2, Rule 67 of the Rules of Court, which provides: Sec. 2. Entry of plaintiff upon depositing value with authorized government depositary. Upon the filing of the complaint or at anytime thereafter and after due notice to the defendant, the plaintiff shall have the right to take or enter upon the possession of the real property involved if he deposits with the authorized government depositary an amount equivalent to the assessed value of the property for purposes of taxation to be held by such bank subject to the orders of the court. Such deposit shall be in money, unless in lieu thereof the court authorizes the deposit of a certificate of deposit of a government bank of the Republic of the Philippines payable on demand to the authorized government depositary.

TRB filed a Motion for Reconsideration of the afore-quoted RTC Order, contending that the payment of interest on money deposited and/or consigned for the purpose of securing a writ of possession was sanctioned neither by law nor by jurisprudence.

TRB filed a Motion to Implement Order dated 7 May 2003, which directed the issuance of an order of expropriation. On 5 November 2004, the RTC issued an Order of Expropriation.

The TRB reminds us that there are two stages[11] in expropriation On 7 February 2005, the RTC likewise granted TRBs Motion for Reconsideration. The RTC ruled that the issue as to whether or not HTRDC is entitled to payment of interest should be ventilated before the Board of Commissioners which will be created later for the determination of just compensation. proceedings, the determination of the authority to exercise eminent domain and the determination of just compensation. The TRB argues that it is only during the second stage when the court will appoint commissioners and determine claims for entitlement to interest, citing Land Bank of the Philippines v. Wycoco[12] and National Power Corporation v. Angas.[13]

Now it was HTRDCs turn to file a Motion for Reconsideration of the latest Order of the RTC. The RTC, however, denied HTRDCs Motion for Reconsideration in an Order dated 16 May 2005. HTRDC sought recourse with the Court of Appeals by filing a Petition for Certiorari, docketed as CAG.R. SP No. 90981. In its Decision, promulgated on 21 April 2006, the Court of Appeals vacated the Orders dated 7 February 2005 and 16 May 2005 of the RTC, and reinstated the Order dated 11 March 2004 of the said trial court wherein it ruled that the interest which accrued on the amount deposited in the expropriation account belongs to HTRDC by virtue of accession. The Court of Appeals thus declared: WHEREFORE, the foregoing premises considered, the assailed Orders dated 07 February and 16 May 2005 respectively of the Regional Trial Court of Malolos, Bulacan (Branch 85) are hereby VACATED and SET ASIDE. Accordingly, the Order dated 11 March 2004 is hereby reinstated.[9]

The TRB further points out that the expropriation account with LBP-South Harbor is not in the name of HTRDC, but of DPWH. Thus, the said expropriation account includes the compensation for the other landowners named defendants in Civil Case No. 869-M-2000, and does not exclusively belong to respondent. At the outset, we call attention to a significant oversight in the TRBs line of reasoning. It failed to distinguish between the expropriation procedures under Republic Act No. 8974 and Rule 67 of the Rules of Court. Republic Act No. 8974 and Rule 67 of the Rules of Court speak of different procedures, with the former specifically governing expropriation proceedings for national
[14]

government

infrastructure

projects. Thus, in Republic v. Gingoyon,

we held:

From the foregoing, the Republic, represented by the TRB, filed the present Petition for Review on Certiorari, steadfast in its stance that HTRDC is entitled only to an amount equivalent to the zonal value of the expropriated property, nothing more and nothing less.[10] According to the TRB, the owner of the subject properties is entitled to an exact amount as clearly defined in both Section 4 of Republic Act No. 8974, which reads: Section 4. Guidelines for Expropriation Proceedings. Whenever it is necessary to acquire real property for the right-of-way, site or location for any national government infrastructure project through expropriation, the appropriate implementing agency shall initiate the expropriation proceedings before the proper court under the following guidelines: (a) Upon the filing of the complaint, and after due notice to the defendant, the implementing agency shall immediately pay the owner of the property the amount equivalent to the sum of (1) one

There are at least two crucial differences between the respective procedures under Rep. Act No. 8974 and Rule 67. Under the statute, the Government is required to make immediate payment to the property owner upon the filing of the complaint to be entitled to a writ of possession, whereas in Rule 67, the Government is required only to make an initial deposit with an authorized government depositary. Moreover, Rule 67 prescribes that the initial deposit be equivalent to the assessed value of the property for purposes of taxation, unlike Rep. Act No. 8974 which provides, as the relevant standard for initial compensation, the market value of the property as stated in the tax declaration or the current relevant zonal valuation of the Bureau of Internal Revenue (BIR), whichever is higher, and the value of the improvements and/or structures using the replacement cost method. xxxx Rule 67 outlines the procedure under which eminent domain may be exercised by the Government. Yet by no means does it serve at present as the solitary guideline through which the State may expropriate private property. For example, Section 19 of the Local Government Code governs as to the exercise by local government units of the power of eminent domain through an enabling ordinance. And then there is Rep. Act No. 8974, which covers expropriation proceedings

intended for national government infrastructure projects. Rep. Act No. 8974, which provides for a procedure eminently more favorable to the property owner than Rule 67, inescapably applies in instances when the national government expropriates property for national government infrastructure projects. Thus, if expropriation is engaged in by the national government for purposes other than national infrastructure projects, the assessed value standard and the deposit mode prescribed in Rule 67 continues to apply.

We agree with the Court of Appeals, and find no merit in the instant Petition.

The deposit was made in order to comply with Section 4 of Republic Act No. 8974, which requires nothing less than

the immediate payment of 100% of the value of the property, based on the current zonal valuation of the BIR, to the property owner. Thus, going back to our ruling in Republic v. Gingoyon[16]: It is the plain intent of Rep. Act No. 8974 to supersede the system of deposit under Rule 67 with the scheme of immediate payment in cases involving national government infrastructure projects. The following portion of the Senate deliberations, cited by PIATCO in its Memorandum, is worth quoting to cogitate on the purpose behind the plain meaning of the law: THE CHAIRMAN (SEN. CAYETANO). x x x Because the Senate believes that, you know, we have to pay the landowners immediately not by treasury bills but by cash. Since we are depriving them, you know, upon payment, no, of possession, we might as well pay them as much, no, hindi lang 50 percent. xxxx THE CHAIRMAN (REP. VERGARA). Accepted. xxxx THE CHAIRMAN (SEN. CAYETANO). Oo. Because this is really in favor of the landowners, e. THE CHAIRMAN (REP. VERGARA). Thats why we need to really secure the availability of funds. xxxx THE CHAIRMAN (SEN. CAYETANO). No, no. Its the same. It says here: iyong first paragraph, diba? Iyong zonal talagang magbabayad muna. In other words, you know, there must be a payment kaagad. (TSN, Bicameral Conference on the Disagreeing Provisions of House Bill 1422 and Senate Bill 2117, August 29, 2000, pp. 1420) xxxx THE CHAIRMAN (SEN. CAYETANO). Okay, okay, no. Unang-una, it is not deposit, no. Its payment. REP. BATERINA. Its payment, ho, payment.

There is no question that the proceedings in this case deal with the expropriation of properties intended for a national government infrastructure project. Therefore, the RTC correctly applied the procedure laid out in Republic Act No. 8974, by requiring the deposit of the amount equivalent to 100% of the zonal value of the properties sought to be expropriated before the issuance of a writ of possession in favor of the Republic.

The controversy, though, arises not from the amount of the deposit, but as to the ownership of the interest that had since accrued on the deposited amount.

Whether the Court of Appeals was correct in holding that the interest earned by the deposited amount in the expropriation account would accrue to HRTDC by virtue of accession, hinges on the determination of who actually owns the deposited amount, since, under Article 440 of the Civil Code, the right of accession is conferred by ownership of the principal property: Art. 440. The ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, either naturally or artificially.

The principal property in the case at bar is part of the deposited amount in the expropriation account of DPWH which pertains particularly to HTRDC. Such amount, determined to be P22,968,000.00 of

the P28,406,700.00 total deposit, was already ordered by the RTC to be released to HTRDC or its authorized representative. The Court of Appeals further recognized that the deposit of the amount was already deemed a constructive delivery thereof to HTRDC: When the [herein petitioner] TRB deposited the money as advance payment for the expropriated property with an authorized government depositary bank for purposes of obtaining a writ of possession, it is deemed to be a constructive delivery of the amount corresponding to the 100% zonal valuation of the expropriated property. Since [HTRDC] is entitled thereto and undisputably the owner of the principal amount deposited by [herein petitioner] TRB, conversely, the interest yield, as accession, in a bank deposit should likewise pertain to the owner of the money deposited.[15]

Since the Court of Appeals found that the HTRDC is the owner of the deposited amount, then the latter should also be entitled to the interest which accrued thereon.

The critical factor in the different modes of effecting delivery which gives legal effect to the act is the actual intention to deliver on the part of the party making such delivery.[17] The intention of the TRB in depositing such amount through DPWH was clearly to comply with the requirement of immediate payment in Republic Act No. 8974, so that it could already secure

a writ of possession over the properties subject of the expropriation and commence implementation of the project. In fact, TRB did not object to HTRDCs Motion to Withdraw Deposit with the RTC, for as long as HTRDC shows (1) that the property is free from any lien or encumbrance and (2) that respondent is the absolute owner thereof.
[18]

value of the property based on the current relevant zonal valuation of the BIR (initial payment); and (2) when the decision of the court in the determination of just compensation becomes final and executory, where the implementing agency shall pay the owner the difference between the amount already paid and the just compensation as determined by the court (final payment).[19]

A close scrutiny of TRBs arguments would further reveal that it does not directly challenge the Court of Appeals determinative pronouncement that the interest earned by the amount deposited in the expropriation account accrues to HTRDC by virtue of accession. TRB only asserts that HTRDC is entitled only to an amount equivalent to the zonal value of the expropriated property, nothing more and nothing less. HTRDC never alleged that it was seeking interest because of delay in either of the two payments enumerated above. In fact, HTRDCs cause of action is based on the prompt initial payment of just compensation, which effectively transferred the ownership of the amount paid to HTRDC. Being the owner of the amount paid, HTRDC is claiming, by the right of accession, the interest earned by the same while on deposit with the bank. We agree in TRBs statement since it is exactly how the amount of the immediate payment shall be determined in accordance with Section 4 of Republic Act No. 8974, i.e., an amount equivalent to 100% of the zonal value of the expropriated properties. However, TRB already complied therewith by depositing the required amount in the expropriation account of DPWH with LBP-South Harbor. By depositing the said amount, TRB is already considered to have paid the same to HTRDC, and HTRDC became the owner thereof. The amount earned interest after the deposit; hence, the interest should pertain to the owner of the principal who is already determined as HTRDC. The interest is paid byLBP-South Harbor on the deposit, and the TRB cannot claim that it paid an amount more than what it is required to do so by law. Notwithstanding that the amount was deposited under the DPWH account, ownership over the deposit transferred by operation of law to the [HTRDC] and whatever interest, considered as civil fruits, accruing to the amount of Php22,968,000.00 should properly pertain to [HTRDC] as the lawful owner of the principal amount deposited following the principle of accession. Bank interest partake the nature of civil fruits under Art. 442 of the New Civil Code. And since these are considered fruits, ownership thereof should be due to the owner of the principal. Undoubtedly, being an attribute of ownership, the *HTRDCs+ right over the fruits (jus fruendi), that is the bank interests, must be respected.[20] That the expropriation account was in the name of DPWH, and not of HTRDC, is of no moment. We quote with approval the following reasoning of the Court of Appeals:

Nonetheless, we find it necessary to emphasize that HTRDC is determined to be the owner of only a part of the amount deposited in the expropriation account, in the sum of P22,968,000.00. Hence, it is entitled by right of accession to the interest that had accrued to the said amount only.

Considering that the expropriation account is in the name of DPWH, then, DPWH should at most be deemed as the trustee of the amounts deposited in the said accounts irrefragably intended as initial payment for

We are not persuaded by TRBs citation of National Power Corporation v. Angas and Land Bank of the Philippines v. Wycoco, in support of its argument that the issue on interest is merely part and parcel of the determination of just compensation which should be determined in the second stage of the proceedings only. We find that neither case is applicable herein. The issue in Angas is whether or not, in the computation of the legal rate of interest on just compensation for expropriated lands, the applicable law is Article 2209 of the Civil Code which prescribes a 6% legal interest rate, or Central Bank Circular No. 416 which fixed the legal rate at 12% per annum. We ruled in Angas that since the kind of interest involved therein is interest by way of damages for delay in the payment thereof, and not as earnings from loans or forbearances of money, Article 2209 of the Civil Code prescribing the 6% interest shall apply. In Wycoco, on the other hand, we clarified that interests in the form of damages cannot be applied where there is prompt and valid payment of just compensation.

the landowners of the properties subject of the expropriation, until said landowners are allowed by the RTC to withdraw the same. As a final note, TRB does not object to HTRDCs withdrawal of the amount of P22,968,000.00 from the expropriation account, provided that it is able to show (1) that the property is free from any lien or encumbrance and (2) that it is the absolute owner thereof.[21] The said conditions do not put in abeyance the constructive delivery of the said amount to HTRDC pending the latters compliance therewith. Article 1187[22] of the Civil Code provides that the effects of a conditional obligation to give, once the condition has been fulfilled, shall retroact to the day of the constitution of the

obligation. Hence, when HTRDC complied with the given conditions, as determined by the RTC in its Order[23] dated 21 April 2003, the effects of the constructive delivery retroacted to the actual date of the deposit of the amount in the expropriation account of DPWH. WHEREFORE, the Petition is DENIED. The Court of Appeals Decision dated 21 April 2006 in CA-G.R. SP No. 90981, which set aside the 7 February 2005 and 16 May 2005 Orders of

The case at bar, however, does not involve interest as damages for delay in payment of just compensation. It concerns interest earned by the amount deposited in the expropriation account.

the Regional Trial Court of Malolos, Bulacan, is AFFIRMED. No costs.

BACHRACH v TALISAY SILAY (1931; Romualdez) Facts:Talisay-Silay was indebted to PNB. To secure the loan, Talisay induced its planters one of whomwas Mariano Lacson Ledesma to mortgage their land. The central, to compensate the planters for mortgagingtheir property, undertook to credit the owners of the plantation every year with a sum

Under Section 4 of Republic Act No. 8974, the implementing agency of the government pays just compensation twice: (1) immediately upon the filing of the complaint, where the amount to be paid is 100% of the

equal to 2% of thedebt secured accdg to the yearly balance. The payment to be made as soon as the central was freed of itsdebts. Mariano sold his land to Cesar Ledesma for P7500. Bachrach on the other hand was a creditor of Mariano Ledesma. When Mariano could no longer pay Bachrach,it went after Talisay (original complaint), praying for the delivery of P13850 Talisay owed to Mariano as bonusstated in the first paragraph, or any instrument of credit. It also prayed for accounting of whatever the centralowed to Mariano by way of bonus, dividend, etc., as well as the nullification of the sale made to CesarLedesma.PNB filed third party claim alleging a preferential right over Marianos credit owed by Talisay as part of thecivil fruits of the land mortgaged to the bank. BAchrach contested this. Talisay prayed for the absolution of 7500 of the credit as it belonged to Cesar Ledesma as buyer in good faith.All parties later agreed to respect Cesars credit and absolved him from the complaint and ordered delivery tohim of P7500Trial court ruled in favor of Bachrach, awarding it P11,076.02 of Marianos bonus from Talisay. Hence thisappeal. Issues:W/N the bonus was a civil fruit which formed part of the mortgaged land Held and Ratio:NO. Art 355 of the old Civil Code (Art 442 of the current Civil Code) considers three things ascivil fruits: rents of buildings, proceeds from leases of lands, and income from perpetual of life annuities or othersimilar sources of revenue. The bonus in question was neither rent of a building nor land. For it to come under the coverage of income, it must be obtained from the land. In this case however,[the] bonus bears no immediate but only aremote and accidental relation to the land. The central granted it as compensation for the risk that thelandowners entered in mortgaging their lands. If the bonus was an income of any kind, it comes from theassumption of risk, and not from the land itself. Thus, it is distinct and independent from the property referred toin the mortgage to the bank. Disposition:Judgment affirmed. Florentino v. Supervalue Facts: Petitioner rents a stall inside SM mall from Supervalue Inc. Petitioner commits several breaches of the contract it entered into with SM,among them violating the requirement to be open on certain days of the year and also for introducing a new product (mini-embutido) withoutthe consent of Supervalue. Supervalue decides not to renew the lease contract after its expiration. Supervalue also retains the deposit of Florentino in the amount of 192,000. Florentino files a case to recover the deposit, as well as the value of the improvements made upon theproperty. RTC awards, CA reverses. In the lease contract, 3 months deposit of rentals was provided as a penalty to ensure full compliancewith each and every term, provision and covenant, which would be subject to forfeiture in case of breach and which was not advance rental.Was the award of the CA proper?Held: Although the penal clause is valid and unequivocal, still the amount is unconscionable. The SC exercises its discretion under article1229 and reduces the penalty to 50% of the value of 192,000. Ignacio Vs. Hilario FACTS: Elias Hilario and his wife Dionisia are the owners of the whole property of a parcel of land, partly rice-land and partly residential. The Ignacios conceding to the Hilarios the ownership of the houses and granaries built by them on the residential portion with the rights of a possessor in good faith, in accordance with article 361 of the Civil Code. The initial judgment renders the defendants to be entitled to hold the position of the residential lot until after they are paid the actual market value of their houses and granaries erected thereon, unless the Hilarios prefer to sell them said residential lot, in which case Ignacios shall pay the Hialrios the proportionate value of said residential lot taking as a basis the price paid for the whole land. Issue:WON then builder in good faith to the land owned by another, is entitled to retain the possession of the land until he is paid the value of his building or to sell the land to the owner of the building. Held:Under ART. 361, the owner of land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the work, sowing or planting, after the payment of the indemnity stated in articles 453 and 454, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. In view of these case, the Hilarios were ordered to sell the land to the Ignacios or to pay the buildings and improvements thereon. LEONOR GRANA and JULIETA TORRALBA VS. THE COURT OF APPEALS, AURORA BONGATO and JARDENIO SANCHEZ GR L-12486 31 AUG 1960 Facts:The herein Petitioners were sued by Bongato and Sanchez for the recovery of 87 square meters of residential land which they have inherited as

the children of the spouses Marcos Bongato and Eusebia. The former were ordered by the to vacate and deliver it to said respondents and to pay a monthly rental of P10.00 from the filing of the complaint until they actually vacate the same, plus attorney's fees and costs.The Petitioners alleged that the said property became a subject of a cadastral survey due to conflicts and overlapping of boundaries. In that survey, Gregorio Bongato's lot, according to petitioners, was identified as Lot No. 311 and that of Isidaria Trillo, their predecessor in interest, as Lot No. 310. Citing the fact that Original Certificate of Title No. RO-72 (138) covers 295 square meters of land, while the sketch plan of the second cadastral survey of Butuan shows that Lot No. 311 has only 230 square meters, petitioners maintain that it is the latter area properly belongs to respondents and that the land in question is part of the adjoining land, Lot No. 310, which belonged to their predecessor in interest. Issue:Whether or not the first survey was erroneous or that it included part of the contiguous land of petitioners' predecessor in interest? Held:Petitioners' stand is untenable. No proof was presented to show that the first survey was erroneous or that it included part of the contigous land of petitioners' predecessor in interest as part of the lot now covered by Original Certificate of Title No. RO-72 (138). Note that the difference in area between the land covered by said title and Lot No. 311 of the resurvey plan is 65 square meters while the area of the land in dispute if 87 square meters. And what is more, the alleged sketch plan of the resurvey was not presented in evidence.Upon the other hand, it is not disputed that the land in question is part of the lot covered by the Torrens title issued way back in 1923 in the name of respondents' predecessor in interest. Said title has not been contested up to the present, and, therefore, has become inconvertible evidence of the ownership of the land covered by it. Well settled is the rule that a Torrens certificate of title becomes conclusive and indefeasible after the lapse of the period within which it may be impugned (Reyes, et al. vs. Borbon, et al., 50 Phil., 791; Yumul vs. Rivera, et al., 64 Phil., 13). Although without any legal and valid claim over the land in question, petitioners, however, were found by the Court of Appeals to have constructed a portion of their house thereon in good faith. Under Article 361 of the old Civil Code (Article 448 of the new), the owner of the land on which anything has been built in good faith shall have the right to appropriate as his own faith shall have the right to appropriate as his own the building, after payment to the builder of necessary and useful expenses, and in the proper case, expenses for pure luxury or mere pleasure, or to oblige the builder to pay the price of the land. Respondents, as owners of the land, have therefore the choice of either appropriating the portion of petitioners' house which is on their land upon payment of the proper indemnity to petitioners, or selling to petitioners that part of their land on which stands the improvement. It may here be pointed out that it would be impractical for respondents to choose to exercise the first alternative, i.e., buy that portion of the house standing on their land, for in that event the whole building might be rendered useless. The more workable solution, it would seem, is for respondents to sell to petitioners that part of their land on which was constructed a portion of the latter's house. If petitioners are unwilling or unable to buy, then they must vacate the land and must pay rentals until they do so. Of course, respondents cannot oblige petitioners to buy the land if its value is considerably more than that of the aforementioned portion of the house. If such be the case, then petitioners must pay reasonable rent. The parties must come to an agreement as to the conditions of the lease, and should they fail to do so, then the court shall fix the same. SILVERIO FELICES, plaintiff-appellee, vs. MAMERTO IRIOLA, defendantappellant. Originally brought to the Court of Appeals, this appeal was certified to us by that Court on the ground that it does not raise any genuine issue of fact. It appears that plaintiff and appellee Silverio Fences was the grantee of a homestead of over eight hectares located in barrio Curry, Municipality of Pili, Province of Camarines Sur, under Homestead Patent No. V-2117 dated January 26, 1949, and by virtue of which he was issued Original Certificate of Title No. 104 over said property. The month following the issuance of his patent, on February 24, 1949, appellee conveyed in conditional sale to defendant and appellant Mamerto Iriola a portion of his homestead of more than four hectares, for the consideration of P1,700. The conveyance (Exh. 1) expressly stipulates that the sale was subject to the provisions of Sec. 119 of Act 141, as amended, and to the prohibitions spread on the vendor's patent; and that after the lapse of five years or as soon as may be allowed by law, the vendor or his successors would execute in vendee's favor a deed of absolute sale over the land in question Two years after the sale, on April 19, 1951, appellee tried to recover the land in question from appellant, but the latter refused to allow it unless he was paid the amount of P2,000 as the alleged value of improvements he had introduced on the property. In view of appellant's persistent refusal, plaintiff deposited the received price in court

and filed this action on October 4, 1951. In the court below, appellant, while recognizing appellee's right to "redeem", insisted that he must first be reimbursed, the value of his improvements. Whereupon, the court appointed a commissioner to ascertain the nature and value of the alleged improvements, and thereafter found that said improvements were made by defendant either after plaintiff had informed him of his intention to recover the land, or after the complaint had been filed; some of the improvements were even introduced after a commissioner had already been appointed to appraise their value. Wherefore, the lower court held defendant in bad faith and not entitled to reimbursement for his improvements. Defendant was, likewise, ordered to accept the amount of P1,700 deposited by plaintiff in court, to execute in favor of the latter the corresponding deed of reconveyance, and to restore him in possession of the land in question. At the outset, it must be made clear that as the sale in question was executed by the parties within the five-year prohibitive period under section 118 of the Public Land Law, the same is absolutely null and void and ineffective from its inception. Consequently, appellee never lost his title or ownership over the land in question, and there was no need either for him to repurchase the same from appellant, or for the latter to execute a deed of reconveyance in his favor. The case is actually for mutual restitution, incident to the nullity ab initio of the conveyance. . The question now is: May appellant recover or be reimbursed the value of his improvements on the land in question, on the theory that as both he and appellee knew that their sale was illegal and void, they were both in bad faith and consequently, Art. 453 of the Civil Code applies in that "the rights of one and the other shall be the same as though both had acted in good faith"? The rule of Art. 453 of the Civil Code invoked by appellant1 can not be applied to the instant case for the reason that the lower court found, and appellant admits, that the improvements in question were made on the premises only after appellee had tried to recover the land in question from appellant, and even during the pendency of this action in the court below. After appellant had refused to restore the land to the appellee, to the extent that the latter even had to resort to the present action to recover his property, appellee could no longer be regarded as having impliedly assented or conformed to the improvements thereafter made by appellant on the premises. Upon the other hand, appellant, recognizing as he does appellee's right to get back his property, continued to act in bad faith when he made improvements on the land in question after he had already been asked extrajudicially and judicially, to surrender and return its possession to appellee; and as a penalty for such bad faith, he must forfeit his improvements without any right to reimbursement therefor. "He who builds, plants or sows in bad faith on the land of another, loses that is built, planted, or sown without right to indemnity" (Art. 449, New Civil Code). Wherefore, the judgment appealed from is affirmed, with the sole modification that appellant need not execute a deed of reconveyance in appellee's favor, the original conveyance being hereby declared void ab initio. Costs against appellant Mamerto Iriola. So ordered. SARMIENTO v. AGANA FACTS:Before Ernesto Valentino and Rebecca Lorenzo wed, Rebeccas mother offered a lot in Paranaque that they could build their house on. In 1967, they finally built their home which cost about PhP8,000-10,000, thinking that someday, the lot would be transferred to them in their name. It turns out, though, that the lot was owned by the Spouses Santos who , in turn, sold the same to Leonila Sarmiento in 1974. A year later, Sarmiento ordered the Valentinos to vacate their lot, then eventually filed and Ejection Suit against them.The lower court ruled in Sarmientos favor and ordered her to pay 20,000 as the value of the house. But the case was then elevated to the CFI of Pasay (w/ Agana as Judge), and pursuant to Art.448 of the CC (March 1979), the Court ordered Sarmiento to exercise the option in 60 days to pay Ernesto 40,000 as the value of the house or to let them purchase the land for 25,000. Sarmiento was not able to exercise this option, and the CFI allowed Ernesto to deposit the 25,000 purchase price with the Court. ISSUE: Whether or not the land owner is compelled to exercise either option: to buy the building or to sell the land? HELD:Ernesto and his wife (BPS) were clearly in good faith as they believed that Rebeccas mother has the capacity to eventually transfer the title of the land to them. In line with this, Sarmiento (LO) was required to exercise only 2 options: To purchase the house or to sell the land to them, in this case, based on the value decided by the courts. Since Sarmiento failed to exercise the option within the allotted period, and based on Art. 448, the LO is compelled by law to exercise either option. Not choosing either is a violation of the law. Francisco Depra VS Agustin Dumlao GR L-57348 16 May 1985

Facts: Depra is the owner of a parcel of land to which Dumlao, living in an adjoining lot, had built a kitchen that encroached an area of 34 square meters. The encroachment was discovered in a relocation survey of Depras property. Upon discovery, Depras mother wrote a demand letter asking Dumlao to move back from his encroachment. She then filed a case of Unlawful Detainer against Dumlao.In the trial court it was proven that Dumlao was a builder in good faith; thus the Municipal Court rendered it judgment that reads:Ordering that a forced lease is created between the parties with the plaintiffs, as lessors, and the defendants as lessees, over the disputed portion with an area of thirty four (34) square meters, the rent to be paid is five (P5.00) pesos a month, payable by the lessee to the lessors within the first five (5) days of the month the rent is due; and the lease shall commence on the day that this decision shall have become final.Neither party appealed. However, Depra did not accept the payment of rentals so that Dumlao deposited such rentals with the Municipal Court.Depra then filed a Complaint for Quieting of Title against Dumlao, the latter admitted the encroachment but alleged, that the present suit us barred by res judicate by virtue of the decision of the Municipal Court.DEPRA claims that the Decision of the Municipal Court was null and void ab initio because its jurisdiction is limited to the sole issue of possession, whereas decisions affecting lease, which is an encumbrance on real property, may only be rendered by Courts of First Instance. Issue:I. Whether or not the Municipal Courts decision was null and void ab initio because it has no jurisdiction over the case?II. Whether or not the factual situations of DUMLAO and DEPRA conform to the juridical positions respectively defined by law, for a "builder in good faith" under Article 448, a "possessor in good faith" under Article 526 and a "landowner in good faith' under Article 448? Held:I. Addressing out selves to the issue of validity of the Decision of the Municipal Court, we hold the same to be null and void. The judgment in a detainer case is effective in respect of possession only (Sec. 7, Rule 70, Rules of Court). The Municipal Court over-stepped its bounds when it imposed upon the parties a situation of "forced lease", which like "forced coownership" is not favored in law. Furthermore, a lease is an interest in real property, jurisdiction over which belongs to Courts of First Instance (now Regional Trial Courts) (Sec. 44(b), Judiciary Act of 1948; Sec. 19 (2) Batas Pambansa Blg. 129). Since the Municipal Court, acted without jurisdiction, its Decision was null and void and cannot operate as res judicata to the subject complaint for Queting of Title. Besides, even if the Decision were valid, the rule on res judicata would not apply due to difference in cause of action. In the Municipal Court, the cause of action was the deprivation of possession, while in the action to quiet title, the cause of action was based on ownership. Furthermore, Sec. 7, Rule 70 of the Rules of Court explicitly provides that judgment in a detainer case "shall not bar an action between the same parties respecting title to the land. " II. ART. 448. The owner of the land on which anything has been built sown or planted in good faith,shall have the rightto appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, orto oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent.However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof (Paragraphing supplied)Pursuant to the foregoing provision, DEPRA has the option either to pay for the encroaching part of DUMLAO's kitchen, or to sell the encroached 34 square meters of his lot to DUMLAO. He cannot refuse to pay for the encroaching part of the building, and to sell the encroached part of his land, 5 as he had manifested before the Municipal Court. But that manifestation is not binding because it was made in a void proceeding.However, the good faith of DUMLAO is part of the Stipulation of Facts in the Court of First Instance. It was thus error for the Trial Court to have ruled that DEPRA is "entitled to possession," without more, of the disputed portion implying thereby that he is entitled to have the kitchen removed. He is entitled to such removal only when, after having chosen to sell his encroached land, DUMLAO fails to pay for the same. 6 In this case, DUMLAO had expressed his willingness to pay for the land, but DEPRA refused to sell.